[Federal Register Volume 65, Number 127 (Friday, June 30, 2000)]
[Notices]
[Pages 40708-40711]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-16581]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27191]


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

June 23, 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 18, 2000 to the Secretary, Securities and Exchange 
Commission, Washington, D.C. 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 18, 2000, the application(s) and/or 
declaration(s), as filed or as amended, may be granted and/or permitted 
to become effective.

New Century Energies, Inc., et al. (70-9635)

    New Century Energies, Inc. (``NCE''), a registered holding company 
under the Act, 1225 17th Street, Denver, Colorado 80202-5533; NCE's 
utility subsidiaries Public Service Company of Colorado (``PSCo''), 
1225 17th Street, Denver, Colorado 80202-5533, Southwestern Public 
Service Company (``SPS''), Tyler at Sixth, Amarillo, Texas 79101, and 
Cheyenne Light, Fuel and Power Company (``Cheyenne''), 108 West 18th 
Street, Cheyenne, Wyoming 82003; NCE's nonutility subsidiaries New 
Century Services, Inc., WestGas Interstate, Inc., NC Enterprises, Inc. 
(``NC Enterprises''), New Century International, Inc., PS Colorado 
Credit Corporation, Colorado Natural Fuels LLC, Natural Station 
Equipment LLC, P.S.R. Investments, Inc., Green and Clear Lakes Company, 
1480 Welton, Inc., The Planergy Group, Inc., New Century-Cadence, Inc., 
New Century WYCO, Inc., and New Century O&M Services, Inc., all located 
at 1225 17th Street, Denver, Colorado 80202-5533; NCE's nonutility 
subsidiaries Utility Engineering Corporation and Quixx Corporation, 
both at 500 South Taylor, Amarillo, Texas 79101, and e prime, inc., 
1099 18th Street, Denver, Colorado 80202; Northern States Power 
Comopany (``NSP''), a public utility company and a holding company 
exempt from registration under section 3(a)(2) of the Act, \1\ 414 
Nicollet Mall, Minneapolis, Minnesota 55401; NSP's utility subsidiary 
Northern States Power Company (``NSP-W''), 100 North Barstow Street, 
Eau Claire, Wisconsin 54701; NSP's nonutility subsidiaries Energy 
Masters Itnernational, Inc., Seren Innovations, Inc., Ultra Power 
Technologies, Inc., Eloigne Company, First Midwest Auto Park, Inc., 
United Power and Land Company, Reddy Kilowatt Corporation, NSP 
Financing I, and Nuclear Management Company, all located at 414 
Nicollet Mall, Minneapolis, Minnesota 55401; and NSP's nonutility 
subsidiaries Viking Gas Transmission Company, 825 Rice Street, St. 
Paul, Minnesota 55117, and NRG Energy, Inc., 1221 Nicollet Mall, 
Minneapolis, Minnesota 55403 (collectively, ``Applicants''), have filed 
an application-declaration under sections 6(a), 7, 9(a), 10, 12(b), 
12(c), 32 and 33 of the Act and rules 43, 45, 46, 53 and 54 under the 
Act.
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    \1\ See Northern State Power Company, HCAR No. 22334 (Dec. 23, 
1981). Section 3(a)(2) of the Act provides an exemption from 
registration to a holding 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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I. Background and Summary

    NCE and NSP have previously filed an application-declaration 
(``Merger Application'') \2\ seeking approvals related to the proposed 
combination of NCE and NSP (``Merger''). \3\ The new

