FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------ ------------
Commission File Number 1-3491
PENNSYLVANIA POWER COMPANY
(Exact name of Registrant as specified in its charter)
Pennsylvania 25-0718810
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1 E. Washington St., P.O. Box 891, New Castle, PA 16103
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 412-652-5531
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date:
6,290,000 shares of common stock, $30 par value, outstanding
as of August 3, 1995
PENNSYLVANIA POWER COMPANY
TABLE OF CONTENTS
Pages
Part I. Financial Information
Statements of Income 1
Balance Sheets 2-3
Statements of Cash Flows 4
Notes to Financial Statements 5-6
Report of Independent Public Accountants 7
Management's Discussion and Analysis of Results
of Operations and Financial Condition 8-9
Part II. Other Information
<TABLE>
PART I. FINANCIAL INFORMATION
PENNSYLVANIA POWER COMPANY
STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
1995 1994 1995 1994
------ ------ ------ ------
(In thousands)
<S> <C> <C> <C> <C>
OPERATING REVENUES $77,622 $74,700 $151,538 $153,058
------- ------- -------- --------
OPERATING EXPENSES AND TAXES:
Fuel and purchased power 15,387 14,072 29,595 31,256
Nuclear operating costs 8,130 8,207 16,015 17,226
Other operating costs 15,090 23,922 28,965 37,336
------- ------- -------- --------
Total operation and maintenance expenses 38,607 46,201 74,575 85,818
Provision for depreciation 8,100 6,628 16,497 14,227
Deferral of net regulatory assets - (1,664) - (2,648)
General taxes 7,362 5,568 13,422 11,912
Income taxes 6,765 4,264 13,415 11,860
------- ------- -------- --------
Total operating expenses and taxes 60,834 60,997 117,909 121,169
------- ------- -------- --------
OPERATING INCOME 16,788 13,703 33,629 31,889
OTHER INCOME 479 522 1,235 936
------- ------- -------- --------
TOTAL INCOME 17,267 14,225 34,864 32,825
------- ------- -------- --------
NET INTEREST:
Interest expense 7,779 8,627 16,190 17,203
Allowance for borrowed funds used during construction (131) (179) (351) (312)
------- ------- -------- --------
Net interest 7,648 8,448 15,839 16,891
------- ------- -------- --------
NET INCOME 9,619 5,777 19,025 15,934
PREFERRED STOCK DIVIDEND REQUIREMENTS 1,301 1,681 2,461 3,037
------- ------- -------- --------
EARNINGS ON COMMON STOCK $ 8,318 $ 4,096 $ 16,564 $ 12,897
======= ======= ======== ========
<FN>
The accompanying Notes to Financial Statements are an integral part of these statements.
</TABLE>
- 1 -
<TABLE>
PENNSYLVANIA POWER COMPANY
BALANCE SHEETS
(Unaudited)
<CAPTION>
June 30, December 31,
1995 1994
------------ -------------
(In thousands)
<S> <C> <C>
ASSETS
------
UTILITY PLANT:
In service, at original cost $1,213,061 $1,215,831
Less--Accumulated provision for depreciation 418,410 410,508
---------- ----------
794,651 805,323
---------- ----------
Construction work in progress-
Electric plant 20,425 11,226
Nuclear fuel 4,609 12,389
---------- ----------
25,034 23,615
---------- ----------
819,685 828,938
---------- ----------
OTHER PROPERTY AND INVESTMENTS 12,641 8,777
---------- ----------
CURRENT ASSETS:
Cash and cash equivalents 8,397 17,200
Note receivable from parent company 6,000 25,000
Receivables-
Customers (less accumulated provisions of $519,000 and $515,000,
respectively, for uncollectible accounts) 34,035 32,745
Parent company 15,385 20,777
Other 11,236 12,823
Materials and supplies, at average cost-
Fuel 5,858 5,384
Other 10,078 11,655
Prepayments 5,757 2,048
---------- ----------
96,746 127,632
---------- ----------
DEFERRED CHARGES:
Regulatory assets 216,790 219,726
Other 7,097 8,125
---------- ----------
223,887 227,851
---------- ----------
$1,152,959 $1,193,198
========== ==========
</TABLE>
- 2 -
<TABLE>
PENNSYLVANIA POWER COMPANY
BALANCE SHEETS
(Unaudited)
<CAPTION>
June 30, December 31,
1995 1994
------------ -------------
(In thousands)
<S> <C> <C>
CAPITALIZATION AND LIABILITIES
------------------------------
CAPITALIZATION:
Common stockholder's equity-
Common stock, $30 par value, authorized 6,500,000 shares-
6,290,000 shares outstanding $ 188,700 $ 188,700
Other paid-in capital (600) (600)
Retained earnings 76,744 70,873
----------- -----------
Total common stockholder's equity 264,844 258,973
Preferred stock-
Not subject to mandatory redemption 50,905 50,905
Subject to mandatory redemption 15,000 15,000
Long-term debt -
Associated companies 12,189 15,155
Other 372,374 409,302
----------- -----------
715,312 749,335
----------- -----------
CURRENT LIABILITIES:
Currently payable long-term debt-
Associated companies 8,090 9,318
Other 15,082 15,126
Accounts payable-
Associated companies 9,883 9,440
Other 24,131 25,276
Accrued taxes 12,169 15,421
Accrued interest 8,760 10,108
Other 20,802 21,473
----------- -----------
98,917 106,162
----------- -----------
DEFERRED CREDITS:
Accumulated deferred income taxes 278,507 277,542
Accumulated deferred investment tax credits 31,540 32,209
Other 28,683 27,950
----------- -----------
338,730 337,701
----------- -----------
COMMITMENTS, GUARANTEES AND CONTINGENCIES (Note 2) ----------- -----------
$1,152,959 $1,193,198
=========== ===========
<FN>
The accompanying Notes to Financial Statements are an integral part of these balance sheets.
</TABLE>
- 3 -
<TABLE>
PENNSYLVANIA POWER COMPANY
STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
1995 1994 1995 1994
------ ------ ------ ------
(In thousands)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 9,619 $ 5,777 $19,025 $15,934
Adjustments to reconcile net income to net cash from
operating activities-
Provision for depreciation 8,100 6,628 16,497 14,227
Nuclear fuel and lease amortization 3,358 1,653 5,108 4,827
Deferred income taxes, net (357) (96) 2,711 2,386
Investment tax credits, net (335) (338) (669) (675)
Allowance for equity funds used during construction (105) (123) (222) (220)
Deferred fuel costs, net 748 (1,926) (270) (2,203)
Other (391) (375) (778) (747)
------- ------- ------- -------
Internal cash before dividends 20,637 11,200 41,402 33,529
Receivables 11,640 (10,978) 5,689 2,921
Materials and supplies 415 (1,301) 1,103 (1,379)
Accounts payable (2,221) 10,060 (443) 2,761
Other 5,369 14,720 (6,525) 13,011
------- ------- ------- -------
Net cash provided from operating activities 35,840 23,701 41,226 50,843
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemptions and Repayments-
Preferred stock - - - 362
Long-term debt 22,344 1,644 40,349 4,807
Dividend Payments-
Common stock 5,347 5,347 10,693 10,693
Preferred stock 1,300 1,355 2,461 2,709
------- ------- ------- -------
Net cash used for financing activities 28,991 8,346 53,503 18,571
------- ------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions 9,018 5,397 15,339 18,155
Loan to parent 6,000 - - -
Loan payment from parent - - (19,000) -
Other (2,040) (647) 187 290
------- ------- -------- -------
Net cash used for (provided from) investing activities 12,978 4,750 (3,474) 18,445
------- ------- -------- -------
Net increase (decrease) in cash and cash equivalents (6,129) 10,605 (8,803) 13,827
Cash and cash equivalents at beginning of period 14,526 16,041 17,200 12,819
------- ------- -------- -------
Cash and cash equivalents at end of period $ 8,397 $26,646 $ 8,397 $26,646
======= ======= ======== =======
<FN>
The accompanying Notes to Financial Statements are an integral part of these statements.
</TABLE>
- 4 -
<PAGE>
PENNSYLVANIA POWER COMPANY
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1 - FINANCIAL STATEMENTS:
The condensed financial statements reflect all normal
recurring adjustments that, in the opinion of management, are
necessary to fairly present results of operations for the interim
periods. These statements should be read in conjunction with the
financial statements and notes included in Pennsylvania Power
Company's (Company) 1994 Annual Report to Stockholders. The results
of operations are not intended to be indicative of results of
operations for any future period.
2 - COMMITMENTS, GUARANTEES AND CONTINGENCIES:
Construction Program --
The Company, a wholly owned subsidiary of Ohio Edison
Company, currently forecasts expenditures of approximately
$138,000,000 for property additions and improvements from 1995-
1999, of which approximately $28,000,000 is applicable to 1995. The
Company's investment in nuclear fuel is expected to be
approximately $29,000,000 during the 1995-1999 period, of which
approximately $4,000,000 is applicable to 1995.
