[Federal Register Volume 64, Number 64 (Monday, April 5, 1999)]
[Notices]
[Pages 16508-16513]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-8239]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-26995]


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

March 26, 1999.
    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 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 April 20, 1999, to the Secretary, Securities and Exchange 
Commission, Washington, DC 20549-0609, and serve a copy on the relevant 
applicant(s) and/or declarants(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 April 20, 1999, the application(s) and/or declaration(s), 
as filed or as amended, may be granted and/or permitted to become 
effective.

Ameren Corporation, et al. (70-9427)

    Ameren Corporation (``Ameren''), a registered holding company, 
Union Electric Company (``UE''), an electric and gas public utility 
subsidiary of Ameren, Union Electric Development Company (``UEDC''), an 
indirect nonutility subsidiary of Ameren, Ameren Development Company 
(``Ameren Development''), and ``energy-related company'' within the 
meaning of rule 58 and a subsidiary of Ameren, Ameren ERC, Inc., and 
``energy-related company'' within the meaning of rule 58 and a wholly 
owned subsidiary of Ameren Development, all located at 1901 Chouteau 
Avenue, St. Louis, Missouri 63103, and Central Illinois Public Service 
Company (``CIPS''), an electric and gas public utility subsidiary of 
Ameren and CIPSCO Investment Company (``CIC''), a nonutility subsidiary 
of Ameren, both located at 607 East Adams, Springfield, Illinois 62739, 
(collectively, ``Applicants'') have filed an application-declaration 
under sections 6(a), 7, 9(a), 10, 12(c), 13(b) and rules 45, 46, 54, 
87, 90 and 91 of the Act.
    By order dated December 30, 1997 (``Merger Order''),\1\ Ameren was 
authorized, among other things, to acquire all of the issued and 
outstanding common stock of UE and CIPS (collectively, the ``Operating 
Companies'') and Ameren Services, a subsidiary service company. By 
order dated March 13, 1998 (``Financing Order''),\2\ Ameren was 
authorized, among other things to: issue and sell common stock and 
other securities; repay, redeem or retire securities of Ameren or its 
subsidiaries; and, provide working capital to its subsidiaries. Ameren 
was also authorized to issue guarantees and provide other forms of 
credit support in respect of the obligations of its existing and future 
nonutility subsidiaries in an aggregate principal amount not to exceed 
$300

[[Page 16509]]

million outstanding at any one time. Ameren's then existing nonutility 
subsidiaries were authorized to provide guarantees and other forms of 
credit support in respect of the obligations of other nonutility 
subsidiaries in an aggregate principal amount not to exceed $50 million 
outstanding at any one time.
---------------------------------------------------------------------------

    \1\ See Holding Co. Act Release No. 26809.
    \2\ See Holding Co. Act Release No. 26841.
---------------------------------------------------------------------------

    Ameren now proposes, through December 31, 2003 (``Authorization 
Period''), to consolidate under Ameren Development, the direct and 
indirect ownership of various existing and future nonutility businesses 
and to engage in preliminary development activities (``Development 
Activities'') \3\ and administrative and management activities 
(``Administrative Activities'') \4\ associated with these 
investments.\5\
---------------------------------------------------------------------------

    \3\ Development Activities will be limited to: due diligence and 
design review; market studies; preliminary engineering; site 
inspection; preparation of bid proposals, including posting of bid 
bonds; application for required permits and/or regulatory approvals; 
acquisition of site options and options on other necessary rights; 
negotiation and execution of contractual commitments with owners of 
existing facilities, equipment vendors, construction firms, power 
purchasers, thermal hosts fuel suppliers and other project 
contractors; negotiation of financing commitments with lenders and 
other third-party investors; and other preliminary activities as may 
be required in connection with the purchase, acquisition and 
construction of facilities.
    \4\ Administrative Activities will include ongoing personnel, 
accounting, engineering, legal, financial, and other support 
activities necessary to manage Ameren Development's Development 
Activities and investments in subsidiaries.
    \5\ Ameren Development proposes to expend up to $250 million 
during the Authorization Period on Development Activities.
---------------------------------------------------------------------------

