Virginia Electric and Power Co. yesterday filed a request with the Virginia State Corporation Commission for a 9.8 percent increase in electric rates.
If approved in full, the increase would add $7.47 to the monthly bill of the average Vepco residential customer, on top of a fuel-factor increase of $2.34 a month that goes into effect today.
Meanwhile, Washington Gas Light Co. yesterday asked the Maryland Public Service Commission to approve an 8.6 percent hike in natural-gas prices for the company's customers in the state.
The gas rate hike increase would add $6.70 per month to the bill of an average WGL residential customer who uses gas for heating and $1.85 per month to the average residential bill of a customer who does not heat with gas.
Vepco's annual base-rate increase request proposes a two-stage rise: a 2.5 percent increase effective May 1, with the remainder to take effect Aug. 29. The electric company said its latest rate request will add $175.2 million to its annual revenues, which last year totaled $2.4 billion.
"The bulk of the request is to adjust rates so we're able to earn a fair return on stockholder investment," the utility's president, William W. Berry, said in an interview.
Although it was authorized to earn a 15.5 percent rate of return on shareholder investment last year, inflation and other factors reduced the actual return to 10.1 percent, Berry said. That rate of return, he said, trailed that of many other large utilities. "Our return on equity is not as good as many of them," Berry said.
Berry said that the Virginia Corporation Commission's policy of basing the rate of return on investment for utilities on past-year results meant a lag in revenues last year that the utility is now trying to make up.
As a result, he said, the rate of increase is much larger than the current inflation rate of less than 4 percent. The company said the total increase in its rates over the past three years, including the new request, is less than the increase in the consumer price index in the period.
Vepco also said that part of the increase is meant to recover some of the costs of abandoning construction of its North Anna Unit Three nuclear plant. The utility said the increase covers $26.9 million of the $481.7 million writeoff Vepco will take on the plant over the next decade.
Under the rate-increase request, Vepco's residential customers would bear slightly more of the increase than the utility's industrial customers. If the request is granted, the average residential electric bill for a customer using 1,000 kilowatt hours of electricity a month would rise 10.7 percent in winter, to $77.31 from $69.84, and 10 percent in summer, to $81.95 from $74.48.
Washington Gas Light's rate-increase request would add $24 million to the company's revenues, which last year were $682.8 million. The utility said it needed the higher rates to cover higher operating, maintenance and capital costs.
Another local utility, Potomac Electric Power Co., will also make a rate change effective today, reducing the fuel-factor charge for its Maryland customers by an average of $3.30 a month. Pepco said the reduction, which follows by four months another $1.17 drop in the fuel factor, is the result of lower fuel costs and the warmer than usual winter, which made it possible to purchase low-cost power from other utilities.