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Allegheny Energy, Inc – ‘8-K’ for 10/26/00

On:  Tuesday, 10/31/00, at 2:08pm ET   ·   For:  10/26/00   ·   Accession #:  3673-0-136   ·   File #:  1-00267

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  As Of                Filer                Filing    For·On·As Docs:Size

10/31/00  Allegheny Energy, Inc             8-K:9      10/26/00    1:18K

Current Report   —   Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Current Report                                        33     45K 


Document Table of Contents

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11st Page   -   Filing Submission
2Item 1 - 8. Not Applicable
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FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): October 26, 2000 Allegheny Energy, Inc. (Exact name of registrant as specified in its charter) Maryland 1-267 13-5531602 (State or other (Commission File (IRS Employer jurisdiction of Number) Identification incorporation) Number) 10435 Downsville Pike Hagerstown, Maryland 21740-1766 (Address of principal executive offices) Registrant's telephone number, Including area code: (301) 790-3400
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Item 1 - 8. Not Applicable Item 9. On October 31, 2000, Senior Vice President and Chief Financial Officer Michael P. Morrell made a presentation as part of the Edison Electric Institute's Financial Conference in San Francisco. The slides used in the presentation follow. {Slide 1} Allegheny Energy, Inc. Perfect Timing EEI Financial Conference San Francisco, CA October 31, 2000
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{Slide 2} Company Data as of June 30, 2000 Direct Sales 44.8 billion kWh Number of Employees 5,083 (In thousands except per share amounts) Total Common Stock Equity $1,687,696 Number of Shares of Common Stock Outstanding 110,436 Book Value Per Share $15.28 Long-Term Debt $2,315,098 Total Capitalization $4,076,794 Number of Common Shareholders 43.8 Current Annualized Dividend Per Share $1.72 Senior Debt Rating: Moody's S&P Fitch Monongahela Power A1 A+ AA- Potomac Edison A1 A+ AA- West Penn Power A2 A+ A+ Allegheny Energy Supply Baa1 A+ BBB+ Allegheny Energy stock (symbol: AYE) is listed on the New York, Chicago, and Pacific Stock Exchanges. Dividend Reinvestment and Stock Purchase Plan available. ________________________________________________________________ Allegheny Energy, Inc. (NYSE: AYE), headquartered in Hagerstown, Md., is a strong, diversified energy company on the leading edge of change. We are excited by the challenge of deregulation and dedicated to the goals of increasing shareholder value, becoming a successful national supplier of energy and value-added energy- related services, and diversifying into other ventures related to our core business which enhance value. The Allegheny Energy family: * Allegheny Energy Supply Company, LLC, operates and markets retail and wholesale electric generation in competitive markets and operates regulated generation for its affiliates. * Allegheny Power delivers low-cost, reliable energy to about three million people in parts of Maryland, Ohio, Pennsylvania, Virginia, and West Virginia. * Allegheny Ventures actively invests in and develops telecommunications and energy-related projects. * Allegheny Energy Service Corporation provides shared services in support of the Allegheny Energy businesses. Allegheny Energy was incorporated in Maryland in 1925. We are a registered utility holding company under the Public Utility Holding Company Act of 1935 that has both regulated and unregulated operations and owns 8,593 megawatts (MW) of low-cost generation. Our generation mix is 87 percent coal-fired, 0.7 percent hydroelectric, 9.8 percent pumped-storage, and 2.5 percent oil- and natural gas-fired. Allegheny Energy also has 299 MW of generation committed to us under long-term purchase agreements under the Public Utility Regulatory Policies Act of 1978. Allegheny Energy's regulated utilities, doing business as Allegheny Power, are Monongahela Power Company, serving customers in West Virginia and Ohio; The Potomac Edison Company, serving customers in Maryland, Virginia, and West Virginia; and West Penn Power Company, serving customers in Pennsylvania. For more information, visit our web site at www.alleghenyenergy.com. Please direct any questions or comments to: Michael P. Morrell Regis F. Binder Gregory L. Fries (301) 665-2716 (301) 665-2715 (301) 665-2713
