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File No. 70-7888
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
POST-EFFECTIVE AMENDMENT NO. 16
TO
FORM U-1
APPLICATION OR DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Allegheny Energy, Inc. Monongahela Power Company
10435 Downsville Pike 1310 Fairmont Avenue
Hagerstown, MD 21740 Fairmont, WV 26554
Allegheny Power Service Corporation The Potomac Edison Company
800 Cabin Hill Drive 10435 Downsville Pike
Greensburg, PA 15601 Hagerstown, MD 21740
Allegheny Generating Company West Penn Power Company
10435 Downsville Pike 800 Cabin Hill Drive
Hagerstown, MD 21740 Greensburg, PA 15601
(Name of company or companies filing this statement
and addresses of principal executive offices)
Allegheny Energy, Inc.
10435 Downsville Pike
Hagerstown, MD 21740
(Name of top registered holding company parent of
each applicant or declarant)
Thomas K. Henderson, Esquire
Vice President and General Counsel
Allegheny Energy, Inc.
10435 Downsville Pike
Hagerstown, MD 21740
________________________________________________________________
(Name and address of agent for service)
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Applicants hereby amend Item 1. Description of Proposed
Transaction by adding the following to the end thereof:
A) Short Term Debt
Allegheny Energy, Inc. (formerly Allegheny Power System,
Inc.) requests the Commission to raise Allegheny Energy, Inc.'s
("Allegheny") aggregate limit on short-term debt financing from
$400 million to $750 million, subject to the same terms and
conditions as are contained in the original Application. In
support thereof, Allegheny submits the following.
Allegheny was authorized by the Commission to issue up to
$400 million in short-term debt through December 31, 2001,
subject to certain conditions and parameters, by prior orders
dated January 29, 1992, February 28, 1992, July 14, 1992,
November 5, 1993, November 28, 1995, April 18, 1996 and December
23, 1997, (HCAR Nos. 25462, 25481, 25581, 25919, 26418, 26506,
and 26804, respectively) ("Prior Orders") in File No. 70-7888.
Subject to the terms and conditions set forth in the Prior
Orders, Allegheny requests authority to increase the limit of
its short term debt and be authorized to issue up to $750
million in short-term debt through December 31, 2007.
Allegheny has not sought an increase in the amount of its
short-term debt financing authority since it was approved to
borrow up to $400 million in 1996 by HCAR No. 26506. On December
23, 1997 , the Commission issued an order (HCAR No. 26804)
authorizing Allegheny, Monongahela Power Company ("Monongahela"),
The Potomac Edison Company ("Potomac Edison"), West Penn Power
Company ("West Penn"), and Allegheny Generating Company ("AGC") to
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continue their short-term debt financing authority from
December 31, 1997 through December 31, 2001, and to continue the
Allegheny Power System Money Pool from December 31, 1997 through
December 31, 2001. Since the time that Applicants received
their order, however, several events have occurred which require
Allegheny to request additional financing authority.
Allegheny has an established goal of increasing its
investment in generally non-rate regulated businesses. As
Allegheny's operations grow, the needs of its subsidiaries for
long-term capital will also increase. Allegheny primarily uses
its short-term financing to support its capital expenditure
program, which is expected to continue to be in excess of $300
annually, and to take advantage of growth opportunities through
acquisitions. In addition, regulated investment opportunities
may arise from time to time. While Allegheny would seek such
additional regulatory approval as may be required in connection
with such acquisitions, the requested increase in short-term
financing authority will enhance its ability to participate
effectively in the evolving energy markets.
Deregulation of generation has begun and competition at the
retail level is now a reality in Pennsylvania, the largest
service territory of Allegheny's public utility subsidiaries.
The Electricity Generation Customer Choice and Competition Act,
66 Pa. C.S. Section 2801 et seq. (together with regulatory
interpretations, the "Pennsylvania Deregulation Act"), allowed
two-thirds of West Penn's generation load to choose its
generation supplier in January, 1999. The remaining one-third
will be allowed to choose its generation supplier beginning
January 2, 2000. In order to position
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Allegheny and its
subsidiaries in this competitive environment, Allegheny needs to
have access to cash through short-term borrowings in order to
take advantage of opportunities that arise and to make capital
contributions to its direct and indirect subsidiaries.
In addition to needing cash to respond to the opportunities
brought about by the deregulated environment in the states in
which the operating subsidiaries of Allegheny serve, the Board of
Directors of Allegheny on March 4, 1999, approved a program
whereby Allegheny will begin repurchasing up to $500 million of
its common stock. In approving the repurchase, the Board made a
determination that Allegheny's common stock is undervalued in the
marketplace. Consequently, Allegheny desires to be in a position
to move quickly to make the best repurchase deal that it can. In
order to accomplish the common stock repurchase, Allegheny needs
to have access to cash.
