Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, January 8, 1995 TAG: 9501060055
SECTION: BUSINESS PAGE: F-1 EDITION: METRO
SOURCE: GREG EDWARDS STAFF WRITER
DATELINE: LENGTH: Long
Bell Atlantic Corp., which provides local phone service in the Roanoke Valley and much of the rest of Virginia, will operate under a new type of state regulation in 1995. For years the State Corporation Commission decided how much profit the company could make and set rates to achieve that return. Beginning this year, however, the company's prices for its monopoly services will be regulated, but it will be free to charge what the market will bear for services that it provides in competition with other companies.
Bell Atlantic's monopolies for local phone service in some localities may disappear this year. Bell Atlantic spokesman Paul Miller said a bill is expected in the General Assembly that would allow cable television companies to offer local telephone service. If that happens, Bell Atlantic officials said, they believe cable TV companies should be regulated in the same way as are the phone companies.
On the other hand, Bell Atlantic has an application pending before the Federal Communications Commission to get into the cable TV business. The company wants to offer video dial-tone service in Northern Virginia and the Norfolk-Virginia Beach area.
Such service, which would offer television viewers 600 channels, could be available in those areas by the end of this year but would be several years off in the Roanoke area, Miller said.
Bell Atlantic's business tends to mirror that of the economy overall, said corporate economist Dave Pitcher. He and Phillip Grutzmacher, Bell Atlantic's regional economist, expect to see the national and Virginia economies on a healthy track in 1995, but not quite as robust as they were in 1994.
A slowdown is not necessarily a bad thing, according to Pitcher. The Federal Reserve Board acted properly when it raised interest rates to cool off the economy, he said.
Pitcher expects growth in the nation's economic output in 1995 of 2.5 percent, driven mostly by exports and business investments in plants and equipment. That compares with growth in Gross Domestic Product of 4 percent last year. The lower growth rate is more in line with what the economy can maintain, he said.
"At this point there's no end in sight [to the current economic expansion]," Pitcher said. The economy has been growing for nearly four years and inflation has remained below an annual rate of 3 percent for three years for the first time since the 1960s.
The 2.5 percent growth rate and 3 percent inflation rate forecast for 1995 is "a very balanced kind of environment," Pitcher said. "There's none of the pressure that can cause an economic expansion to end."
Virginia's economy has grown faster than the national economy for two years. Grutzmacher said he expects Virginia growth at 2.1 percent this year, a little slower than the nation in 1995. Virginia, with its low unemployment rate, has more constraints on the resources it needs to grow than the nation as a whole, he said.
As far as Bell Atlantic is concerned, service industries in Virginia tend to be heavy users of telecommunications services, Pitcher said. That's particularly true in the Roanoke Valley, which, with its catalog service centers and finance and banking industry, has a demand for phone services 11/2 times greater than the state average.
Bell Atlantic also benefits from advances in technology, Miller said. He points out that the increased reliance on fax machines and computers will cause the company to create a third telephone area code in Virginia this year.
Two other major utilities serving the Roanoke Valley, Roanoke Gas Co. and Appalachian Power Co., have one thing to contend with that a phone company doesn't - the weather. Mild-weather years like 1994 hurt their bottom lines.
Apco's Don Johnson pointed out that 1994 had milder weather than did 1993, despite the memory of harsh winter storms. The number of heating-degree days in 1994 was 7 percent below normal and the number of cooling-degree days was 14 percent above normal, the utility said. Heating- and cooling-degree days refer to how much the average daily temperature deviates from 65 degrees.
For three years, Apco has been averaging roughly a 4 percent-a-year increase in demand for electricity in Virginia because of an increase in customers and increase in electricity use, Johnson said.
Warmer-than-normal weather has affected Roanoke Gas earnings, said company Vice President Rob Glenn. To deal with the uncertainty of the weather, the company is trying to boost sales in less weather-sensitive markets such as those for gas-fueled heat pumps, vehicles and water heaters, Glenn said.
Increased interest rates also will have an impact on the gas business if they slow home sales and, thus, the company's customer growth, Glenn said.
Roanoke Gas has been growing 3 percent to 4 percent a year for several years, both from the addition of customers and the conversion of homes to gas, he said.
Deregulation of the natural gas industry has local gas companies going on the market looking for their own gas supplies. That may benefit Roanoke Gas because of the company's control of capacity on the two major pipelines from the South to the Northeast, which pass through Roanoke, Glenn said.
by CNB