[Federal Register Volume 70, Number 32 (Thursday, February 17, 2005)]
[Notices]
[Pages 8117-8119]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-3057]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27946]


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

February 11, 2005.
    Notice is hereby given that the following filing(s) has/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 March 8, 2005, 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

[[Page 8118]]

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 March 8, 2005, the application(s) and/or 
declaration(s), as filed or as amended, may be granted and/or permitted 
to become effective.

Wisconsin Energy Corporation et al. (70-10276)

    Wisconsin Energy Corporation (``Wisconsin Energy''), 231 West 
Michigan Street, Milwaukee, WI 53201 and W.E. Power, LLC, 301 West 
Wisconsin Avenue, Milwaukee, WI 53203 (``W.E. Power'' and together, 
``Applicants''), have filed an application (``Application'') under 
sections 9(a), 10 and 3(a)(1) of the Act.

I. Introduction

    Applicants request authorization to acquire two 545 MW gas-fired, 
combined cycle generating units located in Port Washington, Wisconsin 
(``Port Washington Units'') which are being constructed by Port 
Washington Generating Station, LLC (``Project Company''), an indirect 
subsidiary company of W.E. Power.

II. Description of the Applicants

A. Wisconsin Energy
    Applicants state that Wisconsin Energy is a Wisconsin Corporation 
and an exempt public utility holding company under section 3(a)(1) of 
the Act.\1\ Wisconsin Energy's utility subsidiaries include Wisconsin 
Electric Power Company (``Wisconsin Electric''), Wisconsin Gas LLC 
(``Wisconsin Gas''), Edison Sault Electric Company (``Edison Sault''), 
American Transmission Company LLC (``ATC''), ATC Management Inc. (``ATC 
Management'') and W.E. Power. Applicants state that, on a consolidated 
basis for the year ended December 31, 2003, Wisconsin Energy had total 
operating revenues of more than $4 billion. Applicants further state 
that, as of September 30, 2004, Wisconsin Energy had consolidated total 
assets of $9.012 billion.
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    \1\ See Wisconsin Energy Corp., HCAR No. 24267 (Dec. 18, 1986), 
as most recently confirmed in Wisconsin Energy Corp., et al., HCAR 
No. 27329 (Dec. 28, 2000) (``2000 Order'').
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    Wisconsin Electric, a Wisconsin corporation, is a wholly owned, 
direct, public utility company subsidiary of Wisconsin Energy. 
Wisconsin Electric owns electric generation and distribution facilities 
located in Wisconsin and the Upper Peninsula of Michigan and natural 
gas distribution facilities located in Wisconsin. Applicants state that 
Wisconsin Electric claims exemption under section 3(a)(1) by rule 2 and 
is also the subject of S.E.C. File No. 70-10110, requesting an 
exemption by order.
    Wisconsin Electric generates, distributes, and sells, both at 
wholesale and retail, electric energy in a territory of approximately 
12,000 square miles, with a population estimated at 2,300,000 in 
southeastern Wisconsin, east central, and northern Wisconsin, and in 
the upper peninsula of Michigan. Applicants state that, as of and for 
the year ended December 31, 2003, Wisconsin Electric had approximately 
1,068,000 electric customers and electric operating revenues of $1.986 
billion and total operating revenues of $2.522 billion. Applicants 
further state that, on a consolidated basis, as of September 30, 2004, 
Wisconsin Electric had total assets of $6.678 billion.
    Wisconsin Electric also purchases, distributes and sells natural 
gas to retail customers and transports customer-owned gas in three 
distinct service areas of approximately 3,800 square miles in 
Wisconsin. Applicants state that Wisconsin Electric's gas service 
territory has an estimated population of 1,200,000 and as of December 
31, 2003, Wisconsin Electric served approximately 428,700 gas 
customers. Applicants state that Wisconsin Electric's gas distribution 
system includes approximately 8,800 miles of mains connected at 22 gate 
stations to the pipeline transmission systems of ANR Pipeline Company, 
Guardian Pipeline, L.L.C., Natural Gas Pipeline Company of America, 
Northern Natural Gas Company, and Great Lakes Transmission Company. In 
addition, Wisconsin Electric has a liquefied natural gas storage plant 
with a send-out capability of 70,000 dekatherms per day.
    Applicants state that Wisconsin Electric operates two district 
steam systems that supply steam for space heating and process uses. 
These systems are located in Milwaukee and in Wauwatosa, Wisconsin and 
are subject to regulation by the Public Service Commission of Wisconsin 
(``PSCW'').
    Applicants state that Wisconsin Gas, a Wisconsin limited liability 
company, is a wholly-owned, direct gas public utility subsidiary of 
Wisconsin Energy authorized to provide retail gas distribution service 
in designated territories Wisconsin and transports customer-owned gas. 
Applicants state that Wisconsin Gas also provides water utility service 
to customers in the suburban Milwaukee area and is subject to the 
regulation of the PSCW as to retail gas and water rates, standards of 
service, issuance of long-term securities, construction of certain new 
facilities, transactions with affiliates, billing practices and various 
other matters. For the year ended December 31, 2003, Wisconsin Gas had 
operating revenues of $714.8 million and as of September 30, 2004, 
Wisconsin Gas had total assets of approximately $1.357 billion.
    Applicants state that Edison Sault is a wholly owned, direct 
electric public utility subsidiary of Wisconsin Energy. Edison Sault is 
authorized to provide retail electric service in certain territories in 
Michigan and is subject to the regulation of the Michigan Public 
Service Commission as to various matters associated with retail 
electric service in Michigan. Applicants state that Edison Sault 
generates, distributes and sells electric energy in a territory of 
approximately 2,000 square miles with a population of approximately 
55,000 in the eastern upper peninsula of Michigan and also provides 
wholesale electric service under contract with one rural cooperative. 
On a consolidated basis, as of and for the year ended December 31, 
2003, Edison Sault had total assets of approximately $72.4 million and 
operating revenues of approximately $42.4 million.
    ATC is a Wisconsin limited liability company organized in response 
to Wisconsin legislation as a single-purpose transmission company to 
assume ownership and operation of the transmission facilities that had 
previously belonged to Wisconsin Electric, Edison Sault and several 
other Wisconsin electric utility companies. Applicants state that in 
return for the transfer of the transmission facilities, Wisconsin 
Electric and Edison Sault each acquired membership interests in ATC and 
Wisconsin Electric acquired shares in ATC Management, a Wisconsin 
corporation organized to provide management services to ATC. As of 
December 31, 2003, Wisconsin Energy owned, through Wisconsin Electric 
and Edison Sault, 39.4 percent of ATC, and through Wisconsin Electric, 
40.1 percent of ATC Management.
B. W.E. Power, LLC
    W.E. Power, a Wisconsin limited liability company, is a wholly 
owned, direct intermediate holding company subsidiary of Wisconsin 
Energy. Applicants state that W.E. Power was formed in 2001 to design, 
construct, own, finance and lease to Wisconsin Electric 2,320 megawatts 
of new generating capacity in Wisconsin, including the generating and 
transmission facilities discussed below. Applicants state that W.E. 
Power does

