[Federal Register Volume 66, Number 38 (Monday, February 26, 2001)]
[Notices]
[Pages 11613-11621]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-4651]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27347]


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

February 16, 2001.
    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 March 13, 2001, 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 March 13, 2001, the application(s) and/or 
declaration(s), as filed or as amended, may be granted and/or permitted 
to become effective.

Dominion Resources, Inc., et al.  (70-9807)

    Dominion Resources, Inc. (``DRI''), a registered public utility 
holding company under the Act, and is wholly owned electric utility 
company subsidiary, Virginia Electric and Power Company (``Vepco''), 
both located at 120 Tredegar Street, Richmond, VA 23219, have filed an 
application under sections 9(a)(1) and 10 of the Act.
    DRI and Vepco request approval of Vepco's proposed acquisition of 
three generating facilities (``Generating Facilities'') located in 
Hopewell, Altavista, and Southampton County, Virginia, within Vepco's 
service area. Vepco would effect the acquisition by purchasing all of 
the partnership interests in each of the three limited partnerships 
that currently own the facilities.
    Each of the three Generating Facilities is currently both a 
``qualifying facility'' (``QF'') under the Public Utility Regulatory 
Policies Act of 1978, as amended (``PURPA''), and an ``exempt wholesale 
generator'' (``EWG'') under section 32 of the Act. Each comprises a 
stoker coal-fired cogeneration facility with a maximum net power 
production capacity of 62.7 MW and related interconnection facilities 
that is interconnected with Vepco, to whom it sells all of its energy 
and capacity through long term power purchase and operating agreements, 
at the high voltage (115 kV) side of its main step-up transformer. Upon 
consummation of the proposed acquisition, the Generating Facilities 
will no longer meet the criteria for QFs and PURPA and for EWGs under 
the Act. The Generating Facilities would then be operated in the same 
manner as the rest of Vepco's facilities, and their production would be 
controlled by the same mechanism that drive the dispatch of Vepco's 
other facilities. The same system operator responsible for coordination 
and control of Vepco's other generating units will also be responsible 
for the Generating Facilities, and their dispatch order will be based 
on their relative operating expenses compared with the rest of Vepco's 
generating units, and their capacity and energy will be available for 
Vepco's native load.
    Three California general partnerships (``Partnerships''), LG&E--
Westmoreland Southampton (``Southampton''), LG&E--Westmoreland 
Altavista (``Altavista'') and LG&E--Westmoreland Hopewell 
(``Hopewell'') currently own and operate the Generating Facilities. The 
Partnerships are owned by six limited partnerships and three 
corporations (``Seller''): Westpower-Franklin, L.P., a Virginia limited 
partnership, LG&E Southampton, L.P., a California limited partnership, 
LG&E Power 11 Incorporated, a California corporation, Westpower--
Altavista, L.P., a Virginia limited partnership, LG&E Altavista, L.P., 
a California limited partnership, LG&E Power 12 Incorporated, a 
California corporation, Westpower-Hopewell, L.P., a Virginia limited

[[Page 11614]]

partnership, LG&E Hopewell, L.P., a California limited partnership, and 
LG&E Power 13 Incorporated, a California corporation.
    The acquisition would be effected through a Put and Call Agreement 
dated November 22, 2000 (``Agreement'') that Vepco has entered into 
with the Sellers. Under the terms of that Agreement, Vepco grants 
Sellers an absolute right and option to require Vepco to purchase and 
accept the transfer of the Sellers' interests in the Partnerships (the 
``Put''). The Sellers may exercise the Put at any time from and after 
January 5, 2001 and before September 30, 2001. The Sellers also grant 
to Vepco an absolute and exclusive right and option to require Sellers 
to sell and transfer to the Company Sellers' interests in the 
partnerships (the ``Call''). Vepco may exercise the Call at any time on 
or after March 1, 2001 and before September 30, 2001. Through either 
the Put or the Call, Vepco may acquire the entirety of the Sellers' 
interests in the Partnerships. When Vepco acquires the Sellers' 
interests in the Partnerships, the Partnerships will dissolve as a 
matter of law, and Vepco will directly hold title to the Generation 
Facilities.
    The Sellers will receive approximately $206 million in 
consideration in exchange for their partnership interests. Vepco will 
initially finance the acquisition through commercial paper issuances, 
which at some later date, and possibly combined with other outstanding 
commercial paper may be refinanced with long-term debt under currently 
approved issuance authority. Vepco received authorization to issue 
securities in an amount sufficient to cover the costs of the 
acquisition in an order from the Virginia State Corporation Commission 
(PUF 000016, May 26, 2000), that was registered with the Commission on 
June 8, 2000 (SEC File No. 333-38510). Accordingly, all financings for 
the acquisition will be accomplished in compliance with rule 52.

Entergy Corporation, et al.  (70-8899)

    Entergy Corporation (``Entergy''), a registered holding company, 
639 Loyola Avenue, New Orleans, Louisiana 70113, and its retail public 
utility subsidiary companies, Entergy Arkansas, Inc., 425 West Capitol 
Avenue, Little Rock, Arkansas 72201, Entergy Gulf States, Inc., 350 
Pine Street, Beaumont, Texas 77701, Entergy Louisiana, Inc. 4809 
Jefferson Highway, Jefferson Louisiana 70121, Entergy Mississippi, Inc. 
(``Mississippi''), 308 East Pearl Street, Jackson, Mississippi 39201, 
Entergy New Orleans, Inc. (``New Orleans''), 1600 Perdido Building, New 
Orleans, Louisiana 70112, as well as Entergy's service company 
subsidiary, Entergy Services, Inc. (``ESI''), 639 Loyola Avenue, New 
Orleans, Louisiana 70113, System Energy Resources, Inc., a generating 
public utility subsidiary company of Entergy, Entergy Operations, Inc., 
a nuclear management public utility of Entergy, both located at 1340 
Echelon Parkway, Jackson, Mississippi 39213, and System Fuels, Inc. 
(``SFI''), a nonutility subsidiary, 350 Pine Street, Beaumont, Texas 
77701 (Mississippi, New Orleans, ESI and SFI, collectively, 
``Applicants''), have filed a post-effective amendment to their 
application-declaration under sections 6(a), 7, 9(a), 10, and 12(b) of 
the Act and rules 43, 45 and 54 under the Act.
    In Entergy Corp, et al., Holding Co. Act Release No. 26617 
(November 27, 1996) (``1996 Order''), the Commission, among other 
things, authorized Applicants to engage in short-term borrowings 
through November 30, 2001 (``Authorization Period'') in the following 
amounts: (1) $103 million for Mississippi; (2) $35 million for New 
Orleans; (3) $150 million for ESI; and (4) $95 million for SFI \1\
---------------------------------------------------------------------------

