September 10, 2009
Allegheny Energy and Customer Groups Unanimously Propose Retaining Independent Financial Advisor to Public Service Commission of West Virginia for New Environmental Bond Offering
Saber Partners LLC Chosen to Repeat Role from 2007 Bond Offering
(New York, New York, September 10, 2009) Allegheny Power, the electric delivery business of Allegheny Energy, Inc. (NYSE: AYE), announced today that it has reached agreement with the Staff of the Public Service Commission of West Virginia, the Consumer Advocate Division, and the West Virginia Energy Users Group regarding the company’s July 2009 request to issue up to $105 million ratepayer obligation charge bonds to fund the remaining portion of its flue gas desulfurization (scrubber) project at the Fort Martin Power Station. Ratepayer obligation charge bonds are a special type of bond financing that achieves high credit ratings and low interest rates in order to reduce costs paid by electricity customers on their bills.
Under the settlement agreement or “Joint Stipulation” filed with the Public Service Commission of West Virginia by Allegheny Power, “The Parties found that the Commission’s Financial Advisor was helpful in achieving the Lowest Cost Objective and in ensuring that customers’ interests were protected in connection with the Initial Bonds. The Parties therefore stipulate, recommend and agree that the Commission retain a Financial Advisor, and that the Financial Advisor is required to help achieve the objectives of this Joint Stipulation, including the timely and efficient issuance of Additional Bonds and the Lowest Cost Objective. The Financial Advisor should have the same duties and responsibilities as described in the Financing Order.”
Saber Partners, LLC, served as the Financial Advisor to the West Virginia Commission on the initial bond offering of $459 million in 2007. At the time, the bonds were the first bonds of its kind to finance environmental control facilities and achieved the lowest credit spreads of any other similar bond issue ever issued in the market. West Virginia electricity customers saved more than $130 million over the life of the project versus conventional utility financing methods.
Joseph S. Fichera, Senior Managing Director and Chief Executive Officer of Saber, said “Our firm focuses on serving the client’s needs with innovative ideas and hard work while resisting a “follow the herd” approach. This is an important transaction for the electric utility industry and West Virginia consumers in particular. If the Commission approves the financing, we look forward to working with the utility in the same collaborative and cooperative way that was successful in 2007 to achieve the best value for investors at the lowest cost to consumers under these difficult market conditions.”
Attached: Filed Joint Stipulation Allegheny Power and West Virginia