File No. 70-8663
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
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 is hereby amended and restated in its entirety as follows:
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 for up to an
aggregate of $15,000,000 each, such guarantees to be made within five years
of the formation of 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; and (iv)
related to providing other services to affiliates and nonaffiliates. AYP
has requested further authorization in a post-effective amendment dated May
8, 1995 to an application-declaration (File No. 70-8411) to engage in
activities: (a) related to factoring accounts receivable for affiliates
and nonaffiliates; (b) related to brokering of energy-related commodities
and financial instruments to affiliates and nonaffiliates; (c) related to
brokering new affiliates to engage in power brokering, power marketing and
related activities; and (d) related to engaging in the marketing, sale and
installation of power quality devices to customers of affiliated and
nonaffiliated utility companies.
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 guarantee the loans of the JV ESCO for up to an aggregate
of $15,000,000 each, such guarantees to be made within five years of the
formation 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 requests that any goods or services furnished by Cogenex or
any of its affiliates (other than an affiliate which is a public utility
company) to the JV ESCO 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. The JV ESCO will not be providing goods or services to Cogenex
or its affiliates. AYP requests that any goods or services furnished by
AYP or any of its affiliates (other than an affiliate which is a public
utility company) to the JV ESCO 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; provided that the ultimate consumer of such goods or
services is not an affiliate of AYP, in which case, they would be provided
at cost. The JV ESCO will provide goods or services to AYP or its
affiliates only at cost.
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 August 11, 1995
