[Federal Register Volume 66, Number 52 (Friday, March 16, 2001)]
[Notices]
[Pages 15305-15310]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-6540]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27353]


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

March 9, 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 April 3, 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 April 3, 2001, the application(s) and/or 
declaration(s), as filed or as amended, may be granted and/or permitted 
to become effective.

American Electric Power Company, Inc., (70-9729)

    American Electric Power Company, Inc. (``AEP''), 1 Riverside Plaza, 
Columbus, Ohio 43215, a registered holding company, has filed an 
application-declaration under sections 6(a), 7, 9)a), 10, 12(b), 12(c), 
12(f), 32, and 33 of the Act and rules 42, 45, 46, and 53 under the 
Act.
    AEP proposes to organize and acquire all of the common stock or 
other equity interests of one or more subsidiaries, financing 
subsidiaries, (collectively ``FS'') for the purpose of effecting 
various financing transactions through June 30, 2004 involving the 
issuance and sale of up to an aggregate of $1.5 billion, cash proceeds 
to AEP in any combination of preferred securities, debt securities, 
interest rate hedges, anticipatory hedges, stock purchase contracts and 
stock purchase units, as well as its common stock issuable under the 
stock purchase contracts and stock purchase units to acquire the 
securities of associate companies and interests in other businesses 
including exempt wholesale generators (``EWGs'') and foreign utility 
companies (``FUCOs''). AEP further proposes that it may effect 
directly, without the FS, any such transaction involving preferred 
securities, debt securities, stock purchase contracts or stock purchase 
units, provided that AEP shall not issue any secured indebtedness. 
Also, no FS or Special Purpose Subsidiary (``SPS'') shall acquire or 
dispose of, directly or indirectly, any interest in any utility asset, 
as that term is defined under the Act.

I. Financing Subsidiaries

    AEP will acquire all of the outstanding shares of common stock or 
other equity interests of the FS for amounts (inclusive of capital 
contributions that may be made from time to time to the FS by AEP) 
aggregating up to 35% of the total capitalization of the FS (i.e., the 
aggregate of the equity accounts and indebtedness of the FS). Such 
investment by AEP will not in any event be less than the minimum 
required by any applicable law. The business of the FS will be limited 
to effecting financing transactions for AEP and its affiliates. In 
connection with such financing transactions, AEP will enter into one or 
more guarantee or other credit support agreements in favor of the FS. 
Effecting financings through the FS will have the

[[Page 15306]]

benefit of better distinguishing securities issued by AEP to finance 
its investments in non-core businesses from those issued to finance its 
investments in core businesses operating companies. A separate FS may 
be used by AEP with respect to different types of non-core businesses.

