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File No. 70-9575
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------------------
AMENDMENT NO. 1
FORM U-1/A
APPLICATION-DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
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COLUMBIA ENERGY GROUP
13880 Dulles Corner Lane
Herndon, VA 20171-4600
------------------------------------------------
(Names of company or companies filing this statement
and addresses of principal executive offices)
COLUMBIA ENERGY GROUP
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(Name of top registered holding company parent of
each applicant or declarant)
J. W. Trost, Vice President
COLUMBIA ENERGY GROUP SERVICE CORPORATION
13880 Dulles Corner Lane
Herndon, VA 20171-4600
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(Name and address of agent for service)
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Columbia Energy Group ("Columbia"), a registered holding company under
the Public Utility Holding Company Act of 1935 (the "Act"), hereby submits for
filing this Amendment No. 1 to its Application-Declaration on Form U-1,
originally filed with the Securities and Exchange Commission on November 14,
1999.
The amendment revises a paragraph in Item 1 and restates Item 6 to add
and update the exhibits as follows:
ITEM 1. DESCRIPTION OF PROPOSED TRANSACTION
On page 9 of the original filing, revise paragraph (c) to read as follows:
(c) The market's assessment of Columbia's future growth and earnings
also compares favorably to other gas utility issuers. In 1998, Moody's Investors
Service, Inc. ("Moody's") and Fitch Investors Service ("Fitch") each upgraded
their ratings of Columbia's long-term debt to A3 and A, respectively. Columbia's
long-term debt rating is BBB+ by Standard and Poor's Ratings Group ("S&P").
Columbia's commercial paper ratings are F-1 by Fitch, P-2 by Moody's and A-2 by
S&P. As a result of the pending merger with NiSource Inc., Columbia's long-term
debt ratings have been put on credit watch.
* * * * *
Restate Item 6 to read as follows:
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS
(a) Exhibits
A Letter of the Kentucky Public Service Commission
B Letter of the Maryland Public Service Commission
C Letter of the Public Utilities Commission of Ohio
D Letter of the Pennsylvania Public Utility Commission (previously
filed)
E Letter of the Virginia State Corporation Commission
F Opinion of Counsel
G Proposed Notice (previously filed)
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(b) Financial Statements
Columbia Consolidated Financial Statements as of December 31, 1999
(incorporated by reference to the Annual Report on Form 10-K of Columbia
for the fiscal year ended December 31, 1999).
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, the undersigned companies have duly caused this Application-Declaration
to be signed on their behalf by the undersigned thereunto duly authorized.
COLUMBIA ENERGY GROUP
DATE: April 17, 2000 by: //s//M. W. O'Donnell
---------------------------------------
M. W. O'Donnell, Senior Vice President
& Chief Financial Officer
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EXHIBIT INDEX
A Letter of the Kentucky Public Service Commission
B Letter of the Maryland Public Service Commission
C Letter of the Public Utilities Commission of Ohio
E Letter of the Virginia State Corporation Commission
F Opinion of Counsel
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EXHIBIT A
STATE SEAL
<TABLE>
<S> <C> <C>
PAUL E. PATTON, GOVERNOR COMMONWEALTH OF KENTUCKY B. J. HELTON
PUBLIC SERVICE COMMISSION CHAIRMAN
RONALD MCCLOUD, SECRETARY 211 SOWER BOULEVARD
PUBLIC PROTECTION AND POST OFFICE BOX 615 EDWARD J. HOLMES
REGULATION CABINET VICE CHAIRMAN
FRANKFORT, KENTUCKY 40602-0615
MARTIN J. HUELEMANN WWW.PSC.STATE.KY.US
EXECUTIVE DIRECTOR (502) 564-3940 GARY W. CLIFFS
PUBLIC SERVICE COMMISSION FAX (502) 564-3460 COMMISSIONER
</TABLE>
March 9, 2000
Honorable Arthur Levitt, Chairman
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Columbia Energy Group/SEC File No. 70-9575
Dear Chairman Levitt:
Columbia Gas of Kentucky ("Columbia KY"), a Kentucky gas distribution
utility and subsidiary of Columbia Energy Group ("Columbia EG"), a registered
public utility holding company, has advised this Commission that Columbia EG has
filed an application-declaration on Form U-1 in the above docket ("the U-1")
pursuant to the Public Utility Holding Company Act of 1935 ("PUHCA") requesting
greater authority to invest in exempt wholesale generators ("EWGs") and foreign
utility companies ("FUCOs"). Specifically, we understand that Columbia EG is
requesting to increase its aggregate investment authority in EWGs and FUCOs from
fifty percent of Columbia EG's consolidated retained earnings to one hundred
percent of Columbia EG's consolidated retained earnings.
