UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM U-1
-----------------------------------------
AMENDMENT NO. 2
TO
APPLICATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
----------------------------------------------------
The AES Corporation
1001 North 19th Street
Arlington, VA 22209
(Name of company filing this statement and
address of principal executive offices)
------------------------------------------------------------------
None
(Name of top registered holding company
parent of each applicant or declarant)
---------------------------------
William R. Luraschi
General Counsel and Secretary
The AES Corporation
1001 North 19th Street
Arlington, VA 22209
(Name and address of agent for service)
----------------------------------
The Commission is also requested to send copies of any communications in
connection with this matter to:
Clifford M. Naeve, Esq.
Judith A. Center, Esq.
Kathleen A. Foudy, Esq.
William C. Weeden
Skadden, Arps, Slate, Meagher & Flom L.L.P.
1440 New York Avenue, N.W.
Washington, D.C. 20005
<PAGE>
APPLICATION FOR EXEMPTION FROM THE PROVISIONS OF THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 PURSUANT TO
SECTION 3(a)(5)
The Application previously filed in this proceeding is hereby amended and
restated in its entirety to read as follows:
Introduction and Request For Commission Action
The AES Corporation ("AES") hereby applies for an order from the
United States Securities and Exchange Commission (the "Commission") to the
effect that upon consummation of the merger transaction described in Item 1
below, the resulting public utility holding company, and every subsidiary
company thereof as such, will be exempt from the provisions of the Public
Utility Holding Company Act of 1935, as amended ("PUHCA" or "the Act"), other
than Section 9(a)(2), pursuant to Section 3(a)(5) of the Act.1
ITEM 1. DESCRIPTION OF THE TRANSACTION
A. Summary of the Transaction
Pursuant to a Merger Agreement dated November 22, 1998, between AES
and CILCORP Inc. ("CILCORP"), Midwest Energy, Inc., an Illinois corporation and
wholly-owned subsidiary of AES, will be merged with and into CILCORP, with
CILCORP as the surviving corporation (the "Transaction"). As a result of the
Transaction, each outstanding share of common stock of CILCORP ("CILCORP
Shares") and each associated purchase right under the Rights Agreement, dated as
of October 29, 1996, between Continental Stock Transfer and Trust Company and
CILCORP will be converted into the right to receive $65.00 (subject to
adjustment as described in the Merger Agreement) in cash, without interest. The
Merger Agreement is attached to this Application as Exhibit B-1.
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1 Some AES subsidiaries also will continue to be exempt from the Act as
exempt wholesale generators ("EWGs"), pursuant to Section 32 of the Act, as
foreign utility companies ("FUCOs"), pursuant to Section 33 of the Act, or
as qualifying facilities ("QFs"), pursuant to Section 210(e) of the Public
Utility Regulatory Policies Act of 1978, and the implementing rules of the
Federal Energy Regulatory Commission.
<PAGE>
Following the Transaction, CILCORP will be a first-tier, direct
subsidiary of AES, and CILCORP's subsidiaries will maintain their current
structure as direct or indirect subsidiaries, as the case may be, of CILCORP. In
addition, CILCORP will continue to be an Illinois corporation with its principal
executive offices in Peoria, Illinois and AES will continue to be a Delaware
corporation with its principal executive offices in Arlington, Virginia.
The merger will provide important benefits to CILCORP's utility
customers and shareholders. AES's international and diversified experience in
competitive power markets will provide CILCORP's public utility subsidiary,
Central Illinois Light Company ("CILCO"), the resources necessary to provide
quality customer services in a deregulated environment. Pursuant to the Electric
Service Customer Choice and Rate Relief Law of 1997, which was enacted in
Illinois in December 1997 and becomes effective in October 1999, industrial and
commercial customers will be able to choose their own retail electric power
providers. Residential customers will have the same choice sometime thereafter,
ultimately leading to open choice for all Illinois electricity customers by
mid-year 2002. This deregulation will result in direct competition for customers
and will create demand for a broader range of services at competitive prices.
AES's worldwide experience and management resources, coupled with CILCORP's
utility expertise in Illinois, will facilitate enhanced customer services at
competitive prices.
The Merger Agreement is subject to the approval of CILCORP's
shareholders and was approved at a special meeting of CILCORP shareholders held
on May 20, 1999. The Merger also is subject to approval by the Federal Energy
Regulatory Commission ("FERC"). An application for such approval was filed with
the FERC on February 19, 1999. See Exhibit D-2. The FERC granted the application
and approved the Merger on June 16, 1999. Central Illinois Light Company and The
AES Corporation, 87 FERC P. 61, 293 (1999). (See Exhibit D-3). The Merger also
is subject to the notification and reporting requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"). On
February 22, 1999, the Federal Trade Commission granted early termination of the
HSR Act waiting period.
In addition, CILCO provided notice to the Illinois Commerce Commission
("ICC") pursuant to Section 16-111(g) of the Illinois Public Utilities Act
regarding the Transaction, and filed a petition with the ICC for an order
finding that the ICC has no pre-approval jurisdiction over the Transaction, or,
in the alternative, for an order approving the Transaction with respect to
CILCO's gas operations.2 See Exhibit D-1. After the filing of its petition,
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2 Pursuant to the Illinois Public Utilities Act, the ICC does not have
pre-approval jurisdiction over the Transaction with respect to CILCO's
electric operations. Illinois restructuring legislation removed ICC
authority over the reorganization of electric utilities until January 1,
2005. Although the Illinois restructuring legislation removed much of the
ICC's authority over the sale or other transfer of electric assets to
affiliated or other unaffiliated entities until January 1, 2005, the ICC
does retain authority during this period to prohibit, under certain
circumstances, sales or other transfers of generating plant or transmission
or distribution facilities. If the ICC finds that a proposed transfer will
render the electric utility unable to provide its tariffed services in a
safe and reliable manner, or that there is a strong likelihood that
consumma tion of the proposed transaction will result in the electric
utility being entitled to request an increase in its base rates prior to
January 1, 2005, the ICC may prohibit the transaction. See 220 ILCS section
5/16-111(g).
<PAGE>
CILCO withdrew its request that the ICC make a ruling on the jurisdictional
issue. The ICC held an evidentiary hearing on February 5, 1999, and issued an
order approving the Transaction with respect to CILCO's gas operations on March
10, 1999. See Exhibit K-17. CILCO also requested that the ICC issue a state
commission certification in accordance with the requirements of Section 33(a)(2)
of the Act. The ICC issued such certification by letter to the Commission dated
March 10, 1999. See Exhibit K-18.3
Upon consummation of the Transaction, AES will own CILCORP, an
intrastate exempt holding company under Section 3(a)(1) of the Act, and its
direct and indirect subsidiaries, including CILCO, a utility subsidiary
principally engaged in the generation, transmission, distribution and sale of
electric energy, and the purchase, distribution, transportation and sale of
natural gas in central and east-central Illinois. After giving effect to the
Transaction, CILCORP will remain predominantly an intrastate holding company
that will not derive any material part of its income from an out-of-state
utility subsidiary. Accordingly, CILCORP will continue to claim an exemption
from registration under PUHCA pursuant to Section 3(a)(1) and Rule 2. For the
reasons set forth herein, AES will qualify for an exemption from registration
under Section 3(a)(5) of the Act.
B. Description of Parties to the Transaction
1. AES Corporation
AES, incorporated in Delaware, is a United States-based multinational
electric power generation and energy distribution company, with operations in 16
countries worldwide. AES is engaged principally in the development, ownership,
and operation of electric generating plants and electric and gas distribution
companies, all of which either are (or are owned by) EWGs, FUCOs or QFs.
Revenues from electric generation and distribution activities accounted for over
95 percent of revenues in 1997 and again in 1998. Other activities include the
sale of steam and other commodities related to AES's cogeneration operations, as
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3 The Transaction is not subject to pre-approval by this Commission under
Section 9(a)(2) of the Act, since AES will acquire and own only one
PUHCA-jurisdictional public utility company upon consummation of the
Transaction. See Coral Petroleum, Inc., Rel. No. 35-21, 632 (1980).
<PAGE>
well as operational, construction and project development services, and gas and
power marketing.4 AES currently is not a holding company subject to the
provisions of the Act because none of its subsidiaries is a public utility
company as defined by the Act. Exhibit K-2 lists all AES subsidiaries and their
respective jurisdictions of organization.
AES has grown since its founding in 1981 to become one of the largest,
if not the largest, global electricity suppliers. AES currently owns and/or
operates (entirely or in part) a diverse international portfolio of electric
power plants with a total capacity of 26,466 megawatts ("MW"), including plants
that are part of distribution companies in which AES has an interest. Of that
total, 6,449 MW (fifteen plants) are located in the United States, 1,818 MW
(five plants) are in the United Kingdom, 885 MW (six plants) are in Argentina,
817 MW (eight plants) are in China, 1,281 MW (three plants) are in Hungary,
6,456 MW (41 plants) are in Brazil, 5,384 MW (seven plants) are in Kazakhstan,
210 MW (one plant) are in the Dominican Republic, 110 MW (one plant) are in
Canada, 695 MW (two plants) are in Pakistan, 1,254 MW (three plants) are in
Australia, 405 MW (one plant) are in the Netherlands, 420 MW (one plant) are in
India and 282 MW (two plants) are in Panama. 20,017 MW of this generating
capacity is located outside the United States.5
As noted above, AES also owns partial interests (both majority and
minority) in companies that distribute and sell electricity directly to
commercial, industrial, governmental, and residential customers. AES has
majority ownership in three distribution companies in Argentina, one in Brazil,
one in the country of Georgia, one in Kazakhstan, one in El Salvador, and one in
the Dominican Republic, and less than majority ownership in three additional
distribution companies in Brazil. AES recently increased its ownership interest
in two of the Brazilian distribution companies. These eleven companies serve a
total of approximately 13.6 million foreign customers with sales of nearly
107,000 gigawatt-hours. On a net equity basis, AES's ownership in these
companies represents approximately 3.7 million foreign customers and
approximately 29,000 gigawatt-hours. On June 23, 1999, AES announced that it had
assumed management control of two distribution companies in Kazakhstan, which
together serve approximately 1.8 million customers and own a transmission
network covering an area approximately the size of France.
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4 AES Power, a wholly owned subsidiary of AES active in power marketing,
generated less than 1 percent of AES's1998 net income. CEMIG, in which AES
has a minority investment, has operated a small gas distribution com pany,
Gasmig, since 1995. In addition, AES recently acquired New Energy Ventures
(now renamed NewEnergy Inc.), an energy services provider.
5 On a net equity basis, i.e., actual ownership interest, AES has 17,618 MW
of capacity, of which 11,194 MW is foreign-based.
<PAGE>
In addition to power generation and distribution, AES owns and
operates the Lyukobanya Coal Mine in Hungary. The mine has an output of
approximately one million tons per year of brown coal and is the sole supplier
of AES Borsod.
AES has grown rapidly throughout this decade. In 1990, the year before
it went public, AES had total assets of $1.1 billion, revenues of $190.2 million
and net income of $15.5 million.6 By the end of 1997, total assets grew by
approximately 700 percent to $8.9 billion, revenues grew by approximately 640
percent to $1.4 billion, and net income grew by nearly 1,100 percent to $185
million. From the end of 1997 to the end of 1998, AES's total assets expanded 21
percent to $10.8 billion, revenues rose 71 percent to $2.4 billion and net
income grew 68 percent to $311 million. In the eight year period between
year-end 1990 and 1998, AES's growth in total assets, revenues and net income
were 882 percent, 1,162 percent and 1,906 percent, respectively.
AES has continued its growth in 1999. Thus far in 1999, AES has
acquired or achieved commercial operations for two power plants totaling 282
megawatts ("MW") in Panama, a 420 MW plant in India and three power plants
totaling 1,254 MW in Australia. The company also recently completed financing
for the purchase of six power plants totaling 1,424 MW in New York.7 In 1999,
AES also expects to achieve financial closing on its acquisition of the four
electric generating plants of CILCO (1,152 MW). Also in 1999, AES is expected to
complete construction of and begin operating a 180 MW coal-fired plant in the
United States. Combining the 101 power plants currently in operation, planned
for acquisition in 1999 or projected to begin operations in 1999, AES is
expected to have a minimum of 27,798 MW of generating capacity by the end of the
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6 Determined in accordance with Generally Accepted Accounting Principles
("GAAP").
7 These generating assets of New York State Electric and Gas Corporation
("NYSEG") will be owned by a wholly-owned subsidiary of AES that has EWG
status.
8 Of this 27,798 MW, 20,017 MW will be foreign. On a net equity basis, AES is
expected to have a generating capacity of 18,950 MW at year-end 1999;
11,194 MW of which will be foreign.
<PAGE>
current calendar year.8 As a result, the power generation capacity of companies
in which AES has an interest will have grown by 3,027 percent in 8 years.9 10
The growth of AES's distribution business also has been fast-paced. In
1996, AES purchased its first interests in a distribution company. By the end of
1998, companies in which AES had an interest served approximately 13 million
customers and sold over 102,000 gigawatt-hours of power.11 Thus far in 1999, AES
has acquired 75 percent of a distribution company serving 370,000 customers in
the country of Georgia, 50 percent of an electric distribution company serving
approximately 270,000 customers in the Dominican Republic, and increased its
ownership stakes in two Brazilian distribution companies, Light and
Metropolitana, by 27 percent and 30 percent, respectively. In addition, AES
acquired management control of two distribution companies in Kazakhstan which
together serve 1.8 million customers.
AES's market capitalization has mirrored its growth over the decade.
AES's public offering in 1991 valued the company at $750 million. At present,
AES's market capitalization has risen to approximately $10.77 billion, an
increase of 1,336 percent in approximately 8 years.
Exhibit K-3 lists the AES subsidiary companies which own generation
facilities currently in operation, and also includes company operating
locations, power generation capacities, AES net equity interests, and the
regulatory status of the companies and/or generating facilities (i.e., whether
QF, EWG, or FUCO). Exhibit K-3 also lists the distribution companies in which
AES owns an interest, including location, regulatory status and the nature of
AES's interest. Exhibit K-4 depicts the locations of AES's current generation
and distribution businesses worldwide.
2. CILCORP
CILCORP was incorporated as a utility holding company in the State of
Illinois in 1985. CILCORP is the parent of four first-tier subsidiaries: CILCO,
QST Enterprises Inc. ("QST"), CILCORP Investment Management Inc. ("CIM"), and
CILCORP Ventures Inc. ("CVI"). The consolidated assets, revenues and net income
of CILCORP for the year ending December 31, 1997 were $1.335 billion, $558
million and $16.4 million, respectively. For 1998, CILCORP's consolidated
assets, revenues and net income were $1.313 billion, $559 million and $16.3
million, respectively. CILCORP is exempt from the provisions of PUHCA (except
for Section 9(a)(2)) under Section 3(a)(1) pursuant to Rule 2.
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9 This projection conservatively assumes AES growth only from AES projects
under development which are expected to be operational in this period and
from existing projects which AES already has committed to acquire during
this period.
10 2,093 percent on a net equity basis.
11 Approximately 3.1 million customers and 25,000 gigawatt-hours on a net
equity basis.
<PAGE>
CILCO, the primary business subsidiary of CILCORP, is an electric and
gas utility engaged in the generation, transmission, distribution, and sale of
electric energy in an area of approximately 3,700 square miles in central and
east-central Illinois, and the purchase, distribution, transportation and retail
sale of natural gas in an area of approximately 4,500 square miles in central
and east-central Illinois. As of December 31, 1998, CILCO served approximately
253,000 customers; approximately 189,000 retail electric customers and
approximately 197,000 gas customers, including 837 industrial, commercial and
residential gas transportation customers that purchase gas directly from
suppliers for transportation through CILCO's system. At the end of 1997, the
electric utility assets of CILCO were $723.8 million and the gas utility assets
were $290.5 million. At the end of 1998, the electric utility assets of CILCO
were $729.1 million and the gas utility assets were $286.2 million. In 1997,
CILCO earned $338.1 million in electric utility revenues (62 percent of total
operating revenue) and $208.8 million in gas utility revenues (38 percent of
total operating revenue). In 1998, CILCO earned $360.0 million in electric
utility revenues (68 percent of total operating revenue) and $172.3 million in
gas utility revenues (32 percent of total operating revenue). CILCO owns and
operates two steam-electric generating plants, one cogeneration plant and two
combustion turbine-generators. These facilities had an available summer
capability of 1,152 megawatts in 1998. At the end of 1998, CILCO's transmission
system included approximately 285 circuit miles operating at 138,000 volts, 48
circuit miles operating at 345,000 volts and 16 principal substations with an
installed capacity of 2,150,000 kilovolt-amperes. In 1998, the system peak
demand was 1,195 megawatts for electric activities and the peak day natural gas
send-out was 327,328 million cubic feet. CILCO had total assets, operating
revenues and net income of $1.023 billion, $546.9 million and $50.3 million,
respectively, for the year ending December 31, 1997. At the end of 1998, CILCO
had total assets, operating revenues and net income of $1.024 billion, $532.3
million and $41 million, respectively.
CILCO has two wholly-owned subsidiaries, CILCO Exploration and
Development Company ("CEDCO") and CILCO Energy Corporation ("CECO"). CEDCO was
formed to engage in the exploration and development of gas, oil, coal, and other
mineral resources.
QST was formed in December 1995 to facilitate CILCORP's expansion into
non-regulated energy and related services businesses. QST has three wholly-owned
first-tier subsidiaries: CILCORP Infraservices, Inc. ("CII"), ESE Land
Corporation ("ESE Land") and QST Energy, Inc. ("QST Energy"). QST Energy has one
wholly-owned subsidiary: QST Energy Trading Inc. ("QST Trading").
CII provides utility operation and maintenance services. CII currently
serves one customer in Central Illinois.
<PAGE>
Until recently, ESE Land was a direct subsidiary of QST Environmental,
Inc. ("QST Environmental"), formerly a first-tier subsidiary of QST, as
described below. ESE Land acquired environmentally-impaired property for
remediation and resale. During the fourth quarter of 1998, QST Environmental
sold substantially all of the assets of ESE Land.
QST Energy, which began operations in 1996, provides non-regulated
energy and energy-related services to retail and wholesale customers. QST Energy
competed against marketers, brokers and utility affiliates to market and provide
energy and related services to customers of utilities and other energy providers
who have the ability to choose a supplier. QST Trading was a wholesale natural
gas and electric power marketer which purchased, sold, and brokered energy and
capacity at market-based rates to other marketers, including QST Energy,
utilities and other customers. In June of 1998, CILCORP announced that it was
reevaluating its strategy for QST Energy, and indicated that the company would
focus on opportunities for profitable growth in Illinois, de-emphasizing energy
trading activities at QST. After further consideration, CILCORP decided to wind
down the operations of QST Energy and QST Trading, except to the extent required
to fulfill commitments to existing customers and counterparties. Once these
commitments are fulfilled, the operations of QST Energy and QST Trading will be
completely wound down.
In late 1998, CILCORP decided to sell QST Environmental, an
environmental consulting and engineering firm serving governmental, industrial
and commercial customers. On June 24, 1999, CILCORP completed the sale of QST
Environmental.
As a result of the winding down and sale of various QST operations,
CILCORP is reporting the results of QST and certain of its subsidiaries as
discontinued operations. For the year ending December 31, 1998, QST had total
assets and a net loss of $121.6 million and $21.9 million, respectively.
CIM invests in a diversified portfolio of long-term financial
investments which currently include leveraged leases, energy-related projects
and affordable residential housing. CIM has four wholly-owned subsidiaries:
CILCORP Lease Management, Inc., CIM Leasing, Inc., CIM Air Leasing, Inc., and
CIM Energy Investments, Inc. For the year ending December 31, 1998, CIM had
total assets, revenues and net income of $162.5 million, $11.1 million and $4.3
million, respectively.
CVI primarily invests in ventures in energy-related products and
services. CVI has an 80 percent interest in the Agricultural Research and
Development Corporation and has one wholly-owned subsidiary, CILCORP Energy
Services Inc., ("CESI"). CESI's primary business is the sale of non-regulated
energy services, including non-regulated sales of natural gas. For the year
ending December 31, 1998, CVI had total assets, revenues and a net loss of $7.8
million, $13.5 million and $1.4 million, respectively.
<PAGE>
ITEM 2. FEES, COMMISSIONS AND EXPENSES
The fees, commissions and expenses to be paid or incurred, directly or
indirectly, by all parties in connection with the Transaction are estimated to
total approximately $28 million.
ITEM 3. APPLICABLE STATUTORY PROVISION
Section 3(a)(5)
Under Section 3(a)(5), a holding company and its subsidiaries will be
exempt from the provisions of the Act (except for Section 9(a)(2)) if the
holding company is not and does not derive any material part of its income from
a subsidiary whose principal business within the U.S. is that of a public
utility company. As the Commission has noted, the Section 3(a)(5) exemption is
meant to be available to a holding company system with foreign operations whose
U.S. utility operations "account for no material part of the holding company's
income" and are "small in size". Gaz Metropolitain, Inc., Rel. No. 26170 (1994)
(quoting and citing Electric Bond and Share Company, Rel. No. 11004, 1952 WL
1058 (1952) ("Electric Bond and Share")). For the reasons set forth below, it is
clear that AES will qualify for a Section 3(a)(5) exemption upon completion of
the Transaction.
A. Materiality of CILCO Income
In the relatively few cases decided under Section 3(a)(5) where the
Commission has addressed the materiality of the U.S. utility subsidiary, the
Commission has considered the relative size of the U.S. utility subsidiary's
operations, expressed as a percentage of the applicant holding company's total
operations, based upon a variety of financial yardsticks. See, e.g., Gaz
Metropolitain (citing to U.S. utility contributions to holding company total
consolidated revenues, net income, and net utility plant); TransCanada Pipelines
Limited, Rel. No. 35-25647 (1992)(citing to percentages of holding company total
revenues and net assets); Consumers' Gas Company, Rel. No. 35-14956 (1963)
comparing U.S. utility and holding company revenues, net income, and net
assets). In considering these various financial measurements, the Commission has
not indicated that any given one is entitled to particular deference.
The Commission similarly has not applied a strict percentage test of
materiality under Section 3(a)(5). The Commission has granted Section 3(a)(5)
exemptions where the U.S. utility subsidiary represented less than approximately
5 percent of total holding company operations. See, e.g., Gaz Metropolitain;
<PAGE>
TransCanada Pipelines. The Commission also has indicated that a holding company
that derived approximately 46 percent of its total business revenues from a
utility subsidiary (in the form of fees for underwriting services) received a
material amount of income from such subsidiary. H.M. Byllesby & Company, Rel.
No. 1882 (1940). See also Cities Service Company, 8 SEC 318 (1940)(noting in
dicta that U.S. utility subsidiary contributions to holding company of
approximately 30 percent of gross revenues and 45 percent of net fixed assets
would be considered material). See also NIPSCO Industries, Inc., Rel. No.
35-26975 (Feb. 10, 1999) ("NIPSCO") (in the Section 3(a)(1) context, the
Commission has emphasized that there is no strict percentage test for assessing
materiality under Section 3(a)(1)).
It should be noted that the Commission Staff has recommended that the
Commission adopt a more flexible standard for exemptions under Section 3(a),
urging the agency to take into account the ability of affected state commissions
to "adequately protect utility consumers against any detriment that might be
associated with certain activities of exempt holding companies." The Regulation
of Public-Utility Holding Companies (June 1995), pp. 119-120. As explained
below, the ICC has such ability here.
A review of CILCO's contributions to AES's total operations (including
CILCORP), from the perspective of a variety of financial indicators, reveals
that CILCO's utility activities and assets constitute only a very minor
percentage of AES's overall business, a percentage that will become increasingly
minor over time, as the size of AES's business continues to grow.12 Set forth
below in Table 1 are the percentages, on a pro forma basis for 1996-1998, of
gross revenues, net operating revenues13, operating income, net income, and net
assets of CILCO, to the total combined gross revenues, net operating revenues,
operating income, net income, and net assets of AES as a whole.
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12 In fact, AES expects that CILCO's activities and assets as a percentage of
AES's overall business will trend down to below 10 percent within five
years.
13 Net operating revenues are gross revenues less cost of purchased gas for
retail gas distribution and the cost of fuel for electric generation, for
both AES and CILCO.
<PAGE>
<TABLE>
<CAPTION>
CILCO Contributions To
AES/CILCORP Consolidated Holding Company
(Proportional Consolidation Basis)
($MM)
1996 1997 1998
<S> <C> <C> <C>
Gross Revenues* 31.26% 21.24% 12.81%
AES 1,149 2,045 3,640
CILCO 524 553 538
CILCORP (excluding CILCO) 3 5 21
AES/CILCORP 1,676 2,603 4,199
Net Operating Revenues 26.66% 17.75% 10.35%
AES 891 1,557 3,011
CILCO 325 337 350
CILCORP (excluding CILCO) 3 5 21
AES/CILCORP 1,219 1,899 3,382
Operating Income 21.05% 14.59% 8.54%
AES 365 608 997
CILCO 96 103 93
CILCORP (excluding CILCO) (5) (5) (1)
AES/CILCORP 456 706 1,089
Net Income 27.45% 24.88% 12.54%
AES 125 185 311
CILCO 42 50 41
CILCORP (excluding CILCO) (14) (34) (25)
AES/CILCORP 153 201 327
Net Assets 20.07% 9.12% 7.78%
AES 3,876 9,883 11,851
CILCO 1,036 1,023 1,024
CILCORP (excluding CILCO) 250 312 289
AES/CILCORP 5,162 11,218 13,164
</TABLE>
* In calculating the gross revenues percentage, the numerator is equal to the
total gross business revenues of CILCO, which include revenues from minor
non-utility activities (nearly all of which are from service transactions
with CILCORP affiliates). The denominator is comprised of all CILCORP
business revenues (including revenues from all CILCO activities and CILCORP
non-utility activities) plus all of AES's business revenues.
The AES data contained in Table 1 is compiled on a proportional
consolidation basis rather than in accordance with GAAP. On a proportional
consolidation basis, revenues, income and assets are allocated to AES on a pro
rata basis in proportion to the ownership percentages held by AES in each of the
projects/companies in which it has an equity interest. AES holds a less-than-50
percent equity interest in a number of projects that generate substantial
revenues.14 On a proportional consolidation basis, revenues from sales made by
these minority-interest investments are included as revenues in statements of
operations. On financial statements prepared in accordance with GAAP, on the
other hand, returns from minority-interest projects are not reported as
revenues, but instead are reported as equity in earnings of affiliates (net of
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14 AES holds majority equity interests in a number of projects/companies.
Under GAAP, revenues and income from such projects are included in AES's
consolidated financial statements in the same manner as wholly-owned
projects. However, the revenue impact of these holdings is far outweighed
by the exclusion of minority-owned projects from the calculation of AES's
GAAP-based gross revenues.
<PAGE>
income taxes). Thus, although GAAP-based data is the appropriate data for use in
other contexts, using GAAP-based data here would understate the revenues AES
earns from its electric business. The proportional consolidation data provides a
more accurate representation of the size of AES's generation and distribution
business relative to that of CILCO's business for purposes of the Commission's
materiality analysis.
Commission case law provides support for making appropriate
adjustments to financial data reported on the basis of prescribed, conventional
accounting treatments, where such adjustments would yield a more accurate
picture, from a PUHCA perspective, of a company's operations, revenues, or other
pertinent criteria. For example, on several occasions, the Commission has
considered proportional consolidation data. See, e.g., Northern New England
Company, et al., Rel. No. 11711 (February 13, 1953) (1953 SEC LEXIS 875)
(applying proportional consolidation approach to re-state and allocate income
and balance sheet amounts to reflect ownership percentages) and Sioux City Gas
and Electric Company, Rel. No. 9303 (September 8, 1949) (1949 SEC LEXIS 613)
(applying proportional consolidation approach to evaluation of dividend coverage
ratios). See also Consolidated Cities Light, Power & Traction Company, et al.,
Rel. No. 4130 (February 23, 1943) (1943 SEC LEXIS 556) (consideration of
company's "indirect" sources of income, such as payments by another company of
its interest and sinking fund requirements on outstanding debt).
In addition, proportional consolidation is consistent with the status
of the minority-interest businesses as subsidiary companies of AES. AES owns at
least 10 percent of the voting securities of such companies, and as noted above,
participates in their management and operation. Therefore, it is appropriate to
allocate the revenues and assets of these companies to AES on a pro-rata basis.
To do otherwise significantly would underestimate the extent of AES's foreign
operations.15
Although Table 1 includes data for 1996, 1997 and 1998, given AES's
phenomenal growth, the 1998 data is by far the most relevant for purposes of
comparing the relative size of CILCO and AES. As the description in Item 1,
Section B above notes, AES's revenues increased approximately 640 percent
between 1990 and 1997, and increased by 71 percent from 1997 to 1998. Unlike a
traditional utility company, whose financial results are relatively static over
time or who have year-to-year variations (perhaps attributable to weather
conditions, or one-time extraordinary changes) that can best be viewed over a
several-year period, AES has experienced and will continue to experience rapid
growth through project development and acquisitions. In fact, in light of its
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15 AES also has calculated the percentages set forth in Table 1 in accordance
with GAAP. Such calculations are set forth in Exhibit K-5. As explained
above, however, use of this GAAP-based data understates the size of AES's
worldwide business relative to CILCO, whereas data compiled on a propor
tional consolidation basis provides a more accurate comparison of the size
of CILCO to the size of the AES/CILCORP merged company.
<PAGE>
rapid growth, AES was quite a different company at the end of 1998 than it was
in 1996 or even 1997. As reflected in Table 1, between the end of 1996 and 1998,
AES gross revenues grew 217 percent, from $1.15 billion to $3.64 billion; net
operating revenues grew 238 percent, from $891 million to $3.01 billion;
operating income grew 173 percent, from $365 million to $997 million; net income
grew 149 percent, from $125 million to $311 million; and net assets grew 205
percent, from $3.88 billion to $11.85 billion.16 Therefore, in light of AES's
significant growth from the years 1996 through 1998, the financial data for 1996
and 1997 do not provide an accurate picture of the relative size of AES and its
current foreign operations. Thus, to avoid a misleading comparison, greatest
weight should be given to AES's most recent financial results (1998) in
evaluating the relative contribution of CILCO to the holding company.
Table 1 demonstrates the relative size of AES and the merged
AES/CILCORP holding company based on five financial yardsticks. In this
instance, because of the differing nature of AES's and CILCO's operations,
certain of the financial yardsticks, particularly gross revenues and net income,
tend to overstate CILCO's contributions to the merged AES/CILCORP holding
company. Thus, as explained below, the Table 1 data comparing net operating
revenues, operating income and net assets present the most accurate
representation of the relative size of CILCO to the merged AES/CILCORP holding
company.
There are several reasons why a comparison of gross revenues presents
a misleading picture of the relative size of AES and CILCO. First, between 30
and 40 percent of CILCO's gross revenues over the past four years were earned
from its natural gas business, whereas virtually all of AES's current revenues
have been derived from electric generation and distribution. The Commission has
recognized the difficulty of making size comparisons between an electric company
and a natural gas distribution company based upon gross revenues. Houston
Industries, Inc., Rel. No. 35-26744 (1997); NIPSCO, supra. In NIPSCO, the
Commission observed that the "[c]omponents of gross revenues are different for
electric and gas utilities" and that "pass-through costs" (e.g., purchased gas
and fuel for electric generation) constitute a larger part of gross revenues for
a gas utility than for an electric utility. The Commission thus concluded that
where a predominantly electric system (NIPSCO) acquired an exclusively gas
system (Bay State), a reliance on gross revenues comparisons would distort the
relative sizes of the merging companies.
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16 Similarly, use of an average of financial information for the years 1996
through 1998 also significantly understates the extent of AES's operations
and therefore also proves inadequate. AES's 1998 gross revenues are 52
percent greater than the average of AES's gross revenues for the years 1996
through 1998. AES's 1998 net operating revenues are 54 percent greater than
the average of AES's net operating revenues for the years 1996 through
1998; 1998 operating income is 46 percent greater than the three-year
average; 1998 net income is 43 percent greater than the three-year average;
and 1998 net assets are 51 percent greater than the three-year average.
<PAGE>
The same considerations apply in this instance. Here AES, almost
exclusively an electric company, is acquiring CILCO, a company earning a
substantial portion of its gross revenues from gas distribution. Although AES
does not, for the most part, have automatic "pass-throughs" of its electric fuel
costs in the manner of a domestic regulated electric utility, subtracting AES's
electric fuel and purchased gas costs (as well as CILCO's electric fuel and
purchased gas costs) from gross revenues reveals the impact of different
operating margins of the two companies. In 1998 CILCO had operating revenues of
$532.3 million and net income of $41 million -- a margin of 7.6 percent. AES
reported revenues of $2.4 billion and net income of $311 million --a margin of
approximately 13 percent. Part of this differential also can be explained by the
fact that CILCO provides service which is subject to rate regulation (including,
inter alia, tariff provisions for electric fuel cost recovery and pass-through
of purchased gas costs which provide automatic recoupment from ratepayers),
while AES conducts the vast bulk of its business in unregulated, competitive
markets.
A comparison of AES and CILCO net income also may obscure the true
scope of CILCO's business vis-a-vis that of AES. Net income is sensitive to
differences in capital structure, and AES and CILCO have disparate capital
structures driven by differences in their respective business operations. AES
uses project financing for much of its investment, and thus has proportionally
larger interest expenses than does CILCO.17 Since interest is deducted before
calculating net income, comparisons based on net income may result merely from
differences in capital structure rather than differences in size or scope of
business operations. Such is the case with AES and CILCO, because AES maintains
a more highly leveraged capital structure than does CILCO. A more accurate
comparison of the scope of CILCO's business vis-a-vis the merged AES holding
company is achieved by comparing net operating revenues, operating income and
net assets.
Table 1 shows that in 1998, CILCO's contributions to AES's total net
operating revenues, operating income, and net assets were 10.35, 8.54 and 7.78
percent, respectively. In fact, as noted above, AES expects CILCO's
contributions to AES's gross revenues, net operating revenues, operating income,
net income and net assets to trend down to below 10 percent within five years.
The results of the analysis demonstrate that CILCO will not make a contribution
to AES's total operations that is sufficiently appreciable so as to be deemed
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17 For example, comparing the unleveraged net income of CILCO to the
unleveraged net income of the AES holding company provides a better
understanding of the relative size of the CILCO and AES holding company
business operations. (Unleveraged net income is calculated by determining
net income on a before-interest expense, after-tax basis.) For example,
CILCO would represent 8.26 percent of 1998 total holding company
unleveraged net income, compared to 12.54 percent of total holding company
net income on a GAAP basis.
<PAGE>
"material" within the Commission's understanding of materiality under Section
3(a). In NIPSCO, for example, the Commission recently determined that a
utility's contributions to net operating revenues of 10.8 percent to 11.2
percent and to operating income of 7.1 percent to 8.7 percent would not be
considered material in the context of Section 3(a)(1).
In making such determination, the Commission noted that Section
3(a)(1) "has no specific numerical tests to guide a finding that a
public-utility subsidiary is material" and that the Commission has not "embraced
any numerical bright-line test of materiality under section 3(a)(1)." See
NIPSCO, slip op. at 34-35. Instead, the Commission noted that "factors other
than mere percentages must be taken into consideration in determining the
application of the materiality standard of section 3(a)(1)" and noted the
Division of Investment Management's recommendation (set forth in its 1995 study,
supra) that the Commission "adopt a more flexible standard for exemptions under
section 3(a) that would consider the facts and circumstances of each situation
and take into account the ability of the affected state regulators to adequately
protect the interests of utility consumers." Id. See also Atlanta Gas Light
Company, Rel. No. 35-26482 (1996)(granting Section 3(a)(1) exemption to holding
company with an out-of-state subsidiary representing over 6 percent of the
holding company's consolidated operating revenues and total net assets).18
B. Size of CILCO Operations
In Gaz Metropolitain, the Commission stated that the standard under
which a foreign holding company system could be exempted under Section 3(a)(5)
included, in addition to an inquiry into materiality, an assessment of whether
U.S. utility operations were "small in size."19 This concern about size under
Section 3(a)(5) was articulated in Cities Service Company, where the Commission
stated, based on the legislative history of the Act, that the size standard was
established in order to prevent abuse of the Section 3(a)(5) exemption by
holding companies that had very large, non-utility domestic businesses. The
Commission emphasized that the fact that a holding company's domestic utility
income is not material to its total income is irrelevant if the holding company
is so large that domestic utility activity is still large in an absolute sense.
8 SEC 318, 334-335 (1940). The merged AES/CILCORP holding company will satisfy
both the "small in size" standard and the policy concern underlying the
standard. CILCO's U.S. utility operations clearly are "small in size," both in
terms of prior Commission precedent and as compared to other state, regional and
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18 Although Section 3(a)(1) sets forth a different standard for exemption than
Section 3(a)(5), both Section 3(a)(5) and Section 3(a)(1) incorporate the
concept of "materiality." The Act does not suggest that the term would have
different meanings in the two sections. Thus, the Commission's analysis of
materiality in the Section 3(a)(1) context does provide insight into the
concept of materiality in the Section 3(a)(5) context.
19 58 SEC Docket 189 at 193 (1994) (quoting Electric Bond and Share).
<PAGE>
U.S. utilities today. Moreover, AES has significant foreign operations, and its
existing domestic activity consists of owning and operating EWG and QF
facilities, and engaging in energy marketing.
