11/19/2008

Associated Press

Allegheny Energy Inc. has agreed not to raise bills by more than 15 percent starting next year for Potomac Edison customers as part of an agreement announced Tuesday.

The agreement was announced by Allegheny Energy, the State Corporation Commission and Attorney General's office, and a group of commercial and industrial customers.

The agreement, which requires the commission's approval, would permit the recovery of purchased power costs in Virginia for Potomac Edison while avoiding dramatic rate increases. Potomac Edison serves about 100,000 customers in Virginia.

Allegheny Energy previously increased rates $73 million through next June and will maintain those interim rates under the agreement. The company also agreed not to increase bills by more than 15 percent from July 2009 through June 2010.

Since July 2007, the company's cost of purchasing power for Potomac Edison customers has increased dramatically, primarily due to increased costs for fuel, such as coal and natural gas. As a result, the company is facing a shortfall of more than $100 million in Virginia this year, making it necessary to seek the increased revenues in the agreement.

"We commend all the parties for their support and cooperation," said Paul J. Evanson, Allegheny Energy's chairman, president and chief executive officer. "This agreement will restore the financial stability of our Virginia business while mitigating impacts on our customers."