<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, 1997 and Ending December 31, 1997
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 Incorporation: November 22, 1963
If not Incorporated, Date of Organization: N/A
State or Sovereign Power under which Incorporated or Organized:
Maryland
Location of Principal Executive Offices of Reporting Company:
10435 Downsville Pike
Hagerstown, MD 21740-1766
Name, title, and address of officer to whom correspondence concerning this
report should be addressed :
Thomas J. Kloc Controller 10435 Downsville Pike
Hagerstown, MD 21740-1766
(Name) (Title) (Address)
Name of Principal Holding Company Whose Subsidiaries are served by
Reporting Company:
Allegheny Energy, 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 pre
pared by the Commission. If the space provided on any sheet
of such form is inadequate, 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 ('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, '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, schedules, 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
DESCRIPTION OF REPORTS OR STATEMENTS PAGE 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.
ACCOUNT ASSETS AND OTHER DEBITS AS OF DECEMBER 31
1997 1996
SERVICE COMPANY PROPERTY
101 Service company property (Schedule II) 3,542,762 1,533,842
107 Construction work in progress (Schedule II) 0 0
Total Property 3,542,762 1,533,842
108 Less accumulated provision for depreciation
and amortization of service company
property (Schedule III) 899,797 1,281,808
Net Service Company Property 2,642,965 252,034
INVESTMENTS
123 Investments in associate companies
(Schedule IV) 0 0
124 Other investments (Schedule IV) 57,133 26,674
Total Investments 57,133 26,674
CURRENT AND ACCRUED ASSETS
131 Cash 478,739 67,540
134 Special deposits (2,008) 0
135 Working funds 33,037 15,791
136 Temporary cash investments (Schedule IV) 0 0
141 Notes receivable 0 0
143 Accounts receivable 2,288,675 1,042,015
144 Accumulated provision of uncollectible
accounts 0 0
146 Accounts receivable from associate
companies (Schedule V) 21,334,703 23,003,655
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 1,620,818 342,222
174 Miscellaneous current and accrued
assets (Schedule VIII) 0
Total Current and Accrued Assets 25,753,964 24,471,223
DEFERRED DEBITS
181 Unamortized debt expense 0 0
184 Clearing accounts 67,987 2,301
186 Miscellaneous deferred debits (Schedule IX) 1,998,681 64,052
188 Research, development, or demonstration
expenditures (Schedule X) 0 0
190 Accumulated deferred income taxes 5,389,659 8,085,050
Total Deferred Debits 7,456,327 8,151,403
TOTAL ASSETS AND OTHER DEBITS 35,910,389 32,901,334
<PAGE>
5
ANNUAL REPORT OF Allegheny Power Service Corporation
SCHEDULE I - COMPARATIVE BALANCE SHEET
ACCOUNT LIABILITIES AND PROPRIETARY CAPITAL AS OF DECEMBER 31
1997 1996
PROPRIETARY CAPITAL
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
227 Obligations under capital leases-noncurrent 1,150,710 0
Total Long-Term Debt 1,150,710 0
CURRENT AND ACCRUED LIABILITIES
231 Notes payable 0 0
232 Accounts payable 13,599,512 14,940,980
233 Notes payable to associate
companies (Schedule XIII) 0 0
234 Accounts payable to associate
companies (Schedule XIII) 0 1,753,886
236 Taxes accrued 712,575 3,244,127
237 Interest accrued 0 0
238 Dividends declared 0 0
241 Tax collections payable 2,886,984 517,780
242 Miscellaneous current and accrued
liabilities (Schedule XIII) 8,562,893 7,476,123
Total Current and Accrued Liabilities 25,761,964 27,932,896
DEFERRED CREDITS
253 Other deferred credits 8,947,715 4,305,243
255 Accumulated deferred investment tax credits 0 0
Total Deferred Credits 8,947,715 4,305,243
282 ACCUMULATED DEFERRED INCOME TAXES 0 613,195
TOTAL LIABILITIES AND PROPRIETARY CAPITAL 35,910,389 32,901,334
<PAGE>
6
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1997
SCHEDULE II - SERVICE COMPANY PROPERTY
BALANCE AT RETIRE- BALANCE
BEGINNING MENTS OTHER 1/ AT CLOSE
DESCRIPTION OF YEAR ADDITIONS OR SALES CHANGES OF YEAR
SERVICE COMPANY PROPERTY
ACCOUNT
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/ 59,716 3,019,404 (724,346) 2,354,774
308 OFFICE FURNITURE
AND EQUIPMENT 637,758 128,647 (414,785) 351,620
309 AUTOMOBILES, OTHER
VEHICLES AND
RELATED GARAGE
EQUIPMENT
310 AIRCRAFT AND
AIRPORT EQUIPMENT
311 OTHER SERVICE
COMPANY PROPERTY 3/
SUBTOTAL 1,533,842 3,148,051 (414,785) (724,346) 3,542,762
107 CONSTRUCTION WORK
IN PROGRESS
TOTAL 1,533,842 3,148,051 (414,785) (724,346) 3,542,762
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:
BALANCE
AT CLOSE
SUBACCOUNT DESCRIPTION ADDITIONS OF YEAR
Capitalized lease for data processing equipment 3,019,404 2,354,774
TOTAL 3,019,404 2,354,774
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, 1997
SCHEDULE III
ACCUMULATED PROVISION FOR DEPRECIATION AND
AMORTIZATION OF SERVICE COMPANY PROPERTY
ADDITIONS OTHER
BALANCE AT CHARGED CHANGES BALANCE
BEGINNING TO RETIRE- ADD AT CLOSE
DESCRIPTION OF YEAR ACCT 403 MENTS (DEDUCT) 1/ OF YEAR
ACCOUNT
301 ORGANIZATION
303 MISCELLANEOUS
INTANGIBLE
PLANT
304 LAND AND LAND
RIGHTS
305 STRUCTURES AND
IMPROVEMENTS
306 LEASEHOLD
IMPROVEMENTS 836,369 836,369
307 EQUIPMENT 62,700 (2,984) (55,738) 3,978
308 OFFICE
FURNITURE
AND FIXTURES 382,739 26,849 (350,138) 59,450
309 AUTOMOBILES,
OTHER VEHICLES
AND RELATED
GARAGE EQUIP.
310 AIRCRAFT AND
AIRPORT
EQUIPMENT
311 OTHER SERVICE
COMPANY
PROPERTY
TOTAL 1,281,808 23,865 (405,876) 899,797
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, 1997
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.
BALANCE AT BALANCE AT
DESCRIPTION BEGINNING CLOSE
OF YEAR OF YEAR
ACCOUNT 123 - INVESTMENT IN ASSOCIATE COMPANIES
None.
ACCOUNT 124 - OTHER INVESTMENTS
Membership Certificates 7,000 7,000
AirScrip Certificates 50 50
West Virginia Workmen's Compensation Fund 19,624 50,083
26,674 57,133
ACCOUNT 136 - TEMPORARY CASH INVESTMENTS
None.
