<PAGE>
File No. 70-____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM U-1
APPLICATION OR DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Monongahela Power Company
1310 Fairmont Avenue
Fairmont, WV 26554
The Potomac Edison Company
10435 Downsville Pike
Hagerstown, MD 21740-1766
West Penn Power Company
800 Cabin Hill Drive
Greensburg, PA 15601
(Name of company or companies filing this statement and
addresses of principal executive offices)
Allegheny Energy, Inc.
(Name of top registered holding company parent of each
applicant or declarant)
Thomas K. Henderson, Esq.
Vice President
Allegheny Energy, Inc.
10435 Downsville Pike
Hagerstown, MD 21740
(Name and address of agent for service)
<PAGE>
Item No. 1. Description of Proposed Transaction
The proposed transactions involve the issuance of notes
by Monongahela Power Company ("Monongahela"), The Potomac
Edison Company ("Potomac Edison"), and West Penn Power
Company ("West Penn") (collectively, the "Companies") to
support the contemporaneous issuance of pollution control
revenue bonds by The County Commission of Pleasants County,
West Virginia (the "County Commission"). The proceeds from
the bonds will be used to effect the redemption of presently
outstanding pollution control revenue bonds, all of which
are Series A Bonds issued by the County Commission in 1977
in the following amounts and with the following interest
rates: (i) $45,000,000 principal amount Pollution Control
Revenue Bonds (West Penn Power Company Pleasants Power
Station Project), 1977 Series A; 6 1/8%; (ii) $30,000,000
principal amount Pollution Control Revenue Bonds (The
Potomac Edison Company Pleasants Power Station Project),
1977 Series A, 6.3%; (iii) $14,500,000 principal amount
Pollution Control Revenue Bonds (Monongahela Power Company
Pleasants Power Station Project), 1977 Series A, 6 3/8% ;
and (iv) $3,000,000 principal amount Pollution Control
Revenue Bonds (Monongahela Power Company Pleasants Power
Station Project), 1977 Series A, 6 3/8% (collectively, the
"Series A Bonds"). Due to the change in interest rates
since the time that the Series A Bonds were originally
issued, the County Commission proposes to refund all Series
A Bonds by issuing one new series of pollution control
revenue bonds for each of the Companies (collectively, the
"Series D Bonds") at a lower interest rate. The Companies
request authority from the Securities and Exchange
Commission ("Commission") to enter into new long-term
promissory notes insofar as the terms and conditions of the
long-term bonds to be issued by the County Commission affect
the payments to be made by the Companies under
1
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the current long-term promissory notes presently outstanding. The
presently outstanding Series A notes will be canceled and
new notes will be entered into to reflect the new terms.
A. Background
On November 1, 1977, the Commission authorized
Monongahela, Potomac Edison and West Penn to issue notes in
connection with the tax exempt financing by the County
Commission of certain air and water pollution control
equipment and facilities at the Companies' Pleasants Power
Station located in Pleasants County, West Virginia (the
"Pleasants Station"). (HCAR 20604.) The Pleasants Station
is jointly owned by Monongahela, Potomac Edison and West
Penn in the following undivided percentages: Monongahela
25%, Potomac Edison 30% and West Penn 45%. In 1978 and 1979
(HCAR Nos. 20672 and 20925), the Commission authorized
Monongahela, Potomac Edison and West Penn to issue notes
aggregating $77,500,000 (the "Series B Notes"),
corresponding to the Series B Pollution Control Revenue
Bonds issued by the County Commission. The Companies
entered into the second phase of a financing plan to provide
additional money for the installation of pollution control
equipment and facilities at the Pleasants Station. The
pollution control equipment and facilities at the Pleasants
Station (Facilities) included (i) electrostatic
precipitators for the removal of particulates from flue
gases, together with related fly ash handling and storage
facilities, (ii) wet scrubber systems for removal of sulfur
dioxide from flue gases, (iii) a lime unloading, handling
and feed system related to the scrubbers, (iv) a slurry
dewatering system and a sludge processing and disposal
system to treat and dispose of the sludge from the
scrubbers, (v) a portion of the cooling towers and related
facilities, (vi) waste water treatment facilities, (vii) a
sewage treatment plant, and (viii) facilities for the
removal and disposition
2
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of solid wastes, principally fly ash and bottom ash, and
associated equipment and certain real estate. The Facilities
have been completed.
On May 11, 1994, the Companies were authorized to issue
new pollution control revenue notes (the "Series C Notes")
aggregating $77,500,000. (HCAR 26051.) The County
Commission issued its Series C Pollution Control Revenue
Bonds, the proceeds of which were used to redeem its Series
B Pollution Control Revenue Bonds . (HCAR 26051). The
Series B Notes were canceled as part of this transaction.
B. Requested Authorization
The County Commission proposes to issue
$92,500,000 aggregate principal amount in three new series
of long-term bonds (each series to be designated as "Series
D Bonds", collectively hereinafter referred to as the
"Series D Bonds"), the proceeds of which will be used to
refund the County Commission's Series A Bonds presently
outstanding.
Monongahela, Potomac Edison and West Penn request
authority through December 31, 2002 to enter into the
proposed transaction and to issue new promissory notes which
will be substituted for and replace the promissory notes
presently outstanding. The presently outstanding notes will
be canceled. The Series D Bonds will be issued under a
supplemental trust indenture with a corporate trustee,
approved by the Companies, and sold at such time, at such
interest rate and for such price as shall be approved by the
Companies. However, the interest rate for each series of
Series D Bonds will not exceed the interest rate of the
corresponding series of Series A Bonds presently
outstanding. The timing of the financing will depend upon a
subjective determination by the Companies of market
conditions. The Series D Bonds will mature no later than
the year 2020.
3
<PAGE>
Each Company will deliver concurrently with the
issuance of the Series D Bonds, its non-negotiable Pollution
Control Note (collectively, the "Notes") corresponding to
such series of Bonds in respect of principal amount,
interest rate and redemption provisions (which may include a
special right of the holder to require the redemption or
repurchase of the Bond at stated intervals) and having
installments of principal corresponding to any mandatory
sinking fund payments and stated maturities. The Notes will
be secured by a second lien on the Facilities and certain
other properties, pursuant to the Deed of Trust and Security
Agreement dated November 1, 1977, as supplemented by a First
Supplement thereto dated August 1, 1978 as to West Penn and
Potomac Edison and a First Supplemental thereto dated
February 1, 1979 as to Monongahela, delivered by the
Companies to the trustee creating a mortgage and security
interest in the Facilities and certain other property
(subject to the lien securing each Company's first mortgage
bonds). Payment on the Notes will be made to the Trustee
under the Third Supplemental Indentures to be entered into
between the Companies and the Trustee, described below, and
shall be applied by the Trustee to pay the maturing
principal and redemption price of and interest and other
costs on the Series D Bonds as the same become due. Each
Company also proposes to pay any trustees' fees or other
expenses incurred by the County Commission.
It is expected that the County Commission will
engage an underwriter or underwriters to provide financial
advice and underwrite the sale of the Series D Bonds. Fees,
commissions and expenses of the underwriters and legal
counsel in connection with the proposed transaction will be
filed by amendment. The Companies have been informed that
the County Commission has legal authority to issue tax
exempt revenue bonds in accordance with the proposed
documents and the
4
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Companies understand that legal opinions
to that effect will be delivered to appropriate parties at,
or prior to, the closing date. The Series D Bonds will be
in registered form and initially will be registered in the
name of Cede & Co., as nominee for The Depository Trust
Company, New York, New York. The Series D Bonds will bear
interest semi-annually at rates to be determined. The
Series D Bonds will be issued pursuant to supplemental
indentures which will provide for parameters to be
determined. The supplemental indentures will also provide
that all of the proceeds from the sale of the Series D Bonds
by the County Commission must be applied to the cost of the
Facilities, including the cost of refunding the Series A
Bonds.
