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File No. 70-_______
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM U-1 APPLICATION-DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Allegheny Energy, Inc. West Penn Power Company
10435 Downsville Pike 800 Cabin Hill Drive
Hagerstown, Maryland 21740 Greensburg, Pennsylvania 15601
AYP Energy, Inc.
10435 Downsville Pike
Hagerstown, Maryland 21740
(Name of companies filing this statement
and addresses of principal executive offices)
_____________________
Allegheny Energy, Inc.
(Name of top registered holding company parent of
applicants)
Thomas K. Henderson, Esq.
Vice President
Allegheny Energy, Inc.
10435 Downsville Pike
Hagerstown, Maryland 21740
(Name and address of agent for service)
The Commission is requested to send copies of all notices,
orders and communications in connection with this
Application-Declaration to:
Thomas K. Henderson, Esq.
Vice President
Allegheny Energy, Inc
10435 Downsville Pike
Hagerstown, Maryland 21740-1766
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TABLE OF CONTENTS
Item 1. DESCRIPTION OF PROPOSED TRANSACTIONS 1
A. Introduction 1
B. Background and Regulatory Environment 1
C. Overview of Requested Approvals 2
1. Transactions Related to the Formation and
Capitalization of Energy Subsidiary 2
2. Transactions Related to the Formation and
Capitalization of GENCO 3
3. GENCO Will Become a Subsidiary of Allegheny
Energy 4
4. Transactions Related to GENCO's Operations 4
D. Formation of Energy Subsidiary 6
1. Contributions to Energy Subsidiary and
Transfer of Associated Liabilities 6
2. Dissolution of Energy Subsidiary 7
E. Transfer of Generating Assets by West Penn and
Acquisition of the Generating Assets by Energy
Subsidiary 7
F. Assignment and Delegation by West Penn to Energy
Subsidiary of West Penn's Rights and Obligations
Under Certain Operating Agreements 8
G. Formation of GENCO, Transfer of Generating Assets
from Energy Subsidiary to GENCO and Acquisition of
Generating Assets by GENCO 9
1. Transfer of Generating Assets from Energy
Subsidiary to GENCO and Acquisition by
GENCO 10
2. Distribution of GENCO Limited Liability
Interests 10
3. Contributions to GENCO 11
4. Rule 53 and Rule 58 Compliance 11
H. Assignment and Delegation by Energy Subsidiary to
GENCO of Energy Subsidiary's Rights and
Obligations Under Certain Operating Agreements 11
I. Transfer of Assets of AYP Energy to GENCO and
Assignment and Delegation by AYP Energy of AYP
Energy's Rights and Obligations Under the Ft.
Martin Operating Agreement 12
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TABLE OF CONTENTS (cont'd.)
J. Brokering, Trading and Marketing in the U.S. 13
K. Financing Authority 14
1. Guarantee Authority 14
2. GENCO Independent Financing 15
L. Lease of Certain Generating Assets by West
Penn from GENCO and Proposed Operating
Agreements to be Entered into with GENCO 15
M. Assignment by West Penn to Energy Subsidiary
and Assignment by Energy Subsidiary to
GENCO of the Output of Ohio Valley Electric
Corporation 16
N. Transfer of West Penn's Ownership Interest in
AGC to Energy Subsidiary and Assignment and
Delegation of Certain Rights and Obligations
in Connection Therewith, and Transfer of
Such Interest, Rights and Obligations From
Energy Subsidiary to GENCO 17
O. Proposed Service Agreements with APSC 19
P. GENCO to Sign Tax Allocation Agreement 20
Q. Authorization Period and Reporting 20
Item 2. FEES, COMMISSION AND EXPENSES 20
Item 3. APPLICABLE STATUTORY PROVISIONS 21
Item 4. REGULATORY APPROVAL 25
Item 5. PROCEDURE 25
Item 6. EXHIBITS AND FINANCIAL STATEMENTS 26
A. Exhibits 26
B. Financial Statements as of December 31, 1998 27
Item 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS 27
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Item 1. DESCRIPTION OF PROPOSED TRANSACTIONS
A. Introduction
Allegheny Energy, Inc. (formerly Allegheny Power
System, Inc.) ("Allegheny", which term, as used herein,
shall sometimes refer to Allegheny and/or its subsidiaries,
jointly or separately), West Penn Power Company ("West
Penn"), and AYP Energy, Inc. ("AYP Energy") request
authority to engage in the transactions described in Items
1.D through 1.P below from time to time, as applicable,
through December 31, 2007. Allegheny is registered with the
Securities and Exchange Commission (the "Commission") as a
holding company under the Public Utility Holding Company Act
of 1935, as amended (the "Act"). Monongahela Power Company
("Monongahela"), The Potomac Edison Company ("Potomac
Edison") and West Penn are direct, wholly-owned public
utility subsidiaries of Allegheny. Allegheny Generating
Company ("AGC"), which owns a 40% undivided interest in a
pumped-storage hydroelectric generating facility located in
Bath County, Virginia and related transmission facilities,
is jointly owned by West Penn, Potomac Edison and
Monongahela. AYP Energy, owner of a 50% interest in Unit
No. 1 of the Ft. Martin Power Station located in Monongalia
County, Maidsville, West Virginia, is a wholly-owned utility
subsidiary of AYP Capital, Inc., which is a wholly-owned
nonutility subsidiary of Allegheny.
B. Background and Regulatory Environment
As the Commission is aware, deregulation of generation
has begun and competition at the retail level is now a
reality in Pennsylvania. Allegheny's largest service
territory is in Pennsylvania. It is the state in which
West Penn is incorporated and where its entire service
territory is located. 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 beginning
January 2, 1999. The remaining one-third will be permitted
to choose its generation supplier beginning January 2, 2000.
In August 1997, West Penn was required to file a
restructuring plan with the Pennsylvania Public Utility
Commission (the "Pennsylvania PUC"), which, among other
things, unbundled generation from transmission and
distribution. The restructuring plan was contested and
became the subject of hearings.
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These hearings resulted in
a settlement that the Pennsylvania PUC approved on November
19, 1998 (the "Settlement Agreement"). See the Settlement
Agreement, and the Pennsylvania PUC's Final Opinion and
Order approving such settlement, attached hereto as Exhibits
D-1 and D-2, respectively. The settlement authorized and
provided state regulatory pre-approval for West Penn to
transfer its generating assets to a new affiliate in the
Allegheny system (i.e., GENCO) at net book value.
