File No. 70-7495
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 1 TO
FORM U-1
APPLICATION/DECLARATION WITH RESPECT TO
CREDIT FACILITY SUBSTITUTION
under
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
HOLYOKE WATER POWER COMPANY
ONE CANAL STREET
HOLYOKE, MASSACHUSETTS 01040
(Name of companies filing this statement and address of principal executive
office)
NORTHEAST UTILITIES
(Name of top registered holding company parent of declarant)
Robert P. Wax, Esq.
Vice President, Secretary and General Counsel
Northeast Utilities Service Company
P.O. Box 270
Hartford, CT 06141-0270
(Name and address of agent for service)
The Commission is requested to mail signed copies of all orders, notices, and
communication to
David R. McHale Jeffrey C. Miller
Manager-Project and Short-Term Finance Assistant General
Northeast Utilities Counsel
Service Company Northeast Utilities
P.O. Box 270 Service Company
Hartford, CT 06141-0270 P.O. Box 270
Hartford, CT
06141-0270
I. Description of Proposed Transaction
1. Holyoke Water Power Company ("HWP" or the "Company"), a public utility
subsidiary of Northeast Utilities ("NU"), hereby applies under the Public
Utility Holding Company Act of 1935 ("Act") for approval of a modification of
the order of the Securities and Exchange Commission ("Commission") dated
November 9, 1988 (Release No. 35-24742) (the "Order") in this file.
2. In the Order, the Commission approved HWP's proposed financing of
pollution control facilities at HWP's Mt. Tom Station located in Holyoke,
Mass. (the "Facilities"). The cost of acquiring, constructing and installing
the Facilities was financed by HWP through its use of the net proceeds from
the sale by the Industrial Development Finance Authority of the City of
Holyoke, Mass. ("IDA") of its pollution control revenue bonds ("Bonds") in
the principal amount of $8,000,000. The Bonds were issued pursuant to an
Indenture of Trust between the IDA and Baybank Middlesex, as trustee (the
"Trustee"), and the proceeds of the issuance of the Bonds were loaned to HWP
pursuant to a Loan Agreement (the "Loan Agreement") between HWP and the IDA.
3. As set forth in HWP's Application/Declaration in this file, in order to
obtain the benefits of a high quality rating for the Bonds, HWP's obligations
under the Loan Agreement are secured by an irrevocable letter of credit (the
"Letter of Credit") in the amount of $8,667,000 issued by Union Bank of
Switzerland, New York Branch (the "Bank") in favor of the Trustee. The
Letter of Credit secures $8,000,000 of principal amount plus interest in the
amount of $667,000 at the maximum rate of 15% per annum for 218 days. The
purpose of this filing is to seek authority for HWP (a) to participate in an
amendment to the Reimbursement and Security Agreement dated as of November 1,
1988 between the Company and the Bank ("Agreement") in order (i) to change
the expiration date of the Letter of Credit from perpetual to a three-year
term ending November 1, 1997 extendible for successive one-year terms
thereafter indefinitely with the consent of the Company and the Bank, and
(ii) to reduce the annual Letter of Credit fee payable to the Bank and (b) to
replace the letter of credit provided by the Bank, as permitted by Section
3.13 of the Loan Agreement, by delivery of a substitute credit facility,
consisting of a new letter of credit, and related agreements, to be provided
by a substitute bank to be chosen by HWP ("Substitute Bank").
4. For corporate, accounting and regulatory reasons, the Bank has
approached the Company seeking to eliminate its perpetual obligation to
provide the Letter of Credit. The Company is agreeable to revising this
obligation to a three-year commitment coupled with an "evergreen" feature
whereby, at the request of the Company and with the consent of the Bank, the
Letter of Credit can be extended indefinitely for successive one-year terms.
The Company believes that were the Bank to not consent to an extension in the
future, the Company could obtain a replacement letter of credit on comparable
terms without difficultly.
5. In conjunction with the changes mentioned above, the Bank is agreeable
to revising the annual Letter of Credit fee the Company must pay from 0.45%
of the Letter of Credit amount to 0.40% representing a reduction, based on
the Letter of Credit amount of $8,667,000, of $4,334 per annum.
