Post-Effective Amendment No. 23 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")
GPU, Inc. ("GPU")
300 Madison Avenue
Morristown, New Jersey 07960
GPU INTERNATIONAL, INC. ("GPU International")
Elmwood Energy Corporation
Geddes II Corporation
Geddes Cogeneration Corporation
EI Selkirk, Inc.
EI Canada Holding Limited
EI Services Canada Limited
NCP Energy, Inc.
NCP Lake Power Inc.
NCP Gem, Inc.
NCP Pasco, Inc.
NCP Dade Power, Inc.
NCP Houston Power, Inc.
NCP Perry Inc.
NCP New York Inc.
GPU Generation Services - Pasco, Inc.
GPU Generation Services - Lake, Inc.
GPUI Lake Holdings, Inc.
EI Fuels Corporation
NCP Commerce Power, Inc.
Umatilla Groves, Inc.
Armstrong Energy Corporation
GPU Power, Inc.
Guaracachi America, Inc.
EI Barranquilla, Inc.
Barranquilla Lease Holdings, Inc.
EI International
Los Amigos Leasing Company, Ltd.
GPUI Colombia, Ltda.
International Power Advisors, Inc.
Hanover Energy Corporation
Austin Cogeneration Corporation
GPU Power Philippines, INc.
GPU International Asia, Inc.
GPU Power Ireland, Inc.
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EI Brooklyn Investments Limited
GPU Mississippi Energy, Inc.
One Upper Pond Road
Parsippany, New Jersey 07054
(Name of companies filing this statement and addresses
of principal executive offices)
GPU, INC.
(Name of top registered holding company
parent of the applicants)
T. G. Howson, Douglas E. Davidson, Esq.
Vice President and Treasurer Thelen Reid & Priest LLP
M. J. Connolly, 40 West 57th Street
Vice President - Legal New York, New York 10019
S. L. Guibord, Secretary
GPU Service, Inc.
300 Madison Avenue
Morristown, New Jersey 07960
W. Edwin Ogden, Esq.
Ryan, Russell, Ogden & Seltzer LLP
1100 Berkshire Boulevard
P.O. Box 6219
Reading, Pennsylvania 19601-0219
(Names and addresses of agents for service)
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GPU, GPU International, Elmwood Energy Corporation, Geddes II Corporation,
Geddes Cogeneration Corporation, EI Selkirk, Inc., EI Canada Holding Limited, EI
Services Canada Limited, NCP Energy, Inc., NCP Lake Power Inc., NCP Gem, Inc.,
NCP Pasco, Inc., NCP Dade Power, Inc., NCP Houston Power, Inc., NCP Perry Inc.,
NCP New York Inc., GPU Generation Services - Pasco, Inc., GPU Generation
Services - Lake, Inc., GPUI Lake Holdings, Inc., EI Fuels Corporation, NCP
Commerce Power, Inc., Umatilla Groves, Inc., Armstrong Energy Corporation, GPU
Power, Inc., Guaracachi America, Inc., EI Barranquilla, Inc., Barranquilla Lease
Holdings, Inc., EI International, Los Amigos Leasing Company, Ltd., GPUI
Colombia, Ltda., International Power Advisors, Inc., Hanover Energy Corporation,
Austin Cogeneration Corporation, GPU Power Philippines, Inc. GPU International
Asia, Inc., GPU Power Ireland, Inc., EI Brooklyn Investments Limited and GPU
Mississippi Energy, Inc. hereby post-effectively amend the application on Form
U-1, docketed in SEC File No. 70-7727, as heretofore amended, as follows.
A. By orders dated November 16, 1995 (HCAR No. 26409), June 14, 1995 (HCAR
No. 26307), December 28, 1994 (HCAR No. 26205), September 12, 1994 (HCAR No.
