[Federal Register Volume 65, Number 228 (Monday, November 27, 2000)]
[Notices]
[Pages 70742-70745]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-30133]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27278]


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

November 17, 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 December 12, 2000, to the Secretary, Securities and Exchange 
Commission, Washington, D.C. 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

[[Page 70743]]

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 December 12, 2000, the application(s) and/or 
declaration(s), as filed or as amended, may be granted and/or permitted 
to become effective.

Wisconsin Energy Corporation, et al. (70-9741)

    Wisconsin Energy Corporation (``WEC''), a holding company exempt 
from registration under section 3(a)(1) of the Act,\1\ and its wholly 
owned public utility subsidiary Wisconsin Electric Power Company 
(``Wisconsin Electric''), both located at 231 West Michigan Street, 
P.O. Box 2949, Milwaukee, Wisconsin 53201 (together, ``Applicants''), 
have filed an application (``Application'') under sections 9(a)(2) and 
10 of the Act requesting authorization for a transaction in which: (1) 
Wisconsin Electric and Edison Sault Electric Company (``Edison 
Sault''), a wholly owned electric utility subsidiary of WEC, will 
transfer ownership of and control over their transmission assets 
(``Transmission Assets'') to American Transmission Company LLC 
(``Transco''), a Wisconsin limited liability company, which will be a 
single-purpose transmission company; (2) Wisconsin Electric and Edison 
Sault will receive member units of the Transco in proportion to the 
value of the Transmission Assets; (3) Wisconsin Electric will purchase 
Class A shares of ATC Management Inc. (``Corporate Manager''), a 
Wisconsin corporation, in proportion to the value of the Transmission 
Assets; and (4) Wisconsin Electric will purchase one Class B share of 
the Corporate Manager. In addition, WEC requests an order from the 
Commission affirming its continued section 3(a)(1) exemption from 
registration under the Act.
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    \1\ The Commission granted WEC an exemption under section 
3(a)(1) of the Act by order dated April 10, 2000. See Holding Co. 
Act Release No. 27163.
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    WEC owns directly all of the common stock of two public utility 
companies: Wisconsin Electric, a combination electric and gas utility 
company, and Edison Sault, an electric utility company.\2\ In addition, 
WEC owns all of the common stock of WICOR, Inc. (``WICOR''), a public 
utility holding company incorporated under the laws of the State of 
Wisconsin, which also is exempt from registration under section 3(a)(1) 
of the Act by order of the Commission.\3\ WICOR has one wholly owned 
public utility subsidiary, Wisconsin Gas Company (``Wisconsin Gas''), 
which is a gas utility company organized under the laws of the State of 
Wisconsin.
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    \2\ Applicants state that Edison Sault currently is not an 
``affiliate'' of any public utility company for purposes of section 
9(a)(2) of the Act. Under section 9(a)(2), any person seeking to 
acquire, directly or indirectly, any security of any public utility 
company must apply to the Commission for approval ``if such person 
is an affiliate, under clause (A) of paragraph (11) of subsection 
(a) of section 2, of such company and of any other public utility or 
holding company, or will by virtue of such acquisition become such 
an affiliate''. Because Edison Sault will not become such an 
``affiliate'' until after its acquisition of Transco's member units, 
its proposed transaction is not subject to approval under section 
9(a)(2).
    \3\ See note 1, supra.
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    Wisconsin Electric generates, transmits, distributes, and sells 
electric energy in southeastern, east central and northern Wisconsin 
and in the Upper Peninsula of Michigan. As of December 31, 1999, 
Wisconsin Electric had approximately 1.0 million electric customers. 
During 1999, Wisconsin Electric had electric operating revenues of 
$1.69 billion, total operating revenues of $2.02 billion, and net 
income of $212 million, after dividends on preferred stock.
    In 1999, the State of Wisconsin enacted legislation (``Transco 
