[Federal Register Volume 60, Number 77 (Friday, April 21, 1995)]
[Notices]
[Pages 19973-19981]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-9854]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-26273]
Filings Under the Public Utility Holding Company Act of 1935, as
Amended (``Act'')
April 14, 1995.
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 declarations(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 May 8, 1995, 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,
[[Page 19974]] 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.
Northeast Utilities, et al. (70-8076)
Northeast Utilities (``Northeast''), 174 Brush Hill Avenue, West
Springfield, Massachusetts 01089, a registered holding company, HEC
Inc. (``HEC''), 24 Prime Parkway, Natick, Massachusetts 01760, a
nonutility subsidiary of Northeast, HEC International Corporation
(``HEC International''), 24 Prime Parkway, Natick, Massachusetts 01760
and HEC Energy Consulting Canada Inc. (``HEC Canada''), 285 Yorkland
Boulevard, Willowdale, Ontario M2J 1S5 Canada, each a wholly owned
nonutility subsidiary of HEC, and HECI, 1800 Harrison Street, Oakland,
California 94612, a joint venture subsidiary that is 50% owned by HEC
International and 50% owned by a non-affiliate (collectively,
``Applicants'') have filed a post-effective amendment under sections
9(a), 10, 12(b) and 13(b) of the Act and rules 45, 54, 87, 90 and 91 to
HEC's application-declaration filed under sections 9(a), 10, 12(b) and
13 (b) of the Act and rules 45, 87, 90 and 91 thereunder.
By order dated July 27, 1990 (HCAR No. 25114-A) (``1990 Order''),
among other things, Northeast was authorized to organize HEC and
acquire HEC's capital stock. The 1990 Order also authorized HEC to
acquire substantially all of the assets of HEC Energy Corporation, a
company that provided energy management services to large institutional
customers in New England, New York and elsewhere. In addition, the 1990
Order authorized HEC's provision of energy management services and
demand-side management (``DSM'') services to customers in New England
and New York (``Region''). Furthermore, the 1990 Order authorized HEC
to provide limited services outside the Region.
By order dated September 30, 1993 (HCAR No. 25900) (``1993
Order''), HEC was authorized to provide additional energy management
and DSM services and to enter the consulting business in the energy
management and DSM area. The 1993 Order provided that revenues (other
than consulting revenues) attributed to customers outside the Region
would not exceed revenues (other than consulting revenues) attributed
to customers within the Region (``50% Limitation'').
By order dated August 19, 1994 (HCAR No. 26108) (``1994 Order''),
the Commission authorized HEC to organize and acquire HEC Canada and
HEC International. HEC Canada was organized to provide energy
management, DSM and consulting services to customers located in Canada.
HEC International was organized to participate, on a 50/50 basis, in a
joint venture with Barakat & Chamberlin, an unaffiliated company, to
form HECI, a subsidiary of HEC International. HECI was formed to
provide energy management, DSM and consulting services to customers
located in the western United States (Washington, Oregon, California,
Montana, Idaho, Wyoming, Colorado, Utah, New Mexico, Nevada and
Arizona) and in foreign countries (except Canada). Under the 1994
Order, the revenues (except consulting revenues) of HEC Canada and
HEC's share of HECI's revenues are combined with HEC's revenues for
purposes of the 50% Limitation.
The Applicants now propose that the Commission authorize HEC's and
HEC's direct and indirect subsidiaries' activities, as authorized in
the 1990 Order, 1993 Order and 1994 Order, without regard to the 50%
Limitation.
In addition, HEC requests authorization to form joint ventures with
utilities serving customers in different areas outside of the Region,
without subsequent Commission approval. These joint ventures would be
organized to provide the services that HEC currently provides. The
services of each such joint venture would be provided to customers
located in a defined region that would include, but not be limited to,
the service areas of the participating utility.
The joint ventures between HEC and the utilities would usually be
formed on a 50/50 ownership basis, although other equity sharing may be
negotiated. HEC and the participant utility would each advance money,
property or other consideration to the joint venture (all of which will
be treated as open account advances) for their respective interests in
the joint venture as needed for the joint venture's operations during
the period through June 30, 1996. The joint ventures will reimburse HEC
for its cost of money allocable to such advances. Similarly, each of
the joint ventures would also reimburse the participating utility for
its advance at a rate not to exceed the utility's cost of money.
Some of the joint ventures' expenses may be paid directly by HEC or
the participating utility. For those expenses, the joint venture
participant paying the bill will invoice the other participant's share
of the paid expense. Direct payment of the joint venture's expenses
would be treated as an advance to the joint venture with the same term
and interest rate as the open account advances described above.
HEC's outstanding advances plus the value of any other
contributions to a joint venture combined with HEC's direct payment of
any costs associated with that venture would not exceed $1 million at
any time for any of these joint ventures, unless further Commission
authorization is obtained. In aggregate, HEC's outstanding advances and
other payments to all such joint ventures will not exceed $8 million at
any time, unless further Commission approval is obtained.
The joint ventures would enter into agreements with HEC (and the
participating utilities) to subcontract for their services. Those
services would be provided at cost pursuant to rule 90 and would not be
applied toward the $1 million per venture limit. These subcontract
agreements would include provisions prohibiting HEC and the
participating utility from competing with the joint venture.
Cinergy Corporation, et al. (70-8589)
CINergy Corp. (``CINergy''), a registered holding company, CINergy
Investments, Inc. (``CINergy Investments''), a wholly owned subsidiary
of CINergy, and CINergy Services, Inc. (``Services''), a wholly owned
subsidiary service company of CINergy all located at 139 East Fourth
Street, Cincinnati, Ohio 45202, have filed an application-declaration
under Sections 6(a), 7, 9(a), 10, 12(b), 13(b), 32 and 33 of the Act
and Rules 43, 45, 51, 53 and 83.
