[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]
-----------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\1\ Holding Co. Act Release No. 27328.
---------------------------------------------------------------------------
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
------------------------------------------------------------------------
\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