File No. 70-8411
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
AMENDMENT NO. 1
TO
APPLICATION OR DECLARATION
ON
FORM U-1
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
ALLEGHENY POWER SYSTEM, INC.
12 EAST 49TH STREET
NEW YORK, NY 10017
(Name of company or companies filing this statement and addresses of
principal executive offices)
Allegheny Power System, Inc.
(Name of top registered holding company parent of each applicant or
declarant)
Nancy H. Gormley, Esq.
Vice President
Allegheny Power System, Inc.
Tower Forty-Nine
12 East 49th Street
New York, NY 10017
(Name and address of agent for service)
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1. Applicant hereby amends Item 1. Description of Proposed Transaction by
deleting in its entirety and substituting the following therefor:
Allegheny Power System, Inc. ("APS"), a registered holding company
under the Public Utility Holding Company Act of 1935 (the "Act"), requests
authority through December 31, 1996 to organize and finance a new wholly-
owned, non-utility subsidiary corporation to be named AYP Capital, Inc.
("AYP"). The activities of AYP would be primarily limited to investment
directly or indirectly in (1) companies in the area of emerging technologies
closely related to APS's core utility business, which are in the public
interest by promoting efficient and environmentally friendly means of
generating and using electricity, and (2) companies for the acquisition and
ownership of exempt wholesale generators ("EWGs"), as defined in Section 32 of
the Act, as amended by the Energy Policy Act of 1992. APS requests authority
through December 31, 1996 to invest up to $500,000 in AYP.
Request for Authority to Form AYP Capital, Inc.
APS requests authority to incorporate and operate AYP under the
laws of the State of Delaware, with an initial authorized capital of up to
1,000 shares of common stock with no par value. APS also requests authority
to subscribe to 100 shares of AYP common stock at a price of $10.00 per share.
APS further requests authority to fund AYP from time-to-time through December
31, 1996, by means of purchases of additional AYP stock or capital
contributions, in an aggregate amount not to exceed $500,000 (including
formation costs and the subscription cost of the common stock), without
further Securities and Exchange Commission ("Commission") approval. APS will
obtain funds for this purpose from the sale of APS common stock pursuant to
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its Dividend Reinvestment and Stock Purchase and Employee Stock Ownership and
Savings Plans, from its regular bank lines of credit or from internal sources.
APS will not guarantee any indebtedness of AYP. AYP will use such funds to
pursue appropriate investment opportunities in the area of emerging
technologies or in EWGs.
Initially, APS does not anticipate that AYP will have any paid
employees. Instead, personnel employed by Allegheny Power Service Corporation
("APSC"), a wholly-owned subsidiary of APS, will provide a wide range of
services on an as-needed basis to AYP pursuant to a service agreement to be
entered into between AYP and APSC. Under this service agreement, AYP will
reimburse APSC for the cost of services provided, computed in accordance with
Rules 90 and 91 of the Act, as well as applicable rules and regulations. All
time spent by APSC employees working for AYP will be billed to and paid by AYP
on a monthly basis.
AYP will maintain separate financial records and detailed
supporting records, including profit/loss statements. These records will be
available to any proper federal regulatory agency or state regulatory agency
for review. The accounting staff of APSC, pursuant to the service agreement
with AYP, will be responsible for record keeping and maintaining audit
procedures which are in compliance with generally accepted accounting
principles.
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If AYP acquires an interest in an EWG, it will use APSC employees
or other system employees within a de minimis limit to render services to any
affiliated EWGs. AYP will not use more than 2% of the total employees of all
of the other system domestic public utility companies at any one time for
rendering services to any affiliated EWGs.
Significant opportunities exist for investment by AYP in companies
that are developing new technologies closely related to APS's core utility
business, which are in the public interest by promoting efficient and
environmentally friendly means of generating and using electricity. In
addition, many opportunities exist for AYP to make investments in or to
finance the acquisition of EWGs which may be located within or without the
areas served by System Operating Companies.
The new technologies in which AYP may invest would have the
capability of improving or augmenting the operations of APS' operating
subsidiaries currently or in the future. The areas in which AYP investment
activity would be focused include:
* Energy conversion, storage and delivery technology;
* Conservation, load management, and demand side management
technologies, systems and services;
* Environmental and waste treatment technologies and services
related to electricity generation, transmission and
distribution (e.g. technologies for scrubbing of stack
emissions or disposal of fly ash wastes), or environmental
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technologies which use electric power as a key component in
their waste treatment process;
* Advanced computer hardware and software for use in the
generation, transmission and distribution (or planning
therefor) of electricity (including artificial
intelligence/neural net systems and components);
* Power-related electronic systems, control systems and
components; and
* Electronic automation systems and components, including
instrumentation, sensors, robotics and inspection
techniques.
AYP may invest directly in EWGs or in companies which are
developing emerging technologies relevant to APS's core utility business, or
AYP may seek experienced investment partners and may structure investment
vehicles with those partners to invest in EWGs or in such companies. Although
the exact form of any particular investment may vary, each one will be
structured in such a manner as to limit AYP's exposure to excessive
liabilities. If AYP or an investment vehicle chosen by AYP makes a direct
investment in an EWG or in such company, then AYP may have a role in the
business as though in the latter case it invested directly in it. At this
time, APS does not propose any specific investment or investment vehicles for
AYP and no investments shall be made by AYP without asking for and receiving
prior Commission approval. APS and AYP will not, without such further
Commission approval as may be required, engage in any financing for the future
acquisition by AYP of an EWG or any interest in an EWG.
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Except as described herein, no associate company or affiliate of
the Applicant or any affiliate of any such associate company has any material
interest, directly or indirectly, in the proposed transactions.
