[Federal Register Volume 61, Number 155 (Friday, August 9, 1996)]
[Notices]
[Pages 41667-41669]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-20347]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-26550]
Filings Under the Public Utility Holding Company Act of 1935, as
amended (``Act'')
August 2, 1996.
Notice is hereby given that the following filing(s) summarized
below. The application(s) and/or declaration(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 August 26, 1996, to the Secretary, Securities and Exchange
Commission, Washington, D.C. 20549, and serve a copy on the relevant
applicant(s) and/or declarant(s) at the address(es) specified below.
Proof of service (by affidavit or, in case of an attorney at law, by
certificate) should be filed with the request. Any request for hearing
shall identify specifically the issues of fact or law that are
disputed. A person who so requests will be notified of any hearing, if
ordered, and will receive a copy of any notice or order issued in the
matter. After said date, the application(s) and/or declaration(s), as
filed or as amended, may be granted and/or permitted to become
effective.
The Columbia Gas System, Inc. (70-8801)
The Columbia Gas System, Inc. (``Columbia''), 20 Montchanin Road,
Wilmington, Delaware 19807, a registered public utility holding
company, has filed an amendment to its application-declaration with
this Commission under sections 6(a), 7, 9(a), 10 and 12(b) of the Act
and rules 45 and 54 thereunder.\1\
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\1\ A notice of Columbia's original proposal, filed February 15,
1996 in this application-declaration was issued by the Commission on
March 1, 1996 (HCAR No. 26480). On July 10, 1996, Columbia filed
Amendment No. 1 to the application-declaration, substantially
revising its proposal. This notice supersedes the March notice.
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Columbia proposes: (1) to acquire the common stock of one or more
existing or new direct or indirect subsidiaries through December 31,
1997; (2) to engage, through such subsidiaries or one or more new joint
ventures, in marketing and/or brokering of various energy commodities;
(3) to provide guarantees, through August 31, 2001, to any such
subsidiary or joint venture; and (4) that such subsidiaries utilize
market hedging and certain other techniques in order to minimize their
financial exposure and Columbia's exposure from its guarantees.
By orders of the Commission dated September 26, 1986 and April 22,
1993 (HCAR Nos. 24199 and 25802, respectively), Columbia was authorized
to establish, respectively, TriStar Ventures Corporation and its
subsidiaries (collectively, ``TriStar'') (to invest in and operate
electric cogeneration facilities) and Columbia Energy Services
Corporation (``CES'') to market natural gas products and services).
Columbia now proposes to market and broker other forms of energy either
through TriStar or CES, through one or more new direct or indirect
subsidiaries of Columbia (any one an ``Energy Products Company'') or
through a joint venture entity to be formed with a third party.\2\
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\2\ Columbia requests authorization for Energy Products
Companies to invest funds for the development of joint venture
entities, subject to a reservation of jurisdiction over the
acquisition by an Energy Products Company of any ownership interest
in a joint venture entity. It is proposed that such a joint venture
engage in the marketing or brokering of energy commodities in the
same manner in which an Energy Products Company would be authorized.
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The services provided by Energy Products Companies will include the
marketing and/or brokering of electric energy at wholesale, and, to the
extent permitted by state law, at retail. In addition, it is proposed
that Energy Products Companies market any form of natural gas or
manufactured gas, propane, natural gas liquids, oil, refined petroleum
and petroleum products, coal, food products, compressed air, hot or
chilled water, or steam. It is also requested that Energy Products
company market emission allowances. Columbia states that authorization
to market a broad array of energy products will enable Energy Products
Companies to compete effectively with other energy suppliers.
Energy Products Companies will initially concentrate their efforts
in those states currently served by the Columbia System's natural gas
pipeline and local distribution companies (generally Kentucky,
Maryland, New Jersey, New York, North Carolina, Ohio, Pennsylvania,
Virginia and West Virginia). Columbia states that an Energy Products
Company's potential customer base may include individuals and entities
located outside of this geographic area.
Columbia proposes to provide Energy Products Coompanies with up to
$5 million in funding through December 31, 1997, through the purchase
from time to time of shares of common stock of Energy Products
Companies, $25 par value, at a purchase price at or above par value. In
addition, Columbia proposes to provide guarantees, through August 31,
2001, to Energy Products Companies and/or to any joint venture in which
an Energy Products Company is a participant, so long as such
[[Page 41668]]
guarantees in the aggregate do not exceed $100 million at any time
outstanding.
To minimize financial exposure of Energy Products Companies and of
Columbia resulting from its guarantees, it is proposed that Energy
Products Companies utilize market hedging techniques (including the use
of futures contracts, options of futures, and price swap agreements),
the matching of obligations to market prices, contractual limitation of
damages and volume limitations, and relatively short-term contracts.
Energy Products Companies will use market hedging measures solely to
minimize risk and will limit hedging activity to no more than the total
amount of commodities of Energy Products Companies that are subject to
market price fluctuation.
