[Federal Register Volume 66, Number 233 (Tuesday, December 4, 2001)]
[Notices]
[Pages 63079-63080]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-29985]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27469]


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

November 28, 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 December 24, 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 24, 2001, the application(s) and/or 
declaration(s), as filed or as amended, may be granted and/or permitted 
to become effective.

KeySpan Corporation (70-9987)

    KeySpan Corporation (``KeySpan''), a registered holding company, 
One MetroTech Center, Brooklyn, New York 11202, has filed an 
application-declaration under sections 6(a), 7, 9(a), 10 and 13(b) of 
the Act and rules 43, 45, 90 and 91 under the Act.
    KeySpan requests authority to establish a subsidiary captive 
insurance company, (``Captive''), to engage in reinsuring certain 
levels of predictable risk for KeySpan and its associate companies. 
KeySpan requests authority to form and capitalize Captive. KeySpan will 
be the sole shareholder upon purchase of all shares of common stock for 
$100. The aggregate amount of the initial insurance premiums required 
by Captive is $36 million. Funding of the premiums to Captive will be 
as follows: The first $18 million will be paid in cash from the 
participating KeySpan system companies based on their allocated share 
and the remaining $18 million will be in the form of KeySpan common 
stock issued to Captive. All funds will be depositd with the Captive's 
bank in Vermont and will be invested in securities that are exempt by 
rule 40 under the Act.
    Captive will provide three types of insurance coverage for KeySpan: 
Automobile liability, workers' compensation and general liability 
insurance to affiliates. It will also provide, under an Owner's 
Controlled Insurance Program, general liability and worker's 
compensation insurance to its unaffiliated principal contractor for the 
duration of any projects involving KeySpan system companies. These 
projects will only involve gas main construction and maintenance for 
system companies.
    Captive will be a direct, wholly owned subsidiary of KeySpan and 
will be authorized to operate as an insurance

[[Page 63080]]

company in Vermont. Captive will assume the risk.

PECO Energy Company and PECO Energy Transition Trust (70-10003)

    PECO Energy Company (``PECO''), a utility subsidiary of Exelon 
Corporation (``Exelon''), 10 South Dearborn Street, 37th Floor, 
Chicago, Illinois 60603, a registered holding company, and PECO Energy 
Transition Trust (``PETT''), a special purpose subsidiary of Exelon 
(collectively, ``Declarants''), have filed a declaration under section 
13(b) of the Act and rules 87, 90, 91 and 54 under the Act.
    In Commission orders dated November 2, 2000 (Holding Co. Act 
Release No. 27266), and December 8, 2000 (Holding Co. Act Release No. 
27296) (collectively, the ``Prior Orders''), the Commission approved 
PECO's refinancing of up to the full amount of outstanding transition 
bonds due March 1, 2004, and September 1, 2007, with refunding 
transition bonds having a final maturity not later than March 1, 
2011.\1\ On March 1, 2001, PETT refinanced approximately $805 million 
of the prior transition bonds through the issuance of Series 2001-A 
Transition Bonds.\2\
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    \1\ As of June 30, 2000, there was $1.132 billion outstanding in 
these transition bonds outstanding.
    \2\ Further details regarding PETT's obligations and outstanding 
transition bonds (the ``Outstanding Transition Bonds'') aty 
September 30, 2001,a re set forth in PETT's Quarterly Report on Form 
10-Q for the quarer ended September 30, 2001 in File No. 333-58055.
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    In Amendment No. 5 to the Form U-1 in File No. 70-9693, Exelon 
sought approval under section 13(b) of the Act for PECO to provide 
certain servicing functions to PETT at a price not restricted to cost. 
Exelon states that it will withdraw that request from File No. 70-9693 
and instead Declarants are making the same request in the Form U-1 
filed in the current matter.
    Under the terms of PECO's settlement of its 1998 restructuring 
proceeding and the final order of the Pennsylvania Public Utility 
Commission (``Pennsylvania Commission'') approving the settlement, 
issued on May 14, 1998, PECO is permitted to recover $5.26 billion in 
stranded costs over a twelve year period beginning on January 1, 1999. 
PECO's stranded costs are collected through a non-bypassable transition 
charge which must be paid by all of PECO's transmission and 
distribution customers, regardless of whether the customers continue to 
purchase their electric capacity or energy from PECO. Utilities are 
authorized to securitize the right to recover all or a portion of these 
non-bypassable transition charges through the issuance of ``transition 
bonds.'' This right is known as ``Intangible Transition Property.''
    As permitted under Pennsylvania law, certain portions of the May 
14, 1998, Pennsylvania Commission order were designated a Qualified 
Rate Order (``QRO'') authorizing PECO to securitize up to $4 billion of 
its recoverable costs through the issuance of transition bonds. On 
March 16, 2000, the Pennsylvania Commission issued a second QRO 
authorizing PECO to securitize an additional $1 billion. In order to 
accomplish the approved securitization transactions, PECO created PETT 
as an independent special purpose entity. PETT is a statutory business 
trust formed on June 23, 1998, under a trust agreement between PECO, as 
grantor, First Union Trust Company, N.A., as issuer trustee, and two 
beneficiary trustees appointed by PECO. PETT was organized for the 
special purpose of purchasing from PECO the Intangible Transition 
Property, issuing transition bonds, pledging its interest in the 
Intangible Transition Property and other collateral to a bond trustee 
to secure the transition bonds and performing activities that are 
necessary and suitable to accomplish these purposes including 
collecting the specific part of Intangible Transition Property used to 
pay the bonds, i.e., ``Intangible Transition Charges'' collected from 
PECO customers.
    As part of the transactions relating to the currently Outstanding 
Transition Bonds, PECO and PETT entered into an Amended and Restated 
Master Servicing Agreement, dated March 25, 1999, as amended May 2, 
2000, and March 1, 2001 (the ``Servicing Agreement''), under which 
PECO, as servicer, manages and administers the ITP sold to PETT and 
collects the Intangible Transition Charges on behalf of PETT.\3\
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    \3\ The Servicing Agreement is incorporated by reference to 
Exhibits 10.3 and 10.4 to PETT's Form S-3 Regulation Statement in 
File No. 333-51740.
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    To help ensure the necessary legal separation for purposes of 
isolating PETT from PECO for bankruptcy purposes, the rating agencies 
desire that any servicing arrangement to be at a market price so that a 
successor entity could assume the duties in the event of the bankruptcy 
of PECO without interruption or an increase in fees. Accordingly, the 
Servicing Agreement has provided for at market pricing and will 
continue to do so while any transition bonds remain outstanding. PECO 
and PETT seek approval under section 13(b) of the Act and rules 87, 90 
and to continues this practice during the period and transition bonds 
remain outstanding and the Servicing Agreement remains in place.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-29985 Filed 12-3-01; 8:45 am]
BILLING CODE 8010-01-P