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
THE AHMEDABAD ELECTRICITY COMPANY LIMITED
(Names of foreign utility companies)
MCN ENERGY GROUP INC.
500 Griswold Street
Detroit, Michigan 48226
(Name and Address of filing company)
Please send a copy of all notices and correspondence
concerning this Notice to:
Daniel L. Schiffer Kathleen A. Foudy
MCN Energy Group Inc. Garrett D. Melby
500 Griswold Street Paul S. Kraske
Detroit, Michigan 48226 Skadden, Arps, Slate,
Meagher & Flom
1440 New York Avenue
Washington, D.C. 20005
ITEM 1
State the name of the entity claiming foreign
utility company status, its business address, and a
description of the facilities used for the
generation, transmission and distribution of
electric energy for sale or for the distribution at
retail of natural or manufactured gas. To the
extent known, identify each person that holds five
percent (5%) or more of any class of voting
securities of the foreign utility company and
describe the amount and nature of the interest.
MCN Energy Group Inc., a Michigan corporation
("MCN"), acting on behalf of The Ahmedabad Electricity
Company Limited ("AEC") a public company incorporated
with liability under The Companies Act, India, hereby
notifies the Commission, pursuant to Section 33(a) of the
Act and Rule 57 thereunder, that AEC is a foreign utility
company within the meaning of Section 33(a) of the Act.
Name and Business Address:
The Ahmedabad Electricity Company Limited
Electricity House
Bhadra
Lal Darwaja
Ahmedabad-380 001
India
Description of Facilities:
The jurisdictional facilities consist of the
following electric generation and transmission assets:
AEC currently owns five generating plants in
the State of Gujarat in India with a combined installed
capacity of 550 MW. Of these plants, four are located at
Sabarmati in Ahmedabad, Gujarat and consist of one 120 MW
unit and three 110 MW coal-fired units. In addition, AEC
owns a 100 MW combined cycle, gas/naptha fired plant at
Vatwa, near Ahmedabad. AEC's transmission system
consists of approximately 2329 kilometers of high tension
mains and approximately 7585 kilometers of low tension
mains. AEC has plans to install new turbines and a
boiler at one of its existing plants and is awaiting
final governmental approval for a 120 MW coal-fired plant
in Sabarmati and a 130-150 MW naptha-fueled plant at
Vatwa.
Ownership
Torrent Power Private Limited ("TPPL"), a
public company incorporated with liability under The
Companies Act, India, has a 21.4% ownership interest in
AEC, held directly or through corporate affiliates. TPPL
has agreed to acquire an additional 10% interest in AEC
from the Government of Gujarat ("GOG") which acquisition
will be completed simultaneously with TPPL's purchase of
approximately 5.3% of the outstanding shares of AEC pursuant
to a public offer which TPPL was required by Indian Law to
conduct as a result of the offer to purchase the GOG's
shares. Upon completion of both acquisitions, TPPL's
total ownership interest in AEC will increase to
approximately 36.7%. In addition TPPL, in connection
with these transactions, has granted the GOG the right
to sell TPPL an additional 18.9% of the outstanding stock
of AEC. If this option is exercised, TPPL will own 55.6%
of the stock of AEC.
To the knowledge of MCN, each of the following
entities owns an interest in AEC of 5% or more: Life
Insurance Corporation of India; Unit Trust of India;
Government of Gujarat (subject to the aforementioned
option); and Gujarat State Investment Pvt. Ltd.
ITEM 2
State the name of any domestic associate public-
utility company and, if applicable, its holding
company, and a description of the relationship
between the foreign utility company and such
company, and the purchase price paid by any such
domestic associate public-utility company for its
interest in the foreign utility company.
As noted above, TPPL is an owner of AEC. TPPL
is an indirect partially-owned subsidiary of MCN. MCN is
a public utility company incorporated in Michigan and a
public utility holding company exempt from registration
by order under section 3(a)(1) of the Act. MCN owns 100%
of two public utility companies in Michigan, Michigan
Consolidated Gas Company and Citizens Gas Fuel Company,
each of which is a Michigan corporation. MCN also owns a
one percent general and 46.5 percent limited partnership
interest in a public utility company in Missouri,
Southern Missouri Gas Company, L.P., a Missouri limited
partnership. AEC is an "affiliate" of MCN and an
"associate company" of each of Michigan Consolidated Gas
Company, Citizens Gas Fuel Company and Southern Missouri
Gas Company, L.P. No portion of the purchase price of
AEC was paid directly by any domestic public utility
company.
