File No.
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM U-1
APPLICATION/DECLARATION WITH RESPECT TO SALES OF CERTAIN GOODS
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
CONNECTICUT YANKEE ATOMIC POWER COMPANY
107 Selden Street
Berlin, CT 06037
(Name of company or companies filing this statement and addresses of
principal executive offices)
NORTHEAST UTILITIES
NEW ENGLAND ELECTRIC SYSTEM
(Name of top registered holding company parent of each applicant or
declarant)
Robert P. Wax, Esq.
Vice President, Secretary and General Counsel
Northeast Utilities
P. O. Box 270
Hartford, CT 06141-0270
(Name and address of agent for service)
The Commission is requested to mail signed copies of all orders, notices and
communications to:
Jeffrey C. Miller, Esq. John J. Roman
Assistant General Counsel Vice President and Controller
Northeast Utilities Service Co. Northeast Utilities Service Co.
107 Selden Street 107 Selden Street
Berlin, CT 06037 Berlin, CT 06037
Item 1.
Description of Proposed Transaction
1. Authorization to Make Certain Sales to Associated Companies
The Connecticut Yankee Atomic Power Company (the "Applicant"), an
electric utility subsidiary of Northeast Utilities ("NU") and New England
Electric System ("NEES") under the Public Utility Holding Company Act of 1935
(the "Act"), hereby requests approval to sell certain of its remaining
inventory and plant assets for fair market value to both associate and
non-associate companies. In light of the unusual circumstances, discussed
more fully below, the Applicant believes that an exemption in this case from
the "at cost" standards of Rule 90, to the extent required, is appropriate
and fair under the standards of Section 13(b)(2).
On December 4, 1996, the board of directors of the Applicant voted
unanimously to cease permanently the production of power at its Connecticut
Yankee nuclear plant ("CY"), located in Haddam, Connecticut. The Applicant
has undertaken a number of regulatory filings intended to implement the
decommissioning of the unit, including filings at both the Federal Energy
Regulatory Commission and the Nuclear Regulatory Commission. As part of the
decommissioning and dismantlement process, the Applicant intends to sell
various inventory and plant assets to other companies, including subsidiaries
of NU and NEES in order to achieve the most economic shutdown of CY.
Based on the Applicant's review of sales of similar items, including
sales by other utilities implementing decommissioning plans for nuclear
plants, it is expected that these items have a fair market value that is
substantially below the Applicant's book cost of these assets. In
particular, the Applicant estimates that the total amount of inventory ($16
million book value) and plant assets ($30 million net book value) could be
sold for approximately an aggregate amount of $4 to $4.5 million. If the
Applicant is prohibited from offering these assets to associate companies at
competitive prices, it will substantially limit the pool of potential bidders
and hinder its ability to economically wind down its business activities.
The Applicant has various methods to assure that the prices charged to
associate companies are fair. In the case of commonly available inventory,
documentation of the current market price would provide a readily verifiable
fair value market value. In other cases fair market value could be determined
through a comparison of recent transactions, manufacturers' quotes or
independent appraisals. Furthermore, the Applicant proposes to file with the
Commission within 45 days of the close of any fiscal quarter in which sales
to associates are completed an accounting pursuant to Rule 24 of the prices
of such sales and the method used to determine the fair market value of the
sale. Accordingly, the Applicant hereby requests an exemption under Section
13(b)(2) of the Act from the "cost" requirements of Rule 90 to attain the
flexibility to offer and sell these items at fair market value to both
associated and non-associated companies.
2. Other Matters
Except in accordance with the Act, neither NU nor any subsidiary thereof
(1)has acquired an ownership interest in an exempt wholesale generator ("EWG")
or a foreign utility company ("FUCO") as defined in Sections 32 and 33 of the
Act, or (2) now is or, as a consequence of the transactions proposed herein,
have a right under, a service, sales or construction contract with an EWG or
FUCO. None of the proceeds from the transactions proposed herein will be
used by the NU system companies to acquire any securities of, or any interest
in, an EWG or FUCO.
