As filed with the Securities and Exchange Commission on July 21, 2000
File No. 70-_______
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------
APPLICATION-DECLARATION
ON FORM U-1
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
-------------------------------------
Sierra Pacific Resources Portland General Electric Company
6100 Neil Road 121 SW Salmon Street
Reno, Nevada 89511 Portland, Oregon 97204
------------------------------------
(Name of companies filing this statement
and addresses of principal executive offices)
Michael R. Niggli Peggy Y. Fowler
Chairman and Chief President and Chief Executive Officer
Executive Officer Portland General Electric Company
Sierra Pacific Resources 121 SW Salmon Street
6100 Neil Road Portland, Oregon 97204
Reno, Nevada 89511 (503) 464-8000
(702) 834-3600
-------------------------------------
(Names and addresses of agents for service)
The Commission is also requested to send copies of all
notices, orders and communications in connection
with this Application to:
-------------------------------------
Clifford M. (Mike) Naeve, Esq. Joanne C. Rutkowski, Esq.
William C. Weeden LeBoeuf, Lamb, Greene
Paul Silverman, Esq. & MacRae, L.L.P.
W. Mason Emnett, Esq. 1875 Connecticut Avenue, N.W.
Skadden, Arps, Slate, Washington, D.C. 20009
Meagher & Flom LLP
1440 New York Avenue, N.W. Adam Wenner, Esq.
Washington, D.C. 20005 Vinson & Elkins L.L.P.
1455 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
<PAGE>
Item 1. Description of The Proposed Transaction
A. Introduction and General Request
1. Overview of the Acquisition
Sierra Pacific Resources, a Nevada corporation ("Sierra Pacific"), has
filed with the Commission an Application/Declaration on Form U-1 (File No.
70-9619) (the "Merger U-1") under Sections 9(a)(2) and 10 of the Public Utility
Holding Company Act of 1935, as amended ("Act"), seeking approvals relating to
the proposed acquisition by Sierra Pacific of Portland General Electric Company,
an Oregon corporation ("PGE"), pursuant to which PGE will become a wholly-owned
subsidiary of Sierra Pacific (as described in the Merger U-1, the
"Transaction"), and for other related transactions. Sierra Pacific will register
as a holding company under the Act upon the consummation of the Transaction.
Each of the entities that will be direct or indirect subsidiaries of Sierra
Pacific upon consummation of the Transaction is referred to herein individually
as a "Subsidiary" and collectively as "Subsidiaries." Sierra Pacific and the
Subsidiaries are sometimes collectively referred to below as the "Sierra System"
or as the "Applicants".
2. General Request
This Application/Declaration seeks authorization and approval by the
Commission for the ongoing financing activities and other matters pertaining to
Sierra Pacific and the Subsidiaries following the Transaction and registration
of Sierra Pacific as a holding company. Specifically, this
Application/Declaration seeks the following authorizations and approvals:
o In order to ensure that the Sierra System can meet its capital
requirements immediately following registration and plan its future
financing, Sierra Pacific and the Subsidiaries request authorization
for financing transactions for the period beginning with the effective
date of an order issued pursuant to this filing and continuing for a
period of three (3) years from the date of that order (the
"Authorization Period").
o Sierra Pacific requests that the Commission approve under Sections
6(a) and 7 of the Act the issuance of 6,600,000 shares of common stock
under common stock investment and stock-based management incentive and
employee benefit plans.
<PAGE>
o In addition, the Applicants request authorization to (i) enter into
hedging transactions; (ii) acquire financing subsidiaries; and (iii)
acquire intermediate subsidiaries for the purpose of investing in Rule
58 subsidiaries, exempt telecommunications companies as defined in
Section 34 of the Act ("ETCs"), or other non-exempt non-utility
subsidiaries.
This Application/Declaration also seeks a general grant of authority
for Sierra Pacific, after the Transaction, to restructure its non-utility
interests from time to time, without the need to apply for or receive prior
Commission approval. The restructuring could involve the formation of one or
more new special-purpose subsidiaries to hold direct or indirect interests in
any of all of the Sierra System's existing or future authorized non-utility
businesses. This authority is similar to that recently granted in Columbia
Energy Group, Holding Co. Act Release No. 27099 (Nov. 5, 1999).
B. Description of the Parties to the Transaction
Following completion of the Transaction, Sierra Pacific will have
three operating public utility company subsidiaries (the "Utility
Subsidiaries"):
o Sierra Pacific Power Company ("SPPC"), a public utility company
engaged in: (i) the generation, purchase, transmission, distribution
and sale of electricity in northern Nevada and the Lake Tahoe region
of California; (ii) the purchase, distribution, and sale of natural
gas; and (iii) the distribution and sale of water, the latter two
activities confined to Reno and Sparks, Nevada and the surrounding
area;
o Nevada Power Company ("Nevada Power"), a public utility company
engaged in the generation, purchase, transmission, distribution and
sale of electricity in Las Vegas and surrounding communities in
southern Nevada; and
o PGE, a public utility company engaged in the generation, purchase,
transmission, distribution and sale of electricity in the State of
Oregon.
A list of Sierra Pacific's other Subsidiaries is set forth in the
Merger U-1 and the exhibits thereto. All of Sierra Pacific's direct and indirect
Subsidiaries, other than the Utility Subsidiaries, are referred to as the
"Non-Utility Subsidiaries" in this Application/Declaration.
<PAGE>
C. Other Pending Applications
o File No. 70-9619: Sierra Pacific and PGE are seeking approval for the
Transaction and related matters.
o File No. 70-9621: Sierra Pacific is seeking Commission authorization
and approval with respect to the provision of intra-system services
following the Transaction ("Service Company U-1").
D. Overview of Financing Request
This Application/Declaration requests financing authority to maintain
existing financing facilities after the Transaction and to meet the capital
requirements for the Sierra System after completion of the Transaction and the
registration of Sierra Pacific as a holding company. Specifically, the
Applicants request authorization to engage in the financing transactions
described below during the Authorization Period. Approval of this request will
give the Applicants the flexibility to respond quickly and efficiently to their
financing needs and to changes in market conditions, allowing them to carry on
competitive business activities efficiently and effectively and thus provide
benefits to customers and shareholders. Approval of this Application/Declaration
is consistent with existing Commission precedent, both for newly registered
holding company systems, see, e.g., New Century Energies, Inc., Holding Co. Act
Release No. 26750 (Aug. 1, 1997); Ameren Corporation, Holding Co. Act Release
No. 26809 (Dec. 30, 1997); Conectiv, Inc., Holding Co. Act Release No. 26833
(Feb. 26, 1998); Dominion Resources, Inc., Holding Co. Act Release No. 27112
(Dec. 15, 1999), and holding company systems that have been registered for a
longer period of time, see, e.g., The Columbia Gas System, Inc., Holding Co. Act
Release No. 26634 (Dec. 23, 1996); Gulf States Utilities Company, Holding Co.
Act Release No. 26451 (Jan. 16, 1996)).
