[Federal Register Volume 65, Number 212 (Wednesday, November 1, 2000)]
[Notices]
[Pages 65361-65364]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-27975]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27261]


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

October 25, 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 statement 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 November 20, 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 November 20, 2000, the application(s) and/or 
declaration(s), as filed or as amended, may be granted and/or permitted 
to become effective.

Appalachian Power Company

[70-5503]

    Appalachian Power Company (``Appalachian''), 40 Franklin Road, SW, 
Roanoke, Virginia 24011, an electric public-utility subsidiary company 
of American Electric Power Company, Inc., a registered holding company, 
has filed a post-effective amendment to its application-declaration 
under sections 9(a), 10 and 12(d) of the Act and rules 44 and 54 under 
the Act.
    By order dated December 10, 1974 (HCAR No. 18703), the Commission 
authorized Appalachian, among other things, to enter into an agreement 
of sale (``Agreement'') with the Industrial Development Authority of 
Russell County, Virginia (``Authority''), concerning the financing of 
pollution control facilities (``Facilities'') at Appalachian's Glen Lyn 
and Clinch River plants. Under the Agreement, the Authority may issue 
and sell its pollution control revenue bonds (``Revenue Bonds'') or 
pollution control refunding bonds (``Refunding Bonds'' and, together 
with Revenue Bonds, ``Bonds''), in one or more series, and deposit the 
proceeds with the trustee (``Trustee'') under an indenture 
(``Indenture'') entered into between the Authority and the Trustee. The 
Trustee applies the proceeds to the payment of the costs of 
construction of the Facilities or, in the case of proceeds from the 
sale of the Refunding Bonds, to the payment of principal, premium (if 
any) and/or interest on Bonds to be refunded.
    The same order also authorized Appalachian to convey an undivided 
interest in a portion of the Facilities to the Authority, and to 
reacquire that interest under an installment sales arrangement (``Sales 
Agreement'') requiring Appalachian to pay as the purchase price semi-
annual installments in an amount that, together with other funds held 
by the Trustee under the Indenture for that purpose, will enable the 
Authority to pay, when due, the interest and principal on the Bonds. 
The Authority has issued and sold eight series of Bonds in an aggregate 
principal amount of $116.24 million of which $37.0 million presently 
are outstanding.
    The Authority now intends to issue and sell an additional series of 
bonds in the aggregate principal amount of up to $17.5 million 
(``Series I Refunding Bonds)'' the proceeds of which will be used to 
provide for the redemption on or prior to maturity of $17.5 million 
principal amount of the Series G Bonds of the Authority. It is 
contemplated that the Series I Refunding Bonds will be issued and 
secured under a supplemental indenture between the Authority and the 
Trustee. Appalachian proposes to enter into an amended Sales Agreement 
in connection with the Series I Refunding Bonds under essentially the 
same terms and

[[Page 65362]]

conditions of the original Sales Agreement.
    It is contemplated that the series I Refunding Bonds will be sold 
under arrangements with a group of underwriters with such terms as 
shall be specified by Appalachian. The Series I Refunding Bonds shall 
have a stated maturity of no more than forty years, a fixed rate of 
interest that shall not exceed 8% per annum or an initial rate of 
interest by any fluctuating rate Bonds that shall not exceed 8%. If it 
is deemed advisable, the Series I Refunding Bonds may be provided some 
form of credit enhancement.

Appalachian Power company

[70-6171]

