File No. 70-9545
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
Amendment No. 3
To
FORM U-1
APPLICATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Energy East Corporation
P.O. Box 1196
Stamford, Connecticut 06904-1196
and
Merger Co.
c/o Energy East Corporation
P.O. Box 1196
Stamford, Connecticut 06904-1196
(Name of company or companies filing this statement and address of
principal executive offices)
Kenneth M. Jasinski
Executive Vice President and General Counsel
c/o Energy East Corporation
P.O. Box 1196
Stamford, Connecticut 06904-1196
Telephone: (203) 325-0690
(Names and addresses of agents for service)
Copies to:
Frank Lee, Esq. Adam Wenner, Esq.
Huber Lawrence & Abell Vinson & Elkins
605 Third Avenue 1455 Pennsylvania Avenue, N.W.
New York, New York 10158 Washington, D.C. 20004
Telephone: (212) 682-6200 Telephone: (202) 639-6500
Energy East Corporation ("Energy East") hereby amends its
Application on Form U-1, File No. 70-9545, as previously amended
by Amendment No.1 filed December 8, 1999, and Amendment No. 2
filed December 17, 1999, as follows:
1. By adding the following paragraph at the end of Item 1.B.1
(Description of Energy East and Subsidiaries):
For the twelve months ended September 30, 1999, Energy
East's consolidated gross operating revenues were approximately
$2,348,310,000. Consolidated assets of Energy East and its
subsidiaries as of September 30, 1999, were approximately $4
billion, consisting of $2.1 billion in net utility plant and $1.9
billion in other utility and nonutility assets. Energy East had
115,877,728 and 113,227,228 shares of common stock outstanding at
June 30, 1999, and September 30, 1999, respectively.
2. By adding the following paragraph after the second paragraph of
Item 1.B.2 (Description of Connecticut Energy and Subsidiaries):
For the twelve months ended September 30, 1999, Connecticut
Energy's consolidated gross operating revenues were approximately
$228,296,000. Consolidated assets of Connecticut Energy and its
subsidiaries as of September 30, 1999, were approximately $475
million, consisting of $278 million in net utility plant and $197
million in other utility and nonutility assets. Connecticut
Energy had 10,387,615 and 10,362,127 shares of common stock
outstanding at June 30, 1999, and September 30, 1999,
respectively.
3. By adding the following paragraphs at the end of Item
3.A.2.b(iii) (Economies and Efficiencies):
Energy East and Connecticut Energy are in the process of
identifying additional opportunities for the combined company to
achieve administrative savings in such areas as accounting, tax,
purchasing, legal, planning, human resources (including employee
benefits plan management), information services, financial
services, and regulatory relations.
(a) Corporate Operations
The companies anticipate Transaction-related savings in
areas where costs are relatively fixed and do not vary with an
increase or decrease in the number of customers served. These
areas include legal services, finance, sales, support services,
customer service, accounting, human resources and information
services.
(b) Administration
Savings will be realized through cost avoidance in those
areas where Energy East and Connecticut Energy incur many costs
for items which relate to the operation of each company, but
which are not directly attributable to customers. Eight such
areas have been identified: administrative and general overhead;
benefits administration; insurance; shareholder services;
advertising; association dues; directors' fees; and vehicles.
Achieving cost savings through greater efficiencies will permit
each of the operating utilities to offer more competitively-
priced natural gas service and energy-related products and
services than would otherwise be possible.
(c) Non-Gas Supply Purchasing Economies
Savings will be realized through increased order quantities
and the enhanced utilization of inventory for materials and
supplies. Currently, Energy East and Connecticut Energy
independently maintain separate purchasing departments
responsible for maintaining materials and supplies used by
employees at various locations. In addition, both companies
procure contract services independently. As a direct result of
the Transaction, savings can be realized through the procurement
of both materials and services, as well as in costs associated
with the maintenance of inventory levels.
(d) Gas Supply
As discussed in more detail above, savings will be realized
through the bundling of natural gas purchases in the form of
larger quantities or volumes. It is anticipated that Energy East
will be able to take advantage of commodity savings based on
higher total volumes of natural gas acquisition.
Savings from these sources will be offset by the costs that
must be incurred for activities essential to achieving the
savings. The companies have formed a Transition Steering Team,
which will diligently pursue ways in which to avoid or minimize
such offsetting costs.
(e) Additional Expected Benefits
In addition to the benefits described above, there are other
benefits which, while presently difficult to quantify, are
nonetheless substantial. These other benefits include:
- Increased Scale-- As competition intensifies within the
natural gas industry, the companies believe scale will be one
dimension that will contribute to overall business success.
Scale has importance in many areas, including utility
operations, product development, advertising and corporate
services. The Transaction is expected to improve the
profitability of the combined company by adding approximately
158,000 customers to Energy East's existing customer base and
providing increased economies of scale in all of these areas.
- More Balanced Customer Base-- The Transaction will create a
larger company with a more diverse customer base. This should
reduce Energy East's exposure to adverse changes in any
sector's economic and competitive conditions.
- Financial Flexibility-- By creating a company with a larger
market capitalization, the Transaction should improve Energy
East's overall credit quality and liquidity of the securities
and therefore improve Energy East's ability to fund continued
growth.
- Regional Platform for Growth-- The combination of Energy
East and Connecticut Energy will help to create a regional
platform for growth in the northeastern United States. Energy
East plans to expand relationships with existing customers and
to develop relationships with new customers in the region.
Energy East will use its combined distribution channels to
market a portfolio of energy-related products throughout the
region and will follow regional relationships to other
geographical areas.
SIGNATURE
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, the undersigned companies have duly caused
this Amendment No. 3 to be signed on their behalf by the
undersigned thereunto duly authorized.
Energy East Corporation
Date: December 22, 1999 By /s/ Kenneth M. Jasinski
Kenneth M. Jasinski
Executive Vice President
and General Counsel
Merger Co.
Date: December 22, 1999 By /s/ Kenneth M. Jasinski
Kenneth M. Jasinski
Vice President, Secretary
and Treasurer
