<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM U5S
ANNUAL REPORT
For the year ended December 31, 1996
Filed pursuant to the
Public Utility Holding Company Act of 1935 by
ALLEGHENY POWER SYSTEM, INC.
10435 Downsville Pike
Hagerstown, Maryland 21740-1766
<PAGE>
- 1 -
FORM U5S - ANNUAL REPORT
For the Calendar Year 1996
ITEMS
ITEM 1. SYSTEM COMPANIES AND INVESTMENT THEREIN AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
Number of % of Issuer's Owner's
Type of Common Voting Book Book
Name of Company Company Shares Owned Power Value Value
(Thousands of Dollars)
<S> <S> <C> <C> <C> <C>
Allegheny Power System, Inc. (APS) Holding
Allegheny Power Service Corporation (APSC) Service 5,000 100 $ 50 $ 50
Monongahela Power Company (MP) Electric 5,891,000 100 512,212 512,212
The Potomac Edison Company (PE) Electric 22,385,000 100 678,116 679,581
West Penn Power Company (1) (WPP) Electric 24,361,586 100 962,752 976,364
West Virginia Power and
Transmission Company* (2) 30,000 100 3,874 3,871
West Penn West Virginia
Water Power Company* (3) 5 100 (3) 1
Unsecured debt 12 12
AYP Capital, Inc. (AYP) (4) 100 100 27,405 27,405
AYP Energy, Inc. (5) 100 100 1 1
Allegheny Communications Connect, Inc. (6) 100 100 1 1
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Subsidiaries of More Than One
System Company
Allegheny Generating Company (AGC) Generating
Owners:
Monongahela Power Company 270 27 54,798 54,798
The Potomac Edison Company 280 28 56,827 56,827
West Penn Power Company 450 45 91,330 91,330
Allegheny Pittsburgh Coal Company* (APC) (7)
Owners:
Monongahela Power Company 2,500 25 (3,149) (3,149)
Unsecured debt 3,495 3,495
The Potomac Edison 2,500 25 (3,149) (3,149)
Unsecured debt 3,617 3,617
West Penn Power Company 5,000 50 (6,297) (6,297)
Unsecured debt 7,061 7,061
</TABLE>
*Inactive
(1) Exempt from registration as a holding company under Section 3(a)
pursuant to Rule 2.
(2) Owns land for power development.
(3) Owns land for water power development.
(4) Unregulated nonutility
(5) Exempt wholesale generator and power marketer. See paragraph below.
(6) Exempt telecommunications company. See paragraph below.
(7) Owns coal reserves as a long-term resource.
****************
Allegheny Power System, Inc. owns 12-1/2% of the capital stock of Ohio
Valley Electric Corporation, which owns 100% of the capital stock of
Indiana-Kentucky Electric Corporation. These companies were formed
October 1, 1952, to build electric generating facilities to supply power
under a long-term contract to the Energy Research and Development
Administration's (formerly Atomic Energy Commission) uranium diffusion
project at Portsmouth, Ohio. See Holding Company Act Release No. 11578.
In 1994, APS formed a new subsidiary AYP Capital, Inc. (AYP). AYP,
incorporated in Delaware, is an unregulated, wholly owned nonutility. AYP
was formed in an effort to meet the challenges of the new competitive
environment in the industry. AYP Capital has two wholly owned subsidiaries
which were formed in 1996, AYP Energy, Inc. (AYP Energy) and Allegheny
Communications Connect, Inc.(ACC). AYP Energy is an exempt wholesale
generator and power marketer. ACC is an exempt telecommunications company
under the Public Utility Holding Company Act of 1935 (PUHCA). ACC's
purpose is to develop nonutility opportunities in the deregulated
communications market.
<PAGE>
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ITEM 2. ACQUISITIONS OR SALES OF UTILITY ASSETS.
Sold certain facilities to the Borough of Tarentum for $1,361,531.
ITEM 3. ISSUE, SALE, PLEDGE, GUARANTEE OR ASSUMPTION OF SYSTEM
SECURITIES.
None, except as reported in certificates filed pursuant to Rule
24, Form U-6B-2, Form 10-K 1996, and Schedules IX for Monongahela
Power Company, The Potomac Edison Company, and West Penn Power
Company.
<PAGE>
- 3 -
ITEM 4. ACQUISITION, REDEMPTION, OR RETIREMENT OF SYSTEM SECURITIES
Calendar Year 1996
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
Name of
Company
Acquiring,
Redeeming,
or Retiring Number of Shares or Principal Amount Commission
Name of Issuer and Title of Issue Securities Acquired Redeemed Retired Consideration Authorization
<S> <C> <C> <C> <S> <C>
The Potomac Edison Company:
5-7/8% First Mortgage Bonds PE $18,000 $18,000 $18,000 Rule 42
Monongahela Power Company:
5-1/2% First Mortgage Bonds MP $18,000 $18,000 $18,000 Rule 42
</TABLE>
<PAGE>
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ITEM 5. INVESTMENTS IN SECURITIES OF NON-SYSTEM COMPANIES.
1. Eight investments aggregating $112,685, one of which at
$82,000 is related to industrial development.
2. None
ITEM 6. OFFICERS AND DIRECTORS
Part 1. Names, principal business addresses, and positions of
executives, officers and directors of all system companies
as of December 31, 1996.
The following symbols are used in the tabulation:
CH - Chairman X - Member of Executive Committee
P - President A - Member of Audit Committee
SVP - Senior Vice President F - Member of Finance Committee
VP - Vice President O - Member of Operating Committee
T - Treasurer M - Member of Management Review
Committee
S - Secretary NB - Member of New Business
Committee
S - Member of Strategic Affairs
Committee
C - Controller df - Director's fees
D - Director s - Salary
<PAGE>
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<TABLE>
<CAPTION>
Item 6. OFFICERS AND DIRECTORS - continued
PART I. - Continued Allegheny The West
Allegheny Power Monongahela Potomac Penn
Power Service AYP Capital, Power Edison Power
System, Inc. Corporation Inc. Company Company Company
<S> <C> <C> <C> <C> <C> <C>
Eileen M. Beck S s S S S S S
10435 Downsville Pike
Hagerstown, MD
Klaus Bergman CH D F NB X df D X D D X D X D X
98 Cutter Mill Road
Great Neck, NY
Nancy L. Campbell VP T s VP T VP T T T T
10435 Downsville Pike
Hagerstown, MD
Richard J. Gagliardi VP s VP VP
10435 Downsville Pike
Hagerstown, MD
Thomas K. Henderson VP(1) s VP D VP VP VP
10435 Downsville Pike
Hagerstown, MD
Kenneth M. Jones VP C s VP VP D
10435 Downsville Pike
Hagerstown, MD
James D. Latimer s VP VP VP
10435 Downsville Pike
Hagerstown, MD
Michael P. Morrell SVP SVP s D VP D VP D VP D VP
10435 Downsville Pike
Hagerstown, MD
Alan J. Noia P D X F NB s CH P D X CH D P D CH X D CH X D CH X
10435 Downsville Pike
Hagerstown, MD
Jay S. Pifer SVP s SVP D VP P D O P D O P D O
800 Cabin Hill Drive
Greensburg, PA
Victoria V. Schaff VP(1) s VP
10435 Downsville Pike
Hagerstown, MD
Peter J. Skrgic SVP s SVP VP D D O VP VP D O D O VP
800 Cabin Hill Drive
Greensburg, PA
Eleanor Baum df D F M D df D df D df D
51 Astor Pl., NY, NY
William L. Bennett df D A NB S D df D df D df D
3501 Frontage Road
Tampa, FL
Wendell F. Holland df D A D df D df D df D
1025 Laurel Oak Road
Voorhees, NJ
Phillip E. Lint df D A F NB D df D df D df D
19 High Point Road S
Westport, CT
</TABLE>
(1) Effective 1-1-97
<PAGE>
- 6 -
<TABLE>
<CAPTION>
Item 6. OFFICERS AND DIRECTORS - continued
PART I. - Continued Allegheny The West
Allegheny Power Monongahela Potomac Penn
Power Service AYP Capital, Power Edison Power
System, Inc. Corporation Inc. Company Company Company
<S> <C> <C> <C> <C> <C> <C>
Edward H. Malone df D F D df D df D df D
5601 Turtle Bay Drive
Naples, FL
Frank A. Metz, Jr. df D F M X D X df D X df D X df D X
P. O. Box 26 S
Sloatsburg, NY
Steven H. Rice df D X F M D X df D X df D X df D X
50 Main Street S
White Plains, NY
Gunnar E. Sarsten df D NB M D df D df D df D
11436 Scarborough's S
Neck Rd., P. O. Box 459
Belle Haven, VA
Peter L. Shea df D A NB D df D df D df D
515 Madison Ave., NY, NY
Charles S. Ault s VP
800 Cabin Hill Drive
Greensburg, PA
David C. Benson VP s
800 Cabin Hill Drive
Greensburg, PA
Michael A. Dandrea VP s VP
800 Cabin Hill Drive
Greensburg, PA
C. Vernon Estel VP s
1310 Fairmont Avenue
Fairmont, WV
Donald R. Feenstra VP s
800 Cabin Hill Drive
Greensburg, PA
Thomas J. Kloc C s C C C C
10435 Downsville Pike
Hagerstown, MD
Karl V. Pfirrmann s VP VP VP
800 Cabin Hill Drive
Greensburg, PA
Thomas E. Wallace VP s
800 Cabin Hill Drive
Greensburg, PA
Robert R. Winter
800 Cabin Hill Drive s VP VP VP
Greensburg, PA
</TABLE>
<PAGE>
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<TABLE>
<CAPTION>
Item 6. OFFICERS AND DIRECTORS - continued
PART I. - Continued Allegheny The West
Allegheny Power Monongahela Potomac Penn
Power Service AYP Capital, Power Edison Power
System, Inc. Corporation Inc. Company Company Company
<S> <C> <C> <C> <C> <C> <C>
John D. Brodt
P. O. Box 468
Piketon, OH
William N. D'Onofrio
One Summit Square
Fort Wayne, IN
E. Linn Draper, Jr.
1 Riverside Plaza
Columbus, OH
Murray E. Edelman
P. O. Box 94661
Cleveland, OH
Coulter R. Boyle, III
One Summit Square
Fort Wayne, IN
David L. Hart
1 Riverside Plaza
Columbus, OH
Chris Hermann
P. O. Box 32030
Louisville, KY
Allen M. Hill
P. O. Box 1247
Dayton, OH
Willard R. Holland
76 S. Main Street
Akron, OH
J. Gordon Hurst
20 NW Fourth Street
Evansville, IN
David E. Jones
P. O. Box 468
Piketon, OH
John R. Jones, III
1 Riverside Plaza
Columbus, OH
William J. Lhota
1 Riverside Plaza
Columbus, OH
Gerald P. Maloney
1 Riverside Plaza
Columbus, OH
James J. Markowsky
1 Riverside Plaza
Columbus, OH
</TABLE>
<PAGE>
- 8 -
<TABLE>
<CAPTION>
Item 6. OFFICERS AND DIRECTORS - continued
PART I. - Continued Allegheny The West
Allegheny Power Monongahela Potomac Penn
Power Service AYP Capital, Power Edison Power
System, Inc. Corporation Inc. Company Company Company
<S> <C> <C> <C> <C> <C> <C>
Jackson H. Randolph
P. O. Box 960
Cincinnati, OH
Ronald G. Reherman
20 NW Fourth Street
Evansville, IN
Michael R. Whitley
1 Quality Street
Lexington, KY
</TABLE>
<PAGE>
- 9 -
<TABLE>
<CAPTION>
Item 6. OFFICERS AND DIRECTORS - continued
PART I. - Continued West Penn Indiana-
Allegheny Allegheny West Virginia West Virginia Ohio Valley Kentucky
Generating Pittsburgh Power and Water Power Electric Electric
Company Coal Company Transmission Company Corporation Corporation
<S> <C> <C> <C> <C> <C> <C>
Eileen M. Beck S S S
10435 Downsville Pike
Hagerstown, MD
Klaus Bergman
98 Cutter Hill Road
Great Neck, NY
Nancy L. Campbell T T T
10435 Downsville Pike
Hagerstown, MD
Richard J. Gagliardi
10435 Downsville Pike
Hagerstown, MD
Thomas K. Henderson D
10435 Downsville Pike
Hagerstown, MD
Kenneth M. Jones VP D D VP D
10435 Downsville Pike
Hagerstown, MD
James D. Latimer D VP
10435 Downsville Pike
Hagerstown, MD
Michael P. Morrell D VP D
10435 Downsville Pike
Hagerstown, MD
Alan J. Noia D CH P P D P D D X
10435 Downsville Pike
Hagerstown, MD
Jay S. Pifer VP D D VP P D
800 Cabin Hill Drive
Greensburg, PA
Victoria V. Schaff
10435 Downsville Pike
Hagerstown, MD
Peter J. Skrgic VP D D D D D X
800 Cabin Hill Drive
Greensburg, PA
Eleanor Baum
51 Astor Place, NY, NY
William L. Bennett
3501 Frontage Road
Tampa, FL
Wendell F. Holland
1025 Laurel Oak Road
Voorhees, NJ
Phillip E. Lint
19 High Point Road
Westport, CT
</TABLE>
<PAGE>
- 10 -
<TABLE>
<CAPTION>
Item 6. OFFICERS AND DIRECTORS - continued
PART I. - Continued
West Penn Indiana-
Allegheny Allegheny West Virginia West Virginia Ohio Valley Kentucky
Generating Pittsburgh Power and Water Power Electric Electric
Company Coal Company Transmission Company Corporation Corporation
<S> <C> <C> <C> <C> <C> <C>
Edward H. Malone
5601 Turtle Bay Drive
Naples, FL
Frank A. Metz, Jr.
P. O. Box 26
Sloatsburg, NY
Steven H. Rice
50 Main Street
White Plains, NY
Gunnar E. Sarsten
11436 Scarborough's Neck Rd.
P. O. Box 459
Belle Haven, VA
Peter L. Shea
515 Madison Ave., NY, NY
Charles S. Ault
800 Cabin Hill Drive
Greensburg, PA
David C. Benson
800 Cabin Hill Drive
Greensburg, PA
Michael A. Dandrea
800 Cabin Hill Drive
Greensburg, PA
C. Vernon Estel
1310 Fairmont Avenue
Fairmont, WV
Donald R. Feenstra
800 Cabin Hill Drive
Greensburg, PA
Thomas J. Kloc C C C C D
14035 Downsville Pike
Hagerstown, MD
Karl V. Pfirrmann
800 Cabin Hill Drive
Greensburg, PA
Thomas E. Wallace
800 Cabin Hill Drive
Greensburg, PA
Robert R. Winter VP D
800 Cabin Hill Drive
Greensburg, PA
</TABLE>
<PAGE>
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<TABLE>
<CAPTION>
Item 6. OFFICERS AND DIRECTORS - continued
PART I. - Continued
West Penn Indiana-
Allegheny Allegheny West Virginia West Virginia Ohio Valley Kentucky
Generating Pittsburgh Power and Water Power Electric Electric
Company Coal Company Transmission Company Corporation Corporation
<S> <C> <C> <C> <C> <C> <C>
John D. Brodt s S T S T
P. O. Box 468
Piketon, OH
William N. D'Onofrio D
One Summit Square
Fort Wayne, IN
E. Linn Draper, Jr. P D X P D X
1 Riverside Plaza
Columbus, OH
Murray E. Edelman D
P. O. Box 94661
Cleveland, OH
Coulter R. Boyle, III D
One Summit Square
Fort Wayne, IN
David L. Hart VP VP
1 Riverside Plaza
Columbus, OH
Chris Hermann D X
P. O. Box 32030
Louisville, KY
Allen M. Hill D
P. O. Box 1247
Dayton, OH
Willard R. Holland D X D X
76 S. Main Street
Akron, OH
J. Gordon Hurst D
20 NW Fourth Street
Evansville, IN
David E. Jones s VP VP
P. O. Box 468
Piketon, OH
John R. Jones, III D
1 Riverside Plaza
Columbus, OH
William J. Lhota
1 Riverside Plaza
Columbus, OH
Gerald P. Maloney VP VP
1 Riverside Plaza
Columbus, OH
James J. Markowsky D
1 Riverside Plaza
Columbus, OH
</TABLE>
<PAGE>
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Item 6. OFFICERS AND DIRECTORS - continued
PART I. - Continued
<TABLE>
<CAPTION>
West Penn Indiana-
Allegheny Allegheny West Virginia West Virginia Ohio Valley Kentucky
Generating Pittsburgh Power and Water Power Electric Electric
Company Coal Company Transmission Company Corporation Corporation
<S> <C> <C> <C> <C> <C> <C>
Jackson H. Randolph D X
P. O. Box 960
Cincinnati, OH
Ronald G. Reherman D D
20 NW Fourth Street
Evansville, IN
Michael R. Whitley D
1 Quality Street
Lexington, KY
</TABLE>
<PAGE>
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<TABLE>
<CAPTION>
Item 6. OFFICERS AND DIRECTORS (continued)
Part II. Financial connections of officers and directors as of December 31, 1996
Name of Officer Name and Location of Positions Held in Applicable
or Director Financial Institution Financial Institution Exemption Rule
<S> <C> <C> <C>
M. R. Edelman Key Corporation Director Pub. Utility Holding
Cleveland, OH Company Act
Section 3(a)(1)
A. M. Hill Citizens Federal Bank, Director No interlocking
F.S.B. authority required
Dayton, OH
William J. Lhota Huntington Director Rule 70(c) & (f)
Bancshares, Inc.
41 S. High Street
Columbus, OH
R. C. Menge Fort Wayne National Bank Director Rule 70 (a)(4)(c) & (d)
Fort Wayne National
Corporation Director Rule 70 (a)(4)(c) & (d)
Fort Wayne, IN
J. H. Randolph PNC Bank OH, N.A. Director Reg. 250.70 (e)
Cincinnati, OH
PNC Bank Corporation Director Reg. 250.70 (e)
Pittsburgh, PA
R. G. Reherman National City Bancshares Inc. Director No interlocking
Evansville, IN authority required
M. R. Whitley PNC Bank Kentucky Director No interlocking
Lexington, KY authority required
</TABLE>
<PAGE>
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ITEM 6. OFFICERS AND DIRECTORS (continued)
PART III. Disclosures for System companies are as follows:
(1) Allegheny Power System, Inc. (APS), Allegheny Power Service
Corporation (APSC), Monongahela Power Company (Monongahela and M), The
Potomac Edison Company (Potomac Edison and PE), West Penn Power Company
(West Penn and WP), and Allegheny Generating Company (AGC) sections of
the combined Annual Report on Form 10-K for 1996 of APS, M, PE, WP, and
AGC on pages 15 through 21 and of the APS Proxy Statement on pages 22
through 25. The executive officers of APS are also executive officers of
APSC and receive their compensation from APSC as shown on page 5 and
together with the directors owned beneficially 81,536 shares of common
stock of APS. APSC does not file a proxy statement or Form 10-K.
(2) Allegheny Pittsburgh Coal Company, West Virginia Power and
Transmission Company, and West Penn West Virginia Water Power Company
These companies do not file proxy statements or Form 10-K's. Their
directors and executive officers do not receive any compensation from
these companies, but receive compensation as employees of certain of the
companies as reported in (1) above.
(3) Ohio Valley Electric Corporation and Indiana-Kentucky Electric
Corporation. These companies do not file proxy statements or Form
10-K's. These companies are not wholly owned by Allegheny Power System,
Inc., or its subsidiaries (see page 1 of this Form U5S) and none of
their executive officers are employees of the Allegheny Power System
companies. Except for two executive officers whose compensation was
$199,043, directors and executive officers do not receive any
compensation from these companies. The compensation and interest in
System securities of directors who are employees of the Allegheny Power
System companies are reported in (1) above.
<PAGE>
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ITEM 6. Part III (continued)
(1) APS, AGC, M, PE, WPP
(from 1996 Form 10-K)
ITEM 11. EXECUTIVE COMPENSATION
During 1996, and for 1995 and 1994, the annual compensation
paid by the System companies, APS, APSC, Monongahela, Potomac Edison, West Penn
and AGC directly or indirectly for services in all capacities to such companies
to their Chief Executive Officer and each of the four most highly paid executive
officers of the System whose cash compensation exceeded $100,000 was as follows:
<TABLE>
<CAPTION>
Summary Compensation Tables (a)
APS(b), Monongahela, Potomac Edison, West Penn and AGC(c)
Annual Compensation
All
Name Other
and Long-Term Compen-
Principal Annual Perform- sation
Position(d) Year Salary($) Bonus($)(e) ance Plan($)(f) ($)(g)
<S> <C> <C> <C> <C> <C>
Alan J. Noia, 1996 360,000 253,750 131,071 92,769
Chief Executive Officer 1995 305,000 120,000 48,983
1994 236,336 57,000 47,867
Klaus Bergman, 1996 220,835 - 0 -(h) 239,327 119,258(i)
Chairman of the Board(h) 1995 515,000 187,500 63,677
1994 485,004 120,000 91,458
Peter J. Skrgic, 1996 245,000 176,300 96,119 24,830
Senior Vice President 1995 238,000 73,800 37,830
1994 213,336 50,000 57,253
Jay S. Pifer, 1996 230,000 112,000 87,381 30,949
Senior Vice President 1995 220,000 72,600 34,098
1994 189,996 39,000 50,630
Richard J. Gagliardi 1996 175,008 100,800 52,429 17,898
Vice President 1995 160,008 48,400 18,769
1994 142,008 32,500 19,655
Kenneth M. Jones 1996 175,500 62,000 52,429 25,688
Vice President 1995 168,000 43,200 28,217
1994 160,008 31,000 30,026
</TABLE>
(a) The individuals appearing in this chart perform policy-making
functions for each of the Registrants. The compensation shown is
for all services in all capacities to APS, APSC and the
Subsidiaries. All salaries and bonuses of these executives are
paid by APSC.
(b) APS has no paid employees.
(c) AGC has no paid employees.
(d) See Executive Officers of the Registrants for all positions held.
(e) Incentive awards are based upon performance in the year in which
the figure appears but are paid in the following year. The
incentive award plan will be continued for 1997.
<PAGE>
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ITEM 6. Part III (continued)
(1) APS, AGC, M, PE, WPP
(from 1996 Form 10-K)
(f) In 1994, the Boards of Directors of APS, APSC and the Operating
Subsidiaries implemented a Performance Share Plan (the "Plan") for
senior officers which was approved by the shareholders of APS at
the annual meeting in May 1994. The first Plan cycle began on
January 1, 1994 and ended on December 31, 1996. The figure shown
represents the dollar value to be paid to each of the named
executive officers who participated in Cycle I. A second cycle
began on January 1, 1995 and will end on December 31, 1997. A
third cycle began on January 1, 1996 and will end on December 31,
1998. A fourth cycle began on January 1, 1997 and will end on
December 31, 1999. After completion of each cycle, APS stock
or cash may be paid if performance criteria have been
met.
