[Federal Register Volume 65, Number 146 (Friday, July 28, 2000)]
[Notices]
[Pages 46513-46518]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-19094]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-27202]
Filings Under the Public Utility Holding Company Act of 1935, as
Amended (``Act'')
July 21, 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 August 15, 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 August 15, 2000, the application(s) and/or
declaration(s), as filed or as amended, may be granted and/or permitted
to become effective.
FirstEnergy Corp. (70-9501)
FirstEnergy Corp. (``FirstEnergy''), 76 South Main Street, Akron,
Ohio 44308, a public utility holding company claiming exemption under
section 3(a)(1) of the Public Utility Holding Company Act of 1935, as
amended (``Act''), by rule 2 under the Act, from registration under
section 5 of the Act, has filed an application under sections 9(a)(2)
and 10 of the Act.
FirstEnergy proposes to acquire directly all of the issued and
outstanding voting securities of American Transmission Systems, Inc.
(``ATSI''), a corporation FirstEnergy will organize to own and operate
certain transmission assets more particularly described below
(``Transmission Assets''), currently owned by FirstEnergy's utility
company subsidiaries. These subsidiaries include Ohio Edison, Cleveland
Electric, Toledo Edison, and Penn Power (collectively, ``Operating
Companies'').
Upon completion of the transfer of the Transmission Assets from the
Operating Companies to ATSI, ATSI will become a ``public-utility
company'' as defined in the Act. FirstEnergy states that the
Transmission Assets include over 7,100 circuit miles of transmission
lines with nominal voltages of 345 kV, 138 kV, and 69 kV, servicing
over 2.2 million customers in a 13,200 square mile area in northern and
central Ohio and western Pennsylvania.
FirstEnergy states that the proposed transaction will improve
service in the region by tying together control, planning, maintenance
and financial responsibilities of the Operating Companies' transmission
facilities into a single company. FirstEnergy further states that the
transfer of the Transmission Assets to ATSI is an intermediate step in
its plan to transfer its assets to a regional transmission
organization.
WGL Holdings, Inc., et al. (70-9653)
WGL Holdings, Inc. (``WGL Holdings''), which is currently a wholly
owned subsidiary of Washington Gas Light Company (``Washington Gas''),
a gas utility company, and Washington Gas' nonutility subsidiary
companies, Hampshire Gas Company (``Hampshire''), Crab Run Gas Company
(``Crab Run''), Washington Gas Resources Corp. (``WGR''), and Primary
Investors, LLC (``Primary Investors''), (collectively, ``Applicants''),
all located at 1100 H Street, NW., Washington, DC 20080, have filed an
application-declaration under sections 6(a), 7, 9(a), 10, 11, 12(b),
12(c), 13, 32, and 33 of the Act and rules 45, 46, 47, and 80-92.
On January 13, 2000, Washington Gas entered into an Agreement of
Merger and Reorganization (``Reorganization'') which will result in WGL
Holdings becoming a holding company over Washington Gas and the current
nonutility subsidiaries (``Nonutilities'') of Washington Gas becoming
direct subsidiaries of WGL Holdings.\1\ Washington Gas intends to merge
with WGL Holdings' wholly owned subsidiary, Washington Gas Acquisition
Corp. (``Acquisition''), with Washington Gas as the surviving
company.\2\ Following the Reorganization, WGL Holdings intends to
register as a holding company under the Act.
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\1\ Washington Gas' shareholders and the Virginia State
Corporation Commission (``VSCC'') have both approved the
Reorganization.
\2\ Each share of Washington Gas common stock outstanding before
the Reorganization will be converted into a new share of WGL
Holdings common stock. All shares of Acquisition common stock
outstanding prior to the Reorganization will be converted into
shares of Washington Gas, resulting in WGL Holdings becoming the
owner of all outstanding shares of Washington Gas common stock. The
shares of WGL Holdings common stock held by Washington Gas
immediately prior to the Reorganization will be canceled and the
directors of Washington Gas will become the directors of WGL
Holdings.