State certifications, as required under section
33(a)(2) of the Act, have been received from the
following state commissions and are attached hereto:
Michigan
Missouri
SIGNATURE
The undersigned company has duly caused this
statement to be signed on its behalf by the undersigned
thereunto duly authorized.
MCN Energy Group Inc.
By: /s/ Dan Schiffer
Name: Dan Schiffer
Title: Senior Vice President
Dated: October 17, 1997
EXHIBIT INDEX
Exhibit A - Michigan Certification
Exhibit B - Missouri Certification
EXHIBIT A
STATE OF MICHIGAN
BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION
****
IN THE MATTER OF THE APPLICATION OF )
MCN ENERGY GROUP INC., A MICHIGAN )
CORPORATION, FOR CERTIFICATION PURSUANT TO ) CASE NO.
) U-11457
SECTION 33(A)(2) OF THE PUBLIC UTILITY HOLDING )
COMPANY ACT OF 1935 )
At the July 31, 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 July 10, 1997, MCN Energy Group Inc. (MCN) 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.
MCN is a diversified energy holding company with
natural gas markets and investments throughout North
America. These operations encompass both utility and
nonutility activities. The principal utility subsidiary of
MCN is Michigan Consolidated Gas Company (Mich Con), a
natural gas distribution and intrastate transmission company
serving 1.2 million customers in more than 500 communities
throughout Michigan. Other utility subsidiaries of MCN are
Citizens Gas Fuel Company and Southern Missouri Gas Company,
L.P. MCN Investment Corporation (MCNIC) is a subholding
company of MCN that owns subsidiaries engaged in oil and
natural gas exploration and production, natural gas
gathering and processing, gas marketing, gas storage, and
power generation.
On March 10, 1997, the Commission issued an order
granting approval of MCN's request in Case No. U-11322 for
certification regarding a $60 million investment by MCN and
Torrent Exports Limited (TEL) in Torrent Power Private
Limited (TPPL), formerly known as Torrent Power Limited
Holding Company. The March 10, 1997 order required that MCN
provide notice to the Commission of any future investments
in that project. MCN states that it intends to invest an
additional $150 million dollars in TPPL.
TPPL currently owns a 30% interest in a 655 megawatt
(MW) natural gas/naphtha-fired electric generation project
currently under construction near the city of Bharuch,
India, (Bharuch Project) and an interest in two electric
distribution companies, the Surat Electric Company Ltd.
(SECL) and the Ahmedabed Electric Company Ltd. (ACEL). SECL
currently serves about 350,000 customers and AECL serves
about 850,000 customers.
MCN proposes to add approximately $150 million to its
investment in TPPL, of which about $100 million will be used
to purchase additional shares in AECL and SECL. The
remaining $50 million may be used by TPPL to obtain, in
conjunction with TEL, an additional 28% share in the Bharuch
Project. MCN represents that the $150 million investment
accounts for less than 4% of MCN's total assets. MCN will
provide at least 30 days' notice of the intent to make
additional foreign investment or to increase MCN's interest
in TPPL.
MCN states that TPPL will operate totally separate from
MCN or any of its American subsidiaries. MCN further
asserts that the proposed transaction will have no
detrimental effect on MCN's financial viability, its capital
structure or cost of capital, or tax revenues of Michigan
political subdivisions. It further states that the proposed
transaction is not detrimental to the public interest.
MCN states that it will not seek to recover from its
Michigan customers the direct or indirect costs of the
investment in TPPL. In addition, MCN commits to providing
access to books and records reasonably necessary for the
Commission to exercise its jurisdiction. MCN acknowledges
that the requested certification does not constitute
approval of the proposed investment or a finding that the
investment is reasonable.
MCN represents that it is exempt from regulation under
PUHCA. MCN further represents that TPPL is a foreign
utility as defined by PUHCA and will be exempt from
regulation under PUHCA if every state commission having
jurisdiction over the electric or gas rates of an affiliated
utility company certifies that the state commission has the
authority and resources to protect the utility's ratepayers
and that it intends to exercise that authority. MCN
requests that the Commission grant that certification with
respect to Mich Con.
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 further finds that ex parte
approval is appropriate. The Commission grants the
requested certification while reserving the right to
prospectively revoke it, as PUHCA permits, and on the
condition that Mich Con 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, MCN and its affiliates shall provide
the Commission at least 30 days' notice of the intent to
make additional foreign investment or to increase MCN's
interest in TPPL.
