Page 1 of 15
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended June 30, 1995
Commission File Number 1-267
Allegheny Power System, Inc.
(Exact name of registrant as specified in its charter)
Maryland 13-5531602
(State of Incorporation) (I.R.S. Employer Identification No.)
12 East 49th Street, New York, New York 10017-1028
Telephone Number - 212-752-2121
The registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.
At August 11, 1995, 120,046,969 shares of the Common Stock ($1.25
par value) of the registrant were outstanding.
- 2 -
ALLEGHENY POWER SYSTEM, INC.
Form 10-Q for Quarter Ended June 30, 1995
Page
Index No.
PART I--FINANCIAL INFORMATION:
Consolidated statement of income -
Three and six months ended June 30, 1995 and 1994 3
Consolidated balance sheet - June 30, 1995
and December 31, 1994 4
Consolidated statement of cash flows -
Six months ended June 30, 1995 and 1994 5
Notes to consolidated financial statements 6-7
Management's discussion and analysis of financial
condition and results of operations 8-13
PART II--OTHER INFORMATION 14-15
- 3 -
ALLEGHENY POWER SYSTEM, INC.
Consolidated Statement of Income
Three Months Ended Six Months Ended
June 30 June 30
1995 1994 1995 1994
(Thousands of Dollars)
ELECTRIC OPERATING REVENUES:
Residential $194 896 $187 702 $ 459 014 $ 456 934
Commercial 113 278 106 849 239 162 226 245
Industrial 191 444 177 249 385 438 355 923
Nonaffiliated utilities 87 668 74 704 186 179 186 316
Other 15 805 14 713 33 286 33 099
Total Operating Revenues 603 091 561 217 1 303 079 1 258 517
OPERATING EXPENSES:
Operation:
Fuel 113 236 132 086 248 281 287 805
Purchased power and exchanges, net 123 557 98 742 254 192 235 229
Deferred power costs, net 8 912 (1 827) 27 847 1 597
Other 72 044 68 443 142 108 137 404
Maintenance 59 090 60 319 121 173 124 221
Depreciation 65 399 56 262 130 096 112 133
Taxes other than income taxes 44 119 43 522 91 490 93 298
Federal and state income taxes 27 121 23 953 76 040 71 993
Total Operating Expenses 513 478 481 500 1 091 227 1 063 680
Operating Income 89 613 79 717 211 852 194 837
OTHER INCOME AND DEDUCTIONS:
Allowance for other than borrowed funds
used during construction 890 2 697 2 412 5 562
Other income, net 2 397 41 2 849 (260)
Total Other Income and Deductions 3 287 2 738 5 261 5 302
Income Before Interest Charges
and Preferred Dividends 92 900 82 455 217 113 200 139
INTEREST CHARGES AND PREFERRED DIVIDENDS:
Interest on long-term debt 42 364 37 231 82 728 74 152
Other interest 3 768 2 549 7 250 4 997
Allowance for borrowed funds used
during construction (1 105) (1 866) (2 276) (3 649)
Dividends on preferred stock of subsidiaries 5 180 5 174 10 589 9 407
Total Interest Charges and
Preferred Dividends 50 207 43 088 98 291 84 907
Consolidated Income Before Cumulative Effect
of Accounting Change 42 693 39 367 118 822 115 232
Cumulative Effect of Accounting Change, net - - - 43 446
CONSOLIDATED NET INCOME $ 42 693 $ 39 367 $ 118 822 $ 158 678
COMMON STOCK SHARES OUTSTANDING (average) 119 681 808 118 042 033119 490 581 117 855 917
EARNINGS PER AVERAGE SHARE:
Consolidated income before cumulative effect
of accounting change $.36 $.33 $.99 $ .98
Cumulative effect of accounting change, net - - - .37
Consolidated net income $.36 $.33 $.99 $1.35
See accompanying notes to consolidated financial statements.
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ALLEGHENY POWER SYSTEM, INC.
