File No. 70-09343
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM U-1
AMENDMENT NO. 2
to
APPLICATION/DECLARATION
Under
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
NORTHEAST UTILITIES
174 Brush Hill Avenue
West Springfield, Massachusetts 08109
NORTHEAST UTILITIES SERVICE COMPANY
107 Selden Street
Berlin, Connecticut 06037
(Name of companies filing this statement and address of principal executive
offices)
NORTHEAST UTILITIES
(Name of top registered holding company)
Cheryl W. Grise, Esq.
Senior Vice President, Secretary and General Counsel
Northeast Utilities Service Company
P.O. Box 270
Hartford, Connecticut 06141-0270
(Name of address of agent for service)
The Commission is requested to mail signed copies of all orders, notices and
communications to:
Jeffrey C. Miller, Esq.
Assistant General Counsel
David R. McHale Jane P. Seidl, Esq.
Vice President and Treasurer Senior Counsel
Northeast Utilities Northeast Utilities
Service Company Service Company
P.O. Box 270 P.O. Box 270
Hartford, Connecticut Hartford, Connecticut
06141-0270 06141-0270
The Application/Declaration in this proceeding, as previously amended,
is hereby further amended as follows:
A. Paragraphs 1 through 17 are deleted and replaced in their entirety
as follows:
1. The purpose of this Application/Declaration is to seek the
Commission's authorization for a variety of related transactions under which
Northeast Utilities ("NU") would create and finance a non-utility corporate
subsidiary ("NEWCO") that would, through its new subsidiary ("GENCO"),
preliminarily investigate the acquisition and ownership of non-nuclear
generation assets, and acquire and own certain of NU's existing and to-be-
formed non-utility subsidiaries. In addition, NU and NEWCO (when formed)
propose to guarantee the obligations of certain of NU's direct and indirect
non-utility subsidiaries.
Organization of NEWCO
2. NU proposes to cause (i) the organization of NEWCO under the laws
of the State of Connecticut as a new wholly-owned first tier subsidiary of
NU, a registered holding company under the Act, in the NU system (the "NU
System"); and (ii) the issuance by NEWCO and acquisition by NU of one hundred
shares of the common stock, par value $1 per share of NEWCO ("NEWCO Common
Stock"), for $100,000. Subsequent to the creation of NEWCO as it may be
authorized pursuant to Commission order, NU presently plans to invest, as
permitted by Rule 45, up to an additional $150 million in NEWCO to fund
preliminary development activities and administrative costs associated with,
among other things, (a) identifying and analyzing feasible nonnuclear
generation ("Generation") acquisition opportunities (in the planned
aggregate amount of up to $10 million) and (b) managing NEWCO's other
investments, as described more fully below (in the planned aggregate amount
of up to $140 million). NEWCO and GENCO may also engage in third party
financing as permitted by Rule 52.
3. Subject to Commission order, NEWCO intends to directly or indirectly
acquire the securities of one or more companies organized for the purposes of
performing energy-related and other activities currently authorized, or which
may be authorized in the future, by Commission rule or statute. The only
Commission authorization presently being sought (other than with respect to
Guarantees, as defined and described below) is for NEWCO to acquire the
securities of GENCO; Select Energy, Inc., NU's only existing Rule 58
subsidiary ("Select"); Northeast Generation Services, Inc., a to-be-formed
Rule 58 subsidiary which will engage in a variety of generation and other
utility-related support and service activities ("NGS"); HEC, Inc., an
existing subsidiary of NU previously authorized by Commission order, and its
subsidiaries HEC International Corporation, HEC Energy Consulting Canada and
Southwest HEC Energy Services LLC (collectively, "HEC"); and Mode 1
Communications, Inc., an existing NU subsidiary which is an Exempt
Telecommunications Company ("ETC") under the Act ("Mode 1") Select, NGS, HEC
and Mode 1 are referred to herein as the "Nonutility Subsidiaries."
4. The Applicants anticipate that NEWCO and each of its subsidiaries
may not initially have paid employees. It is likely that personnel employed
by Northeast Utilities Service Company ("NUSCO") or other associate companies
of NU may provide services on an as-needed basis to NEWCO or its subsidiaries
pursuant to a service agreement (`Service Agreement") to be entered into
between NEWCO (or a NEWCO subsidiary or other affiliate) and such associate
company. Under this Service Agreement, NEWCO or its affiliate will reimburse
the NU system company rendering such service for the cost of services
provided, computed in accordance with Rules 90 and 91 under the Act, as well
as applicable rules and regulations. In addition, in the event that such
services are performed on behalf of an EWG or FUCO, such services will be
rendered in accordance with Rule 53 under the Act.
5. NEWCO may also determine from time to time that it is efficient and
advantageous to have certain development activities performed by unaffiliated
third parties. Such arrangements will be on a fee-for-service negotiated
basis at market rates.
