BEFORE THE PUBLIC SERVICE COMMISSION
OF WEST VIRGINIA
EXHIBIT D-2A
In the matter of the Petition of *
Monongahela Power Company and *
The Potomac Edison Company *
for consent and approval * Case No. ________________
to transfer its West Virginia *
generation assets. *
PETITION
NOW COME Monongahela Power Company ("Mon Power") and
The Potomac Edison Company ("PE"), dba Allegheny Power,
("Petitioners"), and hereby petition the Public Service
Commission of West Virginia ("Commission") for consent and
approval of the transfer of their West Virginia generation
assets to an affiliate, Allegheny Energy Supply Company,
LLC, at book value. In support of this petition,
Petitioners respectfully state as follows:
1. Monongahela Power Company is a public utility
corporation organized and existing under the laws of the
State of Ohio, providing retail electric service to
customers in West Virginia, and has its principal place of
business at 1310 Fairmont Avenue, Fairmont, West Virginia
26555-1392.
2. The Potomac Edison Company is a public utility
corporation organized and existing under the laws of the
Commonwealth of Virginia and the State of Maryland,
providing retail electric service to customers in portions
of West Virginia, and has its principal place of business at
10435 Downsville Pike, Hagerstown, Maryland 21740-1766.
<PAGE>
3. Allegheny Energy Supply Company, LLC is a Delaware
limited liability company. It is an unregulated energy
supply affiliate of Allegheny Power. It currently owns
about 4100 megawatts of generation, including generation
previously owned by its affiliates, West Penn Power and AYP
Energy.
4. As deregulation of power supply proceeds, additional
generation will be transferred to Allegheny Energy Supply.
On or about July 1, 2000, PE intends to transfer the
Maryland and Virginia jurisdiction's share of its
generation. On or about January 1, 2001, Mon Power intends
to transfer the Ohio jurisdiction's share of its generation.
5. Petitioners represent that the transfer of the West
Virginia generation assets coincident with the transfer of
the Maryland, Virginia and Ohio generation assets of
Petitioners is consistent and comports with the plan for
customer choice of electric power suppliers, open access to
electricity transfer systems and deregulation of power
supply adopted by the Commission in Case No. 98-0452-E-GI.<F1>
6. PE represents that transfer of its West Virginia
generation assets at the same time as the rest of its
generation assets (Maryland and Virginia) will promote
efficiency by avoiding duplicative and additional
transaction costs. With regard to Mon Power, the Ohio
Legislature passed Amended Sub. S.B. 3 in July, 1999, which
deregulated all generation in Ohio beginning January 1,
<F1> During negotiation of the Restructuring Plan, Petitioners
agreed to grant certain rate reductions for large commercial
and industrial customers. Petitioners view that commitment
as related to transfer of their West Virginia generation
assets to an affiliate at book value. Notwithstanding that
the Restructuring Plan cannot be implemented until further
action by the Legislature allowing implementation,
Petitioners are prepared to honor their commitment to grant
the rate reductions if transfer of the generation assets is
approved as requested in this petition.
<PAGE>
2001, and permitted the transfer of generation to an
affiliate without further Ohio Commission approval.
Accordingly, Mon Power intends to make such transfer of its
Ohio portion of the generation assets on or about January 1,
2001. Mon Power represents that transfer of its West
Virginia generation assets at the same time as the Ohio
generation assets will promote efficiency by avoiding
duplicative and additional transaction costs.
7. After the transfer, the West Virginia customer load
will be met by an arrangement between Allegheny Energy
Supply Company, LLC and Mon Power/PE to make available to
West Virginia customers power supply sufficient to meet all
load requirements at the existing rates (or any rates
established hereafter as approved by the Commission in Case
No. 99-0262-E-GI). The transfer of assets will, in effect,
be totally transparent to customers. Allegheny Energy
Supply Company, LLC would be free to satisfy the West
Virginia regulated service load requirements either by
dispatch of the transferred generation facilities or
purchases in the market. Allegheny Energy Supply Company,
LLC will own and operate the generation facilities and will
incur all operating costs and capital addition costs for the
transferred generation assets.
