The Virginia State Corporation Commission has announced it will conduct a broad-based investigation into current earnings and rate structures of Virginia Electric and Power Co. in light of changes under way in the electric market. The commission's staff had found, as part of an annual earnings review, that the utility "is clearly in an overearnings position."
The staff observed that the company may have "potentially large levels of stranded costs" because of uneconomic power contracts with nonutility generators. The staff said the commission could decide either to allow the company to maintain its current rate levels or order a rate reduction.
The commission consolidated several ongoing proceedings, including review of an alternative rate plan the utility filed that would freeze rates through the year 2001 and a proposal to use part of its earnings to recover stranded costs through a surcharge.
It said that it would decide whether to restructure the utility's rates to reduce any interclass subsidies that might exist and whether to require the company to offer rates for unbundled services. The commission also directed the company and its power suppliers to work together to renegotiate existing power purchase contracts or to seek other arrangements that would help lower the company's cost of service and rates. Re Va. Elec. & Pwr. Co., Case No. PUE960036, April 30, 1997 (Va.S.C.C.).
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