[Federal Register Volume 60, Number 42 (Friday, March 3, 1995)]
[Notices]
[Pages 12000-12004]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-5200]



-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-26237]


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

February 24, 1995.
    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 20, 1995, 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.

Entergy Corporation, et al., (70-8105)

    Entergy Corporation (``Entergy''), 225 Baronne Street, New Orleans, 
Louisiana, a registered holding company, and its wholly owned 
nonutility subsidiary company, Entergy Enterprises, Inc. 
(``Enterprises''), Three Financial Centre, Little Rock, Arkansas, have 
filed an application-declaration under sections 6(a), 7, 9(a), 10, 
12(b), 13(b), 32 and 33 of the Act and rules 45, 53, 87, 90 and 91 
thereunder.
    Entergy proposes through December 31, 1997 to invest up to $350 
million in Enterprises for its use in providing preliminary development 
activities, consulting services, management and administrative support 
services, operations and maintenance services and engaging in certain 
related transactions.
    Pursuant to Commission orders, dated January 11, 1983 (HCAR 22818), 
January 13, 1984 (HCAR No. 23200), January 15, 1985 (HCAR 23569), July 
25, 1991 (HCAR No. 25353), July 13, 1992 (HCAR No. 25580), and 
September 3, 1992 (HCAR No. 25617), Enterprises was organized and has 
been engaged in the analysis and development of various investment 
opportunities for the Entergy system, as well as the marketing of 
management, operating, technical and training expertise developed by 
Entergy system companies to nonaffiliates.\1\ The Commission also 
authorized Enterprises to form an energy management service company, 
Entergy Systems and Service, Inc. (HCAR No. 25718, December 28, 1992) 
and to provide certain consulting services to affiliated utilities in 
Argentina (HCAR Nos. 25705 and 25706, December 14, 1992).

    \1\The Entergy system consists of Entergy and (1) five retail 
electric public-utility subsidiary companies, Arkansas Power & Light 
Company, Gulf States Utilities Company, Louisiana Power & Light 
Company, Mississippi Power & Light Company and New Orleans Public 
Service Inc. (collectively, ``System Operating Companies''), (2) a 
wholesale generating company that sells power to the System 
Operating Companies, System Energy Resources, Inc. (``System 
Entergy''), (3) a wholesale generating company that sells power to 
nonaffiliates, Entergy Power, Inc., (4) a service company 
subsidiary, Entergy Services, Inc. (``ESI''), (5) a nuclear 
management service company, Entergy Operations, Inc. (``EOI''), (6) 
Enterprises, (7) a fuel supply company, System Fuels, Inc. 
(``SFI''), (8) an energy management services company, Entergy 
Systems and Service, Inc., (9) two companies formed to own Entergy's 
interests in certain Argentine utility companies, Entergy S.A. and 
Entergy Argentina S.A., and (10) various direct and indirect 
subsidiary companies of Entergy formed to own Entergy's interests in 
``eligible facilities'' within the meaning of Section 33 of the Act.
---------------------------------------------------------------------------

    As part of a restructuring plan, Entergy entered into a series of 
agreements (``Settlement Agreements'') with four of its five retail 
rate regulators, the Arkansas Public Service Commission, the Council of 
the City of New Orleans, the Louisiana Public Service Commission and 
the Mississippi Public Service Commission concerning,\2\ in part, 
transfer pricing for the provision of services and other affiliate 
transactions between Entergy's regulated utilities\3\ and Entergy's 
nonutility businesses. Entergy has filed an Application-Declaration 
seeking the Commission's approval under the Act to implement provisions 
of the Settlement Agreements (S.E.C. File No. 70-8529).

