RICHMOND, JULY 17 -- State utility regulators, saying the potential for reliable, independently produced electricity "exists largely on paper," granted Virginia Power's request today to meet future energy demands with its own $126 million generating facility.
In a unanimous, 13-page order allowing construction of a new Virginia Power plant outside Richmond, the three-member State Corporation Commission dealt a blow to a growing number of small power producers who are clamoring for a greater piece of the energy pie.
The commission, which has been criticized for not being tough enough with the large utilities it regulates, said it trusted Virginia Power's judgment in responding to increasing demands for power.
"The utility's management decisions of how best to accomplish its prescribed duties should be accorded considerable weight in this type of proceeding," the commissioners wrote.
In this case, they added, they were "reticent to interfere" with the company's pessimistic predictions about the reliability of power produced by outside sources.
"True, a number of parties have signed contracts with Virginia Power to supply power by 1990, and many others have expressed an eager willingness to do so," the commission said. "However, that fact, in and of itself, does not establish that the power will be there when the time comes to throw the switch."
Utility experts around the country were eagerly awaiting the ruling, believing that it could serve as a precedent for other states now grappling with the so-called cogeneration revolution in electricity production.
Relatively new cogeneration technology, which enables producers to extract a great deal of energy from small amounts of fuel, has given rise to an army of independent power producers who say that they offer consumers a better deal than giant utilities.
Roger F. Naill, vice president of Applied Energy Services, an Arlington-based cogenerator that intervened in the Virginia Power case, said today that he was not surprised by the ruling "because that seemed to be the predisposition of the commission."
"We look forward to the next round and hope to provide the next chunk of power that Virginia Power customers will need," Naill said.
Ronald H. Leasburg, the Virginia Power vice president who will oversee the design and construction of the plant, called Chesterfield 7, issued a brief statement saying that the facility "is in the best interest of our customers."
Construction of the gas-fired, 210-megawatt plant will begin early next year, with completion by June 1990, the company said. The facility's main components have been built and are being tested by General Electric.
Power produced by Chesterfield 7 will feed into Virginia Power's central grid of electricity and be dispersed to the utility's 4 million customers between Northern Virginia and northeastern North Carolina.
In its ruling, the State Corporation Commission said it will continue to encourage the development of small power plants in Virginia. However, the commissioners added, "We are not prepared . . . to force the state's major electric utility to place complete reliance on mere promises for all of its future needs.
"Our view is that this massive cogeneration potential presently exists largely on paper," the commission said.