Global Climate Change Report 2009
Message from Paul J. Evanson
The way people around the world view the environment has changed dramatically in recent years. And how our country views environmental and climate issues – particularly with a new administration in the White House – will continue to evolve. What hasn’t changed is Allegheny Energy’s commitment to the environment. It remains a critical area of focus for the company, along with our shareholders, employees, customers and communities. As part of our ongoing environmental stewardship efforts, Allegheny is taking steps to significantly reduce emissions at its generating facilities. We are completing more than $1.2 billion in investments to install clean air technology at both our Hatfield’s Ferry and Fort Martin power stations. With the addition of scrubbers at these plants, 85 percent of our coal-fired fleet will utilize the best available controls for reducing sulfur dioxide emissions. This will give Allegheny one of the cleanest fleets in the United States with respect to sulfur dioxide. The scrubber projects will also significantly reduce our mercury emissions at these power stations, and I’m pleased to report that construction continues. Discussions about climate change continue to dominate the world environmental stage, even in the midst of a worldwide economic recession. The next major environmental and technical challenge we face as a company and industry is the reduction of greenhouse gas emissions, primarily carbon dioxide, from coal-fired power plants. These plants remain an essential component in the region’s energy infrastructure. As detailed in this report, Allegheny Energy continues to support development of a national climate change policy. However, that policy must coincide with a realistic time frame to develop and deploy the necessary technology to both build clean power sources and to ensure the ongoing, environmentally responsible operation of our nation’s existing energy resources. Overseeing the company’s environmental response is the Allegheny Energy Climate Change Team, consisting of senior representatives of Operations, Strategic Planning, Environment, Health & Safety, Legal
Paul J. Evanson Chairman, President and Chief Executive Officer
Introduction
Services, Finance, External Affairs, Communications and Risk Management. This report provides an update on the team’s efforts to develop and implement plans to address these critical issues. Ben Franklin once said: “When you’re finished changing, you’re finished.” More than 200 years later, the words of the man known as the “father of electricity” still ring true. Meeting future energy demands will require the electricity generation and delivery industry to evolve in many ways – from developing innovative technologies to employing new conservation and energy-efficiency measures. Allegheny Energy will respond to the challenges ahead, and remain committed to its shareholders, employees, customers, communities and the environment. The discussion of global climate change is pervasive. The United Nations’ Intergovernmental Panel on Climate Change (IPCC) reports that global temperatures are rising due to an increase in man-made greenhouse gas emissions. Science continues to debate the specifics of climate change, its causes, its potential effects, the practicality of various proposed remedies and even the validity of IPCC claims. The issue, however, can no longer be ignored. The global and national political response requires that companies develop and maintain a long-term climate change strategy. The pending United States response to the climate change debate entails dramatic technical and economic challenges. The nation’s need for reliable energy, as well as its obligation to protect its people and their economy, preclude any easy, inexpensive or short-term solution. No current technology exists to enable many of the carbon dioxide reduction levels being proposed in national, regional and state proposals and the current financial crisis dictates that climate change initiatives be carefully executed. It is critical for Allegheny Energy, as a key energy player, to engage in this discussion and to review any impact on its operations. This updated report was prepared for Allegheny Energy’s stockholders and those interested in the company’s position on the continuing concern surrounding global climate change. Company senior management agrees a defined legislative and business strategy is necessary to respond to this complex scientific and political debate.
