<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, 1998 and Ending December 31, 1998
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, VP & Controller
(Name) (Title)
10435 Downsville Pike
Hagerstown, MD 21740-1766
(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
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.
ACCOUNT ASSETS AND OTHER DEBITS AS OF DECEMBER 31
1998 1997
SERVICE COMPANY PROPERTY
101 Service company property (Schedule II) 2,713,072 3,542,762
107 Construction work in progress (Schedule II) 0 0
Total Property 2,713,072 3,542,762
108 Less accumulated provision for depreciation
and amortization of service company
property (Schedule III) 899,797 899,797
Net Service Company Property 1,813,275 2,642,965
INVESTMENTS
123 Investments in associate companies
(Schedule IV) 0 0
124 Other investments (Schedule IV) 81,412 57,133
Total Investments 81,412 57,133
CURRENT AND ACCRUED ASSETS
131 Cash 0 478,739
134 Special deposits 0 (2,008)
135 Working funds 101,891 33,037
136 Temporary cash investments (Schedule IV) 0 0
141 Notes receivable 0 0
143 Accounts receivable 2,556,846 2,288,675
144 Accumulated provision of uncollectible
accounts 0 0
146 Accounts receivable from associate
companies (Schedule V) 46,572,027 21,334,703
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 38,383 1,620,818
174 Miscellaneous current and accrued
assets (Schedule VIII)
Total Current and Accrued Assets 49,269,147 25,753,964
DEFERRED DEBITS
181 Unamortized debt expense 0 0
184 Clearing accounts 0 67,987
186 Miscellaneous deferred debits (Schedule IX) 1,115,743 1,998,681
188 Research, development, or demonstration
expenditures (Schedule X) 0 0
190 Accumulated deferred income taxes 13,279,511 5,389,659
Total Deferred Debits 14,395,254 7,456,327
TOTAL ASSETS AND OTHER DEBITS 65,559,088 35,910,389
<PAGE>
5
ANNUAL REPORT OF Allegheny Power Service Corporation
SCHEDULE I - COMPARATIVE BALANCE SHEET
ACCOUNT LIABILITIES AND PROPRIETARY CAPITAL AS OF DECEMBER 31
1998 1997
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 152,099 1,150,710
Total Long-Term Debt 152,099 1,150,710
CURRENT AND ACCRUED LIABILITIES
231 Notes payable 0 0
232 Accounts payable 36,604,899 13,599,512
233 Notes payable to associate
companies (Schedule XIII) 0 0
234 Accounts payable to associate
companies (Schedule XIII) 53,395 0
236 Taxes accrued 1,490,695 712,575
237 Interest accrued 0 0
238 Dividends declared 0 0
241 Tax collections payable 5,469,376 2,886,984
242 Miscellaneous current and accrued
liabilities (Schedule XIII) 13,033,721 8,562,893
Total Current and Accrued Liabilities 56,652,086 25,761,964
DEFERRED CREDITS
253 Other deferred credits 8,704,903 8,947,715
255 Accumulated deferred investment tax credits 0 0
Total Deferred Credits 8,704,903 8,947,715
282 ACCUMULATED DEFERRED INCOME TAXES 0 0
TOTAL LIABILITIES AND PROPRIETARY CAPITAL 65,559,088 35,910,389
<PAGE>
6
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1998
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>
301 ORGANIZATION
303 MISCELLANEOUS
INTANGIBLE PLANT
304 LAND AND LAND
RIGHTS
305 STRUCTURES AND
IMPROVEMENTS
306 LEASEHOLD
IMPROVEMENTS 836,368 836,368
307 EQUIPMENT 2,354,774 766,797 (55,738) (1,248,819) 1,817,014
308 OFFICE FURNITURE
AND EQUIPMENT 351,620 (291,930) 59,690
309 AUTOMOBILES, OTHER
VEHICLES AND
RELATED GARAGE
EQUIPMENT
310 AIRCRAFT AND
AIRPORT EQUIPMENT
311 OTHER SERVICE
COMPANY PROPERTY
SUBTOTAL 3,542,762 766,797 (347,668) (1,248,819) 2,713,072
107 CONSTRUCTION WORK
IN PROGRESS
TOTAL 3,542,762 766,797 (347,668) (1,248,819) 2,713,072
</TABLE>
1/ PROVIDE AN EXPLANATION OF THOSE CHANGES CONSIDERED MATERIAL:
Amortization of capitalized leases and adjustments.
<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 2,354,774 1,817,014
TOTAL 2,354,774 1,817,014
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, 1998
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 3,978 3,978
308 OFFICE
FURNITURE
AND FIXTURES 59,450 59,450
309 AUTOMOBILES,
OTHER VEHICLES
AND RELATED
GARAGE EQUIP.
310 AIRCRAFT AND
AIRPORT
EQUIPMENT
311 OTHER SERVICE
COMPANY
PROPERTY
TOTAL 899,797 0 0 899,797
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, 1998
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 0
AirScrip Certificates 50 0
West Virginia Workmen's Compensation Fund 50,083 81,412
57,133 81,412
ACCOUNT 136 - TEMPORARY CASH INVESTMENTS
None.
