File No. 70-8411
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
POST-EFFECTIVE AMENDMENT NO. 12
TO
APPLICATION OR DECLARATION
ON
FORM U-1
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
ALLEGHENY POWER SERVICE CORPORATION
800 CABIN HILL DRIVE
GREENSBURG, PA 15601
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)
Thomas K. Henderson, Esq.
Allegheny Power Service Corporation
Tower Forty-Nine
12 East 49th Street
New York, NY 10017
(Name and address of agent for service)
1. Applicants hereby amend Item 6. Exhibits and Financial
Statements by filing the following:
D-4 Order of the Pennsylvania Public Utility Commission
D-6 Order of the West Virginia Public Service Commission
D-8 Order of the Federal Energy Regulatory Commission
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: CAROL G. RUSS
Carol G. Russ
Counsel
AYP CAPITAL, INC.
By: CAROL G. RUSS
Carol G. Russ
Counsel
ALLEGHENY POWER SERVICE CORPORATION
By: CAROL G. RUSS
Carol G. Russ
Counsel
Dated: May 30, 1996
U:\DUMP\AYP\POSTEF12
Exhibit D-4
COMMONWEALTH OF PENNSYLVANIA
PENNSYLVANIA PUBLIC UTILITY COMMISSION
P. O. BOX 3265, HARRISBURG, PA 17105-3265
March 12, 1996
AYP Capital, Inc. West Penn Power Company
c/o Theresa J. Colecchia c/o John L. Munsch
800 Cabin Hill Dr. 800 Cabin Hill Dr.
Greensburg, PA 15601 Greensburg, PA 15601
Re: Docket No. G-00960476
Dear Sir/Madam:
The request for affiliated interest approval dated January 11,
1996 at the above-captioned docket is deemed approved. Approval of the
agreement does not constitute a determination that the associated costs or
expenses are reasonable or prudent for the purposes of determining just and
reasonable rates. Also, approval is subject to the possibility of subsequent
audit and review pursuant to Section 2102, et seq. of the Public Utility Code,
66 Pa. C.S. Section 2102.
BY THE COMMISSION
JOHN G. ALFORD
John G. Alford
Secretary
Exhibit D-6
PUBLIC SERVICE COMMISSION
OF WEST VIRGINIA
CHARLESTON
At a session of the Public Service Commission of West Virginia in the City of
Charleston on the 9th day of April, 1996.
CASE NO. 96-0099-E-PC
MONONGAHELA POWER COMPANY AND
THE POTOMAC EDISON COMPANY
Petition for consent and approval of the
assignment of the interest of Duquesne Light
Company in Unit No. 1 of the Fort Martin Power
Station, the Fort Martin Construction and
Operating Agreement dated April 30, 1965,
and the Fort Martin Common Facilities
Operating Agreement dated November 14, 1968
to AYP Capital, Inc.
COMMISSION ORDER
On January 31, 1996, Monongahela Power Company (Mon Power) and The Potomac
Edison Company (PE) (collectively, the Companies) filed a Petition for consent
and approval of the assignment of the interest of Duquesne Light Company
(Duquesne) in Unit No. 1 of the Fort Martin Power Station, the Fort Martin
Construction and Operating Agreement dated April 30, 1965, and the Fort Martin
Common Facilities Operating Agreement dated November 14, 1968 to AYP Capital,
Inc. AYP).
On February 14, 1996 the Consumer's Advocate Division (CAD) of the Public
Service Commission filed its Petition to Intervene in this case.
On March 11, 1996, the CAD filed a Request for Hearing in this case raising
certain issues that it would like to have explored on the record including: (i)
the cost and valuation of the proposed transaction; (ii) the operation of the
plant after the substitution of AYP; (iii) the impact on the cost and
responsibility for coal supply at Fort Martin; (iv) the costing of transmission
services provided to AYP by Mon Power and PE; and (v) the availability of AYP
capacity at Fort Martin during times of need by native load customers of Mon
Power and PE.
