Wylie Ridge Transformer Update

3rd and 4th Installation Cost and In Service Date Update

This notification is provided by Allegheny Power (AP) to PJM Interconnection, L.L.C. (PJM) for the purpose of informing PJM of a delay to the in-service dates and an adjustment of estimated costs for the installation of the Wylie Ridge Substation third and fourth 345/500kV transformer project. This project is identified in the PJM RTEP as Project # B0218.
PJM had previously announced at the TEAC meeting on March 1, 2006, that the respective in-service dates for the Wylie Ridge #3 and #4 transformers would be June 2007 and Fall 2007, respectively.

Over the past several months, AP has been working with the power transformer manufacturer that is supplying the transformers for this project to clarify delivery dates for the transformers and has been informed by the manufacturer that it is experiencing delivery problems with the steel tank needed for the completion of the construction of the transformers. The manufacturer has notified AP that the third transformer delivery date will not occur until August 2, 2007. This delay will adversely affect AP’s planned in-service date of the initial transformer by approximately four months. The revised in-service date for the installation of the third transformer is now estimated to be October 1, 2007. As a consequence of the delay of the delivery of the third transformer, the fourth transformer installation has been revised and is now estimated as December 31, 2007.

In addition, the estimated cost of this project has increased by approximately $2.5 million from the estimated $12 million reported in the September 22, 2005 TEAC documentation. This increase in cost is attributable to the following: (1) detailed engineering estimates and design have been updated, (2) a more detailed project time line has been developed, and (3) material, vendor, and contractor costs have been more firmed up.

AP understands the importance of this project. However, these delays are beyond its control. AP will make every effort to improve the final in-service dates as much as possible. Any further adjustments to the schedule or estimated costs will be communicated to PJM when and if they develop.