Has Your State Deregulated Its Energy Industry? Here's What Can Happen if it Doesn't
Pennsylvania, Maryland, and Even California Has; Virginia Hasn't, and the Result is Scandalous. Restructuring the Industry Should be High on Glenn Youngkin's Agenda; It Won't Be on Terry McAuliffe's.
I was pleasantly surprised to discover Pennsylvania’s deregulated energy market when moving to the Philadelphia suburbs 19 years ago. While natural gas and electric provider, PECO, would maintain its monopoly responsibility for maintaining energy distribution, residents can pick from various independent suppliers, who would pay PECO for their “stranded costs.”
Southeast Pennsylvania’s PECO Energy Company can still generate and sell its energy, but it competes with other suppliers. Want a “green energy” supplier? Want to choose a “variable rate” plan, based on market prices, versus a “fixed-rate” plan? You have those choices. You just have to be careful of “promotional” pricing schemes where you might be offered a very low rate only to be surprised by a massive bill when your deal expires. You have to pay attention to your accounts and agreements, but researching and choosing other suppliers are easy.
Pennsylvania is one of 16 states and the District of Columbia that have deregulated or restructured their energy market to provide consumer choice and competition. And they’re not mostly “red” states, either. They include such workers paradises as California, New Jersey, Maryland, Massachusetts, and Connecticut.
And deregulation works. Thanks to the state’s legislature and GOP Governor Tom Ridge, Pennsylvania restructured the energy industry in 1996. The Kleinman Center for Energy Policy at the University of Pennsylvania has studied the impact on prices.
Prior to restructuring, Pennsylvania’s retail electricity prices were 15 percent higher than the national average. As of 2015, the statewide annual average retail price of electricity was 0.1 percent below the national average. On a statewide annual average basis, over the time period reviewed (2001 through 2015), retail electricity prices to Pennsylvania’s residential and industrial customers tended to be above national averages, while prices to the commercial sector tended to be below the national average.
But upon returning to the Commonwealth of Virginia 11 months ago, I was saddened to discover that neither Democratic nor Republican governors had even tried to deregulate the energy market. (There’s only been one Republican in the past 20 years; the others, including Terry McAuliffe, are all Democrats.)
Now we know why, thanks to excellent reporting from the Virginia Mercury. You’ll never see this in the lefty Washington Post, which is wholly indifferent to, if not supportive of, corporate corruption that helps Democrats.
Dominion Energy’s political giving in Virginia has surged into the millions this year, and Democrats are the biggest beneficiaries, with donations totaling more than $1.8 million so far this cycle, according to campaign finance records compiled by the Virginia Public Access Project.
Republicans, meanwhile, have received just over $1 million from the influential electric utility, the records show.
The figures represent a substantial increase over past donations — which for two decades have typically hovered in the $300,000-per-year range — and a break from the company’s old approach of generally giving similar amounts of money to Republicans and Democrats, especially in gubernatorial election years.
The shift comes even as the vast majority of Democrats running for office this year have pledged to reject Dominion’s donations, prompting the company to go to lengths to direct money to candidates who have publicly said they would not solicit or accept the energy utility’s contributions.
This is what corruption begins to look like. It gets worse. Meanwhile, my Virginia energy supplier, Dominion, is forced to refund customers over $330 million for past overcharges. Here’s how sleazy companies like Dominion operate with their political dollars when they want to support candidates who publicly won’t accept their contributions directly. The Mercury uses incumbent Attorney General Mark Herring, a Democrat, as an excellent example (and reason Republican challenger Jason Miyares should replace him on Tuesday).
It was not the first time this year Dominion took a back-door approach to supporting a Democratic candidate who has publicly eschewed their donations. Attorney General Mark Herring announced in 2018 he wouldn’t accept donations from publicly regulated monopolies like Dominion. But during a hard-fought primary in which Herring faced a challenger who pledged a more aggressive stance on the company, Dominion made $200,000 in donations to the Democratic Attorneys General Association, which in turn was backing Herring.
The donations, which remained secret during the primary because of disclosure deadlines, were first publicly reported by the Richmond Times-Dispatch in August — a month after the election.