TOTAL 26,674 57,133
<PAGE>
10
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1997
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.
BALANCE AT BALANCE AT
DESCRIPTION BEGINNING CLOSE
OF YEAR OF YEAR
ACCOUNT 146 - ACCOUNTS RECEIVABLE FROM
ASSOCIATE COMPANIES
Allegheny Power System, Inc. 62,448 42,990
Monongahela Power Company 8,584,850 (9,052,837)
The Potomac Edison Company 6,855,662 8,283,583
West Penn Power Company 4,861,356 12,629,809
Allegheny Generating Company 216,291 93,086
Allegheny Pittsburgh Coal Company 15,402 1,469
AYP Capital, Inc. 645,926 1,364,581
AYP Energy, Inc. 1,632,743 312,460
Allegheny Communications Connect, Inc. 125,689 184,020
Allegheny Energy Solutions, Inc. 0 360,870
Davis Power Project 3,288 0
Albright Power Station 0 74,915
Fort Martin Power Station 0 711,581
Harrison Power Station 0 2,453,415
Pleasants Power Station 0 3,986,778
West Virginia Power & Transmission 0 366
TOTAL 23,003,655 21,447,086
ANALYSIS OF CONVENIENCE OR ACCOMODATION PAYMENTS:
Monongahela The Potomac West Penn
DESCRIPTION Power Edison Power TOTAL
Company Company Company PAYMENTS
None
TOTAL PAYMENTS 0 0 0 0
<PAGE>
11
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1997
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, 1997
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, 1997
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, 1997
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.
BALANCE AT BALANCE AT
DESCRIPTION BEGINNING CLOSE
OF YEAR OF YEAR
ACCOUNT 186 - MISCELLANEOUS DEFERRED DEBITS
NY Headquarters security deposit 58,458 58,458
Deferred Miscellaneous charges 5,594 597,454
Deferred Hourly wage accruals 0 1,342,769
TOTAL 64,052 1,998,681
<PAGE>
15
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1997
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.
DESCRIPTION AMOUNT
ACCOUNT 188 - RESEARCH, DEVELOPMENT, OR
DEMONSTRATION EXPENDITURES
None
TOTAL
<PAGE>
16
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1997
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
<PAGE>
17
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1997
SCHEDULE XII - LONG-TERM DEBT
INSTRUCTIONS: Advances from associate companies should be reported
separately for advances on notes, and 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>
<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, 1997
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.
BALANCE AT BALANCE AT
DESCRIPTION BEGINNING CLOSE
OF YEAR OF YEAR
ACCOUNT 233 - NOTES PAYABLE TO ASSOCIATE
COMPANIES
None.
TOTAL
ACCOUNT 234 - ACCOUNTS PAYABLE TO ASSOCIATE
COMPANIES
Allegheny Power System, Inc. 20,973 0
The Potomac Edison Company (47,483) 0
West Penn Power Company 1,807,264 0
Monongahela Power Company (26,868) 0
TOTAL 1,753,886 0
ACCOUNT 242 - MISCELLANEOUS CURRENT AND
ACCRUED LIABILITIES
Employee benefits 1,726,648 7,016,435
Capital leases 530,327 1,297,958
Restructuring Liability 5,219,148 0
Audit Expense Liability 0 248,500
TOTAL 7,476,123 8,562,893
<PAGE>
19
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1997
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
activities initiated in 1994, 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.
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, 1997
SCHEDULE XV
STATEMENT OF INCOME
ACCOUNT DESCRIPTION CURRENT YEAR PRIOR YEAR
INCOME
457 Services rendered to associate companies 385,810,885 123,657,927
458 Services rendered to nonassociate
companies 0 0
421 Miscellaneous income or loss 13,479 36,029
Total Income 385,824,364 123,693,956
EXPENSE
101-108 Utility plant expenses 110,284,634 0
500-557 Power production expenses 87,925,665 0
560-598 Transmission & Distribution expenses 51,393,325 0
901-910 Customer accounts & services expenses 33,396,721 0
912-913 Sales expenses 6,179,804 0
920 Salaries and wages 30,539,718 57,400,749
921 Office supplies and expenses 14,979,675 8,974,977
922 Administrative expense transferred -
credit 0 (127,201)
923 Outside services employed 13,664,163 21,699,943
924 Property insurance 57,910 2,630
925 Injuries and damages 2,977,648 (63,321)
926 Employee pensions and benefits 9,619,724 9,651,856
928 Regulatory commission expense 193,462 127,201
930.1 General advertising expenses 416,321 614
930.2 Miscellaneous general expenses 2,324,388 41,249
931 Rents 3,917,062 19,708,860
932 Maintenance of structures and
equipment 3,611,694 998,054
403 Depreciation and amortization expense 0 252,029
408 Taxes other than income taxes 11,266,921 4,524,960
409 Income taxes (1,690,524) 5,788,401
410 Provision for deferred income taxes 6,121,022 290,387
411 Provision for deferred income taxes -
credit (4,038,826) (5,867,878)
411.5 Investment tax credit 0 0
426.1 Donations 79,883 129,803
426 Other deductions 2,413,193 80,645
427 Interest on long-term debt 0 0
431 Other interest expense 190,781 79,998
Total Expense 385,824,364 123,693,956
Net Income or (Loss) 0 0
<PAGE>
21
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1997
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
457-1 457-2 457-3
<S> <C> <C> <C> <C>
Monongahela Power Company 78,816,533 0 0 78,816,533
The Potomac Edison Company 80,689,931 0 0 80,689,931
West Penn Power Company 168,772,397 0 0 168,772,397
Albright Power Station 5,392,050 0 0 5,392,050
Fort Martin Power Station 9,598,264 0 0 9,598,264
Harrison Power Station 16,580,471 0 0 16,580,471
Pleasants Power Station 15,719,971 0 0 15,719,971
Allegheny Power System, Inc. 2,476,453 0 0 2,476,453
Allegheny Generating Company 204,931 0 0 204,931
Allegheny Pittsburgh Coal Co. 15,924 0 0 15,924
AYP Capital, Inc. 4,174,161 0 0 4,174,161
AYP Energy, Inc. 1,743,118 0 0 1,743,118
Allegheny Comm. Connect, Inc. 800,867 0 0 800,867
Allegheny Energy Solutions, In 826,181 0 0 826,181
Davis Power Project (367) 0 0 (367)
TOTAL 385,810,885 0 0 385,810,885
</TABLE>
Note: Items that were shown as indirect costs in previous years have now been
allocated directly.
