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turn, down from 15.5, with a $2.5 million rate cut.
Virginia Power’s case is now before the SCC, after public hearings in mid-September. Virginia Power has suggested a half point cut to a 14 percent rate of return. Intervenors are recommending levels as low as 11.2. The SCC should decide Virginia Power’s case by year’s end, with any rate cut effective Sept. 14.
The second source of rate cuts due the consumer results from the Tax Reform Act of 1986. On July 1, 1987, the maximum corporate income tax rate fell from 46 percent to 34 percent. )
The State Corporation Commission did not order all utility companies to reduce rates immediately to reflect the new tax rate this summer. Instead, it asked for volunteers.
The four largest telephone companies voluntarily reduced rates. Meanwhile, Virginia Power’s rates and those of most of the gas companies are still based on the 46 percent income tax rate.
The Commission does not believe that it can legally reduce rates in response to one change in costs without doing a full cost of service review. The consumer will eventually see rates drop as the new tax
91.7%