[Federal Register Volume 59, Number 121 (Friday, June 24, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-15359]


[[Page Unknown]]

[Federal Register: June 24, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-26068]

 

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

June 17, 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 July 11, 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.

PP&L Resources, Inc., (70-8104)

    PP&L Resources, Inc. (``Resources''), a Pennsylvania corporation 
not currently subject to the Act, Two North Ninth Street, Allentown, 
Pennsylvania, 18101-1179, has filed an application requesting an order 
(1) approving the direct acquisition by Resources, under sections 
9(a)(2) and 10 of the Act, of all of the outstanding shares of common 
stock of Pennsylvania Power & Light Company (``PP&L''), and, through 
such acquisition, the indirect acquisition of 33.3% of the outstanding 
shares of Safe Harbor Waters Power Corporation (``Safe Harbor''), and 
(2) granting Resources and its subsidiary companies, upon consummation 
of the proposed transaction, an exemption under section 3(a)(1) of the 
Act from all provisions of the Act, except section 9(a)(2).
    PP&L, a Pennsylvania public-utility company and a public-utility 
holding company exempt from registration by order of the Commission 
under section 3(a)(2) of the Act,\1\ is principally engaged in the 
production, transmission, distribution and sale of electricity to 
approximately 1.2 million customers in central eastern Pennsylvania.\2\ 
Total operating revenues and net income for 1993 were approximately 
$2.7 billion and $348 million, respectively. As of December 31, 1993, 
total assets were $9.8 billion.
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    \1\Pennsylvania Power & Light Company, Holding Co. Act Release 
No. 19725 (1976).
    \2\PP&L, through direct and indirect subsidiary companies, also 
engages in nonutility businesses, including holding coal reserves, 
coal mining-related activities, oil pipeline operations, and passive 
investments.
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    Safe Harbor, a Pennsylvania corporation, owns and operates a 
hydroelectric plant on the Susquehanna River. The output of the plant 
is sold to the companies which own the outstanding capital stock of 
Safe Harbor, PP&L and Baltimore Gas & Electric Company (``BG&E''). PP&L 
purchased 139 megawatts of capacity from Safe Harbor in 1993. Its share 
of Safe Harbor's operating revenues for 1993 was approximately $9.9 
million (BG&E's share was approximately $19.7 million). PP&L's share of 
Safe Harbor's net income for 1993 was $2,121,000 ($21.21 a share).
    PP&L proposes to reorganize by forming a holding company over 
itself. The principal reasons for the proposed restructuring are (1) to 
establish a more appropriate corporate structure for nonutility 
activities, both in the United States and abroad, particularly power 
development activities permitted under the Energy Policy Act of 1992, 
(2) to facilitate participation in nonutility businesses, (3) to 
separate the utility and nonutility businesses, thereby providing a 
better structure for regulators to assure that there is no cross-
subsidization of costs or transfer of business risk from unregulated to 
regulated lines of businesses, (4) to permit the use of financing 
techniques that are more directly suited to the particular 
requirements, characteristics and risks of unregulated and nonutility 
operations without affecting the capital structure or creditworthiness 
of PP&L, and (5) to provide additional flexibility for financing and 
for maintaining appropriate capitalization ratios.
    Power Markets Development Company (``Power Markets''), a wholly 
owned subsidiary of CEP Group, Inc. (``CEP''), a wholly owned 
subsidiary of PP&L engaged in holding passive investments, was formed 
to conduct PP&L's unregulated business activities. Power Markets was 
organized on March 9, 1994 and has received temporary funding of a $50 
million capital contribution from PP&L.
    Under an Agreement and Plan of Exchange (``Plan''), one share of 
common stock, $0.01 par value, of Resources, a corporation organized to 
facilitate the reorganization, will be exchanged for each share of 
common stock, $1.00 par value, of PP&L outstanding (``Exchange'') at 
the effective time of the Plan, and the outstanding shares of the 
Resources's common stock held by PP&L prior to the effective time of 
the Plan of Exchange will be cancelled.
    Following the Exchange, all of the outstanding common stock of 
Resources will be owned by the former PP&L common shareholders, and 
Resources will own all of the outstanding common stock of PP&L. Safe 
Harbor will remain a subsidiary of PP&L. PP&L will transfer the common 
stock of CEP to Resources. CEP will then transfer the common stock of 
Power Markets to Resources and Power Markets will become a direct, 
wholly owned subsidiary of Resources. It is expected that these 
transfers will be made in the form of stock dividends. There will be no 
exchange of the outstanding preferred stock or first mortgage bonds of 
PP&L in connection with the exchange.
    PP&L proposes to submit the Plan to the holders of its common stock 
for approval at its 1995 annual meeting of shareholders, currently 
scheduled for April 26, 1995. The proposed Exchange will also require 
the approval of the Pennsylvania Utility Commission, the Federal Energy 
Regulatory Commission and the Nuclear Regulatory Commission (``NRC'') 
will be requested to consent to the de jure transfer of NRC licenses.
    The application states that following the restructuring, Resources 
and its subsidiaries will meet the requirements for an exemption under 
section 3(a)(1). Resources, PP&L and Safe Harbor are and will continue 
to be predominantly intrastate in character and will continue to carry 
on their business substantially in Pennsylvania, the State in which 
they are organized.