[[Page 40709]]

combined entity will be named Xcel Energy Inc. (``Xcel''). Applicants 
now request authority with respect to the financing arrangements, 
ongoing financings and other matters pertaining to Xcel and its 
subsidiaries after giving effect to the Merger. \4\
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    \2\ The Commission issued a notice of the Merger Application on 
March 13, 2000 (HCAR No. 27152).
    \3\ Under an Agreement and Plan of Merger, dated as of March 24, 
1999 (``Merger Agreement''), NCE will merge with and into NSP, and 
NCE's utility subsidiaries will become subsidiaries of NSP. As part 
of the Merger, NSP is expected to transfer its existing utility 
operations that are being conducted directly by NSP at the parent 
company level to a newly formed, wholly owned subsidiary (``New 
NSP''). In addition, Black Mountain Gas (``BMG''), a division of NSP 
with gas utility operations in Arizona, will become a utility 
subsidiary of Xcel.
    \4\ As used in this Notice, the term ``Utility Subsidiaries'' 
means PSCo, SPS, Cheyenne, New NSP, NSP-W and BMG. In addition, the 
term ``Nonutility Subsidiaries'' means each of the direct and 
indirect nonutility subsidiaries of NCE and NSP, including those 
identified above, and their respective subsidiaries, as well as any 
future direct or indirect nonutility subsidiaries of Xcel whose 
equity securities may be acquired in accordance with the 
Commission's authorization in this proceeding or in accordance with 
an exemption provided under the Act or applicable rules. Further, 
the term ``Subsidiaries'' means the Utility Subsidiaries and the 
Nonutility Subsidiaries collectively.
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    In summary, Applicants request authority for the period through 
September 30, 2004 (``Authorization Period''), unless otherwise noted, 
for: (i) External financings by Xcel, Cheyenne and BMG; (ii) 
intrasystem financing, including guarantees, between Xcel and certain 
of the Subsidiaries, and among certain of the Subsidiaries, (iii) Xcel 
and, to the extent not exempt under rule 52, the Subsidiaries to enter 
into hedging transactions for existing and anticipated debt in order to 
manage interest rate costs; (iv) the issuance by the Subsidiaries of 
types of securities not exempt under rules 45 and 52; (v) Xcel and the 
Subsidiaries to establish, guarantee the obligations of, and borrow the 
proceeds of the debt and preferred securities issued by, one or more 
financial entities; (vi) Xcel and any Subsidiary to acquire and 
restructure investments in one or more special purpose entities 
organized for the purpose of acquiring, financing, and holding the 
securities of one or more Nonutility Subsidiaries; (vii) Xcel and any 
Nonutility Subsidiary to pay dividends out of capital and unearned 
surplus; and (viii) the use of proceeds of financings to invest in 
exempt wholesale generators (``EWGs''), as defined in section 32 of the 
Act, and foreign utility companies (``FUCOs''), as defined in section 
33 of the Act.
    The proceeds from the financings will be used for general corporate 
purposes, including: (i) Investments by and capital expenditures of 
Xcel and the Subsidiaries; (ii) the repayment, redemption, refunding or 
purchase by Xcel or any of the Subsidiaries of securities issued by 
such companies exempt under rule 42; (iii) working capital requirements 
of Xcel and the Subsidiaries; and (iv) other lawful general purposes. 
Any use of proceeds to make investments in Subsidiaries organized under 
rule 58 (``Rule 58 Subsidiaries'') will be subject to the investment 
limitation of that rule, and any use of proceeds to make investment in 
any EWG or FUCO will be subject to the limitation of rule 53(a), as it 
may be modified by order of the commission.
    Applicants propose that the following general conditions apply, 
where appropriate, to the proposed financing transactions. First, the 
effective cost of money on securities issued to non-associates proposed 
by Applicants will not exceed competitive market rates for securities 
of comparable credit quality with similar terms and features. Second, 
the maturity of authorized indebtedness will not exceed 50 years. 
Third, any long-term debt to be issued by Xcel will, at the time of 
original issuance, be rated at least investment grade by a nationally 
recognized credit rating organizations. Fourth, Xcel's common equity, 
as reflected on its most recent Form 10-K or Form 10-Q and as adjusted 
to reflect subsequent events that affect capitalization, will be at 
least 30% of consolidated capitalization.
    By order dated April 7, 1999 (HCAR No. 27000), NCE and certain of 
its Subsidiaries were authorized to engage in, among other things, 
various external and intrasystem financing transactions through 
December 31, 2001. NCE was also authorized by order dated February 26, 
1999 (HCAR No. 26982), to use proceeds of financing invest in EWGs and 
FUCOs if the aggregate investment in EWGs and FUCOs does not exceed 
100% of the system's consolidated retained earnings. These companies 
will relinquish the authority granted in those orders on the effective 
date of an order by the Commission in this proceeding approving the 
proposed transactions.