(g) Effective January 1, 1992, the basic group life insurance provided
employees was reduced from two times salary during employment,
which reduced to one times salary after 5 years in retirement, to a
new plan which provides one times salary until retirement and
$25,000 thereafter. Some executive officers and other senior
managers remain under the prior plan. In order to pay for this
insurance for these executives, during 1992 insurance was purchased
on the lives of each of them. Effective January 1, 1993, APS
started to provide funds to pay for the future benefits due under
the supplemental retirement plan (Secured Benefit Plan) as
described in note (d) on p. 18. To do this, APS purchased, during
1993, life insurance on the lives of the covered executives. The
premium costs of both the 1992 and 1993 policies plus a factor for
the use of the money are returned to APS at the earlier of (a)
death of the insured or (b) the later of age 65 or 10 years from
the date of the policy's inception. The figures in this column
include the present value of the executives' cash value at
retirement attributable to the current year's premium payment
(based upon the premium, future valued to retirement, using the
policy internal rate of return minus the corporation's premium
payment), as well as the premium paid for the basic group life
insurance program plan and the contribution for the 401(k) plan.
For 1996, the figure shown includes amounts representing (a) the
aggregate of life insurance premiums and dollar value of the
benefit to the executive officer of the remainder of the premium
paid on the Group Life Insurance program and the Executive Life
Insurance and Secured Benefit Plans, and (b) 401(k) contributions
as follows: Mr. Noia $88,269 and $4,500; Mr. Bergman $58,700 and
$4,500; Mr. Skrgic $20,330 and $4,500; Mr. Pifer $26,449 and
$4,500; Mr. Gagliardi $13,398 and $4,500; and Mr. Jones $21,188 and
$4,500, respectively.
<PAGE>
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ITEM 6. Part III (continued)
(1) APS, AGC, M, PE, WPP
(from 1996 Form 10-K)
(h) Mr. Bergman retired effective June 1, 1996 from his position as
Chief Executive Officer of APS and each Subsidiary. He will retire
from his position as Chairman of the Board effective May 8,
1997. Mr. Bergman did not receive an incentive award for 1996
because six months of service is required before an award may be
granted.
(i) Included in this amount is $56,058 representing accrued vacation
for which he was paid.
ALLEGHENY POWER SYSTEM PERFORMANCE SHARE PLAN
UNITS AWARDED IN LAST FISAL YEAR (CYCLE III)
<TABLE>
<CAPTION>
Estimated Future Payout
Performance Threshold Target Maximum
Number of Period Until Number of Number of Number of
Name Shares Payout Shares Shares Shares
<S> <C> <C> <C> <C> <C>
Alan J. Noia
Chief Executive Officer 6,114 1996-98 3,668 6,114 12,228
Peter J. Skrgic
Senior Vice President 4,367 1996-98 2,620 4,367 8,734
Jay S. Pifer
Senior Vice President 2,795 1996-98 1,677 2,795 5,590
Richard J. Gagliardi
Vice President 2,445 1996-98 1,467 2,445 4,890
Kenneth M. Jones
Vice President 1,747 1996-98 1,048 1,747 3,494
</TABLE>
The named executives were awarded the above number of shares for Cycle
III. Such number of shares are only targets. As described below, no payouts
will be made unless certain criteria are met. Each executive's 1996-1998 target
long-term incentive opportunity was converted into performance shares equal to
an equivalent number of shares of APS common stock based on the price of such
stock on December 31, 1995. At the end of this three-year performance period,
the performance shares attributed to the calculated award will be valued based
on the price of APS common stock on December 31, 1998 and will reflect dividends
that would have been paid on such stock during the performance period as if they
were reinvested on the date paid. If an executive retires, dies or otherwise
leaves the employment of Allegheny Power prior to the end of the three-year
period, the executive may still receive an award based on the number of months
worked during the period. However, an executive must work at least eighteen
months during the three-year period to be eligible for an award payout. The
final value of an
<PAGE>
- 18 -
ITEM 6. Part III (continued)
(1) APS, AGC, M, PE, WPP
(from 1996 Form 10-K)
executive's account, if any, will be paid to the executive in stock or cash in
early 1999.
The actual payout of an executive's award may range from 0 to 200% of
the target amount, before dividend re-investment. The payout is based upon
customer and stockholder performance factors and APS's rankings versus the peer
group. The combined customer and stockholder rating is then compared to a pre-
established percentile ranking chart to determine the payout percentage of
target. A ranking below 30% results in a 0% payout. The minimum payout begins
at the 30% ranking, which results in a payout of 60% of target, ranging up to a
payout of 200% of target if there is a 90% or higher ranking.
<TABLE>
<CAPTION>
DEFINED BENEFIT OR ACTUARIAL PLAN DISCLOSURE (a)
APS(b), Monongahela, Potomac Edison, West Penn and AGC (c)
Estimated
Name and Capacities Annual Benefits
In Which Served on Retirement (d)
<S> <C>
Alan J. Noia, $275,998
Chief Executive Officer (e)(f)
Klaus Bergman, $302,000
Chairman of the Board (e)(g)
Peter J. Skrgic, $159,005
Senior Vice President (e)(f)
Jay S. Pifer, $140,800
Senior Vice President(e)(f)
Richard J. Gagliardi
Vice President(e)(f) $111,075
Kenneth M. Jones
Vice President(e)(f) $102,938
</TABLE>
(a) The individuals appearing in this chart perform policy-making functions
for each of the Registrants.
(b) APS has no paid employees.
(c) AGC has no paid employees.
<PAGE>
- 19 -
ITEM 6. Part III (continued)
(1) APS, AGC, M, PE, WPP
(from 1996 Form 10-K)
(d) Assumes present insured benefit plan and salary continue and retirement at
age 65 with single life annuity. Under plan provisions, the annual rate
of benefits payable at the normal retirement age of 65 are computed by
adding (i) 1% of final average pay up to covered compensation times years
of service up to 35 years, plus (ii) 1.5% of final average pay in excess
of covered compensation times years of service up to 35 years, plus
(iii) 1.3% of final average pay times years of service in excess of 35
years. Covered compensation is the average of the maximum taxable
Social Security wage bases during the 35 years preceding the member's
retirement. The final average pay benefit is based on the member's
average total earnings during the highest-paid 60 consecutive calendar
months or, if smaller, the member's highest rate of pay as of any July
1st. Effective July 1, 1994 the maximum amount of any employee's
compensation that may be used in these computations was decreased to
$150,000. Benefits for employees retiring between 55 and 62 differ from
the foregoing.
Pursuant to a supplemental plan (Secured Benefit Plan), senior executives
of Allegheny Power System companies who retire at age 60 or over with 40
or more years of service are entitled to a supplemental retirement benefit
in an amount that, together with the benefits under the basic plan and
from other employment, will equal 60% of the executive's highest average
monthly earnings for any 36 consecutive months. The earnings include 50%
of the actual annual bonus paid effective February 1, 1996. The figures
shown do not give any effect to bonus payments. The supplemental benefit
is reduced for less than 40 years service and for retirement age from 60
to 55. It is included in the amounts shown where applicable. In order
to provide funds to pay such benefits, effective January 1, 1993 the
Company purchased insurance on the lives of the plan participants. The
Secured Benefit Plan has been designed that if the assumptions made as to
mortality experience, policy dividends, and other factors are realized,
the Company will recover all premium payments, plus a factor for the use
of the Company's money. The amount of the premiums for this insurance
required to be deemed "compensation" by the SEC is described and included
in the "All Other Compensation" column on page 52. All executive officers
are participants in the Secured Benefit Plan. The figures shown do not
include benefits from an Employee Stock Ownership and Savings Plan
(ESOSP) established as a non-contributory stock ownership plan for all
eligible employees effective January 1, 1976, and amended in 1984 to
include a savings program. Under the ESOSP for 1996, all eligible
employees may elect to have from 2% to 7% of their compensation
contributed to the Plan as pre-tax contributions and an additional 1% to
6% as post-tax contributions. Employees direct the investment of these
contributions into one or more available funds. Each System company
matches 50% of the pre-tax contributions up to 6% of compensation with
common stock of Allegheny Power System, Inc. Effective January 1, 1994
the maximum amount of any employee's compensation that may be used in
these computations was decreased to $150,000. Employees' interests
in the ESOSP vest immediately. Their pre-tax contributions may be
withdrawn only upon meeting certain financial hardship requirements or
upon termination of employment.
(e) See Executive Officers of the Registrants for all positions held.
(f) The total estimated annual benefits on retirement payable to Messrs. Noia,
Skrgic, Pifer, Gagliardi and Jones for services in all capacities to APS,
APSC and the Subsidiaries is set forth in the table.
(g) Mr. Bergman retired effective June 1, 1996 as Chief Executive Officer and
will retire effective May 8, 1997 as Chairman of the Board. The actual
amount he is receiving for service in all capacities to APS, APSC and
the Subsidiaries is set forth in the table.
Change In Control Contracts
In March 1996, APS entered into Change in Control contracts with
certain Allegheny Power executive officers (Agreements). Each Agreement
sets forth (i) the severance benefits that will be provided to the
employee in the event the employee is terminated subsequent to a Change
in Control of APS (as defined in the Agreements), and (ii) the
employee's obligation to continue his or her employment after the
occurrence of certain circumstances that could lead to a Change in
<PAGE>
- 20 -
ITEM 6. Part III (continued)
(1) APS, AGC, M, PE, WPP
(from 1996 Form 10-K)
Control. The Agreements provide generally that if there is a Change in
Control, unless employment is terminated by APS for Cause, Disability or
Retirement or by the employee for Good Reason (each as defined in the
Agreements), severance benefits payable to the employee will consist of
a cash payment equal to 2.99 times the employee's annualized
compensation and APS will maintain existing benefits for the employee
and the employee's dependents for a period of three years. Each
Agreement initially expires on December 31, 1997 but will be
automatically extended for one year periods thereafter unless either APS
or the employee gives notice otherwise. Notwithstanding the delivery of
such notice, the Agreements will continue in effect for thirty-six
months after a Change in Control.
Compensation of Directors
In 1996, APS directors who were not officers or employees of
System companies received for all services to System companies (a)
$16,000 in retainer fees, (b) $800 for each committee meeting attended,
except Executive Committee meetings, for which fees are $200, and (c)
$250 for each Board meeting of each company attended, and 200 shares of
APS common stock pursuant to the Restricted Stock Plan for Outside
Directors. Under an unfunded deferred compensation plan, a director may
elect to defer receipt of all or part of his or her director's fees for
succeeding calendar years to be payable with accumulated interest when
the director ceases to be such, in equal annual installments, or, upon
authorization by the Board of Directors, in a lump sum. Subsequent to
June 1, 1996, Mr. Bergman has received a fixed fee at the annual rate of
$100,000 for services in all capacities to APS and the Subsidiaries.
In addition to the fees mentioned above, the Chairperson of each
of the Audit, Finance, Management Review, New Business, and Strategic
Affairs Committees receives a further fee of $4,000 per year. The
outside Directors also were covered by a Directors' Retirement Plan
(Plan) in 1996 which provides an annual pension equal to the retainer
fee paid to the outside director at the time of his or her retirement,
provided the director was serving at December 5, 1996, has at least five
(5) years of service and, except under special circumstances described
in the Plan, serves until age 65. Directors elected after December 5,
1996 will not be covered under the Plan.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The table below shows the number of shares of APS common stock
that are beneficially owned, directly or indirectly, by each director
and named executive officer of APS, Monongahela, Potomac Edison, West
Penn, and AGC and by all directors and executive officers of each such
company as a group as of December 31, 1996. To the best of the
knowledge of APS, there is no person who is a beneficial owner of more
than 5% of the voting securities of APS.
<PAGE>
- 21 -
ITEM 6. Part III (continued)
(1) APS, AGC, M, PE, WPP
(from 1996 Form 10-K)
<TABLE>
<CAPTION>
Executive Shares of
Officer or APS Percent
Name Director of Common Stock of Class
<S> <C> <C> <C> <C>
Eleanor Baum APS,MP,PE,WP 2,400 Less than .01%
William L. Bennett APS,MP,PE,WP 3,050 "
Klaus Bergman APS,MP,PE,WP,AGC 12,207 "
Richard J. Gagliardi APS 4,852 "
Thomas K. Henderson MP,PE,WP,AGC 4,923 "
Wendell F. Holland APS,MP,PE,WP 573 "
Kenneth M. Jones APS,AGC 5,470 "
Phillip E. Lint APS,MP,PE,WP 1,033 "
Edward H. Malone APS,MP,PE,WP 1,868 "
Frank A. Metz, Jr. APS,MP,PE,WP 2,617 "
Michael P. Morrell APS,MP,PE,WP,AGC 0 "
Alan J. Noia APS,MP,PE,WP,AGC 13,263 "
Jay S. Pifer APS,MP,PE,WP 9,251 "
Steven H. Rice APS,MP,PE,WP 2,868 "
Gunnar E. Sarsten APS,MP,PE,WP 6,400 "
Peter L. Shea APS,MP,PE,WP 2,100 "
Peter J. Skrgic APS,MP,PE,WP,AGC 6,714 "
All directors and executive officers
of APS as a group (18 persons) 81,536 Less than .08%
All directors and executive officers
of MP as a group (23 persons) 100,119 "
All directors and executive officers
of PE as a group (22 persons) 99,491 "
All directors and executive officers
of WP as a group (22 persons) 100,108 "
All directors and executive officers
of AGC as a group (9 persons) 53,374 "
</TABLE>
All of the shares of common stock of Monongahela (5,891,000), Potomac Edison
(22,385,000), and West Penn (24,361,586) are owned by APS. All of the common
stock of AGC is owned by Monongahela (270 shares), Potomac Edison (280 shares),
and West Penn (450 shares).
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the relocation of the New York office,
Allegheny Power made available to each employee involved in the
relocation an interest-free loan of up to 95% of the appraised equity in
the employee's current residence for the purchase of a new residence.
The loan terms required repayment to Allegheny Power upon actual
relocation. In addition, relocating employees were reimbursed by
Allegheny Power for interest paid on a new mortgage until the actual
date of relocation. On October 10, 1995, Allegheny Power made an
interest-free loan in the amount of $215,000 to Richard J. Gagliardi, a
Vice President of APS. On December 7, 1995, Allegheny Power made an
interest-free loan in the amount of $75,000 to Thomas K. Henderson, a
Vice President of Monongahela, Potomac Edison and West Penn. On January
5, 1996, Allegheny Power made an interest-free loan in the amount of
$61,000 to Peter J. Skrgic, a Senior Vice President of APS and a Vice
President of Potomac Edison and AGC. On June 21, 1996, Allegheny Power
made an interest-free loan in the amount of $85,000 to Eileen M. Beck,
Secretary of APS, Monongahela, Potomac Edison, West Penn and AGC. All
outstanding balances on these loans were repaid in full in 1996.
<PAGE>
- 22 -
ITEM 6. Part III (continued)
(1) APS
(from 1997 Proxy Statement)
MANAGEMENT REVIEW COMMITTEE REPORT
GENERAL
The compensation program for executive officers of the Company
and its subsidiaries is directed by the Management Review Committee of
the Company's Board of Directors. The Committee recommends the annual
compensation program for each year to the Board of Directors of the
Company and of each subsidiary for its approval.
The Committee believes that with the advent of competition to
this industry a larger portion of compensation should be included in
incentive plans. For 1997, compensation will include more pay "at
risk."
The executive compensation program is intended to meet three
objectives:
Create a strong link between executive compensation and
total return to stockholders, reliable and economical
service to customers which assures customer
satisfaction, environmental stewardship, and System
financial stability, integrity, and overall performance.
Offer compensation opportunities that are competitive
above the median level of opportunity in the
marketplace, at expected levels of performance.
Ensure internal compensation equity-- maintaining a
reasonable relationship between compensation and the
duties and responsibilities of each executive position.
EXECUTIVE COMPENSATION PROGRAM
The Company's executive compensation program has three
components: salary and short-term and long-term incentive awards.
The Company's executive compensation is both market- and
performance-based. The Committee believes that it is necessary to use
both market- and performance-based compensation to meet the challenges
of intensifying competitive, economic, and regulatory pressures.
To ensure that the System's salary structure and total
compensation continue to be competitive, they are compared each year
through an annual compensation survey with those of comparable electric
utilities--20 or more in recent years. The survey companies are neither
<PAGE>
- 23 -
similar in type and size to the System, contiguous to our geographic
territory, or have a similar fuel mix.
In 1996, over 80% of these survey companies are included in the
Dow Jones Electric Index to which the Company's performance is compared
on page 14 of this proxy statement. This comparison, conducted by a
national compensation consulting firm, involves matching System
positions, including the Chief Executive Officer (CEO), with those in
the survey companies that have comparable duties and responsibilities.
For 1996, the survey indicated that the System's executive salary
structure was slightly below the median. This survey data became the
basis for the consulting firm's recommendations as to market prices for
each position and total compensation in line with the survey average for
comparable positions.
Base Salary
The base salaries of all executive officers, including the
CEO, are reviewed annually by the Committee, which makes
recommendation to the Board of Directors. In recommending base
salary levels, the Committee gives most weight to the performance
of each executive. The Committee receives a report from the CEO
including (a) the performance evaluation of each executive (other
than himself) based on that executive's position-specific
responsibilities and performance evaluation by his or her
supervisor, and (b)a specific salary recommendation for each. In
determining its recommendations to the Board, the Committee also
takes into consideration operating performance, including such
factors as safety, efficiency, competitive position, customer
satisfaction, and financial results, including such things as
total return, earnings per share, quality of earnings, dividends
paid, and dividend payout ration.
Annual Performance Incentive Plan:
The Allegheny Power System Annual Performance Incentive Plan
(the Incentive Plan) is designed to supplement base salaries and
provide cash incentive compensation opportunities to attract,
retain, and motivate a senior group of managers of Allegheny
Power including executive officers selected by the Management
Review Committee. The Incentive Plan provides for establishment
of individual incentive awards based on meeting specific
predetermined corporate performance targets. The performance
targets are based on net income available to common shareholders,
achieved shareholder return, overall corporate financial results
(changes in earnings per share, quality of earnings, dividends
paid per share and dividend payout ratios), cost of service to
customers and System performance, including competitive position.
In addition, personal performance goals as to operating factors
such as efficiency and safety are set on a position specific
basis for participants.
<PAGE>
- 24 -
Specific operating, management, or financial areas to be
emphasized, as well as performance targets, are determined each
year by the Committee with the recommendations of the CEO. If
the corporate performance targets are not met, no awards are
paid. The target awards under the 1996 Incentive Plan were
determined by the Committee, and participants could earn up to 1-
1/2 times the target award. For the 1996 Incentive Plan the
targets were $175,000 for Mr. Noia and from $50,000 to $125,000
for the other named officers. Targets for other participants
ranged from $50,000 to approximately 25% or less of 1996 base
salary. Incentive Plan awards earned are paid in the year after
the year for which they are earned. Awards earned for
performance in 1994, 1995, and 1996 are set forth in the Summary
Compensation Table for those years under the column "Incentive
Award" for the individuals named therein.
Performance Share Plan:
The Allegheny Power System Performance Share Plan (the
Performance Plan) is designed as an aid in attracting and
retaining individuals of outstanding ability and in rewarding
them for total shareholder return and continuous provision of
economical service to customers by the Company. Nine executive
officers of the Company were selected by the Management Review
Committee to participate in Cycle I (1994-1996); seven in Cycle
II (1995-1997); eleven in Cycle III (1996-1998); and twelve in
Cycle IV (1997-1999) of the Performance Plan. The Performance
Plan provides for the establishment of corporate incentive awards
based on meeting specific stockholder and customer performance
rankings (total stockholder return ranking in the Dow Jones
Electric Utility Index and cost of customer service versus nine
other utilities).
The Cycle I target awards under the Performance Plan ranged
from $30,000 for the named officers to $75,000 for Mr. Noia and
$170,000 for Mr. Bergman. These amounts would equate to 1,132 to
6,415 shares under the Plan. The actual award calculated under
the Plan equaled 125% of the target amount. The dollar value of
such shares calculated as of December 31, 1996, including
reinvested dividends, is included in the compensation table on
page 10.
The Cycle II target awards range from $25,000 to $100,000
for Mr. Noia. These amounts equate to 1,149 to 4,598 targeted
shares of stock as of January 1, 1995, the start of the
performance cycle. The Cycle III target awards range from
$25,000 to $175,000 for Mr. Noia, which equate to 873 to 6,114
shares under the Plan at January 1, 1996. The fourth cycle
became effective January 1, 1997, and provides target awards
ranging from $30,000 to $230,000 for Mr. Noia or 988 to 7,572
shares.
<PAGE>
- 25 -
The actual payouts will be determined in 1998 for Cycle II,
in 1999 for Cycle III, and in 2000 for Cycle IV, after completion
of each cycle and determination of the actual stockholder and
customer rankings. The actual awards will be paid in Company
stock and can range from 0 to 200% of the targeted shares noted
above, before including reinvested dividends.
The target opportunity and the corresponding number of
equivalent performance shares allocated to each named executive
officer for Cycle III are listed in the Performance Share Plan
Table on page 12.
For Mr. Noia, the Management Review Committee developed salary
and incentive award recommendations for the Board's consideration. The
base salary recommendation was based upon the Committee's evaluation of
his performance as Chief Operating Officer through May 1996 and as CEO
for the balance of the year, and of his responsibilities in the context
of the Company's overall financial and operating performance, including
the factors described in the next sentence, and the quality and cost of
service rendered to its customers. The incentive award recommendation
was based primarily on 1996 corporate financial results, including total
shareholder return, changes in earnings per share, quality of earnings,
dividends paid per share, and dividend payout ratios. The overall
quality and cost of service rendered to customers and overall Allegheny
Power performance, including competitive position, were also considered.
Mr. Noia's 1996 total compensation reflected the Committee's evaluation
of his performance as Chief Operating Officer and then as CEO, and the
described 1996 overall results.
The executive compensation program, which is annually reviewed
by the Committee and the Board, is intended to reward the individual
performance of each executive relative to the overall financial
performance of the Company, the service provided to customers, and its
cost. The program is further intended to provide competitive
compensation to help the Company attract, motivate, and retain the
executives needed to ensure continued stockholder return and reliable
and economical electric service to customers.
Section 162(m) of the Internal Revenue Code generally limits to
$1 million the corporate deduction for compensation paid to executive
officers named in the Proxy Statement, unless certain requirements are
met. This Committee has carefully considered the effect of this tax
code provision on the current executive compensation program. At this
time, Allegheny's deduction for officer compensation is not limited by
the provisions of Section 162(m). The Committee intends to take such
actions with respect to the executive compensation program, if
necessary, to preserve the corporate tax deduction for executive
compensation paid.
No current member of the Management Review Committee is or ever
was an employee of the Company or any of its subsidiaries.
Frank A. Metz, Jr., Chairman
Eleanor Baum
Steven H. Rice
Gunnar E. Sarsten
<PAGE>
- 26 -
ITEM 8. SERVICE, SALES AND CONSTRUCTION CONTRACTS
Calendar Year 1996
Part I. Between System Companies
<TABLE>
<CAPTION>
In Effect
Date of on Dec. 31
Transaction Serving Company Receiving Company Compensation Contract (Yes or No)
<S> <C> <C> <C> <C> <C>
Operating, maintenance, accounting, Mon Power Potomac Edison $233,377 5/29/73 Yes
supervisory, and other adminis- effective
trative or other services 5/31/74
West Penn Power Company has an Operational Service Contract with The Potomac
Edison Company (effective 12/23/77) for which the compensation was less than
$100,000 in 1996.
West Penn Power Company tests meters for The Potomac Edison Company. The
compensation for this service was $9,966 in 1996.
