By MICHAEL MARTZ AND ROBERT ZULLO
The Supreme Court of Virginia has upheld a hotly disputed state law that suspends regulatory reviews of electric utility rates and, according to reports prepared by state regulators, will allow the state’s large utilities to pocket hundreds of millions in earnings they would otherwise have to return to customers.
Justice William C. Mims dissented from the majority’s 6-1 decision on Thursday in a lengthy opinion that says the ruling would allow the General Assembly to permanently block the State Corporation Commission from exercising regulatory authority enshrined in the state Constitution.
“That sobering outcome thwarts the purpose behind creating the commission in the first place,” said Mims, a former legislator who, as deputy attorney general in 2007, played a critical role in the creation of the system of rate reviews that the General Assembly suspended in 2015 for seven years.
The majority opinion, written by Justice Elizabeth A. McClanahan, cites the presumption that legislative actions, such as the 2015 suspension of rate reviews, are constitutional unless “plainly repugnant” to the Virginia and U.S. constitutions.
“This strong presumption reflects the breadth of legislative power in Virginia,” McClanahan wrote.
Consumer advocates assailed the decision, citing a recent SCC report that concluded that Dominion Energy Virginia had overearned by up to $252 million and ratepayers should have been refunded at least $133 million.
“This ruling means that Dominion Energy Virginia will continue to pocket hundreds of millions of dollars owed to Virginia families who were overcharged for several years,” said Shannon Baker-Branstetter, policy counsel for Consumers Union.
“The decision also means the Virginia State Corporation Commission, charged with protecting the consumer interest, will continue to be constrained in their ability to regulate the state’s largest utility monopoly,” Baker-Branstetter said.
Sen. J. Chapman Petersen, D-Fairfax City, who fought unsuccessfully to overturn the 2015 rate freeze law in the last General Assembly session, said he was disappointed but not surprised by the ruling.
“To rule a statute unconstitutional is very unusual,” said Petersen, a lawyer. “Statutes are presumed to be constitutional. Judges will read anything that they can into them to find them constitutional, and that’s what happened here.”
He said Mims’ dissent hit the mark. “Why have a State Corporation Commission and say they’re going to be in charge of regulating utilities if you’re going to let the General Assembly arbitrarily suspend that?” he said. “They could do it for 50 years; they could do it forever.
“They could say that ‘We find that world history is inherently unstable, North Korea has nuclear weapons … the Cleveland Indians are winning 22 games in a row.”
Petersen said he will revive legislation during the next session seeking to bring back rate review and ban political contributions from regulated monopolies. Dominion is the top corporate donor to state legislative candidates, giving nearly $4.6 million since 1996, according to the Virginia Public Access Project.
“Dominion is sort of head and shoulders in terms of their influence in the General Assembly,” said Petersen, who has also taken the company’s campaign cash. “Some of it is money, but a lot of it is a lot of people in the General Assembly don’t understand these issues.”
Ken Cuccinelli, the former GOP state senator, attorney general and gubernatorial candidate, said the court’s decision shifts the debate to the candidates running for governor and for seats in the House of Delegates. The court’s decision, he said, eviscerates the protections for consumers in the 1971 Constitution against overearning by monopoly utilities.
“Now it’s up to the legislature to fix this, and that’s a tall order since they did this in the first place,” said Cuccinelli, who filed a brief supporting the challenge to the rate freeze law on behalf of the Virginia Poverty Law Center. “There’s no difference between the legislature granting Dominion and (Appalachian Power) windfall profits and raising taxes.”
The General Assembly, Cuccinelli said, needs to hand over electric rate regulation to the SCC “100 percent.”
“They are stealing from poor people to give to these two companies,” he said.
The next General Assembly session, Cuccinelli said, will be a crucial test of the body.
“What we’re going to find out is: Is the General Assembly an independent entity or a wholly owned subsidiary of Dominion Power?”
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