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File Number 70-8577
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
POST-EFFECTIVE AMENDMENT NO. 2
TO
FORM U-1
APPLICATION-DECLARATION UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
By
CONSOLIDATED NATURAL GAS COMPANY
CNG Tower
625 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3199
(a registered holding company and
the parent of the other party)
CNG ENERGY SERVICES CORPORATION
One Park Ridge Center
Pittsburgh, Pennsylvania 15244-0746
CNG PRODUCTS AND SERVICES, INC.
625 Liberty Avenue
Pittsburgh, Pennsylvania 15222-03199
Names and addresses of agents for service:
J. M. Hostetler, Attorney
Consolidated Natural Gas Service Company, Inc.
CNG Tower
625 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3199
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File Number 70-8577
SECURITIES AND EXCHANGE COMMISSION
Washington, DC. 20549
POST-EFFECTIVE AMENDMENT NO. 2 TO
APPLICATION-DECLARATION UNDER THE PUBLIC UTILITY
HOLDING COMPANY ACT OF 1935
Item 1. Description of Proposed Transaction
INTRODUCTION
Consolidated Natural Gas Company ("Consolidated") is a Delaware
corporation and a public utility holding company registered under the Public
Utility Holding Company Act of 1935 ("Act"). It is engaged solely in the
business of owning and holding all of the outstanding securities, with the
exception of certain minor long-term debt, of its subsidiaries. The subsidiary
companies are primarily engaged in natural gas exploration, production,
purchasing, gathering, transmission, storage, distribution, byproduct
operation, energy services and other related activities.
Consolidated incorporated CNG Special Products and Services, Inc., in
1995, as a wholly-owned non-utility subsidiary of its CNG Energy Services
Corporation subsidiary. The name was changed in late 1995, to CNG Products and
Services, Inc. (hereinafter, "Products and Services"). Products and Services
provides energy-related, customer-convenience type services to customers of the
local distribution companies ("LDCs") in the Consolidated System (1) and to
others, primarily customers of non-affiliated utilities. The energy-related
services, approved by Commission Order on August 28, 1995, HCAR No. 26363
("Initial Order"), are closely related to energy services already being
provided to such customers.
____________________
(1) The "Consolidated System" is Consolidated and its wholly-owned
subsidiaries, which includes the following local distribution companies
("Consolidated LDCs"): The East Ohio Gas Company, serving 1,081,000 customers
primarily in northeastern Ohio; The Peoples Natural Gas Company,
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The Initial Order approved the following ten categories of energy-related
services (collectively, "Original Customer Services"):
(1) Service Line Maintenance Program
(2) Appliance Guard (extended service warranty)
(3) Payment Power (bill payment protection)
(4) Routine Furnace Services
(5) One-Package Appliance Inspection and Replacement
(6) Community Bill Payment Center
(7) Energy Audits and Services
(8) Propane Service
(9) Gas Fired Electric Generators
(10) Pipeline Maintenance, Construction, and Managerial Support
Services for others
However, the Commission authorization extended only to these ten specific
categories of Customer Services (2).
____________________
serving 332,000 customers in southwestern Pennsylvania; Virginia Natural Gas,
Inc., serving 184,000 customers in southeastern Virginia; Hope Gas, Inc.,
serving 111,000 customers in central and northern West Virginia; and West Ohio
Gas Company, serving 60,000 customers in a region in western Ohio centered
around Lima.
