THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Friday, January 19, 1996 TAG: 9601190709
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY DAVE MAYFIELD, STAFF WRITER
LENGTH: Medium: 73 lines
Some of the state's heating, cooling and electrical-services contractors think Virginia Power is laying plans to invade their turfs. They're organizing to fight a utility-backed bill in the General Assembly that would help pave the way for Virginia Power to enter new lines of business.
Utility managers met with representatives of nearly 40 Hampton Roads contractors last week to try to calm their fears. Virginia Power executives say the suspicions are unfounded.
But contractors who've attended such meetings say they're unconvinced. They think the utility has already taken the first steps to eventually market heating, cooling and electrical services. And they point to utility moves into contracting in other states - in Maryland by Baltimore Gas & Electric Co., for example - as indicators of what might happen in Virginia.
BG&E first sold appliances then moved into servicing them. Later it moved into kitchen remodeling and servicing heating and cooling systems. And in December 1994 it acquired one of Maryland's largest heating, cooling and plumbing contractors, Maryland Environmental Systems Inc.
``They would definitely have an unfair advantage,'' said Jack Oliver, sales manager for Chesapeake-based Smith & Keene Inc., which provides heating, cooling, plumbing and electrical services. ``Virginia Power needs to continue selling power and let us do our jobs.''
The bill that has drawn the contractors' ire is part of a package of proposals Virginia Power has laid before the legislature. Generally speaking, the measures would allow the State Corporation Commission more flexibility in the way it regulates electric utilities. The commission could even abolish the utilities' profit caps, if it so wished.
Virginia Power says the proposals would give the commission more leeway in an increasingly competitive nationwide electric-utility market.
But the contractors say one of the bills, which would let the state's power companies go into new lines of business, is unnecessarily permissive. Some want language inserted into the bill to prohibit utilities from entering their businesses. Other say they'd settle for language that would keep the utilities from getting into new lines unfairly, by subsidizing the operations with profits from their core operations, for instance.
``They could really misuse their monopoly status,'' said David Bailey, executive director of the Virginia Association of Plumbing-Heating-Cooling Contractors.
Virginia Power executives said they're willing to talk with contractors about amending the bill. But Larry W. Ellis, a Virginia Power senior vice president, said there is really no need.
``We certainly wouldn't want to get into direct competition with them after we've spent years developing relationships with them.''
Ellis said Virginia Power is considering marketing a warranty program for water heaters, heat pumps, air conditioners, furnaces and other appliances through a unit formed with an acquisition this week. The utility purchased the assets of two divisions of Atlanta-based A&C Enercom Consultants Inc. Terms weren't disclosed. The divisions provide energy services, including appliance-warranty programs, in 13 states.
If Virginia Power used the newly acquired operation to expand into warranty programs in Virginia, Ellis said the utility would hire contractors to provide warranty repairs. He said Virginia Power would seek competitive bids from contractors.
He said he wouldn't consider such an operation to be in competition with contractors. If anything, it would help increase overall revenues for them, he said, contending that is one of Virginia Power's goals.
But Smith & Keene's Oliver disagreed. He said such a program would shift power to the utility and that customers would be more inclined to call Virginia Power rather than contractors first when they need services. He said utilities should leave the marketing and pricing of services to contractors themselves. by CNB