Columbia EG has requested that we certify to you that such increased
investment authority in EWGs and FUCOs will not impair the ability of the
Kentucky Public Service Commission to regulate Columbia KY or protect its retail
customers in Kentucky.
As the State commission having jurisdiction over the retail gas rates of
Columbia EG's Kentucky public utility subsidiary, Columbia KY, please be advised
that based on:
(1) this Commission's statutory authority to supervise and regulate gas
utilities and all matters relating to the performance of their public
duties and their charges therefor, and to correct any abuses of such
utilities,
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(2) the representations set forth in the U-1, including but not limited to
the representations that the assets of Columbia KY will not be pledged
or encumbered and that Columbia KY will not seek higher rates for
potential losses or inadequate returns arising from any EWG and FUCO
investments, and
(3) the commitments set forth in Columbia EG's letter of February 24, 2000
(copy attached hereto),
this Commission is of the view that Columbia EG's proposal will not impair the
ability of this Commission to regulate Columbia KY or protect its retail
customers in Kentucky.
The foregoing opinion of this Commission is expressly conditioned on and
is subject to being revised or withdrawn by this Commission, if it deems that
action to be appropriate. Columbia EG has represented that it will timely inform
this Commission when Columbia EG actually acquires ownership in EWGs or FUCOs
pursuant to its proposal.
Sincerely,
B. J. Helton, Ph.D.
Chairman
Attachment
RGR:v
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COLUMBIA
ENERGY
GROUP
13880 DULLES CORNER LANE
HERNDON, VIRGINIA 20171-4600
February 24, 2000
Dr. B.J. Helton, Chair
Kentucky Public Service Commission
211 Sower Boulevard
Frankfort, KY 40602
Re: Columbia Energy Group SEC File No. 70-9575
Dear Chairwoman Helton:
This letter is in response to discussions with your staff regarding the
solicitation by the Securities and Exchange Commission of your views with
respect to the captioned matter.
Columbia Energy Group ("Columbia") will continue to provide Columbia Gas
of Kentucky, Inc. ("CKY") the necessary capital to ensure that CKY continues to
provide safe, reliable service and growth of profitable new gas service at
reasonable rates. CKY pledges to continue to aggressively pursue betterment and
remediation of older plant, while conforming to all underground pipeline safety
regulations. Columbia represents that the investments to be authorized in the
captioned proceeding will not adversely impact the availability of long-term
capital to CKY or the spending priorities related to underground pipeline safety
and customer service.
It is Columbia's opinion that its proposal for increased investment in
exempt wholesale generators (EWGs") and foreign utility companies ("FUCOs") will
not have a detrimental effect on the cost of capital of Columbia or CKY.
Columbia represents that it will prudently manage the proposed increase in EWGs
and FUCOs and it is not expected to cause a detrimental effect on the cost of
capital of Columbia or CKY. Columbia and CKY will not seek recovery through
higher rates or increased expenses to Kentucky ratepayers to compensate for any
possible losses or increased expenses that may be sustained on investment in
EWGs or FUCOs, or for any inadequate return on such investments. However,
Columbia and CKY agree that if the credit rating of Columbia's debt is
downgraded by a major credit rating agency (i.e., S&P, Moody's, or Fitch) due,
in the opinion of the credit agency, wholly or in part to Columbia's investment
in EWGs or FUCOs, Columbia and CKY pledge to notify the Commission within ten
days of any such downgrade. As a part of that notice, Columbia and CKY will
provide a detailed explanation of why the downgrade occurred and what plans
exist to address and restore the previous credit rating. Columbia and CKY will
further provide a detailed explanation of how Kentucky ratepayers can be
prevented from paying higher rates due to increased costs as a result of the
credit downgrading. The explanation will identify in detail the rate case
methodologies for determining debt costs which ensure Kentucky ratepayers will
not pay higher costs should Columbia's credit rating fall below the current
rating due to EWG or FUCO investments, consistent with the SEC financing
authority. Columbia's long-term debt rating is "BBB+" from S&P, an "A3" rating
from Moody's and "A" from Fitch; however, following an unsolicited tender offer
made by NiSource, Inc., some of these credit agencies have placed Columbia's
long-term debt ratings on their review list for a possible change.