CINergy and CINergy Investments propose, through May 31, 1998, to
facilitate investments in foreign utility companies (``FUCOs'') and
foreign exempt wholesale generators (``EWGs''). Specifically, CINergy
and CINergy Investments propose to: (1) Acquire, in one or more
transactions, the securities of one or more Companies to be organized
for the purpose of engaging, directly or indirectly, and exclusively,
in the business of acquiring, owning and holding the securities of,
and/or providing services to, one or more FUCOs and/or EWGs; (2) make
direct and/or indirect debt and equity investments in companies
(``Special Purpose Companies'') and certain existing special purpose
subsidiary companies (``Existing Special Purpose Companies'') and
provide guarantees in connection with the activities of the Special
Purpose Companies up to an aggregate principal amount of $115 million;
and (3) for the Special Purpose Companies to engage in external equity
and non-recourse debt financing transactions with unaffiliated third
[[Page 19975]] parties up to an aggregate principal amount of $300
million.
The terms of such debt and equity securities and guaranties would
be determined in light of the circumstances then prevailing and through
later negotiations with third parties, within certain parameters as to
maximum rates of interest, maturity dates, minimum consideration for
par value shares, and other matters. As of December 31, 1994, CINergy's
aggregate net outstanding investment in FUCOs and EWGs through Existing
Special Purpose Companies was approximately $20 million. The aggregate
net investment of CINergy and CINergy Investments outstanding at any
one time in Special Purpose Companies and Existing Special Purpose
Companies would not exceed $115 million.
CINergy and CINergy Investment also propose that the Special
Purpose Companies provide services to their subsidiaries, an to other
Special Purpose Companies and their subsidiaries. CINergy Services
proposes to provide such additional services as may be necessary or
desirable for the development, acquisition, establishment and operation
of the Special Purpose Companies and their investments and properties.
CINergy anticipates that the Special Purpose Companies and their
subsidiaries will meet (and, in the case of the Existing Special
Purpose Subsidiaries and their subsidiaries, will continue to meet) the
requirements of Rule 83(a) under the Act. Accordingly, the CINergy
requests that services provided to the Special Purpose Companies and
their subsidiaries be exempt from the standards of Section 13 (b) of
the Act and the rules and regulations promulgated thereunder.
CINergy Corp. et al. (70-8587)
CINergy Corp. (``CINergy''), 139 East Fourth Street, Cincinnati,
Ohio 45202, a registered holding company, and certain of its
subsidiaries, CINergy Services, Inc. (``Services''), The Cincinnati Gas
& Electric Co. (``CC&E''), The Union Light, Heat and Power Co.
(``ULH&P''), The West Harrison Gas and Electric Co. (``West
Harrison''), Lawrenceburg Gas Co. (``Lawrenceburg''), Miami Power Corp.
(``Miami''), Tri-State Improvement Co. (``Tri-State''), KO Transmission
Co. (``KO''), CINergy Investments, Inc. (``Investments''), CG&E
Resource Marketing, Inc. (``Resource Marketing''), Power International,
Inc. (``PII''), Beheer-En Belegginsmaatschappij Bruwabel B.V.
(``Bruwabel''), Power International s.r.o. (``Power International''),
and Power Development s.r.o. (``Power Development''), each of 139 East
Fourth Street, Cincinnati, Ohio 45202, and PSI Energy, Inc. (``PSI
Energy''), Wholesale Power Services, Inc. (``Wholesale Power''), PSI
Recycling, Inc. (``Recycling''), and Power Equipment Supply Co.
(``Equipment''), each of 1000 East Main Street, Plainfield, Indiana
46168 (collectively, the ``Applicants''), have filed an application-
declaration under sections 6, 7, 9(a), 10, 12(b), 12(f) and 13 of the
Act and rules 40, 43, 45, 53, 54, and 80-95 thereunder.
The Applicants seek authorization, through May 31, 1997, to incur
short-term borrowings, to issue notes and/or commercial paper, to make
capital contributions, and to implement a system of money pools to
provide for their short-term cash requirements. The aggregate principal
amount of short-term borrowings, notes and/or commercial paper
outstanding at any one time for the CINergy system as a whole would not
exceed $1 billion. The proposed transactions and the proposed
participation of the various Applicants are described below.
Transactions by Utilities and Related Companies
Through May 31, 1997, (1) CG&E, PSI Energy, ULH&P, Lawrenceburg,
West Harrison, Miami, Services, KO and Tri-State seek authorization to
incur short-term borrowings, and to issue notes in connection
therewith; (2) CG&E and PSI Energy seek authorization to issue and sell
commercial paper; (3) CINergy seeks authorization to issue guarantees
and provide letters of credit in connection with the short-term
borrowings; and (4) all of the foregoing companies seek authorization
to implement a money pool (``Utility Money Pool'') to coordinate and
provide for certain of their short-term cash and working capital
requirements. The aggregate principal amount of short-term borrowings
and/or commercial paper outstanding at any one time would not exceed
the following amounts\1\: For Services, $100,000,000; for PSI Energy,
$400,000,000; for CG&E, $400,000,000; for ULH&P, $35,000,000; for West
Harrison, $200,000; for Lawrenceburg, $3,000,000; for Miami, $100,000;
for KO, $2,000,000; and for Tri-State, $40,000,000.
\1\CINergy was authorized to incur short-term indebtedness
through bank borrowings, to issue notes and commercial paper, and to
obtain letters of credit, in an aggregate amount of up to
$375,000,000 in HCAR No. 26215 (Jan. 11, 1995). CINergy's proposed
guarantees in support of bank borrowings would also be subject to
this limitation.
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PSI Energy, CG&E, UHL&P and Lawrenceburg have existing lines of
credit with banks with commitments aggregating $230 million, $82
million, $30 million and $400,000, respectively, under which $120.5
million, $0, $14.5 million and $0, respectively, in borrowings were
outstanding as of December 31, 1994. As of December 31, 1994, Services,
West Harrison, Miami, KO and Tri-State had no committed lines of
credit. Certain of the Applicants also have informal arrangements for
short-term borrowings with various banks on an ``as offered'' basis,
also known as uncommitted lines of credit. Authorization is sought for
the above Applicants to borrow from banks pursuant to the existing
formal and informal lines of credit described above (and any increases
therein that may be negotiated) and pursuant to new credit facilities
(formal or informal) that may be arranged from time to time, or to
borrow funds managed by bank trust departments, if the effective cost
of money is equal to or less than that available from the sale of
commercial paper or other bank borrowings.