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{Slide 3} Certain statements within constitute forward-looking statements with respect to Allegheny Energy, Inc. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance, or achievements of Allegheny Energy to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Such factors may affect Allegheny Energy's operations, markets, products, services, and prices. Such factors include, among others, the following: general and economic and business conditions; industry capacity; changes in technology; changes in political, social, and economic conditions; regulatory matters; litigation involving Allegheny Energy; regulatory conditions applicable to Allegheny Energy; the loss of any significant customers; and changes in business strategy or development plans.
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{Slide 4} Our Strategy * Grow our successful, low-cost generating fleet regionally and then nationally * Broaden the reach of our world-class energy delivery business in contiguous territories * Add a new dimension of earnings growth through Allegheny Ventures, seeking out opportunities related to our core business
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{Slide 5} Allegheny Energy Allegheny Energy, Inc. ________________________|________________________ | | | Allegheny Energy Supply Allegheny Power Allegheny Ventures
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{Slide 6} Financial Performance Targets * Greater than 10% per year earnings per share growth * Allegheny Ventures will contribute 10% of total company net income in 5 years * Non-regulated business growth to at least 70% of total within 5 years
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{Slide 7} Allegheny Energy Supply Company Supply Strategy: Leverage regional generation strength to become a successful national energy supplier * Maximize market advantages afforded by our efficient, low-cost generating assets * Transfer generation owned by regulated affiliates as states deregulate * Add additional units through acquisition and construction * Aggressively market electricity - wholesale and retail
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{Slide 8} {the following is a colored 3-D Column Chart) [Download Table] Allegheny Energy Supply Company Capacity Growth 1999 - 2003 20,000 18,000 ____ 18,201 MW 16,000 ____ ____ 14,000 ____ ____ ____ 13,217 MW 12,000 ____ ____ MW 10,000 ____ ____ ____ ____ ____ 9,091 MW 8,000 ____ 6,000 4,000 ____ 2,000 ____ ____ ____ ____ ____ ____ ____ 1999 2000 2001 2002 2003 2004 2005 [blue] Owned/Committed [yellow] Development [red]Purchase Data Sheet 1999 2000 2001 2002 2003 2004 2005 Owned/Committed 4142 6459 9091 9091 9091 9091 9091 Development 88 88 1966 1966 4126 Purchase 4310 4984 4984 4984 4984
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{Slide 9} Generation Development Plans Project Estimated in NERC Capacity Service Region 88 MW 2001 ECAR 540 MW 2003 ECAR 1,250 MW 2003 SPP 88 MW 2003 ECAR 540 MW 2005 PJM 1,080 MW 2005 WSCC 540 MW 2005 ECAR ________ 4,126 MW
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{Slide 10} Generation Purchase Opportunities Project Potential Capacity Closing 4,130 MW 2001 674 MW 2002 ________ 4,984 MW
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{Slide 11} Our Competitive Advantages Marginal Cost Comparison _______________ Sell to _______________ Sell to _______________ the west the east ECAR AYE MAAC 1.71 cents/kWh <<<<<<< 1.50 cents/kWh >>>>>>> 1.86 cents/kWh _______________ _______________ _______________ AYE's direct or easy access to a number of trading hubs Allows it to take full advantage of price differences. Source: Donaldson, Lufkin & Jenrette
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{Slide 12} Allegheny Power Delivery Strategy: Consider growth opportunities inside and outside our traditional service area to deliver full-service energy * Continue earnings improvement and operational excellence through cost management, operating efficiencies improvement * Expand the business, primarily through acquisitions, in areas that are contiguous to our franchised territory
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{Slide 13} Allegheny Power Recent Acquisitions * West Virginia Power 26,000 new electric customers 24,000 new gas customers * Mountaineer Gas Company of West Virginia 200,000 new gas customers 11.7 billion cubic feet of gas storage Expands service territory to 30,000 square miles and 1.6 million customers
