[Federal Register Volume 66, Number 90 (Wednesday, May 9, 2001)]
[Notices]
[Pages 23746-23747]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-11639]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27392]


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

May 3, 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 May 28, 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 May 28, 2001, the application(s) and/or 
declaration(s), as filed or as amended, may be granted and/or permitted 
to become effective.

Northeast Utilities, et al. (70-9883)

Notice of Proposal To Issue Securities; Order Authorizing Solicitation 
of Proxies

    Northeast Utilities (``NU''), 174 Brush Hill Avenue, West 
Springfield, Massachusetts 01090-0010, a registered holding company, 
has filed a declaration under sections 6(a), 7, and 12(e) of the Act 
and Rules 54, 62, and 65 under the Act.
    NU seeks the Commission's approval for: (1) The solicitation of 
proxies from NU's common shareholders seeking adoption of the Northeast 
Utilities Employee Share Purchase Plan (``Plan''), which contemplates 
the issuance of NU's common shares, $5.00 par value (``Common Shares'') 
and (2) the issuance each year, during the ten year term of the Plan, 
of NU Common Shares (either authorized, but previously unissued shares 
or reacquired shares) not to exceed one-half percent (0.5%) of the 
number of shares outstanding as of the end of the preceding year \1\ 
and derivatives of such shares.
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    \1\ Based on the number of issued and outstanding Common Shares 
on December 31, 2000 this restriction will permit 719,181 Common 
Shares to be issued to fund purchases by Plan participants in 2001 
and 7,191,818 Common Shares over the ten year life of the Plan. The 
issuance each year is subject to appropriate adjustment in the event 
of recapitalizations, mergers, splits or similar corporate 
transactions.
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    On April 9, 2001, NU's Board of Trustees (``Board'') adopted an 
Employee Share Purchase Plan (``Plan''). This Plan replaces an earlier 
Employee Share Purchase Plan adopted in 1 998 by order of the 
Commission dated April 29, 1998 (HCAR No. 26865) (``Prior 1998 Plan''), 
which NU discontinued in December of 2000 in anticipation of the merger 
with Consolidated Edison, Inc. The Prior 1998 Plan allowed officers to 
participate, but only as optional participants, which in effect 
required that the officers purchase the share at 100% rather than 85% 
of the market value as of a designated date determined by the Plan's 
committee. Under the current Plan officers may participate under the 
same terms as other eligible participants. NU proposes to submit the 
Plan to its shareholders for approval at NU's Annual Meeting of 
Shareholders to be held on June 28, 2001. If approved by NU's 
shareholders, the Plan will be effective as of August 1, 2001. The Plan 
will terminate ten years from its effective date, unless terminated 
earlier by the Board.
    The Plan will be administered by the Compensation Committee of NU's 
Board of Trustees or by a delegate (``Committee''). The Plan is 
intended to be an employee stock purchase plan under Section 423 of the 
Internal Revenue Code of 1986, as amended. Through programs established 
by the Committee from time to time eligible employees may purchase 
newly issued Common Shares through payroll deduction. The purchase 
price will be determined by the Committee and will be between 85 
percent and 100 percent of the lower of closing market value on the 
first and last days of the purchase period. Shares purchased under the 
Employee Share Purchase Plan may not be transferred for six months 
following the purchase date.
    Additionally, NU requests authority to solicit proxies approving 
the Plan from the holders of NU Common Shares, for use at the Annual 
Meeting of Shareholders to be held June 28, 2001. It is anticipated 
that solicitation materials will be mailed to shareholders commencing 
on or about May 11, 2001.
    NU proposes to mail the notice of meeting, statement relating to 
the Plan, proxy statement and proxy to its shareholders for the annual 
meeting, and has filed its proxy solicitation material relating to the 
Plan. NU requests that an order authorizing the solicitation of proxies 
be issued as soon as practicable under rule 62(d). It appears to the 
Commission that NU's declaration as it pertains to the proposed 
solicitation of proxies should be permitted to become effective 
immediately under rule 62(d).
    Rule 54 states that the Commission will not consider the effect of 
the capitalization or earnings of any subsidiary which is an exempt 
wholesale generator (``EWG'') or foreign utility company (``FUCO'') 
upon the

[[Page 23747]]

registered holding company system if rule 53(a), (b), and (c) are met. 
NU states, for purposes of rule 54, that it meets all of the conditions 
of rule 53 under the Act, except for rule 53(a)(1). By order dated 
March 7, 2000 (HCAR No. 27148)(``EWG Investment Order''), the 
Commission determined that NU's financing of its investment in 
Northeast Generation Company (``NGC''), NU's only current EWG or FUCO 
investment, in an amount not to exceed 83% of its ``average 
consolidated retained earnings,'' would not have the adverse effects 
set forth in rule 53(c) based on the representations NU set forth at 
that time. As of December 31, 2000, NU's ``aggregate investment,'' as 
defined in rule 53(a)(1) (``Aggregate Investment''), in EWGs and FUCOs 
was approximately $469.5 million, or about 76.1% of NU's consolidated 
retained earnings (``CRE''). For the four quarters ending December 31, 
2000, NU's CRE was $617.3 million.
    The proposed transactions are subject to rule 54. Under rule 54, 
because NU does not meet rule 53(a)(1), the Commission must consider 
the effect of the capitalization and earnings of EWGs and FUCOs. 
Applicants state the proposed transactions, considered in conjunction 
with the effect of the capitalization and earnings of NU's EWGs and 
FUCOs, would not have a material adverse effect on the financial 
integrity of the NU system, or an adverse impact on NU's public-utility 
subsidiaries, their customers, or the ability of state commissions to 
protect such public-utility customers. NU's consolidated capitalization 
ratio and its retained earnings, both have improved since the date of 
the EWG Investment Order. NU's consolidated capitalization consists of 
36.1% common equity and 63.9% debt (including long- and short-term 
debt, preferred stock, capital leases and guarantees). NU's 
consolidated retained earnings have decreased from $581.8 million as of 
the December 31, 1999 to 495.9 million as of December 31, 2000. NU's 
interest in NGC has made a positive contribution to earnings in that 
time by contributing $26.4 million to NU's retained earnings with 
revenues of $108.5 million and net income of $26.4 million. The 
capitalization and earnings attributable to NU's investments in EWGs 
and FUCOs has not had an adverse impact on NU's financial integrity.
    Fees, commissions, and expenses to be incurred in connection with 
the solicitation of proxies are estimated not to exceed $70,000. NU 
states that no state or federal commission, other than this Commission, 
has jurisdiction over the proposed transactions.
    It Is Ordered, under rule 62 under the Act, that the declaration to 
the extent that it relates to the proposed solicitation of proxies is 
permitted to become effective immediately, subject to the terms and 
conditions contained in rule 24 under the Act.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-11639 Filed 5-8-01; 8:45 am]
BILLING CODE 8010-01-M