File No. 70-8062
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________________
POST-EFFECTIVE AMENDMENT NO. 3
TO THE
FORM U-1
APPLICATION AND DECLARATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
____________________________________________________
NORTHEAST UTILITIES
174 Brush Hill Avenue
West Springfield, Massachusetts 01089
CHARTER OAK ENERGY, INC.
COE DEVELOPMENT CORPORATION
107 Selden Street
Berlin, CT 06037-1616
(Name of company filing this statement and
address of principal executive offices)
NORTHEAST UTILITIES
(Name of top registered holding
company parent of each applicant or declarant)
Jeffrey C. Miller, Esq.
Assistant General Counsel
NORTHEAST UTILITIES SERVICE COMPANY
P.O. Box 270
Hartford, Connecticut 06141-0270
(Name and address of agent for service)
The Commission is requested to mail copies of
all orders, notices and communications to:
William S. Lamb, Esq. Jeffrey C. Miller, Esq.
LeBoeuf, Lamb, Greene & MacRae Assistant General Counsel
125 W. 55th Street NORTHEAST UTILITIES SERVICE COMPANY
New York, New York 10019-4513 P.O. Box 270
Hartford, Connecticut 06141-0270
<PAGE>
Northeast Utilities ("NU"), West Springfield,
Massachusetts, a registered holding company, and its wholly owned
subsidiaries, Charter Oak Energy, Inc. ("Charter Oak") and COE
Development Corporation ("COE Development"), both located in
Berlin, Connecticut, (collectively, the "Applicants") hereby file
this Post-Effective Amendment No. 3 to their Application and
Declaration on Form U-1 (HCAR. 25726; December 30, 1992; File No.
70-8062) (the "Amendment"). Under this Amendment, NU and Charter
Oak request approval under Sections 6(a), 7, 9(a), 10 and 12(b)
of the Public Utility Holding Company Act of 1935 (the "Act") and
Rule 45 thereunder, for a modification of the authority
previously granted to the Applicants in the Securities and
Exchange Commission's (the "Commission") order dated December 30,
1992 (HCAR. 25726; File No. 70-8062) (the "December 30, 1992
Order") to include the authority to finance the acquisition of
EWGs, in accordance with Section 32 of the Act and rules
promulgated thereunder, and to make investments in foreign
utility companies ("FUCOs") and to finance the acquisition of
FUCOs, in accordance with Section 33 and rules to be promulgated
thereunder. In addition, the Applicants request a modification
of the authority previously granted in the December 30, 1992
Order to increase NU's authorized investment in Charter Oak to up
to $100 million and to increase Charter Oak's authorized
investment in COE Development to up to $100 million for
preliminary development activities and investments in independent
power projects including preliminary development activities and
investments in EWGs, the acquisition of which may not require SEC
approval under Section 32 of the Act and rules promulgated
thereunder.
Item 1. DESCRIPTION OF PROPOSED TRANSACTIONS
A. Description of Charter Oak
Pursuant to the December 30, 1992 Order and an order
issued on December 29, 1992 (HCAR. No. 25721; File No. 70-8064),
Charter Oak is presently authorized to pursue preliminary
development activities with regard to investment and
participation in qualifying cogeneration and small power
production facilities as defined in the Public Utility Regulatory
Policies Act of 1978 ("QFs") throughout the United States and
independent power production facilities ("IPPs"). Charter Oak
may invest in QFs and IPPs after obtaining Commission approval
and may invest in exempt wholesale generators ("EWGs") without
prior Commission approval to the extent that such authorization
is not required under the Act and any applicable rules and
regulations promulgated thereunder. In addition, Charter Oak is
authorized to provide consulting services in relation to QFs and
IPPs.
