[Federal Register Volume 59, Number 213 (Friday, November 4, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-27384]


[[Page Unknown]]

[Federal Register: November 4, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-26151]

 

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

October 28, 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 November 21, 1994 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.

National Fuel Gas Company (70-7674)

    National Fuel Gas Company (``National''), 10 Lafayette Square, 
Buffalo, New York 14203, a registered holding company, has filed a 
declaration under Sections 6(a) and 7 of the Act.
    By Commission order dated November 21, 1989 (HCAR No. 24988), 
National was authorized, among other things, to issue and deliver from 
time-to-time up to one million shares of its authorized but unissued 
common stock, $1.00 par value (``Additional Common Stock''), to the 
trustee of its two qualified 401(k) plans, in lieu of the required 
matching cash contributions. The two plans are the National Fuel Gas 
Company Tax-Deferred Savings Plan (``TDSP'') and the National Fuel Gas 
Company Tax-Deferred Savings Plan for Non-union Employees (``Non-union 
TDSP'') (together, ``Plans''). As of September 30, 1994, 508,000 shares 
had been issued to the Plans.
    National now proposes to increase the total number of shares of 
Additional Common Stock that it may issue and deliver to Vanguard 
Fiduciary Trust Company (``Vanguard''), trustee for the Plans, to two 
million shares including the previously issued shares, but no more than 
one million shares to the TDSP and Non-union TDSP, respectively. 
National further proposes to extend the time in which it may issue and 
deliver the Additional Common Stock through December 31, 1999.
    National states that any Additional Common Stock delivered to 
Vanguard will be valued at fair market value. Fair market value, as 
defined in the Plans, is the average of the high and low market price 
for National's Common Stock on the date on which the Additional Common 
Stock is issued.

Tri-County Rural Electric Cooperative, Inc., et al. (70-8108)

    Tri-County Rural Electric Cooperative, Inc. (``Tri-County''), a 
member-owned rural electric cooperative not currently subject to the 
Act, and Wilderness Area Utilities (``Wilderness''), a wholly owned 
subsidiary of Tri-County, both of 22 North Main Street, Mansfield, 
Pennsylvania 16933-0448, have filed an application requesting an order: 
(1) approving the indirect acquisition by Tri-County through 
Wilderness, under Sections 9(a)(2) and 10 of the Act, of 92.6% of the 
common stock (``Common Stock'') of Wellsborough Electric Company 
(``WECo''); and (2) granting Tri-County and its subsidiary companies, 
upon consummation of the proposed transaction, an exemption under 
Section 3(a)(1) of the Act from all of the provisions of the Act, 
except Section 9(a)(2).
    WECo, a public-utility company, is principally engaged in the 
acquisition and distribution of electricity to approximately 5,200 
customers in and around the Borough of Wellsboro, Tioga County, 
Pennsylvania. For the fiscal year ended December 31, 1993, WECo's 
operating revenues, net income and total assets were $5,630,440, 
$93,455 and $4,786,896, respectively.
    Tri-County is a member-owned rural electric cooperative 
incorporated under the Pennsylvania Electric Cooperative Corporation 
Act of 1937. Tri-County purchases electric energy at wholesale and 
distributes and sells it to approximately 16,400 customers in north-
central Pennsylvania. Tri-County's service territory encircles WECo's 
service territory. For the fiscal year ended December 31, 1993, Tri-
County's operating revenues, net margins and total assets were 
$14,726,428, $977,580 and $34,328,648, respectively.
    Wilderness is a business corporation incorporated under the laws of 
the Commonwealth of Pennsylvania and is a wholly owned subsidiary of 
Tri-County. Wilderness was incorporated specifically for the purpose of 
acquiring and holding shares of WECo.
    On June 28, 1994, Wilderness, WECo, and Robert B. McCarthy and Nina 
M. McCarthy (the two McCarthys collectively, ``McCarthy'') entered into 
a share purchase agreement (``Agreement''). The Agreement provides for 
the sale by McCarthy and purchase by Wilderness of 986-\3/4\ shares 
(92.6%) of the Common Stock of WECo for a total consideration of 
$7,150,000 ($7,246 per share). Wilderness also agreed to purchase, 
under certain conditions, the remaining 78-\3/4\ shares (7.4%) of the 
Common Stock from the remaining shareholders. If any remaining 
shareholder offers, during the two-year period after the date of the 
closing on the proposed acquisition, to sell to Wilderness any or all 
of such shareholder's Common Stock, Wilderness is required to purchase 
such shares at a price not less than $7,246 per share. Following the 
proposed transaction, Tri-County will own 100% of Wilderness, which 
will own 92.6% of the Common Stock of WECo.
    Applicants state that there are three reasons for the proposed 
corporate structure (i.e., whereby Wilderness, instead of Tri-County, 
will acquire WECo). First, Applicants state that, under Pennsylvania 
law, Tri-County could not directly own and operate WECo because a 
cooperative can ``transmit, distribute, sell, furnish, and dispose of 
electric energy to its members only.''\1\ In addition, only ``persons 
in rural areas\2\ * * * who are not receiving central station 
service''\3\ can be members. Many of WECo's customers are not located 
in rural areas; consequently, Tri-County is prohibited by law from 
directly supplying WECo's consumers. Therefore, under Pennsylvania law, 
Tri-County could not own and operate WECo; however, Tri-County can, 
through a subsidiary, serve WECo's consumers.
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    \1\Pennsylvania Electric Cooperative Law of 1990, at 15 P.S. 
Section 7321(a)(1) (emphasis supplied).
    \2\``Rural areas'' is defined as areas not within boundaries of 
any incorporated city, town, village or borough, having a population 
in excess of 2,500 inhabitants.
    \3\Id. at 15 P.S. Section 7323.
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    Second, all of Tri-County's assets are currently pledged to the 
Rural Electrification Administration of the U.S. Department of 
Agriculture (``REA'') as collateral for outstanding long term debt. 
This lien also applies to after-acquired assets. If Tri-County were to 
acquire the WECo Common Stock directly, it would automatically be 
subject to REA lien and would not be available to secure the 
acquisition financing. However, by interposing Wilderness, the WECo 
Common Stock is not directly owned by Tri-County and is, therefore, not 
included in the lien. Wilderness obtained the acquisition loan only by 
pledging the WECo Common Stock as security.
    Third, the REA loan documents limit Tri-County's investments in 
certain assets without REA approval, including securities such as WECo 
Common Stock, to an aggregate of 15% of its total utility plant. 
Because Tri-County's total utility plant is approximately $37 million, 
Tri-County could not invest more than approximately $5.5 million in 
WECo Common Stock. This limitation could prevent Tri-County from 
directly purchasing the WECo Common Stock. However, Wilderness could 
make the acquisition without such limitation since it is a separate 
corporation.

