File No. 70-09007
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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PRE-EFFECTIVE AMENDMENT
No. 2
TO THE
FORM U-1 APPLICATION/DECLARATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
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New Century Energies, Inc.
Public Service Company of Colorado
Cheyenne Light, Fuel and
Power Company
New Century Services, Inc.
WestGas Interstate Inc.
NC Enterprises, Inc.
New Century International Inc. and
its subsidiary companies
e prime, inc. and its subsidiary companies
PS Colorado Credit Corporation
Natural Fuels Corporation
Fuel Resources Development Company
PSR Investments, Inc.
Green & Clear Lakes Company
1480 Welton, Inc.
1225 Seventeenth Street
Denver, Colorado 80202
Southwestern Public Service Company
Quixx Corporation and its subsidiary companies
Utility Engineering Corporation and its subsidiary companies
Tyler at Sixth
Amarillo, Texas 79101
(Names of companies filing this statement and
addresses of principal executive offices)
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New Century Energies, Inc.
(Name of top registered holding company parent)
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Richard C. Kelly
Executive Vice President, Chief Financial Officer and Treasurer
1225 Seventeenth Street
Denver, Colorado 80202
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(Name and address of agents for service)
The Commission is requested to send copies of all notices, orders and
communications in connection with this
Application/Declaration to:
Susan A. Marshall, Esq. Gary W. Wolf, Esq.
LeBoeuf, Lamb, Greene & MacRae, Cahill Gordon & Reindel
L.L.P. 80 Pine Street
125 West 55th Street New York, New York 10005
New York, New York 10019
James D. Steinhilper William Lewis
Southwestern Public Service Public Service Company of
Company Colorado
Tyler at Sixth 1225 Seventeenth Street
Amarillo, Texas 79101 Denver, Colorado 80202
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TABLE OF CONTENTS
Page
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Item 1. Description of Proposed Transaction.........................................................1
A. General...........................................................................1
B. Description of the Parties to the Transaction.....................................2
C. Overview of Financing Request.....................................................3
D. Parameters for Financing Authorization............................................4
E. Description of Specific Types of Financings.......................................5
1. NCE External Financings......................................................5
a. Common Stock...........................................................5
i. General .................................................................. 6
ii. Benefit Plans and Open Market Purchases of Common Stock...................7
iii. Dividend Reinvestment Plan...............................................8
b. Short-Term Debt........................................................9
c. Other Securities......................................................10
2. Utility Subsidiary Financings...............................................10
a. Short Term Debt.......................................................11
b. Other Securities......................................................11
3. Non-Utility Subsidiary Financings...........................................12
4. Intra-System Financings.....................................................13
a. General...............................................................13
b. Guarantees............................................................14
5. Changes in Capital Stock of Subsidiaries....................................15
6. Financing Entities..........................................................15
F. Financing of EWGs and FUCOs......................................................16
G. Filing of Certificates of Notification...........................................17
H. Statement Pursuant to Rule 54....................................................18
Item 2. Fees, Commissions and Expenses.............................................................19
Item 3. Applicable Statutory Provisions............................................................20
Item 4. Regulatory Approvals.......................................................................20
Item 5. Procedure..................................................................................20
Item 6. Exhibits and Financial Statements..........................................................21
A. Exhibits.........................................................................21
B. Financial Statements.............................................................22
Item 7. Information as to Environmental Effects....................................................23
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Item 1. Description of Proposed Transaction
A. General
New Century Energies, Inc. ("NCE"), a Delaware corporation, has previously
filed an Application/Declaration on Form U-1 with the Securities and Exchange
Commission (the "Commission") requesting authorization under Section 9(a)(2) of
the Public Utility Holding Company Act of 1935, as amended (the "Act"), to
acquire all of the outstanding voting securities of Public Service Company of
Colorado, a Colorado corporation and an operating public utility company
("PSCo"), Southwestern Public Service Company, a New Mexico corporation and an
operating public utility company ("SPS"), and Cheyenne Light, Fuel and Power
Company, a Wyoming corporation and an operating public utility company
("Cheyenne"), and for other related transactions (File No. 70-8787) (the "Merger
U-1").1 Following the consummation of the transactions described in the Merger
U-1, NCE will register as a holding company under the Act. Each of the entities
that will be directly and indirectly owned subsidiaries (as defined in the Act)
of NCE upon consummation of the transactions described in the Merger U-1, is
referred to herein individually as a "Subsidiary" and collectively as
"Subsidiaries". The terms "Subsidiary" and "Subsidiaries" shall also include
entities that become subsidiaries of NCE after the consummation of the Merger.
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1 No authority for the issuance or acquisition of any stock or debt security
is sought in the Merger U-1 except: (i) the issuance of NCE stock in
connection with the business combination, and in exchange for the stock, of
PSCo, SPS and Cheyenne, (ii) the issuance of stock to NCE by NC
Enterprises, Inc. ("Enterprises"), New Century Services, Inc. and West Gas
Interstate, Inc., (iii) the acquisition by Enterprises of the outstanding
voting securities of all of SPS's, and certain of PSCo's, non-utility
subsidiaries, (iv) the acquisition by NCE, Enterprises or e prime, inc. of
the outstanding voting securities of New Century International, Inc. and
(v) the issuance by Enterprises of debt to SPS to acquire SPS's
subsidiaries and the possible guarantee of such debt by NCE. Those
transactions for which authority is sought in the Merger U-1 are not
covered hereby.
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2
In order to ensure that NCE and its Subsidiaries (the "Applicants") are
able to meet their capital requirements upon registration and plan their future
financing accurately, the Applicants are hereby requesting authorization for
financing transactions for the period beginning with the effective date of an
order issued in this proceeding through December 31, 1999 (the "Authorization
Period").
B. Description of the Parties to the Transaction
Following the consummation of the merger of PSCo and SPS (the "Merger"),
NCE will register as a holding company under the Act and will have three
operating utility subsidiaries (the "Utility Subsidiaries"): PSCo, an electric
and gas utility company providing service in an area having an estimated
population of 2.8 million in Colorado; SPS, an electric utility company
providing service to an area with a population of approximately one million in
the Panhandle and south plains of Texas, eastern and southeastern New Mexico,
the Oklahoma Panhandle and southwestern Kansas; and Cheyenne, an electric and
gas utility operating principally in Cheyenne, Wyoming. NCE's other direct
Subsidiaries will include New Century Services, Inc. ("NC Services"), West Gas
Interstate Inc. ("WGI"), PS Colorado Credit Corporation (together with its
successor, if any, "PSCCC") and NC Enterprises, Inc. ("Enterprises"), an
intermediate holding company. NCE may also directly own New Century
International, Inc. All of NCE's directly and indirectly owned subsidiaries,
other than the Utility Subsidiaries, are herein called the "Non-Utility
Subsidiaries".
Additional information about the Applicants and their businesses is set
forth in the Merger U-1 and the exhibits thereto.
C. Overview of Financing Request
The Applicants hereby request authorization to engage in the financing
transactions set forth herein during the Authorization Period.
