SEC FILE NO. 70-7727
SEC FILE NO. 70-8593
SEC FILE NO. 70-9793
SEC FILE NO. 70-9941
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
CERTIFICATE PURSUANT TO
RULE 24
OF PARTIAL COMPLETION OF
TRANSACTIONS
FirstEnergy Corp.
------------------------------------------
:
In the matter of :
FirstEnergy Corp. : Certificate Pursuant
: to Rule 24 of Partial
: Completion of
: Transactions
SEC File No. 70-7727 :
SEC File No. 70-8593 :
SEC File No. 70-9793 :
SEC File No. 70-9941 :
(Public Utility Holding Company Act :
of 1935) :
------------------------------------------
TO THE MEMBERS OF THE SECURITIES AND EXCHANGE COMMISSION:
In August 2000, FirstEnergy Corp. (FirstEnergy) entered into an agreement
to merge with GPU, Inc., (GPU) under which FirstEnergy would acquire all of the
outstanding shares of GPU, Inc.'s common stock for approximately $4.5 billion in
cash and FirstEnergy common stock. The merger became effective on November 7,
2001 and is being accounted for by the purchase method. As of November 7, 2001
GPU merged with and into FirstEnergy and ceased its separate existence. This
filing includes the activity for the period April 1 through June 30, 2002 for
FirstEnergy Generation Corp. (FirstEnergy Generation) which is an exempt
wholesale generator (EWG).
The undersigned, FirstEnergy hereby certifies pursuant to Rule 24 of the
Rules and Regulations under the Public Utility Holding Company Act of 1935 (the
Act), that certain of the transactions proposed in the Applications, as amended,
filed in SEC File No. 70-7727, 70-8593, 70-9793 and 70-9941 respectively, have
been carried out in accordance with the Commission's Orders dated October 29,
2001, December 19, 2000, December 22, 1997, November 16, 1995, June 14, 1995,
December 28, 1994, September 12, 1994, December 18, 1992, and June 26, 1990 with
respect to the transactions proposed in the Application, as amended, in SEC File
No. 70-7727, and the Commission's Orders dated December 26, 2000, December 22,
1997, November 5, 1997, March 6, 1996, January 19, 1996 and July 6, 1995 with
respect to the transactions proposed in the Application, as amended, in SEC File
No. 70-8593, as follows.
1. Guarantees Issued
-----------------
As successor-by-merger to GPU, FirstEnergy assumed all obligations of GPU
under the following guarantees which were outstanding during the period April 1,
2002 through June 30, 2002:
(a) Guaranty dated September 1, 1999 for up to $21.3 million in connection
with the conversion of a construction loan to a term loan for the
Termobarranquilla (TEBSA) project in Colombia. This guarantee expires four years
after the loan conversion date (September 2003).
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(b) Guarantee of the obligations of GPUI Colombia Ltd., and
International Power Advisors, Inc. (the Operators), both of which are
subsidiaries of GPU Power, Inc. (GPU Power), which is a wholly-owned
subsidiary of FirstEnergy, under the operations and maintenance agreement
(O&M Agreement) in the TEBSA project. The liability of the Operators under
the O&M Agreement is $5.9 million.
(c) Guaranty to General Electric Capital Corporation of amounts up to the
lesser of six months average rent (approximately $8.1 million) or $10 million,
to the extent Lake Cogen, Ltd. fails to pay rent when due under the terms of the
project lease or chooses not to renew the lease after its initial 11-year term,
which expires in August 2004. Lake Cogen, Ltd. is a former subsidiary of GPU
International, Inc., which was sold by GPU to Aquila Energy Corporation (Aquila)
in December 2000. Aquila has indemnified FirstEnergy for any losses which
FirstEnergy may incur under this guaranty.
2. Investments by FirstEnergy in Exempt Wholesale Generators
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and Foreign Utility Companies, and Percentage of Equity Ownership
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Set forth below is a summary of the direct or indirect investments as
defined in SEC Rule 53(a) by FirstEnergy, as of June 30, 2002 in EWGs and
foreign utility companies (FUCOs), as well as the percentage of equity
ownership.
