File No. 70-7287
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 20 TO
FORM U-1
APPLICATION-DECLARATION
WITH RESPECT TO ACQUISITION AND FINANCING
OF A WHOLLY-OWNED SUBSIDIARY
AND AUTHORIZATION OF SHORT-TERM BANK BORROWING
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 ("ACT")
EASTERN UTILITIES ASSOCIATES ("EUA")
P.O. Box 2333, Boston, Massachusetts 02107
EUA COGENEX CORPORATION ("COGENEX")
P.O. Box 2333, Boston, Massachusetts 02107
(Names of companies filing this statement
and address of principal executive office)
EASTERN UTILITIES ASSOCIATES
(Name of top registered holding company parent of
applicant or declarant)
CLIFFORD J. HEBERT, JR., TREASURER
EASTERN UTILITIES ASSOCIATES
P.O. Box 2333, Boston, Massachusetts 02107
(Name and address of agent for service)
The Commission is requested to mail signed copies
of all orders, notices and communications to:
ARTHUR I. ANDERSON, P.C.
McDermott, Will & Emery
75 State Street
Boston, MA 02109
The application-declaration on Form U-1 dated September 24,
1986, as amended by Amendment No. 1 dated November 14, 1986, by
Amendment No. 2 dated December 12, 1986, by Post-Effective
Amendment No. 1 dated February 29, 1988, by Post-Effective
Amendment No. 2 dated March 9, 1988, by Post-Effective
Amendment No. 3 dated April 12, 1988, by Post-Effective
Amendment No. 4 dated April 22, 1988, by Post-Effective
Amendment No. 5 dated April 22, 1988, by Post-Effective
Amendment No. 6 dated July 18, 1988, by Post-Effective
Amendment No. 7 dated August 12, 1988, by Post-Effective
Amendment No. 8 dated September 19, 1988, by Post-Effective
Amendment No. 9 dated October 31, 1989, by Post-Effective
Amendment No. 10 dated November 14, 1989, by Post-Effective
Amendment No. 11 dated December 21, 1989, by Post-Effective
Amendment No. 12 dated April 15, 1992, by Post-Effective
Amendment No. 13 dated July 10, 1992, by Post-Effective Amendment
No. 14 dated August 3, 1992, by Post-Effective Amendment No. 15
dated August 21, 1992, by Post-Effective Amendment No. 16 dated
December 12, 1994, by Post-Effective Amendment No. 17 dated
December 19, 1994, by Post-Effective Amendment No. 18 dated
January 30, 1995 and by Post-Effective Amendment No. 19 dated
November 15, 1995 is amended as stated below.
Item 1. Description of Proposed Transactions.
Item 1 of Post-Effective Amendment No. 19 is amended and
restated in its entirety as follows:
A. By an order in this proceeding dated December 19, 1986
(Release No. 35-24273), the Commission authorized EUA to acquire
all of the issued and outstanding capital stock of Citizens Heat
and Power Corporation, a Massachusetts corporation which provided
energy management services to institutional customers and which
became EUA's wholly-owned subsidiary, Cogenex. Cogenex designs,
finances, installs and maintains energy conservation systems. On
September 28, 1995 Cogenex announced that it was discontinuing
one of its principal business segments involving small self-
generation projects. The following is a more complete
description of Cogenex's two remaining principal business
segments.
1. Energy Management Services. Cogenex provides
energy management services (EMS) directly to institutional,
commercial/industrial and governmental customers to reduce their
energy costs and consumption. In its EMS programs, Cogenex
employs energy efficiency technology and equipment through
building automation, lighting modifications, boiler replacement,
and other heat recovery methods to reduce electrical energy and
fuel consumption and related energy costs of its customers. The
principal equipment installed and maintained by Cogenex for EMS
projects consists of lighting equipment, variable speed drives
used in connection with heating, ventilation and air conditioning
systems, building automation control equipment, high-efficiency
motors, chillers and heat exchangers. Cogenex is paid for these
services primarily through "shared savings" agreements in which
the customer, who occupies or owns a facility, pays Cogenex a
portion of the energy savings that result from the installation
and maintenance of the energy efficient equipment in the
facility. Cogenex also may, from time to time, acquire existing
shared savings contracts or the benefits of these agreements from
other EMS contractors or help finance EMS projects being
developed by such contractors.
2. Utility Demand Side Management. Cogenex also
participates in demand side management programs sponsored by
electric utilities as a means to decrease both base load and peak
demand on the utilities' systems. In utility demand side
management programs, Cogenex contracts with the utility and its
customers to provide EMS services to the utility's customers to
reduce the demand on the utility's system. Cogenex is paid by
the utility based on the reduction in the demand on the utility's
system and may also receive a portion of the customer's savings.
