[Federal Register Volume 68, Number 126 (Tuesday, July 1, 2003)]
[Notices]
[Pages 39161-39163]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-16518]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27689]


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

June 24, 2003.
    Notice is hereby given that the following filings 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 July 18, 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 July 18, 2003, the application(s) and/or 
declaration(s), as filed or as amended, may be granted and/or permitted 
to become effective.

Energy East Corp. (70-10119)

    Energy East Corp. (``Energy East''), located at P.O. Box 12904 
Albany, New York 12212-2904, a registered holding company under the 
Act, has filed an application under section 13(b) and rules 88, 90, and 
91 under the Act. Energy East proposes to organize a second wholly 
owned subsidiary service company called Energy East Shared Services 
Corporation (``Shared Services'') that will be a Delaware corporation.
    Currently, Energy East has a Commission authorized service company 
for the Energy East holding company system, Energy East Management 
Corporation (``EEMC''). EEMC has a national and regional focus for its 
activities and will be principally engaged in general management and 
providing strategic services to the Energy East System after Shared 
Services is approved. EEMC's services will then include: overall 
corporate supervision of the Energy East system, strategic advice, 
investor relations, corporate finance, corporate governance and related 
activities associated with maintaining a public holding company that is 
a regional energy services provider, such as corporate financial 
consolidation and reporting.
    In contrast, the second service company, Shared Services, proposes 
to provide the Energy East system with a variety of administrative and 
operations services. The services provided by Shared Services would be 
provided to the public utility subsidiary companies, listed below 
(``Utility Subsidiaries''), but a limited number of services in the 
human resources area such as payroll processing will be provided to 
EEMC and Energy East, where appropriate and consistent with the 
economical and efficient performance of services at cost. Shared 
Service's services may include: supply chain; information technology; 
accounting; human resources; customer service; payroll; engineering; 
regulatory services; and numerous other day today operating and 
administrative services that all Utility Subsidiaries require to 
operate. Energy East states that it is possible, that as functions are 
transitioned to Shared Services some services may be performed, for a 
limited period of time, by Utility Subsidiary personnel until the 
positions are formally transferred to Shared Services. To the extent 
that rule 87(a)(3) does not apply, Energy East requests, on behalf of 
the Utility Subsidiaries, authority for the Utility Subsidiaries to 
provide services to Shared Services.
    Energy East holds direct or indirect interests in the following 
Utility

[[Page 39162]]

