As filed August 17, 1998
File No. 70-____
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------------------------------
FORM U-1
APPLICATION/DECLARATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
---------------------------------------------------------
New Century Energies, Inc.
NC Enterprises, Inc.
e prime, inc. and its subsidiaries
1225 17th Street
Denver, Colorado 80202-5533
(Names of companies filing this statement and
addresses of principal executive offices)
-----------------------------------------------------
New Century Energies, Inc.
(Name of top registered holding company parent)
------------------------------------------------------
Teresa S. Madden
Controller
New Century Energies, Inc
1225 17th Street, Suite 900
Denver, Colorado 80202-5533
(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 or Declaration to:
William M. Dudley, Esq. William T. Baker, Jr., Esq.
New Century Energies, Inc. Thelen Reid & Priest LLP
1225 17th Street, Suite 600 40 West 57th Street
Denver, Colorado 80202-5533 New York, New York 10019
<PAGE>
Item 1. Description of Proposed Transaction.
1.1. Background. New Century Energies, Inc. ("NCE") is a registered
holding company under the Public Utility Holding Company Act of 1935, as amended
(the "Act").1 Its public utility subsidiaries are Public Service Company of
Colorado ("PSCo"), Southwestern Public Service Company, and Cheyenne Light, Fuel
and Power Company. These subsidiaries together serve approximately 1.6 million
electric customers in parts of Colorado, Texas, Wyoming, New Mexico, Oklahoma,
and Kansas and approximately 1 million gas customers in parts of Colorado and
Wyoming.
NCE also engages through subsidiaries in various other energy-related and
non-utility businesses. NC Enterprises, Inc. ("Enterprises"), a wholly-owned
non-utility subsidiary of NCE, serves as an intermediate holding company for
certain of NCE's non-utility subsidiaries and investments. Enterprises owns all
of the common stock of e prime, inc. ("e prime"), which provides energy-related
products and services, including brokering, marketing and trading of electricity
and natural gas. In March 1996, e prime received the authorization of the
Federal Energy Regulatory Commission ("FERC") to act as a power marketer, and,
in September 1996, acquired Texas-Ohio Gas, Inc. ("TOG"), a gas marketer with
headquarters in Houston, Texas. Subsequently, the operations of e prime and TOG
were combined. Together, e prime and TOG now provide value added energy-related
products and services to over 2,200 end-use customers and utilities nationwide.
In addition, e prime owns the stock of a small gas pipeline company (Texas-Ohio
Pipeline, Inc.), which owns a pipeline located in Kentucky connecting two major
interstate pipelines, and indirectly owns a 47.5% general partnership interest
in Young Gas Storage Company, Ltd., which owns and operates an underground gas
storage facility and provides storage services to both PSCo and unrelated third
parties.2 For the year ended December 31, 1997, e prime had consolidated
operating revenues of $196.7 million.
1.2 Summary of Proposed Transaction. Enterprises and e prime are now
seeking authorization to acquire in one or more transactions from time to time
through December 31, 2003 (the "Authorization Period"), non-utility energy
assets in the United States, including, without limitation, natural gas
production, gathering, processing, storage and transportation facilities and
equipment, liquid oil reserves and storage facilities, and associated facilities
(collectively, "Energy Assets"), that would be incidental to and would assist e
prime and its subsidiaries (or any other energy marketing and brokering
subsidiary hereafter acquired by Enterprises or e prime) in connection with
energy marketing, brokering and trading. The Applicants request authorization to
invest up to $400 million (the "Investment Limitation") during the Authorization
Period in such Energy Assets or in the equity securities of companies
- --------
1 See New Century Energies, Inc., 65 SEC Docket 277 (August 1, 1997).
2 In its order approving the formation of NCE, supra n. 1, the
Commission made findings permitting NCE to retain its interests in e
prime and e prime's subsidiaries on the basis that the businesses of
these companies were substantially similar to those that the
Commission had approved in other cases.
