File No. 70-8062
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________________
POST-EFFECTIVE AMENDMENT NO. 11
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
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. 11 (the "Amendment") to their
Application and Declaration on Form U-1 (HCAR. 25726;
December 30, 1992; File No. 70-8062), previously amended on
January 24, 1994 (HCAR. 25977; File No. 70-8062) and on
September 2, 1994 (HCAR. 26116; File No. 70-8062). Under this
Amendment, NU and Charter Oak request approval under Sections
6(a), 7, 9(a), 10, 12(b) and 33 of the Public Utility Holding
Company Act of 1935 (the "Act") and Rules 45 and 53 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") previously amended
on January 24, 1994 (HCAR. 25977; File No. 70-8062) (the
"January 24, 1994 Order") and on September 2, 1994 (HCAR. 26116;
File No. 70-8062 (the "September 2, 1994 Order"), to include the
authority to acquire interests in, finance the acquisition, and
hold the securities, of both foreign utility companies ("FUCOs")
as defined in Section 33 of the Act and companies ("Intermediate
Companies") engaged directly or indirectly and exclusively in the
business of holding securities of one or more FUCOs and/or one or
more exempt wholesale generators ("EWGs"), as defined in Section
32 of the Act, without application to the Commission for specific
individual project authorization, subject to the limitations set
forth herein. In addition, the Applicants request, under
Section 6(a), 7, 12(b) of the Act and Rules 45 and 53 thereunder,
that the Commission modify the authority granted to the
Applicants in the September 2, 1994 Order to include FUCOs and
Intermediate Companies in the definition of Exempt Projects for
which the Applicants may issue guarantees and assume liabilities
in connection with development activities.
Item 1. DESCRIPTION OF PROPOSED TRANSACTIONS
A. Description of Charter Oak
Pursuant to the December 30, 1992 Order as amended by
the January 24, 1994 Order, the Spetember 2, 1994 Order and an
order issued on December 29, 1992 (HCAR. 25721; File No. 70-
8064), Charter Oak and COE Development are 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 that would
constitute a part of NU's "integrated public utility system"
within the meaning of Section 2(a)(29)(A) of the Act ("Qualified
IPPs"). Charter Oak and COE Development may invest in QFs and
Qualified IPPs after obtaining Commission approval and may invest
in, and finance the acquisition of, EWGs and FUCOs 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, the Applicants have
authority to issue guarantees and assume the liabilities of
subsidiary companies for development activities, including
construction and permanent financing, and contingent liabilities
subsequent to operation with regard to those EWG and FUCO
projects that do not require advance approval from the Commission
for Charter Oak and its subsidiaries to acquire an interest.
B. Request for Expansion of Authority Regarding 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. The January 24, 1994
Order expanded the Applicants' authority to include the
preliminary development of, and financing for, acquisitions of
interests in 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. The
January 24, 1994 Order also increased the authorized dollar
limitation for these and other activities to $100 million through
December 31, 1994. At the time of the January 24, 1994 Order,
the Applicants indicated that they would not finance or acquire
interests in FUCOs without Commission authorization until the
Commission promulgated rules under the Act providing guidelines
for such investments. Similarly, in the January 24, 1994 Order,
the Applicants stated that they would not, without Commission
authorization, acquire an interest in an intermediate holding
company that holds, or will acquire, an interest in a FUCO,
unless and until the Commission promulgates rules under the Act
that provide that intermediate holding companies themselves may
be considered FUCOs under the Act. Applicants are now seeking
Commission authorization to make such acquisitions and financings
prior to such rules being promulgated.
Thus, the Applicants hereby seek authority to
(i) acquire interest in, finance the acquisition, and hold the
securities, of one or more FUCOs, without filing specific project
applications, and (ii) acquire interest in, finance the
acquisition, and hold the securities, of one or more Intermediate
Companies,<F1>
____________________
<F1> An Intermediate Company may acquire and hold direct and
indirect interests in both FUCOs and EWGs. The Applicants
currently have authority to finance the acquisition, and
hold the securities, of companies engaged exclusively in the
business of holding the securities of one or more EWGs as
long as that intermediate company itself obtains EWG status,
subject to the requirements of the Act and the rules
promulgated thereunder. For an order granting similar
authority to that being requested herein, see The Southern
Company (HCAR. 26096; August 3, 1994; File No. 70-8421).
without filing specific project applications, both within the
limitations set forth herein. First, the full amount of any such
investment or financing, as well as any authorized guarantees or
assumptions of liability, shall be counted as part of the
Applicants' authorized development activities and investment
limit of $100 million through December 31, 1994. In addition, no
such investment or financing will be made unless at the time of
the investment, NU's "aggregate investment" in EWGs, FUCOs and
Intermediate Companies does not exceed 50% of the system's
"consolidated retained earnings" in compliance with the safe
harbor provisions set forth in Rule 53 under the Act for
investments in EWGs.<F2>
____________________
<F2> To come within the safe harbor of Rule 53, the amount of a
registered holding company's aggregate investments in EWGs
and FUCOs cannot exceed 50% of the system's consolidated
retained earnings. Under this limitation, the Northeast
system's present investment limitation is approximately $450
million. Currently, Charter Oak has $2.3 million invested
in the one qualifying cogeneration facility in Texas and
approximately $6.6 million invested in a power plant in the
United Kingdom. The $6.6 million invested in the U.K
facility which is FUCO represents approximately 0.71% of the
system's consolidated retained earnings.
The Applicants will comply with all other applicable rules under
the Act, including, without limitation, such rules which may be
promulgated in the future pursuant to Section 33.
