Virginia Needs To Restore SCC Oversight
The State Corporation Commission is responsible for ensuring Virginia energy customers receive quality utility service at a reasonable price.
The oversight power of the SCC has been stripped back by the General Assembly in recent decades, allowing utilities to pull in excess profit and leaving Virginians with some of the highest electric bills in the country.
By amending certain provisions of state law, the General Assembly can restore the SCC’s regulatory power and deliver rate relief to Virginia energy customers.
The State Corporation Commission is tasked with ensuring that Virginia’s energy customers enjoy quality utility service at a just and reasonable price. With a regulatory body such as the SCC in place, why do investor-owned utilities such as Dominion Energy continually overcharge customers, leaving Virginians paying the eighth-highest residential, commercial, and industrial electric bills in the country?
Because of legislative action by the General Assembly, the regulatory power of the SCC has been gutted in recent decades. This is in part due to campaign contributions from utilities like Dominion to lawmakers, who have the power to strip back SCC oversight. Dominion Energy is one of the biggest campaign donors in the state, and is a top donor to many members of the influential Senate Commerce and Labor Committee, which considers bills related to energy utility regulation.
Some legislation that wrested oversight power from the SCC was intended to give renewables a fair shot in Virginia. The SCC has historically treated renewables with apprehension due to concerns about a potential spike in electricity prices. But as the cost of renewables came down toward the end of the 2010s, the SCC became more willing to consider them. Legislation that took away SCC oversight in order to help renewable energy establish a footing in Virginia is no longer necessary.
In order to fulfill the SCC’s role of ensuring Virginia energy customers receive adequate utility services at a fair price, the General Assembly needs to restore the proper oversight role of the SCC over utility rates, profits, and investments.
Here are a few measures the General Assembly could adopt to help restore SCC oversight:
Give the SCC greater discretion in adjusting rates
Every three years, the SCC reviews the electric rates customers of utilities pay. This review process is governed by section 56-581.1 of the Virginia Code. By changing certain language in this law, like replacing the word “shall” with the more permissive word “may” in certain instances, the SCC will be able to have greater leeway in determining rates. Currently, this language mandates the SCC to act solely in the interest of utilities, but this simple change will allow the SCC to provide much-needed rate relief to Virginia energy customers.
During the 2021 session, a bill that would have accomplished this passed the House of Delegates with bipartisan support, but was killed in the Senate Commerce and Labor Committee.
Eliminate utility discretion in timing certain payments
State law currently allows utilities to choose which year they’ll recover the costs of certain large expenses, such as those associated with storm damages. In allowing utilities discretion in how they time the payment of certain costs, utilities are able to argue that they have not made excess profits through overcharging customers. By eliminating a provision of section 56-581.1 of the Virginia Code, the authority of the SCC to establish cost recovery periods for utilities would be restored. This would help to bring refunds to Virginia energy customers, who have consistently been overcharged.
This attempt at reform also received bipartisan support in the House during the 2021 session, but, unsurprisingly, met its demise before the Senate Commerce and Labor Committee.
Eliminate the Customer Credit Reinvestment Offset
The 2018 Grid Transformation and Security Act established a mechanism which allows utilities to offset costs for future projects by tapping into over-earnings. Known as the Customer Credit Reinvestment Offset, or CCRO, this provision of state law prevents customer refunds and rate reductions. Virginians need electric rate relief; eliminating the CCRO can help to bring that relief.
Despite bipartisan support in the House, a bill that would have eliminated the CCRO was defeated in the Senate Commerce and Labor Committee during the 2021 session.
Today, the SCC lacks the power to fulfill its duties of ensuring reasonable rates and quality utility service for Virginia’s energy customers. By taking action to restore SCC oversight, the General Assembly can help Virginians see lower electric rates on their energy bills.