Q&A: Dominion Energy, the Regional Greenhouse Gas Initiative and Virginia’s Push Toward Renewables – Inside Climate News

On the last day of July, the Virginia registrar formalized Republican Gov. Glenn Youngkin’s push to remove Virginia from the Regional Greenhouse Gas Initiative (RGGI), a market-based approach to limiting greenhouse gas emissions by the state’s power producers that funnels money toward climate mitigation projects across the Commonwealth. 

The state’s largest utility provider, Dominion Energy, originally opposed Virginia joining RGGI (pronounced reggie) and reiterated its opposition to the program in a public comment supporting Youngkin’s effort to undo it. 

Dominion claimed that a “linkage to RGGI would result in a financial burden to customers with no real mitigation of regional GHG emissions.” Lawyers, economists and conservationists in Virginia have pointed out several legal, economic and environmental justice flaws with that line of thinking. The same day the RGGI overhaul was published, the Southern Environmental Law Center initiated a legal challenge to block the effort.

This comes on the heels of what had been a watershed 2023 legislative session in Virginia. For the first time in decades, there was bipartisan support to reign in Dominion’s ability to set its own rates and craft energy policy. 

One of the principal architects of this legislation, John Chapman “Chap” Petersen, a gregarious, often bowtie-clad state Senator who had been introducing bills aimed at curtailing Dominion’s influence for decades, saw his political fortunes sour shortly after the legislative session concluded. In June, he was upset in the Democratic primary by Saddam Azlan Salim, a first-time candidate who ran to Petersen’s left. Petersen had upset some progressives in Virginia by opposing a gun-control bill in 2020. 

Inside Climate News spoke with Petersen about what the gains from this year’s general assembly, and the state’s pending exit from RGGI, mean for Dominion’s influence over the legislative process going forward.

The conversation has been edited for length and clarity.

You recently said you began taking on Dominion because it was intellectually challenging. How so?

Energy policy is very different from, say, bills about gun control or abortion—your standard social issues. It’s very complicated stuff because what you’re dealing with is an industry that is monopolistic by nature. You got to have one provider, typically, to make the investments to have the infrastructure so as to reach all of the various customers, for one. And then number two, you have this matrix of options, whether it’s coal, gas, renewables or hydro. All of that gets factored into the mix. And then, of course, the standard is that you want to provide the electricity at the lowest possible cost to the consumer. All of this is like doing a very complicated calculus problem. You’ve got all of these various inputs that you’re trying to get to an output. 

The state has a role in trying to prioritize certain things. One of my priorities was having more renewables, for example. The other priority was making sure that the State Corporation Commission (SCC) kept jurisdiction over Dominion so they could limit the return on equity, because if we don’t limit the return on equity, they can charge whatever they want. They’re the only game in town. 

So it’s intellectually challenging in the sense that we need to have electricity, we need to have an infrastructure that provides this vital resource, it requires billions of dollars in investment—particularly in order to reach all Virginians, people in rural areas, things like that—and at the end of the day, it’s got to make money, right? These are private companies—they aren’t going to stay in business if they can’t make money.

And is that intellectual challenge what got you into politics?

Well, no. I got into politics because I enjoy representing people. As an attorney, I had represented people in the energy industry. Because of that, I was sort of drawn into the whole Dominion issue. I had represented clients in these regulatory proceedings—which are complicated—and I understood what was going on, that these companies are seeking a return on equity. They want to have a safe investment portfolio. They obviously want to boost their return on equity, and they don’t want to take on risk if they can avoid it. And, where possible, they want to avoid regulatory oversight because that allows them to keep excess earnings. I just explained this to you in five minutes; there are people that have been in the legislature for 20 years that don’t get this.

Why is that?

This is complicated stuff. Half the people in the General Assembly may not know what I’m talking about. Not everybody goes to business school and the legislature is a democratic institution, and some people have business experience and some people don’t. These bills are like 40 or 50 pages of very dense text. I read it and sometimes I’m like what the hell does that mean? And I do this for a living! I’m not trying to make it seem like I’m smarter, because I’m not. I’m a pretty average guy in terms of intelligence. It’s just because I’ve been involved in this business for a quarter of a century I get it a little bit better than most.

