<PAGE>
OMB Approval
OMB 3235-0153
Expires Nov 30, 1984
Form U-13-60
Mutual and Subsidiary Service Companies
Revised February 7, 1980
ANNUAL REPORT
FOR THE PERIOD
Beginning January 1, 1996 and Ending December 31, 1996
TO THE
U. S. SECURITIES AND EXCHANGE COMMISSION
OF
Allegheny Power Service Corporation
(Exact Name of Reporting Company)
A Subsidiary Service Company
("Mutual" or "Subsidiary")
Date of IncorporatNovember 22, 1963 . If not Incorporated, Date of Orga N/A
State or Sovereign Power under which Incorporated or Maryland
10435 Downsville Pike
Location of Principal Executive Offices of Reporting Hagerstown, MD 21740-1766
Name, title, and address of officer to whom correspondence concerning this
report should be addressed:
10435 Downsville Pike
Thomas J. Kloc, Controller Hagerstown, MD 21740-1766
(Name) (Title) (Address)
Name of Principal Holding Company Whose Subsidiaries are served by Reporting
Company:
Allegheny Power System, Inc.
SEC 1926 (6-82)
<PAGE>
1
INSTRUCTIONS FOR USE OF FORM U-13-60
1. Time of Filing. Rule 94 provides that on or before the first day
of May in each calendar year, each mutual service company and each subsidiary
service company as to which the Commission shall have made a favorable finding
pursuant to Rule 88, and every service company whose application for approval
or declaration pursuant to Rule 88 is pending shall file with the Commission
an annual report on Form U-13-60 and in accordance with the Instructions for
that form.
2. Number of Copies. Each annual report shall be filed in duplicate.
The company should prepare and retain at least one extra copy for itself in
case correspondence with reference to the report become necessary.
3. Period Covered by Report. The first report filed by any company
shall cover the period from the date the Uniform System of Accounts was
required to be made effective as to that company under Rules 82 and 93 to the
end of that calendar year. Subsequent reports should cover a calendar year.
4. Report Format. Reports shall be submitted on the forms prepared
by the Commission. If the space provided on any sheet of such form is inade-
quate, additional sheets may be inserted of the same size as a sheet of the
form or folded to such size.
5. Money Amounts Displayed. All money amounts required to be shown
in financial statements may be expressed in whole dollars, in thousands of
dollars or in hundred thousands of dollars, as appropriate and subject to
provisions of Regulation S-X (Section 210.3-01(b)).
6. Deficits Displayed. Deficits and other like entries shall be
indicated by the use of either brackets or a parenthesis with corresponding
reference in footnotes. (Regulation S-X, Section 210.3-01(c))
7. Major Amendments or Corrections. Any company desiring to amend or
correct a major omission or error in a report after it has been filed with the
Commission shall submit an amended report including only those pages, sched-
ules, and entries that are to be amended or corrected. A cover letter shall
be submitted requesting the Commission to incorporate the amended report
changes and shall be signed by a duly authorized officer of the company.
8. Definitions. Definitions contained in Instruction 01-8 to the
Uniform System of Accounts for Mutual Service Companies and Subsidiary Service
Companies, Public Utility Holding Company Act of 1935, as amended February 2,
1979 shall be applicable to words or terms used specifically within this Form
U-13-60.
9. Organization Chart. The service company shall submit with each
annual report a copy of its current organization chart.
10. Methods of Allocation. The service company shall submit with each
annual report a listing of the currently effective methods of allocation being
used by the service company and on file with the Securities and Exchange
Commission pursuant to the Public Utility Holding Company Act of 1935.
11. Annual Statement of Compensation for Use of Capital Billed. The
service company shall submit with each annual report a copy of the annual
statement supplied to each associate company in support of the amount of
compensation for use of capital billed during the calendar year.
<PAGE>
2
LISTING OF SCHEDULES AND ANALYSIS OF ACCOUNTS
SCHEDULE OR PAGE
DESCRIPTION OF SCHEDULES AND ACCOUNTS ACCT. NO. NO.
COMPARATIVE BALANCE SHEET Schedule I 4-5
Service Company Property Schedule II 6-7
Accumulated Provision for Depreciation and
Amortization of Service Company Property Schedule III 8
Investments Schedule IV 9
Accounts Receivable from Associate Companies Schedule V 10
Fuel Stock Expenses Undistributed Schedule VI 11
Stores Expense Undistributed Schedule VII 12
Miscellaneous Current and Accrued Assets Schedule VIII 13
Miscellaneous Deferred Debits Schedule IX 14
Research, Development, or Demonstration
Expenditures Schedule X 15
Proprietary Capital Schedule XI 16
Long-Term Debt Schedule XII 17
Current and Accrued Liabilities Schedule XIII 18
Notes to Financial Statements Schedule XIV 19
COMPARATIVE INCOME STATEMENT Schedule XV 20
Analysis of Billing - Associate Companies Account 457 21
Analysis of Billing - Nonassociate Companies Account 458 22
Analysis of Charges for Service - Associate
and Nonassociate Companies Schedule XVI 23
Schedule of Expense by Department or
Service Function Schedule XVII 24-25
Departmental Analysis of Salaries Account 920 26
Outside Services Employed Account 923 27
Employee Pensions and Benefits Account 926 28
General Advertising Expense Account 930.1 29
Miscellaneous General Expense Account 930.2 30
Rents Account 931 31
Taxes Other Than Income Taxes Account 408 32
Donations Account 426.1 33
Other Deductions Account 426.5 34
Notes to Statement of Income Schedule XVIII 35
<PAGE>
3
LISTING OF INSTRUCTIONAL FILING REQUIREMENTS
PAGE
DESCRIPTION OF REPORTS OR STATEMENTS NO.
ORGANIZATION CHART 36
METHODS OF ALLOCATION 37
ANNUAL STATEMENT OF COMPENSATION FOR USE
OF CAPITAL BILLED 38
<PAGE>
4
ANNUAL REPORT OF Allegheny Power Service Corporation
SCHEDULE I - COMPARATIVE BALANCE SHEET
Give balance sheet of the Company as of December 31 of the current
and prior year.
<TABLE>
<CAPTION>
ACCOUNT ASSETS AND OTHER DEBITS AS OF DECEMBER 31
1996 1995
SERVICE COMPANY PROPERTY
<S> <C> <C> <C>
101 Service company property (Schedule II) 1,533,842 1,749,831
107 Construction work in progress (Schedule II) 0 0
Total Property 1,533,842 1,749,831
108 Less accumulated provision for depreciation
and amortization of service company
property (Schedule III) 1,281,808 957,429
Net Service Company Property 252,034 792,402
INVESTMENTS
123 Investments in associate companies
(Schedule IV) 0 0
124 Other investments (Schedule IV) 26,674 8,699
Total Investments 26,674 8,699
CURRENT AND ACCRUED ASSETS
131 Cash 67,540 640
134 Special deposits 0 0
135 Working funds 15,791 34,509
136 Temporary cash investments (Schedule IV) 0 0
141 Notes receivable 0 0
143 Accounts receivable 1,042,015 866,586
144 Accumulated provision of uncollectible
accounts 0 0
146 Accounts receivable from associate
companies (Schedule V) 23,003,655 18,205,825
152 Fuel stock expenses undistributed (Schedule VI) 0 0
154 Materials and supplies 0 0
163 Stores expense undistributed (Schedule VII) 0 0
165 Prepayments 342,222 995,886
174 Miscellaneous current and accrued
assets (Schedule VIII) 0 0
Total Current and Accrued Assets 24,471,223 20,103,446
DEFERRED DEBITS
181 Unamortized debt expense 0 0
184 Clearing accounts 2,301 489
186 Miscellaneous deferred debits (Schedule IX) 64,052 59,883
188 Research, development, or demonstration
expenditures (Schedule X) 0 0
190 Accumulated deferred income taxes 8,085,050 1,894,364
Total Deferred Debits 8,151,403 1,954,736
TOTAL ASSETS AND OTHER DEBITS 32,901,334 22,859,283
</TABLE>
<PAGE>
5
ANNUAL REPORT OF Allegheny Power Service Corporation
SCHEDULE I - COMPARATIVE BALANCE SHEET
<TABLE>
<CAPTION>
ACCOUNT LIABILITIES AND PROPRIETARY CAPITAL AS OF DECEMBER 31
1996 1995
PROPRIETARY CAPITAL
<S> <C> <C> <C>
201 Common stock issued (Schedule XI) 50,000 50,000
211 Miscellaneous paid-in capital (Schedule XI) 0 0
215 Appropriated retained earnings (Schedule XI) 0 0
216 Unappropriated retained earnings
(Schedule XI) 0 0
Total Proprietary Capital 50,000 50,000
LONG-TERM DEBT
223 Advances from associate
companies (Schedule XII) 0 0
224 Other long-term debt (Schedule XII) 0 0
225 Unamortized premium on long-term debt 0 0
226 Unamortized discount on long-term
debt-debit 0 0
Total Long-Term Debt 0 0
CURRENT AND ACCRUED LIABILITIES
231 Notes payable 0 0
232 Accounts payable 14,940,980 4,140,995
233 Notes payable to associate
companies (Schedule XIII) 0 0
234 Accounts payable to associate
companies (Schedule XIII) 1,753,886 34,717
236 Taxes accrued 3,244,127 539,780
237 Interest accrued 0 0
238 Dividends declared 0 0
241 Tax collections payable 517,780 206,407
242 Miscellaneous current and accrued
liabilities (Schedule XIII) 7,476,123 17,191,079
Total Current and Accrued Liabilities 27,932,896 22,112,978
DEFERRED CREDITS
253 Other deferred credits 4,305,243 696,305
255 Accumulated deferred investment tax credits 0 0
Total Deferred Credits 4,305,243 696,305
282 ACCUMULATED DEFERRED INCOME TAXES 613,195 0
TOTAL LIABILITIES AND PROPRIETARY CAPITAL 32,901,334 22,859,283
</TABLE>
<PAGE>
6
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1996
SCHEDULE II - SERVICE COMPANY PROPERTY
<TABLE>
<CAPTION>
BALANCE AT RETIRE- BALANCE
BEGINNING MENTS OTHER 1/ AT CLOSE
DESCRIPTION OF YEAR ADDITIONS OR SALES CHANGES OF YEAR
SERVICE COMPANY PROPERTY
ACCOUNT
<S> <C> <C> <C> <C> <C> <C>
301 ORGANIZATION
303 MISCELLANEOUS
INTANGIBLE PLANT
304 LAND AND LAND
RIGHTS
305 STRUCTURES AND
IMPROVEMENTS
306 LEASEHOLD
IMPROVEMENTS 836,368 836,368
307 EQUIPMENT 2/ 178,691 (66,658) (52,317) 59,716
308 OFFICE FURNITURE
AND EQUIPMENT 734,772 286,376 (383,390) 637,758
309 AUTOMOBILES, OTHER
VEHICLES AND
RELATED GARAGE
EQUIPMENT
310 AIRCRAFT AND
AIRPORT EQUIPMENT
311 OTHER SERVICE
COMPANY PROPERTY 3/
SUBTOTAL 1,749,831 286,376 (450,048) (52,317) 1,533,842
107 CONSTRUCTION WORK
IN PROGRESS
TOTAL 1,749,831 286,376 (450,048) (52,317) 1,533,842
</TABLE>
1/ PROVIDE AN EXPLANATION OF THOSE CHANGES CONSIDERED MATERIAL:
Amortization of capitalized leases.
