[Federal Register Volume 62, Number 79 (Thursday, April 24, 1997)]
[Notices]
[Pages 20040-20043]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-10615]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-26708]


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

April 18, 1997.
    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 May 12, 1997, 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.

New Century Energies, Inc., et al. (70-9007)

    New Century Energies, Inc., a Delaware corporation currently not 
subject to the Act (``NCE''),\1\ Public Service Company of Colorado 
(``PSCo''), Cheyenne Light, Fuel and Power Company (``Cheyenne''), New 
Century Services, Inc. (``NCE Services''), WestGas Interstate Inc. 
(``WGI''), New Century Enterprises, Inc. (``Enterprises''), PS Colorado 
Credit Corporation (``PSCCC''), Natural Fuels Corporation, PSRI 
Investments, Inc., Green & Clear Lakes Company, 1480 Welton, Inc., and 
e prime, inc. (``e prime'') and its subsidiary companies, each of 1225 
Seventeenth Street, Denver, Colorado 80202, and Southwestern Public 
Service Company (``SPS''), Quixx Corporation (``Quixx'') and its 
subsidiary companies, and Utility Engineering Corporation (``UE'') and 
its subsidiary companies, each of Tyler at Sixth, Amarillo, Texas 79101 
(collectively, ``Applicants''), have filed an application-declaration 
(``Application'') under sections 6(a), 7, 9(a), 10, 12(b), and 12(c) of 
the Act and rules 42, 43, 45, 53 and 54 under the Act. The Applicants 
seek authorization to engage in various financing and related 
transactions through December 31, 1999 (the ``Authorization Period''), 
unless otherwise noted.
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    \1\ NCE previously filed an application-declaration requesting 
authorization under section 9(a)(2) of the Act to acquire all of the 
outstanding voting securities of PSCo, SPS, and Cheyenne, each a 
public utility company (collectively, ``Utility Subsidiaries''), and 
for related transactions (File No. 70-8787) (``Merger U-1''). Upon 
consummation of the transactions described in the Merger U-1, NCE 
will register as a holding company under the Act. Excluding the 
Utility Subsidiaries, NCE's direct and indirect subsidiaries are 
``Nonutility Subsidiaries.'' The Utility Subsidiaries, together with 
Nonutility Subsidiaries, are ``Subsidiaries.''
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    As described more fully below, the Applicants seek authority for: 
(i) External financings by NCE, the Utility Subsidiaries and certain 
Nonutility Subsidiaries; (ii) intrasystem financing, including 
guarantees, between NCE and its Subsidiaries; and between Subsidiaries; 
(iii) the issuance of types of securities not exempt under rules 45 and 
52; (iv) the Utility Subsidiaries to enter into interest rate swaps and 
other risk management instruments; (v) the Subsidiaries to alter their 
capital stock; (vi) the Subsidiaries' formation of new financing 
entities and the issuance of securities and related guarantees by the 
new and one existing financing entities; and (vii) the retention of 
existing financing arrangements.
    The proceeds from the financing will be used for general corporate 
purposes, including (i) Capital expenditures of NCE and its 
Subsidiaries, (ii) the repayment, redemption, refunding or purchase of 
debt and capital stock of NCE or its Subsidiaries without the need for 
prior Commission approval or pursuant to rule 42 or a successor rule, 
(iii) working capital requirements of the NCE system, (iv) investments 
in exempt wholesale generators (``EWGs'') and foreign utility companies 
(``FUCOs''), as defined in sections 32 and 33 of the Act, respectively, 
and (v) other lawful corporate purposes. The Applicants also represent 
that proceeds from the proposed financings will be used only in 
connection with their respective existing businesses or to make an 
acquisition that is exempt from the requirement of prior Commission 
approval.

1. External Financing by NCE

a. Common Stock
    NCE proposes during the Authorization Period to issue and sell 
shares of its common stock, par value $1.00 per share, for an aggregate 
offering price of up to $175 million. NCE also proposes to issue and 
sell additional shares of its common stock for an aggregate offering 
price of up to $360 million, the proceeds of which will be used by NCE 
to purchase PSCo's interest in Yorkshire Electric Group, plc.\2\ In 
addition, NCE proposes to issue up to an additional 30 million shares 
of its common stock (and awards or options for the common stock) to 
fund benefit and dividend reinvestment plans (collectively, ``Stock 
Plans''), described below, for a period of ten years from the date of 
the Commission's order.
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    \2\ New Century International, Inc., a wholly-owned subsidiary 
of PSCo, owns a 50% interest in Yorkshire Power Group Limited which 
through its wholly-owned subsidiary, Yorkshire Holdings plc, has 
made a tender offer to acquire Yorkshire Electricity Group plc, a 
regional electric company operating in the United Kingdom.
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    Securities may be sold through underwriters or dealers, through 
agents, directly to a limited number of purchasers or a single 
purchaser, or directly to employees (or to trusts established for their 
benefit) and other shareholders through NCE's Stock Plans.
    NCE common stock may be issued and sold pursuant to underwriting 
agreements of a type generally standard in the industry. Public 
distributions may be pursuant to negotiation with underwriters, dealers 
or agents or effected through competitive bidding among underwriters. 
In addition, sales may be made through private

