(The Center Square) – Many Virginia utility customers behind on their payments will have their debts forgiven through federal COVID-19 relief funding and excess money generated by Dominion Energy, if Gov. Ralph Northam keeps the current language in the budget bill.
All utility companies except Dominion Energy would be eligible immediately to access $100 million worth of federal COVID-19 relief funds. The budget bill language requires these utilities to use the funds to forgive utility debts for accounts that are at least 30 days behind on payments to the extent that the funding will cover it.
The federal COVID-19 relief funds would be allocated to the State Corporation Commission, which would be tasked with distributing the money.
Dominion Energy will be required to use about $127 million of its own excess money to forgive accounts that are at least 30 days behind on payments. In the past, excess money had been returned to customers.
After these payments are made, all utilities, including Dominion, would be eligible for any remaining funds to pay down accounts that are less than 30 days behind.
Dominion will be unable to raise rates immediately to offset these costs in 2021 because the company is not eligible to raise rates until 2024.
“We remain committed to helping our customers through this pandemic and support efforts in the Virginia General Assembly budget conference report on both forgiving past due bills and preventing customers from being disconnected for nonpayment,” Dominion Energy spokesperson Rayhan Daudani told The Center Square in a statement.
Stephen Haner, a senior fellow for state and local tax policy at the free-market Thomas Jefferson Institute for Public Policy, told The Center Square that Dominion, its stockholders and its customers will benefit from the company having excess funds, but the long-term effect on other utilities is unclear because the specific amount of unpaid bills is not known and the prohibition on utility shutoffs has been prolonged.
“Dominion and its customers are getting special treatment, mainly because it had a pool of cash to barter with,” Haner said. “But all of the utilities, in effect, have been promised that they will eventually be made whole, and their unpaid and uncollectible bills will be covered by rate hikes on their remaining customers. The utilities are the only businesses that the General Assembly protected from the financial damage of the COVID recession, and those Dominion customers who fell behind before August are the only customers who have had their debts just wiped out. This is a great benefit to those companies and their stockholders.”
Haner said the utility bailout benefits customers and totally protects utility companies.
The General Assembly sent the budget bill to Northam, who is likely to offer amendments on the bill and send it back to lawmakers.