File No. 70 - 9527
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 3
TO
APPLICATION-DECLARATION WITH RESPECT TO
THE ACQUISITION OF A SUBSIDIARY IN CONNECTION
WITH THE UNBUNDLING OF GENERATION BUSINESS
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
________________________________
EASTERN UTILITIES ASSOCIATES ("EUA")
EASTERN EDISON COMPANY ("EASTERN")
MONTAUP ELECTRIC COMPANY
750 West Center Street, West Bridgewater, Massachusetts 02379
(Names of companies filing this statement and addresses of their principal
executive offices)
EASTERN UTILITIES ASSOCIATES
(Name of top registered holding company parent of each applicant or declarant)
_________________________________
Clifford J. Hebert, Jr.
Treasurer
Eastern Utilities Associates
750 West Center Street
West Bridgewater, Massachusetts 02379
(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
28 State Street
Boston, MA 02109-1775
This Amendment Number 3 amends that certain Application-Declaration on Form U-1
(File Number 70-9527) filed by the Declarants with the Commission on July 14,
1999, as previously amended by Amendment No. 1 dated July 28, 1999 and
Amendment No. 2 dated October 26, 1999, as follows:
1. Item 4, Regulatory Approval, is hereby amended and restated in its entirety
to read as follows:
Item 4. Regulatory Approval.
The following Federal regulatory authorities have jurisdiction over the
proposed transactions: the Nuclear Regulatory Commission ("NRC"), and the
Federal Energy Regulatory Commission ("FERC"). The FERC approved the proposed
transactions through its approval of Docket No. EC99-70-000 by Order issued
September 29, 1999. The NRC has indicated by letters dated October 27, 1998
that no NRC consent is required.
Additionally, the Applicants have received approval of the proposed
transactions from the Massachusetts Department of Telecommunications and Energy
("DTE"), through approval of Docket #99-67 by Order issued January 4, 2000 (a
copy of such Order is filed herewith as part of Exhibit D-4), and from the
Connecticut Department of Public Utility Control ("CDPUC"), through approval of
Consolidated Docket Nos. 99-08-11, 99-08-12 and 99-08-13 by Decision dated
October 27, 1999 (a copy of such Decision is filed herewith as part of Exhibit
D-3).
2. Item 6, Exhibits and Financial Statements, is hereby amended and restated
in its entirety to read as follows
Item 6. Exhibits and Financial Statements. (* denotes filed herewith.)
(a) Exhibits.
Exhibit A-1 Amended and Restated Articles of Organization of Montaup
Exhibit D-1 FERC Docket #EC99-70-000; Order dated September 29, 1999 (88
FERC Paragraph 61,292)
Exhibit D-2 NRC Docket #50-423, #50-443
Exhibit D-3* CDPUC Docket #99-08-11; Decision dated October 27, 1999
Exhibit D-4* DTE Docket #99-67; Order dated January 4, 2000
Exhibit F Opinion of Counsel
Exhibit G Proposed Form of Notice
(b) Financial Statements
b-1 Pro forma balance sheet of Eastern Utilities Associates as at
June 30, 1999
b-2 Pro forma balance sheet of Eastern Edison Company as at June
30, 1999
b-3 Pro forma balance sheet of Montaup Electric Company as at June
30, 1999
S I G N A T U R E
Pursuant to the requirements of the Public Utility Holding Company Act of 1935,
as amended, each of the undersigned companies has duly caused this statement to
be duly signed on its behalf by the undersigned thereunto duly authorized.
Date: January 13, 2000
EASTERN UTILITIES ASSOCIATES,
EASTERN EDISON COMPANY, and
MONTAUP ELECTRIC COMPANY,
By /s/ Clifford J. Hebert, Jr.
Clifford J. Hebert, Jr.
