Post-Effective Amendment No. 10 to
SEC File No. 70-7727
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM U-1
APPLICATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 ("Act")
GENERAL PUBLIC UTILITIES CORPORATION ("GPU")
100 Interpace Parkway
Parsippany, New Jersey 07054
ENERGY INITIATIVES, INC. ("EI")
One Upper Pond Road
Parsippany, New Jersey 07054
(Names of companies filing this statement and addresses
of principal executive offices)
GENERAL PUBLIC UTILITIES CORPORATION
(Name of top registered holding company parent of applicants)
T.G. Howson, Vice President Douglas E. Davidson, Esq.
and Treasurer Berlack, Israels & Liberman
M. A. Nalewako, Secretary 120 West 45th Street
GPU Service Corporation New York, New York 10036
100 Interpace Parkway
Parsippany, New Jersey 07054
B. L. Levy, President
K. A. Tomblin, Esq., Secretary
Energy Initiatives, Inc.
One Upper Pond Road
Parsippany, New Jersey 07054
(Names and addresses of agents for service)
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GPU and EI hereby post-effectively amend their
Application on Form U-1, docketed in SEC File No. 70-7727, as
heretofore amended, as follows:
A. By Orders dated September 12, 1994 (HCAR No. 35-
26123), December 18, 1992 (HCAR No. 35-25715), and June 16, 1990
(HCAR No. 35-25108) (collectively, the "Orders"), the Commission,
among other things, authorized EI to engage in preliminary
project development and administrative activities ("Project
Activities") in connection with its investments in (i) qualifying
cogeneration facilities ("QCFs"), as defined in the Public
Utility Regulatory Policies Act of 1978 ("PURPA"), located
anywhere in the United States, (ii) small power production
facilities, as defined in PURPA (together with QCFs, "QFs"), and
exempt wholesale generators, as defined in Section 32 of the Act
("EWGs"), as added by the Energy Policy Act of 1992 (the
"EPAct"), located in any geographic area, and (iii) Foreign
Utility Companies ("FUCOs"), as defined in Section 33 of the Act,
as added by the EPAct.
B. Project Activities include, but are not limited
to, (i) site investigations, feasibility studies, preliminary
design and engineering, licensing and permitting, acquisition of
projects rights and options, negotiation of asset acquisition,
power sales, fuel supply, steam sales, engineering and other
related contracts, development of financing programs and prepara-
tion of bids and other proposals in response to requests for
proposals and other solicitations for development of such
projects and facilities; (ii) engineering, consulting, management
and other project development and operating services for a fee;
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and (iii) accounting, engineering, financial, contract
administration and other similar activities associated with
project development activities and the management of EI's
investments in projects and load management and energy storage
system projects. In its September 12, 1994 Order, the Commission
reserved jurisdiction over EI's request that, under the
circumstances set forth therein, the Commission exempt from the
cost requirements of Section 13(b) of the Act the performance by
EI of operation and maintenance and related project management
and administrative services for certain projects which are
"associate companies" of EI.
C. The Orders also authorized GPU from time to time
through December 31, 1994 to: (x) make capital contributions to
General Portfolios Corporation ("GPC"), which GPC would in turn
make available to EI;(1) and (y) enter into letter of credit
reimbursement agreements ("Reimbursement Agreements") and
guarantees or similar obligations ("Guarantees") to secure EI's
agreement with any person (including without limitation project
lenders) in connection with EI's Project Activities and the
acquisition of ownership or participation interests in projects.
The aggregate amount which GPU was permitted to contribute to EI,
together with the outstanding face or principal amount of the
Reimbursement Agreement and Guarantee obligations, could not
exceed $60 million ("Contribution Cap"). The Orders also
authorized EI to enter into Reimbursement Agreements and
Guarantees in an aggregate
__________________________
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1 On April 29, 1994, pursuant to Commission Order dated April
29, 1994 (HCAR No. 35-26040), GPC merged into EI and,
accordingly, EI became a wholly-owned subsidiary of GPU.
amount of up to $10 million from time to time through December
31, 1994 ("EI Debt Cap").(2)
D. The Orders also authorized EI to issue, sell and
renew from time to time through December 31, 1994 its promissory
notes evidencing short-term borrowings from commercial banks and
other financial institutions, in an aggregate principal amount at
any time outstanding (together with the aggregate amount of
obligations outstanding under Reimbursement Agreements and
Guarantees entered into by EI) not exceeding the EI Debt Cap
("Notes"), and permitted GPU to guarantee payment of the Notes
("Note Guarantees").
