Dear Gov. Kaine:In my last diary on the dreadful Dominion bill, I discussed the impact of this legislation on the environment. Today, I cover why this bill is a terrible deal for Dominion Virginia Power's 2.1 million customers.
The Virginian-Pilot sums up this bill very well in a Feb. 26 editorial: "It essentially gives Dominion the favor of a deregulated monopoly." And that's the core of the problem - since the state's deregulation scheme failed, we're left with the same monopoly we started with - Dominion. Folks, you can't depend on the free market to protect you from a monopoly - you have to either pray for mercy or rely on government regulation.
This bill proposes a form of "hybrid" regulation unlike anything ever attempted anywhere else. "Hybrid" in this case is a nice word for "emasculated." Under this bill, the regulatory agency that monitors rates, the State Corporation Commission (SCC), would be stripped of most of its authority. As the Virginia Citizens Council puts it in an superb analysis of the bill, "The proposal designed by Dominion was carefully engineered to maximize their profits and minimize any potential challenges to that goal."
Monopolies gain their profits by squeezing their customers, who have nowhere else to go. Dominion says it needs extra profit to invest in new coal and nuclear plants - which requires raising rates. (Of course, as the Virginia Conservation Network points out, there's no guarantee that Dominion won't turn around and use its plants to sell excess power to other states - at no benefit to Virginians.)
So what will be the impact on consumers? Let's ask the experts:
Hullihen Moore, a former state utility regulator, said the law is "grossly unfair to consumers" and "abandons basic concepts like 'just and reasonable' that are fundamental to proper ratemaking." (Wall Street Journal, 2/26/07)
Louis Monacell, a lawyer for some of Virginia's largest industrial and commercial electricity consumers, says predicting the cost to consumers of Dominion Virginia Power's plan requires assumptions about the future."However, we are confident the legislation would cost customers billions of dollars in higher rates, more than $10 billion over the next 15 years than would otherwise be the case," Monacell said. Customers would see 10 percent higher bills on average because of limits placed on state regulators, he said. (Richmond Times-Dispatch, 2/13/07)
"Special interest legislation has been drafted in such a way that local rate payers would automatically be charged up to an additional $300 per year," wrote Board of Supervisors Chairman Gerald Connolly in a statement prepared for a rally Monday.The bill, according to Connolly, "will eviscerate 100 years of regulation practices that have served us well in the commonwealth." (The Examiner, 2/21/07)
"This is the utility company's bill carefully designed to protect the utility's interests," said Del. Harvey Morgan, R-Gloucester and chairman of the House committee. "This bill is no favor to the citizens of Virginia." (AP, 2/19/07)
Gov. Kaine, if the state legislature won't protect Virginia's consumers, you are our last hope. Please protect us from Dominion's monopoly power by vetoing this awful bill!
Next - Big money, dirty politics
(You can e-mail Gov. Kaine here.)
The WSJ article cited: February 26, 2007, titled "Incentives for Utility Stir Debate" is a good read:
"Mr, Morrison, the commission chairman, said he and others urged legislatures to defer action. But the legislature turned a deaf ear to the commission as it has done previously. In 1998, the commission opposed deregulation because Virginia's rates already were low. Dominion favored deregulation, and the law was passed ." WSJ, 2/26/07
Dominion didn't get the financial returns they anticipated under de-regulation so now it demands re-regulation without the same oversight of rates and services that existed previously.
Of all 140 legislators, only a handful voted against. The only party line breakdown was in the HOD, where all votes against were... Republicans?
Hmmmm.
Two things strike me:
1. The Republicans who voted against may have been more concerned about a concept than anything else. Re-regulation or Partial Regulation are ugly sounding words, something akin to "taxes", and those free market types would be knee jerk against it. This *might* explain that small block of Republican votes.
2. I suspect, as others have pointed out, that most legislators don't understand or care to understand the sausage making aspects of power generation and rate determination, so they are susceptible to paranoia pitches by Dominion. "The lights will go out in NOVA if this doesn't pass" would scare the crap out of any elected official.
I agree with PM's comment from last time - toss the bill this year and fund an in-depth, independent study done by non-partial experts in the field.
If Kaine does the right thing he just may have a political future.
If Kaine decides to take the anti-consumer side of this (if there is justice in this world) Kaine's star will start to fade quickly....
buzz...buzz...