<PAGE>
File No. 70-8615
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________
Amendment No. 3 to
FORM U-1
__________________________________
APPLICATION OR DECLARATION
under the
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
* * *
APPALACHIAN POWER COMPANY
40 Franklin Road, Roanoke, Virginia 24022
SOUTHERN APPALACHIAN POWER COMPANY
40 Franklin Road, Roanoke, Virginia 24022
(Name of companies filing this statement and
addresses of principal executive offices)
* * *
AMERICAN ELECTRIC POWER COMPANY, INC.
1 Riverside Plaza, Columbus, Ohio 43215
(Name of top registered holding company
parent of each applicant or declarant)
* * *
G. P. Maloney, Executive Vice President
AMERICAN ELECTRIC POWER SERVICE CORPORATION
1 Riverside Plaza, Columbus, Ohio 43215
John F. DiLorenzo, Jr., Associate General Counsel
AMERICAN ELECTRIC POWER SERVICE CORPORATION
1 Riverside Plaza, Columbus, Ohio 43215
(Names and addresses of agents for service)
<PAGE>
Appalachian Power Company ("APCo") and Southern Appalachian
Coal Company ("SACCo") hereby amend their Application/Declaration
on Form U-1 in File No. 70-8615 by supplying the following exhibits
to Item 6. Exhibits and Financial Statements:
Exhibit D-1 Petition to West Virginia Public Service
Commission
Exhibit D-3 Order of West Virginia Public Service
Commission
Exhibit D-4 Order of Virginia State Corporation Commission
SIGNATURE
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, the undersigned companies have duly caused
this Amendment No. 3 to Form U-1 to be signed on their behalf by
the undersigned thereunto duly authorized.
APPALACHIAN POWER COMPANY
SOUTHERN APPALACHIAN POWER COMPANY
By:___/s/ G. P. Maloney___________
G. P. Maloney, Vice President
Date: June 30, 1995
[95FN0061.APC]
/PAGE
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<PAGE>
EXHIBIT D-1
PUBLIC SERVICE COMMISSION
OF WEST VIRGINIA
CHARLESTON
CASE NO. 95-0337-8-PC
APPALACHIAN POWER COMPANY,
a corporation,
Petition for the Commission's consent
and approval of the sale and transfer
to Whites Creek Limited Liability
Company of certain real property,
facilities, equipment, and permits,
pursuant to the provisions of
W. Va. Code, Section 24-2-12.
PETITION
Comes now the above-named Appalachian Power Company
("Appalachian"), the petitioner herein, and respectfully makes
the following representations to the Commission:
1. The name of the petitioner is Appalachian Power
Company, and its address is 40 Franklin Road, Roanoke, Virginia
24011.
2. The name and address of the entity to which Appalachian
and its wholly-owned subsidiary, Southern Appalachian Coal
Company ("Southern"), propose to sell and/or transfer real
property, facilities, equipment, and permits are as follows:
Whites Creek Limited Liability
Company
1000 River East Drive
Belle, West Virginia 25015
Southern is a West Virginia corporation. Whites Creek Limited
Liability Company ("Whites Creek") is a West Virginia limited
liability company, created pursuant to W. Va. Code, Sections 31-
1A-1 et seq. Appalachian seeks exemption from the requirement of
providing copies of Southern's and Whites Creek's articles of
incorporation.
3. Appalachian and Southern propose to sell and/or
transfer to Whites Creek certain real property, including coal
lands and docking facilities, certain coal handling and
preparation facilities, certain fixed assets and improvements,
certain coal mining equipment, certain environmental (and other)
permits, and certain other property, rights, and interests.
4. The estimated sales price which Appalachian and
Southern propose to charge for the items specified in Paragraph 3
hereof is Six Million Fifty Thousand Dollars ($6,050,000.00),
subject to certain adjustments, of which One Million Two Hundred
Fifty Thousand Dollars ($1,250,000.00) will be paid at closing in
immediately available funds, and the remainder shall be secured
by an irrevocable letter of credit and bear interest at
approximately eight percent (8%) per annum and be paid in forty
(40) equal quarterly installments of principal and interest of
One Hundred Seventy-Five Thousand Dollars ($175,000.00) each,
over the period September 30, 1995 through June 30, 2005.
