File No. 70-8411
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
POST-EFFECTIVE AMENDMENT NO. 8
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
AYP CAPITAL, 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)
<PAGE>
Applicants hereby amend Item 1. Description of Transaction. in the
manner set forth below. All references are to text from Item 1. Description
of Transaction contained in Post-Effective Amendment No. 7. See Table of
Contents in Post-Effective Amendment No. 7 for ease of reference.
1. Applicants hereby amend Part I. Energy-Related Activities
by adding the following sentences after the first sentence under Section 1.
Activities.
"Special purpose subsidiaries" as used herein (for example, EMS
NEWCOs, Brokering NEWCOs, Technology NEWCOs, Telecommunications NEWCOs,
Environmental NEWCOs, Laboratory NEWCOs, Project NEWCOs, Factoring NEWCOs and
Real Estate NEWCOs) will be wholly-owned subsidiaries of AYP Capital. AYP
Capital proposes to organize these newly created corporations and to invest in
and provide funding for them up to the aggregate limits sought herein through
(1) acquisition of common stock, (2) capital contributions, and (3) loans and
the conversion of any such loans to capital contributions. When used herein,
the term NEWCOs[1] shall refer to these wholly-owned subsidiaries of AYP
Capital.
2. Applicants hereby amend Part I. Energy-Related Activities
by adding the following sentence after the last sentence under Section 1.(B)
Energy Management Services and Demand-Side Management Services:
AYP Capital requests that the Commission reserve jurisdiction with
respect to its request to provide customer financing for the purchase of
energy conservation, energy management and demand-side management services and
the purchase of equipment, pending completion of the record.
3. Applicants hereby amend Part I. Energy-Related Activities
by deleting the first full paragraph on page 8 following subparagraph (b)
Demand-Side Management Services under Section 1.(B) Energy Management
Services and Demand-Side Management Services which sets forth the cost
standard, and substituting the following paragraph:
AYP Capital requests that any energy management and demand-side
management services furnished by AYP Capital or EMS NEWCOs be furnished at
market prices pursuant to an exception from the requirements of Section 13(b)
and Rules 90 and 91 thereunder; provided that the ultimate consumer of such
goods or services is not an affiliate of AYP Capital, in which case they would
be provided at cost.
4. Applicants hereby amend Part I. Energy-Related Activities
by adding the following sentence after the last sentence under Section 1.(D)
Brokering of Energy-Related Commodities and Power Brokering, Power Marketing
and Related Activities:
[1]Project NEWCOs as used in Part II shall mean one or more companies engaged
directly or indirectly, and exclusively, in the business of owning and holding
the securities of "foreign utility companies" ("FUCOs") as defined in Section
33(a) of the Act and "exempt wholesale generators" ("EWGs"), as defined in
Section 32(a) of the Act.
<PAGE>
AYP Capital requests that the Commission reserve jurisdiction with
respect to the brokering of energy-related commodities, power brokering
services and power marketing activities as well as activities ancillary to the
foregoing, pending completion of the record.
5. Applicants hereby amend Part I. Energy-Related Activities
by adding the following sentence after the last sentence under Section
1.(F) Telecommunications Services:
AYP Capital requests that the Commission reserve jurisdiction with
respect to telecommunications systems and telecommunication services, pending
completion of the record.
6. Applicants hereby amend Part I. Energy-Related Activities
by adding the following paragraph before the last paragraph under Section
1.(G) Environmental Services:
In addition to the environmental audits, planning and design work,
construction and installation of equipment or systems all as outlined above,
AYP Capital or Environmental NEWCOs may provide customers with the following
environmental services:
Arrange for environmental studies (e.g. wetland studies) and
secure environmental permits;
Arrange for hazardous chemical testing and analysis (e.g.
water, PCBs, coal, lime, oils, and solvents);
Monitor environmental regulations and evaluate the impact of
such regulations on specific customers;
Maintain records of environmental compliance (e.g. materials
safety data sheets) and other miscellaneous environmental
reporting requirements; and
Arrange for the remediation of PCBs and other hazardous
chemicals from customer premises by a third party.
7. Applicants hereby amend Part I. Energy-Related Activities
by adding the following sentence after the last sentence under Section 1.(H)
Chemical Laboratory Services:
AYP Capital requests that the Commission reserve jurisdiction with
respect to the sale of chemical laboratory services, and similar services that
APS may develop in connection therewith, pending completion of the record.
8. Applicants hereby amend Part I. Energy-Related Activities by
adding the following sentences at the end of the first paragraph under Section
2, subsection (A) Investment in, and Financing of, AYP Capital:
Applicants propose to keep the aggregate investment authority for
Part I activities at $75 million outstanding at any one time. Although the
<PAGE>
Commission may reserve jurisdiction over certain activities contained in this
Application, Applicants suggest that the nature of the overall limit is such
that any one activity in Part I could take the full amount of the $75 million,
so long as there was not more than an aggregate of $75 million outstanding at
any one time.
