Amendment No. 3 to
SEC File No. 70-8913
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM U-1
APPLICATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 ("Act")
GPU INTERNATIONAL, INC. ("GPUI")
One Upper Pond Road
Parsippany, New Jersey 07054
(Name of company filing this statement and
address of principal executive offices)
GPU, INC. ("GPU")
(Name of top registered holding company parent of applicant)
M. A. Nalewako, Secretary W. S. Greengrove, Secretary
M. J. Connolly, Esq., Assistant GPU International, Inc.
General Counsel One Upper Pond Road
GPU Service, Inc. Parsippany, New Jersey 07054
100 Interpace Parkway
Parsippany, New Jersey 07054
Douglas E. Davidson, Esq.
Berlack, Israels & Liberman LLP
120 West 45th Street
New York, New York 10036
(Names and addresses of agents for service)<PAGE>
GPUI hereby amends its Application on Form U-1, as
heretofore amended, docketed in SEC File No. 70-8913, as follows:
1. By revising paragraphs A and B of Item 1 thereof
to read in their entirety as follows:
A. GPUI (formerly known as Energy Initiatives, Inc.),
a direct wholly owned subsidiary of GPU, is primarily engaged in
the business of developing, owning and operating generation,
transmission and distribution facilities in the United States and
in foreign countries and related activities. GPUI proposes,
directly or through a direct or indirect wholly owned subsidiary
("Subsidiary"), to invest in an enterprise (the "Enterprise")
with one or more unaffiliated entities for the purposes of
developing, manufacturing and marketing stationary electrical
power systems employing fuel cell technology ("Stationary Fuel
Cell Power Systems").
A fuel cell is an electrochemical device that produces
electricity directly without combustion, cleanly and with high
efficiency. In a fuel cell, hydrogen fuel (in pure form or
obtained from natural gas or methanol) and oxygen (from the air)
are combined to produce electricity, heat and water. Unlike a
battery, a fuel cell does not require recharging, as it provides
power as long as fuel is supplied. By contrast, combustion
engines operate by burning fuel to create heat, turn heat into
mechanical energy and convert this mechanical energy into
electric power. These multiple processes, however, result in
lower efficiency and create more pollution.
GPUI thus believes that Stationary Fuel Cell Power
Systems can become an attractive low emission source of power,
for both utility and non-utility applications. As such,<PAGE>
Stationary Fuel Cell Power Systems could be utilized by electric
distribution companies, such as the GPU Energy companies, and
their commercialization could generate additional revenues and
earnings for the GPU System.
B. GPUI has been holding discussions with
representatives of a company (the "Developer") which has been
engaged for several years in the business of developing and
marketing fuel cell-based power systems with a primary focus on
certain limited applications. The Developer and GPUI have also
determined that there exists an accessible market for Stationary
Fuel Cell Power Systems, i.e., systems having a more or less
fixed situs. This market would include, among other things, so-
called "remote" or "distributed generation". "Distributed
generation" is commonly considered to include electrical power
generating systems which are smaller than the typical utility-
owned central generating station and are used as stand-alone
systems at the point of use to power a particular residential
commercial or industrial site or to address a specific, localized
utility need by providing supplemental power to the utility grid.
Use of distributed generation can defer expansion of transmission
and distribution systems, reduce line losses and improve
reliability and power quality. It is expected that power systems
of 1 kw or more would be within the business of the Enterprise,
although smaller systems might also be included if they are
otherwise consistent with the concept of "stationary" systems.
The Developer has spent several years and considerable
amounts in developing its fuel cell technology and commercial
applications therefor. GPUI believes that the Developer's
2
<PAGE>
stationary power applications, which will be encompassed within
the business of the Enterprise, are close to moving from the
research and development stage to commercialization. This belief
is based on GPUI's analysis of the technical status of the
Developer's Stationary Fuel Cell Power System, as well as changes
in the energy marketplace discussed below. As a result, GPUI
views the pending transaction as an opportunity to enter this
business at a time when much of the research and development has
been completed and commercialization is anticipated in the near
term.
The potential market for Stationary Fuel Cell Power
Systems has been evolving as a result of, among other things,
changes related to the deregulation of the electric utility
industry. Two consequences of these changes are particularly
relevant in this context. First, in light of the anticipated
loss of a guaranteed customer base, utilities (and other
electricity providers, such as rural electric cooperatives) have
been increasingly reluctant to make significant investments in
large base load generating stations and in expensive extensions
of their transmission and distribution systems. Second,
utilities have begun to perceive of themselves as not just
providers of basic electricity, but instead as more general
providers of solutions for their customers' overall energy needs.