The approval by the Commission of this Application/Declaration (the
"Application") will give the Applicants flexibility that will allow them to
respond quickly and efficiently to their financing needs and to changes in
market conditions, which, in turn, should make them more competitive
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3
with other utility companies that are not subject to the jurisdiction of the
Act.2 At the same time, the Commission will continue to have oversight over
financings by the Applicants through the regular disclosures under the 1933 Act
and the Securities Exchange Act of 1934, as amended (the "1934 Act"), and
through the notification system established pursuant to this Application.
Finally, although the authorization sought herein is not as broad, this form of
financing authorization under the Act is consistent with existing Commission
precedent. See, e.g., Columbia Gas Systems, Inc., et al., HCAR No. 26634
(December 23, 1996); Consolidated Natural Gas Company, HCAR No. 26500, File
70-8667 (March 28, 1996); Mississippi Power Company, HCAR No. 26491 (March 13,
1996); Gulf States Utilities Company, HCAR No. 26451 (January 16, 1996).
The Applicants also hereby request authorization to deviate from the
Commission's statements of policy with respect to first mortgage bonds and
preferred stock in connection with the securities proposed to be issued and sold
pursuant to this Application or pursuant to applicable exceptions under the Act.
The authorization requested herein relates to (i) external issues of common
stock, short term debt, and other securities by NCE; (ii) external issuances of
capital stock and debt securities not subject to the Rule 52 exemption,
including short term debt, by the Utility Subsidiaries, (iii) external issuances
of capital stock and debt securities not subject to the Rule 52 exemption by
Non-Utility Subsidiaries, (iv) intrasystem financing among NCE and its
Subsidiaries, including the issuance of intrasystem guarantees, (v) the ability
of the Subsidiaries to alter their capital stock in order to engage in financing
with their parent company, (vi) the formation of financing entities and the
issuance by such entities of securities otherwise authorized to be issued and
sold pursuant to this Application or pursuant to applicable exemptions under the
Act, including intrasystem guarantees of such securities and the retention of
existing financing entities and (vii) financing of investments in exempt
wholesale generators ("EWGs") and foreign utility companies ("FUCOs").
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2 This Application is consistent with the recommendations set forth in the
report of the Division of Investment management, The Regulation of
Public-Utility Holding Companies (June 1995) at 50 and 54.
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4
D. Parameters for Financing Authorization
This Application requests authority to engage in certain financing
transactions during the Authorization Period for which the specific terms and
conditions are not at this time known, and which are not covered by Rule 52,
without further prior approval by the Commission. The following general terms
will be applicable where appropriate to the financing transactions requested to
be authorized hereby:
1. Effective Cost of Money on Short-Term Borrowings. The effective cost of
money on short-term debt financings authorized by this Application does not
exceed 300 basis points over the London interbank offered rate (LIBOR);
2. Effective Cost of Money on Other Approved Securities. The effective cost
of money on preferred stock and other fixed income oriented securities does not
exceed 500 basis points over the interest rate borne by 30 year term U.S.
Treasury securities;
3. Maturity of Debt. The maturity of authorized indebtedness will not
exceed 50 years; and
4. Issuance Expenses. The underwriting fees, commissions and other similar
remunerations paid in connection with the non-competitive issue, sale or
distribution of a security pursuant to this Application does not exceed 5% of
the principal or total amount of the financing.
The proceeds from the financings authorized by the Commission pursuant to
this Application will be used for general and corporate purposes, including (i)
financing, in part, capital expenditures of NCE and its Subsidiaries, (ii) the
repayment, redemption, refunding or purchase by NCE or any of its Subsidiaries
of its own debt and capital stock without the need for prior Commission approval
pursuant to Rule 42 or a successor rule, (iii)financing working capital
requirements and capital spending of the NCE system and (iv) other lawful
general purposes.
The authorization requested herein to engage in external or intrasystem
financing without additional Commission approval does not apply in the case of
any financing the proceeds of which will be used to invest in an EWG or a FUCO
unless such financing is in compliance with Rules 53 and 54 (as described
below).
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5
The Applicants represent that no financing proceeds will be used to acquire
a new subsidiary unless the financing is consummated in accordance with an order
of the Commission or an available exemption under the Act.
NCE represents that, at all times during the Authorization Period, its
common equity (as reflected in its most recent Form 10-K or Form 10-Q filed with
the Commission pursuant to the 1934 Act) will be at least 30% of its
consolidated capitalization, as adjusted to reflect subsequent events that
affect capitalization.
E. Description of Specific Types of Financings
1. NCE External Financings
NCE may obtain funds externally through sales of common stock and
short-term debt financing, including commercial paper sales.
a. Common Stock
The aggregate amount of financing obtained by NCE from the issuance and
sale of common stock as described in this section during the Authorization
Period shall not exceed $535,000,000 for the uses set forth under Use of
Proceeds above.3 In addition, authorization is requested to issue 30 million
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3 New Century International, Inc., a wholly-owned subsidiary of PSCo, owns a
50% interest in Yorkshire Power Group Limited which through a wholly-owned
subsidiary Yorkshire Holdings plc, has completed a tender offer to acquire
Yorkshire Electricity Group plc, a regional electric company operating in
the United Kingdom. In connection therewith PSCo invested $360,000,000. NCE
plans to refinance that amount through the issuance of its common stock,
Footnote continued on next page.
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6
shares of NCE common stock pursuant to benefit plans and the dividend
reinvestment plan described in Items 1.E.1.a.ii. and iii. below during the ten
year period from the date of the order of the Commission under this
Application.4
i. General
Subject to the foregoing, NCE may issue and sell common stock or options
exercisable for common stock and issue stock upon the exercise of options. NCE
may also buy back shares of such stock or such options during the Authorization
Period in accordance with Rule 42.
Common stock financings may be issued and sold pursuant to underwriting
agreements of a type generally standard in the industry. Public distributions
may be pursuant to private negotiation with underwriters, dealers or agents as
discussed below or effected through competitive bidding among underwriters. In
addition, sales may be made through private placements or other non-public
offerings to one or more persons. All such common stock sales will be at rates
or prices and under conditions negotiated or based upon, or otherwise determined
by, competitive capital markets.
NCE may sell common stock covered by this Application in any of the
following ways: (i) through underwriters or dealers; (ii) through agents; (iii)
directly to a limited number of purchasers or a single purchaser; or (iv)
directly to employees (or to trusts established for their benefit) and other
shareholders through its employee benefit plans or its dividend reinvestment
plan. If underwriters are used in the sale of the securities, such securities
will be acquired by the underwriters for their own account and may be resold
from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. The securities may be offered to the public either through
underwriting syndicates (which may be represented by a managing underwriter or
underwriters designated by NCE) or directly by one or more underwriters acting
alone. The securities may
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Footnote contined from previous page
which refinancing is included in the authorization sought by this
Application.
4 NCE currently expects that approximately 18 million shares will be issued
pursuant to the dividend reinvestment plan and approximately 12 million
shares will be issued pursuant to benefit plans.