Central and South West Corporation, et al. (70-8133)

    Central and South West Corporation (``CSW''), a registered holding 
company, and its nonutility subsidiaries, CSW Energy, Inc. 
(``Energy''), CSW Development-I, Inc. (``Energy Sub'') and CSW Orange, 
Inc. (``CSWO''), each located at 1616 Woodall Rodgers Freeway, Dallas, 
Texas 75202, and ARK/CSW Development Partnership (``Joint Venture''), 
Orange Cogeneration Limited Partnership (``Project Venture'') and 
Orange Cogeneration G.P., Inc. (``JV Sub''), each located at 23046 
Avenida de la Carlota, Suite 400, Laguna Hills, California 92653 
(collectively, ``Applicants''), have filed a post-effective amendment 
under sections 6(a), 7, 9(a), 10, 12(b), and 12(f) of the Act and rules 
43, 45, and 51 thereunder to their application-declaration filed under 
sections 6(a), 7, 9(a), 10 and 12(b) of the Act and rules 45 and 51 
thereunder.
    By order dated April 15, 1993 (HCAR No. 25796) (``1993 Order''), 
the Commission authorized the Applicants to form CSWO, JV Sub and the 
Project Venture, and to purchase a 103 megawatt qualifying cogeneration 
facility located in or near Bartow, Florida (``Project'') from certain 
third parties. The Commission also authorized the Applicants to incur 
certain development expenses not to exceed $7 million in connection 
with the Project.
    By order dated February 9, 1994 (HCAR No. 25988) (``1994 Order''), 
the Commission authorized the Applicants to obtain a credit facility 
(``Credit Facility'') for the construction and operation of the Project 
in an amount up to $140 million. The Commission also authorized an 
investment in the Project Venture by a third party (``New Limited 
Partner'') in lieu of term financing for the Project. The Applicants 
were authorized to advance certain funds (``Advances''), in the event 
the Project Venture is unable to obtain third party Project financing 
prior to the start of Project construction, in the form of loans, open 
account advances or additional equity contributions to the Project 
Venture from Energy in an aggregate amount not to exceed $125 million. 
In addition, the Commission authorized the issuance of corporate 
guaranties by the Applicants or stand-by letters of credit with the 
Applicants as account party in an amount not to exceed $50 million, 
such guaranties or letters of credit to support payment obligations of 
the Project Venture required by the provider of third party financing 
for the Project or fuel suppliers, fuel transportation or other third 
parties under various project agreements.
    The Applicants now propose that Energy Sub organize a new special 
purpose wholly owned subsidiary under Delaware law, CSW Orange II, Inc. 
(``Orange LP Sub''). Orange LP Sub would have an authorized capital of 
up 1,000 shares of common stock, no par value. Energy Sub will assign 
to Orange LP Sub all of Energy Sub's right, title and interest in and 
to CSWO (``Assignment''). In exchange for the Assignment, Energy Sub 
would subscribe to all of Orange LP Sub's common stock.
    The Applicants also propose that Joint Venture organize another 
special purpose wholly owned subsidiary under Delaware law, Orange 
Cogeneration GP II, Inc. (``Orange GP Sub''). Orange GP Sub would have 
an authorized capital of up to 1,000 shares of common stock, no par 
value. As above, Joint Venture proposes to assign to Orange GP Sub of 
all of its right, title and interest in and to JV Sub. Joint Venture 
would subscribe to all of Orange GP Sub's common stock.
    The Applicants represent that organization of Orange LP Sub and 
Orange GP Sub will limit the liability of Energy and the Joint Venture 
in connection with other projects held by them and in the event that 
Project Venture defaults on its repayment obligations under the Credit 
Facility.
    In the event that Orange LP Sub and Orange GP Sub are formed, the 
Applicants seek to include Orange LP Sub and Orange GP Sub in the flow 
of funds for equity contributions, open account advances and 
intercompany loans on the terms and in the manner authorized by the 
1993 Order and 1994 Order.
    The Applicants seek to organize Orange LP Sub and Orange GP Sub in 
order to aid in the procurement of the Credit Facility. It is 
anticipated that a pledge of the stock of CSWO and JV Sub by Energy Sub 
and the Joint Venture, respectively, will be required in connection 
with the Credit Facility.
    If, as is anticipated, Orange LP Sub is assigned the stock of CSWO 
held by Energy Sub and Orange GP Sub is assigned the stock of JV Sub 
held by the Joint Venture, Orange LP Sub and Orange GP Sub would 
provide such pledges in lieu of such pledges by Energy Sub and the 
Joint Venture, respectively. The Applicants represent that, in the 
event that Orange LP Sub and Orange GP Sub become liable in connection 
with any such pledge, the interests of Energy Sub and the Joint Venture 
that are not associated with the Project will be protected.