E. The September 12, 1994 Order also authorized EI to
form a wholly-owned subsidiary ("Services Sub") for the purpose
of providing operation and maintenance services to both
affiliated and non-affiliated QFs, EWGs and FUCOs, and to
contribute up to $1 million to Services Sub from time to time
through December 31, 1994 to provide temporary working capital.
F. As of September 30, 1994, GPU had made
contributions to EI, and had outstanding Reimbursement Agreement
and Guarantee obligations, in an aggregate amount of $24,145,000.
As of such date EI had not entered into any Reimbursement
Agreements or Guarantees pursuant to the Orders, incurred any
borrowings under Notes, or made any capital contributions to
Services Sub.
G. Summary of Requested Authorization. GPU and EI
now propose: (i) to extend until December 31, 1997 the period
during
_________________________
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(2) Borrowings made by EI pursuant to separate Commission
authorizations (including in SEC File No. 70-8369), are not
included in the EI Debt Cap.
which (A) GPU may make capital contributions to EI and (B) GPU
and EI may enter into Reimbursement Agreements and Guarantees;
(ii) to increase the Contribution Cap to $200 million and the EI
Debt Cap to $30 million; (iii) that EI may use contributions from
GPU to acquire securities and other interests in EWGs and
FUCOs;(3) (iv) to enter into Guarantees and Reimbursement
Agreements for purposes of guaranteeing the securities or other
obligations of EWGs and FUCOs; (v) to assume liabilities of EWGs
and FUCOs; (vi) to extend until December 31, 1997 the period
during which EI may incur borrowings pursuant to the Notes and
GPU may guarantee payment of the Notes pursuant to Note
Guarantees; (vii) to extend until December 31, 1997 the period
during which EI may make capital contributions up to $1 million
to Services Sub; and (viii) that the Commission release its
reservation of jurisdiction over EI's request pursuant to Section
13(b) of the Act as described above. GPU and EI believe such
expanded authorization is necessary and appropriate to sustain
EI's growth and to provide EI with sufficient financial resources
and flexibility in order to further its business of developing,
acquiring, owning and operating power production and associated
facilities and assets both domestically and internationally.
H. Increase in Contribution Cap; Acquisition of
Ownership Interests in EWGs and FUCOs. EI's business has
grown
__________________________
(3) As stated in the Orders, however, neither GPU nor EI will
acquire without prior Commission authorization (i) an
ownership interest in a QF (which is not also an EWG) or
(ii) except as may be permitted by Commission rule or
regulation authorizing the same, an indirect ownership
interest in a FUCO (which is not also an EWG).
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considerably in recent years. EI currently owns an interest in
and/or operates nine generating facilities, and owns an interest
in a tenth under construction, which have a combined capacity of
approximately 526 MW; EI also holds an option to acquire a
minority ownership interest in another facility with a capacity
of approximately 345 MW. Included in the operating facilities
are four qualifying cogeneration facilities owned by subsidiaries
of North Canadian Power Incorporated, which EI acquired on June
13, 1994. See Order dated May 17, 1994 (HCAR No. 35-26053). In
addition, pursuant to the Orders, EI is currently engaged in
preliminary project development activities for a number of
proposed projects both domestically and internationally,
including a proposed 750 MW project to be located in the City of
Barranquilla, Columbia, and a proposed 900 MW project under
development in Muscogee County, Georgia.
