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File No. 70-7888
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
POST-EFFECTIVE AMENDMENT NO. 15
TO
FORM U-1
APPLICATION OR DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Allegheny Energy, Inc. Monongahela Power
Company
10435 Downsville Pike 1310 Fairmont Avenue
Hagerstown, MD 21740 Fairmont, WV 26554
Allegheny Power Service Corporation The Potomac
Edison Company
800 Cabin Hill Drive 10435 Downsville Pike
Greensburg, PA 15601 Hagerstown, MD 21740
Allegheny Generating Company West Penn Power Company
10435 Downsville Pike 800 Cabin Hill Drive
Hagerstown, MD 21740 Greensburg, PA 15601
(Name of company or companies filing this statement
and addresses of principal executive offices)
Allegheny Energy, Inc.
10435 Downsville Pike
Hagerstown, MD 21740
(Name of top registered holding company parent of
each applicant or declarant)
Thomas K. Henderson, Esquire
Vice President
Allegheny Energy, Inc.
10435 Downsville Pike
Hagerstown, MD 21740
(Name and address of agent for service)
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Applicants hereby amend their Application or Declaration on
Form U-1 as follows:
1. Applicants hereby amend Item 4. Regulatory Approvals by
deleting it in its entirety and substituting the following
therefor:
The Public Service Commission of West Virginia has
jurisdiction under the West Virginia Affiliate Act
Statute over Monongahela and Potomac Edison concerning
their involvement in the System Money Pool. West
Virginia does not regulate financing transactions, so
the short-term debt portion of the application is not
under West Virginia jurisdiction. The State
Corporation Commission of Virginia has jurisdiction
under the Virginia Affiliate Act Statute over Potomac
Edison and AGC concerning their involvement in the
System Money Pool. Virginia does not regulate short-
term debt with maturities under one year so long as the
outstanding short-term debt does not aggregate more
than 12% of the total capitalization of such utility.
The Maryland Public Service Commission does not have an
affiliate act statute, nor does it regulate short-term
debt with maturities under one year. The Pennsylvania
Public Utility Commission has jurisdiction under the
Pennsylvania Affiliate Act Statute over West Penn
concerning its involvement in the System Money Pool.
Pennsylvania does not regulate short-term debt with
maturities of less than one year. The Public Utilities
Commission of Ohio does not have an affiliate act
statute. If short-term debt is regulated by the SEC,
the Public Utilities Commission of Ohio will not
regulate it. Consequently, the SEC has jurisdiction
over the short-term debt financing for all companies
and over the System Money Pool for Allegheny Energy,
Inc., Allegheny Power Service Corporation, Potomac
Edison (Maryland portion only) and Monongahela (Ohio
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portion only). No regulatory agency, other than those
named, and the Securities and Exchange Commission, has
jurisdiction over the proposed transactions.
2. Applicants hereby amend Item 6. Exhibits and Financial
Statements by filing herewith the following:
(a) Exhibits
D-4(c) Order of the Pennsylvania Public Utility
Commission.
D-6(c) Order of the West Virginia Public Service
Commission.
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SIGNATURE
Pursuant to the requirements of the Public Utility
Holding Company Act of 1935, the undersigned Applicants have duly
caused this statement to be signed on their behalf by the
undersigned thereunto duly authorized.
ALLEGHENY ENERGY, INC.
BY /s/ CAROL G. RUSS
CAROL G. RUSS
COUNSEL
ALLEGHENY POWER SERVICE CORPORATION
BY /s/ CAROL G. RUSS
CAROL G. RUSS
COUNSEL
ALLEGHENY GENERATING COMPANY
BY /s/ CAROL G. RUSS
CAROL G. RUSS
COUNSEL
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MONONGAHELA POWER COMPANY
BY /s/ CAROL G. RUSS
CAROL G. RUSS
COUNSEL
THE POTOMAC EDISON COMPANY
BY /s/ CAROL G. RUSS
CAROL G. RUSS
COUNSEL
WEST PENN POWER COMPANY
BY /s/ CAROL G. RUSS
CAROL G. RUSS
COUNSEL
Dated: December 22, 1997
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EXHIBIT D-4(c)
PENNSYLVANIA
PUBLIC UTILITY COMMISSION
Harrisburg, PA 17105-3265
Public Meeting held December 18, 1997
Commissioners Present:
John M. Quain, Chairman
Robert K. Bloom, Vice Chairman
John Hanger
David W. Rolka
Nora Mead Brownell
Proposed Changes to an Affiliated Interest Docket No.
Agreement known as the Allegheny Power G-00970583
System Money Pool
OPINION AND ORDER
BY THE COMMISSION:
On October 16, 1997, proposed changes to an affiliated
interest agreement known as the Allegheny Power System Money
Pool ("Agreement" or "Money Pool") were filed to become
effective November 15, 1997. By Secretarial Letter dated
November 12, 1997, the Commission extended the consideration
period for this Agreement to January 16, 1998.