<PAGE>
7
SCHEDULE II - CONTINUED
2/ SUBACCOUNTS ARE REQUIRED FOR EACH CLASS OF EQUIPMENT OWNED. THE
SERVICE COMPANY SHALL PROVIDE A LISTING BY SUBACCOUNT OF EQUIPMENT
ADDITIONS DURING THE YEAR AND THE BALANCE AT THE CLOSE OF THE YEAR:
<TABLE>
<CAPTION>
BALANCE
AT CLOSE
SUBACCOUNT DESCRIPTION ADDITIONS OF YEAR
<S> <C> <C>
Capitalized lease for data processing equipment 0 52,317
Communications equipment 0 7,399
TOTAL 0 59,716
</TABLE>
3/ DESCRIBE OTHER SERVICE COMPANY PROPERTY:
None.
4/ DESCRIBE CONSTRUCTION WORK IN PROGRESS:
None.
<PAGE>
8
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1996
SCHEDULE III
ACCUMULATED PROVISION FOR DEPRECIATION AND
AMORTIZATION OF SERVICE COMPANY PROPERTY
<TABLE>
<CAPTION>
ADDITIONS OTHER
BALANCE AT CHARGED CHANGES BALANCE
BEGINNING TO RETIRE- ADD AT CLOSE
DESCRIPTION OF YEAR ACCT 403 MENTS (DEDUCT) 1/ OF YEAR
ACCOUNT
<S> <C> <C> <C> <C>
301 ORGANIZATION
303 MISCELLANEOUS
INTANGIBLE
PLANT
304 LAND AND LAND
RIGHTS
305 STRUCTURES AND
IMPROVEMENTS
306 LEASEHOLD
IMPROVEMENTS 599,730 236,639 836,369
307 EQUIPMENT 51,760 10,940 62,700
308 OFFICE
FURNITURE
AND FIXTURES 305,939 76,800 382,739
309 AUTOMOBILES,
OTHER VEHICLES
AND RELATED
GARAGE EQUIP.
310 AIRCRAFT AND
AIRPORT
EQUIPMENT
311 OTHER SERVICE
COMPANY
PROPERTY
TOTAL 957,429 324,379 1,281,808
</TABLE>
1/ PROVIDE AN EXPLANATION OF THOSE CHANGES CONSIDERED MATERIAL:
None.
<PAGE>
9
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1996
SCHEDULE IV - INVESTMENTS
INSTRUCTIONS: Complete the following schedule concerning investments.
Under Account 124 "Other Investments", state each
investment separately, with description, including, the
name of issuing company, number of shares or principal
amount, etc.
Under Account 136, "Temporary Cash Investments", list each
investment separately.
<TABLE>
<CAPTION>
BALANCE AT BALANCE AT
DESCRIPTION BEGINNING CLOSE
OF YEAR OF YEAR
<S> <C> <C>
ACCOUNT 123 - INVESTMENT IN ASSOCIATE COMPANIES
None.
ACCOUNT 124 - OTHER INVESTMENTS
Membership Certificates 7,000 7,000
AirScrip Certificates 1,699 50
West Virginia Workmen's Compensation Fund 0 19,624
8,699 26,674
ACCOUNT 136 - TEMPORARY CASH INVESTMENTS
None.
TOTAL 8,699 26,674
</TABLE>
<PAGE>
10
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1996
SCHEDULE V - ACCOUNTS RECEIVABLE FROM ASSOCIATE COMPANIES
INSTRUCTIONS: Complete the following schedule listing accounts receivable
from each associate company. Where the service company has
provided accommodation or convenience payments for associate
companies, a separate listing of total payments for each
associate company by subaccount should be provided.
<TABLE>
<CAPTION>
BALANCE AT BALANCE AT
DESCRIPTION BEGINNING CLOSE
OF YEAR OF YEAR
<S> <C> <C>
ACCOUNT 146 - ACCOUNTS RECEIVABLE FROM
ASSOCIATE COMPANIES
Allegheny Power System, Inc. 23,928 62,448
Monongahela Power Company 4,380,120 8,584,850
The Potomac Edison Company 5,271,554 6,855,662
West Penn Power Company 8,345,436 4,861,356
Allegheny Generating Company 5,223 216,291
Allegheny Pittsburgh Coal Company 620 15,402
AYP Capital, Inc. 179,082 645,926
AYP Energy, Inc. 0 1,632,743
Allegheny Communications Connect, Inc. 0 125,689
Davis Power Project (138) 3,288
TOTAL 18,205,825 23,003,655
</TABLE>
ANALYSIS OF CONVENIENCE OR ACCOMODATION PAYMENTS:
<TABLE>
<CAPTION>
Monongahela The Potomac West Penn
DESCRIPTION Power Edison Power TOTAL
Company Company Company PAYMENTS
<S> <C> <C> <C> <C>
Employee expenses, safety
awards, training, and
manuals 45,344 10,067 74,990 130,401
DP equipment and software 0 0 148,410 148,410
Company vehicle expenses 0 0 6,762 6,762
Other outside services 0 1,400 559 1,959
Network subscription 18 11 218 247
service
TOTAL PAYMENTS 45,362 11,478 230,939 287,779
</TABLE>
<PAGE>
11
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1996
SCHEDULE VI - FUEL STOCK EXPENSES UNDISTRIBUTED
INSTRUCTIONS: Report the amount of labor and expenses incurred with
respect to fuel stock expenses during the year and
indicate amount attributable to each associate company.
Under the section headed "Summary" listed below give an
overall report of the fuel functions performed by the
service company.
DESCRIPTION LABOR EXPENSES TOTAL
ACCOUNT 152 - FUEL STOCK EXPENSES
UNDISTRIBUTED
None.
TOTAL
SUMMARY:
<PAGE>
12
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1996
SCHEDULE VII - STORES EXPENSE UNDISTRIBUTED
INSTRUCTIONS: Report the amount of labor and expenses incurred with
respect to stores expense during the year and indicate
amount attributable to each associate company.
DESCRIPTION LABOR EXPENSES TOTAL
ACCOUNT 163 - STORES EXPENSE
UNDISTRIBUTED
None.
TOTAL
<PAGE>
13
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1996
SCHEDULE VIII
MISCELLANEOUS CURRENT AND ACCRUED ASSETS
INSTRUCTIONS: Provide detail of items in this account. Items less
than $10,000 may be grouped, showing the number of
items in each group.
BALANCE AT BALANCE AT
DESCRIPTION BEGINNING CLOSE
OF YEAR OF YEAR
ACCOUNT 174 - MISCELLANEOUS CURRENT AND
ACCRUED ASSETS
None.
TOTAL 0 0
<PAGE>
14
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1996
SCHEDULE IX - MISCELLANEOUS DEFERRED DEBITS
INSTRUCTIONS: Provide detail of items in this account. Items less
than $10,000 may be grouped by class showing the
number of items in each class.
<TABLE>
<CAPTION>
BALANCE AT BALANCE AT
DESCRIPTION BEGINNING CLOSE
OF YEAR OF YEAR
ACCOUNT 186 - MISCELLANEOUS DEFERRED DEBITS
<S> <C> <C>
NY Headquarters security deposit 58,458 58,458
Miscellaneous 1,425 5,594
TOTAL 59,883 64,052
</TABLE>
<PAGE>
15
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1996
SCHEDULE X
RESEARCH, DEVELOPMENT OR DEMONSTRATION EXPENDITURES
INSTRUCTIONS: Provide a description of each material research,
development, or demonstration project which incurred
costs by the service corporation during the year.