Alternatively, Whites Creek has the option to pay the entire
purchase price at closing.
5. The terms and conditions of the proposed transaction
are set forth in detail in the attached Agreement of Purchase and
Sale, dated as of March 22, 1995, among Southern Appalachian Coal
Company, Appalachian Power Company, and Whites Creek Limited
Liability Company, and in the attached First Addendum to
Agreement of Purchase and Sale, of like date, among the same
parties.
6. The financial condition of Appalachian is well known to
the Commission. The Commission is familiar with the assets and
obligations of Southern from Case No. 84-065-E-PC, in which the
Commission approved the sale of the "Julian" portion of the real
property, fixed assets, mineral rights, and associated permits and
agreements owned or controlled by Southern and Appalachian. Whites
Creek is not subject to the Commission's jurisdiction, and since
its obligations to Appalachian and Southern will either be
discharged at closing or secured by an irrevocable letter of
credit, its financial condition is of no relevance. For these
reasons, Appalachian requests that it, Southern, and Whites Creek
be exempted from the provisions of Rule 21 of the Commission's
Rules of Practice and Procedure.
7. The effect of the transaction described above will be to
enable Appalachian to realize the value of substantially all of the
remaining coal-mining assets which were not disposed of in the
transactions approved in Case No. 84-065-E-PC.
8. The Commission should give its consent and approval to
the transaction proposed herein for the following reasons:
The Commission has previously approved Appalachian's decision,
made over a decade ago, to get out of the affiliated coal mining
business. The Commission specifically approved in Case No. 84-065-
E-PC the disposition of the bulk of the coal mining assets owned by
Appalachian and its three wholly-owned mining subsidiaries. In the
petition in that case, Appalachian informed the Commission that
"[n]egotiations are under way with other parties in connection with
the disposition of the remaining assets associated with Southern's
mining operations." (February 7, 1984 Petition, p.3., fn.) At
this point Appalachian has been successful in negotiating a
transaction which accomplishes that purpose, which the Commission
should approve as the prudent and logical culmination of the
actions taken by Appalachian and its subsidiaries, with the
Commission's endorsement, to divest themselves of their coal mining
assets.
9. The terms and conditions of the transaction proposed
herein are fair and reasonable. The transaction does not confer
upon any party thereto an undue advantage over any other party
thereto, and does not adversely affect the public in West Virginia.
To the best of Appalachian's knowledge, the proposed transaction
will have no effect on other utilities in West Virginia.
WHEREFORE, Appalachian respectfully requests the Commission to
enter an order granting its consent and approval for Appalachian
and its affiliates to make the sale and/or transfer which is
proposed herein. Appalachian asks the Commission to take this
action as promptly as possible since the closing is scheduled to
take place no later than June 30, 1995.
Respectfully submitted,
APPALACHIAN POWER COMPANY
By Counsel
/s/ William C. Porth
William C. Porth
ROBINSON & McELWEE
Post Office Box 1791
Charleston, West Virginia 25326
Counsel for Appalachian Power Company
<PAGE>
VERIFICATION
STATE OF WEST VIRGINIA, )
COUNTY OF KANAWHA )
William C. Porth, counsel for Appalachian Power Company, the
Petitioner in the foregoing Petition of Appalachian Power Company,
being duly sworn, states upon his information and belief that the
facts and allegations therein are true.
/s/ William C. Porth
William C. Porth
Taken, subscribed and sworn to before me on the 26th day of
April, 1995.
My commission expires: August 18, 2003.
/s/ Annetta Sue Bonham
Notary Public
/PAGE
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EXHIBIT D-3
PUBLIC SERVICE COMMISSION
OF WEST VIRGINIA
CHARLESTON
At a session of the Public Service Commission of West Virginia,
in the City of Charleston, on the 30th day of June, 1995.
CASE NO. 95-0337-E-PC
APPALACHIAN POWER COMPANY
Petition for consent and approval
of the sale to Whites Creek Limited
Liability Company of certain real
property, facilities, equipment and permits.
