[Federal Register Volume 66, Number 222 (Friday, November 16, 2001)]
[Notices]
[Pages 57758-57760]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-28717]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27466]


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

November 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 refered 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 December 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 December 4, 2001, the application(s) and/or 
declaration(s), as filed or as amended, may be granted and/or permitted 
to become effective.

Allegheny Energy, Inc., et al. (70-7888)

    Allegheny Energy, Inc. (``Allegheny''), a registered public-utility 
holding company, The Potomac Edison Company (``Potomac Edison''), its 
wholly owned direct public-utility company subsidiary, Allegheny Energy 
Supply Company, LLC (``Allegheny Supply''), a direct public-utility 
company subsidiary of Allegheny, Allegheny Generating Company 
(``AGC''), an indirect public-utility company subsidiary of 
Allegheny,\1\ all at 10435 Downsville Pike, Hagerstown, Maryland 21740, 
Monongahela Power Company, a wholly owned direct public-utility company 
subsidiary of Allegheny, 1310 Fairmont Avenue, Fairmont, West Virginia 
26554, West Penn Power Company (``West Penn''), a wholly owned direct 
public-utility company subsidiary of Allegheny, Allegheny Energy 
Service Corporation (``Service Company''), a wholly owned direct 
service company subsidiary of Allegheny, both at 800 Cabin Hill Drive, 
Greensburg, Pennsylvania 15601 (collectively, ``Applicants''), have 
filed a post-effective amendment to a previously filed declaration 
under sections 6, 7, 12(d), 12(f) and 13(b) of the Act and rules 45 and 
54 under the Act.
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    \1\ AGC is a public-utility company subsidiary of Allegheny 
Supply an Monongahela Power Company, described below.
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    By order dated December 23, 1997,\2\ the Commission authorized the 
continued operation by Service Company of the Allegheny System Money 
Pool (``Money Pool'') through December 31, 2001 (``Money Pool 
Authority''). Specifically, the Commission authorized Allegheny to 
invest in but not borrow from the Money Pool, AGC to borrow from but 
not invest in the Money Pool, and Monongahela, Potomac Edison, and West 
Penn to both borrow from and invest in the Money Pool. In connection 
with the Money Pool, the Commission also authorized Allegheny, 
Monongahela, Potomac Edison, West Penn, and AGC to issue short-term 
debt securities to banks and dealers of commercial paper through 
December 31, 2001 in aggregate amounts not to exceed $750 million, $106 
million, $130 million, $500 million, and $100 million, respectively 
(``Short-Term Debt Authority'').\3\ Applicants now request authority to 
extend the Money Pool Authority and Short-Term Debt Authority through 
December 31, 2004. No short-term notes or commercial paper would mature 
after June 30, 2005.
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    \2\ Allegheny Power System, HCAR No. 26804 (December 23, 1997) 
(``Prior Money Pool Order'').
    \3\ See Prior Money Pool Order, as modified by Allegheny Energy, 
HCAR No. 27030 (May 19, 1999) (increasing Allegheny's short-term 
debt authority from $400 million to $750 million) and West Penn 
Power Co., HCAR No. 27084 (October 8, 1999) (increasing West Penn's 
short-term debt authority from $182 million to $500 million).
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SCANA Corporation, et al. (70-9533)

    SCANA Corporation (``SCANA''), a registered holding company, 
SCANA's public utility subsidiary companies, Public Serivce Company of 
North Carolina, Inc. (``PSNC''), South Carolina Electric & Gas Company, 
South Carolina Generating Company, Inc., and SCANA's nonutility 
subsidiary companies (collectively, ``Applicants''), all located at 
1426 Main Street, Columbia, South Carolina 29201 have filed a post-
effective amendment to their application-declaration under sections 
6(a) and 7, 9(a), 10 and 12(b) of the Act and rules 43, 45, 53 and 54 
under the Act.
    By orders dated February 14, 2000 and January 31, 2001 (HCAR Nos. 
27137 and 27341, respectively) (``Financing Orders''), among other 
things, hte Commission authorized the Applicants, through February 11, 
2003 (``Authorization Period''), to issue and sell common stock, short-
term debt and long-term debt in an outstanding aggregate amount of up 
to $3.55 billion (``Financing Limitation''). In particular, PSNC was 
authorized to issue and sell up to $150 million of long-term debt 
(``Debt Authority'').
    Applicants now propose for the remainder of the Authorization 
Period to increase the Financing Limitation up to $3.85 billion as a 
consequence of PSNC's request to increase Debt Authority from $150 
million up to an aggregate outstanding amount of $450 million. 
Applicants state that Debt Authority will continue to be subject to the 
same regulatory terms and conditions described in the Financing Orders. 
Specifically, (1) the effective cost of long-term debt issued under 
Debt Authority will not exceed 300 basis points over comparable term 
U.S. Treasury securities; (2) maturities of long-term debt issued under 
Debt Authority will not exceed 50 years; (3) PSNC will not issue any 
new long-term debt, unless its outstanding long-term debt is rated 
``investment grade'' by at least one nationally recognized statistical 
rating agency; and (4) underwriting fees, commissions, or similar 
remuneration paid in connection with the issue, sale or distribution of 
a security will not exceed 5% of the

