One of the most significant bills of this session is HB1558, which would repeal the Utility Rate Freeze Bill of 2015. There has been much confusion and controversy about what the bill does, and does not, actually do. Many of you are aware that in 2015, in response to concerns about possible rate increases in the aftermath of passage of the federal Clean Power Plan, a bill was passed to prevent increases by freezing electricity rates for several years. That bill also removed the State Corporation Commission (SCC) from its role in reviewing rates until 2022.
Over the last several years, two big changes have happened. First, the Trump administration has unraveled the Clean Power Plan. Second, our major utilities have accumulated substantial “overearnings.” Most estimates place these overearnings at several hundred million dollars. There is no reason that these overearnings should not be returned to consumers.
In response to this, several bills were proposed that would undo the rate freeze and reinstate SCC oversight for Dominion and the other utilities. Straight repeal has been defeated, and only HB1558 has a chance of passage this Session. The question, then, is whether this bill will return any overearnings to consumers, and the extent to which the bill will lead to new investments in renewable energy availability and use, grid modernization, and weatherization improvements to save energy.
CHANGES ALREADY MADE
In its original form, HB1558 was severely lacking in any of these critical initiatives. It would have delayed SCC review and possible rate relief until 2024, had a smaller amount of immediate rate relief and inadequate investments in grid modernization and renewables. Largely in response to pressure from environmental and consumer groups, that original bill has now changed substantially.
The new proposal involves rebating some $200 million to ratepayers immediately, and another $125 million will come to ratepayers to reflect benefits that utilities would receive as a result of the recent changes in the federal tax code. The revised bill will restore SCC oversight beginning in 2021, earlier than under present law.
The new bill provides for $1 billion in energy efficiency investments over ten years, much more than the original bill and far more than the Rate Freeze Bill of several years ago. It also states as a matter of Virginia public policy that implementing 5,000 megawatts of solar and wind power (enough to power 1.5 million homes) is “in the public interest” — that is, such projects should be approved by the SCC in the event of a request.
The bill also extends the utility-funded EnergyShare programs through 2028, at an increased level of $13 million per year or $130 million over ten years. Under current law, EnergyShare is set to expire in 2019.
DOUBLE-DIPPING IS FINE FOR ICE CREAM, BUT …
One of the major issues still in dispute is whether the new bill allows for “double-dipping” by the utilities in how they handle their investments. This is a complicated issue, and Dominion and its detractors differ in their opinions of whether the bill allows this. To address this problem, I offered an amendment in committee to the original bill that would require the disclosure of information to the SCC so that it could conclude whether or not there was double-dipping. My amendment was passed by the Commerce and Labor Committee before the bill was advanced, so it is in the bill as we will debate it on the House floor next week.
CREATING A FAVORABLE CLIMATE
It is important for the policy directives on renewables and weatherization to be clear in the bill because the SCC has often been skeptical of the utilities’ efforts to expand renewables in the past; it has rejected several solar power project applications, allegedly because of impacts on ratepayers. This has prevented some of the investments in solar power that we need in Virginia.
EVERYONE HAS AN OPINION: WHAT’S YOURS?
With every bill, I always ask myself: “Are my constituents better off by passing this bill than staying with the status quo?” While this bill is not perfect, and I will keep working to improve it as we go through the process, I believe what the bill sets in place is far better than either a strict repeal of the 2015 Act or keeping it in place, because either of those options would cut investments in weatherization so important to low-income communities and neither would require the utilities to invest in solar power and grid modernization to the extent that is needed. This bill could be a first step in transforming the grid, and it replaces something that has not worked and events have conspired to overcome, that is, the Rate Freeze Bill of 2015.
The bill before us is supported by a wide variety of interests, including the Virginia League of Conservation Voters, the Natural Resources Defense Council, Conservatives for Clean Energy, Washington Gas, Apex Clean Energy, the Northern Virginia Technology Council, Orsted Energy (formerly DONG Energy), the Virginia Chamber of Commerce, and the Governor’s Office. The Virginia Poverty Law Center opposes the bill; the Southern Environmental Law Center has raised major issues with the bill, but has not taken a position against it; and the Sierra Club opposes it.
PLEASE TAKE A SHORT SURVEY
I want to know what you think. This link will take you to a short survey about HB1558. If you have thoughts to share beyond the parameters of the survey, please send an email – the best address to use during session is DelDToscano@house.virginia.gov . (If you are one of the many folks who has already emailed, you do not need to resend.)
I value your input as I prepare for both of my jobs: serving my caucus as their floor leader during the debate, and casting my vote in the best interests of my constituents.