[Federal Register Volume 60, Number 145 (Friday, July 28, 1995)]
[Notices]
[Pages 38881-38885]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-18598]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-26337]


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

July 21, 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 August 14, 1995, 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.

Consolidated Natural Gas Company, et al. (70-8577)

    Consolidated Natural Gas Company (``CNG''), a registered holding 
company, located at CNG Tower, 625 Liberty Avenue, Pittsburgh, 
Pennsylvania 15222-3199, and its wholly-owned subsidiary company, CNG 
Energy Services Corporation (``Energy Services''), located at One Park 
Ridge Center, Pittsburgh, Pennsylvania 15244-0746, have filed an 
application-declaration under sections 6(a), 7, 9(a), 10 and 12(b) of 
the Act and rules 43, 45 and 54 thereunder.
    CNG and Energy Services request authorization to form a new 
subsidiary, CNG Special Products and Services, Inc., (``CSPS''), to 
engage in the business 

[[Page 38882]]
of providing certain energy-related services (``Customer Services'') 
\1\ to customers of CNG's local distribution companies (``LDCs'') and 
to others, primarily customers of utilities not affiliated with CNG. 
Applicants also request authorization, through December 31, 2000, for 
CNG to lend Energy Services an aggregate of up to $10 million on a 
revolving basis and for Energy Services, in turn, to provide CSPS with 
``mirror image'' financing reflecting the same source and combination 
of funds as utilized between CNG and Energy Services.

    \1\ The Customer Services offered by CSPS would include the 
following: (1) ``Service Line Maintenance Program'' (repair of 
service lines owned by and located on customers' property, in 
exchange for a nominal monthly fee); (2) ``Appliance Guard'' (an 
extended service warranty covering the cost of repairing customers' 
appliances); (3) ``Payment Power'' (bill payment protection, up to 
$400 a month for six months); (4) ``Routine Furnace Services'' 
(routine furnace inspection and repair); (5) ``One-Package Appliance 
Inspection and Replacement'' (annual inspection, maintenance or 
replacement of any appliance, including hot water heaters); (6) 
``Community Bill Payment Center'' (a centralized bill payment center 
for ``one stop'' payment of all utility and municipal bills); (7) 
``Energy Audits and Services'' (energy audits for institutional 
customers together with a turnkey service package); (8) ``Propane 
Services'' (in areas where it is not economical for local 
distribution companies to extend natural gas service via underground 
pipelines); (9) ``Gas Fired Electric Generators'' (installation of 
temporary or permanent gas-fired turbines for on-site generation and 
consumption of electricity); and (10) ``Pipeline Maintenance, 
Construction and Managerial Support Services for Others'' 
(management of construction of and required maintenance on pipelines 
owned by other utilities and provision of consulting services to 
small non-affiliated utilities). Applicants state that this is not 
an exhaustive list of Customer Services and propose to offer other 
services of a similar nature without additional Commission 
authorization unless additional funding for CSPS is necessary.
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    Energy Services proposes to obtain the funds to lend to CSPS by 
some combination of (1) selling shares of its common stock, $1.00 par 
value, to CNG, (2) obtaining open account advances from CNG, or (3) 
obtaining long-term loans from CNG. Open account advances from CNG to 
Energy Services would be made under a letter agreement with Energy 
Services and would be repaid on or before a date not more than one year 
from the date of the first advance with interest at the same effective 
rate of interest as CNG's weighted average effective rate for 
commercial paper and revolving credit borrowings. If no such borrowings 
are outstanding, the interest rate would be predicated on the Federal 
Fund's effective rate of interest as quoted daily by the Federal 
Reserve Bank of New York. Long-term loans to Energy Services would be 
evidenced by long-term non-negotiable notes of Energy Services 
(documented by book entry only) maturing over a period of time (not in 
excess of 30 years) to be determined by the officers of CNG, with the 
interest predicated on and substantially equal to CNG's cost of funds 
for comparable borrowings by the parent. In the event CNG has not had 
recent comparable borrowings, the rate would be tied to the Salomon 
Brothers indicative rate for comparable debt issuances published in 
Salomon Brothers, Inc. Bond Market Roundup or similar publication on 
the date nearest to the time of takedown. All loans would be prepayable 
at any time without premium or penalty.
    CNG will obtain the funds it loans to Energy Services through 
internal cash generation, issuance of long-term debt securities, as 
authorized by Commission order dated March 6, 1995 (HCAR No. 26245), 
borrowings under credit agreements, as authorized by Commission order 
dated June 29, 1995 (HCAR No. 26321), or through other authorizations 
approved or to be approved by the Commission.
    Applicants expect CSPS to conduct its Customer Services business 
both within and outside of the four states of Virginia, West Virginia, 
Pennsylvania and Ohio where CNG's LDCs are located (collectively, ``LDC 
States''). However, applicants state that during the twelve-month 
period beginning on the first day of January in the year following the 
date CSPS commences its Customer Services business pursuant to a 
Commission order issued in this matter, and for each subsequent 
calendar year thereafter, total revenues of CSPS derived from customers 
in the LDC States will exceed total revenues of CSPS derived from 
customers in all other states.
    Applicants state that CNG's LDSs will assist CSPS with customer 
billing, accounting, and other energy-related services and anticipate 
that these services can be provided to CSPS by the current staff at the 
LDSs. They state that all services required to conduct the Customer 
Services business that are provided to CSPS by the LDCs or any other 
CNG system company will be billed in accordance with section 13(b) of 
the Act and rules 87, 90 and 91 thereunder.

