The attempt to rein in the power of Dominion, which serves utility markets in Idaho, North Carolina, Ohio, South Carolina, Utah, Virginia, West Virginia, and Wyoming, comes as politicians across the country are contemplating the challenges posed by monopoly power and privately held energy utilities.
DOMINION HISTORY can be traced to the great anti-trust battles of President Franklin Roosevelt's New Deal, when insurgent populist Democrats forced the breakup of monopoly transit and electric utilities across the country. When the bill to break up the "power trusts," known as the Wheeler-Rayburn Act, was proposed in 1935, it sparked the most expensive and bitter lobbying battles to date. Consultants hired by the utilities flooded Congress with a quarter million fake telegrams, claiming to show opposition to the legislation from ordinary Americans. The utility monopolies spent $5 million, or close to $100 million today, to try to defeat the reform. They were unsuccessful.
Though it's all but forgotten now, the corporation now known as Dominion played a central role in that fight. The Intercept reviewed Federal Trade Commission reports, congressional investigations, lobbying records, and news archives to piece together Dominion's sordid history over the course of the 20th century: first as part of a rapacious monopoly trust, through its subsequent breakup in the 1930s, and its more recent reemergence as a dominant political interest group.
The official company history of Dominion claims various corporate ancestors, including the Appomattox Trustees, a company chartered by Virginia following the Revolutionary War to improve the navigation of state waterways for the transport of rum and tobacco and early trolley companies that once formed the basis of Richmond's public transit system in the 19th century.
The true trajectory of the firm started in 1904, when a number of Virginia railway companies and power utilities ran into financial trouble. Sensing an opportunity, Frank Jay Gould, the son of infamous Gilded Era robber baron Jay Gould known perhaps best for his quote, "I can hire one half of the working class to kill the other half" used his family's fortune to buy up Virginia rail, power, and transit firms in receivership.
Gould established the new company, Virginia Railway and Power Company, in 1909, and appointed his cousin William Northrop as its first president. In 1925, an investor group led by a firm called Stone & Webster purchased the corporation from Gould, and began merging the company with power utilities throughout Virginia and North Carolina using a holding company based in Delaware. The investor group, using its Delaware holding company, not only controlled the firm first formed by Gould, which had been rebranded as Virginia Electric & Power Co., or VEPCO, but also electric utilities in Georgia, Florida, Louisiana, Texas, Wyoming, South Dakota, Nebraska, Colorado, Kansas, Missouri, Iowa, and Washington. In addition, the company owned toll roads and other corporate assets in Massachusetts and beyond.
The mergers came at a time when a small number of investors were gobbling huge swaths of the economy and exploiting the concentrated power to extract exorbitant utility rates from consumers. In Washington state, for instance, the same holding company that controlled VEPCO used its local utility, Puget Sound Traction, Light & Power, to lobby for laws that restricted public ownership of utilities.
The House Judiciary Committee's Subcommittee on the Study of Monopoly Power found that the Stone & Webster-controlled monopoly served no economic sense other than the enrichment of its investors, given its utility properties were not "interconnected or economically capable of interconnection with those of any other such company." The company, the report noted, had been administering utilities in New York City offices that were as far as 3,100 miles from their customers.
The monopoly-busting New Deal law, the Public Utility Holding Company Act of 1935 the official name of the Wheeler-Rayburn Act instructed the newly formed Securities and Exchange Commission to break up the holding companies, forcing electric utilities to divest from concentrated geographic areas and comply with an array of state and federal regulations designed to prevent economic exploitation of consumers.
The law splintered VEPCO from the Stone & Webster cartel. Though the company filed successful lawsuits with the federal government to merge with a smaller utility in Virginia, as well as to block competition from nonprofit utilities, the company remained a largely state-based utility through much of the 20th century. The rapid expansion of the firm did not return until the deregulation era of the 1990s, at which point the business had rebranded as Virginia Power and Dominion Energy.
"We know how to make money," Dominion's board chair told shareholders. "All we have to do is get the regulators off our back."
The company had long enjoyed influential status in state politics, counting the elite law firm Hunton & Williams (now known as Hunton Andrews Kurth LLP), at which Supreme Court Justice Lewis Powell, author of the "Powell Memo" charting business political strategy, served as partner, as its registered lobbying firm in Richmond. But the push to deregulate the utility started in Virginia in late 1997, when then-Dominion Board Chair Thomas Capps consolidated control of the company and pushed the legislature for a series of changes that rolled back state rules that required the company to reduce customer rates.
The company tapped state Delegate Kenneth Plum, D-Reston, whose largest lifetime donor has been Dominion, to sponsor legislation to deregulate the company. In 1998, Capps blamed low profits on state regulators, promising political changes that could result in higher returns. "We know how to make money," Capps told shareholders, according to the Richmond Times-Dispatch. "All we have to do is get the regulators off our back."
After deregulation passed in 1999, Dominion continued to push for a variety of laws to boost shareholder profits at the expense of ratepayers and taxpayers. In 2007, the company proposed a partial re-regulation, with a special clause that allowed the utility to charge consumers for new power plants with much larger guaranteed profits for Dominion. The company also won special legislation in 2013 to write off $400 million in storm-related costs and $300 million the following year to cut its own taxes using the partially completed North Anna power plant.
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