Exhibit H-5
Retention of Non-Utility Business
The following is a description of the specific bases under which the
non-utility investments of CMP Group, CTG Resources, Berkshire Energy and Energy
East may be retained in the post-Merger Energy East holding company system:
A. ENERGY CONSERVATION AND DEMAND-SIDE MANAGEMENT SERVICES:
The business activities of the following companies are energy-related
activities within the meaning of Rule 58(b)(1)(i), involving "the rendering of
energy conservation and demand-side management services." Accordingly, the
following interests are retainable under Section 11(b)(1) of the Act (1)
1. KENETECH Energy Management, Inc. ("KENETECH"), a wholly-owned
subsidiary of XENERGY Inc., which is an energy services company
specializing in energy management;
2. KEM 1991, Inc. ("KEM 1991"), a wholly-owned subsidiary of KENETECH,
which is an energy services company specializing in energy management;
3. KEM Partners 1991, L.P., which is an energy services company
specializing in energy management. All of its interests are owned by
KENETECH and KEM 1991.
B. DEVELOPMENT AND COMMERCIALIZATION OF ELECTROTECHNOLOGIES:
The business activities of the following companies are energy-related
activities within the meaning of Rule 58(b)(1)(ii), involving "the development
and commercialization of electrotechnologies related to energy conservation,
storage and conversion, energy efficiency, waste treatment, greenhouse gas
reduction, and similar innovations." See also New Century Energies, HCAR No.
26748 (Aug. 1, 1997). Accordingly, such companies are retainable under Section
11(b)(1) of the Act:
---------------
1 Rule 58 explicitly permits indirect investment in energy-related companies
through project parents. Although Rule 58 was adopted pursuant to Section
9(c)(3) of the Act, businesses permissible under the rule are retainable under
Section 11. See Michigan Consolidated Gas Co., 44 S.E.C. 361 (1970), aff'd,
444 F.2d 931 (D.C. Cir. 1971) (Section 9(c)(3) may not be used to circumvent
Section 11).
1
<PAGE>
1. CNE Venture-Tech, Inc., a wholly-owned subsidiary of Connecticut
Energy, which invests in ventures that produce or market
technologically advanced energy-related products;
2. Nth Power Technologies Fund I, L.P., which invests in companies that
develop, produce and market innovative energy-related products. CNE
Venture-Tech owns a 7.8884 percent limited partnership interest in Nth
Power Technologies Fund I, L.P.;
C. BROKERING AND MARKETING OF ENERGY COMMODITIES:
The business activities of the following companies, either directly or
through subsidiaries, are energy-related activities within the meaning of Rule
58(b)(1)(v), involving "the brokering and marketing of energy commodities,
including but not limited to electricity or natural or manufactured gas or other
combustible fuels." See also New Century Energies, Inc. HCAR No. 26784 (Aug. 1,
1997); SEI Holdings, Inc., HCAR No. 26581 (Sept. 26, 1996); Northeast Utilities,
HCAR No. 26654 (Aug. 13, 1996); UNITIL Corp., HCAR No. 26257 (May 31, 1996); New
England Electric System, HCAR No. 26520 (May 23, 1996); and Eastern Utilities
Associates, HCAR No. 26493 (March 14, 1996). Accordingly, the following
interests are retainable under Section 11(b)(1) of the Act:
1. Energy East Solutions, Inc., a wholly-owned subsidiary of XENERGY
Enterprises, which markets electricity and natural gas to end-users
and provides wholesale commodities to retail electric suppliers in the
Northeast;
2. NYSEG Solutions, Inc., a wholly-owned subsidiary of Energy East
Solutions, Inc., which markets electricity and natural gas to
end-users and provides wholesale commodities to retail electric
suppliers in the State of New York;
3. South Jersey Energy Solutions, LLC, a partially-owned subsidiary of
Energy East Solutions, Inc., which was formed to market retail
electricity and energy management services in the mid-Atlantic region
of the United States;
4. CNE Energy Services Group, Inc. ("CNE Energy"), a wholly-owned
subsidiary of Connecticut Energy, which provides an array of energy
products and services to commercial and industrial customers
throughout New England, both on its own and through participation as a
member of various energy-related limited liability companies;
2
<PAGE>
5. Berkshire Service Solutions, Inc., a wholly-owned subsidiary of
Berkshire Energy, which is an energy marketing and natural gas service
provider to commercial and industrial customers;
6. CNE Peaking, L.L.C., a wholly-owned subsidiary of CNE Energy, which
provides a firm in-market supply source to assist energy marketers
and local distribution companies in meeting the maximum demands of