The NU system is in compliance with Rule 53(a), (b) and (c), as
demonstrated by the following determinations:
(i) NU's aggregate investment in EWGs and FUCOs (e.g. amounts invested
in or committed to be invested in EWGs and FUCOs, for which there is recourse
to NU) does not exceed 50 percent of NU system's consolidated retained
earnings as reported for the four most recent quarterly periods on NU's Form
10-K and 10-Qs. At June 30, 1997, the ratio of such investment ($91 million)
to such consolidated retained earnings ($753 million) was 12.1 percent.
(ii) Encoe Partners, Central Termica San Miguel de Tucuman, S.A. Ave
Fenix and Plantas Eolicas, S. A. (NU's only EWGs or FUCOs at this
time)(collectively, "EWGs/FUCOs") maintain books and records and prepare
financial statements in accordance with Rule 53 (a)(2). Furthermore, NU has
undertaken to provide the Commission access to such books and records and
financial statements, as it may request.
(iii) No employees of the NU system's public utility companies have
rendered services to the EWGs/FUCOs.
(iv) NU has submitted (1) a copy of each Form U-1 and Rule 24
certificates that have been filed with the Commission under Rule 53 and (b)
copy of Item 9 of Form U5S and Exhibits G and H thereof to each state
regulator having jurisdiction over the retail rates of the NU system public
utility companies.
(v) Neither NU nor any NU subsidiary has been the subject of a
bankruptcy or similar proceeding unless a plan of reorganization has been
confirmed in such proceeding. In addition, although NU's average
consolidated retained earnings ("CREs") for the four most recent quarterly
periods has decreased by 10 percent or more from the average for the previous
four quarterly periods (at 6/30/96, NU's CREs were $999 million; at 6/30/97,
NU's CREs were $836 million), NU's aggregate investment in EWGs/FUCOs at such
date ($91 million) did not exceed two percent of NU's consolidated capital
invested in utility operations ($133.9 million).
(vi) In the previous fiscal year, NU's operating losses attributable to
its investment in the EWGs/FUCOs did not exceed 5 percent of NU's
consolidated retained earnings.
Neither NEES nor any of its subsidiaries currently has an ownership
interest in an EWG or FUCO. Additionally, neither NEES nor any of its
subsidiaries is a party to, or has any rights under, a service, sales, or
construction agreement with an EWG or FUCO. None of the proceeds from the
transactions proposed herein will be used by the NEES companies to acquire
any securities of, or any interest in, an EWG or FUCO. Please refer to the
Commission's order (HCAR 35-26504) for the NEES companies' authority to make
potential investments in EWGs and FUCOs. NEES and its subsidiaries shall
comply with the requirements of such order and Rules 53 and 54 under the Act
in connection with EWG and FUCO acquisitions and financings.
Item 2. Fees, Commissions and Expenses
No fees, commissions or expenses have been paid or will be paid or
incurred in connection with the proposed transactions, other than routine
expenses for legal, financial and other services billed to the Applicant at
cost by NUSCO.
Item 3. Applicable Statutory Provisions
Sections 9(a), 10, 11, 12 and 13 of the Act and Rules 23, 43, 52, 53,
81, 87(b)1, 90 and 91 thereunder are or may be applicable to the proposed
transactions. To the extent any other sections of the Act may be applicable
to the proposed transaction, the Applicant request appropriate orders
thereunder.
Item 4. Regulatory Approval
The Applicant believes that except for the approval of the Commission,
no other federal or state regulatory approvals are required in order to carry
out the transactions contemplated by this Application/Declaration.
Item 5. Procedure
It is respectfully requested that the Commission enter not later than
September 30, 1997 an appropriate order granting and permitting this
Application/Declaration to become effective.
No recommended decision by a hearing officer or other responsible
officer of the Commission is necessary or required in this matter. The
Office of Public Utility Regulation within the Division of Investment
Management of the Commission may assist in the preparation of the
Commission's decision in this matter. There should be no 30 day waiting
period between the issuance and the effective date of any order issued by the
Commission in this matter, and it is respectively requested that any such
order be made effective immediately upon the entry thereof.
Item 6. Exhibits and Financial Statements
(a) Exhibits
1. Opinion of Counsel
2. Proposed Form of Notice under the Act.
3. Financial Data Schedules - Financial Data Schedules have not
been included because this transaction is not expected to have any material
pro forma effects on the financial statements of the Applicant.