Consolidated Balance Sheet
June 30, December 31,
1995 1994
(Thousands of Dollars)
ASSETS:
Property, Plant, and Equipment:
At original cost, including $220,907,000
and $215,756,000 under construction $7 706 841 $7 586 780
Accumulated depreciation (2 619 242) (2 529 354)
5 087 599 5 057 426
Investments and Other Assets:
Subsidiaries consolidated--excess of cost
over book equity at acquisition 15 077 15 077
Securities of associated company--at cost,
which approximates equity 1 250 1 250
Nonutility investments 197 -
Other 37 461 36 284
53 985 52 611
Current Assets:
Cash and temporary cash investments 42 349 2 765
Accounts receivable:
Electric service, net of $11,548,000 and $11,353,000
uncollectible allowance 245 795 250 367
Other 8 989 8 175
Materials and supplies--at average cost:
Operating and construction 97 462 94 478
Fuel 87 179 84 199
Prepaid taxes 45 168 43 880
Other 26 461 23 730
553 403 507 594
Deferred Charges:
Regulatory assets 651 525 643 791
Unamortized loss on reacquired debt 58 760 40 991
Other 43 743 59 812
754 028 744 594
Total Assets $6 449 015 $6 362 225
CAPITALIZATION AND LIABILITIES:
Capitalization:
Common stock $ 150 059 $ 149 116
Other paid-in capital 979 735 963 269
Retained earnings 967 764 946 919
2 097 558 2 059 304
Preferred stock:
Not subject to mandatory redemption 170 086 300 086
Subject to mandatory redemption - 25 200
Long-term debt 2 258 250 2 178 472
4 525 894 4 563 062
Current Liabilities:
Short-term debt 89 813 126 818
Long-term debt and preferred stock
due within one year 223 032 29 200
Accounts payable 127 075 190 809
Taxes accrued:
Federal and state income 22 672 13 873
Other 32 518 52 782
Interest accrued 41 334 42 078
Other 77 872 62 073
614 316 517 633
Deferred Credits and Other Liabilities:
Unamortized investment credit 153 883 158 018
Deferred income taxes 997 132 972 113
Regulatory liabilities 102 610 105 076
Other 55 180 46 323
1 308 805 1 281 530
Total Capitalization and Liabilities $6 449 015 $6 362 225
See accompanying notes to consolidated financial statements.
- 5 -
ALLEGHENY POWER SYSTEM, INC.
Consolidated Statement of Cash Flows
Six Months Ended
June 30
1995 1994
(Thousands of Dollars)
CASH FLOWS FROM OPERATIONS:
Consolidated net income $118 822 $158 678
Depreciation 130 096 112 133
Deferred investment credit and income taxes, net 14 596 (9 968)
Deferred power costs, net 27 847 1 597
Allowance for other than borrowed funds used
during construction (2 412) (5 562)
Cumulative effect of accounting change before
income taxes - (72 333)
Changes in certain current assets and liabilities:
Accounts receivable, net, excluding cumulative
effect of accounting change 3 758 9 137
Materials and supplies (5 964) (17 018)
Accounts payable (63 734) (19 882)
Taxes accrued (11 465) 11 268
Interest accrued (744) (181)
Other current liabilities 7 661 21 070
Other, net (7 093) 5 929
211 368 194 868
CASH FLOWS FROM INVESTING:
Construction expenditures (152 958) (208 387)
Nonutility investment (197) -
Allowance for other than borrowed funds used
during construction 2 412 5 562
(150 743) (202 825)
CASH FLOWS FROM FINANCING:
Sale of common stock 17 376 17 263
Sale of preferred stock - 49 635
Retirement of preferred stock (910) -
Issuance of long-term debt 482 857 78 036
Retirement of long-term debt (385 381) (26 830)
Short-term debt, net (37 005) (13 614)
Cash dividends on common stock (97 978) (96 637)
(21 041) 7 853
NET CHANGE IN CASH AND TEMPORARY CASH INVESTMENTS 39 584 (104)
Cash and Temporary Cash Investments at January 1 2 765 2 417
Cash and Temporary Cash Investments at June 30 $ 42 349 $ 2 313
Supplemental cash flow information:
Cash paid during the period for:
Interest (net of amount capitalized) $ 87 316 $ 73 384
Income taxes 51 357 65 430
See accompanying notes to consolidated financial statements.
