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File No. 70-9499
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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Post-Effective Amendment No. 3
To
FORM U-1
DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
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Conectiv
Atlantic City Electric Company
Delmarva Power & Light Company
800 King Street
Wilmington, DE 19899
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(Name of company filing this statement
and address of principal executive offices)
Conectiv
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(Name of top registered holding company parent)
Philip S. Reese
Vice President and 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, Esquire Joyce Koria Hayes, Esquire
General Counsel 7 Graham Court
Conectiv Newark, DE 19711
(address above)
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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.
On May 10, 1999, Conectiv's Board of Directors initiated steps to
reduce the Conectiv Common Stock dividend and recapitalize its balance sheet.
The dividend policy was not changed for the Conectiv Class A Common Stock,
subject to declaration by the Conectiv Board of Directors. The Common Stock
quarterly dividend per share was reduced from $0.385 to an intended level of
$0.22, effective with the dividend declared on June 29, 1999. Under this new
policy, Conectiv is targeting a payout ratio of 40% to 60%, which is believed to
be more consistent with companies operating in a competitive environment, and
transitions Conectiv away from the traditionally higher dividend payout ratios
typical of the regulated utility industry.
In this filing under Section 12(c) of the Public Utility Holding
Company Act of 1935, as amended (the "Act"), Conectiv, a Delaware corporation
and registered public utility holding company, requested authority to pay
dividends out of capital or unearned surplus with respect to its common stock
and Class A common stock for up to six quarters in amounts that would aggregate
up to approximately $144 million ("Conectiv Dividends"), Atlantic City Electric
Company, a utility subsidiary incorporated in New Jersey ("ACE"), requested
authority to pay dividends out of capital or unearned surplus to preferred
stockholders and to Conectiv as the holder of ACE common stock for up to four
quarters in amounts that would aggregate up to approximately $52 million ("ACE
Dividends"), and Delmarva Power & Light Company, a utility subsidiary
incorporated in Delaware and Virginia ("Delmarva") requested authority to pay
dividends out of capital or unearned surplus to preferred stockholders and to
Conectiv as the holder of Delmarva common stock for up to four quarters in
amounts that would aggregate up to approximately $52.4 million ("Delmarva
Dividends"). A notice of the proposed transaction was issued under Release No.
35-27033 dated May 28, 1999. By order dated September 27, 1999, Conectiv was
authorized to pay the dividend that would normally be declared on September 28,
1999 of approximately $24 million (the "Third Quarter Dividend") out of capital
or unearned surplus. Jurisdiction was reserved over the payment of Conectiv
Dividends, other than the Third Quarter Dividend, pending completion of state
restructuring proceedings in Delaware, Maryland and New Jersey and a
determination of the impact of those proceedings on Conectiv's retained
earnings. Jurisdiction was also reserved over the payment of ACE Dividends and
Delmarva Dividends pending completion of state restructuring proceedings and a
determination of the impact of those proceedings on the utility companies'
retained earnings.
When the accounting for the Third Quarter was closed so that financial
statements could be prepared, the write-downs due to the implementation of state
electric industry restructuring legislation were sufficiently low and the income
of the third quarter sufficiently high that the Third Quarter Dividend could be
paid from current and retained earnings and the Consolidated Retained Earnings
Balance as of September 30, 1999 was approximately $14 million. The authority
granted
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in the September 27 order was neither needed nor utilized. A further write-down
of the value of certain of Conectiv's fossil-fueled facilities to be sold was
required effective December 31, 1999 resulting in an accumulated deficit.
Therefore, Conectiv requested and this Commission authorized Conectiv to pay up
to $24 million in dividends out of capital or unearned surplus applicable to the
dividend declared on December 7, 1999 and payable on January 31, 2000 ("Fourth
Quarter Dividends"). Conectiv requested that jurisdiction continued to be
reserved over future Conectiv Dividends other than Fourth Quarter Dividends and
that jurisdiction continued to be reserved over ACE Dividends and Delmarva
Dividends pending completion of state restructuring proceedings and a
determination of the impact of those proceedings on the companies' retained
earnings.
Exhibit H-3, which is filed herewith pursuant to a request for
confidential treatment, demonstrates that Conectiv projects that it should be
paying dividends out of retained earnings by the third quarter of 2000.
