<PAGE>
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
AYP Capital, Inc.
A Nonutility Subsidiary*
Date of Incorporation: August 18, 1994.
If not incorporated, Date of Organization: not
applicable.
State or Sovereign Power under which Incorporated
or Organized: Delaware.
Location of Principal Executive Offices of
Reporting Company:
10435 Downsville Pike, Hagerstown, MD.
Name, title, and address of officer to whom
correspondence concerning this report should be
addressed:
Thomas J. Kloc, Controller
AYP Capital, Inc.
10435 Downsville Pike
Hagerstown, MD 21740-1766.
Name of Principal Holding Company Whose
Subsidiaries are served* by Reporting Company:
Allegheny Energy, Inc.
SEC 1926 (6-82)
*Note that this report is being used for a
nonutility subsidiary of such Holding Company.
<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 becomes necessary.
3. Period covered by report. The first
report filed by any company shall cover the period
from the date the Uniform System of Accounts was
required to be made effective as to that company
under Rules 82 and 93, to the end of that calendar
year. Subsequent reports should cover a calendar
year.
4. Report format. Reports shall be
submitted on the forms prepared by the Commission.
If the space provided on any sheet of such form is
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 is 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 Page
Reports or Statements: No.:
Organizational Chart 36
Methods of Allocation 37
Annual Statement of Compensation for Use of
Capital Billed 38
<PAGE>
4
Annual Report of AYP Capital, Inc.
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1998
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 Current Prior
Property
101 Utility property (Schedule II) 0 0
107 Construction work in progress 0 0
(Schedule II)
121 Non Utility Property (Schedule II) 170,797,904 169,192,160
Total Property 170,797,904 169,192,160
108 Less Accumulated provision for
depreciation and amortization of
utility property (Schedule III) 0 0
122 Less Accumulated provision for
depreciation and amortization of
non-utility property (Schedule III) 11,321,960 5,585,657
Net Property 159,475,944 163,606,503
Investments
123 Investments in associate companies
(Schedule IV) 9,360,538 4,992,433
124 Other investments (Schedule IV) 0 0
Total Investments 9,360,538 4,992,433
Current and Accrued Assets
131 Cash 9,106,045 12,297,437
134 Special deposits 0 0
135 Working funds 2,000 2,000
136 Temporary cash investments
(Schedule IV) 0 0
141 Notes receivable 0 0
142 Customer accounts receivable 12,309,022 16,165,512
143 Accounts receivable 2,146,757 1,060,715
144 Accumulated provision for
uncollectible accounts (81,748) (6,080)
146 Accounts receivable from associate
companies (Schedule V) 357,452 139,657
151 Fuel stock 2,560,368 2,166,526
152 Fuel stock expenses undistributed
(Schedule VI) 0 0
154 Material and supplies 2,316,277 2,361,347
163 Stores expense undistributed
(Schedule VII) 0 0
165 Prepayments 2,281,829 2,337,137
172 Rents 250,794 0
174 Miscellaneous current and accrued
assets (Schedule VIII) 940,000 1,000,000
Total Current and Accrued Assets 32,188,796 37,524,251
Deferred Debits
181 Unamortized debt expense 0 0
183 Preliminary Survey & Investigation
Charges 0 0
184 Clearing accounts 10 0
186 Miscellaneous deferred debits 12,392,446 5,455,411
(Schedule IX)
188 Research, development, or demonstration
expenditures (Schedule X) 0 0
190 Accumulated deferred income taxes 0 0
Total Deferred Debits 12,392,456 5,455,411
Total Assets and Other Debits 213,417,734 211,578,598
<PAGE>
5
Annual Report of AYP Capital, Inc.
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1998
SCHEDULE I - COMPARATIVE BALANCE SHEET, CONTINUED
Account Liabilities and Proprietary Capital Current Prior
Proprietary Capital
201 Common stock issued (Schedule XI) 1,000 1,000
211 Miscellaneous paid-in capital
(Schedule XI) 57,823,244 43,869,066
215 Appropriated retained earnings
(Schedule XI) 0 0
216 Unappropriated retained earnings
(Schedule XI) (38,111,422) (17,796,876)
Total Proprietary Capital 19,712,822 26,073,190
Long-term Debt
223 Advances from associate
companies (Schedule XII) 0 0
224 Other long-term debt (Schedule XII) 160,000,000 160,000,000
225 Unamortized premium on long-term debt 0 0
226 Unamortized discount on long-term
debt (debit) 0 0
Total Long-term Debt 160,000,000 160,000,000
Current and Accrued Liabilities
231 Notes payable 1,000,000 0
232 Accounts payable 10,685,257 12,563,821
233 Notes payable to associate
companies (Schedule XIII) 0 0
234 Accounts payable to associate
companies (Schedule XIII) 1,154,106 4,010,613
236 Taxes accrued 6,012,047 3,248,297
237 Interest accrued 1,702,933 1,838,133
238 Dividends declared 0 0
241 Tax collections payable 103,681 34,281
242 Miscellaneous current and accrued
liabilities (Schedule XIII) 990,783 456,176
Total Current and Accrued Liabilities 21,648,807 22,151,321
Deferred Credits
253 Other deferred credits 7,380,836 258,837
255 Accumulated deferred investment tax
credits 0 0
282 Accumulated deferred income taxes 4,675,269 3,095,250
Total Deferred Debits 12,056,105 3,354,087
Total Liabilities and Proprietary Capital 213,417,734 211,578,598
<PAGE>
6
Annual Report of AYP Capital, Inc.
