[Federal Register Volume 65, Number 123 (Monday, June 26, 2000)]
[Notices]
[Pages 39447-39451]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-16062]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27189]


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

June 20, 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 July 14, 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 July 14, 2000, the application(s) and/or 
declaration(s), as filed or as amended, may be granted and/or permitted 
to become effective.

Sierra Pacific Resources, et al. (70-9619)

    Sierra Pacific Resources (``Sierra Pacific''), 6100 Neil Road, 
Reno, Nevada 89511, a public utility holding company claiming exemption 
from registration under section 3(a)(1) of the Act by rule 2, and 
Portland General Electric Company (``PGE''), 121 SW Salmon Street, 
Portland, Oregon 97204, a wholly owned electric public utility 
subsidiary company of Enron Corporation (``Enron''), a holding company 
also claiming exemption under section 3(a)(1) of the Act by rule 2, 
have filed a joint application-declaration under sections 6(a), 7, 
9(a), 10, and 11(b) of the Act and rule 54 under the Act.
    Sierra Pacific proposes to acquire from Enron all of the issued and 
outstanding common stock of PGE and PGH II, Inc. (``PHG II''), an 
indirect subsidiary of Enron and an affiliate of PGE (the ``Merger''). 
Sierra Pacific and PGE (collectively, the ``Applicants'') also request 
authority to: (1) Continue to operate Sierra Pacific Power company 
(``SPPC''), Sierra Pacific's wholly owned public utility subsidiary, as 
a combination electric and gas public utility; (2) retain SPPC's 
existing water-utility business; (3) retain Sierra Pacific's, PGE's and 
PHG II's respective nonutility subsidiary businesses; and (4) issue 
securities in order to finance the Merger. Following the Merger, Sierra 
Pacific will register under section 5 of the act.\1\
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    \1\ In a separate filing, Sierra Pacific also has asked the 
Commission to approve the formation of a subsidiary service company 
under section 13 of the Act and rules 88, 90 and 91 under the Act 
See File No. 70-9621. This separate filing is being noticed 
contemporaneously with the Merger notice.
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    Under the terms of a Stock Purchase Agreement dated as of November 
5, 1999 (``Stock Purchase Agreement'') by and between Sierra Pacific 
and Enron, Enron will sell PGE and cause Portland General Holdings, 
Inc., Enron's wholly owned subsidiary, to sell PGH II, to Sierra 
Pacific for $2.1 billion in cash, reduced by the book value of certain 
obligations of Enron under an order of the Oregon Public Utilities 
Commission

[[Page 39448]]

(``Oregon PUC'').\2\ Sierra Pacific will assume Enron's Merger Payment 
Obligations (as defined in footnote 2) effective as of the Merger's 
closing date.
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    \2\ The Oregon PUC imposed these obligation on Enron (``Enron's 
Merger Payment Obligations'') in its order dated June 4, 19997 
approving Enron's acquisition of PGE.
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A. Description of the Parties

