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EXHIBIT L-1
Filings Under the Public Utility Holding Company Act of
1935, as amended ("Act")
SECURITIES AND EXCHANGE COMMISSION
January , 2001
Notice is hereby given that the following filing(s) has/have been made with
the commission pursuant to provisions of the Act and rules promulgated under the
Act. All interested persons are referred to the applications(s) and/or
declaration(s) for complete statements of the proposed transaction(s) summarized
below. The application(s) and/or declaration(s) and any amendments is/are
available for public inspection through the Commission's Office of Public
Reference.
Interested persons wishing to comment or request a hearing on the
application(s) and/or declaration(s) should submit their views in writing by
[February 26, 2001], to the Secretary, Securities and Exchange Commission,
Washington, D.C. 20549-0609 and serve a copy on the relevant applicant(s)
and/or declarants(s) at the address(es) specified below. Proof of service (by
affidavit or, in case of an attorney at law, by certificate) should be filed
with the request. Any request for hearing should identify specifically the
issues of fact or law that are disputed. A person who so requests will be
notified of any hearing, if ordered, and will receive a copy of any notice or
order issued in the matter. After [February 26, 2001], the application(s)
and/or declaration(s), as filed or as amended, may be granted and/or permitted
to become effective.
Exelon Corporation, a Pennsylvania Corporation ("Exelon"), Exelon Business
Services Company ("Services"), Exelon Ventures Company ("Ventures"), Exelon
Enterprises Company, LLC ("Enterprises"), and Exelon Generation Company, LLC
("Genco" and collectively, "Applicants"), each located at 10 South Dearborn
Street, 37th Floor, Chicago, Illinois 60603 filed an application-declaration
under sections Sections 6(a), 7, 9, 10, 11, 12, 32, 33 and 34 of the Act and
Rules 42, 43, 45, 46, 52, 53, 54 and 58 under the Act (the "Investment
Application").
By order dated October 19, 2000 (Holding Co. Act Release 27256, the "Merger
Order") the Commission approved Exelon's exchange its common stock for the
common stock of PECO Energy Corporation ("PECO"), followed by a merger of Unicom
Corporation ("Unicom") with and into Exelon ("Merger"). Exelon completed the
Merger and filed its notice of intent to register under the Act on October 20,
2000. Exelon will establish Energy Delivery as an intermediate holding company
over PECO and Commonwealth Edison Company ("ComEd"), and will also establish
Ventures as an intermediate holding company over Genco, to which generation
assets of PECO and ComEd will be transferred, and over Exelon's nonutility
subsidiaries. The actions involved in transferring the generating assets of
ComEd and PECO to
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Genco are referred to as the "Restructurings." In addition, Exelon, Ventures,
and Energy Delivery will each register as a holding company under the Act after
the Merger and Restructurings.
In a further Application with this Commission, file no. 70-9693 ("Financing
Application") Exelon and certain Subsidiaries sought authority for certain
financing activities and the Commission entered its order in that matter on
November 2, 2000 as supplemented December 8, 2000./1/
In the instant filing, Applicants seek authorization to engage in the
following general matters through June 30, 2004 (the "Authorization Period"),
all more specifically described below: (i) make future investments in exempt
wholesale generators ("EWGs"), foreign utility companies ("FUCOs") or exempt
telecommunications companies ("ETCs") (collectively, "Exempt Subsidiaries"),
"energy-related companies" within the meaning of Rule 58 ("Rule 58
Subsidiaries"), and certain other types on Non-Utility Subsidiaries; (ii)
consolidate the direct and indirect ownership interests in certain existing non-
utility business and former subsidiaries of Unicom (now subsidiaries of Exelon)
and PECO under Ventures or Enterprises; and (iii) organize and acquire the
securities of one or more additional subsidiaries to act as a holding company
for non-utility investments if, in Exelon's judgment, there are organizational,
functional, tax or other benefits to be derived in separating non-utility
businesses at the first-tier level. Accordingly, unless otherwise indicated,
references in this Application or Declaration to Ventures shall mean Ventures
and such other first-tier subsidiaries as Exelon may choose to organize to serve
a similar purpose./2/
I. Summary
Applicants request authority for each of the following transactions through
the Authorization Period: (i) Ventures, Enterprises, Genco and, prior to the
Restructurings, PECO request authority to engage in preliminary development
