File Nos. 70-7888 / 70-9483 / 70-9469
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
POST-EFFECTIVE AMENDMENT NOS. 19, 1, and 1
FORM U-1
APPLICATION / DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
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Allegheny Energy, Inc. Allegheny Energy Supply Company, LLC
10435 Downsville Pike R.R. 12, P.O. Box 1000
Hagerstown, MD 21740 Roseytown,Penna. 15601
West Penn Power Company Allegheny Energy Service Corporation
800 Cabin Hill Drive 10435 Downsville Pike
Greensburg, PA 15601 Hagerstown, MD 21740
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Allegheny Energy, Inc.
10435 Downsville Pike
Hagerstown, MD 21740
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 and General Counsel
Allegheny Energy, Inc.
10435 Downsville Pike
Hagerstown, MD 21740
Anthony Wilson, Esq.
Senior Attorney
Allegheny Energy Service Corporation
10435 Downsville Pike
Hagerstown, MD 21740
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1. Applicants hereby amend Item 1, Description of Proposed
Transaction, by adding the following to the end thereof:
A) Summary and Background
Applicants request that the Commission increase from $100
million to $300 million the authorized loans (Loans) that
Allegheny Energy, Inc. ("Allegheny") may make to Allegheny Energy
Supply Company, LLC ("GENCO") and increase from $200 million to
$300 million the aggregate commercial paper ("Commercial Paper")
that GENCO may issue - with the limitation that both the Loans and
Commercial Paper when taken in the aggregate not exceed the
authorized short-term debt ceiling of $300 million. Additionally,
Applicants request that the Commission: 1) authorize GENCO to
participate in the Money Pool up to its short-term debt aggregate
of $300 million and increase the aggregate available in the Money
Pool by $300 million to reflect the addition of GENCO; 2)
authorize Allegheny to issue long-term debt up to an aggregate
amount of $138 million; 3) authorize GENCO to issue long-term debt
up to an aggregate amount of $400 million; 4) authorize GENCO to
issue letters of credit up to $100 million to support counterparty
agreements and other trading agreements; 5) authorize GENCO to
lease up to 225 acres; 6) authorize West Penn Funding Corporation
("WPFC") to make additional loans to West Penn; and 7) authorize
the formation of special purpose subsidiaries for the purpose of
owning and managing intellectual property and other intangible
assets. Each of the transactions will be subject to the same
terms and conditions as contained in prior orders, as applicable.
In support, Applicants submit the following.
In a series of orders issued in File No. 70-7888, dated
January 29, 1992, February 28, 1992, July 14, 1992, November 5,
1993, November 28, 1995, April 18, 1996, December 23, 1997, May
19, 1999, and October 8, 1999 (HCAR Nos. 25462, 25481, 25581,
25919, 26418, 26506, 26804, 27030, and 27084 ("Financing Orders"),
among other things, the Allegheny system companies were authorized
to establish and participate in a Money Pool. In File No. 70-9483
(HCAR No. 27101, dated November 12, 1999), the Commission
authorized the formation of and transfer of generating related
assets to GENCO. Additionally, in the same order GENCO was
authorized to issue up to $200 million of short-term debt in the
form of Commercial Paper, Allegheny was authorized to issue up to
$100 million in Loans to GENCO and to enter into counterparty
support agreements up to $150 million. The authorization for the
Commercial Paper and Loans were effective through July 31, 2005
("GENCO Order"). Finally in HCAR No. 27091, the Commission, among
other things, authorized WPFC to loan West Penn up to $600 million
in transition bond proceeds ("WPFC Order").<F1>
Since the issuance of the Financing Orders, GENCO Order, and
the WPFC Order, several events have occurred which now require
Applicants to request additional authority. Specifically,
deregulation of generation has continued and competition at the
retail level is now a reality in Pennsylvania;and is coming to
Maryland on July 1, 2000; and to Ohio, Virginia and West Virginia
over the course of the next two years. In the face of
deregulation, and the limits it imposes on existing revenues, the
Allegheny system has moved aggressively to expand its energy
holdings and customer base. The Allegheny system has: formed a
generating company - GENCO; acquired West Virginia Power; <F2>
<F1> See File No. 70-9469, Order Authorizing Formation of
Subsidiary Corporation and Special Purpose LLC, Issuance of
Transition Bonds, Notes, and Service Agreement (October 19, 1999).