Guarantees --
The Company, together with the other Central Area Power
Coordination Group companies, has severally guaranteed certain debt
and lease obligations in connection with a coal supply contract for
the Bruce Mansfield Plant. As of June 30, 1995, the Company's share
of the guarantee was $9,437,000. The price under the coal supply
contract, which includes certain minimum payments, has been
determined to be sufficient to satisfy the debt and lease
obligations.
Environmental Matters --
Various federal, state and local authorities regulate the
Company with regard to air and water quality and other
environmental matters. The Company has estimated additional capital
expenditures for environmental compliance of approximately
$12,000,000 for the period 1995 through 1999, which is included in
the construction forecast under "Construction Program."
The Clean Air Act Amendments of 1990 required significant
reductions of sulfur dioxide (SO2) and nitrogen oxides (NOx) from
the Company's coal-fired generating units by 1995 and additional
emission reductions by 2000. SO2 reductions for the years 1995
through 1999 are being achieved by burning lower- sulfur fuel,
generating more electricity from lower-emitting plants and/or
purchasing emission allowances. Equipment already installed
provides NOx reductions sufficient to meet the 1995 requirements.
Plans for complying with reductions required for the year 2000 and
- 5 -
thereafter have not been finalized. The Environmental Protection
Agency is conducting additional studies which could indicate the
need for additional NOx reductions from the Company's Pennsylvania
facilities by the year 2003. The cost of such reductions, if
required, may be substantial. The Company continues to evaluate its
compliance plan and other compliance options.
The Pennsylvania Department of Environmental Resources has
issued regulations dealing with the storage, treatment,
transportation and disposal of residual waste such as coal ash and
scrubber sludge. These regulations impose additional requirements
relating to permitting, ground water monitoring, leachate
collection systems, closure, liability insurance and operating
matters. The Company is considering various compliance options but
is presently unable to determine the ultimate increase in capital
and operating costs at existing sites.
Legislative, administrative and judicial actions will
continue to change the way that the Company must operate in order
to comply with environmental laws and regulations. With respect to
any such changes and to the environmental matters described above,
the Company expects that any resulting additional capital costs
which may be required, as well as any required increase in
operating costs, would ultimately be recovered from its customers.
- 6 -
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Pennsylvania Power Company:
We have reviewed the accompanying balance sheet of
Pennsylvania Power Company (a Pennsylvania corporation and a wholly
owned subsidiary of Ohio Edison Company) as of June 30, 1995, and
the related statements of income and cash flows for the three-month
and six-month periods ended June 30, 1995 and 1994. These financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards
established by the American Institute of Certified Public
Accountants. A review of interim financial information consists
principally of applying analytical procedures to financial data and
making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards,
the objective of which is the expression of an opinion regarding
the financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the financial statements
referred to above for them to be in conformity with generally
accepted accounting principles.
We have previously audited, in accordance with generally
accepted auditing standards, the balance sheet and statement of
capitalization of Pennsylvania Power Company as of December 31,
1994, and the related statements of income, retained earnings,
capital stock and other paid-in capital, cash flows and taxes for
the year then ended (not presented separately herein). In our
opinion, the information set forth in the accompanying balance
sheet as of December 31, 1994, is fairly stated, in all material
respects, in relation to the balance sheet from which it has been
derived.
ARTHUR ANDERSEN LLP
Cleveland, Ohio
August 2, 1995
- 7 -
PENNSYLVANIA POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations
During the first half of 1995, retail kilowatt-hour sales
increased 3.6% over last year. Commercial and industrial sales
increased 2.3% and 10.2%, respectively, during this period due to
an improving local economy. The industrial sector was also
positively affected by the start-up of Caparo Steel Company which
purchased the assets of Sharon Steel Corporation, formerly the
Company's largest customer. Residential sales fell 2.5% compared to
last year due to unseasonably mild weather conditions in the first
quarter of 1995. Total kilowatt-hour sales were down 1.6% in the
first half of 1995 due to a 17.8% decrease in sales to other
utilities.
Total kilowatt-hour sales were up 12.6% in the second
quarter of 1995, with retail kilowatt-hour sales increasing 7.6%
over the same period last year. Residential and commercial sales
increased 4.4% and 6.9%, respectively, compared to the second
quarter of 1994, while industrial sales were up 10.6% for the
period. The Company began supplying 40 megawatts of power to
another utility in the second quarter of 1995 under a short-term
contract that expires at the end of 1995. This contract contributed
to a 36.4% increase in sales to other utilities in the second
quarter of 1995 compared to last year.
The change in fuel and purchased power costs during the
three and six month periods ended June 30, 1995 reflects the
differing sales volume for the corresponding periods. Nuclear
expenses were lower in the first half of 1995 than they were last
year because of corrective maintenance work that was being
performed during the scheduled refueling outage at the Perry Plant
in 1994. The comparative decrease in other operating costs reflects
a $9,600,000 charge in the second quarter of 1994 relating to a
voluntary early retirement program offered to qualifying employees.
Increased depreciation charges in 1995 reflect a higher
level of depreciable utility plant combined with an increase in the
accrual for nuclear decommissioning costs. The change in the
deferral of net regulatory assets is due to the Company ceasing
recognition, for financial reporting purposes, of the deferral of
postretirement benefit costs, due to contradictory court decisions
in Pennsylvania which increase the uncertainty of ultimate
recovery. General taxes increased in the first half of the year due
to higher property taxes.
Capital Resources and Liquidity
The Company has continuing cash requirements for planned
capital expenditures and debt maturities. During the second half of
1995, capital requirements for property additions and capital
- 8 -
leases are expected to be about $20,000,000, including $4,000,000
for nuclear fuel. The Company has additional cash requirements of
approximately $600,000 for maturing long-term debt during the
remainder of 1995. These requirements are expected to be satisfied
with internal cash. In addition, $14,250,000 of variable rate
pollution control put bonds are subject to repricing during the
remainder of the year.
As of June 30, 1995, the Company had approximately
$14,000,000 of cash and temporary investments and no short-term
indebtedness. The Company had $2,000,000 of unused short-term bank
lines of credit as of June 30, 1995, and $7,000,000 of bank
facilities which may be borrowed for up to several days at the
banks' discretion.
During the first six months of 1995, the Company purchased
from bondholders $36,750,000 of first mortgage bonds which had a
weighted average interest rate of 8.17%.
On June 29, 1995, the Pennsylvania Public Utility
Commission approved the Company's proposed sale of its interest in
the West Lorain Plant to Ohio Edison for approximately $4,250,000.
Transfer of ownership and payment is expected to take place in the
third quarter of 1995; there will be no material effect to net
income resulting from this transaction.
- 9 -
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number
-------
(A) 10 Pennsylvania Power Company Master Decommissioning Trust
Agreement for Beaver Valley Power Station and Perry
Nuclear Power Plant dated April 21, 1995.
15 Letter from independent public accountants.
Pursuant to paragraph (b)(4)(iii)(A) of Item 601 of
Regulation S-K, the Company has not filed as an exhibit
to this Form 10-Q any instrument with respect to long-
term debt if the total amount of securities authorized
thereunder does not exceed 10% of the total assets of
the Company, but hereby agrees to furnish to the
Commission on request any such documents.
