(As filed July 7, 2000)
File No. 70-9695
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1 TO
FORM U-1/A
APPLICATION OR DECLARATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
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Alliant Energy Corporation
Wisconsin Power & Light Company
222 West Washington Avenue
Madison, Wisconsin 53703
(Names of companies filing this statement and
addresses of principal executive offices)
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ALLIANT ENERGY CORPORATION
(Name of top registered holding company parent)
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Edward M. Gleason, Vice President-Treasurer
and Corporate Secretary
Alliant Energy Corporation
222 West Washington Avenue
Madison, Wisconsin 53703-0192
(Name and address of agent for service)
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The Commission is requested to send copies of all notices, orders
and communications in connection with this Application/Declaration to:
Barbara J. Swan, General Counsel William T. Baker, Jr., Esq.
Alliant Energy Corporation Thelen Reid & Priest LLP
222 West Washington Avenue 40 West 57th Street
Madison, Wisconsin 53703-0192 New York, New York 10019
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Alliant Energy Corporation ("Alliant Energy") and Wisconsin Power & Light
Company ("WPL", and, together with Alliant Energy, "Applicants") hereby amend
and restate their Application/Declaration on Form U-1 in Commission file No.
70-9695 as follows:
ITEM 1. DESCRIPTION OF PROPOSED TRANSACTION.
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A. Alliant Energy is a registered holding company under the Public
Utility Holding Company Act of 1935, as amended (the "Act").1 Its public-utility
subsidiaries are WPL, South Beloit Water, Gas and Electric Company, Interstate
Power Company, and IES Utilities Inc. The principal executive offices of both
Alliant Energy and WPL are located at 222 West Washington Avenue, Madison,
Wisconsin 53703. WPL is engaged principally in the generation, purchase,
distribution and sale of electric power in 35 counties in a 16,000 square-mile
area in southern and central Wisconsin. As of December 31, 1999, WPL provides
retail electric service to approximately 407,000 customers in 615 cities,
villages and towns and wholesale service to 24 municipal utilities, three rural
electric cooperatives, the Wisconsin Public Power Incorporated System, which
provides retail electric service to nine communities, and one privately owned
utility. At and for the twelve months ended March 31, 2000, Alliant Energy's
consolidated assets, operating revenue and net income (all in thousands) were
$6,877,817, $2,271,958 and $174,157, respectively. At and for the twelve months
ended March 31, 2000, WPL's consolidated assets, operating revenue and earnings
available for common stock (all in thousands) were $1,771,874, $768,347 and
$63,103, respectively.
B. In 1999, the state of Wisconsin enacted legislation that
facilitates the formation of a transmission company, American Transmission
Company, LLC, a limited liability company to be organized under Wisconsin law
(the "Transco"), which will be a for-profit single-purpose transmission
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1 See WPL Holdings, Inc., et al., Holding Co. Act Release No. 26856 (Apr. 14,
1998).
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company.2 The Transco will charge a single system-wide average network rate to
be phased in over five years in accordance with the Transco Legislation, under
an open access transmission tariff to be filed with the Federal Energy
Regulatory Commission (the "FERC").3 Key benefits of the Transco include the
elimination of rate "pancaking" among the Transco members' multiple transmission
systems; one-stop shopping for transmission and wholesale distribution service
over multiple transmission systems; the reduction of operational barriers within
the Transco service area; and the transfer of ownership of the transmission
assets from vertically integrated utilities that will further functional
unbundling. These benefits are in keeping with the goals of the Transco
Legislation and FERC principles. The Transco Legislation, among other things,
encourages public utility affiliates of Wisconsin holding companies, including
WPL, to transfer ownership of their transmission assets to the Transco by
beneficially adjusting the calculation of an existing limit on the amount of
unregulated (or non-utility) investments these utilities and their affiliates
can make, after the transfer of their assets to the Transco.4 The Transco will
be managed by ATC Management Co. (the "Manager"), a corporation which will be
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2 1999 Wisconsin Act 9, Sections 2335tr to 2335uh (Assembly Amendment to
Assembly Subcommittee Amendment 1 to 1999 Assembly Bill 133) (the "Transco
Legislation").
3 A system-wide average point-to-point network rate will be charged for
transmission service that is provided through the Transco's system.
4 Section 196.485(5) of the Wisconsin Statutes. This investment cap applies
to any holding company system that owns a Wisconsin public utility.
