[Federal Register Volume 66, Number 42 (Friday, March 2, 2001)]
[Notices]
[Pages 13104-13108]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-5110]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27349]


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

February 23, 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 20, 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 20, 2001, the application(s) and/or 
declaration(s), as filed or as amended, may be granted and/or permitted 
to become effective.

DTE Energy Company, et al. (70-9589)

    DTE Energy Company (``DTE''), a Michigan public utility holding 
company that claims exemption, under section 3(a)(1) of the Act by rule 
2, and its inactive, wholly owned subsidiary, DTE Enterprises, Inc. 
(``Merger Sub'' and with DTE, ``Applicants''), both located at 2000 
Second Avenue, Detroit, Michigan 48226-1279, have filed an application 
under sections 3(a)(1), 9(a)(2), and 10 of the Act.
    DTE is engaged, through subsidiaries, in various utility and 
nonutility

[[Page 13105]]

activities.\1\ Its common stock is listed on the New York Stock 
Exchange (``NYSE'') and, as of October 31, 2000, 142,651,172 of its 
shares were outstanding. For the twelve-month period ending on 
September 30, 2000, DTE had consolidated operating revenues of $5.27 
billion, approximately $4.04 billion of which were attributable to 
utility activities. Applicants state that the total value of the assets 
of DTE and its subsidiaries as of September 30, 2000 was approximately 
$12.3 billion, of which approximately $7.3 billion consisted of the net 
value of electric plant and equipment. Applicants state that, as of 
September 30, 2000, the Detroit Edison Company (``Detroit Edison''), 
DTE's wholly owned electric public utility subsidiary company, had 
8,608 employees and the nonutility subsidiaries of DTE had 429 
employees.\2\
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    \1\ DTE is engaged in many activities and projects, including 
fuel procurement, rail car maintenance and repair, electricity 
generation (by exempt wholesale generators), landfill gas projects, 
real estate, and power marketing. DTE's utility activities are 
described below.
    \2\ By order dated September 13, 2000, the Commission authorized 
DTE to acquire all of the issued and outstanding voting securities 
of International Transmission Company (``ITC''). See DTE Energy Co., 
HCAR No. 27229. Applicants state that, in January of 2001, Detroit 
Edison transferred its transmission assets to ITC in exchange for 
stock, and that ITC assumed responsibility for Detroit Edison's 
transmission business.
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    Detroit Edison is engaged in the generation, purchase, 
transmission, distribution and sale of electric energy in a 7,600 
square-mile area in southeastern Michigan. Detroit Edison's service 
area includes about 13% of Michigan's total land area and about half of 
the population of the State (approximately five million people). 
Applicants state that, for the twelve months ending on September 30, 
2000, Detroit Edison's operating revenues and net income were 
approximately $4.05 billion and $349 million, respectively. As of 
September 30, 2000, Detroit Edison's assets were valued at $10.946 
billion. As of September 30, 2000, Detroit Edison had a summer net 
rated capability of approximately 11,030 MW. Detroit Edison's electric 
generating plants are interconnected by a transmission system operating 
at up to 345 kilovolts through 37 transmission stations. Detroit Edison 
is subject to general regulation by the Michigan Public Service 
Commission (``MPSC'') regarding the conditions of its service, rates 
and recovery of certain costs, accounting and various other matters. 
DTE is also subject to regulation by the Federal Energy Regulatory 
Commission under the Federal Power Act. In addition, the Nuclear 
Regulatory Commission has regulatory jurisdiction over all phases of 
the operation, construction (including plant modifications), licensing 
and decommissioning of Detroit Edison's Fermi 2 nuclear power plant.
    DTE requests authority to acquire indirectly, through Merger Sub, 
under the terms of an Agreement and Plan of Merger dated October 4, 
1999, as amended on November 12, 1999 (``Merger Agreement''), all 
issued and outstanding common stock of MCN Energy Group Inc. (``MCN''), 
a Michigan public utility holding company claiming exemption under 
section 3(a)(1) of the Act by rule 2 under the Act. Specifically, DTE 
proposes to merge Merger Sub with MCN, with Merger Sub surviving as a 
wholly owned direct subsidiary of DTE. Under the Merger Agreement, each 
share of outstanding MCN common stock (including the associated right 
to purchase Series A Junior Participating Preferred Stock) will be 
converted into a right to receive either $28.50 in cash or .775 shares 
of DTE common stock.
    MCN, a Michigan corporation, is engaged through subsidiaries in the 
production, gathering processing, transmission, storage, and 
distribution of natural gas, as well as various nonutility 
activities.\3\ The common stock of MCN on the NYSE, and Applicants 
state that, as of the close of business on November 30, 2000, there 
were 90,212,588 shares of MCN common stock issued and outstanding. For 
the twelve months ending on September 30, 2000, MCN's operating 
revenues on a consolidated basis were approximately $2.6 billion, of 
which approximately $1.1 billion were attributable to utility 
activities. Applicants state that the consolidated assets of MCN and 
its subsidiaries, as of September 30, 2000, were valued at more than 
$4.2 billion, of which approximately $1.5 billion consisted of the net 
value of gas utility plant and equipment. As of September 30, 2000, 
Michigan Consolidated Gas Company (``MichCon''), a wholly owned public 
utility subsidiary of MCN, employed 2,740 people, while MCN itself and 
the other MCN subsidiaries had 253 employees.
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    \3\ MCN is engaged in many nonutility activities, including gas 
marketing, asphalt manufacturing and distribution and methanol 
production.
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    MichCon, a Michigan corporation, is a natural gas distribution and 
transmission company that owns distribution, transmission, production 
and storage properties and facilities and serves approximately 1.2 
million customers in more than 500 communities throughout Michigan. As 
of November 30, 2000, MichCon's distribution system included 17,272 
miles of distribution mains, 1,107,428 service lines and 1,216,514 
active meters. MichCon owns 2,663 miles of transportation and 
production lines that deliver natural gas to the distribution districts 
and interconnect its storage fields with the sources of supply and the 
market areas, as well as properties relating to four underground 
natural gas storage fields with an aggregate working gas storage 
capacity of approximately 124 Bcf. For the twelve months ended 
September 30, 2000, MichCon's operating revenues and net income were 
approximately $1.1 billion and $89.9 million, respectively. As of 
September 30, 2000, MichCon had $2.2 billion in assets. MichCon's rates 
are regulated by the MPSC.
    Citizens Gas Fuel Company (``Citizens''), a wholly owned utility 
subsidiary of MCN, is engaged in the distribution of natural gas 
Michigan. Citizens serves approximately 15,000 residential, commercial 
and industrial customers in and around Adrian, Michigan. The Adrian Gas 
Rate Commission establishes the rates of Citizens, and Applicants state 
that all other phases of its operations are subject to the jurisdiction 
of the MPSC. For the twelve months ending on September 30, 2000, 
Citizens' operating revenues and net income were approximately $16.6 
million and $900,000, respectively. As of September 30, 2000, Citizens' 
assets were valued at $24.4 million.
    MCN also owns a 46.5% limited partnership interest, and a 1.% 
general partnership interest in Southern Missouri Gas Company, L.P. 
(``SMGC''), a public utility engaged in the distribution of natural 
gas, SMGC serves approximately 7,000 residential, commercial, and 
industrial customers in southern Missouri. For the twelve months ending 
on September 30, 2000, MCN's share of SMGC's operating revenues were 
approximately $3 million and MCN 's share of SMGC's net loss was 
approximately $900,000. As of September 30, 2000, MCN's shares of 
SMGC's assets were valued at $23.8 million. Applicants state that 
SMGC's rates, along with other phases of its operations, are subject to 
the jurisdiction of the Missouri Public Service Commission.
    DTE requests authority to acquire indirectly through Merger Sub, 
under the terms of an Agreement and Plan of Merger dated October 4, 
1999, as amended on November 12, 1999 (``Merger Agreement''), all 
issued and outstanding common stock of MCN.