    \2\The System Operating Companies' retail rate regulator in 
Texas is precluded from agreeing to the terms of the Settlement 
Agreements because Texas has regulations governing affiliate 
transactions.
    \3\``Regulated utility'' includes the system's five utility 
companies, System Energy, EOI, ESI, SFI, and any similar subsidiary 
Entergy may create in the future.
---------------------------------------------------------------------------

    Pursuant to the initial order of the Commission issued in this File 
(HCAR No. 25848 (dated July 8, 1993) (the ``Order'')), Enterprises is 
currently authorized, and proposes to continue, to conduct preliminary 
development activities (``Preliminary Development Activities'') related 
to possible investments by Entergy. Enterprises' Preliminary 
Development Activities may include: (1) Project due diligence and 
design review; (2) marketing studies; (3) investigating sites; (4) 
research, preliminary engineering and licensing activities; (5) 
applying for required permits and regulatory approval; (6) acquiring 
options and rights; (7) drafting, negotiation and execution of 
contractual commitments with owners of existing facilities; 
governmental authorities, equipment vendors, construction firms, power 
purchasers, thermal energy users and other project participants; (8) 
negotiation of financing commitments with lenders and equity co-
investors (including the provision of guarantees and other credit 
enhancements); (9) legal, accounting and financial analysis; 
[[Page 12001]] (10) preparing and submitting bids and proposals; and 
(11) any other activities necessary to identify and analyze investment 
opportunities.
    Enterprises would continue its Preliminary Development Activities 
with respect to potential investments by Entergy in the following types 
of businesses and activities (hereinafter, ``Permitted Investments''): 
(1) exempt wholesale generators (``EWGs'') and foreign utility 
companies (``FUCOs'') under the Act; (2) qualifying facilities 
(``QFs'') under the Public Utility Regulatory Policies Act of 1978, as 
amended (``PURPA''); (3) non-exempt domestic and foreign generation, 
transmission and distribution facilities, including but not limited to 
``inside the fence'' generating projects and other power production 
facilities, provided, however, that any nonexempt domestic facility 
would be part of the integrated utility system; (4) technologies 
relating to energy efficiency; (5) the development of alternative 
energy sources; and (6) other exempt or nonutility business investments 
permissible under the Act. Except with respect to investments in EWGs, 
FUCOs and any other Permitted Investment for which Commission approval 
is not required under the Act or rules thereunder, neither Entergy nor 
Enterprises would make any Permitted Investment without obtaining 
further Commission approval. In addition, the financing of any such 
Permitted Investment would, to the extent jurisdictional, be subject to 
further Commission authorization.
    The Order also authorizes Enterprises to provide various consulting 
services (``Consulting Services'') to nonassociate companies in the 
areas of electric power generation, transmission and distribution and 
operations ancillary thereto. Enterprises proposes to continue to 
provide such Consulting Services to nonassociate companies. The 
Consulting Services may include: (1) Management expertise, such as 
strategic planning, organization, policy matters and management 
services; (2) technical expertise, such as design engineering, 
availability engineering, construction management planning and 
procedures, and financial, system and operational planning; (3) 
operating expertise, particularly with respect to generating, 
transmission and distribution facilities; (4) environmental expertise, 
such as environmental licensing and compliance, negotiation of permits 
and environmental planning; (5) training expertise, particularly in the 
areas of operations and management; (6) technical and procedural 
resources, such as are embedded in computer systems, programs and 
manuals; (7) fuel procurement, delivery and storage expertise; (8) 
expertise related to marketing and brokering of power resources; and 
(9) expertise relating to demand side management or other energy 
management services. Enterprises also would continue to market 
expertise in the bulk power business of its associate company, Entergy 
Power Inc., including: (1) Management services related to generating 
projects, transmission facilities and thermal energy facilities, 
