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AP Business Writer
RICHMOND--Lawmakers are considering changes to how regulators handle electric rates following a proposed deal between the attorney general's office and Virginia's largest power companies.
The General Assembly's Commission on Electric Utility Regulation was briefed Thursday in Richmond on an agreement between Attorney General Ken Cuccinelli's office, Dominion Virginia Power and Appalachian Power on the part of a 2007 law that allows utilities to receive financial incentives for using renewable energy.
The commission had asked the parties to propose reforms to the law after a report from the attorney general's office last year found that the millions of dollars in bonuses haven't yielded the intended environmental gains and have contributed to increases in customers' bills.
The November report said utilities have primarily relied on buying renewable energy certificates from existing facilities to receive the incentives allowed by law rather than build any new renewable centers themselves. Overall, the report suggested the bonuses be eliminated or significantly changed because they are not meaningfully protecting customers from unnecessary rate increases, not promoting reliable electricity or fuel diversity, and not providing environmental benefits or stimulating economic development.
Under the agreement, electric utilities would no longer be eligible to receive the bonuses called "adders" for using sources of renewable energy or building new power plants that use fossil fuels. Incentives will still remain for nuclear and offshore wind, but the bonuses would be reduced. The agreement does not, however, repeal the state's voluntary goals that utilities have 15 percent of their generation come from renewable sources by 2025.
The deal also proposes changes to how much money utilities can be awarded by regulators for its performance, how it treats accounting issues related to storm restoration costs and the early closure of power plants, expands an electric provider's potential rate of return and makes other procedural changes.
Deputy Attorney General Wesley G. Russell Jr. told the commission that give-and-take between his office and the electric companies "made the end product better for Virginia consumers, and I believe Virginia utilities feel that it's fair to them as well." Representatives for Dominion and Appalachian Power said they would support legislative efforts stemming from the agreement.