[Federal Register Volume 61, Number 223 (Monday, November 18, 1996)]
[Notices]
[Pages 58718-58725]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-29414]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-26603]


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

November 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 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 December 2, 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 and/or declaration, as filed 
or as amended, may be granted and/or permitted to become effective.

Central and South West Corporation, et al. (70-7113; 70-7218)

    Central and South West Corporation (``CSW''), a registered holding 
company, and its wholly-owned nonutility subsidiary, CSW Credit, Inc. 
(``Credit''), both at 1616 Woodall Rodgers Freeway, Dallas, Texas 
75202, have filed a post-effective amendment under sections 9 and 10 of 
the Act to their application-declarations filed in the above files 
under sections 6, 7, 9, 10 and 12 of the Act and rule 45 thereunder.
    By orders of the Commission dated July 19, 1985 (HCAR No. 23767), 
July 31, 1986 (HCAR No. 24157), February 8, 1988 (HCAR No. 24575), 
December 24, 1991 (HCAR No. 25443) and December 22, 1995 (HCAR No. 
26437), CSW was authorized to organize Credit to engage in the business 
of factoring accounts receivable for certain subsidiaries of CSW \1\ 
and for nonassociate utility companies; Credit was authorized to borrow 
up to $520 million and $304 million in respect of its factoring of 
associate and nonassociate utility receivables, respectively; and CSW 
was authorized to make equity investments in Credit of up to $80 
million and $76 million in connection with its factoring of associate 
and nonassociate utility receivables, respectively, in each case 
through December 31, 1996. Credit was required to limit its acquisition 
of nonassociate utility receivables so that the average amount of such 
receivables for the preceding twelve-month period outstanding as of the 
end of any calendar month would be less than the average amount of 
receivables acquired from associate companies outstanding as of the end 
of each calendar month during the preceding twelve-month period (``50% 
Restriction'').
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    \1\ These companies included Central Power and Light Company 
(``CPL''), Public Service Company of Oklahoma, Southwestern Electric 
Power Company, West Texas Utilities Company and Transok, Inc. 
(``Transok'').
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    In 1987, the applicants filed an application with the Commission 
seeking authorization for Credit to factor the accounts receivable of 
nonassociate utilities without regard to the 50% Restriction, to 
increase Credit's aggregate borrowings and to increase CSW's equity 
investment in Credit. This application was approved in an initial 
decision rendered by an administrative law judge on February 23, 1989 
(File No. 3-7027) (``ALJ Decision''). On review, the Commission, by 
order dated March 2, 1994 (HCAR No. 25995), reversed the initial 
decision, upheld the 50% Restriction and denied the application in its 
entirety.
    The applicants state that on May 29, 1992, CSW and CPL entered into 
a settlement agreement with Houston Industries Incorporated and its 
subsidiary, Houston Lighting & Power Company (``HLP''), to resolve a 
number of disputes between the two systems (``1992 Settlement''). As 
part of the normalization of business relations between the parties, 
Credit and HLP agreed to arrangements whereby Credit would purchase 
electric utility accounts receivable from HLP. The 1992 Settlement was 
entered into when the ALJ Decision, stating that the 50% Restriction 
did not apply to Credit, was in effect. The applicants state that CPL 
and HLP reasonably believed, when they agreed upon the 1992 Settlement, 
that the factoring of HLP receivables under the 1992 Settlement would 
not be subject to the 50% Restriction. They also state that the 
application of the 50% Restriction diminishes the value to be received 
by CPL from the 1992 Settlement.
    By order dated December 8, 1992 (HCAR No. 25696), Credit was 
authorized to borrow up to an additional $650 million in the aggregate 
outstanding at any one time during the 12\1/2\ year term of the 1992 
Settlement for the sole purpose of purchasing accounts receivable of 
HLP. The initial application in connection with this order requested 
authorization for the factoring of HLP receivables without regard to 
the 50% Restriction. This request was withdrawn, however, at the 
request of the Commission staff, pending the outcome of Administrative 
Proceeding File No. 3-7027. In an order dated December 29, 1992 (HCAR 
No. 25720), Credit was authorized to sell a sufficient amount of HLP 
receivables to unrelated third parties in order to comply with the 50% 
Restriction.
    On June 6, 1996, CSW sold Transok and used a portion of the 
proceeds from the sale to repay outstanding debt. Over the twelve 
months prior to Transok's sale, Credit factored a rolling monthly 
average of $87.4 million of Transok accounts receivable, and CSW 
estimates that this amount would have grown with Transok's business. As 
a result of the sale, CSW has significantly less associate receivables 
to factor and, through operation of the 50% Restriction, is forced to 
factor less nonassociate receivables and sell receivables of 
established nonassociate customers. The aggregate effect is to reduce 
the volume of receivables factored by Credit by twice the amount of 
Transok receivables.
    As a result of these two circumstances, the applicants request 
authorization for CSW to factor up to $450 million of HLP accounts 
receivable and up to $100 million of accounts receivable of other 
nonassociate utility companies, on a twelve-month rolling monthly 
average basis, through December 31, 2000. To the extent that such 
factoring activities cause nonassociate accounts receivable factored by 
Credit to exceed the 50% Restriction at any time during that period, 
the applicants request a temporary exemption from the 50% Restriction.

