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File No. 70-____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM U-1
APPLICATION OR DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Monongahela Power Company
1310 Fairmont Avenue
Fairmont, WV 26554
(Name of company or companies filing this statement and
addresses of principal executive offices)
Allegheny Energy, Inc.
(Name of top registered holding company parent of each
applicant or declarant)
Thomas K. Henderson, Esq.
Vice President
Allegheny Energy, Inc.
10435 Downsville Pike
Hagerstown, MD 21740
(Name and address of agent for service)
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Item No. 1. Description of Proposed Transaction
The proposed transactions involve the issuance of
notes by Monongahela Power Company ("Monongahela" or the
"Company") a public utility subsidiary of Allegheny Energy,
Inc., a registered holding company, to support the
contemporaneous issuance of pollution control revenue bonds
by three West Virginia County Commissions. The County
Commissions are located in Marion County, Preston County and
Pleasants County, West Virginia (collectively, the "County
Commissions"). The proceeds from the three series of bonds
will be used to pay off at maturity three series of
presently outstanding pollution control revenue bonds, all
of which are Series B Bonds and all of which mature on April
1, 1998. The Series B Bonds were issued by the Authority
in 1988 in the following amounts with the following interest
rates: (i) $3,055,000 principal amount Marion County
Pollution Control Revenue Bonds (Monongahela Power Company
Rivesville Generating Station), 1988 Series B, 6-7/8%; (ii)
$5,900,000 principal amount Preston County Pollution Control
Revenue Bonds (Monongahela Power Company Albright Generating
Station), 1988 Series B, 6-7/8% ; and (iii) $10,145,000
principal amount Pleasants County Pollution Control Revenue
Bonds (Monongahela Power Company Willow Island Generating
Station), 1988 Series B, 6-7/8%(collectively, the "Series B
Bonds"). Due to the change in interest rates since the time
that the Series B Bonds were originally issued, and the cost
to the Company of financing that is not tax exempt, each
County Commission proposes to issue a new series of
pollution control revenue bonds (collectively, the "Series C
Bonds") at a lower interest rate. The County Commissions
will use the proceeds from the Series C Bonds to pay the
Series B Bonds at maturity. The Company requests authority
from the Securities and Exchange Commission ("Commission")
to enter into new promissory notes insofar as the terms and
conditions of the bonds to be
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issued by the County
Commissions affect the payments to be made by the Company
under the promissory notes presently outstanding. As
information, the presently outstanding Series B notes will
be canceled and new notes will be entered into to reflect
the new terms.
A. Background
On November 26, 1975 and December 17, 1975, the
Commission authorized Monongahela to issue notes in
connection with the tax exempt financing by the County
Commissions of certain electrostatic precipitators and
associated foundations, duct work, fly ash handling system,
interests in land and assorted equipment (collectively the
"Pollution Control Equipment") at the Rivesville Generating
Station (Unit No. 6) in Marion County, West Virginia,
Albright Generating Station (Units 2 and 3) in Preston
County, West Virginia, and Willow Island Generating Station
(Units 1 and 2) in Pleasants County, West Virginia. (HCAR
Nos. 19268 and 19304.) The tax exempt financing provided
money for the installation of Pollution Control Equipment at
the Rivesville, Albright and Willow Island Generating
Stations. The Pollution Control Equipment has been
completed.
The Series A Bonds were issued by the County
Commissions in December 1975, in an aggregate amount of
$21,000,000 at an interest rate of 8-1/2%. They had a
maturity date of December 1. 1995 and were subject to
optional redemption on and after December 1, 1985.
On November 9, 1987, the Commission authorized
Monongahela to issue new pollution control revenue notes
(the "Series B Notes") aggregating $19,100,000. (HCAR
24495). The County Commissions issued their Series B
Pollution Control Revenue Bonds in April, 1988, the proceeds
of which were used to redeem the Series A Pollution Control
Revenue Bonds. The Series A Notes were canceled as part of
this transaction.
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B. Requested Authorization
The County Commissions propose to issue
$19,100,000 aggregate principal amount in three new series
of 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 pay at
maturity the County Commissions' Series B Bonds presently
outstanding which correspond to notes issued by Monongahela.
The figure represents $1,900,000 less than the aggregate
amount of Series A Bonds originally issued due to the
operation of a mandatory sinking fund which required the
County Commissions to redeem bonds each December 1 beginning
in 1986 at par plus accrued interest as follows: Marion
($150,000), Preston ($300,000) and Pleasants ($500,000) per
year. The Series A Bonds were redeemed in April of 1988.
Monongahela requests authority through December
31, 2002 to enter into the proposed transactions and to
issue new promissory notes. The Series C Bonds will be
issued under a supplemental trust indenture with a corporate
trustee, approved by the Company, and sold at such time, at
such interest rate and for such price as shall be approved
by the Company. However, the interest rate for each series
of Series C Bonds will not exceed the interest rate of the
corresponding series of Series B Bonds presently
outstanding. The timing of the financing will depend upon a
subjective determination by the Companies of market
conditions. The Series C Bonds will mature no later than
the year 2015.