COMMISSION ORDER
On April 26, 1995, Appalachian Power Company (Appalachian)
petitioned for consent and approval of the sale of certain real
property interests located in Kanawha and Boone counties, West
Virginia, to Whites Creek Limited Liability Company (Whites
Creek). In the same transaction, Appalachian's wholly-owned
subsidiary, Southern Appalachian Coal Company (Southern), would
sell to Whites Creek certain coal handling and preparation plant
facilities, together with certain fixed assets and improvements
and other coal mining equipment located on Appalachian's real
property interests. In addition, Southern would transfer to
Whites Creek its various reclamation, pollutant discharge,
pollution control and facilities permits applicable to coal
mining, preparation and transportation. Appalachian requested
expedited consideration due to the closeness of the June 30,
1995, closing date.
With its petition, Appalachian filed a copy of the Agreement
of Purchase and Sale dated March 22, 1995, among Southern,
Appalachian and Whites Creek (Sales Contract), without exhibits.
Appalachian also filed the first addendum, to which was attached
an unexecuted Guaranty Agreement by which Whites Creek's
performance was to be guaranteed for five years by August
Enterprises, Ltd. up to $500,000.
On June 16, 1995, Appalachian filed a supplemental petition
and the second and third addenda to the Sales Contract. As
amended, the transaction was restructured so that Battle Ridge
Companies, Inc. (Battle Ridge), an affiliate of Whites Creek,
would receive all of the properties, assets and equipment except
the permits and that Whites Creek would receive the permits. In
addition, the $6,050,000 purchase price would be paid in cash at
closing, and Battle Ridge would become the guarantor of Whites
Creek's performance, instead of August Enterprises, Inc.
On May 2, 1984, as amended by a August 9, 1984, order, the
Commission consented to the sale of the majority of Appalachian's
affiliated coal properties in Appalachian Power Co., Case No. 84-
065-E-PC. In support of the 1995 petition, Appalachian alleged
that the proposed sale would allow Appalachian to divest itself,
and realize the value, of substantially all the remaining coal-
mining assets which were not disposed of in the transactions
approved in 1984. Furthermore, the terms and conditions were fair
and reasonable, no party had an undue advantage over any other,
the sale did not adversely affect the public in West Virginia,
and, to the best of its knowledge, there was no effect on other
utilities, Appalachian stated. By letter dated June 28, 1995,
Appalachian's counsel advised the Commission that Appalachian had
"evaluated the financial condition of Battle Ridge, reviewed
pertinent financial information, and otherwise satisfied [itself]
that the financial strength of Battle Ridge is sufficient to
provide the protection bargained for under the [Sales Contract]
and the Guaranty Agreement executed by Battle Ridge."
In its June 2, 1995, Initial and Final Joint Staff
Memorandum, Commission Staff (Staff) recommended approval,
advising that the terms and conditions appeared fair and
reasonable, no party had an undue advantage over any other, and
the sale did not adversely affect the public. Staff restated that
Appalachian believed that there was no effect on other utilities.
In a June 23, 1995, Further Final Joint Staff Memorandum, Staff
recommended approval of the transaction as amended by the second
and third addenda.
In addition to consent and approval to enter into the Sales
Contract, as amended, Appalachian sought several waivers. First,
without citing any particular rule, Appalachian requested a
waiver of "the requirement of providing copies of Southern's and
Whites Creek's articles of incorporation." Rule 10.6 of the
Commission's Rules of Practice and Procedure requires a selling
utility to provide "the financial condition of the petitioner
[and a] brief statement of the history and corporate makeup and
financial condition, if available, [of the buyer]." Rule 21 of
the Commission's Rules of Practice and Procedure defines
"financial condition." Neither the rules cited above nor West
Virginia Code Section 24-2-12, which requires Appalachian to
obtain Commission approval before it sells property, requires
Appalachian to file the articles of incorporation of its wholly-
owned affiliate or the purchaser. Therefore, no waiver is
necessary.
Since Appalachian's petition was not specific as to the
rules or statutes for which it sought a waiver, we have addressed
the rules and statute which are most obviously applicable. If
Appalachian seeks a waiver which is not specified above, it must
do so by specific application naming the rule, statute or other
source of the requirement. In future filings in general, and
especially those in which expedited treatment is requested, the
Commission asks Appalachian to be more specific.