Southwestern Electric Power Company (70-8123)

    Southwestern Electric Power Company (``SWEPCO''), 428 Travis 
Street, Shreveport, Louisiana 71101, a wholly owned electric utility 
subsidiary company of Central and South West Corporation (``CSW''), a 
registered holding company, has filed a post-effective amendment to its 
application-declaration filed under Sections 9(a) and 10 of the Act.
    By order dated March 31, 1993 (HCAR No. 25776) (``March 1993 
Order''), SWEPCO was authorized to sell environmental laboratory 
services, including analysis of water, oils, soil and waste 
characterization, to nonaffiliates.
    SWEPCO now requests an extension, through December 31, 1997, of the 
authority previously granted in the March 1993 Order.

Connecticut Light and Power Co., et al. (70-8451)

    Connecticut Light and Power Company (``CL&P''), Selden Street, 
Berlin, Connecticut 06037, and Western Massachusetts Electric Company 
(``WMECO''), 174 Brush Hill Avenue, West Springfield, Massachusetts 
01089, both public-utility subsidiary companies of Northeast Utilities 
(``NU''), a registered holding company, have filed an application-
declaration under sections 6(a), 7, 9(a), 10, and 12(b) of the Act and 
rules 45, 53, and 54 thereunder.
    Each company proposes to organize a special-purpose limited 
partnership (``Issuing Partnership'') to issue limited partnership 
interests. Each company will act as the general partner of its Issuing 
Partnership, and either Northeast Utilities Service Company, a wholly-
owned subsidiary of NU, will act as the initial limited partner of the 
Issuing Partnerships, or each company will organize a special-purpose, 
wholly-owned corporation to act as the initial limited partner. The 
initial limited partners will withdraw from the Issuing Partnerships 
upon issuance of preferred limited partnership interests.
    Each company will make an equity contribution to its Issuing 
Partnership when first formed and thereby acquire all of the general 
partnership interest therein. The equity contributions of each general 
partner to its Issuing Partnership will at all times constitute at 
least 3% of the equity contributions by all partners. In addition, each 
company will, indirectly through the initial limited partner, make an 
equity contribution to its Issuing Partnership when first formed and 
thereby acquire all of the initial limited partnership interest in its 
Issuing Partnership. Upon the withdrawal of the initial limited partner 
from each of the Issuing Partnerships, each initial limited partner 
will be entitled to withdraw its equity contribution.
    The Issuing Partnerships will issue and sell through August 31, 
1996, preferred limited partnership interests (``Preferred Partnership 
Interests''), $25 per share stated liquidation preference, in an 
aggregate amount of, in the case of CL&P, up to $150 million, and, in 
the case of WMECO, up to $100 million. The holders of the Preferred 
Partnership Interests will be the limited partners of the Issuing 
Partnerships, and the amounts paid for the Preferred Partnership 
Interests will be treated as capital contributions.
    Each company will issue and sell subordinated debentures 
(``Subordinated Debentures'') to its Issuing Partnership. Each Issuing 
Partnership will use the proceeds from the sale of its Preferred 
Partnership Interests, plus the equity contributions made to it by its 
general partner, to purchase the CL&P Subordinated Debentures or the 
WMECO Subordinated Debentures.
    Each series of the Subordinated Debentures will mature within 50 
years. Prior to maturity, the companies will pay interest only, at a 
fixed rate set forth in the Indentures, on the Subordinated Debentures. 
The distribution rates, payment dates, redemption, and other similar 
provisions of each series of Preferred Partnership Interests will be 
substantially identical to the interest rates, payment dates, 
redemption, and other provisions of the related Subordinated 
Debentures. The interest paid by the companies on their respective 
Subordinated Debentures will constitute the only income of the Issuing 
Partnerships and will be used by the Issuing Partnerships to pay 
monthly distributions on the Preferred Partnership Interests.
    Each company may also enter into a guaranty (``Guaranty'') pursuant 
to which it will unconditionally guarantee (i) payment of distributions 
on the Preferred Partnership Interests, (ii) payments to the holders of 
Preferred Partnership Interests of amounts due upon liquidation of its 
Issuing Partnership or redemption of the Preferred Partnership 
Interests, and (iii) certain additional ``gross up'' amounts that may 
be payable in respect of the Preferred Partnership Interests.
    Each company's Subordinated Debentures and related Guaranty will be 
subordinate to all other existing and future indebtedness for borrowed 
money of the company. Each company will have the right to defer payment 
of interest on its Subordinated Debentures for up to 60 months. 
However, neither company will be permitted to declare and pay dividends 
