EXHIBIT E-5
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KEYSPAN'S, EASTERN'S AND ENERGYNORTH'S NON-UTILITY SUBSIDIARIES
I. KeySpan's Non-Utility Subsidiaries
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KeySpan is a diversified energy holding company which, through
its direct and indirect subsidiaries, engages in energy related businesses.
KeySpan engages in its non-utility activities through seventeen (16) direct
non-utility subsidiaries which are as follows: KeySpan Energy Corporation;
KeySpan Exploration and Production, LLC; KeySpan Corporate Services LLC; KeySpan
Utility Services LLC; KeySpan Electric Services LLC; KeySpan Energy Trading
Services LLC; Marquez Development Corporation; Island Energy Services Company,
Inc.; LILCO Energy Systems Inc.; KeySpan-Ravenswood, Inc.; KeySpan-Ravenswood
Services Corp.; KeySpan Energy Supply, LLC; KeySpan Services, Inc.; Honeoye
Storage Corporation; KeySpan Technologies Inc. and KeySpan MHK, Inc. In
addition, KeySpan's gas utility subsidiary, The Brooklyn Union Gas Company d/b/a
KeySpan Energy Delivery New York, ("KeySpan New York"), owns all or part
interests in three (3) subsidiaries that are engaged in non-utility businesses.1
The following is a description of the activities of KeySpan's
direct and indirect non-utility subsidiaries.
1. Holding Companies for Non-Utility Activities
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a. KeySpan Energy Corporation ("KEC"). KEC, a New York corporation and
wholly owned subsidiary of KeySpan, is a holding company for a variety of
energy related businesses which are conducted through its five (5) direct,
non-utility subsidiaries (I.C., KeySpan North East Ventures, Inc., KeySpan
Energy Development Corporation, THEC Holdings Corp., KeySpan Natural Fuels,
LLC and GEI Development Corp.) and indirectly through KeySpan New York's
non-utility subsidiaries.2 These non-utility businesses are described
herein.
b. KeySpan Energy Development Corporation ("KEDC"). KEDC, a Delaware
corporation and wholly-owned subsidiary of KEC, is a development company,
and a holding company for companies engaged in international and domestic
non-utility activities. KEDC's primary activities, both directly and
through its seven (7) direct subsidiaries, are the development, ownership
and operation of market area natural gas pipelines and storage facilities
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1 KeySpan New York was formerly known as The Brooklyn Union Gas Company. A
certificate of assumed name was filed with the New York Department of State in
May 2000.
2 KeySpan New York is a utility subsidiary of KEC.
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located in the United States, and investments in companies which develop,
own and/or operate non-utility generation plants, gas processing plants and
gathering systems, liquid natural gas processing facilities, foreign
utility companies ("FUCOs") under Section 33 of the Public Utility Holding
Company Act of 1935 (the "Act"), natural gas pipelines, and oil fields
located in certain areas of Europe, Canada, or Latin America. KEDC's direct
subsidiaries are GTM Energy, LLC, Honeoye Storage Corporation, KeySpan
International Corporation, KeySpan Cross Bay, LLC, KeySpan Midstream, LLC,
Solex Production Limited and Adrian Associates L.P. and each are further
described herein.
2. Rule 58(b)(2) Gas Related Companies
a. KeySpan North East Ventures, Inc. ("KNEV"). KNEV, a Delaware
corporation and wholly-owned subsidiary of KEC, holds a 90% ownership
interest in Northeast Gas Markets, LLC. Northeast Gas Markets, LLC, a
Delaware limited liability company, provides natural gas procurement,
contract management and marketing services to clients located in the
northeastern part of the United States.3
b. Honeoye Storage Corporation ("Honeoye"). KEDC owns 28.8% of the
outstanding common stock of Honeoye.4 Honeoye, a New York corporation, owns
an underground gas storage facility in Ontario County, New York consisting
of 28 injection/withdrawal wells, 12 observation wells, 19 miles of field
gathering lines, compressor units totaling 2700 hp and 10.5 miles of
transmission pipeline connecting the facilities to the Tennessee Gas
Pipeline gas transmission system. Honeoye provides up to 4.8 billion cubic
feet ("BCF") of storage service to New York and New England area gas
distribution companies.5 Honeye is regulated by the Federal Energy
Regulatory Commission ("FERC") with respect to its natural gas activities.
In the first quarter of this year, Honeoye filed an application with the
FERC seeking authority to expand field capacity to 6.57 BCF.
c. KeySpan Cross Bay, LLC ("KeySpan Cross Bay"). KeySpan Cross Bay, a
Delaware limited liability company and wholly-owned subsidiary of KEDC, was
formed to own KeySpan's 25% interest in the Cross Bay Pipeline Company, LLC
("Cross Bay"). Cross Bay is involved in the development of the Cross Bay
pipeline, a proposed interstate pipeline that would be subject to FERC
jurisdiction and which will transport gas from two existing interstate
pipelines located in New Jersey to customers located in New York City and
Long Island.6
d. Adrian Associates L.P. ("Adrian"). KEDC holds a 33.7% interest in
Adrian, a New York limited partnership, which owns a 50% interest in the
Adrian gas storage facility in Steuben, New York. The facility consists of
9 injection/withdrawal wells, an observation well, 2 miles of field
gathering lines, compressor units totaling 2700 hp and 13.5 miles of
transmission pipeline connecting the facilities to the gas transportation
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3 SEE Rule 58 (b)(2)(ii). Northeast's gas marketing activities also qualify it
as an energy related company under Rule 58(2)(b)(1)(v). 4 KeySpan also directly
holds a 23.33% interest in Honeoye.
5 SEE Rule 58 (b)(2)(i).
6 SEE Rule 58 (b)(2)(i).
2
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pipeline owned by Tennessee Gas Pipeline. Adrian provides up to 6.2 BCF of
storage service to Public Service Gas and Electric Company, Elizabeth Gas
Company and Commonwealth Gas Company, which are gas distribution companies
located in New Jersey and Massachusetts.7
e. THEC Holdings Corp. ("THEC"). THEC Holdings Corp., a Delaware
corporation and wholly owned subsidiary of KEC, is the company which holds
KeySpan's interest in The Houston Exploration Company ("Houston
Exploration"); KEC currently holds a 70% interest.8 Houston Exploration, is
a publicly held Delaware corporation with its principle executive offices
located in Houston, Texas. It is engaged in the exploration, development
and acquisition of domestic natural gas and oil properties.9 Houston
Exploration also owns associated gathering systems and exploration and
drilling equipment and is engaged in small scale marketing, supplying,
transportation and storage. The company has offshore properties in the Gulf
of Mexico and onshore properties in Texas, Louisiana, Arkansas and West
Virginia. At December 31, 1999, the company had net proved reserves of 541
BCF, approximately 97% of which are natural gas. It sells gas and oil to a
relatively small number of customers (none of which are affiliates) and its
major customer for the year ended December 31, 1999, was Adams Resources
and Energy, Inc. A more detailed description of Houston Exploration is
contained in its Annual Report on Form 10-K for the year ended December 31,
1999, a copy of which is incorporated by reference as Exhibit H-11 hereto.
Houston Exploration also owns 100% of Seneca-Upshur Petroleum, Inc.
("Seneca"), a Delaware corporation, which is a general partner in a group
of limited partnerships which own oil and gas properties in West
Virginia.10 Houston Exploration manages, operates and drills the wells for
Seneca.
f. KeySpan Natural Fuels, LLC ("KNF"). KNF, a Delaware limited
liability company and wholly-owned subsidiary of KEC, owns certain
interests in onshore producing wells of Houston Exploration that produce
oil and gas from non-conventional fuel sources, such as oil being produced
from shale and tar sands and natural gas being produced from geopressured
brine, devonian shale, coal seams and tight sand formations.11 Houston
Exploration manages and administers the daily operation of these
properties.
g. North East Transmission Co., Inc. ("NET"). NET, (a Delaware
corporation and a wholly-owned KeySpan New York subsidiary) was created to
hold a general partner interest in the Iroquois Gas Transmission System,
L.P. ("Iroquois").12 Its general partner interest is currently 18.49%.