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1998
SCHEDULE II - PROPERTY
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Balance at Retiremts Other Balance at
Beginning or Changes Close
Account Description of Year Additions Sales (1) of Year
301 Organization 0 0
303 Miscellaneous
intangible plant 0 0
304 Land and land
rights 0 31,773 849,640 881,413
305 Structures and
improvements 0 14,172,497 14,172,497
306 Leasehold
improvements 170,910 0 4,551 175,461
307 Equipment (2) 168,350,716 13,919 (14,213,363) 154,151,271
308 Office furniture
and equipment 385,506 25,745 (175,000) (13,802) 222,449
309 Automobiles, other
vehicles and
related garage
equipment 56,308 0 (56,308) 0
310 Aircraft and
airport equipment 0 0
311 Other property (3 228,720 1,012,465 (46,373) 1,194,813
Subtotal 169,192,160 1,083,901 (231,308) 753,151 170,797,904
107 Construction work
in progress 0 0 0
Total 169,192,160 1,083,901 (231,308) 753,151 170,797,904
</TABLE>
(1) Provide an explanation of those changes considered material:
In October 1996, the Company purchased a 50% interest in Unit No. 1
of the Fort Martin Power Station. The allocation of net assets
related to the purchase was finalized in 1998, and resulted
in adjustments to plant, property and equipment.
<PAGE>
7
Annual Report of AYP Capital, Inc.
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1998
SCHEDULE II - CONTINUED
(2) Subaccounts are required for each class of equipment owned. The
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 Subaccount Description Additions of Year
121 Non Utility Property 13,919 154,151,271
Additional subaccount detail not available.
Total 13,919 154,151,271
(3) Describe other property: Balance
at Close
Other property consists of: Additions of Year
121 Telecommunications Projects (ACC) 1,012,465 1,194,813
1,012,465 1,194,813
(4) Describe construction work in progress:
Not applicable.
<PAGE>
8
Annual Report of AYP Capital, Inc.
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1998
SCHEDULE III - ACCUMULATED PROVISION FOR
DEPRECIATION AND AMORTIZATION OF PROPERTY
<TABLE>
<CAPTION>
Balance at Additions Other Balance at
Beginning to Changes Close
Account Description of Year Acct 403 / 40Retirements (1) of Year
<S> <C> <C> <C> <C> <C>
301 Organization
303 Miscellaneous
intangible plant
304 Land and land
rights
305 Structures and
improvements
306 Leasehold
improvements 44,737 35,067 79,804
307 Equipment 5,502,094 5,701,252 11,203,346
308 Office furniture
and equipment 25,287 13,523 38,810
309 Automobiles, other
vehicles and
related garage
equipment 13,539 (13,539) 0
310 Aircraft and
airport equipment
311 Other property
Total 5,585,657 5,736,303 0 0 11,321,960
</TABLE>
(1) Provide an explanation of those changes considered material:
Not applicable.
<PAGE>
9
Annual Report of AYP Capital, Inc.
AS OF AND 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.
<TABLE>
<CAPTION>
Balance at Balance at
Beginning Close
Description of Year of Year
Account 123- Investment in Associate Companies
<S> <C> <C>
EnviroTech Investment Fund I, L.P., net 1,237,117 2,158,302
A 9.9% interest in a limited partnership to acquire
securities of companies with a primary emphasis on
investments in energy.
Latin American Energy and Electricity Fund I, L.P. 3,528,262 4,619,451
A 9.9% interest in a limited partnership to invest in
entities involved in new or existing electric power
projects in Latin America and the Caribbean.
APS Cogenex, L.L.C. 209,314 509,636
A 50% joint venture with EUA Cogenex Corporation
formed to engage in demand-side management business
activities.
FondElec General Partner, L.P.
A 4.975% interest in a limited partnership organized for
the purpose of acting as the general partner of the Latin
American Energy and Electricity Fund I, L.P. 17,740 23,149
Allegheny Hyperion Telecommunications, L.L.C.
A joint venture with Hyperion Telecommunications of
Pennsylvania, Inc., formed to construct and operate fiber 0 2,050,000
optic telecommunications facilities.
Account 124- Other Investments
Not applicable.
Account 136- Temporary Cash Investments
Not applicable.
Total 4,992,433 9,360,538
</TABLE>
<PAGE>
10
Annual Report of AYP Capital, Inc.
