RICHMOND -- An attorney for the State Corporation Commission says a competitive bidding system for power suppliers proposed by Virginia Power may not be legal.

Wayne N. Smith, an SCC associate counsel, says "the lawfulness of a bidding program ... is fraught with doubt."

Virginia Power currently negotiates with cogenerators to determine private power supplies. The utility has said a bidding system would be the most efficient method of awarding contracts and the least costly to consumers.

Cogenerators, which simultaneously produce steam power for industry and electricity for sale to utilities, have opposed the bidding system proposed by Virginia Power and its parent company, Dominion Resources Inc.

John E. Cunningham, a Virginia Power lawyer and manager of regulation services, said the commission should consider the public benefits of bidding. "If there is a close call ... it seems like erring on the side of the consumer is the place to be," he said.

The SCC staff last month issued a report endorsing a competitive bidding system, but with "a number of concerns about the legality of bidding programs." The report responded to a commission order last fall to investigate bidding.

At a hearing last month, Smith said opponents of bidding had raised legitimate questions about its legality, and the commission directed that interested parties file memorandums.

Smith's latest report rejects Virginia Power's arguments that competitive bidding is legal because several other states have begun bidding programs without challenge.

The Federal Energy Regulatory Commission has not issued rules to allow bidding, Smith said.

Smith said bidding is "fundamentally incompatible" with the SCC's system of allowing utilities and cogenerators to negotiate over contracts, with the commission acting as arbitrator if talks fail.