In addition, Columbia and CKY agree to, and will observe, the following
reporting requirements:
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1. Provide to the Kentucky Public Service Commission ("Commission") all
SEC forms filed in the public domain for reporting information related
to EWG and FUCO investments no later than 10 days after such forms are
provided to the SEC.
2. Provide the following upon request of the Commission:
a) upon execution of a confidentiality agreement, Columbia
will provide to the Commission, upon request, all SEC
forms designated confidential for reporting information
related to EWG and FUCO investments.
b) a copy of the general corporate objectives regarding
diversification and foreign utility investments and the
specific objectives of such activities.
c) reasonable access to relevant books and records and
financial statements of Columbia and its affiliated
interests.
Columbia Energy Group
By_______________________
Michael W. O'Donnell
Senior Vice President and
Chief Financial Officer
Columbia Gas of Kentucky, Inc.
By_______________________
Robert C. Skaggs, Jr.
President and Chief Executive
Officer
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EXHIBIT B
STATE OF MARYLAND
Commissioners [SEAL] BRYAN G. MOORHOUSE
GENERAL COUNSEL
GLENN F. IVEY DANIEL P. GAHAGAN
CHAIRMAN EXECUTIVE SECRETARY
CLAUDE M. LIGON GREGORY V. CARMEAN
E. MASON HENDRICKSON EXECUTIVE DIRECTOR
SUSANNE BROGAN
GERALD L. THORPE
PUBLIC SERVICE COMMISSION
WILLIAM DONALD SCHAEFER TOWER
6 ST. PAUL STREET
BALTIMORE, MARYLAND 21202-6806
(410) 767-8000
FAX NUMBER (410) 333-6495
(34, 6/24/98AM; ML#62034; S-345)
June 26, 1998
The Honorable Jonathan G. Katz
Secretary, Securities & Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Secretary Katz:
Columbia Gas of Maryland, Inc. ("CMD"), a subsidiary of Columbia Energy
Group ("CEG"), a registered public utility holding company, has advised this
Commission that CED is considering investment opportunities in Foreign Utility
Companies ("FUCos") and Exempt Wholesale Generators ("EWGs"). In that
connection, CMD and CEG have requested the Public Service Commission of Maryland
to provide you with the certification contemplated by Section 33(a)(2) of the
Public Utility Holding company Act, as added by the Energy Policy Act of 1992
(15 U.S.C. Section 79z-5(b)(a)(2)).
The Public Service Company of Maryland certifies that it has the
statutory authority and the resources to protect the ratepayers of CMD and
intends to exercise that authority.
This certification is considered applicable with respect to CEG's
investment and acquisition of ownership in FUCos and EWGs. This certification is
expressly
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conditioned on and is subject to being revised or withdrawn by the Commission on
a prospective basis, if it deems that action to be appropriate.
By Direction of the Commission,
Donald P. Eveleth
Acting Executive Secretary
jrb
Enclosure
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EXHIBIT C
BOB TAFT, GOVERNOR
ALAN R. SCHRIBER, CHAIRMAN
PUCO
The Public Utilities Commission of Ohio
Commissioners
Ronda Hartman Fergus
Craig A. Glazer January 27, 2000
Judy A. Jones
Donald L. Mason
Honorable Arthur Levitt, Chairman
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Chairman Levitt:
RE: Columbia Energy Group (SEC File No. 70-9575)
Exempt Wholesale Generator/Foreign Utility Company Certification
Columbia Energy Group (Columbia) has advised the Public Utilities Commission of
Ohion (PUCO) that Columbia will be requesting the approval of your Commission
for increased investments in exempt wholesale generators (EWGs) and foreign
utility companies (FUCOs) beyond that currently permitted under existing
Columbia orders and Rule 53 under the Public Utilities Holding Company Act.
Columbia has a wholly owned subsidiary, Columbia Gas of Ohio, Inc., which is a
public utility subject to the regulatory authority of the PUCO. Columbia has
requested that the PUCO certify to you that such increased investment authority
in EWGs and FUCOs will not impair the ability of the PUCO to regulate Columbia
Gas of Ohio, Inc. or to protect its ratepayers.
As the State commission having jurisdiction over the retail rates of Columbia
Gas of Ohio, Inc., please be advised that, based on:
(1) the PUCO's statutory authority and jurisdiction, which is unaffected
by this application, to supervise and regulate Columbia Gas of Ohio,
Inc. and all matters relating to the performance of its public duties
and its rates and charges and to protect the ratepayers of Columbia Gas
of Ohio, Inc., and
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(2) the representation that the assets of Columbia Gas of Ohio, Inc.
will not be encumbered,
the PUCO is of the view that Columbia's proposal will not impair the ability of
the PUCO to regulate Columbia Gas of Ohio, Inc. or to protect its retail
customers in Ohio.
