A telecom bill could keep the State Corporation Commission from getting rate-of-return information from electric utilities.
Ward Armstrong on Monday, February 21st, 2011 in a House floor speech.
Ward Armstrong says the telecom bill could hurt electric utility regulation
House Minority Leader Ward Armstrong has been battling with Virginia’s largest electric utilities for more than a year.
During the last week of the recently-concluded General Assembly session, that fight spilled into the debate on a telecommunications bill. Armstrong, D-Henry, was irked by several provisions in the legislation designed to modernize regulation as the state moves from a monopoly utility system to a new environment with many competitors.
Armstrong, who is exploring a run for statewide office in 2013, charged in a fiery floor speech on Feb. 21 that the bill would allow phone companies to refuse to run new landlines if there was an alternative for customers, such as using cell phone service. He also railed that the State Corporation Commission was worried the legislation could hinder its ability to regulate electric utilities.
Although the bill was approved by the General Assembly and is now on Gov. Bob McDonnell’s desk, the acrimony did not die. Several Republicans publicly accused Armstrong of spreading false information on the House floor. Armstrong, in return, defended his remarks.
So we looked at both of Armstrong’s charges.
Armstrong, in thundering floor speech, compared the regulation bill to a ticking time bomb.
"Let me quote the SCC report. ‘If this legislation, SB 1368, would limit such record keeping only to companies required to file rate of return statements annually, this could adversely impact the commission’s ability to get necessary rate of return information from electric utilities such as Dominion Virginia Power and Appalachian Power.’
"Where did that come from?" he demanded, "Where did that little nugget appear, that we’re going to allow Dominion and Appalachian not to submit rate of return information?"
The SCC regulates Virginia’s public utilities, including electric companies and certain segments of the telephone industry. The report Armstrong quoted was prepared by the SCC’s Division of Communications and released Jan. 24.
As Armstrong said, regulators initially had concerns about rate of return language. Electric utility regulation is complicated, but the SCC explains it this way: Regulated companies like ApCo and Dominion are allowed to "recover through their rates their ‘reasonable and prudent’ operating expenses, plus a ‘fair’ rate of return (profit) on their ‘rate base,’ which is the value of their capital investment in things like generating stations and the distribution grid."
Ensuring a fair rate of return requires lots of information on expenses, investments and other activities at the utilities, so there are rules ensuring the electric companies keep the detailed records needed by regulators. The SCC initially worried this law would undermine those rules.
So the SCC brought its concerns to the House Committee on Commerce and Labor, where the bill was being debated. The panel amended the bill on Feb. 3 to state: "All public utilities doing business in the Commonwealth that file rate of return statements shall ... maintain all records necessary to prepare and submit annually a rate of return statement."
William Irby, director of the SCC’s Division of Communications, told us the amendment satisfied his department’s concerns. "Rate of return is not affected by this bill," he said.
Armstrong’s speech pointing to the SCC’s concerns came on Feb. 21 -- almost three weeks after the concerns he was citing had been addressed.
Claire Wilker, Armstrong’s chief of staff, said her boss first learned about the change after his floor speech. She said nobody told Armstrong that the SCC’s concerns had been addressed in committee and that corrections had been made.
"We were pleased to find out that rate of return had been corrected," she said. "That’s a positive."
But Armstrong, speaking the day after he was supposedly corrected, said "I don’t make any apologies when I stand up for the people of my district and for the people of this state."
He also said he would not apologize for sending out an e-mail that repeated the incorrect information on electric utilities.
Let’s review the record and put this debate to rest.
Ward Armstrong told the entire House of Delegates that a telecom bill could undo important regulations on electric utilities. And though he cited a report from the SCC, he spoke on the bill nearly three weeks after the regulatory body’s concerns about the issue were addressed by a House Committee.
This is the second time during the 2011 session Armstrong has used faulty or outdated information during floor speeches about electric utilities. On the last occasion, regarding incorrectly stated utility rate increases, we gave him the benefit of the doubt because the error involved data sent by the SCC to Armstrong.
There are no excuses this time around. Any delegate speaking about a bill on the House floor should know what the legislation says, especially when changes occurred nearly three weeks before his remarks.
We rate Armstrong’s statement False.