Allegheny Energy, Inc., a Greensburg, Pa.-based utility company, filed with the West Virginia Public Service Commission last week for a financing order to issue two 15-year environmental control bonds totaling $381 million. The bonds requested, at sizes of $214 million and $167 million each, will be used to finance improvements to a power plant in Fort Martin, W.Va., according to Allegheny spokesman Allen Staggers. The bonds represent a new breed of stranded cost, or rate reduction bonds.
The W.V. Public Service Commission was granted permission to issue the financing orders by the state legislature earlier this month, and the public utility commissions of Florida and Idaho have also recently been granted permission to issue similar financing orders. Those states will also issue bonds to aid in modernizing environmental controls and, in the case of Florida, repairing hurricane damaged power lines and equipment. The use of funds to finance improvement projects represents a departure for the stranded cost sector.