Virginia Considers New Utility Regulatory Rules

Virginia lawmakers are weighing legislation that would give the state more control over utilities, with some of the measures developed in concert with power companies.

State legislators are discussing the proposals, some of which are designed to lift a freeze on utility rates, which could bring refunds for ratepayers—although others warn it could cause rates to go higher. Democrat Governor Ralph Northam’s office said the measures would give the State Corporation Commission (SCC) full regulatory oversight of electric utilities.

In a statement February 5, the governor—who has said he is in favor of lifting the current freeze on electricity rates—said he wants legislation to “Give Virginians as much of their money back as possible, [and] restore oversight to ensure that utility companies do not overcharge ratepayers for power.”

A Senate panel approved a draft of the legislation on Monday. The energy rules are part of a bipartisan regulatory reform deal announced by Northam and Republican House of Delegates Speaker Kirk Cox. The governor in a statement said, “Promoting the health, safety, and prosperity of Virginians is the chief mission of our state agencies, and regulations can be a helpful tool in that mission. However, we have a responsibility to constantly evaluate every regulatory requirement and policy to ensure that it is doing its job in the least restrictive way possible.”

Northam has been active on energy issues since his election in November 2017, quickly asking lawmakers to move the state into the Regional Greenhouse Gas Initiative, the nation’s largest carbon-trading market. He was sworn in as governor in January.

The state’s attorney general, Democrat Mark Herring, on Monday warned the energy legislation, which would impose limits on the ability of regulators to adjust rates, could result in higher costs for the state’s electric customers. Two utilities, Dominion Energy and Appalachian Power, have said legislation is needed to bring improvements to the state’s electric grid.

The governor said he has worked with utilities, including Dominion and Appalachian, to develop new rules, which he says would increase energy efficiency programs and bring more consumer protection for Virginia electric customers.

Northam’s office released a set of bullet points outlining the proposals before lawmakers:

  • Repeals 2015 rate freeze; restores full regulatory oversight of electric utilities.
  • Allows the SCC to evaluate rates in 2021 and consider issuing refunds to consumers who may have been overcharged.
  • Empowers the SCC to consider reducing rates in 2021 with no possibility of a rate increase for Dominion.
  • The SCC will consider rate reduction in 2020 for Appalachian Power.
  • Allows the SCC to perform full rate reviews in subsequent three-year periods.
  • Requires Dominion to issue $200 million in rate credits to consumers overcharged during the rate freeze period. Appalachian Power will issue $10 million in credits.
  • Requires Dominion to reduce power rates by an additional $125 million; Appalachian Power required to reduce rates by $50 million.
  • Additional refunds and rate reductions possible in the first SCC review and all subsequent reviews.
  • Requires utilities to make $1.145 billion in investments in energy efficiency projects and low-income energy assistance over next decade.
  • Authorizes the SCC to deem 5,000 MW of solar and wind energy projects to be in the public interest, supporting approval of new clean energy projects.
  • Commits Appalachian Power to make a separate investment in 200 MW of new solar capacity.
  • Promotes energy technology including battery storage and pumped storage in Southwest Virginia.
  • Requires review of state regulations that hinder clean energy development.
  • Creates a transparent stakeholder process to expand energy efficiency program offerings.
  • Creates a transparent stakeholder process to make recommendations for solar program expansion, including net metering, community solar, and siting.
  • Deems projects to modernize the grid and support clean energy in the public interest.
  • Deems projects to make the grid more reliable in the public interest.
  • Requires equal commitment by utilities to grid resilience and grid modernization.
  • Allows for a utility line undergrounding pilot project in Haymarket, and a process for the review of additional undergrounding projects.

Darrell Proctor is a POWER associate editor (@DarrellProctor1, @POWERmagazine)