Page 1 of 13
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended June 30, 1994
Commission File Number 1-267
Allegheny Power System, Inc.
(Exact name of registrant as specified in its charter)
Maryland 13-5531602
(State of Incorporation) (I.R.S. Employer Identification No.)
12 East 49th Street, New York, New York 10017-1028
Telephone Number - 212-752-2121
The registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.
At August 10, 1994, 118,456,542 shares of the Common Stock
($1.25 par value) of the registrant were outstanding.
<PAGE>
- 2 -
<TABLE>
<CAPTION>
ALLEGHENY POWER SYSTEM, INC.
Form 10-Q for Quarter Ended June 30, 1994
Page
Index No.
PART I--FINANCIAL INFORMATION:
Consolidated statement of income -
<S> <C>
Three and six months ended June 30, 1994 and 1993 3
Consolidated balance sheet - June 30, 1994
and December 31, 1993 4
Consolidated statement of cash flows -
Six months ended June 30, 1994 and 1993 5
Notes to consolidated financial statements 6
Management's discussion and analysis of financial
condition and results of operations 7-11
PART II--OTHER INFORMATION 12-13
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- 3 -
ALLEGHENY POWER SYSTEM, INC.
Consolidated Statement of Income
Three Months Ended Six Months Ended
June 30 June 30
1994 1993 1994 1993
(Thousands of Dollars)
ELECTRIC OPERATING REVENUES:
<S> <C> <C> <C> <C>
Residential $193 428 $182 749 $ 467 893 $ 416 243
Commercial 107 958 99 369 228 216 205 717
Industrial 178 457 167 460 358 070 330 543
Nonaffiliated utilities 74 704 91 104 186 316 182 432
Other 14 714 11 698 33 098 32 123
Total Operating Revenues 569 261 552 380 1 273 593 1 167 058
OPERATING EXPENSES:
Operation:
Fuel 132 085 130 285 287 805 283 138
Purchased power and exchanges, net 98 743 95 559 235 230 192 785
Deferred power costs, net (150) 1 528 5 032 (97)
Other 68 443 64 822 137 404 127 797
Maintenance 60 319 57 946 124 221 114 757
Depreciation 56 261 52 440 112 133 104 041
Taxes other than income taxes 43 712 42 887 93 708 89 711
Federal and state income taxes 26 350 23 621 76 405 64 110
Total Operating Expenses 485 763 469 088 1 071 938 976 242
Operating Income 83 498 83 292 201 655 190 816
OTHER INCOME AND DEDUCTIONS:
Allowance for other than borrowed funds
used during construction 2 697 3 839 5 562 7 093
Other income, net 40 375 (259) 345
Total Other Income and Deductions 2 737 4 214 5 303 7 438
Income Before Interest Charges
and Preferred Dividends 86 235 87 506 206 958 198 254
INTEREST CHARGES AND PREFERRED DIVIDENDS:
Interest on long-term debt 37 231 40 444 74 154 80 618
Other interest 2 548 1 259 4 996 2 328
Allowance for borrowed funds used
during construction (1 866) (2 827) (3 650) (5 208)
Dividends on preferred stock of
subsidiaries 5 174 4 272 9 406 8 549
Total Interest Charges and
Preferred Dividends 43 087 43 148 84 906 86 287
CONSOLIDATED NET INCOME $ 43 148 $ 44 358 $ 122 052 $ 111 967
COMMON STOCK SHARES OUTSTANDING
(average) 118 042 033 114 256 100 117 855 917 114 080 360
EARNINGS PER AVERAGE SHARE $.37 $.39 $1.04 $.98
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- 4 -
ALLEGHENY POWER SYSTEM, INC.
