File No. _________
As filed with the Securities and Exchange Commission
on December 21, 2000
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM U-1 APPLICATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Dominion Resources, Inc.
120 Tredegar Street
Richmond, VA 23219
Virginia Electric and Power Company
120 Tredegar Street
Richmond, VA 23219
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(Name of companies filing this statement and
Addresses of principal executive offices)
Dominion Resources, Inc.
(Name of top registered holding company
parent of each applicant or declarant)
James F. Stutts
Vice President and
General Counsel
Dominion Resources, Inc.
120 Tredegar Street
Richmond, VA 23219
---------------------------------
(Name and address of agent for service)
The Commission is also requested to send
copies of any communications in connection with
this matter to:
Rudolph Bumgardner, IV
Dominion Resources Services, Inc.
120 Tredegar Street
Richmond, VA 23219
Tia S. Barancik
Thomas B. Reems
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
125 West 55th Street
New York, NY 10019
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TABLE OF CONTENTS
Item 1. Description of Proposed Transaction................................1
A. Introduction.................................................1
1. General Request.......................................1
2. Description of the Transaction........................1
3. Description of Generation Facilities..................2
4. Operation of the Generation Facilities
after Close of the Transaction.....................3
B. Description of the Parties to the Transaction............3
1. DRI and Virginia Power...............................3
2. Sellers..............................................4
Item 2. Fees, Commissions and Expenses.....................................5
Item 3. Applicable Statutory Provisions....................................5
A. Approval of the Transaction..................................6
1. Section 10(b)(1)......................................6
a. Interlocking Relationships...................6
b. Concentration of Control.....................6
2. Section 10(b)(2)......................................7
a. Fairness of Consideration.....................7
b. Reasonableness of Fees........................8
3. Section 10(b)(3)......................................8
4. Section 10(c)(1)......................................8
a. Section 8 Analysis.............................8
b. Section 11 Analysis............................9
5. Section 10(c)(2).....................................10
6. Section 10(f)........................................10
Item 4. Regulatory Approvals..............................................10
Item 5. Procedure.........................................................11
Item 6. Exhibits and Financial Statements.................................11
A. Exhibits....................................................11
B. Financial Statements........................................12
Item 7. Information as to Environmental Effects...........................12
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Item 1. Description of Proposed Transaction.
A. Introduction.
Virginia Electric and Power Company (the "Company"), an electric utility
company and wholly owned subsidiary of Dominion Resources Inc. ("DRI"), a
registered holding company under the Public Utility Holding Company Act of 1935,
as amended ("Act" or "1935 Act") has entered into a Put and Call Agreement dated
November 22, 2000 ("Put and Call Agreement") with Westpower-Franklin, L.P., a
Virginia limited partnership, LG&E Southhampton, L.P., a California limited
partnership, LG&E Power 11 Incorporated, a California corporation, Westpower -
Altavista, L.P., a Virginia limited partnership, LG&E Altavista, L.P., a
California limited partnership, LG&E Power 12 Incorporated, a California
corporation, Westpower-Hopewell, L.P., a Virginia limited partnership, LG&E
Hopewell, L.P., a California limited partnership, and LG&E Power 13
Incorporated, a California corporation (collectively "Sellers"). Sellers own all
of the partnership interests in three California general partnerships: LG&E -
Westmoreland Southampton ("Southampton"), LG&E - Westmoreland Altavista
("Altavista") and LG&E - Westmoreland Hopewell ("Hopewell") (collectively
"Partnerships") which own and operate three separate generation plants located
in Virginia (collectively "Generation Facilities"). Under the Put and Call
Agreement the Company may obtain all of Sellers' interests in the Partnerships,
as described herein. When the Company acquires the Sellers' interests in the
Partnerships, as envisioned by the Put and Call Agreement, the Partnerships will
dissolve as a matter of law at the closing, and the Company will directly hold
title to the Generation Facilities.