on any class of its equity securities unless all payments due under its 
Subordinated Debentures and Guaranty have been made.
    Distributions on the Preferred Partnership Interests will be made 
monthly, will be cumulative, and will be mandatory to the extent that 
the Issuing Partnership has legally available funds and sufficient cash 
for such purposes. The availability of such funds will depend on the 
Issuing Partnership's receipt of the amounts due under the related 
Subordinated Debentures. The Issuing Partnerships will have the right 
to defer distributions on the Preferred Partnership Interests for up to 
60 months to the extent that the related company defers the interest 
payments on the Subordinated Debentures. If distributions on the 
Preferred Partnership Interests are deferred for 18 consecutive months, 
then the holders of Preferred Partnership Interests will have the right 
to appoint a special representative to enforce the Issuing 
Partnership's rights under the related Subordinated Debentures and 
Guaranty.
    It is expected that the interest payments by each company on its 
Subordinated Debentures will be deductible for federal income tax 
purposes and that its Issuing Partnership will be treated as a 
partnership for federal income tax purposes. Consequently, the holders 
of Preferred Partnership Interests and the general partners will be 
deemed to have received partnership distributions, not dividends, from 
the Issuing Partnerships and will not be entitled to any ``dividend 
received deduction'' under the Internal Revenue Code.
    The Preferred Partnership Interests will be subject to redemption 
in whole or part on and after a specified date (``Earliest Redemption 
Date'') at the option of the Issuing Partnership, with the consent of 
its related company, at a price equal to their stated liquidation 
preference plus any accrued and unpaid distributions. The Earliest 
Redemption Date will be not later than 10 years after the date of 
issuance. The Preferred Partnership Interests may also be subject to 
other optional and mandatory redemption provisions. The companies also 
expect that, upon the occurrence of certain events, each company may 
also have the right to exchange its Subordinated Debentures for the 
Preferred Partnership Interests or to otherwise distribute the 
Subordinated Debentures to the holders of Preferred Partnership 
Interests.
    If, as a result of the Subordinated Debentures not being treated as 
indebtedness for federal income tax purposes or the Issuing Partnership 
not being treated as a partnership for federal income tax purposes, the 
Issuing Partnership is required by applicable tax laws to withhold or 
deduct from payments on the Preferred Partnership Interests amounts 
which would not otherwise be required to be withheld or deducted, the 
Issuing Partnership may also have the obligation, if the Preferred 
Partnership Interests are not redeemed or replaced, to ``gross up'' 
such payments so that the holders of Preferred Partnership Interests 
will receive the same payment after such withholding or deduction as 
they would have received if no such withholding or deduction were 
required.
    In the event of any voluntary or involuntary liquidation, 
dissolution, or winding up of the Issuing Partnership, holders of 
Preferred Partnership Interests will be entitled to receive, out of the 
assets of the Issuing Partnerships available for distribution to its 
limited partners, before any distribution of assets to the general 
partner, an amount equal to the stated liquidation preference of the 
Preferred Partnership Interests plus any accrued and unpaid 
distributions.
    Each of the companies proposes to use substantially all of the 
proceeds of the proposed transactions to lower their after-tax cost of 
capital and/or improve the quality of their respective capital 
structures by redeeming or otherwise reacquiring a portion of their 
outstanding fixed-rate preferred stock and/or Dutch Auction Rate 
Transferable Securities.
    The Preferred Partnership Interests will initially be marketed and 
sold pursuant to underwriting agreements (``Underwriting Agreements'') 
to be entered into by each company, its Issuing Partnership, and an 
underwriter or underwriters to be selected by each company. Under the 
terms of the Underwriting Agreements, each underwriter will purchase 
the Preferred Partnership Interests directly from the Issuing 
Partnership and then sell the Preferred Partnership Interests to the 
public. Each company will pay an underwriting fee of up to 3.50% of the 
principal amount of its Issuing Partnership's Preferred Partnership 
Interests to be purchased by such underwriter.
    Based on market conditions, tax laws, and the views of the rating 
agencies, the companies may conclude that they can substantially obtain 
the benefits of the proposed transactions by directly issuing their 
Subordinated Debentures in a public offering. In such event, the 
companies may elect to undertake such public offerings directly without 
organizing the Issuing Partnerships and causing the issuance of the 
Preferred Partnership Interests.

