[Federal Register Volume 61, Number 155 (Friday, August 9, 1996)]
[Notices]
[Pages 41667-41669]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-20347]


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

SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-26550]


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

August 2, 1996.
    Notice is hereby given that the following filing(s) summarized 
below. The application(s) and/or declaration(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 26, 1996, 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.

The Columbia Gas System, Inc. (70-8801)

    The Columbia Gas System, Inc. (``Columbia''), 20 Montchanin Road, 
Wilmington, Delaware 19807, a registered public utility holding 
company, has filed an amendment to its application-declaration with 
this Commission under sections 6(a), 7, 9(a), 10 and 12(b) of the Act 
and rules 45 and 54 thereunder.\1\
---------------------------------------------------------------------------

    \1\ A notice of Columbia's original proposal, filed February 15, 
1996 in this application-declaration was issued by the Commission on 
March 1, 1996 (HCAR No. 26480). On July 10, 1996, Columbia filed 
Amendment No. 1 to the application-declaration, substantially 
revising its proposal. This notice supersedes the March notice.
---------------------------------------------------------------------------

    Columbia proposes: (1) to acquire the common stock of one or more 
existing or new direct or indirect subsidiaries through December 31, 
1997; (2) to engage, through such subsidiaries or one or more new joint 
ventures, in marketing and/or brokering of various energy commodities; 
(3) to provide guarantees, through August 31, 2001, to any such 
subsidiary or joint venture; and (4) that such subsidiaries utilize 
market hedging and certain other techniques in order to minimize their 
financial exposure and Columbia's exposure from its guarantees.
    By orders of the Commission dated September 26, 1986 and April 22, 
1993 (HCAR Nos. 24199 and 25802, respectively), Columbia was authorized 
to establish, respectively, TriStar Ventures Corporation and its 
subsidiaries (collectively, ``TriStar'') (to invest in and operate 
electric cogeneration facilities) and Columbia Energy Services 
Corporation (``CES'') to market natural gas products and services). 
Columbia now proposes to market and broker other forms of energy either 
through TriStar or CES, through one or more new direct or indirect 
subsidiaries of Columbia (any one an ``Energy Products Company'') or 
through a joint venture entity to be formed with a third party.\2\
---------------------------------------------------------------------------

    \2\ Columbia requests authorization for Energy Products 
Companies to invest funds for the development of joint venture 
entities, subject to a reservation of jurisdiction over the 
acquisition by an Energy Products Company of any ownership interest 
in a joint venture entity. It is proposed that such a joint venture 
engage in the marketing or brokering of energy commodities in the 
same manner in which an Energy Products Company would be authorized.
---------------------------------------------------------------------------

    The services provided by Energy Products Companies will include the 
marketing and/or brokering of electric energy at wholesale, and, to the 
extent permitted by state law, at retail. In addition, it is proposed 
that Energy Products Companies market any form of natural gas or 
manufactured gas, propane, natural gas liquids, oil, refined petroleum 
and petroleum products, coal, food products, compressed air, hot or 
chilled water, or steam. It is also requested that Energy Products 
company market emission allowances. Columbia states that authorization 
to market a broad array of energy products will enable Energy Products 
Companies to compete effectively with other energy suppliers.
    Energy Products Companies will initially concentrate their efforts 
in those states currently served by the Columbia System's natural gas 
pipeline and local distribution companies (generally Kentucky, 
Maryland, New Jersey, New York, North Carolina, Ohio, Pennsylvania, 
Virginia and West Virginia). Columbia states that an Energy Products 
Company's potential customer base may include individuals and entities 
located outside of this geographic area.
    Columbia proposes to provide Energy Products Coompanies with up to 
$5 million in funding through December 31, 1997, through the purchase 
from time to time of shares of common stock of Energy Products 
Companies, $25 par value, at a purchase price at or above par value. In 
addition, Columbia proposes to provide guarantees, through August 31, 
2001, to Energy Products Companies and/or to any joint venture in which 
an Energy Products Company is a participant, so long as such

[[Page 41668]]

guarantees in the aggregate do not exceed $100 million at any time 
outstanding.
    To minimize financial exposure of Energy Products Companies and of 
Columbia resulting from its guarantees, it is proposed that Energy 
Products Companies utilize market hedging techniques (including the use 
of futures contracts, options of futures, and price swap agreements), 
the matching of obligations to market prices, contractual limitation of 
damages and volume limitations, and relatively short-term contracts. 
Energy Products Companies will use market hedging measures solely to 
minimize risk and will limit hedging activity to no more than the total 
amount of commodities of Energy Products Companies that are subject to 
market price fluctuation.
    Columbia states that Energy Products Companies will not own or 
operate facilities used for the distribution of gas at retail or 
facilities used for the generation, transmission, or distribution of 
electric energy for sale. Furthermore, Energy Products Companies will 
limit their activities to ensure they do not come within the 
definitions of either ``electric utility company'' or ``gas utility 
company,'' as defined by sections 2(a)(3) and 2(a)(4) of the Act, 
respectively.

