Present: Carrico, C.J., Compton, Stephenson, Lacy, Keenan and 

Koontz, JJ., and Cochran, Retired Justice 

DOSWELL LIMITED PARTNERSHIP 

OPINION BY JUSTICE A. CHRISTIAN COMPTON 

v. Record No. 951027 March 1, 1996 

VIRGINIA ELECTRIC AND POWER COMPANY 

FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND 

Randall G. Johnson, Judge 

 In this breach of contract action, the dispositive issue is 

whether the trial court erred in ruling that the disputed portion 

of a written agreement is clear and unambiguous, thus precluding 

consideration of extrinsic evidence supporting one party's 

interpretation of the document. 

 In March 1993, appellant Doswell Limited Partnership 

(Doswell) filed this action against Virginia Electric and Power 

Company (Virginia Power) for breach of contract. In a second 

amended motion for judgment, Doswell sought damages for Virginia 

Power's alleged breach in the principal amount of $10,317,250.23. 

 The following basic facts are shown by the record, including 

the pleadings, and furnish part of the background for this 

controversy. Doswell, a Virginia limited partnership with its 

principal office in Los Angeles, California and affiliated with 

the Mitsubishi Corporation, is an independent power producer that 

owns and operates two natural gas-fired electrical generating 

units located near the community of Doswell in Hanover County. 

Virginia Power is a public utility that provides electrical 

service to its customers. 

 In 1986, Virginia Power issued a solicitation to purchase 
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electricity from independent power producers through contracts 

that would base payments on the costs that Virginia Power would 

avoid by not building a new power plant and producing the power 

itself. In 1987, it entered into two written agreements with 

Intercontinental Energy Corporation to purchase electricity from 

the two generating units that Intercontinental was then planning 

to build near the Doswell community. The two agreements, one for 

each facility, were virtually identical. For clarity, we shall 

refer to the two agreements as one. 

 On June 21, 1989, with the knowledge and consent of Virginia 

Power, Intercontinental assigned the agreement to Doswell, the 

units' present owner and operator. In August 1989, Virginia 

Power offered Doswell the "option" to modify the agreement and to 

create a new category of payment, called the "Fixed Fuel 

Transportation Charge," sometimes referred to in this opinion as 

the "FFTC." 

 Subsequently, teams of negotiators representing the 

respective parties engaged in extensive discussions about the 

language to be included in the modified agreement. These 

negotiations included consideration of drafts and redrafts of 

contract language submitted by the participants dealing with the 

manner in which the FFTC would be determined. 

 Generally, the parties agreed that Virginia Power would 

measure its payments to Doswell by the costs Virginia Power 

estimated it would incur to construct and operate one of its own 
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planned generating stations in Chesterfield County, known as 

Chesterfield 7. Those projected costs included the costs of 

transporting natural gas to Chesterfield 7. The costs of 

Chesterfield 7 would serve, in effect, as the "surrogate" or 

"benchmark" to measure the costs Virginia Power would avoid by 

purchasing power from a plant to be built and owned by Doswell. 

 The negotiations culminated in the execution by the parties 

of the contract in question, an 83-page document, on January 3, 

1990. It is labelled, "First Amendment and Restatement of the 

Power Purchase and Operating Agreement By and Between Doswell 

Limited Partnership as Successor in Interest to Intercontinental 

Energy Corporation and The Virginia Electric and Power Company." 

 This controversy focuses on Section 10.3 of the agreement. 

 In the second amended motion for judgment, Doswell alleges 

that Section 10.3 of the agreement requires Virginia Power to pay 

a Fixed Fuel Transportation Charge based on 100 per cent of the 

fixed costs associated with transporting natural gas through a 

pipeline system delivering gas to Chesterfield 7. Doswell 

further alleges that Virginia Power breached the contract by 

basing its payment on only 44 per cent of its actual fixed costs 

of one segment of the pipeline and on only 50 per cent of its 

actual fixed costs of another segment. 

 Doswell filed a pretrial motion seeking a declaration that 

it would be permitted to present parol evidence relevant to the 

construction of Section 10.3. Upon consideration of argument of 
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counsel, the court ruled "that Section 10.3 is not ambiguous" and 

that parol evidence would not be admitted at trial. 