    \1\ Borrowings by ESI and SFI from Entergy and commercial banks 
are now exempt from prior Commission approval under rules 45 and 52.
---------------------------------------------------------------------------

    Applicants now request increases in their short-term borrowing 
limits by the following amounts: (1) $57 million, for a total of $160 
million for Mississippi; (2) $35 million, for a total of $60 million 
for New Orleans; (3) $50 million, for a total of $200 million for ESI; 
and (4) $105 million, for a total of $200 million for SFI.
    The short-term borrowings may take the form of borrowings from the 
Entergy intrasystem money (``Money Pool'') and in the case of 
Mississippi and New Orleans, issuance and sale of short term notes and 
commercial paper to banks and dealers in commercial paper. The terms of 
the commercial paper, bank borrowings, and Money Pool borrowings will 
remain unchanged from the 1996 Order. Applicants request the proposed 
increases because of increased fuel costs, increased capital spending 
on transmission and distribution facilities to improve system 
reliability, and other general corporate purposes.

Alliant Energy Corporation et al.  (70-9735)

    Alliant Energy Corporation (``Alliant''), a registered public 
utility holding company and its 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, 
American Transmission Company LLC (``Transco''), a Wisconsin limited 
liability transmission utility subsidiary company of WPL, and ATC 
Management Inc., a Wisconsin subsidiary corporation of WPL (``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 a post-effective 
amendment under sections 6(a), 7, 9(a), 10, and 12 of the Act and rules 
43, 44, and 54 under the Act to an application-declaration previously 
filed.
    In the original application, filed on September 25, 2000, 
Applicants sought various grants of authority, including authority to 
incur short-term debt under a credit agreement between Transco and Bank 
One, N.A., as agent (``Credit Facility'') and through the sale of 
commercial paper in an aggregate amount not to exceed $125 million 
outstanding at any time. Transco was also authorized to incur long-term 
debt consisting of debentures, bank borrowing and other forms of long-
term financing. Transco was authorized to issue short-term and long-
term debt in an aggregate amount not to exceed $400 million outstanding 
at any time. Applicants were authorized to use the proceeds from these 
financings for ``general corporate purposes, including working capital 
requirements, and to fund construction spending to undertake large 
scale capital improvements to the Wisconsin transmission system 
necessary to maintain reliability.''
    Applicants now request that the Commission expressly authorize them 
to engage in the transactions set forth in Section 3.10 of the 
Operating Agreement of American Transmission Company LLC.\2\ As 
contemplated by this provision, Applicants intend to use the proceeds 
from the issuance of the securities authorized in the Order to redeem 
Member Units from certain

[[Page 11615]]

Members as described in Section 3.10 of the Operating Agreement. 
Additionally, WPL and South Beloit request authority to sell the 
interests in Transco which Transco seeks to redeem. The redemption is 
designed to reduce the amount of Transco's equity capitalization and 
will bring Transco's common equity ratio to approximately fifty 
percent, which is more congruent with industry standards than its 
current 100% ratio.
---------------------------------------------------------------------------

    \2\ Section 3.10 of the Operating Agreement of American 
Transmission Company LLC provides that:
    (a) The Company shall use its best efforts to issue, within 90 
days following the Operations Date, long-term debt in an amount 
equal to approximately 50% of its total initial capitalization.
    (b) The net proceeds of such financing shall be distributed to 
the Members that contributed Transmission Assets in accordance with 
their respective Percentage Interests, exclusive of the Percentage 
Interests held by Members that did not contribute Transmission 
Assets, and the Corporate Manager shall revise Schedule A to reflect 
such distribution. Members Units redeemed shall be valued at the 
initial value, as set forth in the definition of Member Unit.
---------------------------------------------------------------------------

Consolidated Edison, Inc., et al.  (70-9711)

    Consolidated Edison, Inc. (``CEI''), a New York corporation and a 
public utility holding company claiming exemption from registration 
under section 3(a)(1) by rule 2 under the Act, and Consolidated Edison, 
Inc. (``New CEI''), a Delaware corporation and a wholly owned 
subsidiary of CEI, both located at 4 Irving Place, New York, New York 
10003; CEI's utility subsidiaries, Consolidated Edison Company of New 
York, Inc. (``CECONY''), 4 Irving Place, New York, New York 10003, 
Orange and Rockland Utilities, Inc. (``O&R''),\3\ Rockland Electric 
Company (``RECO''), and Pike County Light & Power Company (``Pike''), 
all located at 1 Blue Hill Plaza, Pearl River, New York 10965; CEI's 
nonutility subsidiaries, Consolidated Edison Solutions, Inc. and 
Consolidated Edison Energy, Inc., both located at 701 Westchester 
Avenue, Suite 201 West, White Plains, New York 10604, Consolidated 
Edison Communications, Inc., 132 West 31st Street, 13th Floor, New 
York, New York 10001, Consolidated Edison Development, Inc. (``CEDI''), 
CED/SCS Newington, LLC, CED Generation Holding Company, LLC, CED 
Management Company, Inc., CED Operating Company, L.P., Consolidated 
Edison Energy Massachusetts, Inc., CED-GTM, LLC, CED Ada, Inc., 
Lakewood Cogeneration, L.P., CED Lakewood, Inc., CED Generation 
Lakewood Company, all located at 111 Broadway, 16th Floor, New York, 
New York 10006; Northeast Utilities (``NU''), a registered public 
utility holding company, 107 Selden Street, Berlin, Connecticut 06037; 
NU's utility subsidiaries, Connecticut Light and Power Company 
(``CL&P''), 107 Selden Street, Berlin, Connecticut 06037, Public 
Service Company of New Hampshire (``PSNH''), North Atlantic Energy 
Corporation (``NAEC''), both located at 1000 Elm Street, Manchester, 
New Hampshire 03105, Western Massachusetts Electric Company 
(``WMECO''), 174 Brush Hill Road, West Springfield, Massachusetts 
01089, Holyoke Water Power Company (``HWP''), 1 Canal Street, Holyoke, 
Massachusetts 01040, and; NU's nonutility subsidiaries, Northeast 
Utilities Service Company (``NUSCO''), Northeast Nuclear Energy Company 
(``NNECO''), NU Enterprises, Northeast Generation Company (``NGC''), 
Northeast Generation Services Company (``NGCS''), Select Energy, Inc., 
Mode 1 Communications, Inc., The Rocky River Realty Company, Select 
Energy Portland Pipeline, Inc., and Charter Oak Energy, each located at 
107 Selden Street, Berlin, Connecticut 06037, North Atlantic Energy 
Services (``NAESCO''), 1000 Elm Street, Manchester, New Hampshire 
03105, The Quinnehtuck Company, 174 Brush Hill Road, West Springfield, 
Massachusetts 01089, HEC, Inc., and Reeds Ferry, Inc., both located at 
24 Prime Parkway, Natick, Massachusetts 01760; and Yankee Energy 
System, Inc. (``YES''),\4\ a subsidiary exempt gas utility holding 
company of NU, 107 Selden Street, Berlin, Connecticut 06037; YES's 
utility subsidiary, Yankee Gas Services Company (``Yankee Gas''), 599 
Research Parkway, Meriden, Connecticut 06405; YES's nonutility 
subsidiaries, Yankee Energy Financial Services Company and NorConn 
Properties, Inc., both located at 599 Research Parkway, Meriden, 
Connecticut 06450, Yankee Energy Services Company, 148 Norton Street, 
P.O. Box 526 Milldale, Connecticut 06467, and R.M. Services, Inc. 
(``RMS''), located at 639 Research Parkway, Meriden, Connecticut 06450 
(collectively, ``Applicants'') have filed an application-declaration 
under sections 6(a), 7, 9, 10, 12, 13, 32, and 33 of the Act and rules 
42, 43, 44, 45, 53, 54, and 80-92 under the Act.
---------------------------------------------------------------------------

