EXHIBIT B-3
SERVICE AGREEMENT
BETWEEN THE
ALLEGHENY POWER SERVICE CORPORATION
AND
__________________________________________
THE SERVICE AGREEMENT, between Allegheny Power Service
Corporation, a corporation formed under the laws of the State of
Maryland, (the "Service Company"@) and _____________________, a
corporation formed under the laws of the State of __________ (the
"Company").
WITNESSETH:
WHEREAS, the Service Company was created to perform
certain management duties on behalf of Allegheny Energy, Inc.
(the "System"), its utility subsidiary companies (the
"Subsidiaries") and its non-utility subsidiary company; and
WHEREAS, the Service Company offers to provide a
central organization to furnish to the System, the Subsidiaries
and the Company certain advisory, supervisory and other services
in accordance with current practices and procedures; and
WHEREAS, the Company wishes to accept the offer
proposed by the Service Company;
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. The Service Company hereby offers to furnish to
the Company the services detailed on Exhibit I attached hereto
and made a part hereof.
2. For all services rendered for the Company by the
Service the Company agrees to pay the cost thereof. For services
rendered to one or more Subsidiaries and/or the System and/or the
Company, the allocation will be based on the average of the prior
three years' direct costs charged by the Service Company to each
Subsidiary and the Company. Until a
three-year history for the
Company is developed, the Company=s costs will be deemed to be
the same as the average of the System's prior three years' direct
costs, thereby reducing each Subsidiary's share proportionately.
Once a three-year history for the Company is available, APSC will
calculate an allocation percentage for the Company. If the
difference between that allocation percentage and the one used
for any of the Company=s first three years is material, then APSC
will recalculate all allocation percentages for those years in
which the difference was material and the Company, the
Subsidiaries or the System will each either pay an additional
amount or receive a refund of a particular amount for that year.
3. The payment for services rendered by the Service
Company to the System, the Subsidiaries and the Company shall
cover all the costs and expenses of its doing business, excluding
only a return for the use of equity capital, and that each
Subsidiary, the System and the Company shall pay its direct or
fair proportionate share.
4. Payment shall be made by the Company to the
Service 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 by the Service Company to the
Company 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.
5. Nothing herein shall be construed to release the
officers and directors of the Company from the performance of
their respective duties or limit the exercise of their powers as
prescribed by law or otherwise.
6. This Service Agreement shall continue in full
force and effect from year to year but may be terminated by
either party upon 60 days' prior notice, and the Company may
terminate such contract at any time with or without notice for
any cause deemed by it to be sufficient.
7. 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, regulation or order 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.
If the Company desires to accept this offer, please
cause it to be executed in the space provided below by your duly
authorized officers.
Very truly yours,
ALLEGHENY POWER SERVICE CORPORATION
By
President
Attest:
Secretary
Pursuant to authorization of the Board of Directors of this
Company, we hereby accept the above offer this ___ day of
__________, 199_.
___________________________
By
President
Attest:
Secretary
Exhibit I
Allegheny Power Service Corporation Principal Functions
In accordance with the terms and conditions of the Service
Agreement dated __________, 199__, the Service Company shall
perform for the Company the following services:
1. Provide technical support as needed to evaluate,
implement, and develop unregulated opportunities
related to the System's electric business (including,
but not limited to, any engineering, construction,
management and/or operating activities associated with
the development of bulk power supply opportunities).
2. Planning and implementation of financial programs to
raise the funds required for the Company, including
handling arrangements for bank borrowings and sales of
securities and relationships with investors and
analysts.
3. Counsel on corporate, legal and regulatory matters and
on important contractual relationships.
4. Provide general and administrative services including,
but not limited to, the following:
a) Purchasing.
b) Customer billing and accounting.
c) Information services, including computer
applications and programming and electronic data
processing.
d) Preparation of consolidated financial statements
and cost, statistical, and financial data, as
required.
e) Assistance with respect to certain personnel
matters, including, but not limited to, employee
benefit matters.
f) Preparation and filing of consolidated income tax
returns and following developments in federal and
state taxation regulations.
g) Administration of insurance.
h) Internal auditing.
i) Corporate security.
5. Certain other services in addition to the above as the
Service Company may be able to provide and/or the
Company may require or request.
