File No. 70-7888
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
POST-EFFECTIVE AMENDMENT NO. 10
TO
FORM U-1
APPLICATION OR DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Allegheny Power System, Inc. Monongahela Power Company
Tower Forty Nine 1310 Fairmont Avenue
12 East 49th Street Fairmont, WV 26554
New York, NY 10017
Allegheny Power Service Corporation The Potomac Edison Company
800 Cabin Hill Drive 10435 Downsville Pike
Greensburg, PA 15601 Hagerstown, MD 21740
Allegheny Generating Company West Penn Power Company
Tower Forty Nine 800 Cabin Hill Drive
12 East 49th Street Greensburg, PA 15601
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, Esquire
Vice President
Allegheny Power Service Corporation
Tower Forty Nine
12 East 49th Street
New York, NY 10017
(Name and address of agent for service)
<PAGE>
1. Applicants hereby amend Item 1. Description of Proposed Transaction
by adding the following to the end thereof:
AYP Capital, Inc. ("AYP Capital") on February 6, 1996, filed an
application with the Federal Energy Regulatory Commission (the "FERC") to
certify the 50% interest in Fort Martin Unit No. 1 it is purchasing from
Duquesne Light Company as an Exempt Wholesale Generator ("EWG"). That request
is pending. Through prior Commission orders, AYP Capital has authority to
invest in EWGs. See HCAR Nos. 26085 and 26401, dated July 14, 1994 and
October 27, 1995.
AYP Capital expects to use the proceeds from the $235 million requested
increase for the purchase of Fort Martin ($181 million) and for other
activities previously authorized by Commission orders ($54 million).
Analysis Under Rule 53
Rule 53(a) provides that the SEC shall not make certain specified
adverse findings under Sections 7 and 12 in connection with a proposal by a
registered holding company (i) to issue or sell securities for the purpose of
financing the acquisition of an exempt wholesale generator ("EWG"), or (ii) to
guarantee the securities of an EWG, if each of the conditions in paragraphs
(a)(1) through (a)(4) thereof are met, provided that none of the conditions
specified in paragraphs (b)(1) through (b)(3) of Rule 53 exists. For purposes
of this analysis, we will assume that Allegheny Power System, Inc. ("APS")
will borrow $181 million to finance the purchase by its subsidiary AYP
Capital, Inc. ("AYP Capital") of Duquesne Light Company's 50% interest in Unit
No. 1 of Fort Martin Power Station (a proposed EWG). This analysis will also
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assume that APS will make an open account advance or capital contribution of
$181 million to AYP Capital for that purpose. Open account advances and cash
capital contributions are not subject to the limitations contained in Rule 53.
See Rules 45(b)(4) and 52.
AYP Capital is currently authorized under the terms of SEC Orders HCAR
26229 and 26401, issued February 3, 1995 and October 27, 1995, respectively,
to invest in one or more EWGs in an aggregate amount not to exceed $100
million at any one time outstanding. AYP Capital has an application pending
with the SEC to increase this authorized investment authority to an aggregate
amount not to exceed $300 million outstanding at any one time. See File No.
70-8411.
Assuming that AYP Capital's pending application in File No. 70-8411 is
approved, and assuming that APS borrows the entire purchase price ($181
million) for the Fort Martin EWG, then APS and AYP Capital would have
outstanding authority to invest, directly or indirectly, up to $481 million in
EWGs. However, even if the entire $481 million were invested in EWGs, all of
the conditions set forth in Rule 53(a) would be satisfied and none of the
conditions set forth in Rule 53(b) exist or, as a result thereof, would exist.
Rule 53(a)(1): Assuming that the entire $481 million "aggregate
investment" authority was invested in EWGs, it would on a pro forma basis
equal approximately 49% of the system's consolidated retained earnings -
$481,000,000 divided by $974,141,000, the average of the consolidated retained
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earnings of APS reported on Form 10-K or Form 10-Q, as applicable, for the
four consecutive quarters ended December 31, 1995.
Rule 53(a)(2): APS will maintain books and records and cause each
EWG or FUCO in which it directly or indirectly holds an interest to maintain
and make available the books and records required by Rule 53(a)(2).
Rule 53(a)(3): No more than 2% of the employees of APS' domestic
public utility subsidiaries will, at any one time, directly or indirectly,
render services to EWGs or FUCOs in which APS holds a direct or indirect
interest.
Rule 53(a)(4): APS will simultaneously submit a copy of all
Applications or Declarations on Form U-1 in which APS requests authority (i)
to issue or sell securities for the purpose of financing the acquisition of an
EWG or (ii) to guarantee the securities of an EWG, to each of the public
service commissions having jurisdiction over the retail rates of any affected
public utility subsidiary of APS. In addition, APS will submit copies of any
Rule 24 certificates in connection with such Application or Declaration, as
well as a copy of Item 9 and Exhibits G and H of APS' Form U5S (commencing
with the Form U5S filed for the first calendar year for which APS reports any
data under Item 9 or Exhibits G and H), to each of the public service
commissions having jurisdiction over the retail rates of any affected public
utility subsidiary of APS. No data was filed under Item 9 or Exhibits G or H
in APS' Form U5S for the calendar year 1994.
<PAGE>
In addition, APS states that the provisions of Rule 53(a) are not
made inapplicable by reason of the provisions of Rule 53(b).
Rule 53(b)(1): Neither APS nor any subsidiary of APS is the
subject of any pending bankruptcy or similar proceeding.
Rule 53(b)(2): APS' average consolidated retained earnings for
the four most recent quarterly periods ($974,141,000) represented an increase
in the average consolidated retained earnings of approximately $30,059,000 (or
3%) from the previous four quarterly periods ($944,082,000).
