EXHIBIT B-2
SERVICE AGREEMENT
THIS SERVICE AGREEMENT, effective July 1, 1996, between Monongahela Power
Company, a public utility corporation organized and existing under the laws of
the State of Ohio ("Monongahela"), The Potomac Edison Company, a public utility
corporation organized and existing under the laws of the Commonwealth of
Virginia and the State of Maryland ("Potomac Edison"), and West Penn Power
Company, a public utility corporation organized and existing under the laws of
the Commonwealth of Pennsylvania ("West Penn") (collectively, Monongahela,
Potomac Edison, and West Penn are hereinafter referred to as the "Companies"),
WITNESSETH:
WHEREAS, the Companies are wholly-owned subsidiaries of Allegheny Power
System, Inc., a holding company organized and existing under the laws of the
State of Maryland ("APS"), and
WHEREAS, as the result of a restructuring and continuing reengineering of
the corporate and operational functions of APS and its various subsidiaries, the
Companies may be called upon to perform certain services for one another, and
WHEREAS, the Companies have decided to offer to perform for each other
certain services and to set out a method of determining allocation of and
payment for such services.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and for other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto, intending to be reasonably
bound, hereby agree as follows:
1. Each Company hereby offers to furnish to any other Company the
services detailed on Exhibit I attached hereto and made a part hereof.
2. For all services rendered for any Company by another Company, the
Company receiving the services agrees to pay the costs thereof, which costs will
be calculated as follows:
a. Actual costs incurred by a Company shall be accumulated by
specific, identifiable work order numbers or by FERC accounts and shall be
directly billed to the receiving Company.
b. The total cost of a particular service shall be the sum of:
facilities charges (to recover depreciation and return on investment on fixed
assets; working capital charges (where appropriate); all labor charges
(determined from employee timesheets) and related payroll overheads; out-of-
pocket expenses; and any overheads associated with out-of-pocket expenses.
c. When a service is rendered for the benefit of two or more
Companies, the costs shall be accumulated and shared by all receiving Companies
in proportion to the average electric operating revenues of each (exclusive of
sales to another APS subsidiary), operating and maintenance expenses (exclusive
of fuel, deferred fuel, and purchased power and exchanges), kilowatt-hours sold
to regular customers (other than to the APS subsidiaries) and total electric
plant in service (less reserves for depreciation and amortization) over the
three preceding calendar years.
3. Payment shall be made by the receiving Company to the providing
Company on a monthly basis on or before the 20th day of the succeeding month,
upon receipt of a statement showing the amount due. Certain charges billed may
not be due immediately and will be so indicated on the statement of billing.
Monthly charges may be made on an estimated basis, but adjustments will be made
at the end of each calendar year so that all charges for the calendar year will
be in accordance with the foregoing.
4. Nothing herein shall be construed to release the officers and
directors of any Company from the performance of their respective duties or
limit the exercise of their powers as prescribed by law or otherwise.
5. This Service Agreement shall continue in full force and effect from
year to year but may be terminated by any party upon 60 days' prior notice, and
any Company may terminate its participation in this Service Agreement at any
time with or without notice for any cause deemed by it to be sufficient.
6. The Service Agreement will be subject to termination or modification
at any time to the extent its performance may conflict with the provisions of
the Public Utility Holding Company Act of 1935, as amended, or with any rule or
regulation of the Securities and Exchange Commission adopted before or after the
making of this Service Agreement and shall be subject to the approval of any
state commission or other regulatory body whose approval is a legal prerequisite
to its execution and delivery or performance.
IN WITNESS WHEREOF, each Company has caused this Service Agreement to be
signed by its duly authorized officer, effective as of the date first written
above.
MONONGAHELA POWER COMPANY
By _________________________________
ATTEST: President
______________________________
Assistant Secretary
THE POTOMAC EDISON COMPANY
By _________________________________
President
______________________________
Assistant Secretary
WEST PENN POWER COMPANY
By _________________________________
President
______________________________
Assistant Secretary
Exhibit I
In accordance with the terms and conditions of the Service Agreement dated
July 1, 1996, the Companies may perform the following services for one another:
1. Office Services - including secretarial, typing, mail room services,
duplicating, fleet administration, and other similar services.
2. Operations Services - including line construction, maintenance and
repair; meter reading; substation construction, maintenance and repair; power
station construction, maintenance and repair; supply of transmission and
distribution materials; distribution transformer and regulator repair; oil
circuit recloser repair; testing, inspection and repair of rubber goods; meter
testing; meter wiring; building management; transportation services; substation
construction; substation maintenance; and telecommunications operations.
3. Customer Service Center Services - including answering incoming
customer calls to the Companies via one toll-free number, responding to customer
inquiries, initiating new service, dispatching service and line crews in
response to power outages, handling credit and collection activities, responding
to customer and Public Service Commission complaints, and managing the meter
reading and billing activities.
4. Mail Payment Center - including processing of customer xxxx payments.
5. Other Services - including certain other services in addition to the
above as a Company may be able to provide and/or as one or more of the Companies
may require or request.
