[Federal Register Volume 65, Number 234 (Tuesday, December 5, 2000)]
[Notices]
[Pages 75980-75983]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-30850]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27285]


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

November 27, 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 22, 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 order, and will receive a copy of any notice or order issued in the 
matter. After December 22, 2000, the applicant(s) and/or 
declaration(s), as filed or as amended, may be granted and/or permitted 
to become effective.

Alliant Energy Corporation, et al. (70-9735)

    Alliant Energy Corporation (``Alliant''), a registered public 
utility holding company and is wholly owned utility subsidiaries, 
Wisconsin Power & Light Company (``WPL'') and South Beloit Water, Gas & 
Electric Company (``South Beloit''), each with principal executive 
offices N16 W23217 Stone Ridge Drive, Waukesha, Wisconsin 53187, and 
American Transmission Company LLC (``Transco''), an inactive Wisconsin 
limited liability subsidiary company of WPL which intends to operate as 
a utility company, and ATC Management Inc., an inactive Wisconsin 
subsidiary corporation of WPL which also intends to operate as a 
utility company (``Corporate Manager'', and together with Alliant, WPL, 
South Beloit and Transco, ``Applicants''), with principal executive 
offices at 231 W. Michigan Street, Milwaukee, Wisconsin 53203, have 
filed an application-declaration (``Application'') under to sections 
6(a), 7, 9(a), 10, 11, 12 and 13 of the Act and rules 43, 44, 54, 90 
and 91 under the Act.
    In summary, Applicants request authority for: (1) WPL to transfer, 
directly or indirectly, ownership and control over its transmission 
assets (``WPL Transmission Assets'') to Transco, (2) South Beloit to 
transfer, directly or indirectly, ownership and control over its 
transmission assets (``South Beloit Transmission Assets'') to Transco, 
(3) Transco to issue and WPL, South Beloit, Wisconsin Electric Power 
Co. (``WEPCO''), Edison Sault Electric Company (``ESE''), Wisconsin 
Public Power, Inc. (``WPPI''), Wisconsin Public Service Corporation 
(``WPS'') and Madison Gas and Electric Company (``MGE'' and 
collectively ``Member Utilities'' \1\) to acquire, directly or 
indirectly, member units (``Member Units'') of Transco in exchange for 
either transmission assets or cash, (4) WPL to purchase, and Corporate 
Manager to issue Class A shares of the Corporate Manager, (5) WPL to 
purchase, and Corporate Manager to issue, one Class B share of the 
Corporate Manager, (6) Transco to acquire the WPL Transmission Assets 
and the South Beloit Transmission Assets, as well as the transmission 
assets of WEPCO, ESE, WPS and MGE and (7) a series of

[[Page 75981]]