In light of EI's expanded business and, as described
above, in order to sustain EI's growth and provide it with
sufficient financial flexibility, GPU and EI believe that an
increase in the Contribution Cap to $200 million and the EI Debt
Cap to $30 million as hereinabove requested is both necessary and
appropriate. Moreover, given the increasingly competitive
environment in the independent power market, the ability to
timely consummate an investment is frequently a key factor in
being afforded the opportunity to make the investment in the
first place. Accordingly, EI also requests authorization to
utilize capital contributions from GPU, subject to the
limitations set forth above, to acquire securities and other
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interests in EWGs and FUCOs without further Commission
authorization
I. Guarantees, Reimbursement Agreements and
Assumption of Liabilities. (1) GPU and EI request authorization
to guarantee the securities and other obligations of EWGs and
FUCOs, and to assume liabilities of such entities, in order to
provide additional flexibility in structuring investments in EWGs
and FUCOs. For example, in lieu of a Guarantee by GPU of an
obligation of EI to contribute equity to an EWG, the project
lenders may request that EI supply a Guarantee by GPU of a
portion of the EWG's construction financing (with any payment by
GPU under such Guarantee constituting an equity contribution by
EI).
(2) The term of each Guarantee, and any letter of
credit ("L/C") backed by a GPU or EI Reimbursement Agreement,
would not exceed 25 years. Drawings under each L/C would bear
interest at not more than 5% above the prime rate as in effect
from time to time, and letter of credit fees would not exceed 1%
annually of the face amount of the L/C.
(3) The aggregate amount of liabilities of EWGs
and FUCOs assumed by GPU, plus the aggregate face or principal
amount of (i) Guarantees and Reimbursement Agreements entered
into by GPU and (ii) cash contributed directly to EI, will not
exceed the Contribution Cap. The aggregate amount of liabilities
of EWGs and FUCOs assumed by EI, plus the aggregate principal or
face amount of (i) Guarantees and Reimbursement Agreements
entered into by EI and (ii) borrowings under Notes incurred by
EI, will not exceed the EI Debt Cap.
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J. Notes; Note Guarantees. (1) Notes issued and
sold by EI would mature not later than five years after issuance,
bear interest at a rate not in excess of (i) 250 basis points
above the greater of (A) the lending bank's or other recognized
prime rate and (B) 50 basis points above the federal funds rate,
(ii) 400 basis points above the specified London Interbank
Offered Rate plus any applicable reserve requirement, or (iii) a
negotiated fixed rate which, in any event, would not exceed 500
basis points above the 30 year "current coupon" treasury bond
rate. EI may pay the lenders a facility fee of up to 75 basis
points on the aggregate principal amount of the loan facility and
a one-time commitment fee of up to 50 basis points, and other
customary fees (which other fees in any such case would not cause
the effective interest rate under the Notes, after giving effect
to such other fees, to exceed the rates set forth above). The
Notes would be prepayable only to the extent provided therein.
In addition, such borrowings would be unsecured (except as
described in paragraph J(2) below) and would not be made as part
of any public offering. Borrowings may be made pursuant to loan
agreements or lines of credit established by EI with commercial
banks or other institutions. Such agreements or lines of credit
may include a letter of credit facility which would permit EI to
obtain L/Cs in the aggregate face amount, together with the
aggregate principal amount borrowed, not to exceed the aggregate
principal amount of borrowings permitted by the facility.
Drawings on an L/C would bear interest at rates not exceeding the
interest rates described above in this paragraph J(1), and EI
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would be required to pay the issuing bank a letter of credit fee
not exceeding 1% per annum of the face amount of the L/C.
(2) As mentioned above, GPU also proposes to
extend until December 31, 1997 the period during which it may
enter into Note Guarantees with the lenders to secure EI's
obligation to repay such borrowings (including pursuant to any
letter of credit facility as described above), as heretofore
authorized. The total principal amount so guaranteed by GPU
would not exceed $30 million, and would be in addition to the
$200 million which GPU is otherwise authorized to make available
to EI under the Contribution Cap.
