Fitch Rates West Penn Power Company's $275MM 5.95% FMBs 'BBB+'; Outlook Stable

Business Wire, Dec 7, 2007

NEW YORK -- Fitch assigns a rating of 'BBB ' to West Penn Power Company's (West Penn) new $275 million issue of 5.95% first mortgage bonds. The bonds mature on December 15, 2017. The bonds are secured by a first mortgage lien on the company's property, plant and equipment and rank equally with existing and future secured debt of West Penn. The proceeds of the bonds are expected to be used to repay inter-company debt and for other general corporate purposes. West Penn had approximately $90.6 million of affiliate borrowings as of September 30, 2007. The Rating Outlook is Stable.

The ratings and Stable Outlook reflect the stability of the transmission and distribution (T&D) business and Fitch's assumption that West Penn will receive approval from the Pennsylvania Public Utility Commission (PUC) to begin procuring power at market prices for 2011 provider of last resort (POLR) load requirement and fully recover purchased power costs through customer tariffs. In addition, Fitch expects that cash from operations will be sufficient to fund capital spending and dividends in 2007 and 2008. West Penn has filed a request with the PUC to proceed with procurement auctions starting in 2008 for POLR capacity needs beginning in 2011. The on-going special legislative session in Pennsylvania results in some uncertainty over the future electric market structure and transition to market electric rates. West Penn has a contract to procure power from affiliate, Allegheny Energy Supply Co., LLC (AE Supply), through 2010.

West Penn operates an electric T&D system in Pennsylvania that serves approximately 707,000 customers. West Penn is the largest utility subsidiary of Allegheny Energy, Inc. The company contractually purchases a majority of the power necessary to serve POLR customers from affiliate, AE Supply.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.