[[Page 8119]]

not and will not own any facilities directly. W.E. Power directly owns 
a 100 percent interest in Project Company.
C. Project Company
    Applicants state that Project Company, a Wisconsin limited 
liability company, was formed specifically to develop, construct and 
own a 100 percent interest in the Port Washington Units. In addition, 
Project Company will develop, construct and own a 100 percent interest 
in certain transmission facilities necessary to interconnect the Port 
Washington Units with the ATC transmission grid.

III. Proposed Transaction

    Applicants request authorization for Project Company to acquire the 
Port Washington Units and the associated transmission facilities 
necessary to interconnect the units with the ATC transmission grid 
(``Transaction''). Upon completion of construction and the satisfaction 
of certain conditions precedent, including the successful testing of 
the units, Project Company will lease the Port Washington Units to 
Wisconsin Electric under the terms of 25-year facility leases, one for 
each unit (``Facility Leases''), and certain other related contractual 
arrangements (``Lease Transaction''). Applicants state that once the 
Port Washington Units are operational, control of the appurtenant 
transmission facilities will be transferred to ATC.
    Applicants propose to implement the Lease Transaction using a 
``leased generation'' structure specifically authorized under 
Wisconsin's ``Leased Generation Law.'' \2\ Applicants state that this 
law establishes a new regulatory framework under which nonutility 
affiliates may develop, construct and own large-scale dedicated 
generating facilities within the state of Wisconsin and lease those 
facilities to their regulated, franchised public utility affiliates. 
The legislative intent behind the Leased Generation Law is to ``provide 
an incentive for utility holding companies to continue to provide 
generation services for the affiliate utility's native load 
customers.'' \3\ To that end, Applicants state that the statute 
specifically permits a public utility company to acquire generating 
resources by leasing them from an affiliate as an alternative to the 
public utility company constructing the generating facilities itself. 
The Leased Generation Law allows a public utility company to build 
generation indirectly through an affiliate. The Leased Generation Law 
is limited to leases between a public utility company and an affiliated 
entity; it does not apply to leases between a public utility company 
and third parties.
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    \2\ See 2001 Wis. Legis. Serv. 16, Sec.  3008mc (West) (codified 
as Wis. Stat. Sec.  196.52(9)(a)(3)(2002)).
    \3\ See Approval of Affiliated Interest Transactions Between 
W.E. Power; Wisconsin Elec. Power Co.; and Wisconsin Energy Corp., 
PSCW Docket Nos. 05-AE-109, 05-CE-117, 137-CE-104, and 6650-CG-211 
(December 19, 2002) (``PSCW Order'')
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    Once the lease provisions become effective, Wisconsin Electric will 
make fixed monthly lease payments to Project Company for the terms of 
the Facility Leases. In return, Wisconsin Electric will have the right 
to possess and operate the Port Washington Units. The Port Washington 
Units will be integrated with, and operated as part of, Wisconsin 
Electric's existing regulated generation fleet. Wisconsin Electric will 
be responsible for all operations, maintenance, and fuel costs for the 
Port Washington Units.
    Applicants state that neither Project Company nor its immediate 
parent, W.E. Power, will operate or control the Port Washington Units 
or associated transmission facilities. At the end of the terms of the 
Facility Leases, Wisconsin Electric may, at its option, renew each 
Facility Lease for a renewal term determined under the terms of the 
Facility Lease, buy each Port Washington Unit outright from Project 
Company or return the units to Project Company in good condition.
    Wisconsin Energy requests an order affirming that, following the 
Transaction, it will continue to be exempt under section 3(a)(1) of the 
Act and W.E. Power will become and exempt intermediate holding company 
under section 3(a)(1) of the Act.

    For the Commission by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 05-3057 Filed 2-16-05; 8:45 am]
BILLING CODE 8010-01-P