[Federal Register Volume 66, Number 214 (Monday, November 5, 2001)]
[Notices]
[Pages 55966-55973]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-27712]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27460]


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

October 30, 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 November 26, 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 November 26, 2001, the application(s) and/or 
declaration(s), as filed or as amended, may be granted and/or permitted 
to become effective.

National Grid Group plc, et al. (70-9849)

    National Grid Group plc (``National Grid''), a registered public-
utility holding company, its nonutility direct subsidiary, New National 
Grid plc (``New National Grid''), both located at 15 Marylebone Road, 
London, NW15JD, United Kingdom, certain registered public-utility 
holding company subsidiaries of National Grid (``Intermediate Holding 
Companies'')--namely, National Grid (US) Holdings Limited, National 
Grid (US) Investments, both located at 15 Marylebone Road, London, 
NW15JD,

[[Page 55967]]

United Kingdom, National Grid Ireland 1 Limited, National Grid Ireland 
2 Limited, both located at 6 Avenue Pasteur, L 2310, Luxembourg, 
National Grid General Partnership, located on the 8th Floor of the 
Oliver Building, 2 Oliver Street, Boston Massachusetts 02109--National 
Grid USA, a registered public-utility holding company and direct or 
indirect subsidiary of the Intermediate Holding Companies, its direct 
and indirect subsidiaries--namely, New England Power Company 
(``NEPCO''), a public-utility company and public-utility holding 
company exempt from registration under section 3(a)(2),\1\ 
Massachusetts Electric Company (``Massachusetts Electric''), a public-
utility company, The Narragansett Electric Company (``Narragansett''), 
a public-utility company, Granite State Electric Company (``Granite 
State''), a public-utility company, Nantucket Electric Company 
(``Nantucket Electric''), a public-utility company, New England 
Electric Transmission Corporation (``NEET''), a public-utility company, 
New England Hydro-Transmission Corporation (``NH Hydro''), a public-
utility company, New England Hydro-Transmission Electric Co., Inc. 
(``MA Hydro'') a public-utility company, Vermont Yankee Nuclear Power 
Corporation (``Vermont Yankee''), a public-utility company, Wayfinder 
Group, Inc., a nonutility company, Metrowest Realty LLC, a nonutility 
company, NEES Energy, Inc., a nonutility company, EUA Energy 
Investments Corp., a nonutility company, National Grid Transmission 
Services Corp., a nonutility company, National Grid USA Service Company 
Inc. (formerly known as New England Power Service Company), a service 
company within the meaning of rule 88 under the Act, all located at 25 
Research Drive, Westborough, Massachusetts 01582, and each of their 
subsidiaries--together with Niagara Mohawk Holdings, Inc. (``NiMo''), a 
holding company exempt from regulation under section 3(a)(1) of the 
Act,\2\ and its direct and indirect subsidiaries (collectively, 
``Applicants''), including Niagara Mohawk Power Company (``Niagara 
Mohawk''), a public-utility company, and Opinac North America, Inc. 
(``Opinac''), its direct nonutility subsidiary, all located at 300 Erie 
Boulevard West Syracuse, New York 13202, have filed an application-
declaration under sections 3(a)(1), 5, 6(a), 7, 9(a), 10, 12(b) and 
13(b) of the Act and rules 20, 26, 42, 43, 45, 53, 54 and 88 under the 
Act.
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    \1\ See Yankee Atomic Electric Co., HCAR No. 13048 (November 25, 
1955) (granting the section 3(a) proposal).
    \2\ See Niagara Mohawk Holdings, HCAR No. 26986 (March 4, 1999).
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    Generally, Applicants request authority to (1) reorganize the 
National Grid system, by organizing New National Gold as a holding 
company of National Grid (``Reorganization''); (2) Acquire NiMo, by 
effecting a merger of NiMo with Grid Delaware, Inc. (``Grid 
Delaware''), a wholly owned direct subsidiary of New National Grid plc 
(``Merger''); (3) issue and sell securities to finance the proposed 
acquisition and other corporate business; and (4) effect related 
transactions. Applicants also request that the Commission issue an 
order exempting NiMo from all requirements applicable to registered 
holding companies under the Act except for those contained in section 
9(a)(2).\3\
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    \3\ NiMo would remain subject to the Act with respect to its 
status as a subsidiary of a registered holding company.
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I. Description of the Parties

A. The National Grid System

    National Grid was incorporated in England and Wales on April 1, 
1989. Its ordinary shares are listed on the London Stock Exchange and 
its American Depositary Receipts (``ADRs'') are listed on the New York 
Stock Exchange.\4\ As of March 31, 2001, National Grid owned assets 
worth $14.756 billion, including $7.917 billion in net utility plant 
assets. As of March 31, 2001, 1,484,609,664 ordinary shares and one 
special share of National Grid stock were outstanding.\5\
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    \4\ In addition, Applicants state that National Grid has a small 
number of American Depository Shares in the United States, which 
account for less than one percent of National Grid's publicly issued 
shares, that trade as ADRs and are held principally by United States 
institutions.
    \5\ The special share, or the golden share, is a non-voting 
share owned by the United Kingdom government. Applicants state that 
the special share is a means for the United Kingdom government to 
assure the continued independence of National Grid as a provider of 
transmission services.
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    National Grid conducts its principal business, namely the 
transmission of electricity in England and Wales, in the United Kingdom 
through The National Grid Company (``NGC''), its wholly owned indirect 
subsidiary. NGC owns and operates a transmission system consisting of 
approximately 4,400 miles of overhead lines and approximately 600 miles 
of underground cable together with substations at some 220 sites. All 
ownership interests in NGC and other non-United States operations of 
National Grid are held by National Grid Holdings Limited (``National 
Grid Holdings''), a foreign utility company (``FUCO'') within the 
meaning of section 33 of the Act.
    New National Grid was incorporated in England and Wales on July 11, 
2000. Currently, the company does not conduct any business activities. 
An executive director of National Grid hold ten ordinary shares of New 
National Grid, and NG Nominees Limited owns the other 499,990 issued 
ordinary shares.
    The Intermediate Holding Companies are wholly owned, directly or 
indirectly, by National Grid. They are used to avoid the loss of United 
Kingdom tax relief for foreign taxes paid on profits repatriated to the 
United Kingdom, and to minimize taxes on the repatriation of profits by 
the United States to the United Kingdom. In an order dated March 15, 
2000, the Commission held that the Intermediate Holding Companies do 
not unduly complicate National Grid's capital structure, and treated 
the Intermediate Holding Companies as a single company for purposes of 
section 11(b)(2) of the Act.\6\
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    \6\ See National Grid Group plc, Holding Co. Act Release No. 
27154 (``Prior Order'')
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    National Grid USA, an indirect wholly owned subsidiary of National 
Grid, holds directly all of the issued and outstanding ownership 
interests of the following public-utility companies: NEPCO, 
Massachusetts Electric, Narragansett, Granite State, Nantucket, and 
NEET. Additionally, National Grid USA owns directly 53.97% of the 
common stock of both NH Hydro and MA Hydro, each a public-utility 
company. Through subsidiaries, National Grid USA is also engaged in 
various nonutility activities.\7\
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    \7\ For example, through subsidiaries, National Grid USA is 
engaged in the construction and leasing of fiber optic 
telecommunications systems and the provision of consulting services 
to nonaffiliated utilities in the area of electric utility 
restructuring and customer choice.
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    Each of the public-utility company subsidiaries of National Grid 
USA is a member of the New England Power Pool (``NEPOOL''), and they 
have transferred control over their pool transmission facilities system 
to ISO-NE, which was established on the platform of an existing tight 
power pool.\8\ ISO-NE operates the transmission systems of all of the 
public utility systems in New England.\9\
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    \8\ See Unitil Corp., HCAR No. 25524 (April 24, 1992).
    \9\ ISO-NE directs and controls the operation of certain 
facilities, in particular pool transmission facilities (``PTF'') 
that are owned by ISO-NE participants and rated 69 kV or above which 
are required to allow energy from significant power sources to move 
freely on the New England transmission network. ISO-NE also directs 
and controls the operation of certain generating facilities that are 
subject to central dispatch. ISO-NE is the central dispatching 
agency and has responsibility for the NEPOOL control area and the 
administration of the NEPOOL Open Access Transmission Tariff.