Central and South West Corporation, et al. (70-8209)

    Central and South West Corporation (``CSW''), a registered holding 
company, and CSW Energy, Inc. (``Energy''), its wholly owned nonutility 
subsidiary, both located at 1616 Woodall Rodgers Freeway, P.O. Box 
660164, Dallas, Texas 75202, have filed an application-declaration 
under Sections 6(a), 7, 9(a), 10 and 12(b) of the Act and Rules 45, 51 
and 53 thereunder.
    Pursuant to a letter of intent (``Letter of Intent'') entered into 
on January 4, 1993,\3\ CSW and Energy seek to enter into a joint 
venture (``Joint Venture'') with Pentech Energy, Inc., a Delaware 
corporation (``Pentech''). The Joint Venture, which will be a general 
partnership whose general partners will be Pentech and a new subsidiary 
of Energy discussed below, will develop, construct, own and operate 
power projects, including: (1) Independent power projects that would 
constitute a part of CSW's ``integrated public utility system'' within 
the meaning of Section 2(a)(29)(A) of the Act; (2) qualifying 
facilities within the meaning of the Public Utility Regulatory Policies 
Act of 1978; and (3) exempt wholesale generators within the meaning of 
section 32(e) of the Act (collectively, ``Facilities''). Joint Venture 
has specific plans to develop an energy facility (``Avon Lake 
Project'') in Ohio through a limited partnership (``Project 
Partnership'') to be organized.
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    \3\The Letter of Intent, between Energy, Pentech Energy, Inc., 
and Pentech Enterprises, Inc., was subsequently amended on February 
28, 1993 and on March 3, 1993.
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    Joint Venture will also, directly or indirectly, own and hold the 
securities and interests of special purpose corporations and 
partnerships (``Project Entities''). Energy, Energy Sub and the Joint 
Venture will seek the prior approval of the Commission, to the extent 
required by the Act, to invest initially in any particular Project 
Entity (other than the entities described below and the Project Venture 
and the Project Partnership, or any EWG) and to construct, own and 
operate Facilities (other than the Avon Lake Project).
    CSW and Energy seek to make investments of up to $15 million in the 
Joint Venture. CSW and Energy also seek to acquire an interest in, and 
make advances to, Project Partnership. All investments, whether in the 
form of equity contributions, loans, development payments, or 
otherwise, will be included in the aggregate investment authority of 
$15 million (``Joint Venture Investment'').
    Energy will organize a new wholly owned subsidiary company 
(``Energy Sub'') under Delaware law to make its investment in the Joint 
Venture. Energy will subscribe to all of Energy Sub's 1,000 shares of 
common stock, no par value, at $1.00 per share.
    CSW proposes to make, through Energy and Energy Sub to Joint 
Venture, capital contributions, loans, open account advances and 
associated guarantees in an aggregate amount of up to $15 million, from 
time to time through December 31, 1995, to facilitate Energy Sub's 
investment in the Joint Venture.
    Any advances or loans (``Loans'') will have an interest rate per 
annum not in excess of Mellon Bank's prime commercial lending rate as 
announced from time to time plus four percentage points (``Maximum 
Interest Rate'') and a final maturity not to exceed twenty years. The 
loans or advances will be repaid upon the earlier of, and from the 
proceeds of: (i) Construction- and/or term loan closing of any Facility 
developed or owned by the Joint Venture (directly or indirectly); (ii) 
the sale, lease or other disposition by the Joint Venture (directly or 
indirectly) of its interest in any Facility; or (iii) any financing, 
disposition or distribution of any project received by the Joint 
Venture, in which the Joint Venture has an interest (including a 
Facility).
    Energy will own 65%,\4\ and Pentech will own 35%, of each Facility 
to be developed by the Joint Venture. Energy does not anticipate owning 