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ALLEGHENY POWER SYSTEM, INC.
Notes to Consolidated Financial Statements
1. The Company's Notes to Consolidated Financial Statements in the
Allegheny Power System companies' combined Annual Report on
Form 10-K for the year ended December 31, 1994, should be read
with the accompanying financial statements and the following
notes. With the exception of the December 31, 1994
consolidated balance sheet in the aforementioned annual report
on Form 10-K, the accompanying consolidated financial
statements appearing on pages 3 through 5 and these notes to
consolidated financial statements are unaudited. In the
opinion of the Company, such consolidated financial statements
together with these notes thereto contain all adjustments
(which consist only of normal recurring adjustments) necessary
to present fairly the Company's financial position as of June
30, 1995, the results of operations for the three and six
months ended June 30, 1995 and 1994, and cash flows for the six
months ended June 30, 1995 and 1994.
2. The Consolidated Statement of Income reflects the results of
past operations and is not intended as any representation as to
future results. For purposes of the Consolidated Balance Sheet
and Consolidated Statement of Cash Flows, temporary cash
investments with original maturities of three months or less,
generally in the form of commercial paper, certificates of
deposit, and repurchase agreements, are considered to be the
equivalent of cash.
3. Earnings for the 1994 periods have been restated to reflect
retroactively the effect of an accounting change adopted as of
January 1994 to record unbilled revenues.
4. In June 1995, the Company's subsidiaries issued $77.5 million
of 6.15%, 20-year pollution control revenue notes, to refund
the following pollution control revenue notes: $11.5 million
of 6.95% Series B due 2003, $21 million of 7.30% Series B due
2008, $20 million of 7% Series B due 2008, and $25 million of
7.75% Series B due 2009. These notes will be refunded in July
1995 but have been extinguished as of the June 30, 1995 balance
sheet because funds have been placed in an irrevocable trust to
satisfy the obligation.
Monongahela Power Company issued $70 million of 7.625%, 30-year
first mortgage bonds in May 1995 to refund $70 million of
8.875% series due 2019. Monongahela Power also issued $40
million of 8% Junior Subordinated Deferrable Interest
Debentures in June 1995 to replace the following issues of
preferred stock: $5 million of $7.36 Series E, $5 million of
$8.80 Series G, $5 million of $7.92 Series H, $10 million of
$7.92 Series I, and $15 million of $8.60 Series J.
The Potomac Edison Company issued $65 million of 7.75% and $80
million of 7.625% 30-year first mortgage bonds in May 1995 to
refund $65 million of 9.25% series due 2019 and $80 million of
9.625% series due 2020, respectively. Potomac Edison also
issued $45.5 million of 8% Junior Subordinated Deferrable
Interest Debentures in June 1995 to replace the following
issues of preferred stock: $5 million of $7.00 Series D, $5
million of $8.32 Series F, $10 million of $8.00 Series G, and
$25.5 million of $7.16 Series J.
- 7 -
West Penn Power Company issued $30 million of 7.75% Series MM,
30-year first mortgage bonds in May 1995 to refund $30 million
of 9% Series EE due 2019, and issued $15.4 million of 6.05%
Series G 19-year pollution control revenue notes in June 1995
to refund $15.4 million of 9.375% Series E due 2014. West Penn
also issued $70 million of 8% Junior Subordinated Deferrable
Interest Debentures in June 1995 to replace the following
issues of preferred stock: $10 million of $7.00 Series D, $10
million of $7.12 Series E, $10 million of $7.60 Series H, $10
million of $7.64 Series I, $10 million of $8.08 Series G, and
$20 million of $8.20 Series J.
5. Other paid-in capital increased $16,433,000 in the six months
ended June 30, 1995, representing the excess of amounts
received over par value, less related expenses, from the
issuance of 754,015 shares of common stock pursuant to the
Company's Dividend Reinvestment and Stock Purchase Plan and
Employee Stock Ownership and Savings Plan. Additionally, other
paid-in capital increased $33,000 as a result of a subsidiary's
preferred stock transaction.
