File No. 70-9773
United States Securities and Exchange Commission
Washington, D.C. 20549
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Amendment No. 1 to
Form U-1
Application/Declaration
Under the
Public Utility Holding Company Act of 1935
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National Grid Group plc
15 Marylebone Road
London NWI5JD
United Kingdom
(Name of company filing this statement
and address of principal executive offices)
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National Grid Group plc
(Name of top registered holding company)
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Kirk L. Ramsauer
Deputy General Counsel
National Grid USA
25 Research Drive
Westborough, Massachusetts 01582
Telephone: (508) 389-2972
Facsimile: (508) 389-3518
(Name and address of agent for service)
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The Commission is also requested to send copies of any communication in
connection with this matter to:
Joanne C. Rutkowski
Markian M. W. Melnyk
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
1875 Connecticut Ave., N.W.
Washington, D.C. 20009-5728
Telephone: (202) 986-8000
Facsimile: (202) 986-8102
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This pre-effective Amendment No. 1 revises the Form U-1
Application/Declaration in this proceeding, originally filed with the Securities
and Exchange Commission on October 16, 2000, in File No. 70-9773, by adding a
Rule 54 analysis at the end of Item 1, adding fee and expense information to
Item 2, and adding Exhibits F-1 and F-2 to Item 6.
Item 1. Description of the Proposed Transaction
* * * * *
D. Rule 54 Analysis
Under Rule 54, the Commission may not consider the effect of the
capitalization or earnings of any subsidiary which is an exempt wholesale
generator ("EWG") or foreign utility company ("FUCO") upon the registered
holding company system "if Rules 53(a), (b) and (c) are satisfied." National
Grid currently meets all of the conditions of Rule 53(a), except for clauses (1)
and (2)./1 Due to the level of National Grid's aggregate investment in EWGs and
FUCOs and the lack of U.S. GAAP books and records for its FUCO investments,
National Grid cannot comply with Rule 53(a) and consequently, it must
demonstrate that it complies with Rule 53(c).
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1 As the Commission noted in The National Grid Group plc, Holding Co. Act
Release No. 27154 (March 15, 2000) (the "March Order"), National Grid has
preexisting foreign operations and cannot at this time commit to maintain
the books and records of these interests in conformity with U.S. GAAP.
National Grid will, however, comply fully with the substantive provisions
of Rule 53.
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National Grid's aggregate investment, as defined in Rule 53(a), in EWGs and
FUCOs as of September 30, 2000 was $4,034,303,800. As of September 30, 2000,
National Grid's consolidated retained earnings calculated in accordance with
U.S. GAAP was $3,296,256,000. Consequently, National Grid's aggregate investment
in EWGs and FUCOs as a percentage of its consolidated retained earnings was 122%
as of September 30, 2000./2 In the Commission's March Order, National Grid was
authorized to invest up to 252% of its retained earnings in EWGs and FUCOs.
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2 National Grid's consolidated capitalization was 33.5% common stock and
66.5% debt as of September 30, 2000.
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National Grid also notes that none of the conditions described in paragraph
(b) of Rule 53 is applicable. Specifically, (1) there has been no bankruptcy of
any National Grid associate company in which a plan of reorganization has not
been confirmed, (2) the average consolidated retained earnings for the two most
recent semiannual periods has not decreased by 10 percent from the average for
the previous two semiannual periods, and (3) in the past fiscal year, National
Grid has not reported operating losses attributable to its direct or indirect
investments in EWGs and FUCOs. Indeed, National Grid's interests in EWGs and
FUCOs have contributed positively to its consolidated earnings during the period
since the March Order.
National Grid is in full compliance with the conditions of Rule 53(c).
Under Rule 53(c), "[a]n applicant that is unable to satisfy the requirements of
paragraphs (a) and (b) of this section must affirmatively demonstrate that the
proposed issue and sale of a security to finance the acquisition of an exempt
wholesale generator, or the guarantee of a security of an exempt wholesale
generator (1) will not have a substantial adverse impact upon the financial
integrity of the registered holding company system; and (2) will not have an
adverse impact on any utility subsidiary of the registered holding company, or
its customers, or on the ability of state commissions to protect such subsidiary
or customers.
The authority sought herein to solicit proxies from National Grid's
shareholders will have no effect upon National Grid's investment, direct or
indirect, in EWGs or FUCO. The solicitation of proxies also is not an issuance
of securities to finance the acquisition of, or investment in, EWGs or FUCOs
that could have the potential to adversely affect the financial soundness of the
National Grid system or any of its public utility subsidiaries. Since this
Application-Declaration does not involve a financing transaction, there is no
basis for the Commission to withhold or deny approval for the proposal made in
this Application-Declaration. The action requested in the instant filing would
not have an adverse effect on the financial integrity of the National Grid
system, or an adverse impact on National Grid's public-utility subsidiaries,
their customers, or the ability of State commissions to protect such
public-utility customers.
The lack of any adverse effect associated with National Grid's current
financing plan was fully demonstrated in National Grid's Application in File No.
70-9519 and confirmed by the Commission in its March Order. The March Order
notes that in its Application referenced above; (1) National Grid demonstrated
that it had an investment grade credit rating, (2) a history of positive
contributions to earnings from National Grid Company (the most significant part
of National Grid's FUCO operations), (3) that the Application contained various
commitments by National Grid to maintain its financial strength, and (4) that
the public utility subsidiaries in the National Grid system were insulated from
the direct effects of EWG and FUCO investments. Lastly, the Application notes
that National Grid has demonstrated expertise and sound management skills with
respect to its operation of the high-voltage system in England and Wales and
that its project review procedures are stringent. Based on all these factors,
the Commission found in the March Order that "National Grid has made the
requisite showing under rule 53(c)."3
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3 March Order at 64.
