Virginia Electric and Power Co. proposed yesterday a second reduction of about 4 percent in customers' bills, saying it had previously overestimated its fuel costs.

The suggested cut in Vepco's "fuel factor" -- an amount reflecting changes in the utility's oil, coal and other fuel costs -- would decrease a typical customer's bills by $2.55 a month, according to Vepco officials.

Last month, the utility proposed a similar "fuel factor" reduction. Together, the two cuts would reduce a typical homeowner's monthly bill by $5.30 or 8.4 percent, according to Vepco officials. The utility recommended that the decreases go into effect for the July billing period.

The recommended cuts in the "fuel factor" may be partly offset, however, by Vepco's recent request for a 5 percent increase in its rates. The utility says it still plans to press for this rate rise, citing the impact of inflation on its overall costs.

Vepco describes a typical residential customer as using 1,000 kilowatt hours of electricity a month -- an amount close to the average for most of the utility's 1.1 million Virginia customers.

"We're certainly happy that they've come around to our way of thinking," said Jerri Brown, board chairman of the Virginia Consumers Congress, yesterday. "We always thought they've been overestimating the 'fuel factor.'" Brown noted, however, that his group plans to examine the data on which the proposed reduction is based.

Vepco recommended the decrease in response to a request by the State Corporation Commission for additional information about the utility's recent fuel expenses. Jim Wittine, the SCC's energy regulation director, said the agency's staff would review the new Vepco proposal shortly.

Vepco officials said the utility recommended the cut because it spent $31.5 million less for fuel in April and May than it had predicted. The company saved money by buying electricity from neighboring utilities that relied on coal-fired generating stations, instead of using its own, more costly, oil-powered plants, Vepco officials said.

Vepco President William W. Berry said the revised fuel costs reflected the company's "continuing effort to bring our customers electricity at the lowest possible cost."

The two recently proposed decreases were the first suggested by Vepco in a decade. The utility still has a separate request for a $72.6 million rate increase -- about a 5 percent rise -- pending before the State Corporation Commission. Vepco officials attributed the request partly to increased business expenses stemming from inflation.

Berry told a news conference in Richmond, however, that a typical customer's monthly bill would be reduced by more than 3 percent even if the proposed rate rise is approved. "Assuming the commission gives us everything we ask for -- both up and down -- customers will pay less for electricity at the end of the year than they did at the beginning," Berry said.

Vepco officials have also forecast a further decrease of $2.57 a month in a typical customer's bills if it is permitted to put its North Anna 2 nuclear unit into commercial operation later this year. Such a step requires approval by the Nuclear Regulatory Commission. Vepco officials say the plant would produce the savings because nuclear fuel is cheaper than oil and coal.