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. and Honesdale Gas Company PG Energy Inc. ("PG Energy") and
its wholly-owned subsidiary Honesdale Gas Company ("Honesdale"), both
Pennsylvania corporations having their principal office at One PEI Center,
Wilkes-Barre, Pennsylvania 18711, distribute natural gas to an area in
northeastern Pennsylvania lying within the counties of Luzerne, Lackawanna,
Lycoming, Wyoming, Northumberland, Wayne, Columbia, Union, Montour, Snyder,
Susquehanna, Pike and Clinton. This territory includes 130 municipalities, in
addition to the cities of Wilkes-Barre, Scranton and Williamsport. As of
December 31, 1997, PG Energy and Honesdale provided service to 150,300
customers.
PG Energy has one additional subsidiary, Penn Gas Development Co., which
is more fully described below. The aggregate total assets of this subsidiary
at December 31, 1997, were less than 0.5% of PG Energy's total assets.
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 PG Energy. 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.
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NonRegulated Subsidiaries - continued
PG Energy Services Inc. a Pennsylvania corporation having its principal
office at One PEI Center, Wilkes-Barre, Pennsylvania 18711, was formed on
April 8, 1997, when the then existing Pennsylvania Energy Resources, Inc.
changed its name to PG Energy Services Inc. ("Energy Services"). Energy
Services markets a broad array of energy and energy-related products and
services; including the sale of natural gas and electricity to residential,
commercial and industrial users, the sale of propane on both a retail and a
wholesale level, and the inspection and maintenance of residential and small
commercial gas-fired equipment.
Pennsylvania Energy Resources, Inc. a Pennsylvania corporation having its
principal office at One PEI Center, Wilkes-Barre, Pennsylvania 18711, was
formed as a new subsidiary on April 8, 1997, and is an inactive name-holding
corporation.
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 Energy Services. 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 is presently marketing
Company-owned land parcels for residential and commercial development.
Additionally, Theta is developing plans to conduct timber, sand and gravel
operations on the Company's land.
PEI Power Corporation, ("Power Corp"), a Pennsylvania corporation having
its principal office at One PEI Center, Wilkes-Barre, Pennsylvania 18711, was
formed in October, 1997, and is expected to begin generating and selling
electricity and steam produced by a cogeneration facility it acquired in
November, 1997, in mid-1998.
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 PG Energy and Honesdale consist primarily of
2,400 miles of distribution lines, eleven city gate and 80 major regulating
stations, and miscellaneous related and additional property, all of which are
located in Pennsylvania. Additionally, PG Energy owns approximately 45,000
acres of land and Theta owns approximately 1,000 acres. Neither PG Energy nor
Honesdale has natural gas producing fields, pipelines receiving gas at the
borders of Pennsylvania or properties located outside of Pennsylvania.
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3. Natural Gas Distributed in 1997
During the calendar year 1997, of the Claimant and its subsidiaries, PG
Energy and Honesdale were the only operating public utility companies
distributing natural gas. The following data for the calendar year 1997
relates to PG Energy and Honesdale:
(a) Natural or manufactured gas distributed at retail - 48,296,516
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 - 49,651 MCF.
(d) Natural or manufactured gas purchased outside Pennsylvania or at the
State line - 26,858,645 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 1997, 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 1997 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 27th day of February, 1998.
PENNSYLVANIA ENTERPRISES, INC.
(Name of Claimant)
By /s/ John F. Kell, Jr.
John F. Kell, Jr.
