[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