    Ameren and Ameren Development request authority through the 
Authorization Period to organize and acquire, directly or indirectly, 
the equity securities of one or more nonutility subsidiaries 
(``Nonutility Subsidiaries''). \6\ Ameren and Ameren Development 
further propose to acquire the securities of one or more intermediate 
subsidiaries, which would be organized exclusively for the purpose of 
acquiring, holding and/or financing the acquisition of the securities 
of, or other interest in, one or more exempt wholesale generator 
(``EWG''), foreign utility company (``FUCO''), exempt 
telecommunications company (``ETC'') (collectively, ``Exempt 
Subsidiaries''), ``energy-related company'' within the meaning of rule 
58 (``Rule 58 Subsidiary''), or other Nonutility Subsidiaries.
---------------------------------------------------------------------------

    \6\ Nonutility Subsidiaries may include intermediate 
subsidiaries, financing subsidiaries and special-purpose 
subsidiaries.
---------------------------------------------------------------------------

    Intermediate subsidiaries may be organized exclusively for the 
purpose of acquiring and holding the securities of other direct or 
indirect nonutility subsidiaries of Ameren Development and may engage 
in Development Activities and Administrative Activities. An 
intermediate subsidiary may be organized, among other things, (1) to 
facilitate the making of bids or proposals to develop or acquire an 
interest in any Exempt Subsidiary, or other nonutility company which, 
upon acquisition, would qualify as a Rule 58 Subsidiary or other Non-
Exempt Subsidiary; (2) to facilitate closing on the purchase or 
financing of an acquired company; (3) to effect an adjustment in the 
respective ownership interests in the business held by Ameren or Ameren 
Development and non-affiliated investors; (4) to facilitate the sale of 
ownership interests in one or more acquired nonutility company; (5) to 
comply with applicable laws of foreign jurisdictions; (6) to provide 
tax planning; (7) to insulate Ameren and its Operating Companies from 
operational or other business risks that may be associated with 
investments in nonutility companies; or, (8) for other lawful business 
purposes.
    Financing subsidiaries may be formed for the purpose of issuing 
securities to investors other than Ameren in order to finance, in whole 
or in part, Ameren's direct or indirect acquisitions of Exempt 
Subsidiaries and Rule 58 Subsidiaries. Ameren and Ameren Development 
request authority to acquire, directly or indirectly, the equity 
securities of one or more corporations, trusts, partnerships or other 
entities created specifically for the purpose of facilitating the 
financing of Ameren's and its subsidiaries' authorized and exempt 
activities (including exempt and authorized acquisitions) through the 
issuance of long-term debt or equity securities to third parties and 
the transfer of the proceeds of these financings to Ameren or any of 
its subsidiaries.
    Ameren may guarantee or enter into expense agreements in respect of 
the obligations of any of these financing subsidiaries.\7\ If the 
direct parent company of a financing subsidiary is authorized in this 
proceeding or any subsequent proceeding to issue long-term debt or 
similar types of equity securities, then the amount of the securities 
issued by that financing subsidiary would count against the limitation 
applicable to its parent for those securities. In these cases, however, 
the guaranty by the parent of that security issued by its financing 
subsidiary would not be counted against the limitation on guarantees by 
Ameren authorized in the Financing Order or guarantees by Ameren 
Development or any of its subsidiaries, as requested in this 
application-declaration. In other cases, in which the parent company is 
not authorized in this or in a subsequent proceeding to issue similar 
types of securities, the amount of any guarantee not exempt under rules 
45(b)(7) and 52 that is entered into by the parent company with respect 
to securities issued by its financing subsidiary would be counted 
against the limitation on Ameren guarantees under the Financing Order 
or guarantees by Ameren Development and its subsidiaries, as requested 
in this application-declaration.
---------------------------------------------------------------------------

    \7\ The terms and conditions of these guarantees, including the 
duration and expiration thereof, would be the same as now authorized 
under the Financing Order.
---------------------------------------------------------------------------

    Special-purpose subsidiaries seek authority to engage in any of the 
businesses or activities that UEDC or CIC are currently authorized to 
engage in under the terms of the Merger Order and which would not 
otherwise qualify as permitted or exempt businesses under rule 58 or 
section 34 of the Act; \8\ customer financing; development and project 
activities; bill payment insurance; economic development services; 
customer goodwill programs; and outage insurance.
---------------------------------------------------------------------------

    \8\ UEDC holds a small equity interest in a company that may be 
certified as an ETC under section 34.
---------------------------------------------------------------------------

