McAuliffe Reverses, Now Opposes Electric Rate Freeze

Governor Terry McAuliffe said yesterday that he supports legislation that would cancel the freeze in base electric rates on Dominion Virginia Power and Appalachian Power if President Trump kills the Clean Power Plan. The endorsement came a little late for state Sen. J. Chapman Petersen, D-Fairfax City, whose bill to roll back the freeze was killed in a Senate committee in January in a 12 to 2 vote.

Taxpayers “are entitled to the lowest, most efficient rate that we can deliver to them,” McAuliffe said on the John Fredericks Show, which broadcasts in Hampton Roads, Richmond, Lynchburg, Danville and Franklin. “If Chap Petersen can get me a bill on my desk, I’d sign it. Let me be clear.”

“There’s a better chance of me starting for the Redskins as quarterback,” said Petersen, as quoted by the Richmond Times-Dispatch. “Governor, you’re going to need to send down the legislation.”

In 2015 The General Assembly passed a bill freezing base electric rates, which McAuliffe signed, after the Obama administration had rolled out the Clean Power Plan requiring Virginia’s electric utilities to significantly reduce CO2 emissions. The State Corporation Commission staff had estimated that the legislation could push electric rates 20% higher. With a stated goal of providing rate stability in uncertain times, the legislation locked base rates in place for six years.

Environmentalists were critical of the bill from the beginning, arguing that the Clean Power would increase rates only marginally. Then industrial customers contended that Dominion had been overcharging customers before the law went into effect, and the law locked in rates at excessively high levels. Moreover, they charged, the electric companies weren’t even taking on a major risk: If the Clean Power Plan had forced them to retire coal plants and build new generating facilities, they would have been able to pass on the cost through a Rate Adjustment Clause, which wasn’t affected.

Dominion has argued that the law also provided for annual, instead of biennial, review of power companies’ Integrated Resource Plans, making the planning process more transparent. As part of the legislative compromise, the company also upped its financial commitment to its Energy Share energy-efficiency plan for low-income homeowners.

Furthermore, Bill Murray, Dominion’s managing director of public policy, said last week, the company has taken $296 million in write-offs for the past two years for expenses relating to the closure of its coal ash ponds. The freeze prevents the company from recovering those costs. “Those are costs we are absorbing.”

Bacon’s bottom line: McAuliffe’s support for reversing the freeze is a day late and a dollar short. As a practical matter, Petersen’s bill cannot be resurrected. Reversing the freeze without understanding the emerging regulatory context may not make sense anyway. The Trump administration has made clear its intention to kill the Clean Power Plan. We Virginians need a clearer idea of what kind of energy policy we want going forward. Simply rolling back the freeze doesn’t inform that debate.

Solar power is the potential game changer. The cost of generating solar energy continues to decline, and so does the cost of battery storage, which will help offset the intermittent nature of solar generation. No one disagrees with those propositions, but many questions remain open. How rapidly are solar prices declining? When will solar become economically competitive with natural gas in Virginia? That depends in large measure what happens to natural gas prices. Will they rise from currently low levels, and, if so, by how much?

Another big question is how much solar can Dominion, Appalachian Power and Virgina’s electric co-ops absorb without undermining the reliability of the electric grid. A related set of questions revolves around how much retail competition regulators should allow, how to guarantee the integrity of the grid if electric utilities lose market to independent solar operators, and how rate payers will be impacted if utilities experience a decrease in consumption.

One more pressing matter: What’s the role of nuclear in a post-Clean Power Plan world? While it still may make economic sense to renew the licenses for Dominion’s existing nuclear power plants, building a third unit at North Anna guesstimated to be $18 billion probably does not. Dominion wanted to maintain that option as an insurance policy, at a cost of hundreds of millions of dollars in engineering and permitting expenses, to protect against the most onerous of the Clean Power Plan regulatory scenarios. In a Trump presidency, that scenario looks highly unlikely. Should Dominion scrap North Anna 3?

If Virginians want to unfreeze the freeze, we need to recognize that no regulatory action takes place in a vacuum. Rather than dealing with each of these issues piece-meal we should settle them in a comprehensive way.
(This article first ran in Bacon’s Rebellion on February 10, 2017)

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A Charter School Proposal That Can Help Children

During my four years on the Virginia State Board of Education the most frustrating question was “What can we do about school divisions that persistently fail to effectively educate their children?”