<PAGE>
22
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1997
ANALYSIS OF BILLING
NONASSOCIATE COMPANIES
ACCOUNT 458
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
DIRECT INDIRECT COMPENSATION EXCESS TOTAL
NAME OF NONASSOCIATE COMPANY COST COST FOR USE TOTAL OR AMOUNT
CHARGED CHARGED OF CAPITAL COST DEFICIENCY BILLED
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, 1997
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> <C>
101-108 UTILITY PLANT EXPENSES 110,284,634 - 110,284,634 - - - 110,284,634 - 110,284,634
500-557 POWER PRODUCTION EXPENSES 87,925,665 - 87,925,665 - - - 87,925,665 - 87,925,665
560-598 TRANSMISSION & DISTRIBUTION EXP 51,393,325 - 51,393,325 - - - 51,393,325 - 51,393,325
901-910 CUSTOMER ACCOUNT & SERVICES EXP 33,396,721 - 33,396,721 - - - 33,396,721 - 33,396,721
912-913 SALES EXPENSES 6,179,804 - 6,179,804 - - - 6,179,804 - 6,179,804
920 SALARIES AND WAGES 30,539,718 - 30,539,718 - - - 30,539,718 - 30,539,718
921 OFFICE SUPPLIES AND EXPENSES 14,979,675 - 14,979,675 - - - 14,979,675 - 14,979,675
922 ADMINISTRATIVE EXPENSES
TRANSFERRED - CREDIT - - - - - - - - -
923 OUTSIDE SERVICES EMPLOYED 13,664,163 - 13,664,163 - - - 13,664,163 - 13,664,163
924 PROPERTY INSURANCE 57,910 - 57,910 - - - 57,910 - 57,910
925 INJURIES AND DAMAGES 2,977,648 - 2,977,648 - - - 2,977,648 - 2,977,648
926 EMPLOYEE PENSIONS AND BENEFITS 9,619,724 - 9,619,724 - - - 9,619,724 - 9,619,724
928 REGULATORY COMMISSION EXPENSE 193,462 - 193,462 - - - 193,462 - 193,462
930.1 GENERAL ADVERTISING EXPENSES 416,321 - 416,321 - - - 416,321 - 416,321
930.2 MISCELLANEOUS GENERAL EXPENSES 2,324,388 - 2,324,388 - - - 2,324,388 - 2,324,388
931 RENTS 3,917,062 - 3,917,062 - - - 3,917,062 - 3,917,062
932 MAINTENANCE OF STRUCTURES AND
EQUIPMENT 3,611,694 - 3,611,694 - - - 3,611,694 - 3,611,694
403 DEPRECIATION AND AMORTIZATION
EXPENSE - - - - - - - - -
408 TAXES OTHER THAN INCOME TAXES 11,266,921 11,266,921 11,266,921 11,266,921
409 INCOME TAXES (1,690,524) - (1,690,524) - - - (1,690,524) - (1,690,524)
410 PROVISION FOR DEFERRED INCOME
TAXES 6,121,022 - 6,121,022 - - - 6,121,022 - 6,121,022
411 PROVISION FOR DEFERRED INCOME
TAXES - CREDIT (4,038,826) - (4,038,826) - - - (4,038,826) - (4,038,826)
411.5 INVESTMENT TAX CREDIT - - - - - - - - -
421 MISCELLANEOUS INCOME/LOSS (13,479) - (13,479) - - - (13,479) - (13,479)
426.1 DONATIONS 79,883 - 79,883 - - - 79,883 - 79,883
426 OTHER DEDUCTIONS 2,413,193 - 2,413,193 - - - 2,413,193 - 2,413,193
427 INTEREST ON LONG-TERM DEBT - - - - - - - - -
431 OTHER INTEREST EXPENSE 190,781 - 190,781 - - - 190,781 - 190,781
- - - - -
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 385,810,885 - 385,810,885 - - - 385,810,885 - 385,810,885
COMPENSATION FOR USE OF EQUITY CAPITA - - - - - - - - -
430 INTEREST ON DEBT TO ASSOC COS. - - - - - - - - -
TOTAL COST OF SERVICE 385,810,885 - 385,810,885 - - - 385,810,885 - 385,810,885
</TABLE>
Note: Items that were shown as indirect costs in previous years have now
been charged directly.
<PAGE>
24
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1997
SCHEDULE XVII
SCHEDULE OF EXPENSE DISTRIBUTION
BY
DEPARTMENT OR SERVICE FUNCTION
<TABLE>
<CAPTION>
DEPARTMENT OR SERVICE FUNCTION
RETAIL
GENERATION OPERATING MARKETING
TOTAL BUSINESS POWER BUSINESS PLANNING & BUSINESS
DESCRIPTION OF ITEMS AMOUNT OVERHEAD EXECUTIVE UNIT STATIONS UNIT COMPLIANCE UNIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
101-108 UTILITY PLANT EXPENSES 110,284,634 89,481,152 183 240,695 101,357 18,902,658 15,020 -
500-557 POWER PRODUCTION EXPENSES 87,925,665 2,685,108 1,883 9,650,269 68,627,430 211,302 1,727,889 240,494
560-598 TRANS & DISTR EXPENSES 51,393,325 1,944,111 4,154 226,497 159,057 47,262,637 167,196 15,479
901-913 CUSTOMER ACCTS & SVCS EXP. 39,576,525 7,521,843 107,438 74,442 6,834 20,638,427 482,274 6,338,060
920 SALARIES AND WAGES 30,539,718 (4,042,355) 3,766,477 2,023,771 364,181 5,739,019 2,064,766 721,332
921 OFFICE SUPPLIES AND EXPENSES 14,979,675 8,038,057 505,761 421,360 11,238 703,756 347,339 1,075,591
922 ADMINISTRATIVE EXPENSES
TRANSFERRED - CREDIT - - - - - - - -
923 OUTSIDE SERVICES EMPLOYED 13,664,163 452,674 446,940 373,166 11,212 325,243 101,059 604,373
924 PROPERTY INSURANCE 57,910 - - - - - - -
925 INJURIES AND DAMAGES 2,977,648 561,015 4,800 206 (109,335) 1,223,967 - 13,379
926 EMPL. PENSIONS AND BENEFITS 9,619,724 (20,217,360) 352,111 1,141,692 12,852,878 10,140,702 336,245 673,684
928 REGULATORY COMMISSION EXPENSE 193,462 - 659 33,732 - - - -
930.1 GENERAL ADVERTISING EXPENSE 416,321 - - 1,396 - 387 - -
930.2 MISCELLANEOUS GENERAL EXPENSE 2,324,388 38,436 463,009 31,086 - 30,285 246,639 37,949
931 RENTS 3,917,062 - 65,027 263,431 48,136 640,922 52,483 148,328
935 MAINTENANCE OF STRUCTURES AND
EQUIPMENT 3,611,694 3,563 1,520 394,041 9,789 2,681,246 7,779 1,497
403 DEPRECIATION AND AMORTIZATION
EXPENSE - - - - - - - -
408 TAXES OTHER THAN
INCOME TAXES 11,266,921 857,622 143,704 459,975 4,042,960 4,012,739 132,953 247,693
409 INCOME TAXES (1,690,524) (1,690,524) - - - - - -
410 PROVISION FOR DEFERRED INCOME
TAXES 6,121,022 6,121,022 - - - - - -
411 PROVISION FOR DEFERRED INCOME
TAXES - CREDIT (4,038,826) (4,038,826) - - - - - -
411.5 INVESTMENT TAX CREDIT - - - - - - - -
426.1 DONATIONS 79,883 - - 10,196 - - 67,742 -
426 OTHER DEDUCTIONS 2,413,193 22,303 2,059,334 33,689 - 45,507 85 (7,924)
427 INTEREST ON LONG-TERM DEBT - - - - - - - -
430 INTEREST ON DEBT TO ASSOCIATE
COMPANIES - - - - - - - -
431 OTHER INTEREST EXPENSE 190,781 137,246 - - - - - -
INSTRUCTION: Indicate each
department or service function.