Bank borrowings may be evidenced by promissory notes, each of which
would be issued on or before May 31, 1997 and would mature on a date no
later than one year (or, in the case of up to $200 million in
borrowings by PSI Energy, no later than 24 months) from the date of
issuance, would bear interest at a rate no higher than the effective
cost of money for unsecured prime commercial bank loans prevailing on
the date of such borrowing, and would be subject to prepayment at the
option of borrower, or under certain circumstances with the consent of
the lending bank, in whole at any time or in part from time to time,
without premium or penalty. Amounts outstanding under formal lines of
credit typically would become due immediately upon an event of default,
including non-payment, default under other agreements governing
indebtedness, bankruptcy, or insolvency. Short-term notes may be issued
on either a ``grid'' note basis or a transactional basis, under similar
terms and conditions. The Applicants state that the actual terms of the
notes may vary from the terms described above to reflect customary
terms or particular lending practices and policies of different lending
institutions, but otherwise are expected to be substantially similar.
Compensation arrangements under lines of credit would be on a
compensating balance and/or fee basis. Fees will not exceed 25 basis
points per annum on the commitment, and balance arrangements will
require average balances not to [[Page 19976]] exceed 10% of the amount
of the commitment.
PSI Energy and CG&E also propose to issue and sell commercial paper
to one or more dealers (or directly to financial institutions if such
sale results in an equal or lower cost of money than that applicable to
dealer-placed notes), subject to the limitations on aggregate
outstanding principal amount stated above. The commercial paper will be
in the form of book-entry unsecured promissory notes, with varying
denominations of no less than $25,000 each, and will be issued and sold
by CG&E and PSI Energy at market rates. No commission or fee will be
payable in connection with the issuance and sale of the commercial
paper. The purchasing dealer, however, will reoffer such notes at a
rate less than the rate to the issuer and, as principal, will reoffer
such notes in such a manner as not to constitute a public offering
under the Securities Act of 1933. The discount rate to dealers will not
exceed the maximum discount rate per annum prevailing at the date of
issuance for commercial paper of comparable quality and the same
maturity.
The commercial paper proposed to be issued by CG&E and PSI Energy
will have varying maturities of no more than 270 days from date of
issue and will be issued and sold by CG&E and PSI Energy from time to
time through May 31, 1997. Subject to such limitations, sales of
commercial paper (and the bank borrowings described above) ordinarily
will be structured to mature at such time as excess funds are expected
to become available for money pool loans. Upon the availability of any
such excess funds, external borrowings would be retired and loans
refinanced to the extent such funds became available.
Proceeds of any short-term borrowings and, in the case of CG&E and
PSI Energy, sales of commercial paper, may be used by each such
company: (i) For the interim financing of its construction and capital
expenditure programs; (ii) for its working capital needs; (iii) for the
repayment, redemption or refinancing of its debt and preferred stock;
(iv) to meet unexpected contingencies, payment and timing differences,
and cash requirements, to cover intercompany balances, and for other
lawful general corporate purposes; (v) to loan to other participants in
the Utility Money Pool (except the proceeds of certain borrowings by
PSI Energy with maturities more than twelve months from the date of
issuance); and (vi) in the case of borrowings by Services, for other
lawful purposes in connection with the performance by Services of its
functions as a subsidiary service company under the Act. In addition,
proceeds of borrowings, and other available funds, may be used: (a) By
CG&E to make capital contributions of up to $40 million to Tri-State
and up to $2 million to KO for the purpose of settling intercompany
open-account balances and indebtedness to CG&E and to provide Tri-State
and KO with working capital for their activities in support of CG&E's
operations, and (b) by CG&E and its utility subsidiaries to make loans
and open-account advances to one another in connection with services,
goods and construction provided to one another, in amounts not to
exceed $400 million for CG&E, $35 million for ULH&P, $200,000 for West
Harrison, $3 million for Lawrenceburg and $100,000 for Miami.
Authorization is also sought for CINergy to issue guarantees and
provide letters of credit in connection with short-term borrowings,
subject to the limitations on aggregate principal amount described
above. Fees and expenses incurred by CINergy will not exceed 1% per
year of the face amount of such letters of credit, and CINergy may
charge an annual fee up to 2% of the face amount of guarantees.
Under the proposed terms of the Utility Money Pool, short-term
funds would be available from the following sources for short-term
loans to CG&E, PSI Energy, ULH&P, Lawrenceburg, Miami, West Harrison,
Services, KO and Tri-State from time to time: (1) Surplus funds in the
treasuries of Utility Money Pool participants, including CINergy
(``Utility Internal Funds''), and (2) proceeds from bank borrowings by
Utility Money Pool participants or the sale of commercial paper by
CINergy, CG&E and PSI Energy for loan to the Utility Money Pool
(``Utility External Funds'').\2\ Funds would be made available from
such sources in such order as Services, as administrator of the Utility
Money Pool, may determine would result in a lower cost of borrowing,
consistent with the individual borrowing needs and financial standing
of the companies providing funds to the pool. Companies that borrow
would borrow pro rata from each company that lends, in the proportion
that the total amount loaned by each such lending company bears to the
total amount then loaned through the Utility Money Pool. On any day
when more than one fund source with different rates of interest is used
to fund loans through the Utility Money Pool, each borrower would
borrow pro rata from each such fund source in the Utility Money Pool in
the same proportion that the amount of funds provided by that fund
source bears to the total amount of short-term funds available to the
Utility Money Pool. No party would be required to effect a borrowing
through the Utility Money Pool if it is determined that it could effect
a borrowing at lower cost directly from banks or through the sale of
its own commercial paper. No loans through the Utility Money Pool would
be made to CINergy.
