[Federal Register Volume 68, Number 201 (Friday, October 17, 2003)]
[Notices]
[Pages 59825-59827]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-26255]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27735]


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

October 10, 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 November 4, 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 November 4, 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. (70-10112)

    Northeast Utilities (``NU''), 174 Brush Hill Avenue, West 
Springfield, Massachusetts 01090, a registered public-utility holding 
company, and Northeast Nuclear Energy Company (``NNECO''), 107 Selden 
Street, Berlin, Connecticut 06037, NU's wholly owned subsidiary 
(together ``Applicants''), have filed an application-declaration under 
sections 6(a), 7 and 12(c) of the Act and rules 26(c)(3), 42, 43, 44 
and 46(a). Applicants request authorization for NNECO to pay dividends 
to and, or in the alternative, to repurchase stock from, NU out of 
capital or unearned surplus through December 31, 2004 (``Authorization 
Period'').
    NNECO was incorporated in 1950. Through a Special Act of the 
Connecticut Legislature passed in 1967, the company has a valid 
franchise under Connecticut law to sell electricity to utility 
companies engaging in electric business in Connecticut and other 
states; to manufacture, generate and transmit electricity; and to erect 
and maintain facilities on certain public highways and grounds. NNECO's 
sole activity has been to act as agent for the NU system companies and 
other New England utilities in operating and maintaining the Millstone 
nuclear generating facilities located in Waterford, Connecticut 
(``Millstone'').
    Until March 2001, Millstone's facilities were jointly owned by The 
Connecticut Light and Power Company (``CL&P'') and Western 
Massachusetts Electric Company (``WMECO'') (two public utility 
subsidiaries of NU and affiliates of NNECO) and other nonaffilitated 
utility companies. In March 2001, CL&P, WMECO and most of the other 
joint owners of Millstone sold their interests in Millstone to a 
subsidiary of Dominion Resources, Inc. CL&P and WMECO sold their 100% 
interests in Millstone 1 and 2 and, with other selling owners, 94% of 
Millstone 3. As a result, NNECO no longer acts as agent for any owner 
in the operation and maintenance of Millstone 1, 2 or 3. It is largely 
inactive and is winding up its business. NU continues to maintain NNECO 
as a corporate entity in the event that any unforeseen liabilities 
arise from past Millstone operations. Nevertheless, to simplify its 
corporate structure, NU intends to liquidate and dissolve NNECO 
eventually.
    NNECO would like to return up to $16.2 million to NU, an amount 
equal to the approximate value of NNECO's common stockholders' equity. 
The Applicants represent that, as of June 30, 2003, NNECO's paid-in-
capital surplus equaled approximately $15.3 million and retained 
earnings equaled approximately $0.9 million, for total capitalization 
of approximately $16.2 million. As of June 30, 2003, NNECO had 
approximately $48.3 million invested in the NU system money pool and 
approximately $0.7 million in other current and accrued assets. As of 
June 30, 2003, NNECO's net liabilities totaled approximately $32.8 
million. These net liabilities are mainly comprised of (i) 
approximately $20.6 million of net accrued pension costs reflecting 
amounts due former employees of NNECO,\1\ (ii) approximately $9.2 
million of other employee related costs, (iii) $1.4 million in federal 
income taxes due, and (iv) approximately $1.6 million of other 
obligations.\2\
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    \1\ NNECO has $48.9 million of accrued pension costs and an 
accumulated deferred income tax credit of $28.3 million, which is 
realized as NNECO makes contributions to the pension plan, leaving a 
net obligation of $20.6 million.
    \2\ Because NNECO's net accrued pension obligations are owed to 
the Northeast Utilities Retirement Plan and the plan owes the 
employees, NNECO need not continue to exist until all former 
employees receive their pension benefits. The plan will pay these 
benefits. NNECO's obligations to the plan will be paid or otherwise 
satisfied prior to NNECO's dissolution.
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    The Applicants seek authorization for NNECO to pay dividends to 
and, or in the alternative, to repurchase its common stock from, NU out 
of paid-in-capital and unearned surplus up to $16.2 million during the 
Authorization Period. The Applicants state that they do not anticipate 
any further obligations being incurred. They further assert that the 
proposed transactions will not impair NNECO's ability to meet its

[[Page 59826]]

obligations nor render its assets insufficient to meet anticipated 
expenses or liabilities.

