Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, March 5, 1995 TAG: 9503040048
SECTION: BUSINESS PAGE: F-1 EDITION: METRO
SOURCE: GREG EDWARDS STAFF WRITER
DATELINE: LENGTH: Long
At the extreme, utility customers some day may be able to choose a power company for their homes or businesses much the way they now pick their long-distance telephone services.
Competition was introduced into the power industry by the 1992 federal energy bill, which allowed new independent power producers into the market and opened the nation's power transmission system to wholesale movements of power. Now some states - but not yet Virginia - are considering carrying competition to the level of residential and business consumers.
To prepare for the prospect of more competition, Apco is reorganizing its business to focus more on its customers' needs.
Although no office closings are planned, over the next two years Apco's reorganization should eliminate 200, or 4.3 percent, of the company's 4,626 jobs in its Virginia and West Virginia service area. Apco President Joseph Vipperman said in an interview last month the company will attempt to downsize through retirements and other voluntary departures and avoid layoffs if possible. No decisions have been made on the types of jobs to be eliminated.
"We've got an awful lot of good employees and we want to keep them," Vipperman said.
Apco began its reorganization last year with the formation of 10 employee teams to rewrite the company's 60-year old mission statement and to set company goals. That work was completed in 1994, and Apco now is implementing the teams' recommendations, Vipperman said.
The employee study found that Apco has been good at controlling costs but also concluded the company needed to improve customer service, he said.
Apco has some of the lowest electric rates in the country. A nationwide survey of major utilities by the Jacksonville (Fla.) Electric Authority in January showed Apco with the second-lowest residential rates after Seattle City Light in Washington state. Additionally, a study by Fitch Investors Service of New York released on Jan. 30 ranked Apco among the 10 investor-owned utilities in the country that are best prepared to compete in a deregulated environment.
Among the things Apco is doing to improve customer service is reorganizing its substation repair crews. In the past the crews were spread among each of the company's nine geographic operating divisions. In a 19,000-square-mile service area, one of the barriers to improving service is driving time, Vipperman said.
The decision was made to relocate the crews to where most of the company's lines and substations are, he said. In the future, the crews will be based at three regional centers, in Roanoke, Bluefield and Charleston, W.Va.
Apco also decided that some employees have been too specialized. For instance, some workers are trained to operate equipment only above or below certain voltage levels. The company intends to do more cross-training of workers so that one person can be sent to make repairs that might have required two people in the past.
To help them work better with customers, 2,000 employees in jobs with regular public contact will be trained in customer relations. The five days of training for each employee will go well beyond a simple lesson in phone manners and will involve the use of simulation of actual situations involving customers.
Apco adds about 10,000 new customers a year. The company wants to cope with that growth through increased efficiency rather than by adding to its costs, Vipperman said.
Local 978 of the International Brotherhood of Electrical Workers, which represents 1,000 Apco meter readers; electricians; garage workers; and line, station and plant crew members, has concerns about the reorganization. The union wants to do what it can to help but also wants to protect its members and their past gains, said Chuck Coleman, the local's business manager.
The reorganization is presenting the union with situations it hasn't faced often in the past, such as the mixing of union and non-union workers and the use of Apco employees to do maintenance work formerly done by outside contractors, Coleman said.
Apco's management has talked with him about the reorganization but perhaps not as much as he would have liked, Coleman said. That may be because some of the company's plans aren't complete, he said, stressing that he wanted to avoid an adversarial relationship.
In the next couple of years, the electric power industry will be much different, Coleman said. Deregulation already has eliminated many union jobs, he said, particularly in the West, where utilities have set up subsidiaries as independent power producers. Those outfits operate without government regulation and with cheaper, nonunion labor.
The union's contract with Apco expires in March 1997, and Coleman fears the company may use competition as an excuse to ask for concessions during bargaining for the next contract.
It's tough to say whether deregulation's effect on the country as a whole will be good or bad, Vipperman said.
Following the deregulation of other industries, some regions were winners and others were losers, he said. In the airline industry, for example, whether you won or lost depends on where you are, he said.
Apco is the largest operating company of the Columbus, Ohio-based American Electric Power Co. Inc. in terms of its service area and second-largest in terms of revenue. Other AEP operating companies are reassessing their operations but not necessarily in the same way as Apco, Vipperman said. For instance, two AEP operating companies in Ohio recently merged.
While direct competition in their own service areas is new to utilities, Vipperman said electric companies always have vied to lure large industrial customers.
Electric rates often play a large role in where an industrial plant locates, Vipperman said, mentioning the new multimillion-dollar Parkdale Mills plant in Carroll County as an example. The company's owners made it clear that electric rates made a difference in their decision, he said.
Deregulation also means many utilities are looking for opportunities outside their traditional business, Vipperman said. For example, Apco has worked with AEP on a total rebuilding of Pakistan's electric power system and may be involved with AEP on another engineering contract with the Chinese government for construction of 1,700 miles of high-voltage power line.
Rep. Rick Boucher, D-Abingdon, has introduced a bill that would let large power companies get into the telephone business. Apco might be interested in selling some excess capacity on fiber-optic phone cable it strings between its own offices, Vipperman said.
However, for the most part, Apco plans to "stay pretty close to our own knitting," he said. "If we get involved in something, it will be something we know pretty much about."
With its low-cost production, dedicated workforce and effort to sharpen its customer skills, Apco should be ready to meet competition head on, Vipperman said.
Appalachian Power Co.
Appalachian Power Co., which has its headquarters in Roanoke, is the largest of the American Electric Power Co. Inc.'s six operating companies in terms of the size of its service region and second largest in terms of revenues.
At the end of 1994, roughly 2,100 of Appalachian's 4,626 full-time employees worked in Virginia with the remainder in West Virginia. Total employment was down from 4,717 in 1990 but up slightly from 1993. The company serves 840,000 customers of all types, who are roughly evenly divided between the two states. Approximately 10,000 new customers are added annually.
Joseph H. Vipperman, 54, a Patrick County native, joined the company at the start of 1990 as its president.
Appalachian's territory stretches from the Ohio River on the West to the Blue Ridge Mountains on the East and is home to over 2 million people. The company has nine operating divisions based in Beckley, Bluerfield, Charleston, Huntington and Logan in West Virginia and Abingdon, Lynchburg, Pulaski and Roanoke in Virginia.
The name Appalachian Power dates to 1910 when three young entrepreneurs came to the West Virginia coalfields with the aim of building hydroelectric dams on the New River to supply power to the fledgling coal industry. That company was consolidated with other companies and in 1958 its name again became Appalachian Power.
The company's sales in 1994 totalled 34.38 billion kilowatt hours of electricity, bringing in $1.51 billion in gross operating revenues.
Appalachian net income over the past five years was as follows:
1990 - $93.7 million;
1991 - $126.6 million;
1992 - $114.8 million;
1993 - $108.6 million;
1994 - $86.6 million.
Profits in 1994 were reduced by damage from severe winter ice storms and a milder than normal heating season.
Keywords:
PROFILE
by CNB