Next, Appalachian requested a waiver of providing the Rule
21 financial information for itself, Southern and the buyer,
alleging that Appalachian's financial condition was well known to
the Commission, that the Commission was aware of Southern's
financial condition from the 1984 case, and that the buyer's
financial condition was irrelevant because the buyer's financial
obligations would be discharged at closing.
Rule 10.6 expressly requires Appalachian to provide its
financial information. We note, though, that on May 1, 1995,
Appalachian filed with the Commission its 1994 annual report,
which summarizes Appalachian's financial condition. Since
Appalachian has so recently filed its annual report, it is
reasonable to grant the requested waiver in this case.
Rule 10.6 requires the financial condition of the
petitioner, and Southern is not a petitioner. Therefore, no
waiver is necessary as to Southern.
As to the purchaser, Rule 10.6 requires the financial
condition "if it is available." Appalachian did not state
whether the information is available, but argued that the buyer's
condition was irrelevant because the buyer's financial
obligations would be discharged at closing.
We do not agree that Battle Ridge's financial condition is
irrelevant. Pursuant to the Sales Contract, Battle Ridge is
contractually obligated to indemnify Appalachian in certain
circumstances. Moreover, pursuant to the Guaranty Agreement,
Battle Ridge guarantees the Whites Creek's performance for five
years, up to $500,000.
However, the June 28, 1995, letter, from Appalachian's
counsel advises that Appalachian has reviewed Battle Ridge's
financial condition and is satisfied that Battle Ridge can live
up to its contractual obligations. We also note that Battle Ridge
will pay the entire purchase price in cash at closing, and this
cash discharge of its $6 million obligation is some evidence of
its financial condition. Finally, this transaction involves non-
utility assets. Therefore, all risk of loss will be borne
entirely by Appalachian's shareholders. For all of these
reasons, even though we do not agree that Battle Ridge's
financial condition is irrelevant, we will grant the requested
waiver for Battle Ridge. Again, we wish to make it abundantly
clear that this transaction involves non-utility assets and West
Virginia ratepayers will not bear any part of any loss which
Appalachian may suffer pursuant to the transaction.
Turning to Appalachian's request for consent and approval to
enter into the Sales Contract, West Virginia Code Section 24-2-12
requires a public utility to receive permission from the
Commission prior to selling property, in pertinent part as
follows:
Unless the consent and approval of the public
service commission of West Virginia is first
obtained:
* * *
(c) no public utility . . . may . . . sell .
. . its . . . property or any part thereof .
. .
The commission may grant its consent in
advance ...... upon proper showing that the
terms and conditions thereof are reasonable
and that neither party thereto is given an
undue advantage over the other, and [the
terms and conditions] do not adversely affect
the public in this state.
* * *
[T]he commission . . shall, if the public
will be convenienced thereby, enter such
order as it may deem proper and as the
circumstances may require, attaching thereto
such conditions as it may deem proper,
consent to the entering into or doing of the
things herein provided, without approving the
terms and conditions thereof, and thereupon
it shall be lawful to do the things provided
for in such order.
We find persuasive Appalachian's and Staff's positions that
the terms and conditions thereof are reasonable, that neither
party thereto is given an undue advantage over the other, that
the transaction does not adversely affect the public in this
state, and that the transaction likely will have no effect on
other utilities. Moreover, the general interest in the State
economy may be enhanced by the transfer of these coal properties
to another developer, the transaction is consistent with the 1984
Commission policy to divest Appalachian of its coal mining
assets, Appalachian's financial well-being will be reinforced
with the inflow of cash and correspondingly reduced need to
obtain external financing, and no party opposes the transaction.
Accordingly, we find that the public will be convenienced by this
transaction and grant our consent and approval to enter into the
Sales Contract, as amended.
We find it necessary, however, to attach conditions to our
consent and approval. First, because the exhibits were not
attached to the Sales Contract, we have not had an opportunity to
review them. Therefore, our consent and approval is conditioned
upon the exhibits being consistent with the Sales Contract, as
amended, which we reviewed. Second, because the Guaranty
Agreement provided to us had not been executed, our consent and
approval is conditioned upon the executed Guaranty Agreement
being substantially similar to the draft provided to us.
