File No. 70-_____
As filed with the Securities and Exchange Commission on October 15, 1999
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM U-1 APPLICATION-DECLARATION
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APPLICATION-DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
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Dominion Resources, Inc. Consolidated Natural Gas
120 Tredegar Street Company
Richmond, VA 23219 CNG Tower, 625 Liberty Avenue
Pittsburgh, PA 15222
(Name of company filing this statement and
address of principal executive offices)
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Dominion Resources, Inc. Consolidated Natural Gas
Company
(Name of top registered holding company
parent of each applicant or declarant)
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James F. Stutts Stephen E. Williams
Vice President and Senior Vice President and
General Counsel General Counsel
Dominion Resources, Inc. Consolidated Natural Gas
120 Tredegar Street Company
Richmond, VA 23219 CNG Tower, 625 Liberty Avenue
Pittsburgh, PA 15222
(Name and address of agent for service)
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<PAGE>
The Commission is also requested to send
copies of any communication in connection with
this matter to:
Norbert F. Chandler, Esq.
General Attorney & Assistant Secretary
Consolidated Natural Gas Company
CNG Tower, 625 Liberty Street
Pittsburgh, PA 15222
<PAGE>
APPLICATION-DECLARATION
UNDER
SECTIONS 6(a), 7, 9(a), 10, 32 and 33
AND
RULES 53 and 54
OF
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
FOR APPROVAL OF
ISSUANCE OF SECURITIES, GUARANTEES AND CREDIT SUPPORT
IN CONNECTION WITH INVESTMENT IN
EXEMPT WHOLESALE GENERATORS
AND
FOREIGN UTILITY COMPANIES
Item 1. Description of Proposed Transactions.
This Application-Declaration is submitted in connection with the
proposed merger of Dominion Resources, Inc., a Virginia corporation and
currently a holding company exempt from the registration requirements of the
Public Utility Holding Company Act of 1935 (the "1935 Act") pursuant to Section
3(a)(1) thereof and Rule 2 thereunder ("DRI"), and Consolidated Natural Gas
Company, a Delaware corporation and a registered holding company under the 1935
Act ("CNG"), pursuant to the Amended and Restated Agreement and Plan of Merger
dated as of May 11, 1999 (the "Merger Agreement"). After entering into an
initial Agreement and Plan of Merger dated as of February 19, 1999, as amended
and restated as of March 31, 1999, the Boards of Directors of DRI and CNG
approved a revised structure for their merger following CNG's receipt of an
unsolicited offer from a third party. The companies negotiated a revised merger
agreement and entered into the revised merger agreement as of May 11, 1999. In
this Application, any references to the Merger Agreement refer to the revised
merger agreement entered into as of May 11, 1999 unless otherwise noted.
The Merger Agreement contemplates a two-step merger transaction. In
the first step, a wholly owned subsidiary of DRI ("SPV") will merge (the "First
Merger") with and into DRI in a transaction in which DRI will be the surviving
corporation. The First Merger and the issuance of shares of DRI common stock to
DRI shareholders in connection therewith do not require Commission approval
under the 1935 Act. In the second step, CNG will either merge (the "Second
Merger") (i) with and into another wholly owned subsidiary of DRI ("CNG
Acquisition") in a transaction in which CNG Acquisition will be the surviving
corporation (which is the preferred structure for the Second Merger) or (ii)
with and into DRI in a transaction in which DRI will be the surviving
corporation (the alternative structure for the Second Merger). The Second Merger
is the subject of the Application of DRI and CNG on Form U-1 (File No. 70-09477)
previously filed with the Commission (the "Merger
<PAGE>
Application"), and which is hereby incorporated by reference herein. The First
and the Second Merger are each conditioned on the other occurring. The First
Merger and the Second Merger are herein together referred to as the "Merger". As
a result of the Merger and the other transactions contemplated by the Merger
Agreement (collectively, irrespective of the transaction structure actually
implemented, the "Transaction"), CNG will cease to exist and either CNG
Acquisition, as the successor in interest to CNG, will become a direct
subsidiary of DRI or each of CNG's four public utility subsidiaries will become
direct subsidiaries of DRI. As a result of the Merger, CNG's non-utility
subsidiaries will each become direct or indirect subsidiaries of CNG Acquisition
or DRI, as the case may be. Following completion of the Merger, irrespective of
the transaction structure actually implemented, DRI and, if applicable, CNG
Acquisition will register as a holding company pursuant to Section 5 of the 1935
Act. A more fulsome description of the Merger and the other transactions
contemplated by the Merger Agreement is contained in the Merger Application.
