The Virginia Electric and Power Co. could save $50 million on its current building program by correcting its "undermanaged" operations, a team of consultants reported yesterday.
After studying Vepco's construction management, and nothing else, for six months, the Los Angeles-based firm of Theodore Barry and Associates gave Vepco "a 4 to 7, or 4 to 6 out of a possible 10" overall grade, in the words of Dennis Callaghan, the firm's Atlanta office manager.
"These recommendations aren't going to reduce customers' rates today, but over time they will reduce the amount of increase needed over the next few years," Callaghan told a press conference.
The consultants' criticisms centered on "informal" practices at both the North Anna nuclear generating and Bath County pumped storage hydro-electric construction sites where $2.1 billion in construction is in progress. The utility lacks proper inventory records, needs to boost worker productivity and to computerize and install better financial planning programs, the study said.
Vepco senior vice president William L. Proffitt said many of the report's 95 specific recommendations already are being implemented and the others are being studied. The overall report, he said, "demonstrates that the company's construction management effort is performing at a high level."
The Virginia State Corporation Commission, which regulates utilities, ordered the Barry study last August after a former Vepco accountant, Nathaniel W. Hatch, alleged that he could document at least $63 million worth of waste and mismanagement at the North Anna site alone.
Hatch's charges concerned events of five and 10 years ago that could not be adequately investigated, Callaghan said yesterday.
All Hatch's information was made available to the consultants and "all his concerns were addressed," Callaghan said.
"The present program really has not been mismanaged (by Vepco) but we definitely feel that certain areas have been undermanaged . . . and a significant level of savings can be obtained by correcting that," he summarized. The report did not address the validity of past decisions to build one kind of power plant rather than another, or whether designs used were adequate, but only concerned the management of the plans adopted, he explained.
Many consumer group criticisms of Vepco, which is the nation's eigth largest utility, have centered on the questions of overall company direction and policy that are not addressed in this study.
In a related development, the Nuclear Regulatory Commission yesterday reafirmed its authorization for an operating license at North Anna, where consumer group criticism has stalled the licensing process for several months.
The Barry study praised Vepco management for "their commitment to improvement," their "acceptable level" of worker productivity and their hiring of technically competent staff. It made criticisms and recommendations in six general areas:
Engineering controls need "significant improvement." A total of $36 million has been spent at North Anna redoing certain jobs, and responsibility for the extra cost can only be assigned for half that amount because of inadequate monitoring and reporting. "Vepco may owe zero or all $18 million. It's paying all of it . . . nobody's really sure who's responsible," Callaghan said.
Construction materials are poorly watched and inventory listings need immediate attention. The North Anna site has at least $1 million in unneeded electrical equipment lying some of the money, Callagahn said, around that could be sold to recover Management of construction workers relate to their bosses in a "quite informal" way and have a productivity level that is equal to or slightly better than that of other utility workers but could be improved. Vepco's 4,300 construction workers actually work 40 laghan said, compared to an 85 percent to 55 percent of the time, Cal-cent level regarded as the maximum possible.
Project planning, scheduling and cost estimation have relied too much in the past on Vepco's chief contractor, Stone and Webster. Changes are slow to be implemented and much of the planning process ought to be computerized, the report said.
While financial planning and accounting technically are adequate, they have major shortcoming in being transferred to action and related to overall goals.