Legislation'') that facilitates the formation of Transco. The Transco 
Legislation, among other things, encourages public utility affiliates 
of Wisconsin holding companies, including Wisconsin Electric, to 
transfer ownership of their transmission assets to Transco by 
beneficially adjusting the calculation of an existing limit on the 
amount of unregulated investments these holding companies and their 
affiliates can make, after the transfer of their transmission assets to 
Transco. Transco will be managed by the Corporate Manager, which will 
also own a portion of Transco's membership units. All Transco 
participants will ultimately own a direct or indirect interest in 
Transco and the Corporate Manager in proportion to the value of the 
transmission assets each participant contributes to Transco.\4\ Transco 
is expected to transfer operational control of its assets to the 
Midwest Independent System Operator, Inc. by November 1, 2001.
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    \4\ Edison Sault and another participant in Transco, South 
Beloit Water, Gas and Electric Company are not expected to receive 
shares in the Corporate Manager.
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    Applicants expect that the firms taking interests in Transco and 
the Corporate Manager will include, in addition to Wisconsin Electric 
and Edison Sault: Wisconsin Public Service Corporation (``WPSC''), a 
wholly-owned subsidiary of WPS Resources Corporation (``WPSR''), a 
public utility company claiming exemption from registration under 
section 3(a)(1) of the Act by rule 2; Wisconsin Power and Light Company 
(``WP&L''); South Beloit Water, Gas and Electric Company (``South 
Beloit''), a wholly owned subsidiary of WP&L with transmission assets 
in Illinois; Wisconsin Public Power Inc. (``WPPI''), a municipal 
electric utility company owned by 30 Wisconsin municipalities; \5\ and 
Madison Gas and Electric Company (collectively, ``Member 
Utilities'').\6\
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    \5\ WPPI, and any other transmission-dependent tax-exempt entity 
that participates in Transco, will not be contributing transmission 
assets to Transco. Applicants state that, because the participation 
of these entities will reduce the transmission revenue otherwise 
received by Transco, these entities will purchase their interests 
for a price that is designed to keep the other participants in 
Transco whole.
    \6\ WPSR and WPSC filed a separate application under the Act 
seeking approval of WPSC's proposed participation in Transco on 
October 12, 2000 (SEC File No. 70-9767). WPSC's and WPSR's filing is 
being noticed contemporaneously with this notice. In addition, 
Alliant Energy Corporation, WP&L, South Beloit, Transco and 
Corporate Manager filed a separate application-declaration under the 
Act seeking approval of WP&L's proposed participation in Transco, 
certain intrasystem transactions, and various financing transactions 
(SEC File No. 70-9735).
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    Other transmission-owning utilities may, in the future, decide to 
become members of the Transco.
    Applicants expect that the initial participants in Transco will 
contribute their transmission assets to Transco on or about January 1, 
2001 (``Operations Date''). For purposes of establishing relative 
shares, the Transmission Assets will be valued at their contribution 
value (``Contribution Value''), which is defined as original cost less 
accumulated depreciation as adjusted on a dollar-for-dollar basis for 
deferred taxes, excess deferred taxes and deferred investment credits. 
Applicants expect that Wisconsin Electric's and Edison Sault's 
Contribution Value at December 31, 2000 will be approximately $252 
million, and their aggregate initial interest in Transco will 
approximate 50.8%. Applicants further state that this percentage may 
fluctuate based on various factors, including the number of 
participants in Transco.
    The Transmission Assets proposed to be transferred include: (1) 
Transmission lines and transmission substations; (2) transformers 
providing transformation within the bulk transmission system and 
between the bulk and area transmission systems; (3) lines connecting to 
generation sources and step-up substations; (4) radial taps from the 
transmission system up to, but not including, the facilities that 
establish the final connection to distribution

