[Federal Register Volume 62, Number 197 (Friday, October 10, 1997)]
[Notices]
[Pages 53034-53036]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-26905]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-26763]


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

October 3, 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 October 27, 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.

Columbia Gas System, Inc. (70-8925)

    The Columbia Gas System, Inc. (``Columbia''), a registered holding 
company, its service company subsidiary, Columbia Gas System Service 
Corporation, its liquified natural gas subsidiary, Columbia LNG 
Corporation, its trading subsidiary, Columbia Atlantic Trading 
Corporation, all located at 12355 Sunrise Valley Drive, Suite 300, 
Reston, Virginia 20191-3458; Columbia's five distribution subsidiaries, 
Columbia Gas of Ohio, Inc., Columbia Gas of

[[Page 53035]]

Pennsylvania, Inc., Columbia Gas of Kentucky, Inc., Columbia Gas of 
Maryland, Inc., Commonwealth Gas Services, Inc., all located at 200 
Civic Center Drive, Columbus, Ohio 43215; Columbia's two transmission 
subsidiaries, Columbia Gas Transmission Corporation and Columbia Gulf 
Transmission Company, located at 1700 MacCorkle Avenue, S.E., 
Charleston, West Virginia 25314; Columbia's exploration and production 
subsidiary, Columbia Natural Resources, Inc., 900 Pennsylvania Avenue, 
Charleston, West Virginia 25302; Columbia's propane distribution 
subsidiaries, Commonwealth Propane, Inc. and Columbia Propane 
Corporation, both located at 9200 Arboretum Parkway, Suite 140, 
Richmond, Virginia 23236; Columbia's energy services and marketing 
subsidiaries, Columbia Energy Services Corporation (``Columbia 
Energy''), Columbia Service Partners, Inc. and Columbia Energy 
Marketing Corporation, all located at 121 Hill Pointe Drive, Suite 100, 
Canonsburg, Pennsylvania 15317; Columbia's network services subsidiary, 
Columbia Network Services Corporation (``CNS'') and CNS' subsidiary, 
CNS Microwave, Inc., both located at 1600 Dublin Road, Columbus, Ohio 
43215-1082; and Columbia's other subsidiaries, Tristar Ventures 
Corporation, Tristar Capital Corporation, 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, 
have filed a post-effective amendment to their joint application-
declaration under sections 6(a), 7, 9(a), 10 and 12(b) of the Act and 
rules 45 and 53.
    By order dated December 23, 1996 (HCAR No. 26634) (``Order''), the 
Commission authorized the Applicants to establish their internal and 
external financing program, through December 31, 2001. In particular, 
the Order authorized Columbia, its existing nonutility subsidiaries and 
any nonutility subsidiaries established before December 31, 2001, to 
enter into guarantee arrangements, obtain letters of credit, and 
otherwise provide credit support for their respective subsidiaries in 
amounts of up to $500 million (``Guaranties''). Columbia and its 
existing and future nonutility subsidiaries now propose to increase the 
amount of Guaranties to $2 billion.
    Columbia wants to increase its investments in non-rate regulated 
businesses, particularly gas marketing operations, and will use the 
Guaranties to support these activities. Columbia notes that, in May 
1997, Columbia Energy entered into an agreement to purchase and market 
the offshore natural gas production for the Kerr-McGee Corporation 
(``Kerr-McGee'') of approximately 250 Mmcf per day. Columbia Energy 
will mange all of Kerr-McGee's United States natural gas marketing 
activities including scheduling, nominating, balancing pipeline 
transportation and providing financial risk management services. Also, 
Columbia Energy purchased Pennunion Energy Services L.L.C. 
(``Pennunion''), an energy marketing subsidiary of the Pennzoil 
Company. The Pennunion acquisition will add sales of 2. Bcf per day.

Conectiv, Inc. (70-9069)