II. Preferred Securities

    In connection with the issuance of preferred securities 
(``Preferred Securities''), AEP proposes that it or the FS will 
organize one or more separate SPSs as any one or any combination of (a) 
a limited liability company under the Limited Liability Company Act 
(the ``LLC Act'') of the State of Delaware or other jurisdiction 
considered advantageous by AEP, (b) a limited partnership under the 
Revised Uniform Limited Partnership Act of the State of Delaware or 
other jurisdiction considered advantageous by AEP, (c) a business trust 
under the laws of the State of Delaware or other jurisdiction 
considered advantageous by AEP, or (d) any other entity or structure, 
foreign or domestic, that is considered advantageous by AEP. In the 
event that any SPS is organized as a limited liability company, AEP or 
the FS may also organize a second special purpose wholly owned 
subsidiary under the General Corporation Law of the State of Delaware 
or other jurisdiction (``Investment Sub'') for the purpose of acquiring 
and holding SPS membership interests so as to comply with any 
requirement under the applicable LLC Act that a limited liability 
company have at least two members. In the event that any SPS is 
organized as a limited partnership, AEP or the FS also may organize an 
Investment Sub for the purpose of acting as the general partner of such 
SPS and may acquire, either directly or indirectly through such 
Investment Sub, a limited partnership interest in such SPS to ensure 
that such SPS will at all times have a limited partner to the extent 
required by applicable law. The respective SPS then will issue and sell 
to private or public investors, at any time or from time to time, 
unsecured preferred securities (``Preferred Securities'') with a 
specified par or stated value or liquidation preference per security.
    AEP, the FS and/or an Investment Sub will acquire all of the common 
stock or all of the general partnership or other common equity 
interests, as the case may be, of any SPS for an amount not less than 
the minimum required by any applicable law and not exceeding 21% of the 
total equity capitalization from time to time of such SPS (i.e., the 
aggregate of the equity accounts of such SPS) (the aggregate of such 
investment by AEP, the FS and/or an Investment Sub is referred to as 
the ``Equity Contribution''). The constituent instruments of each SPS, 
including its Limited Liability Company Agreement, Limited Partnership 
Agreement or Trust Agreement, as the case may be, will provide, among 
other things, that such SPS's activities will be limited to the 
issuance and sale of Preferred Securities from time to time and the 
lending to the FS or Investment Sub of (a) the proceeds thereof and (b) 
the Equity Contribution to such SPS, and certain other related 
activities. No SPS's constituent instruments will include any interest 
or dividend coverage or capitalization ratio restrictions on its 
ability to issue and sell Preferred Securities as each such issuance 
will be supported by a note (``Note'') and guaranty (``Guaranty'') and 
such restrictions would therefore not be relevant or necessary for any 
SPS to maintain an appropriate capital structure. Each SPS's 
constituent instruments will further state that its common stock or 
general partnership or other common equity interests are not 
transferable (except to certain permitted successors), that its 
business and affairs will be managed and controlled by AEP, the FS and/
or its Investment Sub (or permitted successor), and that AEP or the FS 
(or permitted successor) will pay all expenses of such SPS.
    The FS may issue and sell to any SPS, at any time or from time to 
time in one or more series, unsecured subordinated debentures, 
unsecured promissory notes or other unsecured debt instruments 
(collectively, ``Notes'') governed by an indenture or other document, 
and such SPS will apply both the Equity Contribution made to it and the 
proceeds from the sale of Preferred Securities by it from time to time 
to purchase Notes. Alternatively, the FS may enter into a loan 
agreement or agreements with any SPS under which such SPS will loan to 
the FS (individually, a ``Loan'' and collectively, the ``Loans'') both 
the Equity Contribution to such SPS and the proceeds from the sale of 
the Preferred Securities by such SPS from time to time, and the FS will 
issue to such SPS Notes evidencing such borrowings.
    Each Note will have a term of up to 50 years. Prior to maturity, 
the FS will pay interest only on the Notes at a rate equal to the 
dividend or distribution rate on the related series of Preferred 
Securities, which dividend or distribution rate may be either a fixed 
rate or an adjustable rate to be determined on a periodic basis by 
auction or remarketing procedures, in accordance with a formula or 
formulae based upon certain reference rates, or by other predetermined 
methods. Such interest payments will constitute each respective SPS's 
only income and will be used by it to pay dividends or distributions on 
the Preferred Securities issued by it and dividends or distributions on 
the common stock or the general partnership or other common equity 
interests of such SPS.
    Dividend payments or distributions on the Preferred Securities will 
be made on a monthly or other periodic basis and must be made to the 
extent that the SPS issuing such Preferred Securities has legally 
available funds and cash sufficient for such purposes. However, the FS 
may have the right to defer payment of interest on any issue of Notes 
for up to five or more years. Each SPS will have the parallel right to 
defer dividend payments or distributions on the related series of 
Preferred Securities for up to five or more years, provided that if 
dividends or distributions on the Preferred Securities of any series 
are not paid for up to 18 or more consecutive months, then the holders 
of the Preferred Securities of such series may have the right to 
appoint a trustee, special general partner or other special 
representative to enforce the SPS's rights under the related Note and 
Guaranty.
    The dividend or distribution rates, payment dates, redemption and 
other similar provisions of each series of Preferred Securities will be 
substantially identical to the interest rates, payment dates, 
redemption and other provisions of the Note issued by the FS. The 
Preferred Securities may be convertible or exchangeable into common 
stock of AEP.
    AEP or the FS also proposes to guarantee (collectively, the 
``Guaranties'') (a) payment of dividends or distributions on the 
Preferred Securities of any SPS if and to the extent such SPS has funds 
legally available, (b) payments to the Preferred Securities holders of 
amounts due upon liquidation of such SPS or redemption of the Preferred 
Securities of such SPS, and (c) certain additional amounts that may be 
payable in respect of such Preferred Securities. AEP's credit will 
support any such Guaranty by the FS.
    The Notes and related Guaranties will be subordinate to all other 
existing and future unsubordinated indebtedness for borrowed money of 
the FS or AEP, and may have no cross-default provisions with respect to 
other indebtedness of the FS or AEP. A default under any other 
outstanding indebtedness of the FS (or AEP) would not result in a 
default under any Note or Guaranty. However, AEP and/or the FS may be