The Company currently purchases from the Partnerships energy and capacity
generated by the Generation Facilities pursuant to three long-term contracts at
a price that is higher than existing and anticipated market rates. To reduce its
costs, the Company seeks to acquire the Generation Facilities by purchasing
Sellers' interests in the Partnerships as described in the Put and Call
Agreement.
1. General Request.
Pursuant to Sections 9(a)(1), 10 and 11(b) of the 1935 Act, the Company and
DRI (collectively "Applicants") request authorization and approval of the
Securities and Exchange Commission ("Commission") to acquire the Sellers'
interest in the Partnerships as described in this application ("Application").
When the Company acquires the Sellers' interests in the Partnerships, the
Partnerships will dissolve as a matter of law at the closing, and the Company
will directly hold title to the Generation Facilities. Thus the Transaction is
in effect an asset acquisition.
2. Description of the Transaction.
Under the Put and Call Agreement, the Company grants Sellers an absolute
right and option to require the Company to purchase and accept the transfer of
Sellers' interests in the Partnerships (the "Put"). The Put is exercisable by
Sellers at any time from and after January 5, 2001 and before September 30,
2001. The Sellers also grant to the Company an absolute and exclusive right and
option to require Sellers to sell and transfer to the Company Sellers' interests
in the Partnerships (the "Call"). The Call may be exercised by the Company at
any time on or after March 1, 2001 and before September 30, 2001. Thus via
either the Put or the Call, the Company may acquire all of the Sellers'
interests
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in the Partnerships ("Transaction"). Upon the Company's purchase of Sellers'
interest in the Partnerships, the Partnerships will dissolve by operation of
California law and title to the Generation Facilities will become vested in the
Company. See Cal. Corporate Code Sections 16101(7) and 16302(d). Accordingly,
the Company is, in effect, purchasing the Generation Facilities.
The Sellers will receive approximately $206 million in consideration in
exchange for their partnership interests. The Company will initially finance the
Transaction through commercial paper issuances, which at some later date, and
possibly combined with other outstanding commercial paper may be refinanced with
long-term debt under currently approved issuance authority. The Company received
authorization to issue securities in an amount sufficient to cover the costs of
the Transaction from the Virginia State Corporation Commission ("Virginia
Commission") (PUF 000016, May 26, 2000), which order was registered with the
Commission on June 8, 2000 (SEC File No. 333-38510). Accordingly, all financings
for the Transaction will be accomplished in compliance with Rule 52.
3. Description of Generation Facilities.
The Generation Facilities are currently both "Qualifying Facilities" under
the Public Utility Regulatory Policies Act of 1978, ("PURPA") as amended, and
"Exempt Wholesale Generators" under the 1935 Act.
The first facility, LG&E - Westmoreland Southampton ("Southampton"), is
located in Southampton County, Virginia and is a stoker coal-fired cogeneration
facility with a maximum net power production capacity of 62.7 MW and related
interconnection facilities. It is interconnected with the Company at the high
voltage (115kV) side of Southampton's main step-up transformer. Southampton
currently sells capacity and associated energy at wholesale to the Company.
The second facility, LG&E Westmoreland Altavista ("Altavista") is located
in Altavista, Virginia and is a stoker coal-fired cogeneration facility with a
maximum net power production capacity of 62.7 MW and related interconnection
facilities. It is interconnected with the Company at the high voltage (115kV)
side of Altavista's main step-up transformer. Altavista currently sells capacity
and associated energy at wholesale to the Company.
The third facility, LG&E - Westmoreland Hopewell ("Hopewell") is located in
Hopewell, Virginia and is a stoker coal-fired cogeneration facility with a
maximum net power production capacity of 62.7 MW and related interconnection
facilities. It is interconnected with the Company at the high voltage (230 kV)
side of Hopewell's main step-up transformer. Hopewell currently sells capacity
and associated energy at wholesale to the Company.
All three facilities are within the Company's existing service territory.
See Exhibit E.
