Stephen D. Haner is senior fellow for state and local tax policy with the Thomas Jefferson Institute for Public Policy and contributing editor at the blog Bacon’s Rebellion.
Before the Virginia General Assembly dives in to alter and probably further damage Virginia’s electricity regulatory system, the assembly itself needs fundamental reform. The new proposal from a reform coalition to rewrite our laws to create customer choice should be put on hold.
Energy regulation is a complicated process subject to distortion. The key elected decision-makers don’t understand it and are subject to pressure, and the financial consequences of error are buried on intricate monthly bills or woven throughout the economy and hard to trace. It is very hard stuff. But if we do it the way we’ve done it before, we’ll continue to get outcomes that harm consumers.
So, first, the focus needs to be on the process. Voters should be agitating for campaign finance limits, and not just on regulated entities and energy issues. Virginians should be asking incumbent legislators why they voted for energy bills in 2014, 2015 and 2018 that weakened oversight, while voting down any bill that a utility lobbyist asked them to kill. They should be asking challengers: How will you be different?
The massive amount of money Dominion Energy Virginia has injected into Virginia politics is well recognized, but Dominion is hardly the only player making contributions as profits are being chased on all sides. Big money talks. Period. Virginia is more transparent than most states, but it is one of only a handful with no cap on giving. Virginia is long past due for serious changes to donations to campaigns, parties and independent expenditures.
The amount of money flowing around all sides of this issue would astound people. The funding sources of many of the activist groups are often obscure. The rule is very simple: When you see a legislative committee room or State Corporation Commission courtroom filled with high-paid advocates, they are picking or padding someone’’s pockets.
The SCC staff has issued frank assessments on legislation in recent General Assembly sessions — but only when requested. It was clear in 2018 that many legislators were not reading or heeding them. Those SCC rate impact analyses should be mandatory and part of the official bill record.
We should be very glad that SCC judges who cannot accept one dime of campaign money or anything else of value are making key decisions. But the SCC doesn’t make all the decisions, not even all the big ones. Its judges are making only the decisions that the General Assembly members let them make, and those General Assembly members are taking bundles of campaign cash and gifts from profit-driven interests.
A second fundamental reform is badly needed. Virginia needs far stronger independent advocacy for the consumer point of view than it now gets from the elected attorney general. He or she is under political pressure and needs those campaign funds. It is a fundamental conflict of interest. That office has pulled its punches more than once, in my observation.
The consumer advocacy staff, which is unquestionably well qualified, could be better insulated by having a boss picked by the SCC judges or some other judicial process at least one or two steps removed from the legislature.
A third reform involves the standing Commission on Electric Utility Regulation. It seems to meet when the chairman gets a phone call from a utility, and the meetings usually involve the utility making its presentation with little room for dissenting views. The capture of this process by the regulated entities is never more obvious than when this group meets — or fails to. The proposal on the table to migrate to full retail choice for all customers of the two investor-owned utilities in Virginia, with the need to recognize the rights of those stockholders and maintain a reliable supply, will require a careful transition after a transparent and probably bruising debate. That won’t happen in a subjugated subcommittee.
Fix these things, and then we’ll talk about the next bill, the next path to a promised nirvana. If we don’t fix the underlying problems, the new effort will be tainted from the start.