Central and South West Corp., et al. (70-8469)

    Central and South West Corporation (``CSW''), a registered holding 
company, and CSW Energy, Inc. (``CSW Energy''), a wholly owned 
nonutility subsidiary company of CSW, have filed an application-
declaration under sections 6, 7, 9(a), 10, and 12(b) of the Act and 
rules 45 and 51 thereunder.
    CSW and CSW Energy seek to invest in a qualifying cogeneration 
facility and form related project entities, in connection with their 
program to develop sources of energy and capacity from qualifying 
cogeneration facilities, qualifying small power production facilities, 
and independent power facilities, including exempt wholesale 
generators.
    By orders dated September 28, 1990 (HCAR No. 25162), November 22, 
1991 (HCAR No. 25414), and December 31, 1992 (HCAR No. 25728) 
(``Orders''), CSW and CSW Energy obtained authorization to spend $150 
million to conduct preliminary studies of, to investigate, to research, 
to develop, to consult with respect to, and to agree to construct 
qualifying cogeneration facilities, qualifying small power production 
facilities, and independent power facilities, and to finance such 
activities through capital contributions, open account advances, and 
loans in an aggregate amount not to exceed $150 million.
    CSW and CSW Energy, in accordance with the Orders, seek 
authorization to invest in and develop, construct, own, and operate a 
qualifying cogeneration facility--the Sweeny Cogeneration Project 
(``Project''), which consists of an approximately 320 megawatt (net) 
gas-fired cogeneration facility to be located in or near Sweeny, Texas. 
The requested time limit of the authorization is one year from the date 
of receipt of the order. CSW and CSW Energy presently anticipate 
closing this transaction on or before December 31, 1996.
    It is proposed that CSW Energy invest in and develop the Project 
through a special purpose limited partnership, the Sweeny Cogeneration 
Limited Partnership (``Partnership''). CSW Energy proposes to organize 
and invest in a special-purpose, wholly owned corporation, CSW Sweeny 
GP, Inc. (``Energy GP''), which will hold, either directly or through a 
special-purpose, wholly owned corporation, CSW Sweeny GP II, Inc. 
(``Sweeney GP''), a general partnership interest in the Partnership, as 
well as a special-purpose, wholly owned corporation, CSW Sweeny LP, 
Inc. (``Energy LP''), which will hold, either directly or through a 
special-purpose, wholly owned corporation, CSW Sweeny LP II, Inc. 
(``Sweeny LP''), a limited partnership interest in the Partnership.
    Energy GP and Energy LP, and Sweeny GP and Sweeny LP, each will be 
incorporated with authorized capital of up to 1,000 shares of common 
stock (no par value). CSW Energy will subscribe to all of the common 
stock of Energy GP and Energy LP, Energy GP will subscribe to all of 
the common stock of Sweeny GP, and Energy LP will subscribe to all of 
the common stock of Sweeny LP, each for $1.00 per share.
    Energy GP will be a wholly owned subsidiary of CSW Energy, and 
Sweeny GP will be a wholly owned subsidiary of Energy GP. Energy GP 
will hold, directly or through Sweeny GP, a 20% general partnership 
interest in the Partnership. Energy GP, or Sweeny GP, will be initially 
the sole general partner of the Partnership. Energy LP will be a wholly 
owned subsidiary of CSW Energy, and Sweeny LP will be a wholly owned 
subsidiary of Energy LP. Energy LP will initially hold, directly or 
through Sweeny LP, an 80% limited-partnership interest in the 
Partnership. Energy LP, or Sweeny LP, will be initially the sole 
limited partner of the Partnership.
    After formation of the Partnership but before operation of the 
Project, between 50% and 75% of the interest in the Partnership will be 
acquired by nonaffiliated nonutility entities (``Equity Partner''). 
After the acquisition of an interest in the Partnership by the Equity 
Partner, Energy GP, directly or through Sweeny GP, will hold a 1% to 
10% general partnership interest in the Partnership, Energy LP, 
directly or through Sweeny LP, will hold the remainder of the aggregate 
indirect 25% to 50% interest of CSW Energy in the Partnership as a 
limited partner, and the Equity Partner will hold between 50% and 75% 
interest in the Partnership as a general partner, limited partner, or 
combination thereof.
    CSW Energy and the Partnership might incur certain expenses in 
connection with the development of the Project (``Development 
Expenses''), the total amount of which will not exceed $20 million. CSW 
and CSW Energy propose to fund the Development Expenses by capital 
contributions, loans, or open account advances from CSW to CSW Energy, 
from CSW Energy to Energy GP and Energy LP, and from Energy GP, 
directly or through Sweeny GP, and Energy LP, directly or through 
Sweeny LP, to the Partnership. All loans to the Partnership would have 
a final maturity not to exceed 25 years and would bear interest at a 
rate per annum not in excess either of the weighted cost of capital for 
CSW while CSW Energy indirectly holds all of the interests in the 
Partnership or the prime commercial lending rate as in effect from time 
to time at Mellon Bank plus 4%.
    The prime rate plus 4% approximates the current market rate that 
the Partnership would be able to secure from nonassociate third-party 
lenders for loans of this type. CSW and CSW Energy state that to make 
loans or open account advances through Energy GP, Energy LP, Sweeny GP 
and Sweeny LP to the Partnership in the manner and on the terms 
described herein, they will avoid granting the nonassociate third party 
partners to the Partnership the windfall that would otherwise accompany 
an interest rate to such third parties set artificially low instead of 
an interest rate tied to the market.

Central and South West Corporation, et al. (70-8483)