B. Request for Expansion of Authority Regarding EWGs and
FUCOs
In the December 30, 1992 Order, the Commission
authorized Charter Oak and COE Development to make investments in
EWGs without prior Commission approval to the extent that such
approval is not required under the Act, and any applicable rules
and regulations promulgated thereunder. Charter Oak and COE
Development now request authority to make investments in FUCOs
and to finance the acquisition of EWGs and FUCOs, without prior
Commission approval to the extent that such approval is not
required under the Act, and any applicable rules and regulations
promulgated thereunder.<F1> If such authority is granted by
the Commission, the Applicants will be able to use the $100
million requested in this Amendment for the acquisition and
financing of EWGs without submitting applications on Form U-1 for
approval of the use of such funds so long as the Applicants are
in compliance with the partial safe harbor requirements of Rule
53(a)(1)-(4) and (b)(1)-(3) under the Act.<F2>
C. Request for Expansion of Authority for Preliminary
Development Activities
The order dated May 17, 1989 authorizing the
establishment of Charter Oak (HCAR No. 24893; File No. 70-7545)
(the "1989 Order") authorized Charter Oak to engage in
preliminary development activities relating to eligible private
power investments. Prior to the enactment of the Energy Policy
Act of 1992, the acquisition of an interest in any private power
project by a registered holding company system required the prior
approval of the Commission. In the 1989 Order, the scope of
____________________
<F1> The Applicants will not acquire an interest in an
intermediate holding company that holds, or will acquire, an
interest in a FUCO without prior Commission approval, unless
and until the Commission promulgates rules under the Act
that provide that intermediate holding companies themselves
may be considered FUCOs under the Act.
<F2> The Commission promulgated final rules and forms relating to
EWGs in HCAR. No. 35-25886 (September 23, 1993). In this
Post-Effective Amendment No. 3, the Applicants have amended
their previous filings where necessary to reflect the final
version of the rules and forms.
authorized preliminary development activities included only
certain development activities that the Commission agreed did not
constitute acquiring an interest in a project, and therefore did
not require prior approval by the Commission. With the
enactment of the Energy Policy Act and the promulgation of rules
thereunder, registered holding company systems may acquire
certain EWGs and FUCOs without prior Commission approval
(referred to herein as "Exempt Projects"). Because registered
holding company systems may acquire Exempt Projects without prior
Commission approval, the Applicants' activities with respect to
Exempt Projects will not be limited to the scope of authorized
preliminary development activities provided in previous
Commission orders.
As authorized in the 1989 Order and reauthorized in the
December 30, 1992 Order, these preliminary development activities
include:
the investigation of sites, preliminary
engineering and licensing activities,
acquiring options and rights, contract
drafting and negotiating, preparation of
proposals and other necessary activities to
identify and analyze feasible investment
opportunities and to initiate the
commercialization of a project.
The Applicants now request authority to expand the current scope
of permissible preliminary development activities for projects
the acquisition of which require Commission approval (referred to
herein as "Non-exempt Projects") to include the issuance of
guarantees and assumptions of liability by NU, Charter Oak or any
Charter Oak subsidiary to unaffiliated third parties in
connection with such development activities.<F3> The
guarantees and assumptions of liability for which the Applicants
are seeking approval with respect to Non-exempt Projects are
limited to preliminary development activities and will not
include guarantees relating to construction financing or
permanent financing. Charter Oak has found that on occasion such
guarantees and assumptions of liability may provide them with
____________________
<F3> Such guarantees and assumptions of liability may include bid
bonds, earnest money, reimbursement obligations to parties
providing letters of credit, performance bonds, and material
and payment bonds.
opportunities to participate in private power opportunities on a
favorable basis without expending funds. The total value of such
guarantees and assumptions of liability outstanding at any time
will not exceed $20 million. The term of any such guarantee or
assumption of liability will not exceed five years. Until such
time as there is no possibility of a claim against Charter Oak or
NU, the full contingent amount of any guarantees and assumptions
of liability would be counted as part of the authorized
development activities limit requested by the Applicants in this
Amendment.
The Applicants do not intend to engage in preliminary
development activities for any power project in which they do not
believe they will be able to hold an ownership interest. In the
early stages of developing a power project, however, it is not
always certain what the eventual status of a facility will be
under the 1935 Act and PURPA. For example, a facility being
constructed to be a qualifying cogeneration facility under PURPA
may fail to achieve QF certification because the intended
industrial use is no longer commercially viable. Or, a facility
for which EWG status is being sought may, particularly in a state
in which retail wheeling is being actively promoted by state
regulators, decide to sell some of its power directly to
industrial customers. Accordingly, the Applicants seek to
preserve their existing authority to engage in preliminary
development activities for IPPs throughout the United States. In
the event that a facility in which the Applicants have done
preliminary development work does not qualify as a QF, EWG or
FUCO and cannot be part of an integrated system with the NU
system, the Applicants will make all commercially reasonable
efforts to sell or assign its interests in a manner that will
allow it to recoup its preliminary development expenditures.
