THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Thursday, August 4, 1994 TAG: 9408040006
SECTION: FRONT PAGE: A14 EDITION: FINAL
TYPE: Editorial
LENGTH: Medium: 60 lines
The power struggle between Virginia Power and Dominion Resources Inc., the utility's parent company, has much of the business world atwitter. It's fascinating to watch two giants slug it out, but what matters most to consumers is that their electricity keeps flowing, at reasonable rates, in a fast-changing industry.
That, ultimately, is the focus of the battle. Virginia Power President and CEO James Rhodes says DRI, which wholly owns the power company and is headed by Thomas Capps, is pushing cost-cutting to the point of risking the utility's reliability to its customers. Capps and Dominion Resources deny this, saying that Rhodes is not moving fast enough to slim down Virginia Power in the face of coming deregulation and decentralization of the power industry nationwide.
The 1986 agreement that split the old VEPCO into Virginia Power and DRI - an arrangement created so that the latter could engage in non-regulated businesses - guaranteed Virginia Power a certain degree of independence. With the firing recently of three Virginia Power directors by DRI's board, Virginia Power management charges the wall of separation has been scaled.
The State Corporation Commission, concerned that strife between DRI and Virginia Power could damage the utility's ability to deliver power, has begun an investigation.
The SCC, however, is investigating based on damage that has not yet occurred. No one has alleged that either DRI or Virginia Power has failed in its respective public responsibilities. That either might do so in the future because of the current dispute is sheer speculation.
The SCC's task, unless it intends to take over the management of DRI itself, is to give the company fullest rein within the law - and let the company answer to its shareholders and the public for the consequences. Stockholders, after all, can vote only for DRI's board of directors, not Virginia Power's.
The awkward corporate structure of separate boards for DRI and Virginia Power, with the state mandating at least two independent directors on the latter board, probably guaranteed a dispute. State-level regulation of the power industry, however, is fast becoming as irrelevant as regulation of long-distance telephone rates in the era of MCI and Sprint.
Utilities have long purchased power wholesale from the least expensive source. But now businesses are doing the same, and residential customers might not be far behind. Virginia Natural Gas, for instance, which is owned by Pittsburgh-based Consolidated Natural Gas, on Tuesday announced it would start selling electricity to customers around the country.
Both sides in the Virginia dispute see this upheaval coming, and they differ primarily on how fast to prepare for it. But since a ship can't travel two speeds at once, there seems little alternative but to let DRI show that it knows how to get the job done and be answerable for the results.
KEYWORDS: VIRGINIA POWER DOMINION RESOURCES INC.
VIRGINIA STATE CORPORATION COMMISSION
by CNB