C. Overview of Requested Approvals
As set forth in greater detail below, Allegheny, West
Penn and AYP Energy hereby request, for themselves and, as
applicable, on behalf of Energy Subsidiary and GENCO (all as
defined below), that the Commission approve the following
transactions through December 31, 2007:
1. Transactions Related to the Formation and
Capitalization of Energy Subsidiary
a. the formation and capitalization of a wholly-owned
subsidiary of West Penn (the "Energy Subsidiary")
and the acquisition by West Penn of all of the limited
liability interests in Energy Subsidiary;
b. the transfer by West Penn of all of its generating
utility assets (the "Generating Assets") to Energy
Subsidiary and the acquisition by Energy Subsidiary of the
Generating Assets for cash and a note;
c. the issuance by Energy Subsidiary to West Penn of a
promissory note in complete or partial consideration for the
Generating Assets in a principal amount not in excess of the
Generating Assets' net book value ($990 million) secured by
a purchase money mortgage on the Generating Assets;
d. the transfer by West Penn of its generation related
assets and net liabilities and debt, including outstanding
pollution control and solid waste disposal
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notes (collectively referred to as the "Associated
Liabilities"), to Energy Subsidiary; capital contributions
by West Penn of notes payable to Energy Subsidiary; and the
acquisition by Energy Subsidiary of the Associated Liabilities
and such notes from West Penn;
e. capital contributions by Allegheny or West Penn to
Energy Subsidiary in the form of cash; the transfer of AGC
shares held by West Penn and of certain rights to generation
from the Bath Project (as defined herein) and obligations to
Energy Subsidiary and acquisition by Energy Subsidiary of
such shares and rights;
f. assignment by West Penn to Energy Subsidiary of its
rights and responsibilities under the Joint-Owner Operating
Agreements (as defined herein) and Energy Subsidiary's
assumption of these rights and obligations;
g. assignment by West Penn to Energy Subsidiary of all of
West Penn's rights to receive electrical energy generated by
Ohio Valley Electric Corporation ("OVEC") (as defined
herein) and obligations related to the OVEC Power Agreement
(as defined herein) and acceptance by Energy Subsidiary of
such assignment;
2. Transactions Related to the Formation and Capitalization
of GENCO
h. the formation and capitalization of a wholly-owned
subsidiary of Energy Subsidiary ("GENCO")
and acquisition by Energy Subsidiary of
all of the limited liability interests in
GENCO;
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i. assignment by Energy Subsidiary to GENCO of its rights
and responsibilities under the Joint-Owner
Operating Agreements (as defined herein)
and GENCO's assumption of these rights and
obligations;
j. the transfer by Energy Subsidiary of the Generating
Assets; the AGC shares and related rights
and obligations; other generation related
assets; notes payable to West Penn; and
the Associated Liabilities to GENCO in
exchange for the limited liability
interests of GENCO; and the acquisition by
GENCO of the Generating Assets, the AGC
shares and related rights and obligations;
the Associated Liabilities and the notes
payable;
3.GENCO Will Become a Subsidiary of Allegheny Energy
k. the distribution
of GENCO limited liability interests by
Energy Subsidiary to West Penn, and by
West Penn to Allegheny and the acquisition
of such interests by West Penn and
Allegheny;
4.Transactions Related to GENCO's Operations
l. the transfer of
AYP Energy's assets to GENCO and the
acquisition by GENCO of such generating
assets in exchange for the assumption of
the debt of AYP Energy by GENCO;
m. the assignment by
AYP Energy to GENCO of its rights and
responsibilities under the Joint-Owner
Operating Agreement for Ft. Martin Unit
No. 1
n. the brokering, trading and marketing by GENCO (and Energy
Subsidiary until the assets are
transferred) of energy commodities
throughout the United States;
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o. the obtaining by
GENCO of independent or parent-supported
financing using various methods,
including, but not limited to, bank
financing and/or bank credit support,
project financing, commercial paper
programs, sales of secured or unsecured
debt, notes (excluding the promissory note
described in (c) above), debentures and
issuances of equity, up to $500 million in
the aggregate;
p. the short-term
lease until January 2, 2000, by West Penn
from GENCO of a portion of the Generating
Assets providing approximately one-third
of the total electrical energy generating
capacity of the Generating Assets and
GENCO's entering into the Operating
Agreements (as defined herein), of such
leased Generating Assets;
q. GENCO's entering into the proposed Operating
Agreements (as defined herein), for the operation by
GENCO of all of the generating assets
owned by GENCO;
r. the assignment by
Energy Subsidiary to GENCO of all of
Energy Subsidiary's rights to receive
electrical energy generated by the Ohio
Valley Electric Corporation ("OVEC") and
obligations related to the OVEC Power
Agreement (as defined herein) and the
acceptance by GENCO of such assignment;
s. the provision of services by ASPC (as defined
herein) to Energy Subsidiary and GENCO pursuant to
proposed Service Agreements (as defined herein);
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t. that Allegheny
Energy, Inc. may make loans, guarantees
and support agreements to and for GENCO
and any other type of investments in and
for GENCO as deemed necessary, through
December 31, 2007, up to an aggregate of
$900 million (in addition to the $500
million referred to in (o) above and in
addition to the promissory note referred
to in (c) above);
u. that GENCO will
become a signatory to the Tax Allocation
Agreement with all the system companies;
v. that the
Commission grant such other authorizations
as may be necessary in connection with the
transactions described in Items 1.D
through 1.P below;
D. Formation of Energy Subsidiary
In connection with the formation of Energy Subsidiary,
a new, wholly-owned subsidiary of West Penn, the
transactions for which authorization under the Act is sought
hereunder include: (1) the completion of the steps
necessary for the formation of Energy Subsidiary, a limited
liability corporation to be organized under the laws of the
Commonwealth of Pennsylvania, as a new, wholly-owned
subsidiary of West Penn (see Exhibit A-1); and (2) the
issuance by Energy Subsidiary and the acquisition by West
Penn of all of the limited liability company interests in
Energy Subsidiary.
Energy Subsidiary will own facilities for the
generation of electric energy. Therefore, Energy Subsidiary
will become an "electric utility company" as defined in
Section 2(a)(3) of the Act.
1. Contributions to Energy Subsidiary and Transfer
of Associated Liabilities
Contributions by Allegheny or West Penn to Energy
Subsidiary may take the form of any combination of: (1)
purchases of capital shares, partnership interests, member
interests in limited liability companies, trust certificates
or other forms of equity interests (collectively, "Capital
Stock"); (2) open
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account advances without interest;
(3) loans; and (4) Guarantees, (as defined below), issued in
support of securities or other obligations of Energy
Subsidiary. West Penn will transfer the Associated
Liabilities with the other generation-related assets to
Energy Subsidiary. West Penn will contribute notes payable
to and/or retire notes receivable from Energy Subsidiary.