6. If, as has happened with several other banks providing letters of credit
to HWP, the Bank's credit rating were to deteriorate, the marketability of
the Bonds and their effective interest cost to HWP could be negatively
impacted. In addition, the Bank itself may choose not to renew its
commitment, or HWP may, for a variety of reasons, seek alternative banks.
Accordingly, HWP seeks authority to replace the Bank's letter of credit with
a new letter of credit ("Substitute LOC") to be issued by a new bank
("Substitute Bank"). The Substitute LOC would be issued under a new letter
of credit and reimbursement agreement ("New LOC Agreement") substantially
identical to the Letter of Credit and Reimbursement Agreement dated as of
September 1, 1993 among HWP's affiliate, The Connecticut Light and Power
Company ("CL&P"), Deutsche Bank AG, New York Branch, Issuing Bank and Agent,
and various co-agents and participating banks, as approved by the Commission
in File No. 70-8088.
7. Furthermore, HWP seeks authority hereunder to obtain from time to time
new letters of credit from the same or different banks and further extensions
and modifications of and replacements for the New LOC Agreement with such
banks from time to time during the term of the Bonds supported thereby, in
accordance with the provisions of the Loan Agreement and provided that (A)
the total amount available to be drawn under any such extended, modified, or
replacement letter of credit does not exceed $8,667,000, (B) the annual
letter of credit costs applicable to any such extension, modification, or
replacement do not exceed 1.00% per annum of the total amount available to be
drawn under the extended, modified or replacement letter of credit, (C) the
New LOC Agreement applicable to any such extension, modification or
replacement shall provide (or shall afford HWP the option to elect) that
tender advances bear interest until paid at a rate not to exceed the higher
of (1) the prime rate plus 2.00% or (2) the federal funds rate plus 2.00%,
(D) such extension, modification, or replacement is otherwise on terms that
are substantially similar in all material respects to those applicable to the
New LOC Agreement (or previous extensions or modifications thereof or
replacements therefore) proposed to be entered into in connection with the
replacement of the Bank, the form of which is incorporated herein as Exhibit
B.2, and a Pledge Agreement between HWP and the bank to be named (Exhibit
1.01C to Exhibit B.2), and (E) HWP shall have obtained all necessary
approvals applicable to such extension, modification or replacement. The
Commission has previously granted CL&P authority to obtain extensions or
modifications of, and replacements for, its letters of credit and
reimbursement agreements from time to time during the terms of certain of its
pollution control revenue bonds by its Supplemental Order of August 24, 1994
in File No. 70-7320, and HWP seeks similar authority in accordance with this
Application.
8. Except in accordance with the Act, neither NU nor any subsidiary thereof
("Companies") (a) has acquired an ownership interest in an exempt wholesale
generator ("EWG") or a foreign utility company ("FUCO") as defined in
Sections 32 and 33 of the Act, or (b) now is or as a consequence of the
transactions proposed herein will become a party to, or has or will as a
consequence of the transactions proposed herein have a right under, a
service, sales, or construction contract with an exempt wholesale generator
or a foreign utility company. None of the proceeds from the transactions
proposed herein will be used by the Companies to acquire any securities of,
or any interest in, an exempt wholesale generator or a foreign utility
company.
The NU system is in compliance with Rule 53(a), (b), and (c), as
demonstrated by the following determinations:
(i) NU's aggregate investment in EWGs and FUCOs (i.e., amounts invested in
or committed to be invested in EWGs and FUCOs, for which there is recourse to
NU) does not exceed 50% of the NU system's consolidated retained earnings as
reported for the four most recent quarterly periods on NU's Form 10-K and
10-Qs.
(ii) Encoe Partners (NU's only EWG or FUCO at this time) maintains books and
records, and prepares financial statements in accordance with Rule 53(a)(2).
Furthermore, NU has undertaken to provide the Commission access to such books
and records and financial statements, as it may request.
(iii) No employees of the NU system's public utility companies have rendered
services to Encoe Partners.
(iv) NU has submitted (a) a copy of each Form U-1 and Rule 24 certificates
that have been filed with the Commission under Rule 53 and (b) a copy of Item
9 of Form U5S and Exhibits G and H thereof to each state regulator having
jurisdiction over the retail rates of the NU system public utility companies.
