[Federal Register Volume 61, Number 208 (Friday, October 25, 1996)]
[Notices]
[Pages 55331-55333]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-27391]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-26594]


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

October 18, 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 declaration(s) for complete statements of the 
proposed transaction(s) summarized below. The application(s) and/or 
declaration(s) and any amendments thereto is/are available for public 
inspection through the Commission's Office of Public Reference.
    Interested persons wishing to comment or request a hearing on the 
application(s) and/or declaration(s) should submit their views in 
writing by November 12, 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.

EUA Energy Investment Corporation (70-8617)

    EUA Energy Investment Corporation (``EEIC''), P.O. Box 2333, 
Boston, Massachusetts 02107, a wholly-owned nonutility subsidiary of 
Eastern Utilities Associates, a registered holding company, has filed a 
post-effective amendment, under sections 9(a) and 10 of the Act and 
rule 54 thereunder, to its application-declaration, under sections 
6(a), 7, 9(a), 10 and 12(b) of the Act and

[[Page 55332]]

rules 43(a) and 45(a) thereunder, in the above file.
    By order dated June 21, 1995 (HCAR No. 26314), among other things, 
EEIC was authorized to form a wholly-owned nonutility subsidiary to 
participate as one of two general partners in a joint venture, BIOTEN 
Partnership (``Partnership''), formed to develop and commercialize 
biomass-fired combustion turbine power generation facilities and 
products and/or services offered in connection with such facilities; to 
make capital contributions to the Partnership in an aggregate amount of 
up to $1.907 million to be disbursed in connection with the testing and 
development of a commercial prototype plant and possibly, an additional 
$2 million (``Additional Contribution'') through December 31, 1998; and 
to provide the Partnership with a working capital line of credit in an 
aggregate total amount of up to $3 million through December 31, 1998.
    EEIC now requests authorization to increase the working capital 
line of credit from up to $3 million to up to $6 million through 
December 31, 1998. Advances made under the increased working capital 
line of credit will bear interest at an annual rate equal to the prime 
lending rate announced from time to time by The First National Bank of 
Boston, N.A., plus (a) 6% at any time the Additional Contribution has 
been made but not yet repaid to EEIC and (b) 2% after the Additional 
Contribution made to the Partnership has been repaid, but in no event 
to exceed 16% per annum.
    All advances made under the increased working capital line of 
credit will become due and payable three years after the later of (a) 
the date of the partnership agreement establishing the Partnership and 
(b) the date such line of credit is first drawn upon. All advances 
under the increased working capital line of credit will be evidenced by 
a promissory note and the Partnership's obligations under the note will 
be secured by a first priority security interest in the assets of the 
Partnership.
    EEIC states that additional funding is needed for working capital 
purposes due to unavoidable technical delays in developing the 
prototype plant, scheduled for acceptance testing in November 1996. 
EEIC believes that the long-term profitability of its investment in the 
Partnership would not be adversely affected by the requested increase.

Houston Industries, Inc., et al. (70-8907)

