Wind power plan causes fiscal fallout
The Daily Progress | www.dailyprogress.com
A tangle of public policy issues is exposed in a scathing statement from a state agency on a newly approved wind power project by Dominion Energy Virginia.
The State Corporation Commission last week approved the pilot project for offshore wind power.
But it made clear that it had no power to do otherwise, due to a new law passed by the General Assembly that tied its hands.
The project is a terrible deal for customers, says the SCC. They will bear the costs for the $300 million project, it warns.
“The economic benefits … are speculative,” the SCC says, “whereas the risks and excessive costs are definite and will be borne by Dominion’s customers.”
By definition, a pilot project is something of an experiment.
“It appears that the SCC doesn’t want to embrace change,” countered Dominion spokesman David Botkins.
Until the General Assembly began chipping away at SCC power through individual laws, the agency had a clear and overriding purpose: to protect consumers in their unequal relationship with utility companies and other large businesses that provide vital services.
The premise for this authority is that some services – electricity among them – can be provided only by big companies that can conduct cost-efficient, large-scale operations. But these economic conditions also tend to give big companies an effective monopoly; competitors won’t risk entering the market because capital costs typically are high and the potential for profit is low.
Meanwhile, holding a monopoly gives companies an unfair advantage; they could raise prices outrageously, and consumers would have no ability to switch to a different provider for a vital service.
Enter the State Corporation Commission, with the power to regulate companies, including – traditionally – the ability to disapprove projects that it determined would raise consumer costs excessively or unwisely.
That power has now been curtailed by the legislature.
The SCC’s mandate centers on its fiduciary responsibility to consumers. In objecting to corporate decisions that could raise customer prices because of projects that are merely speculative, it is doing its job.
However, developing wind power and other alternative sources of energy has gained support from many Virginians, who see it as a way to reduce carbon pollution. If a corporation – Dominion or any other – is restricted from recouping its costs in trying new technologies, then innovation and progress in this arena will be stalled.
This dichotomy is at the heart of the problem, but of course it’s ultimately more complicated than that.
For one thing, not everyone endorses offshore wind projects for Virginia – not even all environmentalists, some of whom worry about the impact on marine life. For them, offshore wind is a dubious prospect regardless of any fiduciary concerns.
Yet fiduciary concerns remain at the heart of the SCC’s mandate and, therefore, its reaction to the Dominion wind power pilot. And they’re obviously important to customers, who will pay the costs and bear the risks.
URL to article: https://www.wind-watch.org/news/2018/11/07/wind-power-plan-causes-fiscal-fallout/