Treasurer
Exhibit D-3
STATE OF CONNECTICUT
DEPARTMENT OF PUBLIC UTILITY CONTROL
TEN FRANKLIN SQUARE
NEW BRITAIN, CT 06051
DOCKET NO. 99-08-11 APPLICATION OF MONTAUP ELECTRIC COMPANY FOR THE
TRANSFER OF OWNERSHIP FROM EASTERN EDISON COMPANY TO
EASTERN UTILITIES ASSOCIATES
DOCKET NO. 99-08-12 APPLICATION OF NEW ENGLAND POWER COMPANY FOR APPROVAL
OF A MERGER WITH MONTAUP ELECTRIC COMPANY
DOCKET NO. 99-08-13 APPLICATION OF NEW ENGLAND ELECTRIC SYSTEM FOR APPROVAL
OF A MERGER WITH EASTERN UTILITIES ASSOCIATES
October 27, 1999
By the following Commissioners:
Glenn Arthur
Linda Kelly Arnold
Jack R. Goldberg
DECISION
I. INTRODUCTION
A. SUMMARY
Pursuant to the Regulations of Connecticut State Agencies Section 16-1-9 (Conn.
Agencies Regs.), the Department of Public Utility Control consolidates the
three interrelated petitions, Docket No. 99-08-11, Application of Montaup
Electric Company for the Transfer of Ownership from Eastern Edison Company to
Eastern Utilities Associates; Docket No. 99-08-12, Application of New England
Power Company for Approval of a Merger with Montaup Electric Company; and
Docket No. 99-08-13, Application of New England Electric System for Approval of
a Merger with Eastern Utilities Associates.
In this Decision the Department of Public Utility Control considers these three
interrelated petitions, which ultimately result in the mergers of Eastern
Utilities Associates into New England Electric System, and of EUA's operating
subsidiary, Montaup Electric Company into New England Power Company NEES'
operating subsidiary. As part of the merger plan, direct ownership of Montaup
Electric Company will be transferred to Eastern Utilities Associates. The
Department of Public Utility Control joins the three petitions for the purpose
of this Decision and approves the applications for reorganization and mergers.
B. APPLICANTS' PROPOSAL
By application dated August 12, 1999 (Application I), Montaup Electric Company
(Montaup or Company) requests that the Department of Public Utility Control
(Department) either (1) confirm that Department approval is not required for
the transfer of ownership from Eastern Edison Company (Eastern) to Eastern
Utilities Associates (EUA), or (2) if such Department approval is necessary,
grant such transfer. By virtue of Montaup's minority ownership in Millstone
Unit No. 3 located in Connecticut, Montaup, pursuant to the General Statutes of
Connecticut (Conn. Gen. Stat.) Section 16-246c(c), is an electric and public
service company for all purposes of Title 16 of the Connecticut General
Statutes.
By application dated August 12, 1999 (Application II), New England Power
Company (NEP) and Montaup (with NEP, Petitioners) jointly file this petition
with the Department requesting approval for the merger of NEP with Montaup (NEP
Merger), pursuant to Section 16-43(a)(1) of the Conn. Gen. Stat. By virtue of
NEP's and Montaup's ownership in Millstone Unit No. 3 located in Connecticut,
NEP and Montaup are both electric companies and public service companies for
all purposes of Title 16 of the Conn. Gen. Stat., pursuant to Conn. Gen. Stat.
246c(c).
By application dated August 12, 1999 (Application III), the Petitioners jointly
filed a request with the Department seeking approval for the merger of NEP's
parent company, New England Electric System (NEES), with Montaup's parent, EUA,
(collectively , NEES Merger), pursuant to Section 16-43(a)(1) of the Conn. Gen.
Stat. By virtue of NEP's and Montaup's ownership in Millstone Unit No. 3
located in Connecticut, NEP and Montaup are electric companies and public
service companies, pursuant to Conn. Gen. Stat. Section 246c(c), for all
purposes of Title 16 of Conn. Gen. Stat.
C. CONDUCT OF THE PROCEEDING
There is no statutory requirement for a hearing and none was held.
D. PARTIES AND INTERVENORS
New England Power Company, 25 Research Drive, Westborough, Massachusetts 01582;
Montaup Electric Company, c/o EUA Service Corporation, 750 West Center Street,
West Bridgewater, Massachusetts 02379; and the Office of Consumer Counsel, Ten
Franklin Square, New Britain, CT 06051, were recognized as parties to this
proceeding.
