(As filed with the Securities and Exchange Commission on January 21, 2004)
File No. 70-[_____]
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM U-1
APPLICATION/DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Metropolitan Edison Company
Pennsylvania Electric Company
Pennsylvania Power Company
c/o FirstEnergy Corp.
76 South Main Street
Akron, Ohio 44308
(Names of companies filing this statement and
address of principal executive offices)
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FIRSTENERGY CORP.
(Name of top registered holding company parent of applicants)
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Leila L. Vespoli, Senior Vice President Douglas E. Davidson, Esq.
and General Counsel Thelen Reid & Priest LLP
FirstEnergy Corp. 875 Third Avenue
76 South Main Street New York, New York 10022
Akron, Ohio 44308
(Names and addresses of agents for service)
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ITEM 1. DESCRIPTION OF PROPOSED TRANSACTION.
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1.1 Introduction. Metropolitan Edison Company ("Met-Ed") and
Pennsylvania Electric Company ("Penelec"), each of which is a direct
wholly-owned public-utility subsidiary of FirstEnergy Corp. ("FirstEnergy"), a
registered holding company, and Pennsylvania Power Company ("Penn Power"), an
indirect wholly-owned public-utility subsidiary of FirstEnergy,/1/ are filing
this Application/Declaration pursuant to Sections 6(a), 7, 9(a)(1), 10 and 12(f)
of the Public Utility Holding Company Act of 1935, as amended (the "Act"), to
seek authorization to form and acquire all of the membership interests in
separate Delaware limited liability companies to which Met-Ed, Penelec and Penn
Power will sell their respective customer accounts receivables. Met-Ed, Penelec
and Penn Power are referred to herein individually as an "Applicant" and
collectively as the "Applicants."
The Applicants are FirstEnergy's principal operating public-utility
subsidiaries in Pennsylvania. Met-Ed provides electric transmission and
distribution services to approximately 495,000 customers in a 3,300 square-mile
area of eastern and south central Pennsylvania. Penelec provides electric
transmission and distribution services to approximately 580,000 customers in a
17,600 square-mile area of western, northern and south central Pennsylvania.
Penn Power serves approximately 138,000 customers in a 1,100 square-mile area of
western Pennsylvania.
As of September 30, 2003, the components of capitalization (dollars in
thousands) of each of three Applicants was as follows:
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1 Penn Power is direct wholly-owned subsidiary of Ohio Edison Company, which,
in turn, is a direct wholly-owned subsidiary of FirstEnergy.
MET-ED PENELEC PENN POWER
------------------------ --------------- ------------ --------------- ------------ ------------- ------------
COMMON EQUITY $ 1,295,781 63.08% $ 1,291,461 67.29% $ 204,260 42.85%
------------------------ --------------- ------------ --------------- ------------ ------------- ------------
PREFERRED STOCK $ - 0% $ - 0% $ 39,105 8.20%
------------------------ --------------- ------------ --------------- ------------ ------------- ------------
LONG-TERM DEBT * $ 702,140 34.18% $ 562,055 29.29% $ 225,062 47.21%
------------------------ --------------- ------------ --------------- ------------ ------------- ------------
SHORT-TERM DEBT $ 56,256 2.74% $ 65,720 3.42% $ 8,290 1.74%
------------------------ --------------- ------------ --------------- ------------ ------------- ------------
TOTAL CAPITALIZATION $ 2,054,177 100.00% $ 1,919,236 100.00% $ 476,717 100.00%
------------------------ --------------- ------------ --------------- ------------ ------------- ------------
* Includes preferred securities subject to mandatory redemption and current
portion of long-term debt.
1.2 The Special Purpose Entities. Each Applicant requests authorization
to form and acquire all of the equity securities of a special purpose entity
(each an "SPE" and collectively the "SPEs"), to which each Applicant will sell
its customer accounts receivable ("Receivables"). Each of the SPEs will be
organized under Delaware law as a single-member limited liability company. It
will have nominal capital and will conduct no business operations or own any
assets other than the Receivables purchased from its parent. The purpose in
forming the SPEs is to isolate the Receivables from the Applicants, which have
originated them, such that, pursuant to Financial Accounting Standards Board
Statement No. 140 ("FASB 140"),/2/ the sale of the Receivables to the SPEs
qualifies for treatment as a true sale of assets by the Applicants rather than
as a loan secured by the Receivables. This will allow the Receivables to be
removed as assets from the books of the Applicants.
