<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM U5S
ANNUAL REPORT
For the year ended December 31, 1997
Filed pursuant to the
Public Utility Holding Company Act of 1935 by
ALLEGHENY ENERGY, INC.
10435 Downsville Pike
Hagerstown, Maryland 21740-1766
<PAGE>
FORM U5S - ANNUAL REPORT
For the Calendar Year 1997
ITEMS
ITEM 1. SYSTEM COMPANIES AND INVESTMENT THEREIN AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
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)
Allegheny Energy, Inc. (AYE) Holding
Allegheny Power Service Corporation (APSC) Service 5,000 100 $ 50 $ 50
Monongahela Power Company (MP) Electric 5,891,000 100 540,930 540,930
The Potomac Edison Company (PE) Electric 22,385,000 100 689,781 691,247
West Penn Power Company (1) (WPP) Electric 24,361,586 100 997,027 1,010,639
West Virginia Power and
Transmission Company* (2) 30,000 100 2,505 2,501
West Penn West Virginia
Water Power Company* (3) 5 100 (3) 1
Unsecured debt 13 13
AYP Capital, Inc. (AYP) (4) 100 100 26,073 26,073
AYP Energy, Inc. (5) 100 100 15,625 15,625
Allegheny Communications Connect, Inc. (6) 100 100 586 586
Allegheny Energy Solutions, Inc. (7) 100 100 1,804 1,804
Subsidiaries of More Than One
System Company
Allegheny Generating Company (AGC) Generating
Owners:
Monongahela Power Company 270 27 53,888 53,888
The Potomac Edison Company 280 28 55,847 55,847
West Penn Power Company 450 45 89,783 89,783
Allegheny Pittsburgh Coal Company* (APC) (8)
Owners:
Monongahela Power Company 2,500 25 (3,227) (3,227)
Unsecured debt 3,495 3,495
The Potomac Edison Company 2,500 25 (3,227) (3,227)
Unsecured debt 3,617 3,617
West Penn Power Company 5,000 50 (6,453) (6,453)
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) Unregulated marketer of electric energy and other energy related
services.
(8) Owns coal reserves as a long-term resource.
****************
Allegheny Energy, 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, AYE formed a 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.
In 1997 AYP Capital, Inc. formed Allegheny Energy Solutions, Inc.
(Allegheny Energy Solutions), a new unregulated company that is also
licensed with the PUC as an alternate supplier in Pennsylvania's pilot
program. Subsequently, Allegheny Energy Solutions and DQEnergy Partners,
Inc. (DEP), a subsidiary of DQE, formed Allegheny Energy Solutions, L.L.C.,
a limited liability joint venture, to market electricity and related
services. Allegheny Energy Solutions and DEP each plan to maintain a 50%
interest in Allegheny Energy Solutions, L.L.C.
<PAGE>
ITEM 2. ACQUISITIONS OR SALES OF UTILITY ASSETS.
None.
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 1997, and Schedules IX
for Monongahela Power Company, The Potomac Edison
Company, and West Penn Power Company.
<PAGE>
ITEM 4. ACQUISITION, REDEMPTION, OR RETIREMENT OF SYSTEM SECURITIES
Calendar Year 1997
(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> <C> <C>
The Potomac Edison Company:
6.30% Greene County Pollution
Control Bonds PE $800 $800 $800 Rule 42
Monongahela Power Company:
6.30% Greene County Pollution
Control Bonds MP $500 $500 $500 Rule 42
6-1/2% First Mortgage Bonds MP $15,000 $15,000 $15,000 Rule 42
Allegheny Generating Company
7.55% Medium-Term Notes AGC $1,000 $1,000 $1,000 Rule 42
7.57% Medium-Term Notes AGC $5,000 $5,000 $5,000 Rule 42
7.60% Medium-Term Notes AGC $4,000 $4,000 $4,000 Rule 42
6.97% Medium-Term Notes AGC $600 $600 $600 Rule 42
</TABLE>
<PAGE>
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, 1997.
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 and
Director Affairs 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>
Item 6. OFFICERS AND DIRECTORS - continued
PART I. - Continued
<TABLE>
<CAPTION>
Allegheny The West
Allegheny Power Monongahela Potomac Penn
Energy, Serivce AYP Capital, Power Edison Power
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(1) 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 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 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) Retired 5-8-97
<PAGE>
Item 6. OFFICERS AND DIRECTORS - continued
PART I. - Continued
<TABLE>
<CAPTION>
Allegheny The West
Allegheny Power Monongahela Potomac Penn
Energy, Service AYP Capital, Power Edison Power
Inc. Corporation Inc. Company Company Company
<S> <C> <C> <C> <C> <C> <C>
Edward H. Malone (2) 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 DX df D X
P. O. Box 26 S
Sloatsburg, NY
Steven H. Rice df D X F M D X df D X df DX df D X
999 Bedford Street S
Stamford, CT 06905
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 (3) 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
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>
(2) Retired 5-1-97
(3) Deceased 8-9-97
<PAGE>
Item 6. OFFICERS AND DIRECTORS - continued
PART I. - Continued
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Allegheny The West
Allegheny Power Monongahela Potomac Penn
Energy, Service AYP Capital, Power Edison Power
Inc. Corporation Inc. Company Company Company
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
George W. Basinger
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>
Item 6. OFFICERS AND DIRECTORS - continued
PART I. - Continued
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Allegheny The West
Allegheny Power Monongahela Potomac Penn
Energy, Service AYP Capital, Power Edison Power
Inc. Corporation Inc. Company Company Company
</TABLE>
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
<PAGE>
Item 6. OFFICERS AND DIRECTORS - continued
PART I. - Continued
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
West Virginia West Penn Indiana-
Allegheny Allegheny Power and West Virginia Ohio Valley Kentucky
Generating Pittsburgh Transmission Water Power Electric Electric
Company Coal Company Company Company Corporation Corporation
Eileen M. Beck S S S S
10435 Downsville Pike
Hagerstown, MD
Klaus Bergman(1)
98 Cutter Hill Road
Great Neck, NY
Nancy L. Campbell T T T T
10435 Downsville Pike
Hagerstown, MD
Richard J. Gagliardi
10435 Downsville Pike
Hagerstown, MD
Thomas K. Henderson D VP D D VP
10435 Downsville Pike
Hagerstown, MD
Kenneth M. Jones VP D D VP D D VP
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 VP 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>
(1) Retired 5-8-97
<PAGE>
Item 6. OFFICERS AND DIRECTORS - continued
PART I. - Continued
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
West Virginia West Penn Indiana-
Allegheny Allegheny Power and West Virginia Ohio Valley Kentucky
Generating Pittsburgh Transmission Water Power Electric Electric
Company Coal Company Company Company Corporation Corporation
Edward H. Malone(2)
5601 Turtle Bay Drive
Naples, FL
Frank A. Metz, Jr.
P. O. Box 26
Sloatsburg, NY
Steven H. Rice
999 Bedford Street
Stamford, CT 06905
Gunnar E. Sarsten
11436 Scarborough's Neck Rd.
P. O. Box 459
Belle Haven, VA
Peter L. Shea(3)
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 D
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
800 Cabin Hill Drive
Greensburg, PA
</TABLE>
(2) Retired 5-1-97
(3) Deceased 8-9-97
<PAGE>
Item 6. OFFICERS AND DIRECTORS - continued
PART I. - Continued
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
West Virginia West Penn Indiana-
Allegheny Allegheny Power and West Virginia Ohio Valley Kentucky
Generating Pittsburgh Transmission Water Power Electric Electric
Company Coal Company Company Company Corporation Corporation
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
George W. Basinger 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 D
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>
Item 6. OFFICERS AND DIRECTORS - continued
PART I. - Continued
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
West Virginia West Penn Indiana-
Allegheny Allegheny Power and West Virginia Ohio Valley Kentucky
Generating Pittsburgh Transmission Water Power Electric Electric
Company Coal Company Company Company Corporation Corporation
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>
Item 6. OFFICERS AND DIRECTORS (continued)
Part II. Financial connections of officers and directors as of
December 31, 1997
<TABLE>
<CAPTION>
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
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, N.A. Director No interlocking
Louisville, KY authority required
</TABLE>
<PAGE>
ITEM 6. OFFICERS AND DIRECTORS (continued)
PART III. Disclosures for Allegheny companies are as
follows:
(1) Allegheny Energy, Inc. (AE), 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 1997 of AE, M, PE, WP, and AGC on
pages 15 through 21 and of the AE Proxy Statement on pages
22 through 25. The executive officers of AE are also
executive officers of APSC and receive their compensation
from APSC as shown on page 5 and together with the directors
owned beneficially 115,695 shares of common stock of AE.
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 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 do not file proxy statements or Form
10-K's. These companies are not wholly owned by Allegheny
Energy, Inc., or its subsidiaries (see page 1 of this Form U5S)
and none of their executive officers are employees of the Allegheny
Energy companies. Except for two executive officers whose compensation
was $209,806, 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
Energy companies are reported in (1) above.
<PAGE>
ITEM 6. Part III (continued)
(1) AE, AGC, M, PE, WPP
(from 1997 Form 10-K)
ITEM 11. EXECUTIVE COMPENSATION
During 1997, and for 1996 and 1995, the annual compensation
paid by AE, 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
$100,000 was as follows:
Summary Compensation Tables (a)
AE(b), Monongahela(c), Potomac Edison, West Penn(c) and AGC(c)
Annual Compensation
<TABLE>
<CAPTION>
All
Name Other
and Long-Term Compen-
Principal Annual Performance sation
Position(d) Year Salary($) Incentive($)(e) Plan($)(f) ($)(g)
<S> <C> <C> <C> <C> <C>
Alan J. Noia, 1997 460,000 253,000 250,657 124,495
Chief Executive Officer 1996 360,000 253,750 131,071 92,769
1995 305,000 120,000 48,983
Peter J. Skrgic, 1997 265,000 155,400 150,394 91,409
Senior Vice President 1996 245,000 176,300 96,119 24,830
1995 238,000 73,800 37,830
Jay S. Pifer, 1997 240,000 95,200 150,394 67,810
Senior Vice President 1996 230,000 112,000 87,381 30,949
1995 220,000 72,600 34,098
Michael P. Morrell 1997 240,000 95,200 (h) 26,068
Senior Vice President 1996 183,336 72,500 (h) (h)
1995
Richard J. Gagliardi 1997 190,000 75,600 100,263 25,340
Vice President 1996 175,000 100,800 52,429 17,898
1995 160,000 48,400 18,769
</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 AE and its subsidiaries. All
salaries and bonuses of these executives are paid by APSC.
(b) AE has no paid employees.
(c) Monongahela, West Penn and AGC have 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 1998.
