Allegheny Power gets approval to issue another $105 million of bonds

By Devika Patel

Knoxville, Tenn., Oct. 2 - Allegheny Power said that the Public Service Commission of West Virginia has approved a settlement agreement that allows the company to issue an additional $105 million of bonds.

The bond proceeds will be used to fund the remaining portion of the company's flue gas desulfurization project at the Fort Martin Power Station, near Morgantown, W.Va.

The settlement agreement was submitted to the commission last month. Under it, Allegheny agreed to withdraw its July request for an $82 million interim rate increase for fuel and purchased power costs. The company will pursue recovery of those costs as part of its annual fuel rate case, which was filed on Sept. 1.

"We are committed to environmental stewardship, and the Fort Martin scrubbers are key to that effort," Allegheny's chairman, president and chief executive officer Paul J. Evanson said in a press release.

"We appreciate the commission's timely approval of this proposal, which should save customers more than $40 million compared to traditional ratemaking."

Proceeds collected from Allegheny's West Virginia customers through a surcharge will be dedicated to the repayment of the ratepayer obligation bonds. Based on current estimates, the additional surcharge would increase the bill of a typical West Virginia residential customer using 1,000 kilowatt-hours of electricity per month by $0.76, or less than 1%.

Based in Greensburg, Pa., Allegheny Power is the electric delivery business of Allegheny Energy, an investor-owned electric utility.

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