03-17920. Filings Under the Public Utility Holding Company Act of 1935, as Amended (“Act”)

July 9, 2003.

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 complete statements of the proposed transaction(s) summarized below. The application(s) and/or declaration(s) and any amendment(s) 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 application(s) and/or declaration(s) should submit their views in writing by August 4, 2003 to the Secretary, Securities and Exchange Commission, Washington, DC 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 the 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 August 4, 2003, the application(s) and/or declaration(s), as filed or as amended, may be granted and/or permitted to become effective.

KeySpan Energy Canada Partnership, et al. (70-10126)

KeySpan Energy Canada Partnership (“KECP”) and KeySpan Energy Facilities Limited (“KEFL”), both located at 1700, 400 Third Avenue, SW Calgary, Alberta, Canada T2P 4H2 (together, the “Applicants”), nonutility subsidiaries of KeySpan Corporation, a registered holding company under the Act, located at One MetroTech Center, Brooklyn, New York 11201, have filed an application-declaration (“Application”) under sections 9(a) and 10 of the Act and rule 54.

Background

KECP and KEFL, seek authorization for KECP and/or KEFL to acquire voting securities of Rimbey Pipe Line Co. Ltd. (“Rimbey Co.”), pursuant to a Letter Purchase Agreement dated February 6, 2003, as amended April 3, 2003 (the “Transaction”). KECP and KEFL are indirect, wholly-owned nonutility subsidiaries of KeySpan Corporation (“KeySpan”), a registered holding company under the Act.

KeySpan registered as a holding company under the Act on November 8, 2000, as a result of KeySpan's acquisition of Eastern Enterprises (now known as KeySpan New England, LLC (“KNE LLC”), which was authorized by the Commission by an order issued on November 7, 2000 (Holding Company Act Rel. No. 27271), as corrected by the order issued on December 1, 2000 (collectively, the “Merger Order”).^[1] In addition, on November 8, 2000, the Commission issued an order (Holding Company Act Rel. No. 27272), as corrected by the order issued on December 1, 2000 (collectively, the “Financing Order”), authorizing a program of external financings, credit support arrangements and related proposals for KeySpan and its subsidiaries.

KeySpan is a diversified public-utility registered holding company. KeySpan directly or indirectly owns seven public-utility companies in the northeastern United States.^[2] In addition, since October 2000, KECP, an Alberta, Canada general partnership, and KEFL, an Alberta, Canada corporation (formerly known as Gulf Midstream Services Partnership and GMS Facilities Limited, respectively), have been indirect, wholly-owned subsidiaries of KeySpan. In the Merger Order, the Commission approved KeySpan's retention of KECP and KEFL, finding that these entities are engaged in “gas-related activities” within the meaning of the Gas-Related Activities Act of 1990.

Together, KECP and KEFL own facilities located in Alberta and Saskatchewan through which they operate one of the largest natural gas midstream businesses in Canada, consisting of natural gas gathering and processing as well as natural gas liquids (“NGL”) processing, transportation, storage and marketing. KECP markets natural gas products, including natural gas liquids, from numerous producers, to customers in the United States and Canada. KECP owns interests in 13 natural gas processing plants, along with associated raw gas gathering facilities, and is the operator of 11 of those plants. It also owns interests in NGL fractionation and storage facilities and an NGL pipeline. KEFL owns interests in NGL fractionation and storage facilities. KECP and KEFL together provide gas gathering and processing services to approximately 160 producers.

KEFL also currently owns 40.6% of the issued and outstanding shares of Rimbey Co.,^[3] and operates the facilities owned by Rimbey Co. Rimbey Co. is an Alberta, Canada corporation with a total of 9 shareholders, of which KEFL is the largest.^[4] Rimbey Co. owns the Rimbey Pipe Line, a 110 kilometer NGL pipeline, and the Rimbey Edmonton Terminal, which consists of propane treating, storage, rail loading and truck loading/offloading facilities.

