[Federal Register Volume 65, Number 167 (Monday, August 28, 2000)]
[Notices]
[Pages 52146-52150]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-21877]



[[Page 52146]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27217]


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

August 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 September 14, 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 14, 2000, the application(s) and/or 
declaration(s), as filed or as amended, may be granted and/or permitted 
to become effective.

Dominion Resources, Inc.  (70-9477)

    Dominion Resources (``DRI''), a registered holding company, and 
Consolidated Natural Gas Company (``CNG''), a subsidiary registered 
holding company, both located at 120 Tredegar Street, Richmond, 
Virginia, have filed a post-effective amendment under section 12(d) of 
the Act and rules 43 and 44 under the Act to an application-declaration 
previously filed under sections 6(a), 7, 9(a), 10, 12(d), 13(b), 32 and 
33 of the Act and rules 53, 54, 87, 88, 90 and 91 under the Act 
(``Application'').
    By order dated December 15, 1999 (HCAR 27113), the Commission 
authorized the merger of DRI and CNG (``Merger Order''). In the Merger 
Order the Commission noted that DRI would, within a year of the merger, 
undertake to sell Virginia Natural Gas (``VNG''), a wholly owned 
indirect subsidiary of DRI and a wholly owned direct subsidiary of CNG. 
The Application did not contain any of the terms of the contemplated 
sale required by section 12(d) of the Act. On May 8, 2000, DRI, CNG and 
VNG entered into a Stock Purchase Agreement (``SPA'') with AGLR 
Resources (``AGLR''), a Georgia holding company which is currently 
exempt from all provisions of the Act except section 9(a)(2) under 
section 3(a)(1) by rule 2 under the Act. Under the SPA, DRI and CNG 
agreed to sell, and AGLR agreed to purchase, all of the outstanding 
shares of capital stock of VNG for a purchase price of $550 million, 
subject to adjustment described in the SPA.\1\
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    \1\ In file No. 70-9707 (June 22, 2000), AGLR is seeking 
authority to purchase VNG. AGLR will subsequently register as a 
holding company under the Act. A notice of that transaction is being 
issued simultaneously with this notice.
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AGL Resources Inc.  (70-9707)