Virginia’s public education system remains one of the top performers in the nation, ranking high on such metrics as Advanced Placement, ACT and SAT scores, as well as the National Assessment of Educational Progress.

But one of the biggest concerns remains children who face an uncertain educational future in a select number of school divisions. This year, 94 Virginia schools have had their accreditation denied. More than half — 55 percent — came from just five school divisions.

Let’s be clear: “Accreditation Denied” isn’t some halfway point to full accreditation. “Accreditation Denied” is defined as “the school fails to meet the requirements to be rated fully or provisionally accredited for four consecutive years.” Meaning that these schools were in trouble long before they received their rating.

Not only is it a narrow range of school divisions, but it is an even narrower range of schools: Nine schools have had their accreditation denied for at least three of the past five years. One school has been denied accreditation for a full 11 years in a row — an entire generation’s worth of children given no choice but to attend a school that fails to teach.

And if nine schools doesn’t seem like a lot, look at it another way: 6,600 students spent their entire school career so far in a school whose accreditation has been denied. If they were a school division, it would be larger than 97 school divisions in Virginia.

The solutions offered in the past have been new teachers, new principals, new math programs, new reading programs, leadership development and more. None of them have worked.

Frustration over this state of affairs boiled over in 2013, when the General Assembly created an Opportunity Education Institution (OEI), modeled after the successful Recovery School District that restored schools in New Orleans following Hurricane Katrina and was empowered to take over similarly failing schools.

But state constitutions are all different, and Virginia’s gives absolute authority to local school boards to supervise their schools. OEI was correctly ruled unconstitutional.

Del. Steve Landes, chairman of the House Education Committee, has now come forward with a proposal, sponsored in the Senate by Sen. Mark Obenshain, offering a pathway toward providing alternatives for the children suffering in those schools. The same state constitution granting absolute authority to local school divisions also grants the State Board of Education the right to create new school divisions “subject to the criteria and conditions set by the General Assembly.”

Landes’ legislation sets the criteria under which the State Board can exercise its right to create regional charter school divisions, offering independent quality public schools. These new regional charter school divisions would focus only in areas where schools have been denied accreditation for two out of the past three years; would overlay geographically upon existing traditional school divisions, but leave existing local schools under the control of existing school boards; could not access local dollars; and would be subject to the same civil rights, health and safety requirements applicable to other public schools.

While this is no silver bullet, it opens Virginia to effective charter school operators like KIPP Academies. KIPP teaches 80,000 students in 200 schools nationwide. Ninety-six percent are children of color who choose to attend their school; 88 percent are on free and reduced meals subsidies; 17 percent are English language learners. More important is KIPP’s success: 94 percent of its students graduate high school, 81 percent start college, and 44 percent complete a four-year college. The statistics for low-income students nationally are 74 percent, 45 percent and 9 percent, respectively.

Conditions set down by local school boards have made Virginia an inhospitable state for quality charter operators, so few strong applicants seek to open here. Virginia’s applicants, then, are frustrated moms and dads who really don’t know how to make it work but are desperate to help their children.

As a result, they put together a poor application, and the local school board properly rejects it — but then says, “Well, we don’t get any good applications,” creating a self-fulfilling prophecy.

The Landes-Obenshain legislation avoids the trap of many previous charter proposals by focusing on persistently low-performing schools. It would let existing school divisions operate their schools uninhibited, retaining local control and keeping local funds in the hands of local authorities.

But it offers a new opportunity to try a different approach with a new set of schools run by experienced people who have done it successfully elsewhere.

(This first ran in the Richmond Times Dispatch on Monday, February 6, 2017)

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Gorsuch Could Correct Regulatory Overreach

Most people have never heard the term “Chevron deference” and, if they have never practiced administrative law, could not be blamed.  But, in the weeks ahead we are going to hear a great deal about it.  Here’s why.

“Chevron deference” refers to a rule the Supreme Court of the United States established in the case Chevron U.S. A. v. National Resources Defense Council, Inc., 467 US 837 (1984), for the federal courts dealing with law suits against federal administrative agencies.  The “Chevron deference” rule puts the burden on the farmer, entrepreneur, or small business owner to prove the federal agency is wrong about its regulations rather than putting the burden on the agency to prove the regulations are necessary in the first place.