K. O & M Services. In the September 12, 1994 Order,
the Commission reserved jurisdiction over EI's request to perform
operation and maintenance and related project management and
administrative services ("O&M Services") as managing general
partner or the operator of QFs, EWGs or FUCOs which are
"associate companies" of EI under the Act at fair market prices,
in the following circumstances:
(a) The project is an EWG (a "Foreign
EWG") or FUCO and derives no part of its
income, directly or indirectly, from the
generation, transmission or distribution of
electric energy for sale within the United
States; or
(b) the project is either (I) a non-
Foreign EWG which sells its output at market-
based rates approved by the Federal Energy
Regulatory Commission ("FERC") or the
appropriate state rate regulatory commission,
or (II) a QF, as determined by the FERC,
which sells its net output to the purchasing
utility at the utility's "avoided cost"--
i.e. the purchasing utility's rates are not
determined on the basis of the project's cost
of service.
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GPU and EI now request that the Commission release such
reservation of jurisdiction and, pursuant to the last sentence of
Section 13(b) of the Act, exempt the foregoing transactions from
the cost requirement of Section 13(b) as under such
circumstances, it is not necessary or appropriate for the
protection of investors or consumers that such services be
provided at cost. See In re New England Electric Systems, HCAR
No. 22309 (1981).
L. GPU and EI submit that all of the criteria of
Rules 53 and 54 under the Act with respect to the issuance of
Guarantees and Reimbursement Agreements by GPU and EI, and the
issuance of the Notes and Acquisition Notes by EI, are satisfied.
(i) The average consolidated retained earnings
for GPU and its subsidiaries, as reported for the four
most recent quarterly periods in GPU's Annual Report on
Form 10-K for the year ended December 31, 1993 and
Quarterly Reports on Form 10-Q for the quarters ended
September 30, 1993, March 31, 1994 and June 30, 1994,
as filed under the Securities Exchange Act of 1934, was
approximately $1.84 billion. At the date hereof, GPU
had invested, or committed to invest, directly or
indirectly, an aggregate of approximately $12.5 million
in EWGs and $0 in FUCOs. (GPU does not own any direct
or indirect interest in a FUCO). Accordingly, GPU's
investment in EWGs and FUCOs, assuming the entire $230
million authorization is invested in EWGs or FUCOs,(4)
plus the $200 million authorization requested in SEC
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File No. 70-7926 and $30 million authorization
requested in SEC File No. 70-8369, would be
approximately 26% of such average consolidated retained
earnings, which is below the 50% limitation in Rule 53.
____________________________
(4) The $230 million represents the sum of (x) the up to $200
million for which GPU has requested authority to enter into
Guarantees and Reimbursement Agreements and (y) the
aggregate proceeds of the Notes ($30 million).
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(ii) GPU maintains books and records to identify
investments in, and earnings from, each EWG and FUCO in
which it directly or indirectly holds an interest. (A)
For each United States EWG in which GPU directly or
indirectly holds an interest:
(1) the books and records for such EWG
will be kept in conformity with United States
generally accepted accounting principles ("GAAP");
(2) the financial statements will be
prepared in accordance with the GAAP; and
(3) GPU directly or through its
subsidiaries undertakes to provide the Commission
access to such books and records and financial
statements as the Commission may request.
(B) For each FUCO or foreign EWG which is a
majority-owned subsidiary of GPU:
(1) the books and records for such
subsidiary will be kept in accordance with GAAP;
(2) the financial statements for such
subsidiary will be prepared in accordance with
GAAP; and
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(3) GPU directly or through its
subsidiaries undertakes to provide the Commission
access to such books and records and financial
statements, or copies thereof in English, as the
Commission may request.
(C) For each FUCO or foreign EWG in which
GPU owns 50% or less of the voting securities, GPU directly
or through its subsidiaries will proceed in good faith, to
the extent reasonable under the circumstances, to cause
(1) such entity to maintain books and
records in accordance with GAAP;
(2) the financial statements of such entity
to be prepared in accordance with GAAP; and
(3) access by the Commission to such books
and records and financial statements (or copies
thereof) in English as the Commission may request
and, in any event, will provide the Commission on
request copies of such materials as are made
available to GPU and its subsidiaries. If and to
the extent that such entity's books, records or
financial statements are not maintained in
accordance with GAAP, GPU will, upon request of
the Commission, describe and quantify each
material variation therefrom as and to the extent
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required by subparagraphs (a) (2) (iii) (A) and
(a) (2) (iii) (B) of Rule 53.
