(As filed with the Securities and Exchange Commission
November 2, 2000)
File No. 70-_______
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM U-1
APPLICATION OR DECLARATION UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Madison Gas and Electric Company
133 South Blair Street
P.O. Box 1231
Madison, Wisconsin 53701-1231
(Names of companies filing this statement and
addresses of principal executive offices)
None
(Name of top registered holding company parent)
Mark C. Williamson
Executive Vice President and Chief Strategic Officer
Madison Gas and Electric Company
133 South Blair Street
P.O. Box 1231
Madison, Wisconsin 53701-1231
(Name and address of agent for service)
The Commission is requested to send copies of all notices,
orders and communications in connection with this matter to:
Lee Cullen Gary Mathis
Cullen Weston Pines & Bach LLP Madison Gas and Electric Co.
122 West Washington Avenue 133 South Blair Street
Suite 900 P.O. Box 1231
Madison, WI 53703 Madison, WI 53701-1231
Ph: (608) 251-0101 Ph: (608) 252-7000
Fax: (608) 251-2883 Fax: (608) 252-7098
E-mail: [email protected] E-mail: [email protected]
TABLE OF CONTENTS
Page
ITEM 1: DESCRIPTION OF PROPOSED TRANSACTION . . . . . . . . 3
A. Introduction and Request for Commission Action. . . 3
1. Description of MGE. . . . . . . . . . . . . . . . . 4
2. Description of MGE's Non-Utility Subsidiaries . . . 5
B. Transco Legislation . . . . . . . . . . . . . . . . 6
C. Transco Operations and Organization . . . . . . . . 8
D. Transferred Properties . . . . . . . . . . . . . . 11
E. Related Orders and Applications
Pertaining to the Establishment of
the Transco and Corporate Manager. . . . . . . . . 13
ITEM 2: FEES, COMMISSIONS AND EXPENSES . . . . . . . . . . 14
ITEM 3: APPLICABLE STATUTORY PROVISIONS. . . . . . . . . . 14
A. Section 10 Standards . . . . . . . . . . . . . . . 15
1. Section 10(b). . . . . . . . . . . . . . . . . . . 15
a. Section 10(b)(1). . . . . . . . . . . . . . . 15
b. Section 10(b)(2). . . . . . . . . . . . . . . 16
i. Fairness of Consideration. . . . . . . . 16
ii. Reasonableness of Fees . . . . . . . . . 17
c. Section 10(b)(3). . . . . . . . . . . . . . . 17
2. Section 10(c). . . . . . . . . . . . . . . . . . . 17
a. Section 10(c)(1). . . . . . . . . . . . . . . 18
b. Section 10(c)(2). . . . . . . . . . . . . . . 18
(i) Efficiencies and Economies . . . . . . . 18
(ii) Integrated Public Utility System . . . . 19
(a) Physical Interconnection . . . . . . . . 20
(b) Single Interconnected and
Coordinated System . . . . . . . . . . .20
(c) Single Area or Region. . . . . . . . . . 21
(d) Localized Management, Efficient
Operation and Effective Regulation . . . 21
3. Section 10(f). . . . . . . . . . . . . . . . . . . 22
ITEM 4: REGULATORY APPROVALS . . . . . . . . . . . . . . . 23
ITEM 5: PROCEDURE. . . . . . . . . . . . . . . . . . . . . 23
ITEM 6: EXHIBITS AND FINANCIAL STATEMENTS. . . . . . . . . 24
A. Exhibits . . . . . . . . . . . . . . . . . . . . . 24
B. Financial Statements . . . . . . . . . . . . . . . 25
ITEM 7: INFORMATION AS TO ENVIRONMENTAL EFFECTS. . . . . . 26
ITEM 1: DESCRIPTION OF PROPOSED TRANSACTION
A. Introduction and Request for Commission Action
Pursuant to Sections 9(a)(2) and 10 of the Public Utility
Holding Company Act of 1935, as amended (the "Act"), Madison Gas
and Electric Company ("MGE"), a Wisconsin corporation, hereby
requests authorization for a transaction, as described in
further detail below, in which: (i) MGE will transfer ownership
and control over its transmission assets to American
Transmission Company LLC ("ATC" or the "Transco"), a Wisconsin
limited liability company formed on June 12, 2000, which will be
a single-purpose transmission company; (ii) MGE will receive, in
exchange for such transfer, member units of the Transco in
proportion to the value of the transmission assets contributed;
(iii) MGE will purchase Class A shares of ATC Management Inc.
(the "Corporate Manager"), a Wisconsin corporation formed on
June 12, 2000, in proportion to the value of the transmission
assets contributed; and (iv) MGE will purchase one Class B share
of the Corporate Manager. As explained in Section E below, this
request for Commission action is made in conjunction with
several other such requests by other parties related to the
formation of the Transco.
In 1999, the State of Wisconsin enacted legislation that
facilitates the formation of a single-purpose transmission
company such as the Transco. As explained in more detail below,
that legislation, among its other provisions, encourages public
utility affiliates of Wisconsin utility holding companies to
transfer ownership of their transmission assets to a
transmission company. The legislation does so by adjusting the
calculation of an existing limit on the amount of unregulated
(or non-utility) investments these holding companies and their
affiliates can make, after the transfer of assets to the
Transco. The Transco will be managed by the Corporate Manager,
which will also hold a portion of the Transco's membership
interests. All participants in the Transco will ultimately own
a direct or indirect interest in the Transco and the Corporate
Manager in proportion to the value of the transmission assets or
cash each participant contributes to the Transco (except Edison
Sault and South Beloit Water, Gas & Electric Company, which are
not expected to invest in the Corporate Manager).
In addition to MGE the initial participants in the Transco
will be Wisconsin Public Power Inc. ("WPPI"), Wisconsin Public
Service Corporation ("WPS"), Wisconsin Electric Power Company
("WEPCO"), Edison Sault Electric Company ("Edison Sault"),
Wisconsin Power and Light Company ("WPL"), South Beloit Water,
Gas and Electric Company ("South Beloit"), and the Corporate
Manager. [N1 - The Commission, in HCAR No. 27206 (Aug. 2, 2000)
authorized, among other things, WPL to become a member of the
Transco and to acquire shares of the Corporate Manager.] All
utilities participating in the Transco are referred to herein as
"Member Utilities". Other transmission-owning utilities may, in
the future, decide to become members of the Transco, as may
certain non-transmission-owning utilities, based on their load-
ratio shares.
