File No. 70-
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM U-1
APPLICATION/DECLARATION
under the
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Connecticut Yankee Atomic Power Company
Northeast Nuclear Energy Company
North Atlantic Energy Service Corporation
Northeast Utilities Service Company
107 Selden Street
Berlin, Connecticut 06037
(Names of companies filing this statement
and address of principal executive offices)
Northeast Utilities
New England Electric System
(Name of top registered holding company parents
of each applicant or declarant except that
New England Electric System is the parent of only
Connecticut Yankee Atomic Power Company)
Robert P. Wax, Esq.
Vice President, Secretary and General Counsel
Northeast Utilities
P.O. Box 270
Hartford, CT 06141-0270
(Names and address of agent for service)
The Commission is requested to mail signed copies of all orders, notices and
communications to:
Cheryl W. Grise Jeffrey C. Miller, Esq.
Senior Vice President - Assistant General Counsel
Human Resources and Northeast Utilities Service Company
Administrative Services P. O. Box 270
Northeast Utilities Service Hartford, CT 06141-0270
Company
P. O. Box 270
Hartford, CT 06141-0270
Item 1. Description of Proposed Transaction
1. Northeast Utilities Service Company (NUSCO), Northeast Nuclear Energy
Company (NNECO) and North Atlantic Energy Service Corporation (North
Atlantic), each a subsidiary service company of Northeast Utilities (NU), a
registered holding company, and Connecticut Yankee Atomic Power Company
(CYAPCO), an electric company subsidiary of NU and of New England Electric
System (NEES), a registered holding company, hereby submit to the Commission
an application/declaration pursuant to Sections 6(a), 7, 9(a), 10 and 12(c)
of the Public Utility Holding Company Act of 1935 (the Act) and Rule 42
thereunder. NNECO, North Atlantic, and CYAPCO seek Commission authority to
acquire, through NUSCO, acting on behalf of such companies, up to 40,000
Common Shares of NU, $5.00 par value (Common Shares), through open market
purchases to be effected by NUSCO from time to time prior to December 31,
2004 to be used as part of special compensation packages to be offered to
various employees of NNECO, North Atlantic and CYAPCO from time to time.
2. The NU system operates five nuclear electric generating units. NNECO
holds the operating licenses issued by the Nuclear Regulatory Commission
(NRC) for the three Millstone units located in Waterford, Connecticut. North
Atlantic holds the operating license for the Seabrook unit, located at
Seabrook, New Hampshire. CYAPCO holds the operating license for the Haddam
Neck unit located at Haddam, Connecticut.
3. In order to retain certain highly-valued employees who are subject to
recruitment from competitors, NNECO, North Atlantic and CYAPCO propose to
offer special compensation arrangements to certain senior managers of these
units, which arrangements will include an award of Common Shares under the
following terms.
4. At the beginning of each of four successive years, beginning January 1,
1994, each affected employee will be credited with a number of Common Share
equivalent units (share equivalent units) of market value equal to twenty-
five percent (25%) of the "going rate" of the employee's salary grade for
that year. The market value will be determined with reference to the market
price of a Common Share at the time share equivalent units are credited under
this program.
5. The share equivalent units will be restricted, in that each grant will
vest in five equal annual installments beginning on the first anniversary of
each grant. Additional share equivalent units will be credited from time to
time to reflect dividends on Common Shares as if the share equivalent units
had been Common Shares enrolled in the Northeast Utilities Dividend
Reinvestment Plan. "Dividend" units will vest on the same schedule as the
underlying units, and will also be subject to the same restrictions.
6. As share equivalent units vest, they will be paid out to the employees
in the form of Common Shares. The shares will be purchased on the open
market by NUSCO on behalf of NNECO, North Atlantic and CYAPCO. If the
employee should terminate employment prior to the vesting of all of his or
her units, the unvested portion will be forfeited. In the event of death,
disability, or retirement, any remaining restricted shares will immediately
vest and become unrestricted.
7. NUSCO expects to purchase the Common Shares needed when units vest
under this program on or about the first business day of each year, except
that for units vesting on January 1, 1995, for the initial grant deemed to be
made January 1, 1994, Common Shares will not be purchased prior to approval
of this application/declaration by the Commission.
8. Except in accordance with the Act, neither NU nor any subsidiary
thereof (a) has acquired an ownership interest in an exempt wholesale
generator ("EWG") or a foreign utility company ("FUCO") as defined in
Sections 32 and 33 of the Act, or (b) now is or as a consequence of the
transactions proposed herein will become a party to, or has or will as a
consequence of the transactions proposed herein have a right under, a
service, sales, or construction contract with an exempt wholesale generator
or a foreign utility company. None of the proceeds from the transactions
proposed herein will be used by the Companies to acquire any securities of,
or any interest in, an exempt wholesale generator or a foreign utility
company.
The NU system is in compliance with Rule 53(a), (b), and (c), as
demonstrated by the following determinations:
(i) NU's aggregate investment in EWGs and FUCOs (i.e.,
amounts invested in or committed to be invested in EWGs and FUCOs, for which
there is recourse to NU) does not exceed 50% of the NU system's consolidated
retained earnings as reported for the four most recent quarterly periods on
NU's Form 10-K and 10-Qs.
(ii) Encoe Partners (NU's only EWG or FUCO at this time) maintains
books and records, and prepares financial statements in accordance with Rule
53(a)(2). Furthermore, NU has undertaken to provide the Commission access to
such books and records and financial statements, as it may request.
