Lawmakers reach bipartisan deal in Virginia to change how utilities regulated

The Virginia General Assembly reached a bipartisan agreement Saturday on a set of bills backed by Dominion Energy that lawmakers say will reform how utilities in the state are regulated.

The agreement, passed through Senate Bill 1265 and House Bill 1770, increases the frequency of base rate reviews from every three years to every two years and includes provisions that proponents contend will result in relief for ratepayers.

Specifically, lawmakers say the bill will allow Dominion to spread out increased charges associated with higher fuel costs instead of charging customers’ bills all at once. The process, called securitization, will allow Dominion to issue bonds to pay for fuel costs and recover the costs over a decade.

Lawmakers estimated with this provision in the bill, it will prevent customers from seeing a $17 per month increase on electric bills due to increased fuel costs.

The bill also includes a provision requiring Dominion to select a $350 million portion of previously implemented rate adjustment clauses and absorb those as part of their base rates. Under this specific provision, Dominion estimates customers could see savings of between $6 to $7 each month.

The bill received broad bipartisan support in the politically-divided General Assembly, with lawmakers on both sides speaking in support of the bill Saturday.

“[This] is a deal that is good first and foremost for Virginians and a deal that’s good for Dominion, a utility that we need to deliver energy reliability,” the author of HB 1770, Del. Terry Kilgore, R-Scott, said on the House floor Saturday.

Del. Rip Sullivan, D-Fairfax, also spoke in support of the bill Saturday, saying “anyone who pays an electric bill in Virginia is going to be happy we passed this bill.”

The agreement on the House and Senate versions of the bills comes after weeks of discussion among lawmakers. The bills took several different forms as they wove through the General Assembly, and were subject to review and discussion in several committees over the last few weeks.

In addition to other changes, the finished version of the bill that was agreed to by the General Assembly Saturday will set Dominion's profit margin at 9.7% until 2025, at which time the SCC will have the authority and discretion to set the profit margin.

The agreement on the Dominion-backed bills follows the passage of another measure related to utilities and electric bills dubbed the Affordable Energy Act, which passed by the General Assembly earlier this week. That measure gives the State Corporation Commission the ability to order reductions of base rates when it determines utilities are earning above their authorized rate of return.

Lawmakers in support of the Affordable Energy Act said the measure would help ensure Virginians are not overcharged on their electric bills.

The bills backed by Dominion, HB 1770 and SB 1225, contain language identical to that used in the Affordable Energy Act, outlining that the SCC can lower base rates when it deems utilities will take in revenues in excess of their authorized profits.

Del. Sally Hudson, D-Charlottesville, described HB 1770 and SB 1265 a “glide path” to getting to the Affordable Energy Act by 2025. Hudson told The Center Square that in 2025, there will be a “clean rate case,” meaning the SCC will have the ability to set base rates at its discretion.

Dominion praised the passage of the bill Saturday, calling the passage of the measures a “win for consumers and regulatory oversight.”

“It will lower electricity bills for our customers, reduce the impact of rising fuel costs and strengthen SCC oversight,” Aaron Ruby, manager of media relations for Dominion Energy, told The Center Square in an email. “We appreciate the leadership of the patrons, Governor Youngkin, Attorney General Miyares and lawmakers from both parties in getting this bipartisan legislation across the finish line.”

Del. Lee Ware, R-Powhattan, and other lawmakers said Saturday that Youngkin is the first governor to “share the conviction” that “our first duty is to the customer.”

“This is really fundamentally about restoring public trust in utility regulation,” Ware said Saturday. “It recognizes a new direction, a new road which is taken in public utility regulation.”

In a statement, Youngkin praised the passage of the “landmark bill,” which he said will restore the “independent oversight of the State Corporation Commission” and save customers money.

“Today, the General Assembly came together and put Virginians first,” Youngkin said.

The bills are now headed to Youngkin’s desk for signature.