[Federal Register Volume 61, Number 101 (Thursday, May 23, 1996)]
[Notices]
[Pages 25930-25932]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-13024]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-26518]
Filings Under the Public Utility Holding Company Act of 1935, as
Amended (``Act'')
May 17, 1996.
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 June 10, 1996, to the Secretary, Securities and Exchange
Commission, Washington, DC 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.
Southern Company Services, Inc., et al. (70-8821)
Southern Company Services, Inc. (``SCS''), 64 Perimeter Center
East, Atlanta, Georgia 30346, a wholly-owned subsidiary service company
of The Southern Company (``Southern''), a registered holding company,
and five electric utility subsidiary companies of Southern (``Operating
Companies'')--Alabama Power Company, 600 North 18th Street, Birmingham,
Alabama 35291; Georgia Power Company, 333 Piedmont Avenue, N.E.,
Atlanta, Georgia 30308; Gulf Power Company, 500 Bayfront Parkway,
Pensacola, Florida 32501; Mississippi Power Company, 2992 West Beach,
Gulfport, Mississippi 39501; and Savannah Electric and Power Company,
600 Bay Street East, Savannah, Georgia 31401--have filed an application
under sections 9(a) and 10 of the Act and rule 54 thereunder for
authorization to engage in brokering and marketing activities relative
to electric power and energy commodities (``Activities'').
Through the Operating Companies, Southern provides retail electric
service in much of Georgia and Alabama and in parts of Florida and
Mississippi. Southern also provides firm wholesale service to
municipalities and rural electric cooperatives within the territories
served by the Operating Companies. The Operating Companies buy and sell
wholesale electric power in transactions with other electric utility
companies that are directly interconnected with one or more Operating
Companies (``Tier 1 Utilities'') or electric utility companies that are
directly interconnected with Tier 1 Utilities (``Tier 2 Utilities'')
within a defined region (``Sales Region''), which includes the
territories served by the Operating Companies.\1\ On occasion, the
Operating Companies also engage in wholesale electric power
transactions outside the Sales Region.
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\1\ The Tier 1 and Tier 2 Utilities include all member utilities
of the Southeastern Electric Reliability Council, the Entergy
Corporation system, and certain other utility systems to the west
and northwest of the Southern system.
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When the Operating Companies have excess electric power generation,
SCS, as agent for the Operating Companies, attempts to market this
surplus to other customers. SCS, as agent for the Operating Companies,
also seeks out the most economic sources of electric power. These
transactions often involve base load capacity purchases and sales. In
the course of these activities, SCS and the Operating Companies have
developed extensive knowledge about the loads and resources of other
electric power sources throughout and outside the Sales Region.
The Activities would include (i) brokering of electric power by SCS
between third-party sellers and buyers (``Power Brokering''); (ii)
marketing of electric power, largely within the Sales Region, in
transactions that do not involve Southern system generation or Southern
system transmission (``Power Marketing''); and (iii) marketing and
brokering of other forms of energy commodities by SCS or the Operating
Companies (``Commodities Transactions'').
With respect to Power Brokering, there would be no price exposure
or significant financial risk for SCS because SCS would neither buy nor
sell electric power. Power Brokering would be incidental to its
principal business of centralized administrative and management
services to Southern system companies.
Power Brokering would be carried on by personnel employed by SCS
who engage in the day-to-day power marketing and system supply
activities on behalf of the Operating Companies. Revenues derived from
Power Brokering will be credited entirely to reduce the cost of
operation of SCS, which will, in turn, reduce its cost of service to
the Operating Companies and other system subsidiaries.
With respect to Power Marketing, SCS, as agent for one or more of
the Operating Companies, would enter into separate contracts with
prospective electric power suppliers and customers, either or both of
which usually are located within the Sales Region.\2\
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\2\ Southern, through Southern Energy Marketing, Inc.
(``SEMI''), an ``exempt wholesale generator'' under section 32 of
the Act, engages in wholesale electric power marketing to
unaffiliated third parties. SEMI also is authorized to engage
through other indirect subsidiaries in electric power marketing and
brokering transactions. HCAR No. 26468 (Feb. 2, 1996). However, SCS
and the Operating Companies may not provide to other Southern
marketing subsidiaries non-public information on actual or potential
wholesale customers or on prices or other terms of electric power to
such wholesale customers. This prohibition is part of the ``Codes of
Conduct'' filed with FERC that are applicable to SCS, the Operating
Companies and other Southern subsidiaries. Southern Company
Services, Inc., 72 FERC para. 61,324 (1995), order in reh'g, 74 FERC
para. 61,141 (1996).
