File No. 70-9683
Allegheny Energy Supply Company EWG Application
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
AMENDMENT NO. 1
TO
FORM U-1
APPLICATION / DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
___________________________________
Allegheny Energy, Inc. Allegheny Energy Service
Corporation
10435 Downsville Pike 10435 Downsville Pike
Hagerstown, MD 21740 Hagerstown, MD 21740
Allegheny Energy Supply Company, LLC
R.R. 12, P.O. Box 1000
Roseytown, PA 15601
_____________________________
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
Patricia J. Clark, Esq.
Deputy General Counsel
Allegheny Energy Supply Company
800 Cabin Hill Drive
Greensburg, Pennsylvania 15601
Anthony Wilson, Esq.
Senior Attorney
Allegheny Energy Service Corporation
10435 Downsville Pike
Hagerstown, MD 21740
<PAGE>
1. Applicants hereby amend the application by deleting the first
paragraph of Item 1, Description of Proposed Transactions,
subsection A. Summary, and inserting the following paragraph in
its place:
Allegheny Energy, Inc. ("Allegheny"), a registered public
utility holding company, West Penn Power Company, an electric
public utility subsidiary of Allegheny, and Allegheny Energy
Service Corporation ("AESC") a wholly-owned service company
subsidiary of Allegheny, along with Allegheny Energy Supply
Company, LLC, ("Allegheny Supply") a non-utility generating
company subsidiary of Allegheny, have filed an application -
declaration pursuant to Sections 6(a), 7, 9(a), 10, 12(b), 13, 32
and 33 of the Act and Rules 44, 45, 53, 54, 90, and 91.
2. Applicants hereby amend the application by adding the
following paragraph to the end of Item 1, Description of Proposed
Transactions, subsection C. Discussion:
On February 11, 2000, Allegheny filed the Gans Affiliated
Interest Application with the Pennsylvania Public Utility
Commission ("PaPUC"). In that filing, West Penn was seeking PaPUC
approval of an affiliated interest transaction between West Penn
and Allegheny Supply. The transaction called for West Penn to
build a substation and a 138 kV line for Allegheny Supply and
thereafter for Allegheny Supply to sell two (2) acres to West
Penn. West Penn and Allegheny Supply proposed to price the
transaction at cost. The PaPUC objected to application of the SEC
cost standard. The PaPUC took the position that the Pennsylvania
affiliate conduct standards required the application of the cost
plus 11% standard ("market") as the appropriate pricing mechanism
for an affiliate transaction. At the PaPUC's urging West Penn
pledged to seek an SEC waiver of the "at cost" provisions of the
Act covering affiliate transactions, in order to accommodate the
Pa. Code of Conduct that requires "higher of market or cost."
Therefore, West Penn seeks a limited waiver from the Section 13(b)
of the Act and Rules 90 and 91 "at-cost" standards in order to
comply with the Pennsylvania rules governing affiliate
transactions.
3. Applicants hereby amend the application by replacing the
first paragraph in Item 3, Applicable Statutory Provisions:
This application is subject to Sections 6(a), 7, 9(a), 10, 32
and 33 of the Public Utility Holding Company Act of 1935, as
amended, and Rules 44, 45, 53, 54, 90, and 91 under the Act.
4. Applicants hereby amend the application by adding the
following paragraph as the last paragraph in Item 3, Applicable
Statutory Provisions:
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 EWGs or FUCOs upon the registered
holding company system if the provisions of Rule 53(a), (b) and
(c) are satisfied. At December 31, 1999, Allegheny's average
consolidated retained earnings were approximately $897million, and
Allegheny's aggregate investment in EWGs and FUCOs was
approximately $4.2 million. Accordingly, Allegheny may invest up
to approximately $448.5 million or an additional $444.3 million
(50% of Retained Earnings less existing investment) in EWGs and
FUCOs as of December 31, 1999. 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)
<PAGE>
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.
Allegheny further states that for purposes of Rule 54, that
the conditions specified in Rule 53(a) are satisfied and that none
of the conditions set forth in rule 53(b) exist or will exist as a
result of the proposed Transaction. As a result, the Commission
will not consider the effect on Allegheny subsidiary that is an
EWG or FUCO, as each is defined in sections 32 and 33 of the Act,
respectively, in determining whether to approve the proposed
transactions.
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 SERVICE CORPORATION
/s/ THOMAS K. HENDERSON, INC.
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.
Dated: May 31, 2000