their customers by offering firm supplies for peak-shaving and
emergency deliveries;
7. Energy East Solutions, LLC, a subsidiary of Energy East Solutions,
Inc. and CNE Energy, which sells natural gas, fuel oil and other
services, and markets a full range of energy-related planning,
financial, operational and maintenance services to commercial,
industrial and municipal customers in New England. Energy East
Solutions, LLC's financing activities are retainable as described in
Paragraph K below;
8. The Energy Network, Inc. (TEN)'s wholly owned subsidiary, ENI Gas
Services, Inc., owns a 99% interest in KBC Energy Services, a
partnership that previously was engaged in gas marketing services. KBC
Energy Services ceased operations in November 1998, and it is
anticipated that KBC Energy Services will be dissolved by the end of
2000. After KBC Energy Services is dissolved, ENI Gas Services, Inc.
will be dissolved or merged into TEN;
9. TEN's wholly owned subsidiary, TEN Gas Services, Inc., owns a 1%
interest in KBC Energy Services, a partnership that previously was
engaged in gas marketing services. KBC Energy Services ceased
operations in November 1998, and it is anticipated that KBC Energy
Services will be dissolved by the end of 2000. After KBC Energy
Services is dissolved, TEN Gas Services, Inc. will be dissolved or
merged into TEN;
10. KBC Energy Services, a partnership that is 99% owned by ENI Gas
Services, Inc., and 1% owned by TEN Gas Services, Inc., previously was
engaged in gas marketing services. KBC Energy Services ceased
operations in November 1998, and it is anticipated that KBC Energy
Services will be dissolved by the end of 2000.
D. THERMAL ENERGY PRODUCTS:
The business activities of the following companies (directly or through
subsidiaries) are energy-related activities within the meaning of Rule
58(b)(1)(vi), involving "the production, conversion, sale and distribution of
thermal energy products, such as process steam, heat, hot water, chilled water,
air conditioning, compressed air and similar products; alternative fuels; and
renewable energy resources; and the servicing of thermal energy facilities."
See also New Century Energies, HCAR No. 26748 (Aug. 1, 1997); Cinergy Corp.,
HCAR No. 26474 (Feb. 20, 1996). Accordingly, these interests are retainable
under Section 11(b)(1) of the Act:
3
<PAGE>
1. The Energy Network, Inc. ("TEN"), a wholly-owned subsidiary of CTG
Resources, which provides district heating and cooling services to a
number of large buildings in Hartford, Connecticut. TEN's operating
divisions offer energy equipment rentals and property rentals, which
activities are retainable under Rule 58(b)(1)(iv). TEN's operating
divisions also offer financing services related to such rentals. As
described in Paragraph K below, this is a retainable activity pursuant
to Commission precedent. Another TEN division owns a 3000 square foot
building in Hartford, Connecticut. This building is across the street
from the administrative offices of CNGC, and houses the CNGC
Employees' Federal Credit Union, which serves both CNGC and TEN
employees. In prior orders, the Commission has approved the purchase
of real estate which is incidentally related to the operations of a
registered holding company. See UNITIL Corp, et al., HCAR No. 25524
(April 24, 1992) (Commission noted that UNITIL Realty Corporation, a
subsidiary of the registered holding company, UNITIL, which acquired
real estate to support utility operations, engaged in activities which
are within the confines of the Act). Since the real estate held by
TEN's operating division is substantially similar to that owned by
UNITIL Realty Corporation, it is a retainable subsidiary under Section
11(b)(1) of the Act;
2. The Hartford Steam Company, a wholly-owned subsidiary of TEN, which
provides district heating and cooling services to a number of large
buildings in Hartford, Connecticut. The Hartford Steam Company also
owns and operates a cogeneration facility that serves Hartford
Hospital, providing both steam and electricity to the hospital, with
excess electricity, if any, sold to the local electric utility. The
Hartford Steam Company's ownership and operation of cogeneration
facilities is a retainable business activity pursuant to Rule
58(b)(1)(viii);
3. New Hampshire Gas Corporation, a wholly-owned subsidiary of Energy
East Enterprises, Inc., which specializes in propane air distribution
systems;
4. Berkshire Propane, a wholly-owned subsidiary of Berkshire Energy,
which provides propane service to approximately 6,000 customers in
western Massachusetts, eastern New York and southern Vermont.
