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Utility loses millions on sale

June 28, 2003|by JULIE E. GREENE

julieg@herald-mail.com

Allegheny Energy took a $29 million pre-tax loss in selling its share of the Conemaugh Generating Station in Pennsylvania, company officials announced Friday.

Allegheny Energy Supply Conemaugh LLC sold its share of the station near Johnstown, Pa., to UGI Development Co., a subsidiary of UGI Corp., for approximately $51.25 million, according to an Allegheny Energy news release.

Allegheny Energy Supply Conemaugh is a subsidiary of Allegheny Energy Supply Co., which is Allegheny Energy's energy trading subsidiary.

Allegheny bought 83 megawatts of coal-fired generating capacity at the station near Johnstown, Pa., in January 2001 for $78 million.

Allegheny Energy Supply spokeswoman Janice Lantz said a portion of the sale proceeds might be used to pay down debt.

The utility announced the sale Feb. 26, the day after announcing a $2.4 billion financing deal that allowed the company to avoid filing for bankruptcy.

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Earlier this week, Allegheny officials said they might be forced to consider filing for bankruptcy protection if the Securities and Exchange Commission doesn't give the company permission to raise new capital.

The sales price for Allegheny's share of the Conemaugh station includes a contingent amount of $5 million that Allegheny Energy Supply Conemaugh could get in whole, in part or not at all, depending upon whether Allegheny Energy Supply meets certain post-closing obligations, the news release states.

Because of Allegheny's financial state, the $5 million is credit protection for UGI while Allegheny officials take care of some outstanding issues with the sale, Lantz said.

Lantz said the sale had to be and was approved by the Federal Energy Regulatory Commission, the Federal Trade Commission and the Department of Justice.

Lantz said the book value of Allegheny's share of the Conemaugh station was approximately $75 million as of Dec. 31, 2002, for the property, plant, equipment and inventory.

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