(v) Neither NU nor any NU subsidiary has been subject of a bankruptcy or
similar proceeding unless a plan of reorganization has been confirmed in such
proceeding. In addition, NU's average consolidated retained earnings for the
four most recent quarterly periods has not decreased by 10% or more from the
average for the previous four quarterly periods.
(vi) In the previous fiscal year, NU did not report operating losses
attributable to its investment in Encoe Partners, unless such losses did not
exceed 5 percent of NU's consolidated retained earnings.
Item 2. Fees, Commissions and Expenses
No fees, commissions or expenses have been paid or will be paid or
incurred in connection with the proposed transactions, other than (i) the
Commission's $2,000 filing fee, and (ii) expenses for legal, financial and
other services billed to CL&P at cost by NUSCO, not to exceed $5,000.
Item 4. Regulatory Approval
No federal or state regulatory authority, other than the Commission
under the Act and the Massachusetts Department of Revenue ("Department"), has
any jurisdiction over the proposed transactions.
Item 5. Procedure
It is respectfully requested that the Commission enter not later than
December 16, 1994 an appropriate order granting and permitting this Post-
Effective Amendment to become effective, and subject, if an approving ruling
of the Department has not then been issued, to the issuance of such ruling.
No recommended decision by a hearing officer or other responsible
officer of the Commission is necessary or required in this matter. The
Office of Public Utility Regulation within the Division of Investment
Management of the Commission may assist in the preparation of the
Commission's decision in this matter. There should be no 30 day waiting
period between the issuance and the effective date of any order issued by the
Commission in this matter, and it is respectively requested that any such
order be made effective immediately upon the entry thereof.
Item 6. Exhibits and Financial Statements
(a) Exhibits
B.1. Draft of Amendment to Reimbursement and Security Agreement between
HWP and the Bank. (Exhibit 1 to Exhibit D.1)
B.2. Substitute LOC Agreement. (Reference is made to Exhibits B-7 and
B-8set forth in Amendment No. 1 made August 12, 1993 in File No.
70-8088.)
D.1. Application to Department.
D.2. Department Letter Ruling. (To be filed by amendment.)
F.1.1. Opinion of Counsel.
J.1. Proposed Form of Notice under the Act.
(b) Financial Statements. Financial statements have not been included
because this transaction is not expected to have pro forma effects on the
financial statements of HWP or the NU system consolidated.
Item 7. Information as to Environmental Effects
This Post-Effective Amendment relates to revising security arrangements
for pollution control financing and, as such, it is believed that the
granting and permitting to become effective of this Post-Effective Amendment
will not constitute a major federal action significantly affecting the
quality of the human environment. No other federal agency has prepared or is
preparing an environmental impact statement with respect to the proposed
transaction.
SIGNATURES
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.
HOLYOKE WATER POWER COMPANY
By: /s/Jeffrey C. Miller
Title: Assistant General Counsel
Northeast Utilities Service Company
Dated: November 7, 1994
Exhibit D.1
October 25, 1994
FEDERAL EXPRESS
Commissioner of Revenue
Massachusetts Department of Revenue
Room 810
100 Cambridge Street
Boston, MA 02204
Attention: Rulings and Regulations Bureau
RE: Holyoke Water Power Company
Department of Revenue File No. 2436
Dear Sirs:
By letter ruling dated October 7, 1988 ("Ruling") the Department of
Revenue ("Department") authorized Holyoke Water Power Company ("Company") to
issue $8 million of Floating Rate Demand Bonds ("Bonds") through the
Industrial Development Finance Authority of the City of Holyoke,
Massachusetts ("Issuer"). The proceeds were used to refund a like amount of
maturing tax-exempt pollution control bonds of the Issuer, the proceeds of
which had been lent to the Company under an agreement between the Company and
the Issuer ("Loan Agreement") in 1981 to finance certain hydroelectric and
coal-burning facilities.
The Company's obligations with respect to the Bonds are secured by a
letter of credit ("Letter of Credit") issued by Union Bank of Switzerland
("Bank"), as further described in the amended and restated letter request
("Request") filed by the Company on September 27, 1988.