Central and South West Corporation, et al. (70-7113; 70-7218)

    Central and South West Corporation (``CSW''), a registered holding 
company, and its wholly-owned nonutility

[[Page 58719]]

subsidiary, CSW Credit, Inc. (``Credit''), both of 1616 Woodall Rogers 
Freeway, P.O. Box 660164, Dallas, Texas 75202, have filed a post-
effective amendment to their application-declarations in the above 
files, under sections 6(a), 7, 9(a), 10 and 12(b) of the Act and rules 
45 and 54 thereunder, proposing to extend their existing 
authorizations.
    By order dated July 19, 1985 (HCAR No. 23767) (``1985 Order''), CSW 
was authorized, among other things, to organize Credit to purchase the 
accounts receivable of the operating companies of CSW at a discount and 
to finance these purchases with the issuance and sale of debt. Credit 
was authorized to borrow up to $320 million and CSW was authorized to 
make equity investments in Credit of up to an aggregate of $80 million 
through December 31, 1986.
    By order dated July 31, 1986 (HCAR No. 24157) (``1986 Order''), 
Credit was authorized to expand its business to the factoring of 
accounts receivable of nonaffiliated electric utility companies. In 
order to finance such transactions, Credit was authorized to borrow up 
to an additional $160 million and CSW was authorized to make additional 
equity investments in Credit of up to an aggregate of $40 million, 
through December 31, 1988. The 1986 Order also required Credit to limit 
its acquisition of utility receivables from nonassociate utilities so 
that the average amount of such receivables for the preceding twelve-
month period outstanding as of the end of any calendar month would be 
less than the average amount of receivables acquired from CSW associate 
companies outstanding as of the end of each calendar month during the 
preceding twelve-month period. Further, the 1986 Order extended the 
authority of the 1985 Order until December 31, 1988.
    By order dated February 8, 1988 (HCAR No. 24575), Credit was 
authorized, among other things, to borrow, through December 31, 1989, 
up to $320 million and $304 million to finance the factoring of 
affiliate and nonaffiliate receivables, respectively. CSW was 
authorized to make equity investments in Credit of up to an aggregate 
of $80 million and $76 million in connection with the factoring of 
affiliate and nonaffiliate receivables, respectively. This authority 
was extended through December 31, 1990 by order dated December 27, 1989 
(HCAR No. 25009).
    By order dated August 30, 1990 (HCAR No. 25138), Credit was 
authorized to lower its equity ratio to no less than 5%.
    By orders dated December 21, 1990 (HCAR No. 25228) and December 24, 
1991 (HCAR No. 25443) (``1991 Order''), Credit's existing authority was 
extended through December 31, 1991 and December 31, 1992, respectively. 
In addition, the 1991 Order authorized Credit to borrow up to an 
additional $200 million to finance the factoring of associate 
receivables.
    The applicants state that on May 29, 1992, CSW and Central Power 
and Light Company entered into a settlement agreement with Houston 
Industries Incorporated and its subsidiary, Houston Lighting & Power 
Company (``HLP''), to resolve a number of disputes between the two 
systems (``1992 Agreement''). As part of the normalization of business 
relations between the parties, Credit and HLP agreed to arrangements 
whereby Credit would purchase accounts receivable from HLP. By order 
dated December 8, 1992 (HCAR No. 25696), Credit was authorized to 
borrow up to an additional $650 million in the aggregate outstanding at 
any one time during the 12\1/2\ year term of the 1992 Agreement for the 
sole purpose of purchasing accounts receivable of HLP.
    By orders dated December 9, 1992, December 21, 1993, December 16, 
1994 and December 22, 1995 (HCAR Nos. 25698, 25959, 26190 and 26437, 
respectively), Credit's existing authority was extended through 
December 31, 1993, December 31, 1994, December 31, 1995 and December 
31, 1996, respectively.
    Pursuant to the orders summarized above, the following authority 
has been granted: (1) Credit has been authorized to borrow $824 
million, of which $520 million could be used to purchase receivables of 
affiliated companies and $304 million could be used to purchase 
receivables of nonaffiliated companies; and (2) CSW has been authorized 
to make equity investments in Credit of up to an aggregate of $156 
million, of which $80 million could be used to purchase receivables of 
affiliated companies and $76 million could be used to purchase 
receivables of nonaffiliated companies.
    CSW and Credit now propose to extend the authorizations under the 
previously granted orders through December 31, 2000.

GPU, Inc. et al. (70-8593)

    GPU, Inc. (``GPU''), of 100 Interpace Parkway, Parsippany, New 
Jersey 07054, a registered holding company, and two of its nonutility 
subsidiaries, GPU International, Inc. and EI Services, Inc., both of 
One Upper Pond Road, Parsippany, New Jersey 07054, its operating 
companies, Jersey Central Power & Light Company, Metropolitan Edison 
Company and Pennsylvania Electric Company, each of P.O. Box 16001, 
Reading, Pennsylvania 19640, and its service company, GPU Service, 
Inc., of 100 Interpace Parkway, Parsippany, New Jersey 07054, have 
filed a post-effective amendment under sections 6(a), 7, 9(a), 10, 
12(b), 32 and 33 of the Act and rules 45 and 53 thereunder, to their 
application-declaration, under sections 6(a), 7, 9(a), 10, 12(b), 32 
and 33 of the Act and rules 45, 52, 53 and 54 thereunder, in the above 
file.
    By orders of the Commission dated July 6, 1995 and January 19, 1996 
(HCAR Nos. 26326 and 26457, respectively) (``Orders''), among other 
things, GPU is authorized to acquire and own interests in exempt 
wholesale generators (``EWGs'') and foreign utility companies 
(``FUCOs''), as defined in sections 32 and 33 of the Act, respectively 
(collectively, ``Exempt Entities''), through subsidiaries 
(``Subsidiaries''), that are not Exempt Entities, but are engaged, 
directly or indirectly, and exclusively, in the business of owning and 
holding the interests and securities of one or more Exempt Entities and 
related project development activities. GPU is authorized to make 
equity investments in Subsidiaries in the form of capital stock or 
shares, trust certificates, partnership interests or other equity or 
participation interests; and, through December 31, 1997, to make 
investments in one or more Subsidiaries in the form of cash capital 
contributions or open account advances; loans evidenced by promissory 
notes; guarantees by GPU of the principal of, or interest on, any 
promissory notes or other evidences of indebtedness or obligations of 
any Subsidiary, or of GPU's undertaking to contribute equity to a 
Subsidiary; assumption of liabilities of a Subsidiary; and 
reimbursement agreements with banks entered into to support letters of 
credit delivered as security for GPU's equity contribution obligation 
to a Subsidiary or otherwise in connection with a Subsidiary's project 
development activities.
    GPU is also authorized to make investments in Exempt Entities, 
through December 31, 1997, in the form of guarantees of the 
indebtedness of other obligations of one or more Exempt Entities; 
assumption of liabilities of one or more Exempt Entities; and 
guarantees and letter of credit reimbursement agreements in support of 
equity contribution obligations or otherwise in connection with project 
development activities for one or more Exempt Entities.