\2\CINergy proposes to use the proceeds of certain borrowings
and sales of commercial paper or common stock, previously authorized
in File Nos. 70-8477 and 70-8521, and any funds available for
general corporate purposes, to loan to the other Applicants when
required through the money pools described in the Application-
Declaration.
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The cost of compensating balances and fees paid to banks to
maintain credit lines by Utility Money Pool participants lending
Utility External Funds to the Utility Money Pool would initially be
paid by the participant maintaining such line. A portion of such costs
would be allocated monthly to the companies borrowing such Utility
External Funds through the Utility Money Pool in proportion to their
outstanding borrowings of such Utility External Funds.
If only Utility Internal Funds comprise the funds available in the
Utility Money Pool, the interest rate applicable to loans of such funds
would be the CD yield equivalent of the 30-day Federal Reserve ``AA''
Industrial Commercial Paper Composite Rate (or if no such Composite
Rate is established for that day, then the applicable rate would be the
Composite Rate for the next preceding day for which such Composite Rate
was established). If only Utility External Funds comprise the funds
available in the Utility Money Pool, the interest rate applicable to
loans of such Utility External Funds would be equal to the lending
company's cost for such Utility External Funds (or, if more than one
Utility Money Pool participant had made available Utility External
Funds on such day, the applicable interest rate would be a composite
rate equal to the weighted average of the cost incurred by the
respective Utility Money Pool participants for such Utility External
Funds). In cases where both Utility Internal Funds and Utility External
Funds are concurrently borrowed through the Utility Money Pool, the
rate applicable to all loans comprised of such ``blended'' funds would
be a composite rate equal to the weighted average of (a) the cost of
all Utility Internal Funds contributed by Utility Money Pool
participants and (b) the cost of all such Utility External Funds. In
circumstances where Utility Internal [[Page 19977]] Funds and Utility
External Funds are available for loans through the Utility Money Pool,
loans may be made exclusively from Utility Internal Funds or Utility
External Funds, rather than from a ``blend'' of such funds, to the
extent it is expected that such loans would result in a lower cost of
borrowing.
Funds not required by the Utility Money Pool to make loans (with
the exception of funds required to satisfy the Utility Money Pool's
liquidity requirements) would ordinarily be invested in one or more
short-term investments, including: (i) Interest-bearing accounts with
banks; (ii) obligations issued or guaranteed by the U.S. government
and/or its agencies and instrumentalities, including obligations under
repurchase agreements; (iii) obligations issued or guaranteed by any
state or political subdivision thereof, provided that such obligations
are rated not less than A by a nationally recognized rating agency;
(iv) commercial paper rated not less than A-1 or P-1 or their
equivalent by a nationally recognized rating agency; (v) money market
funds; (vi bank certificates of deposit; (vii) Eurodollar funds; and
(viii) such other investments as are permitted by section 9(c) of the
Act and rule 40 thereunder.
The interest income and investment income earned on loans and
investments of surplus funds would be allocated among the participants
in the Utility Money Pool in accordance with the proportion each
participant's contribution of funds bears to the total amount of funds
in the Utility Money Pool and the cost of funds provided to the Utility
Money Pool by such participant.
Each Applicant receiving a loan through the Utility Money Pool
would be required to repay the principal amount of such loan, together
with all interest accrued thereon, upon demand and in any event not
later than one year from the date of such advance. All loans would be
prepayable by the borrower without premium or penalty. Loans would
ordinarily be made pursuant to open-account advances, and all loans
would be made on or before May 31, 1997. Each lender would at all times
be entitled to receive upon demand one or more promissory notes
evidencing any and all loans by such lender, dated as of the date of
the initial borrowing (and in any event not later than May 31, 1997),
maturing on demand or on a specified date not latter than one year
after the date of the applicable borrowing, and prepayable in whole at
any time or in part from time to time, without premium or penalty.
Interest would be accrued by each borrower monthly.
Transactions by Nonutility Companies
Through May 31, 1997, (1) PII, Bruwabel, Power International, Power
Development, Recycling, Equipment and Wholesale Power (``Designated
Nonutility Companies''), Resource Marketing and CINergy Investments
seek authorization to incur short-term borrowings and to issue notes in
connection therewith; (2) CINergy seeks authorization to issue
guarantees and provide letters of credit in connection with such
borrowings; and (3) all of the foregoing companies seek authorization
to implement a money pool arrangement (``Nonutility Money Pool'') to
coordinate and provide for their short-term cash and working capital
requirements. The aggregate principal amount of short-term borrowings
and notes outstanding would not exceed the following amounts:\3\ for
CINergy Investments, $22,000,000; for PII, $6,750,000; for Bruwabel,
Power International and Power Development, an aggregate of $4,000,000;
for Recycling, $4,400,000; for Equipment, $1,100,000; for Wholesale
Power, $1,200,000; and for Resource Marketing, $2,000,000.
\3\See footnote 1.
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Proceeds of borrowings by CINergy Investments, Resource Marketing
and the Designated Nonutility Companies would be used (a) to provide
working capital to continue to operate such companies' businesses and
to fund commitments existing as of the registration of CINergy as a
holding company under the Act on October 25, 1994, (b) to repay and
refinance indebtedness, (c) to loan to other participants in the
Nonutility Money Pool, and (d) in the case of Resource Marketing, for
the additional purposes of making loans and capital contributions to
U.S. Energy Partners, a partnership in which Resource Marketing holds
an interest.
PII has a $1,000,000 bank line of credit, under which no borrowings
were outstanding at December 31, 1994, which PII proposes to maintain.
It is also proposed that CINergy Investments, Resource Marketing, and
the Designated Non-Utility Companies also have authority to borrow
under bank facilities, and or CINergy to provide guaranties and letters
of credit in connection therewith. Borrowings under such facilities
would be evidenced by promissory notes with terms substantially similar
to those described above under Transactions by Utilities and Related
Companies (but could bear interest at a rate of up to prime plus 2%)
and would be subject to compensation arrangements similar to those
described therein. Fees and expenses in connection with guaranties and
letters of credit to be provided by CINergy also will not exceed the
amounts stated above under such heading.
