The Republican and Democratic candidates for governor of Virginia have called for the state to require the Virginia Electric and Power Co. to guarantee a minimum productivity at nuclear power plants, where breakdowns increase electric bills.
Under terms of the guarantee, Vepco would not be allowed to automatically pass on to consumers the higher costs of burning coal and oil to generate electricity when nuclear output falls below a specified level.
The proposals by Republican nominee John N. Dalton and Democratic nominee Henry E. Howell were made. In separate speeches last Tuesday to a group of electric cooperative managers in Richmond.
They demonstrate a recognition by both candidates that the price of electricity, regulated by the state, is an important political issue. Electric rates have more than doubled since the last gubernatorial election in 1973 and more than half the increase has resulted from the fuel adjustment clause - the automatic pass through of coal and oil costs to customers.
Howell has made consumer advocacy and opposition to electric rate in creases a major theme of his political career, and folooers of this campaign were intrigued when the business-minded Dalton took a stand on the nuclear plant issue that is essentially identical to Howell's.
Enormous amounts of money are at stake in such a proposal, which would add greatly to the financial risks of the already uncertain nuclear power industry. Howell estimated that Vepco customers paid $70 million more for coal and oil in 1976 than they would have if Vepco's two nuclear units, Surry 1 and 2, had operated at full capacity.
No one expects generating plants of any type to operate all the time, but if Vepco had been penalized for roughly half of the nuclear plant idleness cited by Howell, the consequences would have been significant for the customer and harsh for the company. Rates would have been reduced about 3 per cent and profits roughly 20 per cent. The potential economic impact of the proposal would double over the next year as Vepco doubles its nuclear power capacity.
The Dalton and Howell proposal would obviously add to the risks of expanding nuclear power generation, since Vepco is allowed automatically to pass on all coal and oil costs to consumers by the State Corporation Commission, the utility regulating agency. A penalty on nuclear plant shutdowns would encourage greater reliance on conventional oil and coal plants, even if their operation is more costly for customers.
Howell's version of the nuclear standard proposal also would permit the company, but not the customer, to benefit from savings that result from nuclear operations that exceed the minimum standard. He said Vepco should be allowed to add to its earning any fuel cost savings resulting from nuclear operations above the minimum.
Howell called for the SCC to set 66.5 per cent of capacity as the standard for Vepco nuclear plant operations. He said that was the average for all U.S. nuclear plants last year and compared it to a 57.5 per cent operating record for Surray 1 and 2 during their first four years.
Dalton's position reflects a complete turnaround from previous statements on the automatic pass-through of fuel costs under the regulatory rule know as the "fuel adjustment clause."
As recently as Sept. 1, Dalton said in a speech at Manassas that state should concentrate on encouraging nuclear power development and not worry about the fuel adjustment clause. He said that if utilities are not allowed to pass on fuel costs automatically, they will be passed on anyway in the form of annual rate increases.
His change apparently is part of an effort to neutralize Howell's reputation as a consumer advocate and utility foe.
Howell said he still remains in favor of repealing the fuel adjustment clause althogether. He called his proposal for a minimum nuclear operating standard a first step in that direction.
How much either Dalton or Howell can do about utility regulation as governor is debatable. The SCC has almost comple discretion over rate regulation and the General Assembly has been reluctant to intervene with legislation, even during periods of rapid price increases.
A governor can propose utility legislation, but the type of proposals being made by both Dalton and Howell almost certainly would cuse at least as much controversy in the Assembly as President Carter's energy pricing proposals have caused in Congress.
Both candidates have also made the utility area that do not directly affect prices.
Dalton last week called for creation of a utility division under the governor that would take over utility oversight and representation of the public interest in rate cases, tasks now performed by SCC staff personnel under the direction of the same three commissioners who decide rate levels.
The attorney general also is empowered to represent consumers in rate cases.
In addition, Dalton proposed regular management audits of public utilities by the new division that would be similar to government audits of bank management.
He called for creation of an energy commission made up of consumers and energy specialists to advise the governor on energy development in the state.
Finally he endorsed use of the building code and tax credits to encourage conservation through insulation and other techniques.
Dalton's utilities division seems to be an expanded version of Howell's proposal that an agency under the governor monitor utility management.
Howell also has called for expansion of the SCC to five members by adding two "consumer" commissioners, creation of an elected Consumer Protection Agency, "low-cost" loans for insulation that would be paid through utility bills and legislation mandating certain utility accounting and management practices.