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Washington Gas sells and delivers natural gas to customers in
metropolitan Washington, DC, the adjoining areas of Maryland and
Virginia, and several cities and towns in the northern Shenandoah
Valley of Virginia. On April 1, 2000, Washington Gas merged its former
wholly owned gas distribution subsidiary, Shenandoah Gas
(``Shenandoah'') into itself.\3\ The merged company now serves a total
of 863,258 customer meters in an area having a population estimated at
4.5
[[Page 46514]]
million. Approximately 41% of the customers are located in Virginia,
approximately 17% in the District of Columbia and approximately 42% in
Maryland.\4\ In addition to its gas distribution operations, Washington
Gas offers financing for the purchase of natural gas, electrical
appliances and other energy-related products and services, and operates
steam and chilled water facilities located in a mixed residential
commercial complex in Washington DC. Washington Gas is subject to
regulation regarding retail rates and transportation service, the
issuance of securities, affiliate transactions and other matters by the
VSCC, the Public Service Commission of the District of Columbia,
(``PSC-DC'') and the Public Service Commission of Maryland (``PSC-
MD'').
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\3\ See Petition of Washington Gas Light Company and Shenandoah
Gas Company, Case No. PUA990071 (Dec. 22, 1999).
\4\ This number reflects data gathered from the companies
operating separately as of December 31, 1999.
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Washington Gas directly owns 100% of the outstanding voting
securities of three active Nonutility subsidiaries: (i) Hampshire,
which operates an underground gas storage field; (ii) Crab Run, which
holds an investment in a partnership that is engaged in the exploration
and production of oil and gas; and (iii) WGR, which serves as the
holding company for other wholly owned, Nonutility subsidiaries. WGR's
direct subsidiaries are: (i) Washington Gas Energy Services, Inc., an
unregulated energy marketer which holds all of the voting securities of
three other subsidiaries which are engaged in providing commercial
energy services and in real estate development activities; (ii)
American Combustion Industries, Inc., which designs, sells, installs
and services commercial heating, ventilating and air-conditioning
(``HVAC'') equipment in Washington, DC and surrounding areas; (iii) WG
Maritime Plaza I, Inc., whose sole purpose is to hold Washington Gas'
interest in a venture to develop a 12-acre parcel of land in
Washington, DC; and (iv) Washington Gas Consumer Services, Inc., which
operates a fee-based program matching customers with finance companies
for energy-related equipment.
Washington Gas also holds a 50% equity interest in Primary
Investors, a Delaware limited liability company which serves as the
holding company for investments in after-market products and services
for residential and light commercial HVAC customers.
For the 12 months ended December 31, 1999, Washington Gas reported
consolidated operating revenues of $1,148,853,000, of which
$985,287,000 (85.8%) were derived from regulated sales of gas and
transportation service, and $163,566,000 (14.2%) from diversified
nonutility activities, including unregulated sales of gas and the sale,
installation and servicing of residential and commercial HVAC
equipment. At December 31, 1999, Washington Gas reported consolidated
assets of $1,891,626,000, including net property, plant, and equipment
of $1,409,036,000 and current assets of $373,143,000. Common equity
represents 50% of Washington Gas' total capitalization, including
short-term debt.
WGL Holdings requests that the Commission find that Washington Gas'
gas distribution system constitutes an integrated gas utility system
within the meaning of section 2(a)(29)(B) of the Act and that all of
the direct and indirect Nonutility subsidiaries and investments are
retainable under the standards of section 11(b)(1) of the Act and, as
applicable, section 2 of the Gas-Related Activities Act.
In addition, the Applicants are seeking authority through December
31, 2005, (``Authorization Period'') for certain financing activities
related to WGL Holdings, and the utility and Nonutility subsidiaries
(``Subsidiaries''), described below.
WGL Holdings Long-Term Financing
WGL Holdings proposes to issue and sell up to an aggregate amount
of $300 million of securities in the form of common stock, preferred
stock, long-term debt securities and other forms of preferred or equity
linked securities. WGL Holdings also proposes to issue stock options,
performance shares, stock appreciation rights (``SARs''), debentures,
warrants or other stock purchase rights that are exercisable for Common
Stock and to issue Common Stock upon the exercise of such options,
SARs, warrants or other stock purchase rights.
