[Federal Register Volume 65, Number 54 (Monday, March 20, 2000)]
[Notices]
[Pages 15024-15029]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-6754]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-27152]
Filings Under the Public Utility Holding Company Act of 1935, as
Amended (``Act'')
March 13, 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 transactions(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 April 4, 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 April 4, 2000, the application(s) and/or
declaration(s), as filed or as amended, may be granted and/or permitted
to become effective.
National Fuel Gas, et al. 70-9153
National Fuel Gas Company (``NFG''), a registered holding company,
NFG's wholly owned gas utility subsidiary, National Fuel Gas
Distribution Corporation, and NFG's nonutility subsidiaries, National
Fuel Gas Supply Corporation, Highland Land & Minerals, Inc., Leidy Hub,
Inc., Horizon Energy Development, Inc., Data-Track Account Services,
Inc. and Seneca Independence Pipeline Company, each of 10 Lafayette
Square, Buffalo, New York 14203, Seneca Resources Corporation, Niagara
Independence Marketing Company and Upstate Energy Inc., each of 1201
Louisiana Street, Suite 400, Houston, Texas 77002, and National Fuel
Resources, Inc. (collectively, ``Current Money Pool Participants'') and
NFR Power, Inc. (``Power'') \1\ of 165 Lawrence Bell Drive, Suite 120,
Williamsville, New York 14221 (collectively, ``Applicants'', the
Applicants, other than NFG, are referred to collectively as
``Subsidiaries''), have filed with this Commission a post-effective
amendment under sections 6(a), 7, 9(a), 10, 12(b), 12(f) and 32 of the
Act, and rules 45, 53 and 54 under the Act to their application-
declaration filed under sections 6(a), 7, 9(a), 10, 12(b), 12(f), 32
and 33 of the Act, and rule 53 under the Act.
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\1\ Power is a nonutility subsidiary of NFG, and, as a result of
a determination of the Federal Energy Regulatory Commission dated
March 29, 1996 (Docket No. EG96-47-000), is an exempt wholesale
generator as defined in section 32(a)(1) of the Act.
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By order dated March 20, 1998 (HCAR No. 26847) (``March Order''),
the Current Money Pool Participants were authorized to engage in
various financing and related transactions through December 31, 2002
(``Authorization Period''). The March Order also authorized, among
other things, the Current Money Pool Participants to continue to engage
in a money pool arrangement (``Money Pool'') through the Authorization
Period.
Applicants now request authorization for Power to become a limited
participant in the Money Pool through the Authorization Period.
Specifically, Power's participation would be limited to depositing
surplus funds that it may have from time to time into the Money Pool
and withdrawing its own funds as needed. In addition, Power's
participation would be subject to the terms and conditions for Money
Pool participation contained in the March Order.
The March Order also authorized NFG to guarantee securities of, and
provide other forms of credit support with respect to obligations of,
its Subsidiaries in an aggregate amount not to exceed $2 billion at any
time during the Authorization Period (``Guarantee Authority''). NFG
proposes to guarantee securities of Power, and to provide other forms
of credit support with respect to obligations of Power as may be
necessary or appropriate to enable Power to carry on in the ordinary
course of business. Such guarantees and credit support to Power would
be subject to the terms and conditions of the Guarantee Authority
contained in the March Order.
GPU, Inc., et al. (70-9599)
GPU, Inc. (``GPU''), a registered public utility holding company,
and its wholly owned subsidiary, GPX Acquisition Corp. (``Acquisition
Corp.'', and together with GPU, ``Applicants''), both located at 300
Madison Avenue, Morristown, New Jersey 07962, have filed an
application-declaration under sections 6(a), 7, 9(a), 10, 11(b)(1), 12,
and 13(b) of the Act and rules 51, 54, 90 and 91 under the Act.
The Applicants propose to acquire for cash all of the issued and
outstanding common shares of MYR Group, Inc. (``MYR''), a Delaware
corporation (the ``Merger''), under the terms of a Plan and Agreement
of Merger, dated as of December 21, 1999 (``Merger Agreement''). MYR is
a publicly held utility infrastructure services and electrical
contracting company headquartered in Rolling Meadows, Illinois. MYR's
common stock is registered under section 12(b) of the Securities
Exchange Act of 1934, as amended (``Exchange Act''), and is listed for
trading on the New York Stock Exchange.
Under the terms of the Merger Agreement, Acquisition Corp. on
December 29, 1999 commenced a cash tender offer in accordance with
section 14 of the Exchange Act (``Tender Offer'') to acquire MYR common
stock subject to the terms and conditions of the Tender Offer.\1\
Following completion of the Tender Offer, Acquisition Corp. will be
merged with and into MYR, with MYR as the surviving entity. MYR will
then become a direct wholly owned subsidiary of GPU. On February 24,
2000, the Applicants extended the
[[Page 15025]]
Tender Offer expiration date from February 29, 2000 to March 24, 2000.
