FOR IMMEDIATE RELEASE
Allegheny Energy, Inc. Reports First Quarter Earnings
Hagerstown, Md., April 26, 2000 - Allegheny Energy, Inc. (NYSE: AYE) today
reported first quarter 2000 earnings of $86.4 million ($.78 per share),
excluding an extraordinary charge of $70.5 million ($.64 per share). First
quarter earnings for 1999 were $97.8 million ($.80 per share). The
extraordinary charge reflects a write-off of costs determined to be
unrecoverable as a result of West Virginia legislation requiring deregulation
of electric generation. As a result of the write-off, net earnings for the
first quarter were $15.9 million ($.14 per share).
According to Michael P. Morrell, Senior Vice President and Chief Financial
Officer, the move to customer choice in West Virginia and the Company's related
write-off pave the way for the transfer of the last major portion of the
Company's generating assets to the year-old Allegheny Energy Supply Company
(Genco) and also for the Company to move past the uncertainty of the
deregulation process.
"With the deregulation of West Virginia, Allegheny Energy will have 92 percent
of its low-cost generation freed from rate regulation. This is very positive
news, because the benefits from our increased sales of energy into deregulated
markets will flow directly to our shareholders," according to Morrell. "We also
have put the uncertainty of deregulation behind us and are positioned as a key
competitor in new growth markets."
Morrell added, "The quarter also marked notable revenue growth for the Company
of 26 percent or $177 million. This growth was primarily a result of greater
non-regulated revenues which increased by 150 percent over the first quarter
of 1999. Allegheny Energy continues to add to shareholder value through our
unregulated businesses."
First quarter earnings per share, excluding the extraordinary charge, were
affected by unplanned generating plant outages, which caused the Company to
make purchases of higher-priced power on the open energy market, and
substantially warmer than normal weather. The adverse effect on revenues due
to weather was partially offset by revenues and earnings from the Company's
newly acquired subsidiary, West Virginia Power, and lower depreciation expense.
Excluding the extraordinary charge and other charges as shown on the following
chart, earnings for the twelve months ended March 31, 2000, were $295.8 million
($2.61 per share), compared to $306.3 million ($2.50 per share) for the twelve
months ended March 31, 1999. The increase in earnings per share was due to the
Company's 1999 stock repurchase program and lower depreciation expense.
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Per share earnings for the comparable 2000 and 1999 periods are:
First Quarter 12 Months Ended March
2000 1999 2000 1999
Earnings before extraordinary
and other charges $ .78 $ .80 $ 2.61 $ 2.50
Extraordinary charges for West Virginia,
Maryland, and Pennsylvania restructuring ( .64) ( .77) ( 2.25)
Extraordinary charge for retired debt ( .09)
DQE merger-related costs ( .10)
Cancelled pumped-storage project ( .09)
Pennsylvania settlement costs ( .19)
Reported earnings $ .14 $ .80 $ 1.56 $ .06
The 2000 extraordinary charge of $70.5 million ($.64 per share) reflects
write-offs by the Company's West Virginia subsidiaries as a result of the
West Virginia legislation. The extraordinary charges for the twelve months
ended March 31, 1999, and the Pennsylvania settlement costs reflect 1998
write-offs by the Company's Pennsylvania subsidiary of costs determined to
be unrecoverable due to deregulation proceedings in that state. The first
quarter 2000 write-off is shown below:
Millions of Dollars
Gross Net-of-Tax
Unrecoverable regulatory assets $ 60.0 $ 36.2
Rate stabilization obligation 56.7 34.3
2000 extraordinary charges $116.7 $ 70.5
Allegheny Energy was very active during the first quarter of 2000 on a variety
of fronts aimed at increasing revenue and enhancing shareholder value. The
following are some of our milestones:
* Expanding Our Generation Fleet
In February, Allegheny Energy Supply Company, our unregulated energy supply
business, announced plans to further increase our generating capacity with the
installation of five gas combustion turbines with a combined capacity of 220
megawatts (MW) at various sites throughout Pennsylvania. We are also moving
forward with plans to add a 540-MW combined cycle generating plant at
Springdale, Pa.
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* Growing Through Non-Regulated Ventures
Several new initiatives announced by Allegheny Communications Connect (ACC),
our telecommunications subsidiary, will enable us to leverage our growing,
low-cost fiber optic network and offer value-added services to consumers.
ACC's recent activities include:
- - partnering with BroadbandNOW, Inc. to offer high-speed internet access and
multimedia content to retail customers in small- and mid-sized markets;
- - joining with five other energy and telecommunications companies to create
America's Fiber Network, a super-regional, high-speed fiber optics company
that will market its fiber capacity to wholesale providers; and
- - participating in a consortium that has been selected to build an advanced
information technology infrastructure and provide state-of-the-art
telecommunications services for the Commonwealth of Pennsylvania.
* Ranked Among the Nation's Top Companies
Allegheny Energy has been ranked among the nation's top companies in several
national reports. Allegheny Power, our energy delivery business, has received
national recognition for outstanding customer service in a major independent
survey of business customer satisfaction. Allegheny Power was ranked second in
the Eastern Region and ninth in the U.S. for customer satisfaction among
mid-sized businesses.
In addition, Allegheny Energy was named to this year's Fortune 1000, placing
529th overall and 40th in the gas and electric utilities group, and was ranked
485th on the Forbes 500 list.
* Allegheny Energy Employees Help Preserve the Environment
In April, more than 800 Allegheny Energy employees, family members, and friends
participated in our Earth Day 2000 Tire Collection Project. Volunteers collected
nearly 27,000 tires for recycling that had been improperly discarded in streams
and along roadsides in communities throughout our service area.
* Growing Through Customer Choice
West Virginia became the final state in our franchised service area to adopt
legislation that will give customers the option of choosing their electricity
provider. The new law also enables us to transfer our West Virginia generating
assets to Allegheny Energy Supply Company, increasing our ability to compete on
a larger scale and grow earnings.
Allegheny Energy, Inc. is a diversified energy company headquartered in
Hagerstown, Md. The Allegheny Energy family includes Allegheny Power, which
delivers electric energy and natural gas to about three million people in parts
of Maryland, Ohio, Pennsylvania, Virginia, and West Virginia; Allegheny Energy
Supply Company, LLC, which operates and markets competitive retail and wholesale
electric generation and operates regulated electric generation for its
affiliates; and Allegheny Ventures, which actively invests in and develops
telecommunications and energy-related projects. For more information, visit our
web site at www.alleghenyenergy.com.
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