File No. 70-8062
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________________
POST-EFFECTIVE AMENDMENT NO. 10
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. 10 (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). 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") to include the authority to finance
the acquisition, and hold the securities, of 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 any authority that may be granted to the Applicants under
their pending Post-Effective Amendment No. 9 (File No. 70-8062)
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 and an order issued on December 29,
1992 (HCAR. 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 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 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.
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 30, 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.
The Applicants hereby seek authority to (i) finance the
acquisition, and hold the securities, of one or more FUCOs,
without filing specific project applications, and (ii) to finance
the acquisition, and hold the securities, of one or more
Intermediate Companies,<F1> 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 guarantees or assumptions of liability authorized
pursuant to Post-Effective Amendment No. 9, shall be counted as
part of the Applicants' authorized development activities and
investment limit of $100 million through December 30, 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> 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 in EWGs that have been previously authorized by
the December 30, 1992 Order and the January 24, 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 finance the
acquisition and hold securities of Intermediate Companies through
____________________
<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).
<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.
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 any authority that may be granted to the Applicants
pursuant to their pending Post-Effective Amendment No. 9 to this
Application and Declaration on Form U-1 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. Charter Oak will also include information on the projects
authorized herein in any reporting requirements set forth in an
order pursuant to Post Effective Amendment No. 9.
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 . . . . . . . *
Miscellaneous related expenses
(such as telephone, courier and
travel) . . . . . . . . . . . . *
Total . . . . . . . . . . . . *
*To be filed by amendment
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
It is requested that the Commission issue and publish
no later than September 2, 1994 the requisite notice under
Rule 23 with respect to the filing of this Amendment, such notice
to specify a date not later than September 27, 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 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 (to be filed by amendment)
G-1 Proposed Form of Notice
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.
<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: August 31, 1994
SECURITIES AND EXCHANGE COMMISSION
(Release No. 35- )
Filings Under the Public Utility Holding Company Act of 1935
_____________________, 1993
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") have filed
a post-effective amendment 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, 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") to include the
authority to finance the acquisition, and hold the securities, of
foreign utility companies ("FUCOs") as defined in Section 33 of
the Act without application to the Commission for specific
individual project authorization, subject to certain limitations.
The Applicants also request authority to finance the acquisition,
and hold the securities, of one or more companies ("Intermediate
Companies") engaged directly or indirectly and exclusively in the
business of owning and holding the securities of one or more
FUCOs and/or exempt wholesale generators ("EWGs") as defined in
Section 32 of the Act, subject to certain limitations. In
addition, the Applicants request that the Commission modify any
authority that may be granted to the Applicants under their
pending Post-Effective Amendment No. 9 (File No. 70-8062) 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.
Pursuant to the December 30, 1992 Order as amended by
the January 24, 1994 Order and an order issued on December 29,
1992 (HCAR. 25721; File No. 70-8064), Charter Oak is authorized
to pursue preliminary development activities with regard to
investment and participation in qualifying cogeneration and small
power production facilities ("QFs") 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
may invest in QFs and Qualified IPPs after obtaining Commission
approval and may invest in and finance the acquisition of
interests in EWGs without prior Commission approval to the extent
that such authorization is not required under Section 32 the Act
and Rule 53 thereunder.
Charter Oak and COE Development now request authority
to finance the acquisition, and hold the securities, of FUCOs and
Intermediate Companies without prior Commission approval of
specific individual projects subject to the requirements that any
such investment or financing (i) be within the previously
approved $100 million investment authorization for the Applicants
through December 30, 1994, and (ii) satisfy the criteria in Rule
53(a)(1)-(4) and (b)(1)-(3). The financings and investments and
in FUCOs and Intermediate Companies may take the same form as the
financings and investments in EWGs that were authorized in either
the December 30, 1992 Order or the January 24, 1994 Order, and
will be subject to the restrictions and conditions set forth
therein. In addition, the Applicants request that the Commission
modify any authority that may be granted to the Applicants under
their pending Post-Effective Amendment No. 9 to this Application
and Declaration on Form U-1 (File No. 70-8062) 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. 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 $100
million investment authorization. The Applicants are not
requesting any additional investment authorization beyond that
approved in previous Commission orders. The Applicants state
that they 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 of the Act.
The Applicants have found that the ability to respond
quickly to investment opportunities in FUCOs and finance the
acquisition, and hold the securities, of Intermediate Companies
to make such investments is necessary in order to compete
effectively in this market in accordance with the principles set
forth in the Energy Policy Act of 1992. The Applicants also
state that 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.
Charter Oak will report its use of the funds requested
by this Amendment in its quarterly reports of Charter Oak's
activities to be filed with the Commission pursuant to the
December 30, 1992 Order. Charter Oak will also include
information regarding projects authorized herein in any reporting
requirement set forth in an order pursuant to Post-Effective
Amendment No. 9.
For the Commission, by the Division of Investment
Management, pursuant to delegated authority.