2
<PAGE>
substantially all of whose physical properties consist of such Energy Assets.3
Such Energy Assets (or equity securities of companies owning Energy Assets) may
be acquired for cash or in exchange for common stock of NCE or other securities
of NCE, Enterprises, or e prime, or any combination of the foregoing. If common
stock of NCE is used as consideration in connection with any such acquisition,
the market value thereof on the date of issuance will be counted against the
proposed Investment Limitation. Under no circumstances will Enterprises or e
prime acquire, directly or indirectly, any assets or properties the ownership or
operation of which would cause such companies to be considered an "electric
utility company" or "gas utility company" as defined under the Act.
As this Commission has recognized in SEI Holdings, Inc., 62 SEC Docket
2493 (September 26, 1997) and other decisions, a successful marketer of energy
commodities must be able to control some level of physical assets that are
incidental and reasonably necessary in its day-to-day operations. Gas marketers
today must be able to offer their customers a variety of value-added, or
"bundled" services, such as gas storage and processing, that the interstate
pipelines offered prior to FERC Order 636.4 In order to provide such value-added
services, many of the leading gas marketers have invested in production,
gathering, processing, and storage capacity at or near the principal gas
producing areas and hubs and market centers in the U.S. Similarly, in order to
compete with both interstate pipelines and local distribution companies for
industrial and electric utility sales, marketers must have the flexibility to
acquire or construct such supply facilities. In fact, most of the large
marketers today with which e prime competes own substantial physical assets of
the type described herein.
To illustrate how the Energy Assets would support the marketing activities
of e prime, the acquisition of production, gathering, processing, and storage
capacity provide energy marketers the opportunity to hedge the price of future
supplies of natural gas against changes in demand brought about due to weather,
increased usage requirements by end use customers, or other volatilities imposed
by the market. Storage and pipeline assets allow energy marketers to "bank" low
cost supplies for use during periods of high volatility or take advantage of
differential price spreads between different markets. Energy marketers with
strong and balanced physical asset portfolios are able to originate tolling or
reverse tolling of gas and electric commodities, whereby the payment is made in
one or the other commodity. The integration of production, gathering, and
storage assets offer energy marketers the opportunity to provide either gas or
electric products and services to energy users, at their discretion, depending
on user requirements and
- --------
3 Companies whose physical properties consist of Energy Assets may also
be currently engaged in energy (gas or electric or both) marketing
activities. To the extent necessary, Applicants request authorization
to continue such activities in the event they acquire such companies.
4 See FERC Order 636, FERC Stats. & Regs. P. 30,939, "Pipeline Service
Obligations and Revisions to Regulations Governing Self-Implementing
Transportation; and Regulation of Natural Gas Pipelines After Partial
Wellhead Decontrol," 57 Fed. Reg. 13,270 (April 16, 1992).
3
<PAGE>
needs. Finally, the physical assets underlying an energy marketer's balance
sheet may provide substantial credit support for the financial transactions
undertaken by the marketer.
It is the intention of Enterprises and e prime to add to e prime's and its
subsidiaries' existing base of non-utility, marketing-related, assets as and
when market conditions warrant, whether through acquisitions of specific assets
or groups of assets that are offered for sale, or by acquiring existing
companies (for example, other gas marketing companies which own significant
physical assets in the areas of gas production, processing, storage, and
transportation). At the current time, Enterprises and e prime are investigating
several opportunities to acquire upstream assets that are being offered for sale
by integrated gas companies and other marketers. Ultimately, it is Enterprises'
and e prime's objective to control a substantial portfolio of Energy Assets that
would provide the NCE system with the flexibility and capacity to compete for
sales in all major markets in the United States and, in the future, possibly
Canada.
1.3 Summary of Financing Proposals. As indicated, Enterprises and e prime
wish to have the flexibility to acquire Energy Assets in cash transactions or in
transactions in which the seller may wish to receive common stock or other
securities of NCE, Enterprises, or e prime. A seller of Energy Assets may, for
example, wish to arrange a tax-free transaction in which it receives common
stock of NCE. From the perspective of Enterprises and e prime, having the
flexibility to arrange a tax-free transaction may lower the seller's overall
sales price. Accordingly, in order to provide the maximum flexibility, NCE
requests authorization to issue securities in order to finance the purchase or
construction of Energy Assets, or the purchase of the securities of companies
owning Energy Assets, by Enterprises and e prime and its subsidiaries, in an
aggregate amount not to exceed $400 million, such securities to consist of any
combination of (i) shares of common stock of NCE, (ii) borrowings by NCE from
banks or other financial institutions under credit lines or otherwise, (iii)
guarantees of indebtedness issued by Enterprises, e prime, or any existing or
new subsidiary of e prime, or (iv) guarantees of securities issued by any
special purpose financing subsidiary of NCE organized specifically for the
purpose of financing any such acquisition. Borrowing by NCE would be evidenced
by notes having a maturity of not greater than ten years from the date of issue
and an average life of not greater than seven years from the date of issue, and
bear interest at either a fixed rate not greater than 200 basis points over the
yield to maturity on a U.S. Treasury note having a remaining term approximately
equal to the average life of such note, or at a floating rate not greater than
100 basis points over the reference rate (e.g., prime commercial lending rate,
LIBOR, etc.) used as the basis for determining such rate. Such notes may include
terms that would require the payment of a premium upon prepayment.
