Walmart Stuck with Dominion and Appalachian Power, Setting up Potential Fight

Feb 26, 2019

Virginia regulators have denied Walmart's request to buy electricity generated by someone other than the state's two largest electric monopolies, setting up a potential legislative brawl between heavyweight business interests.

The State Corporate Commission issued an order Monday denying Walmart's request to stop buying electricity from Dominion Energy and Appalachian Power. Dominion is the state's largest electric utility and a major force in Virginia politics. Walmart is the state's second largest employer and one of the biggest companies in the world.

Credit Mark Turnauckas, Creative Commons

Virginia is one of a handful of states with electric monopolies where customers can also shop around under certain circumstances. Walmart wanted to aggregate its stores' total electric usage in order to meet the threshold needed under state law in order to buy its energy on the open market. Several other major companies have filed similar requests, including Target, Costco, and Albertsons, which now appear doomed after the Walmart ruling.

The commission said smaller customers would get stuck with larger bills if bigger companies like Walmart were allowed to shop around.

"Given the context of a decade of rising rates and the likelihood of even higher rates in the future, we do not find it consistent with the public interest for captive customers who do not have the legal ability to obtain lower rates — predominantly residential and small business — to suffer from the cost-shifting identified herein by enabling a large-demand customer to seek its power supply elsewhere," the SCC said.

Dominion spokesman Rayhan Daudani said the company was pleased with the ruling and added its rates were fair and competitive.

"We work closely with our business partners, including our large-demand customers, to continuously improve service and expand affordable clean energy options to meet their needs," he said.

Virginia's electric rates are generally competitive with similarly situated electric monopolies in the Southeast. But last year lawmakers restricted the SCC's ability to lower rates and have recently mandated other initiatives. Those include a multibillion dollar plans to clean up coal ash and bury transmission lines, that could lead to significant increases for Dominion customers.

Walmart declined to say what its next steps are. It could appeal the ruling to the Virginia Supreme Court.

Another venue could be at the General Assembly, where Walmart and other business interests could pressure lawmakers to pass legislation that makes it easier for regulators to lower Dominion's rates or shop around. Some legislation related to retail energy was filed during this year's legislative session; the real action has largely been on hold as both sides waited for the SCC's decision.

"This ruling heightens the importance of legislation to secure the right of consumers to access cleaner, and more affordable energy," said Harry Godfrey, executive director Virginia Advanced Energy Economy, a business coalition that advocates for greater energy choice.

Dominion has a long track record of getting utility-friendly legislation passed through the General Assembly. The SCC's annual report on energy prices last September noted that Dominion rates produced more than $300 million in excess revenues.

But many observers said Dominion's political muscles has atrophied in recent years, thanks in part to a 2017 blue wave that saw many more progressives elected to the state House.

The House passed a bill this year that would have posed a serious threat to Dominion's planned Atlantic Coast Pipeline natural gas project, despite heavy opposition from the company's small army of well-connected lobbyists. The bill failed in the Senate, but the fact that it made it so far was a sign to many that Dominion's political punch is not what it once was.

"Dominion is very concerned about their long-term influence over the legislative process," said retiring Democratic Del. David Toscano, a former House minority leader.

In its ruling in the Walmart case, the SCC told the company that if it thought its rates were too high "its potential recourse" could be found at the General Assembly.

Steve Haner, a lobbyist who has often tangled with Dominion, said the commission's message was clear.

"It's sending a signal to the business community, "Sorry, you can't escape, if you want to fix this, it's up to you.'" Haner said.