The financing authorizations requested in this Application/Declaration
relate to:
o (a) external issuances by Sierra Pacific of common stock, preferred
stock, trust preferred securities, hybrid securities (i.e.,
mandatorily convertible securities), long-term debt, short-term debt,
and other securities and (b) the entering into by Sierra Pacific of
transactions to manage interest rate risk ("hedging transactions");
<PAGE>
o issuances of debt securities (including commercial paper) and the
entering into of hedging transactions by the Utility Subsidiaries to
the extent not exempt pursuant to Rule 52;
o issuances by Non-Utility Subsidiaries of debt securities that are not
exempt pursuant to Rule 52;
o the ability of wholly owned Subsidiaries to alter their capital stock
in order to engage in financing transactions with their parent company
and to engage in a reverse stock split to reduce franchise taxes,
subject, in the case of Utility Subsidiaries, to the approval of, if
required, a state utility commission in a state where the utility is
incorporated and doing business; and
o the formation of financing entities and the issuance by such entities
of securities otherwise authorized to be issued and sold pursuant to
this Application/Declaration or pursuant to applicable exemptions
under the Act, including intra-system guarantees of such securities
and the retention of existing financing entities.
As indicated in the Merger U-1, Sierra Pacific anticipates that it
will finance most of the consideration required to complete the Transaction
through the use of short-term debt authorized by that Application/Declaration,
such as commercial paper, money market notes and/or bank loans. Depending on
interest rates prevailing at the time the Transaction closes, it may also be
cost-effective to issue some of the long-term debt authorized by this
Application/Declaration at that time. However, the aggregate amount of
short-term and long-term debt outstanding to finance the Transaction will not
exceed $2.1 billion. After the Transaction is completed, Sierra Pacific plans to
pay off part of the outstanding short-term debt with the proceeds of the sale of
the electric generation assets of SPPC and Nevada Power and also reduce holding
company debt through the issuance of additional common stock. Sierra Pacific
then plans to refinance within the Authorization Period the remaining balance of
short-term debt incurred to fund the Transaction consideration with one or more
forms of long-term debt and/or trust preferred and hybrid securities authorized
in connection with this Application/ Declaration. All of the financing required
to raise the Transaction consideration will be take place at the holding company
level.
<PAGE>
E. Parameters for Financing Authorization
Applicants request authorization to engage without further Commission
prior approval in certain financing transactions during the Authorization Period
for which the specific terms and conditions are not at this time known, and
which may not be covered by Rule 52. The following general terms (collectively,
"Financing Parameters") will be applicable where appropriate to these financing
transactions:
1. Effective Cost of Money on Borrowings
The effective cost of money on long-term debt borrowings occurring
pursuant to the authorizations granted under this Application/Declaration will
not exceed 300 basis points over the comparable term U.S. Treasury securities,
and the effective cost of money on short-term debt borrowings pursuant to
authorizations granted under this Application/Declaration will not exceed 300
basis points over the comparable term London Interbank Offered Rate ("LIBOR").
2. Maturity of Debt
The maturity of indebtedness will not exceed 50 years.
3. Issuance Expenses
The underwriting fees, commissions or other similar remuneration paid
in connection with the non-competitive issue, sale or distribution of a security
pursuant to authority granted in connection with this Application/Declaration
will not exceed 5% of the principal or total amount of the security being
issued.
4. Use of Proceeds
The proceeds from the sale of securities in external financing
transactions will be used:
o to pay the consideration required in order to complete the
Transaction or to refinance short-term debt originally incurred
to raise all or a portion of the Transaction consideration, and
<PAGE>
o for general corporate purposes including (i) the financing, in
part, of the capital expenditures of the Sierra System, (ii) the
financing of working capital requirements of the Sierra System,
(iii) the acquisition, retirement or redemption pursuant to Rule
42 under the Act of securities previously issued by Sierra
Pacific or its Subsidiaries without the need for prior Commission
approval, and (iv) other lawful purposes, including direct or
indirect investment in companies authorized under the Merger U-1,
the Service Co. U-1 and in Rule 58 companies and ETCs. The
Applicants represent that no such financing proceeds will be used
to acquire a new subsidiary unless such financing is completed in
accordance with a Commission order or an available exemption
under the Act.
F. Description of Specific Types of Financing
1. Sierra Pacific External Financing
Sierra Pacific requests authorization to obtain funds externally
through sales of common stock, preferred stock, trust preferred and hybrid
securities, long-term debt and short-term debt securities in an aggregate amount
not to exceed $3.15 billion during the Authorization Period. With respect to
common stock, Sierra Pacific also requests authority to issue common stock to
third parties in consideration for the acquisition by Sierra Pacific or a
Non-Utility Subsidiary of equity or debt securities of a company being acquired
pursuant to Rule 58 or Section 34 of the Act. In addition, Sierra Pacific seeks
the flexibility to enter into certain hedging transactions to manage rate risk.
a. Common Stock
The aggregate amount of financing obtained by Sierra Pacific during
the Authorization Period from issuance and sale of common stock, par value $1.00
per share (other than for employee benefit plans or stock purchase and common
stock investment plans, which are addressed below in this
Application/Declaration) shall not exceed $360 million for the uses set forth in
Section D above.
i. General
Subject to the foregoing, Sierra Pacific may issue and sell up to $360
million of common stock. Sierra Pacific may also repurchase shares of such stock
during the Authorization Period in accordance with Rule 42. Common stock
financings may be effected pursuant to underwriting agreements of a type
generally standard in the industry. Public distributions may be pursuant to
private negotiation with underwriters, dealers or agents as discussed below or
effected through competitive bidding among underwriters. In addition, sales may
be made through private placements or other non-public offerings to one or more
persons. All such common stock sales will be at rates or prices and under
conditions negotiated or based upon, or otherwise determined by, competitive
capital markets.
<PAGE>
Sierra Pacific may sell common stock covered by this
Application/Declaration in any one of the following ways: (i) through
underwriters or dealers; (ii) through agents; (iii) directly to a limited number
of purchasers or a single purchasers; or (iv) directly to employees (or to
trusts established for their benefit), shareholders and others through its
employee benefit plans, director stock plans or stock purchase and common stock
investment plans. If underwriters are used in the sale of the securities, such
securities will be acquired by the underwriters for their own account and may be
resold from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. The securities may be offered to the public either through
underwriting syndicates (which may be represented by a managing underwriter or
underwriters designated by Sierra Pacific) or directly by one or more
underwriters acting alone. The securities may be sold directly by Sierra Pacific
or through agents designated by Sierra Pacific from time to time. If dealers are
utilized in the sale of any of the securities, Sierra Pacific will sell such
securities to the dealers as principals. Any dealer may then resell such
securities to the public at varying prices to be determined by such dealer at
the time of resale. If common stock is being sold in an underwritten offering,
Sierra Pacific may grant the underwriters thereof a "green shoe" option
permitting the purchase from Sierra Pacific at the same price of additional
shares then being offered solely for the purpose of covering over-allotments.
ii. Acquisitions
Under the terms of Rule 58 and Section 34 of the Act, Sierra Pacific
is authorized to acquire securities of companies engaged in energy-related
consumer services, "energy-related businesses" as described in Rule 58 and ETCs.
