[Federal Register Volume 59, Number 9 (Thursday, January 13, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-879]


[[Page Unknown]]

[Federal Register: January 13, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-25971]

 

Filings Under the Public Utility Holding Company Act of 1935 
(``Act'')

January 7, 1994.
    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 January 31, 1994, 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.

General Public Utilities Corporation (70-7933)

    General Public Utilities Corporation (``GPU''), 100 Interpace 
Parkway, Parsippany, New Jersey 07054, has filed a post-effective 
amendment to its declaration under section 12(b) of the Act and Rule 45 
thereunder.
    By order dated March 6, 1992 (HCAR No. 25486) (``Order''), the 
Commission authorized GPU through December 31, 1993 to make cash 
capital contributions to its three electric public-utility subsidiary 
companies (``Subsidiaries'') in the following amounts: $100 million for 
Jersey Central Power & Light Company (``JCP&L''); $50 million for 
Metropolitan Edison Company (``Met-Ed''); and $50 million for 
Pennsylvania Electric Company (``Penelec''). GPU requested such 
authorization to provide it with flexibility to meet the Subsidiaries' 
financing and cash working capital requirements, while enabling the 
Subsidiaries to remain within the short-term debt limits of their 
respective charters particularly in the event that market or other 
conditions constrained the Subsidiaries' ability to issue senior 
securities.
    Pursuant to Order, in October 1993 GPU made a cash capital 
contribution to Met-Ed in the amount of $50 million in order to enable 
Met-Ed to redeem two outstanding series of Met-Ed cumulative preferred 
stock pursuant to their optional redemption provisions. GPU has not 
made any other cash capital contributions pursuant to the Order.
    In order to maintain the financing flexibility described above, GPU 
now requests: (1) An extension of the time during which it may make the 
cash capital contributions authorized in the Order to JCP&L and 
Penelec, through December 31, 1996; and (2) authorization to make 
additional cash contributions to Met-Ed in the amount of $50 million, 
through December 31, 1996.

New England Electric System, et al. (70-7950)

    New England Electric System (``NEES''), a registered holding 
company, and its nonutility subsidiary company, New England Electric 
Resources, Inc. (``NEERI''), both located at 25 Research Drive, 
Westborough, Massachusetts 01582, have filed a post-effective amendment 
under sections 9(a), 10 and 12(b) of the Act and Rule 45 thereunder. By 
order dated September 4, 1992 (HCAR No. 25621), the Commission, among 
other things, authorized NEERI to start the business of providing 
consulting services to nonaffiliates for profit.
    NEERI now proposes to expand its consulting business, through 
December 31, 1997, to include the performance of electrical related 
services (designing, engineering, assisting in licensing and 
permitting, procuring materials and equipment, and installing, 
removing, or constructing electrical related materials). For instance, 
NEERI might install electrical poles, insulated wire, metering 
equipment or provide a turnkey installation service for small 
generators. In addition, NEES proposes to make additional capital 
contributions through December 31, 1997 of up to $1 million to NEERI.

Consolidated Natural Gas Company, et al. (70-8285)

    Consolidated Natural Gas Company (``CNG''), a registered holding 
company, and it wholly owned nonutility subsidiary company, CNG Energy 
Company (``Energy''), both located at CNG Tower, 625 Liberty Avenue, 
Pittsburgh, Pennsylvania 15222-3199, have filed an application-
declaration under sections 6(a), 7, 9(a), 10 and 12(b) of the Act and 
Rules 43, 45 and 50 thereunder.
    By order dated December 26, 1991 (``1991 Order''), HCAR No. 25446, 
Consolidated was authorized to provide, through December 31, 1996, up 
to $15 million to Energy for it to engage in preliminary development 
and administrative activities with respect to qualifying cogeneration 
facilities (``QFs'') as defined in the Public Utility Regulatory 
Policies Act of 1978 (``PURPA''). As of June 30, 1993, CNG has provided 
$1.235 million to Energy under this authorization.
    CNG now proposes to continue its preliminary project development 
and administrative activities in connection with its possible 
investments in QFs. Such activities will be consistent with those 
authorized in the 1991 Order. CNG further proposes to engage in 
preliminary development and administrative activities with respect to 
qualifying small power production facilities as defined in PURPA 
(``QSPs''), exempt wholesale generators (``EWGs'') within the meaning 
of section 32 of the Act and foreign utility companies (``FUCOs'') 
within the meaning of section 33 of the Act (collectively, 
``Preliminary Activities''). CNG further proposes to provide Energy, 
through December 31, 1998, up to an aggregate principal amount of $15 
million to engage in Preliminary Activities. CNG and Energy will not, 
without further required Commission authorization, engage in any 
intrasystem financing for the future acquisition by Energy of an 
interest in QFs, QSPs, EWGs, or FUCOs.
    Energy proposes to raise funds for the Preliminary Activities by: 
(1) Selling shares of its common stock, $1,000 par value, to CNG, (2) 
open account advances, or (3) long-term loans from CNG, in any 
combination thereof. The open account advances and long-term loans will 
have the same effective terms and interest rates as related borrowings 
of CNG in the forms stated below.
    Open account advances may be made to Energy to provide working 
capital and to finance the activities authorized by the Commission. 
Open account advances will be made under letter agreement with Energy 
and will be repaid on or before a date not more than one year from the 
date of the first advance with interest at the same effective rate of 
interest as CNG's weighted average effective rate for commercial paper 
and/or revolving credit borrowings. If no such borrowings are 
outstanding, the interest rate shall be predicated on the Federal 
Funds' effective rate of interest as quoted daily by the Federal 
Reserve Bank of New York.
    CNG may make long-term loans to Energy for the financing of its 
activities described herein. Loans to Energy shall be evidenced by 
long-term non-negotiable notes of CNG Energy (documented by book entry 
only) maturing over a period of time (not in excess of 30 years) to be 
determined by the officers of CNG, with the interest predicated on and 
substantially equal to CNG's cost of funds for comparable borrowings by 
the parent. In the event CNG has not had recent comparable borrowings, 
the rates will be tied to the Solomon Brothers Inc. indicative rate for 
comparable debt issuances published in Solomon Brothers Inc. Bond 
Market Roundup or similar publication on the date nearest to the time 
of takedown. All loans may be prepaid at any time without premium or 
penalty. CNG will obtain the funds required for Energy through internal 
cash generation, issuance of long-term debt securities, borrowings 
under credit agreements or through other future authorizations approved 
by the Commission.

