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Virginia Corporation Commission staff have discovered that Virginia Power Co. (VP) customers overpaid $11 million for fuel under a renegotiated coal-hauling contract with CSX Transportation. Without corrective action, VP would continue to bill ratepayers for excessive fuel payments through 2000, when the contract expires. Staff have recommended that all excessive fuel costs be disallowed, including refunds of previously recovered amounts, and that payments be continuously adjusted over the contract life.

The investigation grew out of the corporate dispute between VP and holding company Dominion Resources Inc. (DRI). VP officials alleged that DRI president and CEO Thomas E. Capps placed "undue and inappropriate pressure on them to renegotiate the CSX transportation contract" and to consider factors that would pass to VP ratepayers any future cost increases experienced by the railroad company. Commission staff found VP's original negotiation position reasonable and conceded that VP had made good faith efforts to evaluate the economic viability of the contract, despite CSX's failure to provide cost information. But staff concluded that "perceived pressure" from Capps caused a reordering of priorities, leading to a "final resolution that otherwise would have been unacceptable," in violation of state law requiring a utility to minimize fuel costs.

According to VP, Capps wanted to protect VP's business relationship with CSX, the utility's dominant coal hauler. Based on their investigation, staff "[do] not understand how expecting a vendor to fulfill contractual commitments, originally suggested by that vendor, violates participation in a good business relationship." (em LB

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