[[Page 15307]]

prohibited from declaring and paying dividends on its outstanding 
capital stock and making payments in respect of pari passu debt unless 
all payments then due under the Notes and Guaranties (without giving 
effect to the deferral rights discussed above) have been made.
    In the event of any voluntary or involuntary liquidation, 
dissolution or winding up of any SPS, the holders of the Preferred 
Securities of such SPS will be entitled to receive, out of the assets 
of such SPS available for distribution to its shareholders, partners or 
other owners, an amount equal to the par or stated value or liquidation 
preference of such Preferred Securities plus any accrued and unpaid 
dividends or distributions.
    The distribution rate to be borne by the Preferred Securities and 
the interest rate on the Notes will not exceed the greater of (a) 300 
basis points over U.S. Treasury securities having comparable maturities 
or (b) a gross spread over U.S. Treasury securities that is consistent 
with similar securities having comparable maturities and credit quality 
issued by other companies. Current market conditions suggest the costs 
for issuing long-term indebtedness with a three to five year maturity 
are less than or equal to the costs for issuing short-term indebtedness 
over the same time period.

III. Debt Securities

    AEP proposes that, in addition to, or as an alternative to, any 
Preferred Securities financing as described above, AEP and/or the FS 
may issue and sell notes directly to public or private investors 
without an intervening SPS (``Debt Securities''). Any notes so issued 
will be unsecured, may be either senior or subordinated obligations of 
AEP or the FS, as the case may be, may be convertible or exchangeable 
into common stock of AEP or Preferred Securities, and may have the 
benefit of a sinking fund. Debt Securities of the FS will have the 
benefit of a guarantee or other credit support by AEP. AEP will not 
issue the Debt Securities, either directly or through the FS, unless it 
has evaluated all relevant financial considerations (including, without 
limitation, the cost of equity capital) and has determined that to do 
so is preferable to issuing common stock or short-term debt. Current 
market conditions suggest the costs for issuing long-term indebtedness 
with a three to five year maturity are less than or equal to the costs 
for issuing short-term indebtedness over the same time period.
    The interest rate on the Debt Securities will not exceed the 
greater of (a) 300 basis points over U.S. Treasury securities having 
comparable maturities or (b) a gross spread over U.S. Treasury 
securities that is consistent with similar securities having comparable 
maturities and credit quality issued by other companies.

IV. Stock Purchase Contracts and Stock Purchase Units

    AEP or the FS may issue and sell to public or private investors 
from time to time stock purchase contracts (``Stock Purchase 
Contracts''), including contracts obligating holders to purchase from 
AEP, and AEP to sell the holders, a specified number of shares or 
aggregate offering price of common stock of AEP at a future date or 
dates up to ten years from the date of issuance. The consideration per 
share of common stock may be fixed at the time the Stock Purchase 
Contracts are issued or may be determined by reference to a specific 
formula set forth in the Stock Purchase Contracts. The Stock Purchase 
Contracts may be issued separately or as a part of units (``Stock 
Purchase Units'') consisting of a Stock Purchase Contract and Debt 
Securities, Preferred Securities, or other debt obligations of third 
parties, including U.S. Treasury securities, securing holders' 
obligations to purchase the common stock of AEP under the Stock 
Purchase Contracts. The funds to purchase obligations would be provided 
by, and the interest income will be for the benefit of the investors. 
The Stock Purchase Contracts may require AEP or the FS to make periodic 
payments to the holders of the Stock Purchase Units or vice versa. Any 
such payments by AEP or the FS not to exceed 5% per annum, and such 
payments may be unsecured or prefunded on some basis. The Stock 
Purchase Contracts may require holders to secure their obligations in a 
specified manner, which may include the pledging of U.S. Treasury 
securities.

