[Federal Register Volume 70, Number 79 (Tuesday, April 26, 2005)]
[Notices]
[Pages 21477-21480]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-8248]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27961]


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

April 20, 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 May 16, 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

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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 May 
16, 2005, the application(s) and/or declaration(s), as filed or as 
amended, may be granted and/or permitted to become effective.

Georgia Power Company (70-10269)

    George Power Company (``Georgia''), 241 Ralph McGill Blvd., NE., 
Atlanta, Georgia, 30308, a wholly owned electric utility subsidiary of 
The Southern Company (``Southern''), has filed an application-
declaration (``Application'') under sections 6(a), 7, 9(a), 10 and 
12(b) of the Act and rules 45, 52, and 54.

A. Description of the Proposed Transactions

    Georgia proposes to organize one or more subsidiaries for the 
purpose of effecting various financing transactions involving the 
issuance and sale of up to an aggregate of $1,100,000,000 of preferred 
securities with a specified par or stated value of liquidation amount 
of preference per security (``Preferred Securities''), from time-to-
time, through May 31, 2008. In connection with the issuance of the 
Preferred Securities, Georgia proposes to organize (1) one or more 
separate subsidiaries as a business trust under the laws of the State 
of Georgia or a statutory trust under the laws of the State of Delaware 
or other comparable trust in any jurisdiction that is considered 
advantageous by Georgia; or (2) any other entity or structure, foreign 
\1\ or domestic, that is considered advantageous by Georgia 
(individually a ``Trust'' and collectively the ``Trusts'').\2\
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    \1\ Georgia requests the Commission reserve jurisdiction over 
the use of a foreign entity as a Trust.
    \2\ Georgia states that the ability to use trusts in financing 
transactions can sometimes offer increased state and/or Federal tax 
efficiency. Increased tax efficiency can result if a trust is 
located in a state or country that has tax laws that make the 
proposed financing transaction more tax efficient relative to the 
company's existing taxing jurisdiction. However, decreasing tax 
exposure is usually not the primary goal when establishing a trust. 
Because of the potential significant non-tax benefits of these 
transactions, use of a trust can benefit an issuer even without a 
net improvement in its tax position. Trusts can increase a company's 
ability to access new sources of capital by enabling it to undertake 
financing transactions with features and terms attractive to a wider 
investor base. Trusts can be established in jurisdictions and/or in 
forms that have terms favorable to its sponsor and that, at the same 
time, provide targeted investors attractive incentives to invest and 
so provide financing. Many of these investors would not be 
participants in the sponsor's bank group and they typically would 
not hold sponsor bonds or commercial paper. Thus they represent 
potential new sources of capital.
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    Trusts sponsored by Georgia have issued and outstanding a total of 
$940,000,000 of preferred securities as of December 31, 2004\3\ Georgia 
currently has authority to issue additional preferred securities in an 
aggregate amount of up to $150,000,000 prior to October 31, 2005 
pursuant to a Commission order (``Current Order'') dated October 23, 
2003 (Holding Company Act Release No. 27584).\4\ Georgia proposes that 
the authority sought in the Application to issue up to an aggregate of 
$1,100,000,000 of preferred securities supersede and replace the 
remaining authorization contained in the Current Order.
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    \3\ Georgia notes that it reclassified $940,000,000 of 
outstanding mandatorily redeemable Preferred Securities as 
liabilities, effective July 1, 2003, pursuant to Financial 
Accounting Standards Board (``FASB'') Statement No. 150 ``Accounting 
for Certain Financial Instruments with the Characteristics of both 
Liabilities and Equity.'' Georgia states that the reclassification 
as a result of implementation of Statement No. 150 did not have a 
material effect on its Statements of Income and Cash Flows.
    \4\ The Current Order authorized Georgia to issue up to 
$650,000,000 aggregate amount of preferred securities. Under that 
order, Georgia has issued $500,000,000 aggregate amount of preferred 
securities.
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    Georgia states that it will acquire all of the common stock of any 
Trust for an amount not less than the minimum required by any 
applicable law and not exceeding 21% of the total equity capitalization 
from time to time of the Trust (i.e., the aggregate of the equity 
accounts of such Trust.\5\ The aggregate of such investment by Georgia 
hereafter is referred to as the ``Equity Contribution.'' Georgia may 
issue and sell to any Trust, at any time or from time to time in one or 
more series, subordinated debentures, promissory notes or other debt 
instruments (individually a ``Note'' and collectively the ``Notes'') 
governed by an indenture or other document. The Trust will apply both 
the Equity Contribution made to it and the proceeds from the sale of 
Preferred Securities by it, from time to time, to purchase Notes. 
Alternatively, Georgia may enter into a loan agreement or agreements 
with any Trust under which the Trust will lend Georgia (Individually a 
``Loan'' and collectively the ``Loans'') both the Equity Contribution 
to the Trust and the proceeds from the sale of the Preferred Securities 
by the Trust, from time to time, and Georgia will issue Notes, 
evidencing such borrowings, to the Trust. As of December 31, 2004, 
Georgia had outstanding $969,073,000 of Notes payable to trusts.
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    \5\ The constituent instruments of each Trust, including its 
Trust Agreement, will provide, among other things, that the Trust's 
activities will be limited to the issuance and sale of Preferred 
Securities, from time to time, and the lending to Georgia of the (1) 
resulting proceeds and (2) Equity Contribution to the Trust, and 
certain other related activities. Accordingly, Georgia proposes that 
no Trust's constituent instruments include any interest or dividend 
coverage or capitalization ratio restrictions on its ability to 
issue and sell Preferred Securities, as each issuance will be 
supported by a Note and Guaranty, and such restrictions would not be 
relevant or necessary for any Trust to maintain an appropriate 
capital structure. Each Trust's constituent instruments will further 
state that its common stock is not transferable (except to certain 
permitted successors), that its business and affairs will be managed 
and controlled by Georgia (or permitted successor), and that Georgia 
(or permitted successor) will pay all expenses of the Trust.
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    Georgia also proposes to guarantee (individually a ``Guaranty'' and 
collectively the ``Guaranties'') (1) payment of dividends or 
distributions on the Preferred Securities of any Trust if, and to the 
extent, the Trust has funds legally available; (2) payments to the 
Preferred Securities holders of amounts due upon liquidation of the 
Trust or redemption of the Preferred Securities of the Trust; and (3) 
certain additional amounts that may be payable by the Preferred 
Securities. Georgia's credit would support any Guaranty.
    Georgia states that each Note will have a term of up to fifty 
years. Prior to maturity, Georgia will pay interest only on the Notes 
at a rate equal to the dividend or distribution rate on the related 
series of Preferred Securities, which dividend or distribution rate may 
be either fixed or adjustable, to be determined on a periodic basis by 
auction or remarketing procedures, in accordance with a formula or 
formulae based upon certain reference rates, or by other predetermined 
methods.\6\
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    \6\ It is expected that Georgia's interest payment on the notes 
will be deductible for Federal income tax purposes and that each 
Trust will be treated as a passive grantor trust for Federal income 
tax purposes. Consequently, holders of the Preferred Securities and 
Georgia will be deemed to have received distributions in respect of 
their ownership interests in the respective Trust and will not be 
entitled to any ``dividends received deduction'' under the Internal 
Revenue Code of 1986, as amended. The Preferred Securities of any 
series, however, may be redeemable at the option of the Trust 
issuing the series (with the consent or at the direction of Georgia) 
at a price equal to their par or stated value or liquidation amount 
or preference, plus any accrued and unpaid dividends or 
distributions, (1) at any time after a specified date into later 
than approximately ten years from their date of issuance, or (2) 
upon the occurrence of certain events, among them that (a) the Trust 
is required to withhold or deduct certain amounts in connection with 
dividend, distribution or other payments or is subject to federal 
income tax with respect to interest received on the Notes issued to 
the Trust, or (b) it is determined that the interest payments by 
Georgia on the related Notes are not deductible for income tax 
purposes, or (c) the Trust becomes subject to regulation as an 
``investment company'' under the Investment Company Act of 1940, as 
amended. The Preferred Securities of any series may also be subject 
to mandatory redemption upon the occurrence of certain events that 
are typical of a transaction of this type. Georgia also may have the 
right in certain cases, or in its discretion, to exchange the 
Preferred Securities of any Trust for the Notes or other junior 
subordinated debt issued to the Trust. In addition, rather than 
issuing Preferred Securities of a Trust, Georgia may instead issue 
Notes or other junior subordinated debt directly to purchasers.