(b) Reports on Form 8-K
None
(A) Provided herein in electronic format as an exhibit.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
August 3, 1995
PENNSYLVANIA POWER COMPANY
--------------------------
Registrant
/s/Robert P. Wushinske
-------------------------------
Robert P. Wushinske
Vice President and Treasurer
Chief Accounting Officer
PENNSYLVANIA POWER COMPANY
MASTER DECOMMISSIONING TRUST AGREEMENT
FOR BEAVER VALLEY POWER STATION
AND PERRY NUCLEAR POWER PLANT
Dated: April 21, 1995
TABLE OF CONTENTS
Page
----
I. DEFINITIONS
1.01 Definitions . . . . . . . . . . . . . . . . . . . 3
II. MASTER TRUST PURPOSE, NAME AND FUNDS
2.01 Master Trust Purpose. . . . . . . . . . . . . . . 9
2.02 Establishment of Master Trust . . . . . . . . . . 9
2.03 Acceptance of Appointment . . . . . . . . . . . . 10
2.04 Name of Master Trust. . . . . . . . . . . . . . . 10
2.05 Division of Master Trust. . . . . . . . . . . . . 10
2.06 Designation of Funds. . . . . . . . . . . . . . . 11
2.07 Duties of Authorized Representatives. . . . . . . 11
2.08 No Authority to Conduct Business. . . . . . . . . 12
2.09 No Transferability of Master Trust. . . . . . . . 12
III. BENEFICIARY OF MASTER TRUST
3.01 Company to be Beneficiary . . . . . . . . . . . . 13
IV. CONTRIBUTIONS AND INCOME
4.01 Contributions . . . . . . . . . . . . . . . . . . 13
4.02 Allocation of Net Income. . . . . . . . . . . . . 13
4.03 Pool Withdrawals. . . . . . . . . . . . . . . . . 14
4.04 Subsequent Transfers. . . . . . . . . . . . . . . 15
V. DISTRIBUTIONS
5.01 Payment of Decommissioning Costs and
Administrative Costs. . . . . . . . . . . . . . . 15
5.02 Payment of Administrative Expenses. . . . . . . . 16
5.03 Fees. . . . . . . . . . . . . . . . . . . . . . . 17
5.04 Liquidation of Investments. . . . . . . . . . . . 17
VI. TERMINATION
6.01 Termination of Funds and Master Trust in
General . . . . . . . . . . . . . . . . . . . . . 18
6.02 Distribution of Master Trust and Funds Upon
Termination . . . . . . . . . . . . . . . . . . . 18
VII. TRUSTEES
7.01 Designation and Qualification of Successor
Trustee(s). . . . . . . . . . . . . . . . . . . . 19
7.02 Exoneration from Bond . . . . . . . . . . . . . . 20
7.03 Resignation . . . . . . . . . . . . . . . . . . . 20
7.04 Transactions With Third Parties . . . . . . . . . 21
7.05 Accounts and Reports. . . . . . . . . . . . . . . 21
7.06 Tax Returns and Other Reports . . . . . . . . . . 22
7.07 Liability. . . . . . . . . . . . . . . . . . . . 24
VIII. INVESTMENTS
8.01 Appointment of Investment Manager(s). . . . . . . 25
8.02 Direction by Investment Manager(s). . . . . . . . 26
IX. TRUSTEE'S GENERAL POWER
9.01 Holding of Securities . . . . . . . . . . . . . . 29
9.02 Borrowing . . . . . . . . . . . . . . . . . . . . 29
9.03 Retention and Removal of Professional and
Employee Services . . . . . . . . . . . . . . . . 29
9.04 Delegation of Ministerial Powers. . . . . . . . . 30
9.05 Powers of Trustee to Continue Until Final
Distribution. . . . . . . . . . . . . . . . . . . 30
9.06 Discretion in Exercise of Powers. . . . . . . . . 30
9.07 Deposition of Funds . . . . . . . . . . . . . . . 30
9.08 Market Inventory Funds. . . . . . . . . . . . . . 31
9.09 Loaning of Securities . . . . . . . . . . . . . . 31
9.10 Retention of Uninvested Cash. . . . . . . . . . . 31
X. TRUSTEE'S INVESTMENT POWERS
10.01 General Investment Powers. . . . . . . . . . . . 32
XI. MISCELLANEOUS
11.01 Headings . . . . . . . . . . . . . . . . . . . . 32
11.02 Particular Words . . . . . . . . . . . . . . . . 33
11.03 Severability of Provisions . . . . . . . . . . . 33
11.04 Delivery of Notices Under Agreement. . . . . . . 33
11.05 Alterations and Amendments . . . . . . . . . . . 34
11.06 Successors and Assigns . . . . . . . . . . . . . 35
11.07 Governing Law; Jurisdiction; Certain Waivers . . 35
11.08 Accounting Year. . . . . . . . . . . . . . . . . 36
11.09 Counterparts . . . . . . . . . . . . . . . . . . 36
11.10 Decommissioning Liability. . . . . . . . . . . . 36
SCHEDULE A PERMITTED INVESTMENTS
EXHIBIT A CERTIFICATE
MASTER DECOMMISSIONING TRUST AGREEMENT
--------------------------------------
AGREEMENT made as of this 21st day of April, 1995,
between PENNSYLVANIA POWER COMPANY, a Pennsylvania corporation
(the "Company"), and MELLON BANK, N.A., as Trustee (the
"Trustee"), a national banking association duly organized and
validly existing under the laws of the United States of America.
WHEREAS, the Company has ownership interests as a
tenant in common of undivided interests in Beaver Valley Power
Station Unit No. 1 and Perry Nuclear Power Plant Unit No. 1;
WHEREAS, Beaver Valley No. 1 and Perry No. 1 are, or
are designed to be, nuclear fueled electric generating units
which will require Decommissioning at the end of their useful
life; and
WHEREAS, pursuant to the requirements of the
Pennsylvania Public Utility Commission ("PPUC") and the Nuclear
Regulatory Commission ("NRC"), the Company is generally required
to create an external source of funding to provide for the costs
associated with the Decommissioning of its proportionate share of
nuclear fueled electric generating units in which it has an
interest; and
WHEREAS, pursuant to Section 468A of the Internal
Revenue Code of 1986, as amended, certain federal income tax
benefits are available to the Company as a result of creating and
making contributions to certain nuclear decommissioning reserve
funds; and
WHEREAS, the Company, in order to comply with the
requirements of the PPUC and NRC, and in order to be in a
position to take advantage of the federal income tax benefits
available under the aforementioned Section 468A, established as
of March 15, 1988 and March 10, 1989 Qualified Funds to hold
amounts in trust for the future Decommissioning of each of the
Units and a Nonqualified Fund to hold amounts in trust for the
Decommissioning of Beaver Valley No. 1; and
WHEREAS, PNC Bank, N.A., Pittsburgh, Pennsylvania, and
First Western Trust Services Company, New Castle, Pennsylvania,
which served as Trustee(s) under the master trust(s) for Beaver
Valley No. 1 and Perry No. 1, respectively, from their respective
inception dates, have been replaced as Trustee(s) by Mellon Bank,
N.A.; and
WHEREAS, the Company and Mellon Bank, N.A. (acting as
Trustee) wish to amend the agreements dated as of March 15, 1988
(PNC Bank, N.A.) and March 10, 1989 (First Western Trust Services
Company) which established the master trust(s) thereunder and to
restate such agreements in their entirety in a single agreement
forming one master trust (the "Master Trust") wherein each of the
Funds constitutes a separate trust under the Master Trust.
NOW, THEREFORE, in consideration of the mutual promises
herein contained and other good and valuable consideration,
receipt and sufficiency of which is hereby acknowledged, the
Trustee hereby acknowledges that it has accepted appointment as
successor Trustee under the Master Trust and agrees (a) to serve
as such on the terms and conditions herein set forth and (b) to
accept, from and after the date first above written,
Contributions to the Master Trust delivered to it from time to
time by or on behalf of the Company;
TO HAVE AND TO HOLD such assets, together with the
assets of the master trust which it received upon becoming
successor Trustee thereunder; and
TO INVEST AND REINVEST the same as provided
herein;
IN TRUST NEVERTHELESS, for the uses and purposes and
upon the terms and conditions, as hereinafter set forth; and
TO PAY OR DISTRIBUTE from the Master Trust as provided
herein.
I. DEFINITIONS
-----------
1.01 Definitions. As used in this Master
-----------
Decommissioning Trust Agreement, the following terms shall have
the following meanings:
(1) "Agreement" shall mean this Master
Decommissioning Trust Agreement as the same may be amended,
modified, or supplemented from time to time.
(2) "Applicable Law" shall mean all applicable laws,
statutes, treaties, rules, codes, ordinances, regulations,
certificates, orders, interpretations, licenses and permits of
any Governmental Authority and judgments, decrees, injunctions,
writs, orders or like action of any court, arbitrator or other
judicial or quasi judicial tribunal of competent jurisdiction
(including those pertaining to health, safety, the environment or
otherwise).
(3) "Applicable Tax Law" shall mean Section 468A of
the Code (or comparable subsequent provision of the Code) and the
regulations thereunder, and any other provision of the Code
relating to the Federal taxation of the Funds or credits or
deductions based on Contributions.
(4) "Authorized Representative" shall mean the
persons designated as such pursuant to Section 2.07 hereof.
(5) "Beaver Valley No. 1" shall mean the nuclear
generating unit located at the Beaver Valley Power Station and
known as Unit 1, together with its associated facilities and
equipment.
(6) "Beaver Valley Power Station" shall mean the
electric generating station located on the south bank of the Ohio
River in Beaver County, Pennsylvania, approximately 25 miles
northwest of Pittsburgh.
(7) "Business Day" shall mean a day that is not a
Saturday or Sunday or a legal holiday in the Commonwealth of
Pennsylvania.
(8) "Certificate" shall mean a document properly
completed and executed by an Authorized Representative of the
Company and substantially in the form of Exhibit A hereto as it
may from time to time be amended.
(9) "Code" shall mean the Internal Revenue Code of
1986, as the same may be amended from time to time.
(10) "Company" shall have the meaning set forth in the
opening paragraph of this Agreement.
(11) "Contribution" shall mean any contribution, cash
or otherwise, made to the Trustee for deposit in one or more of
the Funds and in such subaccount thereunder as provided in this
Agreement. No contribution which consists of real property shall
be permitted.
(12) "Decommissioning" shall mean the decommissioning
and retiring of a nuclear generating unit from commercial service
under Applicable Law and, to the extent a method of
decommissioning is not prescribed by Applicable Law, by the
method of decommissioning determined as provided in the operating
agreement relating to such unit, and may include the removal (as
a facility) of such unit safely from service, the dismantling,
shipping, long-term storage and disposal of all radioactive parts
and components of such unit and the reduction of residual
radioactivity at the site of such unit, including reduction of
residual radioactivity to a level that permits, and the removal
of non-contaminated structures and components and such
restoration as shall be necessary or desirable to permit, the
release of the property for unrestricted use and termination of
the NRC license relating to the unit. This process may include,
but is not limited to (a) the removal of both radioactively
contaminated and radioactively uncontaminated portions of the
unit, and shipping, long-term storage and disposal of the same,
in each case, in accordance with Applicable Law at the end of the
useful life of such unit or if there shall be no Applicable Law
at that time, in accordance with the operating agreement with
respect to such unit (b) work done to the site of the unit and
its associated equipment and facilities and to adjacent areas,
whether or not such areas are contiguous to such site, in order
to decontaminate such site and such areas and (c) work done by or
on behalf of the Company (or for which the Company is charged) to
the site where any portion of the unit and its associated
equipment and facilities are to be stored or disposed of in order
to prepare and maintain such site as a storage or disposal site.