(See Instruction 01-3 General
Structure of Accounting System:
Uniform System of Accounts.)
TOTAL EXPENSES 385,824,364 87,875,087 7,923,000 15,379,644 86,125,737 112,558,797 5,749,469 10,109,935
</TABLE>
Note: Overhead amounts include adjustments and clearing that were not
done at the department level.
<PAGE>
25
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1997
SCHEDULE XVII
SCHEDULE OF EXPENSE DISTRIBUTION
BY
DEPARTMENT OR SERVICE FUNCTION
<TABLE>
<CAPTION>
DEPARTMENT OR SERVICE FUNCTION
TRANSMISSION
BUSINESS AUDIT CORPORATE EXTERNAL FINANCIAL HUMAN INFORMATION
DESCRIPTION OF ITEMS UNIT SERVICES CONTROLLER COMMUNICATION AFFAIRS MGMT. RESOURCES SERVICES
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
101-120 UTILITY PLANT EXPENSES 1,380,278 - 340,717 113 916 88 75 (196,349)
500-557 POWER PRODUCTION EXPENSES 4,411,387 74,851 27,322 9,976 184,972 - 24,799 (135,051)
560-598 TRANS & DISTR EXPENSES 878,962 1,492 224 3,075 8,184 - 4,474 (194,043)
901-913 CUSTOMER ACCTS & SVCS EXP. 104,987 5,621 9,193 1,384,956 356,329 3,076 5,605 (613,772)
920 SALARIES AND WAGES 1,136,208 1,586,841 4,218,647 763,690 804,767 891,108 2,539,028 420,389
921 OFFICE SUPPLIES AND EXPENSES 298,808 243,524 711,469 161,103 178,756 227,500 442,277 (455,861)
922 ADMINISTRATIVE EXPENSES
TRANSFERRED - CREDIT - - - - - - - -
923 OUTSIDE SERVICES EMPLOYED 221,650 717,535 113,982 88,048 650,209 64,655 176,652 275,849
924 PROPERTY INSURANCE - - - - - - - -
925 INJURIES AND DAMAGES 11,669 7,519 14,481 7,032 100 463 387,632 236
926 EMPL. PENSIONS AND BENEFITS 630,313 177,474 560,732 236,794 103,761 128,535 1,026,725 27,930
928 REGULATORY COMMISSION EXPENSE 4,530 - 1,495 - - - - -
930.1 GENERAL ADVERTISING EXPENSE - - - 409,666 - 4,846 26 -
930.2 MISCELLANEOUS GENERAL EXPENSE 31,509 866 20,696 595,408 4,514 2,147 - 105
931 RENTS 897,127 29,225 81,991 33,782 7,705 20,160 116,522 1,208,923
935 MAINTENANCE OF STRUCTURES AND
EQUIPMENT 220,845 2,739 26,181 553 90 862 1,729 235,995
403 DEPRECIATION AND AMORTIZATION
EXPENSE - - - - - - - -
408 TAXES OTHER THAN INCOME TAXES 236,254 75,060 233,325 62,616 40,571 41,192 116,477 1,121
409 INCOME TAXES - - - - - - - -
410 PROVISION FOR DEFERRED INCOME
TAXES - - - - - - - -
411 PROVISION FOR DEFERRED INCOME
TAXES - CREDIT - - - - - - - -
411.5 INVESTMENT TAX CREDIT - - - - - - - -
426.1 DONATIONS - - - 232 150 - - 1,563
426 OTHER DEDUCTIONS 10,233 - (1,023) 27,820 10,000 3,330 39,185 -
427 INTEREST ON LONG-TERM DEBT - - - - - - - -
430 INTEREST ON DEBT TO ASSOCIATE
COMPANIES - - - - - - - -
431 OTHER INTEREST EXPENSE - - 53,535 - - - - -
INSTRUCTION: Indicate each
department or service function.
(See Instruction 01-3 General
Structure of Accounting System:
Uniform System of Accounts.)
TOTAL EXPENSES 10,474,760 2,922,747 6,412,967 3,784,864 2,351,024 1,387,962 4,881,206 577,035
</TABLE>
Note: Overhead amounts include adjustments and clearing that were not
done at the department level.
<PAGE>
25A
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1997
SCHEDULE XVII
SCHEDULE OF EXPENSE DISTRIBUTION
BY
DEPARTMENT OR SERVICE FUNCTION
<TABLE>
<CAPTION>
DEPARTMENT OR SERVICE FUNCTION
TREASURY
REGULATION SERVICES &
AND SYSTEM RISK (Unregulated)
DESCRIPTION OF ITEMS LEGAL PROCURMENT RATES SECURITY MGMT AYP CAPITAL OTHER
<S> <C> <C> <C> <C> <C> <C> <C> <C>
101-120 UTILITY PLANT EXPENSES 8,035 (72) 1,694 (19) 736 53 7,304
500-557 POWER PRODUCTION EXPENSES 134,690 40,554 5,169 63 1,772 1,691 (905)
560-598 TRANS & DISTR EXPENSES 544,356 2,284 27,366 (39) 471 323,552 13,836
901-913 CUSTOMER ACCTS & SVCS EXPENSES 143,978 2,236 215,613 269 2,280,606 508,540 (30)
920 SALARIES AND WAGES 1,769,284 343,802 2,066,129 1,317,202 450,514 1,309,397 285,521
921 OFFICE SUPPLIES AND EXPENSES 374,237 65,770 319,006 323,926 202,241 768,060 15,757
922 ADMINISTRATIVE EXPENSES
TRANSFERRED - CREDIT - - - - - - -
923 OUTSIDE SERVICES EMPLOYED 6,798,342 (1,357) 451,056 3,572 19,542 1,769,761 -
924 PROPERTY INSURANCE - - - - 57,910 - -
925 INJURIES AND DAMAGES 1,360,571 539 605 522 (511,390) 1,283 2,354
926 EMPLOYEE PENSIONS AND BENEFITS 297,778 46,208 334,231 161,826 231,919 245,404 130,142
928 REGULATORY COMMISSION EXPENSE 25,058 - 127,988 - - - -
930.1 GENERAL ADVERTISING EXPENSE - - - - - - -
930.2 MISCELLANEOUS GENERAL EXPENSE 79,361 36,445 202,554 6,677 495,939 - 763
931 RENTS 54,697 37,628 43,882 61,789 16,136 75,462 13,706
935 MAINTENANCE OF STRUCTURES AND
EQUIPMENT 1,589 6,306 11,084 489 1,330 2,232 235
403 DEPRECIATION AND AMORTIZATION
EXPENSE - - - - - -
408 TAXES OTHER THAN INCOME TAXES 122,491 18,303 132,889 64,890 93,735 91,664 38,687
409 INCOME TAXES - - - - - - -
410 PROVISION FOR DEFERRED INCOME
TAXES - - - - - - -
411 PROVISION FOR DEFERRED INCOME
TAXES - CREDIT - - - - - - -
411.5 INVESTMENT TAX CREDIT - - - - - - -
426.1 DONATIONS - - - - - - -
426 OTHER DEDUCTIONS 95,114 1,578 33,699 1,113 63 21,847 17,240
427 INTEREST ON LONG-TERM DEBT - - - - - - -
430 INTEREST ON DEBT TO ASSOCIATE
COMPANIES - - - - - - -
431 OTHER INTEREST EXPENSE - - - - - - -
INSTRUCTION: Indicate each
department or service function.