Monongahela 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
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payments and stated maturities.
Title to the Pollution Control Equipment will
remain with each of the County Commissions in accordance
with the terms of the original Purchase Agreements (the
"Purchase Agreement"), which provide, among other things,
for the payment by Monongahela of all expenses and costs in
connection with the operation and maintenance of the
Pollution Control Equipment, including insurance and taxes,
if any; and semi-annual installments of purchase price equal
to such amounts as are due from the respective County
Commissions under the provisions of certain Trust
Indentures, such amount being sufficient to pay the interest
on and principal of the Bonds due on each installment date.
Title to the Pollution Control Equipment will vest in
Monongahela after payment of the Bonds and payment by
Monongahela of all additional payments due or to become due.
There are also Trust Indentures dated as of
December 15, 1975, between each County Commission and The
Chase Manhattan Trust Company, National Association,
successor trustee to Mellon Bank, N.A., as trustee,
governing terms of the bonds issued pursuant to the
Indenture. Payment on the Notes will be made to the Trustee
under supplemental indentures to be entered into between the
Companies and the Trustee, described below, and shall be
applied by the Trustee to pay the maturing principal price
of and interest and other costs on the Series B Bonds as the
same become due. The Company also proposes to pay any
trustees' fees or other expenses incurred by the County
Commissions.
It is expected that the County Commissions 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 Company has been informed
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that the County Commissions have legal authority to issue tax
exempt revenue bonds in accordance with the proposed documents and
the Company understands 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 initially will be registered in the name of Cede &
Co., as nominee for The Depository Trust Company, New York,
New York. The Series C Bonds 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 parameters 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 Commissions
must be applied to the cost of the Pollution Control
Equipment, including the cost of paying off the Series B
Bonds at maturity.
The Company desires to consummate the proposed
transactions and pay at maturity the Series B Bonds to
provide the lowest cost of permanent financing for non-
revenue-producing Pollution Control Equipment which the
Company has been required to install to meet environmental
standards. The Company has 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 Commissions.
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Item No. 2. Fees, Commissions and Expenses
The following estimated fees and expenses are
expected to be incurred by the Company in connection with
its issuance of Notes and payment at maturity of Series B
Bonds:
Bond Counsel fees and expenses $60,000
Commission Counsel fees 7,500
Price Waterhouse 18,000
Printing expenses 20,000
Trustee's fees 15,000
Underwriter's Counsel fees and expenses 45,000
Blue Sky fees 3,000
Rating Agency fees 58,000
Miscellaneous 5,000
Item No. 3. Applicable Statutory Provisions
The Company is informed by counsel that the
proposed transactions may be subject to Sections 6(a) and 7
of the Public Utility Holding Company Act of 1935.
Item No. 4. Regulatory Approval
The proposed financing transactions will be
authorized by the Public Utilities Commission of Ohio,
as to Monongahela's participation and are therefore
exempt under Rule 52(a). The Public Service Commission
of West Virginia does not have jurisdiction over the
financing aspects of the transaction. However, it does
have jurisdiction over the transfer of any interest in
the facilities that act as security for the notes.
Therefore, the Securities and Exchange Commission has
jurisdiction over the participation by Monongahela
insofar as the transfer of any interest in the
facilities is concerned. No regulatory agency, other
than those named, has jurisdiction over the proposed
transactions.
Item No. 5. Procedure
It is requested that the Commission's order
granting this
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Application or Declaration be issued on or
before March 13, 1998. 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. The
Applicant consents 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.
Item No. 6. Exhibits and Financial Statements
(a) Exhibits
D-1 Monongahela's Application to the Ohio Public
Utility Commission.
D-2 No-Action Letter of the Public Service
Commission of West Virginia (to be
filed by amendment).
D-3 Order of the Ohio Public Utility Commission.
F Opinion of Counsel
G-1 Monongahela's Financial Data Schedule (actual)
(to be filed by amendment).
G-2 Monongahela's Financial Data Schedule (pro forma)
(to be filed by amendment).
G-3 Allegheny Energy, Inc. (actual) (to be filed
by amendment).
G-4 Allegheny Energy, Inc. (pro forma) (to be
filed by amendment).
H Form of Notice
(b) Financial Statements as of December 31, 1997
1-A Balance sheets of Monongahela per books and pro
forma (to be filed by amendment).
2-A Allegheny Energy, Inc. and subsidiaries
consolidated balance sheet, per
books and pro forma (to be filed by
amendment).
1-B Statements of income and retained earnings
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of Monongahela per books and pro forma
(to be filed by amendment).
2-B Allegheny Energy, Inc. and subsidiaries
consolidated statements of income
and retained earnings, per books
and pro forma (to be filed by
amendment).
Item No. 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.
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SIGNATURE
Pursuant to the requirements of the Public Utility
Holding Company Act of 1935, the undersigned company has
duly caused this statement to be signed on its behalf by the
undersigned thereunto duly authorized.