TOTAL 57,133 81,412
<PAGE>
10
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1998
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 Energy, Inc. 42,990 2,118,449
Monongahela Power Company (9,052,837) 11,695,423
The Potomac Edison Company 8,283,583 12,070,985
West Penn Power Company 12,629,809 20,125,895
Allegheny Generating Company 93,086 40,171
Allegheny Pittsburgh Coal Company 1,469 3,164
AYP Capital, Inc. 1,364,581 (73,107)
AYP Energy, Inc. 312,460 525,501
Allegheny Communications Connect, Inc. 184,020 140,282
Allegheny Energy Solutions, Inc. 360,870 38,906
Albright Power Station 74,915 0
Fort Martin Power Station 711,581 0
Harrison Power Station 2,453,415 0
Pleasants Power Station 3,986,778 0
West Virginia Power & Transmission 366 0
Supplemental Executive Retirement Plan 0 (113,642)
TOTAL 21,447,086 46,572,027
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, 1998
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, 1998
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, 1998
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, 1998
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 0
Deferred Miscellaneous charges 597,454 0
Deferred Hourly wage accruals 1,342,769 1,115,743
TOTAL 1,998,681 1,115,743
<PAGE>
15
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1998
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, 1998
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.
</TABLE>
<TABLE>
<CAPTION>
BALANCE AT NET INCOME BALANCE AT
DESCRIPTION BEGINNING OR DIVIDENDS CLOSE
OF YEAR (LOSS) PAID OF YEAR
<S> <C> <C> <C> <C> <C>
ACCOUNT 216 - UNAPPROPRIATED RETAINED
EARNINGS
None.
TOTAL
</TABLE>
<PAGE>
17
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1998
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>
<CAPTION>
TERMS OF OBLIG DATE BALANCE AT BALANCE
NAME OF CREDITOR CLASS & SERIES OF INTEREST AMOUNT BEGINNING AT CLOSE
OF OBLIGATION MATURITY RATE AUTHORIZED OF YEAR ADDITIONS DEDUCTIONS OF YEAR
<S> <C> <C> <C> <C> <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, 1998
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 Energy, Inc. 0 53,395
The Potomac Edison Company 0 0
West Penn Power Company 0 0
Monongahela Power Company 0 0
TOTAL 0 53,395
ACCOUNT 242 - MISCELLANEOUS CURRENT AND
ACCRUED LIABILITIES
Employee benefits 7,016,435 11,060,054
Capital leases 1,297,958 1,660,937
Audit Expense Liability 248,500 312,730
TOTAL 8,562,893 13,033,721
<PAGE>
19
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1998
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.
None
<PAGE>
20
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1998
SCHEDULE XV
STATEMENT OF INCOME
ACCOUNT DESCRIPTION CURRENT YEAR PRIOR YEAR
INCOME
457 Services rendered to associate companies 421,088,368 385,810,885
458 Services rendered to nonassociate
companies 0 0
421 Miscellaneous income or loss 0 13,479
Total Income 421,088,368 385,824,364
EXPENSE
101-108 Utility plant expenses 92,739,147 110,284,634
500-557 Power production expenses 89,314,560 87,925,665
560-598 Transmission & Distribution expenses 52,159,621 51,393,325
901-910 Customer accounts & services expenses 34,268,726 33,396,721
912-913 Sales expenses 4,967,982 6,179,804
920 Salaries and wages 44,432,598 30,539,718
921 Office supplies and expenses 12,729,464 14,979,675
922 Administrative expense transferred -
credit 208 0
923 Outside services employed 14,096,552 13,664,163
924 Property insurance 19,903 57,910
925 Injuries and damages 3,169,440 2,977,648
926 Employee pensions and benefits 33,368,616 9,619,724
928 Regulatory commission expense 154,884 193,462
930.1 General advertising expenses 876,993 416,321
930.2 Miscellaneous general expenses 3,039,080 2,324,388
931 Rents 17,871,488 3,917,062
935 Maintenance of structures and
equipment 3,939,076 3,611,694
403 Depreciation and amortization expense 0 0
408 Taxes other than income taxes 12,680,007 11,266,921
409 Income taxes 8,155,729 (1,690,524)
410 Provision for deferred income taxes 428,620 6,121,022
411 Provision for deferred income taxes -
credit (8,318,472) (4,038,826)
411.5 Investment tax credit 0 0
421 Miscellaneous income/loss 8,080 1,919,342
426.1 Donations 158,845 79,883
426 Other deductions 653,198 493,851
427 Interest on long-term debt 0 0
431 Other interest expense 174,023 190,781
Total Expense 421,088,368 385,824,364
Net Income or (Loss) 0 0
<PAGE>
21
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1998
