Bills Aimed at Lowering Utility Bills Also Renew Pricey Power Line Burial Program

Lawmakers say two bills working through the General Assembly will lower customers’ utility bills in the short-term by pushing more costs onto data centers. The House passed Senate Bill 253 by Sen. L. Louise Lucas, D-Portsmouth, on Tuesday, and the Senate Finance committee advanced House Bill 1393 by Del. Destiny LeVere Bolling, D-Henrico.

But advocates challenge the reality of those projected savings, saying the extension of an expensive power line burial program included in the measures could lead to bills rising in a few short years, a claim one of the state’s main power providers refutes.

SB 253 originated as a weatherization program for utilities but was beefed up to include a cost shift onto data center customers.

The measure now stipulates that data center companies take on capacity auction costs, the price of distribution lines, and some of the financing charges for substations that mainly provide power to the industry, pending State Corporation Commission approval.

If the commission agrees, the measure could save the average residential customer about $5.52 a month.

Dominion Energy backs the plan

The utility at the center of the measure, Dominion Energy, supports its plan to shift more costs onto data centers.

“There is the cost just to connect the data centers to the system, which is hundreds of millions of dollars. Over time, they’ll start paying for those costs,” Joe Reid, an attorney for Dominion, said in a Feb. 9 hearing. “They’re going to pay a little bit more for the next few years, so that the rest of the customers’ share of the pie will get smaller.”

“We have all heard about affordability and energy costs. There are more than 200 energy bills this session, and as far as I am aware, this is the only proposal to reduce rates in the near term,” Lucas said in a February hearing for her bill.

Underground lines, above ground costs

An extension of Dominion’s Strategic Undergrounding Program (SUP) is also included in the bill. At present, the program identifies and buries power lines in the most power outage-prone areas, and adds $4.88 a month to residential bills.

The company may spend only a certain amount per mile when constructing the buried powerlines; SB 253 would increase the cap to $900,000, while reducing the annual total price cap from 5% to 4%.

The program started in 2014; by May of this year, 2,900 miles of distribution lines will have been buried. When the latest phase of the program is completed this spring, $1.4 billion will have been spent in burying lines.

The SCC estimates that by May, just 6.44% of Dominion’s retail customers will have directly benefited from the undergrounding. The extension of the program, while not a new cost for customers, is estimated to total $3.8 billion, including financing costs.

“It significantly reduces storm-related outages, and it gets everyone’s power back on sooner after major storms. It makes a positive difference, and the results keep getting better as we reach more outage-prone areas,” Dominion spokesman Aaron Ruby said in a statement.

The program was set to sunset in 2028, and those costs would eventually be rolled off of monthly bills. SB 253 extends the program through 2033, a key point of concern for consumer advocates who say it only benefits a small portion of Dominion’s customers and could lead to an increase in its monthly cost for customers as additional phases of projects are added to the queue and mandated to be approved by the SCC.

“We would prefer that the language be changed in both of those bills to say that the commission is the one who decides, and it’s not automatically in the customer’s interest,” said Dana Wiggins, the director of the Center of Economic Justice with the Virginia Poverty Law Center.

“In some cases, it is indeed cheaper to just reconstruct a pole or put up the pole and send somebody out to do that, then to underground it,” Wiggins added. “It’s a case-by-case basis. Our preference is that the SCC decides.”

With the increased cap and timeline extension, the SCC has predicted that the power line burial program cost will gradually increase, leading to totals over $5.69 per month for customers. That’s more than the estimated savings from the other cost-shift portion of the bills, and could take effect as soon as 2031.

But if the SUP program was allowed to sunset in 2028, it would not mean an immediate drop of the $4.88 from bills, Dominion said.

“These are assets that are depreciated over about 30 years. The cost would gradually decrease until the assets are fully depreciated,” Reid said in a Feb. 9 hearing.

Lawmakers, such as Sen. Scott Surovell, D-Fairfax, support the program, stating in a Feb. 9 hearing that reducing the number of power lines that go offline and need to be repaired after storms will ultimately save the public costs in the long run.

Surovell spoke in favor of the measure in committee, saying it would allow people in the state’s most outage-prone areas to save money when they don’t have to throw out food due to long power outages. He went on to say that having reliable power will help people run their businesses and get work done.

Prior to 2018, the SCC had a history of criticizing proposed undergrounding riders by Dominion, which are individual costs for certain projects tacked onto monthly bills. When legislation  passed nearly 10 years ago, lawmakers took away the commission’s authority to deny undergrounding lines under the cap of $750,000 per mile.

The commission stated in the rider cases for the first few phases of the current power line burial program that the company needed more proof that it would have state and local benefits. Some groups agree.

“I think it really should be for the commission to decide if it’s cost-effective or not. They’re the ones that have the expertise, have all of the data and the knowledge,” Wiggins said.

“Regardless of whether it’s strategic undergrounding or a new power plant, those staff and a proceeding can happen to make sure that the commission is deciding on the merits,” Wiggins added. ”We socialize costs all the time, but is it worth it to cover those 6.44% of the customer base? I don’t know. But it should be for the commission to decide.”

The SCC recently created a new class of customers, GS5, to encapsulate the high-load power users, who are mainly data centers. The new class created 14-year contracts where they have to pay a specific percentage of transmission, distribution, and generation costs.

Representatives for the data center industry said it is too soon to see the full impact of this new rate class, and it is premature for the General Assembly to make changes to that group of customers through legislation like SB 253.

“If the General Assembly decides to order changes to the SCC’s decision and the way the SCC sets rates, we hope to work with legislators to ensure the final product furthers our shared goals of responsible operations and economic competitiveness,”  Nicole Riley with the Data Center Coalition said in a statement.

The two bills will likely be sent to conference once they pass their respective chambers to bring them into compliance with each other. Then, the measure will be sent to Gov. Abigail Spanberger for approval, amendment or veto. The General Assembly session is scheduled to concludeon  March 14.

by Shannon Heckt, Virginia Mercury

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