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[[Page 55968]]

    NEPCO operates electricity transmission facilities owned by 
associate public-utility companies in concert with the Independent 
System Operator New England (``OSE-NE'').\10\ NEPCO also operates the 
non-pool transmission facilities (transmission facilities rated below 
69 kV). It also holds National Grid USA's remaining ownership interests 
in generating units.\11\ As of March 31, 2001, NEPCO owned assets worth 
$2.9 billion and, for the twelve months preceding that date, earned 
$656.3 million in operating revenues and $58.3 million in net income 
NEPCO is subject to the jurisdiction of the Federal Energy Regulatory 
Commission (``FERC'') for ratemaking purposes and the Nuclear 
Regulatory Commission (``NRC'') because it owns certain nuclear 
facilities. The Rhode Island Division of Public Utilities and Carriers 
(``RIDIV''), Massachusetts Department of Telecommunications and Energy 
(``MDTE''), New Hampshire Public Utilities Commission (``NHPUC''), and 
Vermont Public Service Board have jurisdiction over the company's 
financing transactions and transactions with affiliates. The Maine 
Public Utilities Commission also has jurisdiction over NEPCO's 
financing transactions, but Applicants state that the agency defers to 
the MDTE regarding these matters. NEPCO is also a public-utility 
holding company exempt from registration under section 3(a)(2),\12\ as 
it owns approximately twenty percent of the outstanding voting 
securities of Vermont Yankee.\13\ Vermont Yankee is the licensed 
operator of the Vermont Yankee nuclear facility, which has a gross 
maximum dependable capacity of approximately 535 MW. For the year that 
ended March 31, 2001, Vermont Yankee earned $178,565,569 in operating 
revenues and $6,388,956 in net income, and owned assets worth 
$710,851,866.
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    \10\ Although ISO-NE directs the central dispatch of the 
transmission facilities, NEPCO is responsible for determining 
whether and the extent to which safety requires facilities to be 
operated at less than their rated capability.
    \11\ Applicants state that the company is actively seeking to 
divest these facilities.
    \12\ See Yankee Atomic Electric Co., HCAR No. 13048 (November 
25, 1955) (granting the section 3(a) proposal).
    \13\ NEPCO also holds thirty, twenty, and fifteen percent 
owership interest in Yankee Atomic Electric Company, Maine Yankee 
Atomic Power Company, and Connecticut Yankee Atomic Power Company, 
respectively. Previously, each of these companies was a public-
utility company, but Applicants state that they have all permanently 
eased operations.
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    Massachusetts Electric is engaged in the delivery of electricity to 
approximately 1.2 million customers in 170 cities and towns in 
Massachusetts. The cities and towns served by the company include the 
highly diversified commercial and industrial cities of Worcester, 
Lowell, and Quincy, the Interstate 495 high technology belt, suburban 
communities, and many rural, towns. Massachusetts Electric owns 
approximately 16,021 pole miles of electric transmission and 
distribution lines. As of March 31, 2001, Massachusetts Electric owned 
assets worth $3.0 billion and, during the twelve months preceding that 
date, earned $1.9 billion in operating revenues and $24 million in net 
income. The company is subject to rate regulation by the FERC and the 
MDTE. The MDTE also has jurisdiction over the company's financing 
transactions and transactions with affiliates.
    Narragansett delivers electricity to approximately 460,000 
customers in thirty-eight cites and towns in Rhode Island. Its service 
area covers approximately ninety-nine percent of Rhode Island, and 
includes suburban, rural and urban areas such as the cites of 
Providence, East Providence, Cranston, and Warwick. The company owns 
approximately 4,737 pole miles of electric transmission and 
distribution lines. As of March 31, 2001, Narragansett owned assets 
worth $1.5 billion and, during the twelve months preceding that date, 
earned $757.6 million in operating revenues and $16.9 million in net 
income. Narragansett is subject to rate regulation by the FERC and the 
Rhode Island Public Utilities Commission, and the RIDIV has 
jurisdiction over the company's financing transactions and transactions 
with affiliates.
    Granite State provides retail electric service to approximately 
36,000 customers in twenty-one communities in New Hampshire. Its 
service area includes the Salem area of southern New Hampshire, as well 
as several communities located along the Connecticut River, primarily 
in the Lebanon and Walpole areas. The company owns approximately 1,049 
pole miles of electric transmission and distribution lines. As of March 
31, 2001, Granite State owned assets worth $90.2 million and, during 
the twelve months preceding that date, earned $73.7 million in 
operating revenues and $1.8 million in net revenues. Granite State is 
subject to regulation by the FERC and the NHPUC. The NHPUC also has 
jurisdiction over the company's financing transactions and transactions 
with affiliates.
    Nantucket provides retail electric service to approximately 10,000 
customers on Nantucket Island, in Massachusetts. It owns approximately 
110 pole miles of electric transmission and distribution lines. As of 
March 31, 2001, Nantucket owned assets worth $58 million and, during 
the twelve months preceding that date, earned $17.9 million in 
operating revenues and $100,000 in net income. Nantucket is subject to 
regulation by the FERC and the MDTE. The MDTE also has jurisdiction 
over the company's financing transactions and transactions with 
affiliates.
    NEET owns and operates a direct current/alternating current 
converter terminal facility for the first phase of the Hydo-Quebec and 
New England interconnection (``Interconnection'') and six miles of high 
voltage direct current transmission line in New Hampshire. As of March 
31, 2001, NEET owned assets worth $24 million and, during the twelve 
months preceding that date, earned $8.3 million in operating revenues 
and $700,000 in net income. NEET is subject to rate regulation by the 
FERC, and the NHPUC has jurisdiction over the company's financing 
transactions and transactions with affiliates.
    NH Hydro operates 121 miles of high-voltage direct current 
transmission line in New Hampshire for the second phase of the 
Interconnection that extends to the Massachusetts border. As of March 
31, 2001, NH Hydro owned assets worth $113.8 million and, during the 
twelve months preceding that date, earned $28.2 million in operating 
revenues and $4.2 million in net income. NH Hydro is subject to rate 
regulation by the FERC, and the NHPUC has jurisdiction over the 
company' financing transactions and transactions with affiliates.
    MA Hydro operates a direct current/alternating current terminal and 
related facilities for the second phase of the Interconnection and 
twelve miles of high-voltage direct current transmission line in 
Massachusetts. As of March 31, 2001, the company owned assets worth 
$139.8 million and, during the twelve months preceding that date, 
earned $34.4 million in operating revenues and $7.0 million in net 
income. MA Hydro is subject to rate regulation by the FERC, and the 
MDTE has jurisdiction over the company's financing transactions and 
transactions with affiliates.