MONONGAHELA POWER COMPANY
By /s/ Robert R. Winter
Robert R. Winter
Vice President, Legal Services
Dated: February 6, 1998
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Exhibit F
(724) 838-6770
E-mail: [email protected]
February 6, 1998
Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549
Dear Sirs:
Referring to the Application or Declaration on Form U-1
filed contemporaneously by Monongahela Power Company
("Monongahela") under the Public Utility Holding Company Act of
1935 with respect to the issuance by the County Commissions of
Marion County, Preston County and Pleasants County, West Virginia
(the "County Commissions") of three series of pollution control
revenue bonds (the "Bonds") and the contemporaneous issuance of
notes by Monongahela to support the issuance of the Bonds (the
"Notes"), I have examined such documents and questions of law as
I deemed necessary to enable me to render this opinion.
I understand that the Bonds will be offered by the
County Commissions in a negotiated sale to underwriters; that the
issuance of the Notes has been duly authorized by the Board of
Directors of Monongahela; that all amendments necessary to
complete the above-mentioned Application or Declaration and to
complete Monongahela's applications with the Ohio Public Utility
Commission, have been or will be filed prior thereto; and that
all other necessary corporate action by the Board of Directors
and officers of Monongahela in connection with the issuance of
the Notes has been or will be taken prior thereto.
Based upon the foregoing, I am of the opinion that:
(1) Monongahela is validly incorporated and duly
existing and is in good standing under the laws of the State of
Ohio; and
(2) Provided that (a) the actions outlined above shall
have been duly taken, (b) the above-mentioned Application or
Declaration and state application as so amended, shall have
become effective or been approved pursuant to appropriate order
of the regulatory commission, and (c) the Bonds shall have been
offered, issued and sold and the Notes shall have been issued,
all in accordance with the procedures outlined above and in
accordance with the order of the regulatory commission, then:
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Securities and Exchange Commission
February 6, 1998
Page 2
(i) All state laws applicable to
the proposed transaction will have been
complied with; and
(ii) The Note to be issued by
Monongahela to secure the Bonds will be a
valid and binding obligation of Monongahela
in accordance with its terms; and
(iii) The consummation of the
proposed transaction will not violate the
legal rights of the holders of any securities
issued by Monongahela or any associate
company thereof.
This opinion does not relate to State Blue Sky or
securities laws.
I hereby consent to the filing of this opinion as an
exhibit to the above-mentioned Application or Declaration.
Very truly yours,
/s/ Carol G. Russ
Carol G. Russ
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Exhibit D-1
B E F O R E
THE PUBLIC UTILITIES COMMISSION OF OHIO
In the Matter of the Application 97--EL-AIS
of Monongahela Power Company
for authority to issue and sell debt securities.
To the Honorable
The Public Utilities Commission of Ohio
The Application respectfully shows:
I
The Applicant, Monongahela Power Company (hereinafter called
"Company" or "Applicant"), is an Ohio corporation, having its
principal office in the City of Marietta in said State, and a
public utility as defined in Section 4905.02 of the Ohio Revised
Code. The Company is engaged in the generation, transmission,
distribution and sale of electricity in Washington, Monroe,
Morgan, Athens, Noble and Meigs Counties, Ohio, and elsewhere,
including the northern half of West Virginia, and in the
ownership and operation of an undivided interest in a power
generating station (Hatfield's Ferry Station) in Pennsylvania.
The name and mailing address of the Company is:
Monongahela Power Company
1310 Fairmont Avenue
P.O. Box 1392
Fairmont, WV 26555-1392
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II
The Applicant is a wholly owned subsidiary of Allegheny
Power System, Inc., (hereinafter called "Allegheny"), a Maryland
corporation, and a holding company registered under the Public
Utility Holding Company Act of 1935. Allegheny as a registered
holding company, and the Company as a subsidiary of a registered
holding company, are subject to the jurisdiction of the
Securities and Exchange Commission under the Public Utility
Holding Company Act of 1935. In addition, the Applicant is
subject as to certain aspects of its operations to the
jurisdiction of the Federal Energy Regulatory Commission and the
West Virginia Public Service Commission.
III
The authorized capital stock of Applicant totals 9,500,000
shares having a total par value of $550,000,000, represented by
1,500,000 shares of $100 par value Cumulative Preferred Stock,
740,000 of which are now outstanding, and 8,000,000 shares of $50
par value Common Stock, of which 5,891,000 shares are now
outstanding and owned by Allegheny. Outstanding First Mortgage
Bonds of the Applicant total $355,000,000 principal amount.
Applicant's Quarterly Income Debt Securities total $40,000,000
while its Pollution Control and Solid Waste Disposal Bonds total
$99,710,000.