The source of funds for direct or indirect contributions by
Allegheny to Energy Subsidiary will include: (1) dividends
received from operating companies that are derived from
proceeds of sales of energy to customers; and (2) other
available cash resources. Loans by Allegheny or West Penn
to Energy Subsidiary will have interest rates and maturities
that are designed to provide a return to Allegheny or West
Penn of not less than Allegheny's or West Penn's, as the
case may be, effective cost of capital.
2. Dissolution of Energy Subsidiary
In addition, Allegheny plans to dissolve Energy
Subsidiary after all transfers described in Item 1 are
completed as Energy Subsidiary will then hold no assets and
GENCO will then be owned directly by Allegheny. Legitimate
business reasons exist for the formation, capitalization and
temporary existence of Energy Subsidiary because its
temporary existence (a) is essential in minimizing the tax
and transactional costs of reorganization and transition to
competition and (b) is necessary for the release of the
Generating Assets from the First Mortgage because West Penn,
the sole owner of Energy Subsidiary, must be the source of
cash for such release. West Penn and Allegheny believe that
these advantages offset the need to create a temporary
entity and is consistent with the decisions cited in this
Item and other applicable law.
E. Transfer of Generating Assets by West Penn and
Acquisition of the Generating Assets by Energy Subsidiary
West Penn requests authority to transfer the Generating
Assets to Energy Subsidiary at net book value, for Energy
Subsidiary to acquire the Generating Assets, and for
Energy Subsidiary to issue a promissory note, secured by a
purchase money mortgage on the Generating Assets, to West
Penn in complete or partial consideration therefor in a
principal amount not to exceed the net book value ($990
million) of the Generating Assets.
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The Generating Assets are encumbered by a First
Mortgage, dated March 1, 1916 (the "First Mortgage"), in
favor of West Penn's bondholders. The Chase Manhattan Bank
is the Successor Trustee (the "Trustee" under the First
Mortgage). West Penn is working with the Trustee to release
the Generating Assets from the lien of the First Mortgage,
in accordance with the provisions of the First Mortgage.
West Penn will follow the general release provisions of the
First Mortgage and transfer the Generating Assets to Energy
Subsidiary in exchange for a combination of cash and a
promissory note from Energy Subsidiary to West Penn, in an
amount not to exceed, collectively, the net book value of
the Generating Assets. If a promissory note is issued to
the Trustee, it will be secured by a purchase money mortgage
on the Generating Assets. The cash and promissory note will
be deposited with the Trustee, as required by the First
Mortgage. West Penn will assign all of its rights under the
promissory note to the Trustee for the benefit of West
Penn's bondholders under the First Mortgage.
F. Assignment and Delegation by West Penn to Energy
Subsidiary of West Penn's Rights and Obligations
Under Certain Operating Agreements
As part of the restructuring arising from the
Pennsylvania Deregulation Act and the transfer of the
Generating Assets by West Penn to Energy Subsidiary, West
Penn will transfer to Energy Subsidiary its ownership
interests in four jointly-owned generation facilities (Ft.
Martin, 50% of Unit No. 2; Harrison; Hatfield's Ferry; and
Pleasants) that West Penn currently owns as tenant in common
with Potomac Edison and Monongahela. The transfer of these
ownership interests and the proposed restructuring also
require that West Penn assign and delegate all of its rights
and obligations under certain operating agreements pursuant
to which either West Penn or its affiliate, Monongahela,
currently operates these generation facilities (the "Joint-
Owner Operation Agreements"). See Exhibits B-1 through B-5.
Each of the Joint-Owner Operation Agreements allows
assignment and delegation of rights and obligations
thereunder when such assignment and delegation occur in
connection with the transfer of all of a party's ownership
interest in the generation plant from the party effecting
such transfer to the party accepting such assignment and
delegation. Consequently, the Joint-Owner Operation
Agreements
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authorize the assignment and delegation described
in this Item 1.F in connection with the transfer of the
ownership interest in the generating plants subject to such
agreements from West Penn to Energy Subsidiary.
All regulatory commissions having jurisdiction over the
parties to the Joint-Owner Operation Agreements approved the
Joint-Owner Operation Agreements, to the extent required,
at the time they were entered into.
West Penn requests that the Commission approve the
assignment and delegation described in this Item by West
Penn to Energy Subsidiary and Energy Subsidiary's assumption
of all rights and obligations of West Penn under the Joint-
Owner Operating Agreements.
In addition to West Penn's interest in the jointly-
owned power stations that it plans to transfer to Energy
Subsidiary, West Penn solely owns and operates the
Armstrong, Mitchell, Lake Lynn and Springdale power plants,
which it plans to transfer to Energy Subsidiary. Energy
Subsidiary, as sole owner of these plants, will have the
right to operate them upon such transfer.
G. Formation of GENCO, Transfer of Generating Assets
from Energy Subsidiary to GENCO and Acquisition of
Generating Assets by GENCO
In connection with the formation of GENCO, a new,
wholly-owned subsidiary of Energy Subsidiary, the
transactions for which authorization under the Act is sought
hereunder include: (1) the completion of the steps
necessary for the formation of GENCO, a limited liability
company to be formed initially as a new, wholly-owned
subsidiary of Energy Subsidiary (See Exhibit A-2); (2) the
issuance by GENCO and the acquisition by Energy Subsidiary
of all of the limited liability company interests in GENCO;
(3) the distribution by Energy Subsidiary of all the limited
liability company interests in GENCO to West Penn and the
receipt of those interests by West Penn; (4) the
distribution by West Penn of all the limited liability
interests in GENCO and the receipt of those interests by
Allegheny; and (5) one or more
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loans, guarantees or support
agreements from Allegheny to GENCO of up to an additional
$500 million through December 31, 2007 for the purpose of
funding and/or supporting GENCO's preliminary development
activities and administrative costs associated with, among
other things, identifying and analyzing feasible generation
acquisition opportunities and initiating and contributing to
any financing required in connection therewith.
GENCO will own facilities for the generation of
electric energy. Therefore, GENCO will become an "electric
utility company" as defined in Section 2(a)(3) of the Act.