DRI and CNG have also filed with the Commission a separate
Application-Declaration on Form U-1 (File No. 70-09517) with respect to their
ongoing financing activities, both as they relate to the financing of the Merger
and as to their ongoing financing needs and which is hereby incorporated by
reference herein.
This Application-Declaration seeks authorization and approval of the
Commission with respect to the issuance of securities, guarantees and credit
support in connection with DRI's and CNG's investment in exempt wholesale
generators ("EWGs") under Section 32 of the Act and foreign utility companies
("FUCOs") under Section 33 of the Act. Specifically, this
Application-Declaration seeks authorization and approval of the Commission under
Sections 9(a), 10, 32 and 33 and Rules 53 and 54 for DRI and CNG to invest up to
100% of consolidated retained earnings in EWGs and FUCOs all as more
specifically described below.
Each of DRI and CNG today holds investments in various EWGs and
FUCOs. DRI's specific EWG investments are described in detail in DRI's Exemption
Statement on Form U-3A-2 for the fiscal year ended December 31, 1998 and filed
with the Commission in File No. 69-278. Such Exemption Statement on Form U-3A-2
is hereby incorporated by reference herein. CNG's specific EWG and FUCO
investments are described below and are also described in more detail in CNG's
Annual Report on Form U5S for the fiscal year ended December 31, 1998 and filed
with the Commission in File No. 30-203. Such Annual Report on Form U5S is hereby
incorporated by reference herein. On a pro forma consolidated basis at December
31, 1998, DRI and CNG together have invested $918,700,000 in EWGs and FUCOs
which represents 32% of pro forma consolidated retained earnings at December 31,
1998. However, in order to obtain the cash required in connection with the
Merger and in order to focus DRI's efforts on achieving its MAIN to Maine
strategy, DRI has announced its intention to divest its interests in non-U.S.
EWGs and FUCOs and other non-core assets not consistent with its MAIN to Maine
Strategy. In that connection, DRI has already entered into an agreement with
Duke Energy International, a subsidiary of Duke Energy Corporation
<PAGE>
pursuant to which DRI has agreed to sell to Duke all of DRI's interest in its
Latin American projects. DRI anticipates that it will utilize the proceeds of
such divestitures to repay short-term indebtedness incurred to finance the
Merger.
To date DRI's EWG and FUCO investments have been primarily non-U.S.
enterprises. However, while DRI anticipates that it will continue to explore
non-U.S. investment opportunities and will continue to acquire interests in
non-U.S. EWGs and FUCOs, DRI also anticipates that its investment in U.S. EWGs
will increase substantially over the next several years.1 The principal reason
for this anticipated increase is DRI's announced intention to build new
independent power plants as well as DRI's desire to purchase existing generating
facilities which may be sold as a result of the ongoing restructuring of the
U.S. utility industry which has resulted in the enactment of state laws
mandating separation and/or divestiture of generation by vertically integrated
utilities. Often, newly constructed generation facilities and divested
generation facilities will not satisfy the criteria for designation as
qualifying facilities ("QFs") under the Public Utility Regulatory Policy Act of
1978 and, thus, if they are to be acquired by independent (i.e., non-utility
generation or out-of-region competitors) energy providers, they must be
designated as EWGs. Failure to obtain QF or EWG status for these newly
constructed and divested generation facilities would raise difficult issues
under the 1935 Act because, in the absence of the 1935 Act exemption for QFs and
EWGs, most independent acquirors of these assets could not satisfy the
integration requirements of the 1935 Act with respect to the acquisition of
non-exempt assets or continue to own and operate the assets as part of a
registered system. Finally, pursuant to Virginia restructuring legislation,
DRI's principal electric utility subsidiary, Virginia Electric and Power Company
("Virginia Power"), has been mandated to separate its generation activities from
its retail distribution activities. Thus, as described in the Press Release
dated April 19, 1999 and annexed hereto as Exhibit B- 1, Virginia Power will
undertake the functional separation of Virginia Power's generation assets. It is
possible that these assets will be contributed to a new subsidiary of DRI which
may seek to qualify as an EWG ("Genco").