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 95,554,558 0 0 95,554,558
The Potomac Edison Company 89,706,877 0 0 89,706,877
West Penn Power Company 177,893,310 0 0 177,893,310
Albright Power Station 5,306,085 0 0 5,306,085
Fort Martin Power Station 10,698,868 0 0 10,698,868
Harrison Power Station 15,780,703 0 0 15,780,703
Pleasants Power Station 14,499,042 0 0 14,499,042
Allegheny Energy, Inc. 1,633,005 0 0 1,633,005
Allegheny Generating Company 283,486 0 0 283,486
Allegheny Pittsburgh Coal Co. 6,003 0 0 6,003
AYP Capital, Inc. 2,613,994 0 0 2,613,994
AYP Energy, Inc. 2,694,115 0 0 2,694,115
Allegheny Comm. Connect, Inc. 2,560,016 0 0 2,560,016
Allegheny Energy Solutions, Inc. 1,858,306 0 0 1,858,306
TOTAL 421,088,368 0 0 421,088,368
</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, 1998
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> <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, 1998
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 DIRECT INDIRECT DIRECT INDIRECT
DESCRIPTION OF ITEMS COST COST TOTAL COST COST TOTAL COST COST TOTAL
<S> <C> <C> <C> <C> <C> <C> <C>
101-108 UTILITY PLANT EXPENSES 92,739,147 - 92,739,147 - - - 92,739,147 - 92,739,147
500-557 POWER PRODUCTION EXPENSES 89,314,560 - 89,314,560 - - - 89,314,560 - 89,314,560
560-598 TRANSMISSION & DISTRIBUTION EXP 52,159,621 - 52,159,621 - - - 52,159,621 - 52,159,621
901-910 CUSTOMER ACCOUNT & SERVICES EXP 34,268,726 - 34,268,726 - - - 34,268,726 - 34,268,726
912-913 SALES EXPENSES 4,967,982 - 4,967,982 - - - 4,967,982 - 4,967,982
920 SALARIES AND WAGES 44,432,598 - 44,432,598 - - - 44,432,598 - 44,432,598
921 OFFICE SUPPLIES AND EXPENSES 12,729,464 - 12,729,464 - - - 12,729,464 - 12,729,464
922 ADMINISTRATIVE EXPENSES -
TRANSFERRED - CREDIT 208 - 208 - - - 208 - 208
923 OUTSIDE SERVICES EMPLOYED 14,096,552 - 14,096,552 - - - 14,096,552 - 14,096,552
924 PROPERTY INSURANCE 19,903 - 19,903 - - - 19,903 - 19,903
925 INJURIES AND DAMAGES 3,169,440 - 3,169,440 - - - 3,169,440 - 3,169,440
926 EMPLOYEE PENSIONS AND BENEFITS 33,368,616 - 33,368,616 - - - 33,368,616 - 33,368,616
928 REGULATORY COMMISSION EXPENSE 154,884 - 154,884 - - - 154,884 - 154,884
930.1 GENERAL ADVERTISING EXPENSES 876,993 - 876,993 - - - 876,993 - 876,993
930.2 MISCELLANEOUS GENERAL EXPENSES 3,039,080 - 3,039,080 - - - 3,039,080 - 3,039,080
931 RENTS 17,871,488 - 17,871,488 - - - 17,871,488 - 17,871,488
935 MAINTENANCE OF STRUCTURES AND -
EQUIPMENT 3,939,076 - 3,939,076 - - - 3,939,076 - 3,939,076
403 DEPRECIATION AND AMORTIZATION -
EXPENSE - - - - - - - - -
408 TAXES OTHER THAN INCOME TAXES 12,680,007 12,680,007 12,680,007 12,680,007
409 INCOME TAXES 8,155,729 - 8,155,729 - - - 8,155,729 - 8,155,729
410 PROVISION FOR DEFERRED INCOME -
TAXES 428,620 - 428,620 - - - 428,620 - 428,620
411 PROVISION FOR DEFERRED INCOME -
TAXES - CREDIT (8,318,472) - (8,318,472) - - - (8,318,472) - (8,318,472)
411.5 INVESTMENT TAX CREDIT - - - - - - - - -
421 MISCELLANEOUS INCOME/LOSS 8,080 - 8,080 - - - 8,080 - 8,080
426.1 DONATIONS 158,845 - 158,845 - - - 158,845 - 158,845
426 OTHER DEDUCTIONS 653,198 - 653,198 - - - 653,198 - 653,198
427 INTEREST ON LONG-TERM DEBT - - - - - - - - -
431 OTHER INTEREST EXPENSE 174,023 - 174,023 - - - 174,023 - 174,023
- - - - -
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 421,088,368 - 421,088,368 - - - 421,088,368 - 421,088,368
COMPENSATION FOR USE OF EQUITY CAPITAL - - - - - - - - -
430 INTEREST ON DEBT TO ASSOC COS. - - - - - - - - -
TOTAL COST OF SERVICE 421,088,368 - 421,088,368 - - - 421,088,368 - 421,088,368
</TABLE>
Note: Items that were shown as indirect costs in previous years
have now been changed directly.
<PAGE>
24
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1998
SCHEDULE XVII
SCHEDULE OF EXPENSE DISTRIBUTION
BY
DEPARTMENT OR SERVICE FUNCTION
<TABLE>
<CAPTION>
DEPARTMENT OR SERVICE FUNCTION
GENERATION DELIVERY ENERGY
TOTAL BUSINESS POWER BUSINESS PLANNING & SUPPLY
DESCRIPTION OF ITEMS AMOUNT OVERHEAD EXECUTIVE UNIT STATIONS UNIT COMPLIANCE DIVISION
<S> <C> <C> <C> <C> <C> <C> <C> <C>
101-108 UTILITY PLANT EXPENSES 92,739,147 10,071,467 515,850 4,063,668 1,204,277 66,618,563 57,342 42,243
500-557 POWER PRODUCTION EXPENSES 89,314,560 6,222,695 163,831 8,308,857 68,080,769 3,730,995 1,647,091 303,417
560-598 TRANS & DISTR EXPENSES 52,159,621 2,758,112 2,011 197,571 192,911 48,264,216 372,338 922