Historically, similar acquisitions have occasionally involved the exchange of
parent company stock for securities of the company being acquired in order to
provide the seller with certain tax advantages. These transactions are
individually negotiated. The Sierra Pacific common stock to be exchanged may be
purchased on the open market pursuant to Rule 42 or may be original issue.
Original issue stock may be registered under the Securities Act of 1933, as
amended (the "1933 Act"), but at present it is expected that the common stock
would not be registered and that the common stock acquired by the third parties
would be subject to resale restrictions pursuant to Rule 144 under the 1933 Act.
Such transactions would not occur while a public offering is being made.
<PAGE>
The ability to offer stock as consideration makes a transaction more
economical for Sierra Pacific as well as for the seller of the business.
Therefore, Sierra Pacific requests authorization to issue common stock in
consideration for an acquisition by Sierra Pacific or a Non-Utility Subsidiary
of securities of a business, the acquisition of which is exempt under Rule 58 or
Section 34 of the Act. The Sierra Pacific common stock would be valued at market
value based upon the closing price on the day before the closing of the sale or
based upon average high and low prices for a period prior to the closing of the
sale as negotiated by the parties. From the perspective of the Commission, the
use of stock as consideration valued at market value is no different than a sale
of common stock on the open market and use of the proceeds to acquire
securities, the acquisition of which is otherwise authorized.
b. Preferred Stock
i. General
Although Sierra Pacific does not currently have any shares of
preferred stock outstanding, nor are any shares currently authorized for
issuance under its Restated Articles of Incorporation, Sierra Pacific may find
it advantageous to issue preferred stock to meet some portion of its financing
requirements. In such event, Sierra Pacific would request approval from its
common shareholders of an amendment to its Restated Articles of Incorporation to
create one or more classes of preferred stock. It is anticipated that any such
class of preferred stock would authorize the Board of Directors of Sierra
Pacific to issue preferred stock in one or more series, with such terms,
including par value or stated value, dividend amount, payment dates, redemption
provisions, rights to convert into common stock or other securities of Sierra
Pacific, and relative preference of dividends and upon liquidation, as the Board
of Directors deems appropriate at the time of issuance. Such terms would be set
forth in a certificate of designation which would be filed with the Secretary of
State of the State of Nevada. The aggregate amount of financing obtained by
Sierra Pacific during the Authorization from issuance and sale of preferred
stock shall not exceed $900 million.
ii. Conversion of Mandatorily Convertible Securities
Part of Sierra Pacific's plan to increase its common equity may
involve the issuance, during the Authorization Period, of up to $300 million of
mandatorily convertible securities which will convert to common equity no later
than three years following the date of issue. It is contemplated that these
convertible securities will consist either of preferred stock or long-term,
unsecured debt securities of Sierra Pacific. At the time of issuance of these
securities, Sierra Pacific will need to reserve for issuance a sufficient amount
of preferred stock to cover the potential conversion of the entire amount of
convertible securities. Therefore, Sierra Pacific's request for authorization to
issue $900 million of preferred stock includes $300 million of preferred stock
that would be issued upon conversion of the mandatorily convertible securities.
<PAGE>
c. Short-Term Debt
Sierra Pacific and its Subsidiaries further request Commission
authorization during the Authorization Period to issue short-term debt
securities in an amount not to exceed $940 million. This short-term debt will be
used to fund the general working capital needs of the Subsidiaries following the
Transaction.
The issuance of short-term debt requested in this
Application/Declaration is in addition to the $2.1 billion of short-term debt
requested in the Merger U-1 to provide temporary funding for the Transaction. As
described in the Merger U-1, the short-term debt incurred to fund the
Transaction will be paid off in part with a portion of the proceeds of the
divestiture of SPPC's and Nevada Power's electric generation assets as well as
the sale of common equity and/or non-core assets, with the balance refinanced
with a combination of trust preferred stock, hybrid securities, and/or long-term
debt within one year following the closing of the Transaction.
The short-term debt requested in this Application/Declaration will
consist of one or more of the following: borrowings from commercial or
investment banks or other financial institutions; commercial paper; money market
notes; or, floating rate or variable notes (all as described below).
Sierra Pacific currently maintains a committed line of credit for $150
million under an unsecured revolving credit facility with Mellon Bank, First
Union National Bank and Wells Fargo, as syndication agents. This facility may be
used for working capital and general corporate purposes, including for
commercial paper backup and is currently scheduled to decrease in amount prior
to closing of the Transaction. Accordingly, it is anticipated that any
short-term loans borrowed by Sierra Pacific in connection with or after the
Transaction will be borrowed under one or more new facilities to be entered into
prior to or at the time of the Transaction. It is likely that any such credit
facilities would be provided by a syndicate comprised of a number of commercial
banks or other financial institutions.
<PAGE>
Sierra Pacific also may sell commercial paper in established domestic
or European commercial paper markets. Such commercial paper would be sold to
dealers at the discount rate or the coupon rate per annum prevailing at the date
of issuance for commercial paper of comparable quality and maturities sold to
commercial paper dealers generally. It is expected that the dealers acquiring
commercial paper from Sierra Pacific will reoffer such paper at a discount to
corporate, institutional and, with respect to European commercial paper,
individual investors. Institutional investors are expected to include commercial
banks, insurance companies, pension funds, investment trusts, foundations,
colleges and universities and finance companies. The commercial paper programs
will be backed up by the bank credit facilities described above.
Sierra Pacific also may incur short-term debt through the issuance of
instruments customarily referred to as "money market notes," "floating rate
notes" or "variable rate notes." This type of debt is usually issued pursuant to
a fiscal and paying agency agreement or similar type of agreement, rather than
through an indenture, and bears an interest rate that is either (i) tied to a
customary interest rate index such as LIBOR which is adjusted on a periodic
basis or (ii) set by an auction process. These notes are typically sold to
qualified institutional investors or other accredited investors pursuant to Rule
144A promulgated under the Securities Act of 1933, as amended, although it is
possible that they may be offered in one or more of the manners described under
Long-Term Debt below. The maturity of these notes may vary from less than one
year to up to two years. Hence, they are referenced in this
Application/Declaration both under Short-term debt and long-term debt. The
specific terms of any such notes will be determined by Sierra Pacific at the
time of issuance and will comply in all regards with the Financing Parameters.
d. Long-Term Debt
Sierra Pacific requests Commission authorization during the
Authorization Period to issue long-term debt securities in an amount not to
exceed $950 million. These long-term debt securities will be used to provide
medium to long-term financing for the various capital needs of the Sierra
Pacific System following the Transaction. This amount is in addition to the
long-term debt requested in the Merger U-1 to finance the Transaction
consideration of $2.1 billion.