Rule 53(b)(3): For the year ended December 31, 1995, there were
no losses in connection with any direct or indirect investments in EWGs or
FUCOs.
2. Applicants hereby amend Item 4. Regulatory Approval by adding the
following to the end thereof:
An application has been filed with the State Corporation
Commission of Virginia for approval of the continuation of the Money Pool from
December 31, 1995 through December 31, 1997. No commission, aside from the
Securities and Exchange Commission, has jurisdiction over the proposed
increase in APS' short-term debt authority.
<PAGE>
3. Applicants hereby amend Item 6. Exhibits and Financial Statements
by adding the following:
(a) Exhibits
D-2-b Application to the Virginia State
Corporation Commission.
D-5-b Order of the Virginia State Corporation
Commission (to be filed by amendment).
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company
Act of 1935, the undersigned Applicants have duly caused this statement to be
signed on their behalf by the undersigned thereunto duly authorized.
ALLEGHENY POWER SYSTEM, INC.
ALLEGHENY POWER SERVICE CORPORATION
ALLEGHENY GENERATING COMPANY
MONONGAHELA POWER COMPANY
THE POTOMAC EDISON COMPANY
WEST PENN POWER COMPANY
By CAROL G. RUSS
Carol G. Russ
Counsel
Dated: March 15, 1996
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State Corporation Commission
of Virginia
Petition of The Potomac Edison *
Company for continuing approval * Case No. PUF96________
of a contract with affiliated *
interests *
Petition for Continuing Approval
Pursuant to Chapter 4 of Title 56 of the Code of Virginia, The
Potomac Edison Company ("PE") applies for continuing Commission
approval of a money pool agreement among PE and its affiliates in
the Allegheny Power System. In support for said request, PE
respectfully states as follows:
1. PE is a public service company incorporated under the
laws of Virginia and Maryland and is qualified to
transact business as a foreign corporation in West
Virginia and Pennsylvania. It provides electric service
in fourteen (14) northwestern Virginia counties as well
as in adjoining areas of West Virginia and Maryland.
2. PE's principal office and place of business is located at
10435 Downsville Pike, Hagerstown, Maryland 21740-1766.
3. The Allegheny Power System Money Pool (the Money Pool) is
a contract among affiliated Allegheny Power System
companies. It is an internal financing facility in which
the excess funds of some participants are used to satisfy
the short term borrowing needs of other participants. The
operation of the Money Pool is designed to match on a
daily basis, the available cash to the short term
<PAGE>
borrowing requirements of the participants, thereby
minimizing the need for short term borrowing. A copy of
the Money Pool contract is attached hereto as Exhibit A.
4. The Money Pool contract was submitted to and approved by
the Commission in Case No. PUF910006. Ordering paragraphs
2 and 3 of the Commission's Amending Order dated
January 24, 1992 in that case specifically approved the
Money Pool under Chapter 4 of Title 56 of the Code of
Virginia.
5. On July 26, 1993 PE filed an application pursuant to
Chapter 3 of Title 56 of the Code of Virginia requesting
approval for a proposed short term financing program. The
application was assigned as Commission Case
No. PUF930032. The short term financing program included
borrowings of three types: 1) borrowings from banks,
2) the issuance and sale of commercial paper to dealers;
and 3) borrowings under the terms of the Money Pool. PE
represented in its application that the Money Pool had
been previously reviewed and approved by the Commission
in Case No. PUF910006.
6. By Order dated August 18, 1993 in Case No. PUF930032, the
Commission approved PE's application under Chapter 3 of
Title 56 to borrow up to an aggregate amount of $115
million in short term debt through December 31, 1995,
under the terms and conditions and for the purposes set
<PAGE>
forth in its application.
7. As stated in prior applications, PE believes that by the
Commission's January 24, 1992 Amending Order in Case
No. PUF910006 it has acquired Commission approval under
Chapter 4 of Title 56 of the Virginia Code for the Money
Pool. Staff, on the other hand, interprets the
Commission's order dated August 18, 1993 in Case
No. PUF930032 as limiting the Commission's Chapter 4
approval of the Money Pool through December 31, 1995
only.
8. To the extent required and to eliminate any possible
confusion, PE hereby resubmits the Money Pool for
Chapter 4 approval in this case. The Money Pool is
unchanged from the agreement approved by the Commission
in Case No. PUF910006 and has been operating successfully
since its initial approval. PE respectfully refers the
Commission to the Petition for Consent and Approval dated
October 10, 1991 filed in Case No. PUF910006 for a more
detailed discussion of the terms and provisions of the
Money Pool.
9. As directed by the Commission's orders in both Case
Nos. PUF910006 and PUF930032, PE has been filing reports
of action with the Commission at the end of each calendar
quarter showing the amount, date and interest rate of
each investment in and withdrawal from the Money Pool and
<PAGE>
other details concerning its short term borrowing
activities. The Commission recently closed Case
No. PUF930032 by its Dismissal Order dated February 13,
1996.
Wherefore, for the reasons set forth herein and to the extent
necessary, PE requests that the Commission pass an order granting
its approval under Chapter 4 of Title 56 of the Virginia Code to
PE's continued participation with its affiliates in the Money Pool
attached hereto as Exhibit A.
Dated this 12th day of March, 1996.
The Potomac Edison Company
By: R. A. ROSCHLI
R. A. Roschli, Vice President
Attest:
EUGENE W. MCCAULEY, JR.
Eugene W. McCauley, Jr.
Assistant Secretary
PHILIP J. BRAY
Philip J. Bray, Esq.
The Potomac Edison Company Building
10435 Downsville Pike
Hagerstown, Maryland 21740
(301) 790-6283
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