The Virginia State Corporation Commission today told its staff to try to persuade three gas utilities to refund voluntarily as much as $2 million in "excessive profits" earned by the companies because of abnoramilly cold weather last winter.
Chances that any refunds actually will be made appeared slim, however, because utility executives already have disagreed with SCC staff conclusions that their companies' profits were "excessive."
Richard D. Rogers Jr., general counsel to the SCC, said in an interview that there is no legal basis for forcing the companies to make the refunds.
None of the companies involved serves customers in the Washington area.
Democratic gubernatorial candidate Henry E. Howell called today's actions "a significant victory for consumers in Virginia."
On Feb. 11, Howell, acting as attorney for his wife, Elizabeth M. (Betty) Howell, filed a petition calling for an SCC investigation of gas and electric utility profits during the last winter. SCC staff officials said an investigation was begun before the Howell petition, but when it was filed, the three-member commission issued a formal order setting up the inquiry.
If the SCC staff findings on profits were accepted by the companies, refunds on last winter's total residential bills would roughly average $3.75 to each of about 110,000 customers in the Hampton Roads area, $19 to almost 30,000 customers in Roanoke and $12 to about 20,000 customers in areas north and south of Richmond. These rough estimates are based on date supplied by the SCC staff and the utilities.
In his final report today, Edward M. Vassar, director of public utility accounting for the SCC, said he found "excessive gross earnings" (before taxes) of $874,704 by the Roanoke Gas Co., $692,000 by the gas division of Virginia Electric and Power Co. and $439,556 by the Commonwealth Gas Distribution Co. Vassar's figure were for the yearing ending March 31.
Selection of a year ending with the coldest winter in decades was one of the aspects of the Vassar report that the utilities criticized.
Spokesmen for Vepco and Roanoke Gas said unusually mild weather in April and May of this year has partly offset high revenues in the winter months. Albert Buckley, president of Roanoke Gas, said his company's sales were 20 per cent below normal in April and 14 per cent below normal in May.
Buckley also said that his company's high profits last winter resulted not from sales to local natural gas customers but from the firm's propane business and sales of surplus natural gas to out-of-state customers.
Howell said at a press conference that he is confident that even if no refunds are made now, the SCC will order reductions in utility charges in future rate cases to offset last winter's profits.
However, in permanent rate cases, the commission discounts abnormal weather conditions when deciding whether a company's recent profits have been too high or low. Thus, a utility with high earnings in the last year would not be penalized with rate reductions if the SCC found that the profits resulted from unusual weather.
Vassar said in his report filed today that weather adjustments in permanent rate cases are proper, but said he did not make them in looking at last winter's profits because he thought that to do so "defeats the purpose of the study."
Weather adjustments proposed to Vassar by the companies would have reduced the earnings of all except Roanoke Gas to levels approved by the commission, according to figures in the report.
A weather adjustment is only one of many often complex accounting adjustments made determining whether utility earnings indicate the need for rate changes. In submitting earnings data for this inquiry, the Washington Gas Light Co., which serves Northern Virginia, included adjustments that showed an earnings deficiency for the year ending March 31.
The SCC told its staff to review WGL's accounting methods.