particularly in the areas of strategic planning, feasibility studies, 
and policy and organizational matters; (2) technical services related 
to such projects and facilities, particularly in the areas of design, 
engineering, procurement and construction; and (3) training services 
related to such projects and facilities, particularly in areas of 
operations and maintenance. Enterprises also proposes to provide 
Consulting Services to associate companies, including associate EWGs, 
FUCOs and QFs. Enterprises will not, without further authorization from 
the Commission, provide Consulting Services to Retail Electric 
Companies.
    The Order also authorizes Enterprises to provide, and Enterprises 
proposes to continue to provide, certain management and administrative 
support services to associate companies which are not Retail Electric 
Companies. Administrative services consist of corporate and project 
development and planning, portfolio management, and administrative 
services, including legal, financial, accounting and internal auditing 
(``Administrative Services''). Enterprises would continue to charge its 
associate companies for the fully allocated direct and indirect cost of 
services provided, determined in accordance with Rules 90 and 91 under 
the Act. Enterprises also would continue to utilize a project-based 
accounting system to account properly for and allocate the cost of 
providing such services to its associate companies.
    The Commission reserved jurisdiction in its Order over Enterprises' 
provision of Administrative Services to associate companies that are 
EWGs or FUCOs under Sections 32 and 33, respectively, of the Act. The 
Commission adopted final rules in September 1993 concerning investments 
in EWGs (HCAR No. 25886) (September 3, 1993), and Entergy and 
Enterprises state that they are in compliance with such rules. In 
addition, Entergy and Enterprises agree to comply with the terms and 
conditions of all applicable rules under the Act relating to the 
provision of services to EWGs and FUCOs, including without limitation 
Rule 87 as it may be amended. Accordingly, Entergy and Enterprises 
request the Commission to release jurisdiction over the provision of 
Administrative Services by Enterprises to associate companies that are 
EWGs and FUCOs.
    Enterprises also proposes to offer directly or indirectly through 
one or more special purpose subsidiary companies of Entergy or 
Enterprises (``O&M Sub''), various operations and maintenance services 
(``O&M Services'') to developers, owners and operators of domestic and 
foreign power projects, including power projects that Enterprises may 
develop on its own or in collaboration with third parties. O&M Services 
would include development, engineering, design, construction and 
construction management, pre-operational start-up, testing and 
commissioning, long-term operations and maintenance, fuel procurement, 
management and supervision, technical and training, administrative 
support, and any other managerial or technical services required to 
operate and maintain electric power facilities.
    Enterprises would provide the O&M Services using its own workforce 
and the personnel and resources of the Retail Electric Companies 
obtained pursuant to the Service Agreements with such companies, as 
they may be amended by order of the Commission. Under the terms of the 
Settlement Agreements, the Retail Electric Companies would be 
reimbursed for the fully allocated cost of any services provided to 
Enterprises or any O&M Sub, plus 5%. O&M Subs would be domestic or 
foreign corporations, partnerships or other entities (depending upon 
the legal and regulatory requirements of a particular project). 
Enterprises will provide information to the Commission concerning the 
formation of an O&M Sub that is not an EWG or FUCO, and will represent 
that no Retail Electric Company has subsidized the operations of 
Enterprises or any O&M Sub and that any transfer of personnel from any 
Retail Electric Company to, and the rendering of O&M Services by, 
Enterprises or the O&M Sub are in compliance with applicable rules, 
regulations and orders of the Commission. Enterprises proposes to 
provide Consulting Services and O&M Services to its nonassociate and 
associate companies (excluding the Retail Electric Companies) at fair 
market prices. In this respect, Enterprises requests an exemption 
pursuant to Section 13(b) of the Act from the requirements of Rules 90 
and 91 thereunder, provided one or more of the [[Page 12002]] following 
conditions are satisfied with respect to associate companies:

    (1) An associated power project is an EWG or a FUCO which 
derives no part of its income, directly or indirectly, from the 
generation, transmission, or distribution of electric energy for 
sale within the United States;
    (2) An associated power project is an EWG which sells 
electricity at market-based rates which have been approved by the 
Federal Energy Regulatory Commission (``FERC'') or the appropriate 
state public utility commission, provided that the purchaser is not 
a Retail Electric Company;
    (3) An associated power project is a QF which sells electricity 
exclusively at rates negotiated at arm's length to one or more 
industrial or commercial customers purchasing such electricity for 
their use and not for resale, and/or to an electric utility company, 
other than a Retail Electric Company, at the purchaser's ``avoided 
cost'' determined in accordance with the regulations under PURPA; or
    (4) An associated power project is an EWG or a QF that sells 
electricity at rates based upon its cost of service, as approved by 
FERC or any state public utility commission having jurisdiction, 
provided that the purchaser of such electricity is not a Retail 
Electric Company.

    Enterprises also proposes to continue to market and license to 
nonaffiliated third parties intellectual properties developed by 
Entergy system companies. The Settlement Agreements provide that if a 
nonutility business markets a product that was developed by a Retail 
Electric Company and is actually used by a Retail Electric Company, all 
profits on the sale of the product shall be divided evenly between the 
Retail Electric Company responsible for developing the product and the 
nonutility business responsible for marketing the product after 
deducting all incremental costs associated with making the product 
available for sale, including all costs of marketing the product. 
However, in the event that a product developed by a Retail Electric 
Company to be used in its utility business is not actually so used, and 
subsequently is marketed by a nonutility business to third parties, 
such Retail Electric Company shall be entitled to recover all of its 
costs to develop the product before any profits from marketing shall be 
divided.
    Entergy proposes, through December 31, 1997, to invest up to $350 
million in Enterprises (and continuing beyond December 31, 1997 in 
accordance with the terms of any debt incurred or guarantee issued 
prior to such date) in connection with Enterprises' authorized business 
activities. Entergy's investments in Enterprises may take the form of: 
(1) Additional purchases of Enterprises' common stock, no par value, 
for a purchase price of $1,000 per share; (2) capital contributions; 
(3) loans (and the conversion of any such loans to capital 
contributions); and (4) guarantees of indebtedness or other obligations 
incurred by Enterprises or its associate companies. Any loans to 
Enterprises by Entergy would mature no later than December 31, 2004, 
and would bear interest at a rate not to exceed the prime rate in 
effect on the date of the loan at a bank designated by Entergy.
    Entergy and Enterprises also request authority through December 31, 
1997, to issue guarantees in an aggregate amount that, when added to 
investments in Enterprises and any O&M Sub, will not exceed $350 
million. Guarantees may be required for Enterprises' Preliminary 
Development Activities, which might include undertaking reimbursement 
obligations or acting as surety on bonds, letters of credit, evidences 
of indebtedness, equity commitments, performance and other obligations. 
Guarantees may also be required for Enterprises other business 
activities or to satisfy the requirements of lenders and other project 
participants under financing documents and other agreements to which 
Enterprises, an O&M Sub or another associate company of Entergy (other 
than a Retail Electric Company) becomes a party. The terms and 
conditions of guarantees would be established at arm's length based 
upon market conditions.
    Entergy and Enterprises also request authorization through December 
31, 1997 to organize and provide funding to O&M Subs, through any one 
or combination of: (1) Purchases of capital stock; (2) capital 
contributions; (3) loans; or (4) guarantees of the securities or other 
obligations of an O&M Sub. Any investments in an O&M Sub would be 
included in the $350 million investment authority requested by Entergy.
    Enterprises would use the proceeds from Entergy's investments to: 
(1) Provide working capital in connection with Enterprises' Preliminary 
Development Activities, Consulting Services, Administrative Services, 
O&M Services, and other authorized business activities; (2) to pay its 
associate companies for services rendered to Enterprises; and (3) for 
other general corporate purposes. Entergy and Enterprises currently 
estimate that approximately $100 million of the $350 million of 
investment authority would be applied to meeting Enterprises' foregoing 
capital needs. Enterprises currently estimates that, of the proposed 
additional investments by Entergy, up to $79 million (but in any case 
not more than $86 million) would be used for Preliminary Development 
Activities, and up to $26 million (but in any case not more than $30 
million) would be used for Administrative Services. None of the funds 
will be used to acquire securities or an interest in the business of an 
EWG, FUCO, or QF.

