(As filed with the Securities and Exchange Commission on April 14, 2003)
File No. 70-9793
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POS AMC
Post-Effective Amendment No. 5
(Amendment No. 8)
TO
FORM U-L
APPLICATION/DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
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FIRSTENERGY CORP.
MYR GROUP, INC. AND ITS SUBSIDIARIES
76 South Main Street
Akron, Ohio 44308
(Names of companies filing this statement
and address of principal executive office)
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FIRSTENERGY CORP.
(Name of top registered holding company parent of applicant)
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Leila L. Vespoli, Douglas E. Davidson, Esq.
Senior Vice President and General Counsel Thelen Reid & Priest LLP
FirstEnergy Corp. 875 Third Avenue
76 South Main Street New York, New York 10022
Akron, Ohio 44308
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(Names and addresses of agents for service)
ITEM 1. DESCRIPTION OF PROPOSED TRANSACTION.
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A. Background. By order dated October 29, 2001 in this proceeding
(Holding Co. Act Release No. 27459), as supplemented by supplemental orders
dated November 8, 2001 (Holding Co. Act Release No. 27463) and December 23, 2002
(Holding Co. Act Release No. 27628) (as so supplemented, the "Merger Order"),
the Commission authorized the merger between FirstEnergy Corp. ("FirstEnergy"),
an Ohio corporation, and GPU, Inc. ("GPU"), a Pennsylvania corporation. The
merger became effective on November 7, 2001, with FirstEnergy as the surviving
entity, and FirstEnergy registered under the Act as a holding company on the
same day. As a result of the merger, FirstEnergy directly or indirectly owns all
of the outstanding common stock of ten electric utility subsidiaries: Ohio
Edison Company, The Cleveland Electric Illuminating Company, The Toledo Edison
Company, American Transmission Systems, Incorporated, Jersey Central Power &
Light Company, Pennsylvania Electric Company, Metropolitan Edison Company,
Pennsylvania Power Company, York Haven Power Company, and The Waverly Electric
Power & Light Company, which together provide service to approximately 4.3
million retail and wholesale electric customers in a 37,200 square-mile area in
Ohio, New Jersey, New York and Pennsylvania; and one gas utility subsidiary,
Northeast Ohio Natural Gas Corp., which provides gas distribution and
transportation service to approximately 5,000 customers in central and northeast
Ohio.
MYR Group, Inc. ("MYR"), which was acquired by GPU in 2000,(1) is now
a direct wholly-owned non-utility subsidiary of FirstEnergy. MYR is an
infrastructure services and electrical contracting company which, together with
its subsidiaries, builds and maintains transmission and distribution power lines
and substations for utility, industrial, institutional and governmental
facilities, and also performs storm and other emergency restoration services;
installs and services telecommunications and traffic signalization equipment;
and provides electrical construction services, such as installation of complete
electrical system wiring for utilities and commercial and industrial facilities.
Under the Merger Order, the Commission authorized certain non-utility
subsidiaries of FirstEnergy, referred to as "Energy Related Companies," to sell
goods and services to customers not only within the United States as permitted
by Rule 58 but also outside the United States.(2) Specifically, the Commission
authorized Energy Related Companies to sell "Energy Management Services" and
"Consulting Services" anywhere outside the United States,(3) and to engage in
"Energy Marketing" in Canada and Mexico, subject to a reservation of
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(1) The Commission approved GPU's acquisition of MYR by order dated April 14,
2000. See GPU, Inc., et al., Holding Co. Act Release No. 27165.
(2) Energy Related Companies are defined in the Merger Order as non-utility
subsidiaries which, but for non-U.S. nature of their business, would fall within
the definition of "energy-related companies" under Rule 58.
