The Federal Energy Regulatory Commission voted yesterday to conduct an unprecedented eight-month staff investigation of the operations of Virginia Electric & Power Company.
The probe by FERC staff will assess complaints that Vepco's customers are paying unnecessarily high electric bills because the company is mismanaged. a
If the FERC staff finds some basis for the complaints the agency will expand the investigation into a full-fledged federal inquiry and hold public hearings on Vepco's performance.
The FERC staff study was ordered in rsponse to petitions filed by a North Carolina consumer group and endorsed by several other state and federal officials.
Late yesterday, Vepco Executive Vice President, William W. Berry issued a statement saying the utility will cooperate with the investigation even though it considers the probe costly and unnecessary.
"We know that an impartial investigation will conclude as others have in the past, that this is a well managed, efficient company," Berry said.
FERC's decision to investigate Vepco was announced as critics of the utility were holding a strategy session on Captial Hill.
The investigation was requested by Operation Overcharge, a group representing the chambers of commerce in the cities Vepco serves in North Carolina.
The North Carolina group asked the federal agency to investigate why the wholesale prices Vepco charges municipal utility companies in North Carolina are 40 to 50 percent higher than the rats charged by Carolina Power & Light and Duke Power Co., the two other elctric companies serving that state.
FERC has authority only over wholesale electric rates, but the investigation will study issues that affect the electric bill of every Vepco customer.
Operation Overcharge's demand for the investigation of Vepco was endorsed by the U.S. Office of Consumer Affairs, the state of North Carolina, two North Carolina congressmen and U.S. Rep. Herb Harris (D-Va.).
Harris said the investigation "will open the door to a full study of Vepco's operations."
Harris charged that Vepco customers pay exorbitant bills because of Vepco's multimillion-dollar investment in nuclear power plants that often are shut down and unable to produce any power. Three of Vepco's four nuclear units ar currently out of service, forcing the company to either pay power from other utilities or to use more costly coal and oil burning plants.
"Vepco customers are paying twice for the same service," Harris complained. He said the company charges consumers for building its nuclear plants, then charges them again for power that comes from other sources because the nuclear plants don't work.
Other issues the FERC staff will study include Vepco's heavy use of oil -- much of it imported. Critics complain that Vepco burns more oil than coal, even though it is locatd in one of the world's most important coal producing regions. The company counters that it switched from coal to oil to comply with federal air pollution rules.
FERC staffers also will look into the price Vepco pays for coal. Critics claim the company has no incentive to get the best price possible because it can pass its fuel cost on to customers through the fuel adjustment charge.
Although the agency will not hold public hearings during this phase of the investigation, it plans to subpoena Vepco's records and to require Vepco executives to testify at closed-door sessions, agency sources said.