Bill Limiting Pipeline Costs To Ratepayers Advancing in Virginia’s Legislature

Jan 30, 2019

A little-noticed piece of legislation advancing through the Virginia General Assembly could pose a serious threat to Dominion Energy’s planned Atlantic Coast Pipeline.

The bill would add new restrictions on Dominion’s ability to pass along costs of transporting gas from the ACP to its Virginia-based power stations. That could reduce the potential revenues of a project whose costs have already ballooned in the face of fierce opposition from environmentalists and land owners.

A House committee that almost always sides with Dominion endorsed the bill by an 8-2 vote last week. The measure is backed by an unusual coalition of tea party conservatives and green groups, as well as Democratic Attorney General Mark Herring and his conservative predecessor Ken Cuccinelli.

The bill’s sponsor, Republican Del. Lee Ware, said his goal isn’t to block construction of the pipeline but to “ensure customers are only paying for capacity that the utilities actually need.”

The legislation would require Dominion to show an identified need for increased natural gas capacity and that the ACP was the lowest-cost option before the State Corporation Commission could approve passing along pipeline-related costs.

Dominion said the legislation is unnecessary because regulators already have the ability to make sure any fuel costs from the pipeline are reasonable and prudent.

“The SCC already has a strong process in place to protect consumers,” said Dominion spokesman Karl Neddenien.

Dominion and other developers announced in 2014 plans to build the 600 miles (965 kilometers) pipeline to carry natural gas from West Virginia into Virginia and North Carolina. Most of the capacity for the pipeline is set to go to power plants owned by the companies building the pipeline.

The projected costs have gone up $2 billion since the project was announced to as high as $7 billion. That’s in part of because of a series of legal setbacks. Those include a recent 4th U.S. Circuit Court of Appeals ruling that threw out a permit for the pipeline to cross two national forests, including parts of the Appalachian Trail.

Critics of the pipeline have long questioned the project’s need, saying there’s already enough pipeline capacity in Virginia to supply Dominion’s natural gas power plants. One expert has calculated the ACP’s costs to Virginia ratepayers at $1.6 billion to $2.3 billion over 20 years.

Dominion has strongly denied that its customers will get stuck with unnecessary costs.

“The ACP is going to lower consumer energy costs and make their electricity more reliable,” Neddenien said.

Ware said the issue is too unsettled to risk ratepayers getting stuck with a multibillion dollar bill for the next several years.

“I think it’s time for us to get an answer,” Ware said.

The bill still faces a long road at the legislature. Dominion is one of the most politically powerful corporations in the state and rarely sees legislation it doesn’t like become law.