File No. 70-7543
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 2 TO
FORM U-1
APPLICATION/DECLARATION WITH RESPECT TO
CREDIT FACILITY SUBSTITUTION
under
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
THE CONNECTICUT LIGHT AND POWER COMPANY
SELDON STREET
BERLIN, CONNECTICUT 06037
. (Name of companies filing this statement and address of principal executive
office)
NORTHEAST UTILITIES
(Name of top registered holding company parent of declarant)
Robert P. Wax, Esq.
Vice President, Secretary and General Counsel
Northeast Utilities Service Company
P.O. Box 270
Hartford, CT 06141-0270
(Name and address of agent for service)
The Commission is requested to mail signed copies of all orders, notices, and
communication to
David R. McHale Jeffrey C. Miller
Manager-Project and Short-Term Finance Assistant General
Northeast Utilities Counsel
Service Company Northeast Utilities
P.O. Box 270 Service Company
Hartford, CT 06141-0270 P.O. Box 270
Hartford, CT
06141-0270
Item 1. Description of Proposed Transaction
Paragraph 9 of Item 1 of Post-effective Amendment No. 1 in this file is
amended by adding to the end of subparagraph (i) of the second paragraph thereof
the following:
"At September 30, 1994 the ratio of such investment ($5,647,000) to such
consolidated retained earnings ($937,198,000) was 0.6%."
Item 6. Exhibits and Financial Statements
(a) Exhibits
D.2 DPUC Order
SIGNATURES
Pursuant to the requirements of the Public Utility Holding Company Act of
1935, the undersigned company has duly caused this statement to be signed on its
behalf by the undersigned thereunto duly authorized.
THE CONNECTICUT LIGHT AND POWER COMPANY
By: /s/Jeffrey C. Miller
Title: Assistant General Counsel
Dated: December 9, 1994
EXHIBIT D.2
STATE OF CONNECTICUT
DEPARTMENT OF PUBLIC UTILITY CONTROL
ONE CENTRAL PARK PLAZA
NEW BRITAIN, CT 06051
DOCKET NO. 88-09-01: APPLICATION OF THE CONNECTICUT LIGHT AND POWER COMPANY FOR
APPROVAL TO FINANCE POLLUTION CONTROL AND/OR SEWAGE OR SOLID WASTE DISPOSAL
FACILITIES AT SEABROOK STATION UNIT NO. 1 - REOPENED
November 23, 1994
By the following Commissioners:
Thomas M. Benedict
Reginald J. Smith
Heather F. Hunt
DECISION
I. INTRODUCTION
A. APPLICANTS PROPOSAL
By application filed with the Department of Public Utility Control
(Department) on October 18, 1994, The Connecticut Light and Power Company
(Company or CL&P), a public service company as defined in Section 16-1 of the
General Statutes of Connecticut (Conn. Gen. Stat.), seeks pursuant to Section
16-43 of the Conn. Gen. Stat., a modification of the Decision in Docket No. 88-
09-01, "Application of The Connecticut Light and Power Company for Approval to
Finance Pollution Control and/or Sewage or Solid Waste Disposal Facilities at
Seabrook Station Unit No. 1", dated October 19, 1988. Specifically, the Company
seeks authority (i) to change the expiration date of the letter of credit (LOC)
issued to support the pollution control revenue bonds (Bonds) from perpetual to
a three-year term ending November 1, 1997, extendible for successive one-year
terms thereafter indefinitely with the consent of the Company and the bank, (ii)
to reduce the reimbursement fee payable to the bank and (iii) to obtain approval
for any further changes in the present LOC and replacement of the present and
future letters of credit during the term of the bonds supported thereby.
B. CONDUCT OF THE PROCEEDING
A hearing was noticed for November 14, 1994, but cancelled when all Parties
to this docket notified the Department that they did not need a hearing.
II. APPLICANT'S EVIDENCE
The Connecticut Light and Power Company requests approval of a modification
of the Department's Decision in Docket No. 88-09-01, Above. In the Decision,
the Department approved CL&P's proposed financing of pollution control and/or
sewage or solid waste disposal facilities at the Seabrook Station No. 1 nuclear
electric generating plant (Facilities). The cost of acquiring, constructing and
installing the Facilities was financed by CL&P through its use of the net
proceeds from the sale of the Industrial Development Authority of the State of
New Hampshire (IDA) of its Bonds in the principal amount of $10,000,000. The
Bonds were issued pursuant to an indenture of Trust between the IDA and Baybank
Middlesex, as trustee (Trustee), and the proceeds of the issuance of the Bonds
were loaned to CL&P pursuant to a Financing Agreement (Loan Agreement) between
CL&P and IDA.