<F2> See HCAR No. 27121, Order Authorizing Retention of Assets
(December 23, 1999).
<PAGE>
moved to acquire Mountaineer Gas; <F3> and moved to transfer The
Potomac Edison Company's ("Potomac Edison") generating assets to
GENCO.<F4> To remain a competitive corporation with strong
corporate earnings and shareholder value, Allegheny and its
subsidiaries must continue to grow both within and outside the
energy industry. For these reasons the authorizations below
are sought.
1. Add GENCO to the Money Pool and Increase the Money
Pool
The Allegheny system has established a goal of increasing its
investment in regulated and non-rate regulated businesses. As the
Allegheny system grows, the needs of its subsidiaries for capital
also grows, specifically GENCO's. In the Allegheny system, GENCO
has been assigned the role of acquiring additional non-regulated
generation sources to supply the Allegheny system as well as
participate in various unregulated energy market activities.
GENCO must have access to cash through short-term and long-term
borrowings to take advantage of energy market opportunities or to
address financial emergencies that may arise. Currently, GENCO
primarily uses its short-term financing, guarantees and parent
support to support its capital expenditure program and ongoing
operations. GENCO now seeks to participate in the Money Pool.
Participation in the Money Pool will enhance GENCO's ability to
participate effectively in evolving energy markets by giving it
access to financing in an amount not to exceed $300 million in
the aggregate - the amount of short-term debt financing previously
authorized for GENCO. The transactions will be subject to the same
terms and conditions as were contained in the GENCO Order and
Financing Orders.
2. Increase GENCO's Authorized Commercial Paper and
Allegheny's Authorized Loans to $300 Individually
and in the Aggregate; and Authorize GENCO to Enter
Into Credit Support and Counterparty Agreements
In HCAR No. 27101, the Commission authorized GENCO to issue,
on an as needed basis, up to $200 million in short-term debt in
the form of Commercial Paper. Additionally, Allegheny was
authorized to provide short-term debt financing to GENCO in the
form of Loans not to exceed $100 million. GENCO primarily uses
its short-term financing, guarantees and parent support to support
its capital expenditure program and ongoing operations. While
Allegheny would seek such additional regulatory approval as may be
required, the requested increase in short-term financing authority
and the grant of long-term financing (as described below) will
enhance GENCO's ability to participate effectively in the
evolving energy markets. GENCO needs to have access to cash
through short-term borrowings to take advantage of opportunities
that arise, to maintain its assets, and to expand its ongoing
operations as additional states restructure and funding needs
arise. GENCO now seeks to have maximum flexibility in financing.
Specifically, GENCO seeks an increase its short-term debt
authority from $200 million to $300 million and to increase parent
loans from Allegheny from $100 million to $300 million. The
aggregate shot-term debt authorized will remain unchanged at $300
million and remain subject to the same terms and conditions as
were contained in the original Application, as amended, and
adopted in HCAR No. 27101.
<F3> See File No. 70-9625, Application of Monongahela Power Company
to Acquire 100% of the Securities of Mountaineer Gas (filed Feb.
4, 2000).
<F4> See File No. 70-9627, Application of The Potomac Edison Company
to Transfer Assets (filed Feb. 11, 2000).
<PAGE>
Finally, GENCO seeks authorization to issue letters of credit
up to $100 million to support counterparty agreements and other
trading agreements. The guarantees will be issued without
recourse to the operating companies.
3. Authorize GENCO and Allegheny to Issue Long-term
Debt
GENCO seeks authority to issue Long-term debt up to an
aggregate amount of $400 million. Allegheny seeks to issue Long-
term debt up to $138 million. Long-term financing will include,
but not be limited to, bank financing and/or bank credit support,
project financing, sales of secured or unsecured debt, notes,
debentures and the issuance of equity. The terms and conditions
will be established through arms' length negotiations based upon
current market conditions and will be non-recourse to the system
operating companies unless otherwise authorized.
