As filed with the Securities and Exchange Commission on July 27, 1995
File No. 70-8587
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2 TO FORM U-1 APPLICATION-DECLARATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
_______________________________________________
CINergy Corp.,
The Union Light, Heat and Power Co.,
The West Harrison Gas and Electric Co.,
Lawrenceburg Gas Co. and
Miami Power Corp.
139 East Fourth Street
Cincinnati, Ohio 45202
PSI Energy, Inc.
1000 East Main Street
Plainfield, Indiana 46168
(Names of companies filing this statement and
addresses of principal executive offices)
_______________________________________________
CINergy Corp.
(Name of top registered holding company parent)
________________________________________________
William L. Sheafer
Treasurer
CINergy Corp.
139 East Fourth Street
Cincinnati, Ohio 45202
(Name and address of agent for service)
The Commission is requested to send copies of all notices, orders and
communications in connection with this Application-Declaration to:
Cheryl M. Foley
Vice President, General Counsel and Corporate Secretary
CINergy Corp.
139 East Fourth Street
Cincinnati, Ohio 45202
M. Douglas Dunn William T. Baker, Jr.
Milbank, Tweed, Hadley & McCloy Reid & Priest
One Chase Manhattan Plaza 40 West 57th Street
New York, New York 10005 New York, New York 10019
<PAGE>
The Application-Declaration in this file, as previously amended and
restated, is hereby further amended and, as so amended, is hereby restated in
its entirety as set forth below, and Exhibits 1.1 through 1.12, 1.18, 1.19,
1.21, 1.23, 1.25, 1.27, 1.28, 1.29, 1.31, 6, 6.1 and 7, previously filed, are
hereby withdrawn.
Item 1. Description of Proposed Transactions.
In this Application-Declaration, CINergy Corp. ("CINergy"), a
Delaware corporation and a registered holding company under the Public Utility
Holding Company Act of 1935, as amended (the "Act"), and its subsidiary
companies PSI Energy, Inc. ("PSI Energy"), The Union Light, Heat and Power Co.
("ULH&P"), The West Harrison Gas and Electric Co. ("West Harrison"),
Lawrenceburg Gas Co. ("Lawrenceburg"), and Miami Power Corp. ("Miami")
(collectively with CINergy, the "Applicants") seek the following
authorizations and order:
(a) authorization
(i) for PSI Energy, ULH&P, Lawrenceburg, West Harrison and Miami to
issue notes in connection with short-term borrowings with maturities of
12 months or less from banks and bank trust departments as set forth in
Item 1.A.3 herein and through the Utility Money Pool as set forth in Item
1.A.5 herein;
(ii) for CINergy, in connection with borrowings by its subsidiary
companies from banks and bank trust departments pursuant to the
authorization requested in the preceding clause or applicable rules of
the Commission to issue guarantees and letters of credit as set forth in
Item 1.A.3.b herein; and
(iii) for PSI Energy to issue commercial paper as set forth in Item
1.A.4 herein; and
(b) an order of the Commission declaring that U.S. Energy Partners
("Energy Partners"), a partnership in which CINergy holds an interest, is not
a "subsidiary company" of CINergy within the meaning of Section 2(a)(8) of the
Act.
It is proposed that the authority requested in clauses (a)(i),
(a)(ii), and (a)(iii) be effective in each case through the earlier of May 31,
1997 or the effective date of any rules adopted by the Commission exempting
any such transactions from the approval requirements of the Act.
Description of the Parties
CINergy is a Delaware corporation and a holding company for PSI
Energy, The Cincinnati Gas & Electric Company ("CG&E"), and a number of other
companies. PSI Energy is engaged in the production, transmission,
distribution and sale of electric energy in north central, central, and
southern Indiana. It serves a population of approximately 1.9 million in 69
of the 92 counties in Indiana, including the cities of Terre Haute, Kokomo,
Columbus, Lafayette, Bloomington and New Albany. CG&E and its subsidiaries
ULH&P, Lawrenceburg and West Harrison are primarily engaged in providing
electric and/or gas service in the southwestern portion of Ohio and adjacent
areas in Kentucky and Indiana. The area served with electricity, gas, or both
covers approximately 3,000 square miles, has an estimated population of
approximately 1.8 million, and includes the cities of Cincinnati and
Middletown in Ohio, Covington and Newport in Kentucky, and Lawrenceburg in
Indiana. Miami is an Indiana corporation and a subsidiary of CG&E. Miami
owns a 138 kV transmission line running from the Miami Fort Power Station to a
point near Madison, Indiana.
Additional information about the Applicants and their businesses is
set forth in the Form U-1 Application-Declaration, as amended, of CINergy in
File No. 70-8427, and the exhibits thereto (the "CINergy Merger U-1").
A. Notes, guarantees and commercial paper
1. Borrowing authority
Under the authority requested herein, the maximum principal amount
of such short-term notes and/or commercial paper outstanding at any one time
for PSI Energy, ULH&P, Lawrenceburg, West Harrison and Miami, when added to
notes and/or commercial paper issued pursuant to the exemption set forth in
Rule 52, will not exceed the following amounts:
Company Aggregate amount
PSI Energy $400,000,000
ULH&P 35,000,000
West Harrison 200,000
Lawrenceburg 3,000,000
Miami 100,000
2. Use of Proceeds
Proceeds of any such short-term borrowings by PSI Energy, ULH&P,
Lawrenceburg, West Harrison and Miami and sales of commercial paper by PSI
Energy may be used by each such company (i) for the interim financing of its
construction and capital expenditure programs; (ii) for its working capital
needs; (iii) for the repayment, redemption or refinancing of its debt and
preferred stock; (iv) to meet unexpected contingencies, payment and timing
differences, and cash requirements, to cover inter-company balances, and for
other lawful general corporate purposes; and (v) to loan to participants in
the Utility Money Pool described in Item 1.A.5 below.
3. Notes in connection with bank borrowings
a. Existing bank facilities
PSI Energy has five formal bank facilities which permit borrowings
with maturities of 12 months or less. Commitments under these five credit
lines aggregate $102 million, of which $72.5 million in borrowings were
outstanding at December 31, 1994. The agreements embodying these five lines
of credit are filed as Exhibits 1.20, 1.22, 1.24, 1.26, and 1.30, and are
subject in each case to annual one-year extensions at the request of PSI
Energy and with the consent of the respective banks. The five credit lines
are unsecured and provide for maturities of up to one year and one day for any
borrowings by PSI Energy thereunder, with interest rate options at or below
prime rate.