2
First First Owners not affiliated with
Energy's Energy's % FirstEnergy
FUCO Investment Equity --------------------------
Associate or at 6/30/02 Owner- Type of
Company EWG ($000) ship Name of Entity Entity
--------- ---- ---------- ------- --------------- ------
Empresa EWG 29,603 50% AFP Prevision BBV Foreign
Guaracachi S.A. AFP Futuro de Bolivia Foreign
Guaracachi EWG 50,489* 100% Not Applicable N/A
America, Inc.
GPU Power, Inc. EWG 150,618* 100% Not Applicable N/A
EI International EWG 1,224* 100% Not Applicable N/A
GPUI Colombia, EWG 1,560* 100% Not Applicable N/A
Ltda.
Midlands FUCO 56,138 20% Aquilla, Inc. Domestic
Electricity plc
(Midlands)
Termobarranquilla EWG 92,004 29% ABB Energy Ventures, Foreign
S.A. Inc.
Lancaster Steel Foreign
Distral Group Foreign
Corp. Electrica Foreign
De la Costa
Atlantica
EI Barranquilla, EWG 41,450* 100% Not Applicable N/A
Inc.
Barranquilla EWG 43,965* 100% Not Applicable N/A
Lease Holdings,
Inc.
Los Amigos EWG 12* 100% Not Applicable N/A
Leasing Company,
Ltd.
GPUI EWG N/A** N/A Not Applicable N/A
International
Asia, Inc.
International
Power Advisors,
Inc. EWG 3,962* 100% Not Applicable N/A
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First First Owners not affiliated with
Energy's Energy's % First Energy
FUCO Investment Equity --------------------------
Associate or at 6/30/02 Owner- Type of
Company EWG ($000) ship Name of Entity Entity
--------- ---- ---------- ----- -------------- ------
Empresa
Distribuidora
Electrica
Regional,S.A. FUCO 361,440 100% Not Applicable N/A
FE Generation
Corp. EWG 682,939 100% Not Applicable N/A
---------
Total Aggregate
Investment in
EWGs & FUCOs * $1,222,124
=========
(*) FirstEnergy's aggregate investment does not include the items shown with
asterisks in order to avoid duplication.
(**) Dissolved in June 2002.
As of June 30, 2002, FirstEnergy also owned, directly or indirectly, a
100% interest in each of the following EWGs, in which its aggregate
investment did not exceed $10,000: GPU Power Ireland, Inc.; GPU Power
Philippines, Inc.; and Hanover Energy Corporation. Austin Cogen Partners, LP
and Austin Cogen Corp. were dissolved during June 2002.
In accordance with Orders dated July 6, 1995 and March 6, 1996 in SEC File
No. 70-8593, and Orders dated October 29, 2001 in SEC File No. 70-9793 and
70-9941 and in addition to the reimbursement agreements described in item 1
above, the following is reported:
1. Financial Statements
--------------------
A copy of FirstEnergy Solutions Corp., (FirstEnergy Solutions) GPU
Capital, Inc.'s (GPU Capital) and GPU Power's unaudited Consolidated Balance
Sheets as of June 30, 2002 and unaudited Consolidated Statements of Operations
for the twelve months ended June 30, 2002 will be filed separately under a
request for confidential treatment pursuant to Rule 104(b).
FirstEnergy Solutions is a wholly-owned subsidiary of FirstEnergy and is a
natural gas and power marketer in both the wholesale and retail markets.
GPU Capital was incorporated to secure financing to prepay indebtedness of
certain subsidiaries of GPU Electric, Inc. (GPU Electric), and for working
capital purposes including investments and acquisitions. A capital contribution
was made to GPU Capital of all of the issued and outstanding common stock of GPU
Electric, which then became a wholly-owned subsidiary of GPU Capital. GPU
Capital is a wholly-owned subsidiary of FirstEnergy.
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GPU Capital and GPU Electric own and operate electric transmission and
distribution systems outside the United States and will be referred to as "GPU
Electric."
