Virginia Lawmakers Move to Dismantle Energy Monopoly

Virginia Gov. Ralph Northam, center, is surrounded by Democratic lawmakers as he outlines his legislative agenda at the Capitol in Richmond on Tuesday. (AP Photo/Steve Helber)

RICHMOND, Va. (CN) – Virginians have few options when it comes to how they power their homes. Whether it’s Dominion Energy, Appalachian Power, or a handful of co-ops and municipal providers, consumers are restricted regionally by who can sell them electricity, a system that’s evolved over decades with the blessing of state lawmakers.

But over the last few years, things have soured between Virginians, legislators and the power companies. Now, with Democrats in full control of the state government for the first time in decades, new efforts are emerging that could change the way citizens buy their energy.

Delegates Mark Keam, D-Fairfax, and Lee Ware, R-Powhatan, have joined forces on a piece of legislation they believe would benefit the consumer by opening up the state as a free market for energy.

“[This bill] is a way for us to make our state and law catch up with the marketplace and what’s been happening [in other states] for years,” Keam said in a briefing room at the Virginia General Assembly building Tuesday morning.

He compared the lack of innovation power suppliers have offered Virginians to the way we make phone calls. As phone companies and the products and services they offer have changed, “the one area that has not changed is how we produce energy, how we deliver energy and how the consumer uses it and the carbon it creates,” Keam said.

Ware called the 2020 legislative session “a time of new opportunity.”

“I’ve seen just how much is available in terms of innovation so this is about recognizing where we are and what spaces there are to take advantage,” Ware said.

The two legislators have introduced the Virginia Energy Reform Act, a bill that, although not published in the official record yet, aims to create a competitive market for electricity retailers monitored by a state-run nonprofit. It would also push the burden of maintaining the distribution system onto existing monopolies, and install additional utilities for low-income consumers.

“We used to make these hand signals to represent when we were [passing legislation] for the ordinary Virginian, the little person,” Ware said as he formed a small gap between his index finger and thumb. “I think this bill does that.”

This isn’t the first time legislators from opposing sides of the isle have found common ground on the issue of energy. Spats over Dominion’s request for rate freezes and other legislative efforts the utilities have sought over the last three years proved to be an eye-opening experience for Keam, Ware and others.

Dominion Energy’s Chesterfield Power Station. (CNS Photo/Brad Kutner)

“Most people just assumed if our monopoly carriers wanted a bill it must be a good bill because they’re the only people who know this stuff,” Keam said of legislators’ laissez-faire attitude toward power companies in recent years. “That status quo is a hard thing to break.”

But those disputes blossomed and help spur the creation of the new legislative effort.

“It transcends the normal bounds and I don’t think it will take much to get the kind of buy-in we need,” Ware said.

Efforts to deregulate power monopolies in the U.S. started around 20 years ago in Texas. Seeing a future power beyond oil and gas, and hoping to increase competition to benefit the consumer, the Lone Star State’s politically divided Legislature worked with then-Governor Rick Perry to pass legislation that created the 11th largest energy market in the world.

“You won’t hear me, a Democrat, praise George W. Bush or Rick Perry very much, but Texas, with one of the strongest fossil fuel industries in the country, they decided there were more options in renewables,” said Keam, who is admittedly on the left side of new energy-based legislative efforts. He’s among the sponsors for a 2020 state-level version of a Green New Deal.

But Keam admitted he thinks Texas got it right “when they decided to push the envelope.”

“It allowed for other states to say, ‘If Texas can do it, we can too,’” he said.

Jesse Dickerman, director of corporate affairs for Direct Energy, travels around the country hoping to open up states’ energy markets. His company sells power to people in over a dozen states and Canada where open energy markets already exist.

Dickerman was in Richmond this week to offer support for another bill that aimed to roll back what he called a loophole that allowed Dominion to dominate the state renewable energy market, something that would also be addressed by the Virginia Energy Reform Act.

He said Keam and Ware’s bill has a lofty goal, but there are successful examples of energy market implementation and Texas is chief among them.

Direct Energy points to a 2017 Texas Public Utility Commission report showing energy rates across the state decreased 63%, adjusted for inflation, since the 2001 changes. They continue to be lower than the rest of the country.

But Dickerman also said the system wasn’t perfect. In the summer, depending on who you get your energy from and how you get it, rates can spike.

“As demand goes up, the prices go up to bring more generators to the market,” he said. “Just like supply and demand you learn in an economics class.”

Other states that have since deregulated have also seen mixed success.

Massachusetts deregulated its energy market around the same time as Texas, and within years rates fell by about 20%. Now, the statewide market information aggregator MA Energy Ratings claims rates are 20% less than those in California.

Just last month, the state’s attorney general, Maura Healey, asked Massachusetts regulators to open investigations into several energy retailers accused of using deceptive practices that duped low-income and elderly consumers into paying higher rates in the long run.

But Keam and Ware believe they can avoid some of those issues with yet-to-be-seen specifics added to the Virginia Energy Reform Act.

To that end, they assembled a coalition – including members of right-leaning think tanks and consumer protection and environmental groups – to support the bill.

“There needs to be structural changes to the system as long as low-income people are protected,” said Dana Wiggins, a spokesperson with the Virginia Poverty Law Center.

She said her group’s interest in the legislation originated with predatory lenders stepping in to offer toxic loans to poor Virginians who needed money to keep their lights on.

“We want families to be able to take advantage of a consumer choice system,” Wiggins said.

Meanwhile, Devin Hartman, director for energy and environmental policy with the libertarian group the R Street Institute, praised the effort as a way to increase choice and address something those from his school of economic thought have long taken issue with: heavily regulated monopolies.

“We’re looking to coordinate unorthodox power sources, to do that you need a healthy marketplace,” he said, suggesting an open marketplace could also address calls for more innovation and renewable energy. “The solution is the energy system of the future that gives consumers more control.”

Dominion, meanwhile, said it doesn’t comment on pending legislation but does feel “deregulation isn’t the way forward for Virginia’s energy future.”

In a statement, Dominion spokesman Rayhan Daudani pointed to other deregulated markets, including the one in Massachusetts, as examples of a faulty system that could bring the same problems to Virginia.

He also touted Dominion’s efforts to reduce carbon emissions as the company works to get permits for the country’s largest offshore wind power project and open new solar facilities across the state.

“This coalition’s collection of grab bag policies was tried and failed and ultimately led to the bankruptcy of Enron,” Daudani said, pointing to the legendary downfall of the California energy company. “We know how this story ends, and it is wrong for Virginia.”

A version of the legislation is said to be ready for the public by next week. Virginia’s 2020 legislative session started Wednesday and runs through March.

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