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\1\ The Tender Offer is subject to the terms and conditions of
rule 51 under the Act, which states that consummation of the Tender
Offer is expressly conditioned upon Commission approval of the
Merger under the Act.
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Under the Merger Agreement, GPU has agreed to pay MYR common-stock
shareholders $30.10 per share in cash for their shares. MYR currently
has 6,429,135 shares of common stock outstanding (including 335,927
shares issued under MYR's restricted stock plans). An additional
882,086 MYR shares are issuable under outstanding MYR convertible
debt,\2\ and a total of 756,650 shares of MYR common stock are issuable
under outstanding stock options. Holders of these stock options may
elect to convert these options into options to purchase shares of GPU
common stock, as described below, or may elect to receive cash in an
amount per share equal to the difference between $30.10 and the per
share exercise price. The aggregate purchase price for all shares of
MYR common stock outstanding, after taking into account the offsetting
payments attributable to the future exercise of stock options, is
approximately $215 million.
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\2\ MYR redeemed all of this outstanding convertible debt on
March 5, 2000 in accordance with the optional redemption provisions
of these securities. The total redemption price was $2,272,538.
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Subject to Commission authorization, GPU has agreed to allow the
holders of MYR stock options and the holders of outstanding shares of
MYR restricted stock to elect, in lieu of the cash payments described
above, to: (1) Receive options to purchase shares of GPU common stock
in exchange for MYR stock options; or (2) receive shares of GPU common
stock in exchange for MYR restricted stock. GPU therefore seeks
authority to issue shares of GPU's common stock for this purpose. The
amount of GPU common stock issued or issuable under this arrangement
will be determined according to a formula intended to provide holders
of MYR stock options and MYR restricted stock with equivalent value in
GPU common stock. The ``Exchange Ratio'' will be determined by dividing
$30.10 by the average closing price of GPU common stock for the five
trading days immediately preceding the date of consummation of the
Merger (the ``Operative Price''). The number of shares of GPU common
stock issuable in respect of any assumed MYR stock option shall be
equal to the product of the number of shares of MYR common stock
covered by such option multiplied by the Exchange Ratio, and the per
share exercise price for the GPU common stock so issuable shall be
equal to the quotient determined by dividing the exercise price per
share specified for such MYR stock option by the Exchange Ratio. The
number of shares of GPU common stock issuable in respect of any assumed
outstanding shares of MYR restricted stock shall be equal to the
product of the number of shares of this restricted stock multiplied by
the number determined by dividing $30.10 by the Operative Price.
GPU will finance the purchase price of MYR with short-term bank
borrowings under its existing lines of credit. GPU will account for the
acquisition under the ``purchase method'' of accounting. The expected
acquisition premium, the amount of which has not been quantified, will
be amortized over a period yet to be determined.
MYR's business consists of providing utility transmission and
distribution, infrastructure and related commercial and industrial
electrical (and some mechanical) contracting services to utility,
industrial, mining, institutional and governmental entities on a
nationwide basis. MYR is the fifth largest specialty contractor in the
United States and has eight operating subsidiaries across the
country.\3\ For the nine-month period ended September 30, 1999, MYR had
total consolidated assets of $120,769,000, consolidated gross revenues
(referred to as ``contract revenues'') of $348,116,000; and
consolidated net income of $9,281,000.\4\
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\3\ MYR operates through the following subsidiary companies:
L.E. Myers Co. in the Southeast, Midwest and Northeast; Harlan
Electric Company in Michigan, the Northeast and the Ohio Valley;
Sturgeon Electric Company, Inc. in the West; Hawkeye Construction,
Inc. in the Pacific Northwest; D.W. Close Company, Inc. in Seattle;
Power Piping Company in Pennsylvania, Virginia and the Ohio River
Valley; ComTel Technology, Inc. in Colorado and Arizona; and MYRcom
in the Southeast and Southwest.
\4\ Financial data for the nine months ended September 30, 1999
has been derived from unaudited financial statements.
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MYR's transmission and distribution services (``T&D Services'')
represented approximately 54% of MYR's 1999 gross revenues and is MYR's
predominant business activity. T&D Services include the construction
and maintenance of transmission and distribution power lines and
substations for utility, industrial, institutional and governmental
facilities. MYR also performs storm and other emergency restoration
services for utility networks.
MYR's infrastructure services include telecommunications
installation services and traffic signalization work, each of which
represented less than 10% of MYR's 1999 gross revenues.
Telecommunications services are provided to primary telecommunications
carriers, regional service providers and commercial clients and include
the construction of telecommunications towers, installation of overhead
and underground copper and fiber optic cables, and installation and
maintenance of LAN/WAN, telephone, video, data, and other similar
communication systems.