Paul J. Evanson Chairman, President and Chief Executive Officer
Allegheny Energy’s electricity production is primarily coal-fired
Allegheny Energy produces 95 percent of its electricity from coal. The United States relies on coal-fired plants for almost 50 percent of its energy, and carbon dioxide, a greenhouse gas, is a byproduct of that production. The company currently produces approximately 45 million tons of carbon dioxide annually through its energy production, with output directly proportional to plant productivity. Hence, higher electrical demand will result in higher carbon dioxide emissions and lower demand will mean lower emissions. Carbon dioxide legislation and regulation, if not reasonably designed and applied, could have a significant impact on Allegheny Energy’s operations. Although the newly elected Administration and many federal legislators have announced aggressive climate change intentions, there are many unknowns concerning the final regulation of greenhouse gases in the United States. Allegheny Energy can provide no assurance that such limits, if imposed, will be set at levels that can accommodate its generation facilities absent the installation of controls. Moreover, there exists a chasm between desired reduction levels in the proposed legislation to date and the current capabilities of technology. Existing proposals range from cap-and-trade schemes to direct taxation of tons emitted. Based on estimates from a 2007 Department of Energy National Electric Technology Laboratory report and announced projects, it could cost as much as $5,500 per kilowatt to replace existing coal-based power generation with fossil-fuel stations capable of capturing and sequestering carbon dioxide emissions. Exact estimates are difficult, however, because of the wide range of legislative proposals and the lack of deployable technology. Regardless of the eventual mechanism, for Allegheny Energy this is a major challenge. Most notable will be the potential impact on customer bills and disproportionate increases in energy cost in areas dependent on coal-fired electric generation. The company’s energy portfolio also includes more than 1,115 megawatts of renewable hydroelectric and pump storage power generation. Allegheny Energy recently obtained a permit to use bio-mass (wood chips and saw dust) at one of its coal-based power stations in West Virginia, and is currently approved for limited use of waste-tire derived fuel at another of its coal-based power stations in West Virginia.
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The company is exploring the possibilities of installing additional renewable generation capacity such as wind and solar. Through its electricity delivery business, Pennsylvania customers can voluntarily join the Allegheny Renewable Energy Program, a partnership with Community Energy Incorporated to promote wind energy development in the region.
Allegheny Energy Climate Change Strategy
Allegheny Energy’s current strategy in response to climate change initiatives focuses on six tasks: 1. Maintaining an accurate carbon dioxide emissions inventory. 2. Improving the efficiency of the existing coal-burning fleet. 3. Following developing technologies for clean-coal energy and for carbon dioxide emission controls, including carbon sequestration. 4. Participating in carbon dioxide offset projects (e.g. reforestation projects) both domestically and abroad. 5. Analyzing options for future energy investment (e.g. renewables, clean-coal, etc.). 6. Improving demand-side efficiency programs as evidenced by customer energy conservation outreach plans and Allegheny Power’s Watt Watchers initiatives. Allegheny Energy will continue to aggressively engage in the dialogue that will shape the regulatory landscape surrounding carbon dioxide emissions. Additionally, the company will embrace proven and cost-effective measures to manage the company’s emissions while maintaining an affordable and reliable supply of electricity for our customers.
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Climate change requires a coordinated response
Allegheny Energy believes the United States must commit to a workable set of regulations. Despite the regulatory actions of some states and regional coalitions in the past few years, the company believes the challenge presented by global climate change can only be resolved with global solutions. In addition, Allegheny believes the United States must commit to a response that both encourages the development of technology and creates a workable control system. The United States is moving toward the development of national legislation. However, it is difficult for Allegheny to aggressively implement greenhouse gas emission expenditures until the exact nature and requirements of a national regulation are known, and the capabilities of control or reduction technologies are more fully understood. There is no proven commercial-scale technology that enables control of carbon dioxide emissions from existing pulverized, coal-fired power plants, which constitute the majority of the company’s generation fleet. Nonetheless, Allegheny recognizes that federal legislation and regulations addressing climate change likely will be adopted in the next few years. In anticipation of these regulations, Allegheny is engaged in discussions with various organizations to help advance carbon geological sequestration technology toward technological feasibility and commercial availability. Additionally, the company is exploring other forms of carbon dioxide capture and sequestration with innovative technology vendors ready to conduct field testing of their proprietary processes.