IV
DEBT SECURITIES
The Company requests authority through December 31, 2002, if
market conditions warrant, to issue and sell up to $200 million
aggregate principal amount of secured or unsecured medium term
notes, debentures, first mortgage bonds, or other debt securities
(the Debt Securities), in one or more series, but not to exceed a
total of $200 million (or its equivalent, based upon the exchange
rate on the applicable trade date in such foreign or composite
currencies as the Company shall designate at the time of
issuance). The Company desires to have available sufficient
flexibility to adjust its financing program to developments in
the market for Debt Securities when and as they occur, in order
to obtain the best possible price or prices for the Debt
Securities.
There is little doubt that the electric utility industry
will soon see full-blown competition. There is new awareness
from Washington, D.C. to virtually every state capital that the
electric utility industry can no longer exist as a conglomeration
of independent, regulated monopolies. Changes in the regulatory
environment at both the state and federal levels have set the
stage for transition.
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The Company proposes to issue and sell over the next five
years, Debt Securities that in the aggregate will not exceed $200
million. The Debt Securities will be sold to raise funds (1) to
be able to compete effectively in the new utility market, (2) for
possible early redemption of certain bonds, (3) for replacement
of certain bonds at maturity, (4) for tender offers for bonds,
(5) for redemption of or tender for series of preferred stock,
(6) for general corporate purposes, including the retirement of
any short-term debt and ongoing construction expenditures, (7) to
raise new funds for general corporate addition of assets, or (8)
for any combination of the above.
The annual interest rate to be borne by each series of Debt
Securities, the price to be paid to the Company (which, in the
case of First Mortgage Bonds, shall not be less than 98% and
shall not exceed 101.75% of principal amount), will be determined
(1) by competitive bidding, (2) by negotiations between the
Company and private investors or (3) by negotiations or
arrangements with underwriters and/or agents for the sale of such
series. The compensation to be paid to underwriters and/or
agents will be determined prior to the issuance of each
transaction. It is expected that the successful bidders or, in
the event of a negotiated transaction, the underwriters and/or
agents, will make a public offering of the bonds, unless the size
of any series offered makes such public offering impracticable.
Interest rate and the price to be paid to the Company will
be determined at the time of issuance. The Company will not,
without a further order of the Commission, proceed to issue and
sell the Debt Securities at interest rates greater than the
interest rates set out in Exhibit B attached hereto and made a
part hereof.
The Debt Securities will be issued in one or more series,
with maturity and call provisions, if any, to be determined at
the time of issuance.
If the Debt Securities are Secured Medium Term Notes or
First Mortgage Bonds, they will be issued under and secured,
together with the Company's presently outstanding First Mortgage
Bonds, and any Bonds of other series hereafter authorized and
issued, by the Mortgage Indenture dated August 1, 1945, as
supplemented and amended and as to be further supplemented and
amended by one or more Supplemental Indentures, each to be dated
as of the first day of the month in which the Debt Securities
issued thereunder are issued and sold.
If the Debt Securities are unsecured medium term notes or
debentures, they will be issued subject to an Indenture between
the Company and The Bank of New York, as trustee, dated as of May
15, 1995.
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EARLY REDEMPTION AND TENDER OFFERS:
In view of current and prospective market conditions,
particularly interest rates, the Company believes that the
optional redemption of the below listed securities may be
advantageous to its ratepayers and share holders by reducing the
cost of its outstanding series of debt and equity.
The Company may use part of the proceeds that are realized
from the issuance and sale of the Debt Securities either to make
a tender offer for or to effect the optional redemption prior to
maturity, if market conditions warrant, of any one or more of the
currently outstanding First Mortgage Bonds, Pollution Control or
Solid Waste Disposal Bonds, Quarterly Income Debt Securities, and
Preferred Stock series, not to exceed $200 million in the
aggregate, as follows:
1. First Mortgage Bonds
$355 million principal amount, aggregate
Principal Current Next Change
Series Maturity Amount Optional In
Outstanding Redemption Redemption
Price Price or
Call
6-1/2% 1997 $15,000,000 100 N/A
