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As Filed with the Securities and
Exchange Commission on December 9, 1999
File No. 70-9095
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------------------
POST-EFFECTIVE AMENDMENT NO. 9
To
FORM U-1
DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
CONECTIV
DELMARVA POWER & LIGHT COMPANY
CONECTIV RESOURCE PARTNERS, INC.
CONECTIV ENERGY SUPPLY, INC.
KING STREET ASSURANCE, LTD.
CONECTIV ENERGY, INC
800 King Street
Wilmington, DE 19899
<TABLE>
<S> <C>
DELMARVA CAPITAL INVESTMENTS, INC. ATLANTIC CITY ELECTRIC COMPANY
CONECTIV SERVICES, INC. 6801 Black Horse Pike
CONECTIV COMMUNICATIONS, INC. Egg Harbor Township, NJ 08234
DELMARVA SERVICES COMPANY
DCI I, INC. ATLANTIC GENERATION, INC.
DCI II, INC. ATLANTIC SOUTHERN PROPERTIES, INC
DCTC-BURNEY, INC. ATE INVESTMENT, INC
CONECTIV OPERATING SERVICES CO CONECTIV THERMAL SYSTEMS, INC.
CONECTIV SOLUTIONS, LLC BINGHAMTON GENERAL, INC.
CONECTIV PLUMBING LLC. BINGHAMTON LIMITED, INC.
252 Chapman Road PEDRICK GEN., INC
P.O. Box 6066 VINELAND LIMITED, INC.
Newark, DE 19714 VINELAND GENERAL, INC
ATLANTIC JERSEY THERMAL SYSTEMS, INC
ATS OPERATING SERVICES, INC.
5100 Harding Highway
Mays Landing, NJ 08330
</TABLE>
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(Names of companies filing this statement
and address of principal executive offices)
Conectiv
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(Name of top registered holding company parent)
Philip S. Reese
Treasurer
Conectiv
(address above)
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(Name and address of agent of service)
The Commission is requested to send copies of all notices, orders and
communications in connection with this Application to:
Peter F. Clark Joyce Koria Hayes, Esquire
General Counsel 7 Graham Court
Conectiv Newark, DE 19711
(address above)
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Item 1 as previously filed in Post-Effective Amendments No. 7 and amended and
restated in Post-Effective Amendment No. 8 is further amended and restated as
follows:
Item 1. Description of Proposed Transactions
(a) Furnish a reasonably detailed and precise description of the proposed
transaction, including a statement of the reason why it is desired to consummate
the transaction and the anticipated effect thereof. If the transaction is part
of a general program, describe the program and its relation to the proposed
transaction.
A. BACKGROUND
Conectiv, a Delaware corporation, previously was authorized under
Section 9(a)(2) of the Public Utility Holding Company Act of 1935, as amended
(the "Act") to consummate certain transactions resulting in the acquisition by
Conectiv of all of the outstanding common stock of Delmarva Power & Light
Company, a Delaware and Virginia corporation and an operating public utility
company ("Delmarva"), and of Atlantic City Electric Company, a New Jersey
corporation and an operating public utility company ("ACE") (ACE and Delmarva
are collectively referred to as the "Utility Subsidiaries"), and of certain
direct and indirect nonutility subsidiaries ("Nonutility Subsidiaries"). Both
Utility and Nonutility Subsidiaries are referred to collectively as
"Subsidiaries". See HCAR No. 26832 dated February 25, 1998 (the "Merger Order")
in File No. 70-9069. Delmarva provides electric service in Delaware, Maryland
and Virginia and natural gas service in northern Delaware and ACE provides
electric service in New Jersey. Following the merger, Conectiv and its
Subsidiaries filed an Application/Declaration on Form U-1 in this File No.
70-9095 requesting authorization for financing transactions for the period
beginning with the effective date of an order issued in such proceeding through
December 31, 2000. Those financing transactions were approved by Order dated
February 26, 1998 (HCAR No. 26833) as supplemented by Orders dated August 21,
1998 (HCAR No. 26907), September 28, 1998 (HCAR No. 26921), October 21, 1998
(HCAR No. 26930), and November 13, 1998 (HCAR No. 26941) (the "Financing
Orders"). Further, in early 1999, Conectiv realized that certain write-downs
that might be required due to electric industry restructuring in the states of
New Jersey, Maryland, and Delaware might be sufficient to reduce retained
earnings to a level which would require that dividends be paid out of capital or
unearned surplus. A declaration on Form U-1 was filed in File No. 70-9499 (the
"Dividend File") seeking authority for Conectiv, Delmarva and ACE to issue
certain dividends out of capital or unearned surplus. In September, an order was
requested and issued permitting Conectiv to issue dividends aggregating no more
than $24 million out of capital or unearned surplus and jurisdiction was
reserved with respect to the issuance of future dividends by Conectiv, Delmarva
or ACE out of capital or unearned surplus (HCAR No. 35-27079 dated September 27,
1999).
Pursuant to the Financing Orders, during the period ending December 31,
2000, Conectiv is authorized, among other authorizations, 1) to issue short-term
debt aggregating no more than $800 million less any amount of short-term debt
issued by Delmarva under its authorization to issue up to $275 million of
short-term debt; 2) to issue up to $250 million of long-term debt with the
reservation of jurisdiction over an additional $250 million of long-term debt
(overall short-term and long-term debt thus aggregating $1.3 billion) and 3) to
issue common stock which when aggregated with any long-term debt issued does not
exceed $500 million in the aggregate(1).
Also under the terms of the Financing Orders, the short-term debt
issued by Conectiv may be
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1. Conectiv currently does not envision the issuance of equity unless used as
consideration in connection with an acquisition as permitted under the
Financing Orders. The fair market value of any equity issued would reduce
the amount of long-term debt that may be issued pursuant to the
authorization requested herein.
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used to provide working capital for the general corporate purposes of Conectiv
and its Subsidiaries and to fund the capital requirements of Conectiv's
Subsidiaries until long-term financing can be obtained.(2)
Financings authorized in the Financing Orders are subject to certain
limitations contained therein as follows:
i) Conectiv's consolidated common equity will be at least 30% of
its total consolidated capitalization ("Common Equity Ratio"),
as adjusted to reflect subsequent events that affect
capitalization;
ii) the effective cost of money on long-term debt securities will
not exceed 300 basis points over comparable term U.S. Treasury
securities and the effective cost of money on short-term
securities will not exceed 300 basis points over the
comparable term London Interbank Offered Rate;
iii) maturity of indebtedness will not exceed 50 years; and
iv) the underwriting fees, commissions, or similar remuneration
paid in connection with the issue, sale or distribution of a
security will not exceed 5% of the principal amount of the
financing.
