[Federal Register Volume 70, Number 64 (Tuesday, April 5, 2005)]
[Notices]
[Pages 17271-17272]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-1533]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27953; 70-10290]


Pepco Holdings, Inc.; Filings Under the Public Utility Holding 
Company Act of 1935, as Amended (``Act'')

March 30, 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 April 25, 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 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 April 25, 2005, the application(s) and/or 
declaration(s), as filed or as amended, may be granted and/or permitted 
to become effective.

Notice of Proposal To Amend Charter; Order Authorizing the Solicitation 
of Proxies

    Pepco Holdings, Inc. (``PHI''), 701 Ninth Street, Washington, DC 
20068, a Delaware corporation and a registered public utility holding 
company under the Act, has filed a declaration (``Declaration'') under 
to sections 6(a)(2) and 12(e) of the Act and rules 54, 62 and 65 under 
the Act.
    PHI requests authority to (i) amend its corporate charter to 
eliminate classification of the Board of Directors (``Proposed 
Amendment'') and (ii) solicit proxies from the holders of PHI's shares 
of common stock to implement the Proposed Amendment.
    PHI states that it has had a staggered Board of Directors in place 
since it became a public company at the time of the closing of the 
merger involving its public utility subsidiary Potomac Electric Power 
Company (``Pepco'') and Conectiv, formerly a registered public utility 
holding company, in 2002. Prior to the merger, Pepco had a staggered 
board beginning in 1988 and Conectiv had a staggered board from the 
time it became a public company in 1998. Under PHI's staggered board 
arrangement, the Board of Directors is divided into three classes, with 
the directors of one of the classes elected annually for three-year 
terms.
    PHI states that the Board of Director's Corporate Governance/
Nominating Committee conducted a review of the relative merits of 
annually elected and staggered boards. The Nominating Committee 
recommended to the Board that the staggered election of directors be 
eliminated. After reviewing and assessing the recommendation of the 
Nominating Committee, the Board of Directors adopted a resolution, 
declaring it advisable that section C of Article V of PHI's Restated 
Certificate of Incorporation be amended to eliminate classification of 
the Board of Directors.
    PHI states that if the Proposed Amendment is approved, each nominee 
for election as a director, including directors standing for 
reelection, will be elected for a one-year term. The Proposed Amendment 
will not shorten the term of any director elected at or prior to the 
2005 Annual Meeting. Accordingly, in 2006 only the nominees to succeed 
the directors whose terms expire in 2006, would be elected for one-year 
terms. In 2007, the nominees to succeed the directors whose terms 
expire in 2007 and to succeed the directors elected in 2006 would be 
elected for one-year terms. Beginning in 2008, all of the members of 
the Board of Directors would be elected for one-year terms. Under 
paragraph D of Article V of the Restated Certificate of Incorporation, 
any vacancy on the Board of Directors resulting other than because of 
an increase in the authorized number of directors elected by 
shareholders may be filled by a majority of the directors then in 
office. In accordance with this provision, if during the transition 
period a vacancy occurs with respect to a director whose term of office 
continues beyond the next annual meeting, the term of any director 
elected to fill such a vacancy shall expire at the next shareholders' 
meeting at which directors are elected, and the remainder of the term, 
if any, shall be filled by a director elected at that meeting.
    PHI states that in accordance with paragraph G of Article V of the 
Restated Certificate of Incorporation, adoption of the Proposed 
Amendment requires the affirmative vote of the holders of two-thirds 
the outstanding shares of PHI's

[[Page 17272]]

common stock. Accordingly PHI requests that an order be issued under 
rule 62(d) of the Act authorizing commencement of the proxy 
solicitation.
    The transaction is also governed by the conditions of rule 53(a). 
As of September 30, 2004, PHI's ``aggregate investment,'' as defined in 
rule 53(a)(1) was approximately $3,013.3 million and PHI's consolidated 
retained earnings was $904.6 million. Accordingly, at September 30, 
2004, PHI's aggregate investment exceeded 50% of its consolidated 
retained earnings, the ``safe harbor'' limitation contained in rule 
53(a). However, by order dated July 31, 2002 (HCAR No. 27557) 
(``Financing Order''), the Commission authorized PHI to increase its 
aggregate investment to an amount equal to the sum of 100% of 
consolidated retained earnings plus $3.5 billion. At September 30, 
2004, based on the Financing Order, PHI could have had an aggregate 
investment of $4,404.6 million. Therefore, although PHI's aggregate 
investment at such date exceeded the 50% ``safe harbor'' limitation of 
rule 53, it is within the higher investment level granted by the 
Financing Order.
    PHI states that it currently complies with, and will comply with, 
the record keeping requirements of rule 53(a)(2), the limitation under 
rule 53(a)(3) on the use of the PHI system's domestic public utility 
company personnel to render services to exempt wholesale generators 
(``EWGs''), as that term is defined in section 32 of the Act, and 
foreign utility companies (``FUCOs''), as that term is defined in 
section 33 of the Act, and the requirements of rule 53(a)(4) concerning 
the submission of copies of certain filings under the Act to retail 
regulatory commissions. PHI states that none of the circumstances 
described in rule 53(b) have occurred, and rule 53(c) is inapplicable 
by its terms.
    Fees and expenses in the estimated amount of $670,000 are expected 
to be incurred in connection with the proposed transactions (including 
costs associated with the solicitation of proxies). PHI states that no 
state or federal commission, other than this Commission, has 
jurisdiction over the proposed transactions.
    PHI has filed its proxy solicitation materials and requests that 
its proposal to solicit proxies be permitted to become effective 
immediately, as provided in rule 62(d) under the Act. It appears to the 
Commission that the Declaration, with respect to the proposed 
solicitation of proxies, should be permitted to become effective 
immediately under rule 62(d).
    It is ordered, under rule 62 under the Act, that the Declaration 
regarding the proposed solicitation of proxies from PHI shareholders 
become effective immediately, subject to the terms and conditions 
contained in rule 24 under the Act.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-1533 Filed 4-4-05; 8:45 am]
BILLING CODE 8010-01-P