File No. 70-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM U-1
APPLICATION-DECLARATION WITH RESPECT TO
THE FORMATION OF A JOINT VENTURE
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
EUA COGENEX CORPORATION
P.O. Box 2333, BOSTON, MASSACHUSETTS 02107
AYP CAPITAL, INC.
TOWER FORTY-NINE, 12 EAST 49TH STREET, NEW YORK, NEW YORK 10017
(Name of companies filing this statement
and address of principal executive offices)
EASTERN UTILITIES ASSOCIATES
ALLEGHENY POWER SYSTEM, INC.
(Name of top registered holding company parents of
applicants or declarants)
CLIFFORD J. HEBERT, JR., TREASURER
EASTERN UTILITIES ASSOCIATES
P.O. Box 2333, BOSTON, MASSACHUSETTS 02107
NANCY H. GORMLEY, ESQ., VICE PRESIDENT
ALLEGHENY POWER SYSTEM, INC.
TOWER FORTY-NINE, 12 EAST 49TH STREET, NEW YORK, NEW YORK 10017
(Name and address of agents for service)
The Commission is requested to mail signed copies
of all orders, notices and communications to:
ARTHUR I. ANDERSON, P.C.
McDermott, Will & Emery
75 State Street
Boston, MA 02109
ITEM 1. DESCRIPTION OF THE PROPOSED TRANSACTION.
I. Overview of Application/Declaration. EUA Cogenex Corporation
("Cogenex"), a Massachusetts corporation and a wholly-owned subsidiary of
Eastern Utilities Associates ("EUA"), a Massachusetts business trust and a
registered holding company under the Public Utility Holding Company Act of
1935 (the "Act") and AYP Capital, Inc. ("AYP"), a Delaware corporation and
a wholly-owned subsidiary of Allegheny Power System, Inc., a Maryland
corporation and a registered holding company under the Act (collectively,
the "Applicants"), jointly file this application-declaration with the
Securities and Exchange Commission (the "Commission"). The Applicants seek
Commission approval to the extent required under the Act: (i) for Cogenex
and AYP to form a Delaware limited liability company for the purpose of
providing energy conservation services (the "JV ESCO") and (ii) for Cogenex
and AYP to guarantee third party loans obtained by the JV ESCO.
Cogenex and AYP intend to enter into a long-term relationship to
provide energy conservation services through a Delaware limited liability
company in the states of Pennsylvania, Maryland, Ohio, Virginia, and West
Virginia and in the District of Columbia (the "Territory"). They have
entered into a Letter Agreement dated May 31, 1995 and filed herewith as
Exhibit B-1 in which they have agreed to perform initial marketing, sales,
auditing, bidding, job procurement and performance activities in
preparation of forming the JV ESCO and to develop a long-term business plan
for the JV ESCO. The term of the Letter Agreement is for one year (the
"Interim Period"), unless sooner terminated by the formation of the JV ESCO
or by mutual agreement of the Applicants. The JV ESCO shall only be formed
upon receipt of the Commission's authorization.
II. Description of AYP's and Cogenex's Businesses.
Cogenex is engaged in the business of investing in energy
conservation-related business activities: (i) employing energy efficiency
technology and equipment primarily through shared savings agreements; (ii)
participating in self-generation projects; and (iii) contracting to assist
electric utilities in demand-side management activities including but not
limited to shared-savings energy conservation projects and demand-side
utility programs; (HCAR 35-24273, December 19, 1986; HCAR 35-25697,
December 9, 1992). In addition, Cogenex participates in cogeneration
projects, although it is not actively pursuing such projects at this time.
AYP also provides energy management services and demand side
management services to affiliated and non-affiliated companies, as well as
engaging in activities: (i) related to the development, acquisition,
construction, ownership and operation of exempt wholesale generators; (ii)
directly or indirectly related to the development, acquisition, ownership,
construction and operation of foreign utility companies; (iii) directly or
indirectly related to the development, acquisition, ownership, construction
and operation of qualifying cogeneration facilities and small power
production facilities located throughout the United States; (iv) related to
factoring accounts receivable for affiliates and nonaffiliates; (v) related
to brokering of energy-related commodities and financial instruments to
affiliates and nonaffiliates; (vi) related to brokering new affiliates to
engage in power brokering, power marketing and related activities; (vii)
related to engaging in the marketing, sale and installation of power
quality devices to customers of affiliated and nonaffiliated utility
companies; and (viii) related to providing other services to affiliates and
nonaffiliates.
