[Federal Register Volume 63, Number 59 (Friday, March 27, 1998)]
[Notices]
[Pages 14984-14986]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-8002]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-26846]
Filings Under the Public Utility Holding Company Act of 1935, as
Amended (``Act'')
March 20, 1998.
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 References.
Interested persons wishing to comment or request a hearing on the
application(s) and/or declaration(s) should submit their views in
writing by April 13, 1998, 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 received 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 Energy, Inc., et al. (70-9147)
Allegheny Energy, Inc. (formerly, Allegheny Power System, Inc.)
(``Allegheny''), 10435 Downsville Pike, Hagerstown, Maryland 21740, a
registered holding company, has filed an application-declaration under
sections 6(a), 7, 9(a), 10, 12(b) and 13(b) of the Act and rules 45,
54, and 80-92 under the Act, in connection with a proposed combination
with DQE, Inc. (``DQE''), a holding company exempt under sections
3(a)(1) by rule 2 from all provisions of the Act except section
9(a)(2).
As described in more detail below, Allegheny proposes: (1) to
acquire, by means of the mergers described below all of the issued and
outstanding common stock of DQE (``DQE Common Stock); and, through this
acquisition, (i) all of the issued and outstanding common stock of
DQE's direct electric utility subsidiary company, Duquesne Light
Company (``Duquesne Light''), and all of the issued and outstanding
common stock of Duquesne Light's three electric utility subsidiary
companies, Allegheny Development Corporation (``ADC''), DH Energy, Inc.
and MT Energy, Inc. and (ii) all of the issued and outstanding common
stock of DQE's two direct holding company subsidiaries, Duquesne
Enterprises (``DE'') and DQE Energy Services (``DES''), each of which
is currently exempt under section 3(a)(1) by rule 2 from all provisions
of the Act except section 9(a)(2); (2) to form and capitalize a special
purpose subsidiary and issue Allegheny common stock (``Allegheny Common
Stock'') to effect the proposed transactions; (3) to add DQE and
certain of its subsidiaries to the Allegheny money pool (``Money
Pool''); (4) to provide loans and guarantees to DQE's nonutility
subsidiaries; and (5) to authorize Allegheny Power Service Corporation
(``AP Services'') to render services to DQE's utility and nonutility
subsidiaries.
Allegheny, through subsidiaries, is engaged principally in the
generation, transmission, distribution and sale of electricity
throughout a 29,000 square mile service area covering parts of
Maryland, Ohio, Pennsylvania, Virginia and West Virginia. Allegheny has
three wholly electric operating companies, Monongahela Power Company
(``Monongahela''), The Potomac Edison Company (``Potomac Edison'') and
West Penn Power Company (``West Penn''). The three utility subsidiaries
jointly own Allegheny Generating Company (``AGE''), a Virginia
corporation. AGC's only asset is a 40% undivided interest in a pumped-
storage hydroelectric generating facility located in Bath County,
Virginia and its connecting transmission facilities. AGC's 840-megawatt
share of the capacity of the station is sold to its three parents.
Monongahela, an Ohio corporation, is engaged in the generation,
transmission and distribution of electricity to 350,062 retail
customers and eight wholesale customers in an area of approximately
11,900 square miles with a population of approximately 710,000 in
northern West Virginia and an adjacent portion of
[[Page 14985]]
Ohio.\1\ In the fiscal year ended December 31, 1996, Monongahela
provided approximately 24% of Allegheny's consolidated revenues.
Monongahela is subject to regulation by the Public Utilities Commission
of Ohio and the Public Service Commission for West Virginia.
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\1\ Monongahela also owns generating capacity in Pennsylvania.
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Potomac Edison, a Virginia corporation, is engaged in the
generation, transmission and distribution of electricity to 375,432
retail customers and ten wholesale customers in an area of
approximately 7,300 square miles with a population of approximately
782,000 in portions of Maryland, Virginia and West Virginia. \2\ In the
fiscal year ended December 31, 1996, Potomac Edison provided
approximately 31% of Allegheny's consolidated revenues. Potomac Edison
is subject to regulation by the State Corporation Commission of
Virginia, the West Virginia Commission and the Maryland Public Service
Commission.
