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
GUJARAT TORRENT ENERGY CORPORATION 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 Gujarat Torrent Energy
Corporation Limited ("GTEC") 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
GTEC is a foreign utility company within the meaning of
Section 33(a) of the Act.
Name and Business Address:
Gujarat Torrent Energy Corporation Limited
Torrent House
Off Ashram Road
Amedabad 380 009
India
Description of Facilities:
The jurisdictional facilities consist of a 655
MW gas/naptha power plant currently under construction at
Bharuch, India and owned by GTEC.
Ownership
Torrent Power Private Limited ("TPPL"), a
public company incorporated with liability under The
Companies Act, India, currently owns a 30% ownership
interest in GTEC. On or about November 26, 1997, 28% of
the shares of GTEC, which was being held for issuance to
the public, will instead be distributed pro rata among
GTEC's existing shareholders (the "Offering"). As a
consequence of the Offering, TPPL will acquire an
additional 11.67% interest in GTEC and TPPL's total
ownership interest in GTEC will consequently increase to
approximately 41.67%.
GTEC's remaining issued and outstanding shares
are owned by three companies in percentages as follows:
o Powergen, a U.K. company, holds a 20% ownership
interest in GTEC;
o Siemens AG, a German company, holds a 10% interest
in GTEC; and
o Gujurat Power Corp., a public company with liability
under the Companies Act, India, holds a 12%
ownership interest in GTEC.
After the Offering, the ownership interests of the three
above mentioned companies will increase as follows:
o Powergen will own a 27.78% interest in GTEC;
o Siemens AG will own a 13.88% interest in GTEC; and
o Gujarat Power Corp. will own a 16.67% interest.
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 GTEC. 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. GTEC 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
GTEC 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: November 21, 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 ) CASE NO. U-11457
TO 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 Marc Poston
Mo. Bar No. 27543 Mo. Bar. No. 45722
Attorney at Law Assistant General Counsel
101 West McCarty Street Missouri Public Service
Suite 215 Commission
Jefferson City, MO 65101 P.O. Box 360
Jefferson City, MO 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
MCN Energy Group Inc. Commission
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 Division/ General Counsel's Office/
Date 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.
