[Federal Register Volume 65, Number 161 (Friday, August 18, 2000)]
[Notices]
[Pages 50578-50582]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-21038]



[[Page 50578]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27211]


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

August 11, 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 September 5, 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 September 5, 2000, the application(s) and/or 
declaration(s), as filed or as amended, may be granted and/or permitted 
to become effective.

Consolidated Edison, Inc., and Northeast Utilities (70-9613)

    Consolidated Edison, Inc. (``CEI''), 4 Irving Place, New York, New 
York 10003, a public utility holding company claiming exemption from 
registration under section 3(a)(1) by rule 2 under the Act, and 
Northeast Utilities, 174 Brush Hill Avenue, West Springfield, 
Massachusetts 01090-0010, a registered holding company (collectively, 
``Applicants''), have filed a joint application-declaration under 
sections 6(a), 7, 8, 9(a), 10, 11 and rule 54 under the Act.

Summary of Proposal

    As described in more detail below, the Applicants seek 
authorization for Consolidated Edison, Inc. (``New CEI''),\1\ a 
Delaware corporation and a wholly owned subsidiary of CEI, to acquire 
all of the issued and outstanding stock of NU. Under the proposed 
transactions, Orange and Rockland Utilities, Inc. (``O&R''), 
Consolidated Edison Company of New York (``CECONY''), NU, and certain 
nonutility subsidiaries will become direct subsidiaries of New CEI. 
After the merger, the Applicants state that New CEI will register as a 
public utility holding company under section 5 of the Act.\2\ The 
Applicants seek authorization for New CEI to operate as a combination 
electric and gas utility holding company. In addition, the Applicants 
seek authorization for New CEI to retain O&R as an exempt electric and 
gas subsidiary public utility holding company,\3\ NU as a subsidiary 
registered public utility holding company, and Yankee Energy System, 
Inc. (``YES'') as a subsidiary exempt gas utility holding company of 
NU, New CEI also seeks to retain CEI's interests in its utility and 
nonutility activities, businesses and investments and to acquire and 
retain NU's nonutility activities, businesses and investments.
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    \1\ New CEI was originally incorporated as CWB Holdings, Inc.
    \2\ The Applicants and certain of their subsidiaries have also 
filed in S.E.C. file No. 70-9711 an application-declaration related 
to the financing of the proposed New CEI registered holding company 
system. A notice of that filing will be issued in the future.
    \3\ See Rockland Light and Power Co., 1 S.E.C. 354 (1936) 
(granting an exemption under section 3(a)(2)). Rockland Light and 
Power Company subsequently became O&R and Holding Company Act 
Release No. 27021 (May 13, 1999) (authorizing CEI's acquisition of 
O&R and continuation of O&R's exemption under section 3(a)(2)).
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The Proposed Merger