Common stock may be issued in one or more public or private
transactions through underwriters or dealers, through agents or
directly to a limited number of purchasers or a single purchaser. If
underwriters are used in the sale of Common Stock, such securities will
be acquired by the underwriters for their own account and may be resold
from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices
determined at the time of sale. Common Stock may be offered to the
public either through underwriting syndicates or directly by one or
more underwriters acting alone. Common Stock may be sold directly by
WGL Holdings or through agents designated by WGL Holdings from time to
time.
WGL Holdings may use Common Stock as consideration for the
acquisition of the securities or assets of other, existing companies
WGL Holdings seeks to acquire 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 thereunder. If
Common Stock or other securities linked to Common Stock is used as
consideration in connection with any such authorized or exempt
acquisition, the market value of the Common Stock on the day before
closing of the acquisition, or the average high and low market prices
for a period prior to the closing, as negotiated by the parties, will
be counted against the proposed $300 million limitation on financing.
WGL Holdings also proposes to issue Common Stock under Washington
Gas' Dividend Reinvestment and Common Stock Purchase plan (``DRP'').
Under the DRP, as amended, participating shareholders of WGL Holdings
will be entitled to reinvest dividends and make optional cash purchases
of shares of Common Stock. The DRP may also be amended to allow for
purchases of Common Stock under the plan by new investors.
WGL Holdings also seeks authorization to issue Common Stock under
current and possible future stock based plans maintained for the
benefit of Washington Gas' employees and directors which WGL Holdings
intends to adopt. Shares of Common Stock for use under the Stock Plans
may either be newly issued shares, treasury shares or shares purchased
in the open market. WGL Holdings will make open-market purchases of
Common Stock in accordance with the terms of or in connection with the
operation of the plans under rule 42. WGL Holdings may also acquire
treasury shares through other open-market purchases. WGL Holdings also
proposes to issue and/or sell shares of Common Stock pursuant to the
existing Stock Plans and similar plans or plan funding arrangements
hereafter adopted without any additional prior Commission order. Stock
transactions of this variety would thus be treated the same as other
stock transactions permitted pursuant to this Application/Declaration.
WGL Holdings Short-Term Debt
WGL Holdings seeks authorization to issue short-term debt up to an
aggregate amount of $300 million outstanding at any one time to provide
financing for general corporate purposes, other
[[Page 46515]]
working capital requirements and investments in new enterprises until
long-term financing can be obtained. The effective cost of money on
short-term debt authorized in this proceeding will not exceed at the
time of issuance 300 basis points over LIBOR for maturities of one year
or less. WGL Holdings may sell commercial paper, from time to time, in
established domestic or European commercial paper markets. Commercial
paper would typically be sold to dealers at the discount rate per annum
prevailing at the date of issuance for commercial paper of comparable
quality and maturities sold to commercial paper dealers generally.
WGL Holdings also proposes to establish bank lines in an aggregate
principal amount sufficient to support projected levels of short-term
borrowings and to provide an alternative source of liquidity. Loans
under these lines will have maturities not more than one year from the
date of each borrowing. WGL Holdings may also engage in other types of
short-term financing generally available to borrowers with comparable
credit ratings as it may deem appropriate in light of its needs and
market conditions at the time of issuance.
Washington Gas Short-Term Debt
Washington Gas requests authority to issue and sell from time to
time during the Authorization Period notes and other evidence of
indebtedness having a maturity of one year or less in an aggregate
principal amount outstanding at any one time not to exceed $350
million. Washington Gas also proposes to establish bank lines of credit
in an aggregate principal amount sufficient to support projected levels
of short-term borrowings and to provide an alternative source of
liquidity. Short-term financing could include, without limitation,
commercial paper sold in established domestic or European commercial
paper markets in a manner similar to WGL Holdings, bank lines of credit
and other debt securities. The effective cost of money on short-term
debt of Washington Gas authorized in this proceeding will not exceed at
the time of issuance 300 basis points over LIBOR for maturities of one
year or less.