    Houston Industries Incorporated (``HI''), an exempt public utility 
holding company, and its electric public utility subsidiary company, 
Houston Lighting & Power Company (``HL&P''), both of 1111 Louisiana, 
Houston, Texas, 77002, have filed an application under section 3(a)(2) 
of the Act.
    HI and HL&P propose to merge and then to merge a new subsidiary 
company with NorAm Energy Corp. (``NorAm''). The application requests 
an order from the Commission under section 3(a)(2) of the Act that 
exempts the public utility holding company to be formed, and all 
subsidiary companies thereof, from all provisions of the Act except 
section 9(a)(2).
    HI owns two principal public utility subsidiary companies.\1\ HL&P 
is engaged in the generation, transmission, distribution and sale of 
electric power to 1.5 million customers in a 5,000 square-mile area of 
the Texas Gulf Coast, which area includes Houston. HI also owns Houston 
Industries Energy, Inc. (``HI Energy''), which participates in domestic 
and foreign power generation projects and invests in foreign electric 
utilities.\2\
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    \1\ HI also owns several other non-utility subsidiary companies. 
HL&P, however, accounts for substantially all of the consolidated 
income and common stock equity of HI.
    \2\ Foreign electric utilities in which HI Energy has invested 
are exempt foreign utility companies under section 33(a) of the Act.
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    HI is exempt from the provisions of the Act, other than section 
9(a)(2), pursuant to section 3(a)(1) because both HI and HL&P ``are 
predominantly intrastate in character and carry on their business 
substantially in'' Texas.
    NorAm is a public utility company that provides retail natural gas 
service to 2.75 million customers in 1,300 municipalities. NorAm also 
owns several non-utility subsidiary companies. Its natural gas 
distribution business operates through three divisions--(i) Entex, the 
local gas distribution company in Houston and in other areas in Texas, 
Louisiana and Mississippi; (ii) Arkla, which distributes retail natural 
gas in Arkansas, Louisiana, Oklahoma and Texas; and (iii) Minnegasco, 
which distributes natural gas in Minnesota.
    NorAm also operates interstate gas pipeline facilities through two 
subsidiary companies, NorAm Gas Transmission Company and Mississippi 
River Transmission Corporation, and operates natural gas acquisition 
assets in Oklahoma, Louisiana, Arkansas and Texas through NorAm Field 
Services Corp. Another subsidiary company, NorAm Energy Services, Inc., 
with certain affiliates, markets wholesale natural gas and provides 
risk management services.
    In addition, NorAm provides retail energy services to industrial 
and large commercial concerns through NorAm Energy Management. Finally, 
NorAm plans to form one or more subsidiary companies to invest in 
certain gas distribution systems in Latin America.\3\ In 1995, the 
natural gas business of NorAm accounted for 58% of its consolidated 
revenues.
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    \3\ See SEC File No. 70-8811.
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    On August 11, 1996, HI, HL&P and a new HI subsidiary company, HI 
Merger, Inc. (``HI Merger''), entered into an Agreement and Plan of 
Merger (``Merger Agreement'') with NorAm. Under the Merger Agreement, 
HI will merge with HL&P and the outstanding common stock of HI will 
become the common stock of HL&P, which will be renamed Houston 
Industries, Inc. (``Houston''). Thereafter, NorAm will merge with HI 
Merger, which will be renamed NorAm Energy Corp. The new NorAm Energy 
Corp. will be a wholly owned subsidiary company of Houston after these 
two mergers (``Basic Mergers''). After the Basic Mergers, the electric 
power business of HL&P will be conducted by Houston under the name of 
HL&P.\4\
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    \4\ The application states that, if the order is not granted, 
and if HL&P determines that, upon consummation of the Basic Mergers, 
Houston would not be an exempt public utility holding company, then 
NorAm and HI will both be merged with and into HL&P. HL&P would be 
the surviving corporation and would be renamed Houston Industries 
Incorporated. The application also states that, if, when all 
conditions for consummation of the transaction have been satisfied 
or waived, the Act does not constrain the structure of the 
transaction, then (i) HI will not merge with and into HL&P and (ii) 
NorAm will merge with and into HI Merger. HI Merger would be the 
surviving corporation and would be renamed NorAm Energy Corp. In 
that event, both NorAm and HL&P would be wholly owned subsidiaries 
of HI.
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    Under the Merger Agreement, the shareholders of NorAm common stock 
will receive (i) cash in the amount of $16.00 per share or (ii) Houston 
common stock.\5\ If the closing occurs after May 11, 1997, the cash 
(but not stock) consideration increases thereafter by two percent 
(simple interest) per quarter until closing.
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    \5\ The market value of the stock component will be equal to 
about $16.00 per share if the average New York Stock Exchange 
closing sales price of HI common stock is within a specified price 
range in a twenty-day period prior to the closing date of the Basic 
Mergers.
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    The total value of the cash and stock consideration to be issued in 
exchange for all NorAm common stock and common stock equivalents is 
expected to be about $2.5 billion.
    The Boards of Directors of all parties have approved the Merger 
Agreement. Consummation of the Basic Mergers is subject to usual 
closing conditions and approval by HI and NorAm

[[Page 55333]]

shareholders. The parties contemplate shareholder meetings to approve 
the transactions prior to the end of 1996. The application states that 
consummation of the Basic Mergers is also subject to regulatory 
approvals, including those from state regulatory agencies,\6\ and the 
submission of the notifications under the Hart-Scott-Rodino Antitrust 
Improvements Act of 1976.
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    \6\ The application states that the Basic Mergers are subject to 
review by regulatory commissions in each state other than Texas in 
which NorAm conducts utility operations. HI and NorAm will request 
prior approval of the Basic Mergers from the Minnesota Public 
Utilities Commission, the Arkansas Public Service Commission, the 
Oklahoma Corporation Commission, the Louisiana Public Service 
Commission, and the Mississippi Public Service Commission. Each of 
those agencies regulates rates and services provided by a NorAm 
division and is expected to review the transaction to assure that it 
is not inconsistent with the public interest. Texas statutes do not 
require HI and NorAm to obtain approval of the transaction from the 
Texas Railroad Commission (``Railroad Commission'') or the Texas 
Public Utility Commission (``TPUC''). However, the Basic Mergers 
will not affect the authority of the Railroad Commission over 
operations of NorAm or the authority of the TPUC over the operations 
of HL&P. In addition, NorAm and HI are currently engaged in informal 
discussions with the Railroad Commission and the TPUC on the Basic 
Mergers.
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    The Merger Agreement provides for termination upon the occurrence 
of certain events, to include failure to consummate the Basic Mergers 
by August 11, 1997. The Merger Agreement provides for a termination fee 
to be paid in certain circumstances, which fee ranges from $10 million 
to $75 million.
    The application states that, on a gross-to-gross basis, the gross 
operating revenues of NorAm ($1.72 billion) in 1995 were approximately 
47% of those of HL&P ($3.68 billion).
    The application requests an order from the Commission under section 
3(a)(2) of the Act, which exempts a public utility holding company if 
``such holding company is predominantly a public-utility company whose 
operations as such do not extend beyond the State in which it is 
organized and States contiguous thereto.''