Part II. Between System Companies and others
In effect
Date of on Dec.31
Transaction Serving Company Receiving Company Compensation Contract (Yes or No)
Engineering, drafting American Electric Power Ohio Valley Electric $ 991,293 12/27/56 Yes
and other technical Service Corporation Corporation
and administrative
Engineering, drafting American Electric Power Indiana-Kentucky $1,125,296 12/27/56 Yes
and other technical Service Corporation Electric Corporation
and administrative
Maintenance Services Appalachian Power Ohio Valley Electric $ 612,845 1/1/79 Yes
Company Corporation
</TABLE>
Ohio Valley Electric Corporation has a Maintenance Service Contract (effective
7/10/69) with Cincinnati Gas & Electric Company, Indiana-Kentucky Electric
Corporation has an Operational Service Contract (effective 6/28/55) with
Indiana Michigan Power Company and a Maintenance Service Contract (effective
1/1/79) with Appalachian Power Company. The compensation for each of these
contracts was less than $100,000 in 1996.
Part III.
None.
<PAGE>
- 27 -
ITEM 9. FINANCIAL STATEMENTS AND EXHIBITS
FINANCIAL STATEMENTS
Financial statements are filed as listed on Page A of Appendix 1.
EXHIBITS
EXHIBIT A. Financial Statements incorporated herein by
reference are as follows:
The financial statements of Allegheny Power System, Inc. and its
subsidiaries, and of Monongahela Power Company, The Potomac Edison
Company, West Penn Power Company and its subsidiaries, and
Allegheny Generating Company, listed under ITEM 8 of their
combined Annual Report on Form 10-K for the year ended December
31, 1996, together with the reports of Price Waterhouse LLP with
respect thereto, all dated February 5, 1997 are incorporated in
this Annual Report by reference to such Annual Reports on Form
10-K.
*******************************************
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the foregoing incorporation by reference in
this Annual Report on Form U5S of our reports which apply to the
financial statements and schedules in the above-mentioned Annual
Report on Form 10-K.
/s/ Price Waterhouse
PRICE WATERHOUSE LLP
New York, New York
April 29, 1997
EXHIBIT B. Constituent instruments defining the rights of
holders of equity securities of system companies
are incorporated herein by reference as listed on
pages F-1 and F-2 of Appendix 2.
EXHIBIT C. Constituent instruments defining the rights of
holders of debt securities of System companies are
incorporated herein by reference as listed on pages
F-3 and F-4 of Appendix 2.
EXHIBIT D. Tax Allocation Agreement, dated June 13, 1963, as
amended November 3, 1993 and further amended
December 1, 1994, is incorporated by reference to
the Form U5S for 1994, Appendix 2, Exhibit D.
EXHIBIT E. None
EXHIBIT F. None
<PAGE>
- 28 -
SIGNATURE
The undersigned system company has duly caused this annual
report to be signed on its behalf by the undersigned thereunto
duly authorized pursuant to the requirements of the Public Utility
Holding Company Act of 1935.
ALLEGHENY POWER SYSTEM, INC.
/s/ Thomas K. Henderson
By
Thomas K. Henderson
Counsel for
Allegheny Power System, Inc.
Dated: May 1, 1997
<PAGE>
- 29 -
APPENDIX 1
CONSOLIDATING AND OTHER FINANCIAL STATEMENTS
(See Index on Page A)
<PAGE>
- 30 -
ALLEGHENY POWER SYSTEM, INC. AND SUBSIDIARY COMPANIES
INDEX TO APPENDIX 1--CONSOLIDATING AND OTHER FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Consolidating Statements Other Statements
Allegheny Power West Penn AYP Capital,
System, Inc. Power Company Inc. Indiana-Kentucky Ohio Valley
and Subsidiary and Subsidiary and Subsidiary Electric Electric
Companies Companies Companies Corporation Corporation
<S> <C> <C> <C> <C> <C>
Balance Sheets -
December 31, 1996 A-1, 2 B-1, 2 C-1, 2 D-1 D-4
Statements of Income -
Year ended December 31, 1996 A-3 B-3 C-3 D-2 D-5
Statements of Retained Earnings
and Other Paid-in Capital -
Year ended December 31, 1996 A-4 B-4 C-4 - -
Statements of Cash Flows
Year ended December 31, 1996 A-5 B-5 C-5 D-3 D-6
Long-Term Debt of Subsidiaries -
December 31, 1996 A-6, 7, 8 - - - -
</TABLE>
<PAGE>
- 31 - A-1
ALLEGHENY POWER SYSTEM, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATING BALANCE SHEET - DECEMBER 31, 1996
(000's)
<TABLE>
<CAPTION>
ASSETS APS APSC MP PE WPP Subtotal
(See page B-1)
<S> <C> <C> <C> <C> <C> <C>
Property, plant and equipment:
At original cost - 1,534 1,879,622 2,124,956 3,182,208 7,188,320
Accumulated depreciation - (1,282) (790,650) (791,257) (1,152,383)(2,735,572)
Investments and other assets:
Securities of subsidiaries
consolidated:
Common stock, at equity 2,180,534 - - - - 2,180,534
Excess of cost over book
equity at acquisition 15,077 - - - - 15,077
Investment in APC:
Common stock, at equity - - (3,149) (3,149) (6,297) (12,595)
Advances - - 3,495 3,617 7,061 14,173
AGC - common stock, at equity - - 54,798 56,827 91,330 202,955
Securities of associated
company 1,250 - - - - 1,250
Nonutility investment - - - - - -
Benefit plan's investments 63,197 - - - - 63,197
Other - 27 - 174 117 318
Current assets:
Cash and temporary cash
investments 5,425 83 2,290 1,444 5,160 14,402
Accounts receivable:
Electric service - - 67,564 96,795 128,764 293,123
Allowance for uncollectible
accounts - - (1,948) (1,580) (11,524) (15,052)
Affiliated and other 703 24,046 13,365 2,968 20,251 61,333
Notes receivable from
affiliates 2,415 - - - 2,900 5,315
Materials and supplies -
at average cost:
Operating and construction - - 19,785 23,775 34,011 77,571
Fuel - - 16,694 15,019 26,247 57,960
Prepaid taxes - - 18,332 17,649 20,688 56,669
Deferred income taxes - - 6,442 3,983 29,003 39,428
Other 66 342 4,250 3,779 7,492 15,929
Deferred charges:
Deferred power costs - - - - 7,211 7,211
Regulatory assets - - 171,692 94,919 284,099 550,710
Unamortized loss on
reacquired debt - - 15,256 18,010 10,990 44,256
Other 8 7,538 8,917 9,957 12,409 38,829
Total assets 2,268,675 32,288 1,486,755 1,677,886 2,699,737 8,165,341
</TABLE>
<PAGE>
- 32 - A-1a
ALLEGHENY POWER SYSTEM, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATING BALANCE SHEET - DECEMBER 31, 1996
(000's)
<TABLE>
<CAPTION>
APS Inc.
Combined Eliminations, Consolidated
ASSETS Subtotal APC AGC AYP Totals etc. Totals
(See page C-1)
<S> <C> <C> <C> <C> <C> <C> <C>
Property, plant and equipment:
At original cost 7,188,320 4,040 837,051 176,802 8,206,213 - 8,206,213
Accumulated depreciation (2,735,572) (16)(176,178) 1,744 (2,910,022) - (2,910,022)
Investments and other assets:
Securities of subsidiaries
consolidated:
Common stock, at equity 2,180,534 - - - 2,180,534 (2,180,534)(1) -
Excess of cost over book
equity at acquisition 15,077 - - - 15,077 - 15,077
Investment in APC:
Common stock, at equity (12,595) - - - (12,595) 12,595 (1) -
Advances 14,173 - - - 14,173 (14,173)(2) -
AGC - common stock, at equity 202,955 - - - 202,955 (202,955)(1) -
Securities of associated
company 1,250 - - - 1,250 - 1,250
Nonutility investment - - - 2,791 2,791 - 2,791
Benefit plan's investments 63,197 - - - 63,197 - 63,197
Other 318 - - - 318 - 318
Current assets:
Cash and temporary cash
investments 14,402 58 131 4,651 19,242 - 19,242
Accounts receivable:
Electric service 293,123 - - 2,083 295,206 - 295,206
Allowance for uncollectible
accounts (15,052) - - - (15,052) - (15,052)
Affiliated and other 61,333 - 1,337 12,705 75,375 (53,169)(3) 22,188
(18)(2)
Notes receivable from
affiliates 5,315 - - - 5,315 (5,315)(2) -
Materials and supplies -
at average cost:
Operating and construction 77,571 - 2,091 2,395 82,057 - 82,057
Fuel 57,960 - - 2,795 60,755 - 60,755
Prepaid taxes 56,669 - 3,861 2,175 62,705 (595)(12) 62,110
Deferred income taxes 39,428 - - - 39,428 - 39,428
Other 15,929 - 238 157 16,324 - 16,324
Deferred charges:
Deferred power costs 7,211 - - - 7,211 - 7,211
Regulatory assets 550,710 - 14,475 - 565,185 - 565,185
Unamortized loss on
reacquired debt 44,256 - 9,147 - 53,403 - 53,403
Other 38,829 12 255 17 39,113 (7,484)(11) 31,629
Total assets 8,165,341 4,094 692,408 208,315 9,070,158 (2,451,648) 6,618,510
</TABLE>
<PAGE>
- 33 - A-2
ALLEGHENY POWER SYSTEM, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATING BALANCE SHEET - DECEMBER 31, 1996
(000's)
<TABLE>
<CAPTION>
CAPITALIZATION AND LIABILITIES APS APSC MP PE WPP Subtotal
(see page B-2)
<S> <C> <C> <C> <C> <C> <C>
Capitalization:
Common stock of Allegheny
Power System, Inc. 152,300 - - - - 152,300
Common stock of affiliate
consolidated - - - - - -
Common stock of subsidiaries
consolidated - 50 294,550 447,700 465,994 1,208,294
Other paid-in capital 1,028,124 - 2,441 2,690 55,475 1,088,730
Retained earnings 988,667 - 215,221 227,726 441,283 1,872,897
Preferred stock of subsidiaries:
Not subject to mandatory
redemption - - 74,000 16,378 79,708 170,086
Long-term debt
(see pages A-6, A-7, A-8) - - 474,841 628,431 905,243 2,008,515
Notes and advances payable
to affiliates - - - - - -
Current liabilities:
Short-term debt 87,307 - 28,239 7,497 33,387 156,430
Long-term debt due
within one year - - 15,500 800 - 16,300
Notes payable to affiliates - - 2,900 - - 2,900
Accounts payable to affiliates 5,341 1,754 10,170 17,896 7,985 43,146
Accounts payable - others 5,796 9,750 12,997 33,152 74,229 135,924
Taxes accrued:
Federal and state income - 2,703 3,788 123 250 6,864
Other - 542 21,463 11,542 28,649 62,196
Interest accrued:
Affiliate - - - - - -
Other 696 - 8,234 9,412 15,741 34,083
Deferred power costs - - 12,419 319 10,107 22,845
Restructuring liability - 5,219 13,997 14,970 27,134 61,320
Other 86 7,966 13,613 13,405 21,341 56,411
Deferred credits and
other liabilities:
Unamortized investment credit - - 20,446 23,622 47,786 91,854
Deferred income taxes - - 225,841 183,727 429,122 838,690
Regulatory liabilities - - 18,553 13,906 33,302 65,761
Other 358 4,304 17,542 24,590 23,001 69,795
Total capitalization and
liabilities 2,268,675 32,288 1,486,755 1,677,886 2,699,737 8,165,341
</TABLE>
<PAGE>
- 34 - A-2a
ALLEGHENY POWER SYSTEM, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATING BALANCE SHEET - DECEMBER 31, 1996
(000's)
<TABLE>
<CAPTION>
APS Inc.
Combined Eliminations, Consolidated
CAPITALIZATION AND LIABILITIES Subtotal APC AGC AYP Totals etc. Totals
(See page C-2)
<S> <C> <C> <C> <C> <C> <C> <C>
Capitalization:
Common stock of Allegheny
Power System, Inc. 152,300 - - - 152,300 - 152,300
Common stock of affiliate
consolidated - 1 1 1 3 (3)(1) -
Common stock of subsidiaries
consolidated 1,208,294 - - - 1,208,294 (1,208,294)(1) -
Other paid-in capital 1,088,730 555 202,954 31,284 1,323,523 (295,399)(1) 1,028,124
Retained earnings 1,872,897 (13,150) - (3,880)1,855,867 (867,200)(1) 988,667
Preferred stock of subsidiaries:
Not subject to mandatory
redemption 170,086 - - - 170,086 - 170,086
Long-term debt
(see pages A-6, A-7, A-8) 2,008,515 - 228,634 160,000 2,397,149 - 2,397,149
Notes and advances payable
to affiliates - 14,173 - 13 14,186 (14,186)(2) -
Current liabilities:
Short-term debt 156,430 - - - 156,430 - 156,430
Long-term debt due
within one year 16,300 - 10,600 - 26,900 - 26,900
Notes payable to affiliates 2,900 2,415 - - 5,315 (5,315)(2) -
Accounts payable to affiliates 43,146 15 222 2,821 46,204 (46,204)(3) -
Accounts payable - others 135,924 - - 12,551 148,475 (1,744)(3) 147,161
Taxes accrued: 430 (12)
Federal and state income 6,864 80 - 229 7,173 - 7,173
Other 62,196 - - 900 63,096 (735)(12) 62,361
Interest accrued:
Affiliate - 5 - - 5 (5)(2) -
Other 34,083 - 4,709 1,838 40,630 - 40,630
Deferred power costs 22,845 - - - 22,845 - 22,845
Restructuring liability 61,320 - - - 61,320 (5,219)(3) 56,101
Other 56,411 - - 1,025 57,436 57,436
Deferred credits and
other liabilities:
Unamortized investment credit 91,854 - 49,665 - 141,519 - 141,519
Deferred income taxes 838,690 - 168,168 939 1,007,797 (7,484)(11) 1,000,023
(290)(12)
Regulatory liabilities 65,761 - 27,455 - 93,216 - 93,216
Other 69,795 - - 594 70,389 - 70,389
Total capitalization and
liabilities 8,165,341 4,094 692,408 208,315 9,070,158 (2,451,648) 6,618,510
</TABLE>
<PAGE>
- 35 - A-3
ALLEGHENY POWER SYSTEM, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENT OF INCOME FOR YEAR ENDED DECEMBER 31, 1996
(000's)
<TABLE>
<CAPTION>
APS APSC MP PE WPP Subtotal
<S> <C> <C> <C> <C> <C> <C>
Electric operating revenues: (see page B-3)
Residential - - 206,032 324,120 402,083 932,235
Commercial - - 121,631 146,432 224,663 492,726
Industrial - - 200,971 196,814 355,120 752,905
Wholesale and other,
including affiliates - 123,658 86,472 34,900 74,328 319,358
Bulk power transactions, net - - 17,365 24,495 32,930 74,790
Total operating revenues - 123,658 632,471 726,761 1,089,124 2,572,014
Operating expenses:
Operation:
Fuel - - 135,835 137,311 239,337 512,483
Purchased power and exchanges, net - - 101,596 141,029 126,908 369,533
Deferred power costs, net - - (3,053) 5,039 13,635 15,621
Other 1,046 117,628 76,101 89,753 151,642 436,170
Maintenance - 998 74,735 62,248 104,211 242,192
Restructuring charges and asset
write-offs - 344 24,300 26,094 53,343 104,081
Depreciation - 252 55,495 71,259 119,066 246,072
Taxes other than income taxes 1 4,181 40,417 45,809 90,132 180,540
Federal and state income taxes - 211 34,494 34,132 47,455 116,292
Total operating expenses 1,047 123,614 539,920 612,674 945,729 2,222,984
Operating income (1,047) 44 92,551 114,087 143,395 349,030
Other income and deductions:
Allowance for other than borrowed
funds used during construction - - 313 1,410 1,434 3,157
Other, net 215,669 36 6,831 11,791 13,439 247,766
Total other income
and deductions 215,669 36 7,144 13,201 14,873 250,923
Income before interest charges
and preferred dividends 214,622 80 99,695 127,288 158,268 599,953
Interest charges and preferred
dividends:
Interest on long-term debt - - 36,652 47,982 64,988 149,622
Other interest 4,575 80 1,950 2,214 6,084 14,903
Allowance for borrowed funds
used during construction - - (359) (1,083) (1,289) (2,731)
Dividends on preferred stock
of subsidiaries - - - - -
Total interest charges and
preferred dividends 4,575 80 38,243 49,113 69,783 161,794
Net income 210,047 - 61,452 78,175 88,485 438,159
</TABLE>
<PAGE>
- 36 - A-3a
ALLEGHENY POWER SYSTEM, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENT OF INCOME FOR YEAR ENDED DECEMBER 31, 1996
(000's)
<TABLE>
<CAPTION>
APS Inc.
Combined Eliminations, Consolidate
Subtotal APC AGC AYP Totals etc. Totals
<S> <C> <S> <C> <C> <C> <C> <C>
Electric operating revenues: (See page C-3)
Residential 932,235 - - 932,235 - 932,235
Commercial 492,726 - - 492,726 - 492,726
Industrial 752,905 - - 752,905 - 752,905
Wholesale and other,
including affiliates 319,358 - 83,402 14 402,774 (204,856)(4) 74,260
(123,658)(5)
Bulk power transactions, net 74,790 - - 733 75,523 75,523
Total operating revenues 2,572,014 - 83,402 747 2,656,163 (328,514) 2,327,649
Operating expenses:
Operation:
Fuel 512,483 - - 727 513,210 - 513,210
Purchased power and exchanges, net 369,533 - - - 369,533 (185,176)(4) 184,357
Deferred power costs, net 15,621 - - - 15,621 - 15,621
Other 436,170 - 3,865 1,383 441,418 (19,680)(4) 299,817
430 (12)
(122,351)(5)
Maintenance 242,192 - 1,300 820 244,312 (998)(5) 243,314
Restructuring charges and asset
write-offs 104,081 - - 129 104,210 (345)(5) 103,865
Depreciation 246,072 - 17,160 14 263,246 - 263,246
Taxes other than income taxes 180,540 - 4,801 767 186,108 (735)(12) 185,373
Federal and state income taxes 116,292 - 13,297 (2,189) 127,400 287 (8) 127,992
305 (12)
Total operating expenses 2,222,984 - 40,423 1,651 2,265,058 (328,263) 1,936,795
Operating income 349,030 - 42,979 (904) 391,105 (251) 390,854
Other income and deductions:
Allowance for other than borrowed
funds used during construction 3,157 - - - 3,157 - 3,157
287 (8)
428 (1)
(36)(5)
(120)(6)
Other, net 247,766 (184) 3 (566) 247,019 (771)(7) 4,370
441 (1)
(242,878)(9)
Total other income
and deductions 250,923 (184) 3 (566) 250,176 (242,649) 7,527
Income before interest charges
and preferred dividends 599,953 (184) 42,982 (1,470) 641,281 (242,900) 398,381
Interest charges and preferred
dividends:
Interest on long-term debt 149,622 - 15,235 1,838 166,695 (544)(7) 166,387
236 (12)
Other interest 14,903 120 958 - 15,981 (227)(7) 15,398
(120)(6)
(236)(12)
Allowance for borrowed funds
used during construction (2,731) - - - (2,731) - (2,731)
Dividends on preferred stock
of subsidiaries - - - - - 9,280 (10) 9,280
Total interest charges and
preferred dividends 161,794 120 16,193 1,838 179,945 8,389 188,334
Net income 438,159 (304) 26,789 (3,308) 461,336 (251,289) 210,047
</TABLE>
<PAGE>
- 37 - A-4
ALLEGHENY POWER SYSTEM, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF RETAINED EARNINGS AND OTHER PAID-IN CAPITAL
FOR YEAR ENDED DECEMBER 31, 1996
(000's)
<TABLE>
<CAPTION>
APS MP PE WPP Subtotal
RETAINED EARNINGS (see page B-4)
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1996 983,340 208,761 216,852 451,719 1,860,672
Add:
Net Income 210,047 61,452 78,175 88,485 438,159
Total 1,193,387 270,213 295,027 540,204 2,298,831
Deduct:
Dividends on common stock of
Allegheny Power System, Inc. 204,720 - - - 204,720
Dividends on capital stock
of subsidiary companies:
Preferred - 5,038 818 3,424 9,280
Common - 49,954 66,483 95,497 211,934
Total deductions 204,720 54,992 67,301 98,921 425,934
Balance at December 31, 1996 988,667 215,221 227,726 441,283 1,872,897
OTHER PAID-IN CAPITAL
Balance at January 1, 1996 995,701 2,441 2,690 55,475 1,056,307
Add (Deduct):
Excess of amounts received from
sales of common stock over
the par value thereof 32,423 - - - 32,423
Common stock dividends paid out
of other paid-in capital - - - - -
Other paid-in capital from
APS, Inc. - - - - -
Balance at December 31, 1996 1,028,124 2,441 2,690 55,475 1,088,730
</TABLE>
<PAGE>
- 38 - A-4a
ALLEGHENY POWER SYSTEM, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF RETAINED EARNINGS AND OTHER PAID-IN CAPITAL
FOR YEAR ENDED DECEMBER 31, 1996
(000's)
<TABLE>
<CAPTION>
APS Inc.
Combined Eliminations, Consolidated
Subtotal APC AGC AYP Totals etc. Totals
RETAINED EARNINGS (See page C-4)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1996 1,860,672 (12,846) 4,155 (572) 1,851,409 (868,069) 983,340
Add:
Net Income 438,159 (304) 26,789 (3,308) 461,336 (251,289) 210,047
Total 2,298,831 (13,150) 30,944 (3,880) 2,312,745 (1,119,358) 1,193,387
Deduct:
Dividends on common stock of
Allegheny Power System, Inc. 204,720 - - - 204,720 - 204,720
Dividends on capital stock
of subsidiary companies:
Preferred 9,280 - - - 9,280 (9,280)(10) -
Common 211,934 - 30,944 - 242,878 (242,878)(9) -
Total deductions 425,934 - 30,944 - 456,878 (252,158) 204,720
Balance at December 31, 1996 1,872,897 (13,150) - (3,880) 1,855,867 (867,200) 988,667
OTHER PAID-IN CAPITAL
Balance at January 1, 1996 1,056,307 555 209,999 1,837 1,268,698 (272,997) 995,701
Add (Deduct):
Excess of amounts received from
sales of common stock over
the par value thereof 32,423 - - 32,423 - 32,423
Common stock dividends paid out
of other paid-in capital - - (7,045) (7,045) 7,045 -
Other paid-in capital from
APS, Inc. - - - 29,447 29,447 (29,447)(1) -
Balance at December 31, 1996 1,088,730 555 202,954 31,284 1,323,523 (295,399) 1,028,124
</TABLE>
<PAGE>
- 39 - A-5
ALLEGHENY POWER SYSTEM, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF CASH FLOWS FOR YEAR ENDED DECEMBER 31, 1996
(000's)
<TABLE>
<CAPTION>
APS APSC MP PE WPP Subtotal
(see page B-5)
<S> <C> <C> <C> <C> <C> <C>
Cash Flows from Operations:
Net Income 210,047 * 61,452 78,175 88,485 438,159
Depreciation - - 55,495 71,259 119,066 245,820
Deferred investment credit and
income taxes, net - - 7,739 5,156 2,022 14,917
Deferred power costs, net - - (3,053) 5,039 13,635 15,621
Unconsolidated subsidiaries' dividends
in excess of earnings - - 3,100 3,211 5,191 11,502
Allowance for other than borrowed
funds used during construction (AOFDC) - - (313) (1,410) (1,434) (3,157)
Restructuring liability - - 13,735 15,801 25,879 55,415
Changes in other current assets
and liabilities:
Accounts receivable, net (680) (4,973) 4,357 (2,016) 23,671 20,359
Materials and supplies - - 5,125 6,768 8,847 20,740
Accounts payable 7,010 9,358 (9,969) 4,184 (14,809) (4,226)
Taxes accrued - 2,704 (3,565) (4,232) 4,622 (471)
Interest accrued 200 - (343) (226) (149) (518)
Other, net (15,630) (7,205) 12,898 1,769 (2,759) (10,927)
Total Cash Flows from Operations 200,947 (116) 146,658 183,478 272,267 803,234
Cash Flows from Investing:
Construction expenditures - 164 (72,578) (86,256) (130,606) (289,276)
AOFDC - - 313 1,410 1,434 3,157
Investments in subsidiaries (33,035) - - - - (33,035)
Nonutility Investments - - - - - -
Total Cash Flows from Investing (33,035) 164 (72,265) (84,846) (129,172) (319,154)
Cash Flows from Financing:
Sale of common stock 33,847 - - - - 33,847
Issuance of long-term debt - - - - - -
Retirement of long-term debt - - (18,500) (18,700) - (37,200)
Short-term debt, net 8,612 - 1,271 (14,140) (36,831) (41,088)
Notes receivable from affiliates (325) - - - (2,900) (3,225)
Dividends on capital stock:
Preferred stock - - (5,038) (818) (3,424) (9,280)
Common stock (204,720) - (49,954) (66,483) (95,497) (416,654)
Total Cash Flows from Financing (162,586) - (72,221) (100,141) (138,652) (473,600)
Net Change in Cash and Temporary
Cash Investments** 5,326 48 2,172 (1,509) 4,443 10,480
Cash and Temporary Cash Investments at
January 1 99 35 118 2,953 717 3,922
Cash and Temporary Cash Investments at
December 31 5,425 83 2,290 1,444 5,160 14,402
Supplemental cash flow information:
Cash paid during the year for:
Interest (net of amount capitalized) 3,806 7 37,190 47,580 65,149 153,732
Income taxes - 1,259 31,064 37,694 57,126 127,143
</TABLE>
*Pursuant to service contracts, Allegheny Power Service Corporation's expenses
($123,694) have been apportioned to System companies.