I read your Richmond Times-Dispatch piece from earlier this year. One of the points that you made was about complexity. Why is it advantageous for Dominion to make all these bills really complex?

They can write it in a way that is more explicit. But by keeping it so complicated, the average delegate or senator who reads it will think ‘This is crazy,’ and just give up. Which means that a lobbyist will come in and say, ‘Oh, what this means is rates aren’t going to go up, or rates are limited, or we’re going to have more renewables’—or whatever people want to hear because at the end of the day, nobody can understand this stuff! I feel like it’s made intentionally complicated so that people are dependent on lobbyists to explain it to them.

And is that the main reason why they’ve seen so many policy wins in the past?

I posit two reasons. One is the donations—which gives them access to everybody. Nothing builds trust like a $10,000 donation to your campaign. And two, this is complicated stuff—and by the way, I’ve got a lot of good friends that lobby for Dominion. They’re good people, and they’ve got a great client, and you know, maybe I’m jealous, OK? Cause I’m an attorney. It’s complicated stuff. And these lobbyists know their audience. They explain it in a way that sounds very non-threatening.

Dominion’s very good with customer service. I remember years ago when we got hit with the derecho [a fast-moving, destructive 2012 weather event] which kind of knocked out all of our power lines, I had constituents that had disabled children, and I had constituents that are elderly and they were great about if I made a call, they were over there. So their customer service is exemplary. But to the extent they make legislation complex, lawmakers have to rely on lobbyists. And those lobbyists are going to run right over you.

Have they tried to make a run at you?

I think early in my career, to be honest, I was a little bit of a back-bencher. I wasn’t in the mix. I might vote against something, or speak against it, but I wasn’t moving the needle. Later in my career, I was a little bit more senior and I had a pretty good reputation for crossing the aisle and being more independent, for lack of a better term—so I was able to to move the needle a little bit more. Eventually, you had Michael Bills and Clean Virginia come in and then suddenly it was an economic incentive to not vote with Dominion.

You mentioned that the SCC has clawed back a little bit of its oversight over Dominion. How has the relationship between Dominion and the general assembly changed?

2023 was the first year—and I’ve been chasing this dragon for literally a decade, at least—that we had a Dominion Energy bill that was not written by Dominion. In other words, the bill was put in place by a coalition of groups, but mainly the Attorney General’s Office. It’s a regulatory bill which restores regulatory powers to the SCC [and shortened the amount of time between the company’s rate audits], and it’s not drafted by Dominion. That just sounds obvious. That’s probably how it is in most states, but in this state that’s revelatory.

The final version of that bill was basically drafted by the Attorney General’s Office to be, for a lack of a better term, a “pro-consumer” bill. And I’m not saying that’s my opinion—that was the opinion of Clean Virginia, pretty much everybody that was tracking this issue. And I know some people were not crazy that, you know, the environmental protection or the environmental mandates were not as strong, because the attorney general is a Republican. But having said all that, the bottom line is it was not a Dominion bill. We can still have debates, by the way, as to whether or not we should have more renewables or less renewables. But the bill was not drafted to benefit Dominion, and that was unique.

What is the significance of that moving forward?

What that shows is Dominion no longer controls the General Assembly. That’s not to say they don’t have allies here and there, but back in the old days, they’d just come in and submit a bill and they pretty much got whatever they wanted. The whole rate freeze fiasco back in 2015 [when the company helped pass a law that froze its rate and shielded it from regulatory oversight, leading to overpayments by consumers], that cost a couple billion dollars, maybe $3 billion, some crazy number in over payments. [Dominion ultimately paid $130 million in rebates to consumers].

I want to talk about Virginia’s pending exit from RGGI, because it seems like that is a counterpoint to the idea that Dominion doesn’t hold sway over the legislature. 

I’m not sure that RGGI was necessarily a detriment to Dominion. And here’s why: RGGI is a tax that’s applied on any power plant that produces carbon. That tax will be passed along to the consumer. It is not going to get eaten by Dominion. They just pass it along. Maybe the compliance costs are a hassle for them. I don’t know. I never had anyone at Dominion come and talk to me about RGGI. I think RGGI was more the Republicans pushing back against climate change, environmentalism and green energy. That’s really what’s going on with RGGI.

