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ALLEGHENY POWER SYSTEM 'F-1+' COMMERCIAL PAPER AFFIRMED BY FITCH -- FITCH FINANCIAL WIRE --

 NEW YORK, Aug. 12 /PRNewswire/ -- Allegheny Power System's 'F-1+' commercial paper rating is affirmed by Fitch.
 The rating for this public utility holding company reflects the strong credit quality of its three operating subsidiaries, which account for all of Allegheny's revenue and earnings. The percent of 1992 operating income derived from each of its operating subsidiaries is 23 percent for Monongahela Power Co. (senior debt 'AA-'), 26 percent for Potomac Edison Co. ('AA-'), and 37 percent for West Penn Power ('A+').
 Credit quality is enhanced by the system's low-cost structure, ample baseload capacity through 2002, and favorable regulatory treatment of Clean Air Act (CAA) capital costs. Rating maintenance assumes rate relief by 1995 adequate to return credit quality measures to levels more appropriate for the rating category. The system is complying with Phase 1 CAA regulations by building scrubbers at the Harrison plant, which is jointly owned by Allegheny's operating subsidiaries.
 Regulators pre-approved the system's Phase 1 compliance strategy and the system received favorable treatment of CAA capital costs in all but one jurisdiction (Ohio - regulated 2 percent of 1992 operating revenues). Regulatory treatment of these costs is significant because they are substantial; Allegheny's 1992 Phase 1 construction expenditures totaled $179 million and are projected to be $279 million and $123 million in 1993 and 1994, respectively.
 Allegheny's operating subsidiaries will file rate cases in all jurisdictions (Pennsylvania, West Virginia, Maryland, Virginia and Ohio) prospectively, timing effective dates of authorized rate increases with in-service dates of the Harrison scrubber units (staggered during 1994's 4th quarter). Revenue requirements also will reflect rate relief unrelated to CAA expenditures.
 Despite anticipated rate increases, Allegheny should maintain its strong competitive position since regional competitors also face CAA compliance costs. Average rates at year-end 1992 were 4.17 cents per kilowatt-hour (kwh) sold. Average industrial rates were 3.77 cents/kwh sold.
 Pretax coverage of interest excluding AFUDC was 2.81 times (x) for the 12-month period ended March 31. By 1995, internal generation is expected to improve to about 80 percent of construction expenditures from the trailing 12-month level of 47.7 percent by 1995. Sustained improvement in this measure will depend on Allegheny's ability to defer Phase 2 expenditures by using the estimated 850,000 allowances available during 1995-1999.
 -0- 8/12/93
 /CONTACT: Josephine Zeppieri, CFA of Fitch, 212-908-0575/
 (AYP)


CO: Allegheny Power System ST: New York IN: UTI SU: RTG

WB -- NY025 -- 2070 08/12/93 10:59 EDT
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Publication:PR Newswire
Date:Aug 12, 1993
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