Dominion Energy wins, Virginia consumers lose


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The Dominion Energy offshore wind project is the largest, riskiest, costliest public works project ever undertaken in Virginia history.

It was authorized by the Virginia Clean Economy Act (VCEA), a partisan piece of legislation passed in 2020 by one-vote Democratic margins in both the Virginia Senate and House of Delegates, and signed by Democrat Gov. Ralph Northam.

Ever since Dominion presented the details of the project several months ago to the State Corporation Commission (SCC), it was unclear exactly what position the Youngkin Administration would adopt concerning the project. Gov. Youngkin had campaigned on a pledge to repeal the VCEA – a pledge he had articulated both in interviews and in debate with former Gov. Terry McAuliffe – as well as reducing the cost of living for average Virginians, so some kind of VCEA repudiation was expected.

It was not to be. Without any advance explanation or prior notice, Mr. John Warren, Director of the Virginia Department of Energy, filed a letter with the SCC on May 16, 2022, stating that the Youngkin Administration believed “offshore wind represents an opportunity to introduce a new industrial sector to Virginia’s economic future” and that Virginia should be a “first mover” in order to “rapidly advance the offshore wind industry.” Lest the Administration be accused of ignoring ratepayers, Mr. Warren further stated that the Administration “recommended” that the SCC should include in its order approving the project a concept he described as a “performance guaranty” – a guaranty he claimed was crafted by the staff of the SCC.

But Mr. Warren was dissembling. He already knew that there was no such thing. On May 11, 2022, five days before he signed his letter, the SCC staff signed a “stipulation” with Dominion Energy setting forth the parameters of the SCC order. The stipulation did not contain any kind of performance guaranty or assurances from Dominion. The stipulation simply references a performance “provision” under which Dominion only agrees that for the next 10 years it will provide a “detailed explanation” to the SCC if the project falls below production expectations.

That’s it. No cap on consumer rates, or project costs, or penalties for non-compliance with objective performance measures. Consumers bear all the risk. Dominion Energy and its shareholders bear none.

It is laughable that the SCC stipulation requires Dominion only to provide “detailed” reasons for non-performance. One can see them coming now: Chinese supply chain problems, U.S. port congestion, inflation, climate change, hurricanes, the dog ate my homework. You know – stuff happens.

Thus, in one short letter, the Youngkin Administration rejected the campaign pledge which it ran on, absolved Dominion from any financial reckoning, and covered its explanation with the fig leaf of supposed “job creation.” Because job creation is unknowable, unprovable, and quickly forgotten when it doesn’t happen (think all those nonexistent, Obama era, “shovel ready” jobs) it is the lamest of purported justifications, and a sorry artifice on which to justify the largest electrical generation public works project in Virginia history.

Dominion Energy wins. Virginia consumers lose. At the end of the day, perhaps this is not surprising, given the totally unique position which Dominion Energy holds in Virginia. It is the only “regulated” electric monopoly in the U.S. which exercises total control over its regulators through its ability to supply unlimited campaign contributions to Virginia politicians.

In Virginia, the regulatory authority previously exercised by the SCC has been pirated by the legislature, and Dominion’s stranglehold on the legislature deprives it of the ability to exercise any meaningful oversight. Prior legislative attempts to remove Dominion’s unique campaign contribution capability have been (spoiler alert) soundly defeated. Thus, the fate of Virginia’s energy supply and consumer cost is left wholly to Dominion’s unfettered discretion.

Virginia Republicans had high hopes that the Youngkin Administration would usher in a new day. Why the Youngkin Administration agreed to go down this path is puzzling. One would think a Republican Administration would adamantly oppose a scheme entirely conceived and supported by Democrats. Just three months ago, every Republican in the House of Delegates voted in favor of a bill sponsored by Del. Nick Freitas (R – Culpeper) to repeal the VCEA.

The House Commerce and Energy Committee assembled a record which demonstrated that the wind and solar mandates of the VCEA would increase consumer energy costs by 3-4 times over maintenance of the status quo. Given the brownouts, blackouts and electricity curtailments suffered by Texas, California, England and Europe, the Administration must have realized that this bizarre experiment in electrical generation will end badly, and certainly collapse when federal tax subsidies are terminated.

Perhaps Gov. Youngkin’s political advisors concluded that he would need Dominion Energy’s support when he runs for higher office, or that the bulk of electricity rate increases will occur after his term expires, thereby leaving Lt. Governor Sears and Attorney General Miyares to clean up the mess. Whatever the case, it was a missed opportunity for Virginia to show leadership in opposing the nonsensical decarbonization craze and to support the effort for U.S. energy independence.

One thing is clear, however. There will be no energy independence for Virginia – just obedience to the power of an unregulated monopoly and hope that the sun will shine, and the wind will blow. For the thousands of Virginians living paycheck to paycheck, many of them from Latino, Black and disadvantaged communities, and potential first-time Republican voters, their hopes have been dashed.

  • Johnson has spent the last four decades working in the public and private sectors in Virginia, primarily in the fields of project finance and maritime transportation. He began his career in public service as Chairman of the Board of the Virginia Port Authority. He was appointed by President George W. Bush, and confirmed by the Senate, as a member of the Overseas Private Investment Corporation, and most recently, as Administrator of the St. Lawrence Seaway Development Corporation. In that capacity, he became knowledgeable in the field of climate and its impact on the Great Lakes. He currently serves on CFACT's Board of Advisors. Johnson holds a B.A. degree from Yale University, and a J.D. from the University of Virginia.

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