Traffic signalization services generally consist of electrical
construction and maintenance of traffic and light rail signalization
equipment, such as fiber optic interconnections for traffic management
systems, ramp metering, and highway lighting installation. Customers
for these services include government transportation agencies, regional
transit districts and municipalities.
MYR's commercial and industrial services (``C&I Services'')
primarily consist of electrical construction activities such as the
installation of complete electrical system wiring for utilities and
commercial and industrial facilities. MYR also performs some related
heavy mechanical construction services involving the installation of
complex piping systems and related mechanical equipment and
instrumentation for major new construction projects. In 1999, C&I
Services accounted for approximately 33% of MYR's gross revenues.
MYR has entered into a letter of intent (``LOI'') to acquire from
the two sole stockholders all of the issued and outstanding stock of a
relatively small, privately held transmission and distribution
electrical contracting company located in Colorado (``T&D Co.''). T&D
Co. is a regional utility infrastructure contractor engaged solely in
the construction and installation of electrical substation,
transmission and distribution facilities for both investor-owned and
municipal utility systems as well as governmental entities.\5\ In
addition, T&D Co. constructs and installs fiber optic lines. For 1999,
T&D Co.'s gross revenues were approximately $18 million. MYR currently
expects to complete its acquisition of T&D Co. prior to GPU's
acquisition of MYR. MYR intends to fund the entire purchase price
(approximately $5 million) from internal sources.
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\5\ T&D Co.'s largest customers during 1998 (accounting for
about 72% of its gross revenues) were Bonneville Power
Administration; IREA; M&A Electric Association; Tri-State G&T; Luke
Air Force Base; Lea County Electric; Texas-New Mexico Power; and
Western Area Power Administration.
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In the event that the T&D Co. transaction is not completed prior to
GPU's acquisition of MYR common stock under the Tender Offer,
Applicants request further authorization for MYR to acquire the T&D Co.
[[Page 15026]]
common stock for an aggregate purchase price not to exceed $5 million.
After the Merger, MYR will provide T&D Services, C&I Services, and
other related infrastructure services to both non-affiliates and
affiliates of GPU, including GPU's wholly owned utility subsidiary
companies.\6\ All services provided by MYR to affiliates within the GPU
system will be provided at cost pursuant to Rules 90 and 91 under the
Act except to the extent the Commission may grant an exemption from
such rules or as otherwise provided in the Act. All services provided
by MYR to non-affiliates would be offered at market-based rates
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\6\ GPU's utility subsidiaries are: Jersey Central Power & Light
Company; Pennsylvania Electric Company; and Metropolitan Edison
Company.
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New Century Energies, Inc., et al. (70-9539)
New Century Energies, Inc. (``NCE''), a registered public utility
holding company located at 1225 Seventeenth Street, Denver, Colorado,
80202, and Northern States Power Company (``NSP''), public utility
holding company exempt from registration by order under section 3(a)(2)
of the Act,\1\ located at 414 Nicollet Mall, Minneapolis, Minnesota,
55401, (collectively ``Applicants'') have filed an application-
declaration under sections 6(a), 7, 9(a), 9(c)(3), 10, 12(d), 13(b) of
the Act, and rules 44, 54, 87, 90 and 91 under the Act.
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\1\ See Northern States Power Co., Holding Co. Act Release No.
22334 (Dec. 23, 1981). Section 3(a)(2) of the Act provides an
exemption from registration to a holidng company that is
``predominantly a public-utility company whose operations as such do
not extend beyond the State in which it is organized and states
contiguous thereto.''
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In summary, NCE and NSP propose to combine their businesses under a
new holding company, Xcel Energy Inc. Under an Agreement and Plan of
Merger, dated as of March 24, 1999 (the ``Merger Agreement''), NCE will
merge with and into NSP (``Merger''). NSP, as the surviving
corporation, will change its name to Xcel Energy Inc. (``Xcel''). Also
as part of the Merger, NSP intends to transfer its existing utility
operations currently at the parent company level to a newly formed,
wholly owned utility subsidiary of Xcel (``New NSP'').\2\ Xcel will
have six public-utility subsidiaries after the Merger: Public Service
Company of Colorado (``PSC''), Cheyenne Light, Fuel and Power Company
(``Cheyenne'') and Southwestern Public Service Company (``SPS'')
(collectively, the ``NCE Operating Companies''), New NSP, Black
Mountain Gas Company (``BMG'') \3\ and NSP's current utility
subsidiary, NSP-Wisconsin (``NSP-W'' and, together with BMG and New
NSP, ``NSP Operating Companies'') (collectively, ``Xcel Operating
Companies''). Xcel will register under section 5 of the Act following
the merger. In addition, NSP and NCE propose to engage in various
intrasystem transactions. NCE further requests an extension of time
provided in an earlier Commission order to complete a planned
interconnection between SPS and PSC.
