[Federal Register Volume 62, Number 21 (Friday, January 31, 1997)]
[Notices]
[Pages 4824-4825]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-2359]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-26654]
Filings Under the Public Utility Holding Company Act of 1935, as
Amended (``Act'')
January 24, 1997.
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 thereunder. 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 thereto is/are available for public
inspection through the Commission's Office 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 February 18, 1997, to the Secretary, Securities and Exchange
Commission, Washington, D.C. 20549, 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 case of an attorney at law, by
certificate) should be filed with the request. Any request for hearing
shall identify specifically the issues of fact 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 said date, the application(s) and/or declaration(s), as
filed or as amended, may be granted and/or permitted to become
effective.
Allegheny Power Service Corporation, et al. (70-8941)
Allegheny Power Service Corporation (``APSC''), 800 Cabin Hill
Drive, Greensburg, Pennsylvania 15601, a wholly-owned subsidiary
service corporation of Allegheny Power System, Inc. (``APS''), a
registered holding company, and Monongahela Power Company, 1310
Fairmont Avenue, West Virginia 26554, The Potomac Edison Company, 10435
Downsville Pike, Hagerstown, Maryland 21740 and West Penn Power
Company, 800 Cabin Hill Drive, Greensburg, Pennsylvania 15601, all
public-utility subsidiary companies of APS (collectively, ``Operating
Companies''), have filed a declaration under section 13(b) of the Act
and rules 87(b)(1), 90 and 91 thereunder.
APSC proposes to amend Exhibit I (``Proposed Amendment'') to its
service agreements with the Operating Companies (``Service
Agreements'') to reflect changes in the scope of services APSC will
provide to the Operating Companies. The changes are in large part a
further consolidation of services already performed by APSC, some of
which began on January 1, 1996, and the rest on July 1, 1996. In
addition, the Operating Companies propose to enter into a service
agreement among themselves, similar to the existing Service Agreements,
that will the Operating Companies to perform services for one another
and properly allocate the costs of such services.
In 1995, APS announces its intention to undertake a restructuring
designed to consolidate and reengineer its operations to better meet
the competitive challenges of the changing electric utility industry
and remain the energy supplier of choice in the future for its
customers. Beginning January 1, 1996, APSC began to realign its
organization to create distinct power generation and energy
transmission and distribution groups. As of July 1, 1996, the Operating
Companies restructured, including the reengineering of processes and
the consolidation of functions with services already provided by APSC.
In addition, although the Operating Companies have not changed their
legal corporate names, nor altered in any manner ownership of capital
assets, they began doing business under the trade name ``Allegheny
Power'' as of September 1, 1996.
The restructuring is an effort to further control costs, operate
more efficiently, and prepare for the anticipated increases in retail
and wholesale competition among suppliers of electricity, beginning
with the Energy Policy Act of 1992. APS' goal is to expand by
attracting new customers to its service area and, to the extent legally
permitted, aggressively pursue new business within and outside its
service area, using its resources efficiently and capitalizing on its
competitive strengths.
Allegheny Power expects to realize a number of benefits from its
restructuring. Beginning in 1996 and continuing into the future,
increased efficiencies and synergies are expected to result from the
elimination of layers of management and the elimination of previously
duplicated functions. The flattening, streamlining and consolidation of
functions within the organization will lead to enhanced efficiency and
communication, which should translate into a reduction in the rate of
growth in operating and maintenance costs and thereby minimize the need
for future rate increases.
In general, the restructuring consolidated in APSC certain
functions which previously were either performed
[[Page 4825]]
separately by employees of each APS' three Operating Companies, or by
employees of the Operating Companies along with employees of APSC.
Except for the union work force and possibly some other employees, the
management, engineering, maintenance, legal, accounting, payables and
administrative and support functions previously performed by employees
of the Operating Companies will be supplied, after the realignment, by
employees of APSC. APS has been restructured into the following
functional units: Operating Business Unit; Retail Marketing; Corporate
Affairs; Generation Business Unit; Transmission Business Unit; Planning
and Compliance Business Unit; and Corporate Services, which serves the
business units. The restructuring did not involve the formation of any
new legal entities, nor did it require the writedown of any rate base
assets. No capital assets were transferred among companies within APS
in connection with the restructuring. APSC's current method of
allocations will be maintained in the restructured organization. No new
methods of allocations will be used.