(13) "Decommissioning Costs" shall mean all costs and
expenses relating or allocable to, or incurred in connection with
Decommissioning, including but not limited to the removal of the
equipment, structures and portions of a nuclear generating unit
and its site containing radioactive contaminants or the
decontamination of the same, plus, in the case of decontamination,
the cost of removal, shipping and long-term storage or disposal
of such equipment structures and portions; provided, however,
that if Applicable Law prohibits the foregoing or imposes
requirements that are more costly to implement than the removal,
shipping, storage, disposal or decontamination referred to above
in this definition, the term "Decommissioning Costs" shall mean
all costs and expenses relating or allocable to, or incurred in
connection with, the most costly requirements imposed by
Applicable Law with respect to radioactive contaminants after a
nuclear generating unit ceases operation.
(14) "Funds" shall mean the Qualified Funds and the
Nonqualified Funds, collectively.
(15) "Governmental Authority" shall mean any Federal,
state, county, municipal, foreign, international, regional or
other governmental authority, agency, board, body,
instrumentality or court, including, without limitation, the NRC
and the PPUC.
(16) "Investment Account" shall mean an account
established by the Trustee pursuant to Section 8.01 hereof which
consists of those assets in each Fund under the Master Trust
designated by the Company for management by an Investment
Manager.
(17) "Investment Manager(s)" shall mean the person(s)
appointed by the Company pursuant to Section 8.01 hereof,
including any employees of the Company or its affiliated
companies.
(18) "Investment Manager Agreement(s)" shall mean an
agreement(s) between the Company and an Investment Manager(s)
appointed by the Company which agreement governs the management
of all or a portion of the Funds.
(19) "Master Trust" shall have the meaning ascribed
thereto in the seventh WHEREAS clause of this Agreement.
(20) "Nonqualified Funds" shall mean, collectively,
the Funds not constituting Qualified Funds established under, and
in accordance with, Section 2.02(b) or Section 2.05 of the Master
Trust with respect to any of the Units. Each Nonqualified Fund
shall have such subaccounts as are provided for herein or as the
Company may otherwise specify.
(21) "NRC" shall have the meaning ascribed thereto in
the third WHEREAS clause of this Agreement or any successor
agency.
(22) "Order" shall mean any order relating to
Decommissioning issued by a Governmental Authority and applicable
to one or more of the Units.
(23) "Permitted Investment" shall mean, at any
particular time, each investment shown on Schedule A hereto to be
permissible at such time.
(24) "Perry No. 1" shall mean the nuclear generating
unit located at the Perry Nuclear Power Plant and known as Unit
1, together with its associated facilities and equipment.
(25) "Perry Nuclear Power Plant" shall mean the
electric generating station located on the shore of Lake Erie in
Lake County, Ohio, approximately 35 miles northeast of Cleveland.
(26) "PPUC" shall have the meaning ascribed thereto in
the third WHEREAS clause of this Agreement or any successor
agency.
(27) "Qualified Funds" shall mean, collectively, the
accounts established under, and in accordance with, Section
2.02(b) of the Master Trust for purposes of Section 468A of the
Code which are designated as such in the records of the Trustee.
Each Qualified Fund shall have such subaccounts as are specified
herein or as the Company may otherwise specify. Contributions,
if any, made with respect to each such Fund in any year shall not
exceed the amount permitted to be made to such Fund with respect
to the year in question in order for the Company to be allowed to
take the deduction afforded by Section 468A of the Code. It
shall be the Company's responsibility and not that of the Trustee
to monitor the amount of such contributions.
(28) "Service" shall mean the Internal Revenue
Service.
(29) "Trustee" shall have the meaning ascribed thereto
in the opening paragraph of this Agreement or any successor
appointed pursuant to Section 7.01 hereof.
(30) "Units" shall mean Beaver Valley No. 1 and Perry
No. 1, collectively.
II. MASTER TRUST PURPOSE, NAME AND FUNDS
------------------------------------
2.01 Master Trust Purpose. The exclusive purpose of
--------------------
this Master Trust is to accumulate and hold funds for the
contemplated Decommissioning of the Units and to expend funds for
that purpose.
2.02 Establishment of Master Trust. By execution of
-----------------------------
this Agreement, the Company and the Trustee:
(a) reaffirm the establishment of the master trusts
established on March 15, 1988 and March 15, 1989 to provide for
the Decommissioning Costs of the Units and confirm the
consolidation of said master trusts as a single trust under this
Agreement;
(b) reaffirm the establishment of a Qualified Fund for
each Unit and a Nonqualified Fund for Beaver Valley No. 1; and
(c) reaffirms the appointment of Mellon Bank, N.A., as
successor to PNC Bank, N.A., Pittsburgh, Pennsylvania, and First
Western Trust Services Company, New Castle, Pennsylvania, as
Trustee of the Master Trust.
2.03 Acceptance of Appointment. Upon the terms and
-------------------------
conditions herein set forth, Mellon Bank, N.A. reaffirms
acceptance of its appointment as Trustee of the Master Trust. The
Trustee declares that it will hold all estate, right, title and
interest it may acquire hereunder exclusively for the purposes
set forth in this Article II. The Trustee shall receive any
Contributions deposited with it by the Company in trust for the
benefit of the Company (subject to the rights of other parties as
contemplated by Section 3.01 hereof) and shall deposit such
Contributions in one or more of the Funds, and in such
subaccounts thereunder, as provided in Section 2.05 hereof and
otherwise as the Company shall specify. The Trustee shall hold,
manage, invest and administer such Contributions, together with
earnings and appreciation thereon, in accordance with this
Agreement.
2.04 Name of Master Trust. The Contributions received
--------------------
by the Trustee (or by any predecessor or successor trustee) from
the Company together with the proceeds, reinvestment and
appreciation thereof shall constitute the "Pennsylvania Power
Company Master Decommissioning Trust."
2.05 Division of Master Trust. The Master Trust shall
------------------------
be divided by the Trustee into a Qualified Fund for each of the
Units and a Nonqualified Fund for Beaver Valley No. 1 and into
such other Nonqualified Funds as the Company from time to time
shall establish. Each Fund shall constitute a separate trust
under the Master Trust and shall be designated as relating to a
particular Unit. Each Fund shall have subaccounts as the Company
from time to time shall specify.
The Trustee shall maintain such records as are
necessary to reflect each Fund and each subaccount thereunder
separately on its books from each other Fund and subaccount.
2.06 Designation of Funds. Upon (i) any Contribution
--------------------
to the Master Trust; or (ii) any withdrawal from the Master
Trust; or (iii) any transfer between the Funds or subaccounts
thereunder, the Company shall designate (in writing), in
accordance with Article IV or V, as applicable, the Fund(s), and
the subaccount(s) thereunder, which is to be credited or debited
for the amount of such Contribution, withdrawal or transfer, and
the Trustee shall credit or debit the Fund(s), and the
subaccount(s) thereunder, in accordance with such designation and
shall be fully protected in relying thereon.
2.07 Duties of Authorized Representatives. The
------------------------------------
Company has empowered the Authorized Representatives and their
delegates to act for the Company in all respects hereunder. The
Authorized Representatives may act as a group or may designate
one or more Authorized Representative(s) or delegate(s) to
perform the duties described in the foregoing sentence. The
Company shall provide the Trustee with a written statement
setting forth the names and specimen signatures of the Authorized
Representatives. The Authorized Representatives shall provide
the Trustee with a written statement setting forth the names and
specimen signatures of, and specific authority delegated to, any
delegate of the Authorized Representatives. Until otherwise
notified in writing by the Company, the Trustee may rely upon any
written notice, instruction, direction, certificate or other
communication believed by it to be genuine and to be signed or
certified by any one or more Authorized Representatives or their
designated delegate(s), and the Trustee shall be under no duty to
make any investigation or inquiry as to the truth or accuracy of
any statement contained therein.
2.08 No Authority to Conduct Business. The purpose of
--------------------------------
this Master Trust is limited specifically to the matters set
forth in Section 2.01 hereof, and there is no objective to carry
on any business unrelated to the Master Trust purpose set forth
in Section 2.01 hereof, or divide the gains therefrom.
2.09 No Transferability of Master Trust. Except as
----------------------------------
expressly provided in Article III hereof or in a supplement
hereto, the interest of the Company in the Master Trust is
neither transferable, whether voluntarily or involuntarily, by
the Company nor subject to the payment of the claims of creditors
of the Company; provided, however, that any creditor of the
------------------
Company as to which a Certificate has been properly completed and
submitted to the Trustee may assert a claim directly against the
Master Trust in an amount not to exceed the amount specified in
such Certificate.