The Series D Bonds will be secured by the Notes
and will be supported by various covenants of each Company
contained in the original Pollution Control Financing
Agreement dated as of November 1, 1977, copies of which have
previously been filed in File No. 70-6179.
Applicants desire to consummate the proposed
transactions and refund the Series A Bonds to provide the
lowest cost of permanent financing for non-revenue-producing
pollution control equipment which the Companies have been
required to install to meet environmental standards. The
Companies have been advised that the annual interest rate on
tax exempt bonds has been approximately 1% to 3% lower than
the interest rate on taxable obligations of comparable
quality, depending upon the type to be sold by the County
Commission.
Item No. 2. Fees, Commissions and Expenses
The following estimated fees and expenses are expected
to be incurred by the Applicants in connection with each
Company's issuance of Notes and refunds of Series A Bonds:
5
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Bond Counsel fees and expenses $60,000
Commission Counsel fees 7,500
Price Waterhouse 18,000
Printing expenses 20,000
Trustee's fees 15,000
Underwriter's Counsel fees and expenses 45,000
Blue Sky fees 3,000
Rating Agency fees 58,000
Miscellaneous 5,000
Item No. 3. Applicable Statutory Provisions
The Companies are informed by counsel that the
proposed transactions may be subject to Sections 6(a), 9(a),
10 and 12(c) of the Public Utility Holding Company Act of
1935.
Item No. 4. Regulatory Approval
The proposed transactions will be authorized
to the extent required by the Public Service Commission
of West Virginia and the Public Utilities Commission of
Ohio, as to Monongahela's participation in the proposed
transactions; by the Public Utility Commission of
Pennsylvania as to such participation by West Penn; and
by the Public Service Commission of West Virginia, the
State Corporation Commission of Virginia and the Public
Service Commission of Maryland as to Potomac Edison's
participation. No regulatory agency, other than those
named, and the Securities and Exchange Commission, has
jurisdiction over the proposed transactions.
Item No. 5. Procedure
It is requested that the Commission's order
granting this Application or Declaration be issued on or
before October 31, 1997. There should be no recommended
decision by a hearing or other responsible officer of the
Commission and no 30-day waiting period between the issuance
of the Commission's order and its effective date.
6
<PAGE>
The Applicant consents to the Division of Corporate Regulation's
assisting in the preparation of the Commission's decision
and order in this matter, unless the Division opposes the
transactions covered by this Application or Declaration.
Item No. 6. Exhibits and Financial Statements
(a) Exhibits
D-1 Potomac Edison's Application to the
Maryland Public Service Commission
(to be filed by amendment).
D-2 Monongahela's Application to the Ohio Public
Utility Commission (to be filed by
amendment).
D-3 West Penn's Application to the Pennsylvania
Public Utility Commission (to be
filed by amendment).
D-4 Potomac Edison's Application to the
Virginia State Corporation
Commission (to be filed by
amendment).
D-5 No-Action Letter of the Public Service
Commission of West Virginia
regarding Monongahela's and Potomac
Edison's Application (to be filed
by amendment).
D-6 Order of the Maryland Public Service Commission
(to be filed by amendment).
D-7 Order of the Ohio Public Utility Commission.
D-8 Order of the Pennsylvania Public Utility
Commission (to be filed by amendment).
D-9 Order of the Virginia State Corporation
Commission (to be filed by amendment).
F Opinion of Counsel
G-1 Monongahela's Financial Data Schedule (actual)
G-2 Monongahela's Financial Data Schedule (pro forma)
G-3 Potomac Edison's Financial Data Schedule
(actual)
G-4 Potomac Edison's Financial Data Schedule
(pro forma)
G-5 West Penn's Financial Data Schedule (actual)
G-6 West Penn's Financial Data Schedule (pro forma)
G-7 Allegheny Energy, Inc. (actual)
G-8 Allegheny Energy, Inc. (pro forma)
H Form of Notice
(b) Financial Statements as of June 30, 1997
1-A Balance sheets of Monongahela per books and pro
forma.
2-A Balance sheets of Potomac Edison per books and pro
forma.
3-A Balance sheets of West Penn per books and pro
forma.
4-A Allegheny Energy, Inc. and subsidiaries
consolidated balance sheet, per
books and pro forma.
1-B Statements of income and retained earnings of
Monongahela per books and pro
forma.
2-B Statements of income and retained earnings of
Potomac Edison per books and pro
forma.
3-B Statements of income and retained earnings of
West Penn per books and pro forma.
4-B Allegheny Energy, Inc. and subsidiaries
consolidated statements of income
and retained earnings, per books
and pro forma.
Item No. 7. Information as to Environmental Effects
(a) For the reasons set forth in
Item 1 above, the authorization applied for herein does
not require major federal action significantly
affecting the quality of the human environment for
purposes of Section 102(2)(C) of the National
Environmental Policy Act (42 U.S.C. 4232(2)(C)).
8
<PAGE>
(b) Not applicable.
SIGNATURE
Pursuant to the requirements of the Public Utility
Holding Company Act of 1935, the undersigned companies have
duly caused this statement to be signed on their behalf by
the undersigned thereunto duly authorized.
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: October 1, 1997
9
<PAGE>
EXHIBIT F
October 1, 1997
Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549
Dear Sirs:
Referring to the Application or Declaration on Form U-1
filed contemporaneously by Monongahela Power Company
("Monongahela"), The Potomac Edison Company ("Potomac Edison")
and West Penn Power Company ("West Penn", collectively with
Monongahela and Potomac Edison, the "APS Companies"), under the
Public Utility Holding Company Act of 1935 with respect to the
issuance of three series of pollution control revenue bonds (the
"Bonds") by The County Commission of Pleasants County, West
Virginia (the "County Commission"), and the contemporaneous
issuance of a note by each of the APS Companies to support the
issuance of the Bonds (the "Notes"), I have examined such
documents and questions of law as I deemed necessary to enable me
to render this opinion.
I understand that the Bonds will be offered by the
County Commission in a negotiated sale to underwriters; that the
issuance of the Notes has been duly authorized by the Boards of
Directors of Monongahela, Potomac Edison and West Penn; that all
amendments necessary to complete the above-mentioned Application
or Declaration and to complete Monongahela's applications with
the Ohio Public Utility Commission and the Public Service
Commission of West Virginia, Potomac Edison's applications with
the Public Service Commission of Maryland, the Virginia State
Corporation Commission and the Public Service Commission of West
Virginia, and West Penn's application with the Pennsylvania
Public Utility Commission, have been or will be filed prior
thereto; and that all other necessary corporate action by the
Boards of Directors and officers of Monongahela, Potomac Edison
and West Penn in connection with the issuance of the Notes has
been or will be taken prior thereto.
