[Federal Register Volume 59, Number 39 (Monday, February 28, 1994)]
[Unknown Section]
[Page ]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-4424]


[Federal Register: February 28, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-25990]


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

February 18, 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 March 14, 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.

DQE, Inc. et al. (70-8096)

    DQE, Inc. (``DQE''), P.O. Box 68, Pittsburgh, Pennsylvania 15230-
0068, and its wholly owned subsidiary company, Duquesne Enterprises, 
Inc. (``DE''), Grant Building, 330 Grant Street, suite 2420, 
Pittsburgh, Pennsylvania 15219, both Pennsylvania public-utility 
holding companies exempt from registration under section 3(a)(1) of the 
Act pursuant to Rule 2, have filed an application under sections 
9(a)(2) and 10 of the Act in connection with the acquisition of 
Allegheny Development Corporation (``ADC''), a wholly owned subsidiary 
of DE, that operates an energy services business.
    DQE was organized in 1989 for the purpose of becoming a holding 
company for Duquesne Light Company (``DLC''), an electric utility 
company, and other energy-related subsidiaries. DLC is engaged in the 
generation, transmission, distribution and sale of electric energy and 
serves an area of approximately 800 square miles which includes the 
City of Pittsburgh. DE's subsidiaries other than ADC are engaged in 
real estate ventures.
    In 1987 a competitive bidding process was initiated by the County 
of Allegheny, Pennsylvania (``County'') for the design, installation 
and operation of facilities to provide a complete energy services 
package to the new Midfield Terminal Complex being developed to replace 
the then existing airline terminal at the Greater Pittsburgh 
International Airport (``Airport''). DLC was the supplier of electric 
energy to the Airport at that time. The applicants state that DLC, a 
utility subject to the jurisdiction of the Pennsylvania Public Utility 
Commission, was not in a position to submit a competitive bid; however, 
it was important to participate in the bidding to avoid the loss of a 
significant DLC customer when the Airport ceased operation. 
Consequently, ADC then a wholly-owned subsidiary of DLC, submitted a 
bid to the County and was awarded the contract out of a field of 12 
bidders. As a result, ADC became a public utility company within the 
meaning of the Act.
    On July 7, 1989, DLC became a wholly-owned subsidiary of QE by 
virtue of a merger transaction. ADC was still a wholly-owned subsidiary 
of DLC. An Energy Services Agreement (``Agreement'') dated May 31, 1989 
between the County and ADC was entered into on July 27, 1989. In 
December 1989, DLC distributed all of the stock of ADC to DQE as a 
dividend and later in December 1989, DQE contributed the ADC stock to 
the capital of DE.
    The Agreement requires ADC to supply all of the electrical and 
thermal requirements of the Midfield Terminal Complex, including 
electricity, hot water and chilled water. ADC purchases electricity at 
tariff rates from DLC and sells a portion to the County at the unit 
costs specified in the Agreement. The County also is required to pay to 
ADC an annual fixed charge related to ADC's investment in the 
facilities. The County is the sole customer for the energy services 
provided by ADC.

OLS Acquisition Corp., et al. (70-8311)