(f) In 1994, the Boards of Directors of AE, APS 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 second Plan
began on January 1, 1994 and ended on December 31, 1996. The
second Plan cycle began on January 1, 1995 and ended on December
31, 1997. The figure shown for 1996 represents the dollar value
paid in 1997 to each of the named executive officers who
participated in Cycle I. The figure shown for 1997 represents the
dollar value to be paid in 1998 to each of the named executive
officers who participated in Cycle II. 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, AE stock or cash may be paid if
performance criteria have been met.
<PAGE>
ITEM 6. Part III (continued)
(1) AE, AGC, M, PE, WPP
(from 1997 Form 10-K)
(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, AE 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. 49. To do this, AE 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 AE at the
easlier 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 1997, 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, $119,883 and $4,612; Mr.
Skrgic, $87,313 and $4,096; Mr. Pifer, $63,060 and $4,750; Mr.
Morrell, $21,964 and $4,104; and Mr. Gagliardi, $20,590 and
$4,750.
(h) Michael P. Morrell joined Allegheny on May 1, 1996. He did not
receive a payment from the Long-Term Performance Plan for the
first or second Plan cycles.
ALLEGHENY POWER SYSTEM PERFORMANCE SHARE PLAN
SHARES AWARDED IN LAST FISCAL YEAR (CYCLE IV)
Estimated Future Payout
<TABLE>
<CAPTION>
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 7,570 1997-99 4,542 7,570 15,140
Peter J. Skrgic
Senior Vice President 4,610 1997-99 2,766 4,610 9,220
Jay S. Pifer
Senior Vice President 2,800 1997-99 1,680 2,800 5,600
Michael P. Morrell
Senior Vice President 2,800 1997-99 1,680 2,800 5,600
Richard J. Gagliardi
Vice President 2,300 1997-99 1,380 2,300 4,600
</TABLE>
The named executives were awarded the above number of
shares for Cycle IV. Such number of shares are only
targets. As described below, no payouts will be made unless
certain criteria are met. Each executive's 1997-1999 target
long-term incentive opportunity was converted into
performance shares equal to an equivalent number of shares
of AE common stock based on the price of such stock on
December 31, 1996. 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 AE
common stock on December 31, 1999 and will reflect dividends
that would have been paid on such stock during the
<PAGE>
ITEM 6. Part III (continued)
(1) AE, AGC, M, PE, WPP
(from 1997 Form 10-K)
performance period as if they were reinvested on the date
paid. If an executive retires, dies or otherwise leaves the
employment of Allegheny 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 executive's account, if any, will be paid
to the executive in stock or cash in early 2000.
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 AE'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.
DEFINED BENEFIT OR ACTUARIAL PLAN DISCLOSURE (a)
AE(b), Monongahela, Potomac Edison, West Penn and AGC (c)
Estimated
Name and Capacities Annual Benefits
In Which Served on Retirement (d)
Alan J. Noia, $315,000
Chief Executive Officer (e)(f)
Peter J. Skrgic, $168,005
Senior Vice President (e)(f)
Jay S. Pifer, $146,671
Senior Vice President(e)(f)
Richard J. Gagliardi $116,926
Vice President(e)(f)
Michael P. Morrell $128,775
Senior Vice President(e)(f)(g)
(a) The individuals appearing in this chart perform policy-
making functions for each of the Registrants.
(b) AE has no paid employees.
(c) Monongahela, West Penn and AGC have no paid employees.
(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
cases 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 January 1, 1997 the maximum amount of any
employee's compensation that may be used in these
computations is $160,000. Benefits for employees
retiring between 55 and 62 differ from the foregoing.
<PAGE>
ITEM 6. Part III (continued)
(1) AE, AGC, M, PE, WPP
(from 1997 Form 10-K)
Pursuant to a supplemental plan (Secured Benefit Plan),
senior executives of Allegheny 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, 1997. 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 so 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 47. 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, 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 AE.
Effective January 1, 1997 the maximum amount of any
employee's compensation that may be used in these
computations is $160,000. 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, Morrell and
Gagliardi for services in all capacities to AE and its
subsidiaries is set forth in the table.
(g) Michael P. Morrell joined AE on May 1, 1996. The figure
shown for Mr. Morrell reflects a provision of his
agreement with AE which grants him an additional eight
years of service after he has been with AE for ten
years.
Change In Control Contracts
In March 1996, AE entered into Change in
Control contracts with certain Allegheny 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 AE (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 Control. The Agreements provide
generally that if there is a Change in Control,
unless employment is terminated by AE 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
five-year average of the employee's annual
compensation and AE will maintain existing benefits
for the employee and the employee's dependents for a
period of three years. Each Agreement expired on
December 31, 1997, but is automatically extended for
one year periods thereafter unless either AE 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.
<PAGE>
ITEM 6. Part III (continued)
(1) AE, AGC, M, PE, WPP
(from 1997 Form 10-K)
A Senior Officer Separation Plan has been
approved for senior officers offered a position in
the combined company resulting from AE's merger with
DQE (Merger), that warrants a reduction in
compensation, as the Merger does not qualify as a
Change in Control. The Plan is available only to
those who have signed Change in Control Contracts
and will be offered only upon consummation of the
merger. The Plan offers benefits substantially
similar to the Change in Control Contracts, except
that the cash payment is computed on the basis of
1997 base salary and short-term incentive and long-
term incentive target amounts. The Chief Executive
Officer will determine the date of departure, which
will be within a twelve-month period following
closure of the merger. In addition, if a senior
officer is eligible to retire, the officer will be
credited with three additional years of service and
will receive a payment of $400 per month until age
62 or for 12 months, whichever is greater. Benefits
will not be reduced for early retirement.
An Other Executive Separation Plan has been approved
for certain management personnel offered a position with
Allegheny after the Merger that warrants a reduction in
compensation. The Plan is available only to Business Unit
Heads and certain other management employees of Allegheny
who do not have Change in Control contracts and will be
offered only upon consummation of the Merger. The Plan
provides benefits in the event the employee is offered a
position that warrants a reduction in compensation. The
employee's departure date will be determined by the Chief
Executive Officer, but will be within a twelve-month period
following closure of the Merger. The Plan provides
generally one year's base salary, plus management out-
placement services and 12-month continuance of medical and
dental coverage. In addition, if an employee is eligible to
retire, the employee will be credited with three additional
years of service and will receive a payment of $400 per
month until age 62 or for 12 months, whichever is greater.
Benefits will not be reduced for early retirement.
Compensation of Directors
In 1997, AE 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, (c) $250 for each Board meeting of each
company attended, and (d) 200 shares of AE 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. In addition to the fees mentioned above, the
Chairperson of each of the Audit, Finance,
Management Review and Director Affairs, New
Business, and Strategic Affairs Committees receives
a further fee of $4,000 per year. For the first
five months of 1997, Klaus Bergman received a fixed
fee of $8,333 per month for services as Chairman of
the Board of AE. Mr. Bergman also received a one-
time payment of $250,000 at the time he retired as
Chairman.
<PAGE>
ITEM 6. Part III (continued)
(1) AE, AGC, M, PE, WPP
(from 1997 Form 10-K)
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
In March 1997, the Board of Directors Retirement Plan
was replaced with a Deferred Stock Unit Plan for Outside
Directors. The present value of the accrued benefits under
the Directors Retirement Plan was credited to each director's
opening account balance under the new plan in the form of
deferred stock units. In addition, each year the Company will
credit each outside director's account with 275 deferred stock
units. The value of each director's account will
correspondingly rise or decline with the value of AE stock.
The table below shows the number of shares of AE common
stock that are beneficially owned, directly or indirectly, by
each director and named executive officer of AE, 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, 1997. To the best of the knowledge of AE, there
is no person who is a beneficial owner of more than 5% of the
voting securities of AE.
Executive Shares of
Officer or AE Percent
Name Director of Common Stock of Class
Eleanor Baum AE,MP,PE,WP 2,800* .02% or less
William L. Bennett AE,MP,PE,WP 3,571* "
Richard J. Gagliardi AE 10,147 "
Thomas K. Henderson AE,MP,PE,WP,AGC 5,349 "
Wendell F. Holland AE,MP,PE,WP 1,010* "
Kenneth M. Jones AE,AGC 10,802 "
Phillip E. Lint AE,MP,PE,WP 1,470* "
Frank A. Metz, Jr. AE,MP,PE,WP 3,184* "
Michael P. Morrell AE,MP,PE,WP,AGC 140 "
Alan J. Noia AE,MP,PE,WP,AGC 26,421 "
Jay S. Pifer AE,MP,PE,WP 14,380 "
Steven H. Rice AE,MP,PE,WP 3,451* "
Gunnar E. Sarsten AE,MP,PE,WP 6,800* "
Peter J. Skrgic AE,MP,PE,WP,AGC 15,127 "
Sanford C. Bernstein & Co., Inc. 11,397,135 9.3%
767 Fifth Avenue
New York, NY 10153
All directors and executive officers
of AE as a group (17 persons) 115,695
Less than .10%
All directors and executive officers
of MP as a group (19 persons) 116,637 "
All directors and executive officers
of PE as a group (19 persons) 114,736 "
All directors and executive officers
of WP as a group (19 persons) 120,673 "
All directors and executive officers
of AGC as a group (8 persons) 73,011 Less than .06%
*Excludes the outside directors' accounts in the Deferred Stock Unit
Plan which, at March 1, 1998, were valued at the number of shares
shown: Baum, 3009; Bennett, 1358; Holland, 1223; Lint, 4545; Metz,
3263; Rice, 1879; and Sarsten, 2721.
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 AE. 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
None.
<PAGE>
ITEM 6. Part III (continued)
(1) AE
(from 1997 Proxy Statement)
MANAGEMENT REVIEW AND DIRECTOR AFFAIRS COMMITTEE REPORT
GENERAL
The compensation program for executive officers of the
Company and its subsidiaries is directed by the Management
Review and Director Affairs Committee (the 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 1998, compensation
will continue to 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; the
provision of reliable and economic service to
customers which assures customer satisfaction;
environmental stewardship; insuring the financial
stability of the Company and its subsidiaries;
integrity, and overall Company performance.
Offer compensation opportunities that are
competitive with the median level of opportunity in
the marketplace, at expected levels of performance,
but exceed median levels for performance exceeding
expectations.
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 Company'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 either similar in type and size to
the Company, contiguous to our geographic territory, or have a
similar fuel mix.
In 1997, over 80% of these survey companies are included
in the Dow Jones Electric Index to which the Company's
performance is compared on page 17 of this proxy statement.
This comparison, conducted by a national compensation
consulting firm, involves matching Company positions,
including the Chief Executive Officer (CEO), with those in the
survey companies that have comparable duties and
responsibilities. For 1997, the survey indicated that the
Company'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.
<PAGE>
ITEM 6. Part III (continued)
(1) AE
(from 1997 Proxy Statement)
Base salary:
The base salaries of all executive officers,
including the CEO, are reviewed annually by the
Committee, which makes recommendations 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) a performance assessment
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
ratio.