901-910 CUSTOMER ACCTS & SVCS EXPENSES 34,268,726 7,653,686 246,917 11,895 1,019 22,087,153 483,633 141,128
912-913 SALES EXPENSES 4,967,982 636,479 342 86,042 - 3,245,690 23,401 536,119
920 SALARIES AND WAGES 44,432,598 6,994,714 4,895,269 2,020,792 405,854 7,948,067 1,573,882 584,806
921 OFFICE SUPPLIES AND EXPENSES 12,729,464 6,891,642 395,296 881,712 5,335 1,527,069 229,871 56,136
922 ADMINISTRATIVE EXPENSES
TRANSFERRED - CREDIT 208 - - - - 208 - -
923 OUTSIDE SERVICES EMPLOYED 14,096,552 1,137,342 709,977 689,081 109 1,418,710 118,654 200,300
924 PROPERTY INSURANCE 19,903 - - - - - - -
925 INJURIES AND DAMAGES 3,169,440 547,810 4,628 7,100 11 1,008,417 - 21
926 EMPLOYEE PENSIONS AND BENEFITS 33,368,616 2,357,799 453,591 1,315,567 10,032,171 14,707,515 256,660 165,595
928 REGULATORY COMMISSION EXPENSE 154,884 1 7,432 13,563 - 4,287 - 11,132
930.1 GENERAL ADVERTISING EXPENSE 876,993 - 304 - - 8,239 121 -
930.2 MISCELLANEOUS GENERAL EXPENSE 3,039,080 24,421 255,437 13,710 15,166 358,985 280,636 -
931 RENTS 17,871,488 14,188,564 92,347 412,170 - 2,468,213 60,789 46,034
935 MAINTENANCE OF STRUCTURES AND
EQUIPMENT 3,939,076 3,505 3,805 582,833 24,667 3,237,578 4,932 14,635
403 DEPRECIATION AND AMORTIZATION
EXPENSE - - - - - - - -
408 TAXES OTHER THAN INCOME TAXES 12,680,007 648,786 188,418 597,527 5,063,200 4,515,765 130,468 83,116
409 INCOME TAXES 8,155,729 8,155,729 - - - - - -
410 PROVISION FOR DEFERRED INCOME
TAXES 428,620 428,620 - - - - - -
411 PROVISION FOR DEFERRED INCOME
TAXES - CREDIT (8,318,472) (8,318,472) - - - - - -
411.5 INVESTMENT TAX CREDIT - - - - - - - -
421 MISCELLANEOUS INCOME/LOSS 8,080 (14,707) 1,831 5,997 518 4,657 - -
426.1 DONATIONS 158,845 (1) - 2,949 - 4,116 150,443 -
426 OTHER DEDUCTIONS 653,198 5,899 591,113 (5,084) - 3,393 1 -
427 INTEREST ON LONG-TERM DEBT - - - - - - - -
430 INTEREST ON DEBT TO ASSOCIATE
COMPANIES - - - - - - - -
431 OTHER INTEREST EXPENSE 174,023 173,951 - - - - - -
INSTRUCTION: Indicate each
department or service function.
(See Instruction 01-3 General
Structure of Accounting System:
Uniform System of Accounts.)
TOTAL EXPENSES 421,088,368 60,568,042 8,528,399 19,205,950 85,026,007 181,161,836 5,390,262 2,185,604
</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, 1998
SCHEDULE XVII
SCHEDULE OF EXPENSE DISTRIBUTION
BY
DEPARTMENT OR SERVICE FUNCTION
<TABLE>
<CAPTION>
DEPARTMENT OR SERVICE FUNCTION
AUDIT CORPORATE CORPORATE FINANCIAL HUMAN INFORMATION
DESCRIPTION OF ITEMS SERVICES CONTROLLER COMMUNICATIONS AFFAIRS MGMT. RESOURCES SERVICES
<S> <C> <C> <C> <C> <C> <C> <C>
101-120 UTILITY PLANT EXPENSES 62,593 2,190,540 27,562 45 248,819 1,010,402 158,936
500-557 POWER PRODUCTION EXPENSES 125,722 50,844 4,179 624,273 1,945 10,337 (154,649)
560-598 TRANS & DISTR EXPENSES 711 2,027 8,666 143 - 1,982 (208,348)
901-910 CUSTOMER ACCTS & SVCS EXPENSES - 1,010 1,556,033 170,916 5,746 10,380 (552,587)
912-913 SALES EXPENSES - 109 38,542 - - - (131,874)
920 SALARIES AND WAGES 1,621,869 5,630,389 678,590 891,522 933,962 2,361,669 271,440
921 OFFICE SUPPLIES AND EXPENSES 122,959 1,164,126 363,780 152,076 143,460 283,364 (596,900)
922 ADMINISTRATIVE EXPENSES
TRANSFERRED - CREDIT - - - - - - -
923 OUTSIDE SERVICES EMPLOYED 702,913 429,867 110,747 32,281 102,962 226,092 1,960,105
924 PROPERTY INSURANCE - - - - - - -
925 INJURIES AND DAMAGES 5,917 14,367 3,067 689 1,738 179,688 (2,132)
926 EMPLOYEE PENSIONS AND BENEFITS 175,612 719,530 217,957 92,041 122,646 1,271,004 2,242
928 REGULATORY COMMISSION EXPENSE - 50 - - - - -
930.1 GENERAL ADVERTISING EXPENSE - - 868,329 - - - -
930.2 MISCELLANEOUS GENERAL EXPENSE - 63,824 700,015 - 492 - (58)
931 RENTS 45,698 137,346 42,764 9,453 26,496 131,314 (365,836)
935 MAINTENANCE OF STRUCTURES AND
EQUIPMENT 1,996 13,552 2,330 777 1,061 4,168 (4,504)
403 DEPRECIATION AND AMORTIZATION
EXPENSE - - - - - - -
408 TAXES OTHER THAN INCOME TAXES 89,890 366,180 66,760 40,275 61,111 132,772 -
409 INCOME TAXES - - - - - - -
410 PROVISION FOR DEFERRED INCOME
TAXES - - - - - - -
411 PROVISION FOR DEFERRED INCOME
TAXES - CREDIT - - - - - - -
411.5 INVESTMENT TAX CREDIT - - - - - - -
421 MISCELLANEOUS INCOME/LOSS (3,105)
426.1 DONATIONS - - 452 400 - - 473
426 OTHER DEDUCTIONS - 1,163 2,787 2,169 - - (528)
427 INTEREST ON LONG-TERM DEBT - - - - - - -
430 INTEREST ON DEBT TO ASSOCIATE
COMPANIES - - - - - - -
431 OTHER INTEREST EXPENSE - 72 - - - - -
INSTRUCTION: Indicate each
department or service function.
