Allegheny Power Announces Proposed Settlement of Environmental Project Financing Request in West Virginia
GREENSBURG, Pa.-(Business Wire)-September 9, 2009 - Allegheny Power, the electric delivery business of Allegheny Energy, Inc. (NYSE: AYE), announced today that it has reached agreement with the Staff of the Public Service Commission of West Virginia, the Consumer Advocate Division, and the West Virginia Energy Users Group regarding the company’s July 2009 request to use securitized financing to fund the remaining portion of its flue gas desulfurization (scrubber) project at the Fort Martin Power Station.
Under the settlement agreement filed today, the parties have agreed that:
- the amount of scrubber costs Allegheny is authorized to securitize should be increased by $100 million, which is approximately equal to the remaining cost of the project;
- Allegheny and the commission’s financial advisor will have flexibility on structuring the financing to get the lowest available cost; and
- Allegheny will agree to withdraw its July 2009 request for an interim rate increase of $82 million for fuel and purchased power costs, and will pursue recovery of those costs as part of its annual fuel rate case, which was filed on September 1.
In a January 2007 order, the commission authorized Allegheny to securitize up to $450 million of the approximately $550 million total scrubber costs, plus certain related financing costs.
Based on current estimates, the additional securitization would increase the bill of a typical West Virginia residential customer using 1,000 kilowatt-hours of electricity per month by $0.76, or 0.9 percent. Securitized financing is expected to save customers more than $40 million compared to traditional ratemaking.
The agreement requires approval of the commission to be effective. The parties are requesting that the commission issue a ruling no later than October 1, to permit completion of the financing by December 1.
Allegheny Energy
Headquartered in Greensburg, Pa., Allegheny Energy is an investor-owned electric utility with total annual revenues of over $3 billion and more than 4,000 employees. The company owns and operates generating facilities and delivers low-cost, reliable electric service to 1.6 million customers in Pennsylvania, West Virginia, Maryland and Virginia. For more information, visit our Web site at www.alleghenyenergy.com.
Forward-Looking Statements
In addition to historical information, this release may contain a number of "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Words such as anticipate, expect, project, intend, plan, believe, and words and terms of similar substance used in connection with any discussion of future plans, actions, or events identify forward-looking statements. These include statements with respect to: rate regulation and the status of retail generation service supply competition in states served by Allegheny Energy’s distribution business, Allegheny Power; financing plans; demand for energy and the cost and availability of raw materials, including coal; provider-of-last-resort and power supply contracts; results of litigation; results of operations; internal controls and procedures; capital expenditures; status and condition of plants and equipment; capacity purchase commitments; and regulatory matters. Forward-looking statements involve estimates, expectations and projections and, as a result, are subject to risks and uncertainties. There can be no assurance that actual results will not materially differ from expectations. Actual results have varied materially and unpredictably from past expectations. Factors that could cause actual results to differ materially include, among others, the following: plant performance and unplanned outages; changes in the price of power and fuel for electric generation; general economic and business conditions; changes in access to capital markets and actions of rating agencies; complications or other factors that render it difficult or impossible to obtain necessary lender consents or regulatory authorizations on a timely basis; environmental regulations; the results of regulatory proceedings, including proceedings related to rates; changes in industry capacity, development and other activities by Allegheny Energy’s competitors; changes in the weather and other natural phenomena; changes in customer switching behavior and their resulting effects on existing and future load requirements; changes in the underlying inputs and assumptions, including market conditions used to estimate the fair values of commodity contracts; changes in laws and regulations applicable to Allegheny Energy, its markets or its activities; the loss of any significant customers or suppliers; dependence on other electric transmission and gas transportation systems and their constraints or availability; inflationary and interest rate trends changes in market rules, including changes to PJM participant rules and tariffs; the effect of accounting pronouncements issued periodically by accounting standard-setting bodies and accounting issues facing our organization; and the continuing effects of global instability, terrorism and war. Additional risks and uncertainties are identified and discussed in Allegheny Energy’s reports filed with the Securities and Exchange Commission.
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