Vice President, Financial Services
Corporate Seal
Attest:
/s/ Thomas J. Ward
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, 1997
(Thousands of Dollars)
POWER CONSOLIDATING
PG ENERGY(1) THETA PGES (2) CORP PEI COMBINED ENTRIES CONSOLIDATED
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES:
Regulated $ 190,567 $ - $ - $ - $ - $190,567 $ (34) $ 190,533
Nonregulated -
Gas sales and services - - 26,004 - - 26,004 - 26,004
Pipeline construction and services - - 11,210 - - 11,210 - 11,210
Other - - 293 7 - 300 (1) 299
Total operating revenues 190,567 - 37,507 7 - 228,081 (35) 228,046
OPERATING EXPENSES:
Cost of gas 110,905 - 23,616 - - 134,521 (19) 134,502
Operation and Maintenance 29,735 - 13,193 7 475 43,410 (25) 43,385
Depreciation 8,986 - 478 - - 9,464 - 9,464
Income taxes 7,321 - 1 - 48 7,370 4 7,374
Taxes other than income taxes 11,657 - 82 - 27 11,766 - 11,766
Total operating expenses 168,604 - 37,370 7 550 206,531 (40) 206,491
OPERATING INCOME 21,963 - 137 - (550) 21,550 5 21,555
OTHER INCOME, NET 100 2 849 - 13,773 14,724 (13,503) 1,221
INCOME BEFORE INTEREST CHARGES 22,063 2 986 - 13,223 36,274 (13,498) 22,776
INTEREST CHARGES:
Interest on long-term debt 9,481 - - - 1,244 10,725 (1,670) 9,055
Other interest 700 - 356 - 149 1,205 (395) 810
Allowance for borrowed funds used
during construction (231) - - - - (231) - (231)
Total interest charges 9,950 - 356 - 1,393 11,699 (2,065) 9,634
INCOME BEFORE SUBSIDIARY'S
PREFERRED STOCK DIVIDENDS 12,113 2 630 - 11,830 24,575 (11,433) 13,142
SUBSIDIARY'S PREFERRED STOCK DIVIDENDS 1,312 - - - - 1,312 - 1,312
NET INCOME 10,801 2 630 - 11,830 23,263 (11,433) 11,830
RETAINED EARNINGS (DEFICIT):
Beginning of year 30,186 (12) 1,602 - 49,220 80,996 (31,776) 49,220
Discounts on redemption of
PG Energy's preferred stock 746 - - - 746 1,492 (746) 746
Dividends on common stock (128) - - - (11,501) (11,629) 128 (11,501)
End of year $ 41,605 $ (10) $ 2,232 $ - $ 50,295 $ 94,122 $ (43,827) $ 50,295
NOTES:
Individual companies are identified in column headings and elsewhere as follows:
PG Energy - PG Energy Inc.
THETA - Theta Land Corporation
PGES - PG Energy Services Inc.
POWER CORP - PEI Power Corporation
PEI - Pennsylvania Enterprises, Inc.
See Page 8 for summary of consolidated entries.
(1) Includes the consolidated accounts of Honesdale Gas Company, a wholly-owned subsidiary of PG Energy Inc.
(2) Includes the consolidated accounts of Keystone Pipeline Services, Inc., a wholly-owned subsidiary of PG Energy Services Inc.
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<CAPTION>
PENNSYLVANIA ENTERPRISES, INC. AND SUBSIDIARIES
Consolidating Balance Sheet as of December 31, 1997
(Thousands of Dollars)
POWER CONSOLIDATING
ASSETS PG ENERGY(1) THETA PGES (2) CORP PEI COMBINED ENTRIES CONSOLIDATED
<S> <C> <C> <C> <C> <C> <C> <C> <C>
UTILITY PLANT:
At original cost $ 351,106 $ - $ - $ - $ - $351,106 $ - $ 351,106
Accumulated depreciation (88,129) - - - - (88,129) - (88,129)
262,977 - - - - 262,977 - 262,977
OTHER PROPERTY AND INVESTMENTS:
Nonutility property and equipment 4,827 240 10,125 1,215 - 16,407 (72) 16,335
Accumulated depreciation (405) (29) (4,441) - - (4,875) - (4,875)
Other 37 1,723 317 - 141,370 143,447 (141,276) 2,171
4,459 1,934 6,001 1,215 141,370 154,979 (141,348) 13,631
CURRENT ASSETS:
Cash and cash equivalents 304 72 192 1,600 34 2,202 - 2,202
Accounts receivable -
Customers 23,551 3 5,120 7 - 28,681 - 28,681
Affiliates 63 23 495 - - 581 (581) -
Others 280 - - - 570 850 - 850
Reserve for uncollectible accounts (1,168) - (172) - - (1,340) - (1,340)
Unbilled revenues 11,680 - 428 - - 12,108 - 12,108
Materials and supplies, at average
cost 2,716 - 394 - - 3,110 - 3,110
Gas held by suppliers, at average
cost 21,933 - - - - 21,933 - 21,933
Natural gas transition costs
collectible 134 - - - - 134 - 134
Deferred cost of gas and supplier
refunds, net 6,182 - - - - 6,182 - 6,182
Prepaid expenses and other 1,633 3 50 - - 1,686 - 1,686
67,308 101 6,507 1,607 604 76,127 (581) 75,546
DEFERRED CHARGES:
Regulatory assets -
Deferred taxes collectible 30,592 - - - - 30,592 - 30,592
Other 4,415 - - - - 4,415 - 4,415
Unamortized debt expense 1,164 - - - 197 1,361 - 1,361
Other 225 - 83 - - 308 - 308
36,396 - 83 - 197 36,676 - 36,676
TOTAL ASSETS $ 371,140 $ 2,035 $ 12,591 $ 2,822 $142,171 $530,759 $ (141,929) $ 388,830
NOTE:
See page 9 for summary of consolidating entries.
