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File No. 70-6179
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 4
TO
APPLICATION OR DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Monongahela Power Company
1310 Fairmont Avenue
Fairmont, WV 26554
The Potomac Edison Company
10435 Downsville Pike
Hagerstown, MD 21740-1766
West Penn Power Company
800 Cabin Hill Drive
Greensburg, PA 15601
(Name of company or companies filing this statement and addresses
of principal executive offices)
Allegheny Power System, Inc.
(Name of top registered holding company parent of each applicant
or declarant)
Nancy H. Gormley, Esq.
Allegheny Power System, Inc.
12 East 49th Street
New York, NY 10017
(Name and address of agent for service)
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The undersigned Applicants hereby amend their
Application or Declaration as previously amended as follows:
1. The proposed transactions involve the issuance of
notes by Monongahela Power Company ("Monongahela"), The Potomac
Edison Company ("Potomac Edison"), and West Penn Power Company
("West Penn") (collectively, the "Companies") to support the
contemporaneous issuance of pollution control revenue bonds by The
County Commission of Pleasants County, West Virginia (the "County
Commission"). The proceeds from the bonds will be used to effect
the redemption of presently outstanding pollution control revenue
bonds, all of which are Series B Bonds issued by the County
Commission either in 1978 or 1979 in the following amounts and
with the following interest rates: (i) $11,500,000 principal
amount Pollution Control Revenue Bonds (West Penn Power Company
Pleasants Power Station Project), 1978 Series B, 6.95%; (ii)
$20,000,000 principal amount Pollution Control Revenue Bonds (West
Penn Power Company Pleasants Power Station Project), 1978 Series
B, 7.00%; (iii) $21,000,000 principal amount Pollution Control
Revenue Bonds (The Potomac Edison Company Pleasants Power Station
Project), 1978 Series B, 7.30%; and (iv) $25,000,000 principal
amount Pollution Control Revenue Bonds (Monongahela Power Company
Pleasants Power Station Project), 1979 Series B, 7.75%
(collectively, the "Series B Bonds"). Due to the change in
interest rates since the time that the Series B Bonds were
originally issued, the County Commission proposes to refund all
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Series B Bonds by issuing one new series of pollution control
revenue bonds for each of the Companies (collectively, the "Series
C Bonds") at a lower interest rate. The Companies request
authority from the Securities and Exchange Commission
("Commission") to enter into new long-term promissory notes
insofar as the terms and conditions of the long-term bonds to be
issued by the County Commission affect the payments to be made by
the Companies under the current long-term promissory notes
presently outstanding.
As background, by Commission order dated August 14,
1978 (HCAR No. 20672), West Penn and Potomac Edison were
authorized to enter into the second phase of a financing plan to
provide additional money for the installation of pollution control
equipment and facilities ("Facilities") at Pleasants Power Station
(the "Station") in Pleasants County, West Virginia. The
Facilities included (i) electrostatic precipitators for the
removal of particulates from flue gases, together with related fly
ash handling and storage facilities, (ii) wet scrubber systems for
removal of sulfur dioxide from flue gases, (iii) a lime unloading,
handling and feed system related to the scrubbers, (iv) a slurry
dewatering system and a sludge processing and disposal system to
treat and dispose of the sludge from the scrubbers, (v) a portion
of the cooling towers and related facilities, (vi) waste water
treatment facilities, (vii) a sewage treatment plant, and (viii)
facilities for the removal and disposition of solid wastes,
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principally fly ash and bottom ash, and associated equipment and
certain real estate. The Facilities are now completed. The
Station is jointly owned by the Companies with the following
undivided interests: West Penn - 45%, Potomac Edison - 30% and
Monongahela - 25%.
The second phase of the financing plan was
accomplished through the issuance of an aggregate $77,500,000
principal amount of Pollution Control Revenue Bonds Series B by
the County Commission in 1978 and 1979. The Series B Bonds had
maturities of either 25 or 30 years. The August 14, 1978
Commission Order authorizing Potomac Edison and West Penn to issue
Series B Notes, reserved jurisdiction over transactions to be
entered into by Monongahela. Monongahela had requested authority
to issue up to $25,000,000 principal amount of Series B Notes, but
an adverse ruling in a rate case forced it to postpone the
transaction. The Commission subsequently authorized Monongahela
to issue $25,000,000 principal amount of Series B Notes by Order
dated February 21, 1979 (HCAR No. 20925).
