Virginia’s Power Broker

(AP Photo/Steve Helber)

Judy Hinch of Chesapeake, Virginia, joins a protest again the construction of a natural gas pipeline through rural Virginia on May 6, 2015.

For decades, Dominion Energy has been one of the key generators of both electric and political power in Virginia. The top corporate political donor in the state, Dominion has benefited from a sweetheart rate structure that keeps profits higher than the national average for electric companies. Among the company’s allies are Democratic Governor Terry McAuliffe and the Democratic nominee to succeed him, Lieutenant Governor Ralph Northam, as well as many key Republicans.

Now, however, a popular backlash is building against Dominion’s political giving and its inside legislative influence, compounded by a controversial pipeline project. Dominion could become the symbol of the anti-corporate sentiment that has been strong in the base of both political parties since the 2016 election.

Dominion, once known as the Virginia Electric Power Company (VEPCO), produces about two-thirds of the electric power in the state. Nominally, deregulation of electric power created consumer choice and market pressure to restrain costs, but in practice state law heavily influences the rules under which Dominion operates, and so Dominion invests massively in Virginia legislators. Since 1996, Dominion has given more than $9 million to campaigns, according to the Virginia Public Access Project, and nearly $1 million in the last election cycle alone.

And Dominion gets its money’s worth. In 2015, Virginia’s General Assembly passed legislation drafted by Dominion officials that locked in base electricity rates and protected utilities from rate cuts or consumer refunds through 2022 while still allowing for additional charges to be added on top. These added charges, known as riders, allow Dominion to pass on to customers the cost of new projects. Unlike fuel and transmission rates, riders guarantee a profit margin. Dominion provides cheaper energy than most of its neighboring states, but it also books bigger profits, for which riders are largely to thank.

For Dominion, the bill’s passage was a major coup. In an Orwellian turnabout, the utility provider has strictly referred to the legislation as a “rate freeze,” when in fact the only thing frozen is base rate cuts and consumer refunds. The lock-in established a floor for rates, but no ceiling.

Dominion shareholders are estimated to benefit to the tune of $1 billion over the next five years because of the bill, at the expense of ratepayers. Presented as a means for utilities to mitigate the financial impact of the strict requirements of President Barack Obama’s Clean Power Plan, the law has caused rumblings among Republicans as well as many Democrats. Despite the fact that EPA regulations are not scheduled to go into effect until 2022, the year that base rate reviews would recommence, the rate lock-in was still passed. President Donald Trump has since ordered the dismantling of the Clean Power Plan, but the law remains.

The constitutionality of the lock-in is currently before the Virginia Supreme Court. Consumer advocates challenging the law argue that it inappropriately took away the ability of legislators to regulate electric monopolies in the state. Democratic Attorney General Mark Herring, who is running for reelection this year, has defended the law, calling it bad policy, but not unconstitutional.

A June report by Goldman Sachs found that overturning the law would present substantial—10 percent to 15 percent—downside risk to Dominion’s earnings. The state Supreme Court is expected to make its decision in the coming months.

On top of the rate law, Dominion has proposed a controversial 600-mile natural gas pipeline, creating a perfect storm of opposition against the corporation. Dominion is the lead member in a consortium of energy companies behind the Atlantic Coast Pipeline, one of two proposed pipelines in Virginia. Pipeline supporters, including McAuliffe, have claimed that the infrastructure project would be a “game changer,” creating thousands of jobs in the commonwealth while providing access to cheap energy for manufacturers near the state’s coast.

Critics question the necessity of the pipeline and contend that the real impetus for its construction is to connect to export terminals to sell natural gas abroad, a claim that Dominion has publically denied. The 42-inch-wide pipeline would run from the fracking fields of West Virginia to North Carolina and through Virginia.

A coalition of 51 environmental and citizen organizations has formed in response to the pipeline. Thousands have voiced their opposition in petitions filed to the Federal Energy Regulatory Commission, with hundreds more joining in various events and protests against the pipeline and its potential environmental risks.

“People are aware and activated on both sides of aisle,” says Peter Anderson, Virginia program manager at Appalachian Voices, one of the groups in the coalition. The pipeline “has become a defining issue.”

The $5 billion project would require the use of explosives to remove of the tops of 38 miles of forested ridgelines, cutting through the land of approximately 2,900 private landowners. Dominion had reportedly sued almost 200 landowners for access to their property, according to press accounts quoting Dominion spokesman Aaron Ruby.

