SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 8, 1998
Virginia Electric and Power Company
(Exact name of registrant as specified in its charter)
Virginia 1-2255 54-0418825
(State or other juris- (Commission (IRS Employer
diction of Incorporation) File Number) Identification No.)
701 E. Cary Street, Richmond, Virginia 23219-3932
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (804) 771-3000
(Former name or former address, if changed since last report.)
<PAGE>
<PAGE 2>
ITEM 5. OTHER EVENTS
Virginia Electric and Power Company (the Company) has reached a proposed
settlement of the consolidated proceeding pending before the Virginia State
Corporation Commission (the Virginia Commission) concerned with the Company's
1995 Annual Informational Filing. The settlement defines a new regulatory
framework for the Company's transition to electric competition. The major
provisions of the settlement are as follows:
A two-phased base rate reduction: $100 million per annum beginning March
1, 1998 with one additional $50 million per annum reduction beginning
March 1, 1999
A base rate freeze through February 28, 2002 unless a change is
necessary to protect the legitimate interests of the Company, its
shareholders or ratepayers
An immediate, one-time refund of $150 million for the period March 1,
1997 through February 28, 1998
A write-off of $220 million in regulatory assets
An incentive mechanism until March 1, 2002 for earnings above the
following return on equity (ROE) benchmarks:
1998 10.5%
After 1998 30-Yr Treasury + 450 basis points
All Virginia jurisdiction earnings up to the ROE benchmark flow
to shareholders.
Any earnings above the benchmark are allocated 1/3 to
shareholders, 2/3 to accelerated amortization of regulatory
assets; except that all earnings above the ROE benchmark
plus 270 basis points (initially 13.2%) go to accelerated
amortization of regulatory assets.
For financial reporting purposes, Virginia Power plans to write-off $220 million
of regulatory assets as a one-time impact to earnings in 1998 - a decrease of
$101 million (after tax) in net income ($220 million net of $65 million
accelerated cost recovery reserve balance). Other one-time items in 1998 are
expected to include the rate refund impact which represents a $97 million
(after-tax) reduction to net income, offset by an adjustment of $17 million
(after-tax) related to depreciation and decommissioning expense.
The proposed settlement, which was initiated by the Company, was reached on June
8, 1998, with all major parties involved in the case, including the Staff of the
Virginia State Corporation Commission, the office of the Virginia Attorney
General, and the Virginia Committee for Fair Utility Rates . The full text of
the proposed settlement is filed herewith as Exhibit 99 to this Form 8-K. A
public hearing is currently scheduled for July 10, 1998. The parties to the
settlement have requested the Virginia Commission to consider the proposed
settlement at that time.
<PAGE>
<Page 3>
Forward-Looking Information
This report includes discussion of forward-looking information concerning the
Company and the effect of the settlement on its future financial performance.
Statements based on management's expectations, beliefs, estimates and
assumptions are included. Actual results or outcomes could differ materially
from those expressed. Some important factors which could cause material
differences include additional regulatory action, unanticipated changes in
circumstances which require that the settlement terms be changed or further
addressed and other matters detailed in the Company's filings with the
Securities and Exchange Commission, including its annual and quarterly reports.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibit
Exhibit 99- Motion For Consideration of Stipulation and Changes in
Procedural Schedule and Stipulation dated June 8, 1998.