Columbus Southern Power Company, (70-8573)

    Columbus Southern Power Company (``CSPCo''), 215 North Front 
Street, Columbus, Ohio 43215, Kentucky Power Company (``KPCo''), 1701 
Central Avenue, P.O. Box 1428, Ashland, Kentucky 41101 and Ohio Power 
Company (``OPCo''), 301 Cleveland Avenue, S.W., Canton, Ohio 44702 
(collectively, the (``Companies''), electric utility subsidiary 
companies of American Electric Power Company, Inc., a registered 
holding company, have filed an application-declaration under Sections 
6(a), 7, 9, 10 and 12(b) of the Act and Rules 45 and 54 thereunder.
    The Companies propose to issue and sell Junior Subordinated 
Debentures (``Debentures'') through December 31, 1997. Each series of 
Debenture will mature in not more than 50 years in aggregate principal 
amounts of up to the following: (1) $80 million for CSPCo; (2) $65 
million for KPCo; and (3) $90 million for OPCo. The Debentures may be 
sold by competitive bidding or through negotiation with underwriters or 
agents. The Debentures will be offered for sale at an initial public 
offering price resulting in a yield to maturity which shall not exceed 
by more than 3.0% the yield to maturity on United States Treasury bonds 
of comparable maturity at the time of pricing of the Debentures. The 
commission payable to agents or underwriters will not exceed 3.5% of 
the principal amount of the Debentures sold.
    The Companies may have the right to defer payment of interest on 
the Debentures for up to five years. However, the Companies may not 
declare and pay dividends on its outstanding stock if payments under 
the Debentures are deferred. The payment of principal, premium and 
interest on the Debentures will be subordinated in right of payment to 
the prior payment in full of its senior indebtedness. The Companies 
will agree to specific redemption provisions, if any, at the time of 
the pricing of the Debentures.
    If the Companies determine that it is not advisable to sell the 
Debentures directly to the public, each may organize a separate special 
purpose subsidiary as either: (1) a limited liability company under the 
Limited [[Page 12003]] Liability Company Act (``LLC Act'') of the State 
of Ohio in the case of CSPCo and OPCo, and of the State of Kentucky in 
the case of KPCo or of the State of Delaware or other jurisdiction 
considered advantageous in the case of any of the Companies; or (2) a 
limited partnership under the Revised Uniform Limited Partnership Act 
of the State of Ohio in the case of CSPCo and OPCo, and of the State of 
Kentucky in the case of KPCo or of the State of Delaware or other 
jurisdiction considered advantageous in the case of any of the 
Companies (``Special Purpose Subsidiary''). In the event that any 
Company organizes its Special Purpose Subsidiary as a limited liability 
company, it may also organize a second special purpose wholly owned 
subsidiary under the General Corporation Law of the State of Ohio, the 
State of Kentucky, or the State of Delaware or other jurisdiction 
(``Investment Sub''), for the purpose of acquiring and holding Special 
Purpose Subsidiary common stock to comply with the requirement under 
the applicable LLC Act that a limited liability company have at least 
two members. If any Company organizes its Special Purpose Subsidiary as 
a limited partnership, it may also organize an Investment Sub for the 
purpose of acting, or may itself act, as the general partner of the 
Special Purpose Subsidiary and may acquire, either directly or 
indirectly through such Investment Sub, a limited partnership interest 
in such Special Purpose Subsidiary to ensure that such Special Purpose 
Subsidiary will have a limited partner to the extent required by 
applicable law.
    The Special Purpose Subsidiaries propose to issue and sell at any 
time or from time-to-time, in one or more series through December 31, 
1997, preferred securities (``Preferred Securities''), up to: (1) $75 
million aggregate par or stated value or liquidation preference of 
Preferred Securities, with a par or stated value or liquidation 
preference of up to $100 per security in the case of CSPCo; (2) $60 
million aggregate par or stated value or liquidation preference of 
Preferred Securities, with a par or stated value or liquidation 