The proceeds of the Series B Bonds were allocated to
the Companies in the following manner: West Penn, an aggregate of
$31,500,000; Potomac Edison, $21,000,000; and Monongahela,
$25,000,000. The Series B Bonds have the following terms:
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Maturity Interest
Principal Amount August 1 Rate
Potomac Edison $21,000,000 2008 7.30%
West Penn $11,500,000 2003 6.95%
West Penn $20,000,000 2008 7.00%
Monongahela $25,000,000 2009 7.75%
Jurisdiction was reserved in the Commission's August 14, 1978 and
February 21, 1979 Orders over the fees, commissions and expenses
to be incurred in connection with the long-term financing.
2. By adding the following material at the end of
Item 1. Description of Proposed Transactions:
The County Commission of Pleasants County, West
Virginia (the "County Commission") proposes to issue $77,500,000
aggregate principal amount in three new series of long-term bonds
(each series to be designated as "Series C Bonds", collectively
hereinafter referred to as the "Series C Bonds"), the proceeds of
which will be used to refund the County Commission's Series B
Pollution Control Revenue Bonds currently outstanding as follows:
(i) $11,500,000 principal amount of Pollution Control Revenue
Bonds 6.95% (West Penn Power Company Pleasants Power Station
Project), 1978 Series B; (ii) $20,000,000 principal amount of
Pollution Control Revenue Bonds 7.00% (West Penn Power Company
Pleasants Power Station Project), 1978 Series B; (iii) $21,000,000
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principal amount of Pollution Control Revenue Bonds 7.30% (The
Potomac Edison Company Pleasants Power Station Project), 1978
Series B; and (iv) $25,000,000 principal amount of Pollution
Control Revenue Bonds 7.75% (Monongahela Power Company Pleasants
Power Station Project), 1979 Series B (collectively, the "Series B
Bonds").
Monongahela Power Company ("Monongahela"), The Potomac
Edison Company ("Potomac Edison") and West Penn Power Company
("West Penn") (collectively, the "Companies") request authority
until December 31, 1995 to enter into the proposed transaction and
to issue new promissory notes insofar as the terms and conditions
of the Series C Bonds affect the payments to be made by the
Companies under the promissory notes presently outstanding. The
Series C Bonds will be issued under a supplemental trust indenture
with a corporate trustee, approved by the Companies, and sold at
such time, at such interest rate and for such price as shall be
approved by the Companies. The timing of the financing will
depend upon a subjective determination by the Companies of market
conditions. However, the Companies will not enter into the
proposed refunding transaction unless the estimated present value
savings derived from the net difference between interest payments
on the new issues of comparable securities and on the securities
to be refunded is, on an after- tax basis, greater than the
present value of all redemption and issuing costs, assuming an
appropriate discount rate. The discount rate used shall be the
estimated after-tax interest rate on the Series C Bonds to be
issued. The Series C Bonds will mature no later than the year
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2020.
The Companies also request an exception from the
competitive bidding requirements of Rule 50 for this transaction,
as compliance is not necessary or appropriate for the protection
of investors or consumers.
Each Company will deliver concurrently with the
issuance of the Series C Bonds, its non-negotiable Pollution
Control Note (collectively, the "Notes") corresponding to such
series of Bonds in respect of principal amount, interest rate and
redemption provisions (which may include a special right of the
holder to require the redemption or repurchase of the Bond at
stated intervals) and having installments of principal
corresponding to any mandatory sinking fund payments and stated
maturities. The Notes will be secured by a second lien on the
Facilities and certain other properties, pursuant to the Deed of
Trust and Security Agreement dated November 1, 1977, as
supplemented by a First Supplement thereto dated August 1, 1978 as
to West Penn and Potomac Edison and a First Supplemental thereto
dated February 1, 1979 as to Monongahela, delivered by the
Companies to the trustee creating a mortgage and security interest
in the Facilities and certain other property (subject to the lien
securing each Company's first mortgage bonds). Payment on the
Notes will be made to the Trustee under the Second Supplemental
Indentures described below, copies of which are attached as
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Exhibit G-1-C, and shall be applied by the Trustee to pay the
maturing principal and redemption price of and interest and other
costs on the Series C Bonds as the same become due. Each Company
also proposes to pay any trustees' fees or other expenses incurred
by the County Commission.
It is expected that the County Commission will engage
an underwriter or underwriters to provide financial advice and
underwrite the sale of the Series C Bonds. Fees, commissions and
expenses of the underwriters and legal counsel in connection with
the proposed transaction will be filed by amendment. The
Companies have been informed that the County Commission has legal
authority to issue tax exempt revenue bonds in accordance with the
proposed documents and the Companies understand that legal
opinions to that effect will be delivered to appropriate parties
at, or prior to, the closing date. The Series C Bonds will be in
registered form and will bear interest semi-annually at rates to
be determined. The Series C Bonds will be issued pursuant to
supplemental indentures which will provide for redemption, no-call
and other appropriate provisions to be determined. The
supplemental indentures will also provide that all of the proceeds
from the sale of the Series C Bonds by the County Commission must
be applied to the cost of the Facilities, including the cost of
refunding the Series B Bonds.
