Could the Virginia General Assembly let the State Corporation Commission regulate the rates of city-owned electric utilities, even though the Constitution carves municipal corporations out of the SCC's normal utility authority?

Plain-English summary

Virginia's State Corporation Commission (SCC) regulates the rates, charges, and services of private electric, gas, telephone, and railroad companies. But Article IX, § 7 of the Virginia Constitution carves out a critical exception: when the constitutional provisions in Article IX talk about "corporation" or "company," they don't include municipal corporations, political subdivisions, or state-controlled public institutions. Effect: the SCC doesn't automatically regulate the rates of a city-owned electric utility.

Senator Frank Wagner asked the Attorney General whether the General Assembly could close that gap by general law and require the SCC to regulate municipal electric rates.

Herring's answer was yes. The constitutional exclusion limits the automatic constitutional grant of power to the SCC; it doesn't limit what the General Assembly can do. Article IX, § 2 itself authorizes the SCC to "have such other powers and duties not inconsistent with this Constitution as may be prescribed by law." That's an express invitation to the General Assembly to expand SCC jurisdiction by statute. Article IV, § 14 of the Constitution gives the General Assembly broad legislative authority on all subjects not specifically forbidden.

Herring also pointed to a 1974-75 AG opinion that reached the same conclusion about municipal water authorities. The reasoning carried over directly to municipal electric utilities. The Supreme Court of Virginia had recognized in Lewis Trucking Corp. v. Commonwealth (1966) that the Constitution "does not prohibit or limit the power of the legislature to impose additional duties on the [SCC]." And in Commonwealth v. Virginia Electric & Power Co. (1974), the Court allowed the General Assembly to limit the SCC's electric jurisdiction, confirming that the SCC's scope is adjustable by statute as long as the core constitutional duty isn't impaired.

The opinion did not address whether the General Assembly could regulate municipal utilities through a special act, only that a general law would be constitutional.

Currency note

This opinion was issued in 2015. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. The General Assembly has not passed legislation extending SCC jurisdiction over municipal electric utilities, but the constitutional analysis remains historically interesting. Verify current law before relying on any specific rule mentioned here.

Common questions

Why doesn't the SCC already regulate city-owned electric utilities?

Because Article IX, § 7 of the Virginia Constitution explicitly excludes "municipal corporations, other political subdivisions, and public institutions owned or controlled by the Commonwealth" from the term "corporation" or "company" in Article IX. The SCC's automatic constitutional regulatory authority over electric companies stops at the city limits of municipal utilities.

So if the GA passed such a law, would there be any constitutional risk?

Under Herring's analysis, no, as long as it's a general law (uniform application) and doesn't undermine the SCC's basic constitutional duty to regulate private utility companies. The opinion didn't reach whether a special act targeting one specific municipal utility would be constitutional.

Why is the parallel to municipal water authorities relevant?

The 1974-75 AG opinion concluded that the General Assembly could subject a municipal water authority to SCC regulation. Section 56-232 of the Code currently defines certain water companies as public utilities under SCC jurisdiction. Herring read the precedent as applying with equal force to electric utilities.

Could the General Assembly take away the SCC's authority over private electric companies?

No. The SCC's constitutional power and duty to regulate private electric, gas, telephone, and railroad companies cannot be removed by statute. The General Assembly can add to the SCC's jurisdiction but cannot take away its core constitutional duties.

Background and statutory framework

The Virginia Constitution's Article IX is the source of the State Corporation Commission's authority. Section 2 vests the SCC with the duty of "regulating the rates, charges, and services . . . of railroad, telephone, gas, and electric companies." Section 7 excludes municipal corporations and other public entities from the meaning of "corporation" or "company" in Article IX.

Section 2 closes with a key clause: the SCC "shall have such other powers and duties not inconsistent with this Constitution as may be prescribed by law." That's the legislative-expansion clause.

The Constitution's Article IV, § 14 gives the General Assembly authority on "all subjects of legislation not . . . forbidden or restricted [by the Constitution]." Combined with Coyner (1966) and Harrison v. Day (1959), this means the GA has all legislative powers except those expressly prohibited.

Read together, these provisions create the constitutional structure Herring identified: the SCC has automatic regulatory authority over private utility companies, with a constitutional floor that the GA cannot lower, but with a constitutional ceiling that the GA can raise by statute. Municipal utilities sit outside the constitutional floor but within reach of the legislative ceiling.