In turn, to the extent not exempt under Rule 52 and/or Rule 45(b),
Enterprises, e prime and its subsidiaries, or any special purpose financing
subsidiary, also propose to issue debt or equity securities of any type,
including guarantees as appropriate, from time to time during the Authorization
Period to finance acquisitions of Energy Assets. Such financings in aggregate
with any NCE financings for which approval is requested above and any financings
performed on an exempt basis under Rule 52 will not exceed the Investment
Limitation -- i.e., $400 million.
4
<PAGE>
Any debt security issued to NCE to evidence loans by NCE will comply with the
requirements of Rule 52(b)(2).
The financing authorization sought herein is in addition to the financing
authority of NCE and its subsidiaries as set forth in the orders of the
Commission dated August 1, 1997 (Holding Company Act Release No. 26750) and May
14, 1998 (Holding Company Act Release No.
26872) in File No. 70-9007.
1.4 Other Matters. Pursuant to Rule 24, the Applicants proposed to report
on a quarterly basis the amount of Energy Assets purchased or constructed in the
preceding period and a brief description thereof. It is also proposed that the
amount, type, and, if a debt security, the maturity and interest rate, of
securities issued by NCE, Enterprises, e prime and its subsidiaries, or any
special purpose financing subsidiary in connection with the acquisition of
Energy Assets be made a part of such quarterly report filed pursuant to Rule 24,
and that such reporting also be in lieu of any separate report on Form U-6B-2
for those financings that are performed on an exempt basis under Rule 52.
Item 2. Fees, Commissions and Expenses.
The fees, commissions and expenses incurred or to be incurred in
connection with the transactions proposed herein are estimated at $15,000.
Item 3. Applicable Statutory Provisions.
3.1 Sections 9(a) and 10 of the Act are applicable to the acquisition by
Enterprises, e prime or any subsidiary of e prime of any interest in Energy
Assets or of the securities of any company that owns Energy Assets.
The issuance and sale of debt securities, equity securities or guarantees
by NCE, Enterprises, e prime or any subsidiary of e prime or any special purpose
finance subsidiary for the purpose of financing the acquisition or construction
of Energy Assets are subject to Sections 6(a) and 7 of the Act, and the issuance
of any guarantee is subject to Section 12(b) and Rule 45. The issuance of such
securities by the Applicants other than NCE may be exempt pursuant to Rule 52(b)
or Rule 45(b), as applicable.
3.1.1 Standards of Approval under Section 10. The transactions
proposed herein involve an acquisition of securities, as well as an acquisition
of an interest in an other (i.e., non-utility) business, and are therefore
subject to the approval of this Commission under Section 10. The relevant
standards for approval under Section 10 are set forth in subsections (b), (c),
and
5
<PAGE>
(f). In this case, the requirements of Section 10(c) are met and there is no
basis for the Commission to make any negative findings under Section 10(b).