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\2\ Potomac Edison also owns generating capacity in
Pennsylvania.
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West Penn, a Pennsylvania corporation, is engaged in the
generation, transmission and distribution of electricity to 662,881
retail customers and 15 wholesale customers in an area to approximately
9,900 square miles with a population of approximately 1.399 million in
southwestern and north and south central Pennsylvania.\3\ In the fiscal
year ended December 31, 1996, West Penn provided approximately 45% of
Allegheny's consolidated revenues. West Penn is subject to regulation
by the Pennsylvania Public Utility Commission (``Pennsylvania
Commission'').
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\3\ West Penn also owns generating capacity in West Virginia.
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Wholesale rates for electric energy sold in interstate commerce,
wheeling rates for energy transmission in interstate commerce, and
certain other activities of Allegheny system companies, including the
operation of hydroelectric plants, are subject to the jurisdiction of
the Federal Energy Regulatory Commission (``FERC'').
Allegheny also owns directly all the issued and outstanding stock
of two nonutility companies, AYP Capital, Inc. (``AYP Capital'') and AP
Services. Allegheny conducts its nonutility business through AYP
Capital, which has three wholly owned subsidiaries, AYP Energy, Inc.,
an exempt wholesaler generator and a power marketer; Allegheny
Communications Connect, Inc., an exempt telecommunications company; and
Allegheny Energy Solutions, Inc., formed as an unregulated subsidiary
to provide electric energy and related services to retail customers as
retail energy and service are opened to competition. \4\
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\4\ Through its utility subsidiaries, Allegheny also owns three
other small nonutility companies. Allegheny Pittsburgh Coal Company,
which is jointly owned by Monongahela, Potomac Edison and West Penn,
owns coal rights in a tract of land in Pennsylvania. West Virginia
Power and Transmission Company (``West Virginia Power''), a wholly
owned subsidiary of West Penn, and West Penn West Virginia Water
Power Company, a wholly owned subsidiary of West Virginia Power,
each own tracts of land in West Virginia and Pennsylvania,
respectively.
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For the twelve months ended September 30, 1997, Allegheny's total
revenue on a consolidated basis was $2.3 billion. Consolidated assets
of Allegheny and its subsidiaries as of September 30, 1997, were
approximately $6.5 billion, consisting of $5.2 billion in net electric
utility property, plant and equipment and $1.3 billion in other
corporate assets.
DQE's sole utility subsidiary, Duquesne Light, is engaged in the
production, transmission, distribution and sale of electric energy.
Duquesne Light serves an area of approximately 800 square miles,
including Pittsburgh and municipalities, in Allegheny, Beaver and (to a
limited extent) Westmoreland Counties, Pennsylvania, having a
population of approximately 1.51 million of which 370,000 reside in
Pittsburgh. Duquesne Light also sells electricity to other utilities.
Duquesne Light owns undivided interests as tenant-in-common in two
nuclear facilities and leases an undivided interest in a third
(``Nuclear Facilities''). \5\ Duquesne Light is subject to regulation
by the Pennsylvania Commission. The FERC has jurisdiction over
wholesale rates for electric energy sold in interstate commerce,
wheeling rates for energy transmission in interstate commerce, and
certain other activities of Duquesne Light. DQE's electric utility
operations are also subject to regulation by the Nuclear Regulatory
Commission with respect to the operation of the Nuclear Facilities.
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\5\ Specifically, Duquesne Light owns a 13.74% interest in Perry
Power Station Unit 1 and a 47.5% interest in Beaver Valley Power
Station Unit 1, and leases a 13.74% interest in Beaver Valley Power
Station Unit 2.
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DQE has five direct nonutility subsidiaries. DE makes strategic
investments related to DQE's core energy business. DES is a diversified
energy services company that offers a wide range of energy solutions
for industrial, utility and consumer markets worldwide. DQEnergy
Partners, Inc. was formed in December 1996 to align DQE with strategic
partners to capitalize on opportunities in the energy services
industry. Montauk, Inc. is a financial services company that makes
long-term investments. It was established to provide financing for
DQE's unregulated businesses and their customers. Brighter Light
Corporation has no active operations.