The purpose of this filing is to request:
1. An extension of the effective period for all authorizations contained
in the Financing Orders to March 31, 2002 (the "Authorization Period")
and changes in certain authorizations as described below.(3)
2. Amendment of condition (i) above to state that Conectiv's Common Equity
Ratio will be at least 20% as adjusted to reflect subsequent events
that affect capitalization.
3. An increase in the amount of short-term debt that Conectiv is
authorized to have outstanding during the Authorization Period from
$800 million to $1.3 billion less any short-term debt issued by
Delmarva.
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(2) General corporate purposes could include interim funding of repurchase of
outstanding long-term securities.
(3) Authorizations contained in the Financing Orders which are requested to be
extended but not amended include:
1) Conectiv's authorization to issue up to 10 million shares of Common Stock
pursuant to employee benefit plans and the Conectiv Dividend Reinvestment
Plan.
2) Conectiv's authority to issue up to $500 million of Common Stock less any
long-term debt issued (Since Conectiv has issued $250 million of long-term
debt, authorization remains only to issue up to an additional $250 million
aggregate value of common stock subject to further decrease for any future
long-term debt issued.)
3) Conectiv's and the Utility Subsidiaries' authority to enter into, perform,
purchase and sell financial instruments intended to manage the volatility
of interest rates.
4) Conectiv's authority to issue other securities subject to a reservation of
jurisdiction over the additional types of securities pending completion of
the record.
5) Delmarva's authority to issue up to $275 million of short-term debt and the
Utility Subsidiaries' authority to issue securities which are not exempt
subject to a reservation of jurisdiction over these additional types of
securities pending completion of the record.
6) Nonutility Subsidiaries' authority to issue securities which are not exempt
subject to a reservation of jurisdiction over the issuance of additional
types and amounts of securities that are not exempt under Rule 52 (b)
pending completion of the record.
7) Conectiv's authority to enter into guarantees or otherwise provide credit
support with respect to the obligations of Subsidiaries in an amount not to
exceed $350 million except to the extent exempt under Rule 45 under the Act
and Nonutility Subsidiaries' authority to provide credit support to each
other in an aggregate amount not to exceed $100 million.
8) Authority of wholly-owned Nonutility Subsidiaries to change authorized
capital stock and to issue dividends out of capital without further
authorization of the Commission.
9) Authority of Subsidiaries to organize new corporations, trusts,
partnerships or other entities for the purpose of facilitating financings.
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4. An increase in the level of long term debt for which authorization is
requested from $500 million to $1 billion with the understanding that to
the extent that any of the incremental $500 million is eventually
authorized and issued, the proceeds will be used to pay down short-term
debt. The aggregate debt that Conectiv would be permitted to have
outstanding prior to the removal of the reservation of jurisdiction is $1.3
billion of short-term plus $250 million of long-term previously issued.
Conectiv requests that the Commission reserve jurisdiction over the
issuance of up to $750 million of long-term debt pending completion of the
record. If the reservation of jurisdiction is removed, the aggregate debt
that Conectiv could have outstanding would total $800 million of short-term
and $1 billion of long-term debt for a total of $1.8 billion.
5. Authorization for investments in Exempt Wholesale Generators ("EWGs") in an
amount not exceeding $350 million by the end of the Authorization Period.
Conectiv requests that the Commission reserve jurisdiction over such
investments pending completion of the record.
6. Elimination of the $25 million maximum limit on borrowings by Nonutility
Subsidiaries from the Conectiv System Money Pool and the addition of King
Street Assurance, Ltd. to the Money Pool. Conectiv requests that the
Commission reserve jurisdiction over the participation by King Street
Assurance, Ltd. in the Money Pool pending completion of the record.
B. EXTENSION OF AUTHORIZATION PERIOD, INCREASE IN AUTHORIZED SHORT- AND
LONG-TERM DEBT AND CHANGE IN MINIMUM COMMON EQUITY RATIO.
1. INCREASE IN SHORT-TERM DEBT AUTHORIZATION FROM $800 MILLION TO $1.3
BILLION AT ANY ONE TIME OUTSTANDING DURING THE AUTHORIZATION PERIOD
AND INCREASE IN LONG-TERM DEBT SUBJECT TO RESERVATION OF JURISDICTION.
Conectiv herewith requests an extension of the Authorization Period to
March 31, 2002 and an increase in the aggregate amount of short-term debt at any
one time outstanding to no more than $1.3 billion. This additional $500 million
of short-term debt is required to fund the increased working capital and capital
expenditure needs of Conectiv and its Subsidiaries, including such expenditures
as a possible significant nonutility acquisition.
At the same time that Conectiv is required to fund the capital needs of
the nonutility companies, ACE will be issuing interim funding of the buy-out of
certain power purchase agreements with nonutility generators (the "NUG
Buyouts"). At a later date anticipated to be in mid 2000, debt will be issued by
a special purpose subsidiary of ACE and secured by regulatory assets created
under the New Jersey Electric Discount and Energy Competition Act ("Securitized
Debt"). The Securitized Debt will be issued pursuant to an order of the New
Jersey Board of Public Utilities ("NJBPU"). It is not expected that the
Securitized Debt will be exempt from the requirement of Commission approval.
However, the interim financing of the NUG Buyouts will be issued directly by ACE
pursuant to order of the NJBPU and, therefore, will be exempt from the
requirements of Commission approval under Sections 9 and 10 of the Act by virtue
of Rule 52. The interim funding and the Securitized Debt will, however, be
included in total consolidated debt for purposes of calculating the Common
Equity Ratio.
Conectiv also requests authority to increase the aggregate amount of
long-term debt that may be issued during the Authorization Period to an
aggregate of $1 billion, but requests that the Commission continue to reserve
jurisdiction over the issuance of any long-term debt in excess of the $250
million previously authorized and issued. When the issuance of additional
long-term debt is authorized, proceeds of the incremental $500 million will be
used to pay down outstanding short-term debt that was issued to fund capital
expenditures. The financial statements included in this filing show the pro
forma
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effects of the issuance of an additional $500 million of short-term debt over
that which was previously authorized. The issuance of long-term debt over which
jurisdiction is requested to be reserved will be dealt with in the filing
requesting removal of the reservation of jurisdiction.
It is Conectiv's understanding that an application by another registered
holding company for the issuance of long-term debt is pending before the
Commission for decision. That decision, when issued, will be precedent for
authorization for the issuance of additional long-term debt by Conectiv.
