Regulation protects Allegheny customers

October 19, 2003|by JULIE E. GREENE

No matter how bad things get for Allegheny Energy Inc., customers should expect to get up in the morning and turn on their lights, enjoy a hot shower, get their coffee percolating and make toast.

And when the electric bill arrives in the mail, customers shouldn't have to worry about being shocked by unexpected escalating rates.

That's because the electric industry still is regulated to an extent.

Allegheny shareholders have seen their stock's value plummet and their dividends disappear. More than 600 employees companywide took early retirement or separation offers last year and several employees at the corporate headquarters southwest of Hagers-town will have to transfer or reapply for jobs with the company.


Except for unexpected outages usually beyond Allegheny's control, the utility's customers could have less to worry about, thanks to regulatory controls.

However, there are some unknowns concerning electric service if Allegheny goes bankrupt. And, the energy utility's financial troubles have affected the community in other ways.

For more than two years now, some community groups and events have received less or no assistance from Allegheny Energy as its financial troubles got so bad it was on the brink of filing for bankruptcy protection earlier this year.

Until a year ago, Allegheny sponsored various programs or events for the Hagerstown-Washington County Economic Development Commission, Executive Director Tim Troxell said.

"They just stopped spending money on all that," Troxell said.

One of those events was the Washington County Business Awards that the EDC and Hagerstown-Washington County Chamber of Commerce put on together, Chamber President Fred K. Teeter Jr. said.

When the chamber started that event almost four years ago, Allegheny was one of the first companies to back the event, Teeter said.

Allegheny sponsored the second banquet, but not the most recent one or the one coming up in March, Teeter said.

Allegheny's "fortunes turned sour and they had to cut back," Teeter said.

Allegheny had contributed $3,000 to $5,000 a year to chamber events and programs, Teeter said.

The company also had employees participate in chamber activities. Until two years ago, Allegheny had three or four people serving on or leading chamber committees, Teeter said.

Now there is only one Allegheny employee who serves on a chamber committee, he said.

The first time Allegheny pulled back its resources, Teeter said he probably was caught off guard. But, he said, he quickly shifted gears to search for other people and businesses to replace Allegheny's contributions.

"We're lucky to have retained their membership, frankly," Teeter said. "A company in that kind of financial situation understandably cuts out a lot of stuff they would like to do, but literally can't afford to do anymore.

"Given the paring of employees and physical (assets), we understand and it's our fervent hope that they rebound and come back stronger than ever and participate in the community like they used to."

Allegheny donated $3,000 to the Western Maryland Blues Fest in 2002, but did not contribute to this year's event, City of Hagerstown spokeswoman Karen Giffin said. Giffin wasn't sure whether Allegheny was asked to give this year because of its financial situation.

James Taylor, executive director for the United Way of Washington County, said in most cases the Allegheny employees who were serving the United Way still are helping even if they no longer work for the company.

In some cases, they have stepped up their involvement because they have more time available, he said.

Customer service

While Allegheny Energy avoided bankruptcy earlier this year by securing new financing, energy market and credit analysts said Allegheny still is a risky investment that might face the possibility of bankruptcy again.

Allegheny provides electricity and natural gas service to about 4 million people in Maryland, Pennsylvania, West Virginia, Virginia and Ohio. The utility employs more than 200 people in Washington County and is one of the county's top taxpayers.

The details of how electrical service is provided and how rates are determined if Allegheny goes bankrupt aren't certain, but the power won't go out, said Gregory Carmean, executive director for the Maryland Public Service Commission.

That picture could become clearer because two other cases involving utilities, Mirant in the South and NRG Energy Inc., are having those issues addressed in the courts currently, Carmean said.

"Power will continue to be provided. Rates will be the issue," Carmean said.

Regardless of Allegheny's financial status, rates will become an issue during the next six years when rate caps are lifted for Allegheny's Maryland Potomac Edison and Pennsylvania West Penn residential customers.

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