    Central and South West Corporation (``CSW''), a registered holding 
company, and its nonutility subsidiary, CSW Energy, Inc. (``Energy''), 
both located at 1616 Woodall Rodgers Freeway, P.O. Box 660164, Dallas, 
Texas 75202 (``Applicants''), have filed an application-declaration 
under Sections 6(a), 7, 9(a), 10, 12(b) and 32 of the Act and Rules 45 
and 53 thereunder.
    CSW and Energy propose to invest in, develop, construct, own and 
operate, jointly with KVA Resources, Inc., a nonassociate company 
engaged in the business of independent power development (``KVA''), a 
facility that will qualify as an eligible facility under Section 32(a) 
of the Act and be known as the Northwest Regional Power Facility 
(``Project'') and to form various Project entities. The Project will 
consist of an approximately 838 megawatt (net) generation facility to 
be located in or near Creston, Washington. It will be certified as an 
exempt wholesale generator (``EWG''), as defined in Section 32(e) of 
the Act by the Federal Energy Regulatory Commission (``FERC'').
    The Applicants propose that Energy, indirectly, make investments in 
and develop the Project through a special purpose limited partnership 
anticipated to be known as Northwest Regional Power Limited Partnership 
(``Partnership''). To acquire and hold a general and limited 
partnership interest in the Partnership, respectively, Energy will 
organize and invest in: (1) a special purpose, wholly owned corporation 
anticipated to be known as CSW Northwest GP, Inc. (``Energy Sub GP''), 
which will hold, either directly or through a special purpose, wholly 
owned corporation anticipated to be known as CSW Northwest GP II, Inc. 
(``Northwest GP''); and (2) a special purpose, wholly owned corporation 
anticipated to be known as CSW Northwest LP, Inc. (``Energy Sub LP''), 
which will hold, either directly or through a special purpose, wholly 
owned corporation anticipated to be known as CSW Northwest LP II, Inc. 
(``Northwest LP'').
    Energy Sub GP and Energy Sub LP, and Northwest GP and Northwest LP, 
if formed, each will have authorized capital of up to 1,000 shares of 
common stock, without par value. Energy will subscribe to all of the 
common stock of Energy Sub GP and Energy Sub LP, and, if formed, Energy 
Sub GP will subscribe to all of the common stock of Northwest GP and 
Energy Sub LP will subscribe to all of the common stock of Northwest LP 
at a subscription price of $1.00 per share.
    Energy Sub GP will hold, either directly or through Northwest GP, a 
1% general partnership interest in the Partnership. Energy Sub GP or 
Northwest GP and KVA will be initially the sole general partners of the 
Partnership. Energy Sub LP will initially hold, either directly or 
through Northwest LP, a 74% limited partnership interest in the 
Partnership and KVA will initially hold a 1% general partnership 
interest and a 24% limited partnership interest in the Partnership. 
Energy Sub LP, or Northwest LP, and KVA will be initially the sole 
limited partners of the Partnership.
    CSW and Energy are not seeking Commission authority to finance the 
construction of the Project at this time. However, the Partnership may 
incur certain expenses in connection with the development of the 
Project (``Development Expenses''). The total amount of the Development 
Expenses will not exceed $12 million. CSW and Energy propose to fund 
the Development Expenses by capital contributions, loans or open 
account advances through the various subsidiaries to the Partnership. 
Loans or open account advances would have a final maturity not to 
exceed 25 years and would bear interest at a rate per annum not in 
excess of the prime commercial lending rate as in effect from time-to-
time at Mellon Bank plus 4%. The Applicants believe that this rate 
approximates the current market rate that the Partnership would be able 
to secure from nonassociate third party lenders for loans of this type.

Maine Yankee Atomic Power Company (70-8493)

    Maine Yankee Atomic Power Company (``Maine Yankee''), 329 Bath 
Road, Brunswick, Maine 04011, an indirect subsidiary of New England 
Electric System and Northeast Utilities, both registered holding 
companies, has filed an application under Sections 9(a) and 10 of the 
Act.
    Maine Yankee proposes to acquire nuclear fuel in amounts of up to 
$90 million, through December 31, 1998, in connection with the 
operation of its pressurized water nuclear powered electric generating 
plant in Wiscasset, Maine. Maine Yankee will use the proceeds from 
certain previously authorized short-term debt lines and bank revolving 
credit facilities to finance the acquisitions (HCAR No. 25973, January 
25, 1994). The nuclear fuel would be acquired through long-term 
contracts and by purchases on the spot market, in either case on terms 
that are commercially reasonable at the time of such contract or spot 
market purchase.

Jersey Central Power & Light Company (70-8495)

