[Federal Register Volume 61, Number 246 (Friday, December 20, 1996)]
[Notices]
[Pages 67363-67364]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-32283]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35--26625]


Filings Under the Public Utility Holding Company Act of 1935, as 
Amended (``Act'')

December 13, 1996.
    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 January 6, 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.

AYP Capital, Inc., et al. (70-8951)

    AYP Capital, Inc. (``AYP''), a nonutility subsidiary company of 
Allegheny Power System, Inc. (``APS''), a registered holding company, 
both located at 10435 Downsville Pike, Hagerstown, Maryland 21720, have 
filed an application under sections 9(a) and 10 of the Act and rule 54 
thereunder.
    By order dated July 14, 1994 (HCAR No. 26085), APS was authorized, 
among other things, to organize and finance AYP to invest in companies: 
(1) Engaged in new technologies related to the core utility business of 
APS; and (2) that acquire and own exempt wholesale generators 
(``EWGs''). By subsequent order dated February 3, 1995 (HCAR No. 
26229), AYP was authorized to engage in the development, acquisition, 
construction, ownership and operation of EWGs and in development 
activities with respect to: (1) Qualifying cogeneration facilities and 
small power production facilities (``SPPs''); (2) non-qualifying 
cogeneration facilities, non-qualifying SPPs, and independent power 
production facilities (``IPPs'') located within the service territories 
of APS public utility subsidiary companies; (3) EWGs; (4) companies 
involved in new technologies related to the core business of APS; and 
(5) foreign utility companies (``FUCOS''). APS was also authorized to 
increase its investment in AYP from $500,000 to $3 million.
    By order dated October 27, 1995 (HCAR No. 26401) (``October 
Order''), the Commission authorized AYP or a special-purpose subsidiary 
(``NEWCO'') to provide certain enumerated energy management services 
(``EMS'') and demand-side management services (``DSM'') to non-
associated customers at market prices and to associated companies at 
cost,\1\ and AYP to engage

[[Page 67364]]

in activities relating to the development, acquisition, ownership, 
construction and operation of FUCOS; and to invest in FUCOs through 
various types of investment vehicles, including limited partnerships or 
other types of funds, the sole objective of which is to make 
investments in one or more FUCOs. The October Order also authorized: 
(1) APS to invest directly and indirectly in AYP and NEWCOs up to an 
aggregate of $100 million through December 31, 1999 through loans to 
finance activities related to EMS and DSM services, accounts 
receivable, real estate, FUCOs and EWGs (``Approved Activities''); (2) 
APS and AYP to acquire the securities of NEWCOs that own FUCOs or EWGS 
(``Project NEWCOs''); (3) AYP or a NEWCO to factor the accounts 
receivable of associate companies and of nonassociate companies whose 
primary revenues are derived from the sale of electric power; and (4) 
AYP or a NEWCO, as agent for APS system companies, to manage the real 
estate portfolio of APS and its associate companies, to market excess 
or unwanted real estate and to facilitate the exploitation of resources 
contained on or in real estate.
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    \1\ The EMS services authorized included: (1) Identification of 
energy cost reduction and efficiency opportunities; (2) design of 
facility and process modifications to realize such efficiencies; (3) 
management of or the direct construction and installation of energy 
conservation and equipment; (4) training of client personnel in 
operation of equipment; (5) maintenance of energy systems; (6) 
design, management, construction and installation of energy 
management systems and structures; (7) performance contracts; (8) 
identifying energy conservation or efficiency programs; (9) system 
commissioning; (10) reporting system results; and (11) other similar 
or related energy management activities. The DSM services authorized 
included: (i) design of energy conservation programs; (ii) 
implementation of energy conservation programs; (iii) performance 
contracts for DSM work; (iv) monitoring and evaluating DSM programs; 
and (v) other similar or related DSM activities.
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    AYP, the NEWCOs, and the Project NEWCOs were authorized to obtain 
loans from banks or issue other recourse obligations which could be 
guaranteed by APS or AYP. Such third-party borrowings by AYP, the 
NEWCOs and the Project NEWCOs that are guaranteed by APS or AYP are 
subject to the $100 million investment authority. Through December 31, 
1999, APS and AYP were authorized to guarantee or act as surety and 
bonds, indebtedness and performance and other obligations issued or 
undertaken by AYP, the NEWCOs or the Project NEWCOs subject to the $100 
million investment authority.
    By order dated October 9, 1996 (HCAR No. 26590), the Commission 
authorized APS and AYP to increase the limit on loans and guarantees 
from $100 million to $300 million for all Approved Activities.
    Applicants now request authority, through December 31, 1999, to 
allow AYP and one or more special purpose subsidiaries 
(``NEWMARKETCOs'') to engage in marketing, selling, acquisition and 
installation of a new type of heat pump to and for: (1) Nonassociated 
industrial, commercial and residential customers located within the 
five states in which APS's operating subsidiaries provide electric 
service and (2) persons and businesses located in Washington, D.C. AYP 
proposes to finance the above-mentioned activities up to an aggregate 
principal amount of five hundred thousands dollars ($500,000).
    AYP or the NEWMARKETCO will contract with a representative of the 
heat pump's manufacturer for exclusive distribution rights. The heat 
pump is currently installed primarily in the southern United States. 
AYP or the NEWMARKETCO proposes to serve as a distributor and provide a 
sales force in an exclusive territory that will include Maryland, Ohio, 
Pennsylvania, Virginia, West Virginia, and Washington, D.C. Earnings 
are projected to be approximately 25% of total revenues. Current 
analysis estimates profits at approximately $150,000 in the first year 
of the project, rising steadily to approximately $600,000 in year four. 
It is estimated that two full-time employees will be necessary to 
handle shipping, logistics, billing, reporting, and general 
administration (one full-time office associate and two staff members 
sharing responsibility).
    The applicants propose that Allegheny Power Service Corporation 
(``APSC'') will assist AYP or NEWMARKETCO with marketing, customer 
billing, accounting or other energy-related services. It is anticipated 
that any services provided by APSC can be done with current staff and 
that the number of APSC personnel involved will not be of such 
magnitude that utility services would in any way be impaired. All 
services provided by APSC to AYP or NEWMARKETCO will be in accordance 
with the cost standard established in section 13(b) of the Act and 
rules 90 and 91 thereunder.