    Appalachian Power company (``Appalachian''), 40 Franklin Road, SW., 
Roanoke, Virginia 24011, an electric public-utility subsidiary company 
of American Electric Power Company, Inc., a registered holding company, 
has filed a post-effective amendment to its application-declaration 
under sections 9(a), 10 and 12(d) of the Act and rules 44 and 54 under 
the Act.
    By order dated June 30, 1978 (HCAR No. 20610) (``Order''), 
Appalachian was authorized, among other things, to enter into an 
agreement of sale (``Agreement'') with Mason County, West Virginia 
(``County''). The Agreement provided for the construction, 
installation, financing and sale of certain pollution control 
facilities (``Facilities'') at Appalachian's Mountaineer and Philip 
Sporn Units 1 and 3. Under the Agreement, the County may issue and sell 
its pollution control revenue bonds (``Revenue Bonds'') or pollution 
control refunding bonds (``Refunding Bonds'' and, together with Revenue 
Bonds, ``Bonds''), in one or more series, and deposit the proceeds with 
the trustee (``Trustee'') under an indenture (``Indenture'') entered 
into between the County and the Trustee. The proceeds are applied by 
the Trustee to the payment of the costs of construction of the 
Facilities, or in the case of proceeds from the sale of Refunding 
Bonds, to the payment of the principal, premium (if any) and/or 
interest on Bonds to be refunded.
    The Order also authorized Appalachian to convey an undivided 
interest in a portion of the Facilities to the County, and to reacquire 
that interest under an installment sales arrangement (``Sales 
Agreement'') requiring Appalachian to pay as the purchase price semi-
annual installments in an amount that, together with other funds held 
by the Trustee under the Indenture for that purpose, will enable the 
County to pay, when due, the interest and principal on the Bonds. The 
County has issued and sold eight series of Bonds in an aggregate 
principal amount of $350 million of which $130 million presently are 
outstanding.
    It is now proposed that the County will issue and sell an 
additional series of Bonds in the aggregate principal amount of up to 
$10 million (``Series L Refunding Bonds'') the proceeds of which will 
be used to provide for the redemption on or prior to maturity of $10 
million principal amount of the Series H Bonds of the County. It is 
contemplated that the Series L Refunding Bonds will be issued and 
secured under a supplemental indenture between the County and the 
Trustee. Appalachian proposes to enter into an amended Sales Agreement 
in connection with the Series L Refunding under essentially the same 
terms and conditions of the original Sales Agreement.
    It is contemplated that the Series L Refunding Bonds will be sold 
under arrangements with a group of underwriters with such terms as 
shall be specified by Appalachian. The Series L Refunding Bonds shall 
have a stated maturity of no more than forty years, a fixed rate of 
interest that shall not exceed 8% per annum or an initial rate of 
interest by any fluctuating rate Bonds that shall not exceed 8%. If it 
is deemed advisable, the Series L Refunding Bonds may be provided some 
form of credit enhancement.

The Southern Company, et al.

[70-9701]

    The Southern Company (``Southern''), a registered holding company, 
270 Peachtree Street, N.W., Atlanta, Georgia 30303, and its public-
utility subsidiary companies, Alabama Power Company (``Alabama''), 600 
North 18th Street, Birmingham, Alabama 35291, Georgia Power Company 
(``Georgia''), 241 Ralph McGill Boulevard, N.E., Atlanta, Georgia 
30308, Gulf Power Company (``Gulf''), One Energy Place, Pensacola, 
Florida 32520, Mississippi Power Company (``Mississippi''), 2992 West 
Beach, Gulfport, Mississippi 39501, Savannah Electric and Power Company 
(``Savannah''), 600 East Bay Street, Savannah, Georgia 31401, and 
Southern Electric Generating Company (``SEGCO''),\1\ 600 North 18th 
Street, Birmingham, Alabama 35291 (collectively, ``Applicants''), have 
filed an application-declaration under sections 6(a), 7, 9(a), 10, 
12(b), 12(c), 12(d) and 13(b) of the Act and rules 43, 45, 46, 53, 54, 
90 and 91 under the Act.
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    \1\ Alabama, Georgia, Gulf, Mississippi and Savannah are public-
utility subsidiary companies of Southern. Alabama and Georgia each 
own 50% of the common stock of SEGCO and are each entitled to 50% of 
the output of SEGCO. Alabama, Georgia, Gulf, Mississippi, Savannah 
and SEGCO are referred to as ``Operating Companies.''
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    Applicants seek authority for Southern to organize a new subsidiary 
company (``NewCo''). Applicants propose that NewCo will undertake the 
construction and ownership of certain electric power generation 
facilities interconnected to the transmission systems of the Operating 
Companies, or to transmission systems interconnected to those of the 
Operating Companies designed for serving the power requirements of the 
Operating Companies and of other power purchasers in the region. In 
addition, Applicants seek authority for NewCo to invest in exempt 
wholesale generators (``EWGs''), the generation of which may not be 
interconnected to transmission systems of the Operating Companies. 
Certain power generation owned by NewCo may be integrated into the 
power generation owned by the Operating Companies and operated on a 
central dispatch basis by Southern Company Services, Inc. 
(``Services'').
    Applicants propose that Southern and the Operating Companies will 
transfer the following asset and types of assets (collectively, the 
``Plant Sites and Generating Equipment'') to NewCo: Plant Dahlberg in 
Jackson County, Georgia; plants under construction and/or undeveloped 
plant sites prior to their becoming utility assets; and existing 
contracts for wholesale sales of electricity. Georgia is currently 
developing the Plant Dahlberg facility, an 800 MW simple-cycle natural 
gas peaking facility located north of Athens, Georgia. The facility 
will initially consist of ten combustion turbine generating units. 
Units 1-8 entered commercial operation during May through June, 2000. 
Units 9 and 10 are scheduled for commercial operation in the spring of 
2001. Primary fuel for the units will be natural gas, with No. 2 fuel 
oil as a backup. The facility is interconnected to the Georgia 
Integrated Transmission System and the Southern electrical control area 
via a 230 kV transmission line and is centrally dispatched as part of 
the Southern control area. Plant Dahlberg will be transferred at the 
book cost of Georgia, which is estimated to be $275 million, upon 
completion of Units 9 and 10 in the spring of 2001.
    The Plant Sites and Generating Equipment will be transferred or 
sold to NewCo in an amount equal to the net book value. NewCo will pay 
cash and/or issue promissory notes, secured by purchase money mortgages 
on the Plant

