[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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