Consolidated Balance Sheet
June 30, December 31,
1994 1993
(Thousands of Dollars)
ASSETS:
Property, Plant, and Equipment:
At original cost, including $705,762,000
<S> <C> <C>
and $638,920,000 under construction $7 340 971 $7 176 847
Accumulated depreciation (2 462 804) (2 388 758)
4 878 167 4 788 089
Investments and Other Assets:
Subsidiaries consolidated--excess of cost
over book equity at acquisition 15 077 15 077
Securities of associated company--at cost,
which approximates equity 1 250 1 250
Other 24 455 24 357
40 782 40 684
Current Assets:
Cash and temporary cash investments 2 313 2 417
Accounts receivable:
Electric service, net of $4,743,000 and $3,418,000
uncollectible allowance 188 981 188 139
Other 8 838 7 736
Materials and supplies--at average cost:
Operating and construction 90 926 86 766
Fuel 84 250 71 392
Deferred power costs 10 633 14 054
Prepaid taxes 41 230 43 139
Other 18 557 10 391
445 728 424 034
Deferred Charges:
Regulatory assets 585 736 577 817
Unamortized loss on reacquired debt 42 589 44 435
Other 84 497 74 109
712 822 696 361
Total Assets $6 077 499 $5 949 168
CAPITALIZATION AND LIABILITIES:
Capitalization:
Common stock $ 148 071 $ 147 079
Other paid-in capital 946 970 931 063
Retained earnings 903 088 877 673
1 998 129 1 955 815
Preferred stock:
Not subject to mandatory redemption 300 086 250 086
Subject to mandatory redemption 26 400 26 400
Long-term debt 2 075 552 2 008 104
4 400 167 4 240 405
Current Liabilities:
Short-term debt 117 022 130 636
Long-term debt and preferred stock
due within one year 11 200 27 200
Accounts payable 167 808 187 690
Taxes accrued:
Federal and state income 21 117 14 689
Other 34 121 57 758
Interest accrued 38 445 38 626
Other 94 330 73 467
484 043 530 066
Deferred Credits and Other Liabilities:
Unamortized investment credit 162 166 166 328
Deferred income taxes 889 088 873 695
Regulatory liabilities 104 924 107 372
Other 37 111 31 302
1 193 289 1 178 697
Total Capitalization and Liabilities $6 077 499 $5 949 168
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- 5 -
ALLEGHENY POWER SYSTEM, INC.
Consolidated Statement of Cash Flows
Six Months Ended
June 30
1994 1993
(Thousands of Dollars)
CASH FLOWS FROM OPERATIONS:
<S> <C> <C>
Consolidated net income $122 052 $111 967
Depreciation 112 133 104 041
Deferred investment credit and income taxes, net (5 556) (4 457)
Deferred power costs, net 5 032 (97)
Allowance for other than borrowed funds used
during construction (5 562) (7 093)
Changes in certain current assets and liabilities:
Accounts receivable, net (1 944) (7 029)
Materials and supplies (17 018) 5 293
Accounts payable (19 882) (33 675)
Taxes accrued (17 209) (19 893)
Interest accrued (181) 891
Other current liabilities 21 070 30 152
Other, net 1 933 1 402
194 868 181 502
CASH FLOWS FROM INVESTING:
Construction expenditures (208 387) (252 719)
Allowance for other than borrowed funds used
during construction 5 562 7 093
(202 825) (245 626)
CASH FLOWS FROM FINANCING:
Sale of common stock 17 263 17 498
Sale of preferred stock 49 635 -
Issuance of long-term debt 78 036 507 289
Retirement of long-term debt (26 830) (307 924)
Deposit with trustees for redemption
of long-term debt - (144 166)
Short-term debt, net (13 614) 73 805
Cash dividends on common stock (96 637) (92 401)
7 853 54 101
NET CHANGE IN CASH AND TEMPORARY CASH INVESTMENTS (104) (10 023)
Cash and Temporary Cash Investments at January 1 2 417 17 032
Cash and Temporary Cash Investments at June 30 $ 2 313 $ 7 009
Supplemental cash flow information:
Cash paid during the period for:
Interest (net of amount capitalized) $ 73 384 $ 75 065
Income taxes 65 430 64 447
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
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ALLEGHENY POWER SYSTEM, INC.
Notes to Consolidated Financial Statements
1. The Company's Notes to Consolidated Financial Statements in the
Allegheny Power System companies' combined Annual Report on
Form 10-K for the year ended December 31, 1993, should be read
with the accompanying financial statements and the following
notes. With the exception of the December 31, 1993
consolidated balance sheet in the aforementioned annual report
on Form 10-K, the accompanying consolidated financial
statements appearing on pages 3 through 5 and these notes to
consolidated financial statements are unaudited. In the
opinion of the Company, such consolidated financial statements
together with these notes thereto contain all adjustments
(which consist only of normal recurring adjustments) necessary
to present fairly the Company's financial position as of June
30, 1994, the results of operations for the three and six
months ended June 30, 1994 and 1993, and cash flows for the six
months ended June 30, 1994 and 1993.