Based upon the foregoing, I am of the opinion that:
(1) Monongahela is validly incorporated and duly
existing and is in good standing under the laws of the State of
Ohio; and
(2) Potomac Edison is validly incorporated and duly
existing and is in good standing under the laws of the State of
Maryland and the Commonwealth of Virginia; and
(3) West Penn is validly incorporated and duly
existing and is in good standing under the laws of the
Commonwealth of Pennsylvania; and
(4) Provided that (a) the actions outlined above shall
have been duly taken, (b) the above-mentioned Application or
Declaration and state applications as so amended, shall have
become effective or been approved pursuant to appropriate orders
of the respective regulatory commissions, and (c) the Bonds shall
have been offered, issued and sold and the Notes shall
<PAGE>
have been issued, all in accordance with the procedures outlined above and
in accordance with the orders of the appropriate regulatory
commissions, then:
(i) All state laws applicable to the proposed
transaction will have been complied with; and
(ii) The Note to be issued by Monongahela to secure
the Bonds will be a valid and binding obligation
of Monongahela in accordance with its terms; and
(iii) The Note to be issued by Potomac Edison to secure
the Bonds will be a valid and binding obligation
of Potomac Edison in accordance with its terms; and
(iv) The Note to be issued by West Penn to secure the
Bonds will be a valid and binding obligation of
West Penn in accordance with its terms; and
(v) The consummation of the proposed transactions will
not violate the legal rights of the holders of any
securities issued by Monongahela, Potomac Edison or
West Penn or any associate company thereof.
This opinion does not relate to State Blue Sky or
securities laws.
I hereby consent to the filing of this opinion as an
exhibit to the above-mentioned Application or Declaration.
Very truly yours,
/s/ Carol G. Russ
Carol G. Russ
2
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<TOTAL-CURRENT-ASSETS> 569,173
<TOTAL-DEFERRED-CHARGES> 653,216
<OTHER-ASSETS> 4,573
<TOTAL-ASSETS> 6,564,972
<COMMON> 153,021
<CAPITAL-SURPLUS-PAID-IN> 1,043,513
<RETAINED-EARNINGS> 1,013,041
<TOTAL-COMMON-STOCKHOLDERS-EQ> 2,209,575
0
170,086
<LONG-TERM-DEBT-NET> 2,205,455
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 162,709
<LONG-TERM-DEBT-CURRENT-PORT> 197,400
0
<CAPITAL-LEASE-OBLIGATIONS> 3,371
<LEASES-CURRENT> 2,031
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,614,345
<TOT-CAPITALIZATION-AND-LIAB> 6,564,972
<GROSS-OPERATING-REVENUE> 2,287,539
<INCOME-TAX-EXPENSE> 138,652
<OTHER-OPERATING-EXPENSES> 1,737,215
<TOTAL-OPERATING-EXPENSES> 1,875,867
<OPERATING-INCOME-LOSS> 411,672
<OTHER-INCOME-NET> 13,238
<INCOME-BEFORE-INTEREST-EXPEN> 424,910
<TOTAL-INTEREST-EXPENSE> 181,109
<NET-INCOME> 243,801
9,276
<EARNINGS-AVAILABLE-FOR-COMM> 234,525
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 111,336
<CASH-FLOW-OPERATIONS> 0<F1>
<EPS-PRIMARY> 1.93
<EPS-DILUTED> 1.93
<FN>
<F1>*Not calculated for Form U-1 purposes.
</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> JUL-1-1996
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<BOOK-VALUE> PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 1,087,622
<OTHER-PROPERTY-AND-INVEST> 53,441
<TOTAL-CURRENT-ASSETS> 135,308
<TOTAL-DEFERRED-CHARGES> 194,648
<OTHER-ASSETS> 313
<TOTAL-ASSETS> 1,471,332
<COMMON> 294,550
<CAPITAL-SURPLUS-PAID-IN> 2,441
<RETAINED-EARNINGS> 245,777
<TOTAL-COMMON-STOCKHOLDERS-EQ> 542,768
0
74,000
<LONG-TERM-DEBT-NET> 455,415
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 17,723
<LONG-TERM-DEBT-CURRENT-PORT> 34,600
0
<CAPITAL-LEASE-OBLIGATIONS> 776
<LEASES-CURRENT> 118
<OTHER-ITEMS-CAPITAL-AND-LIAB> 345,932
<TOT-CAPITALIZATION-AND-LIAB> 1,471,332
<GROSS-OPERATING-REVENUE> 611,609
<INCOME-TAX-EXPENSE> 40,467
<OTHER-OPERATING-EXPENSES> 470,105
<TOTAL-OPERATING-EXPENSES> 510,572
<OPERATING-INCOME-LOSS> 101,037
<OTHER-INCOME-NET> 7,388
<INCOME-BEFORE-INTEREST-EXPEN> 108,425
<TOTAL-INTEREST-EXPENSE> 37,853
<NET-INCOME> 70,572
5,037
<EARNINGS-AVAILABLE-FOR-COMM> 65,535
<COMMON-STOCK-DIVIDENDS> 30,928
<TOTAL-INTEREST-ON-BONDS> 26,808
<CASH-FLOW-OPERATIONS> 0<F1>
<EPS-PRIMARY> 0<F2>
<EPS-DILUTED> 0<F2>
<FN>
<F1>*Not calculated for Form U-1 purposes.
<F2>**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> JUL-1-1996
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<BOOK-VALUE> PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 1,322,501
<OTHER-PROPERTY-AND-INVEST> 55,384
<TOTAL-CURRENT-ASSETS> 192,464
<TOTAL-DEFERRED-CHARGES> 117,089
<OTHER-ASSETS> 588
<TOTAL-ASSETS> 1,688,026
<COMMON> 447,700
<CAPITAL-SURPLUS-PAID-IN> 2,690
<RETAINED-EARNINGS> 263,119
<TOTAL-COMMON-STOCKHOLDERS-EQ> 713,509
0
16,378
<LONG-TERM-DEBT-NET> 627,821
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 763
<LONG-TERM-DEBT-CURRENT-PORT> 800
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 328,755
<TOT-CAPITALIZATION-AND-LIAB> 1,688,026
<GROSS-OPERATING-REVENUE> 706,936
<INCOME-TAX-EXPENSE> 35,209
<OTHER-OPERATING-EXPENSES> 555,669
<TOTAL-OPERATING-EXPENSES> 590,878
<OPERATING-INCOME-LOSS> 116,058
<OTHER-INCOME-NET> 13,487
<INCOME-BEFORE-INTEREST-EXPEN> 129,545
<TOTAL-INTEREST-EXPENSE> 48,354
<NET-INCOME> 81,191
818
<EARNINGS-AVAILABLE-FOR-COMM> 80,373
<COMMON-STOCK-DIVIDENDS> 44,099
<TOTAL-INTEREST-ON-BONDS> 37,872
<CASH-FLOW-OPERATIONS> 0<F1>
<EPS-PRIMARY> 0<F2>
<EPS-DILUTED> 0<F2>
<FN>
<F1>*Not calculated for Form U-1 purposes.
<F2>**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> JUL-1-1996
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<BOOK-VALUE> PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 2,014,038
<OTHER-PROPERTY-AND-INVEST> 89,039
<TOTAL-CURRENT-ASSETS> 255,215
<TOTAL-DEFERRED-CHARGES> 321,016
<OTHER-ASSETS> 818
<TOTAL-ASSETS> 2,680,126
<COMMON> 465,994
<CAPITAL-SURPLUS-PAID-IN> 55,475
<RETAINED-EARNINGS> 401,486
<TOTAL-COMMON-STOCKHOLDERS-EQ> 922,955
0
79,708
<LONG-TERM-DEBT-NET> 803,532
<SHORT-TERM-NOTES> 20,050
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 63,189
<LONG-TERM-DEBT-CURRENT-PORT> 102,000
0
<CAPITAL-LEASE-OBLIGATIONS> 960
<LEASES-CURRENT> 769
<OTHER-ITEMS-CAPITAL-AND-LIAB> 686,963
<TOT-CAPITALIZATION-AND-LIAB> 2,680,126
<GROSS-OPERATING-REVENUE> 1,069,509
<INCOME-TAX-EXPENSE> 56,003
<OTHER-OPERATING-EXPENSES> 856,601
<TOTAL-OPERATING-EXPENSES> 912,604
<OPERATING-INCOME-LOSS> 156,905
<OTHER-INCOME-NET> 19,082
<INCOME-BEFORE-INTEREST-EXPEN> 175,987
<TOTAL-INTEREST-EXPENSE> 68,313
<NET-INCOME> 107,674
3,421
<EARNINGS-AVAILABLE-FOR-COMM> 104,253
<COMMON-STOCK-DIVIDENDS> 144,709
<TOTAL-INTEREST-ON-BONDS> 46,656
<CASH-FLOW-OPERATIONS> 0<F1>
<EPS-PRIMARY> 0<F2>
<EPS-DILUTED> 0<F2>
<FN>
<F1>*Not calculated for Form U-1 purposes.