MGE intends to contribute its transmission assets to the
Transco on or about January 1, 2001. [N2 - Wisconsin law
contemplates that the transfer of the transmission assets to the
Transco will occur by January 1, 2001.]
1. Description of MGE
MGE is a Wisconsin corporation organized in 1896, that
generates, transmits and distributes electricity in Dane County,
Wisconsin in an area covering approximately 250 square miles.
MGE also purchases, transports and distributes natural gas
throughout a 1,325 square mile area located in seven Wisconsin
counties: Columbia, Crawford, Dane, Iowa, Juneau, Monroe and
Vernon. MGE is a "public utility" pursuant to PUHCA Sec.
2(a)(5) and is both an "electric utility" and a "gas utility"
pursuant to Sections 2(a)(3) and (4). However, MGE is currently
not a utility holding company. Moreover, although MGE will be
an initial member of the Transco, it is not expected to own a
10% or greater interest in either the Transco or the Corporate
Manager, and thus will not become a utility holding company.
The Public Service Commission of Wisconsin ("Wisconsin
Commission") regulates MGE's rates, accounts, issuance of
securities, plant and transmission line siting, and other
aspects of its business. The Federal Energy Regulatory
Commission ("FERC") has jurisdiction, under the Federal Power
Act, over MGE's transmission facilities, wholesale transactions,
certain accounting practices and certain other aspects of MGE's
business. The Nuclear Regulatory Commission ("NRC") has
jurisdiction over operation of the Kewaunee Nuclear Power Plant
(Kewaunee). MGE has a 17.8% ownership interest in Kewaunee. The
other owners are Wisconsin Public Service Corporation ("WPSC"),
which operates Kewaunee, and Wisconsin Power and Light Company.
As of December 31, 1999, MGE supplied electric service to
approximately 125,000 customers, of whom 112,000 were located in
the cities of Fitchburg, Madison, Middleton and Monona, and
13,000 in adjacent areas. Of the total number of customers,
approximately 108,000 were residential and 17,000 were
commercial and industrial. Electric revenues for 1999 were
derived from sales to the following classes of customers:
residential (35%), commercial (47%), industrial (7%), public
authorities including the University of Wisconsin (7%), and
sales to other utilities (4%). Electric operations accounted for
68% of MGE's total 1999 revenues.
MGE is a member of Mid-America Interconnected Network, Inc.
("MAIN"), a regional reliability group. MAIN members work
together to better utilize reserve generating capacity and
coordinate long-range system planning and day-to-day operations.
MAIN seeks to maintain adequate planning generation reserve
margins in the region, ranging from 15% to 22%. MGE is also a
member of the Mid-Continent Area Power Pool ("MAPP") Regional
Transmission Committee ("RTC"). RTC members pool their
transmission systems allowing each member to easily access
economical energy across the Upper Midwest. Each member is then
compensated for the energy flows on their individual
transmission system.
MGE also owns and controls approximately 636 MW of net
generating capability, and 306 miles of transmission lines and
radials.
In addition to its electric operations, as of Dec. 31,
1999, MGE supplied natural gas service to approximately 111,000
customers in the cities of Elroy, Madison, Middleton, Monona,
Fitchburg, Lodi, Verona and Viroqua; 22 villages; and all or
parts of 41 townships. Gas revenues for 1999 comprised of
residential (57%), commercial (32%), industrial (4%) and other
(7%). Transportation service accounted for slightly more than
3% of the total 1999 gas revenues. Gas operations accounted for
32% of MGE's total revenues.
MGE's gas facilities include 1,955 miles of distribution
mains. MGE has physical interconnections with both ANR Pipeline
Company (ANR) and Northern Natural Gas Company (NNG). MGE's
primary service territory, which includes Madison and the
surrounding area, receives deliveries at four ANR and one NNG
gate station. MGE also receives deliveries at NNG gate stations
located in Viroqua and Elroy and in Crawford County.
Interconnections with two major pipelines provide competition in
interstate pipeline service and a more reliable and economical
supply mix, which includes gas from Canada and the U.S. Mid-
Continent and Gulf/Offshore regions.
2. Description of MGE's Non-Utility Subsidiaries
MGE wholly owns the following subsidiaries.
MAGAEL INC., which holds title to property acquired by the
Company for future utility plant expansion and nonutility
property.
Central Wisconsin Development Corporation, which assists
new and expanding businesses throughout Central Wisconsin by
participating in planning, financing, property acquisition,
joint ventures, and associated activities.
Great Lakes Energy Corp. - Inactive. As of Dec. 31, 1999,
Great Lakes Energy Corp. owned 100% of the voting securities of
American Energy Management, Inc., an inactive Wisconsin
Corporation.
Wisconsin Resources Corporation - Inactive.
North Central Technologies, Inc. - Inactive.
Mid America Technologies, Inc. - Inactive.
B. Transco Legislation
In 1999, the State of Wisconsin enacted legislation that
facilitates the formation of the Transco as a for-profit single-
purpose transmission company. [N3 - 1999 Wisconsin Act 9, Secs.
2335 tr to 2335 uh (Assembly Amendment to Assembly Subcommittee
Amendment 1 to 1999 Assembly Bill 133) (the "Transco
Legislation").] In its proposed tariff, the Transco will charge
a single system-wide average network rate to be phased in over 5
years in accordance with the Transco Legislation, and a single
system-wide average point-to-point rate for "through and out"
service. [N4 - The ATC filed its proposed tariff with the FERC
on July 31, 2000 in Docket No. ER00-3316-000.] 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 services
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 policies. The Transco Legislation, among
other things, encourages public utility affiliates of Wisconsin
utility holding companies 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 the holding company system can
make, after the transfer of their assets to the Transco. [N5 -
Wis. Stat. Sec. 196.485(5). This investment cap applies to any
holding company system that owns a Wisconsin public utility.