At current market prices, it is inappropriate and uneconomical to finance
Conectiv's business needs through the issuance of common stock.
2. DECREASES IN THE COMMON EQUITY RATIO
As is discussed in detail in the Dividend File, each of the states in
which Delmarva and ACE operate as utilities enacted legislation restructuring
the electric utility industry in that state to provide retail choice of
electricity suppliers in the near future. Generally, with restructuring, the
supply component of the price charged to a customer for electricity would be
deregulated, and electricity suppliers would compete to supply electricity to
customers. Customers would continue to pay the local utility a regulated price
for the delivery of the electricity over the transmission and distribution
system. Stranded costs are costs which may not be recoverable in a competitive
energy supply market due to lower prices or customers choosing a different
supplier. Stranded costs generally include above-market costs associated with
generation facilities or long-term purchased power agreements, and regulatory
assets. In Conectiv's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1999, the Company disclosed a charge to earnings, after taxes, as
a result of electric utility industry restructuring of $271.1 million. The Form
10-Q, for the period ended September 30, 1999, set forth that the total amount
charged to Conectiv's earnings, on a consolidated basis, as a result of electric
industry restructuring included (a) the impairment amount for the electric
generating plants of Delmarva and ACE, (b) the stranded cost amount for
Delmarva's purchased power contracts, and (c) regulatory assets of Delmarva and
ACE related to their electric generation businesses. The charge to earnings was
reduced by the estimated cost recovery through Delmarva's and ACE's regulated
electricity delivery rates. The charge of $271.1 million was less than the
previous estimates of management of a charge to earnings in the range of $350
million to $500 million.
As of June 30, 1999, Conectiv had approximately $289 million in
retained earnings. As shown on Exhibit H-1 hereto, if Conectiv had been able to
use pooling rather than purchase accounting in connection with the Merger, the
ACE retained earnings would not have been excluded from Conectiv's consolidated
retained earnings and Conectiv's retained earnings would have been approximately
$225 million higher and better able to absorb the write-downs. Following the
September 30, 1999 write-downs, Conectiv had only $14.389 million in retained
earnings and a Common Equity Ratio of 28.6% which impacts Conectiv's ability to
invest in EWGs as defined in Section 32 of the Act and Rule 53.
A second accounting convention contributes to the problem. Management
expects to sell certain of the electric generating plants of Delmarva and ACE.
Purchase and sale agreements have been executed for some assets, subject to the
receipt of certain regulatory approvals(4). Although sales of the impaired
electric generating plants are not expected to result in significant gains or
losses,(5) some of the electric generating plants that are not impaired may be
sold at a gain. Under GAAP, the write-down of an
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(4) On October 7, 1999, Conectiv, Delmarva and ACE each filed with the
Commission under cover of Form 8-K a current Report, copies of a press
release dated September 30, 1999 announcing agreements for sale of the
Utility Subsidiaries' interests in three nuclear plants.
(5) Although no gain may be realized, a significant cash flow results which
benefits the utility system.
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impaired asset is not reduced by the expected future gain on sales of assets
that are not impaired; the gain on the sale of an asset is only recognized when
the sale occurs.
Exhibit H-2, filed herewith under a request for confidential treatment,
is a consolidated capitalization forecast for the Conectiv System, by quarter
through December 31, 2000 and as of December 31, 2001. This Exhibit includes
estimates of the impacts of a) write-downs due to implementation of state
electric industry restructuring legislation equal to the lower end of the range
of estimates (which was the level anticipated when exhibit H-2 was prepared), b)
the interim financing of the NUG Buyouts by ACE, c) short-term debt issued by
Conectiv to fund a possible significant nonutility acquisition, d) the issuance
of Securitized Debt that will refund the interim debt incurred to fund the NUG
Buy-out and to recover the stranded costs associated with the ACE generating
plants and e) the issue of short-term debt to fund increased investment in
exempt wholesale electric generation facilities. The Exhibit demonstrates that
the interim funding of NUG Buy-outs by ACE (which does not require approval of
this Commission) will further reduce the Common Stock Ratio this year. The
exhibit also shows a "worst case" scenario that includes an issuance of
securitizied debts to fund two additional NUG Buyouts. The Exhibit indicates
that, under the worst case scenario, the Common Equity Ratio for the Conectiv
consolidated system is projected to never be less than 20% during the
Authorization Period and, assuming a 20% annual growth in retained earnings, is
expected to return to over 30% by the end of 2006. Conectiv requests that,
throughout the Authorization Period, it and Delmarva be permitted to issue
securities pursuant to the Financing Orders as supplemented by the Supplemental
Order requested herein so long as the Common Equity Ratio is at least 20%.
3. CONECTIV REMAINS A FINANCIALLY STRONG AND SECURE PARTICIPANT IN THE
EVOLVING ENERGY MARKET
Following the sales of the generating assets, the foundation of
Conectiv's near-term growth opportunities are considered to be its energy,
telecommunications and regulated electric and gas delivery businesses. These
areas allow the company to focus on vital services to the customer and allow
Conectiv to concentrate on deepening customer relationships within its growing
region. The energy business will be centered on 2,000 megawatts of flexible,
low-cost generation that back Conectiv's merchant capabilities. Conectiv also
will focus resources on growing its facilities-based telecommunications
business, taking advantage of the many high growth opportunities including
Internet and high speed DSL (digital subscriber line) that will be available to
customers in the near future.
Conectiv is in very sound financial condition. Following an early 1999
announcement of a dividend reduction, a common stock self-tender, and the future
sale of generating assets (discussed in detail in the Dividend File), both
Standard and Poor's and Moody's confirmed the stable ratings outlook for
Conectiv, ACE and Delmarva. Conectiv does not believe that the September 30,
1999 writedown of assets will have an impact on the Company's ratings. Below are
the ratings for unsecured long-term debt and short-term debt, respectively:
<TABLE>
<CAPTION>
Agency Conectiv Delmarva ACE
- ------ -------- -------- ---
<S> <C> <C> <C>
Moody's Baa1/P-2 A3/P-1 Baa1/P-2
S & P BBB+/A-2 A-/A-1 BBB+/A-2
</TABLE>
C. AUTHORIZATION TO INVEST UP TO $350 MILLION IN EXEMPT WHOLESALE GENERATORS
BY THE END OF THE AUTHORIZATION PERIOD.