1. Transfer of Generating Assets from Energy Subsidiary
to GENCO and Acquisition by GENCO
Pursuant to the Pennsylvania PUC's Final Opinion and
Order, West Penn has been authorized and pre-approved to
transfer the Generating Assets to a new affiliate in the
Allegheny system. Such a transfer will permit the new
affiliate to operate the assets efficiently in a competitive
environment. In addition, the removal of these assets from
the rate regulated entity (West Penn) will permit the new
entity (GENCO) to manage the assets in a manner that is more
conducive to market considerations. In order to
facilitate these objectives, Energy Subsidiary will transfer
the Generating Assets, associated assets, its ownership
interest in AGC, and the Associated Liabilities to GENCO in
exchange for all of the limited liability interests of
GENCO. The Generating Assets will be transferred subject to
the new purchase money mortgage that was put in place when
the Generating Assets were transferred to Energy Subsidiary.
2. Distribution of GENCO Limited Liability Interests
West Penn requests authority for Energy Subsidiary to
distribute the limited liability interests ("Interests") it
holds in GENCO to West Penn and for West Penn to accept the
Interests. West Penn also requests authority for it to
distribute the GENCO Interests in a dividend to Allegheny
and for Allegheny to accept the Interests.
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3. Contributions to GENCO
Contributions initially by Energy Subsidiary to GENCO
and subsequently by Allegheny to GENCO may take the form of
any combination of: (1) purchases of member interests in
limited liability companies, or other forms of equity
interests (collectively, "Capital Stock"); (2) open account
advances without interest; (3) loans; and (4) Guarantees
issued in support of securities or other obligations of
GENCO. The source of funds for contributions by Allegheny
to GENCO will include: (1) dividends received from operating
companies that are derived from proceeds of sales of energy
to customers; and (2) other available cash resources. Loans
by Allegheny to GENCO will have interest rates and
maturities that are designed to provide a return to
Allegheny of not less than Allegheny's effective cost of
capital.
4. Rule 53 and Rule 58 Compliance
If Allegheny provides funds to GENCO which are used to
invest in any exempt wholesale generator ("EWG") or foreign
utility company ("FUCO") (each as defined in the Act), the
amount of the investment will be included in the calculation
of "aggregate investment" required under Rule 53 under the
Act. In addition, to the extent that Allegheny provides
funds to GENCO which are used to invest in an energy-related
company (within the meaning of Rule 58 under the Act), the
amount of the investment will be included in the calculation
of "aggregate investment" required under Rule 58.
H. Assignment and Delegation by Energy Subsidiary to
GENCO of Energy Subsidiary's Rights and Obligations
Under Certain Operating Agreements
In addition to other Generating Assets, Energy
Subsidiary will transfer to GENCO its ownership interests in
the four generation facilities (Ft. Martin, 50% of Unit
No.2; Harrison; Hatfield's Ferry; and Pleasants) it received
from West Penn that GENCO will own as tenant in common with
Potomac Edison and Monongahela. The transfer of these
ownership interests and the proposed restructuring also
require that Energy Subsidiary assign and delegate all of
its rights and obligations under the "Joint-Owner Operation
Agreements".
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Each of the Joint-Owner Operation Agreements allows
assignment and delegation of rights and obligations
thereunder when such assignment and delegation occurs in
connection with the transfer of all of a party's ownership
interest in the generation plant from the party effecting
such transfer to the party accepting such assignment and
delegation. Consequently, the Joint-Owner Operation
Agreements authorize the assignment and delegation described
in this Item 1. in connection with the transfer of the
ownership interest in the generating plants subject to such
agreements from Energy Subsidiary to GENCO.
All regulatory commissions having jurisdiction over the
parties to the Joint-Owner Operation Agreements approved the
Joint-Owner Operation Agreements, to the extent required,
at the time they were entered into.
For these reasons, West Penn requests that the
Commission approve the assignment and delegation by Energy
Subsidiary to GENCO and GENCO's assumption of all rights and
obligations of Energy Subsidiary under the Joint-Owner
Operating Agreements.
In addition to Energy Subsidiary's interest in the
jointly-owned power stations, it solely will own and operate
the Armstrong, Mitchell, Lake Lynn and Springdale power
plants, which it plans to transfer to GENCO. GENCO, as sole
owner of these plants, will have the right to operate them
upon such transfer.
I. Transfer of Assets of AYP Energy to GENCO and
Assignment and Delegation by AYP Energy of AYP
Energy's Rights and Obligations Under the Ft.
Martin Operating Agreement
AYP Energy requests authority to transfer the assets of
AYP Energy to GENCO in exchange for assumption of the
outstanding debt of AYP Energy by GENCO. AYP Energy's only
asset is a 50% interest in Unit No. 1 at the Ft. Martin
Generating Station. In order to have a more efficient and
streamlined operation, Allegheny plans to consolidate its
generation assets under one entity.
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AYP Energy further requests authority, in connection
with the transfer of its assets to GENCO, to assign and
delegate all of its rights and obligations under the
operating agreement pursuant to which Monongahela currently
operates the Ft. Martin Power Station (the "Operating
Agreement"). The Operating Agreement allows assignment and
delegation of rights and obligations there when such
assignment and delegation occur in connection with the
transfer of all of a party's ownership interest in the
generation plant from the party effecting such transfer to
the party accepting such assignment and delegation.
Consequently, the Operating Agreement authorizes the
aforementioned assignment and delegation in connection with
the transfer of the ownership interest in Ft. Martin Unit
No. 1, subject to such agreement from AYP Energy to GENCO.
All regulatory commissions over the parties to the
Operating Agreement approved the Operating Agreement, to the
extent required, at the time it was entered into.
For these reasons, AYP Energy requests that the
Commission approve the assignment and delegation by AYP
Energy to GENCO and GENCO's assumption of all rights and
obligations of AYP Energy under the Operating Agreement.
J. Brokering, Trading and Marketing in the U.S.
Energy Subsidiary (for a short period of time, prior to
completion of the transfer of assets to GENCO) and GENCO
propose to engage in all forms of brokering, marketing and
trading transactions involving electricity and other types
of energy commodities and hedging and/or financial
transactions associated therewith, including derivatives,
future contracts, options and swaps, including, without
limitation, electric power, oil, natural and manufactured
gas, emission allowances, coal, refined petroleum products
and natural gas liquids and to provide incidental related
services to customers, such as fuel management, storage and
procurement services. Energy Subsidiary and GENCO would
engage in such
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activities without regard to the location or
identity of customers or source of revenues; provided,
however, that only with approval of the Federal Energy
Regulatory Commission ("FERC") under the Federal Power Act
(see Exhibit D-3) will GENCO sell electricity to any of
Allegheny's electric utility subsidiaries, Monongahela,
Potomac Edison and West Penn. GENCO will not make any sales
of electricity or natural gas to retail customers in any
state unless authorized or permitted to make such sales
under the laws of that state. GENCO will have the right to
sell at retail in Pennsylvania and will be assuming any
unregulated retail transactions and programs already
underway at West Penn that are connected to the Generating
Assets. Under West Penn's 1998 Pennsylvania electric
restructuring settlement and the Pennsylvania PUC's Final
Order, GENCO is prohibited from selling electricity at
retail to customers in West Penn's geographic service
territory until January 1, 2004 (except for industrial and
commercial customers with locations both outside and inside
West Penn's service territory).
