UPDATE, 3 pm EST Jan 23, 2024: The Virginia House Labor and Commerce Committee announced Tuesday morning that Sam Towell and Kelsey Bagot are likely to fill the SCC Judge vacancies, if confirmed by the General Assembly. 

Towell served as Virginia’s deputy general attorney for civil litigation, which includes the office’s consumer counsel, for almost five years, before joining Smithfield Foods as their associate general counsel. Towell represented consumer interests as deputy general attorney, advocating for rate cuts and refunds on behalf of Virginia’s electricity ratepayers.

The Virginia General Assembly will nominate candidates to fill the two vacancies on the three-member State Corporation Commission this week, according to senior Democratic legislators leading the appointment process. Dominion Energy contributed more than $1.7 million last year to the legislators who will ultimately decide who regulates the utility.

A political stalemate had left two long-time vacancies on the State Corporation Commission (SCC). Republicans, who controlled the House, and Democrats, who controlled the Senate, failed to agree on who should fill the vacancies and the process for doing so, resulting in Chairman Jehmal Hudson serving as the sole SCC judge for over a year. Democrats won a majority in the House last November, ending the stalemate and giving them control over the decision on who to appoint to the Commission.

The SCC is responsible for setting fair rates for consumers and exercising regulatory authority over Virginia’s monopoly electric utilities, like Dominion Energy and Appalachian Power, who collectively provide electricity to over two-thirds of households in the state. The SCC also regulates gas utilities, insurance, state-chartered financial institutions, securities, retail franchising and the Virginia Health Benefit Exchange.

Virginia is one of only two states that selects its utility regulators by legislative election. Governors appoint utility regulators in 38 states, and voters elect the regulators directly in another 10.

Dominion’s influence on the SCC Selection Process

Over 20 candidates applied to be considered to fill the SCC vacancies, Sen. Creigh Deeds, D-Charlottesville, Chair of the Senate Commerce and Labor Committee, told the Energy and Policy Institute (EPI). 

Deeds, along with Del. Jeion Ward, D-Hampton, Chair of the House Labor and Commerce Committee, are overseeing the process to fill the vacancies, which Deeds said he wants to be “as transparent as possible.” 

Each Chair organized a Judicial Nomination Panel to help narrow down the list of contenders to one finalist. The two finalists will then have a public confirmation hearing before being sworn into their new roles by the State Supreme Court. The ad-hoc process loosely follows the judicial selection process determined by Virginia’s Department of Legislative Services, but notably omits solicited public testimony of a candidate’s qualifications. 

In total, 9 members serve on the House or Senate Judicial Nomination Panel: Senators Lucas, Lucas, D-Portsmouth, Marsden, D-Burke, and Surovell, D-Alexandria, serve alongside Sen. Deeds, and Delegates King, D-Dumfries, Herring, D-Alexandria, Shin, D-Herndon, and Scott, D-Portsmouth, serve alongside Del. Ward.

All but two members of the nomination panels listed Dominion Energy as their top donor in 2023, according to the Virginia Public Access Project.

Dominion is historically one of the biggest political spenders in a state that has no limits on corporate contributions to campaigns, spending over $8,000,000 directly on candidates last year to maintain its influence in the General Assembly. Dominion’s contributions were spread across 94 candidates, seven of whom represented more than 20% of Dominion’s total political giving in 2023.

When asked if Dominion has exercised any influence over the selection outcome, Del. Ward told EPI, “Dominion Energy … [has] shown full respect for the SCC selection process by refraining from providing any input directly to me as the Chair.”

Dominion is known for using its political influence to shape legislative outcomes, illustrated by a series of bills that gave Dominion outsized power to raise electricity rates, skirt regulation, and earn excess profits. But a recent wave of successful utility reform legislation highlights a new generation of legislators committed to curtailing the utility’s excessive influence. A bill introduced last session to bump Dominion’s return on equity from 9.35% to 10.07%, costing customers an extra $4 billion, was initially rejected. Instead, the return on equity settled at 9.70% and base rate-setting authority was restored to the SCC, a power previously stripped from the commission in 2015 legislation.