Nonutility Subisdiary Loans
Applicants request authority to make loans to associate, Nonutility
subsidiaries at interest rates and maturities designed to provide a
return to the lending company of not less than its effective cost of
capital on the condition that the Nonutility is not directly or
indirectly, wholly owned by WGL Holdings and does not sell goods or
services to Washington Gas.
Guarantees
WGL Holdings requests authorization to enter into guarantees and
capital maintenance agreements, obtain letters of credit, enter into
expense agreements or otherwise provide credit support on behalf, or
for the benefit, of any Subsidiary as may be appropriate to enable such
Subsidiary to carry on its business in an aggregate principal amount
not to exceed $400 million outstanding at any one time. WGL Holdings
proposes to charge the cost of providing guarantees to the Subsidiary
company receiving the guarantee. The cost will be determined by
multiplying the amount of the WGL Holdings guarantee by the cost of
obtaining the liquidity necessary to perform the guarantee for the
period of time the guarantee remains outstanding. \5\
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\5\ Necessary liquidity may include bank line commitment fees or
letter of credit fees. In addition, WGL Holdings will pass along the
cost of other transactional expenses to the Subsidiary company
receiving the guarantee.
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The Nonutility subsidiaries of WGL Holdings propose to provide
guarantees and other forms of credit support on behalf, or for the
benefit of, of other Nonutility subsidiaries in an aggregate principal
amount not to exceed $200 million outstanding at any one time,
exclusive of any guarantees and other forms of credit support that are
exempt under rule 45(b)(7) and rule 52(b). The Nonutility subsidiary
providing any such credit support may charge its associate company a
fee for each guarantee provided on its behalf determined in the same
manner as guarantees offered by WGL Holdings to its Subsidiaries.
Hedging Transactions
WGL Holdings, and to the extent not exempt under rule 52, its
Subsidiaries, request authorization 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. Interest Rate Hedges would only be
entered into with counterparties (``Approved Counterparties'') whose
senior debt ratings, or the senior debt ratings of the counterparties'
parent companies, as published by Standard and Poor's Ratings Group,
are equal to or greater than BBB, or an equivalent rating from Moody's
Investors Service, Fitch Investor Service or Duff and Phelps. Interest
Rate Hedges will involve the use of financial instruments commonly used
in today's capital markets, such as interest rate swaps, caps, collars,
floors, and structured notes (i.e., a debt instrument in which the
principal and/or interest payments are indirectly linked to th value of
an underlying asset or index), or transactions involving the purchase
or sale, including short sales, of U.S. Treasury obligations. The
transactions would be for fixed periods and stated notional amounts.
Fees, commissions and other amounts payable to the counterparty or
exchange (excluding, however, the swap or option payments) in
connection with an Interest Rate Hedge will not exceed those generally
obtainable in competitive markets for parties of comparable credit
quality.
Anticipatory Hedges
In addition, WGL Holdings and the Subsidiaries request
authorization to enter into interest rate hedging the transactions with
respect to anticipated debt offerings (``Anticipatory Hedges''),
subject to certain limitations and restrictions. Anticipatory Hedges
would only be entered into with Approved Counterparties, and would be
utilized to fix and/or limit the interest rate risk associated with any
new issuance through (i) A forward sale of exchange-traded U.S.
Treasury futures contracts, U.S. Treasury obligations and/or a forward
swap (each a ``Forward Sale''), (ii) the purchase of put options on
U.S. Treasury obligations (a ``Put Options Purchase''), (iii) a Put
Options Purchase in combination with the sale of call options on U.S.
Treasury obligations (a ``Zero Cost Collar''), (iv) transactions
involving the purchase or sale, including short sales, of U.S. Treasury
obligations, or (v) some combination of a Forward Sale, Put Options
Purchase, Zero Cost Collar and/or other derivative or cash
transactions, including, but not limited to structured notes, caps and
collars, appropriate for the Anticipatory Hedges. Anticipatory Hedges
may be executed on-exchange (``On-Exchange Trades'') with brokers
through the opening of futures and/or options positions traded on the
Chicago Board of Trade (``CBOT''), the opening of over-the-counter
positions with one or more counterparties (``Off-Exchange Trades''), or
a combination of On-Exchange Trades and Off-Exchange Trades. WGL
Holdings or a subsidiary will determine the optimal structure of each
Anticipatory Hedge transaction at the time of execution. WGL Holdings
or a Subsidiary may decided to lock in interest rates and/or limit its
exposure to interest rate increases. All open positions under
Anticipatory Hedges will be closed on or prior to the date of the new
issuance and neither WGL
[[Page 46516]]
Holdings nor any Subsidiary will, at any time, take possession or make
delivery of the underlying U.S. Treasury Securities.
