Allegheny Receives Project Deadline - Analyst Blog

Potomac-Appalachian Transmission Highline LLC (PATH), the joint venture between Allegheny Energy Inc. (AYE) and American Electric Power Company Inc. (AEP), received an early deadline for completion of the PATH Transmission Project. PATH is a limited liability company formed in Delaware in 2007 following the PJM interconnections LLC approval. The joint venture will construct a 275-mile, 765-kilovolt (kV) transmission project extending from the Amos substation in Putnam County, West Virginia, to a proposed substation in Frederick County, Maryland.

Independent grid operator, PJM recommended construction of PATH by June 1, 2015 to effectively meet the electricity demand of the Mid-Atlantic region. Earlier in December 2009 Allegheny suffered a setback when PJM recommended that PATH transmission project will not be required until June 2014 due to inadequate demand.

Allegheny’s PATH project was evaluated against six alternatives and found to be the most comprehensive solution for a number of voltage-related issues and line overloads that are projected to begin mid-2015. Allegheny will incorporate the estimated cost of the transmission project into the existing applications, pending regulatory approval in Maryland and West Virginia, as well as in a new application to be filed in Virginia in the third quarter of 2010.

Headquartered in Greensburg, Pennsylvania, Allegheny Energy is an electric utility company with over $3 billion in annual revenues. The company is engaged in both regulated electricity and natural gas distribution utility operations as well as in the unregulated wholesale energy markets. It owns and operates generating facilities and provides electricity to approximately 1.6 million customers across Pennsylvania, West Virginia, Maryland, and Virginia. Similarly American Electric is one of the largest public utility holding companies catering to approximately 5.2 million customers spread over 11 states in the U.S.

In the near-term the fortunes of both Allegheny Energy (Zacks #4 Rank (‘sell’)) and American Electric Power (Zacks #3 Rank (‘hold’)) seem to run out of stream. Presently, we would advise investors to focus on Zacks #1 Rank (‘Strong Buy’) stocks like Huaneng Power International Inc. (HNP).