1. Sierra Pacific
    Sierra Pacific owns all of the common stock of two public utility 
companies: SPPC, a combination electric and gas public utility company 
based in Reno, Nevada; and Nevada Power Company (``Nevada Power''), an 
electric public utility company based in Las Vegas, Nevada. For the 
year ended December 31, 1999, Sierra Pacific's operating revenues on a 
consolidated basis were approximately $1.3 billion, of which $9.1 
million are attributable to nonutility activities. Consolidated assets 
of Sierra Pacific at December 31, 1999 were approximately $5.2 billion, 
of which approximately $3.8 billion consisted of net utility plant and 
equipment. At December 31, 1999, Sierra Pacific and it subsidiary 
companies employed 3,250 employees, of which 1,430 were employed by 
SPPC and 1,677 by Nevada Power.
    SPPC provides electric service to approximately 302,000 retail 
customers in northern Nevada and northeastern California. SPPC also 
sells electric power at wholesale. In the Reno/Sparks area of 
northwestern Nevada, SPPC distributes natural gas at retail to 
approximately 110,000 customers. For the year ended December 31, 1999, 
SPPC had total consolidated assets of approximately $2.1 billion, 
including net utility plant in service of $1.6 billion, consolidated 
utility operating revenues of approximately $764 million, and 
consolidated net income of approximately $66 million. During 1999, 
83.9% of SPPC's revenues were from retail sales of electricity, natural 
gas and water in Nevada, 5.1% from retail sales of electricity in 
California, and 9.9% from wholesale sales of electricity and gas. 
SPPC's 1999 electric and gas operating revenues, which totaled $709 
million, were comprised of its electric business ($609 million, or 86%) 
and its natural gas business ($100 million, or 14%). Of these 1999 
electric and gas operating revenues, $644 million, or 91%, were from 
sales n Nevada and $65 million, or 9% were from sales in California. 
SPPC is subject to regulation by the Public Utilities Commission of 
Nevada (``Nevada PUC''), the California Public Utilities Commission 
(``California PUC''), and the Federal Energy Regulatory Commission 
(``FERC'') under the Federal Power Act.
    SPPC also provides water service to about 71,000 customers. SPPC's 
1999 water business operating revenues were $54.3 million.
    Nevada Power provides retail electric service to approximately 
566,700 customers in Clark county, Nevada, with limited additional 
service provided to the Federal Department of Energy (U.S. Government 
Test Site) in Nye County, Nevada. Nevada Power also sells electric 
power at wholesale. For the year ended December 31, 19991, Nevada Power 
and its subsidiary companies had total consolidated assets of 
approximately $3.4 billion, of which approximately $2.4 billion 
consisted of net electric plant and equipment, consolidated utility 
operating revenues of approximately $977 million, resulting in a net 
income of approximately $52 million. Nevada Power is subject to 
regulation by the Nevada PUC and the FERC.
    Sierra Pacific is engaged in nonutility business through the 
following active subsidiary companies: Tuscarora Gas Pipeline Company 
(``Tuscarora''); Sierra Energy Company d/b/a e.three (``e.three''), 
Lands of Sierra, Inc.'' (``LOS''); Sierra Pacific Communications 
(``SPC''); Sierra Pacific Energy Company (``SPEC''); Commonsite Inc. 
(``Commonsite''); NVP Capital I (``NVP I''); NVP Capital II (NVP II); 
Nevada Electric Investment Company (``NEICO''); Northwind Las Vegas, 
LLC (``Northwind Las Vegas''); \3\ Northwind Aladdin, LLC (``Northwind 
Aladdin''),\4\ and e.three Custom Energy Solutions, LLC (``e.three 
CES'').\5\
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    \3\ NEICO owns 50% of Northwind Las Vegas. UTT Nevada, Inc., an 
affiliate of Unicom, owns the other 50%.
    \4\ NEICO owns 25% of Northwind Aladdin and UTT Nevada, Inc. 
owns the other 75%.
    \5\ NEICO owns 50% of e.three CES and e-three owns the other 
half.
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    Tuscarora was formed in 1993 for the purpose of entering into a 
partnership (the Tuscarora Gas Transmission Company, or ``TGTC'') with 
a subsidiary of TransCanada, a non-affiliated Canadian natural gas 
transportation company, to develop, construct and operate a natural gas 
pipeline to serve an expanding gas market in Reno, northern Nevada and 
northeastern California. In 1995, completed construction and began 
service of its 229-mile pipeline extending from Malin, Oregon to Reno, 
Nevada. As an interstate pipeline, TGTC provides only transmission 
service. Sierra Pacific has an investment of approximately $13.3 
million in this subsidiary. During 1999, SPCC was the largest customer 
of TGTC, contributing 95% of TGTC's revenues of $19.3 million.
    e.three provides energy-related products and services in commercial 
and industrial markets both inside and outside SPPC's service 
territory. e.three's services include: technology and efficiency 
improvements to lighting, heating, ventilation and air-conditioning 
equipment; installation or retrofit of controls and power quality 
systems; energy performance contracting; end-use services; and ongoing 
energy monitoring and verification services. LOS develops and manages 
SPPC nonutility property in Nevada and California.\6\
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    \6\ In recent years, Sierra Pacific has sold several of the LOS 
properties. The properties remaining include only vacant land in 
Nevada and land leases in the Lake Tahoe region.
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    SPC was created to examine and pursue telecommunications 
opportunities that leverage existing skill sets of installing and 
deploying pipe and wire infrastructure. SPC presently has fiber optic 
assets deployed in the cities of Reno and Las Vegas. Sierra Pacific has 
filed an application with the Federal Communications Commission 
(``FCC'') to qualify SPC as an ``exempt telecommunications company'' 
under section 34 of the Act.\7\
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    \7\ The FCC did not issue an order denying SPC's application 
within sixty days of the application filing date. Therefore, under 
47 CFR section 1.5004, the application is deemed granted with no 
further action by the FCC.
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    SPEC was formed to market a package of technology and energy-
related products and services in Nevada. For the year ended December 
31, 1999, SPEC incurred net losses of $3.6 million.
    Commonsite, NVPI and NVP II are non-profit subsidiary companies 
created to assist other business activities of Sierra Pacific. 
Commonsite is a Nevada corporation that owns the real estate occupied 
by Reid Gardner 4, a coal fired power plant owned jointly by Nevada 
Power and the California Department of Water Resources. NVP I and NVP 
II are Delaware trusts formed by Nevada Power for financing 
purposes.\8\ NEICO is a Nevada corporation that has been inactive for 
several years. In recent months, it has obtained ownership intersts in: 
Northwind Las Vegas; Northwind Aladdin, and e.three CES. Northwind Las 
Vegas develops opportunities for district heating and cooling within 
Nevada. As discussed above, Northwind Aladdin will construct, own and 
operate district heating and cooling facilities at the Aladdin casino 
complex, currently under construction. e.three CES was