III. BENEFICIARY OF MASTER TRUST
---------------------------
3.01 Company to be Beneficiary. The beneficial
-------------------------
ownership of the Funds shall, subject to the purpose of the
Master Trust, be at all times in the Company.
IV. CONTRIBUTIONS AND INCOME
------------------------
4.01 Contributions. The Company shall make
-------------
Contributions to any Fund from time to time as it shall deem
necessary or appropriate. The Trustee, if so instructed by the
Company, shall have the ability to return Contributions to the
Company if the Company determines that such Contributions are
excessive in light of Applicable Law or Applicable Tax Law.
4.02 Allocation of Net Income. Upon written consent
------------------------
of the Company, assets of a Qualified Fund relating to one of the
Units may be pooled, but only with the assets of the Qualified
Fund relating to the other Unit; provided that the book and tax
allocations of the Qualified Fund pool are made in proportion to
each Qualified Fund's relative book capital accounts. The
Trustee may pool the assets of the Nonqualified Funds or of any
subaccount thereunder for investment purposes upon the written
consent of the Company and, upon so doing, shall treat each Fund
or subaccount so pooled as having received or accrued a pro rata
portion (based on the principal balances of the Funds or
subaccount so pooled) of the net income of the Master Trust
(including appreciation) related to such pooled assets in any
accounting period of the Master Trust. Without limiting the
requirements of Section 7.05 hereof, the Trustee shall maintain
such separate records of each of the Funds and the subaccounts
thereunder as are necessary to reflect the assets thereof and the
allocation of income and losses among the Funds and subaccounts
thereunder. The Trustee may rely upon the written opinion of
legal counsel of the Company, who may be an employee of the
Company, with respect to any question arising under this Section
4.02.
With respect to the pooling of investments authorized
by this Section 4.02, no part of any Fund's interest in such pool
(or that of the Company or any transferee (a "Transferee") of any
interest of the Company in either of the Units), nor any right
pertaining to such interest (including any right to substitute
another entity for the Fund or for the Company or any Transferee,
as holder of investments pooled pursuant to this Section 4.02)
may be sold, assigned, transferred or otherwise alienated or
disposed of by any holder of an interest in the pool unless the
written consent to the transfer of every other holder of
interests in such pool is obtained in advance of any such
transfer.
4.03 Pool Withdrawals. A Fund's investment in a
----------------
pooled arrangement may be withdrawn from the pool (but not from
the Master Trust, except as otherwise permitted by this
Agreement) at any time upon written notice to the Trustee by the
Fund, after consultation with the Company or, to the extent a
Transferee has an interest in such Fund, with a Transferee. If
the Fund withdraws its entire interest in a pool, the pooled
arrangement shall terminate 30 days after notice of final
withdrawal has been given by any withdrawing Fund. If the pooled
arrangement terminates, each Fund's assets will be segregated
into a separate account (which may include subaccounts) under the
Master Trust, and, if the Funds are Qualified Funds, no further
commingling of Qualified Funds may occur for a period of at least
one year after such termination.
Section 4.02 and this Section 4.03 apply to transfers
of interests within, and withdrawals from, a pooling arrangement.
Nothing within these sections shall be interpreted to permit or
to limit transfer of interests in, or withdrawals from, a Fund,
which transfers and withdrawals are governed by other provisions
of this Agreement. In addition, the provisions of Section 4.02
and this Section 4.03 shall not limit the Trustee's authority to
invest in permissible common or collective trust funds.
4.04 Subsequent Transfers. Upon receipt of a written
--------------------
directive of the Company signed by an Authorized Representative
which sets forth an amount to be transferred from one of the
Funds or subaccount thereunder and states that such amount should
be transferred to one or more other Funds or subaccount as
specified, the Trustee shall transfer such amount to the Fund(s)
or subaccount specified by the Company in the written directive
and shall be fully protected in relying thereon. The Company
shall not direct any transfer to or from a Qualified Fund which
would violate the provisions of Section 468A of the Code.
V. DISTRIBUTIONS
-------------
5.01 Payment of Decommissioning Costs and
------------------------------------
Administrative Costs. In addition to payments otherwise
- --------------------
authorized by this Agreement, the Trustee shall make payments out
of the Funds or any subaccount thereunder upon presentation to
the Trustee of a Certificate by the Company instructing the
Trustee to disburse amounts in the Funds or any subaccount
thereunder in a manner designated in such Certificate for
purposes of paying costs, liabilities and expenses of
Decommissioning or, if so specified, administrative costs related
to services authorized by the Company pursuant to Section 9.03.
If the assets of any Fund or subaccount thereof are insufficient
to permit the payment in full of amounts to be paid pursuant to a
Certificate, the Trustee shall have no liability with respect to
such insufficiency and no obligation to use its own funds to pay
the same, except as it might otherwise be liable under this
Agreement because of its negligence or wilful misconduct.
Notwithstanding any other provision contained herein to the
contrary, assets in the Qualified Funds must be used as
authorized by Code Section 468A and the regulations thereunder
but the Trustee shall have no liability with respect to a failure
to so use such assets so long as it is following instructions
given by the Company.
5.02 Payment of Administrative Expenses. In addition
----------------------------------
to the payment of administrative costs paid pursuant to Section
5.01 hereof, from time to time, the Trustee shall make payments
of all reasonable administrative expenses (including, reasonable
out-of-pocket expenses and Trustee's fees as specified in the
agreement referred to in Section 5.03 hereof and taxes, other
than taxes payable on the income of the Trustee) in connection
with the operation of the Master Trust pursuant to this
Agreement. All such administrative expenses and incidental
expenses of the Master Trust shall require prior written
authorization of the Company and shall be allocated
proportionately among the Funds (based on the fair market value
of each Fund immediately prior to any such payment) and within
each Fund among the subaccounts in the proportion that the
balance in each subaccount bears to the aggregate balance of all
subaccounts in such Fund, provided that income taxes shall be
allocated among the Qualified Funds and Nonqualified Funds in
accordance with the income tax actually imposed on each such
Fund. The Trustee shall maintain such records as are necessary
to reflect the allocation of administrative expenses and
incidental expenses among the Funds and subaccounts in accordance
with this Section 5.02. If the assets of any Fund or subaccount
thereof are insufficient to permit the payment in full of amounts
payable under this Section 5.02, the Trustee shall have no
liability with respect to such insufficiency and no obligation to
use its own funds to pay the same, except as it might otherwise
be liable under this Agreement because of its negligence or
wilful misconduct.
5.03 Fees. The Trustee shall receive as exclusive
----
compensation for its services such reasonable amounts as may from
time to time be agreed to by the Trustee and the Company.
5.04 Liquidation of Investments. At the direction of
--------------------------
the Company or any Investment Manager (with respect to Funds or
portions thereof specified to be under the control of such
Investment Manager as to investment in an Investment Manager
Agreement), the Trustee shall sell or liquidate such investments
of the Funds as may be specified. The proceeds of any such sale
or liquidation shall be credited pro rata to the Fund or Funds
and within each Fund to the subaccount or subaccounts thereunder
to which such investments were credited prior to such sale or
liquidation.
VI. TERMINATION
-----------
6.01 Termination of Funds and Master Trust in General.
------------------------------------------------
Each Fund established hereunder shall terminate only upon the
earlier of (i) the completion of the Decommissioning of the Unit
to which it relates (as evidenced by written notification of that
fact to the Trustee by the Authorized Representative accompanied
by evidence of the concurrence of the NRC with respect thereto,
or (ii) twenty-one (21) years after the death of the last
survivor of each Person who was an officer or director of the
Company on March 15, 1988 and each of their descendants born on
or prior to March 15, 1988. This Master Trust shall terminate
upon the termination of all of the Funds. Prior to its
termination this Master Trust shall be irrevocable.
6.02 Distribution of Master Trust and Funds Upon
-------------------------------------------
Termination. Upon termination of this Master Trust or of the
- -----------
Funds with respect to a particular Unit, the Trustee shall assist
the Company or the Investment Manager(s) in liquidating the
assets of the Master Trust or such Funds, as the case may be, and
distributing the then existing assets thereof (including accrued,
accumulated and undistributed net income), less all reasonable
final administrative costs and expenses agreed to by the Company
(including accrued taxes), to the Company; provided, however,
-------- -------
that no such distribution shall be made unless the conditions set
forth in Section 6.01 shall have been satisfied.
VII. TRUSTEES
--------
7.01 Designation and Qualification of Successor
------------------------------------------
Trustee(s). At any time during the term of this Master Trust,
- ----------
the Company shall have the right to remove the Trustee (at the
Company's sole discretion) acting hereunder and appoint another
qualified entity as a successor Trustee upon thirty (30) days'
notice in writing to the Trustee, or upon such shorter notice as
may be acceptable to the Trustee. In the event that the bank or
trust company serving as Trustee or successor Trustee shall: (a)
become insolvent or admit in writing its insolvency; (b) be
unable or admit in writing its inability to pay its debts as such
debts mature; (c) make a general assignment for the benefit of
creditors; (d) have an involuntary petition in bankruptcy filed
against it; (e) commence a case under or otherwise seek to take
advantage of any bankruptcy, reorganization, insolvency,
readjustment of debt, dissolution or liquidation law, statute, or
proceeding or (f) resign, the Company shall appoint a successor
Trustee as soon as practicable. In the event of any such removal
or resignation, the Trustee or successor Trustee shall have the
right to have its accounts finalized as provided in Section 7.05
hereof. Any successor to the Company, as provided herein, shall
have the same right to remove and to appoint any Trustee or
successor Trustee.