(2) The following is a more detailed description of the Original Customer
Services listed above: (1) Service Line Maintenance Program. Products and
Services pays for repair of service lines -- owned by and on customer's
property -- in exchange for a nominal monthly fee. This is similar to service
offered by telephone companies to repair telephone lines inside the house --
without any additional charge above the nominal monthly fee. (2) Appliance
Guard. Products and Services would provide customers with an extended service
warranty that would cover the cost of repairing appliances owned by the
customer. It would include (but not be limited to) gas grills, furnaces and
air conditioning units, and commercial and residential ranges. (3) Payment
Power. Products and Services, through contractual arrangement with American
Banker's Insurance Group, would provide bill payment protection for customers
up to $400 a month for six months -- should the customer become unemployed,
disabled, or die. (4) Routine Furnace Services. Products and Services would
act as an intermediary for customers to arrange routine inspections or repairs
of furnaces. (5) One Package Appliance Inspection and Replacement. This would
be a "premium service" offered by Products and Services to "add value" for the
customer. it goes beyond the Routine Furnace Services plan mentioned above, by
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PROPOSALS
Applicants now propose the following additional categories to Customer
Services: Energy-Related Equipment, Energy-Related Safety Inspection and Repair
Services, Energy-Related Electronic Measurement Services, Energy-Related
Marketing and Consulting Services, Risk Management Products for Customers,
Expanded Service Line Maintenance Program, Customer Financing, and Incidental
Products and Services (collectively, "New Customer Services").
____________________
offering annual inspection, maintenance service, or even replacement of any
appliance. Also, Products and Services may offer customers the option to rent,
rent-to-own, or purchase appliances like hot water heaters and furnaces. (6)
Community Bill Payment Center. Products and Services would provide a
centralized bill payment center where customers can -- with "one-stop" -pay
their gas, electric, water, telephone, cable and other utility or municipal
bills. The potential for such centers will depend on the local community
(overall interest and feasibility). Local utilities and municipalities may be
able to reduce costs by merging existing bill payment locations into the
community bill payment center. (7) Energy Audits and Services. Products and
Services would arrange energy audits for institutional and commercial
customers, and then offer the customer a turn-key service package, including
bank or other third party financing, to implement energy-saving recommendations
resulting from the audit. (8) Propane Service. Products and Services would
arrange for this service in areas where, at the present time, it is not
economical for LDCs to extend natural gas service via underground pipeline. (9)
Gas Fired Electric Generators. Products and Services would arrange for the
installation of temporary or permanent gas-fired turbines, for the on-site
generation and consumption of electrical energy. (10) Pipeline Maintenance.
Construction and Managerial Support Services For Others. For pipeline
maintenance, Products and Services would manage all Department of
Transportation ("DOT") required maintenance on pipelines owned by other
utilities. For pipeline construction, Products and Services would arrange for
and manage the construction of pipelines to be owned by other utilities. For
managerial support services, which are intended for small, non-affiliated
utilities, Products and Services would offer (1) consultant services to solve
financial or operational difficulties, (2) managerial services for one or more
day-to-day operations, and (3) training services for the employees of small
utilities to meet new standards in the industry or comply with government
regulations. The services would be tailored to meet the particular needs.
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Energy-Related Equipment -- Products and Services would sell and install
(a) energy-related appliances such as furnaces, air conditioners, hot water
heaters, heat pumps, gas grills, gas lights, gas logs and related fireplace
equipment, natural gas vehicle ("NGV") conversion equipment (to convert a non-
gas powered vehicle to "dual-fuel" capability) and the NGV refueling equipment
necessary to allow customers to refuel their NGVs at home, and other similar
appliances, and (b) energy-related products that enhance safety, increase
energy efficiency, or provide energy-related information, such as home security
systems (including carbon monoxide, smoke and fire detectors, and fire
extinguishers), energy consumption monitoring devices (including software
programs), demand side management devices to increase energy efficiency or
reduce energy consumption, and other similar products.
Energy-Related Safety Inspection and Repair Services -- Products and
Services would offer residential and commercial customers a safety inspection
and repair service to detect and correct problems such as carbon monoxide
leaks, and faulty equipment wiring.
Energy-Related Electronic Measurement Services -- Products and Services
would offer residential, commercial and industrial customers a variety of
enhanced measurement and billing services that will enable them to better
monitor and control their energy consumption and expenditures. For example, in
the case of residential consumers, the ability to use a home phone or computer
to determine what their energy bill is at any point during the month, or, in
the case of large commercial/industrial consumers, the ability to continuously
monitor energy consumption, prices and fuel-switching opportunities.
