THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Thursday, June 20, 1996 TAG: 9606200393
SECTION: BUSINESS PAGE: D3 EDITION: FINAL
SOURCE: BY DAVE MAYFIELD, STAFF WRITER
LENGTH: 47 lines
Virginia Power said Wednesday that it has formed an alliance with three other utilities to coordinate operation of their transmission systems.
The Richmond-based utility, a unit of Dominion Resources Inc., said it signed an agreement with Allegheny Power of Hagerstown, Md.; Centerior Energy of Independence, Ohio; and Ohio Edison of Akron, Ohio.
The alliance, which does not include the transfer of any assets, will help the utilities manage transmissions on the rapidly growing wholesale electricity market.
That market, which involves the sale of power to other utilities, municipalities, electric cooperatives and public power authorities, produced about $80 million of Virginia Power's $4.35 billion in revenues last year. That is a little less than 2 percent of its overall power sales.
Wholesale sales have been growing far faster in percentage terms than so-called retail sales of power - to actual end users such as factories, shopping malls and homes.
One reason for the rapid growth in wholesale sales is the federal government's push to give wholesale power customers like co-ops more freedom to bypass their local utilities to purchase electricity.
Eventually, retail customers, beginning with factories, are likely to enjoy that same freedom.
Indeed, the threat of greater competition has prompted utilities like Virginia Power to slash their work forces in the past few years. Since early 1995, Virginia Power has cut about 1,400 jobs. And it has said more cuts are likely this year.
Virginia Power is regarded in industry circles as slightly better than average in its ability to cope with competition. Fitch Investors Service L.P., a New York-based bond-rating agency, issued a report this week, for instance, that ranked Virginia Power 28th among 60 utilities it rated on a ``competitive position'' scale.
Some industry analysts have speculated that to improve their positions in a more competitive environment, Virginia Power and some other utilities may eventually choose to split their operations into separate enterprises: one for generating plants, one for long-distance transmission of power and still another for the local distribution of electricity to end users.
Bill Byrd, a Virginia Power spokesman, said the four utilities involved in Wednesday's announcement have not discussed formally combining their transmission operations into one. But he said their alliance may lead to some other interim steps toward independence - perhaps the hiring of a separate company to operate their transmission systems. by CNB