E. TECHNICAL, OPERATIONAL AND MANAGEMENT SERVICES:
4
<PAGE>
The business activities of the following companies, either directly or
through subsidiaries, are energy-related activities within the meaning of Rule
58(b)(1)(vii), involving "the sale of technical, operational, management, and
other similar kinds of services and expertise, developed in the course of
utility operations in such areas as power plant and transmission system
engineering, development, design and rehabilitation; construction; maintenance
and operation; fuel procurement, delivery and management; and environmental
licensing, testing and remediation." Accordingly, these interests are retainable
under Section 11(b)(1) of the Act:
1. XENERGY Inc., a wholly-owned subsidiary of XENERGY Enterprises, Inc.,
which is an energy services, information systems and consulting
company that specializes in energy management, conservation
engineering and demand-side management;
2. The Union Water-Power Company ("UWP"), a wholly-owned subsidiary of
CMP Group, which provides utility construction and support services
(On Target division); energy efficiency performance contracting and
energy use and management services (Combined Energies division); and
utility-related real estate development services (UnionLand Services).
For the first six months of calendar year 2000, revenues from UWP
amounted to approximately 2.3% of the revenues of CMP Group and
approximately 2.4% of revenues from Central Maine Power.(2)Union
Water's Maine HomeCrafters division, which was in the business of
brokering and financing pre-fabricated housing, was sold in 1999. UWP
was founded in 1878 and was acquired by Central Maine Power in
1948.(3)
---------------
2 UWP revenues were $10,935,000, adjusted to eliminate revenues received
from HomeCrafters division, which has been sold; Central Maine Power revenues
were $458,354,000, and CMP Group revenues were $470,973,000.
3 Historically the principal business of UWP was developing, owning and
operating water storage or impoundment facilities, so as to maximize the
production of electric power at downstream hydroelectric projects. UWP also
acquired real estate surrounding these impoundments to support its operations.
At that time Central Maine Power was a subsidiary of New England Public Service
Company, a registered holding company, and hence the acquisition was subject to
approval under Section 10 of the Act. In its order approving the acquisition,
the Commission stated that Central Maine will hold UWP "for the purpose of
obtaining control, subject to other riparian rights, of the storage reservoirs
on the Androscoggin River so as to assure a maximum use of the water for
generating purposes and for the purpose of assuring continuity in the
maintenance of the storage system," and referred to testimony that ownership of
UWP "will enable the company to make further developments of this water power
system, particularly the storage reservoir system. "Union Water Power Company,
Central Maine Power Company, Release No. 7985 (February 24, 1948)
5
<PAGE>
Substantially all of UWP's revenues (97%, based on year 2000 operating
budget projections) are derived from energy-related activities that
qualify under Rule 58. On Target Construction Services provides
engineering, design and construction services for utilities, as well
as installation of support facilities such as transformer pads,
conduits, piping, and cables. On TargetConstruction Services'
activities qualify as those of an "energy-related company" under
Section 2(b)(1)(vii) of Rule 58. Based on the UWP 2000 operating
budget, On Target Construction Services will provide 48% of UWP's
revenues.
On Target Locating identifies and marks existing underground utility
pipes, conduits and other facilities, so that utilities can avoid
these facilities when they engage in maintenance or construction
activities. On Target Locating provides services to most of the
electric utilities in New England. Based on year 2000 operating budget
projections, revenues from On Target Locating will amount to 34% of
UWP's revenues. On Target Locating activities also qualify as those of
an "energy-related company" under Section 2(b)(1)(vii) of Rule 58.
