FILE NO. 70-8875
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 18
TO
FORM U-1
(AMENDMENT NO. 20)
APPLICATION/DECLARATION UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Northeast Utilities Holyoke Water Power Company
Western Massachusetts Electric Company Canal Street
174 Brush Hill Avenue Holyoke, MA 01040
West Springfield, MA 01090-0010
The Connecticut Light and Power Company Public Service Company
NU Enterprises, Inc. of New Hampshire
Northeast Generation Service Company North Atlantic Energy
Northeast Generation Company Corporation
Select Energy, Inc. 1000 Elm Street
Mode 1 Communications, Inc. Manchester, NH 03015
107 Selden Street
Berlin, CT 06037
Yankee Energy System, Inc. The Rocky River Realty Company
Yankee Gas Services Company The Quinnehtuk Company
Yankee Energy Financial Services Company Northeast Nuclear Energy Company
NorConn Properties, Inc. 107 Selden Street
Yankee Energy Services Company Berlin, CT 06037
R. M. Services, Inc.
599 Research Parkway
Meriden, Connecticut 06450 HEC Inc.
24 Prime Parkway
Natick, MA 01760
(Name of companies filing this statement and addresses 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, 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 David R. McHale
Assistant General Counsel Vice President and Treasurer
Northeast Utilities Northeast Utilities
Service Company Service Company
P.O. Box 270 P.O. Box 270
Hartford, CT 06141-0270 Hartford, CT 06141-0270
Post-Effective Amendment No. 17 (Amendment No. 19) in this File is hereby
amended and restated as follows:
BACKGROUND
1. By Order dated November 20, 1996 (HCAR No. 35-26612) and Supplemental
Orders dated February 11, 1997, March 25, 1997, May 29, 1997, January 16,
1998, May 13, 1999 and November 17, 1999, issued by the Commission in this
File No. 70-8875, the Commission, among other things, authorized (i) the
participation of the companies in the Northeast Utilities holding company
system in a money pool administered by Northeast Utilities Service Company
and (ii) short-term borrowing limits for Northeast Utilities ("NU"), The
Connecticut Light and Power Company and Western Massachusetts Electric
Company and others for the period to and including December 31, 2000.
2. NU and its subsidiaries (collectively, the "Applicants") now wish to
further amend this Application/Declaration by filing this Post-Effective
Amendment (this "Amendment") to:
(a) seek Commission authorization for Yankee Energy System, Inc.
("YES"), Yankee Gas Services Company ("Yankee Gas"), Yankee Energy Financial
Services Company, NorConn Properties, Inc., Yankee Energy Services Company
and R.M. Services, Inc. to participate in the NU System Money Pool as such
companies have become direct or indirect subsidiaries of NU pursuant to the
merger of YES with NU on March 1, 2000, and to clarify the inclusion of
Northeast Nuclear Energy Company, The Quinnehtuk Company, The Rocky River
Realty Company and HEC Inc. as participants in the NU System Money Pool.
(b) seek authorization for YES and Yankee Gas to incur short-term debt
through December 31, 2000, subject to the limits and on the terms as
described herein.
(c) Eliminate any maximum limit on borrowings by nonutility subsidiaries
from the NU System Money Pool.
AMENDMENTS TO THE APPLICATION
To reflect the foregoing, the Application/Declaration, as amended in this
proceeding, is further amended as follows:
3. To add the Yankee Subsidiaries to the Application/Declaration, the
following sentence is added to the end of paragraph 1.
"Yankee Energy System, Inc. ("YES"), which became a wholly-owned holding
company subsidiary of NU on March 1, 2000 (See File No. 70-9535), and
Yankee Gas Services Company ("Yankee Gas"), Yankee Energy Financial
Services Company ("Yankee Financial"), Yankee Energy Service Company
("Yesco"), NorConn Properties, Inc. ("NorConn") and R.M. Services, Inc.
