[Federal Register Volume 65, Number 48 (Friday, March 10, 2000)]
[Notices]
[Pages 13065-13067]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-5915]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27145]


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

March 3, 2000.
    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 amendment(s) 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 March 28, 2000, to the Secretary, Securities and Exchange 
Commission, Washington, DC 20549-0609, 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 the 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 March 28, 2000, the application(s) and/or 
declaration(s), as filed or as amended, may be granted and/or permitted 
to become effective.

Entergy Corporation and Entergy Power, Inc. (70-9583)

    Entergy Corporation (``Entergy''), a registered holding company, 
located at 639 Loyola Avenue, New Orleans, Louisiana 70113, and Entergy 
Power, Inc. (``EPI''),\1\ a wholly owned electric public utility 
subsidiary of Entergy (Entergy and EPI, collectively, the 
``Applicants''), located at Parkwood Two Building, 10055 Grogan's Mill 
Road, Suite 500, The Woodlands, Texas 77380, have filed an application 
pursuant to sections 9(a), 10 and 11 of the Act and rules 51 and 54 
under the Act.
---------------------------------------------------------------------------

    \1\Pursuant to an order of the Commission dated August 27, 1990 
(HCAR No. 25136) (``1990 Order''), Entergy formed EPI to participate 
as a supplier of electricity at wholesale to non-associate companies 
in bulk power markets. EPI currently owns a total of 665 MW of 
generating assets in non-exempt electric generating facilities.
---------------------------------------------------------------------------

    In conjunction with the power supply arrangements recently 
negotiated among EPI, Entergy Power Marketing Corp. (``EPMC''), which 
markets and brokers electricity and other energy commodities and is an 
associate company of EPI, Sam Rayburn Municipal Power Agency 
(``SRMPA''), a municipal corporation and political subdivision of 
Texas, and Vinton Public Power Authority (``VPPA''), a public power 
authority in Louisiana, SRMPA assigned to EPI its option to purchase 
from VPPA a 20% undivided ownership interest in Unit No. 6 of the Roy 
S. Nelson Generating Station (``Nelson 6'') and certain related assets 
(``Nelson 6 Ownership Interest'').\2\ EPI proposes to exercise the 
option and acquire from VPPA the Nelson 6 Ownership Interest for 
$1,000.
---------------------------------------------------------------------------

    \2\In 1981, SRMPA purchased the Nelson 6 Ownership Interest from 
Entergy Gulf States (an Entergy domestic retail electric utility 
company). In 1992, for state tax reasons, VPPA purchased the Nelson 
6 Ownership Interest from SRMP for the remaining undepreciated book 
value of the assets. With the sale to VPPA, SRMPA was granted a 
right of first refusal and an option to repurchase from VPPA legal 
title to the Nelson 6 Ownership Interest. Once the sale to VPPA 
occurred, SRMPA still remained responsible for a proportionate share 
of all costs and expenses of ownership.
---------------------------------------------------------------------------

    The Applicants state that the nominal purchase price that EPI 
proposes to pay for the Nelson 6 Ownership Interest reflects EPMC's 
prior purchase from SRMPA of an entitlement to 20% of the output of 
Nelson 6 (``Nelson 6 Capacity Entitlement'').\3\
---------------------------------------------------------------------------

    \3\Concurrently with the transfer of the Nelson 6 Ownership 
Interest to VPPA, SRMPA purchased the Nelson 6 Capacity Entitlement 
with the money it received form VPPA for its sale. In 1998, SRMPA 
paid EPMC $59,605,565 in consideration for a requirements contract. 
Under the contract, SRMPA was also to make periodic payments based 
on the power actually received. Simultaneously, EPMC purchased the 
Nelson 6 Capacity Entitlement from SRMPA for $59,605,565. EPMC also 
assumed SRMPA's proportionate share of the costs of ownership of 
Nelson 6. EPI has agreed to supply EPMC with any power necessary for 
it to meet its obligations to SRMPA under the requirements contract.
---------------------------------------------------------------------------

    Nelson 6 is a coal-fired, steam electric generating facility 
located in Westlake, Calcasieu Parish, Louisiana. Nelson 6 supplies a 
portion of the electric energy requirements of the cities of Jasper, 
Liberty, and Livingston, Texas and the Town of Vinton, Louisiana. 
Currently, Nelson 6 is owned by VPPA (20%), Sam Rayburn Generation & 
Transmission Cooperative (10%) and Entergy Gulf States (70%), an 
electric subsidiary of Entergy. Nelson 6 is directly interconnected 
with the transmission system of Entergy Gulf States and, thus, 
indirectly interconnected with the entire transmission grid of the 
Entergy System. Entergy Gulf States operates, maintains, and manages 
Nelson 6 on behalf of the co-owners.

