13
668536v3
EXHIBIT D1-2
BEFORE
THE PUBLIC UTILITIES COMMISSION OF OHIO
In the Matter of the Joint )
Petition of VECTREN ENERGY )
DELIVERY OF OHIO, INC. *(1), )
INDIANA GAS COMPANY, INC., AND )
THE DAYTON POWER AND LIGHT ) Case No. 00-524-GA-ATR
COMPANY, to Transfer the )
Natural Gas Assets of The )
Dayton Power and Light Company )
to Vectren Energy Delivery of )
Ohio, Inc. and/or Indiana Gas
Company, Inc. Pursuant to R.C.
Section 4905.48 (B) and (C)
JOINT PETITIONERS'
SUPPLEMENT TO THE JOINT PETITION
(1) Joint Petitioners Vectren Energy Delivery of Ohio,
Inc. ("Company"), Indiana Gas Company, Inc. ("IGC"), and The
Dayton Power and Light Company ("DP&L") filed a Joint
Petition on March 20, 2000 ("Joint Petition") with the
Public Utilities Commission of Ohio ("Commission")
requesting that the Commission approve the sale and
corresponding purchase of certain of the natural gas assets
of DP&L (the "DP&L Gas Assets") by and between DP&L, Company
and IGC. Company and IGC informed the Commission in the
Joint Petition that they desired to proceed with the
acquisition of the DP&L Gas Assets pursuant to a transaction
structure that would result in the continued availability of
an "intrastate" exemption for their ultimate corporate
parent, now Vectren Corporation ("Vectren"), under the
Public Utility Holding Company Act of 1935 ("PUHCA").
(Joint Petition # 2). Accordingly, although the Petition
sought approval of the purchase of the DP&L Gas Assets by a
Vectren subsidiary, the identity
__________________________________________________________
* (1) Vectren Energy Delivery of Ohio, Inc. is a party to
the Asset Purchase Agreement previously submitted with the
Joint Petition initiating this case. The company was
originally named Number-3CHK, Inc., which was the name given
to it by the Dayton Power and Light Company's law firm,
which had originally incorporated the company. On March 17,
2000, the company changed its name to Vectren Energy of
Ohio, Inc. by amending its Articles of Incorporation and
making the necessary filings with the secretary of State's
office. On May 9, 2000, it changed its name to Vectren
Energy Delivery of Ohio, Inc. in an effort to better
communicate to the public its primary business function,
which is the delivery of energy to consumers.
______________________________________________________
<PAGE>
of the purchasing subsidiary was left open, subject to
receiving input from the Securities and Exchange Commission
("SEC"), which administers the PUHCA.
(2) Vectren was created by the merger ("Merger") of
Indiana Energy, Inc. ("IEI"), the former parent company of
Company and IGC, and SIGCORP, Inc. ("SIGCORP"). (Joint
Petition 4). The Merger closed on March 31, 2000, and, as
a result, Company and IGC are now each wholly-owned
subsidiaries of Vectren.
(3) Following the filing of the Joint Petition,
representatives of Company and IGC consulted with
representatives of the SEC Office of Public Utility
Regulation ("SEC Staff") regarding the transaction structure
(the "Structure") which should permit Vectren to retain its
intrastate exemption under Section 3(a)(1) of PUHCA. (Joint
Petition 5). In accordance with input received from the
SEC Staff, and subject to receiving all necessary regulatory
approvals, Company and IGC intend to proceed with the
acquisition of the DP&L Gas Assets pursuant to the Structure
outlined below:
(a) Pursuant to the Structure, Company,
an Ohio corporation, would acquire an
approximate 53% ownership interest in the
DP&L Gas Assets, and IGC, currently an
Indiana corporation, would acquire an
approximate 47% ownership interest in the
DP&L Gas Assets. The ownership interest
of the DPL Gas Assets between Company and
IGC would be in the form of a tenancy in
common.
(b) The Company will be the operator of
the DP&L Gas Assets. Because Ohio law
requires domestic incorporation of any
entity providing utility services in Ohio,
to ensure that it complies with Ohio law,
IGC has also incorporated under Ohio law.
As a result of this action, IGC is now
dually incorporated under Indiana and Ohio
law.
