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EDITORIAL: Overcharging ratepayers should be illegal
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EDITORIAL: Overcharging ratepayers should be illegal

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PHOTO: Dominion logo

EVEN THOUGH Dominion Energy earned more than $1.1 billion above its state-guaranteed rate of return over the past four years, its 2.6 million customers in Virginia can expect to see only a fraction of that overcharge in refunds, according to the State Corporation Commission.

That’s because under the Grid Transformation and Security Act, which was passed by a bipartisan majority in the General Assembly and signed into law by Gov. Ralph Northam in 2018, state-regulated utilities are allowed to use “overearnings”—also known as excessive profits—to modernize the grid and invest in renewable energy.

The state law basically gives Dominion a huge financial incentive to gouge its customers. And because the company is a state-sanctioned monopoly, they have nowhere else to go to purchase electricity, one of the basic necessities of life.

But the SCC, which is supposed to be the public’s watchdog, claims that state law requires Dominion to refund only $312 million to overcharged Virginians. That means that Dominion will get to keep the remaining $831 million—in addition to the guaranteed 9.2 percent return on equity the giant utility is allowed under the law. All perfectly legal, thanks to the General Assembly.

But it gets worse. After pocketing a 13.6 percent profit from 2017 to 2020 by overcharging ratepayers, far in excess of what state law allows, Dominion then had the gall to ask the SCC for an increase in its future profits, from a 9.2 percent ROE to 10.8 percent. By asking for a higher ROE now, Dominion is setting the stage for future rate hikes the utility knows are coming.

The 2018 state law eliminated a rate freeze, but base electric rates cannot be raised until 2024. Legislators were apparently hoping that six years later, their constituents wouldn’t remember.

Patrick Carr, deputy director of the SCC’s Division of Utility Accounting and Finance, testified that Dominion was also being credited with “customer arrearages” during Gov. Ralph Northam’s 2020 COVID-19 lockdown. So small businesses and local landlords who lost money because their locked-out customers couldn’t pay their bills have to take the hit, but the third largest utility in the U.S. doesn’t?

And where has Attorney General Mark Herring been?

In September 2020, Herring sent a letter to the leaders of the General Assembly admitting that Dominion “earned exceedingly more over the last three years than authorized” by state law. Yet his only action was to support Northam’s budget proposal to forgive unpaid residential accounts and make Dominion shareholders eat the $74 million in customer debt instead of ratepayers.

Fine as far as it goes. But Herring made no mention of doing anything to punish the utility for gouging all its other customers by over $1.1 billion. If a grocery store or mortgage company was found to be overcharging its customers by over a billion dollars, they would either be hauled into court or fined—or both. Why does Dominion get a pass?

The SCC staff is currently recommending that instead of raising Dominion’s return on equity to 10.8 percent, it be lowered to 8.7 percent, with rates reduced by $50 million annually—a pittance compared to the $831 million in customer overcharges Dominion will apparently be allowed to keep.

That’s not good enough. Dominion should be punished for gouging its customers. If that isn’t against the law, it should be.

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