Form U-3A-2
File No. 69-221
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM U-3A-2
Statement by Holding Company Claiming Exemption
Under Rule U-3A-2 from the Provisions of the Public
Utility Holding Company Act of 1935
PENNSYLVANIA ENTERPRISES, INC.
(Name of Company)
hereby files with the Securities and Exchange Commission, pursuant to Rule 2,
its statement claiming exemption as a holding company from the provisions of
the Public Utility Holding Company Act of 1935, and submits the following
information:
1. Name and Business of Claimant and Subsidiaries
The name of the Claimant is Pennsylvania Enterprises, Inc., a corporation
organized under the laws of the Commonwealth of Pennsylvania having its
principal office at One PEI Center, Wilkes-Barre, Pennsylvania 18711. The
Claimant is a holding company with two groups of operating subsidiaries,
regulated and nonregulated, as follows:
Regulated Subsidiaries
PG Energy Inc. ("PGE"), a Pennsylvania corporation formerly known as
Pennsylvania Gas and Water Company and having its principal office at One PEI
Center, Wilkes-Barre, Pennsylvania 18711, is a wholly-owned subsidiary of the
Claimant. PGE is an operating public utility engaged in distributing natural
gas to an area lying within the Counties of Lackawanna, Luzerne, Wyoming,
Susquehanna, Columbia, Montour, Northumberland, Lycoming, Union and Snyder, in
northeastern Pennsylvania. This territory includes 116 municipalities in
addition to the cities of Scranton, Wilkes-Barre and Williamsport. On
February 14, 1997, PGE purchased all of the outstanding capital stock of
Honesdale Gas Company ("Honesdale"), an operating public utility engaged in
distributing natural gas to an area lying within Wayne and Pike Counties,
Pennsylvania, adjacent to PGE's service territory. Both PGE and Honesdale are
subject to the jurisdiction of the Pennsylvania Public Utility Commission. As
of December 31, 1996, PGE provided service to 144,200 natural gas customers
and Honesdale provided service to 3,200 natural gas customers.
PGE also provided water service in portions of northeastern Pennsylvania
lying within the Counties of Lackawanna, Luzerne, Susquehanna and Wayne, which
included the cities of Scranton and Wilkes-Barre and 63 other municipalities
through February 16, 1996, the date on which PGE sold its regulated water
operations and certain related assets to Pennsylvania-American Water Company,
a Pennsylvania corporation and a wholly-owned subsidiary of American Water
Works Company, Inc.
PGE has one additional subsidiary, Penn Gas Development Co., which is more
fully described below. The aggregate total assets of this subsidiary at
December 31, 1996, were less than 0.5% of PGE's total assets.
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NonRegulated Subsidiaries
Penn Gas Development Co. ("PGD"), a Pennsylvania corporation having its
principal office at One PEI Center, Wilkes-Barre, Pennsylvania 18711, is a
wholly-owned subsidiary of PGE. PGD was organized in 1969 and its primary
activity was the encouragement of the sale of natural gas by providing
secondary financing to developers and owners of properties using natural gas.
At present, PGD is not providing any such financing and is inactive.
Pennsylvania Energy Resources, Inc. ("PERI"), a Pennsylvania corporation
having its principal office at One PEI Center, Wilkes-Barre, Pennsylvania
18711, is a wholly-owned subsidiary of the Claimant. On June 1, 1996,
Pennsylvania Energy Marketing Company ("PEM"), a Pennsylvania corporation and
wholly-owned subsidiary of the Claimant, was merged into PERI. PERI provides
various energy supply and energy management services including the marketing
and sale of natural gas to commercial and industrial users, the sale of
propane, and the maintenance and servicing of residential and small commercial
gas-fired equipment.
Keystone Pipeline Services, Inc. ("Keystone"), a Delaware corporation
having its principal office at 37 Sea Pave Drive, South Windsor, Connecticut,
06074, is a wholly-owned subsidiary of PERI that was acquired by PERI on
December 7, 1995. Keystone performs various specialized pipeline distribution
services for utilities, including keyhole vacuum excavation, camera inspection
and bridge pipeline rehabilitation, as well as installing mains and services
for the natural gas, water and sewer industry.
Theta Land Corporation ("Theta"), a Pennsylvania corporation having its
principal office at One PEI Center, Wilkes-Barre, Pennsylvania 18711, is a
wholly-owned subsidiary of the Claimant. Theta currently owns a small amount
of real estate and is presently initiating several residential and commercial
real estate development projects in northeastern Pennsylvania. Additionally,
Theta is developing plans to conduct timber, sand and gravel operations in
northeastern Pennsylvania at various locations.