    \3\ O&R is a holding company for Rockland Electric Company and 
Pike County Light & Power Company. O&R is exempt by order under 
section 3(a)(2) of the Act. See Rockland Light and Power Co., 1 
S.E.C. 354 (1936) (Rockland Light and Power Company subsequently 
became O&R); Consolidated Edison, Inc., Holding Co. Act Release No. 
27021 (May 13, 1999) (authorizing CEI's acquisition of O&R and 
continuation of O&R's exemption under section 3(a)(2)).
    \4\ By order dated January 31, 2000, Northeast Utilities, 
(Holding Co. Act Release No. 27127), the Commission approved NU's 
acquisition of YES. YES is the holding company of Yankee Gas and is 
currently claiming an exemption from registration under section 
3(a)(1) of the Act by rule 2.
---------------------------------------------------------------------------

I. Background and Summary

    CEI and NU have previously filed an application-declaration 
(``Merger Application'') \5\ seeking approvals related to the proposed 
merger of CEI and NU (``Merger''). CEI, NU, New CEI, and N Acquisition 
LLC, a Massachusetts limited liability company, which is directly and 
indirectly owned by New CEI, have entered into an amended and restated 
plan of merger dated as of January 11, 2000 (``Merger Agreement''). 
Under the Merger Agreement, CEI will be merged with and into New CEI, 
with New CEI being the surviving entity (``New CEI Merger''), and NU 
will be merged with N Acquisition, with NU being the surviving entity 
(``NU Merger''). Upon consummation of the Merger, New CEI will own all 
of the assets of CEI and NU will become a wholly owned subsidiary of 
New CEI. Applicants now request authority with respect to financing in 
connection with the Merger, ongoing financings, and other matters 
pertaining to New CEI and its subsidiaries after giving effect to the 
Merger.
---------------------------------------------------------------------------

    \5\ The Commission issued a notice of the Merger Application on 
August 11, 2000 (``Merger Notice''). See Consolidated Edison, Inc. 
and Northeast Utilities, (Holding Co. Act Release No. 27211).
---------------------------------------------------------------------------

    Upon completion of the Merger, New CEI will wholly own, directly or 
indirectly, interests in the following twelve public utility companies: 
(1) CECONY; (2) O&R (3) RECO; (4) Pike; (5) CL&P (6) WMECO; (7) PSNH; 
(8) NAEC; (9) HWP; (10) Holyoke Power and Electric Company; (11) Yankee 
Gas; and (12) NNECO (collectively, ``Utility Subsidiaries'').
    As explained more fully in the Merger Application, New CEI has 
proposed to retain O&R as a subsidiary exempt holding company, NU as a 
subsidiary registered holding company, and YES as a subsidiary of NU 
and as an exempt public utility holding company (collectively, 
``Intermediate Holding Companies'').
    Upon completion of the Merger, New CEI will also own interests in 
four companies owning nuclear power plants: Maine Yankee Atomic Power 
Co. (``Maine Yankee''), Yankee Atomic Electric Company, (``Yankee 
Atomic,'') Connecticut Yankee Atomic Power Company (``Connecticut 
Yankee''), and Connecticut and Vermont Yankee Nuclear Power Company 
(``Connecticut and Vermont Yankee''). Maine Yankee, Yankee Atomic and 
Connecticut Yankee have permanently shut down their plants. Connecticut 
and Vermont Yankee has contracted to sell its nuclear power plant.
    Additionally, upon completion of the Merger, New CEI will own, 
directly or indirectly, approximately 50 other active nonutility 
subsidiary companies (``Nonutility Subsidiaries'').\6\
---------------------------------------------------------------------------

    \6\ A listing and description of the Nonutility Subsidiaries may 
be found in the Merger Notice.
---------------------------------------------------------------------------

    Collectively, the Utility Subsidiaries, the Intermediate Holding 
Companies and the Nonutility Subsidiaries are

[[Page 11616]]

referred to as the ``Subsidiaries.'' The term ``Subsidiaries'' shall 
also include entities that become subsidiaries of New CEI after the 
consummation of the Merger.
    In summary, Applicants request authority for a period through 
September 30, 2004 (``Authorization Period''), unless otherwise noted, 
for: (1) New CEI to issue unsecured debt and hybrid debt securities 
(``Acquisition Debt'') and to refund and replace the Acquisition Debt; 
(2) New CEI to issue New CEI stock to NU shareholders; (3) Applicants 
to maintain, amend, and/or refinance existing financing arrangements; 
(4) New CEI to engage in external financing; (5) New CEI and NU to 
engage in guaranties of other Nonutility Subsidiaries; (6) the Utility 
Subsidiaries and the Intermediate Holding Companies to issue short-term 
debt; (7) the Nonutilities to issue debt and equity securities; (8) New 
CEI to acquire financing subsidiaries; (9) New CEI and the Subsidiaries 
to establish a New CEI system money pool (``Money Pool''); (10) New CEI 
to consolidate or otherwise reorganize one or more of the Nonutility 
Subsidiaries; (11) the Nonutility Subsidiaries to pay dividends to each 
subsidiaries' direct parent; (12) New CEI to form two subsidiary 
service companies; (13) certain Subsidiaries to provide sales and 
services to certain other Subsidiaries under an exemption from the at 
cost requirements of section 13(b); (14) Nonutility Subsidiaries to 
engage in certain categories of energy-related activities outside the 
United States; (15) New CEI and certain of the Subsidiaries to enter 
into hedging and derivative transaction for existing and anticipated 
debt; and (16) the allocation of consolidated income tax liabilities 
among New CEI and the Subsidiaries.
    NU received Commission authorization to issue up to $400 million in 
short-term debt through June 30, 2002 (``NU Short-term Debt'').\7\ New 
CEI and NU request authorization for NU to continue being able to issue 
the NU Short-term Debt from time to time through the Authorization 
Period. NU also received Commission authorization to issue up to $275 
million in short- or long-term debt for the purpose of acquiring YES 
(the ``YES Acquisition Debt'') through June 30, 2002.\8\ New CEI and NU 
request authorization for NU to amend, renew, extend, and/or replace 
the YES Acquisition Debt through the Authorization Period.
---------------------------------------------------------------------------

