Press Release

PUC OKs Settlement with Duquesne Light Over Corporate Compliance Issue

Published on 2/9/2006

Filed under: Electric

HARRISBURG – The Pennsylvania Public Utility Commission today gave final approval to a settlement with Duquesne Light that addresses a corporate compliance issue and included a contribution of $250,000 by the company to its programs to help low-income families.

          “The affects of corporate governance issues can ripple through a company and a community,” said Chairman Wendell F. Holland. “These are exactly the types of things our routine audits are designed to detect and prevent. Reaching a settlement on this issue and directing the financial contribution to low-income programming ensures that all parties are working together in the best interest of the community.”

            The settlement agreement, reached between the PUC’s independent prosecutory staff and Duquesne Light, follows an informal investigation into the utility granting an interest rate decrease from 8 percent to 5 percent on a $250 million loan to an affiliate without PUC approval. The issue was discovered during a periodic management and operations audit of the company conducted by the Commission’s audit staff. The agreement also provides that the penalty will be paid by the utility and will not be recovered in rates paid by customers.

            Under the terms of the settlement, which passed by a vote of 5-0, the company will direct $250,000 to its winter 2005-06 Stay Warm Program that is designed to help eligible low-income families and seniors. At the end of winter, any unspent funds are to be transferred to the company’s Consumer Assistance Program (CAP).

             During the informal investigation, the prosecutory staff alleged that Duquesne violated certain affiliated interest provisions of the Public Utility Code by failing to obtain prior Commission approval of the December 2001 transaction and that the company’s failure to properly document the interest rate change was “unreasonable and inconsistent with the public interest,” according to the prosecutory staff.

            The company denies that it violated any provisions of the code of any of the Commission’s regulations.

            In addition to the contributions to its Stay Warm programs, Duquesne Light has agreed to the following:

• Accept from Duquesne Holdings a cash contribution equal to the difference between the interest paid and the interest that would have been paid had the interest remained at 8 percent – a total of about $27.6 million.
• Establish procedures designed to ensure documentation of Duquesne’s Board of Directors’ approval for all inter-company loans and appropriate Commission approvals of the same.

The Pennsylvania Public Utility Commission ensures safe, reliable and reasonably priced electric, natural gas, water, telephone and transportation service for Pennsylvania consumers, by regulating public utilities and by serving as responsible stewards of competition.

For more information about the PUC and additional press releases, visit our website at www.puc.state.pa.us.

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Docket No. M-00051929       

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