activities ("Development Activities") relating to potential investments in EWGs,
FUCOs, ETCs, Rule 58 Subsidiaries and other types of non-utility business
activities hereinafter described and administrative and management activities
("Administrative Activities") associated with such investments and businesses;
(ii) Exelon, Ventures, Enterprises, Genco and, prior to the Restructurings, PECO
request approval to the extent required to acquire the securities of one or more
Intermediate Subsidiaries, Financing Subsidiaries and Commission Approved
Entities, as defined and more fully described below (collectively, "Non-Exempt
Subsidiaries"); (iii) to the extent not exempt under the Act and rules
thereunder, Exelon, Ventures, Enterprises, Genco and, prior to the
Restructurings, PECO and their respective Subsidiaries each request
authorization (a) to transfer,
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/1/ HCAR 35-27266; HCAR 35-27296
/2/ Each of the entities that will be directly or indirectly owned subsidiaries
of Exelon upon consummation of the acquisition described in the Merger U-1 is
referred to herein individually as a "Subsidiary" and collectively as
"Subsidiaries." For purposes of the Application-Declaration, the terms
"Subsidiary" and "Subsidiaries" shall also include other direct or indirect
subsidiaries that Exelon may form or acquire after the Merger with the approval
of the Commission. For purpose of this filing the term "Utility Subsidiaries"
shall include Commonwealth Edison Company of Indiana, Susquehanna Power Company,
Susquehanna Electric Company, and PECO, ComEd and Genco. All of Exelon's direct
and indirect Subsidiaries, other than the Utility Subsidiaries, are herein
called the "Non-Utility Subsidiaries."
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by sale, distribution, or otherwise, investments in the securities or assets of
some or all of the existing non-utility businesses held by Unicom (which were
transferred to Exelon in the Merger), Unicom Enterprises (to which Enterprises
will be the successor after the Restructuring) and of PECO, or any direct or
indirect subsidiary of any of them, and any existing or future Non-Exempt
Subsidiary and (b) to contribute such securities or assets so acquired to other
existing or newly created Subsidiaries of Exelon, Ventures, Enterprises or
Genco; (4) Genco requests authority to expend directly or through its
Subsidiaries up to $500 million to construct or acquire facilities, equipment
and other property ("Energy Assets") that are incidental and related to its
business as an electricity and energy commodities marketer and broker, or to
acquire the securities of one or more existing or new companies substantially
all of whose physical properties consist or will consist of Energy Assets,
provided that the acquisition and ownership of such Energy Assets would not
cause any Subsidiary of Genco to be or become an "electric utility company" or
"gas utility company," as defined in Sections 2(a)(3) and 2(a)(4) of the Act;
and (5) to the extent not exempt under the Act and rules thereunder, Exelon,
Ventures, Enterprises, Genco, PECO, ComEd and each current and future Rule 58
Subsidiary and Non-Exempt Subsidiary request authority to contribute, sell,
distribute, assign or otherwise transfer, and to acquire, existing assets or
securities or interests in other businesses of such companies to each other in
connection with any future internal reorganizations.
II. Investment in Non-Utility Subsidiaries
A. Development Activities.
Applicants seek authority, in connection with existing and future non-utility
businesses, for Ventures, Enterprises, Genco and, prior to the Restructurings,
PECO to engage in preliminary development activities ("Development Activities")
and administrative and management activities ("Administrative Activities")
associated with such investments./3/ In addition, through the other specific
approvals sought therein, Ventures, Enterprises, Genco and, prior to the
Restructurings, PECO each seek to maximize its flexibility in forming new
companies in order to facilitate future acquisitions and financings, to simplify
the overall management and coordination of the operations of such companies, and
to insulate the Utility Subsidiaries from risks and liabilities that may be
associated with Exempt Subsidiaries, Rule 58 Subsidiaries and other Non-Utility
Subsidiaries of the Exelon System. In the future, Applicants contemplate that
Enterprises will be the vehicle through which Exelon would acquire and hold all
or substantially all of its investments in Rule 58 Subsidiaries and the other
Non-Exempt Subsidiaries described below. Applicants note that Genco will be the
vehicle through which Exelon will acquire additional Exempt Subsidiaries (other
than ETCs, which are expected to be held by Ventures or Enterprises).