As applied to interests in non-utility businesses, Section 10(c)(1) of the
Act provides that the Commission shall not approve an acquisition that is
"detrimental to the carrying out of the provisions of section 11." Section
11(b)(1), in turn, directs the Commission to limit the operations of a holding
company system to a single integrated public-utility system, provided that,
subject to making certain specified findings, the Commission may permit a
registered holding company to control one or more additional public-utility
systems.5 Further, the Commission may permit the retention by a registered
holding company of an interest in any non- utility business that is "reasonably
incidental, or economically necessary or appropriate to the operations" of its
integrated system or systems. The Commission has interpreted Sections 10(c)(1)
and 11(b)(1), read together, as expressing a Congressional policy against
non-utility acquisitions that bear no functional relation to a holding company's
utility operations.6
As previously indicated, Enterprises, e prime, and e prime's subsidiaries
are seeking approval to acquire non-utility, energy-related assets, that will be
used in connection with the existing energy marketing operations of e prime and
will be of the same general type as other assets that e prime and certain of its
subsidiaries already own. In addition, the Commission has previously authorized
SEI Holdings, Inc., a subsidiary of The Southern Company, to acquire or
construct substantially similar kinds of assets in connection with its marketing
operations.
3.1.2 Rule 54 Analysis. The transactions proposed herein are also
subject to Section 32(h)(4) of the Act and Rule 54 thereunder. Rule 54 provides
that, in determining whether to approve any transaction that does not relate to
an "exempt wholesale generator" ("EWG") or "foreign utility company" ("FUCO"),
the Commission shall not consider the effect of the capitalization or earnings
of any subsidiary which is an EWG or FUCO upon the registered holding company
system if paragraphs (a), (b) and (c) of Rule 53 are satisfied.
Initially, NCE has complied or will comply with the record-keeping
requirements of Rule 53(a)(2), the limitation under Rule 53(a)(3) on the use of
the NCE system's domestic public- utility company personnel to render services
to EWGs and FUCOs, and the requirements of Rule 53(a)(4) concerning the
submission of copies of certain filings under the Act to retail regulatory
commissions. Further, none of the circumstances described in Rule 53(b) has
occurred or is continuing. Rule 53(c) is inapplicable by its terms because the
proposals contained herein do not involve the issue and sale of securities
(including any guarantees) to finance an acquisition of an EWG or FUCO.
- --------
5 In its order approving the formation of NCE, supra n. 1, the
Commission made findings under Section 11(b)(1) permitting the
retention of PSCo's gas utility business as an additional integrated
system.
6 See Michigan Consolidated Gas Co., 44 S.E.C. 361, 363-65 (1070), aff'd
444 F.2d 913 (D.C. Cir. 1971).
6
<PAGE>
Rule 53(a)(1) limits a registered holding company's financing of
investments in EWGs if such holding company's "aggregate investment" in EWGs and
FUCOs exceeds 50% of its "consolidated retained earnings." NCE's "aggregate
investment" (as defined in Rule 53(a)(1)(i)) in all EWGs and FUCOs, pro forma to
include NCE's indirect investment in Yorkshire Electricity Group plc
("Yorkshire") and Independent Power Corporation plc ("IPC"), is currently equal
to 55.0% of NCE's "consolidated retained earnings" (as defined in Rule
53(a)(1)(ii)) for the four quarters ended June 30, 1998.7 At the present time,
therefore, NCE does not satisfy all of the requirements of Rule 53(a).
However, even if the Commission were to take into account, on a pro forma
basis, the effect of the capitalization and earnings of EWGs and FUCOs
(including, on a pro forma basis, Yorkshire and IPC) in which NCE has invested,
it would have no basis for denying the transactions proposed herein. The
transactions proposed herein relate solely to an investment, through Enterprises
or e prime or its subsidiaries in assets that will be incidental and necessary
to the conduct of e prime's existing energy marketing and trading operations in
the United States.
Moreover, there has been no material impact on NCE's consolidated
capitalization by reason of the inclusion therein of the capitalization and
earnings of EWGs and FUCOs (including on a pro forma basis Yorkshire and IPC) in
which NCE has an interest. Additionally, NCE believes that its capitalization
ratios and income levels are within acceptable ranges. Finally, although NCE's
consolidated earnings for the year ended December 31, 1997, were negatively
affected by its investment in Yorkshire, this was solely as the result of the
imposition by the United Kingdom of a one-time, non-recurring, windfall tax on
Yorkshire. Importantly, this tax did not affect earnings from ongoing
operations, and, therefore, would not have any negative financial impact on
earnings in future periods.
Item 4. Regulatory Approvals.