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7
be sold directly by NCE or through agents designated by NCE from time to time.
If dealers are utilized in the sale of any of the securities, NCE will sell such
securities to the dealers, as principal. Any dealer may then resell such
securities to the public at varying prices to be determined by such dealer at
the time of resale. If common stock is being sold in an underwriting offering,
NCE may grant the underwriters thereof a "green shoe" option permitting the
purchase from NCE at the same price additional shares then being offered solely
for the purpose of covering over allotments.
ii. Benefit Plans and Open Market
Purchases of Common Stock
The number of shares of NCE common stock to be issued and sold under
benefit plans pursuant to the authority requested herein shall be subject to the
limitation set forth in the last sentence of Item 1.E.1.a. relating to benefit
plans and the dividend reinvestment plan. PSCo and SPS currently have five
employee benefit plans pursuant to which they issue and/or sell common stock to
their employees. Pursuant to the terms of the Agreement and Plan of
Reorganization dated as of August 22, 1995, as amended, among NCE, PSCo and SPS,
following the effective time of the Merger, these plans may provide for the
issuance and/or sale of NCE common stock. In addition, NCE will adopt one or
more other plans, and has adopted the New Century Energies, Inc. Omnibus
Incentive Plan, which will provide for the issuance and/or sale of NCE common
stock, stock options and stock awards to a group which has not yet been
determined but may include directors, officers and employees. Attached hereto as
Exhibit B-4 is a summary of the terms of the existing PSCo and SPS plans and the
NCE Omnibus Incentive Plan. NCE may issue shares of its common stock under the
authorization, and within the limitations, set forth herein in order to satisfy
its obligations under such plans. To the extent that following consummation of
the mergers NCE adopts its own employee benefit plans that provide for the
issuance of NCE common stock or options or awards for NCE common stock, NCE may
issue shares of its common stock or options or awards for such shares under the
authorization and within the limitations set forth herein, provided that NCE
will provide the Commission with a summary of the terms of any such NCE employee
benefit plan prior to issuing any shares or options or awards pursuant to any
authorization provided in this proceeding. Shares of common stock for use under
any employee benefit plans may either be newly issued shares, treasury shares or
shares purchased in the open market. NCE hereby seeks authority for its open
market purchase of these shares in accordance with the terms of or in connection
with the operation of the plans. NCE may also acquire treasury shares through
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8
other open market purchases. NCE also proposes to issue and/or sell shares of
common stock pursuant to these existing plans and similar plans or plan funding
arrangements hereafter adopted5, and to engage in other sales of its treasury
shares for general business purposes, without any additional prior Commission
order. Stock transactions of this variety would thus be treated the same as
other stock transactions permitted pursuant to this Application.
iii. Dividend Reinvestment Plan
The number of shares of NCE common stock to be issued and sold under the
dividend reinvestment plan pursuant to the authority requested herein shall be
subject to the limitation set forth in the last sentence of Item 1.E.1.a.
relating to benefit plans and the dividend reinvestment plan. In connection with
the Merger, an NCE Dividend Reinvestment Plan substantially in the form attached
hereto as Exhibit B-5 will become effective. NCE may issue and/or sell shares of
its common stock under the authorization, and within the limitations set forth
herein, in connection with the operation of the NCE Dividend Reinvestment Plan.
Shares of common stock for use under the plan may either be newly issued shares,
treasury shares or shares purchased in the open market. NCE hereby seeks
authority for the issuance and sale or open market purchases and sales of its
shares in accordance with the NCE Dividend Reinvestment Plan.
b. Short-Term Debt
The aggregate amount of short term debt of NCE issued and sold pursuant to
the authorization sought by this Application to be outstanding at any time
during the Authorization Period shall not exceed $100,000,000 to be used as set
forth in the following two paragraphs, provided that upon PSCCC becoming a
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5 The similar plans or plan funding arrangements will consist of plans having
directors, officers and/or employees of NCE and its Subsidiaries as
participants. The plans may be savings or defined contribution plans
(qualified under Section 401(a) or 401(k) of the Internal Revenue Code or
nonqualified plans), pension or defined benefit plans, long and short term
incentive plans providing for awards of stock, options, stock appreciation
rights and other stock-based awards and deferred compensation plans.
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9
direct subsidiary of NCE, such amount shall be increased by an additional
$125,000,000 for the purposes of providing liquidity for PSCCC as discussed in
the third paragraph set forth below.
To provide financing for general corporate purposes, other working capital
requirements and construction spending until long term financing can be
obtained, NCE may sell commercial paper, from time to time, in established
domestic or European commercial paper markets. Such commercial paper would be
sold to dealers at the discount rate per annum prevailing at the date of
issuance for commercial paper of comparable quality and maturities sold to
commercial paper dealers generally. It is expected that the dealers acquiring
commercial paper from NCE will reoffer such paper at a discount to corporate,
institutional and, with respect to European commercial paper, individual
investors. It is anticipated that NCE's commercial paper will be reoffered to
investors such as commercial banks, insurance companies, pension funds,
investment trusts, foundations, colleges and universities, finance companies and
nonfinancial corporations.
Back-up bank lines of credit for 100% of the outstanding commercial paper
are required by credit rating agencies. To satisfy this requirement, NCE
proposes to establish back-up bank lines in an aggregate principal amount not to
exceed the amount of authorized commercial paper. NCE would borrow, repay and
reborrow under these lines from time to time, without collateral, to the extent
that it becomes impracticable to sell commercial paper due to market conditions
or otherwise. Loans under these lines will have a maturity date not more than
one year from the date of each borrowing. NCE may engage in other types of
short-term financing generally available to borrowers with investment grade
credit ratings as it may deem appropriate in light of its needs and market
conditions at the time of issuance.
PSCCC finances (factors) certain of PSCo's accounts receivable and fuel
inventory and has requested authority in the Merger U-1 to engage in financing
accounts receivable and fuel inventories for other companies in the NCE holding
company system and financing accounts receivable of non-affiliated utilities,
subject to the limitations described in the Merger U-1. Authority is requested
to finance such accounts receivable and fuel inventories. To provide financing
for its business, PSCCC sells commercial paper, from time to time, in
established commercial paper markets in a manner similar to that described above
with respect to NCE. Upon PSCCC becoming a direct subsidiary of NCE, NCE will
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10
increase its then existing lines of credit and add PSCCC as a borrower
thereunder or establish, together with PSCCC, one or more new lines of credit to
provide credit support for PSCCC's commercial paper. Such lines of credit will
also provide for direct borrowings thereunder by PSCCC.
c. Other Securities
In addition to the specific securities for which authorization is sought
herein, NCE may also find it necessary or desirable to minimize financing costs
or to obtain new capital under then existing market conditions to issue and sell
other types of securities from time to time during the Authorization Period. NCE
requests that the Commission reserve jurisdiction over the issuance of
additional types of securities and the amount thereof. NCE also undertakes to
file a post-effective amendment in this proceeding which will describe the
general terms of each such security and the amount thereof to be issued and
request a supplemental order of the Commission authorizing the issuance thereof
by NCE.
