As filed with the Securities and Exchange Commission
on June 6, 1997
File No. 70-8787
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------------
PRE-EFFECTIVE AMENDMENT NO. 4
TO THE
FORM U-1 APPLICATION/DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
----------------------------------
New Century Energies, Inc.
1225 Seventeenth Street
Denver, Colorado 80202
----------------------------------
(Name of company filing this statement
and address of principal executive offices)
None
----------------------------------
(Name of top registered holding company)
Richard C. Kelly
Executive Vice President,
Chief Financial Officer and Treasurer
1225 Seventeenth Street
Denver, Colorado 80202
----------------------------------
(Name and address of agent for service)
The Commission is requested to send copies of all notices, orders and
communications in connection with this Application-Declaration to:
Patricia T. Smith, Esq. Gary W. Wolf, Esq.
William M. Dudley, Esq. Cahill Gordon & Reindel
Public Service Company of Colorado 80 Pine Street
1225 Seventeenth Street New York, New York 10005
Denver, Colorado 80202
William S. Lamb, Esq.
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
125 West 55th Street
New York, New York 10019
<PAGE>
-2-
New Century Energies, Inc. ("NCE") hereby amends its
Application/Declaration on Form U-1 (File No. 70-8787), as follows:
1. By amending and restating Item 1.A.1. as follows:
Pursuant to Sections 9(a)(2) and 10 of the Act, NCE hereby requests
authorization and approval of the Commission to acquire, by means of the mergers
described below, all of the issued and outstanding common stock of PSCo, SPS,
and Cheyenne Light, Fuel and Power Company ("Cheyenne"), a Wyoming public
utility company and currently a wholly-owned subsidiary of PSCo. NCE also hereby
requests that the Commission approve (i) the acquisition by NCE of all of the
outstanding voting securities of New Century Services, Inc. ("NC Services"), NC
Enterprises, Inc. ("NC Enterprises"), West Gas Interstate, Inc. ("WGI"), a
subsidiary of PSCo that is engaged in the gas transportation business,(1) and PS
Colorado Credit Corporation ("PSCCC"), a subsidiary of PSCo that finances
(factors) certain of PSCo's current assets, under Section 9(a)(1) of the Act;
(ii) the acquisition by NC Enterprises of securities of all of SPS's and certain
of PSCo's non-utility subsidiaries under Section 9(a)(1) of the Act; (iii) the
acquisition by NCE, NC Enterprises, or e prime, inc. ("e prime"), a subsidiary
of PSCo which is to become a subsidiary of NC Enterprises, of all of the
outstanding voting securities of New Century International, Inc. ("NC
International"); (iv) NC Services as a subsidiary service company in accordance
with the provisions of Rule 88 of the Act and the Utility Service Agreement and
the Non-Utility Service Agreement as a basis for NC Services to comply with
Section 13 of the Act and the Commission's rules thereunder; (v) certain
additional affiliate transactions as being in accordance with the provisions of
Section 13 of the Act; (vi) the issuance of NCE Common Stock in connection with
the Transaction; and (vii) other related transactions as described herein.
2. By amending and restating the first paragraph of Item 1.A.2. as follows:
Pursuant to an Agreement and Plan of Reorganization, dated as of August 22,
1995, as amended on December 8, 1995
- ----------
1 WGI is regulated by the FERC, but is not a public-utility company within
the meaning of the Act.
<PAGE>
-3-
(the "Merger Agreement"), PSCo Merger Corp., a Colorado corporation and a
wholly-owned subsidiary of NCE ("PSCo Merger Corp."), will be merged with and
into PSCo, with PSCo continuing as the surviving corporation (the "PSCo
Merger"), and SPS Merger Corp., a New Mexico corporation and a wholly-owned
subsidiary of NCE, will be merged with and into SPS, with SPS as the surviving
corporation (the "SPS Merger"). As a result of the PSCo Merger and the SPS
Merger, and the declaration of a dividend by PSCO to NCE of all of the stock of
Cheyenne, PSCo, SPS, and Cheyenne will become operating subsidiaries of NCE, and
NCE will be a holding company within the meaning of the Act. NCE will file a
notification of registration under Section 5 of the Act on Form U5A within 30
days of the merger and will file a registration statement on Form U5B within 90
days thereafter.
