File No. 70-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________________
FORM U-1
APPLICATION AND DECLARATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
____________________________________________________
ATLANTIC ENERGY, INC.
6801 Black Horse Pike
Pleasantville, NJ 08232
_____________________________________________________
(Name of company filing this statement and
address of principal executive offices)
J.E. Franklin II
Atlantic Energy, Inc.
6801 Black Horse Pike
Pleasantville, NJ 08232
________________________________________
(Name and address of agent for service)
The Commission is requested to mail copies of
all orders, notices and communications to:
William S. Lamb, Esq.
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
125 W. 55th Street
New York, New York 10019-4513
Atlantic Energy, Inc. (the "Company") hereby applies to
the Securities and Exchange Commission (the "SEC" or the
"Commission") for an order removing the condition contained in
the order issued by the SEC on October 15, 1987 (HCAR 24475; File
No. 70-7323) (the "1987 Order") restricting the Company's ability
to engage in certain acquisitions since the circumstances which
gave rise to the existence of this condition in the 1987 Order no
longer exist. In support of this application, the Company
states as follows:
Item 1. DESCRIPTION OF PROPOSED TRANSACTION
A. Description of the Company.
The Company, a New Jersey corporation, is a public utility
holding company exempt from all provisions of the Public Utility
Holding Company Act of 1935 (the "Act") except Section 9(a)(2)
pursuant to Section 3(a)(1). The Company owns all of the
outstanding common stock of Atlantic City Electric Company
("ACE"), an electric utility company as defined in Section
2(a)(3) of the Act, which is organized in New Jersey and provides
electric service to approximately 465,000 customers in southern
New Jersey. ACE's rates and certain other corporate matters are
subject to the regulation of the New Jersey Board of Public
Utilities (the "BPU"). ACE itself owns an electric utility
subsidiary, namely Deepwater Operating Company, a New Jersey
corporation which operates an electric generation station in
Salem County, New Jersey. In the fiscal year ended December 31,
1994, the Company had consolidated revenues of $913,039,000
($916,302,000 without taking into account certain credits), of
which amount ACE accounted for $913,226,000.
In January of 1995, the Company formed Atlantic Energy
Enterprises, Inc., to which it transferred ownership of the
following non-utility subsidiaries: Atlantic Generation, Inc.,
which holds partnership interests in cogeneration projects; ATE
Investment Inc., which is involved in, among other things,
leveraged lease transactions; Atlantic Southern Properties, Inc.,
which manages commercial property within the Company's service
territory; Atlantic Energy Technology, Inc., which has an
ownership interest in certain alternate energy technologies and
Atlantic Thermal Systems, Inc., which was formed to develop, own
and operate thermal heating and cooling systems.
B. Current Status Under the Act.
As mentioned above, the Company is an exempt public
utility holding company pursuant to Section 3(a)(1) of the Act.
The Company was initially formed as a subsidiary of ACE that,
pursuant to a 1987 internal reorganization, became a holding
company as defined in the Act. In connection with the 1987
internal reorganization, the Company filed a Form U-1 seeking the
Commission's approval under Sections 9(a)(2) and 10 of the Act
for its acquisition of the common stock of both ACE and
Deepwater. At the time of this prior application, the New Jersey
Department of Public Advocate, Division of Rate Counsel (which
itself has been reorganized and is now the Division of the
Ratepayer Advocate, an office in but not of the BPU) requested a
hearing and raised some concerns about the reorganization. After
informal discussions between the Company and Rate Counsel, Rate
Counsel withdrew its request for a hearing and the Commission
issued the 1987 Order approving of the acquisitions subject to
the condition (the "Condition") that following the issuance of
the 1987 Order:
neither Atlantic Energy nor any nonutility subsidiary of
Atlantic Energy will, without prior authorization from the
Commission, acquire from any person other than a subsidiary
company or affiliate of the acquiring company, or an
affiliate of any associate company, any securities or
utility assets, or any interest in any business other than
[an interest that fits within one of the six enumerated
categories].
