File No. 70-
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM U-1
APPLICATION / DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
___________________________________
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
Monongahela Power Company The Potomac Edison Company
1310 Fairmont Avenue 10435 Downsville Pike
Fairmont, WV 26554 Hagerstown, MD 21740
Allegheny Ventures, Inc.
10435 Downsville Pike
Hagerstown, MD 21740
_____________________________
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
<PAGE>
TABLE OF CONTENTS Page
Item 1. Description of the Proposed Transaction . . . . . 3
A. Summary and Discussion . . . . . . . . . . . . . . 3
B. Application of Proceeds . . . . . . . . . . . . . . 5
Item 2. Fees, Commissions and Expenses . . . . . . . . . . . 6
Item 3. Applicable Statutory Provisions . . . . . . . . . . 6
Item 4. Regulatory Approvals . . . . . . . . . . . . . . . . 6
Item 5. Procedure . . . . . . . . . . . . . . . . . . . . . 6
Item 6. Exhibits and Financial Statements . . . . . . . . . 6
A. Exhibits . . . . . . . . . . . . . . . . . . . . . 6
B. Financial Statements . . . . . . . . . . . . . . . 6
Item 7. Information as to Environmental Effects . . . . . . 7
Exhibit H 8
<PAGE>
Item 1. Description of Proposed Transactions
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") <F1> 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. Also,
Applicants request that the Commission: 1) authorize Genco to be a
lender to and a borrower from the Money Pool in outstanding
amounts of up to $300 million; 2) authorize Genco to issue long-
term debt up to an aggregate amount of $400 million; and, 3)
authorize Allegheny to issue long-term debt up to an aggregate
amount of $138 million, all through July 31, 2005. In support of
these requests, Applicants submits the following.
B) Discussion
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 (Holding Co. Act Release 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 (Holding Co. Act Release 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 Holding Co. Act Release No. 27091, the Commission,
among other things, authorized WPFC to loan West Penn up to
$600 million in transition bond proceeds ("WPFC Order").<F2>
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;<F3> moved
to acquire Mountaineer Gas; <F4> and moved to transfer The Potomac
<F1> Genco is a public utility as defined under the Act. However,
for purposes of state regulation Genco is not regulated as a
public utility. Accordingly, Genco's financing requests do not
qualify for Rule 52 treatment as no state has, or will, authorize
the financing requested herein.
<F2> 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).
<F3> See Holding Co. Act Release No. 27121, Order Authorizing
Retention of Assets (December 23, 1999).
<F4> See File No. 70-9625, Application of Monongahela Power Company
to Acquire 100% of the Securities of Mountaineer Gas (filed Feb.
4, 2000).
<PAGE>
Edison Company's ("Potomac Edison") generating assets to Genco. <F5>
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 seeks authority to participate in the Money Pool.
Specifically, Genco proposes to be a lender to and a borrower from
the Money Pool in outstanding amounts of up to $300 million.
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. Genco will lend and borrow on the same
terms and under the same conditions as authorized for other Money
Pool participants.<F6>
2. Increase Genco's Authorized Commercial Paper and Allegheny's
Authorized Loans to $300 Million Individually and in the
Aggregate; and Authorize Genco to Enter Into Credit Support
and Counterparty Agreements
In Holding Co. Act Release No. 27101, the Commission authorized
Genco to issue, on an as needed basis, up to $200 million in short-term
debtin 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 increase its flexibility in
financing. Specifically, Genco seeks an increase its short-term
debt authority from by an additional $100 million 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
<F5> See File No. 70-9627, Application of The Potomac Edison Company
to Transfer Assets (filed Feb. 11, 2000).
<F6> See Holding Co. Act Release No. 25481, Authorizing Formation of
Money Pool (February 28, 1992).
<PAGE>
conditions as were contained in the original Application, as
amended, and adopted in Holding Co. Act Release No. 27101.
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 the Issuance of Long-term Debt
Genco seeks authority to issue long-term debt up to an
aggregate amount of $400 million and Allegheny seeks authority to
issue up to $138 million in long-term debt. Both financings will
include, but not be limited to, bank financing and/or guarantees,
bank credit support, project financing, sales of secured or
unsecured debt, notes, and, debentures.<F7> The interest rates,
fees, and expenses will be comparable to those obtainable by
comparable utilities issuing comparable securities with the same
or similar terms and maturities. The request is consist with
prior Commission orders to issue unsecured long-term debt.<F8>
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.
Item 2. Fees, Commissions, and Expenses
Fees and expenses in the estimated amount of $100,000 are
expected to be incurred in connection with the proposed
transactions plus ordinary expenses not over $500 in connection
with the preparation of this Application. None of the fees,
commissions or expenses is to be paid to any associate or
affiliate company of Allegheny or any affiliate of any such
associate company except for legal, financial and other services
to be performed at cost.
Item 3. Applicable Statutory Provisions
The short-term and long-term debt authorizations are subject
to Sections 6, 7, 9(a), 12(b), and 10 of the Act. 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
company system if the provisions of Rule 53(a), (b) and (c) are
<F7> Guarantees may take the form of Allegheny agreeing to undertake
reimbursement obligations, assume liabilities or assume other
obligations with respect to, or act as surety on, bonds. Letters
of credit, evidences of indebtedness, equity commitments,
performance and other obligations undertaken by Genco.
<F8> See Holding Co. Release No. 27134, Southern Financing Order
(February 9, 2000).
<PAGE>
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.
Item 4. Regulatory Approval
No commission, other than this Commission, has jurisdiction
over the proposed transactions.
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.
Item 6. Exhibits and Financial Statements
(a) Exhibits (to be filed by amendment)
F Opinion of Counsel (to be filed by amendment)
G Financial Data Schedules (to be filed by
amendment)
H Form of Notice - Filed Feb. 4, 2000
(b) Financial Statements as of December 31, 1999
FS-1 Allegheny Energy, Inc. balance sheet, per books
and pro forma (to be filed by amendment).
FS-2 Allegheny Energy, Inc. statement of
income and retained earnings, per
books and pro forma (to be filed by
amendment).
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.
<PAGE>
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 VENTURES, INC.
/s/ THOMAS K. HENDERSON, ESQ.
Thomas K. Henderson, Esq.
ALLEGHENY ENERGY SUPPLY COMPANY,LLC
/s/ THOMAS K. HENDERSON, ESQ.
Thomas K. Henderson, Esq.
THE POTOMAC ELECTRIC COMPANY
/s/ THOMAS K. HENDERSON, ESQ.
Thomas K. Henderson, Esq.
MONONGAHELA POWER COMPANY
/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: May 5, 2000
<PAGE>
EXHIBIT H
a) Draft Notice
Allegheny Energy, Inc., et. al. (70- )
Notice Requesting Authority to: Change Short-Term Debt Limits;
Issue Long-Term Debt; Participate in the Money Pool; Increase the
Money Pool; and Form Nonutility 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, 9, 10, 12(a), 12(b), and 13, of the Act and
under Rules 45, 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 (Holding Co. Act Release 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 (Holding Co. Act Release 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 Holding Co. Act
Release 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 WPFC to make additional loans to West Penn; and 6)
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.