 Later, the parties, by counsel, filed a stipulation that 

placed an unusual twist on the procedure at trial. In the 

stipulation, Virginia Power promised to waive any objection 

during trial to parol evidence presented by Doswell about the 

negotiations surrounding the agreement and another document 

executed by the parties in June 1990. Virginia Power reserved 

the right, however, to argue at the conclusion of the evidence 

that "the contract documents are complete and unambiguous," and 

to argue that the court "should not attribute any weight to such 

parol evidence in making its findings and rulings." 

 Subsequently, during four days of trial, the court, sitting 

without a jury, heard from 17 witnesses and considered more than 

100 exhibits. Extensive parol evidence was presented by both 

parties. 

 At the conclusion, the court ruled from the bench in favor 

of Virginia Power, holding Doswell had not "carried its burden of 

proof that there was a breach of contract in this case." During 

the course of its oral opinion, the court adhered to its earlier 

ruling that "because the contract is clear and unambiguous" parol 

evidence "should not be considered." We awarded Doswell this 

appeal from a March 1995 order entering judgment for Virginia 

Power. 

 The agreement in question was negotiated and executed 
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against the following additional background. At the outset, it 

should be understood that when the agreement in question was 

executed in January 1990, the Doswell facility and Virginia 

Power's Chesterfield facility were in the planning stages and had 

not been built. 

 Both the Doswell facility and Virginia Power's Chesterfield 

7 facility were to be fueled by natural gas supplied from a 

storage site in Pennsylvania and delivered through an 

interconnecting pipeline system that includes the Consolidated 

Natural Gas (CNG) pipeline running through northern Virginia. 

This pipeline feeds into a pipeline, not built at the time of the 

negotiations, operated by Virginia Natural Gas (VNG) running 

through central Virginia and into the Tidewater area. 

 In order to transport gas to Chesterfield 7, construction of 

an additional pipeline, a spur, approximately 16 miles in length 

was necessary. This spur is comprised of two sections: The City 

of Richmond (CR) pipeline, running from Mechanicsville to the 

James River, and the Commonwealth Gas Services (CGS) pipeline, 

running approximately 2,000 feet under the James River and 

connecting to Virginia Power's Chesterfield facility. This 

controversy relates to the cost allocation of the two sections of 

the spur. 

 As the reader will soon learn, the foregoing delivery system 

is referred to in the agreement as the "CNG/VNG/CR/CGS" pipeline 

system. For clarity, we shall often call it the "northern 
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pipeline." 

 Chesterfield 7 is located near another gas-fueled Virginia 

Power generating plant known as Chesterfield 8. Fuel to 

Chesterfield 8 was to be delivered through another pipeline 

system, which we shall often call the "southern pipeline." 

Chesterfield 7 and Chesterfield 8 connect to the two pipelines 

through a common header. Thus, each is capable of receiving gas 

from either system. 

 According to the provisions of the agreement that was 

assigned in 1989, Doswell, as we have said, was required to 

provide, broadly stated, electricity. There were two aspects to 

this obligation. First, the capacity to produce electricity 

whenever Virginia Power required it, called "dependable 

capacity." Second, the duty to physically deliver electricity 

"whenever called upon." Under the assigned contract, Doswell was 

to be paid a fixed capacity charge for this dependable capacity, 

assuming the proposed plant "was, in fact, available and capable 

of producing power." In addition, Doswell was to receive an 

"energy charge," a base amount for each kilowatt hour of 

electricity sold, for the electricity that was actually generated 

and delivered. 

 During the negotiations beginning in the summer of 1989, to 

fulfill the purpose of the agreement for Virginia Power to 

purchase Doswell's generating capacity and electricity employing 

the avoided cost concept, the parties agreed upon a third 
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category of payment. The capacity charge and energy delivery 

charge would remain, but the new FFTC charge was introduced. 

 The discussions included consideration of the "capacity" of 

both the pipelines and the parties' facilities. The maximum 

daily capacity of Chesterfield 7 was projected to be 

approximately 42,500 dekatherms. The use of dekatherms (Dth) is 

a technique employed in the industry to measure the volume of 

natural gas; historically, it was measured in cubic feet. 