Because certain of the Designated Nonutility Companies and Resource
Marketing have heretofore been net borrowers from their corporate
parents, it has been the practice of such corporate parents to advance
funds to such companies in the form of intercompany loans and open-
account advances and periodically to forgive such indebtedness, thereby
making capital contributions in the amount forgiven. Because certain of
the Designated Nonutility Companies and Resource Marketing may remain
net borrowers during the period covered by the proposed transactions,
authorization is requested for CINergy from time to time through May
31, 1997 to make capital contributions and loans (in the form of open-
account advances, repayable on demand, or otherwise through the
Nonutility Money Pool described below) to CINergy Investments and the
Designated Nonutility Companies, and for CINergy Investments and the
Designated Nonutility Companies to make capital contributions and loans
(in the form of open-account advances, repayable on demand, or
otherwise through the Nonutility Money Pool) to their subsidiary
companies, provided that the aggregate amount of all outstanding
borrowings by, and capital contributions to, a company shall not exceed
its aggregate borrowing limit.
Authority is also requested through May 31, 1997 (i) for CINergy
and CINergy Investments from time to time to make capital contributions
and loans (in the form of open-account advances, repayable on demand,
or otherwise through the Nonutility Money Pool) to Resource Marketing,
and (ii) for Resource Marketing from time to time to make capital
contributions and loans to Energy Partners, to provide for working
capital needs, repayment or refinancing of debt, unexpected
contingencies, payment and timing differences, cash requirements and
other general business purposes of Energy Partners. The aggregate
amount of all outstanding capital contributions and loans would not
exceed $2 million to Resource Marketing and $2 million to Energy
Partners.
Under the proposed arrangements governing the Nonutility Money
Pool, short-term funds will be available from the following sources for
use by the respective participants from time to [[Page 19978]] time:
(1) Surplus funds in the treasuries of the Nonutility Money Pool
participants, including CINergy (``Nonutility Internal Funds''), and
(2) proceeds from the sale by CINergy of commercial paper and bank
borrowings by the Nonutility Money Pool participants (``Nonutility
External Funds'').\4\ Loans through the Nonutility Money Pool will be
made only from funds provided by CINergy, CINergy Investments, Resource
Marketing or Designated Nonutility Companies, and no loan will be made
to CINergy, CINergy Investments, Resource Marketing, Energy Partners or
any Designated Non-Utility Company by the Utility Money Pool or by any
public utility company in the CINergy system. In addition, no loans
through the Nonutility Money Pool will be made to CINergy. Funds made
available by CINergy for loans through the money pools will be first
made available for loans through the Utility Money Pool and thereafter
for loans through the Nonutility Money Pool.
\4\See footnote 2.
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The Nonutility Money Fund will be administered by Services and will
have terms similar to those governing the Utility Money Pool (described
above under Transactions by Utilities and Related Companies) with
respect to pro rata borrowing, costs and fees for Nonutility External
Funds lent to the Nonutility Money Pool, interest rates for loans from
Nonutility Internal Funds, Nonutility External Funds and combinations
of Nonutility Internal and External Funds, temporary investment of
funds in the Nonutility Money Pool not required to make loans,
allocation of interest and other investment income earned on loans and
investment of surplus funds, terms of loans made by the Nonutility
Money Pool, and terms of notes evidencing such loans.
Surplus funds of the Utility Money Pool and the Nonutility Money
Pool may be combined in common short-term investments, but separate
records of such funds shall be maintained by Services as administrator
of the pools, and interest thereon shall be separately allocated, on a
daily basis, to each money pool in accordance with the proportion that
the amount of each money pool's surplus funds bears to the total amount
of surplus funds available for investment from both money pools.
Operation of the Utility and Nonutility Money Pools, including
record keeping and coordination of loans, will be handled by Services
under the authority of the appropriate officers of the Applicants.
Services will administer the Utility and Nonutility Money Pools on an
``at cost'' basis and will maintain separate records for each money
pool.
Appalachian Power Company, et al. (70-8591)
Appalachian Power Company, 40 Franklin Road, Roanoke, Virginia
24022, Columbus Southern Power Company, 215 North Front Street,
Columbus, Ohio 43215, Kentucky Power Company, 1701 Central Avenue,
Ashland, Kentucky 41101, Kingsport Power Company, 422 Board Street,
Kingsport, Tennessee 37660, Indiana Michigan Power Company, One Summit
Square, Fort Wayne, Indiana 46801, Ohio Power Company, 339 Cleveland
Avenue, SW., Canton, Ohio 44702, and Wheeling Power Company, 51--16th
Street, Wheeling, West Virginia 26003 (sometimes individually referred
to herein as ``Company'' and collectively as ``Companies''), all
public-utility subsidiary companies of American Electric Power Company,
a registered holding company, have filed an application-declaration
under sections 6, 7, 9(a), 10, and 12(d) of the Act and rules 40(a)(5),
41 and 44 thereunder.
The Companies each propose to market, construct, install, service,
maintain, acquire, sell (and sell maintenance agreements and warranties
for) (i) equipment generating, transmitting or distributing electric
power or steam, (ii) manufacturing and other equipment consuming
electric power or using steam (including electro-technologies), or
(iii) equipment providing load management or communications to the
equipment described in (i) or (ii) above (collectively, ``Customer
Equipment Services''). In addition, each Company proposes to broker
Customer Equipment Services provided by third party contractors and
provide energy management, technical, operating, training and
consulting services (``Customer Consulting Services''). Customer
Equipment Services and Customer Consulting Services will be provided
for (i) present and anticipated industrial, commercial and governmental
retail electric customers of the Company and of full and partial
requirement wholesale customers of the Company and (ii) present and
anticipated nonaffiliated wholesale customers of the Company.
Cutomer Equipment Services will be provided at market-based fees;
the price for Customer Consulting Services will range from free to
market-based rates. The maximum annual revenues from Customer Equipment
Services for each Company will be 5% of the operating revenues of the
Company for the prior calendar year.