The context of this transaction is sharply different from that which
confronted the Commission in Electric Bond and Share and Cities Service. In
those cases, the applicants seeking exemption under Section 3(a)(5) were
companies with little or no foreign business of any sort, and with very large
domestic non-utility businesses. As the Commission pointed out, granting a
Section 3(a)(5) exemption under such circumstances would necessarily mean that
the exemption "[w]ould not be contingent on the existence in the system of
foreign operations and an exemption would be afforded even where the holding
company system has no foreign interest, a result obviously not intended by
Congress." Electric Bond and Share, 1952 WL 1058 at 19. In denying exemptions to
Electric Bond and Share and Cities Service, the Commission also expressed its
concern that Section 3(a)(5) not be used as an exemption for large U.S.
non-utility enterprises that could not qualify for exemption under Section
3(a)(3).
Unlike either Electric Bond and Share or Cities Service, AES has very
significant foreign electric generation and distribution operations and is
without question a global provider of electric services. AES has electric
generation and/or distribution operations in 16 countries. AES owns and/or
operates (entirely or in part) 20,017 MW of generating capacity located outside
of the United States.20 As demonstrated on Exhibit K-23, this foreign generation
capacity constitutes a significant portion of AES's total generating capacity.
In addition, AES owns partial interests (both majority and minority) in eleven
companies located outside of the United States that sell electricity directly to
commercial, industrial, governmental, and residential customers. These eleven
companies serve a total of approximately 13.6 million foreign customers with
sales of approximately 107,000 gigawatt-hours. On a net equity basis, AES's
ownership in these companies represents approximately 3.7 million foreign
customers and foreign sales of approximately 29,000 gigawatt-hours.21 As
demonstrated on Exhibit K-23, in 1998, 100 percent of the distribution company
customers served by AES were located outside of the United States and 100
percent of the gigawatt-hours provided by such companies were provided outside
of the United States.22 Companies in which AES has an ownership interest supply
approximately half of the electricity in Northern Ireland, 40 percent of the
electricity in Panama, 30 percent of the electricity in the Dominican Republic,
19 percent of the electricity in Hungary, 18 percent of the electricity in
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20 11,194 MW on a net equity basis.
21 In addition, AES recently assumed management control of two distribution
companies in Kazakhstan.
22 The addition of CILCO in 1999 will provide AES its first and only domestic
distribution customers and sales: approximately 252,800 customers and sales
of approximately 6,152 gigawatt-hours.
<PAGE>
Kazakhstan, and 10 percent of the electricity in Pakistan. Moreover, as
illustrated on Exhibit K-1, 96 percent of AES employees are located outside of
the United States, and only 6 percent of AES employees speak English as a first
language.
Furthermore, as demonstrated in Exhibits K-19 through K-22, AES's
foreign operations contribute significantly to AES's gross revenues, net
operating revenues, operating income, and assets. For example, in 1998, on a
proportional consolidation basis, AES's foreign operations contributed 83
percent of AES's gross revenues, 84 percent of AES's net operating revenues, 70
percent of AES's operating income, and 73 percent of AES's assets. On a total
project basis, those percentages increase to 93 percent of gross revenues, 94
percent of net operating revenues, 87 percent of operating income, and 91
percent of assets. As also demonstrated in the chart below and in Exhibits K-19
through K-22, the percentage contribution of AES's foreign operations has
increased considerably since 1996.
Growth of AES Foreign Operations
Year-End 1996 - Year-End 1998
(Proportional Consolidation Basis)23
Gross Revenues 406%
Net Operating Revenues 426%
Operating Income 498%
Net Assets 329%
Generating Capacity (MW) - Total 110%
Generation Capacity (MW) - AES Equity 78%
Plants in Operation 280%
Distribution Customers - Total 381%
Distribution Customers - AES Equity 746%
Distribution Output (GWh) - Total 411%
Distribution Output (GWh) - AES Equity 808%
Based on conservative projections of AES growth in 1999 (see footnote
9), AES anticipates that in 1999, AES's foreign operations will contribute, on a
proportional consolidation basis, 78 percent of AES's gross revenues, 82 percent
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23 On a GAAP-basis, during the same period, AES's gross revenues increased 561
percent; AES's net operating revenues increased 609 percent; AES's
operating income increased 1,628 percent; and AES's net assets increased
324 percent.
<PAGE>
of AES's net operating revenues and 64 percent of AES's operating income. On a
total project basis, those percentages increase to 92 percent of AES's gross
revenues, 94 percent of AES's net operating revenues and 88 percent of AES's
operating income. As AES continues its growth as a global energy company, the
percentage of AES's gross revenues, net operating revenues, operating income,
and assets resulting from AES's foreign operations in the year 2000 will be
greater than the percentages in 1999.24
While AES does have operations within the United States, its domestic
businesses are all either QFs or EWGs, which are deemed not to be public utility
companies under the Act and which the Commission does not need to regulate to
protect the interests of U.S. ratepayers and investors. The Commission Staff has
recognized that ownership of QF and EWG interests by foreign utility companies
("FUCOs") should not defeat FUCO status. The Southern Company, 1996 SEC No-Act.
LEXIS 496 (No-Action Letter Issued May 10, 1996). Just as QF and EWG investments
do not transform a FUCO into a holding company subject to the potential full
brunt of jurisdiction under the Act, AES's domestic QF and EWG investments
should not prevent AES from qualifying for a Section 3(a)(5) exemption, where
its only other current investments are FUCOs and foreign EWGs and its proposed
single U.S. regulated utility investment is small in size from any relevant
perspective.
As the facts set forth in this Application demonstrate, AES is a
global energy company whose present business, both domestic and foreign, is the
"exempt utility" business -- i.e., the business of EWGs, QFs and power marketers
in the United States and EWGs and FUCOs outside the United States. As a company
engaged in the "exempt utility" business, AES is the type of company for which
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24 AES notes that the statements of risk factors contained in its disclosure
statements are not inconsistent with AES's well-grounded expectations that
its foreign exempt utility business will continue to grow. Such disclosure
statements are designed to apprise potential investors of the risks
inherent in foreign investment. As evidence of this, AES notes that in a
1996 Form S-3, AES described its foreign investment risks in nearly the
same language AES used in a 1998 Form S-3. As the above table clearly
demonstrates, the growth of AES's foreign business from year-end 1996 to
year-end 1998 was substantial. Moreover, as a global energy company, AES
always is evaluat ing potential investments worldwide. If AES determines
that its growth in any particular foreign country will be curtailed, AES
may shift its efforts to other foreign countries. Or, if AES's foreign
growth were to be curtailed substantially for any reason, AES would shift
its focus to additional domestic exempt utility projects. Regardless, AES
will continue to develop its exempt utility business. Thus, for purposes of
the materiality of CILCO relative to AES, which is not at all dependent on
whether AES's growth is foreign or domestic, AES's exempt utility business
will continue to grow vis-a-vis CILCO, such that AES expects CILCO's
activities and assets as a percentage of AES's overall business to trend
down below 10 percent within five years.
<PAGE>
the 3(a)(5) exemption was designed -- a company whose business and experience is
in the utility industry. See The AES Corporation, Rel. No. 35-25539 (May 21,
1992) (granting AES a Section 3(a)(5) application upon AES's acquisition of
indirect ownership interests of an electric utility company in Northern Ireland,
where AES's existing business was the development, ownership, operation, and
maintenance of qualifying facilities in the United States).25
AES's acquisition of CILCORP is a natural outgrowth and consequence of
AES's corporate focus, i.e., a natural outgrowth of AES's business of being a
global energy provider. For example, AES has extensive business expertise in
competitive domestic and foreign energy markets which will enable CILCO to
compete more effectively in restructured energy markets. This benefit was
recognized by the ICC when it adopted as a finding of fact CILCO's statement
that AES's acquisition of CILCORP will provide CILCO with "access to the
extensive experience of AES in energy markets around the world" and that "CILCO
expects to draw on the experience of AES to improve CILCO's operating efficiency
and customer service." See ICC March 10, 1999 order at 5, 9. As such, AES easily
can be distinguished from Electric Bond and Share and Cities Service, each
non-utility (and non-exempt utility) companies seeking to own large domestic
utility companies even though as a non-utility each had, at best, limited
experience with the utility industry, domestic or foreign. Granting a Section
3(a)(5) exemption to AES, a global energy provider engaged in the exempt utility
business, helps to ensure that the Section 3(a)(5) exemption is granted to those
companies for which it was intended, and not to those companies who seek
exemption under Section 3(a)(5) as a means of evading the restriction on
exemption under Section 3(a)(3). See Electric Bond and Share; Cities Service.
CILCO's U.S. utility operations are small in size, both in terms of
prior Commission precedent and when compared to other regional and U.S.
utilities. In denying the Cities Service exemption application, the Commission
held that Cities Service and its utility subsidiaries: (i) comprised "one of the
most important public utility holding company systems in the United States,"
(ii) "controlled a far-flung utility empire with assets valued at more than
$400,000,000," and (iii) had operations that extended to "20 states and Canada
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25 For example, in 1998, AES earned 98.01 percent of its gross revenues and
97.6 percent of its net operating revenues, both on a proportional
consolida tion basis, from exempt utility operations. (On a GAAP basis, AES
earned 99.82 percent of its net revenues and 99.76 percent of its net
operating revenues from its exempt utility business.) In 1998, a combined
AES/CILCORP would have earned 97.64 percent of its gross revenues and 97.07
percent of its net operating revenues (both on a proportional consolida
tion basis) from utility and exempt utility operations. (On a GAAP basis, a
combined AES/CILCORP would have earned 98.95 percent of its gross revenues
and 98.58 percent of its net operating revenues from utility and exempt
utility operations.)
<PAGE>
with an estimated population in the areas served of approximately 4,500,000."
Id. at 336.
In Electric Bond and Share, Electric Bond and Share Company ("Electric
Bond") sought to be relieved of its commitment to dispose of the common stock it
held in United Gas Corporation ("United"), its gas utility subsidiary, through
exemptions under, inter alia, Section 3(a)(5) of PUHCA. 33 SEC 21 (1952).
Applying the "small in size" standard developed in Cities Service, the
Commission held that the gas utility operations of United, a recently acquired
subsidiary of Electric Bond, were "very substantial" in magnitude and,
therefore, rejected the application. Id. at 43. The Commission focused on the
fact that United operated the second largest gas distribution operations in its
region, and accounted "for a large and significant part of the natural gas
distribution business in the United States." Id. at 43-44. The Commission cited
to the following facts in its analysis of the magnitude of United's gas utility
operations:
o United's non-industrial gas distribution operations were
"approximately twice as large as those carried on in the entire
State of Mississippi, slightly greater than those in the State of
Louisiana, and about 25 percent of those in the State of Texas.
With one exception, there [was] no company whose residential and
commercial gas distribution operations in the three (3) state
area [were] as large as those of United."
o Within the three-state region in which it operated, United served
"approximately 21.1 percent of all residential and commercial
customers, with approximately 18.2 percent of all the residential
and commercial gas consumed and accounted for approximately 19.2
percent of the total gross residential and commercial gas
revenues."
o United's gas distribution operations were large in relation to
other gas distributors in the United States.
The absolute size of CILCO's utility business clearly is smaller when
compared to modern utility companies than the utility businesses of Electric
Bond and Cities Service in their day. Electric Bond's gas operations were in
three states - Texas, Louisiana and Mississippi - in which Electric Bond served
21.2 percent of all customers, provided 18.2 percent of all gas consumed and
accounted for 19.2 percent of total gas reserves. CILCO, on the other hand,
operates only in one state, in which it only serves 5.4 percent of all gas
utility customers, accounts for only 5.9 percent of all gas utility assets and
accounts for only 5.8 percent of total gas revenues (see Exhibit K-15). In Gaz
Metropolitain, on the other hand, the Commission granted a Section 3(a)(5)
exemption to Gaz Metropolitain, whose domestic utility subsidiary, Vermont Gas
Systems, Inc., had a state-wide franchise to sell natural gas at retail and
appeared at that time to deliver nearly all of the natural gas sold at retail in
Vermont. In addition, there are four gas companies larger than CILCO in the
state of Illinois (see Exhibit K-15), while only one gas company was larger than
Electric Bond in its three-state service area. Cities Service, in sharp contrast
<PAGE>
to CILCO, had operations in 19 states, compared to CILCO's single-state
operations. It also should be noted that an analysis of the size of CILCO's
utility activities should reflect the realities of today's public utility
markets. Since the time of Cities Service and Electric Bond, utility operations
have become larger enterprises commensurate with growth in population and number
of utility customers, as well as increased electricity and gas consumption per
utility customer. Recently, the size of public utility companies has grown and
will continue to grow in the wake of consolidations undertaken in response to
increased competition and restructuring initiatives.
It is clear from the case law, in particular Electric Bond and Share,
that the Commission is concerned with the size of the holding company's U.S.
utility operations as compared to state, regional and national competitors.
CILCO's utility operations are small in size relative to other utilities,
whether on a state, regional26, or national basis. The data establishes that the
activities of CILCO, in terms of electric and gas utility activities considered
separately and in terms of combined utility activity, are small in scale.
Exhibit K-14 compares CILCO's electric utility activities to other
Illinois electric utilities in terms of assets, revenues and customers.27
According to all three measures, CILCO's electric utility business accounts for:
o 2.8 percent of Illinois' electric utility revenues;
o 2.7 percent of Illinois' electric utility assets, and
o 3.4 percent of Illinois' electric utility customers.
Out of six investor-owned electric utility companies in Illinois, CILCO is
ranked number four. The three largest electric utility companies in Illinois
earn 95.2 percent of electric utility revenues, have 96.5 percent of the
electric utility assets and serve 96.5 percent of all electric utility
customers.28 Only 2.0 percent of Illinois' electric utility revenues are earned
by electric utility companies with fewer revenues than CILCO; only 0.8 percent
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26 The Region is defined as the State of Illinois and the five states
bordering Illinois - Indiana, Kentucky, Missouri, Iowa, and Wisconsin.
27 The data contained in Exhibits K-6 through K-16 were analyzed, organized
and graphed by LECG, Inc. ("LECG"), an economic consulting service located
in Washington, D.C. The source of LECG's data was Resource Data
International, Inc., which utilizes Federal Energy Regulatory Commission
Form 1 filings and Securities and Exchange Commission Forms 10-K and 10-Q
filings as sources.
28 The third largest electric utility company in Illinois earns 11.8 percent
of the electric utility revenues, has 14.4 percent of the electric utility
assets and serves 9.9 percent of the electric utility customers.
<PAGE>
of Illinois' electric utility assets are owned by electric utility companies
with fewer assets than CILCO; and only 0.1 percent of Illinois' electric utility
customers are served by electric utilities with fewer customers than CILCO.
Exhibit K-15 compares CILCO's gas utility activities to other Illinois
state gas utilities in terms of assets, revenues and customers. According to all
three measures, CILCO's gas utility business accounts for:
o 5.8 percent of Illinois' gas utility revenues;
o 5.9 percent of Illinois' gas utility assets, and
o 5.4 percent of Illinois' gas utility customers.
Out of seven investor-owned gas utility companies in Illinois, CILCO is ranked
number five. The four largest gas utility companies in Illinois earn 93.9
percent of gas utility revenues, have 93.9 percent of gas utility assets and
serve 94.2 percent of all gas utility customers.29 Only 0.3 percent of Illinois'
gas utility revenues are earned by gas utility companies with fewer revenues
than CILCO; only 0.2 percent of Illinois' gas utility assets are owned by gas
utility companies with fewer assets than CILCO; and only 0.4 percent of
Illinois' gas utility customers are served by gas utilities with fewer customers
than CILCO.
Exhibit K-16 compares CILCO's total utility activities to all other
Illinois utilities (electric, gas and combination electric and gas), again in
terms of assets, revenues and customers. According to all three measures,
CILCO's combined electric and gas utility business accounts for:
o 3.5 percent of Illinois' utility revenues;
o 3.1 percent of Illinois' utility assets, and
o 4.2 percent of Illinois' utility customers.
Out of nine investor-owned utilities in Illinois, CILCO is ranked number six.
The five largest utilities in Illinois earn 94.9 percent of the utility
revenues, have 96.2 percent of the utility assets and serve 95.6 percent of the
utility customers.30 Only 1.6 percent of Illinois' total utility revenues are
earned by utility companies with fewer revenues than CILCO; only 0.7 percent of
Illinois' total utility assets are owned by utility companies with fewer assets
than CILCO; and only 0.2 percent of Illinois' total utility customers are served
by utilities with fewer customers than CILCO.
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29 The fourth largest gas utility company in Illinois earns 6.6 percent of the
gas utility revenues, has 6.9 percent of the gas utility assets and serves
7.9 percent of the gas utility customers.
30 The fifth largest utility company in Illinois earns 7.8 percent of the
utility revenues, has 4.1 percent of the utility assets and serves 10.2
percent of the utility customers.
<PAGE>
Exhibit K-6 compares CILCO's electric utility activities to other
regional electric utilities in terms of assets, revenues and customers.
According to all three measures, CILCO's electric utility business accounts for:
o 0.9 percent of the Region's electric utility revenues,
o 1.0 percent of the Region's electric utility assets, and
o 1.1 percent of the Regions's electric utility customers.
Out of thirty investor-owned electric utility companies in the Region, CILCO is
ranked number 19 based on revenues. The electric utility companies in the Region
larger than CILCO earn 96.2 percent of electric utility revenues, have 95.7
percent of electric utility assets and serve 95.4 percent of electric utility
customers.31 Only 2.8 percent of the Region's electric utility revenues are
earned by electric utility companies with fewer revenues than CILCO; only 3.3
percent of the Region's electric utility assets are owned by electric utility
companies with fewer assets than CILCO; and only 3.5 percent of the Region's
electric utility customers are served by electric utilities with fewer customers
than CILCO.
Exhibit K-7 compares CILCO's gas utility activities to other regional
gas utilities, also in terms of assets, revenues and customers. According to all
three measures, CILCO's gas utility business accounts for:
o 1.8 percent of the Region's gas utility revenue,
o 2.1 percent of the Region's gas utility assets, and
o 1.6 percent of the Region's gas utility customers.
Out of thirty-three investor-owned gas utility companies in the Region, CILCO is
ranked number 17. The gas utility companies in the Region larger than CILCO earn
93.7 percent of the gas utility revenues, have 92.0 percent of the gas utility
assets and serve 95.5 percent of the gas utility customers.32 Only 4.5 percent
of the Region's gas utility revenues are earned by gas utility companies with
fewer revenues than CILCO; only 5.9 percent of the Region's gas utility assets
are owned by gas utility companies with fewer assets than CILCO; and only 2.9
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31 The 18th largest electric utility in the Region based on revenues earns 1.2
percent of the Region's electric utility revenues. The 17th largest
electric utility based on assets has 1.1 percent of the Region's electric
utility assets. The 16th largest electric utility in the Region in terms of
customers serves 2 percent of the Region's electric utility customers.
32 The 16th largest gas utility in the Region based on revenues earns 1.9
percent of the Region's gas utility revenues. The 15th largest gas utility
in the Region based on gas utility assets has 2.4 percent of the Region's
gas utility assets. The 17th largest gas utility in the Region based on
customers serves 1.8 percent of the Region's gas customers.
<PAGE>
percent of the Region's gas utility customers are served by gas utilities with
fewer customers than CILCO.
Exhibit K-8 compares CILCO's combined electric and gas utility
activities to other regional combination electric and gas utilities, again in
terms of revenues, assets and customers. According to all three measures,
CILCO's combined electric and gas utility business accounts for:
o 2.5 percent of the Region's combination electric and gas utility
revenue,
o 2.5 percent of the Region's combination electric and gas utility
assets, and
o 2.9 percent of the Region's combination electric and gas utility
customers.
Out of 16 combination electric and gas companies in the Region, CILCO ranks
11th. The 10 combination companies larger than CILCO earn 91.8 percent of the
combination utility revenue, have 91.9 percent of the assets and serve 92.1
percent of the customers. The 10th largest combination utility in the Region
earns 3.1 percent of the revenues, has 2.7 percent of the assets and serves 4.3
percent of the customers.33 Only 5.6 percent of the Region's combination
electric and gas utility revenues are earned by combination electric and gas
utility companies with fewer revenues than CILCO; only 5.5 percent of the
Region's combination electric and gas utility assets are owned by combination
electric and gas utility companies with fewer assets than CILCO; and only 5
percent of the Region's combination electric and gas utility customers are
served by combination electric and gas utilities with fewer customers than
CILCO.
Exhibit K-9 compares CILCO's total utility activities to all other
regional utilities (electric, gas and combination electric and gas), again in
terms of revenues, assets and customers. According to all three measures,
CILCO's combined electric and gas utility business accounts for:
o 1.1 percent of the Region's utility revenues,
o 1.2 percent of the Region's utility assets, and
o 1.3 percent of the Region's utility customers.
Out of forty-eight investor-owned utilities in the Region, CILCO ranks 21st. The
twenty utilities larger than CILCO earn 90.9 of the utility revenues, have 91.8
percent of the utility assets and serve 95.4 percent of the utility customers.34
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33 The 10th largest combination utility in the Region earns 3.1 percent of the
revenues, has 2.7 percent of the assets and serves 4.3 percent of the
custom ers.
<PAGE>
Only 8.0 percent of the Region's total utility revenues are earned by utility
companies with fewer revenues than CILCO; only 7.1 percent of the Region's
utility assets are owned by utility companies with fewer assets than CILCO; and
only 3.3 percent of the Region's utility customers are served by utilities with
fewer customers than CILCO.
The Exhibits described above clearly indicate that CILCO's utility
operations are small in size, particularly when compared to other utilities in
the state and the Region. Comparing the size of CILCO's utility operations to
all United States utilities, again in terms of revenues, assets and customers,
makes it even clearer that CILCO's utility operations are small in size.
Exhibit K-10 compares CILCO's electric utility activities to all other
United States electric utilities in terms of assets, revenues and customers.
According to all three measures, CILCO's electric utility business accounts for:
o 0.2 percent of U.S. electric utility revenues,
o 0.2 percent of U.S. electric utility assets, and
o 0.2 percent of U.S. electric utility customers.
In terms of revenue, CILCO is ranked 79th of electric utilities. The 78 electric
utility companies larger than CILCO earn 98.2 percent of electric utility
company revenues. In terms of assets, CILCO ranks 74th. The 73 electric utility
companies larger than CILCO own 97.6 percent of electric utility assets. In
terms of customers, CILCO is ranked 76th. The 75 companies larger than CILCO in
terms of customers serve 97.8 percent of electric utility customers.35 Only 1.6
percent of U.S. electric utility revenues are earned by electric utility
companies with fewer revenues than CILCO; only 2.2 percent of United States
electric utility assets are owned by electric utility companies with fewer
assets than CILCO; and only 1.9 percent of United States electric utility
customers are served by electric utilities with fewer customers than CILCO.
Exhibit K-11 compares CILCO's gas utility activities to all United
States gas utilities, also in terms of assets, revenues and customers. According
to all three measures, CILCO's gas utility business accounts for:
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34 The 20th largest utility in the Region in terms of revenues earns 1.4
percent of the Region's utility revenues. The 19th largest utility in the
Region in terms of assets has 1.2 percent of the Region's utility assets.
The 23rd largest utility in terms of customers serves 1.4 percent of the
Region's utility customers.
35 The 78th largest electric utility in terms of revenues earns 0.2 percent of
electric utility revenues. The 73rd largest electric utility in terms of
assets has 0.2 percent of the assets. The 75th largest electric utility in
terms of customers serves 0.2 percent of electric utility customers.
<PAGE>
o 0.5 percent of U.S. gas utility revenue,
o 0.5 percent of U.S. gas utility assets, and
o 0.4 percent of U.S. gas utility customers.
In terms of revenue, CILCO is ranked 58th of gas utilities. The 57 utilities
larger than CILCO in terms of revenues earn 92.0 percent of gas utility
revenues. In terms of assets, CILCO is ranked 55th. The 54 companies larger than
CILCO have 90.8 percent of gas utility assets. In terms of customers, CILCO is
ranked 57th. The 56 gas utility companies larger than CILCO serve 93.5 percent
of gas utility customers.36 Only 7.5 percent of U.S. gas utility revenues are
earned by gas utility companies with fewer revenues than CILCO; only 8.7 percent
of U.S. gas utility assets are owned by gas utility companies with fewer assets
than CILCO; and only 6.1 percent of U.S. gas utility customers are served by gas
utilities with fewer customers than CILCO.
Exhibit K-12 compares CILCO's combined electric and gas utility
activities to all U.S. combination electric and gas utilities, again in terms of
revenues, assets and customers. According to all three measures, CILCO's
combined electric and gas utility business accounts for:
o 0.7 percent of U.S. combination electric and gas utility revenue,
o 0.7 percent of U.S. combination electric and gas utility assets,
and
o 0.7 percent of U.S. combination electric and gas utility
customers.
In terms of revenues, CILCO ranks 29th of combined gas and electric companies in
the U.S. The 28 companies larger than CILCO in terms of revenue earn 96.4
percent of combined gas and electric company revenues. In terms of assets, CILCO
also is ranked 28th. The 27 companies larger than CILCO in terms of assets have
96.0 percent of the assets. In terms of customers, CILCORP is ranked 27th. The
26 companies larger than CILCO in terms of customers serve 95.3 percent of the
customers.37 Only 3.0 percent of U.S. combination electric and gas utility
revenues are earned by combination electric and gas utility companies with fewer
revenues than CILCO; only 3.3 percent of U.S. combination electric and gas
utility assets are owned by combination electric and gas utility companies with
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36 The 57th largest gas utility in terms of revenues earns 0.5 percent of gas
utility revenues. The 54th largest gas utility in terms of assets has 0.5
percent of the assets. The 56th largest gas utility in terms of customers
serves 0.4 percent of gas utility customers.
37 The 28th largest combined gas and electric company in terms of revenues
earns 0.8 percent of the revenues. The 28th largest combined gas and
electric company in terms of assets has 0.8 percent of the assets. The 26th
largest combined gas and electric company in terms of customers serves 1.0
percent of the customers.
<PAGE>
fewer assets than CILCO; and only 4.0 percent of U.S. combination electric and
gas utility customers are served by combination electric and gas utilities with
fewer customers than CILCO.
Exhibit K-13 compares CILCO's total utility activities to all other
U.S. utilities (electric, gas and combination electric and gas), again in terms
of revenues, assets and customers. According to all three measures, CILCO's
combined electric and gas utility business accounts for:
o 0.2 percent of U.S. utility revenues,
o 0.2 percent of U.S. utility assets, and
o 0.3 percent of U.S. utility customers.
In terms of revenue, CILCO is ranked 87th of investor-owned utilities. The 86
companies larger than CILCO in terms of revenue earn 93.6 percent of utility
revenues. In terms of assets, CILCO ranks 78th. The 77 companies larger than
CILCO in terms of assets have 93.5 percent of utility assets. In terms of
customers, CILCO is ranked 83rd. The 82 companies larger than CILCO serve 92.0
percent of utility customers.38 Only 6.2 percent of U.S. utility revenues are
earned by utility companies with fewer revenues than CILCO; only 6.2 percent of
U.S. utility assets are owned by utility companies with fewer assets than CILCO;
and only 7.7 percent of U.S. utility customers are served by utilities with
fewer customers than CILCO.
It is clear from the data described above that the utility activities
of CILCO, in terms of combined utility activity and in terms of electric and gas
utility activities considered separately, whether on a state, regional or
national basis, are small in scale.
C. Public Interest
Under the "unless and except" clause of Section 3(a), the Commission
has the authority to deny a request for exemption if it were to determine that
granting the exemption would be "detrimental to the public interest or the
interest of investors or consumers." No such concerns, however, are presented
with respect to this Transaction and request for exemption. The Transaction will
result in a holding company which will be well-equipped to respond effectively
to the changing nature of the electric and gas industries, thus promoting the
interests of both investors and ratepayers.
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38 The 86th largest utility in terms of revenues earns 0.2 percent of utility
revenues. The 77th largest utility in terms of assets has 0.3 percent of
utility assets. The 82nd largest utility in terms of customers serves 0.3
percent of utility customers.
<PAGE>
The Transaction is subject to approval by the FERC and the ICC. The
FERC approved the Merger on June 16, 1999. See Exhibit D-3. Specifically, the
FERC found that the Transaction (1) will not adversely affect competition; (2)
will not adversely affect the rates paid by CILCO ratepayers; and (3) will not
have an adverse effect on federal or state regulation.
As explained earlier, the ICC approved the Transaction with respect to
CILCO's gas operations.39 After noting that AES "is a global energy company that
operates electric generation facilities in the United States and in foreign
countries ... [and] also owns foreign electric distribution businesses, mostly
in South America, and a small amount of gas distribution in foreign countries
...[and] does not own or operate any regulated utilities in the United States,"
the ICC found that AES's acquisition of CILCORP would not adversely affect
CILCO's ability to perform its duties under the Illinois Public Utilities Act
with respect to its gas operations. Specifically, the ICC found that:
o AES's acquisition of CILCORP will not diminish CILCO's ability to
provide adequate, reliable, efficient, safe and least-cost gas
public utility service;
o AES's acquisition of CILCORP will not result in the unjustified
subsidization of non-utility activities by CILCO or its customers
with respect to CILCO's gas operations;
o costs and facilities are fairly and reasonably allocated between
utility and non-utility activities in such a manner that the
Commission may identify those costs and facilities which are
properly included by CILCO for ratemaking purposes for its gas
utility operations;
o AES's acquisition of CILCORP will not significantly impair
CILCO's ability to raise necessary capital on reasonable terms or
to maintain a reasonable capital structure with respect to its
gas utility operations;
o CILCO will remain subject to all applicable laws, regulations,
rules, decisions and policies governing the regulation of
Illinois public utilities with respect to CILCO's gas utility
operations:
o AES's acquisition of CILCORP is not likely to have a significant
adverse effect on competition in the Illinois gas utility markets
over which the Commission has jurisdiction; and
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39 AES notes that the ICC had before them the Merger Agreement (Exhibit B-1
hereto) which discusses AES's intent to seek from this Commission an
exemption from registration.
<PAGE>
o AES's acquisition of CILCORP is not likely to result in any
adverse rate impacts on retail gas customers of CILCO.
See March 10, 1999 ICC Order at 9-10 (see Exhibit K-17). Although the ICC's
jurisdictional focus was limited to the transfer of CILCO's gas operations, most
of its findings (for example, the Transaction's impact on capital structure and
affiliate transactions) are applicable to CILCO as a whole, including its
electric operations. In addition, in a letter issued to the Commission pursuant
to Section 33(a)(2), the ICC acknowledged that AES "currently holds, and intends
to continue to hold and acquire, ownership interest in electric and natural gas
facilities in one or more foreign countries." The ICC then certified to the
Commission that it has "the authority and resources to protect Illinois
consumers in accordance with the Illinois statutes ... and intends to exercise
such authority."
After AES's acquisition of CILCORP, CILCO's operations will continue
to be subject to regulation by the FERC and the ICC, both of whom regulate
utility transactions with affiliates. With respect to the ICC, the Illinois
Public Utilities Act specifically grants the ICC jurisdiction over affiliate
transactions with electric and gas public utilities, "to the extent of access to
all accounts and records of such affiliated interest relating to such
transactions, including access to accounts and records of joint and general
expenses with the electric or gas public utility any portion of which is related
to such transactions; and to the extent of authority to require such reports
with respect to such transactions to be submitted by such affiliated interests,
as the [ICC] may prescribe". Illinois Public Utilities Act, Section
7-101(2)(ii). Thus, the ICC has broad authority to access the books and records
of any member of the AES corporate family, wherever located, if such AES entity
engages in transactions with CILCO or if any costs associated with such entity
are allocated to CILCO.
In addition, the ICC recently adopted rules and regulations governing
the relationship between electric utilities and their affiliates. See 83
Illinois Administrative Code Part 450. Pursuant to such rules, transactions
between electric utilities and their affiliates are prohibited from subsidizing
the affiliate. To that end, transfers of goods and services between electric
utilities and their affiliates must be approved by the ICC (unless approval has
been waived by statute or ICC rule). In addition, the ICC has access to the
electric utility's books and records regarding affiliate transactions and
electric utilities must conduct biennial internal audits regarding affiliate
transactions, which provide assurance that non-utility activities are not
subsidized by the electric utility or its customers.
Furthermore, AES will file certificates with the Commission pursuant
to Rule 24, within 60 days after the end of each calendar quarter beginning
September 30, 1999, for a period of three years, and then every six months
thereafter, that provide to the Commission the following information:
<PAGE>
o a statement of income and balance sheet, for the 12-month period
then ending, of (i) AES, (ii) CILCORP and (iii) CILCO;
o an updated Table 1 (see page 11, supra);
o for both AES and CILCORP: (i) the total number of megawatts of
generating capacity; (ii) the revenues earned from such
generating capacity; (iii) the change in such capacity and
revenues since the filing of the previous certificate and (iv)
the location of any additional capacity;
o for both AES and CILCORP: (i) the amount of electric transmission
and electric and gas distribution assets owned; (ii) the revenues
from such assets and (iii) the change in such assets since the
filing of the previous certificate;
o information regarding any sale or transfer of any CILCO electric
and/or gas utility assets to any affiliate company in the AES
system; and
o copies of any applications to and orders from the ICC that relate
to AES's ownership of or oversight over the operation of CILCORP
and/or CILCO.
ITEM 4. REGULATORY APPROVAL
The Merger Agreement is subject to the approval of CILCORP's
shareholders and was approved by CILCORP's shareholders at a special meeting
held May 20, 1999. The Merger also is subject to approval by the FERC, and was
approved by the FERC on June 16, 1999. See Exhibit D-3. The Merger also is
subject to the notification and reporting requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR Act"). On February 22, 1999, the
Federal Trade Commission granted early termination of the HSR Act waiting
period. In addition, as noted above, all necessary State approvals for the
transaction have been received. The ICC has approved the Transaction with
respect to the transfer of CILCO's gas operations. See Exhibit K-17. The ICC
also has issued a certification in accordance with the requirements of Section
33(a)(2) of the Act. See Exhibit K-18.
ITEM 5. PROCEDURE
AES respectfully requests that the Commission issue its order granting
and permitting the requested exemption as soon as practicable, but in any event
not later than August 20, 1999.
<PAGE>
It is submitted that a recommended decision by a hearing or other
responsible officer of the Commission is not needed for approval of the proposed
Transaction. The Division of Investment Management may assist in the preparation
of the Commission's decision. There should be no waiting period between issuance
of the Commission's order and the date on which it is to become effective.
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS
A. Exhibits
Exhibits attached to this Amendment No. 2 supplement and, where applicable,
replace the exhibits previously filed in this proceeding.
A-1 Articles of Incorporation of AES
A-2 By-Laws of AES
A-3 Articles of Incorporation of CILCORP
A-4 By-Laws of CILCORP
A-5 Articles of Incorporation of Midwest Energy, Inc.
A-6 By-Laws of Midwest Energy, Inc.
B-1 Agreement and Plan of Merger (Exhibit A to Exhibit D-2 hereto)
C-1 Definitive Proxy Statement relating to the special meeting of
shareholders of CILCORP, Inc. to approve the merger with Midwest
Energy, Inc. (File No. 1-8946, filed on March 24, 1999, and
incorporated herein by reference)
D-1 Petition to the Illinois Commerce Commission, filed on December 11,
1998, together with testimony and exhibits (Exhibit F to Exhibit D-2
hereto)
D-2 Application to FERC, filed on February 19, 1999, together with
testimony and exhibits
D-3 FERC Order approving the Merger, dated June 16, 1999
E-1 AES organization chart
E-2 CILCORP organization chart
E-3 Combined company organization chart after the Transaction
F-1 Opinions of AES and CILCO Counsel
F-2 Past Tense Opinion of Counsel (to be filed by amendment with Rule 24
certificate)
G-1 AES's Annual Report on Form 10-K for the fiscal year ended December
31, 1997 (File No. 1-12291, filed March 30, 1998, and incorporated
herein by reference)
<PAGE>
G-2 AES' Quarterly Report on Form 10-Q for the quarters ended March 31,
1998, June 30, 1998 and September 30, 1998 (File No. 1-12291 and
incorporated herein by reference)
G-3 CILCORP's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 (File No. 1-8946, filed March 18, 1998, and
incorporated herein by reference)
G-4 CILCORP's Quarterly Report on Form 10-Q for the quarters ended March
31, 1998, June 30, 1998 and September 30, 1998 (File No. 1-8946 and
incorporated herein by reference)
G-5 AES's Annual Report on Form 10-K for the fiscal year ended December
31, 1998 (File No. 1-12291, filed March 30, 1999, and incorporated
herein by reference)
G-6 CILCORP's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998 (File No. 1-8946, filed March 26, 1999, and
incorporated herein by reference)
H-1 Proposed Form of Notice
K-1 AES Employees
K-2 AES Subsidiaries
K-3 Generating Plants in Operation
K-4 Global Map of Generating Plants and Distribution Companies
K-5 CILCO Contributions To AES Consolidated Holding Company (GAAP Basis)
K-6 Market Shares for Electric Companies in Illinois and Bordering States
K-7 Market Shares for Gas Companies in Illinois and Bordering States
K-8 Market Shares for Combined Gas and Electric Companies in Illinois and
Bordering States
K-9 Market Shares for Utilities in Illinois and Bordering States
K-10 Market Shares for Electric Companies in the U.S.