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Energy-Related Marketing and Consulting Services -- Products and
Services would offer marketing services to non-affiliated businesses by
providing non-affiliated LDCs and other third parties with bill insert and
automated meter reading services as well as other consulting services such as
advice on how to set up a billing mechanism or marketing program.(3)
Risk Management Products for Customers -- A variety of financial
instruments may be made available to customers interested in hedging energy
price or consumption fluctuations under existing contracts. These instruments
will not be used for speculative purposes.
Expanded Service Line Maintenance Program -- Products and Services
proposes to expand the scope of its Service Line Maintenance Program approved
in the Initial Order to cover any type of energy-related service line (wire or
pipe) owned by the customer. In exchange for a nominal monthly fee, Products
and Services pays for any needed repairs to the customer's service lines.
Products and Services does not -- and will not as a result of this expanded
program -- own or operate any facilities or utility assets as defined in
sections 2(a)(3), 2(a)(4), and 2(a)(18) of the Act). (4)
Customer Financing -- Applicants seek authorization for Products and
Services to offer its own or to broker non associate third-party financing to
commercial, industrial and residential customers to facilitate purchases by its
customers of goods and services included within the Energy-Related Equipment
category of New Customer Services.
__________________________
(3) This category of New Customer Services expands on the "Pipeline
Maintenance, Construction and Managerial Support Services for Others," category
of Original Customer Services approved by the Initial Order.
(4) Applicants believe that customers will find it more convenient and cost
effective to pay one monthly fee to Products and Services instead of separate
monthly fees to a variety of utilities (gas, electric, telephone, cable, water,
etc.).
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Customer financing also will be available for purchases by Consolidated LDC
customers of Energy-Related Equipment where the customer is not otherwise
purchasing goods and services promoted by Products and Services. Customer
financing would take the form of direct loans, installment purchase
arrangements and loan guarantees. The amount of funds that may be made
available for the proposed customer financing activities is included within
Products and Services existing financing authorization of $10 million.
Interest on loans and imputed interest on lease payments will be based on
prevailing market rates. The obligations will have terms from one to ten years
and will be secured or unsecured. Products and Services also may assign
obligations acquired from customers to banks, leasing companies or other
financial institutions, with or without recourse.
Incidental Products and Services -- Applicants seek authorization to
provide certain incidental products and services related to the seven
categories of New Customer Services listed above and the ten categories of
Original Customer Services authorized in the Initial Order ("Incidental
Products and Services"). The proposed Incidental Products and Services would
be closely related to the consumption of energy and/or the maintenance of
property by customers. The need for such products and services would arise as
a result of, or evolve out of, and would not differ materially from, the
Original Customer Services and/or New Customer Services described above. (5)
(The Original Customer Services and the proposed New Customer Services, are
hereafter collectively referred to as "Customer Services.")
________________________
(5) The Proposed Incidental Products and Services would not involve the
manufacture of energy-consuming equipment but could be related to, among other
things, the maintenance, financing, sale or installation of such equipment.
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Products and Services conducts or will conduct its Customer Services
business both within and outside of the four states of Virginia, West Virginia,
Pennsylvania and Ohio where the Consolidated LDCs are located (collectively,
"LDC States"). However, applicants state that during the twelve-month period
beginning on the first day of the Month following the date on which Products
and Services commences its New Customer Services business pursuant to a
supplemental order issued by the Commission in this matter, and for each
subsequent calendar year thereafter, total Customer Services revenues of
Products and Services derived from customers in the LDC States will exceed
total Customer Services revenues of Products and Services derived from
customers in all other states.
Consolidated LDCs may assist Products and Services with customer billing,
accounting, and other energy-related services and anticipate that any services
can be provided to Products and Services by the current staff at the
Consolidated LDCs. Services required to conduct the Customer Services and
Incidental Products and Services businesses that are provided to Products and
Services by the Consolidated LDCs or any other CNG system company will be
billed at cost in accordance with section 13(b) of the Act and rules 87, 90 and
91 thereunder.
