
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, May 13, 1993                   TAG: 9305130387
SECTION: NEIGHBORS                    PAGE: W-6   EDITION: METRO 
SOURCE: DAVID M. POOLE
DATELINE:                                 LENGTH: Short

SALEM DECIDES TO FORGO PROPOSED ELECTRICITY DEAL

Salem City Council decided Monday to pass up potential savings of $3 million over 10 years because of uncertainties involved in a proposed deal with an Indiana power company.

Council voted 5-0 to table a plan for Public Service of Indiana to provide 15 percent of the city's electrical needs at rates below those charged by Appalachian Power Co.

Councilman Alex Brown said the savings were too small and the risks too great for the city to leave Apco, which provides wholesale power for the city's electric department.

"We have a good, reliable source of power," Brown said. "I'm not sure we've got that in this proposal."

Among the risks cited was the growth of demand from Indiana's regular customers taking precedent over the supply to Salem.

Apco's rates have been a sore point for years among Western Virginia municipalities that buy wholesale power and resell it to residences and businesses. A consortium of municipalities - which includes Salem - has appealed Apco's rate structure to federal regulators.

The consortium sought a partial bypass of Apco with a the deal with Public Service of Indiana.

Under the plan, Salem would have saved $750,000 in the first year and more than $3 million over 10 years. Apco would continue to provide about 85 percent of the city's electricity.

By tabling the proposal, Salem City Council effectively ruled out any possibility of participating in the deal, according to Doug Smith, director of the city's Electric Department.

by CNB