National Fuel Gas Company, et al. 70-8649

    National Fuel Gas Company (``National''), a registered holding 
company, and Horizon Energy Development, Inc. (``Horizon'') 
(collectively, ``Applicants''), a to-be-acquired wholly-owned 
subsidiary company of National, both located at 10 Lafayette Square, 
Buffalo, New York 14203, 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 43, 45, 53 and 83 thereunder.
    National proposes to acquire, for a purchase price of $500,000 all 
of the issued and outstanding common stock of Horizon, a newly formed 
New York corporation. National proposes to capitalize Horizon by 
providing debt and equity capital not to exceed $150 million at any 
time outstanding through December 31, 2001. Horizon proposes to invest 
up to $150 million at any time outstanding through December 31, 2001 in 
a combination of debt, equity, guarantees, and the assumption of 
liabilities (``Investment Limit'') in authorized project activities 
(``Project Activities'').
    National proposes to invest in Horizon in the form of acquisitions 
of capital stock, capital contributions, open account advances and/or 
loans (collectively, ``Investments''). Aggregate Investments shall not 
exceed $150 million at any time outstanding. Any loans by National to 
Horizon having maturities of less than nine months shall have terms and 
conditions parallel to those of similar loans obtained by National. The 
interest rates on such loans shall not exceed the current LIBOR rates 
plus 200 basis points. Any loans by National to Horizon having 
maturities of more than nine months shall have terms and conditions 
parallel to those of similar loans obtained by National, the proceeds 
of which shall not exceed the current yields of Treasuries having 
similar maturities plus 200 basis points.
    The proposed Project Activities include development activities 
concerning investments in, and financing the acquisitions of, one or 
more companies (``Intermediate Companies'') engaged directly or 
indirectly and exclusively in the business of holding the securities of 
one or more exempt wholesale generators, (``EWGs''), and foreign 
utility companies (``FUCOs''), (collectively, ``Exempt Projects''). 
Project Activities also include consulting services and development 
activities throughout the United States regarding qualifying 
cogeneration and small power production facilities as defined in the 
Public Utility Regulatory Policies Act of 1978, and independent power 
production facilities, (collectively, ``Domestic Power Projects.'')
    Horizon proposes to undertake preliminary development and 
administrative activities in regard to Domestic Power Projects. 
Preliminary development activities would include investigating sites, 
preliminary engineering and licensing activities, 