    AGL Resources Inc. (``AGL Resources''), an exempt Georgia gas 
public utility holding company, its public utility subsidiary 
companies, Atlanta Gas Light Company (``AGLC''), a Georgia gas 
distribution company, Chattanooga Gas Company (``Chattanooga Gas''), a 
wholly owned Tennessee gas utility subsidiary company of AGLC, located 
at 817 West Peachtree Street, NW., Atlanta, GA 30308, and Virginia 
Natural Gas, Inc. (``VNG''), a Virginia gas retail and distribution 
company, located at 5100 East Virginia Beach Boulevard, Norfolk, 
Virginia 23502, have filed an application-declaration under sections 
6(a), 7, 9(a), 10, 12, and 13 of the Public Utility Holding Company Act 
of 1935 (the ``Act''), as amended, and rules 42, 43, 45, 46, 52, 53 and 
88 under the Act.
    Applicants seek authority for AGL Resources, a holding company 
exempt from all provisions of the Act except section 9(a)(2) under 
section 3(a)(1) and rule 2 under the Act, to acquire VNG as a wholly 
owned subsidiary (the ``Acquisition''). VNG is owned indirectly by 
Dominion Resources, Inc., (``Dominion Resources'') a registered holding 
company.\2\ Applicants also request authority for AGL Resources to 
restructure its utility holding by acquiring all outstanding shares of 
Chattanooga from AGLC and retaining it as a direct subsidiary.\3\ In 
addition, AGL Resources seeks authority to retain its non-utility 
businesses and investments.
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    \2\ In file No. 70-9477 (June 29, 2000), Dominion Resources is 
seeking authority to divest ownership of VNG. A notice of that 
transaction is being issued simultaneously with this notice.
    \3\ Applicants state that AGL Resources is evaluating whether to 
restructure its holdings.
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    After the Acquisition, AGL Resources will register with the 
Securities and Exchange Commission as a holding company under Section 5 
of the Act. Applicants seek authorization for various financing, 
intrasystem service and other transactions by companies in the AGL 
Resources system after the Acquisition in connection with the operation 
of a registered holding company.
    For the fiscal year ended September 30, 1999, AGL Resources 
reported total assets of $1,969 million, net utility plant assets of 
$1,517 million, total operating revenues of $1,069 million, and net 
income of $74 million.
    AGL Resources has an ownership interest in several nonutility 
businesses.\4\ AGL Resources also holds interests in the following 
direct or indirect subsidiary companies that are currently inactive or 
holding companies for nonutility businesses.\5\
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    \4\ The businesses are: AGL Energy Services, Inc., a gas supply 
services company that buys and sells natural gas primarily for 
Chattanooga Gas, and its wholly owned subsidiary, Georgia Gas 
Company, a gas-related company that owns minor interests in natural 
gas production activities; SouthStar Energy Services LLC, a marketer 
of natural gas and related services; AGL Peaking Services, Inc., 
which owns a 50% interest in Etowah LNG Company LLC, a company 
formed for the purpose of constructing, owning, and operating a 
liquefied natural gas peaking facility; AGL Interstate Pipeline 
Company, which owns 50% of Cumberland Pipeline Company; AGL 
Investments, Inc., an intermediate holding company for investments 
in AGL Propane, Inc., a seller and marketer of propane tanks, gas 
appliances and wholesale propane; Trustees Investments, Inc., which 
owns Trustees Gardens, a residential and retail development located 
in Savannah, Georgia on and adjacent to a former manufactured gas 
plant site owned by AGLC and Trustees Investments, Inc.; Utilipro, 
Inc., which sells integrated customer care solutions and billing 
services to energy marketers; and AGL Consumer Services, Inc., which 
markets appliance warranty contracts, energy management systems and 
other energy-related consumer services to residential and commercial 
customers.
    \5\ AGL Rome Holdings, Inc., Georgia Engine Sales and Service 
Co., Peachtree Pipeline Company, Atlanta Gas Light Services, Inc., 
Georgia Natural Gas Company, TES, Inc., Georgia Natural Gas 
Services, Inc., AGL Gas Marketing, Inc., AGL Power Services, Inc., 
Georgia Energy Company, and AGL Energy Wise Services, Inc.
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    AGLC is an unbundled gas distribution company serving approximately 
240 communities throughout Georgia including Atlanta, Athens, Augusta, 
Brunswick, Macon, Rome, Savannah and Valdosta. As of October 1, 1999, 
AGLC was delivering natural gas to approximately 1.4 million 
residential and small business end-use customers in Georgia on behalf 
of approximately 15 gas marketers and to approximately 700 large 
commercial and industrial customers on behalf of approximately 40 
poolers. As of the fiscal year ending September 30, 1999,

[[Page 52147]]