preference of up to $100 per security in the case of KPCo; (3) $85 
million aggregate par or stated value or liquidation preference of 
Preferred Securities, with a par or stated value or liquidation 
preference of up to $100 per security in the case of OPCo.
    Each Company and/or its respective Investment Sub will acquire all 
of the common stock or all of the general partnership interests of its 
Special Purpose Subsidiary for an amount up to 5% of the total equity 
capitalization from time-to-time of such Special Purpose Subsidiary 
(``Equity Contribution''). Each Company may issue and sell to its 
Special Purpose Subsidiary the Debentures, at any time or from time-to-
time in one or more series and such Special Purpose Subsidiary will 
apply both the Equity Contribution made to it and the proceeds and from 
the sale of Preferred Securities by it from time-to-time to purchase 
the Company's Debentures. The payment rate, terms, redemption and other 
similar provisions of the Preferred Securities will correspond to those 
of the Debentures purchased from the Company.
    Each Company may also guarantee (``Guarantee''): (1) Payment of 
dividends or distributions on the Preferred Securities of its Special 
Purpose Subsidiary if and to the extent such Special Purpose Subsidiary 
has declared dividends or distributions out of funds legally available 
therefor; (2) payments to the Preferred Securities holders of amounts 
due upon liquidation of such Special Purpose Subsidiary or redemption 
of the Preferred Securities of such Special Purpose Subsidiary; and (3) 
certain additional amounts that may be payable in respect of such 
Preferred Securities.
    It is expected that each Company's interest payments on the 
Debentures issued by it will be deductible for federal income tax 
purposes and that its Special Purpose Subsidiary will be treated as a 
partnership for federal income tax purposes. If Preferred Securities 
are issued, any series may be redeemable at the option of the Special 
Purpose Subsidiary issuing such series, with the consent or at the 
direction of the Company, at a price equal to their par or stated value 
or liquidation preference, plus any accrued and unpaid dividends or 
distributions, upon the occurrence of certain events. The Preferred 
Securities of any series may also be subject to mandatory redemption 
upon the occurrence of certain events. Each Company may also have the 
right in certain cases to exchange the Preferred Securities of its 
Special Purpose Subsidiary for the Debentures of the Company.
    In the event that any Special Purpose Subsidiary is required to 
withhold or deduct certain amounts in connection with dividend, 
distribution or other payments, it may also have the obligation to 
``gross up'' such payments so that the holders of the Preferred 
Securities issued by such Special purpose Subsidiary will receive the 
same payment after such withholding or deduction as they would have 
received if no such withholding or deduction were required. If any 
Special Purpose Subsidiary is required to pay taxes with respect to 
income derived from interest payments on the Debentures issued to it, 
the Company may be required to pay such additional interest on the 
Debentures as shall be necessary in order that net amounts received and 
retained by the Special Purpose Subsidiary, after the payment of such 
taxes, shall result in its having such funds as it would have had in 
the absence of such payment of taxes.
    In the event of any voluntary or involuntary liquidation, 
dissolution or winding up of any Special Purpose Subsidiary, the 
holders of the Preferred Securities will be entitled to receive, out of 
the assets available for distribution to its shareholders or partners, 
before any distribution of assets to the common shareholders or general 
partner of the Special Purpose Subsidiary, an amount equal to the par 
or stated value or liquidation preference of such Preferred Securities 
plus any accrued and unpaid dividends or distributions.
    Each Company expects to apply the net proceeds of the Debentures to 
the repayment of outstanding short-term debt, for construction 
purposes, and for other general corporate purposes, including the 
redemption or other retirement of outstanding preferred stock and 
senior securities.