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2 See FASB Statement No. 140, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities," a replacement of FASB
Statement No. 125 (September 2000). FASB 140 sets forth various tests that have
to be met in order for the transferred assets to be deemed to be isolated from
(i.e., out of the control of) the transferor. Special-purpose entities such as
those described in this filing are typically used to establish such
separateness.
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Each Applicant will enter into a substantially identical Receivables
Sale Agreement ("RSA") with its respective SPE. The RSAs are filed herewith as
Exhibits B-1 through B-3. Each SPE, in turn, will enter into a Receivables
Purchase Agreement ("RPA") pursuant to which the SPE will fund its purchase of
Receivables by selling, on a revolving basis, undivided ownership interests in
the Receivables to one or more entities through Bank One, NA, acting as Agent.
The RPAs, which are substantially identical to each other, are filed herewith as
Exhibits B-4 through B-6.
As indicated, the sale of Receivables by the Applicants is intended to
be a true sale in that it will provide the SPEs to which Receivables are sold
with full benefits of ownership. The Applicants do not intend these transactions
to be, or for any purpose to be characterized as, loans from an SPE to the
Applicant which owns the SPE. The Applicants will not have any obligation to
repurchase Receivables that they have sold.
1.3 Principal Terms of Transaction Agreements.
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(a) Receivables Sale Agreement. Under each RSA, an Applicant will
sell and assign to its respective SPE all of its right, title and interest to
its Receivables (together with any security that may have been obtained from
customers and collections by the Applicant on such Receivables). The Receivables
will be sold to the SPE, without recourse (except as described below), at a
discount using a discount rate to be determined from time to time based on,
among other factors, the SPE's cost of funds (as described below) and the risk
of non-payment by the obligors on the Receivables. Each SPE will finance the
purchase of the Receivables, first, using the funds obtained from investors and
financial institutions under the related RPA (as described below), second, by
delivery of the proceeds of a subordinated revolving loan by the SPE's parent (a
"Subordinated Loan"), and third, by accepting a contribution of Receivables to
its capital in an amount equal to the remaining balance of the purchase price
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for the Receivables./3/
Although Receivables will be sold by each Applicant to its respective
SPE without recourse, the SPE will be entitled to a credit equal to any
reduction in the amount of any Receivables resulting from defective or rejected
goods or services or any discount or any adjustment in the amount thereof by an
Applicant, or any setoff in respect of any claim affecting the Receivables. In
addition, the SPE will be entitled to a credit against the purchase price for
Receivables if any of the representations or warranties made by the Applicant in
the RSA are no longer true with respect to such Receivables.
Each Applicant shall have the right to terminate the facility
represented by the RSA upon giving 15 business days written notice to the SPE.
(b) Receivables Purchase Agreement. As indicated above, each SPE
will fund its initial and subsequent purchases of Receivables by selling, on a
revolving basis, undivided ownership interests in the pool of Receivables that
it owns to a conduit established to issue and sell commercial paper (the
"Conduit") and/or one or more financial institutions (the "Financial
Institutions," and together with the Conduit, the "Purchasers") pursuant to the
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3 The amount of Receivables originated by any Applicant will vary from month
to month based on electricity usage by its customers. As a result of this and
other factors, the funds available to an SPE to purchase Receivables may not
match the cost of Receivables available for sale. The use of the Subordinated
Loan/capital contribution mechanism is intended to address this periodic
mismatch. When the amount of Receivables available for sale by an Applicant
exceeds the amount of cash its SPE has available, the excess will be purchased
by the SPE with the proceeds of a Subordinated Loan and/or by accepting a
capital contribution of Receivables. Conversely, if, after payments of all
amounts due the Agent and Purchasers, an SPE develops a cash surplus due to
collections of previously purchased Receivables exceeding the balance of newly
created Receivables available for purchase, such surplus funds will be used to
repay the Subordinated Loan and/or make a distribution of Receivables. Through
this mechanism, it is expected that the SPEs will not retain substantial cash
balances at any time and that substantially all cash realized from the
collection of the Receivables (net of the costs of the program) will be made
available to the Applicants.
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RPA. The maximum purchase commitment of the Purchasers under the RPAs are $80
million in the case of Met-Ed, $75 million in the case of Penelec, and $25
million in the case of Penn Power.
