RICHMOND — A panel of Virginia senators on Thursday advanced a bill that would let Dominion Power shield part of its books from independent scrutiny until 2023.
The bill, filed by Sen. Frank W. Wagner (R-Virginia Beach) and drafted by Dominion, would let the utility giant skip routine public financial audits that sometimes lead to rate refunds or reductions for consumers. The measure maintains Dominion’s ability to ask for special permission to raise rates.
Supporters, including some businesses that consume a lot of energy, say the bill would stabilize rates and protect Dominion, the largest utility in the state, from the cost of complying with proposed federal regulations intended to stem climate change.
Environmental groups and Attorney General Mark R. Herring (D), however, oppose freeing Dominion from regular financial audits conducted by the State Corporation Commission, which oversees utility rates in Virginia.
After hearing about an hour of testimony, a subcommittee of the Senate Commerce and Labor Committee voted unanimously to advance the bill.
Senate Minority Leader Richard L. Saslaw (D-Fairfax) said doing nothing was not an option.
“I will vote to move it along, but I would just say this has a long way to go. I’m somewhat concerned about not having this biennial review,” he said. And turning to Dominion officials in the hearing room, he said: “You might want to answer everything you heard here today from people who have a different perspective, on a point-by-point basis.”
Sen. John C. Watkins (R-Powhatan), who is chairman of the full committee, suggested conducting a “full-blown review” one year after the federal rules are complete.
“This is a complicated piece of legislation that may only be a couple of pages but it has a huge impact as we go forward,” he said. “I’m still a little bit iffy about where we draw that line with regard to that rate freeze.”
Dominion proposed stopping financial reviews as a way to freeze part of the rate structure and mitigate the impact of possibly having to shutter coal plants.
Daniel A. Weekley, vice president of corporate affairs at Dominion, said the company’s shareholders — not ratepayers — will bear the burden of added costs associated with closing any plants for the six-year life of the bill.
Arlen Bolstad, deputy general counsel at the SCC, shook his head to indicate his disagreement with Dominion’s analysis.
Bolstad said the commission can help “smooth out” the cost of compliance with the federal rules through accounting practices and a formal process for rate adjustments that Dominion has frequently used to manage past unexpected costs.
“The toolbox is currently there,” he said. The SCC took no formal position on the bill.
Irene Leech, president of Virginia Citizens Consumer Council, said suspending financial reviews for six years starting after this year’s audit takes away the concession consumers were granted during a 2007 regulatory overhaul.
“I don’t honestly believe that ratepayers are going to get by with shareholders paying for this,” she said. “I think Dominion knows what’s going on. I think we need to deal with carbon but I don’t think this is the way to do it.”
The Southern Environmental Law Center and the Virginia chapter of the Sierra Club also testified against the bill. The governor’s office has taken no formal position on the bill, but the secretary of commerce and trade, Maurice Jones, said the administration of Gov. Terry McAuliffe (D) has concerns.
Supporters include the Virginia Chamber of Commerce, various industry groups and some large energy consumers, including MeadWestvaco. The bill would not apply to Appalachian Power, the state’s other investor-owned utility.
The issue has become a politicized referendum on President Obama’s Environmental Protection Agency.
Sen. A. Benton Chafin Jr. (R-Russell), who represents a southwest Virginia district reliant on coal, said: “This war on coal is ugly, and I live in ground zero and ground zero is likely coming your way.”