2. Utility Subsidiary Financings
Rule 52 under the Act provides an exemption from the prior authorization
requirements of the Act for most of the issuances and sales of securities by the
Utility Subsidiaries as they will have been approved by the Colorado Public
Utility Commission ("CPUC") in the case of PSCo, the New Mexico Public Service
Commission ("NMPSC") in the case of SPS and the Wyoming Public Service
Commission ("WPSC") in the case of Cheyenne. However, certain external
financings by the Utility Subsidiaries for which authorization is requested
herein may be outside the scope of the Rule 52 exemption. All securities issued
by PSCo or SPS are approved by the CPUC or NMPSC respectively, and all
securities of Cheyenne, except for securities with maturities of less than 12
months, are approved by the WPSC.
a. Short Term Debt
Authority is requested for Cheyenne to issue short-term debt. The aggregate
amount of such short-term debt to be outstanding at any one time during the
Authorization Period shall not exceed $25,000,000.
To provide financing for general corporate purposes and other working
capital requirements, Cheyenne may sell commercial paper, from time to time, in
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11
established domestic or European commercial paper markets in a manner similar to
NCE as discussed in Item 1.E.1.b. above. Cheyenne may also maintain backup lines
of credit in aggregate principal amount not to exceed the amount of authorized
commercial paper. Cheyenne would borrow, repay and reborrow under such lines
from time to time, without collateral, to the extent that it becomes
impracticable to sell commercial paper due to market conditions or otherwise.
Loans under these lines shall have a maturity date not more than one year from
the date of each borrowing. Cheyenne may engage in other types of short-term
financing as it may deem appropriate in light of its needs and market conditions
at the time of issuance. Such short-term financing could include, without
limitation, bank lines and debt securities issued under its indentures and note
programs.
b. Other Securities
In addition to the specific securities for which authorization is sought
herein, the Utility Subsidiaries may find it necessary or desirable to issue
other types of securities during the Authorization Period that are not exempt
from prior Commission approval. The Utility Subsidiaries request that the
Commission reserve jurisdiction over the issuance of such additional types of
securities and the amount thereof except to the extent the same are exempt
pursuant to Rule 52. Each Utility Subsidiary also undertakes to have a
post-effective amendment filed in this proceeding that will describe the general
terms of each such security and the amount thereof of such Utility Subsidiary
and request a supplemental order of the Commission authorizing the issuance
thereof.
3. Non-Utility Subsidiary Financings
The Non-Utility Subsidiaries are engaged in and expected to continue to be
active in the development and expansion of their existing energy-related or
otherwise functionally related, non-utility businesses in the NCE holding
company system. They will be competing with large, well-capitalized companies in
different sectors of the energy and other industries. In order to accomplish
investments in such competitive arenas, it will be necessary for the Non-Utility
Subsidiaries to have the ability to engage in financing transactions which are
commonly accepted for such types of investments. The majority of such financings
will be exempt from prior Commission authorization pursuant to Rule 52(b).
PSCCC will finance accounts receivable and fuel inventories with short-term
debt. See Item 1.E.1.b. for further information. In addition, PSCCC will
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12
continue to borrow under its private unsecured medium-term note program and may
borrow from other sources. The program provides for the issuance of notes having
maturities from nine months to seven years.6
The Non-Utility Subsidiaries may, however, engage in types of security
financing with non-affiliates that are not exempt from prior Commission
approval. The Non-Utility Subsidiaries therefore request that the Commission
reserve jurisdiction over the issuance of such additional types of securities
and the amounts thereof. They also undertake to cause a post-effective amendment
to be filed in this proceeding which will describe the general terms of each
such security and the amounts thereof and request a supplemental order of the
Commission authorizing the issuance thereof by the subject Non-Utility
Subsidiary.
4. Intra-System Financings
a. General
NCE may finance certain of its Subsidiaries and certain Subsidiaries may
finance other Subsidiaries in an aggregate amount not exceeding $300 million
outstanding at any one time during the Authorization Period. NCE will also
refinance the $360,000,000 of debt of PSCo discussed in footnote 3 above. The
$300 million excludes financing that is exempt pursuant to Rules 45 and 52. Such
financings would generally be in the form of open account advances, long-term
loans and/or capital stock purchases, as requested by the chief financial
officer or treasurer or designee thereof of each such Subsidiary and agreed to
by NCE or the lending Subsidiary, as the case may be. Open account advances will
provide funds for general corporate purposes and other working capital
requirements and temporarily for capital expenditures until long-term financing
is obtained and/or cash is generated internally. NCE or the lending Subsidiary
will determine, at its discretion, how much financing to give each borrowing
Subsidiary as its needs dictate during the Authorization Period. Generally,
NCE's or the lending Subsidiary's long-term loans to, and purchase of capital
stock from, such borrowing Subsidiaries will provide financing for their capital
expenditures, and will be exempt transactions under Rule 52.
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6 The PSCCC financing will be exempt pursuant to Rule 52.
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13
Open account advances with interest to the Subsidiaries, which would not be
covered by Rule 45 or Rule 52, may be made, repaid and remade on a revolving
basis, with interest at the same effective rate of interest as the daily
weighted average effective rate of commercial paper, revolving credit and/or
other short-term borrowings of NCE or the lending Subsidiary as the case may be.
If no such borrowings are outstanding then the interest rate shall be predicated
on the Federal Funds' effective rate of interest as quoted daily by the Federal
Reserve Bank of New York.
The Non-Utility Subsidiaries may issue and NCE or other Non-Utility
Subsidiary may acquire other types of securities which do not qualify for use of
Rule 52 but which are considered appropriate during the Authorization Period.
NCE and the Non-Utility Subsidiaries request that the Commission reserve
jurisdiction over the issuance of such additional types of securities and the
amounts thereof. They also undertake to cause a post-effective amendment to be
filed in this proceeding which will describe the general terms of each such
security and the amounts thereof and request a supplemental order of the
Commission authorizing the issuance thereof by the subject Non-Utility
Subsidiary.
b. Guarantees
NCE requests authorization to enter into guarantees, obtain letters of
credit, enter into expense agreements or otherwise provide credit support with
respect to the obligations of other system companies as may be appropriate to
enable such system companies to carry on in the ordinary course of their
respective businesses, in an aggregate principal amount not to exceed $300
million outstanding at any one time7, except to the extent the same are exempt
pursuant to Rule 45. Such credit support may be in the form of committed bank
lines of credit, including arrangements similar to those of PSCo described
below.
In addition, PSCo, PSCCC, and certain subsidiaries have entered into a
credit facility with several banks providing an aggregate of $425 million in
committed bank lines of credit; committed lines for $300 million expire on
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7 This is in addition to the possible guarantee by NCE of the debt of
Enterprises issued to SPS as described above in footnote 1.