V. Interest Rate Hedges

    AEP request authorization for it and/or the FS to enter into 
interest rate hedging transactions with respect to existing 
indebtedness (``Interest Rate Hedges''), subject to certain limitations 
and restrictions, in order to reduce or manage interest rate cost or 
risk. Interest Rate Hedges will only be entered into with 
counterparties (``Approved Counterparties'') whose senior debt ratings, 
or whose parent companies' senior debt ratings, as published by 
Standard and Poor's Ratings Group, are equal to or greater than BBB, or 
an equivalent rating from Moody's Investor's Service or Fitch Investor 
Service. Interest Rate Hedges will involve the use of financial 
instruments and derivatives commonly used in today's capital markets, 
such as interest rate swaps, options, 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. The transactions 
will be for fixed periods and stated notional amounts. In no case will 
the notional principal amount of any interest rate swap exceed that of 
the underlying debt instrument and related interest rate exposure. AEP 
and/or the FS will not engage in speculative transactions. Fees, 
commissions and other amounts payable to the counterparty or exchange 
(excluding, the swap or option payments) in connection with an Interest 
Rate Hedge will not exceed those generally obtainable in competitive 
markets for parties of comparable credit quality.

VI. Anticipatory Hedges

    In addition, AEP requests authorization for it and/or the FS to 
enter into interest rate hedging transactions with respect to 
anticipate debt offerings (the ``Anticipatory Hedges''), subject to 
certain limitations and restrictions. Anticipatory Hedges will only be 
entered into with Approved Counterpaties, and will be utilized to fix 
and/or limit the interest rate risk associated with any new issuance 
through: (a) A forward sale of exchange-traded U.S. Treasury futures 
contracts, U.S. Treasury obligations and/or a forward swap (each a 
``Forward Sale''); (b) the purchase of put options on U.S. Treasury 
obligations (a ``Put Options Purchase''); (c) a Put Options Purchase in 
combination with the sale of call options on U.S. Treasury obligations 
(a ``Zero Cost Collar''); (d) transactions involving the purchase or 
sale, including short sales, of U.S. Treasury obligations; or (e) 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, options, caps and collars, appropriate for 
the Anticipatory Hedges. Anticipatory Hedges may be executed on-
exchange (``On-Exchange Trades'') with broker through the opening of 
futures and/or options positions traded on the Chicago Board of Trade 
or the Chicago Mercantile Exchange, the opening of over-the-counter 
positions with one or more counterparties (``Off-Exchange Trades''), or 
a combination of On-Exchange Trades and Off-Exchange Trades. AEP and/or 
the FS will

[[Page 15308]]

determine the optimal structure of each Anticipatory Hedge transaction 
at the time of execution. AEP may decide to lock in interest rates and/
or limit its exposure to interest rate increases.
    AEP represents that each Interest Rate Hedge and Anticipatory Hedge 
will qualify for hedge accounting treatment under generally accepted 
accounting principles. AEP will comply with the then existing financial 
disclosure requirements of the Financial Accounting Standards Board 
associated with hedging transactions.

VII. Use of Proceeds

    The proceeds of any financing by the FS or any SPS will be 
remitted, paid as a dividend, loaned or otherwise transferred to AEP or 
its designee. The proceeds of the Preferred Securities, Debt 
Securities, Stock Purchase Contracts and Stock Purchase Units will be 
used to acquire the securities of associate companies and interests in 
other businesses, including interests in EWGs and FUCOs, or in any 
transactions permitted under the Act and for other general corporate 
purposes, including the reduction of short-term indebtedness. No 
proceeds will be used to purchase generation assets currently owned by 
AEP or any affiliate unless such purchase has been approved by order of 
the Commission pursuant to S.E.C. File No. 70-9785 or other similar 
application. AEP had approximately $2.3 billion outstanding short-term 
indebtedness as of September 30, 2000. AEP represents that no financing 
proceeds will be used to acquire the equity securities of any company 
unless such acquisition has been approved by the Commission in this 
proceeding or in a separate proceeding or is in accordance with an 
available exemption under sections 32, 33, and 34 or rule 58 of the 
Act. AEP does not seek in this proceeding any increase in the amount it 
is permitted to invest in EWGs and FUCOs.

