Meeting set to discuss Allegheny Power's restructuring deal

October 15, 1999

The Maryland Public Service Commission will hold a public hearing on Allegheny Power's pending electric restructuring settlement at 7 p.m. Monday at North Hagerstown High School.

Under the terms of the settlement, residential customers will save an average of $71 on their annual electric bills from 2002 through 2008, according to the Office of People's Counsel, an independent advocate for residential rate payers.

The settlement also allows all residential customers to begin shopping for their electricity on July 1, 2000, according to a press release from the office.

The agreement calls for a 7 percent base rate cut on Jan. 1, 2002, and frozen rates for the next six years.


The rate cap does not go into effect until Jan. 1, 2002, as a result of a previously negotiated agreement regarding the company's contract with the independent power producer known as AES Warrior Run.

Pursuant to a federal law, Allegheny Power agreed in 1988 to buy $60 million worth of electricity annually from Warrior Run. Because of changing economic conditions, the cost of this power is now more than the market price.

The previously filed agreement allows for small rate increases in 1999, 2000 and 2001 to compensate the company for this contract.

Under the restructuring settlement, the company will sell on the wholesale market the electricity it buys from Warrior Run and credit customers with the proceeds.

Consumers will not have to pay the company for $241 million in so-called stranded costs the company claimed to have when it filed a deregulation plan with the Public Service Commission in July 1998.

Stranded costs are investments utilities made in power plants and other generating assets that they might not be able to recover in a competitive market.

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