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VIRGINIA ELECTRIC $400 MILLION MORTGAGE BONDS SHELF RATED 'A+' BY FITCH -- FITCH FINANCIAL WIRE --

 NEW YORK, May 11 /PRNewswire/ -- Virginia Electric & Power Co.'s (VEPCO) $400 million first and refunding mortgage bonds and $100 million preferred stock shelf registrations are rated 'A+' and 'A', respectively. VEPCO's commercial paper program is rated 'F-1'. The ratings reflect VEPCO's significant reliance on purchased power and incorporate the financial impact of related off-balance sheet liability, as well as above industry performance at the four nuclear units. The credit trend is stable.
 In addition, ratings are affirmed as follows: 'A+' outstanding first and refunding mortgage bonds and shelf registration; 'A' multicurrency medium-term series D notes, medium-term note shelf registration (series E), outstanding preferred stock, and preferred stock shelf registration; and 'A/F-1' money-market municipal pollution control revenue bonds. Proceeds of takedowns from new shelf registrations will be used to redeem outstanding mortgage bonds or preferred shares and to fund capital expenditures.
 While VEPCO's 1992 capital ratios and interest coverage improved modestly, operating income was negatively impacted by mild weather, a $26 million customer refund, and increased purchased power expenses. Operating income was $761.5 million versus 1991's $816.8 million. Nonetheless, by year-end 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.
 Recently implemented rate increases together with a strongly positive 1993 Virginia rate decision, expected by Sept. 1, should enhance earnings protection measures, which currently are weak for the rating category. In December, the Virginia State Corporate Commission permitted a $45.2 million rate increase and the VSCC staff has recommended an 8.6 percent, or $259.9 million, increase in the current case. In February, VEPCO's North Carolina base rates were increased by $12.4 million. Fitch expects coverage to improve from 3.06 times (x) to 3.4x-3.5x by 1994-1995, and leverage should drop modestly from 46 percent-45 percent of capital by 1996.
 VEPCO recently 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 2002, except for the Clover coal-fired plant now under co-development. Moderate sales growth will reduce capital requirements and internal cash generation should fund about 90 percent of capital expenditures. VEPCO is not expected to add non-utility purchased power after the presently contracted capacity comes on-line.
 -0- 5/11/93
 /CONTACT: John Watt of Fitch, 212-908-0523/


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

SH -- NY031 -- 6944 05/11/93 10:33 EDT
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Date:May 11, 1993
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