(See Instruction 01-3 General
Structure of Accounting System:
Uniform System of Accounts.)
TOTAL EXPENSES 11,809,581 600,224 3,972,965 1,942,280 3,341,524 5,118,946 524,610
</TABLE>
Note: Overhead amounts include adjustments and clearing that were not
done at the department level.
<PAGE>
26
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1997
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 983,495 78,663 904,832 3
Administration 284,395 22,057 262,338 2
VP - OBU, TBU, RBU 397,809 33,191 364,618 2
VP - GBU, P&C 314,857 53,154 261,703 2
External Affairs 815,995 2,310 813,685 8
Finance 627,061 49,534 577,527 3
Controller 275,582 4,600 270,982 2
Legal and Corp. Secretary 861,834 43,773 818,061 3
Generating Business Unit 10,652,774 2,353 10,650,421 167
Power Stations 73,147,053 0 73,147,053 1,298
Operating Business Unit 129,928,308 27,886 129,900,422 2,543
Retail Marketing Bus. Unit 5,133,412 3,086 5,130,326 63
Transmission Business Unit 9,095,215 6,510 9,088,705 140
AYP Capital, Inc.(Unregulate) 1,672,773 13,950 1,658,823 29
Support Business Units:
Audit Services 1,635,723 1,004 1,634,719 25
Controller 6,317,672 40,586 6,277,086 123
Corporate Communications 1,206,681 35,078 1,171,603 21
External Affairs 878,770 19 878,751 9
Financial Mgmt. 871,714 2,862 868,852 14
Human Resources 2,953,345 25,480 2,927,865 49
Information Services 7,685,658 47 7,685,611 122
Legal 2,889,865 12,545 2,877,320 53
Plan. & Compliance 2,823,101 225 2,822,876 37
Procurement 1,877,203 864 1,876,339 35
Regulation & Rates 2,888,611 26,259 2,862,352 46
System Security 1,274,281 795 1,273,486 24
Treasury Svcs, Electronic
Commerce & Risk Mgmt. 1,795,239 12,407 1,782,832 45
Other 25,129,275 2,868 25,126,407
TOTAL 294,417,698 502,106 293,915,592 4,868
</TABLE>
In 1997 virtually all employees of associated companies were transferred to
Allegheny Power Service Corporation. These amounts include total salaries
rather than just Account 920 amounts. These amounts may include charges to
accounts throughout the Income Statement and Balance Sheet. Therefore, they
can't be identified in total with any particular line on Schedule XV, but are
distributed among various lines.
<PAGE>
27
ANNUAL REPORT OF Allegheny Power Service Corporation Page 1 of 13
For the Year Ended December 31, 1997
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.
RELATIONSHIP
"A"-ASSOCIATE
"NA"-NON
FROM WHOM PURCHASED ADDRESS ASSOCIATE AMOUNT
Data Processing Service:
ABB Power T&D Co. Inc. PO Box 73367 NA 53,436
Chicago, IL 60673
American Software, Inc. P.O. Box 101593 NA 80,535
Atlanta, GA 30392
Candle Corporation P.O. Box 92278 NA 105,747
Chicago, IL 60675-2278
Cincom Department 796 NA 72,900
Cincinnati, OH 45269
Cognos Corporation PO Box D3923 NA 97,627
Boston, MA 022413
Comdisco, Inc. PO Box 96283 NA 239,804
Chicago, IL 60693
Computer Associates P.O. Box 360355 NA 133,177
International, Inc. Pittsburgh, PA 15251-6355
Computerpeople, Inc. 4400 Campbells Run Rd NA 59,694
Pittsburgh, PA 15205
Compuware Corp Drawer 64376 NA 76,743
Detroit, MI 482640
Hyperion Software Corp 900 Long Ridge Rd NA 308,865
Stamford, CT 06902
IBM Corp PO Box 19222 NA 661,248
Chicago, IL 60693
<PAGE>
Page 2 of 13
Data Processing Service (continued)
INACOM-North Central P.O. Box 8500 (41835) NA 1,185,301
Reg. Philadelphia, PA 19178
Information Mngmnt 7915 Westpark Drive NA 95,446
Consult Inc McLean, VA 22102
Inpower, Inc PO Box 45673 NA 334,650
San Francisco, CA 941450
Intergraph Corporation P.O. Box 13700 NA 145,931
Newark, NJ 07188-0700
Jetform Corp. P. O. Box 66512 NA 103,440
Chicago, IL 60666-0512
Microsoft Premier P. O. Box 844510 NA 66,100
Dallas, TX 75284-4510
MK Consulting Services Penn Center West One, Ste NA 69,683
Pittsburgh, PA 15276
New Energy Assoc. LLC P. O. Box 116022 NA 106,500
Atlanta, GA 30368-6022
Oracle Corp. P. O. Box 71028 NA 187,752
Chicago, IL 60694-1028
Ouellette & Assoc. 40 S. River Rd. NA 79,838
Bedford, NH 03110
Sterling Software P. O. Box 198645 NA 131,821
Atlanta, GA 30384-8645
Miscellaneous - 137 vendors NA 1,025,337
5,421,575
<PAGE>
Page 3 of 13
Engineering Service:
Black & Veatch P. O. Box 802258 NA 260,858
Kansas City, MO 64180-2258
Metzler & Associates 520 Lake Cook Rd. NA 178,469
Deerfield, IL 60015
Putnam Hayes & One Memorial Dr. NA 82,861
Bartlett Inc. Cambridge, MA 02142
SE Technologies Inc. 98 Vanadium Rd. NA 83,395
Bridgeville, PA 15017
Miscellaneous - 24 vendors NA 150,718
756,301
Legal Service:
Carter Ledyard & 2 Wall Street NA 64,076
Milburn New York, NY 10005
Charles River D-3139 NA 61,400
Associates, Inc. Boston, MA 022413
Daticon Systems, Inc. PO Box 269 NA 137,003
Norwich, CT 06360
International Data 5 Schuman Rd NA 178,796
Services of NY, Inc. Millwood, NY 10546
Jackson & Kelly PO Box 11276 NA 134,977
Charleston, WV 25339
Jackson Lewis One North Broadway NA 62,521
Schnitzler & Krupman White Plains, NY 10601-2310
<PAGE>
Page 4 of 13
Legal Service (continued)
Keller & Heckman LLP 1001 G Street NW NA 55,904
Washington D.C. 20001
Kirkpatrick & Lockhart Payne-Shoemaker Bldg NA 4,221,975
LLP 240 N Third St.