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    The interest payments will constitute each respective Trust's only 
income and will be used by it to pay dividends or distributions on its 
Preferred Securities and dividends or distributions on its common 
stock. Dividend payments or distributions on the Preferred Securities 
will be made on monthly or other periodic basis and must be made to the 
extent that the Trust issuing the Preferred Securities has legally 
available funds and cash sufficient for such purposes. However, Georgia 
may have the right to defer payment of interest on any issue of Notes 
for five or more years. Each Trust will have the parallel right to 
defer dividend payments or distributions on the related series of 
Preferred Securities for five or more years, provided that, if 
dividends or distributions on the Preferred Securities of any series 
are not paid for up to eighteen or more consecutive months, then the 
holders of the Preferred Securities of such series may have the right 
to appoint a trustee, special general partner or other special 
representative to enforce the Trust's right under the related Note and 
Guaranty. The dividend or distribution rates, payment dates, redemption 
and other similar provisions of each series of Preferred Securities 
will be substantially identical to the interest rates, payment dates, 
redemption and other provisions of the Notes issued by Georgia.
    Georgia states that the Notes and related Guaranties will be 
subordinate to all other existing and future unsubordinated 
indebtedness for borrowed money of Georgia and will have no cross-
default provisions with respect to other indebtedness of Georgia (i.e., 
a default under any other outstanding indebtedness of Georgia would not 
result in a default under any Note or Guaranty). However, Georgia may 
be prohibited from declaring and paying dividends on its outstanding 
capital stock and making payments in respect of pari passu debt unless 
all payments then due under the Notes and Guaranties (without giving 
effect to the deferral rights discussed above) have been made.
    If any Trust is required to without or deduct certain amounts in 
connection with dividend, distribution or other payments, the Trust may 
also have the obligation to ``gross up'' the payments so that the 
holders of the Preferred Securities issued by the Trust will receive 
the same payment after the withholding or deduction as they would have 
received if no withholding or deduction were required. In that event, 
Georgia's obligations under its related Note and Guaranty may also 
cover the ``gross up obligation.'' In addition, if any Trust is 
required to pay taxes with respect to income derived from interest 
payments on the Notes issued to it, Georgia may be required to pay the 
additional interest on the related Notes as shall be necessary in order 
that net amounts received and retained by the Trust, after payment of 
the taxes, shall result in the Trust's having funds as it would have 
had in the absence of the payment of taxes.
    For financial reporting purposes, each Trust will be a variable 
interest entity. On March 31, 2004, Georgia prospectively adopted FASB 
Interpretation No. 46R, ``Consolidation of Variable Interest Entities'' 
which requires the primary beneficiary of a variable interest entity to 
consolidate the related assets and liabilities (``FIN 46R''). The 
adoption of FIN 46R had no impact on Georgia's net income. Georgia 
accounts for its investment in each Trust under the equity method in 
accordance with FIN 46R, since Georgia does not meet the FIN 46R 
definition of a primary beneficiary.\7\
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    \7\ The primary beneficiary under FIN 46R is the enterprise 
``that will absorb a majority of the entity's expected losses, 
receive a majority of the entity's expected residual returns, or 
both.'' If one of the parties will absorb a majority of the entity's 
expected losses and another party receives a majority of the 
expected residual returns, ``the enterprise absorbing a majority of 
the losses shall consolidate the variable interest entity.'' In the 
case of Georgia's Preferred Securities, the security holders have 
the risk of absorbing the majority of the losses through the default 
by Georgia or the Trusts, and therefore are the primary 
beneficiaries.
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    The Notes that will be payable by Georgia to the Trusts will be 
presented as a separate line item on Georgia's balance sheet. Interest 
payable on the Notes will be reflected as a separate line item on 
Georgia's income statement and appropriate disclosures concerning the 
Preferred Securities, Guaranties and Notes will be included in the 
notes to Georgia's financial statements.