II. PETITIONERS' EVIDENCE
Montaup is a wholly-owned subsidiary of Eastern Edison, which is itself a
wholly-owned subsidiary of EUA. Montaup is located in Massachusetts and
provides transmission service to its retail distribution affiliates and to two
non-affiliated municipal electric utilities in Massachusetts and Rhode Island.
Montaup is a foreign electric company, as defined in the Conn. Gen. Stat. 16-
246a. Pursuant to the provisions of Conn. Gen. Stat. Section 16-246c(c),
Montaup constitutes an electric company and public service company within
meaning of Conn. Gen. Stat. 16-1 by virtue of its minority, non-operating
interest in Millstone Unit No. 3, a nuclear generating asset located in
Waterford, Connecticut. Montaup is attempting to divest its interest in the
nuclear generating assets. Application I, pp. 2-3.
Eastern is a wholly-owned subsidiary of EUA. It provides distribution services
to approximately 186,000 customers in non-contiguous territories covering the
southeastern Massachusetts cities of Brockton and Fall River, and in 20
surrounding towns. Eastern does not directly own any generating or
transmission assets in Connecticut. Application I, p. 2.
NEP, a wholly-owned subsidiary of NEES, is a regulated public utility company
organized and operated under the laws of the Commonwealth of Massachusetts. It
is primarily a transmission company operating over 2,600 miles of transmission
facilities in Massachusetts, Rhode Island, New Hampshire, and Vermont. NEP
currently has a minority ownership interest in Millstone Unit No. 3, a nuclear
generating asset located in Connecticut. NEP intends to divest its interests
in the operating nuclear units . Applications II and III, pp. 2-3.
EUA is a public holding company organized as a voluntary association under
Massachusetts law. Its affiliates are engaged in the transmission and
distribution of electricity in Massachusetts and Rhode Island, delivering
service to more than 305,000 customers in southeastern Massachusetts and
northern and coastal Rhode Island. EUA directly owns all common stock of
Eastern, Newport Electric Corporation, and Blackstone Valley Electric Company
and indirectly owns all common and preferred stock of Montaup. EUA does not
directly own any generating or transmission assets located in Connecticut.
Application I, pp. 1-2.
NEES is a public utility holding company headquartered in Westborough,
Massachusetts. Its subsidiaries are engaged in the transmission and
distribution of electricity and the marketing of energy commodities and
services. The electricity delivery companies serve approximately 1.3 million
customers in Massachusetts, Rhode Island, and New Hampshire. Other NEES
subsidiaries offer telecommunication services. NEES owns the common equity of
NEP. Application III, p. 3.
In Application I, Montaup requests approval of its transfer to EUA all of
Eastern's investment in Montaup's capitalization. Montaup is a second-tier
subsidiary of EUA, and remains a subsidiary of EUA, albeit a direct subsidiary,
after the transfer. Application I, p. 3.
The Company argues that Conn. Gen. Stat. Section 16-47(c), which applies to
holding companies, does not apply in this instance because neither EUA nor
Montaup engages in the business of supplying service within the state.
Application I, pp. 3-4. The Company further argues that Conn. Gen. Stat.
Section 16-43 also does not apply in this instance because the proposed
transaction involves a transfer of ownership of Montaup, a second tier
corporate subsidiary to its parent holding company, and is not a merger or
consolidation, will not cause issuance of new common stock, and is only a
transfer, not the sale, of Montaup's capitalization from a subsidiary to a
parent company. The capital structure of Montaup is not being altered, and
Montaup is not divesting any property. Application I, p. 5.
The proposed transfer is subject to approval by the Securities and Exchange
Commission (SEC), the Federal Energy Regulatory Commission (FERC), and the
Nuclear Regulatory Commission (NRC). In addition, the Massachusetts Department
of Telecommunications and Energy (MDTE) will retain jurisdiction over Montaup
and Eastern after the transfer. Application I, p. 6.
In Application II, the Petitioners are requesting the Department's approval of
the NEP Merger pursuant to Conn. Gen. Stat. Section 16-43(a)(1). Application
II, p. 1. NEP and Montaup constitute "electric companies" and "public service
companies", as defined in Conn. Gen. Stat. Section 16-246c(c). Montaup
proposes to merge with and into NEP. Application II, p. 3. NEP and Montaup
intend eventually to divest their interests in their operating nuclear units.