2. Properties of Claimant and Subsidiaries
The Claimant does not own any properties, and its assets consist primarily
of investments in the common stock of its subsidiaries, as described above.
The natural gas properties of PGE consist primarily of 2,265 miles of
distribution lines, nine city gate and 75 major regulating stations, and
miscellaneous related and additional property, all of which are located in
Pennsylvania. PGE also owned the gas, oil and storage rights for certain
property located near the town of DuBois, in western Pennsylvania, which it
abandoned in 1996, and in connection therewith, certain related physical
property the majority of which it sold in December, 1996. Additionally, PGE
owns approximately 46,000 acres of land. PGE has no natural gas producing
fields, no pipelines receiving gas at the borders of Pennsylvania and no
properties located outside of Pennsylvania. The water properties which PGE
sold to Pennsylvania-American Water Company on February 16, 1996, consisted of
36 active and standby reservoirs, five wells and two pump intakes;
approximately 8,000 acres of watershed land; and a treatment and distribution
system, including approximately 1,730 miles of aqueducts and pipelines, ten
water treatment plants, storage tanks, pumping stations, chlorinating
stations, hydrants, meters, shops and miscellaneous facilities, all located in
northeastern Pennsylvania.
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3. Natural Gas Distributed in 1996
During the calendar year 1996, of the Claimant and its various
subsidiaries, PGE was the only operating public utility company distributing
natural gas, all of which it distributed at retail. The following data for
the calendar year 1996 relates to PGE alone:
(a) Natural or manufactured gas distributed at retail - 47,607,374
thousand cubic feet (MCF).
(b) Natural or manufactured gas distributed at retail outside
Pennsylvania - None.
(c) Natural or manufactured gas sold at wholesale outside Pennsylvania or
at the State line - None.
(d) Natural or manufactured gas purchased outside Pennsylvania or at the
State line - 30,026,148 MCF.
4. Interest in Exempt Wholesale Generators or Foreign Utility
Companies
None
EXHIBIT A
A consolidating statement of income and surplus of the Claimant and its
subsidiary companies for the calendar year 1996, together with a consolidating
balance sheet of the Claimant and its subsidiary companies as of the close of
such calendar year, is filed as Exhibit A hereto.
EXHIBIT B
A Financial Data Schedule for the Claimant for the calendar year 1996 is
filed as Exhibit B hereto.
EXHIBIT C
Not applicable
The above-named Claimant has caused this statement to be duly executed on
its behalf by its authorized officer on this 25th day of February, 1997.
PENNSYLVANIA ENTERPRISES, INC.
(Name of Claimant)
By
John F. Kell, Jr.
Vice President, Financial Services
Corporate Seal
Attest:
Thomas J. Ward
Secretary
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Name, title, and address of officer to whom notices and correspondence
concerning this statement should be addressed:
Thomas J. Ward
Secretary
Pennsylvania Enterprises, Inc.
One PEI Center
Wilkes-Barre, PA 18711
Copy to:
Garett J. Albert, Esquire
Hughes Hubbard & Reed
One Battery Park Plaza
New York, New York 10004
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<CAPTION>
PENNSYLVANIA ENTERPRISES, INC. AND SUBSIDIARIES
Consolidating Statement of Income and Retained Earnings as of December 31, 1996
(Thousands of Dollars)
CONSOLIDATING
PGE THETA PERI (1) PEI COMBINED ENTRIES CONSOLIDATED
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES:
Gas sales and services $160,594 $ - $ 13,028 $ - $173,622 $ - $ 173,622
Pipeline construction and services - - 10,733 - 10,733 - 10,733
Other - - 127 - 127 (2) 125
Total operating revenues 160,594 - 23,888 - 184,482 (2) 184,480
OPERATING EXPENSES:
Cost of gas 88,291 - 10,184 - 98,475 - 98,475