The long-term debt securities requested in this
Application/Declaration would be comprised of: (i) unsecured notes, debentures,
medium-term notes, mandatorily convertible debt securities or other debt
securities under an indenture (the "Sierra Pacific Indenture"); (ii) instruments
customarily referred to as "money market notes," "floating rate notes" or
"variable rate notes" with maturities of greater than one year; or (iii)
<PAGE>
long-term loans from commercial or investment banks pursuant to credit
facilities or loan agreements. Any long-term debt security would have such
designation, aggregate principal amount, maturity, interest rate(s) or methods
of determining the same, terms of payment of interest, redemption provisions,
conversion provisions, sinking fund terms and other terms and conditions as
Sierra Pacific may determine at the time of issuance. Moreover, Sierra Pacific
will not issue any new long-term debt unless its outstanding long-term debt is
rated "investment grade" by at least one nationally recognized statistical
rating organization. The request for authorization for Sierra Pacific to issue
long-term debt securities is consistent with authorization that the Commission
has granted to other combination gas and electric holding companies. See
Dominion Resources, Inc., Holding Co. Act Release No. 27112 (Dec. 15, 1999)
(authorizing the issuance of debt securities by the registered holding company,
including the refinancing of $4.5 billion of acquisition indebtedness);
Conectiv, Inc., Holding Co. Act Release No. 26921 (Sept. 28, 1998) (authorizing
issuance of up to $250 million of debentures); and Cinergy Corp., Holding Co.
Act Release No. 26909 (Aug. 21, 1998) (authorizing the issuance of up to $400
million of unsecured debt securities).
i. Terms of Sierra Pacific Indenture
Sierra Pacific has filed a universal shelf registration with the
Commission on June 7, 1999 (Registration No. 33380149) covering the issuance of
up to $500 million of senior, unsecured debt or trust preferred securities. As
part of that filing, Sierra Pacific filed a form of the Sierra Pacific
Indenture, which will permit the issuance of a wide variety of senior, unsecured
debt securities in one or more series. On May 9, 2000, Sierra Pacific issued
$300 million of notes under the shelf registration. Proceeds from this issuance
were utilized to retire the remaining balance of short-term debt incurred to
complete the merger of Sierra Pacific and Nevada Power Company. Sierra Pacific
currently anticipates no further issuance under the existing shelf
registration.1 Rather, Sierra Pacific expects to file a new universal shelf
registration with the Commission for the issuance of long-term debt securities
authorized pursuant to the Merger U-1 or this Application/Declaration and may
continue to utilize the Sierra Pacific Indenture for any such issuance. The
Sierra Pacific Indenture will be qualified under the Trust Indenture Act of
1939, as amended.
---------------
1 To the extent such issuance is made under the existing shelf registration,
however, the issuance would be subject to the aggregate limits on financing
authorization requested in this Application/Declaration.
<PAGE>
The Sierra Pacific Indenture will permit debt securities with a number
of variable terms, such as the principal amounts (including original issue
discount), interest rates (including those based on a formula or index),
redemption terms, sinking funds, currency of payment, denominations, conversion
provisions, events of default, etc., to be included or excluded or made
applicable to a particular series of securities. These terms will be set forth
either in (i) a supplemental indenture or (ii) an officer's certificate and
company order, as applicable. In theory, any combination of the variable terms
could be included in a single series of securities which, under current
practice, would be called "notes," "debentures" or "medium-term notes." The
Sierra Pacific Indenture will also permit any series of securities to be issued
either in certificated form or in "global" form (i.e., transferable only by book
entry on the records of a securities depository such as The Depository Trust
Company).
As discussed above, part of Sierra Pacific's plan to increase its
common equity may involve the issuance of up to $300 million of mandatorily
convertible securities which will convert to common equity no later than three
years following the date of issue. It is currently contemplated that these
convertible securities will consist of either preferred stock or long-term,
unsecured debt securities of Sierra Pacific. The Sierra Pacific Indenture would
permit the issuance of mandatorily convertible debt securities and the request
for long-term debt authorization includes up to $300 million of such securities.
Other than certain provisions relating to restrictions on liens,
mergers and the sale of significant subsidiaries, the Sierra Pacific Indenture
will contain no negative covenants or restrictions. Any additional covenants or
restrictions negotiated at the time of issuance will be included in either (i) a
supplemental indenture or (ii) an officer's certificate and company order, as
applicable, establishing a particular security. The Sierra Pacific Indenture
will contain the following event of default provisions: (i) defaults in payment
of the Sierra Pacific Indenture securities; (ii) defaults under covenants under
the Sierra Pacific Indenture, (iii) failures to comply with instruments
governing other indebtedness and certain other agreements; and (iv) certain
events of insolvency with respect to Sierra Pacific subject, as applicable, to
customary grace periods.
A copy of any new supplemental indenture under the Sierra Pacific
Indenture or an officer's certificate and company order executed and delivered
pursuant to this Authorization will be filed under cover of the first quarterly
report under Rule 24 filed after such execution and delivery.
<PAGE>
Sierra Pacific may sell long-term debt securities covered by this
Application/Declaration in any one of the following ways: (i) through
underwriters or dealers; (ii) through agents; or (iii) directly to a limited
number of purchasers or a single purchaser, including sales made pursuant to
Rule 144A. If underwriters are used in the sale of the securities, such
securities will be acquired by the underwriters for their own account and may be
resold from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. The securities may be offered to the public either through
underwriting syndicates (which may be represented by a managing underwriter or
underwriters designated by Sierra Pacific) or directly by one or more
underwriters acting alone. The securities may be sold directly by Sierra Pacific
or through agents designated by Sierra Pacific from time to time. If dealers are
utilized in the sale of any of the securities, Sierra Pacific will sell such
securities to the dealers as principals. Any dealer may then resell such
securities to the public at varying prices to be determined by such dealer at
the time of resale.
ii. Terms of Borrowings from Banks and Other Financial
Institutions
Borrowings from commercial or investment banks and other financial
institutions will be unsecured and will rank pari passu with debt securities
issued under the Sierra Pacific Indenture and the short-term credit facilities
(as described above). Specific terms of any borrowings will be determined by
Sierra Pacific at the time of issuance and will comply in all regards with the
Financing Parameters. A copy of any additional note or agreement executed and
delivered pursuant to this authorization will be filed under cover of the first
quarterly report under Rule 24 filed after such execution and delivery.
iii. Terms of Money Market Notes and Similar Instruments
As noted above under Short-Term Debt, Sierra Pacific may issue
instruments customarily referred to as "money market notes," "floating rate
notes" or "variable rate notes." Although these notes frequently have maturities
of less than one year, they can also be issued with maturities of up to three
years. The specific terms of any such notes will be determined by Sierra Pacific
at the time of issuance and will comply in all regards with the Financing
Parameters. As is the case with the short-term version of this instrument, these
notes are usually issued pursuant to a fiscal and paying agency agreement or
similar type of agreement, rather than through an indenture, and bear an
interest rate that is either (a) tied to a customary interest rate index such as
LIBOR which is adjusted on a periodic basis or (b) set through an auction
process. These notes are typically sold to qualified institutional investors or
other accredited investors pursuant to Rule 144A, although they may also be sold
in one or more of the manners described above for other long-term debt
securities.
