QUOTE AND NEWS
Forbes  May 10  Comment 
Duke Energy is one of the largest electric utilities in the U.S. along with American Electric Power Company, Exelon Energy Corp, Allegheny Energy and Progress Energy.
Stock Blog Hub  Mar 5  Comment 
FirstEnergy Corp. (FE) on Friday concluded its long-awaited merger deal with Allegheny Energy Inc. (AYE), thus creating one of the nation’s largest energy companies. The completion of the $4.7 billion merger, which was entered on February 11,...
MarketWatch  Feb 25  Comment 
Shares of mining equipment maker top volume movers late Friday as they move into a key U.S. equity index.
Forbes  Feb 17  Comment 
Standard & Poor's said late yesterday it is updating the market cap guidelines for its U.S. indices. The firm also announced some shifts in index components. The new guidelines require that companies in the S&P 500 have total market...
MarketWatch  Feb 16  Comment 
Mining equipment maker Joy Global Inc. will replace Allegheny Energy Inc. in the S&P 500 Index on a date to be announced, Standard & Poor's said late Wednesday. Allegheny Energy is being purchased by S&P 500 constituent FirstEnergy Corp. , and...
StreetInsider.com  Feb 16  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Corporate+News/S%26P+Announces+Changes+to+US+Market+Cap+Guidelines%3B+%28JOYG%29+to+Replace+%28AYE%29+in+S%26P+500%2C+More+Changes.../6303955.html for the full story.
Market Intelligence Center  Jan 21  Comment 
Allegheny Energy (NYSE: AYE) hit a new 52-Week high of $26.10 so far today. Currently the stock is up $0.08 (0.31%) to $26.02 on 825,457 shares traded. Today's high is up $7.05 from a 52-Week Low of $18.97. Allegheny Energy has been showing...
Market Intelligence Center  Jan 10  Comment 
Allegheny Energy Inc. (NYSE: AYE) closed Friday's trading session at $25.15. In the past year, the stock has hit a 52-week low of $18.97 and 52-week high of $25.44. Allegheny Energy stock has been showing support around $24.77 and resistance in...
MarketWatch  Jan 7  Comment 
FirstEnergy Corp. said Friday that federal regulators have approved the company's pending acquisition of Allegheny Energy Inc. The all-stock deal, announced last February, calls for FirstEnergy to pay $27.65 a share, or $4.7 billion, to acquire...
StreetInsider.com  Dec 21  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Dividends/Allegheny+Energy+%28ATE%29+Announces+Dividend+Plan/6176234.html for the full story.




 

This article is about the electric utility. For other uses of Allegheny, see Allegheny (disambiguation).

In February 2010, FirstEnergy (FE) reported that it would purchase AYE for $4.7 billion in stock.[1]

Allegheny Energy (AYE) is an electric utility company that owns and operates electric generation facilities and delivers electric services to customers in Pennsylvania, West Virginia, Maryland and Virginia. Allegheny Energy generates in excess of $3 billion annually and serves 1.5 million customers with approximately 9,670 megawatts (MW) of electrical generating capacity, enough to power around 7.5 million homes.[2] [3]

Electric utility companies are under increasing pressure, in the form of government legislation, to adopt cleaner electricity generation methods while maintaining competitive prices. AYE, with its easy access to cheap coal in Pennsylvania, West Virginia and Ohio, derives over 95%[4] of its energy from burning coal and is investing over $1 billion over the next several years to retrofit its coal powerplants with technology to reduce toxic emissions. AYE currently does not have plans to substantially diversify its electricity generation base by making forays into nuclear, wind and solar power projects. Beyond the 1090MW derived from hydroelectric power currently, AYE is in the process of pursuing permits for a limited use of bio-mass and waste-tire derived fuel at two of its coal power plants in West Virginia.

Business Overview

Business & Financial Metrics[5]

In 2009, AYE generated a net income of $392.8 million on $3.43 billion in total revenues. This represents a 0.65% decrease in net income on a 1.2% increase in total revenues from 2008.

Business Segments[5]

Allegheney operates through two reportable business segments:

  • Merchant Generation (34.5% of total revenue): This segment operates AE Supply in Delaware and AGC in Virginia. These subsidiaries operate power plants.[6]
  • Regulated Operations (65.5% of total revenue): This segment operates Monongahela in Ohio, Potomac Edison in Maryland, and West Penn in Pennsylvania. Each of these subsidiaries deals with transmission and distribution ("T&D") operations instead of actual power generation. In addition, this segment has two projects called "TrAIL" and "PATH," which are designed to expand the company's transmission network.[7]

Key Trends/Forces

AYE especially vulnerable to rising coal prices

Prices for fossil fuels, the key energy input for greater than 95% of AYE’s electrical output, are volatile. The prices of coal, natural gas, and other fossil fuels all affect AYE's expenses.

More vulnerable than its peers to caps on greenhouse gases

Growing political awareness of the risks of global warming is resulting in increasing governmental pressure for utility companies to reduce emissions. AYE, which generates more than 90% of its energy using coal and none from nuclear power is particularly vulnerable to "greener legislation". The company has announced no plans to increase its nuclear capacity although AYE is pursuing permits to allow for the use of bio-mass (wood chips and saw dust) and waste-tire derived fuel at two of its coal-fired power plants in West Virginia.

Competition

Like all utility companies, Allegheny's distribution services are still regulated by state governments. While this regulation places limits on distribution costs that can be added to electricity bills, it also ensures that the distribution companies have a service monopoly over the areas they serve.

This is no longer the case on the generation side of the business and AYE and its new parent, FE, face competition from a number of generation companies in the Northeast and Midwest. Most notable among these companies are American Electric Power Company (AEP), Duke Energy Corporation (DUK), Entergy (ETR), Exelon (EXC) and Public Service Enterprise Group (PEG).

References

  1. FirstEnergy agrees USD4.7bn acquisition of Allegheny Energy. TradingMarkets.com (Fenruary 12, 2010).
  2. AYE - About US
  3. Power of Electricity
  4. AYE - About US
  5. 5.0 5.1 AYE 2009 10-K pg. 11  
  6. AYE 2009 10-K pg. 2  
  7. AYE 2009 10-K pg. 3  
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