Harrisburg, PA 17101-1507
Legal Management Two Gateway Center NA 123,489
Services Inc. Pittsburgh, PA 15222
Legal Network Ltd. 2987 Babcock Blvd., Ste. NA 130,096
Pittsburgh, PA 15237
Murphy & Shaffer 100 Light Street, Ninth F NA 380,624
Baltimore, MD 21202-1019
Putnam Hayes & One Memorial Dr. NA 917,845
Bartlett Cambridge, MA 02142
Reed Smith Shaw & P. O. Box 360074M NA 92,029
McClay Pittsburgh, PA 15251-6074
Robinson & McElwee PO Box 1791 NA 158,126
LLP Charleston, WV 25326
Sullivan & Cromwell 125 Broad St. NA 1,094,939
New York, NY 10004
Verner-Lippert Bernhard-McPherson & Hand NA 662,573
901 15th St. NW
Washington D.C. 20005-3502
Winston & Strawn 1400 L Street NA 557,109
Washington D.C. 20005-3502
<PAGE>
Page 5 of 13
Legal Service (continued)
Zevnik Horton Guibord The Warner Bldg. NA 225,591
& McGovern 1299 Penna. Ave., NW 9th Fl.
Washington D.C. 20004
Miscellaneous - 65 vendors NA 511,597
9,770,670
Medical Service:
Spectrum Medical Serv. One Landmark N. Ste. 101 NA 75,654
20399 Rt. 19 N.
Cranberry Twp., PA 16066-6136
Miscellaneous - 126 vendors NA 260,340
335,994
Temporary Manpower:
Manpower Inc. Box 68-6003 NA 164,667
Milwaukee, WI 53267-6003
Miscellaneous - 5 vendors NA 16,980
181,647
Rates:
Putnam Hayes & Bartlett One Memorial Drive NA 869,047
Cambridge, MA 02142
Verner-Liipfert 901 15th St. NW NA 62,583
Washington, D.C.
20005-2301
Miscellaneous - 3 vendors NA 8,505
940,135
<PAGE>
Page 6 of 13
Credit and Collections:
Payco American Corp. 180 N. Executive Dr. NA 284,736
Brookfield, WI 53005-6066
Miscellaneous - 15 vendors NA 42,137
326,873
Auditing:
Miscellaneous - 6 vendors NA 37,316
Other Service:
A. C. Coy Co. P.O. Box 1262 NA 852,968
Canonsburg, PA 15317
A. E. Roach 335 Old Plank Rd. NA 52,177
Washington, PA 15301
American Software Inc. P.O. Box 101593 NA 71,737
Atlanta, GA 30392
Andersen Consulting LLP P.O. Box 70629 NA 578,270
Chicago, IL 60673-0629
Antech Limited One Triangle Drive NA 77,937
Export, PA 15632
Bowne of New York City Attn: Accounting Dept. NA 422,615
345 Hudson St.
New York, NY 10014-4502
Chapman Corp. 331 S. Main Street NA 113,743
Washington, PA 15301
<PAGE>
Page 7 of 13
Other Service (continued)
ChaseMellon Shareholder Accounting Dept. NA 324,299
P.O. Box 360857
Pittsburgh, PA 15251-6857
CIBER PO Box 5912 NA 571,651
Denver, CO 80217-5912
Citibank NA GRB Central Customer Srvc NA 53,936
One Court Square 7th Floor
Long Island City, NY 11120
Comdisco Inc. P.O. Box 96283 NA 573,229
Chicago, IL 60693
Commonwealth Relocation 8 Penn Center Plaza NA 1,643,645
Philadelphia, PA 19103
Computer Task Group P.O. Box 60073 NA 88,395
Charlotte, NC 28260
Computerpeople, Inc 4400 Campbells Run Rd NA 886,241
Pittsburgh, PA 15205
Coopers & Lybrand LLP P.O. Box 905695 NA 178,987
Charlotte, NC 28290-5695
Data Systems Network 34705 W. Twelve Mile Rd. NA 80,400
Ste. 300
Farmington Hills, MI 48331
DDI Customer Service Inc.Dept. 1817 NA 68,770
Pittsburgh, PA 15278-1817
<PAGE>
Page 8 of 13
Other Service (continued)
Deloitte & Touche LLP P.O. Box 840148 NA 1,178,903
Dallas, TX 75284-0148
Dollar Energy Fund Inc. P.O. Box 42329 NA 70,077
Pittsburgh, PA 15203-0329
Dri/McGraw-Hill P.O. Box 5-0210 NA 93,600
Woburn, MA 01815-0210
Einhorn Design 1103 Bingham St. NA 86,843
Pittsburgh, PA 15203
Electric Power Rsrch Attn: Barbara J. Solseth NA 185,000
P.O. Box 10412
Palo Alto, CA 94303
Engineering Applied Four Triangle Drive NA 72,070
Sciences, Inc. Ste 120
Export, PA 15632
Environmental Consultant 301 Lakeside Dr. NA 51,000
Southampton, PA 18966-4527
Environmental Futures Inc530 Atlantic Ave. NA 299,149
Boston, MA 02210
EPRI P.O. Box 60624 NA 494,082
Charlotte, NC 28260
Executrain Corp. Penn Center West Four NA 70,526
Ste. 220
Campbells Run Rd.
Pittsburgh, PA 15276
<PAGE>
Page 9 of 13
Other Service (continued)