The Company is now requesting that the Commission issue an order
removing the Condition and its accompanying exceptions from the
1987 Order.
The 1987 Order also recites the fact that the following
language is part of an agreement reached between the Company and
Rate Counsel during their informal negotiations:
So long as Atlantic Energy shall be an exempt holding
company under the 1935 Act, except as may otherwise be
authorized, permitted or approved by order of the
Commission, or of any successor commission, under the 1935
Act, neither Atlantic Energy nor Atlantic City Electric
shall make any investment, including loans, in any non-
utility subsidiary, affiliate or associate company that
would cause the total investment by Atlantic Energy and
Atlantic City Electric in all such non-utility subsidiaries,
affiliates and associate companies to exceed, at the time
any such investment is made, 10% of Atlantic Energy's
consolidated assets. For purposes of the foregoing, a
company primarily engaged in the business of investing in
and/or the ownership or operation of, qualifying facilities,
as defined by PURPA [the Public Utility Regulatory Policies
Act of 1978], shall be deemed not to be a "non-utility"
subsidiary, affiliate or associate company.
C. Discussion.
The circumstances that gave rise to the inclusion of
the Condition no longer exist and the public interest and the
interests of investors and consumers would not be harmed by the
removal of this restriction.
First, the Company and its material utility
subsidiaries are organized in and conduct their business
predominantly within the state of New Jersey. As a result of its
jurisdiction over ACE, the BPU has been able to exercise
authority over certain aspects of the Company's corporate
activities in a manner that ensures ratepayers are protected from
the "evils" that the Act was promulgated to prevent.<F1>
____________________
<F1> Essentially, actions by a holding company that burden
operating utility companies by preventing their efficient
operation and management and force them to support other
activities that benefit management at the expense of
ratepayers and investors (i.e. excessive charges for holding
company services to an operating utility).
Through its ratemaking authority, the BPU can alter ACE's allowed
rate of return which controls the major source of income of the
Atlantic Energy holding company system and gives the BPU
significant influence over the Company. The Section 3(a)(1)
exemption in the Act is premised on the idea that if the holding
company and its major utility subsidiaries are located in the
same state, that state's utility commission will be able to
influence the holding company and protect the operating utility.
The Act was not generally intended to regulate intrastate holding
companies at the level of detail evident in the 1987
Order.<F2>
____________________
<F2> See H. Rep. No. 1318, 74th Cong., 1st Sess. 10 (1935)
("Subsection [3](a) describes five classes of companies
which, although technically holding companies under the
definitions, are not the kind of public-utility holding
companies at which the purposes of this legislation are
directed, for one of the following reasons: (1) The whole
system in intrastate...")
Second, the Ratepayer Advocate has indicated that it
does not object to the removal of the Condition from the 1987
Order.<F3> The Ratepayer Advocate believes that the
____________________
<F3> Attached hereto as Exhibit B is a letter from the Division
of the Ratepayer Advocate confirming that it has no
objection to the Commission removing the Condition from the
1987 Order, subject to the continuing compliance by the
Company with the 10% limitation unless the Ratepayer
Advocate shall agree to any deviation therefrom.
regulatory structure in place in New Jersey adequately protects
ratepayer interests and that additional protection from the
Commission in the form of the Condition is not necessary.
Although the source of the Condition being placed in the 1987
Order is unclear, it is rare for this type of condition to be
placed on exempt holding companies,<F4> and now that the Ratepayer
____________________
<F4> Indeed, we do not know of any exempt holding companies
subject to similar restrictions.
Advocate has no objection to the removal of the Condition from the
1987 Order, the Commission should have no regulatory interest in
retaining the Condition. In addition, under the agreement between
the Company and the predecessor to the Ratepayer Advocate, neither
the Company nor ACE may currently make any investment in any non-
utility subsidiary (other than subsidiaries engaged in the
business of investing in owning or operating qualifying
facilities under PURPA), affiliate or associate company that
would cause the total investment by the Company and ACE in all
such non-utility subsidiaries, affiliates and associates to
exceed 10% of the Company's consolidated revenues without
obtaining prior approval as long as such agreement remains in
force.
Moreover, in the over six years that the Company has
operated as a public utility holding company, the financial
health of its operating utility subsidiaries has not been harmed.