[[Page 38883]]
acquiring options and rights, contract drafting and negotiating, 
preparing proposals and other necessary activities to identify and 
analyze feasible investment opportunities and to initiate the 
commercialization of a project. Administrative activities include 
ongoing personnel, accounting, engineering, legal, financial and other 
support activities necessary for Horizon to manage its development 
activities and investments in Domestic Power Projects.
    Applicants proposed to acquire interests in, finance the 
acquisition of, and hold the securities of, one or more Intermediate 
Companies, without filing specific project applications or 
declarations, within the limitations set forth herein. Applicants 
request authority for Intermediate Companies to issue and acquire 
equity and debt securities, with or without recourse to the Applicants, 
to or from persons other than the Applicants including banks, insurance 
companies, and other financial institutions (``IC Debt Financing''), 
for the purpose of financing (including any refinancing of) investments 
in Exempt Projects.
    The Intermediate Companies' investments in Exempt Projects may take 
the form of the issuance or acquisition of common stock, capital 
contributions, open account advances, other loans, or the borrowing of 
funds. Securities issued or acquired by Intermediate Companies may be 
issued or acquired in one or more transactions from time to time 
through December 31, 2001. Applicants propose that debt securities 
issued to persons other than the Applicants, or acquired by 
Intermediate Companies, may include secured and unsecured promissory 
notes, and other evidence of recourse and nonrecourse indebtedness.
    Securities issued or acquired by Intermediate Companies may be 
denominated in either U.S. dollars or foreign currencies. The Applicant 
state that the amount and type of such securities, and the terms 
thereof, including (in the case of any indebtedness) interest rate, 
maturity, prepayment or redemption privileges, and the forms of any 
collateral security granted with respect thereto, would be negotiated 
on a case by case basis, taking into account differences from project 
to project in desirable debt-equity ratios, projections of earnings and 
cash flow, depreciation lives, and other similar financial and 
performance characteristics. Accordingly, the Applicants propose that 
they have the flexibility to negotiate the terms and conditions of such 
securities without further approval by the Commission.
    Applicants also request authority to issue guarantees and assume 
liabilities for development activities in connection with the proposed 
Exempt Projects and Intermediate Companies up to the proposed 
Investment Limit. The Applicants further propose to obtain recourse and 
norecourse debt financing, from unaffiliated third parties to finance 
investments in Project Activities (``Debt Financing''). All outstanding 
Debt Financing, including IC Debt Financing, guaranteed by National, or 
having some other form of recourse to National (``Recourse Debt''), 
shall not, when aggregated with all other Investments, guarantees and 
assumed liabilities relating to Project Activities, exceed the 
Investment Limit at any time. National may charge a commercially 
reasonable rate for the provisions of such guarantees. Debt Financing 
not having recourse to National (``Nonrecourse Debt''), shall not 
constitute part of the proposed Investment Limit.
    The term of any Recourse Debt will not exceed 40 years and its 
interest rate will not exceed 200 basis points over comparable U.S. 
Treasury securities in effect on the date of issue. The term of any 
Nonrecourse Debt will not exceed 40 years, and its interest rate (if 
payable in U.S. dollars) will not exceed 600 basis points over 
comparable U.S. Treasury securities in effect on the date of issue. If 
any Recourse Debt or Nonrecourse Debt is denominated in foreign 
currencies, the terms and interest rate will be commercially reasonable 
at the time of borrowing. Applicants or the Intermediate Companies may 
also pay commercially reasonable commitment and other fees with respect 
to Debt Financing.
    Notwithstanding the foregoing, the Applicants state that no equity 
security having a stated par value would be issued or sold by an 
Intermediate Company for a consideration that is less than such par 
value; and that any note, bond or other evidence of indebtedness issued 
or sold by any Intermediate Company will mature not later than 40 years 
from the date of issuance thereof, and will bear interest at a rate not 
to exceed the following: (1) If such note, bond or other indebtedness 
is U.S. dollar denominated, at a fixed rate not to exceed 6.0% over the 
yield to maturity on an actively traded, non-callable, U.S. Treasury 
note having a maturity equal to the average life of such note, bond or 
other indebtedness, or at a floating rate not to exceed 6.0% over LIBOR 
from time to time; and (2) if such note, bond or other indebtedness is 
denominated in the currency of a country other than the United States, 
the terms and interest rate will be commercially reasonable at the time 
of borrowing.
    Horizon also proposes to participate directly or through 
Intermediate Companies in joint ventures with non-associates which 
joint ventures are exclusively in the business of researching 
investment opportunities in, and owning and developing, Exempt 
Projects. Horizon further requests authorization to acquire interests 
in Intermediate Companies prior to such Intermediate Companies 
acquiring their interests in Exempt Projects, provided that such 
Intermediate Companies engage and will engage exclusively in the 
business of investing in Exempt Projects.
    Applicants request an exemption from section 13(b) under rule 83 of 
the Act, for any subsidiary company of National providing services to 
EWGs which derive no part of their income, directly or indirectly, from 
the generation of electric energy for sale within the United States, or 
FUCOs.
Entergy Corporation, et al. 70-8653