Annual Performance Incentive Plan:
The Allegheny Power System Annual Incentive
Plan (the Annual 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
Committee. The Annual 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 Company 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.
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 1997
Incentive Plan were determined by the Committee, and
participants could earn up to 1-1/2 times the target
award. For the 1997 Incentive Plan the targets were
$230,000 for Mr. Noia and from $70,000 to $140,000
for the other named officers. Targets for other
participants ranged from $60,000 to approximately
33% or less of 1997 base salary. Annual Incentive
Plan awards earned are paid in the year after the
year for which they are earned. Awards earned for
performance in 1995, 1996, and 1997 are set forth in
the Summary Compensation Table for those years under
the column "Incentive Award" for the individuals
named therein.
<PAGE>
ITEM 6. Part III (continued)
(1) AE
(from 1997 Proxy Statement)
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. Seven
executive officers of the Company were selected by
the Committee to participate 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
implementation of any plan beginning in 1998 is
being postponed pending the approval of the Long-
Term Incentive Plan discussed on pages 3 through 8.
The Cycle II target awards under the
Performance Plan ranged from $40,000 for the named
officers, excluding Mr. Morrell, to $100,000 for Mr.
Noia. These amounts equate to 1,839 to 4,598 shares
of stock as of January 1, 1995, the start of the
performance cycle under the Plan. The actual award
calculated under the Plan equaled 140% of the target
amount. The dollar value of such shares calculated
as of December 31, 1997, including reinvested
dividends, is included in the compensation table on
page 13.
The Cycle III target awards range from $70,000
to $175,000 for Mr. Noia. These amounts equate to
2,445 to 6,114 targeted shares of stock as of
January 1, 1996, the start of the performance cycle.
The Cycle IV target awards under the Performance
Plan range from $70,000 to $230,000 for Mr. Noia,
which equate to 2,300 to 7,570 shares of stock as of
January 1, 1997, the start of the performance cycle.
The actual payouts will be determined 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 may 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 IV are listed
in the Performance Share Plan Table on page 15.
For Mr. Noia, the 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 CEO 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 1997 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
Energy performance, including competitive position. Mr.
Noia's 1997 total
<PAGE>
ITEM 6. Part III (continued)
(1) AE
(from 1997 Proxy Statement)
compensation reflected the Committee's evaluation of his
performance as CEO and the described 1997 overall results.
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 and Director
Affairs 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>
ITEM 8. SERVICE, SALES AND CONSTRUCTION CONTRACTS
Calendar Year 1997
Part I. Between System Companies
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
In effect
Date of on Dec.31
Transaction Serving Company Receiving Company Compensation Contract (Yes or No)
Operating, maintenance, Monongahela Power The Potomac Edison $233,377 5/29/73 Yes
accounting, supervisory, and Company Company effective
other administrative or 5/31/74
or other services
</TABLE>
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 1997.
West Penn Power Company tests meters for The Potomac Edison Company. The
compensation for this service was $9,966 in 1997.
Part II. Between System Companies and others
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
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 $1,089,809 12/27/56 Yes
and other technical Service Corporation Corporation
and administrative
Engineering, drafting American Electric Power Indiana-Kentucky $ 880,031 12/27/56 Yes
and other technical Service Corporation Electric Corporation
and administrative
Maintenance Services Appalachian Power Ohio Valley Electric $ 816,766 1/1/79 Yes
Company Corporation
Maintenance Services Appalachian Power Indiana-Kentucky $ 117,645 1/1/79 Yes
Company Electric Corporation
</TABLE>
Ohio Valley Electric Corporation has a Maintenance Service Contract (effective
7/10/69) with Cincinnati Gas & Electric Company, the compensation for which was
less than $100,000 in 1997.
Part III.
None.
<PAGE>
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
Energy, Inc.'s (AYE, Inc.) regulated subsidiaries.
AYP Energy is a wholly-owned subsidiary of AYP Capital, Inc., a
wholly-owned, nonutility subsidiary of AYE, 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
$29,487,486 as of December 31, 1997.
AYP Capital's Equity in Undistributed Earnings of AYP Energy
totaled ($13,863,092) as of December 31, 1997.
AYP Energy's $160,000,000 of five year debt financing is
supported by AYE, Inc.
No assets have been transferred from other system companies
to AYP Energy.
(c) Ratio of Debt to Common Equity as of December 31, 1997:
Long-term Debt 160,000,000
Common Equity 15,625,394 = 10.24
(d) A copy of the Service Agreement between the Allegheny Power
Service Corporation and AYP Energy, Inc. is already on file.
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. Allehgeny Power Corporate Structure
AYE, Inc.
(NONUTILITY SUBSIDIARY) Regulated Business
AYP Capital Units
(Wholly-owned subsidiary of AYE, Inc.) (Wholly-owned subsidiaries of AYE,Inc.)
<PAGE>
AYP Energy
(Wholly-owned subsidiary of AYP Capital, Inc.)
Part III. Total Investment in AYP Energy: $15,625,394
(PAGE>
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 AYE, Inc.
owns a 9.9% interest in LAEEP.
(b) AYP Capital has invested $3,663,250 in LAEEP as of
December 31, 1997.
AYP Capital's Equity in Undistributed Earnings of LAEEP
totaled ($134,988) as of December 31, 1997.
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 $3,528,262
(PAGE>
ITEM 9. Wholesale Generators & Foregin 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 LAEEP.
AYP Capital, Inc., the nonutility subsidiary of AYE, Inc.
owns a 4.975% interest in FondElec.
(b) AYP Capital has invested $18,408 in FondElec as of
December 31, 1997.
AYP Capital's Equity in Undistributed Earnings of FondElec
totaled ($668) as of December 31, 1997.
AYP Capital advanced $25,000 to FondElec as of
December 31, 1997.
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 $17,740
<PAGE>
ITEM 10. 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 Energy, 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, 1997, together with the
reports of Price Waterhouse LLP with respect thereto, all
dated February 4, 1998, 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 dated February 4, 1998, appearing on pages 41-45
in the above-mentioned Annual Report on Form 10-K.
PRICE WATERHOUSE LLP
Pittsburgh, Pennsylvania
April 29, 1998
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>
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 ENERGY, INC.
By /s/ Thomas K. Henderson
Thomas K. Henderson
Counsel for
Allegheny Energy, Inc.
Dated: April 29, 1998
<PAGE>
APPENDIX 1
CONSOLIDATING AND OTHER FINANCIAL STATEMENTS
(See Index on Page A)
<PAGE>
ALLEGHENY ENERGY, INC. AND SUBSIDIARY COMPANIES
INDEX TO APPENDIX 1--CONSOLIDATING AND OTHER FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Consolidating Statements Other Statements
Allegheny West Penn AYP Capital,
Energy, 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, 1997 A-1, 2 B-1, 2 C-1, 2 D-1 D-4
Statements of Income -
Year ended December 31, 1997 A-3 B-3 C-3 D-2 D-5
Statements of Retained Earnings
and Other Paid-in Capital -
Year ended December 31, 1997 A-4 B-4 C-4 - -
Statements of Cash Flows
Year ended December 31, 1997 A-5 B-5 C-5 D-3 D-6
Long-Term Debt of Subsidiaries -
December 31, 1997 A-6, 7, 8 - - - -
</TABLE>
<PAGE>
ALLEGHENY ENERGY, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATING BALANCE SHEET - DECEMBER 31, 1997
(000's)
<TABLE>
<CAPTION>
ASSETS AYE APSC MP PE WPP Subtotal
(See page B-1)
<S> <C> <C> <C> <C> <C> <C>
Property, plant and equipment:
At original cost - 3,543 1,950,478 2,196,262 3,293,039 7,443,322
Accumulated depreciation - (900) (840,525) (859,076) (1,254,900) (2,955,401)
Investments and other assets:
Securities of subsidiaries consolidated:
Common stock, at equity 2,253,862 - - - - 2,253,862
Excess of cost over book equity at acquisition 15,077 - - - - 15,077
Investment in APC:
Common stock, at equity - - (3,227) (3,227) (6,453) (12,907)
Advances - - 3,495 3,617 7,061 14,173
AGC - common stock, at equity - - 53,888 55,847 89,783 199,518
Securities of associated company 1,250 - - - - 1,250
Nonutility investment - - - - - -
Benefit plans' investments 79,474 - - - - 79,474
Other - 57 - 139 113 309
Current assets:
Cash and temporary cash investments 104 510 1,686 2,319 4,056 8,675
Accounts receivable:
Electric service - - 70,319 85,114 141,674 297,107
Allowance for uncollectible accounts - - (2,176) (1,683) (13,326) (17,185)
Affiliated and other 7,284 23,625 10,918 5,300 21,525 68,652
Notes receivable from affiliates 2,752 - - 1,450 - 4,202
Materials and supplies - at average cost:
Operating and construction - - 18,716 23,715 34,212 76,643
Fuel - - 15,884 15,843 29,467 61,194
Prepaid taxes - - 17,287 15,052 11,738 44,077
Deferred income taxes - - - 1,044 11,959 13,003
Other 177 1,619 3,560 3,673 2,252 11,281
Deferred charges:
Regulatory assets - - 164,260 80,651 333,235 578,146
Unamortized loss on reacquired debt - - 14,338 17,094 9,725 41,157
Other 8 7,456 14,355 17,513 31,999 71,331
Total assets 2,359,988 35,910 1,493,256 1,660,647 2,747,159 8,296,960
</TABLE>
<PAGE>
ALLEGHENY ENERGY, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATING BALANCE SHEET - DECEMBER 31, 1997
<TABLE>
<CAPTION>
(000's) AYE 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 7,443,322 4,040 828,658 169,192 8,445,212 6,212 (14) 8,451,424
Accumulated depreciation (2,955,401) (16)(193,173) (5,586)(3,154,176) (1,034)(14) (3,155,210)
Investments and other assets:
Securities of subsidiaries consolidated:
Common stock, at equity 2,253,862 - - - 2,253,862 (2,253,862)(1) -
Excess of cost over book equity at
acquisition 15,077 - - - 15,077 - 15,077
Investment in APC:
Common stock, at equity (12,907) - - - (12,907) 12,907 (1) -
Advances 14,173 - - - 14,173 (14,173)(2) -
AGC - common stock, at equity 199,518 - - - 199,518 (199,518)(1) -
Securities of associated company 1,250 - - - 1,250 - 1,250