(filed herewith)
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
VIRGINIA ELECTRIC AND POWER COMPANY
By: /s/ J. A. SHAW
-----------------------------
J. A. Shaw
Senior Vice President and
Chief Financial Officer
June 9, 1998
COMMONWEALTH OF VIRGINIA
STATE CORPORATION COMMISSION
APPLICATION OF
VIRGINIA ELECTRIC AND POWER CASE NO. PUE960036
COMPANY
1995 Annual Informational Filing
COMMONWEALTH OF VIRGINIA
At the relation of the CASE NO. PUE960296
STATE CORPORATION COMMISSION
Ex Parte: Investigation of
Electric Utility Industry
Restructuring - Virginia
Electric and Power Company
MOTION FOR CONSIDERATION OF STIPULATION
AND CHANGES IN PROCEDURAL SCHEDULE
On June 8, 1998, the Staff of the State Corporation Commission,
Virginia Electric and Power Company, the Division of Consumer Counsel, Office of
the Attorney General, the Virginia Committee for Fair Utility Rates, the
Apartment and Office Building Association of Metropolitan Washington,
collectively referred to as the "Stipulating Participants," entered into a
Stipulation that resolves certain rate issues among themselves in these
proceedings. A copy of the Stipulation accompanies this Motion. The Stipulating
Participants have agreed that, if approved by the Commission and ordered into
effect, the provisions of the Stipulation will result in a just and reasonable
settlement of those issues, in that it would provide for an appropriate refund
to Virginia jurisdictional customers and a just and reasonable level of rates on
a going-forward basis; allow the Stipulating Participants to re-direct their
resources to the study and resolution of issues related to the transition to a
competitive electric market as provided in recently enacted Virginia House Bill
No. 1172, Senate Joint Resolution No. 91, and the Commission's Order
Establishing Investigation in Case No. PUE980138; and efficiently and
expeditiously reduce significantly the scope of these proceedings.
For these reasons, the Staff, on behalf of and with the support of the
other Stipulating Participants, by Counsel, moves the Commission, in lieu of
conducting the scheduled hearing on the testimony and exhibits of the parties as
originally contemplated (to the extent such testimony and exhibits relate to the
issues resolved by the Stipulation), to give appropriate consideration to the
Stipulation and, after such consideration, to approve it and the settlement of
the issues it covers. In connection with such consideration of the Stipulation,
the Staff requests that:
1. The Commission suspend the present schedule for filing of rebuttal
and surrebuttal testimonies.
2. The Commission establish a schedule for the parties other than the
Stipulating Participants to comment on the Stipulation and for the Stipulating
Participants to respond to any objections raised.
3. A hearing (presently scheduled to begin July 10, 1998) be used to
present the Stipulation and address any comments and responses that may have
been filed, together with any other issues raised by the parties or otherwise
specified by the Commission, rather than the originally contemplated hearing on
the prefiled testimony and exhibits of the parties and the rebuttal and
surrebuttal testimony that would be filed pursuant to the Commission's prior
orders.
4. Consideration of issues not resolved by the Stipulation ("Remaining
Issues") be considered separately, either in this docket at a later date, or in
a new docket or another existing docket.
WHEREFORE, Staff requests that the Commission give appropriate
consideration to the Stipulation, including an opportunity to comment and be
heard by all interested parties, make appropriate arrangements for such
consideration and for consideration of the Remaining Issues, and approve the
Stipulation and the settlement of issues it covers.
