Allegheny Merchant Generation Adjusted Earnings Flat

Allegheny Energy's Merchant Generation unit reported essentially flat adjusted earnings of $62.0 million for the third quarter, versus $61.1 million a year ago.

Increased generation output and higher power prices were largely offset by higher maintenance costs at power plants, the effects of power hedges, and increased depreciation and interest expense.

GAAP net income for the unit was $59.9 million, versus $38.0 million a year ago.

Since the end of the second quarter, Allegheny Energy Supply has won additional power supply contracts and has entered into some direct contracts with retail customers, executives said during and earnings call.

As a result, the Merchant Generation business is now 74% hedged in 2011, 29% in 2012, and 7% in 2013. The Merchant Generation business has established targets to hedge 80% to 90% of the next year's output, 30% to 50% of the year two output, and 0% to 30% of the year three output.