the AGLC gas distribution system included approximately 27,381 miles of 
distribution mains and 26,078 miles of service lines. Since Georgia's 
1997 gas deregulation legislation, AGLC stopped selling natural gas but 
continues to provide intrastate delivery service through its existing 
pipeline system to end-use customers in Georgia. AGLC reported total 
assets of $1.677 billion, total operating revenues of $466 million and 
net income of $62 million. As of September 30, 1999, AGL Resources 
reported consolidated total assets of $1.969 billion of which $1.517 
billion consisted of net utility plant assets.
    AGLC owns all of the outstanding stock of Chattanooga, a natural 
gas retail and distribution company in Tennessee. Chattanooga provides 
gas distribution services to the areas around Chattanooga and 
Cleveland, Tennessee. As of September 30, 1999, Chattanooga had total 
assets of $121 million, total operating revenues of $67 million and net 
income of $4 million.
    VNG, a natural gas retail and distribution company, provides 
services to Norfolk, Newport News, Virginia Beach, Chesapeake, Hampton 
and Williamsburg, Virginia. VNG has approximately 155 miles of gas 
transmission pipeline, and two propane air peak shaving plants in 
Virginia, 4,110 miles of distribution main pipeline and approximately 
231,000 services lines and meter sets. For the fiscal year ending 
December 31, 1999, VNG reported operating revenues of $203 million, net 
income of $7 million and assets totaling $456 million.
    AGL Resources will purchase VNG with cash. The purchase price will 
be funded from cash on hand and from short-term acquisition ``bridge'' 
financing. Applicants expect that the ``bridge'' financing will be 
financed with longer-term debt or preferred securities in the future. 
AGL Resources expects that funding the Acquisition in this manner will 
allow it to retain its investment grade status without an equity 
offering.
    The Acquisition will be accounted for under the purchase method of 
accounting. The excess of the purchase price and assumed liabilities 
over the value of VNG's assets will be recorded on the books of VNG as 
goodwill. The Applicants seek reauthorization to engage in various 
financing activities of the AGL System for a period of three years from 
the date of the Commission's order authorizing these transactions 
(``Authorization Period''). As described more fully below, the 
Applicants seek authorization to: (1) Issue and sell through the 
Authorization Period up to $5 billion of securities at any time 
outstanding and to issue guarantees and other forms of credit support 
in an aggregate amount of $500 million at any time outstanding; (2) 
enter into hedging transactions, including anticipatory hedges, with 
respect to its indebtedness in order to manage and minimize interest 
rate costs and to lock-in current interest rates; (3) establish a money 
pool for the purpose of financing the short-term capital requirements 
of all the utility subsidiaries and nonutility subsidiaries 
collectively (the ``Subsidiaries''); (4) change the terms of any 
wholly-owned Subsidiary's authorized capital stock capitalization; (5) 
issue the payment of dividends out of capital or unearned surplus by 
VNG; (6) acquire the equity securities of one or more special purpose 
subsidiaries (``Financing Subsidiaries'') organized solely to 
facilitate a financing transaction and to guarantee the securities 
issued by the Financing Subsidiaries; (7) approve the form of agreement 
for the allocation of consolidated tax among AGL Resources and the 
Subsidiaries; (8) issue up to 22 million shares of common stock under 
dividend reinvestment and stock-based management incentive and employee 
benefit plans; and (9) issue and sell short-term debt.

I. General Terms and Conditions of Financing

    Financings by AGL Resources would be subject to the following 
limitations: (1) All long-term debt issued to unaffiliated parties will 
be rated investment grade, or will meet the qualifications for being 
rated investment grade, by a nationally recognized statistical rating 
organization; (2) AGL Resources will maintain a consolidated common 
stock equity as a percentage of total capitalization of at least 30%; 
(3) the cost of money on debt financings will not exceed 300 basis 
points over the comparable term U.S. Treasury securities, or, for 
short-term debt borrowings, 300 basis points over the comparable term 
London Interbank Offered Rate (``LIBOR''); (4) the maturity of debt 
will not exceed 50 years; (5) the dividend rate on preferred stock or 
other types of preferred or equity-linked securities will not exceed at 
the time of issuance 500 basis points over the yield to maturity of a 
U.S. Treasury security having a remaining term equal to the term of 
these securities; (6) the underwriting fees, commissions and other 
remuneration paid in connection with the non-competitive issue, sale or 
distribution of a security will not exceed an amount or percentage of 
the principal or total amount of the security being issued that would 
be charged to or paid by other companies with a similar credit rating 
and credit profile in a comparable arms-length credit or financing 
transaction with an unaffiliated person; and (7) AGL Resources' 
``aggregate investment'' in exempt wholesale generators (``EWGs'') and 
foreign utility companies (``FUCOs'') as defined in Rule 53 under the 
Act, will not exceed 50% of the consolidated retained earnings of AGL 
Resources and its Subsidiaries.
    The proceeds from all of the financings will be used for general 
corporate purposes, including refinancing the Acquisition-related debt, 
financing, in part, investments by and capital expenditures of AGL 
Resources and its Subsidiaries, funding future investments in EWGs, 
FUCOs and Rule 58 Subsidiaries, repaying, redeeming, refunding or 
purchasing any securities issued by AGL Resources or any Subsidiary, 
and financing the working capital requirements of AGL Resources and its 
Subsidiaries.

