WEST PENN POWER $493 MILLION 'AA-' DEBT ON FITCHALERT NEGATIVE --FITCH FINANCIAL WIRE--
WEST PENN POWER $493 MILLION 'AA-' DEBT ON FITCHALERT NEGATIVE
--FITCH FINANCIAL WIRE--
NEW YORK, Feb. 12 /PRNewswire/ -- West Penn Power Co.'s 'AA-' $493 million first mortgage bonds, $109.7 million 'AA-' preferred stock, and 'F-1+' commercial paper are placed on FitchAlert with negative implications.
The alert reflects indications that regulatory treatment for the recovery of West Penn Power's acid rain related expenditures is likely to result in a weakening of credit quality. In a Feb. 6 polling (non- binding), the Pennsylvania Public Utility Commission (PUC) denied West Penn's request for an annual surcharge to recover Clean Air Act (CAA) related costs. As a result, West Penn Power will have to file a general rate case to recover CAA related expenditures, delaying cash recovery and increasing the probability that measures of bondholder protection will fall below levels appropriate for the current rating. The less favorable regulatory treatment could result in West Penn Power receiving a lower, disproportionate share of equity funding for capital expenditures from its parent company, Allegheny Power System, Inc. than its affiliates. The commission did determine that West Penn's CAA compliance strategy is prudent. A final order is expected in early March.
State regulators for West Penn's affiliates, Potomac Edison Co. and Monongahela Power Co., were unanimous in their support of acid rain compliance strategies including a mechanism to recover capital costs. West Virginia approved the recovery of investment costs for acid rain expenditures through an annual energy clause. The Maryland Public Service Commission authorized a surcharge mechanism to recover carrying costs for acid rain expenditures. The Virginia State Corporation Commission is likely to approve construction works in progress in rate base. Nonetheless, the credit trend for Monongahela and Potomac Edison remains uncertain pending a clearer delineation of financing strategy and its effect on measures of bondholder protection.
/CONTACT: Josephine Zeppieri of Fitch, 212-908-0575/ CO: West Penn Power Co. ST: Pennsylvania IN: UTI SU: RTG AH -- NY049 -- 9215 02/12/92 11:45 EST