[Federal Register Volume 63, Number 118 (Friday, June 19, 1998)]
[Notices]
[Pages 33740-33742]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-16348]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-26886]


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

June 12, 1998.
    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 under the Act. 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 is/are available for

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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 July 6, 1998, 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 
should 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 July 6, 1998, the application(s) and/or declaration(s), 
as filed or as amended, may be granted and/or permitted to become 
effective.

Consolidated Natural Gas Company, et al. (70-9203)

    Consolidated Natural Gas Company (``CNG''), CNG Tower, 625 Liberty 
Avenue, Pittsburgh, Pennsylvania, 15222-3199, a registered holding 
company, and CNG's wholly owned subsidiaries, CNG Energy Services 
Corporation (``Energy Services''), CNG Power Company (``Power 
Company''), both at One Park Ridge Center, P.O. Box 15746, Pittsburgh, 
Pennsylvania 15244-0746, CNG Retail Services Corporation (``Retail 
Services''), One Chatham Center, Pittsburgh, Pennsylvania 15219, CNG 
Products and Services, Inc. (``Products and Services''), CNG Tower, 
Pittsburgh, Pennsylvania 15222-3199 and CNG Producing Company 
(``Producing Company''), CNG Tower, 1450 Poydras Street, New Orleans, 
Louisiana 70112-6000 (collectively, ``Applicants''), have filed an 
application-declaration, as amended, under sections 9(a), 10 and 12(c) 
of the Act and rules 43, 46 and 54 under the Act.
    CNG has decided to discontinue wholesale marketing and trading of 
natural gas and electricity. Energy Services was principally formed to 
be the subsidiary in the CNG system to market natural gas at wholesale, 
and CNG Power Services Corporation (``Power Services'') was formed to 
market electricity at wholesale. Power Services is an exempt wholesale 
generator (``EWG'') under section 32 of the Act. Energy Services has 
several wholly owned subsidiaries engaged in the energy business. The 
six directly owned subsidiaries of Energy Services (collectively, 
``Energy Services Subsidiaries'') are: Products and Services, Power 
Company, CNG Storage Service Company, CNG Main Pass Gas Gathering 
Corporation (``Main Pass''), CNG Oil Gathering Corporation (``Oil 
Gathering'') and Retail Services. Power Services has one wholly owned 
subsidiary, CNG Lakewood, Inc., which is also an EWG. In its exiting of 
the wholesale energy industry, CNG may sell its equity ownership in 
Energy Services and Power Services. In order to prepare these companies 
for disposition, Applicants propose to transfer ownership of each 
subsidiary of Energy Services and Power Services. Additionally, two 
subsidiaries of Energy Services would be consolidated.
    Applicants consequently propose to effect a two-phase restructuring 
of the Energy Services group consisting of the following transactions.

Phase One

Energy Services Subsidiaries Become Direct Subsidiaries of CNG
    Since CNG desires to retain the Energy Services Subsidiaries as 
part of the CNG System after the disposition of Energy Services, 
Applicants propose to transfer ownership of these companies. This would 
occur through Energy Services transferring to CNG all of the common 
stock of the six subsidiaries as a dividend, so that each company 
initially will become a direct subsidiary of CNG (``Phase One'').\1\
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    \1\ The Application states that the transfers of stock of the 
Energy Services Subsidiaries in Phase One may be in the form of 
either dividends or liquidating distributions under a plan of 
liquidation adopted under section 332 of the Internal Revenue Code, 
depending upon the CNG system's business needs and the ultimate tax 
impact of the restructuring transactions. The term ``dividend'', as 
used in this notice, includes both dividends and liquidating 
distributions.
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Phase Two

Products and Services Merged Into Retail Services
    Retail Services was formed under Commission order dated January 15, 
1997, HCAR No. 26647 (``January 1997 Order''), which authorized Energy 
Services, among other things, to engage in all forms of energy 
brokering and marketing transactions, including those involving 
electricity, natural gas, coal, oil, other hydrocarbons, wood chips, 
wastes and other combustibles, at wholesale and retail. By order dated 
August 28, 1995, HCAR No. 26363 (``August 1995 Order''), the 
Commission, among other things authorized Energy Services to form 
Products and Services to engage in the business of certain energy-
related services. By a subsequent order dated August 27, 1997, HCAR No. 
26757 (``August 1997 Order''), the Commission further authorized 
Products and Services to offer several additional categories of energy-
related services.
    Applicants now propose that Retail Services merge with Products and 
Services, with Retail Services being the surviving corporation (the 
``Merger'').
Retail Services Succeeds to Certain Authorizations
    Upon completion of the Merger, Retail Services would succeed to the 
prior authorizations granted to Products and Services under the August 
1995 Order and the August 1997 Order. However, Applicants request the 
elimination of one restriction in these orders. Both orders state that 
Products and Services will provide it categories of services both 
within and outside of the four states of Virginia, West Virginia, 
Pennsylvania and Ohio where the public utility company subsidiaries of 
CNG are located (collectively, ``LDC States''). Both orders require 
that during the twelve-month period beginning on the first day of the 
month following the commencement of Products and Services' business, 
and for each subsequent calendar year, total revenues derived by 
Products and Services in LDC States exceed total revenues similarly 
derived from customers in all other states. Due to the trend of energy 
markets in a deregulation environment to become integrated national 
markets, Applicants request that this ``50% limit'' be eliminated for 
all future revenues of Retail Services as the successor to Products and 
Services after the Merger.
    In view of the proposed disposition of Energy Services by CNG, 
Applicants propose that Retail Services also succeed to the 
authorizations granted to Energy Services under the January 1997 Order. 
Specifically, Retail Services would be authorized to engage in energy 
marketing to the same extent as that allowed Energy Services, and 
Retail Services would be permitted to form subsidiaries through which 
to engage in marketing activities to the same extent permitted Energy 
Services. CNG would provide financing to Retail Services under rule 52 
of the Act.
CNG Technologies, Inc. Becomes a Subsidiary of Power Company
    By order dated December 21, 1990, HCAR No. 25224, the Commission 
authorized CNG to form CNG Technologies, Inc. (``CNG Technologies'') 
and to invest up to 2 million in CNG Technologies for it to acquire 
limited partnership interests in a gas industry fund created to invest 
in

