ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Sunday, January 7, 1996 TAG: 9601110129
SECTION: BUSINESS PAGE: D8 EDITION: METRO
SOURCE: GREG EDWARDS STAFF WRITER
Executives at local gas and electric utilities are expecting a better year in 1996 and among the reasons are this winter's colder weather and the construction of new housing.
Roanoke Gas Co., for example, said its sales are strongly influenced by both trends, and the Roanoke Valley housing market has been strong for the past two to three years, according to the utility's vice president John Williamson III.
The company expects customer growth of around 3 percent this year, the rate at which the company has grown for the past two to three years, Williamson said. Local building officials are projecting permits and starts for new construction to continue this year at recent levels, he said.
Roanoke Gas, whose fiscal year runs from Oct. 1 through Sept. 30, generally makes its money in its first and second quarters, which fall during cold-weather months.
Last year's warmer than normal winter, depressed the company's profits and forced it to find ways to cut expenses. Roanoke Gas expects that more normal temperatures this year will give a boost to the bottom line.
November, for example, was the coldest its been since 1976, and the company's weather forecasters are predicting normal seasonal temperatures throughout the remainder of the winter, Williamson said.
Also good for Roanoke Gas' outlook is that the company's industrial customers such as Roanoke Electric Steel Corp. and Yokohama Tire Co. are going strong, Williamson said. Roanoke Gas is expecting an increase of 15 percent in its gross gas sales this year over last year, he said.
American Electric Power, known previously by the name of its operating subsidiary Appalachian Power Co., will also benefit from more normal weather, according to Dan Carson Jr., AEP's state president for Virginia and Tennessee. Customer growth at AEP in Virginia will be modest, he said.
Because of the warm winter in 1995, the company's sales were up less than 1 percent for the first 10 months of last year, but November was roughly 60 percent colder than a year earlier, he said.
The biggest story at AEP, however, is the reorganization of the Columbus, Ohio-based utility. In the past AEP served its customers through semi-independent regional power companies, such as Appalachian Power of Roanoke. AEP, however, has reorganized itself by the functions it performs - power generation, transmission and distribution - rather than by geographic service area. From now on it will provide power distribution and other services under the AEP name throughout its service region, which covers parts of seven states.
In the past electric utilities have operated as government-regulated monopolies but that also is changing. Competition is already at work in the wholesale market for power as a result of the 1992 Energy Bill and is coming on the retail level. Some in the industry even speculate that one day customers will be able to choose a power supplier for their individual residences.
The generation function of AEP and other companies will be deregulated and will compete in the open market for the sale of its power, Carson said. The transmission and local distribution lines will continue to be regulated to protect consumers and ensure access to competing power producers.
Carson's organization, based in Roanoke, will be involved in power transmission and distribution.
The reorganization has brought some AEP workers to Roanoke as others have left the area for other localities. Former Appalachian Power Co. president Joseph Vipperman, for instance, has moved to Columbus to head AEP's transmission business.
LENGTH: Medium: 70 lines ILLUSTRATION: GRAPHIC: charts - 1995 Roanoke Regional Utilities Usage colorby CNBSTAFF