<PAGE>
e. Total Financing Sought
The aggregate amount of equity and debt financing to be obtained by
Sierra Pacific during the Authorization Period pursuant to this
Application/Declaration shall not exceed $3.15 billion.
f. Other Securities
In addition to the specific securities for which authorization is
sought herein, Sierra Pacific may also find it necessary or desirable to
minimize financing costs or to obtain new capital under then-existing market
conditions to issue and sell other types of securities from time to time during
the Authorization Period. The issuance of any such securities would be subject
to the aggregate $3.15 billion limit on equity and debt discussed above. Sierra
Pacific will undertake to file an amendment in this proceeding which will
describe the general terms of each such security and the amount to be issued and
to request a supplemental order of the Commission authorizing the issuance
thereof by Sierra Pacific.
g. Interest Rate Risk Management Devices
Sierra Pacific requests authority to enter into, perform, purchase and
sell financial instruments intended to manage the volatility of interest rates,
including but not limited to interest rate swaps, caps, floors, collars and
forward agreements or any other similar agreements. Sierra Pacific would employ
interest rate swaps as a means of prudently managing the risk associated with
any of its outstanding debt issued pursuant to this authorization or an
applicable exemption by, in effect, synthetically (i) converting variable rate
debt to fixed rate debt, (ii) converting fixed rate debt to variable rate debt,
(iii) limiting the impact of changes in interest rates resulting from variable
rate debt and (iv) providing an option to enter into interest rate swap
transactions in future periods for planned issuances of debt securities. In no
case will the notional principal amount of any interest rate swap exceed that of
the underlying debt instrument and related interest rate exposure. Thus, Sierra
Pacific will not engage in "leveraged" or "speculative" transactions. The
underlying interest rate indices of such interest rate swaps will closely
correspond to the underlying interest rate indices of Sierra Pacific's debt to
which such interest rate swap relates. Sierra Pacific will only enter into
interest rate swap agreements with counter parties whose senior debt ratings, as
published by Standard & Poor's, A Division of The McGrawHill Companies, are
greater than or equal to "BBB+", or an equivalent rating from Moody's Investors
Service, Inc., Fitch IBCA, Inc. or Duff & Phelps Credit Rating Co.
<PAGE>
Sierra Pacific and its Subsidiaries will comply with SFAS 80
("Accounting for Futures Contracts"), SFAS 133 ("Accounting for Derivatives
Instruments and Hedging Activities") when it is implemented or such other
standards relating to accounting for derivative transactions as are adopted and
implemented by the Financial Accounting Standards Board ("FASB"). In addition,
these financial instruments will qualify for hedge accounting treatment under
FASB rules.
2. Utility Subsidiary Financing
As indicated on Exhibit H-1 hereto, the Utility Subsidiaries have
financing arrangements in place. These arrangements will remain in place
following the Transaction and are described in more detail in Exhibit H-1
hereto.
Rule 52 provides an exemption from the prior authorization
requirements of the Act for most of the issuances and sales of securities by the
Utility Subsidiaries because they must be approved by the relevant state public
utility commission, which, depending on the particular subsidiary involved, may
mean either the Public Utilities Commission of Nevada (the ("PUCN") or the
Oregon Public Utility Commission (the "Oregon PUC"). However, certain external
financings by the Utility Subsidiaries for which authorization is request herein
may be outside the Rule 52 exemption. The authority herein sought excludes
financings exempt under Rule 52. Financings obtained under this authorization
will be used for general corporate purposes and working capital requirements.
a. Short-Term Debt
Authority is requested for PGE to issue commercial paper and establish
credit lines in the aggregate amount of $350 million to be outstanding at any
one time during the Authorization Period. (This amount is included in the $940
million of short-term debt described in Item I.F.1.c above.) PGE requests
authority to sell commercial paper, from time to time, in established domestic
or European commercial paper markets in a manner similar to Sierra Pacific as
discussed above. PGE may further maintain back-up lines of credit in an
aggregate amount not to exceed the amount of authorized commercial paper.
Credit lines may be set up for use by PGE for general corporate
purposes in addition to credit lines to support commercial paper as described in
this subsection. PGE will borrow and repay under such lines of credit, from time
to time, as it is deemed appropriate or necessary. Subject to the limitations
described herein, PGE may engage in other types of short-term financings as it
may deem appropriate in light of its needs and market conditions at the time of
issuance including, but not limited to, the issuance of "money market notes,"
"floating rate notes" or "variable rate notes" in a manner similar to Sierra
Pacific as discussed above.
<PAGE>
b. Interest Rate Risk Management Devices
PGE requests authority to enter into, perform, purchase and sell
financial instruments intended to manage the volatility of interest rates,
including but not limited to interest rate swaps, caps, floors, collars and
forward agreements or other similar agreements to the extent the same are not
exempt under Rule 52. Such authority would be subject to the same conditions as
are specified above for Sierra Pacific. PGE may employ interest rate swaps as a
means of managing risk associated with any of its outstanding debt issued
pursuant to this authorization or an applicable exemption. PGE requests
authority to make and continue use of financial hedging instruments in
connection with utility operations. PGE will not engage in speculative
transactions.
3. Non-Utility Subsidiary Financings
The Merger U-1 contemplates, and the order permitting the Merger U-1
to become effective will authorize, the formation or retention of other
Non-Utility Subsidiaries which do not currently have outstanding debt. It is
expected that future financing by all such Non-Utility Subsidiaries will be made
pursuant to the terms of Rule 52.
The Non-Utility Subsidiaries are engaged in and expect to continue to
be active in the development and expansion of their existing energy-related or
otherwise functionally-related, non-utility business. They will be competing
with large, well-capitalized companies in different sectors of the energy
industry and other industries. In order to quickly and effectively invest in
such competitive arenas, it will be necessary for the Non-Utility Subsidiaries
to have the ability to engage in financing transactions which are commonly
accepted for such types of investments. The majority of such financings will be
exempt from prior Commission authorization pursuant to Rule 52(b). The
Non-Utility Subsidiaries, however, may engage, from time to time, in types of
security financing with non-affiliates that are not exempt from prior Commission
approval. The Non-Utility Subsidiaries, therefore, request that the Commission
(i) reserve jurisdiction over the issuance of such additional types of
securities and the amounts thereof and (ii) undertake to cause an amendment to
be filed in this proceeding which will request a supplemental order of the
Commission authorizing the issuance thereof by the subject Non-Utility
Subsidiary.
<PAGE>
4. Guarantees
Sierra Pacific requests authorization to enter into guarantees, obtain
letters of credit, enter into expense agreements or otherwise provide credit
support with respect to the obligations of its Subsidiaries as may be
appropriate or necessary to enable such Subsidiaries to carry on in the ordinary
course of their respective businesses in an aggregate principal amount not to
exceed $100 million outstanding at any one time (not taking into account
obligations exempt pursuant to Rule 45). Included in this amount are guarantees
and other credit support mechanisms of Sierra Pacific's Subsidiaries. Sierra
Pacific requests that this guarantee authority include the ability to guarantee
debt.