26123) and June 26, 1990 (HCAR No. 25108) in SEC File No. 70-7727 (collectively,
the "Orders"), the Commission, among other things, authorized GPU International
to engage in preliminary project development and administrative activities
("Project Activities") in connection with its investment in (i) qualifying
facilities ("QFs"), as defined in the Public Utility Regulatory Policies Act of
1978, as amended; (ii) exempt wholesale generators (EWGs"), as defined in
Section 32 of the Act; and (iii) foreign utility companies ("FUCOs"), as defined
in Section 33 of the Act. Such Project Activities are authorized without any
expiration date. The Orders also authorized GPU from time to time through
December 31, 1997 to (i) enter into guarantees, support instruments and bank
letters of credit reimbursement agreements or similar financial instruments or
undertakings ("Guarantees") to secure GPU International's agreement with any
person (including, without limitation, project lenders) in connection with GPU
International's Project Activities and the acquisition of ownership or
participation interests in QF, EWG or FUCO projects; (ii) guarantee the
securities or other obligations of EWGs and FUCOs; and (iii) assume liabilities
of EWGs and FUCOs, in an amount of up to $500 million. The Orders also
authorized GPU International to enter into guarantees and to assume liabilities
of EWGs and FUCOs in an aggregate amount of up to $50 million from time to time
through December 31, 1997.
B. By order dated December 22, 1997 (HCAR No. 26802) (the "1997 Order")
the Commission extended and modified the prior authorizations contained in the
Orders so that GPU is authorized, through December 31, 2000, to, among other
things, (i) enter into
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Guarantees (1) to secure or support GPU International's agreement with any
person (including, without limitation, project lenders) in connection with
Project Activities and the acquisition of ownership or participation interests
in QF, EWG or FUCO projects, including guarantees of any security or other
obligation of GPU International or any existing or future subsidiary of GPU
International ("GPUI Subsidiary"), provided the issuance and sale of any such
security is exempt from the requirement of prior Commission approval under
Section 6(a) of the Act under Rule 52, or has been otherwise authorized by the
Commission; (ii) guarantee the securities or other obligations of EWGs and
FUCOs; and (iii) assume liabilities of EWGs and FUCOs. The aggregate amount of
outstanding face or principal amount of Guarantee obligations and liabilities
assumed will not exceed $500 million. The 1997 Order also authorized GPU
International from time to time through December 31, 2000 to enter into
Guarantees, and to assume the liabilities of EWGs and FUCOs, in an aggregate
amount of up to $150 million and authorized any GPUI Subsidiary which is not an
EWG or a FUCO to guarantee the securities or other obligations of their direct
or indirect subsidiaries from time to time through December 31, 2000 in an
aggregate amount not to exceed, together with the aggregate amount of GPU
International guarantees outstanding, $150 million.
C. Applicants now request that the authority granted by the 1997 Order be
extended until June 30, 2004 except to the extent any previously authorized
guarantees are exempt under Rules 45 and 52. In all other respects, the
transactions heretofore authorized by the Commission in this docket would remain
unchanged.
D. Rule 54 Analysis.
(a) As described below, GPU meets all of the conditions of Rule 53,
except for Rule 53(a)(1). By Order dated November 5, 1997 (HCAR No. 35-26773)
(the "November 5 Order"), the Commission authorized GPU to increase to 100% of
its "average consolidated retained earnings," as defined in Rule 53, the
aggregate amount which it may invest in EWGs and FUCOs. At June 30, 2000, GPU's
average consolidated retained earnings was approximately $2.4 billion and GPU's
aggregate investment in EWGs and FUCOs was approximately $1.8 billion.
Accordingly, under the November 5 Order, GPU may invest up to an additional $614
million in FUCOs and EWGs as of June 30, 2000.
(i) 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.
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1 "Guarantees" include guarantees, support instruments and bank letters of
credit reimbursement agreements or similar financial instruments or
undertakings.