Under each RPA, the SPE is obligated to pay to Bank One, NA, as Agent
for the Purchasers (the "Agent"), various fees (including fees paid to the Agent
and the Conduit under a fee letter), fees and costs paid to the Servicer (as
described below), amounts required to be paid to reduce the interests in the
Receivables purchased by the Purchasers, amounts required to be paid if the
representations and warranties regarding the Receivables are no longer true,
broken funding costs, default fees and amounts payable as yield (the "Yield") on
the capital at any time associated with the undivided interest in purchased
Receivables. The Yield for any interest accrual period, as applied to capital
provided by Financial Institutions, shall be an amount equal to the product of
the applicable Bank Rate (either (i) the London Interbank Offered Rate (LIBOR),
plus a spread, or (ii) the higher of (a) the rate of interest per annum
determined by Bank One, NA from time to time as its prime commercial lending
rate and (b) the Federal Funds Effective Rate plus .50%), multiplied by the
capital invested. The Yield for each month, as applied to capital provided by
the Conduit, shall be an amount based on the effective cost of funds on
promissory notes issued by the Conduit in the commercial paper market.
Each Applicant is designated as the Servicer under the RPA to which it
is a party. Thus, the transactions described above will have no effect on the
services each Applicant provides to its customers. Among other things, each
Applicant will continue to bill and collect all of its utility service accounts
receivable in accordance with its current credit and collection policies. As
compensation for the services it renders, each Applicant (as Servicer) will be
paid a monthly servicing fee equal to .25% of the aggregate outstanding balance
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of all Receivables during such month. Upon the occurrence of certain events,
including, among others, a failure by an SPE to pay indebtedness or other fees
when due or to perform or observe certain covenants under the RPA, an event of
insolvency affecting an SPE or an Applicant, or the failure by an Applicant to
maintain certain debt coverage and capitalization ratios, the Agent would have
the right to designate a new Servicer.
1.4 Benefits of Receivables Program.
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The cost of funds of the Purchasers of the Receivables is based on the
rates payable by the Conduit on commercial paper, plus certain fees and expenses
payable to the Purchasers. The proposed transaction will provide the Applicants
with an additional source of funds, and will save Met-Ed and Penelec
approximately 50-125 basis points over the cost of conventional financing and
Penn Power approximately 40-115 basis points over the cost of conventional
financing. Based on present market conditions, the Applicants estimate that the
current cost of the funds available under the Receivables program is 1.545% in
the case of Met-Ed and Penelec and 1.645% in the case of Penn Power, as compared
to the estimated costs to the Applicants of bank financing (2.75%) and a
one-year floating rate note (approximately 2%).
Proceeds of the Receivables sale program will be used by the Applicants
for general corporate purposes.
ITEM 2. FEES, COMMISSIONS AND EXPENSES.
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The fees, commissions and expenses incurred or to be incurred in
connection with the proposed transactions (excluding the funding costs and other
costs incurred by the SPEs, which have been described in Item 1), are estimated
not to exceed $45,000.
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ITEM 3. APPLICABLE STATUTORY PROVISIONS.
-------------------------------
The acquisition of the membership interests of the SPEs by the
Applicants, and the issuance of such membership interests by the SPEs, in each
case are subject to Sections 6(a), 7, 9(a), 10, and 12(f) of the Act and Rules
43 thereunder./4/ The issuance by the SPEs of notes evidencing Subordinated
Loans, and acquisition thereof by the Applicants, in each case are subject to
Sections 6(a), 7, 9(a), 10, and 12(b) of the Act and Rule 45 thereunder, but may
be exempt pursuant to Rules 52 and 45(b)(1), as applicable. The distribution of
Receivables by an SPE to its parent as a return of capital is subject to Section
12(c) of the Act and Rule 46 thereunder.
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.
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4 The Commission has previously authorized operating subsidiaries of
registered holding companies to organize and acquire the securities of special
purpose entities to facilitate sales of accounts receivable. See e.g., Western
Massachusetts Electric Co., Holding Co. Act Release No. 26710 (Apr. 25, 1997),
and Alliant Energy Corporation, Inc., Holding Co. Act Release No. 27368 (Mar.
30, 2001).
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FirstEnergy currently meets all of the conditions of Rule 53(a), except
for clause (1). By order dated October 29, 2001 (Holding Co. Act Release No.