    CEI, NU, New CEI, and N Acquisition LLC, a Massachusetts limited 
liability company, which is directly and indirectly owned by New 
CEI,\4\ have entered into an amended and restated plan of merger dated 
as of January 11, 2000 (``Merger Agreement''). Under the Merger 
Agreement, CEI will be merged with and into New CEI, with New CEI being 
the surviving entity, and NU will merge with N Acquisition, with NU 
being the surviving entity (``Merger''). Upon consummation of the 
Merger, New CEI will own all of the assets of CEI and NU will be a 
wholly owned subsidiary of New CEI.
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    \4\ New CEI owns 99% of N Acquisition and X Holding Company LLC 
(X Holding), a Massachusetts limited liability company, owns 1% of N 
Acquisition. New CEI owns 99% of X Holding and N Acquisition owns 1% 
of X Holding.
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    The Merger Agreement provides that each CEI common share 
outstanding immediately prior to the closing of the Merger will, at 
closing, be converted into one share of New CEI common stock. Any CEI 
common shares held by CEI as treasury shares or owned by New CEI will 
be canceled without payment for those shares.
    The Merger Agreement provides that NU shareholders may elect to 
receive, for each NU common share that they own, a fraction (the 
``Exchange Ratio'') of a share of New CEI common stock equal to a 
numerator of $25.00 divided by the weighted average trading price of a 
CEI common share over twenty trading days randomly selected from the 
forty trading days ending five trading days prior to the closing. 
However, the CEI share price used to calculate the Exchange Ratio will 
not be less than $36.00 nor greater than $46.000. Also, $1.00 will be 
added to the numerator if, prior to the closing of the Merger, certain 
NU subsidiaries enter into binding agreements to sell to one or more 
non-affiliated third parties their respective interests in the 
Millstone Station Unit 2 and Millstone Station Unit 3 nuclear power 
plant assets, in accordance, in all material respects, with applicable 
law (``Divestiture Condition'').\5\ An additional $.0034 will be added 
to the numerator of the Exchange Ratio for each day after August 5, 
2000 the Merger fails to close through the day prior to the closing of 
the Merger.
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    \5\ If the Merger closes on or prior to December 31, 2000, and 
the Divestiture Condition has not been satisfied, but the 
Divestiture Condition is met after the Merger closes and on or prior 
to December 31, 2000, than each NU shareholder (whether the 
shareholder elected stock or cash consideration) will be entitled to 
$1.00 per converted NU common share to be paid in cash by New CEI.
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    In the alternative, holders of NU common shares may elect to 
receive cash consideration equal to $25.00 per NU common share. An 
additional $1.00 per share will be payable, if, prior to the closing of 
the Merger, NU satisfies the Divestiture Condition and an additional 
$.0034 per share will be payable for every day after August 5, 2000 
through the day prior to the closing of the Merger.
    Election for stock consideration or cash consideration will be 
subject to allocation and proration procedures. If greater than fifty 
percent of the holders of shares of NU elect to receive New CEI common 
stock, these holders who elected to receive New CEI stock may instead 
receive part of his or her consideration in the form of cash. If 
greater than fifty percent of the holders of shares of NU elect to 
receive cash, those holders who elected to receive cash may instead 
receive part of his or her consideration in the form of shares.
    As a result of the Merger, the post-merger New CEI system will have 
pro forma assets of approximately $27.816

[[Page 50579]]

billion for the twelve months ended March 31, 2000 and pro forma total 
operating revenues of approximately $13.134 billion, for the same 
period. If approved, New CEI will be an electric and gas distribution 
utility with over five million electric customers and over 1.4 million 
natural gas customers.
    After the Merger is consummated, New CEI will register with the 
Commission as a public utility holding company under section 5 of the 
Act. New CEI proposes to retain O&R as a subsidiary exempt holding 
company, NU as a subsidiary registered holding company and YES as a 
subsidiary exempt holding company of NU.
    The Merger will be accounted for using the purchase method of 
accounting and will result in the creation of approximately $1.6 
billion of goodwill. New CEI will not push down the goodwill to NU or 
its subsidiaries.\6\
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    \6\ Staff Accounting Bulletin 54, Topic 5.J. question 2 (grants 
an exception to push down accounting for companies with significant 
public debt or preferred stock.)
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Parties ot the Merger