In connection with its business, KECP is a party to two agreements with ConocoPhillips Canada Resources Corp. (“ConocoPhillips Resources”): a Buy-Sell Agreement dated December 1, 1998, as amended (the “Buy-Sell Agreement”), and a Natural Gas Liquids Purchase and Sale Agreement also dated December 1, 1998, as amended (the “Purchase and Sale Agreement” and together with the Buy-Sell Agreement, the “NGL Agreements”). Pursuant to the Buy-Sell Agreement, KECP purchases raw natural gas from ConocoPhillips Resources at the inlet points to certain gas processing facilities owned by KECP, processes the gas on behalf of ConocoPhillips Resources and resells the processed gas and certain gas products (exclusive of certain NGLs which are retained by KECP) to ConocoPhillips Resources at the outlet points of the relevant facilities. Under the Purchase and Sale Agreement, ConocoPhillips Resources sells NGLs to KECP at the outlet points of certain natural gas processing facilities, some of which are not owned by KECP and at which KECP does not provide processing services for ConocoPhillips Resources.

KECP and ConocoPhillips Resources have recently agreed to enter into an Amending Agreement which will revise certain price terms of each of the NGL Agreements. Consideration for KECP's entry into such Amending Agreement is, among other things, the entry into by KECP and ConocoPhillips Canada Limited (“ConocoPhillips”)^[5] a February 6, 2003 Letter Purchase Agreement, amended April 1, 2003, by which ConocoPhillips will transfer 2,610 shares of Rimbey Co. (representing 5.2% of issued and outstanding shares) currently held by ConocoPhillips (the “Rimbey Shares”) to KECP subject to certain conditions described below.

KECP and ConocoPhillips have agreed that the cash value of the consideration for the Amending Agreement associated with the transfer of the Rimbey Shares is $2.25 million Canadian. The proposed transfer of the Rimbey Shares to KECP is subject to the preferential rights of the other Rimbey Co. shareholders to purchase the shares (“Right of First Refusal”) at the same aggregate price of $2.25 million Canadian. KEFL, as a current shareholder of Rimbey Co., has and could exercise a Right of First Refusal.

ConocoPhillips' transfer of the Rimbey Shares to KECP is conditioned upon (i) the failure of other Rimbey Co. shareholders to exercise their Rights of First Refusal and (ii) receipt of the approval by the Commission sought in this Application.

The Proposed Transaction

Applicants now seek authorization for either (a) the acquisition by KECP of the Rimbey Shares from ConocoPhillips pursuant to the Letter Purchase Agreement and amending agreement or (b) the acquisition by KEFL of the Rimbey Shares (or its proportionate share thereof, if other shareholders also exercise their Rights of First Refusal) as a result of the exercise by KEFL, as a current Rimbey Co. shareholder, of its Right of First Refusal to purchase the Rimbey Shares in preference to their sale by ConocoPhillips to KECP. Authorization is sought in the alternative because, while the parties currently contemplate that KECP will acquire the Rimbey Shares as set forth in the Letter Purchase Agreement, KECP and KEFL may determine that it is appropriate for KEFL to acquire the shares by exercise of its Right of First Refusal either to consolidate shareholdings in Rimbey Co. in one entity or to protect against the acquisition of all of the Rimbey Shares by other Rimbey Co. shareholders (by virtue of the exercise of their Rights of First Refusal).

As noted above, the parties have agreed that the cash value of the Rimbey Shares is $2.25 million Canadian. At the generally prevailing exchange rate of approximately $0.69, that equates to a value of approximately $1.55 million in U.S. dollars. After consummation of the transaction, and assuming that no other Rights of First Refusal are exercised, KEFL and/or KECP together would own a total of 22,913 shares (or 45.8% of issued and outstanding shares) in Rimbey Co., an increase of 2,610 shares (or 5.2%) over KEFL's existing ownership share of Rimbey Co.

KeySpan Corporation, et. al. (70-10136)

KeySpan Corporation (“KeySpan”), KeySpan Energy Corporation (“KeySpan Energy”), KeySpan Services, Inc. (“KSI”), KeySpan Business Solutions, Inc. (“KeySpan Business Solutions”) and Paulus, Sokolowski and Sartor LLC (“PS&S”) (collectively, the “Applicants”), each at 201 Old Country Road, Suite 300, Melville, New York, 11747 have filed a declaration with the Commission under sections 9(a) and 10 of the Act and rule 54 under the Act.