ULH&P has formal bank lines of credit with four banks with
commitments aggregating $30 million (Exhibits 1.13-1.16 hereto), under which
$14.5 million in borrowings were outstanding as of December 31, 1994.
Lawrenceburg has a formal line of credit with one bank, with a commitment of
$400,000 (Exhibit 1.17 hereto). Lawrenceburg had no borrowings outstanding
under this facility at year-end 1994. As of December 31, 1994, West Harrison
and Miami had no committed lines of credit.
Certain of the Applicants also have informal arrangements for short-
term borrowings with various banks on an "as offered" basis, also known as
uncommitted lines of credit. Since interest rates on these borrowings, when
and if such borrowings are available, generally are below the prevailing prime
rate, it is intended that these informal arrangements will continue to be
utilized.
b. Notes in connection with additional bank borrowings; guarantees
To provide flexibility to meet their cash needs, authorization is
requested for PSI Energy, ULH&P and Lawrenceburg to issue notes in connection
with borrowings from banks pursuant to the existing formal and informal lines
of credit described above (and any increases therein that may be negotiated),
and for PSI Energy, ULH&P, Lawrenceburg, West Harrison and Miami to issue
notes in connection with borrowings from banks and bank trust departments
pursuant to new credit facilities (formal or informal) that may be arranged
from time to time. All such notes and related CINergy guarantees and letters
of credit would be issued on or before May 31, 1997 and would be subject to
the limitations on aggregate principal amount set forth in Item 1.A.1.
Authorization is also requested for CINergy to issue guarantees and
provide letters of credit in connection with such borrowings and borrowings
from banks and bank trust departments by other subsidiary companies of
CINergy. Such guarantees would be in an aggregate amount that, when added to
any then-outstanding CINergy bank borrowings, commercial paper and letters of
credit authorized by the Commission's Order dated January 11, 1995 in File No.
70-8521, Rel. No. 35-26215 (the "January 1995 Order") (in which the Commission
authorized CINergy through January 31, 1997 to incur short-term indebtedness
through bank borrowings, to issue notes and commercial paper, and to obtain
letters of credit, all in an aggregate amount of up to $375 million), would
not exceed $375 million at any one time. Such letters of credit would be
pursuant to and within the limitations of the January 1995 Order.
The promissory notes issued in connection with the proposed
borrowings are expected to be in substantially the form filed herewith as
Exhibit 2. Each of such notes (a) would be for the principal amount to be
borrowed at the time (if a "transactional" note) or for the principal amount
outstanding from time to time (if a "grid" note) from the lending bank and be
payable to the order of such bank, (b) would be issued on or before May 31,
1997 and would mature on a date no later than one year from the date of
issuance, (c) would bear interest at a rate no higher than the effective cost
of money for unsecured prime commercial bank loans prevailing on the date of
such borrowing, and (d) would be subject to prepayment at the option of
borrower, or under certain circumstances with the consent of the lending bank,
in whole at any time or in part from time to time, without premium or penalty.
Amounts outstanding under formal lines of credit typically would become due
immediately upon an event of default, including non-payment, default under
other agreements governing indebtedness, bankruptcy, or insolvency. Short-
term notes may be issued on either a "grid" note basis or a transactional
basis, under similar terms and conditions. Ordinarily, short-term grid notes
are issued to a lending institution before the first borrowing under such
note. The holder of the notes maintains the record of borrowings and
repayments without the necessity of issuing additional notes. The actual
terms of the notes may vary from the terms described above to reflect
customary terms or particular lending practices and policies of different
lending institutions, but otherwise are expected to be substantially similar.
Compensation arrangements under lines of credit would be on a
compensating balance and/or fee basis. In general, fees range from 5 basis
points to 20 basis points (and will not exceed 25 basis points) per annum on
the commitment, and balance arrangements require average balances of 5% to 10%
(and will not exceed 10%) of the amount of the commitment.
For letters of credit obtained by CINergy pursuant to the
Commission's order in File No. 70-8521 in support of the bank borrowings
described herein, the maximum amount of fees and expenses to be incurred by
CINergy would not exceed 1% per year of the face amount of such letters of
credit.
Subject to the limitations on aggregate outstanding principal amount
set forth in Item 1.A.1 above, authorization is also sought for PSI Energy,
ULH&P, Lawrenceburg, West Harrison and Miami to issue notes in connection with
borrowings of funds managed by the trust departments of banks if such
borrowings would result in an estimated cost of money equal to or less than
that available from the sale of commercial paper or other bank borrowings.
Each such borrowing would be evidenced by notes payable on demand.
4. Commercial paper
The short-term borrowing needs of PSI Energy have been met in part
with the sale of commercial paper through commercial paper dealers (the
"Dealers"). At any given time, PSI Energy may be able to issue commercial
paper at a lower cost than that applicable to short-term bank borrowings.
Accordingly, to provide financing flexibility, PSI Energy requests authority
to issue and sell commercial paper, to one or more Dealers, subject to the
limitations on aggregate outstanding principal amount stated in Item 1.A.1
above.
There is no affiliation between PSI Energy or any of its
subsidiaries, on the one hand, and any Dealer or any of its affiliates, on the
other hand. The proceeds from the sale of commercial paper will be added to
the seller's treasury funds and will be used for the purposes set forth in
Item 1.A.2 above, including, without limitation, for the purpose of loans by
the seller through the Utility Money Pool in the manner described in Item
1.A.5 below.
The commercial paper which PSI Energy proposes to issue to Dealers
will be in the form of book-entry unsecured promissory notes (in substantially
the form filed herewith as Exhibit 3), with varying denominations of no less
than $25,000 each. Such notes will be issued and sold by PSI Energy directly
to Dealers at market rates. No commission or fee will be payable in
connection with the issuance and sale of the commercial paper. The purchasing
Dealer, however, will reoffer such notes at a rate less than the rate to the
issuer and, as principal, will reoffer such notes in such a manner as not to
constitute a public offering under the Securities Act of 1933. PSI Energy
will issue and sell the proposed commercial paper to Dealers at a discount
rate not in excess of the maximum discount rate per annum prevailing at the
date of issuance for commercial paper of comparable quality of the particular
maturity sold by public utility issuers thereof to Dealers.