2. The Consolidated Statement of Income reflects the results of
past operations and is not intended as any representation as to
future results. For purposes of the Consolidated Balance Sheet
and Consolidated Statement of Cash Flows, temporary cash
investments with original maturities of three months or less,
generally in the form of commercial paper, certificates of
deposit, and repurchase agreements, are considered to be the
equivalent of cash.
3. On June 22, 1994, The Potomac Edison Company issued $75 million
of 8%, 30-year first mortgage bonds. On May 11, 1994, the
Monongahela Power Company issued $50 million of $100 par value
cumulative preferred stock with a dividend of $7.73. Proceeds
from both sales were used to repay outstanding short-term debt
and for other corporate purposes.
On March 1, 1994, The Potomac Edison Company retired at
maturity $16 million of 4-5/8% first mortgage bonds.
4. Other paid-in capital increased $16,580,000 in the six months
ended June 30, 1994, representing the excess of amounts
received over par value from the issuance of 792,960 shares of
common stock pursuant to the Company's Dividend Reinvestment
and Stock Purchase Plan and Employee Stock Ownership and
Savings Plan. Additionally, other paid-in capital decreased
$365,000 for expenses related to a subsidiary's May 1994 sale
of preferred stock, $237,000 for expenses related to the
November 1993 common stock split, and $71,000 for expenses
related to the October 1993 public sale of shares of common
stock.
5. Common stock dividends per share declared during the periods
for which income statements are included are as follows:
<TABLE>
<CAPTION>
1994 1993
1st 2nd 1st 2nd
Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C>
Number of Shares 117,663,582 118,037,427 113,898,736 114,252,458
Amount per Share $.41 $.41 $.405 $.405
</TABLE>
<PAGE>
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ALLEGHENY POWER SYSTEM, INC.
Management's Discussion and Analysis of Financial Condition
and Results of Operations
COMPARISON OF SECOND QUARTER AND SIX MONTHS ENDED JUNE 30, 1994
WITH SECOND QUARTER AND SIX MONTHS ENDED JUNE 30, 1993
CONSOLIDATED NET INCOME
Consolidated net income for the second quarter of 1994
was $43.1 million or $.37 per average share, compared with $44.4 million
or $.39 per average share for the corresponding 1993 period. For the
first six months of 1994, consolidated net income was $122.1 million or
$1.04 per average share, compared with $112.0 million or $.98 per average
share for the corresponding 1993 period.
The increase in consolidated net income for the first
six months of 1994 reflects revenue increases from retail customers due to
previously reported rate increases, primarily in Maryland and
Pennsylvania, effective in February and May 1993, respectively, and
greater kilowatthour (kWh) sales to retail customers. Earnings for the
second quarter of 1994 also reflect increased retail revenues, but to a
lesser extent because of more moderate weather in April and May 1994.
Increased depreciation, maintenance, and other expenses continued in both
periods.
SALES AND REVENUES
Retail kWh sales to residential, commercial, and
industrial customers increased 1%, 3%, and 1% for the second quarter and
6%, 4%, and 2% for the first six months, respectively. The increase in
kWh sales to residential and commercial customers was primarily due to
variances in weather-related sales. Record cold temperatures in mid-
January 1994 contributing to first quarter 1994 residential and commercial
kWh sales increases of 9% and 6%, respectively, were followed by milder
temperatures and lower kWh sales in April and May 1994. Increases in
residential sales caused by the June 1994 higher-than-normal temperatures
will, to a substantial extent, be reflected in earnings in the third
quarter after such sales have been billed to customers. The increases in
kWh sales to industrial customers resulted primarily from increased sales
to rubber, chemical, and paper customers. These increases were offset in
part by a decrease in sales to primary metal customers in the second
quarter 1994 resulting primarily from a 70-day strike, ending June 9,
1994, at the System's second largest industrial customer. The increase in
revenues from retail customers resulted from the following:
<TABLE>
<CAPTION>
Increase from Prior Periods
Quarter Six Months
(Millions of Dollars)
<S> <C> <C>
Increased kWh sales $ 3.9 $ 24.7
Fuel and energy cost adjustment
clauses (1) 10.5 36.8
Rate increases (2):
Pennsylvania 9.2 22.7
Virginia 2.5 5.9
Maryland 1.6 4.5
West Virginia 1.6 3.6
14.9 36.7
Other 1.0 3.5
$30.3 $101.7
</TABLE>
<PAGE>
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(1) Changes in revenues from fuel and energy cost adjustment
clauses have little effect on consolidated net income.