On March 18, 1996, the Companies filed their Response to CAD's Request for
Hearing in which the Companies stated that due to the limited nature of the
inquiry in this case a hearing is not necessary. The Companies indicated that
they had contacted CAD and Commission Staff to suggest that they exchange
information in an attempt to resolve the CAD's issues in a form that could be
incorporated into the record of this proceeding. The Companies further
explained that CAD and Staff were in agreement with this proposal.
<PAGE>
On March 18, 1996, the Companies submitted an affiliated interest approval
granted by the Pennsylvania Public Utility Commission regarding the proposed
sale by Duquesne to AYP.
On March 27, 1996, the parties in this case submitted a Joint Motion and
Joint Stipulation of the Parties and requested that the Commission enter an
order approving the proposed assignments without a hearing. The joint
stipulation is attached hereto as Attachment A and incorporated herein.
DISCUSSION
Rule 12.6 of the Commission's Rules of Practice and Procedure provides the
basis by which parties may intervene in proceedings before the Commission. The
Commission has reviewed the petition to intervene filed by the CAD and is of the
opinion that the petitioner shall be granted intervenor status in this case.
The Commission has reviewed the terms of the Joint Motion and Joint
Stipulation of the Parties filed in this case and find that the Joint Motion
addresses each of the issues raised by the CAD in its Request for Hearing filed
in this case.
The Petition for approval of the various assignments specified above is
reasonable and should be granted.
FINDINGS OF FACT
1. The Companies seek approval of the assignment of the interest of
Duquesne in Unit NO. 1 of the Fort Martin Power Station, the Fort Martin
Construction and Operating Agreement dated April 30, 1965, and the Fort Martin
Common Facilities Operating Agreement dated November 14, 1968 to AYP.
2. The CAD file a Motion to Intervene in this case.
3. The issues raised by the CAD in its Request for Hearing have been
addressed in the Joint Motion and Joint Stipulation filed by all of the parties
in this case.
CONCLUSIONS OF LAW
1. CAD's petition to intervene should be granted.
2. The Petition for approval of the assignment of the interest of Duquesne
in Unit No. 1 of the Fort Martin Power Station, the Fort Martin Construction and
Operating Agreement dated April 30, 1965, and the Fort Martin Common Facilities
Operating Agreement dated November 14. 1068 to AYP is reasonable and should be
granted.
ORDER
IT IS, THEREFORE, ORDERED that the CAD's petition to intervene is hereby
granted.
<PAGE>
IT IS FURTHER ORDERED that the Companies' Petition for approval of the
assignment of the interest of Duquesne in Unit No. 1 of the Fort Martin Power
Station, the Fort Martin Construction and Operating Agreement dated April 30,
1965, and the Fort Martin Common Facilities Operating Agreement dated November
14, 1968 to AYP is hereby granted and that this case shall be dismissed from the
Commission's docket of active cases.
IT IS FURTHER ORDERED that the Commission's Executive Secretary shall serve
a copy of this order on all parties of record by First Class United States Mail,
and upon Commission Staff by hand delivery.
ARC.
A True Copy, Teste:
Howard M. Cunningham
Executive Secretary
<PAGE>
BEFORE THE WEST VIRGINIA PUBLIC SERVICE COMMISSION
CHARLESTON, WEST VIRGINIA
Petition of Monongahela Power Company and )
The Potomac Edison Company for consent and )
approval of the assignment of the interest of )
Duquesne Light Company in Unit No. 1 of the )
Fort Martin Power Station, the Fort Martin ) Case No. 96-0099-E-PC
Construction and Operating Agreement dated )
April 30, 1965, and the Fort Martin Common )
Facilities Operating Agreement dated )
November 14, 1968 to AYP Capital, Inc.) )
JOINT MOTION AND JOINT STIPULATION OF THE PARTIES
Pursuant to West Virginia Code Section 24-1-9 and Rule 13.4 of the
Commission's Rules of Practice and Procedure (CSR Section 150-1-13.4),
Monongahela Power Company (Monongahela), The Potomac Edison Company (Potomac
Edison) (collectively called the "Companies"), the Staff of the Public Service
Commission of West Virginia (Staff), and the Consumer Advocate Division of
the Public Service Commission of West Virginia (CAD), constituting all of the
parties to this proceeding, jointly move the Commission to accept and approve
this joint stipulation and in support thereof respectfully represent as follows:
Procedure
1. On January 31, 1996, Monongahela and Potomac Edison filed a petition
for approval of certain affiliated interests that would arise from the
assignment by Duquesne Light Company ("DQE") of all of its interest in Fort
Martin Unit No.1 to AYP Capital, Inc. ("AYP").