    UEDC and CIC are currently engaged directly, or through 
subsidiaries, in certain nonutility businesses, including automated 
meter reading, the sale of appliance warranties, and demand side 
management programs. UEDC and CIC therefore request authority, to the 
extent needed,\9\ to sell or otherwise transfer these businesses or the 
securities of current subsidiaries engaged in some or all of these 
businesses to Ameren Development or a subsidiary of Ameren Development. 
To the extent required, Ameren Development or any subsidiary of Ameren 
Development request authority to acquire the assets of these businesses 
or securities of subsidiaries of UEDC and CIC engaged in these 
businesses.\10\ UEDC and CIC would sell the assets or securities for an 
amount equal to their cost or, alternatively, transfers of the 
securities or assets may be effected by distributions by UEDC, CIC and 
UE to Ameren, followed by Ameren's contribution of these

[[Page 16510]]

securities or assets to Ameren Development.\11\
---------------------------------------------------------------------------

    \9\ The sale of securities, assets or an interest in another 
business to an associate company may be exempt under rule 43(b).
    \10\ It is contemplated that UEDC will remain a wholly owned 
subsidiary of UE. Ameren may, however, contribute the stock of CIC 
to Ameren Development at some point in the future.
    \11\ The transactions proposed in this paragraph will not 
involve the sale or other disposition of any utility assets of the 
Operating Companies.
---------------------------------------------------------------------------

    Investments in special-purpose subsidiaries by Ameren Development 
may take the form of purchases of common stock or other equity 
securities, loans, capital contributions, cash advances or guarantees, 
or any combination of the foregoing.\12\ Special-purpose subsidiaries 
request approval, to the extent required, to purchase the assets of or 
securities held by UEDC and/or CIC in those businesses identified in 
the Merger Order in which UEDC and/or CIC are already engaged, directly 
or indirectly, and which would not qualify as permitted or exempt 
activities under section 34 or rule 58.\13\
---------------------------------------------------------------------------

    \12\ Ameren Development proposes to invest in these entities in 
an aggregate amount at any time outstanding not to exceed $250 
million.
    \13\ UEDC holds a small equity interest in one company that may 
be certified as an ETC under section 34 of the Act.
---------------------------------------------------------------------------

    Ameren Development, Ameren Energy, CIC and any existing or future 
subsidiary of any of the foregoing, propose through the Authorization 
Period to provide guarantees or other forms of credit support in 
respect of securities issued by or other obligations of each other in 
an aggregate principal amount oat any time outstanding not to exceed 
$300 million, provided that any guaranty or other form of credit 
support outstanding on December 31, 2003, shall remain in effect until 
it expires in accordance with its terms.\14\
---------------------------------------------------------------------------

    \14\ The authorization requested herein is intended to replace 
and supersede the $50 million limitation on guarantees and other 
forms of credit support contained in the Financing Order. The terms 
and conditions of these guarantees, including the duration or 
expiration thereof, would be the same as now authorized under the 
Financing Order.
---------------------------------------------------------------------------

    Credit support may take the form of direct guarantees of securities 
issued by any direct or indirect subsidiary, stand-by equity funding 
commitments, obligations under capital maintenance agreements or under 
reimbursement agreements in respect of bank letters of credit, payment 
obligations under contracts, or other similar financial instruments or 
contractual undertakings.
    Ameren Development, Ameren Energy, CIC and any direct or indirect 
Rule 58 Subsidiaries of Nonutility Subsidiaries (including any 
intermediate subsidiary) of Ameren Development request an exemption 
under section 13(b) from the cost standard of rules 90 and 91 as 
applicable to these transactions, in any case in which any of the 
following circumstances apply:
    (1) The client company is a FUCO or foreign EWG that derives no 
part of its income, directly or indirectly, from the generation, 
transmission, or distribution of electric energy for sale within the 
United States;
    (2) The client company is an EWG that sells electricity at market-
based rates which have been approved by the Federal Energy Regulatory 
Commission (``FERC'');
    (3) The client company is a ``qualifying facility'' (``QF'') within 
the meaning of the Public Utility Regulatory Policies Act of 1978, as 
amended (``PURPA'') that sells electricity exclusively (a) at rates 
negotiated at arms' length to one or more industrial or commercial 
customers purchasing electricity for their own use and not for resale 
and/or (b) to an electric utility company at the purchaser's ``avoided 
cost'' as determined in accordance with the regulations under PURPA; or 
(4) the client company is a domestic EWG or QF that sells electricity 
at rates based on its cost of service, as approved by FERC or any state 
public utility commission having jurisdiction, provided that the 
purchaser thereof is not an operating company within the Ameren System; 
or, (5) Ameren does not own 100% of the capital stock of the nonutility 
client company.
    Applicants request an exemption from section 13(b) of the Act in 
connection with the performance of Administrative Activities or 
Development Activities for any client company that is an Exempt 
Subsidiary, Rule 58 Subsidiary or Non-Exempt Subsidiary if (a) the 
client company is a subsidiary of Ameren, the sole business of which is 
developing, owning, operating and/or providing services to other 
affiliated companies described in subparagraphs (1) through (5), above, 
or, (b) the client company is a subsidiary of Ameren, which does not 
derive, directly or indirectly, any material part of its income from 
sources within the United States and is not a public-utility company 
operating within the United States.
    It is contemplated that Ameren Development will purchase 
management, marketing, development, accounting and administrative 
services from Ameren Services under a General Services Agreement.\15\ 
In addition, utilizing a work order procedure, Ameren Development will 
request the Operating Companies to provide personnel and other 
resources as needed, from time to time, to consult and assist in 
engineering and other required functions in connection with the 
authorized business activities of Ameren Development and its 
subsidiaries. Ameren Development proposes to enter into a service 
agreement (``Nonutility Service Agreement'') with each Operating 
Company that will be substantially similar to the General Services 
Agreement to obtain these services. An Operating Company may, in its 
absolute discretion, elect not to participate, either through personnel 
or other resources in any of Ameren Development's projects and 
businesses. If additional personnel and resources are not obtainable 
from within the Ameren System they will be obtained or hired from 
external sources.
---------------------------------------------------------------------------