Finally, pursuant to the discretion accorded us in West
Virginia Code Section 24-l-12, we deem it proper only to approve
the entering into of the Sales Agreement, as amended, and we do
not pass upon the specific terms and conditions thereof.
FINDINGS OF FACT
1. On May 2, 1984, as amended by an August 9, 1984, order,
the Commission consented to the sale of the majority of
Appalachian's affiliated coal properties in Appalachian Power
Co., Case No. 84-065-E-PC.
2. On April 26, 1995, Appalachian petitioned for consent
and approval of the sale to Whites Creek of certain real property
interests in Kanawha and Boone counties, West Virginia.
3. In the same transaction, Appalachian's wholly-owned
subsidiary, Southern, would sell to Whites Creek certain coal
handling and preparation plant facilities, together with certain
fixed assets and improvements and other coal mining equipment
located on Appalachian's real property interests. In addition,
Southern would transfer to Whites Creek its various reclamation,
pollutant discharge, pollution control and facilities permits
applicable to coal mining, preparation and transportation to
whites Creek.
4. In the same transaction, August Enterprises, Ltd. would
guarantee Whites Creek's performance for five years, up to
$500,000.
5. The proposed 1995 sale will allow Appalachian to divest
itself, and realize the value, of substantially all the remaining
coal-mining assets which were not disposed of in the transactions
approved in 1984.
6. The closing is to occur no later than June 30, 1995.
7. Appalachian requested expedited consideration due to
the closeness of the closing date.
8. Southern is not a petitioner is this case.
9. On June 16, 1995, Appalachian filed a supplemental
petition, reflecting a restructured transaction in which Battle
Ridge, an affiliate of Whites Creek, would receive all of the
properties, assets and equipment except the permits and that
Whites Creek would receive the permits. Also, the $6,050,000
purchase price would be paid in cash at closing and Battle Ridge,
instead of August Enterprises, Inc., would become the guarantor
of Whites Creek's performance.
10. On June 2, 1995, Staff filed its Initial and Final
Joint Staff Memorandum, recommending approval because the terms
and conditions appeared fair and reasonable, no party had an
undue advantage over any other, and the sale did not adversely
affect the public. Staff restated that Appalachian believed that
there was no effect on other utilities.
11. In a Further Final Joint Staff Memorandum dated June
23, 1995, Staff recommended approval of the amended transaction.
12. The transaction involves only non-utility assets.
13. Appalachian requested a waiver of "the requirement of
providing copies of Southern's and whites Creek's articles of
incorporation."
14. Rule 10.6 of the Commission's Rules of Practice and
Procedure requires a selling utility to provide "the financial
condition of the petitioner [and a] brief statement of the
history and corporate makeup and financial condition, if
available, [of the buyer]."
15. Appalachian requested a waiver of providing Rule 21
financial information of itself, Southern and the purchaser,
alleging that the Commission was well aware of Appalachian's
financial condition, that the Commission was aware of Southern's
financial condition from the 1984 case, and that the financial
condition of the buyer was irrelevant because the buyer's
financial obligations would be discharged at closing.
16. Rule 21 of the Commission's Rules of Practice and
Procedure defines "financial condition."
17. On May 1, 1995, Appalachian filed with the Commission
its 1994 annual report, which summarizes Appalachian's financial
condition.
18. Appalachian has filed with the Commission the Sales
Contract, without exhibits, and its first, second and third
addenda. A draft Guaranty Agreement was attached to the first
addendum.
CONCLUSIONS OF LAW
1. Due to the June 30, 1995, closing date, Appalachian's
request for expedited treatment is reasonable.
2. Neither Rule 10.6 nor Rule 21 of the Commission's Rules
of Practice and Procedure requires Appalachian to file the
articles of incorporation of its wholly-owned affiliate or the
purchaser.
3. West Virginia Code Section 24-2-12 does not require
Appalachian to file the articles of incorporation of its wholly-
owned affiliate or the purchaser.