Nonutility investment - - - 4,992 4,992 - 4,992
Benefit plans' investments 79,474 - - - 79,474 - 79,474
Other 309 - - - 309 - 309
Current assets:
Cash and temporary cash investments 8,675 39 5,361 12,299 26,374 - 26,374
Accounts receivable:
Electric service 297,107 - - 15,434 312,541 732 (13) 313,273
Allowance for uncollectible accounts (17,185) - - (6) (17,191) - (17,191)
Affiliated and other 68,652 - 6 1,933 70,591 (732)(13) 12,312
(57,547)(3)
Notes receivable from affiliates 4,202 - - - 4,202 (4,202)(2) -
Materials and supplies - at average cost:
Operating and construction 76,643 - 1,832 2,361 80,836 - 80,836
Fuel 61,194 - - 2,167 63,361 - 63,361
Prepaid taxes 44,077 - 4,442 - 3,205 51,724 - 51,724
Deferred income taxes 13,003 - - 13,003 (646)(11) 12,357
Other 11,281 - 235 132 11,648 - 11,648
Deferred charges:
Regulatory assets 578,146 - 7,979 - 586,125 - 586,125
Unamortized loss on reacquired debt 41,157 - 8,393 - 49,550 - 49,550
Other 71,331 4 187 5,456 76,978 (5,394)(11) 66,406
(5,178)(14)
Total assets 8,296,960 4,067 663,920 211,579 9,176,526 (2,522,435) 6,654,091
</TABLE>
<PAGE>
ALLEGHENY ENERGY, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATING BALANCE SHEET - DECEMBER 31, 1997
(000's)
<TABLE>
<CAPTION>
CAPITALIZATION AND LIABILITIES AYE APSC MP PE WPP Subtotal
(see page B-2)
<S> <C> <C> <C> <C> <C> <C>
Capitalization:
Common stock of Allegheny Energy, Inc. 153,045 - - - - 153,045
Common stock of affiliate consolidated - - - - - -
Common stock of subsidiaries consolidated - 50 294,550 447,700 465,994 1,208,294
Other paid-in capital 1,044,085 - 2,441 2,690 55,475 1,104,691
Retained earnings 1,059,768 - 243,939 239,391 475,558 2,018,656
Preferred stock of subsidiaries:
Not subject to mandatory redemption - - 74,000 16,378 79,708 170,086
Long-term debt and QUIDS - - 455,087 627,012 802,319 1,884,418
(see pages A-6, A-7, A-8)
Notes and advances payable to affiliates - - - - - -
Current liabilities:
Short-term debt 97,526 - 56,829 - 52,046 206,401
Long-term debt due
within one year - - 20,100 1,800 103,500 125,400
Notes payable to affiliates - - 1,450 - - 1,450
Accounts payable to affiliates 50 - 5,805 19,929 16,137 41,921
Accounts payable - others 4,651 9,587 5,910 29,125 73,584 122,857
Taxes accrued:
Federal and state income - 47 5,045 2,105 1,605 8,802
Other - 666 18,936 11,461 22,728 53,791
Interest accrued 576 - 7,878 9,487 15,817 33,758
Restructuring liability - - 236 1,186 4,082 5,504
Other 63 15,463 13,234 15,720 24,375 68,855
Deferred credits and other liabilities:
Unamortized investment credit - - 18,297 21,470 45,206 84,973
Deferred income taxes - - 235,291 178,529 450,390 864,210
Regulatory liabilities - - 16,974 12,424 34,326 63,724
Other 224 10,097 17,254 24,240 24,309 76,124
Total capitalization and liabilities 2,359,988 35,910 1,493,256 1,660,647 2,747,159 8,296,960
</TABLE>
<PAGE>
ALLEGHENY ENERGY, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATING BALANCE SHEET - DECEMBER 31, 1997
(000's)
<TABLE>
<CAPTION>
AYE Inc.
Combined Eliminations, Consolidated
CAPITALIZATION AND LIABILITIES Subtotal APC AGC AYP Totals etc. Totals
(see pg C-2)
<S> <C> <C> <C> <C> <C> <C> <C>
Capitalization:
Common stock of Allegheny Energy, Inc. 153,045 - - - 153,045 - 153,045
Common stock of affiliate consolidated - 1 1 - 2 (2)(1) -
Common stock of subsidiaries consolidated 1,208,294 - - 1 1,208,295 (1,208,295)(1) -
Other paid-in capital 1,104,691 555 199,522 43,869 1,348,637 (304,552)(1) 1,044,085
Retained earnings 2,018,656 (13,462) - (17,797)1,987,397 (927,629)(1) 1,059,768
Preferred stock of subsidiaries:
Not subject to mandatory redemption 170,086 - - - 170,086 - 170,086
Long-term debt and QUIDS 1,884,418 - 148,735 160,000 2,193,153 - 2,193,153
(see pages A-6, A-7, A-8)
Notes and advances payable to affiliates - 14,173 - - 14,173 (14,173)(2) -
Current liabilities:
Short-term debt 206,401 - - - 206,401 - 206,401
Long-term debt due
within one year 125,400 - 60,000 - 185,400 - 185,400
Notes payable to affiliates 1,450 2,752 - - 4,202 (4,202)(2) -
Accounts payable to affiliates 41,921 8 6,135 4,012 52,076 (52,076)(3) -
Accounts payable - others 122,857 - - 12,598 135,455 (5,466)(3) 129,989
Taxes accrued:
Federal and state income 8,802 40 - 1,611 10,453 - 10,453
Other 53,791 - - 1,637 55,428 - 55,428
Interest accrued 33,758 - 4,404 1,838 40,000 - 40,000
Restructuring liability 5,504 - - - 5,504 - 5,504
Other 68,855 - 1 456 69,312 (646)(11) 68,666
Deferred credits and other liabilities:
Unamortized investment credit 84,973 - 48,343 - 133,316 - 133,316
Deferred income taxes 864,210 - 169,325 3,095 1,036,630 (5,394)(11) 1,031,236
Regulatory liabilities 63,724 - 27,454 - 91,178 - 91,178
Other 76,124 - - 259 76,383 - 76,383
Total capitalization and liabilities 8,296,960 4,067 663,920 211,579 9,176,526 (2,522,435) 6,654,091
</TABLE>
<PAGE>
ALLEGHENY ENERGY, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENT OF INCOME FOR YEAR ENDED DECEMBER 31, 1997
(000's)
<TABLE>
<CAPTION>
AYE APSC MP PE WPP Subtotal
<S> <C> <C> <C> <C> <C> <C>
Electric operating revenues: (see page B-3)
Residential - - 199,931 299,876 393,036 892,843
Commercial - - 118,825 148,286 223,347 490,458
Industrial - - 196,716 198,171 352,730 747,617
Wholesale and other,
including affiliates - 385,811 95,578 38,855 72,459 592,703
Bulk power transactions, net - - 17,260 23,588 40,590 81,438
Total operating revenues - 385,811 628,310 708,776 1,082,162 2,805,059
Operating expenses:
Operation:
Fuel - - 141,340 140,206 254,210 535,756
Purchased power and exchanges, net - - 98,267 140,183 120,005 358,455
Deferred power costs, net - - (10,028) (4,944) (7,944) (22,916)
Other 2,239 367,870 75,908 83,904 157,780 687,701
Maintenance - 3,612 70,563 56,817 98,252 229,244
Depreciation - - 56,591 71,761 113,793 242,145
Taxes other than income taxes 3 11,267 38,775 47,584 90,140 187,769
Federal and state income taxes - 392 47,518 44,494 73,279 165,683
Total operating expenses 2,242 383,141 518,934 580,005 899,515 2,383,837
Operating income (2,242) 2,670 109,376 128,771 182,647 421,222
Other income and deductions:
Allowance for other than borrowed funds used
during construction - - 570 1,716 2,107 4,393
Other, net 288,586 (2,479) 8,498 13,976 17,562 326,143
Total other income and deductions 288,586 (2,479) 9,068 15,692 19,669 330,536
Income before interest charges and
preferred dividends 286,344 191 118,444 144,463 202,316 751,758
Interest charges and preferred dividends:
Interest on long-term debt - - 36,076 47,659 64,990 148,725
Other interest 5,048 191 2,655 2,162 4,639 14,695
Allowance for borrowed funds used during construction - - (816) (1,113) (1,978) (3,907)
Dividends on preferred stock of subsidiaries - - - - - -
Total interest charges and preferred dividends 5,048 191 37,915 48,708 67,651 159,513
Net income 281,296 - 80,529 95,755 134,665 592,245
</TABLE>
<PAGE>
ALLEGHENY ENERGY, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENT OF INCOME FOR YEAR ENDED DECEMBER 31, 1997
(000's)
<TABLE>
<CAPTION>
AYE Inc.
Combined Eliminations, Consolidated
Subtotal APC AGC AYP Totals etc. Totals
<S> <C> <C> <C> <C> <C> <C> <C>
Electric operating revenues: (see pg C-3)
Residential 892,843 - - 421 893,264 - 893,264
Commercial 490,458 - - 549 491,007 - 491,007
Industrial 747,617 - - 246 747,863 - 747,863
Wholesale and other, (211,800)(4)
including affiliates 592,703 - 76,458 3,713 672,874 (385,811)(5) 75,263
Bulk power transactions, net 81,438 - - 80,867 162,305 (211)(4) 162,094
Total operating revenues 2,805,059 - 76,458 85,796 2,967,313 (597,822) 2,369,491
Operating expenses:
Operation:
Fuel 535,756 - - 24,183 559,939 - 559,939
Purchased power and exchanges, net 358,455 - - 43,663 402,118 (182,281)(4) 219,837
Deferred power costs, net (22,916) - - - (22,916) - (22,916)
Other 687,701 - 3,393 16,499 707,593 (29,720)(4) 308,991
(368,452)(5)
(430)(12)
Maintenance 229,244 - 1,484 4,528 235,256 (3,612)(5) 230,602
(8)(4)
(1,034)(15)
Depreciation 242,145 - 17,000 5,571 264,716 1,034 (15) 265,750
Taxes other than income taxes 187,769 - 4,835 4,906 197,510 (11,267)(5) 186,978
735 (12)
Federal and state income taxes 165,683 - 11,213 (9,203) 167,693 (305)(12) 168,073
685 (8)
Total operating expenses 2,383,837 - 37,925 90,147 2,511,909 (594,655) 1,917,254
Operating income 421,222 - 38,533 (4,351) 455,404 (3,167) 452,237
Other income and deductions:
Allowance for other than borrowed funds used
during construction 4,393 - - - 4,393 - 4,393
Other, net 326,143 (172) 9,126 1,457 336,554 685 (8)
(56,552)(1)
(1,863)(7)
(140)(6)
2,479 (5)
(441)(1) 18,016
(262,706)(9)
Total other income and deductions 330,536 (172) 9,126 1,457 340,947 (318,538) 22,409
Income before interest charges and
preferred dividends 751,758 (172) 47,659 (2,894) 796,351 (321,705) 474,646
Interest charges and preferred dividends:
Interest on long-term debt 148,725 - 14,431 10,999 174,155 (351)(7) 173,568
(236)(12)
Other interest 14,695 140 960 24 15,819 (1,506)(6) 14,409
(140)(6)
Allowance for borrowed funds used during 236 (12)
construction (3,907) - - - (3,907) - (3,907)
Dividends on preferred stock of subsidiaries - - - - - 9,280 (10) 9,280
Total interest charges and preferred
dividends 159,513 140 15,391 11,023 186,067 7,283 193,350
Net income 592,245 (312) 32,268 (13,917) 610,284 (328,988) 281,296
</TABLE>
<PAGE>
ALLEGHENY ENERGY, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF RETAINED EARNINGS AND OTHER PAID-IN CAPITAL
FOR YEAR ENDED DECEMBER 31, 1997
(000's)
<TABLE>
<CAPTION>
AYE MP PE WPP Subtotal
RETAINED EARNINGS (see page B-4)
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1997 988,667 215,221 227,726 441,283 1,872,897
Add:
Net Income 281,296 80,529 95,755 134,665 592,245
Total 1,269,963 295,750 323,481 575,948 2,465,142
Deduct:
Dividends on common stock of Allegheny
Energy, Inc. 210,195 - - - 210,195
Dividends on capital stock of subsidiary companies:
Preferred - 5,037 818 3,430 9,285
Common - 46,774 83,272 96,960 227,006
Total deductions 210,195 51,811 84,090 100,390 446,486
Balance at December 31, 1997 1,059,768 243,939 239,391 475,558 2,018,656
OTHER PAID-IN CAPITAL
Balance at January 1, 1997 1,028,124 2,441 2,690 55,475 1,088,730
Add (Deduct):
Excess of amounts received from sales of
common stock over the par value thereof 15,961 - - - 15,961
Common stock dividends paid out of
other paid-in capital - - - - -
Other paid-in capital from
Allegheny Energy, Inc. - - - - -
Balance at December 31, 1997 1,044,085 2,441 2,690 55,475 1,104,691
</TABLE>
<PAGE>
ALLEGHENY ENERGY, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF RETAINED EARNINGS AND OTHER PAID-IN CAPITAL
FOR YEAR ENDED DECEMBER 31, 1997
(000's)
<TABLE>
<CAPTION>
AYE Inc.
