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File Number 70-9203
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Amendment No. 3
to
Form U-1
APPLICATION-DECLARATION UNDER THE PUBLIC UTILITY
HOLDING COMPANY ACT OF 1935
By
CONSOLIDATED NATURAL GAS COMPANY
CNG Tower
Pittsburgh, Pennsylvania 15222-3199
(a registered holding company and
the parent of the other parties)
CNG ENERGY SERVICES CORPORATION
CNG POWER COMPANY
One Park Ridge Center
P.O. Box 15746
Pittsburgh, Pennsylvania 15244-0746
CNG RETAIL SERVICES CORPORATION
One Chatham Center
Pittsburgh, Pennsylvania 15219
CNG PRODUCTS AND SERVICES, INC.
CNG Tower
Pittsburgh, Pennsylvania 15222-3199
CNG PRODUCING COMPANY
CNG Tower
1450 Poydras Street
New Orleans, Louisiana 70112-6000
Names and addresses of agents for service:
S. E. WILLIAMS, Senior Vice President and General Counsel
Consolidated Natural Gas Company
CNG Tower
625 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3199
N. F. CHANDLER
General Attorney
Consolidated Natural Gas Service Company, Inc.
CNG Tower
625 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3199
<PAGE> 2 File Number 70-9203
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Amendment No. 3
to
Form U-1
APPLICATION-DECLARATION UNDER THE PUBLIC UTILITY
HOLDING COMPANY ACT OF 1935
Consolidated Natural Gas Company and the other joint applicants named
herein hereby amend Part II of the response under Item 1 in the Form U-1
under the above indicated file number to read in its entirety as follows:
Item 1. Description of Proposed Transaction
II. REORGANIZATION OF CNG ENERGY SERVICES CORPORATION GROUP
On April 21, 1998, CNG announced that it will discontinue wholesale
marketing and trading of natural gas and electricity, including integrated
energy management. This decision was based on the Company's perception
that these activities did not provide sufficient opportunities to build
shareholder value despite its determined efforts over the past five years.
Wholesale margins across the industry have been driven to virtually zero in
many instances. The Company does not believe that the time, cost and risk
involved in further scaling up a wholesale marketing and trading company at
the current stage of market maturity are justified, given the potential
rewards. CNG will, however, continue to compete in the unregulated retail
energy marketplace.
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CNG Energy Services Corporation ("Energy Services"), a wholly-owned
subsidiary of Consolidated, was principally formed to be the subsidiary in
the CNG System to market at wholesale natural gas and other energy products
and services. CNG Power Services Corporation ("Power Services"), a wholly-
owned subsidiary of CNG and an exempt wholesale generator ("EWG") under
Section 32 of the Act, engages in wholesale electricity marketing.
In its exiting of the wholesale energy industry, CNG has signed a
definitive agreement, subject to regulatory approval, to sell its entire
equity ownership in Energy Services to Sempra Energy Trading Corp., a
subsidiary of Sempra Energy Corporation, for $48 million, which amount is
subject to final working capital adjustments. The Federal Trade Commission
has approved the transaction. In order to prepare Energy Services for
disposition under the definitive agreement, and for the future disposition
of Power Services, a reorganization plan ("Plan") of the Energy Services
Group is proposed. The Plan consists of two phases. In the first phase
("Phase I"), all of the subsidiaries of Energy Services and Power Services
would be transferred by Energy Services either through liquidating
distributions pursuant to a plan of liquidation under Section 332 of the
Internal Revenue Code ("Plan of Liquidation") or as dividend distributions
to CNG. In the second phase ("Phase II"), some of these former direct or
indirect subsidiaries of Energy Services would be retransferred by CNG to
become subsidiaries of other direct or indirect subsidiaries of CNG, and
two of these former subsidiaries of Energy Services would be consolidated.
The form of distributions to CNG in Phase I and the timing, manner and
extent of the redistributions in Phase II will depend on the business needs
as well as the ultimate tax impact that results from such transactions.
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This application seeks approval of the transactions contained in both
phases of the Plan.
Organizational charts showing the positions of all of the companies in
the Energy Services group before after implementing Phase I and Phase II of
the Plan are filed as Exhibit G.
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Co. Act of
1935, the undersigned companies have duly caused this amendment to be
signed on their respective behalf by the undersigned thereunto duly
authorized.
CONSOLIDATED NATURAL GAS COMPANY
By D. M. Westfall
Senior Vice President and
Chief Financial Officer
CNG ENERGY SERVICES CORPORATION
CNG POWER COMPANY
CNG RETAIL SERVICES CORPORATION
CNG PRODUCTS AND SERVICES, INC.
CNG PRODUCING COMPANY
By N. F. Chandler
Their Attorney
Date: July 22, 1998