(2) Reflects rate increases on an annual basis of about $11.3
million in Maryland effective February 25, 1993, a $61.6
million increase in base rates in Pennsylvania effective May
18, 1993, a surcharge of $3.9 million in West Virginia
effective July 1, 1992, which was increased to $10.9 million
effective July 1, 1993, for recovery of carrying charges on
costs to comply with the Clean Air Act Amendments of 1990
(CAAA), a $10.0 million base rate increase in Virginia
effective September 28, 1993 (including amounts subject to
refund for which estimated liabilities have been recorded), and
cogeneration project and energy conservation surcharges in
Maryland effective January 5, 1994 and May 5, 1994,
respectively.
KWh sales to and revenues from nonaffiliated utilities
are comprised of the following items:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1994 1993 1994 1993
KWh sales (in billions):
<S> <C> <C> <C> <C>
From subsidiaries' generation .4 .5 .7 1.0
From purchased power 1.6 2.5 5.0 5.5
2.0 3.0 5.7 6.5
Revenues (in millions):
From subsidiaries' generation $ 9.5 $11.8 $ 19.9 $ 25.9
From sales of purchased power 65.2 79.3 166.4 156.5
$74.7 $91.1 $186.3 $182.4
</TABLE>
Sales from subsidiaries' generation decreased because
of growth of kWh sales to retail customers and generating unit outages,
both of which reduce the amount available for sale, and continuing price
competition. Sales from purchased power varies depending on the
availability of eastern utilities' generating equipment, demand for
energy, and competition.
The increase in other revenues for the second quarter
resulted primarily from an increase in standard transmission service
tariff revenues which also varies depending on the factors described above
for sales from purchased power. About 95% of the aggregate benefits from
this tariff and sales to nonaffiliated utilities is passed on to retail
customers and has little effect on consolidated net income.
OPERATING EXPENSES
Fuel expenses for the second quarter and the first six
months of 1994 increased 1% and 2%, respectively, due primarily to
increases in average coal prices. Fuel expenses are primarily subject to
deferred power cost accounting procedures with the result that changes in
fuel expenses have little effect on consolidated net income.
<PAGE>
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"Purchased power and exchanges, net" represents power
purchases from and exchanges with other utilities and purchases from
qualified facilities under the Public Utility Regulatory Policies Act of
1978 (PURPA), and is comprised of the following items:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1994 1993 1994 1993
(Millions of Dollars)
Purchased power:
<S> <C> <C> <C> <C>
For resale to other utilities $ 57.3 $67.7 $146.9 $137.9
From PURPA generation 34.5 26.0 64.8 50.5
Other 9.4 3.9 22.7 6.5
Total power purchased 101.2 97.6 234.4 194.9
Power exchanges, net (2.5) (2.0) .8 (2.1)
$ 98.7 $95.6 $235.2 $192.8
</TABLE>
The amount of power purchased from other utilities for
use by subsidiaries and for resale to other utilities depends upon the
availability of subsidiaries' generating equipment, transmission capacity,
and fuel, and their cost of generation and the cost of operations of other
utilities from which such purchases are made. The cost of power purchased
for use by the subsidiaries, including power from PURPA generation, is
mostly recovered from customers currently through the regular fuel and
energy cost recovery procedures followed by the subsidiaries' regulatory
commissions and is primarily subject to deferred power cost procedures
with the result that changes in such costs have little effect on
consolidated net income. As described under SALES AND REVENUES above, the
increase in sales to retail customers combined with generating unit
outages resulted in increased purchases from other utilities. The primary
reason for the fluctuation in purchases for resale to other utilities is
also described under SALES AND REVENUES above.
The increases in other operation expenses resulted
primarily from previously reported asbestos suits and a superfund site
cleanup, increased provisions for uncollectible accounts, and increases in
salaries and wages and employee benefit costs.