For the foregoing reasons and to enable DRI to compete effectively
in the independent generation market, DRI hereby requests authorization,
following completion of the Merger and for purposes of Rule 53, to invest up to
100% of its consolidated retained earnings in EWGs and FUCOs. The EWGs and FUCOs
may be held, and the investments may be made, directly, or indirectly through
intermediate companies, partnerships or other corporate entities. DRI hereby
also requests Commission authorization to exclude from the calculation of
aggregate investment in EWGs and FUCOs for purposes of Rule 53 the amount of the
initial investment attributable to Genco as a result of the above described
functional
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(1) DRI's independent energy subsidiary, Dominion Energy, Inc., has
already entered into an engagement letter to finance approximately $825,000,000
for the construction and leasing of gas turbines to be installed in new domestic
generation facilities which are likely to qualify as EWGs. DRI recognizes that
any amounts invested in EWGs under this arrangement prior to and after the
Merger will count towards its overall investment limit in EWGs.
<PAGE>
separation of Virginia Power's generation assets from Virginia Power or, in the
alternative, to increase the amount that DRI may invest in EWGs and FUCOs for
purposes of Rule 53 by the amount of such initial investment attributable to
Genco as a result of the above described functional separation of Virginia
Power's generation assets from Virginia Power.
Item 2. Fees, Commissions and Expenses.
The fees, commissions and expenses to be paid or incurred, directly
or indirectly, in connection with seeking the authorizations herein requested
are estimated as follows:
Fee, Commission or Expense Thousands
Legal Fees and Expenses 25
=======
Total $ 25
Item 3. Applicable Statutory Provisions.
The following sections of the 1935 Act and the Commission's rules
thereunder are or may be directly or indirectly applicable to the proposed
transactions for which authorization is sought in this Application-Declaration.
Section of/Rule under Transactions to which such Section/Rule is or
the 1935 Act may be applicable
Sections 6(a), 7 Issuance of Securities; Incurrence of Indebtedness;
Provision of Guarantees and other Credit Support
Sections 32, 33 Investment in
Rules 53 and 54 EWGs and FUCOs
The Commission has previously recognized that investment in the
domestic utility industry does not pose the same risks that might arise in the
non-U.S. utility industry.
<PAGE>
The Southern Company, Holding Co. Act Release No. 35-26501 (April 1, 1996). From
a business perspective, however, DRI imposes the same level of scrutiny with
respect to U.S. investments as it does with respect to non-U.S. investments.
Every potential investment in independent energy projects undergoes a series of
reviews by project managers responsible for identifying business opportunities,
senior management and the Board of Directors of DEI (the DRI company through
which most of these investments are made) and, in some cases, senior management
and the Board of Directors of DRI.
Investments are evaluated against a number of investment criteria
including (i) economic viability of the project, (ii) political and regulatory
risk, (iii) availability of non-recourse financing on reasonable terms and (iv)
strategic fit within the DRI system.
Economic Viability of the Project. Analysis of the economic
viability of the project includes an analysis of the overall industry
environment in which the project will operate (i.e., progress towards
privatization and/or restructuring, depending on where the project is
located), the ability of the project to produce electricity at or below
long-run marginal costs in the competitive region and the credit
worthiness of potential power purchasers and other project
counterparties.