financings by Transco and Corporate Manager through June 30, 2004 
(``Authorization Period'').
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    \1\ ESE, WPPI, WPS, WEPCO and MGE are either exempt or municipal 
nonassociate utility companies of alliant and are not required to be 
applicants in this matter.
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    WPL is engaged principally in the generation, purchase, 
distribution and sale of electric power in 35 counties in a 16,000 
square-mile area in southern and central Wisconsin. As of December 31, 
1999, WPL provides retail electric service to approximately 407,000 
customers in 599 cities, villages and towns, and wholesale service to 
24 municipal utilities, three rural electric cooperatives, the WPPI 
system, which provides retail electric service to nine communities in 
the WPL service area, and one privately owned utility. The WPL 
Transmission Assets consist of 107 miles of 345 kV transmission 
facilities, 758 miles of 138 kV transmission facilities, 1,908 miles of 
69 kV transmission facilities and associated substations and real 
property interests. WPL is subject to regulation by the Public Service 
Commission of Wisconsin.
    South Beloit is a wholly owned subsidiary of WPL that supplies 
retail electric and gas services to customers in the cities of South 
Beloit and Rockton, Illinois, and the adjacent rural areas. As of 
December 31, 1999, South Beloit serves approximately 8,000 electric 
customers. The South Beloit Transmission Assets consist of less than 
one mile of 345 kV transmission facilities, 10 miles of 69 kV 
transmission facilities, one substation and associated real property 
interests. The service territory of South Beloit is located in Illinois 
and is adjacent to the service territory of WPL in Wisconsin. South 
Beloit is subject to regulation by the Illinois Commerce Commission.
    The electric distribution systems of WPL and South Beloit are 
interconnected at many points along the Wisconsin-Illinois state line. 
Applicants state that the electric operations of WPL and South Beloit 
are integrated and all of WPL's generating units are centrally 
dispatched by Alliant Energy Corporate Services, Inc., the service 
company affiliate of WPL and South Beloit. The transmission facilities 
that Transco will acquire from WPL and South Beloit operate at voltages 
of 345 kV, 138 kV and 69 kV and include:
    1. Transmission lines (including towers, poles and conductors) and 
transmission substations;
    2. Transformers providing transformation within the bulk 
transmission system and between the bulk and area transmission systems;
    3. Lines providing connections to generation sources and step-up 
(plant) 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;
    6. Voltage control devices and power flow control devices directly 
connected to the transmission system; and
    7. WPL's systems operation center located in Stoughton, Wisconsin.
    As of December 31, 2000, the original cost of the WPL Transmission 
Assets and the South Beloit Transmission Assets will be approximately 
$314,276,000 and $678,000, respectively. The net book value (original 
cost less accumulated depreciation) of the WPL Transmission Assets and 
the South Beloit Transmission Assets is expected to be approximately 
$177,650,000 and $439,000, respectively, at December 31, 2000.
    In 1999, Wisconsin enacted legislation (``Transco Legislation'') 
that facilitates the formation of transmission companies, such as 
Transco, as not for-profit, single-purpose, limited liability 
transmission companies. This legislation promotes the transfer of 
utility company transmission assets to Transco. Transco will issue 
Member Units to the Member Utilities for cash, in the case of those 
Member Utilities who don't own transmission assets, or based on the 
contribution value (``Contribution Value'') of the transmission assets 
conveyed to Transco. Contribution Value is defined as the original cost 
less accumulated deprecation, as adjusted on a dollar-for-dollar basis 
for deferred taxes, excess deferred taxes and deferred investment tax 
credits. Transco also seeks authority to acquire the incidental 
transmission facilities of Member Utilities who do not own any 
transmission assets. The Member Utilities intend to contribute their 
transmission assets to Transco on or about January 1, 2001. Transco 
will have the exclusive duty to provide transmission service in 
geographic areas formerly served by the Transco members.\2\
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    \2\ Transco is expected to transfer operational control of its 
assets to the Midwest Independent Transmission System Operator, Inc. 
by November 1, 2001.
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    Because of limitations imposed by the WPL indenture 
(``Indenture''), WPL will effect the transfer of the WPL Transmission 
Assets to Transco, and its acquisition of Transco Member Units, through 
a newly created limited liability company (``NewCo'') to be wholly 
owned by WPL. Applicants specifically seek authority to carry out the 
following transactions:
    (1) WPL will form NewCo and acquire ownership of NewCo for one or 
more cash payments,
    (2) NewCo will transfer cash \3\ is an amount approximately equal 
to WPL's corresponding cash payment to NewCo for NewCo's ownership 
interest to the trustee under the Indenture (``Trustee''),
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    \3\ The cash payment will be equal to the ``fair value'' to WPL 
of the WPL Transmission Assets, as is defined in, and required by, 
the Indenture. The fair value will approximate the value of the WPL 
Transmission Assets. NewCo's payment of cash to the Trustee will 
permit the WPL Transmission Assets to be released from the Indenture 
lien.
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    (3) Upon receipt of the payment, the Trustee will release the WPL 
Transmission Assets from the Indenture lien,
    (4) WPL will transfer the WPL Transmission Assets to Transco and
    (5) Transco will issue its Member Units to NewCo. WPL and South 
Boloit also seek authority to transfer to Transco, from time to time, 
up to $10,000,000 of additional transmission assets, which are 
currently under construction, in exchange for additional Member Units 
to be issued to NewCo or South Beloit, as the case may be.
    The transmission assets will be valued at their Contribution Value 
when identifying the Member Utilities' relative shares of interest in 
the Transco. The resulting shares will be adjusted based on various 
factors including the relative interest of transmission-dependent 
Member Utilities which acquire Member Units for cash instead of 
transmission assets.\4\ It is expected that WPL and South Beloit's 
Contribution Values at December 31, 2000 will be approximately 
$126,784,000 and $590,000, respectively, and their aggregate initial 
interest in Transco will approximate 26%. This ownership percentage may 
fluctuate based on various factors, including the number of Member 
Utilities.
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    \4\ The transmission dependent Member Utilities' ownership 
interest in Transco will be measured in relative shares of interest 
based upon their 1999 Wisconsin load share ratios.
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    The Member Utilities will enter into an agreement (``Operating 
Agreement'') governing the activities of Transco. The Operating 
Agreement will grant the Corporate Manager full, complete and exclusive 
discretion to manage and control Transco. The Corporate Manager will 
have the power to do all things necessary and convenient to carry out 
Transco's business including the employment of all personnel necessary 
to operate Transco and the management of any future Transco 
subsidiaries. In accordance with the Operating

