Tommy Denton

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Opposing sides in the return to regulated electric utilities in Virginia could have it worse: The state could be dealing with the issue the same way as Venezuela President Hugo Chavez.

Chavez last week announced that his government would effectively nationalize that country's largest private electricity company by buying a controlling stake in the U.S.-owned Electricidad de Caracas for $739 million.

Paul Hanrahan, president and chief executive of Virginia-based AES Corp., signed the agreement at a ceremony in the presidential palace to transfer the company's 82 percent stake in the utility.

Hanrahan conceded that the sale had not exactly been in AES plans and that the parting was consummated "with a heavy heart." But then, $739 million was better than the customary amount generally available in Latin American nationalization "acquisitions."

In other words, AES executives -- despite having purchased the firm's stake in the utility in 2000 for $1.7 billion and having invested an additional $600 million in the company since then -- can recognize a loss-cutting opportunity when they see one.

Back in Richmond, utility giant Dominion Power has been urging an industry-favorable version of legislation allowing its monopoly operations to slip around, through and beyond the accountability-enforcing hand of the state -- a sort of reverse Hugoism.

For decades, the State Corporation Commission oversaw an admirably reliable, efficient and equitable statewide system of electricity generation and distribution. That was before the ill-fated experiment with deregulation beginning in the late 1990s, which has proved to be a nationwide disaster for customers bludgeoned by soaring rate increases.

Now that the "restructuring" has failed the promise of the marketplace to work its miracles, utilities have sought to achieve a new order agreeable to their executives and stockholders. Both houses of the Virginia General Assembly have passed bills moving into a modified status of regulation.

Neither recognizes the need for greater oversight, not less, by the SCC to secure the essential public policy objectives of reliable, efficient service at equitable prices. That includes a predictable, adequate and assured return on the utilities' investment as a means of creating sufficient capacity to serve the state adequately.

Unfortunately, most members of the General Assembly are accepting the pleadings of the industry that it should be spared intrusions into its earnings so that it can build the new plants and other infrastructure to serve the growing needs of the state.

In other words, the industry and its legislative benefactors effectively argue -- though with greater subtlety -- that utilities should be able to charge whatever they right well please.

Lawmakers should take such pleadings with a whole block of salt lick.

As reported Feb. 6 in The Wall Street Journal -- not exactly Pravda or the People's Daily -- utilities already are "significantly increasing" their investments in adding power lines to the national electricity grid, not only because of strong industry earnings and an abundance of capital but also because the earning potential on those investments is enormous.

"The nation is in the early stage of a major build-out," the national newspaper reported, "that will make transmission a more-important part of many companies' earnings, reaping returns of 11 percent to 14 percent on equity."

In the February edition of the Public Utility Fortnightly, Daniel I. Blanchard wrote, "The past few years have seen an amazing rise in the amount of capital available for investment in the global-power sector. Banks, institutional investors and project financiers have relaxed financial performance covenants and borrowing base formulas across every major geographic market."

Those references mean that utilities already have huge sums of capital available to them based on current and future earnings, and already are investing in power lines because they offer enormous potential for profitability by removing costly grid choke points, reducing the need for marginal new power plants and opening access to renewable energy sources.

The power companies, in short, don't need lawmakers to write them a "gouge-the-customers" pass that impedes the SCC from minding the store, that is, exercising its proven expertise in protecting the larger public interest from the inefficiencies and inequities of utility monopolies.

Virginians should remind their representatives that it is the public's store that needs minding, not the utilities'.

Denton's column appears in the Sunday and Tuesday editions of The Roanoke Times.