[[Page 58720]]

    GPU's direct or indirect investments in Subsidiaries and Exempt 
Entities are funded from available cash or pursuant to financing 
transactions authorized by the Commission.\2\ Pursuant to the Orders, 
GPU's ``aggregate investment'' (as defined in rule 53(a)(1)(i)) in 
Subsidiaries and Exempt Entities shall not exceed 50% of GPU's 
``consolidated retained earnings'' (as defined in rule 53(a)(1)(ii)). 
This investment limitation is consistent with the 50% limitation in 
rule 53(a)(1).
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    \2\ In this post-effective amendment, GPU is not requesting 
authorization to issue additional securities to increase its 
investment in Exempt Entities.
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    GPU requests the Commission to modify this limitation, and exempt 
it from the requirements of rule 53(a)(1), to permit GPU to invest 
directly or indirectly in Exempt Entities and Subsidiaries in an 
aggregate amount that, when added to GPU's aggregate investment, direct 
and indirect, in all Exempt Entities and Subsidiaries, would not at any 
time exceed 100% of GPU's consolidated retained earnings. The current 
amount of GPU's aggregate investment, direct and indirect, in Exempt 
Entities and Subsidiaries (approximately $914 million as of June 30, 
1996) represents approximately 45% of its consolidated retained 
earnings (approximately $2.05 billion as of June 30, 1996). Increasing 
this limitation as GPU proposes would allow additional investments, 
direct and indirect, in Exempt Entities and Subsidiaries of 
approximately $1.113 billion.
    GPU intends to make substantial additional investments in EWGs and 
FUCOs, primarily because: (1) over the last five years there has been 
limited capital investment in GPU's operating companies, and it is 
projected that GPU will not be required to make any significant equity 
investment in any GPU operating company for at least the next five 
years; (2) acquisitions of EWGs and FUCOs give GPU the opportunity to 
continue to grow in an industry sector in which GPU has decades of 
experience, and to diversify overall asset risk; and (3) GPU has 
purposely invested in utility systems in foreign countries, which have 
moved further than the United States toward deregulation and full 
competition in both retail and wholesale electricity markets, in order 
to gain valuable experience with deregulated markets that will enhance 
GPU's ability to make its core domestic utility operations more 
competitive and efficient in the future as the United States moves 
toward deregulation and increased competition. Applicants also describe 
comprehensive procedures that GPU has established to identify and 
address risks involved in EWG and FUCO investments.
    GPU states that the additional investments in EWGs and FUCOs to the 
proposed increased level will not have a substantial adverse impact on 
the financial integrity of the GPU system or an adverse impact on any 
utility subsidiary of GPU or its customers or on the ability of the 
affected state commissions to protect such customers. Applicants also 
state that GPU will not seek recovery through higher rates to its 
utility subsidiaries' customers in order to compensate GPU for any 
possible losses that it may sustain on investments in EWGs and FUCOs or 
for any inadequate returns on such investments.

The Columbia Gas System, Inc. et al. (70-8925)