    \7\ See Northeast Utilities, et al., Holding Co. Act Release No. 
27328 (Dec. 28, 2000).
    \8\ See Northeast Utilities, et al., Holding Co. Act Release No. 
27127 (Jan. 31, 2000).
---------------------------------------------------------------------------

    In addition, NU intends to continue to provide guaranties and other 
forms of credit support with respect to the securities or other 
obligations (``NU Guaranties'') of the nonutility subsidiaries of NU in 
an aggregate amount not to exceed $500 million, as authorized through 
December 31, 2002.\9\ NU seeks authority to continue to be able to 
issue NU Guaranties up to such amount through the Authorization Period.
---------------------------------------------------------------------------

    \9\ See Northeast Utilities, et al., Holding Co. Act Release No. 
27093 (Oct. 21, 1999).
---------------------------------------------------------------------------

    New CEI requests authority to issue and sell from time to time 
preferred stock (``Preferred Stock'') of up to $750 million. New CEI 
also requests authority to tissue secured or unsecured indebtedness 
having maturities of one year or less (``Short-term Debt''), and 
secured or unsecured long-term debt (``Debentures'') with an aggregate 
principal amount at any time outstanding (including debt incurred to 
acquire NU, ``Acquisition Debt'') of not more than $4.75 billion. New 
CEI requests authority to issue Short-term Debt and Debentures in place 
of NU's authorized Short-term Debt and YES Acquisition Debt. If New CEI 
substitutes the NU Short-term Debt and the YES Acquisition Debt with 
New CEI issuances, then New CEI's aggregate debt limit will increase to 
up to $5.245 billion (``New CEI Debt Limit''). Applicants state that 
any New CEI short- or long-term debt that will be secured debt will not 
be secured by shares of stock or other securities or property of the 
Utility Subsidiaries.
    New CEI also requests authority to provide guaranties and other 
forms of credit support (``New CEI Guaranties'') with respect to the 
securities or other obligations of its Nonutility Subsidiaries in an 
aggregate principal amount not to exceed $2.5 billion at any one time 
outstanding. New CEI also requests authority to undertake an additional 
$500 million of guaranties so that it may assume any of the NU 
Guaranties it deems necessary and appropriate to acquire. As a result, 
the New CEI Guaranties could aggregate up to $3.0 billion.
    The Utility Subsidiaries and Intermediate Holding Companies request 
authority to issue, sell and have outstanding at any time Short-term 
Debt in the following aggregate principal amounts: CECONY, $800 
million; O&R, $113 million; Pike, $2 million; RECO, $60 million; CL&P, 
$375 million; WMECO, $250 million; PSNH, $225 million; NAEC, $260 
million; Yankee Gas, $100 million; HWP, $5 million; NNECO, $75 million; 
NU, $400 million; and YES, $50 million.
    Applicants propose that the requested financings will be subject to 
the limits set forth in the paragraphs above and the following 
limitations (collectively, ``Financing Conditions''), unless otherwise 
indicated: (1) The cost of money relative to the requested Short-term 
financing shall not exceed 500 basis points over LIBOR for comparable 
short term or variable rate debt; (2) the effective cost of money on 
long-term debt will not exceed at issuance 500 basis points over 
comparable term U.S. Treasury Securities; (3) the maturity of the debt 
will not exceed 50 years from date of issuance; (4) New CEI will only 
issue long-term debt that is at the investment grade level; (5) New 
CEI's common stock equity will be at least 30% of its consolidated 
capitalization; (6) the common stock equity of NU and each of the 
Utility Subsidiaries will be at least 30% of the total capitalization, 
except that under certain circumstances set forth in Northeast 
Utilities, et al., Holding Co. Act Release No. 27147 (March 7, 2000), 
NU's consolidated common equity ratio, and the common equity ratios of 
the NU's utility subsidiaries may decline below 30%; (7) NU's 
consolidated common equity ratio will be restored above 30% prior to 
December 31, 2002; and (8) the underwriting fees, commissions, or other 
similar remuneration paid in connection with the non-competitive issue, 
sale or distribution of a security under authority granted to this 
application-declaration will not exceed 5% of the principal amount of 
the financing.
    The proceeds from the financings will be used for general corporate 
purposes, including: (1) The refunding of the Acquisition Debt and the 
YES Acquisition Debt; (2) the financing, in part, of investments made 
by and capital expenditures of New CEI and its Subsidiaries, including, 
the funding of future investments in exempt wholesale generators 
(``EWGs''), foreign utility companies (``FUCOs''), subsidiaries that 
engage in nonutility businesses permitted by rule 58 under the Act 
(``Rule 58 Subsidiaries''), and exempt telecommunications companies 
(``ETCs''); (3) the repayment, redemption, refunding or purchase by New 
CEI or any Subsidiary of any of its own securities by non-affiliates 
under rule 42; and (4) financing working capital requirements of New 
CEI and its Subsidiaries.