Each Company also proposes to provide or broker financing to
customers in connection with Customer Equipment Services through direct
loan, installment purchase, operating or finance lease arrangements
(including sublease arrangements) or loan guarantees. The maximum
amount of equipment that each Company may finance at any one time is 5%
of capitalization of the Company at the end of the prior calendar year.
Interest on loans and imputed interest lease payments will be at
prevailing market rates. The obligations will have terms ranging from
one to thirty years and will be secured or unsecured. Each Company will
finance the Customer Equipment Services with its general corporate
funds and may assign obligations acquired from customers to banks or
other financial institutions with or without recourse.
Finally, each Company proposes to provide meter reading, billing
and other services to gas, water and other utilities in their service
territories. Such services would be provided at market based rates.
Central Power & Light Co. (70-8597)
Central Power and Light Company (``CPL''), a wholly owned electric
utility subsidiary company of Central and South West Corporation, a
registered holding company, has filed an application-declaration under
sections 6(a), 7, 9(a), 10, 12(c) and 12(d) of the Act and rules 44 and
51 thereunder.
CPL seeks authorization through December 31, 1997 to incur
obligations in connection with the proposed issuance by Matagorda
County Navigation District No. One (``District'') in one or more series
of up to $475 million in Pollution Control Revenue Bonds. Of this
amount, up to $325 million will be Pollution Control Revenue Refunding
Bonds (``Refunding Bonds'') and up to $150 million will be Pollution
Control Revenue Bonds and/or Solid Waste Revenue Bonds (``New Money
Bonds''). The issuance of New Money Bonds and the Refunding Bonds
(``New Bonds'') might be combined.
The purpose of the Refunding Bonds is to reacquire all or a portion
of five types of previously issued Pollution Control Revenue Bonds
(``Old Bonds''). The purpose of the New Money Bonds is to reimburse CPL
for expenditures qualified for tax-exempt financing or to provide for
current solid waste expenditures.
CPL also seeks authorization to manage interest rate risk or to
reduce interest rate costs through forward re- [[Page 19979]] financing
techniques and through the use of interest rate swaps through the life
of the Old Bonds and/or New Bonds.
The Old Bonds were issued to finance pollution control and solid
waste disposal facilities (``Facilities'') for the South Texas Project
Electric Generating Station (``Plant''). CPL owns a 25.2% undivided
interest in the Plant. The Old Bonds were issued pursuant to Indentures
of Trust (``Indentures'') with three banks for trustees--NationsBank of
Texas, N.A., the Bank of New York, and Texas Commerce Bank, N.A.
(``Trustees''):
------------------------------------------------------------------------
Interest First
Series rate Maturity redemption
(percent) date date
------------------------------------------------------------------------
1984.................................. 10\1/8\ 10/15/14 10/15/95
1984-A................................ 7\1/2\ 12/15/14 12/15/99
1985-A................................ 9\3/4\ 07/01/15 07/01/95
1986.................................. 7\7/8\ 12/01/16 12/01/96
1990.................................. 7\1/2\ 03/01/20 03/01/00
------------------------------------------------------------------------
CPL and the District entered into Installment Sale Agreements
(``Sale Agreements'') to provide for the issuance of the Old Bonds. In
connection with the issuance of the New Bonds, CPL will amend the Sale
Agreements, enter into agreements with similar terms, and/or enter into
new installment sale agreements (``Amended Sale Agreements'').
The New Bonds will bear a fixed or floating interest rate, might be
secured with First Mortgage Bonds, and will mature between one and
forty years. The interest rate, redemption provisions and other terms
and conditions applicable to the New Bonds will be determined through
negotiation between CPL and one or more investment banking firms that
will purchase or underwrite the New Bonds (``Purchasers'').
It is anticipated that the New Bonds will be optionally redeemable
upon the occurrence of various events specified in the Amended Sale
Agreements and the Indentures, which might be amended or supplemented
(``Supplemental Indentures''), or, in the case of the New Money Bonds,
a new indenture (``New Indenture''). The New Bonds also will be
optionally redeemable with premiums to be determined through
negotiation between CPL and the Purchasers and will be mandatorily
redeemable in the event the interest on the New Bonds becomes subject
to federal income tax.
CPL might obtain credit enhancement for the New Bonds, which could
include bond insurance, a letter of credit or a liquidity facility, if,
for example, it were to issue floating rate bonds. A premium or fee
would be paid to obtain the credit enhancement, which would, however,
result in a net benefit through a reduced interest rate on the New
Bonds.
CPL might issue First Mortgage Bonds, to secure the New Bonds,
subject to applicable indenture restrictions, under a Supplemental
Indenture to its Mortgage Indenture dated November 1, 1943 to the First
National Bank of Chicago and A.H. Bohm (``Mortgage Indenture''). The
First Mortgage Bonds will be issued to the Trustee for the New Bonds
pursuant to the Mortgage Indenture. The First Mortgage Bonds will be
held by the Trustee for the benefit of the holders of the New Bonds and
will not be transferable. The First Mortgage Bonds will be issued in
the exact amount and have terms similar to the New Bonds. To the extent
payments in respect of the New Bonds are made in accordance with their
terms, like payment obligations under the First Mortgage Bonds will be
deemed satisfied.
The optional redemption provisions, the sinking-fund provisions,
and the limitation on dividends relative to the First Mortgage Bonds
might deviate from the SEC Statement of Policy Regarding First Mortgage
Bonds.
CPL anticipates that the New Bonds will be sold by the District
pursuant to a Bond Purchase Agreement (``Purchase Agreement'') between
the District and one or more Purchasers. CPL requests authority to
enter into negotiations with Purchasers with respect to the interest
rate, redemption provisions and other terms and conditions applicable
to the New Bonds and to set the terms of the New Bonds subject to the
receipt of a Commission order if an order has not been issued when CPL
enters into the Purchase Agreement.
