Dear Climate Friend:
As you know, the Virginia General Assembly is now in session.
CAAV’s Legislation and Elections committee has identified climate-friendly bills that, if enacted, would make a difference. Below is a very brief summary of each one.
Please contact your Delegate and Senator, and urge them to support these bills. And please act quickly. The GA is moving rapidly through a great many bills. If you need the name and contact information for your Delegate and/or Senator, click here:
https://whosmy.virginiageneralassembly.gov/
Clean Transportation Bills
HB 1965–the Clean Cars bill. Allows State Air Pollution Control Board to establish ZEV (zero emissions vehicles) mandate beginning with 2025 vehicles
1) Environmental benefits – 48% of VA’s greenhouse gas emissions (GHGs) come from the transportation sector. More LEV and ZEV vehicles will help reduce this pollution.
2) More ZEV options – Currently many dealerships in VA do not offer ZEVs because they do not want to or because they cannot get them. This law would be a signal to the manufacturers that VA is serious about ZEVs and they will send more ZEVs to VA to be sold.
3) Support the growing clean energy economy – More ZEVs on the road means VA will need to build more EV charging stations and hire more EV technicians, generating good-paying jobs for Virginians.
4) Increase demand for clean electricity – as more ZEVs are deployed, consumer awareness of the source of their electricity will grow, and consumers will want the utilities to provide them with cleaner electricity.
5) Long lead time – the 2025 implementation gives dealerships ample time to prepare for this transition.
HB 1979 EV Rebate bill
1) A state rebate of $2500 will reduce the upfront cost of a new or used EV.
2) This rebate will provide an additional $2,000 to low income Virginians, promoting equity.
3) Cash on the hood rebate reduces the final purchase or lease price of the EV.
Utility Reform Bills
Background
Virginians currently pay the sixth highest energy bills in the country, bills that for more than 75% of Virginia households are considered unaffordable by federal standards. Too many Virginians are desperate for economic relief, particularly when it comes to paying monthly bills. Prioritizing the passage of consumer protection legislation to ensure Virginians are not overcharged by their energy providers should be a major goal of Virginia’s legislators.
With a rate case coming up later in 2021 for Virginia’s largest energy provider, this issue could not be more urgent. If the General Assembly does not act this session to protect consumers and restore oversight authority to regulators, Virginians are poised to lose out on the over $500 million they’ve been overcharged by Dominion Energy since 2017 and, even worse, may continue to be forced to pay bills that are much higher than they should be moving forward. These bills— HB 2160, HB 2200, HB 2049, HB 1984, HB 1914, and HB 1835—will provide much greater balance between utility and customer interests than now exists under Virginia’s “regulated utility mode.”
Why These Bills Matter
- Virginians pay the 6th highest energy bills in the country, bills unaffordable for 75% of Virginia households based on federal energy burden standards.
- Dominion Energy has overcharged customers by at least $502 million since 2017. Virginians deserve this money back.
- Dominion Energy customers have already seen their bills increase by more than 25% in the last decade, and these bills are projected to rise even more as costs for Grid Modernization Act, Clean Economy Act, etc. are added to customers’ bills. Virginians urgently need rate relief.
Bill Specifics
HB 2160 Preventing Utilities from Keeping Customer Overcharges as Unmerited Profit Bonuses
Chief Patron: Delegate Kathy Tran; Chief Co-Patron: Delegate Schuyler VanValkenburg
As regulated utility monopolies benefit from no competition, the State Corporation Commission (SCC) is tasked with establishing their fair – but not unlimited – authorized profit margin. However, Virginia is the only state in the country whose legal code mandates that specific utilities – Dominion Energy and Appalachian Power (APCo) – receive profit bonuses tacked onto this authorized profit margin. These bonuses are not tied to performance, but rather are granted to the utilities as a reward for overcharging their customers. This bill removes provisions that allow utilities to keep customer overcharges as bonuses and instead restores SCC authority to fully refund 100% of overcharges back to customers. The Bill:
1. Eliminates provision that allows utilities to keep a bonus profit of 0.7% above their authorized profit, or return on equity (ROE).
a. Under current law, Dominion and APCo get an automatic profit bonus of 0.7% tacked onto whatever profit margin the SCC sets.
b. Virginia is the only state in the country with a mandatory “earnings band” or “earnings collar” like this written into law.
c. Unless changed, this provision would allow Dominion to keep $136 million of customer overcharges (based on overcharges determined in the 2020 SCC Annual Report).
2. Eliminates provision that allows Dominion to pocket an additional 30% of customer overcharges above the 0.7% earnings collar.
a. Under current law, if a utility’s revenue exceeds the 0.7% profit bonus, they are further allowed to keep 30% of customer overcharges as a bonus.
b. Unless changed, this provision would allow Dominion to keep $110 million of customer overcharges (based on overcharges determined in the 2020 SCC Annual Report). Eliminating these two provisions will prevent Dominion from pocketing $246 million of the $502.7 million it has overcharged Virginians since 2017.
HB 2200 Restoring SCC Authority to Balance the Interest of Utilities and Ratepayers
Chief Patron: Delegate Jay Jones; Chief Co-Patron: Delegate Lee Ware
This ratepayer protection bill makes minor changes to Virginia’s code aimed at restoring State Corporation Commission (SCC) discretion over certain accounting and ratemaking functions that are currently mandated in law to the utility’s benefit. The Bill:
1. Changes “shall” to “may” in key sections of Virginia’s code.
a. This bill takes specific sections of the code that dictate that the State Corporation
Commission (SCC) shall follow pro-utility provisions and changes it so that the SCC may follow them, if the SCC decides such action benefits customers.
b. This leaves the majority of Virginia’s utility-friendly code provisions intact but gives the SCC discretion over whether these provisions should be implemented during a rate case.
