(As filed January 21, 1999)
File No. 70-9397
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Amendment No. 1
on
FORM U-1/A
APPLICATION OR 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.
West Gas Interstate, Inc.
NC Enterprises, Inc.
New Century International, Inc.
e prime, inc.
PS Colorado Credit Corporation
Natural Fuels Corporation
P.S.R. Investments, Inc.
Green and Clear Lakes Company
1480 Welton, Inc.
The Planergy Group, Inc.
New Century-Cadence, Inc.
1225 17th Street
Denver, Colorado 80202-5533
Southwestern Public Service Company
Quixx Corporation
Utility Engineering Corporation
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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Teresa S. Madden
Controller
New Century Energies, Inc
1225 17th Street, Suite 900
Denver, Colorado 80202-5533
(Name and address of agent for service)
The Commission is requested to send copies of all
notices, orders and communications in connection with
this Application 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
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The Application or Declaration filed in this proceeding on October 22,
1998, is hereby amended and restated in its entirety to read as follows:
ITEM 1. DESCRIPTION OF PROPOSED TRANSACTION.
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1.1. INTRODUCTION. New Century Energies, Inc. ("NCE"), a Delaware
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corporation, 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 ("SPS"), and Cheyenne Light, Fuel and Power Company ("Cheyenne")
(collectively, the "Utility Subsidiaries"). The Utility 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 (collectively, the "Non-Utility Subsidiaries"). NCE's
direct, wholly-owned, Non-Utility Subsidiaries are: NC Enterprises, Inc.
("Enterprises"), which serves as an intermediate holding company for certain of
NCE's non-utility subsidiaries and investments; New Century Services, Inc., a
subsidiary service company; and WestGas Interstate Inc., a gas pipeline that
operates in Colorado and Wyoming.
NCE's indirect Non-Utility Subsidiaries held by Enterprises include New
Century International, Inc., which indirectly holds NCE's interest in Yorkshire
Electricity Group plc, a regional electric distribution company serving parts of
England;(2) e prime, inc., which directly and indirectly through other
subsidiaries sells energy-related products and services and engages in
brokering, marketing and trading of electricity and natural gas; Quixx
Corporation, which is engaged directly and through other subsidiaries in
development activities relating to "exempt wholesale generators" ("EWGs") and
exempt "foreign utility companies" ("FUCOs"), as defined in Sections 32 and 33
of the Act, respectively, "qualifying facilities" ("QFs"), as defined under the
Public Utility Regulatory Policies Act of 1978, as amended ("PURPA"), and other
energy related projects; Utility Engineering Corporation, which provides general
engineering, development, design, construction and other services to both
associate and non-associate companies; The Planergy Group, Inc. and New
Century-Cadence, Inc., which engage exclusively in activities permitted under
Rule 58; New Century Energy Communications, Inc. and New Century-Centrus, Inc.,
which are "exempt telecommunications companies" ("ETCs") within the meaning of
Section 34 of the Act; and Natural Fuels Corporation, an 83.63%-owned subsidiary
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1 See New Century Energies, Inc., Holding Company Act Rel.
No. 26748 (August 1, 1997).
2 See Public Service Company of Colorado, Holding Company Act
Rel. No. 26671 (February 19, 1997) (granting exemption pursuant to Section 3(b)
to foreign utility subsidiary of PSCo); and New Century Energies, Inc., et al.,
Holding Company Act Rel. No. 26871 (May 14, 1998) (authorizing transfer of stock
of New Century International, Inc. by PSCo to Enterprises and related
financing).
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of Enterprises, which is engaged in the commercialization of compressed natural
gas as a motor fuel. Other indirect Non-Utility Subsidiaries of NCE are held by
PSCo. The primary purpose of these Subsidiaries is to support PSCo's operations.
They include PS Colorado Credit Corporation ("PSCCC"), which is engaged in
financing and factoring of PSCo's fuel inventories and accounts receivable.
As used herein, the term Subsidiaries means the Utility Subsidiaries
and the Non-Utility Subsidiaries, and the term Non-Utility Subsidiaries means
each of the direct and indirect non-utility subsidiaries of NCE, including those
identified above, and their respective subsidiaries, as well as any future
direct or indirect non-utility subsidiaries of NCE whose equity securities may
be acquired in accordance with the Commission's authorization in this proceeding
or in a separate proceeding or in accordance with an exemption provided under
the Act or rules thereunder.
1.2 NCE AND SUBSIDIARIES' CURRENT FINANCING AUTHORITY. By order dated
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August 1, 1997 in File No. 70-9007,(3) as modified by supplemental order dated
May 14, 1998,(4) NCE and its Subsidiaries (collectively, the "Applicants") are
currently authorized to engage in external and internal financing through
December 31, 1999 (except as otherwise noted below), as follows:
(i) NCE is authorized to issue and sell from time to time, in public
or privately negotiated transactions, shares of common stock, $1
par value per share, for an aggregate offering price of up to
$745 million. In addition, NCE is authorized to issue and sell an
additional 30 million shares of common stock from time to time
through August 1, 2007 to fund various benefit and dividend
reinvestment plans (the "Stock Plans"). Through June 30, 1998,
NCE has issued and sold shares of common stock for an aggregate
offering price of $252.2 million and issued 1.1 million shares of
common stock pursuant to the Stock Plans.
(ii) NCE is authorized to issue and reissue from time to time
short-term debt aggregating up to $200 million at any time
outstanding, subject to increase to $325 million at such time as
PSCCC, a subsidiary of PSCo, becomes a direct subsidiary of NCE.
At June 30, 1998, NCE had $59 million principal amount of notes
and commercial paper outstanding. The Commission reserved
jurisdiction over the issuance by NCE of other types of
securities for which specific approval was not sought.
(iii) NCE is authorized to provide guarantees and similar credit
support on behalf of Subsidiaries in an aggregate amount not to
exceed $300 million outstanding at any one time. At June 30,
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3 Holding Company Act Rel. No. 26750.
4 Holding Company Act Rel. No. 26872.
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1998, there were $105 million in NCE guarantees outstanding.
(iv) Cheyenne is authorized to issue short-term debt aggregating not
more than $25 million outstanding at any one time. At June 30,
1998, Cheyenne had $12 million principal amount of notes and
commercial paper outstanding. The Commission reserved
jurisdiction over other types of securities offerings by the
Utility Subsidiaries as to which the exemption under Rule 52
would not apply.