B. The NiMo System

    Through subsidiaries, NiMo is engaged in the sale, distribution and 
transportation of natural gas, the generation, transmission and 
distribution of electricity, and certain

[[Page 55969]]

nonutility businesses. Its common stock is listed on the New York Stock 
Exchange and, as of March 31, 2001, there were 160,239,918 of its 
shares outstanding. As of March 31, 2001, on a consolidated basis, NiMo 
owned assets worth $12.381 billion, including $5.717 billion in net 
utility plant assets, earned $4.712 billion in operating revenues, and 
reported a net loss of $20 million.\14\ The NiMo system employees 
approximately 7,546 full-time employees. NiMo has two direct, wholly 
owned subsidiaries: Niagara Mohawk and Opinac, a ``holding company'' 
within the meaning of section 2(a)(7) of the Act.
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    \14\ Niagara Mohawk comprises ninety-eight percent of NiMo's 
total assets and generates ninety-four percent of NiMo's total 
revenues.
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    Niagara Mohawk is a combination electric and gas public-utility 
company. Through subsidiaries, Niagara Mohawk is also engaged in 
various nonutility businesses.\15\ As of March 31, 2001, Niagara Mohawk 
owned assets worth $12,0698 billion, including $5.717 billion in net 
utility assets and, during the twelve months preceding that date, 
earned $4.004 billion in operating revenues and incurred a net loss of 
$39.2 million. During the twelve months prior to April 30, 2001, 
Niagara Mohawk provided electric service and sold, distributed and 
transported natural gas to approximately 1,535,135 electric and 546,835 
natural gas customers in eastern, central, northern and western New 
York State.\16\ Niagara Mohawk's electric system interconnects with the 
National Grid USA's system, and consists of 9,327 pole miles of 
transmission lines and 41,125 pole miles of distribution networks. 
Niagara Mohawk owns hydroelectric generation assets located in 
Mechanicsville, New York, that, although inoperable, has a nominal 
capacity of 4.5 MW. It also holds land rights under hydroelectric 
facilities that have a collective generation capacity of 58.5 MW.\17\ 
Currently, Niagara Mohawk holds a 100% ownership interest in the 613 MW 
Nine Mile Point Nuclear Station Unit No. 1 and a forty-one percent 
ownership interest in the 1,143 MW Nine Mile Point Nuclear Station Unit 
No. 2, and operates both of these facilities. Niagara Mohawk has 
entered into an agreement, however, to sell its ownership interests in 
these nuclear plants to Constellation Nuclear LLC. Niagara Mohawk has 
transferred control of its transmission system to the New York 
Independent System Operator (``NYISO'').\18\ All of Niagara Mohawk's 
customers may choose their electricity supplier, but Niagara Mohawk 
distributes electricity through its transmission and distribution 
systems for all customers, regardless of their supplier. It also 
provides electricity to those customers who do not choose a new 
electricity supplier. Niagara Mohawk also purchases, transports and 
distributes natural gas in eastern, central and northern New York State 
in an area that generally extends from Syracuse to Albany. Gas utility 
service is provided largely in areas where Niagara Mohawk also provides 
electrical service, and the majority of the company's gas sales are for 
residential and commercial space and water heating. Niagara Mohawk 
purchases its natural gas for sale to its customers under firm and spot 
contracts, and transports the gas under both firm and interruptible 
transportation contracts. The New York State Public Service Commission 
(``NYPSC'') regulates the following aspects of Niagara Mohawk's 
operations: financing with a term of one year or more, the company's 
capital structure, dividend payments, asset sales, affiliate 
transactions, and the terms and quality of services provided.
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    \15\ Niagara Mohawk's wholly owned direct nonutility 
subsidiaries are NM Uranium, Inc. (``NM Uranium''), NM Properties, 
Inc. (``NM Properties'') NM Receivables LLC (``NM receivables'') and 
NM Receivables Corp. II (``NM Receivables II''). NM Uranium holds a 
fifty percent ownership interest in certain closed uranium mines in 
the State of Texas. NM Properties engages in the divestiture, or in 
conjunction with others, the development of real property formerly 
owned by Niagara Mohawk. NM Receivables is a single-purpose, 
financing subsidiary that purchases and resells Niagara Mohawk's 
customer receivables, including accrued unbilled revenues. NM 
Receivables, LLC is over 99.99% owned by Niagara Mohawk and is also 
owned by NM Receivables Corp. II, a wholly owned subsidiary of 
Niagara Mohawk that manages NM Receivables, LLC.
    NM Properties wholly owns the following real estate development 
subsidiaries: NM Properties, Inc. wholly owns the following 
subsidiary real estate development companies: Hudson Pointe, Inc., 
Land Management & Development, Inc., Landwest, Inc., Moreau Park, 
Inc., Riverview, Inc., Salmon Shores, Inc., Upper Hudson 
Development, Inc., Arbuckle Acres, Inc., and OproprCo., Inc.
    \16\ It provides electric service in the cities of Buffalo, 
Syracuse, Albany, Utica, Schenectady, Niagara Falls and Troy.
    \17\ The nonaffiliate leasees sell the generated power to 
Niagara Mohawk under power purchase agreements.
    \18\ The NYISO is an independent operator of the electric 