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\2\ NSP requests authority to organize and capitalize New NSP
for this purpose.
\3\ Black Mountain Gas Company will be the name of a company NSP
has separately proposed to establish (in File No. 70-9337), that
would assume the assets and operations of NSP's gas and propane
utlity business in Arizona, currently run as a division of NSP.
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I. Background
A. NCE
In accordance with an order of the Commission dated August 1, 1997
(``1997 Order''),\4\ NCE's utility operations consist for three
integrated utility systems. The two electric utility integrated systems
include (1) PSC's and SPS's electric utility operations and (2) the
Cheyenne system. The integrated gas utility system is comprised of
PSC's and Cheyenne's gas utility operations.\5\
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\4\ See New Century Energies, Inc., HCAR No. 26748 (August 1,
1997) (authorizing the formation of the NCE system).
\5\ SPS has no gas utility operations.
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PSC serves approximately 1.;2 million electric customers and
approximately one million gas customers in Colorado. PCS's transmission
facilities are located in Colorado. PSC is a member of the Western
Systems Coordinating Council (``WSCC''), an interstate network of
transmission facilities owned by public entities and investor-owned
utilities. WSCC is the regional reliability coordinating organization
for member electric power systems in the entire western electric grid
of the United States (``Western Interconnect''). Nearby PSC are the two
high voltage direct current (``HVDC'') between the WSCC and the eastern
electrical grid of the United States (``Eastern Interconnect''). PSC is
subject to rate regulation by the Public Utilities Commission of the
State of Colorado. PSC is also subject to wholesale rate regulation by
the Federal Energy Regulatory Commission (the ``FERC'') under the
Federal Power Act, as amended (the ``FPA'') and the Natural Gas Act of
1935, as amended (the ``NGA'')
SPS, a New Mexico corporation, serves approximately 1.2 million
electric customers in portions of Texas, New Mexico, Oklahoma and
Kansas. SPS' transmission system is located in parts of Texas, New
Mexico, Oklahoma and Kansas. SPS is a member of the Southwest Power
Pool (``SPP'') and has the ability to purchase or sell energy from
power producers in the Eastern Interconnect through its interconnection
with Public Service Company of Oklahoma (``PSO''), and electric public
utility subsidiary of Central and South West Corporation, a registered
holding company, and West Plains Energy-Kansas, a division of UtiliCorp
United Inc., a holding company exempt from registration under the Act.
SPS also has the ability to purchase and sell energy from power
producers in the Western Interconnect through its interconnection with
the WSCC. SPS is regulated by the Public Utility Commission of Texas,
the New Mexico Public Regulation Commission, the Kansas Corporation
Commission and the Oklahoma Corporation Commission. SPS is also subject
to regulation by the FERC under the FPA.
Cheyenne, also a member of WSCC, serves approximately 35,000
electric customers and 28,000 gas customers in and around Cheyenne,
Wyoming. Cheyenne's limited transmission facilities, which are located
in Wyoming, serve primarily to deliver power that Cheyenne purchases
from its full requirements supplier, PacifiCorp.\6\ Cheyenne is subject
to regulation by the Wyoming Public Service Commission.\7\
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\6\ The lines consist of two 115 kilovolt transmission line
segments that total 25.5 miles in length.
\7\ Cheyenne does not have any wholesale load.
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NCE also owns, directly or indirectly, various nonutility
subsidiaries.\8\ NCE's two directly owned non-utility subsidiaries are
West Gas InterState, Inc., a natural gas pipeline company subject to
FERC jurisdiction under the NGA, and NC Enterprises, Inc., a holding
company for NCE's foreign operations and most of its nonutility
businesses.
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\8\ The application states that the nonutility operations of NCE
have all been previously authorized under the Act or have been
established under a rule or statutory exemption.
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As of September 30, 1999, 115,533,704 shares of NCE Common Stock
and no shares of NCE preferred stock were issued and outstanding. The
consolidated assets of NCE, as of September 30, 1999, were
approximately $8.1 billion, representing $5.1 billion in net electric
utility property, plant and equipment ($1.7 billion for SPS, $3 billion
for PSC and $42 million for Cheyenne); $808 million in net gas utility
property, plant and equipment (&779 million for PSC and $29 million for
Cheyenne); $443 million in nonutility subsidiary property, plant
[[Page 15027]]
and equipment; and $1.7 billion in other corporate assets.
Revenues for Cheyenne NCE's utility operations for the 12 months
ended September 30, 1999 are as follows ($ in millions):
------------------------------------------------------------------------
Electric
utility Gas utility
revenues revenues
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SPS........................................... 717 ...........