    \15\ The Commission approved the General Services Agreement as a 
part of the Merger Order.
---------------------------------------------------------------------------

    Ameren Services will also continue to provide assistance in 
connection with financial, accounting, and internal auditing functions 
for Ameren Development utilizing those accounting systems which are 
economically justifiable under the circumstances. The accounts of 
Ameren Development will continue to be subject to audit by the 
independent accountants of Ameren.
    Ameren Services and the Operating Companies will be reimbursed 
promptly for their costs incurred in connection with rendering any 
services to Ameren Development or its subsidiaries. The Operating 
Companies will utilize cost accounting procedures designed to identify 
promptly all direct and indirect costs, including overheads, which are 
applicable to the work being performed by or with Operating Company 
personnel, material or other assets. Ameren Services will account for, 
allocate and charge its costs to Ameren Development or its subsidiaries 
using procedures permitted under rules 90 and 91 and currently 
applicable methods of allocation as set forth in the General Services 
Agreement. All transactions between Ameren Development and Ameren 
Services and the Operating Companies will be at cost in compliance with 
section 13 and rules 90, 91 and 92.
    Rule 58 Subsidiaries and special-purpose subsidiaries request 
authority to sell goods and services to customers both within and 
outside of the United States. The goods and services may include 
brokering and marketing electricity, natural gas and other energy 
commodities; energy management services; performance contracting 
services; technical support services; certain retail services; 
monitoring and response goods and services; energy-peaking services; 
and, project development and ownership activities. Ameren Development 
proposes to perform energy management services and technical support 
services and

[[Page 16511]]