II. Request Order

A. Xcel External Financing

    Xcel requests authority to issue and sell common stock and long-
term debt securities during the Authorization Period, provided that the 
aggregate proceeds of these issuances, together with any long-term and 
preferred securities issued by financing entities established by Xcel 
more particularly described below, does not exceed $2.0 billion. These 
amounts exclude issuances of Xcel common stock under various benefit 
and reinvestment plans more particularly described below.
    All common stock sales will be at prices and under conditions 
negotiated or based upon, or otherwise determined by, competitive 
capital markets. Xcel may also issue common stock in public or 
privately negotiated transactions in exchange for the equity securities 
or assets of other companies, provided that the acquisition of any such 
equity securities or assets has been authorized in a separate 
proceeding or is exempt under the Act or the rules under the Act.
    Xcel's long-term debt securities may be issued under an indenture 
to be entered into between Xcel and a national bank, as trustee, with a 
supplemental indenture to be executed in respect of each separate 
offering of one or more series of such securities. The maturity dates, 
interest rates, redemption and sinking fund provisions and conversion 
features, if any, with respect to long-term debt securities, as well as 
any associated placement, underwriting or selling agent fees, 
commissions and discounts, if any, will be established by negotiation 
or competitive bidding.
    Applications also request authority to have outstanding at one time 
short-term debt in an aggregate principal amount of up to $1.5 billion, 
consisting of bank loans or commercial paper. Each loan under these 
facilities will have a maturity date not more than one year from the 
date of the borrowing.
    Further, Applicants propose for Xcel to issue other types of 
securities from time to time as necessary or desirable in order to 
minimize financing costs or obtain new capital under then existing 
market conditions. Applicants request that the Commission reserve 
jurisdiction over the issuance of types of securities by Xcel.

B. Benefit and Dividend Reinvestment Plan

    Xcel requests authority to issue an additional 30 million shares of 
common stock (subject to adjustment for stock splits) of Xcel from time 
to time through June 30, 2007 under its benefits plans and dividend 
reinvestment plan.\5\ Shares of Xcel common stock for use under these 
plans may either be newly issued shares, treasury shares or shares 
purchased in the open market.
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    \5\ Following the Merger, the Xcel dividend reinvestment plan 
will include participants in NCE's dividend reinvestment plan.
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    NSP maintains an employee stock ownership plan for it and its 
Subsidiaries. NSP also maintains a stock equivalent award plan for the 
non-employee directors of NSP. Amounts held under the plan are paid in 
shares of NSP common stock upon a director's termination of service. In 
addition, NSP maintains for its officers and key employees a long-term 
incentive plan (``NSP Incentive Plan'') under which

[[Page 40710]]

non-qualified stock options, incentive stock options, restricted common 
stock, stock appreciation rights and performance awards are granted to 
participants.
    NCE currently maintains for its and its Subsidiaries' employees 
three different benefit plans which provide for the issuance and/or 
sale of common stock. In addition, NCE has adopted an incentive plan 
for certain employees (``NCE Incentive Plan''), which authorizes grants 
of common stock, stock options and other stock-based awards to eligible 
executives and other key employees, and a compensation plan for outside 
directors (``NCE Outside Directors' Plan'') under which non-employee 
directors may elect to receive director compensation in the form of 
common stock. Upon completion of the Merger, all outstanding shares of 
and options to acquire NCE common stock under these plans will be 
converted into shares of Xcel common stock based on the ratio at which 
NCE common stock shares will be converted into NSP common stock shares 
in the Merger.
    Following the Merger, it is not expected that any new awards will 
be made under the NCE Incentive Plan and that such plan will be 
replaced by the NSP Incentive Plan. In addition, following the Merger, 
the NCE Outside Directors' Plan will no longer be active.
    Xcel may adopt on or more other plans which will provide for the 
issuance and/or sale of Xcel common stock, stock options and stock 
awards to a group which may include directors, officers and employees. 
Xcel may issue shares of its common stock within the proposed 
limitations described above in order to satisfy its obligations under 
those plans.

