Press Release

PUC Gives Final Approval to West Penn Settlement

Published on 11/19/1998

Filed under: Electric

    Harrisburg, Pa. ¾ In a 5-0 vote, the Public Utility Commission (PUC) today gave final approval to the restructuring settlement agreement reached earlier this month with West Penn Power.

    Under the Nov. 4 settlement agreement, West Penn will decrease its rates by 2.5 percent in 1999, saving customers an estimated $25 million. In addition, two-thirds of West Penn customers will be able to shop for competitive electricity in 1999 as part of the state’s Electric Choice Program.

    Other highlights of the settlement include:

• Provides a system average price to compare of 3.16 cents per kilowatt-hour in 1999. Customers save money when they purchase electric generation for less than the price to compare;
• Guarantees that the regulated rates charged by West Penn for the transmission and distribution of electricity will not increase through December 31, 2005 ¾ four and one-half years beyond the period required by the Electric Competition Law;
• Extends a rate cap on electricity purchased from West Penn, as the supplier of last resort, through 2008. This is important for customers who opt not to shop for power;
• Establishes a sustainable energy fund for the development and use of renewable energy and clean energy technologies;
• Provides approximately $8 million in 1999 in assistance and energy conservation programs for low-income customers;
• Commits $4 million of shareholder funds to Citizen Power, Inc., the sponsor of the western division of the Energy Cooperative Association of Pennsylvania, a licensed aggregator, for a four-year program to provide lower priced electricity to rural and low-income households in Western Pennsylvania;
• Creates an option for customers to choose another licensed supplier to provide metering and billing services beginning September 1, 1999;
• Permits West Penn to recover $670 million in stranded costs over a 10-year period beginning in January 1999. In the event the corporate merger of West Penn’s parent, Allegheny Power, and DQE is consummated, the allowed stranded costs will be $630 million; and
• Allows West Penn to securitize up to $670 million (or up to $630 million in the event of the merger) in stranded costs and guarantees that 75 percent of the savings would be passed on to customers.

    Parties signing the settlement include the Office of Consumer Advocate; Office of Small Business Advocate, environmental representatives and representatives of commercial and industrial customers. Under the settlement, West Penn and other parties agree to withdraw all legal challenges if the PUC approves the deal. The PUC had tentatively approved the settlement on Nov. 4.

    For recent news releases, or more information about the PUC, visit our Internet home page: http://puc.paonline.com. Additional information on electric competition can be found at www.electrichoice.com or by calling 888-PUC-FACT.

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