<TABLE>
<CAPTION>
DESCRIPTION AMOUNT
<S> <C>
ACCOUNT 188 - RESEARCH, DEVELOPMENT, OR
DEMONSTRATION EXPENDITURES
Administrative - Area 1 - General R&D Support 22,699
Administrative - Area 2 - Generation Performance 17,896
Administrative - Area 3 - Generation Environmental 23,022
Administrative - Area 4 - Transmission 7,033
Administrative - Area 5 - Distribution 10,741
Administrative - Area 6 - Utilization/Economic Development 14,296
Administrative - Area 8 - Information Systems 2,976
Administrative - Area 9 - Alternate Energy 8,491
Electric & Magnetic Fields - Research Scoping Study 19,903
Evaluation of MIS Transformer Gas Analyzer 8,515
Use of Passive Treatment Wetland Systems at Springdale P.S. (814,085)
(The above R & D Project was capitalized in 1996)
Upgraded Coal Interest Group (EPRI) 7,211
Latrobe Steel Baghouse Adjustable Speed Drive 6,386
Acid Mine Drainage Abatement with Fly Ash/Omega Mine 6,925
EPRI Activities (Excluding R & D) 66,319
Miscellaneous (27 projects under $5,000 each) 31,289
TOTAL (560,383)
</TABLE>
<PAGE>
16
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1996
SCHEDULE XI - PROPRIETARY CAPITAL
<TABLE>
<CAPTION>
NUMBER OF PAR OR STATED
OF SHARES VALUE OUTSTANDING CLOSE OF PERIOD
ACCOUNT NUMBER CLASS OF STOCK AUTHORIZED PER SHARE NO. OF SHARES TOTAL AMOUNT
<S> <C> <C> <C> <C> <C>
201 COMMON STOCK ISSUED 50,000 $10 5,000 $50,000
INSTRUCTIONS: Classify amounts in each account with brief explanation, disclosing the general
nature of transactions which give rise to the reported amounts.
DESCRIPTION AMOUNT
ACCOUNT 211 - MISCELLANEOUS PAID-IN CAPITAL None.
ACCOUNT 215 - APPROPRIATED RETAINED EARNINGS None.
TOTAL
INSTRUCTIONS: Give particulars concerning net income or (loss) during the year, distinguishing
between compensation for the use of capital owed or net loss remaining from
servicing nonassociates per the General Instructions of the Uniform System of
Accounts. For dividends paid during the year in cash or otherwise, provide rate
percentage, amount of dividend, date declared and date paid.
BALANCE AT NET INCOME BALANCE AT
DESCRIPTION BEGINNING OR DIVIDENDS CLOSE
OF YEAR (LOSS) PAID OF YEAR
ACCOUNT 216 - UNAPPROPRIATED RETAINED
EARNINGS
None.
TOTAL
</TABLE>
<PAGE>
17
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1996
SCHEDULE XII - LONG-TERM DEBT
INSTRUCTIONS: Advances from associate companies should be reported separately
for advances on notes, an advances on open account. Names of
associate companies from which advances were received shall be
shown under the class and series of obligation column. For
Account 224 - Other long-term debt provide the name of creditor
company or organization, terms of the obligation, date of
maturity, interest rate, and the amount authorized and
outstanding.
<TABLE>
<CAPTION>
TERMS OF OBLIG DATE BALANCE AT BALANCE
NAME OF CREDITOR CLASS & SERIES OF INTEREST AMOUNT BEGINNING AT CLOSE
OF OBLIGATION MATURITYRATE AUTHORIZED OF YEAR ADDITIONSDEDUCTIONS OF YEAR
<S> <C> <C> <C> <C>
ACCOUNT 223-ADVANCES FROM
ASSOCIATE
COMPANIES:
None.
ACCOUNT 224-OTHER LONG-TERM
DEBT:
None.
TOTAL 0 0 0 0
</TABLE>
<PAGE>
18
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1996
SCHEDULE XIII - CURRENT AND ACCRUED LIABILITIES
INSTRUCTIONS: Provide balance of notes and accounts payable to
each associate company. Give description and
amounts of miscellaneous current and accrued
liabilities. Items less than $10,000 may be grouped,
showing the number of items in each group.
<TABLE>
<CAPTION>
BALANCE AT BALANCE AT
DESCRIPTION BEGINNING CLOSE
OF YEAR OF YEAR
<S> <C> <C>
ACCOUNT 233 - NOTES PAYABLE TO ASSOCIATE
COMPANIES
None.
TOTAL
ACCOUNT 234 - ACCOUNTS PAYABLE TO ASSOCIATE
COMPANIES
Allegheny Power System, Inc. 20,973 20,973
The Potomac Edison Company 1,777 (47,483)
West Penn Power Company 6,065 1,807,264
Monongahela Power Company 5,902 (26,868)
TOTAL 34,717 1,753,886
ACCOUNT 242 - MISCELLANEOUS CURRENT AND
ACCRUED LIABILITIES
Employee benefits 3,703,762 1,726,648
Capital leases 52,317 530,327
Restructuring Liability 13,435,000 5,219,148
TOTAL 17,191,079 7,476,123
</TABLE>
<PAGE>
19
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1996
SCHEDULE XIV
NOTES TO FINANCIAL STATEMENTS
INSTRUCTIONS: The space below is provided for important notes regarding
the financial statements or any account thereof. Furnish
particulars as to any significant contingent assets or
liabilities existing at the end of the year. Notes
relating to financial statements shown elsewhere in this
report may be indicated here by reference.
In 1996, the "Principle Holding Company" and its
subsidiaries essentially completed their restructuring
initiatives undertaken in 1995, simplifying the
management structure and streamlining operations. During
1996, restructuring activities included consolidating
operating divisions, customer services, and other
functions. By reorganizing and eliminating certain
processes and consolidating common decentralized
functions, the Company and its subsidaries have reduced
employment by about 1,000 employees since October 1994.
These reductions were accomplished through a voluntary
separation plan, attrition, and layoffs.
In 1996 and 1995, the subsidaries recorded restructuring
charges of $93.1 million and $16.0 million in operating
expenses, including all restructuring charges associated
with the reorganization, which is essentially complete.
These charges reflect liabilities and payments for
severance, employee termination costs, and other
restructuring costs.
<PAGE>
20
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1996
SCHEDULE XV
STATEMENT OF INCOME
<TABLE>
<CAPTION>
ACCOUNT DESCRIPTION CURRENT YEAR PRIOR YEAR
INCOME
<S> <C> <C> <C>
457 Services rendered to associate companies 123,657,927 113,851,035
458 Services rendered to nonassociate
companies 0 0
421 Miscellaneous income or loss 36,029 6,823
Total Income 123,693,956 113,857,858
EXPENSE
920 Salaries and wages 57,400,749 51,318,480
921 Office supplies and expenses 8,974,977 4,819,360
922 Administrative expense transferred -
credit (127,201) (359,873)
923 Outside services employed 21,699,943 10,138,567
924 Property insurance 2,630 2,955
925 Injuries and damages (63,321) 62,682
926 Employee pensions and benefits 9,651,856 21,486,539
928 Regulatory commission expense 127,201 359,873
930.1 General advertising expenses 614 0
930.2 Miscellaneous general expenses 41,249 145,048
931 Rents 19,708,860 20,754,098
932 Maintenance of structures and
equipment 998,054 1,212,801
403 Depreciation and amortization expense 252,029 273,823
408 Taxes other than income taxes 4,524,960 3,762,280
409 Income taxes 5,788,401 (539,582)
410 Provision for deferred income taxes 290,387 598,467
411 Provision for deferred income taxes -
credit (5,867,878) (230,526)
411.5 Investment tax credit 0 0
426.1 Donations 129,803 1,385
426 Other deductions 80,645 10
427 Interest on long-term debt 0 0
431 Other interest expense 79,998 51,471
Total Expense 123,693,956 113,857,858
Net Income or (Loss) 0 0
</TABLE>
<PAGE>
21
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1996
ANALYSIS OF BILLING
ASSOCIATE COMPANIES
ACCOUNT 457
<TABLE>
<CAPTION>
DIRECT INDIRECT COMPENSATION TOTAL
NAME OF ASSOCIATE COMPANY COSTS COSTS FOR USE AMOUNT
CHARGED CHARGED OF CAPITAL BILLED
<S> <C> <C> <C> <C>
457-1 457-2 457-3
Monongahela Power Company 34,091,250 1,066,661 0 35,157,911
The Potomac Edison Company 28,188,758 875,434 0 29,064,192
West Penn Power Company 53,398,055 1,485,759 0 54,883,814
Allegheny Power System, Inc. 199,562 3,860 0 203,422
Allegheny Generating Company 357,604 10,526 0 368,130
Allegheny Pittsburgh Coal Co. 23,936 0 0 23,936
AYP Capital 2,082,683 51,579 0 2,134,262
AYP Energy 1,660,113 9,824 0 1,669,937
Allegheny Comm. Connect, Inc. 147,060 5,263 0 152,323
TOTAL 120,149,021 3,508,906 0 123,657,927
</TABLE>
<PAGE>
22
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1996
ANALYSIS OF BILLING
NONASSOCIATE COMPANIES
ACCOUNT 458
<TABLE>
<CAPTION>
DIRECT INDIRECT COMPENSATION EXCESS TOTAL
NAME OF NONASSOCIATE COMPANY COST COST FOR USE TOTAL OR AMOUNT
CHARGED CHARGED OF CAPITAL COST DEFICIENCY BILLED
<S> <C> <C> <C> <C>
458-1 458-2 458-3 458-4
None.