B. Application of Proceeds
Allegheny may use the proceeds of its proposed short-term
borrowings to acquire common stock of its subsidiaries and for
other general corporate purposes including the financing of
construction and property acquisitions. Allegheny may also make
capital contributions to its direct and advances to its indirect
subsidiaries or other types of loans to its subsidiaries.
Other than Allegheny's 9.9% limited partnership interest in
The Latin America Energy and Electricity Fund I, L.P., neither
Allegheny nor any subsidiary thereof currently has an ownership
interest in an EWG or foreign
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utility company ("FUCO") as defined
in Sections 32 or 33 of the Act. However, some of the proceeds
from the financing transactions proposed herein may be used by
Allegheny as a capital contribution to a nonutility subsidiary
which could acquire an interest in an EWG or a FUCO. Neither
Allegheny nor any subsidiary thereof currently or as a
consequence of the transactions proposed herein will be a party
to, or have any rights under, a service, sales, or construction
agreement with an EWG or a FUCO.
In addition, Allegheny may use the proceeds of such proposed
borrowings to purchase shares of Allegheny common stock in order
to fund its Employee Stock Option and Savings Plan, Performance
Share Plan, the Allegheny Energy, Inc. 1998 Long-Term Incentive
Plan and the Allegheny Energy, Inc. Restricted Stock Plan for
Outside Directors in lieu of issuing additional new shares of
common stock pursuant to such plans.
Except as described herein, no associate company or
affiliate of the Applicants or any affiliate of any such associate
company has any material interest, directly or indirectly, in the
proposed transactions.
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C. Analysis Under Rule 53
Rule 54 provides that in determining whether to approve
certain transactions other than those involving exempt wholesale
generators ("EWGs") or foreign utility companies ("FUCOs"), as
defined in the 1935 Act, the Commission will not consider the
effect of the capitalization or earnings of any subsidiary which
is an EWG or FUCO if Rule 53(a), (b) and (c) are satisfied. The
requirements of Rule 53(a), (b) and (c) are satisfied.
Rule 53(a)(1). Allegheny does not have any amounts
invested, or committed to be invested, in EWGs. Allegheny has
committed to invest up to $5 million in partnerships that may
invest in FUCOs. This investment represents less than 1% of
$898,629,000, the average of the consolidated retained earnings
of Allegheny reported on Form 10-K or Form 10-Q, as applicable,
for the four consecutive quarters ended December 31, 1998.
Rule 53(a)(2). Allegheny will maintain books and records
for any EWG and FUCO in which it holds an interest and will make
those books and records available as required by Rule 53(a)(2).
Rule 53(a)(3). No more than 2% of the employees of
Allegheny's domestic public utility companies will, at any one
time, directly or indirectly, render services to EWGs or FUCOs in
which Allegheny holds an interest.
Rule 53(a)(4). Allegheny will submit a copy of Item 9 and
Exhibits G and H of Allegheny's Form U5S to each of the public
service commissions having jurisdiction over the retail rates of
any of Allegheny's affected public utility companies.
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Rule 53(b):
(i) Neither Allegheny nor any subsidiary of Allegheny is the
subject of any pending bankruptcy or similar proceeding;
(ii) Allegheny's average consolidated retained earnings for the
four most recent quarterly periods($898,629,000) represented a
decrease of approximately $131,840,000 (or 13%) in the average
consolidated retained earnings from the previous four quarterly
periods ($1,030,469,000); however, Allegheny's aggregate
investment in EWGs and FUCOs does not exceed two percent of total
capital invested in utility operations. The decrease in
consolidated retained earnings resulted primarily from West Penn,
one of the Company's regulated subsidiaries, recording an
extraordinary charge of $466.9 million ($275.4 million after
taxes) in 1998. West Penn determined that under the provisions
of SFAS No. 101 an extraordinary charge was required to reflect a
write-off of certain disallowances in the Pennsylvania Public
Utility Commission's (Pennsylvania PUC) May 29, 1998, Order, as
revised by the Pennsylvania PUC-approved November 19, 1998,
settlement agreement. The write-off reflects adverse power
purchase commitments and deferred costs that are not recoverable
from customers under the Pennsylvania PUC's Order and settlement
agreement.
(iii) for the year ended December 31, 1998, there were no
losses attributable to Allegheny's investments in the
partnerships that invest in FUCOs.
Rule 53(c). Rule 53(c) is inapplicable because the
requirements of Rule 53(a) and (b) have been satisfied.
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2. Applicants hereby add the following to the end of Item 2.
Fees, Commissions and Expenses:
None, other than ordinary expenses not over $500 in
connection with the preparation of this Post-Effective Amendment.