B. Cogenex hereby seeks authorization to expand the
services it provides to include services relating to furnishing
and conserving water for the types of customers to whom it has
historically furnished EMS services as described in paragraph A.
above. The water conservation services that Cogenex anticipates
providing may range from domestic applications such as toilet
replacements and retrofits, shower head replacement and aerators,
to commercial and industrial water treatment applications such as
water reclamation, purification and reuse, heating, cooling and
refrigeration, and waste water filtration systems. In addition,
Cogenex may furnish water to customers utilizing technologies
available in the marketplace. Presently, Cogenex anticipates
providing water treatment systems using reverse osmosis
technology which has been effective for desalinization of sea
water and brackish water sources and for the treatment of certain
classes of hazardous and toxic waste. The water treatment
systems generally will be located on or near the host facility,
and in reasonable proximity to the source of the water. Such
water services could be packaged with EMS services or furnished
on a stand alone basis.
Cogenex believes that such water services are functionally
related to EUA's utility system operations and in the public
interest as required by Section 11(b)(1) of the Act because they
are a natural outgrowth of Cogenex's EMS services and would draw
extensively upon Cogenex's experience in optimizing energy
consumption and utilization (Footnote 1). The Commission has stated
that the complexity of a service and its lack of availability to the
public due to the difficulty and expense of its development are
recurring factors in allowing a holding company or its affiliate
to engage in a new business (Footnote 2). Water conservation and
supply are as complex as any of the other services that Cogenex
currently provides to its customers, and like energy conservation,
it is a highly specialized business. Cogenex has sufficient
expertise and resources to quickly and efficiently add water
conservation and supply to its repertoire of services. By being
able to provide water services as a complement to its
energy conservation services, Cogenex will be increasing its
marketability to its EMS customers by meeting more of such
customers' conservation and efficiency needs at a marginal
increase in cost to Cogenex's operations. Such increased
services may also open up projects to Cogenex for which it might
not otherwise qualify. In addition, stand alone water projects
would provide Cogenex with increased opportunities to market its
energy conservation services to customers that may not initially
be soliciting such services. In short, water conservation and
supply services would round out Cogenex's current business while
increasing the availability of valuable services to the public.
The Commission has recognized that expertise developed in
connection with the integrated utility operations of a registered
holding company can be commercially exploited in other contexts.
The Commission, for example, has authorized a number of
registered holding companies to engage in consulting activities
which draw upon existing expertise (Footnote 3). The water services
which Cogenex proposes to furnish draw heavily upon Cogenex's
existing expertise. Cogenex already works extensively with its
customers' water systems as part of its energy management services.
Chilled water and steam are important components of the energy-
related services which Cogenex provides. The availability and
quality of water can be important aspects in the delivery of steam
or chilled water.
Granting the authorization requested in this application-
declaration would eliminate an artificial constraint on the
services Cogenex can provide. For example, Cogenex, in
evaluating a customer's facilities, might determine that the
energy consumption elements of a building's operating systems
were such that a further investment in energy conservation
equipment would not be justified. In conducting such an
evaluation, Cogenex would also review the water systems as part
of its evaluation of the efficiency of the steam and chilling
systems. Such an evaluation might determine that a water
reclamation system would be cost effective but unless installing
or upgrading a water reclamation system also involved upgrading
the steam or chilling systems, Cogenex would arguably be
precluded from undertaking the project.
In the removing the 50% limitation on Cogenex's business,
the Commission took notice of the strong national interest in
promoting energy conservation and efficiency. Cogenex
respectfully submits that there is an equally strong national
interest in promoting the efficient use and reclamation of water
resources (Footnote 4).
Footnotes:
Footnote 1 In the Matter of CSW Credit, Inc. and Central and
South West Corporation, Holding Co. Act Release No.
35-25995 (March 2, 1994).
Footnote 2 Id.
Footnote 3 See, e.g., Southern Co., Holding Co. Act Release No.
22132 (July 17, 1981); American Electric Power Co.,
Inc., Holding Co. Act Release No. 22468 (April 28,
1982).
Footnote 4 EUA Cogenex Corporation, Holding Co. Act Release No.
35-26232 (February 5, 1995).
SIGNATURE
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.
EASTERN UTILITIES ASSOCIATES
By:/s/ Clifford J. Hebert, Jr.
Clifford J. Hebert, Jr.
Treasurer
EUA COGENEX CORPORATION
By:/s/ Clifford J. Hebert, Jr.
Clifford J. Hebert, Jr.
Treasurer
Dated: January 18, 1996
