[Federal Register Volume 69, Number 244 (Tuesday, December 21, 2004)]
[Notices]
[Pages 76500-76503]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-27834]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27924]


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

December 14, 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 January 7, 2005, to the Secretary,

[[Page 76501]]

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 January 7, 2005, the 
application(s) and/or declaration(s), as filed or as amended, may be 
granted and/or permitted to become effective.

American Electric Power Company, Inc., AEP Texas Central Company (70-
10231)

    American Electric Power Company, Inc., (``AEP''), a registered 
holding company, and AEP Texas Central Company (``TCC''), an indirect 
public utility subsidiary of AEP, both at 1 Riverside Plaza, Columbus, 
Ohio 43215 (together ``Declarants''), have filed a declaration under 
section 12(d) of the Act and rules 44 and 54 under the Act.
    Declarants request authority for TCC to sell its ownership 
interests in a 690 Megawatt generation facility located in Wilbarger 
County, Texas (the ``Oklaunion Facility'') to non-affiliated-third 
parties.
    AEP currently holds vertically-integrated electric utility 
companies with retail utility operations in eleven states--Arkansas, 
Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma, Tennessee, 
Texas, Virginia and West Virginia.\1\ TCC is a wholly owned indirect 
subsidiary of AEP, engaged in the transmission and distribution of 
electricity in its service territory located in southern Texas and in 
the generation and sale of electricity in the region of the Electric 
Reliability Council of Texas (``ERCOT''). The entire service territory 
of TCC is located in ERCOT.
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    \1\ AEP subsidiaries with retail utility operations include: AEP 
Generating Company, TCC, AEP Texas North Company, formerly West 
Texas Utilities Company, Appalachian Power Company, Columbus 
Southern Power Company, Indiana Michigan Power Company, Kentucky 
Power Company, Ohio Power Company, Public Service Company of 
Oklahoma, Southwestern Electric Power Company, and Wheeling Power 
Company.
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    The Texas electric restructuring law (the ``Texas Act''), signed 
into law in 1999, required, among other things, that utilities legally 
separate into a retail electric provider, a power generation company, 
and a transmission and distribution utility. The Texas Act provides 
each affected utility an opportunity to recover its generation related 
regulatory assets and stranded costs resulting from the legal 
separation of the transmission and distribution utility from the 
generation facilities and the related introduction of retail electric 
competition. Regulatory assets consist of the Texas jurisdictional 
amount of generation-related regulatory assets and liabilities in the 
audited financial statements as of December 31, 1998. Stranded costs 
consist of the positive excess of the net regulated book value of 
generation assets over the market value of those assets, taking 
specified factors into account, as ultimately determined by the Public 
Utility Commission of Texas.
    TCC is selling all of its generation assets in order to determine 
the assets' fair market value for purposes of calculating TCC's 
stranded costs in accordance with the Texas Act. The divestiture of 
TCC's assets is being achieved through a series of sales to different 
purchasers. On July 2, 2004, TCC completed the sale of 3,813 MW of 
generating assets to a joint venture of Sempra Energy Partners and 
Carlyle/Riverstone Global Energy and Power Fund. TCC's sale of its 
interest in two co-owned 1,250 MW nuclear generating units situated in 
Matagorda County, Texas is the subject of a separate application to the 
Commission.\2\
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    \2\ SEC File No. 70-10253.
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    TCC executed a contract for the sale of its 7.81% undivided 
interest (which corresponds to approximately 54 MW) in the Oklaunion 
Facility to the Golden Spread Cooperative (``Golden Spread'') for 
approximately $42,750,000 on January 30, 2004. Under an earlier 
agreement (the ``Oklaunion Agreement''), the other owners of the 
Oklaunion Facility have a right of first refusal to purchase the TCC 
interest in the Oklaunion Facility. The Oklaunion Agreement provides 
that the interest in the Oklaunion Facility will be divided pro-rata 
among the exercising owners whereby two or more owners each exercise 
their right to purchase the entire Oklaunion interest. Both of the 
other owners, the Public Utilities Board of the City of Brownsville 
(``Brownsville'') and the Oklahoma Municipal Power Authority (``OMPA'') 
exercised their rights of first refusal to purchase either their 
proportionate share or, in the event that the other failed to close, 
the entire TCC interest. In late June, Golden Spread filed an 
Application for Declaratory Judgment in Texas State Court seeking 
confirmation that both the City of Brownsville and OMPA's exercises 
were invalid and that Golden Spread was entitled to purchase the TCC 
interest in Oklaunion. The City of Brownsville then filed a counter 
claim pleading that OMPA did not validly exercise their right of first 
refusal and that Brownsville was therefore entitled to the entire TCC 
interest in Oklaunion.