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14
November 17, 2000 and committed lines for $125 million expire on April 30, 1998;
provided that such expiration dates may be extended. The amount of such credit
facility will be reduced if and to the extent such credit support is provided by
NCE as described above. The credit facility, which is used primarily to support
the issuance of commercial paper by PSCo and PSCCC, alternatively provides for
direct borrowings thereunder. Cheyenne, 1480 Welton, Inc., Fuel Resources
Development Company, e prime, inc., Natural Fuels Corporation, and PSR
Investments, Inc. are provided access to the credit facility with direct
borrowings guaranteed by PSCo. Authority is requested to continue such credit
facility and guarantee thereunder by PSCo or any similar credit facility and
guarantee thereunder by PSCo.
In addition, authority is requested for Subsidiaries to enter into
arrangements with each other similar to those described with respect to NCE
above in an aggregate principal amount not to exceed $50 million outstanding at
any one time, except to the extent the same are exempt pursuant to Rule 45.
The limits on guarantees and other credit support obligations described
above are not to be included in the aggregate respective limits applicable to
external financings or the limits on intrasystem financing requested elsewhere
herein.
In summary, under this Item 1.E.4. authority is requested for the following
maximum amounts to be outstanding at any one time during the Authorization
Period: (a) $300 million for NCE to finance its Subsidiaries and certain
Subsidiaries to finance other Subsidiaries; (b) $300 million for NCE to
guarantee or otherwise provide credit support for obligations of its
Subsidiaries; (c) $450 million for PSCo to guarantee or otherwise provide credit
support for certain of its subsidiaries; and (d) $50 million for Subsidiaries to
guarantee or otherwise provide credit support with respect to other
Subsidiaries.
5. Changes in Capital Stock of Subsidiaries
The portion of an individual Subsidiary's aggregate financing to be
effected through the sale of stock to NCE or other immediate parent company
during the Authorization Period cannot be ascertained at this time. It may
happen that the proposed sale of capital stock may in some cases exceed the then
authorized capital stock of such Subsidiary. In addition, the Subsidiary may
choose to use other forms of capital stock. As needed to accommodate such
proposed transactions and to provide for future issues, request is made for
<PAGE>
15
authority to increase the amount or change the terms of any such Subsidiary's
authorized capital stock by an amount deemed appropriate by NCE or other
immediate parent company in the instant case. A Subsidiary would be able to
change the par value, or change between par and no-par stock, without additional
Commission approval.
6. Financing Entities
Authority is sought for the Subsidiaries to organize new corporations,
trusts, partnerships or other entities created for the purpose of facilitating
financings through their issue to third parties of income preferred securities
or other securities authorized hereby or issued pursuant to an applicable
exemption. Request is also made for these financing entities to issue such
securities to third parties in the event such issuances are not exempt pursuant
to Rule 52. Additionally, request is made for authorization with respect to (i)
the issuance of debentures or other evidences of indebtedness by any of the
Subsidiaries to a financing entity in return for the proceeds of the financing,
(ii) the acquisition by any of the Subsidiaries of voting interests or equity
securities issued by the financing entity to establish any such Subsidiary's
ownership of the financing entity (the equity portion of the entity generally
being created through a capital contribution or the purchase of equity
securities, ranging from 1 to 3 percent of the capitalization of the financing
entity) and (iii) the guarantee by the Applicants of such financing entity's
obligations in connection therewith. Each of the Subsidiaries also request
authorization to enter into expense agreements with its respective financing
entity, pursuant to which it would agree to pay all expenses of such entity. Any
amounts issued by such financing entities to third parties pursuant to this
authorization will be included in the overall external financing limitation
authorized herein for the immediate parent of such financing entity. In order to
avoid double counting, however, the indebtedness issued by an Applicant to a
financing entity will not count against the intrasystem financing limit set
forth herein. Applicants also request that SPS be authorized to retain
Southwestern Public Service Capital I, a wholly owned trust, that issued trust
preferred securities and loaned the proceeds to SPS.
F. Financing of EWGs and FUCOs
As described in the Merger U-1, upon consummation of the Merger, NCE,
through its Non-Utility Subsidiaries (including New Century International Inc.
<PAGE>
16
which is currently a subsidiary of PSCo but will be transferred by PSCo to NCE
or a Non-Utility Subsidiary of NCE as described in the Merger U-1), will own
certain interests in EWGs and FUCOs. As outlined in the Merger U-1, NCE's
Non-Utility Subsidiaries, e prime, New Century International and Quixx and their
subsidiaries, may expend internally generated funds on the development of such
projects. In addition, e prime, New Century International and Quixx and their
subsidiaries will continually seek out and review investment opportunities which
could lead to the acquisition of an interest in or the construction of EWGs or
FUCOs. Sections 32 and 33 of the Act permit a registered holding company to
acquire and maintain interests in one or more EWGs or FUCOs without the need to
apply for or receive approval from the Commission. To the extent that funds for
one or more projects are required in excess of internally generated funds, NCE
hereby requests Commission authorization to invest proceeds from the financings
authorized hereby in EWGs and FUCOs and to guarantee the obligations of an EWG
or FUCO in compliance with Rule 53(a)(1) such that NCE's aggregate investment at
any one time during the period covered by this Application, including any such
guarantees of an EWG or FUCO at that time outstanding, will not exceed 50% of
its "consolidated retained earnings", as defined in Rule 53(a)(1)(ii). NCE may
seek additional Commission authorization if one or more prospective transactions
warrant additional financing.
At the time of issuance of any securities authorized in connection with
this Application, the proceeds of which will be used to invest in any EWG or
FUCO, NCE will be in compliance with Rule 53.
G. Filing of Certificates of Notification
It is proposed that, with respect to NCE, the reporting system of the 1933
Act and the 1934 Act be integrated with the reporting system under the 1935 Act.
This would eliminate duplication of filings with the Commission that cover
essentially the same subject matters, resulting in a reduction of expense for
both the Commission and NCE. To effect such integration, the portion of the 1933
Act and 1934 Act reports containing or reflecting disclosures of transactions
occurring pursuant to the authorization granted in this proceeding would be
incorporated by reference into this proceeding through Rule 24 certificates of
notification. The certificates would also contain all other information required
by Rule 24, including the certification that each transaction being reported on
<PAGE>
17
had been carried out in accordance with the terms and conditions of and for the
purposes represented in this Application. Such certificates of notification
would be filed within 60 days after the end of each of the first three calendar
quarters, and 90 days after the end of the last calendar quarter, in which
transactions occur.