Combined Eliminations, Consolidated
Subtotal APC AGC AYP Totals etc. Totals
RETAINED EARNINGS (See pg C-4)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1997 1,872,897 (13,150) - (3,880) 1,855,867 (867,200) 988,667
Add:
Net Income 592,245 (312) 32,268 (13,917) 610,284 (328,988) 281,296
Total 2,465,142 (13,462) 32,268 (17,797) 2,466,151 (1,196,188) 1,269,963
Deduct:
Dividends on common stock of Allegheny
Energy, Inc. 210,195 - - - 210,195 - 210,195
Dividends on capital stock of
subsidiary companies:
Preferred 9,285 - - - 9,285 (9,285)(10) -
Common 227,006 - 32,268 - 259,274 (259,274)(9) -
Total deductions 446,486 - 32,268 - 478,754 (268,559) 210,195
Balance at December 31, 1997 2,018,656 (13,462) - (17,797) 1,987,397 (927,629) 1,059,768
OTHER PAID-IN CAPITAL
Balance at January 1, 1997 1,088,730 555 202,954 31,284 1,323,523 (295,399) 1,028,124
Add (Deduct):
Excess of amounts received from sales
of common stock over the par value
thereof 15,961 - - - 15,961 - 15,961
Common stock dividends paid out of
other paid-in capital - - (3,432) - (3,432) 3,432 (1) -
Other paid-in capital from
Allegheny Energy, Inc. - - - 12,585 12,585 (12,585)(1) -
Balance at December 31, 1997 1,104,691 555 199,522 43,869 1,348,637 (304,552) 1,044,085
</TABLE>
<PAGE>
ALLEGHENY ENERGY, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF CASH FLOWS FOR YEAR ENDED DECEMBER 31, 1997
(000's)
<TABLE>
<CAPTION>
AYE APSC MP PE WPP Subtotal
(see page B-5)
<S> <C> <C> <C> <C> <C> <C>
Cash Flows from Operations:
Net Income 281,296 * 80,529 95,755 134,665 592,245
Depreciation - - 56,591 71,761 113,793 242,145
Deferred investment credit and income taxes, net - 2,082 18,140 5,984 31,381 57,587
Deferred power costs, net - - (10,028) (4,944) (7,944) (22,916)
Unconsolidated subsidiaries' dividends in excess
of earnings - - 988 1,058 1,702 3,748
Allowance for other than borrowed funds used
during construction (AOFDC) - - (570) (1,716) (2,107) (4,393)
Restructuring liability - - (13,762) (13,783) (23,052) (50,597)
PURPA project buy out - - - - (48,000) (48,000)
Changes in other current assets and liabilities:
Accounts receivable, net (6,581) 421 (81) 9,452 (12,382) (9,171)
Materials and supplies - - 1,878 (764) (3,421) (2,307)
Accounts payable (6,436) (1,917) (11,453) (1,994) 7,507 (14,293)
Other, net (17,106) (445) (5,097) 10,485 11,532 (631)
Total Cash Flows from Operations 251,173 141 117,135 171,294 203,674 743,417
Cash Flows from Investing:
Utility construction expenditures (less allowance
for equity funds used during construction) - 286 (77,568) (76,582) (125,947) (279,811)
Nonutility investments (72,887) - - - - (72,887)
Total Cash Flows from Investing (72,887) 286 (77,568) (76,582) (125,947) (352,698)
Cash Flows from Financing:
Sale of common stock 16,706 - - - - 16,706
Retirement of long-term debt - - (15,500) (800) - (16,300)
Short-term debt, net 10,219 - 28,590 (7,497) 18,659 49,971
Notes receivable from affiliates (337) - - (1,450) 2,900 1,113
Notes payable to affiliates - - (1,450) - - (1,450)
Parent Company contribution
Dividends on capital stock:
Preferred stock - - (5,037) (818) (3,430) (9,285)
Common stock (210,195) - (46,774) (83,272) (96,960) (437,201)
Total Cash Flows from Financing (183,607) - (40,171) (93,837) (78,831) (396,446)
Net Change in Cash and Temporary
Cash Investments** (5,321) 427 (604) 875 (1,104) (5,727)
Cash and Temporary Cash Investments at January 1 5,425 83 2,290 1,444 5,160 14,402
Cash and Temporary Cash Investments at December 31 104 510 1,686 2,319 4,056 8,675
Supplemental cash flow information:
Cash paid during the year for:
Interest (net of amount capitalized) 5,150 53 36,776 47,642 64,594 154,215
Income taxes 1 2,691 28,282 36,705 43,297 110,976
</TABLE>
*Pursuant to service contracts, Allegheny Power Service Corporation's
expenses ($383,332) 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>
ALLEGHENY ENERGY, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF CASH FLOWS FOR YEAR ENDED DECEMBER 31, 1997
(000's)
<TABLE>
<CAPTION>
AYE Inc.
Combined Eliminations, Consolidated
Subtotal APC AGC AYP Totals etc. Totals
(see pg B-5)
<S> <C> <C> <C> <C> <C> <C> <C>
Cash Flows from Operations:
Net Income 592,245 (312) 32,268 (13,917) 610,284 (328,988) 281,296
Depreciation 242,145 - 17,000 5,571 264,716 1,034 (15) 265,750
Deferred investment credit and income 57,587 - 6,329 2,156 66,072 290 (16) 66,362
taxes, net
Deferred power costs, net (22,916) - - - (22,916) - (22,916)
Unconsolidated subsidiaries' dividends in
excess of earnings 3,748 - - - 3,748 (3,748) -
Allowance for other than borrowed funds
used during construction (AOFDC) (4,393) - - - (4,393) - (4,393)
Restructuring liability (50,597) - - - (50,597) - (50,597)
PURPA project buyout (48,000) - - - (48,000) - (48,000)
Changes in certain current assets and
liabilities:
Accounts receivable, net (9,171) - 1,331 (2,572) (10,412) 4,360 (6,052)
Materials and supplies (2,307) - 260 662 (1,385) - (1,385)
Accounts payable (14,293) (7) 5,913 1,238 (7,149) (10,023) (17,172)
Other, net (631) (37) 8,865 5,571 13,768 2,859 15,733
735 (16)
(595)(16)
(1,034)(15)
Total Cash Flows from Operations 743,417 (356) 71,966 (1,291) 813,736 (335,110) 478,626
Cash Flows from Investing:
Utility construction expenditures (less
allowance for equity funds used during
construction) (279,811) - (444) - (280,255) - (280,255)
Nonutility investments (72,887) - - (3,646) (76,533) 75,704 (829)
Total Cash Flows from Investing (352,698) - (444) (3,646) (356,788) 75,704 (281,084)
Cash Flows from Financing:
Sale of common stock 16,706 - - - 16,706 - 16,706
Retirement of long-term debt (16,300) - (30,592) - (46,892) - (46,892)
Short-term debt, net 49,971 - - - 49,971 - 49,971
Notes receivable from affiliates 1,113 - - - 1,113 (1,113) -
Notes payable to affiliates (1,450) 337 - - (1,113) 1,113 -
Parent Company contribution - - - 12,585 12,585 (12,585) -
Dividends on capital stock:
Preferred stock (9,285) - - - (9,285) 9,285 (10) -
Common stock (437,201) - (35,700) - (472,901) 262,706 (9) (210,195)
Total Cash Flows from Financing (396,446) 337 (66,292) 12,585 (449,816) 259,406 (190,410)
Net Change in Cash and Temporary
Cash Investments** (5,727) (19) 5,230 7,648 7,132 - 7,132
Cash and Temporary Cash Investments
at January 1 14,402 58 131 4,651 19,242 - 19,242
Cash and Temporary Cash Investments
at December 31 8,675 39 5,361 12,299 26,374 - 26,374
Supplemental cash flow information:
Cash paid during the year for:
Interest (net of amount capitalized) 154,215 - 14,770 10,999 179,984 (1,863) 178,121
Income taxes 110,976 (140) 10,313 (12,630) 108,519 - 108,519
</TABLE>
*Pursuant to service contracts, Allegheny Power Service Corporation's
expenses ($383,332) 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>
ALLEGHENY ENERGY, INC. A-6
Long-Term Debt of Subsidiaries at December 31, 1997
(000's)
Date of Principal
First mortgage bonds: Issue Amount
Monongahela Power Company:
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 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
Less Current Maturities 102,000
525,000
Total first mortgage bonds 1,462,000
Less current maturities 102,000
1,360,000
<PAGE>
ALLEGHENY ENERGY, INC. A-7
Long-Term Debt of Subsidiaries at December 31, 1997 (Cont'd)
(000's)
<TABLE>
<CAPTION>
Liability
Date of Date of Interest Due Within
Issue Maturity Rate One Year Long-Term
Debentures:
<S> <C> <C> <C> <C>
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 9-30-25 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% 500 14,000
11- 1-77 11- 1-12 6.375% 3,000
5-15-95 5- 1-15 6.150% 25,000
500 42,000
The Potomac Edison Company 11- 1-77 11- 1-98 to 11- 1-07 6.300 % 1,000 29,000
5-15-95 5- 1-15 6.150% 21,000
1,000 50,000
West Penn Power Company 11- 1-77 11- 1-98 to 11- 1-07 6.125% 1,500 43,500
5-15-95 5- 1-15 6.150% 31,500
1,500 75,000
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 3,000 365,300
</TABLE>
<PAGE>
ALLEGHENY ENERGY, INC. A-8
Long-Term Debt of Subsidiaries at December 31, 1997 (Cont'd)
(000's)
<TABLE>
<CAPTION>
Liability
Date of Date of Interest Due Within
Issue Maturity Rate One Year Long-Term
Unsecured notes:
<S> <C> <C> <C> <C> <C>
Hatfield's Ferry pollution control
facilities:
Monongahela Power Company 2- 1-77 2- 1-97 to 2- 1-02 6.30 % 500 2,060
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 6,060
The Potomac Edison Company 2- 1-77 2- 1-97 to 2- 1-02 6.30 % 800 3,200
West Penn Power Company 2- 1-77 2- 1-00 to 2- 1-07 6.10 % 14,435
Total unsecured notes 1,300 23,695
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 facilities 4- 1-88 4- 1-98 6.875% 5,900
19,100
Medium-term notes:
Allegheny Generating Company Various 1998 5.75-7.93% 60,000
AYP Energy, Inc. 10-31-96 10-31-01 6.780% 160,000
Unamortized debt discount and premium, net:
Monongahela Power Company (4,522)
The Potomac Edison Company (7,345)
West Penn Power Company (8,167)
Allegheny Generating Company (1,265)
Total unamortized debt discount and premium, net (21,299)
</TABLE>
<PAGE>
WEST PENN POWER COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATING BALANCE SHEET - DECEMBER 31, 1997
(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> <C> <C> <C> <C> <C>
Property, plant and equipment:
At original cost 3,290,715 2,314 10 3,293,039 - 3,293,039
Accumulated depreciation (1,254,900) - - (1,254,900) - (1,254,900)
Investments and other assets:
Securities of subsidiaries consolidated 2,445 1 - 2,446 (2,446)(1) 0
Equity in undistributed earnings of 56 - - 56 (56)(2) 0
subsidiaries
Indebtedness of subsidiary consolidated- - 13 - 13 (13)(3) 0
not current
Investment in Allegheny Pittsburgh Coal