Central and South West Corporation, et al. (70-9107)

    Central and South West Corporation (``CSW'') 1616 Woodall Rodgers 
Freeway, Dallas, Texas 75202, a registered holding company, and its 
wholly owned public utility subsidiary, Central Power and Light Company 
(``CPL'') 539 North Caracahua Street, Corpus Christi, Texas 78401-2902 
(collectively, ``Applicants''), have filed a post-effective amendment 
under sections 6(a), 7, 9(a), 10, 12(b), 12(c), and 13(b) of the Act, 
and rules 45, 46, 54, 90 and 91 under the Act, to an application-
declaration previously filed under the Act.

[[Page 13066]]

Background

    By order dated December 30, 1997 (``Omnibus Financing Order''),\4\ 
the Commission authorized CSW and certain of its subsidiaries, 
including CPL, through December 31, 2002 (``Authorization Period''), 
to, among other things, engage in certain internal and external 
financing.
---------------------------------------------------------------------------

    \4\Holding Co. Act Release No. 26811.
---------------------------------------------------------------------------

    In 1999, Texas enacted the Texas Public Utility Regulatory Act 
(``Restructuring Legislation'') which governs the restructuring of the 
electric industry in Texas. The Restructuring Legislation permits 
electric utilities with assets in Texas to recover stranded costs 
caused by the transition to a competitive market for electric 
generation services through the issuance of transition bonds 
(``Transition Bonds'') as authorized by the Public Utility Commission 
of Texas (``PUCT''). In accordance with procedures set forth in the 
Restructuring Legislation, on September 18, 1999, CPL filed an 
application with the PUCT for a financing order (``Financing Order'') 
to permit CPL or a third-party assignee of CPL, to issue Transition 
Bonds.\5\
---------------------------------------------------------------------------

    \5\As provided for in the Restructuring Legislation, Transition 
Bonds will have terms of not more than 15 years and the proceeds of 
Transition Bonds may be used solely for purposes of reducing the 
amount of recoverable regulatory assets and stranded costs, as 
determined by the PUCT, through the refinancing or retirement of 
utility debt or equity.
---------------------------------------------------------------------------

    Under the terms of PUCT Financing Orders, the Transition Bonds will 
be secured by the rights and interests of CPL under the Financing 
Order, including the irrevocable right to impose, collect and receive 
nonbypassable market transition charges (``TC''),\6\ as authorized in 
the Financing Order. These rights are referred to as ``Transition 
Property.'' The Restructuring Legislation further provides that the 
PUCT will make periodic adjustments to the TC.
---------------------------------------------------------------------------

    \6\Transition charges are generally defined in the Restructuring 
Legislation as nonbypassable amounts authorized to be charged for 
the use or availability of electric service under a Financing Order 
to recover a utility's ``qualified costs.'' Qualified costs include: 
100% of a utility's regulatory assets as of December 31, 1998, 75% 
of a utility's estimated stranded costs as determined by the PUCT, 
100% of the costs of issuing, supporting and servicing the 
Transition Bonds, 100% of the costs of retiring and refunding the 
utility's debt and equity securities with the proceeds of the 
Transition Bonds, and certain costs incurred by the PUCT in 
proceedings under the Restructuring Legislation.
---------------------------------------------------------------------------

Proposed Transactions

    In connection with the PUCT Financing Order, Applicants and any 
affiliated successor in interest to CPL's electric distribution 
businesses and assets, seek authority through the Authorized Period to: 
(1) Form one or more new wholly owned entities (``Special Purpose 
Issuer'') which are expected to be any one of the following: A trust, 
corporation, limited liability company or partnership; (2) acquire all 
the equity securities issued by each Special Purpose Issuer; (3) cause 
any Special Purpose Issuer to issue and sell Transition Bonds in an 
aggregate principal amount not to exceed $800 million;\7\ (4) enter 
into or cause any Special Purpose Issuer to enter into interest rate 
swaps, interest rate hedging programs and credit enhancement 
arrangements to reduce interest rate risks with respect to, and to 
facilitate the offering of Transition Bonds; and (5) provide certain 
services at other than cost.
---------------------------------------------------------------------------

