Power Play

Saturday, February 10, 2007

NO SINGLE BILL under consideration in Virginia would have an impact so widely and personally felt as legislation setting rules under which Dominion Virginia Power would operate, provide electricity and set rates for the state's 2.1 million paying customers. Yet the legislation before the General Assembly, which will govern how much the large majority of households and businesses in the state pay for electric power, has been a stunningly rushed and closely held affair. Originally drafted by Dominion itself, then pored over by a handful of stakeholders for 60 hours over 13 days in a conference room in the state capital, the measure has been subject to no statewide hearings, limited public scrutiny and little outside analysis. What, exactly, is the rush?

Part of the explanation is that Dominion, despite its vast influence (and heavy political contributions) in Richmond, feared that the political mood was turning sour. Spooked by drastic rate increases in Maryland, a few Virginia lawmakers were drafting bills that would resurrect the rules under which Dominion and the state's other utilities did business before deregulation began in 1999. (Electricity deregulation, which failed to yield the much-promised competition, has been a flop.) Seizing the initiative, Dominion offered up its own plan which, after negotiations under the auspices of the state attorney general's office, was unveiled at the end of January. Given that the General Assembly adjourns in two weeks, that left little time for lawmakers, consumers, environmentalists and other interested parties to get a handle on it.

The resulting legislation is touted as "re-regulation." In fact it is a hybrid that bears scant resemblance to the pre-1999 regime that did an adequate if imperfect job of providing safe, efficient and dependable electrical service at reasonable prices. In place of the old, cost-based regulation that ensured reasonable earnings, the Dominion-backed proposal holds out the prospect, if not the promise, of much larger, and possibly massive, profits. What's more, the state's regulatory muscle -- to turn back proposed rate increases, for instance -- would be severely limited.

The question is whether this is justified. Dominion and its allies point to dramatically surging electricity demand in Virginia, which the firm says it can meet only by building major new generating capacity (meaning nuclear power plants). To provide the risk incentives for such huge infrastructure investment, Dominion contends that it (and its lenders) will need something close to a guarantee of handsome profits in the future. Its earnings under the old regulatory system just won't do, says the firm.

We can't say flatly that's wrong. It's true that demand is growing at a dizzying pace. But whether Dominion's legislative proposal is fully justified is a question that should invite more scrutiny. Virginia has subjected legislation of much less consequence to far greater review. This bill deserves at least as much.

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