METROPOLITAN EDISON COMPANY - Pennsylvania Public Utility ...

• Corporate Affairs• Communications• Governmental Affairs• Human ResourcesAt the time of our fieldwork, FirstEnergy also was seeking approvals for itsagreement to merge with Allegheny Energy, Inc. 2 The Allegheny Energy, Inc. mergerwould include the Pennsylvania EDC West Penn Power Company and its affiliatedEDCs Potomac Edison Company and Monongahela Power Company and the rest ofthe Allegheny Power System affiliates.Prior Recommendation – Submit affiliate transaction contracts for Commissionapproval for all FE-PA Companies’ transactions with affiliates in accordance withSection 2102.Prior Situation – The FE-PA Companies were not adhering to regulations establishedin the Public Utility Code, 66 Pa. C.S. §2102 which require utilities to submit contractsfor transactions with affiliates to the Commission for its approval. Specifically, theCommission’s authority to approve contracts between public utilities and their affiliatescomes under the general authority to regulate public utilities in the Commonwealth, 66C.S. §2102(a) which, in part, states:No contract or arrangement providing for the furnishing ofmanagement, supervisory, construction, engineering, accounting,legal, financial, or similar services, and no contract or arrangementfor the purchase, sale, lease, or exchange of property, right, orthing or for the furnishing of any service, property, right or thingother than those above enumerated, made or entered into after theeffective date of this section between a public utility and anyaffiliated interest shall be valid or effective unless and until suchcontract or arrangement has received the written approval of thecommission.To be valid, most transactions between FE-PA Companies and their affiliatesmust be covered by a contract approved by the PUC. Transactions that are not inexcess of $10,000 are generally exempted from PUC approval, per 66 C.S. §2102(d):. . . where the amount of consideration involved is not in excess of$10,000 or 5% of the par value of outstanding common stock,whichever is smaller. Regularly recurring payments under a generalor continuing arrangement which aggregate a greater annualamount shall not be broken down into a series of transactions tocome with this exemption.(Emphasis added)2 The merger with Allegheny Energy, Inc. subsequently closed on February 25, 2011, after receiving finalapproval from the PAPUC on February 24, 2011.- 19 -