Consummation of the Transaction will trigger two significant changes in the
legal status of the Generation Facilities. First, because the Company will
wholly own the Generation Facilities, they will no longer meet the definition of
Qualifying Facility under PURPA. Second, because the
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Company will include the Generation Facilities in its rate base, the Generation
Facilities will no longer be EWGs under the 1935 Act.
4. Operation of the Generation Facilities after Close of the Transaction
After the transaction closes, the Generation Facilities will be operated in
the same manner as the rest of the Company's facilities, and their production
will be controlled by the same mechanisms that drive the dispatch of the
Company's other facilities. The same system operator responsible for
coordination and control of the Company's current fleet will also be responsible
for the Generation Facilities. Their dispatch order will be based on their
comparative operating expenses with the rest of the Company's units, and their
capacity and energy will be available for native load needs of Virginia Power.
Virginia has begun implementing electric deregulation, and in compliance
with Virginia law, the Company is in the process of separating generation,
transmission and distribution assets, and will treat the Generation Facilities
in the same manner as existing generation assets.
B. Description of the Parties to the Transaction.
1. DRI and The Company.
As stated earlier, Dominion Resources, Inc. is a Virginia corporation and a
registered public utility holding company under the 1935 Act. DRI, through its
subsidiaries, is engaged in the energy business, principally in retail
electricity and natural gas sales, electric and gas distribution, wholesale
natural gas and electric generation and electricity sales, interstate gas
transportation, and natural gas exploration and production activities.
The principal subsidiaries of DRI are the Company, a regulated public
utility engaged in the generation, transmission, distribution and sale of
electric energy in Virginia and northeastern North Carolina, and Consolidated
Natural Gas Company ("CNG") which is also a registered holding company under the
Act and which, through its subsidiaries is engaged in producing, transporting
and acting as a retail marketer of natural gas serving customers in
Pennsylvania, Ohio, Virginia, West Virginia, New York and other cities focused
in the Northeast and Mid-Atlantic regions of the United States. The Company
recently sold Virginia Natural Gas, Inc., ("VNG") a wholly owned subsidiary of
CNG, to AGL Resources, Inc. DRI is also in the process of divesting Dominion
Capital, Inc., another major subsidiary which is a diversified financial
services company. DRI and all of its subsidiaries are referred to as the "DRI
System."
At and as of the nine months ending September 30, 2000 DRI had total assets
of $29.822 billion, revenues of $6.479 billion, and net income of $330 million.
The Company is a public utility engaged in the generation, transmission,
distribution and sale of electric energy within a 30,000 square-mile area in
Virginia and northeastern North Carolina. The Company operates nuclear, fossil
fuel and hydroelectric generating units with an aggregate capability of
13,635Mw. It supplies energy at retail to approximately two million
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customers and sells electricity at wholesale to rural electric cooperatives,
power marketers and certain municipalities. The Virginia service area comprises
about 65 percent of Virginia's total land area, but accounts for over 80 percent
of its population. In North Carolina, the Company serves retail customers
located in the northeastern region of the state, excluding certain
municipalities. The Company, and/or its subsidiaries, also engage in off-system
wholesale purchases and sales of electricity and purchases and sales of natural
gas, and is developing wholesale trading relationships beyond the geographic
limits of its retail service territory.
2. Sellers.
The Generation Facilities are owned by the Partnerships, which, in turn,
are owned by the Sellers.
Westpower-Franklin, L.P., a Virginia limited partnership, LG&E Southampton,
L.P., a California limited partnership, and LG&E Power 11 Incorporated, a
California corporation, own 30%, 25% and 45% general partnership interests,
respectively, in Southampton. Westpower-Altavista, L.P., a Virginia limited
partnership, LG&E Altavista, L.P., a California limited partnership, and LG&E
Power 12 Incorporated, a California corporation, own 30%, 25% and 45% general
partnership interests, respectively, in Altavista. Westpower-Hopewell, L.P., a
Virginia limited partnership, LG&E Hopewell, L.P., a California limited
partnership, and LG&E Power 13 Incorporated, a California corporation, own 30%,
25% and 45% general partnership interests, respectively, in Hopewell.