B. General Financing Parameters and Use of Proceeds

1. Effective Cost of Capital
    Georgia states that the effective cost of capital on the Preferred 
Securities and the interest rate on the Notes will not exceed 
competitive market rates available at the time of the issuance of the 
securities having the same or reasonably similar terms and conditions 
issued by companies of reasonably comparable credit quality, provided 
that, in no event will be effective cost of capital exceed 300 basis 
points over U.S. Treasury securities having comparable maturities.
2. Issuance Expenses
    Georgia states that the underwriting fees, commissions or other 
similar renumeration paid in connection with the non-competitive issue, 
sale or distribution of a security that is the subject of the 
Application (not including any original issue discount) will not exceed 
5% of the principal or total amount of the security being issued.
3. Common Equity Ratio
    Georgia represents that it will maintain its common equity as a 
percentage of capitalization (inclusive of short-term debt) at no less 
than thirty percent.\8\ Georgia requests the Commission to reserve 
jurisdiction over any guarantees or securities that do not satisfy 
these conditions.
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    \8\ In regard to a Trust maintaining a minimum amount of common 
equity, see the discussion in footnote 5, supra.
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4. Investment Grade Criteria
    Georgia further represents that no guaranties or other securities 
may be issued in reliance upon any authorization that may be granted by 
the Commission pursuant to the Application, unless upon original 
issuance (1) the security to be issued, if rates, is rated investment 
grade; (2) all outstanding securities of Georgia that are rated are 
rated investment grade; and (3) all outstanding securities of Southern 
that are rated are rate investment grade. For purposes of this 
provision, a security will be deemed to be rated ``investment grade'' 
if it is rated investment grade by at least one nationally recognized 
statistical rating organization, as that term is used in paragraphs 
(c)(2)(vi)(E), (F) and (H) of rule 15c3-1 under the Securities Exchange 
Act of 1934, as amended. Georgia requests that is be permitted to issue 
a security that does not satisfy the foregoing conditions if the 
requirements of rule 52(a)(i) and rule 52(a)(iii) are met and the issue 
and sale of the security have been expressly authorized by the Georgia 
Public Service Commission. Georgia also requests the Commission to 
reserve jurisdiction over any guaranties or securities that do not 
satisfy these conditions.
5. Use of Proceeds
    Georgia will use the proceeds from the sale of the securities in 
connection

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with its ongoing construction program, to pay scheduled maturities and/
or refundings of its securities, to repay short-term indebtedness to 
the extent outstanding and for other general corporate purposes.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 05-8248 Filed 4-25-05; 8:45 am]
BILLING CODE 8010-01-M