As shown on Exhibit H-1 filed with the original declaration in this
file, had Conectiv been able to use pooling rather than purchase accounting in
connection with the merger that formed the System, the ACE retained earnings
would not have been excluded from Conectiv's consolidated retained earnings and
this filing would not have been required. Conectiv's retained earnings would
have been approximately $225 higher and better able to absorb the write-downs
that have occurred.
Conectiv requests that it be authorized to pay up to $24 million in
dividends normally payable at the end of April 2000 (the "First Quarter 2000
Dividend") and up to $24 million in dividends normally payable at the end of
July 2000 (the "Second Quarter 2000 Dividend") out of capital or unearned
surplus and that the Commission continue to reserve jurisdiction over future
Conectiv Dividends other than First Quarter 2000 Dividend and the Second Quarter
2000 Dividend and that jurisdiction continued to be reserved over ACE Dividends
and Delmarva Dividends pending completion of state restructuring proceedings and
a determination of the impact of those proceedings on the companies' retained
earnings.
STATEMENT PURSUANT TO RULE 54. Rule 54 promulgated under the Act states that in
determining whether to approve the issue or sale of a security by a registered
holding company for purposes other than the acquisition of an 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. Conectiv is in compliance
with Rules 53(a), (b) and (c).
Rule 53(a) permits the Commission to authorize the issuance of
securities to fund the acquisition of EWGs or FUCOs 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. Conectiv's current investment in EWGs is less than 50% of average
consolidated retained earnings as reported for the four most recent quarterly
periods.
Conectiv has two 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
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EWG by Conectiv or any subsidiary. Conectiv Energy, Inc. is in the process of
developing two new combustion turbine generation facilities. As of March 24,
2000, the Company's investment in EWGs totaled $23 million.
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 according to GAAP, and Conectiv
undertakes to provide the Commission access to such books and records and
financial statements as it may request. Employees of Conectiv's domestic
public-utility companies will not render services, directly or indirectly, to
any EWGs or FUCOs in the Conectiv System, thereby satisfying Rule 53(a)(3).
Conectiv, in connection with any Form U-1 seeking approval of EWG and
FUCO financing, will submit copies of such Form U-1 and every certificate filed
pursuant to Rule 24 with every federal, state or local regulator having
jurisdiction over the retail rates of the public utility companies in the
Conectiv System. Rule 53(a)(4) will be correspondingly satisfied.
(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.
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:
Fees of Conectiv Resource Partners, Inc...... $ 500
Fees of outside counsel...................... $ 480
Miscellaneous expenses....................... $ 500
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TOTAL........................................ $ 1,480
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(b) If any person to whom fees or commissions have been or are to be paid
in connection with the proposed transaction is an associate company or an
affiliate of the applicant or declarant, or is an affiliate of an associate
company, set forth the facts with respect thereto.
The financial statements and other portions of this post-effective
amendment were prepared by personnel of Conectiv Resource Partners, Inc., whose
time will be allocated to Conectiv at cost as appropriate.
Item 3. Applicable Statutory Provisions
(a) State the sections of the Act and the rules thereunder believed to be
applicable to the proposed transaction. If any section or rule would be
applicable in the absence of a specific exemption, state the basis of exemption.
Section 12 (c) and Rule 46 (a) are applicable to the proposed dividends out
of capital and unearned surplus by Conectiv, ACE and Delmarva.
(b) If an applicant is not a registered holding company or a subsidiary
thereof, state the name of each public utility company of which it is an
affiliate, or of which it will become an affiliate as a result of the proposed
transactions, and the reasons why it is or will become such an affiliate.
Not applicable.
Item 4. Regulatory Approval.
(a) State the nature and extent of the jurisdiction of any State commission
or any Federal commission (other than the Securities and Exchange Commission)
over the proposed transaction.
No other regulatory agency has jurisdiction over the proposed transaction.
(b) Describe the action taken or proposed to be taken before any commission
named in answer to paragraph (a) of this item in connection with the proposed
transaction
Not applicable.
Item 5. Procedure.
(a) State the date when Commission action is requested. If the date is less
than 40 days from the date of the original filing, set forth the reasons for
acceleration.
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Conectiv requests that the Commission issue an order granting this
Application no later than March 28, 2000.