**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.
<PAGE>
- 40 - A-5a
ALLEGHENY POWER SYSTEM, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF CASH FLOWS FOR YEAR ENDED DECEMBER 31, 1996
(000's)
<TABLE>
<CAPTION>
APS Inc.
Combined Eliminations, Consolidated
Subtotal APC AGC AYP Totals etc. Totals
(See page C-5)
<S> <C> <C> <C> <C> <C> <C> <C>
Cash Flows from Operations:
Net Income 438,159 (304) 26,789 (3,308) 461,336 (251,289) 210,047
Depreciation 245,820 - 17,160 14 262,994 252 (5) 263,246
Deferred investment credit and
income taxes, net 14,917 - 10,898 939 26,754 (5,577)(5) 20,887
(290)(12)
Deferred power costs, net 15,621 - - - 15,621 - 15,621
Unconsolidated subsidiaries' dividends
in excess of earnings 11,502 - - - 11,502 (11,502) -
Allowance for other than borrowed
funds used during construction (AOFDC) (3,157) - - - (3,157) - (3,157)
Restructuring liability 55,415 - - 129 55,544 - 55,544
Changes in other current assets
and liabilities:
Accounts receivable, net 20,359 - 3,937 (14,726) 9,570 10,000 19,570
Materials and supplies 20,740 - (43) (5,190) 15,507 - 15,507
Accounts payable (4,226) 15 206 15,065 11,060 (9,321) 1,739
Taxes accrued (471) 9 (113) 1,129 554 (735)(12) (181)
Interest accrued (518) - (442) 1,838 878 - 878
Other, net (10,927) 9 (3,182) 28,989 14,889 (29,589) (8,780)
595 (12)
(252)(5)
5,577 (5)
Total Cash Flows from Operations 803,234 (271) 55,210 24,879 883,052 (292,131) 590,921
Cash Flows from Investing:
Construction expenditures (289,276) - (178) - (289,454) - (289,454)
AOFDC 3,157 - - - 3,157 - 3,157
Investments in subsidiaries (33,035) - - - (33,035) 33,035 -
Nonutility Investments - - - (180,245) (180,245) - (180,245)
Total Cash Flows from Investing (319,154) - (178) (180,245) (499,577) 33,035 (466,542)
Cash Flows from Financing:
Sale of common stock 33,847 - - - 33,847 - 33,847
Issuance of long-term debt - - - 160,000 160,000 - 160,000
Retirement of long-term debt (37,200) - (16,943) - (54,143) - (54,143)
Short-term debt, net (41,088) 324 - - (40,764) (3,224) (43,988)
Notes receivable from affiliates (3,225) - - - (3,225) 3,225 -
Dividends on capital stock:
Preferred stock (9,280) - - - (9,280) 9,280 -
Common stock (416,654) - (37,989) - (454,643) 249,923 (204,720)
Total Cash Flows from Financing (473,600) 324 (54,932) 160,000 (368,208) 259,204 (109,004)
Net Change in Cash and Temporary
Cash Investments** 10,480 53 100 4,634 15,267 108 15,375
Cash and Temporary Cash Investments at
January 1 3,922 5 31 17 3,975 (108) 3,867
Cash and Temporary Cash Investments at
December 31 14,402 58 131 4,651 19,242 - 19,242
Supplemental cash flow information:
Cash paid during the year for:
Interest (net of amount capitalized) 153,732 - 15,703 - 169,435 (235) 169,200
Income taxes 127,143 (180) 6,256 (1,182) 132,037 - 132,037
</TABLE>
*Pursuant to service contracts, Allegheny Power Service Corporation's expenses
($123,694) have been apportioned to System companies.
**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.
<PAGE>
A-6
ALLEGHENY POWER SYSTEM, INC.
Long-Term Debt of Subsidiaries at December 31, 1996
(000's)
<TABLE>
<CAPTION>
<S> <C> <C>
Date of Principal
First mortgage bonds: Issue Amount
Monongahela Power Company:
6-1/2% Series Due 1997 1967 15,000
5-5/8% Series Due 2000 1993 65,000
7-3/8% Series Due 2002 1992 25,000
7-1/4% Series Due 2007 1992 25,000
8-5/8% Series Due 2021 1991 50,000
8-1/2% Series Due 2022 1992 65,000
8-3/8% Series Due 2022 1992 40,000
7-5/8% Series Due 2025 1995 70,000
Total 355,000
Less current maturities 15,000
340,000
The Potomac Edison Company:
5-7/8% Series Due 2000 1993 75,000
8% Series Due 2006 1991 50,000
8-7/8% Series Due 2021 1991 50,000
8% Series Due 2022 1992 55,000
7-3/4% Series Due 2023 1993 45,000
8% Series Due 2024 1994 75,000
7-5/8% Series Due 2025 1995 80,000
7-3/4% Series Due 2025 1995 65,000
Total 495,000
West Penn Power Company:
5-1/2% Series JJ, Due 1998 1993 102,000
6-3/8% Series KK, Due 2003 1993 80,000
7-7/8% Series GG, Due 2004 1991 70,000
7-3/8% Series HH, Due 2007 1992 45,000
8-7/8% Series FF, Due 2021 1991 100,000
7-7/8% Series II, Due 2022 1992 135,000
8-1/8% Series LL, Due 2024 1994 65,000
7-3/4% Series MM, Due 2025 1995 30,000
Total 627,000
Total first mortgage bonds 1,477,000
Less current maturities 15,000
</TABLE>
<PAGE>
A-7
ALLEGHENY POWER SYSTEM, INC.
Long-Term Debt of Subsidiaries at December 31, 1996 (Cont'd)
(000's)
<TABLE>
<CAPTION>
Liability
Date of Date of Interest Due Within
Issue Maturity Rate One Year Long-Term
<S> <C> <C> <C> <C>
Debentures:
Allegheny Generating Company 9- 1-93 9- 1-23 6.875% 100,000
9- 1-93 9- 1-03 5.625% 50,000
150,000
Quarterly Income Debt Securities:
Monongahela Power Company 6-19-95 6-30-25 8.00 % 40,000
The Potomac Edison Company 6-30-95 6-30-25 8.00 % 45,457
West Penn Power Company 6-12-95 6-30-25 8.00 % 70,000
155,457
Secured notes:
Pleasants pollution control facilities:
Monongahela Power Company 11- 1-77 11-1-98 to 11-1-07 6.375% 14,500
11- 1-77 11- 1-12 6.375% 3,000
5-15-95 5- 1-15 6.150% 25,000
42,500
The Potomac Edison Company 11- 1-77 11-1-98 to 11-1-07 6.300 % 30,000
5-15-95 5- 1-15 6.150% 21,000
51,000
West Penn Power Company 11- 1-77 11-1-98 to 11-1-07 6.125% 45,000
5-15-95 5- 1-15 6.150% 31,500
76,500
Mitchell pollution control facilities:
West Penn Power Company 3- 1-93 3- 1-03 4.950 % 61,500
5-15-95 4- 1-14 6.050% 15,400
76,900
Fort Martin pollution control facilities:
Monongahela Power Company 4- 1-93 4- 1-13 5.950 % 7,050
The Potomac Edison Company 4- 1-93 4- 1-13 5.950 % 8,600
West Penn Power Company 4- 1-93 4- 1-13 5.950 % 7,750
23,400
Harrison pollution control facilities:
Monongahela Power Company 4-15-92 4-15-22 6.875% 5,000
5-1-93 5- 1-23 6.250% 10,675
7-15-94 8- 1-24 6.750% 8,825
24,500
The Potomac Edison Company 4-15-92 4-15-22 6.875% 6,550
5-1-93 5- 1-23 6.250% 13,990
7-15-94 8- 1-24 6.750% 11,560
32,100
West Penn Power Company 4-15-92 4-15-22 6.875% 8,450
5-1-93 5- 1-23 6.300% 18,040
7-15-94 8- 1-24 6.750% 14,910
41,400
Total secured notes 368,300
</TABLE>
<PAGE>
A-8
ALLEGHENY POWER SYSTEM, INC.
<TABLE>
<CAPTION>
Long-Term Debt of Subsidiaries at December 31, 1996 (Cont'd)
(000's) Liability
Date of Date of Interest Due Within
Issue Maturity Rate One Year Long-Term
<S> <C> <C> <S><C> <C> <C> <C> <C>
Unsecured notes:
Hatfield's Ferry pollution control
facilities:
Monongahela Power Company 2- 1-77 2-1-96 to 2-1-02 6.30 % 500 2,560
2- 1-77 2-1-03 to 2-1-07 6.40 % 1,000
2- 1-77 2-1-12 6.40 % 3,000
500 6,560
The Potomac Edison Company 2- 1-77 2-1-96 to 2-1-02 6.30 % 800 4,000
West Penn Power Company 2- 1-77 2-1-00 to 2-1-07 6.10 % 14,435
Total unsecured notes 1,300 24,995
Installment purchase obligations:
Monongahela Power Company -
Rivesville pollution control
facilities 4- 1-88 4- 1-98 6.875% 3,055
Willow Island pollution control
facilities 4- 1-88 4- 1-98 6.875% 10,145
Albright pollution control 4- 1-88 4- 1-98 6.875% 5,900
19,100
Medium-term notes:
Allegheny Generating Company Various 1997-1998 5.75-7.93% 10,600 60,000
AYP Energy, Inc. 10-31-96 10-31-01 6.780% 160,000
Commercial paper:
Allegheny Generating Company Various Various 7.00* 19,992
Unamortized debt discount and premium, net:
Monongahela Power Company (4,869)
The Potomac Edison Company (7,726)
West Penn Power Company (8,742)
Allegheny Generating Company (1,358)
Total unamortized debt discount and premium, net (22,695)
*Weighted average interest rate at December 31, 1996.
</TABLE>
<PAGE>
- 44 - B-1
WEST PENN POWER COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATING BALANCE SHEET - DECEMBER 31, 1996
(000's)
<TABLE>
<CAPTION>
West Virginia Power
and Transmission
Company and Subsidiary
West Virginia West Penn Consolidated
West Penn Power and West Virginia Totals
Power Transmission Water Combined Eliminations, (Carried to
ASSETS Company Company Power Company Totals etc. page A-1)
<S> <C> <S> <C> <S> <C>
Property, plant and equipment:
At original cost 3,179,804 2,394 10 3,182,208 - 3,182,208
Accumulated depreciation (1,152,383) - - (1,152,383) - (1,152,383)
Investments and other assets:
Securities of subsidiaries consolidated 2,445 1 - 2,446 (2,446)(1) -
Equity in undistributed earnings
of subsidiaries 1,425 - - 1,425 (1,425)(2) -
Indebtedness of subsidiary consolidated-
not current - 13 - 13 (13)(3) -
Investment in Allegheny Pittsburgh
Coal Company:
Common stock, at equity (6,297) - - (6,297) - (6,297)
Advances 7,061 - - 7,061 - 7,061
Investment in Allegheny Generating Company
Common stock, at equity 91,330 - - 91,330 - 91,330
Other 117 - - 117 - 117
Current assets:
Cash and temporary cash investments 3,541 1,619 - 5,160 - 5,160
Accounts receivable:
Electric service 128,764 - - 128,764 - 128,764
Allowance for uncollectible accounts (11,524) - - (11,524) - (11,524)
Affiliated and other 20,251 - - 20,251 - 20,251
Note receivable 2,900 - - 2,900 - 2,900
Materials and supplies - at average cost:
Operating and construction 34,011 - - 34,011 - 34,011
Fuel 26,247 - - 26,247 - 26,247
Prepaid taxes 20,688 - - 20,688 - 20,688
Deferred income taxes 29,003 - - 29,003 - 29,003
Other 7,491 1 - 7,492 - 7,492
Deferred charges:
Deferred power costs 7,211 - - 7,211 - 7,211
Regulatory assets 284,099 - - 284,099 - 284,099
Unamortized loss on reacquired debt 10,990 - - 10,990 - 10,990
Other 12,409 - - 12,409 - 12,409
Total assets 2,699,583 4,028 10 2,703,621 (3,884) 2,699,737
</TABLE>
<PAGE>
- 45 - B-2
WEST PENN POWER COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATING BALANCE SHEET - DECEMBER 31, 1996
(000's)
<TABLE>
<CAPTION>
West Virginia Power
and Transmission
Company and Subsidiary
West Virginia West Penn Consolidated
West Penn Power and West Virginia Totals
Power Transmission Water Combined Eliminations, (Carried to
CAPITALIZATION AND LIABILITIES Company Company Power Company Totals etc. page A-2)
<S> <C> <C> <C> <C> <C> <C>
Capitalization:
Common stock of West Penn Power Company 465,994 - - 465,994 - 465,994
Common stock of subsidiaries consolidated - 3,000 1 3,001 (3,001)(1) -
Other paid-in capital 55,475 (555) - 54,920 555 (1) 55,475
Retained earnings 441,283 1,428 (3) 442,708 (1,425)(2) 441,283
Preferred stock:
Not subject to mandatory redemption 79,708 - - 79,708 - 79,708
Long-term debt and QUIDS 905,243 - - 905,243 - 905,243
Indebtedness to affiliated consolidated -
not current - - 13 13 (13)(3) -
Current liabilities:
Short-term debt 33,387 - - 33,387 - 33,387
Accounts payable to affiliates 7,985 - - 7,985 - 7,985
Accounts payable - others 74,229 - - 74,229 - 74,229
Taxes accrued:
Federal and state income 250 - - 250 - 250
Other 28,550 99 - 28,649 - 28,649
Interest accrued 15,741 - - 15,741 - 15,741
Deferred power costs 10,107 - - 10,107 - 10,107
Restructuring liability 27,134 - - 27,134 - 27,134
Other 21,341 - - 21,341 - 21,341
Deferred credits and other liabilities:
Unamortized investment credit 47,786 - - 47,786 - 47,786
Deferred income taxes 429,122 - - 429,122 - 429,122
Regulatory liabilities 33,302 - - 33,302 - 33,302
Other 22,946 55 - 23,001 - 23,001
Total capitalization and liabilities 2,699,583 4,027 11 2,703,621 (3,884) 2,699,737
</TABLE>
<PAGE>
- 46 - B-3
WEST PENN POWER COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENT OF INCOME FOR YEAR ENDED DECEMBER 31, 1996
(000's)
<TABLE>
<CAPTION>
West Virginia Power
and Transmission
Company and Subsidiary
West Virginia West Penn Consolidated
West Penn Power and West Virginia Totals
Power Transmission Water Combined Eliminations, (Carried to
Company Company Power Company Totals etc. page A-3)
<S> <C> <S> <C> <S> <C>
Electric operating revenues:
Residential 402,083 - - 402,083 - 402,083
Commercial 224,663 - - 224,663 - 224,663
Industrial 355,120 - - 355,120 - 355,120
Wholesale and other, including affiliates 74,328 - - 74,328 - 74,328
Bulk power transactions, net 32,930 - - 32,930 - 32,930
Total operating revenues 1,089,124 - - 1,089,124 - 1,089,124
Operating expenses:
Operation:
Fuel 239,337 - - 239,337 - 239,337
Purchased power and exchanges, net 126,908 - - 126,908 - 126,908
Deferred power costs, net 13,635 - - 13,635 - 13,635
Other 151,642 - - 151,642 - 151,642
Maintenance 104,211 - - 104,211 - 104,211
Restructuring charges and asset write-offs 53,343 - - 53,343 - 53,343
Depreciation 119,066 - - 119,066 - 119,066
Taxes other than income taxes 90,132 - - 90,132 - 90,132
Federal and state income taxes 47,455 - - 47,455 - 47,455
Total operating expenses 945,729 - - 945,729 - 945,729
Operating income 143,395 - - 143,395 - 143,395
Other income and deductions:
Allowance for other than borrowed funds
used during construction 1,434 - - 1,434 - 1,434
Other, net 13,439 1,337 - 14,776 (1,337)(2) 13,439
Total other income and deductions 14,873 1,337 - 16,210 (1,337) 14,873
Income before interest charges 158,268 1,337 - 159,605 (1,337) 158,268
Interest charges:
Interest on long-term debt 64,988 - - 64,988 - 64,988
Other interest 6,084 - - 6,084 - 6,084
Allowance for borrowed funds used during
construction (1,289) - - (1,289) - (1,289)
Total interest charges 69,783 - - 69,783 - 69,783
Net income 88,485 1,337 - 89,822 (1,337) 88,485
</TABLE>
<PAGE>
- 47 - B-4
WEST PENN POWER COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF RETAINED EARNINGS AND OTHER PAID-IN CAPITAL
FOR YEAR ENDED DECEMBER 31, 1996
(000's)
<TABLE>
<CAPTION>
West Virginia Power
and Transmission
Company and Subsidiary
West Virginia West Penn Consolidated
West Penn Power and West Virginia Totals
Power Transmission Water Combined Eliminations, (Carried to
Company Company Power Company Totals etc. page A-4)
RETAINED EARNINGS
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1996 451,719 301 (3) 452,017 (298)(2) 451,719
Add:
Net Income 88,485 1,337 - 89,822 (1,337)(2) 88,485
Total 540,204 1,638 (3) 541,839 (1,635) 540,204
Deduct:
Dividends on capital stock of
West Penn Power Co.:
Preferred stock
4-1/2% 1,337 - - 1,337 - 1,337
4.20% Series B 210 - - 210 - 210
4.10% Series C 205 - - 205 - 205
Auction 1,672 - - 1,672 - 1,672
Common stock 95,497 210 - 95,707 (210)(2) 95,497
Total deductions 98,921 210 - 99,131 (210) 98,921
Balance at December 31, 1996 441,283 1,428 (3) 442,708 (1,425) 441,283
OTHER PAID-IN CAPITAL
Balance at December 31, 1996 55,475 (555) - 54,920 555 (1) 55,475
</TABLE>
<PAGE>
- 48 - B-5
WEST PENN POWER COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF CASH FLOWS FOR YEAR ENDED DECEMBER 31, 1996
(000's)
<TABLE>
<CAPTION>
West Virginia Power
and Transmission
Company and Subsidiary
West Virginia West Penn Consolidated
West Penn Power and West Virginia Totals
Power Transmission Water Combined Eliminations, (Carried to
Company Company Power Company Totals etc. page A-5)
<S> <C> <C> <S><C> <C> <C>
Cash Flows from Operations:
Net Income 88,485 1,337 - 89,822 (1,337)(2) 88,485
Depreciation 119,066 - - 119,066 - 119,066
Deferred investment credit and
income taxes, net 2,022 - - 2,022 - 2,022
Deferred power costs, net 13,635 - - 13,635 - 13,635
Unconsolidated subsidiaries' dividends
in excess of earnings 5,191 - - 5,191 - 5,191
Allowance for other than borrowed funds
used during construction (AOFDC) (1,434) - - (1,434) - (1,434)
Restructuring liability 25,879 - - 25,879 - 25,879
Changes in other current assets and
liabilities:
Accounts receivable, net 23,671 - - 23,671 - 23,671
Materials and supplies 8,847 - - 8,847 - 8,847
Accounts payable (14,809) - - (14,809) - (14,809)
Taxes accrued 4,618 4 - 4,622 - 4,622
Interest accrued (149) - - (149) - (149)
Other, net (2,605) (154) - (2,759) - (2,759)
Total Cash Flows from Operations 272,417 1,187 - 273,604 (1,337) 272,267
Cash Flows from Investing:
Construction expenditures (130,606) - - (130,606) - (130,606)
AOFDC 1,434 - - 1,434 - 1,434
Total Cash Flows from Investing (129,172) - - (129,172) - (129,172)
Cash Flows from Financing:
Notes receivable from affiliates (2,900) - - (2,900) - (2,900)
Short-term debt (36,831) - - (36,831) - (36,831)
Dividends on capital stock:
Preferred stock (3,424) - - (3,424) - (3,424)
Common stock (95,497) - - (95,497) - (95,497)
Total Cash Flows from Financing (138,652) - - (138,652) - (138,652)
Net Change in Cash and Temporary
Cash Investments*
Cash and Temporary Cash Investments at
January 1 3,256 1,187 - 4,443 - 4,443
</TABLE>
<PAGE>
- 49 -
WEST PENN POWER COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF CASH FLOWS FOR YEAR ENDED DECEMBER 31, 1996
(000's)
<TABLE>
<CAPTION>
(cont'd.)
<S> <C> <C> <S> <C> <S> <C>
Cash and Temporary Cash Investments at
December 31 283 434 - 717 - 717
3,539 1,621 - 5,160 - 5,160
Supplemental cash flow information:
Cash paid during the year for:
Interest (net of amount capitalized) 65,149 - - 65,149 - 65,149
Income taxes 56,677 449 - 57,126 - 57,126
</TABLE>
*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.
<PAGE>
- 50 -
INTERCOMPANY ELIMINATIONS AND RECLASSIFICATIONS - DECEMBER 31, 1996
Shown on Pages B-1, B-2, B-3, B-4, and B-5
(000's)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
(1)
Common stock of subsidiaries consolidated 3001
Securities of subsidiaries consolidated 2446
Other paid in capital 555
To eliminate in consolidation the par or stated value of intercompany investments.
See schedule below for details.
