- The Washington Times - Monday, June 11, 2001

Allegheny Energy Inc.'s acquisition of a Louisville, Ky., natural gas and electricity consulting firm is a the step in the right direction to bring the company's stock price higher, analysts say.
However, a potential walkout of 1,200 of the company's 5,700 workers may hinder the stock's upswing if talks drag on, says David B. Burks, an analyst with J.J.B. Hilliard, W.L. Lyons in Louisville.
Contract talks between Allegheny Energy and the union that represents the workers, Local 102 of the Utility Workers Union of America (UWUA), started in March. Their contracts were set to expire at the end of April, but were extended until the end of May. The employees are working under the prior contract while negotiating for a new one, says Jay Mason, a spokesman for Allegheny. The union's executive board is expected to meet tomorrow to consider the company's final offer, and then decide whether to strike.
The president of the union says the workers are asking for better medical and pension benefits, as well as "oppressive work rule changes."
"Our members are already on 24-hour call, 365 days a year," says William Sterner, UWUA president.
Allegheny Energy remains confident that there will not be a work stoppage.
"We've had no indication from the union that they plan a work stoppage," Mr. Mason says.
An unregulated subsidiary of the company, Allegheny Ventures, bought Kentucky-based Fellon-McCord & Associates Inc., and Alliance Energy Services Partnership, for $29.6 million in cash. The transaction is expected to be completed later this year.
Fellon-McCord serves more than 300 customers across the country. Alliance Energy, which is owned by Fellon-McCord and Conoco Inc., markets natural gas and provides customer-management services to more than 800 commercial and industrial users nationwide.
Allegheny Energy, the Hagerstown, Md., electric utility holding company that serves customers in parts of five states, including Maryland and Virginia. The stock's price reached a 52-week high of $55.09 on May 24. It traded at a 52-week low of $27.31 on June 30, 2000. The stock price closed at $50.04 Friday.
"The stock's been going up because the company's expanding their presence and their capacity. The expansion allows the company to develop non-regulatory earnings," Mr. Burks says.
Samir Nangia, an analyst with Credit Lyonnais Securities in New York, says the recent acquisitions Allegheny Energy has made are a smart move, reflecting on the company's good management skills. The company also recently acquired Global Energy Markets, a Merrill Lynch & Co. energy-trading unit, last January.
"It adds a much needed outside of utility thinking," he says. "We like to see a good mix of the two," he says about Allegheny?s use of consultants and plant workers.
Mr. Burks rates the company a hold, but says that the rating is only a result of a "function of price." If the stock price declines, with no change in fundamentals, he would most likely change his rating. "We're certainly comfortable with long-term investors owning or buying the stock."
Mr. Nangia, who rates the stock a buy, says the company?s stock is trading at a discount, because earnings estimates have gone up and the company?s now deregulated.
"After they came out of regulation, they now have an incentive to run the plants harder and keep the extra money," Mr. Nangia says.

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