THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Saturday, January 6, 1996 TAG: 9601060232
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY DAVE MAYFIELD, STAFF WRITER
LENGTH: Medium: 58 lines
Virginia Power plans to ask state lawmakers to help loosen controls on the way it and other electric utilities operate.
The state's largest power company said Friday it needs more leeway to negotiate special rates with customers and to enter new lines of business because of increasing competition in the electricity business.
But the head of a statewide consumer group said the proposals could mean higher rates than necessary for many utility customers.
If enacted, Virginia Power's proposals would give the State Corporation Commission the authority to abandon long-established methods of regulating electric utilities. Conceivably, the changes could apply to natural-gas utilities as well.
Indeed, Virginia Natural Gas Inc. said Friday that it will seek legislation along the same lines in the General Assembly session that starts next week.
Virginia Power has several key legislative proposals.
It wants the corporation commission to be granted the authority to approve alternate forms of regulation to the traditional ``rate-based, rate-of-return'' method.
The current method limits energy utilities' profits to a predetermined annual percentage. With such a method no longer required, Virginia Power could ask the commission to lift the profit cap in return, for example, for a freeze on the rates it charges customers. That could encourage Virginia Power to expand its already-aggressive jobs cuts and other cost reductions because it would no longer have to worry about exceeding its allowed profit range.
Virginia Power also wants the commission to have the authority to let it negotiate rates with customers. It says that would help it lure large industrial customers into its service territory. Right now, special rates aren't allowed. Each customer of a certain class - residential, commercial or industrial - pays the same rate.
The electric utility's other main proposal is that the commission be freed to let the power company pursue more lines of business - such as maintenance work on its customers' electrical equipment.
``There's a lot of momentum for change,'' said Robert E. Rigsby, Virginia Power's executive vice president. He said various pro-competition initiatives at the federal level could put Virginia Power and its customers at a disadvantage if state regulators don't keep in step.
But Jean Ann Fox, president of the Virginia Citizens Consumer Council, said Virginia Power is ``jumping the gun.'' She said the legislature should delay taking any action until the commission has completed its own recently started study of power-industry competition. That could be another year from now.
Fox said she is concerned that Virginia Power will try to lock in rates that are higher than it deserves under an alternative regulatory proposal. She said she also worries that the utility will get into businesses that it ought not to and subsidize its costs in those new enterprises with profits from its core operations. by CNB