AS OF AND 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 company has
provided accommodation or convenience payments for associate
companies, a separate listing of total payments for each associate
company by subaccount should be provided.
<TABLE>
<CAPTION>
Balance at Balance at
Beginning Close
Description of Year of Year
Account 146- Accounts Receivable from Associate Companies
<S> <C> <C>
APS Cogenex, L.L.C. 0 0
APS Inc. - Funds given to APS, Inc. to invest 0 0
on behalf of AYP Capital 0 0
General Invoices between AYP Subsidiaries 0 0
General Invoices between AE, Inc subsidiaries 104,049 357,452
AYP Capital Unbilled 35,608 0
Total 139,657 357,452
</TABLE>
Analysis of Convenience or Accommodation Payments
Not applicable.
<PAGE>
11
Annual Report of AYP Capital, Inc.
AS OF AND 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 company.
<TABLE>
<CAPTION>
Description Labor Expenses Total
Account 152- Fuel Stock Expenses Undistributed
Not applicable.
<S> <C> <C> <C>
Account 151- Fuel Stock 2,560,368 2,560,368
Total 0 2,560,368 2,560,368
</TABLE>
Summary:
Fuel Stock in Account 151 is purchased for and consumed by
AYP Capital's share of the Ft. Martin Unit. See Schedule XIV:
Notes to the Financial Statements on page 19.
<PAGE>
12
Annual Report of AYP Capital, Inc.
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1998
SCHEDULE VII - STORES EXPENSE UNDISTRIBUTED
Instructions: Report the amount of labor and expenses
associated 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
Not applicable.
Total 0 0 0
<PAGE>
13
Annual Report of AYP Capital, Inc.
AS OF AND 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
Beginning Close
Description of Year of Year
Account 174- Miscellaneous Current and Accrued Assets
WVA Unexpensed Property Taxes 1,000,000 940,000
Total 1,000,000 940,000
<PAGE>
14
Annual Report of AYP Capital, Inc.
AS OF AND 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, showing the number
of items in each group.
Balance at Balance at
Beginning Close
Description of Year of Year
Account 186- Miscellaneous Deferred Debits
Allegheny Hyperion Communications Capital 0 5,349,791
Lease Payments Receivable
Allegheny Hyperion Communications Capital 0 (2,394,264)
Lease Interest
Expenses associated with the purchase
of Fort Martin Unit #1 0 (9,848)
Expenses associated with the operation 2,298 157,594
of Fort Martin Unit #1
Power Marketing Suite 109,025 0
Medium - Term Notes Deferred Issuance Costs 68,233 50,433
Deferred Call Options 98,400 0
Deferred Termination Loss 0 4,938,837
Deferred Power Station Special Maint. Exp. 5,177,273 4,141,818
Expenses associated with the AE Solutions 0 28,973
Call Center at Fairmont
Magnesium Production Project 0 128,535
Other Miscellaneous Deferred Debits 182 576
Total 5,455,411 12,392,446
<PAGE>
15
Annual Report of AYP Capital, Inc.
AS OF AND 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 company during the year.
Description Amount
Account 188- Research, Development, or Demonstration
Expenditures
Not applicable.
Total 0
<PAGE>
16
Annual Report of AYP Capital, Inc.
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1998
SCHEDULE XI - PROPRIETARY CAPITAL
<TABLE>
<CAPTION>
Number of Par / Stated Outstanding Shares
Shares Value At Close of Period
Account Class of Stock Authorized Per Share Number Amount
<S> <C> <C> <C> <C> <C>
201 Common Stock Issued 1,000 $10 100 $1,000
</TABLE>
Instructions: Classify amounts in each account with brief
explanation, disclosing the general nature of transactions
which give rise to the reported amounts.
Account Description Amount
211 Miscellaneous Paid-in Capital* 57,823,244
215 Appropriated Retained Earnings 0
Total 57,823,244
* AYP Capital is funded in the form of capital contributions from
the holding company, Allegheny Energy, Inc.
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 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>
<CAPTION>
Balance at Net Balance at
Beginning Income Dividends Close
Account Description of Year (Loss) Paid of Year
<S> <C> <C> <C> <C> <C>
216 Unappropriated Retained
Earnings (Deficit) (17,796,876) (20,314,546) 0 (38,111,422)
Total (17,796,876) (20,314,546) 0 (38,111,422)
</TABLE>
Net Losses are a result of non-utility operations.
<PAGE>
17
Annual Report of AYP Capital, Inc.
AS OF AND 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 the name of the creditor
company or organization, terms of the obligation, date of maturity,
interest rate, and the amount authorized and outstanding.
<TABLE>
<CAPTION>
Terms, Date Balance at Balance at
Class, & of Interest Amount Beginning (1) Close
Name of Creditor Series Maturity Rate Authorized of Year Additions Deduction of Year
<S> <C> <C> <C> <C> <C> <C> <C> <C>
223 Advances from associate
companies:
None
224 Other long-term debt:
5-year debt provided by a
syndicate of bank 2001 6.78 %* 160,000,000 160,000,000 160,000,000
Total 160,000,000 160,000,000 0 0 160,000,000
</TABLE>
*See Schedule XIV: Notes to Financial Statements on page 19.
