[Federal Register Volume 63, Number 33 (Thursday, February 19, 1998)]
[Notices]
[Pages 8505-8508]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-4204]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-26825]
Filings Under the Public Utility Holding Company Act of 1935, as
Amended (``Act'')
February 12, 1998.
Notice is hereby given that the following filing(s) has/have been
made with the Commission pursuant to provisions of the Act and rules
promulgated thereunder. All interested persons are referred to the
application(s) and/or declaration(s) for complete statements of the
proposed transaction(s) summarized below. The application(s) and/or
declaration(s) and any amendments thereto is/are available for public
inspection through the Commission's Office of Public Reference.
Interested persons wishing to comment or request a hearing on the
application(s) and/or declaration(s) should submit their views in
writing by March 9, 1998, to the Secretary, Securities and Exchange
Commission, Washington, D.C. 20549, and serve a copy on the relevant
applicant(s) and/or declarant(s) at the address(es) specified below.
Proof of service (by affidavit or, in case of an attorney at law, by
certificate) should be filed with the request. Any request for hearing
shall identify specifically the issues of fact or law that are
disputed. A person who so requests will be notified of any hearing, if
ordered, and will receive a copy of any notice or order issued in the
matter. After said date, the application(s) and/or declaration(s), as
filed or as amended, may be granted and/or permitted to become
effective.
Entergy Corporation, et al. (70-9123)
Entergy Corporation (``Entergy''),\1\ of 639 Loyola Avenue, New
Orleans, Louisiana 70113, a registered holding company, and its wholly
owned nonutility subsidiary companies, Entergy Enterprises, Inc.,\2\
Entergy Global Power Operations Corporation and Entergy Power
Operations U.S., Inc.,\3\ each of 4 Park Plaza, Irvine, California
92614, Entergy Power, Inc.\4\ and Entergy Power Marketing Corp.,\5\
each of 10055 Grogan's Mill Road, The Woodlands, Texas 77380, Entergy
Integrated Solutions, Inc.,\6\ 4740 Shelby Drive, Memphis, Tennessee
38118, Entergy Nuclear, Inc.,\7\ 1340 Echelon
[[Page 8506]]
Parkway, Jackson, Mississippi 39213 and Entergy Operations Services,
Inc.,\8\ 110 James Parkway West, St. Rose, Louisiana 70087
(collectively, ``Applicants''), have filed an application-declaration
(``Application'') under sections 6(a), 7, 9(a), 10, 12(b), 12(c),
12(f), 13(b), 32 and 33 of the Act and rules 42, 45, 46, 53, 54, 58,
83, 87, 90 and 91 under the Act requesting authorization to engage in
various financing and related transactions involving Entergy and/or
certain of its nonutility subsidiaries.
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\1\ Through its five domestic retail public utility companies,
Entergy Arkansas, Inc., Entergy Gulf States, Inc., Entergy
Louisiana, Inc., Entergy Mississippi, Inc. and Entergy New Orleans,
Inc. (collectively, ``System Operating Companies''), Entergy
provides electric service to approximately 2.4 million customers
located in the states of Arkansas, Louisiana, Mississippi, Tennessee
and Texas, and retail gas service in portions of Louisiana.
\2\ By Commission order dated June 30, 1995, Holding Co. Act
Release No. 26322 (``June 1995 Order'') Entergy Enterprises, Inc.
(``EEI'') is authorized, among other things, to engage in
development activities with respect to potential investments by
Entergy in various energy, energy-related and other nonutility
businesses. The June 1995 Order also authorized EEI to provide
various management, administrative and support services to certain
of its associate companies, other than Excepted Companies, as
defined below, to provide consulting services to associate and
nonassociates companies and to provide operations and maintenance
services (``O&M Services'') directly, or indirectly, through other
subsidiaries of Entergy (``O&M Subs''), to nonassociate companies
and to certain of its associate companies, using the skills and
resources of other Entergy system companies.
\3\ Entergy Global Power Operations Corporation and its wholly
owned subsidiary, Entergy Power Operations U.S., Inc., were recently
organized by Entergy as O&M Subs under the June 1995 Order.
Applicants represent that to date, neither company has entered into
any agreements for the provision of O&M services.