This opinion of the PUCO on Columbia's proposal is expressly conditioned on the
provisions 1 and 2 above as well as the representations set forth in Columbia's
application and is subject to being revised or withdrawn by the PUCO in the
future, if the PUCO deems that action to be appropriate. Columbia has
represented that it will timely inform the PUCO when Columbia actually acquires
ownership in FUCOs or EWGs pursuant to its proposal.
Sincerely,
Alan R. Schriber
Chairman
cc: Catherine A. Fisher, Assistant Director, Office of Public Utility
Regulation Robert P. Wason, Chief Financial Analyst, Office of Public
Utility Regulation
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EXHIBIT E
COMMONWEALTH OF VIRGINIA
STATE SEAL
STATE CORPORATION COMMISSION
OFFICE OF SOLICITOR GENERAL
BOX 1197, RICHMOND, VIRGINIA 23218
(804) 371-9778
FAX: (804) 371-9376
December 14, 1999
Mr. Mark F. Vilardo
Senior Counsel
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Re: Columbia Energy Group
SEC File No. 70-9575
Dear Mr. Vilardo:
This letter is in reply to yours of November 10, 1999, addressed to
Chairman Theodore V. Morrison, Jr. of this Commission regarding the above
application.
In that application, Columbia Energy Group ("CEG") has requested
Securities and Exchange Commission ("SEC") approval for an increase in its
authority to invest in exempt wholesale generators and foreign utility companies
beyond that permitted under its existing SEC authority. In connection with such
proposal, you have requested that the Virginia State Corporation Commission
("SCC") provide the SEC with a statement of its views concerning its ability to
protect the ratepayers of Columbia Gas of Virginia ("CGV") in regard to CEG's
proposed transaction.
This Commission has jurisdiction over the retail electric rates in
Virginia of CEG's public utility subsidiary, CGV, and has the statutory
authority to supervise and regulate such gas utilities in all matters relating
to the performance of their public duties and their charges therefor.
Please be advised that, based upon CEG's and CGV's letter of November
10, 1999, to the SCC, copy enclosed, and upon CEG's above filing with the SEC
and representations and agreements made by CEG and CEV in such documents, the
SCC is of the opinion that CEG's proposal will not impair the ability of the SCC
to protect CGV and its ratepayers in the Commonwealth of Virginia. This
Commission has the authority and resources to protect ratepayers subject to its
jurisdiction, and it intends to exercise its authority. This statement of the
SCC is expressly subject to being revised or withdrawn by the SCC if it deems
such action to be appropriate in the future.
Sincerely,
/s/
Stewart E. Farrar
Solicitor General
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SEF/
Enclosure
cc: Chairman Theodore V. Morrison, Jr.
Commissioner Hullihen Williams Moore
Commissioner Clinton Miller
Michael W. O'Donnell, Columbia Energy Group
Anthony Trubisz, Jr., Columbia Gas of Virginia
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COLUMBIA
ENERGY
GROUP
13880 DULLES CORNER LANE
HERNDON, VIRGINIA 20171-4600
November 10, 1999
The Honorable I. Clinton Miller
The Honorable Hullihen Williams Moore
The Honorable Theodore V. Morrison, Jr.
Commonwealth of Virginia
State Corporation Commission
Tyler Building
1300 East Main Street
Richmond, Virginia 23219-3630
RE: COLUMBIA ENERGY GROUP SEC FILE NO. 70-9575
Dear Commissioners:
This letter is in response to discussions with your staff regarding the
solicitation by the Securities and Exchange Commission of your views with
respect to the captioned matter. Your staff expressed several concerns relating
to Columbia Gas of Virginia, Inc.'s ("CGV") access to long-term capital from the
Columbia Energy Group ("Columbia").
Columbia will continue to provide CGV the necessary capital to ensure
that CGV continues to provide safe, reliable service and growth of profitable
new gas service at reasonable rates. CGV pledges to continue to aggressively
pursue betterment and remediation of older plant, while conforming to all
underground pipeline safety regulations. CGV pledges to further improve customer
service and better inform Staff of its plans for improvement of customer service
delivery. Columbia represents that the investments to be authorized in the
captioned proceeding will not adversely impact the availability of long-term
capital to CGV or the spending priorities related to underground pipeline safety
and customer service.