(iii) No more than 2% of GPU's domestic public
utility subsidiaries will render any services, directly or
indirectly, to any EWG or FUCO in which GPU directly or
indirectly holds an interest.
(iv) Copies of this Application on Form U-1 are
being provided to the New Jersey Board of Public Utilities,
the Pennsylvania Public Utility Commission and the New York
Public Service Commission, the only federal, state or local
regulatory agencies having jurisdiction over the retail
rates of GPU's electric utility subsidiaries. In addition,
GPU will submit to each such commission copies of any Rule
24 certificates required hereunder, as well as a copy of
Item 9 of GPU's Form U5S and Exhibits G and H thereof
(commencing with the Form U5S to be filed for the calendar
year in which the authorization herein requested is
granted).
(v) None of the provisions of paragraph (b) of
Rule 53 render paragraph (a) of that Rule unavailable for
the proposed transactions.
(A) Neither GPU nor any subsidiary of GPU is
the subject of any pending bankruptcy or similar
proceeding.
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(B) GPU's average consolidated retained
earnings for the four most recent quarterly
periods (approximately $1.84 billion) represented
an increase of approximately $80 million in the
average consolidated retained earnings for the
previous four quarterly periods (approximately
$1.76 billion).
(C) GPU incurred no losses from direct or
indirect investments in EWGs and FUCOs in 1993.
M. The estimated fees, commissions and expenses
expected to be incurred in connection with the proposed trans-
actions will be supplied by further post-effective amendment.
N. Sections 6(a), 7, 9(a), 10, 12(b) and 13(b) of the
Act and Rules 45, 53 and 54 thereunder are applicable to the
transactions proposed herein.
O. No state commission has jurisdiction with respect
to any aspect of the proposed transactions and, assuming your
Commission authorizes and approves all aspects of the
transactions (including the accounting therefor), no Federal
commission other than your Commission has jurisdiction with
respect to any aspect thereof.
P. It is requested that the Commission issue an order
with respect to the transactions proposed herein at the earliest
practicable date but, in any event, not later than November 15,
1994. It is further requested that (i) there not be a
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recommended decision by an Administrative Law Judge or other
responsible officer of the Commission, (ii) the Office of Public
Utility Regulation be permitted to assist in the preparation of
the Commission's decision, and (iii) there be no waiting period
between the issuance of the Commission's order and the date on
which it is to become effective.
Q. The following exhibits and financial statements
are filed in Item 6 hereof:
(a) Exhibits:
F-1(c) - Opinion of Berlack, Israels & Liberman -
- to be filed by further post-effective
amendment.
G - Proposed form of public notice.
(b) Financial Statements:
1-A - EI Consolidated Balance Sheets, actual
and pro forma, as at June 30, 1994 and
Consolidated Statement of Operations and
Accumulated Deficit, actual and pro
forma, for the twelve months ended June
30, 1994; pro forma journal entries --
to be filed by further post-effective
amendment.
1-B - GPU (Corporate) Balance Sheets, actual
and pro forma, as at June 30, 1994 and
Consolidated Statements of Income and
Retained Earnings, actual and pro forma,
for the twelve months ended June 30,
1994; pro forma journal entries -- to be
filed by further post-effective
amendment.
2 - GPU Consolidated Financial Statements
have been omitted since they are not
materially affected by the proposed
transaction.
3 - Not Applicable.
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4 - Statement of Material Changes since the
date of the balance sheets which are not
reflected in the notes to the financial
statements - None.
R. The proposed transactions will be carried out for
the purpose of financing EI's business activities. As such, the
issuance of an order by your Commission with respect to the
proposed transactions which are the subject hereof is not a major
Federal action significantly affecting the quality of the human
environment. No Federal agency has prepared or is preparing an
environmental impact statement with respect to the proposed
transactions which are the subject hereof.