Iroquois is a FERC regulated natural gas pipeline which transports natural
gas from
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7 SEE Rule 58 (b)(2)(i).
8 On March 31, 2000, KEC's ownership interest in Houston Exploration was
increased from 64% to 70%.
9 SEE Rule 58 (b)(2)(ii).
10 SEE ID.
11 SEE Rule 58 (b)(2)(ii).
12 As noted above, KeySpan New York is a utility subsidiary of KEC.
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Canada to the Northeast United States.13 Iroquois has a wholly
owned subsidiary, Iroquois Pipeline Operating Company, which operates the
Iroquois' pipeline.14
h. LILCO Energy Systems Inc. ("LES"). LES, a New York corporation,
holds a 1% general partner interest in Iroquois.15
i. KeySpan Exploration and Production, LLC ("KEP"). KEP, a Delaware
limited liability company and wholly-owned subsidiary of KeySpan, is part
of a joint venture with Houston Exploration to conduct offshore gas and oil
exploration and development in the Gulf of Mexico consisting of drilling
undeveloped offshore leases. The offshore leases are owned 55% by Houston
Exploration and 45% by KEP. Houston Exploration is the joint venture
manager and operator.16
3. FUCO Investments
KeySpan International Corporation ("KeySpan International").
KeySpan International, a Delaware corporation, is a wholly
subsidiary of KEDC which serves as a non-utility holding company
for KEDC's investments in gas distribution, transportation and
electric projects in selected developing markets in Europe and
Latin America. As described below, KeySpan International has two
(2) direct, wholly-owned subsidiaries, KeySpan CI Limited and
KeySpan CI II Limited, which directly or indirectly hold
KeySpan's interests in the foreign operations.
o KeySpan CI Limited ("KeySpan CI"), a Cayman Island
corporation, was formed to directly hold a 24.5%
ownership interest in Phoenix Natural Gas Limited
("Phoenix"), a natural gas distribution system located
in Northern Ireland. Phoenix is a FUCO.17
o KeySpan CI II, Limited., a Cayman Island corporation,
was formed to hold through its wholly owned subsidiary,
Grupo KeySpan S. de R.L. de C.V., a 50% interest in
FINSA Energeticos, S. de R.L. de C.V. ("FINSA"). FINSA
is a Mexican company and a FUCO which owns a small gas
distribution company in
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13 SEE Rule 58 (b)(2)(i).
14 ID.
15 ID. Collectively, KeySpan indirectly holds a 19.4% interest in Iroquois
through LES's 1% interest and, as described above, NET's 18.4% general
partnership interest. 16 SEE Rule 58 (b)(2)(ii).
17 SEE Section 33 of the Act. Section 33 of the Act expressly states that FUCOs
are deemed to be functionally related to a registered holding company system's
business. As described in Section 4 below, KeySpan CI also holds a 50% interest
in Premier Transco Limited, a foreign natural gas transportation pipeline
company.
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Mexico.18 It is also involved
in the development of generation and gas pipeline
projects in Mexico.
4. International Gas Related Activities
a. KeySpan Midstream, LLC ("KeySpan Midstream"). KeySpan Midstream, a
Delaware limited liability company and wholly-owned subsidiary of KEDC,
indirectly holds, through several wholly-owned subsidiaries, 100% each of
(i) GMS Facilities Limited ("GMF"), (ii) Gulf Midstream Services Limited
("GMSL"), (iii) Gulf Midstream Services Partnership ("GMSP") (collectively,
the "Canadian Companies"), and (iii) KeySpan Energy Canada, Ltd. ("KeySpan
Canada").19
o GMSP, a Canadian general partnership, owns interests in 11 natural
gas processing plants, along with the associated raw gas gathering
facilities, located in Alberta and Saskatchewan, Canada . It is the
operator of nine of those facilities. GMSP also markets natural gas,
on behalf of approximately 40 producers, to about 50 customers in the
United States and Canada, and markets natural gas products (including
propane, butane and sulphur), on behalf of approximately 130 producers
to about 50 customers in the United States and Canada.20
o GMF, a Canadian corporation, owns an interest in one natural gas
processing plant in Alberta, which it
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18 SEE Section 33 of the Act.
19 GMF, GMSL and GMSP will be renamed so that their names will incorporate the
use of the term KeySpan. A chain of intermediary companies has been established
for the purpose of holding interests in the Canadian Companies and KeySpan
Canada. KeySpan Midstream and KEDC together own 100% of KeySpan CI Midstream
Ltd., a Cayman Island corporation, which in turn is the sole shareholder of
KeySpan Luxembourg S.A.R.L. ("KS Luxembourg"). KS Luxembourg, a Luxembourg
limited liability company, and its wholly-owned subsidiary, Nicodama Beheer
V.B.V. (a Netherlands company), hold all of the issued and outstanding shares of
KeySpan Energy Development Co. (Nova Scotia) ("KeySpan Nova Scotia"). KS
Luxembourg also owns 100% of KS Midstream Finance Co. (Nova Scotia) which has
extended credit to KeySpan Nova Scotia. KeySpan Nova Scotia directly owns 100%
of each of the Canadian Companies, 100% of KeySpan Canada, and a 76% interest in
the Paddle River gas processing plant located in western Canada.
20 The company is engaged in gas related businesses identical to those defined
in the GRAA. The Commission has found that the GRAA permits registered gas
utility holding companies to own companies located outside the United States.
The Commission has determined that the "GRAA does not impose any geographic
boundaries within which a gas registered system may engage in the listed
activities." CONSOLIDATED NATURAL GAS COMPANY, Holding Co. Act Release No. 26595
(October 25, 1996) and Holding Co. Act Release No. 26608 (November 19, 1996).
They are also the same activities defined in Rule 58(b)(2) for gas related
companies. Except for the fact that these companies conduct their business
outside of the United States, they would be considered Rule 58(b)(2) gas related
companies.
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operates. It also owns interests in crude oil and natural gas liquids
transportation facilities, which it operates, and interests in natural
gas liquids fractionation and storage facilities at Edmonton, Alberta.
Together, GMSP and GMF provide gas gathering and processing services
to approximately 215 producers.21
o GMSL, a Canadian corporation, is the managing partner for GMSP and
is the agent for GMF and GMSP. GMSL is the managing partner for GMSP
and is the agent for GMF and GMSP. Because neither GMSP nor GMF have
employees or office facilities, GMSP and GMF act through GMSL, which
conducts all GMSP and GMF business, including operating the assets for
which those entities have operating responsibility, and executing and
performing all GMSP and GMF contracts.22
o KeySpan Canada, a Canadian corporation and wholly-owned subsidiary
of KEDC, owns a 19% interest in the Taylor Gas Liquids Partnership
("Taylor"). Taylor owns a 57% interest in the Younger NGL Extraction
Plant (the "Younger Plant") in western Canada which is a natural gas
liquids and extraction facility. The Younger Plant currently has a
production capacity of 38,500 bpd. The Younger Plant obtains the gas
it processes from the West Coast Energy and TCM natural gas pipelines
and ships the natural gas liquids it produces through the Federated
and TCM natural gas liquids systems.23 The majority of Taylor's
customers are gas producers and gas marketers located in Canada.24
b. Premier Transco Limited ("Premier"). KeySpan CI also holds a
50% interest in Premier, which is a natural gas transportation
pipeline company owning and operating pipeline facilities spanning the
Irish Sea between southwest Scotland and Northern Ireland.25
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21 ID.
22 ID.
23 ID.
24 In February 2000, KeySpan Canada exercised its option to participate in the
expansion of the Younger plant, therefore, converting its fluctuating percentage
interest in cash distributions into a fixed percentage of ownership.
25 SEE Section 2(a) of the Gas Related Activities Act ("GRAA"). SEE ALSO
CONSOLIDATED NATURAL GAS COMPANY, Holding Co. Act Release No. 26595 (October 25,
1996) and Holding Co. Act Release No. 26608 (November 19, 1996) (Commission
allowed gas registered holding company to invest in foreign pipeline projects
pursuant to the GRAA). KeySpan CI, Ltd. directly holds a 24.5% interest in
Premier and a 25.5% indirect interest through its wholly-owned subsidiary named
KeySpan (UK) Limited, a corporation organized under the laws of the United
Kingdom.
