[Federal Register Volume 65, Number 155 (Thursday, August 10, 2000)]
[Notices]
[Pages 49030-49033]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-20255]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27208]


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

August 4, 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 29, 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 29, 2000, the application(s) and/or 
declaration(s), as filed or as amended, may be granted and/or permitted 
to become effective.

CP&L Energy, Inc., et al. (70-9643)

    CP&L Energy, Inc. (``CP&L Energy''), a public utility holding 
company claiming an exemption under section 3(a)(1) of

[[Page 49031]]

the Act, located at 411 Fayetteville Street Mall, Raleigh, North 
Carolina 27601, and Florida Progress Corporation (``Florida 
Progress''), a Florida public utility holding company claiming 
exemption under section 3(a)(1) of the Act, located at One Progress 
Plaza, St. Petersburg, Florida 33701 (together with CP&L Energy, 
``Applicants''), have filed an application-declaration under sections 
6(a), 7, 9(a)(2), 10, and 13(b) of the Act and rules 80-91 under the 
Act.
    Applicants request authority for CP&L Energy to directly acquire 
all of the issued and outstanding shares of Florida Progress 
(``Merger''). Following the consummation of the Merger, CP&L Energy 
will register as a holding company under section 5 of the Act.

Description of the Parties

    CP&L Energy has two utility subsidiaries, Carolina Power & Light 
Company (``CP&L'') \1\ and North Carolina Natural Gas Corporation 
(``NCNG''). CP&L is primarily engaged in the business of generating, 
purchasing, transmitting and distributing electricity to approximately 
1.2 million customers located within two noncontiguous services areas 
of North Carolina, separated by Duke Power Company's transmission 
system. CP&L's eastern service area (``Eastern Service Area'') covers 
approximately 30,000 square miles, in eastern North Carolina, including 
the cities of Raleigh and Wilmington, North Carolina, and in northern 
South Carolina. CP&L also serves customers in western North Carolina in 
and around the City of Asheville (``Western Service Area'').
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    \1\ CP&L claims exemption from registration under section 
3(a)(2) of the Act.
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    As of December 31, 1999, CP&L owned or controlled 10,128 MW of 
installed generating capacity, 5,585 pole miles of transmission lines, 
over 44,294 pole miles of overhead distribution lines, and nearly 
13,842 miles of underground distribution lines. CP&L is subject to 
regulation by the North Carolina Utilities Commission (``NCUC'') and 
the South Carolina Public Service Commission regarding retail electric 
rates, securities issuances, affiliate transactions, and other matters, 
and by the Federal Energy Regulatory Commission with respect to 
wholesale electric and electric transmission rates.
    NCNG, a gas public utility company, transports and distributes 
natural gas and propane to approximately 178,000 customers in North 
Carolina. NCNG's natural gas system consists of approximately 1,128 
miles of transmission pipeline and 2,865 miles of distribution mains. 
NCNG is subject to regulation by the NCUC regarding rates, securities 
issuances, affiliate transactions, and other matters and by the Federal 
Energy Regulatory Commission (``FERC'') with respect to wholesale 
electric and electric transmission rates and other matters.
    Applicants state that CP&L Energy has several subsidiaries that are 
engaged in the following businesses: designing, installing and 
providing energy and facilities management software systems and related 
services; providing environmental and energy management services; 
owning and operating an ``eligible facility,'' as defined by section 32 
of the Act; selling Internet-based services and operating fiber optic 
telecommunications facilities; holding certain land and water rights 
used in CP&L's utility operations; owning and operating an interest in 
an existing intrastate natural gas pipeline company; developing, 
owning, and operating a new intrastate gas pipeline and gas 
distribution system that will, upon completion, become a ``gas utility 
company''; \2\ owning and operating an interest in a liquefied natural 
gas project; owning and operating an interest in facilities that 
produce synthetic fuels from coal fines and other coal byproducts; and 
energy marketing and brokering.\3\ Applicants state that certain of 
these subsidiaries also own passive investments in venture capital 
funds, local economic development enterprises, and in tax-advantaged 
low income housing and historic building restoration projects. In 
addition, Applicants stat that CP&L Energy has interests in businesses, 
which do not qualify as subsidiaries, that are engaged in natural gas 
pipeline and liquefied gas activities in North Carolina.\4\