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SIGNATURE
PURSUANT TO THE REQUIREMENTS OF THE PUBLIC UTILITY
HOLDING COMPANY ACT OF 1935, THE UNDERSIGNED COMPANIES HAVE DULY
CAUSED THIS STATEMENT TO BE SIGNED ON THEIR BEHALF BY THE UNDER-
SIGNED THEREUNTO DULY AUTHORIZED.
GENERAL PUBLIC UTILITIES CORPORATION
By: ________________________________
T.G. Howson
Vice President and Treasurer
ENERGY INITIATIVES, INC.
By:______________________________
B. L. Levy, President
Date: October 7, 1994
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EXHIBIT TO BE FILED BY EDGAR
Exhibit:
G - Proposed form of public notice
<PAGE>
EXHIBIT G
General Public Utilities Corporation, et. al. (70-7727)
General Public Utilities Corporation ("GPU"), 100
Interpace Parkway, Parsippany, New Jersey 07054, a registered
holding company, and Energy Initiatives, Inc., One Upper Pond
Road, Parsippany, New Jersey 07054, a non-utility subsidiary of
GPU, have a filed a post-effective amendment under Sections 6(a),
7, 9(a), 10, 12(b) and 13(b) of the Act and Rules 45, 53 and 54
thereunder to their Application on Form U-1.
By Orders dated September 12, 1994 (HCAR No. 35-
26123), December 18, 1992 (HCAR No. 35-25715), and June 16, 1990
(HCAR No. 35-25108) (collectively, the "Orders"), the Commission,
among other things, authorized EI to engage in preliminary
project development and administrative activities ("Project
Activities") in connection with its investments in (i) qualifying
cogeneration facilities ("QCFs"), as defined in the Public
Utility Regulatory Policies Act of 1978 ("PURPA"), located
anywhere in the United States, (ii) small power production
facilities, as defined in PURPA (together with QCFs, "QFs"), and
exempt wholesale generators, as defined in Section 32 of the Act
("EWGs"), as added by the Energy Policy Act of 1992 (the
"EPAct"), located in any geographic area, and (iii) Foreign
Utility Companies ("FUCOs"), as defined in Section 33 of the Act,
as added by the EPAct.
Project Activities include, but are not limited to, (i)
site investigations, feasibility studies, preliminary design and
engineering, licensing and permitting, acquisition of projects
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rights and options, negotiation of asset acquisition, power
sales, fuel supply, steam sales, engineering and other related
contracts, development of financing programs and preparation of
bids and other proposals in response to requests for proposals
and other solicitations for development of such projects and
facilities; (ii) engineering, consulting, management and other
project development and operating services for a fee; and (iii)
accounting, engineering, financial, contract administration and
other similar activities associated with project development
activities and the management of EI's investments in projects and
load management and energy storage system projects. In its
September 12, 1994 Order, the Commission reserved jurisdiction
over EI's request that, under the circumstances set forth
therein, the Commission exempt from the cost requirements of
Section 13(b) of the Act the performance by EI of operation and
maintenance and related project management and administrative
services for certain projects which are "associate companies" of
EI.
The Orders also authorized GPU from time to time
through December 31, 1994 to: (x) make capital contributions to
General Portfolios Corporation ("GPC"), which GPC would in turn
make available to EI;(1) and (y) enter into letter of credit
reimbursement agreements ("Reimbursement Agreements") and
guarantees or similar obligations ("Guarantees") to secure EI's
agreement with any person (including without limitation project
lenders) in connection with EI's Project Activities and
the
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_______________________
(1) On April 29, 1994, pursuant to Commission Order dated April
29, 1994 (HCAR No. 35-26040), GPC merged into EI and,
accordingly, EI became a wholly-owned subsidiary of GPU.
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acquisition of ownership or participation interests in projects.