\4\ Since 1990, Entergy Power, Inc. (``EPI'') has been engaged
in the business of marketing and selling its capacity and related
energy at wholesale to nonassociate bulk power purchasers on market
based terms and conditions. EPI currently owns a 21.5% undivided
ownership interest in Unit No. 2 of the Independence Steam Electric
Generating Station (``Independence 2'') and a 100% ownership
interest in Unit No. 2 of the Ritchie Steam Electric Generating
Station (``Ritchie 2''), at 544 megawatt (``MW'') oil- and gas-fired
generating facility. Together, EPI's interest in Independence 2 and
Ritchie 2 represents an aggregate of 809 MW of generating capacity.
EPI is presently authorized by the Federal Energy Regulatory
Commission (``FERC'') to sell, at market based rates, up to an
aggregate of 1,500 MW of capacity and energy. To facilitate these
sales, EPI receives electric transmission service under the Entergy
system's open access transmission tariff.
\5\ Entergy Power Marketing Corp. (``EPMC'') was originally
organized in 1995 as an EWG, defined below, to engage in the
marketing and brokering of electric power at wholesale. Coincident
with Commission order dated January 6, 1998, Holding Co. Act Release
No. 26812, EPMC relinquished its EWG status. EPMC currently engages
in the brokering and marketing of energy commodities in wholesale
and retail markets in the United States, and risk management and
other activities related to its energy commodities business.
Applicants assert that EPMC does not own or operate any facility
that would cause it to fall within the definition of an ``electric
utility company'' or a ``gas utility company'' under the Act.
\6\ By Commission order dated December 28, 1992, Holding Co. Act
Release No. 25718, Entergy Integrated Solutions, Inc. (``EIS'') was
formed as a wholly owned subsidiary of EEI to engage in, among other
things, the energy management services business and the provision of
related consulting services. EIS's primary business is the
installation and maintenance of high efficiency lighting equipment
through multiyear sales contracts for small to medium size
commercial customers. Under Commission order dated July 27, 1995,
Holding Co. Act Release No. 26342, EIS recently broadened its
product offerings to include the design, installation, operation and
maintenance of high efficiency air conditioning, refrigeration and
energy management systems for commercial, institutional and
government customers.
\7\ Entergy Nuclear, Inc. (``ENI''), a wholly owned subsidiary
of EEI, was formed as an O&M Sub to engage in the business of
operating and managing nuclear power facilities under the June 1995
Order. ENI has entered into a contract to provide services to Maine
Yankee Atomic Power Company through September 30, 1998 in connection
with the decommissioning of the Maine Yankee Nuclear Plant. ENI may
enter into agreements with other utility systems to provide O&M
Services.
\8\ Entergy Operations Services, Inc. (``EOSI''), a wholly owned
subsidiary of EEI was formed as an O&M Sub under the June 1995 Order
to engage in the business of operating and maintaining fossil-fueled
generation, transmission and distribution assets of utility
companies, municipalities and large commercial and industrial
customers, primarily in the United States. EOSI's current business
activities include the sale to nonaffiliates of various O&M
Services, including services related to the design and construction
of fossil-fueled generating facilities and other power projects.
EOSI currently provides services to, or on behalf of, the City of
Austin and ESKOM, a South African utility, with respect to the
management and operations of certain coal-fired generating units and
nuclear generating units owned and/or operated by these customers.
Recently, EOSI has performed substation maintenance and construction
work for several industrial customers.
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New Subsidiaries
Entergy proposes to acquire, directly or indirectly, the securities
of one or more companies (``New Subsidiaries'') organized for the
purposes of (a) performing service and development activities currently
authorized by the Commission \9\ and/or (b) acquiring, owning and
holding the securities of one or more associate companies. These
associate companies would include exempt wholesale generators
(``EWGs''),\10\ foreign utility companies (``FUCOs''),\11\ exempt
telecommunications companies (``ETCs''),\12\ energy-related companies
(``ERCs''),\13\ O&M Subs, other New Subsidiaries and certain
subsidiaries of Entergy (``Authorized Subsidiary Companies'').\14\
EWGs, FUCOs, ETCs, ERCs, O&M Subs, New Subsidiaries and Authorized
Subsidiary Companies are referred to in this Application collectively
as ``Nonutility Companies''.