By the way, I’m a proponent of RGGI. It makes sense. We needed to allocate those costs. But I don’t get the sense that it was really a Dominion-driven thing. I mean, maybe I’m wrong. Maybe it was out there. Dominion doesn’t talk to me necessarily.

On Virginia’s regulatory town hall website, there were several public comments and Dominion made one in support of exiting RGGI. Like you said, they’re not on the hook for RGGI’s costs. But publicly they’re in support of exiting RGGI all the same and it seems like they’re getting their way.

Dominion is probably doing whatever they can to get in the good graces of the administration. So it may be the tail wagging the dog.

Then how would you characterize their commitment to moving to renewable energy?

I think they’re committed to it as long as it helps them make money. They’re going to do whatever makes sense for their shareholders. And so if they do get an incentive payment for renewables, they’ll follow it. Obviously if they get mandated to use renewables, they have to follow it. I don’t think they’re crazy about the Clean Economy Act, which put down a lot of mandates on them [The Virginia Clean Economy Act, passed by the general assembly in 2020, set gradually increasing standards for Dominion’s renewable energy portfolio, which must make up 100 percent of their energy generation by 2045 and beyond]. 

I don’t think they have a huge philosophical problem with renewables per se; but what they have a philosophical problem with is having a return on equity that’s lower, say, than the national average, or having more regulatory oversight than they want. They want as little as possible because, again, they have a monopoly, and that gives them the chance to maximize profits. It hurts consumers because they have to pay a higher price.

Democrats control the Senate this year and Republicans control the Governor’s chambers and the House. Even with a split legislature, how much of a threat does the Youngkin administration pose to the state’s shift to renewables and clean energy?

If Democrats lose the Senate, then you’re going to see a lot of things get repealed. The electric car mandate will probably get repealed. The Clean Energy Act will probably get repealed. Certainly RGGI will get repealed. These will all come off the books.

What did your primary teach you about the state of Democratic politics in Virginia?

Well, it’s a lot more narrow minded and doctrinal than it was back when I got started. I had a reputation of being more of an independent thinker. I led the fight to reopen schools, I ended the mask mandate. I did a lot of things during COVID that were sort of swimming upstream against the party, but I did it because it was the right thing to do. In terms of my election, it was not a big tent result. It was a result that was very doctrinal and more activist-oriented than people-oriented, in my opinion.

In your ideal world, what do you see as the next legislative step in the effort to hold Dominion accountable to taxpayers and other consumers? 

I think the end goal is, honestly—and this is probably overly ambitious—but if I was the governor or if I was in a position to make this happen, I would like to see the energy industry, to the extent it can be, disaggregated. In other words, to have competition; to have a more open, transparent process; to have more producers come to the fore. If you could have smaller five, 10, 20, 25 megawatt sites, you know, maybe a farm, maybe the roof of a school building to decentralize and desegregate the energy industry a little bit, I think that would be good. It would democratize it; also, you wouldn’t have as much need for transmission lines. There’s just all sorts of things that you can do, and to some extent has happened in, say, Europe and other places. I just think that the way we provide and transmit energy—we can do better. We tried to disaggregate the model in the 1990s and it fell apart. But I think our technology is so much further ahead than it was then.

Is that possible with a split legislature?

Energy is the one issue where I really do feel like Republicans and Democrats can work together, because I think they’re kind of both right. Democrats want to put an emphasis on renewables, Republicans want to put an emphasis on free markets, or what have you—I think they’re both right. I think you can get there. I really do. 

Does the average voter in Virginia grasp why this is important?

I was the face of this movement, and you know, I went from being a voice in the wilderness to actually pulling together a statewide coalition and making this happen to six months later getting defeated in a primary because I didn’t have the correct vote on some gun control bill. A prophet goes without honor in his own country. 

It is what it is. I’m not bitter about it because I’m not financially reliant on being a state senator. As important as the issue is, it’s not one that most voters really grasp. It’s complicated stuff. In certain parts of the state, yes, it can be because an electric bill can be a large part of somebody’s disposable income. In northern Virginia, not so much. At the end of the day, it’s very important stuff that we do in the assembly, but it doesn’t move the needle for most voters. It certainly didn’t move the needle for my voters.