    OLS Acquisition Corporation (``Acquisition Corp.'') and OLS Energy-
Berkeley (``Berkeley''), One Upper Pond Road, Parsippany, New Jersey 
07054, both indirect nonutility subsidiaries of Energy Initiatives, 
Inc. (``EII''), an indirect subsidiary of General Public Utilities 
Corporation, a registered holding company, have filed an application-
declaration pursuant to sections 6(a), 7, 9(a), 10, 12(a), and 12(b) of 
the Act and Rule 45 thereunder.
    By order dated August 1, 1989 (HCAR No. 24931), the Commission 
authorized OLS Power Limited Partnership, a Delaware limited 
partnership and an indirect subsidiary of EII, to, among other things, 
acquire indirectly through Acquisition Corp. all of the outstanding 
common stock of OLS-Energy-Chino, a California corporation (``Chino''), 
OLS Energy-Camarillo, a California corporation (``Camarillo''), and 
Berkeley.
    Berkeley, Chino and Camarillo are each lessees, pursuant to leases 
(``Leases'') with General Electric Capital Corporation or a wholly 
owned subsidiary (collectively, ``GECC'') of operating cogeneration 
facilities (``Facilities'') located in California, which are all 
qualifying facilities under the Public Utility Regulatory Policies Act 
of 1978. The Leases expire, in the cases of Chino and Camarillo, on 
December 31, 2007, and in the case of Berkeley, on August 7, 2007, but 
may be renewed, subject to certain conditions, for up to 10 years at 
the lessee's option. Rent payable during such renewal term would be the 
then fair market rent for the respective Facility, or, for an initial 
three year renewal term, an amount which has been agreed upon if the 
renewal option which provides for payment of rent in such agreed upon 
amount is elected by the lessee.
    At the time of the acquisition, Berkeley, Chino and Camarillo each 
were parties to revolving credit agreements (``Credit Agreement(s)'') 
with FECC that provided for the short-term working capital requirements 
of their respective Facilities. Berkeley, Chino and Camarillo have 
issued secured promissory notes to GECC evidencing these borrowings.
    After the acquisition, each company was unable to generate 
sufficient revenue from sales of steam and electricity to pay its 
operating expenses and rent under its Lease on a current basis. In 
order to remedy the problem, the OLS Companies ultimately reached 
agreement with GECC and their host institutions to restructure their 
Leases and the energy services agreements under which they sell 
electricity and steam to their host institutions (``Energy Services 
Agreements'').
    On August 30, 1991, Chino and Camarillo entered into agreements 
with GECC and their respective host institutions which, among other 
things, reduced the rent payable to GECC under their respective Leases, 
increased the amount each could borrow and reduced the rate of interest 
payable under their respective Credit Agreements and reduced certain 
rebates payable to their host institutions under their respective 
Energy Service Agreements. The amendments to Chino's and Camarillo's 
Credit Agreements were authorized by orders of the Commission dated 
February 9, 1990 and December 26, 1990 (HCAR Nos. 25038 and 25230).
    Pursuant to authorization granted in five previous orders of the 
Commission issued from 1990 through 1992, Berkeley has previously 
amended its Credit Agreement to, among other things, increase the 
aggregate amount of the borrowings which may be outstanding at any time 
from $1 million to $1.25 million, extend the time period for borrowings 
to December 31, 1994, and reduce the rate of interest from 5% over the 
prime rate, as defined, to 3% over the prime rate.
    Pursuant to negotiations with GECC and the University of California 
at Berkeley (``University''), where the Berkeley Facility is located, 
Berkeley now proposes to restructure (``Restructure'') the Lease with 
GECC as well as the Energy Services Agreement with the University and 
related agreements. Berkeley also proposes to further amend the Credit 
Agreement.
    The Restructure contemplates, among other things, that (i) rent 
payable to GECC under Berkeley's Lease will be reduced, effective 
December 31, 1993, by approximately $780,000 per year and will be 
payable quarterly in amounts which track expected revenue, rather than 
semi-annually in equal payments, and (ii) rebates payable to the 
University under the Energy Services Agreement will be reduced or 
deferred to increase the cash retained by Berkeley to pay operating 
expenses.
    As part of the Restructure, Berkeley proposes to borrow, subject to 
the satisfaction of certain conditions precedent, up to an aggregate 
amount outstanding of $1 million under a loan facility (``Overhaul Loan 
Facility'') as part of the Berkeley Credit Agreement with GECC. The 
Overhaul Loan Facility would be used to fund the cost of major repairs, 
nonroutine maintenance activities and overhauls of its Facility; 
provided that the initial advance under the Overhaul Loan Facility may 
be used to pay amounts due fuel suppliers and the operator of the 
Facility, costs incurred to consummate the Restructure, prepayments of 
working capital advances and rent under Lease.
    Borrowings under the Overhaul Loan Facility may be made from time 
to time until August 7, 2007, and would bear interest at a rate per 
annum of 3% in excess of the rate of interest per annum publicly 
announced by Morgan Guaranty Trust Company as its commercial reference 
rate, or certain substantially equivalent rates of interest per annum 
if Morgan Guaranty Trust Company ceases to announce such a rate of 
interest. Borrowings would be repayable on a fixed amortization 
schedule over the lesser of three years or the remaining term of 
Berkeley's restructured Lease (August 7, 2007).
    The obligation of GECC to make each loan under the Overhaul Loan 
Facility would be subject, among other conditions, to the delivery of 
certain documentation, the absence of a material adverse change in the 
financial condition of Berkeley, the showing by Berkeley in form and 
substance satisfactory to GECC that Berkeley will have sufficient cash 
to repay the loan and the absence of a default under, among other 
agreements, the amended Lease and the amended Credit Agreement.
    Berkeley also proposes to make the following amendments to the 
Credit Agreement: (1) Provide for the Overhaul Loan Facility with GECC 
and borrow thereunder from time to time prior to August 7, 2007 in 
amounts of up to $1 million at any time outstanding and issue to GECC 
its promissory note evidencing such borrowings; (2) change the 
aggregate amount of the borrowings which may be outstanding at any time 
thereunder to the lesser of $1.25 million or $1.5 million less the 
aggregate face amount of outstanding letters of credit issued under the 
Credit Agreement; (3) extend until August 7, 2007, which is the end of 
the term of Berkeley's restructured lease, for borrowings to be made 
and letters of credit to be outstanding under the Credit Agreement; (4) 
provide that borrowings under the Credit Agreement may be made only 
upon the satisfaction of certain conditions precedent, such as certain 
documentation and the absence of a default under, among other 
agreements, the amended lease and the amended Credit Agreement; and (5) 
provide for an origination fee of $2,500 for the issuance of letters of 
credit in replacement of those presently outstanding under the Credit 
Agreement, plus an annual fee of 1% per annum of the face amount of any 
such replacement letter of credit.
    Acquisition Corp. also proposes to enter into a pledge agreement 
with U.S. Trust Company of New York, the owner trustee and lessor or 
Berkeley's facility under its lease, pledging Berkeley's stock as 
security for Berkeley's obligations under its amended Credit Agreement 
and in connection with the Restructure. Outstanding borrowings under 
the amended Credit Agreement would be required to be repaid in full 
annually and the amended Credit Agreement would contain certain other 
mandatory and optional prepayment provisions.