[[Page 11617]]

II. Merger Financing and Outstanding CEI Financing

A. Securities Issued in Connection With the Merger

    New CEI is authorized under its Amended and Restated Certificate of 
Incorporation to issue 510,000,000 shares consisting of 500,000,000 
shares of common stock, par value $.10 per share (``Common Stock'') and 
10,000,000 shares of preferred stock, par value $.01 per share 
(``Preferred Stock''). The Merger Agreement provides that each CEI 
common share outstanding immediately prior to closing of the Merger 
will, at closing, be converted into one share of New CEI common 
stock.\10\ NU common shareholders may elect to receive, in connection 
with the Merger, a fraction of a share of New CEI stock or cash.\11\ 
The election for the stock or cash consideration will be subject to 
allocation procedures. Accordingly, New CEI will incur debt to finance 
cash payments to NU shareholders who elect the cash consideration.
---------------------------------------------------------------------------

    \10\ Any CEI common shares held by CEI as treasury shares or 
owned by New CEI will be canceled without payment for those shares.
    \11\ See the Merger Application and its notice (Holding Co. Act 
Release No. 27211) for a more detailed description of the exchange 
ratio.
---------------------------------------------------------------------------

    New CEI anticipates that the cash portion of the consideration 
given for the NU shares will initially be financed through New CEI's 
issuance of approximately $2.2 billion of unsecured debt or a mix of 
unsecured debt and hybrid debt securities, the Acquisition Debt, or a 
combination of the Acquisition Debt and Preferred Stock and cash on 
hand. The hybrid securities, which are considered debt for financial 
statement purposes, would be structured to have characteristics of both 
debt and equity and may have maturities ranging up to 50 years. New CEI 
requests authorization to issue Acquisition Debt from time to time 
through the Authorization Period to satisfy the cash portion of the 
consideration in connection with the NU Merger and to refund and 
replace any and all Acquisition Debt initially issued. The application 
states that the Acquisition Debt may include short or long term notes, 
debentures, medium-term notes and hybrid securities and/or borrowings 
from banks and other financial institutions. Any long-term debt 
security will have the designations, aggregate principal amounts, 
maturities, interest rate(s) or methods of determining the same, terms 
of payment of interest, redemption provisions, non-refunding 
provisions, sinking fund terms and other terms and conditions that will 
be established by negotiation or competitive bidding. The proposed 
issuance and/or refunding and replacing the Acquisition Debt will be 
subject to the Financing Conditions.
    New CEI also requests authority to issue up to 60 million shares of 
its Common Stock to NU shareholders to satisfy the stock portion of the 
Merger consideration.

B. Other Outstanding Securities and Obligations of CEI

    Applicants request authorization, to the extent not exempt under 
rule 52, to maintain in effect through the Authorization Period 
existing financing arrangements of CEI and the Subsidiaries as of the 
date of the completion of the Merger,\12\ as well as any additional 
financing arrangements entered into before completion of the 
Merger,\13\ and to enter into Refinancing. Any Refinancing that occurs 
after completion of the Merger and that is subject to Commission 
approval under the Act will comply with the Financing Conditions.
---------------------------------------------------------------------------

    \12\ These are described in Appendix A to the notice.
    \13\ Within 90 days following completion of the Merger, New CEI 
will, under rule 24, notify the Commission of all financing 
arrangements that CEI entered into prior to the Merger, that will 
remain in effect upon closing of the Merger and that New CEI will 
assume.
---------------------------------------------------------------------------

III. Requested and Other Transactions After the Merger

A. Preferred Stock and Long-Term Debt

    New CEI requests authority to issue and sell from time to time up 
to $750 million of Preferred Stock subject to the Financing Conditions.
    New CEI requests authority to issue and sell from time to time 
Debentures, subject to the Financing Conditions.

B. Short-Term Debt

    New CEI requests authority to issue and sell from time to time 
unsecured indebtedness having maturities of one year or less (``Short-
term Debt''), subject to the Financing Conditions.

C. Common Stock

    New CEI proposes during the Authorization Period to issue and/or 
acquire up to 50 million shares \14\ of new CEI Common Stock under New 
CEI's dividend reinvestment and cash payment plan, certain incentive 
compensation plans and certain other employee benefit plans and 
employment or other agreements, as described below.
---------------------------------------------------------------------------

    \14\ New CEI requests that this number be adjusted to reflect 
any stock split.
---------------------------------------------------------------------------

    Both CEI and NU also currently maintain dividend reinvestment plans 
with a direct stock purchase feature. New CEI will have a similar plan 
(``New CEI DRIP''). Participants in the current CEI and NU plans will 
be eligible to become participants in the New CEI DRIP.
    CEI and NU currently maintain employee stock option plans. NU also 
maintains an incentive compensation plan under which stock options and 
restricted shares may be granted. Upon completion of the Merger, New 
CEI will assume the CEI and NU stock option plans and each outstanding 
CEI and NU stock option issued under the various CEI and NU plans. It 
is currently anticipated that prior to the Merger, CEI will adjust its 
employee stock options to provide that the options will constitute 
options to acquire shares of New CEI common stock, on the same terms 
and conditions as apply to the CEI stock options. Prior to the Merger 
NU will adjust the terms of all outstanding NU employee stock options 
to provide that the options will constitute options to acquire, on the 
same terms and conditions as apply to the NU employee stock options, 
the same number of shares of New CEI common stock (rounded down to the 
nearest whole share) as the holder of the option would have received in 
the NU Merger had the holder exercised the option in full immediately 
prior to the NU Merger. The amount of the exercise price per share of 
New CEI common stock (rounded to the nearest cent) under any option 
will be equal to the aggregate amount of the exercise price of the NU 
common shares subject to the NU option divided by the total number of 
shares of New CEI common stock to be subject to the option.
    Both CEI and NU maintain various stock plans for employees and 
directors, including investments in company stock through the 
employee's 401(k) plan. New CEI has not yet decided what specific plans 
will be maintained for employees or directors subsequent to the Merger.
    In addition, CEI, prior to the Merger, or New CEI, subsequent to 
the Merger, may enter into employment or other agreements with certain 
of its officers and employees that may provide for grants of stock 
options and/or restricted stock or units, which would be satisfied 
through open market purchases.