CEI and its Subsidiaries

    CEI is a public utility holding company for its two utilities, 
Consolidated Edison Company of New York, Inc. (``CECONY'') and Orange 
and Rockland Utilities, Inc. (``O & R''), and certain nonutility 
subsidiaries.
CECONY
    CECONY, a New York Corporation incorporated in 1884, provides 
franchised retail electric service to over three million customers and 
gas to over one million customers in New York City and Westchester 
County. It has a service area of about 660 square miles and 
approximately 2,148 MW of generating assets, including the 1,000 MW the 
Indian Point 2 nuclear generating facility. As of December 31, 1999, 
CECONY's transmission system had approximately 430 miles of overhead 
circuits operating at 138, 230, 345 and 500 kilovolts and approximately 
380 miles of underground circuits operating at 138 and 345 kilovolts. 
The company's transmission facilities are located in New York City and 
Westchester, Orange, Rockland, Putnam and Dutchess counties in New York 
State. At December 31, 1999, CECONY's distribution system had 
approximately 88,200 miles of underground distribution lines and 
approximately 32,500 miles of overhead distribution lines. Natural gas 
is delivered by pipeline to Con Edison of New York at various points in 
its service territory and is distributed to customers by the company 
through approximately 4,200 miles of mains and 366,000 service lines. 
CECONY also supplies steam service to customers in parts of Manhattan. 
As of December 31, 1999, CECONY had 13,025 employees. CECONY is 
regulated by the New York Public Service Commission (``NYSC'') as well 
as the Federal Energy Regulatory Commission (``FERC'') and the Nuclear 
Regulatory Commission (``NRC''). CECONY has three wholly owned 
subsidiaries, Davids Island Development Corporation (``Davids 
Island''), and D.C.K. Management Corporation (``DCK''), and Steam House 
Leasing, LLC (``Steam House''). CECONY also owns a 28.8 percent 
interest in Honeoye Storage Corporation (``Honeoye Storage'').
    Davids Island, a New York Corporation, owns real property acquired 
as a possible site for an electric generating plant in Dutchess and 
Columbia Counties in New York State and is in the process of disposing 
of the property.
    DCK, a New York Corporation, owns real property in New York City.
    Steam House leases a steam generating plant that produces steam for 
CECONY's steam distribution business.
    Honeoye Storage, a New York Corporation, owns and operates a gas 
storage facility in upstate New York.
    In accordance with its divestiture plan for its fossil-fueled 
electric generation in New York City (``Divestiture Plan''), which the 
NYPSC approved, CECONY has divested almost all of its in-City electric 
generation to unaffiliated third parties. CECONY retains about 460 MW 
of generating capacity that produces both electricity and steam for its 
steam distribution system in Manhattan and some small combustion 
turbines located in various facilities in New York City and Westchester 
County.
CEI's Nonutility Subsidiaries
    CEI \7\ also engages in other nonutility businesses through four 
directly owned nonutility subsidiaries, Consolidated Edison Solutions 
(``CES''), Consolidated Edison Development, Inc. (``CEDI''),\8\ 
Consolidated Edison Energy, Inc. (``CEEI''), and Consolidated Edison 
Communications (``CECI''), which are described below:
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    \7\ CEI's unregulated subsidiaries own approximately 608 MW of 
additional generating assets.
    \8\ CEDI has nine direct subsidiaries which are discussed below.
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    CES is organized in New York and provides wholesale and retail 
energy and related services. CES has a 50 percent interest in Inventory 
Management & Distribution Company, Inc. (``IMD''), an energy marketing 
firm organized in Delaware, which is in the process of being dissolved. 
CES also has a 14.4 percent interest in Remote Source Lighting 
International, Inc. (``RSLI''), a lighting technology company organized 
in Delaware.
    CEDI, organized in New York, is in the business of investing in 
foreign and domestic energy and other infrastructure projects and the 
marketing of CECONY's technical services. CEDI has the following direct 
subsidiaries: Con Edison Development Guatemala, Ltd. (``CED 
Guatemala''), Consolidated Edison Leasing, Inc. (``CEI Leasing''), Con 
Edison Leasing, LLC (``Con Ed Leasing''), CED Ada, Inc. (``CED Ada''), 
Carson Acquisition, Inc. (``Carson Acquisition''), CED/SCS Newington, 
LLC, (``CED/SCS''), CED GTM 1, LLC (``CED GTM 1''), Consolidated Edison 
Energy Massachusetts, Inc. (``CEEMI''), CED Generation Holding Company, 
LLC (``CED Generation''), CEDST, LLC (``CEDST''), Con Edison 
Development Acquisition and Finance, Ltd. (``CEDAF''), and Con Edison 
El Salvador One, Ltd (CEES), which are discussed below:
    CED Guatemala is organized under the laws of the Cayman Islands. It 
is in the business of investing in energy projects in Central America.
    CEI Leasing, a Delaware corporation, has an investment in a 
leveraged lease transaction in a power plant in the Netherlands.
    Con Ed Leasing, a Delaware limited liability company, has an 
investment in a leveraged lease transaction in a gas distribution 
system in the Netherlands.
    CED Ada, a Delaware corporation, owns an approximate 96 percent 
interest in CED/DELTA Ada, LLC, (``CED/DELTA''), a Delaware limited 
liability company, which owns a 49.5 percent limited partnership 
interest and a 0.5 percent general partnership interest in Ada 
Cogeneration Limited Partnership, (``ACLP''), a Michigan limited 
partnership. ACLP owns a 30 MW gas-fired qualifying cogeneration 
facility under the Public Utility Regulatory Policies Act of 1978 
(``PURPA'') \9\ in Ada, Michigan.
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    \9\ Pub. L. No. 95-617, 92 Stat. 3117 (codified in scattered 
sections of 16 USC).
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    Carson Acquisition, Inc. (``CAI''), a Delaware corporation, which 
formerly owned an interest in a 42 MW qualifying cogeneration facility 
under PURPA in Carson, California, is presently inactive.
    CEI owns approximately 95% of CED/SCS, a Delaware limited liability