    The Columbia Gas System, Inc. (``Columbia''), a registered holding 
company, its service company subsidiary, Columbia Gas System Service 
Corporation (``Service''), its liquefied natural gas subsidiary, 
Columbia LNG Corporation, its trading subsidiary, Columbia Atlantic 
Trading Corporation (``Columbia Atlantic''), all located at 12355 
Sunrise Valley Drive, Suite 300, Reston, Virginia 20191-3458; its 
distribution subsidiaries, Columbia Gas of Ohio, Inc. (``Columbia 
Ohio''), Columbia Gas of Pennsylvania, Inc. (``Columbia 
Pennsylvania''), Columbia Gas of Kentucky, Inc. (``Columbia 
Kentucky''), Columbia Gas of Maryland, Inc. (``Columbia Maryland''), 
Commonwealth Gas Services, Inc. (``Commonwealth Services'') (together, 
``Utility Subsidiaries''), all located at 200 Civic Center Drive, 
Columbia, Ohio 43215; its transmission subsidiaries, Columbia Gas 
Transmission Corporation (``Columbia Transmission'') and Columbia Gulf 
Transmission Company (``Columbia Gulf''), both located at 1700 
MacCorkle Avenue, S.E., Charleston, West Virginia 25314; its 
exploration and production subsidiary, Columbia Natural Resources, Inc. 
(``Columbia Natural''), 900 Pennsylvania Ave., Charleston, West 
Virginia 25302; its propane distribution subsidiaries, Commonwealth 
Propane, Inc. and Columbia Propane Corporation (``Columbia Propane''), 
both located at 800 Moorefield Park Drive, Richmond, Virginia 23236; 
its energy services and marketing subsidiaries, Columbia Energy 
Services Corporation, Columbia Service Partners, Inc. and Columbia 
Energy Marketing Corporation, all located at 2581 Washington Road, 
Upper Saint Claire, Pennsylvania 15241; its network services 
subsidiary, Columbia Network Services Corporation, 1600 Dublin Road, 
Columbus, Ohio 43215-1082; and its other subsidiaries, Tristar Ventures 
Corporation (``TriStar Ventures''), Tristar Capital Corporation 
(``TriStar Capital''), Tristar Pedrick Limited Corporation, Tristar 
Pedrick General Corporation, Tristar Binghamton Limited Corporation, 
Tristar Binghamton General Corporation, Tristar Vineland Limited 
Corporation, Tristar Vineland General Corporation, Tristar Rumford 
Limited Corporation, Tristar Georgetown Limited Corporation, Tristar 
Georgetown General Corporation, Tristar Fuel Cells Corporation, TVC 
Nine Corporation, TVC Ten Corporation and Tristar System, Inc., all 
located at 205 Van Buren, Herndon, Virginia 22070 (together, ``System'' 
or ``Applicants'') (all subsidiaries, ``Subsidiaries'') (all subsidiary 
companies excluding the Utility Subsidiaries, ``Nonutility 
Subsidiaries'') have filed a joint application-declaration under 
sections 6, 7, 9, 10, 12(b), 12(c), 12(e), 12(f), 32 and 33 of the Act 
and rules 42, 43, 45 and 53 thereunder.
    The System is seeking, for the period from the effective date of an 
order in this matter through December 31, 2001, as more fully 
described, below, Commission authorization for: (1) external financing 
by Columbia, including requests for (a) short-term financing in the 
form of borrowing under a revolving credit agreement, commercial paper 
and bid notes; (b) long-term financing; (c) hedging the interest risk 
associated with existing and to be issued fixed and floating rate debt; 
(d) equity financing; and (e) the issuance of other securities; (2) 
intrasystem financing of Subsidiaries, including: (a) long-term debt; 
(b) short-term debt, including continuing of the Columbia system money 
pool (``Money Pool''); (c) guarantees; (d) paying dividends to the 
extent permitted by Delaware law from additional capital surplus; and 
(e) reincorporation of Columbia Natural in Delaware; (3) external 
financing by Nonutility Subsidiaries and the formation of financing 
entities; (4) financing for the purpose of acquiring exempt wholesale 
generators (``EWGs'') and foreign utility companies (``FUCOs'').
    The Applicants request authority to engage in various financing and 
related transactions, for the period from the effective date of an 
order in this matter through December 31, 2001, for which the specific 
terms and conditions are not at this time known. The authorization is 
sought subject to the following conditions: (1) Columbia will

[[Page 58721]]

maintain its long-term debt rating at an investment grade level as 
established by a nationally recognized statistical rating organization, 
as that term is used in rule 15c3-1(c)(2)(vi)(F) of the Securities 
Exchange Act of 1934; (2) its common equity, as reflected in its most 
recent Form 10-K or Form 10-Q and as adjusted to reflect subsequent 
events that affect capitalization, does not fall below 30% of its 
consolidated capitalization; (3) the effective cost of money on debt 
borrowing occurring pursuant to this authorization will not exceed 300 
basis points over comparable term U.S. Treasury securities; (4) the 
effective cost of money on preferred stock and other fixed-income 
oriented securities will not exceed 500 basis points over 30-year term 
U.S. Treasury securities; (5) the maturity of indebtedness will not 
exceed 50 years; (6) the underwriting fees, commissions, or other 
similar remuneration paid in connection with the non-competitive bid 
issue, sale or distribution of a security in this matter will not 
exceed 5% of the principal or total amount of the financing; (7) the 
aggregate amount of external, long-term debt and equity financing 
issued by Columbia, through December 31, 2001, will not exceed $5 
billion of long-term debt and equity financing or more than $1 billion 
of short-term borrowing outstanding at any one time; (8) the proceeds 
from the sale of securities by Columbia in external financing 
transactions will be added to Columbia's treasury and used for general 
and corporate purposes including: (a) the financing, in part, of the 
capital expenditures of Columbia and its Subsidiaries; (b) in the case 
of short-term debt, the financing of gas storage inventories, other 
working capital requirements and capital spending of the System; (c) 
the acquisition of interests in EWGs and FUCOs; and/or (d) the 
acquisition, retirement, or redemption of securities of which Columbia 
is an issuer without the need for prior Commission approval pursuant to 
rule 42 or a successor rule. Any deviations from these conditions would 
require further Commission approval.

External Short-Term Financing

    Columbia currently obtains funds externally through short-term debt 
financing under the $1 billion Credit Agreement dated as of November 
28, 1995, between Columbia and a group of banks with Citibank, N.A. as 
Agent (``Credit Facility'').\3\ To provide financing for general 
corporate purposes, including financing gas storage inventories, other 
working capital requirements and construction spending until long-term 
financing can be obtained, Columbia requests authorization to have 
outstanding at any one time, through December 31, 2001, up to $1 
billion of short-term debt consisting of borrowing under the Credit 
Facility, the issuance of commercial paper, the sale of bid notes, 
discussed below, and other forms of short-term financing generally 
available to borrowers with investment grade credit ratings.
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    \3\ See Columbia Gas System, Inc., Holding Co. Act Release No. 
26361 (August 25, 1995).
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    In order to consolidate all orders authorizing financing under one 
file, Columbia requests that the authorization for the Credit Facility 
be withdrawn and superseded by the order of the Commission sought 
herein. Columbia further requests authorization to amend the Credit 
Facility without further Commission authorization provided that the 
maturity date does not go beyond December 31, 2001, and the principal 
amount and borrowing margins do not increase.
    Commercial paper would be sold, from time-to-time, in established 
domestic or European commercial paper markets to dealers at the 
prevailing discount rate per annum, or at the prevailing coupon rate 
per annum, at the date of issuance. It is expected that the dealers 
acquiring commercial paper from Columbia will re-offer such paper at a 
discount to corporate, institutional and, with respect to European 
commercial paper, to individual investors.
    Back-up bank lines of credit for 100% of the outstanding amount of 
commercial paper are generally required by credit rating agencies. The 
Credit Facility will back-up Columbia's commercial paper program, thus 
negating the need for additional lines of credit.