transmission systems of all of the public utility systems in New 
York State.
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    Through its subsidiaries, Opinac is currently engaged in various 
utility and nonutility businesses.\19\ Opinac Energy Corporation 
(``Opinac Energy''), a wholly owned, direct subsidiary of Opinac, is a 
public-utility holding company exempt from registration under section 
3(a)(5) of the Act.\20\ It holds a fifty percent ownership interest in 
Canadian Niagara Power Company Limited (``CNP Limited''), a public-
utility company based in Ontario, Canada.\21\ CNP Limited will obtain 
certification as a FUCO prior to consummation of the Merger.
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    \19\ Niagara Mohawk Energy, Inc. (``NM Energy''), a wholly owned 
direct subsidiary of Opinac, is an energy marketing and services 
company. Through its wholly owned direct subsidiary, Niagara Mohawk 
Energy Marketing, Inc., NM Energy purchases electricity and gas for 
resale both within and outside New York, through short-term forward 
contracts or spot market purchases. NM Energy also holds the 
following ownership interests: a twenty-five percent ownership 
interest in Telergy Central LLC, a company engaged in the 
development, deployment and operation of a fiber optic network and 
in telecommunications generally; a twenty-six percent ownership 
interest in Direct Global Power, a company engaged in the 
development of photovoltaic and other renewable energy products; and 
a 17.9% ownership interest in Northern Power System, Inc., a company 
engaged in providing remote power and renewable energy systems 
solutions.
    Opinac also holds an eighteen percent and a sixteen percent 
ownership interest in Telergy, Inc. (``Telergy'') and EVonyx, Inc. 
(``EVonyx''), respectively, Telergy is engaged in the development, 
deployment and operation of a fiber optic network and 
telecommunications generally; EVonyx is engaged in the research and 
development of fuel cell and battery technology.
    \20\ See Opinac Energy Corp, HCAR No. 25632 (September 16, 
1992).
    \21\ Fortis Inc. (``Fortis'') holds the remaining fifty percent 
ownership interest in CNP Limited. Applicants state that Fortis is 
an unaffiliated holding company that is exempt from all requirements 
of the Act by rule 5 under the Act.
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    CNP Limited generates electricity, and supplies and markets energy 
and energy services in Ontario. It also sells electricity that is 
surplus to its Ontario needs into the New York wholesale market.\22\ It 
owns and operates the William B. Rankine Generating Station, a 74.6 MW 
hydroelectric plant located on the Canadian side of the Niagara River 
at Niagara Falls. As of March 31, 2001, CNP Limited owned, on a 
consolidated basis, assets worth $20.3 million and, during the 
preceding twelve months, earned $13 million in operating revenues and 
$4.5 million in net income. CNP Limited is subject to the jurisdiction 
of the Ontario Energy Board (``OEB''). Additionally, CNP Limited owns 
all of the issued and outstanding ownership interests in Canadian 
Niagara Power Inc. (``CNP Inc.''), a public-utility company.
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    \22\ During the twelve months preceding March 31, 2001, CNP 
Limited sold 355,886 MWh to various parties in the northeastern 
United States.
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    CNP Inc. primarily distributes electricity to residential, 
commercial and industrial customers in Fort Erie, Ontario. Through an 
international interconnection between its facilities and those of 
Niagara Mohawk, CNP Inc. provides back-up power in the event of an 
outage at Niagara Falls. \23\ CNP Inc.

[[Page 55970]]

serves approximately 14,600 customers, employs forty-four people, and 
is subject to the jurisdiction of the OEB. As of March 31, 2001, the 
company owned $15.8 million in assets and, during the twelve months 
preceding that date, earned $6.8 million in operating income but no net 
income. Additionally, on July 19, 2001, CNP Limited announced that it 
had signed an agreement that provides for CNP Inc. to lease the 
electricity distribution business of Port Colborne Hydro, Inc. (``Port 
Colborne Hydro''), which serves approximately 9,000 customers within 
the City of Port Colborne. This acquisition is subject to the approval 
of OEB. CNP Inc. also recently acquired a ten percent interest in 
Westario Power Holdings Inc. (``Westario Power'') and Rideau St. 
Lawrence Holdings Inc. (``Rideau St. Lawrence''), both nonutility 
holding companies.\24\
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    \23\ CNP Inc. owns 32 km of transmission lines and 900 km of 
distribution lines, including one 25 hertz transmission line and one 
60 hertz transmission line that interconnect the grids in southern 
Ontario with those in northwestern New York. These utility assets 
were formerly owned by CNP Limited; on March 31, 1999, CNP Limited 
transferred its transmission and distribution assets to CNP Inc. to 
comply with Electricity Act of 1998 and regulation of the OEB.
    \24\ Through subsidiaries, Westario Power distributes 
electricity to 20,000 customers in the counties of Bruce, Grey and 
Huron, Ontario, and Rideau St. Lawrence distributes electricity to 
6,000 customers in the counties of Leeds-Grenville and Stormont-
Dundes, Ontario.
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II. Merger Agreement and Restructuring