For the twelve months ended September 30, 1997, DQE's total revenue
on a consolidated basis was approximately $1.22 billion. Consolidated
assets of DQE and its subsidiaries as of September 30, 1997, were
approximately $4.7 billion, consisting of $3.7 billion in net electric
utility assets and $1 billion in nonutility assets.
An Agreement and Plan of Merger, dated as of April 5, 1997
(``Merger Agreement''), among DQE, Allegheny and AYP Sub, Inc., a
wholly owned subsidiary that Allegheny will incorporate under
Pennsylvania law (``Merger Sub''), provides for a combination of
Allegheny and DQE in which Merger Sub will be merged with and into DQE
(``Merger''), with DQE as the surviving corporation.
To effectuate the Merger, Allegheny requests authority to form and
capitalize Merger Sub. Merger Sub will be incorporated solely for the
purpose of effectuating the Merger and, prior to the consummation of
the Merger, Merger Sub will have no operations other than those
contemplated by the Merger Agreement. The authorized capital stock of
Merger Sub will consist of 1,000 shares of common stock, $.01 par
value, all of which will be issued to Allegheny at the price of $1.00
per share.
Allegheny requests authority to issue up to 90,557,682 shares of
Allegheny Common Stock to consummate the Merger. Each share of DQE
Common Stock \6\ issued and outstanding immediately prior to the
effective date of the Merger will be converted into the right to
receive, and become exchangeable for, 1.12 shares of Allegheny Common
Stock. Upon consummation of the Merger, holders of DQE Common Stock
immediately prior to the Merger will own approximately 42% of the
outstanding shares of Allegheny Common Stock after the Merger, based on
the number of shares of Allegheny Common Stock and DQE
[[Page 14986]]
Common Stock outstanding as of September 30, 1997.
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\6\ Other than shares owned by Allegheny, Merger Sub and any
other subsidiary of Allegheny and shares of DQE Common Stock that
are owned by DQE or any subsidiary of DQE, in each case not held on
behalf of third parties and which are not shares of DQE Common Stock
held by Duquesne Light to provide for redemption of the subsidiary's
preference shares under the terms of the subsidiary's 401(k) plan or
to provide benefits under another employee benefit plan of Duquesne
Light (collectively, ``Excluded Shares'').
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After the Merger, DQE will be a wholly owned subsidiary of
Allegheny. Allegheny's utility and nonutility subsidiaries will remain
subsidiaries of Allegheny. DQE's utility and nonutility subsidiaries
will become indirect subsidiaries of DQE. Upon consummation of the
Merger, DQE will be a wholly owned subsidiary of Allegheny.
The applicants request authority for certain of DQE's direct and
indirect subsidiaries to participate in the Money Pool under the same
terms and conditions as Monongahela, Potomac Edison and West Penn
(i.e., be permitted to both invest in and borrow from the Money Pool),
as stated in the Commission order dated April 18, 1996 (HCAR No.
26506).
The applicants also request authorization for DQE's nonutility
subsidiaries to borrow or obtain guarantees from Allegheny under the
same terms and conditions as the nonutility subsidiaries of Allegheny,
as stated in the Commission order dated October 9, 1996 (HCAR No.
26590).
AP Services is a service company subsidiary. It provides various
technical, engineering, accounting, administrative, financial,
purchasing, computing, managerial, operational and legal services to
Allegheny's subsidiaries, including AYP Capital and its subsidiaries,
at cost.
AP Services proposes to enter into service agreements (``Service
Agreements'') with certain utility and nonutility subsidiaries of DQE
(including Duquesne Light), which will become effective upon the
consummation of the Merger. The Service Agreements are similar in all
material respects to those service agreements which AP Services has
signed with its client companies. Under the terms of the Service
Agreements, AP Services will render to DQE's subsidiaries, at cost,
various technical, engineering, accounting, administrative, financial,
purchasing, computing, managerial, operational and legal services. AP
Services will account for, allocate and charge its costs of the
services provided on a full cost reimbursement basis under a work order
system consistent with the Uniform System of Accounts for Mutual and
Subsidiary Service Companies. The time AP Services employees spend
working for the subsidiaries of DQE will be billed to and paid by the
applicable subsidiary on a monthly basis, based upon time records. Each
DQE subsidiary that is party to a Service Agreement will maintain
separate financial records and detailed supporting records.