[[Page 20041]]

placements or other non-public offerings to one or more persons. All 
such common stock sales will be at rates or prices and under conditions 
negotiated or based upon, or otherwise determined by, competitive 
capital markets.
    PSCo and SPS currently have seven employee benefit plans and under 
which they issue and/or sell common stock to their employees. Following 
the Merger, five of these plans, as well as a divided reinvestment 
plan, may provide for the issuance and/or sale of NCE common stock; the 
remaining two benefit plans will be terminated. The benefit plans 
include: (1) Southwestern Public Service Company Employee Investment 
Plan, which permits the employees of SPS and its subsidiaries to make 
contributions, matched by SPS, to be invested in one or more investment 
accounts, including an NCE common stock fund; (2) Southwestern Public 
Service Company Directors' Deferred Compensation Plan, which permits 
directors to defer all or a portion of their annual fees and credit 
those fees to either a dollar account or an NCE common stock account; 
(3) Southwestern Public Service 1989 Stock Incentive Plan, which 
enables SPS to encourage key employees to increase their company 
ownership through the grant of stock option awards (both incentive and 
non-qualified), restricted stock, and the delivery of shares in lieu of 
cash compensation to eligible employees; (4) Public Service Company of 
Colorado Employee's Savings and Stock Ownership Plan, a defined 
contribution plan offered to all eligible employees, under which 
employees may contribute a maximum percentage of their compensation (in 
tax deferred and after-tax dollars, with PSCo matching certain tax 
deferred contributions) for investment in any of six investment funds, 
including purchase of NCE common stock after the Merger; and (5) PSCo 
Omnibus Incentive Plan, designed to reward management officials and 
generally benefit PSCo. NCE anticipates adopting one or more additional 
plans, including an Omnibus Stock Incentive Plan, which will provide 
for the issuance and/or sale of NCE common stock, stock options and 
stock awards to a group which may include directors, officers and 
employees.
    NCE may fund the Stock Plans and the Omnibus Stock Incentive Plan 
with newly issued common stock, treasury shares or shares purchased in 
the open market, and may engage in sales of treasury shares for general 
business purposes.
b. Short-term Debt
    NCE proposes from time to time through the Authorization Period to 
issue short-term debt aggregating not more than $100 million 
outstanding at any one time. In the vent that PSCCC becomes a direct 
subsidiary of NCE, however, NCE proposes to increase its short-term 
debt by an additional $125 million for the purpose of providing 
liquidity for PSCCC, as described below.\3\
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    \3\ PSCCC currently finances PSCO's accounts receivable and fuel 
inventory. In the Merger U-1, PSCCC proposes to continue providing 
these services to PSCo and to offer them to NCE associates; PSCCC 
also proposes in the Merger U-1 to finance accounts receivable for 
nonassociate utilities.
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    NCE may sell commercial paper, from time to time, in established 
domestic or European commercial paper markets. The commercial paper 
would be sold to dealers at the discount rate prevailing at the date of 
issuance for commercial paper of comparable quality and maturities sold 
to commercial paper dealers generally. It is expected that the dealers 
acquiring NCE's commercial paper will reoffer it at a discount to 
corporate and institutional investors, such as commercial banks, 
insurance companies, pension funds, investment trusts, foundations, 
colleges and universities, finance companies and nonfinancial 
corporations, and, with respect to European commercial paper, 
individual investors.
    NCE proposes to establish back-up bank lines in an aggregate 
principal amount not to exceed the amount of authorized commercial 
paper. NCE would borrow, repay and reborrow under these lines from time 
to time, without collateral, to the extent that it becomes 
impracticable to sell commercial paper due to market conditions or 
otherwise. Loans under these lines will have a maturity date not more 
than one year from the date of each borrowing.
    Similarly to NCE, PSCCC finances its activities by selling 
commercial paper in established commercial paper markets.\4\ Upon PSCCC 
becoming a direct subsidiary of NCE, NCE proposes to increase its then 
existing lines of credit and add PSCCC as a borrower under them or 
establish, together with PSCCC, one or more new lines of credit to 
provide credit support for PSCCC's commercial paper. Such lines of 
credit will also provide for direct borrowings thereunder by PSCCC.
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    \4\ Applicants state that PSCCC's issuance of short-term debt to 
finance its authorized activities, so long as it is nonrecourse to 
NCE, is exempt under rule 52.
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    NCE may engage in other types of short-term debt financing 
generally available to borrowers with investment grade credit ratings 
as it may deem appropriate in light of its needs and market conditions 
at the time of issuance.