Bid Notes Agreements

    Columbia also requests approval to enter into individual agreements 
(``Bid Note Agreements'') with one or more commercial banks which are 
lenders under the Credit Facility. The Bid Note Agreements would permit 
Columbia to negotiate with one or more banks (``Bid Note Lender[s]'') 
on any given day for such Bid Note Lender, or any affiliate or 
subsidiary of such lender, to purchase promissory notes (``Bid Notes'') 
directly from Columbia. Such notes would bear interest rates comparable 
to, or lower than, those available through other proposed forms of 
short-term borrowing with similar terms. The maturity of the Bid Notes 
would not exceed 270 days, and the total amount of Bid Notes 
outstanding at any time, when added to the aggregate amounts of short-
term borrowing outstanding under other forms of short-term borrowing, 
would not exceed $1 billion.

Other Short-Term Securities

    Columbia proposes to engage in other types of short-term financing 
as it may deem appropriate in light of its needs and market conditions 
at the time of issuance. Such short-term financing could include, 
without limitation, bank borrowing and medium-term notes issued under 
its Indenture, dated as of November 28, 1995, between Columbia and 
Marine Midland Bank, Trustee, as amended (``Indenture''). The Indenture 
provides that the specific terms of any securities issued be set by 
resolution of Columbia's Board of Directors. The maturities of such 
borrowing would not exceed one year. In no case will the outstanding 
balance of all short-term borrowing exceed $1 billion.

Long-Term Financing

    Columbia proposes to issue from time-to-time, prior to December 31, 
2001, long-term securities aggregating not more than $5 billion. 
Columbia proposes to issue any combination of debentures, which may be 
in the form of medium term notes, and/or common stock, preferred stock, 
or other equity and debt securities in an aggregate amount not to 
exceed $5 billion. Other examples of such long-term debt securities 
would include, but not be limited to, convertible debt, subordinated 
debt, bank borrowing, and securities with call or put options. Any 
long-term debt security would have such designation, aggregate 
principal amount, maturity, interest rate(s) or methods of determining 
the same, terms of payment of interest, redemption provisions, non-
refunding provisions, sinking fund terms, conversion or put terms and 
other terms and conditions as Columbia may determine at the time of 
issuance. Debentures and medium-term notes would be issued under the 
Indenture.
    Such securities may be issued and sold pursuant to standard 
underwriting agreements. Public distribution may be effected through 
private negotiations with underwriters, dealers or agents, or through 
competitive bidding among underwriters. In addition, such securities 
may be issued and sold through private placements or other non-public 
offerings to one or more persons or distribution by dividend or 
otherwise to existing shareholders. All such debentures and stock sales 
will be at rates or prices and under conditions

[[Page 58722]]

negotiated, or based upon, or otherwise determined by, competitive 
capital markets.

Interest Rate Swaps and Other Hedging Strategies

    Columbia proposes to enter into hedging transactions to be 
initiated prior to December 31, 2001, to convert all or a portion of 
existing floating rate debt from time-to-time to fixed rate debt or to 
convert all or a portion of existing fixed rate debt from time-to-time 
to floating rate debt using interest rate swaps or other derivative 
products designed for such purposes.

Interest Rate Swaps for Existing Debt

    Columbia proposes to enter into one or more interest rate swaps 
(``Swaps''), and one or more derivative instruments, such as interest 
rate caps, interest rate floors and interest rate collars 
(collectively, ``Derivative Transactions''), with one or more 
counterparties from time-to-time through December 31, 2001, in national 
amounts aggregating not in excess of the amount of debt outstanding at 
any one time.
    Columbia proposes to use two different swap strategies. Under one 
swap strategy, Columbia would agree to make payments of interest to a 
counterparty, payable periodically. The interest would be payable at a 
variable or floating rate index and would be calculated on a notional 
(i.e., principal) amount. In return, the counterparty would agree to 
make payments to Columbia based upon the same notional amount and at an 
agreed upon fixed interest rate. This would be a ``floating-to-fixed 
swap'' on Columbia's part. Under another swap strategy Columbia would 
pay a fixed interest rate and receive a variable interest rate on a 
notional amount. This would be a ``fixed-to-floating swap'' on 
Columbia's part. Columbia will enter into Swaps and/or Derivative 
Transactions only with creditworthy counterparties.

Hedging Interest Rate Risk for Anticipated Debt

    Columbia also seeks authorization to enter into an interest rate 
hedging program (``Hedge Program'') within a limited time prior to the 
issuance of long-term debt securities. The Hedge Program would only be 
undertaken pursuant to the express approval of the Columbia Board of 
Directors and would only be authorized to occur within 90 days of the 
issuance of long-term debt securities.
    The Hedge Program would be utilized to fix and/or limit the 
interest rate risk exposure of any new issuance through: (1) a forward 
sale of exchange-traded U.S. Treasury futures contracts, U.S. Treasury 
securities and/or a forward swap (each a ``Forward Sale''); (2) the 
purchase of put options on U.S. Treasury securities (``Put Options 
Purchase''); (3) a Put Options Purchase in combination with the sale of 
call options on U.S. Treasury securities (``Zero Cost Collar''); or (4) 
some combination of a Forward Sale, Put Options Purchase and/or Zero 
Cost Collar. The program may be executed on-exchange (``On-Exchange 
Trades'') with brokers through the opening of futures and/or options 
positions traded on the Chicago Board of Trade, the opening of over-
the-counter positions with one or more counterparties (``Off-Exchange 
Trades'') or a combination of On-Exchange Trades and Off-Exchange 
Trades. Columbia will determine the optimal structure of the Hedge 
Program at the time of execution. Columbia may decide to lock in 
interest rates and/or limit its exposure to interest rate increases. 
All open positions under the Hedge Program will be closed on or prior 
to the date of the new issuance and Columbia will not, at any time, 
take possession of the underlying U.S. Treasury securities. Further, no 
hedge position will be outstanding for more than 90 days.
    All transactions entered into under the Hedge Program will be bona 
fide hedges of interest rate risk. To prohibit the possibility of 
``speculative'' transactions, each transaction, or set of transactions, 
under the Hedge Program must be approved by the Columbia Hedge 
Committee, consisting of senior executive officers, and authorized by 
resolution of Columbia's Board of Directors prior to its execution.