Under the Delaware electric industry restructuring legislation, Delmarva
is in the process of exiting the business of generating electricity. Some of the
generating facilities will be sold to third parties and some will be sold to an
affiliated generation company. Appropriate filings will be made with this
Commission under the Act related to both sales. Conectiv's strategic plan calls
for the retention and
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development of the flexible, low-cost generation that will back Conectiv's
merchant capabilities. Two such projects are in development. The output of the
projects will be sold at wholesale to the PJM Interconnection Pool. Since
Delmarva is currently in the process of exiting the generating business and the
new generation company is not as yet formed, investments in the development of
two "mid-merit" generating projects must be and are appropriately made through
an EWG. Conectiv Energy, Inc.("CEI"), a previously inactive subsidiary, has been
making investments in the development of projects involving combustion turbine
generating facilities that upon operation will be eligible facilities which will
qualify CEI as an exempt wholesale generator under Section 32 of the Act.
Rule 54 promulgated under the Act states that in determining whether to
approve the issue or sale of a security by a registered holding company for
purposes other than the acquisition of an EWG or a Foreign Utility Company
("FUCO"), or other transactions by such registered holding company or its
subsidiaries other than with respect to EWGs or FUCOs, the Commission shall not
consider the effect of the capitalization or earnings of any subsidiary which is
an EWG or a FUCO upon the registered holding company system if Rules 53(a), (b),
or (c) are satisfied. Rule 53(a) permits the Commission to authorize the
issuance of securities to fund the acquisition of EWGs(6) if the aggregate
investment does not exceed 50% of the average consolidated retained earnings as
reported for the four most recent quarterly periods on the holding company's
Form 10-K or 10-Q. However, under Rule 53(b)(2), if the average consolidated
retained earnings for the four most recent quarterly periods have decreased by
10% from the average for the previous four quarterly periods and the aggregate
investment in EWG's exceeds two per cent of the total capital invested in
utility operations, Rule 53(a) does not apply. Currently, Conectiv has
insignificant indirect interests in EWGs, DCTC-Burney, Inc., an indirect
subsidiary of Conectiv, holds a 45% direct and indirect interest in Burney
Forest Products, a Joint Venture, which is an EWG. There has been no additional
post-merger investment in this EWG by Conectiv or a subsidiary. CEI has invested
approximately $6 million as of September 30, 1999 in two generating projects
that will be eligible facilities.
Another result of the write-downs due to electric industry restructuring
will be that, under Rule 53(b)(2), Conectiv's ability to issue securities
pursuant to Rule 53 will disappear when the investment in EWGs (and FUCOs in
which there currently is no investment) exceeds an amount equal to 2% of
Conectiv's investment in utility operations. Current projections are that the
investments in the generating facilities could reach that level by the end of
January, 2000.
Conectiv is therefore requesting an order authorizing the use of the
proceeds from the issuance of the securities for investments in EWGs aggregating
no more than $350 million through the end of the Authorization Period. As of
March 31, 2002, a $350 million investment in EWGs would be approximately 145% of
estimated average retained earnings for the preceding four quarters, but only
approximately 75% of estimated average retained earnings if the amount of ACE
retained earnings that were not allowed to Conectiv under the merger accounting
($225 million) were added to retained earnings at the end of each quarter.
In all other ways, Conectiv meets the requirements of Rule 53.
Conectiv and its subsidiaries will maintain books and records to
identify the investments in earnings from EWGs and FUCOs in which they directly
or indirectly hold an interest, thereby satisfying Rule 53(a)(2).
In addition, the books and records of each such entity will be kept in
conformity with United States generally accepted accounting principles ("GAAP"),
the financial statements will be prepared
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(6) The 50% limitation applies to investments in foreign utility companies as
well; however, Conectiv is planning no such investments.
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according to GAAP, and Conectiv undertakes to provide the Commission access to
such books and records and financial statements as it may request. No more than
2% of the employees of Conectiv's domestic public-utility companies will render
services, directly or indirectly, to any EWGs or FUCOs in which Conectiv,
directly or indirectly, has an interest, thereby satisfying Rule 53(a)(3).
Copies of this Post-effective Amendment and every certificate filed
pursuant to Rule 24 will be submitted to the New Jersey Board of Public
Utilities, the Delaware Public Service Commission, the Virginia State
Corporation Commission, and the Maryland Public Service Commission, the only
regulatory agencies having jurisdiction over the retail rates of the public
utility companies in the Conectiv System. Rule 53(a)(4) will be correspondingly
satisfied.
Conectiv requests that the Commission reserve jurisdiction over the
investment in EWGs pending completion of the record.
D. ELIMINATION OF LIMITATION ON PERMISSIBLE MONEY POOL BORROWING BY
NONUTILITIES AND ADDITION OF KING STREET ASSURANCE, LTD. TO MONEY POOL.
Under the terms of the Financing Order, the Money Pool was established to
permit Subsidiaries with excess funds to lend to the Money Pool and Subsidiaries
in need of funds to borrow from the Money Pool, thus utilizing all available
cash and limiting the System's need to use external short-term borrowing to fund
working capital needs. Only those Subsidiaries (other than Conectiv
Communications (an Exempt Telecommunications Company) and Conectiv Energy, Inc.
(an EWG)) that are specifically listed as parties to this
application/declaration may participate in the Money Pool. New subsidiaries may
only be added as participants pursuant to a Supplemental Order. Under the terms
of the Financing Order, borrowing by any one nonutility subsidiary is limited to
$25 million.
The limit on Nonutility Subsidiary borrowing has resulted in unnecessary
borrowing by the System when some Subsidiaries have money invested in the Money
Pool but other Nonutility Subsidiaries need to borrow more than $25 million. The
excess borrowing must be made directly from Conectiv with funds borrowed from
external sources while excess funds in the Money Pool are invested with third
parties. Since Conectiv guarantees the repayment of sums loaned to the Money
Pool, there is little increased risk to the lenders if the limit on Nonutility
borrowing is removed. Conectiv proposes that this limitation be eliminated.
King Street Assurance Ltd. ("KSA") is a new subsidiary that was formed as
an insurance company incorporated in Bermuda to reinsure appliance warranties
under the authority that KSA has as a subsidiary of Conectiv Solutions, Inc.(7)
Authorization is requested to add KSA to the Money Pool. To the extent that the
laws governing insurance companies in Bermuda permit excess funds to be invested
in the Money Pool, KSA would invest excess funds in the Money Pool, which would
again decrease the need for outside borrowing by the Conectiv system. The
Commission is requested to reserve jurisdiction over the addition of KSA to the
Money Pool pending completion of the record.