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c. Alberta Northeast Gas, Ltd. ("Alberta"). KeySpan New York (a
direct subsidiary of KEC) holds a 26% interest in Alberta, a Canadian
corporation which is a gas marketer.26 Alberta purchases Canadian
natural gas in Canada and resells it at the U.S./Canadian border to 17
local distribution gas companies which include KeySpan New York and
KeySpan Long Island as well as three of Eastern Enterprises' gas
utilities and ENGI. The buyers ship the gas they purchase from Alberta
to their operations located in the northeastern part of the United
States through, INTER ALIA, the Iroquois pipeline.27
5. Power Development Companies
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GTM Energy, LLC ("GTM"). KEDC owns a 50% ownership interest
in GTM, a Delaware limited liability company. GTM is a joint
venture that has been formed to engage in the development of
electric generation projects in the City of New York, which may
obtain exempt wholesale generator status under Section 32 of the
Act ("EWGs") if the electric facilities are developed.28
Development of the projects have been suspended and GTM does not
own electric facilities that are operational. If GTM seeks to
make any acquisition of securities or assets after the
Transaction is completed, for which approval is required under
the Act, KeySpan states that it will file a post-effective
amendment with the Commission seeking such approval.
6. Energy Marketers
a. Boundary Gas Inc. ("BGI"). KeySpan New York (a wholly-owned
utility subsidiary of KEC) holds a 36.09% interest in BGI and KeySpan
Long Island (a wholly-owned utility subsidiary of KeySpan) holds a
3.019% interest. BGI, a Delaware corporation, is a gas marketer.29 BGI
purchases Canadian natural gas on the U.S. side of the U.S./Canadian
border
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26 Eastern Enterprises' gas utility, Essex Gas Company ("Essex") also owns a
.7%% interest in Alberta and EnergyNorth's gas utility subsidiary, EnergyNorth
Natural Gas, Inc. ("ENGI") owns a 1.3% interest.
27 SEE citations at footnote 20.
28 The Commission has authorized registered holding companies to retain
non-utility businesses engaged directly or indirectly in the development of
power generation projects and EWG project development. SEE CENTRAL AND SOUTHWEST
CORP., Holding Co. Act Release No. 25162 (September 28, 1990) (authorizing
Central and Southwest Corp. to conduct preliminary studies of, to investigate,
to research, to develop, to consult with respect to, and to agree to construct,
such construction subject to further Commission authorization, QFs, qualifying
small power production facilities and independent power facilities ("IPPs"),
except no need to consult with respect to IPPs); ENERGY INITIATIVES, INC.,
Holding Co. Act Release No. 25876 (September 7, 1993) (authorizing the
acquisition of an ownership interest in a non-affiliate engaged in the business
of developing, owning and operating co-generation and independent power
generation projects); AMEREN CORP., Holding Co. Act Release No. 27053 (July 23,
1999) (authorizing the acquisition of securities of subsidiaries which would be
organized exclusively for the purpose of acquiring, holding and/or financing the
acquisition of the securities of, or other interest in, one or more EWGs); SEE
ALSO CINERGY CORP., Holding Co. Act Release No. 26984 (March 1, 1999).
29 Eastern Enterprises' two gas utilities, Boston Gas Company and Essex, also
own, collectively, a 14.54% interest in BGI. EnergyNorth's gas utility
subsidiary, ENGI, owns a 3.74% interest in BGI.
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and immediately resells it to 14 customers which are local gas
distribution companies.30 The BGI utility customers include KeySpan
New York and KeySpan Long Island as well as two of Eastern
Enterprises' gas utilities and ENGI. The buyers ship the gas they
purchase from BGI to their operations located in the northeastern part
of the United States through the facilities of U.S. pipeline
companies.
b. KeySpan Energy Trading Services LLC ("KETS"). KETS, a New York
limited liability company and wholly-owned subsidiary of Keyspan, is a
broker of electricity and gas on behalf of the Long Island Power Authority
("LIPA"). Specifically, the services provided by KETS include energy supply
portfolio management, risk management and associated administration and
billing, and, as agent for LIPA, KETS is responsible for (a) the purchase
from third parties of additional capacity and energy that LIPA needs to
serve its customers, (b) the off-system sale of LIPA's energy which it does
not require to meet the needs of its system customers; and (c) fuel
procurement, delivery, storage and management to meet LIPA's obligations to
provide fuel to its electricity supplier to generate power to provide LIPA
for its retail and wholesale customers.31
c. KeySpan Energy Supply, LLC ("KE"). KE, a Delaware limited liability
company and wholly-owned subsidiary of KeySpan, is engaged in energy
brokering activities (I.E., it acts as an intermediary and does not take
title to energy). Specifically, it manages the purchases of gas and
electricity as agent for customers of KeySpan Energy Services, Inc. and
KeySpan Energy Management, Inc. KE, as KRS' agent, also manages KRS'
purchases of its fuel supply for the Ravenswood Facility and manages the
bidding of KeySpan-Ravenswood Inc.'s power sales into wholesale electricity
markets.32 KE does not engage in gas marketing or brokering activities with
its affiliated gas utilities.
7. Technical Operation and Maintenance Services
a. KeySpan Electric Services LLC ("KES"). KES is a New York limited
liability company and wholly-owned subsidiary of KeySpan which, pursuant to
a contract, provides day-to-day operation and maintenance services and
construction management services to the LIPA for LIPA's transmission and
distribution facilities located on Long Island, New York ("T&D
Facilities"). In addition, KES provides management and administration
services to LIPA for its interests in the Nine Mile Point Unit 2 nuclear
facility ("NMP2"). KES's services are subject to the overall direction of
LIPA and LIPA maintains control over major decisions.33 In 1998, LIPA
acquired the T&D Facilities and NMP2 interests from the Long Island
Lighting Company ("LILCO") in a contemporaneous transaction related to the
combination of LILCO and KEC which resulted in KeySpan's indirect
acquisition of LILCO's non-nuclear generation assets. LIPA entered into the
services arrangement with KES since it was a beneficiary of the experience
and expertise developed by LILCO in operating the T&D Facilities and NMP2.
The services
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30 SEE Rule 58 (b)(1)(v).
31 ID.
32 ID.
33 KES is not an electric utility company under PUHCA. SEE BL HOLDING CORP.,
Holding Co. Act Release No. 26875 at 5 fn. 8 (May 15, 1998).
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KES provides to LIPA include performance of routine and
emergency facility additions and improvements, customer connections and
disconnections, construction of new facilities, supervision of routine and
major capital improvements, preparation of proposed budgets and monitoring
LIPA approved capital and operating budgets, load and energy forecasts,
long range and short range system and strategic plans, management and
repair or modification activities associated with public works projects and
emergency response activities for events affecting LIPA's facilities.34
b. KeySpan-Ravenswood Services Corp. ("KRS"). KRS, a New York
corporation and wholly-owned subsidiary of KeySpan, was created in June of
1999 in connection with KeySpan-Ravenswood Inc.'s ("KeySpan-Ravenswood")
acquisition of the Ravenswood Facility (as defined in Section 10 below).35
KRS is primarily engaged in providing day-to-day operation and maintenance
services to KeySpan-Ravenswood for the Ravenswood Facility, subject to
KeySpan-Ravenswood's overall direction and control. KRS also provides, at
no charge, small amounts of electricity to Con Edison and provides day to
day operation and maintenance services to Con Edison for its steam plant
located at the site of the Ravenswood Facility; the provision of these
services was a condition of Con Edison's sale of the Ravenswood Facility to
KeySpan-Ravenswood. Con Edison sells the steam produced at the plant to its
steam distribution customers located in New York. KRS employees include Con
Edison employees which were transferred to KRS at the time
KeySpan-Ravenswood acquired the Ravenswood Facilities. KRS does not own any
electric or steam facilities.36
8. Service Companies
a. KeySpan Corporate Services LLC ("KCS"). KCS, a New York limited
liability company and wholly-owned subsidiary of KeySpan, provides a
variety of traditional corporate administrative services to KeySpan and its
subsidiaries. The services KCS provides include general supervision,
corporate planning, and providing centralized services including the
following activities: human resources planning and administration;
accounting; financing and treasury services; insurance and risk management;
regulatory and governmental relations;
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34 SEE Rule 58 (b)(1)(vii).