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    \2\ Applicants state that this gas distribution system will be 
the subject of a separate application.
    \3\ Applicants also state that CP&L derives de miminis revenues 
from various activities such as fleet vehicle repair and servicing, 
transformer maintenance services, data processing and the sale of 
timber.
    \4\ The names of these subsidiaries, funds, enterprises, 
projects and other businesses are listed in Exhibit A to this 
notice.
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    For the year that ended December 31, 1999, CP&L reported $3.5 
billion in consolidated operating revenues, of which $3.14 billion was 
derived from electric utility operations, $201 million from regulated 
natural gas operations, and $125 million from diversified non-utility 
activities. As of December 31, 1999, CP&L had consolidated assets of 
$9.5 billion, including $6.8 billion in net utility plant.
    Florida Progress owns all of the issued and outstanding common 
stock of Florida Power Corporation (``Florida Power''), an electric 
utility that serves approximately 1.4 million customers in a 20,000 
square mile area of central and northern Florida, including St. 
Petersburg, Clearwater, and the areas around Orlando. The Florida Power 
electric system, as of December 31, 2000, has 9,567 MW of total 
generating capacity and owns 4,687 circuit miles of high voltage 
transmission lines and 25,4090 circuit miles of distribution lines. In 
addition, Applicants state that Florida Power, together with other 
utilities and municipalities own 13 transmission lines interconnecting 
peninsular Florida with The Southern Company (``Southern 
Interface'').\5\ Florida Power is subject to regulation by the Florida 
Public Service Commission (``FPSC'') regarding rates, securities 
issuances, affiliate transactions, and other matters and by the FERC 
with respect to wholesale electric and electric transmission rates and 
other matters.
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    \5\ Applicants state that Florida Power is currently allocated 
438 MW of the total import capacity over the Southern Interface, and 
231 MW and 304 MW of the Southern Interface's summer and winter 
export capacity, respectively.
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    Florida Progress' principal nonutility subsidiary is Electric Fuels 
Corporation, which has operations organized into three units: energy 
and related services, inland marine transportation and rail services. 
The energy and related services unit mines and sells coal to Florida 
Power and to nonassociates. This unit also produces and sells natural 
gas and synthetic fuel, and provides marine terminal services and 
offshore marine transportation. The inland marine transportation 
business unit, conducted through MEMCO Barge Lines, Inc., transports 
coal and dry-bulk cargoes primarily along the Mississippi, Illinois and 
Ohio Rivers, using a fleet of river barges and towboats. The rail 
services business unit, conducted primarily through Progress Rail 
Services Corporation, is one of the largest integrated processors and 
suppliers of railroad materials and services in the country. With 
operations in 24 states, Mexico and Canada, Progress Rail offers a full 
range of railcar parts, maintenance-of-way equipment, rail and other 
track material, railcar repair facilities, railcar scrapping and metal 
recycling, as well as railcar sales and leasing.
    Applicants state that Florida Progress also has subsidiaries 
engaged in marketing telecommunications capacity and other 
telecommunications services, developing independent and cogeneration 
power projects, power marketing, holding real estate and accounts 
receivable to support the operations of associates, and selling life

[[Page 49032]]

insurance.\6\ In addition, Florida Progress directly or indirectly owns 
passive investments in affordable housing projects and in a local 
baseball team. Applicants also state that Florida Power derives de 
minimis revenues, from constructing transmission and distribution 
facilities and providing outage maintenance services to nonassociate 
utilities and from constructing relay towers for mobile phones.\7\
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    \6\ Applicants state that Florida Progress is pursuing efforts 
to divest the company, Mid Continent Life Insurance Company, that is 
engaged in selling life insurance.
    \7\ A complete list of the names of the businesses in which 
Florida Progress has an interest in providing in Exhibit A.
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    For the year that ended December 31, 1999, Florida Progress 
reported consolidated operating revenues of $3.85 billion, of which 
nearly $2.63 billion were derived from electric utility operations and 
$1.21 billion were derived from non-utility activities. As of December 
31, 1999, Florida Progress had total assets of $6.5 billion, including 
net utility plant of $3.7 billion.