Northeast Utilities, et al. (70-8875)

    Northeast Utilities (``NU''), 174 Brush Hill Avenue, West 
Springfield, Massachusetts 01809, a registered holding company, and its 
wholly owned subsidiary companies (``Subsidiaries''), Holyoke Water 
Power Company (``HWP''), Canal Street, Holyoke, Massachusetts 01040, 
Western Massachusetts Electric Company (``WMECO''), 174 Brush Hill 
Avenue, West Springfield, Massachusetts 01809, Public Service Company 
of New Hampshire (``PSHN'') and North Atlantic Energy Corporation 
(``NAEC''), both of 1000 Elm Street, Manchester, New Hampshire 03015 
and The Connecticut Light & Power Company (``CL&P''), 107 Selden 
Street, Berlin, Connecticut 06037 (all companies collectively, 
``Applicants''), 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.
    By order dated December 28, 1994 (HCAR No. 26207) (``December 1994 
Order''), the Commission authorized, through December 31, 1996: (1) NU 
to make open account advances to its subsidiary companies; (2) the 
continuation of the Northeast Utilities System Money Pool (``Money 
Pool''); (3) the issuance of short-term notes pursuant to lines of 
credit by NU, (4) the issuance and sale of commercial paper by NU, CL&P 
and WMECO, CL&P, PSNH and HWP; and WMECO. The funds from those short-
term borrowings were to be utilized by NU's subsidiary companies for 
operational, maintenance and construction expenses and to meet certain 
cash needs. The December 1994 Order limited the aggregate amount of all 
short-term borrowing, whether through the issuance of short-term notes, 
commercial paper, open account advances, borrowing from the Money Pool, 
or through existing revolving credit agreements, to the following 
maximum amounts: NU, $150 million; WMECO, $60 million; CL&P, $325 
million; PSNH, $175 million; NAEC, $50 million and HWP, $5 million.
    The Applicants now propose: (1) to make short-term borrowings from 
time to time through December 31, 2000, evidenced (i) in the case of 
NU, CL&P, WMECO and PSNH by short-term notes (``Short-Term Notes'') 
issued to lending institutions through formal and informal credit 
lines, and (ii) in the case of NU, WMECO and CL&P, by commercial paper 
(``Commercial Paper''); (2) the continued use, through December 31, 
2000, of the Money Pool to assist in meeting the short-term borrowing 
needs of the Applicants and certain other NU subsidiaries; (3) in the 
case of all Applicants by borrowing under the existing revolving credit 
agreements until those agreements are terminated; and (4) that NU make 
open account advances, through December 31, 2000, to PSNH, HWP, 
Northeast Nuclear Energy Company, NAEC, the Quinnehtuk Company, Rocky 
River Realty Company and HEC, Inc.
    NU, CL&P and WMECO propose to enter into a revolving credit 
facility (``Facility'') permitting borrowings aggregating up to $450 
million with certain lending institutions. The Facility will be used to 
repay outstanding borrowings and for working capital and other 
corporate purposes. The Facility will be unsecured unless, subject to 
some exceptions, an Applicant incurs any secured indebtedness or 
secures any outstanding indebtedness which is now unsecured in which 
event such Applicant must cause the Facility to be secured equally and 
ratably with such other indebtedness.
    The Applicants state that one or more of the banks which lend to 
the Applicants and other NU subsidiaries under existing revolving 
credit agreements may want to continue their present lending 
arrangements rather than becoming lenders under the Facility. In that 
event, such bank would not be lenders under the Facility until their 
existing credit agreements are terminated.
    The Applicants will pay interest on any borrowings under the 
Facility at a rate determined, at their election, by reference to the 
base rate of certain reference banks, the federal funds rate, or the 
London interbank offering rate (``LIBOR''), in each case plus a margin 
which will depend on the lower of the Standard & Poor's or Moody's 
rating of the borrowing Applicant's long-term senior debt. In no event 
will the margin exceed 1% above the base rate, 1\1/2\% above the 
federal fund rate, or 2% above LIBOR, unless the loan is in default. 
The Applciants will pay an annual facility fee based on each lender's 
pro-rata share of the commitment, whether used or unused. The amount of 
the fee will depend on the credit rating of the borrowing applicant but 
will not exceed .75%.
    The aggregate amount of all short-term borrowings through December 
31, 2000, whether through the issuance of Short-Term Notes, Commercial 
Paper or borrowings from the Money Pool or revolving credit facilities 
or pursuant to open account advances, will not exceed $200 million for 
NU, $375 million for CL&P, $150 million for WMECO, $225 million for 
PSNH, $5 million for HWP, and $50 million for NAEC.
    Short-Term Notes will be issued by NU, CL&P, WMECO and PSNH both on 
a transactional basis (``Transactional Notes''), with a separate note 
evidencing each loan, and on a ``grid-note'' basis (``Grid Notes''). 
Each Transactional Note will be dated the date of issue, will have a 
maximum term of 270 days, and will bear interest at a fixed or floating 
rate, as described below. Transactional Notes will be issued no later 
than December 31, 2000, and will, with certain exceptions, be subject 
to prepayment at any time at the borrower's option.
    Grid Notes will be issued to a particular lending institution at or 
prior to the first borrowing under the Grid Note from that lender. Each 
repayment and reborrowing subsequent to the first borrowing will be 
recorded on a schedule to the note without the necessity of issuing 
additional notes. Also recorded on a schedule to the Grid Note at the 
time of a borrowing will be the date of the borrowing, the maturity 
(which may not exceed 270 days from the date of the borrowing), the 
number of days the borrowing is outstanding, the interest rate or 
method of determining the interest rate, the amount of interest due, 
and the date of the payment. Except as described below, borrowings on a 
Grid Note basis will be subject to prepayment at any time at the 
borrower's option.

