Notice is hereby given that the following filing(s) has/have been made with the Commission pursuant to provisions of the Act and rules promulgated under the Act. All interested persons are referred to the application(s) and/or declaration(s) for complete statements of the proposed transaction(s) summarized below. The application(s) and/or declaration(s) and any amendments(s) is/are available for public inspection through the Commission's Branch of Public Reference.
Interested persons wishing to comment or request a hearing on the application(s) and/or declaration(s) should submit their views in writing by June 27, 2000, to the Secretary, Securities and Exchange Commission, Washington, DC 20549-0609, and serve a copy on the relevant applicant(s) and/or declarant(s) at the address(es) specified below. Proof of service (by affidavit or, in the case of an attorney at law, by certificate) should be filed with the request. Any request for hearing should identify specifically the issues of facts or law that are disputed. A person who so requests will be notified of any hearing, if ordered, and will receive a copy of any notice or order issued in the matter. After June 27, 2000, the application(s) and/or declaration(s), as filed or as amended, may be granted and/or permitted to become effective.
Allegheny Energy, Inc., et al. (70-9627)
Allegheny Energy, Inc., (“Allegheny”), a registered holding company, Allegheny Energy Service Company (“AESC”), a service subsidiary of Allegheny, The Potomac Edison Company (“Potomac Edison”), a wholly owned electric public utility subsidiary of Allegheny, all located at 10435 Downsville Pike, Hagerstown, Maryland 21740-1766, and Allegheny Energy Supply Company, LLC, a wholly owned nonutility subsidiary of Allegheny located at 10435 Downsville Pike, Hagerstown, Maryland 21740-1766, and Allegheny Energy Supply Company, LLC, a wholly owned nonutility subsidiary of Allegheny located at R.R. 12, P.O. Box 1000, Roseytown, Pennsylvania 15601 (“Genco” and collectively, “Applicants”), have filed an application-declaration under sections Start Printed Page 368496(a), 7, 9(a), 10, 12(b), 12(c), 12(d), and 13(b) of the Act, and rules 43, 44, 45, 46, 54, 90 and 91 under the Act.
Potomac Edison, subject to obtaining the requisite regulatory approvals, intends to leave the generating business entirely. To accomplish this, Applicants request authority for Potomac Edison to transfer most of its electric generating business to Genco, which was organized to compete in deregulated, competitive electricity generation markets. Specifically, Applicants request authority for Potomac Edison to transfer to Genco, at net book value, Potomac Edison's undivided ownership interests in certain jointly held and certain wholly owned generating facilities and related fixed assets (“Generating Assets”), in certain current assets related to the Generating Assets (“Related Assets”), and other related interests (“Other Interests”) each of which is more particularly described below. In addition, Applicants request authority for Potomac Edison to transfer and for Genco to assume certain net liabilities and debt associated with the Generation Assets and Related Assets (“Related Liabilities”). As discussed below, Applicants also request authority for Potomac Edison to transfer its undivided ownership interests in certain hydroelectric generating stations located in Virginia (“Virginia Hydros”) to a subsidiary it proposes to organize, PE VA Hydro, LLC (“PE VA Hydro”).
The Generating Assets consist of the undivided ownership interests in the following generating facilities: a 25% interest in the Fort Martin Power station located in Maidsville, West Virginia; a 33% interest in the Albright Power Station located in Albright, West Virginia; a 32.76% interest in the Harrison Power Station located in Shinnston, West Virginia; a 20% interest in the Hatfield's Ferry Power Station located in Masontown, Pennsylvania; a 30% interest in the Pleasants Power Station, located in Saint Mary's, West Virginia; a 100% interest in the R. Paul Smith Station and R. Paul Smith Ash Basin, both located in Williamsport, Maryland; and a 100% interest in the Millville, Dam #4 and Dam #5 hydro stations located in West Virginia. The Generating Assets also consist of step-up transformers and ancillary transmission and distribution equipment, production equipment, buffers and rights of way, and other equipment that connect the Generating Assets to the transmission grid. Applicants project that the total net book value of the Generating Assets will be approximately $448.4 million as of June 30, 2000. Potomac Edison also intends to transfer fuel, supplies, and other inventory (“Inventory”) to Genco through intermediate subsidiaries more particularly described below.
The Related Assets consist of current assets, deferred charges, cash, temporary cash investments, and an undivided 28% ownership interest in Allegheny Generating Company (“ACC”). Applicants project that the net book value of the Related Assets will be approximately $57.9 million as of June 30, 2000. The Other Interests consist of an undivided 2% ownership interest in Ohio Valley Electric Corporation (“OVEC”), a public utility, and Potomac Edison's rights and obligations under four agreements regarding the operation of four of the generating facilities included as Generating Assets.