No state commission has jurisdiction over the proposed transactions. The
pre-notification requirements of the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 may apply to certain acquisitions of Energy Assets or companies
owning Energy Assets, depending upon, among other factors, the dollar amount of
any such transaction. Also, the FERC may have jurisdiction over acquisitions of
companies owning Energy Assets under Section 203 of the Federal Power Act if
such companies engage in electric power marketing.
- --------
7 In a separate proceeding (File No. 70-8787), PSCo obtained Commission
authorization to transfer to Enterprises all of the common stock of New Century
International, Inc. ("NCI"), formerly a wholly-owned subsidiary of PSCo through
which PSCo held, indirectly, a 50% interest in Yorkshire, and IPC. Enterprises
will file with the Commission a Notification of Foreign Utility Company Status
on Form U-57 on behalf of Yorkshire and IPC.
7
<PAGE>
Item 5. Procedure.
The Commission is requested to publish a notice under Rule 23 with respect
to the filing of this Application or Declaration as soon as practicable. The
Applicants request that the Commission's Order be issued as soon as the rules
allow, and that 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.
The Applicants hereby waive a recommended decision by a hearing officer or any
other responsible officer of the Commission and consents that the Division of
Investment Management may assist in the preparation of the Commission's decision
and/or order, unless the Division opposes the matters proposed herein.
Item 6. Exhibits and Financial Statements.
A. Exhibits.
A None.
B None.
F Opinion of Counsel. (To be filed by amendment).
H Proposed Form of Federal Register Notice.
27 Financial Data Schedule Per-Book NCE.
B. Financial Statements.
1.1 Balance Sheet of NCE and consolidated subsidiaries, as of June
30, 1998 (incorporated by reference to the Quarterly Report on
Form 10-Q of NCE for the quarter ended June 30, 1998) (File
No. 1-12927).
1.2 Statement of Income of NCE and consolidated subsidiaries, as
of June 30, 1998 (incorporated by reference to the Quarterly
Report on Form 10-Q of NCE for the quarter ended June 30,
1998) (File No. 1-12927).
2.1 Balance Sheet of NC Enterprises, Inc. and subsidiaries,
consolidated, as of June 30, 1998.
2.2 Statement of Income of NC Enterprises, Inc. and subsidiaries,
consolidated, as of June 30, 1998.
8
<PAGE>
Item 7. Information as to Environmental Effects.
None of the matters that are the subject of this Application or
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 or Declaration will not result in changes in the
operation of the Applicants 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 or Declaration.
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act of
1935, as amended, the undersigned companies have duly caused this Application or
Declaration filed herein to be signed on their behalf by the undersigned
thereunto duly authorized.
NEW CENTURY ENERGIES, INC.
NC ENTERPRISES, INC.
E PRIME, INC. AND ITS SUBSIDIARIES
By: /s/ Richard C. Kelly
Name: Richard C. Kelly
Title: Executive Vice President,
Chief Financial Officer of New Century
Energies, Inc.; Executive Vice
President of NC Enterprises; President
and Chief Executive Officer of e
prime, inc.
Date: August 17, 1998
9
<PAGE>
Exhibit H - Proposed Form of Federal Register Notice
New Century Energies, Inc., et al. (70-[____])
New Century Energies, Inc. ("NCE"), 1225 17th Street, Denver, Colorado
80202-5533, a registered holding company, NC Enterprises, Inc. ("Enterprises"),
1225 17th Street, Denver, Colorado 80202-5533, a non-utility subsidiary through
which NCE holds certain of its non- utility investments, and e prime, inc. and
its subsidiaries ("e prime"), which are direct and indirect subsidiaries of
Enterprises, 1225 17th Street, Denver, Colorado 80202-5533 (collectively, the
"Applicants"), have filed an application or declaration under sections 6(a), 7,
9(a), 10, and 12(b) of the Act and rules 45, 52 and 54 thereunder.