PSI Energy also requests authorization to sell commercial paper
directly to certain financial institutions. Sales of commercial paper
directly to such institutions will be undertaken only if the resulting cost of
money is equal to or less than that available from Dealer-placed notes. The
terms of any such notes would be similar to those of Dealer-placed notes.
Maturities: The commercial paper issued by PSI Energy will have
varying maturities of no more than 270 days from date of issue and will be
issued and sold by PSI Energy from time to time through May 31, 1997. No such
note will have a maturity date more than 270 days after May 31, 1997. Subject
to such limitations, sales of commercial paper (and the bank borrowings
described in Item 1.A.3) ordinarily will be structured to mature at such time
as excess funds are expected to become available for loans through the money
pool described in Item 1.A.5 below. Upon the availability of any such excess
funds, external borrowings would be retired and loans refinanced to the extent
such funds became available.
5. Utility Money Pool
To coordinate and provide for their short-term cash and working
capital requirements, PSI Energy, ULH&P, Lawrenceburg, Miami and West Harrison
propose to issue and acquire promissory notes in connection with a money pool
(the "Utility Money Pool") to be established with CINergy, CINergy Services,
Inc. ("CINergy Services"), a subsidiary service company for the CINergy
system, KO Transmission Co., a subsidiary of CG&E formed to acquire an
interstate natural gas pipeline to which CG&E is entitled as a result of a
settlement with the Columbia gas system, and Tri-State Improvement Co., a
subsidiary of CG&E devoted to acquiring and holding property in Ohio, Kentucky
and Indiana for substations, electric and gas rights of way, office space and
other uses in the utility operations of CG&E and its utility subsidiaries.
The proposed terms of the Utility Money Pool are summarized below and are
memorialized in a definitive form of agreement filed herewith as Exhibit 5.
Under the proposed terms of the Utility Money Pool, short-term funds
would be available from the following sources for short-term loans to
participants, including PSI Energy, ULH&P, Lawrenceburg, Miami and West
Harrison, from time to time: (1) surplus funds in the treasuries of Utility
Money Pool participants other than CINergy, (2) surplus funds in the treasury
of CINergy, and (3) proceeds from bank borrowings by Utility Money Pool
participants (other than borrowings by PSI Energy of more than 12 months
pursuant to the Order of the IURC dated September 9, 1992 in Case No. 39438)
or the sale of commercial paper by CINergy, CG&E and PSI Energy for loan to
the Utility Money Pool ("External Funds"). Funds would be made available from
such sources in such order as CINergy Services, as administrator of the
Utility Money Pool, may determine would result in a lower cost of borrowing,
consistent with the individual borrowing needs and financial standing of the
companies providing funds to the pool. The determination of whether a Utility
Money Pool participant at any time has surplus funds to lend to the Utility
Money Pool or shall lend funds to the Utility Money Pool would be made by such
participant's chief financial officer or treasurer, or by a designee thereof,
on the basis of cash flow projections and other relevant factors, in such
participant's sole discretion.
A separate Non-Utility Money Pool will be established by CINergy
with certain other non-utility subsidiary companies of CINergy. Funds made
available by CINergy for loans through the money pools will be made available
first for loans through the Utility Money Pool and thereafter for loans
through the Non-Utility Money Pool.
Utility Money Pool participants that borrow would borrow pro rata
from each company that lends, in the proportion that the total amount loaned
by each such lending company bears to the total amount then loaned through the
Utility Money Pool. On any day when more than one fund source (e.g., surplus
treasury funds of CINergy and other Utility Money Pool participants ("Internal
Funds") and External Funds), with different rates of interest, is used to fund
loans through the Utility Money Pool, each borrower would borrow pro rata from
each such fund source in the Utility Money Pool in the same proportion that
the amount of funds provided by that fund source bears to the total amount of
short-term funds available to the Utility Money Pool.
Borrowings from the Utility Money Pool would require authorization
by the borrower's chief financial officer or treasurer, or by a designee
thereof. No party would be required to effect a borrowing through the Utility
Money Pool if it is determined that it could (and had authority to) effect a
borrowing at lower cost directly from banks or through the sale of its own
commercial paper. No loans through the Utility Money Pool would be made to,
and no borrowings through the Utility Money Pool would be made by, CINergy.
Certain Costs: The cost of compensating balances and fees paid to
banks to maintain credit lines by Utility Money Pool participants lending
External Funds to the Utility Money Pool would initially be paid by the
participant maintaining such line. A portion of such costs -- or all of such
costs in the event a Utility Money Pool participant establishes a line of
credit solely for purposes of lending any External Funds obtained thereby into
the Utility Money Pool -- would be retroactively allocated every month to the
companies borrowing such External Funds through the Utility Money Pool in
proportion to their respective daily outstanding borrowings of such External
Funds.
Interest Rate on Loans: If only Internal Funds comprise the funds
available in the Utility Money Pool, the interest rate applicable to loans of
such Internal Funds would be the CD yield equivalent of the 30-day Federal
Reserve "AA" Industrial Commercial Paper Composite Rate (or if no such
Composite Rate is established for that day, then the applicable rate would be
the Composite Rate for the next preceding day for which such Composite Rate
was established). The Composite Rate reflects the opportunity cost incurred
by the companies in lending such Internal Funds and therefore parallels the
lenders' effective cost of capital with respect to such Internal Funds.
If only External Funds comprise the funds available in the Utility
Money Pool, the interest rate applicable to loans of such External Funds would
be equal to the lending company's cost for such External Funds (or, if more
than one Utility Money Pool participant had made available External Funds on
such day, the applicable interest rate would be a composite rate equal to the
weighted average of the cost incurred by the respective Utility Money Pool
participants for such External Funds).
