[Federal Register Volume 68, Number 111 (Tuesday, June 10, 2003)]
[Notices]
[Pages 34685-34687]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-14563]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27684]


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

June 4, 2003.
    Notice is hereby given that the following filing(s) has/have been 
made with the Commission under 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 27, 2003, 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 June 27, 2003 the application(s) and/or 
declaration(s), as filed or as amended, may be granted and/or permitted 
to become effective.

Northeast Utilities, et al. (70-9755)

    Northeast Utilities (``NU''), located at 174 Brush Hill Avenue, 
West Springfield, MA 01090-0010, a registered holding company under the 
Act, Northeast Utilities Service Company (``NUSCO''), its wholly-owned 
service company subsidiary, located at 107 Selden Street, Berlin, CT 
06307, and NU's wholly-owned public-utility subsidiaries, Western 
Massachusetts Electric Company (``WMECO''), located at 174 Brush Hill 
Avenue, West Springfield, MA 01090-0010, The Connecticut Light and 
Power Company (``CL&P''), located at 107 Selden Street, Berlin, CT 
06307, Holyoke Water Power Company (``HWP''), located at One Canal 
Street, Holyoke, MA 01040, Public Service Company of New Hampshire 
(``PSNH'') and North Atlantic Energy Corporation (``NAEC''), both 
located at 780 North Commercial Street, Manchester, NH 03101, Northeast 
Nuclear Energy Company (``NNECO'') and NU's wholly-owned nonutility 
subsidiaries, NU Enterprises, Inc. (``NUEI''), a wholly-owned 
nonutility holding company subsidiary of NU and its direct and indirect 
wholly-owned subsidiaries, Northeast Generation Company (``NGC''), 
Northeast Generation Services Company (``NGS''), ES Boulos Company 
(``Boulos''), Woods Electrical Company, Inc. (``Woods''), Woods Network 
Services, Inc. (``Woods Network''), Select Energy, Inc. (``Select 
Energy''), Select Energy New York, Inc. (``SENY''), Mode 1 
Communications, Inc. (``Mode 1''); Yankee Energy System, Inc. 
(``YES''), a wholly-owned holding company subsidiary exempt under 
3(a)(1) of the Act by rule 2 and its wholly-owned subsidiaries, Yankee 
Gas Services Company (``Yankee Gas''), a gas public-utility, Yankee 
Energy Financial Services Company (``Yankee Financial''), Yankee Energy 
Services Company (``YESCO'') and NorConn Properties, Inc. 
(``NorConn''); The Rocky River Realty Company (``RR'') and The 
Quinnehtuk Company (``Quinnehtuk''), all located at 107 Selden Street, 
Berlin, CT 06307; Select Energy Services, Inc., (formerly HEC Inc.) 
(``SESI''), located at 24 Prime Parkway, Natick, MA 01760 
(collectively, the ``Applicants''), have filed a post-effective 
amendment to their application-declaration (``Application'') under 
sections 6(a), 7, 9(a), 10, 12(b), 32 and 33 of the Act and rules 43, 
53 and 54.