[[Page 65363]]

Sites and Generating Equipment, to the respective Operating Company. 
Promissory notes will only be issued to the Operating Companies for a 
term not to exceed five years and at interest rates equivalent to 
similar securities of a like maturity, provided that such rate of 
interest fully compensates the Operating Company for its cost of funds. 
After the transfer of the Plant Sites and Generating Equipment, NewCo 
will assume responsibility for the construction and ownership of the 
Plant Sites and Generating Equipment. NewCo will become an ``electric 
utility company'' as defined in section 2(a)(3) of the Act.

I. Financing Authority

    Applicants propose to engage in the transactions described below 
from time to time, as applicable, through June 30, 2005.

A. Equity Funding, Guarantee and Parent Support Authority

    Southern seeks financing authority to fund the development and 
growth of NewCo up to an aggregate amount not to exceed $1.7 billion. 
The financings will take the form of any combination of: (1) Purchases 
of or contributions in respect of limited liability company interests 
or other forms of equity interests; (2) open account advances without 
interest; (3) loans; and (4) guarantees (as described below) issued in 
support of securities and other obligations of NewCo. The proceeds of 
the financings will be used to finance the operations of NewCo 
including the acquisition, construction and operation of power 
generation facilities, fuel and power generation equipment procurement 
and storage, and energy-related activities, including those permitted 
under rule 58.
    Southern and NewCo will maintain the equity component of NewCo's 
consolidated capitalization at or above 30%. Applicants propose that 
NewCo be permitted to maintain a common equity component less than 30% 
and request that the Commission reserve jurisdiction over transactions 
that will cause the common equity component of NewCo's consolidated 
capitalization to fall below 30%.
    The loans from Southern will provide NewCo with liquidity to 
facilitate cash management. The loans will be at interest rates and 
maturities to provide a return to Southern of not less than its 
effective cost of capital, and will be of a term not to exceed two 
years.
    Guarantees may be used as credit support for NewCo. Southern 
proposes to issue guarantees or provide other forms of credit support 
or enhancements (collectively, ``Guarantees'') to, or for the benefit 
of, NewCo. Guarantees will take the form of Southern agreeing to 
guarantee, to undertake reimbursement obligations, to assume 
liabilities or to assume other obligations with respect to, or to act 
as surety on, bonds, letters of credit, evidences of indebtedness, 
equity commitments, performance and other obligations undertaken by 
NewCo. The terms and conditions of the Guarantees will be established 
through arms-length negotiations based upon current market conditions. 
Any Guarantee issued will be without recourse to any of the Operating 
Companies.

B. NewCo Independent Financing

    In connection with its daily operations, financing the acquisition, 
construction and operation of assets owned by it and its subsidiaries, 
and to achieve its business goals, NewCo proposes to issue securities 
up to an aggregate amount of $2.5 billion. This financing is currently 
expected to take, without limitation, the form of bank loans and/or 
bank credit support, project financing, lease or sale/leaseback 
transactions, commercial paper programs, debt secured by NewCo's assets 
or unsecured debt, notes, debentures, preferred securities, and other 
equity. In connection with any lease or sale/leaseback transaction, 
NewCo may transfer or sell utility assets to a third party. NewCo will 
lease the assets from the third party with an option to buy back the 
assets. Applicants request that the Commission reserve jurisdiction 
over the sale/leaseback of any utility assets.
    In connection with the issuance of preferred securities, NewCo will 
organize a special purpose subsidiary (``SPS'') and might organize 
another special purpose subsidiary for the purpose of complying with 
applicable state law. A SPS will issue preferred securities to third 
parties and NewCo will acquire all of the common equity or general 
partnership interests of the SPS. NewCo will simultaneously issue debt 
securities to the SPS and may guarantee certain payments with respect 
to the preferred securities.
    In connection with project financing of generating assets, NewCo 
may acquire securities or other interests in project subsidiaries. In 
addition, NewCo proposes to incur obligations in connection with the 
issuance and sale by public instrumentalities of one or more series of 
revenue bonds.
    The interest rate or other distribution rate for NewCo's financings 
will reflect rates obtained by companies with comparable credit 
quality. Applicants state that the rate will not exceed the highest of 
the following rates: (1) 400 basis points over U.S. Treasury 
securities; (2) a gross spread over U.S. Treasury securities that is 
consistent with similar securities having comparable maturities; (3) 
200 basis points over the prime rate; or (4) 350 basis points over the 
London Interbank Offered Rate.
    NewCo requests authority for it and its subsidiaries (discussed 
below) to pay dividends to Southern out of capital or unearned surplus 
to the extent permitted by capitalization and without impairing the 
rights of the holder of outstanding securities. This will permit NewCo 
and its subsidiaries to avoid having excess unrestricted cash trapped 
in subsidiaries.