NEWCO's Generation-Related Activities
6. Initially, NEWCO and GENCO intend to explore acquisitions of
Generation in NU's service territory and throughout New England, as well as
in Delaware, Maryland, New Jersey, New York and Pennsylvania. In the near
term, NEWCO and GENCO will also be exploring the potential acquisition of
Generation to be auctioned by, among others, its affiliates, Western
Massachusetts Electric Company, The Connecticut Light and Power Company and
Public Service Company of New Hampshire. Assuming NEWCO or an NU affiliate
identifies a Generation investment opportunity, the acquisition of which
requires prior Commission approval, appropriate application will be made to
the Commission for approval of such investment at that time.
7. The Applicants propose to (i) organize GENCO under the laws of the
State of Connecticut as a new wholly-owned subsidiary of NEWCO and (ii) have
GENCO issue and NEWCO acquire one hundred shares of GENCO common stock, par
value $1 per share ("GENCO Common Stock"), for $10,000. NEWCO presently
plans to invest up to $10 million in GENCO.
Guarantees
8. NU and NEWCO also propose to issue guarantees or provide other
forms of credit support or enhancements (collectively, "Guarantees") to or
for the benefit of NEWCO, the Nonutility Subsidiaries and NU's other direct
and indirect Rule 58 subsidiaries to be formed by NU, NEWCO or the Nonutility
Subsidiaries (the "Guaranteed Entities") in an aggregate amount not to exceed
$ 75 million ("Aggregate Authorization"), through December 31, 1999.
Guarantees may take the form of NU or NEWCO agreeing to guarantee, undertake
reimbursement obligations, assume liabilities or other obligations with
respect to or act as surety on, bonds, letters of credit, evidences of
indebtedness, equity commitments, performance and other obligations
undertaken by the Guaranteed Entities. NU and NEWCO further undertake that
any Guarantee they issue will be without recourse to any System operating
company. The Aggregate Authorization does not include amounts relating to
guarantees or other transactions exempt pursuant to Rule 45(b)(6) or previous
Commission authorizations relating to NU System companies.
9. To the extent that NU or NEWCO provide Guarantees in support of its
investment in any EWG or FUCO, the amount of the investment will be included
in the calculation of "aggregate investment" required under Rule 53.
Moreover, to the extent that NU or NEWCO provide Guarantees in support of its
investment in an ERC, the amount of the investment will be included in the
calculation of "aggregate investment" required under Rule 58.
B. Paragraphs 18 through 27 of the Application/Declaration are
renumbered as Paragraphs 10 through 19.
C. Item 3 (formerly Paragraph 22, renumbered pursuant to B above as
Paragraph 14) is amended and replaced in its entirety as follows:
14. The sections of the Act and the related regulations of the
Commission which are or may be applicable to the transactions as herein
proposed are set forth below:
(i) Initial issuance of common stock by Sections 6(a) and 7.
(a) NEWCO to NU and (b) GENCO
to NEWCO
(ii) Initial acquisition by (a) NU of common Sections 9(a), 10 and 34
stock of NEWCO and (b) NEWCO Rules 45(b) and 58.
of common stock of GENCO, Select,
Mode 1, NGS and HEC
(iii) Loan guarantees or other forms of Sections 9(a), 10 and 12(b)
guarantees by NU of Guaranteed Entities Rules 45 and 58.
(iv) Loan guarantees or other forms of Sections 9(a), 10 and 12(b)
guarantees by NEWCO on behalf of Rules 45 and 58.
Guaranteed Entities
To the extent any other sections of the Act or rules thereunder may be
applicable to the proposed transactions, the Applicants request appropriate
orders thereunder.
D. The following additional exhibit is filed herewith:
A.5 NU/NEWCO/GENCO/Nonutility Subsidiary Corporate Organization Chart
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 officer or attorney thereunto duly
authorized.
Date: November 5, 1998
NORTHEAST UTILITIES
NORTHEAST UTILITIES SERVICE COMPANY
By/s/ David R. McHale
Their Vice President and Treasurer
EXHIBIT A.5
NU/NEWCO/GENCO CORPORATE
ORGANIZATIONAL CHART
NU
---------------------
| |
| |
| Other Rule 58 Companies (1,3)
|
|
NEWCO (1,3)
- -------------------------------------------------
| | | | | |
| | | | | |
GENCO SELECT NGS HEC MODE 1 Other Rule 58
(2,3,4) (2,3,4) (2,3,4) (2,3,4) (2,3,4) Companies
(2,3,4)
1. 100 percent of the issued and outstanding stock will be owned by NU
2. 100 percent of the issued and outstanding stock will be owned by NEWCO
3. NU guaranty authority
4. NEWCO guaranty authority