KeySpan Corporation, et al. (70-10123)

    KeySpan Corporation (``KeySpan''), a registered holding company 
under the Act, and KeySpan Energy Management LLC (``KEM''),\3\ an 
indirect, nonutility subsidiary (collectively, ``Applicants''), both 
located at 201 Old Country Road, Suite 300, Melville, New York 11747, 
have filed an application/declaration (``Application'') under sections 
9(a) and 10 of the Act seeking authorization for KEM to acquire all of 
the issued and outstanding securities of Metro Energy LLC (``Metro 
Energy''), a nonaffiliated New York limited liability company 
(``Transaction'').
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    \3\ KEM is a wholly-owned subsidiary of KeySpan Business 
Solutions LLC, which is a wholly-owned subsidiary of KeySpan 
Services Inc. KeySpan Services is a wholly owned subsidiary of 
KeySpan Energy Corporation, which is a wholly-owned subsidiary of 
KeySpan.
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I. Parties

A. KEM

    KEM is a nonutility engaged in the service, installation, and 
construction of power supply and HVAC systems, including burners and 
boilers for heating purposes. It operates and maintains power supply, 
heating, ventilation and air conditioning systems, including burners 
and boilers for heating purposes. KEM serves large commercial, 
industrial and institutional customers throughout the Northeast, and 
may become involved in the development, ownership, construction, 
financing, operation and maintenance of thermal energy facilities, 
including central steam and chilled water facilities.\4\
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    \4\ By Commission order dated April 24, 2003 (HCAR No. 27670) 
the Commission found these activities to be functionally related to 
KeySpan's integrated gas and electric operations and retainable.
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B. Metro Energy

    Metro Energy is an unaffiliated New York limited liability company 
in the business of developing, operating and maintaining thermal energy 
systems in the New York metropolitan area. Through certain loans made 
to Metro Energy by KEM in the aggregate principal amount of 
$11,715,161.82, plus 8.38% interest per annum, KEM financed the 
construction of a central heating and cooling facility owned, operated, 
and maintained by Metro Energy at a hotel in the New York metropolitan 
area. This prior financing relationship between KEM and Metro Energy 
does not constitute a variable interest arrangement as determined under 
the Financial Accounting Standards Board, Interpretation No. 46 
(Consolidation of Variable Interest Entities). Metro Energy's business 
activities involve the types of energy-related activities enumerated in 
rule 58(b)(1)(vi).

II. The Transaction

    KEM proposes to acquire all of the issued and outstanding 
membership interests of Metro Energy. Upon consummation of the 
acquisition, Metro Energy will become a direct, wholly-owned subsidiary 
of KEM. KEM will acquire Metro Energy in a cash transaction for the 
purchase price of approximately $600,000 payable in three installments 
within a one year period, plus the conversion of the outstanding debt 
owed to KEM by Metro Energy, including principal and interest amounting 
to approximately $13,785,763, in goodwill. The purpose of the 
Transaction is to provide KEM with the benefit of revenues currently 
generated by Metro Energy in furtherance of KeySpan's operations as a 
diversified and integrated gas and electric public-utility system.

CenterPoint Energy, Inc., et al. (70-10162)

    CenterPoint Energy, Inc. (``CenterPoint''), a registered holding 
company, located at 1111 Louisiana, Houston, Texas 77002; and Utility 
Holding, LLC (``Holding''), a direct, wholly-owned registered holding 
company subsidiary of CenterPoint located at 200 West Ninth Street 
Plaza, Suite 411, Wilmington, Delaware 19801 (collectively, the 
``Applicants'') have filed an application/declaration (the 
``Application'') under sections 6, 7, 9, 10, 12, and 13 under the Act 
and rules 88, 90 and 91 under the Act.

