Commentary: The Affordable Energy Act will lower energy rates in Virginia
February 2nd, 2023
Peter Anderson and Benjamin Knotts
Virginians, like all Americans, are dealing with cost-of-living increases, but our power bills are unnecessarily high. Thanks to legislation written and backed by Virginia’s top utilities, the regulator of our monopoly electric companies, the State Corporation Commission, has had its hands tied for years, undermining its ability to fully protect electricity customers and adjust electricity rates to reflect the true costs of service.
As a result, electric monopolies are overcharging Virginia families by hundreds of millions a year — nearly $2 billion in overcharges since 2009, in the case of the largest electric utility, Dominion Energy and Appalachian Power Co. But this year, the commonwealth’s legislature has an opportunity to restore the SCC’s authority to protect families from price gouging by big utility companies. The Affordable Energy Act (Senate Bill 1321/House Bill 1604), sponsored by Sen. Jennifer McClellan, Sen. Creigh Deeds, Del. Rip Sullivan and Del. Lee Ware, is a straightforward piece of legislation supported by a broad and bipartisan coalition of organizations, including Americans for Prosperity and Appalachian Voices, as well as leading environmental, low-income advocacy and grassroots organizations.
Also under consideration during this legislative session is a bill from Dominion Energy (SB 1265/HB 1770), which is once again aimed at changing the rules the SCC follows when reviewing the companies’ electric rates. If the General Assembly passes this legislation, our electric bills will surely continue their rapid rise.
Our organizations do not agree on everything, but we are in lockstep agreement that — because our electric companies have monopolies and no competition — their prices must be regulated; otherwise, consumers suffer. The Affordable Energy Act would simply let the SCC do its job: after examining a utility’s costs of providing service, the regulator would finally be able to order the monopolies to charge reasonable rates (lowering rates if that is supported by the evidence).
In the SCC’s most recent review of Dominion Energy’s rates, evidence showed the company was overcharging customers by more than $200 million per year between 2017 and 2020. But because of a law passed in 2018, the SCC could only lower Dominion’s rates by $50 million per year. It should come as no surprise, then, that the company overcharged customers by $152 million in 2021.
Virginians living in Appalachian Power Co.’s territory have arguably fared even worse. According to the SCC, the typical household electric bill for a Dominion customer rose 51% between 2007 and 2022 while the typical household electric bill for Appalachian Power customers rose 84% over the same period.
Given other rapid increases in the cost of living, this is no time to encourage runaway energy expenses in the commonwealth, especially when home heating costs in the state are expected to reach record levels this winter. No family should have to make a choice between heating their home and affording basic necessities. Yet in 2021, more than 28% of Americans refrained from purchasing food or medicine to pay an energy bill. The restrictions placed on the commission preventing them from carrying out their duty have been particularly damaging amid the highest inflation rates in more than 40 years.
High energy costs can be detrimental to the health of a community in more ways than one. Many may not realize that high electric bills are correlated with greater risk for respiratory diseases, an increase in stress and economic hardship, and fewer opportunities to rise out of poverty. That’s not to mention the obvious health risks from dangerous home temperatures, dampness, mold and humidity. These risks put everyone in danger of illness, but most especially Virginia’s rural elderly community struggling with poor housing and fixed incomes.
Our elected leaders in the General Assembly have a responsibility to create a better process — one in which monopoly electricity prices are fully regulated. Legislators should reject further handouts to corporate monopolies that enjoy the benefits of no competition and demand for their services that will never disappear. At the same time, if legislators restore oversight authority to the SCC by passing the bipartisan Affordable Energy Act, every Virginian family could pay less for energy.