2
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(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 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
(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,
GPU will provide the Commission on request copies
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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
required by subparagraphs (a) (2) (iii) (A) and (a) (2)
(iii) (B) of Rule 53.
(ii) No more than 2% of GPU's domestic public utility
subsidiary employees will render any services, directly or
indirectly, to any EWG and FUCO in which GPU directly or indirectly
holds an interest.
(iii) Copies of this Application on Form U-1 are being
provided to the New Jersey Board of Public Utilities and the
Pennsylvania Public Utility Commission, the only federal, state or
local regulatory agencies having jurisdiction over the retail rates
of GPU's electric utility subsidiaries.(2) In addition, GPU will
submit to each such commission copies of any amendments to this
Application and a copy of Item 9 of GPU's Form U5S and Exhibits H
and I thereof (commencing with the Form U5S to be filed for the
calendar year in which the authorization herein requested is
granted).
(iv) 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 having a book
value exceeding 10% of GPU's consolidated retained earnings is the
subject of any pending bankruptcy or similar proceeding.
(B) GPU's average consolidated retained earnings for the
four most recent quarterly periods (approximately $2.44 billion)
represented a decrease of approximately $13.7 million (or
approximately .5%) compared to the average consolidated retained
earnings for the previous four quarterly periods (approximately
$2.45 billion). The decrease in retained earnings results primarily
from a non-recurring loss of $295
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2 One of GPU's operating subsidiaries, the Pennsylvania Electric Company
("Penelec"), is also subject to retail rate regulation by the New York Public
Service Commission with respect to retail service to approximately 3,700
customers in Waverly, New York served by Waverly Electric Power & Light Company,
a Penelec subsidiary. Waverly Electric's revenues are immaterial, accounting for
less than 1% of Penelec's total operating revenues.
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million, after tax, from the sale during the second quarter of 2000
of GPU PowerNet, which provides transmission services in the State
of Victoria, Australia.
(C) GPU did not incur operating losses from direct or
indirect investments in EWGs and FUCOs in 1999 in excess of 5% of
GPU's December 31, 1999 consolidated retained earnings.
As described above, GPU meets all the conditions of Rule 53(a), except for
clause (1). With respect to clause (1), the Commission determined in the
November 5 Order that GPU's financing of investments in EWGs and FUCOs in an
amount greater than 50% of GPU's average consolidated retained earnings as
otherwise permitted by Rule 53(a)(1) would not have either of the adverse
effects set forth in Rule 53(c).
Moreover, even if the effect of the capitalization and earnings of
subsidiary EWGs and FUCOs were considered, there is no basis for the Commission
to withhold or deny approval for the transactions proposed in this Application.
The transactions would not, by themselves, or even considered in conjunction
with the effect of the capitalization and earnings of GPU's subsidiary EWGs and
FUCOs, have a material adverse effect on the financial integrity of the GPU
system, or an adverse impact on GPU's public utility subsidiaries, their
customers, or the ability of State commissions to protect such public utility
customers.
The November 5 Order was predicated, in part, upon the assessment of GPU's
overall financial condition which took into account, among other factors, GPU's
consolidated capitalization ratio and the recent growth trend in GPU's retained
earnings. As of June 30, 1997, the most recent quarterly period for which
financial statement information was evaluated in the November 5 Order, GPU's
consolidated capitalization consisted of 49.2% common equity and 50.8% debt. As
stated in the November 5 Order, GPU's June 30, 1997 pro forma capitalization,
reflecting the November 6, 1997 acquisition of PowerNet Victoria, was 39.3%
common equity and 60.7% debt.
At June 30, 2000, GPU's common equity and debt represented 31.4% and
68.6%, respectively, of its consolidated capitalization, as set forth in Exhibit
H hereto. Thus, since the date of the November 5 Order, there has been no
material adverse change in GPU's consolidated capitalization ratio, which
remains within acceptable ranges and limits as evidenced by the credit ratings
of GPU's electric utility subsidiaries.(3)
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3 The first mortgage bonds of GPU's operating subsidiaries, Jersey Central Power
& Light Company, Metropolitan Edison Company and Penelec are rated A+ by
Standard & Poors Corporation, and A2 by Moody's Investors Service, Inc.