Combined Energies provides energy management services to governmental
institutions and businesses in Maine, by developing and implementing
energy conservation measures such as retrofitting inefficient energy
consuming resources. Based on UWP's operating budget for 2000,
Combined Energies will provide 15% of UWP's revenues. Combined
Energies qualifies under section 2(b)(1)(i) of Rule 58, which provides
that an entity is an "energy-related company" if it engages in "the
rendering of energy management services and demand-side management
services."
UnionLand Services is engaged primarily in the management of real
estate that UWP acquired over the previous 122 years to support the
generation of hydroelectric power. Based upon year 2000 operating
budget projections, the revenues for this division will account for
approximately 3% of UWP's total revenues,(4) and, based on revenues
for the first half of 2000, approximately one tenth of one percent of
CMP Group revenues.(5) As discussed above, the great majority of the
real estate that UWP currently owns is historically linked to the
hydroelectric projects that Central Maine Power recently sold to FPL
Energy Maine as part of the state-mandated divestiture of electric
generation assets by CMP Group. This land is used for recreational
leases (sporting camp and vacation homes adjacent to lakes), camp lot
leases, for a lease to an Atlantic salmon hatchery facility, and for a
lease to a rafting company. The Commission has
---------------
4 UnionLand revenues -- $941,500; UWP revenues -- $26,471,470.
5 UnionLand revenues for the first six months of 2000 -- $574,381;
CMP Group revenues --$470,973,000.
6
<PAGE>
permitted subsidiaries of registered companies to retain and lease
property originally acquired in connection with electric facilities
for activities such as public recreation and timber rights.
Pennsylvania Electric Company, HRAC No. 24716 (September 15, 1988);
see UNITIL Corp., HCAR No. 25524 (April 24, 1992) (subsidiary that had
acquired real estate to support the system's utility operations deemed
to be retainable); and New Century Energies, Inc., HRAC No. 27212
(August 16, 2000) (subsidiary leases real property adjacent to utility
generating stations to third parties for agricultural purposes).
In addition, UnionLand owns unimproved land acquired from surplus land
owned by Central Maine Power that is used for economic development
activities. UnionLand also owns improved real estate which is leased
to commercial tenants within Central Maine Power's Service area; and
office space that is leased to the State of Maine Department of Human
Services and to commercial tenants. Thus, of the 3% of UWP's revenues
derived from UnionLand, a portion of that is derived from activities
historically related to utility activities. Applicants request the
Commission to reserve jurisdiction for nine months, pending completion
of the record, over the retainability of UnionLand's ownership of the
real estate described in this paragraph.
3. CMP International Consultants (D/B/A CNEX), a wholly-owned subsidiary
of CMP Group, which provided consulting, planning, training, project
management, and information and research services to foreign and
domestic utilities and government agencies. CNEX was dissolved as
of August 28, 2000.
4. CIS Service Bureau, LLC, a wholly-owned subsidiary of CNE
Venture-Tech, which provides access to customer-billing software and
other related services for local distribution and other utility-type
companies. The SEC previously has authorized a subsidiary of a
registered holding company to provide customer billing and software
services. See Consolidated Natural Gas Company, et al., Release Nos.
35-26757, 70-8577 (Aug. 27, 1997).
F. OWNERSHIP AND OPERATION OF QFS:
7
<PAGE>
The business activities of the following companies are energy-related
activities within the meaning of Rule 58(b)(1)(viii), involving "the
development, ownership or operation of qualifying facilities', and any
integrated thermal, steam host, or other necessary facility constructed,
developed or acquired primarily to enable the qualifying facility to satisfy the
useful thermal output requirements under PURPA." See also New Century Energies,
Inc., HCAR No. 26748 (Aug. 1, 1997); Entergy Corp., HCAR No. 26322 (June 30,
1995); Southern Co., HCAR No. 26212 (Dec. 30, 1994); Central and South West
Corp., HCAR No. 26156 (Nov. 3, 1994); Central and South West Corp., HCAR No.