Generally, Wisconsin law limits the amount of assets that all
non-utility 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. Wis. Stat. Sec.
196.795(6m)(b). The Transco Legislation permits an electric
utility within a holding company system to exclude certain
energy related "eligible investments" (as defined in the
Wisconsin Public 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 June 30, 2000, the
Wisconsin Commission 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
Transmission System Operator, Inc.] The Transco will be managed
by the Corporate Manager. All Transco participants will
ultimately own direct or indirect interests in the Transco and
the Corporate Manager in proportion to the value of the
transmission assets or cash each participant contributes to the
Transco. Transmission-dependent utilities, as defined by the
Transco legislation, that participate in the Transco will
purchase their interests for cash and will obtain ownership
shares in proportion to their 1999 Wisconsin load-ratio shares.
Tax exempt transmission-dependent entities that participate in
the Transco, such as WPPI, [N6 - WPPI is a municipal electric
company owned by 30 Wisconsin municipalities that operate
electric utilities. These utilities supply electric power to
more than 100,000 customers in Wisconsin and purchase all of
their electric requirements from WPPI. WPPI was created
pursuant to Wisconsin legislation and is a non-profit, political
subdivision of the state. Wis. Stat. Sec. 66.073.] will
purchase their interests for cash at a price that will keep the
other participants whole, as explained below.
The Transco Legislation obligates the Transco to construct,
operate, maintain and expand its transmission facilities to
provide adequate, reliable transmission services for a single,
system-wide rate for the use of its system under an open-access
transmission tariff (the "Transco OATT") that has been filed
with the FERC. The Transco Legislation directs that the Transco
support robust competition in energy markets, extend no
favoritism to any participant and meet the transmission needs of
all participants. Under the provisions of the Transco
Legislation, the Transco will transfer the operational control
of its transmission facilities to the Midwest Independent
Transmission System Operator, Inc. (the "Midwest ISO") when the
Midwest ISO becomes operational. It is presently expected that
this transfer will occur on or about November 1, 2001.
As previously stated, the initial participants in the
Transco and the Corporate Manager will include, in addition to
MGE, WPL, South Beloit, WPPI, WPS, Wisconsin Electric and Edison
Sault. [N7 - The Corporate Manager will also initially own a
less than 1% interest in the Transco.] All utilities
participating in the Transco are referred to herein as "Member
Utilities". Other entities, both within and outside of
Wisconsin, may, in the future, decide to become members of the
Transco. The Member Utilities intend to contribute their
transmission assets to the Transco on or about January 1, 2001,
(the "Operations Date"). [N8 - The Transco Legislation currently
contemplates that the transfer of the transmission assets will
occur by the Operations Date. Accordingly, the Member Utilities
are proceeding under the assumption that the Transco will begin
operations on the Operations Date and are therefore making all
of the requisite FERC filings to have the Transco OATT effective
as of such date.] The transmission systems of the Member
Utilities are interconnected at various points and essentially
all operate as part of the same reliability and planning council
-- the Mid-America Interconnected Network, Inc. ("MAIN"). [N9 -
Edison Sault is part of the East Central Area Reliability (ECAR)
group but is expected to become part of MAIN by January 1,
2001.] MAIN promotes coordinated planning, construction,
operation, maintenance and use of operation and transmission
facilities by its members. The Member Utilities' transmission
systems were also planned and built on a coordinated basis
pursuant to the Wisconsin "advance planning" law in effect from
1975 until 1997. For a map detailing the interconnection of the
transmission systems of the Member Utilities, see Exhibit E
hereto.
C. Transco Operations and Organization
The Transco will have the exclusive duty to provide
transmission service in geographic areas previously served by
the Transco members. The Transco will not, however, have that
duty in areas where control of transmission facilities has been
transferred directly to the Midwest ISO. Wisconsin law
prohibits the Transco from bypassing distribution systems and
directly serving retail customers.
The transmission-owning Member Utilities and the Transco
have entered into operating agreements ("O&M Agreements")
pursuant to which the Member Utilities will provide the Transco
with "reasonable and cost effective operation and maintenance
services" for at least the first three years after the
Operations Date in accordance with the Transco Legislation. [N10
- Wis. Stat. Sec. 196.485 (3m)(a)1.b.] The Member Utilities and
the Transco have also entered into services agreements
("Services Agreements") pursuant to which the Member Utilities
will provide the Transco with certain services not covered by
the O&M Agreements. Additionally, the Member Utilities and the
Transco have entered into an Operating Agreement pursuant to
which the Transco will provide, among other things, ancillary
services and control-area operations at FERC-approved rates.
Finally, the Transco will operate certain of Alliant Energy
Corporation's transmission facilities outside of Wisconsin that
are not being transferred to the Transco under the terms of an
agency agreement ("Agency Agreement"). [N11 - Alliant Energy
Corporation is the holding company parent of WPL and South
Beloit.]
In accordance with the Transco Legislation, all
transmission owning Member Utilities will transfer all
transmission assets to the Transco on the Operations Date. For
purposes of establishing relative shares, the transmission
assets will be valued at their Contribution Value, defined as
original cost less accumulated depreciation, as adjusted on a
dollar-for-dollar basis for deferred taxes, excess deferred
taxes and deferred investment tax credits. The resulting shares
will then be adjusted based on various factors and the level of
participation by transmission-dependent utilities which may
acquire member units in the Transsco for cash based upon their
1999 Wisconsin load-ratio shares. It is expected that MGE's
Contribution Value at December 31, 2000, exclusive of land
rights, will be approximately $40.1 million, and its initial
interest in the Transco will approximate 5.31%. These ownership
percentages may fluctuate based on various factors, including
the number of participants in the Transco.
WPPI, and any other transmission-dependent tax-exempt
entity that participates in the Transco, will also be members of
the Transco, but will not be contributing transmission assets.