Enron Corp. (70-10239)

    Enron Corp. (``Enron''), an Oregon corporation and registered 
holding company, Four Houston Center, 1221 Lamar, Suite 1600, Houston, 
Texas 77010-1221, has filed an application/declaration with the 
Commission under sections 12(d) and 5(d) of the Act and rules 44 and 54 
under the Act.

I. Background

    On July 2, 1997, Enron became a holding company by acquiring all of 
the outstanding common stock of Portland General Electric Company 
(``Portland General''), its sole public-utility company subsidiary.
A. Description of Portland General
    Portland General, an Oregon corporation, is an electric utility 
company. It is engaged in the generation, purchase, transmission, 
distribution, and retail sale of electricity in the State of Oregon. 
Portland General also sells electricity and natural gas in the 
wholesale market to utilities and power marketers located throughout 
the Western United States. Portland General's service area is located 
entirely within Oregon, and covers approximately 4,000 square miles, 
including 51 incorporated cities. At the end of 2003, approximately 1.5 
million people lived within Portland General's service area and the 
company served approximately 754,000 retail customers.
    Portland General has approximately 26,085 miles of electric 
transmission and distribution lines and owns 1,957 MW of generating 
capacity. Portland General also has long-term power purchase contracts 
for 510 MW from four hydroelectric projects on the mid-Columbia River 
and power purchase contracts of one to twenty-six years for another 740 
MW from Bonneville Power Administration, other Pacific Northwest 
utilities, and certain Native American tribes. As of December 31, 2003, 
Portland General's total firm resource capacity, including short-term 
purchase agreements, was approximately 3,883 MW (net of short-term 
sales agreements of 3,910 MW). Portland General's peak load in 2003 was 
3,351 MW. Portland General had 2,687 employees as of December 31, 2003. 
As of and for the year ended December 31, 2003, Portland General and 
its subsidiaries on a consolidated basis had operating revenues of 
$1,752 million, net income

[[Page 76502]]

