Allegheny Power 2013 Annual Report Download - page 56

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As discussed in Note 8, Variable Interest Entities, in June 2013, the SPEs formed by the Ohio Companies issued approximately
$445 million of pass-through trust certificates supported by phase-in recovery bonds with a weighted average coupon of 2.48% to
securitize the recovery of certain all electric customer heating discounts, fuel and purchased power regulatory assets. The phase-
in recovery bonds were sold to a trust that concurrently sold a like aggregate amount of its pass through trust certificates to public
investors. The proceeds were primarily used to redeem $410 million in existing taxable bonds of the Ohio Companies with a weighted
average coupon of 5.71%, including $30 million of make-whole premiums. The securitization effectively allows for the recovery of
the make-whole premiums and transactional costs through the imposition of non-bypassable phase-in recovery charges on retail
electric customers of the Ohio Companies pursuant to Ohio law. The $410 million of redemption consisted of original maturities of
$225 million due 2013, $150 million due 2015 and $35 million due 2020. The make-whole premiums paid are included in cash flows
from operating activities in the Consolidated Statement of Cash Flows.
On November 15, 2013, AE Supply optionally redeemed $235 million of its 7.00% PCRBs due July 15, 2039 at 100% of the principal
amount in connection with the deactivation of operations at Hatfield's Ferry.
On November 27, 2013, MP issued $400 million of 4.10% FMBs due April 15, 2024 and $600 million of 5.40% FMBs due December
15, 2043. Proceeds from this offering were used by MP to: (i) repay at maturity $300 million of its FMBs, 7.95% Series due December
15, 2013; (ii) redeem $120 million of its FMBs, 6.70% Series due June 15, 2014; (iii) repay a $572.7 million short-term promissory
note originally issued on October 9, 2013 to its affiliate, AE Supply in connection with MP’s acquisition of the remaining ownership
of the Harrison Power Station; and (iv) for working capital needs and other general corporate purposes.
During December of 2013, FE entered into an agreement to extend and amend its $150 million term loan agreement with a maturity
date of December 31, 2014. The maturity of the loan was extended to December 31, 2015 and the principal amount was increased
to $200 million. On December 26, 2013, PN redeemed $150 million of its 5.13% Senior Notes due April 1,2014 and ME redeemed
$100 million of its 4.88% Senior Notes due April 1, 2014.
Cash Flows From Investing Activities
Cash used for investing activities in 2013 principally represented cash used for property additions. The following table summarizes
investing activities for 2013, 2012 and 2011:
For the Years Ended December 31,
Cash Used for Investing Activities 2013 2012 2011
(In millions)
Property Additions:
Regulated distribution $ 1,272 $ 1,074 $ 868
Regulated transmission 461 507 390
Competitive energy services 827 1,014 778
Other and reconciling adjustments 78 83 93
Nuclear fuel 250 286 149
Cash received from Allegheny merger — — (590)
Proceeds from asset sales (4) (17) (840)
Investments 72 (62) 42
Asset removal costs 146 229 114
Other (9) 43 (48)
$ 3,093 $ 3,157 $ 956
Net cash used for investing activities during 2013 decreased by $64 million compared to 2012. The decrease was principally due
to a decrease in property additions of $40 million, lower asset removal costs and nuclear fuel, partially offset by an increase in net
purchases of investment securities and lower cash investments.
In 2012, FG acquired certain equity and other lessor interests in connection with the 1987 Bruce Mansfield Plant sale and leaseback
transactions for approximately $262 million and in March of 2013, FG acquired the remaining interests for approximately $221
million. During 2013, NG purchased lessor equity interests in OE's existing sale and leaseback of Beaver Valley Unit 2 for $23
million. Additionally, in February 2014, NG purchased lessor equity interests in OE's existing sale and leaseback of Beaver Valley
Unit 2 for approximately $94 million.