35 KeySpan-Ravenswood, Inc. is an exempt wholesale generator under Section 32 of
the Act and is described more fully in Section 10 below.
36 SEE Rule 58 (b)(1)(vii). Moreover, in NEW CENTURY ENERGIES, INC., Holding Co.
Act Rel. No. 26-748 (Aug. 1, 1997), the Commission permitted a company that
intended to register as a holding company to retain a non-utility subsidiary
that provided operation and maintenance services to generation facilities in
which the holding company owned an interest and non-associated companies.
Accordingly, independent of Rule 58, KSR is retainable with respect to its
operation and maintenance activities because it is like the company in NEW
CENTURY ENERGIES, INC. Finally, KRS also provides small amounts of electricity
to Con Edison, which is an energy marketing activity within the meaning of Rule
58 (b)(1)(v). In addition, KRS also provides day to day operation and
maintenance services to Con Edison for its steam distribution plant located in
New York adjacent to the EWG's facilities. Rule 58(b)(1)(vi) defines the
following as an energy related activity: the production, conversion, sale and
distribution of thermal energy, including steam, and the servicing of thermal
energy facilities. Although KRS does not own the steam plant or itself sell
steam, the operation and maintenance services it provides for the steam
facilities are Rule 58 (b)(1)(vi) activities.
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corporate communications and external relations; consumer outreach and
education; information systems and technology; materials management and
procurement; legal services; call center operations; corporate and
strategic planning; internal auditing; billing and payment processing;
budget administration; security services; fleet management and maintenance;
and, building design, maintenance and management of buildings owned or
lease by affiliates. In a separate application filed with the Commission,
KeySpan has requested Rule 88 approval of KCS as a service company for the
registered holding company system.
b. KeySpan Utility Services LLC ("KUS"). KUS, a New York limited
liability company and wholly-owned subsidiary of KeySpan, provides the
following services only to KeySpan New York, KeySpan Long Island, KeySpan
Electric Services LLC, KeySpan Energy Trading Services LLC and KeySpan
Generation LLC: gas and electric transmission and distribution system
planning; gas supply planning and procurement; marketing services (I.E.,
planning, administration and support); research and development services;
and meter repair operations. In a separate application filed with the
Commission, KeySpan has requested Rule 88 approval of KUS as a service
company for the registered holding company system.37
9. Mining Company
Marquez Development Corporation ("MDC"). KeySpan owns a
75% interest in Marquez Development Corp. ("Marquez"), a New
York corporation, which owns an inactive uranium mill and
mine in New Mexico, however, the uranium was never mined.
Marquez's facilities are currently in the process of being
dismantled.38
10. Exempt Wholesale Generators
KeySpan-Ravenswood, Inc. ("KeySpan-Ravenswood").
KeySpan-Ravenswood, , a New York corporation and
wholly-owned subsidiary of KeySpan, is an EWG pursuant to
Section 32 of the Act.39 Keyspan-Ravenswood owns and/or
leases and operates an approximately 2,168
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37 Prior to registration or shortly thereafter, KeySpan anticipates acquiring
Montrose Surveying Co, Inc. as an additional direct, wholly-owned, non-utility
subsidiary, which will be renamed KeySpan Engineering & Survey Inc. ("KENG"),
and will be a service company that provides general engineering services to the
companies within the KeySpan system. KENG is described in greater detail in the
Omnibus Application and such description is incorporated herein by reference.
38 The interest in Marquez was originally purchased by LILCO in the 1970's as a
potential fuel supply source for its nuclear generation facilities. KeySpan
acquired the Marquez interest as part of its acquisition in 1998 of certain of
LILCO's generation and gas assets. The Commission has approved registered
holding company investments in companies involved in fuel and fuel-related
interests, including the ownership of mines that are a source of fuel for a
utility system. SEE NORTH AMERICAN CO., 11 SEC 194 (1942), AFF'D, 133 F. 2d 148
(2d Cir. 1943, AFF'D ON CONSTITUTIONAL ISSUES, 327 U.S. 686 (1946); SEE ALSO
1995 Report at 82; SYSTEM FUELS, INC. Holding Co. Act Release No. 20441 (March
9, 1978) (authorizing a uranium exploration program to assure an adequate supply
of uranium); SEE ALSO 1995 Report at 83.
39 SEE Section 32 of the Act and Rule 53.
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megawatt electric generating facility located in
Queens, New York ("Ravenswood Facility"). KeySpan-Ravenswood
acquired the Ravenswood Facility from The Consolidated
Edison Company of New York, Inc. ("Con Edison") in June of
1999 as part of Con Edison's divestiture of its generation
assets. KeySpan-Ravenswood sells energy, capacity and
ancillary services at wholesale.
11. Infrastructure Service Companies
KeySpan Services Inc. ("KSI"). KSI, a Delaware
corporation and wholly-owned subsidiary of KeySpan, is a
holding company of fifteen (15) wholly-owned, direct
non-utility subsidiaries which are engaged in the following
infrastructure service businesses: the ownership of
telecommunication equipment; the design and development of
energy plants for large industrial and institutional
customers; the installation and maintenance of heating and
central air-conditioning systems; providing a wide range of
appliances services for residential customers and small
business customers; providing plumbing and engineering
services; and marketing gas and retail electricity. The
activities of the KSI subsidiaries are conducted as an
integrated business and analyzed as a group. The chart set
forth below is provided to demonstrate the portion of the
business of KSI's companies (by company and in the
aggregate) that are engaged in Rule 58 energy related
activities and other infrastructure service functions that
are energy related. The revenues of the KSI companies are
predominantly derived from energy related activities and the
companies are comparable to similar infrastructure service
companies that the Commission has permitted registered
holding companies to retain either by rule or order.
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KEYSPAN ENERGY SERVICES, INC. AND SUBSIDIARIES
TWELVE MONTHS ENDED JUNE 30, 2000
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AFFILIATE40 PERCENTAGE OF REVENUES FROM THE FOLLOWING ENERGY RELATED FUNCTIONS
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EQUIPMENT SERVICE & TELECOM)45 TOTAL
ENERGY PROFESSIONAL
INSTALLATION41 MAINTENANCE42 SALES43 SERVICES44
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<S> <C> <C> <C> <C> <C> <C>
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KeySpan Services, Inc.
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KeySpan Energy Management, Inc. 78 8 10 4
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40 Binsky & Snyder, Inc, and Binsky & Snyder Service, Inc. were acquired by KSI as of July 1, 2000. Accordingly, revenue
percentages for each such company is not included herein.
41 Installation of heating, ventilating, hot water and air conditioning systems
and equipment.
42 Routine and emergency service and repair of boilers, air conditioners, and
other energy equipment.
43 Marketing of natural gas and electricity to customers.
44 Provision of multi-disciplined
engineering services.
45 Construction, operation and maintenance of fiber optic networks throughout
Long Island and New York City.
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KeySpan Engineering Associates, Inc. 100
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R.D. Mortman LLC 93 7
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Delta KeySpan, Inc. 100
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Roy Kay, Inc. 100
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Roy Kay Electrical, Inc. 100
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Roy Kay Mechanical, Inc.
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WDF, Inc. 98 2
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Paulus Sokolowski & Sartor 100
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Fritze KeySpan 67 33
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Active Conditioning Corp 100
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KeySpan Energy Solutions 29 71
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KeySpan Plumbing Solution, Inc. 100
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KeySpan Energy Services 100
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KeySpan Communications 100
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4th Avenue Enterprise Piping 100
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TOTAL PERCENTAGE 55 11 28 5 1 100%
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</TABLE>
KeySpan anticipates that the proportion of business
that the KSI group will conduct in the near future will
result in approximately the same percentage of revenues.