    National Grid, NiMo, New National Grid, and Grid Delaware entered 
into an Agreement and Plan of Merger and Scheme of Arrangement dated 
September 4, 2000 and amended December 1, 2000 (``Merger Agreement''), 
which contemplates the Restructuring and provides for and governs the 
Merger. The Merger and Restructuring would be effected though a series 
of transactions involving special purpose acquisition corporations, 
temporary intercompany loans (including transitory upstream loans that 
would not survive the Merger),\25\ the acquisition of securities, share 
repurchase or redemptions and other transactions. The Restructuring and 
Merger are intended to collectively qualify as a tax-free transaction 
within the meaning of section 351 of the Internal Revenue Code of 1986, 
as amended.
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    \25\ Applicants state that upstream loans used to fund the 
Merger would be unsecured and limited to loans by wholly owned 
direct or indirect subsidiaries of National Grid and New National 
Grid, and would not be funded by any affiliated public-utility 
company subsidiaries. These loans would be used as a mechanism to 
convey the Merger consideration and the acquired ownership interest 
in NiMo to the appropriate company in the New National Grid System, 
and that the loans would permit New National Grid to avail itself of 
exemptions with respect of taxes that might otherwise arise on 
implementation of the structure.
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    The Restructuring would be implemented immediately prior to the 
Merger, and involves exchanging National Grid's existing shares for 
shares of New National Grid. Specifically, New National Grid would 
issue one of its shares in exchange for each outstanding share of 
National Grid common stock.\26\ After the Restructuring, National Grid 
would be a wholly owned subsidiary of New National Grid, and would no 
longer be the parent company of National Grid USA or any of the 
Intermediate Holding Companies. Instead, National Grid would be the 
direct parent company of National Grid Holdings, a FUCO. 
Correspondingly, National Grid would deregister as a public-utility 
holding company under the Act and submit a notification on Form U-57 to 
obtain FUCO status, and New National Grid, as the parent of the 
Intermediate Holding Companies and National Grid USA, would register 
under section 5 of the Act. The organization of New National Grid as 
the new top, registered holding company is designed to provide National 
Grid the flexibility to increase the cash portion of the Merger 
consideration without jeopardizing the tax free nature of the 
transaction for NiMo shareholders who elect to exchange their shares in 
NiMo for shares in National Grid, should the shareholders in aggregate 
elect to receive more than one-fifth of the consideration for their 
NiMo shares in cash.\27\
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    \26\ Applicants expect that the outstanding special share of 
National Grid stock would be canceled and replaced with a special 
share of New National Grid stock.
    \27\ Applicants state that National Grid cannot be eliminated as 
part of the Restructuring without jeopardizing the tax-free nature 
of the transaction.
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    Under the Merger Agreement, Grid Delaware would merge into NiMo, 
with NiMo surviving as direct subsidiary of New National Grid. The 
Merger Agreement provides that all of the shares of common stock of 
Grid Delaware issued and outstanding prior to the Merger would be 
converted into the right to receive common stock of NiMo. Each share of 
NiMo common stock would be converted into the right to receive the 
merger consideration in the form of cash, American Depositary Shares 
(``ADSs'') or a combination of cash and ADSs. The per-share merger 
consideration would be $19.00 if the Average Price \28\ is between 
$32.50 and $51.00.\29\ Based on National Grid's current share price, 
the value of the Merger consideration is approximately $3.1 
billion.\30\ NiMo shareholders may elect to receive their consideration 
in cash, ADSs or as a combination of both, as long as the aggregate 
cash consideration paid does not exceed $1.015 billion.\31\ 
Subsequently, all equity interests in NiMo would be contributed to 
National Grid USA.
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    \28\ The ``Average Price'' is defined under the Merger Agreement 
as the average of the closing prices of New National Grid ordinary 
shares, as derived from the Daily Official List of the London Stock 
Exchange (converted to a United States dollar value using the 
exchange rate for each date for which the closing price is to be 
determined as reported in The Financial Times) for twenty trading 
days selected at random (using mutually agreed upon procedures) in 
the period of forty consecutive London Stock Exchange trading days 
ending on the close of business on the tenth London Stock Exchange 
trading day prior to the election deadline, multiplied by five.
    \29\ In the event that the Average Price is greater than $51.00, 
the per-share consideration received by NiMo shareholders would 
increase by two-thirds of the percentage of the increase in value 
over $51.00. In the event that the Average Price is less than 
$32.40, the per-share consideration received by NiMo shareholders 
would decrease by two-thirds of the percentage of the decrease in 
value below $32.50.
    \30\ Applicants request authority to obtain more than $3.1 
billion in Merger-related financing because, as discussed above, the 
Merger consideration may increase if the Average Price of National 
Grid common stock rises above $51 per share.
    \31\ If cash elections received from NiMo shareholders exceed 
$1.015 billion, National Grid has the option, but not the 
obligation, to increase the cash component of the consideration. If 
elections for one form of consideration exceed the amount of such 
form of consideration to be issued in the Merger, all shareholders 
electing the oversubscribed form of consideration would receive, on 
a pro rata basis, some of the undersubscribed form of consideration.
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    The Merger would be accounted for under the purchase method of 
accounting, in accordance with generally accepted accounting 
principles.\32\ Applicants state that the common stock shareholders of 
NiMo and National Grid approved the Merger on January 19 and 29, 2001, 
respectively. The Merger is contingent on the completion of the sale of 
Niagara Mohawk's ownership interests in certain nuclear assets 
discussed above or entry into another arrangement covering those 
assets.
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    \32\ Under the purchase method of accounting, the purchase price 
of NiMo, including direct costs of the acquisition, would be 
allocated to the assets acquired and liabilities assumed based upon 
their estimated fair values, with the excess, i.e., the difference 
between the purchase price, representing fair value, and the fair 
value of the identified assets acquired, recorded as goodwill.
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    After the Merger, all of the common stock of NiMo would be owned by 
National Grid USA. The corporate structure of the current NiMo system 
would not otherwise change. Applicants state that, after the Merger, 
Niagara

[[Page 55971]]

Mohawk would be re-branded ``Niagara Mohawk, a National Grid Company.''
    Applicants state that the combination of NiMo and National Grid 
would create the ninth largest electric utility in the U.S., with an 
electric customer base of approximately 3.3 million. They expect that, 
over the ten year period from 2002 through 2011, Merger-related cost 
synergies and the sharing of best practices across operations would 
result in savings of $895 million before costs to achieve, or 
approximately $90 million per year.