(See Instruction 01-3 General
Structure of Accounting System:
Uniform System of Accounts.)
TOTAL EXPENSES 2,955,880 10,781,891 4,692,560 2,017,060 1,650,438 5,623,172 375,780
</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, 1998
SCHEDULE XVII
SCHEDULE OF EXPENSE DISTRIBUTION
BY
DEPARTMENT OR SERVICE FUNCTION
<TABLE>
<CAPTION>
DEPARTMENT OR SERVICE FUNCTION
TREASURY OTHER
REGULATION SERVICES & (MERGER &
AND SYSTEM RISK (Unregulated) CORPORATE
DESCRIPTION OF ITEMS LEGAL PROCURMENT RATES SECURITY MGMT AYP CAPITAL RESTRUCTURING)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
101-120 UTILITY PLANT EXPENSES 574,631 110,633 197,430 2,391 68,358 2,073,982 3,439,415
500-557 POWER PRODUCTION EXPENSES 166,104 45 18,209 27 8,033 1,793 43
560-598 TRANS & DISTR EXPENSES 8,442 2,077 9,300 65,858 3,121 451,876 25,685
901-910 CUSTOMER ACCTS & SVCS EXPENSES 20,793 315 240,894 43 1,947,702 165,928 76,122
912-913 SALES EXPENSES 300 - 804 21 - 531,963 44
920 SALARIES AND WAGES 1,895,755 305,373 2,361,011 1,166,494 434,870 1,409,974 46,296
921 OFFICE SUPPLIES AND EXPENSES 265,497 53,132 185,216 308,835 96,376 195,417 5,065
922 ADMINISTRATIVE EXPENSES
TRANSFERRED - CREDIT - - - - - - -
923 OUTSIDE SERVICES EMPLOYED 4,847,179 22,035 322,880 11,018 1,517 1,013,190 39,593
924 PROPERTY INSURANCE - - - - 19,903 - -
925 INJURIES AND DAMAGES 1,133,093 3,472 7,040 1,762 252,267 485 -
926 EMPLOYEE PENSIONS AND BENEFITS 309,696 36,888 343,053 153,330 216,002 417,959 1,758
928 REGULATORY COMMISSION EXPENSE 18,185 - 100,234 - - - -
930.1 GENERAL ADVERTISING EXPENSE - - - - - - -
930.2 MISCELLANEOUS GENERAL EXPENSE 558,548 52,296 204,647 533 510,050 - 378
931 RENTS 61,921 41,168 67,218 17,281 31,326 357,398 (176)
935 MAINTENANCE OF STRUCTURES AND
EQUIPMENT 2,928 8,041 16,763 8,653 1,700 3,053 6,603
403 DEPRECIATION AND AMORTIZATION
EXPENSE - - - - - -
408 TAXES OTHER THAN INCOME TAXES 152,626 18,691 160,475 73,231 109,874 179,937 905
409 INCOME TAXES - - - - - - -
410 PROVISION FOR DEFERRED INCOME
TAXES - - - - - - -
411 PROVISION FOR DEFERRED INCOME
TAXES - CREDIT - - - - - - -
411.5 INVESTMENT TAX CREDIT - - - - - - -
421 MISCELLANEOUS INCOME/LOSS 8,781 4,108 -
426.1 DONATIONS - - - 13 - - -
426 OTHER DEDUCTIONS 46,355 154 1,590 - 634 - 3,552
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 10,070,834 654,320 4,236,764 1,813,598 3,701,733 6,802,955 3,645,283 -
</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, 1998
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 638,845 8,252 630,593 2
Administration 242,765 159 242,606 2
Delivery 293,910 1,551 292,359 2
Supply 325,415 110 325,305 2
External Affairs 772,382 517 771,865 9
Finance 596,001 2,519 593,482 3
Controller 226,573 17,953 208,620 2
Legal and Corp. Secretary 829,025 1,416 827,609 3
Generating Business Unit 10,659,507 415 10,659,092 162
Power Stations 71,060,411 3 71,060,408 1,251
Energy Supply Division 1,386,326 8 1,386,318 64
Delivery Business Unit 142,857,878 1,470 142,856,408 2,725
AYP Capital, Inc. (Unregulated) 1,949,648 16 1,949,632 25
Support Business Units:
Audit Services 1,580,257 3,337 1,576,920 29
Controller 5,870,076 26,984 5,843,092 102
Corporate Communications 1,027,201 2,992 1,024,209 19
Corporate Affairs 735,197 23 735,174 7
Financial Mgmt. 1,027,882 1,170 1,026,712 14
Human Resources 2,726,969 1,391 2,725,578 58
Information Services 7,188,262 0 7,188,262 126
Legal 2,871,829 6,788 2,865,041 51
Plan. & Compliance 2,242,117 3 2,242,114 10
Procurement 1,853,480 19 1,853,461 35
Regulation & Rates 2,772,789 87 2,772,702 43
System Security 1,198,843 2 1,198,841 24
Treasury Svcs, Electronic
Commerce & Risk Mgmt. 1,743,596 24,137 1,719,459 47
TOTAL 264,677,184 101,322 264,575,862 4,817
</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 not be identified in total with any particular line
on Schedule XV, but are distributed among various lines.
<PAGE>
27
Page 1 of 4
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1998
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 $100,000, 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.