    Entergy Corporation (``Entergy''), a registered holding company, 
and its wholly owned subsidiary companies, New Orleans Public Service 
Inc., Louisiana Power & Light Company, located at 639 Loyola Avenue, 
New Orleans, Louisiana 70113; Arkansas Power & Light Company, 425 West 
Capitol Avenue, Little Rock, Arkansas 72201; Gulf States Utilities 
Company, 350 Pine Street, Beaumont, Texas 77701; Mississippi Power & 
Light Company, 308 Pearl Street, Jackson, Mississippi 39215 
(collectively, ``System Operating Companies''); System Energy 
Resources, Inc. (``SERI''), 1340 Echelon Parkway, Jackson, Mississippi 
39213; Entergy Services, Inc. (``ESI''), 639 Loyola Avenue, New 
Orleans, Louisiana 70113; Entergy Enterprises, Inc. (``EEI''), 900 
South Shackleford Road, Little Rock, Arkansas 72211; and Entergy 
Systems and Service, Inc. (``SASI''), 4740 Shelby Drive, Suite 105, 
Memphis, Tennessee 38118, have filed an application-declaration under 
sections 6(a), 7, 9(a), 10, 12(b), and 13(b) of the Act and rules 43, 
45, 54, 87, 90 and 91 thereunder.
    Entergy proposes to organize a new subsidiary to be called Entergy 
Technologies Company (``ETC'') and to provide funding to ETC, through 
December 31, 1998, up to an aggregate principal amount of $100 million. 
Entergy proposes to incorporate ETC under Delaware law as a direct 
wholly owned subsidiary of EEI, with an authorized capital of up to 
1,000 shares of common stock with a par value of $.01 per share. EEI 
would subscribe to 

[[Page 38884]]
and purchase all of ETC's common stock for a price of $1,000 per share, 
using funds contributed or loaned to EEI by Entergy. EEI would provide 
ETC with additional funding, through December 31, 1998, in the form of 
capital contributions, open account advances, or loans, or combination 
thereof, in an aggregate amount not to exceed $100 million. Entergy 
proposes to provide funding to EEI for reinvestment in ETC out of 
Entergy's internally generated cash and other available cash resources. 
Loans from Entergy to EEI and from EEI to ETC will bear interest at a 
rate per annum not in excess of the prime commercial lending rate 
announced from time to time by a money center bank designated by 
Entergy plus 3%, and will have a final maturity not to exceed 20 years 
from the loan origination date.
    In addition, ETC seeks authority to incur borrowings from external 
sources in an aggregate amount not to exceed $100 million at any one 
time outstanding. Such borrowings would be evidenced by notes issued by 
ETC, would have final maturities not to exceed 20 years from their date 
of issuance, and would bear interest at rates not to exceed the greater 
of: (1) The prime rate as described above plus 5% per annum; or (2) 14% 
per annum. EEI and/or Entergy propose to guarantee such loans.
    ETC would use the proceeds of such investments by EEI and external 
borrowings to make payments to the System Operating Companies and ESI, 
to pay debt service and to meet its working capital and other cash 
needs.
    ETC proposes to enter into arrangements with the System Operating 
Companies, and other Entergy subsidiary companies permitting ETC to use 
and make available to nonassociate companies from time to time certain 
unused capacity on the Entergy System's Telecommunications Backbone 
System (``Backbone System'') for the purpose of providing interstate 
``long haul'' or ``carrier of carriers'' services.\2\

