(As filed with the Securities and Exchange Commission on November 25, 2003)
File No. 70-10122
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________________________________________________________
POS AMC
POST-EFFECTIVE AMENDMENT NO. 1
(Amendment No. 3)
to
FORM U-1
APPLICATION/DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
FirstEnergy Corp.
Ohio Edison Company and its Subsidiaries
The Cleveland Electric Illuminating Company and its Subsidiaries
The Toledo Edison Company and its Subsidiaries
Pennsylvania Power Company
American Transmission Systems, Incorporated
FE Acquisition Corp. and its Subsidiaries
FirstEnergy Properties, Inc. and its Subsidiaries
FirstEnergy Facilities Services Group, LLC and its Subsidiaries
FE Holdings, LLC
FELHC, Inc.
FirstEnergy Securities Transfer Company
FirstEnergy Nuclear Operating Company
FirstEnergy Solutions Corp. and its Subsidiaries
FirstEnergy Ventures Corp. and its Subsidiaries
Marbel Energy Corporation and its Subsidiaries
Centerior Indemnity Trust
Centerior Service Company
FirstEnergy Service Company
Jersey Central Power & Light Company and its Subsidiaries
Pennsylvania Electric Company and its Subsidiaries
Metropolitan Edison Company and its Subsidiaries
York Haven Power Company
Waverly Electric Power & Light Company
GPU Capital, Inc. and its Subsidiaries
GPU Electric, Inc. and its Subsidiaries
GPU Diversified Holdings, LLC and its Subsidiaries
GPU Power, Inc. and its Subsidiaries
GPU Telcom Services, Inc. and its Subsidiaries
GPU Nuclear, Inc.
MYR Group, Inc. and its Subsidiaries
76 South Main Street
Akron, Ohio 44308
(Names of companies filing this statement and
address of principal executive offices)
___________________________________________________________________
FIRSTENERGY CORP.
(Name of top registered holding company parent of applicant)
___________________________________________________________________
Leila L. Vespoli Douglas E. Davidson, Esq.
Senior Vice President And Thelen Reid & Priest LLP
General Counsel 875 Third Avenue
FirstEnergy Corp. New York, New York 10022
76 South Main Street
Akron, Ohio 44308
(Names and addresses of agents for service)
___________________________________________________________________
2
ITEM 1. DESCRIPTION OF PROPOSED TRANSACTION.
-----------------------------------
1.1 Background. By order dated June 30, 2003 in this proceeding
(Holding Co. Act Release No. 27694) (the "Prior Order"), the Commission
authorized FirstEnergy Corp. ("FirstEnergy"), a registered holding company, and
its subsidiary companies ("Subsidiaries") to engage in a program of external
financing, intrasystem financing, and other related transactions for the period
through December 31, 2005 (the "Authorization Period"). Among other specific
approvals granted, the Commission authorized FirstEnergy to provide guarantees
and other forms of credit support ("FirstEnergy Guarantees") with respect to
obligations of its Subsidiaries in an aggregate amount that together with
guarantees and other forms of credit support ("Non-Utility Subsidiary
Guarantees") provided by its non-utility subsidiaries ("Non-Utility
Subsidiaries") shall not exceed $4.0 billion outstanding at any one time,
including any guarantees that are exempt under Rule 40 and guarantees that were
outstanding on the effective date of the Prior Order. FirstEnergy also requested
authorization to issue guarantees with respect to non-affiliated third-party
obligations in the ordinary course of business, subject to the proposed $4.0
billion overall limitation on guarantees, but requested that the Commission
reserve jurisdiction over such third-party guarantees.
In accordance with the foregoing request, the next to last paragraph of the
Prior Order provides, in relevant part, as follows:
IT IS FURTHER ORDERED that jurisdiction is reserved, pending completion of
the record, over: . . . (4) the issuance by FirstEnergy of guarantees on
behalf of its Subsidiaries for the benefit of non-affiliated third parties;
...