Political and Regulatory Risk. Analysis of political and regulatory
risks involves careful review of changing political and regulatory
regimes as well as long-term economic stability in the region. This
analysis is a critical component of DRI's investment review as each of
the 50 states and the U.S. Congress consider utility industry
restructuring and has always been a threshold level review in the
analysis of non-U.S. investments. The analysis also includes review of
permitting and environmental risks as well as legal risk associated with
the ability to enforce contracts relating to the project and its
financing.
Non-Recourse Financing. All of DRI's existing independent energy
projects have obtained some of their long-term financing on a
non-recourse basis with, in some cases, limited support from DRI. In most
cases, DRI's involvement is limited to acting as a backstop to support
arrangements provided in the first instance by DEI. It is an essential
element of the investment analysis that DRI have a reasonable degree of
comfort that each project have an ability to obtain a substantial part of
its ongoing financing needs without DRI support except indirectly through
DRI's support of DEI. As is described in DRI's Exemption Statement on
Form U-3A-2 for the fiscal year ended December 31, 1998 and as is further
described above, DRI has had substantial success in limiting its
financial exposure to its independent energy projects.
Strategic Fit. Finally, DRI is particularly sensitive to ensuring
that its independent energy investments contribute to DRI's overall
strategic growth plan building upon DRI's strengths and resources to
achieve broad corporate objectives within budgeting and expenditure
guidelines. Thus, each potential investment must be reviewed and approved
by a number of managers within the DRI system who will focus their review
not only on the questions of whether a particular project satisfies DRI's
investment criteria and is reasonably anticipated to generate earnings
commensurate with risk, but also on the question of whether the project
is likely to aid in achieving DRI's long-term overall strategic
objectives.
<PAGE>
With respect to disaggregated electric generation assets of Virginia
Power, the rationale for excluding investment in these assets from the Rule 53
calculation is as follows:
I. The separation of Virginia Power's generation assets from its
retail distribution activities is mandated by Virginia law.
Virginia, like many other states, has recently adopted
electric restructuring legislation requiring a transition to
retail competition. A retail distribution company's retention
of control over generation assets is inconsistent with this
legislative goal. As discussed above, functional separation of
generation supply from the retail distribution function is an
essential element of most state restructuring initiatives.
II. DRI will be making no new investment in Genco in connection
with the initial transfer of Virginia Power's generation
assets to Genco. Thus, DRI will not, as a result of such
transfer, be increasing its exposure to new EWG investment
such as would result from the acquisition of new generation
assets for cash and/or with DRI support. It is possible that
DRI will, after the initial transfers of Virginia Power's
generation assets to Genco, cause Genco to acquire new
generation assets in an expansion of Genco's ongoing business.
Any new investment made by DRI in support of such new
acquisitions would be included in the calculation of DRI's
aggregate investment in EWGs.
III. Rule 53 was adopted prior to the onset of state mandated
generation divestitures in connection with the adoption of
state retail restructuring laws and was not designed or
intended to capture functional disaggregation by registered
holding companies. Rule 53 was adopted pursuant to Section
32(h)(6) of the 1935 Act which required the Commission to
promulgate rules relating to registered holding companies'
financing support for their affiliate EWGs and the
circumstances under which such financing support could have a
"substantial adverse impact" on the "financial integrity" of a
registered system. Neither Rule 53 nor Section 32 was designed
or intended to penalize registered holding companies for their
compliance with state- mandated disaggregation laws because
such laws and the results of disaggregation were not
contemplated when Section 32 was enacted or when Rule 53 was
adopted. As discussed above, the alternative of not
designating disaggregated generation assets as EWGs raises
even greater issues under the 1935 Act. First, failure to
obtain EWG exemption for such assets would necessitate prior
Commission approval of the disaggregation transaction under
Section 9(a)(1) as the creation of a Genco would constitute
the acquisition of a separate "public utility company" for
purposes of Section 9(a)(1). Second, serious questions are
<PAGE>
raised as to whether the Commission could approve such a
transaction given the integration requirements of the 1935
Act. Pursuant to Section 32(k) of the 1935 Act, an electric
utility company is prohibited from entering into a contract to
purchase electricity from an EWG which is an affiliate or
associate company unless every state commission with retail
rate jurisdiction over such electric utility company expressly
approves the transaction after having made the specific
findings required by Section 32(k)(2). A state which has just
mandated functional separation of generation from retail
distribution for the express purpose of granting choice to
retail customers is unlikely to approve a contract which
effectively takes that choice away. Thus, it would be
virtually impossible for any registered holding company to
demonstrate that its disaggregated generation is integrated
with its disaggregated distribution under current Commission
interpretation of Section 2(a)(29)(A).