The purpose of this application for modification of the Ruling is to
seek authority for the Company (a) to participate in an amendment to the
Reimbursement and Security Agreement, dated as of November 1, 1988, between
the Company and the Bank ("Agreement") in order (i) to change the expiration
date of the Letter of Credit from perpetual to a three-year term ending
November 1, 1997 extendible for successive one-year terms thereafter
indefinitely with the consent of the Company and the Bank, and (ii) to reduce
the annual Letter of Credit fee payable to the Bank and (b) to replace the
letter of credit provided by the Bank, as permitted by Section 3.13 of the
Loan Agreement, from time to time by delivery of substitute credit
facilities, consisting of new letters of credit, and related agreements, to
be provided by substitute banks to be chosen by CL&P and to modify and extend
such letters of credit and agreements.
For corporate, accounting and regulatory reasons, the Bank has
approached the Company seeking to eliminate its perpetual obligation to
provide the Letter of Credit. The Company is agreeable to revising this
obligation to a three-year commitment coupled with an "evergreen" feature
whereby, at the request of the Company and with the consent of the Bank, the
Letter of Credit can be extended indefinitely for successive one-year terms.
The Company believes that were the Bank to not consent to an extension in the
future, the Company could obtain a replacement letter of credit on comparable
terms without difficulty.
In conjunction with the changes mentioned above, the Bank is agreeable
to revising the annual Letter of Credit fee the Company must pay, from 0.45%
of the Letter of Credit amount to 0.40%, representing a reduction, based on
the Letter of Credit amount of $8,667,000, of $4,334 per annum.
If, as has happened with several other banks providing letters of credit
to the Company, the Bank's credit rating were to deteriorate, the
marketability of the Bonds and their effective interest cost to the Company
could be negatively impacted. In addition, the Bank itself may choose not to
renew its commitment or the Company may, for a variety of reasons, seek
alternative banks. Accordingly, the Company seeks authority to replace the
Bank's Letter of Credit with a new letter of credit ("Substitute LOC") to be
issued by a new bank ("Substitute Bank"). The Substitute LOC would be issued
under a new letter of credit and reimbursement agreement ("New LOC
Agreement") substantially identical to the Letter of Credit and Reimbursement
Agreement dated as of September 1, 1993 among The Connecticut Light and Power
Company ("CL&P"), Deutsche Bank AG, New York Branch, Issuing Bank and Agent,
and various co-agents and participating banks. Northeast Utilities is
attempting to standardize the documentation for financings of this nature
among its various subsidiary companies. This form of Reimbursement Agreement
was approved by the Connecticut Department of Public Utility Control as to
CL&P in Docket No. 93-06-23 and by Massachusetts Electric Company ("WMECO")
(another Company affiliate) in Docket No. DPU93-123. A copy of the Deutsche
Bank form of Reimbursement Agreement is filed herewith for your review and
consideration as Exhibit No. 2.
Furthermore, the Company seeks authority hereunder to obtain from time
to time new letters of credit from the same or different banks and further
extensions and modifications of and replacements for the New LOC Agreement
with such banks from time to time during the term of the Bonds supported
thereby, in accordance with the provisions of the Loan Agreement and provided
that (A) the total amount available to be drawn under any such extended,
modified, or replacement letter of credit does not exceed $8,667,000, (B) the
annual letter of credit costs applicable to any such extension, modification,
or replacement do not exceed 1.00% per annum of the total amount available to
be drawn under the extended, modified or replacement letter of credit, (C)
the New LOC Agreement applicable to any such extension, modification or
replacement shall provide (or shall afford the Company the option to elect)
that tender advances bear interest until paid at a rate not to exceed the
higher of (1) the prime rate plus 2.00% or (2) the federal funds rate plus
2.00%, (D) such extension, modification, or replacement is otherwise on terms
that are substantially similar in all material respects to those applicable
to the New LOC Agreement (or previous extensions or modifications thereof or
replacements therefore) proposed to be entered into in connection with the
replacement of the Bank, the form of which is attached hereto as Exhibit 2,
and the Pledge Agreement between the Company and the bank to be named
(Exhibit 1.01C to Exhibit 2), and (E) the Company shall have obtained all
necessary approvals applicable to such extension, modification or
replacement.
REASONS FOR THE DEPARTMENT'S APPROVAL
Under Section 3 of Chapter 183 of the Acts of 1938, the Department must
"determine [the Bonds] to be reasonably necessary for [the Company's]
corporate purposes."