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smaller companies developing new technologies to enhance the supply, 
transportation and utilization of natural gas. CNG Technologies is 
currently a subsidiary of Products and Services. Applicants propose 
that the outstanding common stock of CNG Technologies be declared as a 
dividend by Products and Services to CNG, and subsequently be 
transferred by CNG as a capital contribution to Power Company after 
Power Company becomes a direct subsidiary of CNG.
Main Pass and Oil Gathering Each Become a Subsidiary of Producing 
Company
    Producing Company is a wholly owned subsidiary of CNG which engages 
in gas and oil exploration and production primarily in the Gulf of 
Mexico, the southern and western United States, the Appalachian region 
and in Canada.
    By order dated July 26, 1995, HCAR No. 26341 (``July 1995 Order''), 
Energy Services was authorized, without further Commission approval, 
through December 31, 1997, to invest an aggregate amount up to at least 
$150 million to acquire direct or indirect interests in entities 
engaged in Gas Related Activities.\2\
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    \2\ ``Gas Related Activities'' include purchasing, pooling, 
transporting, exchanging, storing and selling gas supplies from 
competitively priced sources, including the spot markets, 
independent producers and brokers, and Producing Company.
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    As of December 31, 1997, Energy Services had invested $24,235,000 
and $14,323,000 and acquired a partnership interest in the Main Pass 
Gathering Company and the Main Pass Oil Gathering Company, 
respectively, under the July 1995 Order. Energy Services owns the 
interests in these partnerships through Main Pass and Oil Gathering, 
respectively.
    The July 1995 Order was extended through December 31, 2002 by 
Commission order dated December 30, 1997, HCAR No. 26807 (``December 
1976 Order''). The December 1997 Order also increased the amount Energy 
Services may invest and the amount of guarantees which could be made to 
$200 million in each case.
    Applicants propose the transfer of ownership of all of the 
outstanding common stock of Main pass and Oil Gathering to be held by 
CNG after completion of Phase One to Producing Company. The transfer 
would occur through a transfer by CNG of the stock to Producing Company 
as a capital contribution.
Producing Company Succeeds to Certain Authorizations
    As indicated above, Applicants propose that Producing Company 
succeed to Energy Services' interests in Main Pass and Oil Gathering, 
which are acquired by Energy Services under the July 1995 Order. 
Producing Company will also continue to engage in all aspects of the 
business of a gas producing company which substantially encompasses all 
of the activities defined as ``Gas Related Activities'' in the July 
1995 Order. Applicants propose that Producing Company succeed to and be 
substituted for Energy Services as the authorized party under the July 
1995 Order and the December 1997 Order.
Source and Form of Declaration and Payment of Dividends
    Applicants propose that dividends declared and paid in connection 
with the restructuring be paid out of capital or unearned surplus, to 
the extent permitted under applicable corporate law, in the event the 
payer does not have sufficient earned surplus on its books to cover the 
amount of the dividend. Applicants represent that the payment of 
dividends out of capital or unearned surplus in connection with the 
restructuring would not in any way adversely affect the financial 
integrity of any company in the CNG system or the working capital of 
any public utility company in the CNG system.
    The Application states that the form of distributions to CNG in 
Phase One of the restructuring and the timing, manner and extent of the 
re-distributions by CNG in Phase Two of the restructuring will depend 
on the CNG system's business needs as well as the ultimate tax impact 
of the restruturing transactions.

Atlantic City Electric Company (70-9307)

    Atlantic City Electric Company (``ACE''), 6801 Blackhorse Pike, Egg 
Harbor Township, New Jersey 08234, a wholly owned electric utility 
subsidiary of Conectiv, Inc., a public utility holding company to be 
registered under the Act, has filed an application under sections 9(a) 
and 10 of the Act and rule 41 under the Act.
    By order dated February 25, 1998 (HCAR No. 26832), Conectiv was 
authorized to acquire all of the outstanding voting securities of ACE, 
Delmarva Power & Light Company, a public utility company 
(``Delmarva''), and various nonutility subsidiaries of Delmarva and 
ACE.
    ACE now requests authority to purchase two 39.3 megawatt combustion 
turbine generating units and accessory equipment (``Units'') for a 
purchase price of $8 million. ACE states that the Units were previously 
leased by ACE under a December 1, 1972 Indenture of Lease (``Lease'') 
among ACE, Frank B. Smith and Ben Maushardt, as lessors (``Lessor''), 
and United States Leasing Corporation, as agent for the Lessor. ACE has 
used the Units, located in Upper Deerfield Township. Cumberland County, 
New Jersey, for the generation of electricity for twenty five years. 
The Lease terminates on July 11, 1998 and ACE wishes to purchase the 
Units and continue them in service.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 98-16348 Filed 6-18-98; 8:45 am]
BILLING CODE 8010-01-M