engage in related customer financing on a worldwide basis.
    Ameren Energy proposes to act as agent for Ameren Services and/or 
the Operating Companies in connection with the brokering and marketing 
of electricity and other energy commodities by the Operating Companies. 
Ameren Energy and Ameren Services and each of the Operating Companies 
propose to enter into an Agency Agreement wherein Ameren Energy would 
provide agency and any other incidental services, at cost, determined 
in accordance with rules 90 and 91. Ameren Energy would not receive any 
profits from these transactions and would not receive any other fee or 
commission for its services.
    Ameren Energy (or any other energy marketing and brokering 
subsidiary hereafter acquired or formed by Ameren Development) request 
authority to acquire or construct in one or more transactions, from 
time to time through the Authorization Period, nonutility energy assets 
in the United States, including natural gas production, gathering, 
processing, storage and transportation facilities and equipment, liquid 
oil reserves and storage facilities, and associated facilities 
(collectively, ``Energy Assets''), that would be functionally related 
to and would assist Ameren Energy in connection with energy marketing, 
brokering and trading. Ameren Energy requests authorization to invest 
up to $400 million during the Authorization period in Energy Assets or 
in the equity securities of existing or new companies substantially all 
of whose physical properties consist or will consist of these Energy 
Assets. It is represented that either Ameren Energy nor any marketing 
subsidiary will require, directly or indirectly, any assets or 
properties the ownership or operation of which would cause a company to 
be considered an ``electric utility company'' or ``gas utility 
company'' as defined under the Act. In the event that Applicants 
acquire companies whose physical properties consist of Energy Assets 
which are engaged in energy (gas or electric or both) marketing 
activities, Applicants also request authorization to continue these 
activities.
    Ameren Development seeks authorization, on behalf of itself and 
every direct or indirect Rule 58 Subsidiary and Non-Exempt Subsidiary, 
to pay dividends with respect to the securities of these companies, 
from time to time through the Authorization Period, out of capital and 
unearned surplus. Ameren Development, on behalf of itself and each of 
its current and future Rule 58 Subsidiaries and Nonutility 
Subsidiaries, represents that it will not declare or pay any dividend 
out of capital or unearned surplus in contravention of any law 
restricting the payment of dividends, Ameren Development also states 
that its subsidiaries will comply with the terms of any credit 
agreements and indentures that restrict the amount and timing of 
distributions to shareholders.
    Ameren Development, on behalf of itself and its existing and future 
Rule 58 Subsidiaries and Nonutility Subsidiaries, also seeks 
authorization, to the extent needed, to enter into interest-rate 
hedging transactions with respect to anticipated-debt offerings 
(``Anticipatory Hedges''), subject to certain limitations and 
restrictions. Anticipatory Hedges would only be entered into with 
counterparties whose senior debt ratings, or the senior debt ratings of 
the parent companies of the counterparties, as published by Standard 
and Poor's Ratings Group, are equal to or greater than BBB+, or an 
equivalent rating from Moody's Investors Service, Fitch Investor 
Service or Duff and Phelps.
    All open positions under an Anticipatory Hedge will be closed on or 
prior to the date of the new issuance and Ameren Development will not, 
at any time, take possession of the underlying U.S. Treasury 
securities. Anticipatory Hedge positions will not be outstanding for 
more than 180 days. The overall guidelines, parameters and controls 
applicable to an Anticipatory Hedge transaction by Ameren Development 
or any Rule 58 Subsidiary or Non-Exempt Subsidiary will be the same as 
those described in the Financing Order. All Anticipatory Hedges will 
qualify as bona fide hedges and will meet the criteria established by 
the Financial Accounting Standards Board in order to qualify the hedge 
accounting treatment, and Ameren Development will comply with the then 
existing financial disclosure requirements of the Financial Accounting 
Standards Board associated with hedging transactions.
    Ameren Development may determine to transfer the securities or the 
assets of the subsidiaries to other direct or indirect subsidiaries of 
Ameren Development or to liquidate or merge subsidiaries. The internal 
transactions would be undertaken in order to eliminate corporate 
complexities, to combine related business segments for staffing and 
management purposes, to eliminate administrative costs, to achieve tax 
savings, or for other ordinary and necessary business purposes. These 
transactions would only involve Ameren Development and its direct and 
indirect subsidiaries and would have no impact on any other associate 
companies in the Ameren System. Ameren Development request authority to 
engage in these transactions, to the extent that they are not exempt 
under the Act and rules thereunder, through the Authorization Period.

Consolidated Edison, Inc. (70-9447)

    Consolidated Edison, Inc. (``CEI''), 4 Irving Place, New York, New 
York 10003, a New York electric and gas public utility holding company 
exempt from registration under section 3(a)(1) of the Act by rule 2, 
has filed an application under sections 9(a)(2) and 10 of the Act.
    CEI proposes to acquire all of the issued and outstanding 
securities of Orange and Rockland Utilities, Inc. (``Orange and 
Rockland''), a New York electric and gas public utility holding company 
exempt from registration by order under section 3(a)(2) of the Act.\16\
---------------------------------------------------------------------------

    \16\ See Rockland Light and Power Co., 1 SEC 354 (1936). 
Rockland Light and Power Company subsequently became Orange and 
Rockland Utilities, Inc.
---------------------------------------------------------------------------