The overall goals of the restructuring have been to realign
functions by process and consolidate functions where feasible. As a
result thereof, most of the functions which were performed exclusively
by the Operating Companies have been consolidated into three units: (1)
Operating Business Unit; (2) Retail Marketing Business Unit; and (3)
Corporate Affairs. The Vice Presidents of these groups all report to a
Senior Vice President of APSC, who also holds the title of President of
each of the Operating Companies. Some of the main goals of the
restructuring of these functions include establishing a team-oriented
environment, maintaining fewer layers of management, establishing
broader job classifications, and establishing an integrated work
management system to schedule, design, track, and finish jobs.
GPU, Inc., et al. (70-8967)
GPU, Inc. (``GPU''), of 100 Interpace Parkway, Parsippany, New
Jersey 07054, a registered holding company, and its electric utility
subsidiaries, Jersey Central Power & Light Company (``JCP&L''),
Metropolitan Edison Company (``Met-Ed'') and Pennsylvania Electric
Company (``Penelec''), each of 2800 Pottsville Pike, Reading,
Pennsylvania 19605 (JCP&L, Met-Ed and Penelec, collectively,
``Operating Companies''), have filed a declaration under sections 6(a),
7 and 12(b) of the Act and rule 54 thereunder.
The Operating Companies presently maintain insurance policies
providing coverage for workers compensation claims and employee claims
asserted directly against the Operating Companies.\1\ Under these
policies, the insurance company administers and pays all claims and
expenses as they arise; subsequently, however, the Operating Companies
reimburse the insurance company for the amount of each claim paid up to
the deductible and all expenses paid. Pursuant to orders of the
Commission, the Operating Companies are authorized, among other things,
to enter into letter of credit reimbursement agreements with banks and
to deliver to the insurance company irrevocable bank letters of credit
(``L/Cs'') from time to time through December 31, 1998, as security for
the Operating Companies' obligations to pay the deductible.\2\
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\1\ The service territory of JCP&L is in New Jersey and the
service territories of Met-Ed and Penelec are in Pennsylvania.
\2\ Met-Ed and Penelec, together, and JCP&L, alone, are
authorized to deliver L/Cs in the aggregate face amount not to
exceed $20 million and $15 million, respectively. Holding Co. Act
Release No. 25793 (Apr. 14, 1993) (Met-Ed and Penelec); Holding Co.
Act Release No. 26003 (Mar. 15, 1994) (JCP&L).
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The Operating Companies state that it might be more efficient for
the insurance policies to cover, in addition to their employees, the
Pennsylvania and New Jersey employees of GPU Service, Inc., GPU
Nuclear, Inc. and GPU Generation, Inc., service company subsidiaries of
GPU (collectively, ``Service Companies''). To support the obligations
of the Service Companies to pay the deductible, the applicants intend
that corresponding, additional L/C coverage provided to the insurance
companies.
The applicants also state that it would be cost-effective and less
burdensome administratively for GPU to provide L/Cs for the Operating
Companies and Service Companies. GPU seeks authorization to obtain and
deliver L/Cs and enter related reimbursement agreements from time to
time through December 31, 2006 in support of the Operating Companies'
and Service Companies' reimbursement obligations to the insurance
companies. The aggregate face amount of L/Cs which may be outstanding
at any time would not exceed $40 million: $20 million in respect of all
Pennsylvania employees of the Operating Companies and Service
Companies, and the remaining $20 million in respect of all New Jersey
employees of the Operating Companies and Service Companies. Drawings
under the L/C would bear interest at not more than five percent above
the issuing bank's prime rate as in effect from time to time. The term
of each L/C would not exceed three years.
GPU will allocate the fees of each L/C to the Operating Companies
and Service Companies on whose behalf the L/C was issued based on loss
exposure (determined generally by payroll) in the applicable state. GPU
will also seek reimbursement for a drawing under an L/C from the
Operating Company or Service Company that failed to reimburse the
insurance company for the applicable deductible resulting in such
drawing.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-2359 Filed 1-30-97; 8:45 am]
BILLING CODE 8010-01-M