PSC........................................... 1,156 477
Cheyenne...................................... 40 19
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B. NSP
NSP is engaged primarily in the generation, transmission and
distribution of electricity throughout a 30,000 square mile service
area in Minnesota, North Dakota and South Dakota. NSP also purchases,
distributes and sells natural gas to retail customers in this area and
transports customer-owned gas in approximately 118 communities within
this area and in Arizona.\9\ As of September 30, 1999, NSP provided
retail electric utility service to approximately 1.2 million customers
and gas utility service to approximately 385,000 customers. NSP-W
generates, transmits and distributes electricity to approximately
210,400 retail customers in an area of approximately 18,900 square
miles in northwestern Wisconsin and to approximately 9,100 electric
retail customers in an area of approximately 300 square miles in the
western portion of Michigan's Upper Peninsula. In addition, NSP-W
purchases, distributes and sells natural gas to retail customers or
transports customer-owned natural gas in the same service territory to
approximately 78,000 in Wisconsin and 5,000 customers in Michigan.\10\
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\9\ As noted above, NSP currently serves these customers in
Arizona out of a division that NSP intends to incorporate.
\10\ In 1998, NSP-W provided approximately 13% of NSP's
consolidated revenues.
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The electric transmission system of NSP and NSP-W is located
throughout the service territories of the two utilities in Minnesota,
North and South Dakota, Michigan and Wisconsin. NSP and NSP-W are
directly connected with each other through numerous transmission lines
that they own.\11\ In addition, NSP and NSP-W are members of the Mid-
Continent Area Power Pool (``MAPP''), the regional reliability council
for numerous electric providers in portions of the Midwest. The NSP
electric system is interconnected with 19 other utility systems,
including utilities in MAPP and in the Mid-America Interconnected
Network.
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\11\ The Commission has previously determined that the electric
and gas properties, respectively, of NSP each constitute an
integrated public-utility system. See Northern States Power Co.,
supra at note 1.
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Retail sales rates, services and other aspects of NSP's retail
operations are subject to the jurisdiction of the Minnesota Public
Utilities Commission (``Minnesota Commission''), the North Dakota
Public Service Commission, the South Dakota Public Utilities Commission
and the Arizona Corporation Commission within their respective states.
Retail sales rates, services and other aspects of NSP-W's retail
operations are subject to the jurisdiction of the Wisconsin Public
Service Commission (``Wisconsin Commission'') and the Michigan
Commission. Certain activities of NSP and NSP-W, including wholesale
rates for interstate sales of electricity, the interstate transmission
of electricity and the sale of natural gas for resale, are subject to
the jurisdiction of the FERC.
NSP is also engaged in various nonutility businesses. NSP directly
provides: (i) an appliance services program for its residential
customers, (ii) construction of natural gas distribution systems for
third parties (primarily end-users and municipal gas systems), (iii)
sale and installation of power quality instruments primarily to protect
customers' equipment from electric surges, (iv) sale of steam to
industrial customers in NSP's service territory, and (v) installation
and maintenance of street lighting for municipalities and other
customers.
In addition, NSP owns the following subsidiaries: (i) NSP Financing
I, a special purpose business trust; (ii) Viking Gas Transmission
Company, an interstate natural gas pipeline subject to FERC
jurisdiction under the NGA; (iii) Eloigne Company (``Eloigne''), an
investor in projects that qualify for low-income housing tax credits;
(iv) Energy Masters International, Inc. (``Energy Masters''), an energy
services company; (v) Seren Innovations, Inc., a company that provides
cable, telephone and high-speed internet access; (vi) Ultra Power
Technologies, Inc., a company that markets power-cable testing
technology; (vii) First Midwest Auto Park, Inc., an owner of a parking
garage; (viii) United Power and Land Company, a real estate investment
company; (ix) NRG Energy, Inc., a holding company for many of NSP's
nonutility businesses, including significant investments in the
independent power projects and foreign operations; (x) Reddy Kilowatt
Corporation, the owner of certain energy-related intellectual property
rights; (xi) Nuclear Management Company (``NMCC''), a limited liability
company that will provide services to the nuclear operations of its
members; and (xii) Natrogas, Inc., a provider of propane services.\12\
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\12\ NSP owns 100% of all of these businesses with the exception
of its 25% membership interest in NMC.
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Further, Eloigne, Energy Masters and NRG Energy have their own non-
utility subsidiaries. Eloigne's subsidiaries all invest in affordable
housing projects, while Energy Masters' subsidiary, Energy Solutions
International, Inc., provides energy services. According to the
Applications, NRG Energy's subsidiaries include exempt wholesale
generators (``EWGs''), qualifying facilities (``QFs''), QF holding
companies, foreign utility companies (``FUCOs''), and other companies
engaged either in activities specified in the various subparts of rule
58(b)(1) or in other nonutility activities that comply with Commission
precedent.\13\
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\13\ These activities include payroll and related services,
operations and management services, international power project
business development, and non-profit community development
activities.