FROM WHOM PURCHASED AMOUNT
Data Processing Service:
Candle Corporation 157,085
Cognos Corporation 125,969
Comdisco, Inc. 269,744
Computer Associates International 139,499
Compuware Corporation 778,795
Hyperion Software Corporation 715,222
IBM Corporation 765,366
Inacom Information Systems 766,058
Inpower Inc. 523,015
Intergraph Corporation 112,186
KCS Computer Services Inc 305,004
Oracle Corporation 258,537
Professional Service 339,827
RAD Consulting Inc. 254,683
Risk Advisory 113,709
Sterling Software 108,481
TSI International 104,648
Utilities International 488,111
Utility Marketing Service 146,148
Miscellaneous - 110 vendors 2,252,445
Total Data Processing Service 8,724,532
Engineering Service:
CVA Inc. 112,014
Dravo Lime Company 600,000
Energy & Environmental 140,325
Orbital Engineering Inc. 310,315
Miscellaneous - 23 vendors 650,990
Total Engineering Service 1,813,644
<PAGE>
Page 2 of 4
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1998
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 $100,000, 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.
FROM WHOM PURCHASED AMOUNT
Legal Service:
Babst Calland Clements & Zomnir 225,133
Brown & Wood, LLP 151,985
Carter, Ledyard & Milburn 185,696
Jackson & Kelly 259,559
Kirkpatrick & Lockhart 331,159
Murphy & Shaffer 269,127
Robinson & McElwee LLP 330,725
Schnader Harrison 337,708
Squire Sanders & Dempsey 124,141
Sullivan & Cromwell 1,550,913
Verner-Liipfert 892,353
Winston & Strawn 852,010
Zevnik Horton Guibord & McGovern 130,082
Miscellaneous - 64 vendors 510,925
Total Legal Service 6,151,515
Medical Service:
Miscellaneous - 97 vendors 315,770
Total Medical Service 315,770
Temporary Manpower:
Computerpeople Inc 1,145,147
Manpower Inc. 208,264
Miscellaneous - 6 vendors 28,631
Total Temporary Manpower 1,382,042
Credit and Collections:
Payco American Corporation 825,236
Miscellaneous - 5 vendors 6,714
Total Credit and Collections 831,950
<PAGE>
Page 3 of 4
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1998
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 $100,000, 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.
FROM WHOM PURCHASED AMOUNT
Auditing:
Miscellaneous & 1 vendor 513,817
Total Auditing 513,817
Other Service:
A. C. Coy Co. 554,133
Cambridge Energy Research 206,842
Ciber 849,476
Cinergy Corporation 185,449
Commonwealth Relocation 850,240
Coopers & Lybrand LLP 287,253
Crow Consulting 121,970
Deloitte & Touche LLP 1,210,157
Einhorn Design 197,053
Electric Power Research Institute 738,623
Enterprise Group LTD 534,428
Environmental Futures Inc 172,498
First Data Payment Service 578,883
General Sales Incentives 189,627
Goldman Sachs & Company 150,000
Hallmark Tassone Inc. 509,234
Hoechstetter Printing Company 275,764
J & H Marsh & McLennan 130,000
Lehigh University 121,056
Levitan & Associates Inc 122,030
Lucent Technologies 331,421
Management Consulting 625,162
Marsh & McLennan Inc. 130,000
Maxim Group-Aerotek 153,382
MK Consulting Services 278,659
Moody's Investors Service 203,085
Ogilvy Adams & Rinehart 186,849
Ogilvy Public Relations 422,372
Phoenix Solutions Inc. 195,959
Pittsburgh Business Consulting 245,146
<PAGE>
Page 4 of 4
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1998
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 $100,000, 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.
FROM WHOM PURCHASED AMOUNT
Other Service: (continued)
PNC Bank NA 122,696
Price Waterhouse Coopers 503,816
Professional Services Group 317,272
Putnam Hayes & Bartlett 1,473,293
Source Services Corporation 1,047,749
Test Inc. 244,274
The McKinley Group Inc. 204,494
Towers Perrin Inc. 142,344
Miscellaneous - 285 vendors 5,613,602
Total Other Service 20,426,291
TOTAL OUTSIDE SERVICES 40,159,561
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, 1998
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 607,837
Corporate pension plan 5,216,000
Long-term disability 1,163,437
Employee moving expense 463,562
Group medical 20,085,689
Group life insurance 2,280,083
Savings plan expense 7,075,241
Employee education assistance 228,126
Group dental 1,281,224
Medical salaries & fees 422,491
Postretirement benefits other than pensions 6,500,963
Supplemental Executive Retirement expense 0
News publications & other employee information 69,665
Meal allowance 368,498
Personal vehicle allowance 574,871
Benefits allocated functionally (17,872,376)
Payroll additives 4,629,932
Company vehicle allowance 185,085
Ready Response team allowance 49,730
Health & Dependent care spending plan 28,101
Miscellaneous (2) 10,457
TOTAL 33,368,616
<PAGE>
29
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1998
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:
Hallmark Tassone 36,727
Other Various 38,466
75,193
Billboard Advertising:
Other Various 2,925
2,925
Newspaper Advertising:
Hallmark Tassone 7,538
Tribune Review 6,999
Other Various 15,364
29,901
Publications:
Hallmark Tassone 8,110
Other Various 14,180
22,290
Radio Advertising:
Hallmark Tassone 145,498
Pittsburgh Penguins 27,180
WPA Safety Council 3,500
Other Various 10,152
186,330
Television Advertising:
Hallmark Tassone 345,163
Pittsburgh Penguins 20,000
Other Various 195,191
560,354
TOTAL 876,993
<PAGE>
30
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1998
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. Sect.441(b)(2)) shall be separately
classified.