(1) Give an explanation of deductions.:
Not applicable.
<PAGE>
18
Annual Report of AYP Capital, Inc.
AS OF AND 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 amount of
miscellaneous current and accrued liabilities. Items less
than $10,000 may be grouped, showing the number of items in
each group.
<TABLE>
<CAPTION>
Balance at Balance at
Beginning Close
Description of Year of Year
Account 233- Notes Payable to Associate Companies
Not applicable.
<S> <C> <C>
Total 0 0
Account 234- Accounts Payable to Associate
Companies
Allegheny Power Service Corporation 3,315,298 896,796
West Penn Power Company 455,678 169,008
Monongahela Power Company 95,673 61,864
AYP Affiliates 0 0
Allegheny Energy, Inc. 15,330 11,428
Potomac Edison 128,634 15,010
Total 4,010,613 1,154,106
Account 242- Miscellaneous Current and Accrued Liabilities
Major Maintenance Accruals 0 57,500
Pension Accrual 280,750 (7,317)
Payrolls Accrued (Account 232) - 0
Misc. Accrued Liabilities 80,949 940,600
Misc. Curr. and Accrued Liabilities 94,477 0
Total 456,176 990,783
</TABLE>
<PAGE>
19
ANNUAL REPORT OF AYP CAPITAL, INC.
AS OF AND 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 by reference.
NOTE A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company is a wholly-owned subsidiary of Allegheny Energy,
Inc. Allegheny Energy, Inc. is an electric utility holding
company that derives substantially all of its income from the
electric utility operations of its regulated subsidiaries
(Monongahela Power Company, The Potomac Edison Company, and
West Penn Power Company).
In 1996, AYP Capital, Inc. (the Company) formed two wholly-
owned subsidiaries, AYP Energy, Inc. (AYP Energy), an exempt
wholesale generator and power marketer in the wholesale
electricity market, and Allegheny Communications Connect, Inc.
(ACC), an exempt telecommunications company. In 1997, a new
wholly-owned subsidiary, Allegheny Energy Solutions, Inc. was
formed to market electric energy to retail customers in
deregulated markets and other energy-related services.
The Company has investments in two limited partnerships,
EnviroTech Investment Fund I,L.P., which invests in emerging
electrotechnologies that promote the efficient use of
electricity and improve the environment; and the Latin
American Energy and Electricity Fund I,L.P., which invests in
and develops electric opportunities in Latin America and the
Caribbean.
Significant accounting policies of the Company are summarized
below.
Consolidation
AYP Capital, Inc. owns all of the outstanding common stock of
its subsidiaries, AYP Energy, ACC, and Allegheny Energy
Solutions. The consolidated financial statements shown herein
include all the accounts of the Company and its subsidiary
companies after elimination of intercompany transactions.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates that affect the reported amounts of assets,
liabilities, revenues, expenses, and disclosures of
contingencies during the reporting period, which in the normal
course of business are subsequently adjusted to actual
results.
<PAGE>
Revenues
Revenues for the Company are recorded in the same period in
which the related electric services are provided to customers.
Revenues from other non-regulated activities are recorded in
the period earned.
Property, Plant, and Equipment
Property, plant, and equipment are stated at cost. Provisions
for depreciation are determined on a straight-line method
based on estimated service lives of depreciable properties.
The cost of maintenance and of certain replacements of
property, plant, and equipment is charged to operating
expenses. A reclassification was made in the 1997 period to
move $6.2 million related to a major outage from property,
plant, and equipment to deferred charges to be amortized to
maintenance expense over the six year period 1997-2002.
Property, plant, and equipment is being depreciated over 25
years.
Accounting for Investments
Investments in two limited partnerships are accounted for
under the equity method. That is, the initial investment is
recorded at cost, then the carrying amount is adjusted to
recognize the Company's share of post-acquisition earnings or
losses of the investee.
Income Taxes
The Company joins with its Parent and affiliates in filing a
consolidated federal income tax return. The consolidated tax
liability is allocated among the participants generally in
proportion to the taxable income of each participant, except
that no subsidiary pays tax in excess of its separate return
tax liability.
Financial accounting income before income taxes differs from
taxable income principally because certain income and
deductions for tax purposes are recorded in the financial
income statement in another period. Differences between
income tax expense computed on the basis of financial
accounting income and taxes payable based on taxable income
are deferred. Deferred tax assets and liabilities represent
the tax effect of temporary differences between the financial
statement and tax basis of assets and liabilities computed
utilizing the most current tax rates.