More detailed descriptions of each of KSI's subsidiaries are
described below. In most cases, the businesses of the
subsidiaries qualify as Rule 58 energy related companies.
KeySpan requests that the Commission reserve jurisdiction
over the retention pursuant to Section 11(b)(1) of the Act
of KSI and its subsidiaries. KeySpan will file a
post-effective amendment by June 30, 2001, seeking to
justify its retention of KSI and its subsidiaries pursant to
Section 11(b)(1) and if the Commission should subsequently
order the divestiture of all or any part of KSI's assets,
activities or subsidiaries, KeySpan requests that it be
allowed to take appropriate actions to effect such sale
within three years after such order.
a. KeySpan Communications Corp. ("KCC"). KCC, a New York corporation
and wholly-owned subsidiary of KSI, owns an approximately 400-mile fiber
optic network on Long Island and in New York City. KCC constructs and
operates fiber optic networks and transportation facilities. Currently,
KCC's fiber optic network serves several unaffiliated local, long distance
and transatlantic telephone carriers (such as AT&T and MCI) under long and
short term leases. KCC also has a contract with its affiliate, KCS,
pursuant to which portions of the fiber optic network is used by KCS to
serve the telecommunications needs (E.G., internal voice and date
transmission requirements) of KeySpan and certain of its utility and
non-utility subsidiaries.
b. KeySpan Energy Management, Inc. ("KEMI"). KEMI, a New York
corporation and wholly-owned subsidiary of KSI, is the holding company of
two wholly-owned non-utility subsidiaries which are engaged in the design
and operation of energy systems for large-scale residential and commercial
facilities, and providing energy-related services to clients in the New
12
<PAGE>
York metropolitan area. The customers consist of industrial or large
commercial and institutional entities, including hospitals, universities,
hotels and municipal authorities, such as the New York City Housing
Authority. Energy related services include: the review of existing utility
needs (I.E., electric, power supply and heating, ventilation, and air
conditioning ("HVAC") systems); the design and recommendation of new
efficient systems; and the installation and construction of power supply
and HVAC systems, boilers and burners. KEMI's subsidiaries are (i) KeySpan
Engineering Associates, Inc., a New York professional engineering
corporation, which reviews, and provides recommendations with respect to,
the power supply needs of its large commercial, industrial and
institutional customers and designs efficient, new power supply systems,
such as cogeneration facilities; and (ii) R.D. Mortman, LLC which installs
and services burners and boilers and designs, builds, installs and services
HVAC systems. None of these companies provide services or goods to their
affiliates.
c. KeySpan Energy Services, Inc. ("KESI"). KESI, a Delaware
corporation and wholly-owned subsidiary of KSI, is a gas and retail
electricity marketer.46 It buys and sells gas to residential, commercial
and industrial customers located in the Northeastern United States. It does
not provide any services or goods to its affiliates.47
d. KeySpan Energy Solutions, LLC ("KeySpan Solutions"). KeySpan
Solutions, a New York limited liability company and wholly-owned subsidiary
of KSI, provides service and maintenance for heating equipment, water
heaters, central air conditioners and gas appliances and offers safety
products and services to residential and small commercial gas customers.
The safety products and services include: safety inspections and repair
services; energy assessment and energy related safety checks, such as
carbon monoxide and faulty equipment wiring; products to promote safe
energy use, increase energy efficiency or provide energy related
information, such as carbon monoxide, smoke and fire detectors and fire
extinguishers. KeySpan Solutions also wholly owns the following subsidiary:
KeySpan Plumbing Solutions, Inc., a New York corporation,
provides piping and plumbing maintenance services associated
with the installation of gas heating, systems principally
with regard to boiler and hot water heater installations.
These services are provided to residential and small
commercial customers located in the New York Metropolitan
area. It does not provide any services or goods to its
affiliates.
e. Fritze KeySpan, LLC ("Fritze"). Fritze, a Delaware limited
liability company, designs, builds, installs and services HVAC systems for
small commercial and residential customers in North and Central New Jersey.
It does not provide any services or goods to its affiliates.
f. Delta KeySpan, Inc. ("Delta"). Delta, a Delaware corporation,
designs, builds and installs HVAC systems primarily for commercial
customers in Rhode Island and the New England region. It does not provide
any services or goods to its affiliates.
------------------------
46 It sells electricity to a limited number of retail customers.
47 SEE Rule 58 (b)(1)(v).
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<PAGE>
g. Active Conditioning Corp. ("Active"). Active, a New Jersey
corporation, is engaged in installing and maintaining boilers and HVAC
systems for residential and commercial customers located in New Jersey. It
does not provide any services or goods to its affiliates.
h. Fourth Avenue Enterprise Piping Corp. ("FAEP"). FAEP, a New York
corporation is engaged in installing and maintaining boilers and HVAC
systems for commercial and institutional customers located in New York. It
does not provide any services or goods to its affiliates.
i. Paulus, Sokolowski & Sartor, Inc. ("PSS"). PSS' operations are
designed to provide clients a full array of energy related engineering
services. The firm is structured to provide front end services such as
engineering studies, permitting and design. Accordingly, the services
provided by PSS are as follows: (a) mechanical and electrical engineering
which consists of system analysis (heating, ventilating, air-conditioning,
humidification/dehumidification, power distribution, grounding, lighting,
plumbing and fire protection); programming and planning services (energy
studies, utility consumption analysis and planning, equipment analysis,
utility analysis and planning, analysis of existing layouts and functional
relationships, and analysis of system performance); design services (energy
management systems, office environments (lighting, HVAC), equipment
installations/modifications and permitting); and construction phase
services (observation and evaluation of construction, contract
administration and drawings review); (b) civil engineering and survey which
consists of regulatory compliance and permitting, land use and surveys,
site utility master planning, storm water management, roadway design,
pavement evaluation/rehabilitation, and subdivision plans and applications;
(c) sanitary engineering which consists of sanitary and chemical sewage
systems, wastewater treatment systems (including planning and design of
waste gas to energy facilities), water supply systems, sludge handling,
industrial facility design, construction phase services and water quality
services; (d) architecture and facilities planning which consists of
architectural planning and design (feasibility studies, site
evaluation/selection/planning, zoning assistance, new building
renovations/modifications, construction phase services, project budget and
planning and code compliance); and interior design and facility planning
(interior design, space analysis, facilities planning and management,
lighting design, signage programs and space planning); (e) environmental
engineering which consists of soil investigations, groundwater studies,
regulatory compliance review, regulatory compliance and permitting, solid
waste management, environmental audits, site remediation, spill prevention,
air sampling and monitoring, air quality permitting, environmental impact
statements and underground storage tank analysis; (f) geotechnical
engineering which consists of surface and subsurface investigations,
foundation analysis and design, pavement evaluation and design, soil
mechanics, geophysical analysis, evaluation and design of retaining
structures, landfill site investigations and forensic investigations; and
(g) structural engineering which consists of existing building
investigations and analysis, foundation design, high-rise construction
design, structural steel design, wood construction design, bid review,
construction inspections, cost estimating, seismic analysis and field
investigations.
For the twelve months ended June 30, 2000, the percentage of
PSS' total revenue generated by each of the foregoing categories of services
were as follows: mechanical
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and electrical engineering - 20.10%; civil engineering and survey - 25.84%;
architectural and facilities planning - 6.36%; environmental engineering -
24.48%; sanitary engineering - 6.30%; geotechnical engineering - 7.32%; and
structural engineering - 9.60%.