Proposed Merger and Operations

    Under an Amended and Restated Agreement and Plan of Exchange, dated 
August 22, 1999, as amended March 3, 2000 (as amended, ``Exchange 
Agreement''), Florida Progress shareholders will sell each share of 
their common stock to CP&L Energy in exchange for one contingent value 
obligation (``CVO'') \8\ and, at their election, either $54.00 in cash 
or a number of shares of CP&L Energy common stock equal to the exchange 
ratio which is designed to provide Florida Progress shareholders with 
CP&L Energy common stock having a market value of $54.00, subject to 
certain limitations (``Share Exchange'').\9\ Florida Progress has not 
issued any preferred stock or debt securities. The boards of directors 
of CP&L Energy and Florida Progress approved the Share Exchange on 
February 25, and March 3, 2000, respectively.
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    \8\ Each CVO will represent the assignable and transferable 
right to receive a pro rata portion of certain contingent payments 
that are based upon the net after-tax cash flow, including federal 
income tax credits, to CP&L Energy generated by four synthetic fuels 
plants that were purchased by Florida Progress in October of 1999.
    \9\ The exchange ratio will be determined by dividing $54.00 by 
the average of the closing sale price per share of CP&L Energy 
common stock as reported on the New York Stock Exchange Composite 
Tape on each of the twenty consecutive trading days ending with the 
fifth trading day immediately preceding the closing date (the 
``Average Closing Price''). If, however, the Average Closing Price 
is greater than $45.39, the exchange ratio will be fixed at 1.1897, 
and if the Average Closing Price is less than $37.13, the exchange 
ratio will be fixed at 1.4543. The actual value of stock 
consideration received for each share Florida Progress share will 
depend on the market value of CP&L Energy common stock at the 
completion of the Share Exchange. Therefore, if the Average Closing 
Price is less than $37.13, then each share of Florida Progress 
common stock exchanged for stock consideration will be valued in the 
Share Exchange at less than $54.00, and if the Average Closing Price 
is more than $45.39, then each share of Florida Progress common 
stock exchanged for stock consideration will be valued in the Share 
Exchange at more than $54.00.
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    Applicants state that the electric utility properties will be 
operated as a single integrated system. CP&L Energy intends to 
physically interconnect the electric utility systems via a 
unidirectional, south-to-north, 50 MW firm transmission path 
(``Contract Path'') over Southern Company and Duke Power transmission 
systems.\10\ The Contract Path, which commences on January 1, 2001, 
will extend from the interface of the Southern and Florida Power 
transmission systems to the interface of the Duke Power and CP&L 
Eastern Service Area transmission systems. The Contract Path has been 
reserved for an initial one-year period, and Applicants commit to 
renewing the Contract Path for up to two additional one-year periods, 
to the extent necessary to satisfy the physical interconnection 
requirement of section 11 of the Act. Applicants also state that 
additional non-firm transmission capacity will be available for 
purchase on neighborhood transmission systems.\11\
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    \10\ Applicants predict that, initially, power exchanges between 
Florida Power and CP&L will be small, infrequent and intermittent.
    \11\ Applicants state that CP&L Energy proposes to retain NCNG 
as an additional integrated gas utility system.
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Related Authorizations