The Related Liabilities consist of accounts payables, accrued taxes, tax deferrals, pollution control bonds, and other deferred credits related to the Generating Assets. Applicants project that the book value of the Related Liabilities will be approximately $215.3 million as of July 1, 2000. Applicants state that the Related Liabilities do not include Potomac Edison's first mortgage bonds. Applicants state that Potomac Edison expects to obtain a release from the lien of the first mortgage by pledging additional bondable property in an amount not to exceed the net book value of the Generating Assets, which could include remaining utility assets of Potomac Edison, and request authority to pledge those assets to obtain the described release.
The Virginia Hydros consist of Potomac Edison's undivided 100% ownership interests in the Luray, Newport, Shenandoah and Warren hydroelectric generating stations. According to Applicants, the net book value of the Virginia Hydros will be approximately $3.6 million as of June 30, 2000.
To accomplish the proposed transfers, Applicants request authority to form two limited liability corporations, PE Transferring Agent, LLC (“PE Transferring Agency”) and PE Genco, LLC (“PE Genco”). Potomac Edison would acquire the ownership interests in PE Transferring Agent in exchange for an initial cash contribution of $200,000, and PE Transferring Agent would acquire the membership interests in PE Genco for an initial cash contribution of $100,000, with the contributions to be in the form of collateralized government obligations.
Potomac Edison would then transfer its undivided ownership interests in the Generating Assets, Related Assets, Inventory and Other Interests to PE Transferring Agent. PE Transferring Agent would issue a promissory note to Potomac Edison in an amount equal to the sum of the net book values of the Generating Assets and Inventory (“Purchase Note”) in exchange for the transfer of these assets. In order to assure that PE Transferring agent has sufficient assets to cover the principal amount of the Purchase Note and its accrued interest, Potomac Edison would issue a non-interest bearing note to PE Transferring agent in an amount $20 million greater than the Purchase Note as a capital contribution. In addition, Potomac Edison would issue a non-interest bearing promissory note to PE Transferring Agency in an amount constituting the difference between the net book values of the Related Assets and the Related Liabilities.
PE Transferring Agent would in turn contribute the undivided ownership interests in the Generating Assets, Related Assets, Inventory and Other Interests to PE Genco, which would also assume the Related Liabilities. PE Transferring Agent would then dividend its membership interests in PE Genco to Potomac Edison, which would in turn dividend these membership interests to Allegheny, after which PE Genco would merge with Genco.
Applicants state that it is undesirable, at this time, for Genco to directly acquire the Virginia Hydros because the acquisition could subject Genco to regulation as a “public utility” under Virginia law. In order to facilitate Potomac Edison's exit from the generation business and Genco's entry into Virginia''s deregulated generation market, Applicants request authority for Potomac Edison to organize and acquire PE VA Hydro and for Potomac Edison to transfer the Virginia Hydros to PE VA Hydro. Applicants also request authority for Potomac Edison to dividend the membership interests in PE VA Hydro to Allegheny, and for Allegheny to contribute these interests in PE VA Hydro to Genco, making PE VA Hydro a wholly owned subsidiary of Genco.
In addition, Applicants request authority for Potomac Edison to render operating services with respect to the Generating Assets on behalf of Genco, and to render operating services with respect to the Virginia Hydros on behalf of PE VA Hydro, until Genco and PE VA Start Printed Page 36850Hydro obtain the necessary permits and licenses to operate the Generating Assets and the Virginia Hydros, respectively. These services will be rendered at cost, in accordance with rules 90 and 91 under the Act. Further, Applicants request authority for AE Units 1 and 2, LLC (“AEU”), a public utility subsidiary of Allegheny, to merge with Genco in exchange for Genco assuming the former company's outstanding debt.Start Signature
For the Commission by the Division of Investment Management, pursuant to delegated authority.
Margaret H. McFarland,
1. Applicants state that Potomac Edison will transfer the Inventory at net book value. Applicants project that the net book value of the Inventory will be approximately $32.8 million as of June 30, 2000.Back to Citation
2. AGC, a Virginia corporation that is currently jointly owned by Potomac Edison, Genco, and Monongahela Power Company, owns a 40% undivided interest in a pumped storage hydroelectric generating facility and related facilities located in Bath County, Virginia.Back to Citation
3. AEU's principal assets are to 44MW generation units in Springdale, Pennsylvania.Back to Citation
[FR Doc. 00-14717 Filed 6-9-00; 8:45 am]
BILLING CODE 8010-01-M