1.2 Restatement of Proposal Concerning FirstEnergy Guarantees. In
order to correct an unintended ambiguity, as it relates to FirstEnergy
Guarantees, FirstEnergy hereby amends and restates Item 1.10.1 of the
Application/Declaration in this proceeding, as amended and restated by Amendment
No. 2, filed June 30, 2003, to read as follows:
1.10.1 FirstEnergy Guarantees. FirstEnergy requests authorization to
provide FirstEnergy Guarantees with respect to the obligations of its
Subsidiaries as may be appropriate or necessary to enable such Subsidiaries
to carry on in the ordinary course of their respective businesses, and to
provide guarantees of non-affiliated third-party obligations in the
ordinary course of FirstEnergy's business,/1/ in an aggregate amount which,
together with Non-Utility Subsidiary Guarantees (defined below), shall not
exceed $4.0 billion outstanding at any one time (including obligations
exempt pursuant to Rule 45 and guarantees and other forms of credit support
----------
1 Guarantees of third-party obligations in the ordinary course of business
were approved in Exelon Corporation, Holding Co. Act Release No. 27266
(Nov. 2, 2000). The Commission reserved jurisdiction over a similar
proposal by FirstEnergy in the order approving the merger of FirstEnergy
and GPU, Inc. (Holding Co. Act Release No. 27459, dated October 29,
2001)(the "Merger Order"). FirstEnergy requests that the Commission
continue to reserve jurisdiction over the issuance of guarantees of
non-affiliated third-party obligations in the ordinary course of
FirstEnergy's business pending completion of the record.
3
provided by FirstEnergy or any Non-Utility Subsidiary that are outstanding
on the effective date of the order issued in this proceeding).
As part of normal business activities, FirstEnergy enters into various
agreements on behalf of its Subsidiaries to provide financial or
performance assurances to third parties. Such agreements include contract
guarantees, surety bonds and rating-contingent collateralization
provisions. As of March 31, 2003, the maximum potential future payments
under outstanding guarantees and other assurances totaled $960.2 million.
FirstEnergy Guarantees may be provided from time to time with respect
to obligations of Subsidiaries that are not capable of exact
quantification. In such cases, FirstEnergy will determine the exposure
under such guarantee for purposes of measuring compliance with the $4.0
billion limitation by appropriate means including estimation of exposure
based on loss experience or projected potential payment amounts. If
appropriate, such estimates will be made in accordance with GAAP. Such
estimation will be reevaluated periodically. Any FirstEnergy Guarantees
shall also be subject to the limitations of Rule 53(a)(1) or Rule 58(a)(1),
as applicable. FirstEnergy may charge each Subsidiary a fee for each
guarantee provided on its behalf that is not more than that obtainable by
the beneficiary of the guarantee from third parties. Any guarantees or
other credit support arrangements outstanding at the end of the
Authorization Period will remain in place and expire or terminate in
accordance with their terms.
1.3 Relief Requested.FirstEnergy requests that the Commission issue a
supplemental order in this proceeding to eliminate the unintended ambiguity in
the next to last paragraph of the Prior Order, so that such paragraph will read,
in relevant part, as follows:
IT IS FURTHER ORDERED that jurisdiction is reserved, pending completion of
the record, over: . . . (4) the issuance by FirstEnergy of guarantees of
non-affiliated third-party obligations in the ordinary course of
FirstEnergy's business; ...
ITEM 2. FEES, COMMISSIONS AND EXPENSES.
------------------------------
The additional fees, commissions, and expenses incurred or to be
incurred in connection with this post-effective amendment are estimated not to
exceed $2,000.
ITEM 3. APPLICABLE STATUTORY PROVISIONS.
-------------------------------
Item 3.2 of the Application/Declaration is amended and restated in its
entirety to read as follows:
4
The proposed transactions are also subject to the requirements of
Rules 53 and Rule 54. Under Rule 53(a), the Commission shall not make
certain specified findings under Sections 7 and 12 in connection with a
proposal by a holding company to issue securities for the purpose of
acquiring the securities of or other interest in an "exempt wholesale
generator" ("EWG"), or to guarantee the securities of an EWG, if each of
the conditions in paragraphs (a)(1) through (a)(4) thereof are met,
provided that none of the conditions specified in paragraphs (b)(1) through
(b)(3) of Rule 53 exists. Rule 54 provides that the Commission shall not
consider the effect of the capitalization or earnings of subsidiaries of a
registered holding company that are EWGs or "foreign utility companies"
("FUCOs") in determining whether to approve other transactions if Rule
53(a), (b) and (c) are satisfied.