TOTAL
</TABLE>
INSTRUCTION: Provide a brief description of the services rendered to each
nonassociate company:
<PAGE>
23
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1996
SCHEDULE XVI
ANALYSIS OF CHARGES FOR SERVICE
ASSOCIATE AND NONASSOCIATE COMPANIES
<TABLE>
<CAPTION>
ASSOCIATE NONASSOCIATE TOTAL CHARGES
COMPANY CHARGES COMPANY CHARGES FOR SERVICE
DIRECT INDIRECT DIRECTINDIRECT DIRECT INDIRECT
DESCRIPTION OF ITEMS COST COST TOTAL COST COST TOTAL COST COST TOTAL
<S> <C> <C> <C> <C> <C> <C> <C>
920 SALARIES AND WAGES 55,951,380 1,449,369 57,400,749 55,951,380 1,449,369 57,400,749
921 OFFICE SUPPLIES AND EXPENSES 9,153,707 (178,730) 8,974,977 9,153,707 (178,730) 8,974,977
922 ADMINISTRATIVE EXPENSES 0
TRANSFERRED - CREDIT (127,201) 0 (127,201) (127,201) 0 (127,201)
923 OUTSIDE SERVICES EMPLOYED 20,560,564 1,139,379 21,699,943 20,560,564 1,139,379 21,699,943
924 PROPERTY INSURANCE 2,630 0 2,630 2,630 0 2,630
925 INJURIES AND DAMAGES (130,797) 67,476 (63,321) (130,797) 67,476 (63,321)
926 EMPLOYEE PENSIONS AND BENEFITS 9,815,558 (163,702) 9,651,856 9,815,558 (163,702) 9,651,856
928 REGULATORY COMMISSION EXPENSE 127,201 0 127,201 127,201 0 127,201
930.1 GENERAL ADVERTISING EXPENSES 614 0 614 614 0 614
930.2 MISCELLANEOUS GENERAL EXPENSES 29,281 11,968 41,249 29,281 11,968 41,249
931 RENTS 19,474,291 234,569 19,708,860 19,474,291 234,569 19,708,860
932 MAINTENANCE OF STRUCTURES AND
EQUIPMENT 983,955 14,099 998,054 983,955 14,099 998,054
403 DEPRECIATION AND AMORTIZATION
EXPENSE 0 252,029 252,029 0 252,029 252,029
408 TAXES OTHER THAN INCOME TAXES 4,104,091 420,869 4,524,960 4,104,091 420,869 4,524,960
409 INCOME TAXES 0 5,788,401 5,788,401 0 5,788,401 5,788,401
410 PROVISION FOR DEFERRED INCOME
TAXES 0 290,387 290,387 0 290,387 290,387
411 PROVISION FOR DEFERRED INCOME
TAXES - CREDIT 0 (5,867,878) (5,867,878) 0 (5,867,878) (5,867,878)
411.5 INVESTMENT TAX CREDIT 0 0 0 0 0 0
421 MISCELLANEOUS INCOME (4,651) (31,378) (36,029) (4,651) (31,378) (36,029)
426.1 DONATIONS 129,803 0 129,803 129,803 0 129,803
426 OTHER DEDUCTIONS 78,281 2,364 80,645 78,281 2,364 80,645
427 INTEREST ON LONG-TERM DEBT 0 0 0 0 0 0
431 OTHER INTEREST EXPENSE 314 79,684 79,998 314 79,684 79,998
INSTRUCTION: Total cost of service
will equal for associate and
nonassociate companies the total
amount billed under their separate
analysis of billing schedules.
TOTAL EXPENSES 120,149,021 3,508,906 123,657,927 120,149,021 3,508,906 123,657,927
COMPENSATION FOR USE OF EQUITY CAPI 0 0 0 0 0 0
430 INTEREST ON DEBT TO ASSOC COS. 0 0 0 0 0 0
TOTAL COST OF SERVICE 120,149,021 3,508,906 123,657,927 120,149,021 3,508,906 123,657,927
</TABLE>
24
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1996
SCHEDULE XVII
SCHEDULE OF EXPENSE DISTRIBUTION
BY
DEPARTMENT OR SERVICE FUNCTION
<TABLE>
<CAPTION>
DEPARTMENT OR SERVICE FUNCTION
CORP: CORP: CORP: CORP: CORP: CORP:
EXECUTIVE BULK LEGAL RATES
TOTAL AND POWER AND AND ADMIN-
DESCRIPTION OF ITEMS AMOUNT OVERHEAD ADMIN. SUPPLY FINANCE SECRETARY ACCOUNTING ISTRATION
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
920 SALARIES AND WAGES 57,400,749 2,431,681 1,109,885 360,332 663,095 473,387 334,306 267,724
921 OFFICE SUPPLIES AND EXPENSES 8,974,977 (221,132) 88,643 88,525 153,423 82,895 58,865 41,553
922 ADMINISTRATIVE EXPENSES
TRANSFERRED - CREDIT (127,201) 0 0 0 0 0 0 0
923 OUTSIDE SERVICES EMPLOYED 21,699,943 2,273,651 470,552 13,091 97,923 29,295 101,198 8,875
924 PROPERTY INSURANCE 2,630 0 0 0 0 0 0 0
925 INJURIES AND DAMAGES (63,321) 64,101 0 0 0 0 0 0
926 EMPLOYEE PENSIONS AND BENEFITS 9,651,856 (5,292,338) 104,238 46,743 100,843 96,419 44,198 8,689
928 REGULATORY COMMISSION EXPENSE 127,201 0 0 0 0 0 0 0
930.1 GENERAL ADVERTISING EXPENSE 614 0 0 0 0 0 0 0
930.2 MISCELLANEOUS GENERAL EXPENSE 41,249 11,762 2,375 0 0 53 0 0
931 RENTS 19,708,860 1,523,244 53,442 23,883 63,716 107,291 30,843 24,066
935 MAINTENANCE OF STRUCTURES AND
EQUIPMENT 998,054 0 227 264 561 5,374 0 469
403 DEPRECIATION AND AMORTIZATION
EXPENSE 252,029 252,029 0 0 0 0 0 0
408 TAXES OTHER THAN INCOME TAXES 4,524,960 482,976 45,252 17,100 33,316 21,780 18,040 13,101
409 INCOME TAXES 5,788,401 5,788,401 0 0 0 0 0 0
410 PROVISION FOR DEFERRED INCOME
TAXES 290,387 290,387 0 0 0 0 0 0
411 PROVISION FOR DEFERRED INCOME
TAXES - CREDIT (5,867,878)(5,867,878) 0 0 0 0 0 0
411.5 INVESTMENT TAX CREDIT 0 0 0 0 0 0 0 0
426.1 DONATIONS 129,803 0 0 0 0 0 0 0
426 OTHER DEDUCTIONS 80,645 2,642 0 0 0 0 0 0
427 INTEREST ON LONG-TERM DEBT 0 0 0 0 0 0 0 0
430 INTEREST ON DEBT TO ASSOCIATE
COMPANIES 0 0 0 0 0 0 0 0
431 OTHER INTEREST EXPENSE 79,998 79,666 0 0 0 0 0 0
INSTRUCTION: Indicate each
department or service function.
(See Instruction 01-3 General
Structure of Accounting System:
Uniform System of Accounts.)