I. Prior Authorizations

    By order dated July 5, 2002 (Holding Company Act Release No. 27584) 
(the ``July Order'') the Commission authorized the formation of 
CenterPoint as a new registered holding company, and the distribution 
to shareholders of the remaining common stock of Reliant Resources, 
Inc. (the ``Distribution''). The formation of CenterPoint and the 
Distribution were part of a plan adopted in 2000 for the restructuring 
of Reliant Energy, Incorporated under the requirements of the Texas 
electric restructuring legislation adopted in 1999. The Distribution, 
which was made on September 30, 2002, completed the separation from 
CenterPoint of the merchant power generation and energy trading and 
marketing business of Reliant Resources, Inc. Since CenterPoint 
expected to qualify for an exemption from registration under the Act 
within a year of the July Order, CenterPoint did not intend to form a 
service company following the restructuring. Instead, the July Order 
authorized CenterPoint to provide a variety of services to its 
subsidiaries on an interim basis, including accounting, rates and 
regulation, internal auditing, strategic planning, external relations, 
legal services, risk management, marketing, financial services and 
information systems and technology.
    Since the July Order, CenterPoint has announced that it will remain 
a registered holding company under the Act. In its order dated June 30, 
2003 (Holding Company Act Release No. 35-27692), the Commission noted 
that CenterPoint intended to form a service company and granted 
CenterPoint interim authority to continue to provide goods and services 
to its subsidiaries through December 31, 2003 (the ``Interim Period'').

II. Request To Form the Service Company and Provide Services

A. Summary of Requests

    The Application seeks the authorization and approval by the 
Commission of the provision of intra-system services and goods 
following the expiration of the Interim Period, under section 13 of Act 
and the rules under the Act. Specifically, Applicants request that the 
Commission: (1) Approve the formation and capitalization of CenterPoint 
Energy Service Company, LLC (the ``ServiceCo''); (2) approve the 
designation of ServiceCo as a subsidiary service company in accordance 
with the provisions of rule 88 under the Act and find that ServiceCo is 
organized and will conduct its operations so as to meet the 
requirements of section 13 of the Act and the rules under the Act; (3) 
approve the master services agreement in the form attached as Exhibit 
B-1 to the Application (the ``Master Services Agreement''), and the 
form of service agreement for services rendered by system companies; 
and (4) authorize, to the extent not exempt under rules 81 and 87, 
CenterPoint and certain CenterPoint subsidiaries providing certain 
services and goods to associate companies.

B. Services Provided by ServiceCo

    Applicants request authorizations with respect to the activities of 
ServiceCo, which will be formed in Texas as a limited liability company 
wholly-owned by Holdings, as the

[[Page 59827]]