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The Series C Bonds will be secured by the Notes and
will be supported by various covenants of each Company contained
in the original Pollution Control Financing Agreement dated as of
November 1, 1977, (the "Agreement") copies of which have
previously been filed as Exhibit G-2. A copy of the form of
Indenture has previously been filed as Exhibit G-1(A), copies of
the First Supplemental Indentures have previously been filed as
Exhibit G-1(B), and a copy of the form of the Second Supplemental
Indentures will be filed as Exhibit G-1(C).
Applicants desire to consummate the proposed
transactions and refund the Series B Bonds to provide the lowest
cost of permanent financing for non-revenue-producing pollution
control equipment which the Companies have been required to
install to meet environmental standards. The Companies have been
advised that the annual interest rate on tax exempt bonds has been
approximately 1% to 3% lower than the interest rate on taxable
obligations of comparable quality, depending upon the type to be
sold by the County Commission.
3. Applicants hereby amend Item 3. Applicable Statutory
Provisions, and replace it with the following:
The Companies are informed by counsel that
the proposed transactions may be subject
to Sections 6(a) and 7 and Rule 50(a)(5)
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of the Public Utility Holding Company Act
of 1935.
4. Applicants hereby amend Item 4. Regulatory Approval,
and replace it with the following:
The Public Utility Commission of Ohio and the Public
Service Commission of West Virginia have jurisdiction
over the proposed transactions insofar as Monongahela
is concerned. The State Corporation Commission of
Virginia, the Public Service Commission of Maryland,
and the Public Service Commission of West Virginia
have jurisdiction over the proposed transactions
insofar as Potomac Edison is concerned. The Public
Utility Commission of Pennsylvania has jurisdiction
over the proposed transactions insofar as West Penn is
concerned. No regulatory agency, other than those
named, and the Securities and Exchange Commission, has
jurisdiction over the proposed transactions.
5. The Applicants hereby amend Item 6. Exhibits and
Financial Statements, by filing the following:
(a) Exhibits
D-1(a) Potomac Edison's
Application to the
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Maryland Public Service
Commission (to be filed
by amendment).
D-2(a) Monongahela's
Application to the Ohio
Public Utility
Commission (to be filed
by amendment).
D-3(a) West Penn's Application
to the Pennsylvania
Public Utility
Commission (to be filed
by amendment).
D-4(a) Potomac Edison's
Application to the
Virginia State
Corporation Commission
(to be filed by
amendment).
D-5(a) No-Action Letter of the
Public Service
Commission of West
Virginia regarding
Monongahela's and
Potomac Edison's
Application (to be filed
by amendment).
D-6(a) Order of the Maryland
Public Service
Commission (to be filed
by amendment).
D-7(a) Order of the Ohio Public
Utility Commission (to
be filed by amendment).
D-8(a) Order of the
Pennsylvania Public
Utility Commission (to
be filed by amendment).
D-9(a) Order of the Virginia
State Corporation
Commission (to be filed
by amendment).
G-1(C) Form of Second
Supplemental Indentures
(to be filed by
amendment).
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(b) Financial Statements as of December 31, 1993
1-A(i) Balance sheets of Monongahela per
books and pro forma.
2-A(i) Balance sheets of Potomac Edison per
books and pro forma.
3-A(i) Balance sheets of West Penn per
books and pro forma.
4-A(i) APS and subsidiaries consolidated
balance sheet, per books and pro
forma.
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1-B(i) Statements of income and retained
earnings of Monongahela per books
and pro forma.
2-B(i) Statements of income and retained
earnings of Potomac Edison per books
and pro forma.
3-B(i) Statements of income and retained
earnings of West Penn per books and
pro forma.
4-B(i) APS and subsidiaries consolidated
statements of income and retained
earnings, per books and pro forma.
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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.
MONONGAHELA POWER COMPANY
By NANCY H. GORMLEY
Nancy H. Gormley
Counsel
THE POTOMAC EDISON COMPANY
By NANCY H. GORMLEY
Nancy H. Gormley
Counsel
WEST PENN POWER COMPANY
By NANCY H. GORMLEY
Nancy H. Gormley
Counsel
Dated: February 18, 1994