First Data Payment P.O. Box 502130 NA 326,945
St. Louis, MO 63150-2130
Fitch Investor Service P.O. Box 96663 NA 95,000
Inc. Chicago, IL 60693-6663
FS Integrators Inc. P.O. Box 16727 NA 112,857
Irvine, CA 92623-6727
Fuld & Company, Inc. 126 Charles St. NA 79,883
Cambridge, MA 02141-2130
Goldman Sachs & Co. Attn: Mr. Richard Boughr NA 200,000
85 Broad St.
New York, NY 10004
Hallmark Tassone Attn: Willie Hogue NA 612,883
4 Gateway Center
Pittsburgh, PA 15222-1207
Hoechstetter Printing 218 N. Braddock Ave. NA 277,401
Co. Pittsburgh, PA 15208
Inpower Inc. P.O. Box 45673 NA 51,776
San Francisco, CA 94145-5673
Jana O. Sheffer EN-Net Services LLC NA 77,573
315 W. 2nd St.
Frederick, MD 21701
KCS Computer Services 777 Penn Center Blvd. NA 381,537
Inc. Ste. 600
Pittsburgh, PA 15235-5906
<PAGE>
Page 10 of 13
Other Service (continued)
Kizan Technologies Inc. 200 Whittington Pkwy. NA 52,372
Ste. 101
Louisville, KY 40222
Knepper Press Corp. 1120 Robb Hill Rd. NA 138,526
Oakdale, PA 15071-9106
Kubba Consultants Inc. River Rd. Office Center NA 52,700
2720 River Rd.
Des Plaines, IL 60018
Kwasha Lipton P.O. Box 35012 NA 59,350
Newark, NJ 07193-5012
Lehigh University Bursar's Office NA 90,593
27 Memorial Dr. W.
Bethlehem, PA 18015
Mackenzie Partners Inc. 156 Fifth Ave. NA 76,813
New York, NY 10010
Management Consulting 2710 Rochester Rd. NA 259,760
Solutions Inc. Cranberry Twp., PA 16066
Manpower Inc. Box 68-6003 NA 52,719
Milwaukee, WI 53267-6003
Maxim Group - Aerotek P.O. Box 630853 NA 182,777
Baltimore, MD 21263-0853
McKinsey & Co., Inc. Attn: Heather Scull NA 434,800
1101 Pennsylvania N.W.
Washington, DC 20004-2504
<PAGE>
Page 11 of 13
Other Service (continued)
Mellon Bank NA Commercial Loans NA 67,269
P.O. Box 360061
Pittsburgh, PA 15251-6061
Meta Group Inc. P.O. Box 19114 NA 86,448
Newark, NJ 07195-0114
Metzler & Associates 520 Lake Cook Road NA 1,504,161
Deerfield, IL 60015
MK Consulting Services Penn Center West One NA 388,066
Suite 300
Pittsburgh, PA 15276
Moody's Investor Service P.O. Box 102597 NA 109,018
Atlanta, GA 30368-0597
Ogilvy Adams & Rinehart 1901 L. Street N.W. NA 129,368
Ste. 300
Washington, DC 20036-3540
Pittsburgh Business Cons.Chamber Commerce Bldg. NA 90,055
411 7th Ave. Ste. 1401A
Pittsburgh, PA 15219-5963
PNC Bank NA P.O. Box 821523 NA 207,698
Philadelphia, PA
19182-1523
Price Waterhouse LLP P.O. Box 641300 NA 207,828
Pittsburgh, PA 15264-1300
Professional Services Hartley-Rose Bldg. NA 346,993
Group 425 First Ave.
Pittsburgh, PA 15219-1321
<PAGE>
Page 12 of 13
Other Service (continued)
Putnam Hayes & One Memorial Drive NA 363,073
Bartlett, Inc. Cambridge, MA 02142
R. I. Lampus Co. 816 R.I. Lampus Avenue NA 61,721
Box 167
Springdale, PA 15144
Risk Advisory 3000-300 5th Ave SW NA 65,831
Calgary Alberta
Canada T2P 3C4
Source Consulting Foster Plaza VI NA 161,743
681 Andersen Dr.
Pittsburgh, PA 15220
Source Services Corp. PO Box 970956 NA 662,739
Dallas, TX 75397-0956
Standard & Poor's P.O. Box 80-2542 NA 105,900
Chicago, IL 60680-2542
Test Inc. Accts. Receivable NA 133,562
P.O. Box 326
Nitro, WV 25143-0326
The Abernathy MacGregor 501 Madison Ave. NA 303,391
New York, NY 10022
The Bentley Company Inc. 22 Kane Industrial Dr. NA 290,944
Hudson, MA 01749
The McKinley Group Inc. 115 Chester St. NA 188,147
Front Royal, VA 22630
<PAGE>
Page 13 of 13
Other Service (continued)
Towers Perrin Inc. P.O. Box 8500 S-6110 NA 123,903
Philadelphia, PA 19178
Transervice Air Corp. P.O. Box 338 NA 130,950
4200 First Ave.
Nitro, WV 25143
United Parcel Service P.O. Box 4980 NA 50,224
Hagerstown, MD 21747-4980
XL Connect Systems Inc. P.O. Box 930356 NA 253,280
Atlanta, GA 31193-0356
Yost & Company 3770 Loch Hwy Pkwy NA 57,150
Roswell, GA 30075
Miscellaneous - 337 vendors NA 2,285,705
21,231,681
Total 39,002,192
These amounts summarize all outside services employed and may include charges
to accounts throughout the Income Statement and Balance Sheet. Therefore,
they can't be identified in total with any particular line on Schedule XV,
but are distributed among various lines.
<PAGE>
28
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1997
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.
DESCRIPTION AMOUNT
Employee welfare payments 524,382
Corporate pension plan 2,438,676
Long-term disability 3,270,200
Employee moving expense 401,334
Group medical 8,281,810
Group life insurance 1,685,855
Savings plan expense 1,348,913
Employee education assistance 115,419
Group dental (524,475)
Medical salaries & fees 311,659
Postretirement benefits other than pensions 7,291,000
Supplemental Executive Retirement expense 268,278
News publications & other employee information 75,932
Meal allowance 296,824
Personal vehicle allowance 164,873
Benefits allocated functionally (16,349,247)
Miscellaneous (7) 18,291
TOTAL 9,619,724
<PAGE>
29
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1997
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
General Advertising:
Television Hallmark Tassone 47,177
Other advertising activities Hallmark Tassone 23,048
Advertising Contract Dunn & Bradstreet 4,846
Related salaries & wages 19,944
95,015
Newspaper Advertising:
The Kaiser Group 3,576
Hallmark Tassone 90,052
Other (1) 1,671
Related salaries & wages 1,630
96,929
Radio, Display, Photo. Advertising: 6,131
Television Advertising:
Hallmark Tassone 204,186
Related salaries & wages 82
204,268
Other Customer Information Advertising:
Hallmark Tassone 12,076
Related salaries & wages 1,902
13,978
TOTAL 416,321
<PAGE>
30
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1997
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 53,381
Directors fees and expenses 109,497
Research & development 249,631
Financial expenses 1,166,514