<PAGE>
2. On March 11, 1996, the CAD filed a request for hearing in the above
captioned matter, raising certain issues that CAD wished to have explored on the
record.
3. CAD, the Companies and Staff then agreed to attempt to reach a
stipulation on the issues raised by CAD which could then be incorporated into
the record of this case.
Facts
1. AYP agreed to purchase DQE's interest in Fort Martin Unit No. 1
following a competitive bidding process with other parties. The Companies
represent that they have been informed by DQE that the net value of DQE's
interest in Fort Martin carried on DQE's books is approximately $37,000,000.00.
AYP has agreed to pay $169,000,000.00 for DQE's interest.
2. After acquisition of DQE's share of Fort Martin Unit No. 1, the
Construction and Operating Agreement dated April 30, 1965 and the Common
Facilities Operating Agreement dated November 14, 1968 (collectively referred to
as the "Operating Agreements") will remain in place and AYP will simply step
into DQE's shoes under these agreements. Accounting for AYP's share of the
costs for Fort Martin Unit No. 1 will be carried out in the same manner as
it was for DQE. Fixed costs will be allocated based on proportion
of ownership share, and account 501 costs will be allocated on proportion of
energy used, in accordance with Paragraph 7 of the Construction and Operating
Agreement dated April 30, 1965.
3. The allocation for coal costs for Fort Martin Unit No. 1 will be based
on the average price of coal in the coal pile. The responsibility for coal
procurement at Fort Martin Unit No. 1 shall remain with Monongahela which is
<PAGE>
currently the Operating Company under the Operating Agreements.
4. Transmission services provided to AYP by the Companies shall be
provided under tariffs and service agreements filed with and accepted by the
Federal Energy Regulatory Commission.
5. Under section 32(k) of the Public Utility Holding Company Act of 1935
("PUHCA"), an exempt wholesale generator ("EWG") may not sell to regulated
affiliates unless the state commissions having authority over those affiliates
make certain specific findings. AYP will hold its interest in Fort Martin Unit.
No. 1 as an EWG, thus AYP cannot sell to the Companies without prior commission
approvals. At this time, AYP is not requesting such approvals, but may seek
them in the future.
WHEREFORE, based upon the joint motion and stipulated facts contained
herein, the parties respectfully request that the Commission make appropriate
findings of fact and conclusions of law consenting to and approving the
assignment of the interest of DQE in Unit No. 1 of the Fort Martin Power Station
and in the Operating Agreements unto AYP.
Respectfully submitted this day of , 1996.
Monongahela Power Company and
The Potomac Edison Company
By: EDWARD G. KENNEDY
Edward G. Kennedy
<PAGE>
Staff of the Public Service Consumer Advocate Division of the
Commission of West Virginia Public Service Commission of West
Virginia
By: CARYN WATSON SHORT By: BILLY JACK GREGG
Caryn Watson Short Billy Jack Gregg
Exhibit D-8
CAE-10
UNITED STATES OF AMERICA
FEDERAL ENERGY REGULATORY COMMISSION
Before Commissioners:
FTM Energy, Inc. ) Docket No. EG96-42-000
ORDER DISMISSING APPLICATION FOR EXEMPT WHOLESALE GENERATOR
STATUS WITHOUT PREJUDICE AND INTERPRETING SECTION 32 OF THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935, AS AMENDED
On February 6, 1996, FTM Energy Inc. (Applicant) filed an application
for a determination of exempt wholesale generator (EWG) status pursuant to
section 32 of the Public Utility Holding Company Act of 1935, as amended by
the Energy Policy Act of 1992 (PUHCA). [1]
Notice of the application was published in the Federal Register, [2]
with comments or interventions due on or before March 1, 1996. None was
filed.
