RICHMOND — A bill talked up as a way of dealing with an accounting headache at Dominion Virginia Power could end up costing its customers hundreds of millions of dollars of potential credits, critics told a state Senate Commerce and Labor Committee Monday.
But Dominion, which has donated $477,000 to state Senate candidates since the last election for Senate seats in 2011, got the change it wanted, by a 15-0 vote.
"What this will do is give us regulatory certainty," Dominion senior vice president Thomas Wohlfarth told the committee, explaining the company's request for permission to write off 70 percent of the $600 million it has spent on engineering and development work for a proposed third nuclear power plant in Louisa County.
Doing so means the company's earnings would take a hit.
And that's a problem, said Newport News Shipbuilding lobbyist Steve Haner, because the power company's profits are otherwise so high that state law would require a rebate to its customers.
"The shipyard knows something about nuclear plants. We make nuclear plants and the government pays us a lot of money, but they don't make payments to us until we start building," he said.
But Dominion hasn't even definitively decided to go ahead with the North Anna 3 work, Haner said.
"What they're asking for is for us to pay for a new nuclear plant before it is built," he added.
The issue, he said, is that the write-off Dominion seeks permission to make would reduce Dominion's reported profits over the next two years by $420 million. A write-off is an accounting recognition of the reduced value of an investment that a company doesn't expect to make money on in the foreseeable future.
The utility's profit will be a key measure that regulators at the State Corporation Commission use in 2015 to determine if the utility needs to make a refund to customers. Under state law, any profit the company earns above the expenses and a profit margin approved by the commission is supposed to be credited to consumers in future rates.
The commission's latest rate review, completed last year, projected excess earnings of $280 million for the next two years, said Mead Browder, of the Attorney General's Office of Consumer Counsel, which is assigned to argue for ratepayers' interests in commission proceedings. The write off would eliminate that excess.
"It's a big pot ... these are big numbers," he said.
The bill's sponsor, state Sen. Walter Stosch, R-Henrico, said he introduced the bill in order to let Dominion level out the cost of its $30 million to $40 million refuelings at its nuclear plants.
But he said he added the language about writing off the engineering costs in order to provide an incentive for development of nuclear power.
"If we want to assure sustantainable energy, then we need to encourage people to build these plants," he said.
State Sen. Phillip Puckett, D-Russell, said he was bothered by the way the write off would cut into the profit figures on which rates going forward could be set.
"That doesn't seem fair to me," he said. "I guess my vote's too little to change a thing, but you ought to be straight and fair with people paying the bill."
He voted with the other 14 members of the committee to recommend the bill to the full Senate, however.
The state's largest power company also won a rewording of a passage in the 2007 law setting a new regulatory regimen for the state that critics say could tie the hands of state regulators. That language was included in a bill meant to clear the way for installing more underground power lines.
Company lobbyist Bill Thomas said Dominion is seeking the change because of a State Corporation Commission decision asserting its authority to determine the reasonablness of the costs the utility seeks to cover through its rates.
Ress can be reached by phone at 757-247-4535.Copyright © 2015, The Baltimore Sun