(v) NCE and its Subsidiaries are authorized to finance other
Subsidiaries in an aggregate amount not to exceed $300 million
outstanding at any one time, exclusive of financing of
Subsidiaries that is exempt pursuant to Rules 45(b) and 52, as
applicable. At June 30, 1998, there were $82.7 million in loans,
extensions of credit and advances to Subsidiaries (other than
Cheyenne) outstanding, exclusive of those that are exempt
pursuant to Rules 45(b) and 52, as applicable.
(vi) PSCo is authorized to provide up to $450 million in guarantees
and other forms of credit support on behalf of PSCCC and certain
of its other subsidiaries in connection with borrowings under
certain existing credit facilities and to enter into similar
credit facilities in the future (also with PSCo's guarantee).
These credit facilities are maintained primarily to support the
issuance of commercial paper by PSCo and PSCCC, but also permit
direct borrowings (guaranteed by PSCo) by certain of PSCo's
subsidiaries. The amount of PSCo's guarantee authority will be
reduced if and to the extent that NCE provides guarantees or
credit support on behalf of PSCo's subsidiaries. At June 30,
1998, there were no guaranteed borrowings outstanding under the
existing credit facilities. All of these transactions are now
exempt under Rule 52 and Rule 45(b), as applicable.
(vii) Subsidiaries are authorized to provide guarantees and other
forms of credit support on behalf of other Subsidiaries in an
aggregate amount not to exceed $100 million, exclusive of such
guarantees as may be exempt pursuant to Rule 45(b). At June 30,
1998, Subsidiaries had provided non-exempt guarantees on behalf
of other Subsidiaries in an aggregate amount of $19.7 million
then outstanding.
(viii) Subsidiaries are authorized to organize and acquire the voting
or other equity securities of entities ("Financing Entities")
formed to facilitate financings through the issuance to third
parties of income preferred securities or other securities.
Subsidiaries are also authorized to issue debentures or other
evidences of indebtedness to such Financing Entities in
consideration for the proceeds of external financings by
Financing Entities and to guarantee the obligations of Financing
Entities.
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(ix) NCE is authorized to use the proceeds of financing (including
guarantees) to fund investments in one or more EWGs or FUCOs in
an aggregate amount at any time outstanding which, when added to
NCE's "aggregate investment" (as defined in Rule 53(a)(1)) at any
time in all such entities, will not exceed 50% of NCE's
"consolidated retained earnings" (also as defined in Rule
53(a)(1)).
1.3 OTHER PENDING APPLICATIONS. NCE and certain of its Subsidiaries
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currently have pending before the Commission applications relating to the
following proposals:
(i) File No. 70-9199: NCE, Enterprises and PSCo are seeking approval
for various transactions relating to the construction and
financing of a gas pipeline in the Front Range area of Colorado
which is estimated to cost approximately $25 million.(5)
(ii) File No. 70-9341: NCE is requesting a modification to the terms
of its current financing authority in File No. 70-9007 that would
allow NCE to use the proceeds of financing (including guarantees)
to fund investments in EWGs and FUCOs in an amount which, when
added to NCE's "aggregate investment" in such entities at any
time, will not exceed 100% of NCE's "consolidated retained
earnings."(6)
(iii) File No. 70-9345: NCE, Enterprises and e prime are requesting
authorization to construct or acquire from time to time through
December 31, 2003, certain types of non-utility energy assets (or
the securities of companies substantially all of whose physical
properties consist of such assets), subject to an investment
limitation of $400 million.
1.4 SUMMARY OF REQUESTED APPROVALS. The Applicants herein request
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approval for a program of external financing and intrasystem financing and for
certain additional related proposals for the period through December 31, 2001
("Authorization Period"), as follows:
(i) NCE requests authority to issue and sell from time to time (A) up
to $1.25 billion of its common stock, $1 par value per share
("Common Stock"), and an additional 30 million shares of Common
Stock (as such number may hereafter be adjusted during the
Authorization Period to reflect any stock split) from time to
time through December 31, 2008 pursuant to the Stock Plans, (B)
debt securities in an aggregate principal amount of up to $600
million outstanding at any one time (the "NCE Debt Limitation")
consisting of (1) short-term debt having a maturity from the date
of issue of not more than one year and/or commercial paper
offered to dealers ("Short-term Debt") and (2) unsecured
debentures having a maturity of up to 40 years (the
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5 See Holding Company Act Rel. No. 26894 (July 10, 1998) (notice of
filing).
6 See Holding Company Act Rel. No. 26924 (October 2, 1998) (notice
of filing).
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"Debentures"), provided that the aggregate principal amount of
debentures at any time outstanding shall not exceed $300 million,
and provided further that at such time as PSCCC becomes a direct
subsidiary of NCE, the NCE Debt Limitation shall be increased to
$975 million, of which $450 million may consist of Debentures,
and (C) other securities not specifically identified above. NCE
requests that the Commission reserve jurisdiction over the
issuance of securities other than Common Stock, Short-term Debt
and Debentures, and represents that it will file a post-effective
amendment in this proceeding to supplement the record with
respect to any such other securities.
(ii) Cheyenne requests authority to issue and sell from time to time
up to $40 million of Short-term Debt.
(iii) NCE requests authority to provide financing to its Subsidiaries
and the Subsidiaries propose to provide financing to other
Subsidiaries in an aggregate principal amount of up to $500
million outstanding at any one time, exclusive of financing that
is exempt pursuant to Rule 45(b) or Rule 52, as applicable.
(iv) NCE requests authority to enter into guarantees and provide other
forms of credit support with respect to obligations of any direct
or indirect subsidiary in an aggregate principal or nominal
amount not to exceed $800 million at any one time outstanding,
exclusive of any guarantees or other forms of credit support that
are exempt under Rule 45(b), provided that, upon PSCCC becoming a
direct subsidiary of NCE, NCE may provide guarantees and other
forms of credit support in an aggregate amount not to exceed $850
million. In addition, the Subsidiaries request authority to issue
guarantees and other forms of credit support with respect to
obligations of other Subsidiaries in an aggregate principal or
nominal amount not to exceed $100 million at any one time
outstanding, exclusive of guarantees that are exempt pursuant to
Rule 45(b) and Rule 52.
(v) NCE and, to the extent not exempt under Rule 52, the Subsidiaries
request authority to enter into hedging transactions ("Hedge
Transactions") with respect to existing indebtedness of such
companies in order to manage and minimize interest rate costs.
NCE and the Subsidiaries also request authority to enter into
hedging transactions with respect to anticipatory debt issuances
in order to lock-in current interest rates and/or manage interest
rate risk exposure.