Along with dozens of environmental groups, various Democrats have called attention to Dominion’s proposed pipelines. On the Republican side, former Republican gubernatorial candidate Corey Stewart, who has called Dominion a “horrible corporate citizen,” criticized the pipeline project for trampling on people’s property rights.

A spokesperson from Dominion did not respond to the Prospect’s requests for comment.

But even with all the newly gained attention, the clout Dominion carries in Richmond makes for a lopsided battle for its opponents. According to Corrina Beall, lobbyist for the Sierra Club in Virginia, the corporation’s reach is so palpable that “let me talk to Dominion and get back to you” has become a stock response from lawmakers among both parties.

Between April 2016 and May 2017, there was nearly one Dominion lobbyist for every nine lawmakers in the state legislature, according to the Virginia Public Access Project. “In an era of deep partisanship in Richmond, the only truly bipartisan consensus is taking money from Dominion Power,” former Virginia congressman and Democratic gubernatorial candidate Tom Perriello told The American Prospect in March.

That consensus has remained essentially unchallenged for more than 40 years—until now. “Bernie Sanders’s success convinced a lot of Democratic politicians that a more strident anti-corporate-power message can be helpful,” says Stephen Farnsworth, a political science professor at the University of Mary Washington. “When you add the anger of Sanders voters and the anger of other Democratic voters who are mad about Trump to the backlash to the [Atlantic Coast Pipeline], you have a lot of forces pushing against Dominion.”

Virginia’s campaign-finance laws are some of the most lenient in the country, allowing unlimited contributions and the use of campaign funds for personal expenses. In the run-up to last week’s state primary elections, some 70 House of Delegates candidates pledged to refuse donations from Dominion. Of these candidates, 16 were involved in a primary on Tuesday—13 won, and the remaining three lost to incumbents.

All three of the Democratic candidates for lieutenant governor, including primary-winner Justin Fairfax, also swore off contributions from Dominion during this election. “The only strong conclusion you can draw from this primary is that refusing Dominion money didn’t noticeably hurt, and might actually be helping, Democratic candidates,” says Josh Stanfield, a former Sanders delegate to the Democratic National Convention and executive director of Activate Virginia, the group that first circulated among candidates a pledge to not accept Dominion money. 

Lieutenant Governor Northam, now the Democratic nominee for governor, faced criticism for taking thousands of dollars from Dominion during his primary battle with Perriello. Northam has not spoken out against the company specifically, but proposes a ban on all corporate contributions. “I would like to lead the discussion on campaign-finance reform,” he told the Prospect last month. “Get the money out of it; get the influence out of it.”

Last month, State Senator Chap Petersen, a Democrat from Fairfax, announced his intention to file a legislative package that would, among other things, repeal the rate-freeze bill and block all political contributions from Dominion and other public utilities. Petersen had tried before to repeal the rate-freeze law, introducing legislation to a senate committee after this year’s filing deadline, but did not receive the unanimous consent needed to proceed, a development that he describes to the Prospect as “not just a bad decision, but a decision that was influenced by money.”

The proposed repeal measure made Petersen some unusual allies, including former Republican Attorney General Ken Cuccinelli, who together with Petersen wrote a Richmond Times-Dispatch op-ed titled “Dominion's 'deal' not good for its captive customers.”

Republican gubernatorial nominee Ed Gillespie, who strongly endorsed Dominion’s pipeline project, has spoken out against the rate freeze. “The justification for that bill was the imposition of the Clean Power Plan,” he said on a local political talk show in March. “If the Clean Power Plan goes away, the justification for the bill has gone away.”

In an about-face, McAuliffe, who signed the rate-freeze bill into law after it passed the General Assembly, said during a radio appearance in February that he would sign a repeal if Democrats could get it through the state legislature.

To find precedent for such widespread skepticism, symbolic or otherwise, of a utility company in Virginia, one must return to the 1970s, when Dominion operated as VEPCO.

For nearly a decade, resistance to VEPCO served as a uniting force for Virginia Democrats. Populist State Senator and later Lieutenant Governor Henry E. Howell Jr. ran three times for governor, almost winning in 1973, with his slogan “keep the big boys honest.” He left little doubt that many of the big boys were at VEPCO, which he referred to as “our Very Expensive Power Company.”

Dominion’s rate-freeze bill and mounting hostility to its proposed pipeline have increased opposition, both in the legislature and among the public. But the corporation remains a political juggernaut with many friendly lawmakers in Virginia’s General Assembly, a legislative body that is likely to remain under Republican control after this year’s election.

A populist wave is a rare happening in Virginia. Those who hope for reform could hardly invent a better nemesis than Dominion. 

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