None of such fees, commissions or expenses are to be paid to any
associate company or affiliate of Allegheny or any affiliate of
any such associate company except for legal, financial and other
services to be performed at cost by Allegheny Power Service
Corporation.
3. Applicants hereby add the following to the end of Item 3.
Applicable Statutory Provisions:
Short-term borrowings by Allegheny are subject to
Sections 6 and 7 of the Public Utility Holding Company Act of
1935 (the "Act").
4. Applicants hereby add the following to the end of Item 4.
Regulatory Approval:
No commission, other than the Securities and Exchange
Commission, has jurisdiction over the proposed transactions.
5. Applicants hereby add the following to the end of Item 5.
Procedure:
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It is requested, pursuant to Rule 23(c) of the Rules
and Regulations of the Commission, that the Commissions' Order
permitting this application or declaration to become effective be
issued on or before April 26, 1999. Allegheny waives any
recommended decision by hearing officer or by any other
responsible officer of the Commission and waive the 30-day
waiting period between the issuance of the Commission's Order and
the date it is to become effective since it is desired that the
Commission's Order, when issued, become effective forthwith.
Allegheny consents to the office of Public Utility Regulation
assisting in the preparation of the Commission's decision and/or
Order in this matter unless the Office opposes the matter covered
by this application or declaration.
6. Applicants hereby add the following to the end of Item 6.
Exhibits and Financial Statements:
(a) Exhibits
H-2 Form of Notice.
7. Applicants hereby add the following to the end of Item 7.
Information as to Environmental Effects:
(a) For the reasons set forth in Item 1
above, the authorization applied for herein does
not require major federal action significantly
affecting the quality of the human environment for
purposes of Section 102(2)(C) of the National
Environmental Policy Act (42 U.S.C. 4232(2)(C)).
(b) Not applicable.
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SIGNATURE
Pursuant to the requirements of the Public Utility
Holding Company Act of 1935, the undersigned Applicants have duly
caused this statement to be signed on their behalf by the
undersigned thereunto duly authorized.
ALLEGHENY ENERGY, INC.
BY /s/ Carol G. Russ
CAROL G. RUSS
COUNSEL
MONONGAHELA POWER COMPANY
BY /s/ Carol G. Russ
CAROL G. RUSS
COUNSEL
THE POTOMAC EDISON COMPANY
BY /s/ Carol G. Russ
CAROL G. RUSS
COUNSEL
WEST PENN POWER COMPANY
BY /s/ Carol G. Russ
CAROL G. RUSS
COUNSEL
Dated: March 12, 1999
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EXHIBIT H
SECURITIES AND EXCHANGE COMMISSION
(Release No. 35- : )
Allegheny Energy, Inc.
Notice Requesting Increase in Short-Term Debt Authority
Allegheny Energy, Inc. (Allegheny), 10435 Downsville Pike,
Hagerstown, MD 21740-1766, a registered public utility holding
company, and its direct and indirect wholly owned subsidiaries
Monongahela Power Company (Monongahela), 1310 Fairmont Avenue,
Fairmont, WV 26555-1392, The Potomac Edison Company (Potomac
Edison), 10435 Downsville Pike, Hagerstown, MD 21740-1766, West
Penn Power Company (West Penn) 800 Cabin Hill Drive, Greensburg,
Pennsylvania 15601, and Allegheny Generating Company (AGC), 10435
Downsville Pike, Hagerstown, MD 21740-1766, have filed an
Application or Declaration pursuant to Sections 6 and 7 of the
Act.
Allegheny requests the Commission to raise Allegheny's
aggregate limit on short-term debt financing from $400 million to
$750 million, subject to the same terms and conditions as are
contained in the original Application. In support thereof,
Allegheny submits the following.
Allegheny was authorized by the Commission to issue up to
$400 million in short-term debt through December 31, 2001,
subject to certain conditions and parameters, by prior orders
dated January 29, 1992, February 28, 1992, July 14, 1992,
November 5, 1993, November 28, 1995, April 18, 1996 and December
23, 1997, (HCAR Nos. 25462, 25481, 25581, 25919, 26418, 26506,
and 26804, respectively) ("Prior Orders") in File No. 70-7888.
Subject to the terms and conditions set forth in the Prior
Orders, Allegheny requests authority to increase the limit of
its short term debt to be authorized to issue up to $750
million in short-term debt through December 31, 2007.