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 MCN's
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 certification requested
by MCN Energy Group Inc. 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
___________________________________
Chairman
(SEAL)
/s/ John C. Shea
___________________________________
Commissioner
/s/ David A. Svanda
___________________________________
Commissioner
By its action of July 31, 1997.
/s/ Dorothy Wideman
_________________________________
Its Executive Secretary
EXHIBIT B
STATE OF MISSOURI
PUBLIC SERVICE COMMISSION
At a Session of the Public Service
Commission held at its office
in Jefferson City on the 6th
day of August, 1997.
In the Matter of the Application of MCN )
Corporation d/b/a MCN Energy Group Inc., )
a Michigan Corporation, for Certification ) CASE NO. GO-98-17
Pursuant to Section 33(a)(2) of the Public )
Utility Holding Company Act of 1935. )
ORDER APPROVING APPLICATION,
APPROVING STIPULATION AND AGREEMENT
AND DIRECTING EXECUTIVE SECRETARY
TO ISSUE CERTIFICATION LETTER
On July 11, 1997, MCN Corporation d/b/a MCN Energy
Group Inc. ("MCN") filed an application for certification
pursuant to Section 33(a)(2) of the Public Utility Holding
Company Act of 1935 ("PUHCA"), 15 U.S.C. SECTION 79z-5b.
MCN is a diversified energy holding company with
natural gas markets and investments throughout North America.
These operations encompass both utility and nonutility
activities. The utility subsidiaries of MCN are Michigan
Consolidated Gas Company ("MichCon"), a natural gas distribution
and intrastate transmission company serving 1.2 million customers
in more than 500 communities throughout Michigan; Citizens Gas
Fuel Company, a natural gas utility serving the City of Adrian,
Michigan, and surrounding communities; and Southern Missouri Gas
Company, L.P. ("SMGC"), of which MCN owns 47.5 percent. SMGC is
a natural gas utility serving 15 communities in southern
Missouri. MCN Investment Corporation ("MCNIC") is a sub-holding
company of MCN that owns subsidiaries engaged in oil and natural
gas exploration and production, natural gas gathering and
processing, gas marketing, gas storage, and power generation.
MCN jointly owns Torrent Power Private Limited
("TPPL"), a corporation formed under the laws of India, with
Torrent Exports Limited, also a corporation formed under the laws
of India. The Commission approved MCN's application for
certification of an initial investment of approximately $60
million in TPPL in Case No. GO-97-352 on March 28, 1997. In that
case, MCN represented that its initial investment in TPPL
accounted for less than two percent of MCN's total assets. In
Case No. GO-97-352 on March 28, 1997. In that case, MCN
represented that its initial investment in TPPL accounted for
less than two percent of MCN's total assets. In Case No. GO-97-
352, MCN's application referred to TPPL as Torrent Power Limited
Holding Company ("TLP").
MCN seeks to invest an additional $150 million in TPPL.
TPPL will use $100 million to purchase a controlling interest in
Ahmedabad Electricity Ltd. ("AECL") and Surat Electricity
Company, Ltd. ("SECL"). Currently TPPL owns 21.4 percent of AECL
and 42.5 percent of SECL. MCN believes that with a controlling
interest in these two electric distribution companies, TPPL will
be better positioned to improve operations, enhance the
distribution area, increase generating capacity and reduce
transmission losses.
Of the remaining $50 million, TPPL and MCN are
evaluating the possibility of acquiring an additional 28 percent
share in Gujurat Torrent Energy Corporation 1 ("GTEC 1"). GTEC 1
is a project company set up to build, own and operate a 655 MW
power generation facility near Bharuch, Gujurat. The 28 percent
share may become available if the government of India decides to
make the shares available to partners currently owning a stake in
GTEC 1.
MCN states that TPPL will continue to operate totally
separate from MCN or any of its American-based subsidiaries. MCN
further asserts that the proposed transaction will have no
detrimental impact on the financial viability, capital structure
or cost of capital of MCN, MCNIC, or SMGC. MCN commits that no
SMGC assets will be pledged or encumbered in connection with this
investment. In addition, MCN asserts that the proposed
transaction will have no impact on the tax revenues of Missouri
political subdivisions in which any structure, facility or
equipment of MCN or its subsidiaries are located, and that the
proposed transaction is not detrimental to the public interest.