System Money Pool
WGL Holdings, Washington Gas, Hampshire, Crab Run, WGR, Washington
Gas Energy Systems, Inc., Washington Gas Energy Services, Inc.,
Brandywood Estates, Inc., American Combustion Industries, Inc.,
Washington Gas Consumer Services, and WG Maritime Plaza I, Inc. propose
to establish a system money pool (``Money Pool'') and, to the extent
not exempted by rule 52, also request authorization to make unsecured
short-term borrowings from the Money Pool, to contribute surplus funds
to the Money Pool, and to lend and extend credit to (and acquire
promissory notes from) one another through the Money Pool. Washington
Gas requests authority to borrow up to $350 million at any one time
outstanding from the Money Pool. WGL Holdings may lend to the Money
Pool but may not borrow from it. Under the proposed terms of the Money
Pool Agreement, short-term funds would be available from the following
sources for short-term loans to the participating Subsidiaries from
time to time: (1) Surplus funds in the treasuries of Money Pool
participants other than WGL Holdings, (2) surplus funds in the treasury
of WGL Holdings, and (3) proceeds from bank borrowings and/or
commercial paper sales by WGL Holdings or any Money Pool participant
(``External Funds''). The determination of whether Washington Gas at
any time has surplus funds to lend to the Money Pool or shall lend
funds to the Money Pool would be made by Washington Gas' chief
financial officer or treasurer, or by a designee thereof, on the basis
of cash flow projections and other relevant factors in Washington Gas'
sole discretion. Only those Nonutility subsidiaries identified above
shall borrow through the Money Pool. WGL Holdings shall undertake to
file a post-effective amendment in this proceeding seeking approval to
add any additional Nonutility subsidiary to borrow through the Money
Pool. It is proposed that, without further authorization of the
Commission, other current or future Nonutility subsidiaries may
participate in the Money Pool as lenders but not as borrowers.
Proceeds of any short-term borrowings from the Money Pool may be
used by a participant (i) For the interim financing of its construction
and capital expenditure programs; (ii) for its working capital needs;
(iii) for the repayment, redemption or refinancing of its debt and
preferred stock; (iv) to meet unexpected contingencies, payment and
timing differences, and cash requirements; and (v) to otherwise finance
its own business and for other lawful general corporate purposes.
Changes in Capital Stock
WGL Holdings requests authority to change the terms of any wholly
owned Subsidiary's authorized capital stock capitalization by an amount
deemed appropriate by WGL Holdings or other intermediate parent
company. A Subsidiary would be able to change the par value, or change
between par value and no-par stock, without additional Commission
approval. Any such action by a utility subsidiary would be subject to
and would only be taken upon the receipt of any necessary approvals by
the state commissions in the state or states in which such utility
subsidiary is incorporated and doing business.
Financing Subsidiaries
The Applicants request authority 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 WGL Holdings and the Subsidiaries through the issuance
of long-term debt or equity securities, including but not limited to
monthly income preferred securities, to third parties. Financing
Subsidiaries would loan, dividend or otherwise transfer the proceeds of
the financing to its parent or to other Subsidiaries. The terms of any
loan of the proceeds of any securities issued by a Financing Subsidiary
would mirror the terms of those securities. WGL Holdings may, if
required, guarantee or enter into expense agreements in respect of the
obligations of any Financing Subsidiary which it organizes. The
Subsidiaries may also provide guarantees and enter into expense
agreements, if required, on behalf of any Financing Subsidiaries which
they organize pursuant to Rules 45(b)(7) and 52, as applicable. If the
direct parent company of a Financing Subsidiary is authorized in this
proceeding or any subsequent proceeding to issue long-term debt or
similar types of equity securities, then the amount of securities
issued by that Financing Subsidiary would count against the limitation
applicable to its parent for those securities. However, the guarantee
by the parent of that security issued by its Financing Subsidiary would
not be counted against the limitations on WGL Holdings guarantees or
Subsidiary guarantees. In other cases, in which the parent company is
not authorized in this or in a subsequent proceeding to issue similar
types of securities, the amount of any guarantee not exempt under rules
45(b)(7) and 52 that is entered into by the parent company with respect
to securities issued by its Financing Subsidiary would be counted
against the limitation on WGL Holdings guarantees or Subsidiary
guarantees, as the case may be.