    Jersey Central Power & Light Company, 300 Madison Avenue, 
Morristown, New Jersey 07962 (``JCP&L''), a subsidiary of General 
Public Utilities Corporation, Parsippany, New Jersey 07054, a 
registered holding company, has filed an application-declaration under 
Sections 6(a), 7, 9(a), 10, and 12(b) of the Act and Rules 45 and 54 
thereunder.
    JCP&L proposes to organize a limited partnership (``JCP&L 
Capital'') and a special purpose wholly-owned subsidiary (``Investment 
Sub'') for the sole purpose of acting as the general partner of JCP&L 
Capital. JCP&L will acquire all of the common stock of Investment Sub 
for a nominal consideration and will capitalize Investment Sub with: 
(1) A capital contribution in the amount of approximately 3% of the 
total capitalization of JCP&L Capital, or up to $4 million; and (2) a 
demand promissory note in the principal amount of approximately 10% of 
the total capitalization of JCP&L Capital, or up to $13 million, such 
note to accrue interest, compounded semi-annually, at a rate equal to 
the Citibank, N.A. base rate as in effect from time-to-time. JCP&L 
Capital would then issue and sell from time-to-time, in one or more 
series through December 31, 1996, up to $125 million aggregate stated 
value of preferred limited partner interests, in the form of monthly 
income preferred securities, $25 per security stated value (``Preferred 
Securities'').
    Investment Sub will acquire all of the general partner interests of 
JCP&L Capital for up to $4 million, representing up to a 3% interest in 
JCP&L Capital (``Equity Contribution''). JCP&L Capital will apply the 
proceeds from the sale of the Preferred Securities, together with the 
Equity Contribution, to purchase JCP&L's deferrable interest 
subordinated debentures (``Subordinated Debentures'').
    JCP&L will also guarantee (``Guarantees''), on a limited basis to 
the extent set forth in the Payment and Guarantee Agreement: (1) 
Payment of distributions on the Preferred Securities to the extent 
JCP&L Capital has sufficient cash on hand to permit such payments and 
legally available funds; (2) payments to the holders of the Preferred 
Securities of amounts due upon redemption of the Preferred Securities 
to the extent JCP&L Capital has sufficient cash on hand to permit such 
payments and legally available funds; (3) payment of the lesser of (a) 
the liquidation preference of the Preferred Securities or (b) the 
amount of assets available for distribution to the holders of the 
Preferred Securities in liquidation, upon a liquidation of JCP&L 
Capital other than in connection with a distribution of Subordinated 
Debentures, as discussed below; and (4) certain additional amounts that 
may be payable in respect of the Preferred Securities. JCP&L will also 
covenant in the Guarantees to cause Investment Sub to perform timely 
all of its duties as general partner of JCP&L Capital, including the 
general partner's duty to pay all of the costs and expenses of JCP&L 
Capital.
    Each Subordinated Debenture will be issued under an indenture to be 
entered with United States Trust Company of New York, as trustee, and 
will have an initial term of up to 50 years. Prior to maturity, JCP&L 
will pay only interest on the Subordinated Debentures at a rate equal 
to the distribution rate on the related series of Preferred Securities. 
Such interest payments will constitute JCP&L Capital's only income and 
will be used by it to pay monthly distributions on the Preferred 
Securities and distributions on the general partner interests of JCP&L 
Capital held by Investment Sub. Distributions on the Preferred 
Securities will be made monthly, will be cumulative and must be made to 
the extent that JCP&L Capital has legally available funds and cash 
sufficient for such purposes. However, JCP&L will have the right to 
defer payment of interest on the Subordinated Debentures for up to five 
years, in which event JCP&L Capital may similarly defer payment of 
distributions on the Preferred Securities. If distributions on the 
Preferred Securities are not paid for eighteen consecutive months, then 
the holders of the Preferred Securities will have the right to appoint 
a special representative to enforce JCP&L Capital's rights under the 
Subordinated Debentures and the rights of the holders of the Preferred 
Securities under the Guarantees. JCP&L and JCP&L Capital, as the case 