Customer service public information 131,315
Cost of service studies 220,360
Miscellaneous 393,690
TOTAL 2,324,388
<PAGE>
31
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1997
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 3,041,491
Power control center equipment and space 0
Microwave and telecommunications equipment 677,923
Other office space 148,439
Miscellaneous 49,209
TOTAL 3,917,062
<PAGE>
32
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1997
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 500,032
Franchise tax 400
State sales tax (217,620)
State gross premium 6,918
Commercial rent or occupancy tax 12,531
State capitalized taxes (243,264)
Total Other than U. S. Government Taxes 58,997
(2) U.S. Government Taxes:
FICA 17,559,086
Federal unemployment 247,427
Federal capitalized taxes (6,598,589)
Total U. S. Government Taxes 11,207,924
TOTAL 11,266,921
<PAGE>
33
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1997
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
Jackson & Kelly Dues for OTAG issues 16,438
North Harrison Rails to Trails program 8,000
Eastern Energy Alliance Membership dues 6,333
Penna. Cleanways Paint/Solvent Recycling prog. 5,000
ORSANCO River Sweep program 5,000
Sewickley Creek Watershed Environ. Stewardship donation 5,000
Regional Trail Corporation Renovation of Railroad Car 3,500
Friends of the Cheat Donation 3,000
Belmont Elementary School Nature Fitness Trail 3,000
Miscellaneous (23) 24,612
TOTAL 79,883
<PAGE>
34
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1997
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 (4,579)
Civic & political related expenses Various 484,135
Miscellaneous Various 14,295
TOTAL 493,851
<PAGE>
35
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1997
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, PRESIDENT AND CHIEF EXECUTIVE OFFICER
STAFF ASSISTANT
SENIOR VICE PRESIDENT
VICE PRESIDENT, OPERATING BUSINESS UNIT
DIRECTOR, OPERATIONS (7)
DIRECTOR, OPERATIONS SERVICES (2)
DIRECTOR, CUSTOMER SERVICE
FINANCIAL ADVISOR
VICE PRESIDENT, TRANSMISSION BUSINESS UNIT
DIRECTOR, OPERATIONS
DIRECTOR, TRANSMISSION MARKETING
DIRECTOR, TRANMISSION PROJECTS (2)
GENERAL MANAGER, RETAIL BUSINESS UNIT
SENIOR VICE PRESIDENT (BULK POWER)
VICE PRESIDENT, GENERATION BUSINESS UNIT
DIRECTOR, GENERATION PROJECTS (3)
DIRECTOR, FUEL PROCUREMENT
DIRECTOR, OPERATIONS
DIRECTOR, GENERATION MARKETING
VICE PRESIDENT, PLANNING AND COMPLIANCE BUSINESS UNIT
DIRECTOR, PLANNING AND COMPLIANCE (2)
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
VICE PRESIDENT AND CONTROLLER
CONTROLLER
MANAGER, ASSET & FUEL ACCOUNTING
MANAGER, CORPORATE ACCOUNTING
MANAGER, PAYMENT PROCESSING & PAYROLL
MANAGER, TAXES
<PAGE>
36A
ANNUAL REPORT OF Allegheny Power Service Corporation
ORGANIZATION CHART
CHAIRMAN AND CHIEF EXECUTIVE OFFICER (CONTINUED)
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER (CONTINUED)
VICE PRESIDENT AND CONTROLLER (CONTINUED)
DIRECTOR, AUDIT SERVICES
VICE PRESIDENT AND TREASURER
ASSISTANT TREASURER
MANAGER, RISK MANAGEMENT
COORDINATOR, ELECTRONIC COMMERCE
EXECUTIVE DIRECTOR, REGULATION & RATES
DIRECTOR, REGULATION & RATES
MANAGER, COSTING & RATES
MANAGER, FINANCIAL ANALYSIS
MANAGER, FUEL & CAPITAL RECOVERY
DIRECTOR, FINANCIAL MANAGEMENT
MANAGER, INVESTOR RELATIONS
VICE PRESIDENT (ADMINISTRATION)
VICE PRESIDENT, ALLEGHENY ENERGY SOLUTIONS
ASSISTANT VICE PRESIDENT, ALLEGHENY ENERGY SOLUTIONS
ASSISTANT VICE PRESIDENT, AYP CAPITAL
ENERGY MARKETS DIRECTOR
BUSINESS DEVELOPMENT DIRECTOR
DIRECTOR, CORPORATE COMMUNICATIONS
DIRECTOR, HUMAN RESOURCES
COORDINATOR, IOG
MANAGER, HUMAN RESOURCES (2)
DIRECTOR, INFORMATION SERVICES
MANAGER, INFORMATION SERVICES (3)
BUSINESS CONSULTANT (6)
DIRECTOR, PROCUREMENT
<PAGE>
36B
ANNUAL REPORT OF Allegheny Power Service Corporation
ORGANIZATION CHART
CHAIRMAN AND CHIEF EXECUTIVE OFFICER (CONTINUED)
VICE PRESIDENT (ADMINISTRATION)(CONTINUED)
DIRECTOR, SYSTEM SECURITY
ENERGY SERVICE DIRECTOR
COMMUNICATIONS DIRECTOR
VICE PRESIDENT, EXTERNAL AFFAIRS
ASSISTANT TO VICE PRESIDENT
VICE PRESIDENT, CORPORATE AFFAIRS (3)
MANAGER, CORPORATE AFFAIRS(3)
DIRECTOR, POLICY ANALYSIS
MANAGER, FEDERAL AFFAIRS
MANAGER, STATE GOVERNMENTAL AFFAIRS
VICE PRESIDENT (LEGAL)
VICE PRESIDENT, LEGAL SERVICES
DIRECTOR, LEGAL SERVICES
MANAGER, CLAIMS
ATTORNEY (AYP CAPITAL)
CORPORATE SECRETARY
ASSISTANT SECRETARY (2)
NOTE: THIS ORGANIZATIONAL CHART REFLECTS ONLY SERVICE COMPANY POSITIONS.
IT DOES NOT INCLUDE OPERATING COMPANY POSITIONS WHICH ARE DIRECTED BY
THE SERVICE COMPANY.
<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
(i) 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 30, 1998
<TABLE> <S> <C>
<ARTICLE> OPUR2
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<EXCHANGE-RATE> 1
<BOOK-VALUE> PER-BOOK
<NET-SERVICE-COMPANY-PROPERTY> 2,642,965
<TOTAL-INVESTMENTS> 57,133
<TOTAL-CURRENT-ASSETS> 25,753,964
<TOTAL-DEFERRED-DEBITS> 7,456,327
<OTHER-ASSETS-AND-DEBITS> 0
<TOTAL-ASSETS-AND-DEBITS> 35,910,389
<TOTAL-PROPRIETARY-CAPITAL> 50,000
<TOTAL-LONG-TERM-DEBT> 1,150,710
<NOTES-PAYABLE> 0
<NOTES-PAYABLE-ASSOCIATE-COMP> 0
<OTHER-CURR-AND-ACCRUED-LIAB> 25,761,964
<TOTAL-DEFERRED-CREDITS> 8,947,715
<DEFERRED-INCOME-TAX> 0
<TOT-LIABIL-AND-PROPRIET-CAP> 35,910,389
<SERVICES-ASSOCIATE-COMPANIES> 385,810,885
<SERVICES-NON-ASSOCIATE-COMP> 0
<MISC-INCOME-OR-LOSS> 13,479
<TOTAL-INCOME> 385,824,364
<SALARIES-AND-WAGES> 30,539,718
<EMPLOYEE-PENSION-AND-BENEFIT> 9,619,724
<OTHER-EXPENSES> 345,664,922
<TOTAL-EXPENSES> 385,824,364
<NET-INCOME> 0
<TOTAL-EXPENSES-DIRECT-COST> 440,906,594
<TOTAL-EXPENSES-INDIRECT-COST> (55,095,709)
<TOT-EXP-DIRECT-AND-INDIRECT> 385,810,885
<PERSONNEL-END-OF-YEAR> 4,868
</TABLE>