Participants in the Money Pool are Allegheny Power
System, Inc., Monongahela Power Company ("Mon Power"),
Potomac Edison Company ("Potomac Edison"), West Penn Power
Company ("West Penn") and Allegheny Generating Company
("AGC"). Mon Power, Potomac Edison, West Penn and AGC are
wholly owned subsidiaries of Allegheny Power System, Inc.
The Money Pool is an internal financing arrangement in
which the excess funds of some participants are used to
satisfy the short-term borrowing needs of other
participants. The Money Pool is designed to match, on a
daily basis, the available cash and short-term borrowing
requirements of the participants, thereby minimizing the
need to borrow funds in external short-term capital markets.
The present Agreement, which was approved by the
Commission at Docket No. G-910274, entered November 7, 1991,
calculates interest income and expense using the previous
day's Fed Funds Effective Interest Rate. The first proposed
change is that whenever the Fed Funds rate is not at least
four basis point lower than the seven-day commercial paper
rate, then the seven-day commercial paper rate minus four
basis points would be used. West Penn states that this
change is proposed in order to levelize the interest rate
used for the Money
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Pool, since there are occurrences when the Fed Funds rate will "spike" up.
The second proposed change is that interest income
resulting from external investments will be accrued daily
instead of booked upon receipt. Interest income would also
be allocated to the members of the Money Pool on a basis
equal to their pro rata share of net contributions in the
Money Pool throughout the month, rather than on the net
contributions on the day the investment was placed. The
allocation of interest income would be settled on a cash
basis on the last business day of each month. West Penn
states that this change is proposed so the wording in the
Agreement would better clarify how the Money Pool works.
There will be no change in the operation of the Money Pool.
We note that this Agreement is filed in accordance with
the requirements of Section 2102(b) of the Public Utility
Code, 66 Pa. C.S. 2102(b).
We have examined the Agreement and have determined that
it appears to be reasonable and consistent with the public
interest. However, approval of the Agreement does not
preclude us from investigating, during any formal
proceeding, the reasonableness of this Agreement; THEREFORE,
IT IS ORDERED:
1. That the proposed changes to an affiliated interest
agreement known as the Allegheny Power System Money Pool be,
and hereby are, approved.
2. That acceptance does not preclude the Commission from
investigating, during any formal proceeding, the
reasonableness of charges incurred under this Agreement.
3. That this proceeding at Docket No. g-00970583 be marked
closed.
BY THE COMMISSION,
/s/ James J. McNulty
James J. McNulty
Secretary
(SEAL)
ORDER ADOPTED: December 18, 1997
ORDER ENTERED: December 18, 1997
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EXHIBIT D-6(c)
PUBLIC SERVICE COMMISSION
OF WEST VIRGINIA
CHARLESTON
Entered: December 18, 1997
CASE NO. 97-1416-E-PC
MONONGAHELA POWER COMPANY and
THE POTOMAC EDISON COMPANY, dba
ALLEGHENY POWER
Petition for consent and approval
of Amendment to Money Pool Agreement.
RECOMMENDED DECISION
On October 20, 1997, Monongahela Power Company and The
Potomac Edison Company, dba Allegheny Power (the Companies),
filed a petition, pursuant to West Virginia Code 24-2-12,
seeking Commission consent and approval to amend their
Allegheny Power System Money Pool Agreement (the Money
Pool). The Money Pool is an internal financing facility in
which the excess funds of some participants are used to
satisfy the short-term borrowing needs of other
participants. Participants in the Money Pool are Monongahela
Power Company, The Potomac Edison Company, West Penn Power
Company, Allegheny Generating Company (AGC) and Allegheny
Power System, Inc. (APS, Inc.). 1. AGC may only borrow from
the Money Pool and APS, Inc., may only lend to the Money
Pool. Daily balancing of each Money Pool participant and the
overall administration of the Money Pool are performed by
Allegheny Power Service Corporation, the agent of the
participants. The operation of the Money Pool is designed to
match, on a daily basis, the available cash and short-term
borrowing requirements of the participants, thereby
minimizing the need to borrow funds in the external short-
term capital markets. Any excess funds from the Money Pool
are to be invested according to guidelines outlined in the
Money Pool Agreement. No unregulated affiliates can
participate in the Money Pool.
In September 1991, the Companies herein applied to the
Commission for approval to enter into the Money Pool
Agreement and to participate in the same. By Commission
Order finalized on February 13, 1992, Monongahela and
Potomac Edison were authorized by the Commission to enter
into the Money Pool arrangement among the Allegheny Power
System companies. 2 In their most recent base rate case
proceedings, both Monongahela and Potomac Edison
1 On October 1, 1997, APS, Inc., changed its name to
Allegheny Energy, Inc.
2 See, Case No. 91-710-E-PC.
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requested recovery of the Money Pool expenses for ratemaking
purposes.3 Such rate recovery was granted by the orders of
the Commission in those base rate proceedings dated
September 30, 1994 (ALJ Decision), and March 17, 1995
(Commission Decision).
