If only for a moment, it was 1973 again.
In the House of Delegates Monday, an unlikely coalition of rural conservatives and metropolitan-area liberals stunningly stuck it to The Man, stripping language from legislation pushed by electric monopolies that would allow them to keep billions of dollars in excess earnings rather than return it to ratepayers.
Dominion Energy and Appalachian Power could plow the cash into new gear, then charge customers for it- a “double-dip,” according to the legislation’s critics.
The coalition that emerged earlier this week recalled one cobbled 45 years ago by Henry Howell Jr., the bête noire of Dominion Energy, then known as the Virginia Electric and Power Co. In 1973, Howell came within a whisker of winning the governorship – the closest of his three tries – by attacking the company for high prices and low accountability.
As Dominion Energy and Appalachian Power are now, VEPCO embodied unalloyed corporate and political muscle, arousing the shared suspicions and resentments of voters who otherwise had nothing in common. Four decades ago, these were George Wallace supporters from the countryside and urban-suburban backers of Hubert Humphrey and George McGovern.
A reedy-voiced populist Democrat, Howell would corral these disparate voters with a slogan he filched from a Pacific Northwest New Dealer: Keep the big boys honest.
On Monday, that was the objective of 49 Democrats and six Republicans who out-maneuvered a throng of utility lobbyists, the House GOP leadership and the freshman Democratic governor, Ralph Northam.
Northam, who’s put a premium on peace with Republicans, is, instead, facing his first revolt by his party’s legislative wing – and barely two weeks after brokering a supposed compromise on the utilities legislation that, he claimed, would be a win for customers, the industry and the environment.
The 55 delegates, arguably reflecting the animosity for lopsided wealth and excessive influence to which Donald Trump and Bernie Sanders appealed in 2016, weren’t buying it.
Even the 41 Republicans who favored preserving the double-dip language apparently recognized their votes may not be without peril. In a do-over, they all switched.
To the doubters, there is one certain remedy to this controversy: Reinstate the rules by which Dominion Energy and Appalachian Power used to play, but haven’t since 2015.
That’s when the companies persuaded an obliging legislature to spare them from oversight by the State Corporation Commission for at least five years and let them hold $1 billion or so in over-earnings – again: money the SCC could have ordered refunded to customers – to pay for clean-energy projects the federal government may no longer demand.
The impulse of these contrarian delegates – and that of more than a dozen senators in both parties who opposed their chamber’s version of the double-dip bill last week – was one that occasionally flares in business-friendly Virginia but rarely to full effect. That is, to insist that regulators be allowed to do their job.
In the case of the two electric utilities – businesses with 2.5 million captive customers – that means again fully subordinating them to the SCC, set up 115 years ago to keep the big boys from getting too big.
To Dominion Energy and Appalachian Power, such authority, however, is now interpreted as a threat to their profitability, impinging the invisible hand that ultimately controls all businesses: the economy.
Ken Cuccinelli, the former attorney general and defeated GOP nominee for governor in 2013, was largely alone among Republicans in warning that the utilities’ determination to shackle the SCC was an accommodation to Wall Street to drive up their stock prices. Cuccinelli said they are at it again – and that it’s not a fair fight.
Several hours after the House vote, Cuccinelli sent an email to delegates quoting an analysis by UBS Group last week that depicted the regulatory and political climate in Virginia as ideal for a continued increase in the share price of Dominion Energy. UBS rates Dominion Energy a buy, predicting its price will reach $85 from the current $75.
“Dominion spends mere millions on TV commercials, on lobbying and on political contributions to candidates and legislators, and in return Dominion gets to write its own legislation that returns billions of dollars in cash and value,” said Cuccinelli.
“That means that Wall Street thinks Virginia is among the easiest regulators of utilities in the entire country – i.e., Virginia’s General Assembly and governors are pushovers for Dominion.”
Dominion Energy, through spokesman David Botkins, declined comment.
Though the utilities say they are prepared to submit to some restored control by the state, they don’t mention – perhaps because their Yuppie executives may not even be aware of it – that the SCC actually was instrumental in saving Dominion Energy from bankruptcy, despite fierce public opposition by Howell and others.
In the 1970s, VEPCO was teetering on collapse because of its pricey push into nuclear energy. The SCC backed multiple rate increases to stabilize the company.
Preston Shannon, an SCC judge from 1972 to 1996 and a descendant of one of the commission’s creators, Allen Braxton Caperton, told me in 2015 interview of a private meeting with VEPCO Chairman John McGurn during those bleak days: “There was a lot of emotion in his voice. He said, ‘I fear for the future of the company.’ “
More than a century ago, fear for consumers compelled Virginia to create the State Corporation Commission.
In the late 1800s and early 1900s, riding herd over the General Assembly were the railroads. They flooded the state Capitol with cash, using it to lock in shipping rates that helped their friends and punished their enemies. The SCC would put an end to that, making sure the railroads were flush but customers weren’t fleeced.
As Caperton put it in 1904, “The state is morally responsible to its citizens for any abuse of those powers with which it has clothed the railroad companies, especially as the state, itself, was entrusted by the people with those same powers only for the benefits and protection of all its citizens without distinction.”
Here’s betting that in 2018, some would substitute “electric utilities” for “railroad companies.”