92 FERCP. 62, 155
UNITED STATES OF AMERICA
FEDERAL ENERGY REGULATORY COMMISSION
Southern Indiana Gas & Electric Company, Docket No. EC00-113-000
Vectren Utility Holdings, Inc., and
Vectren Corporation
ORDER AUTHORIZING DISPOSITION OF
JURISDICTIONAL FACILITIES AND
CORPORATE REORGANIZATION
(Issued August 16, 2000)
On July 10, 2000, as supplemented on July 25, 2000, Southern Indiana Gas &
Electric Company (SIGECO), Vectren Corporation (Vectren), and Vectren Utility
Holdings, Inc. (VUHI) (collectively, Applicants) filed a joint application under
section 203 of the Federal Power Act (FPA)/1 for Commission authorization of a
proposed corporate reorganization under which Vectren will contribute all of the
common stock of SIGECO to VUHI.
SIGECO is a power marketer authorized by the Commission to sell electric
power at market-based rates./2 SIGECO, a subsidiary of Vectren, is engaged in
the generation, transmission, distribution and sale of electric energy, as well
as the purchase of natural gas and its transportation, transmission,
distribution and sale in southwestern Indiana. SIGECO provides electric
distribution service and gas distribution service to retail customers in
Indiana.
Vectren, an exempt public utility holding company under the Public Utility
Holding Company Act of 1935 (PUHCA), was formed as a result of the merger of
Indiana Energy, Inc. and SIGCORP, Inc./3 Through its subsidiaries, SIGECO,
Community Natural Gas Company (Community), and Indiana Gas Company, Inc.
(Indiana Gas), Vectren provides electric and/or gas utility service to customers
in Southern and Central Indiana. VUHI, an Indiana corporation and a wholly-owned
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1/ 16 U.S.C.ss.824b (1994).
2/ See, Southern Indiana Gas & Electric Co., 77 FERCP. 61,024 (1996).
3/ See, Southern Indiana Gas & Electric Co. and Vectren Corp., 89 FERCP. 61,288
(1999).
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subsidiary of Vectren was formed to serve as the intermediate holding company
for Vectren's utility interests./4
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4/ According to the application, VUHI will claim exemption from registration
under PUHCA pursuant to Section
3(a)(1).
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According to the application, the proposed reorganization involves a change
in the ownership structure of SIGECO, which will be accomplished by Vectren
contributing all of the common stock of SIGECO, to its wholly-owned subsidiary,
VUHI. Applicants state that the reorganization will only cause a change in
corporate structure and will not cause a change in ultimate control of any of
the assets owned by the parent company. In addition, Applicants contend that the
proposed reorganization is designed to provide increased financial, managerial,
and organizational flexibility in order to better position Applicants to operate
in the changing energy industry. Furthermore, Applicants state that the
intermediate holding company structure will serve to streamline the operations
of the Vectren utilities, provide an additional degree of structural separation
for those companies, and promote the economical and efficient development of an
integrated public utility system.
According to the application, the proposed reorganization is consistent
with the public interest and will not have an adverse effect on competition,
rates or regulation. With respect to competition, Applicants state that the
proposed reorganization will not adversely affect competition because the
propose reorganization is a purely intra-corporate transaction, and therefore,
will not create or enhance market concentration levels in relevant markets. In
addition, Applicants contend that the proposed reorganization will promote the
economical and efficient development of an integrated public utility system.
With regards to rates, Applicants assert that the proposed reorganization
will not have an adverse effect on the wholesale rates of SIGECO. According to
the application, SIGECO currently provides full requirements service to the City
of Huntingburg and the City of Boonville, Indiana. SIGECO also provides partial
requirements service to the City of Jasper, Indiana, and backup and emergency
power to Alcoa Generating Company. The application states that, to protect
wholesale customers, Applicants agree that none of the costs arising from the
proposed reorganization will be used as a vehicle for an increase in
jurisdictional entities' wholesale electric rates. Applicants notes that in the
event that they intend to alter either SIGECO's transmission or wholesale power
rates, they would be required to file such change under section 205 of the FPA.
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Additionally, with regards to the agreements under which SIGECO sells power at
wholesale under its market-based rate authority, Applicants note that such
agreements will remain unaffected by the proposed reorganization. With respect
to regulation, Applicants state that the proposed reorganization will not have
an adverse effect on regulation because SIGECO will continue to be subject to
the Commission's jurisdiction.
Notice of the application was published in the Federal Register with
comments due on or before August 9, 2000. No comments were received.
After consideration, it is concluded that the proposed transaction is
consistent with the public interest and is authorized, subject to the following
conditions:
(1) The proposed transaction is authorized upon the terms and conditions
and for the purposes set forth in the application;
(2) The foregoing authorization is without prejudice to the authority of
the Commission or any other regulatory body with respect to rates,
service, accounts, valuation, estimates or determinations of cost, or
any other matter whatsoever now pending or which may come before the
Commission;
(3) Nothing in this order shall be construed to imply acquiescence in any
estimate or determination of cost or any valuation of property claimed
or asserted;
(4) The Commission retains authority under sections 203(b) and 309 of the
FPA, to issue supplemental orders as appropriate; and
(5) Applicants shall promptly notify the Commission of the date the
disposition of the jurisdictional facilities is consummated.
Authority to act on this matter is delegated to the Director, Division of
Corporate Applications, pursuant to 18 C.F.R. ss. 375.307. This order
constitutes final agency action. Requests for rehearing by the Commission may be
filed within thirty (30) days of the date of issuance of this order, pursuant to
18 C.F.R. ss. 385.713.
Michael C. McLaughlin, Director
Division of Corporate Applications
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