For all of the foregoing reasons, it would unfairly and
inappropriately penalize registered holding companies in their ability to
compete for true new EWG investments if the safe harbors contained in Rule 53
were deemed utilized by reason of a registered holding company effecting a
disaggregation transaction in which functionally separated generation assets are
designated as EWGs.
Item 4. Regulatory Approvals.
No other regulatory commission has jurisdiction over the
transactions for which authority is sought herein. DRI and CNG note, however,
that Virginia Natural Gas, Inc., a wholly-owned subsidiary of CNG, is a public
utility subject to regulation by the Virginia State Corporation Commission. DRI
and CNG are obligated to divest their interest in Virginia Natural Gas, Inc.
following completion of the Merger. Hope Gas, Inc., a wholly-owned subsidiary of
CNG, is a public utility subject to regulation by the West Virginia Public
Service Commission. Virginia Electric and Power Company, a wholly-owned
subsidiary of DRI, is a public utility subject to regulation by the Virginia
State Corporation Commission and the North Carolina Utilities Commission. The
Peoples Natural Gas Company, a wholly-owned subsidiary of CNG, is a public
utility subject to regulation by the Pennsylvania Public Utility
<PAGE>
Commission. The East Ohio Gas Company, a wholly-owned subsidiary of CNG, is a
public utility subject to regulation by the Public Utilities Commission of Ohio.
Item 5. Procedure.
The Commission is respectfully requested to issue and publish, not
later than October 15, 1999, the requisite notice under Rule 23, with respect to
the filing of this Application-Declaration, such notice to specify a date not
later than November 9, 1999 by which comments may be entered and a date not
later than November 10, 1999 as the date after which an order of the Commission
granting and permitting this Application-Declaration to become effective may be
entered by the Commission.
It is submitted that a recommended decision by a hearing or other
responsible officer of the Commission is not needed for approval of the
Transaction. The Division of Investment Management may assist in the preparation
of the Commission's decision. There should be no waiting period between the
issuance of the Commission's order and the date on which it is to become
effective.
Item 6. Exhibits and Financial Statements.
A-1 Application-Declaration on Form U-1 filed by DRI and CNG seeking authority
for the Merger. (File No. 70-09477 and incorporated by reference herein)
A-2 Application-Declaration on Form U-1 filed by DRI and CNG seeking authority
for various financing transactions. (File No. 70-09517 and incorporated by
reference herein)
B-1 Press Release issued by DRI re Virginia Power restructuring. (Filed in
paper format on Form SE)
B-2 DRI Exemption Statement on Form U-3A-2 for the fiscal year ended December
31, 1998. (File No. 69-278 and incorporated by reference herein)
C-1 CNG Annual Report on Form U5S for the fiscal year ended December 31, 1998.
(File No. 30-203 and incorporated by reference herein)
D Form of Notice.
<PAGE>
Item 7. Information as to Environmental Effects.
The Transaction neither involves a "major federal action" nor
"significantly affects the quality of the human environment" as those terms are
used in Section 10(2)(C) of the National Environmental Policy Act, 42 U.S.C.
Section 4321, et seq. The only federal actions related to the Transaction
pertain to the Commission's approval of this Application-Declaration under the
1935 Act and the Commission's clearance and declaration of the effectiveness of
the Joint Proxy and Registration Statement of DRI and CNG on Form S-4 pursuant
to the Securities Exchange Act of 1934 and the other approvals and actions
described in Item 4 of this Application-Declaration. Consummation of the
Transaction will not result in changes in the operations of DRI, CNG or any of
their respective subsidiaries that would have any impact on the environment. No
federal agency is preparing an environmental impact statement with respect to
this matter.