C. Subsidiary Financing

1. External
    Applicants request authority for Cheyenne to issue short-term debt 
to nonassociate lenders maturing in less than one year in an aggregate 
amount at any one time outstanding that, when combined with borrowings 
from associate lenders described below, will not exceed $40 million. 
All securities of Cheyenne, except for securities with maturities of 
less than 12 months, are approved by the Wyoming Public Service 
Commission.
    Similarly, all securities of BMG, except for securities with 
maturities of less than 12 months, will be approved by the Arizona 
Corporation Commission. Accordingly, Applicants request authority for 
BMG to issue debt maturing in less than one year to one or more 
nonassociate lenders in an aggregate principal amount at any one time 
outstanding that, when combined with borrowings from associate lenders 
described below, will not exceed $40 million.
2. Intra-system Financing
    Applicants request authority (i) for Xcel to finance the 
Subsidiaries and certain of the Subsidiaries to finance other 
Subsidiaries and (ii) Xcel and the Subsidiaries to enter into 
guarantees, obtain letters of credit, enter into expense agreements or 
otherwise provide credit support with respect to the debt and other 
obligations of Subsidiaries (``Intrasystem Financings''). the aggregate 
outstanding principal amount of Intrasystem Financings, other than 
borrowings by BMG and Cheyenne, would not exceed $2.5 billion at any 
one time during the Authorization Period, excluding financings that are 
exempt under rules 45(b) and 52, as applicable.
    Interest on any intra-system loans or extensions of credit not 
exempt under rule 45(b) or rule 52, as applicable, will equal the daily 
weighted average effective rate of commercial paper, revolving credit 
and/or other short-term borrowings of the lender, including an 
allocated share of commitment fees and related expenses. If the lender 
has non of these borrowings outstanding, then the interest rate will be 
predicated on the Federal Funds' rate. In the limited circumstances 
where a borrowing Nonutility Subsidiary is not directly or indirectly 
wholly-owned by Xcel, Applicants request authority for Xcel or a 
Nonutility Subsidiary to make loans to those subsidiaries at interest 
rates and maturities designed to provide a return to the lending 
company of not less than its effective cost of capital.
    Intrasystem Financings would generally be in the form of cash 
capital contributions, open account advances, loans and/or capital 
stock purchases. Intrasystem financings will provide funds for general 
corporate purposes and other working capital requirements, investments 
and capital expenditures.
    Applicants request the Commission reserve jurisdiction over the 
issuance by the Subsidiaries of types of securities other than those 
described above where rules 45 or 52 would not provide an exemption.