4. Since the articles of incorporation are not required to
be filed by rule or statute, it is not necessary to grant a
waiver.
5. Rule 10-6 requires the petitioner to provide its
financial condition, as well as the financial condition of the
buyer if it is available.
6. Since Appalachian, the petitioner, filed its 1994
annual report on May 1, 1995, the Commission is familiar with
Appalachian's financial condition. Therefore, it is reasonable
to grant the requested waiver as it pertains to Appalachian.
7. The rule does not require the financial condition of
Southern because Southern is not a petitioner.
8. The financial condition of the buyer is relevant to
this transaction, notwithstanding that the buyer will pay the
sales price in cash at closing, because the buyer has
contractually agreed to indemnify Appalachian under certain
conditions and to guarantee Whites Creek's performance up to
$500,000.
9. Battle Ridge's agreement to pay the entire $6 million
purchase price in cash at closing is some evidence of its
financial condition.
10. Appalachian's counsel's representation that Appalachian
has reviewed Battle Ridge's financial condition and is satisfied
that Battle Ridge can live up to its contractual obligations is
some evidence of the buyer's financial condition.
11. Since this transaction concerns only non-utility assets
and all risk of loss will be borne entirely by Appalachian's
shareholders, evidence of the buyer's financial condition is not
as critical as it might be in other circumstances.
12. For the reasons set forth in paragraphs 9, 10 and 11
above, it is reasonable to grant Appalachian's request for a
waiver as it pertains to the buyer.
13. The terms and conditions of the transaction are fair
and reasonable.
14. No party to the transaction has an undue advantage over
any other.
15. The sale does not adversely affect the West Virginia
public.
16. The sale likely will have no effect on other utilities.
17. The general interest in the State economy may be
enhanced by the transfer of these coal properties to another
developer.
18. The transaction is consistent with the 1984 Commission
policy to divest Appalachian of its coal mining assets.
19. Appalachian's financial well-being will be reinforced
with the inflow of cash and correspondingly reduced need to
obtain external financing.
20. Since the transaction involves only non-utility assets,
all risk of loss will be borne entirely by Appalachian's
shareholders.
21. The public will benefit from Appalachian's disposition
of these coal-mining interests.
22. For the reasons set forth in paragraphs 13 through 21
above, we find that a proper showing has been made under West
Virginia Code Section 24-2-12 and consent and approve Appalachian
entering into the Sales Contract, as amended.
23. Since we have not reviewed the Sales Contract's
exhibits, it is reasonable, pursuant to the discretion accorded
us in West Virginia Code Section 24-2-12, to condition our
consent and approval upon the exhibits beings consistent with the
Sales Contract, as amended, which we reviewed.
24. Since we have not reviewed an executed guaranty
agreement, it is reasonable, pursuant to the discretion accorded
us in West Virginia Code Section 24-2-12, to condition our
consent and approval upon the guaranty agreement being
substantially similar to the draft provided for our review.
25. Furthermore, pursuant to the discretion accorded us in
West Virginia Code Section 24-2-12, we approve only Appalachian's
entering into the Sales Agreement, as amended, and we do not pass
upon the specific terms and conditions thereof.
ORDER
IN CONSIDERATION THEREOF, IT IS, THEREFORE, ORDERED that
Appalachian's request for expedited consideration be and is
hereby granted.
IT IS FURTHER ORDERED that Appalachian's request to waive
the requirement to provide articles of incorporation for Southern
and the buyer be and is hereby dismissed.
IT IS FURTHER ORDERED that Appalachian's request to waive
the Rule 21 financial information requirement as to itself be and
is hereby granted.
IT IS FURTHER ORDERED that Appalachian's request to waive
the Rule 21 financial information requirement as to Southern is
dismissed.
IT IS FURTHER ORDERED that, based upon the specific facts
and circumstances of this case, Appalachian's request to waive
the Rule 21 financial information requirement as to the buyer be
and is hereby granted.
IT IS FURTHER ORDERED that Appalachian's petition for
consent and approval to enter into the Sales Contract, as amended
be and is hereby granted, conditioned upon the Sales Contract
exhibits being consistent with Sales Contract, as amended, that
we reviewed and upon the executed Guaranty Agreement being
substantially similar to the draft we reviewed. Our approval goes
only to the entering into of the Sales Contract, as amended, and
we do not pass upon its specific terms and conditions.