<PAGE>
Pursuant to the Public Utility Holding Company Act of 1935, each of
the undersigned companies has caused this Application-Declaration to be signed
on its behalf by the undersigned thereunto duly authorized.
DOMINION RESOURCES, INC. CONSOLIDATED NATURAL GAS COMPANY
By: /s/ James F. Stutts By: /s/ Stephen E. William
---------------------------- -----------------------------
Name: James F. Stutts Name: Stephen E. Williams
Title: Vice President and Title: Senior Vice President and
General Counsel General Counsel
Date: October 15, 1999 Date: October 15, 1999
EXHIBIT D
UNITED STATES OF AMERICA
before the
SECURITIES AND EXCHANGECOMMISSION
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Release No. / , 1999
- - - - - - - - - - - - - - - - - - -
)
In the Matter of )
)
Dominion Resources, Inc. )
120 Tredegar Street )
Richmond, VA 23219 )
)
and )
)
Consolidated Natural Gas Company )
CNG Tower, 625 Liberty Avenue )
Pittsburgh, PA 15222 )
)
(70 - _____) )
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Dominion Resources, Inc., a Virginia corporation and currently a
holding company exempt from the registration requirements of the Public Utility
Holding Company Act of 1935 (the "Act") pursuant to Section 3(a)(1) thereof and
Rule 2 thereunder ("DRI"), and Consolidated Natural Gas Company, a Delaware
corporation and a registered holding company under the Act ("CNG"), have entered
into an Amended and Restated Agreement and Plan of Merger dated as of May 11,
1999 (the "Merger Agreement"). DRI and CNG have filed an application on Form U-1
under the Act seeking authorization to invest up to 100% of consolidated
retained earnings in exempt wholesale generators ("EWGs") under Section 32 of
the Act and foreign utility companies ("FUCOs") under Section 33 of the Act.
Each of DRI and CNG today holds investments in various EWGs and
FUCOs. DRI's specific EWG investments are described in detail in DRI's Exemption
Statement on Form U-3A-2 for the fiscal year ended December 31, 1998 and filed
with the Commission in File No. 69-278. Such Exemption Statement on Form U-3A-2
is hereby incorporated by reference herein. CNG's specific EWG and FUCO
investments are described below and are also described in more detail in CNG's
Annual Report on Form U5S for the fiscal year ended December 31, 1998 and filed
with the Commission in File No. 30-203. Such Annual Report on Form U5S is hereby
incorporated by reference herein. On a pro forma consolidated basis
<PAGE>
at December 31, 1998, DRI and CNG together have invested $918,700,000 in EWGs
and FUCOs which represents 32% of pro forma consolidated retained earnings at
December 31, 1998. However, in order to obtain the cash required in connection
with the Merger and in order to focus DRI's efforts on achieving its MAIN to
Maine strategy, DRI has announced its intention to divest its interests (and the
interests it will acquire from CNG) in non-U.S. EWGs and FUCOs. In that
connection, DRI has already entered into an agreement with [Duke] pursuant to
which DRI has agreed to sell to Duke all of DRI's interest in its Latin American
projects. DRI anticipates that it will utilize the proceeds of such divestitures
to repay short-term indebtedness incurred to finance the Merger.
To date DRI's and CNG's EWG and FUCO investments have been primarily
non-U.S. enterprises as most of their U.S. independent energy projects have
either qualified for "qualifying facility" ("QF") status under the Public
Utility Regulatory Policies Act of 1978 ("PURPA") or have not been
jurisdictional businesses under the 1935 Act (e.g., CNG's investment in the
Iroquois interstate gas pipeline). However, while DRI anticipates that it will
continue to explore non-U.S. investment opportunities and will continue to
acquire interests in non-U.S. EWGs and FUCOs, DRI also anticipates that its
investment in U.S. EWGs will increase substantially over the next several years.