American Electric Power Co., Inc., et al. (70-8307)

    American Electric Power Company, Inc. (``AEP''), a registered 
holding company, and its nonutility subsidiary company, AEP Energy 
Services, Inc. (``AEP Energy'') (collectively, ``Applicants''), both 
located at 1 Riverside Plaza, Columbus, Ohio 43215, have filed an 
application-declaration pursuant to sections 6(a), 7, 9(a), 10, 12(b) 
and 13(b) of the Act and Rules 45, 50(a)(5), 87, 90, and 91 thereunder.
    By order dated April 26, 1982 (HCAR No. 22468), the Commission 
authorized AEP to organize AEP Energy for the purpose of providing 
consulting services to nonassociate companies.\1\ The 1982 Order also 
authorized AEP to make capital contributions to AEP Energy in the 
amount of up to $1 million.
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    \1\The 1982 Order also authorized AEP Energy to sell or 
otherwise dispose of intellectual property owned and/or developed by 
AEP system companies. Should AEP Energy use any intellectual 
property developed by American Electric Power Service Corporation 
(``AEP Service'') or any other AEP system company, AEP Energy states 
that it will pay the following amounts to that AEP system company 
for any such intellectual property actually sold or licensed by AEP 
Energy: (1) 70% of the revenues from the intellectual property until 
the AEP system company that developed the intellectual property 
recovers its programming and development costs; and (2) 20% of such 
revenues thereafter. AEP Energy would pay cost for intellectual 
property developed at its request. AEP Energy would address such 
requests only to AEP Service.
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    The preliminary development activities associated with AEP Energy's 
consulting business include contract drafting and negotiating, 
preparation of proposals and other necessary activities to identify and 
analyze feasible consulting opportunities and to initiate the 
commercialization of a project. Authorized administrative activities 
include the ongoing personnel, accounting, engineering, legal, 
financial and other support activities necessary for AEP Energy to 
manage its preliminary development activities related to consulting 
activities. However, AEP Energy is not proposing to provide demand-side 
management services.
    AEP Energy anticipates undertaking the activities on its own and in 
conjunction with unaffiliated third parties. The arrangements may take 
the form of informal and unincorporated consortia. AEP Energy 
anticipates that any consulting opportunities arising from the 
arrangements will either take the form of a direct contractual 
relationship with the end-user of its services, or as a subcontractor 
working under the direction of a general contractor of a particular 
project.
    AEP now proposes to make additional investments in AEP Energy, 
through December 31, 1995, in the amount of $5 million for preliminary 
development activities associated with its consulting business. 
Investments in AEP Energy may take the form of additional acquisitions 
of common stock, capital contributions, open account advances and/or 
subordinated loans (collectively, ``Investments''). Any such open 
account advances or subordinated loans would bear interest at a rate 
based on AEP's cost of funds in effect on the date of issue, but in no 
case in excess of the prime rate at a bank designated by AEP. AEP's 
cost of funds is represented by its commercial paper rating, which is 
currently rated P-2 by Moody's Investors Services, Inc. and F-2 by 
Fitch Investors Service, Inc. Recently, on December 10, 1993, AEP sold 
$64 million of commercial paper notes at a discount rate of 3.28%, for 
a term of 18 days and maturing on December 28, 1993.
    In addition, it is contemplated that AEP Energy may obtain debt 
financing from unaffiliated third parties consisting of commercial 
banks, insurance companies or other institutional investors (``Debt 
Financing''), as long as the total of all Investments together with any 
Debt Financing does not exceed the total funding authorization of AEP 
Energy of $5 million. Such Debt Financing may require a guarantee by 
AEP. Nonaffiliated Debt Financing obtained by AEP Energy will not 
exceed a term of ten years or bear a floating interest rate in excess 
of 115% of the prime rate in effect at the time of issuance. In 
connection with any Debt Financing obtained by AEP Energy, it may be 
required to pay commitment and other fees not to exceed 25 basis points 
per annum on the total amount of the Debt Financing. AEP Energy 
requests an exception from the competitive bidding requirements of Rule 
50 pursuant to subsection (a)(5) thereof in connection with such Debt 
Financing.
    AEP and AEP Energy also request authority to expand the current 
scope of financial commitment of AEP to include the issuance of 
guarantees or assumption of liabilities by AEP on behalf of AEP Energy 
to unaffiliated third parties in an aggregate amount not to exceed $25 
million. These may take the form of performance guarantees or direct or 
indirect financial guarantees. The Applicants state that such 
arrangements may be necessary in order for AEP Energy to satisfy a 
potential customer that it has the financial support for its 
contractual warranty obligations as may be negotiated as features of 
specific contracts.