The ownership of the Sellers is held, through subsidiaries, by three
intermediate parent entities: Westmoreland Energy, Inc., a Delaware corporation
("Westmoreland Energy"), LG&E Energy Corp., a Kentucky corporation ("LG&E
Energy") and Fourfold Cogeneration Corporation, a Delaware corporation
("Fourfold"). The ownership of the intermediate parent entities is held, through
subsidiaries, by three ultimate parent entities, respectively: Westmoreland Coal
Company, a Delaware corporation ("Westmoreland Coal"), Powergen plc, a public
limited company registered in England and Wales ("Powergen") and Chrysler
Financial Corp., a Michigan corporation ("Chrysler").
Westmoreland Coal, through subsidiaries, is principally engaged in the
production and sale of coal from the Powder River Basin, the ownership of
interests in cogeneration and other non-regulated independent power plants and
the leasing of capacity at a maritime coal storage and vessel loading facility.
Powergen is a registered public utility holding company under the 1935 Act
and is, through its subsidiaries, engaged in the generation and distribution of
electricity, the transportation, marketing and delivery of natural gas and the
development and operation of independent power plants, in the United States, the
United Kingdom and worldwide. Powergen's principal non-United States
subsidiaries include, Powergen Group Holdings ("PGGH"), a foreign utility
company ("FUCO") under the 1935 Act, which owns Powergen International Holdings
Ltd. ("PGIH") and Powergen UK plc ("PGUK").
On December 11, 2000, Powergen completed its acquisition of LG&E Energy, a
public utility holding company exempt from registration under Section 3(a)(1) of
the 1935 Act. LG&E
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Energy has two principal subsidiaries, Louisville Gas and Electric Company, a
Kentucky corporation ("LG&E"), and Kentucky Utilities Company, a Kentucky and
Virginia corporation ("KU"), both of which are public utilities. KU is also a
public utility holding company exempt from registration by order under Section
3(a)(1) of the 1935 Act by reason of its minority ownership interests in
Electric Energy Inc., an Illinois corporation, and Ohio Valley Electric
Corporation, an Ohio corporation, both electric utility companies.
LG&E Energy, through wholly-owned subsidiaries and subsidiaries jointly
owned with Fourfold, indirectly owns a 50% interest in each of the Partnerships.
Fourfold, a subsidiary of Chrysler, through subsidiaries jointly owned with
LG&E Energy, indirectly owns a 20% interest in each of the Partnerships.
Item 2. Fees, Commissions and Expenses.
The fees, commissions and expenses to be paid or incurred, directly or
indirectly, in connection with the Transaction are estimated as follows:
Accountants' Fees 25,000
Legal Fees and Expenses 1,000,000
Investment Bankers' Fees and Expenses 0
Other Fees 996,000
Total 2,021,000
Item 3. Applicable Statutory Provisions.
Sections 9(a)(1), 10 and 11(b) of the 1935 Act and the Commission's rules
thereunder are or may be directly or indirectly applicable to the Transaction.
To the extent that other Sections of the 1935 Act or the Commission's Rules
thereunder are deemed applicable to the Transaction, such Sections and Rules
should be considered to be set forth in Item 3.
Because the Partnerships will dissolve upon closing, the Transaction is in
effect an asset acquisition. The Generation Facilities will be: (1) directly
physically connected to the Company's transmission system; (2) directly owned by
the Company, a public utility company; and (3) within the Company's existing
service territory. Therefore, the Transaction will not create the kind of
disjointed utility system that Congress intended to prohibit when it adopted the
Act. The Company currently purchases all of the electrical capacity and energy
output of the Generation Facilities at prices higher than the current and
expected market price pursuant to 25-year Power Purchase and Operating
Agreements ("PPAs"). By acquiring the Generation Facilities, the Company will
obtain the flexibility to operate them when it is economical to do so rather
than having to dispatch those units at times solely to comply with the terms of
the PPAs. Thus, the proposed system will enable the Company to operate the
Generation Facilities when they produce the greatest economic benefits.