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NSP-W owns Clearwater Investments, Inc., an investor in housing
projects that qualify for low-income housing tax credits, and NSP Land,
Inc., a real estate investment company. NSP-W also owns &75.86% of
Chippewa and Flambeau Improvement Company, a company that builds and
operates dams and reservoirs for hydro-electric plants.
As of September 30, 1999, there were 154,358,267 shares of NSP
Common Stock and 1,050,000 shares of NSP cumulative preferred stock
issued and outstanding. Consolidated assets of NSP and its subsidiaries
as of September 30, 1999 were approximately $8.7 billion, consisting of
$3.5 billion in net electric utility property, plant and equipment
($2.9 billion for NSP and $622 million for NSP-W); $459 million in net
gas utility property, plant and equipment ($395 million for NSP and $64
million for NSP-W); and $2.9 billion in nonutility subsidiary assets,
and $1.7 billion in other corporate assets.
Revenues for NSP's utility operations for the year ended September
30, 1999 are as follows (before intercompany eliminations ( ($ in
millions):
------------------------------------------------------------------------
Electric
utility Gas utility
revenues revenues
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NSP........................................... 2,343 360
NSP-W......................................... 335 81
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II. Description of the Merger
Under the Merger Agreement, each share of NCE common stock issued
and outstanding immediately prior to the effective time of the Merger,
together with any NCE Rights (as defined
[[Page 15028]]
below),\14\ will be converted into the right to receive 1.55 shares
(the ``Conversion Ratio'') of NSP common stock,\15\ and each share of
NCE common stock, together with any NCE Right, owned by NSP or a
subsidiary or held in the treasury of NCE, will be canceled.\16\ Based
upon the capitalization of NCE and NSP on March 24, 1999 (the date on
which the Merger Agreement was signed) and the Conversion Ratio, NCE
and NSP shareholders would own 54% and 46%, respectively, of the common
equity of Xcel as of that date. As a result of the Merger, PSC, SPS and
Cheyenne will come subsidiaries of Xcel along with New NSP and NSP-
W.\17\
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\14\ The ``NCE Rights'' are rights issued by NCE that entitled
registered holders of purchase from NCE one-hundredth of a share of
Series A Junior Participating Preferred Stock for each NCE Right.
The NCE Rights were distributed a dividend on each outstanding share
of NCE Common Stock as part of NCE's shareholder rights plan, which
was approved in the 1997 Order.
\15\ As noted above, NSP will change its name to Xcel at or
before the Merger.
\16\ Each issued and outstanding share of NSP Common Stock and
each share of preferred stock of NSP issued and outstanding
immediately prior to the effective time of the Merger will remain
outstanding.
\17\ As noted above, NSP has proposed that BMG become a
subsidiary of Xcel after the Merger. See note 3 supra.
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III. The Combined Operations
A. Overview
The application states that the gas utility operations of the NSP
Operating Companies, PSC and Cheyenne, together will constitute a gas
integrated public-utility system within the meaning of section
2(a)(29)(B) of the Act. In addition, the application states that the
electric utility operations of the NSP Operating Companies, PSC and SPS
will be an electric integrated public-utility system (the ``Primary
System'') within the meaning of section 2(a)(29)(A).\18\
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\18\ The Commission determined in the 1997 Order that NCE could
own the electric operations of Cheyenne as an additional electric
integrated system.
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Applicants state that the Primary System will not engage in joint
economic dispatch. As more particularly described below. Applicants
contend that the Primary System will be integrated through, among other
things, the coordination of transmission operations, the coordination
of generation operations, and the coordination of marketing and
administrative operations.
B. The Primary System
1. Transmission Coordination. Applicants state that three of the
Xcel Operating Companies, i.e., NSP, NSP-W and SPS, will participate in
the Midwest Independent Transmission System Operator, Inc.
(``MISO'').\19\ Applicants state that participation in MISDO will
consolidate in MISO management and control of Applicants' transmission
facilities, along with those of the other MISDO members, and through
their access to the MISO transmission tariff, will enable Applicants to
transact with each other and with the other MISO members at single-
system transmission rates.
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\19\ The participating transmission owners in MISO currently
are: Allegheny Energy, Alliant Corporation (on behalf of IES
Utilities, Inc., Interstate Power Company, South Benoit Water, Gas &
Electric Company, and Wisconsin Power Company), Ameren (on behalf of
Central Illinois Public Service Company and Union Electric Company),
Central Illinois Light Company, Cinergy Corp. (on behalf of
Cincinnati Gas & Electric Company, PSI Energy, Inc., and Union
Light, Heat & Power), Commonwealth Edison Company (including
Commonwealth Edison Company of Indiana), Hoosier Energy Rural
Electric Cooperative, Inc., Illinois Power Company, Kentucky
Utilities Company, Louisville Gas & Electric Company, Northern
States Power Company, Southern Illinois Power Cooperative, Southern
Indiana Gas & Electric Company, Wabash Valley Power Association,
Inc. and Wisconsin Electric Power Company. PSC will not be a member
of MISO.