[[Page 39449]]

formed to enter into performance contracts and similar energy-related 
services in southern Nevada.
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    \8\ NVP I and NVP II were used by Nevada Power to issue 
Quarterly Income Preferred Securities.
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    Sierra Pacific also has the following inactive nonutility 
subsidiary companies, all of which are incorporated in Nevada: Sierra 
Water Development Company, formerly engaged in water exploration; 
Sierra Gas Holdings Company, formerly engaged in gas and oil 
exploration; Great Basin Energy Company, which was formed to hold real 
estate for a proposed power plant that was never constructed; Genwal 
Coal Co.; Castle Valley Resources Inc., formerly the sales arm of 
Genwal Coal Co.; and Alkan Mining Company.\9\
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    \9\ Nevada Power recently created several Nevada limited 
liability companies that have conducted no business activities but 
are in good standing. They are: Nevada Power Services, LLC; Nevada 
Power Choices, LLC; Nevada Power Solutions, LLC; Las Vegas Energy, 
LLC; Nevada Solutions, LLC; Power Choice, LLC; Nevada Power Energy 
Services, LLC; and Nevada Choices, LLC. It is anticipated that one 
or more of these companies will engage in competitive energy 
markets.
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2. PGE
    PGE provides retail electric service to approximately 719,000 
customers in northwestern Oregon. PGE also sells electric power at 
wholesale. For the year ended December 31, 1999, PGE had consolidated 
assets of approximately $3.2 billion, of which approximately $1.9 
billion consisted of net electric plant and equipment, consolidated 
utility operating revenues of approximately $1.4 billion, and net 
income of approximately $128 million. At December 31, 1999, PGE 
employed approximately 2,787 employees. PGE is subject to regulation by 
the Oregon PUC and the FERC.
    PGE owns all of the common stock of the following nonutility 
subsidiary companies, all of which are Oregon corporations: 121 SW 
Salmon Street Corporation (``Salmon Street''); Portland General 
Transport Corp. (``Portland General Transport''); and Salmon Springs 
Hospitality Group (``Salmon Springs'').
    Salmon Street was formed in order to lease an office complex at the 
World Trade Center in Portland, Oregon and to sublease the complex to 
PGE to serve as PGE's headquarters. A wholly owned subsidiary of Salmon 
Street, World Trade Center Northwest Corporation, is an Oregon 
corporation that managers the World Trade Center and promotes 
international commerce. Portland General Transport was formed to sell 
segmented gas pipeline capacity and is currently inactive. Salmon 
Springs provides operations and catering services to PGE and, to the 
extent available, to third parties in meeting facilities of the World 
Trade Center Building Two.
3. PGH II
    PGH II is engaged in developing several nonutility lines of 
business. As of December 31, 1999, PGH II had total assets of 
$1,560,000, revenues of $54,000, and a net less of $2,894.000.
    PGH II holds a 99% ownership interest in the following companies, 
all of which the Oregon limited liability companies \10\: Columbia-
Pacific Distribution Services Company, LLC (``Columbia-Pacific''); 
Enron Distribution Services Company, LLC (``EDS''); and Portland Energy 
Solutions Company, LLC (``PES'').
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    \10\ The remaining 1% interest is held by Portland General 
Distribution Company, a wholly owned direct subsidiary of PGH II 
described below.
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    Columbia-Pacific, currently inactive, was established to provide 
operation and maintenance service for utility distributions systems. 
EDS, currently inactive, was established to hold investments in 
transmission and distribution services companies to be acquired. PES 
was established to develop opportunities in district heating and 
cooling in downtown Portland, Oregon.
    PGH II also holds all the outstanding common stock of the following 
subsidiary companies and currently generate no material revenue and 
hold de minimis assets: Columbia-Willamette Development Company 
(``Columbia-Willamette''); Enron MicroClimates, Inc. (``Eron 
MicroClimates''); Portland General Distribution Company (``PGD''); 
Portland General Operations Company, Inc. (``PGO''); and Tule Hub 
Services Company (``Tule Hub'').
    Columbia-Willamette formerly engaged in real estate development and 
is currently inactive. Enron MicroClimates was formed to design, own 
and operate heating, cooling and network infrastructure. PGD was formed 
to invest in companies providing distribution and network services, 
including operation and maintenance services for utility distribution 
systems. PGO provides consulting services to global markets regarding 
design, maintenance, management, and financing for electric and 
telecommunications facilities. Tule Hub was formed to engage in 
electric trading hub transaction information management, and is 
currently inactive.

B. Description of the Merger

    Under the Stock Purchase Agreement described above, Sierra Pacific 
will acquire from Enron all of the issued and outstanding common stock 
of PGE and PGH II for a consideration of $2.1 billion in an all-cash 
transaction. The Merger is not subject to the approval of the 
shareholders of PGE, PHG II, Enron or Sierra Pacific.
    Sierra Pacific's acquisition of PGE and PGH II will result in a 
substantial level of goodwill equal to the excess of consideration to 
be paid to Enron over the net value of assets acquired. Sierra Pacific 
estimates this goodwill to be approximately $845 million, which will be 
amortized at the holding company level over a forty-year period.