On the last day of July, the Virginia registrar formalized Republican Gov. Glenn Youngkin’s push to remove Virginia from the Regional Greenhouse Gas Initiative (RGGI), a market-based approach to limiting greenhouse gas emissions by the state’s power producers that funnels money toward climate mitigation projects across the Commonwealth. 

The state’s largest utility provider, Dominion Energy, originally opposed Virginia joining RGGI (pronounced reggie) and reiterated its opposition to the program in a public comment supporting Youngkin’s effort to undo it. 

Dominion claimed that a “linkage to RGGI would result in a financial burden to customers with no real mitigation of regional GHG emissions.” Lawyers, economists and conservationists in Virginia have pointed out several legal, economic and environmental justice flaws with that line of thinking. The same day the RGGI overhaul was published, the Southern Environmental Law Center initiated a legal challenge to block the effort.

This comes on the heels of what had been a watershed 2023 legislative session in Virginia. For the first time in decades, there was bipartisan support to reign in Dominion’s ability to set its own rates and craft energy policy. 

One of the principal architects of this legislation, John Chapman “Chap” Petersen, a gregarious, often bowtie-clad state Senator who had been introducing bills aimed at curtailing Dominion’s influence for decades, saw his political fortunes sour shortly after the legislative session concluded. In June, he was upset in the Democratic primary by Saddam Azlan Salim, a first-time candidate who ran to Petersen’s left. Petersen had upset some progressives in Virginia by opposing a gun-control bill in 2020. 

Inside Climate News spoke with Petersen about what the gains from this year’s general assembly, and the state’s pending exit from RGGI, mean for Dominion’s influence over the legislative process going forward.

The conversation has been edited for length and clarity.

You recently said you began taking on Dominion because it was intellectually challenging. How so?

Energy policy is very different from, say, bills about gun control or abortion—your standard social issues. It’s very complicated stuff because what you’re dealing with is an industry that is monopolistic by nature. You got to have one provider, typically, to make the investments to have the infrastructure so as to reach all of the various customers, for one. And then number two, you have this matrix of options, whether it’s coal, gas, renewables or hydro. All of that gets factored into the mix. And then, of course, the standard is that you want to provide the electricity at the lowest possible cost to the consumer. All of this is like doing a very complicated calculus problem. You’ve got all of these various inputs that you’re trying to get to an output. 

The state has a role in trying to prioritize certain things. One of my priorities was having more renewables, for example. The other priority was making sure that the State Corporation Commission (SCC) kept jurisdiction over Dominion so they could limit the return on equity, because if we don’t limit the return on equity, they can charge whatever they want. They’re the only game in town. 

So it’s intellectually challenging in the sense that we need to have electricity, we need to have an infrastructure that provides this vital resource, it requires billions of dollars in investment—particularly in order to reach all Virginians, people in rural areas, things like that—and at the end of the day, it’s got to make money, right? These are private companies—they aren’t going to stay in business if they can’t make money.

And is that intellectual challenge what got you into politics?

Well, no. I got into politics because I enjoy representing people. As an attorney, I had represented people in the energy industry. Because of that, I was sort of drawn into the whole Dominion issue. I had represented clients in these regulatory proceedings—which are complicated—and I understood what was going on, that these companies are seeking a return on equity. They want to have a safe investment portfolio. They obviously want to boost their return on equity, and they don’t want to take on risk if they can avoid it. And, where possible, they want to avoid regulatory oversight because that allows them to keep excess earnings. I just explained this to you in five minutes; there are people that have been in the legislature for 20 years that don’t get this.

Why is that?

This is complicated stuff. Half the people in the General Assembly may not know what I’m talking about. Not everybody goes to business school and the legislature is a democratic institution, and some people have business experience and some people don’t. These bills are like 40 or 50 pages of very dense text. I read it and sometimes I’m like what the hell does that mean? And I do this for a living! I’m not trying to make it seem like I’m smarter, because I’m not. I’m a pretty average guy in terms of intelligence. It’s just because I’ve been involved in this business for a quarter of a century I get it a little bit better than most.