3. By amending and restating footnote 9 in Item 1.B.3.a. as follows:
PSCo through NC International (or alternatively e prime) expects to acquire
prior to the closing of the Transaction for $2 million a minority interest in
Independent Power Corporation PLC ("IPC"), a British company that is in the
business of developing, owning, and operating foreign generating plants. IPC
will be qualified as a FUCO under Section 33 of the Act.
4. By amending and restating the third to last paragraph of Item 1.B.3.b.
as follows:
UE and Quixx had net earnings in the aggregate of approximately $2.0
million (including $7.7 million from the sale of water rights and a $10.4
million loss from the write-off of the BCH Project) in calendar 1996, $12
million (including $7.7 million from the sale of water rights) in fiscal 1996
and $5.2 million in fiscal 1995.
5. By amending Item 3. by amending and restating the following listed under
"Sections of the Act" as follows:
9(a)(1), 10 Acquisition by NCE of stock of WGI, PSCCC, NC Services, NC
Enterprises, and possibly NC International; acquisition by
NC Enterprises of stock of certain non-utility subsidiaries
of PSCo and SPS; possible acquisition of stock by e prime
of stock of NC Interna-
<PAGE>
-4-
tional; acquisition by SPS of debt of NC Enterprises;
acquisition of substations by SPS from UE
12 Sale of substations by UE to SPS
6. By amending Item 3. by deleting the reference to Rule 58 and by adding
the following under "Rules":
43 Sale of substations by UE to SPS
7. By amending and restating the first paragraph of Item 3.A.2.a.ii.II. as
follows:
UE: UE is engaged in a variety of engineering, development, design,
construction, and other related services for non-affiliated customers. UE will
also provide such services to affiliates. Clearly, the engineering, construction
and design of utility plants is functionally related to the core utility
operations of NCE. A utility company must be able to construct or otherwise
acquire additional capacity as needed, and UE has a proven ability to do so.
While UE's principal expertise grew out of the construction of power-related
projects for SPS and it continues to work on power-related projects, UE does,
from time to time, provide engineering and design services for other types of
industrial plant construction. UE is not expected to conduct its business
principally with NCE affiliated companies. For example, for calendar 1996 and
fiscal 1996, revenues derived by UE from sales to associates represented only
33.3% and 30.5%, respectively, of its total revenues. As a non-regulated
subsidiary in the NCE system, UE will be able to compete in the developing
independent, as well as regulated, power markets due to its ability to
accomplish plant construction quickly and at a competitive price. UE also
currently owns twenty-five electric substation facilities that it leases to
twelve industrial customers of SPS. Revenues from that activity are
approximately $2.5 million per year. The substations were purchased over a
period of years from SPS, and the customers utilize the leased substations to
secure power from SPS under a favorable transmission tariff recognized by Texas
regulators. In order to obtain service under this tariff, the customer must own
or lease its own substation facilities. The customer elects whether to build its
own facility or lease it from UE or some other provider. SPS maintains a
metering point upstream from the substation to record sales to the particular
industrial customer. The delivery and sale of
<PAGE>
-5-
the electric energy to the industrial customer takes place at transmission level
voltage prior to the energy reaching the UE-owned substation. UE will attempt to
renegotiate the existing leases to make them into capital leases in conformity
with generally accepted accounting principles. UE will also endeavor to ensure
that all future leases of substation equipment are such capital leases. At the
end of five years from the date of the consummation of the Transaction, to the
extent that there are outstanding any substation leases that are not such
capital leases, NCE commits that those substations will be sold by UE to SPS at
their then net book value, and hereby requests authority to make such transfers
at that time. If any substations are transferred to SPS, UE personnel may
continue to administer the lease arrangements for SPS for a fee determined in
accordance with Section 13 of the Act and Rules 87 and 90 thereunder. Except
with respect to services provided to EWGs and FUCOs, and except as provided
below, all of UE's activities, as well as the activities of all of UE's
subsidiaries, are limited to the United States. UE will not engage in any
activity that would cause it to be a "public utility" under the Act.