<F2>**All common stock is owned by parent, no EPS required.
</FN>
</TABLE>
<PAGE>
CONTENTS
Statement
No.
Balance sheets at June 30, 1997, and pro forma giving
effect as at that date to the adjustments set forth herein:
Monongahela Power Company 1-A
The Potomac Edison Company 2-A
West Penn Power Company and Subsidiaries 3-A
Allegheny Power System, Inc. and Subsidiaries 4-A
Statements of income and retained earnings for twelve months
ended June 30, 1997, and pro forma giving effect
as at beginning of period to the adjustments set forth herein:
Monongahela Power Company 1-B
The Potomac Edison Company 2-B
West Penn Power Company and Subsidiaries 3-B
Allegheny Power System, Inc. and Subsidiaries 4-B
These financial statements have been prepared for Form U-1
purposes and are unaudited.
Reference is made to the Notes to Financial Statements in the
Allegheny Power System companies combined Annual Report on
Form 10-K for the year ended December 31, 1996 and to the Form 10-Q's
for the quarters ended March 31, 1997 and June 30, 1997.
The income statements do not reflect any additional income from
investments which may be made with the proceeds from the
transactions set forth in this application-declaration.
<PAGE>
Statement 1-A
MONONGAHELA POWER COMPANY
BALANCE SHEET - JUNE 30, 1997 PER BOOKS
AND PRO FORMA GIVING EFFECT AS AT THAT DATE
TO THE ADJUSTMENTS SET FORTH HEREIN
<TABLE>
<CAPTION>
(Thousands)
Per Books Adjustments* Pro Forma
Assets
<S> <C> <C> <C>
Property, plant, and equipment:
At original cost 1,905,794 1,905,794
Accumulated depreciation (818,172) (818,172)
Investments:
Allegheny Generating Company -
common stock at equity 53,441 53,441
Other 313 313
Current assets:
Cash 149 (17,124)(1) 0
16,975 (2)
Accounts receivable:
Electric service, net of $1,767,000
uncollectible allowance 66,414 66,414
Affiliated and other 10,114 10,114
Materials and supplies-at average cost:
Operating and construction 18,857 18,857
Fuel 21,681 21,681
Prepaid taxes 11,993 11,993
Other 6,249 6,249
Deferred charges:
Regulatory assets 165,761 165,761
Unamortized loss on reacquired debt 14,797 14,797
Other 13,565 525 (2) 14,090
Total Assets 1,470,956 376 1,471,332
</TABLE>
*Adjustments:
(1) Proposed retirement by the Company of $17,500,000 principal amount of
existing Pollution Control Revenue Bonds.
(2) Proposed sale by the Company of $17,500,000 principal amount of New
Pollution Control Revenue Bonds, less estimated issuance expenses.
<PAGE>
Statement 1-A
(continued)
MONONGAHELA POWER COMPANY
BALANCE SHEET - JUNE 30, 1997 PER BOOKS
AND PRO FORMA GIVING EFFECT AS AT THAT DATE
TO THE ADJUSTMENTS SET FORTH HEREIN
<TABLE>
<CAPTION>
(Thousands)
Per Books Adjustments* Pro Forma
Capitalization and Liabilities
<S> <C> <C> <C>
Capitalization:
Common stock:
Common stock - par value $50 per share,
authorized 8,000,000 shares, outstanding
5,891,000 shares (no change
since 7-1-96) 294,550 294,550
Other paid-in capital (no change
since 7-1-96) 2,441 2,441
Retained earnings 245,777 245,777
Preferred stock:
Cumulative preferred stock - par value
$100 per share, authorized 1,500,000
shares, outstanding 740,000 shares: 74,000 74,000
Long-term debt and QUIDS 455,415 (17,500)(1) 455,415
17,500 (2)
Current liabilities:
Short-term debt 17,347 376 (1) 17,723
Long-term debt due within one year 34,600 34,600
Accounts payable 3,851 3,851
Accounts payable to affiliates 16,042 16,042
Taxes accrued:
Federal and state income 901 901
Other 16,873 16,873
Deferred power costs 4,074 4,074
Interest accrued 8,268 8,268
Restructuring liability 6,771 6,771
Other 8,334 8,334
Deferred credits and other liabilities:
Unamortized investment credit 19,371 19,371
Deferred income taxes 226,184 226,184
Regulatory liabilities 17,831 17,831
Other 18,326 18,326
Total Capitalization and Liabilities 1,470,956 376 1,471,332
</TABLE>
<PAGE>
Statement 2-A
THE POTOMAC EDISON COMPANY
BALANCE SHEET - JUNE 30, 1997 PER BOOKS
AND PRO FORMA GIVING EFFECT AS AT THAT DATE
TO THE ADJUSTMENTS SET FORTH HEREIN
<TABLE>
<CAPTION>
(Thousands)
Per Books Adjustments* Pro Forma
Assets
<S> <C> <C> <C>
Property, plant, and equipment:
At original cost 2,150,580 2,150,580
Accumulated depreciation (828,079) (828,079)
Investments and other assets:
Allegheny Generating Company -
common stock at equity 55,384 55,384
Other 588 588
Current assets:
Cash 137 (29,237)(1) 0
29,100 (2)
Accounts receivable:
Electric service, net of $1,114,000
uncollectible allowance 84,989 84,989
Affiliated and other 7,081 7,081
Notes receivable from affiliates 34,650 34,650
Materials and supplies-at average cost:
Operating and construction 23,719 23,719
Fuel 20,336 20,336
Prepaid taxes 14,465 14,465
Other 7,224 7,224
Deferred charges:
Regulatory assets 88,606 88,606
Unamortized loss on reacquired debt 17,552 17,552
Other 10,031 900 (2) 10,931
Total Assets 1,687,263 763 1,688,026
</TABLE>
*Adjustments:
(1) Proposed retirement by the Company of $30,000,000 principal amount of
existing Pollution Control Revenue Bonds.
(2) Proposed sale by the Company of $30,000,000 principal amount of New
Pollution Control Revenue Bonds, less estimated issuance expenses.
