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___________________________________
:
IN THE MATTER OF :
:
ALLEGHENY ENERGY, INC. et. al. :
: CERTIFICATE
File No. 70-8411 : PURSUANT TO RULE 24
: FOR THE QUARTER ENDED
(Public Utility Holding : MARCH 31, 1998
Company Act of 1935) :
___________________________________ :
Through March 31, 1998, Allegheny Energy, Inc. (Allegheny) has made
capital contributions to AYP Capital, Inc. ("AYP Capital") and its subsidiaries
totaling $44,710,786. See attached consolidated financial statements for the
quarter ended March 31, 1998. During the first quarter of 1998, 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 Allegheny's core business. Other specific activities performed by
AYP Capital during the first quarter of 1998 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.
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C. EWGs and FUCOs
AYP Capital, through the Latin American Energy and Electricity Fund I,
L.P., 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 first quarter. As of the
end of the first quarter of 1998, AYP Capital has invested $3,579,227 in
LAEEF.
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 first quarter, AYP Capital, Inc., has continued its activities in
marketing and selling Insider heat pumps.
F. HVAC and Appliance Warranties/Power Quality Devices
No new activities.
II. Guarantees or assumption of liabilities by Allegheny on behalf of AYP
Capital or its subsidiaries.
Allegheny 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.
Allegheny Energy is providing support to AYP Capital in connection with
a $15 million discretionary line of credit for AYP Capital to be utilized by
AYP Capital's subsidiary Allegheny Energy Solutions as working capital.
Allegheny Energy is providing support to AYP Energy trading activities by
providing parent guarantees to AYP Energy counterparties. Through the
first quarter of 1998, Allegheny Energy has provided guarantees of support
in the amount of $10,000,000.
2
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III. Services Provided by AYP Capital to Associate Companies
AYP Capital did not provide any services to associate companies during
the first quarter of 1998.
IV. Factoring Activities
AYP Capital did not perform any activities associated with the factoring of
accounts receivable in the first quarter of 1998.
ALLEGHENY ENERGY, INC.
By /s/ Thomas K. Henderson
Thomas K. Henderson
Vice President
AYP CAPITAL, INC.
By /s/ Thomas K. Henderson
Thomas K. Henderson
Vice President
Dated: May 28, 1998
3
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AYP CAPITAL
CONSOLIDATED STATEMENT OF INCOME
FOR THREE MONTHS ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
QTR YTD 12MOS
<S> <C> <C> <C>
ELECTRIC OPERATING REVENUES 49,093,300 49,093,300 122,601,433
OPERATING EXPENSES:
Operation:
Fuel 5,023,902 5,023,902 23,415,711
Purchased Power & Exchange 40,223,324 40,223,324 80,634,003
Other 1,500,893 1,500,893 5,695,050
Transmission & Distribution 496,867 496,867 3,450,859
Cust. Accts & Services 833,539 833,539 3,896,795
Administrative & General 2,025,999 2,025,999 8,965,889
Total Operation & Maintenance 50,104,524 50,104,524 126,058,307
Depreciation 1,397,725 1,397,725 6,686,692
Taxes other than income taxes 1,689,432 1,689,432 5,883,832
Federal and state income taxes (2,359,113) (2,359,113) (9,820,607)
Total Operating Expenses 50,832,568 50,832,569 128,808,223
Operating Income (1,739,268) (1,739,269) (6,206,790)
OTHER INCOME AND DEDUCTIONS:
Other income, net 367,526 367,526 1,813,179
Total Other Income and Deductio 367,526 367,526 1,813,179
Income Before Interest Charges and
Preferred Dividends (1,371,742) (1,371,743) (4,393,611)
INTEREST CHARGES AND PREFERRED DIVIDENDS:
Interest on other long-term obligations 2,552,000 2,552,000 10,838,667
Other interest 5,741 5,741 16,509
Total Interest Charges and
Preferred Dividends 2,557,741 2,557,741 10,855,176
Consolidated Net Income (3,929,483) (3,929,483) (15,248,787)
</TABLE>
Unaudited
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AYP Capital, Inc.
CONSOLIDATED BALANCE SHEET
As of March 31, 1998
Assets
Property, plant, and equipment:
At original cost 171,050,344
Accumulated depreciation (6,974,479)
164,075,865
Investments and other assets:
Nonutility investments 5,132,293
5,132,293
Current assets:
Cash and temporary cash investments 8,734,556
Accounts receivable:
Electric service 15,726,552
Other 1,353,898
Allowance for Uncollectible Accounts (33,785)
Accts. Receivable - Affiliates 257,691
Materials and supplies--at average cost:
Operating and construction 2,422,602
Fuel 2,706,999
Other 7,090,794
38,259,307
Deferred charges:
Other 5,740,678
5,740,678
Total Assets 213,208,143
Capitalization and Liabilities
Capitalization:
Common stock 1,000
Other paid-in capital 44,709,786
Retained earnings (21,726,359)
22,984,427
Preferred stock:
Long-term debt of subsidiaries 160,000,000
Long-term debt of subsidiaries 0
182,984,427
Current liabilities:
Short-term debt 600,000
Accounts payable - Affil. 6,132,976
Accounts payable - Other 12,267,635
Taxes accrued:
Federal and state income 2,156,183
Other 2,042,974
Interest accrued 1,648,000
Payrolls Accrued 0
Other 1,541,879
26,389,647
Deferred credits and other liabilities:
Deferred income taxes 3,692,333
Other 141,736
3,834,069
Total Capitalization and Liabilities 213,208,143
Unaudited