D. Guaranties

    In addition to New CEI's request to maintain in place existing 
guaranties at the time of the Merger,\15\ New CEI requests 
authorization for the period

[[Page 11618]]

from and after the Merger through the Authorization Period to provide 
additional guaranties or other credit support for the Nonutility 
Subsidiaries (``New CEI Guaranties'') within the parameters of the 
Financing Conditions.
---------------------------------------------------------------------------

    \15\ See Appendix A to this notice for a discussion of these 
guarantees.
---------------------------------------------------------------------------

E. Utility Subsidiary and Intermediate Holding Companies Financing

    The Utility Subsidiaries and Intermediate Holding Companies request 
authority to issue, sell and have outstanding at any time Short-term 
Debt in the following aggregate principal amounts: CECONY, $800 
million; O&R, $113 million; Pike, $2 million; RECO, $60 million; CL&P, 
$375 million; WMECO, $250 million; PSNH, $225 million; NAEC, $260 
million; Yankee Gas, $100 million; HWP, $5 million; NNECO, $75 million; 
NU, $400 million; and YES, $50 million (collectively, ``Utility Short-
term Debt Limits''), subject to the Financing Conditions.\16\
---------------------------------------------------------------------------

    \16\ PSNH and NAEC only seek short-term debt authorization for 
amounts up to 10% of each company's respective net fixed plant. 
Short-term debt in excess of such amount requires approval of the 
New Hampshire Public Utility Commission (``NHPUC'').
---------------------------------------------------------------------------

    The parent of a Financing Subsidiary may, if required, guarantee or 
enter into support or expense agreements in respect of the obligations 
of its Financing Subsidiaries. Any amounts issued by a Financing 
Subsidiary to third parties will be included in the proposed financing 
limit, if any, applicable to its immediate parent. However, if a parent 
guarantees these issuances by the Financing Subsidiary, the guaranties 
would not be counted against the proposed limits on New CEI Guaranties 
of NU Guaranties. In other cases, in which the parent company is not 
authorized to issue similar types of securities, the amount of any 
guaranty not exempt under rules 45(b)(7) and 52 that the parent company 
enters into with respect to securities that its Financing Subsidiary 
issues will be counted against the limitation on New CEI Guaranties of 
NU Guaranties.

G. New CEI Money Pool

    New CEI and the Subsidiaries (``Pool Participants'') \17\ request 
authorization to establish a Money Pool. Applicants propose that the 
Money Pool will principally consist of surplus funds in the treasury of 
Pool Participants, including New CEI (``Internal Funds''). A Pool 
Participant's chief financial officer or treasurer, or a designee, will 
determine on the basis of cash flow projections and other relevant 
factors, whether a Pool Participant at any time has surplus funds to 
lend to the Money Pool. Borrowings from the Money Pool would also 
require the authorization of the borrower's chief financial officer or 
treasurer, or a designee. The funds available to the Money Pool will be 
loaned on a short-term basis to those Subsidiaries, other than any 
public utility holding company, EWG, FUCO, or ETC (collectively, 
``Nonborrowing Companies''). No loans or borrowings through the Money 
Pool would be made to the Nonborrowing Companies. Under Massachusetts 
law, WMECO may not invest in its affiliates through the money pool 
without specific Massachusetts Department of Telecommunication and 
Energy approval. The Applicants request that the Commission authorize 
the participation of WMECO in the Money Pool, but reserve jurisdiction 
over any contributions of funds by WMECO to the Money Pool, pending 
completion of the record.
---------------------------------------------------------------------------

    \17\ Consolidated Edison, Inc. Service Company and any FUCO 
subsidiary of New CEI will not be participants in the Money Pool.
---------------------------------------------------------------------------

    Applicants propose that Consolidated Edison, Inc. Service Company 
(``CEISCO'') administer and maintain the Money Pool at cost and under 
the direction of an officer in the CEISCO Treasury Organization.
    In addition to surplus funds, New CEI proposes to borrow funds 
through the issuance of short-term notes, selling of commercial paper, 
or through other borrowings (collectively, ``External Funds'') as a 
source of funds for making loans or open account advances to certain of 
its Subsidiaries through the Money Pool. These borrowings will be 
subject to the proposed New CEI Short-term debt limits. The Pool 
Participants, excluding the Nonborrowing Companies, are the potential 
recipients of the open account advances.
    The aggregate outstanding amount of borrowings that each Utility 
subsidiary may incur will count against the proposed Utility Short-term 
Debt Limits. Applicants request that, to the extent borrowings from the 
Money Pool by the Nonutility Subsidiaries are not exempt under rule 52, 
there be no limitation on the borrowings of the Nonutility 
Subsidiaries.
    Applicants state that they anticipate that the short-term borrowing 
requirements of the Subsidiaries (other than the Nonborrowing 
Companies) will be met first with the proceeds of borrowings available 
through the Money Pool, and thereafter, with the proceeds of external 
short-term borrowings. Pool Participants that do not have access to the 
commercial paper market will have priority over other Money Pool 
borrowers. No Pool Participant would be required to borrow through the 
Money Pool if it is determined that it could effect a borrowing at a 
lower cost directly through banks or through the sale of its own 
commercial paper. All borrowings from and contributions to the Money 
Pool, including the open account advances, will be documented and will 
be evidenced on the books of each Participant that is borrowing from or 
contributing surplus funds to the Money Pool. Any Participant 
contributing funds to the Money Pool may withdraw those funds at any 
time without notice to satisfy its daily need for funds. Loans made by 
the Pool will be open account advances for periods of less than twelve 
months, although the agent may receive upon demand a promissory note 
evidencing the transaction. All loans made by the Money Pool from 
surplus funds are payable on demand by the agent. The interest rate 
applicable to the loans of External Funds would be equal to New CEI's 
cost for those External Funds. These loans cannot be prepaid unless New 
CEI is made whole for any additional costs that may be incurred because 
of such prepayment. Applicants propose that New CEI be fully reimbursed 
for all costs that it incurs in relation to loans made to the other 
Pool Participants.
    Funds not required by the Money Pool to make loans (with the 
exception of funds not required by the Money Pool's liquidity 
requirements) would ordinarily be invested in one of more short-term 
investments, including: (1) Interest-bearing accounts with banks; (2) 
obligations issued or guaranteed by the U.S. government and/or its 
agencies and instrumentalities, including obligations under repurchase 
agreements; (3) obligations issued or guaranteed by any state or 
political subdivision of the state, provide the obligations are not 
rated less than ``A,'' ``A-1'' or ``P-1'' or their equivalent by a 
nationally recognized rating agency; (4) commercial paper rated not 
less than ``A-1'' or ``P-1'' or their equivalent by a nationally 
recognized rating agency; (5) money market funds; (6) bank certificates 
of deposit; (7) Eurodollar funds; or (8) such other investments as are 
permitted by section 9(c) of the Act and rule 40 under the Act, and, 
with respect to contributions from WMECO, approved by the Massachusetts 
Department of Telecommunications and Energy. Applicants proposed that 
CEISCO, as agent for the Money Pool, will invest the funds not required 
by the Money Pool to make loans as described above and allocate the 
earnings on the investments among the Pool Participants that provided 
the excess funds on a pro rata

[[Page 11619]]

basis, according to the amount of funds a subsidiary provided.