MCN states that it will not seek to recover from its
Missouri customers the direct or indirect costs of the
investments in TPPL. In addition, MCN commits to providing
access to books and records reasonably necessary for the
Commission to exercise its jurisdiction. MCN acknowledges that
the requested certification does not constitute approval of the
proposed investment or a finding that the investment is
reasonable.
MCN represents that it is exempt from regulation as a
holding company under PUHCA pursuant to Section 3(a)(1), 15
U.S.C. SECTION 79(a)(1). MCN further represents that TPPL is a foreign
utility as defined by PUHCA and will be exempt from regulation
under PUHCA if every state commission having jurisdiction over
the electric or gas rates of an affiliated utility company,
certifies that the state commission has the authority and
resources to protect the utility's ratepayers and it intends to
exercise that authority. MCN therefore requests that the
Commission grant that certification with respect to SMGC.
On July 31, 1997, the Staff of the Missouri Public
Service Commission (Staff) filed a memorandum to the official
case file and a Stipulation and Agreement. In order to ensure
that Staff has information necessary to protect SMGC's
ratepayers, MCN has agreed to five conditions in consideration
for the Staff memorandum recommending that the Commission issue a
certification letter. The Stipulation and Agreement is attached
to this order and designated Attachment B.
After review of the application, the Stipulation and
Agreement and Staff's memorandum, the Commission finds that
approval of the application and Stipulation and Agreement is
appropriate. The Commission concludes that it should grant the
requested certification while reserving the right to
prospectively revoke it, as permitted by Section 715 of the 1992
Energy Policy Act, and on the condition that SMGC not seek to
recover from its 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, the Commission finds that the
certification letter attached hereto as Attachment A fulfills the
requirements of PUHCA and should be sent to the Securities and
Exchange Commission.
IT IS THEREFORE ORDERED:
1. That the application filed by MCN Corporation
d/b/a MCN Energy Group, Inc. on July 11, 1997 is approved.
2. That the Stipulation and Agreement filed by MCN
Corporation d/b/a MCN Energy Group, Inc. and the Staff of the
Missouri Public Service Commission on July 31, 1997 is hereby
approved.
3. That nothing in this order shall be considered a
finding by the Commission of the value of this transaction for
ratemaking purposes, and the Commission reserves the right to
consider the ratemaking treatment to be afforded these financing
transactions and their results in cost of capital in any later
proceeding.
4. That this order shall not be deemed to be
precedent for any future financing even if the facts may be
similar.
5. That any adverse financial effects of this
acquisition shall be borne by company stockholders and not by
Missouri ratepayers.
6. That the Executive Secretary of the Commission
shall send the letter attached hereto as Attachment A, including
the recommendation of the Staff of the Commission in this case
and a copy of this order as attachments to the letter, to the
Securities and Exchange Commission.
7. That this order shall become effective on August
11, 1997.
BY THE COMMISSION
/s/ Cecil I. Wright
Cecil I. Wright
Executive Secretary
(S E A L)
Zobrist, Chm., Crumpton, Murray,
Lumpe and Drainer, CC., concur.
ALJ: George
BEFORE THE PUBLIC SERVICE COMMISSION
STATE OF MISSOURI
In the Matter of the Application of MCN )
Corporation d/b/a/ MCN Energy Group Inc. )
a Michigan corporation for certification ) Case No. GO-98-17
pursuant to Section 33(a)(2) of the Public )
Utility Holding Company Act of 1935. )
STIPULATION AND AGREEMENT
On July 11, 1997, MCN Corporation d/b/a MCN Energy Group,
Inc. ("MCN" or "Applicant") filed an Application with the
Commission requesting certification pursuant to Section 33(a)(2)
of the Public Utility Holding Company Act of 1935. MCN is a
Michigan holding corporation that owns 47.5% of Southern Missouri
Gas Company, L.P. ("SMGC"), a Commission regulated natural gas
utility that serves 15 communities in southern Missouri.
According to the Application, MCN intends to invest through
Torrent Power Private Limited ("TPPL") an additional US $100
million dollars in shares of Ahmedabad Electricity Company Ltd
("AECL") and Surat Electricity Company Ltd ("SECL"), two electric
distribution companies located in the state of Gujurat, India.(1)
In addition, the Application states that MCN, along with its
partner Torrent Exports, Ltd, is evaluating the possible
investment of US $50 million for an additional 28% share in
Gujurat Torrent Energy Corporation 1 ("GTEC 1") GTEC 1 is a
project company set up to build, own and operate a 655 MW power
generation facility near Bharuch, Gujurat.(2) The Application
sought certification by the Commission that it has the authority
and resources to protect ratepayers of SMGC from any impacts of
the India investments and that it intends to exercise that
authority.