Any successor Trustee shall be a bank or trust company
incorporated and doing business within the United States of
America and having a combined capital and surplus of at least
$250,000,000 (in 1988 dollars), if there be such an institution
willing, able and legally qualified to perform the duties of
Trustee hereunder upon reasonable or customary terms.
Any successor Trustee shall qualify by a duly
acknowledged acceptance of this Master Trust, delivered to the
Company. Upon acceptance of such appointment by the successor
Trustee, the Trustee shall assign, transfer and pay over to such
successor Trustee the assets then constituting the Master Trust.
Any successor Trustee shall have all the rights, powers, duties
and obligations herein granted to the original Trustee.
7.02 Exoneration from Bond. No bond or other security
---------------------
shall be exacted or required of any Trustee or successor Trustee
appointed pursuant to this Agreement.
7.03 Resignation. The Trustee or any successor
-----------
Trustee may resign and be relieved as Trustee at any time without
prior application to or approval by or order of any court, by a
duly acknowledged instrument, which shall have been delivered to
the Company by the Trustee no less than sixty (60) days prior to
the effective date of such Trustee's resignation or upon such
shorter notice as may be acceptable to the Company. If for any
reason the Company cannot or does not act in the event of the
resignation of the Trustee, the Trustee may apply to a court of
competent jurisdiction for the appointment of a successor Trustee
and the cost of making such application shall be an
administrative expense.
7.04 Transactions With Third Parties. No person or
-------------------------------
organization dealing with the Trustee hereunder shall be required
to inquire into or to investigate its authority for entering into
any transaction or to see to the application of the proceeds of
any such transaction.
7.05 Accounts and Reports. The Trustee shall keep
--------------------
accurate and detailed accounts of all investments, receipts and
disbursements and other transactions hereunder with respect to
each Fund and each subaccount thereunder in accordance with
specifications of the Company and generally accepted accounting
principles, and all accounts, books and records relating thereto
shall be open to inspection and audit at all reasonable times by
any person designated by the Company. Within 8 Business Days
following the close of each month, the Trustee shall provide a
written report of the market value of each Fund and each
subaccount thereunder, prepared on an accrual basis which shall
set forth all investments, receipts and disbursements and other
transactions effected by it during the month and containing an
exact description of all cash and securities contributed,
purchased, sold or distributed and the cost or net proceeds of
sale, and showing all cash, and securities and other investments
held at the end of such month and the cost and fair market value
of each item thereof as carried on the books of the Trustee.
Such accounts and reports shall be based on the accrual method of
reporting net income and expenses and shall show the portion of
the assets applicable to each Fund and subaccount thereunder and
shall also identify all disbursements from each Fund and
subaccount thereunder.
In addition to the foregoing, on or before January 31
in each calendar year, the Trustee shall submit such reports to
any Governmental Authority as may be required under any
applicable regulation.
All records and accounts maintained by the Trustee with
respect to the Master Trust and the Funds shall be preserved at
least until one year after the termination of the Master Trust
and thereafter for such additional period as may be required
under any applicable law. Upon the expiration of any such
required retention period, the Trustee shall have the right to
destroy such records and accounts after first notifying the
Company in writing of its intention and transferring to the
Company any records and accounts requested by the Company.
7.06 Tax Returns and Other Reports. The Trustee shall
-----------------------------
prepare, execute and timely file all federal, state and local
income or franchise tax returns or other reports (including
estimated tax returns and information returns) as may be required
from time to time with respect to the Qualified Funds, and the
Company agrees to provide the Trustee in a timely manner with any
information within its possession, and to cause the Investment
Manager(s) to provide the Trustee with any information in its
possession, which is necessary to such filings. The Trustee
shall prepare and submit to the Company in a timely manner all
information requested by the Company regarding the Funds required
to be included in the Company's federal, state and local income
tax returns or other reports (including estimated tax returns and
information returns). Subject to the limitations contained in
Section 9.03 hereof, the Trustee may employ independent certified
public accountants or other tax counsel to prepare or review such
returns and reports and the cost thereof shall be an
administrative cost. The Trustee agrees to remit from the Master
Trust appropriate payments or deposits of federal, state and
local income or franchise taxes directly to the taxing agencies
or authorized depositaries in a timely manner. Notwithstanding
Section 7.07 hereof, any interest or penalty charges assessed
against the Master Trust pursuant to Chapters 67 or 68 of the
Code, or pursuant to any similar state or local tax provisions,
as a result of the Trustee's failure to comply with this Section
7.06 (other than as a result of the Company's failure to provide
or cause to be provided the information that it has agreed to
provide or cause to be provided in this Section 7.06) shall be
borne by the Trustee and not the Master Trust. The Trustee
agrees to notify immediately the Company in writing of the
commencement of the audit of any Qualified Fund's federal, state,
or local tax returns, and to participate with the Company on
behalf of the Qualified Funds in such audits and related
inquiries. The Trustee further agrees to provide the Company
with any additional information in its possession regarding the
Master Trust which may be requested by the Company to be
furnished in an audit of the Company's federal, state, or local
tax returns within 30 days of receipt of notice of audit but in
no event less than 15 days prior to the commencement of any
audit.
In addition, the Trustee, upon being instructed by the
Company to do so, shall file within thirty days of the filing
thereof with a State or Federal agency, copies of the documents
so filed that the Master Trust is required to file with any other
State or Federal agency, including without limitation tax
returns.
7.07 Liability. (a) The Trustee shall be liable only
---------
for such Trustee's own acts or omissions (and those of its
officers and employees) occasioned by the willful misconduct or
negligence of such Trustee (or that of its officers and
employees).
(b) Notwithstanding anything contained in this
Agreement to the contrary, the Trustee agrees to refrain from
authorizing or carrying out transactions that would constitute
"self-dealing" under Code Section 468A(e) (5) or Code Section
4951 (or any applicable successor provisions). If the Trustee
authorizes or carries out any transaction in violation of the
provisions of this clause (b), the Trustee (and not the Master
Trust or any Qualified Fund) shall be liable for any tax imposed
on the Master Trust, any Qualified Fund, or the Trustee pursuant
to Code Section 4951 (or any applicable successor provision) and
for any loss or damage sustained by the Master Trust, any
Qualified Fund, or the Company; provided, however, that the
Trustee shall have no such liability with respect to transactions
authorized or carried out pursuant to specific written
instructions of the Company.
(c) The Company shall indemnify the Trustee and hold it
harmless against any and all claims, losses, liabilities, excise
taxes, damages or expenses (including reasonable attorneys' fees
and expenses) howsoever arising from or in connection with this
Agreement or the responsible performance of its duties hereunder,
together with any income taxes imposed on the Trustee as a result
of any indemnity paid to it hereunder, provided that nothing
contained herein shall require that the Trustee be indemnified
for any liability imposed pursuant to clauses (a) or (b) of this
Section 7.07. Nothing contained herein shall limit or in any way
impair the right of the Trustee to indemnification under any
other provision of this Agreement.
VIII. INVESTMENTS
-----------
8.01 Appointment of Investment Manager(s). The
------------------------------------
Company may appoint one or more Investment Managers to direct the
investment of all or part of the Funds under the Master Trust.
The Company shall also have the right to remove any such
Investment Manager(s). Whenever such appointment is made, the
Company shall provide written notice of such appointment to the
Trustee, shall specify the portion of the Funds under the Master
Trust with respect to which an Investment Manager has been
designated, and shall instruct the Trustee to segregate into an
Investment Account for each Fund those assets designated for
management by the Investment Manager. Each Investment Account
shall be divided into subaccounts as the Company from time to
time shall specify. To the extent that assets are segregated
into an Investment Account, the Trustee shall be released and
relieved of all investment responsibilities with respect to the
assets in the Investment Account, and as to such Investment
Account the Trustee shall act as custodian. An Investment
Manager shall certify in writing to the Trustee the identity of
the person or persons authorized to give instructions or
directions to the Trustee on its behalf, including specimen
signatures. The Trustee may continue to rely upon all such
certifications unless otherwise notified in writing by the
Company or an Investment Manager, as the case may be.
8.02 Direction by Investment Manager(s). An
----------------------------------
Investment Manager appointed by the Company to manage an
Investment Account shall have authority, subject to the
limitations set forth in Schedule A hereto, to manage and to
direct the acquisition and disposition of the assets of the Funds
under the Master Trust, or a portion thereof, as the case may be,
and, after notification of such appointment, the Trustee shall
exercise the powers set forth in Article X hereof with respect to
those assets only when, if, and in the manner directed by the
Company in writing, and shall not be under any obligation to
invest or otherwise manage any assets in the Investment Account.
An Investment Manager shall have the power and authority,
exercisable in its sole discretion at any time, and from time to
time, to issue and place orders for the purchase or sale of
portfolio securities directly with qualified brokers or dealers.