It is Columbia's opinion that its proposal for increased investment in
exempt wholesale generators ("EWGs") and foreign utility companies ("FUCOs")
will not have a detrimental effect on the cost of capital of Columbia or CGV.
Columbia represents that it will prudently manage the proposed increase in EWGs
and FUCOs and it is not expected to cause a detrimental effect on the cost of
capital of Columbia or CGV. Columbia and CGV will not seek recovery through
higher rates or increased expenses to Virginia ratepayers to compensate for any
possible losses or increased expenses that may be sustained on investment in
EWGs or FUCOs, or for any inadequate return on such investments. However,
Columbia and CGV agree that if the credit rating of Columbia's debt is
downgraded by a major credit rating agency (i.e., S&P, Moody's, or Fitch) due,
in the opinion of the credit agency, wholly or in part to Columbia's investment
in EWGs or FUCOs, Columbia and CGV pledge to notify the Commission with ten days
of any such downgrade. As a part of that notice, Columbia an CGV will provide a
detailed explanation of why the downgrade occurred and what plans exist to
address and restore the previous credit rating. Columbia and CGV will further
provide a detailed explanation of how Virginia ratepayers can be prevented from
paying higher rates due to increased costs as a result of the credit
downgrading. The explanation will identify in detail the rate case methodologies
for determining debt costs which ensure Virginia ratepayers will not pay higher
costs should Columbia's credit rating fall below the current rating due to EWG
or FUCO investments, consistent with the SEC financing authority. Columbia debt
currently carries a
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"BBB+" rating from S&P, an "A3" rating from Moody's, and an "A" rating from
Fitch; however, in the second quarter of 1999, Moody's and Fitch announced that
they placed Columbia's debt ratings on review for possible downgrade due to
uncertainties surrounding the unsolicited tender offer made by NiSource, Inc.
Fitch subsequently affirmed its rating.
In addition, Columbia and CGV agree to, and will observe, the following
reporting requirements:
1. Provide to the SCC's Division of Economics and Finance
("Division") all SEC forms filed in the public domain for
reporting information related to EWG and FUCO investments no
later than 10 days after such forms are provided to the SEC.
2. Provide the Division, by December 31 of each year, a copy of
CGV's Gas Utility Five-Year Forecast, including a detailed
five-year cash flow forecast, five-year projected capital
structure balances and planned dividend payments from CGV to
Columbia (see page 3 for a sample format), and descriptions of
major improvements and reliability programs planned for each
region/division of CGV, as well as regional/divisional/statewide
customer service improvement programs.
3. Provide the following upon request of the Division:
a) upon execution of a confidentiality agreement, Columbia
will provide to the Division, upon request, all SEC forms
designated confidential for reporting information related
to EWG and FUCO investments.
b) a copy of the general corporate objectives regarding
diversification and foreign utility investments and the
specific objectives of such activities.
c) reasonable access to relevant books and records and
financial statements of Columbia and its affiliated
interests.
Columbia Energy Group
By:______________/s/_____________________
Michael V. O'Donnell
Senior Vice President and
Chief Financial Officer
Columbia Gas of Virginia, Inc.
By:______________/s/_____________________
Anthony Trubisz, Jr.
President and Chief Executive Officer
cc: Sherry H. Bridewell, Esq.
[Sample format omitted]
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EXHIBIT F
April 17, 2000
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Columbia Energy Group, File No. 70-9575
Dear Sirs:
As counsel for Columbia Energy Group ("Columbia"), a holding
company registered under the Public Utility Holding Company Act of 1935 (the
"Act") I deliver to you this opinion for filing as Exhibit F to the
Application-Declaration referenced above. Briefly stated, Columbia is seeking
authority to invest in exempt wholesale generators and foreign utility companies
in an amount up to 100% of its consolidated retained earnings as defined in Rule
53 under the Act.
In connection with the above, I have examined:
- - the Application-Declaration, as amended; and
- - such other documents, records and matters of law as I deemed necessary
to enable me to render this opinion.
Based upon the foregoing and relying thereupon, I am of the
opinion that if the above-referenced transactions are consummated in accordance
with the Application-Declaration:
- - all state and federal laws applicable to the proposed transactions will
have been complied with; and
- - the consummation of the proposed transactions will not violate the
legal rights of the holders of any securities issued by Columbia, or by
any associate company thereof.
I hereby consent to the filing of this opinion as an exhibit to the
Application-Declaration.
Very truly yours,
//s// Emanuel D. Strauss
Columbia Energy Group Service Corporation
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