NCE, Enterprises, and e prime are seeking authorization to acquire in one
or more transactions from time to time through December 31, 2003 (the
"Authorization Period"), non- utility energy assets in the United States,
including, without limitation, natural gas production, gathering, processing,
storage and transportation facilities and equipment, liquid oil reserves and
storage facilities and associated facilities (collectively, "Energy Assets"),
that would be incidental to and would assist e prime and its subsidiaries (or
any other energy marketing and brokering subsidiary hereafter acquired by
Enterprises or e prime) in connection with energy marketing, brokering and
trading. The Applicants request authorization to invest up to $400 million (the
"Investment Limitation") during the Authorization Period in such Energy Assets
or in the equity securities of companies substantially all of whose physical
properties consist of such Energy Assets. Such Energy Assets (or equity
securities of companies owning Energy Assets) may be acquired for cash or in
exchange for common stock or other securities of NCE or other securities of
Enterprises or e prime, or any combination of the foregoing. If common stock of
NCE is used as consideration in connection with any such acquisition, the market
value thereof on the date of issuance will be counted against the proposed
Investment Limitation. Under no circumstances will Enterprises or e prime
acquire, directly or indirectly, any assets or properties the ownership or
operation of which would cause such companies to be considered an "electric
utility company" or "gas utility company" as defined under the Act.
The Applicants state that gas marketers today must be able to offer their
customers a variety of value-added, or "bundled" services, such as gas storage
and processing, that the interstate pipelines offered prior to FERC Order 636.1
In order to provide such value-added services, many of the leading gas marketers
have invested in production, gathering, processing and storage capacity at or
near the principal gas producing areas and hubs and market centers in the U.S.
Similarly, in order to compete with both interstate pipelines and local
distribution companies for industrial and electric utility sales, marketers must
have the flexibility to acquire
- --------
1 See FERC Order 636, FERC Stats. & Regs. P. 30,939, "Pipeline Service
Obligations and Revisions to Regulations Governing Self-Implementing
Transportation; and Regulation of Natural Gas Pipelines After Partial
Wellhead Decontrol," 57 Fed. Reg. 13,270 (April 16, 1992).
<PAGE>
or construct interconnecting pipeline facilities. In fact, most of the large
marketers today with which e prime competes own substantial physical assets of
the type described herein.
It is the intention of e prime and its subsidiaries to add to their
existing base of non- utility, marketing-related, assets as and when market
conditions warrant, whether through acquisitions of specific assets or groups of
assets that are offered for sale, or by acquiring existing companies (for
example, other gas marketing companies which own significant physical assets in
the areas of gas production, processing, storage and transportation). At the
current time, e prime is investigating several opportunities to acquire upstream
assets that are being offered for sale by integrated gas companies and other
marketers. Ultimately, it is e prime's objective to control a substantial
portfolio of Energy Assets that would provide it with the flexibility and
capacity to compete for sales in all major markets in the United States, and, in
the future, Canada.
NCE requests authorization to issue securities in order to finance the
purchase or construction of Energy Assets, or the purchase of the securities of
companies owning Energy Assets, by Enterprises and e prime and its subsidiaries
in an aggregate amount not to exceed $400 million, such securities to consist of
any combination of (i) shares of common stock of NCE, (ii) borrowings by NCE
under credit lines with banks or other financial institutions, (iii) guarantees
of indebtedness issued by Enterprises, e prime or any existing of new subsidiary
of e prime, or (iv) guarantees of securities issued by any special purpose
financing subsidiary of NCE organized specifically for the purpose of financing
any such acquisition. It is stated that any borrowings by NCE would be evidenced
by notes having a maturity not greater than 10 years from the date of issue and
an average life of not more than 7 years and bear interest at either a fixed
rate not greater than 200 basis points over the yield to maturity on a U.S.
Treasury note having a remaining term approximately equal to the average life of
such note, or at a floating rate not greater than 100 basis points over the
reference rate (e.g., prime commercial lending rate, LIBOR, etc.) used as the
basis for determining such rate. Such notes may include terms that would require
the payment of a premium upon prepayment.
In turn, to the extent not exempt under Rule 52 and/or Rule 45(b),
Enterprises, e prime and its subsidiaries, or any special purpose financing
subsidiary, also propose to issue debt or equity securities of any type from
time to time during the Authorization Period to finance acquisitions of Energy
Assets. Such financing is aggregate with any NCE financings and any financings
that are exempt under Rule 52 will not exceed the $400 million Investment
Limitation. Any debt security issued to NCE to evidence loans by NCE will comply
with the requirements of Rule 52(b)(2).
2
<PAGE>
Financial Statement 2.1
File No. _______
NC Enterprises, Inc.