Because the participation of tax exempt entities like WPPI will
reduce the transmission revenue otherwise received by the
Transco, [N12 - Based on FERC precedent with respect to natural
gas pipelines, the revenue requirement reflected in the
Transco's FERC petition includes provision for income taxes
payable by its members with respect to Transco income. The
participation of any tax-exempt entity in the Transco will
reduce that revenue requirement and therefore each tax-exempt
Transco member must make contributions to the Transco to make up
for the diminished return of the other members. Alternatively,
the Transco participants may agree on special allocations of
certain tax elements, rather than adjust the purchase price to
be paid by such tax-exempt entities.] such entities will
purchase their interests for a price that is designed to keep
the other participants whole. It is anticipated that funds
received from WPPI and any other tax-exempt Transco member will
be used to fund outlays necessary to pay start-up costs and
construction work-in-progress or be used as cash working
capital. The tax-exempt purchase price will be recalculated
annually, such that all tax-exempt participants will be required
to make additional cash contributions (or receive a refund of
any "over contributed" funds) to ensure that the return
otherwise payable to the other transmission-contributing
participants is not diminished because of the tax exempt
entities' participation.
The Corporate Manager will manage the Transco, and will
employ all personnel necessary to operate the Transco. All
costs and expenses of the Corporate Manager will be treated as
Transco expenses. The Transco members will enter into an
agreement (the "Operating Agreement") which will govern the
activities of the Transco.
In accordance with the Transco's Operating Agreement, the
Member Utilities will not be permitted to sell their interests
in the Transco for a period of three years following the
Operations Date, with certain exceptions. [N13 - Interests may
be transferred to another Member Utility or to a person who is
and remains 100% directly or indirectly owned by the Member
Utility selling its interest or the related holding company.]
After the three-year period expires, any Transco interest may be
freely transferred subject to any applicable legal constraints.
The Member Utilities may exchange all or a portion of their
Transco member units for shares in the Corporate Manager on a
one-for-one basis at any time after the three years, or, if
earlier, one year after an initial public offering by the
Corporate Manager.
No Member Utility will be obligated to make any additional
capital contributions to the Transco or the Corporate Manager;
however, there may be additional contributions if a majority of
the Corporate Manager's directors determine that such additional
capital is appropriate. The Operating Agreement will establish
a target dividend rate of 80% of the Transco's earnings, subject
to adjustment.
Member Utilities will also purchase shares of the Corporate
Manager for cash, in proportion to their percentage interests in
the Transco. It is expected that MGE will pay approximately
$5,000 for an approximate 5.31% interest in the Corporate
Manager. The Corporate Manager will have two classes of stock:
Class A and Class B. MGE will receive approximately 5.31% of
the non-voting Class A shares, in proportion to its ownership
interest in the Transco. Additionally, each Member Utility,
including MGE, will receive one Class B voting share. [N14 -
Neither South Beloit nor Edison Sault will receive shares in the
Corporate Manager.] Each holder of a Class B share will be
entitled to appoint one of the Corporate Manager's directors.
All Class B shares will convert into Class A shares on the
earlier of (i) the ownership by the Corporate Manager of more
than 50% of the Transco interests or (ii) the tenth anniversary
of the Operations Date, unless the Corporate Manager's Board of
Directors elects to override the conversion. Class A shares
will become voting shares upon the conversion of Class B shares
to Class A shares or after the Corporate Manager commences a
public offering of its stock. Following the public offering,
the Class A shareholders will have the right to elect a majority
of the Board of Directors and the Class B shareholders will
elect a minority of the directors, but each owner of a Class B
share will continue to have the right to appoint one of the
Corporate Manager's directors.
More detailed information regarding the financing and
governance of the Transco and the Corporate Manager is contained
in the August 15, 2000 Application of Alliant Energy, SEC File
No. 70-9735 (the "Alliant Application").
D. Transferred Properties
MGE proposes to transfer ownership and control of its
transmission assets to the Transco. [N15 - For a complete list
of these facilities, please see MGE's sec. 203 application to
FERC (D-1).] The Transco will acquire from MGE transmission
facilities that operate at voltages of 345 kV, 138 kV and 69 kV,
excluding radial facilities. The MGE transmission assets
proposed to be transferred include:
- Transmission lines (including towers, poles, and
conductors);
- Transformers providing transformation within the
bulk transmission system and between the bulk and
area transmission systems; and
- Substations that solely provide a transmission
function.
The determination as to what MGE assets constitute
"transmission" assets to be transferred to the Transco has been
made pursuant to an order of the Wisconsin Commission, dated
July 13, 2000, in Docket No. 05-EI-119. The PSCW conducted a
proceeding specifically to provide direction on this issue to
the Wisconsin utilities. [N16 - See Investigation into the
Classification of Transmission Facilities Pursuant to Wis. Stat.
Sec. 196.485(1)(h), Docket No. 05-EI-119. Under the Wisconsin
Commission Order, MGE has made its compliance filing to list its
transmission assets and to request exceptions. MGE will amend
this Application by filing the Wisconsin Commission order
accepting MGE's compliance filing, once such order has been
issued.]
A breakdown of MGE's transmission assets to be contributed
to the Transco is provided in Exhibit I. The net book value
(original cost less accumulated depreciation) of the MGE
transmission assets at December 31, 2000 is expected to be
approximately $40.1 million.
The facilities MGE will transfer to the Transco do not
include distribution or generation facilities or radial lines
used to provide retail service. Distribution facilities include
all facilities with voltages below 50 kV, including the final
circuit connection to substations providing transformation or
connection to any retail customer regardless of voltage level.
The Transco will be under a statutory mandate to transfer
operational control of its jurisdictional facilities to the
Midwest ISO. Prior to the transfer, the Transco will have
operational control of the transmission system contributed by
Wisconsin utilities; provide ancillary services; operate an Open
Access Same-Time Information System ("OASIS") in conformance
with FERC Order No. 889; and administer the Transco OATT. The
Transco will also be responsible for the maintenance of the
transmission facilities under its ownership and control and will
assume responsibility for transmission system planning. After
the transfer to the Midwest ISO, the Transco will make changes
to its OATT to accommodate operational differences between the
Transco and the Midwest ISO open access transmission tariff.
MGE will enter into a bill of sale, deeds, easement
assignments and other documentation with the Transco governing
the conveyance of its respective transmission assets. The
transmission assets transferred to the Transco will include
MGE's rights and interests in any contracts under its existing
Open Access Transmission Tariff (the "MGE OATT").