    Applicants request authority to organize CP&L Service as a service 
company subsidiary of CP&L Energy. Applicants request under rule 88(b) 
under the Act that the Commission find that the company will be 
organized and conducted to meet the requirements of section 13(b) of 
the Act. CP&L Service would provide services, at cost, under two 
separate service agreements to associate companies, in accordance with 
rules 90 and 91 under the Act. In addition, CP&L, NCNG, and Florida 
Power request authority to provide services and sell or lease goods to 
each other and associate companies in accordance with rules 87, 90, and 
91 under the Act.
    Applicants also propose to continue and extend two agreements under 
which Electric Fuels sells coal to Florida Power for use at Florida 
Power's Crystal River generating station. The price charged by Electric 
Fuels to Florida Power consists of (a) the costs paid by Electric Power 
to associate and nonassociate coal suppliers, (b) the cost of 
transportation to the Crystal River station by rail or water, (c) 
Electric Fuel's other expenses and (d) a return on Electric Fuels' 
equity investment associated with assets dedicated to regulated 
businesses, at the rate of return on equity authorized by the FPSC for 
Florida Power.
    CP&L Energy also proposes to retain Florida Progress for a period 
of up to eight years as a wholly owned subsidiary, which will continue 
to own all of the issued and outstanding common stock of Florida Power, 
and requests that the Commission grant Florida Power an exemption under 
section 3(a)(1) of the Act. In this connection, Applicants state that 
both Florida Progress and Florida Power are incorporated in Florida and 
that all of Florida Power's operations are in Florida. Applicants state 
that it is desirable to retain Florida Progress as an exempt holding 
company in order to avoid repayment of debt and preferred securities 
issued by Florida Progress subsidiaries that are guaranteed by Florida 
Progress.

    For the Commission by the Division of Investment Management, 
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.

EXHIBIT A: Nonutility Businesses

CP&L Energy

    CP&L Energy directly or indirectly owns all of the outstanding 
equity securities of the following nonutility subsidiaries: 
Strategic Resource Solutions Corp., Applied Computer Technologies 
Corp., ACT Controls, Spectrum Controls, Inc., SRS Engineering Corp., 
Monroe Power Company, CP&L Service Company, LLC CPL Energy Ventures, 
Inc., CPL Synfuels, LLC, Caronet, Inc., Capitan Corporation, 
CaroFund, Inc., CaroHome, LLC, CaroFinancial, Inc., Cape Fear Energy 
Corporation, NCNG Cardinal Pipeline Investment Corporation, NCNG 
Pine Needle Investment Corporation, and NCNG Energy Corporation. In 
addition, CP&L Energy also holds a 50% interest in Eastern North 
Carolina Natural Gas Company, LLC, a 35% interest in Interpath 
Communications, Inc., a 33\1/3\ interest in Autonomous Networks, 
LLC, a 20% interest in CFN FiberNet LLC, a 10% interest in BellSouth 
Carolinas PCS, LP, a 90% interest in each of Solid Fuel, LLC and 
Sandy River Synfuel, LLC, and a five percent interest in each of 
Cardinal Pipeline Company, LLC and Pine Needle LNG Company.
    CP&L also directly or indirectly owns a passive interest in the 
following entities: Absolut Limited Partnership LP, Better Homes for 
Garner, Capital City Low Income Housing LP, Walnut Street LP, WNC 
Institutional Tax Credit Fund, LP, Maxey

[[Page 49033]]

Flats, LLC, Powerhouse Square, LLC, Utech Venture Capital 
Corporation, Utech Climate Challenge Fund LP, Carousel Capital 
Partners, LP, NC Enterprise Fund, LP, 1-40 Enterprises, LLC, 
Southeast Regional Park Development Company, LLC, South Atlantic 
Private Equity Fund IV, LP, Palmetto Seed Capital Challenge Fund LP, 
Pantellos Corporation, Utility Competitive Advantage Fund, LLC, 
Affordable Housing Developers, LLC, Anaheim Affordable, LP, ARV Troy 
Villa, LP, Bradford Place of Fuquay-Varina LP, Siler City, Cedar 
Tree Properties, LP, Lumberton-Chestnut Place LLC, Dillon Apartments 
of South Carolina, Enston Home LP, Excelsior Apartments LP, First 
Partners II, LP, Garden Spring Housing Association, LLC, The Garner 
School Apartments LP, Wilmington-Hooper School Apts, LLC, 
Mountainside LLC, Meadow Spring Housing Assoc. LLC, Hartsville 
Apartments LP, Manor Associates LP, Asheboro-North Forest LLC, 
Northgate II LLC, Knightdale Development LLC, Parkview Housing 
Associate LP, Prarie Limited Liability Company, Ridgewood Housing 
Assc LLC, Arden-River Glen LLC, Rockwook North LLC, Rockwood AH-1 
LP, Marion Apartments LP, Spring Forest Housing Assoc, LLC, 
Bishopville Apartments LP, Trinity Ridge LLC, Havelock-Tyler Place 
Apartments LLC, West Cary Apartments LLC, Westridge Wood LLC, Wilrik 
Hotel Apartments LLC, Asheville-Woodridge LP, Knightdale Apts, LLC, 
Savannah Place Apartments, LLC, Willow Run, LLC, Wind Ridge, LLC, 
HGA Development, LLC, GAR, LLC, and Raleigh-CaroHome/WCK, LLC.