    CEI owns all of the common stock of Consolidated Edison Company of 
New York, Inc. (``Con Edison''), a New York electric and gas utility 
company as defined under the Act. Orange and Rockland owns two public 
utility subsidiaries, Rockland Electric Company (``RECO''), a New 
Jersey electric utility company, and Pike County Light & Power Company 
(``Pike''), a Pennsylvania electric and gas utility company. Under the 
terms of the Agreement and Plan of Merger among Orange and Rockland, 
CEI and C Acquisiton Corp.\17\, dated May 10, 1998 (``Merger 
Agreement''), C Acquisition Corp. will be merged with and into Orange 
and Rockland. Orange and Rockland will be the surviving corporation in 
the Merger and become a wholly owned subsidiary of CEI and Orange and 
Rockland's two utility subsidiaries, RECO and Pike, will remain direct 
subsidiaries of Orange and Rockland.
---------------------------------------------------------------------------

    \17\ C Acquisition Corp. is a New York corporation and a wholly 
owned subsidiary of CEI which was created solely for merger 
purposes.
---------------------------------------------------------------------------

    Con Edison supplies electric service in all of New York City 
(except part of the Borough of Queens) and most of Westchester County, 
New York, an approximate 660 square mile service territory with a 
population of more than eight million. Con Edison also supplies gas in 
the Boroughs of Manhattan and the Bronx and parts of the Borough of 
Queens and Westchester County, New York, and provides steam in part of

[[Page 16512]]

Manhattan. Con Edison is regulated by the New York State Public Service 
Commission (``NYPSC'') as to retail rates, service, accounts, issuance 
of securities and in other respects. The Federal Energy Regulatory 
Commission (``FERC'') has jurisdiction over Con Edison under the 
Federal Power Act (``FPA'') in connection with electric transmission 
facilities and operations, wholesale sales of power and related 
transactions.
    CEI's common stock is listed on the New York Stock Exchange. As of 
October 31, 1998, CEI had outstanding 233,186,794 common shares ($.10 
par value). The issued and outstanding shares of Con Edison number 
235,489,650 ($2.50 par value), all of which are held by CEI.
    For the twelve months ended September 30, 1998, CEI's total 
operating revenues were $7.22 billion, of which approximately $5.74 
billion were derived from electric operations, $1 billion were from gas 
operations, $355 million were from the steam business, and $113 million 
were from nonutility businesses. Consolidated assets of CEI at 
September 30, 1998, were approximately $14.5 billion.
    In September 1997, the NYPSC approved a settlement agreement among 
Con Edison, the Staff of the NYPSC and other parties (``Con Edison 
Settlement Agreement'') providing for: (1) a transition to a 
competitive electric market through the development of a ``retail 
access'' plan; (2) a rate plan providing for substantial retail rate 
reductions through March 31, 2002; (3) a reasonable opportunity to 
recover ``strandable costs''; and (4) the divestiture by Con Edison to 
unaffiliated third parties of at least 50 percent of its New York City 
fossil-fueled electric generating capacity.
    Under the Con Edison Settlement Agreement, Con Edison submitted a 
divestiture plan for its fossil-fueled electric generation in New York 
City (``Divestiture Plan''). The NYPSC approved Con Edison's electric 
generation Divestiture Plan in orders issued July 21, 1998 and August 
5, 1998. Under the Divestiture Plan, Con Edison will auction off its 
New York City electric generation to unaffiliated third parties in 
three bundles. Closing on the sales of these three bundles is expected 
in the second half of 1999.
    Under its Steam System Plan, announced on April 15, 1998, Con 
Edison will auction off the remainder of its electric generation in New 
York City in a fourth bundle, consisting of 463 MW of units that 
produce electricity and steam for Con Edison's steam delivery system. 
Con Edison plans to close on the sales of the fourth bundle by the end 
of 1999.
    The NYPSC, in a July 21, 1998 order, gave Con Edison the option of 
having its unregulated affiliate participate in the auction to purchase 
one of the initial three bundles. On July 24, 1998, Con Edison advised 
the NYPSC that its affiliate would forego its right to participate in 
the auction.\18\ Accordingly, Con Edison plans to divest all of its in-
City generation to third parties.
---------------------------------------------------------------------------

    \18\ Con Edison's relinquishment of its affiliate's right to 
participate in the auction was based on certain understandings as to 
the treatment of any gain on the sales. On August 5, 1998, the NYPSC 
approved Con Edison's proposal in this regard, subject to one 
modification, which Con Edison accepted on August 10, 1998. Con 
Edison, accordingly, is proceeding with the divestiture.
---------------------------------------------------------------------------