C. Description of Merger-Related Financing

    Sierra Pacific proposes to finance the purchase price of PGE and 
PGH II through a combination of various types of short-term debt, long-
term debt, and other financing transactions.\11\ Specifically, for a 
period beginning with the effective date of the Commission's Order in 
this matter and ending one year from the date of that Order 
(``Authorization Period''), Sierra Pacific request authority to: (1) 
Issue long-term debt securities, short-term debt securities, commercial 
paper, hybrid securities, and other debt securities for cash; (2) enter 
into transactions to manage interest rate risk (``hedging 
transactions''); and (3) enter into credit facilities or loan 
agreements with commercial or investment banks, both for purposes of 
direct borrowings and as back-up for commercial paper programs. The 
aggregate amount of short-term and long-term debt outstanding at any 
one time to finance the Merger will not exceed $2.1 billion.
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    \11\ Sierra Pacific will file a separate application-declaration 
to request additional financing authority to maintain existing 
financing facilities after the Merger and to meet the capital 
requirements for the Sierra Pacific system after the Merger 
(``Financing Application'').
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1. General Conditions of Financing
    Sierra Pacific requests authority to engage in various financing 
and related transactions during the Authorization Period for which the 
specific terms and conditions are not at this time known. The 
authorization is sought subject to the conditions stated above and to 
the following conditions: (1) The effective cost of money on long-term 
debt borrowing occurring under this authorization will not exceed 300 
basis points over the comparable term U.S. Treasury securities; (2) the 
effective cost of money on short-term debt borrowing occurring under 
this authorization will not exceed 300 basis point over the comparable 
term London Interbank Offered Rate (``LIBOR''); (3) the maturity

[[Page 39450]]