5. Changes in Capital Stock of Wholly Owned Subsidiaries
The portion of an individual Subsidiary's aggregate financing to be
effected through the sale of stock to Sierra Pacific or other immediate parent
company during the Authorization Period pursuant to Rule 52 and/or pursuant to
an order issued pursuant to this filing cannot be ascertained at this time. It
is possible that the proposed sale of capital securities may in some cases
exceed the then authorized capital stock of such Subsidiary. In addition, the
Subsidiary may choose to use capital stock with no par value. Also, a wholly
owned Subsidiary may wish to engage in a reverse stock split to reduce franchise
taxes. As needed to accommodate such proposed transactions and to provide for
future issues, request is hereby made for authority to change the terms of any
such wholly owned Subsidiary's authorized capital stock capitalization by an
amount deemed appropriate by Sierra Pacific or other intermediate parent company
in the instant case. A Subsidiary would be able to change the par value, or
change between par value and no-par stock, without additional Commission
approval. Any such action by a Utility Subsidiary would be subject to and would
only be taken upon the receipt of any necessary approvals by the state
commission in the state or states where the Utility Subsidiary is incorporated
and doing business.
6. Amortization of Goodwill
Sierra Pacific expects that the Transaction will result in the
amortization of goodwill equal to the excess of consideration to be paid to
Enron over the net value of assets acquired. Sierra Pacific estimates this
goodwill to be approximately $845 million, which will be amortized at the
holding company level over a forty year period. Accordingly, Sierra Pacific
estimates a reduction in net income associated with this amortization of
approximately $21 million per year. As this merger-related accounting adjustment
will be recorded by Sierra Pacific, it will not affect the cash flow associated
with the utility subsidiaries and there will be no need to pay dividends out of
unearned surplus.
<PAGE>
7. Financing Entities
Authority is sought for Sierra Pacific and the Subsidiaries to
organize new corporations, trusts, partnerships or other entities created for
the purpose of facilitating financings through their issuance to third parties
of income preferred securities or other securities authorized hereby or issued
pursuant to an applicable exemption.2 Request is also made for these financing
entities to issue such securities to third parties in the event such issuances
are not exempt pursuant to Rule 52. Additionally, request is made for
authorization with respect to (i) the issuance of debentures or other evidences
of indebtedness by Sierra Pacific or any of the Subsidiaries to a financing
entity in return for the proceeds of the financing, (ii) the acquisition by
Sierra Pacific or any of the Subsidiaries of voting interests or equity
securities issued by the financing entity (the equity portion of the entity
generally being created through a capital contribution or the purchase of equity
securities, ranging from 1 to 3 percent of the capitalization of the financing
entity) and (iii) the guarantee by the Applicants of such financing entity's
obligations in connection therewith. Each of the Applicants also requests
authorization to enter into an expense agreement with its respective financing
entity, pursuant to which it would agree to pay all expenses of such entity. Any
amounts issued by such financing entities to third parties pursuant to this
authorization will be included in the overall external financing limitation
authorized herein for the immediate parent of such financing entity. However,
the underlying intra-system mirror debt and parent guarantee will not be so
included.
---------------
2 Both SPPC and NPC have existing subsidiaries that have issued trust
preferred securities to the public and hold debentures of their respective
parent company. Sierra Pacific established two subsidiaries in connection
with the filing of its universal shelf registration statement for the
purpose of issuing trust preferred securities. Although it is currently
anticipated that no trust preferred securities will be issued under the
existing universal shelf registration, Sierra Pacific intends to keep such
subsidiaries in existence for possible use in future financings.
Authorization is requested to retain the foregoing financing entities.
<PAGE>
G. Authority to Restructure Non-Utility Interests
Similar to the authority granted in Columbia Energy Group, Holding Co.
Act Release No. 27099 (Nov. 5, 1999), Sierra Pacific seeks a general grant of
authority to restructure, from time to time, its non-utility interests as may be
appropriate to enable the Sierra System to participate effectively in its
authorized non-utility activities. Such restructuring may involve the formation
of new subsidiaries and the reincorporation of existing subsidiaries in a
different state. A reincorporation could take place by merging the existing
subsidiary with a successor incorporated in the desired state. This general
grant of authority will enable the Sierra System to compete more effectively in
its non-utility activities and will apply only to those businesses in which
Sierra Pacific is authorized, whether by statute, rule, regulation or order, to
engage. The proposed restructuring activities would not involve the entry into
another business or otherwise implicate a regulatory concern under the Act. As a
result, this general grant of authority would eliminate the need for subsequent
filings which, while largely a matter of form, represent additional demands on
the Commission's resources in this area.
H. Common Stock Investment Plan, Non-Employee Director Stock Plan and Employee
Benefit Plans
Sierra Pacific proposes, from time to time during the Authorization
Period, to issue and/or to acquire in open market transactions or by some other
method which complies with applicable law and Commission interpretations then in
effect, up to 5 million shares of Sierra Pacific common stock under the Common
Stock Investment Plan, as defined below, and 1.6 million shares of Sierra
Pacific common stock under the Sierra Pacific Plans, as defined below. Sierra
Pacific also proposes to issue options exercisable for common stock and common
stock upon the exercise of options.
1. Common Stock Investment Plan
Sierra Pacific maintains a dividend reinvestment plan with a direct
stock purchase feature called the Sierra Pacific Resources Common Stock
Investment Plan ("Common Stock Investment Plan"). The Common Stock Investment
Plan will remain in effect following completion of the Transaction.
Set forth below is a description of the principal terms of the Common
Stock Investment Plan:
<PAGE>
The Common Stock Investment Plan offers shareholders and other
investors the opportunity to buy, hold and sell shares of Sierra Pacific common
stock. Existing Sierra Pacific shareholders may reinvest dividends on all of
their shares of common stock held in certificate and book entry form in their
Plan account. Investors who are not already shareholders may join the Plan by
making an initial investment of at least $250, up to a maximum of $100,000 per
year. All participants in the Plan may invest additional cash amounts of not
less than $50 per payment, up to $100,000 per year, to purchase additional
shares of Sierra Pacific common stock. The shares of common stock issued under
the Plan can be either newly-issued shares or shares purchased on the open
market by an independent agent of Sierra Pacific, currently Harris Trust Company
of New York. Sierra Pacific may not change from newly-issued shares to open
market purchases more than once in any three (3) month period and only if the
board of directors or chief financial officer of Sierra Pacific determines that
Sierra Pacific's need to raise additional capital has changed or that there is
another valid reason for the change, such as an action by a state or federal
regulatory agency recommending or requiring a change in the capital structure of
Sierra Pacific or any of its major subsidiaries. The current commission charge
for purchasing shares is $.05 per share. The Plan purchases shares once a month
usually on the first day of the month. Cash received and reinvested dividends
are sent to the Plan's administrative agent. A statement is sent each time there
is activity in a shareholder's account.