Company:
Common stock, at equity (6,453) - - (6,453) - (6,453)
Advances 7,061 - - 7,061 - 7,061
Investment in Allegheny Generating Company
Common stock, at equity 89,783 - - 89,783 - 89,783
Other 113 - - 113 - 113
Current assets:
Cash and temporary cash investments 3,401 655 - 4,056 - 4,056
Accounts receivable:
Electric service 141,674 - - 141,674 - 141,674
Allowance for uncollectible accounts (13,326) - - (13,326) - (13,326)
Affiliated and other 21,525 - - 21,525 - 21,525
Materials and supplies - at average cost:
Operating and construction 34,212 - - 34,212 - 34,212
Fuel 29,467 - - 29,467 - 29,467
Prepaid taxes 11,738 - - 11,738 - 11,738
Deferred income taxes 11,959 - - 11,959 - 11,959
Other 2,252 - - 2,252 - 2,252
Deferred charges:
Regulatory assets 333,235 - - 333,235 - 333,235
Unamortized loss on reacquired debt 9,725 - - 9,725 - 9,725
Other 31,998 1 - 31,999 - 31,999
Total assets 2,746,680 2,984 10 2,749,674 (2,515) 2,747,159
</TABLE>
<PAGE>
WEST PENN POWER COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATING BALANCE SHEET - DECEMBER 31, 1997
(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)
Capitalization:
<S> <C> <C> <C> <C> <C> <C>
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 475,558 60 (4) 475,614 (56)(2) 475,558
Preferred stock:
Not subject to mandatory redemption 79,708 - - 79,708 - 79,708
Long-term debt and QUIDS 802,319 - - 802,319 - 802,319
Indebtedness to affiliated consolidated - - - 13 13 (13)(3) -
not current
Current liabilities:
Short-term debt 52,046 - - 52,046 - 52,046
Long-term debt due within one year 103,500 - - 103,500 - 103,500
Accounts payable to affiliates 16,124 13 - 16,137 - 16,137
Accounts payable - others 73,584 - - 73,584 - 73,584
Taxes accrued:
Federal and state income 1,605 - - 1,605 - 1,605
Other 22,261 467 - 22,728 - 22,728
Interest accrued 15,817 - - 15,817 - 15,817
Restructuring liability 4,082 - - 4,082 - 4,082
Other 24,376 (1) - 24,375 - 24,375
Deferred credits and other liabilities:
Unamortized investment credit 45,206 - - 45,206 - 45,206
Deferred income taxes 450,390 - - 450,390 - 450,390
Regulatory liabilities 34,326 - - 34,326 - 34,326
Other 24,309 - - 24,309 - 24,309
Total capitalization and liabilities 2,746,680 2,984 10 2,749,674 (2,515) 2,747,159
</TABLE>
<PAGE>
WEST PENN POWER COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENT OF INCOME FOR YEAR ENDED DECEMBER 31, 1997
(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)
Electric operating revenues:
<S> <C> <C> <C> <C> <C> <C>
Residential 393,036 - - 393,036 - 393,036
Commercial 223,347 - - 223,347 - 223,347
Industrial 352,730 - - 352,730 - 352,730
Wholesale and other, including affiliates 72,459 - - 72,459 - 72,459
Bulk power transactions, net 40,590 - - 40,590 - 40,590
Total operating revenues 1,082,162 - - 1,082,162 - 1,082,162
Operating expenses:
Operation:
Fuel 254,210 - - 254,210 - 254,210
Purchased power and exchanges, net 120,005 - - 120,005 - 120,005
Deferred power costs, net (7,944) - - (7,944) - (7,944)
Other 157,780 - - 157,780 - 157,780
Maintenance 98,252 - - 98,252 - 98,252
Depreciation 113,793 - - 113,793 - 113,793
Taxes other than income taxes 90,140 - - 90,140 - 90,140
Federal and state income taxes 73,279 - - 73,279 - 73,279
Total operating expenses 899,515 - - 899,515 - 899,515
Operating income 182,647 - - 182,647 - 182,647
Other income and deductions:
Allowance for other than borrowed funds used
during construction 2,107 - - 2,107 - 2,107
Other, net 17,562 3,632 (1) 21,193 (3,631)(2) 17,562
Total other income and deductions 19,669 3,632 (1) 23,300 (3,631) 19,669
Income before interest charges 202,316 3,632 (1) 205,947 (3,631) 202,316
Interest charges:
Interest on long-term debt 64,990 - - 64,990 - 64,990
Other interest 4,639 - - 4,639 - 4,639
Allowance for borrowed funds used during
construction (1,978) - - (1,978) - (1,978)
Total interest charges 67,651 - - 67,651 - 67,651
Net income 134,665 3,632 (1) 138,296 (3,631) 134,665
</TABLE>
<PAGE>
WEST PENN POWER COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF RETAINED EARNINGS AND OTHER PAID-IN CAPITAL
FOR YEAR ENDED DECEMBER 31, 1997
(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, 1997 441,283 1,428 (3) 442,708 (1,425)(2) 441,283
Add:
Net Income 134,665 3,632 (1) 138,296 (3,631)(2) 134,665
Total 575,948 5,060 (4) 581,004 (5,056) 575,948
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 1,678 - - 1,678 - 1,678
Common stock 96,960 5,000 - 101,960 (5,000)(2) 96,960
Total deductions 100,390 5,000 - 105,390 (5,000) 100,390
Balance at December 31, 1997 475,558 60 (4) 475,614 (56) 475,558
OTHER PAID-IN CAPITAL
Balance at December 31, 1997 55,475 (555) - 54,920 555 (1) 55,475
</TABLE>
<PAGE>
WEST PENN POWER COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF CASH FLOWS FOR YEAR ENDED DECEMBER 31, 1997
(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)
Cash Flows from Operations:
<S> <C> <C> <C> <C> <C> <C>
Net Income 134,665 3,632 (1) 138,296 (3,631)(2) 134,665
Depreciation 113,793 - - 113,793 - 113,793
Deferred investment credit and income taxes, net 31,381 - - 31,381 - 31,381
Deferred power costs, net (7,944) - - (7,944) - (7,944)
Unconsolidated subsidiaries' dividends in excess
of earnings 1,702 - - 1,702 - 1,702
Allowance for other than borrowed funds used
during construction (AOFDC) (2,107) - - (2,107) - (2,107)
Restructuring liability (23,052) - - (23,052) - (23,052)
PURPA project buyout (48,000) - - (48,000) - (48,000)
Changes in other current assets and liabilities:
Accounts receivable, net (12,382) - - (12,382) - (12,382)
Materials and supplies (3,421) - - (3,421) - (3,421)
Accounts payable 7,507 - - 7,507 - 7,507
Other, net 12,496 (4,596) 1 7,901 3,631 11,532
Total Cash Flows from Operations 204,638 (964) - 203,674 - 203,674
Cash Flows from Investing:
Construction expenditures (less allowance
for equity funds used during construction) (125,947) - - (125,947) - (125,947)
Cash Flows from Financing:
Notes receivable from affiliates 2,900 - - 2,900 - 2,900
Short-term debt 18,659 - - 18,659 - 18,659
Dividends on capital stock:
Preferred stock (3,430) - - (3,430) - (3,430)
Common stock (96,960) - - (96,960) - (96,960)
Total Cash Flows from Financing (78,831) - - (78,831) - (78,831)
Net Change in Cash and
Temporary Cash Investments* (140) (964) - (1,104) - (1,104)
Cash and Temporary Cash Investments at January 1 3,541 1,619 - 5,160 - 5,160
Cash and Temporary Cash Investments at December 31 3,401 655 - 4,056 - 4,056
Supplemental cash flow information:
Cash paid during the year for:
Interest (net of amount capitalized) 64,594 - - 64,594 - 64,594
Income taxes 42,735 562 - 43,297 - 43,297
</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>
WEST PENN POWER COMPANY AND SUBSIDIARY COMPANIES
DATA FOR U5S
1997
(000's)
<TABLE>
<CAPTION>
Item 5 - Investment in Securities of Non-System Companies
<S> <C> <C> <C> <C> <C>
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
West Penn Power Co. Allegheny Pittsburgh Coal Co. Capital Stock 5,000 (6,453) (6,453)
West Virginia Power &
Transmission Co. Capital Stock 30,000 2,505 2,501
Allegheny Generating Co. Capital Stock 450 89,783 89,783
85,835 85,831
West Virginia Power West Penn West Virginia
& Transmission Co. Water Power Co. Capital Stock 5 (4) 1
</TABLE>
<PAGE>
D-1
INDIANA-KENTUCKY ELECTRIC CORPORATION
BALANCE SHEET--DECEMBER 31, 1997
UNAUDITED
(000's)
Assets
Electric plant - at original cost, including $2,937,304
construction work in progress 399,294
Less - Accumulated provisions for depreciation
and amortization 336,299
62,995
Current assets:
Cash and cash equivalents 58
Accounts receivable 28
Coal in storage, at average cost 10,948
Coal sold under agreement to be repurchased 8,000
Materials and supplies, at average cost 9,146
Interest receivable 1
Prepaid expenses and other 1,086
29,267
Deferred charges and Other:
Future federal income tax benefits 51,019
Unrecognized postemployment benefits 814
Unrecognized pension expense 4,933
Unrecognized postretirement benefits 18,500
Deferred depreciation - coal switch 5,518
Prepaids and other 1,192
81,976
TOTAL ASSETS 174,238
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 15,482
Coal purchase obligation 8,000
Accrued taxes 1,978
Accrued interest and other 2,104
27,564
Deferred credits:
Accrued pension liability 4,933
Customer advances for construction 926
Advances from parent - construction 64,488
Antitrust settlement 2,594
Deferred credit-tax benefit obligation 51,019
Postretirement benefits obligation 18,500
Postremployment benefits obligation 814
Deferred credit - allowances 0
143,274
TOTAL CAPITALIZATION AND LIABILITIES 174,238
<PAGE>
D-2
INDIANA-KENTUCKY ELECTRIC CORPORATION
STATEMENT OF INCOME
FOR YEAR ENDED DECEMBER 31, 1997
UNAUDITED
(000's)
Operating revenues:
Sale of electric energy 148,198
Other operating revenues 67
Total operating revenues 148,265
Operating expenses:
Fuel consumed in operation 106,121
Other operation 16,904
Maintenance 16,099
Provision for depreciation and amortization 6,061
Taxes, other than federal income taxes 3,094
Total operating expenses 148,279
Operating loss (14)
Interest income and other 14
Income before interest charges 0
Interest charges 0
Net income -
<PAGE>
D-3
INDIANA-KENTUCKY ELECTRIC CORPORATION
STATEMENT OF CASH FLOWS
FOR YEAR ENDED DECEMBER 31, 1997
UNAUDITED
(000's)
Cash From Operations:
Net Income -
Adjustments to reconcile net income to net
cash (used) provided by operating activities:
Depreciation 6,061
Changes in assets and liabilities:
Accounts receivable 35
Coal in storage and coal sold under agreement to be
repurchased 3,499