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Allegheny Energy reducing greenhouse gas emissions – past & present
In February 1995, the company signed a participation accord with the United States Department of Energy as a participant in the Climate Challenge Program. Under this accord, Allegheny Energy agreed to reduce its greenhouse gas emissions (as carbon dioxide equivalents) by 2 million tons per year by 2000. Through a series of reduction efforts including demand side management programs, heat-rate and efficiency improvements on generation equipment, transportation alternatives, and land-use management involving forestation and vegetative sequestration efforts, Allegheny was able to achieve just under 8.5 million tons of carbon dioxide-equivalent reductions. These reductions fulfilled the company’s Climate Challenge commitment goal by the calendar year 2000 and are documented in the U.S. Department of Energy’s 1605(b) Voluntary Reporting of Greenhouse Gases report. Carbon dioxide reduction efforts have continued since 2000 and Allegheny has since recorded another 9 million tons of avoided emissions through continued efficiency improvements, demand side management measures, and vegetative sequestration.
Allegheny Energy Fleet CO2 Emissions Rate
The company’s coal-fired generation fleet consists of 22 units of varying age and design. Although somewhat constricted by EPA regulations, there are ongoing opportunities to improve the efficiency and heat rates of these units. Over the years, improved turbine blade changes, variable speed controls on motorized ancillary equipment, and boiler optimization software have led to efficiency improveCO2 Rate (Tons/MWh) ments lowering carbon dioxide emission rates. Additional such 1.100 1.07 projects are always under consideration. The result of these 1.050 0.99 1.00 0.98 0.98 0.99 efforts, along with refined monitoring methods, is a decreased 1.000 carbon dioxide emissions rate. Decreasing rates have paralleled 0.950 0.93 0.92 0.93 0.94 decreasing tons of emissions, allowing Allegheny to join the 0.900 reduction programs of the Chicago Climate Exchange. 0.850
0.800
1995 2000 2001 2002 2003 2004 2005 2006 2007 2008
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Allegheny is using forest management projects for the purpose of vegetative sequestration. The company, along with 40 other United States utility companies, partnered with the Edison Electric Institute and formed UtiliTree® Carbon Company in 1995. Since that date, UtiliTree has sponsored a portfolio of forestry projects to manage greenhouse gases, especially carbon dioxide. UtiliTree’s projects involve a diverse mix of rural tree planting, forest preservation, and forest management at both domestic sites in Louisiana, Arkansas, Mississippi, and Oregon, and international sites in Belize and Malaysia. In addition to restoring marginal farmland into forested acreage, these projects also advance knowledge of forestry management options, establish carbon dioxide sequestration opportunities, and promote environmental stewardship by the electric utility industry. The domestic reforestation projects encompass a total of 3,646 acres of land and have a net calculated carbon dioxide benefit of 1.58 million tons over the lifetime of the projects (approximately 70 years). The Belize and Malaysia projects, designed to aid sustainable farming projects, entail conservation and forest management programs. These international projects cover 136,900 acres and have an estimated carbon dioxide benefit of 1.38 million tons over a 40-year time frame. Allegheny’s climate change strategy has recently focused on both the emissions associated with the generation of power and on the demand – or consumer – side. Demand side management (DSM) addresses the reduction of energy use by customers, thereby lowering the associated emissions for residential, municipal, commercial and industrial customers. Allegheny employs numerous energy efficiency measures related to DSM in its distribution business. In response to the Energy Policy Act of 2005, the company discontinued the use of mercury vapor lamps for street lighting and parking lots. The application of metal halide and high pressure sodium lamps provides equal or improved lighting characteristics and maximizes energy efficiency and environmental benefits at lower electrical consumption. In addition, the company specifies and purchases distribution transformers on the basis of economic evaluation of the transformer losses, assuring the use of the most energy efficient transformers.