The removal of the Condition from the 1987 Order will function to
place the Company on level ground with other exempt holding
companies<F5> and allow it to compete more effectively in the
____________________
<F5> For example, in New Jersey, New Jersey Resources
Corporation, Public Service Electric & Gas Company and South
Jersey Industries, Inc. are all public utility holding
companies exempt from the Act pursuant to Section 3(a)(1)
and are not subject to similar restrictions by the SEC with
regard to non-utility acquisitions.
marketplace, which is, on balance, a benefit to investors in the
Company.
The Commission has in the past removed conditions from
orders issued to exempt holding companies as circumstances change
and the conditions become unnecessary for the protection of the
public interest,<F6> and given the regulatory regime to which
____________________
<F6> See e.g., In the Matter of Penn Fuel Gas, Inc., HCAR 15839
(August 10, 1967)(removing conditions established in two
prior orders); In the Matter of Margaret W. Putnam et. al.,
HCAR 15368 (Dec. 20, 1965)(removing condition relating
certain securities sales or exchanges) and In the Matter of
Penn Fuel Gas, Inc. and John H. Ware, HCAR 13767 (June 3,
1967) (removing condition relating to salary payments to
certain individuals).
the Company will continue to be subject even without the
Condition and the competitive benefit that such removal will have
for the Company, the granting of this application is in the
public interest.
Item 2. FEES, COMMISSIONS AND EXPENSES
The fees, commissions and expenses of the Company
expected to be paid or incurred, directly or indirectly, in
connection with this application are estimated as follows:
Commission filing fee
relating to Application
on Form U-1 . . . . . . . . . . . . . . . . $2,000
Legal fees and expenses . . . . . . . . To be filed
by amendment
Miscellaneous related expenses
(such as telephone, courier and travel) . To be filed
by amendment
Total . . . . . . . . To be filed
by amendment
Item 3. APPLICABLE STATUTORY PROVISIONS
Sections 9(a)(2) and 10 are applicable to the Company's
request for removal of the Condition.
Item 4. REGULATORY APPROVAL
No commission, other than this Commission, has
jurisdiction over any of the proposed transactions described in
this application.
Item 5. PROCEDURE
It is requested that the Commission issue and publish
no later than June 15, 1995 the requisite notice under Rule 23
with respect to the filing of this Application, such notice to
specify a date not later than July 11, 1995 as the date after
which an order granting and permitting this application to become
effective may be entered by the Commission and that the
Commission enter not later than July 15, 1995 an appropriate
order granting and permitting this application to become
effective.
The Company respectfully requests that appropriate and
timely action be taken by the Commission in this matter. The
Company hereby waives any recommended decision by a hearing
officer or by any other responsible officer of the Commission and
waive the 30-day waiting period between issuance of the
Commission' order and the date on which it is to become
effective, since it is desired that the Commission's order, when
issued, become effective forthwith. The Company hereby consents
that the Office of Public Utility Regulation within the Division
of Investment Management may assist in the preparation of the
Commission's decision and/or order unless the Office opposes the
transactions covered by this application.
Item 6. EXHIBITS
A. Form of Notice
B. Letter from the Division of the Ratepayer Advocate (to
be filed by amendment)
C. Financial Statements (to be filed by amendment)
Item 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS
The matter that is the subject of this application does
not involves a "major federal action" nor does it "significantly
affect the quality of the human environment" as those terms are
used in section 102(2)(C) of the National Environmental Policy
Act. The matter that is the subject of this application will not
result in changes in the operation of the Company that will have
an impact on the environment. The Company is not aware of any
federal agency which has prepared or is preparing an
environmental impact statement with respect to the matter that is
the subject of this application.
Signature
The Company has caused this Application to be duly signed on
its behalf by its authorized officer in the city of
Pleasantville, the State of New Jersey, on this 12th day of June
1995.
ATLANTIC ENERGY, INC.