Par of stated Other
value of Paid-in Investment
Common Stock Capital Total
Company
Owned by West Penn Power Company:
West Virginia Power & Transmission Company 3,000 (555) 2,445
Owned by West Virginia Power & Transmission Company
West Penn West Virginia Water Power Company 1 - 1
3,001 (555) 2,446
(2)
Retained earnings - undistributed earnings of subsidiaries at January 1, 1996 298
Other income and deductions - other, net 1337
Investment in subsidiaries consolidated - equity in undistributed earnings 1,425
Common Stock dividend - WVP&T 210
To eliminate undistributed earnings of subsidiaries at January 1, 1996 and
net income and dividends for the year ended December 31, 1996
(3)
Indebtedness to affiliated consolidated - not current 13
Indebtedness of subsidiary consolidated - not current 13
To eliminate intercompany indebtedness
</TABLE>
<PAGE>
- 51 -
WEST PENN POWER COMPANY AND SUBSIDIARY COMPANIES
DATA FOR U5S
1996
(000's)
<TABLE>
<CAPTION>
Item 5 - Investment in Securities of Non-System Companies
Various Miscellaneous
RIDC Industrial Development Fund Capital Stock 8,200
Item 6 - Investments in System Securities
Value
Number Books Value
of Shares of to
Name of Owner Name of Issuer Security Owned Owned Issuer Owner
<S> <C> <C> <C> <C> <C>
West Penn Power Co. Allegheny Pittsburgh Coal Co. Capital Stock 5,000 (6,297) (6,297)
West Virginia Power &
Transmission Co. Capital Stock 30,000 3,874 3,871
Allegheny Generating Co. Capital Stock 450 91,330 91,330
88,907 88,904
West Virginia Power West Penn West Virginia
& Transmission Co. Water Power Co. Capital Stock 5 (3) 1
</TABLE>
<PAGE>
D-1
INDIANA-KENTUCKY ELECTRIC CORPORATION
BALANCE SHEET--DECEMBER 31, 1996
UNAUDITED
(000's)
<TABLE>
<CAPTION>
Assets
<S> <C>
Electric plant - at original cost, including $4,703,000
construction work in progress 391,472
Less - Accumulated provisions for depreciation and
amortization 319,262
72,210
Current assets:
Cash and cash equivalents 573
Accounts receivable 62
Coal in storage, at average cost 11,448
Coal sold under agreement to be repurchased 11,000
Materials and supplies, at average cost 8,474
Interest receivable 1
Prepaid expenses and other 582
32,140
Deferred charges and Other:
Future federal income tax benefits 51,005
Unrecognized postemployment benefits 733
Unrecognized pension expense 4676
Unrecognized postretirement benefits 17324
Deferred depreciation - coal switch 4,131
Prepaids and other 571
78,440
TOTAL ASSETS 182,790
Capitalization and Liabilities
Capitalization:
Common stock, without par value, stated
at $200 per share -
Authorized - 100,000 shares
Outstanding - 17,000 shares 3,400
Current liabilities:
Accounts payable 12,311
Coal purchase obligation 11,000
Accrued taxes 2,722
Accrued interest and other 1,963
27,996
Deferred credits:
Accrued pension liability 4,676
Customer advances for construction 4,017
Advances from parent - construction 70,549
Antitrust settlement 2,595
Deferred credit-tax benefit obligation 51,005
Postretirement benefits obligation 17,324
Postemployment benefits obligation 733
Deferred credit - allowances 495
151,394
TOTAL CAPITALIZATION AND LIABILITIES 182,790
</TABLE>
<PAGE>
D-2
INDIANA-KENTUCKY ELECTRIC CORPORATION
STATEMENT OF INCOME
FOR YEAR ENDED DECEMBER 31, 1996
UNAUDITED
(000's)
Operating revenues:
Sale of electric energy 158,916
Other operating revenues 67
Total operating revenues 158,983
Operating expenses:
Fuel consumed in operation 117,246
Other operation 16,213
Maintenance 16,511
Provision for depreciation and amortization 5,682
Taxes, other than federal income taxes 3,387
Total operating expenses 159,039
Operating loss (57)
Interest income and other 59
Income before interest charges 2
Interest charges 2
Net income -
<PAGE>
D-3
INDIANA-KENTUCKY ELECTRIC CORPORATION
STATEMENT OF CASH FLOWS
FOR YEAR ENDED DECEMBER 31, 1996
UNAUDITED
(000's)
Cash From Operations:
Net Income -
Adjustments to reconcile net income to net
cash (used) provided by operating activities:
Depreciation 5,682
Changes in assets and liabilities:
Accounts receivable 292
Coal in storage and coal sold under agreement
to be repurchased (802)
Materials and supplies (353)
Prepaid expenses and other (199)
Accounts payable 1,819
Accrued taxes (221)
Accrued interest and other 165
Other (289)
Net cash provided by operating activities 6,094
Investing Activities:
Reimbursement for plant replacements and
additional facilities 1,107
Net electric plant additions (1,323)
Advances from parent (5,682)
Net cash used by investing activities (5,898)
Financing Activities:
Coal purchase obligation 0
Net cash provided by financing activities 0
Net increase in cash and cash equivalents 195
Cash and cash equivalents, beginning of year 378
Cash and cash equivalents, end of year 573
Supplemental Disclosures
Interest paid 743
Federal income taxes paid -
For purposes of this statement, the company considers temporary cash
investments to be cash equivalents since they are readily convertible
into cash and have maturities of less than three months.
<PAGE>
OHIO VALLEY ELECTRIC CORPORATION D-4
BALANCE SHEET--DECEMBER 31, 1996
UNAUDITED
(000's)
Assets
Electric plant - at original cost, including $2,208,000
construction work in progress 272,902
Less - Accumulated provisions for depreciation
and amortization 265,770
7,132
Investments and other:
Special funds held by trustee 0
Investment in subsidiary company 3,400
Advances to subsidiary - construction 70,549
73,949
Current assets:
Cash and cash equivalents 2,436
Accounts receivable 21,460
Coal in storage, at average cost 6,964
Coal sold under agreement to be repurchased 8,000
Materials and supplies, at average cost 10,334
Property taxes applicable to subsequent years 3,600
SO2 Allowances 32
Refundable Federal income taxes 1885
Prepaid expenses and other 495
55,206
Deferred charges and Other:
Debt expense, being amortized 357
Future federal income tax benefits 9,657
Unrecognized postemployment benefits expense 533
Unrecognized pension expense 4,883
Unrecognized postretirement benefits expense 17,741
Prepaids and other 229
33,400
TOTAL ASSETS 169,687
Capitalization and Liabilities
Capitalization:
Common stock, $100 per value -
Authorized - 300,000 shares
Outstanding - 100,000 shares 10,000
Senior secured notes 64,666
Retained earnings 2,431
77,097
Current liabilities:
Note payable maturing in one year 8,500
Current portion - long term debt 6,061
Accounts payable 10,644
Coal purchase obligation 8,000
Accrued taxes 7,388
Accrued interest and other 2,483
43,076
<PAGE>
OHIO VALLEY ELECTRIC CORPORATION D-4 cont'd.
BALANCE SHEET--DECEMBER 31, 1996
UNAUDITED
(000's)
Assets
Deferred credits:
Investment tax credits 10,610
Accrued pension liability 4,883
Customer advances for construction 2,856
Antitrust settlement 1,518
Deferred credit-tax benefit obligation 10,989
Postretirement benefits obligation 17,741
Postemployment benefits obligation 533
Deferred credit - allowances 384
49,514
TOTAL CAPITALIZATION AND LIABILITIES 169,687
<PAGE>
D-5
OHIO VALLEY ELECTRIC CORPORATION
STATEMENT OF INCOME
FOR YEAR ENDED DECEMBER 31, 1996
UNAUDITED
(000's)
Operating revenues:
Sale of electric energy 311,918
Other operating revenues 805
Total operating revenues 312,723
Operating expenses:
Fuel consumed in operation 94,698
Purchased power 171,033
Other operation 19,986
Maintenance 16,942
Taxes, other than federal income taxes 5,045
Federal income taxes (332)
Total operating expenses 307,372
Operating income 5,351
Interest income and other 2,313
Income before interest charges 7,664
Interest charges
Interest expense, net 5,309
Amortization of debt expense and discount 40
Total interest charges 5,349
Net income 2,315
Retained earnings, beginning of year 1,606
Cash dividends on common stock 1,490
Retained earnings, end of year 2,431
<PAGE>
D-6
OHIO VALLEY ELECTRIC CORPORATION
STATEMENT OF CASH FLOWS
FOR YEAR ENDED DECEMBER 31, 1996
UNAUDITED
(000's)
Cash From Operations:
Net Income 2,315
Adjustments to reconcile net income to net
cash (used) provided by operating activities:
Debt expense amortization 40
Future federal income and deferred credit tax benefits 254
Changes in assets and liabilities:
Accounts receivable 391
Coal in storage and coal sold under
agreement to be repurchased (3,601)
Materials and supplies 684
Property taxes applicable to subsequent years 200
Prepaid expenses and other (180)
Accounts payable 4,332
Deferred income (1,753)
Accrued taxes (2,664)
Accrued interest and other 161
Other 194
Net cash used by operating activities 373
Investing Activities:
Reimbursement for plant replacements and
additional facilities 1,643
Net electric plant additions (1,925)
Advances in subsidiary 5,682
Net cash provided by investing activities 5,400
Financing Activities:
Special funds held by trustee 1,934
Notes payable maturing in one year (500)
Senior secured notes (5,683)
Coal purchase obligation (2,000)
Lines-of-credit borrowings 0
Dividends on common stock (1,490)
Net cash used by financing activities (7,739)
Net decrease in cash and cash equivalents (1,966)
Cash and cash equivalents, beginning of year 4,402
Cash and cash equivalents, end of year 2,436
Supplemental Disclosures
Interest paid 5,938
Federal income taxes received 1,631
For purposes of this statement, the company considers temporary cash
investments to be cash equivalents since they are readily convertible
into cash and have maturities of less than three months.
<PAGE>
- 59 - C-1
AYP CAPITAL, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATING BALANCE SHEET - DECEMBER 31, 1996
(000's)
<TABLE>
<CAPTION>
Allegheny Totals
AYP Communications AYP Combined Eliminations, (Carried to
ASSETS Capital Connect Energy Totals etc. page A-1a)
<S> <C> <C> <C> <C> <C>
Property, plant and equipment:
At original cost 83 - 176,719 176,802 - 176,802
Accumulated depreciation (10) - 1,754 1,744 - 1,744
Investments and other assets:
Securities of subsidiaries
consolidated 26,704 - - 26,704 (26,704)(1) -
Equity in undistributed earnings
of subsidiaries (2,722) - - (2,722) 2,722 (2) -
Indebtedness of subsidiary
consolidated-not current - - - - - -
Nonutility Investment 2,791 - - 2,791 - 2,791
- - - - - -
Other - - - - - -
Current assets:
Cash and temporary cash
investments 1,276 1 3,374 4,651 - 4,651
Accounts receivable:
Electric service 15 - 2,068 2,083 - 2,083
Allowance for uncollectible
accounts - - - - - -
Affiliated and other 37 1 12,667 12,705 - 12,705
Materials and supplies -
at average cost:
Operating and construction - - 2,395 2,395 - 2,395
Fuel - - 2,795 2,795 - 2,795
Prepaid taxes - 55 2,120 2,175 - 2,175
Deferred income taxes - - - - - -
Other - - 157 157 - 157
Deferred charges:
Regulatory assets - - - - - -
Unamortized loss on reacquired
debt - - - - - -
Other (1) 4 14 17 - 17
Total assets 28,173 61 204,063 232,297 (23,982) 208,315
</TABLE>
<PAGE>
- 60 -
AYP CAPITAL, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATING BALANCE SHEET - DECEMBER 31, 1996
(000's)
<TABLE>
<CAPTION>
Allegheny Totals
AYP Communications AYP Combined Eliminations, (Carried to
CAPITALIZATION AND LIABILITIES Capital Connect Energy Totals etc. page A-2a)
<S> <C> <C> <C> <C> <C> <C>
Capitalization:
Common stock owned by Allegheny
Power System, Inc. 1 - - 1 - 1
Common stock of subsidiaries
consolidated - 1 1 2 (2)(1) -
Other paid-in capital 31,284 45 26,657 57,986 (26,702)(1) 31,284
Retained earnings (3,880) (103) (2,619) (6,602) 2,722 (2) (3,880)
Preferred stock:
Not subject to mandatory
redemption - - - - - -
Long-term debt and QUIDS - - 160,000 160,000 - 160,000
Notes and advances payable
to affiliates - - 13 13 - 13
Current liabilities:
Short-term debt - - - - - -
Accounts payable to affiliates 531 118 2,172 2,821 - 2,821
Accounts payable - others 7 - 12,544 12,551 - 12,551
Taxes accrued:
Federal and state income 229 - - 229 - 229
Other 1 - 899 900 - 900
Interest accrued - - 1,838 1,838 - 1,838
Deferred power costs - - - - - -
Other - - 1,025 1,025 - 1,025
Deferred credits and other
liabilities:
Unamortized investment credit - - - - - -
Deferred income taxes - - 939 939 - 939
Regulatory liabilities - - - - - -
Other - - 594 594 - 594
Total capitalization
and liabilities 28,173 61 204,063 232,297 (23,982) 208,315
</TABLE>
<PAGE>
- 61 -
AYP CAPITAL, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENT OF INCOME FOR YEAR ENDED DECEMBER 31, 1996
(000's)
<TABLE>
<CAPTION>
Consolidated
Allegheny Totals
AYP Communications AYP Combined Eliminations, (Carried to
Capital Connect Energy Totals etc. page A-3a)
<S> <C> <C> <C> <C> <C> <C>
Electric operating revenues:
Residential - - - - - -
Commercial - - - - - -
Industrial - - - - - -
Wholesale and other,
including affiliates 14 - - 14 - 14
Bulk power transactions, net - - 733 733 - 733
Total operating revenues 14 - 733 747 - 747
Operating expenses:
Operation:
Fuel - - 727 727 - 727
Purchased power and exchanges, net - - - - - -
Deferred power costs, net - - - - - -
Other 286 139 958 1,383 - 1,383
Maintenance - - 820 820 - 820
Restructuring - - 129 129 - 129
Depreciation 9 - 5 14 - 14
Taxes other than income taxes 2 - 765 767 - 767
Federal and state income taxes (325) (55) (1,809) (2,189) - (2,189)
Total operating expenses (28) 84 1,595 1,651 - 1,651
Operating income 42 (84) (862) (904) - (904)
Other income and deductions:
Allowance for other than borrowed
funds used during construction - - - - - -
Other, net (3,350) (19) 81 (3,288) 2,722 (2) (566)
Total other income and deductions (3,350) (19) 81 (3,288) 2,722 (566)
Income before interest charges (3,308) (103) (781) (4,192) 2,722 (1,470)
Interest charges:
Interest on long-term debt - - 1,838 1,838 - 1,838
Other interest - - - - - -
Allowance for borrowed funds used
during construction - - - - - -
Total interest charges - - 1,838 1,838 - 1,838
Net income (3,308) (103) (2,619) (6,030) 2,722 (3,308)
</TABLE>
<PAGE>
- 62 -
AYP CAPITAL, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF RETAINED EARNINGS AND OTHER PAID-IN CAPITAL
FOR YEAR ENDED DECEMBER 31, 1996
(000's)
<TABLE>
<CAPTION>
Allegheny Totals
AYP Communications AYP Combined Eliminations, (Carried to
Capital Connect Energy Totals etc. page A-4a)
RETAINED EARNINGS
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1996 (572) - - (572) - (2) (572)
Add:
Net Income (3,308) (103) (2,619) (6,030) 2,722 (2) (3,308)
Total (3,880) (103) (2,619) (6,602) 2,722 (3,880)
Deduct:
Dividends on common stock of
Allegheny Power System, Inc. - - - - - -
Dividends on capital stock of
subsidiary companies:
Preferred - - - - - -
Common - - - - - -
Charges on redemption of
preferred stock - - - - - -
Total deductions - - - - - -
Balance at December 31, 1996 (3,880) (103) (2,619) (6,602) 2,722 (3,880)
OTHER PAID-IN CAPITAL
Balance at January 1, 1996 1,837 - - 1,837 - 1,837
Add:
Capital Contributions from
Parent 29,447 45 26,657 56,149 (26,702)(1) 29,447
Balance at December 31, 1996 31,284 45 26,657 57,986 (26,702) 31,284
</TABLE>
<PAGE>
- 63 -
AYP CAPITAL, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF CASH FLOWS FOR YEAR ENDED DECEMBER 31, 1996
(000's)
<TABLE>
<CAPTION>
Allegheny Totals
AYP Communications AYP Combined Eliminations, (Carried to
Capital Connect Energy Totals etc. page A-5a)
<S> <C> <C> <C> <C> <C> <C> <C>
Cash Flows from Operations:
Net Income (3,308) (103) (2,619) (6,030) 2,722 (2) (3,308)
Depreciation 9 - 5 14 - 14
Deferred investment credit and
income taxes, net - - 939 939 - 939
Deferred power costs, net - - - - - -
Unconsolidated subsidiaries'
dividends in excess of earnings - - - - - -
Allowance for other than
borrowed funds used during
construction (AOFDC) - - - - - -
Restructuring - - 129 129 - 129
Changes in other current assets
and liabilities:
Accounts receivable, net 10 (1) (14,735) (14,726) - (14,726)
Materials and supplies - - (5,190) (5,190) - (5,190)
Accounts payable 360 118 14,587 15,065 - 15,065
Taxes accrued 229 - 900 1,129 - 1,129
Interest accrued - - 1,838 1,838 - 1,838
Other, net 5,731 (14) 25,994 31,711 (2,722) 28,989
Total Cash Flows from
Operations 3,031 - 21,848 24,879 - 24,879
Cash Flows from Investing:
Nonutility Investments (1,771) - (178,474)(180,245) - (180,245)
AOFDC - - - - - -
Total Cash Flows from Investing (1,771) - (178,474)(180,245) - (180,245)
Cash Flows from Financing:
Retirement of preferred stock - - - - - -
Issuance of long-term debt and
QUIDS - - 160,000 160,000 - 160,000
Retirement of long-term debt - - - - - -
Notes receivable from affiliates - - - - - -
Short-term debt - - - - - -
Dividends on capital stock:
Preferred stock - - - - - -
Common stock - - - - - -
Total Cash Flows from
Financing - - 160,000 160,000 - 160,000
Net Change in Cash and Temporary Cash Investments*
Cash and Temporary Cash Investments
at January 1 17 - - 17 - 17
Cash and Temporary Cash Investments
at December 31 1,277 - 3,374 4,651 - 4,651
1,260 - 3,374 4,634 - 4,634
Supplemental cash flow information:
Cash paid during the year for:
Interest (net of amount
capitalized) - - - - - -
Income taxes (1,182) - - (1,182) - (1,182)
</TABLE>
*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.
<PAGE>
- 64 -
INTERCOMPANY ELIMINATIONS AND RECLASSIFICATIONS - DECEMBER 31, 1996
Shown on Pages C-1, C-2, C-3, C-4, and C-5
(000's)
<TABLE>
<CAPTION>
(1)
<S> <C> <C> <C> <C> <C>
Common stock of subsidiaries consolidated 2
Securities of subsidiaries consolidated 26,704
Other paid in capital 26,702
To eliminate in consolidation the par or stated value of intercompany investments.
See schedule below for details.
Par of stated Other
value of Paid-in Investment
Common Stock Capital Total
Company
Owned by AYP Capital:
Allegheny Communications Connect, Inc. 1 45 46
AYP Energy, Inc. 1 26,657 26,658
2 26,702 26,704
(2)
Retained earnings - undistributed earnings of subsidiaries at January 1, 1996 2,722
Other income and deductions - other, net 2,722
Investment in subsidiaries consolidated - equity in undistributed earnings 0
To eliminate undistributed earnings of subsidiaries at January 1, 1996 and
net income and dividends for the year ended December 31, 1996
(3)
Indebtedness to affiliated consolidated - not current 0
Indebtedness of subsidiary consolidated - not current 0
To eliminate intercompany indebtedness
</TABLE>
<PAGE>
- 65 -
AYP CAPITAL, INC. AND SUBSIDIARY COMPANIES
DATA FOR U5S
1996
(000's)
<TABLE>
<CAPTION>
Item 5 - Investment in Securities of Non-System Companies
Item 6 - Investments in System Securities
Value
Number Books Value
of Shares of to
<S> <C> <S> <C> <C> <C>
Name of Owner Name of Issuer Security Owned Owned Issuer Owner
AYP Capital, Inc. AYP Energy, Inc. Common Stock 1,000 1,000 1,000
Allegheny Communications,
Connect, Inc. Common Stock 1,000 1,000 1,000
2,000 2,000
</TABLE>
<PAGE>
- 66 -
ITEM 9. Wholesale Generators & Foreign Utility Companies
I. AYP ENERGY, INC.
Part I.
(a) AYP Energy, Inc.
One Stuart Plaza
RR 12 Box 40
Greensburg PA 15601
In October 1996, AYP Energy, Inc. (AYP Energy) purchased Duquesne Light
Company's 50% interest (276 MW) in Unit No. 1 of the Fort Martin Power
Station. The remainder of the station is owned by Allegheny Power System,
Inc.'s (APS, Inc.) regulated subsidiaries.
AYP Energy is a wholly-owned subsidiary of AYP Capital, Inc., a wholly-
owned, non-regulated utility of APS, Inc.
(b) AYP Capital owns 100% of AYP Energy common stock, 100 shares
with a total book value of $1,000.
AYP Capital has made additional capital contributions of
$26,656,632 as of December 31, 1996.AYP Capital's Equity in
Undistributed Earnings of AYP Energy totaled ($2,177,798) as
of December 31, 1996.
AYP Energy's $160,000,000 of five year debt financing is supported by APS,
Inc.
No assets have been transferred from other system companies to AYP Energy.
(c) Ratio of Debt to Common Equity as of December 31, 1996:
Long-term Debt 160,000,000
Common Equity 27,845,154 = 5.75
(d) A copy of the Service Agreement between Allegheny Power
Service Corporation and AYP Energy, Inc. is attached.
Fort Martin Common Facilities Operating Agreement and
Fort Martin Construction and Operating Agreement between
Duquesne Light, Monongahela Power Company, The Potomac
Edison Company, and West Penn Power Company were previously
filed. When AYP Energy purchased Duquesne's 50% interest
in Unit 1, it agreed to replace Duquesne as a party to
these agreements.
Part II. Allegheny Power Corporate Structure
APS, Inc.
(NONUTILITY SUBSIDIARY) Regulated Business
AYP Capital Units
(Wholly-owned subsidiary of APS, Inc.) (Wholly-owned subsidiaries of APS,
Inc.)
AYP Energy
(Wholly-owned subsidiary of AYP Capital, Inc.)
Part III.Total Investment in AYP Energy: 24,479,834
<PAGE>
- 67 -
ITEM 9. Wholesale Generators & Foreign Utility Companies
II. LATIN AMERICA ENERGY AND ELECTRICITY FUND I, L.P.
Part I.
(a) Latin America Energy and Electricity Fund I, L.P.
P. O. Box 309
Ugland House
George Town, Grand Cayman
Cayman Islands, British West Indies
Latin America Energy and Electricity Fund I, L.P. (LAEEP)
is a limited partnership which invests in entities involved
in new or existing electric power projects in Latin America
and the Caribbean.
AYP Capital, Inc., the nonutility subsidiary of APS, Inc.
owns a 9.9% interest in LAEEP.
