EXHIBIT B-1
AMENDMENT TO SERVICE AGREEMENTS
This Amendment, effective as of July 1, 1996, by and between Allegheny
Power Service Corporation, a Maryland corporation ("APSC"), and Monongahela
Power Company, an Ohio corporation ("MP"), The Potomac Edison Company, a
Maryland and Virginia corporation ("PE"), and West Penn Power Company, a
Pennsylvania corporation ("WPP") (MP, PE and WPP are hereinafter collectively
referred to as the "Electric Companies"),
WITNESSETH THAT, WHEREAS, the Electric Companies and APSC are all
subsidiaries of Allegheny Power System, Inc., a Maryland corporation ("APS"),
and
WHEREAS, each Electric Company entered into a service agreement with APSC
dated November 3, 1993 (the "Service Agreements"), and
WHEREAS, as a result of the restructuring and continuing reengineering of
the corporate and operational functions of APSC and of the Electric Companies,
APSC and the Electric Companies have agreed to amend Exhibit I to the Service
Agreements (which describes the services that APSC may perform for each of the
Electric Companies) as provided herein.
NOW THEREFORE, APSC and the Electric Companies hereby agree that Exhibit
I to the Service Agreements shall be deleted and replaced by the revised Exhibit
I which is attached hereto and incorporated herein.
IN WITNESS WHEREOF, the parties have signed or have caused this Amendment
to be signed by their duly authorized representatives effective as of the day
and year first above written.
ATTEST: ALLEGHENY POWER SERVICE CORPORATION
____________________________ By: ___________________________________
Vice President
ATTEST: MONONGAHELA POWER COMPANY
____________________________ By: ___________________________________
President
ATTEST: THE POTOMAC EDISON COMPANY
____________________________ By: ___________________________________
President
ATTEST: WEST PENN POWER COMPANY
____________________________ By: ___________________________________
President
Exhibit I
(As Amended, effective July 1, 1996)
Allegheny Power Service Corporation Principal Functions
The following is a description of the principal functions of
Allegheny Power Service Corporation ("APSC"). In accordance with the terms and
conditions of the Service Agreement dated November 3, 1993, APSC may perform the
services described herein for Monongahela Power Company, The Potomac Edison
Company, and West Penn Power Company (collectively hereinafter referred to as
the "Allegheny Power" companies or the "Electric Companies").
I. Corporate Services
1. Accounting
(a) Payroll - Processes and verifies timesheets and paychecks
for Allegheny Power employees. Ensures compliance with payroll tax laws and
regulations.
(b) Asset Accounting - Maintains corporate accounting records
for Allegheny Power's fixed assets in accordance with regulatory requirements,
corporate capital budget management, and fixed asset return objectives.
(c) Taxes - Ensures compliance with all federal, state and
local tax laws (except payroll and benefits matters). Prepares and files
applicable returns, gives instructions for timely payment of tax liabilities,
and coordinates the issuance of tax accounting instructions to Allegheny Power.
Also provides tax planning services.
(d) Corporate Accounting - Gathers, reports, and analyzes
accounting and management information. Reviews and corrects accounting data.
(e) Payment Processing - Processes invoices from, and issues
payment to, vendors for goods and services provided to Allegheny Power.
(f) Fuel Accounting - Initiates payment for fuel receipts and
compiles fuel data for report preparation on fuel purchases and generation
statistics to meet various regulatory requirements.
2. Information Services
Provides electronic data processing services:
(a) Machine related computer activity - services such as data
processing for customer accounting, payroll and general accounting, engineering
planning, purchasing and stores studies, forecasts and various other
administrative and engineering applications.
(b) Computer applications activity - services such as
feasibility studies for new applications, development and/or acquisition of new
applications, enhancement of existing applications and other related activity.
3. Financial Management
Oversees annual budgeting and capital management, long-term
forecasting, and financial planning.
4. Treasury
(a) Cash Processing - Maintains relationship with banking
institutions for lines of credit. Handles customer xxxx processing, money pool
(internal funding among Allegheny Power companies, external short-term borrowing
and investing), and long-term financing and cash forecasting.
(b) Risk Management - provides risk financing through
insurance purchases and other funding mechanisms. Provides transfer of risk via
contracts and insurance certification for all contractors, lessees,cogenerators,
and PURPA projects. Provides risk control to protect Allegheny Power companies'
properties from loss, and provides advice to Legal, Claims, and Human Resources
relative to liability and worker's compensation issues, including litigation.
(c) Electronic Commerce - Provides guidance, implementation,
and oversight of Electronic Commerce (EC) activities. EC is defined as any
binding business transaction conducted or consummated over an electronic network
between Allegheny Power and its customers, suppliers, financial institutions, or
other entities.
5. Audit Services
Performs independent appraisals of significant activities carried
out within, and/or related to, the Allegheny Power companies through application
of financial, contract, operational and compliance audit techniques. Provides
consulting services upon management request.
6. Legal
(a) Legal Services - Renders services relating to financings,
financial reporting, shareholders' meetings, rates and other regulatory
proceedings, environmental matters, litigation, marketing, human resources,
contracts, real estate, leasing, corporate and other legal matters.
(b) Corporate Secretary - Responsible for creation,
maintenance, and retention of corporate records; liaison with Board of
Directors; administration of indentures (performed by Assistant Secretaries);
support for long-term financing, regulatory filings; handles
shareholder/bondholder relations
and relationship with stock transfer agent and
bond trustee (records kept, checks sent, etc. by outside agents).