TOTAL EXPENSES 123,693,956 1,819,192 1,874,614 549,938 1,112,877 816,494 587,450 364,477
</TABLE>
<PAGE>
25
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1996
SCHEDULE XVII
SCHEDULE OF EXPENSE DISTRIBUTION
BY
DEPARTMENT OR SERVICE FUNCTION
<TABLE>
<CAPTION>
DEPARTMENT OR SERVICE FUNCTION
BPS: BPS: BPS: CS: CS: CS: CS: CS: CS:
TRANS- PLANNING & FINANCIAL HUMAN
MISSION GENERATION COMPLIANCE CORPORATE MGMT. AND GOVERN- RESOURCES
ACCOUNT BUSINESS BUSINESS BUSINESS AUDIT COMMUN- INVESTOR MENTAL AND BUSINESS
NUMBER UNIT UNIT UNIT SERVICES CONTROLLER ICATIONS RELATIONS AFFAIRS PRACTICES
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
920 8,269,552 9,715,105 2,715,968 1,257,483 1,027,258 299,641 692,286 248,751 3,663,876
921 1,933,696 1,475,141 284,847 128,663 139,659 82,251 168,474 67,710 356,518
922 9,023 11,329 0 0 2,029 0 0 0 0
923 1,053,541 1,132,782 557,372 29,895 299,974 57,665 375,665 50,680 871,254
924 0 0 0 0 0 0 408 0 0
925 0 0 0 0 0 0 (229,036) 0 59,891
926 1,189,707 1,333,251 436,674 204,429 183,802 47,869 110,193 114,545 984,228
928 (9,023) (11,329) 0 0 (2,029) 0 0 0 0
930.1 0 0 0 0 0 0 0 0 0
930.2 3,162 2,200 0 0 0 0 0 0 0
931 6,284,982 2,008,660 456,961 160,468 203,423 33,099 146,859 18,644 650,940
935 23,683 19,215 7,328 1,408 1,828 0 1,064 0 8,529
403 0 0 0 0 0 0 0 0 0
408 625,689 731,107 202,991 94,851 79,263 21,046 52,617 15,931 273,549
409 0 0 0 0 0 0 0 0 0
410 0 0 0 0 0 0 0 0 0
411 0 0 0 0 0 0 0 0 0
411.5 0 0 0 0 0 0 0 0 0
426.1 100 0 50 0 0 0 0 0 225
426 0 0 0 0 10,005 25,000 0 40,387 0
427 0 0 0 0 0 0 0 0 0
430 0 0 0 0 0 0 0 0 0
431 0 0 0 0 162 0 0 0 170
19,384,112 16,417,461 4,662,191 1,877,197 1,945,374 566,571 1,318,530 556,648 6,869,180
</TABLE>
<PAGE>
25A
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1996
SCHEDULE XVII
SCHEDULE OF EXPENSE DISTRIBUTION
BY
DEPARTMENT OR SERVICE FUNCTION
<TABLE>
<CAPTION>
DEPARTMENT OR SERVICE FUNCTION
CS: CS: CS: CS: CS: CS: NON- OBU: OBU:
REGULATORY TREAS SVCS REGULATED: RETAIL
ACCOUNT INFORMATIONLEGAL AND PROCURE- AND SYSTEM AND AYP MARKETING CUSTOMER
NUMBER SERVICES CLAIMS MENT PRICING SECURITY RISK MGMT CAPITAL BUS. UNIT SERVICE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
920 7,416,943 2,394,112 1,672,636 968,866 1,133,283 233,991 908,023 2,353,200 1,073,461
921 885,198 459,665 122,777 32,446 202,500 26,700 542,426 1,400,542 1,496
922 73 36,992 0 67,648 0 0 107 0 0
923 5,083,935 4,201,341 79,066 89,323 42,547 36,571 1,614,581 1,247,067 1,878
924 0 0 0 0 0 2,222 0 0 0
925 0 0 0 0 0 10,592 30,870 0 0
926 1,017,502 350,220 276,043 130,503 151,156 49,292 148,948 534,997 295,528
928 (73) (36,992) 0 (67,648) 0 0 (107) 0 0
930.1 0 614 0 0 0 0 0 0 0
930.2 325 12,504 0 0 0 132 0 500 0
931 6,294,611 322,080 390,521 207,364 232,984 273 102,800 108,249 0
935 917,977 1,536 3,961 1,103 753 194 338 0
403 0 0 0 0 0 0 0 0 0
408 557,340 178,660 130,380 73,009 82,655 18,353 67,998 182,941 73,071
409 0 0 0 0 0 0 0 0 0
410 0 0 0 0 0 0 0 0 0
411 0 0 0 0 0 0 0 0 0
411.5 0 0 0 0 0 0 0 0 0
426.1 50 0 0 0 250 0 0 3,000 0
426 0 0 0 0 0 0 0 1,231 0
427 0 0 0 0 0 0 0 0 0
430 0 0 0 0 0 0 0 0 0
431 0 0 0 0 0 0 0 0 0
22,173,881 7,920,732 2,675,384 1,502,614 1,846,128 378,126 3,415,840 5,832,065 1,445,434
</TABLE>
<PAGE>
25B
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1996
SCHEDULE XVII
SCHEDULE OF EXPENSE DISTRIBUTION
BY
DEPARTMENT OR SERVICE FUNCTION
<TABLE>
<CAPTION>
DEPARTMENT OR SERVICE FUNCTION
OBU: OBU: OBU:
ACCOUNT ADMIN- CORPORATE
NUMBER ISTRATION AFFAIRS OPERATIONS OTHER
<S> <C> <C> <C> <C>
920 413,192 501,756 3,282,869 1,518,087
921 74,701 94,454 243,912 (41,571)
922 0 0 0 0
923 21,917 350,484 1,316,337 191,483
924 0 0 0 0
925 0 241 20 0
926 71,762 68,756 792,725 6,050,934
928 0 0 0 0
930.1 0 0 0 0
930.2 200 8,036 0 0
931 34,562 18,426 171,249 35,220
935 0 0 1,699 543
403 0 0 0 0
408 23,495 36,453 268,123 103,873
409 0 0 0 0
410 0 0 0 0
411 0 0 0 0
411.5 0 0 0 0
426.1 100 126,028 0 0
426 0 1,380 0 0
427 0 0 0 0
430 0 0 0 0
431 0 0 0 0
639,929 1,206,014 6,076,934 7,858,569
</TABLE>
<PAGE>
26
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1996
DEPARTMENTAL ANALYSIS OF SALARIES
ACCOUNT 920
<TABLE>
<CAPTION>
DEPARTMENTAL SALARY EXPENSE NUMBER
NAME OF DEPARTMENT INCLUDED IN AMOUNTS BILLED TO PERSONNEL
Indicate each dept. TOTAL PARENT OTHER NON END OF
or service function. AMOUNT COMPANY ASSOCIATES ASSOCIATES YEAR
<S> <C> <C> <C> <C>
Corporate:
Executive 1,060,911 25,631 1,035,280 3
Administration 267,724 24 267,700 2
Bulk Power Supply 360,332 49 360,283 2
Finance 663,095 748 662,347 3
Legal and Secretarial 473,387 1,056 472,331 3
Rates and Accounting 334,306 22 334,284 2
Operating Business Unit:
Sr. Vice President 413,192 39 413,153 1
Corporate Affairs 501,756 23 501,733 6
Customer Service 1,073,461 1,073,461 224
Operations Services 3,348,390 211 3,348,179 116
Retail Marketing Bus. Unit 2,353,201 2,353,201 84
Bulk Power Supply Business
Units:
Generation 9,715,105 28 9,715,077 158
Transmission 8,269,552 760 8,268,792 144
Planning & Compliance 2,715,779 16 2,715,763 40
Support Business Units:
Audit Services 1,257,483 425 1,257,058 20
Controller 1,213,939 12,795 1,201,144 20
Corporate Communications 299,641 555 299,086 6
Financial Mgmt. 692,286 394 691,892 12
Governmental Affairs 248,751 23 248,728 3
Human Resources 3,712,851 4,304 3,708,547 58
Information Services 7,416,943 38 7,416,905 113
Legal & Claims 2,394,112 4,695 2,389,417 38
Procurement 1,672,637 1,672,637 36
Regulatory & Pricing 968,866 331 968,535 15
System Security 1,133,283 1,133,283 24
Treasury Svcs, Electronic
Commerce & Risk Mgmt. 233,991 2 233,989 10
Corporate, Staffing Force, 0
& Other 3,763,273 3,763,273
AYP Capital, Inc. 842,502 936 841,566 11
TOTAL 57,400,749 53,105 57,347,644 1,154
</TABLE>
<PAGE>
27
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1996
OUTSIDE SERVICES EMPLOYED
ACCOUNT 923
INSTRUCTIONS: Provide a breakdown by subaccount of outside services
employed. If the aggregate amounts paid to any one payee
and included within one subaccount is less than $50,000,
only the aggregate number and amount of all such payments
included within the subaccount need be shown. Provide a
subtotal for each type of service.
<TABLE>
<CAPTION>
RELATIONSHIP
"A"-ASSOCIATE
"NA"-NON
FROM WHOM PURCHASED ADDRESS ASSOCIATE AMOUNT
Data Processing Service:
<S> <C> <C> <C>
A. C. Coy P.O. Box 1262 NA 753,283
Canonsburg, PA 15317
American Management 300 Chapel Road NA 82,370
Systems, Inc. Manchester, CT
06040-9926
American Software, Inc.P.O. Box 101593 NA 120,984
Atlanta, GA 30392
Candle Corporation P.O. Box 92278 NA 133,140
Chicago, IL 60675-2278
Cincom Department 796 NA 73,948
Cincinnati, OH 45269
Cognos Corporation One Sentry Parkway NA 157,249
Suite 6000
Blue Bell, PA 19422
Computer Associates P.O. Box 360355 NA 187,085
International, Inc. Pittsburgh, PA
15251-6355
Compuware Corp. Drawer #64376 NA 76,743
Detroit, MI 48264-0376
</TABLE>
<PAGE>
27A
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1996
OUTSIDE SERVICES EMPLOYED
ACCOUNT 923
INSTRUCTIONS: Provide a breakdown by subaccount of outside services
employed. If the aggregate amounts paid to any one payee
and included within one subaccount is less than $50,000,
only the aggregate number and amount of all such payments
included within the subaccount need be shown. Provide a
subtotal for each type of service.
<TABLE>
<CAPTION>
RELATIONSHIP
"A"-ASSOCIATE
"NA"-NON
FROM WHOM PURCHASED ADDRESS ASSOCIATE AMOUNT
Data Processing Service (continued)
<S> <C> <C> <C>
Daticon Systems, Inc P.O. Box 647 NA 220,435
Gales Ferry, CT 06335
Electronic Data SystemsP.O. Box 75649 NA 134,899
Charlotte, NC 28275-0649
INACOM-North Central P.O. Box 8500 (41835) NA 1,973,463
Reg. Philadelphia, PA 19178
International Business P.O. Box 7247-0276 NA 1,064,008
Machines Philadelphia, PA
19170-0276
International Business P.O. Box 91222 NA 207,040
Machines Corp. Chicago, IL 60693-9102
International Data Five Schuman Road NA 105,329
Services of New York Millwood, NY 10546
Intergraph Corporation P.O. Box 13700 NA 150,062
Newark, NJ 07188-0700
Jetform Corp. P. O. Box 66512 NA 83,344
Chicago, IL 60666-0512
</TABLE>
<PAGE>
27B
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1996
OUTSIDE SERVICES EMPLOYED
ACCOUNT 923
INSTRUCTIONS: Provide a breakdown by subaccount of outside services
employed. If the aggregate amounts paid to any one payee
and included within one subaccount is less than $50,000,
only the aggregate number and amount of all such payments
included within the subaccount need be shown. Provide a
subtotal for each type of service.