FirstEnergy currently meets all of the conditions of Rule 53(a),
except for clause (1). In the Merger Order, the Commission, among other
things, authorized FirstEnergy to invest in EWGs and FUCOs so that
FirstEnergy's "aggregate investment," as defined in Rule 53(a)(1), in EWGs
and FUCOs does not exceed $5 billion, which $5 billion amount is greater
than the amount which would be permitted by clause (1) of Rule 53(a) which,
based on FirstEnergy's "consolidated retained earning," also as defined in
Rule 53(a)(1), of $1.6 billion as of September 30, 2003, would be $800
million. The Merger Order, as modified by the Prior Order, also specifies
that this $5 billion amount may include amounts invested in EWGs and FUCOs
by FirstEnergy and GPU at the time of the Merger Order ("Current
Investments") and amounts relating to possible transfers to EWGs of certain
generating facilities owned by certain of FirstEnergy's operating utilities
("GenCo Investments"). FirstEnergy has made the commitment that through
December 31, 2005, its aggregate investment in EWGs and FUCOs other than
the Current Investments and GenCo Investments ("Other Investments") will
not exceed $1.5 billion (the "Modified Rule 53 Test"). FirstEnergy requests
that the Commission continue to reserve jurisdiction over Other Investments
that exceed such $1.5 billion amount.
As of September 30, 2003, and on the same basis as set forth in the
Merger Order, FirstEnergy's "aggregate investment" in EWGs and FUCOs was
approximately $1.06 billion,/2/ an amount significantly below the $5
billion amount authorized in the Merger Order, as modified by the Prior
Order. Additionally, as of September 30, 2003, "consolidated retained
earnings" were $1.6 billion. By way of comparison, FirstEnergy's
consolidated retained earnings as of December 31, 2001 were $1.52 billion.
In any event, even taking into account the capitalization of and
earnings from EWGs and FUCOs in which FirstEnergy currently has an
interest, there would be no basis for the Commission to withhold approval
of the transactions proposed herein. With respect to capitalization, since
the date of the Merger Order, there has been no material adverse impact on
FirstEnergy's consolidated capitalization resulting from FirstEnergy's
----------
2 This $1.1 billion amount represents Current Investments only. As of
September 30, 2003, FirstEnergy had no GenCo Investments.
5
investments in EWGs and FUCOs. As of September 30, 2003, FirstEnergy's
consolidated capitalization consisted of 38.7% common equity, 1.7%
cumulative preferred stock, 1.3% subsidiary - obligated mandatorily
redeemable preferred securities, 57.1% long-term debt and 1.2% notes
payable. As of December 31, 2001, those ratios were as follows: 30.3%
common equity, 3.1% cumulative preferred stock, 2.2% subsidiary-obligated
mandatorily redeemable preferred securities, 60.9% long term debt and 3.5%
notes payable. Additionally, the proposed transactions will not have any
material impact on FirstEnergy's capitalization. Further, since the date of
the Merger Order, FirstEnergy's investments in EWGs and FUCOs have
contributed positively to its level of earnings, other than for the
negative impact on earnings due to FirstEnergy's writedowns of its
investments in Avon Energy Partners Holdings ("Avon") and GPU Empresa
Distribuidora Electrica Regional S.A. ("Emdersa")./3/
Further, since the date of the Merger Order, and, after taking into
account the effects of the Merger, there has been no material change in
FirstEnergy's level of earnings from EWGs and FUCOs.
The Utility Subsidiaries remain financially sound companies as
indicated by their investment grade ratings from the nationally recognized
rating agencies for their senior unsecured debt. The following chart
includes a breakdown of the senior, unsecured credit ratings for those
Utility Subsidiaries that have ratings:
----------
3 At the time of the Merger Order, FirstEnergy identified certain former GPU
EWG and FUCO investments for divestiture within one year. Among those
identified were Avon, a holding company for Midlands Electricity plc, an
electric distribution business in the United Kingdom and Emdersa and
affiliates, an electric distribution business in Argentina. In May 2002,
FirstEnergy sold 79.9% of its interest in Avon, and in the fourth quarter
of 2002, recorded a $50 million charge ($32.5 million net of tax) to reduce
the carrying value of its remaining 20.1% interest. Additionally,
FirstEnergy did not reach a definitive agreement to sell Emdersa as of
December 31, 2002, and therefore, the Emdersa assets could no longer be
treated as "assets pending sale" on the FirstEnergy consolidated balance
sheets. On November 1, 2002, FirstEnergy began consolidating the results of
Emdersa's operations in its financial statements. In the fourth quarter of
2002, FirstEnergy recorded a one-time, after-tax charge of $88.8 million
(comprised of $104.1 million in currency transaction losses arising
principally from U.S. dollar denominated debt, offset by $15.3 million of
operating income). In addition to the currency transaction losses,
FirstEnergy recognized a currency translation adjustment in other
comprehensive income of $91.5 million as of December 31, 2002. These
accounting charges, in the aggregate, resulted in a $212.8 million decrease
in FirstEnergy's consolidated capitalization of $21.55 billion as of
December 31, 2002, which amount includes short-term borrowings.