6. Common stock dividends per share declared during the periods
for which income statements are included are as follows:
1995 1994
1st 2nd 1st 2nd
Quarter Quarter Quarter Quarter
Number of Shares 119,292,954 119,677,751 117,663,582 118,037,427
Amount per Share $.41 $.41 $.41 $.41
- 8 -
ALLEGHENY POWER SYSTEM, INC.
Management's Discussion and Analysis of Financial Condition
and Results of Operations
COMPARISON OF SECOND QUARTER AND SIX MONTHS ENDED JUNE 30, 1995
WITH SECOND QUARTER AND SIX MONTHS ENDED JUNE 30, 1994
CONSOLIDATED NET INCOME
Consolidated net income for the second quarter of 1995
was $42.7 million or $.36 per average share, compared with $39.4 million
or $.33 per average share for the corresponding 1994 period. For the
first six months of 1995, consolidated net income was $118.8 million or
$.99 per average share, compared with $115.2 million or $.98 per average
share for the corresponding 1994 period, before the cumulative effect of
an accounting change to record unbilled revenues.
The increase in consolidated net income for the second
quarter and in consolidated income before cumulative effect of accounting
change for the first six months of 1995 reflects increased retail revenues
resulting primarily from previously reported rate increases and also in
the second quarter from greater kilowatthour (kWh) sales to retail
customers. The increased retail revenues in the 1995 periods more than
offset increases in depreciation, interest, and other expenses.
SALES AND REVENUES
Retail kWh sales to commercial and industrial customers
in the second quarter increased 2% and 6%, respectively, and to
residential customers decreased 2%. In the first six months, retail kWh
sales to commercial and industrial customers increased .5% and 6%,
respectively, and to residential customers decreased 6%. Milder weather
in the second quarter and first six months of 1995 as compared to some of
the coldest temperatures ever recorded in much of the System's service
territory during the first quarter of 1994 resulted in reduced residential
kWh sales. Increased usage by commercial customers in the second quarter
offset the decrease in kWh sales in the first quarter. The increase in
kWh sales to industrial customers in the second quarter and first six
months of 1995 resulted primarily from increased sales to primary metals
customers. KWh sales to primary metals customers in the second quarter of
1994 were impacted by a 70-day strike, ending June 9, 1994, at the
System's second largest industrial customer. The increase in revenues
from retail customers resulted from the following:
Change from Prior Periods
Quarter Six Months
(Millions of Dollars)
Change in kWh sales $ 4.7 $(6.2)
Fuel and energy cost adjustment
clauses (1) .1 (2.4)
Rate changes (2):
Pennsylvania 11.7 25.3
West Virginia 8.0 17.2
Maryland 4.8 12.0
Virginia (1.9) (1.6)
22.6 52.9
Other .4 .2
$27.8 $44.5
- 9 -
(1) Changes in revenues from fuel and energy cost adjustment
clauses have little effect on consolidated net income.
(2) Reflects rate increases on an annual basis of about $55.5
million in Pennsylvania effective December 31, 1994, a $25
million annual increase in base rates in West Virginia
effective in mid-November 1994, an increased surcharge of $8.8
million in West Virginia effective July 1, 1994 for recovery of
carrying charges on costs to comply with the Clean Air Act
Amendments of 1990 (CAAA), and an annual increase of $19.6
million in Maryland effective November 11, 1994. These rate
increases included recovery of carrying charges on investment,
depreciation, and operating costs required to comply with Phase
I of the CAAA, and other increasing levels of expense. See
page 11 for further information on the West Virginia rate case.