II. AGL Resources External Financing

    AGL Resources requests authorization to issue long-term equity and 
debt securities aggregating not more than $5 billion at any one time 
outstanding during the Authorization Period. The Securities could 
include, but would not be limited to, common stock, preferred stock, 
options, warrants, long- and short-term debt (including commercial 
paper), convertible securities, subordinated debt, bank borrowings and 
securities with call or put options. AGL Resources also requests 
authorization to issue guarantees and enter into interest rate swaps 
and hedges.
A. Common Stock
    AGL Resources requests authorization to issue and sell common stock 
or, if under employee benefit plans, issue options exercisable for 
common stock and common stock upon the exercise of options. AGL 
Resources requests authorization for common stock financings as part of 
underwriting agreements of a type generally standard in the industry. 
Public distribution may be made by private negotiation with 
underwriters, dealers or agents as discussed below or through 
competitive bidding among underwriters. In addition, sales may be made 
through private placements or other non-public offerings to one or more 
persons.
B. Preferred Stock
    AGL Resources requests authorization to issue preferred stock from 
time to time during the Authorization Period. Preferred stock or other 
types of

[[Page 52148]]

preferred or equity-linked securities may be issued in one or more 
series with these rights, preferences, and priorities as may be 
designated in the instrument creating each series, as determined by AGL 
Resources' board of directors. All of these securities would be 
redeemed no later than 50 years after the issuance. The dividend rate 
on any series of preferred stock or other preferred securities will not 
exceed at the time of issuance 500 basis points over the yield to 
maturity of a U.S. Treasury security having a remaining term equal to 
the term of these securities. Dividends or distributions on preferred 
stock or other preferred securities will be made periodically and to 
the extent funds are legally available for this purpose, but may be 
made subject to terms that allow the issuer to defer dividend payments 
for specified periods. Preferred stock or other preferred securities 
might be convertible or exchangeable into shares of common stock.
C. Long-Term Debt
    AGL Resources requests authorization to issue long-term debt. Any 
long-term debt security would have the maturity, interest rate(s) or 
methods of determining the same, terms of payment of interest, 
redemption provisions, and sinking fund terms and other terms and 
conditions as AGL Resources may determine at the time of issuance.
D. Short-Term Debt
    AGL Resource requests authorization to issue short-term debt 
including, but not limited to, institutional borrowings, commercial 
paper and bid notes. Proceeds of any short-term debt insurance may be 
used to refund pre-Acquisition short-term debt and Acquisition-related 
debt, and to provide financing for general corporate purposes, working 
capital requirements and Subsidiary capital expenditures until long-
term financing can be obtained.
    AGL Resources currently has the following short-term debt 
facilities in place, which may remain in place following the 
Acquisition: (1) Uncommitted bank lines of credit in the current amount 
of $50 million; (2) committed lines of bank credit for $125 million 
with various banks; and (3) AGL Resources is currently negotiating 
additional bank commitments of approximately $115 million. These 
amounts are included within the overall authorization amount requested.
    AGL Resources requests authorization to sell commercial paper, from 
time to time, in established domestic or European commercial paper 
markets. This commercial paper would be sold to dealers at the discount 
rate or the coupon rate per annum prevailing at the date of issuance 
for commercial paper of comparable quality and maturities sold to 
commercial paper dealers generally.
    AGL Resources also proposes to establish bank lines of credit 
directly or indirectly through one or more financing subsidiaries. 
