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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM U-57
NOTIFICATION OF FOREIGN UTILITY COMPANY STATUS
Filed under section 33(a) of the
Public Utility Holding Company Act of 1935, as amended
Horizon Energy Partners
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(Name of foreign utility company)
CMS Energy Corporation
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(Name of filing company, if filed on behalf of a foreign utility company)
Item 1
The name and address of the entity claiming foreign utility company status
is Horizon Energy Partners, 500 Collins Street, Level 5, Melbourne,
Australia. Horizon Energy Partners is an Australian general partnership
which has been formed to own the assets of and operate Loy Yang A Power
Station ("Loy Yang"). Loy Yang is located in the southeastern end of the
Latrobe Valley which is about 140 km east of Melbourne, Australia. Loy
Yang consists of a 2000 megawatt brown coal-fired electricity-generating
station and an adjacent open cut mine. The power station has four 500
megawatt units that range in age between 9 and 12 years old. Briquettes
supported by natural gas are the start up and auxiliary fuel. Electricity
generated from Loy Yang is sold through the Victorian Power Exchange and
is transmitted to purchasers through the high voltage transmission network
of PowerNet Victoria.
The Loy Yang power station and mine were developed by the State
Electricity Commission of Victoria, Australia. As part of the reform of
the electric supply industry, the State of Victoria has called for bids
for Loy Yang. A consortium consisting of CMS Generation Horizon Energy
Holdings Limited ("CMS Generation Horizon"), Horizon Energy Holdings
Limited ("Horizon Energy Holdings"), Horizon Energy Investment Limited
No. 2 Pty ("Horizon Energy Investments") and NR Generating Holdings
(No.4) BV ("NR Generating") have formed Horizon Energy Partners to make a
bid to acquire the assets of Loy Yang. The consortium members who will
own more than a five percent partnership interest in Horizon Energy
Partners are:
Partner Name Partnership Interest
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CMS Generation Horizon approximately 25%
Horizon Energy Holdings approximately 25%
Horizon Energy Investments approximately 25%
NR Generating approximately 25%
Item 2
CMS Generation Horizon and Horizon Energy Holdings are Cayman Island
companies and indirect wholly owned subsidiaries of CMS Energy
Corporation, a Michigan corporation and an exempt public utility holding
company. CMS Energy Corporation's ownership interests in CMS Generation
Horizon and Horizon Energy Holdings are held through intervening
subsidiaries CMS Enterprises Company and CMS Generation Co., each of which
are Michigan corporations, as well as several Cayman Island entities.
Consumers Energy Company, a Michigan corporation and combination electric
and gas utility, is also a wholly-owned subsidiary of CMS Energy
Corporation. Consumers Energy Company will not pay any portion of the
purchase price for the assets of Loy Yang or the ownership interests in
Horizon Energy Partners.
EXHIBIT A
The certification required under Section 33(a)(2) of the Public
Utility Holding Company Act from the Michigan Public Service Commission is
attached hereto.<PAGE>
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SIGNATURE
CMS Energy Corporation has duly caused this statement to be signed on
its behalf by the undersigned thereunto duly authorized.
By: /s/ Michael D. Van Hemert
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Name: Michael D. Van Hemert
Title: Assistant General Counsel
Date: April 17, 1997
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S T A T E O F M I C H I G A N
BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION
* * * * *
In the matter of the application of )
CMS GENERATION COMPANY for )
certification pursuant to Section 33(a)(2) ) Case No. U-11333
of the Public Utility Holding Company )
Act of 1935. )
____________________________________________)
At the April 10, 1997 meeting of the Michigan Public Service
Commission in Lansing, Michigan.
PRESENT: Hon. John G. Strand, Chairman
Hon. John C. Shea, Commissioner
Hon. David A. Svanda, Commissioner
ORDER
On February 27, 1997, CMS Generation Company filed an application
for certification pursuant to Section 33(a)(2) of the Public Utility
Holding Company Act of 1935 (PUHCA), 15 USC 79z-5b.
CMS Generation is a wholly-owned subsidiary of CMS Enterprises,
which is a wholly-owned subsidiary of CMS Energy Corporation.