Allegheny Energy, Inc., et al. (70-9747)

    Allegheny Energy, Inc., (``Allegheny''), a registered holding 
company, and Allegheny Energy Service Corporation (``AESC''), a service 
company subsidiary of Allegheny, both located at 10435 Downsville Pike, 
Hagerstown, Maryland 21740, Monongahela Power Company (``Monongahela 
Power''), a wholly owned combination gas and electric utility 
subsidiary of Allegheny, located at 1310 Fairmont Avenue, Fairmont, 
West Virginia 26554, and Allegheny Energy Supply Company, LLC 
(``Genco''), a wholly owned generating company subsidiary of Allegheny 
located at R.R. 12, P.O. Box 1000, Greensburg, Pennsylvania 15601 
(collectively, ``Applicants''), have filed an application-declaration 
under sections 6(a), 7, 9(a), 10, 12(b), 12(c), 12(d) and 13(b) of the 
Act, and rules 43, 44, 45, 46, 54, 90 and 91 under the Act.
    Monongahela Power, subject to obtaining the requisite regulatory 
approvals, intends to leave the generating business entirely. To 
accomplish this, Applicants request authority for Monongahela Power to 
transfer its electric generating business to Genco, which was organized 
to compete in deregulated, competitive electricity generation 
markets.\1\ Specially, Applicants request authority for Monongahela 
Power to transfer to Genco, at net book value, Monongahela Power's 
undivided ownership interests in certain jointly held and certain 
wholly owned electric generating facilities (``Generating Assets''), 
current assets related to the Generating Assets (``Related Assets''), 
fuel, supplies and other inventory (``Inventory'') and other related 
interests (``Other Interests'') each of which is more particularly 
described below. In addition, Applicants request authority for 
Monongahela Power to transfer and for Genco to assume certain net 
liabilities and debt associated with the Generation Assets and Related 
Assets (``Related Liabilities'').
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    \1\ Genco is an electric utility company within the meaning of 
section 2(a)(3) of the Act.
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    The Generating Assets consist of the undivided ownership interests 
in the following generating facilities: A 25% interest in unit No. 1 
and a 20% interest in Unit No. 2 of the Fort Martin Power station 
located in Maidsville, West Virginia; a 66% interest in the Albright 
Power Station located in Albright, West Virginia; a 25% interest in the 
Harrison Power Station located in Shinnston, West Virginia; a 27.5% 
interest in the Hatfield's Ferry Power Station located in Masontown, 
Pennsylvania; a 25% interest in the Pleasants Power Station, located in 
Saint Mary's, West Virginia; a 100% interest in the Willow Island 
Station located in Willow Island, West Virginia. Applicants state that 
the total net book value of the Generating Assets was approximately 
$456.5 million as of December 31, 2000. Monongahela Power also intends 
to transfer Inventory to Genco.\2\
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    \2\ Applicants state that Monongahela Power would transfer the 
Inventory at net book value. Applicants state that the net book 
value of the Inventory was approximately $33 million as of December 
31, 2000.
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    The Related Assets consist of current assets, deferred charges, 
cash, temporary cash investments and an undivided 27% ownership 
interest in the stock of Allegheny Generating Company (``AGC'').\3\ 
Applicants state that the net book value of the Related Assets was 
approximately $52.2 million as of December 31, 2000. The Other 
Interests consist of a 3.5% ownership interest in the Ohio Valley 
Electric Corporation (``OVEC''), a public utility, and Monongahela 
Power's contractual rights and obligations under five agreements 
regarding the operation of five of the generating facilities included 
as Generating Assets.\4\
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    \3\ AGC, a Virginia corporation that is jointly owned by Genco 
and Monongahela Power, owns a 40% undivided interest in a pumped 
storage hydroelectric generating facility and related transmission 
facilities located in Bath County, Virginia, 73% of which ownership 
has already been transferred to Genco in the form of AGC stock 
interests.
    \4\ The Other Interests have a book value of zero.
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    The Related Liabilities consist of accounts payable, accrued taxes, 
tax deferrals, pollution control bonds, solid waste bonds and other 
deferred credits related to the Generating Assets. Applicants state 
that the book value of the Related Liabilities was approximately $253.9 
million as of December 31, 2000. Applicants state that the Related 
Liabilities do not include Monongahela Power's first mortgage bonds. 
Applicants state that Monongahela Power expects to obtain a release 
from the lien of the first mortgage by certifying or pledging 
additional bondable property in an amount not less than the net book 
value of the Generating Assets, which could include remaining utility 
assets of Monongahela Power, and request authority to pledge those 
assets to obtain the described release.
    To accomplish the proposed transfers, Applicants request authority 
to form two companies, MP Transferring Agent, LLC (``MP Transferring 
Agent''), a limited liability company and MP Genco (``MP Genco''), a 
corporation. Monongahela Power would acquire the ownership interests in 
MP Transferring Agent in exchange for an initial cash contribution of 
$200,000, and MP Transferring Agent in exchange for an initial cash 
contribution of $200,000, and MP Transferring Agent would acquire the 
interests in MP Genco for an initial cash contribution of $100,000, 
with the contributions to be in the form of collateralized government 
obligations.
    Monongahela Power would then transfer its undivided ownership 
interests in the Generating Assets, Related Assets, Related 
Liabilities, Inventory and Other Interests to MP Transferring Agent. MP 
Transferring Agent would issue an interest bearing unsecured promissory 
note to