(b) State (i) whether there should be a recommended decision by a hearing
officer, (ii) whether there should be a recommended decision by any other
responsible officer of the Commission, (iii) whether the Division of Corporate
Regulation may assist in the preparation of the Commission's decision, and (iv)
whether there should be a 30-day waiting period between the issuance of the
Commission's order and the date on which it is to become effective.
Conectiv waives a recommended decision by a hearing officer or other
responsible officer of the Commission; consents that the Staff of the Division
of Investment Management may assist in the preparation of the Commission's
order; and requests that there be no waiting period between the issuance of the
Commission's order and its effectiveness.
Item 6. Exhibits and Financial Statements.
(a) Exhibits:
A Not applicable
B Not applicable
C Not applicable
D Not applicable
E Not applicable
F -3 Opinion of counsel
G Not Applicable
H-3 Revised Projection (Filed under request for confidential treatment)
Item 7. Information as to Environmental Effects.
(a) Describe briefly the environmental effects of the proposed transaction
in terms of the standards set forth in Section 102(2)(C) of the National
Environmental Policy Act (42 U.S.C. 4312(2)(C)). If the response to this item is
a negative statement as to the applicability of Section 102(2)(C) in connection
with the proposed transaction, also briefly state the reasons for that response.
The Commission's action in this matter will not constitute major
federal action significantly affecting the quality of the human environment.
(b) State whether any other federal agency has prepared or is preparing an
environmental impact statement ("EIS") with respect to the proposed transaction.
If any other Federal agency has prepared or is preparing an EIS, state which
agency or agencies and indicate the status of that EIS preparation.
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No other federal agency has prepared or is preparing an environmental
impact statement with regard to the proposed transactions.
SIGNATURE
Pursuant to the requirements of the Act, the undersigned companies have
duly caused this amended Application to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: March 24, 2000
Conectiv
By: /s/ Philip S. Reese
Vice President and Treasurer
Atlantic City Electric Company
By /s/ Philip S. Reese
Vice President and Treasurer
Delmarva Power & Light Company
By: /s/ Philip S. Reese
Vice President and Treasurer
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Exhibit F-3
March 24, 2000
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D. C. 20549
Re: Conectiv
SEC File No. 70-9499
Dear Sir or Madam:
As General Counsel for Conectiv, a Delaware corporation ("Conectiv"), I
have acted as counsel to Conectiv in connection with Post-Effective Amendment
No. 3 to the Application/Declaration on Form U-1 (File No. 70-9499) (the
"Amendment") filed with the Securities and Exchange Commission ("Commission")
jointly by Conectiv and two of its subsidiaries which are operating utility
companies (Delmarva Power & Light Company ("DPL") and Atlantic City Electric
Company ("ACE")) and previously amended by Pre-Effective Amendment No. 1 and
Post-Effective Amendments No. 1 and 2 (as so amended, the "Application").
By Post-Effective Amendment No.3, Conectiv requests that the Commission
authorize the payment by Conectiv of dividends on Common Stock and Class A
Common Stock aggregating up to $24 million in dividends normally payable at the
end of April 2000 and up to $24 million in dividends normally payable at the end
of July 2000 out of capital or unearned surplus (hereinafter referred to as the
"Proposed Transactions"). I am also familiar with the order of the Commission
dated September 27, 1999 (HCAR No. 35-27079) authorizing the payment out of
capital of up to $24 million in dividends normally declared on September
28,1999, and the order of January 28, 2000 making the previous authorization
applicable to the dividend payable on January 31, 2000.
I am a member of the bar of the State of Delaware, the state in which
Conectiv is incorporated or qualified to do business. 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 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 with respect to the Proposed Transactions
are subject to the following assumptions, qualifications, limitations,
conditions and exceptions:
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(a) The Commission shall have duly entered an appropriate order or orders
granting and permitting the Application, as amended by the Amendment,
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 Amendment.
(b) No act or event other than as described herein shall have occurred
subsequent to the date hereof which would change the opinions expressed
above.
(c) Appropriate corporate action will have been taken by Conectiv to
authorize the Proposed Transactions.
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 is consummated in accordance with the Application as amended by the
Amendment:
1) All state laws applicable to the Proposed Transactions will have been
complied with; and
2) 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,
/s/ Peter F. Clark
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