Appalachian Power Company (70-8957)

    Appalachian Power Company (``APCO''), 1 Riverside Plaza, Columbus, 
Ohio 43215, an electric utility subsidiary of American Electric Power 
Company, a registered holding company, has filed a declaration under 
section 6(a) of the Act.
    APCO is party to a utility mortgage (the ``Mortgage'') dated 
December 1, 1940 with Bankers Trust Company (the ``Trustee''). Under 
Section 40 of the Mortgage, APCO covenants that it will ``make or cause 
to be made such expenditures by means of repairs, maintenance, 
substitutions of property or otherwise as shall be necessary to 
maintain, preserve and keep the mortgaged property to good repair, 
working order and condition as an operating system or systems * * *.''
    In furtherance of this maintenance obligation, APCO annually must 
furnish the Trustee with a treasurer's maintenance certificate. Part I 
of the maintenance certificate requires that the maintenance obligation 
be calculated on a 15% of base operating revenue test. Part II of the 
maintenance certificate supplements Part I by requiring that the 
maintenance obligation be calculated on the basis of a percentage of 
depreciable property, currently 2.25% (the ``Applicable Percentage'').
    In a previous order dated May 7, 1979 (HCAR No. 21040), the 
Commission authorized APCO, among other things, to amend its Mortgage 
to facilitate (by removing the requirement of prior bondholder 
approval) the future deletion of Part I of the two-part maintenance 
certificate requirement, and, upon such deletion, to change the 
Applicable Percentage specified in Part II of the maintenance 
certificate requirement from 2.25% to 2.90%, ``unless a different 
percentage is authorized or approved by [the] Commission.'' The order 
specified that the contemplated future amendment of the Mortgage to 
delete Part I of the maintenance certificate requirement and change the 
Applicable Percentage in Part II from 2.25% to 2.90% could not take 
place as long as bonds issued under the original two-part maintenance 
certificate requirement were outstanding. Since no such bonds remain 
outstanding, APCO now proposes to delete Part I of the maintenance 
certificate requirement, but seeks authorization to retain the 2.25% 
Applicable Percentage in Part II instead of increasing it to 2.90%.
    Applicant states that the current 2.25% Applicable Percentage is a 
reasonable annual requirement for the replacement of the book cost of 
depreciable mortgaged property and that retention of the 2.25% 
Applicable Percentage will benefit the holders of outstanding bonds by 
not increasing the amount of their outstanding bonds subject to 
redemption at par, thus preserving the holders' anticipated interest 
income over the life of the bonds.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 96-32283 Filed 12-19-96; 8:45 am]
BILLING CODE 8010-01-M