Applicant has not satisfied all of the requirements of the Commission's
regulations implementing section 32 of PUHCA (see 18 C.F.R. Section 365.3(b)
(1995)), because it has failed to include with the application a determination
of the Pennsylvania Public Utilities Commission (Pennsylvania Commission) as
required by PUHCA section 32(c). Thus, we will dismiss the application
without prejudice to Applicant filing an application that includes the
required determination. We also interpret section 32 as not requiring the
Applicant to provide determinations from any other state commission.
I. The Facility
The eligible facility (Facility) will be an undivided 50 percent
interest in Ft. Martin Unit No. 1, a steam-electric generating unit (including
a 25 percent interest in the associated facilities of the unit and a second
unit located at the Ft. Martin Power Station, and an associated undivided 50
percent interest in Ft. Martin Unit No. 1's main transformers). The Ft.
Martin Power Station, of which the Facility is a part, is currently owned by
Duquesne Light Company (Duquesne) and by two
[1] 15 U.S.C. Section 79z-5a (1994).
[2] 61 Fed. Reg. 6,370 (1996).
<PAGE>
Docket No. EG96-42-000
affiliates of Applicant, Monongahela Power Company (Monongahela) and Potomac
Edison Company (PECO). [3]
The portion of the Ft. Martin Power Station that will be the Facility is
currently owned by Duquesne. [4] Under an agreement with Allegheny, Duquesne
will sell to Allegheny on or before December 31, 1996 all of its interest in
the Facility. Allegheny will then assign the agreement to Applicant. [5]
II. The Issues
We deal here with a portion of a facility that, under the terms of the
agreement, would be removed from existing rate base used to fix rates under
state law. Consequently, we can approve the application for EWG status only
if the requirements of PUHCA subsections 32(c) and (d) are met. There are two
issues presented, both of which relate to the requirement of PUHCA
[3] Applicant, Monongahela, and PECO are all affiliates of Allegheny Power
System, Inc. (Allegheny), a registered public utility holding company.
[4] Applicant states that, because the Facility will be a portion of an
already operating unit, the remainder of which is owned by electric
utility companies that are affiliates or associates of Applicant, the
"entire facility" is a "hybrid" facility as defined by PUHCA subsection
32(d).
Subsection 32(d) of PUHCA provides:
(d) HYBRIDS. -- (1) No exempt wholesale generator may
own or operate a portion of any facility in any other
portion of the facility is owned or operated by an electric
utility company that is an affiliate or associate company of
such exempt wholesale generator.
(2) ELIGIBLE FACILITY. -- Notwithstanding
paragraph (1), an exempt wholesale generator may own
or operate a portion of a facility identified in
paragraph (1) if such portion has become an eligible
facility as a result of the operation of subsection
(c).
[5] Under an operating agreement, Monongahela operates the main transformers
of the entire Ft. Martin Power Station for all of the joint owners, and will
continue to do so after the sale of Duquesne's interest to Allegheny and
Allegheny's assignment to Applicant.
<PAGE>
Docket No. EG96-42-000
subsection 32(c), regarding state consent for existing rate-based facilities.
[6] The first issue is which state determinations are required in the
circumstances presented in this application. In other words, is only the
consent of Pennsylvania required because only Duquesne's interest in the Ft.
Martin Power Station is to be the eligible facility; or are the consents of
Maryland, Ohio, Virginia and West Virginia also required because Monongahela
and PECO own an interest in the Ft. Martin Power Station? The second issue is
whether a state determination regarding an eligible facility must be included
with an EWG application.
III. Applicant's Arguments
Applicant states that Duquesne's 50 percent undivided interest in Ft.