    \2\ The Backbone System is the Entergy system's fiber optic 
network, high capacity analog and digital telecommunications system, 
related coaxial cables, computers, software and other 
telecommunications equipment, facilities and property, and any 
future extensions and additions to such systems, equipment, 
facilities and property.
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    ETC would enter into one or more Capacity Use and Service 
Agreements (``Agreement'') with the System Operating Companies and ESI 
under which they would make available to ETC unused capacity on the 
Backbone System, as determined from time to time. The System Operating 
Companies and ESI would retain full ownership of, and rights to operate 
and maintain, their respective portions of the Backbone System. 
Capacity on the Backbone System would not be deemed unused or made 
available to ETC for any period of time in which it would interfere 
with the actual and anticipated usage of the Backbone System for 
utility purposes by other System companies.
    Under the Agreements, ETC would receive only the right to 
commercialize for interstate carrier of carriers purposes the unused 
communications capacity on the Backbone System (i.e., the right to 
commercialize the signal transmission and carrying capability of the 
Backbone System). Accordingly, the System Operating Companies would not 
transfer ownership or control of the Backbone System to ETC or to any 
nonassociate company.
    ETC would be responsible pursuant to the Agreements for monitoring, 
establishing and evaluating operational standards for use of the 
Backbone System by its nonassociates. ETC also would cause to be 
developed, constructed and installed, at no cost to the System 
Operating Companies or ESI, equipment and facilities to link the 
Backbone System to the telecommunications systems of other carriers. 
Any such equipment or facilities located on utility property would be 
owned by the appropriate System Operating Company or ESI. ETC also, 
under certain circumstances, would make additional investments in 
advanced electronics and other new technologies that could serve to 
enhance the transmission capability of the Backbone System. ETC would 
pay for the full costs (including both capital and increased operating 
and maintenance expenses) of such upgrades, if such upgrades are not 
primarily for utility-related purposes or if they would not have been 
necessary but for the use of capacity by ETC pursuant to the 
Agreement(s).
    ETC may acquire rights to use the capacity of telecommunications 
systems of non-System parties in order to enhance its ability to 
commercialize the unused capacity on the Backbone System. This would be 
done at no cost to the System Operating Companies. Arrangements with 
nonassociates may take the form of capacity exchanges or other 
reciprocal use or ``in kind'' transactions, pooling arrangements, 
consortia, joint ventures or other transactions involving the use of, 
or access to, the unused capacity on the Backbone System. The purposes 
of these transactions would include, but not be limited to, providing 
alternative or extended routing for fiber-based or wireless 
telecommunications, creating back-up or other redundant 
telecommunications networks, and other measures designed to enhance the 
capability and value of the Backbone System. The particular terms and 
conditions regarding the provision of interstate carrier of carriers 
telecommunications services by ETC to nonassociates would be negotiated 
at arm's length between such parties. In addition, ETC proposes to 
provide unused capacity on the Backbone System, at cost to associate 
companies that are not regulated utilities, including EEI and SASI.
    ETC also proposes to engage in research and development activities 
relating to telecommunications and information systems and products 
that might potentially be deployed on a utility or non-utility basis, 
or both. ETC will be a ``clearinghouse'' for telecommunications and 
information systems technologies, undertaking research and development 
activities, field testing various manufacturers' equipment, and 
evaluating prototype technologies and equipment that may be useful in 
enhancing the operation of utility and nonutility telecommunications 
facilities. Entergy believes such activities will facilitate the design 
and development of communications practices and applications in 
connection with the Backbone System. In conjunction with such 
activities, ETC may acquire ownership of, or licenses to use or 
sublicense, telecommunications products or technologies, and may 
provide consulting services.
    Entergy expects to staff ETC initially through a combination of 
recruiting (e.g., marketing and business staff) and transfers from ESI. 
Total staffing is not expected to exceed thirty employees, including up 
to ten employees transferred from ESI. In accordance with the terms of 
settlement arrangements among the Entergy System Operating Companies 
and certain of their retail regulators (``Settlement Arrangement''),\3\ 
Entergy would not effect any personnel transfers that would adversely 
affect ESI or any System Operating Company. Moreover, no more than one 
percent (1%) of the total number of the personnel of the System 
Operating Companies and ESI would be utilized by ETC at any one time in 
connection with its authorized activities.