Allocated Charges
The Company has no employees. As a result of AYP Energy being
a 50% owner of Fort Martin Power Station Unit No. 1, it incurs
expenses which include its proportionate share of all fuel,
operation and maintenance costs, and salaries, wages, and
employee benefits. The Company also incurs expenses which
include its proportionate share of salaries, wages, and
employee benefits related to services provided by Allegheny
Energy Company, Inc. and its subsidiaries for the Company's
other subsidiaries. Employee benefits include the expenses of
a noncontributory defined benefit pension plan and partially
contributory medical and life insurance plans.
<PAGE>
NOTE B: PROPOSED MERGER
On April 7, 1997, Allegheny Energy, Inc. and DQE, Inc. (DQE),
parent company of Duquesne Light Company in Pittsburgh,
Pennsylvania announced that they had agreed to merge in a tax-
free, stock-for-stock transaction.
At separate meetings held on August 7, 1997, the shareholders
of the Company and DQE approved the merger. The Company and
DQE made all necessary regulatory filings. Since then, the
Company and DQE received approval of the merger from the
Nuclear Regulatory Commission, the Pennsylvania Public Utility
Commission (PUC), and the Federal Energy Regulatory Commission
(FERC). The Pennsylvania PUC and the FERC approvals were
subject to conditions acceptable to Allegheny Energy. In
addition, while not required, the Maryland Public Service
Commission and the Public Utilities Commission of Ohio have
indicated their approval.
On October 5, 1998, DQE notified Allegheny Energy that it had
unilaterally decided to terminate the merger. Allegheny
Energy believes DQE's action was without basis and was a
breach of the merger agreement. In response, the Company
filed with the United States District Court for the Western
District of Pennsylvania on October 5, 1998, a lawsuit for
specific performance of the merger agreement or,
alternatively, damages. Allegheny Energy also filed motions
for preliminary injunctive relief against DQE.
On October 28, 1998, the District Court denied Allegheny
Energy's motions for preliminary injunctive relief. The
District Court did not rule on the merits of the complaint for
specific performance or damages. On October 30, 1998,
Allegheny Energy appealed the District Court's order to the
United State Court of Appeals for the Third Circuit. The
Company cannot predict the outcome of this litigation.
NOTE C: CAPITALIZATION
Long-Term Debt
Maturities for long-term debt for the next five years are $160
million in the year 2001. In October 1996, AYP Energy
borrowed $160 million for five years from a syndicate of eight
banks priced at a floating rate based on the 90-day London
Interbank Offering Rate (LIBOR) plus a spread. AYP Energy
also entered into a floating-to-fixed interest rate swap to
hedge against fluctuations in interest rates. The swap plus
the spread on the underlying financing fixed the interest rate
to the Company at 6.78%. In January 1998, the swap was
refinanced in exchange for the counterparty's right to
exercise an option to extend the swap until 2006. The new
swap plus the spread on the underlying financing lowered the
interest rate to AYP Energy to 6.18%. During 1998 the Company
recorded a mark-to-market loss of $2.3 million related to this
option.
<PAGE>
NOTE D: COMMITMENTS AND CONTINGENCIES
Construction Program
The Company has entered into commitments for its construction
programs, for which expenditures are estimated to be $0.3
million for 1999 and $2.5 million for 2000. Construction
expenditure levels in 2000 and beyond will depend upon the
strategy eventually selected for complying with Phase II of
the Clean Air Act Amendments of 1990 and the extent to which
environmental initiatives currently being considered become
mandated. The Company estimates that its banked and planned
purchase of emission allowances will allow it to comply with
Phase II sulfur dioxide (SO2) limits through 2005. Studies to
evaluate cost-effective options to comply with Phase II SO2
limits beyond 2005, including those available in connection
with the emission allowance trading market, are continuing.
Risk Management
AYP Energy supplies power in the bulk power market. At
December 31, 1998, the marketing books of the Company
consisted primarily of fixed priced, forward-purchase and/or
sale contracts which require settlement by physical delivery
of electricity. These transactions result in market risk which
occurs when the market price of a particular obligation or
entitlement varies from the contract price. The Company's
exposure to volatility in the price of electricity and other
energy commodities is maintained within approved policy
limits.
Environmental Matters and Litigation
System companies are subject to various laws, regulations, and
uncertainties as to environmental matters. Compliance may
require them to incur substantial additional costs to modify
or replace existing and proposed equipment and facilities, and
may affect adversely the cost of future operations.
The Environmental Protection Agency (EPA) issued its final
regional Nox State Implementation Plan (SIP) call rule on
September 24, 1998. The EPA's SIP call rule found that 22
eastern states (including Maryland, Pennsylvania, and West
Virginia) and the District of Columbia are all contributing
significantly to ozone nonattainment in downwind states. The
final rule declares that this downwind nonattainment will be
eliminated (or sufficiently mitigated) if the upwind states
reduce their Nox emissions by an amount that is precisely set
by the EPA on a state-by-state basis. The final SIP call rule
requires that all state-adopted Nox reduction measures must be
implemented by May 1, 2003. System Companies' compliance with
these requirements would require the installation of Post-
Combustion control technologies on most, if not all, of its
power stations. System Companies continues to work with other
coal-burning utilities and other affected constituencies in
coal-producing states to challenge this EPA action.