Florida Progress Corporation

    Florida Progress has a number of direct and indirect nonutility 
subsidiaries: FPC Del, Inc., Energy Solutions, Inc., Progress 
Capital Holdings, Inc., Florida Progress Funding Corporation, FPC 
Capital I, FPC Capital II, Mid-Continent Life Insurance Company, 
PIH, Inc., Progress Reinsurance Company, Ltd., Progress 
Telecommunications Corporation, Progress-Centrus, Inc., Progress 
Energy Corporation, PEC Fort Drum, Inc., Westmoreland-Ft. Drum, 
L.P., Westpower Ft. Drum, Black River Limited Partnership, Progress 
Desal, Inc., Progress Power Marketing, Inc., Progress Holdings, 
Inc., Cadence Network, Inc., Progress Provisional Holdings, Inc., 
Electric Fuels Corporation, Awayland Coal Company, Inc., Dixie Fuels 
Limited, Dixie Fuels II Limited, EFC Synfuel L.L.C., Homeland Coal 
Company, Inc., Powell Mountain Joint Venture, Kentucky May Coal 
Company, Inc., Diamond May Coal Company, Diamond May Mining Company, 
Cincinnati Bulk Terminals, Inc., Kanawha River Terminals, Inc., 
Marigold Dock, Inc., Colona Sub No. 2, LLC, Black Hawk Synfuel, 
Ceredo Synfuel L.L.C., Sandy River Synfuel L.L.C., Solid Energy 
L.L.C., Solid Fuel L.L.C., LLC, New River Synfuel, LLC, Coal 
Recovery V, LLC, Colona Newco, LLC, Ceredo Liquid Terminals, Inc., 
Colona Synfuel Limited Partnership, LLLP, Kentucky May mining 
Company, Little Black Mountain Coal Reserves, Inc., Dulcimer Land 
Company, Little Black Mountain Land Company MEMCO Barge Line, Inc., 
Elmwood Marine Services, Inc., Conlease, Inc., International Marine 
Terminals Partnership, I.M.T. Land Corp., Mesa Hydrocarbons, Inc., 
Powell Mountain, Inc., PMCC, Inc., Powell Mountain Coal Company, 
Inc., Murphy Land Company, Inc., Progress Land Corporation, Progress 
Materials, Inc., Progress Metal Reclamation Company, West Virginia 
Auto Shredding, Progress Rail Services Corporation, Chemetron-
Railway products, Inc., FM Industries, Inc., Kentuckiana Railcar 
Repair and Storage Facility, LLC, PRS International Sales Company, 
Inc., Progress Rail Services de Mexico, S.A. de C.V., Progress Rail 
Canada Corp., Progress Rail Holdings, Inc., Progress Rail 
Transcanada Corporation, Progress Vanguard Corp., Railcar, Ltd., 
Southern Machine and Tool Company, United Industries, Inc., 
Servicios Ferroviarios Progress, S. de R.L. de C.V., Servicios 
Administrativos Progress, S. de R.L. de C.V. and Progress Synfuel 
Holdings, Inc.
    In addition, Florida Progress has a passive investment in the 
following entities: American Tax Credit Corporate Fund III, L.P., 
Boston Capital Corporate Tax Credit Fund VII, Boston Capital 
Corporate Tax Credit Fund, VIII, KeyCorp Investment Limited 
Partnership II, Lehman Housing Tax Credit Fund, L.P. McDonald 
Corporate Tax Credit Fund 1996 Limited Partnership, and National 
Corporate Tax Credit Fund VI.

[FR Doc. 00-20255 Filed 8-9-00; 8:45 am]
BILLING CODE 8010-01-M