K. Financing Authority
1. Guarantee Authority
Allegheny seeks increased finance authority to
facilitate the growth of its non-rate-regulated businesses,
including GENCO. In particular, trading, marketing and
brokering activities, although not necessarily capital
intensive, generally require significant parent guarantees.
Guarantees may also be utilized as credit support for GENCO.
Allegheny's management currently intends to increase its
energy marketing operations over the next eight years. A
corresponding increase in guarantee authority is necessary
if the energy marketing segment of Allegheny's business is
expected to achieve its goal of increasing operating income
from non-rate-regulated businesses in the next few years.
Allegheny proposes, through December 31, 2007, to issue
additional guarantees or provide other forms of credit
support or enhancements (collectively, "Guarantees") to, or
for the benefit of, GENCO in an aggregate amount not to
exceed an additional $900 million. Guarantees may take the
form of Allegheny agreeing to guarantee, to undertake
reimbursement obligations, to assume liabilities or to
assume other obligations with respect to, or to act as
surety on, bonds, letters of credit, evidences of
indebtedness, equity commitments, performance and other
obligations undertaken by GENCO.
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The terms and conditions of the Guarantees will be
established through arm's-length negotiations based upon
current market conditions. Any Guarantee issued will be
without recourse to any of the Allegheny system operating
companies to the extent not authorized under Rule 52 under
the Act.
2. GENCO Independent Financing
In connection with its daily operations and to achieve
its business goals, it will be necessary for GENCO to obtain
independent or parent-supported financing. This financing
is currently expected to take, without limitation, the form
of bank financing and/or bank credit support , project
financing, commercial paper programs, sales of secured or
unsecured debt, notes, debentures and issuances of equity.
GENCO requests that this Commission authorize it to obtain
financing up to an aggregate of $500 million, which is in
addition to parent support and guarantees of up to an
additional $900 million.
L. Lease of Certain Generating Assets by West Penn
From GENCO and Proposed Operating Agreements to
be entered into with GENCO
Pursuant to the Pennsylvania Deregulation Act, until
January 2, 2000 one-third of West Penn's
customer load will not be deregulated. Therefore, it will
be necessary for West Penn to continue directly to supply
the generation needs of such customers until January 2,
2000. Accordingly, West Penn requests permission to lease a
portion of the Generating Assets from GENCO that will
provide approximately one-third of the total electrical
energy generating capability available from those Generating
Assets. The amounts payable by West Penn under the lease
described in this section will be computed in accordance
with Rules 90 and 91 under the Act and other applicable
rules and regulations. During the lease, GENCO will
operate that portion of the Generating Assets leased to West
Penn pursuant to operating agreements (collectively, the
"Operating Agreements") to be entered into at the time of
such lease. Authorization is hereby sought for GENCO to
enter into each of the proposed Operating Agreements with
West Penn substantially in the form of Exhibit B-2 hereto
for the operation of all other Generating Assets
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owned by GENCO. It is currently expected that the lease, and the
Operating Agreements will terminate on January 2, 2000.
M. Assignment by West Penn to Energy Subsidiary and
Assignment by Energy Subsidiary to GENCO of the Output of
Ohio Valley Electric Corporation
In connection with its proposed restructuring and in
order to more effectively and efficiently compete in the
deregulated environment brought about by the Pennsylvania
Deregulation Act and as authorized by the Pennsylvania PUC
Deregulation Settlement Order, West Penn intends not only to
transfer the Generating Assets but also its rights and
obligations under the OVEC Power Agreement (as defined
below) to Energy Subsidiary which will then transfer the
same to GENCO..
OVEC is an investor-owned utility furnishing electric
service in the Ohio River Valley area that was formed for
the purpose of providing large electric power requirements
for a major uranium enrichment complex built by the Atomic
Energy Commission near Portsmouth, Ohio. Allegheny Energy,
Inc. has a 12.5% ownership interest in OVEC. Allegheny
Energy, Inc., OVEC and other investor-owned utilities
entered into an Inter-Company Power Agreement, dated July
10, 1953 (the "OVEC Power Agreement") by which the parties
thereto allocated each utility's share of the power
generated by OVEC and by the Indiana-Kentucky Electric
Corporation. See Exhibit B-8. Under the OVEC Power
Agreement, Allegheny Energy, Inc. assigned to West Penn, the
right to receive 7% of the power participation benefits of
OVEC. As part of the restructuring described herein, West
Penn plans to transfer these rights to a portion of OVEC's
generation capacity obligation and benefits to Energy
Subsidiary, and then to GENCO.
The OVEC Power Agreement permits assignment and
delegation of the rights and obligations thereunder, subject
to the consent of all of the parties thereto. West Penn
plans to obtain any necessary consents before assigning its
rights and obligations under the OVEC Power Agreement to
Energy Subsidiary and then to GENCO.
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All regulatory commissions having jurisdiction over the
parties to the OVEC Power Agreement approved the OVEC Power
Agreement, to the extent required, at the time it was
entered into. West Penn requests that the Commission
approve West Penn's assignment to Energy Subsidiary and then
Energy Subsidiary's assignment to GENCO of West Penn's
rights under the OVEC Power Agreement and Energy
Subsidiary's and GENCO's acceptance of such assignments.
N. Transfer of West Penn's Ownership Interest
in AGC to Energy Subsidiary and Assignment
and Delegation of Certain Rights and Obligations
in Connection Therewith, and Transfer
of Such Interest, Rights and Obligations From
Energy Subsidiary to GENCO.
As part of the restructuring arising from the
Pennsylvania Deregulation Act and Settlement Order, West
Penn intends to transfer to Energy Subsidiary not only its
ownership interests in generation facilities and assets, but
also its ownership interests in its subsidiary engaged in
the business of electricity generation and of other
generation interests assets and liabilities arising from
such ownership interests.
West Penn currently owns 45% (450 shares) of the common
stock of AGC. Monongahela and Potomac Edison own 27% and
28% of the common stock of AGC, respectively. (See Exhibit
B-9 (the "Bath Equity Agreement")). West Penn acquired its
ownership interest in AGC in 1981 in connection with the
development of the Bath County Pumped Storage Project (the
"Bath Project").