By /s/
__________________
Name: J.E. Franklin
Title: Vice-President, Secretary and
General Counsel
<TABLE> <S> <C>
<ARTICLE> OPUR1
<CIK> 0000806393
<NAME> ATLANTIC ENERGY, INC.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,781,314
<OTHER-PROPERTY-AND-INVEST> 181,512
<TOTAL-CURRENT-ASSETS> 275,617
<TOTAL-DEFERRED-CHARGES> 373,075
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 2,611,518
<COMMON> 575,108
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 240,192
<TOTAL-COMMON-STOCKHOLDERS-EQ> 815,300
149,250
40,000
<LONG-TERM-DEBT-NET> 766,071
<SHORT-TERM-NOTES> 110,150
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 28,147
12,250
<CAPITAL-LEASE-OBLIGATIONS> 39,240
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 651,110
<TOT-CAPITALIZATION-AND-LIAB> 2,611,518
<GROSS-OPERATING-REVENUE> 218,626
<INCOME-TAX-EXPENSE> 6,197
<OTHER-OPERATING-EXPENSES> 184,845
<TOTAL-OPERATING-EXPENSES> 191,042
<OPERATING-INCOME-LOSS> 27,584
<OTHER-INCOME-NET> 2,095
<INCOME-BEFORE-INTEREST-EXPEN> 29,679
<TOTAL-INTEREST-EXPENSE> 14,800
<NET-INCOME> 11,469
3,787
<EARNINGS-AVAILABLE-FOR-COMM> 11,469
<COMMON-STOCK-DIVIDENDS> 20,391
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> (54,004)
<EPS-PRIMARY> 0.21
<EPS-DILUTED> 0.21
</TABLE>
Exhibit A
SECURITIES AND EXCHANGE COMMISSION
(Release No. 35- )
Filing Under the Public Utility Holding Company Act of 1935
______________, 1995
Atlantic Energy, Inc. (70- )
Atlantic Energy, Inc. ("Atlantic"), 6801 Black Horse
Pike, Pleasantville, New Jersey 08232 has filed an Application
and Declaration on Form U-1 under Sections 9(a)(2) and 10 of the
Public Utility Holding Company Act of 1935 (the "Act"), for the
purpose of obtaining an order removing a condition contained in
an order previously granted to Atlantic by the Securities and
Exchange Commission (the "Commission") on October 15, 1987 (HCAR.
24475; File No. 70-7323) (the "1987 Order").
Atlantic, a New Jersey corporation, is a public utility
holding company exempt from all provisions of the Act except
Section 9(a)(2) pursuant to Section 3(a)(1). Atlantic's
principal utility subsidiary, Atlantic City Electric Company
("ACE"), provides electric service in southern New Jersey. The
1987 Order authorized Atlantic to acquire the securities of ACE
and another utility company (Deepwater Operating Company)
pursuant to Sections 9(a)(2) and 10 of the Act subject to the
condition (the "Condition") that neither Atlantic nor any non-
utility subsidiary of Atlantic would, without prior authorization
of the Commission, acquire from any person other than a
subsidiary company or an affiliate of the acquiring company or an
affiliate of any associate company, any securities, utility
assets or interests in other business except in certain
conditions set forth therein.
Atlantic requests that the Condition be removed from
the 1987 Order because the circumstances which gave rise to the
inclusion of the Condition in the 1987 Order no longer exist and
such removal would not be detrimental to the public interest.
Atlantic notes that ACE's rates and certain other matters are
subject to regulation by the New Jersey Department of Public
Utilities ("BPU") and Atlantic believes that the regulatory
structure in existence in New Jersey is sufficient to protect
ratepayers' interests. In addition, the New Jersey Division of
the Ratepayer Advocate, which is the successor to Rate Counsel,
has indicated that it does not object to the removal of the
Condition, subject to Atlantic agreeing to remain in compliance
with the limitation on non-utility investments contained in an
agreement between Atlantic and Rate Counsel established at the
time of the formation of Atlantic as a holding company unless the
Ratepayer Advocate shall agree to any deviation therefrom.
Atlantic notes that the Commission has in the past removed
conditions contained in orders issued to exempt holding companies
as circumstances change. Finally, Atlantic believes that the
removal of the Condition from the 1987 Order will place it on
equal grounds with the majority of other exempt holding
companies, who are not subject to similar restrictions at the
federal level, and will be beneficial to investors.
For the Commission, by the Division of Investment
Management, pursuant to delegated authority.