Likewise, should the need for the Generation Facilities cease, the Company will
have the ability to retire or sell them without having to continue to pay the
capacity payments required by the PPAs.
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When examining similar transactions in the past, the Commission has
approved the acquisition of assets based on similar factual predicates. See
Public Service Company of Oklahoma, Holding Co. Act Release No. 34696 (Aug. 16,
1988); Delmarva Power & Light Company, Holding Co. Act Release No. 19653 (Aug.
18, 1976); Ohio Edison Company, Holding Co. Act Release No. 18527 (Aug. 9,
1974).
A. Approval of the Transaction.
In pertinent part, Section 9(a)(1) provides that "unless the acquisition
has been approved by the Commission under Section 10, it shall be unlawful . . .
for any registered holding company . . . to acquire, directly or indirectly, any
securities or utility assets or any other interest in any business." As set
forth more fully below, the Transaction complies with all of the applicable
provisions of Section 10.
1. Section 10(b)(1).
Section 10(b)(1) directs the Commission to approve an acquisition that
meets the requirements of subsection (f) unless it finds that the 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."
a. Interlocking Relationships.
Because the Transaction is essentially an asset purchase, and the
Partnerships will dissolve upon closing, there will not be any interlocking
relations among public-utility companies.
b. Concentration of Control.
Likewise, the Transaction will not result in detrimental concentration of
control. Section 10(b)(1) also is intended to avoid "an excess of concentration
and bigness" while preserving the "opportunities for economies of scale, the
elimination of duplicate facilities and activities, the sharing of production
capacity and reserves and generally more efficient operations" afforded by the
coordination of local utilities into an integrated system. American Electric
Power Co., Holding Co. Act Release No. 20633 (July 21, 1978). In applying
Section 10(b)(1) to utility acquisitions, the Commission must determine whether
the acquisition will create "the type of structures and combinations at which
the Act was specifically directed." Vermont Yankee Nuclear Corp., Holding Co.
Act Release No. 15958 (Feb.6, 1968). The Transaction will not create a "huge,
complex and irrational system" but will allow the Company to operate the
Generation Facilities when it is economical to do so rather than in the
uneconomical manner required by the PPAs.
While the Transaction will expand the generation capability of the Company
by approximately 188 MW, this is an insignificant increase. In addition, the
Transaction will not increase the Company's customer base or revenues, the other
traditional means of measuring a utility's size, since the Company already
purchases all of the Generation Facilities' output. Rather, it will merely
increase the Company's asset base and reduce its cost of purchased electricity.
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Other regulatory agencies will review the concentration of control and any
potential competitive effects. In Northeast Utilities, Holding Co. Act Release
No. 25221 (Dec. 21, 1990), the Commission stated that "antitrust ramifications
of an acquisition must be considered in light of the fact that public utilities
are regulated monopolies and that federal and state administrative agencies
regulate the rates charged consumers." DRI and the Sellers will file
Notification and Report Forms with the DOJ and FTC pursuant to the
Hart-Scott-Rodino Act of 1976, as amended ("HSR ACT") describing the effects of
the Transaction on competition in the relevant market and it is a condition to
the consummation of the Transaction that the applicable waiting periods under
the HSR Act shall have expired or been terminated. Moreover, the Virginia
Commission, must approve the transaction, and the Applicants will submit an
application seeking approval of the Transaction. See Exhibit D-3.
Finally, the competitive impact of the Transaction will be fully considered
by the Federal Energy Regulatory Commission ("FERC") pursuant to Section 203 of
the Federal Power Act in its review of the Transaction. As explained more fully
in the FERC application, a copy of which is attached hereto as Exhibit D-1, the
Transaction will not have an adverse effect on competition.