In cases where both Internal Funds and External Funds are
concurrently borrowed through the Utility Money Pool, the rate applicable to
all loans comprised of such "blended" funds would be a composite rate equal to
the weighted average of (a) the cost of all Internal Funds contributed by
Utility Money Pool participants (as determined pursuant to the second
preceding paragraph above) and (b) the cost of all such External Funds (as
determined pursuant to the immediately preceding paragraph above). In
circumstances where Internal Funds and External Funds are available for loans
through the Utility Money Pool, loans may be made exclusively from Internal
Funds or External Funds, rather than from a "blend" of such funds, to the
extent it is expected that such loans would result in a lower cost of
borrowing.
Investment of Surplus Funds: Funds not required by the Utility
Money Pool to make loans (with the exception of funds required to satisfy the
Utility Money Pool's liquidity requirements) would ordinarily be invested in
one or more short-term investments, including: (i) interest-bearing accounts
with banks; (ii) obligations issued or guaranteed by the U.S. government
and/or its agencies and instrumentalities, including obligations under
repurchase agreements; (iii) obligations issued or guaranteed by any state or
political subdivision thereof, provided that such obligations are rated not
less than A by a nationally recognized rating agency; (iv) commercial paper
rated not less than A-1 or P-1 or their equivalent by a nationally recognized
rating agency; (v) money market funds; (vi) bank certificates of deposit,
(vii) Eurodollar funds; and (viii) such other investments as are permitted by
Section 9(c) of the Act and Rule 40 thereunder.
Allocation of Interest Income and Investment Earnings: The interest
income and investment income earned on loans and investments of surplus funds
would be allocated among the participants in the Utility Money Pool in
accordance with the proportion each participant's contribution of funds bears
to the total amount of funds in the Utility Money Pool and the cost of funds
provided to the Utility Money Pool by such participant.
Repayment: Each Applicant receiving a loan through the Utility
Money Pool would be required to repay the principal amount of such loan,
together with all interest accrued thereon, on demand and in any event not
later than one year after the date of such loan. All loans made through the
Utility Money Pool could be prepaid by the borrower without premium or
penalty.
Form of Loans to Applicants: Under the authorization requested
herein, all loans through the Utility Money Pool would be made on or before
May 31, 1997. Each lender would receive one or more promissory notes
evidencing any and all loans by such lender. Such notes would be
substantially in the form filed as Exhibit 4, would be dated as of the date of
the initial borrowing (and in any event not later than May 31, 1997), would
mature on demand, or on a date agreed by the parties (but in any case not
later than one year after the date of the applicable borrowing), and would be
prepayable in whole at any time or in part from time to time, without premium
or penalty. Interest would be accrued by each borrower monthly.
Additional provisions: Operation of the Utility and Non-Utility
Money Pools, including record keeping and coordination of loans, will be
handled by CINergy Services under the authority of the appropriate officers of
the participating companies. CINergy Services will administer the Utility and
Non-Utility Money Pools on an "at cost" basis and will maintain separate
records for each money pool. Surplus funds of the Utility Money Pool and the
Non-Utility Money Pool may be combined in common short-term investments, but
separate records of such funds shall be maintained by CINergy Services as
administrator of the pools, and interest thereon shall be separately
allocated, on a daily basis, to each money pool in accordance with the
proportion that the amount of each money pool's surplus funds bears to the
total amount of surplus funds available for investment from both money pools.
Within 45 days after the end of each calendar quarter, CINergy
Services, on behalf of the Applicants, will file a certificate with the
Commission pursuant to Rule 24 under the Act setting forth (i) each
Applicant's maximum principal amount of short-term borrowings outstanding
during such quarter, (ii) the average rate for the Utility Money Pool during
such period, and (iii) the maximum amount outstanding during such period for
each source of outside borrowings.
B. Statement Pursuant to Rule 54
Applicants do not intend at present to use the borrowings proposed
herein to finance the acquisition of an exempt wholesale generator ("EWG") or
a foreign utility company ("FUCO"). If the Applicants' intention changes, an
amended Application-Declaration will be filed requesting authorization for
such use.
Under Rule 54, in determining whether to approve the issuance or
sale of a security by a registered holding company for purposes other than the
acquisition of an EWG or FUCO or other transactions by such registered holding
company or its subsidiaries other than with respect to EWGs or FUCOs, the
Commission shall not consider the effect of the capitalization or earnings of
any subsidiary which is an EWG or FUCO upon the registered holding company
system, if the conditions set forth in Rule 53(a), (b) and (c) are satisfied.
As set forth below, all applicable conditions set forth in Rule 53(a) are and,
assuming the consummation of the transactions proposed herein, will be
satisfied, and none of the conditions set forth in Rule 53(b) exists or, as a
result thereof, will exist. The following discussion assumes the CINergy
system's existence for the dates and periods in question.
Four CINergy system companies are EWGs or FUCOs. PSI Argentina,
Inc. ("PSI Argentina") and its subsidiary, Costanera Power Corp.
("Costanera"), were determined to be EWGs by the Federal Energy Regulatory
Commission ("FERC") in Costanera Power Corp., 61 FERC Par. 61,335 (1992), and
PSI Argentina, Inc., 68 FERC Par. 61,286 (1994). E P EDEGEL, Inc. was deter-
mined to be an EWG by the FERC in E P EDEGEL, Inc., 68 FERC Par. 61,265 (1994).
PSI Energy Argentina ("Energy Argentina") is a FUCO and has filed a Notifica-
tion of FUCO status on Form U-57. In addition to these investments, CINergy
owns a number of other companies formed to hold investments in FUCOs and/or
EWGs (CGE ECK, Inc., PSI T&D International, Inc. and PSI Yacyreta, Inc.), and
is seeking authorization in File No. 70-8589 to retain certain other companies
(including PSI Power Resource Development, Inc., PSI Power Resource Operations,
Inc., PSI International, Inc., and PSI Sunnyside, Inc.) and to form additional
companies to facilitate FUCO and EWG investments. Because none of these other
companies presently owns any EWG or FUCO, they are not included in the
calculations below.
Rule 53(a)(1): The average of CINergy's pro forma consolidated
retained earnings for the four consecutive quarters ended December 31, 1994
was $929 million, and CINergy's aggregate investment in EWGs and FUCOs at
December 31, 1994 was approximately $20 million, or approximately 2% of
consolidated retained earnings.