Subsidiaries, each of which is wholly owned by companies within the 
Energy East system:
    [sbull] New York State Electric & Gas Corporation, a New York 
corporation and a wholly-owned direct subsidiary of RGS Energy Group, 
Inc., which purchases, transmits and distributes electricity and 
purchases, transports and distributes natural gas in parts of New York;
    [sbull] RG&E, a New York corporation and a wholly-owned subsidiary 
of RGS, which generates, purchases, transmits and distributes 
electricity and purchases, transports and distributes natural gas in 
parts of New York;
    [sbull] The Southern Connecticut Gas Company, a Connecticut 
corporation and a wholly-owned subsidiary of Connecticut Energy, which 
is engaged in the retail distribution and transportation of natural gas 
in parts of Connecticut;
    [sbull] Central Maine Power Company, a Maine corporation and a 
public utility holding company exempt from all provisions of the Act 
except Section 9(a)(2), by order issued under Section 3(a)(2), the 
common stock of which is wholly-owned by CMP Group, which is primarily 
engaged in purchasing, transmitting and distributing electricity in 
Maine;
    [sbull] Connecticut Natural Gas Corporation, a Connecticut 
corporation and a wholly-owned subsidiary of CTG Resources, which is 
primarily engaged in the retail distribution and transportation of 
natural gas to parts of Connecticut; and
    [sbull] The Berkshire Gas Company, a Massachusetts corporation and 
a wholly-owned subsidiary of Berkshire Energy, which is engaged in the 
sale and distribution of natural gas in western Massachusetts;
    [sbull] Maine Natural Gas Corporation, a Maine corporation which 
distributes gas in Maine and which is a wholly-owned subsidiary of 
Energy East Enterprises, Inc., a Maine corporation, a wholly-owned 
subsidiary of Energy East and a public utility holding company exempt 
from all provisions of the Act except Section 9(a)(2), by order issued 
under section 3(a)(1) of the Act.
    Energy East also owns indirect interests in the following public 
utility companies: MEPCo, a Maine corporation, which owns and operates 
a 345kV transmission interconnection between Maine and New Brunswick, 
Canada international border at Orient, Maine. Central Maine Power 
presently owns a 78.3% voting interest in MEPCo with the remaining 
interests owned by two other Maine utilities; NORVARCO, a Maine 
corporation, which holds a 50% general partnership interest in Chester 
SVC Partnership, a general partnership which owns a static var 
compensator located in Chester, Maine, adjacent to MEPCo's transmission 
interconnection. NORVARCO is presently a wholly-owned subsidiary of 
Central Maine Power.
    Shared Services will be a wholly-owned direct subsidiary of Energy 
East. Shared Services capitalization will consist of 200 shares of 
common stock, par value $.01 per share. Initially, Shared Services 
working capital needs will be met through intercompany borrowings from 
Energy East pursuant to rule 52(b). Shared Services proposes to provide 
the companies in the Energy East system with a variety of 
administrative and operations services. Shared Services' activities 
would be conducted in accordance with service agreements (``Service 
Agreements'') that Shared Services will enter into with each of the 
companies that it serves.
    The presidents of each of the Utility Subsidiaries will serve on 
the Board of Directors of Shared Services, in addition to other persons 
as may be elected from time to time. Shared Services will be staffed by 
employees who will be transferred over time from other Energy East 
system companies or who will be hired externally. The decision to move 
positions from the Utility Subsidiaries to Shared Services will be made 
function by function and position by position with a view towards 
maximizing system wide efficiency. Energy East, states the 
determinative factor whether a position is moved to the Shared Services 
payroll will be whether the employee in that position would spend the 
majority of his or her time on group-wide activities (and allocate his/
her time between a number of companies) or company-specific activities 
(and allocate virtually all of his/her time to a single company). If 
the former, that position would generally be transferred to Shared 
Services. As a general rule, the individual system companies will 
continue to perform services that can benefit from individualized 
application at the company level, with Shared Services performing 
functions that can be more economically and efficiently performed in a 
centralized manner. To the extent that employees of system companies 
other than Shared Services are collecting data or information for use 
by Shared Services, management will provide the necessary direction to 
other system company employees and oversight as to the functions they 
perform to ensure proper coordination and efficient integration of the 
Energy East system.
    The Service Agreements will provide methodologies to ensure that 
all client companies pay to Shared Services the cost of all services, 
computed in accordance with the applicable rules and regulations 
(including, but not limited to rules 90 and 91) under the Act and 
appropriate accounting standards. Where more than one client company is 
involved in, or has received benefits from, a service performed by 
Shared Services, the Service Agreements will provide that client 
companies will pay their fairly allocated pro rata share in accordance 
with the methods set out in appendices to the Service Agreements. Thus, 
charges for all services provided by Shared Services to Energy East 
system companies will be on an ``at cost'' basis as determined under 
rules 90 and 91 under the Act.
    Shared Services will maintain its accounts, cost-accounting 
procedures and other records in accordance with the requirements of the 
Commission's Uniform System of Accounts for Mutual Service Companies 
and Subsidiary Service Companies utilizing, however, the chart of 
accounts specified in the FERC Uniform System of Accounts for Public 
Utilities and Licensees (18 CFR part 101). Shared Services will file 
annual reports on Form U-13-60 in accordance with rule 94, commencing 
with the report for calendar year 2003.
    No material change in the organization of Shared Services, the 
methods of allocating cost to associate companies, or in the scope or 
character of the services to be rendered by Shared Services, subject to 
section 13 of the Act, or any rule, regulation or order, shall be made 
unless and until Shared Services shall first have given the Commission 
written notice of the proposed change not less than 60 days prior to 
the proposed effectiveness of any such change. If, upon the receipt of 
any such notice, the Commission shall notify Shared Services within the 
60-day period that a question exists as to whether the proposed change 
is consistent with the provisions of section 13 of the Act, or of any 
rule, regulation or order, then the proposed change shall not become 
effective unless and until Shared Services shall have filed with the 
Commission an appropriate declaration regarding such proposed change 
and the Commission shall have permitted such declaration to become 
effective.



[[Page 39163]]


    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-16518 Filed 6-30-03; 8:45 am]
BILLING CODE 8010-01-P