Allegheny Energy Seeks Financing Approval for Environmental Improvement Project
GREENSBURG, Pa.--(BUSINESS WIRE)--Allegheny Power, the electric delivery business of Allegheny Energy, Inc. (NYSE: AYE), is seeking approval from the West Virginia Public Service Commission to use securitized financing to fund the remaining portion of its flue gas desulfurization (scrubber) project at the Fort Martin Power Station.
The securitization, if approved, would involve issuing approximately $105 million of environmental control bonds with a term of up to 10 years. The bonds would be repaid using funds collected from West Virginia customers through an adjustment to the current Environmental Control Charge.
“This approach should save customers more than $40 million compared to traditional ratemaking,” stated Paul J. Evanson, Chairman, President and Chief Executive Officer of Allegheny Energy.
The proposed securitization would increase the bill of a typical customer using 1,000 kilowatt-hours of electricity per month by $1.21, or 1.5 percent. Even with this requested increase, Allegheny Power’s monthly charges for a typical residential customer would be about $84.50, well below the national average of $112.
The total construction cost for the Fort Martin scrubber project is approximately $550 million. In a January 2007 order, the commission authorized Allegheny to securitize up to $450 million of the scrubber costs, plus certain related financing costs.
The scrubbers, scheduled for completion later this year, will remove more than 90 percent of sulfur dioxide and significantly reduce mercury emissions from the facility. The project has created more than 350 construction jobs in the past two years, and it will allow Allegheny to use more West Virginia coal when completed. Fort Martin Power Station is located near Morgantown, W.Va.
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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