I read your Richmond Times-Dispatch piece from earlier this year. One of the points that you made was about complexity. Why is it advantageous for Dominion to make all these bills really complex?

They can write it in a way that is more explicit. But by keeping it so complicated, the average delegate or senator who reads it will think ‘This is crazy,’ and just give up. Which means that a lobbyist will come in and say, ‘Oh, what this means is rates aren’t going to go up, or rates are limited, or we’re going to have more renewables’—or whatever people want to hear because at the end of the day, nobody can understand this stuff! I feel like it’s made intentionally complicated so that people are dependent on lobbyists to explain it to them.

And is that the main reason why they’ve seen so many policy wins in the past?

I posit two reasons. One is the donations—which gives them access to everybody. Nothing builds trust like a $10,000 donation to your campaign. And two, this is complicated stuff—and by the way, I’ve got a lot of good friends that lobby for Dominion. They’re good people, and they’ve got a great client, and you know, maybe I’m jealous, OK? Cause I’m an attorney. It’s complicated stuff. And these lobbyists know their audience. They explain it in a way that sounds very non-threatening.

Dominion’s very good with customer service. I remember years ago when we got hit with the derecho [a fast-moving, destructive 2012 weather event] which kind of knocked out all of our power lines, I had constituents that had disabled children, and I had constituents that are elderly and they were great about if I made a call, they were over there. So their customer service is exemplary. But to the extent they make legislation complex, lawmakers have to rely on lobbyists. And those lobbyists are going to run right over you.

Have they tried to make a run at you?

I think early in my career, to be honest, I was a little bit of a back-bencher. I wasn’t in the mix. I might vote against something, or speak against it, but I wasn’t moving the needle. Later in my career, I was a little bit more senior and I had a pretty good reputation for crossing the aisle and being more independent, for lack of a better term—so I was able to to move the needle a little bit more. Eventually, you had Michael Bills and Clean Virginia come in and then suddenly it was an economic incentive to not vote with Dominion.

You mentioned that the SCC has clawed back a little bit of its oversight over Dominion. How has the relationship between Dominion and the general assembly changed?

2023 was the first year—and I’ve been chasing this dragon for literally a decade, at least—that we had a Dominion Energy bill that was not written by Dominion. In other words, the bill was put in place by a coalition of groups, but mainly the Attorney General’s Office. It’s a regulatory bill which restores regulatory powers to the SCC [and shortened the amount of time between the company’s rate audits], and it’s not drafted by Dominion. That just sounds obvious. That’s probably how it is in most states, but in this state that’s revelatory.

The final version of that bill was basically drafted by the Attorney General’s Office to be, for a lack of a better term, a “pro-consumer” bill. And I’m not saying that’s my opinion—that was the opinion of Clean Virginia, pretty much everybody that was tracking this issue. And I know some people were not crazy that, you know, the environmental protection or the environmental mandates were not as strong, because the attorney general is a Republican. But having said all that, the bottom line is it was not a Dominion bill. We can still have debates, by the way, as to whether or not we should have more renewables or less renewables. But the bill was not drafted to benefit Dominion, and that was unique.

What is the significance of that moving forward?

What that shows is Dominion no longer controls the General Assembly. That’s not to say they don’t have allies here and there, but back in the old days, they’d just come in and submit a bill and they pretty much got whatever they wanted. The whole rate freeze fiasco back in 2015 [when the company helped pass a law that froze its rate and shielded it from regulatory oversight, leading to overpayments by consumers], that cost a couple billion dollars, maybe $3 billion, some crazy number in over payments. [Dominion ultimately paid $130 million in rebates to consumers].

I want to talk about Virginia’s pending exit from RGGI, because it seems like that is a counterpoint to the idea that Dominion doesn’t hold sway over the legislature. 

I’m not sure that RGGI was necessarily a detriment to Dominion. And here’s why: RGGI is a tax that’s applied on any power plant that produces carbon. That tax will be passed along to the consumer. It is not going to get eaten by Dominion. They just pass it along. Maybe the compliance costs are a hassle for them. I don’t know. I never had anyone at Dominion come and talk to me about RGGI. I think RGGI was more the Republicans pushing back against climate change, environmentalism and green energy. That’s really what’s going on with RGGI.

