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
MCN Energy Group
500 Griswold Street
Detroit, Michigan 48226
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 41.67% ownership interest in GTEC. In
connection with GTEC's final capital call upon its shareholders
for construction financing, Gujurat Power Corporation
("GPC"), a public company with liability under the Companies
Act, India, currently owning a 16.67% interest in GTEC, has
allocated subscription rights to TPPL. TPPL intends to
exercise these rights thereby acquiring an additional 4.67% of
the equity in GTEC and increasing TPPL's total ownership
interest in GTEC to approximately 46.34%.
GTEC's remaining issued and outstanding shares are
owned by three companies in percentages as follows:
o Powergen, a U.K. company, holds a 27.78% ownership
interest in GTEC;
o Siemens AG, a German company, holds a 13.88% interest in
GTEC; and
o As noted above, GPC currently owns a 16.67% interest in
GTEC. Following TPPL's acquisition, GPC's equity interest
in GTEC will decrease to 12%.
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/Dominic Monterosso
__________________________________
Name: Dominic Monterosso
Title: Attorney in fact for Daniel Schiffer
Dated: March 12, 1998
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, 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
----------------------
(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.
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.
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-
---------------------
(3) All statutory references are to Revised Statutes of
Missouri 1994, unless otherwise noted.
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.
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 7/31/97 /s/Thomas R. Schwartz, Jr. 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 available 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.
