ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Saturday, February 17, 1996 TAG: 9602190019
SECTION: BUSINESS PAGE: A-6 EDITION: METRO
SOURCE: GREG EDWARDS STAFF WRITER
THE HOUSE CORPORATIONS COMMITTEE votes Tuesday on approving cheaper electric rates quickly.
A controversial bill that would allow the state to quickly approve cheaper electric rates for some industries goes before the House of Delegates' Committee on Corporations, Insurance and Banking on Tuesday.
The legislation passed the state Senate 23-16 on Feb. 1. It would also authorize the State Corporation Commission to deviate from the traditional method of rate regulation, which is to allow a utility a set percentage of profit.
A coalition that includes large industrial users of power, merchants, and consumer groups opposes the legislation, which is being promoted heavily by Virginia Power Co. of Richmond.
"The Virginia Power legislation would result in the worst possible situation for consumers - a deregulated monopoly," said Jean Ann Fox, president of the Virginia Citizens Consumer Council.
The legislation does away with protections for ratepayers and is premature because an SCC study of competition in the power industry is not yet complete, opponents say.
But Bill Byrd, a Virginia Power spokesman, said the bill doesn't require any regulatory changes. It only gives the SCC the ability to approve alternative rate regulation speedily if it's determined to be in the public interest. In light of the coming competition within the electric power industry, when rates will be set by the marketplace, it might be in the public interest to consider new ways of setting rates, Byrd said.
"It's a very anti-competitive piece of legislation," countered Charles Carmichael, a spokesman for the opponents. Large industrial customers such as DuPont and Ford that oppose the bill see it as a way for Virginia Power to lock up the market before it faces real competition, he said.
Both Virginia Power and American Electric Power Co. Inc., two of the state's largest utilities, say they need the flexibility to offer special rates to both new and existing industries to encourage economic development. Tennessee is the only state bordering Virginia that doesn't already offer economic-development rates, according to a map prepared by Virginia Power.
The special rates are one of the most powerful tools a state can have for attracting new business, Byrd said. The state's efforts last year to land a new plant for Nucor Corp., a steel maker, were hurt because Virginia Power couldn't offer special rates, he said, and Nucor wound up in South Carolina, where such rates are allowed.
West Virginia allows AEP to offer discounted rates to some industries in return for the right to curtail their power supplies during periods of heavy demand, such as on very cold days, said Dan Carson, AEP state president for Virginia.
It would be premature to say AEP would offer such discounts in Virginia, even if they are allowed to, he said.
LENGTH: Medium: 59 lines KEYWORDS: GENERAL ASSEMBLY 1996by CNB