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:
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
October 1, 2002 through December 31, 2002.
(a) Guarantee 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).
(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) Guarantee 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
---------------------------------------------------------
and Foreign Utility Companies, and Percentage of Equity Ownership
-----------------------------------------------------------------
Set forth below is a summary of the direct or indirect investments as
defined in SEC Rule 53(a) by FirstEnergy, as of December 31, 2002 in EWGs and
foreign utility companies (FUCOs), as well as the percentage of equity
ownership.
3
First First Owners not affiliated with
Energy's Energy's % FirstEnergy
FUCO Investment Equity -------------------------------
Associate or at 12/31/02 Owner- Type of
Company EWG ($000)** ship Name of Entity Entity
--------- ---- ---------- ------- --------------- ------
Empresa EWG 30,151* 50.001% AFP Prevision BBV Foreign
Guaracachi S.A. AFP Futuro de Bolivia Foreign
Guaracachi EWG 54,657* 100% Not Applicable N/A
America, Inc.
GPU Power, Inc. EWG 151,543 100% Not Applicable N/A
EI International EWG 1,381* 100% Not Applicable N/A
GPUI Colombia, EWG 1,866* 100% Not Applicable N/A
Ltda.
Midlands FUCO 63,813 20.1% Aquila, Inc. Domestic
Electricity plc
(Midlands)
Termobarranquilla EWG 92,004* 28.67% ABB Energy Ventures, Foreign
S.A. Inc.
Lancaster Steel Foreign
Distral Group Foreign
Corp. Electrica Foreign
De la Costa
Atlantica
EI Barranquilla, EWG 45,176* 100% Not Applicable N/A
Inc.
Barranquilla EWG 45,691* 100% Not Applicable N/A
Lease Holdings,
Inc.
Los Amigos EWG 12* 100% Not Applicable N/A
Leasing Company,
Ltd.
International
Power Advisors,
Inc. EWG 3,962* 100% Not Applicable N/A
4
First First Owners not affiliated with
Energy's Energy's % FirstEnergy
FUCO Investment Equity -------------------------------
Associate or at 12/31/02 Owner- Type of
Company EWG ($000)** ship Name of Entity Entity
--------- ---- ---------- ------- --------------- ------
Empresa
Distribuidora
Electrica
Regional,S.A.
(EMDERSA) FUCO 273,963 100% Not Applicable N/A
FE Generation
Corp. EWG 794,317 100% Not Applicable N/A
---------
Total Aggregate
Investment in
EWGs & FUCOs * $1,283,636
=========
(*) FirstEnergy's aggregate investment does not include the items shown with
asterisks in order to avoid duplication.
(**) Aggregate investment amounts reflected here exclude any goodwill or other
fair value adjustments.
As of December 31, 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 Philippines, Inc. and Hanover Energy
Corporation.
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 GPU Capital, Inc.'s (GPU Capital) and GPU Power's unaudited
Consolidated Balance Sheets as of December 31, 2002 and unaudited Consolidated
Statements of Operations for the twelve months ended December 31, 2002 will be
filed separately under a request for confidential treatment pursuant to Rule
104(b).
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.
5
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 (pound)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 (pound)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 Aquila
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 Aquila together own all of the outstanding shares of Avon through
a jointly owned subsidiary, Aquila 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
----------------------------------------------------------------
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 50.001% 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.
6
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 $18,285,413 for the three months ended December 31, 2002. GPU Service, Inc.
provided administrative services to GPU Power and GPU Electric in the amount of
$199,461 and $829,487 respectively, for the three months ended December 31, 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 October 1, 2002 through December
31, 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:
7
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 December 31, 2002 is as follows:
(In Thousands)
FUCOs
----- --------------
Midlands Electricity plc $ 13,813
Emdersa 273,963
---------
Subtotal 287,776
---------
EWGs
----
FE Generation Corp. $ 794,317
GPU Power, Inc. 151,543
---------
Subtotal 945,860
---------
Aggregate Investment in FUCOs and EWGs $1,233,636
=========
b) As of December 31, 2002 FirstEnergy's Aggregate Investment in FUCOs and EWGs
(in thousands) is $1,233,636.
Aggregate Investment as a Percentage of FirstEnergy and Subsidiary Companies:
-----------------------------------------------------------------------------
Total capitalization $ 21,551,415 5.7%
Net utility plant $ 12,679,813 9.7%
Total consolidated assets $ 33,580,773 3.7%
Market value of common equity $ 9,813,068 12.6%
c) FirstEnergy and Subsidiary Companies Consolidated Capitalization Ratios as of
December 31, 2002:
Amount (000's) %
------------ -----
Common equity $ 7,120,049 33.0
Cumulative preferred stock 355,394 1.7
Subsidiary-obligated mandatorily
redeemable preferred securities 409,867 1.9
Subsidiary-obligated trust
preferred securities - -
Long-term debt 12,573,288 58.3
Notes payable 1,092,817 5.1
----------- -----
Total capitalization $ 21,551,415 100.0%
=========== =====
d) Market-to-book ratio of FirstEnergy and Subsidiary Companies common stock at
December 31, 2002:
Closing Market Price per Share $ 32.97
Book Value per Share $ 24.18
Market-to Book Ratio of Common Stock 136.3%
8
e) Analysis of Growth in Retained Earnings for FirstEnergy and Subsidiary
Companies:
(In Thousands)
-------------
Retained Earnings as of 12/31/02 $1,711,457
Retained Earnings as of 12/31/01 1,521,805
---------
Growth in Retained Earnings $ 189,652
=========
Analysis of Growth in Retained Earnings:
----------------------------------------
Income contribution from regulated utility companies $ 890,878
Income contribution from FUCOs/EWGs (78,111)
Income contribution from all other companies (26,169)
FirstEnergy Holding and Service companies (157,318)
Cash dividends declared on common stock (439,628)
---------
Growth in Retained Earnings $ 189,652
=========
f) Statements of Operations for the period ended December 31, 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.
Emdersa
9
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: March 31, 2003
10