Co-op News
Va. Co-ops to Acquire IOU’s Assets
Two rural electric cooperatives are getting closer to acquiring an investor-owned utility’s distribution assets in Virginia.
Rappahannock Electric Co-op and Shenandoah Valley Electric Co-op have reached agreement with Allegheny Energy on a $340 million deal. It will transfer the Virginia assets of Potomac Edison’s distribution system to the co-ops’ control. Allegheny Energy owns Potomac Edison.
Kent D. Farmer
“This is a strong agreement for the Potomac Edison ratepayers that will be joining our cooperative,” said Kent D. Farmer, president and CEO of Rappahannock Electric Co-op, Fredericksburg.
Each co-op will acquire more than 2,500 miles of distribution line. They will equally divide Potomac Edison’s 102,000 customers in 14 Virginia counties. Terms added to the agreement will protect the co-ops’ new consumer-members from significant rate hikes once the state-mandated rate cap on Potomac Edison expires in June 2011.
Myron Rummel
The company has agreed to contribute $27.5 million over a three-year period beginning in July 2011, to reduce the impact of any rate increases on its former customers. Allegheny Energy has also agreed to contribute $35 million to reduce the costs of the acquisition, minimizing its impact on the base rates paid by co-op consumer-members.
“It will allow the acquisition to proceed while providing additional protections against significant rate increases for Potomac Edison’s consumers,” said Myron Rummel, president and CEO of Shenandoah Valley Electric Co-op, Mount Crawford.
The co-ops have agreed not to increase base rates on former Potomac Edison customers before July 1, 2014. Distribution rate hikes during the 2014-2016 time period will be capped at 5 percent for former IOU customers. Both co-ops have agreed to modify their bylaws to ensure representation for their new consumer-members.
Virginia’s attorney general and the government of Frederick County, Va., have also signed off on the stipulation agreement, which is still subject to approval of Virginia’s State Corporation Commission.
“It is truly a win-win for all parties involved,” Rummel said.