[[Page 15309]]

Monongahela Power in an amount equal to the net book value of the 
Generating Assets and Inventory (``Purchase Note'') in exchange for the 
transfer of these assets. In order to assure that MP Transferring Agent 
has sufficient assets to cover the principal amount of the Purchase 
Note and its accrued interest, Monongahela Power would issue a non-
interest bearing note to MP Transferring Agent in an amount $20 million 
greater than the Purchase Note as a capital contribution (``Liquidation 
Note''). In addition, Monongahela Power would issue a non-interest 
bearing promissory note to MP Transferring Agent in an amount 
constituting the difference between the net book values of the Related 
Assets and the Related Liabilities (``Balancing Note''), as an 
additional capital contribution.
    MP Transferring Agent proposes to contribute the Generating Assets, 
Related Assets, Inventory and Other Interests to MP Genco, which would 
also assume the Related Liabilities. The Liquidation Note and Balancing 
Note would remain at MP Transferring Agent, as well as the Purchase 
Note obligation. MP Transferring Agent proposes to dividend its 
interests in MP Genco, the Balancing Note, and the Liquidation Note, 
net of the Purchase Note to Monongahela Power. Monongahela Power 
proposes to then dividend the MP Genco interests to Allegheny, after 
which MP Genco would merge with Genco. Applicants would then liquidate 
MP Transferring Agent.
    Monongahela Power and Genco propose to enter into a debt assumption 
agreement under which Genco would assume the obligation for $100 
million in outstanding debt (``Debt Assumption Agreement''). Applicants 
note that the Debt Assumption Agreement is a result of Monongahela 
Power's first mortgage obligations, a portion of which relate to the 
Generating Assets being transferred. In addition, Applicants request 
authority for Monongahela Power and Genco to enter into leaseback, 
service and operating agreements with respect to the Generating Assets, 
until Genco obtains the necessary permits and licenses to operate the 
Generating Assets. These services would be rendered at cost, in 
accordance with rules 90 and 91 under the Act.

Cinergy Corp. (70-9803)

