RICHMOND — A law that opponents say allows Dominion Virginia Power to keep hundreds of millions in excess profit is being tested before the Supreme Court of Virginia.
Lawyers made oral arguments Friday on the 2015 law, which put a temporary freeze on the base electricity rates of Dominion Virginia Power and Appalachian Power Company.
In one corner: A group of utility customers who challenged the law and argue that the General Assembly violated the state Constitution in passing it. If the law is struck down, they say, every customer will receive a refund. In the other corner: The State Corporation Commission, the entity that regulates the energy monopolies and ruled that the law is constitutional, and Appalachian Power.
Joining the SCC, however, was an odd bedfellow: Democratic Attorney General Mark R. Herring's office. Although Herring opposed the law and his office calls it bad policy, he believes it's constitutional. Solicitor General Stuart A. Raphael from Herring's office argued for the law's constitutionality before the seven justices on Friday.
But because the attorney general also has a duty to represent consumers, former state Attorney General Andrew P. Miller called out Herring at a news conference after the arguments.
Miller said Herring had "decided to go over to the other side in this case" and told reporters to look at what he called large campaign donations to Herring from Dominion.
"When you have that kind of money being contributed to a candidate, there’s some reasonable expectation of some type of return," said Miller, who served as a Democrat in the 1970s and was joined Friday by former Attorney General Kenneth T. Cuccinelli, a Republican. "And I frankly think what you see today is an example of that type of return."
Miller and Cuccinelli said Herring could have used outside counsel to defend the law's constitutionality while still acting as a representative of the consumer. Miller endorsed Republican Mark Obenshain for attorney general in 2013. Obenshain lost to Herring, a Democrat.
Dominion has given Herring $114,500 since his time as a state senator, according to the Virginia Public Access Project. That includes a $10,000 campaign donation last month. Herring, who is seeking re-election, will face Republican lawyer John Adams in the November general election. Adams is a partner in McGuireWoods, which represents Dominion.
Herring did not respond Friday to a request for an interview, but spokesman Michael Kelly said Herring "has strongly opposed this law on policy grounds" and still does.
"If these gentlemen agree so strongly with Attorney General Herring that this is bad policy, we would have welcomed their support when we tried to make that case to the General Assembly," he wrote in an email.
Dominion is not an appellee in the case, but company spokesman David Botkins monitored the proceedings in the courtroom and the company filed a brief in support of the law.
The law in question was the most controversial of the 2015 legislative session after it was introduced by Sen. Frank W. Wagner, R-Virginia Beach, one of three Republicans now seeking the party's nomination for governor. The law temporarily put a moratorium on the SCC's ability to conduct biennial reviews of base electricity rates - about 60 percent of a residential customer bill.
Dominion is a public service corporation and because it has no competition it is regulated by the SCC, whose three commissioners are appointed by the General Assembly. The company is allowed to earn a certain amount of profit, but anything over the established amount must be returned to customers. Wagner's bill froze Dominion's rates in place until 2022 and stopped the SCC's ability to review Dominion's base rates.
Dominion's rationale in requesting the bill was financial uncertainty over the Obama administration's then-pending Clean Power Plan, which would have cut carbon emissions from power plants.
Gov. Terry McAuliffe's administration at first expressed concerns over the bill, but after meeting with Dominion CEO Tom Farrell and changes to the bill to promote solar energy, McAuliffe signed it. The Clean Power Plan was delayed in the courts and now with President Donald Trump in office the plan is dead. So the rationale for the bill - which even in 2015 was questioned by critics - is no longer an issue.
Several legislators this year asked McAuliffe to take action to undo the law. Although he said he agreed with them, he took no action.
Edward L. Petrini led the arguments for the consumers - the Old Dominion Committee for Fair Utility Rates.
As things stand, Dominion is expected to take in $300 million annually that should be returned to customers, Karen E. Torrent of Falls Church, one of the consumers, argued in court Friday. Dominion disputes that figure.
The SCC has ruled that the 2015 law is constitutional. Torrent told the Supreme Court the constitution, however, protects consumers and asked justices to do "what the SCC and attorney general have refused to do."