Dominion Energy is backing legislation in Virginia that critics say would limit the State Corporation Commission’s ability to set its rates, while the utility has claimed it would save consumers millions.

Senate Bill 1265 also initially included language that would have made energy shopping by large commercial and industrial customers “nearly impossible,” according to the Retail Energy Supply Association, but that was removed as it advanced through a Senate subcommittee last week.

“As Virginians face historic inflation and rising energy costs, there is broad agreement that consumers need relief on their power bills,” a Dominion spokesperson said. “The proposed legislation would provide immediate and ongoing rate relief to our customers. It would provide strong state regulatory oversight. And it supports our mission of delivering reliable, safe, affordable and clean energy to our customers.”

The bill, sponsored by Sen. Richard L. Saslaw (D), cleared the Energy Subcommittee by a 4-1 vote, and it still must clear the full Commerce and Labor Committee before it can be voted on by the Senate. A House version of the legislation, HB 1770, has not moved forward yet.

Ever since Virginia decided against moving forward with retail restructuring back in 2007, state law has required the SCC to set Dominion’s rates based on a group of its investor-owned peers in the Southeast.

The bill would eliminate the SCC’s ability to remove the two highest returns on equity and two lowest returns from that peer group when setting Dominion’s rates. In return for that, it would shift some costs from riders to the firm’s base rates and make it go through rate cases every two years instead of every three.

Eliminating those riders would save $300 million annually effective July 1, which would save the average customer bill about $5 to $7 per month.

While the bill removed any language dealing with electric shoppers, at a Senate Energy Subcommittee hearing last week lawmakers indicated that they want to hear from the SCC on whether shopping shifts costs to remaining customers. That is an issue in California’s capped power market, where cost shifts from customers leaving utility service are covered through a mechanism called the power charge indifference adjustment.

“Our rates have been below the national average for some time,” Dominion Senior Vice President of Corporate Affairs Bill Murray said at last week’s subcommittee hearing. “This is a way for us to keep our rates below the national average, while having the certainty we need to raise a great deal of capital to build needed infrastructure, whether its generation, transmission or grid-hardening.”

The current peer group on which Dominion’s rates are based is made up of about 10 utilities in the Southeast, and Dominion has the lowest rate of return on equity among them, Murray said. That peer group has shrunk from about 20 when the legislature first set it up 15 years ago because of industry consolidation, so removing two highest returns and two lowest has a much bigger impact on Dominion’s rates than it usSBed to.

If Dominion wanted to offer customers $300 million in savings, the firm could do so on its own without any legislation, Southern Environmental Law Center’s Will Cleveland said at the hearing.

“This legislation does not let the Virginia commission set the rate of return for the Virginia monopoly utilities — that is our concern,” Cleveland said.

Walmart lobbyist Kenneth Hutcheson told the subcommittee the retailer appreciated the removal of changes to the state’s shopping rules, but he said the peer group should be expanded to include vertically integrated utilities from the Midwest and Gulf Coast.

Attorney Will Reisinger testified at the hearing on behalf of Clean Virginia, saying it would remove the ability of the SCC to independently set Dominion’s rates.

Eventually all the investments Dominion is making, including projects to meet the goals of the Virginia Clean Economy Act such as the 2.6-GW Coastal Virginia Offshore Wind project, would be impacted by any higher rates of return Dominion is able to get under the legislation, Reisinger said in an interview.

“It’s pretty extraordinary for a monopoly utility to try to set its own rate of return via legislation,” Reisinger told RTO Insider. “This is exactly what public utility commissions were designed to do — set the utility’s ROE at the correct level.”

The Dominion-backed legislation isn’t the only bill under consideration.

Senate Bill 1321, sponsored by Sen. Jennifer McClellan (D) and Sen. Creigh Deeds (D), and House Bill 1604, sponsored by Del. R. Lee Ware (R), would allow the SCC to lower a utility’s base rates if it finds they result in “unreasonable revenues in excess of the utility’s authorized rate of return.” The bill has also been assigned to the Senate subcommittee.