CMS Generation develops, owns, and operates independent power generation
projects in the United States, Latin America, and Asia. Within Michigan,
CMS Generation is a partner in the Midland Cogeneration Venture, as well
as other power generation projects. CMS Enterprises develops, owns, and
operates electric generation and transmission facilities, as well as gas
transportation and processing facilities, in Michigan and throughout the
world. The principal subsidiary of CMS Energy is Consumers Energy Company
(Consumers), a combination electric and gas utility located entirely in
the state of Michigan.
CMS Generation states that as part of the reform of the electricity
supply industry, the state of Victoria, Australia has called for bids on
the proposed sale of Loy Yang A Power Station (Loy Yang). With
Infrastructure Trust of Australia and potentially others, through a
subsidiary formed for this purpose, CMS Generation intends to submit a
final bid to acquire the assets of Loy Yang. If successful in the
bidding, CMS Generation also intends to operate Loy Yang and an open cut
coal mine by itself, through an affiliate, or through a subsidiary or
subsidiaries to be formed for that purpose. CMS Generation intends to
obtain non-recourse financing for a major portion of its investment, with
the remainder of its equity financing from cash operations. In addition,
the company might use proceeds from an issuance of equity by CMS Energy.
Loy Yang is located in the southeastern end of the Latrobe Valley,
which is about 140 kilometers east of Melbourne, Australia. Loy Yang
consists of a 2,000 megawatt (MW) brown coal-fired electric generating
station and an adjacent open cut coal mine. The power station has four
500 MW units and the open cut mine has a production rate currently of 28
million tons of brown coal per annum.
CMS Energy represents that it is exempt from regulation under
PUHCA. It further represents that Loy Yang and the proposed operating
subsidiary are foreign utilities that will be exempt from regulation under
PUHCA if every state commission having jurisdiction over the electric or
gas rates of an affiliated public utility company, in this case Consumers,
certifies that the state commission has the authority and resources to
protect the utility's ratepayers and that it intends to exercise that
authority. CMS Enterprises requests that the Commission grant that
certification with respect to Consumers.
CMS Generation states that Loy Yang and the proposed operating
subsidiary will remain separate from CMS Generation, CMS Enterprises,
CMS Energy, and Consumers. CMS Generation asserts that the proposed
transaction will not affect Consumers' day-to-day utility services or
rates and will not harm the financial viability, capital structure, or
cost of capital of CMS Enterprises, CMS Energy, or Consumers. It says
that no utility assets of Consumers or assets of any Consumers subsidiary
will be pledged or encumbered for the benefit of the investment. It
commits that CMS Generation will not seek recovery of the direct or
indirect costs of the investment from Michigan ratepayers. CMS Generation
further states that the proposed transaction will not affect the tax
revenues of Michigan political subdivisions in which any structure,
facility, or equipment of CMS Energy or its subsidiaries is located.
CMS Generation will make available books and records reasonably necessary
for the Commission to determine that Michigan ratepayers are not being
adversely affected. It acknowledges that a grant of certification is not
approval of the transaction or a finding that the transaction is reason-
able.
Finally, CMS Generation notes that the Commission has previously
granted at least nine such certifications, and says that there has been no
subsequent change in the Commission's jurisdiction or statutory authority.
After a review of the application, the Commission finds that it is
appropriate to certify that it has the authority and resources under
Michigan law to protect Michigan's utility ratepayers and that it intends
to exercise that authority. The Commission also finds that ex parte
approval is appropriate. The Commission finds that it should grant the
requested certification while reserving the right to prospectively revoke
it, as PUHCA permits, and on condition that CMS Generation,
CMS Enterprises, CMS Energy, and Consumers not seek to recover from
Michigan ratepayers any direct or indirect costs of the investment in
foreign utilities. Furthermore, the granting of the certificate is not
approval or endorsement of the transaction. Finally, CMS Generation and
its affiliates shall provide the Commission at least 30 days' notice of
the intent to make additional foreign investment or to increase
CMS Generation's interest in Loy Yang or the proposed operating
subsidiary.