The Trustee, upon proper notification from an Investment Manager,
shall settle the transactions in accordance with the appropriate
trading authorizations. Written notification of the issuance of
each such authorization shall be given promptly to the Trustee by
an Investment Manager, and such Investment Manager shall cause
the settlement of such transaction to be confirmed in writing to
the Trustee, and to the Company, by the broker or dealer. Such
notification shall be proper authority for the Trustee to pay for
portfolio securities purchased against receipt thereof and to
deliver portfolio securities sold against payment therefor, as
the case may be. All directions to the Trustee by an Investment
Manager shall be in writing and shall be signed by a person who
has been certified by such Investment Manager pursuant to Section
8.01 hereof as authorized to give instructions or directions to
the Trustee.
Should an Investment Manager at any time elect to place
security transactions directly with a broker or dealer, the
Trustee shall not recognize such transaction unless and until it
has received instructions or confirmation of such fact from an
Investment Manager. Should an Investment Manager direct the
Trustee to utilize the services of any person with regard to the
assets under its management or control, such instructions shall
be in writing and shall specifically set forth the actions to be
taken by the Trustee as to such services. In the event that an
Investment Manager places security transactions directly or
directs the utilization of a service, such Investment Manager
shall be solely responsible for the acts of such persons. The
sole duty of the Trustee as to such transactions shall be
incident to its duties as custodian.
The authority of an Investment Manager and the terms
and conditions of the appointment and retention of an Investment
Manager(s) shall be the responsibility solely of the Company, and
the Trustee shall not be deemed to be a party to, or to have any
obligations under, any agreement with an Investment Manager. Any
duty of supervision or review of the acts, omissions or overall
performance of the Investment Manager(s) shall be the exclusive
responsibility of the Company, and the Trustee shall have no duty
to review any securities or other assets purchased by an
Investment Manager, or to make suggestions to an Investment
Manager or to the Company with respect to the exercise or
nonexercise of any power by an Investment Manager; provided,
however, that the Trustee shall keep complete records of all
transactions in accordance with Section 7.05 hereof (whether
conducted by the Trustee or an Investment Manager) and shall not
carry out any instruction from an Investment Manager which would
violate the investment standards set forth in Schedule A hereto.
Nothing contained in this Section 8.02 shall be deemed
to authorize any Investment Manager as such to direct or
otherwise cause assets to be transferred between Funds or
subaccounts. Any investment authorization shall at all times be
subject to the investment standards set forth in Schedule A
hereto.
IX. TRUSTEE'S GENERAL POWER
-----------------------
The Trustee shall have, with respect to the Master
Trust, the following powers, all of which powers are fiduciary
powers to be exercised in a fiduciary capacity and in the best
interests of this Master Trust and the purposes hereof, namely:
9.01 Holding of Securities. To hold any stocks,
---------------------
bonds, securities, and/or other property in the name of a
nominee, in bearer form, in a clearinghouse corporation or in a
depository (including an affiliate of the Trustee), or by other
titleholding device, without indication of trust and generally to
exercise the powers of an owner, including without limitation the
power to vote in accordance with instructions provided by the
Company and to collect principal and interest payments, with
respect to any such property whether so held or held in its own
name, as Trustee, so long as the Trustee's records clearly
indicate that the assets held are a part of a Fund.
9.02 Borrowing. To borrow money in such amounts and
---------
upon such terms as the Company may authorize in writing as
necessary to carry out the purposes of this Master Trust, and to
pledge any securities or other property for the repayment of any
such loan as the Company may direct.
9.03 Retention and Removal of Professional and
-----------------------------------------
Employee Services. To employ (upon authorization by the Company)
- -----------------
attorneys, accountants, custodians, engineers, contractors,
clerks and agents (which may be affiliates of the Trustee or
employees of such affiliates) to carry out the purposes of this
Master Trust. The cost of any such employment shall be an
administrative cost.
9.04 Delegation of Ministerial Powers. To delegate to
--------------------------------
other persons, as agents of the Trustee, such ministerial powers
and duties as the Trustee may deem to be advisable.
9.05 Powers of Trustee to Continue Until Final
-----------------------------------------
Distribution. To exercise any of such powers after the date on
- ------------
which the principal and income of the Funds under the Master
Trust shall have become distributable and until such time as the
entire principal of, and income from, the Master Trust shall have
been actually distributed by the Trustee. It is intended that
distribution of one or more of the Funds under the Master Trust
will occur as soon as possible after termination of the Master
Trust or any Fund, subject, however, to the limitations contained
in Article V hereof.
9.06 Discretion in Exercise of Powers. Except as
--------------------------------
specifically limited herein, to do any and all other acts which
the Trustee shall deem proper to effectuate the powers
specifically conferred upon it by this Agreement, including
without limitation, if authorized by the Company in writing,
commencing or defending suits or legal proceedings to protect the
Funds.
9.07 Deposition of Funds. To the extent it shall
-------------------
constitute a Permitted Investment or shall be temporary pending
further investment, to invest in common trust funds maintained by
the Trustee or its affiliate and to deposit funds in interest
bearing account deposits maintained by or savings certificates
issued by Mellon Bank, N.A. in its separate corporate capacity,
or in any other banking institution affiliated with Mellon Bank,
N.A.; provided, however, that the assets of a Qualified Fund may
-------- -------
only be so deposited if the requirements of Applicable Tax Law
are met.
9.08 Market Inventory Funds. To maintain and operate
----------------------
one or more market inventory funds as a vehicle to exchange
securities among Funds without alienating the property from the
Trust.
9.09 Loaning of Securities. To the extent it shall
---------------------
constitute a Permitted Investment, to loan securities (including
securities held in a common trust fund maintained by the Trustee
or an affiliate) to brokers or dealers or other borrowers under
such terms and conditions as the Trustee, in its absolute
discretion, deems advisable, to secure the same in any manner
permitted by law and the provisions of this Agreement, and during
the term of any such loan, to permit the loaned securities to be
transferred into the name of and voted by the borrowers or
others, and, in connection with the exercise of the powers
hereinabove granted, to hold any property deposited as collateral
by the borrower pursuant to any master loan agreement in bulk or
otherwise, together with the unallocated interests of other
lenders, and to liquidate and retain any such property upon the
default of the borrower, and to receive compensation therefor out
of any amount paid by or charged to the account of the borrower.
9.10 Retention of Uninvested Cash. To hold such
----------------------------
uninvested cash as may be reasonably required with its commercial
bank or that of an affiliate for the timely disbursement of funds
under this Agreement without incurring any liability for the
payment of interest thereon. All other cash allocable to a Fund
shall be placed in an interest bearing account (which may be with
the Trustee or an affiliate of the Trustee) immediately upon the
receipt thereof by the Trustee pending further investment or the
disbursement thereof.
X. TRUSTEE'S INVESTMENT POWERS
---------------------------
10.01 General Investment Powers. The Trustee
-------------------------
recognizes the authority of an Investment Manager to manage,
invest, and reinvest the assets in an Investment Account pursuant
to an Investment Manager Agreement and as provided in Article
VIII of this Agreement, and the Trustee agrees to cooperate with
any Investment Manager as deemed necessary to accomplish these
tasks. Notwithstanding the foregoing, to the extent that the
assets of the Funds under the Master Trust have not been
segregated into an Investment Account to be invested by an
Investment Manager, the Trustee, subject to the limitations
contained in Schedule A hereto, shall have the power to invest
such assets in accordance with the written directions of the
Company and, as to Qualified Funds, in conformity with the
limitations set forth in Section 468A of the Code and the
regulations thereunder.
XI. MISCELLANEOUS
-------------
11.01 Headings. The section headings set forth in
--------
this Agreement and the Table of Contents are inserted for
convenience of reference only and shall be disregarded in the
construction or interpretation of any of the provisions of this
Agreement.
11.02 Particular Words. Any word contained in the
----------------
text of this Agreement shall be read as the singular or plural
and as the masculine, feminine, or neuter as may be applicable or
permissible in the particular context. Unless otherwise
specifically stated, the word "person" shall be taken to mean and
include an individual, partnership, association, trust, company,
or corporation.
11.03 Severability of Provisions. If any provision of
--------------------------
this Agreement or its application to any person or entity or in
any circumstances shall be invalid and unenforceable, the
application of such provision to persons and in circumstances
other than those as to which it is invalid or unenforceable, and
the other provisions of this Agreement, shall not be affected by
such invalidity or unenforceability.
11.04 Delivery of Notices Under Agreement. Any
-----------------------------------
notice, direction or instruction required by this Agreement to be
given to the Company or the Trustee shall be deemed to have been
properly given when mailed, postage prepaid, by registered or
certified mail, to the person to be notified as set forth below:
If to the Company:
PENNSYLVANIA POWER COMPANY
1 East Washington Street
P. O. Box 891
New Castle, PA 16103-0891
Attention: Treasurer
If to the Trustee:
Mellon Bank, N.A.
One Mellon Bank Center, Room 3346
Pittsburgh, Pennsylvania 15258
Attention: Institutional Trust Department
The Company or the Trustee may change the above address by
delivering notice thereof in writing to the other party.
