[Federal Register Volume 61, Number 51 (Thursday, March 14, 1996)]
[Notices]
[Pages 10604-10605]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-6090]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-26487]
Filings Under the Public Utility Holding Company Act of 1935, As
Amended (``Act'')
March 8, 1996.
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 declarations(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 April 1, 1996, 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.
Unitil Corporation, et al.
Unitil Corporation (``Unitil''), a registered holding company,\1\
Unitil's wholly-owned non-utility subsidiary, Unitil Resources, Inc.
(``URI''), and Unitil's wholly-owned service company subsidiary, Unitil
Service Corp. (``Unitil Service'') (collectively ``Applicants''), all
located at 216 Epping Road, Exeter, New Hampshire, 03833, have filed an
application-declaration under sections 6(a), 7, 9(a), 10, 12, and 13(b)
of the Act and rules 45, 54, 87, 90, and 91 thereunder.
\1\ Unitil has four utility subsidiaries: Fitchburg Gas and
Electric Light Company (``FG&E''), Concord Electric Company
(``Concord''), Exeter & Hampton Electric Company (``E&H'') and
Unitil Power Corporation.
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Pursuant to a Commission order dated May 24, 1993 (HCAR No. 25816),
URI is currently engaged in the business of providing certain energy
related management and consulting services, including electric power
brokering, to entities outside the Unitil holding company system.
Applicants request authorization for URI to expand its authorized
activities to include engaging in transactions as a wholesale and
retail marketer of electricity, natural gas and other energy
commodities (``collectively, ``Energy Marketing''),\2\ and providing
customers with certain energy related services involving technical
assistance and energy management (collectively, ``Energy Management
Services'') \3\ While initially concentrated in the New England region,
URI's potential customer base may include individuals and entities
located outside the New England region.
\2\ Applicants state that URI's Energy Marketing activities will
involve arranging the sale and purchase, transportation,
transmission and storage of electricity, natural gas or other energy
commodities for a commission as well as entering into contracts to
purchase electricity, natural gas or other energy commodities from
suppliers and resell them to utility and nonutility customers.
Applicants state that energy marketing arrangements may be
undertaken for long or short term durations and pursuant to
individualized terms and conditions, and that sales of energy to
groups of customers would likely be aggregated together for purposes
of obtaining competitive wholesale energy supplies. Applicants state
that, in some cases, URI may acquire energy supplies and then market
that energy to customers as competitively as possible, whereas in
other cases, URI may establish contracts with customers and then
acquire energy supplies to meet the customers' requirements.
Although the Energy Marketing transactions URI proposes to engage in
may take a variety of different forms, in a typical transaction, URI
will purchase power from a utility or nonutility generator, contract
with other utilities for the transmission of the power, and resell
the power to a utility or end-user. Applicants expect that the bulk
or URI's Energy Marketing activities will involve marketing
electricity or gas, but state the URI needs to be able to engage in
transactions involving other energy commodities, such as oil,
refined petroleum products, gas liquids, coal, wood and other
similar combustible substances, in order to compete effectively with
other suppliers in the marketplace who can provide a full range of
energy options to meet customer demands.
\3\ Applicants state that such Energy Management Services may
include demand side management, and energy usage consulting
services, as well as limited engineering services pertaining to
power quality management (ensuring uninterruptible supplies, proper
grounding of equipment and related matters) and power factor
correction, both of which are designed to help customers manage
their power efficiency, supply and cost. Applicants state that
Concord, E&H and FG&E currently provide demand side management
services to their customers, including, among other things, hot
water heater tank and pipe wrapping, energy efficient lighting,
heating and cooling programs, energy audits and the provision of
rebates in connection with energy efficient equipment. Concord, E&H
and FG&E also currently provide engineering services pertaining to
power quality management and power factor correction for their own
systems and, on occasion, for their customers. Applicants note that
some employees of Unitil's public utility subsidiaries may perform
certain of the technical engineering functions that are part of
URI's demand side management services but state that the performance
of such functions will not impair the employees' ability to provide
services to the relevant utility subsidiaries. Applicants expect
that URI's Energy Marketing and Energy Management Services will
often be marketed jointly to customers as a complete energy services
package and state that the ability to offer both types of services
will enable URI to offer complete energy management services and
solutions to customers on a competitive basis.
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Applicants also seek authorization for Unitil to indemnify and
guarantee the power and fuel transactions of URI, through December 31,
2000 and in an amount not to exceed $30 million in the
[[Page 10605]]
aggregate,\4\ and for Unitil Service to provide URI with facilities,
personnel and services necessary for its energy Marketing and Energy
Management Services activities.\5\
\4\ Applicants state that URI may, from time to time, need
Unitil to indemnify third parties, to guarantee performance of its
obligations or payment of its debts and/or to act as surety for its
activities. The need for such guarantee authority grows out of
customary market practice pursuant to which energy marketing
companies, which often are not highly capitalized, demonstrate their
financial credibility to customers. Applicants state that the usual
method for establishing the financial credibility of the marketing
company is by the parent (such as Unitil) standing behind its
subsidiary through guarantees, thus allowing the subsidiary to
compete effectively in increasingly deregulated markets.
\5\ Applicants state that services would be provided by Unitil
Service pursuant to its service agreement with URI and may include
gas and power supply planning and contracting, marketing, sales,
customer services, engineering, operations management, conservation
services design and contracting and related management and
professional services. Applicants note that Unitil Service currently
provides similar services to other Unitil system companies and state
that Unitil Service personnel have extensive knowledge of the
markets for electric power and natural gas and are experienced in
evaluating potential electric power and natural gas suppliers,
negotiating contracts and arranging for the transmission and pooling
of electric power. URI would reimburse Unitil Service at cost for
the services provided in the same manner as any other Unitil
affiliate company. Applicants state that the provision of these
services to URI by Unitil Service will not impair Unitil Service's
ability to provide services to other Unitil system companies. They
also note that, if needed in the future, URI could employ its own
staff to provide these services.