The Applicants also seek authority for the issuance of
guarantees and assumptions of liability in relation to
development activities for Exempt Projects, including
construction and permanent financing, in accordance with the Act.
D. Request for Authority for Additional Investment
Under the December 30, 1992 Order, during 1993 and
1994, NU is authorized to invest in Charter Oak up to $10 million
annually and Charter Oak is authorized to invest in COE
Development up to $9 million annually. In addition, Charter Oak
and COE Development are authorized to annually spend $10 million
and $9 million, respectively. The Applicants have also recently
obtained approval to invest up to $7 million to acquire an
interest in a power plant in the United Kingdom (HCAR. No. 35-
25891; September 24, 1993; File No. 70-8084) (the "U.K. Order").
The Applicants request a modification to the
Commission's December 30, 1992 Order to increase NU's authorized
investment limit in Charter Oak up to $100 million for the period
from January 1, 1993 through December 31, 1994 for additional
preliminary development activities, for investments in QFs and
IPPs for which the Applicants will obtain prior Commission
approval and for investments in EWGs and FUCOs, that may or may
not require prior Commission approval under the Act and any rules
and regulations promulgated thereunder. In addition, the
Applicants request a modification to the Commission's December
30, 1992 Order to increase Charter Oak's authorized investment in
COE Development up to $100 million for the period from January 1,
1993 through December 31, 1994 for additional preliminary
development activities and for investments in QFs and IPPs for
which the Applicants will obtain prior Commission approval and
for investments in EWGs and FUCOs that may or may not require
prior Commission approval under the Act and any rules and
regulations promulgated thereunder. Charter Oak and COE
Development also seek authority to spend up to $100 million for
the period from January 1, 1993 through December 30, 1994. The
$100 million authorization requested in this Amendment includes
the $7 million investment approved in the U.K. Order.
This request for increased funding is based on the
Applicants' desire to further increase its preliminary
development activities and to make investments in QFs, IPPs, EWGs
and FUCOs. This request is consistent with intent of the U.S.
Congress to promote private power activities by utility companies
in the U.S. and abroad when Congress enacted the amendments to
the Act in the Energy Policy Act of 1992. In addition, this
request for up to $100 million, together with the Applicants'
present investments in private power, is relatively small
compared to the total EWG and FUCO investment limit in Rule 53
under the Act.<F4>
NU's investment in Charter Oak, and Charter Oak's
investment in COE Development, may take the form of additional
acquisitions of common stock, capital contributions, open account
advances and/or subordinated loans (collectively, "Investments").
Any such open account advances or subordinated loans would bear
interest at a rate based on NU's cost of funds in effect on the
date of issue, but in no case in excess of the prime rate at a
bank designated by NU. In addition, pursuant to the initial
authorization of Charter Oak in the 1989 Order, which was
extended by the December 30, 1992 Order, Charter Oak may obtain
debt financing from unaffiliated third parties<F5> ("Debt
Financing"), as long as the total of all Investments together
with any Debt Financing does not exceed the total funding
authorization of Charter Oak. Such Debt Financing may require a
guarantee by NU.<F6> Pursuant to the 1989 Order, non-
affiliate Debt Financing obtained by Charter Oak will not exceed
a term of 15 years or bear a floating interest rate in excess of
125% of the prime rate in effect at the time of issuance or a
fixed interest rate more than 350 basis points above that borne
____________________
<F4> Rule 53(a)(1) places a limit on EWG and FUCO investments of
50% of system consolidated retained earnings for purposes of
determining whether such investments are "not reasonably
adapted to the earning power of such company or to the
security structure of such company and other companies in
the same holding company system, or that the circumstances
are such as to constitute ... an improper risk for such
company..." Under this limitation, the NU system's present
investment limitation is over $400 million.