[[Page 70744]]

facilities or retail customers; (5) substations that provide primarily 
a transmission function; and (6) voltage control devices and power flow 
control devices directly connected to the transmission system. 
Applicants expect that, as of December 31, 2000, the original cost of 
the Transmission Assets of Wisconsin Electric and Edison Sault will be 
approximately $442.9 million and $41 million, respectively. The net 
book value \7\ of the Transmission Assets of Wisconsin Electric and 
Edison Sault at December 31, 2000 is expected to be approximately 
$223.8 million and $31.4 million, respectively.
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    \7\ ``Net book value'' is defined as original cost less 
accumulated depreciation.
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    Applicants state that the transmission-owning Member Utilities and 
Transco expect to enter into various agreements (``Agreements'') under 
which the Member Utilities will provide Transco with operations and 
maintenance services, control area operations, and other services. Any 
services provided or received by Applicants under any of these 
Agreements will be provided at cost, unless authorized or directed by 
appropriate governmental or regulatory authority in accordance with 
rules 90 and 91 under the Act.

WPS Resources Corporation, et al. (70-9767)

    WPS Resources Corporation (``WPSR''), a public utility holding 
company claiming exemption under section 3(a)(1) of the Act by rule 2, 
and Wisconsin Public Service Corporation (``WPSC'', and together with 
WPSR, ``Applicants''), WPSR's wholly owned public utility 
subsidiary,\8\ both located at 700 North Adams Street, Green Bay, 
Wisconsin 54301, have filed an application (``Application'') under 
sections 9(a) and 10 of the Act.
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    \8\ WPSC is also a holding company because it owns an interest 
in another subsidiary of WPSR, Wisconsin River Power Company. WPSC 
claims exemption from registration under section 3(a)(2) of the Act 
by rule 2 under the Act.
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    Applicants request authorization for: (1) WPSC, or a limited 
liability company of which WPSC will be the sole member (``WPSC-
NEWCO''), to receive a proportionate share of the membership interests 
of American Transmission Company, LLC, a Wisconsin limited liability 
company (``Transco'') in exchange for the transfer of WPSC's 
transmission facilities, associated substations and real property 
interests (the ``WPSC Transmission Assets'') to Transco; \9\ (2) WPSC 
to purchase Class A shares of ATC Management Inc., a Wisconsin 
corporation created a manage Transco (``Manager''); (3) WPSC to 
purchase one Class B Share of Manager; and (4) WPSC to acquire all of 
WPSC-NEWCO's membership interests in exchange for cash. \10\
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    \9\ Applicants' proportional share in the Transco will be based 
on the book value of the WPSC Transmission Assets contributed 
relative to that contributed by other utility companies that are to 
become members of the Transco.
    \10\ Applicants state that it may be necessary to effect the 
proposed transfer of transmission assets through WPSC-NEWCO as a 
result of certain limitations imposed by WPSC's mortgage indenture. 
Accordingly, WPSC also requests authority to form WPSC-NEWCO and to 
acquire all of WPSC-NEWCO's membership interests in exchange for one 
or more cash payments to WPSC-NEWCO. After WPSC-NEWCO receives 
Transco's member units, it will pay to the trustee under the WPSC 
mortgage indenture cash in an amount approximately equal to WPSC's 
corresponding cash payment to WPSC-NEWCO.
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    WPSR's public-utility subsidiaries are: WPSC; Upper Peninsula Power 
Company; and Wisconsin River Power Company. WPSC is engaged principally 
in the generation, purchase, distribution and sale of electric power in 
northeastern and central Wisconsin and in a portion of the Upper 
Peninsula of Michigan. WPSC also is engaged in the purchase, 
distribution and sale of natural gas in northeastern and central 
Wisconsin and in a portion of the Upper Peninsula of Michigan. As of 
December 31, 1999, WPSC provided retail electric service to 
approximately 388,000 customers and retail gas service to approximately 
230,000 customers. WPSC provides wholesale electric service to various 
customers including municipal utilities, rural electrification 
cooperatives, energy marketers, other investor owned utilities and a 
municipal joint action agency. At and for the twelve months ended 
September 30, 2000, WPSR's consolidated assets, operating revenue and 
net income were $2,188,504, $1,528,310, and $66,407 respectively. At 
and for the twelve months ended September 30, 2000, WPSC's consolidated 
assets, operating revenue and earnings available for common stock were 
$1,420,591, $749,412 and $71,988 respectively.
    In 1999, the State of Wisconsin enacted legislation (``Transco 
Legislation'') that facilitates the formation of Transco, which will be 
a for-profit single-purpose transmission company. The Transco 
Legislation, among other things, encourages public utility affiliates 
of Wisconsin holding companies, including WPSC, to transfer ownership 
of their transmission assets to Transco by beneficially adjusting the 
calculation of an existing limit on the amount of unregulated 
investments these utilities and their affiliates can make, after the 
transfer of their assets to Transco. Manager will manage Transco and 
will also hold a portion of Transco's membership interests. All Transco 
participants will ultimately own direct or indirect interests in 
Transco and Manager in proportion to the value of the transmission 
assets and/or cash each participant contributes to Transco. Transco is 
expected to transfer operational control of its assets to the Midwest 
Independent System Operator, Inc. by November 1, 2001.
    It is expected that the participation in Transco and Manager will 
include in addition to WPSR and WPSC: Wisconsin Power and Light Company 
(``WP&L''); South Beloit Water, Gas and Electric Company (``South 
Beloit'') a wholly owned subsidiary of WP&L with transmission assets in 
Illinois; Wisconsin Energy Corporation (``WEC''), an exempt holding 
company; Wisconsin Electric Power Co. (``Wisconsin Electric''), a 
wholly owned subsidiary of WEC; and Edison Sault Electric Company 
(``ESE''), a wholly owned subsidiary of WEC with transmission assets in 
Michigan; \11\ Wisconsin Public Power, Inc. (``WPPI''), a municipal 
electric company owned by 30 Wisconsin municipalities; \12\ and Madison 
Gas & Electric Company (collectively, ``Member Utilities''').\13\ Other 
transmission-owning utilities may, in the future, decide to become 
members of Transco.
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    \11\ Neither ESE nor South Beloit will receive shares in 
Manager.
    \12\ WPPI, and any other transmission-dependent tax-exempt 
entity that participates in Transco, may not contribute transmission 
assets to Transco. Applicants state that, because the participation 
of these entities will reduce the transmission revenue otherwise 
received by Transco, these entities will purchase their interests 
for a price that is designated to keep the other participants in 
Transco whole.
    \13\ WEC and Wisconsin Electric filed a separate application 
under the Act seeking approval of WPSC's and ESE's proposed 
participation in Transco on August 25, 2000 (SEC File No. 70-9741). 
WEC's and Wisconsin Electric's filing is being noticed 
contemporaneously with this notice. In addition, Alliant Energy 
Corporation, WP&L, South Beloit, Transco and Manager filed a 
separate application-declaration under the Act seeking approval of 
WP&L's proposed participation in Transco, certain intrasystem 
transactions, and various financing transactions (SEC File NO. 70-
9735).
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    Applicants' final percentage ownership interest in Transco, as well 
as the definitive number of Transco member units and Manager Class A 
shares to be acquired will depend upon the actual number of 
participants in Transco and the contribution value (``Contribution 
Value'') \14\ of the transmission assets transferred to