Generally, after January 1, 2001, Wisconsin law will limit the amount of
assets that all nonutility affiliates in a holding company system may own
to an amount equal to 25% of the assets owned by all of the electric public
utility affiliates within that system. Section 196.795(6m)(b) of the
Wisconsin Statutes. The Transco Legislation permits an electric utility
within a holding company system to exclude certain energy related "eligible
assets" (as defined in the Wisconsin Utility Holding Company Act) from the
calculation of non-utility assets that count towards the 25% asset cap if,
among other things, each electric utility within a holding company system
that owns transmission assets in Wisconsin transfers all of those
transmission assets to the Transco before January 1, 2001 and each electric
utility within that holding company system petitions, by January 1, 2001,
the Public Service Commission of Wisconsin and the FERC for authority to
transfer operational control of all of its transmission facilities in
Wisconsin and the surrounding states to the Midwest independent system
operator. For purposes of the Transco Legislation, the term "eligible
assets" includes assets of a non-utility affiliate used to, among other
things, generate or transmit gas, oil, electricity or steam energy; provide
energy management services; provide energy-related customer services;
recover, produce energy from, or process waste materials; provide
telecommunication services; provide environmental engineering services; and
manufacture or sell products that filter, pump or process water or other
fluids. All such assets in the Alliant Energy System will thus not count
towards the investment cap if, among other things, WPL participates in the
Transco in accordance with the Transco Legislation.
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formed under Wisconsin law. The Manager will also hold a portion of the
Transco's membership interests. All Transco participants will ultimately own
direct or indirect interests in the Transco and the Manager in proportion to the
value of the transmission assets each participant contributes to the Transco.
The Transco is expected to transfer operational control of its assets to the
Midwest Independent System Operator, Inc. by November 1, 2001.
C. It is expected that the participants in the Transco and the Manager
will include in addition to WPL, South Beloit Water, Gas and Electric Company
("South Beloit") (a wholly-owned subsidiary of WPL with transmission assets in
Illinois), Wisconsin Energy Corporation ("WEC"), an exempt holding company which
owns Wisconsin Electric Power Co., Wisconsin Public Power, Inc. ("WPPI"), WPS
Resources Corp., an exempt holding company which owns Wisconsin Public Service
Corporation, and Madison Gas & Electric Company. Other transmission-owning
utilities may, in the future, decide to become members of the Transco.
D. WPL, the other participating Wisconsin utilities and South Beloit
intend to contribute their transmission assets to the Transco on or about
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January 1, 2001 (the "Operations Date").5 WPL and South Beloit will seek
Commission authority to do so in a separate application, as discussed below.
Applicants now seek authority only to: (i) acquire, for a nominal consideration
not to exceed $125,000, a membership interest in the Transco; and (ii) acquire,
for a nominal consideration not to exceed $125,000, 100 shares of the Manager,
which will each have a par value of $1.00. Depending on the number of initial
members of the Transco, it is expected that Applicants' interest in the Transco
and the Manager will be between 35% and 40% of each entity. The Transco's other
participants will make similar initial contributions. Alliant Energy also seeks
authority to guaranty the Transco's payment obligations under a credit
agreement, and to enter into a reimbursement agreement with the Transco, both as
described below.
E. Applicants must make these initial contributions prior to the
Operations Date so that the Transco and the Manager may conduct start-up and
other interim operations (e.g., lease office space, establish benefits plans and
negotiate loans or other financing arrangements), which must occur before the
Transco accepts transfers of transmission assets from its participants. WPL,
South Beloit and Alliant Energy will seek Commission authority in a separate
application to transfer any transmission assets, to engage in any affiliated
transactions and to carry out other related jurisdictional activities; thus,
they are not now seeking any such authorization.
F. The Transco will enter into a credit agreement with Bank One, NA
(the "Credit Agreement"). Additional lenders may participate in the Credit
Agreement in the future through Bank One's syndication. The Credit Agreement
will permit borrowings by the Transco in an aggregate amount not to exceed $30
million. Promissory notes issued under the Credit Agreement (the "Notes") will
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5 The Transco Legislation currently contemplates that the transfer of the
transmission assets will occur by January 1, 2001. It is not clear how a
failure to effect such transfer by January 1, 2001 would impact Alliant
Energy's position with respect to the asset cap calculation.
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bear interest at either (1) a rate which will be equal to the sum of (a) the
quotient of (i) the London Interbank Offered Rate in effect at the time, divided
by (ii) one minus the reserve requirement imposed under Regulation D of the
Board of Governors of the Federal Reserve System on Eurocurrency liabilities,
plus (b) 0.30% per annum; (2) the Alternate Base Rate; or (3) at a higher rate
after default. The Alternate Base Rate is defined as the rate of interest per
annum equal to the higher of (1) the Bank One corporate base rate and (2) the
sum of the Federal Funds effective rate plus 0.5% per annum. The Credit
Agreement will have an initial term of 364 days and will provide for automatic
renewal for successive 364-day periods with the consent of the Transco and the
lenders under the Credit Agreement.