[[Page 50580]]

company. CED/SCS owns 100% of Newington Energy, LLC, a Delaware limited 
liability company, which is currently developing a 525 MW electric 
generating facility in Newington, New Hampshire.
    CED GTM1, a Delaware limited liability company, owns an approximate 
one-half interest in GTM Energy LLC, a Delaware limited liability 
company, which was formed to pursue an opportunity to develop an 
electric generating facility in New York City. It has recently been 
decided to discontinue the pursuit of this opportunity.
    CEEMI is a Delaware company which was established for the purpose 
of owning and operating 290 MW of generation facilities acquired from 
Western Massachusetts Electric Company, a wholly-owned subsidiary of 
NU, in July 1999.
    CED Generation is a Delaware company which indirectly owns and 
manages a 236 MW power plant located in Lakewood, New Jersey.
    CEDST is a Delaware company which owns 100% of CED 42, LLC, both 
formed to invest in low-income housing transactions to achieve tax 
credits for the system.
    CEDAF is organized under the laws of the Cayman Islands. It was 
organized in connection with a potential investment in Guatemala, which 
was never made. At present, CEDAF has no assets or operations and is 
inactive.
    CEES is organized under the laws of the Cayman Islands. CEES was 
organized in connection with a potential investment in El Salvador, 
which was never made. At present, CEES has no assets or operations and 
is inactive.
    CEEI is a wholly-owned subsidiary of CEI, organized in New York to 
invest in, operate and market the output of electric energy supply 
facilities in the United States and to provide specialized wholesale 
energy services in the electric power and natural gas markets.
    CECI, a wholly owned subsidiary of CEI, was organized in New York 
in late 1997 to own, operate or invest in facilities used for 
telecommunications or otherwise to compete in the telecommunications 
industry. On November 23, 1999, CECI agreed to acquire a 10.75% stock 
interest in Northeast Optic Network, Inc. (``NEON''), a provider of 
broadband telecommunications services in the northeast United States, 
in exchange for certain telecommunication facilities and rights of way 
in New York City. NU owns approximately 30% of NEON's common shares.
O&R
    O&R, a New York Corporation incorporated in 1926, is a wholly owned 
utility subsidiary of CEI and an electric and gas public utility 
holding company currently exempt from registration by order under 
section 3(a)(2) of the Act. After the merger is consummated, O&R 
proposes to remain an exempt holding company under the Act. Along with 
its public utility subsidiaries, O&R supplies franchised retail 
electricity to approximately 275,640 customers and gas to approximately 
117,283 customers in it service territory that covers approximately 
1,350 square mites. The eastern boundary of the service area extends 
along the west bank of the Hudson, directly across the river from the 
service territory of CECONY. O&R has two utility subsidiaries: Rockland 
Electric Company (``RECO'') and Pike County Light and Power Company 
(``Pike''). As of December 31, 1999, O&R and its utility subsidiaries 
owned, in whole or in part, transmission and distribution facilities 
which include 601 circuit miles of transmission lines, and 5,046 pole 
miles of overhead distribution lines and 2,493 miles of underground 
distribution lines. O&R and Pike own their gas distribution systems, 
which include 1,780 miles of mains. As of December 31, 1999, O&R had 
1,001 employees. Neither RECO nor Pike have employees.
    O&R directly owns three nonutility subsidiaries: Clove Development 
Corporation (``Clove''); O&R Energy Development, Inc. (``O&R Energy''); 
and other O&R Development, Inc. (``O&R Development''). O&R indirectly 
owns other nonutility subsidiaries, which are discussed below. O&R is 
regulated by the NYPSC.
    RECO, a New Jersey corporation incorporated in 1899, supplies 
electricity to parts of New Jersey. RECO directly and indirectly owns 
several nonutility subsidiaries, as discussed below. RECO's retail 
rates and certain other matters are subject to regulation by the New 
Jersey Board of Public Utilities (``NJBPU'').
    Pike, a Pennsylvania corporation incorporated in 1914, supplies 
electricity and gas to the northeastern corner of Pike County in 
Pennsylvania. Pike's retail rates and certain other matters are subject 
to regulation by the Pennsylvania Public Utility Commission 
(``PaPUC'').
    O&R, Pike and RECO also are subject to regulation by FERC.
    In accordance with its divestiture plan (``Divestiture Plan'') 
filed under NYPSC divestiture orders, O&R sold all of its electric 
generating facilities in July 1999.
    O&R engages in nonutility businesses through three directly owned 
subsidiaries: Clove, a New York Corporation, that owns real estate, 
located primarily in the Mongaup Valley region of Sullivan County, New 
York; O&R Energy, a Delaware corporation, that owns real estate that is 
being marketed for sale and was formed to promote industrial and 
corporate development in O&R's service territory by providing improved 
sites and buildings; and (3) O&R Development, Inc., a Delaware 
corporation, that is inactive.
    RECO engages in nonutility businesses through its directly and 
indirectly owned subsidiaries, Enserve Holdings, Inc. (``Enserve''), 
Saddle River Holdings Corp. (``SRH''), Palisades Energy Services, Inc. 
(``Palisades Energy''), Compass Resources, Inc. (``Compass''), NORSTAR 
Holdings, Inc. (``NHI''), NORSTAR Management, Inc. (``NMI''), and 
Millbrook Holdings, Inc. (``Millbrook''): Enserve is a wholly owned 
nonutility holding company subsidiary of RECO and a Delaware 
corporation. It wholly owns Palisades Energy and Compass which are 
Delaware inactive corporations. SRH is a wholly owned nonutility 
holding company subsidiary of RECO and a Delaware corporation. NHI is a 
wholly owned nonutility holding company subsidiary of SRH and a 
Delaware corporation. NHI wholly owns Millbrook, a Delaware 
corporation. Millbrook holds a leasehold interest in nonutility real 
estate in Morris County, New Jersey. NHI also wholly owns NMI, a 
Delaware Corporation. NMI is the sole general partner of a Delaware 
limited partnership, NORSTAR Energy Limited Partnership (``NORSTAR 
Partnership''), a gas marketing company that is discontinuing 
operation, of which NHI is the sole limited partner. NORSTAR 
Partnership is the majority owner of the NORSTAR Energy Pipeline 
Company, LLC, a Delaware limited liability company, which is inactive.
    CECONY and O&R (including RECO and Pike) are transmission owner 
market participants in the New York Independent System Operator 
(``NYISO'') power pool.
    For the twelve month period ending March 31, 2000, CEI had 
approximately $8 billion in consolidated operating revenues. CEI's 
common stock is listed on the New York Stock Exchange. As of March 31, 
2000, CEI had outstanding 211,959,922 common shares ($.10 par value per 
share).