The Rule 24 certificates will contain the following information:
(a) If sales of common stock by NCE are reported, the purchase price per
share and the market price per share at the date of the agreement of sale;
(b) The total number of shares of NCE common stock issued during the
quarter, under NCE's (i) dividend reinvestment plan and (ii) employee benefit
plans, including those hereinafter adopted as discussed under Item 1.E.1.ii;
(c) If a parent company guarantee is issued during the quarter, the name of
the parent company, the name of the subsidiary and the amount, terms and purpose
of the guarantee;
(d) The amount and terms of any short-term debt issued by NCE during the
quarter;
(e) The amount and terms of any financings consummated by any Utility
Subsidiary during the quarter, which financings are not exempt under Rule 52;
(f) The amount and terms of any financings consummated by any Non-Utility
Subsidiary during the quarter, which financings are not exempt under Rule 52;
(g) A list of the U-6B-2 forms filed with the Commission during the
quarter, including the name of the filing entity and the date of filing;
(h) Consolidated balance sheets as of the end of the quarter, and separate
balance sheets as of the end of the quarter for each company, including NCE,
that has engaged in financing transactions during the quarter; and
(i) Future registration statements filed under the 1933 Act with respect to
securities that are the subject of the Application will be filed (or
<PAGE>
18
incorporated by reference) as exhibits to the next certificate filed pursuant to
Rule 24.
H. Statement Pursuant to Rule 54
Rule 54 promulgated under the Act states that in determining whether to
approve the issue or sale of a security by a registered holding company for
purposes other than the acquisition of an exempt wholesale generator ("EWG") or
a foreign utility company ("FUCO"), or other transactions by such registered
holding company or its subsidiaries other than with respect to EWGs or FUCOs,
the Commission shall not consider the effect of the capitalization or earnings
of any subsidiary which is an EWG or a FUCO upon the registered holding company
system if Rules 53(a), (b) or (c) are satisfied. As demonstrated below, such
rules are satisfied.
Rule 53 requires that the aggregate investment in EWGs and FUCOs not exceed
50% of a system's consolidated retained earnings. NCE's present investments in
EWGs and FUCOs, pro forma to include the investment in Yorkshire Electricity
Group plc, satisfies the 50% limitation, and the NCE system will not make any
additional investments in EWGs and FUCOs from proceeds of financings authorized
hereby that at the time of issuance cause it to exceed that limitation, unless
the Commission otherwise authorizes.
NCE and its Subsidiaries will maintain books and records to identify the
investments in and earnings from EWGs and FUCOs in which they directly or
indirectly hold an interest, thereby satisfying Rule 53(a)(2). In addition, the
books and records of each such entity are and will be kept in conformity with
United States generally accepted accounting principles ("GAAP"), the financial
statements are and will be prepared according to GAAP, and NCE undertakes to
provide the Commission access to such books and records and financial statements
as it may request.
Employees of NCE's domestic public-utility companies will not render
services, directly or indirectly, to the EWGs or FUCOs in the NCE System,
thereby satisfying Rule 53(a)(3).
NCE, in connection with any Form U-1 seeking approval of EWG or FUCO
financing, will submit copies of the documents described in Rule 53(a)(4) with
every federal, state or local regulation having jurisdiction over the retail
rates of the public-utility companies in the NCE System. Rule 53(a)(4) will be
correspondingly satisfied.
<PAGE>
19
None of the conditions described in Rule 53(b) exist with respect to NCE,
thereby satisfying Rule 53(b) and making Rule 53(c) inapplicable.
Item 2. Fees, Commissions and Expenses
Estimated Legal Fees and Expenses
$45,000
Estimated Miscellaneous Expenses
5,000
-------
Total $50,000
The above fees do not include underwriting fees and all other expenses
incurred in consummating financings covered hereby. It is estimated that such
fees and expenses will not exceed 5% of the proceeds.
Item 3. Applicable Statutory Provisions
Sections 6(a), 7, 9(a), 10, 12, and 32 of the Act and Rules 42, 43, 45, 52,
53, and 54 are considered applicable to the proposed transactions.
To the extent that the proposed transactions are considered by the
Commission to require authorization, approval or exemption under any section of
the Act or provision of the rules or regulations other than those specifically
set forth herein, request for such authorization, approval or exemption is
hereby made.
Item 4. Regulatory Approvals
No state or federal regulatory agency other than the Commission under the
Act has jurisdiction over the proposed transactions. If any such agency obtains
jurisdiction over any of the proposed transactions, any orders obtained will be
promptly filed with the Commission.
Item 5. Procedure
The Commission published the requisite notice under Rule 23 with respect to
the filing of this Application on April 18, 1997, such notice specifying May 12,
1997, as the date by which comments were to be entered. No petitions to
<PAGE>
20
intervene have been filed. NCE requests that the Commission's Order be issued as
soon as the rules allow.
Without prejudice to its right to modify the same if a hearing should be
ordered on this Application, NCE hereby makes the following specifications
required by paragraph (b) of Item 5 of Form U-1:
1. There should not be a recommended decision by a hearing officer or
any other responsible officer of the Commission.
2. The Division of Investment Management may assist in the preparation
of the Commission's decision and/or order.
3. There should not be a 30-day waiting period between issuance of the
Commission's order and the date on which the order is to become effective.
Item 6. Exhibits and Financial Statements
A. Exhibits
B-1 Form of Commercial Paper Note (previously filed)
B-2 Form of Standard Purchase Agreement - Debt securities (previously
filed)
B-3 Form of Standard Purchase Agreement - Stock (previously filed)
B-4 Summary of Terms of Employee Benefit Plans (filed herewith)
B-5 Form of NCE Dividend Reinvestment Plan (incorporated by reference to
the Registration Statement on Form S-3 of NCE (File No. 333-28637)
B-6 Form of Indenture for Debt Securities (previously filed)
F-1 Opinion of Counsel (filed herewith)
<PAGE>
21
G-1 Revised Proposed Form of Public Notice (previously filed)
G-2 Financial Data Schedules (incorporated by reference to the Annual
Report on Form 10-K of NCE for the fiscal year ended December 31, 1996)
B. Financial Statements
1.1 Pro-Forma Balance Sheet of NCE and subsidiaries, consolidated, as of
December 31, 1996 (incorporated by reference to the Annual Report on
Form 10-K of PSCo for the fiscal year ended December 31, 1996 (File
No. 1-3280)).
1.2 Pro-Forma Statement of Income of NCE and subsidiaries, for the 12
months ended December 31, 1996 (incorporated by reference to the
Annual Report on Form 10-K of PSCo for the fiscal year ended December
31, 1996 (File No. 1-3280)).
1.3 Pro-Forma Balance Sheet of NCE and subsidiaries, consolidated, as of
March 31, 1997 (incorporated by reference to the Quarterly Report on
Form 10-Q of PSCo for the fiscal quarter ended March 31, 1997 (File
No. 1-3280)).
1.4 Pro-Forma Statement of Income of NCE and subsidiaries, for the three
months ended March 31, 1997 (incorporated by reference to the
Quarterly Report on Form 10-Q of PSCo for the fiscal quarter ended
March 31, 1997 (File No. 1-3280)).
2.1 Balance Sheet of PSCo as of December 31, 1996 (incorporated by
reference to the Annual Report on Form 10-K of PSCo for the year ended
December 31, 1996 (File No. 1-3280)).
2.2 Statement of Income and Retained Earnings of PSCo for the twelve
months ended December 31, 1996 (incorporated by reference to the
Annual Report on Form 10-K of PSCo for the year ended December 31,
1996 (File No. 1-3280)).