26155 (Nov. 2, 1994); and Northeast Utilities, HCAR No. 25977 (Jan. 24, 1994).
Accordingly, the following companies are retainable under Section 11(b)(1) of
the Act:
1. Cayuga Energy, Inc., a wholly-owned subsidiary of XENERGY Enterprises,
which invests in co-generation facilities;
2. Carthage Energy, LLC, a wholly-owned subsidiary of Cayuga Energy,
Inc., which owns a co-generation facility in upstate New York;
3. South Glens Falls Energy, LLC, a partially-owned subsidiary of Cayuga
Energy, Inc., which owns a co-generation facility in upstate New York.
4. Downtown Cogeneration Associates Limited Partnership, a
partially-owned subsidiary of TEN, which owns and operates a
cogeneration facility in Hartford, Connecticut.
G. FUEL TRANSPORTATION AND STORAGE:
The business activities of the following companies, either directly or
through subsidiaries, are energy-related activities within the meaning of Rule
58(b)(1)(ix), involving "the ownership, operation and servicing of fuel
procurement, transportation, handling and storage facilities" Accordingly,
these interests are retainable under Section 11(b)(1) of the Act:
1. Southern Vermont Natural Gas Corporation, a wholly-owned subsidiary of
Energy East Enterprises, Inc., which is currently developing a
combined natural gas supply and distribution project that includes an
extension of a pipeline from New York to Vermont and the development
of natural gas distribution systems in Vermont;
2. CNE Development Corporation, a wholly-owned subsidiary of Connecticut
Energy, which owns a 16.67% equity participant in East Coast Natural
Gas Cooperative, LLC. East Coast purchases and stores spot gas
supplies, provides storage service utilization services and is
involved in bundled sales;
8
<PAGE>
4. Total Peaking Services, LLC, a wholly-owned subsidiary of CNE Energy,
which operates a 1.2 billion cubic foot storage facility in Milford,
Connecticut;
5. TEN Transmission Company, a wholly-owned subsidiary of TEN, owns a
4.87 percent interest in the Iroquois Gas Transmission System Limited
Partnership, which operates a natural gas pipeline transporting
Canadian natural gas into the states of New York, Massachusetts and
Connecticut.
H. TELECOMMUNICATIONS FACILITIES:
Section 34 of the Act provides an exemption from the requirement of prior
Commission approval the acquisition and retention by a registered holding
company of interests in companies engaged in a broad range of telecommunications
activities and businesses. Section 34 permits ownership of interests in
telecommunications companies engaged exclusively in the business of providing
telecommunications services upon application to the Federal Communications
Commission for a determination of "exempt telecommunications company" status.
1. Energy East Telecommunications, Inc. (EETI) filed for status as an
exempt telecommunications company under Section 34 of the Act prior to
consummation of the Merger. EETI is a wholly-owned subsidiary of
XENERGY Enterprises, Inc., which provides telecommunications services,
including the construction and operation of fiber optic networks. Its
application was filed on April 24, 2000, in NSD File No. ETC 00-16.
Based on the Federal Communications Commission's failure to issue and
order denying the application within 60 days of the receipt of the
application, the application is deemed granted as a matter of law as
of the date of the application.
2. Telergy East, LLC, a partially-owned subsidiary of Energy East
Telecommunications, Inc., which was formed to construct, own and
operate a fiber optic network. Telergy East, LLC filed an application
for status as an exempt telecommunications company on August 17,2000;
3. MaineCom Services, a wholly-owned subsidiary of CMP Group, which
provides telecommunications services, including point-to-point
connections, private networking, consulting, private voice and data
transport, carrier services, and long-haul transport. On July 21,
2000, in NSD File No. ETC 00-28, MaineCom Services filed an
application for status as an exempt telecommunications company. In
addition, on July 21, 2000 exempt telecommunications company
applications were submitted for MaineCom's three subsidiaries, New
England Business Trust, NSD File No. ETC 00-30 (see No. 4 below), New
England Investment Corporation, a Delaware corporation, NSD File No.