5-5/8% 2000 $65,000,000 No Call N/A
7-3/8% 2002 $25,000,000 No Call N/A
7-1/4% 2007 $25,000,000 No Call 9-1-2002
8-5/8% 2021 $50,000,000 106.28 11-1-1997
8-1/2% 2022 $65,000,000 106.20 6-1-1997
8-3/8% 2022 $40,000,000 No Call 7-1-2002
7-5/8% 2025 $70,000,000 No Call 5-1-2005
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2. Pollution Control or Solid Waste Disposal Bonds
$99,710,000 principal amount, aggregate
Principal Current Next Change
County Series Maturity Amount Optional In Redemption
Outstanding Redemption Price or Call
Price
Greene, PA "A" 6.30% 2002 $2,560,000 100.00 N/A
6.40% 2007 $1,000.000 100.00 N/A
6.40% 2012 $3,000,000 100.00 N/A
Pleasants, WV 6-3/8% 2007 $14,500,000 100.00 N/A
"A" 6-3/8% 2012 $ 3,000,000 100.00 N/A
Marion, 6-7/8% 1998 $19,100,000 No Call Maturity
Pleasants &
Preston, WV "B"
Harrison, WV "A" 6-7/8% 2022 $ 5,000,000 No Call 4-15-2002
Monongalia, WV 5.95% 2013 $ 7,050,000 No Call 4- 1-2003
"B"
Harrison, WV "B" 6-1/4% 2023 $10,675,000 No Call 5- 1-2003
Harrison, WV "C" 6-3/4% 2024 $ 8,825,000 No Call 8- 1-2004
Pleasants, WV "C" 6.15% 2015 $25,000,000 No Call 4- 1-2005
3. Quarterly Income Debt Securities
$40 million principal amount, aggregate
Principal Current Next Change
Series Maturity Amount Optional In Right to
Outstanding Redemption Call
Price
8% 2025 $40,000,000 No Call 6-19-2000
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4. Preferred Stock
$74 million principal amount, aggregate
Shares Principal Current
Series Outstanding Amount Optional Date of
Outstanding Redemption Issue
Price
4.40% 90,000 $9,000,000 106.50 1945
4.80% B 40,000 $4,000,000 105.25 1947
4.50% C 60,000 $6,000,000 103.50 1950
$6.28 D 50,000 $5,000,000 102.86 1967
$7.73 L 500,000 $50,000,000 100.00 1994
MATURITY: $80 million principal amount, aggregate
The issuance of Debt Securities may be advantageous in order
to provide the Company with funds to pay at maturity the
following series:
Principal Current Next Change
Series Maturity Amount Optional In
Outstanding Redemption Redemption
Price Price
6-1/2% 1997 $15,000,000 100.00 N/A
5-5/8% 2000 $65,000,000 No Call N/A
COMPETITION: Up to $200 million
Monongahela may use the entire aggregate amount over the
next five years to prepare for competition in this era of
deregulation and uncertainty. Broad-based competition appears to
be inevitable and the future will be determined by the
marketplace. As the Company prepares for competition, it needs
to be in a position to act quickly to raise funds. In a
competitive marketplace, the Company must have both the
flexibility to adapt to changing conditions and the ability to
issue various forms of debt. While we are unsure of the
particular application of these funds since legislation has not
been enacted in our states, certainly such developments or
corporate restructuring, Regional Power Exchange (RPX) funding
and regional transmission pacts are possible uses for such funds.
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GENERAL PURPOSES: $200 million
The entire aggregate amount may also be used for general
corporate purposes, to pay off short-term debt, or to raise new
funds for construction expenditures.
Monongahela will incur expenses in the following areas in
connection with the issuance of the Debt Securities:
Independent accountants*
Legal fees*
Printing*
Trustee's fee*
Trustee's expenses*
Recordation fees and taxes*
SEC registration fee*
Bond rating fee*
Blue sky fees and expenses*
Miscellaneous*
*The figures cannot be ascertained prior to issuance and
will be provided by amendment when they are ascertained.
The Company proposes to file a registration statement with
respect to the Debt Securities covered by this Securities
Certificate under the Securities Act of 1933, as amended.
The Company has not filed an application or declaration on
Form U-1 filed with the Securities and Exchange Commission
pursuant to the Public Utility Holding Company Act of 1935 (the
"Act") concerning the proposed issue of Debt Securities because
the issuance is exempt from such requirement pursuant to Rule 52
of the Act (17 C.F.R. 250.52) upon authorization of the issuance
by the Public Utility Commission. Within 10 days after the
issuance, a copy of Certificate of Notification on Form U 6B-2
will be filed with the Securities and Exchange Commission
pursuant to Rule 52.
V
EXHIBITS
Monongahela has attached hereto a copy of its financial
statements as of March 31, 1997, as Exhibit A. Also attached
hereto is a summary of the parameters for the Debt Securities
which it proposes to issue, as Exhibit B.
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VI
CONCLUSION
Applicant desires to consummate some or all of the proposed
transactions outlined above over the next five years in order to
reduce its cost of long-term financing and thereby to maintain
its position as a low cost producer of electric energy in order
to meet the challenges presented over the next five years in a
competitive business environment.