Allegheny has not sought an increase in the amount of its
short-term debt financing authority since it was approved to
borrow up to $400 million in 1996 by HCAR No. 26506. On December
23, 1997 , the Commission issued an order (HCAR No. 26804)
authorizing Allegheny, Monongahela Power Company ("Monongahela"),
The Potomac Edison Company ("Potomac Edison"), West Penn Power
Company ("West Penn"), and Allegheny Generating Company ("AGC")
to continue their short-term debt financing authority from
December 31, 1997 through December 31, 2001, and to continue the
Allegheny Power System Money Pool from December 31, 1997 through
December 31, 2001. Since the time that Applicants received
their order, however, several events have occurred which require
Allegheny to request additional financing authority.
Allegheny has an established goal of increasing its
investment in generally non-rate regulated businesses. As
Allegheny's operations grow, the
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needs of its subsidiaries for
long-term capital will also increase. Allegheny primarily uses
its short-term financing to support its capital expenditure
program, which is expected to continue to be in excess of $300
annually, and to take advantage of growth opportunities through
acquisitions. In addition, regulated investment opportunities
may arise from time to time. While Allegheny would seek such
additional regulatory approval as may be required in connection
with such acquisitions, the requested increase in short-term
financing authority will enhance its ability to participate
effectively in the evolving energy markets.
Deregulation of generation has begun and competition at the
retail level is now a reality in Pennsylvania, the largest
service territory of Allegheny's public utility subsidiaries.
The Electricity Generation Customer Choice and Competition Act,
66 Pa. C.S. Section 2801 et seq. (together with regulatory
interpretations, the "Pennsylvania Deregulation Act"), allowed
two-thirds of West Penn's generation load to choose its
generation supplier in January, 1999. The remaining one-third
will be allowed to choose its generation supplier beginning
January 2, 2000. In order to position Allegheny and its
subsidiaries in this competitive environment, Allegheny needs to
have access to cash through short-term borrowings in order to
take advantage of opportunities that arise and to make capital
contributions to its direct and indirect subsidiaries.
In addition to needing cash to respond to the opportunities
brought about by the deregulated environment in the states in
which the operating subsidiaries of Allegheny serve, the Board of
Directors of Allegheny on March 4, 1999, approved a program
whereby Allegheny will begin repurchasing up to $500 million of
its common stock,. In approving the repurchase, the Board made a
determination that Allegheny's common stock is undervalued in the
marketplace. Consequently, Allegheny desires to be in a position
to move quickly to make the best repurchase deal that it can. In
order to accomplish the common stock repurchase, Allegheny needs
to have access to cash.
Allegheny may use the proceeds of its proposed short-term
borrowings to acquire common stock of its subsidiaries and for
other general corporate purposes including the financing of
construction and property acquisitions. Allegheny may also make
capital contributions to its direct and advances to its indirect
subsidiaries or other types of loans to its subsidiaries.
Other than Allegheny's 9.9% limited partnership interest in
The Latin America Energy and Electricity Fund I, L.P., neither
Allegheny nor any subsidiary thereof currently has an ownership
interest in an EWG or foreign utility company ("FUCO") as defined
in Sections 32 or 33 of the Act. However, some of the proceeds
from the financing transactions proposed herein may be used by
Allegheny as a capital contribution to a nonutility subsidiary
which could acquire an interest in an EWG or a FUCO. Neither
Allegheny nor any subsidiary thereof currently or as a
consequence of the transactions proposed herein will be a party
to, or have any rights under, a service, sales, or construction
agreement with an EWG or a FUCO.
In addition, Allegheny may use the proceeds of such proposed
borrowings to purchase shares of Allegheny common stock in order
to fund its Employee Stock Option and Savings Plan, Performance
Share Plan, the Allegheny Energy,
<PAGE>
Inc. 1998 Long-Term Incentive
Plan and the Allegheny Energy, Inc. Restricted Stock Plan for
Outside Directors in lieu of issuing additional new shares of
common stock pursuant to such plans.
Except as described herein, no associate company or
affiliate of the Applicants or any affiliate of any such
associate company has any material interest, directly or
indirectly, in the proposed transactions.
Except as described herein, no associate company or
affiliate of the Applicants or any affiliate of any such
associate company has any material interest, directly or
indirectly, in the proposed transactions.
The application and any amendments thereto are
available for public inspection through the Commission's Office
of Public Reference. Interested persons wishing to comment or
request a hearing should submit their views in writing
by_______________, 1999, to the Secretary, Securities and
Exchange Commission, Washington, DC 20549, and serve a copy of
the Applicant at the address specified above. Proof of service
(by affidavit or, in case of an attorney at law, by certificate)
should be filed with the request. Any request for a hearing
shall identify specifically the issues of fact or law that are
disputed. A person who so requests will be notified of any
hearing, if ordered, and will receive a copy of any notice or
order issued in this matter. After said date, the application,
as filed or as it may be amended, may be granted.
For the Commission, by the Division of Investment
Management, pursuant to delegated authority.
