SB 150 Targets Windfalls (and Loses)

Richmond has a strange way of causing alliances between unlike groups.

Take for example SB 150.

Last fall, Senator Richard Stuart (R-Westmoreland) and I chaired an Energy Commission Subcommittee focused on achieving efficiency across the electric grid.

During the hearing, we heard from the SCC who predicted that the legislature’s new laws creating utility incentives for “effiiciency” programs would actually cause customer bills to increase, despite using less energy.  That potential outcome was a serious concern to Senator Stuart and myself.

The current law for efficiency-based incentives permits the utility to recover three “costs” for efficiency programs:

1.  The cost of the actual program
2.  A “return on equity” for the program (which was the main purpose of the 2009 law)
3.  Compensation for “lost profits” for energy not sold as a result of the program.

In other words, if the program succeeds and the utility doesn’t sell the power, then it can still get “lost profits” — notwithstanding the fact that energy usage is growing every year in Virginia which is a net exporter of energy anyway!

To me, that’s spelled   W I N D F A L L

SB 150, sponsored by Senator Stuart (and copatroned by me), would strip out #3 from cost recovery and cause any efficiency program to prove it held a “net cost savings” to the consumer before being approved by the SCC.

The bill was obviously opposed by the utilities, which is no surprise since it impacts their potential profit margin.  The surprise was that the environmental advocates also opposed our bill, because it took away incentives for efficiency programs which are their top priority (personallly, I think these programs should be required by our regulated monopolies, not incentivized).

So we had the odd position of fighting Dominion and the environmental groups.  How often does that happen?  On the other hand, AARP and other consumer groups supported us. 

To make a long story short, our bill was defeated 9-6 in the Commerce Committee yesterday.

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