__________________
1 MCN previously received a similar certification from the
Commission in Case No. GO-97-352 in connection with its plan to
invest up to US $70 million in Torrent Power Private Ltd
("TPPL"). TPPL currently owns 21.4% and 42.5% of AECL and SECL,
respectively. If successful in purchasing additional shares,
TPPL will have an controlling interest in AECL and SECL.
2 MCN previously received a similar certification from the
Commission in Case No. GO-97-352 in connection with its plan to
invest through TPPL in GTEC 1.
In order to ensure that it has the information necessary to
protect SMGC ratepayers, the Staff has requested certain
commitments from MCN. In consideration for the Staff
recommendation that the Commission issue a certification letter,
the Company agrees that:
1. MCN, its affiliates and its subsidiaries agree to make
available to the Missouri Pubic Service Commission and its staff
at reasonable times and places all books, records, employees and
officers of MCN and any affiliate or subsidiary of MCN, provided
that MCN and any affiliate or subsidiary of MCN shall have the
right to object to such production of records of personnel on any
basis under applicable Missouri law and Missouri Public Service
Commission rule, excluding any objection that such records and
personnel are not subject to the Missouri Public Service
Commission's jurisdiction.
2. MCN will notify the Commission Staff of any and all
affiliated transactions in which any costs, assets or equity
could be assigned from, or to, Southern Missouri Gas Company,
L.P., from MCN or any MCN affiliate or subsidiary, and will
maintain all records related to such affiliated transactions for
review by Commission Staff.
3. The Staff is recommending that MCN receive approval for
a $175 million investment in TPPL. MCN shall file a new
certification letter from the Missouri Public Service Commission
for any additional outlays in TPPL which may be made in the
future.
4. MCN agrees that no investments will be made
inconsistent with the specific investments and corporate
structure proposed in the Application.
5. MCN will notify the Missouri Public Service Commission
and its staff of any transaction between any affiliated foreign
company or affiliate or associated company thereof and any public
utility subject to Missouri Public Service Commission
jurisdiction.
None of the signatories to this Stipulation and Agreement
shall be deemed to have approved or acquiesced in any ratemaking
or procedural principle, any method of cost determination or cost
allocation, or any service or payment standard; and none of the
signatories shall be prejudiced or bound in any manner by the
terms of this Stipulation and Agreement in this or any other
proceeding, except as otherwise expressly specified herein.
This Stipulation and Agreement has resulted from extensive
negotiations among the signatories and the terms hereof are
interdependent. In the event the Commission does not approve and
adopt this Stipulation and Agreement in total, then this
Stipulation and Agreement shall be void and no signatory shall be
bound by any of the agreements or provisions hereof.
In the event the Commission accepts the specific terms of
this Stipulation and Agreement, the Parties waive, with respect
to the issues resolved herein: their respective rights pursuant
to Section 536.080.1, RSMo 1994,(3) to present testimony, to
cross-examine witnesses, and to present oral argument and written
briefs; their respective rights to the reading of the transcript
by the Commission pursuant to Section 536.080.2; and their
respective rights to judicial review pursuant to Section 386.510.
__________________
3 All statutory references are to Revised Statutes of
Missouri 1994, unless otherwise noted.
If requested by the Commission, the Staff shall have the
right to submit to the Commission a memorandum explaining its
rationale for entering into this Stipulation and Agreement. Each
Party of Record shall be served with a copy of any memorandum and
shall be entitled to submit to the Commission, within five (5)
days of receipt of Staff's memorandum, a responsive memorandum
which shall also be served on all parties. All memoranda
submitted by the Parties shall be considered privileged in the
same manner as are settlement discussions under the Commission's
rules; shall be maintained on a confidential basis by all
Parties; and shall not become a part of the record of this
proceeding or bind or prejudice the party submitting such
memorandum in any future proceeding or in this proceeding,
whether or not the Commission approves this Stipulation and
Agreement. The contents of any memorandum provided by any Party
are its own and are not acquiesced in or otherwise adopted by the
other signatories to this Stipulation and Agreement, whether or
not the Commission approves and adopts this Stipulation and
Agreement.
