The Questions Not Asked: What Does This Cost?

Will Electricity be More Reliable?

The Virginia General Assembly has approved a long list of bills to double down on its previous commitment to ending the use of hydrocarbon fuel in Virginia. It ignored warnings from the regional electricity marketplace, the Virginian who now chairs the Federal Energy Regulatory Commission and even its own hired expert that natural gas is essential for energy security. 

Governor Glenn Youngkin now has the final say and should apply his veto vigorously.  

Most of the bills passed on party line votes, with Youngkin’s fellow Republicans opposed, but not all of them. What is true for all is that none of the bills were subject to any formal written analysis of their ratepayer impact from either the State Corporation Commission (SCC) or the newly reconstituted Commission on Electric Utility Regulation (CEUR). 

When CEUR was revived by the legislature, one of its promised roles was to provide that impact analysis. Instead, it has become a cheerleader for some of the worst ideas now before the Governor, but no one should be surprised. 

For its part, the SCC’s impact statements often focused on its own bills to raise a utility consumption tax by up to $4 million per year to pay for all the staff and outside experts it will need to add. Maybe if the Governor vetoes enough of the bills that add to the SCC’s workload, he can also veto the two bills raising their requested utility tax.  

Much of the additional work for the regulators will come from the approved revisions to the integrated resource planning process, Senate Bill 1021 and House Bill 2413. The bills add transmission issues to the utility plan reviews, but its worst provision mandates that the SCC use an assumed “social cost of carbon” in making all future decisions on electricity generation.  

Under the Biden Administration in Washington, they claimed the negative financial impact of hydrocarbons was over $200 per ton of CO2. If this cost was plugged into a cost-benefit analysis, it would end any use of natural gas from here on out. No Virginia-specific social cost of carbon has been declared, but the SCC is required by law to eventually determine one. 

The SCC is also ordered to put more focus on driving down electricity consumption through various demand reduction schemes, usually financed by ratepayers. In the face of massive demand growth for electricity facing Virginia, some legislators see value in trimming that curve by a percentage point or two. The forest is being ignored in favor of a few trees.

Another pair of bills which will massively increase future electric bills expands the existing mandate in the Virginia Clean Economy Act for battery storage. The cost was highlighted in a pair of Bacon’s Rebellion articles, here and here. The bills are Senate Bill 1394 and House Bill 2537. Too many Republicans who have been complaining about consumer cost voted aye.

One way to keep the use of electricity down is to let the utility take over the thermostat and control other energy-using devices in Virginia homes or businesses. This aggressive move to control your life has a benign-sounding name, a virtual power plant. The companion bills pushing Virginia into this world (you knew they had a plan for that smart meter) are House Bill 2346 and Senate Bill 1100. It is just a pilot program but should not take off at all, because the legislature is giving the utilities control of local battery-powered school buses. an idea rejected years ago. 

Virginia’s electric utilities already can build and operate public charging stations for electric vehicles, but the forces behind House Bill 2087 believe it will greatly accelerate that process. General ratepayers will subsidize the effort, of course. This is another bill that was flagged early as problematic, but it passed with bipartisan votes. The most troubling aspects of the bill demand the utilities complete aggressive plans to promote the expanded use of EVs and create rate structures that drive customers toward EVs. Expect both the carrot and the stick to be applied.

A more straightforward subsidy for installing chargers in certain rural areas is provided by House Bill 1791. A small sum is expected to be included in the budget, a sum you can expect to grow if this subsidy takes root. The Governor should veto the bill and the budget item.

House Bill 2743 orders the use of prevailing wage rules on any project involving underground infrastructure. It applies to all public service corporations, so that would be gas companies and other pipelines along with the electric utilities. The only impact statement assures us there is new money in the budget for enforcement (a line item which should also be vetoed). Be assured, the projects themselves will not get less expensive because of these wage mandates. 

Prevailing wage levels and a percentage of job slots for apprentices on other utility work are also mandated by Senate Bill 853 and House Bill 2356. Again, the only impact statement focused on the staff the Department of Labor and Industry would need to enforce the new laws, not what this might add to electricity project costs.

The use of propane or heating oil in homes is targeted directly by House Bill 2744. They are not named but notice the reference to “upgrades at a qualifying household that substantially reduce or eliminate the household’s reliance on fuel delivered to the household and stored onsite and utilized for household heating, cooking, or water heating.” (Emphasis added). How such “upgrades” (read conversions to electricity) will be paid for is not specified, reason enough for the veto. 

A pair of bills passing with high bipartisan vote totals make changes in the VCEA’s existing renewable portfolio standard, but they are internal shifts, a new deckchair pattern for the sinking ship.  Senate Bill 1040 and House Bill 1883 may make it easier for the utilities to comply and thus reduce the consumer hit those rules create. Both may be ripe for Governor’s amendments. 

Consumer outrage in parts of Western Virginia served by the Appalachian Power Company – now the most expensive investor-owned utility — was behind a host of bills, and two which survived claim they will reduce those ratepayer bills. They probably will do no such thing. 

Borrowing a trick used elsewhere, they may spread out (“securitize”) large expenses over multiple years. This creates short-term savings but creates higher long-term costs, which also enriches bond holders. Given that the other major utility has pulled off this maneuver, it may fly again. The bills are Senate Bill 1076 and House Bill 2621, enmeshed in a conference committee as the session approaches adjournment.

The one solid defeat for the wind and solar industrial complex involved several bills seeking to make it far easier to overcome local zoning objections to major solar and battery installations. But a mandate to cover large parking lots with solar panels may be coming to your city or county soon under House Bill 2037. This bill would allow local ordinances to require that of property owners. 

Whatever Youngkin does veto will remain a gleam in the eye of the legislators and lobbyists behind them, waiting for the outcome of the 2025 election to try again.  

Steve Haner is a Senior Fellow for Environment and Energy Policy. He can be reached at Steve@thomasjeffersoninst.org.