("RMS"), each of which is a wholly-owned subsidiary of YES (YES, Yankee
Gas, Yankee Financial, Yesco, NorConn and RMS are sometimes herein
collectively referred to as the "Yankee Subsidiaries"), join in the
submission of this Application with respect to (a) establishing a short-
term borrowing limit for YES and Yankee Gas (collectively, the "Yankee
Borrowers"), (b) participation by the Yankee Subsidiaries in the Money
Pool, and (c) incurring of short-term debt by the Yankee Borrowers
through December 31, 2000."
4. To seek short-term borrowing authority for the Yankee Borrowers, the
following new paragraph 1B is added after paragraph 1A.
"1B. The Yankee Borrowers hereby seek authorization to engage in
certain financing transactions for which the specific terms and
conditions are not known at this time, and which may not be covered by
Rule 52, without further approval by the Commission through the
Authorization Period. The short-term borrowings of the Yankee Borrowers
have taken and will take a variety of forms, including short-term notes
issued to bank and non-bank lending institutions through formal and
informal credit lines, commercial paper issuances, open-account advances
by NU and use of the NU System Money Pool. The following general terms
will be applicable to the financing transactions requested to be
authorized hereby. The effective cost of money on borrowings occurring
pursuant to the authorization granted under this Application will not
exceed 400 basis points over the base rate in effect from time to time of
the bank or financial institution identified for such purpose with
respect to the relevant financing or, if no such base rate is identified,
the base rate in effect from time to time of a representative money
center bank. The maturity of debt incurred will not exceed 364 days. The
fees, commissions, or other similar remuneration paid in connection with
the issuance of such debt or the entering into of credit facilities with
respect to debt incurred pursuant to the Application will not exceed 3%
of the principal amount of such debt. Borrowings from banks and other
financial institutions may be either unsecured or secured. To the extent
required, the provision of any collateral to secure debt incurred
pursuant to this Application will be approved by applicable state
regulatory commissions. Specific terms of any borrowings will be
determined by the Yankee Borrowers at the time of issuance and will
comply in all regards to the parameters of financing authorizations set
forth above. A copy of any note or agreement executed pursuant to this
Authorization will be filed under cover of the next quarterly report
under Rule 24. The funds to be derived by the Yankee Borrowers from
short-term borrowings authorized by the Commission pursuant to this
Application will be applied, with other funds available to those
companies, to provide working capital and for general corporate
purposes."
5. To provide that NNECO, The Quinnehtuk Company, The Rocky River Realty
Company and HEC Inc. may borrow through the NU System Money Pool, paragraph 9
is deleted in its entirety and replaced with the following new paragraph 9.
"9. Pool Participants borrowing surplus funds through the NU System Money
Pool pay interest at a rate equal to the daily composite federal funds
rate. All the borrowing companies have previously received an order from
the Commission authorizing such borrowings except NNECO, The Quinnehtuk
Company ("Quinnehtuk"), RR and HEC Inc. ("HEC"), wholly owned
subsidiaries of NU. To the extent these companies borrow funds from
associate companies through the Money Pool at a rate matching the
lenders' effective cost of capital, such borrowings are exempt under Rule
52(b)(2). From time to time, these companies also borrow surplus funds
through the NU System Money Pool at rates which do not match the lenders'
effective cost of capital. Such borrowings are not exempt under Rule
52(b)(2). Accordingly, NNECO, Quinnehtuk, RR and HEC seek authorization
to borrow funds from the NU System Money Pool in accordance with the
terms of the NU System Money Pool in circumstances where the exemption
provided by Rule 52(b)(2) is not available."
6. To restate the terms of the NU System Money Pool to take into account
these changes, paragraphs 13 through 19 are deleted in their entirety and
replaced with the following new paragraphs 13 through 19.