    Conectiv, Inc. (``Conectiv''), 800 King Street, Wilmington, 
Delaware 19899, a Delaware corporation not currently subject to the 
Act, has filed an application-declaration under sections 6(a), 7, 8, 
9(a), 10, 11, and rules 80 through 91, 93 and 94 under the Act.
    Conectiv proposes to acquire, by means of the Mergers described 
below (``Mergers''), all of the issued and outstanding common stock of 
Delmarva Power & Light Company (``Delmarva'') and Atlantic Energy, Inc. 
(``Atlantic''). Conectiv makes four other requests. Following the 
Mergers, Conectiv will register under section 5 of the Act.
    First, Conectiv requests that Support Conectiv (``Support 
Conectiv'') be designated as a subsidiary service company under rule 88 
of the Act.\1\ Second, Conectiv requests approval of the terms of the 
service agreement among companies in the Conectiv system and Support 
Conectiv. Third, Conectiv seeks Commission approval for it to acquire 
the gas properties of Delmarva and to continue to operate Delmarva as a 
combination utility. Fourth, Conectiv seeks Commission approval for it 
to acquire the nonutility activities, businesses and investments of 
Delmarva and Atlantic.
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    \1\ Support Conectiv will be incorporated before the 
consummation of the Mergers to serve as the service company for the 
Conectiv system.
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    Delmarva is a public utility company which provides electric 
service in Delaware, Maryland and Virginia and gas service in Delaware. 
As of December 31, 1996, Delmarva provided electric utility service to 
approximately 442,000 customers in an area encompassing about 6,000 
square miles in Delaware (253,000 customers), Maryland (169,000 
customers) and Virginia (20,000 customers), and gas utility service to 
approximately 100,000 customers in an area consisting of about 275 
square miles in northern Delaware.
    For the year ended December 31, 1996, Delmarva's operating revenues 
on a consolidated basis were approximately $1,160 million, of which 
approximately $981 million were derived from electric operations, $114 
million from gas operations and $65 million from other operations. 
Consolidated assets of Delmarva and its subsidiaries at December 31, 
1996 were approximately $2,979 million, consisting of approximately 
$2,536 million in identifiable electric utility property, plant and 
equipment; approximately $219 million in identifiable gas utility 
property, plant and equipment; and approximately $224 million in other 
corporate assets.
    As of December 31, 1996 Delmarva owned gas property consisting of a 
liquefied natural gas plant located in Wilmington, Delaware with a 
storagecapacity of 3.045 million gallons and a maximum daily sendout 
capacity of 49,898 Mcf per day. This facility is used primarily as a 
peak-shaving facility for Delmarva's gas customers. Delmarva also owns 
four natural gas city gate stations at various locations in its gas 
service territory. These stations have a total contract sendout 
capacity of 125,000 Mcf per day. Delmarva has 111 miles of transmission 
mains (including 11 miles of joint-use gas pipelines that are used 10% 
for gas distribution and 90% for electricity production), 1,539 miles 
of distribution mains and 1,091 miles of service lines. The Delmarva 
gas facilities are located exclusively in New Castle County, Delaware.
    Delmarva has seven direct nonutility subsidiaries: Delmarva 
Industries, Inc., Delmarva Energy Company, Delmarva Services Company, 
Conectiv Services, Inc., Conectiv Communications, Inc., Delmarva 
Capital Investments,Inc. and East Coast Natural Gas Cooperative, L.L.C. 
(``ECNG'').\2\
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    \2\ Delmarva Industries, Inc. and Delmarva Energy Company 
participate in oil and gas exploration and development 
opportunities.
    Delmarva Services Company owns and finances an office building 
that it leases to Delmarva and/or its affiliates. Delmarva Services 
Company also owns approximately 2.9% of the common stock of 
Chesapeake Utilities Corporation, a publicly-traded gas utility 
company with gas utility operations in Delaware, Maryland and 
Florida.
    Conectiv Services, Inc. acquires and operates service businesses 
primarily involving heating, ventilation and air conditioning sales, 
installation and servicing, and other energy-related activities.
    Conectiv Communications, Inc. provides a full-range of retail 
and wholesale telecommunications services.
    Delmarva Capital Investments, Inc. is a holding company for a 
variety of unregulated investments.
    ECNG is a limited liability company in which Delmarva holds a 
\1/7\th interest, is engaged in gas related activities.

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[[Page 53036]]