The principal reason for this anticipated increase is DRI's announced intention
to build new independent power plants as well as DRI's desire to purchase
existing generating facilities which may be sold as a result of the ongoing
restructuring of the U.S. utility industry which has resulted in the enactment
of state laws mandating separation and/or divestiture of generation by
vertically integrated utilities. Often, newly constructed generation facilities
and divested generation facilities will not satisfy the criteria for designation
as QFs and, thus, if they are to be acquired by independent (i.e., non-utility
generation or out-of-region competitors) energy providers, they must be
designated as EWGs. Failure to obtain QF or EWG status for these newly
constructed and divested generation facilities would raise difficult issues
under the 1935 Act because, in the absence of the 1935 Act exemption for QFs and
EWGs, most independent acquirors of these assets could not satisfy the
integration requirements of the 1935 Act with respect to the acquisition of
non-exempt assets or continue to own and operate the assets as part of a
registered system. Finally, pursuant to Virginia restructuring legislation,
DRI's principal electric utility subsidiary, Virginia Electric and Power Company
("Virginia Power"), has been mandated to separate its generation activities from
its retail distribution activities. Thus, Virginia Power will undertake the
functional separation of Virginia Power's generation assets. It is possible that
these assets will be contributed to a new subsidiary of DRI which may seek to
qualify as an EWG ("Genco").
For the foregoing reasons and to enable DRI to compete effectively
in the independent generation market, DRI has requested authorization, following
completion of the Merger and for purposes of Rule 53, to invest up to 100% of
consolidated retained earnings in EWGs and FUCOs. DRI has also requested
Commission authorization to exclude from the calculation of aggregate investment
in EWGs and FUCOs for purposes of Rule 53 the amount of the initial investment
attributable to Genco as a result of the above described functional separation
of Virginia Power's generation assets from Virginia Power or, in the
alternative, to increase the amount that DRI may invest in EWGs and FUCOs for
purposes of Rule 53 by the
<PAGE>
amount of such initial investment attributable to Genco as a result of the above
described functional separation of Virginia Power's generation assets from
Virginia Power.
DRI, a diversified utility holding company, has its principal office
at 120 Tredegar Street, Richmond, Virginia 23219, telephone (804) 819-2000.
DRI's common stock is listed on the New York Stock Exchange. DRI's principal
subsidiary is Virginia Electric and Power Company ("Virginia Power"), a
regulated public utility engaged in the generation, transmission, distribution
and sale of electric energy. The primary service area of Virginia Power is in
Virginia and northeastern North Carolina. DRI's other major subsidiaries are
Dominion Energy, Inc., an independent power and natural gas subsidiary, and
Dominion Capital, Inc., a diversified financial services company. DRI was
incorporated in 1983 as a Virginia corporation. DRI and its subsidiaries had
11,033 full-time employees as of December 31, 1998. DRI is currently exempt from
registration as a holding company under the Act. DRI also owns and operates a
365 Mw natural gas fired generating facility in the United Kingdom.
CNG is a Delaware corporation organized on July 21, 1942, and a
public utility holding company registered under the 1935 Act. CNG's common stock
is listed on the New York Stock Exchange. CNG is engaged solely in the business
of owning and holding all of the outstanding equity securities of nineteen
directly owned subsidiary companies. CNG and its subsidiaries are engaged in all
phases of the natural gas business: distribution, transmission, storage and
exploration and production.
The Application and any amendments thereto are available for public
inspection through the Commission's Office of Public Reference. Interested
persons wishing to comment or request a hearing should submit their views in
writing by October 26, 1999, to the Secretary, Securities and Exchange
Commission, Washington, D.C. 20549, and serve a copy on AES at the address
specified above. Proof of service (by affidavit or, in case of an attorney at
law, by certificate) should be filed with the request. Any request for hearing
shall identify specifically the issues of fact or law that are disputed. A
person who so requests will be notified of any hearing, if ordered, and will
receive a copy of any notice or order issued in the manner. After said date, the
Application, as filed or as amended, may be granted and/or permitted to become
effective.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
