THE scenario has been repeated year after year. Dominion Energy, with the State Corporation Commission looking over its shoulder, reviews its debits and credits. It then either asks the SCC to grant a rate increase to make up for a shortfall, or announces a refund that customers will see in their upcoming electricity bills.
Now, “thanks” to legislation approved by the General Assembly and signed by Gov. Ralph Northam after the 2018 session, Dominion can pretty much do what it sees fit with any surplus funds.
And that has fired up critics who have rallied against Dominion’s newfound authority.
The spark is Dominion’s decision to keep nearly $380 million in ratepayer overcharges in 2017 and 2018 rather than refund the money to customers.
The company, in reconciling its decision, says the funds will be used to develop its solar and wind alternative energy projects.
Given recent discussions about climate change and greenhouse gases, that’s a good idea, isn’t it?
Yes, and no.
Back in July, we endorsed Dominion’s offshore wind power pilot project to erect a pair of wind turbines 27 miles off the coast of Virginia Beach and lay 27 miles of cable back to shore.
The legislation allows the SCC to let Dominion spend a percentage of profits that would normally be returned to its customers. Dominion also wants to use excess profits to pay for efficient “smart meters” for its customers—advanced technology the utility says will help hold down future electricity bills.
We can hear Dominion officials now: We said what we wanted to do, the General Assembly and the SCC went along, and now we’re doing it. What’s the problem?
Granted, Dominion has every right to do what the General Assembly and the SCC allow it to do.
But let’s just power down for a minute.
Dominion has priced its offshore wind experiment alone at $300 million, which is instantly covered by these overcharges. It could easily put the other $80 million toward the smart meters or something else.
Was the idea from the beginning that all overcharges could go toward these special projects that the utility wants to pursue? No matter how much?
That’s not in the spirit of how the deal was pitched, unless you assume that a percentage of overcharges means 100 percent of the overcharges.
We understand customers’ concerns that Dominion would have less incentive to keep rates low if it can do as it pleases with the overcharges.
We remain in favor of Dominion’s offshore wind project and its efforts to explore and invest in alternative energy sources as part of a future in which we wean ourselves from fossil fuels. We understand that these efforts don’t come cheap.
But Dominion Energy remains a regulated monopoly despite the long leash lawmakers and SCC officials are willing to give it.
Opponents of the 2018 legislation said it would allow the utility to become self-regulating, and there appears to be some truth to their prophecy.
The idea is that Dominion and the SCC come to an annual agreement on costs and rates.
The calculations aim to provide Dominion with a 9.2 percent annual profit margin to encourage shareholder investment. Dominion is now asking the SCC to raise that figure 10.75 percent while the SCC says it could be lowered to 8.75 percent.
The difference that would make on a customer’s bill depends on how much electricity the household uses.
Dominion no doubt has a long list of projects it wants to pursue over time. It leased the 113,000 acres of Atlantic Ocean for its wind energy project back in 2013 in anticipation of the pilot project.
We would hope that its rates take such initiatives into account with funds being earmarked from year to year.
But it shouldn’t have to clean out the refund bank to pay for such things.
There is wisdom in investing today in the energy sources of tomorrow.
But there is also, in the here and now, the need for customers to pay a fair price for the electricity they use.
Not to mention getting some money back if they end up paying way too much.