2. Utility Subsidiary External Financings

a. Cheyenne
    Cheyenne proposes to issue short-term debt aggregating not more 
than $25 million outstanding at any one time during the Authorization 
Period. Cheyenne may sell commercial paper in established domestic or 
European commercial paper markets in the same manner as NCE. Similarly, 
Cheyenne may also maintain backup lines of credit that, aggregated, do 
not exceed the amount of commercial paper. Cheyenne would borrow, repay 
and reborrow under such lines from time to time, without collateral, to 
the extent that it becomes impracticable to sell commercial paper due 
to market conditions or otherwise. Loans under these lines shall have a 
maturity date not more than one year from the date of each borrowing.
b. Interest Rate Swaps
    The Utility Subsidiaries request authority to enter into, perform, 
purchase and sell financial instruments intended to manage the 
volatility of interest rates, including but not limited to interest 
rate swaps, caps, floors, collars and forward agreements or any other 
similar agreements. Each Utility Subsidiary proposes to employ interest 
rate swaps as a means of prudently managing the risk associated with 
outstanding debt issued pursuant to this authorization or an applicable 
exemption by, in effect, (i) Converting variable rate debt to fixed 
rate debt, (ii) converting fixed rate debt to variable rate debt, (iii) 
limiting the impact of changes in interest rates resulting from 
variable rate debt and/or (iv) providing an option to enter into 
interest rate swap transactions in future periods for planned issuances 
of debt securities. In no case will the notional principal amount of 
any interest rate swap exceed that of the underlying debt instrument 
and related interest rate exposure, i.e., each Utility Subsidiary will 
not engage in ``leveraged'' or ``speculative'' transactions. The 
underlying interest rate indices of such interest rate swaps will 
closely correspond to the underlying interest rate indices of each 
Utility Subsidiary's debt to which the interest rate swap relates. Each 
Utility Subsidiary will only enter into interest

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rate swap agreements with counterparties whose senior secured debt 
ratings, as published by Standard & Poor's Corporation, are greater 
than or equal to ``BBB+'', or an equivalent rating from Moody's 
Investor Service, Inc., Fitch Investor Service or Duff & Phelps.

3. Nonutility Subsidiary External Financings

    The Nonutility Subsidiaries expect to continue, as part of the NCE 
system, to engage in the development and expansion of their businesses 
and to finance authorized activities. The Applicants anticipate that 
the majority of such financings will be exempt from prior Commission 
authorization under rule 52(b).
    The Applicants seek authorization, however, for PSCCC to continue 
to borrow under its existing private unsecured medium-term note 
program, which provides for the issuance of medium-term notes with 
maturities from nine months to seven years. As of December 31, 1996, 
notes aggregating $100 million are outstanding. The Applicants propose 
that PSCCC be permitted to issue notes under the program in an 
aggregate principal amount not to exceed $150 million outstanding at 
any one time.

4. Intrasystem Financing

    The Applicants propose to engage in intrasystem financings in an 
aggregate amount that will not exceed $300 million outstanding at any 
one time during the Authorization Period. The $300 million limit 
excludes financings that are exempt under rules 45 and 52 under the 
Act. Under the proposed intrasystem financing, NCE may acquire 
securities issued by its Subsidiaries, and Subsidiaries may acquire 
securities issued by other Subsidiaries.