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Forest management and sequestration programs will continue
Demand side management efforts lower emissions
Allegheny Energy Launches Efficiency and Conservation Initiative
Allegheny Energy, through its electricity delivery business, Allegheny Power, has embarked on a customer energy efficiency and conservation program known as Watt Watchers™. The company is committed to helping its customers make smart energy choices. Allegheny is an ENERGY STAR® partner. Through the partnership, the company is joining a nationwide effort to eliminate energy waste by promoting energy efficient appliances, building techniques and home improvements along with energy management strategies for homes and businesses. ENERGY STAR was introduced by EPA in 1992 as a voluntary market-based partnership to reduce greenhouse gas emissions through energy efficiency. Today, the ENERGY STAR label can be found on more than 50 products as well as on new and existing homes. Allegheny Power is participating in the ENERGY STAR Change the World, Start with ENERGY STAR 2008 campaign to encourage consumers to replace inefficient appliances and lighting with those that are ENERGY STAR rated. Allegheny encourages its customers to use energy wisely. Conserving energy has two important benefits— reducing the monthly cost of electricity for customers and benefiting the environment. The company is developing a number of new programs for customers under its Watt Watchers™ program that will help drive efficiency and conservation to new levels, such as Advanced Utility Infrastructure (AUI) projects. AUI could help identify new technologies for the nation’s electricity grid. Such projects hold the potential to move beyond technologies such as smart meters to an advanced communications and control network that links utility infrastructure with customers’ equipment and appliances. The ideal outcome will be a system that reduces peak power consumption, enables real-time pricing options, improves system efficiency and enhances service reliability. These efforts complement Allegheny’s demand side management programs offered to large commercial and industrial customers, which are currently integrated into the regional wholesale electricity market.
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Learn more about the Watt Watchers™ program at www.alleghenypower.com
Consumer conservation and efficiency takes center stage
Energy management on the consumer level is an important element of any comprehensive plan to reduce greenhouse gas emissions. Conservation and efficiency programs are being introduced across the company’s distribution service territories under the “Watt Watchers” umbrella. The programs teach customers the latest and most innovative energy management strategies and offer new techniques for consumers to control their energy consumption. Utilizing Energy Star, home energy audit programs and access to compact fluorescent light bulbs, Allegheny Energy is working with customers and state regulators to reduce electricity consumption. These collaborative efforts with state officials are leading to programs designed to produce quantifiable reductions in consumption. Specifically, Allegheny has proposed programs to satisfy EmPower Maryland standards and similar initiatives are being developed specific to Pennsylvania customers to comply with the state’s Act 129 provisions. Successful programs can be easily transferred to other jurisdictions. Allegheny continues to evaluate energy efficiency initiatives aimed at helping its customers conserve energy and reduce costs. The company, and its partner organizations, have a portfolio of existing energy conservation programs that have helped customers reduce peak consumption and lower overall energy, including: Net metering, a program for consumers who own renewable energy sources, providing an energy credit on their bill for the electricity they generate. Education programs for students about energy conservation and how to reduce energy usage at home. Allegheny offers free educational materials for school students across its service territory. Advanced meters, which are capable of storing electric consumption data at specified time intervals in conformance with applicable performance specifications and remote meter reading. These meters help large commercial and industrial customers manage electric consumption.
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Energy data services, which provide business customers the ability to access historical electric consumption data, providing critical information needed to make money-saving energy decisions. Data Pulses, a near real-time energy data system enabling industrial customers to take advantage of advanced consumption management systems and tools. Two demand response programs: the Economic Load Responsee Program (ELRP) and the Interruptible Load Resource (ILR) program for Allegheny Power’s large commercial and industrial customers in Pennsylvania and West Virginia. Energy programs specific to Pennsylvania customers include:
Proposed LEED-certified Allegheny Power Transmission Headquarters to be located at the I-79 High Technology Park in Fairmont, West Virginia.
o The Keystone Home Energy Loan Program, initially developed by the West Penn Power Sustainable Energy Fund, now offers low-interest rate loans with extended payment terms for qualifying energy efficient home improvement projects for Allegheny’s Pennsylvania residential customers. o The Smart Thermostat Program, funded and administered by the West Penn Power Sustainable Energy Fund, provides low-income Fayette, Washington, and Greene County, Pennsylvania citizens with a state-of-the-art, internet-enabled thermostat, including installation, in the participant’s homes. o PA Home Energy, a new program, developed, funded and directed by the West Penn Power Sustainable Energy Fund that assists Pennsylvania homeowners in the task of reducing their energy use while improving overall performance, comfort and safety of their home. o Customer opportunity to purchase renewable energy credits from wind energy sources. The Allegheny Renewable Energy Program is provided as a wholly voluntary option to Pennsylvania customers who want to support the development of existing and future wind energy projects.