<PAGE>
Statement 2-A
(continued)
THE POTOMAC EDISON COMPANY
BALANCE SHEET - JUNE 30, 1997 PER BOOKS
AND PRO FORMA GIVING EFFECT AS AT THAT DATE
TO THE ADJUSTMENTS SET FORTH HEREIN
<TABLE>
<CAPTION>
(Thousands)
Per Books Adjustments* Pro Forma
Capitalization and Liabilities
<S> <C> <C> <C>
Capitalization:
Common stock:
Common stock - no par value, authorized
23,000,000 shares, outstanding
22,385,000 shares (no change
since 7-1-96) 447,700 447,700
Other paid-in capital (no change
since 7-1-96) 2,690 2,690
Retained earnings 263,119 263,119
Preferred stock:
Cumulative preferred stock - par value
$100 per share, authorized 5,378,611
shares, outstanding 163,784 shares: 16,378 16,378
Long-term debt and QUIDS 627,821 (30,000)(1) 627,821
30,000 (2)
Current liabilities:
Short-term debt - 763 (1) 763
Long-term debt due within one year 800 800
Accounts payable 22,008 22,008
Accounts payable to affiliates 15,914 15,914
Taxes accrued - Other 16,641 16,641
Interest accrued 9,433 9,433
Customer deposits 5,058 5,058
Restructuring liability 7,959 7,959
Other 8,630 8,630
Deferred credits and other liabilities:
Unamortized investment credit 22,546 22,546
Deferred income taxes 180,886 180,886
Regulatory liabilities 13,190 13,190
Other 26,490 26,490
Total Capitalization and Liabilities 1,687,263 763 1,688,026
</TABLE>
<PAGE>
Statement 3-A
WEST PENN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET - JUNE 30, 1997 PER BOOKS
AND PRO FORMA GIVING EFFECT AS AT THAT DATE
TO THE ADJUSTMENTS SET FORTH HEREIN
<TABLE>
<CAPTION>
(Thousands)
Per Books Adjustments* Pro Forma
Assets
<S> <C> <C> <C>
Property, plant, and equipment:
At original cost 3,226,648 3,226,648
Accumulated depreciation (1,212,610) (1,212,610)
Investments and other assets:
Allegheny Generating Company -
common stock at equity 89,039 89,039
Other 818 818
Current assets:
Cash and temporary cash investments 7,562 (45,000)(1) 6,212
43,650 (2)
Accounts receivable:
Electric service, net of $11,521,000
uncollectible allowance 109,013 109,013
Affiliated and other 14,238 14,238
Materials and supplies-at average cost:
Operating and construction 37,442 37,442
Fuel 33,275 33,275
Deferred income taxes 12,802 12,802
Prepaid taxes 23,764 23,764
Other 18,469 18,469
Deferred charges:
Regulatory assets 286,639 286,639
Unamortized loss on reacquired debt 10,357 10,357
Other 22,670 1,350 (2) 24,020
Total Assets 2,680,126 0 2,680,126
</TABLE>
*Adjustments:
(1) Proposed retirement by the Company of $45,000,000 principal amount of
existing Pollution Control Revenue Bonds.
(2) Proposed sale by the Company of $45,000,000 principal amount of New
Pollution Control Revenue Bonds, less estimated issuance expenses.
<PAGE>
Statement 3-A
(continued)
WEST PENN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET - JUNE 30, 1997 PER BOOKS
AND PRO FORMA GIVING EFFECT AS AT THAT DATE
TO THE ADJUSTMENTS SET FORTH HEREIN
<TABLE>
<CAPTION>
(Thousands)
Per Books Adjustments* Pro Forma
Capitalization and Liabilities
<S> <C> <C> <C>
Capitalization:
Common stock:
Common stock - no par value, authorized
28,902,923 shares, outstanding
24,361,586 shares (no change
since 7-1-96) 465,994 465,994
Other paid-in capital (no change
since 7-1-96) 55,475 55,475
Retained earnings 401,486 401,486
Preferred stock:
Cumulative preferred stock - par value
$100 per share, authorized 3,097,077
shares, outstanding 797,077 shares 79,708 79,708
Long-term debt and QUIDS 803,532 (45,000)(1) 803,532
45,000 (2)
Current liabilities:
Short-term debt 83,239 83,239
Long-term debt due within one year 102,000 102,000
Accounts payable 55,985 55,985
Accounts payable to affiliates 24,885 24,885
Taxes accrued - Other 10,347 10,347
Interest accrued 15,743 15,743
Restructuring liability 17,050 17,050
Other 19,052 19,052
Deferred credits and other liabilities:
Unamortized investment credit 46,496 46,496
Deferred income taxes 423,451 423,451
Regulatory liabilities 50,264 50,264
Other 25,419 25,419
Total Capitalization and Liabilities 2,680,126 0 2,680,126
</TABLE>
<PAGE>
Statement 4-A
ALLEGHENY POWER SYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET - JUNE 30, 1997
PER BOOKS AND PRO FORMA GIVING EFFECT AS AT
THAT DATE TO THE ADJUSTMENTS SET FORTH HEREIN
<TABLE>
<CAPTION>
(Thousands)
Assets Per Books Adjustments* Pro Forma
<S> <C> <C> <C>
Property, plant, and equipment:
At original cost 8,305,062 8,305,062
Accumulated depreciation (3,047,881) (3,047,881)
5,257,181 5,257,181
Investments and other assets:
Subsidiaries consolidated--excess of cost
over book equity at acquisition 15,077 15,077
Benefit plan's investments 65,752 65,752
Other 4,573 4,573
85,402 85,402
Current assets:
Cash and temporary cash investments 21,062 (91,361)(1) 19,426
Accounts receivable: 89,725 (2)
Electric service, net of $14,402,000
uncollectible allowance 265,088 265,088
Other 15,033 15,033
Materials and supplies--at average cost:
Operating and construction 84,587 84,587
Fuel 78,135 78,135
Prepaid taxes 56,891 56,891
Deferred income taxes 12,880 12,880
Other 37,133 37,133
570,809 (1,636) 569,173
Deferred charges:
Regulatory assets 549,977 549,977
Unamortized loss on reacquired debt 51,476 51,476
Other 48,988 2,775 51,763
650,441 2,775 653,216
Total Assets 6,563,833 1,139 6,564,972
Capitalization and Liabilities
Capitalization:
Common stock 153,021 153,021
Other paid-in capital 1,043,513 1,043,513
Retained earnings 1,013,041 1,013,041
2,209,575 2,209,575
Preferred stock 170,086 170,086
Long-term debt and QUIDS of subsidiaries 2,205,455 (92,500)(1) 2,205,455
92,500 (2)
4,585,116 0 4,585,116
Current liabilities:
Short-term debt 161,570 1,139 (1) 162,709
Long-term debt due within one year 197,400 197,400
Accounts payable 102,212 102,212
Taxes accrued:
Federal and state income 1,206 1,206
Other 45,484 45,484
Interest accrued 40,616 40,616
Restructuring liability 31,780 31,780
Other 80,926 80,926
661,194 1,139 662,333
Deferred credits and other liabilities:
Unamortized investment credit 137,417 137,417
Deferred income taxes 994,852 994,852
Regulatory liabilities 108,741 108,741
Other 76,513 76,513
1,317,523 1,317,523
Total Capitalization and Liabilities 6,563,833 1,139 6,564,972
</TABLE>
*Adjustments:
(1) Proposed retirement by the subsidiaries of $92,500,000 principal amount
of existing Pollution Control Revenue Bonds.
(2) Proposed sale by the subsidiaries of $92,500,000 principal amount of New
Pollution Control Revenue Bonds, less estimated issuance expenses.