[[Page 57759]]

principal amount of the security issued. Further, the Applicants 
represent that at all times during the Authorization Period, SCANA's 
common equity will be at least 30% of its consolidated capitalization, 
as required by the Commission's order approving the organization of 
SCANA (HCAR No. 27133; February 9, 2000).

AGL Resources, Inc. and Virginia Natural Gas, Inc. (70-9911)

    AGL Resources, Inc. (``AGL Resources''), 817 West Peachtree Street, 
NW., Atlanta, Georgia, 30308, a registered holding company, and 
Virginia Natural Gas, Inc. (``VNG''), 5100 East Virginia Beach Blvd., 
Norfolk, Virginia 23502, a gas public utility subsidiary of AGL 
Resources (collectively, ``Declarants''), have filed a declaration 
under sections 12(c) and 12(d) of the Act and rules 43(a), 44(a), and 
54 under the Act.
    The proposal set forth in the declaration relates to the 
recapitalization of VNG. By prior Commission order dated October 5, 
2000. (Holding Co. Act Release No. 27243), AGL Resources was 
authorized, through March 31, 2004, to acquire all of the outstanding 
common stock of VNG (the ``Acquisition'') and to engage in various 
financing and other transactions related to the establishment of AGL 
Resources as a registered holding company system after the Acquisition. 
All of the outstanding debt of VNG was repaid prior to the Acquisition 
and VNG has subsequently conducted minimal debt financing. As a result, 
the current capital structure of VNG is predominantly equity. As of 
September 30, 2001, VNG's common stock equity as a percentage of its 
total capitalization was 80%.
    In this declaration, Declarants request authority for VNG to 
repurchase its common stock from AGL Resources and for AGL Resources to 
sell that common stock to VNG (``Recapitalization'').\4\ Declarants 
propose to execute the Recapitalization within 180 days of the issuance 
of the order in this matter. VNG will obtain the funds necessary to 
repurchase its shares from cash balances and the proceeds of debt and/
or preferred stock issuances. All securities issued by VNG are subject 
to the approval of the Virginia State Corporation Commission (``VSCC'') 
and would be issued under appropriate VSCC orders.\5\ Declarants state 
that VNG's target capital structure would include common stock and 
long- and short-term debt securities, but in no event will VNG have 
less than 30% common equity in proportion to its total capitalization 
including short-term debt and current maturities of long-term debt. 
Shares repurchased will initially be held as treasury stock and, if 
authorized by VNG's board of directors, some or all of the repurchased 
shares may be cancelled, from time to time. Declarants state that the 
share repurchase will increase the debt recorded on VNG's balance sheet 
and reduce its capital and capital surplus accounts.
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    \4\ VNG proposes to repurchase up to 3,691 shares at a price of 
$101,460 per share to effect the Recapitalization.
    \5\ VNG intends to rely on rule 52(a) under the Act in 
connection with any securities issuances that will in whole or part 
fund its common stock repurchase.
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Allegheny Energy, Inc. (70-9801)