The Columbia Gas System, Inc., (70-8575)

    The Columbia Gas System, Inc. (``Columbia''), 20 Montchanin Road, 
Wilmington, Delaware 19807, a registered gas utility holding company, 
has filed a declaration under section 12(b) of the act and rule 45 
thereunder.
    Columbia and Columbia Gas Transmission Corporation (``TCO'') 
presently are debtors-in-possession under Chapter 11 of the U.S. 
Bankruptcy Code in U.S. Bankruptcy Court for the District of Delaware.
    Columbia proposes to make a loan of no more than $4.3 million to 
the Employees' Thrift Plan of Columbia Gas System (``Thrift Plan''). 
Columbia is the plan sponsor of the Thrift Plan, a defined contribution 
plan which is qualified under sections 401 (a) and (k) of the Internal 
Revenue Code. Columbia's subsidiary companies (``Subsidiaries'') are 
Thrift Plan participating employers,\4\ whose [[Page 12004]] employees, 
former employees and beneficiaries constitute the participants. The 
Thrift Plan is administered by the Thrift Plan Committee, which is 
appointed by Columbia's board of directors and which is currently 
comprised of members of senior management of major Columbia companies, 
including the distribution companies and the transmission companies.

    \4\The participating employers are the following Subsidiaries: 
Columbia Gas of Pennsylvania, Inc., Columbia Gas of Ohio, Inc., 
Columbia Gas of Maryland, Inc., Columbia Gas of Kentucky, Inc., 
Commonwealth Gas Services, Inc., Columbia Gulf Transmission Company, 
Columbia Gas Transmission Corporation, Columbia Gas Development 
Corporation, Columbia Natural Resources, Inc., Columbia Coal 
Gasification Corporation, Columbia Energy Services Corporation, 
Columbia Gas System Service Corporation, Columbia Propane 
Corporation, Commonwealth Propane, Inc., TriStar Ventures 
Corporation and Columbia LNG Corporation.
---------------------------------------------------------------------------

    One of the investment options under the Thrift Plan is the Money 
Market/Investment Contract Fund (``Fund'') offered by Fidelity 
Investments of Boston, Massachusetts (``Fidelity''). The Fund includes 
a guaranteed investment contract (``GIC'') issued by Confederation Life 
Insurance Company of Canada (``Confederation Life''). The Confederation 
Life GIC was acquired by the Thrift Plan of January 2, 1990 in the 
amount of $6.5 million.
    On August 12, 1994, Canadian governmental authorities seized 
Confederation Life. In order to protect Confederation Life's U.S. 
assets, the Insurance Commissioner for the State of Michigan moved to 
seize all such assets. At the time Confederation Life was seized, a 
segregated subaccount was established by the Thrift Plan Committee and 
the Thrift Plan's trustee and was frozen within the Fund.
    The Thrift Plan Committee, which is the named fiduciary as well as 
Plan Administrator of the Thrift Plan, has considered various options 
and has recommended to the boards of directors for Columbia and TCO 
that loans be made to the Thrift Plan in order to allow Thrift Plan 
participants access to their frozen funds as soon as practicable. 
Subject to the receipt of necessary regulatory and Bankruptcy Court 
approvals, the boards of directors of Columbia and TCO have considered 
the Thrift Plan Committee's recommendation and approved loans to the 
Thrift Plan.
    Columbia proposes to make two loans to the Thrift Plan, one to be 
made by Columbia, subject to the approval of the Bankruptcy Court and 
the Commission, and one to be made by TCO, subject to the approval of 
the Bankruptcy Court.\5\ The total amount of the loans would be $6.8 
million, which represents the accumulated value of the frozen 
investment in the Confederation Life GIC, including accrued interest, 
as of the close of business on August 11, 1994 (the date preceding the 
seizure of Confederation Life's assets). TCO's loan would be 
approximately $2.5 million, and Columbia's loan would be no more than 
$4.3 million. The loans would be made unsecured and without interest, 
would be evidenced by notes and would be non-recourse to participants 
or assets held in the Thrift Plan. Repayment of the loans would be made 
only from the proceeds received from Confederation Life (from 
liquidation and rehabilitation proceedings or otherwise), state 
guaranty funds, and other sources, including litigation, in connection 
with the Confederation Life GIC. Should the ultimate recovery of these 
funds from Confederation Life and other sources be less than 100 
percent, full repayment would be waived, and this cost would be borne 
by Columbia and TCO.

    \5\Columbia and TCO assert the TCO's loan is exempted from 
Commission approval pursuant to rule 49(c).
---------------------------------------------------------------------------

    Upon issuance of the loans, the participants' segregated 
subaccounts would be immediately closed, and their previously frozen 
funds would be transferred to Fidelity's Money Market Fund. 
Periodically as amounts are received from Confederation Life, state 
guaranty funds and other sources with regard to the Confederation Life 
account, the proceeds would be paid to Columbia or TCO, as the case may 
be, and the amounts of the loans would be reduced accordingly.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-5200 Filed 3-2-95; 8:45 am]
BILLING CODE 8010-01-M