PSS' clients consist of large and industrial customers, such as
utilities, corporate offices, hotels, laboratories, warehouses, pharmaceutical
companies, hospitals, universities and power plants. PSS does not provide any
services or goods to its affiliates. PSS serves as a general environmental and
engineering consultant to major utility companies in New Jersey. These clients
include PSE&G, GPU, Conectiv, and New Jersey Natural Gas. For example, for over
ten years PSS has provided environmental and engineering consulting services for
various generation and transmission facilities under a multi-year contract to
PSE&G. Services including environmental permitting and professional planning;
air quality engineering and permitting; wetlands and general environmental
analysis; and water quality engineering and permitting. PSS also provides
engineering and environmental consulting services to GPU Energy on a contract
basis. PSS responds to GPU Energy's requests for a variety of specific services
including, but not limited to, the preparation of Environmental Assessments of
projects presented to the Board of Public Utilities (BPU), expert testimony for
BPU Applications, wetland delineation and permitting, waterfront development
permitting, US Army Corp of Engineers permitting, as well as geotechnical,
structural and civil engineering services. PSS has provided these services to
GPU Energy for approximately ten years.48 PSS has also provided environmental
and full-service engineering services to Conectiv and its subsidiaries on a
variety of projects over the past several years. Projects located in Atlantic
City include the Midtown Thermal Plant, a thermal line running along the beach
and Boardwalk and the Marina Thermal Plant. Also, PSS has provided
----------------------
48 Examples of GPU projects in which PSS participated are as follows. THE
FRENEAU - TAYLOR LANE TRANSMISSION PROJECT - With respect to this project, PS&S
completed an environmental assessment and prepared expert testimony in support
of a GPU's application to the New Jersey Board of Public Utilities for the 6 1/2
mile 69kV transmission line. Approximately four miles of the transmission line
project is proposed as an underground facility. In preparation for applicable
wetland permits applications, PS&S is managing production of historic and
archaeological investigations and has completed wetland delineations for the
transmission line and associated substation expansion. PLEASANTVILLE - NEW
BRUNSWICK FIBER OPTIC CABLE - PSS' role in this project was to prepare
applications on behalf of GPU Telecom Services, Inc. to the New Jersey
Department of Environmental Protection (NJDEP) and the US Army Corps of
Engineers to obtain permits for the construction of a fiber optic cable across
numerous tidal waterbodies along the New Jersey coast. PSS produced survey
information regarding each of these crossings to facilitate GPU's placement of
the fiber optic cable on Conectiv's transmission and distribution system. PSS
also worked to manage and coordinate the agency reviews so as to obtain the
permits in a timely manner given a compressed project schedule. CENTRAL JERSEY
TRANSMISSION RELIABILITY PROJECT - On this project, PSS completed preliminary
and final environmental assessments and expert testimony for two-230kV
transmission circuits totaling 9 miles. PSS also obtained necessary NJDEP
wetlands permits including assessments regarding the presence of endangered
plant species proximate to a substation expansion.
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environmental and engineering services to a PSE&G/Conectiv joint venture for a
thermal plant in Essex County, New Jersey. 49
j. WDF, Inc. ("WDF"). WDF, a New York corporation, provides mechanical
contracting services to large scale commercial, institutional and
industrial customers in the New York area. Its services are primarily the
design, construction, alteration, maintenance and repair of plumbing and
HVAC systems including related piping installation and welding. It does not
provide any services or goods to its affiliates.
k. Roy Kay, Inc. ("RKI"). RKI, a New Jersey corporation, is primarily
engaged in providing mechanical and electrical services to commercial,
industrial and institutional customers such as the New York City Housing
Authority and New York State Dormitory Authority. RKI installs and
renovates HVAC systems, as well as oil and gas burners. Its services
include the installation of all piping equipment, as well as the design and
fabrication of piping and sheet metal for its mechanical contracting
services. Sometimes in connection with the mechanical and electrical
contracting services it provides, RKI will also engage in general
contracting services which are incidental to a given mechanical or
electrical contracting project upon which it is working. For example, RKI
is currently involved in 15 mechanical and electric contracting projects
and only 6 of those projects involve RKI also providing general contracting
services. The general contracting services relate to the structures in
which RKI is installing or servicing HVAC systems and consists of
observation and evaluation of the specific projects, contract
administration, drawings review, selection and supervision of
subcontractors, vendors and suppliers, procurement activities, and
permitting and licensing. In the future, RKI intends to continue to
predominantly provide electrical and mechanical contracting services and
only engage in general contracting services that are incidental and
necessary in connection with its HVAC activities. It does not provide any
services or goods to its affiliates.
l. Roy Kay Electrical Company ("RK Electrical"). RK Electrical is a
New Jersey corporation that is licensed to perform electrical contracting
work both in New York and New Jersey. RK Electrical's services include
installing and upgrading the wiring and power supply of buildings for
commercial, institutional and industrial customers such as the New York
City Housing Authority and New York State Dormitory Authority.50 It does
not provide any services or goods to its affiliates.
m. Roy Kay Mechanical, Inc. ("RK Mechanical"). RK Mechanical is
engaged in the installation and renovation of sprinkler systems and fire
suppression systems in New York and New Jersey which are necessary to put
out fires which may be the result of, INTER ALIA, faulty electrical wiring
or other electrical problems.51 Its services include piping fabrication for
its systems for commercial, institutional and industrial customers such as
the New York City Housing Authority and New York State Dormitory Authority.
It does not provide any services or goods to its affiliates.
----------------
49 The Commission has previously authorized registered holding companies to
retain and acquire companies engaged in consulting and engineering services. WPL
HOLDINGS, INC. Holding Co. Act Release No. 26856 (April 14, 1998); CENTRAL AND
SOUTH WEST SERVICES, Holding Co. Act Release No. 26898 (July 21, 1998). In WPL,
the Commission permitted the retention of non-utility companies that provided a
wide range of environmental consulting and engineering services, such as
management services for solid waste management, hazardous waste management,
industrial health safety, strategic environmental management services and
facility and process design. In CENTRAL, the Commission approved a registered
holding company's ownership of a company engaged in engineering and
environmental services relating to consulting and design engineering,
environmental and occupational health permitting, and environmental and
occupational health management systems.
50 SEE GPU, INC. (The Commission authorized acquisition of a company which,
INTER ALIA, provides commercial and industrial services consisting of
electrical, mechanical and maintenance contracting, including construction
activities such as the installation of complete electrical systems wiring for
utilities and commercial and industrial facilities).
16
<PAGE>
n. Binsky & Snyder, Inc. ("BSI"). BSI, a New Jersey corporation, is
engaged in installing HVAC systems for commercial and industrial customers
located primarily in New Jersey.
o. Binsky & Snyder Service, Inc. ("BSSI"). BSSI,a New Jersey
corporation, is engaged in the servicing and maintenance of HVAC systems
for commercial and industrial customers located primarily in New Jersey.
12. Energy Technology Companies
KeySpan Technologies Inc. ("KT"). KT is a New York corporation,
and wholly-owned subsidiary of KeySpan, involved in developing, demonstrating,
marketing, operating and maintaining, for residential and institutional
customers, fuel cells that utilize natural gas.52 Its industrial customers
include hospitals and chemical companies located in New York.
13. ETCs
KeySpan MHK, Inc. ("KMHK"). KMHK, a Delaware corporation,
currently owns an approximately 18.2% equity interest in MyHomeKey.com, Inc.
("MHK").53 MHK, a Delaware corporation, has been created to establish and
maintain an Internet-based website which will serve as (1) a national platform
for local websites offering energy and home-related goods and services and (2) a
contractor for energy and home-related services from goods and services
providers of national scope.54 On November 3, 2000, MHK applied to the Federal
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51 SEE CONSOLIDATED NATURAL GAS CO., Holding Co. Act Release No. 26757 (August
27, 1997) ( The Commission has authorized registered holding companies to retain
businesses engaged in selling safety products and services, including such
products as smoke and fire detectors and fire extinguishers, finding such
services and products to be energy related).
52 SEE Rule 58 (b)(1)(iv).
53 KMHK acquired its interest in MHK in late March of 2000. KMHK's approximate
18.2% equity interest is calculated as of April 18, 2000, on a fully diluted
basis, assuming the conversion of all issued and outstanding convertible
preferred stock of MHK and the exercise of all outstanding stock options.
54 MHK will act as a national website which incorporates software and software
integration systems which can be accessed by local websites operated by MHK
licensees. It is intended that MHK licensees will be energy companies throughout
the United States, each of which will be allocated an exclusive geographic
territory. Each licensee will
17
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Communications Commission ("FCC") for certification as an exempt
telecommunications company ("ETC") under Section 34 of the Act.55 During the
pendency of its application, MHK is deemed to be an ETC. Accordingly, MHK, and
KMHK as an investor/licensee of MHK, are retainable under the Act.