(vi) NCE and the Subsidiaries request authority to acquire the equity
securities of one or more Financing Subsidiaries and to guarantee
the securities issued by such Financing Subsidiaries, to the
extent not exempt pursuant to Rule 45(b) and Rule 52, and
Financing Subsidiaries request authority to acquire the notes or
other evidence of indebtedness of NCE or any Subsidiary in
consideration for the proceeds of external financing by Financing
Subsidiaries.
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(vii) NCE, Enterprises and any direct or indirect subsidiary of
Enterprises request authority to acquire the equity securities of
one or more intermediate subsidiaries ("Intermediate
Subsidiaries") organized exclusively for the purpose of
acquiring, financing, and holding the securities of one or more
existing or future Non-Utility Subsidiaries, including but not
limited to EWGs, FUCOs, companies engaged in activities permitted
by Rule 58 ("Rule 58 Subsidiaries"), or ETCs, provided that
Intermediate Subsidiaries may also provide management,
administrative, project development, and operating services to
such entities.
(viii) Enterprises and any direct or indirect subsidiary of
Enterprises (including Intermediate Subsidiaries and Rule 58
Subsidiaries) request authority to pay dividends out of capital
and unearned surplus to the extent allowed under applicable law
and the terms of any credit or security instruments to which they
may be parties.
(ix) To the extent not exempt pursuant to Rule 90(d)(1), Non-Utility
Subsidiaries request authority to perform services for and sell
goods to each other at fair market prices, without regard to
"cost," as determined in accordance with Rules 90 and 91, subject
to certain proposed limitations set forth below.
Upon the effective date of the Commission's order in this proceeding
approving the proposals summarized above in subsections (i) through (iv) and
(vi), NCE and its Subsidiaries will relinquish their current authorization in
File 70-9007. In addition, the Commission's order in this proceeding approving
the proposal summarized above in subsection (ix) will modify the general
exemption under Section 13(b) granted to certain of the Applicants hereto in the
Commission's order of August 1, 1997 approving the creation of NCE (see fn. 1,
above).
1.5 USE OF PROCEEDS. The proceeds from the financings authorized by
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the Commission pursuant to this Application or Declaration will be used for
general corporate purposes, including (i) financing, in part, investments by and
capital expenditures of NCE and its Subsidiaries, (ii) the repayment,
redemption, refunding or purchase by NCE or any of its Subsidiaries of
securities issued by such companies without the need for prior Commission
approval pursuant to Rule 42 or a successor rule, (iii) financing working
capital requirements of NCE and its Subsidiaries, and (iv) other lawful general
purposes. Any use of proceeds to make investments in Rule 58 Subsidiaries will
be subject to the investment limitation of such rule, and any use of proceeds to
make investments in any EWG or FUCO will be subject to the investment limitation
of Rule 53, as it may be modified by order of the Commission in File No. 70-9341
(see Item 1.3, above).
Specifically, in consideration for its purchase from PSCo of the stock
of New Century International, Inc., which indirectly holds a 50% interest in
Yorkshire Power Group Limited, Enterprises issued a note payable to PSCo for
$292.6 million, representing the purchase price. See New Century Energies, Inc.,
et al., supra n. 2. Among other uses of the proceeds of financing proposed
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herein, NCE plans to make advances or cash capital contributions to Enterprises
to enable Enterprises to prepay its note in whole or in part to PSCo.
The Applicants represent that no financing proceeds will be used to
acquire the equity securities of any new subsidiary unless such acquisition has
been approved by the Commission in this proceeding or in a separate proceeding
or in accordance with an available exemption under the Act or rules thereunder.
Further, the Applicants represent that they will not issue any
securities in accordance with the authority granted in this proceeding unless,
at the time thereof and giving effect thereto, NCE's common equity (as reflected
in its most recent Form 10-K or Form 10-Q filed with the Commission pursuant to
the Securities Exchange Act of 1934) is equal to at least 30% of its
consolidated capitalization, as adjusted to reflect subsequent events that
affect capitalization.
1.6 DESCRIPTION OF EXTERNAL FINANCING PROGRAM.
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1.6.1 NCE Financing.
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(i) Common Stock. NCE proposes to issue and sell from time to
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time during the Authorization Period up to $1.25 billion of its Common Stock. In
addition, NCE requests authorization to issue and sell from time to time through
December 31, 2008 up to 30 million additional shares of Common Stock (as such
number may be adjusted for any stock split) pursuant to the Stock Plans
described below.(7) Subject to the foregoing, NCE may issue and sell Common
Stock or options exercisable for Common Stock and issue Common Stock upon the
exercise of options. NCE may also buy back shares of Common Stock or such
options during the Authorization Period in accordance with Rule 42.
NCE may issue and sell Common Stock 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.
Specifically, NCE may issue and sell Common Stock 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 officers, directors and employees (or to trusts established for
their benefit) through various benefit plans and to shareholders through the NCE
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7 NCE currently expects that, during the Authorization Period,
approximately 18 million shares of Common Stock 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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dividend reinvestment plan. If underwriters are used in the sale of Common
Stock, 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. Common Stock 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. Common Stock may be sold directly by NCE or
through agents designated by NCE from time to time. If dealers are utilized in
the sale of Common Stock, NCE will sell such securities to the dealers, as
principals. Any dealer may then resell such Common Stock 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.
NCE may also issue Common Stock in public or privately-negotiated
transactions in exchange for the equity securities or assets of other companies,
provided that the acquisition of any such equity securities or assets has been
authorized in a separate proceeding or is exempt under the Act or the rules
thereunder.
NCE currently maintains for its and its Subsidiaries' employees three
different benefit plans which provide for the issuance and/or sale of Common
Stock. In addition, NCE has adopted the New Century Energies, Inc. Omnibus
Incentive Plan, which authorizes grants of Common Stock, stock options and other
stock-based awards to eligible executives and other key employees, and the
Outside Directors' Compensation Plan, under which non-employee directors may
elect to receive director compensation in the form of Common Stock.(8) 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
Stock Plans. Shares of Common Stock for use under the Stock Plans may either be
newly issued shares, treasury shares or shares purchased in the open market. NCE
will make open-market purchases of Common Stock in accordance with the terms of
or in connection with the operation of the plans pursuant to Rule 42. NCE may
also acquire treasury shares through other open-market purchases. NCE also
proposes to issue and/or sell shares of Common Stock pursuant to these existing
Stock Plans and similar plans or plan funding arrangements hereafter adopted,
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.