    \7\The Transition Bonds reflect the securitization of 
approximately $764 million of regulatory assets and up to $36 
million of other qualified costs.
---------------------------------------------------------------------------

    Applicants further request that the issuance of Transition Bonds in 
an amount up to $800 million, be in addition to the financing 
limitations previously authorized in the Omnibus Financing Order.
    Following the issuance of the PUCT Financing Order, CPL will sell 
and transfer the Transition Property and the associated TC revenue 
stream created by the Financing Order to a Special Purpose Issuer in 
exchange for the net proceeds from the sale of the Transition Bonds. 
The Special Purpose Issuer will issue Transition Bonds in an amount not 
to exceed $800 million to finance its purchase of the Transition 
Property and the associated TC revenue stream from CPL in accordance 
with the related Financing Order. CPL will use the gross proceeds from 
the sale of Transition Bonds to: (1) Pay costs incurred in the issuance 
and sale of the Transition Bonds; (2) refund or retire utility debt or 
equity associated with its stranded costs; and (3) pay the costs of 
such refinancing and retirement.
    The Special Purpose Issuer may issue Transition Bonds in one or 
more series, and each series may be issued in one or more classes. 
Different series may have different maturities and coupon rates and 
each series may have classes with different maturities and coupon 
rates. There will be a date on which each class of Transition bonds is 
expected to be repaid and a legal final maturity date by which each 
class of Transition Bonds must be repaid, which will not be later than 
fifteen years after the date of issuance.\8\
---------------------------------------------------------------------------

    \8\Applicant state that the Transition Bonds are expected to 
have a credit rating of AAA.
---------------------------------------------------------------------------

    In addition, CPL proposes to enter into a Servicing Agreement with 
the Special Purpose Issuer, under which CPL will act as the servicer of 
the TC revenue stream. In this capacity, CPL, among other things, 
would: (1) Bill customers and retail electric providers and make 
collections on behalf of the Special Purpose Issuer; and (2) file with 
the PUCT for adjustment to the TC to achieve a level which permits the 
payment of all debt service and full recovery of qualified costs to be 
collected through TCs in accordance with the amortization schedule for 
each series and class of Transition Bonds. CPL may subcontract with its 
affiliates to carry out some of its servicing responsibilities, 
provided that the ratings of the Transition Bonds are neither reduced 
nor withdrawn as a result. In order to satisfy rating agency 
requirements, compensation to CPL must be at an arms' length basis. 
Accordingly, Applicants request an exemption from the at-cost standards 
of section 13(b).\9\
---------------------------------------------------------------------------

    \9\In addition, the Special Purpose Issuer may enter into an 
``Administration Agreement'' with CPL or another affiliate of CSW 
(the ``Administrator''), under which the Administrator would provide 
ministerial services on an as-needed basis to the Special Purpose 
Issuer. These services will consist primarily of administrative or 
housekeeping matters relating to the Special Purpose Issuer and may 
include providing Transition Bond documentation notices, maintaining 
books and records, and maintaining authority to do business in 
appropriate jurisdictions. The Special Purpose Issuer will reimburse 
the Administrator for the cost of these services provided in 
compliance with section 13(b) and rules 90 and 91.
---------------------------------------------------------------------------

    Applicants also seek authority for the Special Purpose Issuer (and/
or CPL, acting on behalf of the Special Purpose Issuer) to enter into 
transactions to convert all or a portion of any Transition Bond bearing 
interest at a floating rate (''Floating Rate Transition Bonds``) to 
fixed rate obligations using interest rate swaps (''Swaps``) or other 
derivative products designed for these purposes.
    The Special Purpose Issuer may enter into one or more Swaps or one 
or more derivative instruments, such as interest rate caps, interest 
rate floors and interest rate collars (collectively, ''Derivative 
Transactions``), with one or more counterparties from time-to-time 
through the Authorization Period. The notional amounts of the Swaps and 
the expected average life of the Swaps will not exceed that of the 
underlying Transition Bonds. The term of the Swaps would match the 
maturity of the Floating Rate Transition Bonds and the swap notional 
amount would equal the outstanding principal amount of the bonds. 
Applicants also seek authorization for the Special Purpose Issuer (or 
CPL, acting on behalf of the

[[Page 13067]]

Special Purpose Issuer) to enter into an interest rate hedging program 
utilizing Derivative Transactions.

    For the Commission by the Division of Investment Management, 
under delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 00-5915 Filed 3-9-00; 8:45 am]
BILLING CODE 8010-01-M