may be, may be required to pay interest on any deferred interest or 
distributions, to the extent permitted by applicable law. The interest 
rates, payment dates, redemption and other similar provisions of each 
series of Subordinated Debentures will be identical to the distribution 
rates, payment dates, redemption and other similar provisions of the 
related series of Preferred Securities.
    Each Subordinated Debenture and related Guarantee will be 
subordinate to all other existing and future indebtedness of JCP&L and 
will have no cross-default provisions with respect to other JCP&L 
indebtedness. However, JCP&L may not declare or pay dividends on its 
outstanding Cumulative Preferred Stock or Common Stock unless all 
payments then due under the Subordinated Debentures and the Guarantees 
have been made.
    It is expected that JCP&L interest payments on the Subordinated 
Debentures will be deductible for income tax purposes and that JCP&L 
Capital will be treated as a partnership for federal income tax 
purposes. Consequently, it is represented that the holders of the 
Preferred Securities and Investment Sub will receive partnership 
distributions in respect of their distributions from JCP&L Capital and 
will not be entitled to any ``dividend received deduction'' under the 
Internal Revenue Code.
    The Preferred Securities may be redeemable at the option of JCP&L 
Capital at a price equal to their stated value plus any accrued and 
unpaid distributions: (1) at any time after five years from their date 
of issuance; or (2) in the following events: (a) JCP&L Capital is 
required by applicable tax laws to withhold or deduct certain amounts 
in connection with distributions or other payments, (b) JCP&L Capital 
is subject to federal income tax with respect to interest received on 
the Subordinated Debentures or is otherwise not treated as a 
partnership for federal income tax purposes, (c) it is determined that 
the interest payments by JCP&L on the Subordinated Debentures are not 
deductible for federal income tax purposes, (d) JCP&L Capital is 
subject to more than a de minimis amount of other taxes, duties or 
other governmental charges, or (e) JCP&L Capital becomes subject to 
regulation as an ``investment company'' under the Investment Company 
Act of 1940, as amended. Upon occurrence of any of the events set forth 
in clause (2), above, JCP&L Capital may also have the right to dissolve 
and distribute the Subordinated Debentures to the holders of the 
Preferred Securities in liquidation of their interests in JCP&L 
Capital.
    In the event that JCP&L Capital is required by applicable tax laws 
to withhold or deduct certain amounts in connection with distributions 
or other payments, JCP&L Capital may also have the obligation, if the 
Preferred Securities are not redeemed or Subordinated Debentures are 
not distributed to the holders, to ``gross up'' such payments so that 
the holders of the Preferred Securities will receive the same payment 
after such withholding or deduction as they would have received if no 
such withholding or deduction were required. In the latter event, 
JCP&L's obligations under the Subordinated Debentures and the 
Guarantees would also cover any such ``gross up'' obligations.
    JCP&L expects to apply the net proceeds from the sale of 
Subordinated Debentures to JCP&L Capital, to the repayment of 
outstanding short-term debt, for construction purposes, and for other 
general corporate purposes, including the redemption of outstanding 
senior securities pursuant to their optional redemption provisions. 
JCP&L represents that it will not so redeem such outstanding securities 
unless the estimated present value savings derived from the difference 
between interest or dividend payments on a new issue of comparable 
securities and those securities refunded is on an after-tax basis 
greater than the estimated present value of all redemption, tendering 
and issuing costs, assuming an appropriate discount rate. Such discount 
rate will be based on meeting JCP&L's long-term capital structure 
goals, with appropriate adjustments for income taxes. JCP&L will not 
use any of the net proceeds from the sale of Subordinated Debentures to 
acquire, either directly or indirectly, any interest in any exempt 
wholesale generators (``EWG'') or foreign utility companies (``FUCO''), 
as those terms are defined in Sections 32 and 33 of the Act, 
respectively.