Like the previously approved Original Customer Services, the New Customer
Services will generally be offered as a convenience to utility customers, will
be closely related to energy services already being provided to such customers,
and will lead to increased and more efficient utilization of existing
Consolidated LDC personnel and facilities and additional revenues to offset the
cost of maintaining such personnel and facilities. Applicants also expect the
New Customer Services activities to benefit the Consolidated System and/or its
customers by, among other things, (i) promoting the safe and efficient
distribution of natural gas at retail, (ii) fostering effective demand side
management by reducing unnecessary consumption, (iii) maintaining or increasing
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the gas load of the Consolidated LDCs by facilitating the repair or replacement
of service lines, (iv) promoting aspects of the Consolidated LDCs' gas business
that are less weather sensitive, (v) reducing one-time cash outlays for repairs
by the Consolidated LDCs' customers and protecting customers against high
repair costs, (vi) reducing the overall energy costs of the Consolidated LDCs'
customers, thereby improving the financial strength and continued viability of
the Consolidated System's existing customer base, and (vii) increasing customer
satisfaction and goodwill. The New Customer Services activities are expected
to produce profits which will inure to the benefit of Consolidated's investors.
Applicants submit that the proposed New Customer Services are reasonably
incidental and/or economically necessary or appropriate to the Consolidated
LDCs' core utility business of distributing gas at retail and will primarily
benefit the Consolidated LDCs and their customers. They note, for example,
that, in addition to protecting customers against high repair costs, the
Expanded Service Line Maintenance Program will further enhance the ability of
the Consolidated LDCs to maintain their distribution lines in good working
order and effect repairs when needed, thereby minimizing service interruptions
and lost sales due to line breaks and enhancing the utility service provided to
customers and the ability of the Consolidated LDCs to distribute gas reliably
and efficiently. Similarly, the proposed Energy-Related Safety Inspection and
Repair Services will promote the safe and efficient distribution of gas at
retail by facilitating the maintenance and repair of gas utilizing equipment
that is broken or not working properly. In addition, like the proposed Energy-
Related Electronic Measurement Services and certain of the Energy-Related
Equipment, the Safety Inspection and Repair Services will foster effective
demand side management by reducing unnecessary consumption. Applicants submit
that the proposed Risk Management and Energy-Related Marketing and Consulting
Services are consistent with the type of activities previously approved by the
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Commission in various "consulting" (6) and "licensing" (7) cases and that the
proposed activities involving the financing, sale and installation of Energy-
Related Equipment are consistent with or reasonably incidental to the type of
appliance sales and marketing activities that have previously been approved by
the Commission in cases such as Engineers Public Service Company, 12 S.E.C. 41
(1942); Mississippi Power Company, Holding Co. Act Release No. 22453 (September
1, 1978); General Public Utilities Corporation, Holding Co. Act Release No.
15184 (February 9, 1965); and Cities Service Company, Holding Co. Act Release
No. 5028 (May 5, 1944). (8)(9)
COMPLIANCE WITH RULE 53
Any direct or indirect investment by Consolidated in any EWG would be
consummated only if, at the time thereof, and giving effect thereto,
Consolidated's "aggregate investment" determined in accordance with Rule
53(a)(1)(i) in all EWGs and FUCOs would not exceed 50% of Consolidated's
________________________________
(6) See, e.g., New England Electric System, Holding Co. Act Release No. 22719
(November 19, 1982); American Electric Power Company, Holding Co. Act Release
No. 22468 (April 28, 1982); The Southern Company, Holding Co. Act Release No.
22132 (July 17, 1981).
(7) See, e.g., GPU Nuclear Corporation, Holding Co. Act Release No. 25401
(November 6, 1991); and Jersey Central Power and Light Company, Holding Co. Act
Release No. 24348 (March 18, 1987).
(8) Equipment financing authority and authorization to provide Incidental
Products and Services substantially similar to that requested here was granted
by the Commission in the recent cases of Columbia Gas System, Inc., Holding Co.
Act Release No. 26498 (March 25, 1996), and Cinergy Corp., et al., Holding Co.
Act Release No. 26662 (February 7, 1997).
(9) Applicants submit that several of the Customer Services (e.g., Expanded
Service Line Maintenance Program, Customer Financing, Incidental Products and
Services) falls outside of the categories of energy-related activities now
permitted under Rule 58. Therefore, Products and Services is not an "energy-
related company" as defined in Rule 58.
