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FORM U-3A-2
File No. 69-353
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
Statement by Holding Company Claiming Exemption
Under Rule U-3A-2 from the Provisions of the
Public Utility Holding Company Act of 1935
ESELCO, Inc. hereby files with the Securities and Exchange Commission,
pursuant to Rule 2, its statement claiming exemption as a holding company from
the provisions of the Public Utility Holding Company Act of 1935 and submits the
following information:
1. CLAIMANT ESELCO, Inc.
725 East Portage Avenue
Sault Ste. Marie, Michigan 49783
State of organization: Michigan
Nature of business: Holding Company
SUBSIDIARIES - Edison Sault Electric Company
725 East Portage Avenue
Sault Ste. Marie, Michigan 49783
State of organization: Michigan
Nature of business: Generation, purchase, transmission and
distribution of electric energy in a service area in the
eastern Upper Peninsula of Michigan.
- Northern Tree Service, Inc.
725 East Portage Avenue
Sault Ste. Marie, Michigan 49783
State of organization: Michigan
Nature of business: Tree removal and tree trimming service
within the upper peninsula and the northern part of the
lower peninsula of Michigan.
2. PROPERTIES
(a) Claimant -
Claimant's total properties consist of the Common Stock of Edison
Sault Electric Company.
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(b) Subsidiary -
Edison Sault Electric Company ("Edison Sault") owns a
hydroelectric plant with a rated capacity of 30,000 KW located on the
St. Mary's River at Sault Ste. Marie, Michigan. Edison Sault owns and
operates internal combustion generation with a name plate rating of
4800 KW.
Edison Sault owns and maintains transmission and distribution
lines in its service area in the Michigan counties of Chippewa, Delta,
Mackinac and Schoolcraft.
Edison Sault's transmission and distribution lines are located
for the most part on or under public streets, alleys, highways and
other public property, or on private property with permission of the
individual owners. Edison Sault property located on or under public
property was installed pursuant to valid consents granted by the
appropriate local authorities.
Edison Sault also owns substations, switching stations, garages,
warehouses, offices and other buildings necessary in the conduct of
its business.
All of Edison Sault's property is located in Michigan, and all
deliveries of electric energy sold for resale are made at points
within Michigan. Edison Sault has no transmission facilities which
deliver or receive electric energy at the Michigan borders.
3. Claimant submits the following information for the calendar year 1997
with respect to claimant and Edison Sault Electric Company:
Claimant sold, purchased and distributed no electric energy in 1997.
In 1997, Edison Sault Electric Company:
(a) Sold (at retail or wholesale) 799,242 MWH of electric energy;
(b) Distributed no electric energy at retail outside Michigan;
(c) Sold at wholesale no electric energy outside Michigan or at the
state line;
and
(d) Purchased no electric energy outside Michigan or at the state
line.
4. Claimant submits that neither it nor Edison Sault holds directly or
indirectly any interest in an exempt wholesale generator or foreign utility
company.
Information listed under Items 2, 3 and 4 pertain to ESELCO and Edison Sault
Electric Company only.
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EXHIBIT A
The unaudited Consolidating Statements of Income and Retained Earnings for
the year ended December 31, 1997 and a Consolidating Statement of Financial
Position as of December 31, 1997 for ESELCO and its subsidiaries are attached as
Exhibit A.
The above-named claimant has caused this statement to be duly executed on
its behalf by its authorized officer on this 25th day of February, 1998.
ESELCO, INC.
By: /s/ William R. Gregory, President
--------------------------------
William R. Gregory, President
Attest:
/s/ David R. Hubbard
- -------------------------------------------
David R. Hubbard, Vice President - Finance
Name, title and address of officer to whom notices and correspondence concerning
this statement should be addressed:
Donald C. Wilson, Secretary
ESELCO, Inc.