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Allegheny Energy supports federal legislation based on a cap-and-trade system with significant R&D funding, as well as a global response network.
Allegheny Energy actively reviews the ongoing legislative initiatives along with the technical, regulatory and operational issues associated with future emissions controls on greenhouse gases. Given the critical need for the power generated by the company’s fleet, and the need to keep it operational for the foreseeable future, Allegheny endorses federal climate change legislation and has adopted the following principles with respect to greenhouse gas regulation: Allegheny Energy supports federal legislation over a mix of state or regional control efforts, Allegheny Energy believes any carbon control system should be economy-wide to evenly allocate the significant costs of such controls and to provide society-wide incentives for conservation and technology innovation, Allegheny Energy calls for a cap-and-trade regulatory format with significant allocations being issued, on a heat input basis, to current carbon dioxide emitters, and with a limited allowance auction, Allegheny Energy strongly supports federal funding of clean coal research and technology and is committed to working with federal agencies and other parties to advance that research, Allegheny Energy encourages a control system that recognizes the extended time line required for the research, development and deployment of new technologies, particularly with regard to carbon control systems for coal-fired generation facilities, Allegheny Energy calls for a control system that will protect United States economic interests and American energy supply reliability, and Allegheny Energy believes any control system, and any United States position on climate change, must acknowledge the global nature of the issue and create proper incentives and disincentives that will result in both global responses and global solutions.
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Federal Legislation
Controls developed by states, groups of states, or regions will not necessarily conform to any common standard as each state or region will focus on what benefits their interests as opposed to the good of the entire nation. Federal legislation on the other hand offers a uniform set of standards with which all entities within a given industrial sector must comply. This uniformity, if properly constructed, can lessen the advantage one company, state or region might gain over another and can provide a consistent environmental control system nationwide. The expense of controlling greenhouse gas emissions is high, likely much higher than realized by consumers and much higher than admitted by some politicians and legislative proponents. And although greenhouse gas emissions can easily be assigned to certain industrial sectors such as fossil-fuel power generation, the generation of electricity from fossil fuels is so inextricably tied to the smooth operation of society and the United States’ economy that rapidly rising costs of energy could have harmful effects. By requiring more sectors within society to contribute to the reduction of greenhouse gas emissions, the 60 percent of greenhouse gas emissions in this country not attributable to power generation can be incorporated into a control system, and the country can more evenly spread the costs over the responsible elements of the economy. This approach will also help avert disproportionate local and regional economic disruption in areas of the country historically more dependent on both coal mining and coal-fired energy. The cap-and-trade systems currently employed for nitrogen oxide and sulfur dioxide emissions have proven effective at both reducing emissions and maintaining economic stability. Allegheny Energy believes that reduction of carbon dioxide emissions can be achieved in the same economy driven fashion and, therefore, advocates a time-proven, cap-and-trade regulatory structure. As with the existing cap-and-trade programs, allowances should be provided to those entities that will be required to expend considerable capital to maintain coal-fired energy infrastructure over the next several decades. It will take that long to develop clean coal technologies, invest in and develop alternative energy sources and implement aggressive conservation practices.
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Economy-wide Controls
Cap-and-Trade Regulatory Format
No one sector should assume the burden of financing the cost of developing new technology. The required cost of developing new technologies to control emissions from critical, existing coal-fired power stations and to develop new, cleaner fossil fuels for energy production will be beyond the investment capabilities of single companies or even of a single industry. Allegheny Energy believes it is incumbent upon the federal government to provide the primary funding for research, development and deployment of technologies that will enable the country to meet the regulatory limits to be imposed by any pending legislation. Despite legislation proposing rapid, significant carbon dioxide reductions, the companies and academics developing the technologies and industry experts agree that a minimum 15- to 20-year period is necessary to develop, test, and deploy these solutions on a commercial scale. This is particularly true of unproven technologies such as geologic sequestration of carbon dioxide, a theoretically appealing but largely unproven response to carbon dioxide emissions. Too often, climate change control proponents suggest the need for short-term deadlines and solutions. Such enthusiasm, however, ignores the fact that new technology development and deployment is decades, not years, away. And the prospect of permitting, constructing, and installing such new power facilities, control systems and sequestration fields further dictates a lengthy period of implementation. Realistic time frames will be necessary to develop the appropriate programs. Premature compliance deadlines, indifferent to the staggering technical challenges ahead and the growing energy demands of the country, will serve only to jeopardize the country’s existing energy supply while doing nothing to accelerate future energy options. Additionally, given the global nature of the issue, Allegheny believes that any emission control structure must contain provisions to protect the economy of the United States with respect to countries that do not participate in greenhouse gas mitigation efforts.
