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VIRGINIA ELECTRIC $50 MILLION PREFERRED STOCK RATED 'A' BY FITCH -- FITCH FINANCIAL WIRE --

 NEW YORK, June 30 /PRNewswire/ -- Virginia Electric and Power Co.'s (VPC) $50 million new issue of 7.05 percent preferred stock, noncallable for 10 years, is rated 'A' by Fitch. This is a takedown from a 1993 shelf registration. The credit trend is stable.
 The rating reflects recently implemented rate increases and the anticipation of a strongly positive Virginia State Corporate Commission (VSCC) rate decision on the recovery of purchased power expenses. Expected in third-quarter 1993, the VSCC rate order should enhance earnings protection measures, which currently are weak for the rating category. In December 1992, the VSCC permitted a $45.2 million rate increase; in the current case, the VSCC staff in March recommended raising rates by 8.6 percent, or $249.8 million. Also, in February, base rates in North Carolina were increased by $12.4 million. By 1996, Fitch expects interest coverage to improve to 3.5 times (x) from 3.06x, and leverage should moderate as the common stock ratio improves to 46 percent of capitalization.
 While VPC's 1992 capital ratios and interest coverage improved modestly, operating income dropped to $761.6 million versus 1991's $816.8 million due to mild weather, a $26 million customer refund, and increased purchased power expenses. However, for first-quarter 1993, VPC halted its earnings decline as operating income was $194.4 million, virtually identical with the prior year's result. Proceeds of the preferred financing will be used to retire a portion of the outstanding 7.72 percent first and refunding mortgage bonds. In 1992, aggressive debt refunding lowered the embedded cost of long-term debt to 7.86 percent and common equity reached 44 percent of total capitalization.
 VPC has lowered its expected 20-year annual growth rate to 2.2 percent from 2.5 percent. Consequently, new generating plant construction has been deferred to at least 2002, except for the Clover plant now under construction with Old Dominion Electric Cooperative. Moderate sales growth will reduce capital requirements, which should be 90 percent funded with internal cash generation. VPC is not expected to add non-utility purchased power after the presently contracted capacity comes on-line.
 -0- 6/30/93
 /CONTACT: John N. Watt of Fitch, 212-908-0523/


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

LD -- NY077 -- 7348 06/30/93 16:55 EDT
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Date:Jun 30, 1993
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