DESCRIPTION AMOUNT
Corporate membership dues 2,828
Directors fees and expenses 77,761
Research & development 277,662
Financial expenses 1,746,877
Customer service public information 110,884
Cost of service studies 266,309
Miscellaneous 556,759
TOTAL 3,039,080
<PAGE>
31
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1998
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 2,423,398
Microwave and telecommunications equipment 1,191,050
Office space 7,082,845
Office furniture and equipment 7,149,976
Miscellaneous 24,219
TOTAL 17,871,488
<PAGE>
32
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1998
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 1,510,350
Franchise tax 2,390
State gross premium & license 4,497
Commercial rent or occupancy tax 3,279
State capitalized taxes (465,691)
General corporation tax 1,767
Other (116)
Total Other than U. S. Government Taxes 1,056,476
(2) U.S. Government Taxes:
FICA 20,043,023
FICA capitalized taxes (8,585,632)
Federal unemployment 280,350
Federal unemployment capitalized taxes (114,210)
Total U. S. Government Taxes 11,623,531
TOTAL 12,680,007
<PAGE>
33
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1998
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
Allegheny Highland's Trail Environmental Stewardship 15,000
Allegheny Valley Land Trust Environmental Stewardship 10,000
Blackwater Watershed Assoc. Environmental Stewardship 5,000
Comm Found. of Upper St Clair Environmental Stewardship 10,000
Emissions Marketing Assoc. Environmental Stewardship 5,000
Environmental Fund of PA Environmental Stewardship 5,000
ORSANCO Environmental Stewardship 7,100
PA Cleanways Environmental Stewardship 12,025
PA Electric Assoc. Guidance & Use Doc. & Booklet 6,320
Shepherd College Environmental Stewardship 5,000
The Nature Conservancy of WV Environmental Stewardship 8,000
Westmoreland Conservation Dist.Environmental Stewardship 25,580
WV Environthon Committee Environmental Stewardship 4,100
Youghtoberfest 98 Environmental Stewardship 5,000
Miscellaneous (44) 35,720
TOTAL 158,845
<PAGE>
34
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1998
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 6,180
TOTAL 6,180
<PAGE>
35
ANNUAL REPORT OF Allegheny Power Service Corporation
For the Year Ended December 31, 1998
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
SENIOR VICE PRESIDENT (DELIVERY BUSINESS UNIT)
VICE PRESIDENT, CUSTOMER AFFAIRS
DIRECTOR, CUSTOMER SERVICE
DIRECTOR, CUSTOMER AFFAIRS & MARKETING
VICE PRESIDENT, SYSTEM PLANNING & OPERATIONS
DIRECTOR, ASSET MANAGEMENT
DIRECTOR, BUSINESS DEVELOPMENT
DIRECTOR, ENGINEERING & CONSTRUCTION PROJECTS
DIRECTOR, ENGINEERING SERVICES
DIRECTOR, SYSTEM OPERATIONS
DIRECTOR, TECHNOLOGY DEVELOPMENT & SUPPORT
VICE PRESIDENT, CUSTOMER OPERATIONS
DIRECTOR, OPERATIONS (5)
DIRECTOR, OPERATIONS SERVICES
DIRECTOR, OPERATIONS SUPPORT
DIRECTOR, HUMAN RESOURCES (a)
SENIOR VICE PRESIDENT (SUPPLY BUSINESS UNIT)
VICE PRESIDENT, ENERGY SUPPLY DIVISION
DIRECTOR, MARKETING SUPPORT
DIRECTOR, BUDGETS & ACCOUNTING
DIRECTOR, RETAIL DIRECT SALES
DIRECTOR, RETAIL MASS MARKET
DIRECTOR, TRADING
<PAGE>
36A
ANNUAL REPORT OF Allegheny Power Service Corporation
ORGANIZATION CHART
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER (Continued)
SENIOR VICE PRESIDENT (SUPPLY BUSINESS UNIT) (Continued)
VICE PRESIDENT, GENERATION
DIRECTOR, ASSET MANAGEMENT
DIRECTOR, ENGINEERING & TECHNICAL SUPPORT
DIRECTOR, FIELD SERVICES
DIRECTOR, MARKETING & FUELS
DIRECTOR, OPERATIONS
DIRECTOR, PLANNING
DIRECTOR, HUMAN RESOURCES (a)
DIRECTOR, INFORMATION MANAGEMENT(b)
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
VICE PRESIDENT AND TREASURER
DIRECTOR, REGULATION & RATES
MANAGER INVESTOR RELATIONS
DIRECTOR, CASH MANAGEMENT
DIRECTOR, CORPORATE FINANCIAL MANAGEMENT
DIRECTOR, FINANCIAL MANAGEMENT-SUPPLY (c)
VICE PRESIDENT AND CONTROLLER
DIRECTOR, FINANCIAL PROCESSING
DIRECTOR, FINANCIAL SOLUTIONS & TECHNOLOGY (b)
DIRECTOR, FINANCIAL REPORTING & BUDGETING
DIRECTOR, TAXES
BUSINESS CONTROLLER-SUPPLY (c)
BUSINESS CONTROLLER-DELIVERY (d)
<PAGE>
36B
ANNUAL REPORT OF Allegheny Power Service Corporation
ORGANIZATION CHART
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER (Continued)
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER (Continued)
VICE PRESIDENT AND Y2K PROJECT MANAGER
DIRECTOR, STRATEGIC PLANNING
DIRECTOR, AUDIT SERVICES
VICE PRESIDENT (ADMINISTRATION)
ASSISTANT VICE PRESIDENT, ALLEGHENY COMMUNICATIONS CONNECT
ASSISTANT VICE PRESIDENT, AYP CAPITAL
DIRECTOR, CORPORATE COMMUNICATIONS
EXECUTIVE DIRECTOR, HUMAN RESOURCES
DIRECTOR, HR STRATEGIC PARTNERSHIPS
DIRECTOR, EMPLOYEE RELATIONS
DIRECTOR, ORGANIZATIONAL DEVELOPMENT
DIRECTOR, REWARDS
DIRECTOR, EMPLOYEE SERVICE CENTER (b)
EXECUTIVE DIRECTOR, INFORMATION SERVICES
DIRECTOR, PLANNING AND PROJECTS
DIRECTOR, PRODUCTION
DIRECTOR, RESOURCE CENTER
DIRECTOR, PROCUREMENT
DIRECTOR, SYSTEM SECURITY
DIRECTOR, ENERGY SERVICES
<PAGE>
36C
ANNUAL REPORT OF Allegheny Power Service Corporation