ETC 00-29, and New England Security Corp., a Massachusetts
corporation, NSD File No. ETC 00-31.
9
<PAGE>
4. NorthEast Optic Network, Inc., a partially-owned subsidiary of
MaineCom Services, which develops, constructs, owns and operates a
fiber optic telecommunications system in New England and New York.
MaineCom Services' wholly-owned subsidiary, New England Business
Trust, owns 26.8 percent of NorthEast Optic Network, Inc.'s common
stock. By a date no later than One year after the date on which the
Commission approves the Merger, NorthEast Optic Network, Inc. will
have obtained status as an exempt telecommunications company or Energy
East will divest its interest in this company.
I. REAL ESTATE
In prior orders, the Commission has approved the purchase of real estate
which is incidentally related to the operations of a registered holding company.
See, e.g., Conectiv, Inc., HCAR No. 26832 (Feb. 25, 1998); UNITIL Corporation,
HCAR No. 25524 (April 24, 1992); WPL Holdings, Inc., HCAR 26856 (April 14,
1998) (subsidiary of holding company purchases and holds real property primarily
for use in public utility operations) Accordingly, the following companies are
retainable under Section 11(b)(1) of the Act:
1. CNG Realty Corp., a wholly-owned subsidiary of Connecticut Natural
Gas, the sole business activity of which is to own Connecticut Natural
Gas' corporate headquarters located on a 7-acre site in downtown
Hartford, Connecticut;
2. Central Securities Corporation, the sole activity of which is to own
and lease office and service facilities in Central Maine Power's
service territory for the conduct of Central Maine Power's business.
Central Maine Power owns all of the outstanding common stock of
Central Securities;
3. Cumberland Securities Corporation (Cumberland), which owns and leases
office and service facilities in Central Maine Power's service
territory for the conduct of Central Maine Power's business. The
primary activity of Cumberland is property ownership for public
utility operations. Cumberland owns the land on which Central Maine
Power's corporate office building is located; it leases the property
to a third-party, which constructed the corporate office building and
leases the building and land to Central Maine Power. Cumberland also
owns and leases four parcels of land in Richmond, Maine, totaling 62
acres, for agricultural use and a two acre parcel in Richmond for a
mobile home lot. The total revenues for Cumberland in 1999 were
$7,990, of which $6,240, or approximately 78 percent, was from a lease
to Central Maine Power (lease of service facilities in Bridgton, Maine
for customer service operations), and $2,950, or approximately 22
percent, was from the agricultural and mobile home leases. The
agricultural property was acquired in 1975-76, and the mobile home
10
<PAGE>
property was acquired in the early 1990s. Cumberland leases an
undeveloped parcel of land in northern Maine from Union Water.
Cumberland is not engaged in, and has no plans to engage in,
development activities relating to this land. Central Maine Power owns
all of the outstanding common stock of Cumberland Securities.
Applicant will divest the properties used for agriculture and mobile
home leases within three years of the date of the Commission's
approval of the merger.
J. NONUTILITY HOLDING COMPANIES:
In addition to Connecticut Energy, CTG Resource, CMP Group, Berkshire
Energy, and Energy East Enterprises, which will be exempt holding companies
in the post-Merger Energy East system, post-Merger Energy East will have
one other holding company subsidiary, XENERGY Enterprises, Inc. It is an
exempt non-utility holding company holding XENERGY Inc., Energy East
Solutions, Inc., Energy East Telecommunications, Inc. and Cayuga Energy,
Inc. (and, indirectly, their subsidiaries). It is retainable because all of
its investments are in companies which are retainable, as outlined above.
XENERGY Enterprises will be a "intermediate subsidiary" as defined in File
No. 70-9609.