For these reasons, the Transaction will not "tend toward interlocking
relations or the concentration of control" of public utility companies, of a
kind or to the extent detrimental to the public interest or the interests of
investors or consumers within the meaning of Section 10(b)(1) and the Commission
may justifiably rely on the FERC and the DOJ/FTC to review any other allegations
that the Transaction will result in anti-competitive effects.
2. Section 10(b)(2).
Section 10(b)(2) requires the Commission to determine whether the
consideration to be paid in connection with the Transaction, including all fees,
commissions and other remuneration, is reasonable and whether it bears a fair
relation to, investment in and earning capacity of the underlying utility
assets.
a. Fairness of Consideration.
The consideration for the Transaction is the product of extensive and
vigorous arm's-length negotiations between the Company and the Sellers. These
negotiations were preceded by extensive due diligence, analysis and evaluation
of the assets, liabilities and business prospects of each of the Generation
Facilities. As recognized by the Commission in Northeast Utilities, Holding Co.
Act Release No. 25221 (Dec. 21, 1990) citing Ohio Power Co., 44 SEC 340, 346
(1970), prices arrived at through arm's-length negotiations are particularly
persuasive evidence that Section 10(b)(2) is satisfied.
b. Reasonableness of Fees.
Applicants believe that the overall fees, commissions and expenses incurred
and to be incurred in connection with the Transaction are reasonable and fair in
light of the size and complexity of the Transaction relative to other
transactions and the anticipated benefits of the Transaction to the public,
investors and consumers; that they are consistent with recent precedent; and
that they meet the standards of Section 10(b)(2).
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As set forth in Item 2 of this Application, Applicants together expect to
incur a combined total of approximately $2,021,000 in fees, commissions and
expenses in connection with the Transaction. Applicants believe that the
estimated fees and expenses in this matter bear a fair relation to the value of
the Transaction and the strategic benefits to be achieved, and further that the
fees and expenses are fair and reasonable in light of the complexity of the
Transaction. See Northeast Utilities, Holding Co. Act Release No. 25548 (June 3,
1992), modified on other grounds, Holding Co. Act Release No. 25550 (June 4,
1992) (noting that fees and expenses must bear a fair relation to the value of
the company to be acquired and the benefits to be achieved in connection with
the acquisition). Based on an acquisition price of $206 million, the total
estimated fees and expenses represent approximately 1% of the value of the
consideration. This percentage of fees and expenses is less than that of other
transactions approved by the Commission. See Entergy Corp., Holding Co. Act
Release No. 25952 (Dec. 17, 1993) (fees and expenses represented approximately
1.7% of the value of the consideration paid to the shareholders of Gulf States
Utilities); Northeast Utilities, Holding Co. Act Release No. 25548 (June 3,
1992) (approximately 2% of the value of the assets to be acquired).
3. Section 10(b)(3).
Section 10(b)(3) requires the Commission to determine whether the
Transaction will unduly complicate the capital structure of DRI or will be
detrimental to the public interest, the interest of investors or consumers or
the proper functioning of the DRI system. As mentioned earlier, the Company will
initially finance the Transaction through commercial paper issuances, which at
some later date and possibly combined with other outstanding commercial paper
may be refinanced with long-term debt under currently approved issuance
authority. Because the Transaction will not result in the creation of any new
subsidiaries and DRI is financing the Transaction with standard forms of
short-term and long-term debt which comply with its existing financing orders,
the Transaction does not unduly complicate the capital structure of DRI.
4. Section 10(c)(1).
Section 10(c)(1) prohibits the Commission from approving an acquisition for
which Commission approval is required under Section 9(a) if such acquisition is
unlawful under the provisions of Section 8 or is detrimental to the carrying out
of the provisions of Section 11.
a. Section 8 Analysis.
Section 8 concerns are not implicated by a transaction in which an
existing electric utility company purchases electric generation assets with
state commission approval.
b. Section 11 Analysis.