27459) (the "Merger Order"), as modified by order dated June 30, 2003 (Holding
Co. Act Release No. 27694) (the "June 2003 Order"), the Commission, among other
things, authorized FirstEnergy to invest in EWGs and FUCOs so long as
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 June 2003 Order, also specifies that this $5 billion
amount may include amounts invested in EWGs and FUCOs by FirstEnergy and GPU,
Inc. ("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"). Under the Merger Order and June 2003 Order, the Commission reserved
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,/5/ an amount significantly below the $5 billion
amount
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5 This $1.1 billion amount represents Current Investments only. As of
September 30, 2003, FirstEnergy had no GenCo Investments.
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authorized in the Merger Order, as modified by the June 2003 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 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
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Regional S.A. ("Emdersa")./6/
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.
FirstEnergy's operating public-utility subsidiaries (including the
three Applicants) remain financially sound companies as indicated by their
investment grade ratings from the nationally recognized rating agencies for
their senior secured debt. The following chart includes a breakdown of the
senior, secured credit ratings for those public-utility subsidiaries of
FirstEnergy that have ratings:
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6 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 to reduce the carrying value of its remaining 20.1% interest. On
January 16, 2004, FirstEnergy announced that it had completed the sale of its
remaining 20.1% interest in Avon. 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. In April 2003, FirstEnergy abandoned
its ownership interest in Emdersa. As a result of this divestiture, FirstEnergy
recognized a one-time, non-cash charge of $67.4 million in the second quarter of
2003. In addition, FirstEnergy reflected the results of this business (after-tax
loss of $87.5 million) as discontinued operations in the restated Consolidated
Statement of Income for the year ended December 31, 2002. FirstEnergy also
recognized a currency translation adjustment in other comprehensive income of
$91.5 million in 2002.
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Subsidiary Standard & Poors/7/ Moody's/8/ Fitch/9/
Ohio Edison BBB Baa1 BBB+
Cleveland Electric BBB- Baa2 BBB-
Toledo Edison BBB- Baa2 BBB-
Penn Power BBB- Baa1 BBB+
JCP&L BBB A2 BBB+
Met-Ed BBB A2 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 APPROVAL.
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The Pennsylvania Public Utility Commission ("PaPUC") has jurisdiction
over and has approved the transactions described in this Application/
Declaration. Copies of the applications filed with and orders issued by the
PaPUC are filed herewith as Exhibits D-1 through D-6. No other state commission,
and no federal commission, other than this Commission, has over any of the
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7 Standard & Poor's Rating Services
8 Moody's Investors Service, Inc.
9 Fitch, Inc.
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transactions proposed in this Application/Declaration.
ITEM 5. PROCEDURE.
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The Commission is requested to publish a notice under Rule 23 with
respect to the filing of this Application/Declaration as soon as practicable.
The Applicants request that the Commission's order be issued as soon as
practicable after the notice period and in any event not later than March 1 ,
2004 in order to accommodate a closing on the Receivables sale on or before
March 31, 2004. The Applicants further request that there should not be a 30-day
waiting period between issuance of the Commission's order and the date on which
the order is to become effective, hereby waive a recommended decision by a
hearing officer or any other responsible officer of the Commission, and consent
to the assistance of the Division of Investment Management in the preparation of
the Commission's decision and/or order, unless the Division of Investment
Management opposes the matters proposed herein.
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS:
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(a) EXHIBITS.
A Not applicable.
B-1 Form of Receivables Sale Agreement between Met-Ed, as
originator, and Met-Ed SPE, as buyer.
B-2 Form of Receivables Sale Agreement between Penelec, as
originator, and Penelec SPE, as buyer.
B-3 Form of Receivables Sale Agreement between Penn Power, as
originator, and Penn Power SPE, as buyer.
B-4 Form of Receivables Purchase Agreement among Met-Ed SPE, as
seller, Met-Ed, as servicer, certain financial institutions
parties thereto, Jupiter Securitization Corporation, and Bank
One, NA (Main Office Chicago), as agent.
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B-5 Form of Receivables Purchase Agreement among Penelec SPE, as
seller, Penelec, as servicer, certain financial institutions
parties thereto, Jupiter Securitization Corporation, and Bank
One, NA (Main Office Chicago), as agent.
B-6 Form of Receivables Purchase Agreement among Penn Power SPE,
as seller, Penn Power, as servicer, certain financial
institutions parties thereto, Jupiter Securitization
Corporation, and Bank One, NA (Main Office Chicago), as agent.