Respectfully submitted,
The Staff of the
State Corporation Commission
By: /s/ JAMES C. DIMITRI
_________________________
Counsel
James C. Dimitri, General Counsel
William H. Chambliss, Deputy General Counsel
State Corporation Commission
Office of General Counsel
P.O. Box 1197
Richmond, Virginia 23218
(804) 371-9671
June 8, 1998
<PAGE>
CERTIFICATE OF SERVICE
I hereby certify that a true copy of the foregoing "Motion for
Consideration of Stipulation and Changes in Procedural Schedule" was mailed
first-class mail, postage prepaid, this 8th day of June, 1998, to: Pamela
Johnson, Esquire, Virginia Electric and Power Company, P.O. Box 26666, Richmond,
Virginia 23261; Thomas B. Nicholson, Senior Assistant Attorney General, Division
of Consumer Counsel, Office of Attorney General, 900 East Main Street, Richmond,
Virginia 23219; William S. Bilenky, Esquire, 8133 Forest Hill Avenue, Suite 101,
Richmond, Virginia 23235; R. Peter Lalor, Commonwealth Power Corporation, 3
Koger Center, Suite 213, Norfolk, Virginia 23502; Edward L. Petrini, Esquire,
Christian & Barton, 909 East Main Street, Suite 1200, Richmond, Virginia
23219-3095; Kenneth G. Hurwitz, Venable, Baetjer, Howard & Civiletti, LLP, 1201
New York Avenue, N.W., Washington, D.C. 20005-3917; Jean Ann Fox, 114 Coachman
Drive, Yorktown, Virginia 23693; Donald A. Fickenscher, Virginia Natural Gas,
Inc., 5100 East Virginia Beach Boulevard, Norfolk, Virginia 23502-3488; Jeffrey
M. Gleason, Southern Environmental Law Center, 201 West Main Street, Suite 14,
Charlottesville, Virginia 22902; Marc C. Hebert, Esquire, Enron Capital and
Trade Resource, 2000 K Street, N.W., Suite 500, Washington, D.C. 20006-1872;
Michael L. Sarahan, Assistant City Attorney, Office of the City Attorney, 900
East Broad Street, Suite 300, Richmond, Virginia 23219; Frann G. Francis,
Esquire, Apartment and Office Building Association, 1050 17th Street, N.W.,
Suite 300, Washington, D.C. 20036; Kerri L. Boyer, Esquire, Multitrade of
Pittsylvania, 5301 Wisconsin Avenue, N.W., Washington D.C. 20015; Dennis R.
Bates, Esquire, Senior Assistant County Attorney, Fairfax County, 12000
Government Center Parkway, Suite 549, Fairfax, Virginia 22035-0064; Jon L.
Praed, Esquire, Latham & Watkins, 1001 Pennsylvania Avenue, N.W., Washington,
D.C. 20004; Robert L. Daileader, Jr., Esquire, Ogden Martin Systems of
Alexandria, One Thomas Circle, Suite 700, Washington, D.C. 20005-5802; John H.
Bucy, II, Coalition for Equitable Rates, 106 East Sixth Street, Suite 900,
Austin, Texas 78701; Johnson Kanady, III, Esquire, VHM, Inc., 100 Shockoe Slip,
Richmond, Virginia 23219-4140; Frederick H. Ritts, Esquire, Philip Morris USA,
1025 Thomas Jefferson Street, Washington, D.C. 20007; Donald R. Hayes, Esquire,
Washington Gas Light Company, 1100 H Street, N.W., Washington, D.C. 20080;
Kenworth E. Lion, Jr., Esquire, Lion Law Offices, 6501 Mechanicsville Turnpike,
Suite 105, Mechanicsville, Virginia 23111; Michael Quinan, Esquire, and Anthony
Gambardella, Esquire, Woods, Rogers & Hazlegrove, P.L.C., 823 East Main Street,
Suite 1200, Richmond, Virginia 23219; John Pirko, Esquire, Virginia, Maryland &
Delaware Association, 4201 Dominion Boulevard, Suite 200, Glen Allen, Virginia
23060; David Boies, Esquire, Doswell Limited Partnership, 5301 Wisconsin Avenue,
N.W., Washington, D.C. 20015; Archibald Wallace, III, Sands, Anderson, Marks &
Miller, P.O. Box 1998, Richmond, Virginia 23218-1998; JoAnne L. Nolte, Esquire,
Durrette, Irvin & Bradshaw, P.C., Twentieth Floor, Main Street Centre, 600 East
Main Street, Richmond, Virginia 23219; Evans B. Brasfield, Esquire, Hunton &
Williams, Riverfront Plaza, East Tower, 951 East Byrd Street, Richmond, Virginia
23219-4074; and William G. Thomas, Esquire, 510 King Street, Suite 200,
Alexandria, Virginia 22314.