The reader couldn’t be blamed for asking what difference could that possibly make in a person’s day-to-day life or business.  Supreme Court nominee Judge Neil Gorsuch has explained what it means and why it is a horrible idea for family farmers, entrepreneurs, and small business owners.  Judge Gorsuch, currently serving on the U.S. 10th Circuit Court of Appeals, has been a leading voice in the judiciary calling for a change to the rule which kills jobs and has allowed federal busybodies to bully farmers and job creators. In other words, Judge Gorsuch sides with the farmers and job creators against the job-killing regulators and says courts should not automatically side with regulatory agencies.  Judge Gorsuch has questioned the constitutionality of the rule which concentrates executive, legislative, and judicial powers in the hands of executive agencies in violation of the Constitution’s separation of powers.

Judge Gorsuch would be a strong voice on the U.S. Supreme Court for the kind of clear thinking and constitutional fidelity previously supplied by the late Justice Scalia.  The Judge was appointed to the U.S. Court of Appeals in 2006 by President George W. Bush after having served as an attorney in the U.S. Department of Justice, law clerk to two U. S. Supreme Court Justices, worked in the private sector, and, having now served as an appellate judge for over a decade, authored numerous opinions for the U.S. Court of Appeals.  Judge Gorsuch is renowned for his clear and concise writing and according to his colleagues and law clerks he is also known for his good sense of humor.

The Senate has the opportunity to restore common sense to the bench and put a justice in place who will not automatically defer to unelected bureaucrats in government agencies when they want to regulate every pond on Virginia farms as a wetland and put our famers and entrepreneurs out of business.  Judge Gorsuch faced no opposition when he was confirmed by voice vote by the Senate for the Circuit Court of Appeals.  His strong academic background, degrees from Columbia, Harvard Law, and Oxford, indicates a keen mind and his record of clear common sense opinions demonstrate his mastery of the law and fidelity to the Constitution.

Minority Leader Charles Schumer (D-NY), Senator Diane Feinstein (D-CA) the Ranking Democrat on the Senate Judiciary Committee, which will hold confirmation hearings, and former Judiciary Committee Chairman Patrick Leahy (D-VT) were all in the in the Senate when Gorsuch was last confirmed. No doubt, they will ask the Judge about his position on “Chevron deference” but it would be odd, indeed, for them to claim now that such an experienced jurist was anything other than fit for the Supreme Court.  The American people will be watching closely and will not be amused by partisan shenanigans.

Judge Gorsuch deserves a fair hearing and if the Senate finds him fit, as it should, a swift confirmation.  As so many on the left have said, the Supreme Court needs nine.

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Military Families Deserve Choices

Military dependent children move 6-9 times during their K-12 years, according to the Military Child Education Coalition (MCEC). Although there is much uncertainty in every move, Military families typically begin the relocation process with two questions: 1) Where will we live? 2) Where will our children attend school?

When transitioning to Virginia, military families learn quickly that unlike most states, these two questions are condensed into one. The address a family selects determines the public school students will attend. Too often, this address also determines the quality of the public school a student may attend and the opportunities a child has for advanced academic programs.

A move to Virginia, home to the highest number of military dependent children in the nation, is a cause for stress for many families with school age children. Military families relocating near some of our largest installations learn quickly that the quality of public schools is at best, uneven.

Fifty-one percent of the schools in Virginia that were denied accreditation for the 2016-2017 school year, are located in Hampton Roads. The Hampton Roads area hosts one of our nation’s highest concentrations of military families and is home to the largest Naval Base in the United States.

Military families have few good options. They may choose base housing and accept the uneven quality of the public schools. They may elect for longer commutes to live in communities with accredited public education options. They may homeschool or invest in private education. They may choose to voluntarily separate from their service member either temporarily or for the length of the orders (geographic bachelorhood).

Or they may elect to leave military service or start that process by indicating that they are less willing to move to certain locations.

“If one denies orders, it’s a career suicide”, according to Brandy Sharpe, a military spouse and parent. “We purchased a house over our housing allowance rate, in a higher performing school district with better opportunities for children, and have Ramen noodles as a staple meal.  These are the facts of our choices. I feel that many do not understand the sacrifices we make.”