<TABLE>
<CAPTION>
RELATIONSHIP
"A"-ASSOCIATE
"NA"-NON
FROM WHOM PURCHASED ADDRESS ASSOCIATE AMOUNT
Data Processing Service (continued)
<S> <C> <C> <C>
KCS Computer Service, 777 Penn Center Blvd. NA 247,655
Inc. Suite 600
Pittsburgh, PA
15235-5906
National Decision P. O. Box 919027 NA 107,908
Systems San Diego, CA 92191
Oracle Corp. P. O. Box 71028 NA 129,993
Chicago, IL 60694-1028
SE Technologies, Inc. 98 Vanadium Road NA 109,197
Bridgeville, PA 15017
Strand Management 569 Abbington Drive NA 70,551
Solutions, Inc. East Windsor, NJ 08520
Stream International, P.O. Box 3514 NA 176,173
Inc. Boston, MA 02241
Texas Instruments, Inc.P.O. Box 198645 NA 84,606
Atlanta, GA 30384-8645
</TABLE>
<PAGE>
27C
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1996
OUTSIDE SERVICES EMPLOYED
ACCOUNT 923
INSTRUCTIONS: Provide a breakdown by subaccount of outside services
employed. If the aggregate amounts paid to any one payee
and included within one subaccount is less than $50,000,
only the aggregate number and amount of all such payments
included within the subaccount need be shown. Provide a
subtotal for each type of service.
<TABLE>
<CAPTION>
RELATIONSHIP
"A"-ASSOCIATE
"NA"-NON
FROM WHOM PURCHASED ADDRESS ASSOCIATE AMOUNT
Data Processing Service (continued)
<S> <C> <C> <C>
The McKinley Group, 115 Chester St NA 128,536
Inc. Front Royal, VA 22630
X L Connect Systems, PO Box 825072 NA 74,665
Inc. Philadelphia, PA
19182-5072
Miscellaneous - 121 vendors NA 1,545,945
8,198,610
Engineering Service:
Miscellaneous - 9 vendors NA 87,032
Legal Service:
Carter Ledyard & 2 Wall Street NA 63,840
Milburn New York, NY 10005
Jackson & Kelly P. O. Box 553 NA 188,977
Charleston, WV 25322
Jones Day Reavis & 599 Lexington Avenue NA 103,031
Pogue New York, NY 10022
</TABLE>
<PAGE>
27D
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1996
OUTSIDE SERVICES EMPLOYED
ACCOUNT 923
INSTRUCTIONS: Provide a breakdown by subaccount of outside services
employed. If the aggregate amounts paid to any one payee
and included within one subaccount is less than $50,000,
only the aggregate number and amount of all such payments
included within the subaccount need be shown. Provide a
subtotal for each type of service.
<TABLE>
<CAPTION>
RELATIONSHIP
"A"-ASSOCIATE
"NA"-NON
FROM WHOM PURCHASED ADDRESS ASSOCIATE AMOUNT
Legal Service (continued)
<S> <C> <C> <C>
Kirpatrick & Lockhart 1500 Oliver Bldg NA 2,240,217
LLP Pittsburgh, PA
15222-5379
Milbank Tweed Hadley & 1 Chase Manhattan Plaza NA 50,422
McCloy New York, NY 10005-1413
Murphy & Shaffer 100 Light Street NA 134,873
Suite 750
Baltimore, MD 21202-1019
Pietragallo Bosick & One Oxford Center NA 62,487
Gordon Pittsburgh, PA 15219
Polito & Smock Four Gateway Center NA 57,209
Pittsburgh, PA 15222-1207
Robinson & McElwee PO Box 1791 NA 2,240,217
Charleston, WV 25326
Squire Sanders & 4900 Society Center NA 92,186
Dempsey 127 Public Square
Cleveland, OH 44114-1304
</TABLE>
<PAGE>
27E
For the Year Ended December 31, 1996
OUTSIDE SERVICES EMPLOYED
ACCOUNT 923
INSTRUCTIONS: Provide a breakdown by subaccount of outside services
employed. If the aggregate amounts paid to any one payee
and included within one subaccount is less than $50,000,
only the aggregate number and amount of all such payments
included within the subaccount need be shown. Provide a
subtotal for each type of service.
<TABLE>
<CAPTION>
RELATIONSHIP
"A"-ASSOCIATE
"NA"-NON
FROM WHOM PURCHASED ADDRESS ASSOCIATE AMOUNT
Legal Service (continued)
<S> <C> <C> <C>
Winston & Strawn 1400 L Street NW NA 166,984
Washington, DC
20005-3502
Miscellaneous - 65 vendors NA 690,908
3,933,850
Medical Service:
Miscellaneous - 10 vendors NA 8,003
Other Service:
Antech Limited One Triangle Drive NA 166,984
Export, PA 15632
Chapman Corp. 331 S. Main Street NA 69,065
Washington, PA 15301
Charles River D-3139 NA 130,670
Associates, Inc. Boston, MA 02241-3139
CIBER PO Box 5912 NA 102,658
Denver, CO 80217-5912
Computerpeople, Inc. 4400 Campbells Run Rd NA 201,809
Pittsburgh, PA 15205
</TABLE>
<PAGE>
27F
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1996
OUTSIDE SERVICES EMPLOYED
ACCOUNT 923
INSTRUCTIONS: Provide a breakdown by subaccount of outside services
employed. If the aggregate amounts paid to any one payee
and included within one subaccount is less than $50,000,
only the aggregate number and amount of all such payments
included within the subaccount need be shown. Provide a
subtotal for each type of service.
<TABLE>
<CAPTION>
RELATIONSHIP
"A"-ASSOCIATE
"NA"-NON
FROM WHOM PURCHASED ADDRESS ASSOCIATE AMOUNT
Other Service: (continued)
<S> <C> <C> <C>
Engineering Applied Four Triangle Drive NA 57,678
Sciences, Inc. Ste 120
Export, PA 15632
Heidrick & Struggles, P. O. Box 92227 NA 120,727
Inc. Chicago, IL 60675-4590
MK Consulting Services Penn Center West One NA 128,246
Suite 300
Pittsburgh, PA 15276
ManPower, Inc. Box 68-6003 NA 53,242
Milwaukee, WI 53267-6003
Metzler & Associates 520 Lake Cook Road NA 2,056,939
Deerfield, IL 60015
New Harbor, Inc. 12th Floor NA 1,518,003
885 Third Avenue
New York, NY 10022
Pennsylvania Electric 301 APC Building NA 125,395
Association Harrisburg, PA 17102
Putnam Hayes & One Memorial Drive NA 69,545
Bartlett, Inc. Cambridge, MA 02142
</TABLE>
<PAGE>
27G
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1996
OUTSIDE SERVICES EMPLOYED
ACCOUNT 923
INSTRUCTIONS: Provide a breakdown by subaccount of outside services
employed. If the aggregate amounts paid to any one payee
and included within one subaccount is less than $50,000,
only the aggregate number and amount of all such payments
included within the subaccount need be shown. Provide a
subtotal for each type of service.
<TABLE>
<CAPTION>
RELATIONSHIP
"A"-ASSOCIATE
"NA"-NON
ADDRESS ASSOCIATE AMOUNT
Other Service: (continued)
<S> <C> <C> <C>
R. M. Dolgin, Inc. Ste 800 NA 91,541
7800 Forsyth Blvd
St. Louis, MO 63105
Risk Advisory 3000-300 5th Ave SW NA 51,905
Calgary Alberta
Canada T2P 3C4
Saratoga Systems, Inc. 1550 S. Bascom Avenue NA 76,706
Ste 200
Campbell, CA 95008
Source Services Corp. PO Box 970956 NA 143,943
Dallas, TX 75397-0956
Strategy, Inc. 2531 Landmark Drive NA 67,604
Bldg. E Ste 201
Clearwater, FL 34621
The Consulting Team, 1601 Forum Place NA 306,649
Inc. Suite 500
West Palm Beach, FL
33401
</TABLE>
<PAGE>
27H
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1996
OUTSIDE SERVICES EMPLOYED
ACCOUNT 923
INSTRUCTIONS: Provide a breakdown by subaccount of outside services
employed. If the aggregate amounts paid to any one payee
and included within one subaccount is less than $50,000,
only the aggregate number and amount of all such payments
included within the subaccount need be shown. Provide a
subtotal for each type of service.
<TABLE>
<CAPTION>
RELATIONSHIP
"A"-ASSOCIATE
"NA"-NON
ADDRESS ASSOCIATE AMOUNT
<S> <C> <C> <C>
Towers Perrin P. O. Box 8500 S-6110 NA 97,213
Philadelphia, PA 19178
Miscellaneous - 230 vendors NA 1,883,944
7,460,259
West Penn Power Company Charges:
Principally payroll, accounting,
billing control, personnel, and
general office services at cost
for the field operation depart-
ments. A 2,012,189
Total 21,699,943
</TABLE>
<PAGE>
28
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1996
EMPLOYEE PENSIONS AND BENEFITS
ACCOUNT 926
INSTRUCTIONS: Provide a listing of each pension plan and benefit
program provided by the service company. Such
listing should be limited to $25,000.