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{Slide 14} Allegheny Ventures Growth Opportunities Strategy: Develop unregulated businesses that contribute significantly to AYE earnings over the next five years. * Develop high-growth opportunities in telecommunications, distributed generation, corporate real estate, and other services * Focus on opportunities with double digit growth rates
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{Slide 15} Growth Opportunities Allegheny Communications Connect * Delivers fiber optic-based, wholesale telecommunications services * America's Fiber Network partner * Extend network to more than 1,300 miles by year end 2000
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{Slide 16} 2000 Growth Opportunities Allegheny Ventures * Investment in Genosys Technology Management * Distributed generation opportunities * Working to extract the value of real estate holdings
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{Slide 17} New Issues * Regulation FD * PJM West * FAS 133
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{Slide 18} SEC Regulation FD "That's what they say." * Prohibits intentional disclosure of material nonpublic information without simultaneous broad public disclosure (required disclosure through 8K filing or news release) * Requires prompt public disclosure of unintentionally disclosed material information (within 24 hours or prior to the next trading day, whichever is the longer period) * Earnings guidance, either given expressly or indirectly, by private discussion with analysts/investors invites a high degree of risk * Review and comment on analyst reports/models should be limited to historical fact or factual description
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{Slide 19} PJM West What it means to Allegheny Energy * Expands our reach in Mid-Atlantic energy market * Boosts competitiveness of our generating assets ECAR generation capacity reserve rules apply Transmission reliability constraints alleviated * Ability to sell power through bilateral contracts or the PJM Power Exchange * Meets requirements of FERC Order 2000 * Gives PJM functional control of our transmission assets
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{Slide 20} FAS 133 * Requires recognition of derivatives at fair value * Requires fair value changes to be recognized in earnings * Will increase earnings volatility
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{Slide 21} {the following is a 3-D column chart} [Download Table] Operating Earning History $2.70 _____ _____ $2.50 _____ $2.30 _____ _____ $2.10 $1.90 _____ $1.70 $1.50 1995 1996 1997 1998 1999 2000 Five Year Annual EPS Compound Growth Rate: 7.4% Twelve months ended June 30, 2000 Excludes the effects of one-time events Data Sheet 1995 1996 1997 1998 1999 2000 1.88 2.32 2.12 2.26 2.64 2.69
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{Slide 22} Performance Metrics Allegheny Industry Energy Average* EPS Growth 6.8% 1.9% Five years ended 12/31/99 Return on Equity 17.0% 12.9% One-year period ending 6/30/00 Five-Year Average 13.4% 11.8% 1995-1999 Total Return 10.2% 9.5% Five years ended 12/31/99 * Source - Regulatory Research Associates, Inc.
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{Slide 23} Hidden Value 2000E* P/E 2000 Value Generation $1.86 20.0 $37.20 Delivery 0.93 11.0 10.23 Ventures 0.06 50.0 3.00 _____ ______ Sum $2.85 $50.43 Stock Price (as of 9/30/00) = 38.00 ______ Hidden Value = $12.43 * Recent Goldman Sachs estimate
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{Slide 24} Why Allegheny ? Industry expertise High-quality, low-cost assets Powerful brand Hidden value Proven track record Sound strategies in unrelated and regulated businesses Commitment to earnings growth and Shareholder value
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{Slide 25} Allegheny Energy, Inc. Setting the Standard for Others to Follow
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{Slide 26} Allegheny Energy, Inc. Presentation Supplement
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{Slide 27} [Enlarge/Download Table] Allegheny Energy, Inc. Generation Station Data MW Ownership Split Net Book Value @ 12/31/99 ($000) Allegheny Allegheny Power Fuel Capacity Mon. Energy Mon. Energy Station Type (MW) Power Supply Co. Power Supply Co. Total Albright 1 Coal 76 76.0 $6,981 $6,981 Albright 2 Coal 76 76.0 $11,542 $11,542 Albright 3 Coal 140 140.0 $21,564 $21,564 Armstrong 1 Coal 180 180.0 $88,853 $88,853 Armstrong 2 Coal 176 176.0 $53,422 $53,422 Fort Martin 1 Coal 552 138.0 414.0 $7,096 $147,720 $154,816 Fort Martin 2 Coal 561 112.2 448.8 $5,695 $55,717 $61,412 Harrison 1 Coal 650 162.5 487.5 $102,422 $328,488 $430,910 Harrison 2 Coal 650 162.5 487.5 $20,139 $72,409 $92,548 