Materials and supplies (672)
Prepaid expenses and other (505)
Accounts payable 3,171
Accrued taxes (743)
Accrued interest and other 140
Other (1,116)
Net cash provided by operating activities 9,870
Investing Activities:
Reimbursement for plant replacements and
additional facilities 7,313
Net electric plant additions (8,637)
Advances from parent (6,061)
Net cash used by investing activities (7,385)
Financing Activities:
Coal purchase obligation (3,000)
Net cash provided by financing activities (3,000)
Net increase in cash and cash equivalents (515)
Cash and cash equivalents, beginning of year 573
Cash and cash equivalents, end of year 58
Supplemental Disclosures
Interest paid 719
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, 1997
UNAUDITED
(000's)
Assets
Electric plant - at original cost, including $2,067,307
construction work in progress 291,658
Less - Accumulated provisions for depreciation and
amortization 286,058
5,600
Investments and other:
Special funds held by trustee 0
Investment in subsidiary company 3,400
Advances to subsidiary - construction 64,488
67,888
Current assets:
Cash and cash equivalents 5,325
Accounts receivable 26,186
Coal in storage, at average cost 3,869
Coal sold under agreement to be repurchased 8,000
Materials and supplies, at average cost 10,315
Property taxes applicable to subsequent years 4,086
SO2 Allowances 5,587
Refundable Federal income taxes 0
Prepaid expenses and other 835
64,203
Deferred charges and Other:
Debt expense, being amortized 317
Future federal income tax benefits 19,174
Unrecognized postemployment benefits expense 416
Unrecognized pension expense 5,019
Unrecognized postretirement benefits expense 18,338
SO2 Allowances 5,779
Prepaids and other 3,683
52,726
TOTAL ASSETS 190,417
Capitalization and Liabilities
Capitalization:
Common stock, $100 par value -
Authorized - 300,000 shares
Outstanding - 100,000 shares 10,000
Senior secured notes 58,201
Retained earnings 2,065
70,266
Current liabilities:
Short-Term Borrowings 20,000
Note payable maturing in one year 7,600
Current portion - long-term debt 6,465
Accounts payable 8,549
Coal purchase obligation 8,000
Accrued taxes 7,883
Accrued federal income taxes 6,910
Accrued interest and other 2,356
67,763
Deferred credits:
Investment tax credits 10,611
Accrued pension liability 5,019
Customer advances for construction 1,735
Antitrust settlement 1,517
Deferred credit-tax benefit obligation 14,752
Postretirement benefits obligation 18,338
Postemployment benefits obligation 416
Deferred credit - allowances 0
52,388
TOTAL CAPITALIZATION AND LIABILITIES 190,417
<PAGE>
D-5
OHIO VALLEY ELECTRIC CORPORATION
STATEMENT OF INCOME
FOR YEAR ENDED DECEMBER 31, 1997
UNAUDITED
(000's)
Operating revenues:
Sale of electric energy 300,673
Other operating revenues 787
Total operating revenues 301,460
Operating expenses:
Fuel consumed in operation 98,556
Purchased power 148,963
Other operation 21,072
Maintenance 15,472
Taxes, other than federal income taxes 5,040
Federal income taxes 4,641
Total operating expenses 293,744
Operating income 7,716
Interest income and other 454
Income before interest charges 8,170
Interest charges
Interest expense, net 6,061
Amortization of debt expense and discount 0
Total interest charges 6,061
Net income 2,109
Retained earnings, beginning of year 2,430
Cash dividends on common stock 2,475
Retained earnings, end of year 2,064
<PAGE>
D-6
OHIO VALLEY ELECTRIC CORPORATION
STATEMENT OF CASH FLOWS
FOR YEAR ENDED DECEMBER 31, 1997
UNAUDITED
(000's)
<TABLE>
<CAPTION>
Cash From Operations:
<S> <C>
Net Income 2,109
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 (5,755)
Changes in assets and liabilities:
Accounts receivable (4,726)
Coal in storage and coal sold under agreement to be
repurchased 3,095
Materials and supplies 19
Property taxes applicable to subsequent years (486)
Prepaid expenses and other (5,895)
Accounts payable (2,095)
Deferred income 0
Accrued taxes 9,291
Accrued interest and other (127)
Other (9,617)
Net cash used by operating activities (14,147)
Investing Activities:
Reimbursement for plant replacements and
additional facilities 20,729
Net electric plant additions (20,318)
Advances in subsidiary 6,062
Net cash provided by investing activities 6,473
Financing Activities:
Special funds held by trustee 0
Notes payable maturing in one year (900)
Senior secured notes (6,062)
Coal purchase obligation 0
Lines-of-credit borrowings 20,000
Dividends on common stock (2,475)
Net cash used by financing activities 10,563
Net decrease in cash and cash equivalents 2,889
Cash and cash equivalents, beginning of year 2,436
Cash and cash equivalents, end of year 5,325
Supplemental Disclosures
Interest paid 6,420
Federal income taxes received 1,580
</TABLE>
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>
AYP CAPITAL, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATING BALANCE SHEET - DECEMBER 31, 1997
(000's)
<TABLE>
<CAPTION>
Allegheny Allegheny Totals
AYP Communications AYP Energy Combined Eliminations, (Carried to
ASSETS Capital Connect Energy Solutions Totals etc. page A-1a)
Property, plant and equipment:
<S> <C> <C> <C> <C> <C> <C> <C>
At original cost 539 228 168,250 175 169,192 - 169,192
Accumulated depreciation (47) - (5,536) (3) (5,586) - (5,586)
Investments and other assets:
Securities of subsidiaries consolidated 18,016 - - - 18,016 (18,016) (1) 0
Nonutility Investment 4,992 - - - 4,992 - 4,992
Other - - - - - - -
Current assets:
Cash 3,549 458 6,893 1,399 12,299 - 12,299
Accounts receivable:
Electric service 808 135 13,242 1,249 15,434 - 15,434
Allowance for uncollectible accounts - - - (6) (6) - (6)
Affiliated and other 48 - 841 1,061 1,950 (17) (4) 1,933
Materials and supplies - at average
cost:
Operating and construction - - 2,361 - 2,361 - 2,361
Fuel - - 2,167 - 2,167 - 2,167
Prepaid taxes - - 3,205 - 3,205 - 3,205
Other - - 132 - 132 - 132
Deferred charges:
Other - - 5,456 - 5,456 - 5,456
Total assets 27,905 821 197,011 3,875 229,612 (18,033) 211,579
</TABLE>
<PAGE>
AYP CAPITAL, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATING BALANCE SHEET - DECEMBER 31, 1997
(000's)
<TABLE>
<CAPTION>
Allegheny Allegheny Totals
AYP Communications AYP Energy Combined Eliminations, (Carried to
CAPITALIZATION AND LIABILITIES Capital Connect Energy Solutions Totals etc. page A-2a)
Capitalization:
<S> <C> <C> <C> <C> <C> <C> <C>
Common stock owned by Allegheny Energy,
Inc. 1 - - 1 - 1
Common stock of subsidiaries consolidated - 1 1 1 3 (3)(1) -
Other paid-in capital 43,869 890 29,488 3,243 77,490 (33,621)(1) 43,869
Retained earnings (17,797) (305) (13,864) (1,440) (33,406) 15,609 (2) (17,797)
Long-term debt and QUIDS - - 160,000 - 160,000 - 160,000
Current liabilities:
Accounts payable to affiliates 1,484 215 1,924 407 4,030 (18)(3) 4,012
Accounts payable - others 7 1 11,549 1,041 12,598 - 12,598
Taxes accrued:
Federal and state income 325 11 652 623 1,611 - 1,611
Other 13 8 1,616 - 1,637 - 1,637
Interest accrued - - 1,838 - 1,838 - 1,838
Other - - 456 - 456 - 456
Deferred credits and other liabilities:
Deferred income taxes - - 3,095 - 3,095 - 3,095
Other 3 - 256 - 259 - 259
Total capitalization and liabilities 27,905 821 197,011 3,875 229,612 (18,033) 211,579
</TABLE>
<PAGE>
AYP CAPITAL, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENT OF INCOME FOR YEAR ENDED DECEMBER 31, 1997
(000's)
<TABLE>
<CAPTION>
Consolidated
Allegheny Allegheny Totals
AYP Communications AYP Energy Combined Eliminations, (Carried to
Capital Connect Energy Solutions Totals etc. page A-3a)
Electric operating revenues:
<S> <C> <C> <C> <C> <C> <C> <C>
Residential - - - 421 421 - 421
Commercial - - - 549 549 - 549
Industrial - - - 246 246 - 246
Wholesale and other, including affiliates 3,233 402 947 - 4,582 (869)(5) 3,713
Bulk power transactions, net - - 80,867 - 80,867 - 80,867
Total operating revenues 3,233 402 81,814 1,216 86,665 (869) 85,796
Operating expenses:
Operation:
Fuel - - 24,183 - 24,183 - 24,183
Purchased power and exchanges, net - - 43,617 915 44,532 (869)(5) 43,663
Other 4,781 714 7,411 3,593 16,499 - 16,499
Maintenance 14 - 4,514 - 4,528 - 4,528
Depreciation 37 - 5,531 3 5,571 - 5,571
Taxes other than income taxes 89 6 4,830 (19) 4,906 - 4,906
Federal and state income taxes (555) (108) (7,765) (775) (9,203) - (9,203)
Total operating expenses 4,366 612 82,321 3,717 91,016 (869) 90,147
Operating income (1,133) (210) (507) (2,501) (4,351) - (4,351)
Other income and deductions:
Other, net (12,781) 8 283 1,061 (11,429) 12,886 (2) 1,457
Total other income and deductions (12,781) 8 283 1,061 (11,429) 12,886 1,457
Income before interest charges (13,914) (202) (224) (1,440) (15,780) 12,886 (2,894)
Interest charges:
Interest on long-term debt - - 10,999 - 10,999 - 10,999
Other interest 3 - 21 - 24 - 24
Total interest charges 3 - 11,020 - 11,023 - 11,023
Net income (13,917) (202) (11,244) (1,440) (26,803) 12,886 (13,917)
</TABLE>
<PAGE>
AYP CAPITAL, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF RETAINED EARNINGS AND OTHER PAID-IN CAPITAL
FOR YEAR ENDED DECEMBER 31, 1997
(000's)
<TABLE>
<CAPTION>
Allegheny Allegheny Totals
AYP Communications AYP Energy Combined Eliminations, (Carried to
Capital Connect Energy Solutions Totals etc. page A-4a)
RETAINED EARNINGS
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1997 (3,880) (103) (2,619) - (6,602) 2,722 (3,880)
Rounding - - (1) - (1) 1 -
Add:
Net Income (13,917) (202) (11,244) (1,440) (26,803) 12,886 (2) (13,917)
Total (17,797) (305) (13,864) (1,440) (33,406) 15,609 (17,797)
Deduct:
Dividends on common stock of Allegheny
Energy, Inc. - - - - - -