725 East Portage Avenue
Sault Ste. Marie, Michigan 49783
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<CAPTION>
E S E L C O, INC. EXHIBIT A
CONSOLIDATING STATEMENT OF FINANCIAL POSITION 1 OF 3
DECEMBER 31, 1997
EDISON ESELCO N T S ESEG ELIMINATIONS CONSOLIDATED
SAULT
ASSETS: ------------ ------------ ------------ ------------ ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
PLANT, at original cost $75,160,110 $7,315 $430,608 $4,436,184 $0 $80,034,217
Less - Accumulated depreciation 31,658,979 0 222,121 746,432 0 32,627,532
------------ ------------ ------------ ------------ ------------- --------------
$43,501,131 $7,315 $208,487 $3,689,752 $0 $47,406,685
------------ ------------ ------------ ------------ ------------- --------------
CURRENT ASSETS:
Cash $144,441 $1,500,000 $79,981 $38,019 ($1,480,000) $282,441
Accounts receivable, less reserve
of $32,000 3,837,541 671,857 23,944 5,517 (684,070) 3,854,789
Unbilled revenue 1,145,572 0 0 0 0 1,145,572
Materials and supplies, at average cost 1,156,667 0 0 0 0 1,156,667
Prepayments 2,297,802 0 5,645 0 0 2,303,447
------------ ------------ ------------ ------------ ------------- --------------
$8,582,023 $2,171,857 $109,570 $43,536 ($2,164,070) $8,742,916
------------ ------------ ------------ ------------ ------------- --------------
INVESTMENTS IN SUBSIDIARIES $0 $18,722,051 $0 $0 ($18,722,051) $0
------------ ------------ ------------ ------------ ------------- --------------
OTHER ASSETS:
Debt expense, being amortized $21,152 $0 $0 $0 $0 $21,152
Regulatory asset 3,164,400 0 0 0 0 3,164,400
Other 594,255 0 0 0 0 594,255
------------ ------------ ------------ ------------ ------------- --------------
$3,779,807 $0 $0 $0 $0 $3,779,807
------------ ------------ ------------ ------------ ------------- --------------
TOTAL ASSETS $55,862,961 $20,901,223 $318,057 $3,733,288 ($20,886,121) $59,929,408
============ ============ ============ ============ ============= ==============
STOCKHOLDERS' INVESTMENT AND LIABILITIES:
CAPITALIZATION:
Common equity $17,709,172 $20,242,320 $20,740 $6,858 ($18,722,051) $19,257,039
Preferred stock 0 0 0 0 0 0
Long-term debt (less current portion) 13,667,682 126,502 0 3,584,137 0 17,378,321
------------ ------------ ------------ ------------ ------------- --------------
$31,376,854 $20,368,822 $20,740 $3,590,995 ($18,722,051) $36,635,360
------------ ------------ ------------ ------------ ------------- --------------
CURRENT LIABILITIES:
Notes payable $5,343,500 $0 $0 $0 ($1,480,000) $3,863,500
Current portion of long-term debt 3,736,768 90,658 89,888 115,863 0 4,033,177
Accounts payable 2,260,699 0 176,485 0 (237,980) 2,199,204
Dividends declared 446,090 446,090 0 0 (446,090) 446,090
Accrued taxes 2,364,942 (4,347) 682 0 0 2,361,277
Current deferred income taxes 205,020 0 0 0 0 205,020
Accrued interest 145,093 0 0 14,167 0 159,260
Other 245,657 0 0 0 0 245,657
------------ ------------ ------------ ------------ ------------- --------------
$14,747,769 $532,401 $267,055 $130,030 ($2,164,070) $13,513,185
DEFERRED CREDITS: ------------ ------------ ------------ ------------ ------------- --------------
Deferred income taxes $3,200,451 $0 $30,262 $12,263 $0 $3,242,976
Net regulatory liability 1,085,514 0 0 0 1,085,514
Unamortized investment tax credit 806,421 0 0 0 0 806,421
Other 4,645,952 0 0 0 0 4,645,952
------------ ------------ ------------ ------------ ------------- --------------
$9,738,338 $0 $30,262 $12,263 $0 $9,780,863
TOTAL STOCKHOLDERS' INVESTMENT ------------ ------------ ------------ ------------ ------------- --------------
