[Federal Register Volume 64, Number 117 (Friday, June 18, 1999)]
[Notices]
[Pages 32904-32906]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-15482]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-27036]
Filings Under the Public Utility Holding Company Act of 1935, as
Amended (``Act'')
June 11, 1999.
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 under the Act. all interested persons are referred to the
application(s) and/or declaration(s) for
[[Page 32905]]
complete statements of the proposed transaction(s) summarized below.
The application(s) and/or declaration(s) and any amendments is/are
available for public inspection through the Commission's Branch of
Public Reference.
Interested persons wishing to comment or request a hearing on the
applications(s) and/or declaration(s) should submit their views in
writing by July 6, to the Secretary, Securities and Exchange
Commission, Washington, D.C. 20549-0609, 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 should identify specifically the issues of facts 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 July 6, 1999, the application(s) and/or
declaration(s), as filed or as amended, may be granted and/or permitted
to become effective.
AES Corporation (70-9465)
The AES Corporation (``AES''), Arlington, Virginia, a Delaware
corporation not currently subject to the Act, has filed an application
under section 3(a)(5) of the Act. AES requests an order exempting it
from all provisions of the Act except section 9(a)(2) upon consummation
of the transaction described below.
AES is a United States-based multinational electric power
generation and energy distribution company with operations in 16
countries worldwide. AES is engaged principally in the development,
ownership and operation of electric generating plants and electric and
gas distribution companies, all of which are, or are owned by, exempt
wholesale generators as defined in section 32 of the Act, foreign
utility companies as defined in section 33 of the Act, or qualifying
facilities under the Public Utility Regulatory Policies Act. Revenues
from electric generation and distribution activities accounted for over
95% of revenues in 1997 and in 1998. Other activities include the sale
of steam and other commodities related to AES' cogeneration operations,
as well as operational, construction and project development services,
and gas and power marketing.\1\ AES does not currently have any public-
utility subsidiary or affiliate.
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\1\ AES Power, a wholly owned subsidiary that engages in power
marketing, generated less than 1% of AES' 1998 net income.
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Since AES was founded in 1981, it has grown to become one of the
largest, if not the largest, global electricity suppliers. AES
currently owns and/or operates, entirely or in part, a diverse
international portfolio of electric power plants with a total project
capacity of 26,466 megawatts (``MW''), including plants that are part
of distribution companies in which AES has an interest. On a total
project basis, 20,017 MW of this generating capacity is located outside
the United States. On a net equity basis, i.e., pro-rated to reflect
AES' actual ownership interests, AES has 17,618 of capacity, of which
11,194 is foreign-based.
AES also owns partial interests (both majority and minority) in
companies that distribute and sell electricity directly to commercial,
industrial, governmental and residential customers. AES has majority
ownership in three distribution companies in Argentina, one in Brazil,
one in the country of Georgia, one in Kazakhstan and one in El
Salvador; and less than majority ownership in three additional
distribution companies in Brazil. AES also recently acquired the right
to purchase a 50% interest in a distribution company in the Dominican
Republic and expects to close on the purchase soon. These eleven
companies serve a total of approximately 13.6 million foreign customers
with sales of nearly 107,000 gigawatt hours. On a net equity basis,
AES' ownership in these companies will represent approximately 3.6
million foreign customers following the closing of the Dominican
Republic acquisition and sales of approximately 29,000 gigawatt hours
by the end of 1999.
The application states that AES has grown rapidly throughout this
decade.\2\ In 1990, the year before it went public, AES had total
assets of $1.1 billion, operating revenues of $190.2 million and net
income of $15.5 million, all determined in accordance with Generally
Accepted Accounting Principles (``GAAP''). By the end of 1998, AES'
total assets, gross revenues and net income, determined in accordance
with GAAP, were $10.8 billion, $2.4 billion and $311 million,
respectively.
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\2\ In the eight-year period between year end 1990 and 1998,
AES' growth in total assets, revenues and net income was 882%,
1,162% and 1,906%, respectively.
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AES has continued its fast-paced growth in 1999. Combining 101
power plants currently in operation or projected to begin operations
and plants to be acquired, AES expects to have a minimum of 27,798 MW
of total project generating capacity by the end of 1999, of which
20,017 MW will be foreign. On a net equity basis, AES is expected to
have a generating capacity of 18,950 MW by year end 1999, of which
11,194 MW will be foreign. As a result, the power generation capacity
of companies in which AES has an interest will have grown by 3,027% on
a total project basis and 2,093% on a net equity basis in the eight
years from 1991 to 1999.
The growth of AES' distribution business in 1999 also has been
fast-paced. In 1996, AES purchased its first interests in a
distribution company. By the end of 1998, companies in which AES had an
interest served approximately 13 million customers and sold over
102,000 gigawatt-hours of power (approximately 3.1 million customers
and 25,000 gigawatt-hours on a net equity basis). Thus far in 1999, AES
has acquired the interests or rights to acquire interests in
distribution companies in Georgia and the Dominican Republic, mentioned
above, and the right to increase its ownership interests in two
Brazilian distribution companies.