------------------------
COMMONWEALTH OF VIRGINIA
STATE CORPORATION COMMISSION
APPLICATION OF
VIRGINIA ELECTRIC AND POWER CASE NO. PUE960036
COMPANY
1995 Annual Informational Filing
COMMONWEALTH OF VIRGINIA
At the relation of the
STATE CORPORATION COMMISSION CASE NO. PUE960296
Ex Parte: Investigation of Electric Utility
Industry Restructuring - Virginia
Electric and Power Company
Stipulation
This Stipulation sets forth the agreement among Virginia Electric and
Power Company ("Virginia Power" or "Company"), the Staff of the State
Corporation Commission ("Staff"), the Division of Consumer Counsel of the Office
of the Attorney General ("Attorney General"), the Virginia Committee for Fair
Utility Rates ("VCFUR"), and the Apartment and Office Building Association of
Metropolitan Washington ("AOBA"), collectively referred to as "Stipulating
Participants", as to an appropriate resolution of certain rate issues in the
above-captioned proceedings. As to Case No. PUE960036, these issues are included
in Virginia Power's 1995 Annual Informational Filing ("AIF") dated June 13,
1996, and the Staff Report filed on March 28, 1997. As to Case No. PUE960296
("1996 Rate Case"), the issues are included in the Company's Application,
accompanying Schedules and direct testimony filed on March 24, 1997, the
testimony filed on December 23, 1997, on behalf of the Attorney General, VCFUR
and AOBA and the Staf s testimony filed on March 24, 1998. The Stipulating
Participants believe that this Stipulation of these issues will result in a fair
and reasonable resolution of certain rate issues in the 1995 AIF and the 1996
Rate Case (including all issues that would be raised in a 1996 AIF); will
provide for an appropriate refund to Virginia jurisdictional customers and a
just and reasonable level of rates on a going-forward basis; will allow the
Stipulating Participants to re-direct their resources to the study and
resolution of issues related to the transition to a competitive electric market
as provided in recently enacted Virginia House Bill No. 1172, Senate Joint
Resolution No. 91, and the Commission's Order Establishing Investigation in Case
No. PUE980138; and will efficiently and expeditiously reduce significantly the
scope of the above-captioned proceedings.
The Stipulating Participants will, as soon as possible after execution
of this Stipulation, file it with the Commission, together with a motion of the
Staff requesting the Commission to (a) consider the Stipulation and such other
matters as the Commission may determine at a hearing (presently scheduled for
July 10, 1998 (the "Hearing")), subject to such changes in procedural dates and
in the hearing date as the Commission may direct, (b) retain for further
consideration in this docket or to transfer to a separate docket any issues that
have been properly raised in this docket and that are not resolved by the
Stipulation, and (c) enter an order prescribing appropriate procedures for other
parties to comment and be heard upon the issues presented in the Stipulation and
for the Commission's consideration of the Stipulation and such other issues as
may be considered at the Hearing.
<PAGE>
The rate plan proposed herein shall be a five-year plan extending from
March 1, 1997, through February 28, 2002 ("Rate Period"). A summary of the rate
refund, rate reductions, and write-offs by Virginia Power is as follows:
Refund: $150,000,000 for the 12 months ended
February 28, 1998 (plus interest)
Rate Reduction: $100,000,000, effective March 1, 1998 (and
applicable refund plus interest)
Additional Rate
Reduction: $50,000,000, effective March 1, 1999
Write-offs: $220,000,000 minimum, with additional
write-offs depending on earnings
The stipulated agreements are as follows:
1. Virginia Power shall refund to its Virginia jurisdictional
customers an amount consisting of (a) a one-time refund of excess
revenues based on an annual jurisdictional base revenue reduction of
$150 million for the period March 1, 1997, through February 28, 1998,
(b) a one-time pro-rata refund associated with an annual base revenue
reduction of $100 million for the period March 1, 1998, through
February 28, 1999, and (c) interest on these amounts until paid as
specified in Exhibit 1 to this Stipulation, incorporated herein by
reference. Payment shall be completed 90 days from the date of the
order approving this stipulation. The payment to each customer shall be
based on that customer's billing history from March 1, 1997, through
the effective date of the Commission's final order approving this
Stipulation.