[[Page 70745]]

Transco by those participants. It is expected that WPSC's Contribution 
Value as of December 31, 2000 will be approximately $63 million, and 
its initial interest in Transco will be approximately 12.62%. WPSR, the 
other participating Wisconsin utilities, and South Beloit intend to 
contribute their transmission assets to Transco on or about January 1, 
2001 (the ``Operations Date''). Depending on the number of initial 
members of the Transco, it is expected that Applicants' interest in 
Transco and Manager will be between 10% and 15% of each entity. The 
Transco's other participants will make similar initial contributions.
    The WPSC Transmission Assets proposed to be transferred include: 
(1) Transmission lines and transmission substations; (2) transformers 
providing transformation within the bulk transmission system and 
between the bulk and area transmission systems; (3) lines connecting to 
generation sources and step-up substations; (4) radial taps from the 
transmission system up to, but not including, the facilities that 
establish the final connection to distribution facilities or retail 
customers; (5) substations that provide primarily a transmission 
function; and (6) voltage control devices and power flow control 
devices directly connected to the transmission system. Applicants 
expect that, as of December 31, 2000, the original cost of the WPSC 
Transmission Assets will be approximately $139 million. The net book 
value \15\ of the WPSC Transmission Assets at December 31, 2000 is 
expected to be approximately $70 million.
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    \14\ Contribution Value is defined as original cost less 
accumulated depreciation, as adjusted on a dollar-for-dollar basis 
for deferred taxes, excess deferred taxes, and deferred investment 
tax credits.
    \15\ ``Net book value'' is defined as original cost less 
accumulated depreciation.
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    Applicants state that the transmission-owning Member Utilities and 
Transco expect to enter into various agreements (``Agreements'') under 
which the Member Utilities will provide Transco with operations and 
maintenance services, control area operations, and other services. Any 
services provided or received by Applicants under any of these 
Agreements will be provided at cost in accordance with rules 90 and 91 
under the Act, unless authorized or directed by appropriate 
governmental or regulatory authority.\16\
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    \16\ Applicants state that certain of the Agreements may provide 
for certain services between Transco and affiliates of WPSR, 
including WPSC, to be rendered at market rates, without regard to 
cost.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-30133 Filed 11-24-00; 8:45 am]
BILLING CODE 8010-01-M