II. Proposed Service Agreements With Services and Operating 
Companies

    It is proposed that personnel employed by Services, will provide a 
wide range of services on an as-needed basis under a service agreement 
(``Service Agreement'') to be entered into between NewCo and Services. 
It is also proposed that personnel employed by the Operating Companies 
will provide services to NewCo under Operating Agreements (the 
``Operating Agreements'') between NewCo and each Operating Company or 
other arrangements.
    The Service Agreement will take effect upon Commission approval and 
will be similar in all material respects to those service agreements 
which Services has signed with each of the Operating Companies. Under 
the proposed Service Agreement, Services will render to NewCo, at a 
cost computed in accordance with rules 90 and 91 under the Act and 
other applicable rules and regulations, various services including 
general executive and advisory services, power pool operations, general 
engineering, design engineering, purchasing, accounting, finance and 
treasury, taxes, insurance and pensions, corporate, rates, budgeting, 
public relations, employee relations, systems and procedures and other 
services with respect to business and operations. Services will account 
for, allocate and charge its costs of the services provided on a full 
cost reimbursement basis under a work order system consistent with the 
Uniform System of Accounts for Mutual and Subsidiary Service Companies.
    The Operating Agreements will provide that each Operating Company 
will provide certain services relating to accounting matters and to the 
construction, operation, maintenance and rehabilitation of assets owned 
by

[[Page 65364]]

NewCo at cost to NewCo. NewCo will also determine from time to time 
that it is efficient and advantageous to have certain development 
activities performed by its own employees and/or by unaffiliated third 
parties. The arrangements with unaffiliated third parties will be on a 
fee-for-service negotiated basis at market rates.

III. Formation of EWG Subsidiaries of NewCo

    NewCo proposes to acquire securities or interests in the business 
of one or more EWGs, as the term is defined in the Act (the ``Exempt 
Subsidiaries''), either directly or indirectly through project 
companies (``Intermediate Companies'').
    Intermediate Companies will be special purpose subsidiaries formed 
to engage exclusively in activities to facilitate the consummation of 
investments in EWGs. They may also engage in development activities. 
Intermediate Companies may acquire interests in, finance the 
acquisition of and hold the securities of EWGs. Intermediate Companies 
will enhance the ability of NewCo to respond quickly to investment 
opportunities. An Intermediate Company may be organized at the time of 
the making of bids or proposals to acquire an interest in any EWG or at 
any time thereafter in order to facilitate the bidding and subsequent 
consummation of an acquisition of an interest in an EWG.
    Applicants also propose that an Intermediate Company will issue 
equity securities and debt securities to persons other than NewCo or 
Southern (and with respect to which there will be no recourse to 
Southern), including banks, insurance companies and other financial 
institutions, exclusively for the purpose of financing (including any 
refinancing) investments in EWGs.
    Applicants state that the Intermediate Companies will issue 
securities to Southern and/or NewCo, and Southern and/or NewCo will 
acquire the securities. The investment by Southern or NewCo in the 
Exempt Subsidiaries will take the form of capital stock or shares, debt 
securities, trust certificates, capital contributions, open account 
advances without interest and partnership interests or other equity or 
participation interests, bid bonds or other credit support to secure 
obligations incurred by NewCo and/or Intermediate Companies in 
connection with Exempt Subsidiary investments or of NewCo's undertaking 
to contribute equity to an Intermediate Company. Southern and NewCo 
propose, from time to time through June 30, 2005, to (1) guarantee the 
indebtedness or other obligations of one or more Exempt Subsidiaries; 
(2) assume the liabilities of one or more Exempt Subsidiaries; and/or 
(3) enter into guarantees and letters of credit reimbursement 
agreements in support of equity contribution obligations or otherwise 
in connection with project development activities for one or more 
Exempt Subsidiaries.
    Investments will be made from Southern to NewCo and/or Intermediate 
Companies directly or indirectly. Any open account advance made by 
Southern will have a maturity of not more than one year.
    Applicants propose for Southern to enter into reimbursement 
agreements with banks to support letters of credit delivered as 
security for Southern's or NewCo's equity contribution obligation to an 
Intermediate Company or otherwise in connection with an Intermediate 
Company's or Exempt Subsidiary's project development activities.
    The investment in Intermediate Companies and Exempt Subsidiaries is 
included in the requested $4.2 billion total financing authority.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-27975 Filed 10-31-00; 8:45 am]
BILLING CODE 8010-01-M