(b) Financial Statements. Financial statements have not been included
because this transaction is not expected to have any material pro forma
effects on the financial statements of the Applicant.
Item 7. Information as to Environmental Effects
The issuance of an order with respect to this Application/Declaration
will not constitute a major federal action significantly affecting the
quality of the human environment. No other federal agency has prepared or is
preparing an environmental impact statement with respect to the proposed
transaction.
SIGNATURES
Pursuant to the requirements of the Act, the undersigned company has
duly caused this statement to be signed on their behalf by the undersigned
thereunto duly authorized.
CONNECTICUT YANKEE ATOMIC POWER COMPANY
By: /s/John J. Roman
John J. Roman
Its Vice President and Controller
Dated: August 29, 1997
Exhibit 1
August 29, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Re: Connecticut Yankee Atomic Power Company
Ladies and Gentlemen:
I am Assistant General Counsel of Northeast Utilities Service Company
("NUSCO"), a service company affiliate of Northeast Utilities ("NU"). I have
acted as counsel to the Connecticut Yankee Atomic Power Company ( the
"Applicant"), an electric utility subsidiary of NU and the New England
Electric System in connection with the transactions contemplated by the
application/declaration filed on the date hereof (the "Application"). This
opinion is given to you with respect to such transactions pursuant to your
Instructions as to Exhibits to applications and declarations filed on Form
U-1. Except as otherwise defined herein, terms used herein shall have the
meanings given them in the Application.
In connection with this opinion, I have reviewed or caused to be
reviewed the Application and the exhibits thereto, the Applicant's charter
documents, as amended to the date of this opinion, the proceedings of its
shareholders and board of directors to date and such other papers, documents
and records, and have made or caused to be made such examination of law, as I
deemed relevant and necessary in order to give this opinion. I have assumed
that in respect of the Application an appropriate order of the Commission
under the Public Utility Holding Company Act of 1935 will be issued and all
actions of the Applicant will be in conformity therewith.
The opinions set forth herein are qualified in their entirety as
follows: (a) every opinion rendered herein is expressly subject to the
consummation of such transactions in accordance with the Application; (b) no
opinion is expressed as to any laws other than the federal laws of the United
States and the laws of the State of Connecticut; and (c) insofar as any
opinion relates to the Certificate of Incorporation or Bylaws of the
Applicant, I have assumed that the Certificate and Bylaws will not be amended
between now and the time the transactions contemplated by the Application are
consummated.
Based on and subject to the foregoing, I am of the opinion that:
1. All state laws applicable to the transactions for which the
Commission's approval is sought will have been complied with at the time each
transaction is consummated.
2. The Applicant is validly organized and duly existing under the laws
of the State of Connecticut.
3. The consummation of the transactions for which the Commission's
approval is sought will not violate the legal rights of the holders of any
securities issued by the Applicant or any associate company of the Applicant.
I hereby consent to the use of this opinion in connection with the
filing of the Application.
I am a member of the Bar of the State of New York. As to matters
involving the laws of other jurisdictions, I have made a study of such laws
and consulted with lawyers employed by NUSCO who are admitted to the Bars of
such other jurisdictions.
Very truly yours,
/s/Jeffrey C. Miller
Assistant General Counsel
Northeast Utilities Service Company
Exhibit 2
Form of Proposed Notice
Connecticut Yankee Atomic Power Company (the "Applicant"), 107 Selden
Street, Berlin, Connecticut 06037 has filed an application/declaration with
this Commission pursuant to Section 13 of the Act and certain other
provisions of the Act and the Commission's rules thereunder. The Applicant
is an electric utility subsidiary of Northeast Utilities and New England
Electric System, each a registered holding company under the Act. The
Applicant seeks authority to sell certain of its remaining inventory and
plant assets for fair market value to both associate and non-associate
companies. In order to achieve the most economic shutdown of the Connecticut
Yankee nuclear unit located in Haddam, Connecticut, the Applicant believes
that an exemption in this case from the "at cost" standards of Rule 90, to
the extent required, is appropriate and fair under the standards of Section
13(b)(2). The Applicant will report to the Commission quarterly concerning
each sale of assets to an associated company during the previous quarter.