of $58 million, retained earnings of $545 million, and assets of $3,372 
million.
    Portland General is a reporting company under the Securities 
Exchange Act of 1934, and it files annual, quarterly and periodic 
reports with the Commission. Portland General is regulated by the 
Oregon Public Utility Commission (``OPUC'') with regard to its rates, 
terms of service, financings, affiliate transactions and other aspects 
of its business. In addition, the Federal Energy Regulatory Commission 
(``FERC'') regulates Portland General's activities in the interstate 
wholesale power markets.
B. Enron's Bankruptcy
    On December 2, 2001, Enron and certain of its subsidiaries each 
filed a voluntary petition for relief under chapter 11 of title 11 of 
the United States Code (``Bankruptcy Code'') in the United States 
Bankruptcy Court for the Southern District of New York (``Bankruptcy 
Court''). Enron and its subsidiaries that have filed voluntary 
petitions (collectively, ``Debtors'') continue to operate their 
businesses and manage their properties as debtors in possession. 
Portland General is not in bankruptcy.
    On March 9, 2004, Enron registered as a holding company under the 
Act and the Commission issued two orders. By one of the orders (HCAR 
No. 27809), the Commission authorized Enron and certain subsidiaries to 
engage in financing transactions, nonutility corporate reorganizations, 
the declaration and payment of dividends, affiliate sales of goods and 
services, and other transactions needed to allow those applicants to 
continue their businesses. By the other order (HCAR No. 27810, ``Plan 
Order''), the Commission approved the Debtors' plan of reorganization 
(``Plan'') under section 11(f) of the Act.\3\ The Plan was approved by 
the Bankruptcy Court on July 15, 2004, and the effective date of the 
Plan occurred on November 17, 2004. As explained in the Plan Order, the 
Plan does not provide for Enron to survive in the long term as an 
ongoing entity with any material operating businesses. Enron's role as 
a Reorganized Debtor is to hold and sell assets and to manage the 
litigation of the estates pending the final conclusion of the chapter 
11 filings.
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    \3\ The Plan Order also constituted a report on the Plan under 
section 11(g) of the Act and authorized the Debtors to continue the 
solicitation of votes of the Debtors' creditors for acceptances or 
rejections of the Plan.
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C. Sale of Portland General
    Enron entered into an agreement, dated November 18, 2003 
(``Purchase Agreement'') to sell all of the common stock of Portland 
General to Oregon Electric Utility Company, LLC (``Oregon Electric''), 
a recently formed entity financially backed by investment funds managed 
by the Texas Pacific Group, a private equity investment firm.\4\ Enron 
expects that the sale will close in the first quarter of 2004, after 
the receipt of certain regulatory authorizations.
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    \4\ The status of Oregon Electric after the acquisition of 
Portland General is the subject of a separate pending application 
(Commission File No. 70-10262). In a companion filing, TPG Partners 
IV, L.P. and TPG III Oregon Electric Investment Company, LLC, both 
private equity funds, have filed an application (Commission File No. 
70-10263) concerning their statuses under the Act resulting from 
their intended investments in Oregon Electric. Both TPG Partners IV, 
L.P. and TPG III Oregon Electric Investment Company, LLC would be 
managed by Texas Pacific Group, a private equity firm that manages 
funds on behalf of institutional and private investors.
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    The purchase price for the issued and outstanding common stock of 
Portland General is a cash amount equal to (a) $1,250,000,000, subject 
to a purchase price adjustment based on the difference between Portland 
General's shareholders' equity and retained earnings at the closing 
date of the transaction and $1,129,422,925 (Portland General's 
shareholders' equity and retained earnings at December 31, 2002), plus 
(b) up to $10.4 million in cash based on a sharing mechanism for 
indemnity items settled between signing and closing of the transaction. 
Of the cash purchase price (subject to reduction for certain pre-
closing settlement of certain specified liabilities), $94,000,000 would 
be placed in an escrow account at the closing and available to satisfy 
indemnification obligations of Enron under the Purchase Agreement.
    Under the Purchase Agreement, after closing, Enron would indemnify 
Oregon Electric and Portland General, subject to certain limitations, 
for: (1) Breaches by Enron of representations, warranties and pre-
closing covenants; (2) breaches by Enron of post-closing covenants; (3) 
certain specified Portland General and Enron related liabilities; and 
(4) certain tax and employee benefits liabilities related to Enron's 
ownership of Portland General.
    Enron is obligated to pay Oregon Electric a break-up fee equal to 
$31.25 million (``Break-up Fee'') if Oregon Electric terminates the 
Purchase Agreement upon Enron's election to distribute the PGE Common 
Stock to creditors or upon Enron's willful breach of the Purchase 
Agreement.\5\ Under the Purchase Agreement, Enron also agreed to 
reimburse Oregon Electric for its reasonable and documented expenses, 
up to a specified cap that increases over time, if Oregon Electric 
terminates the Purchase Agreement upon a non-willful breach by Enron of 
the Purchase Agreement. In any circumstances where Oregon Electric's 
expenses are reimbursed and a break-up fee is subsequently owed to 
Oregon Electric, the Break-up Fee would be reduced by the amount of 
such expenses.
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    \5\ If Oregon Electric terminates the Purchase Agreement by 
reason of Enron's willful breach and Enron, within the one-year 
period following such termination, enters into a purchase agreement 
for an alternative transaction, then Oregon Electric may seek 
additional damages from Enron equal to the difference between the 
purchase price that would have been payable by Oregon Electric and 
the purchase price payable in such alternative transaction.
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    In connection with the execution of the Purchase Agreement, Oregon 
Electric placed a letter of credit in escrow in the amount of 
$18,750,000 as a deposit. The full amount of the proceeds of the letter 
of credit would be payable to Enron if it terminates the Purchase 
Agreement because of Oregon Electric's breach. In addition, Enron would 
be entitled to receive a portion of the deposit ($5,000,000 or 
$10,000,000) depending on the circumstances in certain cases if Oregon 
Electric is unable to obtain financing for the transaction.
    The transactions contemplated by the Purchase Agreement require the 
approval of the Bankruptcy Court, OPUC, Oregon Energy Facilities Siting 
Council, FERC, Federal Communications Commission, Nuclear Regulatory 
Commission and the Commission. The transaction is supported by the 
Official Unsecured Creditors' Committee in the Enron bankruptcy 
proceeding (``Creditors'' Committee''), and has been approved by the 
Enron board of directors and, as discussed below, the Bankruptcy Court.
    Under the Purchase Agreement, Enron was permitted to accept a bid 
that represented a ``higher or better'' offer for Portland General. The 
Bankruptcy Court issued an order (``Bidding Procedures Order'') 
establishing a process for considering possible alternative better 
proposals to purchase the common shares of Portland General. 
Specifically, the Bidding Procedures Order authorized Enron to conduct 
an auction for the sale of the common stock to any bidder that could 
demonstrate that it had the financial ability to consummate the 
transaction and the ability to comply with all obligations under its 
purchase agreement (``Qualified Bidder''). Enron was directed, upon 
consultation with

