THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: SATURDAY, June 18, 1994 TAG: 9406180255
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: By TOM SHEAN, STAFF WRITER
DATELINE: 940618 LENGTH: Medium
In a highly unusual move, the SCC told Richmond-based Dominion Resources to respond to evidence it had violated a 1986 order by not allowing Virginia Power's board sufficient discretion to manage the utility and select its own officers.
{REST} ``The current turmoil and uncertainty may already be affecting the personnel of both companies, to the possible detriment of utility operations,'' the SCC order said.
The regulators' action has no direct bearing on Virginia Power's rates or level of service, but it strikes at the heart of who will control the state's largest utility.
``It is the board and officers of Virginia Power which have specific responsibilities to manage the utility efficiently and effectively, without diversion or interference from others,'' the SCC declared in its 10-page order.
``Dominion Resources,'' it added, ``does not have the authority or responsibility to direct Virginia Power in the performance of its public duties.''
The utility-holding company has 15 days to explain why it should not be considered in violation of the SCC's 1986 order spelling out the independence of Virginia Power. In addition, the utility and its parent were given 10 days to respond to the SCC's interrogatories and requests for documents.
Dominion's common shares closed Friday at 38 7/8, down 3/4 for the day.
An SCC spokesman would not elaborate on the SCC order, and Dominion Resources said it was still studying the document.
``Our affiliate arrangements have been regularly audited by the SCC in the past, and we believe we are fully in compliance,'' Paul J. Bonavin, Dominion Resources' general counsel, said in a prepared statement.
Nothing in the SCC's order called into question the financial or operating health of Dominion Resources and Virginia Power.
In a separate statement, Virginia Power said it ``will cooperate fully in the inquiry, and will continue to maintain efficient and reliable service while these matters are resolved.''
\ In its order, the SCC described a search by the Dominion Resources board for a successor to James T. Rhodes, Virginia Power's 52-year-old president and chief executive officer. Rhodes joined Virginia Power in 1971 as a nuclear physicist and became its president and CEO in 1989.
However, his relationship with Dominion Resources chairman and CEO Thomas E. Capps apparently had become strained during the past year.
In April, Rhodes reportedly spoke to some Dominion directors about leaving the company unless his reporting relationship with Capps were ended. The Dominion board responded by naming a new vice chairman, James T. Betts, and having Rhodes report to the board through Betts rather than to Capps.
In the order issued Friday, the SCC said that it had been asked to mediate the dispute over management of Virginia Power but that its efforts failed.
\ The SCC order came one day after Dominion Resources expanded its board from 12 members to 15 and named a replacement for a director who had retired.
These changes, Dominion Resources said, were an effort to resolve a division within the board and to deal with issues raised by the SCC regarding ties between Virginia Power and its parent.
Known for decades by the acronym Vepco, Virginia Electric and Power Co. created Dominion Resources in 1983 as vehicle by which to diversify into other areas of energy production. But in an attempt to protect Virginia Power ratepayers, the SCC spelled out limits on Dominion Resources' control of the utility in 1986.
Virginia Power provides electric power to more than 1.8 million customers throughout most of Virginia. An affiliate, North Carolina Power, serves northeastern North Carolina.
by CNB