5. Guarantees

    NCE also requests authorization to enter into guarantees, obtain 
letters of credit, enter into expense agreements or otherwise provide 
credit support for the obligations of its system companies, in an 
aggregate principal amount not to exceed $300 million outstanding at 
any one time during the Authorization Period. Guarantees that are 
exempt pursuant to rules under the Act are not included in the limit. 
Credit support may be in the form of committed bank lines of credit, 
including arrangements similar to those of PSCo described below.
    In addition, PSCo proposes to provide guarantees and other credit 
support to PSCCC and certain other subsidiaries under an existing 
credit facility with several banks that will provide $450 million in 
committed banks lines of credit. The credit facility is used primarily 
to support the issuance of commercial paper by PSCo and PSCCC. The 
credit facility also provides, however, for direct borrowings by 
Cheyenne, 1480 Welton, Inc., Fuelco, e prime and PSRI, and the 
borrowings are guaranteed by PSCo. PSCo and its subsidiaries propose to 
continue the credit facility and guarantees, or any similar facility 
and guarantee program. The Applicants state, however, that the amount 
of PSCo's guarantee authority under the credit facility will be reduced 
if and to the extent NCE provides guarantees or credit support. In 
addition, the applicants state that PSCCC's borrowings under the credit 
facility are not guaranteed by PSCo.
    The Subsidiaries propose to enter into guarantees and other credit 
support arrangements with each other, similar to those described with 
respect to NCE, in an aggregate principal amount that will not exceed 
$50 million outstanding at any one time during the Authorization 
Period.
    The Applicants state that the aggregate limit for guarantees and 
other credit support arrangements excludes such arrangements that are 
exempt pursuant to rules under the Act. The Applicants also propose 
that the aggregate limits for intrasystem guarantees and other credit 
support obligations not be included in the aggregate limits applicable 
to the external or other intrasystem financings.

6. Other Securities

    NCE, the Utility Subsidiaries and the Nonutility Subsidiaries state 
that it may become necessary or desirable during the Authorization 
Period to issue and sell, to associate and nonassociate companies, 
other types of securities (``Other Securities'') that are not exempt 
under rules 45 and 52 to minimize financing costs or to obtain new 
capital under changing market conditions. The Applicants request that 
the Commission reserve jurisdiction over the issuance and amount of 
such Other Securities pending completion of the record.

7. Changes in Capital Stock of Subsidiaries

    The Applicants state that they cannot ascertain at this time the 
portion of an individual Subsidiary's aggregate financing to be 
effected through the sale of capital stock to NCE or other immediate 
parent company during the Authorization Period. They assert that 
circumstances may arise where the proposed sale of capital stock would 
exceed the then authorized capital stock of such Subsidiary. They also 
note that the Subsidiary may choose to use other forms of capital 
stock. As needed to accommodate such proposed transactions and to 
provide for future issues, the Applicants propose that each Subsidiary 
be authorized to increase the amount of its authorized capital stock by 
an amount that it deems appropriate, and to change the par value, or 
change between par and no-par stock, without additional Commission 
approval.

8. Financing Entities

    The Subsidiaries also propose to organize new corporations, trusts, 
partnerships or other entities created to facilitate financings through 
the issuance, to third parties, of authorized or otherwise exempt 
income preferred securities or other securities. To the extent not 
exempt under rule 52, the Subsidiaries request authority for the 
financing entities to issue securities to third parties. Additionally, 
the Subsidiaries request authorization to (i) Issue debentures or other 
evidences of indebtedness to a financing entity in return for the 
proceeds of the financing, (ii) acquire voting interests or equity 
securities issued by the financing entity to establish the Subsidiary's 
ownership of the financing entity (the equity portion of the entity 
generally being created through a capital contribution or the purchase 
of equity securities, ranging from 1 to 3 percent of the capitalization 
of the financing entity) and (iii) guarantee the financing entity's 
obligations in connection with the financing activities. Each 
Subsidiary also requests authorization to enter into expense agreements 
with its respective financing entity, pursuant to which it would agree 
to pay all expenses of such entity. The Applicants state that any 
amounts issued by financing entities to third parties will be included 
in the overall external financing limitation for the immediate parent 
of the financing entity. However, the indebtedness issued by a 
Subsidiary to a financing entity will not count against the intrasystem 
financing limit set forth herein. Applicants also request that SPS be 
authorized to maintain the financing transactions with its existing 
financing entity, Southwestern Public Service Capital I, a wholly owned 
trust, that issued trust preferred securities and loaned the proceeds 
to SPS.

9. Financing EWGs and FUCOs

    NCE proposes, to the extent internally generated funds are not 
available, to invest proceeds from the financings in EWGs and FUCOs and 
to guarantee the obligations of EWGs or FUCOs. NCE states that, unless 
otherwise authorized by the Commission, its aggregate