As stated in the Decision, in order to obtain the benefits of a high
quality rating for the Bonds, CL&P's obligations under the Loan Agreement are
secured by an irrevocable LOC in the amount of $10,833,334 issued by Union Bank
of Switzerland, New York Branch (Bank) in favor of the Trustee. The purpose of
this application for modification of the Decision is to seek authority for CL&P
(a) to participate in an amendment to the Reimbursement and Security Agreement
dated as of October 1, 1988, between the Company and the Bank (Agreement) in
order (i) to change the expiration date of the LOC from perpetual to a three-
year term ending November 1, 1997, extendible for successive one-year terms
thereafter indefinitely with the consent by the Company and the Bank, and (ii)
to reduce the annual LOC fee payable to the Bank and (b) to replace the LOC
provided by the Bank, as permitted by Section 3.13 of the Loan Agreement, by
delivery of a substitute credit facility, consisting of a new LOC, and related
agreements, to be provided by a substitute bank to be chosen by CL&P (Substitute
Bank).
For corporate, accounting and regulatory reasons, the Bank has approached
the Company seeking to eliminate its perpetual obligation to provide the LOC.
The Company is agreeable to revising this obligation to a three-year commitment
coupled with an "evergreen" feature whereby, at the request of the Company and
with the consent of the Bank, the LOC can be extended indefinitely for
successive one-year terms. The Company believes that were the Bank not to
consent to an extension in the future, the Company could obtain a replacement
LOC on comparable terms without difficulty.
In conjunction with the changes mentioned above, the Bank is agreeable to
revising the annual LOC fee the Company must pay, from 0.45% of the LOC amount
to the following percentage, depending on the lower of the Company's bond
ratings from time to time as determined by Moody's and Standard and Poor's.
Applicable Per
Moody's S&P Annum LOC Fee Rate
A3 or higher A-or higher 0.35%
Baa 1 and Baa 2 BBB+ and BBB 0.40%
Baa 3 BBB- 0.55%
Baa 1 or below BB+ or below 0.70%
or no rating from or no rating from
either agency either agency
At the Company's present bond rating, Moody's Baa1 and S&P BBB+,
respectively, the annual LOC fee would change from 0.45% to 0.40%, representing
a reduction of $5,417 per annum.
If, as has happened with several banks providing letters of credit to CL&P,
the Bank's credit rating were to deteriorate, the marketability of the Bonds and
their effective interest cost to CL&P could be affected negatively. In
addition, the Bank itself may choose not to renew its commitment or CL&P may,
for a variety of reasons, seek alternative banks. Accordingly, CL&P seeks
authority to replace the Bank's LOC with a new LOC (Substitute LOC) to be issued
by a new bank (Substitute Bank). The Substitute LOC would be issued under a new
letter of credit and reimbursement agreement (New LOC Agreement) substantially
identical to the Letter of Credit and Reimbursement Agreement dated as of
September 1, 1993 among CL&P, Deutsche Bank AG, New York Branch, Issuing Bank
and Agent, various co-agents and participating banks, as approved by the
Department in Docket No. 93-06-23, "Application of CL&P Regarding Refinancing
of Indebtedness Relating to Pollution Control Facilities."
Furthermore, CL&P seeks authority to obtain from time to time new letters
of credit from the same or different banks and further extensions or
modifications of and replacements for the New LOC Agreement with such banks from
time to time during the term of the Bonds supported thereby, in accordance with
the provisions of the Loan Agreement and provided that (A) the total amount
available to be drawn under any such extended, modified, or replacement LOC does
not exceed $10,833,334, (B) the annual LOC costs applicable to any such
extension, modification, or replacement do not exceed 1.00% per annum of the
total amount available to be drawn under the extended, modified or replacement
LOC, (C) the New LOC Agreement applicable to any such extension, modification
or replacement shall provide (or shall afford CL&P the option to elect) that
tender advances bear interest until paid at a rate not to exceed the higher of
(1) the prime rate plus 2.00% or (2) the federal funds rate plus $2.00%, (D)
such extension, modification, or replacement is otherwise on terms that are
substantially similar in all material respects to those applicable to the New
LOC Agreement (or previous extensions or modifications thereof or replacements
thereto) proposed to be entered into in connection with the replacement of the
Bank (Exhibit 2), and the Pledge Agreement between CL&P and the bank to be named
(Exhibit B to Exhibit 2), and (E) CL&P shall have obtained all necessary
approvals applicable to such extension, modification or replacement.