[[Page 75982]]

Agreement, all expenses of the Corporate Manager will be treated as 
Transco expenses. These expenses will be charged back to Transco at 
cost in accordance with section 13 of the Act and rules 90 and 91 under 
the Act. The Corporate Manager will employ all personnel necessary to 
operate Transco. The Corporate Manager will also hold Member Units.
    It is expected that the transmission-owning Member Utilities and 
Transco will enter into one or more agreements (``O&M Agreements'') 
pursuant to which the Member Utilities will provide Transco with 
``reasonable and cost effective operations and maintenance services'' 
for at least the first three years after the operations date in 
accordance with the Transco Legislation. Services provided under the 
O&M Agreements will include line equipment services, station equipment 
services and emergency response services. The Member Utilities and 
Transco will also enter into one or more services agreements 
(``Services Agreements'') under which the Members Utilities will 
provide Transco with certain services, such as control center services, 
real estate services and capital project services, not covered by the 
O&M Agreements. Additionally, the Member Utilities and Transco will 
enter into a system operating agreement (``System Operating 
Agreement'') under which Transco will provide, among other things, 
ancillary services and control area operations at rates approved by the 
Federal Energy Regulatory Commission. Finally, Transco will provide 
certain services from the Stoughton Operations Center to support 
Alliant Energy's operation of its transmission facilities outside of 
Wisconsin and its 34.5 kV facilities in Wisconsin that are not being 
transferred to Transco. It is expected that these operations will be 
governed by an agency agreement (``Agency Agreement''). Any services 
provided or received by WPL, South Beloit or any other Alliant Energy 
affiliate under the foregoing agreements will be provided ``at cost'' 
in accordance with section 13 and rules 90 and 91 under the Act, unless 
otherwise authorized or directed by appropriate governmental or 
regulatory authority.
    Member Utilities will also purchase shares of the Corporate Member, 
for cash, in proportion to their percentage interests in Transco. WPL 
proposes to pay $10 per share for an approximate 26% interest in the 
Corporate Manager. The Corporate Manager will have two classes of 
stock: Class A and Class B shares. \5\ WPL will receive approximately 
26% of the nonvoting Class A shares. Additionally, each Member Utility 
will receive one Class B voting share. \6\ Each holder of a Class B 
share will be entitled to appoint one of the Corporate Manager's 
directors. All Class B shares will convert into Class A shares on the 
earlier of (1) the ownership by the Corporate Manager of more than 50% 
of Transco interests or (2) the tenth anniversary of the first day of 
operations of Transco, unless the Corporate Manager's board of 
directors (``Board'') elects to override the conversion. Class A shares 
will become voting shares upon the conversion of Class B shares to 
Class A shares or after the Corporate Manager commences a public 
offering of its stock. Following a public offering, the Class A 
shareholders will have the right to elect a majority of the Board and 
the Class B shareholders will elect a minority of the Board, but each 
owner of a Class B share will continue to have the right to appoint one 
of the Board. Each Class A and Class B share will be entitled to the 
same amount of dividends.
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    \5\ The Class A and B structure ensures that the Member 
Utilities will have economic interests proportionate to the value of 
their contribution to the Transco while still maintaining the 
desired per capita voting arrangement.
    \6\ Neither South Beloit nor ESE will receive shares in the 
Corporate Manager.
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    Transco and the Corporate Manager also request authorization for 