Development Activities will be limited to due diligence and design review;
market studies; preliminary engineering; site inspection; preparation of bid
proposals, including, in connection therewith, posting of bid bonds; application
for required permits and/or regulatory approvals; acquisition of site options
and options on other necessary rights; negotiation and execution of contractual
commitments with owners of existing facilities, equipment vendors, construction
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/3/ Subsidiaries of Ventures, Enterprises or Genco which are Intermediate
Subsidiaries may also engage in Development Activities and Administrative
Activities.
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firms, power purchasers, thermal "hosts," fuel suppliers and other project
contractors; negotiation of financing commitments with lenders and other third-
party investors; and such other preliminary activities as may be required in
connection with the purchase, acquisition or construction of facilities or the
securities of other companies. Ventures proposes to expend directly or through
Subsidiaries up to $500 million in the aggregate outstanding at any time during
the Authorization Period on all such Development Activities./4/ Administrative
Activities will include ongoing personnel, accounting, engineering, legal,
financial, and other support activities necessary to manage Development
Activities and investments in subsidiaries.
B. Activities Related to Exempt Subsidiaries and Rule 58 Subsidiaries
In the future, Exelon would make additional investments in Ventures, Enterprises
or Genco pursuant to Rules 52 and 45(b) in the form of purchases of common stock
and other securities, capital contributions, loans or open account advances, or
any combination of the foregoing. Exelon would utilize the proceeds of
financings authorized under the Financing Order or in a separate proceeding, as
well as internal sources of cash, in order to make additional investments in
Ventures, Enterprises or in Genco, so that those companies may make additional
investments, also pursuant to Rules 52 and 45(b), in Exempt Subsidiaries.
In addition, Exelon may from time to time provide guarantees and other forms of
credit support on behalf of Ventures, Enterprises, Genco and any of their direct
and indirect Subsidiaries, subject to the limitation set forth in the Financing
Order. Further, the aggregate amount of the proceeds of securities and
guarantees issued by Exelon for the purpose of funding any direct or indirect
investment in an EWG or FUCO would not, when added to Exelon's "aggregate
investment" (as defined in Rule 53(a)(1)) in all such companies, exceed the Rule
53 limitation then in effect for Exelon.
Direct or indirect investments by Exelon in Rule 58 Subsidiaries would be
subject to the limitations of Rule 58.
It is also contemplated that Ventures, Enterprises, Rule 58 Subsidiaries and
Non-Exempt Subsidiaries will, in turn, issue securities from time to time
pursuant to the exemption provided under Rule 52 to investors other than Exelon
for the purpose of financing their respective operations, including future
acquisitions of Exempt Subsidiaries, Rule 58 Subsidiaries, and other Non-Exempt
Subsidiaries. Genco will issue securities pursuant to the authority granted
pursuant to the Financing Order for these purposes. In this regard, one of the
goals in consolidating all or substantially of Exelon's existing and future
investments in non-utility businesses under Ventures is that it may ultimately
enhance the ability of Non-Utility Subsidiaries to access external capital
markets without the need for credit support from Exelon.
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/4/ Amounts expended in the development of projects leading to an investment in
an Exempt Subsidiary will not count against the limitation on expenditures for
Development Activities. Amounts will be restored to the authorized Development
Activities amount when a Subsidiary for which such amounts were expended becomes
an Exempt Subsidiary.
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III. Acquisition of Non-Exempt Subsidiaries
In addition to acquiring and holding the securities of Exempt Subsidiaries in
transactions that are exempt pursuant to Section 32, 33, or 34, as applicable,
or Rule 58 Subsidiaries, in transactions intended to be exempt pursuant to Rule
58, Exelon, Ventures, Enterprises, Genco and, prior to the Restructurings, PECO
each request authority through the Authorization Period to organize and acquire,
directly or indirectly, the equity securities of:
(i) one or more corporations, trusts, partnerships, limited liability companies
or other entities ("Intermediate 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 Exempt
Subsidiaries, Rule 58 Subsidiaries, or other Non-Exempt Subsidiaries, provided
that Intermediate Subsidiaries may also engage in Development Activities and
Administrative Activities relating to such subsidiaries. To the extent such
transactions are not exempt from the Act or otherwise authorized or permitted by
rule, regulation or order of the Commission issued thereunder, Exelon requests
authority for Intermediate Subsidiaries to engage in the activities described
herein.
