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Allegheny Energy Inc.'s subsidiary, Trans-Allegheny Interstate Line Co. (TrAILCo), has filed a settlement agreement with the Federal Energy Regulatory Commission (FERC) for a formula rate treatment for the proposed TrAIL line and other transmission-related projects. All active parties to the proceeding either support or do not oppose the settlement agreement.

The settlement agreement, which requires FERC approval and would resolve all issues previously set for hearing, includes an incentive return on equity rate of 12.7% for the TrAIL project; an incentive return on equity rate of 12.7% for the static value at risk compensator installed at the existing Black Oak Substation and a return on equity rate of 11.7%.

Also, the Potomac-Appalachian Transmission Highline (PATH), American Electric Power's transmission joint venture with Allegheny Energy, has received approval from FERC for transmission incentives to help support construction of the approximately 290-mile, extra-high-voltage transmission line from West Virginia into Maryland.

The companies requested and FERC granted four incentives for the project:

- An incentive return on equity for new transmission of 14.3%;

- recovery of a return on 100% of prudently incurred transmission-related construction work in progress prior to the project's in-service date;

- recovery of all startup business and administrative costs incurred prior to the time the rates go into effect; and

- authorization to recover all prudently incurred development and construction costs if the PATH project is abandoned as a result of factors beyond the control of PATH or its parents.

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