    Cinergy Corp. (``Cinergy''), a registered holding company, 139 East 
Fourth Street, Cincinnati, Ohio 45202, has filed an application-
declaration with the Commission under sections 6(a), 7, 9(a), 10 and 
12(c) of the Act and rules 42 and 54 under the Act.
    By order dated February 7, 1997, Holding Co. Act Release No. 26662 
(``1997 Order''), the Commission authorized Cinergy to establish a 
nonutility subsidiary, Cinergy Solutions, to engage in nonutility 
energy-related businesses, directly or indirectly through its 
subsidiaries, in the United States and, with respect to certain of 
these activities, within and anywhere outside of the United States.\5\ 
The Commission authorized Cinergy Solutions to market energy management 
services \6\ (``Energy Management Services'') and energy-related 
consulting services \7\ (``Consulting Services'') exclusively to 
nonassociate commercial/industrial customers and residential customers 
within and anywhere outside of the United States.
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    \5\ The Commission reserved jurisdiction over the provision of 
asset management services, project development and ownership , and 
consumer services outside the United States, pending completion of 
the record.
    \6\ The 1997 Order defines Energy Management Services as: (a) 
Identification (through energy audits or otherwise) of energy and 
other resource (water, labor, maintenance, materials, etc.) cost 
reduction or efficiency opportunities; (b) design of facility and 
process modifications or enhancements to realize such opportunities; 
(c) management, or direct construction and installation, of energy 
conservation or efficiency equipment; (d) training of client 
personnel in the operation of equipment; (e) maintenance of energy 
systems; (f) design, management or direct construction and 
installation of new and retrofit heating, ventilating, and air 
conditioning; electrical and power systems, motors, pumps, lighting, 
water and plumbing systems, and related structures, to realize 
energy and other resource efficiency goals or to otherwise meet a 
customer's energy-related needs; (g) system commissioning (i.e., 
monitoring the operation of an installed system to ensure that it 
meets design specifications); (h) reporting of system results; (i) 
design of energy conservation programs; (j) implementation of energy 
conservation programs; (k) provision of conditioned power services 
(i.e., services designed to prevent, control or mitigate adverse 
effects of power disturbances on a customer's electrical system to 
ensure the level of power quality required by the customer, 
particularly with respect to sensitive electronic equipment); and 
(l) other similar or related activities.
    \7\ The 1997 Order defines Consulting Services as technical and 
consulting services involving technology assessments, power factor 
correction and harmonics mitigation analysis, commercialization of 
electro-technologies, meter reading and repair, rate schedule 
analysis and design, environmental services, engineering services, 
billing services including conjunctive billing, summary billing for 
customers with multiple locations and bill auditing, risk management 
services, communications systems, information system/data 
processing, system planning, strategic planning, finance, 
feasibility studies, and other similar or related services.
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I. Energy Management Services, Consulting Services, Commodity Brokering 
and Marketing

    Cinergy now seeks authorization for its nonutility subsidiaries, in 
addition to Cinergy Solutions, to: (a) Market Energy Management 
Services and Consulting Services anywhere in the world;\8\ (b) broker 
and market energy commodities (including but not limited to 
electricity, natural gas and other combustible fuels) anywhere in the 
world; and (c) to invest up to $1 billion over a ten-year period in 
nonutility energy-related assets located anywhere in the world that are 
incidental to and used to support their Energy Management Services and 
Consulting Services; in all cases without further Commission 
authorization.
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    \8\ Cinergy states that this authority would supplement, not 
supercede, the authority granted in the 1997 Order.
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    Cinergy requests that the Commission reserve jurisdiction over 
Cinergy's proposal for: (a) Its nonutility subsidiaries to engage in 
the business of brokering and marketing energy commodities anywhere in 
the world outside of the United States and Canada; and (b) Cinergy to 
invest up to $1 billion over a ten-year period in nonutility energy-
related assets located anywhere in the world that are incidental to and 
used to support their Energy Management Services and Consulting 
Services.

II. Adjustments to Capital Securities of Subsidiaries

    Cinergy also requests authorization for Cinergy to change the terms 
of, or otherwise, adjust, the capital stock or any other equity 
securities of its wholly owned utility and nonutility subsidiaries' 
capital stock or other equity securities as it deems appropriate or 
necessary, without further Commission authorization. As examples, 
Cinergy states that it may convert a subsidiary's par value capital 
stock to no par value stock, to effect a reverse stock split, or change 
the total number of shares of capital securities it holds in a 
subsidiary while maintaining its percentage of ownership. Any change in 
capitalization will be subject to the approval of the State commission 
in the State in which the subsidiary is incorporated and doing 
business.
    Cinergy requests that the Commission reserve jurisdiction over any 
of Cinergy's proposed adjustments to capital securities of subsidiaries 
that are not wholly owned by Cinergy.

