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Northam steps into efforts to undo controversial Dominion rate freeze

ARLINGTON,VA A lineman for Dominion Energy, upgrades a transformer at N. Woodstock in Arlington, Va. (James A. Parcell)

RICHMOND — An ambitious effort to redraw the way Virginia oversees its biggest utility took a small step forward Tuesday, and Gov. Ralph Northam (D) has taken a direct hand in brokering a deal to restore the state's ability to regulate consumers' electricity bills.

Undoing the controversial rate freeze that Dominion Energy has enjoyed since 2015 has become a primary focus of this year's General Assembly session. A bipartisan group of legislators rolled out sweeping bills last week to return some excess earnings to ratepayers, but the package drew criticism for locking in even more protections for both Dominion and the far smaller Appalachian Power, which delivers electricity to the southwest corner of the state.

The State Corporation Commission, which saw its authority over the utilities curbed by the General Assembly's 2015 rate freeze, told lawmakers in a letter this week that the legislation would shortchange ratepayers.

On Tuesday, the main sponsor of the legislation in the House of Delegates unveiled a new version that increases the reimbursement to consumers and addresses some concerns about future state oversight. Dominion, the state's biggest corporate political donor, helped draft the old and new bills.

Separately, Northam has convened a group of stakeholders to hash out issues and recommend further changes. That group reportedly met for five hours on Monday and for at least two hours Tuesday, and was set to meet again Wednesday.

It includes administration officials as well as representatives from the utilities, various industries and business groups as well as environmentalists and consumer advocates. Legislators are not participating in the meetings but have said they would consider incorporating any recommendations.

"I think things are moving in a positive direction," state Secretary of Natural Resources Matt Strickler said. "The goal right now is just having everybody around the table and having some discussions on how to work things out . . . to get a good bill to the governor's desk."

Lawmakers froze the base rate charged by utilities in 2015 out of concern that the now-defunct federal Clean Power Plan would create uncertainty and drive up expenses for Dominion and Appalachian Power. The move stripped away the SCC's power to review rates every two years and return overpayments to consumers. It became an issue in last year's elections, as candidates charged that Dominion receives sweetheart treatment because of its campaign contributions to establishment Richmond.

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Del. Terry Kilgore (R-Scott) revamped his re-regulation bill on Tuesday. He bumped up the amount Dominion would return to ratepayers — to $175 million from about $130 million — and extended the period of time that would be subject to review when the SCC resumes its oversight.

However, the bill still calls for a rate review every three years — previously, the SCC examined rates every two years — and seems to protect Dominion from having to return future excess earnings to consumers. Instead, Dominion would be allowed to credit overpayments toward investing in modernizing the grid and expanding use of alternative energy.

"We think the bill that's in front of you has answered the questions the commission has raised," Dominion lobbyist Jack Rust told a House subcommittee on Tuesday. "We think it gives us an opportunity to bring the grid into the 21st century without raising rates, and we think this is something very positive for Virginia."

But Steve Haner, a lobbyist for the Virginia Poverty Law Center, said the new version "still grievously weakens the State Corporation Commission's authority" and leaves consumers unprotected.

The House subcommittee passed Kilgore's updated bill on to the full Commerce and Labor committee. But Kilgore, who is chairman of the full committee, promised not to bring it up for consideration until next week to give the governor's group time to weigh in.