<TABLE>
<CAPTION>
DESCRIPTION AMOUNT
<S> <C>
Employee welfare payments 212,859
Corporate pension plan 392,000
Long-term disability 165,699
Employee moving expense 122,609
Group medical 2,587,704
Group life insurance 352,744
Savings plan expense 1,368,306
Home sale plan payments 98,449
Employee education assistance 146,615
Group dental 231,474
Medical Salaries & Fees 116,825
Postretirement benefits other than pensions 2,336,000
Restructuring Charges 1,494,416
Miscellaneous (6) 26,156
TOTAL 9,651,856
</TABLE>
<PAGE>
29
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1996
GENERAL ADVERTISING EXPENSES
ACCOUNT 930.1
INSTRUCTIONS: Provide a listing of the amount included in Account
930.1, "General Advertising Expenses", classifying
the items according to the nature of the advertising
and as defined in the account definition. If a
particular class includes an amount in excess of
$3,000 applicable to a single payee show separately
the name of the payee and the aggregate amount
applicable thereto.
DESCRIPTION NAME OF PAYEE AMOUNT
Newspaper Advertising 614
TOTAL 614
<PAGE>
30
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1996
MISCELLANEOUS GENERAL EXPENSES
ACCOUNT 930.2
INSTRUCTIONS: Provide a listing of the amount included in Account
930.2, "Miscellaneous General Expenses", classifying
such expenses according to their nature. Payments and
expenses permitted by Sections 321(b)(2) of the Federal
Election Campaign Act, as amended by Public Law 94-283
in 1976 (2 U.S.C. Section 441(b)(2)) shall be separately
classified.
DESCRIPTION AMOUNT
Corporate membership dues 35,521
Miscellaneous 5,728
TOTAL 41,249
<PAGE>
31
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1996
RENTS
ACCOUNT 931
INSTRUCTIONS: Provide a listing of the amount included in Account
931, "Rents", classifying such expenses by major
groupings of property, as defined in the account
definition of the Uniform System of Accounts.
TYPE OF PROPERTY AMOUNT
Data processing equipment and space 6,721,810
Power control center equipment and space 2,937,531
Microwave and telecommunications equipment 2,138,972
Other office space 5,870,975
Other office furniture and equipment 413,897
Restructuring charges 1,362,969
Miscellaneous 262,706
TOTAL 19,708,860
<PAGE>
32
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1996
TAXES OTHER THAN INCOME TAXES
ACCOUNT 408
INSTRUCTIONS: Provide an analysis of Account 408, "Taxes Other Than
Income Taxes". Separate the analysis into two groups:
(1) other than U.S. Government taxes, and (2) U.S.
Government taxes. Specify each of the various kinds
of taxes and show the amount thereof. Provide a
subtotal for each class of tax.
KIND OF TAX AMOUNT
(1) Other than U.S. Government Taxes:
State unemployment tax 168,581
Franchise tax 48,986
State gross premium 1,827
State license 260
Other state 15
New York City commercial rent or occupancy tax 42,936
New York City general occupation tax 32,790
Payroll taxes (1,082)
Total Other than U. S. Government Taxes 294,313
(2) U.S. Government Taxes:
FICA 4,165,892
Federal unemployment 62,961
Other federal 1,794
Total U. S. Government Taxes 4,230,647
TOTAL 4,524,960
<PAGE>
33
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1996
DONATIONS
ACCOUNT 426.1
INSTRUCTIONS: Provide a listing of the amount included in Account
426.1, "Donations", classifying such expenses by its
purpose. The aggregate number and amount of all
items of less than $3,000 may be shown in lieu of
details.
NAME OF RECIPIENT PURPOSE OF DONATION AMOUNT
Penna. Electric Assoc. 1996/1997 Membership Dues 124,503
Specialty Steel Ind. Sponsorship 3,000
Miscellaneous (9) 2,300
TOTAL 129,803
<PAGE>
34
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1996
OTHER DEDUCTIONS
ACCOUNT 426.5
INSTRUCTIONS: Provide a listing of the amount included in Account
426.5, "Other Deductions", classifying such expenses
according to their nature.
DESCRIPTION NAME OF PAYEE AMOUNT
Tax related penalties Various 12,647
Civic & politicial related expenses Various 67,998
TOTAL 80,645
<PAGE>
35
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1996
SCHEDULE XVIII
NOTES TO STATEMENT OF INCOME
INSTRUCTIONS: The space below is provided for important notes
regarding the statement of income or any account
thereof. Furnish particulars as to any significant
increase in services rendered or expenses incurred
during the year. Notes relating to financial
statements shown elsewhere in this report may be
indicated here by reference.
See notes on page 19, Schedule XIV.
<PAGE>
36
ANNUAL REPORT OF Allegheny Power Service Corporation
ORGANIZATION CHART
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
STAFF ASSISTANT
VICE PRESIDENT, GOVERNMENTAL AFFAIRS
ASSISTANT TO VICE PRESIDENT
ASSISTANT TO VICE PRESIDENT
DIRECTOR, POLICY ANALYSIS
MANAGER, STATE GOVERNMENTAL AFFAIRS
SENIOR VICE PRESIDENT (BULK POWER)
VICE PRESIDENT, PLANNING AND COMPLIANCE BUSINESS UNIT
DIRECTOR, PLANNING AND COMPLIANCE
DIRECTOR, PLANNING AND COMPLIANCE
VICE PRESIDENT, TRANSMISSION BUSINESS UNIT
DIRECTOR, TRANSMISSION PROJECTS
DIRECTOR, TRANSMISSION PROJECTS
DIRECTOR, TRANSMISSION PROJECTS
DIRECTOR, TRANSMISSION MARKETING
DIRECTOR, OPERATIONS
VICE PRESIDENT, GENERATION BUSINESS UNIT
DIRECTOR, GENERATION PROJECTS
DIRECTOR, GENERATION PROJECTS
DIRECTOR, GENERATION PROJECTS
DIRECTOR, FUEL PROCUREMENT
DIRECTOR, OPERATIONS
DIRECTOR, GENERATION MARKETING
VICE PRESIDENT & CONTROLLER (ACCOUNTING AND RATES)
CONTROLLER
MANAGER, ASSET & FUEL ACCOUNTING
MANAGER, CORPORATE ACCOUNTING
MANAGER, PAYMENT PROCESSING & PAYROLL
MANAGER, SYSTEM TAXES
<PAGE>
36A
ANNUAL REPORT OF Allegheny Power Service Corporation
ORGANIZATION CHART
CHAIRMAN AND CHIEF EXECUTIVE OFFICER (CONTINUED)
VICE PRESIDENT & CONTROLLER (ACCOUNTING AND RATES) (CONTINUED)
DIRECTOR, REGULATION & PRICING
MANAGER, FINANCIAL ANALYSIS
MANAGER, FUEL & CAPITAL RECOVERY
DIRECTOR, AUDIT SERVICES
MANAGER, BUSINESS PRACTICES
VICE PRESIDENT (ADMINISTRATION)
DIRECTOR, PROCUREMENT
DIRECTOR, INFORMATION SERVICES
MANAGER, INFORMATION SERVICES
MANAGER, INFORMATION SERVICES
MANAGER, INFORMATION SERVICES
BUSINESS CONSULTANT
BUSINESS CONSULTANT
BUSINESS CONSULTANT
BUSINESS CONSULTANT
BUSINESS CONSULTANT
BUSINESS CONSULTANT
DIRECTOR, HUMAN RESOURCES
MANAGER, HUMAN RESOURCES (1)
MANAGER, HUMAN RESOURCES
DIRECTOR, SYSTEM SECURITY
DIRECTOR, CORPORATE COMMUNICATIONS
ASSISTANT DIRECTOR, CORPORATE COMMUNICATIONS
VICE PRESIDENT (LEGAL)
VICE PRESIDENT, LEGAL SERVICES
MANAGER, CLAIMS
DIRECTOR, LEGAL SERVICES
ATTORNEY (AYP CAPITAL)
CORPORATE SECRETARY
<PAGE>
36B
ANNUAL REPORT OF Allegheny Power Service Corporation
ORGANIZATION CHART
CHAIRMAN AND CHIEF EXECUTIVE OFFICER (CONTINUED)
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
DIRECTOR, FINANCIAL MANAGEMENT
MANAGER, INVESTOR RELATIONS (2)
VICE PRESIDENT AND TREASURER
ASSISTANT TREASURER
MANAGER, CORPORATE RISK MANAGEMENT
COORDINATOR, ELECTRONIC COMMERCE
SENIOR VICE PRESIDENT (OPERATING UNITS)
VICE PRESIDENT, CORPORATE AFFAIRS
VICE PRESIDENT, CORPORATE AFFAIRS
VICE PRESIDENT, CORPORATE AFFAIRS
VICE PRESIDENT, RETAIL MARKETING
MANAGER, INDUSTRIAL MARKETING
MANAGER, CORPORATE AFFAIRS
MANAGER, CORPORATE AFFAIRS
FINANCIAL ADVISOR
CORPORATE AFFAIRS ADVISOR
VICE PRESIDENT (OPERATING BUSINESS UNIT)
NOTE: THIS ORGANIZATIONAL CHART REFLECTS ONLY SERVICE COMPANY POSITIONS.
IT DOES NOT INCLUDE OPERATING COMPANY POSITIONS WHICH ARE DIRECTED BY
THE SERVICE COMPANY.
(1) REPORTS TO VICE PRESIDENT ADMINISTRATION AND DIRECTOR, HUMAN RESOURCES.
(2) REPORTS TO SENIOR VICE PRESIDENT & CHIEF FINANCIAL OFFICER AND DIRECTOR,
CORPORATE AFFAIRS.