K-11 Market Shares for Gas Companies in the U.S.
K-12 Market Shares for Combined Gas and Electric Companies in the U.S.
K-13 Market Shares for Utility Companies in the U.S.
K-14 Market Shares for Electric Companies in Illinois
K-15 Market Shares for Gas Companies in Illinois
K-16 Market Shares for Utilities in Illinois
K-17 Order Issued by the Illinois Commerce Commission pursuant to petition
filed by CILCO (March 10, 1999)
K-18 Letter from Richard L. Mathias, Chairman of the Illinois Commerce
Commission to the Securities and Exchange Commission (March 10, 1999)
K-19 AES Foreign Breakout: Gross Revenues
K-20 AES Foreign Breakout: Net Operating Revenues
K-21 AES Foreign Breakout: Operating Income
K-22 AES Foreign Breakout: Assets
K-23 AES Foreign Breakout for Generation, Power Plants and Distribution
<PAGE>
B. Financial Statements
FS-1 AES Consolidated Balance Sheet as of December 31, 1997 (previously
filed with the Commission in AES's Annual Report on Form 10K for the
year ended December 31, 1997 (Exhibit G-1 hereto), filed March 30,
1998, File No. 1-12291, and incorporated herein by reference)
FS-2 AES Consolidated Balance Sheet as of September 30, 1998 (previously
filed with the Commission in AES's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1998 (Exhibit G-2 hereto), filed
November 16, 1998, File No. 1-12291, and incorporated herein by
reference)
FS-3 AES Consolidated Statement of Income for the 12 months ended December
31, 1997 (previously filed with the Commission in AES's Annual Report
on Form 10K for the year ended December 31, 1997 (Exhibit G-1 hereto),
filed March 30, 1998, File No. 1-12291, and incorporated herein by
reference)
FS-4 AES Consolidated Statement of Income for the 9 months ended September
30, 1998 (previously filed with the Commission in AES's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1998 (Exhibit
G-2 hereto), filed November 16, 1998, File No. 1-12291, and
incorporated herein by reference)
FS-5 CILCORP Consolidated Balance Sheet as of December 31, 1997 (previously
filed with the Commission in CILCORP's Annual Report on Form 10K for
the year ended December 31, 1997 (Exhibit G-3 hereto), filed March 18,
1998, File No. 1-8946, and incorporated herein by reference)
FS-6 CILCORP Consolidated Balance Sheet as of September 30, 1998
(previously filed with the Commission in CILCORP's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1998 (Exhibit G-4
hereto), filed November 10, 1998, File No. 1-8946, and incorporated
herein by reference)
FS-7 CILCORP Consolidated Statement of Income for the 12 months ended
December 31, 1997 (previously filed with the Commission in CILCORP's
Annual Report on Form 10K for the year ended December 31, 1997
(Exhibit G-3 hereto), filed March 18, 1998, File No. 1-8946, and
incorporated herein by reference)
FS-8 CILCORP Consolidated Statement of Income for the 9 months ended
September 30, 1998 (previously filed with the Commission in CILCORP's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1998
(Exhibit G-4 hereto), filed November 10, 1998, File No. 1-8946, and
incorporated herein by reference)
FS-9 AES Consolidated Balance Sheet as of December 31, 1998 (previously
filed with the Commission in AES's Annual Report on Form 10K for the
year ended December 31, 1998 (Exhibit G-5 hereto), filed March 30,
1999, File No. 1-12291, and incorporated herein by reference)
FS-10 AES Consolidated Statement of Income for the 12 months ended December
31, 1998 (previously filed with the Commission in AES's Annual Report
on Form 10K for the year ended December 31, 1998 (Exhibit G-5 hereto),
filed March 30, 1999, File No. 1-12291, and incorporated herein by
reference)
FS-11 CILCORP Consolidated Balance Sheet as of December 31, 1998 (previously
filed with the Commission in CILCORP's Annual Report on Form 10K for
<PAGE>
the year ended December 31, 1998 (Exhibit G-6 hereto), filed March 26,
1999, File No. 1-8946, and incorporated herein by reference)
FS-12 CILCORP Consolidated Statement of Income for the 12 months ended
December 31, 1998 (previously filed with the Commission in CILCORP's
Annual Report on Form 10K for the year ended December 31, 1998
(Exhibit G-6 hereto), filed March 26, 1999, File No. 1-8946, and
incorporated herein by reference)
<PAGE>
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, the undersigned company has duly caused this Application to be signed
on its behalf by the undersigned thereunto duly authorized.
The AES Corporation
By: /s/ William R. Luraschi
--------------------------------
Name: William R. Luraschi
Title: General Counsel and Secretary
Date: August 18, 1999
FEDERAL ENERGY REGULATORY COMMISSION
Before Commissioners: James J. Hoecker, Chairman;
Vicky A. Bailey, William L. Massey,
Linda Breathitt, and Curt Hebert, Jr.
Central Illinois Light Company and The AES Corporation
Docket No. EC99-40-000
ORDER APPROVING MERGER
(Issued June 16, 1999)
I. Introduction
On February 19, 1999, Central Illinois Light Company (CILCO) and The
AES Corporation (collectively, Applicants), filed a joint application under
section 203 of the Federal Power Act (FPA)1 requesting Commission approval
of the merger of CILCO's parent, CILCORP Inc. (CILCORP), into and with Midwest
Energy, Inc. (Midwest), a wholly-owned subsidiary of AES, with CILCORP being the
surviving entity, and thereafter, at the option of AES, the merger of CILCORP
into AES. We will approve the proposed merger as consistent with the public
interest.
II. Background
A. The Parties to the Merger
1. CILCO and CILCORP
CILCO, a wholly-owned subsidiary of CILCORP,2 provides electric
services to approximately 193,000 customers in central and east central
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1 16 U.S.C. 824b (1994).
2 CILCORP is an exempt public utility holding company under section 3(a)(1)
of the Public Utility Holding Company Act (PUHCA), 15 U.S.C. 79c (1994).
Applicants state that CILCORP has a subsidiary (QST), in addition to CILCO,
that is involved in wholesale and/or retail energy transactions. QST,
through its subsidiary QST Environmental Inc., provides environmental
services to governmental and industrial clients across the United States.
QST also provides energy and energy-related services to a broad spectrum of
retail and wholesale customers through another subsidiary, QST Energy Inc.
QST Energy Inc. has one wholly-owned subsidiary, QST Energy Trading Inc.,
which purchases and sells energy in the wholesale market. CILCO and QST
Energy Trading Inc. have each received approval from the Commission to
charge market-based rates. See Central Illinois Light Company, 83 FERC
61,252 (1998); QST Energy Trading, Inc., 74 61,282 (1996).
<PAGE>
Illinois, where it also provides retail gas service to approximately 202,000
customers. CILCO distributes electricity in Peoria, Pekin and Lincoln, Illinois
and numerous other communities in central and east central Illinois and provides
natural gas distribution service in Peoria, Pekin and Springfield, Illinois and
numerous other communities in central and east central Illinois. Applicants
state that CILCO's natural gas service is exempt from Commission jurisdiction
under the Hinshaw Amendment to the Natural Gas Act. Applicants state that the
1998 net generating capability owned by CILCO is approximately 1152 MW. CILCO
owns two coal-fired generating stations in central Illinois. Those facilities
have a combined capability of 1106 MW. In addition, CILCO owns a 30 MW gas-fired
peaking station. CILCO also owns the 16 MW Midwest Grain Cogeneration plant.
CILCO has two contracts under which it currently makes wholesale purchases of
150 MW of capacity and energy, plus reserves.
2. AES
AES is a United States-based multinational electric power generation
and distribution company with operations in 16 countries worldwide. Applicants
state that AES is engaged principally in the development, ownership and
operation of electric generating plants and electric distribution companies.
Revenues from electric generation and distribution activities accounted for over
95 percent of revenues in 1997. Other activities include the sale of steam from
cogeneration operations as well as operational, construction and project
development services and gas and power marketing.
The Commission has authorized the following AES subsidiaries to make
wholesale sales of power at market-based rates: (1) AES Power, Inc.; (2)
Northern/AES Energy L.L.C.; (3) Commonwealth Chesapeake Company, L.L.C. ; and
(4) AES NY, L.L.C. In addition, the Commission has granted three AES
subsidiaries (AES Huntington Beach, L.L.C., AES Alamitos, L.L.C. and AES Redondo
Beach, L.L.C.) authority to sell wholesale power and certain ancillary services
at market-based rates.
Applicants state that AES has grown since its founding in 1981 to
become one of the largest, if not the largest, global electricity suppliers.
They state that AES currently owns and/or operates (entirely or in part) a
diverse international portfolio of electric power plants with a total capacity
of 23,656 MW, including plants that are part of distribution companies in which
AES has an interest. Of that total, 5,025 MW (nine plants) are either qualifying
facilities (QFs) or Exempt Wholesale Generators (EWGs) that are located in the
United States; 1818 MW (five plants) are located in the United Kingdom; 885 MW
(six plants) are located in Argentina; 817 MW (eight plants) are in China; 1,291
MW (three plants) are in Hungary; 6,456 MW (41 plants) are in Brazil; 5,384 MW
(seven plants) are in Kazakhstan; 210 MW (one plant) are in the Dominican
Republic; 110 MW (one plant) are in Canada; 695 MW (two plants) are in Pakistan;
288 MW (one plant) are in Australia; 405 MW (one plant) are in the Netherlands;
and 282 MW (two plants) are in Panama. On a MW-basis, nearly 80 percent of the
AES generating capacity is outside of the United States.
<PAGE>
In addition, AES owns Midwest, an Illinois corporation that was
incorporated for the sole purpose of the merger transaction.
Applicants state that AES is not currently a public utility holding
company within the meaning of PUHCA. They state that each of the generating
facilities in which AES has an interest is or has been (1) owned and operated by
a "foreign utility company" within the meaning of section 33 of PUHCA; (2)
certified as a QF; (3) determined to be owned and operated by an EWG; or (4)
some combination of the foregoing statutory exemptions from regulation under
PUHCA.
B. Description of the Proposed Merger
Under the terms of the Merger Agreement, the merger would take place
in two steps, the second being within AES's discretion. First, Midwest would be
merged into CILCORP, with CILCORP as the surviving corporation. As part of the
first merger, the common stock of CILCORP would be canceled in exchange for the
right to receive $65.00 per share in cash, and the common stock of Midwest would
be the common stock of the surviving corporation, CILCORP. AES would own all of
CILCORP's common stock and, thus, AES indirectly would own and control all of
the common stock of CILCORP's subsidiaries, including CILCO. Thereafter, at the
discretion of AES, CILCORP may be merged into AES, with AES as the surviving
corporation.
Following the merger, AES would own and control (directly if the
second merger takes place, and indirectly, if it does not) CILCO and its
jurisdictional assets. Thus, either or both merger transactions would result in
a transfer of control over CILCO and its jurisdictional assets. The Merger
Agreement provides that following the merger, each CILCORP subsidiary, including
CILCO, will continue to provide the same products and services it provided
before the merger.
Applicants state that CILCORP, the corporation that currently owns
CILCO, is an exempt holding company under section 3(a)(1) of PUHCA (the
intrastate exemption). Applicants state that they have applied to the Securities
and Exchange Commission (SEC) for an exemption for the merged company from
registration as a holding company under section 3(a)(5) of PUHCA.3 They
state that the SEC's issuance to AES of a section 3(a)(5) exemption to PUHCA is
a condition to the closing of the merger. They state that with a section 3(a)(5)
PUHCA exemption, the merger will have no effect on the QF status of AES's
cogeneration and small power facilities.
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3 Section 3(a)(5) of PUHCA provides that the SEC may exempt from PUHCA any
holding company, if:
such holding company is not, and derives no material part of its
income, directly or indirectly, from any one or more subsidiary companies
which are, a company or companies the principal business of which within
the United States is that of a public-utility company.
<PAGE>
III. Notice of Filing and Interventions
Notice of the Applicants' filing was published in the Federal
Register,4 with motions to intervene and protests due on or before April 22,
1999. Timely motions to intervene and protests were filed by Allegheny Energy,
Inc. on behalf of itself and its subsidiaries, West Penn Power Company and The
Potomac Edison Company (collectively, Allegheny), and by Central Illinois Public
Service Company and Union Electric Company, wholly-owned subsidiaries of Ameren
Corporation (collectively, the Ameren Companies). Allegheny and the Ameren
Companies allege that the proposed merger, and Applicants' application to the
SEC for a section 3(a)(5) exemption to PUHCA, will enable the AES QF facilities
to avoid the ownership requirements of PURPA. Allegheny further alleges that the
post-merger retention of QF status would be inconsistent with the spirit of the
Commission's PURPA regulations and would foster economic inefficiencies.
Allegheny and the Ameren Companies conclude that the merger would not be in the
public interest if it allows the post-merger company to retain more than a
fifty percent interest in facilities that at the same time retain QF status.
Applicants moved to dismiss the protests of Allegheny and the Ameren
Companies. Applicants claim that the merger proceeding is not the proper
proceeding in which to challenge the effect of the merger on the QF status of
AES facilities. Allegheny and the Ameren Companies filed a response to
Applicants' motion to dismiss protests.
IV. Discussion
A. Procedural Matters
Pursuant to Rule 214 of the Commission's Rules of Practice and
Procedure, 18 C.F.R. 385.214 (1999), the timely, unopposed motions to intervene
of Allegheny and the Ameren Companies serve to make them parties to this
proceeding.
As noted above, Allegheny and the Ameren Companies included "protests"
in their motions to intervene. Applicants filed a motion to dismiss the
"protests" on the ground that the issues raised (concerning the post-merger QF
status of several AES facilities and whether AES should be ordered to divest
itself of some of its interests in QFs as a condition of the merger) are
irrelevant to the issues in the merger proceeding. We do not agree with
Applicants that all of the concerns raised by the intervenors are irrelevant to
a merger proceeding, and we address the concerns raised by the intervenors to
the extent relevant to this proceeding. Accordingly, we will deny Applicants'
motion that we dismiss the protests.
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4 64 Fed. Reg. 10,288 (1999).
<PAGE>
B. Standard of Review
Section 203(a) of the FPA provides, in relevant part, as follows:
No public utility shall sell, lease, or otherwise dispose of the whole
of its facilities subject to the jurisdiction of the Commission, or any part
thereof of a value in excess of $50,000, or by any means whatsoever, directly or
indirectly, merge or consolidate such facilities or any part thereof with those
of any other person, or purchase, acquire, or take any security of any other
public utility, without first having secured an order of the Commission
authorizing it to do so.
16 U.S.C. 824b(a) (1994). Under section 203(a), the Commission must
approve a proposed merger if it finds that the merger "will be consistent with
the public interest." Id.
In 1996, the Commission issued its Merger Policy Statement updating
and clarifying its procedures, criteria and policies applicable to public
utility mergers.5 The Merger Policy Statement provides that the Commission
will generally take account of three factors in analyzing proposed mergers: (a)
the effect on competition; (b) the effect on rates; and (c) the effect on
regulation.
For the reasons discussed below, we find that Applicants' proposed
merger, as conditioned below, is consistent with the public interest.
Accordingly, we will approve the merger without further investigation.
C. Effect on Competition
In the Merger Policy Statement, the Commission adopted the Department
of Justice and Federal Trade Commission (DOJ/FTC) Horizontal Merger Guidelines
(Guidelines) as the analytical framework for evaluating the effect of a proposed
merger on competition.6 The Merger Policy Statement adopted a five-part analytic
screen and established conditions under which the Commission would set the issue
of competition for hearing.7 The Commission also stated in the Merger Policy
Statement that:
it will not be necessary for the merger applicants to perform the
screen analysis or file the data needed for the screen analysis in
cases where the merging firms do not have facilities or sell relevant
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5 See Inquiry Concerning the Commission's Merger Policy Under the Federal
Power Act: Policy Statement, Order No. 592, 61 Fed. Reg. 68,595 (1996),
FERC Stats. & Regs. 31,044 at 30,117-18 (1996), order on reconsideration,
Order No. 592-A, 62 Fed. Reg. 33,341 (1997), 79 FERC 61,321 (1997) (Merger
Policy Statement).
6 FERC Stats. & Regs. at 30,117-18.
7 Id. at 30,119. Appendix A of the Policy Statement provides a detailed
description of the analytic screen.
<PAGE>
products in common geographic markets. In these cases, the proposed
merger will not have an adverse competitive impact (i.e., there can be
no increase in the applicants' market power unless they are selling
relevant products in the same geographic markets) so there is no need
for a detailed analysis.8
In the Merger Policy Statement, the Commission observed, however, that
the analytic screen . . . is not infallible. In some cases, the screen may not
detect certain market power problems.9 As a result, the Commission allowed for
showings of competitive harm that would not be indicated by the screen.
1. Applicants' Analysis
Applicants state that they have evaluated the competitive effects of
the proposed merger in accordance with the requirements of the Merger Policy
Statement and have also considered the Commission's Notice of Proposed
Rulemaking for revising merger filing requirements.10 They assert that the
proposed merger will have no adverse effect on competition, resulting either
from the horizontal or vertical aspects of the consolidation. In regard to
horizontal effects, Applicants note that under the Policy Statement, a detailed
screen analysis is unnecessary because AES and CILCO do not sell the same
products in the same geographic markets.11 With regard to vertical effects,
Applicants state that neither party has more than de minimis control over
generation inputs and that such inputs are not in locations that could give rise
to vertical market power issues. Applicants provide an abbreviated market
analysis to support their claim that the proposed merger will not adversely
affect competition.
To support their assertion that a screen analysis is unnecessary,
Applicants analyze: (1) installed capacity in a market centered on CILCO and (2)
historical transactions data. With regard to the first, Applicants analyze
installed capacity for themselves and all utilities directly interconnected with
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8 Id. at 30,136.
9 Id. at 30,119.
10 See Revised Filing Requirements Under Part 33 of the Commission's
Regulations, 63 FR 20,340 (1998), FERC Stats. & Regs. 32,528.
11 Applicants note that AES's power marketing subsidiaries, AES Power Inc. and
Northern/ AES Energy, LLC (in which it has a 45 percent ownership
interest), do not own or control power supplies under long-term contracts
(i.e., of one or more year's duration) that are not committed to other
purchasers.
<PAGE>
CILCO.12 Their analysis shows that for the years 1999 through 2001, the
combination of AES's and CILCO's generation assets produces no increase in
market share. Applicants provide supporting information showing that AES's
generators that are located nearest to the CILCO and Ameren markets (in which
CILCO sells) are two to four wheels away.13 They then analyze historical trade
data to demonstrate that AES and CILCO have sold no energy to common customers
in 1996 and 1997.
Because CILCO and AES do not compete in the same geographic markets,
Applicants conclude that the merger raises no vertical competitive concerns
either with regard to CILCO's sales of gas or transmission services or with
regard to both CILCO's and AES's control of potential generation sites or
emission allowances.14
2. Intervenors Concerns
Allegheny argues that the merger will create competitive distortions
because of AES' ownership of certain QFs. Allegheny notes that upon consummation
of the merger, AES will own an electric utility (CILCO) and up to 100 percent of
seven QFs.15
Allegheny argues that this result is inconsistent with the rationale
relied upon by the Commission when it established the 50 percent ownership
limitation. That rationale, according to Allegheny, is substantially based upon
concerns about potential self-dealing (i.e., preferring their own QFs to those
owned by others) and cross-subsidization (e.g., subsidizing their QFs at the
expense of their captive retail customers) by vertically-integrated electric
utilities.
Allegheny argues that QF-owning utilities are potentially able to
maximize their competitive positions by subsidizing with QF profits their rates
in competitive markets while at the same time forcing competitors to purchase
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12 CILCO's direct interconnections are with Commonwealth Edison Company,
Ameren, Illinois Power Co., Springfield, City Water Light & Power, Corn
Belt Electric Cooperative (Corn Belt), and the Village of Riverton,
Illinois (Riverton). Total installed capacity in the market consisting of
Applicants and CILCO's direct interconnects is in excess of 40,000 MW.
Affidavit of Cliff W. Hamal, February 19, 1999 at Table CWH-6.
13 In support of this argument, Applicants further maintain that the output of
these units is fully committed to customers under long-term contracts. They
note that while AES has projects under development and other acquisitions
are expected to increase the generating capacity under AES's control, those
activities are all far from markets in which CILCO operates and the output
of the projects generally is sold under long-term contracts. Affidavit of
Cliff W. Hamal at 4.
14 Affidavit of Cliff W. Hamel at 16-17.
15 Motion at 12.
<PAGE>
high cost QF power. This, Allegheny claims, would cause distortions in
competitive power markets.16
Allegheny requests that the Commission, as a condition of the merger,
direct AES to divest portions of its interests in QFs so that it will not own
more than 50 percent of any QF. Alternatively, Allegheny requests that the
Commission determine that current AES QFs will lose QF status upon consummation
of the merger.
In response, Applicants argue that Allegheny ignores the demonstrated
fact that AES owns no QFs located in the vicinity of CILCO's service territory.
Therefore, it is highly unlikely that sales from AES's QFs would ever be made to
CILCO's customers.17 In response, Allegheny argues that with the current and
potential membership in the Midwest Independent Transmission System Operator
(MISO), two of AES's generation facilities would not be three wheels away -- as
claimed by Applicants -- but only one wheel away from CILCO.18 As a result,
Allegheny claims, it would be very possible for the merged company to use its
QFs for self-dealing and cross-subsidization, thereby creating economic
inefficiencies.
3. Discussion
As the Commission stated in the Merger Policy Statement, a screen
analysis is unnecessary if the merging firms do not have facilities or sell
relevant products in common geographic markets. Applicants argue that this is
the case here. To support this claim, applicants have provided information on
installed capacity in the CILCO market and historical transactions data showing
that AES and CILCO sell products in different geographic markets. We note that
no intervenor has raised any specific comments or criticisms regarding
Applicants' analysis of the competitive effects of the proposed merger, except
the QF-related concerns addressed below. Given the foregoing circumstances, the
Commission believes that Applicants' approach to evaluating -- and conclusions
regarding the competitive effects of the proposed merger are reasonable.
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16 Allegheny claims that it, specifically, will be competitively disadvantaged
as a result of the merger because its subsidiaries are forced to purchase
power from two AES owned QFs at costs that are substantially above market
levels, and upon consummation of the merger, its payments would go to
subsidize a utility holding company whose subsidiaries are competing or
potentially competing with Allegheny. According to Allegheny, such a result
distorts the marketplace and creates a tilted playing field. Id. at 23 and
Affidavit of Peter S. Fox-Penner, April 21, 1999 at 5-6.
17 Motion to Dismiss Protests at 7-8.
18 AES's Beaver Valley and Warrior Run QFs, located in Pennsylvania and
Maryland, respectively.
<PAGE>
As the Commission observed in the Merger Policy Statement, a basic
concern in evaluating the competitive effects of mergers involving entities that
own or control electric generation is whether the merger increases the ability
of the merged company to affect prices and/or output in electricity markets.
This ability can result, for example, from a merger-induced increase in market
power, a prerequisite of which is that the merging entities sell relevant
products in the same geographic markets.
We note that Allegheny's concern that the merged company could engage
in self-dealing and cross-subsidization (e.g., AES using QF revenues to
subsidize generation sales in competitive markets) is based on a largely
unsupported and unsubstantiated claim that such behavior could distort
competition and result in economic inefficiency. Allegheny makes no persuasive
argument that the merged company would have the ability to affect electricity
prices or output or that conditions necessaryto do so (i.e., that CILCO and AES
sell products in the same geographic market) are present.
Allegheny argues that because of the MISO, two of AES's generators
would be one wheel away from the markets in which CILCO participates, so that it
would be very possible for the merged company to engage in
competition-distorting self-dealing and cross-subsidization. We do not find this
argument compelling. The likely effect of an RTO should be to make markets
broader and less concentrated. Moreover, we note that even if AES and CILCO
could be considered to sell products in the same geographic market, information
on the size and disposition of the output of AES's generators indicates that:
(1) the change in market concentration due to the combining AES's and CILCO's
generation will be insignificant, and (2) the output of AES's facilities is
committed under long-term contracts, making it more difficult for the merging
company to withhold such capacity. As a result, we reject Allegheny's argument
that it is essential, in order to prevent distortions in competitive power
markets, to limit AES's QF ownership to 50 percent if the SEC grants AES the
exempt status it seeks.
For the reasons discussed above, we find that the proposed merger will
not adversely affect competition.
D. Effect on Rates
The Merger Policy Statement explains our concern that there be
adequate ratepayer protection from adverse rate effects as a result of a merger.
It describes various commitments that may be acceptable means of protecting
ratepayers, such as hold harmless provisions, open seasons for wholesale
customers, rate freezes, and rate reductions.19
According to the application, the proposed merger will not have an
adverse effect on rates. In support, Applicants state that AES has no captive
customers and that CILCO serves at wholesale only two transmission dependent
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19 Merger Policy Statement, FERC Stats. and Regs. at 30,123-24.
<PAGE>
utilities (TDUs); Riverton and Corn Belt. With respect to generation rates,
Applicants maintain that because CILCO's contract with Riverton is a fixed-rate
requirements contract, no merger-related costs can be passed through to
Riverton.20 With respect to transmission rates, Applicants state that Corn Belt
is served under a five-year transmission contract which precludes CILCO from
increasing its transmission rate.21 Applicants assert that once these contracts
expire, Riverton will be free to obtain sales service on the competitive market
and transmission service will be available to both Riverton and Corn Belt under
CILCO's open-access tariff.22
According to the application, CILCO is a participant in the MISO,
which has filed a single ISO-wide open-access tariff (MISO tariff).23 Applicants
state that the proposed transaction will have no adverse effect on transmission
rates because the MISO tariff rates are currently under review by the
Commission. Applicants commit that CILCO will not seek any increase in its
jurisdictional transmission rates or its MISO tariff rates for a period of four
years after the merger is consummated.24 Applicants also maintain that the
proposed merger will not have an adverse effect on its market-based rates
because those rates are based on the market, not costs.25 With respect to the
rates charged by AES affiliates that own QF and EWG generating plants,
Applicants state that the proposed merger will not have any effect on these
rates, since AES cannot change them unilaterally.26 For the above reasons,
Applicants assert that the Commission's ratepayer protection goals are met.
Intervenors raise no rate or ratepayer protection issues.
Upon consideration of the above, we conclude that the proposed merger
will not adversely affect rates.
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20 The CILCO/Riverton contract terminates February 28, 2001. Application at
20.
21 Id. at 3.
22 Id.
23 On September 16, 1998, the MISO tariff was accepted for filing with certain
rate and non-rate terms set for hearing. Midwest Independent System
Operator, 84 FERC 61,231 (1998), order on reh'g, 85 FERC 61,372 (1998).
However, the MISO has not yet begun operating.
24 Id. at 3 and 22.
25 Id. at 20-21. Applicants further state that CILCORP's power marketing
subsidiary, QST Energy, Inc., plans to terminate its marketing activities
and will file a request to terminate its market-based rate tariff.
26 Id. at 21.
<PAGE>
E. Effect on Regulation
As explained in the Merger Policy Statement, the Commission's primary
concern with the effect on regulation of a proposed merger involves possible
changes in the Commission's jurisdiction when a registered holding company is
formed, thus invoking the jurisdiction of the Securities and Exchange Commission
(SEC). We are also concerned with the effect on state regulation where a state
does not have authority to act on a merger and the state raises concerns about
the effect of the merger on regulation.27
With respect to Federal regulation, Applicants state that the proposed
merger will not result in the formation of a registered public utility holding
company under PUHCA, and thus, the Commission's jurisdiction over CILCO will not
be affected. In support, Applicants note that CILCORP (CILCO's parent company)
is currently an exempt public utility holding company under PUHCA, and that
post-merger, AES is expected to enjoy the same status. Applicants also note
that, as a condition of closing, the SEC must issue AES an exemption from
registration as a holding company under PUHCA section 3(a)(5).28
With respect to state regulation, Applicants maintain that the
proposed merger will have no effect on the Illinois Commerce Commission's
(Illinois Commission) jurisdiction over CILCO's retail rates.29
As noted, Allegheny and Ameren Companies maintain that the proposed
merger may allow AES to escape the Commission's qualifying facility (QF)
regulations, which restrict utility ownership of QFs to a maximum of fifty
percent.30 Allegheny requests that, regardless of whether the SEC grants AES
exempt status pursuant to section 3(a)(5) of PUHCA, the Commission should
condition the merger on either elimination of QF status of the AES plants, or
require divestiture to ensure that the merged company owns no more than fifty
percent of any QFs. Ameren Companies request that the Commission delay taking
action until the SEC acts on AES's pending request for a section 3(a)(5)
exemption. If the exemption is granted, Ameren Companies request that a hearing
be held to determine if AES should be subject to the Commission's regulations
regarding QF ownership.
We disagree with Allegheny's and Ameren Companies' contentions that
the proposed merger will allow AES to evade our QF regulations. If the SEC
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27 Merger Policy Statement, FERC Stats. and Regs. at 30,124-25.
28 Application at 23. As previously noted, section 3(a)(5) provides an
exemption if "such holding company is not, and derives no material part of
its income, directly or indirectly, from any one or more subsidiary
companies which are, a company or companies the principle business of which
within the United States is that of a public utility company."
29 On March 10, 1999, the Illinois Commission issued an order approving the
proposed merger with respect to its effects on CILCO's gas utility
operations.
<PAGE>
determines that AES qualifies for exempt status, the Commission's QF ownership
requirements do not apply.31 However, if the SEC denies AES's request for exempt
status, and AES opts to proceed with the merger,32 AES would have to either
divest or reduce its QF ownership as necessary to comply with the Commission's
regulations or lose QF status for those facilities where its equity ownership
exceeds fifty percent.33
Allegheny also argues that AES should not be considered to be a
foreign utility company, which would allow it to obtain a section 3(a)(5)
exemption under PUHCA and thus not be subject to this Commission's QF
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30 According to Allegheny, AES has equity ownership interests in seven QFs;
six of the AES ownership interests are in the 80 to 100 percent range.
Motion at 8.
31 The Commission's ownership requirements are found in 18 C.F.R. 292.206
(1999). That regulation provides:
(a) General Rule. A cogeneration facility or small power production
facility may not be owned by a person primarily engaged in the generation
or sale of electric power (other than electric power solely from
cogeneration facilities or small power production facilities).
(B) Ownership test. For purposes of this section, a cogeneration or
small power production facility shall be considered to be owned by a person
primarily engaged in the generation or sale of electric power, if more than
50 percent of the equity interest in the facility is held by an electric
utility or utilities, or by an electric utility holding company, or
companies, or any combination thereof. If a wholly or partially owned
subsidiary of an electric utility or electric utility holding company has
an ownership interest of a facility, the subsidiary's ownership interest
shall be considered as ownership by an electric utility or electric utility
holding company.
(c) Exceptions. For purposes of this section a company shall not be
considered to be an "electric utility" company if it:
(1) Is a subsidiary of an electric utility holding company which is
exempt by rule or order adopted or issued pursuant to section 3(a)(3) or
3(a)(5) of the Public Utility Holding Company Act of 1935, 15 U.S.C.
79c(a)(3), 79c(a)(5).
32 While Applicants maintain that receiving PUHCA exempt status is a condition
of closing, AES can, under the merger agreement, waive this condition and
proceed with the merger as a registered public utility holding company.
Application at Exhibit A, Merger Agreement at 61-62. We address this
possibility below.
33 See e.g., Coso Energy Developers, et al., 85 FERC 61,355 (1998).
<PAGE>
regulations. Similarly, Ameren Companies argue that CILCO's operations are too
large to be considered immaterial under section 3(a)(5) of PUHCA. Both Allegheny
and Ameren Companies argue that, notwithstanding the SEC's action regarding
AES's exemption request, it would be unduly discriminatory to allow AES a less
restrictive ownership of a QF than other investor-owned utilities or domestic
public utility holding companies.
Allegheny's and Ameren Companies' arguments regarding AES's status
under PUHCA are misplaced. Allegheny and Ameren Companies should raise their
concerns with the SEC. We note that the proposed merger does not change the
applicability of our QF regulations.
In light of the above, we will not condition the merger as requested
by Allegheny, nor will we delay our finding or require a hearing as requested by
Ameren Companies.
As noted above, Applicants indicate that AES is expected to be an
exempt public utility holding company after closing, and, therefore, that the
Commission will not lose jurisdiction over intra-corporate transactions.
However, if the SEC were to determine that AES does not qualify for exempt
holding company status, and AES becomes a registered holding company, Ohio
Power34 would deprive this Commission of authority over certain intra-corporate
transactions.
Thus, because AES's status as a holding company under PUHCA is
unclear, and because the Commission may not be able to adequately protect
ratepayers from affiliate abuse should AES become a registered holding company,
we will condition approval of the proposed merger on Applicants' agreeing to
abide by our policies with respect to intra-corporate transactions. Applicants
shall inform the Commission within 15 days of the date of this order whether
this condition is acceptable.
Accordingly, we find that the proposed merger, as conditioned, will
not have an adverse effect on regulation.
F. Accounting Issues
According to the application, the merger will take place at the
holding company level, with no effect on the account balances or financial
statements of the jurisdictional utility, CILCO. For this reason, Applicants
request a waiver of the requirement to file their accounting for the merger.
Based on Applicants' assertion that CILCO's account balances and financial
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34 Ohio Power Co. v. FERC, 954 F.2d 779, 782-86 (D.C. Cir.), cert. denied, 498
U.S. 73 (1992). Federal Energy Regulatory Commission
<PAGE>
statements will not be affected by the merger and the understanding that CILCO
will continue to maintain its accounts in accordance with the Commission's
Uniform System of Accounts, we will grant the waiver of the requirement to file
accounting related to the merger.
The Commission orders:
(A) Applicants' motion to dismiss the protests is hereby denied.
(B) Applicants' proposed merger is hereby approved subject to the
commitments and conditions discussed in the body of this order.
(C) The request for waiver of the requirement to file accounting
related to the merger is hereby granted.
(D) The foregoing authorization is without prejudice to the authority
of the Commission or any other regulatory body with respect to rates, services,
accounts, valuation, estimates or determinations of cost, or any other matter
whatsoever now pending or which may come before the Commission.
(E) Nothing in this order shall be construed to imply acquiescence in
any estimate or determination of cost or any valuation of property claimed or
asserted.
(F) The Commission retains authority under section 203(b) of the FPA
to issue supplemental orders as appropriate.
(G) Applicants shall notify the Commission that the merger has
occurred within 10 days of the date the merger is consummated.
By the Commission.
(SEAL)
/s/ David P. Boergers
----------------------------------------
David P. Boergers
Secretary
<PAGE>
UNITED STATES OF AMERICA
FEDERAL ENERGY REGULATORY COMMISSION
Before Commissioners: James J. Hoecker, Chairman;
Vicky A. Bailey, William L. Massey,
Linda Breathitt, and Curt Hebert, Jr.
Central Illinois Light Company
and Docket No. EC99-40-001
The AES Corporation
ORDER DENYING REHEARING
(Issued August 16, 1999)
On July 16, 1999, Allegheny Energy, Inc., West Penn Power Co. and The
Potomac Edison Co. (collectively "Allegheny") filed a timely request for
rehearing of the Commission's June 16, 1999 order in this proceeding. Central
Illinois Light Company and The AES Corp, 87 FERC 61,293 (1999) (June 16 order).
As explained below, we will deny rehearing.
Background
In the June 16 order, the Commission approved the application filed by
Central Illinois Light Company (CILCO) and The AES Corporation (AES)
(collectively, Applicants) filed pursuant to section 203 of the Federal Power
Act (FPA)1 requesting approval of the merger of CILCO's parent, CILCORP
Inc. (CILCORP), into and with Midwest Energy, Inc. (Midwest), a wholly-owned
subsidiary of AES, with CILCORP being the surviving entity, and thereafter, at
the option of AES, the merger of CILCORP into AES.
Applicants stated that they have applied to the Securities and Exchange
Commission (SEC) for an exemption for the merged company from registration as a
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1 16 U.S.C. 824b (1994).
<PAGE>
holding company under section 3(a)(5) of PUHCA.2 They stated that the SEC's
issuance to AES of a section 3(a)(5) exemption to PUHCA is a condition to the
closing of the merger. They stated that with a section 3(a)(5) PUHCA exemption,
the merger will have no effect on the QF status of AES's cogeneration and small
power production facilities under the Commission's regulations.
A. Allegheny's Intervention
Allegheny intervened in the merger proceeding. Allegheny argued that the
proposed merger will create competitive distortions because of AES's ownership
of certain QFs. Allegheny also argued that AES's post-merger QF ownership of
more than fifty percent of a QF would be inconsistent with the ownership
restrictions contained in the Public Utility Regulatory Policies Act of 1978
(PURPA) and the Commission's regulations implementing PURPA.
Allegheny argued that AES should not be considered to be a foreign utility
company, which would allow it to obtain a section 3(a)(5) exemption under PUHCA
and thus not be subject to this Commission's QF regulations. Finally, Allegheny
argued that, notwithstanding the SEC's action regarding AES's exemption request,
it would be unduly discriminatory to allow AES to own more than fifty percent of
a QF while precluding other investor-owned utilities or domestic public utility
holding companies from doing so.