AGC and Virginia Electric and Power Company are the
owners as tenants in common of the Bath Project. Each is
entitled, under the Project Construction and Purchase
Agreement, dated June 17, 1981 (the "Bath Project
Agreement"), to a portion of the Bath Project's generating
capacity. The shareholders of AGC, in turn, have allocated
among themselves under the APS Power Agreement dated as of
August 24, 1981 (the "APS Power Agreement" and, together
with the Bath Equity Agreement, the "AGC Agreements"), the
power generated by the Bath Project to which AGC is entitled
under the Bath Project Agreement. See Exhibit B-10. West
Penn, therefore, currently is entitled to a portion of the
generating capacity of the Bath Project.
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As part of the deregulation and restructuring described
herein, West Penn plans to transfer its ownership interest
in AGC to Energy Subsidiary, in exchange for equity
interests in Energy Subsidiary. The Bath Project Agreement
permits the transfer of shares of AGC from West Penn to
Energy Subsidiary because Energy Subsidiary will be an
"Affiliate" of West Penn, as this term is defined in such
agreement. The Bath Equity Agreement allows the transfer of
shares of AGC from West Penn to Energy Subsidiary, subject
only to the consent of Potomac Edison and Monongahela. West
Penn plans to assign its rights and obligations under the
APS Power Agreement to Energy Subsidiary.
Energy Subsidiary plans to transfer its newly acquired
ownership interest in AGC to GENCO in exchange for equity
interests in GENCO. The Bath Project Agreement permits the
transfer of AGC shares from Energy Subsidiary to GENCO
because GENCO will be an "Affiliate" of Energy Subsidiary,
as this term is defined in such agreement. The Bath Equity
Agreement allows the transfer of shares of AGC from Energy
Subsidiary to GENCO, subject only to the consent of Potomac
Edison and Monongahela. Energy Subsidiary plans to assign
its rights and obligations under the APS Power Agreement to
GENCO.
Allegheny has previously filed the AGC Agreements with
the Commission. All regulatory commissions having
jurisdiction over the parties thereto, including state
public utility commissions and the FERC, have approved the
AGC Agreements. For these reasons, Allegheny requests that
the Commission approve (a) West Penn's transfer of the AGC
shares to Energy Subsidiary, (b) West Penn's assignment and
delegation to Energy Subsidiary of its rights and
obligations under the APS Power Agreement, (c) Energy
Subsidiary's acquisition of the AGC shares, and (d) Energy
Subsidiary's assumption of rights and obligations under the
APS Power Agreement. Moreover, Allegheny requests that the
Commission approve (a) Energy Subsidiary's transfer of the
AGC shares to GENCO, (b) Energy Subsidiary's assignment and
delegation to GENCO of its rights and obligations under the
APS Power Agreement, (c) GENCO's acquisition of the AGC
shares, and (d) GENCO's assumption of rights and
obligations under the APS Power Agreement.
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O. Proposed Service Agreements with APSC
Initially, Allegheny anticipates that Energy Subsidiary
and GENCO will not have their own paid employees. It is
likely that personnel employed by Allegheny Power Service
Corporation ("APSC"), a service company approved by the
Commission under Section 13 of the Act and Rule 88
thereunder (see HCAR 14966), will provide a wide range of
services on an as-needed basis to those companies pursuant
to service agreements ("Service Agreement") to be entered
into between each of those companies and APSC.
The proposed Service Agreements will take effect upon
Commission approval thereof and will be similar in all
material respects to those service agreements which APSC has
signed with each of Monongahela, Potomac Edison, West Penn,
AGC, AYP Capital, Inc. ("AYP Capital") and subsidiaries of
AYP Capital. Under the proposed service agreements, APSC
will render to Energy Subsidiary and GENCO at cost computed
in accordance with Rules 90 and 91 under the Act and other
applicable rules and regulations, various technical,
engineering, accounting, administrative, financial,
purchasing, computing, managerial, operational and legal
services. APSC will account for, allocate and charge its
costs of the services provided on a full cost reimbursement
basis under a work order system consistent with the Uniform
System of Accounts for Mutual and Subsidiary Service
Companies. The time APSC employees spend working for Energy
Subsidiary and GENCO will be billed to and paid by each of
those companies on a monthly basis, based upon time records.
Each company will maintain separate financial records and
detailed supporting records. The proposed form of Service
Agreement to be entered into is filed as Exhibit B-11.
Energy Subsidiary and GENCO may also determine from
time to time that it is efficient and advantageous to have
certain development activities performed by unaffiliated
third parties. Such arrangements will be on a fee-for-
service negotiated basis at market rates.
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P. GENCO to Sign Tax Allocation Agreement
GENCO requests authority to participate in the Tax
Allocation Agreement for Allegheny. GENCO plans to sign as
a participant when it receives permission from the
Commission to be formed as a subsidiary of Energy
Subsidiary.
Q. Authorization Period and Reporting
Rule 24 (c)(1) under the Act provides, in pertinent
part, that unless otherwise designated in an application or
declaration, every order is subject to a requirement that
the transaction proposed be carried out within 60 days of
the date of such order. To avoid the situation in which the
Applicants fail to designate an alternative period,
Applicants hereby designate the period from the date of the
order in this matter to the expiration of the authority
under this order as the period in which they will carry out
the transactions authorized in this order, or previously
authorized by Commission order, in accordance with the terms
and conditions of, and for the purposes as authorized by,
the relevant orders.
Applicants request that Energy Subsidiary and GENCO be
authorized to report, annually in an Annual Report on Form U-
13-60 under the Act, the following information: (a) each
investment made by Allegheny or West Penn in those companies
during the immediately prior year; (b) a general description
of the activities of each company in the immediately prior
year; (c) the number of APSC employees providing services to
each company on a regular basis during the immediately prior
year; and (d) the revenues and expenses of each company
during the immediately prior year. The foregoing shall be
in lieu of any certificates of completion or partial
completion otherwise required by Rule 24 under the Act. If
any report contains confidential or proprietary business or
commercial information, confidential treatment under Rule
104 under the Act may be sought at such time.
Item 2. FEES, COMMISSIONS AND EXPENSES
Estimated fees and expenses are expected to be incurred
by Applicants in connection with the transactions described
above will be filed by amendment.
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Item 3. APPLICABLE STATUTORY PROVISIONS
Applicants are informed by counsel that the proposed
transactions are or may be directly or indirectly subject to
Sections 6, 7, 9, 10, 11, 12 and 13 of the Act and Rules 46
and 54 under the Act.
To 1the extent that other sections of the Act or the
Commission's rules thereunder are deemed to be applicable to
the transactions described herein, such sections and rules
should be considered to be set forth in this Item 3.