D. Existing Financing Arrangements

    The NCE system has entered into various financing transactions 
based upon prior Commission orders. With respect to existing financing 
obligations by NCE itself, NCE will to the extent possible transfer 
those obligations to Xcel, and will count them towards the applicable 
proposed authorization limits for Xcel as described above. With respect 
to the existing financing obligations and arrangements that NCE's 
subsidiaries have entered into and that they are able to retain post-
Merger, these obligations and arrangements will be counted towards the 
applicable proposed authorization limits for Subsidiaries, except as 
described below.
    Separately, Applicants request authority for NC Enterprises to 
transfer its obligations under two notes issued in connection with its 
acquisitions, previously authorized by the Commission, of certain NCE 
Subsidiaries. One of the Notes, having an outstanding principal balance 
of approximately $119.1 million, was issued to SPS in exchange for the 
acquisition by NC Enterprises of certain NCE Subsidiaries and would be 
transferred to another Subsidiary in connection with the expected 
reorganization of NCE's nonutility interests.
    Another note, having an outstanding principal balance of 
approximately $192.6 million, was issued to PSCo by NC Enterprises in 
exchange for its acquisition of New Century International, Inc., and 
would also be transferred to another Subsidiary in connection with the 
expected reorganization of NCE's nonutility interests.\6\ The amounts 
of these notes would not count against the proposed intrasystem 
authorization limits described above.
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    \6\ According to Applicants, NCE was obligated under the terms 
of an order of the Commission dated May 14, 1998 (HCAR No. 26871) to 
notify the Commission if NC Enterprises did not prepay this note by 
December 31, 1999. The outstanding principal amount owed under the 
note has been reduced to its current balance from approximately 
$292.6 million, and Applicants now propose to prepay the note by 
December 31, 2004.
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    Applicants also request authority to maintain in place through the 
Authorization Period the existing financing arrangements of NSP and its 
Subsidiaries, and any other guarantees and other credit arrangements 
entered into by NSP and its Subsidiaries prior to completion of the 
Merger and which remain in effect on the date the Merger is completed. 
\7\ All of these borrowings

[[Page 40711]]

by NSP, intra-company financings, and guarantees with respect to 
obligations of NSP or the Subsidiaries will be included in the proposed 
aggregate limits described above.
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    \7\ These arrangements are as follows: Under the terms of 
comfort letters provided to lenders to certain NSP Subsidiaries, NSP 
will require that those Subsidiaries maintain specified interest 
coverage ratios. In addition, NSP has provided a comfort letter to a 
third party stating that it has approved an equity investment in its 
subsidiary Energy Masters International, Inc. (``EMI'') necessary to 
support certain performance guarantees made by EMI to the third 
party. Also, NSP Subsidiary NRG Energy, Inc., is the obligor on a 
$6.5 million promissory note to NSP, which will assign its rights 
under the note to New NSP following the Merger. Additionally, NSP is 
a borrower under three bank loans, related to its employee stock 
ownership plan, having an aggregate outstanding principal balance of 
$11.6 million as of December 31, 1999.
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    In addition to these arrangements, NSP has entered into an 
indenture dated as of January 30, 1997, as supplemented, under which 
NSP has issued junior subordinated debentures to NSP Financing I, which 
has in turn issued trust preferred securities to investors. Payments by 
NSP on account of the junior subordinated debentures are used by NSP 
Financing I to make payments on account of the trust preferred 
securities, which are guaranteed by NSP. Upon consummation of the 
Merger, NSP's obligations under the guaranty and the debentures will be 
assigned to New NSP, but Xcel, as NSP's successor, will not be released 
from its liability under these instruments. Xcel requests authority to 
maintain in effect the above-described financing arrangement, but to 
not include these obligations in the applicable limitations described 
above.

E. Interest Hedge Transactions

    Xcel and, to the extent not exempt under rule 52, the Subsidiaries 
request authority to enter into interest rate hedging transactions with 
respect to existing indebtedness (``Interest Rate Hedges''), subject to 
certain limitations and restrictions, in order to reduce or manage 
interest rate cost. Applicants state that Interest Rate Hedges would 
involve the use of financial instruments commonly used in today's 
capital markets, such as interest rate swaps, caps, collars, floors, 
and structured notes, or transactions involving the purchase or sale, 
including short sales, of U.S. Treasury Securities.
    In addition, the Applicants request authority to enter into 
interest rate hedging transactions with respect to anticipated debt 
offerings, subject to certain limitations and restrictions. 
Anticipatory hedges would be utilized to fix and/or limit the interest 
rate risk associated with any new issuance through the use of various 
derivative or cash transactions, including, but not limited to 
structured notes, caps and collars.