[[Page 76503]]

the Creditors'' Committee, to consider only those bids that were 
presented under a contract substantially identical to the Purchase 
Agreement, accompanied by a deposit in an amount at least equal to the 
greater of $20,250,000 or 1.5% of the bidder's proposed purchase price, 
and received no later than noon on January 28, 2004. The Bidding 
Procedures Order provided that any bid: (1) Must not be subject to due 
diligence review or any board approval, or subject to any conditions, 
or the receipt of any consents, that are not otherwise required by the 
Purchase Agreement; and (2) must contain an initial overbid (``Initial 
Overbid'') in an amount that was at least $50,000,000 over and above 
the base purchase price in the Purchase Agreement. Bids meeting those 
and other requirements as to form were designated ``Qualifying 
Competing Bids.'' In the event there were Qualifying Competing Bids, 
under the Bidding Procedures Order, Enron was to conduct an auction of 
the common stock on February 2, 2004.
    Enron provided notice of the bidding procedures to all interested 
persons in accordance with the Bidding Procedures Order. No bids were 
received, qualifying or otherwise. Accordingly, Enron did not hold the 
auction. By order dated February 5, 2004 (``Sale Order''), the 
Bankruptcy Court approved the Purchase Agreement and authorized the 
sale of all common stock of Portland General to Oregon Electric.

II. Requests for Authority

    Enron requests authority to: (1) Sell all of the common stock of 
its sole public-utility company subsidiary, Portland General to Oregon 
Electric; and (2) deregister under the Act after completing that 
transaction.