WHEREFORE, the Applicant prays, consistent with the
Application and Exhibits filed herein, that an Order be issued by
the Commission without hearing as follows:
(1) authorizing Applicant to invite bids for the purchase
of up to $200 million of its Debt Securities for the purposes as
hereinabove described;
(2) authorizing Applicant, in the event a bid for the said
Debt Securities is acceptable to Applicant, to execute and
deliver to the successful bidder or bidders an acceptance in
writing thereof, without further authorization by your Honorable
Commission;
(3) authorizing Applicant, in the event a bid for said Debt
Securities is accepted, to issue and sell said Debt Securities on
or before December 31, 2002, pursuant to the purchase contract
therefor consisting of the bid and its exhibits, without further
authorization by your Honorable Commission;
(4) authorizing Applicant, subject to the parameters set
out above, to negotiate with private investors or with
underwriters and/or agents for the offering by such underwriters
of the Debt Securities, to enter into a purchase contract with
such investors or underwriters upon completion of such
negotiations and to sell said Debt Securities to and through such
investors or underwriters, without further authorization by your
Honorable Commission;
(5) authorizing Applicant to issue Debt Securities in the
principal amount of up to $200 million for the purpose of
refunding before maturity higher cost First Mortgage Bonds;
(6) authorizing Applicant to issue Debt Securities in the
principal amount of up to $99,710,000 on or before December 31,
2002 for the purpose of refinancing issues of its Pollution
Control and Solid Waste Disposal tax-exempt revenue Bonds;
(7) authorizing Applicant to issue Debt Securities in the
principal amount of up to $40 million for the purpose of
refunding before maturity higher cost Quarterly Income Debt
Securities;
(8) authorizing Applicant to issue Debt Securities in the
principal amount of up to $74 million for the purpose of
refunding higher cost Preferred Stock;
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(9) authorizing Applicant to issue Debt Securities in the
principal amount of up to $80 million for the purpose of paying
first mortgage bonds at maturity;
(10) authorizing Applicant to issue Debt Securities in the
principal amount of up to $200 million for the purpose of meeting
demands placed upon Applicant by competitive forces;
(11) authorizing that the total of the Debt Securities to
be sold on or before December 31, 2002 for all of the purposes
outlined above shall not exceed $200 million;
(12) authorizing all other and further relief necessary or
appropriate in the premises.
Respectfully submitted,
MONONGAHELA POWER COMPANY
By /s/ C. Vernon Estel, Jr.
Vice President
(SEAL)
ATTEST:
/s/ Thomas C. Sheppard, Jr.
Assistant Secretary
/s/ Gary A. Jack
Gary A. Jack
Attorney for Applicant
Monongahela Power Company
1310 Fairmont Avenue
P.O. Box 1392
Fairmont, West Virginia 26555-1392
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STATE OF WEST VIRGINIA,
COUNTY OF MARION,
C. Vernon Estel, Jr. and Thomas C. Sheppard, Jr., being
first duly sworn, depose and state that they are the Vice
President and Assistant Secretary, respectively, of Monongahela
Power Company, the Applicant in the foregoing Application, and
that the statements and allegations contained therein are true to
the best of their knowledge, information and belief.
/s/ C. Vernon Estel, Jr.
Vice President
/s/ Thomas C. Sheppard, Jr.
Assistant Secretary
Sworn to and subscribed before me this 22nd day of July, 1997.
/s/ Marcia F. Johnston
Notary Public
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<PAGE>
Exhibit D-3
BEFORE
THE PUBLIC UTILITIES COMMISSION OF OHIO
In the Matter of the Application of )
The Monongahela Power Company ) Case No. 97-803-EL-AIS
For Authority to Issue and Sell Debt )
Securities )
FINDING AND ORDER
The Commission finds:
(1) Applicant, Monongahela Power Company, is an Ohio
Corporation and a public utility as defined in Section
4905.02, Revised Code, and is subject to the
jurisdiction of this Commission.
(2) This Application, as amended (collectively, the
"Application"), is filed under the provisions of
Sections 4905.40 and 4905.41, Revised Code.
(3) Applicant proposes to issue and sell, from time to
time, in one or more series, through December 31, 2002, up
to $200 million aggregate principal amount of secured or
unsecured medium term notes, debentures, first mortgage
bonds, or other debt securities, or a combination thereof
(collectively, the "Debt Securities"), pursuant to the terms
and conditions as set forth in the Application and Exhibits.
(4) The proceeds from the Debt Securities will be used for
the redemption of a portion of Applicant's outstanding debt
securities and preferred stock, repayment of short-term
debt, to finance its construction program and for other
general corporate purposes, all pursuant to Section 4905.40,
Revised Code.
(5) The maximum amount of the Debt Securities, their
probably costs, price to Applicant, and other terms thereof,
do not appear to be unjust or unreasonable.
(6) The effect of the issuance of the Debt Securities on
Applicant's revenue requirements will be considered in the
determination of required revenues in rate proceedings in
which all factors affecting rates are taken into account
according to law.
<PAGE>
(7) Applicant is requesting authorization to issue the Debt
Securities through December 31, 2001. However, the
Commission is of the opinion that the authorization should
be limited to a time period ending August 31, 1998, for the
following reasons: (1) uncertainty of interest rates beyond
a 12-month period, and (2) difficulty in predicting
financial market conditions over a larger time period.
(8) (8) Based on the information contained in the
Application and Exhibits thereto, and other documentary
information to which the Commission has access, the purposes
to which the proceeds from the Debt Securities shall be
applied appear to be reasonably required by Applicant to
meet its present and prospective obligations to provide
utility service and the Commission is satisfied that consent
and authority should be should be granted.