Loans under these lines would have maturities of less than one year 
from the date of each borrowing. AGL Resources also requests authority 
to 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.
E. Hedging Transactions and Interest Rate Risk Management
    1. Interest Rate Hedges: AGL Resources requests authority to enter 
into, perform, purchase and sell financial instruments intended to 
manage the volatility of interest rates, including but not limited to 
interest rate swaps, caps, floors, collars and forward agreements or 
any other similar agreements. AGL Resources would employ interest rate 
swaps as a means of prudently managing the risk associated with any of 
its outstanding debt issued under the authority requested in this 
application or an applicable exemption by, in effect, synthetically (1) 
converting variable rate debt to fixed rate debt, (2) converting fixed 
rate debt to variable rate debt, and (3) limiting the impact of changes 
in interest rates resulting from variable rate debt. In no case would 
the notional principal amount of any interest rate swap exceed that of 
the underlying debt instrument and related interest rate exposure. The 
underlying interest rate indices of these interest rate swaps would 
closely correspond to the underlying interest rates indices of AGL 
Resources' debt to which the interest rate swap relates. AGL Resources 
would only enter into interest rate swap agreements with counter 
parties whose senior debt ratings are investment grade as determined by 
Standard & Poor's, Moody's Investors Service, Inc. or Fitch IBCA, Inc. 
(``Approved Counterparites'').
    2. Anticipatory Hedges: AGL Resources also requests authorization 
to enter into interest rate hedging 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 used to fix 
and/or limit the interest rate risk associated with any new issuance 
through (1) a forward sale of exchange-traded U.S. Treasury futures 
contracts, U.S. Treasury obligations and/or a forward swap (each a 
``Forward Sale''), (2) the purchase of put options on U.S. Treasury 
obligations (a ``Put Options Purchase''), (3) a Put Options Purchase in 
combination with the sale of call options on U.S. Treasury obligations 
(a ``Zero Cost Collar''), (4) transactions involving the purchase or 
sale, including short sales, of U.S. Treasury obligations, or (5) some 
combination of a Forward Sale, Put Options Purchase, Zero Cost Collar 
and/or other derivative or cash transactions, including, but no limited 
to structured notes, caps, and collars, appropriate for the 
Anticipatory Hedges.
    Anticipatory Hedges might 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, the opening of over-
the-counter positions with one or more counter parties (``Off-Exchange 
Trades''), or a combination of On-Exchange Trade and Off-Exchange 
Trades. AGL Resources will determine the optimal structure of each 
Anticipatory Hedge transaction at the time of execution.
    AGL Resources states that it will comply with standards relating to 
accounting for derivative transactions as are adopted and implemented 
by the Financial Accounting Standards Board (``FASB''). In addition, 
these financial instruments will qualify for hedge accounting treatment 
under FASB rules.
F. Guarantees
    AGL Resources requests authorization to enter into guarantees, 
obtain letters of credit, enter into expense agreements or otherwise 
provide credit support (``Guarantees'') with respect to the obligations 
of its Subsidiaries as may be appropriate or necessary to enable its 
Subsidiaries to carry on in the ordinary course of their respective 
businesses in an aggregate principal amount not to exceed $500 million 
outstanding at any one time (not taking into account obligations exempt 
under Rule 45). Included in this amount are Guarantees entered into by 
AGL Resources that were previously issued in favor of its Subsidiaries. 
The limit on Guarantees is separate from the limit on AGL Resources' 
external financing. Currently, AGL Resources guarantees AGLC with 
respect to the obligations of SouthStar, AGL Resources' affiliated 
marketer. This intra-system Guarantee is expected to remain in place 
following the Acquisition.