B. The Commission's June 16 order
In its June 16 order, the Commission approved the proposed merger as
consistent with the public interest. With respect to the QF ownership issue, the
Commission stated that if the SEC grants AES its requested exemption, the
- ---------------
2 Section 3(a)(5) of PUHCA provides that the SEC may exempt from PUHCA any
holding company, if:
such holding company is not, and derives no material part of its
income, directly or indirectly, from any one or more subsidiary
companies which are, a company or companies the principal business of
which within the United States is that of a public-utility company.
<PAGE>
Commission's QF ownership requirements do not apply; but if the SEC denies the
requested exemption, and AES opts to proceed with the merger, AES would have to
either divest or reduce its QF ownership as necessary to comply with the
Commission's regulations, or lose QF status for those facilities where its
ownership exceeds fifty percent. The Commission further stated that the SEC was
the proper forum in which to address whether a section 3(a)(5) PUHCA exemption
should be granted to the merged company. Finally, the Commission noted that "the
proposed merger does not change the applicability of our QF regulations." 87
FERC at 62,162. The Commission accordingly denied Allegheny's request that the
merger be conditioned on either loss of the QF status of facilities owned by AES
or divestiture of a sufficient equity interest in AES's QF facilities to reduce
its equity interests below fifty percent. Id.
C. Allegheny's Request for Rehearing
With one exception, Allegheny has raised many of the same arguments
that the Commission has already addressed in its prior order, and nothing raised
causes us to revise our earlier finding. However, on rehearing Allegheny now
argues that Applicants are attempting to create a regulatory gap by having
argued to this Commission that this Commission should defer to the SEC regarding
exemption from PUHCA, and now arguing to the SEC that this Commission has
already addressed the QF ownership issue so that the SEC should not consider the
QF issue in determining whether to grant AES the requested exemption from PUHCA.
Allegheny states that if the Commission and the SEC accept AES's arguments, the
result will be that the post-merger entity will be permitted to retain more than
fifty percent ownership of QFs without any finding that the continued QF
ownership complies with PURPA or is in the public interest.
Allegheny urges that the Commission, in order "[t]o prevent this
regulatory gap,"3 determine: (1) whether the merger is in the public interest,
if the SEC grants the requested section 3(a)(5) exemption, given the fact that
the merged company will own more than 50 percent of its QFs; and (2) whether it
is discriminatory to allow the AES/CILCORP merged company to own more than 50
percent of its QFs while denying such ownership to the merged
CalEnergy/MidAmerican company.4 Finally, Allegheny requests that the merged
company be prohibited from owning more than fifty percent of any QF.
- ---------------
3 Request for Rehearing at 8.
4 See MidAmerican Energy Company and MidAmerican Energy Holdings Company, 85
FERC 61,354 (1998).
<PAGE>
Discussion
We will deny rehearing. As an initial matter, we note that Allegheny's
allegation of a regulatory gap is premised on its notion that this Commission
and the SEC can somehow be misled by CILCO/AES into failing to take all relevant
facts and law into account in three types of related, but separate
determinations, i.e., (1) the determination by the SEC whether the merged
company satisfies the requirements for an exemption under section 3(a)(5) of
PUHCA; (2) our determination of whether the merger is in the public interest;
and (3) any determination by this Commission concerning the QF status of the AES
facilities following merger.5
- ---------------
5 Allegheny's concerns about the QF status of the facilities relate to
whether the AES facilities will satisfy the ownership requirements for QF
status following the merger. The Commission's ownership requirements are
found in 18 C.F.R. 292.206 (1999). That regulation provides:
(a) General Rule. A cogeneration facility or small power production
facility may not be owned by a person primarily engaged in the
generation or sale of electric power (other than electric power solely
from cogeneration facilities or small power production facilities).
(B) Ownership test. For purposes of this section, a cogeneration or
small power production facility shall be considered to be owned by a
person primarily engaged in the generation or sale of electric power,
if more than 50 percent of the equity interest in the facility is held
by an electric utility or utilities, or by an electric utility holding
company, or companies, or any combination thereof. If a wholly or
partially owned subsidiary of an electric utility or electric utility
holding company has an ownership interest of a facility, the
subsidiary's ownership interest shall be considered as ownership by an
electric utility or electric utility holding company.
(c) Exceptions. For purposes of this section a company shall not be
considered to be an "electric utility" company if it:
(1) Is a subsidiary of an electric utility holding company which is
exempt by rule or order adopted or issued pursuant to section 3(a)(3)
or 3(a)(5) of the Public Utility Holding Company Act of 1935, 15
U.S.C. 79c(a)(3), 79c(a)(5).
<PAGE>
We disagree, and reiterate our finding that the proposed merger will
not allow Applicants to evade our regulations, nor will it create a regulatory
gap in the event Applicants receive the requested PUHCA exemption. We continue
to believe that the public interest concerns regarding the merger, and whether
AES's current QFs will continue to satisfy the ownership requirements for QF
status following the merger, are best addressed in separate proceedings.6
This conclusion is consistent with the approach we took in the
CalEnergy/MidAmerican merger proceeding (cited by Allegheny in its Request for
Rehearing at 3), where we stated:
The effect of the merger on the projects' QF status and SoCal Edison's
related concerns are addressed in the relevant QF proceedings, and are
independent of whether the merger is consistent with the public
interest.7
Moreover, Allegheny remains free to challenge the QF status of any
facilities the merged company claims have QF status. Allegheny's challenges,
however, must be made in QF status proceedings, not in the merger proceeding. In
addition, we reiterate that the SEC remains the proper forum in which Allegheny
should address its concerns regarding that agency's granting of a section
3(a)(5) exemption to the merged company.
Turning to Allegheny's request that this Commission consider whether
it is discriminatory to allow the AES/CILCORP merged company to own more than 50
percent of its QFs, while denying such ownership to the merged
CalEnergy/MidAmerican company, we note that Allegheny's allegations of
discrimination are at this point entirely speculative in that the SEC has not
yet granted AES its requested exemption. If the requested exemption is not
granted, AES will have to take divestiture action similar to that taken by
CalEnergy following its merger in order to retain QF status for its facilities,
and thus there could be no claim of discriminatory action.
- ---------------
6 In this regard, the Commission made the finding that themerger is
consistent with the public interest, 87 FERC at 62,156, 62,158; that the
merged company's ownership of QFs will not adversely affect competition, 87
FERC at 62,161, and the merged company's ownership of QFs will not
adversely affect regulation 87 FERC at 62,162. Nothing in the record
supports Allegheny's allegation that this Commission has been misled in
making these determinations.
7 MidAmerican, 85 FERC at 62,367. Federal Energy Regulatory Commission 88
FERC P 61,181, 1999 WL 619557 (F.E.R.C.)
<PAGE>
On the other hand, it is clear that AES/CILCORP and
CalEnergy/MidAmerican will not be similarly situated if the SEC grants the
requested exemption. If the requested exemption is granted, AES/CILCORP and
CalEnergy/MidAmerican will have different legal statuses. When entities are not
similarly situated, differing treatments do not result in undue discrimination.
The Commission orders:
Allegheny's request for rehearing is hereby denied.
By the Commission.
(SEAL)
/s/ Linwood A. Watson, Jr.
----------------------------------------
Linwood A. Watson, Jr.
Acting Secretary
Exhibit E-1
AES Corporation
|
|--|
|-------- Six US Power Plants Owned
| by Second Tier US Companies
|
|-------- Seven US Power Plants Owned
| by Fourth Tier US Companies
|
|-------- Two US Power Plants Owned
| by Fifth Tier US Companies
|
|-------- Four Foreign Power Plants Owned
| by Second Tier Foreign Companies
|
|-------- Six Foreign Power Plants Owned
| by Third Tier Foreign Companies
|
|-------- Eight Foreign Power Plants Owned
| by Fourth Tier Foreign Companies
|
|-------- Fifty-Six Foreign Power Plants Owned
| by Fifth Tier Foreign Companies
|
|-------- Six Foreign Power Plant Owned
| by Sixth Tier Foreign Companies
|
|-------- One Foreign Power Plant Owned
| by Seventh Tier Foreign Companies
|
|-------- Seven Foreign Distribution
| Companies Owned by Fourth
| Tier Foreign Companies*
|
|-------- Three Foreign Distribution
| Company Owned by Fifth
| Tier Foreign Companies
|
|-------- One Foreign Distribution
| Company Owned by Sixth
| Tier Foreign Companies
|
|-------- Midwest Energy, Inc.
(100% Owned First Tier US Subsidiary)
- - AES has approximately 147 additional US companies used as holding
companies, development companies, and for other purposes.
- - AES has approximately 156 additional foreign companies used as holding
companies, development companies, and for other purposes.
Exhibit E-2
CILCORP
|
|--|
|-------- Central Illinois Light Company
| |
| |--- CILCO Exploration and
| | Development Company
| |
| |--- CILCO Energy Corporation
|
|
|-------- CILCORP Ventures, Inc.
| |
| |--- CILCORP Energy Services Inc
| |
| |--- Agricultural Research and
| Development Corp.*
|
|
|-------- CILCORP Investment Management Inc.
| |
| |--- CIM Energy Investments Inc.
| |
| |--- CIM Leasing Inc.
| |
| |--- CIM Air Leasing Inc.
| |
| |--- CILCORP Lease
| Management Inc.
| |
| |--- CLM Inc. - IV
| |
| |--- CLM Inc. - VI
| |
| |--- CLM Inc. - VII
| |
| |--- CLM Inc. - VIII
|
|
|-------- QST Enterprises Inc.
|
|--- CILCORP Infraservices Inc.
|
|--- QST Energy Inc.
| |
| |--- QST Energy
| Trading Inc.
|
|--- ESE Land Corporation
|
|--- Savannah
| Resources Corp.
| |
| |
| |- McCadden
| Development,
| LLC *
|
|--- ESE Placentia
| Development Corp.
|
|--- ELC Makena I,
| L.L.C. *
|
|--- Wilmington
| Land Co.
|
|--- California/Nevada
| Development,
| LLC *
|
|--- Future
Developments
LLC *
* Not a wholly-owned subsidiary
Exhibit E-3
AES Corporation
|
|--|
|-------- Six US Power Plants Owned
| by Second Tier US Companies
|
|-------- Seven US Power Plants Owned
| by Fourth Tier US Companies
|
|-------- Two US Power Plants Owned
| by Fifth Tier US Companies
|
|-------- Four Foreign Power Plants Owned
| by Second Tier Foreign Companies
|
|-------- Six Foreign Power Plants Owned
| by Third Tier Foreign Companies
|
|-------- Eight Foreign Power Plants Owned
| by Fourth Tier Foreign Companies
|
|-------- Fifty-Six Foreign Power Plants Owned
| by Fifth Tier Foreign Companies
|
|-------- Six Foreign Power Plant Owned
| by Sixth Tier Foreign Companies
|
|-------- One Foreign Power Plant Owned
| by Seventh Tier Foreign Companies
|
|-------- Seven Foreign Distribution
| Companies Owned by Fourth
| Tier Foreign Companies*
|
|-------- Three Foreign Distribution
| Company Owned by Fifth
| Tier Foreign Companies
|
|-------- One Foreign Distribution
| Company Owned by Sixth
| Tier Foreign Companies
|
|----- CILCORP
|
|-------- Central Illinois Light Company
| |
| |--- CILCO Exploration and
| | Development Company
| |
| |--- CILCO Energy Corporation
|
|
|-------- CILCORP Ventures, Inc.
| |
| |--- CILCORP Energy Services Inc
| |
| |--- Agricultural Research and
| Development Corp.**
|
|
|-------- CILCORP Investment
| Management Inc.
| |
| |--- CIM Energy Investments Inc.
| |
| |--- CIM Leasing Inc.
| |
| |--- CIM Air Leasing Inc.
| |
| |--- CILCORP Lease
| Management Inc.
| |
| |--- CLM Inc. - IV
| |
| |--- CLM Inc. - VI
| |
| |--- CLM Inc. - VII
| |
| |--- CLM Inc. - VIII
|
|
|-------- QST Enterprises Inc.
|
|--- CILCORP Infraservices Inc.
|
|--- QST Energy Inc.
| |
| |--- QST Energy
| Trading Inc.
|
|--- ESE Land Corporation
|
|--- Savannah
| Resources Corp.
| |
| |
| |- McCadden
| Development,
| LLC **
|
|--- ESE Placentia
| Development Corp.
|
|--- ELC Makena I,
| L.L.C. **
|
|--- Wilmington
| Land Co.
|
|--- California/Nevada
| Development,
| LLC **
|
|--- Future
Developments
LLC **
- - AES has approximately 147 additional US companies used as holding
companies, development companies, and for other purposes.
- - AES has approximately 156 additional foreign companies used as holding
companies, development companies, and for other purposes.
** Not a wholly-owned subsidiary.
[AES LETTERHEAD]
August 18, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Re: The AES Corporation - Application Under the Public Utility
Holding Company Act of 1935
Ladies and Gentlemen:
The AES Corporation ("AES") proposes to acquire CILCORP, Inc.
("CILCORP"), an Illinois corporation, and its wholly-owned public utility
subsidiary, Central Illinois Light Company ("CILCO") (the "Transaction"). AES
seeks an order from this Commission that upon AES's consummation of the
Transaction, AES, and its subsidiary companies as such, will be exempt from the
provisions of the Public Utility Holding Company Act of 1935, as amended
("PUHCA" or the "Act"), other than Section 9(a)(2), pursuant to Section 3(a)(5)
of the Act. I am General Counsel for The AES Corporation and am familiar with
the Transaction. In this connection and in accordance with the requirements of
Exhibit F to Form U-1, I have examined the Articles of Incorporation of AES, the
By-Laws of AES, and such other documents, certificates and corporate records,
and such matters of law, as I have deemed necessary for the purpose of rendering
this opinion.
The opinions expressed below with respect to the Transaction are
subject to and rely upon the following assumptions and conditions:
a. The Transaction shall have been duly authorized and approved, to
the extent required by the governing corporate documents and applicable
state laws, by the shareholders of CILCORP.
b. All required approvals, authorizations, consents, certificates,
rulings, and orders of, and all filings and registrations with, all
applicable federal and state commissions and regulatory authorities with
respect to the Transaction shall have been obtained or made, as the case
may be, and shall have become final and unconditional in all respects and
shall remain in effect and the Transaction shall have been accomplished in
accordance with all such approvals, authorizations, consents, certificates,
orders, filings, and registrations.
c. The Commission shall have duly entered an appropriate order with
respect to the Transaction granting AES an exemption pursuant to Section
3(a)(5) of the Act.
d. All corporate formalities required by the laws of the state of
Illinois for the consummation of the Transaction shall have been taken, and
the Transaction shall have become effective in accordance with the laws of
the state of Illinois.
e. AES and CILCORP shall have obtained all consents, waivers and
releases, if any, required for the Transaction under all applicable
governing corporate documents, contracts, agreements, debt instruments,
indentures, franchises, licenses, and permits.
f. The representations and warranties of CILCORP concerning the
corporate organization and existence of CILCORP set forth in the Agreement
and Plan of Merger Among The AES Corporation, CILCORP, Inc. and Midwest
Energy, Inc. dated as of November 22, 1998 (the "Merger Agreement") are
true and correct as of the date hereof and CILCORP has complied with all
applicable covenants and conditions set forth in the Merger Agreement.
Based upon the foregoing, and subject to the assumptions and
conditions set forth herein, I am of the opinion that:
1. AES is a corporation validly organized and existing under the laws of
the State of Delaware.
2. AES may lawfully purchase the stock of CILCORP.
I am a member of the New York bar and do not hold myself out as an
expert on the laws of any other state.
I hereby consent to the filing of this opinion as an exhibit to the
Application.
Very truly yours,
/s/ William R. Luraschi
----------------------------------------
William R. Luraschi
Vice President, Secretary and
General Counsel
<PAGE>
[CILCORP LETTERHEAD]
August 17, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Re: The AES Corporation - Application Under the Public Utility
Holding Company Act of 1935
Ladies and Gentlemen:
The AES Corporation ("AES") proposes to acquire CILCORP Inc.
("CILCORP"), an Illinois corporation, and its wholly-owned public utility
subsidiary, Central Illinois Light Company ("CILCO") (the "Transaction"). AES
seeks an order from this Commission that upon AES's consummation of the
Transaction, AES, and its subsidiary companies as such, will be exempt from the
provisions of the Public Utility Holding Company Act of 1935, as amended
("PUHCA" or the "Act"), other than Section 9(a)(2), pursuant to Section 3(a)(5)
of the Act. I am Vice President, Secretary and Treasurer for CILCORP and am
familiar with the Transaction. In this connection and in accordance with the
requirements of Exhibit F to Form U-1, I have examined the Articles of
Incorporation of CILCORP, the By-Laws of CILCORP, and such other documents,
certificates and corporate records, and such matters of law, as I have deemed
necessary for the purpose of rendering this opinion.
The opinions expressed below with respect to the Transaction are
subject to and rely upon the following assumptions and conditions:
a. The Transaction shall have been duly authorized and approved, to
the extent required by the governing corporate documents and applicable
state laws, by the shareholders of CILCORP.
b. All required approvals, authorizations, consents, certificates,
rulings, and orders of, and all filings and registrations with, all
applicable federal and state commissions and regulatory authorities with
respect to the Transaction shall have been obtained or made, as the case
may be, and shall have become final and unconditional in all respects and
shall remain in effect and the Transaction shall have been accomplished in
accordance with all such approvals, authorizations, consents, certificates,
orders, filings, and registrations.
c. The Commission shall have duly entered an appropriate order with
respect to the Transaction granting AES an exemption pursuant to Section
3(a)(5) of the Act.
d. All corporate formalities required by the laws of the state of
Illinois for the consummation of the Transaction shall have been taken, and
the Transaction shall have become effective in accordance with the laws of
the state of Illinois.
e. AES and CILCORP shall have obtained all consents, waivers and
releases, if any, required for the Transaction under all applicable
governing corporate documents, contracts, agreements, debt instruments,
indentures, franchises, licenses, and permits.
f. The representations and warranties of CILCORP concerning the
corporate organization and existence of CILCORP set forth in the Agreement
and Plan of Merger among The AES Corporation, CILCORP Inc. and Midwest
Energy, Inc. dated as of November 22, 1998 (the "Merger Agreement") are
true and correct as of the date hereof and CILCORP has complied with all
applicable covenants and conditions set forth in the Merger Agreement.
Based upon the foregoing, and subject to the assumptions and
conditions set forth herein, I am of the opinion that:
1. CILCORP is a corporation validly organized and existing under the laws
of the State of Illinois.
2. All state laws applicable to the Transaction will have been complied
with.
3. The shares of CILCORP common stock to be acquired in conjunction with
the Transaction will be validly issued, fully paid and nonassessable and
the holders thereof will be entitled to the rights and privileges
appertaining thereto set forth in the Articles of Incorporation of CILCORP.
I am a member of the Illinois bar and do not hold myself out as an
expert on the laws of any other state.
I hereby consent to the filing of this opinion as an exhibit to the
Application.
Very truly yours,
/s/ John G. Sahn
----------------------------------------
John G. Sahn
Vice President, Secretary and
Treasurer
<PAGE>
EXHIBIT H-1
UNITED STATES OF AMERICA
before the
SECURITIES AND EXCHANGE COMMISSION
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Release No. / , 1999
- ------------------------------------
)
In the Matter of )
)
The AES Corporation )
1001 North 19th Street )
Arlington, VA 22209 )
)
(70- ) )
- ------------------------------------)
The AES Corporation ("AES"), a Delaware Corporation, has filed an
Application on Form U-1 for an exemption from the provisions of the Public
Utility Holding Company Act of 1935 (the "Act"). AES seeks an order from the
Commission to the effect that, upon consummation of the merger transaction
described therein, the resulting public utility holding company, and every
subsidiary company thereof as such, will be exempt from the provisions of the
Act, other than Section 9(a)(2), pursuant to Section 3(a)(5) of the Act.
AES intends to merge its wholly-owned subsidiary, Midwest Energy, Inc.
("Midwest Energy"), an Illinois corporation, with and into CILCORP Inc.
("CILCORP"), a utility holding company in the State of Illinois, with CILCORP as
the surviving corporation (the "Transaction"). Following the Transaction,
CILCORP will be a first-tier, direct subsidiary of AES, and CILCORP's
subsidiaries will maintain their current structure as direct or indirect
subsidiaries, as the case may be, of CILCORP. CILCORP will continue to be an
Illinois corporation with its principal executive office in Peoria, Illinois and
AES will continue to be a Delaware corporation with its principal executive
offices in Arlington, Virginia.
AES is a United States-based multinational electric power generation
and energy distribution company, with operations in 17 countries worldwide. AES
is not currently a holding company subject to the provisions of the Act because
none of its subsidiaries is a public utility company as defined by the Act. AES
is engaged principally in the development, ownership, and operation of electric
generating plants and electric and gas distribution companies. AES currently
owns and/or operates (entirely or in part) a diverse international portfolio of
electric power plants with a total capacity of 24,076 megawatts ("MW"),
including plants that are part of distribution companies in which AES has an
interest.
CILCORP is an intrastate holding company exempt from the Act, except
for Section 9(a)(2), under Section 3(a)(1) and Rule 2. CILCORP is the parent of
four first-tier subsidiaries: Central Illinois Light Company ("CILCO"), QST
Enterprises Inc., CILCORP Investment Management Inc., and CILCORP Ventures Inc.
CILCO is the primary business subsidiary of CILCORP and is a utility subsidiary
principally engaged in the generation, transmission, distribution and sale of
electric energy in an area of approximately 3,700 square miles in central and
east-central Illinois, and the purchase, distribution, transportation and retail
sale of natural gas in an area of approximately 4,500 square miles in central
and east-central Illinois.
The merger of CILCORP with and into Midwest Energy will be governed by
the terms of an Agreement and Plan of Merger dated as of November 22, 1998 (the
"Merger Agreement"), by and among AES, CILCORP and Midwest Energy. As a result
of the Transaction, each outstanding share of common stock of CILCORP and each
associated purchase right under the Rights Agreement, dated as of October 29,
1996, between Continental Stock Transfer and Trust Company and CILCORP will be
converted into the right to receive $65.00 (subject to adjustment as described
in the Merger Agreement).
Following the Transaction, CILCORP will remain predominantly an
intrastate holding company that will not derive any material part of its income
from an out-of-state utility subsidiary. Accordingly, CILCORP will continue to
claim an exemption from registration under PUHCA pursuant to Section 3(a)(1) and
Rule 2.
AES seeks an order from the Commission that AES will be exempt from
registration pursuant to Section 3(a)(5) of the Act. AES states that following
the Transaction it will meet the statutory requirements of the Section 3(a)(5)
exemption because it will not be and will not derive a material part of its
income, directly or indirectly, from any one or more subsidiary companies which
are, a company or companies the principal business of which within the U.S. is
that of a public utility company. AES also states that following the
Transaction, AES will be a holding company system with significant foreign
operations whose U.S. utility operations do not account for a material part of
the holding company's income and are small in size. Accordingly, exemption under
Section 3(a)(5) is appropriate and in the public interest.
The Application and any amendments thereto are available for public
inspection through the Commission's Office of Public Reference. Interested
persons wishing to comment or request a hearing should submit their views in
writing by _______, 1999, to the Secretary, Securities and Exchange Commission,
Washington, D.C. 20549, and serve a copy on AES at the address specified above.
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 manner. After said date, the Application,
as filed or as amended, may be granted and/or permitted to become effective.
For the Commission, by the Division of Investment Management, pursuant
to delegated authority.
Jonathan G. Katz
Secretary
Exhibit K-1
AES Employees
[Two Pie Charts Placed Side-by-Side]
The first pie chart is entitled "By First Language" and is placed to the left of
the second pie chart. This pie chart reflects the fact that the first language
of six percent of AES employees is English (as shown by a red slice). The first
language of ninety-four percent of AES employees is a language other than
English(as shown by a blue slice).
The second pie chart is entitled "By Work Location" and is placed to the right
of the first pie chart. This pie chart reflects the fact that four percent of
AES employees are located in the United States (as shown by a red slice).
Ninety-six percent of AES employees are located outside of the United States (as
shown by a blue slice).
EXHIBIT K-2
AES SUBSIDIARIES
<TABLE>
<CAPTION>
Subsidiary Jurisdiction
---------- ------------
<S> <C>
AEE2, L.L.C. Delaware
AES (India) Private Limited India
AES - MS Pty Ltd. Australia
AES Alamitos Development, Inc. Delaware
AES Alamitos, L.L.C. Delaware
AES Allegheny, Inc. Delaware
AES Altoona, Inc. Delaware
AES Americas International Holdings, Limited Bermuda
AES Americas Investments, Inc. Delaware
AES Americas, Inc. Delaware
AES Andean Partners, L.P. Delaware
AES Andes II, Inc. Delaware
AES Andes III, Inc. Delaware
AES Andes, Inc. Delaware
AES Andino, L.L.C Delaware
AES Angel Falls, L.L.C. Delaware
AES Anhui Power Co. Ltd. British Virgin Islands
AES Anhui Power Company (L) Ltd. Labuan
AES Aramtermelo Holdings B.V. Netherlands
AES Argentina Operations, Ltd. Cayman Islands
AES Argentina, Inc. Delaware
AES Aurora, Inc. Delaware
AES Australia Holding B.V. Netherlands
AES Balboa, Inc. Delaware
AES Bandeirante Empreendimentos Ltda. Brazil
AES Bandeirante, Ltd. Cayman Islands
AES Barry Operations Ltd. United Kingdom
AES Barry, Ltd. United Kingdom
AES Beauvior B.V. Netherlands
AES Beaver Valley, Inc. Delaware
AES Big Sky, L.L.C. Delaware
AES Borsodi Avamtermelo Kft Hungary
AES Brasil Ltda. Brazil
AES Brazil Holdings, Inc. Delaware
AES Brazil International Holdings, Limited Bermuda
AES Brazil, Inc. Delaware
AES Bucks County, Inc. Delaware
AES California Management Co., Inc. Delaware
AES Canada, Inc. Delaware
AES Canal Power Services, Inc. Delaware
AES Canal, Ltd. Cayman Islands
AES Caracoles I Cayman Islands
AES Caracoles II Cayman Islands
<PAGE>
AES Caracoles III L.P. Cayman Islands
AES Caracoles SRL Argentina
AES Caribbean Holdings, Inc. Delaware
AES Caribbean Services, Inc. Delaware
AES Cayman Empreendimentos Ltda. Brazil
AES Cayman Guaiba, Ltd. Cayman Islands
AES Cayman I Cayman Islands
AES Cayman II Cayman Islands
AES Cayman Islands Holdings, Ltd. Cayman Islands
AES Cayman Pampas, Ltd. Cayman Islands
AES Cayuga, L.L.C. Delaware
AES Cemig Empreendimentos, Inc. Cayman Islands
AES Cemig Holdings, Inc. Delaware
AES Central America Power Ventures, Ltd. Cayman Islands
AES Central American Management Services, Inc. Delaware
AES Cerros Negros Holdings, Ltd. Cayman Islands
AES Chengdu Power Co. (L) Ltd. Malaysia
AES Chesapeake, Inc. Delaware
AES Chigen Co. Ltd. British Virgin Islands
AES Chigen Company (L) Limited Malaysia
AES China Company Cayman Islands
AES China Generating Co. Ltd. China
AES China Holding Co. (L) Ltd. Malaysia
AES Cilcorp Funding, L.L.C. Delaware
AES Colstrip, L.L.C. Delaware
AES Connecticut Management, Inc. Delaware
AES Constructors, Inc. Delaware
AES Coral Reef, LLC Cayman Islands
AES Costa Rica Hydroelectrica, Ltd. Cayman Islands
AES Creative Resources, L.P. Delaware
AES Dahe Power Co. Ltd. British Virgin Islands
AES Deepwater Owner Trust Delaware
AES Deepwater, Inc. Delaware
AES Del Sol, Inc. Cayman Islands
AES Development of Argentina S.A. Argentina
AES Distribucion Dominicana, Ltd. Cayman Islands
AES Distribuidores Salvadorenos Limitada San Salvador
AES Distribuidores Salvadorenos Y Campania San Salvador
AES Dominican Holdings, Inc. DE/USA
AES Eagle, Inc. Delaware
AES Eastern Energy, L.P. Delaware
AES Edelap Funding Corporation, L.L.C. Delaware
AES El Salvador, Ltd. El Salvador
AES Electric Investments, Ltd. Bermuda
AES Electric, Ltd. United Kingdom
AES Elsta B.V. Netherlands
<PAGE>
AES Emerald III, Inc. Delaware
AES Emerald, Ltd. Cayman Islands
AES Energen, Ltd. Cayman Islands
AES Energia Cartagena S.R.L. Spain
AES Energia de Mexico, S.A. de C.V. Mexico
AES Energia SRL Italy
AES Energy (Asia) Pte Ltd. Singapore
AES Energy Canada, Inc. Canada
AES Energy Mexico, Inc. Delaware
AES Energy, Ltd. Bermuda
AES Engineering, Ltd. Cayman Islands
AES Enterprise, Inc. Delaware
AES Europe S.A. France
AES Forca Empreendimentos Ltda. Brazil
AES Forca, Ltd. Cayman Islands
AES FSC Corporation Barbados
AES Gas Empreendimentos Ltda. Brazil
AES Gas Power, Inc. Delaware
AES Generacion Dominicana, Ltd. Cayman Islands
AES Gerasul Empreendimentos Ltda. Brazil
AES Gerasul, Ltd. Cayman Islands
AES Global Power Holdings, B.V. Netherlands
AES Goldfields Power B.V. Netherlands
AES GPH, L.L.C. Delaware
AES Granbury, L.P. Delaware
AES Great Falls, B.V. Netherlands
AES Greenfield, L.L.C. Delaware
AES Greenidge, L.L.C Delaware
AES Guaiba Empreendimentos Ltda. Brazil
AES Guaiba II Empreendimentos Ltda. Brazil
AES Haripur (Pvt.) Limited Bangladesh
AES Harriman Cove, Inc. Delaware
AES Hawaii Management Company, Inc. Delaware
AES Hawaii, Inc. Delaware
AES Hazleton, Inc. Delaware
AES HGP, Inc. Delaware
AES Hickling, L.L.C. Delaware
AES HLP, Inc. Delaware
AES Holdings Limited Cayman Islands
AES Hungary Investment Ltd. Hungary
AES Hungary Limited United Kingdom
AES Huntington Beach Development, Inc. Delaware
AES Huntington Beach, L.L.C. Delaware
AES IB Valley Holding Mauritius
AES Inchon Generating Ltd. Korea
AES India, L.L.C. Delaware
<PAGE>
AES Indian Queens Power Ltd. United Kingdom
AES Intercon II, Ltd. Cayman Islands
AES Intercon, Ltd. Cayman Islands
AES Interenergy, Ltd. Cayman Islands
AES International Holdings II, Ltd. British Virgin Islands
AES International Holdings, Ltd. British Virgin Islands
AES International Power Marketing, Inc. Delaware
AES Investments II, Ltd. Cayman Islands
AES Ironwood Funding, L.L.C. Delaware
AES Ironwood, Inc. Delaware
AES Ironwood, L.L.C. Delaware
AES Isthmus Energy, S.A. Panama
AES Jennison, L.L.C. Delaware
AES Joshua Tree, Inc. Delaware
AES Juniata, Inc. Delaware
AES Kelanitissa (Private) Limited Sri Lanka
AES King Harbor, Inc. Delaware
AES Kingston, Inc. Canada
AES Korea, Inc. Delaware
AES Korean Investments, L.L.C. Delaware
AES La Gloria II, Inc. Delaware
AES la Playa Holdings, B.V. Netherlands
AES Lal Pir Limited Pakistan
AES Lal Pir, L.L.C. Delaware
AES Las Mareas, Inc. Delaware
AES las Palmas, L.L.C. Delaware
AES Latrobe Valley, BV Netherlands
AES Light II, Inc. Delaware
AES Londonderry, L.L.C. Delaware
AES Los Mina Finance Company Cayman Islands
AES Los Mina Holdings, Inc. Delaware
AES Madison Holdings BV Netherlands
AES Mayan Holdings, S. de R.L. de C.V. Mexico
AES Medway Electric Limited United Kingdom
AES Medway Operations Limited United Kingdom
AES Meghnaghat Limited Bangladesh
AES Merida B.V. Netherlands
AES Merida III, S. de R.L. de C.V. Mexico
AES Merida Management Services, S. de R.L. de C.V. Mexico
AES Merida Operaciones SRL de CV Mexico
AES Mexico Development, S. de R.L. de C.V. Mexico
AES Mexico Farms, Inc. Delaware
AES Monroe Holdings B.V. Netherlands
AES Monterey, Inc. Delaware
AES Monticello B.V. Netherlands
AES Mount Vernon B.V. Netherlands
<PAGE>
AES Mt. Stuart B.V. Netherlands
AES Mt. Stuart General Partnership Australia
AES New York Funding, L.L.C. Delaware
AES New York Holdings, L.L.C. Delaware
AES Nograd Holdings B.V. Netherlands
AES NY, L.L.C. Delaware
AES NY2, L.L.C. Delaware
AES NY3, L.L.C. Delaware
AES Oasis Private Ltd. Singapore
AES Ocean Springs, Ltd. Cayman Islands
AES Oklahoma Management Co., Inc. Delaware
AES Operations Colombia Ltda. Colombia
AES OPGC Holding Mauritius
AES Orient, Inc. Delaware
AES Orissa Operations Private Limited India
AES Pacific, Inc. Delaware
AES Pak Gen (Pvt) Company Pakistan
AES Pak Gen Holdings, Inc. Pakistan
AES Pakistan (Holdings) Limited United Kingdom
AES Pakistan (Pvt) Ltd. Pakistan
AES Pakistan Holdings Mauritius
AES Pakistan Operations, Ltd. Delaware
AES Panama Energy, S.A. Panama
AES Panama Holding, Ltd. Cayman Islands
AES Parana Gas S.A. China
AES Parana Holdings, Ltd. Cayman Islands
AES Parana I Limited Partnership Cayman Islands
AES Parana IHC, Ltd. Cayman Islands
AES Parana II Limited Partnership Cayman Islands
AES Parana SCA Partnership Argentina
AES Parana Sociedad Anonima Argentina
AES Partington Ltd. United Kingdom
AES Pasadena, Inc. Delaware
AES Peru S.R.L. Peru
AES Phoenix Ltd. Hungary
AES PJM, Inc. Delaware
AES Placerita, Incorporated Delaware
AES Power North, Inc. Delaware
AES Power, Inc. Delaware
AES Prachinburi Holdings B.V. Netherlands
AES Prescott, L.L.C. Delaware
AES Puerto Rico, Inc. Delaware
AES Puerto Rico, L.P. Delaware
AES Pumped Storage Arkansas, L.L.C. Delaware
AES Red Oak, Inc. Delaware
AES Red Oak, L.L.C. Delaware
<PAGE>
AES Redondo Beach, L.L.C. Delaware
AES Rio Diamante, Inc. Delaware
AES Rio Ozama Holdings, Ltd. Cayman Islands
AES River Bend, L.L.C. Delaware
AES Riverside, Inc. Delaware
AES Rock Springs, B.V. Netherlands
AES San Nicolas, Inc. Delaware
AES Santa Ana, Ltd. Cayman Islands
AES Services, Ltd. Cayman Islands
AES Shady Point, Inc. Delaware
AES Silk Road Holdings B.V. Netherlands
AES Silk Road Ltd. United Kingdom
AES Silk Road, Inc. Delaware
AES Somerset, L.L.C. Delaware
AES South City, L.L.C. Delaware
AES Southington Holdings, Inc. Delaware
AES Southington, L.L.C. Delaware
AES Southland Funding, L.L.C. Delaware
AES Southland Holdings, L.L.C. Delaware
AES Southland, L.L.C. Delaware
AES Sul Distribuidora Gaucha de Energia S.A. Brazil
AES Sul Funding, L.L.C. Delaware
AES Summit Generation Ltd. United Kingdom
AES Sunbelt, L.L.C. Delaware
AES Suntree Power Ltd. Kazakstan
AES Taiwan, Inc. Delaware
AES Tau Power B.V. Netherlands
AES Termosul Empreendimentos Ltda. Brazil
AES Terneuzen Cogen B.V. Netherlands
AES Terneuzen Engineering B.V. Netherlands
AES Terneuzen Management Services B.V Netherlands
AES Thames, Inc. Delaware
AES Tisza Holdings B.V. Netherlands
AES Trading Limited Cayman Islands
AES Transgas Empreendimentos Ltda. Brazil
AES Transpower - Taiwan Taiwan
AES Transpower Australia Pty Ltd. Australia
AES Transpower Private Ltd. Singapore
AES Transpower, Inc. Mauritius
AES Transpower, Inc. (DE) Delaware
AES Treasure Cove, Ltd. Cayman Islands
AES Trust I Delaware
AES Trust II Delaware
AES Trust III Delaware
AES Trust IV Delaware
AES Trust V Delaware
<PAGE>
AES Turbine Equipment, Inc. Delaware
AES Turkish Holdings B.V. Netherlands
AES Tyneside Ltd. United Kingdom
AES U&K Holdings B.V. Netherlands
AES UK Holdings, Ltd. United Kingdom
AES Uruguaiana Empreedimentos Ltda. Brazil
AES Uruguaiana, Inc. Cayman Islands
AES Venezuela Holdings, B.V. Netherlands
AES Venezuela, C.A. Venezuela
AES Victoria Holdings B.V. Netherlands
AES Victoria Partners B.V. Netherlands
AES Warrior Run Funding, L.L.C. Delaware
AES Warrior Run, Inc. Delaware
AES Western Australia Holdings B.V. Netherlands
AES Western Maryland Management Co., Inc. Delaware
AES Westover, L.L.C. Delaware
AES White Cliffs B.V. Netherlands
AES WR Limited Partnership Delaware
AES Yucatan, S. de R.L. de C.V. Mexico
AES ZEG Holdings B.V. Netherlands
AES Zemplen Ltd. Hungary
AES-CLESA Services Limitada San Salvador
AES-ST Ekibastuz, LLP Kazakstan
AES-TB Power Company Limited Cayman Islands
AES/Sonat Adelanto, Inc. Delaware
AES/Sonat Power, L.L.C. Virginia
AESE SRL Italy
AESEBA S.A. Argentina
Altoona Cogeneration Partners, L.P. Pennsylvania
Anhui Liyuan - AES Power Co., Ltd. China
Belfast West Power Limited Northern Ireland
Blank Inc Venezuela
Blue Mountain Power LP Pennsylvania
Blue Mountain Power, Inc. Delaware
Borsod Energetikia, Kft. Hungary
BV Partners Delaware
Camille, Ltd. Cayman Islands
Cavanal Minerals, Inc. Delaware
Cayman Energy Traders Cayman Islands
Central Dique, S.A. Argentina
Central Termica San Nicolas S.A. Argentina
Chengdu AES Kaihua Gas Turbine Power Co. Ltd. China
Chiahui Power Corporation Taiwan
Chongqing Nanchuan Aixi Power Company Limited China
Cloghan Limited Northern Ireland
Cloghan Point Holdings Limited Northern Ireland
<PAGE>
CMS Generation San Nicolas Company Michigan
Coal Creek Minerals, Inc. Delaware
Compagnia Energetica de Minas Gerais Brazil
Companhia Centro-Oeste de Distribuicao de Energia Eletrica Brazil
Compania de Inversiones en Electricidad, S.A. Argentina
DEMEX, Inc. Delaware
DEMSA, Inc. Delaware
DOC Dominicana, S.A. Dominican Republic
DOC Guatemala S.A. Guatemala
Dominican Power Metering, Ltd. Cayman Islands
Dominican Power Partners LDC Cayman Islands
Eden Village Produce Limited Northern Ireland
Elsta BV Netherlands
Elsta BV & Co. CV Netherlands
Emerald Power Holdings C.V. Netherlands
Empresa Distribuidora de Energia Norte S.A. Argentina
Empresa Distribuidora de Energia Sur S.A. Argentina
Empresa Distribuidora La Plata, S.A. Argentina
Global Power Holdings CV Netherlands
Hefei Zhongli Energy Co. Ltd. China
Hidroelectrica Rio Juramento S.A. Argentina
Hidrotermica San Juan S.A. Argentina
Hispaniola Power Ventures, Ltd. Cayman Islands
Hunan Xiangci - AES Hydro Power Company Ltd. China
Inversora AES Americas S.A. Argentina
Inversora de San Nicolas S.A. Argentina
Ir. G. Passchier Management B.V. Netherlands
Jiaozuo AES Wan Fang Power Company Limited China
JSC Telasi Republic of Georgia
Kilroot Electric Limited Cayman Islands
Kilroot Power Limited Northern Ireland
Kingston CoGen Limited Partnership Canada
La Plata Holdings Delaware
La Plata Holdings, Inc. Delaware
La Plata I Empreendimentos Ltda. Brazil
La Plata I, Inc. Delaware
La Plata II Empreendimentos Ltda. Brazil
La Plata II, Inc. Delaware
La Plata III, Inc. Delaware
La Plata IV, L.L.C. Delaware
Light Servicos de Eletricidade S.A. Brazil
LIGHT.COM, Inc. Delaware
LIGHT.COM, L.L.C. Delaware
Loy Yang Energy Pty Ltd. Australia
Loy Yang Finance Corporation Pty Ltd Australia
Loy Yang Management Pty Limited Australia
<PAGE>
Luz del Plata S.A. Argentina
Medway Power Limited United Kingdom
Merco Intercon, Ltda. Brazil
Midwest Energy, Inc. Illinois
Mountain Minerals, Inc. Delaware
myLIGHT.COM, Inc. Delaware
myLIGHT.COM, L.L.C. Delaware
NIGEN Limited Northern Ireland
Nogradszen Kft Hungary
Northern/AES Energy, LLC Minnesota
Placerita Oil Co., Inc. Delaware
San Francisco Energy Company, L.P. Delaware
Shazia S.R.L. Argentina
Southern Electric Brazil Participacoes, Ltda. Brazil
Terneuzen Cogen B.V. Netherlands
The AES Corporation Delaware
Tisza Eromu Rt. Hungary
Twin Rivers Power, Inc. Delaware
UK Asset Management Services, Ltd. United Kingdom
UK Energy Holdings Limited United Kingdom
Wildwood Funding, Ltd. Cayman Islands
Wildwood II, Ltd. Cayman Islands
Wuhu Shaoda Electric Power Development Co. Ltd. China
Wuxi AES CAREC Gas Turbine Power Company Limited China
Wuxi AES Zhong Hang Power Company Limited China
Yangcheng International Power Generating Co. Ltd. China
Yangchun Fuyang Diesel Engine Power Co. Ltd. China
Zarnowicka Elektrownia Gazowa Sp.zo.o. Poland
</TABLE>
<TABLE>
<CAPTION>
Exhibit K-3
GENERATING PLANTS IN OPERATION
AES
Capacity AES Equity Regulatory
Company Country (MW) Interest (%) (MW) Status
- ------- ------- ---- ----------- ------ ------
<S> <C> <C> <C> <C> <C>
AES Deepwater USA 143 100.00 143.00 QF
AES Beaver Valley USA 125 80.00 100.00 QF
AES Placerita USA 120 100.00 120.00 QF
AES Thames USA 181 100.00 181.00 QF
AES Shady Point USA 320 100.00 320.00 QF
AES Hawaii USA 180 100.00 180.00 QF
NGE Generation (6 plants) USA 1,424 100.00 1,424.00 EWG
AES Alamitos USA 2,083 100.00 2,083.00 EWG
AES Redondo Beach USA 1,310 100.00 1,310.00 EWG
AES Huntington Beach USA 563 100.00 563.00 EWG
AES Kingston Canada 110 50.00 55.00 EWG
AES San Nicolas Argentina 650 69.00 448.50 EWG
AES Cabra Corral Argentina 102 98.00 99.96 FUCO
AES El Tunal Argentina 10 98.00 9.80 FUCO
AES Sarmiento Argentina 33 98.00 32.34 FUCO
AES Ullum Argentina 45 98.00 44.10 FUCO
AES Quebrada Argentina 45 100.00 45.00 FUCO
Fontes Nova - Light Brazil 144 13.75 19.80 FUCO
Ilha dos Pombos - Light Brazil 164 13.75 22.55 FUCO
Nilo Pecanha - Light Brazil 380 13.75 52.25 FUCO
Pereira Passos - Light Brazil 100 13.75 13.75 FUCO
CEMIG (37 plants) Brazil 5,668 20.96* 1,188.14 FUCO
EGE Bayano Panama 192 49.00 94.08 FUCO
EGE Chiriqui Panama 90 49.00 44.10 FUCO
AES Los Mina Dom. Rep. 210 100.00 210.00 EWG
ECOGEN (2 plants) Australia 966 100.00 966.00 FUCO
AES Mt. Stuart Australia 288 100.00 288.00 FUCO
AES Xiangci - Cili China 26 51.00 13.26 FUCO
AES Wuxi China 63 55.00 34.65 FUCO
Wuhu China 250 25.00 62.50 FUCO
Yangchun China 15 25.00 3.75 FUCO
Chengdu Lotus City China 48 35.00 16.80 FUCO
AES Jiaozou China 250 70.00 175.00 FUCO
AES Hefei China 115 70.00 80.50 FUCO
AES Fuling Aixi China 50 70.00 35.00 FUCO
AES Ekibastuz Kazakhstan 4,000 70.00 2,800.00 FUCO
AES Ust-Kamenogorsk GES Kazakhstan 332 85.00 282.20 FUCO
AES Shulbinsk GES Kazakhstan 702 85.00 596.70 FUCO
AES Ust-Kamenogorsk TETS Kazakhstan 240 85.00 204.00 FUCO
AES Leninogorsk TETS Kazakhstan 50 85.00 42.50 FUCO
AES Sogrinsk TETS Kazakhstan 50 85.00 42.50 FUCO
<PAGE>
AES
Capacity AES Equity Regulatory
Company Country (MW) Interest (%) (MW) Status
- ------- ------- ---- ----------- ------ ------
AES Semipalatinsk TETS Kazakhstan 10 85.00 8.50 FUCO
OPGC India 420 49.00 205.80 FUCO
AES Lal Pir Pakistan 351 90.00 315.90 FUCO
AES Pak Gen Pakistan 344 90.00 309.60 FUCO
AES Borsod Hungary 171 96.00 164.16 FUCO
AES Tisza II Hungary 860 96.00 825.60 FUCO
AES Tiszapalkonya Hungary 250 96.00 240.00 FUCO
AES Elsta Netherlands 405 50.00 202.50 FUCO
Medway U.K. 688 25.00 172.00 FUCO
AES Indian Queens U.K. 140 100.00 140.00 EWG
Kilroot U.K. 520 47.00 244.40 FUCO
Belfast West U.K. 240 47.00 112.80 FUCO
AES Barry U.K. 230 100.00 230.00 FUCO
--- ------
TOTALS 26,466 17,617.99
Percentage of Foreign Generation 75.63% 63.54%
</TABLE>
<TABLE>
<CAPTION>
ELECTRIC DISTRIBUTION COMPANIES
Company Location AES Interest Regulatory Status
- ------- -------- ------------ -----------------
<S> <C> <C> <C>
AES EDEN Argentina Majority FUCO
AES EDES Argentina Majority FUCO
AES EDELAP Argentina Majority FUCO
AES Sul Brazil Majority FUCO
Light Servicios de Electricidade, S.A. Brazil Minority FUCO
o Electropaulo Metropolitana, S.A. Brazil Minority FUCO
Cemig, S.A. Brazil Minority FUCO
AES CLESA El Salvador Majority FUCO
AES Telasi Georgia Majority FUCO
ALTAI Kazakhstan Majority FUCO
EDE Este ** Dominican 50% FUCO
Republic
</TABLE>
* CEMIG owns 21.648% of 36 plants accounting for 5,458 MW and 3.14% of 1
plant accounting for 210 MW.
