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19 January 2007 -- Allegheny Energy, Inc. announced today that the Public Service Commission of West Virginia has approved the company's revised plan to finance the installation of flue gas desulfurization equipment (scrubbers) at its Fort Martin Power Station near Maidsville, W.Va.
On December 18, 2006, Allegheny, along with a group of interested parties, submitted a settlement agreement to the commission outlining the revised financing plan. In an order issued on January 17, 2007, the commission authorized Allegheny to securitize up to $450 million of the scrubber construction costs, plus certain related financing costs and seek recovery of a rate of return on actual construction costs exceeding $450 million during the period prior to placing the project into commercial service (construction work in progress).
The order also indicated that Allegheny may seek recovery of actual construction costs exceeding $450 million in a subsequent base rate proceeding.
Allegheny said the securitization will involve issuing environmental control bonds. Funds collected from customers through an environmental surcharge will be dedicated to the repayment of those bonds. The surcharge will begin once the bonds are issued, and based on the estimates stated in the order, the charges should amount to about $3.50 per month for a typical residential customer using 1,000 kilowatt-hours of electricity. Excluding the surcharge, a typical Allegheny Power residential customer in West Virginia currently pays about $70 per month for 1,000 kilowatt-hours, well below the national average of more than $90.
Allegheny expects to complete the Fort Martin scrubber project by year-end 2009. The utility said the project would allow Allegheny to use more West Virginia coal and create more than 350 construction jobs.
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