    \3\ The settlement arrangement is currently pending before the 
Commission under file no. 70-8529.
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    In exchange for the right under the Agreements, ETC would pay to 
the respective System companies a monthly 

[[Page 38885]]
charge calculated pursuant to the Settlement Arrangements to fully 
reimburse each System company for its direct and indirect costs 
associated with that portion of the capacity of the Backbone System 
being made available to ETC. ETC will receive from the System Operating 
Companies under the Agreements, installation, operations, maintenance 
and repair services relating to their respective portions of the 
Backbone System. ESI and the System Operating Companies would also 
charge ETC for the fully allocated direct and indirect cost of the 
telecommunications services provided in accordance with the Settlement 
Arrangements.
    The System Operating Companies would apply such payments to reduce 
their costs of service, to the extent that the related facilities are 
in rate base or otherwise are used in utility operations. The 
Agreements will contain provisions that ensure that ETC's usage, and 
the usage by nonassociates, of the Backbone System would not in any way 
interfere with the operation of the Backbone System by the System 
Operating Companies and ESI.
    To the extent that any upgrades of the Backbone System are 
contemplated primarily for utility purposes, the System Operating 
Companies or ESI would fund the costs of and deploy the assets, and 
payments under the Capacity Use and Service Agreements would be 
adjusted accordingly. ETC would pay for the full costs (including both 
capital and increased operating and maintenance expenses) of such 
upgrades, if such upgrades are not primarily for utility-related 
purposes or if they would not have been necessary but for the use of 
capacity by ETC pursuant to the Agreements. ETC will further agree 
under the Agreement(s) to indemnify and hold harmless the System 
Companies and ESI from any claims, liabilities and costs arising out of 
or related to ETC's activities with respect to its customers' use of 
the Backbone System.
    Although ETC will have its own managerial, technical and 
administrative staff, pending full deployment of its own workforce, and 
from time to time thereafter, ETC will receive services from ESI and 
the System Operating Companies, including managerial, accounting, 
technical, engineering, legal and other services. Therefore, ETC will 
enter into a service agreement with ESI whereby ESI would perform or 
cause to be performed for ETC these various services relating to the 
Backbone System, similar to the services that ESI currently provides to 
other nonutility Entergy system companies such as EEI.