(ii) Exelon, Ventures, Enterprises, Genco, ComEd and PECO each propose to
acquire directly or indirectly the securities of one or more corporations,
trusts, partnerships, limited liability companies or other entities ("Financing
Subsidiaries") created specifically for the purpose of facilitating the
financing of Exelon's and its Subsidiaries' authorized and exempt activities
(including exempt and authorized acquisitions) through the issuance of long-term
debt or equity securities to third parties and the transfer of the proceeds of
such financings to Exelon or any of its Subsidiaries. To the extent authorized
by the Commission pursuant to the Financing Order or otherwise, Exelon,
Ventures, Enterprises, Genco, ComEd or PECO may, if required, guarantee or enter
into expense or support agreements in respect of the obligations of any such
Financing Subsidiaries and one or more Financing Subsidiaries may borrow from,
make loans to or otherwise provide for the use of the proceeds of the financings
by transfer of funds between Financing Subsidiaries and the Subsidiary for whose
benefit the financing is undertaken.
(iii) Exelon, Ventures, Enterprises, Genco and, prior to the Restructurings,
PECO each propose to acquire directly or indirectly the securities of one or
more corporations, trusts, partnerships, limited liability companies or other
entities ("Commission Approved Entities") for the purpose of engaging in any
"functionally related" business for which Exelon has specific approval from the
Commission. Commission Approved Entities would include: (a) any of the
businesses or activities that Exelon is authorized to engage in under the terms
of the Merger Order (i.e., the existing non-utility businesses of Exelon
(formerly Unicom) and PECO except for those businesses over which the Commission
reserved jurisdiction until such time as such businesses are approved by the
Commission), but not including Exempt Subsidiaries or Rule 58 Subsidiaries; (b)
additional investments in entities in which Unicom and PECO have less than a 10%
voting interest and are thus not Subsidiaries but which were approved for
retention by the Commission in the Merger Order provided that such investment
would not exceed 9.9%; and (c) businesses engaged in any of the activities
described below regarding services to be provided outside the United States but
only to the extent such businesses do not qualify as Exempt Subsidiaries or Rule
58 Subsidiaries.
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To the extent that Exelon provides funds directly or indirectly for the purpose
of making an investment in any Commission Approved Entity, Exelon requests that
the amount of such funds will count against Exelon's "aggregate investment" in
Rule 58 Subsidiaries.
To the extent not exempt under Rule 58, Exelon furthermore seeks authority to
acquire additional infrastructure service companies through Exelon
Infrastructure Services, Inc. ("EIS") so long as taking each acquisition into
account the aggregate revenues from services of the EIS group consisting of
traditional infrastructure service functions including the construction of
electric "transmission and distribution" facilities, substation construction,
utility pipelines and other facilities, meter reading and installation including
fiber-optic cable installation is not less than 60% of EIS's total aggregate
revenues. Thus, a particular company that is acquired need not itself meet the
60% - 40% test so long as, taking into account all acquisitions, the aggregate
revenues of EIS are at least 60% from such traditional activities. Exelon
claims that the investment in EIS companies pursuant to the investment in EIS
companies pursuant to the preceding paragraph will be considered as "Rule 58"
investments and will count against Exelon's Rule 58 Subsidiary investment
limitation. Exelon is proposing a "60%" test rather than the "75%" test of the
Merger Order, a "60%" test being consistent with Commission precedent.
