Allegheny files energy efficiency plan in Maryland

NEW YORK, Sept 9 (Reuters) - Allegheny Energy Inc's (AYE.N) Allegheny Power subsidiary filed an energy efficiency and conservation proposal with utility regulators in Maryland that would cost customers about $1.30 a month, the company said in a release Tuesday.

Residential and commercial customers that take advantage of the program could save more than $1.30 a month, a spokesman for the company said.

The proposals, which are subject to regulatory approval, are Allegheny's response to the state's new energy efficiency law which targets a 15 percent reduction in energy consumption by 2015.

For homeowners, the company proposed to pay part of the difference in cost between standard air conditioners, heat pumps or other appliances and the more expensive energy efficiency units, among other things.

For commercial customers, Allegheny proposed to cover part of the cost of installing energy efficient lighting, air conditioning, motors and drives, among other things. For its biggest customers, Allegheny will also conduct an energy audit to find the most efficient upgrades.

Allegheny Power makes money in Maryland by transmitting and distributing power. If the efficiency programs work as proposed, customers would use less power and Allegheny revenue would suffer.

To make up the lost revenue, Allegheny proposed a decoupling or rate stabilization mechanism that would allow it to continue making the same money it needs to maintain the system and earn profits.

Customers, meanwhile, still benefit because they would buy less power. About half of a customer's power bill goes toward energy supply costs and half goes to transmission and distribution costs.

Allegheny makes money only on the transmission and distribution side of the bill. It buys energy supplies in the wholesale power market and passes those costs on to customers.

Allegheny, of Greensburg, Pennsylvania, owns and operates almost 10,000 megawatts of generating capacity, markets energy commodities and transmits and distributes power to 1.6 million customers in Pennsylvania, West Virginia, Maryland and Virginia. (Reporting by Scott DiSavino)