<PAGE>
Statement 1-B
MONONGAHELA POWER COMPANY
STATEMENT OF INCOME FOR TWELVE MONTHS ENDED JUNE 30, 1997
PER BOOKS AND PRO FORMA GIVING EFFECT AS AT BEGINNING OF PERIOD
TO THE ADJUSTMENTS SET FORTH HEREIN
<TABLE>
<CAPTION>
(Thousands)
Per Books Adjustments* Pro Forma
<S> <C> <C> <C>
ELECTRIC OPERATING REVENUES 611,609 611,609
OPERATING EXPENSES:
Operation:
Fuel 131,298 131,298
Purchased power and exchanges, net 100,714 100,714
Deferred power costs, net (15,771) (15,771)
Other 74,293 74,293
Maintenance 72,663 72,663
Restructuring charges 10,455 10,455
Depreciation 56,445 56,445
Taxes other than income taxes 40,008 40,008
Federal and state income taxes 40,405 62 40,467
Total Operating Expenses 510,510 62 510,572
Operating Income 101,099 (62) 101,037
OTHER INCOME AND DEDUCTIONS:
Allowance for other than borrowed funds
used during construction 514 514
Other income, net 6,874 6,874
Total Other Income and Deductions 7,388 7,388
Income Before Interest Charges 108,487 (62) 108,425
INTEREST CHARGES:
Interest on first mortgage bonds 26,808 26,808
Interest on other long-term obligations 9,676 (153) 9,523
Other interest 2,123 2,123
Allowance for borrowed funds used during
construction (601) (601)
Total Interest Charges 38,006 (153) 37,853
Net Income 70,481 91 70,572
*Adjustments:
Retirement of $17,500,000 existing Pollution Control Revenue Bonds -
interest rate of 6.375% 1,116
Sale of $17,500,000 New Pollution Control Revenue Bonds -
assumed rate of 5.50% 963
Decrease in interest on Pollution Control Revenue Bonds 153
Increase in federal and state income taxes 62
Increase in Net Income 91
</TABLE>
<PAGE>
Statement 1-B
(continued)
MONONGAHELA POWER COMPANY
STATEMENT OF RETAINED EARNINGS
FOR TWELVE MONTHS ENDED JUNE 30, 1997
(Thousands)
Per Books
Balance at July 1, 1996 211,261
Add:
Net income 70,481
281,742
Deduct:
Dividends on capital stock:
Preferred stock 5,037
Common stock 30,928
Total deductions 35,965
Balance at June 30, 1997 245,777
<PAGE>
Statement 2-B
THE POTOMAC EDISON COMPANY
STATEMENT OF INCOME FOR TWELVE MONTHS ENDED JUNE 30, 1997
PER BOOKS AND PRO FORMA GIVING EFFECT AS AT BEGINNING OF PERIOD
TO THE ADJUSTMENTS SET FORTH HEREIN
<TABLE>
<CAPTION>
(Thousands)
Per Books Adjustments* Pro Forma
ELECTRIC OPERATING REVENUES 706,936 706,936
<S> <C> <C> <C>
OPERATING EXPENSES:
Operation:
Fuel 135,421 135,421
Purchased power and exchanges, net 139,584 139,584
Deferred power costs, net (2,634) (2,634)
Other 88,535 88,535
Maintenance 64,915 64,915
Restructuring charges 9,835 9,835
Depreciation 72,594 72,594
Taxes other than income taxes 47,419 47,419
Federal and state income taxes 35,120 89 35,209
Total Operating Expenses 590,789 89 590,878
Operating Income 116,147 (89) 116,058
OTHER INCOME AND DEDUCTIONS:
Allowance for other than borrowed funds
used during construction 1,622 1,622
Other income, net 11,865 11,865
Total Other Income and Deductions 13,487 13,487
Income Before Interest Charges 129,634 (89) 129,545
INTEREST CHARGES:
Interest on first mortgage bonds 37,872 37,872
Interest on other long-term obligations 9,772 (240) 9,532
Other interest 2,242 2,242
Allowance for borrowed funds used during
construction (1,292) (1,292)
Total Interest Charges 48,594 (240) 48,354
Net Income 81,040 151 81,191
*Adjustments:
Retirement of $30,000,000 existing Pollution Control Revenue Bonds -
interest rate of 6.30% 1,890
Sale of $30,000,000 New Pollution Control Revenue Bonds -
assumed rate of 5.50% 1,650
Decrease in interest on Pollution Control Revenue Bonds 240
Increase in federal and state income taxes 89
Increase in Net Income 151
</TABLE>
<PAGE>
Statement 2-B
(continued)
THE POTOMAC EDISON COMPANY
STATEMENT OF RETAINED EARNINGS
FOR TWELVE MONTHS ENDED JUNE 30, 1997
(Thousands)
Per Books
Balance at July 1, 1996 226,996
Add:
Net income 81,040
308,036
Deduct:
Dividends on capital stock:
Preferred stock 818
Common stock 44,099
Total deductions 44,917
Balance at June 30, 1997 263,119
<PAGE>
Statement 3-B
WEST PENN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME FOR TWELVE MONTHS ENDED JUNE 30, 1997
PER BOOKS AND PRO FORMA GIVING EFFECT AS AT BEGINNING OF PERIOD
TO THE ADJUSTMENTS SET FORTH HEREIN
<TABLE>
<CAPTION>
(Thousands)
Per Books Adjustments* Pro Forma
<S> <C> <C> <C>
ELECTRIC OPERATING REVENUES 1,069,509 1,069,509
OPERATING EXPENSES:
Operation:
Fuel 244,872 244,872
Purchased power and exchanges, net 123,284 123,284
Deferred power costs, net 4,859 4,859
Other 151,821 151,821
Maintenance 104,047 104,047
Restructuring charges 19,265 19,265
Depreciation 119,349 119,349
Taxes other than income taxes 89,104 89,104
Federal and state income taxes 55,888 115 56,003
Total Operating Expenses 912,489 115 912,604
Operating Income 157,020 (115) 156,905
OTHER INCOME AND DEDUCTIONS:
Allowance for other than borrowed funds
used during construction 2,638 2,638
Other income, net 16,444 16,444
Total Other Income and Deductions 19,082 19,082
Income Before Interest Charges 176,102 (115) 175,987
INTEREST CHARGES:
Interest on first mortgage bonds 46,656 46,656
Interest on other long-term obligations 18,332 (281) 18,051
Other interest 5,320 5,320
Allowance for borrowed funds used during
construction (1,714) (1,714)
Total Interest Charges 68,594 (281) 68,313
Consolidated Net Income 107,508 166 107,674
*Adjustments:
Retirement of $45,000,000 existing Pollution Control Revenue Bonds -
interest rate of 6.125% 2,756
Sale of $45,000,000 New Pollution Control Revenue Bonds -
assumed rate of 5.50% 2,475
Decrease in interest on Pollution Control Revenue Bonds 281
Increase in federal and state income taxes 115
Increase in Consolidated Net Income 166
</TABLE>
<PAGE>
Statement 3-B
(continued)
WEST PENN POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
FOR TWELVE MONTHS ENDED JUNE 30, 1997
(Thousands)
Per Books
Balance at July 1, 1996 442,108
Add:
Consolidated net income 107,508
549,616
Deduct:
Dividends on capital stock:
Preferred stock 3,421
Common stock 144,709
Total deductions 148,130
Balance at June 30, 1997 401,486
<PAGE>
Statement 4-B
ALLEGHENY POWER SYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME FOR TWELVE MONTHS ENDED JUNE 30, 1997
PER BOOKS AND PRO FORMA GIVING EFFECT AS AT BEGINNING OF PERIOD
TO THE ADJUSTMENTS SET FORTH HEREIN
<TABLE>
<CAPTION>
(Thousands)
Per Books Adjustments* Pro Forma
<S> <C> <C> <C>
ELECTRIC OPERATING REVENUES 2,287,539 2,287,539
OPERATING EXPENSES:
Operation:
Fuel 524,204 524,204
Purchased power and exchanges, net 185,152 185,152
Deferred power costs, net (13,550) (13,550)
Other 301,771 301,771
Maintenance 245,264 245,264
Restructuring charges 39,684 39,684
Depreciation 268,239 268,239
Taxes other than income taxes 186,451 186,451
Federal and state income taxes 138,386 266 138,652
Total Operating Expenses 1,875,601 266 1,875,867
Operating Income 411,938 (266) 411,672
OTHER INCOME AND DEDUCTIONS:
Allowance for other than borrowed funds
used during construction 4,775 4,775
Other income, net 8,463 8,463
Total Other Income and Deductions 13,238 13,238
Income Before Interest Charges and
Preferred Dividends 425,176 (266) 424,910
INTEREST CHARGES AND PREFERRED DIVIDENDS:
Interest on first mortgage bonds 111,336 111,336