(iii) No employees of the NU system's public utility companies have
rendered services to Encoe Partners.
(iv) NU has submitted (a) a copy of each Form U-1 and Rule 24
certificates that have been filed with the Commission under Rule 53 and (b) a
copy of Item 9 of Form U5S and Exhibits G and H thereof to each state
regulator having jurisdiction over the retail rates of the NU system public
utility companies.
(v) Neither NU nor any NU subsidiary has been subject
of a bankruptcy or similar proceeding unless a plan of reorganization has been
confirmed in such proceeding. In addition, NU's average consolidated retained
earnings for the four most recent quarterly periods has not decreased by 10%
or more from the average for the previous four quarterly periods.
(vi) In the previous fiscal year, NU did not report operating losses
attributable to its investment in Encoe Partners, unless such losses did not
exceed 5 percent of NU's consolidated retained earnings.
Item 2. Fees, Commissions and Expenses
No fees, commissions or expenses have been paid or will be paid or incurred
in connection with the proposed transactions, other than (i) the Commission's
$2,000 filing fee, and (ii) expenses for legal, financial and other services
billed to NU, NNECO, North Atlantic and CYAPCO at cost by NUSCO, not to
exceed $5,000.
Item 3. Applicable Statutory Provisions
Sections 6(a) and 7 of the Act may be applicable with respect to the use of
Common Shares as compensation for employees, and the payment of such shares
to the employees upon vesting. Sections 9(a), 10 and 12(c) of the Act and
Rule 42 under the Act may be applicable with respect to NUSCO's acquisition
of Common Shares on the open market on NNECO's, North Atlantic's, and
CYAPCO's behalf for the accounts of the eligible employees.
Item 4. Regulatory Approval
No federal or state regulatory authority, other than the Commission under
the Act, has any jurisdiction over the proposed transactions.
Item 5. Procedure
It is respectfully requested that the Commission enter not later than
December 16, 1994 an appropriate order granting and permitting this
application/declaration to become effective.
No recommended decision by a hearing officer or other responsible officer of
the Commission is necessary or required in this matter. The Office of Public
Utility Regulation within the Division of Investment Management of the
Commission may assist in the preparation of the Commission's decision in this
matter. There should be no 30 day waiting period between the issuance and
the effective date of any order issued by the Commission in this matter, and
it is respectively requested that any such order be made effective
immediately upon the entry thereof.
Item 6. Exhibits and Financial Statements
(a) Exhibits
Exhibit A - Declaration of Trust of Northeast Utilities, as amended
(Incorporated by Reference to Exhibit 3.1.1 to Annual Report on Form
10-K of Northeast Utilities for Year Ended December 31, 1988, File No.
1-5324).
Exhibit B - Proposed notice of the filing of this
application/declaration with the Securities and Exchange Commission.
Exhibit C - Opinion of Counsel for the Company (to be filed by
amendment).
(b) Financial Statements. The financial statements have not been included
because these transactions are not expected to have pro forma effects
on the financial statements of any Applicant, NU system consolidated,
NEES, or NEES system consolidated.
Item 7. Information as to Environmental Effects
This application/declaration relates to the implementation of a stock
compensation program for employees and as such, it is believed that the
granting and permitting to become effective of this application/declaration
will not constitute a major federal action significantly affecting the
quality of the human environment. No other federal agency has prepared or is
preparing an environmental impact statement with respect to the proposed
transactions.
SIGNATURES
Pursuant to the requirements of the Public Utility Holding Company Act of
1935, the undersigned companies have duly caused this statement to be signed
on their behalf by the undersigned thereunto duly authorized.
NORTHEAST UTILITIES SERVICE COMPANY
NORTHEAST NUCLEAR ENERGY COMPANY
NORTH ATLANTIC ENERGY SERVICE CORPORATION
CONNECTICUT YANKEE ATOMIC POWER COMPANY
By /s/Cheryl W. Grise
Title: Senior Vice President
Human Resources and
Dated: October 25, 1994 Administrative Services
Exhibit B - Proposed Form of Notice
Northeast Utilities Service Company et al (70- )
Northeast Utilities Service Company ("NUSCO"), Berlin, Connecticut, Northeast
Nuclear Energy Company ("NNECO"), Waterford, Connecticut, and North Atlantic
Energy Service Corporation ("North Atlantic"), Seabrook, New Hampshire,
service company subsidiaries of Northeast Utilities ("NU"), West Springfield,
Massachusetts, a registered holding company, and Connecticut Yankee Atomic
Power Company ("CYAPCO"), Haddam, Connecticut, an electric company subsidiary
of NU and New England Electric System, Westborough, Massachusetts, have filed
an application/declaration on Form U-1. The application/declaration is filed
pursuant to Sections 6(a), 7, 9(a), 10, and 12(c) of the Public Utility
Holding Company Act of 1935 (the "Act") and Rule 42 thereunder.
In their application/declaration the applicants seek approval of a proposed
special compensation program under which a portion of certain employees'
compensation would be paid in the form of share equivalent units with
reference to NU common shares, subject to regular vesting and forfeiture of
non-vested units upon termination of employment. Applicants further seek
approval to acquire, through NUSCO acting on their behalf, from time to time
prior to December 31, 2004, up to a total of 40,000 common shares on the open
market for the purpose of paying out such units as they vest.