<F5> It is anticipated that such unaffiliated third parties will
be banks, insurance companies and other institutional
investors.
<F6> Since the Debt Financing is included within the total
funding authorization of Charter Oak, any guarantee by NU
will not be counted towards the total funding authorization
limitation.
by U.S. Treasury securities of comparable maturities. If any
nonaffiliate Debt Financing obtained by Charter Oak is guaranteed
by NU, the term of such Debt Financing will not exceed 15 years
and the interest rate will not exceed the prime rate in effect on
the date of issue at a bank designated by NU from among the major
lenders to the companies in the NU system. In connection with
any Debt Financing obtained by Charter Oak, Charter Oak may be
required to pay commitment and other fees not to exceed 25 basis
points per annum on the total amount of the Debt Financing.
Pursuant to the 1989 Order, Charter Oak has an exception from the
competitive bidding requirements of Rule 50 pursuant to Rule
50(a)(5) with respect to the proposed issuance of securities in
connection with such Debt Financing.
The Applicants request that the Commission renew the
exception from the competitive bidding requirements of
Rule 50(a)(5) with respect to the proposed issuance of securities
in connection with such Debt Financing. Due to the nature of the
business ventures contemplated by this Amendment and the
uncertainty regarding the exact nature of contractual and
investment opportunities which may become available, flexibility
to negotiate specific financing provisions with third parties
without further Commission authorization, subject to the monetary
caps listed earlier in this Amendment, is required. The
requirements of Rule 50 are unnecessary in this instance for the
protection of investors or consumers.
The proposed development activities and investment
authorization are modest relative to the size of the NU system.
At June 30, 1993, the NU system's consolidated total
capitalization, stockholders' equity and retained earnings were
$7,092,945,000, $2,203,429,000 and $867,083,000, respectively.
The authorization sought herein is for up to $100 million total
authorization for the two years, including the existing $10
million authorization approved in the December 30, 1992 Order,
which as a percentage of the NU system's consolidated total
capitalization, stockholders' equity and retained earnings at
June 30, 1993 would be 1.4%, 4.5% and 11.5%, respectively.
Charter Oak currently has $2.3 million invested in one qualifying
cogeneration facility in Texas and approximately $6.5 million
invested in a power plant in the United Kingdom. Accordingly,
the Applicants have adequate assets to make the potential
investment and expenditures without endangering the financial
health of the registered holding company system or the system's
operating public utility companies. Furthermore, only
investments in Exempt Projects and EWG and FUCO financings that
do not require Commission approval under the Act and any rules
and regulations promulgated thereunder would be made pursuant to
the general authority requested above in paragraph B.<F7>
Other investments would be submitted to the Commission for prior
approval.
E. Retained Earnings Tests of Rule 53(a)(1) and 53(b)(2)
As discussed above, this Amendment requests approval
for up to an additional $100 million investment by the NU system
in EWGs, FUCOs and other independent power projects. The maximum
aggregate investment by the NU System, including this proposed
investment, would be no more than $102.3 million, which is well
below fifty percent of the NU system's consolidated retained
earnings as of June 30, 1993. Accordingly, this level of
investment does not present a risk of substantial adverse impact
as described in Sections 32 and 33 of the Act and Rule 53(a)(1).
In addition, because the Applicants's total investment in EWGs,
FUCOs and other power projects does not exceed more than two
percent of the total capital invested in utility operations,
there cannot be an exclusion under Rule 53(b)(2) from the safe
harbor.
____________________
<F7> As noted in paragraph B above, if such authority is granted
by the Commission, the Applicants will be able to use the
$100 million requested in this Amendment for the acquisition
and financing of EWGs without submitting applications on
Form U-1 for approval of the use of such funds so long as
the Applicants are in compliance with the partial safe
harbor requirements of Rule 53(a)(1)-(4) and (b)(1)-(3)
under the Act.
F. Bankruptcy Exclusion of Rule 53(b)(1)
Neither the Applicants nor any other members of the NU
registered holding company system have been the subject of a
bankruptcy or similar proceeding while a part of the NU system.
