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VIRGINIA ELECTRIC $200 MILLION SENIOR DEBT RATED 'A+' BY FITCH -- FITCH FINANCIAL WIRE --

 NEW York, Oct. 12 /PRNewswire/ -- Virginia Electric and Power Co.'s new $200 million 6.75 percent first and refunding mortgage bonds due Oct. 1, 2023 are rated 'A+' by Fitch. The issues are takedowns from a previously rated 1993 shelf registration. The credit trend is stable.
 The ratings reflect the health of VEPCO's service territory, recent rate increases, and anticipation of a strongly positive Virginia State Corporate Commission (VSCC) rate decision on the recovery of purchased power expenses. Expected late this quarter, the VSCC rate order should enhance earnings protection measures, which are currently weak for the rating category. In December 1992, the VSCC permitted a $45.2 million rate increase; in the current case, the VSCC staff recommends raising rates by 8.6 percent, or $249.9 million. By 1996, Fitch expects interest coverage to improve to 3.5 times(x) from 3.31x, and leverage should moderate as the common stock ratio improves to 46 percent of capitalization.
 Operating income for the first six months 1993 rebounded strongly to $370.3 million from $339.2 million for the same period in 1992. Since the cooling degree days in the third quarter of 1993 were approximately 40 percent above the abnormally cool prior year, Fitch expects further improvement in 1993's operating income. Pretax interest coverage of 3.31x (June 1993) is ahead of the 3.06x achieved in December 1992. Temporarily, VEPCO's common equity has decreased to 42.8 percent of capitalization as a result of an earlier $200 million debt offering. Up to $100 million new equity from VEPCO's parent company, Dominion Resources, Inc. (NYSE: D), is expected by year-end. Entering 1994, the common ratio should be 44 percent of capitalization.
 VEPCO has lowered its expected 20-year annual growth rate to 2.2 percent from 2.5 percent. Consequently, new generating plant has been deferred to at least 2004, except for the Clover coal-fired plant now under co-development. Moderate sales growth will reduce capital requirements and cash generation should fund about 90 percent of capital expenditures. To enhance competitive posture, VEPCO is not expected to add non-utility purchased power after the presently contracted capacity comes on-line but, with VSCC permission, may control, or build and own, up to 10 non-utility generators in Virginia.
 -0- 10/12/93
 /CONTACT: John Watt of Fitch, 212-908-0523/
 (D)


CO: Virginia Electric and Power Co. ST: Virginia IN: UTI SU: RTG

TM -- NY101 -- 1313 10/12/93 17:01 EDT
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Publication:PR Newswire
Date:Oct 12, 1993
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