KWh sales to and revenues from nonaffiliated utilities
are comprised of the following items:
Three Months Ended Six Months Ended
June 30 June 30
1995 1994 1995 1994
KWh sales (in billions):
From subsidiaries' generation .1 .4 .3 .7
From purchased power 2.9 1.6 6.1 5.0
3.0 2.0 6.4 5.7
Revenues (in millions):
From subsidiaries' generation $ 3.2 $ 9.5 $ 7.4 $ 19.9
From sales of purchased power 84.5 65.2 178.8 166.4
$87.7 $74.7 $186.2 $186.3
Sales from subsidiaries' generation decreased because
of growth of kWh sales to retail customers and generating unit outages,
both of which reduce the amount available for sale, and because of
decreased demand and continuing price competition. Sales of purchased
power vary depending on the availability of eastern utilities' generating
equipment, demand for energy, and competition. About 95% of the aggregate
benefits from sales to nonaffiliated utilities is passed on to retail
customers and has little effect on consolidated net income.
OPERATING EXPENSES
Fuel expenses for both the second quarter and the first
six months of 1995 decreased 14%. The decrease in fuel expenses was a
result of a 9% decrease in average coal prices in both periods, and a
decrease in kWhs generated of 6% in the second quarter and 5% in the first
six months. The reduced average coal prices are primarily the result of
renegotiations of long-term fuel contracts which reduced fuel prices
effective January 1995. Fuel expenses are primarily subject to deferred
power cost accounting procedures with the result that changes in fuel
expenses have little effect on consolidated net income.
- 10 -
"Purchased power and exchanges, net" represents power
purchases from and exchanges with other utilities and purchases from
qualified facilities under the Public Utility Regulatory Policies Act of
1978 (PURPA), and is comprised of the following items:
Three Months Ended Six Months Ended
June 30 June 30
1995 1994 1995 1994
(Millions of Dollars)
Purchased power:
For resale to other utilities $ 75.4 $ 57.3 $158.3 $146.9
From PURPA generation 35.3 34.5 68.7 64.8
Other 15.3 9.4 25.7 22.7
Total power purchased 126.0 101.2 252.7 234.4
Power exchanges, net (2.4) (2.5) 1.5 .8
$123.6 $ 98.7 $254.2 $235.2
The amount of power purchased from other utilities for
use by subsidiaries and for resale to other utilities depends upon the
availability of the subsidiaries' generating equipment, transmission
capacity, and fuel, and their cost of generation and the cost of
operations of other utilities from which such purchases are made. The
cost of power purchased for use by the subsidiaries, including power from
PURPA generation, is mostly recovered from customers currently through the
regular fuel and energy cost recovery procedures followed by the
subsidiaries' regulatory commissions and is primarily subject to deferred
power cost procedures with the result that changes in such costs have
little effect on consolidated net income. The primary reason for the
increases in purchases for resale to other utilities is described under
SALES AND REVENUES above.
The increases in other operation expense for the second
quarter and the first six month periods resulted primarily from increased
power station operating costs, including expenses related to the Harrison
scrubbers which became available for service in November 1994, an increase
in research and development expenses due to the timing of payments, and
increases in salaries and wages and employee benefits. For the first six
months these increases were offset in part by environmental liabilities
recorded in the first quarter of 1994.
Maintenance expenses represent costs incurred to
maintain the power stations, the transmission and distribution (T&D)
system, and general plant, and reflect routine maintenance of equipment
and rights-of-way as well as planned major repairs and unplanned
expenditures, primarily from forced outages at the power stations and
periodic storm damage on the T&D system. The subsidiaries are also
experiencing, and expect to continue to experience, increased expenditures
due to the aging of their power stations. Variations in maintenance
expense result primarily from unplanned events and planned major projects,
which vary in timing and magnitude depending upon the length of time
equipment has been in service without a major overhaul and the amount of
work found necessary when equipment is dismantled.
The increases in depreciation expense for the second
quarter and first six months of 1995 resulted from additions to electric
plant, primarily because of the Harrison scrubbers which became available
for service in November 1994, offset in part by a decrease in depreciation
rates in West Virginia concurrent with the West Virginia base rate
increase effective in November 1994.
- 11 -
Taxes other than income taxes increased $.6 million in
the second quarter and decreased $1.8 million in the first six months.