(b) AYP Capital has invested $2,043,391 in LAEEP as of
December 31, 1996.
AYP Capital's Equity in Undistributed Earnings of LAEEP
totaled ($409,210) as of December 31, 1996.
None.
No assets have been transferred from other system
companies to LAEEP.
(c) Not applicable.
(d) None.
Part II. LAEEP is simply an investment on the books of AYP Capital, Inc.
Part III.Total Investment in LAEEP 1,634,182
<PAGE>
- 68 -
ITEM 9. Wholesale Generators & Foreign Utility Companies
III. FONDELEC GENERAL PARTNER, LP
Part I.
(a) FondElec General Partner, LP
P. O. Box 309
Ugland House, South Church Street
George Town, Grand Cayman
Cayman Islands, British West Indies
Fondelec General Partner, LP is a limited partnership
organized for the purpose of acting as the general partner
of the Latin America Energy and Electricity Fund I, LP.
AYP Capital, Inc., the nonutility subsidiary of APS, Inc.
owns a 4.975% interest in Fondelec.
(b) AYP Capital has invested $10,212 in Fondelec as of
December 31, 1996.
AYP Capital's Equity in Undistributed Earnings of Fondelec
totaled ($1,917) as of December 31, 1996.
AYP Capital advanced $25,000 to Fondelec as of
December 31, 1996.
None.
No assets have been transferred from other system
companies to LAEEP.
(c) Not applicable.
(d) None.
Part II. Fondelec is simply an investment on the books of AYP Capital, Inc.
Part III.Total Investment in Fondelec 33,295
<PAGE>
- 69 -
APPENDIX 2
Pages F-1 through F-4
<PAGE>
ITEM 9 - EXHIBIT B (continued) F-1
CONSTITUENT INSTRUMENTS DEFINING THE RIGHTS OF HOLDERS
OF EQUITY SECURITIES OF SYSTEM COMPANIES.
<TABLE>
<CAPTION>
INCORPORATED BY REFERENCE
<S> <C>
ALLEGHENY POWER SYSTEM, INC.:
Charter, as amended Form 10-Q, September 1993,
exh. (a)(3)
By-laws, as amended Form 10-Q, September 1995,
exh. (a)(3)
ALLEGHENY POWER SERVICE CORPORATION:
Charter, effective November 22, 1963 Form U5S, 1964, exh. B-2
By-laws, as amended November, 1, 1996 Form U5S, 1983, exh. B-1
Form U5S, 1990, exh. B-2
MONONGAHELA POWER COMPANY:
Charter, as amended Form 10-Q, September 1995
exh. (a)(3)(i)
Code of Regulations, as amended Form 10-Q, September 1995,
exh. (a)(3)(ii)
THE POTOMAC EDISON COMPANY:
Charter, as amended Form 10-Q, September 1995,
exh. (a)(3)(i)
By-laws, as amended Form 10-Q, September 1995,
exh. (a)(3)(ii)
WEST PENN POWER COMPANY:
Charter, as amended Form 10-Q, September 1995,
exh. (a)(3)(i)
By-laws, as amended Form 10-Q, September 1995,
exh. (a)(3)(ii)
ALLEGHENY PITTSBURGH COAL COMPANY:
Charter, effective October 1, 1918 Form U5B, File 30-75, exh. B-2
Amendment to Charter, effective
October 5, 1918 Form U5B, File 30-75, exh. B-2
January 21, 1956 Form U5S, 1964, exh. B-7
By-laws, as amended
ALLEGHENY GENERATING COMPANY:
Charter, effective May 26, 1981 Form 10-K, December 1996
Amendment, effective July 14, 1989 exh. E-5, 3.2
By-laws, as amended Form 10, 1986, exh. 3(1)
Form 10-Q, June 1989, exh. (a)
Form 10, 1986, exh. 3(2)
Form U5S, 1992, exh. B
Form 10-Q, September 1995,
exh. (a)(3)(ii)
WEST VIRGINIA POWER & TRANSMISSION COMPANY:
Charter, effective April 3, 1912 and
Amendments to March 22, 1934 Form U5B, File 30-75, exh. B-38
Amendments to Charter, effective
January 28, 1956 Form U5S, 1964, exh. B-10
February 7, 1961 Form U5S, 1964, exh. B-11
By-laws, as amended
WEST PENN WEST VIRGINIA
WATER POWER COMPANY:
Charter, effective January 25, 1924 Form U5B, File 30-75, exh. B-39
Amendment to Charter, effective
January 21, 1956 Form U5S, 1964, exh. B-12
By-laws, as amended
</TABLE>
<PAGE>
ITEM 9 - EXHIBIT B (continued) F-2
Service Agreement between
Allegheny Power Service
Corporation and AYP Energy,
Inc.
<PAGE>
ITEM 9 - EXHIBIT C F-3
CONSTITUENT INSTRUMENTS DEFINING THE RIGHTS OF HOLDERS
OF DEBT SECURITIES OF SYSTEM COMPANIES
<TABLE>
<CAPTION>
<S> <C>
Monongahela Power Company Incorporation
Documents by Reference
4 Indenture, dated as of S 2-8782, exh. 7(f) (1)
August 1, 1945, and S 2-8881, exh. 7(b)
certain Supplemental S 2-9355, exh. 4(h) (1)
Indentures of the S 2-9979, exh. 4(h) (1)
Company defining rights S 2-10548, exh. 4(b)
of security holders.* S 2-14763, exh. 2(b) (i)
S 2-26806, exh. 4(d);
Forms 8-K of the Company (1-268-2) dated November
21, 1991, June 4, 1992, July 15, 1992, September 1,
1992, April 29, 1993, and May 23, 1995
The Potomac Edison Company Incorporation
Documents by Reference
4 Indenture, dated as of S 2-5473, exh. 7(b); Form
October 1, 1944, and S-3, 33-51305, exh. 4(d)
certain Supplemental Forms 8-K of the Company (1-3376-2)
Indentures of the August 21, 1991, December 11, 1991,
Company defining rights December 15, 1992, February 17,
of Security holders.* 1993, March 30, 1993, June 22, 1994,
May 12, 1995, and May 17, 1995
* There are omitted the Supplemental Indentures which do no more than
subject property to the lien of the above Indentures since they are
not considered constituent instruments defining the rights of the
holders of the securities. The Company agrees to furnish the Commission
on its request with copies of such Supplemental Indentures.
West Penn Power Company Incorporation
Documents by Reference
4 Indenture, dated as of
March 1, 1916, and certain S 2-1835, exh. B(1), B(6)
Supplemental Indentures of S 2-4099, exh. B(6), B(7)
the Company defining rights S 2-4322, exh. B(5)
of security holders.* S 2-5362, exh. B(2), B(5)
S 2-7422, exh. 7(c), 7(i)
S 2-7840, exh. 7(d), 7(k)
S 2-8782, exh. 7(e) (1)
S 2-9477, exh. 4(c), 4(d)
S 2-10802, exh. 4(b), 4(c)
S 2-13400, exh. 2(c), 2(d)
Form 10-Q of the Company (1-255-2), June 1980, exh.
D Forms 8-K of the Company (1-255-2) dated June
1989, February 1991, December 1991, August 13,
1992, September 15, 1992, June 9, 1993 and June 9,
1993, August 2, 1994, and May 19, 1995
</TABLE>
* There are omitted the Supplemental Indentures which do no more than
subject property to the lien of the above Indentures since they are
not considered constituent instruments defining the rights of the
holders of the securities. The Company agrees to furnish the
Commission on its request with copies of such Supplemental Indentures.
<PAGE>
ITEM 9 - EXHIBIT C (continued) F-4
Allegheny Generating Company
<TABLE>
<CAPTION>
Documents
<S> <C> <C>
4 Indenture, dated as of December 1, 1986, Incorporated by reference to the
and Supplemental Indenture, dated as of designated exhibit to form 10-K
December 15, 1988, of the Company for year ended December 31, 1996.
defining rights of security holders.
</TABLE>
<PAGE> EXHIBIT B-1
BY-LAWS
of
ALLEGHENY PITTSBURGH COAL COMPANY
*****
ARTICLE I.
STOCKHOLDERS
SECTION 1 - ANNUAL MEETING
A meeting of the Stockholders of this Company shall be held,
at the principal office of the Company in Pennsylvania, or at such
other place or places either within or without the Commonwealth of
Pennsylvania as may be designated in the notice thereof, on the
last Tuesday in February in each year (and if that be a legal
holiday under the laws of the state where such meeting is to be
held, then on the next business day), for the purpose of electing
directors for the ensuing year, and for the transaction of such
other business as may properly be brought before the meeting.
SECTION 2 - SPECIAL MEETINGS
Special meetings of the Stockholders may be held whenever and
as often as a majority of the Board of Directors may deem
expedient, and such majority shall call such meetings upon the
written request of the owners or holders of a majority of the
Capital Stock of the Company. Such special meetings may be held at
such place or places either within or without the Commonwealth of
Pennsylvania as may be designated in the notice thereof.
SECTION 3 - NOTICE OF MEETINGS
Fifteen days' written notice of every meeting of Stockholders
shall be mailed to or served personally upon each Stockholder of
record, at his last address known to the Secretary, which notice
shall state the object of the meeting.
SECTION 4 - QUORUM
A majority in interest of all the Stockholders of the Company
at such time qualified to vote at meetings of the Stockholders,
represented in person or by proxy, shall constitute a quorum at all
meetings of the Stockholders; but if there be less than a quorum
represented at any meeting, a majority in interest so represented
may adjourn the meeting from time to time.
<PAGE>
SECTION 5 - VOTING AND JUDGES OF ELECTION
At all meetings of the Stockholders every registered owner of
shares of the Capital Stock of the Company may vote in person or by
proxy, and shall have, except in voting for directors, one vote for
every share standing in his name on the books of the Company.
At all elections of directors each Stockholder shall have a
number of votes equal to the number of shares of stock standing in
his name, multiplied by the number of Directors to be elected at
such election and he may cumulate or distribute said votes upon or
among one or more candidates as he may prefer.
ARTICLE II.
BOARD OF DIRECTORS
SECTION 1 - NUMBER; TIME OF HOLDING OFFICE
The business and property of this Company shall be managed and
controlled by a Board of five Directors, who shall hold office for
a period of one year after their election and until their
successors are elected and qualified. The Board of Directors may
without a vote of the Stockholders and by a two-thirds vote of the
entire Board, at any regular meeting or at any special meeting of
said Board called for that purpose, increase the number of
Directors to a number not exceeding fifteen. In case the number of
Directors is so increased at any time the said Board shall by a
majority vote of those directors in office prior to the increase
elect additional Directors to the full number to which the Board
may have been increased. Such additional Directors shall hold
office until the next annual meeting of Stockholders and until
their successors are elected and qualified.
If for any reason the annual meeting of the Stockholders for
the election of Directors shall not be held at the time appointed
by these By-laws or shall be adjourned, the Directors then in
office shall continue in office until such election shall have been
held and their successors duly chosen.
SECTION 2 - POWERS AND DUTIES
The Board may elect an Executive Committee to consist of not
less than three nor more than five members of the Board and shall
also elect the officers specified in Section 1 of Article III
hereof, and may provide for the election or appointment of such
other officers and such agents and employees as may be necessary or
desirable in the proper conduct of the Company's business, and may
fill any vacancy which may occur in any office. All officers,
- 2 -
<PAGE>
agents and employees shall be removable at the will of the Board;
provided, however, that the word "officer" as used in those By-laws
shall not be construed to mean "Director". It shall not be the
duty of the Board of Directors to furnish financial reports to the
stockholders, unless requested by the stockholders.
SECTION 3 - VACANCIES
In case of any vacancy in the Board of Directors from death,
resignation, disqualification or other cause, the remaining
directors, by affirmative vote of a majority of the Board of
Directors may elect a successor to hold office for the unexpired
portion of the term of the director whose place shall be vacant.
SECTION 4 - PLACE OF MEETING
The Directors may hold their meetings and have an office and
keep the books of the Company (except the stock and transfer books)
without the State of Pennsylvania and in such place or places as
the Board may from time to time determine.
SECTION 5 - REGULAR MEETINGS
Regular meetings of the Board shall be held at such times and
on such notice as the Directors may from time to time determine.
The annual meeting of the Board, for the election of the
executive officers of the Company, shall be held as soon as
practicable after the annual meeting of the Stockholders for the
election of Directors.
SECTION 6 - SPECIAL MEETINGS
Special meetings of the Board may be held at any time upon the
call of the President or of a majority of the Directors, by oral or
telegraphic or written notice duly served on or sent or mailed so
as to reach each Director in due course not less than two days
before such meeting.
SECTION 7 - WAIVER OF NOTICE OF MEETING
By unanimous written waiver of notice of the meeting, any
meeting of the Board of Directors may be held without notice.
- 3 -
<PAGE>
SECTION 8 - QUORUM
A majority of the Board of Directors shall constitute a quorum
for the transaction of business, but if there be less than a quorum
present at any meeting of the Board a majority of those present may
adjourn the meeting from time to time.
Any action required or permitted to be taken at a meeting of
the Board or any committee thereof may be taken without a meeting
if the action is taken by the whole Board or committee and is
evidenced by one or more written consents describing the action
taken, signed by all directors on the Board or committee, and filed
with the minutes or corporate records of Board and committee
proceedings. Members of the Board may participate in a regular or
special meeting of the Board or any committee thereof by means of
conference telephone or similar communications equipment by which
all persons participating can simultaneously hear each other.
Participation in a meeting by these communications means
constitutes presence in person at the meeting.
SECTION 9 - ORDER OF BUSINESS
At meetings of the Board of Directors, business shall be
transacted in such order as the Board may be resolution from time
to time determine.
SECTION 10 - EXECUTIVE COMMITTEE
The executive committee shall possess and exercise all of the
delegable powers of the Board of Directors except when the latter
is in session; shall have a special control of the business policy
and management of the Company and of all matters of finance and
accounts; shall exercise a general supervision of the business of
the Company; and shall cause to be examined from time to time the
accounts and vouchers of the Treasurer for moneys received and paid
out by him. It shall keep a record of all its proceedings and
shall report the same to the Board of Directors. A majority of the
committee shall constitute a quorum.
SECTION 11 - PERSONAL LIABILITY OF DIRECTORS
(a) Directors shall not be personally liable for monetary
damages as such for any action taken, or any failure to
take any action, unless:
(1) the director has breached or failed to
perform the duties of his office pursuant to
Section 8363 of the Pennsylvania Directors'
Liability Act, Act 145 of 1986; and
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(2) the breach or failure to perform
constitutes self-dealing, willful misconduct
or recklessness.
(b) The provisions of this section shall not apply
to:
(1) the responsibility or liability of a
director pursuant to any criminal statute; or
(2) the liability of a director for the
payment of taxes pursuant to the local, State
or Federal law.
SECTION 12 - INDEMNIFICATION OF DIRECTORS
(a) The Corporation shall indemnify any person who was or is
a party or is threatened with being made a party to any threatened,
pending or completed action, suit or proceeding, including all
appeals, by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he is or was a
director, officer or employee of the Corporation, or is or was
serving at the request of the Corporation as a director, officer or
employee of another corporation, partnership, joint venture, trust
or other enterprise, against expenses (including attorneys' fees,
judgments, decrees, fines, penalties and amounts paid in
settlement) actually and reasonably incurred by him in connection
with the defense or settlement of such action, suit or proceeding.
However, indemnification under this Section shall be made only if
the person to be indemnified acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests
of the Corporation; and no such indemnification shall be made in
respect of any claim, issue or matter as to which such person shall
have been finally adjudged to be liable for negligence or
misconduct in the performance of his duty to the Corporation
unless, and only to the extent that, the court or body in or before
which such action, suit or proceeding determine upon application
that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably
entitled to indemnify for such expenses or other amounts paid as
such court or body shall deem proper.
(b) Indemnification may be granted for any action taken or for
any failure to take any action giving rise to the claim for
indemnification, and may be made whether or not the Corporation
would have the power to indemnify the person under any other
provision except as provided by this Section, and whether or not
the indemnified liability arises or arose from any threatened,
pending, or completed action by or in the right of the Corporation.
However, such indemnification shall not be made in any case where
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<PAGE>
the act or failure to act giving rise to the claim for
indemnification is finally determined by a court to have
constituted willful misconduct or recklessness.
ARTICLE III.
OFFICERS
SECTION 1 - EXECUTIVE OFFICERS
The executive officers of this Company shall be a Chairman of
the Board of Directors, a President, one or more Vice Presidents,
a Controller, a Treasurer, one or more Assistant Treasurers, a
Secretary, one or more Assistant Secretaries and a General Auditor.
Any two offices, except those of President ad Secretary, may
be held by the same person.
SECTION 2 - POWERS AND DUTIES OF CHAIRMAN OF THE BOARD OF DIRECTORS
It shall be the duty of the Chairman of the Board of Directors
to preside at all meetings of the Board of Directors. He may sign
and execute all authorized contracts in the name of the Company and
he shall perform such other duties as may be assigned to him from
time to time by the Board of Directors.
SECTION 3 - POWERS AND DUTIES OF PRESIDENT
It shall be the duty of the President to preside at all
meetings of the stockholders and, in the absence of the Chairman of
the Board of Directors, at meetings of the Board of Directors; he
shall present a report of the state of the business of the Company
at every annual meeting of the stockholders; he may sign and
execute all authorized contracts in the name of the Company and may
sign with the Treasurer, or an Assistant Treasurer, or the
Secretary, or an Assistant Secretary certificates of shares in the
capital stock of the Company; he shall have direct charge of the
business of the Company subject to the control of the Board and he
shall do and perform all acts and things incident to the position
of President and such other duties as may be assigned to him from
time to time by the Board of Directors.
SECTION 4 - POWERS AND DUTIES OF VICE PRESIDENTS
In the absence or inability to act of the President, any Vice
President may perform the duties and may exercise any of the powers
of the President subject to the control of the Board of Directors;
and they shall respectively perform such other duties as may be
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assigned to them from time to time by the Board of Directors, or by
the President.
SECTION 5 - POWERS AND DUTIES OF CONTROLLER
The Controller shall have general charge, supervision and
control of the accounts of the Company. He shall direct as to
forms and blanks relating to the books and accounts in all
departments, and no change therein shall be made without his
knowledge and consent. He shall supervise and direct the
preparation of the construction and operating budgets of the
Company. He shall verify the assets and cause all books and
accounts of the Treasurer and other officers and agents of the
Company charged with the receipt and disbursement of money to be
audited and examined by his representatives from time to time and
as often as may be practicable. He shall have direct supervision
of taxes, insurance and all official reports made to State or other
governmental authorities. He shall as and when required furnish to
the Board of Directors or such executive officer as it may
designate full and complete statements of account showing the
financial position of the Company with relative detail. Generally,
he shall perform such other duties as from time to time may be
conferred upon or prescribed for him by the Board of Directors, as
may be incident to his office.
SECTION 6 - POWERS AND DUTIES OF TREASURER
It shall be the duty of the Treasurer to have the care and
custody of all the funds and securities of the Company which may
come into his hands, and to endorse the same for deposit or
collection when necessary or proper, as such Treasurer, and to
deposit the same to the credit of the Company, in such bank or
banks or depositary as the Board of Directors may designate; he
shall endorse all bills of lading, warehouse receipts, insurance
policies and other commercial documents requiring endorsements for
or on behalf of the Company; he shall sign all receipts and
vouchers for payments made to the Company; he may sign, with the
President or a Vice President, certificates of shares in the
Capital Stock; he shall render a statement of his cash account to
the Board of Directors as often as shall be required; he shall
enter regularly, in books to be kept by him for that purpose, full
and accurate account of all moneys received and paid by him on
account of his Company; he shall, at all reasonable times, exhibit
his books and accounts to any Director of the Company, upon
application at the office of the Company during business hours; he
shall perform all acts incident to the position of Treasurer,
subject to the control of the Board of Directors; and he shall give
a bond for the faithful discharge of his duties in such sum and
with such surety as the Board of Directors may require.
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SECTION 7 - POWERS AND DUTIES OF SECRETARY
It shall be the duty of the Secretary to keep the minutes of
all meetings of the Board of Directors in a proper book provided
for that purpose, and also the minutes of all meetings of the
stockholders; he shall attend to the giving and serving of all
notices of the Company; he may sign, with the President or a Vice
President, all authorized contracts in the name of the Company and
certificates of shares in the capital stock, and shall affix the
seal of the Company thereto; he shall have charge of the
Certificate Book, Transfer Book and Stock Ledger, and such other
books and papers as the Board may direct, all of which shall, at
all reasonable times, be open to the examination of any Director,
upon application at the office of the Company during business
hours; and he shall in general perform all the duties incident to
the office of Secretary, subject to the control of the Board of
Directors.
SECTION 8 - POWERS AND DUTIES OF ASSISTANT TREASURERS
Any Assistant Treasurer may sign, with the President or a Vice
President, certificates of shares in the capital stock of the
Company.
In the absence or inability to act of the Treasurer, the
Assistant Treasurers shall perform all the duties and may exercise
any of the powers of the Treasurer, subject to the control of the
Board of Directors.
SECTION 9 - POWERS AND DUTIES OF ASSISTANT SECRETARIES
Any Assistant Secretary may sign, with the President or a Vice
President, certificates of shares in the capital stock of the
Company.
In the absence or inability to act of the Secretary, the
Assistant Secretaries shall perform all the duties and may exercise
any of the powers of the Secretary, subject to the control of the
Board of Directors.
SECTION 10 - POWERS AND DUTIES OF GENERAL AUDITOR
The General Auditor shall have immediate charge of the general
books and accounts of the Company and all accounts and data
relating thereto. He shall make such reports and statements as may
be directed by the Controller. Generally, he shall perform such
other duties as from time to time may be conferred upon or
prescribed for him by the Board of Directors as may be incident to
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<PAGE>
his office. He shall report to and perform his duties under the
immediate supervision and direction of the Controller.
ARTICLE IV.
CAPITAL STOCK - DIVIDENDS - FISCAL YEAR - SEAL
SECTION 1 - CERTIFICATES OF SHARES
Ownership or proprietary interest in the assets of this
Company shall be evidenced by certificates of shares in the Capital
Stock of the Company, in such form as the Board may from time to
time prescribe.
All certificates shall be consecutively numbered and bound in
book form, and shall be issued in consecutive numerical order; and
the name of the person owning the shares represented thereby, with
the number of such shares and the date of issue, shall be entered
on the margin or stub of each certificate.
No certificate shall be valid unless it is signed by the
President or a Vice President and by the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary, and impressed
with the Company's seal.
All certificates exchanged or surrendered to the Company shall
be canceled by the Secretary and pasted in their original places in
the certificate book, and no new certificate shall be issued until
the old certificate for the same number of shares has been
surrendered and canceled, or a bond of indemnity given as
hereinafter provided.
SECTION 2 - LOST OR STOLEN CERTIFICATES
No certificate of shares in the Capital Stock of the Company
shall be issued in place of any certificate alleged to have been
lost, stolen or destroyed, except on delivery to the Company of a
bond of indemnity against such lost, stolen or destroyed
certificate, to be approved by the Board of Directors. Proper and
legal evidence of such loss or theft shall be produced to the Board
if they require the same.
SECTION 3 - TRANSFER OF SHARES
Shares in the capital stock of the Company shall be
transferred on the books of the Company only by the holder thereof
in person by his attorney upon surrender and cancellation of
certificates for the same number of shares, with duly executed bill
of sale and power to transfer endorsed thereon or attached thereto.