The Bank has offered the Company a meaningful fee reduction if the
Company will agree to limit the Bank's obligation to furnish the Letter of
Credit to three years, with a continuing one-year evergreen extension right
if both parties agree. Because the Bank's own credit rating remains very
high, AAA, the Company continues to enjoy a lower interest rate on the Bonds
because of the Letter of Credit and has no desire to replace the Bank at the
present time. Similar transactions entered into at this time would be
secured with letters of credit issued for a specific term, not perpetual, and
the Bank has offered a new annual fee structure which is comparable to and
competitive with fees that would be charged by competing banks today.
The Company is also seeking the same kind of flexibility previously
granted to its affiliates CL&P and WMECO to obtain
new letters of credit to support long-term pollution control financings.
Since the Bank herein can choose not to extend its commitment beyond a three-
year term, the Company needs the latitude to effect new arrangements within
the parameters stated above to seek alternatives if the Bank cannot recommit
or does so on uneconomic terms. The Company agrees to seek competitive
choices from letter of credit providers if such a course of action is
necessary.
APPLICABLE STATUTES AND REGULATIONS
This application is subject to 830 Code of Massachusetts Regulations
Section 62C.3.2 (1988), the Massachusetts Department of Revenue Regulations
concerning letter rulings. While such regulations are designed for the
requests of taxpayers for private letter rulings concerning Massachusetts tax
matters, and not for the approval of financings such as this, we have
followed its requirements as to form and content as closely as practicable.
The Company has the power and authority to engage in the refinancing
proposed herein under Section 3 of Chapter 183 of the Acts of 1938, which,
with the above referenced approval of the Commissioner, permits the issuance
of "bonds, coupon notes, and other evidences of indebtedness..."
Although the Company generates and distributes electricity, it is
classified as a manufacturing corporation rather than an electric utility for
many purposes under Massachusetts law. Because of this classification, the
transaction proposed by the Company herein is not subject to the jurisdiction
of the Massachusetts Department of Public Utilities. Board of Assessors of
Holyoke v. State Tax Commission, 355 Mass. 223,____. 244 N.E. 2d 287, 291-
292 (1969) (a copy of which is attached hereto as Exhibit 3).
This proposed refinancing must be approved by the Securities and
Exchange Commission ("SEC") pursuant to the provisions of the Public Utility
Holding Company Act of 1935. Final SEC approval cannot be obtained until an
approving order of your Department has been submitted to the SEC. The
parties are desirous of obtaining SEC approval of this transaction on or
before December 22, 1994; accordingly, we respectfully request that an
approving order of your Department be issued on or before November 30, 1994.
Please provide copies of correspondence and other communication in this
matter to:
Mr. David R. McHale
Manager- Project and Short-Term Finance
Northeast Utilities Service Company
P.O. Box 270
Hartford, Connecticut 06141-0270
Telephone: (203) 665-5601
and
Jeffrey C. Miller
Assistant General Counsel
Northeast Utilities Service Company
P.O. Box 270
Hartford, Connecticut 06141-0270
Telephone: (203) 665-3532
We would be pleased to provide you with such other information as you
may consider necessary or desirable. If you have any questions, please feel
free to contact the undersigned.
Please acknowledge receipt of this letter by stamping the enclosed copy
and returning it to me in the self-addressed, stamped envelope.
Very truly yours,
/s/Jeffrey C. Miller
Assistant General Counsel
Northeast Utilities Service Company
cc: D. R. McHale
K. A. Maitland
J. P. Seidl
APPLICATION OF HOLYOKE WATER POWER COMPANY
FOR MODIFICATION OF RULING WITH
RESPECT TO APPROVAL OF FINANCING FOR POLLUTION CONTROL FACILITIES
APPENDIX I - EXHIBITS
1. Draft of Amendment to Reimbursement Agreement between the Company and
the Bank.
2. Substitute LOC Agreement. (Letter of Credit and Reimbursement Agreement
dated as of September 1, 1993, among The Connecticut Light and Power
Company, Deutsche Bank AG, New York Branch, Issuing Bank and Agent, and
various co-agents and participating banks).
