DATE: Tuesday, June 17, 1997                TAG: 9706170339

SECTION: BUSINESS                PAGE: D1   EDITION: FINAL 

SOURCE: BY AKWELI PARKER, STAFF WRITER 

                                            LENGTH:   57 lines

VA. POWER'S PLANTS ARE NATION'S TOP COST-CUTTERS

Consider it the ugly duckling story of nuclear power.

In the late 1980s Virginia Power's nuclear division was, as company officials kindly put it, ``in a ditch'': poorly run and on the Nuclear Regulatory Commission's Watch List.

Today, the company is considered among the best.

Virginia Power's Surry and North Anna nuclear plants produced energy more cheaply than anybody in the nation in 1996, the Utility Data Institute announced Monday.

Surry rose from 16th in the 1995 ranking.

Virginia Power President James T. Rhodes said the low-cost operations of the nuclear plants have been key in keeping customer electric bills stable throughout this decade and attracting industry with relatively cheap power.

Surry's turbines cranked out electricity for $11.45 per net megawatt-hour generated in 1996.

That figure takes into account the sum of operations, maintenance and fuel costs, divided by the net amount of megawatt-hours produced. North Anna did it for $12.65 per megawatt-hour.

As the institute data started coming out last week, the feeling throughout Virginia Power's nuclear division was well, electric, according to Jim Norvelle, a spokesman for Virginia Power's nuclear business unit.

``When we looked at the preliminary numbers, we thought, `Hey, we could be one and two,' '' said Norvelle.

Industrywide, production costs dropped 1.6 percent, an average of about $20 per megawatt-hour.

Those costs should fall even more as utilities, facing the specter of competition, endeavor to make their nuclear operations leaner and more cost-effective.

``Many plant owners are obviously looking at their situation in an increasingly competitive market for bulk power supply and continuing to work on controllable costs,'' said Chris Bergeson, Utility Data Institute vice president.

At hundreds of millions of dollars per plant, many nuclear stations are gorilla-sized burdens on the backs - and books - of the utilities who own them.

The electric utilities' options, then, are pretty straightforward: Either whip their nuke operations into shape or get rid of them.

Nearly a dozen stations or reactor units have been or are in the process of shutting down, according to the Nuclear Regulatory Commission.

Virginia Power isn't showing signs of closing shop on nuclear power. In fact the company is applying for extensions on the 40-year operating licenses of its plants.

Virginia Power nuclear is also looking for new revenue streams - consulting is a pretty lucrative business these days. The company is advising one consortium on nuclear waste storage techniques for a site in Wyoming.

On the low-cost production front, the company isn't resting. The division would eventually like to hit $10 per megawatt-hour.

``Ten years ago, no one thought ($12 per megawatt-hour) was possible,'' said Norvelle.

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