(c) Claims - Responsible for investigating and taking other
appropriate actions concerning claims made against Allegheny Power by third
parties. Also responsible for activities involved with collecting monies owed
to Allegheny Power by third parties for property damage.
7. Regulation & Pricing
(a) Costing & Pricing - Provides cost of service analysis.
Identifies usage pattern trends to assist marketing efforts. Performs special
studies requested internally or by regulatory agencies. Provides analyses such
as separation, cost of service and loss studies.
(b) Financial Analysis - Assembles and provides primary
support for regulatory filings. Maintains contacts with state commission staff
members. Performs special financial studies.
(c) Fuel & Capital Recovery - Assembles and provides primary
support for fuel and depreciation regulatory filings.
8. Human Resources
Initiates, maintains, supervises and administers the human resources
policies of the Allegheny Power companies. Assists the Allegheny Power
companies' management in maximizing the results from their employees. This is
accomplished by developing and administering programs and policies, and
consulting in five primary functions. They are:
(a) Employee Relations - labor relations,litigation/regulatory
compliance, employee communications and employee policies.
(b) Employee Development - training program development and
delivery, performance evaluation and management development.
(c) Medical Services - workers' compensation, employee
assistance program, and employee wellness/awareness programs.
(d) Rewards - design and administration of compensation,
benefits, and recognition programs.
(e) Staffing - employment/placement, succession planning and
EEO/affirmative action.
In addition, Business Practices is a group within HR which coordinates and
participates in the development and/or documentation of new and revised
policies, business practices, procedures, references and forms.
9. Governmental Affairs
Analyzes and provides views and recommendations on state and federal
legislation to assure fair and equitable treatment of the Allegheny Power
companies. Provides information to assist management decision-making on company
strategy and policy.
10. System Security
Originates, establishes, and administers security standards,
procedures and policies. Provides investigative and loss prevention services in
reference to the protection of assets and its employees. Acts as liaison with
federal, state and local law enforcement agencies.
11. Procurement
Provides services and gives functional direction in connection with
the procurement of goods and services, including market research, preparation of
commitments, requests for quotations, preparation of bid summaries, and
materials management.
12. Corporate Communications
Responsible for media relations, including the financial and trade
press, production of stockholder publications, advertising, and numerous
internal and customer communications.
13. AYP Capital
Oversees the business development and operations of and investments
in products, services and ventures that are not regulated as public utility
services. Included are unregulated power generators, power marketing and
related activities.
II. Business Xxxxx
0. Xxxxxxxxx Xxxxxxxx Xxxx (XXX)
x) Customer Service Center - Answers all incoming calls to
Allegheny Power via one toll-free number, responds to customer inquiries,
initiates new service, dispatches service and line crews in response to power
outages, handles credit and collection activities, responds to customer and
public service/utility commission complaints, and manages the meter reading and
billing activities.
b) Operations Services - Operations Services provides the
following services in the indicated areas: Stores - Centralizes materials supply
and distribution; Technical Services - Provides electrical equipment repair and
testing; Transportation - Handles fleet management and repair services; Safety,
Quality and Training - Develops safety and training programs; Building
Services - Provides building maintenance and management, and office services;
Substations -
Builds, operates, and maintains substations and equipment; T&D Operation -
Performs switching functions for all facilities above distribution voltage;
Forestry -Provides maintenance services for electrical facilities rights-of-way;
Planning - Provides planning services for all non-network electrical facilities;
Lines Services - Provides lines support for lines teams in service centers; and
Telecommunications - Provides support and maintenance for the telecommunications
systems.
c) Various Regions - Each region supports the processes for
responding to electric service requests, ensuring reliable service, and
restoration of service.
2. Retail Marketing
Executes the marketing and sales of the products and services of
Allegheny Power. Also performs economic development activities which affect
areas served by the Electric Companies.
3. Corporate Affairs
Maintains relationships with state regulatory commissions, municipal
and county governments and is responsible for identifying state-level regulatory
issues.
4. Transmission Business Unit (TBU)
Responsible for ensuring that adequate high-voltage network
facilities are available and on-line to convey power produced from the power
production operations run by, or procured by, the Generation Business Unit (GBU)
to serve native load and to engage in wholesale transmission sales to
nonaffiliates. Will engage in marketing efforts for sales of bundled and
unbundled transmission services to nonaffiliates and will be responsible for
accommodating requests for transmission service submitted by nonaffiliates who
qualify as customers for that service under federal regulations. Finally, is
responsible for maintaining the optimal economic balance on a real-time basis
between native customer load and the output of the generation resources supplied
by the GBU.
5. Generation Business Unit (GBU)
Responsible for ensuring that adequate generation is available to
serve the native load customers of Allegheny Power by using its own generating
facilities and the third-party generation obtained through its marketing
efforts. Primary responsibilities include ensuring the cost-effective operation
and maintenance of our generating units, and providing the most economic mix of
generation by available generating units and off-system purchases and sales. It
also provides advisory and supervisory services as needed. The GBU will also
broker energy services.
6. Planning and Compliance Business Unit (P&CBU)
Forecasts electric demand and energy requirements for Allegheny
Power and develops plans to provide and integrate the production and
transmission facilities needed to serve the electricity requirements of
customers of the Electric Companies. Oversees compliance with state and federal
regulatory and legal requirements.
III. ADDITIONAL SERVICES
Certain other services in addition to the above as APSC may be able
to provide to the Allegheny Power companies.