AES' market capitalization has mirrored its growth over the decade.
AES' public offering in 1991 valued the company at $750 million. At
present, AES' market capitalization has risen to approximately $10
billion, an increase of 1,233% in approximately eight years.
As part of this growth, AES intends to acquire CILCORP Inc.
(``CILCORP''), an Illinois public-utility holding company exempt from
registration under section 3(a)(1) of the Act by rule 2. Through the
acquisition, AES would acquire CILCORP's Illinois public-utility
subsidiary, Central Illinois Light Company (``CILCO'').\3\
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\3\ CILCORP is also the parent of three first-tier nonutility
subsidiaries: QST Enterprises Inc., a company formed to facilitate
CILCORP's expansion into nonregulated energy and related services
businesses; CILCORP Investment Management Inc., which invests in
leveraged leases, energy-related projects and affordable residential
housing; and CILCORP Ventures Inc., which primarily invests in
energy-related products and services.
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CILCORP had consolidated assets, revenues and net income for the
year ending December 31, 1997 of $1.335 billion, $558 million and $16.4
million, respectively. For 1998, CILCORP's consolidated assets,
revenues and net income were $1.313 billion, $559 million and $16.3
million, respectively.
CILCO is engaged in the generation, transmission, distribution and
sale of electric energy in an area of approximately 3,700 square miles
in central and east-central Illinois, and the
[[Page 32906]]
purchase, distribution, transportation and retail sale of natural gas
in an area of approximately 4,500 square miles in central and east-
central Illinois. As of December 31, 1998, CILCO served approximately
253,000 customers: 189,000 retail electric customers and 197,000 gas
customers, including 837 industrial, commercial and residential gas
transportation customers.\4\ CILCO is subject to regulation by the
Illinois Commerce Commission (``Illinois Commission'').
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\4\ Of the 253,000 individual customers served by CILCO, some
take electric service only, some take gas service only, and some
take both.
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For the year ended December 31, 1997, CILCO had total assets,
operating revenues and net income of $1.023 billion, $546.9 million and
$50.3 million, respectively. Electric utility assets were $723.8 and
gas utility assets were $290.5. In 1997, electric utility revenues were
$338.1 million (625% of total operating revenues) and gas utility
revenues were $208.8 million (38% of total operating revenues).
At the end of 1998, CILCO had total assets, operating revenues and
net income of $1.024 billion, $532.3 million and $41 million,
respectively. Electric utility assets were $729.1 million and gas
utility assets were $286.2 million. In 1998, CILCO earned $360 million
in electric utility revenues (68% of total operating revenues) and
$172.3 million in gas utility revenues (32% of total operating
revenues).
Under a Merger Agreement dated November 22, 1998 between AES and
CILCORP, Midwest Energy, Inc. (``Midwest Energy''), a wholly owned
Illinois subsidiary of AES, will be merged with and into CILCORP, with
CILCORP as the surviving corporation (the ``Transaction''). Following
the Transaction, CILCORP will be a direct subsidiary of AES and
CILCORP's subsidiaries will maintain their current structure as direct
or indirect subsidiaries, as the case may be, of CILCORP.
CILCORP's shareholders approved the Merger Agreement at a special
meeting held on May 20, 1999. The merger also requires approval by the
Federal Energy Regulatory Commission and is subject to the notification
and reporting requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976. The Transaction does not require approval
under section 9(a)(2) of the Act, because AES will acquire only one
public-utility company through the Transaction.\5\
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\5\ See Coral Petroleum, Inc., Holding Co. Act Release No. 21632
(June 19, 1980).
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The Illinois Commission approved the reorganization with respect to
the gas utility operations of CILCO by order dated March 10, 1999.\6\
As contemplated by section 33(a)(2) of the Act, the Illinois Commission
has informed the Commission, by letter dated March 10, 1999, that it
has the authority and resources to protect Illinois consumers in
accordance with Illinois law, and intends to exercise its authority.
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\6\ Central Illinois Light Co., order approving petition
pursuant to section 16-111(g) of the Public Utilities Act, Dkt. No.
98-0882 (Mar. 10, 1999). Under the Illinois Public Utilities Act,
the Illinois Commission does not have pre-approval jurisdiction over
the Transaction with respect to CILCO's electric operations.
Illinois restructuring legislation removed the state commission's
authority over the sale or other transfer of electric assets to
affiliated or unaffiliated entities until January 1, 2005.
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AES request an exemption from registration under section 3(a)(5) of
the Act following the Transaction. AES states that it will be a holding
company that ``is not, and derives no material part of its income,
directly or indirectly, from any one or more subsidiary companies which
are, a company or companies the principal business of which within the
United States is that of a public-utility company.'' The application
further states that CILCORP will continue to qualify for exemption
under section 3(a)(1) of the Act following the Transaction because both
it and CILCO will be ``predominantly intrastate in character'' and will
``carry on their business substantially in'' Illinois, the state in
which both are organized.
For the Commission by the Division of Investment Management,
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-15482 Filed 6-17-99; 8:45 am]
BILLING CODE 8010-01-M