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\9\ See note 15 below.
\10\ EWGs are defined in section 32 of the Act.
\11\ FUCOs are defined in section 33 of the Act.
\12\ ETCs are defined in section 34 of the Act.
\13\ ERCs are defined in rule 58 under the Act.
\14\ The Authorized Subsidiary Companies are the Applicants,
other than Entergy.
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New Subsidiaries may be direct or indirect subsidiaries of Entergy,
and may perform development activities and administrative services and/
or consulting services, as described below. Investments by Entergy in
New Subsidiaries may take the form of any combination of: (i) purchases
of capital shares, partnership interests, member interests in limited
liability companies, trust certificates or other forms of equity
interests (collectively, ``Capital Stock''); (ii) capital
contributions; (iii) open account advances without interest; (iv)
loans; and (v) Guarantees, as defined below, issued in support of
securities or other obligations of New Subsidiaries. The source of
funds for direct or indirect investments by Entergy in any New
Subsidiary include (a) borrowings authorized by Commission orders dated
February 26, 1997 (HCAR No. 26674); (b) proceeds from the sale of
Entergy common stock authorized by Commission order dated March 25,
1997 (HCAR No. 26693) and June 6, 1996 (HCAR No. 26528); (c) proceeds
derived from securities issuances authorized by the Commission in
future orders; and (d) other available cash resources. Loans by Entergy
to a New Subsidiary will have interest rates and maturity dates that
are designed to provide a return to Entergy of not less than Entergy's
effective cost of capital. To the extent not exempt or otherwise
authorized by the Commission, initial investments in the Capital Stock
of New Subsidiaries will be included in the Aggregate Authorization, as
described below.
To the extent that Entergy provides funds to a New Subsidiary which
are used to invest in any EWG or FUCO, the amount of the investment
will be included in the calculation of ``aggregate investment''
required under rule 53. Moreover, to the extent that Entergy provides
funds to a New Subsidiary which are used to invest in an ERC, the
amount of the investment will be included in the calculation of
``aggregate investment'' required under rule 58.
From time to time, Entergy proposes to consolidate or reorganize
all or any part of its ownership interests in Nonutility Companies and/
or New Subsidiaries to the extent these restructuring activities are
not exempt or otherwise authorized by the Commission.
Guarantees
Entergy and Nonutility Companies also propose to issue guarantees
or provide other forms of credit support or enhancements (collectively,
``Guarantees'') to or for the benefit of Nonutility Companies in an
aggregate amount not to exceed $750 million (``Aggregate
Authorization''), through December 31, 2002. Guarantees may take the
form of Entergy or a Nonutility Company agreeing to guarantee,
undertake reimbursement obligations, assume liabilities or other
obligations with respect to or act as surety on, bonds, letters of
credit, evidences of indebtedness, equity commitments, performance and
other obligations undertaken by Entergy or its associate Nonutility
Companies. Entergy represents that the terms and conditions of
Guarantees will be established through arm's length negotiations based
upon current market conditions. Entergy further undertakes that any
Guarantee it or any Nonutility Company issues will be without recourse
to any System Operating Company.
In determining what portion of the Aggregate Authorization is
available for use, the amount of any guarantee previously issued and
outstanding under the June 1995 Order will reduce Aggregate
Authorization by an equal amount.\15\ However, the amount of any
Guarantee exempt from the Act or otherwise authorized by the Commission
would not reduce the Aggregate Authorization.
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\15\ The June 1995 Order authorizes Entergy to finance the
performance of certain services and the organization of O&M Subs
through purchases of common stock, capital contributions, open
account advances, loans and guarantees provided by EWGs, FUCOs and
other Nonutility Companies in an aggregate amount not to exceed $350
million. This authorization expired on December 31, 1997.
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To the extent that Entergy provides Guarantees in support of its
investment in any EWG or FUCO, the amount of the investment will be
included in the calculation of ``aggregate investment'' required under
rule 53. Moreover, to the extent that Entergy provides Guarantees in
support of its investment in an ERC, the amount of the investment will
be included in the calculation of ``aggregate investment'' required
under rule 58.
