[Federal Register Volume 66, Number 57 (Friday, March 23, 2001)]
[Notices]
[Pages 16303-16304]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-7256]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27359]


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

March 19, 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 12, 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 laws 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 12, 2001, the

[[Page 16304]]

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

Northeast Utilities, et al. (70-9839)

    Northeast Utilities (``NU''), a registered public utility holding 
company, Western Massachusetts Electric Company (``WEMCO''), an 
electric utility subsidiary of NU, both located at 174 Brush Hill 
Avenue, West Springfield, Massachusetts 01090 and Connecticut Light and 
Power Company (``CL&P''), an electric utility subsidiary of NU located 
at 107 Selden Street, Berlin, Connecticut 06037 (collectively, 
``Applicants'') have filed an application-declaration under sections 
6(a), 7, 9(a), 10 and 12(c) and rules 42, 43, 44, 46(a) and 54.
    Applicants request authorization, through December 31, 2004, for: 
(1) CL&P to pay dividends to and/or repurchase stock from NU out of 
capital or unearned surplus in an amount not to exceed $100 million in 
using the proceeds from the sale of nuclear generating facilities 
(``Millstone''); (2) CL&P to pay dividends and/or repurchase stock in 
accordance with the provisions of CL&P's dividend covenant under its 
first mortgage indenture and deed of trust (``Mortgage Indenture'') \1\ 
dated May 1, 1921 to the Bankers Trust Company as trustee; and (3) 
WMECO to pay dividends to and/or repurchase stock from NU out of 
capital or unearned surplus in an amount not to exceed $21 million 
using proceeds from the sale of nuclear generating facilities.
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    \1\ The Mortgage Indenture provides, among other things, that 
cash dividends may not be paid on the capital stock of CL&P, or 
distributions made, or capital stock purchased by CL&P, in an 
aggregate amount which exceeds CL&P's earned surplus after December 
31, 1966, plus the earned surplus of CL&P accumulated prior to 
January 1, 1967 in amount not exceeding $13,500,000, plus such 
additional amount as may be authorized or approved by the Commission 
under the Act.
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    Applicants note that each of the states in which CL&P and WMECO 
(collectively, ``Utilities'') operate, Connecticut and Massachusetts, 
has enacted restructuring legislation (``Restructuring Legislation'') 
that is intended to deregulate the electric utility industry and 
provide retail customers with a choice of electricity providers. The 
Restructuring Legislation strongly encourages the Utilities to, among 
other things, divest their nuclear and non-nuclear generating assets. 
The non-nuclear electric generating assets of CL&P and WMECO have been 
sold. The Utilities are in the process of selling Millstone, a nuclear 
generating asset. In addition to the proceeds raised from these sales 
of generating assets, CL&P and WMECO will also receive proceeds from 
the issuance of rate reduction bonds (``RRBs'') as part of the 
restructuring process. This application only deals with the use of 
proceeds from the sale of Millstone.
    By order dated March 7, 2000 (HCAR No. 27147), the utility 
subsidiaries \2\ sought and were granted authorization, among other 
things, to pay dividends to, and/or repurchase shares of their 
respective stock from NU out of capital or unearned surplus using the 
proceeds from the sale of non-nuclear generating assets and the 
issuance of RRBs, despite the lack of sufficient retained earnings. 
Applicants state that the sale of nuclear assets was not foreseen at 
the time of the previous filing as resulting in any substantial net 
cash to the Utilities. However, as a result of the proposed sale of 
Millstone, the Utilities will experience a significant influx of cash 
without a corresponding increase in retained earnings. To achieve the 
cost reduction goals of the Restructuring Legislation, Applicants 
propose to reduce their common equity capitalizations using a portion 
of such proceeds.
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    \2\ In addition to CL&P and WMECO, North Atlantic Energy 
Corporation and Public Service Company of New Hampshire also 
requested authorization in HCAR No. 27147.
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    Applicants state the payment of dividends would not impair the 
financial integrity of CL&P or WMECO because, after the payment of 
these dividends, each Utility will still have adequate cash to operate 
its substantially smaller business. The senior debt ratings of CL&P and 
WMECO issued by Standard & Poor's were upgraded to ``BBB+'' on January 
31, 2001 while the senior debt ratings of CL&P and WMECO issued by 
Moody's Investor Service Inc. were upgraded to ``Baa1'' on January 23, 
2001.
    Applicants note that as a result of the proposed transactions, the 
issuance of rate reduction bonds, and the accounting treatment of the 
debt relating to the rate reduction bonds, the equity-to-capitalization 
ratio of CL&P and of NU on a consolidated basis, is expected to fall 
below the Commission's 30% equity standard. Applicant represents that 
the companies will adhere to any state commission order requiring a 
higher equity ratio.\3\
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    \3\ On March 16, 2001, the Connecticut Department of Public 
Utility Control issued a temporary order requiring CL&P to use the 
proceeds in a way to result in a common equity ratio for CL&P 
between 45% and 50% (not including the rate reduction bonds as 
debt).

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-7256 Filed 3-22-01; 8:45 am]
BILLING CODE 8010-01-M