The Staff shall also have the right to provide, at any
agenda meeting at which this Stipulation and Agreement is noticed
to be considered by the Commission, whatever oral explanation the
Commission requests, provided that the Staff shall, to the extend
reasonably practicable, promptly provide other Parties with
advance notice of when the Staff shall respond to the
Commission's request from Staff (and afford all such parties, to
the maximum extent practicable, the right to be present at such
oral explanation). Staff's oral explanation shall be subject to
public disclosure, except to the extent it refers to matters
which are privileged or protected from disclosure pursuant to any
Protective Order issued in this case.
In the event the Missouri Public Service Commission does not
issue a certification letter in this docket, this Stipulation and
Agreement shall be void.
Respectfully submitted,
/s/ James M. Fischer /s/ Marc Poston
__________________________ _____________________________
James M. Fischer Mo. Bar No. 27543 Marc Poston Mo. Bar. No. 45722
Attorney at Law Assistant General Counsel
101 West McCarty Street, Suite 215 Missouri Public Service Commission
Jefferson City, Missouri 65101 P.O. Box 360
Jefferson City, Missouri 65102
Telephone: (573) 636-6758 Telephone: (573) 751-8701
Fax: (573) 636-0383 Fax: (573) 751-9285
Attorney for Attorney for the Staff of the
MCN Corporation d/b/a Missouri Public Service Commission
MCN Energy Group Inc.
CERTIFICATE OF SERVICE
I do hereby certify that a true and correct copy of the
foregoing document has been hand-delivered or mailed, postage
prepaid, this 31st day of July, 1997, to:
Office of the Public Counsel
P.O. Box 7800
Jefferson City, Missouri 65102
/s/ James M. Fischer
James M. Fischer
[ON MISSOURI PUBLIC SERVICE COMMISSION LETTERHEAD]
August 6, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: MCN Corporation d/b/a MCN Energy
Group Inc.
Gentlemen:
MCN Corporation d/b/a MCN Energy Group Inc.
("MCN"), doing business in the state of Missouri as a
public utility through its operating subsidiary, Southern
Missouri Gas Company, L.P. ("SMGC"), has advised this
Commission that MCN Investment Corporation ("MCNIC"), a
sub-holding company of MCN, has reached a preliminary
agreement with Torrent Exports Limited ("TEL"), a
corporation formed under the laws of India, to jointly
own Torrent Power Private Limited ("TPPL"), a corporation
formed under the laws of India. TPPL will initially own
interests in: (1) a 655 MW natural gas/naptha fired
electric generation project currently under construction
near the city of Bharuch, India ("Bharuch Project"); (2)
the Surat Electric Company ("SECL"), an electric
distribution company; and (3) Ahmedabed Electric Company
("AECL"), an electric distribution company. MCNIC made
an initial equity investment of approximately $60 million
in TPPL. MCNIC has now expressed its intention to make
an additional equity investment of approximately $150
million in TPPL.
MCN has filed or will file a Notification of
Foreign Utility Company Status with the Securities and
Exchange Commission under Section 33 of the Public
Utility Holding Company Act of 1935, as amended ("PUHCA"
or the "ACT"), in respect to the TPPL investments. In
connection therewith, MCN will file with this Commission
a copy of its Notifications to the Securities and
Exchange Commission. MCN has asked this Commission to
provide you with the certification contemplated by the
applicable provisions of the PUHCA.
The Missouri Public Service Commission has
jurisdiction over the retail natural gas rates of SMGC in
the state of Missouri and hereby certifies that it has
the authority and resources to protect the ratepayers
subject to its jurisdiction and that the Commission
intends to exercise its authority with respect to MCN's
proposed investment in TPPL. The Commission notes that
this certification may be revised or withdrawn
prospectively as to any future acquisition. In making
this certification, this Commission is relying on the
belief that the Securities and Exchange Commission will
enforce all sections of PUHCA which govern MCN's proposed
investment in TPPL for which it has jurisdiction.
Sincerely,
/s/ Cecil I. Wright
Cecil I. Wright
Executive Secretary
(573) 751-3048
Attachments
cc: Mr. Robert Wason
Securities and Exchange Commission
Office of Public Utility Regulation
Division of Investment Management
450 Fifth Street, N.W.
Washington, D.C. 20549
Mr. William K. McCrackin
Vice Chairman and Chief Financial Officer
c/o Jamie Fields
MCN Energy Group Inc.