2. Virginia Power shall reduce its base rates to its Virginia
jurisdictional customers by $150 million pursuant to the following
schedule: first, for service rendered on and after March 1, 1998,
rates will be reduced by $100 million on an annual basis (and
appropriate refunds with interest shall be made); and second, for
service rendered on and after March 1, 1999, rates will be reduced by
an additional $50 million on an annual basis. The $150 refund and the
$100 million and $50 million rate reductions shall be allocated among
classes of customers as set forth on Exhibit 2 to this Stipulation,
incorporated herein by reference.
3. Subject to the conditions set forth in this paragraph, it is
intended that the base rates approved herein shall remain in effect
during the Rate Period except to effect the $50 million rate reduction
on March 1, 1999. If, however, during the Rate Period developments,
changes of circumstance or other factors make it necessary for the
protection of the legitimate interests of the Company's customers or
its shareholders, the Commission may, on its own motion or on motion of
any of the Stipulating Participants or any other interested party,
institute a proceeding to consider and to order such increases,
decreases, or other changes in rates necessary for the protection of
those interests. Nothing in this Stipulation shall impair the
Commission's ability to exercise its lawful jurisdiction or carry out
its lawful responsibilities or limit the Staff in the performance of
its duties and responsibilities. Except as provided in the Stipulation,
all regulatory requirements shall remain in effect.
<PAGE>
4. By the end of the Rate Period, March 1, 2002, Virginia Power
shall amortize against earnings $220 million of deferred expenses
(consisting of $60 million of deferred capacity expenses and $160
million of previously approved generation-related (except as otherwise
specified herein) deferred costs ("Regulatory Assets") regardless of
actual earnings during the Rate Period. This amount is in addition to
those amounts of Regulatory Assets now being amortized and collected in
current rates. The schedule for recognition of the $220 million of
write-offs of Regulatory Assets for ratemaking purposes shall be in
accordance with an "earnings test" as described in paragraph 5. If,
however, such earnings tests result in total Regulatory Asset
write-offs of less than $220 million by the end of the Rate Period,
then an additional amount of Regulatory Assets shall be written off in
the final year of the Rate Period to assure that a total of $220
million shall be written off by the end of the Rate Period. If earnings
pursuant to the earnings tests during the Rate Period are such that an
amount greater than $220 million of Regulatory Assets can be written
off, then such greater amount shall be written off. Subject to the
earnings test for each year, the Virginia jurisdictional balances of
Regulatory Assets are to be written off in the following order: the
total such balances of (a) deferred capacity expenses, (b) unamortized
losses on reacquired debt and preferred stock, and (c) the
generation-related portions of the balances of (i) Surry and North Anna
steam generator removal costs, (ii) asbestos removal costs, (iii) North
Anna electric generator removal costs, (iv) 40 year versus 20 year
amortization of Other Post Employment Benefit ("OPEB") transition
obligations, (v) nuclear design basis documentation costs, (vi)
depreciation reserve deficiency, and (vii) Department of Energy
decontamination and decommissioning. The system balances of the
aforesaid Regulatory Assets as of December 31, 1996 are set forth on
Exhibit 3 to this Stipulation, incorporated herein by reference. If all
book balances of Virginia jurisdictional generation-related Regulatory
Assets are written off without exhausting the earnings available for
such write-offs, the remaining earnings shall, with the concurrence of
the Staff, be used to write off book balances of other Regulatory
Assets. No new regulatory asset or other new deferred non-fuel costs
shall be created during the Rate Period, except that, in the event the
Financial Accounting Standards Board ("FASB") changes the accounting
requirements related to obligations associated with the retirement of
long-lived assets, including nuclear decommissioning,(1) the Company
reserves the right to seek approval from the Staff to create any
regulatory asset that would be appropriate as part of adopting such new
requirements. Except as provided in paragraph 6, the Stipulating
Participants agree that nothing herein shall be deemed to limit any
position regarding stranded costs or benefits issues.