2. Investments in Exempt Entities
------------------------------
In July 1999, GPU Electric became the 100% owner (formerly 50% owner) of
Avon Energy Partners Holdings, Inc. (Avon) by acquiring the additional 50%
ownership interest for British pounds (BP) 452.5 million (approximately US $714
million). Accordingly, GPU Electric became the sole owner of Midlands' electric
distribution and contracting businesses as well as independent power plants
worldwide. The acquisition was financed at that time through a US $250 million
equity contribution, the issuance of US $50 million of commercial paper by GPU
Capital, and a two-year BP 245 million (approximately US $357 million) credit
agreement entered into by EI UK Holdings (EI UK), a wholly owned subsidiary of
GPU Electric.
In March 2002, FirstEnergy announced that it had finalized terms of a
joint venture agreement with Aquila, Inc. (formerly Utilicorp United) for Aqulla
to acquire partial ownership of Avon. Accordingly, on May 8, 2002 Aquila
acquired a 79.9 percent interest in Avon for approximately $1.9 billion
including the assumption of $1.7 billion of debt. FirstEnergy (through GPU
Electric) and Aquilla together own all of the outstanding shares of Avon through
a jointly owned subsidiary, Aquilla Sterling Holdings, Inc. (ASH) with each
company having a 50 percent voting interest. FirstEnergy's investment in ASH is
held by EI UK.
In 1999, GPU Electric acquired Empresa Distribuidora Electrica Regional,
S.A. (Emdersa), an Argentine holding company, for $375 million. The acquisition
was financed at that time through the issuance of commercial paper by GPU
Capital and a $50 million capital contribution.
All of the acquisition debt associated with FirstEnergy's ownership of the
above mentioned FUCOs has been retired.
3. Description of Exempt Entities in Which There are Funds Invested
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FirstEnergy Generation Corp.
----------------------------
FirstEnergy Generation, incorporated in October 2000, is a wholly owned
subsidiary of First Energy Solutions. FirstEnergy Generation operates fossil
fuel plants and a pumped storage plant, most of which is leased from the
FirstEnergy Solutions companies and sells all of its output at wholesale prices
to FirstEnergy Solutions.
Empresa Guaracachi, S.A.
------------------------
In July 1995, GPU Power, through Guaracachi America, Inc. acquired from
the Bolivian Government a 50% interest in Empresa Guaracachi, S.A.(EGSA). EGSA
has an aggregate capacity of 338 MW of natural gas-fired and oil-fired
generation facilities located in Bolivia in and around the cities of Santa Cruz,
Sucre and Potosi which represents more than one-third of Bolivia's generation
capacity.
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Termobarranquilla, S.A.
-----------------------
In October 1995, GPU Power, through EI Barranquilla, Inc., acquired a 29%
interest in Termobarranquilla, S.A., Empresa de Servicios Publicos (TEBSA).
TEBSA has an aggregate capacity of 890 MW of gas-fired generation facilities
located near Barranquilla, Colombia. Electricity generated by these facilities
is sold to Corporacion Electrica de la Costa Atlantica under a long-term (20.5
years) contract.
Barranquilla Lease Holdings, Inc. and Los Amigos Leasing Company, Ltd.
----------------------------------------------------------------------
Barranquilla Lease Holdings, Inc., a subsidiary of GPU Power, through its
wholly-owned subsidiary Los Amigos Leasing Company, Ltd. (Leaseco), owns and
leases to TEBSA equipment in generation facilities constructed and operated by
TEBSA. The lease provides for TEBSA to make monthly lease payments to Leaseco
through September 2011.
Midlands
--------
Midlands distributes electricity to 2.3 million customers in England in an
area with a population of five million. Midlands also owns an independent power
production business that generates electricity in England and internationally.
Emdersa
-------
Emdersa owns three electric distribution companies that serve three
provinces in northwest Argentina. The three distribution companies serve
approximately 335,000 customers throughout a service territory of approximately
124,300 square miles. The provinces have a total population of about 1.5
million.
4. Services Obtained From Associated Companies
-------------------------------------------
FirstEnergy Generation received administrative and construction services
from associate companies (primarily FirstEnergy Service Company) in the amount
of $16,773,456 for the three months ended June 30, 2002. GPU Service, Inc.
provided administrative services to GPU Power and GPU Electric in the amount of
$265,302 and $247,507 respectively, for the three months ended June 30, 2002 in
support of operations and management activities.