** Closing expected in June of 1999.
Exhibit K-4
[Map]
Map of the world, including national borders. The map identifies the location of
AES's generating plants (designated by purple triangles), distribution companies
(designated by red squares), projects under construction or advanced development
(designated by orange circles with orange borders) and pending acquisitions
(designated by black squares). In cases where numerous generating plants are
located in the same country or region within a country, the multiple plants may
be designated by a large purple triangle and footnoted in order to identify the
number of generating plants represented by such box.
AES has ninety-six generating plants located in the following countries:
the United States - fifteen,
Canada - one,
Panama - two,
the Dominican Republic - one,
Argentina - six,
Brazil - forty-one,
the United Kingdom - five,
the Netherlands - one,
Hungary - three,
Pakistan - two,
India - one,
Kazakhstan - seven,
China - eight,
Australia - three.
AES has eleven distribution companies located in the following countries:
Brazil - four,
Argentina - three,
El Salvador - one,
Georgia - one,
Kazakhstan - one,
Dominican Republic - one.
<PAGE>
AES also assumed management control of two distribution companies in
Kazakhstan.
AES has eighteen projects under construction or advanced development located in
the following countries:
the United States - three,
Mexico - one,
Puerto Rico - one,
Brazil - one,
Argentina - two,
the United Kingdom - two,
Hungary - one,
Poland - one,
Egypt - one,
India - one,
Sri Lanka - one,
Bangladesh - two,
China - one.
AES has one pending acquisition in the United States (CILCORP).
EXHIBIT K-5
CILCO Contributions To
AES/CILCORP Consolidated Holding Company
(GAAP Basis)
($MM)
<TABLE>
<CAPTION>
1996 1997 1998
<S> <C> <C> <C>
GROSS REVENUES* 38.47% 28.09% 18.19%
AES 835 1,411 2,398
CILCO 524 553 538
CILCORP (excluding CILCO) 3 5 21
AES/CILCORP 1,362 1,969 2,957
NET OPERATING REVENUES 34.50% 25.63% 16.06%
AES 614 973 1,809
CILCO 325 337 350
CILCORP (excluding CILCO) 3 5 21
AES/CILCORP 942 1,315 2,180
OPERATING INCOME 26.02% 22.10% 11.27%
AES 278 368 733
CILCO 96 103 93
CILCORP (excluding CILCO) (5) (5) (1)
AES/CILCORP 369 466 825
NET INCOME 27.45% 24.88% 12.54%
AES 125 185 311
CILCO 42 50 41
CILCORP (excluding CILCO) (14) (34) (25)
AES/CILCORP 153 201 327
NET ASSETS 21.11% 9.99% 8.47%
AES 3,622 8,909 10,781
CILCO 1,036 1,023 1,024
CILCORP (excluding CILCO) 250 312 289
AES/CILCORP 4,908 10,244 12,094
</TABLE>
* In calculating the gross revenues percentage, the numerator is equal to the
total gross business revenues of CILCO, which include revenues from minor
non-utility activities (nearly all of which are from service transactions
with CILCORP affiliates). The denominator is comprised of all CILCORP
business revenues (including revenues from all CILCO activities and CILCORP
non-utility activities) plus all of AES's business revenues.
Exhibit K-6
Market Share for Electric Companies in Illinois and Bordering States
(Companies Listed in Order of Customers Served)
- --------------------------------------------------------------------------------
[Vertical Bar Chart]
X-axis (bottom of chart):
Unicom Corp.
American Electric Power Co., Inc.
Ameren Corp.
Northern States Power Co.
Cinergy Corp.
Wisconsin Energy Corp.
Alliant Energy Corp.
MidAmerican Energy Holdings Co.
Illinova Corp.
KU Energy Corp.
Kansas City Power & Light Co.
IPALCO Enterprises, Inc.
NIPSCO Industries, Inc.
WPS Resources Corp.
UtiliCorp United, Inc.
LG&E Energy Corp.
Cilcorp, Inc.
Empire District Electric Co.
Everyone else
Y-axis (left side of chart): Market Share Percentages (listed in increments of 5
percent between and including 0 and 25 percent)
[Bar Chart lists market shares for electric companies in Illinois and Bordering
States in terms of assets, revenues and number of customers. The companies are
listed in the order of customers served as provided below. Assets, revenues and
customers are represented by green, violet and red bars, respectively.]
<TABLE>
<CAPTION>
Market Share for Electric Companies in Illinois and Bordering States
Companies Sorted by Revenue
Holding Company Revenue Rank Share of Cumulative Share
(millions of $) Total
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Unicom Corp. 7,176 1 19.7% 19.7%
American Electric Power Co., Inc. 6,979 2 19.2% 38.9%
Cinergy Corp. 4,059 3 11.2% 50.0%
Ameren Corp. 2,889 4 7.9% 58.0%
Northern States Power Co. 2,483 5 6.8% 64.8%
Alliant Energy Corp. 1,524 6 4.2% 69.0%
Illinova Corp. 1,420 7 3.9% 72.9%
Wisconsin Energy Corp. 1,412 8 3.9% 76.8%
MidAmerican Energy Holdings Co. 1,126 9 3.1% 79.9%
NIPSCO Industries, Inc. 1,017 10 2.8% 82.7%
Kansas City Power & Light Co. 896 11 2.5% 85.1%
IPALCO Enterprises, Inc. 738 12 2.0% 87.1%
KU Energy Corp. 716 13 2.0% 89.1%
LG&E Energy Corp. 615 14 1.7% 90.8%
UtiliCorp United, Inc. 557 15 1.5% 92.3%
Minnesota Power, Inc. 491 16 1.3% 93.7%
WPS Resources Corp. 479 17 1.3% 95.0%
Ohio Valley Electric Corp. 450 18 1.2% 96.2%
Cilcorp, Inc. 338 19 0.9% 97.2%
SIGCORP, Inc. 273 20 0.7% 97.9%
Electric Energy, Inc. 232 21 0.6% 98.5%
Empire District Electric Co. 214 22 0.6% 99.1%
Madison Gas & Electric Co. 163 23 0.4% 99.6%
St. Joseph Light & Power Co. 87 24 0.2% 99.8%
Consolidated Water Power Co. 37 25 0.1% 99.9%
Northwestern Wisconsin Electric Co. 10 26 0.0% 100.0%
Mount Carmel Public Utility Co. 9 27 0.0% 100.0%
Wisconsin River Power Co. 5 28 0.0% 100.0%
North Central Power Co., Inc. 2 29 0.0% 100.0%
Pioneer Power & Light Co. 2 30 0.0% 100.0%
Total 36,401
</TABLE>
<TABLE>
<CAPTION>
Market Share for Electric Companies in Illinois and Bordering States
Companies Sorted by Assets
Holding Company Assets Rank Share of Cumulative Share
(millions of $) Total
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Unicom Corp. 26,322 1 23.0% 23.0%
American Electric Power Co., Inc. 17,993 2 15.7% 38.7%
Ameren Corp. 10,446 3 9.1% 47.8%
Cinergy Corp. 8,951 4 7.8% 55.7%
Northern States Power Co. 6,866 5 6.0% 61.7%
Illinova Corp. 6,465 6 5.6% 67.3%
Wisconsin Energy Corp. 4,969 7 4.3% 71.6%
Alliant Energy Corp. 4,682 8 4.1% 75.7%
NIPSCO Industries, Inc. 3,911 9 3.4% 79.1%
MidAmerican Energy Holdings Co. 3,876 10 3.4% 82.5%
Kansas City Power & Light Co. 3,497 11 3.1% 85.6%
IPALCO Enterprises, Inc. 2,695 12 2.4% 87.9%
KU Energy Corp. 2,553 13 2.2% 90.2%
LG&E Energy Corp. 2,242 14 2.0% 92.1%
WPS Resources Corp. 1,409 15 1.2% 93.4%
UtiliCorp United, Inc. 1,403 16 1.2% 94.6%
Minnesota Power, Inc. 1,231 17 1.1% 95.7%
Cilcorp, Inc. 1,187 18 1.0% 96.7%
SIGCORP, Inc. 1,050 19 0.9% 97.6%
Empire District Electric Co. 791 20 0.7% 98.3%
Ohio Valley Electric Corp. 686 21 0.6% 98.9%
Madison Gas & Electric Co. 487 22 0.4% 99.3%
Electric Energy, Inc. 348 23 0.3% 99.6%
St. Joseph Light & Power Co. 305 24 0.3% 99.9%
Consolidated Water Power Co. 37 25 0.0% 99.9%
Northwestern Wisconsin Electric Co. 28 26 0.0% 100.0%
Wisconsin River Power Co. 26 27 0.0% 100.0%
Mount Carmel Public Utility Co. 18 28 0.0% 100.0%
North Central Power Co., Inc. 7 29 0.0% 100.0%
Pioneer Power & Light Co. 3 30 0.0% 100.0%
Total 114,483
</TABLE>
<TABLE>
<CAPTION>
Market Share for Electric Companies in Illinois and Bordering States
Companies Sorted by Number of Customers
Holding Company Customers Rank Share of Cumulative Share
(thousands) Total
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Unicom Corp. 3,420 1 19.6% 19.6%
American Electric Power Co., Inc. 2,958 2 17.0% 36.6%
Ameren Corp. 1,495 3 8.6% 45.1%
Northern States Power Co. 1,474 4 8.4% 53.6%
Cinergy Corp. 1,401 5 8.0% 61.6%
Wisconsin Energy Corp. 973 6 5.6% 67.2%
Alliant Energy Corp. 892 7 5.1% 72.3%
MidAmerican Energy Holdings Co. 644 8 3.7% 76.0%
Illinova Corp. 559 9 3.2% 79.2%
KU Energy Corp. 464 10 2.7% 81.9%
Kansas City Power & Light Co. 443 11 2.5% 84.4%
IPALCO Enterprises, Inc. 417 12 2.4% 86.8%
NIPSCO Industries, Inc. 414 13 2.4% 89.2%
WPS Resources Corp. 371 14 2.1% 91.3%
UtiliCorp United, Inc. 366 15 2.1% 93.4%
LG&E Energy Corp. 355 16 2.0% 95.4%
Cilcorp, Inc. 194 17 1.1% 96.5%
Empire District Electric Co. 141 18 0.8% 97.3%
Minnesota Power, Inc. 137 19 0.8% 98.1%
SIGCORP, Inc. 122 20 0.7% 98.8%
Madison Gas & Electric Co. 122 21 0.7% 99.5%
St. Joseph Light & Power Co. 61 22 0.4% 99.9%
Northwestern Wisconsin Electric Co. 11 23 0.1% 99.9%
Mount Carmel Public Utility Co. 6 24 0.0% 100.0%
North Central Power Co., Inc. 4 25 0.0% 100.0%
Pioneer Power & Light Co. 2 26 0.0% 100.0%
Consolidated Water Power Co. 1 27 0.0% 100.0%
Ohio Valley Electric Corp. 0 28 0.0% 100.0%
Electric Energy, Inc. 0 29 0.0% 100.0%
Wisconsin River Power Co. 0 30 0.0% 100.0%
Total 17,446
</TABLE>
Exhibit K-7
Market Share for Gas Companies in Illinois and Bordering States
(Companies Listed in Order of Customers Served)
- --------------------------------------------------------------------------------
[Vertical Bar Chart]
X-axis (bottom of chart):
Columbia Energy Group, Inc.
Nicor, Inc.
Southern Union Co.
Peoples Energy Corp.
UtiliCorp United, Inc.
NIPSCO Industries, Inc.
MidAmerican Energy Holdings Co.
Wicor, Inc.
Atmos Energy Corp.
Indiana Energy, Inc.
Cinergy Corp.
Northern States Power Co.
Illinova Corp.
Alliant Energy Corp.
Ameren Corp.
LG&E Energy Corp.
WPS Resources Corp.
Cilcorp, Inc.
Madison Gas & Electric Co.
Everyone else
Y-axis (left side of chart): Market Share Percentages (listed in increments of 2
percent between and including 0 and 20 percent)
[Bar Chart lists market shares for gas companies in Illinois and Bordering
States in terms of assets, revenues and number of customers. The companies are
listed in the order of customers served as provided below. Assets, revenues and
customers are represented by green, violet and red bars, respectively.]
<TABLE>
<CAPTION>
Market Shares for Gas Companies in Illinois and Bordering States
Companies Sorted by Revenue
Holding Company Revenue Rank Share of Cumulative Share
(millions of $) Total
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Columbia Energy Group, Inc. 2,282 1 18.6% 18.6%
Nicor, Inc. 1,731 2 14.1% 32.6%
Peoples Energy Corp. 1,238 3 10.1% 42.7%
Southern Union Co. 882 4 7.2% 49.9%
NIPSCO Industries, Inc. 772 5 6.3% 56.1%
Wicor, Inc. 537 6 4.4% 60.5%
MidAmerican Energy Holdings Co. 536 7 4.4% 64.9%
Indiana Energy, Inc. 528 8 4.3% 69.2%
Northern States Power Co. 505 9 4.1% 73.3%
Atmos Energy Corp. 502 10 4.1% 77.3%
Cinergy Corp. 496 11 4.0% 81.4%
Alliant Energy Corp. 408 12 3.3% 84.7%
Illinova Corp. 354 13 2.9% 87.6%
UtiliCorp United, Inc. 276 14 2.2% 89.8%
Ameren Corp. 250 15 2.0% 91.8%
LG&E Energy Corp. 231 16 1.9% 93.7%
Cilcorp, Inc. 219 17 1.8% 95.5%
WPS Resources Corp. 211 18 1.7% 97.2%
Madison Gas & Electric Co. 108 19 0.9% 98.1%
SIGCORP, Inc. 86 20 0.7% 98.8%
Wisconsin Fuel & Light Co. 51 21 0.4% 99.2%
Delta Natural Gas Co., Inc. 39 22 0.3% 99.5%
Minnesota Power, Inc. 14 23 0.1% 99.6%
Midwest Bottle Gas Co. 9 24 0.1% 99.7%
Illinois Gas Co. 9 25 0.1% 99.8%
St. Joseph Light & Power Co. 6 26 0.0% 99.8%
Consumers Gas Co. 5 27 0.0% 99.9%
Master Gas Service Co. 4 28 0.0% 99.9%
St. Croix Valley Natural Gas Co., Inc. 4 29 0.0% 99.9%
Indiana Utilities Corp. 3 30 0.0% 100.0%
Mount Carmel Public Utility Co. 3 31 0.0% 100.0%
Natural Gas, Inc. 2 32 0.0% 100.0%
Fidelity Natural Gas, Inc. 1 33 0.0% 100.0%
Total 12,299
</TABLE>
<TABLE>
<CAPTION>
Market Shares for Gas Companies in Illinois and Bordering States
Companies Sorted by Assets
Holding Company Assets Rank Share of Cumulative Share
(millions of $) Total
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Nicor, Inc. 2,956 1 15.8% 15.8%
Columbia Energy Group, Inc. 2,424 2 13.0% 28.8%
Peoples Energy Corp. 2,083 3 11.2% 40.0%
Southern Union Co. 1,518 4 8.1% 48.1%
NIPSCO Industries, Inc. 1,230 5 6.6% 54.7%
UtiliCorp United, Inc. 954 6 5.1% 59.8%
Indiana Energy, Inc. 847 7 4.5% 64.4%
Wicor, Inc. 787 8 4.2% 68.6%
MidAmerican Energy Holdings Co. 769 9 4.1% 72.7%
Cinergy Corp. 739 10 4.0% 76.6%
Atmos Energy Corp. 684 11 3.7% 80.3%
Illinova Corp. 634 12 3.4% 83.7%
Northern States Power Co. 608 13 3.3% 87.0%
Alliant Energy Corp. 495 14 2.7% 89.6%
Ameren Corp. 447 15 2.4% 92.0%
Cilcorp, Inc. 383 16 2.1% 94.1%
LG&E Energy Corp. 335 17 1.8% 95.9%
WPS Resources Corp. 231 18 1.2% 97.1%
Madison Gas & Electric Co. 167 19 0.9% 98.0%
SIGCORP, Inc. 134 20 0.7% 98.7%
Delta Natural Gas Co., Inc. 106 21 0.6% 99.3%
Wisconsin Fuel & Light Co. 57 22 0.3% 99.6%
Midwest Bottle Gas Co. 15 23 0.1% 99.7%
Minnesota Power, Inc. 14 24 0.1% 99.7%
Illinois Gas Co. 12 25 0.1% 99.8%
St. Joseph Light & Power Co. 7 26 0.0% 99.8%
Consumers Gas Co. 6 27 0.0% 99.9%
Fidelity Natural Gas, Inc. 5 28 0.0% 99.9%
Master Gas Service Co. 5 29 0.0% 99.9%
Indiana Utilities Corp. 4 30 0.0% 99.9%
Mount Carmel Public Utility Co. 4 31 0.0% 100.0%
St. Croix Valley Natural Gas Co., Inc. 4 32 0.0% 100.0%
Natural Gas, Inc. 2 33 0.0% 100.0%
Total 18,665
</TABLE>
<TABLE>
<CAPTION>
Market Shares for Gas Companies in Illinois and Bordering States
Companies Sorted by Number of Customers
Holding Company Customers Rank Share of Cumulative Share
(thousands) Total
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Columbia Energy Group, Inc. 1,940 1 15.7% 15.7%
Nicor, Inc. 1,848 2 15.0% 30.7%
Southern Union Co. 988 3 8.0% 38.7%
Peoples Energy Corp. 963 4 7.8% 46.5%
UtiliCorp United, Inc. 786 5 6.4% 52.9%
NIPSCO Industries, Inc. 688 6 5.6% 58.5%
MidAmerican Energy Holdings Co. 612 7 5.0% 63.4%
Wicor, Inc. 513 8 4.2% 67.6%
Atmos Energy Corp. 501 9 4.1% 71.7%
Indiana Energy, Inc. 477 10 3.9% 75.5%
Cinergy Corp. 453 11 3.7% 79.2%
Northern States Power Co. 443 12 3.6% 82.8%
Illinova Corp. 394 13 3.2% 86.0%
Alliant Energy Corp. 380 14 3.1% 89.1%
Ameren Corp. 294 15 2.4% 91.4%
LG&E Energy Corp. 281 16 2.3% 93.7%
WPS Resources Corp. 218 17 1.8% 95.5%
Cilcorp, Inc. 200 18 1.6% 97.1%
Madison Gas & Electric Co. 106 19 0.9% 98.0%
SIGCORP, Inc. 106 20 0.9% 98.8%
Wisconsin Fuel & Light Co. 48 21 0.4% 99.2%
Delta Natural Gas Co., Inc. 37 22 0.3% 99.5%
Minnesota Power, Inc. 11 23 0.1% 99.6%
Illinois Gas Co. 10 24 0.1% 99.7%
Midwest Bottle Gas Co. 10 25 0.1% 99.8%
St. Joseph Light & Power Co. 6 26 0.1% 99.8%
Consumers Gas Co. 6 27 0.0% 99.9%
St. Croix Valley Natural Gas Co., Inc. 5 28 0.0% 99.9%
Master Gas Service Co. 4 29 0.0% 99.9%
Mount Carmel Public Utility Co. 4 30 0.0% 100.0%
Indiana Utilities Corp. 2 31 0.0% 100.0%
Natural Gas, Inc. 2 32 0.0% 100.0%
Total 12,335
</TABLE>
Exhibit K-8
Market Share for Combined Gas and Electric Companies in Illinois
and Bordering States
(Companies Listed in Order of Customers Served)
- --------------------------------------------------------------------------------
[Vertical Bar Chart]
X-axis (bottom of chart):
Northern States Power Co.
Cinergy Co.
Ameren Corp.
Alliant Energy Corp.
MidAmerican Energy Holdings Co.
UtiliCorp United, Inc.
NIPSCO Industries, Inc.
Illinova Corp.
LG&E Energy Corp.
WPS Resources Corp.
Cilcorp, Inc.
Madison Gas & Electric Co.
SIGCORP, Inc.
Minnesota Power, Inc.
St. Joseph Light & Power Co.
Mount Carmel Public Utility Co.
Y-axis (left side of chart): Market Share Percentages (listed in increments of 5
percent between and including 0 and 25 percent)
[Bar Chart lists market shares for combined gas and electric companies in
Illinois and Bordering States in terms of assets, revenues and number of
customers. The companies are listed in the order of customers served as provided
below. Assets, revenues and customers are represented by green, violet and red
bars, respectively.]
<TABLE>
<CAPTION>
Market Share for Combined Gas and Electric Companies in Illinois and Bordering States
Companies Sorted by Revenue
Holding Company Revenue Rank Share of Total Cumulative Share
(millions of $)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cinergy Corp. 4,555 1 20.7% 20.7%
Ameren Corp. 3,139 2 14.3% 35.0%
Northern States Power Co. 2,988 3 13.6% 48.5%
Alliant Energy Corp. 1,932 4 8.8% 57.3%
NIPSCO Industries, Inc. 1,789 5 8.1% 65.5%
Illinova Corp. 1,774 6 8.1% 73.5%
MidAmerican Energy Holdings Co. 1,663 7 7.6% 81.1%
LG&E Energy Corp. 846 8 3.8% 84.9%
UtiliCorp United, Inc. 833 9 3.8% 88.7%
WPS Resources Corp. 690 10 3.1% 91.8%
Cilcorp, Inc. 557 11 2.5% 94.4%
Minnesota Power, Inc. 505 12 2.3% 96.7%
SIGCORP, Inc. 358 13 1.6% 98.3%
Madison Gas & Electric Co. 271 14 1.2% 99.5%
St. Joseph Light & Power Co. 93 15 0.4% 99.9%
Mount Carmel Public Utility Co. 12 16 0.1% 100.0%
Total 22,004
</TABLE>
<TABLE>
<CAPTION>
Market Share for Combined Gas and Electric Companies in Illinois and Bordering States
Companies Sorted by Assets
Holding Company Assets Rank Share of Total Cumulative Share
(millions of $)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ameren Corp. 10,893 1 17.7% 17.7%
Cinergy Corp. 9,690 2 15.7% 33.4%
Northern States Power Co. 7,474 3 12.1% 45.5%
Illinova Corp. 7,099 4 11.5% 57.0%
Alliant Energy Corp. 5,177 5 8.4% 65.4%
NIPSCO Industries, Inc. 5,141 6 8.3% 73.7%
MidAmerican Energy Holdings Co. 4,645 7 7.5% 81.3%
LG&E Energy Corp. 2,578 8 4.2% 85.4%
UtiliCorp United, Inc. 2,357 9 3.8% 89.3%
WPS Resources Corp. 1,640 10 2.7% 91.9%
Cilcorp, Inc. 1,570 11 2.5% 94.5%
Minnesota Power, Inc. 1,245 12 2.0% 96.5%
SIGCORP, Inc. 1,184 13 1.9% 98.4%
Madison Gas & Electric Co. 654 14 1.1% 99.5%
St. Joseph Light & Power Co. 311 15 0.5% 100.0%
Mount Carmel Public Utility Co. 22 16 0.0% 100.0%
Total 61,680
</TABLE>
<TABLE>
<CAPTION>
Market Share for Combined Gas and Electric Companies in Illinois and Bordering States
Companies Sorted by Number of Customers
Holding Company Customers Rank Share of Total Cumulative Share
(thousands)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Northern States Power Co. 1,917 1 14.1% 14.1%
Cinergy Corp. 1,853 2 13.6% 27.7%
Ameren Corp. 1,789 3 13.2% 40.9%
Alliant Energy Corp. 1,271 4 9.4% 50.2%
MidAmerican Energy Holdings Co. 1,256 5 9.2% 59.5%
UtiliCorp United, Inc. 1,152 6 8.5% 68.0%
NIPSCO Industries, Inc. 1,102 7 8.1% 76.1%
Illinova Corp. 953 8 7.0% 83.1%
LG&E Energy Corp. 636 9 4.7% 87.8%
WPS Resources Corp. 589 10 4.3% 92.1%
Cilcorp, Inc. 395 11 2.9% 95.0%
Madison Gas & Electric Co. 228 12 1.7% 96.7%
SIGCORP, Inc. 228 13 1.7% 98.3%
Minnesota Power, Inc. 148 14 1.1% 99.4%
St. Joseph Light & Power Co. 68 15 0.5% 99.9%
Mount Carmel Public Utility Co. 9 16 0.1% 100.0%
Total 13,594
</TABLE>
Exhibit K-9
Market Share for Utilities in Illinois and Bordering States
(Companies Listed in Order of Customers Served)
- -------------------------------------------------------------------------------
[Vertical Bar Chart]
X-axis (bottom of chart):
Unicom Corp.
American Electric Power Co., Inc.
Columbia Energy Group, Inc.
Northern States Power Co.
Cinergy Corp.
Nicor, Inc.
Ameren Corp.
Alliant Energy Corp.
MidAmerican Energy Holdings Co.
UtiliCorp United, Inc.
NIPSCO Industries, Inc.
Southern Union Co.
Wisconsin Energy Corp.
Peoples Energy Corp.
Illinova Corp.
LG&E Energy Corp.
WPS Resources Corp.
Wicor, Inc.
Atmos Energy Corp.
Indiana Energy, Inc.
KU Energy Corp.
Kansas City Power & Light Co.
IPALCO Enterprises, Inc.
Cilcorp, Inc.
Madison Gas & Electric Co.
Everyone else
Y-axis (left side of chart): Market Share Percentages (listed in increments of 5
percent between and including 0 and 25 percent)
[Bar Chart lists market shares for utilities in Illinois and Bordering States in
terms of assets, revenues and number of customers. The companies are listed in
the order of customers served as provided below. Assets, revenues and customers
are represented by green, violet and red bars, respectively.]