3. Board of Assessors of Holyoke v. State Tax Commission, 355 Mass. 223,
_____. 244 N.E. 2d 287, 291-292 (1969).
Exhibit 1
AMENDMENT TO REIMBURSEMENT AND SECURITY AGREEMENT
AMENDMENT dated as of July , 1994 between Holyoke Water Power Company
(the "Company") and Union Bank of Switzerland, New York Branch (the "Bank").
WHEREAS, the parties hereto have entered into a Reimbursement and
Security Agreement dated as of November 1, 1988 ([as heretofore amended,] the
"Agreement"); and
WHEREAS, the parties hereto wish to amend the Agreement in the manner
specified below;
NOW THEREFORE, the parties hereto hereby agree as follows:
Section 1. Definitions: Interpretation. Each term used herein has the
meaning set forth in the Agreement unless otherwise defined herein.
References to "hereof", "hereunder" and "this Agreement" and all similar
references contained in the Agreement shall during the effectiveness of this
Amendment refer to the Agreement as amended hereby. Except as expressly set
forth herein, this Amendment shall not amend or waive any provision of the
Agreement, and all such provisions are hereby ratified and confirmed in all
respects.
Section 2. Amendment of the Agreement. (a) Section 3(b) of the Agreement
is hereby amended by replacing the words "45/100 of 1% per annum" in the
clause (ii) thereof with the words "40/100 of 1% per annum".
Section 3. Counterparts. This Amendment may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if
all signatures thereon were upon the same instrument.
Section 4. Effectiveness. This Amendment shall become effective as of
the date hereof when each party shall have received a counterpart hereof duly
executed by the other party.
Section 5. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT
REGARD TO CONFLICT OF LAWS PRINCIPLES).
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
Holyoke Water Power Company
By:
Title:
Union Bank of Switzerland
New York Branch
By:
Title:
By:
Title:
____________, 1994
Ref: Irrevocable Letter of Credit No. 84266
Chemical Bank,
as agent for the trustee under
Indenture of Trust dated as of
November 1, 1988
Dear Sirs:
Subject to your approval hereof as requested below, this letter amends
our Irrevocable Letter of Credit No. 84266, dated November 18, 1988 and
issued in your favor.
The last paragraph on page 3 and the first paragraph on page 4 of the
referenced Letter of Credit is hereby amended to read in full as follows:
This Letter of Credit shall expire at our close of business at our
aforesaid address on the earlier to occur of (i) the Expiration Date (or if
the same is not a Business Day, the first Business Day following the
Expiration Date) or (ii) the date on which we receive from the Trustee a
certificate in form of Annex F hereto. This Letter of Credit shall be
promptly surrendered to us by you upon such expiration. The Expiration Date
shall be July 1, 1997; provided that, unless this Letter of Credit shall have
previously expired, if the Company so requests by Irrevocable written notice
to the Bank not more than 90 nor less than 60 days prior to July 1 in any
year, the Bank may, in its sole and absolute discretion, elect to extend the
Expiration Date by an additional period of one year. Any such extension may
be effected only be a written instrument signed by the Bank and specifying
the new Expiration Date. If the Bank fails to respond to any such request of
the Company, the Bank shall be deemed conclusively to have elected not to
consent to such request.
Please signify your consent to the foregoing amendment by signing a copy
of this letter in the space provided below and returning it to us, whereupon
the referenced Letter of Credit shall be amended as set forth above,
effective as of the date of this letter.
Very truly yours,
UNION BANK OF SWITZERLAND
NEW YORK BRANCH
By:
By:
Accepted and agreed to:
Chemical Bank,
as agent for the trustee under the
Indenture of Trust referred to above
By:
Exhibit F.1.1
File No. 70-7495
November 1, 1994
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: File No. 70-7495
Application/Declaration by Holyoke Water Power Company with Respect to
Credit Facility Substitution
Ladies and Gentlemen:
I am Assistant General Counsel of Northeast Utilities Service Company
("NUSCO"), a service company subsidiary of Northeast Utilities ("NU"), and I
am furnishing this opinion in connection with Post-Effective Amendment No. 1
to the Application/Declaration, as amended, on Form U-1 (the "Declaration")
of Holyoke Water Power Company, a subsidiary of NU ("HWP" or the "Company"),
to the Securities and Exchange Commission in File No. 70-7495 with respect to
the amending of a letter of credit and the acquisition of a Substitute LOC
and other letter of credit facilities by the Company to secure certain bonds
issued to finance the cost of certain pollution control facilities, all as
more fully set forth in the Declaration. Capitalized terms used herein and
not otherwise defined are used as defined in the Declaration.