In pertinent part, Section 11(b)(1) of the 1935 Act charges the Commission
with ensuring that:
each registered holding company, and each subsidiary company thereof, shall
take such action as the Commission shall find necessary to limit the
operations of the holding-company system of which such company is a part to
a single integrated public-utility system, and to such other businesses as
are reasonably incidental, or economically necessary or appropriate to the
operations of such integrated public-utility system: Provided however, that
the Commission may permit as reasonably incidental, or economically
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necessary or appropriate to the operations of one or more integrated
public-utility systems the retention of an interest in any business (other
than the business of a public-utility company as such) which the Commission
shall find necessary or appropriate in the public interest or for the
protection of investors or consumes and not detrimental to the proper
functioning of such system or systems.
DRI is an integrated system, and applicants propose to acquire the
Generation Facilities as integrated parts of the Company. Section 2(a)(29)(A)
defines integrated public-utility system 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 operations 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 fact that (1) the Generation Facilities are already physically
interconnected to the Company's electrical system; (2) the Company will dispatch
the Generation Facilities using the same mechanisms and same system operator as
it does to operate its existing generation; and (3) the Generation Facilities
are all located in the Commonwealth of Virginia and within the Company's
existing service territory demonstrate that the acquisition complies with the
interconnection, economical operation and single area or region requirements of
Section 11(b)(1). The Virginia Commission is evaluating the Transaction, and
after consummation of the Transaction, the Company will continue to be subject
to regulation by the Virginia Commission and the North Carolina Utilities
Commission, and DRI will be continue to be regulated by the same agencies as
before the Transaction. Thus, the Transaction will not impair the effectiveness
of regulation. See Conectiv, Inc., Holding Co. Act Release No. 26832 (Feb. 25,
1998). Finally, since the Generation Facilities are located within the Company's
existing service territory and since LG&E Power Services Inc. will continue to
manage the Generation Facilities pursuant to operation and maintenance
agreements, as they did before the Transaction, the Transaction will not impair
the effectiveness of local management.
5. Section 10(c)(2).
Section 10(c)(2) requires the Commission to find that a proposed
transaction will serve the public interest by tending towards the economical and
efficient development of an integrated public utility system. As discussed
earlier, the Company currently purchases all of the electrical capacity and
energy output of the Generation Facilities at prices higher than the current and
expected market price. By acquiring the Generation Facilities, the Company will
obtain the flexibility to operate them when it is economical to do so rather
than having to dispatch those units solely to comply with the terms of the PPAs.
Thus, the proposed system will enable the Company to operate the Generation
Facilities when they produce the greatest economic benefits.
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Likewise, should the need for the Generation Facilities cease, the Company will
have the ability to retire or sell them without having to continue to pay the
capacity payments required by the PPAs.
6. Section 10(f).
Section 10(f) prohibits the Commission from approving the Transaction
unless the Commission is satisfied that the Transaction will be undertaken in
compliance with applicable state laws. As described in Item 4 of this
Application, the Transaction requires approval of the Virginia Commission and
will be consummated in compliance with the laws of Virginia.
Item 4. Regulatory Approvals.
Set forth below is a summary of the regulatory approvals, in addition
to the approval of the Commission under the 1935 Act, that Applicants will
obtain in connection with the Transaction.
Antitrust Considerations
Under the HSR Act, the Company and Sellers cannot consummate the
Transaction until each has submitted certain information to the Antitrust
Division of the DOJ and the FTC. Additionally, the Company and Sellers must
satisfy specified HSR Act waiting period requirements. The Company and Sellers
expect to file the required Notification and Report Form as soon as practicable.
Federal Power Act
Under Section 203 of the Federal Power Act, the FERC has jurisdiction over
a public utility's transfer of jurisdiction facilities with a value in excess of
$50,000. The application to the FERC is attached as Exhibit D-1.