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At present, PSO whose service territory lies between SPS and Ameren
Corporation (``Ameren''), the nearest member of MISO, does not plan to
become a member of MISO. Applicants anticipate, however, that, by the
time that MISO becomes fully operational, it will have attracted
additional members, which will permit SPS to be connected with MISO
through intervening MISO-member utilities. For example, if the SPP were
to join MISO,\20\ Applicants state that there would be a MISO
transmission region between SPS and NSP that would be contiguous to
both utilities. Absent changes that result in a connection between SPS,
another MISO member and NSP, however, SPS intends to obtain a firm, 200
MW bi-directional transmission path from the point at which SPS
connects with PSO to the point at which PSO connects with Ameren.
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\20\ Applicants state that the SPP currently plans to join MISO.
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Applicants also state that, whether or not these changes occur,
they plan to achieve additional operational efficiencies for the
combined electric operations through reservation of a 100 MW firm
transmission unit-directional path from SPS to New NSP, through SPP and
Ameren for the period 2002 through 2004 (the ``Contract Path'').\21\
The Contract Path would permit a flow of 100 MW from a point of receipt
in SPS's service territory (its Tolk generating station) to a point of
delivery in NSP-W's service territory (its Sherbourne County generation
station).
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\21\ Applicants state that the Contract Path, like virtually
every firm contract path, has some market concentrating effects as a
result of loop-flows, as well as market-deconcentrating effects. For
this reason, Applicants have treated the Contract Path as a separate
option from MISO in their filing for FERC approval of the Merger.
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2. Coordination of Generation Operations. Applicants state that
they have entered into a joint operating agreement (``Joint Operating
Agreement''), according to which they will coordinate the operation and
dispatch of the electric generating resources of the Xcel Operating
Companies. Applicants assert that although not providing for joint
economic dispatch the Joint Operating Agreement will provide for
coordinated dispatch. Under this arrangement, system dispatchers will
arrange for economy energy sales where the sales would lower the
operating costs of the purchasing Xcel Operating Company.
The Joint Operating Agreement also provides for short-term capacity
and associated energy sales, subject to the same limitations. In
addition, the Joint Operating Agreement provides for joint generation
planning and the common procurement of resources. Further, the Joint
Operating Agreement vests New Century Services, Inc., (to be renamed
Xcel Energy Services Inc.) (``New Century Services''), currently NCE's
service company subsidiary, with the responsibility of arranging joint
sales and purchases of electricity and makes provision for the
allocation of associated costs and revenues.
3. Marketing and Administrative Coordination. The Xcel Operating
Companies will coordinate through joint marketing efforts, both as
buyers and sellers. The Xcel Operating Companies already have the
ability to reach common suppliers, purchasers, and trading hubs in
various combinations.
Applicants state that virtually all administrative and general
services will be performed for the Xcel system by New Century Services.
Applicants note that the accounting functions of the combined system
will be consolidated. Applicants further state that there will also be
coordination and integration of information system networks; customer
service; procurement organizations; organized structures for power
generation, energy delivery and customer relations; and support
services.
C. Combined Gas Operations
The Xcel gas system will operate in Michigan, Wisconsin, Minnesota,
North Dakota, South Dakota, Wyoming,
[[Page 15029]]
Colorado and Arizona. Applicants state that approximately 74% of the
324.7 billion cubic feet of natural gas purchased by the applicants
during 1998 were from common supply sources. Applicants also state that
NSP and NCE share access, through their respective pipeline
transporters, to several industry-recognized market and supply-area
hubs.
IV. Proposed Intrasystem Transactions
A. Extension of Service Company Subsidiary Services
Applicants propose that New Century Services be the service company
subsidiary for the Xcel system. Applicants request a finding that New
Century Services is so organized and will be so conducted as to meet
the requirements of section 13(b) with respect to all associates in the
Xcel system. New Century Services will provide Xcel, New NSP, NSP-W,
PSC, SPS and Cheyenne, under the Utility Service Agreement, and the
nonutility subsidiaries of the combined system, under the Non-Utility
Service Agreement, with various services. These include:
administrative, management and support services, including services
relating to support of electric and gas plant operations (i.e., energy
supply management of the bulk power and natural gas supply, procurement
of fuels, dispatch of generating units, coordination of electric and
natural gas distribution systems, maintenance, construction and
engineering work); customer bills and related matters; materials
management; facilities; real estate; rights of way; human resources;
finance; accounting; internal auditing; information systems; corporate
planning and research; public affairs; corporate communications; legal;
environmental matters; and executive services. These services will
comply with the at-cost standards of section 13(b) and rules 87, 90 and
91 under the Act, unless otherwise exempted as discussed below.