(3) "Energy Management Services" are defined as energy management services,
including the marketing, sale, installation, operation and maintenance of
various products and services related to energy management and demand-side
management, including: energy and efficiency audits; meter data management,
facility design and process control and enhancements; construction,
installation, testing, sales and maintenance of (and training client personnel
to operate) energy conservation equipment; design, implementation, monitoring
and evaluation of energy conservation programs; development and review of
architectural, structural and engineering drawings for energy efficiencies,
design and specification of energy consuming equipment; general advice on
programs; the design, construction, installation, testing, sales, operation and
maintenance of new and retrofit heating, ventilating, and air conditioning
("HVAC"), electrical and power systems, fuel cells, uninterruptible power
systems, alarm, security, access control and warning systems, motors, pumps,
lighting, water, water-purification and plumbing systems, building automation
and temperature controls, installation and maintenance of refrigeration systems,
building infrastructure wiring supporting voice, video, data and controls
networks, environmental monitoring and control, ventilation system calibration
and maintenance, piping and fire protection systems, and design, sale,
engineering, installation, operation and maintenance of emergency or distributed
power generation systems, and related structures, in connection with
energy-related needs; and the provision of services and products designed to
prevent, control, or mitigate adverse effects of power disturbances on a
customer's electrical systems.
jurisdiction with respect to energy marketing elsewhere outside the United
States.(4)
The Commission also reserved jurisdiction under the Merger Order over
FirstEnergy's request that Energy Related Companies be permitted to engage in
providing "Infrastructure Services" anywhere outside the United States. The term
"Infrastructure Services" is defined to include utility infrastructure services,
including the services provided by MYR and its subsidiaries, such as installing
and maintaining underground communications and energy networks, high voltage
transmission and distribution lines, substations and towers for electric and
telecommunications companies, construction and ongoing maintenance services to
industrial and municipal owners of complex electric and communications
infrastructures on a nationwide basis, management of large volumes of technical
service and repair work for communications and energy utilities and new
residential design and construction services, permitting a single point of
contact for the design and construction of all utility infrastructures
(including electric, gas, water, sewer, cable and telephone) and outdoor
lighting.
B. Action Requested. In this Post-Effective Amendment, FirstEnergy and MYR
are requesting that the Commission issue a supplemental order releasing
jurisdiction over the performance of Infrastructure Services by MYR in Canada in
order to enable MYR to provide Infrastructure Services to subsidiaries of Emera
Inc. ("Emera"), a registered holding company. Emera has issued a request for
proposals ("RFP") for power line, substation and related work for its
public-utility subsidiaries, Bangor Hydro-Electric Company ("BHE") and Nova
Scotia Power Inc. ("NSPI"). BHE provides electric transmission and distribution
service in eastern Maine. NSPI generates, transmits and distributes electricity
solely in the province of Nova Scotia, Canada. All of the work covered by the
RFP falls within the scope of Infrastructure Services, as defined under the
Merger Order (and, to the extent performed in the United States, would be
permitted under Rule 58). Such work would consist primarily of line construction
(e.g., erecting poles and related structures and streetlights, installing
underground cables, and mounting transformers), line and substation service and
maintenance work (including preventive maintenance), outage restoration response
services, engineering and design work, work planning and scheduling, utility
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"Consulting Services" are defined as consulting services with respect to
energy- and gas-related matters for associate and nonassociate companies, as
well as for individuals. Such consulting services would include technical and
consulting services involving technology assessments, power factor correction
and harmonics mitigation analysis, meter reading and repair, rate schedule
design and analysis, environmental services, engineering services, billing
services (including consolidation or centralized billing, bill disaggregation
tools and bill inserts), risk management services, communications systems,
information systems/data processing, system planning, strategic planning,
finance, feasibility studies, and other similar related services.
(4) "Energy Marketing" is defined as the brokering and marketing of
electricity, natural gas and other energy commodities, as well as providing
incidental related services, such as fuel management, storage and procurement.
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underground location and response services, and performance of other
line-related services. If awarded the contract, MYR would perform the work
through its subsidiary, L.E. Myers Co., or other existing or newly-formed
subsidiaries, depending upon, among other considerations, requirements of local
law. MYR intends to enter into subcontracts with local vendors and suppliers to
perform portions of the work contemplated under the Emera Agreement. MYR would
not acquire, directly or indirectly, any interest in, or operate, any assets of
Emera's subsidiaries.
ITEM 2. FEES, COMMISSIONS AND EXPENSES.
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FirstEnergy estimates that the additional fees, commissions and expenses
incurred or to be incurred in connection with the preparation of this
Post-Effective Amendment will not exceed $2,500.
ITEM 3. APPLICABLE STATUTORY PROVISIONS.
