Virginia Electric and Power Co. will sell part of two nuclear power plants to a group of Virginia electric cooperatives for $800 million.
"There will be no immediate impact on electric rates," Vepco President William W. Berry said at a Richmond news conference yesterday, announcing the agreement with Old Dominion Electric Cooperative.
Old Dominion will buy a 25 percent interest in Vepco's North Anna 2 power plant, which went into operation last year; an 18 percent share of North Anna 3, scheduled to be finished in 1989; and 12 percent of the common facilities at Vepco's North Anna Power Station in Louisa County.
Old Dominion, also based in Richmond, is an umbrella organization that buys electricity for 15 smaller co-ops serving 258,000 customers in areas from the Blue Ridge Mountains to the Eastern Shore. Old Dominion buys virtually all of its power from Vepco already and now will move into the electrical generation business.
To pay for the two Vepco plants, Old Dominion has applied for an $827 million government loan guarantee from the Rural Electricification Administration.
The Reagan administration, however, is threatening to curtail government loan guarantees sharply and has already designated REA as a target for cutbacks.
Ernest M. Jordan, Old Dominion's executive vice president, said the co-ops are counting on the low-interest loan to finance the project. "We have other alternatives for financing, but they are quite remote," he conceded.
Old Dominion and Vepco have been negotiating the deal for seven years. The Virginia General Assembly passed a resolution five years ago encouraging the sale, and the State Corporation Commission has endorsed it.
To make the deal more attractive, the Virginia legislature approved a bill last year that eliminated a tax on the sale of power plants, cutting the price to Old Dominion by about $10 million.
The bill to sweeten the sale was written by state Sen. Nathan H. Miller, the Republican candidate for lieutenant governor, who has been criticized for pushing bills to benefit his private clients. Miller yesterday urged an investigation of the conflict-of-interest charges against him.
Although sale of the plants will not cut electric bills of Vepco customers directly, it ultimately could benefit both customers and stockholders of the troubled utility. Old Dominion representatives said they expect the purchase to hold down future increases in the co-op's electric rates.
Selling part of the plant will save Vepco from borrowing $800 million at today's near record interest rates. The cash Vepco gets from Old Dominion will pay for other projects, eliminating the need to sell additional stock to finance them. Selling more stock probably would depress the price of Vepco shares.
The agreement signed by Berry and Jordan calls for Old Dominion to pay Vepco about $300 million cash for its share of the existing facilities at North Anna. Later, Old Dominion would pay 18 percent of the cost of completing the North Anna reactor, an amount expected to total another $500 million.