For electric companies, coming under fire from the public can jeopardize support from lawmakers and regulators
- Oct 13, 2020 2:31 pm GMT
To some degree, the public accepts that companies in the electric power industry need to have good relationships with state lawmakers and/or regulators. After all, generating, transmitting and distributing power in a way that keeps everyone’s lights on is a complex endeavor and they need to make sure the laws and regulations in the states in which they operate help them accomplish those tasks.
Where companies can run into trouble, however, is if they are perceived as going beyond advocating for policies that help them best serve their customers while providing a fair return to their shareholders.
Occasionally, that happens because laws, such as those governing bribery, are broken. More often, however, it happens because external events ranging from storms to the pandemic cause electric customers to pay extra attention to things the companies have been doing for years, such as advocating for laws and seeking rate increases.
For example, in Virginia, Dominion's relationship with lawmakers and the governor are coming into question as a result of a story by the Richmond Times-Dispatch and Pro Publica, an investigative journalism nonprofit.
The story details how Dominion's sway over the Virginia General Assembly was expected to decrease when Democrats wrested control of it from Republicans in the 2019 election. Instead, the story says, Dominion doubled the size of its lobbying corps and, among other things, got Virginia Gov. Ralph Northam's deputy commerce secretary to insert last-minute changes into a clean energy law that increased the recoverable cost of an offshore wind farm Dominion is building by $2.5 billion. In another story, the Times-Dispatch and Pro Publica say the change will boost the monthly bills of Dominion's typical residential customer by nearly $30 over the next decade.
That may come at a cost to Dominion. According to the Times-Dispatch and Pro Publica, Dominion's battles over the years and on the clean energy bill have at times put it crossways with Virginia’s regulators and attorney general, as well environmental and consumer advocacy groups. As a result, the company may be in a position in which it needs to retain the support it has from Virginia's legislators and governor because its other constituencies in the state are firmly against it.
That’s a high-stakes gamble under any circumstances, but especially in an age when one severe weather event to which the public deems Dominion’s response insufficient could force politicians to abandon it, too.
To see how that could play out, Dominion only need cast its gaze northward to Connecticut. There, in July, Eversource customers were so outraged when a rate hike went into effect that the state Public Utilities Regulatory Commission suspended the increase so it could investigate whether the utility was overcharging its customers. As a result, when Tropical Storm Isaias struck the state in early August, few people were willing to cut Eversource some slack when it took more than a week to restore power to all its customers. That led to the Connecticut legislature passing and Gov. Ned Lamont signing a bill that requires PURA to create a performance-based system for determining electric distribution utilities’ rates, financial incentives and penalties, and requires the utilities to credit and reimburse their customers for food and medicine spoiled during outages that reach 96 consecutive hours. Meanwhile, Eversource had become so unpopular that the opponents of two state senators who work for it are using the fact that the senators work for Eversource against them in campaigns even though both voted in favor of the bill.
Among the politicians criticizing Eversource for its response to Isiais was one of Connecticut’s two U.S. senators, Democrat Richard Blumenthal, who, in an Aug. 28 Hartford Courant opinion piece called for PURA to “strongly consider breaking up Eversource into a smaller, Connecticut-focused and consumer-based utility operated solely for the benefit of the Connecticut ratepayers” that could be publicly owned like a municipal utility.
Blumenthal isn’t the only New Englander who wants to make his state’s utilities publicly owned. Last month, some Mainers submitted a request with the Maine Secretary of State’s office to let them begin collecting signatures for a petition to put a question on the 2021 ballot that asks voters if they want to create a nonprofit consumer-owned utility that would replace Avangrid subsidiary Central Maine Power and Versant. A bill to do the same thing was on the verge of being voted on by the Maine Legislature’s Energy, Utilities and Technology Committee on July 24 when its sponsor changed its wording to make it a proposal to have a task force study the issue, reportedly because neither the committee nor Maine Gov. Janet Mills supported it in its original form.
Making Maine’s investor-owned utilities publicly owned has the degree of support it does largely because of unpopular actions by Central Maine Power and its parent that include bill mismanagement, improper disconnection warnings, long restoration times for some outages caused by storms and attempting to build the New England Clean Energy Connect transmission project. That support, however, may not be enough to get a referendum on a state takeover of the utilities on the ballot and will have to grow to get the legislature to consider such an action.
“This is something that the next two or three Legislatures are going to have to work on,” Maine state Sen. Mark Lawrence told the Portland Press Herald. “It’s not something that’s going to happen overnight.”
Avangrid and Central Maine Power likely are hoping time is on their side, that their support among Maine elected officials will remain constant while public ire at them fades. But depending on that may be risky, especially while they’re working to get the NECEC, which is controversial at best, built.
Elsewhere, other electric power companies have put themselves in positions where they can’t count on much, if any, legislative support in the states in which they operate.
For example, PG&E staved off a threat by California Gov. Gavin Newsome to turn it into a state-owned utility and put together a plan that enabled it to emerge in summer from a bankruptcy brought on by liabilities for damage caused by fires sparked by its equipment. The latest round of fires, however, may consume whatever good will the utility has left. PG&E said investigators with the California Department of Forestry and Fire Protection have seized some of its electrical equipment near where the Zogg Fire started Sept. 27 and has warned customers it may be cutting off their power this week to prevent more fires as high winds return to the state.
In Illinois and Ohio, bribery scandals involving Commonwealth Edison and FirstEnergy, respectively, could lead to the states repealing laws they passed to subsidize nuclear power plants operated by ComEd’s parent, Exelon, and a company spun off from FirstEnergy. Illinois legislators also could fail to pass a second law that would subsidize two nuclear plants owned by Exelon that weren’t supported by the first law.
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