Columbia states that Energy Products Companies will not own or
operate facilities used for the distribution of gas at retail or
facilities used for the generation, transmission, or distribution of
electric energy for sale. Furthermore, Energy Products Companies will
limit their activities to ensure they do not come within the
definitions of either ``electric utility company'' or ``gas utility
company,'' as defined by sections 2(a)(3) and 2(a)(4) of the Act,
respectively.
Northeast Utilities, et al. (70-8875)
Northeast Utilities (``NU''), 174 Brush Hill Avenue, West
Springfield, Massachusetts 01809, a registered holding company, and its
wholly owned subsidiary companies (``Subsidiaries''), Holyoke Water
Power Company (``HWP''), Canal Street, Holyoke, Massachusetts 01040,
Western Massachusetts Electric Company (``WMECO''), 174 Brush Hill
Avenue, West Springfield, Massachusetts 01809, Public Service Company
of New Hampshire (``PSHN'') and North Atlantic Energy Corporation
(``NAEC''), both of 1000 Elm Street, Manchester, New Hampshire 03015
and The Connecticut Light & Power Company (``CL&P''), 107 Selden
Street, Berlin, Connecticut 06037 (all companies collectively,
``Applicants''), have filed an application-declaration under sections
6(a), 7, 9(a), 10 and 12(b) of the Act and rules 43, 45 and 54
thereunder.
By order dated December 28, 1994 (HCAR No. 26207) (``December 1994
Order''), the Commission authorized, through December 31, 1996: (1) NU
to make open account advances to its subsidiary companies; (2) the
continuation of the Northeast Utilities System Money Pool (``Money
Pool''); (3) the issuance of short-term notes pursuant to lines of
credit by NU, (4) the issuance and sale of commercial paper by NU, CL&P
and WMECO, CL&P, PSNH and HWP; and WMECO. The funds from those short-
term borrowings were to be utilized by NU's subsidiary companies for
operational, maintenance and construction expenses and to meet certain
cash needs. The December 1994 Order limited the aggregate amount of all
short-term borrowing, whether through the issuance of short-term notes,
commercial paper, open account advances, borrowing from the Money Pool,
or through existing revolving credit agreements, to the following
maximum amounts: NU, $150 million; WMECO, $60 million; CL&P, $325
million; PSNH, $175 million; NAEC, $50 million and HWP, $5 million.
The Applicants now propose: (1) to make short-term borrowings from
time to time through December 31, 2000, evidenced (i) in the case of
NU, CL&P, WMECO and PSNH by short-term notes (``Short-Term Notes'')
issued to lending institutions through formal and informal credit
lines, and (ii) in the case of NU, WMECO and CL&P, by commercial paper
(``Commercial Paper''); (2) the continued use, through December 31,
2000, of the Money Pool to assist in meeting the short-term borrowing
needs of the Applicants and certain other NU subsidiaries; (3) in the
case of all Applicants by borrowing under the existing revolving credit
agreements until those agreements are terminated; and (4) that NU make
open account advances, through December 31, 2000, to PSNH, HWP,
Northeast Nuclear Energy Company, NAEC, the Quinnehtuk Company, Rocky
River Realty Company and HEC, Inc.
NU, CL&P and WMECO propose to enter into a revolving credit
facility (``Facility'') permitting borrowings aggregating up to $450
million with certain lending institutions. The Facility will be used to
repay outstanding borrowings and for working capital and other
corporate purposes. The Facility will be unsecured unless, subject to
some exceptions, an Applicant incurs any secured indebtedness or
secures any outstanding indebtedness which is now unsecured in which
event such Applicant must cause the Facility to be secured equally and
ratably with such other indebtedness.
The Applicants state that one or more of the banks which lend to
the Applicants and other NU subsidiaries under existing revolving
credit agreements may want to continue their present lending
arrangements rather than becoming lenders under the Facility. In that
event, such bank would not be lenders under the Facility until their
existing credit agreements are terminated.
The Applicants will pay interest on any borrowings under the
Facility at a rate determined, at their election, by reference to the
base rate of certain reference banks, the federal funds rate, or the
London interbank offering rate (``LIBOR''), in each case plus a margin
which will depend on the lower of the Standard & Poor's or Moody's
rating of the borrowing Applicant's long-term senior debt. In no event
will the margin exceed 1% above the base rate, 1\1/2\% above the
federal fund rate, or 2% above LIBOR, unless the loan is in default.
The Applciants will pay an annual facility fee based on each lender's
pro-rata share of the commitment, whether used or unused. The amount of
the fee will depend on the credit rating of the borrowing applicant but
will not exceed .75%.
The aggregate amount of all short-term borrowings through December
31, 2000, whether through the issuance of Short-Term Notes, Commercial
Paper or borrowings from the Money Pool or revolving credit facilities
or pursuant to open account advances, will not exceed $200 million for
NU, $375 million for CL&P, $150 million for WMECO, $225 million for
PSNH, $5 million for HWP, and $50 million for NAEC.
Short-Term Notes will be issued by NU, CL&P, WMECO and PSNH both on
a transactional basis (``Transactional Notes''), with a separate note
evidencing each loan, and on a ``grid-note'' basis (``Grid Notes'').