4. Authorize WPFC to Make Additional Loans to West Penn
WPFC seeks authorization to make additional loans to West
Penn. Additional loans are necessary in order to maximize the
economic benefits the Allegheny system as a whole receives from
the ongoing transaction. The loans will be subject to the same
terms and conditions as set forth in the WPFC Order.
5. Authorize GENCO to Enter Lease Agreement
GENCO seeks authorization to enter into a lease agreement
with West Penn for 150 - 225 acres at the Limestone Run site for a
term of about 15 years.
6. Form Intellectual Property Subsidiaries
Applicants propose, and seek authorization, to form special
purpose subsidiaries for the purpose of owning and managing
intellectual property and other intangible assets. The special
purpose subsidiary, or subsidiaries, will allow the Allegheny
system to maximize asset value.
B. Application of Proceeds
GENCO will continue to use the proceeds of its proposed short-
term debt financings to support operations, supplement daily cash
flow fluctuations, and for temporary stop-gap financing measures
until other financing transactions are completed. Additionally,
GENCO may use the proceeds of its proposed Long-term borrowings to
finance strategic purchases, construction, to replace or retire
short-term debt, or for other strategic corporate purposes. Some
of the proceeds may be used by GENCO as capital contributions to
nonutility subsidiaries. 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.
C. Rule 53 Analysis
Rule 54 provides that the Commission, in determining whether
to approve certain transactions by such registered holding company
or its subsidiaries other than with respect to EWGs and FUCOs,
will not consider the effect of the capitalization or earnings of
any subsidiary which is an EWG or FUCO upon the registered holding
<PAGE>
company system if the provisions of Rule 53(a), (b) and (c) are
satisfied. When the transaction is consummated, for purposes of
compliance with Rule 54, Allegheny's aggregate investment in EWGs
and FUCOs will not exceed 50% of its consolidated retained
earnings and the provisions of Rule 53(a) will be satisfied.
Allegheny further states that none of the conditions set forth in
rule 53(b) exist or will exist as a result of the proposed
Transaction. Therefore, Rule 53(c) is inapplicable.
2. Applicants hereby add the following to the end of Item 2,
Fees, Commissions And Expenses:
Fees and expenses in the estimated amount of $1,482,200 are
expected to be incurred in connection with the proposed
transactions, including standard rating fees aggregating
approximately $ 126,000, underwriting fees $1,250,000, trustee
fees $5,700, and miscellaneous fees of $100,000, plus ordinary
expenses not over $500 in connection with the preparation of this
Post-Effective Amendment. None of the fees, commissions or
expenses is 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.
3. Applicants hereby add the following to the end of Item 3,
Applicable Statutory Provisions:
The short-term and long-term debt authorizations are subject
to Sections 6 and 7 of the Act. The proposed lease agreement is
subject to Section 13.
4. Applicants hereby add the following to the end of Item 4,
Regulatory Approval:
Applications to approve the requested financing and money
pool participation, to the extent required, have or will be filed
with the utility regulatory bodies of Ohio, Pennsylvania,
Maryland, West Virginia, and Virginia. Similarly, an application
to transfer the utility property has, or will be, filed with the
jurisdictional states. All state approvals are expected prior to
the time an order is issued from this Commission or Applicant
engages in any authorized act under this application. No
commission, other than this Commission, has jurisdiction over the
proposed transactions.
5. Applicants hereby add the following to the end of Item 5,
Procedure:
Allegheny waives any recommended decision by hearing officer
or by any other responsible officer of the Commission and waives
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 becomes effective upon issuance.
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 (attached)
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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.
SIGNATURE
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, as amended, the undersigned Applicants have
duly caused this statement to be signed on their behalf by the
undersigned thereunto duly authorized.
ALLEGHENY ENERGY, INC.
