The rating on West Penn Power Co. (West Penn) reflects the consolidated credit profile of its parent, Allegheny Energy Inc. (Allegheny), whose credit quality is determined in conjunction with that of its unregulated subsidiary, Allegheny Energy Supply Co. LLC (AE Supply), and its regulated utility subsidiaries, Monongahela Power Co., Potomac Edison Co., and West Penn. The rating on parent Allegheny reflects heavy, albeit improving, credit metrics, capped tariff rates in Pennsylvania, and exposure to coal and emission credits. These weaknesses are partially mitigated by regulated subsidiaries that generate stable cash flow, valuable coal-based generation assets in the PJM interconnect, operational improvements, and higher negotiated tariffs in Pennsylvania from 2006. Successful efforts at reducing O&M and interest expenses, and higher market