"13. NU, CL&P, WMECO, PSNH, NAEC, HWP, NUEI, NGS, NGC, Select, HEC,
NNECO, Quinnehtuk, RR and Mode 1 ("the "Original Participants") propose
to continue using, and the Yankee Subsidiaries propose participating in,
the NU System Money Pool, which is administered on their behalf by
Northeast Utilities Service Company ("NUSCO") under the direction of an
officer in the NUSCO Treasury Organization (the Original Participants and
the Yankee Subsidiaries are referred collectively herein as the "Pool
Participants"). The NU System Money Pool currently consists principally
of surplus funds that may be available from day to day to the Pool
Participants, including NU. The funds available to the NU System Money
Pool will be loaned on a short-term basis to those Pool Participants,
other than NU, YES, Mode 1 and NGC (NU's only exempt wholesale
generator), that have a need for short-term funds, subject to certain
limitations described therein. If no such short-term needs match the
amount of funds that are available for the period such funds are
available, the funds in the NU System Money Pool will be invested
directly or indirectly through investment funds in:
(a) obligations issued or guaranteed by the United States of
America;
(b) obligations issued or guaranteed by any entity controlled,
sponsored by, or supervised by and acting as an instrumentality of the United
States of America pursuant to authority granted by the Congress of the United
States, including but not limited to the obligations of the Government
National Mortgage Association (GNMA), Student Loan Marketing Association
(SLMA), Federal Home Loan Mortgage Corporation (FHLMC) and Federal National
Mortgage Association (FNMA);
(c) obligations issued or guaranteed by any state or political
subdivision thereof, provided that such obligations are rated for investment
purposes at not less than "A" by Moody's Investors Service, Inc. ("Moody's")
or by the Standard & Poor's Rating Group ("S&P");
(d) certificates of deposit issued or banker's acceptances
drawn on and accepted by commercial banks which are members of the
Federal Deposit Insurance Corporation and which have a combined capital,
surplus and undistributed profits of at least $100,000,000;
(e) commercial paper rated not less than "P-1" by Moody's or
not less than "A-1" by S&P;
(f) repurchase agreements with any commercial or investment
bank secured by obligations issued or guaranteed by the United
States of America or an instrumentality thereof provided
collateral is held by a third party; and
(g) as to WMECO contributions, such other instruments as are
permitted by Rule 40(a)(1) under the Act and approved by the MDTE pursuant to
Massachusetts General Laws Chapter 164, Section 17A and the regulations
thereunder.
14. In addition to surplus funds, funds borrowed by NU through
the issuance of the Short-Term Notes, by selling commercial paper or by
borrowing under the Facility described in paragraphs 1A to 5 above are a
source of funds for making open account advances to certain of its
subsidiaries through the NU System Money Pool. The potential recipients
of such open account advances will be all Pool Participants with the
exception of CL&P, WMECO, Mode 1 and NGC. Such arrangements have in
the past resulted in a reduction in borrowing costs to the recipients
because NU has access to funds at lower interest rates than the
subsidiaries listed above and/or because the transaction costs of
arranging several small financings to meet the needs of the smaller
subsidiaries are higher than the costs of arranging one larger financing
by NU. The amounts to be borrowed by NU for the purpose of making open
account advances or to be lent through the Money Pool to the Pool
Participants, will also be subject to the short-term limits on the
aggregate amount outstanding for which approval is sought in this filing.
15. PSNH is currently prohibited, by order of the New Hampshire
Public Utilities Commission (the "NHPUC"), from lending funds to the NU
System Money Pool. PSNH has recently requested that the NHPUC remove
such restriction. In addition, only CL&P, HWP, NNECO, RR and Quinnehtuk
will be entitled to borrow funds through the NU System Money Pool that
are attributable to contributions from WMECO unless and until the MDTE
has issued an order authorizing WMECO to lend funds to other NU
subsidiaries through the NU System Money Pool.
16. The Pool Participants request that the Commission reserve
jurisdiction over any PSNH contributions to the NU System Money Pool and
any borrowings by companies other than CL&P, HWP, NNECO, RR and
Quinnehtuk of NU System Money Pool funds attributable to contributions
thereto by WMECO until such time as the MDTE has issued an order
authorizing such borrowings. Without such an order, WMECO may not lend
money to such companies through the Money Pool. In the event that such
an order is received from the MDTE, the Pool Participants will file a
post-effective amendment hereto seeking the necessary Commission
approval.