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<PAGE>
SECTION 4 - CLOSING OF THE TRANSFER BOOKS AND FIXING OF A RECORD
DATE
The Board of Directors of the Company shall have power to
close the stock transfer books of the Company, for a period not
less than ten nor more than forty days, preceding the date of any
meeting of Stockholders, or the date for the payment of any
dividend or distribution, or the date for the allotment of rights,
or the date when any change or conversion or exchange of capital
stock shall go into effect; provided, however that in case of any
such closing of stock transfer books, notice thereof shall be
mailed to each Stockholder at his last known address as the same
appears upon the books of the Company, at least ten days before the
closing thereof. While the stock transfer books of the Company
shall be so closed, no transfers of stock shall be made thereon.
The Board of Directors, in lieu of closing the stock transfer
books as aforesaid, may fix in advance a date, not less than ten
nor more than forty days preceding the date of any meeting of
stockholders, or the date for the payment of any dividend or
distribution, or the date for the allotment of rights, or the date
when any change or conversion or exchange of capital stock shall go
into effect, as a record date, for the determination of
stockholders entitled to vote at any such meeting, or entitled to
receive payment of any such dividend or distribution, or to any
such allotment of rights, or to exercise the rights in respect of
any such change, conversion or exchange of capital stock. In such
case, if otherwise entitled, all stockholders of record on the date
so fixed and no others, shall be entitled to vote at such meeting,
to receive such dividend or distribution, to receive such allotment
of rights or to exercise such rights, as the case may be,
notwithstanding any transfer of stock on the books of the Company
after any such record date fixed as aforesaid.
SECTION 5 - DIVIDENDS
The Board of Directors may declare dividends from the surplus
or net profits of the Company whenever they shall deem it
expedient, in the exercise of their discretion, and in conformity
with the provisions upon which the capital stock of this Company
has been issued.
The Board of Directors may, in their discretion, fix a sum
which may be set aside or reserved, over the above the Company's
capital paid in, as a working capital for the Company, and may
increase or diminish the same, from time to time; but they shall
not be required, either in January in each year or at any other
time or times, to declare and pay to the Stockholders a dividend of
the whole of the Company's accumulated profits exceeding the amount
which may be reserved as working capital for the Company.
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<PAGE>
SECTION 6 - FISCAL YEAR
The fiscal year of the Company shall begin on the first day of
January and shall end on the thirty-first day of December.
SECTION 7 - CORPORATE SEAL
The Board of Directors shall provide a suitable seal
containing the name of the Company, which seal shall be in charge
of the Secretary.
ARTICLE V.
CHECKS, NOTES, ETC.
All checks and drafts on the Company's bank accounts, all
bills of exchange and promissory notes, and all acceptances,
obligations and other instruments for the payment of money, shall
be signed by such officer or officers or agent or agents as shall
be thereunto authorized from time to time by the Board of
Directors.
ARTICLE VI.
BY-LAWS
The stockholders shall have power to make, amend and repeal
the By-laws of the Company at any regular or special meeting, by a
majority of the votes cast thereat.
February 25, 1997
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<PAGE> EXHIBIT B-2
BY-LAWS
of
WEST VIRGINIA POWER AND TRANSMISSION COMPANY
ARTICLE I.
STOCKHOLDERS
SECTION 1 - ANNUAL MEETING
The annual meeting of the stockholders shall be held at
the principal office of the Company, or at such other place or
places either within or without the State of West Virginia as
may be designated by the Board of Directors, on the last
Tuesday in February in each year, or, if that be a legal
holiday, then on the next business day, for the purpose of
electing directors and for the transaction of such other
business as may properly be brought before the meeting.
SECTION 2 - SPECIAL MEETINGS
Special meetings of the stockholders may be called at
any time by the Board of Directors, or by the President and
Secretary, or by any number of stockholders owning in the
aggregate of at least one-tenth of the number of shares
outstanding and entitled to vote. Special meetings of the
stockholders may be held at the principal office of the
Company, or at such other place or places, either within or
without the State of West Virginia, as may be designated in
the notices of such meetings.
SECTION 3 - NOTICE OF MEETINGS
Notice of each annual or special meeting of the
stockholders shall be given by mailing to each stockholder
entitled to vote thereat at his last known post office
address, postage prepaid, at least ten days prior to the date
of the meeting, a written or printed notice thereof, or by
publication of notice thereof once a week for two successive
weeks in some newspaper published and of general circulation
in the county of the principal office or place of business of
the Company in West Virginia. Such notice shall state the
time and place of such meeting. The notice of special
meetings of the stockholders shall state the business to
be transacted, and no business other than that included in the
notice or incidental thereto shall be transacted at any such
meeting. Notice of the time, place or purpose of any meeting
of stockholders may be dispensed with if every stockholder
entitled to vote thereat shall attend either in person or by
proxy, or if every absent stockholder so entitled to vote
shall, in writing filed with the records of the meeting,
either before or after the holding thereof, waive such notice.
<PAGE>
SECTION 4 - QUORUM
A quorum of the stockholders shall consist of at
least a majority of all of the shares of stock entitled to
vote. Any number less than a quorum present may adjourn any
stockholders' meeting until a quorum is present.
SECTION 5 - CHAIRMAN
Meetings of the stockholders shall be presided over by
the President or, in his absence, by a Vice President or, if
no such officer is present, by a chairman to be chosen at the
meeting. The Secretary of the Company or, in his absence, an
Assistant Secretary, or, if no such officer is present, a
secretary appointed at the meeting shall act as secretary of
such meeting.
SECTION 6 - VOTING
In all elections of directors each stockholder shall
have the right to cast one vote for each share of stock owned
by him and entitled to a vote, and he may cast the same in
person or by proxy, for as many persons as there are directors
to be elected, or he may cumulate such votes and give one
candidate as many votes as the number of directors to be
elected multiplied by the number of his shares of stock shall
equal, or he may distribute them on the same principle among
as many candidates and in such manner as he shall desire, and
directors shall not be elected in any other manner. The
voting at such elections shall be by ballot, and a majority of
the votes cast thereat shall elect. At any such election,
upon the request of the holders of ten per cent of the stock
entitled to vote thereat, the Chairman of the meeting shall
appoint two Judges of election, who shall first subscribe an
oath or affirmation to execute faithfully the duties of Judges
at such election with strict impartiality and according to the
best of their ability, and shall make a certificate of the
result of the vote taken. No candidate for the office of
director shall be appointed as such Judge.
On any question to be determined by a vote of shares
at any meeting of stockholders, other than the election of
directors, each stockholder shall be entitled to one vote for
each share of stock owned by him and entitled to a vote at
such meeting, and he may exercise this right in person or by
proxy.
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<PAGE>
ARTICLE II.
BOARD OF DIRECTORS
SECTION 1 - NUMBER; TIME OF HOLDING OFFICE
The business of the Company shall be managed and
controlled by a Board of five Directors, who shall hold office
until the annual meeting of stockholders next ensuing after
their election and until their successors are respectively
elected and qualified. Directors need not be stockholders or
residents of the State of West Virginia.
SECTION 2 - COMMITTEES
The Board may, by resolution or resolutions, passed by
a majority of the whole Board, designate one or more
committees to consist of two or more of the directors, which
to the extent provided in such resolution or resolutions,
shall have and may exercise the powers of the Board in the
management of the business and affairs of the Company and may
have power to authorize the seal of the Company to be affixed
to all papers which may require it, and which shall have such
name or names as may be determined from time to time by
resolution adopted by the Board. The Board may designate
alternate members of any committee.
SECTION 3 - VACANCIES
Vacancies in the Board of Directors shall be filled by
a majority of the remaining directors, though less than a
quorum, and the directors so elected shall hold office until
the annual meeting of the stockholders next ensuing after
their election and until their successors are respectively
elected and qualified.
SECTION 4 - REGULAR MEETINGS
Regular meetings of the Board shall be held at such time
or place, either within or without the State of West Virginia,
as may be determined from time to time by resolution of the
Board.
SECTION 5 - SPECIAL MEETINGS
Special meetings of the Board may be called, at any time
by the President, a Vice President or any two directors, and
shall be held at such time or place, either within or without
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the State of West Virginia, as may be stated in the notice of
the meeting.
SECTION 6 - NOTICE OF MEETINGS
Telegraphic, written or printed notice stating the time
and place of every regular meeting and the time, place and
purpose of every special meeting of the Board shall be given
each director not less than two days before such meeting.
Notice of the time, place or purpose of any meeting of the
Board may be dispensed with if every director shall attend in
person or if every absent director shall in writing file with
the records of the meeting, either before or after the holding
thereof, a waiver of such notice.
SECTION 7 - QUORUM
A majority of the directors shall constitute a quorum
for the transaction of business. Any number less than a
quorum present may adjourn any meeting of the Board until a
quorum is present.
Any action required or permitted to be taken at a
meeting of the Board or any committee thereof may be taken
without a meeting if the action is taken by the whole Board or
committee and is evidenced by one or more written consents
describing the action taken, signed by all directors on the
Board or committee and filed with the minutes or corporate
records of Board and committee proceedings. Members of the
Board may participate in a regular or special meeting of the
Board or any committee thereof by means of conference
telephone or similar communications equipment by which all
persons participating can simultaneously hear each other.
Participation in a meeting by these communications means
constitutes presence in person at the meeting.
SECTION 8 - POWERS OF DIRECTORS
The Board may exercise all of the powers of the Company,
except such as are by law or by the charter or by the By-laws
conferred upon or reserved to the stockholders.
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ARTICLE III.
OFFICERS
SECTION 1 - EXECUTIVE OFFICERS
The Board shall at its annual meeting elect a President,
one or more Vice Presidents, a Secretary, a Treasurer, one or
more Assistant Secretaries and one or more Assistant
Treasurers, and it may from time to time elect or appoint a
Chairman of the Board.
Any two of the officers, except those of Chairman of the
Board, President and Vice President, may be held by the same
person, but no officer shall execute, acknowledge or verify
any instrument in more than one capacity if such instrument is
required by law or by the By-laws to be executed,
acknowledged, verified or countersigned by two or more
officers. The Board also may from time to time elect or
appoint such other officers, agents and employees as it may
deem proper.
The Chairman of the Board and the President shall be chosen
from among the directors, but no other officer need be a
member of the Board of Directors.
All officers shall hold office until the annual meeting of
the Board next ensuing after their election and until their
successors are respectively elected and qualified. The Board
may fill any vacancy which may occur in any office. All
officers, agents and employees shall be removable at the will
of the Board; provided, however, that the word "officer", as
used in these By-laws, shall not be construed to mean
"director".
SECTION 2 - CHAIRMAN OF THE BOARD
It shall be the duty of the Chairman of the Board, if
one is elected, to preside at meetings of the Board of
Directors. He may sign and execute all authorized contracts
in the name of the Company and he shall perform such other
duties as may be assigned to him from time to time by the
Board.
SECTION 3 - PRESIDENT
It shall be the duty of the President to preside at
meetings of the stockholders and, in the absence of a Chairman
of the Board, at meetings of the Board of Directors; he shall
present a report of the state of the business of the Company
at each annual meeting of the stockholders; he may sign and
execute all authorized contracts in the name of the Company
and may sign, with the Treasurer or an Assistant Treasurer, or
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<PAGE>
the Secretary or an Assistant Secretary, certificates of
shares in the capital stock of the Company; he shall have
direct charge of the business of the Company, subject to the
control of the Board, and he shall do and perform all acts and
things incident to the position of President, and such other
duties as may be assigned to him, from time to time, by the
Board.
SECTION 4 - VICE PRESIDENT
In the absence or inability to act of the President, any
Vice President may perform the duties and may exercise any of
the powers of the President, subject to the control of the
Board; and the Vice Presidents shall respectively perform such
other duties as may be assigned to them from time to time by
the Board or by the President.
SECTION 5 - SECRETARY
It shall be the duty of the Secretary to keep the
minutes of all meetings of the Board, in a proper book
provided for that purpose, and also the minutes of all
meetings of the stockholders; he shall attend to the giving
and serving of all notices of the Company; he may sign, with
the President or a Vice President, all authorized contracts in
the name of the Company, and shall affix the seal of the
Company thereto; he may sign, with the President or a Vice
President, all certificates of shares in the capital stock of
the Company and shall affix the seal of the Company to all
such certificates when properly signed in accordance with
Section 1 of Article IV of these By-laws; he shall have
general charge of the Certificate Book, Transfer Book and
Stock Ledger, and such other books and papers as the Board may
direct, all of which shall, at all reasonable times, be open
to the examination of any director, upon application at the
office of the Company during business hours; and he shall in
general perform all the duties incident to the office of
Secretary, subject to the control of the Board.
SECTION 6 - ASSISTANT SECRETARIES
Any Assistant Secretary may sign, with the President or
a Vice President, certificates of shares in the capital stock
of the Company.
In the absence or inability to act of the Secretary, the
Assistant Secretaries shall perform all the duties and may
exercise any of the powers of the Secretary, subject to the
control of the Board.
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<PAGE>
SECTION 7 - TREASURER
It shall be the duty of the Treasurer, subject to the
control of the Board, to have the general care and custody of
all the funds and securities of the Company which may come
into his hands, and to endorse the same for deposit or
collection when necessary or proper, as such Treasurer, and to
deposit the same to the credit of the Company, in such bank or
banks or depository as the Board may designate; he may endorse
bills of lading, warehouse receipts, insurance policies and
other commercial documents requiring endorsements for or on
behalf of the Company; he shall sign all receipts and vouchers
for payments made to the Company; he may sign, with the
President or a Vice President, certificates of shares in the
capital stock; he shall render a statement of his cash account
to the Board or such executive officer as it may designate, as
often as shall be required; he shall enter regularly, in books
to be kept by him for that purpose, full and accurate account
of all moneys received and paid by him on account of the
Company; he shall, at all reasonable times, exhibit his books
and accounts to any director of the Company, upon application
at the office of the Company during business hours; he shall
perform all acts incident to the position of Treasurer,
subject to the control of the Board, or such executive officer
as it may designate; and he shall give a bond for the faithful
discharge of his duties in such sum and with such surety as
the Board may require.
SECTION 8 - ASSISTANT TREASURERS
Any Assistant Treasurer may sign, with the President or
a Vice President, certificates of shares in the capital stock
of the Company.
In the absence or inability to act of the Treasurer, the
Assistant Treasurers shall perform all the duties and may
exercise any of the powers of the Treasurer, subject to the
control of the Board.
ARTICLE IV.
CAPITAL STOCK
SECTION 1 - STOCK CERTIFICATES
Every holder of stock in the Company shall be entitled
to have a certificate, in such form as shall be approved by
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<PAGE>
the Board, signed by the President or a Vice President and by
the Treasurer or an Assistant Treasurer or a Secretary or an
Assistant Secretary of the Company, certifying the number of
shares owned by such holder. Where such certificate is
countersigned by a transfer agent or transfer clerk and by a
registrar, the signature of any such officer may be facsimile.
SECTION 2 - TRANSFER OF SHARES
Shares of stock of the Company shall be transferred on
its books only by the holder thereof in person or by his
attorney, upon surrender and cancellation of a certificate or
certificates for the same number of shares, with duly executed
assignment and power of transfer endorsed thereon or attached
thereto, and with such proof of the authenticity of the
signature as the Company or its agents may reasonably require.
SECTION 3 - TRANSFER BOOKS
A book or books for the transfer of stock shall be kept
by the Company or by one or more transfer agents appointed by
the Board, and transfers shall be made under such regulations
as the Board shall determine.
SECTION 4 - CLOSING OF BOOKS; RECORD DATE
The Board may fix the time, not exceeding forty days
preceding the date of any meeting of the stockholders or any
dividend payment date or any date for the allotment of rights,
during which the books of the Company shall be closed against
the transfer of stock; or, in lieu of providing for the
closing of the books against transfers of stock, may fix a
date not exceeding forty days preceding the date of any
meeting of the stockholders, any dividend payment date or any
date for the allotment of rights, as a record date for the
determination of the stockholders entitled to notice of or to
vote at such meeting and/or entitled to receive such dividend
payment or rights, as the case may be, and only stockholders
of record on such date shall be entitled to notice of and/or
to vote at such meeting or to receive such dividend payment or
rights.
SECTION 5 - LOST OR DESTROYED CERTIFICATES
A new certificate may be issued in lieu of a stock
certificate lost or destroyed (a) upon delivery to the
Company, by the holder of record of said lost or destroyed
certificate, if an affidavit of ownership and loss and a bond
of indemnity satisfactory to the Board, together with such
further assurance or instruments as may be reasonable required
by the Board, or (b) upon compliance with any terms and
- 8 -
<PAGE>
conditions upon which such holder may by law be entitled to
require the issuance of such new certificate.
SECTION 6 - DIVIDENDS
The Board may from time to time declare and pay
dividends from the surplus or net profits of the Company
whenever they shall deem it expedient, in the exercise of
their discretion, and in conformity with the provisions upon
which the capital stock of the Company has been issued.
ARTICLE V.
FISCAL YEAR AND SEAL
SECTION 1 - FISCAL YEAR
The fiscal year of the Company shall begin on the first
day of January and shall end on the thirty-first day of
December in each year.
SECTION 2 - CORPORATE SEAL
The Board shall provide a suitable seal containing the
name of the Company, which seal shall be under the general
charge of the Secretary.
ARTICLE VI.
BY-LAWS
The stockholders shall have the power to make, amend and
repeal the By-laws of the Company at any regular or special
meeting by a majority of the votes cast thereat. The Board
shall have the power to amend, alter and supplement the By-
laws of the Company at any regular or special meeting by a
majority of the votes cast thereat. Any By-laws or amendments
to By-laws made by the Board may be amended, altered or
repealed by the Board or by the stockholders.
February 25, 1997
- 9 -
<PAGE> EXHIBIT B-3
BY-LAWS
OF
WEST PENN WEST VIRGINIA WATER POWER COMPANY
ARTICLE I.
STOCKHOLDERS
SECTION 1 - ANNUAL MEETING
A meeting of the stockholders of this Company shall be held, at
the principal office of the Company in Pennsylvania, or at such other
place or places either within or without the Commonwealth of
Pennsylvania as may be designated in the notice thereof, on the last
Tuesday in February in each year (and if that be a legal holiday, under
the laws of the state where such meeting is to be held, then on the next
business day), for the purpose of electing directors for the ensuing
year, and for the transaction of such other business as may properly be
brought before the meeting.
SECTION 2 - SPECIAL MEETINGS
Special meetings of the Stockholders may be held whenever and as
often as a majority of the Board of Directors may deem expedient, and
such majority shall call such meetings upon the written request of the
owners or holders of a majority of the Capital Stock of the Company.
Such special meetings may be held at such place or places either within
or without the Commonwealth of Pennsylvania as may be designated in the
notice thereof.
SECTION 3 - NOTICE OF MEETINGS
Fifteen days written notice of every meeting of Stockholders shall
be mailed to or served personally upon each Stockholder of record
entitled to vote, at his last address known to the Secretary, which
notice shall state the object of the meeting.
SECTION 4 - QUORUM
A majority in interest of all the Stockholders of the Company at
such time qualified to vote at meetings of the Stockholders, represented
in person or by proxy, shall constitute a quorum at all meetings of the
Stockholders; but if there be less than a quorum represented at any
meeting, a majority in interest so represented may adjourn the meeting
from time to time.
SECTION 5 - VOTING AND JUDGES OF ELECTION
At all meetings of the Stockholders every registered owner of
shares of the capital stock of the Company may vote in person or by
proxy, and shall have, except in voting for directors, one vote for
<PAGE>
every share standing in his name on the books of the Company.
At all elections of directors each stockholder shall have a number
of votes equal to the number of shares of stock standing in his name,
multiplied by the number of directors to be elected at such election and
he may cumulate or distribute said votes upon or among one or more
candidates as he may prefer.
At all elections of directors the voting shall be by ballot, and a
majority of the votes cast thereat shall elect.
The Directors at their meeting next preceding the time of any
Stockholders' meeting, shall appoint three Stockholders to be Judges of
Election at such meeting, who shall first take and subscribe the
statutory oath or affirmation, and who shall take charge of the polls,
and after the balloting shall make a certificate of the result of the
vote taken; but no candidate for the office of Director shall be
appointed as such Judge.
ARTICLE II.
BOARD OF DIRECTORS
SECTION 1 - NUMBER; TIME OF HOLDING OFFICE
The business and property of this Company shall be managed and
controlled by a Board of five directors who shall hold office for a
period of one year after their election and until their successors are
elected and qualified. The Board of Directors may, without a vote of
the Stockholders and by a two-thirds vote of the entire Board, at any
regular meeting or at any special meeting of said Board called for that
purpose, increase the number of Directors to a number not exceeding
nine. In case the number of directors is so increased at any time the
said Board shall by a majority vote of those directors in office prior
to the increase elect additional Directors to the full number to which
the Board may have been increased. Such additional Directors shall hold
office until the next annual meeting of stockholders and until their
successors are elected and qualified.
If for any reason the annual meeting of the Stockholders for the
election of Directors shall not be held at the time appointed by these
By-laws or shall be adjourned, the Directors
then in office shall continue in office until such election shall have
been held and their successors duly chosen.
- 2 -
<PAGE>
SECTION 2 - POWERS AND DUTIES
The Board shall in each year elect not less than three, nor more
than five, Directors as an Executive Committee of the Board (including
the Chairman of the Board) and shall also elect the officers specified
in Section 1 of Article III hereof, and may elect or appoint such other
officers and such agents and employees as they may deem necessary for
the proper conduct of the Company's business, and may fill any vacancy
which may occur in any office. All officers, agents and employees shall
be removable at the will of the Board; provided, however, that the word
"officer" as used in these By-laws shall not be construed to mean
"Director"; and the Board shall determine the compensation to be paid to
all officers, agents and employees of the Company.
SECTION 3 - VACANCIES
In case of any vacancy in the Board of Directors from death,
resignation, disqualification or other cause, the remaining directors,
by affirmative vote of a majority of the Board of Directors, may elect a
successor to hold office for the unexpired portion of the term of the
director whose place shall be vacant.
SECTION 4 - PLACE OF MEETING
The Directors may hold their meetings and have an office and keep
the books of the Company (except the stock and transfer books) without
the State of Pennsylvania and in such place or places as the Board may
from time to time determine.
SECTION 5 - REGULAR MEETINGS
Regular meetings of the Board shall be held at such times and on
such notice as the Directors may from time to time determine.
The annual meeting of the Board, for the election of the
Executive Committee and the Executive Officers of the Company, shall be
held as soon as practicable after the annual meeting of the stockholders
for the election of Directors.
SECTION 6 - SPECIAL MEETINGS
Special meetings of the Board may be held at any time upon the
call of the President or of a majority of the Directors, by oral or
telegraphic or written notice, duly served on or sent or mailed so as to
reach each Director in due course not less than two days before such
meeting.
- 3 -
<PAGE>
SECTION 7 - WAIVER OF NOTICE OF MEETING
By unanimous written waiver of notice of the meeting, any meeting
of the Board of Directors may be held without notice.
SECTION 8 - QUORUM
A majority of the Board of Directors shall constitute a quorum
for the transaction of business, but if there be less than a quorum
present at any meeting of the Board a majority of those present may
adjourn the meeting from time to time.