Intermediate Subsidiaries
WGL Holdings proposes to acquire, directly or indirectly through a
Nonutility subsidiary, the securities of one or more new subsidiary
companies (``Intermediate Subsidiaries'') which may 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
exempt wholesale generators as defined in section 32 of the Act
(``EWGs''), foreign utility companies as defined under section 33 of
the Act (``FUCOs''), companies, the acquisition of which are, exempted
from section 9(a) of the Act under rule 58 (``Rule 58 Companies''),
exempt telecommunication companies as defined under section 34 of the
Act (``ETCs'') or other non-exempt Nonutility subsidiaries provided
that Intermediate Subsidiaries may also engage in development
activities and administrative activities relating to these
Subsidiaries. To the extent such transactions are not exempt from the
Act or otherwise authorized or permitted by rule, regulation or order
of the Commission, WGL Holdings requests authority for Intermediate
Subsidiaries to provide management, administrative, project development
and operating services to such entities. Such services may be rendered
at fair market prices to the extent they qualify for any of the
exceptions from the ``at cost'' standard provided by rule 90(d)(1). WGL
Holdings also requests that Washington Gas' investments prior to the
date of the reorganization in Subsidiaries engaged in ``energy-
related'' activities under rule 58 be disregarded for purposes of
calculating the dollar limitation on such investments under rule 58.
An Intermediate Subsidiary may be organized, among other things,
(1) In order to facilitate the making of birds or proposals to develop
or acquire an interest in any EWG or FUCO, Rule 58 Company, ETC or
other non-exempt Nonutility subsidiary; (2) after the award of a bid
proposal, in order to
[[Page 46517]]
facilitate closing on the purchase or financing of the acquired
company; (3) at any time subsequent to the consummation of an
acquisition of an interest in a company in order, among other things,
to effect an adjustment in the respective ownership interests in the
business held by WGL Holdings and non-affiliated investors; (4) to
facilitate the sale of ownership interests in one or more acquired
Nonutility companies; (5) to comply with applicable laws of foreign
jurisdictions limiting or otherwise relating to the ownership of
domestic companies by foreign nationals; (6) as a part of tax planning
in order to limit WGL Holdings' exposure to U.S. and foreign taxes; (7)
to insulate WGL Holdings and Washington Gas from operational or other
business risks that may be associated with investments in Nonutility
companies; or (8) for other lawful business purposes.
Investments in Intermediate Subsidiaries may take the form of any
combination of the following: (1) Purchase of capital shares,
partnership interests, member interests in limited liability companies,
trust certificates or other forms of equity interests; (2) capital
contributions; (3) open account advances with or without interest; (4)
loans; and (5) guarantees issued, provided or arranged in respect of
the securities or other obligations of any Intermediate Subsidiaries.
Funds for any direct or indirect investment in any Intermediate
Subsidiary will be derived from (1) financings authorized in this
proceeding; (2) any appropriate future debt or equity securities
issuance authorization obtained by WGL Holdings from the Commission;
and (3) other available cash resources, including proceeds of
securities sales by a Nonutility subsidiary under rule 52. To the
extent that WGL Holdings provides funds or guarantees directly or
indirectly to an Intermediate Subsidiary which are used for the purpose
of making an investment in any EWG or FUCO or a rule 58 Company, the
amount of such funds or guarantees will be included in WGL Holdings'
``aggregate investment,'' as calculated in accordance with rule 53 or
rule 58, as applicable.