III. Financing Transactions

    Applicants also request authority to issue and/or sell certain 
securities to finance the New National Grid system through September 
30, 2004 (``Authorization Period''). They request that the system 
financing parameters imposed under the Prior Order be replaced by the 
following ones (collectively, ``Financing Parameters''):
     All long-term debt or preferred stock issued by New 
National Grid, National Grid USA, or any of the current public-utility 
company subsidiaries of National Grid USA and Niagara Mohawk 
(collectively, ``Utility Subsidiaries'') in public offerings would be 
rated at the investment grade level by a nationally recognized 
statistical rating organization.
     New National Grid would maintain common stock equity as a 
percentage of total capitalization, measured on a book value basis 
under generally accepted accounting principles in the United State 
(``U.S. GAAP''), of at least 28.5% or above at the time of the closing 
of the Merger and thereafter during the Authorization Period, and 
thirty percent or above by March 31, 2002.
     National Grid USA, on a consolidated basis, and each of 
the Utility Subsidiaries (except NEET and Vermont Yankee) on a stand-
alone basis, would maintain common stock equity of at least thirty 
percent of total capitalization.
     The cost of money on New National Grid's debt or preferred 
stock financings would not exceed the cost of comparable term U.S. 
treasury securities or government benchmark for the currency concerned 
plus the margin demanded in the financial markets in a competitive 
offering by an issuer of such securities with New National Grid's 
credit rating.
     For debt securities proposed to be issued by the Utility 
Subsidiaries, the cost of money on debt securities issued to 
nonassociated would not exceed the cost of comparable term U.S. 
treasury securities or government benchmark for the currency concerned 
plus the margin demanded in the financial markets in a competitive 
offering by an issuer of such securities with the respective Utility 
Subsidiary's credit rating.
     The cost of money on proposed National Grid USA debt 
securities or preferred stock would not exceed the cost of comparable 
term U.S. treasury securities or government benchmark for the currency 
concerned plus the margin demanded in the financial markets in a 
competitive offering by an issuer of such securities with National Grid 
USA's credit rating.
     The underwriting fees, commissions or other similar 
remuneration paid in connection with the non-competitive issue, sale or 
distribution of a security would not exceed five percent of the 
principal or total amount of the security being issued.

A. New National Grid

    As described above, in connection with the Merger, NiMo 
shareholders would receive New National Grid ordinary shares and case 
(``Merger Consideration''). To raise the Merger Consideration, 
Applicants request authority for New National Grid to issue its 
ordinary shares to NiMo shareholders and, issue and sell debt 
securities to banks under one or more credit facilities and forward 
underwriting commitments that would be established prior to completion 
of the Merger. The aggregate amount of these debt securities, when 
combined with the value of the ordinary shares issued in connection 
with the Merger, will not exceed $4 billion at any one time 
outstanding.\33\
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    \33\ As discussed above, the value of the Merger Consideration 
is approximately $3.1 billion based upon National Grid's current 
share price. That amount may increase, however, if the Average Price 
of New National Grid shares increases above fifty-one dollars per 
share.
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    Applicants request authority for New National Grid to issue to 
nonaffiliates up to an aggregate amount of $6 billion (``Aggregate 
Limit'') of equity and debt securities at any one time outstanding 
during the Authorization Period.\34\ These securities could include 
ordinary shares, preferred shares, options, warrants, long- and short-
term debt (including commercial paper), convertible securities, 
subordinated debt, bank borrowings and securities with call or put 
options. Applicants would issue up to $4.5 billion in equity securities 
(including options and warrants) and $5 billion in debt securities, 
subject to the Aggregate Limit. The Aggregate Limit would replace the 
$4 billion limit authorized in the Prior Order, and does not include 
the Merger Consideration.\35\
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    \34\ The Aggregate Limit would apply only to securities issued 
and outstanding during the Authorization Period. Accordingly, when a 
security is issued during the Authorization Period and later 
redeemed or retired during the Authorization Period, the aggregate 
amount issued and outstanding under the Aggregate Limit would be 
reduced and additional financing capacity under the Aggregate Limit 
would be made available.
    \35\ In addition, common shares to be issued in connection with 
presently outstanding convertible bonds would not count against the 
Aggregate Limit. See below, at footnote 40.
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    New National Grid proposes to enter into, perform, purchase and 
sell financial instruments intended to manage the volatility of 
currencies and interest rates, including currency and interest rate 
swaps, caps, floors, collars and forward agreements, and other similar 
agreements (``Hedging Instruments''). Hedging Instruments may be 
executed on-exchange (``On-Exchange Trades'') with brokers, through the 
opening of futures and/or options positions, or by opening over-the-
counter positions with one or more counterparties (``Off-Exchange 
Trades''), or a combination of On-Exchange Trades and Off-Exchange 
Trades. Off-Exchange Trades would be entered into only with associate 
companies or counterparties whose senior debt ratings are investment 
grade, as determined by Standard & Poor's, Moody's Investors Service, 
Inc. or Fitch IBCA, Inc. (``Approved Counterparties'').\36\ Hedging 
Instruments will qualify for hedge accounting treatment under U.S. GAAP 
or the United Kingdom (``U.K. GAAP''). If a transaction qualifies for 
hedge accounting treatment only under U.K. GAAP, New National Grid will 
reconcile on its financial statements the difference between U.S. GAAP, 
in accordance with Form 20-F. No gain or loss on a Hedging Instrument 
entered into by New National Grid will be allocated to National Grid 
USA or its subsidiaries. Applicants request authority for New National 
Grid to enter into Hedging Instruments to fix and/or limit the interest 
rate or currency exchange risk associated with anticipated debt 
offerings (``Anticipatory Hedges''). For the purpose of Anticipatory 
Hedges, Hedging Instruments may include the following: forward sales of 
exchange-traded Government Securities\37\ futures contracts, Government 
Securities and/or a forward swap (each, ``Forward Sales''), purchases 
of put options on Government Securities (``Put Options Purchases''), 
Put Options Purchases in

[[Page 55972]]

combination with sales of call options on Government Securities (``Zero 
Cost Collars''), transactions involving purchases or sales (including 
short sales) of Government Securities, or combinations of Forward 
Sales, Put Options Purchases, Zero Cost Collars, and/or other 
derivative or cash transactions. Neither Hedging Instruments nor 
Anticipatory Hedges entered into by New National Grid would be subject 
to the Aggregate Limit.
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    \36\ See below, at footnote 41.
    \37\ ``Government Securities'' would include U.S. Treasury 
obligations, U.K. Gilts or the appropriate government benchmark 
security for the currency involved in the hedge.
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    Applicants request authority for New National Grid to enter into 
guaranties, obtain letters of credit, enter into guaranty-type expense 
agreements or otherwise provide credit support with respect to the 
obligations of the Subsidiaries, to enable those companies to carry on 
their respective businesses. These guaranties would not be counted 
against the Aggregate Limit but would instead be subject to a $2 
billion limit, based upon the amount at risk.\38\ The fee, if any, 
charged for any guaranty would not exceed the cost of obtaining the 
liquidity necessary to perform the guaranty for the period of time the 
guaranty remains outstanding.
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    \38\ Guaranties previously issued by National Grid that New 
National Grid assumes would not count against this limit.
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B. Subsidiary Financing