Virginia State Corporation Commission
The Virginia Utility Facilities Act, Va. Code Section 56-265.2, requires a
public utility to obtain a certificate of public convenience and necessity from
the Virginia Commission before it constructs or acquires any facilities for use
in public utility service, and the Company will submit an application requesting
the necessary approvals. The application to the Virginia Commission is attached
as Exhibit D-3.
Item 5. Procedure.
Applicants request that the Commission issue and publish no later than
January 19, 2001, the requisite notice under Rule 23 with respect to this
Application; such notice specifying February 13, 2001 as the date by which
comments may be entered and the date on which an order granting and permitting
the Application to become effective may be entered by the Commission and that
the Commission enter not later March 2, 2001, an appropriate order granting and
permitting this Application to become effective.
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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. Exhibits.
A-1 Amended and Restated Joint Venture Agreement of Hadson Power 12 -
Altavista, dated December 28, 1989; Amendment to Amended and Restated
Joint Venture Agreement of Hadson Power 12 - Altavista, dated August
28, 1992; Second Amendment to Amended and Restated Joint Venture
Agreement of LG&E - Westmoreland Altavista, dated April 3, 1995 (Filed
Under Form SE).
A-2 Amended and Restated Joint Venture Agreement of Hadson Power 13 -
Hopewell, dated December 28, 1989; Amendment to Amended and Restated
Joint Venture Agreement of Hadson Power 13 - Hopewell, dated August 28,
1992; Second Amendment to Amended and Restated Joint Venture Agreement
of LG&E - Westmoreland Hopewell, dated April 3, 1995 (Filed Under Form
SE).
A-3 Amended and Restated Joint Venture Agreement of Hadson Power 11 -
Southampton, dated December 28, 1989; Amendment to Amended and Restated
Joint Venture of Hadson Power 11 - Southampton, dated August 28, 1992;
Second Amendment to Amended and Restated Joint Venture Agreement of
LG&E - Westmoreland Southampton, dated April 3, 1995 (Filed Under Form
SE).
D-1 Application to the Federal Energy Regulatory Commission (Filed Under
Form SE).
D-2 Order of the Federal Energy Regulatory Commission (to be filed by
amendment)
D-3 Application to the Virginia State Corporation Commission (to be filed
by Amendment)
D-4 Order of the Virginia State Corporation Commission (to be filed by
amendment)
E Map of the Company's Service Territory and Generation Facilities
(to be filed by amendment)
F-1 Opinion of Counsel for the Company (to be filed by amendment)
F-2 Past-Tense Opinion of Counsel (to be filed by amendment)
G Financial Data Schedule (to be filed by amendment)
H Form of Notice
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B. Financial Statements.
FS-1 Dominion Resources Actual and Pro Forma Consolidated Balance Sheet and
Statement of Income for the nine months ending September 30, 2000
incorporated by reference to SEC File No. 001-08489.
FS-2 The Company Actual and Pro Forma Consolidated Balance Sheet and
Statement of Income for the nine months ending September 30, 2000
incorporated by reference to SEC File No. 001-08489.
FS-3 Dominion Resources Annual Report for the year ending December 31,
1999, incorporated by reference to SEC File No. 001-8489.
FS-4 The Company Actual and Pro Forma Consolidated Balance Sheet and
Statement of Income for the year ending December 31, 1999 (to be filed
by amendment)
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 under the 1935.
Consummation of the Transaction will not result in changes in the operations of
DRI, the Company or their subsidiaries. No federal agency is preparing an
environmental impact statement with respect to this matter.
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SIGNATURE
Pursuant to the Public Utility Holding Company Act of 1935, the undersigned
company has caused this Application to be signed on its behalf by the
undersigned thereunto duly authorized.
Dominion Resources, Inc. Virginia Electric and Power Company
By: /s/James F. Stutts By: /s/E. Paul Hilton
Name: James F. Stutts Name: E. Paul Hilton
Title: Vice President and Title: Senior Vice President
General Counsel
Date: December 21, 2000 Date: December 21, 2000
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