Public Service Company of New Hampshire entered into bankruptcy
proceedings before it was acquired by Northeast Utilities in
June, 1992. Public Service Company of New Hampshire's plan of
reorganization was confirmed by the bankruptcy court on April 20,
1990.
G. Operating Loss Limitations of Rule 53(b)(3)
The companies in which Charter Oak invested pursuant to
its U.K. Order do not have any losses attributable to operations.
The Applicants presently do not have any other EWGs and FUCOs.
The Paris, Texas cogeneration facility, in which Charter Oak has
an interest, did not report losses attributable to operations
during 1992. Accordingly, the present investments of the
Applicants in EWGs and FUCOs as well as other power projects do
not present a risk of substantial adverse impact as described in
Sections 32 and 33 of the Act and Rule 53.
H. Compliance with Safe Harbor Provisions
The authority being sought by the Applicants in this
Amendment will allow the Applicants to finance an investment in
an EWG without further Commission approval if two conditions are
met: (i) the investment is within the $100 million authorization
requested herein, and (ii) the investment satisfies the criteria
in Rule 53(a)(1)-(4) and (b)(1)-(3). Accordingly, it is
important that the Applicants ensure that subsections (a)(1)-(4)
and (b)(1)-(3) of Rule 53 are satisfied before proceeding with
the financing of an investment in an EWG without submitting an
application on Form U-1 to obtain prior Commission approval.
In conjunction with receipt of an order approving this
Amendment, the Applicants will take certain steps to ensure
compliance with Section 32 and the regulations promulgated
thereunder. First, all employees of Charter Oak responsible for
evaluating potential EWG and FUCO investments will be briefed on
the requirements of Section 32 and Rule 53. Second, in
connection with evaluating an investment in an EWG or FUCO, the
Charter Oak employees responsible for evaluating potential EWG
and FUCO investments will prepare, for internal review, an
analysis of the impact of the proposed investment on the
requirements of Rule 53(a) and (b). Third, after preparing an
analysis of the proposed investment, the Charter Oak employees
responsible for evaluating the investment will consult with in-
house counsel or outside counsel to confirm compliance with the
requirements of Section 32 and the regulations promulgated
thereunder.
Applicants are not requesting approval for the use of
system operating company employees for the rendering of services
to affiliated EWGs and FUCOs, and no such use of employees will
occur without prior Commission approval unless expressly
permitted under the Act.<F8> To the extent that any such
services are necessary, they will be performed by Charter Oak
employees (who are employees of Northeast Utilities Service
Company) or other service company employees.
I. Maintenance of Books and Records
Charter Oak will comply with Rule 53(a)(2) with regard
to the maintenance of books and records in connection with
investments in EWGs and FUCOs authorized by this Amendment.
J. Reporting of Activities
Charter Oak will report its use of the funds requested
herein in its quarterly reports of Charter Oak's activities to be
filed with the Commission pursuant to the December 30, 1992
Order.
____________________
<F8> The Commission issued proposed rules relating to intrasystem
service, sales and construction contracts involving EWGs and
FUCOs in HCAR. No. 25887. The comment period has expired
but the Commission has not yet promulgated, or taken any
other action regarding, the proposed rules. The proposed
rules would explicitly exclude intrasystem contracts
involving EWGs and FUCOs from Rule 87's general exemption of
intrasystem contracts. In its comment letter on the
proposed rules, NU requested a modification of the proposed
amendment to Rule 87 in order to allow for a partial safe
harbor for contracts employing a de minimis percentage of
system employees. In the event that the Commission issues
rules that allow for such de minimis use of system
employees, the Applicants would not seek Commission approval
for use of system employees within such safe harbor.
Item 2. FEES, COMMISSIONS AND EXPENSES
The fees, commissions and expenses of NU and Charter
Oak expected to be paid or incurred, directly or indirectly, in
connection with this Amendment are estimated as follows:
Commission filing fee
relating to Application
on Form U-1 . . . . . . . . . . . . $ N/A
Legal fees and expenses . . . . . . . $8,000
Miscellaneous related expenses
(such as telephone, courier and
travel) . . . . . . . . . . . . $500
Total . . . . . . . . . . . . $8,500
Item 3. APPLICABLE STATUTORY PROVISIONS
The sections of the Act and rules or exemptions
thereunder that Applicants consider applicable to the
transactions and the basis for exemption therefrom are set forth
below:
(i) Authority for Charter Sections 6(a), 7
Oak and COE Development and 32, Rule 53
to finance the
acquisition of EWGs.