K. FINANCIAL INVESTMENTS
The Commission has approved investments of registered holding companies
where such investments are passive and/or de minimis. See, e.g., WPL Holdings,
Inc., HCAR No. 26856 (April 14, 1998) (approving retention of IES Investments,
Inc.); Ameren Corp., HCAR No. 26809 (Dec. 30, 1997) (St. Louis Equity Fund
retainable because of passive investment). The following company is thus
retainable under Commission precedent:
1. Energy East Management Corporation, a wholly-owned subsidiary of
Energy East, invests the proceeds of the sale in 1999 of Energy East's
coal-fired generation assets. The assets have been invested in
short-term money market instruments by the Boston Company and Goldman
Sachs Asset Management. The custodian is Mellon Bank. Money market
investments are managed to seek preservation of capital, daily
liquidity and maximum current income. Typical investments include US
Government Securities, obligations of US banks, commercial papers,
repurchase agreements and other short-term obligations. These
investments are passive. NGE Generation, which has been dissolved and
which was a wholly-owned subsidiary of Energy East, sold the Homer
City generation assets to Edison Mission Energy in March 1999 and the
remaining coal-fired generation assets to AES in May 1999.
11
<PAGE>
L. INTERNATIONAL SERVICES
Energy East has certain other direct and indirect subsidiaries that provide
energy-related services outside the United States, including energy management,
conservation, and demand-side management. Energy management services are
consulting services that assist customers in resource planning, market research
and energy program evaluation; conservation services include the provision of
engineering and performance contracting service, primarily to large energy
users; demand-side management involves working with customers to increase their
efficiency of energy use; and software services involve the development and
support of software to assist clients with automated energy audit tools, client
management systems, maintainance and monitoring of utility field equipment, and
consulting and outsourcing of billing/direct mail fulfillment services to energy
providers. While these companies would otherwise constitute" energy-related
companies" pursuant to Rule 58, the "activities permitted by [Rule 58] are
limited to the United States." See Rule 58, Exemption of Acquisition By
Registered Public Utility Holding Companies of Securities of Nonutility
Companies, HCAR No. 26667, n. 146 Feb. 14, 1997). The Commission has nonetheless
approved registered holding company ownership of companies that provide
energy-related services on an international basis. See,e.g., Cinergy Corp.,
HCAR No. 26662 (Feb. 7, 1997) (approving Cinergy Solutions' marketing of
energy-related services on both a domestic and international basis); Conectiv,
Inc., HCAR No. 26832 (Feb. 25, 1998) (approving retention by registered holding
company of DCI II, Inc., a Virgin Islands corporation and wholly-owned foreign
sales subsidiary involved in equity investments in leveraged leases); and
Northeast Utilities, Holding HCAR Nos. 26335 and 26108 (July 1, 1995 and August
19, 1994, respectively) and Eastern Utilities Associates, HCAR Nos. 26232 and
26135 (February 15, 1995 and September 30, 1994, respectively) (authorization to
engage in demand-side management activities in Canada). Accordingly, the
following interests are retainable under Section 11(b)(1) of the Act:
1. XENERGY International, Inc., a wholly-owned subsidiary of XENERGY
Inc., which is an energy services information systems and consulting
company that specializes in energy management, conservation
engineering and demand-side management in the United Kingdom and Spain
2. KENETECH Energy Management International, Inc. ("KENETECH
International"), a wholly-owned subsidiary of KENETECH, which is an
energy services company specializing in energy management;
3. KENETECH Energy Management, Limited, a wholly-owned subsidiary of
KENETECH International, which is an energy services company
specializing in energy management;
4. XENERGY Canada, Inc., a wholly-owned subsidiary of XENERGY Inc., which
provides software services related to a utility client management
system. Examples of software services are provision of software that
monitors utility field equipment and software that automates energy
audits.
12
<PAGE>
M. OTHER
The special purpose subsidiaries Oak Merger Co. (formed solely for the
purpose of consummating the proposed merger with CTG Resources), EE Merger Corp.
formed solely for the purpose of consummating the proposed merger with CMP
Group) and Mountain Merger LLC (formed solely for the purpose of consummating
the proposed merger with Berkshire Energy) do not represent current investments
by any of CMP Group, CTG Resources, Berkshire Energy or Energy East and upon
consummation of the Merger will be merged with post-Merger Energy East holding
company subsidiaries, as discussed in Item I.B.1.a. of the
Application/Declaration. These subsidiaries have thus been excluded from the
above analysis of non-utility investments.
<PAGE>