Equity Financing

    Columbia proposes, through December 31, 2001, to issue equity 
securities in an amount, when combined with the proposed long-term debt 
securities, will not exceed $5 billion. Such issuance would include 
common stock issued pursuant to the Long-Term Incentive Plan where 
options to purchase up to 3 million shares of common stock may be 
issued over a ten-year period, through February 21, 2006, monthly or 
quarterly income preferred securities, rights, options and/or warrants 
convertible into common or preferred stock and common and/or preferred 
stock issued upon the exercise of convertible debt, rights, options, 
warrants and/or similar securities.
    From time-to-time in the future, other employee benefit plans may 
be adopted by Columbia or a divided reinvestment plan or stock purchase 
plan may be adopted, providing for the issuances of common stock. For 
instance, a dividend reinvestment plan and direct stock purchase plan 
allowing sales to persons not already shareholders may be implemented. 
Columbia now proposes to issue and/or sell shares of common stock 
pursuant to the existing plan and similar plan or plans funding 
arrangements hereinafter adopted and to engage in other sales of its 
treasury shares, if any, for reasonable business purposes without any 
additional prior Commission order through December 31, 2001, except 
that the options to purchase shares under the Long-Term Incentive Plan 
may be issued from time-to-time until February 21, 2006. Stock 
transactions of this variety would thus be treated the same as other 
stock transactions permitted pursuant to this proposal. Such 
authorization would supersede the Long-Term Incentive Plan 
authorization.

Other Securities

    In addition to the specific securities for which authorization is 
sought, Columbia also proposes to issue other types of securities that 
it deems appropriate during the period ending December 31, 2001. 
Columbia requests that the Commission reserve jurisdiction over the 
issuance of additional types of securities. Columbia also undertakes to 
file a post-effective amendment which will describe the general terms 
of each such security and request a supplemental order of the 
Commission authorizing the issuance thereof by Columbia.

Intrasystem Financing

    The Maryland Public Service Commission does not exercise 
jurisdiction over the issuance by Columbia Maryland of long or short-
term securities. The Kentucky, Ohio and Pennsylvania utility 
commissions do not exercise jurisdiction over the issuance of short-
term debt. Commission authorization is, therefore, requested for the 
issuance, from time-to-time, prior to December 31, 2001, of short-term 
securities by Columbia Maryland, Columbia Kentucky, Columbia Ohio and 
Columbia Pennsylvania and for the issuance, from time-to-time, prior to 
December 31, 2001, of long-term securities by Columbia Maryland and 
their purchase, in each instance, by Columbia.

Internal Long-Term Financing by Utility Subsidiaries

    Columbia and Columbia Maryland are seeking Commission authorization 
for the sale of long-term debt securities (``Notes'') by Columbia 
Maryland to

[[Page 58723]]

Columbia or the sale of common stock by Columbia Maryland to Columbia 
in a cumulative amount not to exceed $30 million for the period through 
December 31, 2001.
    Columbia Maryland plans to finance part of its 1997-2001 capital 
expenditure programs with funds generated from the sale of Notes and 
common stock to Columbia for cash. Columbia states that the portion of 
the financing to be effected through the sale of stock cannot be 
ascertained at this time. Columbia would continue to finance Columbia 
Maryland to maintain a capital structure in a manner consistent with 
that of a company with an investment grade credit rating.
    The interest rate on the Notes will be the rate, including issuance 
costs, for the most recent long-term debt securities issued by Columbia 
during the previous calendar quarter. If no long-term debt securities 
were issued during the previous calendar quarter, the interest rate 
will be either the estimated new long-term rate that would be in effect 
if Columbia were to issue securities, as projected by a major 
investment bank, or the prevailing market rate for a newly-issued ``A'' 
rated utility bond. The current rate on a newly issued ``A'' rated 25-
30 year utility bond is 8%. A default rate equal to 2% per annum in 
excess of the stated rate on unpaid principal or interest amounts would 
be assessed if any interest or principal payment becomes past due. The 
principal amount of the Notes will be repaid over a term not exceeding 
thirty years.
    The Notes will be issued under a previously authorized loan 
agreement. The loan agreement provides for Columbia Maryland to issue 
either secured or unsecured debt securities to Columbia from time-to-
time in exchange for cash.

Internal Long-Term Financing by Nonutility Subsidiaries

    The Nonutility Subsidiaries propose to issue and Columbia proposes 
to acquire, through December 31, 2001, other types of securities which 
do not qualify for exemption under rule 52. Columbia and the Nonutility 
subsidiaries request that the Commission reserve jurisdiction over the 
issuance of such additional securities. The parties undertake to file a 
post-effective amendment in this proceeding describing the general 
terms of each security and requesting a supplemental order of the 
Commission authorizing the issuance thereof by the subject Nonutility 
Subsidiary.