- -----------------------
(1) This issue is currently under consideration ina FASB Agenda Project
entitled "Obligations Associated with the Retirement of Long-Lived Assets".
<PAGE>
5. The annual earnings test referred to in paragraph 4 shall be
applied using the same methodology and comparable adjustments adopted
by the Commission in Virginia Power's last base rate proceeding, Case
No. PUE920041. The earnings test shall include only those regulated
revenues and related expenses and investments incurred in furnishing
electric utility service to Virginia jurisdictional customers.
Beginning in 1999, Virginia Power shall submit by March 31 its
calculation of such an earnings test for the preceding calendar year
during the Rate Period. The calculation of the earnings test for
calendar year 1997 shall be filed within 90 days from the date that the
Commission approves this Stipulation. The benchmark earnings in the
earnings test shall be a return on equity ("ROE") of 10.5%, and the
earnings to be tested against that benchmark shall be the ROE actually
earned in the preceding calendar year, after applying regulatory
adjustments similar in nature to those adjustments adopted in Case No.
PUE920041. These adjustments should reflect differences between
financial reporting and Virginia regulatory accounting, the removal of
costs excluded from the cost of service for Virginia ratemaking
purposes, and adjustments necessary to reflect revenues at the actual
pro-rated approved revenue level for the earnings test period. There
shall be two steps in the application of the earnings test: first, an
actual ROE level shall be determined before any write-off of any
portion (other than scheduled amortization) of the Regulatory Assets
specified in paragraph 4, and second, if the actual ROE exceeds 10.5%,
the difference between that actual ROE above 10.5% and a 10.5% ROE
shall be allocated between the amortization of Regulatory Assets and
shareholder return. Earnings between 10.5% and 13.2% shall be allocated
two-thirds to amortization of Regulatory Assets as set forth in
paragraph 4 and one-third to shareholder return, and earnings above
13.2% shall be applied 100% to amortization of Regulatory Assets.
Examples of the effect of this formula on Virginia Power's ROE follow:
If earnings test ROE is 10.50%
No write-off; ROE remains 10.50%
If earnings test ROE is 11.00%
ROE after write-off is 10.67%
If earnings test ROE is 11.50%
ROE after write-off is 10.83%
If earnings test ROE is 12.00%
ROE after write-off is 11.00%
If earnings test ROE is 12.50%
ROE after write-off is 11.17%
If earnings test ROE is 13.00%
ROE after write-off is 11.33%
If earnings test ROE is 13.20% or above
ROE after write-off is 11.40%
<PAGE>
The benchmark ROEs of 10.5% and 13.2% used in the earnings test shall
be adjusted each year (beginning for 1999) as follows:
The low-end benchmark (presently 10.5%) shall be changed to an
ROE equal to the sum of (i) the average yield on 30-year
Treasury securities for the most recent preceding
September-November period, and (ii) 450 basis points; and The
high-end benchmark (presently 13.2%) shall be an ROE equal to
the new low-end benchmark for each year plus 270 basis points.
This formula is applicable only to the earnings test
prescribed in this Stipulation, and it shall not necessarily
constitute evidence or proof of what is a reasonable ROE at
any time.
6. As of March 1, 2002, Virginia Power's Virginia jurisdictional
costs for purposes of determining future rates and charges to
customers shall have been reduced by the write-off of
Regulatory Assets prescribed herein, which shall be at least
$220 million. As a result, Virginia Power's future rates and
charges shall not include any of the costs eliminated by such
write-offs. The Commission shall ensure that jurisdictional
customers in the future receive the benefit of such write-offs
in future rates and charges.
7. Virginia Power shall terminate the deferral of capacity
expenses effective as of March 1, 1998. Virginia Power's
depreciation and nuclear decommissioning rates in effect as of
February 28, 1997 shall remain in effect through the duration
of the Rate Period.