Each Transactional Note will be dated the date of issue, will have a
maximum term of 270 days, and will bear interest at a fixed or floating
rate, as described below. Transactional Notes will be issued no later
than December 31, 2000, and will, with certain exceptions, be subject
to prepayment at any time at the borrower's option.
Grid Notes will be issued to a particular lending institution at or
prior to the first borrowing under the Grid Note from that lender. Each
repayment and reborrowing subsequent to the first borrowing will be
recorded on a schedule to the note without the necessity of issuing
additional notes. Also recorded on a schedule to the Grid Note at the
time of a borrowing will be the date of the borrowing, the maturity
(which may not exceed 270 days from the date of the borrowing), the
number of days the borrowing is outstanding, the interest rate or
method of determining the interest rate, the amount of interest due,
and the date of the payment. Except as described below, borrowings on a
Grid Note basis will be subject to prepayment at any time at the
borrower's option.
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The interest rate on all Short-Term Notes will be determined on the
basis of competitive quotations from several lending institutions, and
will either be at a fixed interest rate or a floating interest rate
determined with reference to an agreed-upon index (such as a lending
institution's prime rate, LIBOR certificate of deposit rates, money
market rates or commercial paper rates). The interest rate in any case
will not exceed two percentage points above the Federal Funds Effective
Rate. The Applicants will select the lending institution(s) from which
to make a particular short-term borrowing and determine whether to
borrow at a fixed or a floating rate on the basis of the lowest
expected effective interest cost for borrowings of comparable sizes and
maturities.
Borrowings bearing floating interest rates will generally be
subject to prepayment at the borrower's option. In order to realize the
benefits of fixed interest rates when a fixed-rate borrowing is
evaluated to be the lowest cost borrowing available, the Applicants may
from time to time agree with individual lenders that such borrowings
may not be prepaid or may only be prepaid if the lender is made whole
for its losses (including lost profits) as a result of the prepayment.
NU, CL&P, WMECO and PSNH propose to secure both formal and informal
credit lines with a number of lending institutions. Formal credit lines
may be subject to compensating balance and/or fee requirements and will
therefore be used only when an Applicant determines that such a credit
line offers advantages as compared with other available credit options.
Compensating balance requirements will not exceed 5% of the committed
credit line amount, and fees will not exceed 0.30% per annum. Each
Applicant participating in a credit line would be able to draw funds to
the exclusion of the other Applicants. The Applicants may change their
credit lines and may obtain additional lines over time. The continued
availability of such credit lines is subject to the continuing review
of the lending institutions.
CL&P, WMECO and NU propose to sell Commercial Paper publicly. Such
Commercial Paper will be issued through The Depository Trust Company in
the form of book entry notes in denominations of not less than $50,000,
of varying maturities, with no maturity more than 270 days after the
date of issue. The Commercial Paper will not be repayable prior to
maturity. The Commercial Paper will be sold through a placement agent
or agents in a co-managed commercial paper program at either the
discount rate per annum or the interest rate per annum prevailing at
the date of issuance for commercial paper of comparable quality and of
the particular maturity sold by public utility issuers thereof. No
Commercial Paper will be issued unless the issuing Applicant believes
that the effective interest cost to the Applicant will be equal to or
less than the effective interest rate at which the Applicant could
issue Short-Term Notes in an amount at least equal to the principal
amount of such Commercial Paper. The placement agent or agents will
receive a commission for the sale of the Commercial Paper of not more
than \1/8\ of 1% per annum on a discounted basis.
The Applicants also propose the continued use, through December 31,
2000, of the Money Pool, which is composed of available funds loaned by
the NU and participating subsidiaries and borrowed by those
subsidiaries to assist in meeting their respective short-term borrowing
needs. Another potential component of the Money Pool is funds borrowed
by NU through the issuance of Short-Term Notes, by selling Commercial
Paper or by borrowing through the Facility (or existing revolving
credit agreements if all are not terminated when the new Facility
becomes effective) for the purpose of making open account advances
through the Money Pool. NU requests that its authority for such
borrowings be extended through December 31, 2000. The amounts to be
borrowed by NU for the purpose of making open account advances and to
be borrowed through the Money Pool by the recipients set forth above
will also be subject to the short-term limits on aggregate amount
outstanding for which approval is sought in this filing.
All borrowings from and contributions to the Money Pool, including
the open account advances, will be documented and will be evidenced on
the books of each Applicant that is borrowing from or contributing
surplus funds to the Money Pool. Except for loans from the proceeds of
external borrowings by NU, all loans made under the Money Pool will
bear interest for both the borrower and lender, payable monthly, equal
to the daily Federal Funds Effective Rate as quoted by the Federal
Reserve Bank of New York. Loans from the proceeds of external
borrowings by NU will bear interest at the same rate paid by NU on the
borrowings, and no such loans may be prepaid (unless NU is made whole
for any additional costs that may be incurred because of such
prepayment). To the extent that there are any excess funds available in
the Money Pool, such funds will be invested with the earnings allocated
on a pro rata basis.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 96-20347 Filed 8-8-96; 8:45 am]
BILLING CODE 8010-01-M