New England Electric System (70-8497)

    New England Electric System (``NEES''), 25 Research Drive, 
Westborough, Massachusetts 01582, a registered holding company, has 
filed a declaration under Section 12(b) of the Act and Rule 45 
thereunder.
    By orders dated December 11, 1992 and June 18, 1993 (HCAR Nos. 
25701 and 25832, respectively), NEES was granted the authority to make 
capital contributions to its wholly owned electric-utility subsidiaries 
through December 31, 1994.
    NEES now proposes to make, from time to time from January 1, 1995 
through December 31, 1996, one or more capital contributions to New 
England Power Company (``NEP''), Massachusetts Electric Company 
(``Mass. Electric''), The Narragansett Electric Company 
(``Narragansett''), and Granite State Electric Company (``Granite''), 
each a wholly owned electric-utility subsidiary of NEES. Such capital 
contributions shall not exceed an aggregate of $50 million each for 
NEP, Mass. Electric and Narragansett, and $3 million for Granite. NEP, 
Mass. Electric, Narragansett and Granite will credit their capital 
contributions to ``Other Paid-In Capital,'' and NEES will record such 
capital contributions as ``Investments in Subsidiaries, Consolidated.'' 
NEES will obtain the funds for such capital contributions from 
dividends paid to it by its subsidiaries, repayment of notes from 
subsidiaries or through short-term borrowings.
    NEP, Mass, Electric, Narragansett and Granite will apply the funds 
received from the capital contributions toward the cost of, or the 
reimbursement of the treasury for, or the payment of short-term 
borrowings incurred for, retirement of outstanding general and 
refunding and first mortgage bonds and preferred stock, capitalizable 
additions and improvements to plant and property or other corporate 
purposes.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-27384 Filed 11-3-94; 8:45 am]
BILLING CODE 8010-01-M