17. Money Pool transactions will be designed to match, on a
daily basis, the available cash of the Pool Participants and the short-
term borrowing requirements of certain Pool Participants (other than NU,
YES, NGC and Mode 1), thereby minimizing the need for short-term
borrowings to be made by the Pool Participants from external sources. To
this end, it is anticipated that the short-term borrowing requirements of
the Pool Participants (other than NU, YES, NGC and Mode 1) will be met,
in the first instance, with the proceeds of borrowings available through
the NU System Money Pool, and thereafter, to the extent necessary, with
the proceeds of external short-term borrowings, as described below.
Those participants in the NU System Money Pool without access to external
borrowing facilities will have priority as borrowers from the NU System
Money Pool, and all Pool Participants, other than CL&P, WMECO, Mode 1 and
NGC, will be eligible to borrow through the NU System Money Pool from
the proceeds of external borrowings by NU. If at any time there are
funds remaining in the NU System Money Pool after satisfaction of the
borrowing needs of the borrowers, NUSCO, as agent for the NU System
Money Pool, will invest those funds as described in paragraph 13 and
allocate the earnings on any such investments among the Pool
Participants, providing such excess funds on a pro rata basis according
to the amount of the funds so provided
18. All borrowings from and contributions to the NU System
Money Pool, including the open account advances, will be documented and
will be evidenced on the books of each participant that is borrowing from
or contributing surplus funds to the NU System Money Pool. Any
participant contributing funds to the NU System Money Pool may withdraw
those funds at any time without notice to satisfy its daily need for
funds. Except for loans from the proceeds of external borrowings by NU,
all loans will be payable on demand, may be prepaid by any borrowing Pool
Participant at any time without premium or penalty and will bear interest
for both the borrower and lender, payable monthly, equal to the daily
Federal Funds Effective Rate as quoted by the Federal Reserve Bank of New
York. Loans from the proceeds of external borrowings by NU will bear
interest at the same rate paid by NU on its borrowings, and no such loans
may be prepaid unless NU is made whole for any additional costs that may
be incurred because of such prepayment. NU will be fully reimbursed for
all costs that it incurs in relation to loans made to the Pool
Participants.
19. The Applicants believe that the cost of the proposed
borrowings through the NU System Money Pool will generally be more
favorable to the borrowing Pool Participants than the comparable cost of
external short-term borrowings, and that the yield to the Pool
Participants contributing available funds to the NU System Money Pool
will generally be the same as the typical yield on short-term
investments. However, if on any given day the funds available through
the NU System Money Pool are insufficient to satisfy the short-term
borrowing requirements of a Pool Participant, such Pool Participant may
effect short-term borrowings through lending institutions and/or through
the sale of commercial paper, if appropriate, as described below."
7. To set out the applicable short-term borrowing limits and eliminate the
limits previously imposed on the nonutility subsidiaries, paragraph 27 is
deleted in its entirety and replaced with the following new paragraph 27.
"27. The aggregate amount of short-term debt that will be
outstanding at any one time, whether evidenced by Short-Term Notes issued
to lending institutions or by Commercial Paper or through borrowings from
the NU System Money Pool pursuant to the authority requested in this
Application or through borrowings through revolving credit facilities
described in paragraphs 1A through 5 and paragraph 29, for which
Commission authorization is being sought will not exceed the following
limits:
NU $400 million
CL&P $375 million
WMECO $250 million
PSNH $225 million
HWP $ 5 million
NAEC $ 60 million
NNECO $ 75 million
YES $ 50 million
Yankee Gas $100 million
The Pool Participants request that the Commission reserve jurisdiction
over the request that there be no limit placed on the NU System Money
Pool borrowings of RR, Quinnehtuk, HEC, NUEI, Select, NGS, Yankee
Financial, Yesco, RMS and NorConn (the "Nonutility Participants") pending
completion of the record. A limit on the Nonutility Participants may
result in unnecessary borrowings by the NU system. Such unnecessary
borrowings may occur when some Pool Participants have money invested in
the NU System Money Pool but other Nonutility Participants need to borrow
in excess of pre-established limits. The excess borrowing must be made
directly from NU with funds borrowed from external sources while excess
funds in the money pool are invested with third parties. This results in
an inefficient use of funds by the NU System as a whole. A similar
request was made by Conectiv and approved by the Commission in HCAR NO.