In addition to the assets from MGE, it is expected that the
Transco will also acquire transmission assets from WPL, South
Beloit, Wisconsin Electric, Edison Sault and WPS. The Transco
is also expected to acquire the incidental transmission
facilities of transmission-dependent utilities, such as WPPI's
member municipal utilities. The Transco will assign a nominal
value of $10 to each member unit initially issued in exchange
for transmission assets.
The Transco will offer ancillary services under the
Transco's OATT. Because the Transco will own no generating
facilities, it will purchase ancillary services from third
parties and resell them under its OATT. The Transco expects to
enter into agreements to purchase must-run and ancillary
services from generators in the control areas of MGE, WPL, WPS
and Wisconsin Electric. The Transco will contract for must-run
operations and ancillary services with the generators located in
its control area and connected to its transmission system. In
accordance with Wisconsin law, the Transco will not, however,
engage in the purchase and sale of energy other than to obtain
necessary ancillary services required by its customers.
Upon receipt of necessary regulatory approvals, the Transco
will begin providing open access transmission services under its
OATT to those existing open access customers currently served by
MGE under the existing MGE OATT and to any other eligible
customer requesting transmission service from the Transco. MGE
will become a transmission customer of the Transco under its
transmission tariff. Where MGE is responsible for providing
transmission service under agreements or tariffs pre-dating FERC
Order No. 888 ("grandfathered agreements"), the Transco will
make its transmission system available under the Transco OATT in
order to provide transmission service to customers under the
grandfathered agreements.
E. Related Orders and Applications Pertaining to the
Establishment of the Transco and Corporate Manager
On August 3, 2000, Alliant and WPL obtained a Commission
order authorizing them to: (i) acquire small membership
interests in the Transco; (ii) acquire a small percentage of the
capital stock of the Corporate Manager; and (iii) authorizing
Alliant, through September 30, 2001, to guarantee the Transco's
payment obligations under a credit agreement and to enter into a
reimbursement agreement with the Transco. [N17 - Alliant Energy
Corporation, HCAR No. 27206 (August 3, 2000).]
On August 15, 2000, WPL, South Beloit, the Transco and the
Corporate Manager filed the Alliant Application seeking
Commission authorization for: (i) WPL to transfer ownership and
control over its transmission assets to the Transco; (ii) South
Beloit to transfer ownership and control over its transmission
assets to the Transco; (iii) WPL and South Beloit to receive, in
exchange for their transmission assets, member units, i.e.,
shares, of the Transco; (iv) WPL to purchase Class A shares of
the Corporate Manager; (v) WPL to purchase one Class B share of
the Corporate Manager; (vi) the Transco's issuance of member
units in exchange for transmission assets, in the case of
transmission-owning Transco members, or cash, in the case of
transmission-dependent Transco members; and (vii) the Corporate
Manager's issuance of its Class A and Class B shares in exchange
for cash payments.
WPL and South Beloit have also sought Commission
authorization through June 30, 2004 for external financing by
the Transco and the Corporate Manager through various forms of
(i) short-term debt financing; (iii) long-term debt financing;
and (iii) equity financing in the form of common or preferred
stock of the Corporate Manager, other equity securities or
additional interests in the Transco.
This Application, the Alliant Application and any
applications filed by other Member Utilities should be viewed as
companion filings. All must be approved expeditiously if the
Transco is to commence operations prior to the Operations Date.
If the Commission does not act within this timeframe certain
Applicants will be in violation of the Transco Legislation and
may face adverse regulatory consequences. [N18 - For example,
pursuant to Wis. Stats. Sec. 196.485(8), any public utility
affiliate that does not complete the contribution of its
transmission facilities to the Transco by January 1, 2000, will
be subject to a penalty of $25,000 for each day that the
contribution is delayed if the Transco is legally able to accept
the contribution.]
ITEM 2: FEES, COMMISSIONS AND EXPENSES.
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
MGE believes that the proposed transaction is regulated by
Sections 9(a)(2) and 10 of the Act. To the extent the
Commission finds that the transaction requires authorization,
approval or exemption under any section of the Act or provision
of the rules or regulations thereunder other than those
specifically referred to herein, MGE hereby requests such
authorization, approval or exemption.
When the transmission assets of the Member Utilities are
transferred to the Transco, the Transco will become an "electric
utility company" under Section 2(a)(3) of the Act and a "public
utility company" under Section 2(a)(5). In addition, the
Corporate Manager, by virtue of its ownership interest in, and
management of, the Transco, will also become an "electric
utility company" and a "public utility company." As a result of
the proposed transaction, MGE will be acquiring 5% or more of
the outstanding voting securities of the Transco and Corporate
Manager. As a consequence, MGE's acquisition of an interest in
the Transco and Corporate Manager will be subject to the
Commission's approval pursuant to Section 9(a)(2) of the Act.
Therefore, MGE believes that the proposed transaction cannot
proceed without the Commission's approval under Section 10 of
the Act. The relevant statutory standards to be satisfied are
set forth in Sections 10(b), 10(c) and 10(f) of the Act.
A. Section 10 Standards
The statutory standards to be considered by the Commission
in evaluating the transaction are set forth in Sections 10(b),
10(c) and 10(f) of the Act. For the reasons set forth in detail
below, the transaction fully complies with such sections.
1. Section 10(b)
Section 10(b) of the Act provides that, if the
requirements of Section 10(f) are satisfied, the Commission
shall approve an acquisition under Section 9(a) unless the
Commission finds that:
(1) such acquisition will tend towards interlocking
relations or the concentration of control of
public-utility companies, of a kind or to an
extent detrimental to the public interest or the
interest of investors or consumers;
(2) in case of the acquisition of securities or
utility assets, the consideration, including all
fees, commissions, and other remuneration, to
whomsoever paid, to be given, directly or
indirectly, in connection with such acquisition
is not reasonable or does not bear a fair
relation to the sums invested in or the earning
capacity of the utility assets to be acquired or
the utility assets underlying the securities to
be acquired; or
(3) such acquisitions will unduly complicate the
capital structure of the holding-company of the
applicant or will be detrimental to the public
interest or the interest of investors or
consumers or the proper functioning of such
holding-company system.
a. Section 10(b)(1)
The proposed transaction will not tend towards interlocking
relations or the concentration of control of public utility
companies, of a kind or to an extent detrimental to the public
interest or the interest of investors or consumer.