8. Virginia Power shall maintain the overall reliability of its
electric service at levels no less than the overall levels it
has achieved in the past decade. Virginia Power will provide
quarterly service reliability reports (annual data for an
historical five year period) indicating its System Average
Interruption Duration Index (SAIDI) and the System Average
Interruption Frequency Index (SAIFI), and these indices shall
be determined and reported both including and excluding major
storm events. The Company also commits to provide such other
data as required by the Staff, including information on
transmission and generation reliability. Virginia Power will
meet with the Commission every six months to review such
reports and other operational information. If the Commission
promulgates new reliability standards for electric utilities,
they shall be applicable to Virginia Power.
9. The right to apply for new alternative rate designs or
experiments, or special rates, contracts or incentives to
individual customers or classes of customers, as allowed under
law and implementing Commission regulations, shall continue
during the Rate Period.
10. The Stipulating Participants recognize that this Stipulation,
if adopted by the Commission, would represent a full and fair
resolution of certain rate issues raised in Case Nos.
PUE960036 and PUE960296. In recognition of that, all matters
addressed in this Stipulation shall be deemed not to have been
adopted or rejected by the Commission and shall have no
precedential effect in subsequent proceedings.
11. This Stipulation reflects a balancing of many important
interests put forward in these proceedings by the Stipulating
Participants. If the Commission does not intend to approve
all aspects of this Stipulation, then the Stipulating
Participants respectfully request that the Commission (a)
notify them of such intention and (b) allow them [10] days to
attempt to reach a modified stipulation that addresses the
Commission's concerns. If no such modified stipulation is
reached after [10] days, then the Stipulating Participants, or
any of them, may withdraw their support of this Stipulation
and request a hearing on any issues raised in the
above-captioned proceedings.
Respectfully submitted,
STAFF OF STATE CORPORATION
COMMISSION OF VIRGINIA
/s/ JAMES C. DIMITRI
------------------------------------------
Title General Counsel
------------------------------------
DIVISION OF CONSUMER COUNSEL OF THE OFFICE OF THE
ATTORNEY GENERAL
/s/ JUDITH WILLIAMS JAGDMANN
------------------------------------------
Title Deputy Attorney General
-------------------------------------
VIRGINIA COMMITTEE FOR FAIR UTILITY RATES
/s/ EDWARD L. PETRINI
------------------------------------------
Title Counsel
-------------------------------------
APARTMENT AND OFFICE BUILDING ASSOCIATION OF
METROPOLITAN WASHINGTON
/s/ FRANN G. FRANCIS
------------------------------------------
Title V.P. & General Counsel
-------------------------------------
VIRGINIA ELECTRIC AND POWER COMPANY
/s/ THOMAS F. FARRELL
------------------------------------------
Title Executive V.P. and General Counsel
-------------------------------------
June 8, 1998
<PAGE>
James C. Dimitri
William H. Chambliss
State Corporation Commission
Tyler Building
1300 East Main Street
Richmond, VA 23219
Judith Williams Jagdmann
Thomas B. Nicholson
Office of the Attorney General
Division of Consumer Counsel
900 E. Main Street, 2nd Floor
Richmond, VA 23219
Louis R. Monacell
Edward L. Petrini
John F. Dudley
Christian & Barton, L.L.P.
Suite 1200
909 East Main Street
Richmond, VA 23219-3095
Frann G. Francis
Margaret O. Jeffers
Apartment and Office Building Association
of Metropolitan Washington
1050 17th Street, NW, Suite 300
Washington, DC 20036
Pamela Johnson
Virginia Electric and Power Company
P. O. Box 26666
Richmond, VA 23261-6666
Evans B. Brasfield
Richard D. Gary
Hunton & Williams
951 E. Byrd Street
Riverfront Plaza, East Tower
Richmond, VA 23219-4074
James C. Roberts
Edward L. Flippen
Mays & Valentine, L.L.P.