Other operation expenses 25,070 - 11,668 681 37,419 (2) 37,417
Maintenance 5,513 - - - 5,513 - 5,513
Depreciation 7,612 - 221 - 7,833 - 7,833
Income taxes 6,364 - 643 (1,207) 5,800 - 5,800
Taxes other than income taxes 11,028 - 31 123 11,182 - 11,182
Total operating expenses 143,878 - 22,747 (403) 166,222 (2) 166,220
OPERATING INCOME 16,716 - 1,141 403 18,260 - 18,260
OTHER INCOME (DEDUCTIONS), NET 143 (22) (57) 11,093 11,157 (9,431) 1,726
INCOME (LOSS) BEFORE INTEREST CHARGES 16,859 (22) 1,084 11,496 29,417 (9,431) 19,986
INTEREST CHARGES:
Interest on long-term debt 6,862 - 58 3,457 10,377 (768) 9,609
Other interest 658 - 85 338 1,081 (321) 760
Allowance for borrowed funds used
during construction (177) - - - (177) - (177)
Total interest charges 7,343 - 143 3,795 11,281 (1,089) 10,192
INCOME (LOSS) FROM CONTINUING OPERATIONS 9,516 (22) 941 7,701 18,136 (8,342) 9,794
LOSS WITH RESPECT TO DISCONTINUED
OPERATIONS (363) - - - (363) - (363)
INCOME (LOSS) BEFORE SUBSIDIARY'S
PREFERRED STOCK DIVIDENDS 9,153 (22) 941 7,701 17,773 (8,342) 9,431
SUBSIDIARY'S PREFERRED STOCK DIVIDENDS 1,730 - - - 1,730 - 1,730
INCOME (LOSS) BEFORE EXTRAORDINARY LOSS 7,423 (22) 941 7,701 16,043 (8,342) 7,701
EXTRAORDINARY LOSS (NET OF TAX BENEFIT
OF $575) - - - (1,117) (1,117) - (1,117)
NET INCOME (LOSS) 7,423 (22) 941 6,584 14,926 (8,342) 6,584
RETAINED EARNINGS (DEFICIT):
Beginning of year 57,868 (191) 340 55,147 113,164 (58,017) 55,147
Additional funding by PEI - 201 - - 201 (201) -
Merger of PEM into PERI - - 321 - 321 (321) -
Premiums on redemption of PGE's
preferred stock (1,337) - - (1,337) (2,674) 1,337 (1,337)
Cash dividends on common stock (33,768) - - (11,174) (44,942) 33,768 (11,174)
End of year $ 30,186 $ (12) $ 1,602 $ 49,220 $ 80,996 $ (31,776) $ 49,220
NOTES:
Individual companies are identified in column headings and elsewhere as follows:
PGE - PG Energy Inc.
THETA - Theta Land Corporation
PEM - Pennsylvania Energy Marketing Company
PERI - Pennsylvania Energy Resources, Inc.
PEI - Pennsylvania Enterprises, Inc.
See Page 8 for summary of consolidated entries.
(1) Includes the consolidated accounts of Keystone Pipeline Services, Inc., a wholly-owned subsidiary of PERI.
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<CAPTION>
PENNSYLVANIA ENTERPRISES, INC. AND SUBSIDIARIES
Consolidating Balance Sheet as of December 31, 1996
(Thousands of Dollars)
CONSOLIDATING
ASSETS PGE THETA PERI (1) PEI COMBINED ENTRIES CONSOLIDATED
<S> <C> <C> <C> <C> <C> <C> <C>
UTILITY PLANT:
At original cost $319,205 $ - $ - $ - $319,205 $ - $ 319,205
Accumulated depreciation (79,783) - - - (79,783) - (79,783)
239,422 - - - 239,422 - 239,422
OTHER PROPERTY AND INVESTMENTS:
Nonutility property and equipment 5,074 273 7,227 - 12,574 (72) 12,502
Accumulated depreciation (447) (4) (4,223) - (4,674) - (4,674)
Other 267 596 295 137,917 139,075 (137,355) 1,720
4,894 865 3,299 137,917 146,975 (137,427) 9,548
CURRENT ASSETS:
Cash and cash equivalents 690 16 414 6 1,126 - 1,126
Accounts receivable -
Customers 17,183 - 5,281 - 22,464 - 22,464
Affiliates 58 - (40) - 18 (18) -
Others 565 - - - 565 - 565
Reserve for uncollectible accounts (1,140) - (93) - (1,233) - (1,233)
Unbilled revenues 11,830 - 1,136 - 12,966 - 12,966
Materials and supplies, at average cost 2,460 - 405 - 2,865 - 2,865
Gas held by suppliers, at average cost 20,265 - - - 20,265 - 20,265
Natural gas transition costs collectible 2,525 - - - 2,525 -
2,525
Deferred cost of gas and supplier refunds,
net 19,316 - - - 19,316 - 19,316
Prepaid expenses and other 1,313 - 125 - 1,438 - 1,438
75,065 16 7,228 6 82,315 (18) 82,297
DEFERRED CHARGES:
Regulatory assets -
Deferred taxes collectible 29,771 - - - 29,771 - 29,771
Other 4,274 - - - 4,274 - 4,274
Unamortized debt expense 1,153 - - 345 1,498 - 1,498
35,198 - - 345 35,543 - 35,543
TOTAL ASSETS $354,579 $ 881 $ 10,527 $138,268 $504,255 $ (137,445) $ 366,810
NOTE:
See page 9 for summary of consolidating entries.