11.05 Alterations and Amendments. The Trustee and the
--------------------------
Company understand and agree that modifications or amendments may
be required to this Agreement, and to the exhibits and schedules
hereto, from time to time to effectuate the purpose of the Master
Trust and to comply with Applicable Law, Applicable Tax Law, any
Order, any changes in tax laws, regulations or rulings (whether
published or private) of the Service and any similar state taxing
authority, and any other changes in the laws applicable to the
Company or the Units. This Agreement, and the exhibits and
schedules hereto, may be altered or amended to the extent
necessary or advisable to effectuate such purposes or to comply
with such Applicable Law, Applicable Tax Law, Order or changes.
Otherwise, this Agreement, and the exhibits and
schedules hereto, subject to and in conformity with Section 15 of
any applicable Supplement, may be amended, modified, or altered
for any purpose requested by the Company so long as such
amendment, modification, or alteration does not affect the use of
the assets of any Fund or subaccount to pay the costs of
Decommissioning to which they are dedicated.
Any alteration or amendment to, or modification of,
this Agreement or an exhibit hereto must be in writing and signed
by the Company and the Trustee. Schedules to this Agreement may
be amended, modified or altered by delivery of such amended,
modified or altered schedule to the Trustee together with notice
that such amended, modified or altered schedule shall be
effective forthwith or at such later date as specified in the
notice. The Trustee shall execute any such alteration,
modification or amendment required to be executed by it and shall
accept and be governed by any amended, modified or altered
schedule delivered to it but shall have no duty to inquire or
make any investigation as to whether any amendment, modification
or alteration is consistent with this Section 11.05.
Notwithstanding the foregoing, no alteration, modification or
amendment to this Agreement or any exhibit or schedule hereto
shall have any effect whatsoever if it shall fail to comply with
the terms and conditions set forth in the proviso to the second
sentence of the first paragraph of this Section 11.05.
Notwithstanding any other provision contained herein to
the contrary, this Agreement may not be amended so as to violate
Code Section 468A or the regulations thereunder.
11.06 Successors and Assigns. Subject to the
----------------------
provisions of Sections 2.09 and 7.01, this Agreement shall be
binding upon and inure to the benefit of the Company, the Trustee
and their respective successors, assigns, personal
representatives, executors and heirs.
11.07 Governing Law; Jurisdiction; Certain Waivers.
--------------------------------------------
The Master Trust and all questions pertaining to its validity,
construction, and administration shall be determined in
accordance with the laws of the Commonwealth of Pennsylvania to
the extent not superseded by Federal law.
11.08 Accounting Year. The Master Trust shall operate
---------------
on an accounting year which coincides with the calendar year,
January 1 through December 31.
11.09 Counterparts. This Agreement may be executed in
------------
any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were
upon the same instrument.
11.10 Decommissioning Liability. Nothing in this
-------------------------
Agreement is intended to impose any responsibility on the Trustee
for overseeing or paying the cost of the Decommissioning of the
Units or any of them other than, in the case of the Trustee, the
disbursement of funds in accordance with Article V hereof.
IN WITNESS WHEREOF, the Company and the Trustee have
set their hands and seals to this Agreement as of the day and
year first above written.
PENNSYLVANIA POWER COMPANY
By /s/ Robert P. Wushinske
-------------------------
Attest: /s/ Randy Scilla
---------------------
MELLON BANK, N.A.
By /s/ Earl G. Kleckner
--------------------------
Attest: /s/ Denise A. Fuhrer
----------------------
COMMONWEALTH OF PENNSYLVANIA )
) ss:
COUNTY OF ALLEGHENY )
I, Laurie A. Adams, a Notary Public in and for the
---------------
aforesaid jurisdiction, do hereby certify that Earl G. Kleckner
----------------
and Denise A. Fuhrer, who are personally known to
- ---------- ----------------
me to be the persons who executed the foregoing Master
Decommissioning Trust Agreement, personally appeared before me in
the aforesaid jurisdiction, and as Vice President and
--------------
Assistant Officer of Mellon Bank, N.A., and by virtue of the
- -----------------
power and authority vested in them, acknowledged the same to be
the act and deed of Mellon Bank, N.A., and they executed the same
as such.
Given under my hand and seal this 21st day of April
---- -----
1995.
[NOTARIAL SEAL]
/s/ Laurie A. Adams
------------------------------------
Notary Public, State of Pennsylvania
My commission expires July 26, 1997
--------------
<PAGE>
SCHEDULE A
Beaver Valley No. 1
- -------------------
Qualified Fund:
Investments permitted from time to time under Section
468A of the Code and Regulations thereunder, unless the
investments permitted with respect to Beaver Valley No. 1
Nonqualified Funds would be more restrictive, in which case, the
investments permitted with respect to Beaver Valley No. 1
Nonqualified Funds shall control.
Nonqualified Fund:
No restrictions on permitted investments other than as
imposed by Applicable Law.
Perry No. 1
- -----------
Qualified Fund:
Investments permitted from time to time under Section
468A of the Code and Regulations thereunder, unless the
investments permitted with respect to Perry No. 1 Nonqualified
Funds would be more restrictive, in which case, the investments
permitted with respect to Perry No. 1 Nonqualified Funds shall
control.
Nonqualified Fund:
No restrictions on permitted investments other than as
imposed by Applicable Law.
Beaver Valley No. 1 and Perry No. 1
- -----------------------------------
All Funds:
No investment of the Funds shall be made (i) in the
Company or an affiliate of the Company or (ii) in securities
issued by any owner of the Perry Nuclear Power Plant or the
Beaver Valley Power Station.
<PAGE>
EXHIBIT A
CERTIFICATE NO.
-------------------------
The undersigned [Authorized Representative of
Pennsylvania Power Company (Company), a Pennsylvania corporation]
being duly authorized and empowered to execute and deliver this
Certificate, hereby certifies that payments in the amounts and to
the payees listed below are for obligations duly incurred for the
Decommissioning of [insert name of Unit] and hereby directs the
Trustee of the Pennsylvania Power Company Master Decommissioning
Trust (Master Trust), pursuant to Article V of the Master Trust
Agreement to pay to each payee listed, including the Company if
so listed, (Payees) in Exhibit 1 hereto, the amounts set forth
therein, and certifies that the payments requested are proper
expenditures of the Master Trust.
Accordingly, request is hereby made that the Trustee
provide for the withdrawal of $____________ from the [insert name
of Unit and Fund and Subaccount(s)] in order to permit payment of
such sum to be made to the Payees. You are further requested to
disburse such sum, once withdrawn, directly to such Payees in the
following manner: [CHECK/WIRE TRANSFER/_____________] on or
before _______________, 1995.
WITNESS MY HAND THIS ____ day of ____________, 1995.
[PENNSYLVANIA POWER COMPANY]
By___________________________________
Authorized Representative
EXHIBIT 15
Pennsylvania Power Company
1 E. Washington Street
P. O. Box 891
New Castle, Pennsylvania 16103
Gentlemen:
We are aware that Pennsylvania Power Company has incorporated by
reference in its previously filed Registration Statements No. 33-
47372, No. 33-62450 and No. 33-65156, the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1995, which
includes our report dated August 2, 1995, covering the unaudited
interim financial statements contained therein. Pursuant to Rule
436(c) of Regulation C of the Securities Act of 1933, such report
is not considered a part of the Registration Statement prepared or
certified by our firm or a report prepared or certified by our firm
within the meaning of Sections 7 and 11 of the Act.
Very truly yours,
ARTHUR ANDERSEN LLP
Cleveland, Ohio
August 2, 1995
<TABLE> <S> <C>
<ARTICLE> OPUR1
<LEGEND>
(Amounts in 1,000's, except earnings per share)
Income tax expense includes $816,000 related to other income.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 819,685
<OTHER-PROPERTY-AND-INVEST> 12,641
<TOTAL-CURRENT-ASSETS> 96,746
<TOTAL-DEFERRED-CHARGES> 223,887
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,152,959
<COMMON> 188,700
<CAPITAL-SURPLUS-PAID-IN> (600)
<RETAINED-EARNINGS> 76,744
<TOTAL-COMMON-STOCKHOLDERS-EQ> 264,844
15,000
50,905
<LONG-TERM-DEBT-NET> 384,563
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 14,250
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 8,922
<OTHER-ITEMS-CAPITAL-AND-LIAB> 414,475
<TOT-CAPITALIZATION-AND-LIAB> 1,152,959
<GROSS-OPERATING-REVENUE> 151,538
<INCOME-TAX-EXPENSE> 14,231
<OTHER-OPERATING-EXPENSES> 104,494
<TOTAL-OPERATING-EXPENSES> 117,909
<OPERATING-INCOME-LOSS> 33,629
<OTHER-INCOME-NET> 1,235
<INCOME-BEFORE-INTEREST-EXPEN> 34,864
<TOTAL-INTEREST-EXPENSE> 15,839
<NET-INCOME> 19,025
2,461
<EARNINGS-AVAILABLE-FOR-COMM> 16,564
<COMMON-STOCK-DIVIDENDS> 10,693
<TOTAL-INTEREST-ON-BONDS> 14,962
<CASH-FLOW-OPERATIONS> 41,226
<EPS-PRIMARY> 2.63
<EPS-DILUTED> 2.63
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