B. Services, Goods and Assets Involving the Xcel Operating Companies
The Xcel Operating Companies may provide to one another and other
associate companies services incidental to their utility businesses,
such as power plant maintenance overhauls and power plant and storm
outage emergency repairs. These services will be provided in accordance
with rules 87, 90 and 91. Moreover, in accordance with these rules, an
Xcel Operating Company may provide certain goods through a leasing
arrangement or otherwise to one or more other Xcel Operating Companies,
and may use certain assets for the benefit of one or more other
associate companies.
In addition to the foregoing, NSP and NSP-W are currently providing
goods and services to, or receiving goods and services from, affiliated
interests, as defined under applicable state law, in accordance with
agreements approved by the Minnesota Commission. Those transactions
between NSP or NSP-W and these affiliated interests performed in
accordance with Minnesota law are generally priced on a ``fully
allocated cost'' basis. To the extent necessary, Applicants request an
exemption under section 13(b) of the Act from the at-cost requirements
of section 13 and rules 90 and 91 with respect to these transactions.
C. Nonutility Sale of Goods and Services to EWGs, FUCOs and QFs
The 1997 Order and an order of the Commission dated April 7, 1999
(``1999 Order'') \22\ granted an exemption from the at-cost
requirements of section 13 and rules 90 and 91 for the sale of goods
and services by New Century Services and certain nonutility
subsidiaries of NCE to associate QFs, EWGs and FUCOs (``Associate
Exempt Entities'') where certain conditions were met (``Nonutility
Exemption''). In the 1999 Order, the Commission reserved jurisdiction
over a request for an exemption from the at-cost standards for the sale
by these subsidiaries of goods and services to exempt telecommunication
companies under section 34 of the Act, to rule 58 companies, or to
other nonutility subsidiaries that do not derive any part of their
income from sales of goods, services or other property to the NCE
Operating Companies (``Requested Additional Exemption''). Applicants
now request that the Nonutility Exemption and the Requested Additional
Exemption be extended, on the same conditions as those described in the
1999 Order, to the sale of goods and services by certain Xcel
nonutility subsidiaries.
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\22\ HCAR No. 27000.
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Applicants also note that the 1997 NCE Order exempted two NCE
nonutility subsidiaries, Utility Engineers Corporation (``UE'') and
Quixx Power Services, Inc. from the at-cost requirements of section
13(b) with respect to the sale of services to an associate QF.\23\
Applicants request that this exemption be extended, to the extent
necessary following the Merger, to transactions that are still ongoing.
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\23\ The 1997 Order noted that power from the QF would be sold
to SPS.
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D. Other Sales of Goods and Services by Nonutility Subsidiaries
Applicants note that the 1997 NCE Order authorized an NCE
nonutility subsidiary, UE, to perform engineering, development, design,
construction and other related services to the NCE Operating Companies
at cost. Applicants now request that this authority be extended to
enable UE to provide such services to Xcel Operating Companies.
In addition, Applicants request authority for NMC to provide
services to New NSP. Applicants note that the Commission recently
authorized NMC to provide certain services to IES Utilities, Inc., a
utility subsidiary of another registered holding company, Alliant
Energy corporation.\24\ The services to be provided by NMC to New NSP
will comply with the at cost standards of section 13(b).
V. Extension of Time To Construct Interconnection
The 1997 Order requires that, ''[i]n the event that New Century
Energies at any time determines not to construct the tie, or the tie is
not substantially completed within five years of the date of
consummation of the [PSC/SPS] merger [interconnecting SPS with PSC
(``SPS-PSC Interconnection'')], New Century Energies will file a post-
effective amendment concerning the measures it will take to ensure that
the requirements of section 2(a)(29)(A) are satisfied.''
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\24\ Alliant Energy Corporation, et al., HCAR No. 27096 (October
26, 1999).
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Applicants state that the project to complete the SPS-PSC
Interconnection will be accomplished in a phased approach and will
require various regulatory approvals. The first phase will involve
construction of a 230-mile, 345 kV line from Amarillo, Texas to
Holcomb, Kansas, expected to be completed in the third quarter of 2001.
The second phase will involve construction of a 100-mile, 345 kV line
from Holcomb to Lamar, Colorado and a HVDC facility that would
interconnect the PSC and SPS systems, as well as the WSCC and SPP
regional transmission grids. The application states that this second
phase is now scheduled for completion in 2004.
For the Commission by the Division of Investment Management,
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-6754 Filed 3-17-00; 8:45 am]
BILLING CODE 8010-01-M