Citations

• Va. Const. art. IV, § 14 (General Assembly's broad legislative authority)
• Va. Const. art. IX, § 2 (SCC powers and duties)
• Va. Const. art. IX, § 7 (exclusion of municipal corporations)
• Va. Code Ann. § 2.2-505 (AG advisory opinions)
• Va. Code Ann. § 56-1 (definition of "public service corporation/company")
• Va. Code Ann. § 56-232 (water companies as public utilities)
• Marshall v. N. Va. Transp. Auth., 275 Va. 419 (2008)
• Commonwealth v. Va. Elec. & Power Co., 214 Va. 457 (1974)
• Fairfax Cnty. Indus. Dev. Auth. v. Coyner, 207 Va. 351 (1966)
• Harrison v. Day, 201 Va. 386 (1959)
• Lewis Trucking Corp. v. Commonwealth, 207 Va. 23 (1966)
• 1974-75 Op. Va. Att'y Gen. 421 (municipal water authority precedent)

Source

• Landing page: https://www.oag.state.va.us/annual-reports-opinions/official-opinions
• Original PDF: https://www.oag.state.va.us/files/Opinions/2015/15-005_Wagner.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

COMMONWEALTH of VIRGINIA
Office of the Attorney General
Mark R. Herring
Attorney General

900 East Main Street
Richmond, Virginia 23219
804-786-2071

July 2, 2015

The Honorable Frank W. Wagner
Member, Senate of Virginia
Post Office Box 68008
Virginia Beach, Virginia 23471

Dear Senator Wagner:

I am responding to your request for an official advisory Opinion in accordance with § 2.2-505 of the Code of Virginia.

Issue Presented

You ask whether the General Assembly may enact a general law requiring the State Corporation Commission ("SCC" or "Commission") to regulate the rates, charges, and services of electric utilities operated by municipal corporations.

Applicable Law and Discussion

Article IX of the Constitution of Virginia establishes the SCC and sets forth its powers and duties. Several provisions of Article IX are relevant to your inquiry.

Article IX, § 2 provides that "[s]ubject to such criteria and other requirements as may be prescribed by law, the Commission shall have the power and be charged with the duty of regulating the rates, charges, and services . . . of railroad, telephone, gas, and electric companies." Article IX, § 7 excludes "all municipal corporations, other political subdivisions, and public institutions owned or controlled by the Commonwealth" from the term "corporation" or "company" as it is used in Article IX. Thus, the Constitution does not grant to the SCC the authority to regulate the rates, charges, and services of electric utilities operated by municipal corporations.

It is critical to observe that while Article IX fails to grant the SCC express authority to regulate municipal utilities, it does not bar the SCC from regulating them. Article IX also authorizes the General Assembly to expand the jurisdiction of the SCC: Article IX, § 2 states that "[t]he Commission shall have such other powers and duties not inconsistent with this Constitution as may be prescribed by law." This provision affirms the General Assembly's power to add to the SCC's authority. That is, the General Assembly has the power to enact laws that augment or supplement the SCC's jurisdiction provided that such laws do not contravene the SCC's fundamental power and duty to regulate the "rates, charges, and services . . . of railroad, telephone, gas, and electric companies." Moreover, the Constitution of Virginia gives the General Assembly broad authority, stating, "[t]he authority of the General Assembly shall extend to all subjects of legislation not . . . forbidden or restricted [by the Constitution]; and a specific grant of authority in [the] Constitution upon a subject shall not work a restriction of [the General Assembly's] authority upon the same or any other subject." Thus, the General Assembly has all powers except those prohibited by either the Virginia or United States Constitutions.

The General Assembly's authority to confer powers to the SCC that are not explicitly provided by Article IX has been recognized by the Supreme Court of Virginia. To the same end, a previous Attorney General's opinion addressed questions surrounding the constitutionality of placing a municipal water authority under the regulation of the SCC. It opined that the General Assembly has "the authority to confer upon the Commission jurisdiction over any subject matter not clearly and expressly limited by the Constitution . . . ." The opinion also finds that Article IX, § 7 represents an express limitation upon the constitutional grant of power of the Commission over municipal corporations, but is not a limitation on the power of the General Assembly. In other words, Article IX, § 7 "does not constitute a prohibition against action by the General Assembly to confer such jurisdiction upon the Commission." I find that this rationale is equally applicable to the rates, charges, and services of electric utilities operated by municipal corporations.

In sum, the Constitution vests the SCC with the express, fundamental power and duty to regulate the "rates, charges, and services . . . of railroad, telephone, gas, and electric companies." While that power does not extend to municipal electric utilities, the General Assembly may grant the SCC additional "powers and duties not inconsistent with [the] Constitution." Although the Constitution does not give the SCC jurisdiction over electric utilities operated by municipal corporations, the General Assembly retains the authority to enact a general law giving the SCC that jurisdiction.

Conclusion

Accordingly, it is my opinion that the General Assembly may enact a general law requiring the SCC to regulate the rates, charges, and services of electric utilities operated by municipal corporations.

With kindest regards, I am

Sincerely yours,

Mark R. Herring
Attorney General