The second quarter increase was primarily due to increases in gross
receipts taxes resulting from higher revenues from retail customers. The
decrease in the first six months was primarily due to decreases in
property taxes resulting from an adjustment of prior year liabilities
($1.4 million) and West Virginia Business and Occupation taxes (B&O taxes)
due to an increase in the industrial expansion credit ($1.4 million),
offset in part by increases in gross receipts taxes ($1.2 million). As a
result of an amendment in the B&O tax law effective June 1, 1995, which
changed the basis for this tax from generation to generating capacity,
this tax is expected to decrease effective February 1, 1996, because of a
rate reduction for scrubbed capacity.
The net increases of $3.2 million and $4.0 million in
federal and state income taxes for the second quarter and first six month
periods, respectively, resulted primarily from increases in income before
income taxes.
The combined decreases of $2.6 million and $4.5 million
in allowance for funds used during construction (AFUDC) for the second
quarter and first six- month periods, respectively, reflect decreases in
capital expenditures upon substantial completion of Phase I of the CAAA.
The increase in other income, net for the second
quarter and first six month periods was due primarily to income from
demand-side management programs and an increase in interest income earned
on funds available as a result of the timing of the debt and preferred
stock refinancings in the second quarter of 1995.
Interest on long-term debt increased $5.1 million for
the quarter and $8.6 million for the first six months due primarily to the
timing of the refinancing of the $245 million of first mortgage bonds and
$92.9 million of pollution control revenue notes, interest related to the
issuance of $155.5 million of Junior Subordinated Deferrable Interest
Debentures, and new security issues in 1994. Fluctuations in other
interest expense reflect changes in the level of short-term debt
maintained by the companies.
LIQUIDITY AND CAPITAL RESOURCES
The Company's discussion on Liquidity and Capital
Resources in the Allegheny Power System companies' combined Annual Report
on Form 10-K for the year ended December 31, 1994 should be read with the
following information.
In March 1995, in response to requests for
reconsideration of rate orders to Monongahela Power Company (MP) and The
Potomac Edison Company (PE) in mid-November 1994, the Public Service
Commission of West Virginia (PSC) ordered a considerable number of changes
from the November order, including reallocations of the rate increases
among customer classes and that certain Harrison scrubber-related expenses
be reviewed as part of the annual Expanded Net Energy Cost (ENEC) review
procedure in June 1995. The PSC later agreed with its staff to delay
implementation of the March 1995 order until completion of the ENEC
review. Following the March 1995 order, the companies petitioned the West
Virginia Supreme Court of Appeals to review the PSC's order as to various
issues, including the low allowed return on equity of 10.85%.
- 12 -
Effective July 1, 1995, following the ENEC review, the
PSC reduced the companies' annual base rates by $1.6 million related to
scrubber expenses and stated that those items would be again reviewed in
the 1996 ENEC review. On July 10, 1995 the companies filed a petition for
reconsideration related to the scrubber expenses.
The Virginia State Corporation Commission on March 9,
1995, issued an order in PE's rate case which authorized an increase in
revenues of about $3 million on an annual basis. PE had been collecting
higher rates, subject to refund, from its Virginia customers since
November 1994. A refund of revenues collected in excess of the amount
authorized was completed in May 1995, for which adequate reserves had been
provided.
The parties have agreed to settlements, subject to
Federal Energy Regulatory Commission (FERC) approval, in PE's FERC rate
case filing for wholesale customers, which resulted in an increase in
annual revenues under three-year contracts of about $2.3 million effective
on June 25, 1995. With these settlements, customers representing about
85% of the revenues from wholesale full service customers regulated by the
FERC who have the ability to obtain their electricity requirements from
other suppliers have agreed to remain as customers under contracts of from
three to seven years.
In the normal course of business, the subsidiaries are
subject to various contingencies and uncertainties relating to their
operations and construction programs, including cost recovery in the
regulatory process, laws, regulations and uncertainties related to
environmental matters, and legal actions.
As previously reported, the subsidiaries are currently
named as defendants along with multiple other defendants in 3,156 pending
asbestos cases involving multiple plaintiffs, including 815 new cases
filed in 1995 to date. While the cumulative number of claims appears to
be significant, previous cases have been settled for an amount
substantially less than the anticipated cost of defense. Also as
previously reported, the subsidiaries and approximately 875 others have
been identified by the Environmental Protection Agency as potentially
responsible parties in a Superfund site subject to cleanup. The
subsidiaries believe that provisions for liabilities and insurance
recoveries are such that final resolution of these matters will not have a
material effect on their financial position.