By the way, I’m a proponent of RGGI. It makes sense. We needed to allocate those costs. But I don’t get the sense that it was really a Dominion-driven thing. I mean, maybe I’m wrong. Maybe it was out there. Dominion doesn’t talk to me necessarily.

On Virginia’s regulatory town hall website, there were several public comments and Dominion made one in support of exiting RGGI. Like you said, they’re not on the hook for RGGI’s costs. But publicly they’re in support of exiting RGGI all the same and it seems like they’re getting their way.

Dominion is probably doing whatever they can to get in the good graces of the administration. So it may be the tail wagging the dog.

Then how would you characterize their commitment to moving to renewable energy?

I think they’re committed to it as long as it helps them make money. They’re going to do whatever makes sense for their shareholders. And so if they do get an incentive payment for renewables, they’ll follow it. Obviously if they get mandated to use renewables, they have to follow it. I don’t think they’re crazy about the Clean Economy Act, which put down a lot of mandates on them [The Virginia Clean Economy Act, passed by the general assembly in 2020, set gradually increasing standards for Dominion’s renewable energy portfolio, which must make up 100 percent of their energy generation by 2045 and beyond]. 

I don’t think they have a huge philosophical problem with renewables per se; but what they have a philosophical problem with is having a return on equity that’s lower, say, than the national average, or having more regulatory oversight than they want. They want as little as possible because, again, they have a monopoly, and that gives them the chance to maximize profits. It hurts consumers because they have to pay a higher price.

Democrats control the Senate this year and Republicans control the Governor’s chambers and the House. Even with a split legislature, how much of a threat does the Youngkin administration pose to the state’s shift to renewables and clean energy?

If Democrats lose the Senate, then you’re going to see a lot of things get repealed. The electric car mandate will probably get repealed. The Clean Energy Act will probably get repealed. Certainly RGGI will get repealed. These will all come off the books.

What did your primary teach you about the state of Democratic politics in Virginia?

Well, it’s a lot more narrow minded and doctrinal than it was back when I got started. I had a reputation of being more of an independent thinker. I led the fight to reopen schools, I ended the mask mandate. I did a lot of things during COVID that were sort of swimming upstream against the party, but I did it because it was the right thing to do. In terms of my election, it was not a big tent result. It was a result that was very doctrinal and more activist-oriented than people-oriented, in my opinion.

In your ideal world, what do you see as the next legislative step in the effort to hold Dominion accountable to taxpayers and other consumers? 

I think the end goal is, honestly—and this is probably overly ambitious—but if I was the governor or if I was in a position to make this happen, I would like to see the energy industry, to the extent it can be, disaggregated. In other words, to have competition; to have a more open, transparent process; to have more producers come to the fore. If you could have smaller five, 10, 20, 25 megawatt sites, you know, maybe a farm, maybe the roof of a school building to decentralize and desegregate the energy industry a little bit, I think that would be good. It would democratize it; also, you wouldn’t have as much need for transmission lines. There’s just all sorts of things that you can do, and to some extent has happened in, say, Europe and other places. I just think that the way we provide and transmit energy—we can do better. We tried to disaggregate the model in the 1990s and it fell apart. But I think our technology is so much further ahead than it was then.

Is that possible with a split legislature?

Energy is the one issue where I really do feel like Republicans and Democrats can work together, because I think they’re kind of both right. Democrats want to put an emphasis on renewables, Republicans want to put an emphasis on free markets, or what have you—I think they’re both right. I think you can get there. I really do. 

Does the average voter in Virginia grasp why this is important?

I was the face of this movement, and you know, I went from being a voice in the wilderness to actually pulling together a statewide coalition and making this happen to six months later getting defeated in a primary because I didn’t have the correct vote on some gun control bill. A prophet goes without honor in his own country. 

It is what it is. I’m not bitter about it because I’m not financially reliant on being a state senator. As important as the issue is, it’s not one that most voters really grasp. It’s complicated stuff. In certain parts of the state, yes, it can be because an electric bill can be a large part of somebody’s disposable income. In northern Virginia, not so much. At the end of the day, it’s very important stuff that we do in the assembly, but it doesn’t move the needle for most voters. It certainly didn’t move the needle for my voters.