Suite of Bills Seek to Ease Ratepayer Burden

Dominion Energy frequently advertises that their customers pay rates 10% below the national average, yet Virginians end up paying the sixth highest energy bills in the country. In fact, energy bills can become so high that they’re considered unaffordable for 75% of Virginian households based on federal energy burden standards. And with the ongoing implementation of the Clean Economy Act and the Grid Modernization Act, customers can expect to see their energy bill continue to increase as public utility companies push the burden of the costs onto customers.

Dominion Energy has overcharged customers $502 million since 2017. The energy monopoly has over-earned a staggering $3.4 billion since 1994 with only about $1.3 billion being returned to customers, according to a 2020 State Corporation Commission estimation.

How have Virginia’s public utility monopolies become so unaccountable to the customers they serve?

For years, the regulatory power of the SCC has been diminished by the General Assembly. Some adjustments were made in an effort to ensure renewable energy has a fair shot in the state. But others have simply guaranteed Dominion’s earnings. With each chip in the authority of the SCC approved by the General Assembly (whose members receive more campaign funds from Dominion Energy than any other donor), more money is transferred from the pockets of customers to the profit margins of utility companies.

General Assembly action over the course of the past three decades has stripped the SCC of its ability to lower rates, capping rate reductions at $50 million. Current law also allows utilities to keep a bonus profit of 0.7% above the profit margin limit set by the SCC. Virginia is the only state in the country with this “earnings collar” enshrined in law, allowing Dominion to keep $136 million of customer overcharges. Yet another provision of state law allows Dominion to keep an additional 30% of customer overcharges above the 0.7% earnings collar.

A slate of bills introduced in the 2021 General Assembly session aim to rein in public utility over-earning and restore the SCC’s ability to perform its regulation duties.

HB 1835, sponsored by Del. Suhas Subramanyam, allows the SCC set utility rates in the future that fairly balance customer and utility interests. The bill eliminates the $50 million cap on rate reductions, prevents Dominion from avoiding rate reductions by writing off large expenses, and restores the SCC’s authority in determining recovery periods for large costs. Keeping rates as low as possible while ensuring utilities can pay for the cost of business is a key goal of this bill.

HB 2160, sponsored by Del. Kathy Tran, seeks to eliminate provisions in current law allowing utilities to keep a bonus profit of 0.7% above their authorized profit and which enable utilities to keep an additional 30% of customer overcharges above that 0.7% earnings collar. The elimination of these two provisions would prevent Dominion from pocketing $246 million of the $502.7 million it has overcharged since 2017.

HB 2200, sponsored by Del. Jay Jones and Del. Lee Ware, aims to protect customers by restoring the SCC’s ability to set utility rates and authorized profit. The bill also changes language in existing law that gives the SCC leeway in taking actions to benefit customers, rather than being required to act solely in the interest of utilities.

In the midst of a pandemic, Virginians urgently need rate relief. In restoring the regulatory power of the SCC, these bills prevent public utility monopolies from over-earning and ensure customers receive refunds. Their enactment would allow public utilities to make a reasonable profit in delivering quality services while ensuring customers aren’t burdened with unfair rates.