Power Play?

Cuccinelli Says Legal Loophole For Utilities Costly To Virginians

Posted: December 8, 2012

HARRISONBURG — Attorney General Ken Cuccinelli is in “coalition-building mode” to rally support for potential legislation to close an apparent loophole that he says will cost Virginians more than $1 billion.

The benefactors of the loophole, Dominion Virginia Power and Appalachian Power Co. — the state’s two largest utilities — dispute the attorney general’s findings.

In a report released Nov. 29, Cuccinelli says the companies have benefited from renewable energy standard bonuses, or “adders,” without building any new renewable facilities.

While he notes that the companies are not in violation of the 2007 law, he says they have increased revenues and customer bills without addressing environmental concerns.

Dominion Power supplies energy to more than 23,000 customers in Rockingham County, and another 22 in Harrisonburg.

“They’re doing what you or I would do if we owned the businesses and understood the law,” Cuccinelli said in a phone interview Thursday. “It would take me 15 minutes to explain how [the energy] adders play out mathematically for utilities. Take my word for it, it raises your rates meaningfully. That might be OK if we were on the cutting edge of energy stewardship.”

But Virginia is not, he says, which sparked him to contact environmental groups, industrialists and lawmakers in an effort to build momentum for amending the law.

The General Assembly convenes Jan. 9.

“If we don’t change course, the people of Virginia …  are going to pay more than $1 billion than they should, and that’s a fairly conservative estimate, between now and 2025,” Cuccinelli said. “This has enormous consequences.”

Dominion CEO Thomas F. Farrell II said the report ignores “key benefits” of the law, including low electric rates, consumer protections, cleaner air and jobs. The company’s rates are 16 percent lower than the national average, he said, and down from what they were in 2008.

“Highlighting a few isolated elements of this act without considering the whole fabric of this thoughtfully crafted legislation threatens to unravel the common good,” Farrell said in a statement.

Through the 2007 legislation, bonuses were made available to utilities if they undertook certain projects. The bonuses allowed a higher return on equity, or potential profit, for meeting renewable energy goals and building new electricity generation facilities, Cuccinelli said.

He said utility companies have not invested in new renewable facilities, and instead meet the law’s goals by relying on energy credits from existing facilities, such as hydroelectric plants built more than 80 years ago.

The facilities generate the credits when they produce electricity. Dominion can then purchase the credits and place the renewable energy into the power grid.

Virginia’s utility companies are not penalized for failing to meet renewable energy program goals. Advocates have said the standards are easier to meet because Virginia’s law is weaker than in other states.

Farrell argues that the law works as designed, and that more than $3.3 billion in economic activity and 14,000 jobs have been created by Dominion’s energy generation projects.

Sen. Mark Obenshain, R-Harrisonburg, who is seeking the Republican nomination for attorney general in 2013 against Del. Rob Bell, R-Albemarle, did not return a message for comment.

Bell, who represents the Elkton area of Rockingham County, said he is still reviewing Cuccinelli’s report, and was not ready to comment.

Contact Preston Knight at 574-6272 or pknight@dnronline.com

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