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between Vepco’s generating capacity and the amount of electricity its customers demand.
The shift in fuel use and the productivity improvements couldn’t be done overnight. They required substantial investments of capital, but they are now providing large and continuing savings in fuel costs, which pass through directly to Vepco’s customers.
Vepco’s fuel expense has dropped by an average of nearly $100 million in each of the last three years — from more than $1 billion in, 1980 to about $725 million in 1983. This reduction has occurred despite rising fuel prices and increases in electricity generated over most of the period.
Vepco's fuel cost has declined from 2.8 cents per kilowatt hour in 1980 to 1.9 cents at the end of 1983.
Vepco’s rates during the 1980s reflect its cost-cutting actions. The fuel cost reductions have been able to offset a large part of the increases in other costs.
Vepco’s rates since January 1980 have increased less than general inflation. Vepco’s rates are up about 10 percent. The Consumer Price Index, over the same period, is up about 30 percent.
Among the nation’s 20 largest utilities, Vepco’s rates increased less between 1980 and 1982 (the last year for which comparative data are available) than the average of the other 19.
Vepco’s rates for 1982 were below the average for all investor-owned utilities.
Vepco continues to look for ways to make further cost reductions.
Vepco is also completing work on the world’s largest pumped storage hydroelectric project, which will allow us to substitute electricity from low-cost coal units for energy from more costly oil and gas-fired generators.
Vepco is also in the midst of a major study of alternatives to conventional generating systems — designed to assure that the future electricity needs of its customers are met at the lowest possible cost.
The cancellation of the planned third nuclear unit at North Anna is also in the best interest of Vepco’s customers, even though the capacity that the unit would have provided will be needed by the end of the decade.
Sure, it would have been better if Federal regulations hadn’t made the unit too expensive to complete. But given that reality, Vepco’s customers will be better off with the unit cancelled than if it had been completed.
Some other utilities are completing expensive nuclear units that will require rate increases of 50 percent or more when the units start generating electricity.
In contrast, even with all
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