O&M Subs
Entergy also proposes to organize and acquire the Capital Stock of
O&M Subs through December 31, 2002. O&M Subs will be formed as domestic
or foreign corporations, partnership or other entities. Following the
organization of an O&M Sub, investments in O&M Subs may take the form
of (i) Additional purchases of Capital Stock; (ii) capital
contributions or open account advances without interest; (iii) loans;
(iv) Guarantees of the securities or other obligations of an O&M Sub;
or (v) any combination of (i) to (iv) above. Loans by Entergy to O&M
Subs will have
[[Page 8507]]
interest rates and maturity dates that are designed to provide a return
to Entergy of not less than Entergy's effective cost of capital. To the
extent not exempt or otherwise authorized by the Commission, initial
investments in the Capital Stock of O&M Subs will be included in the
Aggregate Authorization.
Entergy proposes to continue to provide O&M Services,\16\
indirectly through one or more O&M Subs, to or for the benefit of
associate and nonassociate developers, owners and operators of domestic
and foreign power projects and other electric utility systems or
facilities, including projects that Entergy may develop on its own,
through an associate Nonutility Company, or in collaboration with third
parties. O&M Subs proposes to charge fair market value for O&M Services
performed. To the extent not exempt or otherwise authorized by the
Commission, Entergy requests an exemption from the ``at-cost''
requirements of rules 90 and 91 for services rendered to associate
companies, other than an Excepted Company,\17\ provided that no O&M
Services will be rendered to an associate power project unless the
project (i) Is a FUCO or an EWG that derives no part of its income,
directly or indirectly, from the generation and sale of electric energy
within the United States; (ii) is an EWG that sells electricity at
market-based rates which have been approved by the FERC or the relevant
state public utility commission, provided that the purchaser is not an
Excepted Company; (iii) is a ``qualifying facility'' (``QF'') under the
Public Utility Regulatory Policies Act of 1978, as amended (``PURPA''),
that sells electricity exclusively at rates negotiated at arm's length
to one or more industrial or commercial customers purchasing the
electricity for their own use and not for resale, or to an electric
utility company (other than an Excepted Company) at the purchaser's
``avoided cost'' as determined under the regulations under PURPA; or
(iv) is an EWG or QF that sells electricity at rates based upon its
cost of services, as approved by the FERC or any state public utility
commission having jurisdiction, provided that the purchaser of the
electricity is not an Excepted Company.
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\16\ O&M Services would include, but not be limited to,
development, engineering, design, construction and construction
management, pre-operational start-up, testing and commissioning,
long-term operations and maintenance, fuel procurement, management
and supervision, technical and training, administrative support,
market analysis, consulting, coordination and any other managerial,
technical, administrative or consulting required in connection with
the business of owning or operating facilities used for the
generation, transmission or distribution of electric energy
(including related facilities for the production, conversion, sale
or distribution of thermal energy) or coordinating their operations
in the power market.
\17\ Excepted Companies include the System Operating Companies,
System Energy Resources, Inc., System Fuels, Inc., Entergy Services,
Inc., Entergy Operations, Inc. or any other subsidiary Entergy may
create whose activities and operations are primarily related to the
domestic sale of electric energy at retail or at wholesale or the
provision of related goods or services to Entergy's affiliates.
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Securities Issuances by Nonutility Companies
Entergy requests authorization for Nonutility Companies to issue
and/or sell securities of any type, including the issuance of
Guarantees (collectively, ``Securities''), to Entergy, to other
Nonutility Companies or to nonassociate companies, including banks,
insurance companies and other financial institutions from time to time
through the earlier to occur of December 31, 2002 or the effective date
of any rule adopted by the Commission exempting the proposed sale and
issuance of Securities from the requirements of prior approval under
sections 6(a) and 7 of the Act.
Equity Securities issued by a Nonutility Company may include
capital shares, partnership interests, member interests in limited
liability companies, trust certificates or the equivalent security
under applicable foreign law. Equity Securities may be denominated in
either U.S. dollars of foreign currencies. Entergy requests that the
Commission reserve jurisdiction over the modification by Nonutility
Companies of the terms of their charters or other governing documents
to effect the issuance of equity Securities, pending completion of the
record. Entergy undertakes that it will file a post-effective amendment
in this proceeding describing the proposed charter modification and
obtain a supplemental order of the Commission authorizing the charter
modifications.
