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Calif. opposes Allegheny request

November 18, 2002|by JULIE E. GREENE

julieg@herald-mail.com

HAGERSTOWN - California officials are asking the Federal Energy Regulatory Commission to deny a request by Allegheny Energy Supply Co. to dismiss the state's complaint about two energy supply contracts.

The contracts - the question of who decides whether the stand and when that decision is made - are the subject of a dispute between the state and the utility.

Allegheny Energy Supply - an energy trading subsidiary of Allegheny Energy - filed an emergency motion on Oct. 29 to dismiss the California complaint about the two contracts.

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The contracts were signed in March 2001 in the wake of an energy crisis in California when energy prices were much higher. Now that the market has stabilized with much lower prices, California officials are trying to renegotiate the contracts.

The regulatory commission had set a December hearing for the matter before an administrative law judge. Allegheny officials asked the commission to make an immediate decision, saying the uncertainty of the matter was hurting the utility's debt rating and efforts to secure favorable loan terms.

The comment period on Allegheny's request ended this week, but the FERC had not made a decision on the matter and it was not on the commission's agenda for its Nov. 20 meeting, spokeswoman Barbara Connors said Friday.

The commission does not need to put a matter on the agenda to make a decision.

The commission may simply ignore Allegheny's request for a dismissal, Connors has said.

On Thursday, the California Public Utilities Commission and the California Electricity Oversight Board filed a joint response to Allegheny's motion. They asked the FERC to deny Allegheny's request and let the matter go to the December hearing.

The two California agencies stated Allegheny's argument for immediate dismissal included misinformation because the utility's debt rating was reduced to junk status by Moody's Investors Service for more reasons than just the uncertainty over the dispute with California.

The Moody's report cited unplanned equipment outages and unfavorable weather as factors in Allegheny's operating difficulties.

"Allegheny believes that the claims asserted against our contract are without merit," Allegheny Energy Supply spokeswoman Janice Lantz said Friday.

Lantz said testimony filed Nov. 8 by FERC staff members endorsed Allegheny's position.

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