    Applicants request authority for the Intermediate Holding Companies 
and National Grid USA to issue and sell securities to (1) their direct 
and indirect parent companies; and (2) National Grid and its associate 
company subsidiaries\39\ (collectively, ``FUNCO Subsidiaries''), except 
that the FUCO Subsidiaries would not purchase equity and convertible 
debt securities from any of the Intermediate Holding Companies or 
National Grid USA. Financing between an Intermediate Holding Company 
and its direct or indirect parent or a FUCO Subsidiary would be on 
market terms. All interest rates and maturity dates of debt securities 
issued by National Grid USA to an associate company would be designed 
to parallel the lower of the effective cost of capital of National Grid 
USA or New National Grid. All borrowings by the Intermediate Holding 
Companies and National Grid USA would be unsecured. These securities 
would be used to finance the operations of the National Grid USA and 
its subsidiaries.
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    \39\ As discussed above, after the Restructuring, National Grid 
would become a FUCO and a holding company over National Grid 
Holdings, the current FUCO holding company in the National Grid 
System.
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    Applicants request authority for the Intermediate Holding Companies 
and National Grid USA to acquire securities from their direct or 
indirect subsidiary companies. Neither the Intermediate Holding 
Companies nor National Grid USA, however, would borrow or receive any 
extension of credit or indemnity from any of their respective direct or 
indirect subsidiaries. Debt offerings by the Intermediate Holding 
Companies and National Grid USA would have short, medium and long-term 
maturities.\40\
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    \40\ Short-term debt would be less than one year in maturity, 
medium-term debt would have maturities up to five years, and long-
term debt would have maturities up to fifty years.
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    Applicants request authority for the Utility Subsidiaries to enter 
into Hedging Instruments with nonaffiliated Approved Counterparties, to 
the extent the issuance and sale of these securities is not exempt 
under rule 52(a) under the Act.\41\ These securities would be entered 
into on the same terms generally applicable to New National Grid.\42\
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    \41\ By order dated October 22, 2001, the Commission authorized 
through May 31, 2003; (1) the Intermediate Holding Companies to 
enter into currency derivatives with National Grid and its 
subsidiaries that are outside of the National Grid USA ownership 
chain, including the FUCO Subsidiaries; (2) National Grid to 
increase the aggregate amount of convertible bonds that it may issue 
to $2 billion; and (3) the Intermediate Holding Companies to enter 
into currency derivatives with National Grid and the FUCO 
Subsidiaries. See National Grid Group plc, HCAR No. 27455 (``October 
2001 Order''). Applicants request that the authority granted in the 
October 2001 Order be modified to reflect the Reorganization.
    \42\ Hedging Instruments entered into by the Utility 
Subsidiaries would differ from those entered into by New National 
Grid in that the former would qualify for hedge accounting treatment 
under U.S. GAAP and, to the extent a Utility Subsidiary incurs a 
gain or loss on a Hedging Instrument that it has entered into to 
hedge a currency or interest rate risk associated with a security 
that such Utility Subsidiary has issued, the gain or loss would be 
attributed to the Utility Subsidiary.
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    Applicants request authority for Niagara Mohawk to issue to 
associate and nonassociate companies debt securities with maturities of 
less than one year, in an aggregate amount not to exceed $1 billion at 
any one time outstanding.
    Applicants request authorization for NiMo to issue and sell 
securities, other than equity and convertible securities, to associate 
companies, but not to NiMo's direct or indirect subsidiaries other than 
special purpose financing subsidiaries. Proceeds from the sales of 
these securities would be used to finance NiMo's existing business and 
its respective subsidiaries and future authorized or permitted 
businesses. All borrowings by NiMo would be unsecured. To the extent 
that NiMo invests any funds in CNP Limited (its FUCO subsidiary) or its 
subsidiaries, those amounts would be counted against the overall EWG 
and FUCO investment limits applicable to New National Grid.
    Applicants request authority for National Grid USA to issue up to 
an aggregate amount of $500 million at any one time outstanding of debt 
securities to third parties through public or private offerings. As 
mentioned above, all borrowings by National Grid USA would be unsecured 
and would have the short, medium and long-term maturities described 
above.
    Applicants request authority for the Intermediate Holding 
Companies, National Grid USA, and NiMo to issue guaranties and other 
forms of credit support on behalf of their direct and indirect 
subsidiaries. These guaranties would be subject to a limit of $1 
billion.\43\ Applicants also request authority for the Nonutility 
Subsidiaries to enter into guaranties with each other for up to an 
aggregate amount of $1 billion, to the extent such transactions are not 
exempt under rule 45. The fee, if any, charged for any guaranty would 
not exceed the cost of obtaining the liquidity necessary to perform the 
guaranty for the period of time the guaranty remains outstanding.
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    \43\ Applicants state that certain guaranties may be in support 
of obligations that are not capable of exact quantification. To 
value these obligations for purposes of the limit, New National Grid 
would determine the exposure under a guarantee by an appropriate 
means, including estimating its subsidiary's exposure based on loss 
experience or projected potential payment amounts.
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    Applicants request authority for Massachusetts Electric, Nantucket, 
Narragansett, NEPCO, and MA Hydro to continue issuing up to aggregate 
amounts of $275 million, $6 million, $145 million, $750 million, $25 
million, respectively, in short term debt securities through the 
Authorization Period.\44\
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    \44\ The Commission previously granted these companies the 
requested authorizations. See National Grid USA, UCAR No. 27381 
(April 19, 2001) (authorizing Massachusetts Electric, Nantucket, and 
Narragansett to issue up to $275 million, $6 million, and $145 
million, respectively, in short-term debt securities through May 31, 
2003); New England Electric System, HCAR No. 26881 (June 2, 1998) 
(authorizing NEPCO to issue up to $750 million in short-term debt 
securities through October 31, 2001); New England Electric System, 
HCAR No. 26768 (October 29, 1997) (authorizing MA Hydro to issue up 
to $25 million in short-term debt securities through October 31, 
2001).
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C. Money Pool Expansion

    Applicants request authority for the Money Pool to be operated as 
authorized under the Prior Order. Applicants also request authority for 
NiMo and its current subsidiaries, except for those companies that are 
exempt telecommunication carriers (``ETCs''), exempt wholesale 
generators (``EWGs''), and FUCOs, to participate in

[[Page 55973]]

the Money Pool under the same terms and conditions established in the 
Prior Order. Further, Applicants request authority for all newly formed 
or acquired or currently non-participating National Grid subsidiary 
companies (including EWGs and FUCOs, but excluding ETCs) to participate 
in the Money Pool as lenders only.