G. Issuance of the Notes will be subject to certain conditions, and
the Notes will be subject to acceleration under certain circumstances, which
conditions and circumstances are customary for agreements similar to the Credit
Agreement.
H. The Transco will pay the lenders under the Credit Agreement a
facility fee at a rate equal to 0.09% per annum on the average daily aggregate
commitment under the Credit Agreement, payable on each payment date and at the
termination of the Credit Agreement. The Transco will make payments under the
Credit Agreement quarterly.
I. The Credit Agreement will include a letter of credit ("L/C")
facility. Pursuant to this facility, the Transco will be able to request that
Bank One issue an L/C, in a maximum aggregate face amount for all L/Cs
outstanding of up to $12.5 million. The aggregate amount that the Transco may
borrow under the Credit Agreement will be reduced by the face amount of all
outstanding L/Cs. Drawings on an L/C would initially bear interest at the
Alternate Base Rate. The Transco will be required to pay the issuing bank
certain letter of credit fees.
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J. The Transco will use the advances under the Credit Agreement to
fund its activities during its developmental stages. Expenses in connection with
such activities would include accounting fees, legal fees, office space rental,
salaries and other start-up expenses. Funds advanced in connection with the
Credit Agreement will not, however, be used to acquire utility assets of any
kind.
K. To induce the lenders to enter into the Credit Agreement, Alliant
Energy proposes to deliver to the lenders a guaranty agreement (the "Guaranty
Agreement"), pursuant to which Alliant Energy will guaranty payment of all of
the principal, interest and other fees of the Transco under the Credit
Agreement. The Guaranty Agreement will be non-recourse to Alliant Energy's
affiliates. The principal amount of advances made under the Credit Agreement
will not exceed $30 million. The Guaranty Agreement is meant to be temporary and
to operate only until the Transco is able to establish its credit standing as an
independent entity and thus the Guaranty Agreement will terminate when the
Transco receives an "A-" (or higher) credit rating from Standard & Poors
Corporation and an "A3" (or higher) credit rating from Moody's Investors
Service, Inc. Additionally, in the Reimbursement Agreement, which is discussed
below, the Transco will agree to obtain the release of Alliant Energy from its
obligations under the Guaranty Agreement 60 days after transmission assets are
transferred to the Transco. Applicants represent that in no event will the
Guaranty Agreement or Alliant Energy's obligations thereunder extend beyond
September 30, 2001 without further Commission authorization.
L. In addition to the Guaranty Agreement, Alliant Energy will enter
into a reimbursement agreement (the "Reimbursement Agreement") with the Transco,
pursuant to which the Transco will reimburse Alliant Energy for all amounts it
pays in respect of the Guaranty Agreement. Alliant Energy will also enter into
an indemnification and reimbursement agreement (the "Indemnification Agreement")
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with WEC. Pursuant to the terms of the Indemnification Agreement, WEC will
reimburse Alliant Energy for one-half of any payments Alliant Energy must make
in respect of the Guaranty Agreement to the extent the Transco does not
reimburse Alliant Energy for such payments in accordance with the Reimbursement
Agreement. It is contemplated that all other participants in the Transco, other
than WPPI, will ultimately enter into one or more indemnification and
reimbursement agreements with Alliant Energy under which each participant will
agree to reimburse Alliant Energy for its Guaranty Agreement payments in
proportion to each participant's ownership interest in the Transco.
ITEM 2. FEES, COMMISSIONS AND EXPENSES.
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The fees, commissions and expenses incurred or to be incurred in connection
with the transactions proposed herein will be filed by amendment.
ITEM 3. APPLICABLE STATUTORY PROVISIONS.
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Sections 6(a), 7, 9(a), 10 and 12(b) of the Act and Rules 45 and 54
thereunder apply to the proposed transactions.
Rule 54 Analysis. The transactions proposed herein are also subject to
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Section 32(h)(4) of the Act and Rule 54 thereunder. Rule 54 provides that, in
determining whether to approve any transaction that does not relate to an
"exempt wholesale generator" ("EWG") or "foreign utility company" ("FUCO"), as
defined in Sections 32 and 33, respectively, the Commission shall not consider
the effect of the capitalization or earnings of any subsidiary which is an EWG
or FUCO upon the registered holding company system if paragraphs (a), (b) and
(c) of Rule 53 are satisfied.
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Alliant Energy is in compliance with all requirements of Rule 53(a).