Finally, NCE may also issue and sell shares of its Common Stock under
the authorization, and within the limitations set forth herein, in connection
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8 A detailed description of the Omnibus Incentive Plan and Outside
Directors' Compensation Plan is contained in NCE's Proxy Statement on Form 14A,
dated March 30, 1998, in File No. 1-12927.
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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 pursuant to Rule 42. NCE hereby seeks
authority for the issuance and sale of Common Stock in accordance with the NCE
Dividend Reinvestment Plan.
(ii) NCE Debt.
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(A) Short-Term Debt. The aggregate principal amount of Short-
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term Debt of NCE at any time outstanding during the Authorization Period shall
not exceed the NCE Debt Limitation ($600 million), provided that, upon PSCCC
becoming a direct subsidiary of NCE, it is proposed that the NCE Debt Limitation
be increased to $975 million in order to provide liquidity for PSCCC as
discussed in subparagraph (C) below. The effective cost of money on Short-term
Debt authorized in this proceeding will not exceed the competitive market rates
available to companies with comparable credit ratings.
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
typically 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.
NCE also proposes to establish bank lines in an aggregate principal
amount not to exceed the NCE Debt Limitation. 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 comparable credit ratings as it may deem appropriate in light of its needs
and market conditions at the time of issuance.
(B) Debentures. NCE proposes to issue and sell from
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time to time through the Authorization Period up to $300 million principal
amount of Debentures in one or more series, provided that the aggregate
principal amount of Short-term Debt and Debentures at any time outstanding shall
not exceed the NCE Debt Limitation. At such time as PSCCC becomes a direct
subsidiary of NCE, it is proposed that the limitation on the amount of
Debentures NCE may issue be increased from $300 million to $450 million. The
Debentures (a) may be convertible into any other securities of NCE, (b) will
have maturities ranging from one to 40 years, (c) may be subject to optional
and/or mandatory redemption, in whole or in part, at par or at various premiums
above the principal amount thereof, (d) may be entitled to mandatory or optional
sinking fund provisions, (e) may provide for reset of the coupon pursuant to a
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remarketing arrangement, and (f) may be called from existing investors by a
third party. In addition, NCE may have the right from time to time to defer the
payment of interest on the Debentures of one or more series (which may be fixed
or floating or "multi-modal" debentures, i.e., debentures where the interest is
periodically reset, alternating between fixed and floating interest rates for
each reset period). The Debentures will be issued under an indenture (the
"Indenture") to be entered into between NCE and a national bank, as trustee (the
"Trustee," including any successor trustee appointed pursuant to the Indenture),
with a supplemental indenture to be executed in respect of each separate
offering of one or more series of Debentures (each a "Supplemental Indenture").
Forms of the Debentures, Indenture and Supplemental Indenture will be filed by
amendment hereto.
NCE contemplates that the Debentures would be issued and sold directly
to one or more purchasers in privately-negotiated transactions or to one or more
investment banking or underwriting firms or other entities who would resell the
Debentures without registration under the Securities Act of 1933 in reliance
upon one or more applicable exemptions from registration thereunder, or to the
public either (i) through underwriters selected by negotiation or competitive
bidding or (ii) through selling agents acting either as agent or as principal
for resale to the public either directly or through dealers. A form of Purchase
Agreement with respect to any private offerings of Debentures through investment
banking or underwriting firms will be filed by amendment hereto.
The maturity dates, interest rates, redemption and sinking fund
provisions and conversion features, if any, with respect to the Debentures of a
particular series, as well as any associated placement, underwriting or selling
agent fees, commissions and discounts, if any, will be established by
negotiation or competitive bidding and reflected in the applicable Supplemental
Indenture and Purchase Agreement or underwriting agreement setting forth such
terms; provided, however, that NCE will not issue and sell any Debentures at
interest rates in excess of those generally obtainable at the time of pricing or
repricing of such Debentures for securities having the same or reasonably
similar maturities and having reasonably similar terms, conditions and features
issued by utility companies or utility holding companies of the same or
reasonably comparable credit quality, as determined by the competitive capital
markets.
Finally, NCE undertakes that without further Commission authorization
it will not issue any Debentures that are not at the time of original issuance
rated at least investment grade by a nationally recognized statistical rating
organization.
(C) Increase in NCE Debt Limitation. As previously
indicated, PSCCC currently finances (factors) certain of PSCo's accounts
receivable and fuel inventories and may in the future finance accounts
receivable and fuel inventories for other affiliated and non-affiliated
entities, subject to the limitations described in August 1, 1997 order approving
the creation of NCE (supra, n. 1). To provide financing for its business, PSCCC
sells commercial paper and issues other debt securities. Historically, these
have included credit facilities shared with PSCo. These financing and credit
support arrangements are exempt under Rule 52 and Rule 45(b), as applicable.
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Upon PSCCC becoming a direct subsidiary of NCE, NCE proposes to increase the NCE
Debt Limitation by $375 million (to $975 million), which is the amount
corresponding to PSCCC's expected seasonal debt peak of $375 million. Up to $150
million of such increased debt limitation may be represented by Debentures.
Thus, at that time, the maximum aggregate principal amount of Debentures NCE may
issue would be $450 million. Borrowings by PSCCC would continue to be exempt
pursuant to Rule 52(b).
(iii) Other Securities. In addition to the specific securities for
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which authorization is sought herein, NCE may also find it necessary or
desirable in order 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.
1.6.2 Utility Subsidiary Financing.
----------------------------
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 Utility Commission ("NMPUC") 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.
(i) Short Term Debt of Cheyenne. All securities of Cheyenne,
---------------------------
except for securities with maturities of less than 12 months, are approved by
the WPSC. Accordingly, authority is requested for Cheyenne to issue Short-term
Debt to one or more non-associate lenders. The aggregate amount of such
Short-term Debt to be outstanding at any one time during the Authorization
Period shall not exceed $40 million. Cheyenne may engage in 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,
commercial paper sold in established domestic or European commercial paper
markets in a manner similar to NCE, bank lines and debt securities issued under
its indentures and note programs. Borrowings under bank lines and other
borrowings shall have a maturity of not more than one year from the date of each
borrowing.
(ii) Other Securities. The Utility Subsidiaries may also issue
----------------
and sell other types of securities to non-associate purchasers which do not
qualify for use of Rule 52 but which are considered appropriate during the
Authorization Period. The 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
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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 Utility Subsidiary.