500 Griswold Street
Detroit, Michigan 48226
Mr. James M. Fischer
Attorney at Law
101 West McCarty Street, Suite 215
Jefferson City, Missouri 65101
MEMORANDUM
TO: Missouri Public Service Commission Official Case File,
Case No. GO-98-17,
MCN Corporation
FROM: David P. Broadwater, Financial Analysis Department
/s/ Cecil I. Wright /s/ Thomas R. Schwartz, Jr.
7/31/97 7/31/97
Director - Utility Services General Counsel's Office/Date
Division/Date
SUBJECT: Staff Recommendation Regarding MCN's Application for a
Commission Issued Letter of Certification to be Sent to
the Securities and Exchange Commission,
DATE: July 30, 1997
MCN CORPORATION
On July 11, 1997, MCN Corporation d/b/a MCN Energy Group Inc. (MCN
or Company) filed an Application with the Missouri Public Service
Commission (Commission) requesting that a letter of certification
be approved and sent to the Securities and Exchange Commission
pursuant to Section 33(a)(2) of the Public Utility Holding Company
Act of 1935 (PUHCA). This section of PUHCA allows a regulatory
reporting exemption to a foreign utility company, where the state
commission with jurisdiction over the retail electric or gas rates
of a public utility company that is an associate company or an
affiliate of a foreign utility company must certify to the
Securities and Exchange Commission "that it has the authority and
resources to protect ratepayers subject to its jurisdiction and
that it intends to exercise its authority."
MCN, a Michigan corporation, is a diversified energy company with
natural gas markets and investments throughout North America. MCN
has utility operations that are both regulated and non-regulated.
The regulated utility subsidiaries are Michigan Consolidated Gas
Company, Citizens Gas Fuel Company and Southern Missouri Gas
Company, L.P. MCN Investment Corporation (MCNIC) is a sub-holding
company of MCN with subsidiaries engaged in oil and natural gas
exploration and production, natural gas gathering and processing,
gas marketing, gas storage and power generation.
MCNIC jointly owns Torrent Power Private Limited (Torrent Power), a
corporation formed under the laws of India, with Torrent Exports
Limited (Torrent Exports), a corporation formed under the laws of
India. MCNIC made an initial investment of $70 million in Torrent
Power, and now is seeking approval to invest another $150 million
in Torrent Power. Torrent Power will use approximately $100
million to purchase a controlling interest in Ahmedabad Electricity
Ltd. (AECL) and Surat Electricity Ltd. (SECL). Torrent Power
currently owns 21.4 percent of AECL and 42.5 percent of SECL. MCN
believes that Torrent Power will be better positioned to improve
operations, enhance the distribution area, increase generating
capacity and reduce transmission losses with a controlling interest
in the companies.
Torrent Power is evaluating the possibility of using the additional
$50 million to acquire up to an additional 28 percent share in
Gujurat Torrent Energy Corporation 1 (GTEC 1). "GTEC 1 is a project
company set up to build, own and operate a 655 MW power generation
facility near Bharuch, Gujurat. The 28% share may become availiable
if the government of India decides to make the shares available to
partners currently owning a stake in GTEC 1."
MCN's latest write up in The Value Line Investment Survey: Ratings
& Reports, dated June 27, 1997, states the following:
... This year alone, the company plans to spend over $l.l
billion to further expand its industry reach through
acquisitions, joint ventures and other capital investments.
MCN has several opportunities in all three of the segments
that make up MCNIC. For example, MCN recently entered into a
power-generation joint venture agreement in India. By the end
of this year, these nonregulated businesses will probably
account for about 40% of total revenue, and, by the year 2000,
that percentage may grow to 60%. (They were 36% last year)
The Commission Staff had several concerns with the Application but
the Company has agreed to the conditions below in a Stipulation and
Agreement filed with the Commission on July 31, 1997. Therefore,
the Commission Staff is recommending approval of MCN's Application
requesting that a letter of certification be approved and sent to
the Securities and Exchange Commission, pursuant to Section
33(a)(2) of the Public Utility Holding Company Act of 1935 with the
following conditions:
1) MCN, its affiliates and its subsidiaries agree to make
available to the Missouri Public Service Commission and its
Staff at reasonable times and places all books, records,
employees and officers of MCN and any affiliate or subsidiary
of MCN, provided that MCN and any affiliate or subsidiary of
MCN shall have the right to object to such production of
records or personnel on any basis under applicable Missouri
law and Missouri Public Service Commission rule, excluding any
objection that such records and personnel are not subject to
the Missouri Public Service Commission's jurisdiction.