less than 50% of facilities being developed by Pentech in partnership 
with other entities; however, the exact percentage will be subject to 
negotiation.\5\
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    \4\Energy may hold its ownership interests indirectly through 
subsidiaries. In addition, ownership may be held by persons or 
entities to whom Energy may sell its interests.
    \5\In addition, to the extent the Facilities will be qualifying 
facilities under the Public Utility Regulatory Policies Act of 1978 
(``PURPA''), Energy will not acquire or retain an ownership interest 
in excess of the maximum level consistent with qualifying facility 
status.
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    Energy Sub will pay Pentech all the prior substantiated development 
expenses of the Facilities selected for the Joint Venture's 
development. The payment will serve as a development loan 
(``Development Loan'') with interest compounded annually at the Maximum 
Interest Rate. The Development Loan will be repaid upon the earlier of, 
and from the proceeds of: (i) Construction- and/or term-loan closing of 
any Facility developed or owned by Pentech (directly or indirectly); 
(ii) the sale, lease or other disposition by Pentech or its affiliates 
of its interest in any Facility; or (iii) any financing, disposition or 
distribution received by Pentech or its affiliates of any project in 
which Pentech or any such affiliate has an interest (including the 
Facilities and regardless of whether Energy or any of its affiliates 
has participated in the development of any such project).
    It is expected that Energy Sub will pay the budgeted development 
expenses for the Facilities. This payment also will be considered a 
Development Loan and will have the same repayment and interest terms.
    It is further proposed that, based upon each Facility's development 
budget, Energy Sub will directly or indirectly fund, through loans, 
external development costs not otherwise funded. Energy Sub and Pentech 
will each pay its own internal development cost.\6\ These external 
development costs will be repaid in the same manner, and with the same 
interest, as the Loans.
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    \6\Pentech's development costs will be paid by the Development 
Loan.
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    Energy Sub will, directly or indirectly, contribute each Facility's 
equity requirement (including any equity commitment of Pentech in the 
form of the Development Loans) not otherwise underwritten at the 
construction-loan closing; provided, however, that the equity 
requirement for each Facility will not exceed 20% if the total cost of 
each Facility. Pentech will arrange for its pro rata equity commitment 
not later than six months prior to the commencement of such Facility's 
commercial operation.
    The Avon Lake Project is currently being developed by Avon Lake 
Partnership, a California limited partnership (``Project Venture'').\7\ 
The Project Venture is currently owned by Pentech Power Corporation, a 
Delaware corporation (``Pentech GP''), which is a ten percent (10%) 
general partner of the Project Venture, and by Avon Lake, Inc., a 
Delaware corporation (``Pentech LP''), which is a ninety percent (90%) 
limited partner of the Project Venture. Pentech GP and Pentech LP are 
both wholly owned by Pentech, which is in turn owned by the ultimate 
corporate parent of the group, Pentech Enterprises, Inc., also a 
Delaware corporation (``Pentech Enterprises''). None of these entities 
is an affiliate of CSW.
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    \7\The Project, which is still in the planning stage, is 
currently contemplated to be an exempt wholesale generator under the 
Act and/or a qualifying facility under PURPA. The Project Venture is 
negotiating contracts for the acquisition of certain rights to 
develop the Project, and it is contemplated that the construction of 
the Project will commence in 1995, and be completed in 1997.