The proceeds of the New Bonds will be used to redeem the Old Bonds
pursuant to the terms of the Indentures or reacquire all or a portion
of the Old Bonds through open market and negotiated transactions or
pursuant to one or more tender offers (``Reacquisition'') and reimburse
CPL for expenditures qualified for tax-exempt financing or to provide
for current solid waste expenditures. The proceeds might also be used
to reimburse CPL for Old Bonds previously acquired. Additional funds
required to pay for the Reacquisition and the costs of issuance of the
New Bonds will be provided by CPL from internally generated funds and
short-term borrowings.
CPL will not permit the issuance of the Refunding Bonds unless the
estimated net present value savings is, on an after-tax basis, in
excess of the present value of all costs to acquire the Old Bonds and
issue the Refunding Bonds on the basis of an appropriate discount rate.
Such discount rate would be based on the estimated after-tax interest
rate on the Refunding Bonds.
CPL proposes to manage interest rate risk through interest rate
swaps, forward swaps, caps, collars and floors, and through forward
transactions. CPL might also use interest rate swaps to lower its
interest costs on one or more series of Old Bonds and/or New Bonds. CPL
requests authorization to enter into these types of transactions from
time to time either in connection with the issuance of New Bonds or
otherwise.
CPL could use the interest rate swap market to hedge against
changes in the interest rates of variable rate securities through a
``fixed-for-floating'' swap arrangement. In addition, CPL might be able
to realize a reduced all-in rate in the synthetic fixed market. CPL
might also issue fixed rate New Bonds and then seek to reduce its
interest costs on such New Bonds through a ``floating-for-fixed''
interest rate swap arrangement. In this manner, CPL would hope to take
advantage of interest cost savings associated with short-term interest
rates.
None of the interest rate swaps would be ``leveraged.'' Thus
changes in interest payments or receipts under an interest rate swap
due to changes in the floating rate index used in the swap will not
exceed the product of the change in such index and the notional amount
of that swap. In no event would the aggregate notional amount of the
interest rate swaps exceed $475 million. The interest rate swaps might
also be forward swaps, whereby a swap agreement is entered into but the
exchange of fixed and floating payments does not begin until a future
date, which is generally the call date on outstanding bonds.
It is anticipated that interest rate swap agreements would provide
that redemption, reacquisition or maturation of the Old Bonds and/or
New Bonds would terminate obligations under the swap agreement for a
like notional amount. CPL might enter into a swap that allows optional
termination and CPL would exercise such option for a like notional
amount upon the redemption, reacquisition or maturation of the
corresponding Old Bonds and/or New Bonds. Termination of its
obligations under the interest rate swap agreement might require CPL to
pay an additional amount under the terms of the swap agreement, which
could be substantial.
Finally, CPL also requests authorization to enter into reverse
interest rate swap agreements, or other [[Page 19980]] contractual
arrangements, in order to limit the impact of anticipated movements in
interest rates or offset the effect of interest rate swap agreements.
If CPL issues variable rate New Bonds, it might elect to purchase an
interest rate cap to limit its exposure to increased interest rates.
CPL might also sell an interest rate floor to either reduce the cost of
variable rate debt, or in conjunction with an interest rate cap to
reduce the cost of the cap.
Consolidated Natural Gas Co. et al. (70-8599)
Consolidated Natural Gas Co. (``Consolidated''), CNG Tower, 625
Liberty Avenue, Pittsburgh, Pennsylvania, 15222-3199, a registered
holding company, and Consolidated System LNG Company (``Consolidated
LNG''), of the same address, a wholly owned subsidiary company of
Consolidated, have filed a declaration under section 12(c) of the Act
and rule 46 thereunder.
Consolidated LNG holds what remains of a past venture on the part
of Consolidated into the liquefied natural gas (``LNG'') business, and
LNG terminal and re-gasification facilities at Cove Point, Maryland and
a pipeline between Cove Point and underground pipelines near Loudoun,
Virginia (``LNG Facilities''). Consolidated LNG is for all practical
purposes, and is expected to remain, dormant. Consolidated contemplates
the dissolution of Consolidated LNG.
Consolidated LNG proposes to declare on its common stock ($10,000
par value per share) a one-time dividend to Consolidated of
$48,816,000. This will provide additional cash to Consolidated to
finance other non-utility and utility subsidiaries.
Consolidated LNG has no physical assets. Thus, its asset value is
its capitalization. No dividend was paid from 1988 to 1994.
Consolidated LNG has not made the standard payout of 100% of its liquid
cash assets to Consolidated since 1988. A dividend of $2,502,000 was
declared on December 15, 1994 and paid on February 15, 1995, which left
$304,000 in retained earnings as of that date.
Consolidated LNG now proposes to declare a one-time dividend of
$48,816,000, of which $48,512,000 will come from capital surplus and
$304,000 will be out of retained earnings. When combined with the 1994
dividend of $2,502,000, it achieves an approximate 100% payout of
liquid cash assets to Consolidated. For the remainder of the ten-year
amortization period (until 1997), Consolidated LNG will pay 100% of its
liquid cash assets to Consolidated out of retained earnings.
Consolidated LNG requests Commission authorization to declare and
pay from capital surplus the $48,512,000 portion of the one-time
dividend of $48,816,000 to Consolidated.
The Columbia Gas System, Inc. et al. (70-8605)
The Columbia Gas System, Inc. (``Columbia''), a registered holding
company and a debtor-in-possession under Chapter 11 of the United
States Bankruptcy Code, and its wholly owned subsidiary company,
TriStar Ventures Corporation (``TVC''), both located at 20 Montchanin
Road, Wilmington, Delaware 19807, have filed an application-declaration
under sections 6(a), 7, 9(a), 10, 12(b), and 13(b) of the Act and rules
16, 43, 45, 87, 90 and 91 thereunder.
Columbia proposes to invest up to $7 million through December 31,
1996, in natural gas vehicle (``NGV'') activities indirectly through a
new subsidiary corporation (``TNGV'') that will be established solely
to engage in such activities. TNGV will be a wholly owned subsidiary of
TVC.
