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Allegheny Energy Announces Proposed Rate Settlement in West Virginia
Posted by: gurufocus (IP Logged)
Date: December 15, 2008 12:09PM
GREENSBURG, Pa.--(BUSINESS WIRE)--Allegheny Energy, Inc. (NYSE: AYE) announced today that it has reached agreement with the Consumer Advocate Division, Staff of the Public Service Commission of West Virginia, and the Press Release: Allegheny Energy Announces Proposed Rate Settlement in West Virginia Allegheny Energy Inc. is a diversified utility holding company. They own directly and indirectly various regulated and non-regulated subsidiaries and have aligned its businesses into three principal business segments: regulated utility operations unregulated generation operations and other unregulated operations. Allegheny Energy Inc. has a market cap of $5.53 billion; its shares were traded at around $32.36 with a P/E ratio of 14.54 and P/S ratio of 1.67. The dividend yield of Allegheny Energy Inc. stocks is 1.83%. Allegheny Energy Inc. had an annual average earning growth of 46% over the past 5 years. More on AYE: Gurus buys and sells of AYE 10-year financial history of AYE. Insider buys/sells of AYE.
GREENSBURG, Pa.--(BUSINESS WIRE)--Allegheny Energy, Inc. (NYSE: AYE) announced today that it has reached agreement with the Consumer Advocate Division, Staff of the Public Service Commission of West Virginia, and the West Virginia Energy Users Group regarding the company’s August 2008 rate request for the recovery of fuel and purchased power costs.
Under the settlement agreement filed today, the parties have agreed that the company’s West Virginia rates shall be increased by $142.5 million (annualized) on January 1, 2009, largely to recover anticipated increased costs of fuel and purchased power. Of this amount, $5.5 million represents the company’s total under-recovery for the period May 2007 through June 2008. The agreement requires approval of the Commission to be effective.
If adopted, the typical residential customer using 1,000 kilowatt-hours per month would see an overall bill increase of about 15 percent or $11.
The proposed increase is largely due to the dramatic rise in coal prices, which is the single largest component of Allegheny’s cost of producing electricity. Under a cost recovery clause established by the Commission last year, customer rates are adjusted annually to reflect projected upward or downward changes in the cost of fuel and purchased power for the year ahead, and actual energy costs for the previous period.
In its August filing, Allegheny had requested a $173 million revenue increase for its Monongahela Power and Potomac Edison subsidiaries, effective January 1, 2009. Of that amount, $5.5 million represents the under-recovery of actual fuel and purchased power costs for the period May 2007 through June 2008 and $167.7 million was the company’s projection of increased costs for 2009 at the time of the filing.
Any difference between amounts collected through the cost recovery clause and actual 2009 costs would be recorded as deferred energy costs and eligible for recovery or refund under the recovery clause. As a result, the proposed settlement would not affect net income other than interest on deferred amounts.
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.
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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