General Public Utilities Corporation, et al. (70-8315)

    General Public Utilities Corporation (``GPU''), 100 Interpace 
Parkway, Parsippany, New Jersey 07054, a registered holding company, 
and its wholly owned non-utility subsidiary company, Energy 
Initiatives, Inc. (``EII'') (collectively, ``Applicants''), One Upper 
Pond Road, Parsippany, New Jersey 07074, have filed an application-
declaration under sections 6, 7, 9, 10, 12(b), and 32 of the Act and 
Rules 45 and 53 thereunder.
    EII proposes to acquire a limited partnership interest for $11.5 
million in a Canadian limited partnership (``Partnership'') being 
formed to develop, construct, own, and operate a 22.5 megawatt wood and 
oil fired cogeneration facility in Brooklyn, Nova Scotia, Canada 
(`Project''). Applicants expect that Polsky Energy Corporation, or a 
wholly owned subsidiary or affiliate thereof, will be the general 
partner and a limited partner of the Partnership. Applicants state that 
the Project will not engage in any retail electric sales, and 
anticipate that it will qualify as an exempt wholesale generator as 
defined by section 32(a)(1) of the Act.
    EII proposes to secure its equity contribution to the Partnership 
through an irrevocable letter of credit (``Letter of Credit'') for 
$11.5 million with GPU unconditionally guaranteeing EII's obligations. 
Alternatively, should the Partnership elect to borrow $11.5 million 
from lending institutions to provide a portion of the construction 
financing, GPU proposes to guarantee unconditionally EII's repayment 
obligations.
    Applicants anticipate that the Letter of Credit will expire no 
later than March 31, 1996 and that any drawings thereon will bear 
interest at not more than five percent above the prevailing prime rate 
for large United States commercial banks. Related Letter of Credit fees 
payable by EII or GPU will not exceed one percent annually of the face 
amount of the Letter of Credit. Any Partnership construction borrowings 
guaranteed by GPU in lieu of the Letter of Credit will mature no later 
than March 31, 1996, will bear interest at no more than 1.5% above the 
prevailing London Interbank Offered Rate, and will be prepayable by the 
Partnership as and to the extent provided in the related loan 
agreements.

Jersey Central Power & Light Company (70-8323)

    Jersey Central Power & Light Company 300 Madison Avenue, 
Morristown, New Jersey 07960 (``JCP&L''), a subsidiary of General 
Public Utilities Corporation, a registered holding company, has filed a 
declaration under section 6(a) and 7 of the Act.
    JCP&L maintains an insurance policy that provides coverage for 
workers compensation claims, as required by New Jersey Law. The 
insurance policy also provides liability insurance coverage for 
employee claims made directly against JCP&L.
    JCP&L has decided to modify the insurance policy so that JCP&L 
would now be required to pay a deductible for each claim, up to a 
specified maximum amount for all claims in the calendar year 
(``Deductible Cap''). While the insurance company would continue to 
administer and pay all claims as they arise, JCP&L would, on a monthly 
basis, reimburse the insurance company for the amount of each claim 
paid up to the deductible amount, subject to the Deductible Cap.
    In order to secure its obligations, JCP&L proposes to enter into 
letter of credit reimbursement agreements with banks and to deliver to 
their insurance company irrevocable bank letters of credit (``LOC'') 
from time-to-time through December 31, 1998. The insurance company 
would be entitled to draw upon the LOC in the event that JCP&L fails to 
reimburse the insurance company.
    The LOC would expire not later than December 31, 1998, and would be 
in the aggregate face amount not to exceed $15 million. Drawings on the 
LOC would bear interest at not more than 5% above the bank's prime rate 
as in effect from time-to-time. For example, based on the present prime 
rate of 6%, the maximum interest rate would be 11%. JCP&L may also be 
required to pay annual LOC fees which would not exceed 1% of the face 
amount of the LOC.

    For the Commission, by the Division of Investment Management 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-879 Filed 1-12-94; 8:45 am]
BILLING CODE 8010-01-M