When the history of public utility regulation in Virginia is written, the 1998 session will be but a footnote to the events we expect will follow next year (or maybe in the year 2,000). Before the General Assembly even convened this year, Jack Reasor, chairman of the legislature's joint study committee which had already been considering for two years the prospect of bringing competition to the electric utility industry, announced his position that at least another year of study would be necessary before any comprehensive restructuring package could be ready. Senator Reasor would, he promised, introduce a restructuring bill this year, but he would immediately ask that it be assigned to the study committee and carried over until the 1999 session. He said he wanted to give the committee a target at which to shoot. That bill (SB 688) has in fact been carried over. The study committee itself has been renewed by SJR 91.
Senator Reasor suggested that other legislation relating to restructuring likewise be withheld, or carried over, so that it could be developed through the study committee in coordinated fashion. At least one member of his committee disagreed. Delegate Kenneth Plum introduced a detailed and lengthy bill (HB 1172), originally styled the "Electric Energy Wholesale Competition and Economic Development Act of 1998." That bill was supported primarily by Virginia Power, which evidenced a change in position by the Commonwealth's largest electric company. Previously, Virginia Power had been advocating a "go slow" approach to competition. In the 1998 session of the General Assembly, however, VEPCo wanted action. At first, at least, they stood alone. In the course of the session, the Plum bill was pared down significantly, and other legislators and some of the other parties in interest got on board. While the State Corporation Commission remained vociferously opposed to any restructuring legislation this year, in the end a bill was passed. It bears little resemblance to HB 1172 as it was initially introduced, and in effect merely establishes target dates and a few priority issues for restructuring that will need to be addressed again in future legislation.
There were a few other bills introduced relating to industry restructuring that were carried over and sent to the Reasor committee for consideration. They included a bill that would permit retail wheeling (i.e., competitive sales) opportunities to certain qualifying small power producers (HB 485) and two bills relating to public utility taxation (SB 619 and SB 620). Also carried over was a joint resolution (SJR 46) that would be the first step toward a constitutional amendment to permit a central state agency to assess property for taxes, in place of the current more specific requirement of central assessment of public service corporation property for purposes of the gross receipts tax. (A joint resolution did pass memorializing Congress to carefully consider the effect of any federal restructuring legislation on state and local tax revenues. (SJR 45.)) Another measure of significance to public utilities that was carried over would permit a court to award attorneys fees to property owners in condemnation actions where the amount awarded is greater then the amount that was offered. (HB 221.) That bill was referred to the House Courts of Justice Committee for re-consideration next year.
In addition to the measures that were carried over, a couple of bills that foreshadow the new competitive energy industry managed to get passed. One will allow the Commission to permit the construction of merchant plants, providing certain safeguards are satisfied. (HB 755.) A merchant plant is an electrical generating plant that is not in the rate base of a regulated public utility, and which therefore sells its power on the wholesale market or perhaps -- after the arrival of retail competition -- to retail customers. Another bill that passed will expand the opportunities for electric cooperatives to engage, directly and through subsidiaries, in non-regulated business activities. (SB 687.)
In the telecommunication field, a dispute between municipal governments and telecommunication service providers over the fees charged for use of public rights of way was resolved. (HB 957.) The law now will prescribe a mileage-based fee, which will be included as a separate item on customers' bills. A bill also passed which will prohibit localities from entering the telecommunications business. (HB 335.) That measure is discussed in greater depth in the accompanying article on developments in Local Government Law.
*article courtesy of Michael J. Quinan of Woods Rogers, quinan@woodsrogers.com.