THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Friday, April 21, 1995 TAG: 9504210487
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY DAVE MAYFIELD, STAFF WRITER
LENGTH: Short : 48 lines
Virginia Power on Thursday won the State Corporation Commission's approval to experiment with a new rate structure for its largest industrial customers. The program ties prices for electricity to the hour-by-hour cost of delivering it.
But the commission rejected another proposal by the utility to custom build steam- and electricity-generating plants for large customers - at least in its current form.
The Real Time Pricing plan, which won the commission's approval for five years, was the more significant of the two proposals. Virginia Power wants to offer the pricing plan to its 25 largest industrial customers. It would allow the customers to schedule their factories to run in the hours when power is cheapest.
Other utilities are developing such programs. Virginia Power said it needed its own to attract and hold onto large customers, some of which have factories in other states to which they can shift production if electricity rates there are cheaper.
The commission agreed that it needs to allow utilities more flexibility in the face of growing competition. But it did raise a concern: that some of Virginia Power's other customers might suffer as industrial power rates fall.
The commission's staff estimated that Virginia Power's revenues could drop $6 million a year if all the eligible customers enroll in the program. The commission said Virginia Power needs to address whether it will try to recover those revenues by increasing charges for other customers.
Virginia Power has downplayed negative effects, saying all its customers would be hurt even more if big manufacturers shifted production to factories outside Virginia because of cheaper power rates.
It hopes the new pricing plan over the long term will encourage big customers to expand their factories and buy even more power in Virginia.
The utility's arguments weren't as convincing, however, when it came to its proposal to custom build co-generating plants for manufacturing customers.
The commission rejected Virginia Power's request because the proposal covered too many potential customers and because it lacked specifics. The commission did say it will consider allowing the utility to build such plants on a case-by-case basis. by CNB