[[Page 50581]]

NU and Subsidiaries
    NU, a Massachusetts business trust, is a registered public utility 
company that is the parent of a number of companies comprising the NU 
system (``System'') and is not itself an operating company. NU serves 
approximately 30 percent of New England's electric needs and had 9,099 
employees as of December 31, 1999. NU owns all of the outstanding 
shares of common stock of five electric utility operating subsidiaries: 
The Connecticut Light and Power Company (``CL&P''), Public Service 
Company of New Hampshire (``PSNH''), Western Massachusetts Electric 
Company (``WMECO''), Holyoke Water Power Company (``HWP''), and North 
Atlantic Energy Corporation (``NAEC'').\10\ NU has traditionally 
furnished franchised retail electric service in Connecticut, New 
Hampshire and western Massachusetts through CL&P, PSNH and WMECO. NU 
has also furnished retail electric service to a limited number of 
customers through HWP, doing business in and around Holyoke, 
Massachusetts. In addition to their retail electric service businesses, 
CL&P PSNH, WMECO and HWP (including its wholly owned subsidiary Holyoke 
Power and Electric Company (``HPEC'')) together furnish wholesale 
electric service to various municipalities and other utilities 
throughout the Northeast. The NU System is also engaged in the retail 
distribution of natural gas through its directly owned Yankee Energy 
System, Inc. (``YES'').\11\ YES directly owns Yankee Gas Service 
Company (``Yankee Gas''). Yankee Gas purchases, distributes, and sells 
natural gas to residential customers in Connecticut. NU also wholly 
owns six nonutility businesses: Northeast Utilities Service Company 
(``NUSCO''), North Atlantic Energy Service (``NAESCO''), Northeast 
Nuclear Energy Company (``NNECO''), Rocky River Realty Company (``Rocky 
River''), The Quinnehtuk Company (``Quinnehtuk'') and NU Enterprises 
(``NUEI'').
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    \10\ The Commission has found that NU's electric companies 
operate as an integrated system. See In the Matter of Northeast 
Utilities, 42 SEC 963.
    \11\ By order dated January 31, 2000, Northeast Utilities, 
(Holding Co. Act Release No. 27127), the Commission approved NU's 
acquisition of Yankee Energy System, Inc. (``YES''). YES is the 
holding company of Yankee Gas and is currently claiming an exception 
from registration under section 3(a)(1) of the Act by rule 2.
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    The four electric utility and one gas utility operating 
subsidiaries of NU are each described below:
    CL&P, a corporation organized under the laws of Connecticut, 
furnishes electric retail delivery franchise service to approximately 
1.12 million customers through its service territory of 149 cities and 
towns in Connecticut. As of December 31, 1999, CL&P owned 1,286 pole 
miles (1,638 circuit miles) of overhead transmission lines and 36 bank 
miles (167.8 cable miles) of underground transmission lines, and 18,202 
pole miles of overhead and 746 bank miles (7,271 cable miles) of 
underground distribution lines. CL&P also owns an 81% interest in the 
870 MW Millstone 2 nuclear generating facility (``Millstone 2''), 
approximately 53% of the 1,154 MW Millstone 3 nuclear generating 
facility (``Millstone 3'') located in Waterford, Connecticut, and 
approximately 4% of the 1,148 MW Seabrook nuclear generating facility 
(``Seabrook'') located in Seabrook, New Hampshire.
    PSNH, a New Hampshire corporation, furnishes retail delivery 
franchise service to 422,000 customers through its service territory of 
198 towns and cities in New Hampshire. Properties, Inc. is a wholly 
owned subsidiary of PSNH. As of December 31, 1999, PSNH owned 
approximately 974 pole miles (974 circuit miles) of overhead 
transmission lines and 11,188 pole miles of overhead distribution lines 