6
Subsidiary Standard & Poors/4/ Moody's/5/ Fitch/6/
Ohio Edison BBB- Baa2 ---
Cleveland Electric BBB- Baa3 ---
Toledo Edison BBB- Baa3 BB
Penn Power BBB- Baa2 ---
JCP&L BBB --- ---
Met-Ed BBB --- ---
Penelec BBB A2 BBB+
FirstEnergy satisfies all of the other conditions of paragraphs (a)
and (b) of Rule 53. With respect to Rule 53(a)(2), FirstEnergy maintains
books and records in conformity with, and otherwise adheres to, the
requirements thereof. With respect to Rule 53(a)(3), no more than 2% of the
employees of FirstEnergy's domestic public utility companies render
services, at any one time, directly or indirectly, to EWGs or FUCOs in
which FirstEnergy directly or indirectly holds an interest. With respect to
Rule 53(a)(4), FirstEnergy will continue to provide a copy of each
application and certificate relating to EWGs and FUCOs and relevant
portions of its Form U5S to each regulator referred to therein, and will
otherwise comply with the requirements thereof concerning the furnishing of
information. With respect to Rule 53(b), none of the circumstances
enumerated in subparagraphs (1), (2) and (3) thereunder have occurred.
ITEM 4. REGULATORY APPROVALS.
--------------------
(No change)
ITEM 5. PROCEDURE.
---------
FirstEnergy requests that the Commission issue a supplemental order in this
proceeding to correct the Prior Order, in the manner proposed in Item 1.3 above,
as soon as practicable.
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS.
---------------------------------
The following additional financial statements are provided herewith:
FS-17 FirstEnergy Consolidated Balance Sheets as of June 30, 2003, and
Consolidated Statements of Income, Statement of Retained Earnings,
and Consolidated Statements of Cash Flows for the six months ended
June 30, 2003. (Incorporated by reference to FirstEnergy Form 10-Q
for the period ended June 30, 2003) (File No. 333-21011)
----------
4 Standard & Poor's Rating Services
5 Moody's Investors Service, Inc.
6 Fitch, Inc.
7
ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS.
---------------------------------------
(No change)
8
SIGNATURES
Pursuant to the requirements of the 1935 Act, the undersigned companies
have duly caused this post-effective amendment be signed on their behalves by
the undersigned thereunto duly authorized.
FirstEnergy Corp.
Ohio Edison Company
The Cleveland Electric Illuminating Company
The Toledo Edison Company
Pennsylvania Power Company
American Transmission Systems, Incorporated
FE Acquisition Corp.
FirstEnergy Properties, Inc.
FirstEnergy Facilities Services Group, LLC
FE Holdings, LLC
FELHC, Inc.
FirstEnergy Securities Transfer Company
FirstEnergy Nuclear Operating Company
FirstEnergy Solutions Corp.
FirstEnergy Ventures Corp.
Marbel Energy Corporation
Centerior Indemnity Trust
Centerior Service Company
FirstEnergy Service Company
Jersey Central Power & Light Company
Pennsylvania Electric Company
Metropolitan Edison Company
York Haven Power Company
Waverly Electric Power & Light Company
GPU Capital, Inc.
GPU Electric, Inc.
GPU Diversified Holdings, LLC
GPU Power, Inc.
GPU Telcom Services, Inc.
GPU Nuclear, Inc.
MYR Group, Inc.
By: /s/ Harvey L. Wagner
----------------
Name: Harvey L. Wagner
Title: Vice President and Controller
Date: November 25, 2003
9