of indebtness will not exceed 50 years; (4) the underwriting fees, 
commissions, or other similar remuneration paid in connection with the 
non-competitive issue, sale or distribution of a security in this 
matter will not exceed 5% of the principal or total amount of the 
security being issued; and (5) the proceeds from the sale of securities 
issued under this authorization will be used (a) to pay the 
consideration required in order to consummate the Merger, (b) to 
refinance short-term debt originally incurred to raise all or a portion 
of the Merger consideration; or (c) for general corporate purposes.
2. Short-Term Debt Financing
    Sierra Pacific requests Commission authorization during the 
Authorization Period to issue short-term debt securities in an amount 
not to exceed $2.1 billion, consisting of financing for the Merger 
consideration. Sierra Pacific anticipates that most of the Merger 
consideration will be funded temporarily through the use of short-term 
debt.\12\ The short-term debt will consist of one or more of the 
following: bank borrowings, commercial paper, money market notes, 
floating rate or variable notes, all as described below.
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    \12\ This short-term debt will be paid off in part with the 
proceeds of the planned divestiture of SPPC's and Nevada Power's 
electric generation assets, and the sale of common equity or certain 
non-core assets, with the balance refinanced within the 
Authorization Period through long-term debt exclusively to refinance 
short-term debt or other securities from the divestiture of certain 
non-core assets. Sierra Pacific will request authority to issue 
additional common equity in its Financing Application.
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    Sierra Pacific currently maintains a committed line of credit for 
$300 million under an unsecured revolving credit facility with Mellon 
Bank, First Union National Bank and Wells Fargo, as syndication agents 
(``Credit Facility''). This Credit Facility, the amount of which is 
included in the overall authorization requested above, may be used for 
working capital and general corporate purposes, including for 
commercial paper backup. It is anticipated that all or a portion of the 
short-term debt used to fund the Merger will be borrowed by Sierra 
Pacific either through this credit Facility or through one or more new 
facilities to be entered into prior to the Merger.
    Sierra Pacific also may sell commercial paper in established 
domestic or European commercial paper markets to provide temporary 
funding of the Merger consideration. This commercial paper would be 
sold to dealers at the discount rate or the coupon rate per annum 
prevailing at the date of issuance for commercial paper of comparable 
quality and maturities sold to commercial paper dealers generally. It 
is expected that the dealers acquiring commercial paper from Sierra 
Pacific will reoffer such paper at a discount to corporate, 
institutional and, with respect to European commercial paper, 
individual investors. The commercial paper programs will be backed up 
by the Credit Facility and by any new credit facilities to be entered 
into by Sierra Pacific, as discussed above.
    Sierra Pacific also may incur short-term debt through the issuance 
of instruments customarily referred to as ``money market notes,'' 
``floating rate notes'' or ``variable rate notes.'' This type of debt 
is usually issued under a fiscal and paying agency agreement or similar 
type of agreement, rather than through an indenture, and bears an 
interest rate that is either (a) tied to a customary interest rate 
index such as LIBOR which is adjusted on a periodic basis or (b) set by 
an auction process. The maturity of these notes may vary from less than 
one year to up to three years. Consequently, Sierra Pacific may also 
issue these notes as long-term debt. The specific terms of any notes 
issued under this authorization will be determined by Sierra Pacific at 
the time of issuance.
3. Long-Term Debt Financing
    Sierra Pacific requests Commission authorization during the 
Authorization Period to issue long-term debt securities in an amount 
not to exceed $2.1 billion, as stated above. Sierra Pacific intends to 
use this long-term debt exclusively to refinance short-term debt 
originally incurred to finance the Merger. These long-term debt 