1.6.3 Non-Utility Subsidiary Financings.
---------------------------------
The Non-Utility Subsidiaries are engaged in and expect to
continue to be active in the development and expansion of their existing
energy-related, telecommunications-related or otherwise functionally-related,
non-utility businesses in the NCE holding company system. They will be competing
in different sectors of the energy and other industries. In order to finance
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. It is believed that, in almost
all cases, such financings will be exempt from prior Commission authorization
pursuant to Rule 52(b). The Non-Utility Subsidiaries request that the Commission
reserve jurisdiction over the issuance of any other securities with respect to
which the exemption under Rule 52(b) would not apply. They also undertake to
cause a post-effective amendment to be filed in this proceeding which will
describe the general terms of each such non-exempt security and the amounts
thereof and request a supplemental order of the Commission authorizing the
issuance thereof by the subject Non-Utility Subsidiary.
1.7 DESCRIPTION OF INTRASYSTEM FINANCING PROGRAM.
--------------------------------------------
1.7.1 General.
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NCE may finance certain of its Subsidiaries and certain
Subsidiaries may finance other Subsidiaries in an aggregate amount not exceeding
$500 million outstanding at any one time during the Authorization Period. The
$500 million excludes financing that is exempt pursuant to Rules 45(b) and 52,
as applicable. Such financings would generally be in the form of cash capital
contributions, open account advances, inter-company loans, and/or capital stock
purchases. Intrasystem financing will provide funds for general corporate
purposes and other working capital requirements, investments and capital
expenditures. 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 loans to,
and purchase of capital stock from, such borrowing Subsidiaries will be exempt
under Rule 52, and capital contributions and open account advances without
interest will be exempt under Rule 45(b).
To the extent that any intrasystem loans or extensions of credit are
not exempt under Rule 45(b) or Rule 52, as applicable, the company making such
loan or extending such credit may charge 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 such company, including
an allocated share of commitment fees. If no such borrowings are outstanding,
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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 Subsidiaries may issue and NCE or other Subsidiaries 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 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 Subsidiary.
1.7.2 Guarantees.
----------
(i) NCE Guarantees. NCE requests authorization to enter into
--------------
guarantees, obtain letters of credit, enter into expense agreements or otherwise
provide credit support (collectively, "NCE Guarantees") with respect to the
obligations of any Subsidiary as may be appropriate to enable such Subsidiary to
carry on in the ordinary course of its business, in an aggregate principal
amount not to exceed $800 million outstanding at any one time, exclusive of any
such guarantees that may be exempt pursuant to Rule 45(b), provided that the
limitation on NCE Guarantees shall be increased to $850 million at such time as
PSCCC becomes a direct subsidiary of NCE. NCE will charge each Subsidiary a fee
for each guarantee provided on behalf of such Subsidiary that is determined by
multiplying the amount of the NCE guarantee provided by the cost of obtaining
the liquidity necessary to perform the guarantee (for example, bank line
commitment fees or letter of credit fees) for the period of time the guarantee
remains outstanding.
(ii) Subsidiary Guarantees. In addition, authority is
---------------------
requested for Subsidiaries to provide to other Subsidiaries guarantees and other
forms of credit support ("Subsidiary Guarantees") in an aggregate principal
amount not to exceed $100 million outstanding at any one time, exclusive of any
guarantees and other forms of credit support that are exempt pursuant to Rule
45(b) and Rule 52. Subsidiaries may also charge each Subsidiary a fee for each
guarantee provided on its behalf determined in the same manner as specified
above.
The amount of NCE Guarantees and Subsidiary Guarantees outstanding at
any one time shall not be counted against the aggregate respective limits
applicable to external financings or the limits on intrasystem financing
requested elsewhere herein.
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1.8 HEDGE TRANSACTIONS.
------------------
1.8.1 Interest Rate Hedging Program.
-----------------------------
NCE, and to the extent not exempt pursuant to Rule 52, the
Subsidiaries, request authorization to enter into interest rate hedging
transactions with respect to existing indebtedness ("Interest Rate Hedges"),
subject to certain limitations and restrictions, in order to reduce or manage
interest rate cost. Interest Rate Hedges would only be entered into with
counterparties ("Approved Counterparties") whose senior debt ratings, or the
senior debt ratings of the parent companies of the counterparties, as published
by Standard and Poor's Ratings Group, are equal to or greater than BBB, or an
equivalent rating from Moody's Investors Service, Fitch Investor Service or Duff
and Phelps.
Interest Rate Hedges will involve the use of financial instruments
commonly used in today's capital markets, such as interest rate swaps, caps,
collars, floors, and structured notes (i.e., a debt instrument in which the
principal and/or interest payments are indirectly linked to the value of an
underlying asset or index), or transactions involving the purchase or sale,
including short sales, of U.S. Treasury Securities. The transactions would be
for fixed periods and stated notional amounts. Fees, commissions and other
amounts payable to the counterparty or exchange (excluding, however, the swap or
option payments) in connection with an Interest Rate Hedge will not exceed those
generally obtainable in competitive markets for parties of comparable credit
quality.
1.8.2 Anticipatory Hedges.
-------------------
In addition, the Applicants request authorization to enter
into interest rate hedging transactions with respect to anticipated debt
offerings (the "Anticipatory Hedges"), subject to certain limitations and
restrictions. Such Anticipatory Hedges would only be entered into with Approved
Counterparties, and would be utilized to fix and/or limit the interest rate risk
associated with any new issuance through (i) a forward sale of exchange-traded
U.S. Treasury futures contracts, U.S. Treasury Securities and/or a forward swap
(each a "Forward Sale"), (ii) the purchase of put options on U.S. Treasury
Securities (a "Put Options Purchase"), (iii) a Put Options Purchase in
combination with the sale of call options on U.S. Treasury Securities (a "Zero
Cost Collar"), (iv) transactions involving the purchase or sale, including short
sales, of U.S. Treasury Securities, or (v) some combination of a Forward Sale,
Put Options Purchase, Zero Cost Collar and/or other derivative or cash
transactions, including, but not limited to structured notes, caps and collars,
appropriate for the Anticipatory Hedges.
Anticipatory Hedges may be executed on-exchange ("On-Exchange Trades")
with brokers through the opening of futures and/or options positions traded on
the Chicago Board of Trade ("CBOT"), the opening of over-the-counter positions
with one or more counterparties ("Off-Exchange Trades"), or a combination of
On-Exchange Trades and Off-Exchange Trades. NCE or a Subsidiary will determine
the optimal structure of each Anticipatory Hedge transaction at the time of
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execution. NCE or a Subsidiary may decide to lock in interest rates and/or
limit its exposure to interest rate increases. All open positions under
Anticipatory Hedges will be closed on or prior to the date of the new
issuance and neither NCE nor any Subsidiary will, at any time, take
possession or make delivery of the underlying U.S. Treasury Securities.