<PAGE>
37
ANNUAL REPORT OF Allegheny Power Service Corporation
METHODS OF ALLOCATION
1. The costs of rendering services by Service Company include all costs of
doing business including interest on debt but excluding a return for the
use of Service Company's initial equity capital amounting to $50,000.
2. (a) Service Company maintains a separate record of the expenses of each
department. These expenses include expenses that are directly
attributable to the department, and an appropriate portion of those
expenses that are not directly attributable to the department but
which are necessary to its operation.
(b) The aggregate of these expenses will be referred to hereinafter as
"Departmental Expenses," and such expenses consist of salaries of
officers and other employees, employee welfare expenses (i.e., social
security taxes, life, pension, post-retirement benefits (other than
pension), medical, dental, and other welfare expenses), expenses of
training and development of Service Company's employees, rents, dues
and memberships, and all other expenses attributable to, or necessary
to the operation of, the department.
(c) Departmental Expenses do not include:
(i) Those incremental Out-of-Pocket Expenses that are incurred for
the direct benefit and convenience of a particular Customer
Company or a group of Customer Companies and are to be charged
solely to such Customer Company or group of Customer Companies
and;
(ii) Service Company's Overhead Expenses. Such expenses include,
among others, costs of maintaining the corporate existence of
Service Company; taxes; two-thirds of the New York Secretary and
Office Services Department (the estimated portion of this
department's expenses for general office services, telephone
switchboard, mail and messenger service and central records),
and other expenses, such as outside auditing and legal fees.
3. (a) Employees in each department are divided into two groups:
(i) Employees directly engaged in rendering services to Customer
Companies or to Service Company are designated as Group A
employees.
(ii) Secretaries, clerical, office service and other employees, who
are not engaged directly in rendering services to Customer
Companies or to Service Company, are designated as Group B
employees.
(b) Group A employees maintain records showing time employed in rendering
services ("Chargeable Hours"), nature of services rendered, and
identity of companies or groups of companies served.
<PAGE>
37A
ANNUAL REPORT OF Allegheny Power Service Corporation
METHODS OF ALLOCATION
(c) An hourly departmental expense billing rate for each Group A employee
is calculated monthly as follows:
(i) The total Chargeable Hours of all Group A employees of each
department are summarized from the Group A time records for the
month.
(ii) The hourly departmental expense billing rate for each Group A
employee of the department is the quotient obtained by dividing
the Chargeable Hours for the department (as determined in Section
3.(c)(i)) into the total Departmental Expenses for the department
(as defined in Section 2.(b)).
4. The Chargeable Hours and incremental Out-of-Pocket Expenses expended in
respect of specific services rendered to individual Customer Companies or to
Service Company are separately recorded.
5. ALLOCATION FACTORS
(a) Operating Company Allocation Factor
(1) Chargeable Hours and incremental Out-of-Pocket Expenses expended
for a group of Operating Companies are allocated to each Operating
Company in the group based on the ratio that the Allocation Factor
of such Operating Company, determined as hereinafter provided,
bears to the total of the Allocation Factors of all the Operating
Companies in such group.
(ii) The Allocation Factor applicable to an Operating Company during
any year is the average of the quotients of:
(1) The total electric operating revenues of such Operating
Company (excluding revenues from sales to Operating
Companies) for the three years immediately preceding the
current year divided by the total of such revenues of all
Operating Companies for the three-year period;
(2) The total expenses of such Operating Company (excluding costs
of power purchased from other utilities and fuel costs)
charged to Operating and Maintenance Expense Accounts under
the Uniform System of Accounts prescribed for Public
Utilities and Licensees subject to the provisions of the
Federal Power Act for the same three-year period divided by
the total of such expenses of all Operating Companies for
the same period;
<PAGE>
37B
ANNUAL REPORT OF Allegheny Power Service Corporation
METHODS OF ALLOCATION
(3) The total number of kwhs sold by such Operating Company to
regular customers (excluding other Operating Companies) during
the same three-year period divided by the total number of kwhs
so sold by all Operating Companies during the three years; and
(4) The sum of the total amounts of electric plant in service on
the books of such Operating Company (less reserves for
depreciation and amortization) at the close of each of the
three years immediately preceding the current year divided
by the sum of the total amounts of electric plant in service
(less reserves for depreciation and amortization) on the
books of all Operating Companies at the close of each of
such three years.
(5) If the use of the aforesaid bases of allocation results in
inequity, the bases of allocation are adjusted so as to effect
a more equitable distribution of group service charges based
upon more appropriate functional relationships between the
services rendered and the allocation formula employed.
(b) All System Companies Allocation Factor
(i) Chargeable Hours and incremental Out-of-Pocket Expenses expended
for a group which includes APS and AYP Capital, Inc. (AYP) are
allocated among the constituent companies on the basis of the
average of the prior three years' direct costs charged by the
Service Company to each Operating Company, APS, and AYP.
(c) Power Station Allocation Factor
(i) The Allocation Factor applicable to Service Company employees
who provide services to Customer Companies' Power Stations during
any year is based upon the generating capacity of each power
station divided by the System total generating capacity.
(d) Service Company Corporate Allocation Factor
(i) Overhead Expenses (as defined in Section 2.(c)(ii) above) and cost
of services rendered to Service Company are distributed among
Customer Companies in direct proportion to the amounts of
Departmental Expenses charged to or allocated to such companies,
as described in Sections 5.(a)(b)(c) above, respectively.
(e) Direct Assignment Allocation Factor
(i) This applies to other allocations which are 100% assigned to a
specific company or station.
<PAGE> 37C
ANNUAL REPORT OF Allegheny Power Service Corporation
METHODS OF ALLOCATION
6. The amount of Departmental Expenses charged to a Customer Company or to
Service Company are the sum of the products obtained by multiplying the
estimated hourly departmental expense billing rate in respect of each
Group A employee by the sum of (a) the number of Chargeable Hours expended
by each such Group A employee on services performed specifically for such
Customer Company or Service Company as described in Section 4. above, and
(b) the number of Chargeable Hours of each such Group A employee allocated
to such Customer Company in respect of services performed for Groups of
Customer Companies of which the aforesaid company is a constituent member,
as described in Section 5. above.
7. The total cost of a particular service rendered to a specified Customer
Company is the sum of the Departmental Expenses, Overhead Expenses, cost of
services rendered to Service Company, and incremental Out-of-Pocket
Expenses which are applicable to such Company in respect of such service.
8. The total cost of a particular service rendered to a specific group of
Customer Companies is the sum of the amounts of the Departmental Expenses,
Overhead Expenses, costs of services rendered to Service Company, and
incremental Out-of-Pocket Expenses which are applicable to such group of
companies in respect of such service.
9. Whenever the charges to individual Customer Companies for services rendered
are based upon estimates of Service Company's costs, such service charges
are adjusted to actual cost at the end of each year, as required by the
terms of Rule 90(a)(2) promulgated under the 1935 Act.
<PAGE>
38
ANNUAL REPORT OF Allegheny Power Service Corporation
ANNUAL STATEMENT OF COMPENSATION FOR USE OF CAPITAL BILLED
None.
<PAGE>
39
ANNUAL REPORT OF Allegheny Power Service Corporation
SIGNATURE CLAUSE
Pursuant to the requirements of the Public Utility
Holding Company Act of 1935 and the rules and regulations of the
Securities and Exchange Commission issued thereunder, the
undersigned company has duly caused this report to be signed
on its behalf by the undersigned officer thereunto duly
authorized.
Allegheny Power Service Corporation
(Name of Reporting Company)
By: /s/ Thomas J. Kloc
(Signature of Signing Officer)
Thomas J. Kloc, Controller
(Printed Name and Title of Signing Officer)
Date: April 25, 1997
<TABLE> <S> <C>
<ARTICLE> OPUR2
<MULTIPLIER> 1,000
<CURRENCY> U.S.DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<BOOK-VALUE> PER-BOOK
<NET-SERVICE-COMPANY-PROPERTY> 252,034
<TOTAL-INVESTMENTS> 26,674
<TOTAL-CURRENT-ASSETS> 24,471,223
<TOTAL-DEFERRED-DEBITS> 8,151,403
<OTHER-ASSETS-AND-DEBITS> 0
<TOTAL-ASSETS-AND-DEBITS> 32,901,334
<TOTAL-PROPRIETARY-CAPITAL> 50,000
<TOTAL-LONG-TERM-DEBT> 0
<NOTES-PAYABLE> 0
<NOTES-PAYABLE-ASSOCIATE-COMP> 0
<OTHER-CURR-AND-ACCRUED-LIAB> 27,932,896
<TOTAL-DEFERRED-CREDITS> 4,918,438
<DEFERRED-INCOME-TAX> 0
<TOT-LIABIL-AND-PROPRIET-CAP> 32,901,334
<SERVICES-ASSOCIATE-COMPANIES> 123,657,927
<SERVICES-NON-ASSOCIATE-COMP> 0
<MISC-INCOME-OR-LOSS> 36,029
<TOTAL-INCOME> 123,693,956
<SALARIES-AND-WAGES> 57,400,749
<EMPLOYEE-PENSION-AND-BENEFIT> 9,651,856
<OTHER-EXPENSES> 44,593,264
<TOTAL-EXPENSES> 123,693,956
<NET-INCOME> 0
<TOTAL-EXPENSES-DIRECT-COST> 120,149,173
<TOTAL-EXPENSES-INDIRECT-COST> 3,508,754
<TOT-EXP-DIRECT-AND-INDIRECT> 123,657,927
<PERSONNEL-END-OF-YEAR> 1,154
</TABLE>