The Common Stock Investment Plan currently acquires shares in the open
market. All cash received for this Plan is used to buy shares for Plan
participants. The total number of shares issued under the Plan in 1999 was 470.
A full statement of the current provisions of the Common Stock
Investment Plan is included in Sierra Pacific's Registration Statement on Form
S-3 (Exhibit I-1 hereto).
2. Employee and Director Stock-Based Plans
a. Sierra Pacific Plans
Sierra Pacific currently maintains the following employee stock-based
plans: Non-Employee Director Plan, Executive Long-Term Incentive Plan and
Employee Stock Purchase Plan (collectively, the "Sierra Pacific Plans"). The
Sierra Pacific Plans will remain in effect following completion of the
Transaction. Set forth below is a summary of certain features of each of the
Sierra Pacific Plans, which summary is qualified by reference to each such plan
(Exhibits I-2, I-3, and I-4 hereto):
<PAGE>
i. Sierra Pacific Non-Employee Director Stock Plan
The purpose of this plan is to promote the achievement of long-term
objectives of Sierra Pacific by linking the personal interest of eligible
directors, non-employee individuals who are members of Sierra Pacific's Board of
Directors, to those of Sierra's shareholders and to attract and retain highly
qualified eligible directors by mandating that a portion of the annual retainer
fee of each participant be paid in Sierra Pacific common stock. The number of
shares to be issued to each participant as a stock payment is determined by
dividing the applicable market price of the stock into the amount of the annual
retainer in excess of $10,000. In lieu of receiving the cash portion of his or
her annual retainer, a non-employee director may make an election to have all or
part of the cash portion instead applied to purchase additional shares of common
stock. In addition, in lieu of receiving a stock payment under the Plan, a
non-employee director may elect to defer such receipt until he or she ceases to
be a non-employee director. With respect to such deferred shares, the
non-employee director is not a shareholder, has no vote and does not receive
cash dividends. Shares for the Plan are currently purchased through open market
transactions. The total number of shares issued from this plan in 1999 was
11,924. A total of 150,000 shares has been authorized by the Board of Directors
for issuance under this Plan, subject to approval by the shareholders at the
Sierra Pacific annual meeting to be held in June 2000.
ii. Sierra Pacific Executive Long-Term Incentive Plan
The purpose of Sierra Pacific's Executive Long-Term Incentive Plan
(the "ELTIP") is to promote the success and enhance the value of Sierra Pacific
by linking participants' personal interests with those of Sierra Pacific's
shareholders, customers and employees, by providing participants with an
incentive for outstanding performance, and to motivate, attract and retain the
services of participants upon whom the success of Sierra Pacific depends. The
ELTIP provides for the granting of stock options (both incentive stock options
under Section 422 of the Internal Revenue Code and so-called non-qualified
options), stock appreciation rights, restricted stock performance units,
performance shares and bonus stock to participating employees.
Executives granted performance shares under the ELTIP are assigned
target awards at the beginning of each three-year period based primarily on
salary level, level of responsibilities and competitive practices. Awards are
based on the achievement of pre-established financial goals for Sierra Pacific.
Goals have been established for customer satisfaction, total shareholder return
compared with the Dow Jones Utility Index, and annual growth in earnings per
share. Awards under this plan represent a significant portion of executives'
"at-risk" compensation. Awards may be paid in stock or cash or a combination of
stock and cash.
<PAGE>
The total number of shares issued from the plan in 1999 was 5,493. A
total of 1,750,000 shares has been authorized by the Board of Directors for
issuance under this Plan, subject to approval by the shareholders at the Sierra
Pacific annual meeting to be held in June 2000.
iii. Sierra Pacific Employee Stock Purchase Plan
The purpose of the Sierra Pacific Employee Stock Purchase Plan (the
"ESPP") is to encourage stock ownership in Sierra Pacific by employees in order
to give them an increased interest in the success and progress of Sierra Pacific
and to strengthen their desire to continue in its employment. The ESPP is
intended to qualify as an "employee stock purchase plan" under Section 423 of
the Internal Revenue Code.
All employees of Sierra Pacific and any of its subsidiaries (to the
extent approved by Sierra Pacific's Board of Directors and the board of
directors of such subsidiary) who are customarily employed for more than 20
hours per week and more than five(5) months per year may participate in the
ESPP. The ESPP provides that twice each year, at the beginning of designated
six-month payment periods, Sierra Pacific will grant to each eligible employee
who is then a participant in the ESPP and option to purchase Sierra Pacific
common stock at a price equal to the lesser of (i) 90% of the closing price for
such stock on the day the option was granted or (ii) 100% of the closing price
for such stock on the offering exercise date.
Employees who elect to participate in the ESPP will save regularly by
payroll deductions up to, but not exceeding, 15% of base pay. Participants may
not be granted an option to purchase stock at a rate that exceeds $25,000 of the
fair market value of the stock for each calendar year in which the option is
outstanding. At the end of each six-month period, these savings will be used to
acquire Sierra Pacific common stock, with any brokerage commissions to be paid
by Sierra Pacific.
The total number of shares issued from the ESPP in 1999 was 7,717. A
total of 900,162 shares has been authorized by the Board of Directors for
issuance under this Plan, subject to approval by the shareholders at the Sierra
Pacific annual meeting to be held in June 2000.
<PAGE>
I. Tax Allocation Agreement
Sierra Pacific proposes to enter into a tax allocation agreement with
the Subsidiaries, a copy of which is attached hereto as Exhibit J-1. This
agreement will comply fully with Rule 45(c) under the Act, and no exemption is
being requested in this connection at this time.
J. Filing of Certificates of Notification
It is proposed that, with respect to Sierra Pacific, the reporting
systems of the Securities Exchange Act of 1934, as amended (the "1934 Act") and
the 1933 Act be integrated with the reporting system under the Act. This
integration would eliminate duplication of filings with the Commission that
cover essentially the same subject matters, resulting in a reduction of expense
for both the Commission and Sierra Pacific. To effect such integration, the
portion of the 1933 Act and 1934 Act reports containing or reflecting
disclosures of transactions occurring pursuant to the authorization granted in
this proceeding would be incorporated by reference into this proceeding through
Rule 24 certificates of notification. The certificates would also contain all
other information required by Rule 24, including the certification that each
transaction being reported on had been carried out in accordance with the terms
and conditions of and for the purposes represented in this
Application/Declaration. Such certificates of notification would be filed within
60 days after the end of the last calendar quarter, in which transactions occur.