III. Formation of the JV ESCO. Cogenex and AYP expect that the
formation of the JV ESCO will create a more attractive provider of energy
conservation services to customers within the Territory, thereby allowing
Cogenex and AYP to expand their customer bases and will provide synergies
which will enable Cogenex and AYP to provide their services in a more cost-
effective and efficient manner, enhancing their profitability. Upon
receipt of the Commission's authorization, they will form a limited
liability company in Delaware. Their relationship will be governed by a
limited liability company operating agreement, a copy of which will be
filed by amendment as Exhibit B-2 hereto. Generally, each Applicant will
be a 50% owner of the JV ESCO, sharing equally in the capital
contributions, allocation of profits and losses and distributions of the JV
ESCO. The JV ESCO will be governed overall by a board of directors
comprised of six directors, three of whom will be appointed by Cogenex and
three by AYP. Daily management decisions will be made by a management
committee comprised of one representative from each Applicant. Cogenex
will assign all contracts and business opportunities obtained during the
Interim Period within the Territory at cost to the JV ESCO. AYP will also
be reimbursed by the JV ESCO for its expenses incurred during the Interim
Period. Cogenex and AYP will make capital contributions in an amount
initially expected to be approximately $1,000 each which will be used by
the JV ESCO for working capital purposes. Both Applicants will subcontract
personnel to the JV ESCO at cost as needed until such time, if any, as the
JV ESCO employs its own personnel.
IV. Activity During the Interim Period. During the Interim Period,
Cogenex and AYP are performing initial marketing, sales, auditing, bidding,
job procurement and performance activities for energy conservation services
in the Territory. All business opportunities and contracts derived from
such activity, except for those independent, pre-existing relationships of
Cogenex and its affiliates and AYP and its affiliates and opportunities
brought by or developed with non-affiliated third parties, shall be
developed and held in the name of Cogenex and shall be subject to
assignment to the JV ESCO.
Cogenex and AYP have each committed to providing employees and other
resources as set forth in the Interim Business Plan which is attached to
the Letter Agreement. During the Interim Period, Cogenex and AYP will
share the cost of their employees and support provided as set forth in the
Letter Agreement.
V. Cogenex and AYP hereby request authorization to the extent required
under the Act (i) to form the JV ESCO and (ii) if it becomes necessary in
order to obtain third party loans or to obtain more favorable terms from
third parties, to guaranty the loans of the JV ESCO. The capital
contributions will be exempt from the requirement of Commission
authorization pursuant to Rule 45(b)(4), and any amount borrowed by the JV
ESCO from third party lenders will be through loans exempt from the
requirement of Commission authorization by Rule 52(b). Cogenex and AYP
request that any goods or services furnished by the JV ESCO to Cogenex or
AYP or any of their respective affiliates be furnished at prices not to
exceed market prices and that any goods or services furnished by Cogenex,
AYP or any of their respective affiliates (other than an affiliate which is
an electric utility) to the JV ESCO also be furnished at prices not to
exceed market prices pursuant to an exception from the requirements of
13(b) and Rules 90 and 91 thereunder.
ITEM 2. FEES, COMMISSIONS, AND EXPENSES.
The fees, commissions and expenses of the Applicants expected to be
paid or incurred, directly or indirectly, in connection with the
transactions described will be filed by amendment.
ITEM 3. APPLICABLE STATUTORY PROVISIONS.
The sections of the Act and rules or exemptions thereunder that the
applicants believe are or may be applicable to the transactions proposed
are set forth below:
Acquisition of interest in JV ESCO Sections 9(a) and 10.
by AYP and Cogenex.
Provision of services by JV ESCO to Sections 12(f), 13; Rules
Cogenex, AYP and their affiliates and 90 and 91.
by Cogenex and AYP and their affiliates
to JV ESCO.
Guaranty of obligations of JV ESCO Section 12(b); Rule 45(a).
by Cogenex and AYP.
ITEM 4. REGULATORY APPROVALS.
No state commission and no Federal commission, other than the
Commission, has jurisdiction over the proposed transactions.
ITEM 5. PROCEDURE.
(a) In order to be in a position to carry out the proposed
transactions at the most advantageous time, the Applicants request that the
Commission issue its order hereon on the earliest practical date.
(b) It is not considered necessary that there be a recommended
decision by a hearing officer or by any other responsible officer of the
Commission. The Office of Public Utility Regulation may assist in the
preparation of the decision of the Commission, and it is believed that a
thirty (30) day waiting period between the issuance of the order of the
Commission and the day on which the order is to become effective would not
be appropriate.
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS (* filed herewith)
(**confidential treatment requested)
(a) Exhibits.
Exhibit A-1 Form of Certificate of Formation of JV ESCO
(to be filed by amendment).
**Exhibit B-1 Letter Agreement between EUA Cogenex
Corporation and AYP Capital, Inc. dated May
31, 1995.
Exhibit B-2 Form of limited liability company operating
agreement.
Exhibit F-1 Opinion of McDermott, Will & Emery (to be
filed by amendment).
Exhibit F-2 Opinion of AYP Counsel (to be filed by
amendment).
*Exhibit H Proposed Form of Notice.
(b) Financial Statements.
To be filed by amendment.
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, the undersigned Applicants have duly caused this statement to be
signed on their behalf by the undersigned duly authorized individuals.