2.3 Balance Sheet of PSCo as of March 31, 1997 (incorporated by reference
to the Quarterly Report on Form 10-Q of PSCo for the quarter ended
March 31, 1997 (File No. 1-3280)).
2.4 Statement of Income and Retained Earnings of PSCo for the three months
ended March 31, 1997 (incorporated by reference to the Quarterly
Report on Form 10-Q of PSCo for the quarter ended March 31, 1997 (File
No. 1-3280)).
3.1 Balance Sheet of SPS as of December 31, 1996 (incorporated by
reference to the Annual Report on Form 10-K of SPS for the
year ended December 31, 1996 (File No. 1-3789)).
3.2 Statement of Earnings for the four months ended December 31, 1996
(incorporated by reference to the Annual Report on Form 10-K of
SPS for the year ended December 31, 1996 (File No. 1-3789)).
3.3 Balance Sheet of SPS as of March 31, 1997 (incorporated by
reference to the Quarterly Report on Form 10-Q of SPS for the
quarter ended March 31, 1997 (File No. 1-3789)).
3.4 Statement of Earnings for the three months ended March 31, 1997
(incorporated by reference to the Quarterly Report on Form 10-Q of
SPS for the quarter ended March 31, 1997 (File No. 1-3789)).
Item 7. Information as to Environmental Effects
None of the matters that are the subject of this application and
declaration involve a "major federal action" nor do they "significantly
affect the quality of the human environment" as those terms are used in
section 102(2)(C) of the National Environmental Policy Act. The transaction
that is the subject of this application will not result in changes in the
operation of the company that will have an impact on the environment. The
Applicants are not aware of any federal agency that has prepared or is
preparing an environmental impact statement with respect to the
transactions that are the subject of this application.
<PAGE>
23
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.
By: /S/ Richard C. Kelly
------------------------------
Name: Richard C. Kelly
Title: Executive Vice
President, Chief
Financial Officer
and Treasurer
Date: July 24, 1997
NEW CENTURY ENERGIES, INC.
FORM U-1
EXHIBIT B-4
Summary of Terms of Employee Benefit Plans
1. Southwestern Public Service Company Employee Investment Plan
(the "EIP")
The EIP is a broad-based employee savings plan available to all eligible
employees of SPS, Quixx and UE and their respective subsidiaries. The EIP
permits employees to elect to make contributions and provides for matching
contributions to be made on behalf of participating employees by SPS. In
addition, the EIP provides for a discretionary contribution by SPS allocated to
all eligible employees participating in the EIP in proportion to their
respective compensation during the period for which the contribution is made.
The contributions are invested in one or more investment accounts, as selected
by each participant, including an NCE common stock fund. Distributions from the
EIP are generally made to an employee upon his or her termination, death,
disability or retirement.
2. Southwestern Public Service Company Directors' Deferred
Compensation Plan (the "Directors' Plan")
The Directors' Plan permits a director to defer all or a portion of his or
her annual retainer or meeting fees or both. Each participant may elect to
credit any amounts deferred to either a dollar account or an NCE common stock
account. Distributions from the account, which shall be in the form of cash with
respect to dollar accounts and in the form of NCE common stock with respect to
stock accounts, are made to participants following termination of service as a
director.
3. Southwestern Public Service 1989 Stock Incentive Plan (the
"SIP")
The SIP enables SPS to encourage key employees of SPS and its subsidiaries
to acquire or increase their ownership of SPS common stock on reasonable terms
or as an incentive bonus. The SIP provides for (i) the granting of awards of
stock options, which may be incentive stock options or non-qualified stock
<PAGE>
-2-
options, (ii) the granting of restricted stock and (iii) the delivery of shares
in lieu of cash compensation to each employee eligible for an award under the
SIP who receive cash under any management bonus or incentive plan, if so
requested by such employee and approved by the SPS compensation committee. Any
outstanding awards, and any future awards that may be made under the SIP, will
be payable in NCE common stock after consummation of the mergers.
4. Public Service Company of Colorado Employee's Savings and
Stock Ownership Plan
The Employees' Savings and Stock Ownership Plan (the "Savings Plan") is a
defined contribution plan and is offered to all eligible employees. Under the
provisions of the Savings Plan, employees may contribute a maximum of 12% of
their eligible compensation to the Savings Plan. Employee contribution can be
made in any combination of tax deferred and after-tax percentages as long as no
more then 8% of compensation is contributed on an after-tax basis. Contributions
may only be made on a payroll deduction basis. Effective January 1, 1991, the
PSCo match of tax-deferred contributions is 100% of up to the first 3% of
eligible compensation contributed by the employee, and 50% of up to the next 4%
of compensation contributed. Employees can choose to invest their contributions
among any of six investment funds. The PSCo contribution purchases PSCo common
stock for the employee (and will purchase NCE common stock after consummation of
the mergers). Loans and withdrawals are available to employees under certain
circumstances; otherwise distribution of funds and stock is made only upon the
resignation, retirement, death, or disability of the employee, or in certain
hardship cases.
5. The PSCo Omnibus Incentive Plan
The PSCo Omnibus Incentive Plan (the "OIP") was established to
(i)recognize, reward and retain management employees of PSCo whose performance,
contribution and skills promote the achievement of PSCo's long-term financial
and business objectives; (ii)align the interests of the shareholders and
management of PSCo with each other; (iii)attract and retain high-quality
employees; and (iv)improve the earnings of PSCo. Awards under the OIP may be in
the form of (i)options to purchase shares, including but not limited to,
incentive stock options within the meaning of Section422 of the Code, (ii)shares
subject to certain restrictions (the "Restricted Shares"), or (iii)performance
awards entitling the holder thereof to cash, shares, or a
<PAGE>
-3-
combination thereof if certain performance goals are met during the applicable
performance period (the "Performance Awards"). Persons eligible to participate
will be those management employees, including officers, who are employed by PSCo
or a subsidiary in which 50 percent or more of the outstanding common stock was
owned by PSCo, and whose performance, contributions and skills promote the
achievement of PSCo's long-term financial and business objectives. Upon a Change
In Control (as defined in the OIP), all stock-based awards, such as options and
Restricted Shares, will vest 100 percent, and all Performance Awards will be
paid out immediately in cash, as if the performance objectives have been
obtained through the effective date of the Change In Control. Change In Control
in the OIP means, among other things, when a person becomes the owner, directly
or indirectly, of 20 percent or more of outstanding PSCo Common Stock pursuant
to a tender or exchange offer by such person. The consummation of the mergers
will constitute a Change In Control under the OIP. Any future awards will be
payable in NCE common stock.