    Allegheny Energy, Inc. (``Allegheny''), a registered public utility 
holding company, and Allegheny Energy Supply Company, LLC (``AE 
Supply''), Allegheny's wholly owned utility subsidiary company, both 
located at 10435 Downsville Pike, Hagerstown, Pennsylvania 21740 
(collectively, ``Applicants'') have filed a post-effective amendment to 
their application-declaration under sections 6, 7, 9, 10, 12(b) and 
12(f) of the Act and rules 45 and 54 under the Act.
    The Commission issued an order on March 30, 2001 (HCAR No. 27370) 
(``March Order'') authorizing the financing and acquisition of certain 
exempt wholesale generators. By this post-effective amendment 
Applicants propose to engage in certain additional related financing 
transactions.
    In the March Order, the Commission, among other things, authorized 
the Applicants to: (1) Acquire the issued and outstanding membership 
interests in certain limited liability companies--all exempt wholesale 
generators as defined in section 32 of the Act (``EWGs'')--of Enron 
North America Corp (the ``Enron Acquisition''), (2) issue and sell an 
aggregate of $550 million in short-term bridge financing and long-term 
debt, and (3) establish a financing vehicle, Allegheny Energy Supply 
Capital LLC (``Supply Capital''), to, among other things, issue equity 
or other financial instruments to and acquire notes or other financial 
instruments from AE Supply in connection with related activities. Under 
the March Order, AE Supply incurred temporary indebtedness of 
approximately $550 million in aggregate principal amount (``Bridge 
Loan'') to consummate the Enron Acquisition.
    Applicants now propose to refinance the Bridge Loan and repay other 
debt by engaging in the following series of transactions:
    (1) The creation of a wholly owned subsidiary of AE Supply to serve 
as a special-purpose financing vehicle (``Leaseback SPV''), to which AE 
Supply will transfer of AE Supply's right, title, and interest in and 
to the Hatfield's Ferry Power Station generation facility located in 
Masontown, Pennsylvania (``Facility''), together with certain related 
contracts, assets, and liabilities (``Internal Asset Transfer 
Transaction'');
    (2) The (i) entry by Leaseback SPV and AE Supply \6\ into a 
leaseback transaction in which AE Supply's 76.6% undivided interest in 
the Facility will be leased to an unaffiliated third party and 
immediately leased back to Leaseback SPV (``Leaseback''), (ii) 
guarantee by AE Supply of Leaseback SPV's lease payment and performance 
obligations (``Guaranty''), and (iii) pledge by the Leaseback SPV or AE 
Supply, as the case may be, of its undivided interest in the Facility 
to secure its lease payment and performance obligations (``Pledge'' and 
together with the Leaseback and the Guaranty, the ``Leaseback 
Transaction''); \7\
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    \6\ AE Supply may perform the Internal Asset Transfer 
Transaction immediately after the Leaseback Transaction (as defined 
below) in order to avoid certain significant negative state tax 
consequences that may result if the Internal Asset Transfer 
Transaction occurred prior to the Leaseback Transaction. In that 
event, AE Supply would make the initial transfer of the Facility in 
connection with the Leaseback Transaction and execute documentation 
accordingly. And as a result, AE Supply would transfer to Leaseback 
SPV as part of the Internal Asset Transfer Transaction the following 
additional contracts, assets and liabilities: (i) All relevant 
operative documents in connection with the Leaseback Transaction and 
(ii) all proceeds received by AE Supply in connection with the 
Leaseback Transaction. Applicants represent that, other than an 
described herein, the Leaseback Transaction will remain consistent 
with the description contained in Post-Effective Amendment No. 1, 
filed on October 19, 2001.
    \7\ Applicants represent that Leaseback Transaction will be 
accounted for by Applicants as an operating lease and not as debt. 
As a result, AE Supply's ownership share of the Facility will remain 
an asset of AE Supply.
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    (3) The creation of a wholly owned subsidiary of SPV (``Subsidiary 
LLC'') that will, among other things, receive the proceeds of the 
Leaseback as a capital contribution, and engage in making an 
intercompany loan in the amount of the capital contribution of AE 
Supply to be used for authorized activities (``Intercompany Loan 
Transaction''); and
    (4) The making of subsequent intercompany, interest bearing loans 
(``Subsequent Intercompany Loans'') to AE Supply in the amount of 
interest earned from the Intercompany Loan transaction and under any 
Subsequent

[[Page 57760]]

Intercompany Loans (``Subsequent Intercompany Loan Transactions'').
    The transactions are expected to raise approximately $1 billion, 
which will be used to refinance the Bridge Loan, reduce other 
indebtedness of AE Supply, provide working capital for the facilities 
obtained in the Enron Acquisition, and for general corporate purposes.
    All of the operative documents relating to the Leaseback will be 
negotiated on an arms length basis. Leaseback SPV at all times during 
the Leaseback would retain possession of and all meaningful operating 
rights with respect to the Facility. During the period of the 
Leaseback, Leaseback SPV or an affiliate will operate the Facility 
under the existing operating agreement.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-28717 Filed 11-15-01; 8:45 am]
BILLING CODE 8010-01-M