A proposed bill in the Virginia House of Delegates seeks to freeze Appalachian Power Company (AEP) rate increases for two years while introducing greater citizen input into the State Corporation Commission’s (SCC) decision-making process.
House Bill (HB) 2665, sponsored by Del. Will Morefield, R-Tazewell, and co-sponsored by Del. Eric Phillips, R-Martinsville, among others, was referred to the House Committee on Labor and Commerce last week.
Morefield emphasized the need for ratepayers to have a stronger voice in the SCC’s approval process. “They are the ones who make the tough decision to either pay their electric bill or buy food,” he said.
Phillips noted the sharp increases in power bills as a pressing concern voiced by his constituents.
“We’re hearing from people with $700 to $1,000 power bills, and it’s just not sustainable for power rates to keep increasing at the rate that they are,” Phillips said.
The Role of the Virginia Clean Economy Act
Phillips attributed much of the rising costs to the Virginia Clean Economy Act (VCEA), passed in 2020, which mandates a transition to 100% renewable electricity by 2045 for Dominion Energy Virginia and by 2050 for Appalachian Power.
The VCEA “requires that AEP start decommissioning coal-fired plants and moving more and more to ‘green energy,’ which is less efficient. There’s a cost to shuttering plants. There is also a cost to paying to build solar farms and wind farms and all these alternative ways of generating energy,” he said, adding solar and wind farms are less efficient and costly to build.
“At the end of the day, that cost gets passed on to the ratepayer,” Phillips said, estimating that 25% of a customer’s bill can be linked to the VCEA. For example, if someone is paying $200 for electricity, then $50 can be directly attributed to the Clean Economy Act.
Additionally, Virginia’s largest utilities companies can’t meet the requirements set by the Clean Energy Act, Phillips said.
“One of the largest power suppliers in the Commonwealth is so desperate to get credit for solar energy that they sell their solar power into the grid, sometimes at a negative price. In other words, they pay people to take their solar power because they have to meet these requirements. Because ultimately, it’s saying that all power companies have to be carbon-neutral by a drop-dead date within sometime in the next decade-and-a-half or so, which is just not going to happen,” he said.
Phillips said while Republicans would prefer to repeal the VCEA or at least amend it to extend deadlines, the current Democratic control of the General Assembly makes such changes unlikely.
“We can’t afford to pay for this green energy agenda overnight,” Phillips said, warning that rates will continue to climb as utilities face increasing pressure to meet the law’s requirements.
“There’s no end in sight as it gets closer to these dates. I mean, they’re going to have to get more aggressive, these power companies, to do these things, so I think you’ll continue to see rates climb,” he said.
HB 2665 proposes freezing AEP’s rate increases for two years to provide lawmakers time to seek bipartisan solutions “and maybe come up with some kind of compromise, some new ideas on ways to keep it from being completely passed onto the consumer.”
However, Phillips acknowledged the bill faces an uphill battle.
“It’s going to be difficult to get this passed, but we’ve got to try and do what we can,” he said.
The SCC ultimately decides whether to approve rate increases or not. Phillips said the General Assembly has no authority in rate increase approval.
“We can’t ultimately approve or deny a rate change, but we can direct the SCC to do certain things in that regard,” he said.
Noting it will be a hard fought battle to gain approval for the proposal, Phillips said it does have some bipartisan support with a Democrat among the chief co-patrons.
“You never know with a bill till it gets there what’s going to happen. I would say it’s going to have an uphill battle, but we’ve got to do something,” Phillips said. “We’ve got to try and do what we can do and hope that we can get some support for this bill to figure out some of these issues.”
Del. Wren Williams, R-Stuart, expressed skepticism about HB 2665, cautioning that a rate freeze could lead to larger increases after the two-year period ends.
Williams also noted that a freeze would prevent rates from decreasing during the period, potentially locking in higher costs.
“I believe the proposed legislation is trying to fix the problem, but it’s going about it in a nuanced way that’s just going to cause more problems down the road,” he said. “What’s going to happen two years from now is bills are going to be quadrupled. I don’t agree with the legislation, I don’t think that’s the right fix.”
Williams has introduced his own bill, HB 1588, to address the issue by prohibiting electricity rate increases during the winter months of November through February. The proposal has bipartisan support, including co-sponsorship by Phillips.
In a January 16 Facebook post, Williams described his bill as a practical measure to provide relief to ratepayers during colder months.