WGL Holdings requests authorization to consolidate or otherwise
reorganize under one or more direct or indirect Intermediate
Subsidiaries WGL Holdings' ownership interests in existing and future
Nonutility subsidiaries. These transactions may take the form of a
Nonutility subsidiary selling, contributing or transferring the equity
securities of a Subsidiary as a dividend to an Intermediate Subsidiary,
and Intermediate Subsidiaries acquiring, directly or indirectly, the
equity securities of such companies, either by purchase or by receipt
of a dividend. The purchasing Nonutility subsidiary in any transaction
structured as an intrasystem sale of equity securities may execute and
deliver its promissory note evidencing all or a portion of the
consideration given. Each transaction would be carried out in
compliance with all applicable U.S. or foreign laws and accounting
requirements and any transaction structured as a sale would be carried
out for a consideration equal to the book value of the equity
securities being sold. WGL Holdings will report each such transaction
in the next quarterly certificate filed under rule 24 in this file, as
described below.
Energy Consumer Financing Activities
Washington Gas currently offers financing to its customers for the
purchase of natural gas and electric appliances and other energy-
related products and services and may continue to do so after the
Reorganization. WGL Holdings proposes to expand its financing program
for purchases from nonassociate vendors of energy-related equipment and
related products and services to include financing for purchases of new
or replacement gas or oil furnaces, gas swimming pool heaters, gas or
electric hot water heaters, gas fireplace inserts, heat pumps, air
conditioning equipment, electric and gas kitchen appliances, air and
water treatment equipment and other energy conservation equipment,
products and services, and for the costs of any related installation
and remodeling work, such as duct work, plumbing and electrical work.
WGL Holdings proposes to offer the expanded consumer financing
through one or more existing or newly formed, direct or indirect,
Nonutility subsidiaries. The proposed financing activities will be
limited to Virginia, Maryland and the District of Columbia. It is
anticipated that in the vast majority of cases, the individuals or
businesses to whom consumer financing is provide will be natural gas
customers of Washington Gas or individuals or businesses who are not
currently served by any natural gas supplier. Consumer financing may
take the form direct loans to customers, guarantees of third-party
loans or purchases, with or without recourse, from vendors of the
equipment, supplies or services of installment purchase obligations
executed by customers.
During the Authorization Period, WGL Holdings proposes to invest
not more than $100 million in existing or new Nonutility Subsidiaries
that are engaged in the business of providing financing for purchase of
energy-related equipment, goods and services. These investments would
be in the form of purchases of stock or other equity securities, loans,
cash capital contributions and/or open account advances, WGL Holdings
will use the proceeds of the financing authorized in this proceeding
and/or other available cash to make such investments.
Payment of Dividends Out of Capital or Unearned Surplus
WGL Holdings proposes, on behalf of each of its current ad future
non-exempt, Nonutility subsidiaries that these companies be permitted
to pay dividends with respect to the securities of such companies out
of capital and unearned surplus (including revaluation reserve), to the
extent permitted under applicable corporate law. However, a non-exempt,
Nonutility subsidiary will seek approval of the Commission before
declaring or paying any dividend out of capital or unearned surplus if
the subsidiary derives any material part of its revenues from the sales
of goods, services, electricity or natural gas to Washington Gas.
Services
Washington Gas has been providing administrative, management,
technical, legal and other support services to its subsidiaries for
many years, subject to approval of the terms of those arrangements by
the VSCC-VA and also to the oversight of the PSC-DC C and PSC-MD. In
addition, there have been occasions when subsidiaries of Washington Gas
have provided services to Washington Gas or to other Washington Gas
subsidiaries. Accordingly, Washington Gas requests authorization to
provide administrative, management, technical, legal and other support
services to the Nonutilities and to provide similar services to WGL
Holding after the Reorganization. Consistent with Section 13(a) of the
Act, WGL Holdings would not be able to provide any services to
Washington Gas. The Nonutilities seek to provide services to Washington
Gas or other Nonutilities as may be reasonably necessary. All services
or goods shall be provided in accordance with rules 90 through 92.
For the Commission by the Division of Investment Management,
pursuant to delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 00-19094 Filed 7-27-00; 8:45 am]
BILL
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ING CODE 8010-01-M