Download 8 - Maryland Public Service Commission

BEFORE THE
PUBLIC SERVICE COMMISSION
OF MARYLAND
IN THE MATTER OF THE APPLICATION
OF THE POTOMAC EDISON COMPANY,
DBA ALLEGHENY POWER FOR AUTHORITY
TO ISSUE UP TO $200 MILLION OF DEBT SECURITIES
Case No. 8775
MOTION TO REVISE AND EXTEND AUTHORITY TO ISSUE SECURITIES
Now comes The Potomac Edison Company, dba Allegheny Power (“Applicant”), a
Maryland and Virginia corporation and respectfully shows:
1.
Applicant is a public service company and the primary supplier of electricity to portions
of the states of Maryland and West Virginia and the Commonwealth of Virginia..
2.
By Order No. 73776 of the Public Service Commission of Maryland
(“ the
Commission”) in the above styled matter dated November 5, 1999, Applicant was
granted authority to issue, prior to December 31, 2002, up to $200 million in the
aggregate principal amount of first mortgage bonds (the New Bonds), secured or
unsecured medium term notes (the Notes), unsecured debentures (the Debentures),
pollution control or solid waste disposal revenue notes (the Revenue Notes), or other debt
securities, or any combination thereof, in one or more series (collectively the Debt
Securities), the total of said Debt Securities to be issued not to exceed $200 million.
3.
Pursuant to said authority Applicant has issued the following securities:
a)
$30 million of Pleasants County, West Virginia, 4.70% pollution control revenue
notes 1998 Series D due November 1, 2007;
b)
$3.2 million of Greene County, Pennsylvania, 4.35% pollution control notes 1998
Series B due February 1, 2002; and
c)
4.
$100 million 5% notes 2001 due November 1, 2006.
After issuance of the above securities, the authority remaining under the Commission’s
order is $66.8 million.
5.
As a part of the Petition originally filed in this matter by the Applicant and adopted by
the Commission in its order recited above, Applicant provided that the “interest rate and
the price to be paid to Applicant may be fixed or floating and will be determined at the
time of issuance. Applicant will not, without further order of the Commission, proceed to
issue and sell Debt Securities with interest rates greater than the following:
a)
for the New Bonds and the Notes with a maturity of ten years or less, not to
exceed 125 basis points above the yield to maturity on United States Treasury
Notes of comparable maturity at the time of pricing;
b)
for the New Bonds and Notes with a maturity of more than ten years, not in
excess of 200 basis points above the yield to maturity on United States Treasury
Bonds of comparable maturity at the time of pricing;
c)
for the Debentures with a maturity of ten years or less, not to exceed 175 basis
points above the yield to maturity on Untied States Treasury Notes of comparable
maturity at the time of pricing;
d)
for the Debentures with a maturity of more than ten years, not in excess of 225
basis points above the yield to maturity on United States Treasury Bonds of
comparable maturity at the time of pricing; and
e)
for the Revenue Notes, not greater than the interest rates on the pollution control
or solid waste disposal revenue notes they replace.”
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6.
Applicant hereby moves the Commission to extend the time for issuing any remaining
authorized debt through December 31, 2003 and further requests that the interest rate
limitations be amended as follows:
a)
for the New Bonds and the Notes with a maturity of ten years or less, not to
exceed 525 basis points above the yield to maturity on United States Treasury
Notes of comparable maturity at the time of pricing;
b)
for the New Bonds and Notes with a maturity of more than ten years, not to
exceed 750 basis points above the yield to maturity on United States Treasury
Bonds of comparable maturity at the time of pricing;
c)
for the Debentures with a maturity of ten years or less, not to exceed 750 basis
points above the yield to maturity on Untied States Treasury Notes of comparable
maturity at the time of pricing; and
d)
for the Debentures with a maturity of more than ten years, not in excess of 900
basis points above the yield to maturity on United States Treasury Bonds of
comparable maturity at the time of pricing.
7.
As reasons for the requested increase in interest rate limitations, Applicant states as
follows:
a)
recent rating reductions of Applicant’s Debt Securities make an increase of the
basis point spread over United States Treasury Notes necessary if Applicant is to
raise capital in the future; and
b)
record low United States Treasury Note rates have also widened the basis point
spread over United States Treasury Notes demanded by investors
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8.
Additional time is requested through December 31, 2003 to facilitate the issuance of
additional Debt Securities. The shelf registration with the Securities and Exchange
Commission for this debt financing remains in effect and additional time through the end
of next year aill allow Applicant the flexibility to accomplish this debt financing in the
most efficient manner.
9.
To the extent that Debt Securities are issued under this authority, as amended, prior to
December 31, 2003, the proceeds will be used for the purposes authorized by the
Commission’s November 5, 1999 order in this matter.
Respectfully submitted,
The Potomac Edison Company
dba Allegheny Power
By:_____________________________
Richard J. Gagliardi
Vice President
Counsel:
____________________
Philip J. Bray, Esq.
Kathy L. Mitchell, Esq.
Allegheny Power .
10435 Downsville Pike
Hagerstown, MD 21740-1766
(301) 790-6283
Dated: November __, 2002
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