Rule 53(a)(2): CINergy will maintain books and records enabling it
to identify investments in and earnings from each EWG and FUCO in which it
directly or indirectly holds an interest. At present, CINergy does not hold
any interest in a domestic EWG; Rule 53(a)(2)(i) is therefore inapplicable.
In accordance with Rule 53(a)(2)(ii), the books and records and
financial statements of each foreign EWG and FUCO which is a "majority-owned
subsidiary company" of CINergy are kept in conformity with and prepared
according to U.S. generally accepted accounting principles ("GAAP"). CINergy
will provide the Commission access to such books and records and financial
statements, or copies thereof, in English, as the Commission may request.
In accordance with Rule 53(a)(2)(iii), for each foreign EWG and FUCO
in which CINergy directly or indirectly owns 50% or less of the voting
securities, CINergy will proceed in good faith, to the extent reasonable under
the circumstances, to cause each such entity's books and records to be kept in
conformity with, and the financial statements of each such entity to be
prepared according to, GAAP. If such books and records are maintained, or
such financial statements are prepared, according to a comprehensive body of
accounting principles other than GAAP, CINergy will, upon request of the
Commission, describe and quantify each material variation from GAAP in the
accounting principles, practices and methods used to maintain such books and
records and each material variation from GAAP in the balance sheet line items
and net income reported in such financial statements, as the case may be. In
addition, CINergy will proceed in good faith, to the extent reasonable under
the circumstances, to cause access by the Commission to such books and records
and financial statements, or copies thereof, as the Commission may request,
and in any event will make available to the Commission any such books and
records that are available to CINergy.
Rule 53(a)(3): At any one time, a maximum of approximately 25
CINergy system employees have rendered services to PSI Argentina, Costanera
and Energy Argentina. Based on current staffing levels, this represents less
than 0.3% of the approximately 8,650 full-time employees of CINergy's domestic
operating utility subsidiaries. Such services have heretofore been rendered,
in part, by employees of PSI Energy in accordance with the Commission's order
in PSI Resources, Inc. et al., Holding Co. Act Rel. No. 35-25674, 52 SEC
Docket 2533, 2534-35 (Nov. 13, 1992), and by employees of CG&E in accordance
with business practices established prior to the formation of the CINergy
system and the registration of CINergy as a holding company under the Act.
Pursuant to the Commission's October 21, 1994 Order granting the CINergy
Merger U-1, CINergy Services is authorized to provide services to utility and
non-utility associate companies, including those that are EWGs or FUCOs.
Rule 53(a)(4): CINergy is simultaneously submitting a copy of this
Application-Declaration, and will submit copies of any Rule 24 certificates
required hereunder, as well as a copy of Item 9 of CINergy's Form U5S and
Exhibits H and I thereto, to each of the public service commissions having
jurisdiction over the retail rates of CINergy's operating utility subsidiaries
at the time such documents are filed with the Commission.
Rule 53(b): The provisions of Rule 53(a) are not made inapplicable
to the authorizations herein requested by reason of the provisions of Rule
53(b).
Rule 53(b)(1): Neither CINergy nor any subsidiary of CINergy is the
subject of any pending bankruptcy or similar proceeding.
Rule 53(b)(2): CINergy's total capital invested in utility
operations as of December 31, 1994 totaled approximately $5.9 billion,
consisting of approximately $2.8 billion in long-term and $208 million in
short-term debt of CG&E, PSI Energy and the utility subsidiaries of CG&E, $478
million in preferred stock of CG&E and PSI Energy, and $2.4 billion in common
equity of CG&E, PSI Energy and the utility subsidiaries of CG&E. CINergy's
aggregate present investment in EWGs and FUCOs (approximately $20 million)
represents less than 0.4% of CINergy's total capital invested in utility
operations. Together with the $95 million in additional investment authority
requested by CINergy in its pending Application-Declaration in File No. 70-
8589, CINergy's aggregate investment authority for EWGs and FUCOs
($115,000,000) would represent less than 2% of CINergy's total capital
invested in utility operations. Average consolidated retained earnings for
the four quarters ended December 31, 1994 equaled $929 million, versus $1,053
million for the four quarters ended December 31, 1993, a difference of
approximately $124 million or 12%.
Rule 53(b)(3): For the 12 months ended December 31, 1994, CINergy
had net income of approximately $175,000 attributable to its direct or
indirect investments in EWGs and FUCOs.
Rule 53(c). Inasmuch as Rule 53(c) applies only if an applicant is
unable to satisfy the requirements of Rules 53(a) and (b), it is inapplicable
here.
C. Energy Partners is not a "subsidiary company" of CINergy
Through its indirect subsidiary CG&E Resource Marketing, Inc.,
CINergy holds a one-third partnership interest in Energy Partners, a gas
marketing partnership with Public Service Electric & Gas Company. Resource
Marketing was formed to compete with traditional regulated local distribution
companies by offering "merchant service" (i.e., acquiring natural gas and
selling it to customers) and to broker gas to industrial and large commercial
customers, with the initial aim of recapturing former customers of CG&E's gas
utility business.
CINergy's interest in Energy Partners is a minority interest, with
the remaining majority interest held by one partner unaffiliated with CINergy.
For this and other reasons set forth in the legal memorandum filed herewith
(Exhibit 16 hereto), CINergy does not "control" Energy Partners or possess a
"controlling influence" over its management or policies, and hereby requests
an order by the Commission that Energy Partners is not a "subsidiary company"
of CINergy within the meaning of Section 2(a)(8) of the Act.
Item 2. Fees, Commissions and Expenses.
An estimate of the fees and expenses to be paid or incurred by the
Applicants in connection with the proposed transactions is set forth below:
Amount
Holding Company Act filing fee . . . . . $ 2,000*
Rating agency fees for commercial
paper (annual) . . . . . . . . . . . . . 10,000
Counsel fees . . . . . . . . . . . . . . 60,000
Miscellaneous and incidental expenses
including travel, telephone and
postage. . . . . . . . . . . . . . . . . 3,000
Total. . . . . . . . . . . . . . . . . . $ 75,000
_______________
*Actual amount.
Fees with respect to bank borrowings are set forth in Item 1. In
addition to the foregoing fees, CINergy Services will provide certain services
in connection with the application, consisting primarily of treasury and legal
services.