H. Consolidation and Reorganization of Nonutility Subsidiaries

    New CEI's nonutility businesses will be conducted principally 
through Nonutility Holding Company, a new wholly owned subsidiary of 
New CEI. The Nonutility Subsidiaries are principally involved in 
energy-related and telecommunications businesses.
    New CEI requests authorization under the Act to consolidate or 
otherwise reorganize, under one or more new or existing subsidiaries, 
New CEI's ownership interests in one or more Nonutility Subsidiaries 
not currently owned, directly or indirectly, by a utility company, or 
sell the equity securities of one or more Nonutility Subsidiaries to a 
new or existing subsidiary. Alternatively, a Nonutility Subsidiary 
could dividend the securities of one or more Nonutility Subsidiaries to 
a new or existing subsidiary. To the extent that such transactions are 
not exempt under the Act or otherwise authorized or permitted by rule 
under the Act, New CEI requests authorization to consolidate or 
otherwise reorganize, under one or more new or existing subsidiaries, 
New CEI's ownership interests in one or more of Nonutility Subsidiaries 
that are not currently owned directly or indirectly, by a utility 
company, the acquisition of the securities of which is exempt from 
Commission approval under the Act.

I. Payment of Dividends

    New CEI requests authorization on behalf of CEI's current and New 
CEI's future nonexempt Nonutility Subsidiaries (other than Nonutility 
Subsidiaries that are subsidiaries of public utility companies) to pay 
dividends to each subsidiaries' direct parent with respect to the 
securities of the companies, from time to time through the 
Authorization Period, out of capital and unearned surplus.
    NU has already been granted authority for certain of its utilities 
and nonutilities to pay dividends out of capital or unearned 
surplus.\18\ The Applicants request that this authority remain in 
effect after the Merger, but only through the Authorization Period.
---------------------------------------------------------------------------

    \18\ See Northeast Utilities, et al., Holding Co. Act Release 
No. 27147 (March 7, 2000).
---------------------------------------------------------------------------

J. Establishment of Service Companies; Service Agreements; Sales and 
Services

    New CEI intends to form two subsidiary service companies to perform 
services for the companies in the New CEI System.\19\ Subsequent to the 
Merger, New CEI seeks approval for NU to transfer to New CEI, through 
sale at book value, all the stock of NUSCO, which will be renamed 
CEISCO. Additionally, prior to the closing of the Merger, New CEI will 
establish one new subsidiary service company, Nonutility ServCo. CEISCO 
will be a direct subsidiary of New CEI and Nonutility ServCo will be a 
direct subsidiary of the proposed Nonutility Holding Company. 
Initially, Nonutility Holding Company will issue 1000 shares of common 
stock, at no or nominal par value, all of which will be subscribed to 
by New CEI at a price of $1 per share. CEISCO and Nonutility ServCo 
will, subsequent to the Merger, assume from CECONY, O&R and NUSCO, all 
of the service functions currently performed for affiliates by CECONY, 
O&R, and NUSCO.\20\ Applicants request, however, a transition period of 
fifteen months from the date of the order issued in this filing to 
study and effectuate these changes.
---------------------------------------------------------------------------

    \19\ Applicants state that New CEI is setting up two service 
companies in accordance with the order of the NHPUC. See NHPUC Order 
No. 23,594, Docket No. DE 00-009, Dec. 6, 2000, slip op. at 117.
    \20\ In addition, New CEI requests that the Commission find that 
the application-declaration is deemed to constitute a filing by 
CEISCO and Nonutility ServCo on Form U-13-1 for purposes of rule 88 
under the Act, or, alternatively, that the filing on Form U-13-1 is 
not necessary under the Act.
---------------------------------------------------------------------------

    Upon closing of the Merger, New CEI and the Subsidiaries (including 
the Nonutility Subsidiaries) propose to enter into a new single system 
wide Service Agreement with CEISCO. The Nonutility Subsidiaries also 
propose to enter into a Nonutility Service Agreement with Nonutility 
ServCo.
    CEISCO will provide a variety of administrative, management, and 
support services. The Applicants state that CEISCO's accounting and 
cost allocation methods will comply with Commission standards for 
service companies in a registered holding company system, and that its 
billing system will follow the Commission's Uniform System of Accounts 
for Mutual Service Companies and Subsidiary Service Companies. 
Additionally, charges for all services provided by CEISCO to affiliated 
companies will be performed on an ``at cost'' basis in accordance with 
rules 90 and 91.
    Nonutility ServCo will provide specified competitive services to 
the Nonutility Subsidiaries, which will include: employee recruiting, 
engineering, hedging and financial derivatives and arbitrage services, 
electric purchasing for resale, purchasing of electric transmission, 
system operations and marketing.
    New CEI also seeks approval for O&R to provide services at cost to 
Pike and RECO.
    Nonutility ServCo and the Nonutility Subsidiaries propose to 
provide services to each other at cost or fair market prices. 
Therefore, they request an exemption from section 13(b) of the Act from 
the ``at cost'' requirements of Rules 90 and 91 under the Act. 
Accordingly, the Nonutility Subsidiaries \21\ request authorization to 
provide services to each other at other than cost, provided that no 
services will be rendered to an associate power project unless one or 
more of the following conditions is satisfied: (1) The project is a 
FUCO or an EWG which derives no part of its income, directly or 
indirectly, from the generation, transmission, or distribution of 
electric energy for sale within the United States; (2) the project is 
an EWG which sells electricity at market-based rates which have been 
approved by the Federal Energy Regulatory Commission (``FERC''), 
provided that the purchaser is not one of the Utility Subsidiaries; (3) 
the project is a ``qualifying facility'' (``QF'') within the meaning of 
the Public Utility Regulatory Policies Act of 1978, as amended 
(``PURPA'') that sells electricity exclusively (a) at rates negotiated 
at arms'-length to one or more industrial or commercial customers 
purchasing such electricity for their own use and not for resale, and/
or (b) to an electric utility company (other than a Utility Subsidiary) 
at the purchaser's ``avoided cost'' as determined in accordance with 
the regulations under PURPA; (4) the project is a domestic EWG or QF 
that sells electricity at rates based upon its cost of service, as 
approved by FERC or any state public utility commission having 
jurisdiction, providing that the purchaser of the electricity is not 
one of the Utility Subsidiaries; or (5) the project is a Rule 58 
Subsidiary or any other Nonutility Subsidiary that (a) is partially-
owned by New CEI, provided that the ultimate purchaser of such goods or 
services is not a Utility Subsidiary (or any other entity that New CEI 
may form whose activities and operations are primarily related to the 
provisions of goods and services to the Utility Subsidiaries), (b) is 
engaged solely in the business of developing, owning, operating and/or 
providing services or goods to Nonutility Subsidiaries described in 
clauses (1) through (4) immediately above, or (c) does not derive, 
directly or indirectly, any material part of its income from