Virginia Power planned to reserve approximately 42,500 Dth of 

"firm transportation" on the northern pipeline. This means that 

Virginia Power had the right to "push gas" down the pipeline 

without interruption and without giving priority to other users 

along the pipeline. In contrast, "interruptible transportation" 

means the ability of a user "to move gas down the pipeline . . . 

subject to the availability of that pipeline capacity with other 

users on the pipeline" that may have priority of use. The 

companies that own the pipelines charge the user for the reserved 

capacity. Generally, the discussions proceeded on the basis that 

Virginia Power's two Chesterfield units would receive fuel from 

both the northern and southern pipelines, with lateral pipelines 

(spurs) to be constructed to "hook up" those two routes with 

Chesterfield 7 and Chesterfield 8, and incidentally with a third, 

nearby Virginia Power unit at Darbytown. 

 During the negotiations, the parties understood that the 

spur (CR/CGS) would be constructed with more capacity than needed 
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for Chesterfield 7. The CR section (planned to be built by the 

City of Richmond but ultimately built and operated by Virginia 

Power) has 96,000 Dth capacity. Virginia Power reserved 86,000 

Dth of firm capacity on the CGS section. The parties also 

understood that the gas service to Chesterfield 7 would be on a 

firm basis, and that Chesterfield 8 and Darbytown would receive 

interruptible service from the northern pipeline and the spur. 

 Shortly after execution of the agreement in January 1990, 

Doswell sought construction financing from Credit Suisse. In 

connection with the financing, Virginia Power, Doswell, and 

Credit Suisse executed on June 4, 1990 a document labelled 

"Virginia Electric and Power Company Consent to Assignment of 

Agreements" (the Consent). This document evidenced Virginia 

Power's consent to Doswell's assignment of the January 1990 

agreement to Credit Suisse as security for Doswell's repayment of 

a construction loan. 

 During negotiations preceding execution of the Consent, the 

parties focused on the provisions of the January 1990 agreement, 

including the Fixed Fuel Transportation Charge. In paragraph 

(13)(g) of the executed Consent, there is language dealing with 

the determination of the FFTC. 

 Subsequently, Virginia Power computed the charges due 

Doswell according to its interpretation of the agreement. The 

allocation of costs for the CR/CGS spur pipeline, as we have 

said, is the basis of this controversy. Because the maximum 
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capacity of Chesterfield 7 is 42,500 Dth and the total capacity 

available to it as owner of the CR section is 96,000 Dth, 

Virginia Power attributed only 44 per cent (42,500 divided by 

96,000) of its fixed costs on the CR section to Chesterfield 7. 

Likewise, because Virginia Power has contracted for 86,000 Dth of 

firm capacity on the CGS section, with the maximum capacity of 

Chesterfield 7 being 42,500 Dth, Virginia Power attributed only 

49.4 percent, rounded to 50 per cent, (42,500 divided by 86,000) 

of its fixed costs on the CGS section to Chesterfield 7. 

 Doswell disagreed with Virginia Power's computation, 

insisting on 100 per cent of the actual fixed costs on both the 

CR and CGS sections. This action ensued. 

 On appeal, Doswell contends that the trial court erred in 

ruling that Section 10.3 is unambiguous and constituted the 

complete agreement between the parties, and "in failing to 

consider parol or extrinsic evidence showing the entirety of the 

agreement." Also, Doswell contends that the trial court erred in 

"ignoring" testimony it presented of trade custom and usage in 

the gas pipeline industry with respect to the meaning of certain 

phrases defining the FFTC. Additionally, Doswell contends the 

trial court erred in relying on the Consent, which it says was 

extrinsic evidence offered by Virginia Power. Finally, Doswell 

contends the trial court erred in concluding it "had not carried 

its burden of proof to establish that it was entitled to recover 

100% of the fixed costs associated with transporting gas through 
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the Spur delivery system to its sole `firm' user, Chesterfield 7, 

and that Doswell was only entitled to 44% of the fixed costs of 

one portion of the Spur and 50% of another as a matter of law." 

 Urging affirmance, Virginia Power argues the agreement and 

the Consent comprise an integrated contract that the trial court 

properly read together. Alternatively, it argues that the 

agreement is unambiguous, even without consideration of the 

Consent. Finally, it argues that the trial court was not 

required "to accord controlling weight" to Doswell's evidence of 

trade usage. 