Potential Contenders to Fill the SCC Vacancies

Of the more than 20 candidates, some are “non-lawyers, Virginia lawyers, [and] … people that [aren’t] licensed in Virginia” Sen. Deeds told EPI when describing candidates who applied to fill the SCC vacancies. Deeds and Ward said they hoped to nominate a qualified candidate that was a “good representation of Virginia,” was qualified to “manage an agency of 700 people,” and “has the ability to handle other issues” outside of energy policy, like “banking and insurance.” The eventual nominees are not required to meet any specific qualifications, as state law requires only one judge on the three-member SCC to be a lawyer, a requirement currently fulfilled by Chairman Jemal Hudson. 

Deeds and Ward both declined to reveal the top candidates being considered for the judicial vacancies, but multiple sources with knowledge of the appointment process told EPI that former state legislator Lynwood Lewis, Apex Clean Energy’s Hannah Coman, and NextEra Energy’s Kelsey Bagot are top contenders.

Lewis served in the Virginia General Assembly for nearly two decades, from 2004 to 2023. He wrote and carried the 2020 legislation in the Senate that entered Virginia into the Regional Greenhouse Gas Initiative, a cap-and-invest program designed to reduce electricity producers’ generated emissions. Governor Youngkin withdrew Virginia from RGGI at the end of last year, when the state’s three-year contract for participation also expired, a decision currently being challenged in court.

While in office, Lewis collected nearly $100,000 from Dominion and Appalachian Power and voted in favor of legislation that weakened the authority of the SCC, an agency that he’s now applying to oversee. 

In 2015, Lewis voted in favor of the 2015 Rate Freeze Bill (SB1349), legislation that Dominion successfully lobbied for, which froze base rates, but allowed rate increases to continue via riders while suspending biennial reviews of company profits by the SCC through 2022. The SCC later found that the law generated at least $365 million in utility over-earnings, according to a 2018 Commission report. In 2018, Lewis voted in favor of the Grid Transformation and Security Act (SB 966) that, among other things, eliminated the SCC’s ability to properly account for overcharges and refund ratepayers. Lewis voted against the 2020 Fair Energy Bills Act (HB1132), which would have restored power to the SCC and reversed limits set by the 2015 Rate Freeze legislation. 

Hannah Coman is the Senior Associate General Counsel at Apex Clean Energy, a clean energy developer which provides power to utilities, corporates, and the public sector under long-term power purchase agreements. Before joining Apex Clean Energy, she worked with the Southern Environmental Law Center, a nonprofit law firm, as an attorney, and intervened in SCC rulemaking proceedings on behalf of environmentals groups like Appalachian Voices. Coman served as Chair of Virginia’s Clean Energy Advisory Board from 2019-2022, helping to establish a pilot program for disbursing loans or rebates for the installation of solar energy infrastructure in low-income and moderate-income households through the "Low-to-Moderate Income Solar Loan and Rebate Fund". 

Kelsey Bagot is a Senior Attorney at NextEra Energy, the utility which is the subject of a Federal Election Commission complaint and a class action lawsuit accusing the company of defrauding investors for withholding material information related to the company’s political scandals. Prior to joining NextEra, Bagot served as Legal Advisor to Republican FERC Commissioner Mark Christie, who was previously a judge of the Virginia State Corporation Commission. While an Associate at Troutman Pepper Hamilton Sanders LLP, Bagot’s practice focused on representing electric and natural gas utilities in regulatory and rate case litigation proceedings before FERC. 

Once interviews conclude, the House and Senate Nomination Panel will deliberate and independently nominate one candidate to fulfill the judicial vacancy, who will go through a public confirmation hearing by the General Assembly, which is expected to happen later this week. 

Header image from the Virginia State Corporation Commission.

Posted by Shelby Green