Item 3. Applicable Statutory Provisions.
Sections 2(a)(8), 6, 7, 9(a), 10, 12(b), 12(f) and 13 of the Act and
Rules 40, 43, 45, 53, 54 and 80-95 thereunder are or may be applicable to one
or more of the proposed transactions. To the extent any other sections of the
Act and the Commission's rules thereunder may be applicable to the proposed
transactions, the Applicants hereby request appropriate orders thereunder.
Item 4. Regulatory Approval.
PSI Energy, West Harrison, Lawrenceburg and Miami: Under the
Indiana Code, IURC authorization is not required for borrowings of 12 months
or less by Indiana utility companies and is therefore not required for the
borrowings by PSI Energy (including the issuance of commercial paper by PSI
Energy), West Harrison, Lawrenceburg and Miami proposed herein. The Indiana
Code does not limit the use of such 12-month-or-less borrowings or preclude
the use of the proceeds of such borrowings for purposes of making loans
through the Utility Money Pool, and IURC authorization is not required for PSI
Energy, West Harrison, Lawrenceburg or Miami to lend the proceeds of such
12-month-or-less borrowings through the Utility Money Pool as proposed herein.
ULH&P: Pursuant to an Order issued on October 25, 1994 in FERC
Docket No. ES94-43-000 (Exhibit 9 hereto), ULH&P presently has all necessary
authority from the FERC to issue up to $35,000,000 of unsecured promissory
notes through December 31, 1996. No additional authorization from the
Kentucky Public Service Commission ("KPSC") is required under Kentucky law for
the ULH&P borrowings proposed herein.
Additional approvals: Pursuant to the terms of certain settlement
agreements, commitments and orders relating to the mergers that resulted in
the formation of the CINergy system, CINergy is required to submit certain
proposed inter-affiliate agreements subject to the Commission's jurisdiction
(including the proposed Utility Money Pool Agreement) to the IURC and the
Public Utilities Commission Ohio ("PUCO") for their review (over a period of
up to 60 days) before filing such agreements with the Commission. During such
review period, the applicable state commission may (among other things)
reject, disapprove or find unreasonable the proposed inter-affiliate
agreement, as more fully described in Item 3.B of the CINergy Merger U-1.
On April 4, 1995, copies of the Utility Money Pool Agreement were
submitted to the IURC and the PUCO. On June 29, 1995, PSI Energy submitted a
letter to the IURC Staff (Exhibit 8.1 hereto) in which PSI Energy agreed to
provide the IURC with certain information on a periodic basis relating to PSI
Energy's participation in the Utility Money Pool to be filed by PSI Energy
with the Commission pursuant to Item 1 hereof. On July 19, 1995, the IURC
Staff provided PSI Energy with a letter (Exhibit 8.2 hereto) clearing the
Utility Money Pool Agreement. On May 4, 1995, the PUCO issued an order in
Case No. 95-275-GE-AIS approving the Utility Money Pool Agreement.
Except as described above, no state or federal regulatory authority,
other than the Commission under the Act, has jurisdiction over any of the
proposed transactions, and no other state or federal authorizations are
required for the transactions described herein.
Item 5. Procedure.
It is requested that the Commission issue and publish no later than
March 17, 1995, the requisite notice under Rule 23 with respect to the filing
of this Application-Declaration, such notice to specify a date not later than
April 11, 1995 as the date after which an order granting and permitting this
Application-Declaration to become effective may be entered by the Commission
and that the Commission enter not later than April 12, 1995, an appropriate
order granting and permitting this Application-Declaration to become
effective.
No recommended decision by a hearing officer or other responsible
officer of the Commission is necessary or required in this matter. The
Division of Investment Management of the Commission may assist in the
preparation of the Commission's decision in this matter. There should be no
thirty-day waiting period between the issuance and the effective date of any
order issued by the Commission in this matter, and it is respectfully
requested that any such order be made effective immediately upon the entry
thereof.
Item 6. Exhibits and Financial Statements.
Exhibit 1.1 - Withdrawn.
Exhibit 1.2 - Withdrawn.
Exhibit 1.3 - Withdrawn.
Exhibit 1.4 - Withdrawn.
Exhibit 1.5 - Withdrawn.
Exhibit 1.6 - Withdrawn.
Exhibit 1.7 - Withdrawn.
Exhibit 1.8 - Withdrawn.
Exhibit 1.9 - Withdrawn.
Exhibit 1.10 - Withdrawn.
Exhibit 1.11 - Withdrawn.
Exhibit 1.12 - Withdrawn.
Exhibit 1.13 - Letter agreement between ULH&P and Star Bank and Grid
Note ($7,500,000).
Exhibit 1.14 - Letter agreement between ULH&P and The Fifth Third
Bank and Promissory Note ($7,500,000).
Exhibit 1.15 - Letter agreement between ULH&P and Central Trust
Company and Amended and Restated Grid Note in favor
of PNC Bank, Ohio, National Association ($7,500,000).
Exhibit 1.16 - Letter agreement between ULH&P and National City
Bank, Kentucky, and Master Promissory Note in favor
of First National Bank of Louisville ($7,500,000).
Exhibit 1.17 - Letter agreement between The Lawrenceburg Gas Company
and Star Bank N.A., Indiana ($400,000).
Exhibit 1.18 - Withdrawn.
Exhibit 1.19 - Withdrawn.
Exhibit 1.20 - Committed Line of Credit Agreement between PSI Energy
and Barclays Bank PLC and Grid Note of same date
($15,000,000).
Exhibit 1.21 - Withdrawn.
Exhibit 1.22 - Letter agreement between PSI Energy and The Chase
Manhattan Bank, N.A., Promissory Note, and amendment
letters ($30,000,000).
Exhibit 1.23 - Withdrawn.
Exhibit 1.24 - Amended and Restated Revolving Note by PSI Energy in
favor of The Fifth Third Bank ($15,000,000).
Exhibit 1.25 - Withdrawn.
Exhibit 1.26 - Letter agreement between PSI Energy and Bank of
Montreal and Unsecured Note ($27,000,000).
Exhibit 1.27 - Withdrawn.
Exhibit 1.28 - Withdrawn.
