[Federal Register Volume 64, Number 167 (Monday, August 30, 1999)]
[Notices]
[Pages 47201-47202]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-22425]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27066]


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

August 23, 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 Branch 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 September 21, 1999, to the Secretary, Securities and 
Exchange Commission, Washington, D.C. 20549-0609, and serve a copy on 
the relevant applicant(s) and/or declaration(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 facts 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 September 21, 1999, the application(s) and/
or declaration(s), as filed or as amended, may be granted and/or 
permitted to become effective.

Eastern Utilities Associates (70-9527)

    Eastern Utilities Associates (``EUA''), One Liberty Square, P.O. 
Box 2333, Boston, Massachusetts 02107, a registered holding company, 
Eastern Edison Company (``Eastern Edison''), 750 West Center Street, 
West Bridgewater, Massachusetts 02379, an electric utility subsidiary 
of EUA, and Montaup Electric Company (``Montaup''), 750 West Center 
Street, West Bridgewater, Massachusetts 02379, a nonutility subsidiary 
of Eastern Edison, have filed an application-declaration under sections 
6(a)(2), 7, 9(a), 10, and 12(c) of the Act and rules 43 and 46 under 
the Act.
    EUA proposes to acquire from Eastern Edison, and Eastern Edison 
proposes to transfer to EUA, the securities of Montaup, including: (1) 
preferred stock; (2) common stock; and (3) debentures (``Montaup 
Securities''). The transfer of the Montaup Securities to EUA by Eastern 
Edison will take the form of, and it is also proposed that Eastern 
Edison make, a special dividend payment comprising all remaining 
capitalization of Montaup. Eastern Edison further proposes to make the 
dividend payment out of retained earnings to the maximum extent 
possible and, thereafter, out of paid-in capital and unearned surplus. 
Eastern Edison proposes that the dividend payment take the form of a 
redemption of its common stock, which will be funded with Montaup 
Securities.
    Prior to executing the transactions proposed above (and subject to 
Commission authorization and the consent of Eastern Edison, as sole 
shareholder of Montaup), Montaup proposes to amend its corporate 
charter to eliminate its status as a Section 9A company under Chapter 
164 of the Massachusetts General Laws so that its ability to transmit 
and sell electricity will not be tied to its sole shareholder.

Cinergy Corp., et al. New Century Energies, Inc., et al. (70-9531)

    Cinergy Corp. (``Cinergy''), a registered holding company located 
at 139 East Fourth Street, Cincinnati, Ohio 45202, New Century 
Energies, Inc. (``NCE''), a registered holding company located a 1225 
17th Street Denver, Colorado 80202, and Cadence Network LLC 
(``Cadence'' and together with Cinergy and NCE, ``Applicants''), a 
nonutility company and subsidiary of each of Cinergy and NCE, located 
at 105 East Fourth Street, Suite 200 Cincinnati, Ohio 45202, have filed 
a joint application under sections 6(a), 7, 9(a) and 10 of the Act and 
rule 54 under the Act.
    Cinergy and NCE acquired their ownership interests in Cadence in 
September 1997 under rule 58. Each of Cinergy and NCE indirectly holds 
a one-third ownership interest in Cadence. Cinergy holds its one-third 
interest in Cadence through its wholly owned, special-purpose 
nonutility subsidiary, Cinergy-Cadence, Inc. (``Cinergy-Cadence''); NCE 
holds its one-third interest in Cadence through its wholly owned, 
special-purpose nonutility subsidiary, New Century-Cadence, Inc. (``New 
Century-Cadence''). Both of these subsidiaries were formed under rule 
58 in order to acquire and hold Cinergy's and NCE's respective 
interests in Cadence.
    Applicants state that Cadence uses information to reduce energy-
related costs for commercial businesses that own and operate families 
of chain stores or other multi-location retail establishments. Cadence 
collects, centralizes and redistributes to customers relevant cost 
information using sophisticated technology. Through The Cadence Network 
(``Network''), an Internet-based interactive reporting tool developed 
by Cadence, Cadence's are able to track and manage electricity, natural 
gas and related costs incurred at their facilities (e.g., with respect 
to heating ventilation and air conditioning, water/sewage, telephone, 
cable, and trash collection). The Network anchors other services 
offered by Cadence that are specifically targeted at reducing the 
customers's energy-related costs. Currently these services consist of 
bill verification and