and 1102 bank miles (1102 cable miles) of underground distribution 
lines.
    WMECO, a Massachusetts corporation, provides electric retail 
delivery to approximately 198,012 retain franchise customers through 
its service territory of 59 cities and towns in Massachusetts. As of 
December 31, 1999, WMECO owned approximately 342 pole miles of overhead 
transmission lines (446 circuit miles) and 8 bank miles (28 cable 
miles) of underground transmission lines. WMECO also owns 3,660 pole 
miles of overhead distribution lines and 267 bank miles (2,416 cable 
miles) of underground distribution lines. WMECO also owns a 19% 
interest in Millstone 2 and approximately 13% in Millstone 3.
    Restructuring legislation in New Hampshire, Massachusetts and 
Connecticut now requires PSNH, WMECO and CL&P, respectively, to 
separate the distribution and transmission functions of their business 
from the generation function by mandating the sale of fossil fuel and 
hydroelectric generation assets.
    In addition to regulation by the respective state commissions of 
their states of operation, CL&P, WMECO and PSNH are also regulated by 
FERC and the NRC.
    HWP, a Massachusetts corporation, serves 32 retail customers in 
Holyoke, Massachusetts under contracts regulated by FERC. HWP wholly 
owns HPEC. HWP owns 200 MW of generating assets, 13.3 pole miles (14.5 
circuit miles) of overhead transmission lines, 18.47 pole miles of 
overhead distribution lines and 2.24 bank miles (4.3 cable miles) of 
underground distribution lines.
    NAEC is a special-purpose operating subsidiary of NU, organized 
under the laws of New Hampshire, that owns a 35.98 percent interest in 
Seabrook. NAEC sells its share of the capacity and output from Seabrook 
to PSNH under two life-of-unit, full-cost recovery contracts. These 
contracts are regulated by FERC.
    YES is a public utility holding company incorporated in Connecticut 
in 1988. In addition to being the holding company for Yankee Gas, it is 
also the holding company for four nonutility subsidiaries, NorConn 
Properties, Inc. (``NorConn''), Yankee Energy Financial Services 
Company (``Yankee Financial''), Yankee Energy Services Company 
(``YESCo'') and R.M. Services, Inc. (``RMS''). These companies are 
referred to collectively as ``the Yankee Energy System.''
    Yankee Gas, a gas utility company, purchases, distributes and sells 
natural gas to approximately 185,000 residential, commercial and 
industrial users in Connecticut. Its service territory consists of 69 
cities and towns, and covers approximately 1,995 square miles, all in 
Connecticut and all within the service territory of CL&P.\12\ In 
addition to being regulated by the Connecticut Department of Public 
Utility Control, Yankee Gas is also regulated by FERC.
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    \12\ Yankee Gas' assets include distribution lines, meters, 
pumps, valves and pressure and flow controllers. Yankee Gas owns 
approximately 2,820 miles of distribution mains, 133,033 service 
lines, and 185,000 active meters for customer use, all located in 
Connecticut.
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    NorConn, a Connecticut corporation, was formed in 1988 to hold 
property and facilities of the Yankee Energy System.
    Yankee Financial, a Connecticut corporation incorporated in 1992, 
provides customers with financing for energy equipment installments.
    YESCo, a Connecticut corporation, provides a wide range of energy-
related services for its customers. Through its YESCo Controls 
division, such services include comprehensive building automation with 
engineeering, installation and maintenance of building control systems. 
Through its YESCo Mechanical Services division, customers are provided 
comprehensive heating, ventilation and air-conditioning, boiler and 
refrigeration equipment services and installation.