Application III, p. 2. The Petitioners request approval of the merger pursuant
to Conn. Gen. Stat. Section 16-43.
The proposed NEP merger transaction is subject to approval by FERC and MDTE.
Approval of the Public Service Board of Vermont, where NEP and Montaup own
property, is also required, and approval from the New Hampshire Public Service
Commission may also be necessary. Application II, p. 4.
In Application III, the Petitioners are requesting the Department's approval of
the NEES Merger pursuant to Conn. Gen. Stat. Section 16-43(a)(1). Application
III, p. 1. NEES and EUA are registered holding companies under the Public
Utility Holding Company Act of 1935. It is contemplated that a NEES affiliate,
Research Drive LLC, will merge with and into EUA, with EUA being the surviving
entity that will merge into NEES. Application III, pp. 1 and 3. The
Petitioners request Department approval of t his merger pursuant to Conn. Gen.
Stat. Section 16-43.
The proposed NEES merger transaction is subject to approval by the SEC, FERC,
the NRC, and the Rhode Island Public Utilities Commission. In addition, the
proposed transaction is being scrutinized by the MDTE. The proposed
transaction also requires a Hart-Scott-Rodino filing with the U.S. Justice
Department. (Footnote 1) Application III, pp. 5-6.
III. DEPARTMENT ANALYSIS
The Department has reviewed the proposed reorganization and mergers submitted
in Docket Nos. 99-08-11, 99-08-12, and 99-08-13. The proposed transfer of
Montaup from a secondary subsidiary to a first-tier subsidiary of its holding
company, EUA, is not a merger. Montaup is not being absorbed into EUA, but is
retaining its separate identity. Nor is the transfer a consolidation as
Montaup and EUA are not combining to form a new entity. No new common stock in
Montaup is being issued; the existing capitalization of Montaup is being
transferred intact within the holding company's structure. Under the
particular set of facts and circumstances of this docket, the Department finds
that the transfer of Montaup, a subsidiary of EUA's subsidiary Eastern,
constitutes a corporate reorganization. Subsequent to this reorganization,
Montaup will merge with NEP, the new entity being a subsidiary of NEES, and EUA
will then merge with NEES, the resulting entity being NEES.
The Petitioners qualify as foreign electric companies pursuant to the
provisions of Conn. Gen. Stat. Section 16-246c by virtue of their minority
interest in Millstone Unit No. 3, a nuclear generating asset located in
Waterford, Connecticut. Pursuant to Conn. Gen. Stat. Section 16-246c(c), NEP
and Montaup constitute "electric companies" and "public service companies"
within meaning of Conn. Gen. Stat. Section 16-1. The NEP Merger falls under
Conn. Gen. Stat. Section 16-43(a), which provides, in pertinent part:
A public service company shall obtain the approval of the Department . .
. to directly or indirectly (1) merge, consolidate or make common stock
with any other company, or (2) sell, lease, assign . . . or otherwise
dispose of any essential part of its franchise, plant equipment or other
property necessary or useful in the performance of its duty to the public
. . . .
Thus, the Petitioners must obtain approval from the Department for the merger
of the public service companies. Although the merger of their holding
companies, EUA and NEES, may be considered under Conn. Gen. Stat. Section
16-47, it is determined that the merger also falls under Conn. Gen. Stat.
Section 16-43(a) for approval.
The Department has reviewed the Petitioners' applications and supporting
exhibits, and finds that the proposed mergers will not adversely affect
electric service in Connecticut. NEP and Montaup have no ratepayers in
Connecticut and are regulated by the jurisdiction of Massachusetts, where they
are domiciled. The NEP Merger and the NEES Merger would have no detrimental
effect on Connecticut ratepayers. Therefore, under Conn. Gen. Stat. Section
16-43, the Department approves the Petitioners' requests in Docket Nos. 99-08-
11, 99-08-12, and 99-08-13, subject to compliance with all applicable
requirements as found in the Petitioners' applications.
