File No. 70-8461
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 20
(Post-Effective No. 17)
TO
FORM U-1
APPLICATION OR DECLARATION
under
The Public Utility Holding Company Act of 1935
ALABAMA POWER COMPANY GULF POWER COMPANY
600 North 18th Street One Energy Place
Birmingham, Alabama 35291 Pensacola, Florida 32520
GEORGIA POWER COMPANY MISSISSIPPI POWER COMPANY
241 Ralph McGill Boulevard, N.E. 2992 West Beach
Atlanta, Georgia 30308 Gulfport, Mississippi 39501
SAVANNAH ELECTRIC AND POWER COMPANY
600 East Bay Street
Savannah, Georgia 31401
(Name of company or companies filing this statement
and addresses of principal executive offices)
THE SOUTHERN COMPANY
(Name of top registered holding company parent of each applicant or declarant)
William E. Zales, Jr., Vice President Warren E. Tate, Secretary
and Corporate Secretary and Treasurer
Alabama Power Company Gulf Power Company
600 North 18th Street One Energy Place
Birmingham, Alabama 35291 Pensacola, Florida 32520
Judy M. Anderson, Vice President Michael W. Southern, Vice
and Corporate Secretary President, Secretary and Treasurer
Georgia Power Company Mississippi Power Company
241 Ralph McGill Boulevard, N.E. 2992 West Beach
Atlanta, Georgia 30308 Gulfport, Mississippi 39501
Nancy E. Frankenhauser
Corporate Secretary
Savannah Electric and Power Company
600 East Bay Street
Savannah, Georgia 31401
(Names and addresses of agents for service)
The Commission is requested to mail signed copies of all orders,
notices and communications to:
W. L. Westbrook John D. McLanahan, Esq.
Financial Vice President Troutman Sanders LLP
The Southern Company 600 Peachtree Street, N.E.
270 Peachtree Street, NW Suite 5200
Atlanta, Georgia 30303 Atlanta, Georgia 30308-2216
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ITEM 1. DESCRIPTION OF PROPOSED TRANSACTIONS.
The information added to Item 1 in Amendment No. 13 (Post-Effective No.
10) is hereby deleted and replaced with the following:
By order dated December 15, 1994 (HCAR No. 26187) (the "December 1994
Order"), the Operating Companies were authorized to form separate special
purpose subsidiaries. Each special purpose subsidiary would issue and sell
preferred securities in one or more series from time to time through December
31, 1997. In the December 1994 Order, Georgia was authorized to issue
$100,000,000 of preferred securities and jurisdiction was reserved pending
completion of the record over the issuance of preferred securities in the amount
of $175,000,000 in the case of Alabama, $200,000,000 in the case of Georgia,
$15,000,000 in the case of Gulf, $15,000,000 in the case of Mississippi and
$10,000,000 in the case of Savannah.
By order dated January 17, 1996 (HCAR No. 26452) (the "January 1996
Order"), Alabama was authorized to issue $97,000,000 of preferred securities and
jurisdiction was reserved pending completion of the record over the issuance of
preferred securities in the amount of $78,000,000 in the case of Alabama,
$200,000,000 in the case of Georgia, $15,000,000 in the case of Gulf,
$15,000,000 in the case of Mississippi and $10,000,000 in the case of Savannah.
By post-effective amendment dated June 18, 1996, the Operating
Affiliates requested that the authority to issued preferred securities be
increased to $250,000,000 in the case of Alabama, $500,000,000 in the case of
Georgia, $60,000,000 in the case of Gulf, $60,000,000 in the case of Mississippi
and $35,000,000 in the case of Savannah. In the case of Alabama and Georgia,
such amounts were in addition to the amounts authorized by the December 1994
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Order and the January 1996 Order. The Operating Affiliates also requested that
such authority be extended through December 31, 2001. Such request was noticed
June 21, 1996 (HCAR No. 26535).
By order dated August 26, 1996 (HCAR No. 26560) (the "August 1996
Order"), Georgia was authorized to issue $400,000,000 of preferred securities
and the Operating Companies were authorized, pending completion of the record,
to effect the sale of preferred securities in one or more series from time to
time through December 31, 2001 in the amount of $250,000,000 in the case of
Alabama, $100,000,000 in the case of Georgia, $60,000,000 in the case of Gulf,
$60,000,000 in the case of Mississippi and $35,000,000 in the case of Savannah.
By subsequent orders (HCAR No. 26644, dated January 14, 1997; HCAR No.
26657, dated January 29, 1997 and HCAR No. 26660, dated February 5, 1997) the
record was completed and the sale of preferred securities was authorized as
follows: $250,000,000 for Alabama; $60,000,000 for Gulf; and $55,000,000 for
Mississippi.