<PAGE>
20
Annual Report of AYP Capital, Inc.
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1998
SCHEDULE XV - COMPARATIVE STATEMENT OF INCOME
Give income statement of the Company for the current and prior years ending
ending December 31.
<TABLE>
<CAPTION>
Account Description Current Prior
Income
<S> <C> <C> <C>
440-447 Sales 240,197,154 82,082,986
450-456 Other operating revenues 156,232 77,693
457 Services rendered to associate companies 0 0
458 Services rendered to nonassociate
companies 6,630,023 3,635,126
417-421 Miscellaneous income or loss (716,461) 1,458,987
Total Income 246,266,948 87,254,792
Expense
Power Costs:
501 Fuel 21,136,727 24,183,161
555 Purchased Power 210,558,867 43,663,227
500-514 Other 6,826,387 6,119,460
556-598 Transmission & Distribution 2,373,765 3,755,822
903 Cashiering 432,196 159,601
904 Uncollectibles 124,663 6,080
908-910 Other Customer Service 372,023 (373)
912 Selling Activities Expense 1,778,045 1,076,889
913 Sales Advertising 107,992 1,884,553
920 Salaries and wages 2,134,747 2,024,321
921 Office supplies and expenses 985,527 1,915,388
922 Administrative expense transferred
- credit 0 0
923 Outside services employed 6,445,634 3,118,664
924 Property insurance 109,313 139,258
925 Injuries and damages 11,897 74,137
926 Employee pensions and benefits 912,866 469,503
928 Regulatory commission expense 75,000 0
930.1 General advertising expense 0 1,672
930.2 Miscellaneous general expenses 88,826 (71,192)
931 Rents 632,096 346,098
935 Maintenance of structures and
equipment 13,552 8,572
403 - 404 Depreciation and amortization
expense 5,770,210 5,570,364
408 Taxes other than income taxes 6,881,568 4,907,184
409 Income taxes (12,951,963) (11,650,715)
410 Provision for deferred income taxes 2,418,734 2,446,484
411 Provision for deferred income taxes
- credit (838,672) 0
411.5 Investment tax credit 0 0
426.1 Donations 0 0
426 Other deductions 22,971 98
427 Interest on long-term debt 10,105,333 11,019,433
428 Amortization on Medium-term notes 17,800 0
430 Interest on debt to associate companies 0 0
431 Other interest expense 35,390 3,352
Total Expense 266,581,494 101,171,041
Net Income or (Loss) (20,314,546) (13,916,249)
</TABLE>
<PAGE>
21
Annual Report of AYP Capital, Inc.
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1998
ANALYSIS OF BILLING
ASSOCIATE COMPANIES - ACCOUNT 457
<TABLE>
<CAPTION>
Direct Indirect Comp. Total
Costs Costs for Use Amount
Name of Associate Company Charged Charged of Capital Billed
<S> <C> <C> <C> <C>
Not applicable.
Total 0 0 0 0
</TABLE>
<PAGE>
22
Annual Report of AYP Capital, Inc.
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1998
ANALYSIS OF BILLING NONASSOCIATE COMPANIES
ACCOUNT 458
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Direct Indirect Comp. Excess Total
Cost Cost for Use Total or Amount
Name of Nonassociate Company Charged Charged of Capital Cost Deficiency Billed
(458.1) (458.2) (458.3) (458.4)
AYP Capital believes that this page is not applicable to nonutility
companies who are using the U-13-60 Form designed for and used by
Service Companies. Nonutility companies perform numerous billings
to nonassociate companies, and requiring them to provide a list of
all of their customers and billings would be unduly burdensome.
In addition, the Company considers its customer data to be
proprietary information.
Total 0 0 0 0 0 0
</TABLE>
Instructions: Provide a brief description of the services rendered to each
nonassociate company.
<PAGE>
23
Annual Report of AYP Capital, Inc.
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1998
SCHEDULE XVI - ANALYSIS OF CHARGES FOR SERVICE
ASSOCIATE AND NONASSOCIATE COMPANIES
<TABLE>
<CAPTION>
Associate Co. Charges Nonassociate Co. Charges Total 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> <C> <C>
920 Salaries and wages
921 Office supplies and expense
922 Admin expense transferred - cr
923 Outside services employed This type of breakdown is
924 Property insurance not available for
925 Injuries and damages competitive job billings.
926 Employee pensions and benefits
928 Regulatory commission expense
930.1General advertising expenses
930.2Miscellaneous general expenses
931 Rents
935 Maint of structures and equip
403 Depreciation and amortiz exp
408 Taxes other than income taxes
409 Income taxes
410 Prov for def income taxes
411 Prov for def income taxes - cr
411.5Investment tax credit
426.1Donations
426 Other deductions
427 Interest on long-term debt
431 Other interest expense
Total expenses 0 0 0 0 0 0 0 0 0
Comp for use of equity capital
430 Int on debt to assoc companies
Total cost of service 0 0 0 0 0 0 0 0 0
</TABLE>
Instructions: Total cost of service will equal for assocate
and nonassociate companies the total amount
billed under their separate analysis of billing
schedules.