[[Page 20043]]

investment in EWGs and FUCOs will not exceed 50% of its consolidated 
retained earnings, as defined in rule 53, and that at the time of each 
issuance, the proceeds of which will be used to invest in EWGs or 
FUCOs, NCE will be in compliance with rule 53.
    The authorization requested by the Applicants would be subject to 
the following conditions: (1) NCE's (and each Utility Subsidiary's) 
common equity will be at least 30% of its consolidated capitalization, 
as adjusted to reflect subsequent events that affect capitalization; 
(2) the effective cost of money on short-term debt financings may not 
exceed 300 basis points over the London interbank offered rate; (3) the 
effective cost of money on preferred stock and other fixed income 
oriented securities may not exceed 500 basis points over the interest 
rate on 30-year U.S. Treasury securities; (4) issuance expenses in 
connection with an offering of securities, including any underwriting 
fees, commissions, or other similar compensation, may not exceed 5% of 
the total amount of the securities being issued; and (5) the aggregate 
amount of external financing, not including existing financing 
arrangements, will not exceed (i) $535 million from NCE's issuance and 
sale of common stock, excluding amounts from the issuance of up to 30 
million shares of common stock to fund the Stock Plans, (ii) $225 
million from NCE's issuance and sale of short-term debt, (iii) $25 
million from Cheyenne's issuance and sale of short-term debt, and (iv) 
$150 million from PSCCC's issuance and sale of medium-term notes; (6) 
the aggregate amount of guarantees will not exceed (i) $300 million for 
NCE to guarantee or provide credit support for obligations of its 
Subsidiaries, (ii) $450 million for PSCs to guarantee or provide credit 
support for certain of its subsidiaries, and (iii) $50 million for 
Subsidiaries to guarantee or provide credit support to other 
Subsidiaries; and (7) intrasystem financing will not exceed $300 
million for NCE to finance its Subsidiaries, and Subsidiaries to 
finance Subsidiaries.
    The Applicants request authorization to deviate from the 
Commission's Statement of Policy Regarding First Mortgage Bonds, HCAR 
No. 13105 (Feb. 16, 1956), as amended by HCAR No. 16369 (May 8, 1969), 
and Statement of Policy Regarding Preferred Stock, HCAR No. 13106 (Feb. 
16, 1956), as amended by HCAR No. 16758 (June 22, 1970), as applicable, 
with respect to the proposed financings.

American Electric Power Co., et al. (70-9021)

    American Electric Power Company, Inc. (``AEP''), a registered 
holding company, and AEP Resources, Inc. (``AEP Resources''), a 
nonutility subsidiary company of AEP, both of 1 Riverside Plaza, 
Columbus, Ohio, 43215, have filed a declaration under sections 6(a), 7, 
12(b), 32 and 33 of the Act and rules 45, 53 and 54 thereunder.
    AEP, through its direct and indirect subsidiary companies, is 
engaged in development activities relative to exempt wholesale 
generators (``EWGs''), as defined in section 32 of the Act, and foreign 
utility companies (``FUCOs''), as defined in section 33 of the Act.
    AEP is authorized under several Commission orders (``Orders'') to 
finance these activities through the issuance and sale of debt and 
equity securities and through the issuance of guarantees relative to 
the obligations of certain subsidiary companies.\5\
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    \5\ HCAR No. 24898 (June 6, 1989); HCAR No. 25905 (Oct. 8, 
1993); HCAR No. 25984 (Feb. 4, 1994); HCAR No. 26200 (Dec. 22, 
1994); HCAR No. 26516 (May 10, 1996).
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    Under the Orders, AEP is authorized to use the proceeds of common 
stock sales and borrowings to finance the acquisition of interests in 
EWGs and FUCOs and to issue guarantees relative to the obligation of 
such entities, provided that the sum of the guarantees and the net 
proceeds of common stock sales and borrowing used for this purpose, 
together with AEP's aggregate investment in all EWG's and FUCOs, shall 
not exceed 50% of its consolidated retained earnings.
    AEP and AEP Resources request that the Commission authorize them to 
issue securities for the purpose of financing the acquisition, directly 
or indirectly, of interests in EWGs and FUCOs, and to issue guarantees 
relative to the obligations of such entities, in an aggregate amount 
that, together with AEP's aggregate investment in all EWGs and FUCOs, 
would not exceed 100% of its consolidated retained earnings.
    The consolidated retained earnings of AEP through December 31, 1996 
were about $1.508 billion. Thus, under rule 53(a), it was authorized to 
invest up to about $754 million in EWGs and FUCOs. Although AEP had 
aggregate investments of about $1 million through December 31, 1996, in 
February 1997, it committed about $360 million to its investment in 
Yorkshire Electricity Group plc. In addition, it has $110 million 
designated for another FUCO, of which about $11.5 million was invested 
through March 13, 1997. AEP is considering further investment 
opportunities, some of which would require an investment in excess of 
the approximately $284 million that it would be authorized to invest 
under rule 53(a).

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-10615 Filed 4-23-97; 8:45 am]
BILLING CODE 8010-01-M