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(7) By Order dated August 10, 1999 (Release No. 27059) Conectiv was
authorized to transfer the ownership of ATE Investment, Inc. ("ATE") to either
Conectiv Services, Inc ("CSI") or Conectiv Solutions, Inc. ("Solutions")
depending upon whether the merger of Solutions into CSI had occurred. On August
11, 1999, Conectiv transferred all shares of Common Stock of ATE held by
Conectiv to Solutions as a capital contribution. Simultaneously, ATE formed KSA
for the purpose of reinsuring appliance warranties related to the heating, air
conditioning and ventilation business. Under the Merger Order, Solutions is
authorized to conduct such activities directly or indirectly through
subsidiaries. KSA was funded by the contribution to KSA by ATE of the limited
partnership interest in Enertech Capital Partners LP, a venture capital fund
investing in various energy-related and telecommunications technologies as also
authorized for Solutions or its subsidiaries under the terms of the Merger
Order. An application-declaration has been filed seeking authorization to expand
the reinsurance activities of KSA (File No. 70-9573).
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E. SUMMARY OF REQUESTED ACTION:
Conectiv requests that this Commission authorize:
- - Extension of the Authorization Period to March 31, 2002 for all authorities
granted in the Financing Orders and amendment of certain authorities as
described below.
- - Reduction of the Common Equity Ratio condition to all financing from 30% to
20%.
- - Increase in the amount of short-term debt that Conectiv is authorized to
have outstanding during the Authorization Period from $800 million to $1.3
billion.
- - Elimination of the $25 million maximum limitation on borrowings by
nonutilities from the Conectiv System Money Pool.
The Commission is requested to reserve jurisdiction over the following
authorities pending completion of the record:
- - An increase in the level of Conectiv's long-term debt authorization from
$500 million to $1 billion increasing the level of long-term debt subject
to the reservation of jurisdiction from $250 million to $750 million with
the understanding that to the extent that any of the incremental $500
million is eventually authorized and issued, the proceeds will be used to
pay down short-term debt.
- - Authorization for investments of up to $350 million in EWGs through the
Authorization Period.
- - The addition of KSA to the Money Pool.
(b) Describe briefly, and where practicable state the approximate amount of, any
material interest in the proposed transaction, direct or indirect, of any
associate company or affiliate of the applicant or any affiliate of any such
associate company.
Not applicable.
(c) If the proposed transaction involves the acquisition of securities not
issued by a registered holding company or a subsidiary thereof, describe briefly
the business and property, present or proposed, of the issuer of such
securities.
Not applicable.
(d) If the proposed transaction involves the acquisition or disposition of
assets, describe briefly such assets, setting forth original cost, vendor's book
cost (including the basis of determination) and applicable valuation and
qualifying reserves.
Not applicable.
Item 2. Fees, Commissions and Expenses.
Item 2(a) as previously filed is revised to read as follows:
9
<PAGE> 10
(a) The fees, commissions and expenses to be incurred, directly or
indirectly, by Conectiv or any associate company thereof in connection with the
proposed transactions are estimated as follows:
<TABLE>
<S> <C>
Fees of Conectiv Resource Partners, Inc...... $ 6,000
Fees of outside counsel............ $ 6,000
Miscellaneous expenses $ 1,000
--------
TOTAL.............................. $ 13,000
</TABLE>
Item 5. Procedure
Item 5(a) as previously filed is hereby amended to read as follows:
Conectiv requests that the Commission issue its order permitting this
application/declaration to become effective not later than December 15, 1999. A
significant amount of short-term debt is maturing on that date and Conectiv
urgently requires increased financial flexibility as the end of the year
approaches.
Item 6. Exhibits and Financial Statements.
The list of exhibits and financial statements is revised as follows:
(a) Exhibits:
A Not applicable
B Not applicable
C Not applicable
D Not applicable
E Not applicable
F Preliminary opinion of counsel (filed herewith)
G Revised Form of Federal Register notice (Previously filed.)
H-1 Comparison of Impact on Retained Earnings of Purchase versus Pooling
Accounting for Merger (Previously filed)
H-2 Conectiv Capitalization Forecast (Previously filed under
request for confidential treatment)
(b) Financial Statements (Previously filed):
FS-1 Conectiv Consolidated Balance Sheet per books and per forma, dated
September 30, 1999.
FS-2 Conectiv Consolidated Income Statement per books and per forma for the
period ended September 30, 1999
FS-3 Conectiv Consolidated Financial Data Schedule (included in electronic
submission only)
10
<PAGE> 11
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, the undersigned companies have duly caused this Post-Effective
Amendment No. 9 to Form U-1 to be signed on their behalf by the undersigned
thereunto duly authorized.
DATE: December 9, 1999 CONECTIV
DELMARVA POWER & LIGHT COMPANY
CONECTIV RESOURCE PARTNERS, INC.
CONECTIV ENERGY SUPPLY INC.
KING STREET ASSURANCE, LTD.
CONECTIV ENERGY, INC.
DELMARVA CAPITAL INVESTMENTS, INC.
CONECTIV SERVICES, INC.
CONECTIV COMMUNICATIONS, INC.
DELMARVA SERVICES COMPANY
DCI I, INC.
DCI II, INC.
DCTC-BURNEY, INC.
CONECTIV OPERATING SERVICES COMPANY
CONECTIV SOLUTIONS, LLC
CONECTIV PLUMBING, LLC
ATLANTIC CITY ELECTRIC COMPANY
ATLANTIC GENERATION, INC.
ATLANTIC SOUTHERN PROPERTIES, INC.
ATE INVESTMENT, INC.
CONECTIV THERMAL SYSTEMS, INC.
BINGHAMTON GENERAL, INC.
BINGHAMTON LIMITED, INC.
PEDRICK GEN., INC.
VINELAND LIMITED, INC.
VINELAND GENERAL, INC.
ATLANTIC JERSEY THERMAL SYSTEMS, INC.
ATS OPERATING SERVICES, INC.
By/s/Philip S. Reese
----------------------------
Philip S. Reese
Vice President and Treasurer
11
<PAGE> 1
Exhibit F-6
December 9, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D. C. 20549
Re: Conectiv
SEC File No. 70-9095
Dear Sir or Madam:
I have acted as counsel to Conectiv, a Delaware corporation
("Conectiv"), in connection with Post-Effective Amendments Nos. 7, 8 and 9 to
the Application/Declaration on Form U-1 (File No. 70-9095) (the "Amendments")
filed with the Securities and Exchange Commission ("Commission") jointly by
Conectiv, by two subsidiaries which are operating utility companies (Delmarva
Power & Light Company ("DPL") and Atlantic City Electric Company ("ACE")) and
various non-utility subsidiaries named therein ("Nonutility Subsidiaries"),
including King Street Assurance, Ltd. ("KSA") (each an "Applicant" and
collectively the "Applicants") and previously amended by Pre-Effective
Amendments Nos. 1 through 3 and Post-Effective Amendments Nos. 1 through 6 (as
so amended, the "Application").