Any action required or permitted to be taken at a meeting of the
Board or any committee thereof may be taken without a meeting if the
action is taken by the whole Board or committee and is evidenced by one
or more written consents describing the action taken, signed by all
directors on the Board or committee and filed with the minutes or
corporate records of Board and committee proceedings. Members of the
Board may participate in a regular or special meeting of the Board or
any committee thereof by means of conference telephone or similar
communications equipment by which all persons participating can
simultaneously hear each other. Participation in a meeting by these
communications means constitutes presence in person at the meeting.
SECTION 9 - ORDER OF BUSINESS
At meetings of the Board of Directors, business shall be
transacted in such order as the Board may by resolution from time to
time determine.
SECTION 10 - EXECUTIVE COMMITTEE
The Executive Committee, which shall consist of three members of
the Board of Directors, shall possess and exercise all of the delegable
powers of the Board of Directors except when the latter is in session,
and shall have a special control of the business policy and management
of the company and of all matters of finance, accounts and salaries, and
shall exercise a general supervision of the business of the company, and
it shall cause to be examined from time to time the accounts and
vouchers of the
Treasurer for moneys received and paid out by him. It shall keep a
record of all its proceedings and shall report the same to the Board of
Directors. A majority of the Committee shall constitute a quorum.
SECTION 11 - PERSONAL LIABILITY OF DIRECTORS
(a) Directors shall not be personally liable for monetary damages as such
for any action taken, or any failure to take any action, unless:
- 4 -
<PAGE>
(1) the director has breached or failed to perform the
duties of his office pursuant to Section 8363 of the
Pennsylvania Directors' Liability Act, Act 145 of 1986;
and
(2) the breach of failure to perform constitutes self-
dealing, willful misconduct or recklessness.
(b) The provisions of this section shall not apply to:
(1) the responsibility or liability of a director pursuant
to any criminal statute; or
(2) the liability of a director for the payment of taxes
pursuant to the local, State or Federal law.
SECTION 12 - INDEMNIFICATION OF DIRECTORS
(a) The Corporation shall indemnify any person who was or
is a party or is threatened with being made a party to any
threatened, pending or completed action, suit or proceeding,
including all appeals, by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact that he is
or was a director, officer or employee of the Corporation, or is
or was serving at the request of the Corporation as a director,
officer or employee of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including
attorneys' fees, judgments, decrees, fines, penalties and amounts
paid in settlement) actually and reasonably incurred by him in
connection with the defense or settlement of such action, suit or
proceeding. However, indemnification under this Section shall be
made only if the person to be indemnified acted in good faith and
in a manner he reasonably believed to be in or not opposed to the
best interests of the Corporation; and no such indemnification
shall be made in respect of any claim, issue or matter as to
which such person shall have been finally adjudged to be liable
for negligence or misconduct in the performance of his duty to
the Corporation unless, and only to the extent that, the court or
body in or before which such action, suit or proceeding determine
upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnify for such expenses or
other amounts paid as such court or body shall deem proper.
(b) Indemnification may be granted for any action taken or
for any failure to take any action giving rise to the claim for
indemnification, and may be made whether or not the Corporation
would have the power to indemnify the person under any other
provision except as provided by this Section, and whether or not
the indemnified liability arises or arose from any threatened,
pending, or completed action by or in the right of
- 5 -
<PAGE>
the Corporation. However, such indemnification shall not be made
in any case where the act or failure to act giving rise to the
claim for indemnification is finally determined by a court to
have constituted willful misconduct or recklessness.
ARTICLE III.
OFFICERS
SECTION 1 - EXECUTIVE OFFICERS
The executive officers of this Company shall be a Chairman
of the Board of Directors (who shall be a Director), a President
(who will be a Director), one or more Vice Presidents, a
Comptroller, a Treasurer, one or more Assistant Treasurers, a
Secretary, one or more Assistant Secretaries and a General
Auditor.
SECTION 2 - POWERS AND DUTIES OF CHAIRMAN OF THE BOARD OF
DIRECTORS
It shall be the duty of the Chairman of the Board of
Directors to preside at all meetings of the Board of Directors.
He may sign and execute all authorized contracts in the name of
the Company and he shall perform such other duties as may be
assigned to him from time to time by the Board of Directors.
SECTION 3 - POWERS AND DUTIES OF PRESIDENT
It shall be the duty of the President to preside at all
meetings of the stockholders and, in the absence of the Chairman
of the Board of Directors, at meetings of the Board of Directors;
he shall present a report of the state of the business of the
Company at every annual meeting of the stockholders; he may sign
and execute all authorized contracts in the name of the Company
and may sign with the Treasurer, or an Assistant Treasurer, or
the Secretary, or an Assistant Secretary, certificates of shares
in the capital stock of the Company; he shall have direct charge
of the business of the Company subject to the control of the
Board and he shall do and perform all acts and things incident to
the position of President and such other duties as may be
assigned to him from time to time by the Board of Directors.
SECTION 4 - POWERS AND DUTIES OF VICE PRESIDENTS
In the absence or inability to act of the President, any
Vice President may perform the duties and may exercise any of the
powers of the President subject to the control of the Board of
Directors; and they shall respectively perform such other duties
- 6 -
<PAGE>
as may be assigned to them from time to time by the Board of
Directors, or by the President.
SECTION 5 - POWERS AND DUTIES OF COMPTROLLER
The Comptroller shall have general charge, supervision and
control of the accounts of the Company. He shall direct as to
forms and blanks relating to the books and accounts in all
departments, and no change therein shall be made without his
knowledge and consent. He shall supervise and direct the prep-
aration of the construction and operating budgets of the Company.
He shall verify the assets and cause all books and accounts of
the Treasurer and other officers and agents of the Company
charged with the receipt and disbursement of money to be audited
and examined by his representatives from time to time and as
often as may be practicable. He shall have direct supervision of
taxes, insurance and all official reports made to State or other
governmental authorities. He shall as and when required furnish
to the Board of Directors or such executive officer as it may
designate full and complete statements of account showing the
financial position of the Company with relative detail.
Generally, he shall perform such other duties as from time to
time may be conferred upon or prescribed for him by the Board of
Directors, as may be incident to his office.
SECTION 6 - POWERS AND DUTIES OF TREASURER
It shall be the duty of the Treasurer to have the care and
custody of all the funds and securities of the Company which may
come into his hands, and to endorse the same for deposit or
collection when necessary or proper, as such Treasurer, and to
deposit the same to the credit of the Company, in such bank or
banks or depository as the Board of Directors may designate; he
shall endorse all bills of lading, warehouse receipts, insurance
policies and other commercial documents requiring endorsements
for or on behalf of the Company; he shall sign all receipts and
vouchers for payments made to the Company; he may sign, with the
President or a Vice President, certificates of shares in the
capital stock; he shall render a statement of his cash account to
the Board of Directors as often as shall be required; he shall
enter regularly, in books to be kept by him for that purpose,
full and accurate account of all moneys received and paid by him
on account of this Company; he shall , at all reasonable times,
exhibit his books and accounts to any Director of the Company,
upon application at the office of the Company during business
hours; he shall perform all acts incident to the position of
Treasurer, subject to the control of the Board of Directors; and
he shall give a bond for the faithful discharge of his duties in
such sum and with such surety as the Board of Directors may
require.
- 7 -
<PAGE>
SECTION 7 - POWERS AND DUTIES OF SECRETARY
It shall be the duty of the Secretary to keep the minutes of
all meetings of the Board of Directors in a proper book provided
for that purpose, and also the minutes of all meetings of the
stockholders; he shall attend to the giving and serving of all
notices of the Company; he may sign, with the President or a Vice
President, all authorized contracts in the name of the Company
and certificates of shares to the capital stock, and shall affix
the seal of the Company thereto; he shall have charge of the
Certificate Book, Transfer Book and Stock Ledger, and such other
books and papers as the Board may direct, all of which shall at
all reasonable times be open to the examination of any Director,
upon application at the office of the Company during business
hours; and he shall in general perform all the duties incident to
the office of Secretary, subject to the control of the Board of
Directors.
SECTION 8 - POWERS AND DUTIES OF ASSISTANT TREASURERS
Any Assistant Treasurer may sign, with the President or a
Vice President, certificates of shares in the capital stock of
the Company.
In the absence or inability to act of the Treasurer, the
Assistant Treasurers shall perform all the duties and may
exercise any of the powers of the Treasurer, subject to the
control of the Board of Directors.
SECTION 9 - POWERS AND DUTIES OF ASSISTANT SECRETARIES
Any Assistant Secretary may sign, with the President or a
Vice President, certificates of shares in the capital stock of
the Company.
In the absence or inability to act of the Secretary, the
Assistant Secretary shall perform all the duties and may exercise
any of the powers of the Secretary, subject to the control of the
Board of Directors.
SECTION 10 - POWERS AND DUTIES OF GENERAL AUDITOR
The General Auditor shall have immediate charge of the
general books and accounts of the Company and all accounts and
data relating thereto. He shall make such reports and statements
as may be directed by the Comptroller. Generally, he shall
perform such other duties as from time to time may be conferred
upon or prescribed for him by the Board of Directors as may be
incident to his office. He shall report to and perform his
- 8 -
<PAGE>
duties under the immediate supervision and direction of the
Comptroller.
ARTICLE IV.
CAPITAL STOCK; DIVIDENDS; FISCAL YEAR; SEAL
SECTION 1 - CERTIFICATES OF SHARES
Ownership or proprietary interest in the assets of this
Company shall be evidenced by certificates of shares in the
Capital Stock of the Company, in such form as the Board may from
time to time prescribe.
All certificates shall be consecutively numbered and bound
in book form, and shall be issued in consecutive numerical order;
and the name of the person owning the shares represented thereby,
with the number of such shares and the date of issue, shall be
entered on the margin or stub of each certificate.
No certificate shall be valid unless it is signed by the
President or a Vice-President and by the Treasurer or the
Assistant Treasurer, and impressed with the Company's seal, and
(after the appointment of a Registrar) unless countersigned and
registered by the duly appointed Registrar of the Stock of this
Company.
A receipt for each certificate, by the owner thereof or his
duly authorized agent or attorney, shall be signed on or attached
to the margin thereof at the time of its issue.
All certificates exchanged or surrendered to the Company
shall be canceled by the Secretary and posted in their original
places in the certificate book, and no new certificate shall be
issued until the old certificate for the same number of shares
has been surrendered and canceled, or a bond of indemnity given
as hereinafter provided.
SECTION 2 - LOST OR STOLEN CERTIFICATES
No certificate of shares in the Capital Stock of the Company
shall be issued in place of any certificate alleged to have been
lost or stolen, except on delivery to the Company of a bond of
indemnity against such lost or stolen certificate, to be approved
by the Board of Directors. Proper and legal evidence of such loss
or theft shall be produced to the Board if they require the same.
- 9 -
<PAGE>
SECTION 3 - TRANSFER OF SHARES
Shares in the capital stock of the Company shall be
transferred on the books of the Company only by the holder
thereof in person or by his attorney, upon surrender and
cancellation of certificates for the same number of shares, with
duly executed bill of sale and power to transfer endorsed thereon
or attached thereto.
SECTION 4 - CLOSING OF TRANSFER BOOKS
The stock transfer books of the Company may be closed for at
least twenty days before every annual meeting of the Stockholders
for the election of Directors, and for such length of time as the
Directors may from time to time determine before the payment of
any dividends.
SECTION 5 - DIVIDENDS
The Board of Directors may declare dividends from the
surplus or net profits of the Company whenever they shall deem it
expedient, in the exercise of their discretion, and in conformity
with the provisions upon which the capital stock of this Company
has been issued.
The Board of Directors may, in their discretion, fix a sum
which may be set aside or reserved, over and above the Company's
capital paid in, as a working capital for the Company, and may
increase or diminish the same, from time to time; but they shall
not be required, either in January in each year or at any other
time or times, to declare and pay to the stockholders a dividend
of the whole of the Company's accumulated profits exceeding the
amount which may be reserved as working capital for the Company.
SECTION 6 - FISCAL YEAR
The fiscal year of the Company shall begin on the first day
of January and shall end on the thirty-first day of December.
SECTION 7 - CORPORATE SEAL
The Board of Directors shall provide a suitable seal
containing the name of the Company, which seal shall be in charge
of the Secretary.
- 10 -
<PAGE>
ARTICLE V.
CHECKS, NOTES, ETC.
All checks and drafts on the Company's bank accounts and all
bills of exchange and promissory notes, and all acceptances,
obligations and other instruments for the payment of money, shall
be signed by such officer or officers or agent or agents as shall
be thereunto authorized from time to time by the Board of
Directors.
ARTICLE VI.
BY-LAWS
The Stockholders shall have power to make, amend and repeal
the Bylaws of the Company at any regular or special meeting, by a
majority of the votes cast thereat.
February 25, 1997
- 11 -
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<GROSS-OPERATING-REVENUE> 726,761
<INCOME-TAX-EXPENSE> 34,132
<OTHER-OPERATING-EXPENSES> 578,542
<TOTAL-OPERATING-EXPENSES> 612,674
<OPERATING-INCOME-LOSS> 114,087
<OTHER-INCOME-NET> 13,201
<INCOME-BEFORE-INTEREST-EXPEN> 127,288
<TOTAL-INTEREST-EXPENSE> 49,113
<NET-INCOME> 78,175
818
<EARNINGS-AVAILABLE-FOR-COMM> 77,357
<COMMON-STOCK-DIVIDENDS> 66,483
<TOTAL-INTEREST-ON-BONDS> 38,224
<CASH-FLOW-OPERATIONS> 183,478
<EPS-PRIMARY> 0<F1>
<EPS-DILUTED> 0<F1>
<FN>
<F1>*All common stock is owned by parent, no EPS required.
</FN>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> OPUR1
<MULTIPLIER> 1,000
<CURRENCY> U.S.DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-1-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 2,029,825
<OTHER-PROPERTY-AND-INVEST> 92,094
<TOTAL-CURRENT-ASSETS> 262,992
<TOTAL-DEFERRED-CHARGES> 314,709
<OTHER-ASSETS> 117
<TOTAL-ASSETS> 2,699,737
<COMMON> 465,994
<CAPITAL-SURPLUS-PAID-IN> 55,475
<RETAINED-EARNINGS> 441,283
<TOTAL-COMMON-STOCKHOLDERS-EQ> 962,752
0
79,708
<LONG-TERM-DEBT-NET> 905,243
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 33,387
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 1,280
<LEASES-CURRENT> 769
<OTHER-ITEMS-CAPITAL-AND-LIAB> 716,598
<TOT-CAPITALIZATION-AND-LIAB> 2,699,737
<GROSS-OPERATING-REVENUE> 1,089,124
<INCOME-TAX-EXPENSE> 47,455
<OTHER-OPERATING-EXPENSES> 898,274
<TOTAL-OPERATING-EXPENSES> 945,729
<OPERATING-INCOME-LOSS> 143,395
<OTHER-INCOME-NET> 14,873
<INCOME-BEFORE-INTEREST-EXPEN> 158,268
<TOTAL-INTEREST-EXPENSE> 69,783
<NET-INCOME> 88,485
3,424
<EARNINGS-AVAILABLE-FOR-COMM> 85,061
<COMMON-STOCK-DIVIDENDS> 95,497
<TOTAL-INTEREST-ON-BONDS> 46,656
<CASH-FLOW-OPERATIONS> 272,267
<EPS-PRIMARY> 0<F1>
<EPS-DILUTED> 0<F1>
<FN>
<F1>*All common stock is owned by parent, no EPS required.
</FN>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> OPUR1
<MULTIPLIER> 1,000
<CURRENCY> U.S.DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-1-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 660,873
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 7,658
<TOTAL-DEFERRED-CHARGES> 23,877
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 692,408
<COMMON> 1
<CAPITAL-SURPLUS-PAID-IN> 202,954
<RETAINED-EARNINGS> 0
<TOTAL-COMMON-STOCKHOLDERS-EQ> 202,955
0
0
<LONG-TERM-DEBT-NET> 228,634
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 10,600
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 250,219
<TOT-CAPITALIZATION-AND-LIAB> 692,408
<GROSS-OPERATING-REVENUE> 83,402
<INCOME-TAX-EXPENSE> 13,297
<OTHER-OPERATING-EXPENSES> 27,126
<TOTAL-OPERATING-EXPENSES> 40,423
<OPERATING-INCOME-LOSS> 42,979
<OTHER-INCOME-NET> 3
<INCOME-BEFORE-INTEREST-EXPEN> 42,982
<TOTAL-INTEREST-EXPENSE> 16,193
<NET-INCOME> 26,789
0
<EARNINGS-AVAILABLE-FOR-COMM> 26,789
<COMMON-STOCK-DIVIDENDS> 37,989
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 55,210
<EPS-PRIMARY> 0<F1>
<EPS-DILUTED> 0<F1>
<FN>
<F1>*All common stock is owned by parent, no EPS required.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> OPUR1
<MULTIPLIER> 1,000
<CURRENCY> U.S.DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-1-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 178,546
<OTHER-PROPERTY-AND-INVEST> 2,791
<TOTAL-CURRENT-ASSETS> 26,961
<TOTAL-DEFERRED-CHARGES> 17
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 208,315
<COMMON> 1
<CAPITAL-SURPLUS-PAID-IN> 31,284
<RETAINED-EARNINGS> (3,880)
<TOTAL-COMMON-STOCKHOLDERS-EQ> 27,405
0
0
<LONG-TERM-DEBT-NET> 160,000
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 13
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 20,897
<TOT-CAPITALIZATION-AND-LIAB> 208,315
<GROSS-OPERATING-REVENUE> 747
<INCOME-TAX-EXPENSE> (2,189)
<OTHER-OPERATING-EXPENSES> 3,840
<TOTAL-OPERATING-EXPENSES> 1,651
<OPERATING-INCOME-LOSS> (904)
<OTHER-INCOME-NET> (566)
<INCOME-BEFORE-INTEREST-EXPEN> (1,470)
<TOTAL-INTEREST-EXPENSE> 1,838
<NET-INCOME> (3,308)
0
<EARNINGS-AVAILABLE-FOR-COMM> (3,308)
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 24,879
<EPS-PRIMARY> 0<F1>
<EPS-DILUTED> 0<F1>
<FN>
<F1>*All common stock is owned by parent, no EPS required.
</FN>
</TABLE>
<PAGE>
Exhibit B
SERVICE AGREEMENT
BETWEEN
ALLEGHENY POWER SERVICE CORPORATION
AND
AYP ENERGY, INC.
THIS SERVICE AGREEMENT will be effective as of October 14, 1996,
between Allegheny Power Service Corporation, a corporation formed under the
laws of the State of Maryland, (the "Service Company") and AYP Energy, Inc., a
corporation formed under the laws of the State of Delaware ("AYP Energy").
WITNESSETH:
WHEREAS, the Service Company was created to perform certain
management duties on behalf of Allegheny Power System, Inc. (the "System"),
its utility subsidiary companies (the "Subsidiaries") and its nonutility
subsidiary companies (the "Nonutility Subsidiaries"); and
WHEREAS, the Service Company offers to provide a central
organization to furnish to the System, the Subsidiaries and the Nonutility
Subsidiaries certain advisory, supervisory and other services in accordance
with current practices and procedures; and
WHEREAS, AYP Energy wishes to accept the offer proposed by the
Service Company.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, and for other good and valuable consideration,
the receipt of which is hereby acknowledged, the parties hereto, intending to
be reasonably bound, hereby agree as follows:
1. The Service Company hereby offers to furnish to AYP Energy the
services detailed on Exhibit I attached hereto and made a part hereof.
2. For all services rendered to AYP Energy by the Service Company,
AYP Energy agrees to pay the cost thereof. For services rendered to one or
more Subsidiaries, Nonutility Subsidiaries and/or the System and/or AYP
Energy, the allocation will be based on the average of the prior three years'
direct costs charged by the Service Company to each Subsidiary, Nonutility
<PAGE>
Subsidiary and AYP Energy. Until a three-year history for AYP Energy is
developed, AYP Energy's costs will be deemed to be the same as the average of
the System's prior three years' direct costs, thereby reducing each
Subsidiary's share proportionately. Once a three-year history for AYP Energy
is available, APSC will calculate an allocation percentage for AYP Energy. If
the difference between that allocation percentage and the one used for any of
AYP Energy's first three years is material, then APSC will recalculate all
allocation percentages for those years in which the difference was material
and AYP Energy, the Subsidiaries, the Nonutility Subsidiaries or the System
will each either pay an additional amount or receive a refund of a particular
amount for that year.
3. The payment for services rendered by the Service Company to the
System, the Subsidiaries, the Nonutility Subsidiaries and AYP Energy shall
cover all the costs and expenses of its doing business, excluding only a
return for the use of equity capital, and that each Subsidiary, Nonutility
Subsidiary, the System and AYP Energy shall pay its direct or fair
proportionate share.
4. Payment shall be made by AYP Energy to the Service Company on a
monthly basis on or before the 20th day of the succeeding month, upon receipt
of a statement showing the amount due. Certain charges billed by the Service
Company to AYP Energy may not be due immediately and will be so indicated on
the statement of billing. Monthly charges may be made on an estimated basis,
but adjustments will be made at the end of each calendar year so that all
charges for the calendar year will be in accordance with the foregoing.
5. Nothing herein shall be construed to release the officers and
directors of AYP Energy from the performance of their respective duties or
limit the exercise of their powers as prescribed by law or otherwise.
6. The offer set forth herein shall become a contract effective
as of the date of signing. Such Service Agreement shall continue in full
force and effect from year to year but may be terminated by either party upon
60 days' prior notice, and AYP Energy may terminate such contract at any time
with or without notice for any cause deemed by it to be sufficient.
- 2 -
<PAGE>
7. The Service Agreement will be subject to termination or
modification at any time to the extent its performance may conflict with the
provisions of the Public Utility Holding Company Act of 1935, as amended, or
with any rule, regulation or order of the Securities and Exchange Commission
adopted before or after the making of this Service Agreement and shall be
subject to the approval of any state commission or other regulatory body whose
approval is a legal prerequisite to its execution and delivery or performance.
ALLEGHENY POWER SERVICE CORPORATION
/s/ Alan J. Noia
By Alan J. Noia
President
Attest:
/s/ Eileen M. Beck
Eileen M. Beck
Secretary
AYP Energy, Inc.
/s/ Alan J. Noia
By Alan J. Noia
President
Attest:
/s/ Eileen M. Beck
Eileen M. Beck
Secretary
- 3 -
<PAGE>
Exhibit I
Allegheny Power Service Corporation Principal Functions
In accordance with the terms and conditions of the Service Agreement
dated as of October 14, 1996, Allegheny Power Service Corporation shall perform
for AYP Energy the following services as requested:
1. Provide technical support as needed to offer power marketing
services and to manage AYP Energy's interest in Fort Martin Unit
No. 1.
2. Planning and implementation of financial programs to raise the
funds required for AYP Energy, including handling arrangements
for bank borrowings and sales of securities and relationships
with investors and analysts.
3. Counsel on corporate, legal and regulatory matters and on
important contractual relationships.
4. Provide general and administrative services including, but not
limited to, the following:
a) Purchasing.
b) Customer billing and accounting.
c) Information services, including computer applications and
programming and electronic data processing.
d) Preparation of consolidated financial statements and cost,
statistical, and financial data, as required.
e) Assistance with respect to certain personnel matters,
including, but not limited to, employee benefit matters.
f) Preparation and filing of consolidated income tax returns and
following developments in federal and state taxation
regulations.
g) Administration of insurance.
h) Internal auditing.
i) Corporate security.
5. Certain other services in addition to the above as Allegheny
Power Service Corporation may be able to provide and/or AYP
Energy may require or request.