(1) Includes the consolidated accounts of Keystone Pipeline Services, Inc., a wholly-owned subsidiary of PERI.
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<CAPTION>
PENNSYLVANIA ENTERPRISES, INC. AND SUBSIDIARIES
Consolidating Balance Sheet as of December 31, 1996
(Thousands of Dollars)
CONSOLIDATING
CAPITALIZATION AND LIABILITIES PGE THETA PERI (1) PEI COMBINED ENTRIES CONSOLIDATED
<S> <C> <C> <C> <C> <C> <C> <C>
CAPITALIZATION:
Common shareholders' investment $ 96,005 $ 330 $ 2,603 $118,132 $217,070 $ (99,419) $ 117,651
Preferred stock of PGE -
Not subject to mandatory redemption,
net 18,851 - - - 18,851 - 18,851
Subject to mandatory redemption 739 - - - 739 - 739
Long-term debt 55,000 - - 20,000 75,000 - 75,000
170,595 330 2,603 138,132 311,660 (99,419) 212,241
CURRENT LIABILITIES:
Current portion of long-term debt -
Parent 31,400 - - - 31,400 (31,400) -
Other 38,721 - - - 38,721 - 38,721
Preferred stock subject to repurchase
or mandatory redemption 115 - - - 115 - 115
Notes payable 10,000 - - - 10,000 - 10,000
Accounts payable -
Suppliers 17,831 26 2,088 - 19,945 - 19,945
Affiliates, net 348 490 4,948 - 5,786 (5,786) -
Accrued general business and realty
taxes 2,239 11 117 (17) 2,350 - 2,350
Accrued income taxes 14,559 (1) (29) (4) 14,525 - 14,525
Accrued interest 1,936 - - 75 2,011 (768) 1,243
Accrued natural gas transition costs 2,095 - - - 2,095 - 2,095
Other 3,375 19 510 - 3,904 - 3,904
122,619 545 7,634 54 130,852 (37,954) 92,898
DEFERRED CREDITS:
Deferred income taxes 49,119 6 151 (6) 49,270 - 49,270
Unamortized investment tax credits 4,767 - - - 4,767 - 4,767
Operating reserves 3,086 - - - 3,086 - 3,086
Other 4,393 - 139 88 4,620 (72) 4,548
61,365 6 290 82 61,743 (72) 61,671
TOTAL CAPITALIZATION AND LIABILITIES $354,579 $ 881 $ 10,527 $138,268 $504,255 $ (137,445) $ 366,810
NOTE:
See page 10 for summary of consolidating entries.
(1) Includes the consolidated accounts of Keystone Pipeline Services, Inc., a wholly-owned subsidiary of PERI.
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<CAPTION>
PENNSYLVANIA ENTERPRISES, INC. AND SUBSIDIARIES
Summary of Consolidating Statement of Income and Retained
Earnings Entries as of December 31, 1996
ENTRY TO ENTRY TO ENTRY TO
ELIMINATE ELIMINATE ELIMINATE
INTERCOMPANY INTERCOMPANY SUBSIDIARY
INTEREST SALES EARNINGS TOTAL
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Gas sales and service $ - $ - $ - $ -
Pipeline construction and services - - - -
Other - (2) - (2)
Total Operating revenues - (2) - (2)
OPERATING EXPENSES:
Cost of gas - - - -
Other operation expenses - (2) - (2)
Maintenance - - - -
Depreciation - - - -
Income taxes - - - -
Taxes other than income - - - -
Total operating expenses - (2) - (2)
OPERATING INCOME - - - -
OTHER INCOME (DEDUCTIONS), NET (1,089) - (8,342) (9,431)
INCOME (LOSS) BEFORE INTEREST CHARGES (1,089) - (8,342) (9,431)
INTEREST CHARGES:
Interest on long-term debt (768) - - (768)
Other interest (321) - - (321)
Allowance for borrowed funds used
during construction - - - -
Total interest charges (1,089) - - (1,089)
INCOME (LOSS) FROM CONTINUING
OPERATIONS - - (8,342) (8,342)
LOSS WITH RESPECT TO DISCONTINUED
OPERATIONS - - - -
INCOME (LOSS) BEFORE SUBSIDIARY'S
PREFERRED STOCK DIVIDENDS - - (8,342) (8,342)
SUBSIDIARY'S PREFERRED STOCK DIVIDENDS - - - -
INCOME (LOSS) BEFORE EXTRAORDINARY
LOSS - - (8,342) (8,342)
EXTRAORDINARY LOSS (NET OF TAX
BENEFIT OF $575) - - - -
NET INCOME (LOSS) - - (8,342) (8,342)
RETAINED EARNINGS (DEFICIT):