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consolidated retained earnings as defined in Rule 53(a)(1)(ii). As of March
31, 1997, one-half of the Company's consolidated retained earnings was
$775,026,000; the Company's investment in EWGs as of the same date is
approximately $14,566,000.
The books and records of Consolidated's EWGs are kept in conformity with
United States generally accepted accounting principles ("GAAP"), the financial
statements are prepared according to GAAP, and Consolidated undertakes to
provide the Commission access to such books and records and financial
statements as it may request. It is anticipated that a minimal number of
employees of Consolidated's LDCs will render services, directly or indirectly,
to EWGs and FUCOs in the Consolidated system, and the number of such employees
shall not in any event exceed two percent of the total number of employees of
such LDCs.
Based on the above, Applicants submit that, for purposes of Rule 54, the
requirements of Rule 53(a)-(c), 17 C.F.R. Section 250.53(a), (b) and (c), are
satisfied.
RULE 24 CERTIFICATES
Applicants request that Rule 24 Certificates of Notification be filed
within 60 days after the end of each quarterly calendar period (within 90 days
after the end of the fourth quarterly period) to report to the Commission with
respect to transactions authorized pursuant to this filing. Such certificates
shall contain the following information:
(1) a statement of all revenues derived from the Customer Services
activities both during the period covered and cumulatively, including
information on the amount and percentage of revenues attributable to
each category or type of service provided;
(2) copies of all state commission orders approving, or post-
transaction audit documents pertaining to, affiliate service
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arrangements or affiliate transactions between Products and Services
and Consolidated System LDCs obtained during the period covered;
(3) a statement containing a company-by-company breakdown of all
services provided to Products and Services by Consolidated System
LDCs (or any other Consolidated system companies) and all payments
for such services made by Products and Services during the period
covered and cumulatively; and, provided further, that (i) no later
than August 15th of each year, Applicants shall file balance sheets
for Products and Services as of June 30th of that year and income
statements for Products and Services for the six-month period ending
on June 30th of that year, and (ii) no later than 120 days after the
end of each calendar year, Applicants shall file a modified U-13-60
annual report.
The above information will be reported in the Rule 24 Master Certificate
of Notification file under File No. 70-8667.
Item 2. Fees, Commissions, and Expenses
It is estimated that the fees, commissions and expenses ascertainable at
this time to be incurred by Consolidated in connection with the proposed
transactions will not exceed $5,000, including $4,000 payable to Consolidated
Natural Gas Service Company, Inc. ("Service Company") for services on a cost
basis (including regularly employed counsel) for the preparation of this
Application-Declaration and other documents, and $1,000 for miscellaneous other
expenses.
The charges of Service Company, a subsidiary service company, for
services on a cost basis (including regularly employed counsel) in connection
with the preparation of this Application-Declaration and other related
documents and papers required to consummate the proposed transactions are as
stated above.
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Item 3. Applicable Statutory Provisions
If the Commission considers the proposed future transactions to
require any authorization, approval or exemption, under any section of the Act
or Rule or Regulation other than those cited herein, such authorization,
approval or exemption is hereby requested.
Item 4. Regulatory Approval
Applicants state that no state commission and no federal agency other than
this Commission has jurisdiction over the proposed transactions except that,
with regard to service agreements and affiliate transactions between the CNG
LDCs and Products and Services, the CNG LDCs will be required to make certain
affiliate transaction filings with and/or obtain certain pre-transaction
authorizations from or submit to certain post-transaction audit review by the
state public-utility commissions of Ohio, Pennsylvania, Virginia and West
Virginia. Applicants state that they will not engage in any Customer Services
activities in states requiring pre-transaction authorizations in connection
with intra-system service agreements and/or affiliate transactions until the
necessary authorizations are obtained. In addition, copies of all such
authorizations as well as any documents pertaining to post-transaction audit
proceedings will be provided to the Commission in accordance with the rule 24
Certificate of Notification requirements outlined below.