[[Page 11620]]

sources within the United States and is not a public-utility company 
operating within the United States.
---------------------------------------------------------------------------

    \21\ This request does not include NGSC's proposal to provide 
services to NGC at other than cost, which is a subject of S.E.C. 
file No. 70-9543.
---------------------------------------------------------------------------

K. Activities of Rule 58 Subsidiaries Outside the United States

    New CEI, on behalf of any current or future Nonutility 
Subsidiaries, requests authority to engage in the type of business 
activities listed in rule 58 outside of the United States. These 
activities would include: (1) The brokering and marketing of 
electricity, natural gas and other energy commodities (``Energy 
Marketing''); (2) energy management services (``Energy Management 
Services'') including the marketing, sale, installation, operation and 
maintenance of various products and services related to energy 
management and demand-side management; and (3) engineering, consulting 
and other technical support services (``Consulting Serivces'') with 
respect to energy-related businesses and for individuals.
    New CEI requests that the Commission: (1) Authorize Nonutility 
Subsidiaries to engage in Energy Marketing Activities in Canada and 
reserve jurisdiction over Energy Marketing activities outside the 
United States and Canada, pending completion of the record; and (2) 
authorize Nonutility Subsidiaries to provide Energy Management Services 
and Consulting Services anywhere outside the United States.

L. Hedging and Derivative Transactions

    New CEI, and to the extent not exempt under rule 52, the 
Subsidiaries, request authorization to enter into interest rate hedging 
transactions with respect to outstanding indebtedness (``Interest Rate 
Hedges''), subject to certain limitations and restrictions, in order to 
reduce or manage interest rate costs. Interest Rate Hedges would only 
be entered into with counterparties (``Approved Counterparties'') whose 
senior debt ratings, or the senior debt ratings of the parent companies 
of the counterparties, as published by Standard and Poor's, are equal 
to or greater than BBB-, or an equivalent rating from Moody's Investors 
Service, Fitch Investor Service or Duff and Phelps.
    Interest Rate Hedges will involve the use of financial instruments 
commonly used in today's capital markets, such as interest rate swaps, 
caps, collars, floors, and structured notes (i.e., a debt instrument in 
which the principal and/or interest payments are indirectly linked to 
the value of an underlying asset or index), or transactions involving 
the purchase or sale, including short sales, of U.S. Treasury 
obligations.
    In addition, New CEI and the Subsidiaries request authorization to 
enter into interest rate derivative transactions with respect to 
anticipated debt offerings (``Anticipatory Derivatives''), subject to 
certain limitations and restrictions. Anticipatory Derivatives would 
only be entered into with Approved Counterparties, and would be 
utilized 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 not limited to structured notes, caps and collars, appropriate for 
the Anticipatory Derivatives.

M. Tax Allocation Agreement

    Applicants request approval of an agreement for the allocation of 
consolidated tax among New CEI and the Subsidiaries (``Tax Allocation 
Agreement''). Applicants state that they require this approval because 
the proposed Tax Allocation Agreement may provide for the retention by 
New CEI of certain payments for tax losses incurred from time to time, 
rather than the allocation of such losses to Subsidiaries without 
payment as would otherwise be required by rule 45(c)(5). As a result of 
the Merger, New CEI will be creating tax credits that are non-recourse 
to the Subsidiaries. New CEI believes that it should retain the 
benefits of those tax credits. Applicants request that the Commission 
reserve jurisdiction over the Tax Allocation Agreement, pending 
completion of the record.

Appendix A

Outstanding Financing

CEI Debt and Guaranties

    CEI currently maintains two revolving credit agreements. The 
first is a $175 million facility with seven major banks, which 
terminates on December 3, 2003. The second is a $175 million 
facility with thirteen major banks, which terminates on November 28, 
2001 (collectively, ``CEI Credit Facility''). CEI may borrow 
directly against these facilities or use them to support the 
issuance of commercial paper, which is sold through dealers to the 
market, at a discount from par.
    In addition to the financing facilities described above, CEI 
also currently supports the operations of its nonutility 
subsidiaries through capital contributions, guarantees and other 
support arrangements. As of December 31, 2000, CEI had approximately 
$700 million of guaranties, which guarantee payment and performance 
obligations of the Nonutility Subsidiaries under various agreements.
    CEI may also borrow funds from Hawkeye Funding (``Hawkeye''). 
Hawkeye is a limited partnership and is the lessor on a synthetic 
lease of a generating station which is currently under construction. 
This station will be leased to Newington, LLC (``Newington''), an 
indirect subsidiary of CEI.

Intermediate Holding Companies and the Utility Subsidiaries

    CECONY maintains two revolving credit agreements. The first is a 
$375 million facility with eight major banks that terminates 
December 23, 2002. The second is a $125 million facility with 
thirteen major banks that terminates on November 28, 2001. O&R 
maintains a $100 million facility with thirteen major banks that 
terminates on November 28, 2001.\22\ CECONY and O&R may borrow 
directly against these facilities or may use them to support the 
issuance of commercial paper, which is sold through dealers to the 
market, at discount from par. These facilities do not include 
letters of credit supporting CECONY and O&R tax-exempt debt.
---------------------------------------------------------------------------

    \22\ Applicants state that they believe that this credit 
facility will be extended or renegotiated as well.
---------------------------------------------------------------------------

    NU maintains a short-term Credit Agreement dated as of November 
17, 2000 (``NU Credit Agreement''), among NU and several banks with 
the United Bank of California as Administrative Agent. The NU Credit 
Agreement provides a credit facility of up to $400 million comprised 
of borrowing commitments and letter of credit commitments. The NU 
Credit Agreement has a termination date of November 16, 2001.
    NU also maintains a short-term credit facility in the amount of 
$266 million for the YES Acquisition Debt, which terminates February 
28, 2001.
    Also outstanding is a short-term Credit Agreement dated as of 
November 17, 2000 (``Regulated Credit

[[Page 11621]]

Agreement''), among CL&P and WMECO on the one hand and several banks 
with Citibank, N.A. as Administrative Agent on the other. The 
Regulated Credit Agreement provides a credit facility of up to $500 
million comprised of borrowing commitments. The Regulated Credit 
Agreement has a termination date of November 16, 2001.
    On November 9, 2000, NAEC entered into an unsecured $200 million 
364-day Term Credit Agreement with four banks, which was approved by 
the NHPUC.
    Yankee Gas currently has a revolving line of credit of $60 
million, which terminates November 16, 2001.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-4651 Filed 2-23-01; 8:45 am]
BILLING CODE 8010-01-M