By Matt Leonard and Benjamin May
Capital News Service 

RICHMOND
A Senate committee on Monday approved a bill that would exempt Dominion Virginia Power from financial regulation and freeze electric rates until 2023.

The Senate Labor and Commerce Committee voted 14-1 in favor of Senate Bill 1349. It now will be considered by the full Senate.

The bill enjoyed bipartisan support from committee members: 10 Republicans – including the bill’s sponsor, Sen. Frank Wagner, of Virginia Beach – and four Democrats voted for it; Sen. Stephen Newman, R-Forest, voted against it.

Afterward, Dominion Virginia Power officials pointed to a list of groups that support the legislation. They range from the Virginia Coal and Energy Alliance and the Virginia Chamber of Commerce to the American Red Cross of Virginia and the Virginia branch of the NAACP.

The bill was the focus of debate among utility officials, environmentalists and state utility regulators at a subcommittee hearing last week.

Dominion officials say the bill would help the company comply with the U.S. Environmental Protection Agency’s Clean Power Plan. The plan, to be finalized this summer, would require Virginia to cut carbon dioxide emissions from 1,297 pounds to 810 pounds per megawatt hour – a 38 percent decrease. Dominion says it wants to accomplish this without passing the costs on to customers.

To achieve the cuts mandated by the EPA, Dominion said it may have to close four power plants. Utility officials estimate that would cost $2.1 billion.

Without SB 1349, Dominion would pass those costs along to consumers by raising rates. That’s allowed under current Virginia law, subject to a biennial review by the State Corporation Commission. The SCC examines Dominion’s rates every other year to make sure the company isn’t “overearning” – that is, reaping excessive profits.

However, Dominion says it wants to protect consumers from higher rates triggered by the costs of the Clean Power Plan. That is where SB 1349 comes in: It would freeze rates and eliminate the SCC’s biennial reviews. Under this plan, Dominion says, its shareholders, instead of customers, would shoulder the costs of closing power plants.

But some state officials don’t buy the utility’s rationale.

For one thing, the legislation doesn’t allow any plants to close during the period that Dominion would be freed from financial regulations, said Ken Schrad, director of information resources at the SCC. And if Dominion did have to close a plant, he said, the existing regulatory process is sufficient to help ease the impact on customers.

“The commission, under the current regulatory structure, has the tools to deal with such a situation,” Schrad said, “should the company have to close an existing facility and the cost would need to be passed along to ratepayers. That tool allows the commission to spread these costs out over a period of years so that there is no rate shock that occurs to the customer.”

Last Thursday, at a meeting of the Special Subcommittee to Examine the EPA’s Clean Power Plan, Maurice Jones, Virginia’s secretary of commerce and trade, wondered aloud whether allowing Dominion to go without review was a responsible decision.

“Not being able to review for six periods is the issue,” Jones said. “Is suspending reviews the most prudent course?”

The biennial reviews have at times determined that Dominion was overearning and resulted in refunds to customers or a reduction in rates. One way the company has overearned is by taking in more money than it needs to cover its facility costs.

“This utility has over-recovered, and has historically over-recovered,” said Angela Navarro, staff attorney for the Southern Environmental Law Center.

Glen Besa, director of the Sierra Club’s Virginia chapter, disputed Dominion’s assertion that the EPA’s rules would raise the company’s costs and the specter of higher rates. “We believe Dominion is using the EPA Clean Power Plan to sidestep a review of its rates,” Besa said. “This could result in a windfall for Dominion.”

But Dominion officials said SB 1349 would benefit consumers. Indeed, they said that under the legislation, the average residential bill would decrease from about $116 a month to $109 – about $25 below the national average.

“The goal of Senate Bill 1349 is to stabilize rates and protect consumers through a period of significant uncertainty,” according to a fact sheet distributed by the company.