Two bills pushed by Virginia’s largest utility company that could cause customers’ rates to increase moved forward Monday, passing unanimously out of the Senate Committee on Commerce and Labor.
Dominion Power says the bills will allow for improved service and a modernized energy system.
The first bill would allow utilities to petition the State Corporation Commission (SCC) for a rate-increase rider to pay for the cost of moving power lines underground. Nearly all storm-related power outages occur because of above-ground lines, the company has said. Dominion estimates that moving 20 percent of lines underground would cut the time it takes for all power to be restored by as much as 50 percent.
The goal is to put 350 miles of line underground a year, until 4,000 miles have been moved.
The undergrounding project is expected to cost about $175 million a year, according to Dominion, and the utility will seek a gradual rate increase to pay for it. Senate Democratic Leader Richard L. Saslaw (D-Fairfax), who sponsored the legislation, said the rate increase could range from 70 cents a month at the start of the project to $4 a month by its completion.
Without the ability to raise rates, he said, Dominion would not be able to move lines underground.
“It’s not a freebie,” Saslaw said. “It’s expensive.”
Large industrial customers would be exempt from the increase.
A second bill, sponsored by Sen. Walter A. Stosch (R-Henrico), would allow electric utilities to apply 70 percent of the cost of building nuclear and offshore wind power projects over the past six years to their expenses over 2013 and 2014. The other 30 percent, along with some future costs, could be recovered through another rider that raises rates, if approved by the SCC.
The expenses are important for Dominion, because if the utility earns profits over a certain amount in a year, the SCC can order a refund to consumers. If profits are excessive for consecutive two-year cycles, the SCC can order a rate cut.
By applying 70 percent of the $600 million that Dominion says has been spent on nuclear and wind power generation between 2007 and 2013, Dominion can avoid a possible refund in 2015 and rate cut in 2017.
Supporters argued that the legislation is necessary to modernize Virginia’s energy system and reduce reliance on coal and natural gas.
“If we believe in sustainable power and diverse power,” Stosch said, the legislation is necessary to “allow [utilities] to move forward.”
Consumer advocates argued that both bills would undermine 2007 legislation that gave the SCC broad oversight of rates and costs.
“These Dominion-supported bills should be rejected because they would eliminate fundamental commission authority included in the act in 2007 to protect customers,” said Edward L. Petrini, an attorney representing large industrial power customers.
Dominion voluntarily cut rates in the fall, citing milder weather and lower gas prices on the commodities markets than expected, and the SCC ordered another rate cut that took effect this month. The utility’s base rate, which accounts for about 60 percent of a residential customer’s bill, has not changed since 1992.
The bills now go to the Senate floor. The underground power-line legislation has passed the state House with 95 of 100 delegates in support; a bill on the expensing of the nuclear and wind projects is in committee.