Leidy Hub, Inc., et al. (70-8655)

    Leidy Hub, Inc. (``Leidy Hub''), 10 Lafayette Square, Buffalo, New 
York 14203, a wholly-owned nonutility subsidiary of National Fuel Gas 
Company (``NFG''), a registered public utility holding company, and 
NFG, 30 Rockefeller Plaza, New York, New York 10112, have filed an 
application-declaration with this Commission under sections 9(a), 10, 
12(b) and 13(b) of the Act and rule 45 thereunder.
    Leiby Hub proposes to acquire a 14.5% interest in Enerchange, a 
Delaware member-managed limited liability company, from Hub Services, a 
nonaffiliated Delaware corporation and a wholly owned subsidiary of NGC 
Corporation. Enerchange was formed, among other reasons: (i) To 
develop, implement and operate an electronic gas trading and nomination 
system; and (ii) to manage, own and operate Enerchange's interests in 
the Chicago Hub, the California Energy HUB and the Ellisburg-Leigy 
Northeast Hub, each a natural gas market area hub. As a member of 
Enerchange, Leidy Hub would make capital contributions from time to 
time as required by Enerchange's Executive Committee pursuant to the 
Limited Liability Company Agreement of Enerchange, L.L.C.\4\ If another 
member of Enerchange failed to make any required capital contribution, 
Leidy Hub proposes that it may make loans to Enerchange to compensate 
for the defaulting member's unpaid capital contribution. The amount of 
the loan would be based on the ratio of Leidy Hub's 14.5% interest to 
the interests of the other nondefaulting members of Enerchange. 
Enerchange plans to join with a subsidiary of Energy Exchange, Inc., a 
nonaffiliated Canadian corporation, to acquire a 50% interest in 
QuickTrade, a Delaware member-managed limited liability company to be 
formed in the future.\5\ QuickTrade would develop and operate an 
electronic trading and nomination system which could be accessed via 
computer by buyers and sellers of natural gas to make and accept 
binding offers to buy or sell gas at specific locations, generally at 
market hubs. Subscribers to QuickTrade's system would be able to see, 
on-line in real time, the price at which gas is being sold at any 
location listed on the system (without being able to see the names of 
the parties involved). Subscribers will also be able to nominate 
directly to interstate pipelines to transport or store the gas being 
sold via the system. The operations of QuickTrade would be limited to 
``cash forward contracts'' typically settled by actual physical 
delivery. QuickTrade will not be involved with futures contracts.

    \4\ Leidy Hub and NFG state that such capital contributions 
would be exempt from the requirement for a declaration under section 
12(b) pursuant to rule 45(b)(4).
    \5\ Leidy Hub and NFG state that Enerchange's participation in 
this transaction would be exempt from the requirement for a 
declaration because Enerchange satisfies the requirements of rule 
16.
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    Enerchange would subscribe to the QuickTrade system and use it to 
buy and sell natural gas and to engage in market-making activities. 
Specifically, Enerchange would act as an intermediary between potential 
buyers and sellers of natural gas, including, without limitation, 
electronic solictation of transactions between anonymous sellers and 
buyers, implementation and documentation of such transactions, and 
assumption of the performance and credit risk associated with such 
transactions.
    It is also proposed that NFG guarantee certain obligations of Leidy 
Hub, Enerchange and QuickTrade and that Leidy Hub guarantee certain 
obligations of Enerchange and QuickTrade in a total amount not to 
exceed $5 million outstanding at any time from time to time for a 
period not to exceed four years through December 31, 2000. The 
obligations of Leidy Hub, Enerchange and QuickTrade to be guaranteed 
would be incurred as a result of the activities undertaken by 
Enerchange and QuickTrade related to the supply of natural gas. 
Whenever Enerchange is required to provide a guarantee, it would be 
provided 14.5% by NFG and/or Leidy Hub and 85.5% by the other members 
of Enerchange and/or their corporate parents. Such guarantees include 
the guarantee of obligations associated with: (i) Gas transportation 
agreements to be entered into by Enerchange with local distribution 
companies or pipelines; (ii) gas purchase and sale agreements entered 
into by Enerchange; and (iii) any and all other agreements relating to 
the transportation, storage or supply (including marketing) of natural 
gas.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-18598 Filed 7-27-95; 8:45 am]
BILLING CODE 8010-01-M