[Federal Register Volume 70, Number 119 (Wednesday, June 22, 2005)]
[Notices]
[Pages 36217-36218]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-3218]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27983]


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

June 15, 2005.
    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 amendment(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 July 11, 2005, 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 July 11, 2005, 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. (70-10270)

    Allegheny Energy, Inc. (``Allegheny''), a registered holding 
company, its wholly-owned public-utility company subsidiary, 
Monongahela Power Company (``Monongahela''), and its system service 
company, Allegheny Energy Service Corporation (``AESC'' and, together 
with Allegheny and Monongahela, ``Applicants''), 800 Cabin Hill Drive, 
Greensburg, Pennsylvania 15601, have filed an application-declaration 
(``Application'') under sections 12(c), 12(d), and 13 of the Act and 
rules 44, 46, and 54 under the Act.
    The Applicants seek authority for Monongahela to sell to 
Mountaineer Gas Holdings Limited Partnership (``Buyer''), a West 
Virginia limited partnership, all of the common stock of Mountaineer 
Gas Company (``Mountaineer''), a gas utility company under the Act. In 
addition, Applicants seek authority for Monongahela to sell to the 
Buyer certain utility assets (``Related Assets'') \1\ it currently owns 
directly and that are used to serve natural gas customers. The sale by 
Monongahela of the common stock of Mountaineer and the Related Assets 
are referred to as the ``Transaction.'' Monongahela also requests 
authority to dividend the proceeds from the Transaction to Allegheny 
out of unearned surplus. Finally, Allegheny requests authority for AESC 
\2\ to perform

[[Page 36218]]

certain services for Mountaineer following completion of the 
Transaction.
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    \1\ These assets include gas distribution pipelines and 
appurtenant facilities and are listed in Exhibit B of the 
Application.
    \2\ AESC is a wholly owned subsidiary of Allegheny and serves as 
a service company for the holding company. AESC is reimbursed by 
Allegheny and its subsidiaries at cost for services it provides.
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    Mountaineer is a natural gas distribution company that serves 
approximately 205,000 retail natural gas customers in West Virginia. It 
owns approximately 4,000 miles of natural gas distribution pipelines. 
Mountaineer's wholly-owned subsidiary Mountaineer Gas Services, Inc. 
(``MGS'') operates natural gas producing properties, gas gathering 
facilities, and intra-state transmission pipelines. It also engages in 
the sale and marketing of natural gas in the Appalachian basin. MGS 
owns more than 300 natural gas wells and has a net revenue interest in, 
but does not operate, an additional approximately 100 wells. 
Mountaineer is regulated by the West Virginia Public Service 
Commission. Allegheny contributed $162.5 million of equity into 
Monongahela when Monongahela purchased Mountaineer in 2000.
    The Buyer is a limited partnership comprised of IGS Utilities LLC, 
IGS Holdings LLC (``IGS Entities'') and affiliates of ArcLight Capital 
Partners, LLC (``ArcLight''). The Buyer was formed for the purpose of 
acquiring Mountaineer's common stock and the Related Assets. The 
principals of the IGS Entities have been involved in the natural gas 
industry since the mid-1980s. ArcLight is a privately held energy 
infrastructure investment firm with more than $2.5 billion under 
management. Following completion of the Transaction, Mountaineer will 
become a wholly-owned subsidiary of the Buyer. It is the Applicants' 
understanding that the Buyer will request exemption under section 
3(a)(1) under the Act and that ArcLight will seek relief under section 
2(a)(7) of the Act.
    On August 4, 2004, Monongahela and the Buyer executed an 
acquisition agreement (``Acquisition Agreement'') under which 
Monongahela agreed to sell to the Buyer all of Mountaineer's common 
stock, the Related Assets, and other assets that do not constitute 
utility assets under the Act but that are integral to the operation of 
Mountaineer and the Related Assets. The purchase price for 
Mountaineer's common stock and the Related Assets was the result of 
arm's-length bargaining and will be determined according to a formula 
set forth in the Acquisition Agreement. At the time the Acquisition 
Agreement was executed, the price was estimated to be $141 million in 
cash and $87 million in assumed debt, subject to certain closing 
adjustments. In addition, the Buyer will settle certain inter-company 
accounts over a three-year period. The current estimate of these 
amounts is approximately $5 million. Upon closing of the Transaction, 
Mountaineer and MGS will be wholly owned subsidiaries of the Buyer, 
which will operate Mountaineer as a stand-alone gas utility based in 
Charleston, West Virginia. Mountaineer will own the Related Assets. 
Monongahela proposes to dividend the proceeds from the Transaction to 
Allegheny out of unearned surplus. The proceeds will be used to reduce 
debt.
    In connection with the Transaction, AESC and the Buyer propose to 
enter into a transition services agreement (``TSA''). Under the TSA, 
AESC would perform various services for the Buyer. These services fall 
into three broad categories: (i) Financial accounting, (ii) technology 
services, and (iii) call center and billing services. AESC will provide 
financial accounting and technology services for a period up to 12 
months from the date the Transaction closes. AESC will provide call 
center and billing services for succeeding one year terms beginning on 
the date the Transaction closes and continuing until terminated by 
either party under the terms of the TSA. Allegheny seeks Commission 
authorization for AESC to provide these services.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-3218 Filed 6-21-05; 8:45 am]
BILLING CODE 8010-01-P