If the FCC denies MHK's application, KeySpan commits to make a
filing with the Commission by June 30, 2001, explaining why it should be
permitted under the Act to retain its interests in MHK and KMHK.56
14. Inactive Companies57
a. Solex Production Limited ("Solex"). In October of 2000, Solex
Production Limited, a Canadian corporation and wholly owned subsidiary of
KEDC, sold all of its interests in the Nipisi oil and gas field located in
western Canada and no longer operates the field. Solex is currently in the
process of winding down its business affairs and will be dissolved as soon
as practicable.
------------------
establish and maintain its own website which will
be accessed through the MHK master site. With the combined functionality of the
national and local websites, the users of the MHK licensees' websites will be
able to access a wide variety of services, including (i) identifying and
scheduling local and national providers of routine and emergency energy and
home-related services (plumbing; HVAC installation, maintenance and repair;
roofing; carpet cleaning; security system installation and monitoring; etc.);
(ii) purchasing and scheduling installation of home appliances; (iii) monitoring
and remotely controlling energy usage and the home environment; (iv) purchasing
energy through links with other websites; (v) paying utility and other bills;
(vi) monitoring community calendars (E.G., civic events, governmental meetings,
Little League games); (vii) making reservations and purchasing tickets for local
activities (E.G., restaurants, movies, sporting events); and (viii) managing
residential relocations. MHK will operate and maintain the national website, and
will have responsibility for making arrangements with national service
providers. The MHK licensees will operate and manage their local websites, and
will have responsibility for making arrangements with local services providers
and local communities. Responsibility for promoting the website nationally will
rest with MHK. Responsibility for promoting the co-branded website within a
licensee's geographic territory will be divided between MHK and the licensee.
KMHK has entered into a license agreement with MHK pursuant to which KMHK will
develop, operate and maintain a local website featuring KeySpan companies. The
local websites will be co-branded" so that, in the case of KeySpan, the local
website will be known as "KeySpan MyHomeKey." KMHK's license agreement with MHK
designates six states as KMHK's geographic territory (I.E., New York, New
Jersey, Connecticut, Massachusetts, New Hampshire and Rhode Island).
55 Section 34 of the Act deems ETCs to be functionally related to a registered
holding company's business.
56 SEE EXELON CORPORATION, Holding Co. Act Rel. No. 35-27256 (Commission
required holding company to cause non-utility holding company subsidiaries to
apply for ETC status by June 30, 2001, or make a filing by that date explaining
why such companies were retainable under the Act).
57 In the event that KeySpan seeks to reactivate any of the inactive companies
listed below, KeySpan commits to file a post-effective amendment seeking
authorization to engage in the proposed activities if such authorization is
required under PUHCA or the Commission's rules thereto.
18
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b. GEI Development Corp. ("GEI"). GEI, a Delaware corporation and
wholly-owned subsidiary of KEC, is the successor company to, and holds the
outstanding obligations of, Gas Energy Inc. and Gas Energy Cogeneration
Inc., which owned interests in several QFs. The QF interests were sold to
Calpine Corporation in December 1997. GEI is currently in the process of
winding down its business affairs and will be dissolved as soon as
practicable.
c. Island Energy Services Company, Inc. ("Island Energy"). KeySpan
owns a 70% interest in Island Energy, a New York corporation. Island Energy
is an inactive company which owns no assets.
II. Eastern's Subsidiaries
Eastern, through its direct and indirect subsidiaries, engages
in energy related businesses and such subsidiaries are described below.
1. Rule 52(b) Gas Related Companies
Transgas Inc. ("Transgas"). Transgas is an unregulated energy
trucking company, which provides over-the-road transportation of LNG,
propane and other commodities to companies in the United States.58
Transgas is the nation's largest over-the-road transporter of LNG.
2. Real Estate Activities
a. Eastern Rivermoor Company, Inc. ("ERC"). ERC holds title to
real estate used by Boston Gas Company (Eastern's utility subsidiary)
in its operations (E.G., for service centers, garages, ETC.).59
b. PCC Land Company, Inc. holds title to real property in
Pennsylvania that was the site of a coke plant operated by
Philadelphia Coke Co., Inc., an associate company that is now
inactive.60 KeySpan requests that the Commission reserve jurisdiction
pursuant to Section 11(b)(1) of the Act over the retention of PCC.
KeySpan will file a post-effective amendment by June 30, 2001, seeking
to justify its retention of PCC pursuant to Section 11(b)(1) and if
the Commission should subsequently order the divestiture of all, or
any one or part of, PCC or its assets or activities, KeySpan requests
that it be allowed to take appropriate actions to effect such sale
within three years after such order.
3. HVAC Companies
--------------------
58 SEE Rule 58 (b)(2)(ii); CONSOLIDATED NATURAL GAS COMPANY, ET AL., Holding Co.
Act Release No. 26363 (August 28, 1995).
59 SEE UNITIL CORPORATION, Holding Co. Act Release No. 25524 (Apr. 24, 1992).
60 ID.
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ServiceEdge Partners, Inc. ("ServiceEdge"). ServiceEdge offers
heating, ventilation and air conditioning services, primarily to
residential customers in eastern Massachusetts.61
4. Meter Companies
AMR Data Corporation ("AMR"). AMR provides customized metering
equipment and performs automated meter reading services to municipal
utilities.62
5. Civic Investments
KeySpan requests that the Commission reserve jurisdiction over
the retention pursuant to Section 11(b)(1) of the Act of the following
companies. KeySpan will file a post-effective amendment by June 30, 2001,
seeking to justify its retention of these subisidiaries pursuant to Section
11(b)(1) and if the Commission should subsequently order the divestiture of all,
or any one or part of, the subisidiaries or their assets or activities, KeySpan
requests that it be allowed to take appropriate actions to effect such sale
within three years after such order.
a. Eastern Enterprises Foundation ("EEF"). EEF makes charitable
contributions.63
b. Eastern Urban Services, Inc. ("EUS"). EUS, beginning in the 1960s,
invested in a number of limited partnerships which acquired, rehabilitated and
operated existing low-income housing projects for which Federal financing was
available. Only one of these partnerships, Amiff Housing Associates, continues
to operate.64
c. Eastern Associated Securities Corp. ("EASC"). EASC was formed to hold
investment securities.65
6. Inactive Companies66
-----------------
61 SEE Rule 58(b)(1)(iv). SEE ALSO CONECTIV, SUPRA. AND CINERGY, SUPRA.
62 SEE NEW CENTURY ENERGIES, INC., Holding Co. Act Release No. 26748 (Aug. 1,
1997); CENTRAL AND SOUTH WEST CORP., Holding Co. Act Release No. 26250 (March
14, 1995); and APPALACHIAN POWER CO., Holding Co. Act Release No. 26639 (January
2, 1997).
63 The Commission has permitted registered holding companies to make and retain
investments that are passive and/or DE MINIMIS in civic, charitable, and
economic development ventures, including investments in venture capital
partnerships, that are important to the responsibilities of good corporate
citizenship. SEE WPL HOLDINGS, Holding Co. Act Release No. 26856 (April 14,
1998); AMEREN CORPORATION, Holding Co. Act Release No. 26809 (December 30,
1997).
64 ID.
65 ID.
66 In the event that KeySpan seeks to reactivate any of the inactive companies
listed below, KeySpan commits to file a post-effective amendment seeking
authorization to engage in the proposed activities if such authorization is
required under PUHCA or the Commission's rules thereto.