<PAGE>
(c) For all purposes of providing
service to customers, as well as for all
facets of regulation by the Commission,
the DP&L Gas Assets owned by Company and
IGC would be operationally combined so
that effectively they would be operated in
Ohio by Company as a single entity. Ohio
customers would therefore be served and
billed by Company. The Company would
submit all regulatory filings on a
consolidated basis in the name of the
Company. The operationally combined
enterprise would maintain a single tariff
applicable to Ohio customers in the name
of the Company. The business would be
conducted under the name of the Company,
with IGC securing the d/b/a in Ohio of
"Vectren Energy Delivery of Ohio, Inc."
(d) To effectuate the operational
combination of the DP&L Gas Assets, the
order of the Commission should acknowledge
the structure described herein and provide
accounting authority sufficient in all
respects for Company (in its individual
capacity and jointly on behalf of IGC) to
maintain such books, system of accounts,
depreciation reserve or fund and any other
records as Company and IGC may reasonably
require to lawfully own, operate and
maintain the DP&L Gas Assets in accordance
with Title 49, Revised Code, as well as
all other applicable laws and regulations.
<PAGE>
(e) Based upon discussions with the
Staff of the Commission, IGC and the
Company confirm that the accounting
treatment to be employed by the
operationally combined enterprise relating
to the asset acquisition shall be as
follows:
(i) Company (individually and
jointly on behalf of IGC) will
record the purchase and sale of the
DP&L Gas Assets as a consolidated
enterprise in accordance with the
Uniform System of Accounts for
Natural Gas Companies which the
Commission has prescribed for use by
natural gas companies in Ohio,
including the inclusion of the
acquisition adjustment in Account
114: and
(ii) Company (individually and
jointly on behalf of IGC) will
record any amortization of the
acquisition adjustment as a
consolidated enterprise in Account
425, Miscellaneous Amortization,
unless and until the Commission
orders otherwise. Any amortization
will be reflected over the remaining
estimated book life of the assets to
which the acquisition adjustment
relates.
(f) The bargaining employees of DP&L
who will be hired by Company will have
a collective bargaining agreement with
Company. The agreement may also
include IGC as a party. The addition
of IGC as a party to the agreement to
be negotiated has been offered to the
Utility Workers Union, Local 175 (the
"Union"), which represents these
bargaining employees. Negotiations
between the Union and Company are
ongoing with respect to the terms and
conditions of the agreement that will
govern the relationship between
bargaining personnel and Company
following the closing of the asset
acquisition.
(g) The non-bargaining employees of
DP&L who will be hired by Company will
most likely be employed by Company,
but, depending upon their
responsibilities, may instead be
employed by Vectren or one or more of
its other subsidiaries.
(4) The Structure will permit Vectren to retain its
intrastate exemption under Section 3(a)(1) of PUHCA and will
therefore subject Vectren to state law.
(5) The Structure satisfies the SEC's requirements for an
intra-state exemption because:
(a) Vectren and each of Vectren's
"material" public utility subsidiaries will
continue to be deemed "predominantly"
intrastate in character and carry on
business "substantially" in a single state
(Indiana) in which Vectren and its material
subsidiaries are organized.
(b) Based on certain financial tests used
by the SEC, Company would not likely be
considered a "material" subsidiary of
Vectren.
(6) DP&L , as seller of the DP&L Gas Assets,
has no objection to selling the Assets to IGC and
Company in the manner described herein, and
further states the proposed structure will be
consistent with the terms of the Asset Purchase
Agreement.
<PAGE>
(7) Joint Petitioners believe that this
Supplement addresses the issues raised by the
Union in its April 3, 2000 Motion to Intervene and
to Reject, or, Alternatively, to Defer Action, and
Objections (the "Motion"). In the Motion the
Union argued that the Joint Petition seeks an
impermissible advisory opinion because of the
uncertainty as to which Vectren subsidiary,
Company or IGC, would be the ultimate purchaser of
the DP&L Gas Assets. As shown by this Supplement,
since execution of the Asset Purchase Agreement,
Vectren and DP&L have pursued consummation of this
transaction, and it was certain that the sale
would be to a subsidiary of IEI, now Vectren.
While this Supplement specifies the Structure of
this purchase, this has been a definitive
transaction since execution of the Asset Purchase
Agreement, and, therefore, the approval sought has
never been "advisory" in nature. In any event, by
defining the Structure, this Supplement
constitutes Joint Petitioners' response to the
points made in the Union's motion.