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GPU's consolidated retained earnings grew on average approximately 6.5%
per year from 1994 through 1999. Earnings attributable to GPU's investments in
EWGs and FUCOs have contributed positively to consolidated earnings.
Accordingly, since the date of the November 5 Order, the capitalization
and earnings attributable to GPU's investments in EWGs and FUCOs have not had
any adverse impact on GPU's financial integrity.
Reference is made to Exhibit H which sets forth GPU's consolidated
capitalization at June 30, 2000 and after giving effect to the transactions
proposed herein. As set forth in such exhibit, the proposed transactions will
not have a material impact on GPU's capitalization or earnings.
E. GPU's estimated fees, commissions and expenses in connection with the
proposed transactions will be filed by further post-effective amendment.
F. GPU believes that Sections 6(a), 7, 9(a) 10, 12, 32, and 33 of the Act
and Rules 45, 53 and 54 thereunder are applicable to the proposed transactions.
G. No Federal or State commission, other than your Commission, has
jurisdiction with respect to the proposed transactions.
H. 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 December 1, 2000. It is further requested that (iii) there not be
a recommended decision by an Administrative Law Judge or other responsible
officer of the Commission, (iv) the Office of Public Utility Regulation be
permitted to assist in the preparation of the Commission's decision, and (v)
there be no waiting period between issuance of the Commission's order and the
date on which it is to become effective.
I. The following exhibits and financial statements are filed in Item 6.
(a) Exhibits:
G - Financial Data Schedule.
H - Capitalization and Capitalization Ratios as at
June 30, 2000, actual and pro forma.
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J. (a) The issuance of an order by your Commission with respect to the
transactions contemplated herein is not a major Federal action significantly
affecting the quality of the human environment.
(b) No Federal agency has prepared or is preparing an environmental impact
statement with respect to the various proposed transactions which are the
subject hereof. Reference is made to paragraph G hereof regarding regulatory
approvals with respect to the proposed transactions.
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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 UNDERSIGNED THEREUNTO DULY AUTHORIZED.
GPU, INC.
By: /s/ T. G. Howson
---------------------------------
T. G. Howson,
Vice President and Treasurer
GPU INTERNATIONAL, INC.
Elmwood Energy Corporation
Geddes II Corporation
Geddes Cogeneration Corporation
EI Selkirk, Inc.
EI Canada Holding Limited
EI Services Canada Limited
NCP Energy, Inc.
NCP Lake Power Inc.
NCP Gem, Inc.
NCP Pasco, Inc.
NCP Dade Power, Inc.
NCP Houston Power, Inc.
NCP Perry Inc.
NCP New York Inc.
GPU Generation Services - Pasco, Inc.
GPU Generation Services - Lake, Inc.
GPUI Lake Holdings, Inc.
EI Fuels Corporation
NCP Commerce Power, Inc.
Umatilla Groves, Inc.
Armstrong Energy Corporation
GPU Power, Inc.
Guaracachi America, Inc.
EI Barranquilla, Inc.
Barranquilla Lease Holdings, Inc.
EI International
Los Amigos Leasing Company, Ltd.
International Power Advisors, Inc.
Hanover Energy Corporation
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Austin Cogeneration Corporation
GPU Power Philippines
GPU International Asia, Inc.
GPU Power Ireland, Inc.
EI Brooklyn Investments Limited
GPU Mississippi Energy, Inc.
By: /s/ R. P. Lantzy
---------------------------------
R. P. Lantzy
President
GPUI COLOMBIA, LTDA.
By: /s/ L. G. Martinez
---------------------------------------
L. G. Martinez
Officer
Date: October 25, 2000
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