Last week, an unexpected coalition formed with the aim of significantly changing Virginia’s energy landscape. With the slogan, “It’s Time to Take Back Our Dominion,” the group’s aim is very clear. Dominion Energy is often accused of overstepping in the legislative process in Virginia in order to secure more favorable positions for itself. The coalition seeks to end this practice.
The most significant of the coalition’s objectives is to deregulate Virginia’s electric utilities, which means the only permissible monopolies would be for transmission and distribution lines. Dominion Energy, and Appalachian Power in certain territories, currently have a monopoly on energy production and distribution in the state of Virginia.
Monopolies were originally formed around public utilities when there were high costs associated with building and maintaining a complex infrastructure (e.g., railroads, telephone lines, transmission and distribution lines). In exchange for these hefty upfront costs, governments grant monopolies as an incentive. Monopolies also serve to deter duplicative construction; we would not want multiple electric companies building their own power lines.
Now some states have moved away from this structure in favor of a deregulated energy market, in which various electricity producers compete to sell their product. These structures have had varying levels of success. Dominion’s spokespeople have warned that deregulation would lead to higher prices for consumers.
A monopoly has worked in Virginia for many years, however, there have been major concerns in the last decade that Dominion Energy is slowly chipping away at the government oversight designed to keep it in check. In 1999 Virginia attempted deregulation of the energy markets but abandoned the efforts for fear there would not be enough energy producers to sustain the desired level of competition. This failed effort strengthened Dominion’s presence in the General Assembly. In 2015, Dominion successfully negotiated a rate freeze in the General Assembly, which essentially stripped the State Corporation Commission’s power to regulate the rates that Dominion charges its customers.
The Virginia Energy Reform Coalition was formed in response to what they view as a significant overstep by a state-regulated monopoly. The most remarkable aspect of this coalition is its bipartisan membership. One of the most outspoken members of the coalition has been Ken Cuccinelli, Virginia’s former Republican state Attorney General. On this topic, Cuccinelli stated, “I’m proud to stand here today with a politically eclectic group that is committed to modernizing Virginia’s electricity markets.”
States like Texas and Ohio have successfully deregulated their energy markets and their consumers have seen the benefits. Whether or not the coalition accomplishes its mission, it has been successful in starting important conversations about the future of energy in Virginia