(8) The DP&L Gas Assets being purchased by
Company and IGC include the net book cost at
closing of GCR balances (positive or negative) and
PIPP balances (positive or negative). As
proposed, Company (individually and jointly on
behalf of IGC) will adopt the existing DP&L
tariff. Upon adoption of that tariff, the combined
enterprise will either credit or surcharge
customers for such amounts as provided for by the
tariff in the normal course of providing service
to gas customers. At the present time, it is
anticipated that the GCR balance will be a
negative number at closing, which will result in
the need to recover that amount from customers as
an under-recovered gas cost.
<PAGE>
(9) Except as supplemented by this filing, the Joint
Petition remains unmodified and the requests therein remain
before the Commission.
(10) The attached affidavit of Timothy M. Hewitt,
President of IGC and Interim President of Company, affirms
under the penalties of perjury that the foregoing
representations are true and correct.
WHEREFORE, Joint Petitioners respectfully request that
the Commission approve the sale of the DP&L Gas Assets,
including GCR and PIPP balances, from DP&L to Company and
IGC, as described herein and in the Joint Petition, pursuant
to R.C. Section 4905.48; approve the operational combination
of the DP&L Gas Assets, as described herein pursuant to R.C.
Section 4905.48, including the adoption of the DP&L tariff;
permit the Company and IGC to continue the accounting
treatment previously approved for the DP&L Gas Assets,
including the depreciation accounts; permit the Company and
IGC to file consolidated annual reports and to be treated as
a combined unit for other filings as required by the
Commission or by R.C. Title 49; and otherwise grant their
prayer in the Joint Petition.
Respectfully submitted on behalf of
THE DAYTON POWER AND LIGHT COMPANY
By:_______________________________
Charles J. Faruki
Paul L. Horstman
FARUKI GILLIAM & IRELAND P.L.L.
600 Courthouse Plaza, S.W.
Dayton, Ohio 45402
(937) 227-3705
and
<PAGE>
By:_______________________________
Stephen F. Koziar, Jr.
Group Vice President and Secretary
THE DAYTON POWER AND LIGHT COMPANY
MacGregor Park
1065 Woodman Drive
Dayton, Ohio 45432
(937) 259-7214
Its Counsel
VECTREN ENERGY DELIVERY OF OHIO, INC.
INDIANA GAS COMPANY, INC.
By:________________________________
Sally W. Bloomfield
Julia L. Dorrian
BRICKER & ECKLER LLP
100 South Third Street
Columbus, Ohio 43215-4291
(614) 227-2368
and
By:________________________________
Ronald E. Christian
Robert E. Heidorn
P.O. Box 209
20-24 N.W. Fourth Street,
Evansville, Indiana 47702-0209
(812) 491-4202; 491-4203.
Their Counsel
<PAGE>
CERTIFICATE OF SERVICE
The undersigned does hereby certify that a copy of the
foregoing Joint Petitioners' Supplement to the Joint
Petition was served upon the parties listed on Attachment A
by regular U.S. Mail this _____ day of June, 2000.
_________________________________
Sally W. Bloomfield
<PAGE>
STATE OF INDIANA )
) SS:
COUNTY OF _______________)
AFFIDAVIT OF TIMOTHY M. HEWITT
IN SUPPORT OF THE SUPPLEMENT
TO THE JOINT PETITION
I, Timothy M. Hewitt, being first duly sworn upon my
oath, state as follows:
1. I am over the age of twenty-one, and am competent
to testify to the matters set forth herein.
2. I am President of Indiana Gas Company, Inc.
("IGC") and Interim President of Vectren Energy Delivery of
Ohio, Inc. ("Company").
3. As President of IGC and Interim President of
Company, I have read the Supplement to the Joint Petition
and affirm that the statements contained therein are true
and correct.
Further, affiant sayeth not.
____________________________
Timothy M. Hewitt
Before me the undersigned, a Notary Public in and for
said County and State, personally appeared Timothy M.
Hewitt, who acknowledged the execution of the foregoing
instrument as President of Indiana Gas Company, Inc. and
Interim President of Vectren Energy Delivery of Ohio, Inc.
this _______ day of May, 2000.
____________________________
Notary Public
_____________________________
Printed Name
My Commission Expires: County of Residence:
_______________________ _____________________________
