Power rate controversy comes to town

January 03, 1997


Staff Writer

Allegheny Power President Alan J. Noia said Monday a new power plant will be costly for the electric company's customers, but protesters from Allegany County said it would be too costly not to build the $400 million plant in Cumberland, Md.

Greeting Dual Highway drivers with signs carrying messages like "Working People for AES" and "Say YES to AES," about 24 protesters organized by various unions and AES said the Warrior Run plant would mean jobs and economic growth.

"This power plant is the fulcrum of revitalization in Allegany County," said Terry Bowman, president of the Western Maryland Building and Construction Trades Council.


During a noon media briefing at the Best Western Venice Inn, Noia said the 180-megawatt Warrior Run plant, which has contracted to sell electric to Allegheny Power starting in 1999, will result in a 13 percent rate increase, which would hike the average residential bill by $9 a month.

"This is an uneconomical contract, and the effects of this are real and will be seen by all the customers," Noia said.

AES Warrior Run Development Director Steven Hase accused Allegheny Power of having concerns other than its customers, namely protecting its own interests in power generation.

"They're acting as if they're on the side of the rate payers when, in fact, what they are trying to do in buying us out is a bailout for their shareholders," Hase said.

Noia said the deal has "no bottom-line" - negative or positive - on the company, and only customers would be affected.

Allegheny Power is bound to purchase electricity from AES under a 1988 contract between the utility and AES. But a national electricity glut, caused by a move toward deregulation and increased competition in the utility industry, allows Allegheny Power to shop around for a cheaper rate, the company said.

And a lack of growth in Maryland has made the need for the coal-fired Warrior Run project unnecessary, Noia said.

"This was a mistake," he said of the contract.

Allegheny Power said staying with the Warrior Run deal will cost its 191,000 Maryland customers $1.7 billion over the 30-year life of the pact. Allegheny Power's largest customer, Eastalco Aluminum Co. in Frederick County, has said it would consider producing its own electricity if the rate hike goes through.

Noia said he would like to negotiate a buyout, but an AES official said his company intends to hold Allegheny Power to the contract.

An Allegheny Power study concluded that a 10 percent rate increase in Maryland would cause the loss of 88 jobs a year in its five-county service area in the state.

AES counters by saying its plant, a year into construction, will create 600 construction jobs and 270 permanent jobs, pay $100 million in taxes, and add $3 billion to the state's economy. Hase said there likely will be a first-year rate hike, but that rates will be stable thereafter.

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