/s/ THOMAS K. HENDERSON, Esq.
Thomas K. Henderson, Esq.
ALLEGHENY ENERGY SUPPLY COMPANY, LLC
/s/ THOMAS K. HENDERSON, Esq.
Thomas K. Henderson, Esq.
WEST PENN POWER COMPANY
/s/ THOMAS K. HENDERSON,Esq.
Thomas K. Henderson, Esq.
ALLEGHENY ENERGY SERVICE CORPORATION
/s/ THOMAS K. HENDERSON, Esq.
Thomas K. Henderson, Esq.
Dated: March 21, 2000
<PAGE>
EXHIBIT H
a) Draft Notice
Allegheny Energy, Inc., et. al. (70-7888 / 70-9483 / 70-9469)
Notice Requesting Authority to: Change Short-term Debt Limits;
Issue Long-Term Debt; Participate in the Money Pool; Increase the
Money Pool; Enter a Lease Agreement; and Form Special Purpose
Subsidiaries
Allegheny Energy, Inc. ("Allegheny"), 10435 Downsville Pike,
Hagerstown, MD 21740-1766, a registered public utility holding
company, its direct and indirect wholly owned public utility
subsidiary, West Penn Power Company ("West Penn"), 800 Cabin Hill
Drive, Greensburg, Pennsylvania 15601, Allegheny Energy Supply
Company, LLC ("GENCO"), R.R. 12, P.O. Box 1000, Roseytown, Penna.,
15601, and Allegheny Energy Service Corporation, 10435 Downsville
Pike, Hagerstown, MD 21740-1766, have filed a Post Effective
Amendment to an Application - Declaration filed pursuant to
Sections 6(a), 7, 12(a), 12(b), and 13, of the Act and under Rules
53 and 54.
In a series of orders issued in 70-7888, dated January 29,
1992, February 28, 1992, July 14, 1992, November 5, 1993, November
28, 1995, April 18, 1996, December 23, 1997, May 19, 1999, and
October 8, 1999 (HCAR Nos. 25462, 25481, 25581, 25919, 26418,
26506, 26804, 27030, and 27084, among other things, a Money Pool
was established for Allegheny system companies. In 70-9483 (HCAR
No. 27101, dated November 12, 1999), the Commission authorized the
formation of GENCO. GENCO was authorized to issue up to $200
million of short-term debt in the form of commercial paper, on an
as needed basis, through July 31, 2005. Additionally, the
Commission authorized Allegheny to loan GENCO up to $100 million
through July 31, 2005. Finally, the Commission in HCAR No. 27091
(70-9469, Order Authorizing Formation of Subsidiary Corporation
and Special Purpose LLC, Issuance of Transition Bonds, Notes, and
Service Agreement (October 19, 1999)), among other things,
authorized West Penn Funding Corp. ("WPFC") to loan West Penn up
to $600 million in transition bonds proceeds.
Applicants request that the Commission increase from $100
million to $300 million the authorized loans that Allegheny may
make to GENCO and increase from $200 million to $300 million the
aggregate commercial paper that GENCO may issue - with the
limitation that both the loans and commercial paper when taken in
the aggregate not exceed the authorized short-term debt
ceiling of $300 million. Additionally, Applicants request that the
Commission: 1) authorize GENCO to participate in the Money Pool up
to its short-term debt aggregate of $300 million and increase the
aggregate available in the Money Pool by $300 million to reflect
the addition of GENCO; 2) authorize Allegheny to issue long-term
debt up to an aggregate amount of $138 million; 3) authorize GENCO
to issue long-term debt up to an aggregate amount of $400 million;
4) authorize GENCO to issue letters of credit up to $100 million
to support counterparty agreements and other trading agreements;
5) authorize GENCO to lease up to 225 acres; 6) authorize WPFC to
make additional loans to West Penn; and 7) authorize the formation
of special purpose subsidiaries for the purpose of owning and
managing intellectual property and other intangible assets. Each
of the transactions will be subject to the same terms and
conditions as contained in prior orders, as applicable.
_______________________________