5. Services Provided to Associated Companies
-----------------------------------------
A description of services provided by FirstEnergy Generation and GPU Power
to associate companies during the period April 1, 2002 through June 30, 2002
will be filed separately under a request for confidential treatment under Rule
104(b). GPU Electric did not provide any services to associate companies during
this reporting period.
In accordance with the Commission's Order dated November 5, 1997 in SEC
File No. 70-8593, and the Order dated October 29, 2001 in SEC File No. 70-9793
and 70-9941 the following is reported:
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a) FirstEnergy's aggregate investment includes all amounts invested, or
committed to be invested, in foreign utility companies (FUCOs) and exempt
wholesale generators (EWGs), for which there is recourse, directly or
indirectly, to the registered holding company. Accordingly, FirstEnergy's
aggregate investment as of June 30, 2002 is as follows:
(In Thousands)
FUCOs --------------
-----
Midlands Electricity plc $ 56,138
Emdersa 361,440
---------
Subtotal 417,578
---------
EWG
---
FE Generation Corp. $ 682,939
Termobarranquilla, S.A. 92,004
Empresa Guaracachi, S.A. 29,603
---------
Subtotal 804,546
---------
Aggregate Investment in FUCOs and EWGs $ 1,222,124
=========
b) As of June 30,2002 FirstEnergy's Aggregate Investment in FUCOs and EWGs (in
thousands) is $1,222,124.
Aggregate Investment as a Percentage of FirstEnergy and Subsidiary Companies:
----------------------------------------------------------------------------
Total capitalization $ 22,469,054 5.4%
Net utility plant $ 12,483,929 9.8%
Total consolidated assets $ 34,279,588 3.6%
Market value of common equity $ 9,935,099 12.3%
c) FirstEnergy and Subsidiary Companies Consolidated Capitalization Ratios
as of June 30, 2002:
Amount (000's) %
-------------- -
Common equity $ 7,565,454 33.7
Cumulative preferred stock 569,474 2.5
Subsidiary-obligated mandatorily
redeemable preferred securities 529,658 2.4
Subsidiary-obligated trust
preferred securities - -
Long-term debt 13,149,059 58.5
Notes payable 655,409 2.9
----------- -----
Total capitalization $ 22,469,054 100.0%
=========== =====
d) Market-to-book ratio of FirstEnergy and Subsidiary Companies common stock at
June 30, 2002:
Closing Market Price per Share $ 33.38
Book Value per Share $ 25.72
Market-to Book Ratio of Common Stock 129.8%
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e) Analysis of Growth in Retained Earnings for FirstEnergy and Subsidiary
Companies:
(In Thousands)
--------------
Retained Earnings as of 6/30/02 $1,652,006
Retained Earnings as of 12/31/01 1,521,805
---------
Growth in Retained Earnings $ 130,201
=========
Analysis of Growth in Retained Earnings:
---------------------------------------
Income contribution from regulated utility companies $ 430,671
Income contribution from FUCOs/EWGs 59,340
Income contribution from all other companies (38,360)
FirstEnergy Holding and Service companies (101,848)
Cash dividends declared on common stock (219,602)
--------
Growth in Retained Earnings $ 130,201
==========
f) Statements of Operations for the period ended June 30, 2002 for the following
Project Parents and Exempt Entities will be filed separately under a request for
confidential treatment under Rule 104 (b):
Termobarranquilla, S.A.
GPUI Colombia, Ltda.
Empresa Guaracachi, S.A.
FirstEnergy Generation Corp.
GPU International Australia Pty., Ltd.
Emdersa
Midlands Electricity plc
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SIGNATURE
PURSUANT TO THE REQUIREMENTS OF THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935,
THE UNDERSIGNED COMPANY HAS DULY CAUSED THIS CERTIFICATE TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED THEREUNTO DULY AUTHORIZED.
FirstEnergy Corp.
By:/s/ Harvey L. Wagner
--------------------
Harvey L. Wagner
Vice President, Controller
and Chief Accounting Officer
Date: August 29, 2002
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