Alliant Energy's "aggregate investment" (as defined in Rule 53(a)(1)(i)) in all
EWGs and FUCOs at March 31, 2000 was $199 million, or about 17% of Alliant
Energy's "consolidated retained earnings" ($1,143 million for the four quarters
ended March 31, 2000 as defined in Rule 53(a)(1)(ii) and including Alliant
Energy's accumulated other comprehensive income). In addition, Alliant Energy
has complied and will comply with the record-keeping requirements of Rule
53(a)(2), the limitation under Rule 53(a)(3) on the use of the Operating
Companies' 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 regulatory commissions. Finally, none of the circumstances
described in Rule 53(b) has occurred or is continuing. Alliant Energy need not
make the affirmative demonstration contemplated by Rule 53(c), because Alliant
Energy has satisfied the requirements of Rule 53(a) and (b).
ITEM 4. REGULATORY APPROVALS.
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No state commission and, other than this Commission, no federal commission
has jurisdiction over the proposed transactions that are the subject of this
application. The Public Service Commission of Wisconsin and the Federal Energy
Regulatory Commission will, however have jurisdiction over WPL's transfer of its
transmission assets to the Transco. As stated herein, Commission authority for
such transfer will be sought under a separate application.
ITEM 5. PROCEDURE.
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The Commission is requested to publish a notice under Rule 23 with respect
to the filing of this Application/Declaration as soon as practicable. The
Applicants request that the Commission's Order be issued as soon as practicable
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after the notice period and in any event not later than July 21 in order to
accommodate a closing to enable the Transco to commence its developmental
activities before August 1, 2000. The Applicants further request that there
should not be a 30-day waiting period between issuance of the Commission's order
and the date on which the order is to become effective, hereby waive a
recommended decision by a hearing officer or any other responsible officer of
the Commission, and consent that the Division of Investment Management may
assist in the preparation of the Commission's decision and/or order, unless the
Division opposes the matters proposed herein.
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS.
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A. - EXHIBITS.
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A-1 Form of Articles of Organization of the Transco.
A-2 Form of Operating Agreement of the Transco.
A-3 Form of Articles of Incorporation of the Manager.
A-4 Form of By-laws of the Manager.
B-1 Form of Credit Agreement.
B-2 Form of Guaranty.
B-3 Form of Reimbursement Agreement.
B-4 Form of Indemnification Agreement.
C Not Applicable.
D Not Applicable.
E Not Applicable.
F Opinion of Barbara Swan, Esq.*
G Not Applicable.
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H Revised Form of Notice.
* To be filed by amendment.
B. FINANCIAL STATEMENTS.
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1.1 Balance Sheet of Alliant Energy and consolidated subsidiaries, as
of March 31, 2000 (incorporated by reference to the Quarterly
Report on Form 10-Q of Alliant Energy for the quarter ended March
31, 2000) (File No. 1-9894).
1.2 Statement of Income of Alliant Energy and consolidated
subsidiaries for the period ended March 31, 2000 (incorporated by
reference to the Quarterly Report on Form 10-Q of Alliant Energy
for the quarter ended March 31, 2000) (File No. 1-9894).
1.3 Balance Sheet of WPL, as of March 31, 2000 (incorporated by
reference to the Quarterly Report on Form 10-Q of WPL for the
quarter ended March 31, 2000) (File No. 0-337).
1.4 Statement of Income of WPL for the period ended March 31, 2000
(incorporated by reference to the Quarterly Report on Form 10-Q
of WPL for the quarter ended March 31, 2000) (File No. 0-337).
ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS.
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None of the matters that are the subject of this Application or Declaration
involve a "major federal action" nor do they "significantly affect the quality
of the human environment" as those terms are used in section 102(2)(C) of the
National Environmental Policy Act. The transaction that is the subject of this
Application or Declaration will not result in changes in the operation of the
Applicants that will have an impact on the environment. The Applicants are not
aware of any federal agency that has prepared or is preparing an environmental
impact statement with respect to the transactions that are the subject of this
Application or Declaration.
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SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act of
1935, as amended, the undersigned companies have duly caused this Application or
Declaration filed herein to be signed on their behalf by the undersigned
thereunto duly authorized.
ALLIANT ENERGY CORPORATION
By: /s/ Edward M. Gleason
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Name: Edward M. Gleason
Title: Vice President-Treasurer
and Corporate Secretary
WISCONSIN POWER & LIGHT COMPANY
By: /s/ Edward M. Gleason
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Name: Edward M. Gleason
Title: Vice President-Treasurer
and Corporate Secretary
Date: July 7, 2000
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