[[Page 41669]]

    The interest rate on all Short-Term Notes will be determined on the 
basis of competitive quotations from several lending institutions, and 
will either be at a fixed interest rate or a floating interest rate 
determined with reference to an agreed-upon index (such as a lending 
institution's prime rate, LIBOR certificate of deposit rates, money 
market rates or commercial paper rates). The interest rate in any case 
will not exceed two percentage points above the Federal Funds Effective 
Rate. The Applicants will select the lending institution(s) from which 
to make a particular short-term borrowing and determine whether to 
borrow at a fixed or a floating rate on the basis of the lowest 
expected effective interest cost for borrowings of comparable sizes and 
maturities.
    Borrowings bearing floating interest rates will generally be 
subject to prepayment at the borrower's option. In order to realize the 
benefits of fixed interest rates when a fixed-rate borrowing is 
evaluated to be the lowest cost borrowing available, the Applicants may 
from time to time agree with individual lenders that such borrowings 
may not be prepaid or may only be prepaid if the lender is made whole 
for its losses (including lost profits) as a result of the prepayment.
    NU, CL&P, WMECO and PSNH propose to secure both formal and informal 
credit lines with a number of lending institutions. Formal credit lines 
may be subject to compensating balance and/or fee requirements and will 
therefore be used only when an Applicant determines that such a credit 
line offers advantages as compared with other available credit options. 
Compensating balance requirements will not exceed 5% of the committed 
credit line amount, and fees will not exceed 0.30% per annum. Each 
Applicant participating in a credit line would be able to draw funds to 
the exclusion of the other Applicants. The Applicants may change their 
credit lines and may obtain additional lines over time. The continued 
availability of such credit lines is subject to the continuing review 
of the lending institutions.
    CL&P, WMECO and NU propose to sell Commercial Paper publicly. Such 
Commercial Paper will be issued through The Depository Trust Company in 
the form of book entry notes in denominations of not less than $50,000, 
of varying maturities, with no maturity more than 270 days after the 
date of issue. The Commercial Paper will not be repayable prior to 
maturity. The Commercial Paper will be sold through a placement agent 
or agents in a co-managed commercial paper program at either the 
discount rate per annum or the interest rate per annum prevailing at 
the date of issuance for commercial paper of comparable quality and of 
the particular maturity sold by public utility issuers thereof. No 
Commercial Paper will be issued unless the issuing Applicant believes 
that the effective interest cost to the Applicant will be equal to or 
less than the effective interest rate at which the Applicant could 
issue Short-Term Notes in an amount at least equal to the principal 
amount of such Commercial Paper. The placement agent or agents will 
receive a commission for the sale of the Commercial Paper of not more 
than \1/8\ of 1% per annum on a discounted basis.
    The Applicants also propose the continued use, through December 31, 
2000, of the Money Pool, which is composed of available funds loaned by 
the NU and participating subsidiaries and borrowed by those 
subsidiaries to assist in meeting their respective short-term borrowing 
needs. Another potential component of the Money Pool is funds borrowed 
by NU through the issuance of Short-Term Notes, by selling Commercial 
Paper or by borrowing through the Facility (or existing revolving 
credit agreements if all are not terminated when the new Facility 
becomes effective) for the purpose of making open account advances 
through the Money Pool. NU requests that its authority for such 
borrowings be extended through December 31, 2000. The amounts to be 
borrowed by NU for the purpose of making open account advances and to 
be borrowed through the Money Pool by the recipients set forth above 
will also be subject to the short-term limits on aggregate amount 
outstanding for which approval is sought in this filing.
    All borrowings from and contributions to the Money Pool, including 
the open account advances, will be documented and will be evidenced on 
the books of each Applicant that is borrowing from or contributing 
surplus funds to the Money Pool. Except for loans from the proceeds of 
external borrowings by NU, all loans made under the Money Pool will 
bear interest for both the borrower and lender, payable monthly, equal 
to the daily Federal Funds Effective Rate as quoted by the Federal 
Reserve Bank of New York. Loans from the proceeds of external 
borrowings by NU will bear interest at the same rate paid by NU on the 
borrowings, and no such loans may be prepaid (unless NU is made whole 
for any additional costs that may be incurred because of such 
prepayment). To the extent that there are any excess funds available in 
the Money Pool, such funds will be invested with the earnings allocated 
on a pro rata basis.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 96-20347 Filed 8-8-96; 8:45 am]
BILLING CODE 8010-01-M