27111 (December 14, 1999). Until such time as the Commission releases
such jurisdiction, the aggregate amount of borrowings by each Nonutility
Participant that will be outstanding through the NU System Money Pool
will not exceed the following limits:
YESCo $30 million
R.M.S. $10 million
NorConn $10 million
Yankee Financial $10 million
NUEI $100 million
NGC $0
NGS $20 million
Mode 1 $0
HEC $20 million
RR $30 million
Quinnehtuk $16 million
Select $200 million"
ITEM 2. FEES, COMMISSION AND EXPENSES
8. See Exhibit K.4 attached hereto.
ITEM 3. APPLICABLE STATUORY PROVISIONS
9 Borrowings from the NU System Money Pool are subject to the requirements
of Sections 6, 7, 9(a), 10 and 12 of the Act and Rules 43, 45 and 52
thereunder. Loans to the Money Pool are subject to the requirements of
Sections 9(a), 10 and 12 of the Act.
ITEM 4. REGULATORY APPROVALS
10. The approval of the MDTE is required pursuant to C.164, Section 17A of
the Massachusetts General Laws for the participation of WMECO in the NU
System Money Pool. The MDTE granted such approval on October 29, 1986. As
explained above, the approval of the MDTE will be required under
Massachusetts General Laws C.164, Section 17A before companies other than
CL&P, HWP, NNECO, RR and Quinnehtuk can borrow NU System Money Pool funds
attributable to contributions by WMECO. WMECO has not yet requested that
authorization. Until that authorization is granted, companies other than
CL&P, HWP, NNECO, RR and Quinnehtuk may not borrow through the NU System
Money Pool from funds attributable to WMECO
11. PSNH is currently prohibited by the NHPUC from contributing funds to the
NU System Money Pool. The NHPUC approved NAEC's participation in the NU
System Money Pool in an order dated March 19, 1992.
ITEM 5. PROCEDURE
12. The Applicants hereby request that the Commission publish a notice under
Rule 23 with respect to the filing of this Application as soon as practicable
and that the Commission's order be issued as soon as possible. A form of
notice suitable for publication in the Federal Register is attached hereto as
Exhibit h.1. The Applicants respectfully request the Commission's approval,
pursuant to this Application/Declaration, of all transactions described
herein, whether under the sections of the Act and Rules thereunder enumerated
in Item 3 or otherwise. It is further requested that the Commission issue an
order authorizing the transactions proposed herein at the earliest
practicable date. Additionally, the Applicants (i) request that there not be
any recommended decision by a hearing officer or by any responsible officer
of the Commission, (ii) consent to the Office of Public Utility Regulation
within the Division of Investment Management assisting in the preparation of
the Commission's decision, and (iii) waive the 30-day waiting period between
the 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 immediately.
.
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS
13. The following additional exhibits and financial statements are filed
herewith:
(a) Exhibits
A.9 Proposed Terms of the NU Money Pool (Revised March 2000)*
A.10 Proposed Terms of the NU Money Pool (Revised October 2000)*
F.6 Opinion of Counsel related to matters described in Post-
Effective Amendment No. 14.*
K.4 Schedule of Fees, Commissions and Expenses relating to matters
described on Post-Effective Amendment No. 14.*
I.4 Form of Notice*
* Previously filed
13 "Other Matters
Except in accordance with the Act, neither NU nor any subsidiary thereof
(a) 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 (b) now is or as a consequence of the transactions proposed
herein will become a party to, or has or will as a consequence of the
transactions proposed herein have a right under, a service, sales, or
construction contract with an EWG or a FUCO. None of the proceeds from the
transactions proposed herein will be used by NU and its subsidiaries to
acquire any securities of, or any interest in, an EWG or a FUCO.
