The $81 million rate increase that will be imposed by Virginia Electric & Power Co. on Monday will be partially offset by a $58 million reduction in the utility's fuel charges effective the same day. This means that the net annual increase Vepco customers will face will be $23 million, or $1.88 on the average consumer's bill of $74.88. Vepco is permitted to impose the increase because the State Corporation Commission failed to complete action within 150 days on a $175.2 million rate increase the utility filed with the agency.

Virginia Electric & Power Co., taking advantage of a failure to act by the state agency charged with regulating it, plans to impose a $81 million rate increase next week that has been challenged as "clearly excessive" by the state attorney general's office.

The rate increase, which will add $1.88 to the average customer's monthly bill of $74.48, will come as the state's biggest utility invokes for the first time a three-year-old state law that allows utilities to impose general rate increases temporarily if the State Corporation Commission (SCC) has failed to rule within 150 days from the date the increase was requested.

A spokesman for the commission said today the agency has been unable to act on the Vepco request during the 150-day time period partly because it has been swamped by a barrage of unusually complex utility rate requests. Moreover, the hearing examiner who conducted a week of hearings on Vepco's request last month has been on vacation for the past two weeks and has yet to file his report to the three SCC judges. An SCC official said today it would be a "physical impossibility" for the hearing examiner's report to be done by Monday's deadline.

Vepco's decision to impose the rate increase drew a swift rebuke from a spokesman for consumer groups that have been conducting a statewide letter-writing campaign protesting the increase.

"We're talking about millions of dollars that are going to be coming out of the pocketbooks of consumers," said Scott Reynolds, staff coordinator for the Fair Energy Campaign by Virginia Action, a coalition of consumer, civil rights and other citizen groups. "We think its a terribly unjustified rate increase."

Vepco spokesman Rodney Smith emphasized that the full weight of the increase will be mitigated by the fact that Vepco is also implementing on Monday a fuel charge reduction, stemming from lower costs for coal and improved performance at its coal and nuclear power plants. As a result, a potential average increase of $3.80 per month has been cut by nearly two thirds, he said.

In addition, Smith said, if the SCC later rules that its rate increase is too high, Vepco will refund the money with interest in the form of a credit to consumers on their future bills. "There really is no penalty to the customer," Smith said. Vepco's action, however, is likely to fuel the controversy that has surrounded the rate increase since it was requested on March 31.

At the time, Vepco asked for a $175 million increase, citing such factors as an inflationary increase in operating expenses and its costs building its cancelled North Anna 3 nuclear power plant. The commission first disallowed $29 million of the request and then removed $65 million attributed to North Anna.

The remaining $81 million request was then subjected to public hearings that were conducted by the hearing examiner last month. The hearings were unusually stormy, with hundreds of citizens, mobilized by Virginia Action, showing up to protest the increase. Another 1,400 letters objecting to the increase poured into SCC headquarters here.

In addition, the SCC's own accounting staff and the state attorney general's Office of Consumer Counsel have called the Vepco request unjustified. In a brief filed last Friday, the attorney general's office labeled the increase "clearly excessive."

The attorney general and SCC staff have cited, among other factors, a dramatic decline in interest rates and inflation that have lowered costs to Vepco. Virginia Action has asked the commission to actually lower Vepco's rates by $54.7 million, citing what it called large Vepco expenses for advertising, research and salaries to top management.

For example, the group said, Vepco contributed $6.7 million last year for research to the Electric Power Research Institute, a think tank for utilities, and another $3.7 million to other outside groups. Virginia Action also objects to salaries paid top Vepco executives, citing a report filed with the Federal Energy Regulatory Commission.

That report says T. Justin Moore, Vepco chairman of the board, received an annual salary of $317,770 plus another $50,000 in stock dividends in 1981, while being entitled to a pension upon retirement of $255,100; President William W. Berry received a salary of $230,151 with a promised pension of $132,000, and Executive Vice President Jack Ferguson received a salary of $176,536.

Virginia Action spokesman Reynolds said the SCC should set a "reasonable salary" for top Vepco top management of $60,000 a year. "The rate payers should only have to pay $60,000 and then if Vepco wants to pay them more, it should come from the stockholders," he said.

Smith, in response, said today that Vepco's compensation to top management is comparable to other public utilities and "somewhat below" that of other large corporations. As for Vepco's overall rate request, Smith said: "Our average price per kilowatt hour is below the national average, our rates for the decade of the 1980s have been below the rate of inflation and finally, our fuel costs per kilowatt hour are the lowest of the investor-owned utilities in Virginia."