securities would include (a) unsecured notes, debentures, medium-term 
notes, or other debt securities issued under an indenture (``Sierra 
Pacific Indenture'') \13\, (b) instruments customarily referred to as 
``money market notes,'' ``floating rate notes,'' or ``variable rate 
notes,'' as described above, if those notes have a maturity of greater 
than one year \14\, or (c) long-term loans from commercial or 
investment banks under credit facilities or loan agreements.\15\
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    \13\ Sierra Pacific filed a form of the Sierra Pacific Indenture 
with the Commission as part of a universal shelf registration on 
June 8, 1999 (Registration No. 333-80149). Applicants state that the 
Sierra Pacific Indenture will permit the issuance of a wide variety 
of unsecured debt securities in one or more series. The Sierra 
Pacific Indenture will contain numerous variable terms, such as 
principal amount, interest rate, redemption terms, sinking funds, 
currency of payment, denominations, and events of default. The 
Sierra Pacific Indenture contains no negative covenants or 
restrictions.
    On May 9, 2000, Sierra Pacific issued of $300 million of notes 
under this shelf registration. Proceeds from this issuance were used 
to retire the remaining balance of short-term debt incurred to 
complete the merger of Sierra Pacific and Nevada Power. Sierra 
Pacific expects to file a new universal shelf registration for the 
issuance of long-term debt authorized under this application-
declaration and may continue to use the Sierra Pacific Indenture for 
any such issuance.
    \14\ On April 20, 2000, Sierra Pacific also issued $300 million 
of floating rate notes that are not related to this authorization 
request. The proceeds of this issuance were used: (1) to reduce 
Nevada Power's debt and strengthen its capitalization; and (2) to 
reduce short term debt at the holding company level incurred to 
complete the merger of Sierra Pacific and Nevada Power.
    \15\ Borrowings from banks and other financial institutions will 
be unsecured debt and will rank in pari passu with debt securities 
issued under the Sierra Pacific Indenture and the short-term credit 
facilities described above. Specific terms of any borrowings will be 
determined by Sierra Pacific at the time of issuance and will comply 
with the parameters on financing authorization set forth above.
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4. Other Securities
    In addition to the specific securities described above, Sierra 
Pacific may also find it necessary or desirable to minimize financing 
costs or to obtain new capital under then-existing market conditions to 
issue and sell other types of securities during the Authorization 
Period. The issuance of any of these securities would be subject to the 
aggregate $2.1 billion limit on short-term and long-term debt and to 
the overall conditions on financing authorization discussed above.
5. Interest Rate Risk Management Devices
    Sierra Pacific requests authority to enter into, perform, purchase 
and sell financial instruments intended to manage the volatility of 
interest rates, including but not limited to interest rate swaps, caps, 
floors, collars and forward agreements or any other similar agreements. 
Sierra Pacific would employ interest rate swaps as a means of prudently 
managing the risk associated with any of its outstanding debt issued 
under this authorization by, in effect, synthetically (a) covering 
variable rate debt to fixed rate debt; (b) covering fixed rate debt to 
variable rate debt; (c) limiting the impact of changes in interest 
rates resulting from variable rate debt; and (d) providing an option to 
enter into interest rate swap transactions in future periods for 
planned issuances of debt securities. In no case will the notional 
principal amount of any interest rate swap exceed that of the 
underlying debt instrument and related interest rate exposure.\16\
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    \16\ Sierra Pacific will only enter into interest rate swap 
agreements with counter parties whose senior debt ratings, as 
published by Standard & Poor's, a Division of The McGraw-Hill 
Companies, are greater than or equal to ``BBB+'', or an equivalent 
rating from Moody's Investors Service, Inc., Fitch IBCA, Inc., or 
Duff & Phelps Credit Rating Co.