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With respect to Commodities Transactions, SCS and the Operating
Companies would, in connection with the sale of electric power, serve
as a single source of gas, oil or coal as well. SCS and the Operating
Companies would not broker or market other energy commodities except in
conjunction with making an electricity sale.
All of the Activities would be carried on by personnel employed by
SCS who engage in the day-to-day power marketing and fuel procurement
activities of the Southern system. Except in the case of Power
Brokering, SCS would act as agent for the account of those Operating
Companies that are directly related to the customer involved and will
therefore have no beneficial interest in the revenues from the
Activities. The Operating Companies would act as principals and
[[Page 25931]]
would hold the beneficial interest in the electric power subject of the
arrangement. All Power Marketing opportunities would be associated with
one or more of the Operating Companies, which would therefore be
credited with all revenues from, and would bear all costs and risks
associated with, such transactions.
SCS personnel engaged in the Activities would account for their
time through the regular Southern system time accounting system and
would thus charge their time to specific ``activity codes'' established
for the affected Southern companies. Overheads and ancillary expenses
would be similarly charged. The Operating Companies may also engage
directly in the Activities for their own account, individually or in
cooperation with other Operating Companies, and with or without the
assistance of SCS.
The Operating Companies do not anticipate the need for financial
support from Southern or independent sources of capital to engage in
the Activities. SCS would be indemnified by the Operating Companies for
claims or losses that result from its involvement, as agent for the
Operating Companies, in the Activities.
It is anticipated that in the ordinary course of business the
Operating Companies would take appropriate steps to hedge risk through
the purchase of options, puts, futures and other similar risk
management measures. In addition, the Operating Companies may offset
price risk exposure under a purchase or sale contract through an
opposite position to that purchase or sale. Similarly, in a portfolio
of purchase and sales contracts, risk may also be limited through an
appropriate mix of long-term and short-term contracts. SCS, as agent
for the Operating Companies, would negotiate the terms of such
instruments and manage overall portfolio risk.
General Public Utilities Corporation (70-8843)
General Public Utilities Corporation (``GPU''), 100 Interpace
Parkway, Parsippany, New Jersey 07054, a registered holding company,
has filed a declaration under sections 6(a), 7, 32 and 33 of the Act
and rules 53 and 54 thereunder.
GPU proposes to issue and sell for cash from time to time through
December 31, 2001 up to $300,000,000 aggregate principal amount of
unsecured debentures (the ``Debentures''). The debentures will be
issued under an indenture to be entered into with United States Trust
Company of New York, as trustee, and will have terms ranging from one
year to up to 40 years. In addition, the Debentures may be subject to
optional and/or mandatory redemption, in whole or in part, by GPU at
par or at various premiums above the principal amount thereof. The
Debentures may also be entitled to mandatory or optional sinking fund
provisions.
GPU will utilize the net proceeds (after deduction of commissions
and expenses) from the sale of the debentures to (a) fund the
acquisition of interests, and to make investments, in exempt wholesale
generators, foreign utility companies and qualifying facilities, (b)
make cash capital contributions to its electric operating subsidiaries,
Jersey Central Power & Light Company, Metropolitan Edison Company and
Pennsylvania Electric Company (``Operating Subsidiaries''), (c) to
repay outstanding GPU indebtedness, (d) for other GPU corporate
purposes, and (e) reimburse GPU's treasury for funds previously
expended for such purposes.
The Operating Subsidiaries will use proceeds of the proposed
issuance of Debentures contributed to them (a) to repay outstanding
indebtedness, (b) to redeem outstanding senior securities in accordance
with the optional redemption provisions thereof or reacquire such
securities in open market transactions (c) for construction purposes,
(d) for other corporate purposes, and (e) to reimburse their treasuries
for funds previously expended for such purposes.
Southwestern Electric Power Company, (70-8847)
Southwestern Electric power Company (``SWEPCO''), 428 Travis
Street, Shreveport, Louisiana 71101, an 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 and 12(d) of the Act and rules 44 and 54 promulgated
thereunder.
SWEPCO proposes, through December 31, 1999, to incur obligations in
connection with the issuance by Sabine River Authority of Texas
(``Sabine'' or ``Issuer''), in one or more series, of up to $131.7
million aggregate principal amount of Pollution Control Revenue Bonds
in connection with the Southwestern Electric Power Company Project. Of
this amount, up to $81.7 million aggregate principal amount may be
Pollution Control Revenue Refunding Bonds (``Refunding Bonds'') and up
to $50 million aggregate principal amount may be new money Revenue
Bonds (``New Money Bonds'' and, together with the Refunding Bonds, the
``New Bonds''). The issuance of New Money Bonds may be combined with
the issuance of Refunding Bonds.