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Federal Funding of Clean Coal Research
Extended Timeline
United States Economic Interests
Global Response and Global Solutions
Natural and Man-Made CO2 Emissions (metric tons)
Natural 92% 352 billion Man-made 8% 29.2 billion
Greenhouse gas emissions are a true global issue and growing world economies have the potential to dwarf the current emissions of the developed world. To the extent the United States or the United Nations wish to drive change and emissions reductions, they must create a global response and a global responsibility. Allegheny Energy recognizes the advantage the developed countries have had without carbon constraints, but this simply dictates a new formula for global cooperation. Allegheny Energy believes a national approach is necessary over a state or regional approach. The company also believes the United States and the United Nations must require all nations of the world to participate in response systems and funding.
Residential 6%
Source: EIA/DOE (2006 data, rounded), IPCC 2007
US Compared to World; Man-Made CO2 Emissions (metric tons)
Remaining World 80% 23.3 billion
US Contributions 20% 5.9 billion
Commercial 4% Industrial/ Agriculture 16%
US Sources of CO2 Emissions (by sector)
Transportation 34%
Electric Generation 40%
Source: EIA/DOE (2006 data, rounded)
Source: EIA/DOE (2007 data, rounded)
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Allegheny Energy Continues to Reduce Overall Emissions
Since the passage of the Clean Air Act, Allegheny Energy has invested nearly $3.2 billion in environmental expenditures, principally at its power stations. Although regulations have changed and requirements have become stricter, Allegheny Energy satisfies its environmental compliance obligations while meeting customer electrical demand. The newest significant air regulation passed by the United States Environmental Protection Agency is the Clean Air Interstate Rule (CAIR). CAIR seeks further nitrogen oxide and sulfur dioxide emission reductions beyond those established by the 1990 Clean Air Act Amendments. Allegheny has also reduced its nitrogen oxide emissions by 58 percent from 1990 levels and continues to reduce such emissions. Beginning year-round operation in 2009 of existing control equipment, to comply with CAIR, will generate further reduction in nitrogen oxide emissions. By 2010, at least a 70 percent overall reduction will be realized in nitrogen oxide emission levels as compared to 1990 levels. Allegheny reduced its sulfur dioxide emissions approximately 52 percent between 1990 and 2008. These reductions are largely attributable to the installation of emission control equipment in accordance with state and federal regulations at Allegheny Energy’s Pleasants and Harrison plants in West Virginia and its Mitchell power station in Pennsylvania. The almost completed installation of pollution control equipment (scrubbers) at the Hatfield’s Ferry and Fort Martin facilities will further reduce sulfur dioxide emissions, providing for a total reduction of approximately 81 percent from 1990 levels. Upon completion of these scrubber projects, 85 percent of Allegheny’s coal-fired fleet will be scrubbed, making it one of the most highly controlled fleets in the United States with respect to sulfur dioxide. These scrubbers will also remove a significant amount of mercury.