8. By amending and restating the last paragraph of Item 3.A.2.a.ii.III. as
follows:
Sale and servicing of electric and gas appliances: PSCo's appliance service
operations provide repair services and warranties to customers in connection
with certain household appliances and may involve the leasing of certain large
appliances (i.e. HVAC system, lighting system, chillers) to industrial
customers. In Mississippi Power & Light Co., HCAR No. 25140 (August 30, 1990),
the Commission authorized Mississippi Power & Light Co. to market and sell
manufacturers' warranties and service agreements for space conditioning
equipment as well as to market, sell, lease, and finance the acquisition and
installation of surge suppressors. PSCO's activities are similar and are,
therefore, retainable. Such activities should also be retainable for the reason
set forth above with respect to Quixx's financing for heat pump acquisition by
SPS customers. Also under Rule 48 public utility companies, such as PSCo, are
permitted to provide financing for customer purchases of, including from such
public-utility company engaged in the business of selling, standard electric and
gas appliances. Moreover, "[t]he sale of electric and gas appliances . . . and
the installation and servicing thereof" are "energy-related" activities under
Rule 58(b)(1)(iv).
<PAGE>
-6-
9. By amending and restating the second paragraph of Item 3.A.2.a.ii.V. as
follows:
Because NCE was not yet a holding company, none of the investments in
non-utility activities that are described herein were pursuant to Commission
order. However, since all of the activities of SPS were outside the ambit of the
Act and since the non-utility investments of PSCo, an exempt holding company,
were exempt under the Act, investments made by SPS and PSCo prior to the
consummation of the Transaction which will continue as part of the NCE holdings
after consummation of the merger, should not count in the calculation of the 15%
maximum. The same reasoning that led the Commission to exempt prior investments
for registered holding companies, justifies exempting from the 15% calculation
the existing investments of a company about to be registered. As stated in the
Rule, all additional investments made in those activities subsequent to the
adoption of Rule 58 should be included in the 15% test.(2)
10. By amending and restating the fifth paragraph of Item 3.A.2.b.ii.I. as
follows:
This additional interconnect will further the economic operation of the NCE
system by enabling it to achieve additional production-related synergies.
Indeed, the plans for the line's construction are not related to any requirement
of the Act, but rather to the substantial benefits that will accrue as a result
of the line. As recently as 1992, SPS and PSCo discussed connecting their
systems through an HVDC tie and transmission line to facilitate transactions
between their systems. The production-related benefits of the proposed
interconnect were determined in three areas: capacity deferral savings, joint
dispatch savings, and fuel energy savings. The process used to estimate these
savings involved modeling each company's system and determining its costs on a
stand-alone basis and then on a combined basis. The savings were based on a
comparison of the individual system costs to those determined on a combined
basis. The representation of the individual systems was based on each company's
most recent resource plan, modified to account for any major changes in
assumptions since the plan was developed, and the most recent fuel forecasts.
The combined system expansion plan was based on the reduced ca-
- ----------
2 Footnote omitted from this Amendment but not deleted from the Application.
<PAGE>
-7-
pacity requirements of the combined system and accounted for the expected fuel
synergy savings. The development of these costs considered production costs as
well as investment-related costs. Benefits attributed to joint dispatch savings
were developed within the combined system model and coincide with the in-service
date of a new transmission line between the two companies. Overall, it is
anticipated that the electric production-related savings from the merger of PSCo
and SPS will aggregate approximately $270 million (net of the cost of the line).
To achieve this level of savings, the tie line will need to be constructed.
Additional savings are likely to be realized over time. Additional information
regarding electric production-savings can be found in Exhibit D-1.2.2. attached
hereto. NCE undertakes to file a post-effective amendment to this
Application/Declaration if the construction of the transmission tie line is not
substantially completed within five years of consummation of the Transaction or
if NCE determines not to build the tie line. Such post-effective amendment will
address the measures that the NCE system will take to satisfy the requirements
of Section 2(a)(29) of the Act.
11. By amending and restating the first paragraph of Item 3.B.3. as
follows:
Various non-utility companies in the NCE system, namely NC Services, UE,
Utility Services, PRC, Quixx, QPS, and e prime, e prime Operating, and ep3 (or
successor company -- see note 48, supra) (collectively, the "Exempt Companies"),
currently are, or will in the future be, providing services (including operation
and maintenance) and selling goods to associated EWGs and QFs or to entities
that will qualify as QFs, EWGs, or FUCOs following the Transaction. The
Applicants request that the Commission permit the Exempt Companies to continue
such transactions without compliance with the provisions of Section 13(b) and
the rules and regulations thereunder.
<PAGE>
-8-
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act of
1935, the undersigned company has duly caused this amendment to the application
and declaration to be signed on its behalf by the undersigned thereunto duly
authorized.
New Century Energies, Inc.
By:/s/Richard C. Kelly
------------------------------
Richard C. Kelly
Executive Vice President,
Chief Financial Officer
and Treasurer
Date: June 6, 1997