Beginning of year - - (58,017) (58,017)
Additional funding by PEI - - (201) (201)
Merger of PEM into PERI - - (321) (321)
Premiums on redemption of PGE's
preferred stock - - 1,337 1,337
Cash dividends on common stock - - 33,768 33,768
End of year $ - $ - $ (31,776) $(31,776)
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<CAPTION>
PENNSYLVANIA ENTERPRISES, INC. AND SUBSIDIARIES
Summary of Consolidating Balance Sheet Entries as of December 31, 1996
(Thousands of Dollars)
ENTRY TO ENTRY TO
ENTRY TO ELIMINATE ELIMINATE
ENTRY TO ELIMINATE GAIN ON INTERCOMPANY
ELIMINATE INTERCOMPANY INTERCOMPANY LONG-TERM DEBT
INVESTMENT IN ACCOUNTS PAYABLE SALE OF AND ACCRUED
ASSETS SUBSIDIARIES AND RECEIVABLE ASSETS INTEREST TOTAL
<S> <C> <C> <C> <C> <C>
UTILITY PLANT:
At original cost $ - $ - $ - $ - $ -
Accumulated depreciation - - - - -
- - - - -
OTHER PROPERTY AND INVESTMENTS:
Nonutility property and equipment - - (72) - (72)
Accumulated depreciation - - - - -
Other (99,419) (5,768) - (32,168) (137,355)
(99,419) (5,768) (72) (32,168) (137,427)
CURRENT ASSETS:
Cash and cash equivalents - - - - -
Accounts receivable -
Customers - - - - -
Affiliates - (18) - - (18)
Others - - - - -
Reserve for uncollectible accounts - - - - -
Unbilled revenues - - - - -
Materials and supplies, at average cost - - - - -
Gas held by suppliers, at average cost - - - - -
Propane inventory, at average cost - - - - -
Natural gas transition costs collectible - - - - -
Deferred cost of gas and supplier refunds, net - - - - -
Prepaid expenses and other - - - - -
- (18) - - (18)
DEFERRED CHARGES:
Regulatory assets -
Deferred taxes collectible - - - - -
Other - - - - -
Unamortized debt expense - - - - -
- - - - -
TOTAL ASSETS $ (99,419)$ (5,786) $ (72) $ (32,168) $(137,445)
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<CAPTION>
PENNSYLVANIA ENTERPRISES, INC. AND SUBSIDIARIES
Summary of Consolidating Balance Sheet Entries as of December 31, 1996
(Thousands of Dollars)
ENTRY TO ENTRY TO
ENTRY TO ELIMINATE ELIMINATE
ENTRY TO ELIMINATE GAIN ON INTERCOMPANY
ELIMINATE INTERCOMPANY INTERCOMPANY LONG-TERM DEBT
INVESTMENT IN ACCOUNTS PAYABLE SALE OF AND ACCRUED
CAPITALIZATION AND LIABILITIES SUBSIDIARIES AND RECEIVABLE ASSETS INTEREST TOTAL
<S> <C> <C> <C> <C> <C>
CAPITALIZATION:
Common shareholders' investment $ (99,419) $ - $ - $ - $ (99,419)
Preferred stock of PGE -
Not subject to mandatory redemption, net - - - - -
Subject to mandatory redemption - - - - -
Long-term debt - - - - -
(99,419) - - - (99,419)
CURRENT LIABILITIES:
Current portion of long-term debt -
Parent - - - (31,400) (31,400)
Other - - - - -
Preferred stock subject to repurchase or
mandatory redemption - - - - -
Notes payable - - - - -
Accounts payable -
Suppliers - - - - -
Affiliates, net - (5,786) - - (5,786)
Accrued general business and realty taxes - - - - -
Accrued income taxes - - - - -
Accrued interest - - - (768) (768)
Accrued natural gas transition costs - - - - -
Other - - - - -
- (5,786) - (32,168) (37,954)
DEFERRED CREDITS:
Deferred income taxes - - - - -
Unamortized investment tax credits - - - - -
Operating reserves - - - - -
Other - - (72) - (72)
- - (72) - (72)
TOTAL CAPITALIZATION AND LIABILITIES $ (99,419)$ (5,786) $ (72) $ (32,168) $(137,445)
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<TABLE> <S> <C>
<ARTICLE> OPUR3
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-ASSETS> 366,810,000
<TOTAL-OPERATING-REVENUES> 184,480,000
<NET-INCOME> 6,584,000
</TABLE>