The Companies desire to amend the Money Pool Agreement
in the following respects, to-wit:
(a) Under the prior Agreement, interest income and
expense were calculated "using the previous day's
federal funds effective interest rate as quoted by
the Federal Reserve Bank of New York." A revision
has been made which adds to the end of that
sentence the following: "as long as this rate is
at least four basis points lower than the previous
day's seven-day commercial paper rate, as quoted
by the same resource. Whenever the federal fund
rate is not at least four basis points lower than
the seven-day commercial paper rate, the seven-day
commercial paper rate, minus four basis points,
should be used";
(b) The interest income resulting from the external
investments will be accrued daily instead of
booked upon receipt. Interest income will be
allocated to members of the Pool on a basis equal
to their prorata share of net contributions in
the Pool throughout the month, instead of the net
contributions on the day the investment was
placed. Also added to the Agreement is a sentence
that the allocation of interest income will be
settled on a cash basis on the last business day
of each month;
(c) In all other respects, the Money Pool Agreement
remains the same.
The Companies assert that using the Money Pool is a
more efficient method of managing the funds of the
subsidiaries. They believe that the cost of the proposed
borrowing through the Money Pool will generally be more
favorable to the borrowing participants than the comparable
costs of external short-term borrowing and that the yield to
the participants contributing available funds to the Money
Pool will generally be higher than the typical yield on
short-term investments. The Companies also assert that the
terms and conditions of the amendments to the Money Pool
Agreement are fair and reasonable and will not grant an
undue advantage to any party to the transactions and that
the Commission's approval of the proposed amendments to the
Money Pool Agreement is in the best interest of the
Companies' West Virginia customers.
3 See, Case Nos. 94-0035-E-42T and 94-0027-E-42T
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By order dated November 18, 1997, the Commission
referred this matter to the Division of Administrative Law
Judges for disposition and ordered that an Administrative
Law Judge's decision be rendered on or before May 19, 1998.
On December 11, 1997, Staff Attorney Caryn Watson Short
filed a Final Joint Staff Memorandum. A Utilities Division
Final Staff Recommendation, dated December 10, 1997, from
Diane Davis Calvert, Senior Utilities Analyst, Special
Studies Section, Utilities Division, was attached thereto.
Both of these memoranda recommended the petition filed
herein on October 20, 1997, be approved, subject to the
conditions set forth in the Commission's initial February
13, 1992 approval of the Money Pool Agreement.
FINDINGS OF FACT
1. On October 20, 1997, Monongahela Power Company and
The Potomac Edison Company, dba Allegheny Power, filed a
petition seeking Commission consent and approval to amend
their Allegheny Power System Money Pool Agreement. (See,
October 20, 1997 filing).
2. Commission Staff recommended that the petition be
approved, subject to the conditions of Commission approval
of the underlying Money Pool Agreement, as enunciated in
Case No. 91-710-E-PC. (See, Final Joint Staff Memorandum and
attachment filed December 11, 1997).
CONCLUSION OF LAW
Upon consideration of all of the above, the undersigned
Administrative Law Judge is of the opinion that the petition
filed herein on October 20, 1997, by Monongahela Power
Company and the Potomac Edison Company, dba Allegheny Power,
seeking Commission consent and approval for amendments to
the Allegheny Power System Money Pool Agreement, should be
approved.
ORDER
IT IS, THEREFORE, ORDERED that the petition filed
herein on October 20, 1997, by Monongahela Power Company and
The Potomac Edison Company, dba Allegheny Power, filed a
petition seeking Commission consent and approval for certain
amendments to the Allegheny Power System Money Pool
Agreement, be, and hereby is, granted, without specifically
approving the terms and conditions thereof.
IT IS FURTHER ORDERED that the approval herin
granted shall in no way be construed to preclude or prevent
the Commission or its Staff from reviewing or challenging
the reasonableness of any specific transaction under the
Money Pool Agreement or the reasonableness of its underlying
terms and conditions for ratemaking purposes.
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IT IS FURTHER ORDERED that this matter be, and hereby
is, removed from the Commission's docket of open cases.
The Executive Secretary is hereby ordered to serve a
copy of this order upon the Commission by hand delivery, and
upon all parties of record by United States Certified Mail,
return receipt requested.
Leave is hereby granted to the parties to file written
exceptions supported by a brief with the Executive Secretary
of the Commission within fifteen (15) days of the date this
order is mailed. If exceptions are filed, the parties filing
exceptions shall certify to the Executive Secretary that all
parties of record have been served said exceptions.
If no exceptions are so filed this order shall become
the order of the Commission, without further action or
order, five (5) days following the expiration of the
aforesaid fifteen (15) day time period, unless it is ordered
stayed or postponed by the Commission.
Any party may request waiver of the right to file
exceptions to an Administrative Law Judge's Order by filing
an appropriate petition in writing with the Secretary. No
such waiver will be effective until approved by order of the
Commission, nor shall any such waiver operate to make any
Administrative Law Judge's Order or Decision the order of
the Commission sooner than five (5) days after approval of
such waiver by the Commission.
/s/ Melissa K. Marland
Melissa K. Marland
Chief Administrative Law Judge
MKM/JC:pst