Unaudited Consolidated Balance Sheet
(Thousands of Dollars)
June 30, 1998
Assets
Property, plant and equipment at cost $50,526
Less: accumulated depreciation 20,521
---------
Net plant 30,005
Construction work in progress 804
---------
Total property, plant and equipment 30,809
---------
Total investments 328,067
Cash and temporary cash investments 59,052
Accounts receivable 74,462
Notes receivable from associated companies 9,000
Materials and supplies 4,009
Prepaid expenses and other 11,376
---------
Total current assets 157,899
---------
Total deferred debits 38,475
---------
Total assets $555,250
=========
Capital and liabilities
Common stock $31,366
Retained earnings (deficit) (15,191)
----------
Total common equity 16,175
Long-term debt 3,802
Notes payable to associated companies 411,657
---------
Total capital 431,634
---------
Noncurrent liabilities 100
Notes payable to associated companies 30,693
Long term debt due within one year 567
Accounts payable 60,194
Customer deposits 364
Other 13,003
----------
Total current liabilities 104,821
----------
Accumulated deferred income taxes 16,469
Other 2,226
----------
Total deferred credits 18,695
----------
----------
Total capital and liabilities $555,250
==========
<PAGE>
Financial Statement 2.2
File No. _______
NC Enterprises, Inc.
Unaudited Consolidated Statement of Income
(Thousands of Dollars)
For the six months ended June 30, 1998
Operating Revenues
Electric $ 32,646
Gas 90,173
Other 62,954
--------
185,773
Operating Expenses
Purchased power 32,095
Cost of gas sold 83,212
Other operating and maintenance expenses 64,677
Depreciation and amortization 2,898
Taxes other than income taxes 710
--------
183,592
--------
Operating income 2,181
Other income and deductions
Equity in earnings (losses) of Yorkshire Power
and other unconsolidated subsidiaries (7,263)
Miscellaneous income and deductions - net 2,829
---------
(4,434)
---------
Interest charges 9,978
---------
Income (loss) before income taxes (12,231)
Income tax expense (benefit) (3,864)
=======
Net income (loss) ($8,367)
=======
<TABLE> <S> <C>
<ARTICLE> OPUR1
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NEW CENTURY
ENERGIES, INC. CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1998 AND CONSOLIDATED
STATEMENTS OF INCOME AND CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<CIK> 0001004858
<NAME> New Century Energies, Inc.
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 6-Mos
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> Jan-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<BOOK-VALUE> Per-Book
<TOTAL-NET-UTILITY-PLANT> 5,672,476
<OTHER-PROPERTY-AND-INVEST> 357,705
<TOTAL-CURRENT-ASSETS> 780,439
<TOTAL-DEFERRED-CHARGES> 559,783
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 7,370,403
<COMMON> 111,492
<CAPITAL-SURPLUS-PAID-IN> 1,615,789
<RETAINED-EARNINGS> 672,718
<TOTAL-COMMON-STOCKHOLDERS-EQ> 2,399,999
294,000
0
<LONG-TERM-DEBT-NET> 2,190,893
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 454,063
<LONG-TERM-DEBT-CURRENT-PORT> 186,007
0
<CAPITAL-LEASE-OBLIGATIONS> 37,235
<LEASES-CURRENT> 4,976
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,803,230
<TOT-CAPITALIZATION-AND-LIAB> 7,370,403
<GROSS-OPERATING-REVENUE> 1,799,125
<INCOME-TAX-EXPENSE> 76,909
<OTHER-OPERATING-EXPENSES> 1,470,622
<TOTAL-OPERATING-EXPENSES> 1,470,622
<OPERATING-INCOME-LOSS> 328,503
<OTHER-INCOME-NET> (5,762)
<INCOME-BEFORE-INTEREST-EXPEN> 322,741
<TOTAL-INTEREST-EXPENSE> 103,090
<NET-INCOME> 142,742
0
<EARNINGS-AVAILABLE-FOR-COMM> 0
<COMMON-STOCK-DIVIDENDS> 64,550
<TOTAL-INTEREST-ON-BONDS> 83,191
<CASH-FLOW-OPERATIONS> 362,779
<EPS-PRIMARY> 1.28
<EPS-DILUTED> 1.28
</TABLE>
