The U.S. Office of Consumer Affairs asked the Federal Energy Regulatory Commission yesterday to conduct an unprecedented federal investigation of the management of Virginia Electric and Power Co.
The White House consumer office said it is concerned that Vepco customers may be paying unnecessarily high electric bills because of the way the company is run.
The consumer agency joined the state of North Carolina, two North Carolina congressmen and a consumer group in urging FERC to look into Vepco's operations.
The Energy Regulatory Commission controls only wholesale prices of electricity that power companies sell to other utilities. But FERC could use that authority to raise issue that affect the electric bills of every Vepco customer.
Vepco's executive vice president, William Berry, issued a statement saying the federal probe "would only rehash previous investigations" of the company.
"Our operations have been carefully scrutinized by (state) regulatory commissions and outside consultants," Berry said. "Another investigation on the same issue would be costly, time consuming and would direct available resources away from current improvement efforts."
In a petition to FERC, the Office of Consumer Affairs called Vepco's main power plants "extremely unreliable." Three of Vepco's nuclear power plants are now closed down for repairs and inspections and several of its coal-burning plants have suffered long shutdowns.
When its own power plants are unable to generate electricity, Vepco must buy power at higher prices from other utilities, said office of Consumer Affairs attorney Harold T. Judd.
That means Vepco's customers must pay both for costly power plants that don't work and for power purchased from other companies, Judd said in the agency's complaint to FERC.
"In addition, Vepco may have failed to pursue the conversion of coil-fired generating facilities to coal-fired as expeditiously as possible," the filing noted. "If so, this too has resulted in higher cost than an efficient utility would incur."
The call for a federal investigation of Vepco is believed to be the first such request ever made by the Office of Consumer Affairs, the agency headed by President Carter's consumer adviser, Esther Peterson.
If FERC agrees to investigate Vepco, it would also be a precedent-setting step by that agency.
At the very best, the five FERC commissioners are expected to direct their staff to study the complaints about Vepco, to determine whether a full-fledged investigation is needed, sources at the agency said.
The state of North Carolina, in a petition filed last Friday, urged FERC to conduct a broad-scale investigation of Vepco with public hearings before an administrative law judge.
Vepco provides electricity to 22 counties in Northeastern North Carolina as well as to most of Virginia and part of West Virginia.
Criticizing Vepco is a politically popular stance in North Carolina. Also urging FERC to act were two North Carolina Democrats, Sen. Robert Morgan and Rep. Walter B. Jones, whose district includes most of the counties served by Vepco.
The chief complaint of the North Carolina residents served by Vepco is that they pay much higher electric rates than their neighbors who buy power from Duke Power Co. or Carolina Power & Light.
The issue was brought to FERC because Vepco supplies electricity to many municipal power companies in North Carolina and those prices are regulated by the federal government.
In a petition to FERC by the state attorney general and the staff of the state Utilities Commission, North Carolina blasted Vepco for mismanagement and urged punitive actions against the company.
"Vepco's abortive adventures with nuclear power have not only been inept, and have not only imposed an excessive burden on Vepco ratepayers, but have resulted in Vepco being the most consistent violator of Nuclear Regulatory Commission (NRC) regulations," the state's attorneys charged.
"Vepco's mismanagement is also shown in its inexcusable delay in taking reasonable steps to convert its expensive oil-fired generating facilities to coal.
"Vepco is located in one of the world's most important coal producing regions. Yet it uses expensive imported oil to generate electricity, thus imposing a crushing burden on its ratepayers while making the United States more dependent on OPEC."
The North Carolina petition said FERC hearings should be held to decide what to do about Vepco.
"It may be necessary for the commission to reduce Vepco's rate of return (its profit on the money invested in power plants and facilities) dramatically to send a clear signal to Vepco stockholders that the time has come to change management practices," the state's complaint said.
The state asked FERC to order Vepco to pay back to its customers "unjust and unreasonable" fuel costs resulting from the use of imported oil and said other specific remedies may be needed.