ORGANIZATION CHART
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER (Continued)
VICE PRESIDENT, EXTERNAL AFFAIRS
DIRECTOR, POLICY ANALYSIS
VICE PRESIDENT, STATE AFFAIRS
ASSISTANT TO VICE PRESIDENT
MANAGER, FEDERAL LEGISLATIVE AFFAIRS
MANAGER, FEDERAL REGULATORY AFFAIRS
VICE PRESIDENT AND GENERAL COUNSEL
DEPUTY GENERAL COUNSEL-SUPPLY (c)
DEPUTY GENERAL COUNSEL-DELIVERY (d)
DEPUTY GENERAL COUNSEL-CORPORATE & COMPLIANCE
CORPORATE SECRETARY
ASSISTANT SECRETARY (2)
(a) Dotted-line relationship to Exec. Dir., Human Resources
(b) Dotted-line relationship to Exec. Dir., Information Services
(c) Dotted-line relationship to Sr. VP Supply
(d) Dotted-line relationship to Sr. VP Delivery
<PAGE>
37
Annual Report of ALLEGHENY POWER SERVICE CORPORATION
METHODS OF ALLOCATION
Costs of Rendering Services:
1. The costs of rendering services by APSC include all costs of
doing business including interest on debt but excluding a
return for the use of APSC's initial equity capital of
$50,000.
2. (a) APSC maintains a separate record of the expenses for
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 insurance, pensions, post-
retirement benefits (other than pension), medical,
dental, and other welfare expenses), expenses of
training and development of APSC 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 Client Company or a
group of Client Companies and are to be charged
solely to such Client Company or group of Client
Companies and;
(ii) APSC Overhead Expenses. Such expenses include,
among others, costs of maintaining the corporate
existence of APSC, taxes, 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 Client Companies or to APSC.
(ii) Secretaries, clerical, office service and other employees,
who are not engaged directly in rendering services to Client
Companies or to APSC.
<PAGE>
37A
Annual Report of ALLEGHENY POWER SERVICE CORPORATION
METHODS OF ALLOCATION
(b) Employees directly engaged in rendering services to
Client Companies or to APSC maintain records showing
time employed in rendering services, nature of services
rendered, and identity of companies or groups of
companies served. Support staff expenses are billed
based on the billings of employees directly engaged in
rendering services for the respective department.
Allocation Factors
5. (a) Operating Company Allocation Factor
(i) Departmental 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;
(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
<PAGE>
37B
Annual Report of ALLEGHENY POWER SERVICE CORPORATION
METHODS OF ALLOCATION
(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) Departmental and incremental out-of-pocket expenses expended
for a group which includes all AE system companies (excluding
APSC) are allocated among the Client Companies on the basis of
the average of the prior three years' direct costs charged by
APSC to each Client Company.
(c) Power Station Allocation Factor
(i) The Allocation Factor applicable to APSC
employees who provide services to Client Companies'
Power Stations during any year is based upon the
generating capacity of each power station divided by
the System total generating capacity.
(d) APSC Corporate Allocation Factor
(i) Overhead Expenses (as defined in Section 2.(c)(ii) above)
and cost of services rendered to APSC are distributed among
Client 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 that are
100% assigned to a specific company or station.
<PAGE>
37C
Annual Report of ALLEGHENY POWER SERVICE CORPORATION
METHODS OF ALLOCATION
6. The total cost of a particular service rendered to a
specified Client Company is the sum of the Departmental
Expenses, Overhead Expenses, cost of services rendered to
APSC, and incremental Out-of-Pocket Expenses which are
applicable to such Company in respect of such service.
7. The total cost of a particular service rendered to a specific
group of Client Companies is the sum of the amounts of the
Departmental Expenses, Overhead Expenses, costs of services
rendered to APSC, and incremental Out-of-Pocket Expenses
which are applicable to such group of companies in respect of
such service.
8. Whenever the charges to individual Customer Companies for
services rendered are based upon estimates of APSC'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, VP & Controller
(Printed Name and Title of Signing Officer)
Date: April 7, 1999
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<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
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<NET-SERVICE-COMPANY-PROPERTY> 1,813,275
<TOTAL-INVESTMENTS> 81,412
<TOTAL-CURRENT-ASSETS> 49,269,147
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<OTHER-ASSETS-AND-DEBITS> 0
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<TOTAL-PROPRIETARY-CAPITAL> 50,000
<TOTAL-LONG-TERM-DEBT> 152,099
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<TOTAL-EXPENSES> 421,088,368
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