The aggregate amount which GPU was permitted to contribute to EI,
together with the outstanding face or principal amount of the
Reimbursement Agreement and Guarantee obligations, could not
exceed $60 million ("Contribution Cap"). The Orders also
authorized EI to enter into Reimbursement Agreements and
Guarantees in an aggregate amount of up to $10 million from time
to time through December 31, 1994 ("EI Debt Cap").(2)
The Orders also authorized EI to issue, sell and renew
from time to time through December 31, 1994 its promissory notes
evidencing short-term borrowings from commercial banks and other
financial institutions, in an aggregate principal amount at any
time outstanding (together with the aggregate amount of
obligations outstanding under Reimbursement Agreements and
Guarantees entered into by EI) not exceeding the EI Debt Cap
("Notes"), and permitted GPU to guarantee payment of the Notes
("Note Guarantees").
The September 12, 1994 Order also authorized EI to form
a wholly-owned subsidiary ("Services Sub") for the purpose of
providing operation and maintenance services to both affiliated
and non-affiliated QFs, EWGs and FUCOs, and to contribute up to
$1 million to Services Sub from time to time through December 31,
1994 to provide temporary working capital.
__________________________
(2) Borrowings made by EI pursuant to separate Commission
authorizations (including in SEC File No. 70-8369), are not
included in the EI Debt Cap.
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As of September 30, 1994, GPU had made contributions to
EI, and had outstanding Reimbursement Agreement and Guarantee
obligations, in an aggregate amount of $24,145,000. As of such
date EI had not entered into any Reimbursement Agreements or
Guarantees pursuant to the Orders, incurred any borrowings under
Notes, or made any capital contributions to Services Sub.
GPU and EI now propose: (i) to extend until December
31, 1997 the period during which (A) GPU may make capital
contributions to EI and (B) GPU and EI may enter into
Reimbursement Agreements and Guarantees; (ii) to increase the
Contribution Cap to $200 million and the EI Debt Cap to $30
million; (iii) that EI may use contributions from GPU to acquire
securities and other interests in EWGs and FUCOs;(3) (iv) to
enter into Guarantees and Reimbursement Agreements for purposes
of guaranteeing the securities or other obligations of EWGs and
FUCOs; (v) to assume liabilities of EWGs and FUCOs; (vi) to
extend until December 31, 1997 the period during which EI may
incur borrowings pursuant to the Notes and GPU may guarantee
payment of the Notes pursuant to Note Guarantees; (vii) to extend
until December 31, 1997 the period during which EI may make
capital contributions up to $1 million to Services Sub; and
______________________________
(3) As stated in the Orders, however, neither GPU nor EI will
acquire without prior Commission authorization (i) an
ownership interest in a QF (which is not also an EWG) or
(ii) except as may be permitted by Commission rule or
regulation authorizing the same, an indirect ownership
interest in a FUCO (which is not also an EWG).
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(viii) that the Commission release its reservation of
jurisdiction over EI's request pursuant to Section 13(b) of the
Act as described above. GPU and EI believe such expanded
authorization is necessary and appropriate to sustain EI's growth
and to provide EI with sufficient financial resources and
flexibility in order to further its business of developing,
acquiring, owning and operating power production and associated
facilities and assets both domestically and internationally.
The term of each Guarantee, and any letter of credit
("L/C") backed by a GPU or EI Reimbursement Agreement, would not
exceed 25 years. Drawings under each L/C would bear interest at
not more than 5% above the prime rate as in effect from time to
time, and letter of credit fees would not exceed 1% annually of
the face amount of the L/C.
The aggregate amount of liabilities of EWGs and FUCOs
assumed by GPU, plus the aggregate face or principal amount of
(i) Guarantees and Reimbursement Agreements entered into by GPU
and (ii) cash contributed directly to EI, will not exceed the
Contribution Cap. The aggregate amount of liabilities of EWGs
and FUCOs assumed by EI, plus the aggregate principal or face
amount of (i) Guarantees and Reimbursement Agreements entered
into by EI and (ii) borrowings under Notes incurred by EI, will
not exceed the EI Debt Cap.