IV. Other Requests

    As mentioned above, the purchase method of accounting would apply 
to the Merger. Consequently, the current retained earnings of NiMo and 
its subsidiaries, the traditional source of dividend payment, would be 
eliminated and the value of the goodwill would be reflected in their 
balance sheets as additional paid-in-capital. Applicants request 
authority for Niagara Mohawk to pay dividends or to acquire, retire or 
redeem its securities using its capital or unearned surplus as follows: 
Niagara Mohawk would in any calendar year, limit dividends paid on its 
common stock to ``income available for common dividends'' \45\ plus a 
fixed amount per calendar year.\46\ To the extent that Niagara Mohawk 
does not pay the maximum dividends allowable, the company would carry 
the balance forward to subsequent years. Applicants also request 
authority for NiMo and its nonutility subsidiaries to pay dividends or 
to acquire, retire or redeem their securities without restriction, to 
the extent permitted under applicable state and corporate law or 
applicable financing covenants. Accordingly, Applicants request that 
the Commission eliminate the restriction established by the Prior Order 
limiting the payment of dividends by the Utility Subsidiaries to eighty 
percent of their post-New England Electric System merger earnings 
before the amortization of goodwill, based on a rolling five-year 
average.
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    \45\ To calculate ``income available for dividends,'' Applicants 
would add back amounts attributable to the write down of goodwill so 
that income available for dividends would reflect Niagara Mohawk's 
income before the deduction for goodwill impairment.
    \46\ Applicants propose the following fixed amounts: $100 
million during 2001; $100 million during 2002; $80 million during 
2003; and $60 million during 2004.
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    Applicants request authority to amend the National Grid USA tax 
allocation agreement, previously approved by the Commission,\47\ to add 
NiMo and its subsidiaries as members, allowing National Grid General 
Partnership (``NGGP'') to retain the value of the tax deduction 
associated with the debt incurred by New National Grid to finance the 
Merger.
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    \47\ See Prior Order.
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    Applicants request authority for NiMo and its wholly owned 
subsidiaries to increase the amount or change the terms of the 
authorized capital securities without further Commission approval.\48\ 
The terms that may be changed include dividend rates, conversion rates 
and dates, and expiration dates. The changes to capital stock would 
affect only the manner in which financing is conducted by those 
companies; the terms of limits proposed by this application or prior 
Commission orders would not be altered.
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    \48\ By the Prior Order, the Commission authorized National Grid 
USA, its subsidiaries and the Intermediate Holding Companies, to 
increase the amount or change the terms of their authorized capital 
securities without additional Commission approval.
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    Applicants request authorization for NiMo and its subsidiaries to 
acquire financing entities to facilitate financings by issuing to third 
parties income preferred securities or other authorized or exempt 
securities.\49\ Amounts issued by these financing entities to third 
parties under the Commission's authorization would count against any 
applicable limits for the immediate parent of that financing entity, 
but the underlying intrasystem mirror debt and parent guarantee would 
not count against any financing or guarantee limits.
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    \49\ By the Prior Order, the Commission authorized National 
Grid, the Intermediate Holding Companies, National Grid USA, and its 
subsidiaries to organize these types of financing entities.
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    By the Prior Order, the Commission authorized National Grid to 
invest up to $4.406 billion in EWGs and FUCOs through May 31, 2003. 
Applicants request authority for New National Grid to increase its 
investments in EWGs and FUCOs through the Authorization Period to no 
more than $5.406 billion of its retained earnings.
    Applicants request authority for NiMo and its subsidiaries to enter 
into service agreements with National Grid USA Service Company 
(``Service Company''), the current service company for the National 
Grid USA and its subsidiaries (collectively, ``National Grid USA 
Group''), and receive the same services that current members of the 
National Grid Group receive from Service Company. This affiliate 
service relationship would follow in all material respects the 
authority granted in the Prior Order. Applicants state that Service 
Company would continue to be operated in accordance with the policies 
and procedures manual previously filed, and the service agreements 
entered into between Service Company and NiMo and its subsidiaries 
would be in the same form as those entered into by the current National 
Grid USA Group.
    Applicants request authority for New National Grid to acquire, 
directly or indirectly, the equity securities of one or more 
intermediate subsidiaries (``Intermediate Subsidiaries'') organized 
exclusively for the purpose of acquiring, financing, and holding the 
securities of one or more existing or future Nonutility Subsidiaries. 
Intermediate Subsidiaries may also provide management, administrative, 
project development, and operating services to such entities.\50\ To 
the extent their provision of those services is not authorized or 
permitted by rule, regulation, or order of the Commission, applicants 
request authority for the Intermediate Subsidiaries to contract to 
provide them.
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    \50\ ``Development Activities'' would be limited to due 
diligence and design review; market studies; preliminary 
engineering; site inspection; preparation of bid proposals, 
including, in connection therewith, posting of bid bonds; 
application for required permits and/or regulatory approvals; 
acquisition of site options and options on other necessary rights; 
negotiation and execution of contractual commitments with owners of 
existing facilities, equipment vendors, construction firms, power 
purchasers, thermal ``hosts,'' fuel suppliers and other project 
contractors; negotiation of financing commitments with lenders and 
other third-party investors; and such other preliminary activities 
as may be required in connection with the purchase, acquisition, 
financing or construction of facilities or the acquisition of 
securities of or interests in new businesses. ``Administrative 
Activities'' would include ongoing personnel, accounting, 
engineering, legal, financial, and other support activities 
necessary to manage New National Grid's investments in Nonutility 
Subsidiaries.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-27712 Filed 11-2-01; 8:45 am]
BILLING CODE 8010-01-M