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[[Page 39451]]

Sierra Pacific Resources (70-9621)

    Sierra Pacific Resources (``Sierra Pacific''), 6100 Neil Road, 
Reno, Nevada 89511, a public utility holding company claiming exemption 
from registration under section 3(a)(1) of the Act by rule 2 
(``Applicant''), has filed an application under section 13(b) of the 
Act and rules 87, 88, 90, and 91 under the Act.
    In this filing, Sierra Pacific requests the Commission to 
authorize: (1) The designation of Sierra Pacific Resource Services 
Company (``SPRSC'') as a subsidiary service company in accordance with 
rule 88 under the Act; (2) the provision of services by SPRSC to the 
Sierra Pacific system following Sierra Pacific's proposed merger with 
Portland General Electric Company (``PGE'') (described below) and the 
registration of Sierra Pacific as a holding company under the Act; and 
(3) certain lease transactions among associate companies within the 
Sierra Pacific system after the Merger, as described below. Sierra 
Pacific further requests that the Commission find that SPRSC is 
organized and will conduct its operations so as to meet the 
requirements of section 13 of the Act and the rules under the Act.\17\
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    \17\ In addition, Sierra Pacific requests that the Commission 
find that this application is deemed to constitute a filing on Form 
U-13-1 for purposes of rule 88 under the Act, or, alternatively, 
that the filing of a Form U-13-1 is not necessary under the Act.
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    In a separate filing, Sierra Pacific and PGE, a wholly owned 
electric public utility subsidiary company of Enron Corporation, a 
public utility holding company claiming exemption from registration 
under section 3(a)(1) of the Act by rule 2, seek approvals relating to 
the proposed acquisition by Sierra Pacific of PGE and PGE's affiliate, 
PGH II, Inc. (``PGH II'') (``Merger U-1'') \18\ Sierra Pacific will 
register as a holding company under the Act upon the consummation of 
the acquisition (``Merger'') described in the Merger U-1.
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    \18\ See File No. 70-9619. The Commission's notice describing 
this filing is included elsewhere in this Release.
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    Following the consummation of the Merger, Sierra Pacific proposes 
to have three operating public utility company subsidiaries (the 
``Utility Subsidiaries''): (1) Sierra Pacific Power Company (``SPPC''), 
a public utility company that provides retail electric service in 
Nevada and northeastern California, sells electric power at wholesale, 
distributes natural gas at retail in northwestern Nevada, and provides 
water service; (2) Nevada Power Company (``Nevada Power''), a public 
utility company that provides retail electric service predominantly to 
the residents of Clark County, Nevada, provides limited service to the 
Federal Department of Energy (U.S. Government Test Site) in Nye County, 
Nevada, and sells electric power at wholesale; and (3) PGE, a public 
utility company that provides retail electric power service in 
northwestern Oregon and sells electric power at wholesale.\19\
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    \19\ A more complete description of the Utility Subsidiaries is 
set forth in the Merger U-1.
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    Sierra Pacific's direct and indirect nonutility subsidiary 
companies following the Merger are to include the following: PGH II; 
\20\ Tuscarora Gas Pipeline Company; Sierra Energy Company d/b/a 
e.three (``e.three''); Lands of Sierra, Inc.; Sierra Pacific 
Communications Company; Sierra Pacific Energy Company; Commonsite Inc. 
(``Commonsite''); NVP Capital I (``NPV I''); NVP Capital II (``NVP 
II''); Nevada Electric Investment Company (``NEICO''); Northwind Las 
Vegas, LLC (``Northwind Las Vegas'') \21\; Northwind Aladdin, LLC 
(``Northwind Aladdin'') \22\; e.three CES Custom Energy Solutions, LLC 
(``e.three CES'').\23\; 121 SW Salmon Street Corporation; Portland 