By post-effective amendment dated May 13, 1997, the Operating
Affiliates requested new or additional authority to issue preferred securities
as follows: $500,000,000 in the case of Alabama, $400,000,000 in the case of
Georgia, $50,000,000 in the case of Gulf, $70,000,000 in the case of Mississippi
and $5,000,000 in the case of Savannah. The Operating Affiliates requested that
the Commission reserve jurisdiction over the issue and sale of preferred
securities as follows: $500,000,000 for Alabama; $500,000,000 for Georgia;
$50,000,000 for Gulf; $75,000,000 for Mississippi; and $40,000,000 for Savannah.
The Operating Affiliates also requested that such authority be extended through
December 31, 2005. Such request was noticed May 16, 1997 (HCAR No. 26718).
By order dated June 10, 1997 (HCAR No. 26727) Georgia completed the
record and was authorized to issue $189,250,000 of preferred securities and the
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Operating Companies were authorized, pending completion of the record, to effect
the sale of preferred securities in one or more series from time to time through
December 31, 2005 in the amount of $500,000,000 in the case of Alabama,
$310,750,000 in the case of Georgia, $50,000,000 in the case of Gulf,
$75,000,000 in the case of Mississippi and $40,000,000 in the case of Savannah.
By subsequent orders (HCAR No. 26817, dated January 16, 1998 and HCAR
No. 26949, dated December 7, 1998) the record was completed and the sale of
preferred securities was authorized through December 31, 2005 as follows:
$500,000,000 for Alabama; $310,000,000 for Georgia; $50,000,000 for Gulf;
$75,000,000 for Mississippi; and $40,000,000 for Savannah. Giving effect to
issuances under these orders, the remaining authorizations are as follows:
$450,000,000 for Alabama; $110,750,000 for Georgia; $5,000,000 for Gulf;
$75,000,000 for Mississippi; and $0 for Savannah.
The Operating Companies now request an extension of the authorization
period through June 30, 2007. New or additional authority hereunder is requested
as follows: $389,250,000 for Georgia; $95,000,000 for Gulf: $25,000,000 for
Mississippi; and $50,000,000 for Savannah. Upon the issuance by the Commission
of an appropriate order or orders in respect of this request, the sale of
preferred securities through June 30, 2007 would be authorized as follows:
$450,000,000 for Alabama (no increase); $500,000,000 for Georgia; $100,000,000
for Gulf; $100,000,000 for Mississippi; and $50,000,000 for Savannah.
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Item 3. Applicable Statutory Provisions.
Rule 54 Analysis: The proposed transactions are also subject to Rule
54, which provides that, in determining whether to approve an application which
does not relate to any EWG or FUCO, the Commission shall not consider the effect
of the capitalization or earnings of any such EWG or FUCO which is a subsidiary
of a registered holding company if the requirements of Rule 53(a), (b) and (c)
are satisfied.
Southern currently meets all of the conditions of Rule 53(a), except
for clause (1). At April 30, 2000, Southern's "aggregate investment," as defined
in Rule 53(a)(1), in EWGs and FUCOs was approximately $2.748 billion, or about
65.53% of Southern's "consolidated retained earnings," also as defined in Rule
53(a)(1), for the four quarters March 31, 2000 ($4.194 billion). With respect to
Rule 53(a)(1), however, the Commission has determined that Southern's financing
of investments in EWGs and FUCOs in an amount greater than the amount that would
otherwise be allowed by Rule 53(a)(1) would not have either of the adverse
effects set forth in Rule 53(c). See The Southern Company, Holding Company Act
Release No. 26501, dated April 1, 1996 (the "Rule 53(c) Order"); and Holding
Company Act Release No. 26646, dated January 15, 1997 (order denying request for
reconsideration and motion to stay).
In addition, Southern has complied and will continue to comply with the
record-keeping requirements of Rule 53(a)(2), the limitation under Rule 53(a)(3)
on the use of domestic utility subsidiary company personnel to render services
to EWGs and FUCOs, and the requirements of Rule 53(a)(4) concerning the
submission of copies of certain filings under the Act to retail rate regulatory
commissions. Further, none of the circumstances described in Rule 53(b) has
occurred.
Moreover, even if the effect of the capitalization and earnings of EWGs
and FUCOs in which Southern has an ownership interest upon the Southern holding
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company system were considered, there would be no basis for the Commission to
withhold or deny approval for the proposal made in this Application-Declaration.
The action requested in the instant filing would not, by itself, or even
considered in conjunction with the effect of the capitalization and earnings of
Southern's EWGs and FUCOs, have a material adverse effect on the financial
integrity of the Southern system, or an adverse impact on Southern's
public-utility subsidiaries, their customers, or the ability of State
commissions to protect such public-utility customers.