2) MCN shall notify the Missouri Public Service Commission of any
and all affiliated transactions in which any costs, assets or
equity could be assigned from, or to Southern Missouri Gas
Company, L.P., from MCN or any MCN affiliate or subsidiary and
will maintain all records of any such affiliated transaction
for Commission Staff review.
3) MCN shall file for a new certification letter from the
Missouri Public Service Commission for any additional capital
outlays in Torrent Power which may be made in the future over
$175 million.
4) MCN agrees that no investments shall be made inconsistent with
the specific investments and corporate structure proposed in
the Application.
5) MCN shall notify the Missouri Public Service Commission and
its Staff of any transaction between any affiliated foreign
company or any affiliate or associated company thereof and any
public utility subject to Missouri Public Service Commission
jurisdiction.
LEGAL ISSUES
The Energy Policy Act and Public Utility Holding Company Act
implications of MCN's proposed transactions are addressed in the
memorandum from the General Counsel's Office, attached as
Attachment A. Additionally, on Attachment A, is a proposed
modification to the requested letter to be sent to the Securities
and Exchange Commission.
RECOMMENDATION
In addition to the above conditions which were agreed to by the
Company, the Staff recommends the Commission's Order include the
following conditions:
1) That nothing in the Commission's order shall be considered a
finding by the Commission of the value of this transaction for
rate making purposes, and that the Commission reserves the
right to consider the rate making treatment to be afforded
these financing transactions and their results in cost of
capital in any later proceeding.
2) That the Commission's order shall not be deemed to be
precedent for any future financing even if the facts may be
similar.
3) That any adverse financial effects of this acquisition be
borne by Company stockholders and not by Missouri ratepayers.
4) That the Staff's recommendation and the Commission's order be
included as attachments to the certification letter to the
Securities and Exchange Commission.
5) That the certification letter with the Staff proposed modified
language be sent to the Securities and Exchange Commission.
Attachment: A: General Counsel's Memorandum
Copies: Director - Utility Services Division
Director - Policy and Planning Division
Director - Utility Operations Division
General Counsel
Manager - Financial Analysis Department
Manager - Accounting Department
Manager - Energy Department
Michael J. Way, MCN Energy Group, Inc.
James M. Fischer, Attorney for MCN Energy Group, Inc.
Office of the Public Counsel
Attachment A
MEMORANDUM
TO: Missouri Public Service Commission's Official Case File
FROM: Marc Poston
RE: Case No. GO-98-17 MCN Corporation
DATE: July 29, 1997
Section 715 of the 1992 Energy Policy Act added a new section
to the Public Utility Holding Company Act of 1935 (PUHCA) which
exempts a foreign utility company from the provisions of PUHCA. A
copy of Section 715 is attached as Attachment A. Under the
exemption, the state commission with jurisdiction over the retail
electric or gas rates of a public utility company that is an
associate company or an affiliate of a foreign utility company must
certify to the Securities and Exchange Commission (SEC) "that it
has the authority and resources to protect ratepayers subject to
its jurisdiction and that it intends to exercise its authority."
See Section (a)(2) of Attachment A.
MCN Corporation requests that the Commission send a
certification letter consistent with the above statute to the SEC.
The Commission ordered a similar certification letter in MCN's
application for certification to the SEC in Case No. GO-97-352.
That letter dated March 28, 1997 is attached hereto as Attachment
B. See Attachment B.
The letter appears to meet the requirements of the statute. As
the Commission is aware, even though it may file a certification
letter for this particular foreign investment by MCN, it may revise
or withdraw its certification as to any future acquisition. See,
Section (a)(2) of Attachment A. In addition, the General Counsel's
Office recommends that the Commission's Report and Order contain
language expressly limiting its findings to this particular filing
so that MCN and other applicants cannot use this certification as
precedent for future diversification. The General Counsel's Office
suggests the following language: "This Order shall not be deemed to
be precedent for any future financing even if the facts may be
similar."
As outlined in Staff's recommendation, MCN has made
commitments to the Staff. The General Counsel's Office recommends
that the certification letter reflect that MCN has made these
commitments. The General Counsel's Office believes that the Staff
recommendations and Commission Order should be included as
attachments to the certification letter.
The General Counsel's Office recommends that the certification
letter be sent to the SEC.