6. The New Century Energies, Inc. Omnibus Incentive Plan
The New Century Energies, Inc. Omnibus Incentive Plan (the "NCE Plan") was
established to promote the interests of NCE and its shareholders by
(i)attracting and retaining executive personnel and other key employees of
outstanding training, experience and ability; (ii)motivating executive personnel
and other key employees, by means of performance-related incentives, to achieve
longer-range performance goals; and (iii)enabling such employees to participate
in the long-term growht and financial success of NCE. Awards under the NCE Plan
may be in the form of (i)options to purchase shares, including but not limited
to, incentive stock options within the meaning of Section422 of the Code,
(ii)stock appreciation rights, either in tandem with options or freestanding and
unrelated to options, (iii) shares which may or may not be subject to certain
restrictions, (iv)performance awards entitling the holder thereof to cash,
shares, or a combination thereof if certain performance goals are met during the
applicable performance period, or (v) other stock based awards, the value of
which will be based, in whole or in part, on the value of NCE common stock.
Persons eligible to participate will be those management employees, including
officers, who are employed by NCE or a subsidiary in which 50 percent or more of
the outstanding common stock was owned by NCE or an affiliate which is not a
subsidiary but as to which NCE possesses an ownership interest and has
representation on the board, and whose performance, contributions and skills
promote the achievement of NCE's long-term financial
<PAGE>
-4-
and business objectives. Upon a Change In Control (as defined in the NCE Plan),
all stock-based awards, such as options and restricted shares, will vest 100
percent, and all cash-based awards will be paid out immediately in cash, as if
the performance objectives have been obtained through the effective date of the
Change In Control. Change In Control in the NCE Plan means, among other things,
when a person becomes the owner, directly or indirectly, of 20 percent or more
of outstanding NCE Common Stock.
Exhibit F-1
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
July 24, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: New Century Energies, Inc.
SEC File Number 70-9007
--------------------------
Dear Sirs:
We have acted as counsel for New Century Energies, Inc., a Delaware corporation
("NCE"), in connection with its Form U-1 Application/Declaration (File No.
70-9007), as amended ("Declaration"), filed jointly by NCE and its subsidiary
companies including its three operating utility subsidiaries (the "Utility
Subsidiaries"): Public Service Company of Colorado ("PSCo"), Southwestern Public
Service Company ("SPS") and Cheyenne Light, Fuel & Power Company ("Cheyenne" and
together with PSCo and SPS, the "Utility Subsidiaries") and each of its direct
and indirect non-utility subsidiary companies (the "Non-Utility Subsidiaries"
and together with the Utility Subsidiaries, the "Subsidiaries")) with the
Securities and Exchange Commission ("SEC") with respect to the proposed
transactions described therein ("Proposed Transactions"). The authorization
requested in the Declaraction relates to (i) external issues of common stock,
short term debt, and other securities by NCE; (ii) external issuances of capital
stock and debt securities not subject to the Rule 52 exemption, including short
term debt, by the Utility Subsidiaries, (iii) external issuances of capital
stock and debt securities not subject to the Rule 52 exemption by Non-Utility
Subsidiaries, (iv) intrasystem financing among NCE and its Subsidiaries,
<PAGE>
-2-
including the issuance of intrasystem guarantees, (v) the ability of the
Subsidiaries to alter their capital stock in order to engage in financing with
their parent company, (vi) the formation of financing entities and the issuance
by such entities of securities otherwise authorized to be issued and sold
pursuant to this Application or pursuant to applicable exemptions under the Act,
including intrasystem guarantees of such securities and the retention of
existing financing entities and (vii) financing of investments in exempt
wholesale generators ("EWGs") and foreign utility companies ("FUCOs").
In connection with this opinion, we have examined originals or copies, certified
or otherwise identified to our satisfaction, of such records of NCE and its
Subsidiaries and such other documents, certificates and corporate or other
records as we have deemed necessary or appropriate as a basis for the opinions
set forth herein. In our examination, we have assumed the genuineness of all
signatures, the legal capacity of all persons, the authenticity of all documents
submitted to us as originals, the conformity to original documents of documents
submitted to us as certified or photostatic copies and the authenticity of the
originals of such copies.
The opinions expressed below in respect of the Proposed Transactions are subject
to the following assumptions and conditions:
(a) The transactions contemplated by the Application-Declaration on Form
U-1, as amended (the "Merger U-1"), filed with the SEC by NCE (File No. 70-8787)
shall have been authorized by the SEC and shall have been consummated as
described therein (including, without limitation, the due formation of all
parties to the transactions described in the Merger U-1).
(b) The Proposed Transactions shall have been duly authorized and approved
to the extent required by the governing documents and applicable law state laws,
by the Board of Directors of NCE or the appropriate Subsidiary.
(c) The Commission shall have duly entered an appropriate order or orders
with respect to the Proposed Transactions as described in the Declaration
granting and permitting the Declaration to become effective under the Act and
the rules and regulations thereunder and the Proposed Transactions are
consummated in accordance with the Declaration.
(d) Registration statements with respect to the shares of NCE common stock
to be issued in connection with the Proposed Transactions shall have become
effective pursuant to the Securities Act of 1933, as amended; no stop order
shall have been entered with respect thereto; and the issuance of shares of NCE
common stock in connection with the Transactions shall have been consummated in
<PAGE>
-3-
compliance with the Securities Act of 1933, as amended, and the rules and
regulations thereunder.
(e) The parties shall have obtained all consents, waivers and releases, if
any, required for the Proposed Transactions under all applicable governing
corporate documents, contracts, agreements, debt instruments, indentures,
franchises, licenses and permits.
(f) No act or event other than as described herein shall have occurred
subsequent to the date hereof which would change the opinions expressed above.
(g) The consummation of the Proposed Transactions shall be conducted with
our involvement and all legal matters incident thereto shall be satisfactory to
us, including the receipt in satisfactory form of opinions of other counsel,
qualified to practice in jurisdictions pertaining to such transactions in which
we are not admitted to practice, as we may deem appropriate.
Based on the foregoing, and relying on the opinion of William M. Dudley,
Esq. Associate General Counsel of PSCo as to the matters referenced in paragraph
2 below insofar as they relate to PSCo and its subsidiaries, and subject to the
assumptions and conditions set forth herein, and having regard to legal
considerations which we deem relevant, we are of the opinion that, in the event
the Proposed Transactions are consummated in accordance with the Declaration:
1 . All state laws applicable to the Proposed Transactions will have been
complied with; however, we express no opinion as to need to comply with state
blue sky laws;
2 . NCE and each of the Subsidiaries are validly organized and duly
existing under the laws of their respective states of incorporation;
3 . The equity securities to be issued by NCE and the Subsidiaries in the
Proposed Transactions will be validly issued, fully paid and nonassessable, and
the holders thereof will be entitled to the rights and privileges appertaining
thereto set forth in the applicable certificates of incorporation which define
such rights and privileges;
4 . The various debt instruments and guarantees to be issued by NCE and
certain of the Subsidiaries as part of the Proposed Transactions indicated above
will be valid and binding obligations of NCE and such Subsidiaries in accordance
<PAGE>
-4-
with the terms of such instruments and guarantees; and
5 . The consummation of the Proposed Transactions will not violate the
legal rights of the holders of any securities issued by NCE, the Subsidiaries or
any associate company thereof.
We hereby consent to the use of this opinion in connection with the
Declaration.
Very truly yours,
/s/ CAHILL GORDON & REINDEL
