Commentary: Reviewing the Grid Transformation and Security Act

Commentary: Reviewing the Grid Transformation and Security Act

Many constituents have contacted me regarding the big Dominion bill, the “Grid Transformation and Security Act,” also known as the repeal of the so-called “Rate Freeze” act of three years ago where Dominion froze their base rate and negotiated less oversight in order to address President Obama’s Clean Power Plan, federal legislation that has since been repealed.

This new proposed bill addresses the utility’s over-earnings that resulted from General Assembly action in 2015, a year before I joined the body. I am very supportive of rebating those over-earnings by Dominion to the rate-paying customers and also of returning the State Corporation Commission (SCC) to full rate regulation over electricity providers like Dominion. We also must provide strong incentives to promote renewable energy.

The General Assembly and Gov. Ralph Northam seem to have reached a compromise on repealing the Dominion rate freeze. As of this writing, I have not made up my mind whether to support the legislation, but I am watching it eagerly and working to get the best deal for consumers.

This legislation has very simple goals: give Virginians as much of their money back as soon as possible, restore oversight to ensure that utility companies do not overcharge ratepayers for power, and to make Virginia a leader in clean, renewable energy and electrical grid modernization.

Governor Northam has convened a group of stakeholders that represent every perspective of this debate, and are working furiously to make sure the legislation meets these goals.

According to the administration, the compromise puts more money in ratepayers’ pockets, ensures real oversight of utility rates, paves the way for significant upgrades, including security, to Virginia’s electrical grid, and mandates historic investments in energy efficiency and clean power.

However, the Attorney General’s office disagrees and believes that this legislation, while providing a larger refund to consumers, will lock in higher utility rates in the future.

Here are some of the key aspects of the compromise legislation at this point in time:

It restores consumer protections for utility rates by repealing the 2015 rate freeze and restores full regulatory oversight of electric utilities and allows the State Corporation Commission (SCC) to evaluate rates in 2021 and consider issuing refunds to consumers who may have been overcharged. This bill also empowers the SCC to consider reducing rates in 2021 with no possibility of a rate increase for Dominion. The SCC will consider rate reduction in 2020 for Appalachian Power and it could perform full rate reviews in subsequent three-year periods.

The compromise bill also offers immediate relief for ratepayers by requiring Dominion to issue $200 million in rate credits to consumers who were overcharged during the rate freeze period. Appalachian Power will issue $10 million in credits. The bill also requires Dominion to reduce power rates by an additional $125 million and Appalachian Power to reduce rates by $50 million, and provides the SCC to be able to review possible additional refunds and rate reductions in the first SCC review and all subsequent reviews.

The compromise legislation makes massive investments in clean and efficient energy programs by requiring Virginia utilities to make $1.145 billion in investments in energy efficiency projects and low-income energy assistance over the next 10 years. Furthermore, it authorizes the SCC to deem 5,000 megawatts of solar and wind energy projects to be in the public interest, paving the way for approval of new clean energy projects.

It commits Appalachian Power to make a separate investment in 200 megawatts of new solar capacity; promotes energy technology including battery storage and pumped storage in Southwest Virginia; requires a review of state regulations that hinder clean energy development; and creates a transparent stakeholder process to expand energy efficiency program offerings; and creates a transparent stakeholder process to make recommendations for solar program expansion, including net metering and community solar.

Finally, the compromise legislation ensures development of a modern and resilient energy grid. It would deem projects to modernize the grid and support clean energy or to make the grid more reliable in the public interest. The compromise also requires an equal commitment by utilities to grid resilience and grid modernization and allows for a utility line undergrounding pilot project in Haymarket, and a process for the review of additional undergrounding projects, like along the Route 1 corridor.

As I make up my mind, I encourage my constituents to contact my office and tell me their opinion of the new compromise legislation. It is being carried by Sen. Dick Saslaw (D) in the Senate and Delegates Terry Kilgore (R) and Lamont Bagby (D) in the House. It also has the support of the League of Conservation Voters and the opposition of the Virginia Poverty Law Center.