Maintenance expenses represent costs incurred to
maintain the power stations, the transmission and distribution (T&D)
system, and general plant, and reflect routine maintenance of equipment
and rights-of-way as well as planned major repairs and unplanned
expenditures, primarily from forced outages at the power stations and
periodic storm damage on the T&D system. In early January 1994,
Monongahela Power Company experienced the worst storm in that company's
history with nearly $7 million of damage to its facilities. These
expenses were deferred pending rate recovery which has been requested in a
rate case filing made on January 18, 1994. The subsidiaries are
experiencing, and expect to continue to experience, increased expenditures
due to the aging of their power stations. Variations in maintenance
expense result primarily from unplanned events and planned major projects,
which vary in timing and magnitude depending upon the length of time
equipment has been in service without a major overhaul, the amount of work
found necessary when equipment is dismantled, and outage requirements to
comply with the CAAA.
The increases in depreciation expense for the second
quarter and first six months of 1994 resulted primarily from additions to
electric plant. Because of the increased levels of capital expenditures
as a result of the CAAA and the replacement of aging equipment at the
subsidiaries' power stations, depreciation expense is expected to increase
significantly over the next few years.
<PAGE>
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Taxes other than income taxes increased $.8 million and
$4.0 million for the second quarter and first six months of 1994,
respectively, due primarily to increases in gross receipts taxes resulting
from higher revenues from retail customers. The net increases of $2.7 and
$12.3 million in federal and state income taxes for the second quarter and
first six month periods, respectively, resulted primarily from increases
in income before taxes and an increase in the federal income tax rate
pursuant to the Revenue Reconciliation Act of 1993 enacted in August 1993.
The combined decreases of $2.1 million and $3.1 million
in allowance for funds used during construction (AFUDC) for the second
quarter and first six- month periods, respectively, reflect increases in
the current recovery of carrying charges on CAAA expenditures in lieu of
recording AFUDC.
Interest on long-term debt decreased $3.2 million for
the quarter and $6.5 million for the first six months due primarily to
interest savings from debt refinancings in 1993. Fluctuations in other
interest expense as well as other income, net, reflect changes in the
levels of short-term debt and temporary investments maintained by the
companies.
LIQUIDITY AND CAPITAL RESOURCES
The Company's discussion on Liquidity and Capital
Resources in the Allegheny Power System companies' combined Annual Report
on Form 10-K for the year ended December 31, 1993 should be read with the
following information.
Monongahela Power Company, on January 18, 1994, and The
Potomac Edison Company, on January 14, 1994, filed applications with the
Public Service Commission of West Virginia for base rate increases
designed to produce $61.3 million and $12.2 million, respectively, in
additional annual revenues.
On March 31, 1994, West Penn Power Company filed with
the Pennsylvania Public Utility Commission for an increase in base rates
of about $80 million in additional annual revenues.
On April 15, 1994, The Potomac Edison Company filed
with the Maryland Public Service Commission for a rate increase designed
to produce $31 million in additional annual revenues from its Maryland
customers. Also, on June 22, 1994, The Potomac Edison Company filed with
the Virginia State Corporation Commission for an increase in electric
rates that would result in about $12.5 million in additional revenues on
an annual basis when combined with interim rates now in effect (subject to
refund) from an earlier filing.
These increases, along with additional rate increase
requests to be filed in Ohio and at the Federal Energy Regulatory
Commission for wholesale customers, include recovery of the remaining
carrying charges on investment, depreciation, and operating costs required
to comply with Phase I of the CAAA, and other increasing levels of
expenses. It is expected that the subsidiaries will begin to receive
additional revenues from these rate cases on or about the time they begin
to incur additional depreciation and operating costs for the scrubbers to
be placed in service on or before January 1, 1995.
On August 2, 1994, West Penn Power Company sold $65
million of 30-year, 8-1/8% first mortgage bonds to repay outstanding
short-term debt and for general corporate purposes.
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On August 10, 1994, the Company's subsidiaries issued a
total of $35.295 million of 6-3/4%, 30-year solid waste disposal revenue
notes, the proceeds of which will be used on the Harrison Power Station
scrubber project.
In the normal course of business, the subsidiaries are
subject to various contingencies and uncertainties relating to their
operations and construction programs, including cost recovery in the
regulatory process, laws, regulations and uncertainties related to
environmental matters, and legal actions.