The Corporate Manager will initially have a ten member
Board of Directors. While five directors will be appointed by
the Member Utilities, four directors will be independent, as
mandated by the Transco Legislation. The remaining director
will be the chief executive officer of the Corporate Manager.
The employees of the Transco and the Corporate Manager will not
be employees of any of the member utilities. Therefore, any
interlocking relations will be minimal, at most.
Similarly, the proposed transaction will not tend toward
any "concentration of control of public utility companies" that
is detrimental to the public interest or the interest of
consumers or investors. The end result of the formation of the
Transco will not be the concentration of control over the
Wisconsin transmission system, but rather the dilution of
control. There will be at least five member utilities with
input, through the Corporate Manager, over decisions as to the
management and operation of the Transco's transmission assets.
One of these Member Utilities -- WPPI -- currently has no such
input. Indeed the creation of the Transco will encourage
competition, rather than concentrate control.
b. Section 10(b)(2)
Under Section 10(b)(2) of the Act, the Commission must
determine whether the consideration to be paid in connection
with the transaction "including all fees, commission and other
remuneration ... is not reasonable or does not bear a fair
relation to the sums invested in or the earning capacity of ...
the utility assets underlying the securities to be acquired
...."
i. Fairness of Consideration
Section 10(b)(2) of the Act requires the Commission to
determine whether the consideration in connection with a
proposed acquisition of securities is reasonable and whether it
bears a fair relation to the investment in, and the earning
capacity of, the utility assets underlying the securities being
acquired. All transmission assets that will be transferred to
the Transco will be valued based on the same methodology. This
methodology is generally mandated by the Transco Legislation and
the specifics have been arrived at as the result of arms-length
negotiations among all of the Member Utilities, subject to the
review and approval of the Wisconsin Commission. Applicants
further believe that such consideration bears a fair relation to
the investment in and the earning capacity of the transmission
assets to be transferred because it is based on the Contribution
Value of those assets. Because the Transco's rates will also be
subject to FERC approval, it can be expected that those rates
(which will largely also be based on the same Contribution
Value) will permit the Transco to earn a fair return on them as
well. This being the case, all Member Utilities, including MGE,
can expect to earn a fair return on their investment.
ii. Reasonableness of Fees
An estimate of the fees and expenses to be paid in
connection with the proposed transactions is set forth in Item 2
hereof. The estimated amounts to be paid are fees required to
be paid to governmental bodies, fees for necessary professional
services, and other expenses incurred or to be incurred in
connection with carrying out the proposed transaction.
Applicants believe that such fees and expenses are reasonable
and customary for a transaction of this kind and that the
standards of Section 10(b)(2) are thus satisfied.
c. Section 10(b)(3)
Section 10(b)(3) requires that the Commission determine
whether the proposed transaction will unduly complicate MGE's
capital structure or will be detrimental to the public interest,
the interests of investors or consumers or the proper
functioning of MGE's system. The corporate capital structure of
MGE after the consummation of the proposed transaction will not
be unduly complicated.
The ownership structure of the Corporate Manager and the
Transco has been designed to simplify management of the Transco
and to facilitate public investment in the Transco enterprise
through a public offering of stock in the Corporate Manager,
such stock being more attractive to investors than would be the
equivalent member units (LLC interests) of the Transco.
Although such structure introduces an additional corporate layer
into the MGE system, the Transco and the Corporate Manager will,
as a practical matter, function as one entity. The Corporate
Manager has been introduced simply to make public investment in
the Transco enterprise more "investor-friendly".
In any event, as set forth more fully elsewhere in this
Application/Declaration the proposed formation of the new
transmission company is expected to result in benefits to the
public and to consumers and investors of the MGE holding company
system.
2. Section 10(c)
Section 10(c) of the Act provides that:
Notwithstanding the provisions of subsection (b), the
Commission shall not approve:
(1) An acquisition of securities or utility assets,
or of any other asset, which is unlawful under
the provisions of Section 8 or is detrimental to
the carrying out of the provisions of Section 11;
or
(2) The acquisition of securities or utility assets
of a public utility or holding company unless the
Commission finds that such acquisition will serve
the public interest by tending towards the
economical and efficient development of any
integrated public utility system ....
a. Section 10(c)(1)
Consistent with the standards set forth in Section 10(c)(1)
of the Act, the proposed acquisition of securities will not be
unlawful under the provisions of Section 8 of the Act, or
detrimental to the carrying out of the provisions of Section 11
of the Act.
Section 8 prohibits a registered holding company or any of
its subsidiaries from acquiring, owning interests in, or
operating both a gas utility company and an electric utility
company serving substantially the same area if prohibited by
state law, and is thus not applicable to the transactions
contemplated herein.
Section 11(a) of the Act requires the Commission to examine
the corporate structure of registered holding companies to
ensure, among other things, that unnecessary complexities are
eliminated and voting powers are fairly and equitably
distributed, and is thus not applicable to the transactions
contemplated herein.
b. Section 10(c)(2)
As the following discussion will demonstrate, the proposed
transaction will serve the public interest by tending towards
the economical and efficient development of an integrated public
utility system as required by Section 10(c)(2) of the Act.
(i) Efficiencies and Economies.
As described more fully above, the proposed transaction
tends toward the following efficiencies and economies: (i)
greater corporate and organizational separation of transmission
from generation; and (ii) by tying together control, planning,
maintenance and financial responsibilities for the Member
Utilities' transmission facilities into a single company having
an independent, stream-lined and cost-efficient operation,
synergies will be created that result in better service in the
region and non-discriminatory access for all transmission users
will be assured.
(ii) Integrated Public Utility System
As applied to electric utility companies, the term
"integrated public utility system" is defined in Section
2(a)(29)(A) of the Act as:
a system consisting of one or more units of generating
plants and/or transmission lines and/or distributing
facilities, whose utility assets, whether owned by one
or more electric utility companies, are physically
interconnected or capable of physical interconnection
and which under normal conditions may be economically
operated as a single interconnected and coordinated
system confined in its operation to a single area
or region, in one or more states, not so large as to
impair (considering the state of the art and the area
or region affected) the advantages of localized
management, efficient operation, and the effectiveness
of regulation.