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    To hold its interest in the Avon Lake Project, Energy Sub will 
organize two new wholly owned subsidiaries under Delaware law: (i) CSWE 
Avon Lake GP, Inc. (``CSWE GP'') and (ii) CSWE Avon Lake LP, Inc., a 
Delaware corporation (``CSWE LP'').\8\ Energy Sub (or Energy GP Sub) 
will subscribe to all of CSWE GP's 1,000 shares of common stock, no par 
value, at $1.00 per share, and Energy Sub (or Energy LP Sub) will 
subscribe to all of CSWE LP's 1,000 shares of common stock, no par 
value, at $1.00 per share.\9\
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    \8\Energy Sub will own CSWE LP and CSWE GP either directly or 
indirectly through a wholly owned special purpose subsidiary or 
affiliate companies to be organized under Delaware law (``Energy LP 
Sub'' and ``Energy GP Sub,'' respectively).
    \9\Energy Sub will also subscribe to all of Energy GP Sub's and 
Energy LP Sub's and Energy LP Sub's 1,000 shares of common stock, no 
par value, at $1.00 per share, assuming these companies are 
organized.
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    CSWE GP and CSWE LP will require an interest in the Avon Lake 
Project in the following steps: (1) CSWE GP will acquire a general 
partnership interest in the Project Venture from Pentech GP, for the 
purchase price of $1,000, pursuant to a to-be-negotiated subscription 
agreement (``Subscription Agreement''); (2) CSWE LP will acquire a 
limited partnership interest in the Project Venture from Pentech LP, 
for the purchase price of $1,000, pursuant to the Subscription 
Agreement; (3) Pentech GP, Pentech LP, CSWE GP, CSWE LP and Siemens 
Power Ventures, Inc., a nonaffiliate Delaware corporation (``Siemens'') 
will execute a to-be-negotiated Amended and Restated Agreement of 
Limited Partnership; (4) the Project Venture will change its name from 
``Avon Lake Partnership, a California limited partnership'' to ``Avon 
Lake Limited Partnership''; and (5) the Project Venture will be 
reorganized as a limited partnership under Delaware law. The Project 
Venture will thereupon become the Project Partnership.
    Alternatively, CSWE GP, CSWE LP, Pentech GP, Pentech LP and Siemens 
(directly or indirectly) will form the Project Partnership and merge 
the Project Venture into the Project Partnership such that the 
resulting entity is the Project Partnership.
    Upon the organization of the entities and/or purchase of the 
interests in the Project Venture, each entity will bear the following 
relationship to the others. Pentech GOP will hold a 1% general 
partnership interest in the Project Partnership; CSWE Avon Lake GP will 
hold a 1% general partnership interest in the Project Partnership; 
Pentech LP will hold a 9% limited partnership interest in the Project 
Partnership; CSWE LP will hold a 49% limited partnership interest in 
the Project Partnership; and Siemens will hold a 1% general partnership 
interest and a 39% limited partnership interest in the Project 
Partnership.
    Energy and the Project Partnership may incur certain development 
expenses (``Development Expenses'') in connection with the Avon Lake 
Project. The total amount of the Development Expenses will not exceed 
such amount to be included in the Joint Venture Investment.
    Energy will fund its pro rata share of the Development Expenses 
(whether incurred pursuant to the Subscription Agreement or otherwise) 
by capital contributions, loans or open account advances to the Project 
Partnership (directly or indirectly), by capital contributions, loans 
or open account advances from Energy to Energy Sub; from Energy Sub to 
Energy GP (if formed) and/or Energy LP Sub (if formed) or to CSWE GP 
and/or CSWE LP; from Energy GP Sub (if formed) to CSWE GP; from Energy 
LP Sub (if formed) to CSWE LP; and from CSWE GP and/or CSWE LP to the 
Project Partnership. Loans or advances extended for the purpose of 
funding the Development Expenses will be repaid with the same interest 
and repayment terms as the Loans.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-15359 Filed 6-23-94; 8:45 am]
BILLING CODE 8010-01-M