It is, therefore,
ORDERED, That Applicant is authorized to issue or sell,
from time to time, in one or more series, through August 31,
1998, up to $200 million aggregate principal amount of
secured or unsecured medium term notes, debentures, first
mortgage bonds, or other debt securities, or a combination
thereof, pursuant to the terms and conditions as set forth
in the Application and Exhibits. It is further,
ORDERED, That the proceeds from the sale of the Debt
Securities shall be used for the purposes set forth in this
Order and otherwise pursuant to the provisions of Section
4905.40, Revised Code. It is, further,
ORDERED, That after any of the Debt Securities
authorized by this Order are issued and sold, the Applicant
shall report to this Commission the terms and full
particulars regarding each sale of the Debt Securities. In
lieu of above, Applicant may submit a copy of each
prospectus as filed with the Securities and Exchange
Commission setting forth such information. It is further,
ORDERED, That Applicant shall account for the Debt
Securities as prescribed by the Federal Energy Regulatory
Commission Uniform System of Accounts as currently in
effect. It is, further,
ORDERED, That nothing in this Order shall be construed
to imply any guaranty, obligation or endorsement of the Debt
Securities or the associated interest thereon, on the part
of the State of Ohio. It is, further,
ORDERED, That nothing in this Order shall be construed
to imply any guaranty or obligation by the Commission to
assure completion of any specific construction project of
the Applicant. It is, further,
<PAGE>
ORDERED, That nothing in this Order shall be deemed to
be binding upon this Commission in any future proceeding or
investigation involving the justness or reasonableness of
any rate, charge, rule or regulation. It is, further,
ORDERED, That a copy of this Order be served upon all
parties of record.
THE PUBLIC UTILITIES COMMISSION OF OHIO
/s/ Craig A. Glazer
Craig A. Glazer, Chairman
/s/ Jolynn Barry Butler /s/ Ronda Hartman Fergus
Jolynn Barry Butler Ronda Hartman Fergus
/s/ David W. Johnson /s/ Judith A. Jones
David W. Johnson Judith A. Jones
SEJ:dj
Entered in the Journal
Aug 27 1997
A True Copy
/s/ Gary L. Vigorito
Gary L. Vigorito
Secretary
<PAGE>
EXHIBIT H
SECURITIES AND EXCHANGE COMMISSION
(Release No. 35- : )
Monongahela Power Company )
Notice of Proposed Refinancing )
of Pollution Control Revenue )
Notes )
Monongahela Power Company (Monongahela), 1310 Fairmont
Avenue, Fairmont, WV 26555-1392, a public utility subsidiary of
Allegheny Energy, Inc., 10435 Downsville Pike, Hagerstown, MD
21740-1766, a registered holding company, has filed an
Application or Declaration pursuant to Sections 6(a)and 7 of the
Act.
The proposed transactions involve the issuance of notes
by Monongahela Power Company ("Monongahela" or the "Company") a
public utility subsidiary of Allegheny Energy, Inc., a registered
holding company, to support the contemporaneous issuance of
pollution control revenue bonds by three West Virginia County
Commissions. The County Commissions are located in Marion
County, Preston County and Pleasants County, West Virginia
(collectively, the "County Commissions"). The proceeds from the
three series of bonds will be used to pay off at maturity three
series of presently outstanding pollution control revenue bonds,
all of which are Series B Bonds and all of which mature on April
1, 1998. The Series B Bonds were issued by the Authority in
1988 in the following amounts with the following interest rates:
(i) $3,055,000 principal amount Marion County Pollution Control
Revenue Bonds (Monongahela Power Company Rivesville Generating
Station), 1988 Series B, 6-7/8%; (ii) $5,900,000 principal amount
Preston County Pollution Control Revenue Bonds (Monongahela Power
Company Albright Generating Station), 1988 Series B, 6-7/8% ; and
(iii) $10,145,000 principal amount Pleasants County Pollution
Control Revenue Bonds (Monongahela Power Company Willow Island
Generating Station), 1988 Series B, 6-7/8%(collectively, the
"Series B Bonds"). Due to the change in interest rates since the
time that the Series B Bonds were originally issued, and the cost
to the Company of financing that is not tax exempt, each County
Commission proposes to issue a new series of pollution control
revenue bonds (collectively, the "Series C Bonds") at a lower
interest rate. The County Commissions will use the proceeds from
the Series C Bonds to pay the Series B Bonds at maturity. The
Company requests authority from the Securities and Exchange
Commission ("Commission") to enter into new promissory notes
insofar as the terms and conditions of the bonds to be issued by
the County Commissions affect the payments to be made by the
Company under the promissory notes presently outstanding. As
information, the presently outstanding Series B notes will be
canceled and new notes will be entered into to reflect the new
terms.