NU currently meets all of the conditions of Rule 53(a),except for clause
(1). At June 30, 2000, NU's "aggregate investment," as defined in Rule
53(a)(1), in EWGs and FUCOs was approximately $469.5 million, or
approximately 76.3 % of NU's average "consolidated retained earnings," also
as defined in Rule 53(a)(1), for the four quarters ended June 30, 2000
($615.3 million). With respect to Rule 53(a)(1), however, the Commission has
determined that NU's financing of its investment in Northeast Generation
Company ("NGC"), NU's only current EWG or FUCO in an amount not to exceed to
$481 million or 83% of its "average consolidated retained earnings" would not
have either of the adverse effects set forth in Rule 53(c). See Northeast
Utilities, Holding Company Act Release No. 27148, dated March 7, 2000. NU
continues to assert that its EWG investment in NGC will not adversely affect
the System.
In addition, NU and its subsidiaries are in compliance with the other
provisions of Rule 53(a) and (b), as demonstrated by the following
determinations:
(i) NGC maintains books and records, and prepares 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;
(ii) No employees of NU's public utility subsidiaries have rendered
services to NGC;
(iii) NU has submitted (a) a copy of each Form U-1 and Rule 24 certificate
that has been filed with the Commission under Rule 53 and (b) a copy
of Item 9 of the Form U5S and Exhibits G and H thereof to each state
regulator having jurisdiction over the retail rates of NU's public
utility subsidiaries;
(iv) Neither NU nor any subsidiary has been the subject of a bankruptcy or
similar proceeding unless a plan of reorganization has been confirmed
in such proceeding;
(v) NU's average CREs for the four most recent quarterly periods have not
decreased by 10% or more from the average for the previous four
quarterly periods; and
(vi) In the previous fiscal year, NU did not report operating losses
attributable to its investment in EWGs/FUCOs exceeding 3 percent of
NU's consolidated retained earnings.
Set forth below are summaries of the consolidated capital structures of
NU as of June 30, 2000 and the pro forma consolidated capital structure of
NU showing the effect of the inclusion of the Yankee Subsidiaries in the NU
System Money Pool as proposed herein:
NU Consolidated Capital Structure
(as of June 30, 2000)
(Dollars in thousands)
(unaudited)
Actual Pro Forma
Common Stock Equity . . $2,365,854 37.5% $2,365,854 36.8%
Preferred stock* $ 177,700 2.8% $ 177,700 2.8%
Short and Long-Term Debt* $3,768,353 59.7% $3,888,353 60.4%
Total $6,311,907 100% $6,431,907 100%
* Includes current portion.
SIGNATURES
Pursuant to the requirements of the Public Utility Holding Company Act of
1935, as amended, the undersigned have duly caused this Post-Effective
Amendment to be signed on behalf of each of them by the undersigned thereunto
duly authorized.
Date: October 27, 2000
Northeast Utilities
The Connecticut Light and Power Company
Western Massachusetts Electric Company
Public Service Company of New Hampshire
Holyoke Water Power Company
Northeast Nuclear Energy Company
North Atlantic Energy Corporation
The Rocky River Realty Company
The Quinnehtuk Company
NU Enterprises, Inc.
Northeast Generation Company
Northeast Generation Service Company
Select Energy, Inc.
Mode 1 Communications, Inc.
HEC Inc.
Yankee Energy System, Inc.
Yankee Gas Services, Inc.
Yankee Financial Services, Inc.
Yankee Energy Services Company
NorConn Properties, Inc.
R.M. Services, Inc.
By: /s/ Cheryl W. Grise, Senior Vice President, Secretary and General
Counsel, Northeast Utilities Service Company as Agent for all of the above
named companies