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Allegheny Energy Historic and Estimated NOX Emissions
Tons/Year MWh/Year
180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0
1990 2005 2006 2007 2008 2010
50,000,000 45,000,000 40,000,000 35,000,000 30,000,000 25,000,000
NOx tons
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MWh
Allegheny Energy Historic and Estimated SO2 Emissions
Tons/Year MWh/Year
700,000 600,000 500,000 400,000 300,000 200,000 100,000 0
1990 2005 2006 2007 2008 2010
50,000,000 45,000,000 40,000,000 35,000,000 30,000,000 25,000,000
SO2 tons
6
MWh
Allegheny Energy Environment, Health & Safety Policy
Allegheny Energy will produce and distribute electricity in a reliable and responsible manner that protects our personnel, communities, customers, and the environment. We will accomplish this objective through the following guiding principles:
Safety & Health Environmental Stewardship Improved Performance Sustainability Outreach
We will provide a safe and healthful environment for our personnel, customers, and the community. We will create a safety culture through the leadership, commitment, and involvement of all personnel. We will strive to minimize the environmental impact of our operations through the efficient use of natural resources, reduction of air emissions, and pollution prevention. We will promote energy conservation and efficiency. We will plan, set goals, implement, measure and continually improve our performance using a dynamic management system. We will integrate safety, health, and environmental considerations into all areas of business planning and decision-making. We will promote and maintain open and honest dialogue with personnel, customers, regulatory agencies, and our communities with respect to environment, health and safety issues. We will foster customer education and respond to stakeholder concerns. We will participate in development of laws, regulations, and policies and partner with various stakeholders to improve the well-being of the communities we serve. We will comply with all applicable safety, health, and environmental laws and regulations.
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Compliance
About Allegheny Energy
Headquartered in Greensburg, Pa., Allegheny Energy is an investor-owned electric utility with total annual revenues of over $3 billion and more than 4,000 employees. The company owns and operates generating facilities and delivers low-cost, reliable electric service to 1.6 million customers in Pennsylvania, West Virginia, Maryland and Virginia. For more information, visit the company’s Web site at www.alleghenyenergy.com.
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Forward-Looking Statement
In addition to historical information, this report may contain a number of “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Words such as anticipate, expect, project, intend, plan, believe, and words and terms of similar substance used in connection with any discussion of future plans, actions, or events identify forward-looking statements. These include statements with respect to: rate regulation and the status of retail generation service supply competition in states served by Allegheny Energy’s distribution business, Allegheny Power; financing plans; demand for energy and the cost and availability of raw materials, including coal; provider-of-last-resort and power supply contracts; results of litigation; results of operations; internal controls and procedures; capital expenditures; status and condition of plants and equipment; capacity purchase commitments; regulatory matters; and accounting issues. Forward-looking statements involve estimates, expectations and projections and, as a result, are subject to risks and uncertainties. There can be no assurance that actual results will not materially differ from expectations. Actual results have varied materially and unpredictably from past expectations. Factors that could cause actual results to differ materially include, among others, the following: plant performance and unplanned outages; changes in the price of power and fuel for electric generation; general economic and business conditions; changes in access to capital markets; complications or other factors that render it difficult or impossible to obtain necessary lender consents or regulatory authorizations on a timely basis; environmental regulations; the results of regulatory proceedings, including proceedings related to rates; changes in industry capacity, development and other activities by Allegheny Energy’s competitors; changes in the weather and other natural phenomena; changes in customer switching behavior and their resulting effects on existing and future load requirements; changes in the underlying inputs and assumptions, including market conditions used to estimate the fair values of commodity contracts; changes in laws and regulations applicable to Allegheny Energy, its markets or its activities; the loss of any significant customers or suppliers; dependence on other electric transmission and gas transportation systems and their constraints or availability; changes in PJM, including changes to participant rules and tariffs; the effect of accounting policies issued periodically by accounting standard-setting bodies; and the continuing effects of global instability, terrorism and war. Additional risks and uncertainties are identified and discussed in Allegheny Energy’s reports filed with the Securities and Exchange Commission.
Allegheny Energy owns and maintains the Cheat Lake Park & Trail recreational facility in Monongalia County, West Virginia.
For more information on Allegheny Energy’s environmental, health and safety initiatives, visit our Web site at www.alleghenyenergy.com and click on “Safety & Environment.”
© Allegheny Energy, Inc. 2009