<TABLE>
<CAPTION>
Market Share for Utilities in Illinois and Bordering States
Companies sorted by Revenue
Holding Company Revenue Rank Share of Cumulative Share
(millions of $) Total
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Unicom Corp. 7,176 1 14.7% 14.7%
American Electric Power Co., Inc. 6,979 2 14.3% 29.1%
Cinergy Corp. 4,555 3 9.4% 38.4%
Ameren Corp. 3,139 4 6.4% 44.9%
Northern States Power Co. 2,988 5 6.1% 51.0%
Columbia Energy Group, Inc. 2,282 6 4.7% 55.7%
Alliant Energy Corp. 1,932 7 4.0% 59.6%
NIPSCO Industries, Inc. 1,789 8 3.7% 63.3%
Illinova Corp. 1,774 9 3.6% 66.9%
Nicor, Inc. 1,731 10 3.6% 70.5%
MidAmerican Energy Holdings Co. 1,663 11 3.4% 73.9%
Wisconsin Energy Corp. 1,412 12 2.9% 76.8%
Peoples Energy Corp. 1,238 13 2.5% 79.4%
Kansas City Power & Light Co. 896 14 1.8% 81.2%
Southern Union Co. 882 15 1.8% 83.0%
LG&E Energy Corp. 846 16 1.7% 84.7%
UtiliCorp United, Inc. 833 17 1.7% 86.4%
IPALCO Enterprises, Inc. 738 18 1.5% 88.0%
KU Energy Corp. 716 19 1.5% 89.4%
WPS Resources Corp. 690 20 1.4% 90.9%
Cilcorp, Inc. 557 21 1.1% 92.0%
Wicor, Inc. 537 22 1.1% 93.1%
Indiana Energy, Inc. 528 23 1.1% 94.2%
Minnesota Power, Inc. 505 24 1.0% 95.2%
Atmos Energy Corp. 502 25 1.0% 96.2%
Ohio Valley Electric Corp. 450 26 0.9% 97.2%
SIGCORP, Inc. 358 27 0.7% 97.9%
Madison Gas & Electric Co. 271 28 0.6% 98.5%
Electric Energy, Inc. 232 29 0.5% 98.9%
Empire District Electric Co. 214 30 0.4% 99.4%
St. Joseph Light & Power Co. 93 31 0.2% 99.6%
Wisconsin Fuel & Light Co. 51 32 0.1% 99.7%
Delta Natural Gas Co., Inc. 39 33 0.1% 99.8%
Consolidated Water Power Co. 37 34 0.1% 99.8%
Mount Carmel Public Utility Co. 15 35 0.0% 99.9%
Midwest Energy, Inc. 12 36 0.0% 99.9%
Northwestern Wisconsin Electric Co. 10 37 0.0% 99.9%
Midwest Bottle Gas Co. 9 38 0.0% 99.9%
Illinois Gas Co. 9 39 0.0% 99.9%
Wisconsin River Power Co. 5 40 0.0% 100.0%
Consumers Gas Co. 5 41 0.0% 100.0%
Master Gas Service Co. 4 42 0.0% 100.0%
St. Croix Valley Natural Gas Co., Inc. 4 43 0.0% 100.0%
Indiana Utilities Corp. 3 44 0.0% 100.0%
Natural Gas, Inc. 2 45 0.0% 100.0%
North Central Power Co., Inc. 2 46 0.0% 100.0%
Pioneer Power & Light Co. 2 47 0.0% 100.0%
Fidelity Natural Gas, Inc. 1 48 0.0% 100.0%
Total 48,714
</TABLE>
<TABLE>
<CAPTION>
Market Share for Utilities in Illinois and Bordering States
Companies sorted by Assets
Holding Company Assets Rank Share of Cumulative Share
(millions of $) Total
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Unicom Corp. 26,322 1 19.8% 19.8%
American Electric Power Co., Inc. 17,993 2 13.5% 33.3%
Ameren Corp. 10,893 3 8.2% 41.5%
Cinergy Corp. 9,690 4 7.3% 48.7%
Northern States Power Co. 7,474 5 5.6% 54.3%
Illinova Corp. 7,099 6 5.3% 59.7%
Alliant Energy Corp. 5,177 7 3.9% 63.6%
NIPSCO Industries, Inc. 5,141 8 3.9% 67.4%
Wisconsin Energy Corp. 4,969 9 3.7% 71.2%
MidAmerican Energy Holdings Co. 4,645 10 3.5% 74.6%
Kansas City Power & Light Co. 3,497 11 2.6% 77.3%
Nicor, Inc. 2,956 12 2.2% 79.5%
IPALCO Enterprises, Inc. 2,695 13 2.0% 81.5%
LG&E Energy Corp. 2,578 14 1.9% 83.5%
KU Energy Corp. 2,553 15 1.9% 85.4%
Columbia Energy Group, Inc. 2,424 16 1.8% 87.2%
UtiliCorp United, Inc. 2,357 17 1.8% 89.0%
Peoples Energy Corp. 2,083 18 1.6% 90.5%
WPS Resources Corp. 1,640 19 1.2% 91.8%
Cilcorp, Inc. 1,570 20 1.2% 92.9%
Southern Union Co. 1,518 21 1.1% 94.1%
Minnesota Power, Inc. 1,245 22 0.9% 95.0%
SIGCORP, Inc. 1,184 23 0.9% 95.9%
Indiana Energy, Inc. 847 24 0.6% 96.5%
Empire District Electric Co. 791 25 0.6% 97.1%
Wicor, Inc. 787 26 0.6% 97.7%
Ohio Valley Electric Corp. 686 27 0.5% 98.2%
Atmos Energy Corp. 684 28 0.5% 98.7%
Madison Gas & Electric Co. 654 29 0.5% 99.2%
Electric Energy, Inc. 348 30 0.3% 99.5%
St. Joseph Light & Power Co. 311 31 0.2% 99.7%
Delta Natural Gas Co., Inc. 106 32 0.1% 99.8%
Wisconsin Fuel & Light Co. 57 33 0.0% 99.9%
Consolidated Water Power Co. 37 34 0.0% 99.9%
Northwestern Wisconsin Electric Co. 28 35 0.0% 99.9%
Mount Carmel Public Utility Co. 26 36 0.0% 99.9%
Wisconsin River Power Co. 26 37 0.0% 99.9%
Midwest Bottle Gas Co. 15 38 0.0% 100.0%
Illinois Gas Co. 12 39 0.0% 100.0%
Midwest Energy, Inc. 10 40 0.0% 100.0%
North Central Power Co., Inc. 7 41 0.0% 100.0%
Consumers Gas Co. 6 42 0.0% 100.0%
Fidelity Natural Gas, Inc. 5 43 0.0% 100.0%
Master Gas Service Co. 5 44 0.0% 100.0%
Indiana Utilities Corp. 4 45 0.0% 100.0%
St. Croix Valley Natural Gas Co., Inc. 4 46 0.0% 100.0%
Pioneer Power & Light Co. 3 47 0.0% 100.0%
Natural Gas, Inc. 2 48 0.0% 100.0%
Total 133,162
</TABLE>
<TABLE>
<CAPTION>
Market Share for Utilities in Illinois and Bordering States
Companies sorted by Number of Customers
Holding Company Customers Rank Share of Cumulative Share
(thousands) Total
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Unicom Corp. 3,420 1 11.5% 11.5%
American Electric Power Co., Inc. 2,958 2 9.9% 21.4%
Columbia Energy Group, Inc. 1,940 3 6.5% 27.9%
Northern States Power Co. 1,917 4 6.4% 34.4%
Cinergy Corp. 1,853 5 6.2% 40.6%
Nicor, Inc. 1,848 6 6.2% 46.8%
Ameren Corp. 1,789 7 6.0% 52.8%
Alliant Energy Corp. 1,271 8 4.3% 57.0%
MidAmerican Energy Holdings Co. 1,256 9 4.2% 61.3%
UtiliCorp United, Inc. 1,152 10 3.9% 65.1%
NIPSCO Industries, Inc. 1,102 11 3.7% 68.8%
Southern Union Co. 988 12 3.3% 72.1%
Wisconsin Energy Corp. 973 13 3.3% 75.4%
Peoples Energy Corp. 963 14 3.2% 78.6%
Illinova Corp. 953 15 3.2% 81.8%
LG&E Energy Corp. 636 16 2.1% 84.0%
WPS Resources Corp. 589 17 2.0% 85.9%
Wicor, Inc. 513 18 1.7% 87.7%
Atmos Energy Corp. 501 19 1.7% 89.3%
Indiana Energy, Inc. 477 20 1.6% 90.9%
KU Energy Corp. 464 21 1.6% 92.5%
Kansas City Power & Light Co. 443 22 1.5% 94.0%
IPALCO Enterprises, Inc. 417 23 1.4% 95.4%
Cilcorp, Inc. 395 24 1.3% 96.7%
Madison Gas & Electric Co. 228 25 0.8% 97.5%
SIGCORP, Inc. 228 26 0.8% 98.2%
Minnesota Power, Inc. 148 27 0.5% 98.7%
Empire District Electric Co. 141 28 0.5% 99.2%
St. Joseph Light & Power Co. 68 29 0.2% 99.4%
Wisconsin Fuel & Light Co. 48 30 0.2% 99.6%
Delta Natural Gas Co., Inc. 37 31 0.1% 99.7%
Mount Carmel Public Utility Co. 13 32 0.0% 99.8%
Midwest Energy, Inc. 12 33 0.0% 99.8%
Northwestern Wisconsin Electric Co. 11 34 0.0% 99.8%
Illinois Gas Co. 10 35 0.0% 99.9%
Midwest Bottle Gas Co. 10 36 0.0% 99.9%
Consumers Gas Co. 6 37 0.0% 99.9%
St. Croix Valley Natural Gas Co., Inc. 5 38 0.0% 100.0%
Master Gas Service Co. 4 39 0.0% 100.0%
North Central Power Co., Inc. 4 40 0.0% 100.0%
Indiana Utilities Corp. 2 41 0.0% 100.0%
Natural Gas, Inc. 2 42 0.0% 100.0%
Pioneer Power & Light Co. 2 43 0.0% 100.0%
Consolidated Water Power Co. 1 44 0.0% 100.0%
Ohio Valley Electric Corp. 0 45 0.0% 100.0%
Electric Energy, Inc. 0 46 0.0% 100.0%
Wisconsin River Power Co. 0 47 0.0% 100.0%
Total 29,797
</TABLE>
<TABLE>
<CAPTION>
Market Shares for Electric Companies in the U.S.
Number of Portion of Market Served
Cilcorp's Cilcorp's Larger by Cilcorp and Larger
Parameter Units Statistics Share Companies Companies
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Customers thousands 194 0.2% 75 98.1%
Assets $millions 1,187 0.2% 73 97.8%
Revenues $millions 338 0.2% 78 98.4%
</TABLE>
<TABLE>
<CAPTION>
Comparison of Cilcorp, Inc. to Large Electric Utilities
Number of Utilities Average Size
Necessary for 50% of of These Ratio of Average Large
Parameter Units U.S. Utilities Utility to Cilcorp
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Customers thousands 17 2,690 14
Assets $millions 16 18,148 15
Revenues $millions 17 5,863 17
Number of Utilities Average Size
Necessary for 80% of of These Ratio of Average Large
Parameter Units U.S. Utilities Utility to Cilcorp
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Customers thousands 38 1,906 10
Assets $millions 37 18,148 15
Revenues $millions 38 4,120 12
</TABLE>
<TABLE>
<CAPTION>
Market Shares for Electric Companies in the United States
Companies Sorted by Revenue
Holding Company Revenue Rank Share of Cumulative Share
(millions of $) Total
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Southern Company 9,076 1 4.7% 4.7%
Edison International 7,933 2 4.1% 8.8%
PG&E Corp. 7,700 3 4.0% 12.7%
Entergy Corp. 7,649 4 3.9% 16.7%
Unicom Corp. 7,176 5 3.7% 20.4%
American Electric Power Co., Inc. 6,979 6 3.6% 24.0%
Texas Utilities Co. 6,210 7 3.2% 27.2%
FPL Group, Inc. 6,132 8 3.2% 30.4%
Consolidated Edison, Inc. 5,647 9 2.9% 33.3%
FirstEnergy Corp. 5,172 10 2.7% 35.9%
Dominion Resources, Inc. 4,628 11 2.4% 38.3%
Duke Energy Corp. 4,361 12 2.2% 40.6%
Northeast Utilities 4,297 13 2.2% 42.8%
Reliant Energy, Inc. 4,251 14 2.2% 45.0%
PECO Energy Co. 4,191 15 2.2% 47.2%
Public Service Enterprise Group, Inc. 4,167 16 2.1% 49.3%
GPU, Inc. 4,096 17 2.1% 51.4%
Cinergy Corp. 4,059 18 2.1% 53.5%
New England Electric System 3,989 19 2.1% 55.6%
PacifiCorp 3,684 20 1.9% 57.5%
DTE Energy Co. 3,619 21 1.9% 59.3%
Central & South West Corp. 3,427 22 1.8% 61.1%
Niagara Mohawk Power Corp. 3,308 23 1.7% 62.8%
PP&L Resources, Inc. 3,048 24 1.6% 64.4%
Carolina Power & Light Co. 3,024 25 1.6% 65.9%
Ameren Corp. 2,889 26 1.5% 67.4%
Allegheny Energy, Inc. 2,655 27 1.4% 68.8%
CMS Energy Corp. 2,513 28 1.3% 70.1%
Northern States Power Co. 2,483 29 1.3% 71.4%
New Century Energies, Inc. 2,452 30 1.3% 72.6%
Florida Progress Corp. 2,448 31 1.3% 73.9%
Baltimore Gas & Electric Co. 2,222 32 1.1% 75.1%
Conectiv 2,083 33 1.1% 76.1%
Potomac Electric Power Co. 1,864 34 1.0% 77.1%
Energy East Corp. 1,792 35 0.9% 78.0%
Pinnacle West Capital Corp. 1,790 36 0.9% 78.9%
Sempra Energy 1,776 37 0.9% 79.9%
BEC Energy 1,769 38 0.9% 80.8%
Alliant Energy Corp. 1,524 39 0.8% 81.6%
Illinova Corp. 1,420 40 0.7% 82.3%
Enron Corp. 1,419 41 0.7% 83.0%
Wisconsin Energy Corp. 1,412 42 0.7% 83.7%
Puget Sound Energy, Inc. 1,231 43 0.6% 84.4%
Western Resources, Inc. 1,228 44 0.6% 85.0%
- ---------------------------------------------------------------------------------------------
SCANA Corp. 1,203 45 0.6% 85.6%
TECO Energy, Inc. 1,202 46 0.6% 86.3%
OGE Energy Corp. 1,192 47 0.6% 86.9%
DQE, Inc. 1,147 48 0.6% 87.5%
MidAmerican Energy Holdings Co. 1,126 49 0.6% 88.0%
NIPSCO Industries, Inc. 1,017 50 0.5% 88.6%
DPL, Inc. 1,015 51 0.5% 89.1%
CMP Group, Inc. 977 52 0.5% 89.6%
Hawaiian Electric Industries, Inc. 938 53 0.5% 90.1%
Kansas City Power & Light Co. 896 54 0.5% 90.5%
Eastern Utilities Associates 829 55 0.4% 91.0%
Commonwealth Energy System 812 56 0.4% 91.4%
Nevada Power Co. 799 57 0.4% 91.8%
Idaho Power Co. 749 58 0.4% 92.2%
IPALCO Enterprises, Inc. 738 59 0.4% 92.6%
UniSource Energy Corp. 730 60 0.4% 92.9%
Washington Water Power Co. 726 61 0.4% 93.3%
PSC of New Mexico 722 62 0.4% 93.7%
KU Energy Corp. 716 63 0.4% 94.1%
United Illuminating Co. 710 64 0.4% 94.4%
Rochester Gas & Electric Corp. 700 65 0.4% 94.8%
LG&E Energy Corp. 615 66 0.3% 95.1%
El Paso Electric Co. 594 67 0.3% 95.4%
TNP Enterprises, Inc. 581 68 0.3% 95.7%
UtiliCorp United, Inc. 557 69 0.3% 96.0%
Orange & Rockland Utilities, Inc. 554 70 0.3% 96.3%
Sierra Pacific Resources 541 71 0.3% 96.6%
Montana Power Co. 508 72 0.3% 96.8%
Minnesota Power, Inc. 491 73 0.3% 97.1%
WPS Resources Corp. 479 74 0.2% 97.3%
Cleco Corp. 456 75 0.2% 97.6%
Ohio Valley Electric Corp. 450 76 0.2% 97.8%
Central Hudson Gas & Electric Corp. 416 77 0.2% 98.0%
Central Vermont Public Service Corp. 372 78 0.2% 98.2%
Cilcorp, Inc. 338 79 0.2% 98.4%
Everyone else combined 3,141 1.6% 100.0%
Total 193,832
</TABLE>
<TABLE>
<CAPTION>
Market Shares for Electric Companies in the United States
Companies Sorted by Assets
Holding Company Assets Rank Share of Cumulative Share
(millions of $) Total
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Southern Company 30,208 1 5.3% 5.3%
Unicom Corp. 26,322 2 4.6% 9.9%
PG&E Corp. 23,988 3 4.2% 14.1%
Entergy Corp. 22,637 4 4.0% 18.1%
Texas Utilities Co. 22,328 5 3.9% 22.0%
Edison International 20,723 6 3.6% 25.6%
American Electric Power Co., Inc. 17,993 7 3.1% 28.7%
FPL Group, Inc. 16,643 8 2.9% 31.7%
Duke Energy Corp. 14,760 9 2.6% 34.2%
Dominion Resources, Inc. 14,545 10 2.5% 36.8%
FirstEnergy Corp. 14,289 11 2.5% 39.3%
DTE Energy Co. 14,123 12 2.5% 41.8%
PECO Energy Co. 13,805 13 2.4% 44.2%
Public Service Enterprise Group, Inc. 13,648 14 2.4% 46.6%
Reliant Energy, Inc. 12,614 15 2.2% 48.8%
Consolidated Edison, Inc. 11,739 16 2.1% 50.8%
PacifiCorp 11,417 17 2.0% 52.8%
Central & South West Corp. 11,314 18 2.0% 54.8%
Ameren Corp. 10,446 19 1.8% 56.6%
Carolina Power & Light Co. 10,090 20 1.8% 58.4%
PP&L Resources, Inc. 9,957 21 1.7% 60.1%
GPU, Inc. 9,896 22 1.7% 61.9%
Northeast Utilities 9,751 23 1.7% 63.6%
Cinergy Corp. 8,951 24 1.6% 65.1%
Niagara Mohawk Power Corp. 8,734 25 1.5% 66.7%
Allegheny Energy, Inc. 7,977 26 1.4% 68.1%
Pinnacle West Capital Corp. 6,923 27 1.2% 69.3%
Baltimore Gas & Electric Co. 6,908 28 1.2% 70.5%
Northern States Power Co. 6,866 29 1.2% 71.7%
New Century Energies, Inc. 6,639 30 1.2% 72.9%
Illinova Corp. 6,465 31 1.1% 74.0%
New England Electric System 6,246 32 1.1% 75.1%
Potomac Electric Power Co. 6,211 33 1.1% 76.2%
Florida Progress Corp. 6,158 34 1.1% 77.2%
CMS Energy Corp. 5,788 35 1.0% 78.3%
Conectiv 5,593 36 1.0% 79.2%
Energy East Corp. 5,160 37 0.9% 80.1%
Wisconsin Energy Corp. 4,969 38 0.9% 81.0%
Western Resources, Inc. 4,722 39 0.8% 81.8%
Alliant Energy Corp. 4,682 40 0.8% 82.7%
Sempra Energy 4,502 41 0.8% 83.4%
DQE, Inc. 4,334 42 0.8% 84.2%
BEC Energy 4,295 43 0.8% 84.9%
SCANA Corp. 4,280 44 0.7% 85.7%
- --------------------------------------------------------------------------------------------
NIPSCO Industries, Inc. 3,911 45 0.7% 86.4%
MidAmerican Energy Holdings Co. 3,876 46 0.7% 87.1%
TECO Energy, Inc. 3,626 47 0.6% 87.7%
OGE Energy Corp. 3,609 48 0.6% 88.3%
Puget Sound Energy, Inc. 3,498 49 0.6% 88.9%
Kansas City Power & Light Co. 3,497 50 0.6% 89.6%
DPL, Inc. 3,261 51 0.6% 90.1%
Enron Corp. 3,014 52 0.5% 90.7%
IPALCO Enterprises, Inc. 2,695 53 0.5% 91.1%
Idaho Power Co. 2,606 54 0.5% 91.6%
KU Energy Corp. 2,553 55 0.4% 92.0%
Rochester Gas & Electric Corp. 2,436 56 0.4% 92.5%
Nevada Power Co. 2,378 57 0.4% 92.9%
El Paso Electric Co. 2,259 58 0.4% 93.3%
LG&E Energy Corp. 2,242 59 0.4% 93.7%
UniSource Energy Corp. 2,189 60 0.4% 94.0%
Hawaiian Electric Industries, Inc. 2,084 61 0.4% 94.4%
PSC of New Mexico 1,949 62 0.3% 94.7%
United Illuminating Co. 1,819 63 0.3% 95.1%
Montana Power Co. 1,798 64 0.3% 95.4%
CMP Group, Inc. 1,689 65 0.3% 95.7%
Washington Water Power Co. 1,576 66 0.3% 95.9%
Sierra Pacific Resources 1,543 67 0.3% 96.2%
Cleco Corp. 1,446 68 0.3% 96.5%
WPS Resources Corp. 1,409 69 0.2% 96.7%
UtiliCorp United, Inc. 1,403 70 0.2% 97.0%
Minnesota Power, Inc. 1,231 71 0.2% 97.2%
TNP Enterprises, Inc. 1,225 72 0.2% 97.4%
Central Hudson Gas & Electric Corp. 1,194 73 0.2% 97.6%
Cilcorp, Inc. 1,187 74 0.2% 97.8%
Everyone else combined 12,509 2.2% 100.0%
Total 571,350
</TABLE>
<TABLE>
<CAPTION>
Market Shares for Electric Companies in the United States
Companies Sorted by Number of Customers
Holding Company Customers Rank Share of Cumulative Share
(thousands) Total
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PG&E Corp. 4,486 1 5.0% 5.0%
Edison International 4,235 2 4.7% 9.6%
Southern Company 3,683 3 4.1% 13.7%
FPL Group, Inc. 3,615 4 4.0% 17.7%
Unicom Corp. 3,420 5 3.8% 21.5%
Consolidated Edison, Inc. 3,010 6 3.3% 24.8%
American Electric Power Co., Inc. 2,958 7 3.3% 28.1%
Texas Utilities Co. 2,459 8 2.7% 30.8%
Entergy Corp. 2,447 9 2.7% 33.5%
FirstEnergy Corp. 2,151 10 2.4% 35.9%
DTE Energy Co. 2,039 11 2.3% 38.1%
GPU, Inc. 2,008 12 2.2% 40.4%
Dominion Resources, Inc. 1,977 13 2.2% 42.5%
Duke Energy Corp. 1,919 14 2.1% 44.7%
Public Service Enterprise Group, Inc. 1,897 15 2.1% 46.8%
Central & South West Corp. 1,712 16 1.9% 48.6%
Northeast Utilities 1,706 17 1.9% 50.5%
CMS Energy Corp. 1,603 18 1.8% 52.3%
Reliant Energy, Inc. 1,558 19 1.7% 54.0%
New Century Energies, Inc. 1,557 20 1.7% 55.7%
Niagara Mohawk Power Corp. 1,554 21 1.7% 57.5%
Ameren Corp. 1,495 22 1.7% 59.1%
PECO Energy Co. 1,482 23 1.6% 60.8%
Northern States Power Co. 1,474 24 1.6% 62.4%
PacifiCorp 1,421 25 1.6% 64.0%
Cinergy Corp. 1,401 26 1.5% 65.5%
Allegheny Energy, Inc. 1,395 27 1.5% 67.0%
New England Electric System 1,337 28 1.5% 68.5%
Florida Progress Corp. 1,314 29 1.5% 70.0%
PP&L Resources, Inc. 1,240 30 1.4% 71.3%
Sempra Energy 1,168 31 1.3% 72.6%
Carolina Power & Light Co. 1,138 32 1.3% 73.9%
Baltimore Gas & Electric Co. 1,109 33 1.2% 75.1%
Wisconsin Energy Corp. 973 34 1.1% 76.2%
Conectiv 926 35 1.0% 77.2%
Alliant Energy Corp. 892 36 1.0% 78.2%
Puget Sound Energy, Inc. 864 37 1.0% 79.2%
Energy East Corp. 811 38 0.9% 80.1%
Pinnacle West Capital Corp. 748 39 0.8% 80.9%
OGE Energy Corp. 687 40 0.8% 81.6%
Potomac Electric Power Co. 685 41 0.8% 82.4%
Enron Corp. 679 42 0.8% 83.1%
BEC Energy 669 43 0.7% 83.9%
MidAmerican Energy Holdings Co. 644 44 0.7% 84.6%
- ------------------------------------------------------------------------------------------
Western Resources, Inc. 614 45 0.7% 85.3%
DQE, Inc. 581 46 0.6% 85.9%
Illinova Corp. 559 47 0.6% 86.5%
CMP Group, Inc. 525 48 0.6% 87.1%
TECO Energy, Inc. 518 49 0.6% 87.7%
Nevada Power Co. 504 50 0.6% 88.2%
SCANA Corp. 499 51 0.6% 88.8%
DPL, Inc. 482 52 0.5% 89.3%
KU Energy Corp. 464 53 0.5% 89.8%
Kansas City Power & Light Co. 443 54 0.5% 90.3%
IPALCO Enterprises, Inc. 417 55 0.5% 90.8%
NIPSCO Industries, Inc. 414 56 0.5% 91.3%
Hawaiian Electric Industries, Inc. 385 57 0.4% 91.7%
WPS Resources Corp. 371 58 0.4% 92.1%
Commonwealth Energy System 367 59 0.4% 92.5%
UtiliCorp United, Inc. 366 60 0.4% 92.9%
Idaho Power Co. 357 61 0.4% 93.3%
LG&E Energy Corp. 355 62 0.4% 93.7%
PSC of New Mexico 346 63 0.4% 94.1%
Rochester Gas & Electric Corp. 343 64 0.4% 94.4%
Eastern Utilities Associates 316 65 0.3% 94.8%
UniSource Energy Corp. 314 66 0.3% 95.1%
United Illuminating Co. 312 67 0.3% 95.5%
Washington Water Power Co. 297 68 0.3% 95.8%
Sierra Pacific Resources 283 69 0.3% 96.1%
El Paso Electric Co. 282 70 0.3% 96.4%
Montana Power Co. 279 71 0.3% 96.7%
Orange & Rockland Utilities, Inc. 268 72 0.3% 97.0%
Central Hudson Gas & Electric Corp. 266 73 0.3% 97.3%
Cleco Corp. 234 74 0.3% 97.6%
TNP Enterprises, Inc. 221 75 0.2% 97.8%
Cilcorp, Inc. 194 76 0.2% 98.1%
Everyone else combined 1,758 1.9% 100.0%
Total 90,483
</TABLE>
<TABLE>
<CAPTION>
Market Shares for Gas Companies in the U.S.
Number of Portion of Market Served
Cilcorp's Cilcorp's Larger by Cilcorp and Larger
Parameter Units Statistics Share Companies Companies
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Customers thousands 200 0.4% 56 93.9%
Assets $millions 383 0.5% 54 91.3%
Revenues $millions 219 0.5% 57 92.5%
</TABLE>
<TABLE>
<CAPTION>
Comparison of Cilcorp, Inc. to Large Gas Utilities
Number of Utilities Average Size
Necessary for 50% of of These Ratio of Average Large
Parameter Units U.S. Utilities Utility to Cilcorp
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Customers thousands 12 2,075 10
Assets $millions 14 2,787 7
Revenues $millions 15 1,601 7
Number of Utilities Average Size
Necessary for 80% of of These Ratio of Average Large
Parameter Units U.S. Utilities Utility to Cilcorp
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Customers thousands 34 1,157 6
Assets $millions 38 1,642 4
Revenues $millions 39 966 4
</TABLE>
<TABLE>
<CAPTION>
Market Shares for Gas Companies in the United States
Companies Sorted by Revenue
Holding Company Revenue Rank Share of Cumulative Share
(millions of $) Total
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sempra Energy 3,196 1 6.9% 6.9%
Columbia Energy Group, Inc. 2,282 2 4.9% 11.7%
Consolidated Natural Gas Co. 2,027 3 4.3% 16.1%
Public Service Enterprise Group, Inc. 1,937 4 4.2% 20.2%
PG&E Corp. 1,892 5 4.1% 24.3%
Nicor, Inc. 1,731 6 3.7% 28.0%
Houston Industries, Inc. 1,695 7 3.6% 31.6%
MarketSpan Corp. 1,310 8 2.8% 34.4%
Peoples Energy Corp. 1,238 9 2.7% 37.1%
MCN Energy Group, Inc. 1,227 10 2.6% 39.7%
CMS Energy Corp. 1,195 11 2.6% 42.3%
AGL Resources, Inc. 1,120 12 2.4% 44.7%
Consolidated Edison, Inc. 1,096 13 2.3% 47.0%
Washington Gas Light Co. 1,079 14 2.3% 49.4%
National Fuel Gas Co. 986 15 2.1% 51.5%
Texas Utilities Co. 969 16 2.1% 53.5%
Southern Union Co. 882 17 1.9% 55.4%
Piedmont Natural Gas Co., Inc. 784 18 1.7% 57.1%
NIPSCO Industries, Inc. 772 19 1.7% 58.8%
Eastern Enterprises 756 20 1.6% 60.4%
Niagara Mohawk Power Corp. 659 21 1.4% 61.8%
New Century Energies, Inc. 637 22 1.4% 63.2%
ONEOK, Inc. 600 23 1.3% 64.5%
New Jersey Resources Corp. 574 24 1.2% 65.7%
Wicor, Inc. 537 25 1.2% 66.8%
MidAmerican Energy Holdings Co. 536 26 1.1% 68.0%
Indiana Energy, Inc. 528 27 1.1% 69.1%
Baltimore Gas & Electric Co. 522 28 1.1% 70.2%
Northern States Power Co. 505 29 1.1% 71.3%
Atmos Energy Corp. 502 30 1.1% 72.4%
Cinergy Corp. 496 31 1.1% 73.5%
NUI Corp. 455 32 1.0% 74.4%
PECO Energy Co. 451 33 1.0% 75.4%
Questar Corp. 448 34 1.0% 76.4%
Bay State Gas Co. 442 35 0.9% 77.3%
Equitable Resources, Inc. 410 36 0.9% 78.2%
Puget Sound Energy, Inc. 409 37 0.9% 79.1%
Alliant Energy Corp. 408 38 0.9% 79.9%
UGI Corp. 368 39 0.8% 80.7%
Illinova Corp. 354 40 0.8% 81.5%
NW Natural (Northwest Natural Gas Co.) 352 41 0.8% 82.2%
PSC of North Carolina, Inc. 348 42 0.7% 83.0%
Energy East Corp. 338 43 0.7% 83.7%
Rochester Gas & Electric Corp. 336 44 0.7% 84.4%
- --------------------------------------------------------------------------------------------------
Commonwealth Energy System 331 45 0.7% 85.1%
South Jersey Industries, Inc. 325 46 0.7% 85.8%
Yankee Energy System, Inc. 319 47 0.7% 86.5%
PSC of New Mexico 295 48 0.6% 87.2%
CTG Resources, Inc. 285 49 0.6% 87.8%
UtiliCorp United, Inc. 276 50 0.6% 88.4%
Southwest Gas Corp. 258 51 0.6% 88.9%
Connecticut Energy Corp. 252 52 0.5% 89.4%
Ameren Corp. 250 53 0.5% 90.0%
TECO Energy, Inc. 250 54 0.5% 90.5%
SCANA Corp. 234 55 0.5% 91.0%
SEMCO Energy, Inc. 233 56 0.5% 91.5%
LG&E Energy Corp. 231 57 0.5% 92.0%
Cilcorp, Inc. 219 58 0.5% 92.5%
Everyone else combined 3,509 7.5% 100.0%
Total 46,653
</TABLE>
<TABLE>
<CAPTION>
Market Shares for Gas Companies in the United States
Companies Sorted by Assets
Holding Company Assets Rank Share of Cumulative Share
(millions of $) Total
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sempra Energy 6,652 1 8.6% 8.6%
PG&E Corp. 5,985 2 7.7% 16.2%
Nicor, Inc. 2,956 3 3.8% 20.0%
Consolidated Natural Gas Co. 2,705 4 3.5% 23.5%
Public Service Enterprise Group, Inc. 2,697 5 3.5% 27.0%
MCN Energy Group, Inc. 2,541 6 3.3% 30.3%
Columbia Energy Group, Inc. 2,424 7 3.1% 33.4%
Peoples Energy Corp. 2,083 8 2.7% 36.1%
CMS Energy Corp. 1,926 9 2.5% 38.5%
AGL Resources, Inc. 1,885 10 2.4% 41.0%
Washington Gas Light Co. 1,832 11 2.4% 43.3%
MarketSpan Corp. 1,827 12 2.3% 45.7%
Houston Industries, Inc. 1,764 13 2.3% 47.9%
Consolidated Edison, Inc. 1,740 14 2.2% 50.2%
Texas Utilities Co. 1,677 15 2.2% 52.3%
Southern Union Co. 1,518 16 2.0% 54.3%
NIPSCO Industries, Inc. 1,230 17 1.6% 55.9%
Piedmont Natural Gas Co., Inc. 1,227 18 1.6% 57.4%
National Fuel Gas Co. 1,187 19 1.5% 59.0%
Puget Sound Energy, Inc. 1,169 20 1.5% 60.5%
Niagara Mohawk Power Corp. 1,132 21 1.5% 61.9%
NW Natural (Northwest Natural Gas Co.) 1,129 22 1.5% 63.4%
New Century Energies, Inc. 1,124 23 1.4% 64.8%
Eastern Enterprises 955 24 1.2% 66.0%
UtiliCorp United, Inc. 954 25 1.2% 67.3%
PECO Energy Co. 878 26 1.1% 68.4%
Baltimore Gas & Electric Co. 847 27 1.1% 69.5%
Indiana Energy, Inc. 847 28 1.1% 70.6%
Questar Corp. 836 29 1.1% 71.6%
ONEOK, Inc. 826 30 1.1% 72.7%
New Jersey Resources Corp. 810 31 1.0% 73.7%
Wicor, Inc. 787 32 1.0% 74.8%
MidAmerican Energy Holdings Co. 769 33 1.0% 75.7%
Southwest Gas Corp. 747 34 1.0% 76.7%
Cinergy Corp. 739 35 0.9% 77.7%
Atmos Energy Corp. 684 36 0.9% 78.5%
PSC of North Carolina, Inc. 671 37 0.9% 79.4%
UGI Corp. 638 38 0.8% 80.2%
Illinova Corp. 634 39 0.8% 81.0%
Bay State Gas Co. 622 40 0.8% 81.8%
South Jersey Industries, Inc. 616 41 0.8% 82.6%
Northern States Power Co. 608 42 0.8% 83.4%
NUI Corp. 607 43 0.8% 84.2%
Equitable Resources, Inc. 567 44 0.7% 84.9%
- --------------------------------------------------------------------------------------------------
Energy East Corp. 563 45 0.7% 85.6%
Yankee Energy System, Inc. 524 46 0.7% 86.3%
Alliant Energy Corp. 495 47 0.6% 86.9%
TECO Energy, Inc. 460 48 0.6% 87.5%
Ameren Corp. 447 49 0.6% 88.1%
PSC of New Mexico 441 50 0.6% 88.7%
Cascade Natural Gas Corp. 423 51 0.5% 89.2%
Rochester Gas & Electric Corp. 417 52 0.5% 89.8%
CTG Resources, Inc. 406 53 0.5% 90.3%
Connecticut Energy Corp. 396 54 0.5% 90.8%
Cilcorp, Inc. 383 55 0.5% 91.3%
Everyone else combined 6,780 8.7% 100.0%
Total 77,787
</TABLE>
<TABLE>
<CAPTION>
Market Shares for Gas Companies in the United States
Companies Sorted by Number of Customers
Holding Company Customers Rank Share of Cumulative Share
(thousands) Total
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sempra Energy 5,508 1 11.2% 11.2%
PG&E Corp. 3,680 2 7.5% 18.7%
Houston Industries, Inc. 2,075 3 4.2% 22.9%
Columbia Energy Group, Inc. 1,940 4 3.9% 26.9%
Nicor, Inc. 1,848 5 3.8% 30.6%
Consolidated Natural Gas Co. 1,786 6 3.6% 34.3%
Public Service Enterprise Group, Inc. 1,531 7 3.1% 37.4%
CMS Energy Corp. 1,511 8 3.1% 40.5%
AGL Resources, Inc. 1,361 9 2.8% 43.2%
Texas Utilities Co. 1,355 10 2.8% 46.0%
MCN Energy Group, Inc. 1,178 11 2.4% 48.4%
MarketSpan Corp. 1,132 12 2.3% 50.7%
Consolidated Edison, Inc. 1,033 13 2.1% 52.8%
New Century Energies, Inc. 1,006 14 2.0% 54.8%
Southern Union Co. 988 15 2.0% 56.8%
Peoples Energy Corp. 963 16 2.0% 58.8%
Washington Gas Light Co. 790 17 1.6% 60.4%
UtiliCorp United, Inc. 786 18 1.6% 62.0%
ONEOK, Inc. 744 19 1.5% 63.5%
National Fuel Gas Co. 712 20 1.4% 65.0%
NIPSCO Industries, Inc. 688 21 1.4% 66.4%
Questar Corp. 626 22 1.3% 67.6%
MidAmerican Energy Holdings Co. 612 23 1.2% 68.9%
Eastern Enterprises 570 24 1.2% 70.1%
Baltimore Gas & Electric Co. 565 25 1.2% 71.2%
Niagara Mohawk Power Corp. 526 26 1.1% 72.3%
Wicor, Inc. 513 27 1.0% 73.3%
Puget Sound Energy, Inc. 510 28 1.0% 74.4%
Atmos Energy Corp. 501 29 1.0% 75.4%
Indiana Energy, Inc. 477 30 1.0% 76.3%
Southwest Gas Corp. 468 31 1.0% 77.3%
Cinergy Corp. 453 32 0.9% 78.2%
NW Natural (Northwest Natural Gas Co.) 443 33 0.9% 79.1%
Northern States Power Co. 443 34 0.9% 80.0%
Piedmont Natural Gas Co., Inc. 440 35 0.9% 80.9%
PECO Energy Co. 405 36 0.8% 81.7%
PSC of New Mexico 401 37 0.8% 82.6%
Illinova Corp. 394 38 0.8% 83.4%
Alliant Energy Corp. 380 39 0.8% 84.1%
New Jersey Resources Corp. 367 40 0.7% 84.9%
NUI Corp. 339 41 0.7% 85.6%
PSC of North Carolina, Inc. 310 42 0.6% 86.2%
Ameren Corp. 294 43 0.6% 86.8%
LG&E Energy Corp. 281 44 0.6% 87.4%
- -------------------------------------------------------------------------------------------------
Rochester Gas & Electric Corp. 281 45 0.6% 87.9%
Citizens Utilities Co. 277 46 0.6% 88.5%
Bay State Gas Co. 270 47 0.5% 89.1%
South Jersey Industries, Inc. 260 48 0.5% 89.6%
Equitable Resources, Inc. 260 49 0.5% 90.1%
UGI Corp. 254 50 0.5% 90.6%
SCANA Corp. 249 51 0.5% 91.1%
Washington Water Power Co. 241 52 0.5% 91.6%
Energy East Corp. 240 53 0.5% 92.1%
Commonwealth Energy System 235 54 0.5% 92.6%
TECO Energy, Inc. 234 55 0.5% 93.1%
WPS Resources Corp. 218 56 0.4% 93.5%
Cilcorp, Inc. 200 57 0.4% 93.9%
Everyone else combined 2,987 6.1% 100.0%
Total 49,142
</TABLE>
<TABLE>
<CAPTION>
Market Shares for Combined Gas & Electric Companies in the U.S.