Interest on other long-term obligations 59,222 (674) 58,548
Other interest 14,831 14,831
Allowance for borrowed funds used during
construction (3,606) (3,606)
Dividends on preferred stock of subsidiaries 9,276 9,276
Total Interest Charges and
Preferred Dividends 191,059 (674) 190,385
Consolidated Net Income 234,117 408 234,525
*Adjustments:
Retirement of $92,500,000 existing Pollution Control Revenue Bonds -
interest rates of 6.125% to 6.375% 5,762
Sale of $92,500,000 New Pollution Control Revenue Bonds -
assumed rate of 5.50% 5,088
Decrease in interest on Pollution Control Revenue Bonds 674
Increase in federal and state income taxes 266
Increase in Consolidated Net Income 408
</TABLE>
<PAGE>
Statement 4-B
(continued)
ALLEGHENY POWER SYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
FOR TWELVE MONTHS ENDED JUNE 30, 1997
(Thousands)
Per Books
Balance at July 1, 1996 987,034
Add:
Consolidated net income 234,117
1,221,151
Deduct:
Dividends on common stock of Allegheny
Power System, Inc. (cash) 208,110
Balance at June 30, 1997 1,013,041
<PAGE>
EXHIBIT H
SECURITIES AND EXCHANGE COMMISSION
(Release No. 35- : )
Monongahela Power Company, et al )
Notice of Proposed Refinancing )
of Pollution Control Revenue )
Notes )
Monongahela Power Company (Monongahela), 1310 Fairmont
Avenue, Fairmont, WV 26555-1392, The Potomac Edison Company
(Potomac Edison), 10435 Downsville Pike, Hagerstown, MD 21740-
1766, and West Penn Power Company (West Penn) 800 Cabin Hill
Drive, Greensburg, Pennsylvania 15601, public utility
subsidiaries of Allegheny Energy, Inc., 10435 Downsville Pike,
Hagerstown, MD 21740-1766, a registered holding company, have
filed an Application or Declaration pursuant to Sections 6(a),
9(a), 10 and 12(c) of the Act.
The proposed transactions involve the issuance of notes by
Monongahela, Potomac Edison, and West Penn (collectively, the
"Companies") to support the contemporaneous issuance of pollution
control revenue bonds by The County Commission of Pleasants
County, West Virginia (the "County Commission"). The proceeds
from the bonds will be used to effect the redemption of presently
outstanding pollution control revenue bonds, all of which are
Series A Bonds issued by the County Commission in 1977 in the
following amounts and with the following interest rates: (i)
$45,000,000 principal amount Pollution Control Revenue Bonds
(West Penn Power Company Pleasants Power Station Project), 1977
Series A; 6 1/8%; (ii) $30,000,000 principal amount Pollution
Control Revenue Bonds (The Potomac Edison Company Pleasants Power
Station Project), 1977 Series A, 6.3%; (iii) $14,500,000
principal amount Pollution Control Revenue Bonds (Monongahela
Power Company Pleasants Power Station Project), 1977 Series A, 6
3/8% ; and (iv) $3,000,000 principal amount Pollution Control
Revenue Bonds (Monongahela Power Company Pleasants Power Station
Project), 1977 Series A, 6 3/8% (collectively, the "Series A
Bonds"). Due to the change in interest rates since the time that
the Series A Bonds were originally issued, the County Commission
proposes to refund all Series A Bonds by issuing one new series
of pollution control revenue bonds for each of the Companies
(collectively, the "Series D Bonds") at a lower interest rate.
The Companies request authority from the Securities and Exchange
Commission ("Commission") to enter into new long-term promissory
notes insofar as the terms and conditions of the long-term bonds
to be issued by the County Commission affect the payments to be
made by the Companies under the current long-term promissory
notes presently outstanding. The presently outstanding Series A
notes will be canceled and new notes will be entered into to
reflect the new terms.
A. Background
On November 1, 1977, the Commission authorized
Monongahela, Potomac Edison and West Penn to issue notes in
connection with the tax exempt financing by the County Commission
of certain air and water pollution control equipment and
facilities at the Companies' Pleasants Power Station located in
Pleasants County, West Virginia (the "Pleasants Station"). (HCAR
20604.) The Pleasants Station is jointly owned by Monongahela,
Potomac Edison and
1
<PAGE>
West Penn in the following undivided
percentages: Monongahela 25%, Potomac Edison 30% and West Penn
45%. In 1978 and 1979 (HCAR Nos. 20672 and 20925), the
Commission authorized Monongahela, Potomac Edison and West Penn
to issue notes aggregating $77,500,000 (the "Series B Notes"),
corresponding to the Series B Pollution Control Revenue Bonds
issued by the County Commission. The Companies entered into the
second phase of a financing plan to provide additional money for
the installation of pollution control equipment and facilities at
the Pleasants Station. The pollution control equipment and
facilities at the Pleasants Station (Facilities) included (i)
electrostatic precipitators for the removal of particulates from
flue gases, together with related fly ash handling and storage
facilities, (ii) wet scrubber systems for removal of sulfur
dioxide from flue gases, (iii) a lime unloading, handling and
feed system related to the scrubbers, (iv) a slurry dewatering
system and a sludge processing and disposal system to treat and
dispose of the sludge from the scrubbers, (v) a portion of the
cooling towers and related facilities, (vi) waste water treatment
facilities, (vii) a sewage treatment plant, and (viii) facilities
for the removal and disposition of solid wastes, principally fly
ash and bottom ash, and associated equipment and certain real
estate. The Facilities have been completed.
On May 11, 1994, the Companies were authorized to issue new
pollution control revenue notes (the "Series C Notes")
aggregating $77,500,000. (HCAR 26051.) The County Commission
issued its Series C Pollution Control Revenue Bonds, the
proceeds of which were used to redeem its Series B Pollution
Control Revenue Bonds . (HCAR 26051). The Series B Notes were
canceled as part of this transaction.
B. Requested Authorization
The County Commission proposes to issue $92,500,000
aggregate principal amount in three new series of long-term bonds
(each series to be designated as "Series D Bonds", collectively
hereinafter referred to as the "Series D Bonds"), the proceeds of
which will be used to refund the County Commission's Series A
Bonds presently outstanding.
Monongahela, Potomac Edison and West Penn request
authority through December 31, 2002 to enter into the proposed
transaction and to issue new promissory notes which will be
substituted for and replace the promissory notes presently
outstanding. The presently outstanding notes will be canceled.
The Series D Bonds will be issued under a supplemental trust
indenture with a corporate trustee, approved by the Companies,
and sold at such time, at such interest rate and for such price
as shall be approved by the Companies. However, the interest
rate for each series of Series D Bonds will not exceed the
interest rate of the corresponding series of Series A Bonds
presently outstanding. The timing of the financing will depend
upon a subjective determination by the Companies of market
conditions. The Series D Bonds will mature no later than the
year 2020.