I. Background

    NU has seven public-utility company subsidiaries, CL&P, WMECO, 
PSNH, Yankee Gas, HWP, NAEC and NNECO. CL&P, WMECO and PSNH engage, 
among other things, in the sale of electric energy at retail and Yankee 
Gas engages in the sale of natural gas at retail. Prior to the sale by 
the NU system of all of its nuclear assets, NAEC and NNECO were an 
owner and a manager, respectively, of various nuclear generating 
assets. As noted above, YES is an intrastate exempt holding company 
subsidiary of NU. CL&P, WMECO, PSNH, YES and Yankee Gas are referred to 
collectively below as the ``Utility Borrowers.''
    Applicant nonutility subsidiaries of NU are: NUSCO, the NU system 
service company; NGC, an exempt wholesale generator (``EWG''); NUEI, a 
nonutility holding company; RR, Quinnehtuk and NorConn, each a real 
estate company; SESI, an energy services company; Select, SENY, NGS, 
Woods, Boulos and YESCO, each a rule 58 company; Mode 1 and Woods 
Network, each an exempt telecommunications company under section 34 of 
the Act (``ETC''); and Yankee Financial, a financial services company. 
The Applicants, with the exception of NUSCO, are also referred to as 
``Pool Participants'' and NU, YES, Mode 1, Woods Network and NGC are 
referred to as ``Non-borrowing Pool Participants.''
    By order dated December 28, 2000 (the ``Prior Order''), the 
Commission authorized NU, CL&P, WMECO, PSNH, YES and Yankee Gas, among 
others, to enter into short-term unsecured debt within specified limits 
and parameters through June 30, 2003.\1\ In addition, the Prior Order 
authorized all of the Applicants, except NUSCO, to enter into short-
term debt transactions with NU and to extend credit to, and acquire 
promissory notes from, one another through their participation in the 
NU Money Pool. The Prior Order authorized NUSCO to administer the NU 
Money Pool.
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    \1\ Holding Co. Act Release No. 27328.
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    Applicants now seek the following authorizations:
    1. continuation through June 30, 2006 (the ``Authorization 
Period'') for NU and the Utility Borrowers to issue short-term 
unsecured debt to unaffiliated third parties;
    2. amendment of the NU, utility and nonutility subsidiary dollar 
limitations imposed by the Prior Order upon the short-term borrowings 
of the respective company, whether from unaffiliated third parties or 
the NU Money Pool;

[[Page 34686]]

    3. authorization through the Authorization Period for the Utility 
Borrowers to issue short-term secured debt, pending completion of the 
record;
    4. authorization for NU and the Utility Borrowers to enter into 
interest rate hedging transactions (``Interest Rate Hedges'') related 
to their short-term debt transactions;
    5. continuation through June 30, 2004 of the NU Money Pool, with 
NUSCO as the administrator;
    6. participation in the NU Money Pool by those companies authorized 
to participate by the requested order and previous orders, subject to 
(a) amendment of the NU Money Pool Agreement to provide for utility 
subsidiaries' borrowing priority over Nonutility Pool Participants and 
(b) the Applicants' submission to the Commission by December 31, 2003 
of a feasibility study concerning the creation of a separate money pool 
for nonutility subsidiaries of NU;
    7. participation of Boulos, Woods and SENY, each a nonutility 
subsidiary, in the NU Money Pool both as lenders and borrowers;
    8. participation of Woods Network in the NU Money Pool solely as a 
lender; and
    9. addition of any additional participants to the Money Pool.

II. The Proposed External Financings

A. General Terms and Conditions

    Financings with third parties by NU and the Utility Borrowers will 
be subject to the following conditions (``Financing Parameters''): (i) 
the effective cost of capital on short-term debt financings will not 
exceed competitive market rates available at the time of issuance for 
securities having the same or reasonably similar terms and conditions 
issued by similar companies of reasonably comparable credit quality, 
provided that in no event will the effective cost of capital on short-
term debt borrowings exceed 500 basis points over the comparable term 
London Interbank Offered Rate, and (ii) the underwriting fees, 
commissions or other similar remuneration paid in connection with the 
non-competitive issue, sale or distribution of securities requested 
will not exceed the greater of 5% of the principal or total amount of 
the securities being issued.

B. Use of Proceeds

    The proceeds from the short-term debt of NU and the Utility 
Borrowers authorized by the Commission pursuant to this Application 
will be used for (i) general corporate purposes, including investments 
by and capital expenditures of NU and its subsidiaries, including, 
without limitation, the funding of future investments in EWGs, foreign 
utility companies (each to the extent permitted under the Act or 
Commission order), rule 58 subsidiaries and ETCs, (ii) the repayment, 
redemption, refunding or purchase by NU or any subsidiary of any of its 
own securities from non-affiliates pursuant to rule 42, and (iii) 
financing working capital requirements of NU and its subsidiaries.