EUA COGENEX CORPORATION
By: /s/ Edward T. Liston
Edward T. Liston
President
AYP CAPITAL, INC.
By: /s/ Stanley I. Garnett, II
Stanley I. Garnett, II
Vice President
Dated July 26, 1995
EXHIBIT B-1
Letter Agreement between EUA Cogenex Corporation and AYP Capital, Inc.
dated May 31, 1995
** FILED WITH CONFIDENTIAL TREATMENT REQUESTED **
Exhibit H
(PROPOSED FORM OF NOTICE)
SECURITIES AND EXCHANGE COMMISSION
(Release No. 35- , 70- )
EUA Cogenex Corporation ("Cogenex"), a wholly-owned
subsidiary of Eastern Utilities Associates ("EUA"), a registered
holding company, and AYP Capital, Inc. ("AYP"), a wholly-owned
subsidiary of Allegheny Power System, Inc., a registered holding
company, have filed an application-declaration with this
Commission pursuant to Sections 9(a), 10, 12(b), 12(f) and 13 of
the Public Utility Holding Company Act of 1935 (the "Act") and
Rules 45(a), 90 and 91 promulgated thereunder.
Cogenex and AYP have requested Commission approval to enter
into a long-term relationship to provide energy conservation
services through a Delaware limited liability company (the "JV
ESCO") in the States of Pennsylvania, Maryland, Ohio, Virginia,
and West Virginia and in the District of Columbia (the
"Territory").
Cogenex and AYP expect that the formation of the JV ESCO
will create a more attractive provider of energy conservation
services to customers within the Territory, thereby allowing
Cogenex and AYP to expand their customer bases and will provide
synergies which will enable Cogenex and AYP to provide their
services in a more cost-effective and efficient manner, enhancing
their profitability. Upon receipt of the Commission's
authorization, they will form the JV ESCO. Their relationship
will be governed by a limited liability company operating
agreement, a copy of which will be filed as Exhibit B-2 to the
application-declaration. Generally, each Applicant will be a 50%
owner of the JV ESCO, sharing equally in the capital
contributions, allocation of profits and losses and distributions
of the JV ESCO. The JV ESCO will be governed overall by a board
of directors comprised of six directors, three of whom will be
appointed by Cogenex and three by AYP. Daily management
decisions will be made by a management committee comprised of one
representative from each Applicant. Cogenex will assign
contracts and business opportunities at cost to the JV ESCO.
Cogenex and AYP will make capital contributions in an amount
initially expected to be approximately $1,000 each which will be
used by the JV ESCO for working capital purposes. Both
Applicants will subcontract personnel to the JV ESCO at cost as
needed until such time, if any, as the JV ESCO employs its own
personnel.
Cogenex and AYP have requested authorization to the extent
required under the Act (i) to form the JV ESCO and (ii) if it
becomes necessary in order to obtain third party loans or to
obtain more favorable terms from third parties, to guaranty the
loans of the JV ESCO. The capital contributions will be exempt
from the requirement of Commission authorization pursuant to Rule
45(b)(4), and any amount borrowed by the JV ESCO from third party
lenders will be through loans exempt from the requirement of
Commission authorization by Rule 52(b). Cogenex and AYP have
requested that any goods or services furnished by the JV ESCO to
Cogenex or AYP or any of their respective affiliates be furnished
at prices not to exceed market prices and that any goods or
services furnished by Cogenex, AYP or any of their respective
affiliates (other than an affiliate which is an electric utility)
to the JV ESCO also be furnished at prices not to exceed market
prices pursuant to an exception from the requirements of 13(b)
and Rules 90 and 91 thereunder.
NOTICE IS FURTHER GIVEN that any interested person may, not
later than _________, 1995, request in writing that a hearing be
held on such matter, stating the nature of his interest, the
reasons for such request, and the issues of fact or law raised by
said application/declaration which he desires to controvert; or
he may request that he be notified if the Commission should order
a hearing thereon. Any such request should be addressed:
Secretary, Securities and Exchange Commission, 450 5th Street,
N.W., Judiciary Plaza, Washington, D.C. 20549. A copy of such
request should be served personally or by mail upon the
applicant/declarant at the above-stated address and proof of
service (by affidavit or, in case of an attorney at law, by
certificate) should be filed with the request. At any time after
said date the application/declaration, as filed or as it may be
amended, may be granted and permitted to become effective as
provided in Rule 23 of the General Rules and Regulations
promulgated under the Act, or the Commission may grant exemption
from such rules as provided in Rules 20(a) and 100 thereof or
take such other action as it may deem appropriate. Persons who
request a hearing or advice as to whether a hearing is ordered
will receive any notices and orders issued in this matter,
including the date of the hearing (if ordered) and any
postponements thereof.
For the Commission, by the Division of Corporate Regulation,
pursuant to delegated authority.
Secretary
