Virginia Electric & Power Co. threatened today to stop construction of its $1 billion Bath County, Va., hydroelectric plant unless the Virginia State Corporation Commission promptly grants it the financial relief it wants.
Vepco reviewed two rate increase requests already filed and one it plans to file that together would generate an additional $109 million in revenues for the utility.
The planned rate increase request, which Vepco would like to see take effect next July 1, would generate $45 million and would increase a typical monthly residential bill, for 1,000 kilo watt-hours, by about $2.
Vepco also presented four different ways to recover a $125 million short-fall between what it estimates it is paying for fuel this year and what it is charging customers for that fuel in their monthly bills. The plans would recover the money in one, two, three or five quarters beginning Oct. 1.
During an unusual four-hour hearing before the SCC, Vepco officials said the utility is suffering serious cash-flow problems. The utility attributed these problems partly to the SCC's rejection of Vepco's requests to recover current fuel costs and to other factors such as increased costs of fuel and the closing of two nuclear plants by the Nuclear Regulatory Commission.
Following the hearing, Vepco President Stanley Ragone denied suggestions that the threat of halting construction was orchestrated to pressure the SCC, particularly since its last two requests for relief were cut sharply by the commission. The SCC has planned a rate hearing for Vepco in September.
"No sir," Ragone said. The threat "was done because it's a fact" that the company has a a cash-flow problem. "We're not springing anything on anyone. This was brought about by the commissioners' delays in allowing Vepco to recover current fuel costs, he said.
Any decision by the commissioners is not expected before the Vepco hearing on Sept. 7.
Ragone said the utility will wait until the SCC decides the September case before halting construction at the Bath facility.
The hearing was requested by two of the three commissioners, Preston C. Shannon and Thomas P. Harwood, as the result of Vepco's announcement last week that the Bath project may be halted. Commissioner Junie Bradshaw is out of town.
The hearing was purely for informational purposes, and Vepco didn't submit any requests formally. Shannon said at the end of the hearing that it had been "very informative" and "we will evaluate the situation."
But throughout the hearing, Vepco officials said that part of their problem would have been solved had the SCC granted all of its request for a $54 million fuel-factor adjustment three weeks ago rather than $9.8 million.
Shannon, however, seemed skeptical during the hearing that the utility had not used all its resources to alleviate its cash-flow problems. He suggested that the company investgate selling stock to Virginia residents. He also said the utility could accrue about $315 million by selling its gas company and agreeing to an offer by a number of rural cooperatives to buy some of its nuclear-generating capacity for $250 million.
Shannon also noted that Vepco received a $111 million settlement from Westinghouse Corp. last week resulting from a lawsuit and that Westing-house will pay the utility an additional $41 million next year.
But Vepco officials said that the settlement already had been spent to reduce the utility's short-term debt to $150 million.
Vepco lawyers are drafting a questionnaire for its customers to determine whether they would be interested in a special plan to buy the company's stock, officials said.
Vepco had considered ending work on its North Anna Unit Two and two Surry nuclear-generating units, but felt that could be detrimental to its cash flow and to customers in the long run. Ragone predicted that Surry Unit One will return to service by Oct. 1, and Unit Two by Nov. 1, and that commercial operation of North Anna Unit Two will begin on Dec. 1.
By stopping construction of Bath now, Vepco can save $67 million immediately, its officials said. The company already has spent $160 million on construction at Bath this year.
Halting construction, however, also would result in the loss of about 3,400 jobs, a $6-million-per-month payroll. In its attack on the commission's refusal to grant it recovery of current fuel costs, Vepco officials said that the utility's financial condition and what they consider the SCC's inadequate actions may affect its bond rating and future sale of stocks.