General Transport Corp.; and Salmon Springs Hospitality Group 
(collectively, with the Utility Subsidiaries, the ``Subsidiaries'').
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    \20\ PGH II is engaged in developing several nonutility 
businesses through the following subsidiary companies: Columbia-
Willamette Development Company; Enron MicroClimates, Inc.; Portland 
General Distribution Company; Portland General Operations Company, 
Inc.; and Tule Hub Services Company. These subsidiary companies 
currently generate no material revenue and hold de minimis assets. 
PGH II also holds a 99% ownership interest in the following limited 
liability companies: Columbia-Pacific Distribution Services Company, 
LLC; Eron Distribution Services Company, LLC; and Portland Energy 
Solutions Company.
    \21\ NEICO owns 50% of Northwind Las Vegas. UTT Nevada. Inc., an 
affiliate of Unicom Thermal Technologies, Inc., owns the other 50%.
    \22\ NEICO owns 25% of Northwind Aladdin and UTT Nevada. Inc. 
owns the other 75%.
    \23\ NEICO owns 50% of e.three CES and e-three owns the other 
half.
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    Sierra Pacific also owns the following inactive subsidiary 
companies: Sierra Water Development Company; Sierra Gas Holdings 
Company; Great Basin Energy Company; Genwal Coal Co.; Castle Valley 
Resources, Inc.; and Alkan Mining Company. In addition, Nevada Power 
recently created several Nevada limited liability companies that have 
conducted no business activities but are in good standing. They are: 
Nevada Power Services, LLC; Nevada Power Choices, LLC; Nevada Power 
Solutions, LLC; Las Vegas Energy, LLC; Nevada Solutions, LLC; Power 
Choice, LLC; Nevada Power Energy Services, LLC; and Nevada Choices, 
LLC.
    After the Merger, SPRSC proposes to provide the Sierra Pacific 
system companies with a variety of administrative, management, 
enegineering, construction, environmental and support services, either 
directly or through agreements with associate or nonassociate 
companies, as needed.\24\ SPRSC will enter into a services agreement 
with each of the Subsidiaries (the ``Services Agreement''). The 
Services Agreement will be administered in accordance with the Act and 
the rules under the Act, and the cost of services payable to SPRSC 
under the Services Agreement will be computed in accordance with the 
applicable rules under the Act and with appropriate accounting 
standards. Sierra Pacific presently expects that SPRSC will be staffed 
with personnel drawn from Sierra Pacific, SPPC, Nevada Power, and PGE. 
Sierra Pacific has not yet determined the numbers of SPRSC personnel 
that will be drawn from each of these companies.
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    \24\ Before the consummation of the Merger, SPRSC will be 
incorporated in the State of Nevada to serve as the service company 
for the Sierra Pacific system.
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    SPRSC's authorized capital stock will consist of 100 shares of 
common stock, no par value per share, issued to Sierra Pacific for 
$1,000. upon consummation of the Merger, Sierra Pacific will hold all 
issued and outstanding shares of SPRSC common stock. Sierra Pacific 
will describe any debt financing for SPRSC in a separate application-
declaration to be filed with the Commission dealing with the financing 
of the post-Merger Sierra Pacific holding company system.
    Sierra Pacific further requests authorization under section 13(b) 
of the Act for the Subsidiaries to enter, from time to time, into 
leases of office or other space with other associate companies. These 
leases will comply with the requirements of rules 87, 90 and 91 under 
the Act. The Utility Subsidiaries may also provide to one another any 
services, construction, or goods as are reasonably required to meet a 
breakdown or other emergency in accordance with the standards of rule 
87(b)(2) under the Act. These services will be provided at cost in 
accordance with the standards of the Act and rules 87, 90 and 91 under 
the Act.

    For the Commission by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-16062 Filed 6-23-00; 8:45 am]
BILLING CODE 8010-01-M