In March 1995, the FERC published a Notice of Proposed
Rulemaking (NOPR) that would mandate sweeping changes to promote increased
competition in the wholesale electric industry. The proposals would
require that utilities file nondiscriminatory open access transmission
tariffs and offer comparable transmission services to eligible third
parties. It also would allow utilities the opportunity to recover
stranded costs. The Company has submitted comments to the FERC.
On May 11, 1995, at the annual meeting of stockholders,
the Company announced that it was proceeding with a functional
reorganization. As a result of the reorganization and consolidation
efforts currently underway, staff reductions with possible future layoffs
appear to be inevitable.
On May 31, 1995, AYP Capital, Inc. and EUA Cogenex
Corporation, a subsidiary of Eastern Utilities Associates, signed a one-
year letter of agreement facilitating the formation of a joint venture
energy services company. The energy services company will promote energy-
efficient products among major
- 13 -
companies and institutions in Maryland, Ohio, Pennsylvania, Virginia, West
Virginia, and the District of Columbia. Industrial, commercial, and
institutional organizations will be targeted for the installation of new
or modified equipment to save energy. The joint enterprise will finance
the equipment used for energy reduction, and customers will pay for it
through sharing the benefits of lower energy bills.
In April 1995, AYP Capital, Inc. became a limited
partner in EnviroTech Investment Fund I Limited Partnership, a venture
capital fund to offer utility investors the opportunity to achieve an
attractive financial return on investments in energy and the environment.
The initial investment of $200,000 is expected to increase to a maximum
commitment of $5 million over the next several years.
- 14 -
ALLEGHENY POWER SYSTEM, INC.
Part II - Other Information to Form 10-Q
for Quarter Ended June 30, 1995
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
(a) Date and kind of meeting:
At the annual meeting of stockholders held on May 11,
1995, votes were taken for the election of directors to serve until the
next annual meeting of stockholders, for the approval of the appointment
of Price Waterhouse LLP as independent accountants, and for proposals to
approve the amendment of the Charter of the Company to eliminate
cumulative voting and preemptive rights. The total number of votes cast
was 94,145,448, with the following results:
Nominees for Director Votes For Votes Withheld Broker Non-Votes
Eleanor Baum 93,292,438 853,010 None
William L. Bennett 93,282,233 863,215 "
Klaus Bergman 93,341,421 804,027 "
Wendell F. Holland 92,952,788 1,192,660 "
Phillip E. Lint 92,993,123 1,152,325 "
Edward H. Malone 93,018,855 1,126,593 "
Frank A. Metz, Jr. 93,217,762 927,686 "
Alan J. Noia 93,333,881 811,567 "
Steven H. Rice 93,268,461 876,987 "
Gunnar E. Sarsten 93,334,910 810,538 "
Peter L. Shea 93,281,720 863,728 "
Broker
Votes For Votes Against Abstentions Non-Votes
Approval of Independent
Accountants 92,682,105 525,804 937,539 None
Approval of Elimination
of Cumulative Voting 63,761,912 15,404,613 1,664,834 13,314,089
Approval of Elimination
of Preemptive Rights 65,079,021 13,837,709 1,914,629 13,314,089
The stockholders did not approve proposals to amend the
Corporate Charter to eliminate provisions for cumulative voting in the
election of Directors and for preemptive rights of existing stockholders
to purchase additional shares of the Company's common stock because
approval by two-thirds of all shares entitled to vote to eliminate these
provisions was not achieved.
- 15 -
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 Financial Data Schedule.
(b) No reports on Form 8-K were filed on behalf of the
Company for the quarter ended June 30, 1995.
Signature
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
ALLEGHENY POWER SYSTEM, INC.
K. M. JONES
K. M. Jones, Vice President
(Chief Accounting Officer)
August 11, 1995