F. Financing Subsidiaries

    Applicants request authority for Xcel and the Subsidiaries to 
acquire, directly or indirectly, the equity securities of one or more 
corporations, trusts, partnerships or other entities (``Financing 
Subsidiaries'') created specifically for the purpose of facilitating 
the financing of the authorized and exempt activities (including exempt 
and authorized acquisitions) of Xcel and the Subsidiaries, through the 
issuance of debt or preferred securities to third parties. The proceeds 
of any securities issuance by a Financing Subsidiary would be loaned, 
dividend or otherwise transferred to Xcel or the Subsidiary that 
established the Financing Subsidiary or to another entity that they may 
designate. The proceeds of any securities issuances by a Financing 
Subsidiary would count against any applicable proposed authorization 
limit of Xcel or the Subsidiary establishing that Financing Subsidiary 
as described above. Xcel or the Subsidiary may, if required, guarantee 
all or part of the obligations of any Financing Subsidiary under any 
securities issued by the Financing Subsidiary. Xcel or the Subsidiary 
also may enter into expense arrangements in respect of the obligations 
of any of these Financing Subsidiaries. However, the amount of any 
guarantee by Xcel or the Subsidiary would not be counted against the 
proposed authorization limit on intra-system financings and guaranties 
described above.

G. Intermediate Subsidiaries

    Xcel and its Subsidiaries propose to invest in one or more 
Subsidiaries (``Intermediate Subsidiaries''), which would be organized 
exclusively for the purpose of acquiring, holding and/or financing the 
acquisition of the securities of or other interest in one or more EWGs 
or FUCOs, Rule 58 Subsidiaries, Exempt Telecommunications Companies 
(``ETCs'') or other Nonutility Subsidiaries authorized by order of the 
Commission. Investments in Intermediate Subsidiaries may take the form 
of any combination of the following: (i) Purchases of capital shares, 
partnership interests, member interests in limited liability companies, 
trust certificates or other forms of equity interests, (ii) capital 
contributions; (iii) open account advances with or without interest; 
(iv) loans; and (v) guarantees issued, provided or arranged in respect 
of the securities or other obligations of any Intermediate 
Subsidiaries.
    In addition, Applicants request authority for Xcel to consolidate 
or otherwise reorganize all or any part of its direct and indirect 
ownership interests in Nonutility Subsidiaries, including the 
Intermediate Subsidiaries through which it may hold investment sin 
Nonutility Subsidiaries, and the activities and functions of these 
Subsidiaries, under one or more new Intermediate Subsidiaries, from 
time to time, without further Commission authority. In addition, as 
needed to accommodate these transactions and to provide for future 
issues, Applicants seek authority to change the terms of any wholly-
owned Nonutility Subsidiary's authorized capital stock capitalization 
as deemed appropriate by Xcel or other immediate parent company.

H. Payment of Dividends Out of Capital and Unearned Surplus

    Applicants state that there may be situations in which one or more 
Subsidiaries will have unrestricted cash available for distribution in 
excess of current and retained earnings. Accordingly, Applicants 
propose that the direct and indirect Nonutility Subsidiaries be 
permitted to pay dividends from time to time through the Authorization 
Period, out of capital and unearned surplus (including any revaluation 
reserve), to the extent permitted under applicable state law.

I. EWGs and FUCOs

    As indicated above, NCE currently has authority to use the proceeds 
of the issuances of securities to invest up to 100% of its 
``consolidated retained earnings,'' as defined in rule 53 under the 
Act, in EWGs and FUCOs. Assuming the Merger were effective as of 
December 31, 1999, aggregate investment in these entities would total 
approximately $0.9 billion, or 41.9%, of Xcel's consolidated retained 
earnings, as defined in rule 53. Applicants now request authority for 
Xcel to use financing proceeds to invest in EWGs and FUCOs in amounts 
that would constitute 100% of Xcel's consolidated retained earnings.

    For the Commission by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-16581 Filed 6-29-00; 8:45 am]
BILLING CODE 8010-01-M