C. Short-Term Debt Limits

    The Applicants seek external short-term debt financing 
authorization for NU and the five Utility Borrowers, subject to 
aggregate limits described below. The external financing authorization 
for HWP, NAEC and NNECO expires on June 30, 2003 and these utility 
subsidiaries' authorization will be limited to borrowings through the 
NU Money Pool, also described below. The short-term debt of NU, CL&P, 
WMECO, PSNH, HWP, NAEC, NNECO, YES and Yankee Gas outstanding at any 
one time, whether through external financings (which authorization 
expires on June 30, 2006) or borrowings through the NU Money Pool 
(which authorization expires on June 30, 2004), pursuant to the 
authority requested in this Application, will not exceed the following:

------------------------------------------------------------------------
                                                              Aggregate
                          Company                               limits
                                                              (millions)
------------------------------------------------------------------------
NU.........................................................         $400
CL&P.......................................................      \2\ 375
WMECO......................................................          200
PSNH.......................................................      \3\ 100
HWP........................................................            5
NAEC.......................................................           10
NNECO......................................................           10
YES........................................................           50
Yankee Gas.................................................         100
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\2\ CL&P's aggregate unsecured debt is also restricted by charter
  provisions relating to its preferred stock. CL&P is authorized by its
  preferred stockholders, through March 31, 2004, to issue securities
  representing unsecured indebtedness to a maximum of 20% of its
  capitalization. Based on its capitalization as of December 31, 2002,
  CL&P is limited to $480 million of unsecured indebtedness, which
  exceeds the authorization sought here.
\3\ PSNH aggregate short-term debt is restricted by New Hampshire law to
  an amount equal to 10% of its net fixed plant without further New
  Hampshire Public Utilities Commission (``NHPUC'') approval. Any short-
  term debt of PSNH in excess of 10% of net fixed plant would require
  NHPUC approval and would be exempt from this Commission's jurisdiction
  pursuant to rule 52(a). PSNH currently has approval from NHPUC to
  issue up to $100 million in short-term debt, which is in excess of 10%
  of net fixed plant debt limit, for general corporate purposes. NHPUC
  Order 23,841, November 9, 2001. However, in the event the NHPUC order
  is revoked, lapses or its rescinded or issuance of short-term debt in
  an amount to $100 million is not exempt pursuant to rule 52, PSNH
  wishes to have the flexibility to issue such debt pursuant to this
  Commission's authorization.

    With respect to the Utility Borrowers, as described below, these 
limitations would include both unsecured and secured debt amounts.

D. Northeast Utilities Short-Term Debt

    NU requests authority to issue and sell, through the Authorization 
Period, short-term unsecured debt in an aggregate principal amount at 
any time outstanding not to exceed $400 million. The short-term 
unsecured debt of NU will take a variety of forms, including commercial 
paper and notes to banks or other financial institutions, and will be 
on terms that are generally available to borrowers with comparable 
credit ratings. All NU short-term unsecured debt will have maturities 
of less than one year from the date of issuance.
    Subject to its short-term debt limit and the Financing Parameters, 
NU intends to renew and extend outstanding short-term debt as it 
matures, to refund such short-term debt with other similar short-term 
debt, to repay such short-term debt or to increase the amount of its 
short-term debt from time to time.