20
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The following direct and indirect subsidiaries of Eastern (other
than direct and indirect subsidiaries of Midland) are inactive and have no
material assets:
o Eastern Energy Systems Corp.
o Mystic Steamship Corporation
o Philadelphia Coke Co., Inc.
o Water Products Group Incorporated
o Western Associated Energy Corp.
o CGI Transport Ltd. (an indirect subsidiary of Colonial Gas Company)
7. Barge Companies
Midland Enterprises, Inc. ("Midland")67 is a non-utility holding
company engaged, through wholly owned subsidiaries, in activities primarily
consisting of operating a fleet of towboats, tugboats and barges which transport
a variety of commodities including stone, grain, sand, scrap, coal, steel, coke;
performing repair work on marine equipment; operating coal dumping and other
river terminals and a ship loading terminal for phosphate rock; and provide
refueling and barge fleeting services. Midland's subsidiaries are as follows:
a. The Ohio River Company ("ORCO"), the largest of Midland's
subsidiaries in terms of tonnage transported, operates a fleet of
towboats and barges, principally on the Ohio River and certain of its
tributaries and the commodities it transports consist of coal used by
electric utilities and other non-utility customers, stone, grain,
sand, scrap, steel, coke and other commodities.
b. The Ohio River Company Traffic Division, Inc. which provides
sales and customer services to ORCO and its affiliated barge lines.
c. Orgulf Transport Co. which operates a fleet of towboats and
barges principally on the Mississippi and Ohio Rivers and the Illinois
Waterway, transporting coal used by electric utilities and other
non-utility customers, stone, grain, scrap and other commodities.
----------------
67 Midland files annual and other periodic reports with the Commission pursuant
to Section 12(g) of the Securities Exchange Act of 1934. SEE File No. 2-39895.
21
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d. Orsouth Transport Co. which operates principally on the
Tennessee-Tombigbee and Gulf Intracoastal Waterways, and on the Black
Warrior and Mississippi Rivers, transporting primarily coal and steel
related commodities.
e. Red Circle Transport Co. which is primarily engaged in the
offshore transportation of phosphate rock in the Gulf of Mexico and
grain from Louisiana to Puerto Rico.
f. Capital Marine Supply, Inc. which leases and operates barge
fleeting facilities near New Orleans, Louisiana, and provides port
services on the Mississippi River.
g. Chotin Transportation, Inc. charters barges which are operated
by affiliated barge lines.
h. Eastern Associated Terminals Company which operates a
rail-to-vessel fertilizer and phosphate rock terminal in Tampa,
Florida.
i. Federal Bridge Lines, Inc. owns riparian land in Louisiana.
j. River Fleets, Inc. operates a terminal on the Tennessee River
and barge fleeting facilities on the Mississippi and Tennessee Rivers.
k. Hartley Marine Corp. operates shipyard facilities at Paducah,
Kentucky, sells fuel to towboats on the Ohio River, operates cargo
transfer facilities on the Ohio and Tennessee Rivers, and provides
towing services principally on the Ohio River and its tributaries;
Minnesota Harbor Service, Inc. leases barge mooring sites in the Port
of St. Paul, Minnesota.
l. The Ohio River Terminals Company owns and operates a coal
dumping facility in Huntington, West Virginia.
m. Port Allen Marine Service, Inc. is an inactive company which
formerly operated a shipyard at Brusly, Louisiana.
n. West Virginia Terminals, Inc. leases an inactive coal dumping
terminal in Kenova, West Virginia.
KeySpan recognizes that the activities of Midland and its
subsidiaries do not satisfy the standard for retention by a registered gas
utility holding company under Section 11(b)(1) of the Act because they consist
predominantly of barge transportation activities, and the hauling of commodities
(E.G., grain and rocks) to unaffiliated parties, that are unrelated to KeySpan's
gas utility business. Moreover, although coal is transported by some of the
Midland companies, it is unrelated to KeySpan's electric utility business (I.E.,
KeySpan Generation) because fossil fuels other than coal are used to operate the
plants. Accordingly, KeySpan requests that any order that the Commission issues
which approves the Transaction but requires KeySpan to divest of Midland
pursuant to Section 11(b)(1) of the Act permits KeySpan to take the appropriate
actions to effect the sale of all of its interests in Midland, its subsidiaries
and assets, within three years after the Transaction is consummated.
22
<PAGE>
III. EnergyNorth's Non-Utility Subsidiaries
EnergyNorth, through its direct and indirect subsidiaries,
engages in energy related businesses and such subsidiaries are described below.
1. Energy Marketers
EnergyNorth Propane, Inc. ("ENPI"). ENPI sells propane to
approximately 15,300 customers in more than 150 communities located primarily
within a 50-mile radius of Concord, New Hampshire. Propane distribution does not
require a regulatory franchise in New Hampshire. ENPI operates from separate
headquarters and plant facilities that it owns in Concord, New Hampshire and has
distribution centers in Bedford and Gilford, New Hampshire. Propane is
transported in bulk supply by trucks to and from ENPI's distribution centers.68
ENPI owns a 49% interest in VGS Propane, LLC ("VGSP"), a joint venture with
Northern New England Gas Corporation, which owns the other 51%. VGSP is a
Vermont limited liability company which provides propane service to
approximately 10,000 customers in the state of Vermont.69
2. HVAC Companies.
---------------
ENI Mechanicals, Inc. ("ENM"). ENM, a non-utility holding
company, owns all of the outstanding stock of Northern Peabody, Inc. ("NPI") and
Granite State Plumbing and Heating, Inc. ("GSPH"). NPI and GSPH are mechanical
contractors engaged in the design, construction and service of plumbing,
heating, ventilation, air conditioning and process piping systems. They serve
commercial, industrial and institutional customers in northern and central New
England. NPI and GSPH operate from separate headquarters and facilities located
in Manchester, New Hampshire and Goffstown, New Hampshire, respectively. The
activities of the ENM subsidiaries are conducted as an integrated business and
analyzed as a group. The chart set forth below is provided to demonstrate the
portion of the business of NPI and GSPH's activities (by company and in the
aggregate) are engaged in Rule 58 energy related activities. The revenues of
these companies are exclusively derived from energy related activities and the
companies are comparable to similar infrastructure service companies that the
Commission has permitted registered holding companies to retain either by rule
or order. KeySpan requests that the Commission reserve jurisdiction over the
retention pursuant to Section 11(b)(1) of the Act of the above companies.
KeySpan will file a post-effective amendment by June 30, 2001, seeking to
justify its retention of these subisidiaries pursuant to Section 11(b)(1) and if
the Commission should subsequently order the divestiture of all, or any one or
part of, the subisidiaries or their
----------------------
68 SEE Rule 58(b)(1)(v).
69 ID.
23
<PAGE>
assets or activities, KeySpan requests that it be allowed to take appropriate
actions to effect such sale within three years after such order.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
ENI MECHANICALS, INC. AND SUBSIDIARIES
TWELVE MONTHS ENDED JUNE 30, 2000
-----------------------------------------------------------------------------------------------------------------------------------
AFFILIATE PERCENTAGE OF REVENUES FROM THE FOLLOWING ENERGY RELATED FUNCTIONS
-------------------------------------------------------------------------------------
EQUIPMENT PLUMBING/PIPING TOTAL
INSTALLATION AND SERVICING70 SERVICES
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ENI Mechanicals, Inc.
---------------------------------------------------------------------------------------------------------------------------------
Northern Peabody, Inc. 58% 42%
---------------------------------------------------------------------------------------------------------------------------------
Granite State Plumbing and Heating, Inc. 64% 36%
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
TOTAL PERCENTAGE 60% 40% 100%
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
3. Real Estate Companies
a. EnergyNorth Realty, Inc. ("ENR"). ENR is engaged primarily in
owning and leasing land and a building located at 1260 Elm Street in
Manchester, New Hampshire, where EnergyNorth and all of its
subsidiaries, except ENPI and ENM, maintain corporate offices.71
b. Broken Bridge Corp. ("Broken Bridge"). Broken Bridge owns
undeveloped land located in Concord, New Hampshire holds unimproved
real estate acquired for utility purposes that is adjacent to a take
station located in Concord, NH, at the northern terminus of the
Tennessee Gas pipeline system, where it interconnects with the ENGI
gas system.72
--------------------
70 Installation and service of heating, ventilating, hot water and air
conditioning systems and equipment.
71 SEE UNITIL CORPORATION, SUPRA.
72 ID.
24