Exhibit 1.29 - Withdrawn.
Exhibit 1.30 - Revolving Credit Agreement between PSI Energy and
Swiss Bank Corporation, New York Branch, Promissory
Note, and Amendment No. 2 ($15,000,000).
Exhibit 1.31 - Withdrawn.
Exhibit 2 - Form of note to evidence borrowings from banks.
Exhibit 3 - Form of commercial paper note.
Exhibit 4 - Form of note to be executed by borrowing Applicants
to lending Applicants.
Exhibit 5 - Form of Utility Money Pool Agreement (filed
herewith).
Exhibit 6 - Withdrawn.
Exhibit 6.1 - Withdrawn.
Exhibit 7 - Withdrawn.
Exhibit 8 - Withdrawn.
Exhibit 8.1 - Letter from PSI Energy to IURC Staff dated June 29,
1995 (filed herewith).
Exhibit 8.2 - Letter from Robert C. Glazier, Director of Utilities
for the IURC, to PSI Energy dated July 19, 1995
(filed herewith).
Exhibit 9 - FERC Order issued October 25, 1994 (Docket No.
ES94-43-000).
Exhibit 10 - Withdrawn.
Exhibit 10.1 - Revised preliminary opinion of counsel (filed
herewith).
Exhibit 11 - Final or "past tense" opinion of counsel (to be filed
with certificate of notification).
Exhibit 12 - Proposed notice of proceeding.
Exhibit 13 - Withdrawn.
Exhibit 14 - Financial statements of Applicants (filed herewith).
Exhibit 15 - U.S. Energy Partners General Partnership Agreement
Effective as of January 1, 1994 (filed herewith).
Exhibit 16 - Legal memorandum (filed herewith).
Exhibit 27 - Financial data schedules (filed with electronic
submission only) (filed herewith).
Item 7. Information as to Environmental Effects.
The proposed transactions do not involve major federal action having
a significant effect on the human environment. To the best of the Applicants'
knowledge no federal agency has prepared or is preparing an environmental
impact statement with respect to the proposed transactions.
Item 8. Power of Attorney.
KNOW ALL MEN BY THESE PRESENTS, that each person signing below
constitutes J. Wayne Leonard, Jackson H. Randolph and William L. Sheafer, and
each of them, with full power to act without the others, his lawful attorney-
in-fact and agent, with full power of substitution and resubstitution, for him
and in his name, in any capacity, to sign any further amendment to this
Application-Declaration, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Commission granting unto the
attorneys-in-fact and agents, and each of them, full authority to do each act
necessary to be done, as fully to all purposes as he might do in person,
hereby ratifying all that the attorneys-in-fact and agents or any of them, or
their or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
<PAGE>
S I G N A T U R E
Pursuant to the requirements of the Public Utility Holding Company
Act of 1935, as amended, the undersigned companies have duly caused this
document to be signed on their behalf by the undersigned thereunto duly
authorized.
Dated: July 27, 1995
CINergy CORP.
By: WILLIAM L. SHEAFER
William L. Sheafer
Treasurer
PSI ENERGY, INC.
By: WILLIAM L. SHEAFER
William L. Sheafer
Treasurer
THE UNION LIGHT, HEAT AND POWER CO.
By: WILLIAM L. SHEAFER
William L. Sheafer
Treasurer
THE WEST HARRISON GAS AND ELECTRIC CO.
By: WILLIAM L. SHEAFER
William L. Sheafer
Treasurer
LAWRENCEBURG GAS CO.
By: WILLIAM L. SHEAFER
William L. Sheafer
Treasurer
MIAMI POWER CORPORATION
By: WILLIAM L. SHEAFER
William L. Sheafer
Treasurer
<PAGE>
EXHIBIT INDEX
The number in parentheses after each exhibit description refers to the number
of the amendment to this Application-Declaration with which that exhibit was
filed. Exhibits marked "(0)" were filed with the initial Application-
Declaration.