As previously reported, the subsidiaries are currently
named as defendants along with multiple other defendants in 2,252 pending
asbestos cases involving multiple plaintiffs, including 196 new cases
filed in the second quarter of 1994. While the cumulative number of
claims appears to be significant, previous cases have been settled for an
amount substantially less than the anticipated cost of defense, and it is
believed that more than half of the cases relate solely to other
defendants. The subsidiaries believe that the remaining cases involving
them are without merit and that provisions for liabilities are such that
these suits will not have a material effect on their financial position.
The subsidiaries previously reported that the
Environmental Protection Agency (EPA) had identified them and
approximately 875 others as potentially responsible parties in a Superfund
site subject to cleanup. A Remedial Investigation/Feasibility Study prepared
by the EPA indicates remedial alternatives which range as high as $113 million
to be shared by all responsible parties. The EPA has not yet selected which
remedial alternative it will use. The subsidiaries believe they have defenses
to allegations of liability and intend to vigorously defend this matter.
Although it is not possible at this time to determine what costs, if any, the
subsidiaries may incur, they have recorded provisions for liabilities based on
the range of remediation cost estimates and their relative participation, along
with the approximately 875 others. The subsidiaries believe that final
resolution of this matter will not have a material effect on their financial
position.
<PAGE>
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ALLEGHENY POWER SYSTEM, INC.
Part II - Other Information to Form 10-Q
for Quarter Ended June 30, 1994
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
(a) Date and kind of meeting:
At the annual meeting of stockholders held on May 12,
1994, votes were taken for the election of directors to serve until the
next annual meeting of stockholders, for the approval of the appointment
of Price Waterhouse as independent accountants, for a proposal to approve
the implementation of a performance share plan, and for a proposal to
require a report by the Company on the capital cost potential if standards
on carbon dioxide emissions are imposed. The total number of votes cast
was 91,719,464, with the following results:
<TABLE>
<CAPTION>
Nominees for Director Votes For Votes Withheld Broker Non-Votes
<S> <C> <C> <S>
Eleanor Baum 91,017,313 702,151 None
William L. Bennett 91,014,252 705,212 "
Klaus Bergman 91,050,223 669,241 "
Phillip E. Lint 90,854,280 865,184 "
Edward H. Malone 90,909,915 809,549 "
Frank A. Metz, Jr. 90,965,943 753,521 "
Steven H. Rice 91,049,566 669,898 "
Gunnar E. Sarsten 91,009,177 710,287 "
Peter L. Shea 91,019,099 700,365 "
</TABLE>
<TABLE>
<CAPTION>
Broker
Votes For Votes Against Abstentions Non-Votes
Approval of Independent
<S> <C> <C> <C> <S>
Accountants 90,334,316 742,422 642,726 None
Approval of Performance
Share Plan 82,074,977 7,654,447 1,990,038 None
Requirement for Carbon
Dioxide Emission
Standards Report 12,856,544 64,316,626 3,416,109 11,130,185
</TABLE>
ITEM 5. OTHER INFORMATION
On July 14, 1994, the Securities and Exchange
Commission authorized the Company to establish a new wholly-owned,
nonutility subsidiary company to be named AYP Capital, Inc. (AYP Capital)
and to invest up to $500,000 for its formation and preliminary development
activities, through 1996, directly or indirectly in new technologies that are
related to the Company's core business or in Exempt Wholesale Generators.
<PAGE>
- 13 -
As previously reported, the Consumer Advocate Division
of the Public Service Commission of West Virginia, Maryland People's
Counsel, and the Pennsylvania Office of Consumer Advocate filed a joint
complaint with the Federal Energy Regulatory Commission (FERC) challenging
Allegheny Generating Company's existing return on equity. On June 2,
1994, the FERC denied Allegheny Generating Company's motion to dismiss the
complaint, set an effective date of April 1, 1994 for any refund, and
ordered that a public hearing be held on the complaint.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(b) No reports on Form 8-K were filed on behalf of the
Company for the quarter ended June 30, 1994.
Signature
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
ALLEGHENY POWER SYSTEM, INC.
K. M. JONES
K. M. Jones, Vice President
(Chief Accounting Officer)
August 11, 1994