Further, no Anticipatory Hedge position will be outstanding (open) for more
than 180 days.
The Applicants will comply with the then existing financial disclosure
requirements of the Financial Accounting Standards Board associated with hedging
transactions.
1.9 FINANCING SUBSIDIARIES. NCE and the Subsidiaries request
----------------------
authority to acquire, directly or indirectly, the equity securities of one or
more corporations, trusts, partnerships or other entities created specifically
for the purpose of facilitating the financing of the authorized and exempt
activities (including exempt and authorized acquisitions) of NCE and the
Subsidiaries through the issuance of debt or equity securities, including but
not limited to monthly income preferred securities, to third parties and the
loaning of the proceeds of such financings to NCE or such Subsidiaries. Such
Financing Subsidiaries would issue and sell securities to third parties pursuant
to Rule 52. NCE may, if required, guarantee or enter into expense agreements in
respect of the obligations of any such Financing Subsidiaries. The principal
amount of any long-term debt securities issued by any Financing Subsidiary which
are guaranteed by NCE will be counted against the limitation on Debentures that
NCE may issue. However, the amount of any such guarantee would not be counted
against the NCE Guarantee limit proposed in Item 1.7, above. Subsidiaries may
also provide guarantees and enter into expense agreements, if required, on
behalf of such entities pursuant to Rules 45(b)(7) and 52, as applicable
1.10 INTERMEDIATE SUBSIDIARIES. NCE and Enterprises propose to acquire
-------------------------
the securities of one or more Intermediate Subsidiaries, which would be
organized exclusively for the purpose of acquiring, holding and/or financing the
acquisition of the securities of or other interest in one or more EWGs or FUCOs,
Rule 58 Subsidiaries, ETCs or other non-exempt Non-Utility Subsidiaries,
provided that Intermediate Subsidiaries may also engage in development
activities and administrative activities relating to such subsidiaries.(9) To
the extent such transactions are not exempt from the Act or otherwise authorized
or permitted by rule, regulation or order of the Commission issued thereunder,
NCE requests authority for Intermediate Subsidiaries to provide management,
administrative, project development and operating services to such entities,
subject to the limitations described in Item 1.12, below.
There are several legal and business reasons for the use of
special-purpose subsidiaries such as the Intermediate Subsidiaries in connection
- --------
9 Utility Engineering Corporation already has authority under the
terms of the Commission's order approving the formation of NCE as a holding
company to organize intermediate subsidiaries to engage in its authorized
activities. Likewise, there are special purpose intermediate subsidiary
companies in the chain of ownership over Yorkshire Power Group Limited.
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with making investments in EWGs and FUCOs, Rule 58 Subsidiaries, ETCs and other
non-exempt Non-Utility Subsidiaries. For example, the formation and acquisition
of special-purpose subsidiaries is often necessary or desirable to facilitate
financing the acquisition and ownership of a FUCO, an EWG or another non-utility
enterprise. Furthermore, the laws of some foreign countries may require that the
bidder in a privatization program be organized in that country. In such cases,
it would be necessary for NCE or Enterprises to form a foreign subsidiary as the
entity (or participant in the entity) that submits the bid or other proposal. In
addition, the interposition of one or more Intermediate Subsidiaries may allow
NCE to defer the repatriation of foreign source income, or to take full
advantage of favorable tax treaties among foreign countries, or otherwise to
secure favorable U.S. income tax treatment that would not otherwise be
available. Intermediate Subsidiaries would also serve to isolate business risks,
facilitate subsequent adjustments to, or sales of, ownership interests by or
among the members of the ownership group, or to raise debt or equity capital in
domestic or foreign markets.
An Intermediate Subsidiary may be organized, among other things, (1) in
order to facilitate the making of bids or proposals to develop or acquire an
interest in any EWG or FUCO, Rule 58 Subsidiary, ETC or other non-exempt
Non-Utility Subsidiary; (2) after the award of such a bid proposal, in order to
facilitate closing on the purchase or financing of such acquired company; (3) at
any time subsequent to the consummation of an acquisition of an interest in any
such company in order, among other things, to effect an adjustment in the
respective ownership interests in such business held by NCE or Enterprises and
non-affiliated investors; (4) to facilitate the sale of ownership interests in
one or more acquired non-utility companies; (5) to comply with applicable laws
of foreign jurisdictions limiting or otherwise relating to the ownership of
domestic companies by foreign nationals; (6) as a part of tax planning in order
to limit NCE's exposure to U.S. and foreign taxes; (7) to further insulate NCE
and the Utility Subsidiaries from operational or other business risks that may
be associated with investments in non-utility companies; or (8) for other lawful
business purposes.
Investments in Intermediate Subsidiaries may take the form of any
combination of the following: (1) purchases of capital shares, partnership
interests, member interests in limited liability companies, trust certificates
or other forms of equity interests; (2) capital contributions; (3) open account
advances with or without interest; (4) loans; and (5) guarantees issued,
provided or arranged in respect of the securities or other obligations of any
Intermediate Subsidiaries. Funds for any direct or indirect investment by NCE or
Enterprises in any Intermediate Subsidiary will be derived from (1) financings
authorized in this proceeding; (2) any appropriate future debt or equity
securities issuance authorization obtained by NCE from the Commission; and (3)
other available cash resources, including proceeds of securities sales by
Enterprises pursuant to Rule 52. To the extent that NCE provides funds or
guarantees directly or indirectly to an Intermediate Subsidiary which are used
for the purpose of making an investment in any EWG or FUCO or a Rule 58
Subsidiary, the amount of such funds or guarantees will be included in NCE's
"aggregate investment" in such entities, as calculated in accordance with
Rule 53 or Rule 58, as applicable.
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1.11 PAYMENT OF DIVIDENDS OUT OF CAPITAL AND UNEARNED SURPLUS.
--------------------------------------------------------
Enterprises also proposes, on behalf of itself and its direct or indirect Rule
58 Subsidiaries and Non-Utility Subsidiaries, that such companies be permitted
to pay dividends with respect to the securities of such companies, from time to
time through the Authorization Period, out of capital and unearned surplus
(including revaluation reserve), to the extent permitted under applicable
corporate law.