E. Utility Borrowers' Short-Term Unsecured and Secured Debt

    The Utility Borrowers request authority to issue and sell, through 
the Authorization Period, short-term unsecured debt, on terms that are 
generally available to borrowers with comparable credit ratings, 
subject to the applicable debt limits, Financing Parameters and the 
same terms as are applicable to NU, described above. In addition, the 
Utility Borrowers request the Commission to reserve jurisdiction, 
through the Authorization Period, over their request to issue and sell 
short-term secured debt, on terms that are generally available to 
borrowers with comparable credit ratings, pending their completion of 
the record. In all other respects the proposed short-term secured debt 
would be subject to the applicable debt limits, Financing Parameters 
and, to the extent

[[Page 34687]]

appropriate, the same terms as are applicable to NU.
    Subject to the applicable short-term debt limits and the Financing 
Parameters, discussed above, as in the case of NU, the Utility 
Borrowers intend to renew and extend outstanding short-term debt as it 
matures, to refund such short-term debt with other similar short-term 
debt, to repay such short-term debt or to increase the amount of their 
short-term debt from time to time.

III. Authorization to Engage in Interest Rate Hedge Transactions

    NU and the Utility Borrowers also request authorization to enter 
into interest rate hedging transactions with respect to its outstanding 
indebtedness (``Interest Rate Hedges''), subject to the limitations and 
restrictions below, in order to reduce or manage the effective interest 
rate cost. Interest Rate Hedges would only be entered into with 
counterparties (``Approved Counterparties'') whose senior debt ratings, 
or those of any credit support providers guaranteeing the Approved 
Counterparties, as published by Standard & Poor's Rating Group, are 
equal to or greater than BBB, or an equivalent rating from Moody's 
Investor Service or Fitch IBCA, or through on-exchange transactions.
    Interest Rate Hedges will involve the use of financial instruments 
commonly used in the capital markets, such as options, interest rate 
swaps, locks, caps, collars, floors, exchange-traded futures and 
options, and other similar appropriate instruments. The transactions 
would be for fixed periods and stated notional amounts as are generally 
accepted as prudent in the capital markets. In no case will the 
notional principal amount of any Interest Rate Hedge exceed that of the 
underlying debt instrument. Neither NU nor the Utility Borrowers will 
engage in speculative transactions within the meaning of such term in 
Statement of Financial Accounting Standard 133, as amended. Transaction 
fees, commissions and other amounts payable to brokers in connection 
with an Interest Rate Hedge will not exceed those generally obtainable 
in competitive markets for parties of comparable credit quality.

IV. The NU Money Pool

    The Applicants request authorization to continue the NU Money Pool 
through June 30, 2004, with NUSCO as the NU Money Pool administrator. 
The Applicants also request continued participation in the NU Money 
Pool by those companies authorized to participate, subject to (a) 
amendment of the NU Money Pool Agreement to provide for utility 
subsidiaries' borrowing priority over Nonutility Pool Participants and 
(b) the Applicants' submission to the Commission by December 31, 2003 
of a feasibility study concerning the creation of a separate money pool 
for nonutility subsidiaries of NU.
    The Pool Participants, other than the Non-borrowing Pool 
Participants, request authority to continue to enter into, from time to 
time, short-term unsecured debt transactions through the NU Money Pool, 
to contribute surplus funds to the NU Money Pool and to lend to (and 
acquire promissory notes from) one another through the NU Money Pool. 
The Non-borrowing Pool Participants also request authority solely to 
contribute surplus funds and to lend to the Pool Participants through 
the NU Money Pool.
    In addition, the Applicants seek authorization for Boulos, Woods 
and SENY to participate in the Money Pool, as both borrowers and 
lenders, and for Woods Network to participate in the NU Money Pool, 
solely as a lender, through June 30, 2004.
    Finally, the Nonutility Pool Participants request authorization to 
borrow from the NU Money Pool to the following limits: Quinnehtuk to 
$10 million, NUEI to $100 million, NGS to $25 million, Select to $200 
million, RR to $30 million, Yankee Financial to $10 million, NorConn to 
$10 million, YESCO to $10 million, SESI (formerly HEC, Inc.) to $35 
million, Boulos to $10 million, Woods to $10 million and SENY to $10 
million.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. 03-14563 Filed 6-9-03; 8:45 am]
BILLING CODE 8010-01-P