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Given National Grid's continued compliance with the terms of the March
Order and the lack of any proposed financing transaction in the instant
Application-Declaration, the Commission should find the terms of Rule 54
satisfied.
Item 2. Fees, Commissions and Expenses
National Grid estimates that the fees and expenses payable in connection
with the proposed Solicitation will be approximately $1,665,000. This amount
includes printing and mailing the Circular, proxy tabulation services, legal
services and miscellaneous expenses.
Item 6. Exhibits and Financial Statements
(a) Exhibits.
Exhibit B-1 Press Release (incorporated by reference to National Grid's Form
425 dated September 5, 2000, File No. 1-2987).
Exhibit B-2 Merger Agreement (incorporated by reference to Niagara Mohawk's
Form 8-K dated September 13, 2000, File No. 000-25595).
Exhibit B-3 Draft Circular (to be filed separately under confidential
treatment request pursuant to Rule 104(b)).
Exhibit F-1 Opinion of Counsel - National Grid Group plc.
Exhibit F-2 Past Tense Opinion of Counsel (to be filed by amendment).
Exhibit I-1 Form of Notice.
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act of
1935, Applicant has duly caused this Pre-Effective Amendment No. 1 to its
Application-Declaration, File No. 70-9773, to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: December 19, 2000 By: /s/ Jonathan M.G. Carlton
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Jonathan M.G. Carlton
Vice President and Director
of Regulatory Research
National Grid USA
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Exhibit Index
Exhibit F-1 Opinion of Counsel - National Grid Group plc.
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EXHIBIT F-1
December 19, 2000
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: National Grid Group plc, Application-Declaration on Form U-1
in File No. 70-9773.
Dear Sirs:
National Grid Group plc ("National Grid") has applied to the Commission for
authority to solicit proxies in connection with the acquisition of Niagara
Mohawk Holdings, Inc. As counsel for National Grid, I deliver this opinion to
you for filing as Exhibit F-1 to the Application-Declaration referenced above.
Briefly stated, National Grid is seeking the Commission's authorization under
Section 12(e) of the Public Utility Holding Company Act of 1935 (the "Act") and
Rule 62 which require that any solicitation of National Grid's shareholders be
made only in accordance with a Declaration which the Commission has permitted to
become effective. The Application-Declaration and National Grid's draft
Circular, filed as Exhibit B-3 to the Application-Declaration, explain the
transaction in more detail.
I am a member of the Law Society of England and Wales, the place of
incorporation of National Grid, and I am also a member of the Law Society of
Scotland. I am not a member of the bars of any other country, or any state of
the United States, states in which certain subsidiaries of the Applicant are
incorporated or qualified to do business, and do not hold myself out as an
expert in the laws of such states, although I have consulted and will consult
with counsel to National Grid who are experts in such laws. For purposes of this
opinion, to the extent I deemed necessary, I have relied on advice from counsel
employed or retained by National Grid, in particular, CMS Cameron McKenna,
Cleary, Gottleib, Steen & Hamilton and LeBoeuf, Lamb, Greene & MacRae, L.L.P.,
who are expert in the laws applicable to the Applicant.
In connection with this opinion, I or attorneys in whom I have confidence,
have examined originals or copies, certified or otherwise identified to my
satisfaction, of such records and such other documents, certificates and
corporate or other records as I have deemed necessary or appropriate as a basis
for the opinions expressed in this letter. In my examination, I have assumed the
genuineness of all signatures, the legal capacity of all persons, the
authenticity of all documents submitted to me as originals, the conformity to
original documents of documents submitted to me as copies and the authenticity
of the originals of such copies. As to various questions of fact material to
such opinions, I have, when relevant facts were not independently established,
relied upon statements contained in the Application-Declaration.
The opinions expressed below are subject to the following assumptions,
qualifications, limitations, conditions and exceptions:
o The Commission shall have duly entered an appropriate order or orders
with respect to the proposed proxy solicitation, as described in the
Application-Declaration, permitting the Application-Declaration to
become effective under the Act and the rules and regulations
thereunder, and the proposed proxy solicitation is consummated in
accordance with the Application-Declaration and the Commission's
orders.
o No act or event other than as described herein shall have occurred
subsequent to the date hereof which would change the opinions
expressed below.
o The Applicant will at the time of the proxy solicitation be a duly
incorporated corporation or duly formed limited liability company or
partnership in the jurisdiction in which it is domiciled.
Based upon the foregoing and subject to the assumptions, qualifications,
limitations, conditions and exceptions set forth herein, I am of the opinion
that, in the event the proxy solicitation is consummated in accordance with the
Application-Declaration:
(a) all state and federal laws applicable to the proposed proxy
solicitation will have been complied with, and;
(b) the consummation of the proposed proxy solicitation will not violate
the legal rights of the holders of any securities issued by National
Grid, or by any associate company thereof.
I hereby consent to the filing of this opinion as an exhibit to the
Application-Declaration.
Very truly yours,
//s//Fiona Smith
Company Secretary and General Counsel
National Grid Group plc