Enterprises anticipates that there will be situations in which it or
one or more of its direct or indirect subsidiaries will have unrestricted cash
available for distribution in excess of any such company's current and retained
earnings. In such situations, the declaration and payment of a dividend would
have to be charged, in whole or in part, to capital or unearned surplus. As an
example, if Enterprises (directly or indirectly through an Intermediate
Subsidiary) purchases all of the stock of an EWG or FUCO, and following such
acquisition, the EWG or FUCO incurs non-recourse borrowings some or all of the
proceeds of which are distributed to the New Subsidiary as a reduction in the
amount invested in the EWG or FUCO (i.e., return of capital), the Intermediate
Subsidiary (assuming it has no earnings) could not, without the Commission's
approval, in turn distribute such cash to Enterprises for possible distribution
to NCE.(10)
Similarly, using the same example, if an Intermediate Subsidiary,
following its acquisition of all of the stock of an EWG or FUCO, were to sell
part of that stock to a third party for cash, the Intermediate Subsidiary would
again have substantial unrestricted cash available for distribution, but
(assuming no profit on the sale of the stock) would not have current earnings
and therefore could not, without the Commission's approval, declare and pay a
dividend to its parent out of such cash proceeds.
Further, there may be periods during which unrestricted cash available
for distribution by Enterprises or a direct or indirect subsidiary exceeds
current and retained earnings due to the difference between accelerated
depreciation allowed for tax purposes, which may generate significant amounts of
distributable cash, and depreciation methods required to be used in determining
book income.
Finally, even under circumstances in which an Intermediate Subsidiary
or other downstream subsidiary has sufficient earnings, and therefore may
declare and pay a dividend to its immediate parent, such immediate parent may
have negative retained earnings, even after receipt of the dividend, due to
losses from other operations. In this instance, cash would be trapped at a
subsidiary level where there is no current need for it.
Enterprises, on behalf of itself and each of its current and future
direct and indirect subsidiaries, represents that it will not declare or pay any
dividend out of capital or unearned surplus in contravention of any law
restricting the payment of dividends. In this regard, it should be noted that
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10 The same problem would arise where an Intermediate Subsidiary is
over-capitalized in anticipation of a bid which is ultimately unsuccessful. In
such a case, Enterprises would normally desire a return of some or all of the
funds invested.
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all U.S. jurisdictions limit to one extent or another the authority of
- ---
corporations to make dividend distributions to shareholders. Most State
corporations statutes contain either or both an equity insolvency test or some
type of balance sheet test. Enterprises also states that its subsidiaries will
comply with the terms of any credit agreements and indentures that restrict the
amount and timing of distributions to shareholders.
1.12 EXEMPTION FROM "COST" RULE UNDER SECTION 13(B). In its order
dated August 1, 1997, approving the creation of NCE, the Commission authorized
certain non-utility subsidiaries of NCE (including New Century Services, Inc.,
Quixx Corporation, Quixx Power Services, Inc. and e prime, inc.) to provide
services and goods at fair market prices to associate companies that are EWGs,
FUCOs or QFs, subject to certain restrictions. NCE and its Non-Utility
Subsidiaries now wish to expand the scope of the general exemption in two
respects. First, the Subsidiaries which may sell services or goods to associate
non-utility companies would include, in addition to the companies identified as
"Designated Companies" in the August 1, 1997 order, Enterprises or any current
or future Non-Utility Subsidiary of Enterprises, including without limitation
Intermediate Subsidiaries. Second, NCE wishes to expand the categories of
non-utility associate companies to which services and goods may be sold to
include, in addition to EWGs, FUCOs and QFs, ETCs, Rule 58 Subsidiaries and
other non-exempt subsidiaries that do not derive any part of their income from
sales of goods or services to any of the Utility Subsidiaries.(11) Accordingly,
to the extent not exempt under Rule 90(d)(1), New Century Services, Inc. and
Non-Utility Subsidiaries request authority to provide goods and services to any
associate company (a "client company") at fair market prices, without regard to
"cost," if:
(i) The client company is a FUCO or foreign EWG which derives no part
of its income, directly or indirectly, from the generation,
transmission, or distribution of electric energy for sale within
the United States;
(ii) The client company is an EWG which sells electricity at
market-based rates which have been approved by the Federal Energy
Regulatory Commission ("FERC"), provided that the purchaser
thereof is not a Utility Subsidiary;
(iii) The client company is a QF within the meaning of PURPA that
sells electricity exclusively (a) at rates negotiated at
arms'-length to one or more industrial or commercial customers
purchasing such electricity for their own use and not for resale,
and/or (ii) to an electric utility company other than an Utility
Subsidiary at the purchaser's "avoided cost" as determined in
accordance with the regulations under PURPA;
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11 In addition to the general exemption under Section 13(b) granted
by the August 1, 1997, order, certain subsidiaries of NCE were also specifically
authorized to render services at fair market prices to a 50%-owned QF located in
Texas that will sell electricity to SPS. No modification in the terms of such
authorization is requested here.
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(iv) The client company is a domestic EWG or QF that sells electricity
at rates based upon its cost of service, as approved by FERC or
any state public utility commission having jurisdiction, provided
that the purchaser thereof is not a Utility Subsidiary; or
(v) The client company is an ETC, a Rule 58 Subsidiary, or a
non-exempt subsidiary of NCE that does not derive any part of its
income from sales of goods, services or other property to a
Utility Subsidiary.
1.13 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 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. It is
also proposed that such certificates, which will include information with
respect to all securities issuances that are exempt under Rule 52, be in lieu of
any separate certificates required on Form U-6B-2 pursuant to Rule 52.
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 Common Stock issued during
the quarter, under (i) NCE's dividend reinvestment plan and (ii) NCE
system employee benefit and executive compensation plans, including any
such plans hereinafter adopted;
(c) If a guarantee or other form of credit support is issued
during the quarter, the name of the parent or issuing 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;
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(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) The amount and terms of any financings consummated by any
Utility Subsidiary during the quarter pursuant to the exemption
provided under Rule 52;
(h) The amount and terms of any financings consummated by any
Non-Subsidiary during the quarter pursuant to the exemption provided
under Rule 52;
(i) The notional amount and principal terms of any Interest
Rate Hedge or Anticipatory Hedge entered into during the quarter and
the identity of the parties to such instruments;
(j) The name, parent company, and amount invested in any new
Intermediate Subsidiary or Financing Subsidiary during the quarter;
(k) 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
(l) Future registration statements filed under the 1933 Act
with respect to securities that are the subject of the Application will
be filed (or incorporated by reference) as exhibits to the next
certificate filed pursuant to Rule 24.
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. 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.