[[Page 47202]]

correction,\1\ ``best rate'' assurance,\2\ and consulting with respect 
to gas and electric commodity purchasing \3\ and energy efficiency 
projects.\4\ Customers compensate Cadence on a fixed fee or shared 
savings basis. At June 30, 1999, Cadence was serving customers with 
operations in all 50 states.
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    \1\ Under this service option, Cadence audits and otherwise 
reviews and monitors individual invoices and invoicing patterns for 
electricity, natural gas and water/sewage service furnished to 
customer sites. Cadence also identifies clusters of likely savings 
and provides comparative reports. Once errors are detected, 
Cadence's utility billing experts isolate the cause and negotiate on 
the client's behalf directly with the utility supplier for refunds 
and credits.
    \2\ Under this service option, Cadence assures that the client's 
high priority facilities are being assessed optimal utility rates 
for electricity and natural gas service. Cadence scrutinizes and 
verifies facility load data and utility rate schedules and 
negotiates or renegotiates directly with the utility supplier to 
ensure application of the optimal rates to these high-priority 
customer facilities. In connection with this program, clients can 
also authorize Cadence to conduct a national rate assessment, 
identifying and prioritizing tariff-based rate savings opportunities 
for electric and natural gas service with respect to all of the 
customer's sites throughout the United States.
    \3\ Under this service option, Cadence assists its customers in 
shopping for electric and natural gas supplies. Cadence can help 
secure the most attractive commodity rates possible through custom 
proposals and proposal reviews. After Cadence determines which 
facilities are most likely to profit from electric and gas 
deregulation and other competitive purchasing opportunities, Cadence 
uses the Network to aggregate load information and create the custom 
request for proposals necessary to shop for the commodity supply. 
Cadence then reviews proposals from the various marketers, analyzes 
rate pricing option, and helps to negotiate the contractual terms. 
Throughout this process, Cadence acts as a consultant for the 
customer. Cadence does not take title to the commodity nor act as a 
broker for the buyer or seller.
    \4\ Under this service option, Cadence helps implement energy 
efficiency projects to realize further cost savings for its 
customers. Using the detailed data captured from the Network, 
Cadence can begin to identify high-cost facilities that cannot be 
corrected by better rates or more accurate billing. To identify the 
most likely targets for cost reduction, Cadence conducts internal 
benchmarking, drawing on internal data-mining techniques. Once it 
has identified the problem and likely solution, Cadence prepares 
proposals for national energy-efficiency projects and develop 
comprehensive strategies. Cadence develops the implementation plan, 
recommends the proposed application, and negotiates for project 
procurement. In this regard, Cadence acts as a project facilitator 
or overseer, rather than a contractors.
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    As an ``energy-related company,'' as defined under rule 58, 
substantially all of Cadence's revenues must derive, and, according to 
Applicants, have derived, from permissible energy-related activities 
carried out within the United States. However, Applicants assert that 
this geographical restriction imposes significant business and 
competitive disadvantages on Cadence, noting, among other things, that 
certain of Cadence's customers have locations outside of the United 
States for which they would like Cadence to provide services consistent 
with the services Cadence provides them in the United States.
    Applicants propose that Cadence be permitted to market its utility-
related cost reporting and reduction services anywhere outside the 
United States, without restriction on the amount or proportion of 
revenues derived from these activities outside the United States. In 
connection with this proposal, Cinergy and NCE request authority to 
retain their ownership interests in Cadence, Cinergy-Cadence and New 
Century-Cadence previously acquired under rule 58. In addition, 
Applicants propose that this authority cover not merely the utility-
related cost reporting and reduction services now in place, but include 
additional similar and complementary energy-related services that 
Cadence may develop and seek to offer to customers in future, both in 
the United States and abroad, provided that in no event would these 
future services be broader in scope than the energy management services 
and consulting services approved for Cinergy's nonutility subsidiary, 
Cinergy Solutions, Inc.\5\ Applicants further request that Cadence be 
granted the flexibility to provide its services directly or indirectly 
through one or more special-purpose subsidiaries, formed as 
corporations, partnerships, limited liability companies or other legal 
entities, as applicable business, legal, tax, accounting or strategic 
considerations dictate.\6\ Cinergy and NCE commit that they will not 
seek recovery through higher rates to customers of their utility 
subsidiaries for any losses or inadequate returns arising from the 
proposed transactions.

    \5\ See Cinergy Corp., Holding Co. Act Release No. 26662 
(February 7, 1997).
    \6\ Cinergy and NCE anticipate that they will meet their 
allocable shares of Cadence's financing needs through capital 
contributions or loans exempt under rules 45 and 52. In addition, 
Cadence may issue its securities to outside parties to finance its 
business in transactions exempt under rule 52. To the extent 
necessary, any Cinergy guarantees in respect to Cadence securities 
would be issued under the authority granted to Cinergy in Holding 
Co. Act Release No. 26984 (March 1, 1999). Likewise, any NCE 
guarantees in respect of Cadence securities would be issued under 
the authority granted to NCE in Holding Co. Act Release No. 27000 
(April 7, 1999).
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    For the Commission by the Division of Investment Management, 
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-22425 Filed 8-27-99; 8:45 am]
BILLING CODE 8010-01-M