IV. Sale Of Certain Goods And Services Outside The United States.
Rule 58 Subsidiaries and Commission Approved Entities request authority to sell
goods and services to customers not only within the United States as permitted
by Rule 58 but also outside the United States. Approval is sought to engage in
sales of the following goods and services outside the United States: (i) the
brokering and marketing of electricity, natural gas and other energy
commodities; (ii) utility infrastructure services, including the services
provided by EIS; (iii) mechanical services; (iv) energy management services,
meter data management, facility design and process control and enhancements;
construction, installation, testing, sales and maintenance of (and training
client personnel to operate) energy conservation equipment; design,
implementation, monitoring and evaluation of energy conservation programs;
development and review of architectural, structural and engineering drawings for
energy efficiencies, design and specification of energy consuming equipment; and
general advice on programs; the design, construction, installation, testing,
sales and maintenance of new and retrofit heating, ventilating, and air
conditioning ("HVAC"), electrical and power systems, alarm and warning systems,
motors, pumps, lighting, water, water-purification and plumbing systems, and
related structures, in connection with energy-related needs; and the provision
of services and products designed to prevent, control, or mitigate adverse
effects of power disturbances on a customer's electrical systems; (v)
performance contracting services aimed at assisting customers in realizing
energy and other resource efficiency goals in the areas of process control, fuel
management, and asset management services in respect of energy-related systems,
facilities and equipment located on or adjacent to the premises of a customer
and used by that customer in connection with business activities/5/; (vi)
technical support services ("Technical Support Services") with respect to
energy-related and gas-related matters for associate companies and nonassociate
companies, as well as for individuals; (vii) certain retail services; (viii)
monitoring and response goods and services;
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/5/ These services may be provided to, among others, QFs and to independent
power projects and district thermal energy systems and municipalities and
cooperatives. Rule 58 Subsidiaries may directly or indirectly act as agent for
these customers on energy management matters, including the operation and
dispatch of generation facilities
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(ix) energy-peaking services via propane-air or liquefied natural gas ("LNG"),
which involves the provision of back-up electricity or gas supply in periods of
high or "peak" energy demand using a propane-air mixture or LNG as fuel sources
for such back-up services; (x) project development and ownership activities,
which involves the installation and ownership of gas-fired turbines for on-site
generation and consumption of electricity; (xi) thermal services and (xii)
development and demonstration of new technologies for the generation,
transmission or distribution of electricity including new nuclear technology.
In addition, Exelon requests authority to provide through Subsidiaries other
energy-related goods and services. These include incidental goods and services
closely related to the consumption of energy and the maintenance of energy
consuming property by customers.
V. Approval For Subsidiary Reorganizations.
Unicom and PECO currently engage directly or through Subsidiaries in certain
non-utility businesses. Exelon (as successor to Unicom), Enterprises (as
successor to Unicom Enterprises and the entity to which the PECO non-utility
businesses will be transferred) and PECO request authority, to the extent
needed, to sell or otherwise transfer (i) such businesses, (ii) the securities
of current subsidiaries engaged in some or all of these businesses or (iii)
investments which do not involve a Subsidiary (i.e., less than 10% voting
interest) to Ventures or a Subsidiary of Ventures, and, to the extent approval
is required, Ventures or any such Subsidiary of Ventures requests authority to
acquire the assets of such businesses, securities of subsidiaries of Exelon and
PECO or other investment interests. Alternatively, transfers of such securities
or assets may be effected by share exchanges, share distributions or dividends
followed by contribution of such securities or assets to the receiving entity.
The transactions proposed in this paragraph will not involve the sale or other
disposition of any utility assets of the Utility Subsidiaries.
In the future, following its direct or indirect acquisition of the securities of
new Non-Utility Subsidiaries, Exelon may determine to transfer such securities
or the assets of such Non-Utility Subsidiaries and/or Non-Utility Subsidiaries
existing as of the date of the Merger, to other direct or indirect Non-Utility
Subsidiaries or to liquidate or merge Non-Utility Subsidiaries. Such internal
transactions would be undertaken in order to eliminate corporate complexities,
to combine related business segments for staffing and management purposes, to
eliminate administrative costs, to achieve tax savings, or for other ordinary
and necessary business purposes. Exelon requests authority to engage in such
transactions, to the extent that they are not exempt under the Act and rules
thereunder, through the Authorization Period.
For the Commission by the Division of Investment Management, pursuant to
delegated authority.
[______________]
[Deputy] Secretary