Virginia has a choice. The Commonwealth may elect to retain the status quo or improve access to public school choice options for military families.   Legislation now working its way to Governor McAuliffe would create new opportunities for quality public charter schools in areas where one or more schools have failed to be accredited for multiple years.  This would be of immense benefit to children whose parents have been assigned to the Hampton Roads area, as well as Fort Lee.

All children deserve the choice of attending a high quality public school. There are over 6,700 charter schools in the United Stated educating nearly three million students. At least eight are located on military installations and also open for the children of civilians.

Public charter schools would also offer an opportunity for families to have the option of attending a school not determined by their address. For a military family, this has the added benefit of enrolling students in school while in temporary housing and keeping their child in the same school regardless of the school zone they choose for permanent housing. During the already stressful transition process, students would not be forced to move to several different schools during their first year of relocation as their parents work to secure affordable housing or elect to live on base.

Charter schools are highly accountable based on student achievement and in most states, military families have the choice of a charter school.

Requiring military families to enroll their children in schools that fail to meet minimum expectations for accreditation in Virginia has been done long enough.

Charter schools are not a magic bullet. They are a choice. The families of military dependent children and all families deserve at least a choice when their address assigns their children to a school that fails to meet the minimum standards.

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Making the Case for Medicare Advantage

By Kristen Grow

Government watchers know there are two parts to federal policy. First, there is the law passed by Congress. Second, there is how agencies implement the law. For Medicare Advantage, congressional support remains robust – but the program’s future lies squarely with the Centers for Medicare and Medicaid Services (CMS).

CMS reviews and sets rates, which is an important milestone for beneficiaries. Adjustments directly affect coverage. Health plans must have sufficient funding to remain in the market and provide the comprehensive benefits seniors and disabled individuals—including 204,000 Virginia residents—rely on.

This year’s process will take on greater-than-usual importance. With new faces occupying key posts, senior CMS officials must be made aware of the program’s many benefits so they understand why 90 percent of enrollees are happy with their Medicare Advantage plans.

Choice plays a big part in satisfaction levels. Medicare Advantage enrollees shop for a health plan that best meets their needs. Whether a beneficiary wants to avoid monthly premiums, opt for a plan a current doctor accepts, or match the pharmaceutical formulary to their treatment, a suitable product is likely available in the Medicare Advantage market.

Beneficiaries also want value. While all Medicare Advantage health plans are required to match traditional Medicare’s benefits, Medicare Advantage consistently incorporates much more. Enrollees gain access to comprehensive coverage at a very affordable cost, often just a $5 co-pay for most services.

That includes a wide array of preventive care. Plans assist enrollees in taking control of their health with health screenings, disease management programs, nurse help lines, and in many cases, free senior-friendly fitness memberships to help maintain strength, cardiovascular health, and range of motion.

The array of services combined with the financial protections—including a cap on annual out-of-pocket expenses—help explain the high enrollment in Medicare Advantage across a diverse population of beneficiaries. In fact, approximately 45 percent of Hispanic and 30 percent of African-American beneficiaries choose Medicare Advantage, as do 37 percent of beneficiaries with incomes less than $20,000.

The true significance of Medicare Advantage, however, can be found in better health. The American Journal of Managed Care found Medicare Advantage’s hospital readmission rate to be 13 percent to 20 percent lower than traditional Medicare. And Medicare Advantage enrollees make more appropriate use of services, according to Health Affairs. They also enjoy lower incidences of emergency services, fewer hip replacements, and higher rates of coronary bypass surgery in accordance with national guidelines.

These statistics indicate enrollees are receiving better care. They’re staying more nimble, so they avoid falling. Post-hospital care is preventing complications. And disease management and appropriate medical interventions are reducing crisis events.

Better health is good for patients – and the federal budget. This fact has earned Medicare Advantage broad support from lawmakers in both parties. Elected officials are once again stepping forward. Already a bipartisan groups of 65 U.S. Senators, including Virginia’s Mark Warner, sent a letter to CMS in support of Medicare Advantage. For the 18 million Americans who choose the program – that is a welcomed start.

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