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Power rate hike expected

December 09, 1998|By KERRY LYNN FRALEY

Average residential customers in Maryland can expect their Allegheny Power bills to increase by nearly $9 over the next three years under a settlement to resolve several rate issues announced Tuesday, a company spokeswoman said.

The settlement, which calls for 4 percent rate hikes in 1999, 2000 and 2001, is good news for residential customers, according to the Office of People's Counsel, Maryland's consumer watchdog agency for utilities.

Imposed at the same percentage rate on residential, commercial and industrial customers, the total increase is significantly less than what the company projected it would impose to cover its purchase obligation for the new AES Warrior Run plant, officials said.

Representatives of the Office of People's Counsel and Allegheny Power said Tuesday that the settlement, which will be filed with the Maryland Public Service Commission later this week, is good for everyone concerned.

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"We were able to look at the big picture and see what was best for the ratepayers, the utility and the other parties involved and try to get a package that everyone could accept," said Deputy People's Counsel Sandra Guthorn.

"It's the best way to accomplish what needs to be accomplished," Allegheny Power spokeswoman Midge Teahan said Tuesday.

The settlement, which fulfilled the company's wish to address several rate-affecting issues, was possible because the company worked hard to reduce some operating costs, Teahan said.

It's actually the second part of a settlement ironed out during the past year by the utility, Office of People's Counsel, Maryland Public Service Commission, the Maryland Energy Administration, and major electricity users Westvaco Corp. and Eastalco Aluminum Co., Guthorn said.

Negotiations began after the Office of People's Counsel filed a petition contending Potomac Edison Co., a subsidiary of Hagerstown-based Allegheny Power, was making too high a profit and should lower Maryland customers' rates, she said.

An initial settlement outlining the amount Potomac Edison Co. would raise through rate increases over the next three years was reached in July, Guthorn said.

The settlement offset a projected $131.2 million in increased capacity costs once the Warrior Run plant starts operating in October 1999 with $52 million in estimated "overearnings" for the three-year period, she said.

The settlement has two versions, one that factors in a $4.4 million annual merger savings if Allegheny Power's merger with Pittsburgh-based DQE Inc. goes through and another without the savings if the merger deal isn't consummated, Guthorn said.

The average residential customer using 1,000 kilowatt hours a month can expect a $2.80 monthly increase in 1999, Teahan said.

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