THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Wednesday, February 21, 1996 TAG: 9602210440
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY DAVE MAYFIELD, STAFF WRITER
DATELINE: RICHMOND LENGTH: Medium: 90 lines
In a key showdown between the state's largest electric utility and advocates for its biggest and smallest customers, Virginia Power on Tuesday convinced members of a House of Delegates committee to loosen controls on how power companies set rates.
The House Corporations, Insurance and Banking Committee voted 18-4 in favor of a measure that would let the state's electric companies negotiate rate discounts and give the State Corporation Commission the authority to lift caps on utility profits.
The measure is part of a six-bill legislative package that Virginia Power says is necessary to help it prepare for a more competitive nationwide electricity market.
The House committee also approved unanimously, in a voice vote, a separate bill that would let the state commission charge federal agencies a penalty if their facilities in Virginia bypass their local electric utility and buy power elsewhere.
A coalition including consumer and environmental groups, big manufacturers and independent power producers has tried to rally opposition to the entire Virginia Power legislative package. They've argued for at least a year's delay on the package to hear the results of an ongoing corporation commission study on the electric-utility industry.
Leaders of the opposition group had said Tuesday's committee vote was probably their last chance to stop the proposals. The Senate had already passed the two bills that cleared the House committee. Little opposition is expected on the House floor.
Virginia Power President James T. Rhodes said he was pleased with the utility's victory Tuesday. But he passed up the chance to gloat.
``We still have to get it through the House, and I don't want to make any predictions until it's over,'' Rhodes said.
Opponents were disappointed that lawmakers have rejected their call for more time to study the measures. They said Virginia Power is rushing to make changes in laws and regulations so that its shareholders will be protected from any fallout in a more open market for electricity. They pointed out that competition in the power market, though growing steadily, is still in its infancy.
The Virginia Power proposals will ``skew the market in favor of the entrenched utility,'' August Wallmeyer, head of the Virginia Independent Power Producers, told committee members. He said Virginia Power's competitive edge will be strengthened when policymakers, instead, should be spearheading a process to help rivals break the utility's monopoly.
Until Tuesday, Virginia Power had managed to advance its legislative proposals with no outside support. Opponents had hoped this single-handedness would backfire and show the utility as isolated.
But the utility introduced a few allies in its fight before the House committee, the most persuasive of whom appeared to be a group of economic-development directors.
Gregory H. Wingfield, president of the Greater Richmond Partnership, testified in favor of a provision that would let electric utilities go to the corporation commission with rate discounts for individual customers. Many other states that Virginia economic developers compete against for industrial prospects have liberalized their policies on rate discounts, he said.
``If we do not have this enabling legislation,'' Wingfield said, ``we will not be competitive with our neighbors to the south.''
But representatives of the Virginia Committee for Fair Utility Rates, said the legislation is not the economic-development aid proponents claim it to be. The committee represents 20 of the state's largest industrial companies, which are big buyers of electricity.
Louis Monacell, a committee attorney, said recently that Virginia Power's intention with its new rate freedom will be to force its large customers into long-term power-supply contracts by leveraging one against another. Then, when and if competition is introduced, those customers won't be able to shop for lower-cost power elsewhere, he said.
Monacell said that until customers can freely shop for power, the commission should be required to stick to the tradition of making all customers of a certain class - industrial, commercial or residential - pay the same rate per kilowatt hour.
Jean Ann Fox, president of the Virginia Citizens Consumer Council, said her main complaint about the legislation is that it opens the door to the abandonment of traditional rate regulation. The state shouldn't change utility regulations until all customers can benefit from competition.
But Virginia Power's Rhodes contended that the bills will help all customers. He said that some of the same industrial customers opposing the Virginia Power measures are working in Congress to pass measures that would let them grab the lion's share of any benefits to customers from a competitive market.
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