[[Page 13106]]

Specifically, Merger Sub will merge with MCN, with Merger Sub surviving 
as a wholly owned direct subsidiary of DTE (``Merger''). Under the 
Merger Agreement, each share of outstanding MCN common stock (including 
the associated right to purchase Series A Junior Participating 
Preferred Stock) will be converted into a right to receive either 
$28.50 in each or 775 shares of DTE common stock.
    The officers, directors, corporate charter and bylaws of MCN 
immediately before the Merger will become the officers, directors, 
corporate charter and bylaws of Merger Sub. DTE's principal and 
executive offices will not change as a result of the Merger.
    Applicants state that the Merger will enable DTE to provide its 
customers with an expanded range of the energy choices, while producing 
economies of scope and integration that will benefit consumers and 
investors. Specifically, Applicants state that DTE will be able to 
offer attractive energy supply options to large customers, provide 
expanded product offerings to its customers, and develop on-site energy 
facilities and services for business customers. Applicants state that 
DTE will be better positioned after the Merge to compete with other 
integrated regional and national energy companies, and that the Merger 
will therefore enhance competition.
    Additionally, Applicants request that the Commission issue an order 
exempting DTE and Merger Sub, under section 3(a)(1) of the Act, from 
all of the requirements of the Act, except for section 9(a)(2) of the 
Act.

