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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: June 5, 1996
THE BROOKLYN UNION GAS COMPANY
(Exact name of registrant as specified in its charter)
NEW YORK 1-722 11-0584613
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation or File Number) Identification No.)
organization)
One MetroTech Center,Brooklyn, New York 11201-3850
(Address of principal executive Offices) (Zip Code)
Registrant's telephone number, including area code (718) 403-2000
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Item 5 - Press Release - Rate settlement agreement: Approval of
Holding Company Status by Public Service Commission Staff
The following is a complete extract of a press release issued by
the Brooklyn Union Gas Company June 4, 1996:
BROOKLYN UNION AND PSC STAFF REACH SETTLEMENT AGREEMENT
TO ALLOW HOLDING COMPANY STATUS;
NEW RATE PLAN FOR CUSTOMERS THROUGH YEAR 2002
Brooklyn Union announced today that it has reached an
agreement with the staff of the New York State Department of
Public Service to allow Brooklyn Union to reorganize its gas-
distribution operations and its subsidiaries into a new holding
company.
The agreement also includes an innovative change in the
company's rate-making formula that will provide greater pricing
flexibility. Through the year 2002, the non-gas component in
customer bills will be under specific price caps, which means
that the total amount in rates that the company can charge all
customers remains constant over the life of the agreement.
Brooklyn Union is the first natural-gas utility in the country to
reach a settlement on a price-cap plan with a state utility
commission.
The agreement is subject to approval by the New York State
Public Service Commission (PSC). Action by the PSC is expected in
early Fall, 1996. Shareholder approval of the reorganization into
a holding company is also required. Upon approval, the name of
the parent holding company will be KeySpan Energy Corporation.
Holding Company
Robert B. Catell, chairman and chief executive officer of
Brooklyn Union, said, "We are at the threshold of a new
competitive era. The holding company will provide us with the
organizational flexibility necessary to take advantage of
business opportunities in a timely fashion and to compete more
aggressively in the open marketplace. This agreement strikes a
good balance between the necessary pricing flexibility we need
and the service requirements of our customers. It also allows us
to reap the benefits of reduced costs and increased revenues for
our shareholders."
The holding company structure allows the company to invest
in much broader utility-related lines of business and permits
non-utility investments to increase from the current level of 15%
of capitalization to as much as 50% over the life of the
agreement.
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Utility Service and Customer Rates
"Brooklyn Union has planned well to meet the challenges of
this new competitive environment," says Craig Matthews, president
and chief operating officer. "Our customer-satisfaction rates
have been consistently excellent. We listen to our customers and
they want choice, quality service and competitive prices. We have
reengineered our business processes to provide value to our
customers at competitive rates. We intend to offer our customers
a full array of services and have them select options that fit
their needs."
Under terms of the agreement, Brooklyn Union's gas-
distribution operations will still be regulated by the PSC as
they always have been. All service to customers will be
maintained at current high levels consistent with company and PSC
policies and guidelines.
The new rate-design flexibility reflects market-based
pricing resulting from the deregulation of natural gas and
development of competitive energy markets. The effect on
customers will vary according to the use and the amount of gas
consumed during a billing period. An overall rate decrease of at
least $3 million will take effect in the first year. The rates of
residential heating customers will decline slightly in the first
year and will remain stable over the next five years. Commercial
and small multi-family apartment buildings also will see a rate
reduction. Other customers, primarily low-volume customers, using
gas for cooking or water heating only, will see an increase in
their bills since these are the customers for which it is most
expensive to provide service, and rates to these customers
historically have not recovered the cost to serve them. In
addition, Brooklyn Union expects to charge for certain
competitive services such as appliance repair.
The agreement also has several features to protect the
financial integrity of Brooklyn Union and establishes standards
of corporate governance between the holding company, the utility,
and subsidiary operations. These protections relate to cost
allocation, affiliate transactions, access to the books and
records of unregulated affiliates, capital ratio maintenance
requirements for the utility subsidiary, dividend payment
policies and independence of the utility's Board of Directors.
Brooklyn Union distributes natural gas in the New York City
boroughs of Brooklyn and Staten Island and in two-thirds of the
borough of Queens, and serves the growing energy needs of four
million residents. Brooklyn Union has energy-related investments
in gas exploration, production and marketing in the United States
and Canada, as well as energy services in the United States,
including cogeneration projects, pipeline transportation and gas
storage.
The World Wide Web provides access to news about Brooklyn
Union at http://www.bug.com
6/4/96
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SIGNATURE
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
THE BROOKLYN UNION GAS COMPANY
(Registrant)
s/ V.D. Enright
V.D. Enright
Senior Vice President and
Chief Financial Officer
Dated: June 5, 1996