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Sections 9(a) and 10 of the Act are applicable to the proposed
Infrastructure Services. As indicated in Item 1, all of the services to be
provided under the Emera Agreement will come within the definition of
Infrastructure Services under the Merger Order. The agreement with Emera
represents a logical extension of MYR's existing business into Canada on behalf
of a customer whose utility system is located in part in Canada and in part in
the United States.
The proposed transaction is also subject to the requirements of Rule 54.
Rule 54 provides that in determining whether to approve an application by a
registered holding company which does not relate to any exempt wholesale
generator ("EWG") or "foreign utility company" ("FUCO"), the Commission shall
not consider the effect of the capitalization or earnings of any subsidiary
which is an EWG or a FUCO upon the registered holding company if paragraphs (a),
(b) and (c) of Rule 53 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 of $1.71 billion as of December 31, 2002, would be
$856 million. The Merger 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
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FirstEnergy's operating utilities ("GenCo Investments"). FirstEnergy has made
the commitment that through June 30, 2003, its aggregate investment in EWGs and
FUCOs other than the Current Investments and GenCo Investments ("Other
Investments") will not exceed $1.5 billion. The Commission has reserved
jurisdiction over investments that exceed such amount.
As of December 31, 2002, and on the same basis as set forth in the Merger
Order, FirstEnergy's aggregate investment in EWGs and FUCOs was approximately
$1.23 billion,(5) an amount significantly below the $5 billion amount authorized
in the Merger Order. Additionally, as of December 31, 2002, consolidated
retained earnings were $1.71 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
December 31, 2002, FirstEnergy's consolidated capitalization consisted of 33%
common equity, 1.7% cumulative preferred stock, 1.9% subsidiary - obligated
mandatorily redeemable preferred securities, 58.3% long-term debt and 5.1% 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 and Emdersa as described in
footnote 2.(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.
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(5) This $1.23 billion amount represents Current Investments only. As of
December 31, 2002, FirstEnergy had no Genco Investments.
(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 Energy Partners Holdings ("Avon"), a holding company for Midlands
Electricity plc, an electric distribution business in the United Kingdom and GPU
Empresa Distribuidora Electrica Regional S.A. and affiliates ("Emdersa"), 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 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.
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FirstEnergy's operating subsidiaries are 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 FirstEnergy's operating
utility subsidiaries that have ratings:
Subsidiary Standard & Poors(7) Moody's(8) Fitch(9)
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. Finally, Rule 53(c) by
its terms is inapplicable since the proposed transaction does not involve the
issue or sale of a security to finance the acquisition of an EWG or FUCO.
ITEM 4. REGULATORY APPROVALS.
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No State commission, and no Federal commission, other than this Commission
has jurisdiction over the proposed transaction.
ITEM 5. PROCEDURE.
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FirstEnergy requests that the Commission issue a supplemental releasing
jurisdiction over the performance of Infrastructure Services in Canada pursuant
to an agreement or agreements with Emera as soon as practical and continue to
reserve jurisdiction over the performance of other Infrastructure Services
outside the United States. It is further requested that: (i) there not be a
recommended decision by an Administrative Law Judge or other responsible officer
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(7) Standard & Poor's Rating Services
(8) Moody's Investors Service, Inc.
(9) Fitch, Inc.
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of the Commission, (ii) the Division of Investment Management be permitted to
assist in the preparation of the Commission's decision and (iii) there be no
waiting period between the issuance of the Commission's order and the date on
which it is to become effective.
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS.
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(a) Exhibits:
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No additional exhibits filed herewith.
(b) Financial Statements:
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Omitted as not relevant to the proposed transaction.
ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS.
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(a) The proposed transaction does not involve a major Federal action
significantly affecting the quality of the human environment.
(b) No federal agency has prepared or is preparing an environmental impact
statement with respect to the proposed transaction.
SIGNATURES
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, as amended, the undersigned companies have duly caused this
statement to be signed on their behalves by the undersigned thereunto duly
authorized.
FIRSTENERGY CORP.
MYR GROUP, INC.
By: /s/ Harvey L. Wagner
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Harvey L. Wagner
Vice President and Controller
Date: April 14, 2003