8. The transfers will not adversely impact tax revenues of
state and local governments. Allegheny Energy Supply
Company, LLC will continue to pay the same amount of taxes
to the Board of Public Works as Petitioners would have paid
prior to said transfer. Petitioners are working with the
West Virginia Board of Public Works and secured its
understanding that there should be no significant adverse
<PAGE>
tax impact. Petitioners are also working with the West
Virginia Department of Taxation to insure no adverse tax
impact. Petitioners do not believe there will be any
adverse tax consequences due to said transfer.
9. Attached as Exhibit Nos. 1 and 2 are lists of the
Petitioners' generation assets to be transferred to
Allegheny Energy Supply Company, LLC. The book value as of
March 31, 2000 for each of the assets to be transferred is
set out on the exhibit. The values actually transferred
will be those in existence at the time of the asset
transfer. Since all PE generation is proposed to be
transferred at the same time on or after July 1, 2000,
(except for very small PE hydro actually located in
Virginia) and all Mon Power generation is proposed to be
transferred at the same time on or after January 1, 2001,
there are no allocation or cost responsibility issues among
the state jurisdictions.
10. Incidental items appurtenant to said generation assets
will also be transferred to Allegheny Energy Supply Company,
LLC, such as bonds, debts, receivables, liens, allowances,
easements, licenses, and permits. Additionally, it is
proposed that deferred fuel accounting cease as of the time
of transfer and no further adjustments to fuel (ENEC) rates
will be made after said transfer.
11. Mon Power and PE have partial ownership in an
affiliated company, Allegheny Generating Company ("AGC"),
that owns generating capacity in the Bath County pumped
storage generating station. Mon Power's and PE's stock in
AGC will be transferred to Allegheny Energy Supply Company,
<PAGE>
LLC, along with a proportional amount of any obligations Mon
Power and PE have to AGC. Mon Power's and PE's investment
in AGC is included in FERC account 123.1, Investments in
Subsidiary Companies. Also, there may be assignments of
contractual obligations for the power supply business from
Petitioners to Allegheny Energy Supply Company, LLC, not
represented by assets or liabilities on Petitioners' books.
These could include some purchased power contracts (non-
PURPA), non-affiliated sales contracts, other contracts,
such as the Money Pool, and other items related to power
supply.
12. Petitioners agree to continue the arrangement for power
supply as described in paragraph 7 until such time as the
Legislature implements customer choice.
13. The financial information of Monongahela Power Company
and The Potomac Edison Company has been provided in the
Annual Report of the Companies.
14. Petitioners represent that the terms and conditions
hereof are reasonable, that neither party thereto is given
any advantage over the other, and that the transaction does
not adversely affect the public or State.
15. Petitioners further represent that no purpose will be
served by the giving of formal notice or the conducting of a
hearing concerning the approval sought herein and that Mon
Power and PE and their customers would be convenienced by
the waiving of formal notice and hearing in regard thereto.
<PAGE>
16. Petitioners request that the Commission maintain
jurisdiction over this petition and not transfer it to the
ALJ Division since this concerns restructuring of the
electric utility industry and an expedited order is needed
to help insure the proposed July 1, 2000 transaction.
WHEREFORE, The Potomac Edison Company and Monongahela
Power Company hereby request consent and approval, to the
extent necessary, for it to transfer its West Virginia
portion of electric generation assets to its affiliate,
Allegheny Energy Supply Company, LLC at book value on or
after July 1, 2000, for PE, and on or after January 1, 2001,
for Mon Power.
Dated this _____ day of May, 2000.
MONONGAHELA POWER COMPANY
THE POTOMAC EDISON COMPANY
dba Allegheny Power
BY: ___________________________
Its: Assistant Secretary
By Counsel
___________________________
Gary A. Jack, Esq.
Robert R. Winter, Esq.
Allegheny Power
1310 Fairmont Avenue
Fairmont, WV 26554
(304) 367-3423
<PAGE>
VERIFICATION
STATE OF WEST VIRGINIA,
COUNTY OF MARION, TO WIT
Thomas C. Sheppard, Jr., Assistant Secretary of
Monongahela Power Company and The Potomac Edison Company,
after being duly sworn, says that the facts and allegations
set forth in the foregoing Petition are true, except insofar
as they are stated to be on information, he believes them to
be true.
______________________________
Taken, sworn to and subscribed before me this ______
day of __________________________, 2000.
__________________________________________
Notary Public in and for said County
My commission expires __________________________.