Number of Portion of Market Served
Cilcorp's Cilcorp's Larger by Cilcorp and Larger
Parameter Units Statistics Share Companies Companies
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Customers thousands 395 0.7% 26 96.0%
Assets $millions 1,570 0.7% 27 96.7%
Revenues $millions 557 0.7% 28 97.0%
</TABLE>
<TABLE>
<CAPTION>
Comparison of Cilcorp, Inc. to Large Utilities
Number of Utilities Average Size
Necessary for 50% of of These Ratio of Average Large
Parameter Units U.S. Utilities Utility to Cilcorp
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Customers thousands 6 4,665 12
Assets $millions 8 14,510 9
Revenues $millions 7 5,796 10
Number of Utilities Average Size
Necessary for 80% of of These Ratio of Average Large
Parameter Units U.S. Utilities Utility to Cilcorp
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Customers thousands 16 2,765 7
Assets $millions 17 10,339 7
Revenues $millions 16 4,021 7
</TABLE>
<TABLE>
<CAPTION>
Market Shares for Combined Gas and Electric Companies in the United States
Companies Sorted by Revenue
Holding Company Revenue Rank Share of Cumulative Share
(millions of $) Total
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PG&E Corp. 9,592 1 11.9% 11.9%
Consolidated Edison, Inc. 6,743 2 8.4% 20.3%
Public Service Enterprise Group, Inc. 6,103 3 7.6% 27.9%
Sempra Energy 4,973 4 6.2% 34.1%
PECO Energy Co. 4,642 5 5.8% 39.9%
Cinergy Corp. 4,555 6 5.7% 45.5%
Niagara Mohawk Power Corp. 3,967 7 4.9% 50.5%
CMS Energy Corp. 3,708 8 4.6% 55.1%
Ameren Corp. 3,139 9 3.9% 59.0%
New Century Energies, Inc. 3,090 10 3.8% 62.8%
Northern States Power Co. 2,988 11 3.7% 66.5%
Baltimore Gas & Electric Co. 2,743 12 3.4% 69.9%
Conectiv 2,236 13 2.8% 72.7%
Energy East Corp. 2,130 14 2.6% 75.4%
Alliant Energy Corp. 1,932 15 2.4% 77.8%
NIPSCO Industries, Inc. 1,789 16 2.2% 80.0%
Illinova Corp. 1,774 17 2.2% 82.2%
MidAmerican Energy Holdings Co. 1,663 18 2.1% 84.3%
Puget Sound Energy, Inc. 1,641 19 2.0% 86.3%
SCANA Corp. 1,436 20 1.8% 88.1%
Rochester Gas & Electric Corp. 1,037 21 1.3% 89.4%
PSC of New Mexico 1,017 22 1.3% 90.6%
Washington Water Power Co. 892 23 1.1% 91.8%
LG&E Energy Corp. 846 24 1.1% 92.8%
UtiliCorp United, Inc. 833 25 1.0% 93.8%
Orange & Rockland Utilities, Inc. 722 26 0.9% 94.7%
WPS Resources Corp. 690 27 0.9% 95.6%
Sierra Pacific Resources 611 28 0.8% 96.4%
Cilcorp, Inc. 557 29 0.7% 97.0%
Everyone else combined 2,373 3.0% 100.0%
Total 80,422
</TABLE>
<TABLE>
<CAPTION>
Market Shares for Combined Gas and Electric Companies in the United States
Companies Sorted by Assets
Holding Company Assets Rank Share of Cumulative Share
(millions of $) Total
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PG&E Corp. 29,973 1 13.6% 13.6%
Public Service Enterprise Group, Inc. 16,345 2 7.4% 21.0%
PECO Energy Co. 14,682 3 6.7% 27.6%
Consolidated Edison, Inc. 13,479 4 6.1% 33.7%
Sempra Energy 11,154 5 5.1% 38.8%
Ameren Corp. 10,893 6 4.9% 43.7%
Niagara Mohawk Power Corp. 9,865 7 4.5% 48.2%
Cinergy Corp. 9,690 8 4.4% 52.6%
New Century Energies, Inc. 7,763 9 3.5% 56.1%
Baltimore Gas & Electric Co. 7,755 10 3.5% 59.6%
CMS Energy Corp. 7,714 11 3.5% 63.1%
Northern States Power Co. 7,474 12 3.4% 66.5%
Illinova Corp. 7,099 13 3.2% 69.7%
Conectiv 5,835 14 2.6% 72.4%
Energy East Corp. 5,723 15 2.6% 75.0%
Alliant Energy Corp. 5,177 16 2.3% 77.3%
NIPSCO Industries, Inc. 5,141 17 2.3% 79.6%
Puget Sound Energy, Inc. 4,667 18 2.1% 81.8%
MidAmerican Energy Holdings Co. 4,645 19 2.1% 83.9%
SCANA Corp. 4,632 20 2.1% 86.0%
Rochester Gas & Electric Corp. 2,853 21 1.3% 87.3%
LG&E Energy Corp. 2,578 22 1.2% 88.4%
PSC of New Mexico 2,390 23 1.1% 89.5%
UtiliCorp United, Inc. 2,357 24 1.1% 90.6%
Washington Water Power Co. 1,941 25 0.9% 91.4%
Sierra Pacific Resources 1,690 26 0.8% 92.2%
WPS Resources Corp. 1,640 27 0.7% 93.0%
Cilcorp, Inc. 1,570 28 0.7% 93.7%
Everyone else combined 6,986 3.2% 100.0%
Total 220,699
</TABLE>
<TABLE>
<CAPTION>
Market Shares for Combined Gas and Electric Companies in the United States
Companies Sorted by Number of Customers
Holding Company Customers Rank Share of Cumulative Share
(thousands) Total
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PG&E Corp. 8,167 1 14.9% 14.9%
Sempra Energy 6,676 2 12.2% 27.1%
Consolidated Edison, Inc. 4,043 3 7.4% 34.4%
Public Service Enterprise Group, Inc. 3,428 4 6.2% 40.7%
CMS Energy Corp. 3,115 5 5.7% 46.4%
New Century Energies, Inc. 2,563 6 4.7% 51.0%
Niagara Mohawk Power Corp. 2,080 7 3.8% 54.8%
Northern States Power Co. 1,917 8 3.5% 58.3%
PECO Energy Co. 1,887 9 3.4% 61.8%
Cinergy Corp. 1,853 10 3.4% 65.1%
Ameren Corp. 1,789 11 3.3% 68.4%
Baltimore Gas & Electric Co. 1,674 12 3.1% 71.5%
Puget Sound Energy, Inc. 1,374 13 2.5% 74.0%
Alliant Energy Corp. 1,271 14 2.3% 76.3%
MidAmerican Energy Holdings Co. 1,256 15 2.3% 78.6%
UtiliCorp United, Inc. 1,152 16 2.1% 80.7%
NIPSCO Industries, Inc. 1,102 17 2.0% 82.7%
Energy East Corp. 1,051 18 1.9% 84.6%
Conectiv 1,028 19 1.9% 86.5%
Illinova Corp. 953 20 1.7% 88.2%
SCANA Corp. 748 21 1.4% 89.6%
PSC of New Mexico 747 22 1.4% 90.9%
LG&E Energy Corp. 636 23 1.2% 92.1%
Rochester Gas & Electric Corp. 623 24 1.1% 93.2%
WPS Resources Corp. 589 25 1.1% 94.3%
Washington Water Power Co. 538 26 1.0% 95.3%
Cilcorp, Inc. 395 27 0.7% 96.0%
Everyone else combined 2,190 4.0% 100.0%
Total 54,846
</TABLE>
<TABLE>
<CAPTION>
Market Shares for Utility Companies in the U.S.
Number of Portion of Market Served
Cilcorp's Cilcorp's Larger by Cilcorp and Larger
Parameter Units Statistics Share Companies Companies
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Customers thousands 395 0.3% 82 92.3%
Assets $millions 1,570 0.2% 77 93.8%
Revenues $millions 557 0.2% 86 93.8%
</TABLE>
<TABLE>
<CAPTION>
Comparison of Cilcorp, Inc. to Large Utilities
Number of Utilities Average Size
Necessary for 50% of of These Ratio of Average Large
Parameter Units U.S. Utilities Utility to Cilcorp
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Customers thousands 21 3,329 8
Assets $millions 18 18,213 12
Revenues $millions 20 6,061 11
Number of Utilities Average Size
Necessary for 80% of of These Ratio of Average Large
Parameter Units U.S. Utilities Utility to Cilcorp
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Customers thousands 53 2,113 5
Assets $millions 44 11,851 8
Revenues $millions 50 3,863 7
</TABLE>
<TABLE>
<CAPTION>
Market Share for Utilities in the U.S.
Companies sorted by Revenue
Holding Company Revenue Rank Share of Cumulative Share
(millions of $) Total
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PG&E Corp. 9,592 1 4.0% 4.0%
Southern Company 9,076 2 3.8% 7.8%
Edison International 7,933 3 3.3% 11.0%
Entergy Corp. 7,649 4 3.2% 14.2%
Texas Utilities Co. 7,179 5 3.0% 17.2%
Unicom Corp. 7,176 6 3.0% 20.2%
American Electric Power Co., Inc. 6,979 7 2.9% 23.1%
Consolidated Edison, Inc. 6,743 8 2.8% 25.9%
FPL Group, Inc. 6,132 9 2.5% 28.4%
Public Service Enterprise Group, Inc. 6,103 10 2.5% 31.0%
Houston Industries, Inc. 5,946 11 2.5% 33.4%
FirstEnergy Corp. 5,172 12 2.1% 35.6%
Sempra Energy 4,973 13 2.1% 37.6%
PECO Energy Co. 4,642 14 1.9% 39.6%
Dominion Resources, Inc. 4,628 15 1.9% 41.5%
Cinergy Corp. 4,555 16 1.9% 43.4%
Duke Energy Corp. 4,361 17 1.8% 45.2%
Northeast Utilities 4,297 18 1.8% 47.0%
GPU, Inc. 4,096 19 1.7% 48.7%
New England Electric System 3,989 20 1.7% 50.3%
Niagara Mohawk Power Corp. 3,967 21 1.6% 52.0%
CMS Energy Corp. 3,708 22 1.5% 53.5%
PacifiCorp 3,684 23 1.5% 55.0%
DTE Energy Co. 3,619 24 1.5% 56.5%
Central & South West Corp. 3,427 25 1.4% 58.0%
Ameren Corp. 3,139 26 1.3% 59.3%
PP&L Resources, Inc. 3,107 27 1.3% 60.6%
New Century Energies, Inc. 3,090 28 1.3% 61.8%
Carolina Power & Light Co. 3,024 29 1.3% 63.1%
Northern States Power Co. 2,988 30 1.2% 64.3%
Baltimore Gas & Electric Co. 2,743 31 1.1% 65.5%
Allegheny Energy, Inc. 2,655 32 1.1% 66.6%
Florida Progress Corp. 2,448 33 1.0% 67.6%
Columbia Energy Group, Inc. 2,282 34 0.9% 68.5%
Conectiv 2,236 35 0.9% 69.5%
Energy East Corp. 2,130 36 0.9% 70.4%
Consolidated Natural Gas Co. 2,027 37 0.8% 71.2%
Alliant Energy Corp. 1,932 38 0.8% 72.0%
Potomac Electric Power Co. 1,864 39 0.8% 72.8%
Pinnacle West Capital Corp. 1,790 40 0.7% 73.5%
NIPSCO Industries, Inc. 1,789 41 0.7% 74.3%
Illinova Corp. 1,774 42 0.7% 75.0%
BEC Energy 1,769 43 0.7% 75.7%
Nicor, Inc. 1,731 44 0.7% 76.5%
MidAmerican Energy Holdings Co. 1,663 45 0.7% 77.1%
Puget Sound Energy, Inc. 1,641 46 0.7% 77.8%
TECO Energy, Inc. 1,451 47 0.6% 78.4%
SCANA Corp. 1,436 48 0.6% 79.0%
- ---------------------------------------------------------------------------------------------
Enron Corp. 1,419 49 0.6% 79.6%
Wisconsin Energy Corp. 1,412 50 0.6% 80.2%
MarketSpan Corp. 1,310 51 0.5% 80.7%
Peoples Energy Corp. 1,238 52 0.5% 81.3%
Western Resources, Inc. 1,228 53 0.5% 81.8%
MCN Energy Group, Inc. 1,227 54 0.5% 82.3%
OGE Energy Corp. 1,192 55 0.5% 82.8%
DQE, Inc. 1,147 56 0.5% 83.2%
Commonwealth Energy System 1,144 57 0.5% 83.7%
AGL Resources, Inc. 1,120 58 0.5% 84.2%
Washington Gas Light Co. 1,079 59 0.4% 84.6%
Rochester Gas & Electric Corp. 1,037 60 0.4% 85.1%
PSC of New Mexico 1,017 61 0.4% 85.5%
DPL, Inc. 1,015 62 0.4% 85.9%
National Fuel Gas Co. 986 63 0.4% 86.3%
CMP Group, Inc. 977 64 0.4% 86.7%
Hawaiian Electric Industries, Inc. 938 65 0.4% 87.1%
Kansas City Power & Light Co. 896 66 0.4% 87.5%
Washington Water Power Co. 892 67 0.4% 87.9%
Southern Union Co. 882 68 0.4% 88.2%
LG&E Energy Corp. 846 69 0.4% 88.6%
UtiliCorp United, Inc. 833 70 0.3% 88.9%
Eastern Utilities Associates 829 71 0.3% 89.3%
Nevada Power Co. 799 72 0.3% 89.6%
Piedmont Natural Gas Co., Inc. 784 73 0.3% 89.9%
Eastern Enterprises 756 74 0.3% 90.2%
Idaho Power Co. 749 75 0.3% 90.5%
IPALCO Enterprises, Inc. 738 76 0.3% 90.8%
UniSource Energy Corp. 730 77 0.3% 91.2%
Orange & Rockland Utilities, Inc. 722 78 0.3% 91.5%
KU Energy Corp. 716 79 0.3% 91.7%
United Illuminating Co. 710 80 0.3% 92.0%
WPS Resources Corp. 690 81 0.3% 92.3%
Sierra Pacific Resources 611 82 0.3% 92.6%
ONEOK, Inc. 600 83 0.2% 92.8%
El Paso Electric Co. 594 84 0.2% 93.1%
TNP Enterprises, Inc. 581 85 0.2% 93.3%
New Jersey Resources Corp. 574 86 0.2% 93.6%
Cilcorp, Inc. 557 87 0.2% 93.8%
Everyone else combined 14,956 6.2% 100%
Total 240,866
</TABLE>
<TABLE>
<CAPTION>
Market Share for Utilities in the U.S.
Companies sorted by Assets
Holding Company Assets Rank Share of Cumulative Share
(millions of $) Total
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Southern Company 30,208 1 4.6% 4.6%
PG&E Corp. 29,973 2 4.6% 9.3%
Unicom Corp. 26,322 3 4.0% 13.3%
Texas Utilities Co. 24,004 4 3.7% 17.0%
Entergy Corp. 22,637 5 3.5% 20.5%
Edison International 20,723 6 3.2% 23.7%
American Electric Power Co., Inc. 17,993 7 2.8% 26.4%
FPL Group, Inc. 16,643 8 2.6% 29.0%
Public Service Enterprise Group, Inc. 16,345 9 2.5% 31.5%
Duke Energy Corp. 14,760 10 2.3% 33.8%
PECO Energy Co. 14,682 11 2.3% 36.0%
Dominion Resources, Inc. 14,545 12 2.2% 38.3%
Houston Industries, Inc. 14,378 13 2.2% 40.5%
FirstEnergy Corp. 14,289 14 2.2% 42.7%
DTE Energy Co. 14,123 15 2.2% 44.9%
Consolidated Edison, Inc. 13,479 16 2.1% 46.9%
PacifiCorp 11,417 17 1.8% 48.7%
Central & South West Corp. 11,314 18 1.7% 50.4%
Sempra Energy 11,154 19 1.7% 52.1%
Ameren Corp. 10,893 20 1.7% 53.8%
Carolina Power & Light Co. 10,090 21 1.6% 55.4%
PP&L Resources, Inc. 10,049 22 1.5% 56.9%
GPU, Inc. 9,896 23 1.5% 58.4%
Niagara Mohawk Power Corp. 9,865 24 1.5% 60.0%
Northeast Utilities 9,751 25 1.5% 61.5%
Cinergy Corp. 9,690 26 1.5% 63.0%
Allegheny Energy, Inc. 7,977 27 1.2% 64.2%
New Century Energies, Inc. 7,763 28 1.2% 65.4%
Baltimore Gas & Electric Co. 7,755 29 1.2% 66.6%
CMS Energy Corp. 7,714 30 1.2% 67.8%
Northern States Power Co. 7,474 31 1.1% 68.9%
Illinova Corp. 7,099 32 1.1% 70.0%
Pinnacle West Capital Corp. 6,923 33 1.1% 71.1%
New England Electric System 6,246 34 1.0% 72.0%
Potomac Electric Power Co. 6,211 35 1.0% 73.0%
Florida Progress Corp. 6,158 36 0.9% 73.9%
Conectiv 5,835 37 0.9% 74.8%
Energy East Corp. 5,723 38 0.9% 75.7%
Alliant Energy Corp. 5,177 39 0.8% 76.5%
NIPSCO Industries, Inc. 5,141 40 0.8% 77.3%
Wisconsin Energy Corp. 4,969 41 0.8% 78.1%
Western Resources, Inc. 4,722 42 0.7% 78.8%
Puget Sound Energy, Inc. 4,667 43 0.7% 79.5%
MidAmerican Energy Holdings Co. 4,645 44 0.7% 80.2%
- -------------------------------------------------------------------------------------------------------
SCANA Corp. 4,632 45 0.7% 80.9%
DQE, Inc. 4,334 46 0.7% 81.6%
BEC Energy 4,295 47 0.7% 82.3%
TECO Energy, Inc. 4,086 48 0.6% 82.9%
OGE Energy Corp. 3,609 49 0.6% 83.4%
Kansas City Power & Light Co. 3,497 50 0.5% 84.0%
DPL, Inc. 3,261 51 0.5% 84.5%
Enron Corp. 3,014 52 0.5% 84.9%
Nicor, Inc. 2,956 53 0.5% 85.4%
Rochester Gas & Electric Corp. 2,853 54 0.4% 85.8%
Consolidated Natural Gas Co. 2,705 55 0.4% 86.2%
IPALCO Enterprises, Inc. 2,695 56 0.4% 86.7%
Idaho Power Co. 2,606 57 0.4% 87.1%
LG&E Energy Corp. 2,578 58 0.4% 87.5%
KU Energy Corp. 2,553 59 0.4% 87.9%
MCN Energy Group, Inc. 2,541 60 0.4% 88.2%
Columbia Energy Group, Inc. 2,424 61 0.4% 88.6%
PSC of New Mexico 2,390 62 0.4% 89.0%
Nevada Power Co. 2,378 63 0.4% 89.4%
UtiliCorp United, Inc. 2,357 64 0.4% 89.7%
El Paso Electric Co. 2,259 65 0.3% 90.1%
UniSource Energy Corp. 2,189 66 0.3% 90.4%
Hawaiian Electric Industries, Inc. 2,084 67 0.3% 90.7%
Peoples Energy Corp. 2,083 68 0.3% 91.0%
Washington Water Power Co. 1,941 69 0.3% 91.3%
AGL Resources, Inc. 1,885 70 0.3% 91.6%
Washington Gas Light Co. 1,832 71 0.3% 91.9%
MarketSpan Corp. 1,827 72 0.3% 92.2%
United Illuminating Co. 1,819 73 0.3% 92.5%
Montana Power Co. 1,798 74 0.3% 92.7%
Sierra Pacific Resources 1,690 75 0.3% 93.0%
CMP Group, Inc. 1,689 76 0.3% 93.3%
WPS Resources Corp. 1,640 77 0.3% 93.5%
Cilcorp, Inc. 1,570 78 0.2% 93.8%
Everyone else combined 40,561 6.2% 100%
Total 650,055
</TABLE>
<TABLE>
<CAPTION>
Market Share for Utilities in the U.S.
Companies sorted by Number of Customers
Holding Company Customers Rank Share of Cumulative Share
(thousands) Total
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PG&E Corp. 8,167 1 5.8% 5.8%
Sempra Energy 6,676 2 4.8% 10.6%
Edison International 4,235 3 3.0% 13.6%
Consolidated Edison, Inc. 4,043 4 2.9% 16.5%
Texas Utilities Co. 3,814 5 2.7% 19.3%
Southern Company 3,683 6 2.6% 21.9%
Houston Industries, Inc. 3,633 7 2.6% 24.5%
FPL Group, Inc. 3,615 8 2.6% 27.1%
Public Service Enterprise Group, Inc. 3,428 9 2.4% 29.5%
Unicom Corp. 3,420 10 2.4% 32.0%
CMS Energy Corp. 3,115 11 2.2% 34.2%
American Electric Power Co., Inc. 2,958 12 2.1% 36.3%
New Century Energies, Inc. 2,563 13 1.8% 38.1%
Entergy Corp. 2,447 14 1.7% 39.9%
FirstEnergy Corp. 2,151 15 1.5% 41.4%
Niagara Mohawk Power Corp. 2,080 16 1.5% 42.9%
DTE Energy Co. 2,039 17 1.5% 44.4%
GPU, Inc. 2,008 18 1.4% 45.8%
Dominion Resources, Inc. 1,977 19 1.4% 47.2%
Columbia Energy Group, Inc. 1,940 20 1.4% 48.6%
Duke Energy Corp. 1,919 21 1.4% 50.0%
Northern States Power Co. 1,917 22 1.4% 51.3%
PECO Energy Co. 1,887 23 1.3% 52.7%
Cinergy Corp. 1,853 24 1.3% 54.0%
Nicor, Inc. 1,848 25 1.3% 55.3%
Ameren Corp. 1,789 26 1.3% 56.6%
Consolidated Natural Gas Co. 1,786 27 1.3% 57.9%
Central & South West Corp. 1,712 28 1.2% 59.1%
Northeast Utilities 1,706 29 1.2% 60.3%
Baltimore Gas & Electric Co. 1,674 30 1.2% 61.5%
PacifiCorp 1,421 31 1.0% 62.5%
Allegheny Energy, Inc. 1,395 32 1.0% 63.5%
Puget Sound Energy, Inc. 1,374 33 1.0% 64.5%
AGL Resources, Inc. 1,361 34 1.0% 65.5%
New England Electric System 1,337 35 1.0% 66.4%
Florida Progress Corp. 1,314 36 0.9% 67.4%
Alliant Energy Corp. 1,271 37 0.9% 68.3%
MidAmerican Energy Holdings Co. 1,256 38 0.9% 69.2%
PP&L Resources, Inc. 1,240 39 0.9% 70.1%
MCN Energy Group, Inc. 1,178 40 0.8% 70.9%
UtiliCorp United, Inc. 1,152 41 0.8% 71.7%
Carolina Power & Light Co. 1,138 42 0.8% 72.6%
MarketSpan Corp. 1,132 43 0.8% 73.4%
NIPSCO Industries, Inc. 1,102 44 0.8% 74.2%
Energy East Corp. 1,051 45 0.8% 74.9%
Conectiv 1,028 46 0.7% 75.6%
- ------------------------------------------------------------------------------------------------------
Southern Union Co. 988 47 0.7% 76.3%
Wisconsin Energy Corp. 973 48 0.7% 77.0%
Peoples Energy Corp. 963 49 0.7% 77.7%
Illinova Corp. 953 50 0.7% 78.4%
Washington Gas Light Co. 790 51 0.6% 79.0%
TECO Energy, Inc. 753 52 0.5% 79.5%
Pinnacle West Capital Corp. 748 53 0.5% 80.1%
SCANA Corp. 748 54 0.5% 80.6%
PSC of New Mexico 747 55 0.5% 81.1%
ONEOK, Inc. 744 56 0.5% 81.7%
National Fuel Gas Co. 712 57 0.5% 82.2%
OGE Energy Corp. 687 58 0.5% 82.7%
Potomac Electric Power Co. 685 59 0.5% 83.1%
Enron Corp. 679 60 0.5% 83.6%
BEC Energy 669 61 0.5% 84.1%
LG&E Energy Corp. 636 62 0.5% 84.6%
Questar Corp. 626 63 0.4% 85.0%
Rochester Gas & Electric Corp. 623 64 0.4% 85.5%
Western Resources, Inc. 614 65 0.4% 85.9%
Commonwealth Energy System 602 66 0.4% 86.3%
WPS Resources Corp. 589 67 0.4% 86.7%
DQE, Inc. 581 68 0.4% 87.2%
Eastern Enterprises 570 69 0.4% 87.6%
Washington Water Power Co. 538 70 0.4% 87.9%
CMP Group, Inc. 525 71 0.4% 88.3%
Wicor, Inc. 513 72 0.4% 88.7%
Nevada Power Co. 504 73 0.4% 89.1%
Atmos Energy Corp. 501 74 0.4% 89.4%
DPL, Inc. 482 75 0.3% 89.8%
Indiana Energy, Inc. 477 76 0.3% 90.1%
Southwest Gas Corp. 468 77 0.3% 90.4%
KU Energy Corp. 464 78 0.3% 90.8%
NW Natural (Northwest Natural Gas Co.) 443 79 0.3% 91.1%
Kansas City Power & Light Co. 443 80 0.3% 91.4%
Piedmont Natural Gas Co., Inc. 440 81 0.3% 91.7%
IPALCO Enterprises, Inc. 417 82 0.3% 92.0%
Cilcorp, Inc. 395 83 0.3% 92.3%
Everyone else combined 10,790 7.7% 100%
Total 139,916
</TABLE>
Exhibit K-14
Market Share for Electric Companies in Illinois
(Companies Listed in Order of Customers Served)
- -------------------------------------------------------------------------------
[Vertical Bar Chart]
X-axis (bottom of chart):
Unicom Corp.
Ameren Corp.
Illinova Corp.
Cilcorp, Inc.
Mount Carmel Public Utility Co.
Electric Energy, Inc.
Y-axis (left side of chart): Market Share Percentages (listed in increments of
10 percent between and including 0 and 70 percent)
[Bar Chart lists market shares for electric companies in Illinois in terms of
assets, revenues and number of customers. The companies are listed in the order
of customers served as provided below. Assets, revenues and customers are
represented by green, violet and red bars, respectively.]
<TABLE>
<CAPTION>
Market Share for Electric Companies in Illinois
Companies Sorted by Revenue
Holding Company Revenue Rank Share of Cumulative Share
(millions of $) Total
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Unicom Corp. 7,176 1 59.5% 59.5%
Ameren Corp. 2,889 2 23.9% 83.4%
Illinova Corp. 1,420 3 11.8% 95.2%
Cilcorp, Inc. 338 4 2.8% 98.0%
Electric Energy, Inc. 232 5 1.9% 99.9%
Mount Carmel Public Utility Co. 9 6 0.1% 100.0%
Total 12,064
</TABLE>
<TABLE>
<CAPTION>
Market Share for Electric Companies in Illinois
Companies Sorted by Assets
Holding Company Assets Rank Share of Cumulative Share
(millions of $) Total
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Unicom Corp. 26,322 1 58.8% 58.8%
Ameren Corp. 10,446 2 23.3% 82.1%
Illinova Corp. 6,465 3 14.4% 96.5%
Cilcorp, Inc. 1,187 4 2.7% 99.2%
Electric Energy, Inc. 348 5 0.8% 100.0%
Mount Carmel Public Utility Co. 18 6 0.0% 100.0%
Total 44,786
</TABLE>
<TABLE>
<CAPTION>
Market Share for Electric Companies in Illinois
Companies Sorted by Number of Customers
Holding Company Customers Rank Share of Cumulative Share
(thousands) Total
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Unicom Corp. 3,420 1 60.3% 60.3%
Ameren Corp. 1,495 2 26.3% 86.6%
Illinova Corp. 559 3 9.9% 96.5%
Cilcorp, Inc. 194 4 3.4% 99.9%
Mount Carmel Public Utility Co. 6 5 0.1% 100.0%
Electric Energy, Inc. 0 6 0.0% 100.0%
Total 5,674
</TABLE>
Market Share for Gas Companies in Illinois
(Companies Listed in Order of Customers Served)
- -------------------------------------------------------------------------------
[Vertical Bar Chart]
X-axis (bottom of chart):
Nicor, Inc.
Peoples Energy Corp.
Illinova Corp.
Ameren Corp.
Cilcorp, Inc.
Illinois Gas Co,
Mount Carmel Public Utility Co.
Y-axis (left side of chart): Market Share Percentages (listed in increments of
10 percent between and including 0 and 60 percent)
[Bar Chart lists market shares for gas companies in Illinois in terms of assets,
revenues and number of customers. The companies are listed in the order of
customers served as provided below. Assets, revenues and customers are
represented by green, violet and red bars, respectively.]
<TABLE>
<CAPTION>
Market Shares for Gas Companies in Illinois
Companies Sorted by Revenue
Holding Company Revenue Rank Share of Cumulative Share
(millions of $) Total
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Nicor, Inc. 1,731 1 45.5% 45.5%
Peoples Energy Corp. 1,238 2 32.5% 78.1%
Illinova Corp. 354 3 9.3% 87.4%
Ameren Corp. 250 4 6.6% 93.9%
Cilcorp, Inc. 219 5 5.8% 99.7%
Illinois Gas Co. 9 6 0.2% 99.9%
Mount Carmel Public Utility Co. 3 7 0.1% 100.0%
Total 3,803
</TABLE>
<TABLE>
<CAPTION>
Market Shares for Gas Companies in Illinois
Companies Sorted by Assets
Holding Company Assets Rank Share of Cumulative Share
(millions of $) Total
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Nicor, Inc. 2,956 1 45.3% 45.3%
Peoples Energy Corp. 2,083 2 32.0% 77.3%
Illinova Corp. 634 3 9.7% 87.0%
Ameren Corp. 447 4 6.9% 93.9%
Cilcorp, Inc. 383 5 5.9% 99.8%
Illinois Gas Co. 12 6 0.2% 99.9%
Mount Carmel Public Utility Co. 4 7 0.1% 100.0%
Total 6,519
</TABLE>
<TABLE>
<CAPTION>
Market Shares for Gas Companies in Illinois
Companies Sorted by Number of Customers
Holding Company Customers Rank Share of Cumulative Share
(thousands) Total
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Nicor, Inc. 1,848 1 49.8% 49.8%
Peoples Energy Corp. 963 2 25.9% 75.7%
Illinova Corp. 394 3 10.6% 86.3%
Ameren Corp. 294 4 7.9% 94.2%
Cilcorp, Inc. 200 5 5.4% 99.6%
Illinois Gas Co. 10 6 0.3% 99.9%
Mount Carmel Public Utility Co. 4 7 0.1% 100.0%
Total 3,714
</TABLE>
Exhibit K-16
Market Share for Utilities in Illinois
(Companies Listed in Order of Customers Served)
- --------------------------------------------------------------------------------
[Vertical Bar Chart]
X-axis (bottom of chart):
Unicom Corp.
Nicor, Inc.
Ameren Corp.
Peoples Energy Corp.
Illinova Corp.
Cilcorp, Inc.
Illinois Gas
Mount Carmel Public Utility Co.
Electric Energy, Inc.
Y-axis (left side of chart): Market Share Percentages (listed in increments of
10 percent between and including 0 and 60 percent)
[Bar Chart lists market shares for utilities in Illinois in terms of assets,
revenues and number of customers. The companies are listed in the order of
customers served as provided below. Assets, revenues and customers are
represented by green, violet and red bars, respectively.]
<TABLE>
<CAPTION>
Market Share for Utilities in Illinois
Companies sorted by Revenue
Holding Company Revenue Rank Share of Cumulative Share
(millions of $) Total
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Unicom Corp. 7,176 1 45.2% 45.2%
Ameren Corp. 3,139 2 19.8% 65.0%
Illinova Corp. 1,774 3 11.2% 76.2%
Nicor, Inc. 1,731 4 10.9% 87.1%
Peoples Energy Corp. 1,238 5 7.8% 94.9%
Cilcorp, Inc. 557 6 3.5% 98.4%
Electric Energy, Inc. 232 7 1.5% 99.9%
Mount Carmel Public Utility Co. 12 8 0.1% 99.9%
Illinois Gas Co. 9 9 0.1% 100.0%
Total 15,867
</TABLE>
<TABLE>
<CAPTION>
Market Share for Utilities in Illinois
Companies sorted by Assets
Holding Company Assets Rank Share of Cumulative Share
(millions of $) Total
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Unicom Corp. 26,322 1 51.3% 51.3%
Ameren Corp. 10,893 2 21.2% 72.5%
Illinova Corp. 7,099 3 13.8% 86.4%
Nicor, Inc. 2,956 4 5.8% 92.1%
Peoples Energy Corp. 2,083 5 4.1% 96.2%
Cilcorp, Inc. 1,570 6 3.1% 99.3%
Electric Energy, Inc. 348 7 0.7% 99.9%
Mount Carmel Public Utility Co. 22 8 0.0% 100.0%
Illinois Gas Co. 12 9 0.0% 100.0%
Total 51,305
</TABLE>
<TABLE>
<CAPTION>
Market Share for Utilities in Illinois
Companies sorted by Number of Customers
Holding Company Customers Rank Share of Cumulative Share
(thousands) Total
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Unicom Corp. 3,420 1 36.4% 36.4%
Nicor, Inc. 1,848 2 19.7% 56.1%
Ameren Corp. 1,789 3 19.1% 75.2%
Peoples Energy Corp. 963 4 10.3% 85.4%
Illinova Corp. 953 5 10.2% 95.6%
Cilcorp, Inc. 395 6 4.2% 99.8%
Illinois Gas Co. 10 7 0.1% 99.9%
Mount Carmel Public Utility Co. 9 8 0.1% 100.0%
Electric Energy, Inc. 0 9 0.0% 100.0%
Total 9,388
</TABLE>
Exhibit K-17
STATE OF ILLINOIS
ILLINOIS COMMERCE COMMISSION
CENTRAL ILLINOIS LIGHT COMPANY :
:
PETITION PURSUANT TO SECTION :
16-111(G) OF THE PUBLIC UTILITIES ACT : 98-0882
REQUESTING THE ILLINOIS COMMERCE :
COMMISSION TO ENTER AN ORDER :
FINDING IT HAS NO PRE-APPROVAL :
JURISDICTION OVER CERTAIN :
REORGANIZATIONS, OR, IN THE :
ALTERNATIVE, APPROVING THE :
REORGANIZATIONS WITH RESPECT TO THE :
GAS OPERATIONS OF CENTRAL ILLINOIS :
LIGHT COMPANY PURSUANT TO THE :
PROVISIONS OF SECTION 7-204 OF THE :
PUBLIC UTILITIES ACT. :
ORDER
By the Commission:
I. PROCEDURAL HISTORY
On December 14, 1998, Central Illinois Light Company ("CILCO") filed a
petition with the Illinois Commerce Commission ("Commission") pursuant to
Section 16-111(g) of the Public Utilities Act ("Act") (220 ILCS 5/16-111(g)),
seeking a determination that the Commission does not have pre-approval
jurisdiction of two proposed reorganizations involving CILCO's parent
corporation, CILCORP Inc. ("CILCORP"). In the alternative, CILCO requested entry
of an order pursuant to Section 7-204 of the Act (220 ILCS 5/7-204) seeking an
expedited order of the Commission approving the two reorganizations with respect
to CILCO's gas operations. The first reorganization involves a transaction by
which The AES Corporation ("AES") will acquire ownership and control of CILCORP,
which owns all of the common stock of CILCO. As a result of the second
<PAGE>
reorganization, which will occur only at the discretion of AES, AES will acquire
direct ownership of all of CILCO's common stock.