TNGV proposes to use the $7 million to develop and promote consumer
use and acceptance of natural gas as a fuel for cars, buses, trucks and
other vehicles. TNGV intends to provide natural gas fueling stations,
promote the establishment of facilities for the conversion of vehicles
to NGVs, provide related training and to provide fuel supply and
management services (all such activities, the ``NGV Activities'').
TNGV proposes to engage in some of the NGV Activities through
various arrangements with nonassociated companies or individuals.
Columbia's public-utility subsidiary companies may also provide TNGV
with services such as training in the use of fueling station and
conversion equipment, identification of potential customers, and
station design, construction maintenance and operations.
The application-declaration states that TNGV may acquire an
ownership interest, which may be up to 100% voting or nonvoting stock,
in one or more corporations or other entities established for the sole
purpose of engaging in NGV Activities. Such entities would be
established by TNGV and/or nonassociates knowledgeable and experienced
in the construction and operation of gasoline stations or natural gas
fueling stations, and/or who have expertise in vehicle repair and
maintenance or specialized technical experience with NGVs. Each such
entity would provide limited liability protection to the owners and
would be formed to build NGV infrastructure in a specific geographic
area or to provide management of a specific NGV Activity. The
organizational documents governing such entities would expressly limit
the activities of these corporations primarily to NGV Activities.
TNGV may also invest in and participate in joint arrangements such
as partnerships or joint ventures to carry out NGV Activities. If
necessary, TNGV would establish one or more wholly owned limited
purpose corporations or entities for the sole purpose of engaging in
NGV Activities through such partnerships or joint ventures or other
arrangements. The organizational documents governing such partnerships
or joint ventures would expressly limit the activities of these
entities primarily to NGV Activities.
The application-declaration states that TNGV may lend funds to
vehicle fleet owners, or may guarantee borrowings by those owners from
a third party lender such as a bank, to enable such nonassociates to
carry out NGV Activities in connection with their business, or to
acquire the equipment, personnel or facilities needed to do so. Loans
either made by TNGV directly or with respect to the TNGV is giving a
guarantee would have an interest rate not exceeding the maximum legal
rate, and would have a maturity not exceeding 20 years. Such loans may
be unsecured or secured by a lien on, or other security interest in,
NGV conversion equipment, fueling station equipment or facilities or
other real or personal property, excluding utility assets.
It is further proposed that corporations, partnerships, joint
ventures or other entities in which TNGV has an ownership interest of
less than 100% may obtain third party debt financing.
In entering into arrangements with nonassociates to engage in the
NGV Activities described in this application, TNGV and its subsidiaries
will limit the amount of their equity or debt investment, contractual
obligations, loan guarantees, loan obligations and other financial
obligations and commitments to an amount that, when aggregated with all
other investments, obligations and commitments made or undertaken,
directly or indirectly, by TNGV and its subsidiaries in connection with
the NGV Activities as described in the Application, will not exceed $7
million through December 31, 1996.
Columbia, TVC and TNGV propose that TNGV be authorized to engage in
the above described NGV Activities and [[Page 19981]] to obtain funds
from time to time through December 31, 1996, to finance such NGV
Activities through the sale of shares of TVC common stock, $25 par
value, to Columbia at or above par value, and the sale of shares of
TNGV Common Stock, $25 par value, to TVC at or above par value provided
that the aggregate amount of funds obtained by TVC from Columbia, and
by TNGV from TVC, outstanding at any one time for NGV Activities shall
not exceed $7 million.
In the event that a wholly owned limited purpose subsidiary
corporation of TNGV is established to engage in the NGV Activities
through a non-corporate entity, such subsidiary will have mirror-image
authorizations and obligations of TNGV under this filing as such relate
to the relevant investment, with TNGV functioning as ``passthrough''
with regard to its indirect financing of the entity.
Eastern Utilities Associates, et al. (70-8609)
Eastern Utilities Associates (``EUA''), a registered holding
company, and its direct subsidiary companies, Eastern Edison Company,
EUA Cogenex Corporation, P.O. Box 2333, Boston, Massachusetts 02107,
EUA Service Corporation, P.O. Box 543, West Bridgewater, Massachusetts
02379, and Newport Electric Corporation, 12 Turner Road, Middletown,
Rhode Island 02840, and its indirect subsidiary companies, Montaup
Electric Company, P.O. Box 2333, Boston, Massachusetts 02107,
TransCapacity Limited Partnership, 2 Corporate Place 128, Suite 101,
Wakefield, Massachusetts 01880, and Blackstone Valley Electric Company,
Washington Highway, Lincoln, Rhode Island 02865 (collectively
``Subsidiaries'') have filed an application-declaration under Sections
6(a), 7, 9(a) and 10 of the Act and Rule 54 thereunder.
By Order dated March 8, 1991, (HCAR No. 25269) (``1991 Order''),
EUA and certain of its subsidiaries were authorized, among other
things, to contribute up to 200,000 common shares of EUA, $5.00 par
value per share (``Common Shares''), or cash for the purchase thereof,
to the Eastern Utilities Associates Employees' Savings Plan (``Plan''),
through December 15, 1995. The Common Shares issued to the Plan may be:
(1) Authorized but unissued shares issued to the Plan by EUA; (2)
purchased on the open market; or (3) purchase shares from EUA. Whenever
cash contributions to the Plan by EUA or the participating subsidiary
companies are used to purchase Common Shares from EUA, the proceeds are
added to the general funds of EUA and may be used for, among other
corporate purposes, the payment or prepayment of outstanding short-term
indebtedness.
The number of Common Shares available under the 1991 Order is now
expected to be depleted by July 1995. Therefore, EUA and the
Subsidiaries now propose to contribute an additional 150,000 common
shares of EUA or cash to purchase such number of shares for the Plan,
through December 15, 1997 under the terms and conditions authorized in
the 1994 Order.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-9854 Filed 4-20-95; 8:45 am]
BILLING CODE 8010-01-M