By these Amendments, Applicants request the following:
1) An extension to March 31, 2003, of the authorization period ("Authorization
Period") for various authorities previously granted in an Order dated
February 26, 1998 (HCAR No. 26833), as supplemented by Orders dated August
21, 1998 (HCAR No. 26907), September 28, 1998 (HCAR No. 26921), October 21,
1998 (HCAR No. 26930), and November 13, 1998 (HCAR No. 26941) (the
"Financing Orders"), (1)
- ----------
(1) Authorizations contained in the Financing Orders which are requested to be
extended but not amended include: 1) Conectiv's authorization to issue up to 10
million shares of Common Stock pursuant to employee benefit plans and the
Conectiv Dividend Reinvestment Plan; 2) Conectiv's authority to issue up to $500
million of Common Stock less any long-term debt issued (since Conectiv has
issued $250 million of long-term debt, authorization remains only to issue up to
an additional $250 million aggregate value of common stock subject to further
decrease for any future long-term debt issued); 3) Conectiv's, DPL's and ACE's
authority to enter into, perform, purchase and sell financial instruments
intended to manage the volatility of interest rates; 4) Conectiv's authority to
issue other securities subject to a reservation of jurisdiction over the
additional types of securities pending completion of the record; 5) DPL's
authority to issue up to $275 million of short-term debt and DPL's and
ACE's authority to issue securities which are not exempt subject to a
reservation of jurisdiction over these additional types of
<PAGE> 2
2) Relief from the consolidated common stock equity to consolidated total
capitalization ratio standard that is a condition to all financing,
3) An increase in short-term debt authorized from $800 million to $1.3
billion,
4) Removal of the limitation on borrowings from the system money pool by
Nonutility Subsidiaries,
5) An increase in long-term debt subject to a reservation of jurisdiction,
6) An increase in permissible investments in exempt wholesale generators, and
7) Participation by KSA in the system money pool.
In Post-Effective Amendment No. 9, Conectiv requests that the Commission
reserve jurisdiction over items 5 through 7 pending completion of the record.
Items 1 through 4 shall be herein referred to as the "Proposed Transactions."
I am a member of the bar of the State of Delaware, the state in which DPL
and certain of the Nonutility Subsidiaries are incorporated or qualified to do
business. I am also a member of the bar of the Commonwealth of Virginia, a state
in which DPL is also incorporated and in which certain of the Nonutility
Subsidiaries are authorized to do business. I am not a member of the bars of the
States of New Jersey (in which ACE is incorporated) or Maryland or the
Commonwealth of Pennsylvania, states in which certain of the Nonutility
Subsidiaries are incorporated or qualified to do business. I do not hold myself
out as an expert in the laws of any state other than Delaware or Virginia,
although I have consulted and will consult with counsel to Conectiv who are
experts, in such laws. For purposes of this opinion, to the extent I deemed
necessary, I have relied on advice from counsel employed or retained by Conectiv
who are members of the bars of the States of Maryland and New Jersey and the
Commonwealth of Pennsylvania.
In connection with this opinion, I, or attorneys in whom I have confidence,
have examined originals or copies, certified or otherwise identified to my
satisfaction, of such
- ----------
securities pending completion of the record; 6) Nonutility Subsidiaries'
authority to issue securities which are not exempt subject to a reservation of
jurisdiction over the issuance of additional types and amounts of securities
that are not exempt under Rule 52 (b) pending completion of the record; 7)
Conectiv's authority to enter into guarantees or otherwise provide credit
support with respect to the obligations of subsidiaries in an amount not to
exceed $350 million except to the extent exempt under Rule 45 under the Act and
Nonutility Subsidiaries' authority to provide credit support to each other, in
an aggregate amount not to exceed $100 million; 8) Nonutility Subsidiaries'
(wholly-owned) authority to change authorized capital stock and to issue
dividends out of capital without further authorization of the Commission; 9)
Conectiv's, DPL's and ACE's authority to organize new corporations, trusts,
partnerships or other entities for the purpose of facilitating financings.
2
<PAGE> 3
records of Conectiv and such other documents, certificates and corporate or
other records as I have deemed necessary or appropriate as a basis for the
opinions set forth herein. In my examination, I or they have assumed the
genuineness of all signatures, the legal capacity of all persons, the
authenticity of all documents submitted to me as originals, the conformity to
original documents of documents submitted to me as certified or photostatic
copies and the authenticity of the originals of such copies. As to various
questions of fact material to such opinions, I have relied, when relevant facts
were not independently established, upon statements contained in the
Application.
The opinions expressed below in respect of the proposed issuance of
securities are subject to the following assumptions, qualifications,
limitations, conditions and exceptions:
(a) The issuance of securities shall have been duly authorized and
approved to the extent required by the governing documents of
Conectiv and applicable state laws by the Board of Directors of
Conectiv and any consideration to be received in exchange for issuance
of the securities as provided in such resolutions shall have been
received and the securities properly executed and issued as provided
in said resolutions.
(b) The Commission shall have duly entered an appropriate order or orders
granting and permitting the Application, as amended by the Amendments,
to become effective under the Act and the rules and regulations
thereunder and the Proposed Transactions are consummated in accordance
with Application as amended by the Amendments.
(c) If any Conectiv securities are issued in a public offering,
registration statements shall have become effective pursuant to the
Securities Act of 1933, as amended; no stop order shall have been
entered with respect thereto; and the issuance of the securities shall
have been consummated in compliance with the Securities Act of 1933,
as amended, and the rules and regulations thereunder.
(d) Conectiv shall have obtained all consents, waivers and releases, if
any, required for the issuance of long-term debt under all applicable
governing documents, contracts, agreements, debt instruments,
indentures, franchises, licenses and permits.
(e) No act or event other than as described herein shall have occurred
subsequent to the date hereof which would change the opinions
expressed above.
Based on the foregoing, and subject to the assumptions and conditions
set forth herein, I am of the opinion that, in the event the Proposed
Transactions are consummated in accordance with the Application as amended by
the Amendments:
3
<PAGE> 4
1. All state laws applicable to the Proposed Transaction will have been
complied with; however, I express no opinion as to the need to comply
with state blue-sky laws.