KeySpan is a registered holding company under the Act.^[6] KeySpan Energy is a direct wholly-owned subsidiary of KeySpan. KSI is a direct, wholly-owned nonutility subsidiary of KeySpan Energy. KeySpan Business Solutions is a direct wholly-owned subsidiary of KSI. PS&S is a direct, wholly-owned nonutility subsidiary of KeySpan Business Solutions. PS&S proposes to acquire all of the issued and outstanding stock of Bard, Roa + Athanas Consulting Engineers, Inc. (“BR+A”), an unaffiliated Massachusetts corporation (the “Transaction”).

By order dated April 24, 2003, the Commission released jurisdiction over the retention by KSI of certain nonutility subsidiaries.^[7] These subsidiaries engage in energy-related activities that have been found retainable under rule 58 of the Act or Commission precedent. In the KeySpan Order, the Commission authorized KSI, over the next five years, either on a stand alone basis or through other methods, to increase the percentage of energy-related revenues of PS&S so that its revenues are substantially energy-related as defined by Commission rule and/or precedent.

Applicants submit that the purpose of the Transaction is to increase the percentage of energy-related revenues of PS&S and its subsidiaries, consistent with the KeySpan Order. Applicants represent that, based on historical data, subsequent to the Transaction, the percentage of energy-related engineering revenues for KSI subsidiaries would be increased from 65% to approximately 81% of total business revenues. In addition, the Applicants state that consummation of the Transaction will produce tangible benefits to the public, investors and consumers by adding to the KeySpan system's ability to compete with exempt holding company systems in the electric and/or gas utility industry, as well as nonutility companies engaged in similar lines of energy-related businesses, and enhance the ability of PS&S to obtain new clients in the energy sector within KeySpan's existing geographic footprint.

KSI is the holding company of KeySpan's interests in a number of nonutility, “energy-related” companies as such term is defined in rule 58(b)(1) of the Act or pursuant to Commission precedent. PS&S is one such energy-related subsidiary company engaged in the business of engineering and consulting services relating to the design and permitting of energy management systems, office environments and equipment installations and modifications. PS&S’ clients consist primarily of large industrial customers such as utilities, corporate offices, hotels, laboratories, warehouses, pharmaceutical companies, hospitals, universities and power plants primarily located in New York, Pennsylvania and New Jersey. PS&S also serves as a general environmental and engineering consultant to major utility companies in New Jersey.

Applicants indicate that BR+A is an unaffiliated Massachusetts corporation in the business of providing engineering services primarily related to the: (1) Mechanical, electrical and plumbing components of heating, ventilating and air conditioning systems; (2) design, construction, installation, maintenance and service of new and retrofit heating, ventilating, and air conditioning, electrical and power systems, motors, pumps, lighting, water, and plumbing systems for non-associated industrial and commercial customers; and (3) sale, installation and servicing of electric and gas appliances. BR+A's principal office and operating location is in Boston, Massachusetts and the majority of its clients are based in the Northeast. BR+A also maintains sales and field support offices in New York, Philadelphia, Baltimore, Chicago and Los Angeles.

PS&S intends to acquire all of the issued and outstanding shares of BR+A common stock from its ten individual shareholders who collectively own 100% of BR+A. The acquisition of BR+A will be undertaken pursuant to the terms of a stock purchase agreement (the “Agreement”). Pursuant to the Agreement, BR+A will be purchased for: (1) $32 million in cash, with an additional $3 million to be deposited into an escrow account and held for adjustment based on a subsequent determination of whether BR+A has met certain financial criteria at the time of closing, and (2) payment of up to $14.7 million in contingent consideration, subject to BR+A's performance in meeting certain target levels of net operating earnings (excluding interest income) before payment of interest and income taxes, depreciation and amortization for the years 2003 to 2008. Subsequent to the consummation of the acquisition, BR+A will become a direct, wholly-owned subsidiary of PS&S and will be converted to a limited liability company.