IT IS FURTHER ORDERED that the Commission's Executive
Secretary shall serve a copy of this order upon all parties of
record by United States First Class Mail, and upon Commission
Staff by hand delivery.
A True Copy, Teste:
ARC.
/s/ Howard M. Cunningham
Howard M. Cunningham
Executive Secretary
/PAGE
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EXHIBIT D-4
COMMONWEALTH OF VIRGINIA
STATE CORPORATION COMMISSION
AT RICHMOND, JUNE 30, 1995
APPLICATION OF
CASE NO. PUA950017
APPALACHIAN POWER COMPANY
For approval of its agreement
to indemnify the buyer regarding
the sale of mining assets
ORDER GRANTING APPROVAL
On April 14, 1995, Appalachian Power Company ("APCO,"
"Company," "Applicant") filed an application with the Commission
under the Public Utilities Affiliates Act for approval of an
agreement with Southern Appalachian Coal Company ("SACCO,"
"Affiliate"). Company states in its application that SACCO, a
corporation organized and doing business under the laws of the
State of West Virginia, is a wholly owned subsidiary of APCO.
APCO owns all of the outstanding shares of common stock of SACCO,
and no other class of stock is outstanding. SACCO is engaged in
the development and mining of certain coal lands and reserves
located in the State of West Virginia.
As stated in the application, APCO and Affiliate have
entered into an Agreement of Purchase and Sale (the "Agreement")
dated March 22, 1995, with Whites Creek Limited Liability
Company, a West Virginia limited liability company (the "Buyer"),
with respect to most of its remaining West Virginia mining
assets. Company has entered into three addendums to the
Agreement dated March 22, 1995, June 2, 1995, and June 12, 1995,
collectively referred to as the "Addendums." By Order dated May
29, 1984, in Case No. PUA840010, APCO was granted authority to
enter into various affiliate transactions in connection with the
sale of a large part of the coal mining properties owned or
controlled by it.
Under the Agreement, APCO and Affiliate have agreed to
indemnify, defend, and save harmless the Buyer against certain
liabilities and contingencies that may be asserted by employees
or former employees of Affiliate against Buyer or by federal,
state, or local agencies as a result of non-compliance with laws
relating to mining operations. The indemnities include claims
under the West Virginia Workers Compensation Act, the federal
Black Lung Benefits Act, and the National Bituminous Coal Wage
Agreement of 1993. Company requests approval of its agreement to
indemnify the Buyer against certain liabilities and contingencies
that may be asserted by employees or former employees of
Affiliate.
THE COMMISSION, upon consideration of the application and
representations of Applicant and having been advised by its
Staff, is of the opinion and finds that the above-described
Agreement and Addendums would be in the public interest and
should be approved. Accordingly,
IT IS ORDERED:
1) That, pursuant to Section 56-77 of the Code of Virginia,
Appalachian Power Company is hereby granted approval of the
Agreement of Purchase and Sale with Southern Appalachian Coal
Company and Whites Creek Limited Liability Company and the
Addendums referred to herein;
2) That the approval granted herein shall have no
ratemaking implications;
3) That the approval granted herein shall not preclude the
Commission from exercising the provisions of Sections 56-78 and 56-80
of the Code of Virginia hereafter;
4) That the Commission reserves the authority to examine
the books and records of any affiliate in connection with the
authority granted herein whether or not such affiliate is
regulated by this Commission, pursuant to Section 56-79 of the Code of
Virginia; and
5) That there appearing nothing further to be done in this
matter, the same be, and it hereby is, dismissed.
AN ATTESTED COPY hereof shall be sent to the Applicant, care
of Ann B. Graf, Senior Attorney, American Electric Power Service
Corporation, 1 Riverside Plaza, Columbus, Ohio 43215-2373; and
delivered to the Director of Public Utility Accounting of the
Commission.
A True Copy /s/ William J. Bridge
Teste
Clerk of the
State Corporation Commission
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I:\FINANCE\APCO\95FN0061.APC