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Applicants state that URI must obtain authorization from the
Federal Energy Regulatory Commission (``FERC'') before engaging in
wholesale electric power marketing activities and from the appropriate
state authorities before engaging in retail electric power marketing
activities. Applicants state that URI will not enter into any electric
power purchase or sale contracts that are not within federal or state
regulatory purview and that its activities in developing wholesale and
retail electric power markets will, therefore, be subject to
appropriate limitations, conditions and controls.\6\ Applicants state
that URI's gas and energy commodity marketing activities and its Energy
Management Services activities will also be undertaken in accordance
with all applicable federal and state laws.
\6\ Applicants note, for example, that FERC regulations would
preclude URI from purchasing electric energy or capacity from, or
selling these products to, any affiliated companies in the Unitil
system unless specifically authorized by the FERC. In addition,
under FERC regulations, URI would be unable to charge competitive,
market based rates at wholesale unless its affiliated public utility
companies have filed open access transmission tariffs acceptable to
the FERC, and until URI has satisfied the FERC that it has mitigated
any market power which it may have. Applicants also state that,
while URI is not deemed a utility under most state laws, URI would
only be able to undertake retail power marketing activities in the
context of state legislative or regulatory initiatives, such as the
New Hampshire Retail Wheeling Pilot Program and the Massachusetts
Industry Restructuring Proceedings. Thus, Applicants say, URI's
retail activities would be effectively limited to those permitted by
state regulators. Applicants also note that Unitil has notified the
New Hampshire Public Utility Commission and the Massachusetts
Department of Public Utilities, the two state commissions with
jurisdiction over the public utility subsidiaries in the Unitil
system, of the plan to expand URI's business activities.
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New England Electric System (70-8803)
New England Electric System (``NEES''), a registered holding
company, located at 25 Research Drive, Westborough, Massachusetts
01582, has filed an application-declaration under sections 6(a), 7,
9(a), 10, 12(b) and 13(b) of the Act and rule 45 thereunder.\7\
\7\ NEES owns three retail electric utility companies (``Retail
Companies'') serving New Hampshire, Massachusetts, and Rhode Island,
as well as New England Power Company (``NEP''), which generates,
purchases, transmits, and sells electric energy in wholesale
quantities primarily to the Retail Companies.
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NEES proposes to form one or more direct or indirect new
subsidiaries (``Marketing Companies'') in Massachusetts, Rhode Island,
New Hampshire, New York, New Jersey, Pennsylvania, Maryland and
Delaware to engage in the business of wholesale and retail marketing of
electricity.\8\ Marketing Companies in Massachusetts, Rhode Island and
New Hampshire that elect to provide Standard Offer Service may provide
such services only to customers of affiliated Retail Companies. In
addition, NEES proposes to establish Marketing Companies in each of
these three states, as well as the other states noted above, that will
market electricity to retail and wholesale customers of affiliated
Retail Companies that do not choose Standard Offer Service and to
customers of nonaffiliated electric utilities (``General Marketing
Companies'').\9\
\8\ New Hampshire has adopted a pilot program to establish
retail electric competition, under which each New Hampshire utility
must allow customers representing three percent of their peak loads
to have access to alternative suppliers of electricity for two
years, starting on or about May 28, 1996. Massachusetts and Rhode
Island also are considering programs to promote retail competition.
Under a proposal developed by NEES, customers could elect to receive
service under a standard offer from an affiliate of their incumbent
utility (``Standard Offer Service''), the pricing of which would be
approved by regulators.
\9\ Under New Hampshire's pilot program, a General Marketing
Company would have limited ability to contract with customers of
nonaffiliated electric utilities within New Hampshire.
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The Marketing Companies also propose to provide a broad range of
energy and related services to customers, including but not limited to
audits, power quality, fuel supply, repair, maintenance, construction,
design, engineering and consulting.
Initially, the Marketing Companies are expected to have only a few
employees, primarily sales staff. Technical and support staff needed
for a particular project could be assigned for the duration of that
project from NEES, NEP and/or the Retail Companies. No more than 1% of
the employees of NEES, NEP and/or the Retail Companies will render,
directly or indirectly, services to the Marketing Companies at any one
time. All costs associated with such staff (including compensation,
overheads and benefits) would be fully reimbursed by the Marketing
Company to which they were assigned in accordance with rules 90 and 91.
Reimbursements for these costs will be on a thirty-day cycle in
accordance with service contracts to be entered.
NEES proposes initially to finance the Marketing Companies by
purchasing 1,000 shares of their capital stock, for a total purchase
price of $1,000. Subsequently, NEES intends to make capital
contributions and/or loans to the Marketing Companies from time to time
through December 31, 1999, provided that such contributions and/or
loans for all Marketing Companies will not exceed $15 million. Any
loans will be in the form of noninterest bearing subordinated notes
payable in twenty years or less from the date of issue. The Marketing
Company may prepay any or all of the outstanding notes without premium
or penalty. NEES shall only make such loans provided: (a) There shall
be in full force and effect appropriate orders of all regulatory
authorities having jurisdiction; (b) the making of such loan shall not
contravene any provision of law or any provisions of the certificate of
incorporation or by-laws or any binding agreement of the Marketing
Company; (c) and the making of such loan shall not contravene any
provision of law or any provision of the Agreement and Declaration of
Trust of NEES. To the extent that these loans require state commission
approval, rule 52 of the Act may apply.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
FR Doc. 96-6090 Filed 3-13-96; 8:45 am]
BILLING CODE 8010-01-M