NiSource, Inc., et al. (70-9681)

    NiSource Inc. (``NiSource'') 801 East 86th Avenue, Merrillville, 
Indiana 46410-6272, a registered holding company,\4\ NiSource's direct 
public utility subsidiary companies, Northern Indian Public Service 
Company (``Northern Indiana''). Kokomo Gas and Fuel Company 
(``Kokomo''), Northern Indiana Fuel and Light Company (``NIFL'') all 
located at 801 East 86th Avenue, Merrillville, Indiana 46410-6272 and 
Bay State Gas Company \5\ (``Bay State''), its exempt intermediate 
public utility holding company, and Bay State's public utility 
subsidiary company, Northern Utilities, Inc. (``Northern Utilities''), 
both located at 300 Friberg Parkway, Westborough, Massachusetts 01581-
5039 (collectively Northern Indiana, Kokomo, NIFL, Bay State, and 
Northern Utilities, ``NiSource Utility Subsidiaries''), Columbia, 200 
Civic Center Drive, Columbus, Ohio 43215, NiSource's registered 
intermediate holding company, Columbia's public utility subsidiary 
companies, Columbia Gas of Kentucky, Inc., Columbia Gas of Maryland, 
Inc., Columbia Gas of Ohio, Inc., Columbia Gas of Pennsylvania, Inc., 
and Columbia Gas of Virginia, Inc., all located at 200 Civic Center 
Drive, Columbia, Ohio 43215 (collectively ``Columbia Utility 
Subsidiaries''), NiSource's nonutility subsidiary companies, EnergyUSA, 
Inc., NiSource Pipeline Group, Inc., NI Energy Services, Inc., NiSource 
Development Company, Primary Energy, Inc., NiSource Capital Markets, 
Inc., NiSource Finance Corp., Hamilton Harbour Insurance Services, 
Ltd., NiSource Corporate Services Company, NiSource Energy 
Technologies, Inc., Columbia LNG Corporation, Columbia Atlantic Trading 
Corporation, Columbia Energy Group Capital Corporation, Columbia 
Pipeline Corporation, Columbia Finance Corporation, and Columbia Energy 
Services Corporation all located at 801 East 86th Avenue, Merrillville, 
Indiana 46410-6272, IWC Resources Corporation, 1220 Waterway Blvd., 
Indianapolis, Indiana 46202, SM&P Utility Resources Inc., 1145 Meredian 
St., Suite 200, Carmel, Indiana 46032, Columbia Energy Resources, Inc., 
c/o 900 Pennsylvania Avenue, Charleston, West Virginia 25302, Columbia 
Gas Transmission Corporation and Columbia Transmission Communications 
Corporation both located at 12801 Fair Lakes Parkway, Fairfax, Virginia 
22030-0146, Columbia Gulf Transmission Company, 2603 Augusta, Suite 
125, Houston, Texas 77057, Columbia Network Services Corporation, 1600 
Dublin Road, Columbus, Ohio 43215-1082, and Columbia Insurance 
Corporation Ltd., 20 Parliament Street, P.O. Box HM 649; Hamilton HM 
CX, Bermuda have filed a post-effective amendment to their application-
declaration under sections 6(a), 7, 9(a), 10, and 12(b) of the Act. The 
Commission issued the notice of the original application-declaration on 
September 26, 2000 (HCAR No. 27236).
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    \4\ By order dated November 1, 2000 (HCAR No. 27263) NiSource 
became a registered holding company following its acquisition of 
Columbia Energy Group (``Columbia''), which is also a registered 
holding company.
    \5\ Bay State is a holding company for Northern Utilities, Inc. 
Bay State is currently claiming an exemption as a holding company 
under section 3(a)(2) of the Act and under rule 2 of the Act.
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    By order dated November 1, 2000 (HCAR No. 27265) (``Financing 
Order''), the Commission authorized NiSource and its subsidiaries to 
engage in external financing and intrasystem financing, and other 
related transactions, for the period through December 31, 2003 
(``Authorization Period''). Under the Financing Order, the Commission 
authorized NiSource to issue and sell from time to time during the 
Authorization Period, either directly or indirectly through one or more 
financing subsidiaries (including NiSource Finance Corp. (``NiSource 
Finance'')), equity securities and long-term and short-term debt 
securities. Among other specific approvals granted, the Commission 
authorized NiSource to issue and sell, directly or indirectly, short-
term debt securities in the form of commercial paper, bank notes or 
other evidence of indebtedness having maturities of less than one year 
(``Short-term Debt'') in an aggregate principal amount at any time 
outstanding not to exceed $2 billion. The Commission also authorized 
the NiSource Utility Subsidiaries to issue and sell short-term debt 
securities, including commercial paper, to finance their utility 
operations, in the following maximum principal amounts at any time 
outstanding during the Authorization Period:

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                      Subsidiary                             Amount
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Northern Indiana.....................................     $1,000,000,000
Bay State............................................        250,000,000
NIFL.................................................         50,000,000
Kokomo...............................................         50,000,000
Northern Utilities...................................         50,000,000
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Northern Indiana and Bay State currently have commercial paper 
facilities that are backed by revolving credit lines. Borrowings by Bay 
State are used, in part, to make short-term loans to Northern 
Utilities.
    NiSource is now requesting a modification to the Financing Order to 
authorize an increase from $2 billion to $3.4 billion in the maximum 
principal amount of short-term debt that NiSource (or any financing 
subsidiary of NiSource) may have outstanding at any one time. NiSource 
states that it will use the proceeds of increased short-term borrowings 
to make loans to Columbia and the NiSource Utility Subsidiaries in 
order to enable those companies to retire, at maturity, external short-
term borrowings. After March 31, 2001, Columbia and Northern Indiana 
will not issue any new Short-term Debt securities to unaffiliated 
lenders but will instead satisfy all of their short-term borrowing 
needs through intercompany borrowings from NiSource. Bay State will 
maintain its external funding arrangements in order to fund loans to 
Northern Utilities until such time as Northern Utilities has obtained 
an order of the Maine Public Utilities Commission permitting NiSource 
(or a financing subsidiary of

[[Page 13107]]

NiSource) to become the external funding source for Bay State's loans 
to Northern Utilities. All short-term borrowings by Columbia and the 
NiSource Utility Subsidiaries from NiSource will bear interest at rates 
designed to parallel the effective cost of short-term debt issued by 
NiSource. Short-term borrowings by Columbia and the NiSource Utility 
Subsidiaries from NiSource will be within the individual company limits 
previously approved in the Financing Order.

Allegheny Energy, Inc., et al. (70-9683)

    Allegheny Energy, Inc., (``Allegheny''), a registered public-
utility holding company, Allegheny Energy Service Corporation 
(``AESC''), a service company subsidiary of Allegheny, both located at 
10435 Downsville Pike, Hagerstown, Maryland 21740-1766, and Allegheny 
Energy Supply Company, LLC (``AE Supply''), a utility \6\ generating 
company subsidiary of Allegheny, R.R. 12, P.O. Box 1000, Roseytown 
Road, Greensburg, Pennsylvania 15601 (collectively, ``Applicants''), 
have filed an application-declaration (``Application'') under sections 
6(a), 7, 9(a), 10, 12(b), 12(f), 13(b), 32 and 33 of the Act and rules 
45, 53, 54, 90 and 91 under the Act.
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    \6\ AE Supply is a public utility company within the meaning of 
section 2(a)(3) of the Act, but is not a utility for purposes of 
state regulation.
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    Applicants seek authority to engage in various transactions 
relating to the development and acquisition of interests in exempt 
wholesale generators (``EWGs'') and foreign utility companies 
(``FUCOs''), as defined in sections 32 and 33 of the Act, respectively, 
and in activities permitted by rule 58 under the Act (``Rule 58 
Activities''). Applicants also propose to engage in various related 
financing and intrasystem transactions, as described below.

I. Formation of Special-Purpose Subsidiaries

    AE Supply requests authorization to organize and finance one or 
more special purpose subsidiaries (``Exempt Subsidiaries'') to: (1) 
Engage in Rule 58 Activities within the United States; and (2) to 
invest, directly or indirectly, in EWGs and FUCOs. AE Supply also 
proposes to organize one or more special project entities 
(``Intermediate Companies'') for the purpose of facilitating the 
development and consummation of investments in EWGs and FUCOs by (1) 
exploring investment opportunities; and (2) investing in companies for 
the acquisition and ownership of EWGs, FUCOs, and to engage in Rule 58 
Activities prior to the formation of the Exempt Subsidiaries.