    In addition, Con Edison is in the process of divesting its 810 MW 
interest in the Bowline Point generating station (``Bowline Station'') 
located in Orange and Rockland's territory as part of Orange and 
Rockland's auction of its generation, as described below. Similarly, 
Con Edison has agreed to divest its 400 MW interest in the Roseton 
station located in the service area of Central Hudson Gas and Electric 
Corporation, a nonaffiliate, in conjunction with Central Hudson's 
divestiture auction. As a result of the divestitures described above, 
Con Edison no longer will own dispatchable generation resources.\19\ 
Con Edison will, however, retain an obligation to serve load in its 
service territory. In order to serve that load, Con Edison will 
purchase capacity and energy in the competitive market.
---------------------------------------------------------------------------

    \19\ Con Edison will retain its interests in a nuclear power 
generating facility. It is expected that Con Edison's nuclear 
facility will operate whenever it is available and be bid into the 
generation market at an incremental price reflecting the ``to go'' 
costs.
---------------------------------------------------------------------------

    Orange and Rockland and its public utility subsidiaries supply 
electricity and gas to a service territory covering approximately 1,350 
square miles. The eastern boundary of the service area extends along 
the west bank of the Hudson, directly across the river from the service 
territory of Con Edison. Orange and Rockland's New York electric and 
gas service territory includes all of Rockland County, most of Orange 
County and part of Sullivan County. In New Jersey, RECO supplies 
electricity to the northern parts of Bergen and Passaic Counties and 
small areas in the northeastern and northwestern parts of Sussex 
County. Pike supplies electricity and gas to the northeastern corner of 
Pike County, Pennsylvania. The application states that Orange and 
Rockland, RECO and Pike jointly operate a single fully integrated 
electric production and transmission system serving parts of New York, 
New Jersey and Pennsylvania.
    Orange and Rockland and its public utility subsidiaries furnish 
electric service to approximately 269,000 customers in 96 communities 
with an estimated population of 681,000 and gas service to 
approximately 114,000 customers in 57 communities with an estimated 
population of 482,000. Approximately 77 percent of Orange and 
Rockland's consolidated energy sales are from its New York electric and 
gas service territory, which includes all of Rockland County, most of 
Orange County and part of Sullivan County, with 21 percent of 
consolidated energy sales generated from RECO in New Jersey and 
approximately one percent of consolidated energy sales from Pike in 
Pennsylvania.
    Orange and Rockland is regulated by the NYPSC. RECO is regulated by 
the New Jersey Board of Public Utilities and Pike is regulated by the 
Pennsylvania Public Utility Commission as to retail rates, service and 
accounts, issuance of securities and in other respects as to service 
provided in those individual states. FERC has jurisdiction under the 
FPA over certain of the electric facilities and operations of Orange 
and Rockland and its subsidiaries.
    For the twelve months ended September 30, 1998, Orange and 
Rockland's total operating revenues on a consolidated basis were 
approximately $643,281,000 and total utility operating revenues were 
$642,524,000, of which approximately $496 million was derived from 
electric sales and $146 million from gas sales.\20\ As noted above, 21 
percent of total utility revenues is generated from New Jersey, 
approximately one percent is from Pennsylvania, and the balance is from 
operations in New York. Consolidated assets of Orange and Rockland and 
its subsidiaries at September 30, 1998, were approximately $1.3 billion
---------------------------------------------------------------------------

    \20\ All intercompany balances and transactions have been 
eliminated.
---------------------------------------------------------------------------

    Orange and Rockland filed a plan (``Final Divestiture Plan'') to 
divest all of its electric generation facilities under the NYPSC 
divestiture orders. By orders issued April 16, 1998, and May 26, 1998, 
the NYPSC approved Orange and Rockland's Final Divestiture Plan. Orange 
and Rockland's Final Divestiture Plan provides for the divestiture of 
100 percent of Orange and Rockland's generating assets by auction.
    On November 24, 1998, Orange and Rockland agreed to sell all of its 
electric generating facilities, including its one-