2. Conectiv is and each Applicant other than Conectiv issuing securities
including securities issued to the money pool will, at the time of
such issuance or sale, be validly organized and duly existing under
the laws of the jurisdiction in which the Conectiv or such Applicant
is domiciled.
3. Any short-term debt security issued by Conectiv and any debt security
issued by an Applicant to the money pool or otherwise will be a valid
and binding obligation of the issuer in accordance with its terms,
except to the extent such enforceability may be limited (i) by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors; rights generally
or (ii) by applicable principles of equity (regardless of whether such
principles are applied in a proceeding at law or in equity).
4. The consummation of the Proposed Transactions will not violate the
legal rights of the holders of any securities issued by any Applicant
or any associate company thereof.
I hereby consent to the use of this opinion in connection with the
Application.
Very truly yours,
Peter F. Clark
4
<PAGE> 1
Exhibit FS-1
------------
CONECTIV AND SUBSIDIARIES
ACTUAL AND PRO FORMA CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 1999
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Pro Forma
Actual Adjustments Pro Forma
----------- ------------ -----------
ASSETS
<S> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 139,553 $ 706,468 (1) $ 846,021
Accounts receivable 514,209 -- 514,209
Allowance for Doubtful Accounts (11,274) -- (11,274)
Inventories, at average cost:
Fuel (coal, oil, and gas) 64,142 -- 64,142
Materials and supplies 51,709 -- 51,709
Prepaid New Jersey sales and excise taxes 17,134 -- 17,134
Deferred energy costs 22,724 -- 22,724
Other prepayments 18,095 -- 18,095
Deferred income taxes, net 44,260 -- 44,260
----------- ----------- -----------
860,552 706,468 1,567,020
----------- ----------- -----------
INVESTMENTS
Investment in leveraged leases 73,440 -- 73,440
Funds held by trustee 180,029 -- 180,029
Other investments 133,832 -- 133,832
----------- ----------- -----------
387,301 -- 387,301
----------- ----------- -----------
PROPERTY, PLANT, and EQUIPMENT
Electric generation 1,775,763 -- 1,775,763
Electric transmission and distribution 2,608,769 -- 2,608,769
Gas transmission and distribution 255,990 -- 255,990
Other electric and gas facilities 374,074 -- 374,074
Telecommunications, thermal systems, and other property,
plant, and equipment 225,356 -- 225,356
----------- ----------- -----------
5,239,952 -- 5,239,952
Less: Accumulated depreciation 2,121,662 -- 2,121,662
----------- ----------- -----------
Net plant in service 3,118,290 -- 3,118,290
Construction work-in-progress 211,069 -- 211,069
Leased nuclear fuel, at amortized cost 55,293 -- 55,293
Goodwill, net 370,121 -- 370,121
----------- ----------- -----------
3,754,773 -- 3,754,773
----------- ----------- -----------
DEFERRED CHARGES AND OTHER ASSETS
Recoverable stranded costs 703,669 -- 703,669
Deferred recoverable income taxes 90,900 -- 90,900
Unrecovered purchased power costs 33,965 -- 33,965
Unrecovered New Jersey state excise tax 28,424 -- 28,424
Deferred debt refinancing costs 21,671 -- 21,671
Deferred other postretirement benefit costs 33,104 -- 33,104
Prepaid employee benefits costs 30,000 -- 30,000
Unamortized debt expense 27,915 -- 27,915
License fees 23,675 -- 23,675
Other 36,196 -- 36,196
----------- ----------- -----------
1,029,519 -- 1,029,519
----------- ----------- -----------
TOTAL ASSETS $ 6,032,145 $ 706,468 $ 6,738,613
=========== =========== ===========
</TABLE>
<PAGE> 2
Exhibit FS-1
------------
CONECTIV AND SUBSIDIARIES
ACTUAL AND PRO FORMA CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 1999
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Pro Forma
Actual Adjustments Pro Forma
------------ ------------ -----------
<S> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
CURRENT LIABILITIES
Short-term debt $ 623,532 $ 706,468 (1) $ 1,330,000
Long-term debt due within one year 67,019 -- 67,019
Variable rate demand bonds 158,430 -- 158,430
Accounts payable 256,368 -- 256,368
Taxes accrued 97,707 -- 97,707
Interest accrued 46,245 -- 46,245
Dividends payable 28,258 -- 28,258
Deferred energy costs 53,422 -- 53,422
Current capital lease obligation 28,033 -- 28,033
Above-market purchased energy contracts 25,885 -- 25,885
Excess Merrill Creek Reservoir capacity and other
electric restructuring liabilities 27,773 -- 27,773
Other 87,229 -- 87,229
----------- ----------- -----------
1,499,901 706,468 2,206,369
----------- ----------- -----------
DEFERRED CREDITS AND OTHER LIABILITIES
Other postretirement benefits obligation 97,522 -- 97,522
Deferred income taxes, net 703,154 -- 703,154
Deferred investment tax credits 75,705 -- 75,705
Regulatory liability for New Jersey income tax benefit 40,831 -- 40,831
Long-term capital lease obligation 28,452 -- 28,452
Above-market purchased energy contracts 57,222 -- 57,222
Excess Merrill Creek Reservoir capacity and other
electric restructuring liabilities 64,108 -- 64,108
Other 54,391 -- 54,391
----------- ----------- -----------
1,121,385 -- 1,121,385
----------- ----------- -----------
CAPITALIZATION
Common stock: $0.01 par value;
150,000,000 shares authorized; shares outstanding--
87,742,313 actual and pro forma 1,020 -- 1,020
Class A common stock, $0.01 par value;
10,000,000 shares authorized; shares outstanding--
5,742,604 actual and pro forma 57 -- 57
Additional paid-in capital--common stock 1,473,135 -- 1,473,135
Additional paid-in capital--Class A common stock 93,742 -- 93,742
Retained earnings 14,389 -- 14,389
----------- ----------- -----------
1,582,343 -- 1,582,343
Treasury shares, at cost:
14,242,773 shares actual and pro forma (362,365) -- (362,365)
Unearned compensation (1,868) -- (1,868)
----------- ----------- -----------
Total common stockholders' equity 1,218,110 -- 1,218,110