II. Proposed External and Internal Financings

    Applicants also seek authority to issue guaranties, short-term debt 
and long-term debt through July 31, 2005 (``Authorization Period''), up 
to an aggregate amount of $430 million at any one time outstanding 
(``Aggregate Financing Limit'') for the purpose of investing directly 
or indirectly in EWGs, FUCOs, Rule 58 Activities, or for other 
strategic corporate purposes related to investments in EWGs and 
RUCOs.\7\ Applicants further represent that investments in EWGs and 
FUCOs will not exceed the limits imposed by rules 53 and 54 under the 
Act.
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    \7\ AE Supply may use a portion of the proceeds as capital 
contributions to to-be-formed Intermediate Companies and Exempt 
Subsidiaries to the extent permissible under the Act and rules.
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    Applicants state that the proposed debt to be issued includes, but 
is not limited to, bank financing, bank credit support, sales of 
secured \8\ or unsecured debt, notes, loans, and debentures. Applicants 
also seek authorization for the Exempt Subsidiaries and Intermediate 
Companies to issued debt securities to unaffiliated third parties,\9\ 
including banks, insurance companies and other financial institutions, 
exclusively for the purpose of financing or refinancing investments in 
EWGs and FUCOs up to the Aggregate Financing Limit. Applicants state 
that interest rates, fees, and expenses will be comparable to those 
obtainable by similar entities issuing comparable securities containing 
the same or similar terms and maturities.
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    \8\ Applicants state that any debt issued by Allegheny under the 
authority requested in this Application will be unsecured.
    \9\ Applicants state that there will be no recourse to Allegheny 
with respect to these debt securities.
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    Applicants further propose that investments may be made from 
Allegheny to AE Supply, Exempt Subsidiaries or to Intermediate 
Companies directly or indirectly. Investment by Allegheny or AE Supply 
into the Exempt Subsidiaries or Intermediate Companies may take the 
form of capital stock or shares, debt securities, trust certificates, 
capital contributions, open account advances and partnership interests 
or other equity or participation interests, bid bonds, or other credit 
support to secure obligations incurred by AE Supply and/or the 
Intermediate Companies in connection with the Exempt Subsidiaries.\10\
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    \10\ Applicants state that the source of funds for direct or 
indirect contributions by Allegheny to AE Supply may include 
dividends received from operating companies that are derived from 
proceeds of sales of energy to customers and other available cash 
resources. Loans by Allegheny to AE Supply or by Applicants to 
Exempt Subsidiaries and Intermediate Subsidiaries will have interest 
rates and maturities that are designed to provide a return equal to 
the Applicant's respective effective cost of capital.
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    Applicants also request authority to issue guaranties and enter 
into support agreements (``Guaranties'') to and for the benefit of 
Exempt Subsidiaries and Intermediate Subsidiaries through the 
Authorization Period up to the Aggregate Financing Limit. Applicants 
state that the Guaranties will be used to support the commercial paper 
program and to support counterparty agreements and other trading 
contracts. Guaranties will be issued without recourse to any of the 
Allegheny system operating companies.\11\
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    \11\ Guaranties may take the form of Applicants agreeing to 
guarantee, undertake reimbursement obligations, assume liabilities 
or assume other obligations with respect to, or to act as surety on, 
bonds, letters of credit, evidences of indebtedness, equity 
commitments, performance, and other obligations undertaken by AE 
Supply, the Exempt Subsidiaries, and Intermediate Companies.
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III. Proposed Intrasystem Service Transactions

    Applicants state that the Exempt Subsidiaries and Intermediate 
Companies will not have their own paid employees. Consequently, 
Applicants request authority for AESC to provide services to those 
companies under proposed service agreements (``Service Agreements'') to 
be entered into between each of those companies and AESC. The Service 
Agreements will take effect upon Commission approval and will be 
similar in all material respects to those service agreements that AESC 
has executed. AESC will render services to Exempt Subsidiaries and 
Intermediate Companies in accordance with rules 90 and 91 under the 
Act.

IV. Proposed Transfer of Generating Assets

    On January 8, 2001, Allegheny acquired a five percent interest, 
totaling approximately 83 megawatts, in the Conemaugh Generating 
Station (``Conemaugh''), a coal-fired generating station located near 
Johnstown, Pennsylvania,\12\ from The Potomac Electric Power Company 
for a purchase price of approximately $78 million. In order to 
centralize its generating assets, Allegheny now proposes to transfer 
the Conemaugh generating assets to AE Supply for net book value of 
approximately $80 million, including capitalized transaction costs. In

[[Page 13108]]

exchange for Allegheny's interest in Conemaugh, AE Supply will issue to 
Allegheny an interest-baring unsecured promissory note for the purchase 
price.
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    \12\ Applicants state that the Federal Energy Regulatory 
Commission has certified Conemaugh as an EWG under section 32 of the 
Act.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-5110 Filed 3-1-01; 8:45 am]
BILLING CODE 8010-01-M