IV. FINDINGS OF FACT
1. NEP and Montaup are foreign electric companies pursuant to Conn. Gen.
Stat. Section 16-246c with minority interests in Millstone Unit No. 3
located in Waterford, Connecticut.
2. NEP and Montaup each constitute an "electric company" and "public
service company" pursuant to Conn. Gen. Stat. Section 16-43.
3. NEP and Montaup have no ratepayers in Connecticut.
4. NEP and Montaup have minority interests in Millstone Unit No. 3 located
in Waterford, Connecticut.
5. EUA and NEES are holding companies of Montaup and NEP, respectively.
V. CONCLUSION AND ORDER
A. CONCLUSION
Accordingly, pursuant to Conn. Gen. Stat. Section 16-43, the Department
approves the Petitioners' requests for the reorganization and mergers as
discussed above. These transactions would have no adverse impact on electric
service or ratepayers in Connecticut. The Department's approval is subject to
compliance with all applicable requirements of agencies that intend to exercise
authority over the proposed transaction.
B. ORDER
1. NEP and Montaup shall file with the Department any decisions issued by the
MDTE relating to the merger of the public service companies and the holding
companies that are the subject of these dockets within 30 days after each
decision becomes available.
DOCKET NO. 99-08-11 APPLICATION OF MONTAUP ELECTRIC COMPANY FOR THE
TRANSFER OF OWNERSHIP FROM EASTERN EDISON COMPANY TO
EASTERN UTILITIES ASSOCIATES
DOCKET NO. 99-08-12 APPLICATION OF NEW ENGLAND POWER COMPANY FOR APPROVAL
OF A MERGER WITH MONTAUP ELECTRIC COMPANY
DOCKET NO. 99-08-13 APPLICATION OF NEW ENGLAND ELECTRIC SYSTEM FOR APPROVAL
OF A MERGER WITH EASTERN UTILITIES ASSOCIATES
This Decision is adopted by the following Commissioners:
Glenn Arthur
/s/ Glenn Arthur
Linda Kelly Arnold
/s/ Linda Kelly
Jack R. Goldberg
/s/ Jack R. Goldberg
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/ Louise E. Rickard 11/04/99
Louise E. Rickard Date
Acting Executive Secretary
Department of Public Utility Control
(Footnote 1) The Hart-Scott-Rodino Antitrust improvement Act of 1976, PUB. L.
94-435, Sept. 30, 1976, requires a filing with the Federal Trade Commission and
Assistant Attorney General prior to the subject transaction. 15 U.S.C. Section
18a.
Exhibit D-4
The Commonwealth of Massachusetts
_________
DEPARTMENT OF
TELECOMMUNICATIONS AND ENERGY
January 4, 2000
D.T.E. 99-67
Petition of Eastern Edison Company, pursuant to G.L. c. 164, Section 9A, for
approval to transfer all of its outstanding securities in Montaup Electric
Company to its parent company, Eastern Utilities Associates.
APPEARANCE:
David A. Fazzone, Esq.
David A. Fazzone, P.C.
and
Laura S. Olton, Esq.
McDermott, Will & Emery
28 State Street
Boston, Massachusetts 02109
FOR: EASTERN EDISON COMPANY
Petitioner
I. INTRODUCTION
On July 19, 1999, Eastern Edison Company ("Eastern" or "Company") pursuant to
G.L. c. 164, Section 9A, petitioned the Department of Telecommunications and
Energy ("Department") for approval to transfer all of its outstanding
securities in its wholly-owned subsidiary, Montaup Electric Company
("Montaup"), to its parent company, Eastern Utilities Associates ("EUA"),
thereby causing Montaup to become a wholly-owned, first-tier subsidiary of EUA.
Alternatively, Eastern requests that the Department find t hat it does not have
jurisdiction over the transaction, if Montaup first amends its charter so as to
no longer be an electric company pursuant to G. L. c. 164, Section 9A.
(Footnote 1)
On October 18, 1999, the Department held a public hearing to afford interested
persons the opportunity to comment. No members of the public attended the
hearing. The Department received no petitions to intervene.