Local Union No. 51, International Brotherhood of Electrical Workers,
AFL-CIO ("Local No. 51, IBEW") filed a petition to intervene. That petition was
allowed by the Hearing Examiner.
Pursuant to proper legal notice, a prehearing conference was held in
this matter on January 13,1999, and an evidentiary hearing was held on February
5,1999, at the Commission's offices in Springfield, Illinois. Appearances were
entered by counsel on behalf of CILCO, the Commission Staff, and Local No. 51,
IBEW. At the hearing on February 5,1999, CILCO submitted the testimony of
William M. Shay, a Senior Vice President of CILCO, Nicholas T. Shay, CILCO's
Director of Rates and Regulatory Affairs, and Robert J. Sprowls, Vice President
and Chief Financial Officer of CILCO. Mr. Robert Plaza, Case Manager for Staff,
testified that Staff had no objection to the proposed reorganizations and did
not oppose the granting of the application. At the conclusion of the hearing on
February 5, 1999, the record was marked "Heard and Taken."
CILCO, Staff and Local No. 51, IBEW, waived the filing of initial and
reply briefs and the service of the Hearing Examiner's proposed order.
II. DESCRIPTION OF THE PROPOSED REORGANIZATIONS
CILCORP is an Illinois corporation and the owner of a majority of the
voting capital stock of CILCO. Under date of November 22, 1998, CILCORP entered
into an Agreement and Plan of Merger ("Agreement") with AES, a Delaware
corporation, and Midwest Energy, Inc. ("Midwest"), an Illinois corporation and a
wholly-owned subsidiary of AES. Pursuant to the Agreement, Midwest will be
merged into CILCORP, and CILCORP will be the surviving corporation. The capital
stock of CILCORP issued and outstanding immediately prior to the merger will be
canceled and extinguished and converted into the right to receive $65 per share,
and AES, as the owner of all the capital stock of Midwest, will become the owner
of all the capital stock of CILCORP. Under the Agreement, a second proposed
merger may occur. In the second merger, CILCORP will be merged into AES, CILCORP
will cease to exist, and AES will become the owner of a majority of the voting
capital stock of CILCO.
2
<PAGE>
CILCO is a combination gas and electric utility providing retail gas
and electric service to customers in Illinois. Midwest was created by AES solely
for the purpose of effecting the first merger. AES is a global energy company
that operates electric generation facilities in the United States and in foreign
countries. AES also owns foreign electric distribution businesses, mostly in
South America, and a small amount of natural gas distribution in foreign
countries. AES does not own or operate any regulated utilities in the United
States.
III. APPLICABLE LAW
The action of the Commission in this proceeding is governed by Section
7-204 of the Act relating to the approval of reorganizations. Under Section
7-204, the term "reorganization" is defined as "any transaction which,
regardless of the means by which it is accomplished, results in a change of a
majority of the voting capital stock of an Illinois public utility; or the
ownership or control of any entity which owns or controls a majority of the
voting capital stock of a public utility . . . ." This section further provides
that the "Commission shall not approve any proposed reorganization if the
Commission finds, after notice and hearing, that the reorganization will
adversely affect the utility's ability to perform its duties under this Act."
In reviewing the proposed reorganization, the Commission is required
by Section 7-204 to find that:
(1) the proposed reorganization will not diminish the utility's
ability to provide adequate, reliable, efficient, safe and
least-cost public utility service;
(2) the proposed reorganization will not result in the unjustified
subsidization of non-utility activities by the utility or its
customers;
(3) costs and facilities are fairly and reasonably allocated between
utility and non-utility activities in such a manner that the
Commission may identify those costs and facilities which are
properly included by the utility for ratemaking purposes;
3
<PAGE>
(4) the proposed reorganization will not significantly impair the
utility's ability to raise necessary capital on reasonable terms
or to maintain a reasonable capital structure;
(5) the utility will remain subject to all applicable laws,
regulations, rules, decisions and policies governing the
regulation of Illinois public utilities;
(6) the proposed reorganization is not likely to have a significant
adverse effect on competition in those markets over which the
Commission has jurisdiction; and
(7) the proposed reorganization is not likely to result in any
adverse rate impacts on retail customers.
Section 7-204(c) provides that the Commission shall not approve a
reorganization without ruling on:
(i) the allocation of any savings resulting from the proposed
reorganization; and
(ii) whether the companies should be allowed to recover any costs
incurred in accomplishing the proposed reorganization and,
if so, the amount of costs eligible for recovery and how the
costs will be allocated.
Section 7-204(f) provides that "in approving any proposed
reorganization pursuant to this Section the Commission may impose such terms,
conditions or requirements as, in its judgment, are necessary to protect the
interests of the public utility and its customers."
After CILCO filed its petition in this proceeding, the Commission
entered an order in MidAmerican Energy Company, Docket No. 98-0853. In that
docket, which involved a merger of the parent of a combination gas and electric
utility, the Commission exercised pre-approval jurisdiction under Section 7-204
of the Act with regard to the gas operations of the utility. In view of the
decision in that case, CILCO acknowledges that the Commission has effectively
determined that with respect to CILCO's gas operations, the Commission has
jurisdiction over the reorganization proposed in this proceeding. Accordingly,
without waiving its jurisdictional argument, CILCO has withdrawn its request
4
<PAGE>
that the Commission make a specific ruling on the jurisdictional issue in this
proceeding, and CILCO requests the Commission to approve the proposed
reorganization, based upon the evidence submitted in this proceeding.
IV. REQUEST FOR EXPEDITED TREATMENT
CILCO requests that the Commission expedite its consideration of the
reorganizations proposed in this proceeding and issue an order in this docket by
the end of March. In support of its request, CILCO pointed out that CILCORP and
AES had not expected that a separate approval proceeding would be required in
Illinois, and had planned to have all other regulatory approvals secured so that
the mergers could be finalized prior to the middle of 1999. CILCO explained that
a closing before the end of June is essential, among other reasons, for CILCO's
participation in the initial opening of the Illinois electricity markets on
October 1, 1999. CILCO stated that the expectation that no regulatory approval
would be required in Illinois was part of the attraction of the merger
transactions for AES and CILCORP. The requirement for an additional,
unanticipated regulatory approval with respect to CILCO's gas operations adds
uncertainty to the proposed mergers. CILCO expressed further concern that
federal regulators may wait until state regulators have completed their review
before acting on the merger proposals, and that state approval may become
crucial in soliciting stockholder approval. For all these reasons, CILCO
requested that this proceeding be considered on an expedited basis to assure
that it does not interfere with the merger timetable that has been established
or endanger the closing of the merger transactions.
V. SECTION 7-204 CRITERIA
A. CILCO'S ABILITY TO PROVIDE ADEQUATE, RELIABLE, EFFICIENT, SAFE
AND LEAST-COST PUBLIC UTILITY SERVICE.
With regard to the quality of ClLCO's future customer service, Mr.
Shay testified that the proposed reorganizations will involve only CILCORP,
Midwest, and AES. The mergers will have no direct effect upon ClLCO other than a
change in the ownership of the capital stock of CILCO's parent, and, thereafter,
a possible change in the direct ownership of CILCO's common stock. CILCO's gas
utility operations and assets and the capital structure of CILCO's gas utility
operations will not change as a result of the reorganizations. CILCO's gas
operations are not involved in the proposed mergers, and CILCO does not expect
5
<PAGE>
any changes in the provision of gas service or its gas budgets because of the
proposed mergers. CILCO's ability to perform its duties under the Act will not
be impaired. CILCO adds that in all likelihood, its abilities to provide
adequate, reliable, efficient, safe and least-cost public utility service will
be enhanced by the mergers and that there will be a positive benefit to the
public. Mr. Shay testified that the reorganizations will provide an enlarged
financial base and access to the extensive experience of AES in energy markets
around the world. CILCO asserts that its is an efficient, low-cost provider of
energy, and has demonstrated its commitment to the deregulation of retail energy
markets through its leadership in offering choice to all customers, including
residential customers, through pilot open access programs for both natural gas
and electricity. CILCO believes that if it is unable to enlarge its financial
and skill base, there is less assurance that CILCO can remain a viable, separate
competitor in Illinois, offering an additional option to customers seeking
competitive energy services. In addition to the enlarged financial base that
will result from the proposed reorganizations, CILCO expects to draw on the
experience of AES to improve CILCO's operating efficiency and customer service.
B. UNJUSTIFIED SUBSIDIZATION OF NON-UTILITY ACTIVITIES BY CILCO
OR ITS CUSTOMERS.
CILCO witness Shay testified that because the proposed reorganizations
do not directly involve CILCO, CILCO will continue to operate in the same way as
before the reorganizations. All the guidelines and procedures currently
applicable to CILCO's non-utility transactions will remain applicable after the
reorganizations and assure that there is no subsidization of non-utility
activities by CILCO's gas operations or CILCO's gas customers. Mr. Shay stated
that CILCO has on file with the Commission guidelines and procedures covering
transactions between CILCO and its affiliates. These guidelines were adopted and
filed pursuant to the Commission's Order in Docket No. 84-0413. In addition,
CILCO has filed guidelines and procedures with the Commission applicable to
non-utility activities of CILCO. These guidelines and procedures were adopted
pursuant to the rule recently approved by the Commission at 83 Ill. Adm. Code,
Part 506, Accounting for Non-Public Utility Business of Gas Utilities. Mr. Shay
testified that these two sets of procedures assure that there will be no
subsidization of affiliate or other non-utility transactions by CILCO's gas
utility operations or CILCO's gas customers.
6
<PAGE>
CILCO is required by the Commission's rules to make biennial audits of
its compliance with the guidelines and procedures described by Mr. Shay. CILCO
recently completed those audits and filed them with the Commission on December
1, 1998. The audits found that CILCO was in compliance with the guidelines
covering affiliate and other non-utility transactions. Audits of affiliate and
non-utility transactions will be performed at two-year intervals in the future,
and Mr. Shay testified that the audits and the reports filed with the Commission
provide continuing assurance that there will be no subsidy of non-utility
activities by CILCO or its customers.
C. FAIR AND REASONABLE ALLOCATION OF COSTS AND FACILITIES BETWEEN
CILCO'S ILLINOIS GAS UTILITY OPERATIONS AND NON-UTILITY
ACTIVITIES.
Mr. Shay testified that the guidelines and procedures applicable to
non-utility activities assure that costs and facilities are fairly and
reasonably allocated between utility and non-utility activities. The procedures
applicable under 83 Ill. Adm. Code, Part 506, require that all non-utility
transactions be recorded in sub-accounts. The sub-accounts facilitate review of
non-utility transactions and cost allocations by the Commission as well as by
CILCO's own auditors, and assist in assuring proper allocation of costs and
facilities for ratemaking purposes.
D. IMPAIRMENT OF THE ABILITY OF CILCO'S GAS UTILITY OPERATIONS TO
RAISE NECESSARY CAPITAL ON REASONABLE TERMS OR TO MAINTAIN A
REASONABLE CAPITAL STRUCTURE.
CILCO witness Sprowls testified that the proposed reorganizations will
not impair CILCO's ability to raise capital on reasonable terms, and will not
impair CILCO's ability to maintain a reasonable capital structure. Mr. Sprowls
stated that the balance sheet and capitalization of CILCO will not be changed by
the proposed mergers, and CILCO's financial ratios will not be changed as a
result of the proposed mergers. After the mergers, CILCO will continue to have
the ability to raise capital through the issuance of short-term debt, and, with
Commission approval, the issuance of long-term debt and preferred stock.
Mr. Sprowls testified that CILCO's debt and preferred stock ratings
were placed on credit watch with negative implications following the
announcement of the proposed merger transactions, but Mr. Sprowls stated that
7
<PAGE>
this is a normal practice. CILCO's ratings will be more carefully analyzed by
the rating agencies after the mergers are completed, and Mr. Sprowls testified
that the ratings should remain at investment grade.
Mr. Sprowls further testified that common equity capital is provided
to CILCO through retained earnings. If common equity is required in greater
amounts than normal, CILCO can reduce the amount of dividends payable to its
parent corporation. If common equity capital is required in excess of earnings,
the parent corporation would have to invest additional capital, out of cash
flow, retained earnings, borrowings, or the issuance of common equity or
preferred stock by the parent. CILCO has not required an infusion of common
equity capital in excess of its own earnings since it became a subsidiary of
CILCORP in 1985, and CILCO does not anticipate the need for the investment of
common equity capital for its gas operations within the foreseeable future.
However, if investments of common equity capital were required after the
mergers, the larger financial base of AES would likely make it easier to obtain
such capital.
In supplemental testimony, Company witness Shay confirmed that in the
absence of advance approval of the Commission, no debt incurred by AES will have
any recourse against the funds or other assets of CILCO's gas utility.
E. CONTINUED APPLICATION OF ALL APPLICABLE LAWS, REGULATIONS,
RULES, DECISIONS AND POLICIES GOVERNING THE REGULATION OF
ILLINOIS PUBLIC UTILITIES TO CILCO'S GAS UTILITY OPERATIONS.
Mr. Shay testified that CILCO will continue to operate as a regulated
public utility after the proposed reorganizations, and will remain subject to
all requirements applicable to public utilities. The reorganizations will cause
no change affecting the regulation of CILCO as a public utility.
F. IMPACT OF PROPOSED REORGANIZATION ON COMPETITION IN THE
NATURAL GAS UTILITY MARKET OVER WHICH THE COMMISSION HAS
JURISDICTION.
Mr. Shay testified that the proposed reorganization will have no
adverse effects in the retail gas sales markets in Illinois. AES is not engaged
in the sale or delivery of gas at wholesale or retail to any customers in
Illinois or adjoining states. On the basis of these facts, Mr. Shay concluded
that the level of competition in Illinois gas markets will not be diminished in
8
<PAGE>
any manner as a result of the proposed reorganizations. Mr. Shay added that the
proposed reorganizations are more likely to have a positive effect on
competition in Illinois, because CILCO will be part of a larger and economically
stronger corporate system, which should enhance CILCO's ability to remain a
separate utility and compete with other gas utilities and marketers in Illinois.
G. RATE IMPACT OF PROPOSED REORGANIZATIONS ON RETAIL CUSTOMERS.
Mr. Shay testified that the proposed reorganizations will not directly
affect CILCO's gas operations, and will not result in any increase in the costs
incurred by CILCO in providing gas service. Therefore, the proposed mergers will
have no rate impact on CILCO's retail gas customers. CILCO indicated in response
to Staff data request ML-3 that AES will take a role in the management of
CILCO's gas operations in the same manner as CILCORP does at the present time,
by electing the Board of Directors, assuring that capable management of CILCO
gas operations is being provided, and reviewing the results of operations. To
the extent AES personnel take a direct role in the management of gas operations,
there would be corresponding reduction in the need for management personnel
employed directly by CILCO. Accordingly, CILCO does not expect an increase in
the overall costs of gas operations as the result of AES participation in the
management of CILCO gas operations.
In supplemental testimony, CILCO witness Shay stated that CILCO has no
current plans to file a gas rate case.
H. ALLOCATION OF SAVINGS AND COSTS ASSOCIATED WITH THE PROPOSED
REORGANIZATIONS.
Section 7-204(c) of the Act requires the Commission to rule on the
allocation of any savings resulting from the proposed reorganizations. This
Section also requires the Commission to rule whether the reorganizing companies
should be allowed to recovery any costs incurred in accomplishing the proposed
reorganizations, and if so, the amount of costs eligible for recovery and how
the costs will be allocated.
Mr. Shay testified that the proposed mergers involving CILCORP and AES
are different from situations in which two public utilities or their holding
companies merge. In those cases, it is often possible to reduce operating costs
and produce savings by combining operations and eliminating duplicative
9
<PAGE>
resources, functions or personnel. No such operational synergies will occur as a
result of the mergers proposed in this case, and none are intended. AES is not a
regulated public utility and does not own or operate any regulated public
utility in the United States. CILCO will remain a separate, public,
SEC-reporting company, with preferred stock that is publicly traded. The
proposed mergers are strategic in nature, to provide AES a mid-west presence and
a base from which to grow in the Illinois energy markets, and perhaps beyond,
and to provide CILCO a broader financial base and an assured future as a
separate operating utility. For these reasons, CILCO does not anticipate any
measurable savings in the operation of its gas utility business as a result of
the proposed mergers. In his supplemental testimony, Mr. Shay stated that if
savings did unexpectedly result from the mergers in the future, CILCO would not
in any future gas rate case request any different treatment for those savings
than for any other reduction in the cost of providing gas service. In addition,
Mr. Shay stated that CILCO would not seek recovery in any future gas rate case
of the costs incurred, including the premium paid by AES for CILCORP's stock, in
accomplishing the mergers. These undertakings assure that if the proposed
reorganizations do result in any savings in gas operating costs in the future,
the Commission will be free to allocate those savings to CILCO's gas customers
in any future gas rate case.
VI. SECTION 7-204A
Section 7-204A of the Act sets forth information to be furnished in
connection with certain applications for approval of reorganizations under
Section 7-204. Although Section 7-204A is not applicable to CILCO, because CILCO
became a subsidiary of CILCORP prior to 1989, CILCO provided to Staff all the
information required under Section 7-204A, or proxies for that information, as
requested by Staff.
VII. FINDINGS AND ORDERING PARAGRAPHS
The Commission, having considered the entire record, is of the opinion
and finds that:
(1) CILCO is an Illinois corporation providing natural gas service to
customers in the State of Illinois and is a public utility within
the meaning of the Act;
(2) the Commission has jurisdiction over CILCO and the subject matter
of this proceeding;
10
<PAGE>
(3) the recitals of fact and conclusions reached in the prefatory
portion of this Order are supported by the evidence of record,
and are hereby adopted as findings of fact;
(4) the proposed reorganizations meet the criteria set forth in
Section 7-204 of the Act with respect to CILCO gas operations, in
that:
a) the proposed reorganizations will not diminish CILCO's
ability to provide adequate, reliable, efficient, safe and
least-cost gas public utility service;
b) the proposed reorganizations will not result in the
unjustified subsidization of non-utility activities by CILCO
or its customers with respect to CILCO's gas operations;
c) costs and facilities are fairly and reasonably allocated
between utility and non-utility activities in such a manner
that the Commission may identify those costs and facilities
which are properly included by CILCO for ratemaking purposes
for its gas utility operations;
d) the proposed reorganizations will not significantly impair
CILCO's ability to raise necessary capital on reasonable
terms or to maintain a reasonable capital structure with
respect to its gas utility operations;
e) CILCO will remain subject to all applicable laws,
regulations, rules, decisions and policies governing the
regulation of Illinois public utilities with respect to
CILCO's gas utility operations;
f) the proposed reorganization is not likely to have a
significant adverse effect on competition in the Illinois
gas utility markets over which the Commission has
jurisdiction;
g) the proposed reorganizations are not likely to result in any
adverse rate impacts on retail gas customers of CILCO;
11
<PAGE>
(5) CILCO has furnished information specified in Section 7-204A
adequate to enable the Staff to review and analyze the proposed
reorganizations;
(6) the proposed reorganizations will not adversely affect the
ability of CILCO to perform its duties under the Act with respect
to its gas utility operations;
(7) any savings resulting from the proposed reorganizations with
respect to CILCO's gas utility operations shall be reflected in
CILCO's cost of service for recognition in future rate
proceedings;
(8) transaction costs, including the premium paid for CILCORP's
stock, with respect to CILCO's gas utility operations portion of
the reorganizations shall be recorded below-the-line at the
holding company level;
(9) transition costs that result directly from the reorganizations
shall not be recovered from CILCO's gas customers;
(10) the application of CILCO for approval of the proposed
reorganizations with respect to CILCO's gas utility operations
should be approved;
(11) the consent, authority and approval of the Commission should be
granted to CILCO to do any and all other things not contrary to
law or to the rules and regulations of the Commission that are
incidental, necessary or appropriate to the performance of any
and all acts specifically authorized by the Commission in this
Order.
IT IS THEREFORE ORDERED that approval is hereby granted to Central
Illinois Light Company, with respect to its gas utility operations, for the
reorganizations that are the result of the transactions in which The AES
Corporation will acquire ownership and control of CILCORP Inc., and, at the
discretion of The AES Corporation, The AES Corporation will acquire direct
ownership of a majority of the voting capital stock of Central Illinois Light
Company.
12
<PAGE>
IT IS FURTHER ORDERED that Central Illinois Light Company shall file
with the Commission written notice of completion of the reorganizations and the
effective date thereof within 30 days after the effective dates of the
respective reorganizations.
IT IS FURTHER ORDERED that the consent, authority and approval of the
Commission are granted to Central Illinois Light Company to do any and all other
things not contrary to law or to the rules and regulations of the Commission
that are incidental, necessary or appropriate to the performance of any and all
acts specifically authorized by the Commission in this Order.
IT IS FURTHER ORDERED that subject to the provisions of Section 10-113
of the Public Utilities Act and 83 Ill. Adm. Code 200.880, this Order is final;
it is not subject to the Administrative Review Law.
By order of the Commission this 10th day of March, 1999.
(SIGNED) RICHARD L. MATHIAS
Chairman
(SEAL)
13
Exhibit K-18
[Letterhead]
[State of Illinois]
[Illinois Commerce Commission]
150 NORTH LASALLE STREET
SUITE C-800
CHICAGO, ILLINOIS 60601-3104
March 10, 1999 TEL: (312) 814-2859
FAX: (312) 814-1818
[Richard L. Mathias]
[Chairman]
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549
Ladies and Gentlemen:
We are writing to you with respect to Central Illinois Light Company
("CILCO") and its parent, CILCORP Inc., and the pending merger transaction
involving CILCORP Inc. and The AES Corporation.
We have been advised that The AES Corporation, through its
subsidiaries (other than CILCORP Inc. or subsidiaries of CILCORP Inc.),
affiliates, or through other entities, currently holds, and intends to continue
to hold and acquire, ownership interest in electric and natural gas facilities
in one or more foreign countries. We submit this letter pursuant to the
requirements of Section 33(a)(2) of the Public Utility Holding Company Act of
1935, as amended (the "Act").
A 1997 Illinois law implemented changes to historical utility
regulation. The law required all regulated electric utilities to reduce their
rates to residential consumers in 1998 and, subject to certain specified
exceptions, froze such electric rates until 2005. While neither the utilities
nor the Illinois Commerce Commission ("Commission") can change bundled electric
rates until 2005, the Commission retains jurisdiction to set rates for unbundled
delivery service. In addition, electric utilities are subject to other statutory
provisions that require a sharing of revenues with consumers if the utility
earns more than certain specified thresholds. However, the restructuring
legislation gave electric utilities great flexibility in writing down assets and
<PAGE>
Securities and Exchange Commission
Page 2
June 2, 1999
accelerating depreciation, so utilities may be able to avoid triggering the
over-earning threshold. Also, the legislation removed Commission authority over
the sale, lease or other transfer of assets to affiliated or unaffiliated
entities until January 1, 2005. Also, the Commission has jurisdiction over
electric and gas delivery system reliability. However, the Commission cannot
order a utility to construct additional generation. Finally, while the
Commission's authority to approve or disapprove some merger and reorganization
transactions has been suspended until 2005, regulated utilities are required to
provide the Commission with a 30-day advanced notice of any proposed
transaction, with supporting documentation, and to file certain reports
thereafter.
The Illinois Commerce Commission hereby certifies to you that we have
the authority and resources to protect Illinois consumers in accordance with the
Illinois statutes discussed in the previous paragraph. We intend to exercise
such authority.
Sincerely,
Illinois Commerce Commission
/s/ Richard L. Mathias
----------------------------------------
Richard L. Mathias
Chairman
cc: Mr. Edward J. Griffin, DeFrees & Fiske
Mr. Robert W. Wason, Security and Exchange Commission
Exhibit K-19
AES Foreign Breakout
Gross Revenues
- --------------------------------------------------------------------------------
[Vertical Bar Chart]
X-axis (bottom of chart):
1996
1997
1998
1999
Y-axis (left side of chart): Percentages of AES Gross Revenues earned by AES's
foreign operations, on a GAAP basis, Proportional Consolidated basis, and a
Total Project basis (listed in increments of 10 percent between and including 0
and 100%)
[Bar Chart provides the below-listed percentages of AES gross revenues earned by
AES's foreign operations on a GAAP basis, Proportional Consolidated basis, and a
Total Project basis. GAAP percentages are reflected by violet bars, Proportional
Consolidated percentages are reflected by red bars, and Total Project
percentages are reflected by green bars]
Proportional Total
Year GAAP Consolidated Project
- ---- ---- ------------ -------
1996 33% 52% 83%
1997 58% 72% 90%
1998 76% 83% 93%
1999* 70% 78% 92%
* Assumes CILCORP operations for the last two months of 1999.
Exhibit K-20
AES Foreign Breakout
Net Operating Revenues
- --------------------------------------------------------------------------------
[Vertical Bar Chart]
X-axis (bottom of chart):
1996
1997
1998
1999
Y-axis (left side of chart): Percentages of AES Net Operating Revenues earned by
AES's foreign operations, on a GAAP basis, Proportional Consolidated basis, and
a Total Project basis (listed in increments of 10 percent between and including
0 and 100%)
[Bar Chart provides the below-listed percentages of AES net operating revenues
earned by AES's foreign operations on a GAAP basis, Proportional Consolidated
basis, and a Total Project basis. GAAP percentages are reflected by violet bars,
Proportional Consolidated percentages are reflected by red bars, and Total
Project percentages are reflected by green bars]
Proportional Total
Year GAAP Consolidated Project
- ---- ---- ------------ -------
1996 32% 54% 86%
1997 55% 72% 92%
1998 77% 84% 94%
1999* 74% 82% 94%
* Assumes CILCORP operations for the last two months of 1999.
Exhibit K-21
AES Foreign Breakout
Operating Income
- --------------------------------------------------------------------------------
[Vertical Bar Chart]
X-axis (bottom of chart):
1996
1997
1998
1999
Y-axis (left side of chart): Percentages of AES Operating Income earned by AES's
foreign operations, on a GAAP basis, Proportional Consolidated basis, and a
Total Project basis (listed in increments of 10 percent between and including 0
and 100%)
[Bar Chart provides the below-listed percentages of AES operating income earned
by AES's foreign operations on a GAAP basis, Proportional Consolidated basis,
and a Total Project basis. GAAP percentages are reflected by violet bars,
Proportional Consolidated percentages are reflected by red bars, and Total
Project percentages are reflected by green bars]
Proportional Total
Year GAAP Consolidated Project
- ---- ---- ------------ -------
1996 9% 32% 67%
1997 30% 58% 83%
1998 59% 70% 87%
1999* 53% 64% 88%
* Assumes CILCORP operations for the last two months of 1999.
Exhibit K-22
AES Foreign Breakout
Assets
- --------------------------------------------------------------------------------
[Vertical Bar Chart]
X-axis (bottom of chart):
1996
1997
1998
1999
Y-axis (left side of chart): Percentages of AES Assets held by AES's foreign
operations, on a GAAP basis, Proportional Consolidated basis, and a Total
Project basis (listed in increments of 10 percent between and including 0 and
100%)
[Bar Chart provides the below-listed percentages of AES assets held by AES's
foreign operations on a GAAP basis, Proportional Consolidated basis, and a Total
Project basis. GAAP percentages are reflected by violet bars, Proportional
Consolidated percentages are reflected by red bars, and Total Project
percentages are reflected by green bars]
Proportional Total
Year GAAP Consolidated Project
- ---- ---- ------------ -------
1996 52% 52% 80%
1997 82% 77% 93%
1998 74% 73% 91%
1999*
* Numbers not available
<TABLE>
<CAPTION>
Exhibit K-23
AES Foreign Breakout for Generation,
Power Plants and Distribution
- ------------------------------------------------------------------------------------------------------------------------------------
THE AES CORPORATION
- ------------------------------------------------------------------------------------------------------------------------------------
AES 1991 1992 1993 1994 1995 1996 1997 1998 6/30/99 12/31/99 2000
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GENERATION - IN OPERATION
Capacity (MW) 889 1,829 2,479 2,505 3,383 9,655 17,682 23,086 26,466 27,798 31,892
Foreign 0 760 1,410 1,436 2,314 8,586 16,613 18,061 20,017 20,017 24,111
Domestic 889 1,069 1,069 1,069 1,069 1,069 1,069 5,025 6,449 7,781 7,781
Percentage Foreign 0% 42% 57% 57% 68% 89% 94% 78% 76% 72% 76%
- ------------------------------------------------------------------------------------------------------------------------------------
AES Equity (MW) 864 1,401 1,850 1,863 2,221 6,429 9,697 14,596 17,618 18,950 21,251
Foreign 0 357 806 819 1,177 5,385 8,653 9,596 11,194 11,194 13,495
Domestic 864 1,044 1,044 1,044 1,044 1,044 1,044 5,000 6,424 7,756 7,756
Percentage Foreign 0% 25% 44% 44% 53% 84% 89% 66% 64% 59% 64%
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PLANTS - IN
OPERATION 5 8 9 10 15 26 75 85 96 101 107
---------------------
Foreign 0 2 3 4 9 20 69 76 81 81 87
Domestic 5 6 6 6 6 6 6 9 15 20 20
Percentage Foreign 0% 25% 33% 40% 60% 77% 92% 89% 84% 80% 81%
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTION COMPANIES
Number of Customers 0 0 0 0 0 2,700,000 8,197,000 12,982,000 13,622,000 13,874,800 13,874,800
Foreign 0 0 0 0 0 2,700,000 8,197,000 12,982,000 13,622,000 13,622,000 13,622,000
Domestic 0 0 0 0 0 0 0 0 0 252,800 252,800
Percentage Foreign 0% 0% 0% 0% 0% 100% 100% 100% 100% 98% 98%
- ------------------------------------------------------------------------------------------------------------------------------------
AES Equity 0 0 0 0 0 371,250 2,407,550 3,139,527 3,552,027 3,944,938 3,944,938
Foreign 0 0 0 0 0 371,250 2,407,550 3,139,527 3,552,027 3,692,138 3,692,138
Domestic 0 0 0 0 0 0 0 0 0 252,800 252,800
Percentage Foreign 0% 0% 0% 0% 0% 100% 100% 100% 100% 94% 94%
- ------------------------------------------------------------------------------------------------------------------------------------
GWH 0 0 0 0 0 19,981 64,686 102,036 106,890 113,042 113,042
Foreign 0 0 0 0 0 19,981 64,686 102,036 106,890 106,890 106,890
Domestic 0 0 0 0 0 0 0 0 0 6,152 6,152
Percentage Foreign 0% 0% 0% 0% 0% 100% 100% 100% 100% 95% 95%
- ------------------------------------------------------------------------------------------------------------------------------------
AES Equity GWH 0 0 0 0 0 2,747 19,808 24,950 27,927 35,170 35,170
Foreign 0 0 0 0 0 2,747 19,808 24,950 27,927 29,018 29,018
Domestic 0 0 0 0 0 0 0 0 0 6,152 6,152
Percentage Foreign 0% 0% 0% 0% 0% 100% 100% 100% 100% 83% 83%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Total AES MW
[Vertical Bar Chart]
X-axis (bottom of chart): Years 1991 through and including 2000.
Y-axis (left side of chart): Megawatt capacity of AES power plants (listed in
increments of 2,000 megawatts between and including 0 and 26,000 megawatts).
[Bar Chart lists two sets of data (i) megawatt capacity of foreign AES power
plants and (ii) megawatt capacity of domestic AES power plants. Foreign capacity
is represented by blue bars and domestic capacity is represented by yellow
bars.]
<TABLE>
<CAPTION>
Foreign Domestic
Year Capacity Capacity
---- -------- --------
(MW) (MW)
<S> <C> <C>
1991 0 889
1992 760 1,069
1993 1,410 1,069
1994 1,436 1,069
1995 2,314 1,069
1996 8,586 1,069
1997 16,613 1,069
1998 18,061 5,025
6/30/99 20,017 6,449
12/31/99 20,017 7,781
2000 24,111 7,781
</TABLE>
<PAGE>
AES Equity MW
[Vertical Bar Chart]
X-axis (bottom of chart): Years 1991 through and including 2000.
Y-axis (left side of chart): Megawatt capacity of AES power plants in terms of
AES equity in such plants (listed in increments of 1,000 megawatts between and
including 0 and 14,000 megawatts).
[Bar Chart lists two sets of data (i) megawatt capacity of foreign AES power
plants in terms of AES equity in such plants and (ii) megawatt capacity of
domestic AES power plants in terms of AES equity in such plants. Foreign
capacity is represented by blue bars and domestic capacity is represented by
yellow bars.]
<TABLE>
<CAPTION>
Foreign Domestic
Year Capacity Capacity
---- -------- --------
(MW) (MW)
<S> <C> <C>
1991 0 864
1992 357 1,044
1993 806 1,044
1994 819 1,044
1995 1,177 1,044
1996 5,385 1,044
1997 8,653 1,044
1998 9,596 5,000
6/30/99 11,194 6,424
12/31/99 11,194 7,756
2000 13,495 7,756
</TABLE>
<PAGE>
Total AES Plants
[Vertical Bar Chart]
X-axis (bottom of chart): Years 1991 through and including 2000.
Y-axis (left side of chart): Number of AES power plants (listed in increments of
5 plants between and including 0 and 90 plants).
[Bar Chart lists two sets of data (i) number of foreign AES power plants and
(ii) number of domestic AES power plants. The number of foreign power plants is
represented by blue bars and the number of domestic power plants is represented
by yellow bars.]
<TABLE>
<CAPTION>
Foreign Domestic
Year Plants Plants
---- -------- --------
<S> <C> <C>
1991 0 5
1992 2 6
1993 3 6
1994 4 6
1995 9 6
1996 20 6
1997 69 6
1998 76 9
6/30/99 81 15
12/31/99 81 20
2000 87 20
</TABLE>
<PAGE>
Total AES Distribution Customers
[Vertical Bar Chart]
X-axis (bottom of chart): Years 1996 through and including 2000.
Y-axis (left side of chart): Total AES distribution customers (listed in
increments of 1,000,000 customers between and including 0 and 14,000,000
customers).
[Bar Chart lists two sets of data (i) total foreign AES distribution customers
and (ii) total domestic AES distribution customers. The number of foreign
customers is represented by blue bars and the number of domestic customers is
represented by yellow bars.]
<TABLE>
<CAPTION>
Foreign Domestic
Year Customers Customers
---- --------- ---------
<S> <C> <C>
1996 2,700,000 0
1997 8,197,000 0
1998 12,982,000 0
6/30/99 13,622,000 0
12/31/99 13,622,000 252,800
2000 13,622,000 252,800
</TABLE>
<PAGE>
AES Equity Customers
[Vertical Bar Chart]
X-axis (bottom of chart): Years 1996 through and including 2000.
Y-axis (left side of chart): Total AES distribution customers on a net equity
basis (listed in increments of 200,000 customers between and including 0 and
3,800,000 customers).
[Bar Chart lists two sets of data (i) total foreign AES distribution customers
on a net equity basis and (ii) total domestic AES distribution customers on a
net equity basis. The number of foreign customers is represented by blue bars
and the number of domestic customers is represented by yellow bars.]
<TABLE>
<CAPTION>
Foreign Domestic
Year Customers Customers
---- --------- ---------
<S> <C> <C>
1996 371,250 0
1997 2,407,550 0
1998 3,139,527 0
6/30/99 3,552,027 0
12/31/99 3,692,138 252,800
2000 3,692,138 252,800
</TABLE>
<PAGE>
Total AES GWH
[Vertical Bar Chart]
X-axis (bottom of chart): Years 1996 through and including 2000.
Y-axis (left side of chart): Total AES gigawatt-hour sales (listed in increments
of 10,000 gigawatt-hours between and including 0 and 120,000 gigawatt-hours).
[Bar Chart lists two sets of data (i) gigawatt-hour sales of foreign AES
operations and (ii) gigawatt-hour sales of domestic AES operations. Foreign
sales are represented by blue bars and domestic sales are represented by yellow
bars.]
<TABLE>
<CAPTION>
Foreign Domestic
Year Sales Sales
---- ------- --------
(GWH) (GWH)
<S> <C> <C>
1996 19,981 0
1997 64,686 0
1998 102,036 0
6/30/99 106,890 0
12/31/99 106,890 6,152
2000 106,890 6,152
</TABLE>
<PAGE>
AES Equity GWH
[Vertical Bar Chart]
X-axis (bottom of chart): Years 1996 through and including 2000.
Y-axis (left side of chart): Total AES gigawatt-hour sales on a net equity basis
(listed in increments of 2,000 gigawatt-hours between and including 0 and 30,000
gigawatt-hours).
[Bar Chart lists two sets of data (i) gigawatt-hour sales of foreign AES
operations on a net equity basis and (ii) gigawatt-hour sales of domestic AES
operations on a net equity basis. Foreign sales are represented by blue bars and
domestic sales are represented by yellow bars.]
<TABLE>
<CAPTION>
Foreign Domestic
Year Sales Sales
---- ------- --------
(GWH) (GWH)
<S> <C> <C>
1996 2,747 0
1997 19,808 0
1998 24,950 0
6/30/99 27,927 0
12/31/99 29,018 6,152
2000 29,018 6,152
</TABLE>
