EXHIBIT D-6
PENNSYLVANIA
PUBLIC UTILITY COMMISSION
HARRISBURG, PA 17105-3265
Public Meeting held December 18, 2003
Commissioners Present:
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Application and Affiliated Interest Docket Numbers:
Agreement of Pennsylvania Power A-110450 F0021
Company for approval of the G-00031029
transactions related to the sale of
undivided interests in accounts
receivable to a special purpose
affiliate
ORDER
BY THE COMMISSION:
On October 27, 2003, Pennsylvania Power Company (Penn Power) filed pursuant
to Chapter 11 and Chapter 21 of the Pennsylvania Public Utility Code, 66 Pa.
C.S. Sections 1101, et seq. and 66 Pa. C.S. Sections 2101, et seq.,
respectively, an application for approval of the sale of undivided interests in
accounts receivable (Receivables) to a newly formed wholly owned special purpose
entity (SPE), for the formation of the SPE by Penn Power, and for affiliated
transactions related to the sale of Receivables.
The instant application also seeks relief for the registration of a
securities certificate in the event that the proposed transactions may be viewed
to constitute a form of indebtedness. Penn Power provided proof of compliance
with our regulations at 52 Pa. Code Section 5.14, relating to applications
requiring notice. Further notice was not required and no protest period was
established. No protests or comments have been received.
On December 4, 2003, Penn Power filed a supplement to the instant
application. The supplement included the form of the agreements that will be
entered into as part of the sale of Receivables. Based on those agreements, Penn
Power determined that the registration of a securities certificate was not
necessary since the sale of Receivables is intended to be a true sale and the
termination date for each of the Receivables' arrangements will be 364 days. We
agree that a securities certificate is not necessary for the evidence of
indebtedness for which the date of maturity is set at a period of less than one
year from the date of its execution.
Through the instant application, Penn Power requests authorization to sell
its Receivables at a discount to its wholly owned SPE. The sale of Receivables
is intended to be a true sale in that it provides the SPE with the full benefits
of ownership. Penn Power and the SPE do not intend these transactions to be, or
for any purpose to be characterized as, loans from the SPE to Penn Power.
Furthermore, Penn Power will not have any obligation to repurchase the
Receivables that have been sold to the SPE.
The SPE will fund its purchases of Receivables by selling, on a revolving
basis, undivided ownership interests in the Receivables to one or more
investment companies administered by Bank One, NA and/or to Bank One, NA and the
other committed funded entities (Financial Institutions). The maximum investment
in Receivables at any time will not exceed $25,000,000. The Financial
Institutions will sell commercial paper to fund the purchase of the Receivables.
The proposed sale of Receivables will have no effect on the service
provided to Penn Power's customers. Penn Power will continue to bill and collect
all its utility service accounts receivable in accordance with its current
credit and collection policies.
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Through the sale of Receivables, Penn Power will gain indirect access to
the commercial paper market which should result in financing costs that would be
lower than the cost of conventional financing. Penn Power will use the funds for
general corporate purposes.
Our review of the subject application leads us to conclude that the
proposed sale of receivables is necessary or proper for the service,
accommodation, convenience, or safety of the public and thus the application
should be approved; THEREFORE,
IT IS ORDERED:
1. That the application of Pennsylvania Power Company at A-110450 F0021 and
G-00031029 for approval of the transactions related to the sale of an undivided
interest in accounts receivable to a special purpose affiliate is hereby
approved, and that certificates of public convenience be issued evidencing such
approvals.
2. That within 30 days of the effective date of the sale of accounts
receivable, Pennsylvania Power Company file with this Commission a copy of the
agreement governing such sale in the form in which it is executed.
3. That if it is determined that the instant transaction will not occur,
Pennsylvania Power Company shall promptly file with this Commission notice of
such determination.
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4. That the sale of accounts of receivable authorized in Paragraph No. 1,
above, is subject to audit by the Commission's Bureau of Audits.
BY THE COMMISSION,
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Secretary
(SEAL)
ORDER ADOPTED: December 18, 2003
ORDER ENTERED: December 18, 2003
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