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Allegheny Power Completes Auctions for 2011 Electricity Supply in Pennsylvania

^{Published on 2010-10-22 12:15:55 - Market Wire}
 

GREENSBURG, Pa.--([ BUSINESS WIRE ])--Allegheny Power, the electricity delivery unit of Allegheny Energy, Inc. (NYSE: AYE), announced today that the Pennsylvania Public Utility Commission approved the results of the utilitya™s sixth auction to purchase power for its Pennsylvania customers for 2011 and beyond.

"Residential customers should only see a modest increase in their bills next year when long-standing generation rate caps expire"

Allegheny Power has now completed the auction purchases needed to serve its customers next year after generation rate caps expire on December 31, 2010. The auction purchases account for 80 percent of supply needed for residential customers next year and approximately 90 percent of small and mid-sized non-residential customersa™ needs. Additional spot market purchases will be made throughout 2011 to complement the fixed-priced auction purchases.

Assuming the spot market purchases are consistent with current market pricing, a typical Pennsylvania residential customera™s monthly bill next year would increase only $3.16, or 3.4 percent over 2010 levels, assuming usage of 1,000 kilowatt-hours (kWh) per month. For small and mid-sized non-residential customers, rates in 2011 will decrease 3.2 percent and 3.9 percent, respectively.

aResidential customers should only see a modest increase in their bills next year when long-standing generation rate caps expire,a said Paul J. Evanson, Chairman, President and Chief Executive Officer of Allegheny Energy. aOur auction results, along with our Watt Watchers conservation programs, will help ensure a smooth transition to market-based rates.a

Allegheny Power awarded 20 contracts in this auction, representing approximately 7.4 million megawatt-hours (MWh) of generation supply. The new contracts include the purchase of 5.2 million MWhs for large non-residential customers (Service Type 40) who have not selected a competitive supplier and have requested a one-year fixed price.

The results of the auction were:

For residential customers:

• One 17-month contract
• One 29-month contract
• Average weighted retail generation price: $55.01/MWh

For small and mid-sized non-residential customers:

• Three 17-month contracts
• One 29-month contract
• Average weighted retail generation price: $59.14/MWh

For large non-residential customers:

• 14 twelve-month contracts
• Average weighted retail generation price: $65.66/MWh

Included in the average weighted retail generation pricing are energy, capacity, Pennsylvania gross receipts taxes, line losses, renewable energy requirements, ancillary services and other provisions. The contracts awarded today begin on January 1, 2011.

The winning suppliers were selected from among seven competitive bidders. An independent monitoring firm, Boston Pacific Company, Inc., oversaw the process for Allegheny Power. Two more auctions are scheduled in 2012. The multiple auctions are designed to shield customers against overexposure to market conditions at any single point in time.

Money-saving options available

Now that customers have a clear picture of next yeara™s market-based rates, they can more easily consider choices available to manage their bills and use energy wisely. Customers may take advantage of Pennsylvaniaa™s electric choice program and consider offers from competitive suppliers. Allegheny Powera™s average price-to-compare for residential customers next year is 7.008/kWh. More information about choosing a competitive electric generation supplier is available on the Customer Choice page at [ www.alleghenypower.com ].

In addition, Allegheny Powera™s Watt Watchers program offers incentives, rebate programs and money-saving information. For more information about programs and tips for using energy more efficiently, visit the Watt Watchers section of the companya™s website at [ www.alleghenypower.com ].

Schedule is for all purchases required for the plan period of January 1, 2011 to May 31, 2013.

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 approximately 1.5 million customers in Pennsylvania, West Virginia and Maryland. 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 Energya™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 Energya™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 pronouncementsissued 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 Energya™s reports filed with the Securities and Exchange Commission.