Monongahela Power Company, et al. (70-8349)

    Monongahela Power Company (``Monongahela''), 1310 Fairmont Avenue, 
Fairmont, West Virginia 26554, The Potomac Edison Company (``Potomac 
Edision''), 10435 Downsville Pike, Hagerstown, Maryland 21740-1766, and 
West Penn Power Company (``West Penn''), 800 Cabin Hill Drive, 
Greensburg, Pennsylvania 15601 (collectively, ``Applicants''), each an 
electric utility subsidiary of Allegheny Power System, Inc., a 
registered holding company, have filed an application-declaration under 
sections 9(a), 10 and 12(c) of the Act.
    Applicants propose, through December 31, 1996, to redeem all of the 
shares of certain series of their preferred stock, which are eligible 
for optional redemption at specified premiums over their respective par 
values, as follows:

----------------------------------------------------------------------------------------------------------------
                                                                             Current                            
                                         Dividend     No. of                 optional                           
        Company              Series        rate       shares    Par value   redemption    Date price applicable 
                                                                              price                             
----------------------------------------------------------------------------------------------------------------
Monongahela............  G                  $8.80       50,000       $100      $104.20  After 5/1/86.           
Monongahela............  H                   7.92       50,000        100       103.52  After 4/1/87.           
Monongahela............  I                   7.92      100,000        100       103.52  After 11/1/88.          
Monongahela............  J                   8.60      150,000        100       103.33  After 12/1/91.          
Potomac Edison.........  F                   8.32       50,000        100       103.54  After 5/1/86.           
Potomac Edison.........  G                   8.00      100,000        100       103.25  After 5/1/87.           
West Penn..............  G                   8.08      100,000        100       103.27  After 7/1/87.           
West Penn..............  H                   7.60      100,000        100       103.23  After 6/1/87.           
West Penn..............  I                   7.64      100,000        100       103.16  After 11/1/88.          
West Penn..............  J                   8.20      200,000        100       103.30  After 12/1/91.          
----------------------------------------------------------------------------------------------------------------

    Applicants propose to effect such redemptions by issuing new 
preferred stock with a lower dividend rate.
    Applicants will not enter into the proposed refunding transactions 
unless, in each instance, the estimated present value savings derived 
from the net difference between interest payments on the new issue of 
comparable securities and on the securities to be refunded is, on an 
after tax basis, greater than the present value of all redemption and 
issuing costs, assuming an appropriate discount rate. The discount rate 
used shall be the estimated after tax interest rate on the securities 
to be issued.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-4424 Filed 2-25-94; 8:45 am]
BILLING CODE 8010-01-M