Xcel Energy Inc. (70-9823)

    Xcel Energy Inc. (``Xcel''), 800 Nicollet Mall, Minneapolis, 
Minnesota 55402, a registered holding company, has filed an 
application-declaration under sections 6(a), 7, 9(a), 10 and 12(c) of 
the Act and rules 42, 46 and 54 under the Act.

[[Page 15310]]

    Xcel request authority to implement a stockholder protection rights 
plan (``Plan'') and related agreement creating the stockholder rights 
(``Rights Agreement''). The Plan is intended to maximize stockholder 
value due to opportunistic takeover proposals. Under the Plan, the 
board of directors of Xcel (``Board'') would declare a dividend of one 
right (``Rights'') for each outstanding share of Xcel common stock, par 
value $2.50 per share (``Common Stock''), payable to all stockholders 
of record on the close of business in the tenth business day following 
the first public announcement by Xcel of the granting of an order by 
the Commission approving this application-declaration.
    Each Right issued to a registered holder of Common Stock would, 
after the Right becomes exercisable, entitle the holder to purchase 
from Xcel one share of Common Stock at a price of $95.00 per Right, 
subject to adjustment (``Exercise Price''). The Rights would not 
entitle the holders to make a discounted purchase of shares of Common 
Stock or the common stock of the person acquiring Xcel until the 
occurrence of one of the events described below. The Rights will expire 
at the close of business ten years from the date of the Rights 
Agreement, unless earlier redeemed exchanged by Xcel.
    Until the earlier of the two dates described below (``Flip-In 
Date''), Rights would not be exercisable and would trade with the 
outstanding shares of Common Stock. One date occurs on the day the 
Board publicly announces (or a later date if the board so chooses) that 
a person or group (``Acquiring Person'') has acquired beneficial 
ownership of 15% or more of the Common Stock. The second date occurs 
ten business days (unless extended by the Board) after any person or 
group has commenced a tender or exchange offer which would, upon its 
consummation, result in such person or group becoming an Acquiring 
Person.
    After the Flip-In Date, the holders of the Rights would immediately 
have the right to receive, for each Right exercised, Common Stock 
having a market value equal to two times the Exercise Price then in 
effect. Under certain circumstances where Xcel is acquired in a 
business combination transaction with, or 50% or more of its assets or 
earning power is sold or transferred to, another person or entity 
(``Acquiror''), exercise of a Right will entitle its holder to receive 
common stock of the Acquiror having a market value equal to two times 
the Exercise Price then in effect. Rights beneficially owned by any 
Acquiring Person and certain transferees of the Acquiring Person will 
be null and void.
    The Rights may be redeemed, as a whole, at the discretion of the 
Board, at a Redemption Price of $0.01 per Right, subject to adjustment, 
which will be paid, at Xcel's option, in cash, shares of Common Stock 
or other equivalent Xcel securities, at any time prior to the close of 
business on the date that any person has become an Acquiring Person.
    At any time after a Flip-in Date and prior to the time that any 
person (other than Xcel and certain related entities), together with 
its affiliates and associates, becomes the beneficial owner of 50% or 
more of the outstanding shares of Common Stock, the Board may direct 
the exchange of shares of Common Stock for all of the Rights (other 
than Rights which have become void) at the exchange ratio of one share 
of Common Stock per right, subject to adjustment.
    The Exercise Price payable, and the number of shares of Common 
Stock (or other securities, as the case may be) issuable upon exercise 
of the Rights are subject to adjustment from time to time to prevent 
dilution (a) in the event of a stock dividend on, or a subdivision or 
combination of, the Common Stock, or (b) upon the distribution to 
holders of the Common Stock of securities or assets (excluding regular 
periodic cash dividends) whether by dividend, reclassification, 
recapitalization or otherwise.
    The terms of the Rights may be amended by the Board (a) prior to 
the Flip-in Date in any manner and (b) on or after the Flip-in Date to 
cure any ambiguity, to correct or supplement any provision of the 
Rights Agreement which may be defective or inconsistent with any other 
provisions, or in any manner not adversely affecting the interests of 
the holders of the Rights generally.

     For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-6540 Filed 3-15-01; 8:45 am]
BILLING CODE 8010-01-M