In connection with this opinion, I have examined the Declaration and the
exhibits thereto, and I have examined or caused to be examined such other
papers, documents, and records and have made such examination of law and have
satisfied myself as to such other matters as I have deemed relevant or
necessary for the purpose of this opinion. I have assumed the authenticity
of all documents submitted to me as originals, the genuineness of all
signatures, the legal capacity of natural persons, and the conformity to
originals of all documents submitted to me as copies.
Based upon the foregoing, and in the event the proposed transactions
contemplated by the Declaration are carried out in accordance therewith, I am
of the opinion that
(a) Upon receipt of approval from the Massachusetts Department of
Revenue and compliance with the conditions stated therein, all
state laws applicable to HWP in connection with the proposed
transactions will have been complied with;
(b) HWP is validly organized and duly existing under the laws of the
State of Massachusetts;
(c) The debt securities issued by HWP will, upon compliance with the
terms, conditions and provisions applicable to their issuance
stated in the governing agreements pertaining thereto, be valid and
binding obligations of HWP in accordance with their terms; and
(d) The consummation of the proposed transactions will not violate the
rights of the holders of any securities issued by HWP or any
associate thereof.
The opinions set forth herein are limited to the laws of the State of
Massachusetts and the federal laws of the United States. I am a member of
the bar of the State of New York. I am not a member of the bar of the State
of Massachusetts, and do not hold myself out as an expert on the laws of
Massachusetts, although I have made a study of relevant laws of
Massachusetts. In expressing opinions about matters governed by the laws of
Massachusetts, I have consulted with counsel who are employed by NUSCO and
are members of the bar of Massachusetts.
I hereby consent to the use of this opinion in connection with the
filing of the Declaration.
Very truly yours,
/s/Jeffrey C. Miller
Assistant General Counsel
Northeast Utilities Service Company
EXHIBIT J.1
SECURITIES AND EXCHANGE COMMISSION
(Release No. 35 - )
Filings Under the Public Utility Holding Company Act of 1935 ("Act")
, 1994
Holyoke Water Power Company ("HWP" or the "Company"), One Canal Street,
Holyoke, Massachusetts 01040, an electric utility company subsidiary of
Northeast Utilities ("Northeast"), a registered holding company, has filed a
post-effective amendment to its Application/Declaration (File No. 70-7495)
under Sections 6(a) and 7 of the Act.
In 1988, pursuant to Commission order dated November 9, 1988 (HCAR No.
35-24742) the Industrial Development Finance Authority of the City of
Holyoke, Massachusetts issued $8 million in principle amount of a series of
pollution control revenue bonds ("Bonds") for financing HWP's share of the
cost of constructing certain pollution control facilities at the Company's
Mt. Tom Station in Holyoke, Mass.
In order to improve the credit ratings of, and to support, the Bonds,
HWP obtained a letter of credit from Union Bank of Switzerland ("UBS"). HWP
now seeks authority to change the expiration date of the UBS letter of credit
from perpetual to a three-year term renewable on an evergreen basis from year
to year thereafter with the consent of the parties; to reduce the annual
letter of credit fee to UBS; and to obtain new letters of credit from new
banks should it become necessary. The new letters of credit would not exceed
$8,667,000 in amount, representing principal in the amount of $8,000,000 and
interest in the amount of $667,000 at the maximum rate of 15% per annum for
218 days and would be issued pursuant to new letters of credit and
reimbursement agreements and related documents between a bank and HWP.
Tender advances under such arrangements would bear interest at a rate not to
exceed the higher of (i) the prime rate plus 2.00%, or (ii) the federal funds
rate plus 2.00%. Annual letter of credit costs under the substitute facility
will not exceed 1.00% per annum.
HWP also seeks authority to obtain further extensions and modifications
of replacements for the letter of credit and reimbursement agreement from
time to time during the term of the bonds supported thereby.
For the Commission, by the Division of Investment Management, pursuant
to delegated authority.
Jonathan G. Katz
Secretary