[[Page 50582]]

    RMS, a Connecticut corporation, was formed in 1994 to provide debt 
collection services to utilities and other businesses nationwide.
    NU also has six wholly owned nonutility subsidiaries:
    NUSCO is a wholly owned subsidiary of NU and provides centralized 
accounting, administrative, information resources, engineering, 
financial, legal, operational, planning, purchasing and other services 
to the NU System companies.
    NAESCO is a wholly owned subsidiary of NU. NAESCO has operational 
responsibility for Seabrook.
    NNECO is a wholly owned subsidiary of NU, NNECO acts as an agent 
for the System companies and other New England utilities in operating 
the Millstone Nuclear generating facilities, which are located in 
Waterford, Connecticut.
    Rocky River and Quinnehtuk, both wholly owned subsidiaries of NU, 
and Properties, Inc. construct, acquire, or lease some of the property 
and facilities used by the NU System companies.
    NU Enterprises, Inc. (``NUEI''), a wholly owned subsidiary of NU, 
acts as the holding company for NU's nonutility businesses.
    Northeast Generation Company (``NGC''), a subsidiary of NUEI, was 
formed to acquire and manage generating facilities.
    Northeast Generation Services Company, another subsidiary of NUEI, 
was formed to acquire and manage generating facilities.
    Northeast Generation Services Company, another subsidiary of NUEI, 
was formed to provide services to the electric generation market as 
well as to large commercial and industrial customers in the Northeast.
    In January of 1999, NU transferred to NUEI the stock of three of 
its wholly owned subsidiaries: Select Energy, Inc., HEC, Inc. and Mode 
I Communications, Inc. These companies engage, either directly or 
indirectly through subsidiaries, in a variety of energy-related and 
telecommunications activities, primarily in the unregulated energy 
retail and wholesale commodity, marketing and services fields.
    Select Energy Portland Pipeline, Inc., a subsidiary of NUEI, and 
was formed as a single purpose rule 58 subsidiary to hold a 5% 
partnership interest in the Portland Natural Gas Transmission System 
Partnership, the partnership that owns and operates the Portland 
Natural Gas Transmission Pipeline.
    The NU electric operating companies are members of the New England 
Power Pool (``NEPOOL'' and have transferred control over most of their 
transmission facilities to Independent System Operator-New England. 
NEPOOL is a cooperative association of the major electric utilities 
operating in the New England region.
    For the twelve month period ending March 31, 2000 NU had 
approximately $4.8 billion in consolidated operating revenues. The 
Common Shares of NU are listed on the New York Stock Exchange. As of 
March 31, 2000, NU had approximately 143,150,550 shares outstanding 
$5.50 par value per share).

    For the Commission, by the Division of Investment Management, 
under delegated authority.

Jonathan G. Katz,
Secretary.
[FR Doc. 00-21038 Filed 8-17-00; 8:45 am]
BILLING CODE 8010-01-M