And as previously reported, Dominion did the same thing with McAuliffe’s campaign just weeks ago. McAuliffe publicly eschewed direct contributions from Dominion. But the utility sent $200,000 to a sleazy Democratic PAC, “Accountability Virginia.” That PAC then sends messages to Republicans in rural, primarily western Virginia, claiming to question Youngkin’s support of the 2nd Amendment. It was a blatant effort to suppress GOP support for Youngkin. We know where McAuliffe and most other Democrats stand on the 2nd Amendment.
Dominion’s CEO made a big splash about asking for the money back because it wasn’t properly vetted. Yeah, sure. They’ve never disclosed if the money was returned (of COURSE it wasn’t). Why would a public utility invest in a political operation like this? No one has proven this yet, but you can bet that agents or backers asked them of McAuliffe’s campaign. Take it to the bank.
I’m tempted to ask, “Where the hell is the State Corporation Commission,” whose three members (one of whom is a former energy lobbyist) are elected to six-year terms by the General Assembly? Frankly, it falls outside of their jurisdiction and is perfectly legal. All three were first elected to their terms under Democratic governors. Any accountability should fall with the Virginia General Assembly.
And how is that working out? From the Mercury, again:
According to Clean Virginia, a rival PAC founded by multi-millionaire Michael Bills to counter Dominion’s influence in Virginia, 75 percent of the House’s 55 Democratic members have said they won’t accept Dominion’s money.
The House Democratic Caucus’s PAC, however, counts Dominion as one of its largest donors, receiving $350,000 so far this year, according to VPAP. And more of the company’s money gets funneled into the account through caucus leadership, who collected more than $400,000 this year from Dominion.
Those leaders, few of whom face competitive races of their own, in turn make their own donations to the caucus PAC.
This is what “bought and paid for” looks like, and it’s corporate-political self-dealing that needs to end, starting by selecting the right candidates on November 2nd, at least in Virginia. And if your state doesn’t allow competition and consumer choice in energy, the same thing could be happening where you live. Looking at you, North Carolina and Florida. I’ve seen similar political “influence” with big utilities in those states that remind me of Virginia and Dominion. And neither state has a deregulated energy market.
High on Youngkin’s and the legislature’s agendas next year should be a four-part plan to end this corruption. Maybe Youngkin has room to add this to his “Day One” plan.
First, any public utility regulated by the State Corporation Commission should be prohibited from contributing to political candidates, parties, and committees in the Commonwealth of Virginia. Period, full stop, no exceptions. An editorial originally posted by the Fredericksburg Free Lance-Star says it best:
Other public corporations that give contributions to politicians and PACs that support them must weigh the advantages of doing so with the very real possibility that they could alienate a large percentage of their customers as a result. Utilities have no such concerns. All the money they use to make political contributions is coming from captive ratepayers who have nowhere else to go to purchase electricity, a basic necessity of life.
This is wrong. Dominion’s employees and shareholders are free to support whatever political causes and candidates they choose. But their customers should not be forced to make involuntary contributions every time they turn on a light.
Virginia’s Department of Elections requires any entity that spends $200 or more to influence elections to file with the state, so this should not be hard to implement.
Second, Virginia should join 16 other states (including their neighbors in Maryland) and restructure or deregulate the energy market to provide consumer choice and competition. Pennsylvania is a good model; other states may be as well. And while the new Governor is at it, he may want to check out Keystone State’s Department of Motor Vehicles (DMV). Their operations are more consumer-friendly and efficient than the sclerotic, bureaucratic, and demonstrably unfriendly DMV in Virginia, including online tools.
Third, the General Assembly and the new Attorney General need to conduct investigations and oversight hearings into Dominion’s political activities, going as far back as necessary to uncover their sleaze. Maybe what they did was legal, but the learnings should help frame new laws to prevent this unholy and self-serving relationship in the future.
Fourth and finally, Virginia should follow the lead of states like Oklahoma and convert the three members of the State Corporation Commission into statewide elected positions, each chosen to a six-year term on a staggered basis (a seat up every two years). I don’t care if you make them partisan or not, but it would make them more accountable to the public, less so to an obviously compromised General Assembly. Any vacancies can be filled by a temporary appointment, up to one year, confirmed by the State Senate until the next scheduled federal or state general election.
Let’s hope Virginia voters choose wisely. Youngkin’s new ad should help.