The investments and financings authorized by an order
pursuant to this Amendment may take the same form as investments
and financings for which Charter Oak currently has authorization
to make with regard to COE Development and EWGs by the December
30, 1992 Order, the January 24, 1994 Order and the September 2,
1994 Order and will be subject to the limitations and conditions
set forth therein.
The Applicants have found that the ability to respond
quickly to investment opportunities in FUCOs and to acquire
interests in, finance the acquisition and hold securities of
Intermediate Companies through which such investments in FUCOs
are often made is advantageous and believe that the authority
being requested herein will enable them to effectively compete
in this market in accordance with the principles of the Energy
Policy Act of 1992. The use of Intermediate Companies is often
necessitated by business concerns such as foreign ownership
requirements in countries where FUCOs are located or to
facilitate investments via a consortium of companies where each
member of the consortium has a consolidated subsidiary involved
in the final FUCO structure for tax and accounting purposes and
to ease subsequent adjustments to or sales of interests among
members of the ownership group. Moreover, since any investment
in a FUCO or Intermediate Company which is authorized hereunder
will be subject to the previously approved $100 million overall
limitation, as well as the requirements of Rule 53, this
authorization will not have a detrimental effect on the holding
company system's finances.
The Applicants also hereby request that the Commission
modify the authority granted to the Applicants in the September
2, 1994 Order to include FUCOs and Intermediate Companies in the
definition of Exempt Projects in connection with which the
Applicants may issue guarantees and assume liabilities for
development activities. Again, until such time as there is no
possibility of a claim against NU or Charter Oak, the full
contingent amount of any such guarantees and assumptions of
liability would be counted as part of the authorized development
activities and investment limit of $100 million.
C. Retained Earnings Tests of Rule 53(a)(1) and 53(b)(2)
As discussed above, this Amendment does not request
approval of any investment authorization in addition to that
previously approved in the January 24, 1994 Order. Thus, it
remains true that the maximum aggregate investment in EWGs, FUCOs
and Intermediate Companies by the NU system, 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, 1994.
Accordingly, the level of investment approved by the January 24,
1994 Order 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' total investment in EWGs,
FUCOs, Intermediate Companies 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.
D. 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.
E. Operating Loss Limitations of Rule 53(b)(3)
The companies in the U.K. in which Charter Oak invested
pursuant to an order dated September 24, 1993 (HCAR. 25891; File
No. 70-7966) do not have any losses attributable to operations.
The Applicants presently do not have any other EWGs, FUCOs or
Intermediate Companies. The Paris, Texas qualifying cogeneration
facility, in which Charter Oak has an interest, did not report
losses attributable to operations during 1993. Accordingly, the
present investments of the Applicants in EWGs, FUCOs and
Intermediate Companies 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.
F. Compliance with Safe Harbor Provisions
The authority being sought by the Applicants in this
Amendment will allow the Applicants to finance an investment in a
FUCO or an Intermediate Company without further Commission
approval if two conditions are met: (i) the investment is within
the previously approved $100 million authorization, 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 a FUCO or an Intermediate Company without submitting an
application on Form U-1 to obtain prior Commission approval.
In conjunction with the January 24, 1994 Order, the
Applicants took certain steps to ensure compliance with
Section 32 and the regulations promulgated thereunder with regard
to financing investments in EWGs. Specifically, under the system
in place today, all employees of Charter Oak responsible for
evaluating potential EWG and FUCO investments are first to 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 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. These same procedures shall be followed with regard
to any investments or financings made pursuant to an order
approving this Amendment.
Applicants are not requesting approval for the use of
system operating company employees for the rendering of services
to affiliated FUCOs or Intermediate Companies, and no such use of
employees will occur without prior Commission approval unless
expressly permitted under the Act.<F3>
____________________
<F3> 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.
G. 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 FUCOs or Intermediate Companies authorized by this
Amendment.
H. 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
as well as in the annual report of its activities for the
preceding calendar year to be filed with the Commission pursuant
to the September 2, 1994 Order.
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 . . . . . . . 4,100
Miscellaneous related expenses
(such as telephone, courier and
travel) . . . . . . . . . . . . 300
Total . . . . . . . . . . . . $ 4,400
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: Sections
6(a) 7, 9(a), 12(b) and 33 and Rules 45 and 53 all relating to
the authority for Charter Oak and COE Development to make
investments in and finance the acquisitions of FUCOs and
Intermediate Companies.
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
On September 2, 1994, the Commission issued and
published the requisite notice under Rule 23 with respect to the
Filing of this request for authority and no intervention occurred
within the specified time period. Consequently, we hereby
request that the Commission enter not later than September 30,
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 (Inapplicable)
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.
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: September 27, 1994
Jeffrey C. Miller
107 Selden Street
Berlin, Connecticut 06037
September 26, 1994
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 numbers 10 and 11 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 a 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. 35-34893), 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. 35-35726)
September 24, 1993 (HCA Rel. No. 35-25891), January 24, 1994 (HCA
Rel. No. 35-25977), and September 2, 1994 (HCA Rel.
No. 35-26116), 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,
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 and Charter Oak and/or COE Development will
legally acquire any common stock and other security of any Exempt
Wholesale Generator ("EWG" -- as defined in Section 32 of the
Act), Foreign Utility Company ("FUCO" -- as defined in Section 33
of the Act), and/or any "Intermediate Company" (a subsidiary of
Charter Oak or COE Development organized to hold or acquire a
direct or indirect interest in EWGs or FUCOs) 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 and/or Charter Oak 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,
/s/
Jeffrey C. Miller