AND LIABILITIES $55,862,961 $20,901,223 $318,057 $3,733,288 ($20,886,121) $59,929,408
============ ============ ============ ============ ============= ==============
</TABLE>
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<TABLE>
<CAPTION>
E S E L C O, INC. EXHIBIT A
2 OF 3
CONSOLIDATING STATEMENT OF INCOME
For the Year Ended December 31, 1997
EDISON ESELCO N T S ESEG ELIMINATIONS CONSOLIDATED
SAULT
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES $37,481,889 $0 $512,837 $30,000 ($513,277) $37,511,449
------------ ------------ ------------ ------------ ------------ ------------
OPERATING EXPENSES:
Operation - Purchased power $18,128,749 $0 $0 $0 $0 $18,128,749
- Early retirement costs 2,330,053 0 0 0 0 2,330,053
- Merger related costs 980,787 0 0 0 0 980,787
- Other 7,412,603 15,040 412,358 64 (513,277) 7,326,788
Maintenance 2,200,264 0 0 0 0 2,200,264
Depreciation and amortization 2,691,558 0 38,124 5,564 0 2,735,246
Property and other taxes 1,697,485 (374) 10,231 0 0 1,707,342
Income taxes 358,706 (5,157) 9,891 3,348 0 366,788
------------ ------------ ------------ ------------ ------------ ------------
Total operating expenses $35,800,205 $9,509 $470,604 $8,976 ($513,277) $35,776,017
------------ ------------ ------------ ------------ ------------ ------------
Net operating income $1,681,684 ($9,509) $42,233 $21,024 $0 $1,735,432
------------ ------------ ------------ ------------ ------------ ------------
OTHER INCOME (DEDUCTIONS), NET ($28,476) $99,873 $0 $0 ($99,873) ($28,476)
------------ ------------ ------------ ------------ ------------ ------------
ALLOWANCE FOR FUNDS USED
DURING CONSTRUCTION $81,569 $0 $0 $0 $0 $81,569
------------ ------------ ------------ ------------ ------------ ------------
INTEREST CHARGES:
Interest on long-term debt $1,542,893 $0 $10,193 $14,167 $0 $1,567,253
Other interest 213,560 0 12,839 0 (99,873) 126,526
------------ ------------ ------------ ------------ ------------ ------------
Total interest charges $1,756,453 $0 $23,032 $14,167 ($99,873) $1,693,779
------------ ------------ ------------ ------------ ------------ ------------
NET INCOME ($21,676) $90,364 $19,201 $6,857 $0 $94,746
EQUITY IN EARNINGS OF SUBSIDIARIES 0 4,382 0 0 (4,382) 0
------------ ------------ ------------ ------------ ------------ ------------
NET INCOME AVAILABLE FOR COMMON ($21,676) $94,746 $19,201 $6,857 ($4,382) $94,746
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</TABLE>
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<TABLE>
<CAPTION>
E S E L C O, INC. EXHIBIT A
3 OF 3
CONSOLIDATING STATEMENT OF RETAINED EARNINGS
For the Year Ended December 31, 1997
EDISON ESELCO N T S ESEG ELIMINATIONS CONSOLIDATED
SAULT
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE BEGINNING OF YEAR $9,400,738 $4,204,585 ($62,461) $0 ($9,338,277) $4,204,585
ADD:
INVESTMENT IN SUBSIDIARY 0 404,182 0 0 (404,182) 0
NET INCOME (21,676) 90,364 19,201 6,857 0 94,746
------------ ------------ ------------ ------------ ------------ ------------
$9,379,062 $4,699,131 ($43,260) $6,857 ($9,742,459) $4,299,331
DEDUCT:
DIVIDENDS ON COMMON STOCK 1,771,528 1,771,528 0 0 (1,771,528) 1,771,528
3% STOCK DIVIDEND 0 1,740,766 0 0 0 1,740,766
------------ ------------ ------------ ------------ ------------ ------------
BALANCE END OF YEAR $7,607,534 $1,186,837 ($43,260) $6,857 ($7,970,931) $787,037
=========== =========== =========== =========== =========== ===========
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