Section 9(a)(1) provides that unless the acquisition
has been approved by the Commission under Section 10, it
shall be unlawful for any registered holding company or any
subsidiary company thereof "to acquire, directly or
indirectly, any securities or utility assets or any other
interest in any business."
Applicants believe that the proposed transactions
described herein which are subject to Section 9(a) of the
Act satisfy the standards of Section 10 of the Act.
The transactions described herein comply with all
applicable state laws and, as described above, are in
response to state laws, in particular the Pennsylvania
Deregulation Act, mandating deregulation and the
introduction of competition in the retail electrical
generation market, and do not tend toward interlocking
relations or the concentration of public utility companies.
Moreover, the deregulation of, and the introduction of
competition in, the retail electrical generation market have
been enacted specifically to benefit the public interest and
the interests of investors and consumers; as the
transactions described herein are being effected to comply
with and to further such legislative initiatives, they
likewise should be of benefit to the public interest and the
interests of investors and consumers.
Applicants also believe that the consideration to be
paid in connection with the transactions described herein is
fair and reasonable. Indeed, the Pennsylvania PUC has
determined that the price (i.e.,
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net book value) to be paid
to West Penn by Energy Subsidiary for the Generating Assets
is fair and reasonable. See Washington Gas Light Company,
Washington and Suburban Companies, 5 SEC 576, 579.
Applicants believe that the transactions described in
Item 1 do not unduly complicate the capital structure of the
Allegheny holding company system and are in the public
interest and in the interest of investors and consumers.
Applicants also believe that the transactions described in
Item 1 will tend toward the proper functioning of the
Allegheny holding company system in a partly deregulated,
partly regulated operating environment and, as a
consequence, toward the economical and efficient development
of an integrated public utility system.
The transactions described in Item 1 are, in the
context of deregulation and competition in the retail
electrical generation market, "reasonably incidental, or
economically necessary and appropriate to" the operations of
a registered electric utility holding company system such as
Allegheny. See Holding Company Act Release No. 26,211.
These transactions will enable the Allegheny system to offer
competitive generation in the deregulated retail market,
thus they tend toward the economical and efficient
development of an integrated public utility system.
The various transfers of assets and equity securities
and the formation of Energy Subsidiary and GENCO described
in Item 1 would not result in the existence of any company
in the holding company system that would unduly or
unnecessarily complicate the structure, or unfairly or
inequitably distribute voting power among security holders,
of the Allegheny holding company system. The creation of
the new subsidiaries is necessary to adapt to competition in
the deregulated retail generation industry and to minimize
the costs of the transition to competition. As noted in
Item 1, the transfers and the formation of new subsidiaries
(a) are a result of the Settlement Agreement and
Pennsylvania PUC approval thereof and the Pennsylvania
Deregulation Act, (b) will allow West Penn to continue to
serve the needs of its regulated customers while gearing
Allegheny for competition in the deregulated retail
generation market, (c) will remove the Generating Assets
from rate-regulated West Penn, (d) will allow GENCO to
manage and
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operate the Generating Assets with due regard to
market considerations, and (e) will increase the flexibility
for financing activities on cost-effective terms that
reflect the costs of capital for each area of business
activity. After all transfers and actions described in Item
1 are completed, redundant organizational structures will
not remain. See Entergy Corp., Holding Company Act Release
No. 25, 952 (Dec. 17, 1993). For these reasons, the
resulting increased efficiency of operations significantly
offsets the added complexity. See Wisconsin's Environmental
Decade, Inc. v SEC, 882 F.2d 523, 527 (D.C. Cir. 1989);
Northeast Utilities, Holding Company Act Release No. 25,221
(Dec. 21, 1990); Entergy Corp., Holding Company Act Release
No. 25, 136 (Aug. 27, 1990).
In addition, Allegheny plans to dissolve Energy
Subsidiary after all transfers described in Item 1 are
completed as Energy Subsidiary will then hold no assets and
GENCO will then be owned directly by Allegheny. Legitimate
business reasons exist for the formation, capitalization and
temporary existence of the Energy Subsidiary because its
temporary existence (a) is essential in minimizing the tax
and transactional costs of reorganization and transition to
competition and (b) is necessary for the release of the
Generating Assets from the First Mortgage because West Penn,
the sole owner of Energy Subsidiary, must be the source of
cash for such release. The release provisions of the First
Mortgage Bond Indenture require sale of the Generating
Assets by West Penn. For tax reasons, this sale is
structured between West Penn and its single member LLC.
Such sale does not result in taxable income because sales
between a company and its single member LLC that is taxed as
a flow-through entity is disregarded. After this sale is
executed, a transfer to GENCO can be made as a tax-free
reorganization. The applicants believe that these
advantages offset the need to create a temporary entity and
are consistent with the decisions cited in this Item and
other applicable law.
For all of the foregoing reasons, Applicants
believe that the transactions described in Item 1 meet the
requirements of and are entirely consistent with the
principles behind Sections 9, 10 and 11 of the Act.
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Allegheny expects that the distribution of the
Interests of GENCO by Energy Subsidiary to West Penn and,
then, by West Penn to Allegheny, in each instance will be a
dividend out of "capital or unearned surplus" within the
meaning of Rule 46 under the Act. Applicants believe that,
in the overall context of the transactions described in Item
1, the interests of each security holder at the time of such
distributions (West Penn with respect to Energy Subsidiary
and Allegheny with respect to West Penn) and of the public
will not be adversely affected by such distributions. While
the distributions are being structured as such in order to
minimize the tax burden on the Applicants (which also
benefits the sole security holder of Energy Subsidiary or
West Penn, as the case may be, and indirectly, the public),
the distributions are fundamentally meant to effect the
transfer by West Penn of the Generating Assets to an
affiliate in the Allegheny system in accordance with the
Settlement Agreement and Final Opinion and Order of the
Pennsylvania PUC described herein. The distributions will
be the final step in the reduction of the capitalization of
West Penn and the reorganization of the Allegheny system, in
accordance with, and fulfillment of, the regulations and
legislative policies and objectives that culminated in
deregulation of and competition in electrical generation in
Pennsylvania, as described herein. The distributions are
clearly not intended to harm the interests of West Penn or,
ultimately, Allegheny, who will continue to own the assets
transferred by such distributions. Moreover, in that the
regulated parts of West Penn's business (transmission and
distribution) which are not subject to deregulation and
competition will continue to be owned directly by West Penn,
West Penn and the public which it serves will not be subject
to the impact of deregulation and competition on West Penn's
former generation business and will, to a large degree, be
protected from the uncertainties and possible losses
affecting generation in a competitive and deregulated retail
environment. For these reasons, Applicants believe that the
proposed distributions are entirely consistent with the
policies and principles behind Section 12 of the Act and
request that the proposed distributions from energy
Subsidiary to West Penn and from West Penn to Allegheny
described in Item 1 be approved.
