The Office of the Attorney General of Virginia and the County of Frederick also joined in the stipulation agreement.
Under the stipulation agreement, Potomac Edison will contribute $27.5m between July 1, 2011 and July 1, 2014, to reduce the impact of any rate increases through June 30, 2015 for former Potomac Edison ratepayers transitioning to service provided by the cooperatives. The company will also contribute an additional $35m that will be applied to decrease the purchase price, which will reduce base rates for all consumers of the cooperatives.
The cooperatives agree that Potomac Edison consumers will see no base rate increases before July 1, 2014, extending a rate agreement that previously only existed through 2011. The cooperatives further agree, for 2014, 2015 and 2016, to cap distribution rate increases so that total member bills in those years will not increase by more than 5% as a result of distribution rate increases.
The bylaws of both cooperatives will be revised to ensure that there is representation for transitioning ratepayers on the board of directors of their respective cooperative.
Allegheny agreed to sell its Virginia distribution assets to REC and SVEC for cash proceeds of approximately $340m, subject to adjustment for changes in assets and liabilities through the closing date. The Virginia Commission held hearings on the company’s request for approval of the transaction in March of this year.
The stipulation agreement is subject to State Corporation Commission (SCC) approval. The proposed sale has received all other necessary approvals and third party consents.
Rodney Dickens, president of Allegheny Power, said: “This agreement will protect consumers from potential large rate increases for years to come and helps to ensure that their transition to the cooperatives will be smooth.”