The Rule 24 certificates will contain the following information:
a. If sales of common stock by Sierra Pacific are reported, the
purchase price per share and the market price per share at the
date of the agreement of sale;
b. The total number of shares of Sierra Pacific common stock issued
or issuable pursuant to options granted during the quarter under
employee benefit plans and dividend reinvestment plans including
any employee benefit plans or dividend reinvestment plans
hereafter adopted;
c. If Sierra Pacific common stock has been transferred to a seller
of securities of a company being acquired, the number of shares
so issued, the value per share and whether the shares are
restricted in the hands of the acquiror;
<PAGE>
d. If a guarantee is issued during the quarter, the name of the
guarantor, the name of the beneficiary of the guarantee and the
amount, terms and purpose of the guarantee;
e. The amount and terms of any short-term debt issued by any Utility
Subsidiary during the quarter;
f. The amount and terms of any financings consummated by any Utility
Subsidiary that are not exempt under Rule 52;
g. A list of U-6B-2 forms filed with the Commission during the
quarter, including the name of the filing entity and the date of
filing;
h. Consolidated balance sheets as of the end of the quarter and
separate balance sheets as of the end of the quarter for each
company, including Sierra Pacific, that has engaged in
jurisdictional financing transactions during the quarter; and
i. Future registration statements filed under the 1933 Act with
respect to securities that are subject of the
Application/Declaration will be filed or incorporated by
reference as exhibits to the next certificate filed pursuant to
Rule 24.
Item 2. Fees, Commissions and Expenses
Estimated Legal Fees and Expenses $ **
Estimated Miscellaneous Expenses $ **
--------
Total $ **
** To be filed by amendment.
Item 3. Applicable Statutory Provisions
A. General
Sections 6(a), 7, 9(a), 10 and 12 of the Act and Rules 42, 43, 45, 52
and 54 are considered applicable to the proposed transactions.
<PAGE>
To the extent that the proposed transactions are considered by the
Commission to required authorization, exemption or approval under any section of
the Act or the rules and regulations other than those set forth above, request
for such authorization, exemption or approval is hereby made.
B. Compliance with Rules 53 and 54
Rule 54 under the Act states that in determining whether to approve
the issue or sale of a security by a registered holding company for purposes
other than the acquisition of an exempt wholesale generator ("EWG") or foreign
utility company ("FUCO"), or other than with respect to EWGs or FUCOs, the
Commission shall not consider the effect of the capitalization or earnings of
any subsidiary which is an EWG or FUCO upon the registered holding company
system if Rules 53(a), (b) and (c) are satisfied. Sierra Pacific does not, and
after the Transaction will not, retain any EWGs or FUCOs. Therefore, Rules
53(a), (b) and (c) are satisfied.
Item 4. Regulatory Approvals
The PUCN has jurisdiction over issuances of securities by SPPC and
Nevada Power. The Oregon PUC has jurisdiction over issuances of securities by
PGE, other than the issuance of notes with a maturity of one year or less. The
regulatory approvals relating to the Transaction are described in the Merger
U-1.
Except as stated above, no state or federal regulatory agency other
than the Commission under the Act has jurisdiction over the proposed
transactions.
Item 5. Procedure
The Applicants respectfully request that the Commission issue and
publish not later than August 21, 2000, the requisite notice under Rule 23 with
respect to the filing of this Application/Declaration, such notice to specify a
date not later than September 15, 2000, by which comments may be entered, and
issue an publish an order granting and permitting this Application/Declaration
to become effective concurrent with the issuance of an order approving the
Merger U-1.
The Applicants hereby (i) waive a recommended decision by a hearing
officer, (ii) waive a recommended decision by any other responsible officer or
the Commission, (iii) consent that the Division of Investment Management may
assist in the preparation of the Commission's decision and (iv) waive a 30-day
waiting period between the issuance of the Commission's order and the date on
which it is to become effective.
<PAGE>
Item 6. Exhibits and Financial Statements
Exhibits
A-1 Articles of Incorporation of Sierra Pacific (Exhibit A-1 to Form U-1,
File No. 70-9619, filed February 3, 2000, and incorporated herein by
reference)
A-2 By-Laws of Sierra Pacific (Exhibit A-2 to Form U-1, File No. 70-9619,
filed February 3, 2000, and incorporated herein by reference)
A-3 Articles of Incorporation of PGE (Exhibit A-3 to Form U-1, File No.
70-9619, filed February 3, 2000, and incorporated herein by reference)
A-4 By-Laws of PGE (Exhibit A-4 to Form U-1, File No. 70-9619, filed
February 3, 2000, and incorporated herein by reference)
B-1 Sierra Pacific Indenture (Exhibit 4.2 to Form S-3, File No. 333-80149,
dated June 8, 1999 and incorporated herein by reference)
G-1 Sierra Pacific's Annual Report on Form 10-K for the fiscal year ended
December 31, 1999 (File No. 1-8788, filed March 28, 2000, and
incorporated herein by reference)
G-2 Sierra Pacific's Quarterly Report on Form 10-Q for the quarter ended
March 31, 2000 (File No. 1-8788, filed May 15, 2000, and incorporated
herein by reference)
G-3 PGE's Annual Report on Form 10-K for the fiscal year ended December
31, 1999 (File No. 1-5532-99, filed March 3, 2000, and incorporated
herein by reference)
G-4 PGE's Quarterly Report on Form 10-Q for the quarter ended March 31,
2000 (File No. 1-5532-99, filed May 11, 2000, and incorporated herein
by reference)
H-1 Description of Existing Utility Subsidiary Financing Arrangements
<PAGE>
I-1 Sierra Pacific Common Stock Investment Plan (Form S-3D, File No.
333-77523, dated April 30, 1999 and incorporated herein by reference)
I-2 Sierra Pacific's Non-Employee Director Stock Plan (Exhibit 99.2 to
Form S-8, File No. 333-92651, dated December 13, 1999 and incorporated
herein by reference herein)
I-3 Sierra Pacific's Executive Long-Term Incentive Plan (Exhibit 99.1 to
Form S-8, File No. 333-92651, dated December 13, 1999 and incorporated
herein by reference herein)
I-4 Sierra Pacific's Employee Stock Purchase Plan (Exhibit 99.3 to Form
S-8, File No. 333-92651, dated December 13, 1999 and incorporated
herein by reference herein)
J-1 Sierra Pacific Resources Tax Sharing Agreement (to be filed by
amendment)
Item 7. Information as to Environmental Effects
The transactions described in this Application/Declaration will not
involve major federal action significantly affecting the quality of the human
environment as those terms are used in Section 102(2)(C) of the National
Environmental Policy Act, 42 U.S.C. Section 4321 et seq. ("NEPA"). To the
Applicants' knowledge, no federal agency is preparing an environmental impact
statement with respect to this matter.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, the applicants have duly caused this Application/Declaration to be
signed on its behalf by the undersigned thereunto duly authorized.
SIERRA PACIFIC RESOURCES
By: /s/ William E. Peterson Date: 7/21/00
------------------------------ -------
Name: William E. Peterson
-------------------
Title: Senior Vice President, General Counsel and Corporate Secretary
--------------------------------------------------------------
PORTLAND GENERAL ELECTRIC COMPANY
By: /s/ Alvin L. Alexanderson Date: 7/21/00
------------------------------ ------
Name: Alvin L. Alexanderson
---------------------
Title: Senior Vice President, General Counsel, and Secretary
-----------------------------------------------------