2. Applicant hereby amends Item 3. Applicable Statutory Provisions by
deleting it in its entirety and substituting the following therefor:
The Applicant has been advised that the proposed transactions, in
whole or in part, may be subject to Sections 9(a), 10, 12(b), 13(b) and 32 of
the Public Utility Holding Company Act of 1935 and Rules 45, 53, 87, 90 and 91
thereunder.
3. Applicant hereby amends Item 6. Exhibits and Financial Statements by
filing the following:
(b) Financial Statements as of March 31, 1994
1-A(i) APS and subsidiaries consolidated balance sheet,
per books.
1-B(i) APS and subsidiaries consolidated statements of
income, per books, and earned surplus.
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SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company
Act of 1935, the undersigned company has duly caused this statement to be
signed on its behalf by the undersigned thereunto duly authorized.
ALLEGHENY POWER SYSTEM, INC.
By: NANCY H. GORMLEY
Nancy H. Gormley
Counsel
Dated: April 26, 1994
CONTENTS
Statement
No.
Balance sheet at March 31, 1994:
Allegheny Power System, Inc. and Subsidiaries 1-A(i)
Statement of income and retained earnings for twelve
months ended March 31, 1994:
Allegheny Power System, Inc. and Subsidiaries 1-B(i)
These financial statements have been prepared for Form U-1
purposes and are unaudited.
Reference is made to the Notes to Financial Statements in the
Allegheny Power System companies combined Annual Report on
Form 10-K for the year ended December 31, 1993.
The income statements do not reflect any additional income from
investments which may be made with the proceeds from the
transactions set forth in this application-declaration.
<PAGE>
ALLEGHENY POWER SYSTEM, INC. AND SUBSIDIARIES Statement 1-A(i)
CONSOLIDATED BALANCE SHEET - MARCH 31, 1994
(Thousands)
Assets
Property, plant, and equipment:
At original cost, including $659,626,000
under construction 7,238,334
Accumulated depreciation (2,422,280)
Investments and other assets:
Subsidiaries consolidated--excess of cost
over book equity at acquisition 15,077
Securities of associated company--at cost,
which approximates equity 1,250
Other 24,431
Current assets:
Cash and temporary cash investments 4,269
Accounts receivable:
Electric service, net of $4,345,000
uncollectible allowance 224,405
Other 9,587
Materials and supplies--at average cost:
Operating and construction 90,997
Fuel 68,935
Prepaid taxes 55,176
Deferred power costs 9,449
Other 16,433
Deferred charges:
Regulatory assets 582,158
Unamortized loss on reacquired debt 43,660
Other 84,914
Total Assets 6,046,795
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ALLEGHENY POWER SYSTEM, INC. AND SUBSIDIARIES Statement 1-A(i)
(continued)
CONSOLIDATED BALANCE SHEET - MARCH 31, 1994
(Thousands)
Capitalization and Liabilities
Capitalization:
Common Stock:
Common stock of Allegheny Power System, 147,547
Inc. - $1.25 par value per share,
authorized 260,000,000 shares, out-
standing 118,037,427 shares (3,784,969
shares issued since April 1, 1993)
Other paid-in capital (net increase of 939,424
$95,044,000 since April 1, 1993)
Retained earnings 908,334
Preferred stock of subsidiaries:
Preferred stock - cumulative, par value
$100 per share; authorized 9,997,123
shares, outstanding 2,776,861 shares
Not subject to mandatory redemption
3.60% - 4.80% 65,086
$5.88 - $7.92 80,000
$8.00 - $8.80 65,000
Auction 2.52%-2.7% 40,000
Subject to mandatory redemption
$7.16 26,400
Long-term debt of subsidiaries 2,035,685
Current liabilities:
Short-term debt 122,504
Long-term debt and preferred stock
due within one year 11,200
Accounts payable 177,562
Taxes accrued:
Federal and state income 63,969
Other 42,221
Interest accrued 36,685
Other 89,529
Deferred credits and other liabilities:
Unamortized investment credit 164,247
Deferred income taxes 887,833
Regulatory liabilities 107,475
Other 36,094
Total Capitalization and Liabilities 6,046,795
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ALLEGHENY POWER SYSTEM, INC. AND SUBSIDIARIES Statement 1-B(i)
CONSOLIDATED STATEMENT OF INCOME FOR TWELVE MONTHS ENDED MARCH 31, 1994
(Thousands)
ELECTRIC OPERATING REVENUES 2,421,180
OPERATING EXPENSES:
Operation:
Fuel 547,526
Purchased power and exchanges, net 456,711
Deferred power costs, net (4,655)
Other 263,718
Maintenance 238,253
Depreciation 214,699
Taxes other than income taxes 181,959
Federal and state income taxes 137,696
Total Operating Expenses 2,035,907
Operating Income 385,273
OTHER INCOME AND DEDUCTIONS:
Allowance for other than borrowed funds
used during construction 12,110
Other income, net (275)
Total Other Income and Deductions 11,835
Income Before Interest Charges and
Preferred Dividends 397,108
INTEREST CHARGES AND PREFERRED DIVIDENDS:
Interest on first mortgage bonds 110,772
Interest on other long-term obligations 43,426
Other interest 7,191
Allowance for borrowed funds used during
construction (8,385)
Dividends on preferred stock of subsidiaries 17,053
Total Interest Charges and
Preferred Dividends 170,057
Consolidated Net Income 227,051
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Statement 1-B(i)
(continued)
ALLEGHENY POWER SYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
FOR TWELVE MONTHS ENDED MARCH 31, 1994
(Thousands)
Balance at April 1, 1993 870,878
Add:
Consolidated net income 227,051
1,097,929
Deduct:
Dividends on common stock of Allegheny
Power System, Inc. (cash) 189,589
Charge on redemption of preferred stock 6
Total Deductions 189,595
Balance at March 31, 1994 908,334