external financing as follows: (1) Short-term debt financing by Transco 
in the form of, among other things, borrowings under a revolving credit 
agreement and issuance of commercial paper, (2) long-term debt 
financing by Transco in the form of debentures or other forms of long-
term debt financing and (3) equity financing by Transco and the 
Corporate Manager in the form of common or preferred stock of the 
Corporate Manager and other equity securities or additional interests 
in Transco. The amount of Transco's short-term and long-term debt 
outstanding at any time will not exceed, in the aggregate, $400 
million.
    Transco will initially obtain funds externally through short-term 
debt financing under a Credit Agreement between Transco and Bank One, 
N.A., as Agent (``Credit Facility''). Transco seeks authority to enter 
into borrowings up to a principal amount of $125 million under the 
Credit Facility.\7\ Transco proposes to issue short-term debt under the 
Credit Facility, commercial paper or other forms of short-term 
financing from time to time during the Authorization Period. Commercial 
paper would be issued in established domestic or European commercial 
paper markets to dealers at the prevailing discount rate per annum, or 
at the prevailing coupon rate per annum, at the date of issuance. The 
maturity of short-term debt will not exceed one year. Transco seeks 
authority to amend the Credit Facility without further authorization 
provided that the maturity date does not extend beyond the 
Authorization Period and the aggregate principal amount of authorized 
borrowings does not exceed $125 million.
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    \7\ Transco was previously authorized to enter into borrowings 
of $30 million under the Credit Facility. See Alliant Energy 
Corporation, et al., Holding Co. Act Release No. 27197 (August 3, 
2000).
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    Transco also proposes to issue long-term debt consisting of 
debentures, which may be in the form of medium-term notes, convertible 
debt, subordinated debt, bank borrowings, other debt securities or 
other forms of long-term financing from time to time, through the 
Authorization period. Any long-term debt security would have a maturity 
ranging from one to 50 years. Debentures and medium-term notes would be 
issued under an indenture. The aggregate amount of short-term and long-
term debt outstanding at any time, including debt under the Credit 
Facility, will not exceed $400 million.
    Transco and the Corporate Manager propose to issue equity 
securities from time to time through the Authorization Period. 
Corporate Manager intends to issue common or preferred stock and 
Transco intends to issue other equity securities or additional 
interests. The aggregate amount of both Transco and Corporate Manager's 
equity securities will not exceed $500 million. The dividend rate on 
any series of preferred securities issued by the Corporate Manager will 
not exceed 500 basis points over the yield to maturity of U.S. Treasury 
security having a remaining term equal to the term of that series of 
preferred securities at the time of issuance. Preferred securities may 
have mandatory redemption dates. Transco also requests authorization to 
enter into interest rate hedging transactions with respect to existing 
indebtedness, subject to certain limitations and restrictions, in order 
to reduce or manage interest rate cost. In addition, the Transco 
request authorization to enter into interest rate hedging transactions 
with respect to anticipated debt offerings, subject to certain 
limitations and restrictions.
    Applicants state that proceeds requested under this application 
will be used to provide financing for general corporate purposes, 
including working capital requirements, and to fund construction 
spending to undertake large scale capital improvements to the

[[Page 75983]]

Wisconsin transmission system necessary to maintain reliability.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-30850 Filed 12-4-00; 8:45 am]
BILLING CODE 8010-01-M