2008-11-19 05:40:01 -
www.alleghenyenergy.com/ - Allegheny Energy, Inc. (NYSE: AYE) announced today an agreement that would permit the recovery of purchased power costs in Virginia for Potomac Edison, an Allegheny subsidiary, while avoiding dramatic rate increases for customers. Joining Allegheny in the agreement are the Staff of the Virginia State Corporation Commission, a group of large and mid-sized commercial and industrial
customers, and the Office of the Virginia Attorney General. The agreement requires the approval of the Commission.
"We commend all the parties for their support and cooperation," said Paul J. Evanson, Chairman, President and Chief Executive Officer of Allegheny Energy. "This agreement will restore the financial stability of our Virginia business while mitigating impacts on our customers."
Potomac Edison provides approximately 100,000 customers in Virginia with 3 million megawatt-hours of power per year. Since July 2007, the company"s cost of purchasing power for these customers has increased dramatically, primarily due to increased costs for fuel, such as coal and natural gas. As a result, the company is facing a shortfall of more than $100 million in Virginia this year, necessitating the increased revenues provided by this agreement.
Key components of the agreement include:
- Current interim rates " which incorporated a $73 million increase for the July 1, 2008 to June 30, 2009 period " will remain in place through June 30, 2009.
- Bills for residential and small commercial customers will not increase by more than 15 percent for the period from July 1, 2009 through June 30, 2010. For ratemaking purposes, Potomac Edison will be deemed to have purchased 876,000 megawatt-hours per year at a fixed cost of $55 per megawatt-hour to supply these customers for a two-year period, beginning July 1, 2009.
- For large and mid-sized commercial and industrial customers, Potomac Edison will forego recovery of 50 percent of the increase in purchased power cost for the July 1, 2009 through Dec. 31, 2009 period, up to a maximum of $15 million.
- Full recovery of purchased power costs will begin on Jan. 1, 2010 for large and mid-sized commercial and industrial customers and on July 1, 2010 for residential and small commercial customers, except for the previously discussed block of pre-priced power. In addition, the company"s transmission and distribution rates are effectively frozen in Virginia until July 1, 2010, except for requests to recover certain transmission charges.
- Potomac Edison"s consideration of long-term products and resources for power procurement.
The company has agreed not to seek recovery of any revenue under-collection that may result from the above-mentioned provisions of the agreement.
Allegheny is reviewing the accounting and earnings implications of the settlement and will update the financial community on these topics in the near future.
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 the company"s Web site at
cts.businesswire.com/ct/CT"id=smartlink&url=http%3A%2F%2Fwww ...
Forward-Looking Statements
In addition to historical information, this release contains 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; regulatory matters; and accounting issues. 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; 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; changes in PJM, including changes to participant rules and tariffs; the effect of accounting policies issued periodically by accounting standard-setting bodies; 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.
Allegheny Energy, Inc.
Media contact:
Mark Nitowski, 724-838-6718
Manager, Corporate Communications
Media Hotline: 888-233-3583
E-mail: mailto:mnitows@alleghenyenergy.com
or
Investor contact:
Max Kuniansky, 724-838-6895
Executive Director, Investor Relations
and Corporate Communications
E-mail: mailto:mkunian@alleghenyenergy.com