Item 5. Procedure
Applicants respectfully request that an order be issued approving this
Post Effective Amendment by June 30, 1997.
It is submitted that a recommended decision by a hearing or other
responsible officer of the Commission is not needed with respect to the
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proposed transactions. The office of the Division of Investment Management
Office of Public Utility Regulation may assist in the preparation of the
Commission's decision. There should be no waiting period between the issuance
of the Commission's order and the date on which it is to become effective.
Item 6. Exhibits and Financial Statements
The following exhibits and financial statement are made a part of
this statement:
(a) Exhibits
o Proposed Notice pursuant to Rule 22(f)
(b) Financial Statements
Financial statements of the applicant-declarants are deemed
unnecessary with respect to the proposed authorizations sought herein due to
the simple nature of the Amendment. However, any financial information will be
furnished which the Commission shall request.
Item 7. Information as to Environmental Effects
The proposed transactions do not involve major federal action having a
significant effect on the human environment. See Item 1(a).
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No federal agency has prepared or is preparing an environmental impact
statement with respect to the proposed transaction.
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.
CONSOLIDATED NATURAL GAS COMPANY
CNG ENERGY SERVICES CORPORATION
CNG PRODUCTS AND SERVICES, INC.
By J. M. Hostetler
Its Attorney
Dated: June 24, 1997
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EXHIBIT O
Proposed Notice Pursuant to Rule 22f)
(Release No. 35-__________)
FILINGS UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 ("ACT")
June ____, 1997
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 thereunder.
All interested persons are referred to the application(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 thereto 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
July ___, 1997 to the Secretary, Securities and Exchange Commission,
Washington, DC 20549, and serve a copy on the relevant applicant(s) and/or
declarant(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 shall 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 said date, the application(s) and/or
declaration(s), as filed or as amended, may be granted and/or permitted to
become effective.
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Consolidated Natural Gas Company, et al. (70-8577)
__________________________________________________
Consolidated Natural Gas Company ("Consolidated"), CNG Tower, 625 Liberty
Avenue, Pittsburgh, Pennsylvania 15222-3199, a registered holding company, and
its wholly-owned non-utility subsidiaries, CNG Energy Services Corporation and
CNG Products and Services, Inc. ("Products and Services"), have filed a post
effective amendment to their Application-Declaration under Sections 6, 7, 9(a),
10, 12(b), and 13(b) of the Act.
Products and Services is engaged in the business of providing energy-
related services ("Customer Services") to customers of the local distribution
companies ("LDCs") in the Consolidated System and to others, primarily
customers of non-affiliated utilities. The Customer Services are offered by
Products and Services as a convenience to utility customers, are related to
energy services being provided to such customers.
The existing categories of energy-related services (collectively,
"Original Customer Services") are as follows:
(1) Service Line Maintenance Program
(2) Appliance Guard (extended service warranty)
(3) Payment Power (bill payment protection)
(4) Routine Furnace Services
(5) One-Package Appliance Inspection and Replacement
(6) Community Bill Payment Center
(7) Energy Audits and Services
(8) Propane Service
(9) Gas Fired Electric Generators
(10) Pipeline Maintenance, Construction, and Managerial Support
Services for others
<PAGE> 3
Applicants now propose the following additional categories to Customer
Services: Energy-Related Equipment, Energy-Related Safety Inspection and Repair
Services, Energy-Related Electronic Measurement Services, Energy-Related
Marketing and Consulting Services, Risk Management Products for Customers,
Expanded Service Line Maintenance Program, Customer Financing, and Incidental
Products and Services (collectively, "New Customer Services").
Energy-Related Equipment -- Products and Services would sell and install
(a) energy-related appliances such as furnaces, air conditioners, hot water
heaters, heat pumps, gas grills, gas lights, gas logs and related fireplace
equipment, natural gas vehicle ("NGV") conversion equipment (to convert a non-
gas powered vehicle to "dual-fuel" capability) and the NGV refueling equipment
necessary to allow customers to refuel their NGVs at home, and other similar
appliances, and (b) energy-related products that enhance safety, increase
energy efficiency, or provide energy-related information, such as home security
systems (including carbon monoxide, smoke and fire detectors, and fire
extinguishers), energy consumption monitoring devices (including software
programs), demand side management devices to increase energy efficiency or
reduce energy consumption, and other similar products.
