EPSA, PJM Power Providers welcome Virginia Attorney General’s review of 2007 Re-Regulation Act

WASHINGTON, D.C. – The Electric Power Supply Association (EPSA) and the PJM Power Providers Group (P3) this week jointly responded to Virginia Attorney General Kenneth T. Cuccinelli’s July 19, 2012, questionnaire on the effectiveness of revenue enhancements, known as “ROE adders,” offered to the state’s regulated electric utilities under Virginia’s 2007 Electric Utility Regulation Act.

In a letter signed by EPSA President & CEO John E. Shelk and P3 President Glen Thomas, EPSA and P3 “commend the Office of the Attorney General for undertaking this important review of the 2007 Re-Regulation Act to shed light on how Virginia residents currently pay for electricity and explore opportunities to provide the Commonwealth’s consumers with lower cost power.”

While the Attorney General’s questionnaire poses detailed questions regarding specific incentives and ROE adders available to Virginia utilities, the joint letter from EPSA and P3 focuses on how greater participation in the PJM Interconnection’s regional wholesale power markets can benefit consumers. The letter quotes from the 2003 application to join PJM from Virginia’s largest regulated utility, Dominion Virginia Power, on the benefits of participation in the regional PJM market.

In commenting on the ROE adders that are at the heart of the Attorney General’s questionnaire, EPSA and P3 state that “These ‘adders’ can increase an electric utility’s authorized return on equity, thus skewing the utility’s preference toward self-building more expensive generation to the detriment of Virginia’s consumers when less costly alternatives are available to help the state’s economy.”

The EPSA and P3 joint letter recommends reforming the 2007 Re-Regulation Act to rely on competitive procurement and competitive market purchases. The letter concludes by asking the Attorney General to request an explanation from Dominion as to how it justifies its role as a significant competitive retail and wholesale supplier in other states while blocking access to competitive market benefits for Virginia consumers.