[[Page 16513]]

third interest in the Bowline Station, to Southern Energy, Inc., a 
subsidiary of The Southern Company, a registered holding company. Also 
included in this sale is Con Edison's two-thirds interest in the 
Bowline Station. Orange and Rockland anticipates that this sale will be 
completed by April 30, 1999.
    Con Edison and Orange and Rockland are members of the New York 
Power Pool (``NYPP''), a cooperative association consisting of the 
major electric utilities operating in the State of New York. NYPP is a 
``tight'' power pool through which its members agree to coordinate 
their operations by operating their systems in parallel, by consulting 
on design, use and construction of capacity, by scheduling repair 
outages and by providing support to each other in meeting generating 
capacity and energy transmission needs. NYPP has a centralized computer 
system that monitors the available capacity on the system and the 
demand for energy of all of the NYPP members to determine which sources 
of capacity should be used to reliably provide economic energy to meet 
customer demand. Under the current NYPP structure, each member utility 
owns and controls its separate transmission system. Access to those 
systems is available through each utility's open access transmission 
tariff. Applicants state that NYPP has filed with the FERC a plan to 
reorganize and establish an Independent System Operator. Following the 
Merger, Con Edison and Orange and Rockland will continue to be members 
of NYPP and will continue to coordinate operations in accordance with 
applicable NYPP procedures. The Merger will be effected through the 
purchase of Orange and Rockland stock. Each share of Orange and 
Rockland common stock will be canceled and converted into the right to 
receive $58.50 in cash, without interest payable to the holder of such 
share upon surrender. Any Orange and Rockland common stock owned as 
treasury stock will be canceled and no payment will be due. All 
preferred stock and preference stock of Orange and Rockland will be 
redeemed, prior to the effective date of the Merger, at a redemption 
price equal to the respective amount set forth in Orange and Rockland's 
restated Certificate of Incorporation, together with all dividends 
accrued and unpaid to the date of redemption. The transactions relating 
to the Merger are expected to be taxable to the stockholders of Orange 
and Rockland for federal income tax purposes. The Merger Agreement is 
subject to customary closing conditions, including receipt of approval 
of the holders of Orange and Rockland's Common Stock and the approval 
of various state and federal regulatory agencies, including the 
Commission. Orange and Rockland held a meeting of its common 
stockholders on August 24, 1998, and the requisite two-third votes of 
its stockholders approved the Merger.
    CEI states that following consummation of the Merger, CEI and 
Orange and Rockland will continue to be entitled to exemptions from all 
provisions of the Act, except sections 9(a)(2) and 10 of the Act. CEI 
requests an order granting it an exemption under section 3(a)(1) of the 
Act. CEI states that it will continue to satisfy the requirements for 
exemption because it and each of its public utilities are and will 
continue to be predominately intrastate in character and will continue 
to carry on their businesses substantially in New York.\21\ Orange and 
Rockland will continue to rely on the Commission's order exempting 
Orange and Rockland from registration based on its status as a holding 
company which is predominantly a public utility company under section 
3(a)(2) of the Act.
---------------------------------------------------------------------------

    \21\ CEI states that after the Merger, 2% of its consolidated 
utility revenues will be derived from out of state operations. RECO, 
which operates only in New Jersey, will be 1.91% of the total. Pike, 
which operates only in Pennsylvania, is .09% of the total. CEI 
states that it does not have significant investments in nonutility 
businesses.
---------------------------------------------------------------------------

Allegheny Energy, Inc. (70-7888)

    Allegheny Energy, Inc. (``Allegheny''), 10435 Downsville Pike, 
Hagerstown, MD 21740-1766, a registered holding company, has filed a 
post-effective amendment under sections 6(a) and 7 of the Act and rule 
54 under the Act to application-declaration originally filed under 
sections 6(a), 7, 9(a), 10 and 12(b) of the Act and rules 45 and 54 
under the Act.
    By orders dated January 29, 1992 (HCAR No. 25462), February 28, 
1992 (HCAR No. 25481), July 14, 1992 (HCAR No. 25581), November 5, 1993 
(HCAR No. 25919), November 28, 1995 (HCAR No. 26418), April 18, 1996 
(HCAR No. 26506), and December 23, 1997 (HCAR No. 26804) (collectively 
``Prior Orders''), Allegheny was authorized, among other things, to 
issue up to $400 million in short-term debt through December 31, 2001. 
Allegheny now proposes to: (1) Increase the limit on the issuance of 
short-term debt from $400 million up to $750 million under the terms 
and conditions stated in the Prior Orders; and (2) extend the period of 
authorization through December 31, 2007.
    Allegheny states that the increase is necessary to enhance its 
ability to participate in evolving energy markets resulting form 
deregulation and, upon application and approval, to support acquisition 
and diversification plans.

    For the Commission by the Division of Investment Management, 
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-8239 Filed 4-2-99; 8:45 am]
BILLING CODE 8010-01-M