Energy-Related Safety Inspection and Repair Services -- Products and
Services would offer residential and commercial customers a safety inspection
and repair service to detect and correct problems such as carbon monoxide
leaks, and faulty equipment wiring.
Energy-Related Electronic Measurement Services -- Products and Services
would offer residential, commercial and industrial customers a variety of
enhanced measurement and billing services that will enable them to better
monitor and control their energy consumption and expenditures. For example, in
the case of residential consumers, the ability to use a home phone or computer
to determine what their energy bill is at any point during the month, or, in
the case of large commercial/industrial consumers, the ability to continuously
monitor energy consumption, prices and fuel-switching opportunities.
<PAGE> 4
Energy-Related Marketing and Consulting Services -- Products and
Services would offer marketing services to non-affiliated businesses by
providing non-affiliated LDCs and other third parties with bill insert and
automated meter reading services as well as other consulting services such as
advice on how to set up a billing mechanism or marketing program.(1)
Risk Management Products for Customers -- A variety of financial
instruments may be made available to customers interested in hedging energy
price or consumption fluctuations under existing contracts. These instruments
will not be used for speculative purposes.
Expanded Service Line Maintenance Program -- Products and Services
proposes to expand the scope of its Service Line Maintenance Program approved
in the Initial Order to cover any type of energy-related service line (wire or
pipe) owned by the customer. In exchange for a nominal monthly fee, Products
and Services pays for any needed repairs to the customer's service lines.
Products and Services does not -- and will not as a result of this expanded
program -- own or operate any facilities or utility assets as defined in
sections 2(a)(3), 2(a)(4), and 2(a)(18) of the Act). (2)
Customer Financing -- Applicants seek authorization for Products and
Services to offer its own or to broker non associate third-party financing to
commercial, industrial and residential customers to facilitate purchases by its
customers of goods and services included within the Energy-Related Equipment
category of New Customer Services.
__________________________
(1) This category of New Customer Services expands on the "Pipeline
Maintenance, Construction and Managerial Support Services for Others," category
of Original Customer Services approved by the Initial Order.
(2) Applicants believe that customers will find it more convenient and cost
effective to pay one monthly fee to Products and Services instead of separate
monthly fees to a variety of utilities (gas, electric, telephone, cable, water,
etc.).
<PAGE> 5
Customer financing also will be available for purchases by Consolidated LDC
customers of Energy-Related Equipment where the customer is not otherwise
purchasing goods and services promoted by Products and Services. Customer
financing would take the form of direct loans, installment purchase
arrangements and loan guarantees. The amount of funds that may be made
available for the proposed customer financing activities is included within
Products and Services existing financing authorization of $10 million.
Interest on loans and imputed interest on lease payments will be based on
prevailing market rates. The obligations will have terms from one to ten years
and will be secured or unsecured. Products and Services also may assign
obligations acquired from customers to banks, leasing companies or other
financial institutions, with or without recourse.
Incidental Products and Services -- Applicants seek authorization to
provide certain incidental products and services related to the seven
categories of New Customer Services listed above and the ten categories of
Original Customer Services authorized in the Initial Order ("Incidental
Products and Services"). The proposed Incidental Products and Services would
be closely related to the consumption of energy and/or the maintenance of
property by customers. The need for such products and services would arise as
a result of, or evolve out of, and would not differ materially from, the
Original Customer Services and/or New Customer Services described above. (3)
(The Original Customer Services and the proposed New Customer Services, are
hereafter collectively referred to as "Customer Services.")
________________________
(3) The Proposed Incidental Products and Services would not involve the
manufacture of energy-consuming equipment but could be related to, among other
things, the maintenance, financing, sale or installation of such equipment.
<PAGE> 6
____________________________
For the Commission, by the Division of Investment Management, pursuant to
delegated authority.
Jonathan G. Katz
Secretary