 Because of the view we take of the ambiguity issue, it is 

unnecessary for us to determine whether the agreement and the 

Consent constitute an integrated document. The principle debated 

is that when parties have entered into two documents relating to 

a business transaction, the writings will be construed together 

to determine the parties' intent. Daugherty v. Diment, 238 Va. 

520, 524, 385 S.E.2d 572, 574 (1989); J.M. Turner & Co. v. 

Delaney, 211 Va. 168, 171, 176 S.E.2d 422, 425 (1970). See Dime 

Deposit & Discount Bank v. Wescott, 113 Va. 567, 573, 75 S.E. 

179, 182 (1912). The reason we do not address this issue is that 

we hold the agreement is clear and unambiguous without reference 

to the Consent. 

 "Parol evidence of prior or contemporaneous oral 

negotiations are generally inadmissible to alter, contradict, or 

explain the terms of a written instrument provided the document 
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is complete, unambiguous, and unconditional." Renner Plumbing, 

Heating & Air Conditioning, Inc. v. Renner, 225 Va. 508, 515, 303 

S.E.2d 894, 898 (1983). "An ambiguity exists when language 

admits of being understood in more than one way or refers to two 

or more things at the same time." Id.; Berry v. Klinger, 225 Va. 

201, 207, 300 S.E.2d 792, 796 (1983). 

 The question whether an agreement is ambiguous is not one of 

fact but one of law, and the function of the court is to construe 

the contract made by the parties, not to make a contract for 

them. Wilson v. Holyfield, 227 Va. 184, 187, 313 S.E.2d 396, 398 

(1984). Contracts are not rendered ambiguous merely because the 

parties or their attorneys disagree upon the meaning of the 

language employed to express the agreement. Id. Even though an 

agreement may have been drawn unartfully, the court must construe 

the language as written if its parts can be read together without 

conflict. Berry, 225 Va. at 208, 300 S.E.2d at 796. 

 And, parol evidence may not be used to first create an 

ambiguity and then to remove it. Cohan v. Thurston, 223 Va. 523, 

525, 292 S.E.2d 45, 46 (1982). Finally, an agreement is not 

rendered ambiguous merely because it deals with a technical 

subject that may be considered complex to the uninformed lay 

person who is not familiar with the topic. 

 Guided by these settled principles, we turn to the center of 

this controversy, Section 10.3(a) of the agreement, included 

within Article X of the document labelled "Compensation, Payment, 
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and Billings." Section 10.3(a) provides as follows: 

 "10.3 (a) Operator [Doswell] shall be compensated 

by Virginia Power for the fixed transportation charges 

associated with transporting gas to Chesterfield 7 

through the use of the Fixed Fuel Transportation 

Charge. The Fixed Fuel Transportation Charge 

($/kW/Month) shall be determined on a Monthly basis 

using the following equation: 

 Fixed Fuel CNG/VNG/CR/CGS Transportation Fixed Charges

 Transportation - 214,000 [kW] 

 Charge 

 The CNG/VNG/CR/CGS Transportation Fixed Charges shall 

be determined on a Monthly basis and shall be equal to 

all costs associated with natural gas transportation 

and storage that do not vary with the volume of gas 

consumed at Chesterfield 7 for the Month in question. 

Fixed costs for natural gas transportation and storage 

shall include demand charges for natural gas pipeline 

transportation, pipeline operation and maintenance, and 

demand and capacity charges for natural gas storage 

services. The CNG/VNG/CR/CGS Transportation Fixed 

Charges shall be based on all the fixed costs 

associated with transporting gas through the 

CNG/VNG/CR/CGS delivery system. In determining the 

CNG/VNG/CR/CGS Transportation Fixed Charges, any 

discount prices received by Virginia Power for 

transporting gas through such delivery system through 

settlement of litigation and not applicable to Operator 

shall be adjusted to offset the effect of such 

discount. Any retroactive adjustments based on changes 

in the tariffs shall be included in the current Month's 

CNG/VNG/CR/CGS Transportation Fixed Charges. An 

example calculation for determining the Fixed Fuel 

Transportation Charge is shown in Exhibit B." 