The purpose of the Refunding Bonds is to reacquire all or a portion
of Sabine's $81.7 million of outstanding Series 1986, 8.20% Pollution
Control Revenue Refunding Bonds, maturing on July 1, 2014 (``Old
Bonds''). The purpose of the New Money Bonds is to reimburse SWEPCO for
expenditures that qualify for tax-exempt financing or to provide for
current solid waste expenditures.
SWEPCO also seeks authorization to manage interest rate risk or
lower its interest costs through the use of forward refinancing
techniques and the use of hedging products, including interest rate
swaps, forward swaps, caps, collars and floors during the life of the
Old Bonds and/or New Bonds. SWEPCO requests authority to enter into the
foregoing types of transactions from time-to-time either in connection
with the Old Bonds or New Bonds.
It is anticipated that any interest rate swap agreement entered
into would provide that redemption, reacquisition or maturation of the
corresponding Old Bonds and/or New Bonds would terminate SWEPCO's
obligations to the counterparty under the swap agreement for a
corresponding notional amount. If an interest rate swap with automatic
termination is not available or economically appropriate, SWEPCO will
enter into a swap permitting termination at SWEPCO's option and it
would exercise such option for a corresponding notional amount upon the
redemption, reacquisition or maturation of the corresponding Old Bonds
and/or New Bonds. SWEPCO further requests authorization to enter into
reverse (or offsetting) interest rate swap agreements, or other
contractual arrangements, in order to limit the impact of anticipated
movements in interest rates or offset the effect of an existing
interest rate swap agreement.
SWEPCO and the Issuer entered into an installment sale agreement
(``Sale Agreement'') for the issuance of the Old Bonds. In connection
with the issuance of the New Bonds, SWEPCO will amend the Sale
Agreement, enter into agreements with substantially the same terms as
the Sale Agreement and/or enter into new installment sales agreements
(collectively ``Amended Sales Agreements'').
The New Bonds will bear interest at a fixed or floating rate, may
be secured with first mortgage bonds and will mature in not more than
forty years. The interest rate, redemption provisions and other terms
and conditions applicable to
[[Page 25932]]
the New Bonds will be determined by negotiations between SWEPCO and one
or more investment banking firms or other entities that will purchase
or underwrite the New Bonds (``Purchasers'').
SWEPCO anticipates that the New Bonds will be redeemable at its
option upon the occurrence of various events specified in the Amended
Sales Agreements and the Indentures, which may be amended or
supplemented (``Supplemental Indentures''), or a new indenture (``New
Indenture''). The New Bonds will be subject to optional redemption with
premiums to be determined by negotiations between SWEPCO and the
Purchasers and will be subject to mandatory redemption if the interest
on the New Bonds become subject to federal income tax.
SWEPCO may obtain a credit enhancement for the New Bonds, which
could include bond insurance, a letter of credit or a liquidity
facility. SWEPCO anticipates it may be required to provide credit
enhancement if it issues floating rate bonds. A premium or fee would be
paid for the credit enhancement, which would still result in the net
benefit through a reduced interest rate on the New Bonds. SWEPCO will
not provide credit enhancement unless it is economically beneficial.
SWEPCO also seeks authority to issue first mortgage bonds as
security for the New Bonds, subject to applicable indenture
restrictions under its Mortgage Indenture dated February 1, 1940 to the
Continental Bank, National Association and M.J. Kruger (``Mortgage
Indenture''). The First Mortgage Bonds will be held by the Trustee for
the New Bonds for the benefit of the New Bond holders and will not be
transferable, except to a successor trustee. The First Mortgage Bonds
will be issued in the exact amount and have substantially the same
terms as the New Bonds. The Supplemental Indenture or New Indenture for
the New Bonds may provide that the New Bonds will cease to be secured
by First Mortgage Bonds when all other First Mortgage Bonds have been
retired. To the extend payments in respect of the New Bonds are made in
accordance with their terms, corresponding payment obligations under
the First Mortgage Bonds will be deemed satisfied.
The proceeds of the offering of the New Bonds will be used to
redeem the Old Bonds pursuant to the terms of the Indentures
(``Redemption'') and reimburse SWEPCO for expenditures made that
qualify for tax-exempt financing or to provide for current solid waste
expenditures. The proceeds of any offering may also be used to
reimburse SWEPCO for Old Bonds previously acquired. Additional funds
required to pay for the Redemption and the cost of issuance of the New
Bonds will be provided by SWEPCO from internally generated funds and
short-term borrowings.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-13024 Filed 5-22-96; 8:45 am]
BILLING CODE 8010-01-M