    On December 31, 1996, Delmarva's nonutility subsidiaries and 
investments constituted approximately 4 percent of the consolidated 
assets of Delmarva and its subsidiaries.
    Delmarva also has a nonutility subsidiary trust, Delmarva Power 
Financing I (``DPF I''), which was formed in 1996 in connection with 
the issuance by Delmarva of Cumulative Quarterly Income Preferred 
Securities.
    Atlantic is a public utility holding company that claims an 
exemption from regulation by the Commission under section 3(a)(1) from 
all provisions of the Act except section 9(a)(2).
    The principal subsidiary of Atlantic is Atlantic City Electric 
Company (``ACE''). ACE is itself a holding company which claims 
exemption from regulation by the Commission under section 3(a)(1) from 
all provisions of the Act except section 9(a)(2). ACE is engaged in the 
generation, transmission, distribution and sale of electric energy. ACE 
serves a population of approximately 476,000 customers in a 2,700 
square-mile area of Southern New Jersey.
    ACE currently has one utility subsidiary, Deepwater Operating 
Company (``Deepwater''). Deepwater operates generating facilities in 
New Jersey for ACE. Deepwater owns no physical assets. Prior to the 
closing of the Mergers, the employees of Deepwater will become 
employees of ACE. ACE also has a nonutility subsidiary trust, Atlantic 
Capital I (``ACI''), which was formed in 1996 in connection with the 
issuance by ACE of Cumulative Quarterly Income Preferred Securities.
    On a consolidated basis, Atlantic's operating revenues for the 
calendar year ended December 31, 1996 were approximately $980 million, 
and its total assets as of December 31, 1996 were approximately $2,671 
million.
    Atlantic has two direct nonutility subsidiaries, Atlantic Energy 
International, Inc. (``AEII'') and AEE.\3\
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    \3\ AEII brokers used utility equipment to developing countries, 
and provides utility consulting services related to the design of 
sub-stations and other utility infrastructure. AEE is a holding 
company for Atlantic's non-regulated subsidiaries.
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    At December 31, 1996, Atlantic's nonutility subsidiaries and 
investments constituted approximately 8.2 percent of the consolidated 
book value of the assets of Atlantic and its subsidiaries.
    Conectiv has no operations other than those contemplated by the 
Merger Agreement to accomplish the Mergers. At present, Conectiv's 
common stock, consisting of 1,000 issued and outstanding shares, is 
owned by Delmarva and Atlantic, each of which owns 500 shares.
    The merger agreement, dated as of August 9, 1996, as amended and 
restated as of December 26, 1996 (``Merger Agreement''), provides for 
Atlantic to be merged with and into Conectiv. Also under the Merger 
Agreement, DS Sub, Inc., a direct subsidiary of Conectiv (``DS Sub''), 
will be merged with and into Delmarva.\4\
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    \4\ DS Sub has been incorporated as a direct transitory 
subsidiary of Conectiv established to effectuate the Delmarva 
Merger. The authorized capital stock of DS Sub consists of 1000 
shares of common stock, $0.01 par value, all of which is held by 
Conectiv. DS Sub has not had, and prior to the closing of the 
Mergers will not have, any operations other than the activities 
contemplated by the Merger Agreement necessary to accomplish the 
combination of DS Sub and Delmarva.
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    Conectiv will be a public utility holding company and will have two 
direct utility subsidiaries, Delmarva and ACE, whose only nonutility 
subsidiaries will be the two trusts: DPF I and ACI. Delmarva's and 
Atlantic's other direct subsidiaries will also become direct 
subsidiaries of Conectiv. Support Conectiv will be incorporated as a 
service company for the Conectiv system.
    Conectiv proposes to convert each issued and outstanding share of 
Delmarva common stock into the right to receive one share of Conectiv 
common stock (``Conectiv Common Stock''). Each issued and outstanding 
share of Atlantic common stock shall be converted into the right to 
receive 0.75 shares of Conectiv Common Stock and 0.125 shares of Class 
A common stock of Conectiv (``Conectiv Class A Common Stock'').\5\
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    \5\ The proposed use of two classes of common stock addresses 
the difference in Delmarva's and Atlantic's evaluations of the 
growth prospects of, and uncertainties associated with deregulation 
of, the regulated electric utility business of Atlantic. The 
Conectiv Class A Common Stock has been created to track the 
performance of the currently regulated electric utility businesses 
of ACE. This stock will be issued only to the holders of the 
Atlantic Common Stock, thereby giving the current holders of 
Atlantic Common Stock a proportionately greater opportunity to share 
in the growth prospects of, and a proportionately greater exposure 
to the uncertainties associated with deregulation of, the regulated 
electric utility business of Atlantic. The proposed Conectiv Class A 
Common Stock will have full voting rights with the Conectiv Common 
Stock.
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    The Mergers will have no effect on the shares of preferred stock of 
Delmarva issued and outstanding at the time of the consummation of the 
Mergers, each series of which and each share of which will remain 
unchanged. Atlantic has no shares of preferred stock outstanding.
    Conectiv proposes that the Commission authorize Support Conectiv as 
the system service company. Support Conectiv will provide the Conectiv 
system companies with a variety of administrative, management, 
engineering, construction, environmental and support services, either 
directly or through agreements with associate or nonassociate 
companies, as needed.
    Support Conectiv will enter into a service agreement with most, if 
not all, companies in the Conectiv system. Support Conectiv's 
authorized capital stock will consist of up to 3,000 shares of common 
stock, $1 par value per share. Conectiv will hold all issued and 
outstanding shares of Support Conectiv common stock.
    Support Conectiv and its associate companies' cost and allocation 
methods will conform with the ``at costs'' requirements of section 13 
and rules under the Act.
    Conectiv also requests authority to provide, directly, or through 
one or more of its subsidiaries, retail services to residential, 
commercial and industrial customers. Retail services include energy 
analysis, project management, design and construction, energy efficient 
equipment installation and maintenance, facilities management services, 
environmental services and compliance, fuel procurement, and other 
similar kinds of managerial and technical services.\6\
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    \6\ Conectiv states that the retail services may specifically 
include: (1) service lines repair/extended warranties; (2) surge 
protection; (3) appliance merchandising/repair/extended warranties; 
(4) utility bill insurance; and (5) incidental and reasonably 
necessary products and services related to the choice, purchase or 
consumption of any of these products and services.
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    Conectiv further requests authority, after consummation of the 
Mergers for a period of 24 months from the effective date of the 
Mergers, to transfer certain assets such as real property used for 
administrative purposes and information technology equipment and 
software from Delmarva or ACE at cost to Support Conectiv.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-26905 Filed 10-9-97; 8:45 am]
BILLING CODE 8010-01-M