A. Background
On November 26, 1975 and December 17, 1975, the
Commission authorized Monongahela to issue notes in connection
with the tax exempt financing by the County Commissions of
certain electrostatic precipitators and associated foundations,
duct work, fly ash handling system, interests in land and
assorted equipment (collectively the "Pollution Control
Equipment") at the Rivesville Generating Station (Unit No. 6) in
Marion County, West Virginia, Albright Generating Station (Units
2 and 3) in Preston County, West Virginia, and Willow Island
Generating Station (Units 1 and 2) in Pleasants County, West
Virginia. (HCAR Nos. 19268 and 19304.) The tax exempt financing
provided money for the installation of Pollution Control
Equipment at the Rivesville,
<PAGE>
Albright and Willow Island Generating
Stations. The Pollution Control Equipment has been completed.
The Series A Bonds were issued by the County
Commissions in December 1975, in an aggregate amount of
$21,000,000 at an interest rate of 8-1/2%. They had a maturity
date of December 1. 1995 and were subject to optional redemption
on and after December 1, 1985.
On November 9, 1987, the Commission authorized
Monongahela to issue new pollution control revenue notes (the
"Series B Notes") aggregating $19,100,000. (HCAR 24495). The
County Commissions issued their Series B Pollution Control
Revenue Bonds in April, 1988, the proceeds of which were used to
redeem the Series A Pollution Control Revenue Bonds. The Series
A Notes were canceled as part of this transaction.
B. Requested Authorization
The County Commissions propose to issue $19,100,000
aggregate principal amount in three new series of 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 pay at maturity the County Commissions'
Series B Bonds presently outstanding which correspond to notes
issued by Monongahela. The figure represents $1,900,000 less
than the aggregate amount of Series A Bonds originally issued due
to the operation of a mandatory sinking fund which required the
County Commissions to redeem bonds each December 1 beginning in
1986 at par plus accrued interest as follows: Marion ($150,000),
Preston ($300,000) and Pleasants ($500,000) per year. The Series
A Bonds were redeemed in April of 1988.
Monongahela requests authority through December 31,
2002 to enter into the proposed transactions and to issue new
promissory notes. The Series C Bonds will be issued under a
supplemental trust indenture with a corporate trustee, approved
by the Company, and sold at such time, at such interest rate and
for such price as shall be approved by the Company. However, the
interest rate for each series of Series C Bonds will not exceed
the interest rate of the corresponding series of Series B Bonds
presently outstanding. The timing of the financing will depend
upon a subjective determination by the Companies of market
conditions. The Series C Bonds will mature no later than the
year 2015.
Monongahela 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.
Title to the Pollution Control Equipment will remain
with each of the County Commissions in accordance with the terms
of the original Purchase Agreements (the "Purchase Agreement"),
which provide, among other things, for the payment by Monongahela
of all expenses and costs in connection with the operation and
maintenance of the Pollution Control Equipment, including
insurance and taxes, if any; and semi-annual installments of
purchase price equal to such amounts as are due from the
respective County Commissions under the provisions of certain
Trust Indentures, such amount being sufficient to pay the
interest on and principal of the Bonds due on each installment
date. Title to the Pollution Control Equipment will vest in
Monongahela after payment of the Bonds and payment by Monongahela
of all additional payments due or to become due.
There are also Trust Indentures dated as of December
15, 1975, between each County Commission and The Chase Manhattan
Trust Company, National Association, successor trustee to Mellon
Bank, N.A., as trustee, governing
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terms of the bonds issued pursuant to the Indenture. Payment
on the Notes will be made to the Trustee under supplemental
indentures to be entered into between the Companies and the
Trustee, described below, and shall be applied by the Trustee
to pay the maturing principal price of and interest and other
costs on the Series B Bonds as the same become due. The Company
also proposes to pay any trustees' fees or other expenses incurred
by the County Commissions.
It is expected that the County Commissions 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 Company
has been informed that the County Commissions have legal
authority to issue tax exempt revenue bonds in accordance with
the proposed documents and the Company understands 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 initially will be registered in the name of
Cede & Co., as nominee for The Depository Trust Company, New
York, New York. The Series C Bonds 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 parameters 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 Commissions must be applied to the
cost of the Pollution Control Equipment, including the cost of
paying off the Series B Bonds at maturity.
The Company desires to consummate the proposed
transactions and pay at maturity the Series B Bonds to provide
the lowest cost of permanent financing for non-revenue-producing
Pollution Control Equipment which the Company has been required
to install to meet environmental standards. The Company has 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 Commissions.
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.
The application and any amendments thereto are
available for public inspection through the Commission's Office of
Public Reference. Interested persons wishing to comment or request
a hearing should submit their views in writing by ,
1998, to the Secretary, Securities and Exchange Commission, Washington,
DC 20549, and serve a copy on the Applicant at the address specified
above. Proof of service (by affidavit or, in case of an attorney at
law, by certificate) should be filed with the request. Any request
for a hearing shall identify specifically the issues of fact or law
that are disputed. A person who so requests will be notified of any
hearing, if ordered, and will receive a copy of any notice or order
issued in this matter. After said date, the application, as filed or
as it may be amended, may be granted.
For the Commission, by the Division of Investment
Management, pursuant to delegated authority.
2