II. STANDARD OF REVIEW
In pertinent part, G.L. c. 164, Section 9A states that an already organized
electric company may, by vote of two thirds in amount of all its stockholders,
state that its corporate purpose shall be the generating and buying of
electricity and the transmitting and selling of the same to two or more
corporations specified. Upon the Department's approval of the stockholders'
statement, the corporation may subscribe for, acquire, own and dispose of
stock, bonds or other securities of such electric company, and may issue and
sell its own stock, bonds or other securities to obtain the capital necessary
to acquire the same.
III. THE COMPANY'S PROPOSAL
Eastern reported that Montaup has a total capitalization of $215,615,000,
consisting of $42,140,000 in common stock, $21,238,000 in other paid-in
capital, $1,500,000 in preferred stock, $88,117,000 in debenture bonds, and
$62,630,000 in retained earnings (Exhs. DTE 1-3; DTE 2-8). (Footnote 2)
Eastern requests authorization to transfer to EUA, and for EUA to acquire from
Eastern, all of Eastern's securities and other investments in Montaup, thereby
converting Montaup into a wholly-owned first-tier subsidiary of EUA (Petition
at Att. 1; Exh. DTE 1-1). The transfer of Montaup's securities to EUA by
Eastern will take the form of one or more special dividend payments to be paid
out of Eastern's retained earnings to the maximum extent possible, and
thereafter, subject to receipt of federal approval, out of paid-in-capital,
unearned surplus and/or a redemption of Eastern's common stock (Petition at
Att. 1; Exh. DTE 2-4).
Eastern contends that its customers will benefit from the proposed Montaup
spin-off by eliminating any risks associated with the generation business from
Eastern's long-term debt and preferred stock ratings and completely separating
the competitive, generation-related business from the regulated, monopoly
businesses (Exh. DTE 1-4). Also, the Company maintains that the spin-off
reduces the costs of litigating rate cases by avoiding protracted debate about
the cost impact of owning Montaup on Eastern's distribution rates (id.).
Moreover, Eastern states that the proposed stock transfer will have no adverse
effect on Eastern's electric rates (Exh. DTE 2-2). Eastern notes that (1) in
accordance with the restructuring settlement agreement, distribution rates are
frozen until December 31, 2000; (2) Massachusetts law requires a 15 percent
rate reduction in total rates to continue through 2004; and (3) the treatment
of changes in capitalization used for Montaup caps the overall pretax rate of
return at 11.12 percent. Therefore, the Company considers that any changes to
the capitalization that may increase Eastern's overall rate of return would not
have an adverse impact on ratepayers (id.).
As noted above, Eastern intends to transfer its interest in Montaup to EUA by
way of one or more special non-cash dividends (Exhs. DTE 2-4; DTE 2-5).
Because Montaup's total capitalization of $215,615,000 exceeds Eastern's total
retained earnings of $109,530,000, the Company has requested that it be allowed
to draw from its paid-in-capital, unearned surplus and common stock accounts as
necessary to provide for the difference (Exh. DTE 2-3). The Company considers
its post-transfer capitalization would be an interim structure, pending the
disposition of the proposed merger of EUA and New England Electric System
("NEES") (Exh. DTE 1-3). (Footnote 3) If Eastern were to remain a stand-alone
retail distribution utility, the Company would seek long-term financing of any
outstanding short-term debt (id.).
IV. ANALYSIS AND FINDINGS
Eastern's proposed transfer of Montaup to EUA would ensure the separation of
EUA's competitive generation-related activities conducted by Montaup from those
regulated operations conducted by Eastern (Exh. DTE 1-4). Eastern's proposed
transaction will also simplify and facilitate the proposed merger of EUA with
NEES, because as part of the proposed merger. Eastern would be merged directly
into Massachusetts Electric Company ("MECo") (Exh. DTE 1-5). Consequently, in
the absence of the transfer, MECo would revert back to a fully-integrated
generation, transmission, and distribution company by virtue of its ownership
of Montaup. Therefore, the Department considers the Company's proposal to be
consistent with the objectives of the Electric Industry Restructuring Act, G.L.
c. 164, Section 1 et seq., and the Restructuring Settlement Agreement approved
by the Department in Eastern Edison Company, D.P.U./D.T.E. 96-24 (1997).