American Electric Power Company, Inc., AEP Texas Central Company (70-
10253)

    American Electric Power Company, Inc., (``AEP'') a registered 
holding company, and AEP Texas Central Company (``TCC''), an indirect 
public utility subsidiary of AEP, both located at 1 Riverside Plaza, 
Columbus, Ohio 43215 (together ``Declarants''), have filed a 
declaration under section 12(d) of the Act and rules 44 and 54 under 
the Act.
    Declarants request authority for TCC to sell its interest in two 
co-owned 1,250 MW nuclear generating units situated in Matagorda 
County, Texas (``STP'') to non-affiliated third parties.
    AEP currently holds vertically-integrated electric utility 
companies with retail utility operations in eleven states--Arkansas, 
Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma, Tennessee, 
Texas, Virginia and West Virginia.\6\ TCC is a wholly owned indirect 
subsidiary of AEP, engaged in the transmission and distribution of 
electricity in its service territory located in southern Texas and in 
the generation and sale of electricity in the region of the Electric 
Reliability Council of Texas (``ERCOT''). The entire service territory 
of TCC is located in ERCOT.
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    \6\ AEP subsidiaries with retail utility operations include: AEP 
Generating Company, TCC, AEP Texas North Company, formerly West 
Texas Utilities Company, Appalachian Power Company, Columbus 
Southern Power Company, Indiana Michigan Power Company, Kentucky 
Power Company, Ohio Power Company, Public Service Company of 
Oklahoma, Southwestern Electric Power Company, and Wheeling Power 
Company.
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    The Texas electric restructuring law (the ``Texas Act''), signed 
into law in 1999, required, among other things, that utilities legally 
separate into a retail electric provider, a power generation company, 
and a transmission and distribution utility. The Texas Act provides 
each affected utility an opportunity to recover its generation related 
regulatory assets and stranded costs resulting from the legal 
separation of the transmission and distribution utility from the 
generation facilities and the related introduction of retail electric 
competition. Regulatory assets consist of the Texas jurisdictional 
amount of generation-related regulatory assets and liabilities in the 
audited financial statements as of December 31, 1998. Stranded costs 
consist of the positive excess of the net regulated book value of 
generation assets over the market value of those assets, taking 
specified factors into account, as ultimately determined by the Public 
Utility Commission of Texas.
    TCC is selling all of its generation assets in order to determine 
the assets' fair market value for purposes of calculating TCC's 
stranded costs pursuant to the Texas Act. The divestiture of TCC's 
assets is being achieved through a series of sales to different 
purchasers. On July 2, 2004, TCC completed the sale of 3,813 MW of 
generating assets to a joint venture of Sempra Energy Partners and 
Carlyle/Riverstone Global Energy and Power Fund. TCC's sale of its 
interest in a 690 Megawatt generation facility located in Wilbarger 
County, Texas is the subject of a separate application to the 
Commission.\7\
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    \7\ SEC File No. 70-10231.
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    TCC executed a contract for the sale of its 25.2% undivided 
interest (which corresponds to approximately 630 MW) in STP to Cameco 
South Texas Project LP, a Texas limited partnership and subsidiary of 
Cameco Corporation (``Cameco'') for approximately $330 million on 
February 27, 2004. Pursuant to an earlier agreement (the ``STP 
Agreement''), the other owners of STP have a right of first refusal to 
purchase the TCC interest in STP. The STP Agreement provides that the 
interest in STP will be divided pro-rata among the exercising owners 
when two or more owners exercise their right to purchase TCC's 
undivided STP interest.
    On May 28, 2004, in accordance with the STP Agreement, two of the 
other owners of STP, the City of San Antonio, acting through the City 
Public Service Board of San Antonio (``San Antonio'') and Texas Genco, 
L.P., a Texas limited partnership (``Texas Genco'') exercised their 
rights of first refusal to purchase the entire share of the TCC 
interest in STP according to the terms and conditions (including the 
purchase price) stated in the agreement with Cameco. On September 3, 
2004, TCC entered into a purchase and sale agreement with San Antonio 
and Texas Genco under which, subject to certain regulatory approvals, 
San Antonio and Texas Genco will purchase the entire TCC interest in 
STP. In accordance with the sale, TCC also intends to assign, transfer 
or otherwise sever all rights, obligations and other interest in STP 
Nuclear Operating Company, a nonprofit Texas corporation that operates 
STP under a contract.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-27834 Filed 12-20-04; 8:45 am]
BILLING CODE 8010-01-P