The Commission FINDS that:
a. Jurisdiction is pursuant to 1909 PA 106, as amended, MCL
460.551 et seq.; MSA 22.151 et seq.; 1919 PA 419, as amended, MCL 460.51
et seq.; MSA 22.1 et seq.; 1939 PA 3, as amended, MCL 460.1 et seq.; MSA
22.13(1) et seq.; 1969 PA 306, as amended, MCL 24.201 et seq.; MSA
3.560(101) et seq.; 15 USC 79z-5b; and the Commission's Rules of Practice
and Procedure, as amended, 1992 AACS, R 460.17101 et seq.
b. With respect to the transaction described in the
application, the Commission has the authority and resources to protect
ratepayers subject to its jurisdiction and intends to exercise that
authority.
c. Ex parte approval is appropriate.
THEREFORE, IT IS ORDERED that the certification requested by
CMS Generation Company pursuant to 15 USC 79z-5b is granted. With respect
to the transaction described in the application, the Commission has the
authority and resources to protect ratepayers subject to its jurisdiction
and intends to exercise that authority.
The Commission reserves jurisdiction and may issue further orders
as necessary.
Any party desiring to appeal this order must do so in the
appropriate court within 30 days after issuance and notice of this order,
pursuant to MCL 462.26; MSA 22.45.
MICHIGAN PUBLIC SERVICE COMMISSION
/s/ John G. Strand
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Chairman
( S E A L )
/s/ John C. Shea
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Commissioner
/s/ David A. Svanda
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Commissioner, dissenting in a
separate opinion.
By its action of April 10, 1997.
/s/ Dorothy Wideman
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Its Executive Secretary<PAGE>
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S T A T E O F M I C H I G A N
BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION
* * * * *
In the matter of the application of )
CMS GENERATION COMPANY for )
certification pursuant to Section 33(a)(2) ) Case No. U-11333
of the Public Utility Holding Company )
Act of 1935. )
____________________________________________)
DISSENTING OPINION OF
COMMISSIONER DAVID A. SVANDA
I respectfully dissent from the majority opinion in Case
No. U-11333, issued this day approving the application of CMS Generation
Company for certification pursuant to Section 33(a)(2) of the Public
Utility Holding Company Act (PUHCA) of 1935. CMS Generation intends to
submit a final bid to acquire the assets of Loy Yang A Power Station in
the state of Victoria, Australia.
As it did in Case No. U-11049, Case No. U-11064, and Case
No. U-1158, the majority agrees that this Commission has the legal
authority and resources to protect Michigan ratepayers from being
adversely affected by the proposed investment. As I stated in my previous
dissenting opinions, I am unable to endorse the diversion of
CMS leadership, management, legal, financial, and analytical talents from
the issue of utmost importance to Michigan, implementation of a meaningful
program of customer choice.
Continued certification of additional foreign investments must not
be taken lightly. I note with interest a March 16, 1997 column by Jon
Pepper of The Detroit News reporting an interview with CMS Chairman
William McCormick. Clearly, Mr. McCormick's vision of the future of CMS,
as reported by Mr. Pepper, is both innovative and exciting. However,
Mr. Pepper's column did address one concern that I share that directly
relates to my responsibility as a Michigan utility regulator. He writes,
The bigger concern is whether making money in exotic locales is as easy as
making electricity. While a quarter of CMS Energy's $4.8 billion revenues
come from international business, 100 percent of its net comes from
ol' reliable Consumers Energy, the Michigan utility based in Jackson.
As I have stated in the past, competitive electricity markets in
Michigan will offer the best assurance for ratepayer protection in the
event of a failed off-shore investment by sister companies of Consumers
Energy. Until the day when Consumers Energy's electricity monopoly is
open to competition, the suspicion that Consumers Energy is the "cash cow"
for CMS off-shore ventures will continue.
I remain unconvinced that this Commission can offer any assurances
to Michigan ratepayers that they can be protected without a viable program
of customer choice. Competitive electricity markets in Michigan will
offer the only assurance for ratepayer protection in the event of failed
investments by sister companies of Consumers Energy. When competition
through customer choice comes to Michigan, I will happily endorse
CMS ventures anywhere on the planet. For this reason, and the reasons
stated above, I must dissent from the majority's grant of the requested
certification.
MICHIGAN PUBLIC SERVICE COMMISSION
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Commissioner
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