The Commission has previously taken notice of developments
that have occurred in the gas and electric industries in recent
years, and has interpreted the Act and analyzed proposed
transactions in light of those developments. [N19 - See, e.g.,
American Electric Power Co., HCAR No. 27186 (June 14, 2000)
(AAEP Order@); New Century Energies, Inc., HCAR No. 26748 (Aug.
1, 1997) (approving transactions relating to combination of a
Colorado gas and electric utility company and intrastate exempt
holding company and a New Mexico electric utility company),
citing Hearing on Regulation of Public Utility Holding Companies
Before Subcomm. on Telecommunications and Finance and Subcomm.
on Energy and Power of the House of Representatives Comm. on
Commerce, 104th Cong., 1st Sess. (Aug. 4, 1995) (testimony of
Arthur Levitt, Chairman, SEC). See also Rust v. Sullivan, 500
U.S. 173, 186-87 (1991) (stating that "an agency is not required
to" establish rules of conduct to last forever, "but rather must
be given ample latitude to 'adopt [its] rules and policies to
the demands of changing circumstances.'") (citations omitted);
Shawmut Assn. v. SEC, 146 F.2d 791, 796-97 (1st Cir. 1945)
(stating that an agency "is expected to treat experience not as
a jailer but as a teacher").]
Based on the statutory definition, the Commission has
established four standards that must be met before it will find
that an integrated public-utility system will result from a
proposed acquisition of securities:
(1) the utility assets of the system are physically
interconnected or capable of physical
interconnection;
(2) the utility assets, under normal conditions, may
be economically operated as a single
interconnected and coordinated system;
(3) the system must be confined in its operations to
a single area or region; and
(4) the system must not be so large as to impair
(considering the state of the art and the area or
region affected) the advantages of localized
management, efficient operation, and the
effectiveness of regulation. [N20 - Environmental
Action, Inc. v. SEC, 895 F.2d 1255, 1263 (9th
Cir. 1990), quoting In re Electric Energy, Inc.,
38 S.E.C. 658, 668 (1958).]
The proposed transaction satisfies all four of these
requirements. In examining proposed transactions to determine
whether the integration requirements have been satisfied, the
Commission has "interpreted the Act and analyzed transactions in
the light of ... changed and changing circumstances." [N21 - AEP
Order.] Applicants believe that the Transco Legislation, as
well as the recent FERC Order No. 2000, both of which strongly
encourage transmission company formation, constitute such
changing circumstances which the Commission should consider when
evaluating the proposed transaction.
(a) Physical Interconnection
In view of the above, the facts presented clearly support a
finding that the utility assets of the Transco will be
"physically interconnected or capable of physical
interconnection" within the meaning of Section 2(a)(29)(A) of
the Act once the transactions contemplated herein are completed.
Indeed, as discussed in Item 1, the utility assets to be owned
by the Transco are already physically interconnected.
(b) Single Interconnected and Coordinated System.
Section 2(a)(29)(A) of the Act requires that the utility
assets, under normal circumstances, may be "economically
operated as a single interconnected and coordinated system."
The Commission has interpreted this language to refer to the
physical operation of utility assets as a system in which, among
other things, the generation and/or flow of current within the
system may be centrally controlled and allocated as need or
economy dictate. [N22 - See UNITIL Corp., HCAR No. 25524 (Apr.
24, 1992).] As discussed above, the transmission assets that
will be transferred to the Transco will be operated in a manner
that satisfies the standard of economic and coordinated
operations in Section 2(a)(29)(A) of the Act. Moreover, the
proposed transaction is expected to result in greater
coordination and more efficient allocation of the provision of
transmission services within the area served by the Transco.
(c) Single Area or Region
The "single integratedd system" of the Transco will
initially be the central and eastern portions of the State of
Wisconsin and small adjacent areas of the Michigan Upper
Peninsula and Illinois. Through the membership of additional
transmission-owning-utilities, the Transco's system may grow to
include other parts of Wisconsin and portions of other
Midwestern states.
(d) Localized Management, Efficient Operation and
Effective Regulation
The creation of the Transco will not impair localized
management, efficient operation or effective regulation by
reason of its size. Moreover, the Commission's past decisions
on "localized management" show that the proposed transaction
fully preserves the advantages of localized management. In such
cases, the Commission has evaluated localized management in
terms of:
(1) responsiveness to local needs [N23 - See American
Electric Power Co., HCAR No. 20633 (July 31,
1978) (advantages of localized management
evaluated in terms of whether an enlarged system
could be "responsive to local needs"); General
Public Utilities Corp., 37 S.E.C. 28, 36 (1956)
(localized management evaluated in terms of
"local problems and matters involving relations
with consumers").];
(2) whether management and directors were drawn from
local utilities [N24 - See Centerior Energy
Corp., HCAR No. 24073 (April 29, 1986)
(advantages of localized management would not be
compromised by the affiliation of two electric
utilities under a new holding company because the
new holding company's "management [would be]
drawn from the present management" of the two
utilities)];
(3) the preservation of corporate identities [N25 -
See Northeast Utilities, HCAR No. 25221 (December
21, 1990) (utilities "will be maintained as
separate New Hampshire corporations ...
[t]herefore the advantages of localized
management will be preserved"); Columbia Gas
System, Inc., HCAR No. 24599 (March 15, 1988)
(benefits of local management maintained where
the utility to be added would be a separate
subsidiary).]; and
(4) the ease of communications [N26 - See American
Electric Power Co., HCAR No. 20633 (July 21,
1978) (distance of corporate headquarters from
local management was a "less important factor in
determining what is in the public interest" given
the "present-day ease of communication and
transportation")].