C Not applicable.
D-1 Application and supplemental letter of Met-Ed to the
Pennsylvania Public Utility Commission.
D-2 Application and supplemental letter of Penelec to the
Pennsylvania Public Utility Commission.
D-3 Application and supplemental letter of Penn Power to the
Pennsylvania Public Utility Commission.
D-4 Order of the Pennsylvania Public Utility Commission approving
application of Met-Ed.
D-5 Order of the Pennsylvania Public Utility Commission approving
application of Penelec.
D-6 Order of the Pennsylvania Public Utility Commission approving
application of Penn Power.
E Not applicable.
F-1 Opinion of Thelen Reid & Priest LLP (to be filed by amendment).
F-2 Opinion with respect to Pennsylvania law (to be filed by
amendment).
G Form of Federal Register Notice.
(b) FINANCIAL STATEMENTS.
FS-1 Metropolitan Edison Company Consolidated Balance Sheet as of
December 31, 2002, and Consolidated Statements of Income,
Statement of Retained Earnings and Consolidated Condensed
Statements of Cash Flows for the year ended December 31, 2002.
(Incorporated by reference to Metropolitan Edison Company Form
10-K for the period ended December 31, 2002) (File No. 1-446)
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FS-2 Pennsylvania Electric Company Consolidated Balance Sheet as of
December 31, 2002, and Consolidated Statements of Income,
Statement of Retained Earnings and Consolidated Condensed
Statements of Cash Flows for the year ended December 31, 2002.
(Incorporated by reference to Pennsylvania Electric Company
Form 10-K for the period ended December 31, 2002) (File No.
1-3522)
FS-3 Pennsylvania Power Company Consolidated Balance Sheet as of
December 31, 2002, and Consolidated Statements of Income,
Statement of Retained Earnings, and Consolidated Condensed
Statements of Cash Flows for the year ended December 31, 2002.
(Incorporated by reference to Pennsylvania Power Company Form
10-K for the period ended December 31, 2002) (File No. 1-3491)
FS-4 Metropolitan Edison Company Consolidated Balance Sheet as of
September 30, 2003, and Consolidated Statements of Income,
Statement of Retained Earnings and Consolidated Condensed
Statements of Cash Flows for the nine months ended September
30, 2003. (Incorporated by reference to Metropolitan Edison
Company Form 10-Q for the period ended September 30, 2003)
(File No. 1-446)
FS-5 Pennsylvania Electric Company Consolidated Balance Sheet as of
September 30, 2003, and Consolidated Statements of Income,
Statement of Retained Earnings and Consolidated Condensed
Statements of Cash Flows for the nine months ended September
30, 2003. (Incorporated by reference to Pennsylvania Electric
Company Form 10-Q for the period ended September 30, 2003)
(File No. 1-3522)
FS-6 Pennsylvania Power Company Consolidated Balance Sheet as of
September 30, 2003, and Consolidated Statements of Income,
Statement of Retained Earnings, and Consolidated Condensed
Statements of Cash Flows for the nine months ended September 30,
2003. (Incorporated by reference to Pennsylvania Power Company
Form 10-Q for the period ended September 30, 2003) (File No.
1-3491)
There have been no material changes, not in the ordinary course of
business, to the aforementioned balance sheets from September 30, 2003, to the
date of this Application/Declaration.
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ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS.
---------------------------------------
None of the matters that are the subject of this
Application/Declaration involves a "major federal action" nor do such matters
"significantly affect the quality of the human environment" as those terms are
used in section 102(2)(C) of the National Environmental Policy Act. The
transactions that are the subject of this Application/Declaration will not
result in changes in the operation of the Applicants that will have an impact on
the environment. The Applicants are not aware of any federal agency that has
prepared or is preparing an environmental impact statement with respect to the
transactions that is the subject of this Application/Declaration.
SIGNATURES
Pursuant to the requirements of the 1935 Act, the Applicants have duly
caused this Application/Declaration to be signed on their behalves by the
undersigned thereunto duly authorized.
METROPOLITAN EDISON COMPANY
PENNSYLVANIA ELECTRIC COMPANY
PENNSYLVANIA POWER COMPANY
By: /s/ Harvey L. Wagner
----------------
Name: Harvey L. Wagner
Title: Vice President and Controller
Date: January 21, 2004
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