[Federal Register Volume 69, Number 225 (Tuesday, November 23, 2004)]
[Notices]
[Pages 68196-68197]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-3286]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27910]


Filing Under the Public Utility Holding Company Act of 1935, as 
Amended

November 16, 2004.
    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 December 9, 2004, 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 December 9, 2004, the application(s) and/or 
declaration(s), as filed or as amended, may be granted and/or permitted 
to become effective.

CenterPoint Energy, Inc., et al.

    CenterPoint Energy, Inc. (``CenterPoint''), 1111 Louisiana, 
Houston, Texas, 77002, a registered holding company under the Act and 
Utility Holding, LLC, (``Utility Holding''), 200 West Ninth Street 
Plaza, Suite 411, Wilmington, Delaware, 19801, have filed with the 
Securities and Exchange Commission (``Commission'') a declaration 
(``Declaration'') under section 12(c) of the Act and rules 46 and 54 
under the Act asking the Commission to authorize Utility Holding to 
declare and pay two dividends out of its capital account to CenterPoint 
consisting of the proceeds it receives from the first and second phase 
of the sale of its interest in Texas Genco Holdings, Inc. (``Texas 
Genco'').
    CenterPoint holds its utility interests through Utility Holding, a 
Delaware limited liability company that is a conduit entity formed 
solely to minimize tax liability. Utility Holding is wholly-owned by 
CenterPoint and a registered holding company subsidiary. Utility 
Holding owns the stock of Texas Genco and CenterPoint Energy Houston 
Electric, LLC (``T&D Utility'').\1\
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    \1\ Texas Genco is an associate company, and not a subsidiary of 
the T&D Utility.
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    CenterPoint is in the process of completing the final steps in a 
restructuring process that began when Texas adopted legislation 
designed to deregulate and restructure the electric utility industry in 
the state. That legislation required integrated electric utilities to 
separate their generating, transmission and distribution, and retail 
sales functions in accordance with plans approved by the Public Utility 
Commission of Texas (``Texas Commission''). CenterPoint's predecessor, 
Reliant Energy Incorporated (``REI'') accomplished its restructuring in 
the fall of 2002, when after CenterPoint became the parent entity, 
CenterPoint distributed to its shareholders its remaining ownership 
interest in its merchant power generation and energy trading and 
marketing business.\2\ In order to facilitate compliance with the Texas 
restructuring law, CenterPoint retained ownership of the Texas 
generating assets (which were placed in Texas Genco), pending 
determination of stranded costs by the Texas Commission.\3\
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    \2\ By order dated June 5, 2002, the Commission authorized the 
formation of CenterPoint as a new registered holding company and 
CenterPoint's distribution to shareholders of the remaining stock of 
Reliant Resources, Inc., a merchant power generation and energy 
trading and marketing business (Holding Company Act Release No. 
27548).
    \3\ Under the Texas restructuring law, the T&D Utility would be 
allowed to recover, among other costs, the amount by which the 
market value of its generating assets, as determined by the Texas 
Commission under a formula prescribed by law, is below its 
regulatory book value for those assets as of the end of 2001 
(otherwise known as stranded costs). Utility Holding has recorded an 
after-tax charge to earnings in the third quarter of 2004 of 
approximately $894 million. The charge was recorded before the Texas 
Commission rendered its final decision and was based on 
CenterPoint's understanding of the Texas Commission's deliberations 
during previous public meetings. On November 11, 2004, the Texas 
Commission issued a draft order and, based on that order, Utility 
Holding does not believe that it will be required to take any 
additional material charges to earnings in connection with the 
stranded cost proceeding.

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[[Page 68197]]

    On July 21, 2004, CenterPoint announced the sale of Texas Genco, 
which will be accomplished in two steps. The first step is expected to 
be completed in the fourth quarter of 2004 and will involve Texas Genco 
purchasing the approximately 19% of its shares owned by the public at a 
price of $47 per share, and then selling its fossil-fueled generating 
business to the buyer. In the second step, expected to take place in 
the first half of 2005 following receipt of approval by the Nuclear 
Regulatory Commission, Texas Genco will merge with a subsidiary of the 
buyer, thus transferring its remaining asset, an interest in a nuclear 
generating facility.
    Total cash proceeds from both steps will be approximately $2.9 
billion. CenterPoint intends to use the net after-tax proceeds of about 
$2.5 billion to retire debt. In the first stage of the sale 
transaction, Texas Genco will receive cash for the sale of its fossil 
generating business and will dividend $2.231 billion of those proceeds 
to Utility Holding. Utility Holding in turn will simultaneously 
dividend that amount to CenterPoint, which will repay bank debt and 
release a pledge that banks hold on the Texas Genco common stock. In 
the second step, Utility Holding will receive $700 million in cash for 
the sale of its stock in Texas Genco and will dividend that amount to 
CenterPoint.
    Because it is the vehicle through which CenterPoint holds its 
utility interests, Utility Holding has recorded a substantial charge to 
its retained earnings account in connection with the extraordinary 
events of the sale of Texas Genco and the stranded cost proceeding. In 
addition, the magnitude of the expected proceeds from both phases of 
the sale of Texas Genco exceeds Utility Holding's ability to dividend 
to CenterPoint the proceeds from each phase of the sale out of retained 
earnings.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E4-3286 Filed 11-22-04; 8:45 am]
BILLING CODE 8010-01-P