Harrison 3 Coal 650 162.5 487.5 $19,893 $70,417 $90,310 Hatfield 1 Coal 570 156.8 413.2 $36,968 $90,857 $127,825 Hatfield 2 Coal 570 156.8 413.2 $21,973 $42,870 $64,843 Hatfield 3 Coal 570 156.8 413.2 $20,930 $53,408 $74,338 Mitchell 1 Oil 50 50.0 $14,928 $14,928 Mitchell 2 Oil 82 82.0 $14,928 $14,928 Mitchell 3 Coal 288 288.0 $46,663 $46,663 Pleasants 1 Coal 626 156.5 469.5 $68,380 $205,996 $274,376 Pleasants 2 Coal 640 160.0 480.0 $31,941 $107,620 $139,561 Rivesville 5 Coal 48 48.0 $10,446 $10,446 Rivesville 6 Coal 94 94.0 $10,446 $10,446 Smith 3 Coal 28 28.0 $2,559 $2,559 Smith 4 Coal 87 87.0 $22,169 $22,169 Willow Island 1 Coal 55 55.0 $12,408 $12,408 Willow Island 2 Coal 188 188.0 $29,562 $29,562 Bath County Pumped 840 226.8 613.2 $162,282 $438,761 $601,043 (AGC) Storage Lake Lynn Hydro 52 52.0 $13,055 $13,055 PE Hydro Hydro 6 6.0 $4,995 $4,995 Springdale CT 1 Gas CT 44 44.0 $22,634 $22,634 Springdale CT 2 Gas CT 44 44.0 $22,634 $22,634 Total Owned Capacity 8,593 2,352.4 6,240.6 $593,687 $1,928,084 $2,521,771 Book Value/KW @ 12/31/99 $252.38 $308.96 * Excludes Springdale 7 and 8, 207 MW of oil-fired capacity in cold reserve, and PURPA capacity of 470 MW under contract.
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{Slide 28} Allegheny Energy Supply Generating Stations 1999 Capacity Factors Generating 1999 Net Capacity Station Generation (MWh) Factor % Harrison 13,657,289 81 Hatfield's Ferry 8,383,345 60 Fort Martin 8,182,188 84 Pleasants 7,844,721 72 Armstrong 1,920,970 63 Bath County* 1,526,824 21 Mitchell 1,477,050 41 Willow Island 1,460,199 70 Albright 1,174,949 46 Rivesville 338,728 28 R. Paul Smith 336,613 34 Lake Lynn* 94,561 21 PE Hydro* 26,747 72 Allegheny Energy 1&2 6,881 17 __________ _____ 46,431,065 69% * *System average capacity factor of 69% compares to 68% in 1998 (calculation of average excludes hydro/pumped storage stations)
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{Slide 29} {The following is a graph chart} % Revenues from Nonutility Operations 80% __________________________________________________________ 70% ________________________________________________________._ . 60% _______________________________________.__________________ . 50% __________________________________________________________ 40% __________________________________________________________ . 30% __________________________________________________________ 20% __________________________________________________________ 10% ___.______________________________________________________ . 0% __________________________________________________________ 1998 1999 2000 2001 2002 2003 2004 Year Data Sheet Revenues 1998 2576436744 246983410 10% 1999 2808441349 251230796 9% 2000 2885792961 994349885 36% 2001 3221949725 1169956080 57% 2002 3328139582 1760595000 61% 2003 3654866332 2065068000 65% 2004 3961854681 2372297000 70% Net Income 1998 287000000 -1000000 0%
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{Slide 30} {The following is a graph chart} % Net Income from Nonutility Operations 80% ____________________________________________________________ . . 70% _______________________________________.____________________ . 60% ____________________________________________________________ 50% ____________________________________________________________ 40% ____________________________________________________________ . 30% ____________________________________________________________ 20% ____________________________________________________________ . 10% ____________________________________________________________ 0% ___.________________________________________________________ 1998 | 1999 | 2000 | 2001 | 2002 | 2003 | 2004 Year Data Sheet Revenues: 1998 2576436744 246983410 10% 1999 2808441349 251230796 9% 2000 2885792961 994349885 34% 2001 3221949725 1169956080 36% 2002 3328139582 1760595000 53% 2003 3654866332 2065068000 57% 2004 3961854681 2372297000 60% Net Income: 1998 287000000 -1000000 0% 1999 307000000 50000000 16% 2000 306521625 104266575 35% 2001 393024175 179125156 65% 2002 468735508 298384137 69% 2003 524118799 361428791 72% 2004 603049043 425327307 76%
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{Slide 31} Historical Quarterly Operating Earnings for the Period 1995-1999 First quarter 28% Second quarter 21% Third quarter 26% Fourth quarter 25% 100%
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SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. Allegheny Energy, Inc. /S/ THOMAS K. HENDERSON Name: Thomas K. Henderson Title: Vice President Dated: October 31, 2000

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