(1) Includes the consolidated accounts of Honesdale Gas Company, a wholly-owned subsidiary of PG Energy Inc.
(2) Includes the consolidated accounts of Keystone Pipeline Services, Inc., a wholly-owned subsidiary of PG Energy Services Inc.
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<TABLE>
<CAPTION>
PENNSYLVANIA ENTERPRISES, INC. AND SUBSIDIARIES
Consolidating Balance Sheet as of December 31, 1997
(Thousands of Dollars)
POWER CONSOLIDATING
CAPITALIZATION AND LIABILITIES PG ENERGY(1) THETA PGES (2) CORP PEI COMBINED ENTRIES CONSOLIDATED
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CAPITALIZATION:
Common shareholders' investment $ 107,425 $ 1,632 $ 3,232 $ 967 $122,585 $235,841 $ (113,736) $ 122,105
Preferred stock of PG Energy -
Not subject to mandatory
redemption, net 15,864 - - - - 15,864 - 15,864
Subject to mandatory redemption 640 - - - - 640 - 640
Long-term debt 129,500 - - 1,000 20,000 150,500 (23,500) 127,000
253,429 1,632 3,232 1,967 142,585 402,845 (137,236) 265,609
CURRENT LIABILITIES:
Current portion of long-term debt 24,776 - - - - 24,776 - 24,776
Preferred stock subject to
repurchase or mandatory redemption 80 - - - - 80 - 80
Notes payable 2,170 - - - - 2,170 - 2,170
Accounts payable -
Suppliers 14,515 68 3,748 112 5 18,448 - 18,448
Affiliates, net 199 186 3,362 743 - 4,490 (4,490) -
Accrued general business and realty
taxes 2,797 12 151 - (7) 2,953 - 2,953
Accrued income taxes 4,946 102 34 - (464) 4,618 - 4,618
Accrued interest 1,844 - - - 70 1,914 (131) 1,783
Accrued natural gas transition costs 1,087 - - - - 1,087 - 1,087
Other 1,188 29 505 - - 1,722 - 1,722
53,602 397 7,800 855 (396) 62,258 (4,621) 57,637
DEFERRED CREDITS:
Deferred income taxes 52,207 6 491 - (193) 52,511 - 52,511
Unamortized investment tax credits 4,596 - - - - 4,596 - 4,596
Operating reserves 2,825 - - - - 2,825 - 2,825
Other 4,481 - 1,068 - 175 5,724 (72) 5,652
64,109 6 1,559 - (18) 65,656 (72) 65,584
TOTAL CAPITALIZATION AND LIABILITIES $ 371,140 $ 2,035 $ 12,591 $ 2,822 $142,171 $530,759 $ (141,929) $ 388,830
NOTE:
See page 10 for summary of consolidating entries.
(1) Includes the consolidated accounts of Honesdale Gas Company, a wholly-owned subsidiary of PG Energy Inc.
(2) Includes the consolidated accounts of Keystone Pipeline Services, Inc., a wholly-owned subsidiary of PG Energy Services Inc.