(ii) Authorization for Sections 6(a)
Charter Oak to obtain and 7, Rule 50
Debt Financing from non-
affiliates
(iii) Authorization for NU to Sections 9(a), 10,
invest up to $100 12(b), Rules 45(a)
million in Charter Oak and 45(b)(1)
and Charter Oak to
invest up to $100
million in COE
Development in the form
of acquisitions of
common stock, capital
contributions, open
account advances and
subordinated loans.
Item 4. REGULATORY APPROVAL
No commission, other than this Commission, has
jurisdiction over any of the proposed transactions described in
this Amendment. Pursuant to Rule 53(a)(4), the Applicants will
file this Amendment with the Connecticut Department of Public
Utility Control, the Massachusetts Department of Public Utilities
and the New Hampshire Public Utilities Commission.
Item 5. PROCEDURE
It is requested that the Commission issue and publish
no later than January 14, 1994 the requisite notice under Rule 23
with respect to the filing of this Amendment, such notice to
specify a date not later than February 8, 1994, as the date after
which an order granting and permitting this Amendment to become
effective may be entered by the Commission and that the
Commission enter not later than February 14, 1994 an appropriate
order granting and permitting this Amendment to become effective.
Applicants respectfully request that appropriate and
timely action be taken by the Commission in this matter.
Applicants hereby waive any recommended decision by a hearing
officer or by any other responsible officer of the Commission and
waive the 30-day waiting period between issuance of the
Commission's order and the date on which it is to become
effective, since it is desired that the Commission's order, when
issued, become effective forthwith. Applicants hereby consent
that the Office of Public Utility Regulation within the Division
of Investment Management may assist in the preparation of the
Commission's decision and/or order unless the Office opposes the
transactions covered by this Amendment.
Item 6. EXHIBITS AND FINANCIAL STATEMENTS
a) Exhibits
F-1 Opinion of Counsel
G-1 Proposed Form of Notice (previously filed)
b) Financial Statements
1.1 Balance Sheet (Actual and Pro
Forma) - NU (parent only), as
of June 30, 1993 (previously filed)
1.2 Statement of Income (Actual and Pro Forma) - NU
(parent only), as of June 30, 1993 (previously
filed)
2.1 Balance Sheet (Actual and Pro Forma) - Charter Oak
(consolidated), as of June 30, 1993 (previously
filed)
2.2 Statement of Income (Actual and Pro Forma) -
Charter Oak (consolidated), as of June 30, 1993
(previously filed)
3.1 Balance Sheet (Actual and Pro Forma) - NU
(consolidated), as of June 30, 1993 (previously
filed)
3.2 Statement of Income (Actual and Pro Forma) - NU
(consolidated), as of June 30, 1993 (previously
filed)
Item 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS
None of the matters that are the subject of this
Amendment 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. None of the transactions that are the
subject of this Amendment will result in changes in the operation
of the Applicants that will have an impact on the environment.
The Applicants are not aware of any federal agency which has
prepared or is preparing an environmental impact statement with
respect to the transactions which are the subject of this
Amendment.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Public Utility
Holding Company Act of 1935, the undersigned companies have duly
caused this Amendment to be signed on their behalf by the
undersigned thereunto duly authorized.
NORTHEAST UTILITIES
CHARTER OAK ENERGY, INC.
COE DEVELOPMENT CORPORATION
By: /s/
William S. Lamb
LeBoeuf, Lamb, Greene & MacRae
A Partnership Including
Professional Corporations
125 W. 55th Street
New York, NY 10019-4513
Attorney for Northeast Utilities,
Charter Oak Energy, Inc. and COE
Development Corporation
Date: January 13, 1994
Jeffrey C. Miller
Selden Street
Berlin, Connecticut 06037
November 10, 1993
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Gentlemen:
As Assistant General Counsel of Northeast Utilities' (NU)
subsidiary, Northeast Utilities Service Company (NUSCO), I have
acted as counsel to NU, and as counsel to its subsidiaries
Charter Oak Energy, Inc. (Charter Oak) and COE Development
Corporation (COE Development), with respect to the post-effective
amendments to the application/declaration (collectively, the
Amendment) on Form U-1 to the Securities and Exchange Commission
in File No. 70-8062, seeking an expansion of the Commission's
authorization of the activities of, and an increase in the
funding for, Charter Oak and COE Development. I am furnishing
this opinion to you in connection with the Amendment.
