[Federal Register Volume 67, Number 104 (Thursday, May 30, 2002)]
[Notices]
[Pages 37881-37882]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-13621]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27531]


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

May 24, 2002.
    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 June 18, 2002, to the Secretary, Securities and Exchange 
Commission, Washington, D.C. 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 June 18, 2002, the application(s) and/or 
declaration(s), as filed or as amended, may be granted and/or permitted 
to become effective.

Progress Energy, Inc. et al. (70-10035)

    Progress Energy, Inc. (``Progress Energy''), a registered holding 
company, Carolina Power & Light Company (``CP&L''), its wholly-owned 
utility subsidiary and Eastern North Carolina Natural Gas Company 
(``Eastern NCNG''), a newly formed company (collectively, 
``Applicants''), all of 410 South Wilmington Street, Raleigh, NC 27602, 
have filed an application-declaration under sections 6(a), 7, 9(a), 10, 
12(b), 12(f) and 13(b) of the Act and rules 45, 54, 87(b), 90 and 91 
under the Act.
    Progress Energy is registered holding company that owns, directly 
or indirectly, all of the issued and outstanding common stock of two 
electric utility subsidiary companies, CP&L and Florida Power 
Corporation. Florida Power Corporation generates, transmits, purchases 
and sells electricity in parts of Florida. Progress Energy also owns 
all of the issued and outstanding common stock of North Carolina 
Natural Gas Corporation, a gas utility company which serves customers 
primarily in eastern and south central North Carolina.\1\ CP&L is an 
electric utility company which generates, transmits, purchases and 
sells electricity in parts of North Carolina and South Carolina. The 
territory served by CP&L includes a substantial portion of the coastal 
plain of North Carolina extending to the Atlantic coast between the 
Pamlico River and the South Carolina border.

[[Page 37882]]

    Progress Energy owns 50% of the issued and outstanding common stock 
of Eastern NCNG. The remaining 50% is owned by the Albermarle Pamlico 
Economic Development Corporation (``APEC''), a North Carolina nonprofit 
corporation created to encourage infrastructure and economic 
development in eastern North Carolina. Eastern NCNG is currently 
engaged in developing and constructing a ``greenfield'' natural gas 
transmission and distribution system in eastern North Carolina. Eastern 
NCNG is a newly-formed company that has been granted a certificate of 
convenience and necessity by the North Carolina Utilities Commission 
(``NCUC'') to provide natural gas service in 14 counties in eastern 
North Carolina that are not now being served with natural gas.\2\ 
Eastern NCNG will become a ``gas utility company'' within the meaning 
of section 2(a)(4) of the Act at such time as it commences deliveries 
of natural gas.
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    \1\ See CP&L Energy, Inc., et al., Holding Co. Act Release No. 
27284 (Nov. 27, 2000) (``Merger Order'').
    \2\ The 14 counties are Dare, Currituck, Camden, Pasquotank, 
Perquimans, Chowan, Gates, Washington, Hyde, Tyrrell, Pamlico, 
Jones, Carteret and Pender.
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    The transmission and distribution system owned by Eastern NCNG is 
being designed and constructed and will be operated by CP&L. Gas supply 
commodity purchases for Eastern NCNG will be arranged and contracted in 
the gas market by CP&L's Energy Trading Department. Upstream 
transportation capacity and any long-term supply arrangements will be 
arranged by CP&L's Term Marketing Department.
    Generally, Applicants request authorization for: (1) CP&L to 
provide intra-system services to Eastern NCNG; (2) Progress Energy to 
acquire and retain stock of Eastern NCNG as an additional public 
utility subsidiary;\3\ and (3) Progress Energy to provide inter-company 
loans to Eastern NCNG as more specifically described below.
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    \3\ As indicated in the Merger Order, Eastern NCNG was 
originally formed as a limited liability company, with CP&L holding 
a 50% membership interest. Since the merger, Eastern NCNG was 
converted into a stock corporation and CP&L's 50% interest was 
transferred to Progress Energy.
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    Specifically, Applicants request authorization for CP&L to provide 
services to Eastern NCNG under a Construction, Operation and 
Maintenance Agreement (``Construction Agreement''), under which CP&L 
would be responsible for the design, engineering and construction of 
the transmission and distribution facilities to be owned by Eastern 
NCNG. CP&L would also provide or cause to be provided both day-to-day 
operating and maintenance services associated with operation of the 
pipeline facilities and administrative liaison and related services 
associated with the conduct of its business. Services to be provided by 
CP&L to Eastern NCNG under the Construction Agreement would be charged 
at cost in accordance with rules 90 and 91 under the Act and in 
accordance with the form of service agreement approved by the 
Commission as part of the Merger Order.
    Eastern NCNG is obligated to reimburse CP&L for all costs and 
expenses that CP&L incurs in constructing and operating the Eastern 
NCNG gas system. All administrative and general expenses of CP&L would 
be charged as 3.1% of direct labor expenses under the Construction 
Agreement. It is estimated that the total cost of constructing the 
Eastern NCNG natural gas system will be approximately $210.2 million 
and that when the completed system is fully operational, operating and 
maintenance expenses (not including the cost of natural gas) will be 
approximately $3.2 million annually.
    Progress Energy has committed to fund 100% of the economic portion 
of the transmission and distribution facilities of Eastern NCNG (i.e., 
the portion not funded by the state of North Carolina under a state 
bond package). Progress Energy proposes to provide the funding for 
construction of the economic portion of the project primarily through 
the purchase by Progress Energy of 500 shares of common stock of 
Eastern NCNG at a price $1.00 per share and through the purchase of 500 
shares of Series A Preferred Stock of Eastern NCNG at a price of 
$44,200.00 per share in cash. The Articles of Incorporation of Eastern 
NCNG provide that the dividend of the Series A Preferred Stock shall be 
equal to 8.688% per year. Progress Energy requests authorization to 
acquire and retain such common stock and preferred stock of Eastern 
NCNG. Progress Energy's equity investment would be made on a phase by 
phase basis after the state bond funds have been exhausted. Progress 
Energy is obligated to invest a total of $7.676 million in the Series A 
Preferred Stock of Eastern NCNG in 2002. Under the original projections 
filed with the NCUC, Progress Energy's equity investment would be fully 
funded in year sixteen.
    Additional funding for the construction of the Eastern NCNG 
transmission and distribution system, if needed, may be provided 
through unsecured loans from its shareholders, including Progress 
Energy. Progress Energy and Eastern NCNG request authorization for 
Progress Energy to make loans to Eastern NCNG from time to time through 
September 30, 2003 with the total principal amount outstanding at any 
time not to exceed $30 million. The loans would be made under the terms 
of a 364-Day Revolving Credit Facility (``Credit Facility'') dated June 
1, 2001. Interest on any loans by Progress Energy under the Credit 
Facility would equal the then-current thirty day London Interbank 
Offered Rate plus 0.30%.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-13621 Filed 5-29-02; 8:45 am]
BILLING CODE 8010-01-M