Entergy also requests that the Commission reserve jurisdiction over
the issuance of any equity Securities not currently exempt under rule
52(b) or otherwise authorized by the Commission (``Other Securities'').
Entergy undertakes that it will file a post-effective amendment in this
proceeding describing the general terms of the proposed Other
Securities and obtain a supplemental order of the Commission
authorizing the issuances of Other Securities.
In connection with the issuance of debt Securities by Nonutility
Companies, Entergy requests authorization for Nonutility Companies to
enter into interest rate swaps, options and similar products to
mitigate interest rate risk associated with debt Securities.
Net proceeds from the issuance and sale of Securities will be used
for general corporate purposes, including (1) loans to and/or equity
investments in Nonutility Companies; (2) for the repayment, refinancing
or redemption of outstanding securities of Entergy or Nonutility
Companies originally issued for purposes of acquiring interests in
Nonutility Companies or providing funds for the authorized business
activities of these companies; and (3) for working capital or other
cash requirements of Nonutility Companies. Entergy states that net
proceeds will only be applied to finance activities that are exempt
under the Act or otherwise authorized by the Commission.
Entergy undertakes that no System Operating Company will incur any
indebtedness, extend any credit, or sell or pledge its assets, directly
or indirectly, to or for the benefit of any Nonutility Company. Entergy
further undertakes that any Securities issued by a Nonutility Company
will be nonrecourse to any System Operating Company.
Services by Nonutility Companies
To the extent not exempt or otherwise authorized by the Commission,
Entergy requests authorization for Nonutility Companies to provide
other Nonutility Companies with administrative services
(``Administrative Services''),\18\ to provide consulting services
(``Consulting Services'')\19\ to other Nonutility Companies and to
nonassociate companies, and to engage in development activities
(``Development Activities''),\20\ all on a world-wide basis.
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\18\ Administrative Services would include, without limitation,
corporate and project development and planning, management,
administrative, employment, tax, legal, accounting, engineering,
consulting, marketing, utility performance and electric data
processing services, and intellectual property development,
marketing and other support services.
\19\ Consulting Services would include, without limitation,
providing technical capabilities and expertise primarily in the
areas of electric power generation, transmission and distribution
and ancillary operations.
\20\ Development Activities would include, without limitation,
investigating sites, research, engineering and licensing activities,
acquiring options and rights, contract drafting and negotiation,
legal, accounting and financial analysis, preparing and submitting
bids and proposals, and other activities necessary to identify and
analyze investment opportunities on behalf of companies in the
Entergy system, excluding Excepted Companies.
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The Applicants state that Administrative Services, Consulting
Services and Development Activities
[[Page 8508]]
would generally be performed at cost. The Applicants further state that
to the extent that any Nonutility Company uses the expertise or
resources of an Excepted Company in connection with the performance of
Administrative Services, Consulting Services or Development Activities,
such expertise or resources shall be provided in a manner consistent
with the terms and conditions contained in the June 1995 Order.
To the extent not exempt or otherwise authorized by the Commission,
Entergy requests an exemption from the ``at cost'' requirements of
rules 90 and 91 for the performance of Administrative Services,
Consulting Services and Development Activities by Nonutility Companies
for associate Nonutility Companies, provided that no Excepted Company
shall be engaged or otherwise involved, directly or indirectly, in the
performance of Administrative Services, Consulting Services or
Development Activities that are provided to Nonutility Companies at a
price other than at cost. Nonutility Companies would continue to
provide Consulting Services to nonassociate companies at market rates.
Payment of Dividends
To the extent not exempt from the Act or otherwise authorized by
the Commission, Entergy requests authorization for Nonutility Companies
to declare and pay dividends out of capital or unearned surplus to
their immediate parent companies through December 31, 2002, subject to
applicable corporate law and any applicable financing agreement which
restricts distributions to shareholders.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-4204 Filed 2-18-98; 8:45 am]
BILLING CODE 8010-01-M