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G. Money Pool
    AGL Resources and the Subsidiaries request authorization to 
establish the AGL System money pool (``Money Pool''). AGLC and 
Chattanooga Gas 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. AGL Resources requests 
authorization to contribute surplus funds and to lend and extend credit 
to the Money Pool.
    Applicants believe that the cost of the proposed borrowings through 
the Money Pool will generally be more favorable to the Subsidiaries 
than the comparable cost of external short-term borrowings, and the 
yield to the Subsidiaries contributing available funds to the Money 
Pool will generally be higher than the typical yield on short-term 
investments.
    Applicants propose that the Money Pool would make short-term funds 
available for short-term loans to the Subsidiaries from time to time 
from the following sources: (1) surplus funds in the treasuries of the 
Subsidiaries; (2) surplus funds in the treasury of AGL Resources and 
(3) proceeds from bank borrowings by Money Pool participants or the 
sale of commercial paper by AGL Resources or the Subsidiaries for loan 
to the Money Pool. Funds would be made available from these sources in 
the order as AGL Services, as administrator of the Money Pool, may 
determine would result in a lower cost of borrowing, consistent with 
the individual borrowing needs and financial standing of the companies 
providing funds to the pool.
    Money Pool loans and borrowings would require authorization by the 
borrower's chief financial officer or treasurer, or by a designee. No 
party would be required to effect a borrowing through the Money Pool if 
it is determined that it could (and had authority to) effect a 
borrowing at lower cost directly from banks or through the sale of its 
own commercial paper. No loans through the Money Pool would be made to, 
and AGL Resources would make no borrowings through the Utility Money 
Pool. No subsidiary that is an EWG, FUCO or Exempt Telecommunications 
Company (``ETC'') under section 34 of the Act, would borrow from the 
Money Pool. Applicants request that the Commission reserve jurisdiction 
over the participation in the Money Pool of any Subsidiary formed or 
acquired after the issuance of an order in this file until Applicants 
have completed the record with respect to each company.
    AGL Services would administer the operation of the Money Pool on an 
``at cost'' basis, including record keeping and coordination of loans.
H. Changes in Capital Stock
    Applicants state that the portion of an individual Subsidiary's 
aggregate financing to be effected through the sale of stock to AGL 
Resources or other immediate parent company during the Authorization 
Period under Rule 52 and/or an order issued in this file is unknown at 
this time. Applicants request authority to change the terms of any 
wholly owned Subsidiary's authorized capital stock capitalization by an 
amount deemed appropriate by AGL Resources or other intermediate parent 
company.
    The requested authorization is limited to AGL Resources' wholly 
owned Subsidiaries and would not affect the aggregate limits or other 
conditions contained in the application. A Subsidiary would be able to 
change the par value, or change between par value and no-par stock, 
without additional Commission approval. This action by a Utility 
Subsidiary would be subject to and would only be taken upon the receipt 
of any necessary approvals by the state commission in the state or 
states where the utility subsidiary is incorporated and doing business. 
In addition, each of the utility subsidiaries would maintain, during 
the Authorization Period, a common equity capitalization of at least 
30%.
I. Payment of Dividends
    As a result of the application of the purchase method of accounting 
to the Acquisition, the current retained earnings of VNG will be 
eliminated. In addition, the Acquisition will give rise to a 
substantial level of goodwill, the difference between the aggregate 
values allocated to all identifiable tangible and intangible (non-
goodwill) assets on the one hand, and the total consideration to be 
paid for VNG and the fair value of the liabilities assumed, on the 
other. VNG requests authorization to pay dividends out of additional 
paid-in-capital up to the amount of its retained earnings immediately 
prior to the Acquisition and out of earnings before the amortization of 
goodwill.
J. Financing Entities
    AGL Resources and the Subsidiaries seek authorization to organize 
new corporations, trusts, partnerships or other entities that will 
facilitate financings by issuing income preferred securities or other 
securities to third parties. To the extent not exempt under Rule 52, 
the financing entities also request authorization to issue these 
securities to third parties. In connection with this method of 
financing, AGL Resources and the Subsidiaries request authority to: (1) 
Issue debentures or other evidences of indebtedness to a financing 
entity in return for the proceeds of the financing; (2) acquire voting 
interests or equity securities issued by the financing entity to 
establish ownership of the financing entity (the equity portion of the 
entity generally being created through a capital contribution or the 
purchase of equity securities, ranging from one to three percent of the 
capitalization of the financing entity); and (3) guarantee a financing 
entity's obligations in connection with a financing transaction. AGL 
Resources and the Subsidiaries also request authorization to enter into 
expense agreements with financing entities to pay their expenses. Any 
amounts issued by a financing entity to a third party under this 
authorization would be included in the overall external financing 
limitation authorized for the immediate parent of the financing entity. 
The underlying intra-system mirror debt and parent guarantee would not 
be included.
K. Tax Allocation Agreement
    Applicants request Commission approval of the agreement between AGL 
Resources and its Subsidiaries to file a consolidated tax return (``Tax 
Allocation Agreement''). The Tax Allocation Agreement provides for the 
retention by AGL Resources of certain payments for tax losses that it 
has incurred, rather than the allocation of these losses to the 
Subsidiaries without payment as would otherwise be required by Rule 
45(c)(5). AGL Resources is seeking to retain the benefit of tax losses 
that have been generated by it in connection with Acquisition-related 
debt only. As a result of the Acquisition, ALG Resources will be 
creating tax benefits from the interest expense on Acquisition-related 
debt that is non-recourse to the Subsidiaries and unrelated to the 
financing of subsidiary operations.
L. Subsidiary Financings
    AGLC and Chattanooga request authorization to issue short-term debt 
securities with maturities of less than one year. VNG currently has no 
public securities outstanding and all debts to companies in the 
Dominion Resources holding company system of utility and nonutility 
subsidiary companies will be repaid prior to or upon the Acquisition. 
VNG will rely on financings under rule