III. AUTHORITY ANALYSIS
The Company is requesting to modify its LOC in order to change the terms
of the LOC renewal and to reduce the annual LOC fee payable to the Bank. The
Company is also requesting authority to replace the LOC provided by the Bank
with a substitute credit facility without prior approval by the Department.
The Company stated that it had no desire to change banks at this time since
the Bank has offered the Company a meaningful fee reduction subject to the
Bank's terms of renewal on the LOC. The Bank's credit rating remains very high,
AAA, which enables the Company to maintain low interest rates on its variable
rate Bonds. Application, p. 7.
The Company indicated that, aside from the terms of LOC renewal, the new
LOC agreement would be substantially similar to the documents originally entered
into between CL&P and the Bank as approved in Docket No. 88-09-01, Decision
dated October 19, 1988. The terms of the LOC renewal - from a perpetual to a
three-year term ending November 1, 1997, extendible for successive one-year
terms with the consent of the Company and the Bank - are substantially similar
to those recently entered into by CL&P in Docket No. 93-06-23, above, and Docket
No. 86-11-10, "Application of The Connecticut Light and Power Company for
Approval of Financing for Pollution Control and/or Sewage or Solid Waste
Disposal Facilities." Response to Interrogatory WA-1. The Company has
indicated that because there would be administrative costs associated with an
annual renewal of the LOC, the Bank agreed to reduce the LOC fee from 0.45% to
0.40% per annum (at the Company's current bond rating). This represents a fee
reduction of $5,417 per year. Response to Interrogatory WA-1. While this
represents a negligible ratepayer effect, the Department supports this cost-
saving effort.
Finally, the Company is also seeking authority to obtain, extend or modify
the existing LOC under this docket without prior Department approval, provided
that the new, modified or extended LOC is in accordance with the terms described
in Section II, paragraph 8. The Department approves, provided that CL&P
notifies the Department and can demonstrate that the transaction will result in
a lower overall cost to the Company.
IV. FINDINGS OF FACT
1. The terms of the LOC renewal are substantially similar to those recently
entered into by CL&P.
2. Annual savings from the new LOC are estimated at $5,417, minus
administrative costs.
V. CONCLUSION AND ORDER
A. CONCLUSION
Approval of the proposed LOC substitution is in the public interest. The
Company may obtain, modify or extend its LOC, provided that (A) the total amount
available to be drawn under any such extended, modified, or replacement LOC does
not exceed $10,833,334, (B) the annual LOC costs applicable to any such
extension, modification, or replacement do not exceed 1.00% per annum of the
total amount available to be drawn under the extended, modified or replacement
LOC, (C) the New LOC Agreement applicable to any such extension, modification
or replacement shall provide (or shall afford CL&P the option to elect) that
tender advances bear interest until paid at a rate not to exceed the higher of
(1) the prime rate plus 2.00% or (2) the federal funds rate plus $2.00%, (D)
such extension, modification, or replacement is otherwise on terms that are
substantially similar in all material respects to those applicable to the New
LOC Agreement (or previous extensions or modifications thereof or replacements
therefore) proposed to be entered into in connection with the replacement of the
Bank and the Pledge Agreement between CL&P and the bank to be named, (E) CL&P
shall have obtained all necessary approvals applicable to such extension,
modification or replacement, and (F) provided that it meets the conditions
stated in Order No. 1 below.
B. ORDER
For the following order, please submit an original and ten (10) copies of
any requested material to the Executive Secretary, identified by Docket Number,
Title and Order Number.
1. Upon obtaining, modifying or extending its LOC during the term of the
Bonds, in accordance with the terms set forth in Section II, paragraph 8 of this
Decision, the Company shall file no later than 10 days after the transaction (1)
evidence that it has made use of competitive bidding in obtaining the lowest
fees from a financial institution, (2) itemization of estimated transactions
costs, and (3) estimated ratepayer benefits, including all transactions costs.
DOCKET NO. 88-09-01: APPLICATION OF THE CONNECTICUT LIGHT AND POWER COMPANY FOR
APPROVAL TO FINANCE POLLUTION CONTROL AND/OR SEWAGE OR SOLID WASTE DISPOSAL
FACILITIES AT SEABROOK STATION UNIT NO. 1 - REOPENED
This Decision is adopted by the following Commissioners:
Thomas M. Benedict
Reginald J. Smith
Heather F. Hunt
CERTIFICATE OF SERVICE
The foregoing is a true and correct copy of the Decision issued by the
Department of Public Utility Control, State of Connecticut, and was forwarded
by Certified Mail to all parties of record in this proceeding on the date
indicated.
/s/Robert J. Murphy Date: November 28, 1994
Executive Secretary
Department of Public Utility Control