Additionally, the proposed transfer would eliminate the risk to Eastern's
ratepayers associated with the effect of Montaup's generation operations on the
Company's long-term debt and preferred stock ratings (Exh. DTE 1-4). The
elimination of this risk would also give rise to other benefits, as represented
by reduced litigation expense in rate proceedings concerning the impact of
Montaup's ownership on distribution rates (Exh. DTE 1-4). See Brockton Edison
Company, D.P.U. 19841, at 5-7 (1979); Brockton Edison Company, D.P.U. 19258, at
9-12 (1978).
Concerning Eastern's request to use its common stock and other capital accounts
to implement the Montaup transfer to EUA, the Department notes that the Company
is a wholly-owned subsidiary of EUA; no issues have been raised concerning the
effect of w hat effectively constitutes an internal transfer on EUA's corporate
accounts on EUA and its shareholders. Additionally, Eastern has represented
that, depending upon the outcome of the Department's investigation in D.T.E.
99-47, the Company will either be directly merged into MECo or will seek long-
term financing at a later date. The Department concludes that to the extent
there are any short-term effects on Eastern's relative risk resulting from the
reduction in the Company's common equity accounts, these would be remedied as
part of a future financing or related proceeding. Accordingly, the Department
approves the Company's request to use its common stock and other common equity
accounts to consummate the transfer of Montaup to EUA. (Footnote 4) Based on
the foregoing analysis, the Department approves of the proposed transfer of
Eastern's interest in Montaup to EUA.
V. ORDER
Accordingly, after notice, hearing, and consideration, the Department
ORDERED: That the petition of Eastern Edison Company to transfer all
outstanding securities of Montaup Electric Company to its parent, Eastern
Utilities Associates is approved; and it is
FURTHER ORDERED: That Eastern Edison Company's request for alternative
findings of no jurisdiction is denied.
By Order of the Department,
/s/ Janet Gail Besser
Janet Gail Besser, Chair
/s/ James Connelly
James Connelly, Commissioner
/s/ W. Robert Keating
W. Robert Keating, Commissioner
/s/ Paul B. Vasington
Paul B. Vasington, Commissioner
/s/ Eugene J. Sullivan
Eugene J. Sullivan, Jr., Commissioner
A true copy
Attest:
/s/ Mary L. Cottrell
MARY L. COTTRELL
Secretary
Appeal as to matters of law from any final decision, order or ruling of the
Commission may be taken to the Supreme Judicial Court by an aggrieved party in
interest by the filing of a written petition praying that the Order of the
Commission be modified or set aside in whole or in part.
Such petition for appeal shall be filed with the Secretary of the Commission
within twenty days after the date of service of the decision, order or ruling
of the Commission, or within such further time as the Commission may allow upon
request filed prior to the expiration of twenty days after the date of service
of said decision, order or ruling. Within ten days after such petition has
been filed, the appealing party shall enter the appeal in the Supreme Judicial
Court sitting in Suffolk County by filing a copy thereof with the Clerk of said
Court. (Sec. 5, Chapter 25, G.L. Ter. Ed., as most recently amended by Chapter
485 of the Acts of 1971).
Footnote 1: The Department has reviewed Eastern's proposal in accordance
with jurisdiction afforded pursuant to G.L. c. 164, Section 9A, and makes no
determination on whether Montaup could have amended its articles of
organization so as to avoid the Department 's approval of this transaction.
Footnote 2: The Department, on its own motion, accepts the following as
exhibits in this proceeding: Responses to the Department's information
requests as Exhs. DTE 1-1 through 1-5, 2-1 through 2-11, and 3-1; the
Company's petition; and a transcript of the minutes of a special meeting of
Eastern's Board of Directors held on December 7, 1999
Footnote 3: The proposed merger is the present subject of Department
proceedings in D.T.E. 99-47.
Footnote 4: In granting this approval, it is the Department's understanding
that Eastern intends to include all of the Montaup-related balances booked to
Account 216.1 (Unappropriated Undistributed Subsidiary Earnings) as part of the
special dividend or dividends to EUA.