9. Applicants hereby amend Part II. Other Activities by adding
the following paragraph at the end of Section (A) FUCOs, EWGs and Project
NEWCOs:
All services rendered by AYP Capital or Project NEWCOs to non-
affiliates will be based upon the fair market value thereof. AYP Capital and
Project NEWCOs also propose to provide such services and sell goods at fair
market prices to any associate EWG, FUCO or QF[2] and to Project NEWCOs which
are any of the foregoing, and request an exemption pursuant to Section 13(b)
from the requirements of Rules 90 and 91 as applicable to such transactions in
which any one or more of the following circumstances are met:
1. Such associate entity is a FUCO, or is an EWG which derives
no part of its income, directly or indirectly, from the generation,
transmission, or distribution of electric energy for sale within the United
States;
2. Such associate entity is an EWG which sells electricity at
market-based rates which have been approved by the Federal Energy Regulatory
Commission ("FERC") or the appropriate state public utility commission,
provided that the purchaser of such electricity is not an associate company of
AYP Capital within the APS System;
3. Such associate entity is a QF that sells electricity
exclusively (i) at rates negotiated at arms'-length to one or more industrial
or commercial customers purchasing such electricity for their own use and not
for resale, and/or (ii) to an electric utility company, other than any
associate company of AYP Capital within the APS System, at the purchaser's
"avoided cost" as determined in accordance with the regulations under PURPA;
or
4. Such associate entity is an EWG or QF that sells electricity
at rates based upon its cost of service, as approved by FERC or any state
public utility commission having jurisdiction, provided that the purchaser of
such electricity is not an associate company of AYP Capital within the APS
System.
10. Applicants hereby amend Part II. Other Activities by adding
the following sentence at the end of Section (B) Factoring or Securitization
of Accounts Receivable:
[2]QF is a qualifying facility as defined under the Public Utility Regulatory
Policies Act of 1978, as amended ("PURPA").
<PAGE>
AYP Capital requests that the Commission reserve jurisdiction with
respect to the securitization of accounts receivable, pending completion of
the record.
11. Applicants hereby amend Part II. Other Activities by adding
the following sentences at the end of the first paragraph under Section (C)
Real Estate Activities:
The system companies which currently own real estate that is not
in regulated rate base are Monongahela Power Company, The Potomac Edison
Company, West Penn Power Company, AP Coal Company and West Virginia Power &
Transmission Company. Managing the real estate portfolio by AYP Capital or a
Real Estate NEWCO may involve identifying non-productive real estate assets,
identifying and evaluating alternative uses for such assets, arranging for the
"best use" of those assets (i.e. sale, timbering, oil/gas drilling, and
mining), or monitoring the ongoing financial performance of the system's real
estate portfolio that is not in rate base.
The resources contained in or on system real estate which is not
in rate base include timber, oil, gas and coal. AYP Capital may explore
options and arrange for the logging of timber, drilling for oil and gas and/or
mining for coal on those properties.
12. Applicants hereby amend Part II. Other Activities by adding
the following paragraph at the end of Section (C) Real Estate Activities:
AYP Capital requests that the Commission reserve jurisdiction with
respect to the development of system real estate, pending completion of the
record.
13. Applicants hereby amend Part III. Transactions With
Associates And Accounting in the following manner:
(1) By adding the following sentence to the end of the fourth
paragraph:
At no time will AYP Capital or NEWCOs use in excess of 2% of the
total employees of all other Allegheny system domestic public utility
companies.
(2) By adding the following sentences to the end of the fifth
paragraph:
If AYP Capital utilizes Operating Company personnel, the Operating
Company personnel will maintain records (by work order) showing the time spent
in rendering services and the nature of the services. All charges for time
and associated incremental out-of-pocket expenses incurred by Operating
Company personnel working on behalf of AYP Capital will be billed to and paid
by AYP Capital on a monthly basis. Internal system controls, such as monthly
reviews of accounts, assure that charges will be paid by AYP Capital monthly.
14. Applicants hereby amend Part IV. Reporting by deleting it
in its entirety and substituting the following therefor:
<PAGE>
AYP Capital will provide, not later than 60 days following the end
of each calendar quarter and 120 days after the end of each calendar year, a
certificate of notification pursuant to Rule 24. Such certificates shall
include the following:
(1) An unaudited balance sheet and income statement for AYP
Capital and one for each NEWCO, when established;
(2) A narrative description of AYP Capital's activities during
the quarter just ended and a total of expenses organized by segment (i.e. QFs
and SPPs, Energy Management Services, New Technologies, FUCOs and EWGs,
Factoring of Accounts Receivable, Real Estate and others), and within each
segment, a narrative description of services rendered by project, and new
developments and updates by project type;
(3) Amounts and forms of: (i) guarantees of, and similar
provisions and arrangements concerning, performance and undertaking of other
obligations by AYP Capital, or any subsidiary of AYP Capital, which APS has
granted and are currently effective; and (ii) indemnifications of and with
respect to persons acting as sureties on bonds or other obligations on behalf
of AYP Capital, or any subsidiary of AYP Capital, which APS has granted and
are currently effective;
(4) A description of services provided to associate companies
which identifies the recipient company, the service, the charge to the
associate and whether the charge was computed at cost, market or pursuant to
another method, which method shall be specified;
(5) A description of the amount and type of each investment made
by AYP Capital in Technology Companies; and
(6) In connection with its factoring activities, (1) a balance
sheet as of the end of the year, statement of income for the twelve months
then ended and notes to the financial statements; (2) a listing of AYP
Capital's and each Factoring NEWCO's principal amount of borrowings
outstanding at the end of each year, which will contain the terms of each
obligation, name of lending institution and effective cost of borrowing;
(3) outstanding accounts receivable as of the end of each month, separated by
associate and non-associate companies with each non-associate company listed
separately and a detailed calculation of the annual discount for associate
companies; and (4) calculation by month of AYP Capital's consolidated earnings
coverage.
<PAGE>
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
Vice President
AYP CAPITAL, INC.
By: NANCY H. GORMLEY
Nancy H. Gormley
Counsel
Dated: August 24, 1995
U:\DUMP\AYP\POSTEFF8