-------------------------------
3.1 GENERAL. Sections 6(a) and 7 of the Act are applicable to the
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issuance and sale of Common Stock, Debentures and Short-term Debt by NCE and to
the issuance and sale of certain securities by the Subsidiaries that are not
exempt under Rule 52. In addition, Sections 6(a) and 7 of the Act are applicable
to Interest Rate Hedges, except to the extent that they may be exempt under Rule
52, and to Anticipatory Hedges. Sections 6(a), 7, 9(a), 10, 12(b) and 12(f) and
Rules 43, 45 and 52 are applicable to the program of intrasystem financing
described herein. Section 12(b) of the Act and Rule 45(a) are applicable to the
issuance of NCE Guarantees and to Subsidiary Guarantees, to the extent not
exempt under Rules 45(b) and 52. Sections 9(a)(1), 10 and 12(f) of the Act are
applicable to the acquisition by NCE or any Subsidiary of any securities issued
by an associate company, except to the extent that such transaction are exempt
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under Rule 52. Sections 9(a)(1) and 10 of the Act are also applicable to NCE's
or any Subsidiary's acquisition of the equity securities of any Financing
Subsidiary or Intermediate Subsidiary. Section 12(c) of the Act and Rule 46 are
applicable to the payment of dividends from capital and unearned surplus by
Enterprises or any direct or indirect subsidiary of Enterprises. Section 13(b)
of the Act and Rule 90(d)(1) thereunder apply to the Non-Utility Subsidiaries'
request for exemption from the "cost" requirements of Rules 90 and 91. Sections
32 and 33 and Rules 53 and 54 are also deemed applicable to the proposed
transactions.
3.2 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 EWG or 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.
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"), which will become a FUCO, and Independent Power Corporation plc
("IPC"), which will become either an EWG or a FUCO, is currently equal to 53.8%
of NCE's "consolidated retained earnings" (as defined in Rule 53(a)(1)(ii)) for
the four quarters ended September 30, 1998 ($677.8 million). 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 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 to a program of external and intrasystem financing for a variety of
corporate purposes, including the refunding of significant amounts of
indebtedness of PSCo. NCE's ability to finance future investments in any EWGs
and FUCOs is limited by Rule 53, and, in addition, is the subject of a separate
application in File No. 70-9341.
23
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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. NCE believes that its current capitalization ratios
(43% equity and 57% debt and preferred securities as of September 30, 1998) and
relevant measurements of earning capacity (e.g., earnings per share) are within
acceptable ranges established by peer group utilities. 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, and no federal commission, other than the
Commission, has jurisdiction over the proposed transactions.
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 in any event not later than January 22, 1999, 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. (To be filed by amendment unless otherwise indicated)
--------
A None.
B-1 Form of Commercial Paper Note.
B-2 Form of Standard Purchase Agreement - Common Stock.
B-3 Form of Debentures.
B-4 Form of Debenture Indenture.
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B-5 Form of Supplemental Indenture.
B-6 Form of Debenture Purchase Agreement.
F Opinion of Counsel.
G Financial Data Schedule. (incorporated by reference
to the Quarterly Report on Form 10-Q of NCE for the
quarter ended June 30, 1998) (File No. 1-12927).
H Proposed Form of Federal Register Notice. (Previously
filed).
B. FINANCIAL STATEMENTS.
--------------------
1.1 Balance Sheet of NCE and consolidated subsidiaries,
as of September 30, 1998 (incorporated by reference
to the Quarterly Report on Form 10-Q of NCE for the
quarter ended September 30, 1998) (File No. 1-12927).
1.2 Statements of Income of NCE and consolidated
subsidiaries for the three and nine-month periods
ended September 30, 1998 (incorporated by reference
to the Quarterly Report on Form 10-Q of NCE for the
quarter ended September 30, 1998) (File No. 1-12927).
2.1 Balance Sheet of PSCo and consolidated subsidiaries,
as of September 30, 1998 (incorporated by reference
to the Quarterly Report on Form 10-Q of PSCo for the
quarter ended September 30, 1998) (File No. 1-3280).
2.2 Statements of Income of PSCo and consolidated
subsidiaries for the three and nine-month periods
ended September 30, 1998 (incorporated by reference
to the Quarterly Report on Form 10-Q of PSCo for the
quarter ended September 30, 1998) (File No. 1-3280).
3.1 Balance Sheet of SPS, as of September 30, 1998
(incorporated by reference to the Quarterly Report on
Form 10-Q of SPS for the quarter ended September 30,
1998) (File No. 1-3789).
3.2 Statements of Income of SPS for the three and
nine-month periods ended September 30, 1998
(incorporated by reference to the Quarterly Report on
Form 10-Q of SPS for the quarter ended September 30,
1998) (File No. 1- 3789).
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4.1 Unaudited Balance Sheet of Enterprises and
consolidated subsidiaries as of June 30, 1998
(incorporated by reference to Exhibit 2.1 to
Application/Declaration filed in File No. 70-9345).
4.2 Unaudited Statement of Income of Enterprises and
consolidated subsidiaries for the six months ended
June 30, 1998 (incorporated by reference to Exhibit
2.2 to Application/Declaration filed in File No. 70-
9345).
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.
26
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SIGNATURES
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.
PUBLIC SERVICE COMPANY OF COLORADO
NEW CENTURY SERVICES, INC.
NC ENTERPRISES, INC.
E PRIME, INC.
GREEN AND CLEAR LAKES COMPANY
THE PLANERGY GROUP, INC.
NEW CENTURY-CADENCE, INC.
SOUTHWESTERN PUBLIC SERVICE COMPANY
By: /s/ Richard C. Kelly
-----------------------------------
Name: Richard C. Kelly
Title: Executive Vice President of
New Century Energies, Inc.,
Public Service Company of
Colorado, New Century
Services, Inc., NC
Enterprises, Inc., and
Southwestern Public Service
Company; President of e
prime, inc.; Treasurer of
Green and Clear Lakes
Company and New
Century-Cadence, Inc.; and
Vice President of The
Planergy Group, Inc.
CHEYENNE LIGHT, FUEL AND POWER
COMPANY
WEST GAS INTERSTATE INC.
NEW CENTURY INTERNATIONAL INC.
PS COLORADO CREDIT CORPORATION
1480 WELTON, INC.
P.S.R. INVESTMENTS, INC.
By: /s/ Cathy J. Hart
-----------------------------------
Name: Cathy J. Hart
Title: Secretary
(signatures continued on the next page)
27
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NATURAL FUELS CORPORATION
QUIXX CORPORATION
UTILITY ENGINEERING CORPORATION
By: /s/ Bill D. Helton
-----------------------------------
Name: Bill D. Helton
Title: Chairman of the Board
Date: January 21, 1999
28