Rule 54 under the Act provides that in determining
whether to approve certain transactions other than those
involving EWGs and FUCOs , the Commission will not consider
the effect of the capitalization
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or earnings of any
subsidiary which is an EWG or FUCO upon a registered holding
company system if Rules 53(a), (b) and (c) under the Act are
satisfied. Rules 53(a), (b) and (c) under the Act are
satisfied.
Item 4. REGULATORY APPROVAL
The proposed transactions have been authorized and pre-
approved to the extent required by the Pennsylvania PUC.
However, West Penn intends to request a certificate from the
Pennsylvania PUC specifically authorizing the proposed
transactions. The FERC must approve: (a) the transfer of
the license at the Lake Lynn generating facility to Energy
Subsidiary and then to GENCO in connection with the transfer
of such facility first to Energy Subsidiary and later to
GENCO; (b) the transfer to Energy Subsidiary of the stock of
AGC held by West Penn and the assignment and delegation to
Energy Subsidiary by West Penn of its rights and obligations
under the APS Power Agreement; (c) the transfer to GENCO of
the AGC stock held by Energy Subsidiary and the assignment
and delegation to GENCO by Energy Subsidiary of its rights
and obligations under the APS Power Agreement; and (d) the
transfer of West Penn's rights under the OVEC Agreement to
Energy Subsidiary and later to GENCO. Applications for such
FERC approval will be made. No other regulatory agency,
other than the Securities and Exchange Commission, has
jurisdiction over the proposed transactions.
Item 5. PROCEDURE
It is requested that the Commission's order granting
this Application or Declaration be issued on or before July
15, 1999. There should be no recommended decision by a
hearing or other responsible officer of the Commission and
no 30-day waiting period between the issuance of the
Commission's order and its effective date. Applicants
consent to the Division of Corporate Regulation's assisting
in the preparation of the Commission's decision and order in
this matter, unless the Division opposes the transactions
covered by this Application or Declaration.
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Item 6. EXHIBITS AND FINANCIAL STATEMENTS
A. Exhibits
A-1 Certificate of
Organization of Energy Subsidiary, including
Operating Agreement (to be filed by
amendment).
A-2 Certificate of
Organization of GENCO, including Operating
Agreement (to be filed by amendment).
B-1 Fort Martin Unit No.
2 Construction and Operating Agreement, dated
December 30, 1965, among Monongahela, Potomac
Edison, and West Penn (to be filed, or
incorporated by reference, by amendment).
B-2 Pleasants Power
Station Construction and Operating Agreement,
dated as of September 15, 1977, among
Monongahela, Potomac Edison and West Penn (to
be filed, or incorporated by reference, by
amendment).
B-3 Hatfield's Ferry
Power Station Construction and Operating
Agreement, dated April 20, 1968, among
Monongahela, Potomac Edison and West Penn (to
be filed, or incorporated by reference, by
amendment).
B-4 Harrison Power
Station Construction and Operating Agreement,
dated as of March 31, 1971, among
Monongahela, Potomac Edison and West Penn (to
be filed, or incorporated by reference, by
amendment).
B-5 Form of Assignment
of each Joint-Owner Operating Agreement (to
be filed by amendment).
B-6 Form of Proposed
Operating Agreement between West Penn and
Energy GENCO (to be filed by amendment).
B-7 Lease of Certain
Generating Assets between GENCO, as Lessor,
and West Penn, as Lessee (to be filed by
amendment).
B-8 Inter-Company Power
Agreement among Ohio Valley Electric
Corporation, West Penn and the other parties
thereto, dated July 10, 1953, as modified (to
be filed, or incorporated by reference, by
amendment).
B-9 Equity Agreement
among Monongahela, Potomac Edison and West
Penn, dated June 17, 1981, as amended (to be
filed, or incorporated by reference, by
amendment).
B-10 APS Power Agreement
among, Monongahela, Potomac Edison, West Penn
and AGC, dated August 24, 1981 (to be filed,
or incorporated by reference, by amendment).
B-11 Form of Service
Agreement to be entered into between
Allegheny Power Service Corporation and
Energy Subsidiary and APSC and GENCO (to be
filed by amendment).
D-1 Application of West
Penn for Approval of its Restructuring Plan
under Section 2806 of the Public Utility
Code, dated November 3, 1998 ( to be filed by
amendment).
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D-2 Final Opinion and
Order of Pennsylvania Public Utility
Commission Approving West Penn's
Restructuring Plan, dated November 19, 1998
(to be filed by amendment).
D-3 Approval of FERC
regarding Brokering and Marketing Activities
of Energy Subsidiary and GENCO (to be filed
by amendment).
D-4 Approval of FERC
regarding Transfer of Lake Lynn Generating
Facility (to be filed by amendment).
D-5 Approval by FERC
regarding Transfer of Shares of AGC from West
Penn to Energy Subsidiary (to be filed by
amendment).
D-6 Approval by FERC
regarding transfer of shares of AGC from
Energy Subsidiary to GENCO (to be filed by
amendment).
D-7 Approval by FERC of
transfer of West Penn's rights under the OVEC
Agreement to GENCO.
F Opinion of Counsel
(to be filed by amendment).
G-1 Allegheny Energy,
Inc.'s Financial Data Schedule (pro forma)
(to be filed by amendment).
G-2 Allegheny Energy,
Inc.'s Financial Data Schedule (actual). (To
be filed by amendment)
H Form of Notice (to be filed by amendment).
B. Financial Statements as of December 31, 1998
FS-1 Allegheny Energy,
Inc. and subsidiaries consolidated balance
sheet, per books and pro forma (to be filed
by amendment).
FS-2 Allegheny Energy,
Inc. and subsidiaries consolidated statement
of income and retained earnings, per books
and pro forma (to be filed by amendment).
Item 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS
A. The authorizations applied for herein do 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 companies have
duly caused this statement to be signed on their behalf by
the undersigned thereunto duly authorized.
ALLEGHENY ENERGY, INC.
By /s/ Thomas K. Henderson
Thomas K. Henderson, Esq.
Vice President
WEST PENN POWER COMPANY
By /s/ Thomas K. Henderson
Thomas K. Henderson, Esq.
Vice President
AYP ENERGY, INC.
By /s/ Thomas K. Henderson
Thomas K. Henderson, Esq.
Vice President
Dated: April 16, 1999
