Allegheny Power preparing for deregulation

September 15, 1997


Staff Writer

Allegheny Power has formed an unregulated subsidiary to compete for retail customers' energy supply business in the coming era of deregulation, according to a company spokesman.

The new company - Allegheny Energy Solutions Inc. - will find its first group of prospective customers among Pennsylvanians who will get to choose their electric supplier under a pilot program beginning Nov. 1, said spokesman John Vincze.

The company is poised to start selling electrical power to the program's approximately 278,000 initial participants, including about 30,000 of Allegheny Power's current customers, he said.


Vincze said the pilot program will act as a test ground during Pennsylvania's move toward deregulation of the power industry.

Instead of buying electrical power through the regulated power company that serves its area, customers will be able to shop approved unregulated power marketing companies for that portion of their energy cost, he said.

Allegheny Power will continue to maintain its customers' lines, read meters and service accounts, he said. Billing can be combined or separate.

Only 5 percent of Pennsylvania's retail customers will be able to participate in the first phase of the state-mandated pilot program, which will run through December 1998, Vincze said.

Customers are being recruited for the program through mass mailings and newspaper advertisements, he said.

He said the plan is to incrementally expand participation year by year until 2001, when all the state's retail electric customers will get to choose their power supplier.

Deregulating the sale of electric should benefit customers because the market will determine the price, said Vincze, who said the state's Public Utilities Commission has projected customers will see the energy costs drop about 10 percent.

Competition should prevent price gouging, said Dennis Higgins, a research analyst with Morgan Stanley Dean Witter in New York City.

He said Allegheny Power's formation of Allegheny Energy Solutions mirrors an industry-wide trend.

Most of the larger power companies have created unregulated subsidies to sell power, Higgins said.

"You need to have some entity that would sell power to the consumer. If they didn't have that type of subsidiary when the market opened up, they'd be at a disadvantage," he said. Allegheny Power serves nearly 1.4 million customers in parts of Maryland, Pennsylvania, West Virginia, Virginia and Ohio.

For information on the program, call Allegheny Power at 1-800-255-3443.

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