Additionally, with the increasing deregulation of the electricity
markets, a convergence of gas and electric suppliers has begun.
There are now numerous energy services providers with access to
natural gas supplies who may well regard fuel cells as an
enabling technology to enter the electricity market.
3<PAGE>
Thus, utilities and related energy services companies
are expected to be a key component of the target market for
Stationary Fuel Cell Power Systems. Utilities are expected
either to integrate such Systems into their existing electric
grid or to provide power at a particular location, such as a new
housing development, without investing in expensive line
extensions. In addition, utilities are expected to employ such
Systems to meet their customers' demands for premium power, i.e.,
power that is free from the normal disturbances and distortions
of grid power. Examples of such customers include manufacturers
of high end electronic equipment, telecommunication service
providers and data centers.
Other potential customers include direct end users,
i.e., self generators, such as shopping centers, hospitals and
multi-family dwellings.
Stationary Fuel Cell Power Systems are also expected to
be employed in the effort to electrify rural areas of developing
countries which are located at remote distances from existing
power grids. Indeed, GPUI currently owns interests in electric
generating facilities in Bolivia and Colombia, which could become
prime markets for such "remote generation" applications.
During the course of its due diligence analysis of this
investment, GPUI has reviewed, among other things, publicly
available marketing studies and proprietary market studies
commissioned by the Developer and by GPUI itself. GPUI has also
reviewed technical and market data concerning fuel cell products
developed and compiled by various organizations such as the
Electric Power Research Institute, the Alliance to Commercialize
4<PAGE>
Carbonate Technology, the Small Fuel Cell Commercialization Group
and the Fuel Cell Users Group.
GPUI understands that certain competitors of the
Developer have already begun marketing fuel cell-based stationary
power systems on a commercial basis, and that numerous systems
have been sold to date. These commercial activities demonstrate
the emerging commercial viability of these products and the fuel
cell power system concept. At the same time, GPUI believes that
the Developer's Stationary Fuel Cell Power System, once it
reaches commercial status, will have many technical and pricing
advantages over these competing systems, thus providing the
Enterprise with an anticipated advantage over such competitors.
While recognizing that no investment in a development
stage enterprise is risk free, based on all of the foregoing GPUI
believes that there is a significant potential market for
Stationary Fuel Cell Power Systems, and that the potential
returns from this investment are attractive.
2. By revising the first sentence of paragraph C of
Item 1 thereof to read in its entirety as follows:
GPUI will invest, directly or through a direct or
indirect wholly owned subsidiary, up to $23.25 million in the
Enterprise (which amount includes the purchase price of two field
test power plants to be purchased by GPUI from the Enterprise),
from time to time through December 31, 2000.
3. By revising paragraph F of Item 1 thereof to read
in its entirety as follows:
F. The authorization requested herein with respect to
the acquisition of securities of a Subsidiary and/or the
5<PAGE>
Enterprise shall expire upon the first to occur of (i) December
31, 2000 or (ii) the adoption by the Commission of proposed Rule
58 (HCAR No. 35-26313, June 20, 1995) or such other rule,
regulation or order as shall exempt the transactions as herein
proposed from Section 9(a) of the Act.
4. By revising the second paragraph of Item 3 thereof
to read in its entirety as follows:
It is requested that GPUI be authorized to report,
annually in an Exhibit to its Annual Report on Form U-13-60, the
following information: (a) each investment made by GPUI in a
Subsidiary or the Enterprise during the previous year; (b) a
general description of the activities of the Enterprise in the
previous year; (c) the number of GPUI employees providing
services to the Enterprise on a regular basis during the previous
year; and (d) the revenues and expenses of the Enterprise during
the previous year. The foregoing shall be in lieu of any
certificates of completion or partial completion otherwise
required by Rule 24 under the Act. To the extent such
certificates contain confidential or proprietary business or
commercial information, confidential treatment under Rule 104 may
be sought.
6<PAGE>
SIGNATURE
PURSUANT TO THE REQUIREMENTS OF THE PUBLIC UTILITY
HOLDING COMPANY ACT OF 1935, THE UNDERSIGNED COMPANY HAS DULY
CAUSED THIS STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
GPU INTERNATIONAL, INC.
By: /s/B. L. Levy
B. L. Levy, President
Date: December 13, 1996<PAGE>