 Plainly, Section 10.3(a) limits the fixed costs to be used 

in computing the FFTC payment to those costs associated with 

transporting natural gas to Chesterfield 7. The first sentence 

of 10.3(a) clearly states that Doswell "shall be compensated by 

Virginia Power for the fixed transportation charges associated 

with transporting gas to Chesterfield 7 through the use of the 
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Fixed Fuel Transportation Charge." The third sentence of 10.3(a) 

provides that the charges to be used to compute monthly the FFTC 

payment "shall be equal to all costs associated with natural gas 

transportation and storage that do not vary with the volume of 

gas consumed at Chesterfield 7 for the Month in question." 

 The calculation example for determining the FFTC included in 

Exhibit B, referenced in the last sentence of 10.3(a), confirms 

that the FFTC payment is limited to Chesterfield 7's costs, and 

does not include 100 per cent of Virginia Power's fixed costs on 

the CR and CGS pipelines. The example contains estimates of the 

CNG and VNG portions of the payment. These estimates are limited 

by certain assumptions in the example to the fixed costs 

associated with transporting that volume of gas equal to the 

maximum daily capacity of Chesterfield 7, assumed to be 43,000 

Dth in the example. Nowhere does the agreement provide that the 

CR and CGS portions of the FFTC payment should be computed 

differently. 

 As the calculation example makes clear, the denominator in 

the equation, 214,000 kW, represents Chesterfield 7's capacity in 

terms of producing electricity, not accepting fuel. As 

demonstrated in the example, the equation, by employing the 

denominator, tabulates the monthly payment on a per kilowatt 

basis. 

 Doswell implicitly argues, however, that even if the 

agreement, standing alone, is unambiguous, the judgment must be 
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reversed because the trial court considered the Consent, which 

Doswell says is extrinsic evidence. We do not agree that the 

judgment should be reversed. 

 Apparently, the trial court, in making its pretrial ruling, 

considered the Consent. In the letter to counsel announcing the 

ruling, the court said, "After again reviewing Section 10.3 of 

the Amended Agreements, the Consent to Assignment of Agreements, 

and your arguments, I am of the opinion that Section 10.3 is not 

ambiguous." 

 At the trial held ten months later, however, and when final 

judgment was pronounced, the record shows that the trial court 

did not give controlling consideration to the Consent. During 

its oral opinion, the court, in first discussing the agreement, 

plainly stated that Section 10.3 "is clear and unambiguous" and 

that parol evidence should not be considered. Later during its 

comments, the court said, "If that [the agreement] were not clear 

enough in and of itself, it's made even more clear, if that's 

possible, in the Consent." Thus, even assuming the Consent 

qualifies as prohibited extrinsic evidence, the record shows that 

the trial court based its judgment primarily on the agreement, 

including Section 10.3. But even if the court erroneously 

considered the Consent, we will affirm the judgment because the 

court reached the correct conclusion arguably for the wrong 

reason. Robbins v. Grimes, 211 Va. 97, 100, 175 S.E.2d 246, 248 

(1970). Accord Richmond, Fredericksburg & Potomac R.R. v. 
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Metropolitan Washington Airports Auth., 251 Va. ___, ___, 

___S.E.2d ___, ___ (1996), decided today. 

 Finally, we reject Doswell's contention that the trial court 

erroneously "ignored" testimony it presented of trade custom and 

usage with respect to the meaning of certain contract terms 

defining the FFTC. Evidence that contract phrases or terms have 

acquired, by custom in the locality, or by usage of the trade, a 

peculiar meaning not attached to them in their ordinary use is 

admissible even though the phrases or terms themselves are 

unambiguous. Richlands Flint Glass Co. v. Hiltebeitel, 92 Va. 

91, 94-95, 22 S.E. 806, 807 (1895). See Code § 8.2-202(a) (terms 

in commercial sales agreements may be explained or supplemented 

by course of dealing or usage of trade evidence). 

 But Doswell has not referred us to any specific part of the 

record to support its claim that such evidence was "ignored" by 

the trial court, and we have found no support for Doswell's 

conclusion. Moreover, the trial court was not required to accept 

such evidence that was contradicted by other evidence in the 

record and that related to usage in a separate business, that is, 

the formula the Federal Energy Regulatory Commission uses to fix 

rates operators of interstate natural gas pipelines may charge 

their customers. 

 Consequently, we hold there is no reversible error in the 

judgment below and it will be 

Affirmed.