Each Company will deliver concurrently with the
issuance of the Series D Bonds, its non-negotiable Pollution
Control Note (collectively, the "Notes") corresponding to such
series of Bonds in respect of principal amount, interest rate and
redemption provisions (which may include a special right of the
holder to require the redemption or repurchase of the Bond at
stated intervals) and having installments of principal
corresponding to any mandatory sinking fund payments and stated
maturities. The Notes will be secured by a second lien on the
Facilities and certain other properties, pursuant to the Deed of
Trust and Security Agreement dated November 1, 1977, as
supplemented by a First Supplement thereto dated August 1, 1978
as to West Penn and Potomac Edison and a First Supplemental
thereto dated February 1, 1979 as to Monongahela, delivered by
the Companies to the trustee creating a mortgage and
2
<PAGE>
security
interest in the Facilities and certain other property (subject to
the lien securing each Company's first mortgage bonds). Payment
on the Notes will be made to the Trustee under the Third
Supplemental Indentures to be entered into between the Companies
and the Trustee, described below, and shall be applied by the
Trustee to pay the maturing principal and redemption price of and
interest and other costs on the Series D Bonds as the same become
due. Each Company also proposes to pay any trustees' fees or
other expenses incurred by the County Commission.
It is expected that the County Commission will engage
an underwriter or underwriters to provide financial advice and
underwrite the sale of the Series D Bonds. Fees, commissions and
expenses of the underwriters and legal counsel in connection with
the proposed transaction will be filed by amendment. The
Companies have been informed that the County Commission has legal
authority to issue tax exempt revenue bonds in accordance with
the proposed documents and the Companies understand that legal
opinions to that effect will be delivered to appropriate parties
at, or prior to, the closing date. The Series D Bonds will be in
registered form and initially will be registered in the name of
Cede & Co., as nominee for The Depository Trust Company, New
York, New York. The Series D Bonds will bear interest semi-
annually at rates to be determined. The Series D Bonds will be
issued pursuant to supplemental indentures which will provide for
parameters to be determined. The supplemental indentures will
also provide that all of the proceeds from the sale of the Series
D Bonds by the County Commission must be applied to the cost of
the Facilities, including the cost of refunding the Series A
Bonds.
The Series D Bonds will be secured by the Notes and
will be supported by various covenants of each Company contained
in the original Pollution Control Financing Agreement dated as of
November 1, 1977, copies of which have previously been filed in
File No. 70-6179.
Applicants desire to consummate the proposed
transactions and refund the Series A Bonds to provide the lowest
cost of permanent financing for non-revenue-producing pollution
control equipment which the Companies have been required to
install to meet environmental standards. The Companies have been
advised that the annual interest rate on tax exempt bonds has
been approximately 1% to 3% lower than the interest rate on
taxable obligations of comparable quality, depending upon the
type to be sold by the County Commission.
Except as described herein, no associate company or
affiliate of
the Applicants or any affiliate of any such associate company has
any material
interest, directly or indirectly, in the proposed transactions.
The application and any amendments thereto are
available for public inspection through the Commission's Office of Public
Reference. Interested persons wishing to comment or request a hearing should
submit their views in writing by , 1997, to the Secretary,
Securities and Exchange Commission, Washington, DC 20549, and serve a copy on
the Applicant at the address specified above. Proof of service (by affidavit
or, in case of an attorney at law, by certificate) should be filed with the
request. Any request for a hearing shall identify specifically the issues of
fact or law that are disputed. A person who so requests will be notified of
any hearing, if ordered, and will receive a copy of any notice or order issued
in this matter. After said date, the application, as filed or as it may
be amended, may be granted.
For the Commission, by the Division of Investment
Management, pursuant to delegated authority.
3
<PAGE>
Exhibit D-7
BEFORE
THE PUBLIC UTILITIES COMMISSION OF OHIO
In the Matter of the Application of )
The Monongahela Power Company ) Case No. 97-803-EL-AIS
For Authority to Issue and Sell Debt )
Securities )
FINDING AND ORDER
The Commission finds:
(1) Applicant, Monongahela Power Company, is an Ohio
Corporation and a public utility as defined in Section
4905.02, Revised Code, and is subject to the
jurisdiction of this Commission.
(2) This Application, as amended (collectively, the
"Application"), is filed under the provisions of
Sections 4905.40 and 4905.41, Revised Code.
(3) Applicant proposes to issue and sell, from time to
time, in one or more series, through December 31, 2002, up
to $200 million aggregate principal amount of secured or
unsecured medium term notes, debentures, first mortgage
bonds, or other debt securities, or a combination thereof
(collectively, the "Debt Securities"), pursuant to the terms
and conditions as set forth in the Application and Exhibits.
(4) The proceeds from the Debt Securities will be used for
the redemption of a portion of Applicant's outstanding debt
securities and preferred stock, repayment of short-term
debt, to finance its construction program and for other
general corporate purposes, all pursuant to Section 4905.40,
Revised Code.
(5) The maximum amount of the Debt Securities, their
probably costs, price to Applicant, and other terms thereof,
do not appear to be unjust or unreasonable.
(6) The effect of the issuance of the Debt Securities on
Applicant's revenue requirements will be considered in the
determination of required revenues in rate proceedings in
which all factors affecting rates are taken into account
according to law.
<PAGE>
(7) Applicant is requesting authorization to issue the Debt
Securities through December 31, 2001. However, the
Commission is of the opinion that the authorization should
be limited to a time period ending August 31, 1998, for the
following reasons: (1) uncertainty of interest rates beyond
a 12-month period, and (2) difficulty in predicting
financial market conditions over a larger time period.
(8) (8) Based on the information contained in the
Application and Exhibits thereto, and other documentary
information to which the Commission has access, the purposes
to which the proceeds from the Debt Securities shall be
applied appear to be reasonably required by Applicant to
meet its present and prospective obligations to provide
utility service and the Commission is satisfied that consent
and authority should be should be granted.
It is, therefore,
ORDERED, That Applicant is authorized to issue or sell,
from time to time, in one or more series, through August 31,
1998, up to $200 million aggregate principal amount of
secured or unsecured medium term notes, debentures, first
mortgage bonds, or other debt securities, or a combination
thereof, pursuant to the terms and conditions as set forth
in the Application and Exhibits. It is further,
ORDERED, That the proceeds from the sale of the Debt
Securities shall be used for the purposes set forth in this
Order and otherwise pursuant to the provisions of Section
4905.40, Revised Code. It is, further,
ORDERED, That after any of the Debt Securities
authorized by this Order are issued and sold, the Applicant
shall report to this Commission the terms and full
particulars regarding each sale of the Debt Securities. In
lieu of above, Applicant may submit a copy of each
prospectus as filed with the Securities and Exchange
Commission setting forth such information. It is further,
ORDERED, That Applicant shall account for the Debt
Securities as prescribed by the Federal Energy Regulatory
Commission Uniform System of Accounts as currently in
effect. It is, further,
ORDERED, That nothing in this Order shall be construed
to imply any guaranty, obligation or endorsement of the Debt
Securities or the associated interest thereon, on the part
of the State of Ohio. It is, further,
ORDERED, That nothing in this Order shall be construed
to imply any guaranty or obligation by the Commission to
assure completion of any specific construction project of
the Applicant. It is, further,
<PAGE>
ORDERED, That nothing in this Order shall be deemed to
be binding upon this Commission in any future proceeding or
investigation involving the justness or reasonableness of
any rate, charge, rule or regulation. It is, further,
ORDERED, That a copy of this Order be served upon all
parties of record.
THE PUBLIC UTILITIES COMMISSION OF OHIO
/s/ Craig A. Glazer
Craig A. Glazer, Chairman
/s/ Jolynn Barry Butler /s/ Ronda Hartman Fergus
Jolynn Barry Butler Ronda Hartman Fergus
/s/ David W. Johnson /s/ Judith A. Jones
David W. Johnson Judith A. Jones
SEJ:dj
Entered in the Journal
Aug 27 1997
A True Copy
/s/ Gary L. Vigorito
Gary L. Vigorito
Secretary