<PAGE>
24
Annual Report of AYP Capital, Inc.
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1998
SCHEDULE XVII - EXPENSE DISTRIBUTION BY
DEPARTMENT OR SERVICE FUNCTION
<TABLE>
<CAPTION>
Department or Service Function
Total Over-
Description of Items Amnt head
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
920 Salaries and wages
921 Office supplies and expense
922 Admin expense transferred - credit
923 Outside services employed This type of breakdown is
924 Property insurance not applicable.
925 Injuries and damages
926 Employee pensions and benefits
928 Regulatory commission expense
930.1General advertising expenses
930.2Miscellaneous general expenses
931 Rents
935 Maint of structures and equipment
403 Depreciation and amortization expense
408 Taxes other than income taxes
409 Income taxes
410 Prov for def income taxes
411 Prov for def income taxes - credit
411.5Investment tax credit
426.1Donations
426 Other deductions
427 Interest on long-term debt
430 Interest on debt to associate companies
431 Other interest expense
Total expenses 0 0 0 0 0 0 0 0 0
</TABLE>
Instructions: Indicate each department or service function.
(See Instruction 01-3, General Structure of
Accounting System: Uniform System of Accounts.)
<PAGE>
25
Annual Report of AYP Capital, Inc.
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1998
SCHEDULE XVII - EXPENSE DISTRIBUTION BY
DEPARTMENT OR SERVICE FUNCTION, CONTINUED
<TABLE>
<CAPTION>
Department or Service Function
Account
Number
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
920
921
922
923 This type of breakdown is
924 not applicable.
925
926
928
930.1
930.2
931
932
403
408
409
410
411
411.5
426.1
426.5
427
430
431
0 0 0 0 0 0 0 0 0 0 0 0
</TABLE>
<PAGE>
26
Annual Report of AYP Capital, Inc.
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1998
DEPARTMENTAL ANALYSIS OF SALARIES
ACCOUNT 920
<TABLE>
<CAPTION>
Departmental Salary Expense
Name of Department Included in Amounts Billed to Personnel
Indicate each department Total Parent Other Non- at Close
service function. Amount Company Associates Associates of Year
Not applicable.
<S> <C> <C> <C> <C> <C>
Total 0 0 0 0 0
</TABLE>
<PAGE>
27
Annual Report of AYP Capital, Inc.
AS OF AND 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 $25,000, 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 Address Relationship* Amount
Administrative and Engineering:
Allegheny Power Service Corp. Greensburg, PA A 927,841
Generation, Transmission & Distribution Services:
Economic & Technical Consultants Rockville, MD NA 25,564
V&S Schuler Engineering, Inc. Canton, OH NA 26,764
City Crane & Equipment Co., Inc. Morgantown, WV NA 28,992
Keller & Heckman LLP Washington,DC NA 30,684
Columbia Natural Resources Pittsburgh, PA NA 33,711
Scott Electric Greensburg, PA NA 34,155
Electroswitch Boston, MA NA 34,540
Verner-Liipfert Washington,DC NA 38,201
C W Wright Chester, VA NA 38,213
Cooper Power Systems Pittsburgh, PA NA 42,679
Southern States, Inc. Atlanta, GA NA 52,340
General Electric Company Pittsburgh, PA NA 53,994
Ellsworth Clectric Co., Inc. Hagerstown, MD NA 60,248
WESCO Distribution, Inc. Chicago, IL NA 86,424
PEMCO NCD Dallas, TX NA 94,984
Matrixx Marketing, Inc. Cinncinnati, OH NA 106,405
S & C Electric Co. Chicago, IL NA 161,808
Davis H. Elliot Co., Inc. Baltimore, MD NA 174,244
BICC Cables Co. Chicago, IL NA 180,871
Hartman & Hartman, Inc. Washington,PA NA 182,118
Tatman Assoc., Inc. Cleveland, OH NA 217,560
New River Electrical Corp. Cloverdale, VA NA 632,788
Delta Star, Inc. Lynchburg, VA NA 926,081
ABB Power T&D Co., Inc. Newark, NJ NA 1,520,979
Other 733,446
Grand Total 6,445,634
*A = associate, NA = nonassociate
<PAGE>
28
Annual Report of AYP Capital, Inc.
AS OF AND 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 company. Such listing should be limited to $25,000.
Description Amount
Life Insurance 42,193
Medical Insurance & Fees 384,636
Dental Insurance & Fees 29,912
Long-term Disability Fees 27,074
Postretirement benefits other than pensions 167,431
Corporate Pension Plan 138,606
Savings Plan Expense 123,065
Miscellaneous (8) (52)
Total 912,866
<PAGE>
29
Annual Report of AYP Capital, Inc.