Martin Unit No. 1 was included in its retail rate
[6] Section 32(c) provides:
(c) STATE CONSENT FOR EXISTING RATE-BASED
FACILITIES. -- If a rate or charge for, or in
connection with, the construction of a facility, or
for electric energy produced by a facility (other than
any portion of a rate or charge which represents
recovery of the cost of a wholesale rate or charge)
was in effect under the laws of any State as of the
date of enactment of this section, in order for the
facility to be considered an eligible facility, every
State commission having jurisdiction over any such
rate or charge must make a specific determination that
allowing such facility to be an eligible facility (1)
will benefit consumers, (2) is in the public interest,
and (3) does not violate State law; Provided, that in
the case of such a rate or charge which is a rate or
charge or an affiliate of a registered holding
company:
(A) such determination with respect to the
facility in question shall be required from every
State commission having jurisdiction over the retail
rates and charges of the affiliates of such registered
holding company; and
(b) the approval of the Commission under this
Act shall not be required for the transfer of the
facility to an exempt wholesale generator.
<PAGE>
Docket No. EG96-42-000
base, subject to the jurisdiction of Pennsylvania, on the date EPAct was
enacted. Thus, it recognizes that section 32(c) of PUHCA, prescribing a state
determination for existing rate-based facilities, applies. Allegheny and
another affiliate, West Penn Power Company (West Penn), have applied for the
required determination from the Pennsylvania Commission for the portion of the
Ft. Martin Power Station that is to be the eligible facility. Applicant
states that it has not yet received the order from Pennsylvania Commission,
but will forward it to the Commission when it is received.
Applicant argues that state determinations are not required with respect
to the portion of the Ft. Martin Power Station that will not be the eligible
facility. This portion was on the date of enactment of EPAct, and continues
to be, owned by Monongahela and PECO, whose retail rates are regulated under
the laws of Maryland, Ohio, Virginia and West Virginia. Applicant contends
that, under PUHCA section 32(c), only the rates for the portion of a hybrid
facility that is to become the eligible facility are subject to the
requirement for a state determination. Thus, Applicant believes that it does
not have to obtain the section 32(c) determinations from the State Commissions
of Maryland, Ohio, Virginia and West Virginia.
Applicant argues that the drafters of PUHCA section 32 wanted to ensure
that a utility would not be able to establish EWGs by transferring generating
assets from a franchised electric utility to an EWG affiliate unless the
transfer is authorized by the utility's state commission. It contends that
that concern is not present here because the sale of the assets from Duquesne
to Allegheny that will comprise the Facility is an arm's length transaction
between non-affiliated companies. The ratepayers of the companies affiliated
with Allegheny (Monongahela, PECO and West Penn) are not affected by the
sale, so determinations from the state commissions regulating their rates are
unnecessary.
Discussion
We agree with Applicant that state determinations are not required from
the Maryland, Ohio, Virginia and West Virginia Commissions regarding the non-
eligible facility portion of the Ft. Martin Power Station. The "rate of
charge" specified in section 32(c) is "a rate of charge . . . for electric
energy produced by a facility . . .in effect under the laws of any State as of
the date of enactment of this section . . ." We interpret the reference to a
"facility" as meaning a facility or portion thereof which will be an eligible
facility. [7] The
[7] Section 32(a)(2) of PUHCA states that the term "facility" within the term
"eligible facility" may include a portion of
(continued...)
<PAGE>
Docket No. EG96-42-000
only applicable rate or charge in connection with the portion of the Ft.
Martin Power Station that will become an eligible facility is that under the
laws of the State of Pennsylvania. Therefore, pursuant to section 32(c), the
only State commission having jurisdiction over that rate or charge (here, the
Pennsylvania Commission) must make the specific determination required by
section 32(c).
Finally, we will dismiss the application without prejudice because the
Applicant has not included the required section 32(c) determination of the
Pennsylvania Commission with its application. 18 C.F.R. Section 365.3(b)
clearly requires Applicant to file, with its application, the determination of
the Pennsylvania Commission.
By the Commission.
[SEAL]
LOIS D. CASHELL
Lois D. Cashell
Secretary
[7](...continued)
a facility subject to the limitations of section 32(d). See also
section 32(d)(2) recognizing that an EWG may be a portion of a larger
facility.