Entergy Gulf States, Inc. (70-8911)

    Entergy Gulf States, Inc. (``Gulf States''), 350 Pine Street, 
Beaumont, Texas 77701, a wholly owned public-utility subsidiary of 
Entergy Corporation (``Entergy''), a registered holding company, has 
filed an application-declaration under sections 9(a), 10 and 12(d) of 
the Act and rule 44 thereunder.
    Gulf States provides steam and associated byproduct electrical 
energy to Exxon Corporation (``Exxon'') at its petrochemical 
manufacturing facilities that surround and are contiguous to Gulf 
States' cogeneration facility, Louisiana Station No. 1, located in East 
Baton Rouge Parish, Louisiana (``Louisiana Station''). Louisiana 
Station was originally constructed to serve the steam and electrical 
requirements of the Exxon facility and has been primarily dedicated to 
that purpose since its construction.
    Pursuant to an arrangement between Exxon and Gulf States, Exxon 
supplies fuel to Louisiana Station that is converted into steam and 
byproduct electricity which is then delivered to the Exxon facility. 
The amount of electricity produced from this process is not normally 
sufficient to met Exxon's requirements and Exxon purchases additional 
electricity from Gulf States pursuant to an electric service contract.
    Gulf States and Exxon propose to enter into an agreement that would 
allow for the modernization of the Louisiana Station to improve its 
reliability and efficiency and potentially increase its capacity for 
the continued production of steam and electric energy produced from 
fuel supplied by Exxon. To facilitate the above-mentioned transaction, 
Gulf States now proposes to enter into an Agreement for Lease of 
Generating Facilities (``Lease''), a Base Facility Sublease and Lease 
of Additions and Betterments (``Sublease'') and other related 
agreements.
    Pursuant to the Lease, Gulf States will lease to Exxon its 
generating facilities and certain property located within and 
surrounding the Louisiana Station upon which Exxon proposes to 
construct a new gas-fired turbine and associated facilities. All 
capital and other costs to effect such modernization will be borne by 
Exxon. Gulf States has certain termination rights should Exxon fail to 
commence the modernization of Louisiana Station by appropriating funds 
within one (1) year of the date of the grant of all necessary 
regulatory approvals.
    The Lease has an initial term in excess of twenty (20) years with 
two (2) optional term extensions of ten (10) years. The initial term is 
divided into two (2) stages, Phases 1 and 2. Generally, Phase 1 is the 
period during which Exxon is to complete modernization of Louisiana 
Station, which should not exceed thirty (30) months from the date Gulf 
States secures all necessary regulatory approvals. Phase 2 is the 
twenty (20) year period thereafter.
    During Phase 1 of the Lease, the Sublease will be in effect in 
order that Gulf States may continue to use the facilities to fulfill 
its obligations to Exxon under an existing steam contract. Pursuant to 
the Sublease, Gulf States will pay the same monthly rent that Exxon is 
obligated to pay under the Lease. Steam and electric service rendered 
by Gulf States to Exxon during the same period will be paid for at the 
rates as set forth in an Amended and Restated Steam Contract (``Steam 
Contract''), and any additional electricity shall be provided to Exxon 
pursuant to the existing Electric Agreement.
    By structuring the transaction to include both the Lease and the 
Sublease, Exxon may immediately commence modernization of Louisiana 
Station and Gulf States may continue to fulfill its contractual 
obligations to the Steam Contract.
    Phase 2 of the Lease will commence once improvements and 
modernization to Louisiana Station are complete, and Exxon shall begin 
to pay Gulf States a monthly fixed rent and a monthly variable rent up 
to a stated maximum amount depending upon the quantity of steam 
generated by Louisiana Station. The Sublease will no longer be in 
effect.
    Also during Phase 2, Gulf States will provide equipment, personnel 
and services required for operation and maintenance of the facility 
pursuant to an operating and maintenance service agreement (``Operating 
Agreement''). Gulf States will be compensated for its services under 
this Operating Agreement by a fee structure that includes, in addition 
to reimbursement of its expenses, the payment of an overhead fee and an 
incentive fee. The overhead fee is fixed initially at a stated minimum 
per year and will not be subject to renegotiation more than every two 
(2) years. The incentive fee is fixed at a stated maximum per year 
based upon Gulf States attainment of certain performance goals, and the 
company has the opportunity to earn other incentives based on cost 
savings.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-27391 Filed 10-24-96; 8:45 am]
BILLING CODE 8010-01-M