Notes issued and sold by EI would mature not later
than five years after issuance, bear interest at a rate not in
excess of (i) 250 basis points above the greater of (A) the
lending bank's or other recognized prime rate and (B) 50 basis
points above the federal funds rate, (ii) 400 basis points above
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the specified London Interbank Offered Rate plus any applicable
reserve requirement, or (iii) a negotiated fixed rate which, in
any event, would not exceed 500 basis points above the 30 year
"current coupon" treasury bond rate. EI may pay the lenders a
facility fee of up to 75 basis points on the aggregate principal
amount of the loan facility and a one-time commitment fee of up
to 50 basis points, and other customary fees (which other fees in
any such case would not cause the effective interest rate under
the Notes, after giving effect to such other fees, to exceed the
rates set forth above). The Notes would be prepayable only to
the extent provided therein. In addition, such borrowings would
be unsecured (except as described below) and would not be made as
part of any public offering. Borrowings may be made pursuant to
loan agreements or lines of credit established by EI with
commercial banks or other institutions. Such agreements or lines
of credit may include a letter of credit facility which would
permit EI to obtain L/Cs in the aggregate face amount, together
with the aggregate principal amount borrowed, not to exceed the
aggregate principal amount of borrowings permitted by the
facility. Drawings on an L/C would bear interest at rates not
exceeding the interest rates described above with respect to
Notes, and EI would be required to pay the issuing bank a letter
of credit fee not exceeding 1% per annum of the face amount of
the L/C.
As mentioned above, GPU also proposes to extend
until December 31, 1997 the period during which it may enter into
Note Guarantees with the lenders to secure EI's obligation to
repay such borrowings (including pursuant to any letter of credit
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facility), as heretofore authorized. The total principal amount
so guaranteed by GPU would not exceed $30 million, and would be
in addition to the $200 million which GPU is otherwise authorized
to make available to EI under the Contribution Cap.
In the September 12, 1994 Order, the Commission
reserved jurisdiction over EI's request to perform operation and
maintenance and related project management and administrative
services ("O&M Services") as managing general partner or the
operator of QFs, EWGs or FUCOs which are "associate companies" of
EI under the Act at fair market prices, in the following
circumstances:
(a) The project is an EWG (a "Foreign
EWG") or FUCO and derives no part of its
income, directly or indirectly, from the
generation, transmission or distribution of
electric energy for sale within the United
States; or
(b) the project is either (I) a non-
Foreign EWG which sells its output at market-
based rates approved by the Federal Energy
Regulatory Commission ("FERC") or the appro-
priate state rate regulatory commission, or
(II) a QF, as determined by the FERC, which
sells its net output to the purchasing
utility at the utility's "avoided cost"--
i.e. the purchasing utility's rates are not
determined on the basis of the project's cost
of service.
GPU and EI now request that the Commission release such
reservation of jurisdiction and, pursuant to the last sentence of
Section 13(b) of the Act, exempt the foregoing transactions from
the cost requirement of Section 13(b) as under such
circumstances, it is not necessary or appropriate for the
protection of investors or consumers that such services be
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provided at cost. See In re New England Electric Systems, HCAR
No. 22309 (1981).
GPU and EI submit that all of the criteria of Rules 53
and 54 under the Act with respect to the issuance of Guarantees
and Reimbursement Agreements by GPU and EI, and the issuance of
the Notes and Acquisition Notes by EI, are satisfied.
Interested persons wishing to comment or request a
hearing on the post-effective amendment should submit their views
in writing by ___________, 1994 to the Secretary, Securities and
Exchange Commission, Washington, D.C. 20549, and serve a copy on
the applicants at the addresses specified below. Proof of
service (by affidavit or, in case of an attorney at law, by
certificate) should be filed with the request. Any request for
hearing shall identify specifically the issues of fact or law
that are disputed. A person who so requests will be notified of
any hearing, if ordered, and will receive a copy of any notice or
order issued in the matter. After said date, the post-effective
amendment to the application, as filed or as amended, may be
granted.
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