Preferred stock of subsidiaries:
Not subject to mandatory redemption 95,933 -- 95,933
Subject to mandatory redemption 188,950 -- 188,950
Long-term debt 1,907,866 -- 1,907,866
----------- ----------- -----------
3,410,859 -- 3,410,859
----------- ----------- -----------
TOTAL CAPITALIZATION AND LIABILITIES $ 6,032,145 $ 706,468 $ 6,738,613
=========== =========== ===========
</TABLE>
<PAGE> 1
Exhibit FS-2
------------
CONECTIV AND SUBSIDIARIES
ACTUAL AND PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 1999
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Pro Forma
Actual Adjustments Pro Forma
------------- ------------ -------------
OPERATING REVENUES
<S> <C> <C> <C>
Electric $ 2,402,736 $ - $ 2,402,736
Gas 835,153 - 835,153
Other services 463,085 - 463,085
------------- ------------ -------------
3,700,974 - 3,700,974
------------- ------------ -------------
OPERATING EXPENSES
Electric fuel and purchased energy 925,049 - 925,049
Gas purchased 779,831 - 779,831
Other services' cost of sales 361,597 - 361,597
Purchased electric capacity 218,013 - 218,013
Special charges 106,278 - 106,278
Operation and maintenance 606,568 - 606,568
Depreciation 269,948 - 269,948
Taxes other than income taxes 83,393 - 83,393
------------- ------------ -------------
3,350,677 - 3,350,677
------------- ------------ -------------
OPERATING INCOME 350,297 - 350,297
------------- ------------ -------------
OTHER INCOME
Allowance for equity funds used
during construction 2,384 - 2,384
Other income 60,585 - 60,585
------------- ------------ -------------
62,969 - 62,969
------------- ------------ -------------
INTEREST EXPENSE
Interest charges 175,324 42,388 (2) 217,712
Allowance for borrowed funds used during
construction and capitalized interest (5,177) - (5,177)
------------- ------------ -------------
170,147 42,388 212,535
------------- ------------ -------------
PREFERRED STOCK DIVIDEND
REQUIREMENTS OF SUBSIDIARIES 17,105 - 17,105
------------- ------------ -------------
INCOME BEFORE INCOME TAXES AND
EXTRAORDINARY ITEM 226,014 (42,388) 183,626
INCOME TAXES, EXCLUDING INCOME TAXES
APPLICABLE TO EXTRAORDINARY ITEM 101,554 (16,955) (3) 84,599
------------- ------------ -------------
INCOME BEFORE EXTRAORDINARY ITEM 124,460 (25,433) 99,027
EXTRAORDINARY ITEM (Net of $160,193 of income taxes) (271,106) - (271,106)
------------- ------------ -------------
NET INCOME (LOSS) $ (146,646) $ (25,433) $ (172,079)
============= ============ ==============
EARNINGS (LOSS) APPLICABLE TO:
Common stock
Income before extraordinary item $ 114,056 $ (25,433) $ 88,623
Extraordinary item, net of income taxes (266,053) - (266,053)
------------- ------------ -------------
Total $ (151,997) $ (25,433) $ (177,430)
Class A common stock
Income before extraordinary item $ 10,404 - $ 10,404
Extraordinary item, net of income taxes (5,053) - (5,053)
------------- ------------ -------------
Total $ 5,351 $ - $ 5,351
============= ============ =============
COMMON STOCK
Average shares outstanding (000)
Common stock 96,739 96,739
Class A common stock 6,316 6,316
Earnings (Loss) per average share--basic and diluted
Common stock
Before extraordinary item $1.18 $0.92
Extraordinary item (2.75) (2.75)
------------- -------------
Total ($1.57) ($1.83)
============= =============
Class A common stock
Before extraordinary item $1.65 $1.65
Extraordinary item (0.80) (0.80)
------------- -------------
Total $0.85 $0.85
============= =============
Dividends declared per share
Common stock $1.21 $1.21
Class A common stock 3.20 3.20
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
PRO FORMA NOTES Exhibit FS-2
- --------------- ------------
($000's)
----------------
<S> <C>
(1) Represents the issuance of short-term debt in the amount necessary to
bring Conectiv up to the $1.3 billion limit being requested (total
Conectiv consolidated short-term debt is increased to $1.33 billion since
the Atlantic City Electric Company has $30 million of short-term debt that
is not included under the financing order dated February 26, 1998 (HCAR
No. 26833).
(2) Represents the yearly interest expense on the additional short-term debt at 6%. $ 706,468
6%
-----------------
$ 42,388
=================
(3) Represents the tax effect of the additional interest expense. $ 42,388
40%
-----------------
$ 16,955
=================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> SEP-30-1999 SEP-30-1999
<PERIOD-END> SEP-30-1999 SEP-30-1999
<BOOK-VALUE> PER-BOOK PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 2,869,791 2,869,791
<OTHER-PROPERTY-AND-INVEST> 635,800 635,800
<TOTAL-CURRENT-ASSETS> 860,552 1,567,020
<TOTAL-DEFERRED-CHARGES> 1,028,519 1,028,519
<OTHER-ASSETS> 636,483 636,483
<TOTAL-ASSETS> 6,032,145 6,738,613
<COMMON> 1,077 1,077
<CAPITAL-SURPLUS-PAID-IN> 1,566,677 1,566,677
<RETAINED-EARNINGS> 14,389 14,389
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,218,110 1,218,110
188,950 188,950
95,933 95,933
<LONG-TERM-DEBT-NET> 1,907,866 1,907,866
<SHORT-TERM-NOTES> 623,532 1,330,000
<LONG-TERM-NOTES-PAYABLE> 0 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0 0
<LONG-TERM-DEBT-CURRENT-PORT> 67,019 67,019
0 0
<CAPITAL-LEASE-OBLIGATIONS> 28,452 28,452
<LEASES-CURRENT> 28,033 28,033
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,874,250 1,874,250
<TOT-CAPITALIZATION-AND-LIAB> 6,032,145 6,738,613
<GROSS-OPERATING-REVENUE> 3,700,974 3,700,974
<INCOME-TAX-EXPENSE> 101,554 64,599
<OTHER-OPERATING-EXPENSES> 3,350,677 3,350,677
<TOTAL-OPERATING-EXPENSES> 3,462,231 3,435,276
<OPERATING-INCOME-LOSS> 246,743 265,898
<OTHER-INCOME-NET> 62,989 62,989
<INCOME-BEFORE-INTEREST-EXPEN> 311,712 328,667
<TOTAL-INTEREST-EXPENSE> 187,252 229,640
<NET-INCOME> (146,646) (172,079)
0 0
<EARNINGS-AVAILABLE-FOR-COMM> (146,646) (172,079)
<COMMON-STOCK-DIVIDENDS> 135,690 135,690
<TOTAL-INTEREST-ON-BONDS> 0 0
<CASH-FLOW-OPERATIONS> 0 0
<EPS-BASIC> (1.57) (1.83)
<EPS-DILUTED> (1.57) (1.83)
</TABLE>