2. Allows the SCC to balance utility and ratepayer interests.
a. Utilities retain ability to recover all costs and their full authorized profit, but the SCC regains authority to determine the time period over which the utilities recover those costs.
b. SCC will be able to (i) prevent utilities from overcharging ratepayers in the future and (ii) order refunds for past overcharges.
3. Restores full SCC discretionary authority over:
a. The length of the recovery period for certain large-scale utility costs (storm expenses, metering retirements, etc.).
b. The cost recovery mechanism utilities can use for large-scale infrastructure projects.
c. Setting utility rates and authorized profit (ROE) moving forward.
d. Issuing full refunds to customers when they have been overcharged by their utility.
HB 2049 Eliminating Roadblocks for Electricity Rate Cuts
Chief Patron: Delegate Dan Helmer; Chief Co-Patrons: Delegate Sally Hudson, Delegate Suhas Subramanyam
This bill allows the State Corporation Commission (SCC) to set future electricity rates that fairly balance
ratepayer and utility interests by eliminating roadblocks currently preventing the SCC from ordering rate reductions. The Bill:
1. Eliminates $50 million cap in rate reductions.
a. Under current law, the SCC is prevented from lowering rates by more than $50 million, only for Dominion Energy, regardless of whether analysis justifies a much larger rate cut.
b. In recent years, Dominion has overcharged Virginians by more than $300 million/year.
2. Allows SCC to set forward-going rates based on forward-going costs.
a. The SCC is legally barred from reducing Dominion Energy’s electricity rates in the future unless Dominion has been required to pay refunds for overcharges in the past.
b. In practice, this has allowed Dominion to dodge rate reductions by writing off large past expenses in a single year to eliminate refunds, thus preventing the SCC from lowering rates solely based on non-recurring past expenses.
3. Restores SCC authority to determine the recovery period for large costs.
a. Allows the SCC to consider ratepayer and shareholder interests when establishing appropriate cost recovery periods for large expenses like storm damage and metering retirements.
b. This eliminates a key accounting gimmick utilities can use to unfairly keep future rates higher than they should be.
c. This bill brings the rest of Virginia’s code in line with the General Assembly’s decision last year to restore SCC authority over cost recovery periods for retiring generation facilities.
4. Ensures the SCC can set rates as low as possible while still ensuring the utilities can recover their full cost of service and authorized profit but not so high as to continue overcharging customers.
HB 1984 Electric utilities; triennial review proceeding by SCC, fair rates of return.
Chief Patron: Sally Hudson, Dan Helmer (chief co-patron), Suhas Subramanyam (chief co-patron), Dawn Adams, Lee Carter, Carrie Coyner, Patrick Hope, Jay Jones, Mark Keam, Kaye Kory, Sam Rasoul, Ibraheem Samirah, Shelly Simonds, Lee Ware
The Bill:
1. Enables utilities to build new infrastructure projects and guarantees that the utilities can recover the full cost of those projects – plus a guaranteed profit – through either base rates or rate adjustment clauses (RACs).
2. Rolls back a third, yet-untested cost recovery mechanism, the Customer Credit Reinvestment Offset (CCRO).
a. CCROs are designed to allow utilities to instantaneously recover all of the costs for large infrastructure projects by using customer overcharges to instantly pay themselves back for new investments.
b. This is a departure from normal capital investing, where utilities recover their costs over time.
3. Allows the SCC to issue refunds when customers are overcharged.
a. Removing the CCRO mechanism is crucial to guaranteeing customer refunds because CCROs allow a utility to keep the money it has overcharged customers to pay itself back for capital investments.
b. Without this change, customers could lose the over $500 million they have been overcharged by Dominion Energy since 2017 (2020 SCC Annual Report).
4. Increases the SCC’s ability to lower energy prices moving forward.
a. The SCC is legally only allowed to lower a utility’s future rates if it finds that the utility was overcharging its customers in the past.
b. Because CCROs allow utilities to “disappear” past overcharges, if all of a utility’s overearnings are used up by CCROs, then the SCC cannot lower future rates.
c. This is true even though CCROs are all one-off, non-recurring costs.
HB 1914 Electric Utilities Period Costs
Patrons––Helmer, Cole, J.G., Hudson, Subramanyam, Bourne, Coyner, Davis, Hope and Lopez
The Bill:
Requires the Commission to conduct a review for a Phase II Utility in 2021, utilizing the four successive 12-month test periods beginning January 1, 2017, and ending December 31, 2020, with subsequent reviews on a triennial basis utilizing the three successive 12-month test periods ending December 31 immediately preceding the year in which such review proceeding is conducted.
HB 1835 Electric utilities; rate reductions.
Chief Patron Suhas Subramanyam; Alfonso Lopez
The Bill:
- Eliminates provisions that limit any rate reduction ordered by the SCC in the first triennial review of Dominion Energy Virginia after January 1, 2021, to $50 million in annual revenues.
- Provides that in any triennial review, regardless of whether (1) the Commission has ordered bill credits, (2) the utility earned above its authorized rate of return during the test period under review, or (3) the utility has made a request regarding any customer credit reinvestment offsets, the Commission may order any rate reduction it deems necessary and appropriate unless it finds that the resulting rates will not provide the utility with the opportunity to (i) fully recover its costs of providing its services and (ii) earn not less than a fair combined rate of return on its generation and distribution services.
HB 1994, patron Chris Runion
This bill extends the small agricultural generator benefits to businesses that sell Virginia agricultural products, businesses like wineries, breweries, distilleries, and farm markets. Originally, only farmers growing crops and raising farm animals were eligible for small agricultural generator benefits.
This post is being updated as CAAV L&E members offer input.
Climate Action Alliance of the Valley 