Moody’s places Allegheny Energy, subsidiaries on review for downgrade

New York, February 28, 2002 — Moody’s Investors Service has placed Allegheny Energy, Inc. (AYE) (Baa1 senior unsecured, negative outlook) and two of its subsidiaries, Allegheny Energy Supply Company, LLC (AYE Supply) (Baa1, senior unsecured, negative outlook) and Allegheny Generating Company (AGC) (Baa1, senior unsecured, negative outlook) on review for possible downgrade.

The action reflects Moody’s concern about weakening cash flow in 2001 as well as ongoing cash flow stability relative to the company’s increased debt load. It also reflects Moody’s ongoing concern since the negative outlooks were assigned in November 2000, that the company and its management are facing operating and structural challenges in the transition from a formerly-integrated utility company into a national energy company.

While the growth strategy has benefitted from long-term supply contracts between AYE Supply and the AYE transmission and distribution subsidiaries, it is also subject to more volatile cash flow from marketing and trading activities. Moody’s has also changed the outlook of Monongahela Power to negative from stable reflecting concern related to pressure on the company’s coverages.

The review will focus on the impact of changes in the business risk profile of the company and its ability to manage cash flow stability.

While the company remains dependent on bank financing, its near term liquidity appears adequate. Ratings under review include: AYE, Senior Unsecured, Baa1, Commercial Paper, P-2 AYE Supply, Senior Unsecured, Baa1, Commercial Paper , P-2 AGC, Senior Unsecured, Baa1 Rating outlook changes for Monongahela Power include: Senior Secured, A1 Senior Unsecured, A2 Subordinated, A3 Preferred Stock, Baa1 Allegheny Energy, Inc. is an integrated energy company headquartered in Hagerstown, Md., including Allegheny Power, which delivers electric energy and natural gas to about three million people in Maryland, Ohio, Pennsylvania, Virginia, and West Virginia.

Previous articleEnergy cost management solution earns ABB Inc. a Frost & Sullivan award
Next articleELP Volume 80 Issue 3

No posts to display