The Rule 53(c) Order was predicated, in part, upon an assessment of
Southern's overall financial condition which took into account, among other
factors, Southern's consolidated capitalization ratio and the recent growth
trend in Southern's retained earnings. As of December 31, 1995, the most recent
fiscal year preceding the Rule 53(c) Order, Southern's consolidated
capitalization consisted of 49.3% equity (including mandatorily redeemable
preferred securities) and 50.7% debt (including $1.68 billion of long-term,
non-recourse debt and short-term debt related to EWGs and FUCOs). Southern's
consolidated capitalization as of March 31, 2000 was 40.3% equity, 59.7% debt
including all non-recourse debt, and 53.7% equity and 46.3% debt excluding all
non-recourse debt. On a pro forma basis, taking into consideration the
transactions contemplated hereby, such ratios are 42.7% and 57.3%, respectively,
for equity and debt. The common equity component of Southern's pro forma
consolidated capitalization represents 29.6% of total capitalization at March
31, 2000.
Since the date of the Rule 53(c) Order, there has been a reduction in
Southern's consolidated equity capitalization ratio; however, it remains within
acceptable ranges and limits of rating agencies for strong investment grade
corporate credit ratings. In addition, the affiliated operating companies, which
have a significant influence on the Southern corporate rating, continue to show
strong financial statistics as measured by the rating agencies. The following
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table presents the senior secured ratings history for each as rated by S&P,
Moody's and Duff & Phelps:
----------- -------------- ---------- ---------- ---------- ---------- ---------
Company Agency 1995 1996 1997 1998 19998
----------- -------------- ---------- ---------- ---------- ---------- ---------
----------- -------------- ---------- ---------- ---------- ---------- ---------
Alabama S&P A+ A+ A+ A+ A+
Moody's A1 A1 A1 A1 A1
Duff & Phelps A+ AA- AA- AA- AA-
----------- -------------- ---------- ---------- ---------- ---------- ---------
----------- -------------- ---------- ---------- ---------- ---------- ---------
Georgia S&P A+ A+ A+ A+ A+
Moody's A1 A1 A1 A1 A1
Duff & Phelps AA- AA- AA- AA- AA-
----------- -------------- ---------- ---------- ---------- ---------- ---------
----------- -------------- ---------- ---------- ---------- ---------- ---------
Gulf S&P A+ A+ AA- AA- AA-
Moody's A1 A1 A1 A1 A1
Duff & Phelps A+ AA- AA- AA- AA-
----------- -------------- ---------- ---------- ---------- ---------- ---------
----------- -------------- ---------- ---------- ---------- ---------- ---------
Mississippi S&P A+ A+ AA- AA- AA-
Moody's Aa3 Aa3 Aa3 Aa3 Aa3
Duff & Phelps AA- AA- AA- AA- AA-
----------- -------------- ---------- ---------- ---------- ---------- ---------
----------- -------------- ---------- ---------- ---------- ---------- ---------
Savannah S&P A+ A+ AA- AA- AA-
Moody's A1 A1 A1 A1 A1
Duff & Phelps Not rated Not rated Not rated Not rated Not rated
----------- -------------- ---------- ---------- ---------- ---------- ---------
Southern's consolidated retained earnings grew on average approximately
5.9% per year over the last five years. Excluding the $111 million one-time
windfall profits tax imposed on SWEB in 1997, the $221 million write down of
assets in 1998, the $69 million write down of the Mobile Energy investment in
1999 and the $78 million gain on the sale of the SWEB supply business in 1999,
the average growth would be 7.4%. In 1999, consolidated retained earnings
increased $354 million, or 9.1%. Southern's interests in EWGs and FUCOs have
made a positive contribution to earnings over the four calendar years ending
after the Rule 53(c) Order.
Accordingly, since the date of the Rule 53(c) Order, the capitalization
and earnings attributable to Southern's investments in EWGs and FUCOs has not
had an adverse impact on Southern's financial integrity.
_____________________________
1 In April 2000, Moody's and Duff & Phelps reaffirmed their ratings; however,
S&P placed the ratings of Southern and its affiliates on credit watch with
negative implications.
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SIGNATURES
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, the undersigned companies have duly caused this amendment to be signed
on their behalf by the undersigned thereunto duly authorized.
Date: June 19, 2000 ALABAMA POWER COMPANY
By: /s/Wayne Boston
Wayne Boston, Assistant Secretary
GEORGIA POWER COMPANY
By: /s/Wayne Boston
Wayne Boston, Assistant Secretary
GULF POWER COMPANY
By: /s/Wayne Boston
Wayne Boston, Assistant Secretary
MISSISSIPPI POWER COMPANY
By: /s/Wayne Boston
Wayne Boston, Assistant Secretary
SAVANNAH ELECTRIC AND POWER COMPANY
By: /s/Wayne Boston
Wayne Boston, Assistant Secretary
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