April 11, 2007
Public Service Commission Of West Virginia (PSC) Projects $130 Million In Savings For Ratepayers Through Innovative Bond Sale
FOR IMMEDIATE RELEASE
Contact: Sarah Robertson 304.340.0351
PSC oversees bond offering to fund environmental equipment at the lowest possible cost for ratepayers; action will create jobs, promote use of West Virginia-mined coal, and strengthen the state’s economy.
PSC sets a nationwide precedent in utilizing a cost-effective solution to finance environmental compliance costs while implementing “best practices” for consumers.
Charleston, West Va., (April 11, 2007) The Public Service Commission of West Virginia (PSC) estimates that ratepayers will save about $130 million in the financing of the construction of environmental control equipment at Monongahela Power’s Fort Martin Generating Plant – an achievement that was made possible through the PSC’s financing order that today resulted in the successful sale of $459.3 million in bonds for funding the equipment at record low interest rates.
The PSC, through its financial advisor, Saber Partners, oversaw the bond offering process in cooperation and collaboration with Allegheny Energy, the parent of the two utilities Monongahela Power and Potomac Edison that serve West Virginia customers. The PSC ensured that a $459.3 million bond sale by the two units of Allegheny Energy for construction of the equipment resulted in the lowest possible costs for ratepayers. The construction of the equipment at the Fort Martin coal-burning power plant will facilitate jobs, increase the use of West Virginia-mined coal, strengthen the State’s economy and reduce pollution. The bond offering was launched on April 3 and closed today.
The bond offering was based on authority granted the PSC in March 2005 by the West Virginia legislature. The legislature authorized the PSC to approve Environmental Control Bonds. The bond issue – the first to be sold in the nation – is divided into a $344.5 million issue for Monongahela Power Co., and a $114.8 million issue for Potomac Edison Co. Based on the legislation and PSC financing order, the bonds received top AAA credit ratings from three nationally recognized rating services. The bonds were sold to investors in the US and Europe by underwriters lead by First Albany Corp at credit based interest rates lower than all similar bond issues sold by utilities in other states.
Jon W. McKinney, Chairman of the PSC, said, “The PSC of West Virginia is proud to announce substantial savings to ratepayers of more than $130 million compared with the costs of traditional utility financing. This unparalleled savings achievement was made possible through regulations that also guarantee consumers’ best interests are represented in the process of obtaining the financing. As a result of the PSC’s financing order and the initiative and cooperation of Allegheny Energy, jobs will be created, demand will increase for West Virginia-mined coal, and our economy will reap strong benefits. In addition, the PSC has set a nationwide precedent in using its authority to administer a cost-effective solution for environmental compliance costs.”
The environmental control equipment reduces mercury emissions, smog and acid rain – a pressing objective for the PSC in supporting a healthier environment for the citizens of West Virginia. Allegheny Energy estimates the environmental control equipment will reduce sulfur dioxide emission sat the Fort Martin Plant by 90,000 tons each year.
New York-based Saber Partners, LLC served as advisor to the PSC on this transaction.