Now that the strategic underground
program has been deemed in the public interest in the new law, the commission could no longer apply its standard of: “Is this needed and is the cost to taxpayers reasonable?” says Schrad. Virginia Attorney General Mark
Herring and the SCC’s Deputy General Counsel Arlen Bolstad also have ques- tioned whether the General Assembly’s new law provides enough protection to consumers. “Put simply, SB 966’s prede- termining ‘in the public interest’ language puts limits on the SCC’s authority to ensure that customers do not overpay for utility projects if and when there are less costly alternatives available,” Bolstad said in a letter to Toscano. Dominion officials disagree. “By
saying certain projects are in the public interest, the General Assembly is laying out energy policy in Virginia, as is their duty. The SCC still has the ability to deny those projects if they feel they aren’t in the interest of our customers,” says Rayhan Daudani, a company spokesman. According to Daudani, “The SCC
will have oversight of grid transforma- tion projects before, during and after the investments. Dominion Energy can’t spend one penny on grid modernization until the SCC deems the investments reasonable and prudent. The SCC will also have opportunities during and after the projects to review the expenses to ensure it was spent according to their authorization.” Some SCC officials remain skepti-
cal. While the overhaul provides a structure to move Virginia forward, it also creates what has been called a “rein- vestment model,” allowing Dominion and APCO to offset profits above their authorized rate of return by investing in those projects deemed as “in the public interest.” Schrad notes that, under the new
law, utilities will be subject to financial reviews every three years, instead of every two years, the timeframe in place before the 2015 rate freeze. Under the prior system, if a utility
overearned in a single biennial review period, then the amount of money collected from ratepayers over a cer- tain threshold was returned to them. Basically, the company could keep 30
percent, and 70 percent was returned to ratepayers, Schrad says. Now instead of returning money to
ratepayers, “the utility has the option to reinvest that money into certain qualify- ing projects — solar, wind generation, grid modernization programs. Ratepay- ers would ultimately be paying for all of these projects anyway. But instead of any refund coming back to customers, that money would instead be used to start paying for these projects,” says Schrad. In a report to the governor and Gen-
eral Assembly in September, the SCC said that Dominion Energy Virginia’s return on equity (ROE) for generation and distribu- tion for the combined years of 2015 and 2016 — when the freeze was in effect— was 11.94 percent, above the 10 percent approved by the SCC during its last bien- nial review of the company. APCO’s return was 11.09 percent for that same time. In the meantime, Dominion’s rates
within its peer group of other Southeast- ern utilities have become less competi- tive, according to the SCC. Dominion Energy Virginia’s annual- ized residential rates, based on a cus-
tomer using 1,000 kilowatts per month, was 11th in a recent SCC ranking of 20 peer companies in terms of least expen- sive rates. The company ranked sixth in 2007. Dominion’s rate was $111.76 in January 2017 compared with $90.59 in July 2007, an increase of 23.3 percent. During the same period, APCO rates
in Southwest Virginia increased from $66.72 to $114.29, or a boost of 71.3 percent. (See chart on page 46). What’s happening in
Federico
Virginia “is pretty consis- tent with what’s going on in other states,” says Lillian Federico, research director with New Jersey-based Regulatory Research Associates, a part of S&P
Global Market Intelligence. Other states are making a big push
into solar and modernizing their grids. “If you’re using excess earnings to fund an investment, rather than come in for a rate case to make the investment, you’re getting to the same place, but in a simpler way. Other states have done similar things,” she says.
Remodeling A
Pre-1978 Home? Attention: Homeowners, Contractors, Child Care Facilities, Schools
There are state and federal regulations you need to know if you are planning to perform renovations or lead-based paint removal on a structure built before 1978. Lead-based paint can be very hazardous to both the worker and the occupants.
www.VirginiaBusiness.com VIRGINIA BUSINESS 47 FOR MORE INFORMATION:
LIST OF VIRGINIA LICENSED LEAD WORKERS/FIRMS
WWW.DPOR.VIRGINIA.GOV
LEAD ABATEMENT NOTIFICATION FORM (NO MINIMUM CONTRACT AMOUNT AND NO FEE FOR RESIDENTIAL PROPERTIES)
WWW.DOLI.VIRGINIA.GOV
LIST OF EPA RRP CERTIFIED RENOVATORS
WWW.EPA.GOV/LEAD
LEAD SAFE VIRGINIA PROGRAM
WWW.VDH.VIRGINIA.GOV/LEADSAFE
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