</TABLE>
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<TABLE>
<CAPTION>
PENNSYLVANIA ENTERPRISES, INC. AND SUBSIDIARIES
Summary of Consolidating Statement of Income and Retained
Earnings Entries as of December 31, 1997
ENTRY TO ENTRY TO ENTRY TO ENTRY TO
ELIMINATE ELIMINATE ELIMINATE ELIMINATE
INTERCOMPANY INTERCOMPANY INTERCOMPANY SUBSIDIARY
INTEREST SALES RENT EARNINGS TOTAL
<S> <C> <C> <C> <C> <C>
OPERATING REVENUES:
Regulated $ - $ (19) $ (15) $ - $ (34)
Nonregulated -
Gas sales and service - - - - -
Pipeline construction and services - - - - -
Other - (1) - - (1)
Total Operating revenues - (20) (15) - (35)
OPERATING EXPENSES:
Cost of gas - (19) - - (19)
Operation and maintenance - (1) (24) - (25)
Depreciation - - - - -
Income taxes - - 4 - 4
Taxes other than income - - - - -
Total operating expenses - (20) (20) - (40)
OPERATING INCOME - - 5 - 5
OTHER INCOME, NET (2,065) - (5) (11,433) (13,503)
INCOME BEFORE INTEREST CHARGES (2,065) - - (11,433) (13,498)
INTEREST CHARGES:
Interest on long-term debt (1,670) - - - (1,670)
Other interest (395) - - - (395)
Allowance for borrowed funds used
during construction - - - - -
Total interest charges (2,065) - - - (2,065)
INCOME BEFORE SUBSIDIARY'S
PREFERRED STOCK DIVIDENDS - - - (11,433) (11,433)
SUBSIDIARY'S PREFERRED STOCK DIVIDENDS - - - - -
NET INCOME - - - (11,433) (11,433)
RETAINED EARNINGS (DEFICIT):
Beginning of year - - - (31,776) (31,776)
Discounts on redemption of PG Energy's
preferred stock - - - (746) (746)
Dividends on common stock - - - 128 128
End of year $ - $ - $ - $ (43,827) $(43,827)
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<CAPTION>
PENNSYLVANIA ENTERPRISES, INC. AND SUBSIDIARIES
Summary of Consolidating Balance Sheet Entries as of December 31, 1997
(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 (113,736) (3,909) - (23,631) (141,276)
(113,736) (3,909) (72) (23,631) (141,348)
CURRENT ASSETS:
Cash and cash equivalents - - - - -
Accounts receivable -
Customers - - - - -
Affiliates - (581) - - (581)
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 - - - - -
- (581) - - (581)
DEFERRED CHARGES:
Regulatory assets -
Deferred taxes collectible - - - - -
Other - - - - -
Unamortized debt expense - - - - -
- - - - -
TOTAL ASSETS $ (113,736) $ (4,490) $ (72) $ (23,631) $(141,929)
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<CAPTION>
PENNSYLVANIA ENTERPRISES, INC. AND SUBSIDIARIES
Summary of Consolidating Balance Sheet Entries as of December 31, 1997
(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 $ (113,736) $ - $ - $ - $(113,736)
Preferred stock of PG Energy -
Not subject to mandatory redemption, net - - - - -
Subject to mandatory redemption - - - - -
Long-term debt - - - (23,500) (23,500)
(113,736) - - (23,500) (137,236)
CURRENT LIABILITIES:
Current portion of long-term debt -
Parent - - - - -
Other - - - - -
Preferred stock subject to repurchase or
mandatory redemption - - - - -
Notes payable - - - - -
Accounts payable -
Suppliers - - - - -
Affiliates, net - (4,490) - - (4,490)
Accrued general business and realty taxes - - - - -
Accrued income taxes - - - - -
Accrued interest - - - (131) (131)
Accrued natural gas transition costs - - - - -
Other - - - - -
- (4,490) - (131) (4,621)
DEFERRED CREDITS:
Deferred income taxes - - - - -
Unamortized investment tax credits - - - - -
Operating reserves - - - - -
Other - - (72) - (72)
- - (72) - (72)
TOTAL CAPITALIZATION AND LIABILITIES $ (113,736) $ (4,490) $ (72) $ (23,631) $(141,929)
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<TABLE> <S> <C>
<ARTICLE> OPUR3
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-ASSETS> 388,830,000
<TOTAL-OPERATING-REVENUES> 228,046,000
<NET-INCOME> 11,830,000
</TABLE>
