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WEST PENN POWER DOWNGRADED FROM 'AA-/F-1+' TO 'A+/F-1' BY FITCH -- FITCH FINANCIAL WIRE --

 WEST PENN POWER DOWNGRADED FROM 'AA-/F-1+' TO 'A+/F-1' BY FITCH
 -- FITCH FINANCIAL WIRE --
 NEW YORK, March 26 /PRNewswire/ -- West Penn Power Co.'s first mortgage bond rating is downgraded to 'A+' from 'AA-.' The preferred rating is downgraded to 'A' from 'AA-.' The company's commercial paper rating is downgraded to 'F-1' from 'F-1+.' All issues are removed from FitchAlert. The company's credit trend is declining.
 The lower ratings reflect significant acid rain expenditures and uncertain regulatory treatment by the Pennsylvania Public Utility Commission (PUC). The PUC, which regulates 98 percent of West Penn's revenues, issued a non-commmital prudency decision of the company's acid rain compliance plan, and denied the company's request to recover actual acid rain related capital costs through a surcharge. As a result, West Penn's parent, Allegheny Power System Inc. (APS) expressed the intent to provide less equity support for West Penn's acid rain expenditures.
 The PUC determined that West Penn's acid rain compliance plan was prudent based on currently available information, but conditioned their ruling on the availability of new information on bonus and extension allowances and the market for low sulfur coal. The Environmental Protection Agency is expected to issue regulations concerning bonus and extension allowances by mid-year.
 Allegheny Power plans to comply with 1990 Clean Air Act phase I requirements by building scrubbers at its mine-mouth Harrison plant for $726.6 million including AFUDC. West Penn's share is $311.1 million.
 West Penn's affiliation with its parent provides it with operating and financial support that would be unavailable to it as a stand alone entity. However, reduced parent financial or equity support is expected to result in weakened measures of bondholder protection for West Penn. Nonetheless, West Penn will continue to benefit from its access to substantial resources and strong service reliability provided by the APS System, which operates and dispatches operating subsidiary resources as a single integrated system.
 West Penn's financial protection measures improved in 1991 following a 1990 base rate increase. Pretax coverage improved to 3.37 times (x) at year end 1991 from 3.07 x in 1990. However, higher operating and interest expense associated with the scrubber project will reverse the improvement in this measure for the duration of its construction. Internal generation, 67 percent in 1991, is expected to provide less than 50 percent of construction expenditures until 1995. Total debt as a percent of capitalization, 49.5 percent in 1991, is expected to approximate 48 percent over the next five years.
 -0- 3/26/92
 /CONTACT: Josephine Zeppieri of Fitch, 212-908-0575/
 (AYP) CO: West Penn Power Co. ST: Pennsylvania IN: UTI SU: RTG


CK -- NY071 -- 2042 03/26/92 14:27 EST
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Publication:PR Newswire
Date:Mar 26, 1992
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