___________________________________
:
IN THE MATTER OF :
:
ALLEGHENY POWER SYSTEM, INC. et. al. :
: CERTIFICATE
File No. 70-8411 : PURSUANT TO RULE 24
: FOR THE QUARTER ENDED
(Public Utility Holding : JUNE 30, 1997
Company Act of 1935) :
___________________________________ :
As of June 30, 1997, Allegheny Power System, Inc. ("APS") has made
capital contributions to AYP Capital, Inc. ("AYP Capital") and its
subsidiaries totaling $36,474,446. See attached consolidated financial
statements for the quarter ended June 30, 1997. During the second quarter of
1997, AYP Capital performed studies and completed preliminary development
activities in connection with the ownership of companies in the areas of
emerging technologies closely related to APS's core business. Other specific
activities performed by AYP Capital during the second quarter of 1997 are
shown below.
I. Description of Activities
A. Consulting and Engineering Services
AYP Capital provided engineering, consulting, procurement and
construction services to nonaffiliated entities and completed
development and marketing activities associated with the provision
of such services to nonaffiliated entities.
B. Energy Management Services - APS Cogenex
As previously reported, AYP Capital and EUA-Cogenex agreed to cease
joint marketing activities for energy management services under the
terms of their joint venture agreement for APS Cogenex. Pending
resolution of outstanding jobs, the APS Cogenex joint venture
continues to exist.
AYP Capital developed energy management products and services to be
offered to customers in and around the service territory of its
affiliates.
<PAGE>
C. EWGs and FUCOs
AYP Capital, through the Latin American Energy and Electricity Fund
I, L.P. ("FondElec"), a limited partnership formed to invest in and
develop electric energy opportunities in Latin America, continued
to investigate FUCO investments. No new investments were made in
the second quarter. As of the end of the second quarter of 1997,
AYP Capital has invested $1,787,566 in FondElec.
AYP Energy continues as an exempt wholesale generator ("EWG") and
power marketer.
D. Real Estate Activities
No new activities.
E. Insider Heat Pump Distributorship
During the second quarter, AYP Capital, Inc. (AYP Capital)
continued its activities in marketing and selling heat pumps.
F. HVAC and Appliance Warranties/Power Quality Devices
On April 24, 1997, AYP Capital received SEC approval to engage in
the sale and marketing of HVAC (Heating, Ventilation and Air
Conditioning) appliance warranties and power quality devices.
II. Guarantees or assumption of liabilities by APS on behalf of AYP
Capital or its subsidiaries
APS continues to provide a Support Agreement to AYP Energy in
connection with a $15 million discretionary line of credit for AYP
Energy for the issuance of standby letters of credit for the
benefit of AYP Energy's activities.
III. Services Provided by AYP Capital to Associate Companies
AYP Capital did not provide any services to associate companies
during the second quarter of 1997.
2
<PAGE>
IV. Factoring Activities
AYP Capital did not perform any activities associated with the
factoring of accounts receivable.
ALLEGHENY POWER SYSTEM, INC.
By /s/ Thomas K. Henderson
Thomas K. Henderson
Vice President
AYP CAPITAL, INC.
By /s/ Thomas K. Henderson
Thomas K. Henderson
Counsel
Dated: August 29, 1997
<PAGE>
AYP CAPITAL
CONSOLIDATED STATEMENT OF INCOME
FOR TWELVE MONTHS ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
QTR YTD 12MOS
<S> <C> <C> <C>
ELECTRIC OPERATING REVENUES 12,250,205 24,537,877 26,619,606
OPERATING EXPENSES:
Operation:
Fuel 6,090,005 11,881,357 12,608,856
Purchased Power & Exchange 2,357,770 5,610,319 6,944,903
Other 921,814 1,811,661 2,938,270
Transmission & Distribution 984,770 1,786,599 2,044,919
Cust. Accts & Services 105,844 169,339 256,514
Administrative & General 1,744,156 2,830,686 3,690,161
Total Operation & Maintenance 12,204,358 24,089,960 28,483,623
Depreciation 1,326,681 2,643,534 2,655,668
Taxes other than income taxes 1,355,910 2,451,230 3,216,792
Federal and state income taxes (2,092,544) (3,991,547) (5,933,101)
Total Operating Expenses 12,794,405 25,193,177 28,422,982
Operating Income (544,200) (655,300) (1,803,376)
OTHER INCOME AND DEDUCTIONS:
Other income, net 177,860 191,096 328,261
Total Other Income and Deductio 177,860 191,096 328,261
Income Before Interest Charges and
Preferred Dividends (366,340) (464,203) (1,475,115)
INTEREST CHARGES AND PREFERRED DIVIDENDS:
Interest on other long-term obligations 2,742,133 5,454,133 7,292,267
Other interest 8,517 21,867 21,882
Total Interest Charges and
Preferred Dividends 2,750,650 5,476,000 7,314,149
Consolidated Net Income (3,116,990) (5,940,203) (8,789,264)
</TABLE>
Unaudited
<PAGE>
AYP Capital, Inc.
CONSOLIDATED BALANCE SHEET
As of June 30, 1997
Assets
Property, plant, and equipment:
At original cost 176,308,206
Accumulated depreciation (2,967,742)
173,340,464
Investments and other assets:
Nonutility investments 3,008,925
3,008,925
Current assets:
Cash and temporary cash investments 8,265,043
Accounts receivable:
Electric service 4,671,361
Other 929,588
Accts. Receivable - Affiliates 382,012
Materials and supplies--at average cost:
Operating and construction 2,524,287
Fuel 2,843,608
Other 2,984,435
22,600,333
Deferred charges:
Other 325,412
325,412
Total Assets 199,275,133
Capitalization and Liabilities
Capitalization:
Common stock 1,000
Other paid-in capital 36,473,446
Retained earnings (9,820,830)
26,653,615
Preferred stock:
Long-term debt of subsidiaries 160,000,000
Long-term debt of subsidiaries 0
186,653,615
Current liabilities:
Accounts payable - Affil. 3,824,822
Accounts payable - Other 2,155,756
Taxes accrued:
Federal and state income 180,411
Other 1,119,716
Interest accrued 1,838,133
Payrolls Accrued 0
Other 931,304
10,050,142
Deferred credits and other liabilities:
Deferred income taxes 2,286,017
Other 285,359
2,571,376
Total Capitalization and Liabilities 199,275,133
Unaudited
