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Pa. wants to intervene in Allegheny Energy suit

November 11, 2002|BY JULIE E. GREENE

julieg@herald-mail.com

HAGERSTOWN - The Pennsylvania Public Utility Commission is trying to go to bat for Pennsylvania's electrical ratepayers and Allegheny Energy employees by asking the Federal Energy Regulatory Commission for permission to intervene in Allegheny's dispute with California over energy supply contracts.

In the motion filed Friday with the FERC, the Pennsylvania commission states it "seeks protection of Pennsylvania ratepayers and Allegheny Power employees from harm."

The case the Pennsylvania commission wants to intervene upon revolves around two energy supply contracts Allegheny Energy Supply Co. signed with California in March 2001. Allegheny Energy Supply is Allegheny Energy's energy trading subsidiary.

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California officials have been trying to renegotiate the terms of the contracts with Allegheny Energy. When they had no luck they filed a motion with the FERC, asking that the price be lowered or the contracts be voided.

One 11-year contract has California paying $61 per megawatt hour. The current West Coast market price is around $30 to $40 per megawatt hour and Allegheny argues that prices around the time of the contract being signed were much higher, around $250 to $350 per megawatt hour.

Allegheny Energy Supply officials have asked the FERC to dismiss the California complaint and let the contracts stand.

The Pennsylvania commission's motion states California officials have not shown that Allegheny did anything wrong.

The commission's motion states its members are concerned about the impact of the dispute on Pennsylvania consumers.

Ratepayers and Allegheny Energy employees could be "adversely affected by the adverse financial and credit position of Allegheny Energy," the commission's motion states.

Allegheny officials have cited Moody's Investors Service reference to the dispute as a reason for the rating agency downgrading Allegheny's rating to "junk" status. The utility's officials also have said the dispute is affecting their efforts to secure loans to sustain agreements with some energy trading partners.

The Pennsylvania commission is seeking permission to intervene even though the deadline to intervene has passed.

"FERC procedural rules require that a showing of good cause be made for late filed interventions," wrote Pennsylvania Public Utility Commission Assistant Counsel John A. Levin in an e-mail to The Herald-Mail.

If granted the right to intervene, the commission states it would not seek to reopen or delay any matter already settled, according to the FERC filing.

Allegheny Energy Supply spokeswoman Janice Lantz said she had no comment on the Pennsylvania commission's motion.

In other Allegheny news, the utility filed a response Thursday with the FERC to the California Electricity Oversight Board's motion to intervene in another Allegheny matter.

The oversight board opposes Allegheny's request to transfer the two California contracts with the California Department of Water Resources from Allegheny Energy Supply to a new subsidiary, Allegheny Trading Finance Co.

Erik Saltmarsh, director and chief counsel for the oversight board, has said such a move could leave California with no recourse if the new subsidiary defaults on the contracts. That would be because the new subsidiary has no other assets, he said.

In a response filed by Allegheny Energy Supply and Allegheny Trading Finance, the utility states the oversight board is not a party to the contracts and lacks the standing to intervene.

The utility's response also argues that the oversight board failed to show how transferring the contracts would make the California Department of Water Resources worse off.

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