Continuation of Money Pool/Internal Short-Term Financing

    The Subsidiaries require short-term funds to meet normal working 
capital requirements. It is proposed that the Subsidiaries borrow 
short-term funds from the Money Pool, through December 31, 2001. The 
maximum amount of Money Pool borrowing outstanding for each Subsidiary 
will be determined by Columbia and the Subsidiaries in accordance with 
business needs. Actual short-term financing would be issued based on 
working capital requirements and any interim financing needed to bridge 
between issuances of long-term capital. The maximum short-term debt to 
be issued by Columbia Pennsylvania, Columbia Ohio, Columbia Maryland 
and Columbia Kentucky will not exceed 40% of their total 
capitalization.
    All short-term borrowing will be through the Money Pool with 
Service acting as agent. Columbia may invest in the Money Pool, but 
will not borrow from the Money Pool. Should there be insufficient funds 
in the Money Pool to meet the Subsidiaries' aggregate short-term needs 
for funds, Columbia will borrow or issue short-term securities and 
invest the proceeds in the Money Pool to fund the shortage.
    The cost of money on all short-term advances and the investments 
rate for moneys invested in the Money Pool will be the interest rate 
per annum equal to the Money Pool's weighted average short-term 
investment rate and/or Columbia's short term borrowing rate. Should 
there be no Money Pool investments or Columbia borrowing, the cost of 
money will be the prior month's average Federal Funds rate as published 
in the Federal Reserve Statistical Release, Publication H. 15 (519). A 
default rate equal to 2% per annum above the pre-default rate on unpaid 
principal or interest amounts will be assessed if any interest or 
principal payment becomes past due. For Money Pool participation by new 
direct or indirect subsidiaries engaged in new lines of business, 
Columbia requests that the Commission reserve jurisdiction.

Guarantees

    Columbia and the Nonutility Subsidiaries and any nonutility 
subsidiary established prior to December 31, 2001, request 
authorization to enter guarantee arrangements, obtain letters of 
credit, and otherwise provide credit support with respect to 
obligations of their respective subsidiaries as may be needed and 
appropriate to enable them to carry on in the ordinary course of their 
respective businesses. The maximum aggregate limit on all such credit 
support by Columbia and by all Subsidiaries at any time will be $500 
million. The $500 million of guarantees is in addition to any financing 
requested in this matter. Columbia would charge a cost-based fee for 
its credit support under the guarantee arrangement.

Reduction of Authorized Shares/Dividends

    Columbia Atlantic, Columbia Gulf, Columbia Transmission, Columbia 
Maryland, Service, Columbia Propane, Tristar Capital and Tristar 
Ventures propose to reduce their authorized and outstanding shares of 
common stock to 3,000 shares or less via a reverse stock split. The 
reverse stock split will be accomplished through an amendment to their 
respective certificates of incorporation.
    Based on reducing their respective authorized shares to 3,000 or 
less, the Subsidiaries will save an estimated aggregate amount of 
$125,000 in franchise taxes each year. As a result of this transaction, 
additional capital surplus will be created. It is requested that each 
of the subsidiaries receive authorization to pay dividends from the 
surplus created by the reverse stock split transaction; however, no 
extraordinary dividends are anticipated at this time.

Reincorporation of Columbia Natural

    Columbia Natural proposes to reincorporate in Delaware. Under a 
Plan of Reorganization and Merger, all of the assets and trade 
liabilities of Columbia Natural will be transferred to Columbia Natural 
(DE) in exchange for common stock of Columbia Natural (DE) which would 
simultaneously be transferred to Columbia in exchange for all 
outstanding shares of Columbia Natural, leaving Columbia Natural (DE) 
the surviving company.
    The merger will qualify as a tax-free reorganization under sections 
368(a)(1) (A) and (F) of the Internal Revenue Code of 1986, as amended. 
Columbia Natural (DE) will succeed to all of the rights and assets of 
Columbia Natural and will assume all of its liabilities and 
obligations. The officers and directors of Columbia Natural will become 
the officers and directors of Columbia Natural (DE).

External Nonexempt Financing by Nonutilities

    The Nonutility Subsidiaries are expected to be active in the 
development and expansion of energy-related, nonutility businesses in 
the System. The Nonutility Subsidiaries

[[Page 58724]]

may engage in types of security financing with nonaffiliates which do 
not qualify for the application of Rule 52. The Nonutility 
Subsidiaries, therefore, request that the Commission reserve 
jurisdiction over the issuance of such additional types of securities. 
They also undertake to cause a post-effective amendment to be filed in 
this proceeding which will describe the general terms of each such 
security and request a supplemental order of the Commission authorizing 
the issuance thereof by the subject Nonutility Subsidiary.

Financing Entities

    Columbia and the Nonutility Subsidiaries propose to organize new 
corporations, trusts, partnerships or other entities created to 
facilitate financing through their issue to third parties of monthly 
and quarterly income preferred securities. Columbia and Nonutility 
Subsidiaries seek authority to issue such securities to third parties 
to the extent required under the Act. Additionally, request is made for 
authorization with respect to: (1) The issuance of debentures or other 
evidences of indebtedness by Columbia to a financing entity in return 
for the proceeds of the financing; and (2) the acquisition by Columbia 
of voting interests or equity securities issued by the financing entity 
to establish Columbia's ownership of the financing entity. Columbia and 
the Nonutility Subsidiaries also request authorization to enter into 
expense agreements with their respective financing entities, pursuant 
to which they would agree to pay all expenses of such entity.