AS OF AND 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
Not applicable.
Total 0
<PAGE>
30
Annual Report of AYP Capital, Inc.
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1998
MISCELLANEOUS GENERAL EXPENSE
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
Outside directors' fees and expenses 166
Financial Expenses 88,068
Miscellaneous 592
Total 88,826
<PAGE>
31
Annual Report of AYP Capital, Inc.
AS OF AND 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
EDP Equip. 98,725
Office Space 485,101
Office Furniture\Equip. 47,760
Other Rent 510
Total 632,096
<PAGE>
32
Annual Report of AYP Capital, Inc.
AS OF AND 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 amounts
thereof. Provide a subtotal for each class of tax.
Kind of Tax Amount
Other than U.S. Government taxes:
Business & Occupation Tax 4,104,027
Gross Receipts Tax 1,150,523
Property Tax 901,389
Capital Stock / Franchise Tax 226,964
State License Tax 4,905
State Gross Premium Tax 387
Other State Tax 21
State Unemployment 35,963
Subtotal 6,424,179
U.S. Government taxes:
FICA 450,061
Federal Unemployment 7,328
Subtotal 457,389
Total 6,881,568
<PAGE>
33
Annual Report of AYP Capital, Inc.
AS OF AND 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
Not applicable.
Total 0
<PAGE>
34
Annual Report of AYP Capital, Inc.
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1998
OTHER DEDUCTIONS
ACCOUNT 426
Instructions: Provide a listing of the amount included in Account 426,
"Other Deductions", classifying such expenses according to their nature.
Description Name of Payee Amount
Penalties 14,974
Civic & Political Activities 7,982
Miscellaneous 15
Total 22,971
<PAGE>
35
Annual Report of AYP Capital, Inc.
AS OF AND 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.
Refer to Schedule XIV on page 19.
<PAGE>
36
Annual Report of AYP Capital, Inc.
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1998
ORGANIZATIONAL CHART
AYP Capital, Inc. has no employees - Allegheny Power Service
Corporation provides administrative and engineering services.
<PAGE>
37
Annual Report of AYP Capital, Inc.
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1998
METHODS OF ALLOCATION
AYP Capital, Inc. expenses are not allocated to associate companies.
<PAGE>
38
Annual Report of AYP Capital, Inc.
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1998
ANNUAL STATEMENT OF COMPENSATION FOR USE OF CAPITAL BILLED
AYP Capital, Inc. does not bill associate companies for use of holding
company capital.
<PAGE>
39
Annual Report of AYP Capital, Inc.
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1998
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 theeunto duly authorized.
AYP Capital, Inc.
(Name of Reporting Company)
By: /s/ Thomas J. Kloc, Controller
(Signature of Signing Officer)
Thomas J. Kloc, Controller
(Printed Name and Title of Signing Officer)
April 27, 1999
(Date)
<TABLE> <S> <C>
<ARTICLE> OPUR2
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<BOOK-VALUE> PER-BOOK
<NET-SERVICE-COMPANY-PROPERTY> 159,475,944
<TOTAL-INVESTMENTS> 9,360,538
<TOTAL-CURRENT-ASSETS> 32,188,796
<TOTAL-DEFERRED-DEBITS> 12,392,456
<OTHER-ASSETS-AND-DEBITS> 0
<TOTAL-ASSETS-AND-DEBITS> 213,417,734
<TOTAL-PROPRIETARY-CAPITAL> 19,712,822
<TOTAL-LONG-TERM-DEBT> 160,000,000
<NOTES-PAYABLE> 0
<NOTES-PAYABLE-ASSOCIATE-COMP> 0
<OTHER-CURR-AND-ACCRUED-LIAB> 21,648,807
<TOTAL-DEFERRED-CREDITS> 7,380,836
<DEFERRED-INCOME-TAX> 4,675,269
<TOT-LIABIL-AND-PROPRIET-CAP> 213,417,734
<SERVICES-ASSOCIATE-COMPANIES> 0
<SERVICES-NON-ASSOCIATE-COMP> 246,983,409<F1>
<MISC-INCOME-OR-LOSS> (716,461)
<TOTAL-INCOME> 246,266,948
<SALARIES-AND-WAGES> 2,134,747
<EMPLOYEE-PENSION-AND-BENEFIT> 912,866
<OTHER-EXPENSES> 263,533,881
<TOTAL-EXPENSES> 266,581,494
<NET-INCOME> (20,314,546)
<TOTAL-EXPENSES-DIRECT-COST> 0
<TOTAL-EXPENSES-INDIRECT-COST> 0
<TOT-EXP-DIRECT-AND-INDIRECT> 0
<PERSONNEL-END-OF-YEAR> 0
<FN>
<F1>*Sales are associated with AYP Energy, Inc., a wholly-owned
subsidiary of AYP Capital that operates as an exempt wholesale
generator and power marketer in the wholesale electricity market.
</FN>
</TABLE>