As counsel for NU, Charter Oak and COE Development in this
matter, I am generally familiar with the nature and character of
the businesses of Charter Oak and COE Development. I am a member
of the bar of New York. I am not a member of the bar of the
Commonwealth of Massachusetts, the state in which NU is
incorporated, nor am I a member of the bar of the State of
Connecticut, the state in which Charter Oak and COE Development
are incorporated, and I do not hold myself out as an expert in
the laws of such states, although I have made a study of such
laws and am associated with and have consulted with other counsel
to NUSCO who are expert in such laws. For purposes of this
opinion, I have relied on advice from counsel employed by NUSCO,
who are members of the bar of the Commonwealth of Massachusetts
and of the State of Connecticut.
In connection with this opinion, I have examined or caused
to be examined the Commission's orders dated May 17, 1989 (HCA
Rel. No. 35-24893), January 28, 1992 (HCA Rel. No. 35-25461),
October 16, 1992 (HCA Rel. No. 35-25655), December 29, 1992 (HCA
Rel. No. 35-25721), December 30, 1992 (HCA Rel. No. 35-25726) and
September 24, 1993 (HCA Rel. No. 35-25891), the Amendment and the
various exhibits thereto, the minutes of various meetings of the
Board of Trustees of NU and the Boards of Directors of Charter
Oak and COE Development, the laws of the Commonwealth of
Massachusetts and the State of Connecticut, the certificates of
incorporation and by-laws of COE Development and Charter Oak and
such other documents as I deem necessary for the purpose of this
opinion. I assume that the Board of Trustees of NU, the Boards
of Directors of Charter Oak and COE Development and the officers
and other representatives of NU, Charter Oak and COE Development
will take all future corporate action necessary to authorize and
implement the transactions contemplated by the Amendment. I also
assume that the Securities and Exchange Commission will issue an
order under the Public Utility Holding Company Act of 1935 as
requested in the Amendment, and that all actions taken thereafter
will be in conformity with such order.
Based on the foregoing, I am of the opinion that:
A. All state laws applicable to the transactions described
in the Amendment have been complied with;
B. Charter Oak and COE Development are validly organized
and duly existing;
C. When issued and sold as described in the Amendment, any
common stock of Charter Oak and of COE Development issued and
sold in accordance with the Commission's authorization of the
transactions contemplated by the Amendment will be validly
issued, fully paid, and non-assessable, and the holders thereof
will be entitled to the rights and privileges appertaining
thereto set forth in the corporate documents defining such rights
and privileges;
D. When acquired as described in the Amendment, NU will
legally acquire any common stock and other security of Charter
Oak issued and sold in accordance with the Commission's
authorization of the transactions contemplated by the Amendment
and Charter Oak will legally acquire any common stock and other
security of COE Development issued and sold in accordance with
the Commission's authorization of the transactions contemplated
by the Amendment;
E. When issued as described in the Amendment, any evidence
of indebtedness issued by Charter Oak to non-affiliates, and any
NU guarantee in respect thereof, will be valid and binding
obligations of Charter Oak and NU, respectively, in accordance
with their terms, subject to laws of general application with
respect to rights and remedies of creditors and subject to
equitable principles;
F. When NU shall have received any necessary consents of
certain lenders as to certain transactions described in the
Amendment, the consummation of the proposed transactions as
described in the Amendment will not violate the legal rights of
any holders of securities issued by NU, Charter Oak, COE
Development, or any other existing NU subsidiary company.
I hereby consent to the use of this opinion in connection
with the filing of the Amendment.
Very truly yours,
Jeffrey C. Miller
JCM1/1193.9