[[Page 52150]]

52(a) after the Acquisition. The Nonutility Subsidiaries will finance 
their capital needs through the issuance of securities under Rule 
52(b).
M. Intra-System Service Transactions
    1. AGL Services: AGL Resources requests authorization to form a 
service company, AGL Services, to provide a variety of services to the 
companies in the AGL System. AGL Services would offer system-wide 
coordination and strategy services, oversight services and other 
services where economies can be captured by centralization of services. 
Applicants anticipate that the following services would be offered by 
AGL Services to system companies: corporate compliance, internal 
auditing, strategic planning, public affairs, gas supply and capacity 
management (regulated subsidiaries), legal services, marketing and 
sales, financial services, information system services, executive, 
investor relations, customer services, purchasing, risk management, 
telecommunications, employee services, engineering and technical 
services.
    2. Other Services: The Utility Subsidiaries will need authorization 
to provide services to affiliated and unaffiliated gas marketing 
companies and charge fees under approved tariffs that may not be ``at 
cost.''
N. Nonutility Reorganizations
    1. Intermediate Subsidiaries: AGL Resources requests authorization 
to acquire, directly or indirectly, through purchase of capital shares, 
partnership interests, member interests in limited liability companies, 
trust certificates or other forms of equity interests, the equity 
securities of one or more intermediate subsidiaries (``Intermediate 
Subsidiaries'') organized exclusively for the purpose of acquiring, 
financing, and holding the securities of one or more existing or future 
nonutility subsidiaries. Intermediate Subsidiaries may also provide 
management, administrative, project development, and operating services 
to these entities. These subsidiaries would engage only in businesses 
to the extent the AGL System is authorized, whether by statute, rule, 
regulation or order, to engage in those businesses. AGL Resources does 
not seek authorization to acquire an interest in any nonassociate 
company as part of the authority requested in this application and 
states that the reorganization will not result in the entry by the AGL 
System into a new, unauthorized line of business.
    The Intermediate Subsidiaries would be organized for the purpose of 
acquiring, holding and/or financing the acquisition of the securities 
of or other interest in one or more EWGs, FUCOs, Rule 58 Subsidiaries, 
ETCs or other non-exempt nonutility subsidiaries. Intermediate 
Subsidiaries may also engage in development activities (``Development 
Activities'') and administrative activities (``Administrative 
Activities'') relating to the permitted businesses of the nonutility 
subsidiaries.
    Intermediate Subsidiaries request authority to expend up to $300 
million during the Authorization Period on all Development Activities. 
Administrative Activities will include ongoing personnel, accounting, 
engineering, legal, financial, and other support activities necessary 
to manage AGL Resources' investments in Nonutility Subsidiaries.
    An Intermediate Subsidiary may be organized to facilitate the 
making of bids or proposals to develop or acquire an interest in any 
EWG, FUCO, Rule 58 Subsidiary, ETC or other non-exempt nonutility 
subsidiary; to facilitate closing on the purchase or financing of an 
acquired company after the award of a bid proposal; to effect an 
adjustment in the respective ownership interests in the business held 
by AGL Resources and non affiliated investors; to facilitate the sale 
of ownership interests in one or more acquired nonutility companies; to 
comply with applicable laws of foreign jurisdictions limiting or 
otherwise relating to the ownership of domestic companies by foreign 
nationals; as a part of tax planning in order to limit AGL Resources' 
exposure to U.S. and foreign taxes; as a means to further insulate AGL 
Resources and the Utility Subsidiaries from operational or other 
business risks that may be associated with investments in nonutility 
companies or for other lawful business purposes.
    2. Intermediate Holding Company Guarantees: To the extent that AGL 
Resources provides funds or guarantees directly or indirectly to an 
Intermediate Subsidiary that are used for the purpose of making an 
investment in any EWG or FUCO or a rule 58 Subsidiary, the amount of 
these funds or guarantees will be included in AGL Resources' 
``aggregate investment'' in those entities, as calculated in accordance 
with Rule 53 or Rule 58, as applicable.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-21877 Filed 8-25-00; 8:45 am]
BILLING CODE 8010-01-M