Dividends on capital stock of subsidiary
companies:
Preferred - - - - - -
Common - - - - - -
Charges on redemption of preferred stock - - - - - -
Total deductions - - - - - -
Balance at December 31, 1997 (17,797) (305) (13,864) (1,440) (33,406) 15,609 (17,797)
OTHER PAID-IN CAPITAL
Balance at January 1, 1997 31,284 45 26,657 - 57,986 (26,702) 31,284
Add:
Capital Contributions from Parent 12,585 845 2,831 3,243 19,504 (6,919)(1) 12,585
Balance at December 31, 1997 43,869 890 29,488 3,243 77,490 (33,621) 43,869
</TABLE>
<PAGE>
AYP CAPITAL, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF CASH FLOWS FOR YEAR ENDED DECEMBER 31, 1997
(000's)
<TABLE>
<CAPTION>
Allegheny Allegheny Totals
Communications AYP Energy Combined Eliminations, (Carried to
AYP Capital Connect Energy Solutions Totals etc. page A-5a)
Cash Flows from Operations:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Income (13,917) (202) (11,244) (1,440) (26,803) 12,886 (2) (13,917)
Depreciation 37 - 5,531 3 5,571 - 5,571
Deferred investment credit and income
taxes, net - - 2,156 - 2,156 - 2,156
Changes in other current assets and
liabilities:
Accounts receivable, net (804) (134) 652 (2,303) (2,589) 17 (2,572)
Materials and supplies - - 662 662 - 662
Accounts payable 953 98 (1,243) 1,448 1,256 (18) 1,238
Taxes accrued 108 19 1,369 623 2,119 - 2,119
Other, net 5,994 59 3,365 9,418 (5,966) 3,452
Total Cash Flows from Operations (7,629) (160) 1,248 (1,669) (8,210) 6,919 (1,291)
Cash Flows from Investing:
Nonutility Investments (2,683) (228) (560) (175) (3,646) - (3,646)
Cash Flows from Financing:
Parent company contribution 12,585 845 2,831 3,243 19,504 (6,919) 12,585
Retirement of preferred stock - - - - - - -
Issuance of long-term debt and QUIDS - - - - - - -
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 12,585 845 2,831 3,243 19,504 (6,919) 12,585
Net Change in Cash 2,273 457 3,519 1,399 7,648 - 7,648
Cash at January 1 1,276 1 3,374 - 4,651 - 4,651
Cash at December 31 3,549 458 6,893 1,399 12,299 - 12,299
Supplemental cash flow information:
Cash paid during the year for:
Interest - - 10,999 - 10,999 - 10,999
Income taxes refund (587) (174) (10,471) (1,398) (12,630) - (12,630)
</TABLE>
<PAGE>
AYP CAPITAL, INC. AND SUBSIDIARY COMPANIES
DATA FOR U5S
1997
(000's)
Item 5 - Investment in Securities of Non-System Companies
Item 6 - Investments in System Securities
<TABLE>
<CAPTION>
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>
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>
ITEM 10 - EXHIBIT B F-1
CONSTITUENT INSTRUMENTS DEFINING THE RIGHTS OF HOLDERS
OF EQUITY SECURITIES OF SYSTEM COMPANIES.
INCORPORATED BY REFERENCE
ALLEGHENY ENERGY, INC.:
Charter, as amended Form 10-K of the Company
(1-267), December 31,
1997, exh. 3.1
By-laws, as amended Form 10-K of the Company
(1-267), December 31,
1997, exh. 3.2
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 Filed herewith as Exhibit 3.(ii)(a)
ALLEGHENY GENERATING COMPANY:
Charter, as amended Form 10, 1986, exh. 3(1)
Form 10-Q, June 1989, exh. (a)
By-laws, as amended Form 10-K, of the Company (0-14688),
December 31, 1996, exh. 3.2
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 Filed herewith as Exhibit 3.(ii)(b)
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 Filed herewith as Exhibit 3.(ii)(c)
<PAGE>
ITEM 10 - EXHIBIT C F-2
CONSTITUENT INSTRUMENTS DEFINING THE RIGHTS OF HOLDERS
OF DEBT SECURITIES OF SYSTEM COMPANIES
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
* 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 10 - EXHIBIT C (continued) F-3
Allegheny Generating Company
Documents
4 Indenture, dated as of December 1, Incorporated by reference to
1986, and Supplemental Indenture, the designated exhibits to
dated as of December 15, 1988, of Form 10-K for the year ended
the Company defining rights of December 31, 1996.
security holders.
<PAGE>
Exh. 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.
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.
<PAGE>
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, 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.
2
<PAGE>
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.
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 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 consititue 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
3
<PAGE>
Pennsylvania Directors' Liability Act, Act 145 of 1986;
and
(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 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.
4
<PAGE>
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 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
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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.
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 his office. He shall report to and perform his duties under
the immediate supervision and direction of the Controller.
6
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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.
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
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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.
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
8
<PAGE>
Exh. 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
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.
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
<PAGE>
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.
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.
2
<PAGE>
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 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 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.
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,
3
<PAGE>
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 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
4
<PAGE>
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.
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 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.
5
<PAGE>
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 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.
6
<PAGE>
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
7
<PAGE>
Exh. 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 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 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.
<PAGE>
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 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 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.
2
<PAGE>
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.
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 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
3
<PAGE>
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:
(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 idemnified 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 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.
4
<PAGE>
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
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
5
<PAGE>
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.
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.
6
<PAGE>
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
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 cancelled 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 cancelled, 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.
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.
7
<PAGE>
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 confirmity
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.
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
8
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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<TOTAL-COMMON-STOCKHOLDERS-EQ> 199,523
0
0
<LONG-TERM-DEBT-NET> 148,735
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 60,000
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 255,662
<TOT-CAPITALIZATION-AND-LIAB> 663,920
<GROSS-OPERATING-REVENUE> 76,458
<INCOME-TAX-EXPENSE> 11,213
<OTHER-OPERATING-EXPENSES> 26,712
<TOTAL-OPERATING-EXPENSES> 37,925
<OPERATING-INCOME-LOSS> 38,533
<OTHER-INCOME-NET> 9,126
<INCOME-BEFORE-INTEREST-EXPEN> 47,659
<TOTAL-INTEREST-EXPENSE> 15,391
<NET-INCOME> 32,268
0
<EARNINGS-AVAILABLE-FOR-COMM> 32,268
<COMMON-STOCK-DIVIDENDS> 32,268
<TOTAL-INTEREST-ON-BONDS> 14,431
<CASH-FLOW-OPERATIONS> 71,966
<EPS-PRIMARY> 0.00<F1>
<EPS-DILUTED> 0.00<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-31-1997
<PERIOD-START> JAN-1-1997
<PERIOD-END> DEC-31-1997
<EXCHANGE-RATE> 1
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 163,606
<OTHER-PROPERTY-AND-INVEST> 4,992
<TOTAL-CURRENT-ASSETS> 37,525
<TOTAL-DEFERRED-CHARGES> 5,456
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 211,579
<COMMON> 1
<CAPITAL-SURPLUS-PAID-IN> 43,869
<RETAINED-EARNINGS> (17,797)
<TOTAL-COMMON-STOCKHOLDERS-EQ> 26,073
0
0
<LONG-TERM-DEBT-NET> 160,000
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 25,506
<TOT-CAPITALIZATION-AND-LIAB> 211,579
<GROSS-OPERATING-REVENUE> 85,796
<INCOME-TAX-EXPENSE> (9,203)
<OTHER-OPERATING-EXPENSES> 99,350
<TOTAL-OPERATING-EXPENSES> 90,147
<OPERATING-INCOME-LOSS> (4,351)
<OTHER-INCOME-NET> 1,457
<INCOME-BEFORE-INTEREST-EXPEN> (2,894)
<TOTAL-INTEREST-EXPENSE> 11,023
<NET-INCOME> (13,917)
0
<EARNINGS-AVAILABLE-FOR-COMM> (13,917)
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> (1,291)
<EPS-PRIMARY> 0.00<F1>
<EPS-DILUTED> 0.00<F1>
<FN>
<F1>*All common stock is owned by parent, no EPS required.
</FN>
</TABLE>