1111 E. Main Street
Richmond, VA 23219
<PAGE>
Exhibit 1
Provisions Governing Payment of Interest
(1) Interest upon the refunds specified in the Stipulation of which
this Exhibit is a part shall be computed from the date payment of each monthly
bill was due during the periods covered by the refunds until the date refunds
are made, at an average prime rate for each calendar quarter. The applicable
average prime rate for each calendar quarter shall be the arithmetic mean, to
the nearest one hundredth of one percent, of the prime rate values published in
the Federal Reserve Bulletin or in the Federal Reserve's Selected Interest Rates
("Selected Rates") (Statistical Release G.13), for the three months of the
preceding calendar quarter.
(2) The interest required to be paid shall be compounded quarterly.
(3) The refunds may be accomplished by credit to the appropriate
customer's account for current customers (each such refund category being shown
separately on each customer's bill). Refunds to former customers shall be made
by a check to the last known address of such customers when the refund amount is
$1 or more. Virginia Power may offset the credit or refund to the extent no
dispute exists regarding the outstanding balances of its past or current
customers. To the extent that outstanding balances of such customers are
disputed, no offset shall be permitted for the disputed portion. Virginia Power
may retain refunds owed to former customers when such refund amount is less than
$1; however, Virginia Power will prepare and maintain a list detailing each of
the former accounts for which refunds are less than $1 and in the event such
former customers contact Virginia Power and request refunds, such refunds shall
be made promptly. All unclaimed refunds shall be handled in accordance with Va.
Code ss. 55-210.6:2.
<PAGE>
Exhibit 2
Allocation of Refunds and Rate Reductions
The $150 million refund shall be allocated among classes of customers as
follows:
Residential $ 75,507,907
GS-1 $ 19,004,879
GS-2 $ 23,476,002
GS-3 $ 21,180,649
GS-4 $ 9,150,000
Churches $ 597,403
Lighting $ 1,083,160
-------------
TOTAL $ 150,000,000
The $100 million rate reduction effective March 1, 1998 shall be allocated among
classes of customers as follows:
Residential $ 50,338,604
GS-1 $ 12,669,919
GS-2 $ 15,650,668
GS-3 $ 14,120,433
GS-4 $ 6,100,000
Churches $ 398,269
Lighting $ 722,107
-------------
TOTAL $ 100,000,000
The $50 million rate reduction effective March 1, 1999 shall be allocated among
classes of customers as follows:
Residential $ 25,169,303
GS-1 $ 6,334,960
GS-2 $ 7,825,334
GS-3 $ 7,060,216
GS-4 $ 3,050,000
Churches $ 199,134
Lighting $ 361,053
------------
TOTAL $ 50,000,000
<PAGE>
Exhibit 3
Regulatory Assets
System
(millions)
Regulatory Assets Balance
- ----------------- -------
Total Balances:
Deferred Capacity Expense (balance @ 3/1/98) $ 61.1
Unamortized Losses on Reacquired Debt and $ 93.4
Preferred Stock (balance @ 12/31/96)
Generation-related Balances @ 12/31/96
Surry & North Anna Steam Generators $ 62.7
Asbestos Removal $ 12.3
North Anna Electric Generator $ 3.3
OPEB 20 year versus 40 year recovery $ 7.7
Nuclear Design Basis Documentation $ 44.3
Depreciation Reserve Deficiency $ 142.6
DOE Decontamination and Decommissioning $ 73.5
---------
TOTAL $ 500.9
The foregoing amounts of regulatory assets as of December 31, 1996 do not
represent the amounts to be written off pursuant to the Stipulation of which
this Exhibit is a part. The amounts to be written off will be determined by the
results of the earnings tests prescribed by the Stipulation, the Virginia
jurisdictional allocation factors at the time of the write-offs, and the extent
to which the December 31, 1996 balances shall have been previously amortized.