PS&S will obtain the funds necessary to complete the Transaction from two sources. Thirty-five percent of the purchase price will be obtained from a loan from KeySpan to KSI to KeySpan Business Solutions to PS&S. The loan will have a maturity equal to the estimated useful life-span of the long-lived assets acquired in the Transaction. The interest rate on the loan will match the interest rate being paid by KeySpan on already existing debt with a similar maturity. The balance of the funds needed by PS&S to complete the Transaction will be obtained from a capital contribution from KeySpan to KeySpan Energy to KSI to KeySpan Business Solutions to PS&S.

For the Commission, by the Division of Investment Management, under delegated authority.

Margaret H. McFarland,

Deputy Secretary.

Footnotes

1.  On May 29, 2002, the Commission issued an order approving KeySpan and Eastern Enterprises' application in File No. 70-9995 (Holding Co. Act Rel. No. 27532) for a reorganization of Eastern from a Massachusetts business trust to a Massachusetts limited liability company (“Conversion Order”). Pursuant to the Conversion Order, on May 31, 2002, Eastern and KNE LLC, a newly formed Massachusetts limited liability company subsidiary of KeySpan, executed an agreement and plan of merger, with KNE LLC as the surviving entity and successor-by-merger to Eastern Enterprises.

2.  The Brooklyn Union Gas Company, d/b/a KeySpan Energy Delivery New York, distributes natural gas at retail to residential, commercial and industrial customers in the New York City Boroughs of Brooklyn, Staten Island and Queens; KeySpan Gas East Corporation, d/b/a KeySpan Energy Delivery LI, distributes natural gas at retail to customers in New York State located in the counties of Nassau and Suffolk on Long Island and the Rockaway Peninsula in Queens County; KeySpan Generation LLC owns and operates electric generation capacity located on Long Island that is sold at wholesale to the Long Island Power Authority; Boston Gas Company, d/b/a KeySpan Energy Delivery New England, distributes natural gas to customers located in Boston and other cities and towns in eastern and central Massachusetts; Essex Gas Company, d/b/a KeySpan Energy Delivery New England, distributes natural gas to customers in eastern Massachusetts; Colonial Gas Company, d/b/a KeySpan Energy Delivery New England, distributes natural gas to customers located in northeastern Massachusetts and on Cape Cod; and EnergyNorth Natural Gas, Inc., d/b/a KeySpan Energy Delivery New England, distributes natural gas to customers located in southern and central New Hampshire and the City of Berlin located in northern New Hampshire. KeySpan, through its subsidiaries, also engages in energy related nonutility activities.

3.  KEFL acquired these shares in 1998, prior to KeySpan's registration as a holding company. KEFL's ownership interest in Rimbey Co. is an interest in “natural gas liquids transportation facilities,” i.e., the Rimbey Pipe Line, Rimbey Co.’s primary asset.

4.  KEFL currently owns 20,303 shares (40.6%) of Rimbey Co. The other shareholders and their shareholdings are: EnerPro Midstream Inc.—17,766 shares (35.5%); Shell Canada Limited—4,320 shares (8.6%); ConocoPhillips Canada Limited—2,610 shares (5.2%); Husky Oil Operations Ltd.—2,312 shares (4.6%); Imperial Oil Limited—1,287 shares (2.6%); BP Canada Energy Resources Company—1,194 shares (2.4%); Murphy Oil Company Ltd.—135 shares (0.35%); and The Great West Life Assurance Co.—73 shares (0.15%).

5.  ConocoPhillips is an existing Rimbey Co. shareholder and an affiliate of ConocoPhillips Resources. See note 4, supra.

6.  KeySpan, a New York corporation, was formed in May 1998 as a result of the business combination of KeySpan Energy Corporation, the parent of Brooklyn Union Gas Company, and certain businesses of the Long Island Lighting Company. KeySpan owns six natural gas public utility companies, one electric public utility company and various other non-utility companies.

7.  See KeySpan Corporation, et al., Holding Company Act Rel. No. 27670 (April 24, 2003) (“KeySpan Order”).