service company for the CenterPoint system. ServiceCo will:
    [sbull] Have a minimal equity capitalization of not more than 1,000 
membership interests with total equity capitalization of not more than 
$1,000;
    [sbull] Derive substantially all of its needs for additional 
working capital from borrowings under CenterPoint's money pool and/or 
additional investments by CenterPoint pursuant to rule 45 and/or rule 
52, as applicable;
    [sbull] Provide recipients \5\ certain administrative and service 
functions involving system-wide coordination and strategy, compliance 
and oversight, including accounting, internal auditing, finance and 
treasury, communications, legal, human resources, executive, regulatory 
and governmental affairs, information systems and technology, mainframe 
operations, business services, and leasing services.
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    \5\ Applicants state that it is expected that ServiceCo will 
enter into service agreements with CenterPoint, CenterPoint Energy 
Houston Electric, LLC (the ``T&D Utility''), Texas Genco, LP 
(``Texas Genco''), CenterPoint Energy Resources Corp. (``GasCo'') 
and any other subsidiaries that request services from ServiceCo by 
executing a Master Services Agreement (the ``Recipients''). T&D 
Utility, Texas Genco and GasCo are the public-utility subsidiaries 
in the CenterPoint system.
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    [sbull] Administer the CenterPoint money pool;
    [sbull] Be staffed by a transfer of personnel from CenterPoint and 
GasCo;
    [sbull] Lease office and other space currently owned by CenterPoint 
Energy Properties, Inc. (Properties), and from time-to-time lease other 
space that may be acquired by Properties either in fee or by lease. 
ServiceCo will enter into one or more lease agreements with Properties 
and, as applicable, will enter into subleases with Recipients that 
occupy space obtained from Properties, at cost in accordance with the 
Act and the applicable rules under the Act. Applicants state that none 
of the property proposed to be occupied, used by, or provided to 
ServiceCo constitute facilities used for the production, transmission, 
transportation, or distribution of electric energy or natural or 
manufactured gas;
    [sbull] License, lease, sublease or enter into service arrangements 
with CenterPoint and T&D Utility for the use of computer hardware, 
software, communications facilities (including local, long distance, 
internet and wireless services), office equipment and furnishings, and 
vehicles currently owned, licensed or leased by CenterPoint or T&D 
Utility at cost in accordance with the Act and the applicable rules 
under the Act. Applicants state that none of the property proposed to 
be occupied, used by, or provided to ServiceCo constitutes facilities 
used for the production, transmission, transportation, or distribution 
of electric energy or natural or manufactured gas;
    [sbull] Assume CenterPoint's obligation to provide transition 
services and facilities, including business, corporate, and information 
technology services to Reliant Resources, Inc., which obligations will 
largely terminate in early 2004;
    [sbull] Assume CenterPoint's obligation to provide business, 
corporate, and information technology services to Texas Genco at cost 
in accordance with the Act and the applicable rules under the Act, 
until CenterPoint's investment in Texas Genco is sold, and for a brief 
transition period after a sale;
    [sbull] Comply with the Commission's standards for accounting and 
cost allocation methods and procedures for service companies in 
registered holding company systems;
    [sbull] Use the Commission's ``Uniform System of Accounts for 
Mutual Service Companies and Subsidiary Service Companies'' for 
ServiceCo's billing system, as may be adjusted to use the Federal 
Energy Regulatory Commission's uniform system of accounts; and
    [sbull] Provide all services to affiliated companies on an ``at 
cost'' basis as determined by rules 90 and 91 of the Act. ServiceCo 
will distribute all charges among Recipients, to the extent possible, 
based on direct assignment. Amounts remaining after direct assignment 
shall be allocated among Recipients in a fair and equitable manner, 
using the allocation methods set forth in the Master Services 
Agreement.

C. Services Provided by Certain Subsidiaries

1. T&D Utility and GasCo's Shared Services
    Applicants request authorization for the T&D Utility and GasCo to 
provide the following services to each other in their overlapping 
service territory: meter reading, trenching operations, vehicle 
maintenance, line locating, call center, and credit and collections 
functions when the companies determine it is efficient and cost 
effective to do so. The companies also share common warehouse space. 
Some of these functions are provided by GasCo to the T&D Utility and 
others are provided by the T&D Utility to GasCo. In addition, the T&D 
Utility provides GIS mapping for GasCo and its pipeline subsidiaries, 
Texas Genco, and other CenterPoint system companies. When such services 
are provided, costs are allocated based on appropriate cost allocation 
measures, such as number of meters with respect to meter reading, 
square footage occupied and location of shared space. All of these 
services are provided at cost in accordance with rules 90 and 91 under 
the Act.
2. GasCo and GasCo's Pipeline Subsidiaries' Shared Services
    Applicants request authorization for GasCo to share with GasCo's 
pipeline subsidiaries and GasCo's other subsidiaries certain services 
when the companies determine it is efficient and cost effective to do 
so. Services proposed to be shared are environmental services provided 
to GasCo by personnel from its pipeline subsidiaries, along with 
support for compliance with the new pipeline integrity law. In 
addition, GasCo's telephone operations provide some services to its 
pipeline subsidiary, and pipeline personnel use office and warehouse 
space in GasCo facilities. GasCo and its subsidiary, CenterPoint Energy 
Gas Transmission Company (``CEGT''), share signals from a system that 
electronically monitors the physical operating conditions of the 
distribution system, with CEGT maintaining the equipment. CEGT and 
GasCo also share meter testing responsibilities, with GasCo testing 
small pipeline meter stations and CEGT testing large distribution 
meters. Similarly, GasCo and CEGT share some cathodic protection from 
rectifiers at certain points on the system, and GasCo reads some rural 
and town border station meters where CEGT maintains the equipment. All 
of these services are provided at cost in accordance with rules 90 and 
91 under the Act.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-26255 Filed 10-16-03; 8:45 am]
BILLING CODE 8010-01-P