Gulf Power Co., et al. (70-9171)
Gulf Power Company (``Gulf''), 500 Bayfront Parkway, Pensacola,
Florida, 32501, and Mississippi Power Company (``Mississippi''), 2992
West Beach, Gulfport, Mississippi, 39501, wholly owned subsidiaries of
The Southern Company, a registered holding company, have filed a
declaration under sections 6(a) and 7 of the Act and rule 54 under the
Act.
Gulf and Mississippi propose to issue and sell in one or more
series through March 31, 2003 senior debentures, senior promissory
notes or other senior debt instruments (``Senior Notes'') governed by
an indenture or other document. The amount of Senior Notes would not
exceed $350 million outstanding for Gulf or $400 million outstanding
for Mississippi.
The provisions of each series of Senior Notes and related
instruments would be determined when the sale of each series of Senior
Notes occurs. However, Gulf and Mississippi request authority to issue
and sell Senior Notes whose terms fall within certain parameters
described below.
First, the effective cost of money on Senior Notes will not exceed
the greater of 300 basis points over U.S. Treasury securities having
comparable maturities or a gross spread over those Treasury securities
that is consistent with comparable securities. Second, the maturity of
the Senior Notes will not exceed approximately 50 years.
Third, the interest rate on the Senior Notes will be either fixed
or adjusted on a periodic basis, either by auction or remarketing
procedures that use one or more formulas based on certain reference
rates, or by other predetermined methods. Fourth, the Senior Notes will
be direct, unsecured and unsubordinated obligations of Gulf or
Mississippi ranked equally with all other unsecured and unsubordinated
obligations of Gulf or Mississippi.
The proceeds from the issuance and sale of Senior Notes will be
used principally (i) to finance capital expenditures, (ii) to acquire,
retire or redeem securities, (iii) to repay outstanding short-term
borrowings, (iv) to provide working capital and/or (v) for other
general corporate purposes.
American Electric Power Company, Inc., et al. (70-9181)
American Electric Power Company, Inc. (``AEP''), a registered
holding company, and its wholly owned nonutility subsidiary, American
Electric Power Service Corporation (``AEPSC''), both of 1 Riverside
Plaza, Columbus, Ohio 43215, have filed a declaration under sections
6(a), 7, and 12(b) of the Act and rules 45 and 54 under the Act
requesting authorization for AEP to guarantee certain payment
obligations of AEPSC.
AEPSC will issue unsecured long-term promissory notes (``Notes'')
to one or more commercial banks, financial institutions or other
institutional investors under the terms and conditions of one or more
term-loan agreements (``Proposed Loan Agreement''). The Proposed Loan
Agreement and the Notes will have a term of not less than nine months
and no more than ten years from the date of borrowing.
The Notes will bear interest at a fixed, fluctuating or combination
fixed and fluctuating rate. If the interest rate is fixed, interest on
the Notes at the time of issuance will not be greater than 250 basis
points above the yield to maturity of United States Treasury
obligations which have maturities similar to the maturity date of the
Notes. If the interest rate is fluctuating, interest on the Notes will
be not be greater than 200 basis points above the rate of interest
announced publicly by a major bank from time to time as its base or
prime rate. The actual rate of interest on the Notes will be as further
determined by AEPSC and the lender.
AEPSC intends to use proceeds from the Notes to pay long-term debt
at, or prior to, maturity, to repay short-term debt, for working
capital or other corporate purposes.\2\
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\7\ AEPSC currently has a term loan in the principal amount of
$10 million, which will mature on October 14, 1998.
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AEP proposes to issue guarantees (``Guarantees'') in support of the
Notes in an aggregate amount not to exceed $20 million outstanding at
any one time, through December 31, 2003. Under the Guarantees, AEP will
be unconditionally obligated to pay amounts due and unpaid by AEPSC in
connection with the Notes.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-8002 Filed 3-26-98; 8:45 am]
BILLING CODE 8010-01-M