Financing of EWGs and FUCOs

    Columbia currently owns no equity interests in either EWGs or 
FUCOs. Sections 32 and 33 of the Act permit a registered holding 
company to acquire and maintain interests in one or more EWGs and FUCOs 
without the need to apply for or receive approval from the Commission. 
To the extent that funds for one or more projects are required in 
excess of internally generated funds, Columbia hereby requests 
Commission authorization to invest proceeds from the proposed 
securities to be issued herein for the purpose of financing the 
acquisition of EWGs and FUCOs in compliance with rule 53(a)(1) such 
that Columbia's aggregate investment at any one time during the period 
covered by this Application will not exceed 50% of its ``consolidated 
retained earnings,'' as defined in rule 53(a)(1)(ii).

Gulf Power Company (70-8947)

    Gulf Power Company (``Gulf Power''), 500 Bayfront Parkway, 
Pensacola, Florida 32501, an electric utility subsidiary of The 
Southern Company, a registered holding company, has filed a declaration 
under sections 6(a), 7 and 12(d) of the Act and rules 44 and 54 
thereunder.
    As described in more detail below, Gulf Power proposes to issue and 
sell from time to time, prior to January 1, 2004, short-term and/or 
term loan notes to lenders, commercial paper to or through dealers and/
or issue non-negotiable promissory notes to public entities for their 
revenue anticipation notes in an aggregate principal amount at any one 
time outstanding of up to $300 million. Gulf Power states that any 
proposed borrowings may be, and any such borrowings in excess of the 
maximum aggregate principal amount of unsecured debt permitted under 
its charter and under the exemption afforded by section 6(b) of the Act 
would be, secured by a subordinated lien on certain assets of Gulf 
Power.
    Gulf Power proposes to borrow from certain banks or other lending 
institutions. Such borrowings will be evidenced by notes to be dated as 
of the date of such borrowings to mature in not more than 10 years 
after the date of issue, or by ``grid'' notes evidencing all 
outstanding borrowings from each lender to be dated as of the date of 
the initial borrowing to mature not more than 10 years after the date 
of issue. Gulf Power proposes that it may provide that any note 
evidencing such borrowings may not be prepayable, or that it may be 
prepaid with payment of a premium that is not in excess of the stated 
interest rate on the borrowing to be prepaid, which premium in the case 
of a note having a maturity of more than one year may thereafter 
decline to the date of the note's final maturity.
    Borrowings will be at the lender's prevailing rate offered to 
corporate borrowers of similar quality. Such rates will not exceed the 
prime rate or (i) the London Interbank Offered Rate plus up to 2%, (ii) 
the lender's certificate of deposit rate plus up to 1\3/4\% or (iii) a 
rate not to exceed the prime rate plus 1% to be established by bids 
obtained from the lenders prior to a proposed borrowing; provided, 
however, that with respect to borrowings with a maturity in excess of 
one year, the rate will not exceed the yield for a comparable maturity 
Treasury note plus one percent.
    Compensation for the credit facilities may be provided by fees of 
up to \1/2\ of 1% per annum of the amount of the facility. Compensating 
balances may be used in lieu of fees to compensate certain of the 
lenders.
    Gulf Power also may make short-term borrowings in connection with 
the financing of certain pollution control facilities through the 
issuance by public entities of their revenue bond anticipation notes. 
Under an agreement with the public entity, Gulf Power effectively would 
borrow the proceeds of the sale of the revenue bond anticipation notes, 
having a maturity of not more than one year after the date of issue, 
for which Gulf Power may issue a non-negotiable promissory note. Such 
note would provide for payments to be made at times and in amounts to 
correspond to payments for the principal, premium, if any, and 
interest, which shall not exceed the prime rate, on such revenue bond 
anticipation notes, whenever and in whatever manner the same shall 
become due, whether at stated maturity, upon redemption or declaration 
of otherwise. Gulf Power requests that the Commission reserve 
jurisdiction over the issuance by Gulf Power of its non-negotiable 
promissory notes pending completion of the record.
    Gulf Power also proposes to issue and sell commercial paper to or 
through dealers from time to time prior to January 1, 2004. Such 
commercial paper will be in the form of promissory notes with varying 
maturities not to exceed nine months. Actual maturities will be 
determined by market conditions, the effective interest costs and Gulf 
Power's anticipated cash flow, including the proceeds of other 
borrowings, at the time of issuance. The commercial paper notes will be 
issued in denominations of not less than $50,000 and will not by their 
terms be prepayable prior to maturity.
    The commercial paper will be sold by Gulf Power directly to or 
through a dealer or dealers (``Dealer''). The discount rate (or the 
interest rate in the case of interest-bearing notes), including any 
commissions, will not be in excess of the discount rate per annum (or 
equivalent interest rate) prevailing at the date of issuance for 
commercial paper of comparable quality of the particular maturity sold 
by issuers thereof to commercial paper dealers. No commission fee will 
be payable in connection with the issuance and sale of commercial 
paper, except for a commission not to exceed \1/8\ of 1% per annum 
payable to the Dealer in respect of commercial paper sold through the 
Dealer as principal. The Dealer will reoffer such commercial paper at a 
discount rate of up to \1/8\ of 1% per annum less than the prevailing 
interest

[[Page 58725]]

rate to Gulf Power or at an equivalent cost if sold on an interest-
bearing basis.
    Pursuant to order dated May 9, 1994 (HCAR No. 26049), Gulf Power is 
authorized to effect certain short-term borrowings prior to January 1, 
1997. At September 30, 1996, borrowings in the aggregate principal 
amount of approximately $64.1 million were outstanding pursuant to such 
authorization. Gulf proposes that the authorization sought pursuant to 
this declaration would supersede and replace authorizations in file 
number 70-8397 effective immediately upon the date of the Commission's 
order authorizing this declaration.
    The proceeds from the proposed borrowings will be used by Gulf 
Power for working capital purposes, including the financing in part of 
its construction program.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-29414 Filed 11-15-96; 8:45 am]
BILLING CODE 8010-01-M