These elements will all be satisfied here. The Transco is
being created in response to local needs. The Wisconsin
Legislature has determined that the Transco will improve
electric service in Wisconsin. Each local utility (except
Edison Sault and South Beloit) will elect one director to the
Corporate Manager's Board of Directors. Each Member Utility
will continue to exist after the transmission assets are
transferred to the Transco. Finally, communication between the
Transco and its members will flow easily. [N27 - In addition,
under the Transco Legislation, the Transco and/or the Midwest
ISO are obligated, to the maximum extent practicable, to
"eliminate[] advantages in electric generation, wholesale and
retail markets that are otherwise related to ownership, control
or operation of transmission facilities" and "[s]atisf[y] the
reasonable needs of transmission users in this state for
reliable, low-cost and competitively priced electric service."
Wis. Stat. Sec. 196.485(3)(c).]
3. Section 10(f)
Section 10(f) provides that:
the Commission shall not approve any acquisition as to
which an application is made under this section unless
it appears to the satisfaction of the Commission that
such State laws as may apply in respect of such
acquisition have been complied with, except where the
Commission finds that compliance with such State laws
would be detrimental to the carrying out of the
provisions of Section 11.
As discussed above, the Transco is being created pursuant to,
and in accordance with, Wisconsin law. As already discussed,
Wisconsin law provides an incentive for Wisconsin public utility
holding companies to transfer their transmission assets to a
single-purpose transmission company such as the Transco will be.
The Wisconsin Transco Legislation also facilitates and regulates
the proposed transaction. As described below, the transaction
requires the approval of the Wisconsin Commission. Thus, the
requirements of Section 10(f) are satisfied.
ITEM 4: REGULATORY APPROVALS
On July 31, 2000, the Transco filed an application with the
FERC seeking approval of the Transco OATT, and on September 8,
2000, MGE filed an application with FERC under sec. 203 of the
Federal Power Act for approval to contribute its transmission
facilities to the ATC. (Docket No. EC00-136-000.) In addition,
the Wisconsin Commission must approve certain aspects of the
transactions contemplated herein. To receive those approvals,
the ATC and the member utilities filed an application to the
Wisconsin Commission on August 18, 2000. (Docket No.
137-NC-100.) No other state or other federal agency has
jurisdiction in this matter concerning MGE's contributions to
the Transco.
ITEM 5: PROCEDURE
The Commission is requested to publish a notice under Rule
23 with respect to the filing of this Application/Declaration as
soon as practicable. MGE requests that the Commission's Order
be issued as soon as practicable after the notice period and in
any event not later than December 1, 2000 in order to
accommodate a closing before December 15, 2000. This will
facilitate the Member Utilities' meeting the January 1, 2001
deadline contemplated by the Transco Legislation for the
commencement of Transco operations and the timely completion of
the transmission asset transfers that are required in order for
the Wisconsin public utility holding companies to qualify for
relief from the Wisconsin non-utility asset cap limit.
MGE further requests 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
waives a recommended decision by a hearing officer or any other
responsible officer of the Commission, and consents 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
A. Exhibits
A-1 Form of Articles of Organization of the Transco. - -
Incorporated by reference to Alliant Energy SEC File
No. 70-9695.
A-2 Form of Operating Agreement of the Transco. - -
Incorporated by reference to Alliant Energy SEC File
No. 70-9695.
A-3 Form of Articles of Incorporation of the Corporate
Manager. - - Incorporated by reference to Alliant
Energy SEC File No. 70-9695.
A-4 Form of Bylaws of the Corporate Manager. - -
Incorporated by reference to Alliant Energy SEC File
No. 70-9695.
B-1 Form of O&M Agreements.*
B-2 Form of Services Agreements.*
B-3 Form of System Operating Agreement.*
B-4 Form of Agency Agreement.*
C Not Applicable.
D-1 Application of MGE to FERC under sec. 203 of the
Federal Power Act.
D-2 Order of FERC regarding MGE Application.*
D-3 Comprehensive Application for Commission Approvals
Required For the Formation and Operation of the
Transmission Company, American Transmission Company
LLC, ATC Management, Inc., Wisconsin Electric Power
Company, Wisconsin Public Power, Inc., Wisconsin Power
and Light Company, Wisconsin Public Service
Corporation, Madison Gas and Electric Company.
D-4 Order of Public Service Commission of Wisconsin
regarding MGE Compliance Filing in Docket No. 05-EI-
119.*
D-5 Compliance Filing of MGE to Public Service Commission
of Wisconsin pursuant to its Order of July 13, 2000 in
Docket No. 05-EI-119.
D-6 Application of the Transco to FERC under sec. 205 of
the Federal Power Act.*
D-7 Order of FERC regarding Transco Application.*
E Interconnection Map -- to be incorporated by reference
or filed pursuant to Form SE*
F-1 Preliminary Opinion of Counsel.*
F-2 Past-tense Opinion of Counsel.*
G Not applicable.
H Form of Notice.
I Description and valuation of transferred assets.*
* To be filed by amendment.
B. Financial Statements.
1.1 Balance Sheet of MGE and consolidated
subsidiaries, as of June 30, 2000 (incorporated
by reference to the Quarterly Report on Form 10-Q
of MGE for the quarter ended June 30, 2000) (File
No. 0-1125).
1.2 Statement of Income of MGE and consolidated
subsidiaries for the six months ended June 30,
2000 (incorporated by reference to the Quarterly
Report on Form 10-Q of MGE for the quarter ended
June 30, 2000) (File No. 0-1125).
1.3 Balance Sheet of MGE as of June 30, 2000
(incorporated by reference to the Quarterly
Report on Form 10-Q of MGE for the quarter ended
June 30, 2000) (File No. 0-1125).
1.4 Statement of Income of MGE for the period ended
June 30, 2000 (incorporated by reference to the
Quarterly Report on Form 10-Q of MGE for the six
months ended June 30, 2000) (File No. 0-1125).
ITEM 7: INFORMATION AS TO ENVIRONMENTAL EFFECTS
None of the matters that are the subject of this
Application/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/Declaration will not result in changes in
the operation of MGE that will have an impact on the
environment.
MGE is 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/Declaration.
SIGNATURE
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, MGE has duly caused this statement to be
signed on its behalf by the undersigned thereunto duly
authorized.
MADISON GAS AND ELECTRIC COMPANY
By: Mark C. Williamson
Mark C. Williamson
Executive Vice President and
Chief Strategic Officer
Dated: November 2, 2000