Exhibit Transmission
Number Exhibit Method
1.1 Withdrawn.
1.2 Withdrawn.
1.3 Withdrawn.
1.4 Withdrawn.
1.5 Withdrawn.
1.6 Withdrawn.
1.7 Withdrawn.
1.8 Withdrawn.
1.9 Withdrawn.
1.10 Withdrawn.
1.11 Withdrawn.
1.12 Withdrawn.
1.13 Letter agreement between ULH&P and Star Bank and
Grid Note ($7,500,000) (1). Form SE
1.14 Letter agreement between ULH&P and The Fifth Third
Bank and Promissory Note ($7,500,000) (1). Form SE
1.15 Letter agreement between ULH&P and Central Trust
Company and Amended and Restated Grid Note in favor
of PNC Bank, Ohio, National Association
($7,500,000) (1). Form SE
1.16 Letter agreement between ULH&P and National City Bank,
Kentucky, and Master Promissory Note in favor of First
National Bank of Louisville ($7,500,000) (1). Form SE
1.17 Letter agreement between The Lawrenceburg Gas Company
and Star Bank N.A., Indiana ($400,000) (1). Form SE
1.18 Withdrawn.
1.19 Withdrawn.
1.20 Committed Line of Credit Agreement between PSI Energy
and Barclays Bank PLC and Grid Note ($15,000,000) (1). Form SE
1.21 Withdrawn.
1.22 Letter agreement between PSI Energy and The Chase
Manhattan Bank, N.A., Promissory Note, and amendment
letters ($30,000,000) (1). Form SE
1.23 Withdrawn.
1.24 Amended and Restated Revolving Note by PSI Energy in
favor of The Fifth Third Bank ($15,000,000) (1). Form SE
1.25 Withdrawn.
1.26 Letter agreement between PSI Energy and Bank of
Montreal and Unsecured Note ($27,000,000) (1). Form SE
1.27 Withdrawn.
1.28 Withdrawn.
1.29 Withdrawn.
1.30 Revolving Credit Agreement between PSI Energy and
Swiss Bank Corporation, New York Branch, Promissory
Note, and Amendment No. 2 ($15,000,000) (1). Form SE
1.31 Withdrawn.
2 Form of note to evidence borrowings from banks (0). Electronic
3 Form of commercial paper note (0). Electronic
4 Form of note to be executed by borrowing Applicants
to lending Applicants (0). Electronic
5 Form of Utility Money Pool Agreement (2). Electronic
6 Withdrawn.
6.1 Withdrawn.
7 Withdrawn.
8 Withdrawn.
8.1 Letter from PSI Energy to IURC Staff dated June
29, 1995 (2). Electronic
8.2 Letter from Robert C. Glazier, Director of Utilities
for the IURC, to PSI Energy dated July 19, 1995 (2). Electronic
9 FERC Order issued October 25, 1994 (Docket No.
ES94-43-000) (1). Form SE
10 Withdrawn.
10.1 Revised preliminary opinion of counsel (2) Electronic
11 Final or "past tense" opinion of counsel (to be filed
with certificate of notification). --
12 Proposed notice of proceeding (0). Electronic
13 Withdrawn.
14 Financial statements of Applicants (2). Electronic
15 U.S. Energy Partners General Partnership Agreement
Effective as of January 1, 1994 (2). Form SE
16 Legal memorandum (2). Electronic
27 Financial data schedules (filed with electronic
submission only) (2). Electronic
File No. 70-8587
Exhibit 5
Utility Money Pool Agreement
This UTILITY MONEY POOL AGREEMENT is made and entered into this ___
day of _________, 1995 by and among CINergy Corp. ("CINergy"), a Delaware
corporation and a registered holding company under the Public Utility Holding
Company Act of 1935, as amended (the "Act"); CINergy Services, Inc. ("CINergy
Services"), a Delaware corporation and a subsidiary service company of
CINergy; PSI Energy, Inc. ("PSI Energy"), an Indiana corporation and a utility
subsidiary of CINergy; The Cincinnati Gas & Electric Company ("CG&E"), an Ohio
corporation and a utility subsidiary of CINergy; The Union Light, Heat and
Power Co. ("ULH&P"), a Kentucky corporation and a utility subsidiary of CG&E;
The West Harrison Gas and Electric Co. ("West Harrison"), an Indiana
corporation and a utility subsidiary of CG&E; Lawrenceburg Gas Co.
("Lawrenceburg"), an Indiana corporation and a utility subsidiary of CG&E;
Miami Power Corp. ("Miami"), an Indiana corporation and a utility subsidiary
of CG&E; Tri-State Improvement Co. ("Tri-State"), an Ohio corporation and a
subsidiary of CG&E; and KO Transmission Co. ("KO"), a Kentucky corporation and
a subsidiary of CG&E (each a "party" and collectively, the "parties").
Recitals
The parties from time to time have need to borrow funds on a
short-term basis. Some of the parties from time to time have funds available
to loan on a short-term basis. The parties desire to establish a pool (the
"Utility Money Pool") to coordinate and provide for certain of their
short-term cash and working capital requirements.
NOW THEREFORE, in consideration of the premises, and the mutual
promises set forth herein, the parties hereto agree as follows:
ARTICLE I
CONTRIBUTIONS AND BORROWINGS
Section 1.1 Contributions to Utility Money Pool. Each party will
determine each day, on the basis of cash flow projections and other relevant
factors, in such party's sole discretion, the amount of funds it has available
for contribution to the Utility Money Pool, and will contribute such funds to
the Utility Money Pool. The determination of whether a party at any time has
surplus funds to lend to the Utility Money Pool or shall lend funds to the
Utility Money Pool will be made by such party's chief financial officer or
treasurer, or by a designee thereof, on the basis of cash flow projections and
other relevant factors, in such party's sole discretion. Each party may
withdraw any of its funds at any time upon notice to CINergy Services as
administrative agent of the Utility Money Pool.
Section 1.2 Rights to Borrow. Subject to the provisions of Section
1.4(b) of this Agreement, all short-term borrowing needs of the parties, with
the exception of CINergy, will be met by funds in the Utility Money Pool to
the extent such funds are available. Each party (other than CINergy) shall
have the right to make short-term borrowings from the Utility Money Pool from
time to time, subject to the availability of funds and the limitations and
conditions set forth herein and in the applicable orders of the Securities and
Exchange Commission ("SEC"). Each party (other than CINergy) may request
loans from the Utility Money Pool from time to time during the period from the
date hereof until this Agreement is terminated by written agreement of the
parties; provided, however, that the aggregate amount of all loans requested
by any party hereunder shall not exceed the applicable borrowing limits set
forth in applicable orders of the SEC and other regulatory authorities,
resolutions of such party's shareholders and Board of Directors, such party's
governing corporate documents, and agreements binding upon such party. No
loans through the Utility Money Pool will be made to, and no borrowings
through the Utility Money Pool will be made by, CINergy.
Section 1.3 Source of Funds. (a) Funds will be available through
the Utility Money Pool from the following sources for use by the parties from
time to time: (i) surplus funds in the treasuries of parties other than
CINergy, (ii) surplus funds in the treasury of CINergy, and (iii) proceeds
from bank borrowings by parties and the sale of commercial paper by CINergy,
CG&E and PSI Energy ("External Funds"), in each case to the extent permitted
by applicable laws and regulatory orders. Funds will be made available from
such sources in such other order as CINergy Services, as administrator of the
Utility Money Pool, may determine will result in a lower cost of borrowing to
companies borrowing from the Utility Money Pool, consistent with the
individual borrowing needs and financial standing of the parties providing
funds to the Utility Money Pool.
(b) Borrowing parties will borrow pro rata from each lending party
in the proportion that the total amount loaned by such lending party bears to
the total amount then loaned through the Utility Money Pool. On any day when
more than one fund source (e.g., surplus treasury funds of CINergy and other
Utility Money Pool participants ("Internal Funds") and External Funds), with
different rates of interest, is used to fund loans through the Utility Money
Pool, each borrowing party will borrow pro rata from each fund source in the
same proportion that the amount of funds provided by that fund source bears to
the total amount of short-term funds available to the Utility Money Pool.
Section 1.4 Authorization. (a) Each loan shall be authorized by
the lending party's chief financial officer or treasurer, or by a designee
thereof.
(b) All borrowings from the Utility Money Pool shall be authorized
by the borrowing party's chief financial officer or treasurer, or by a
designee thereof. No party shall be required to effect a borrowing through
the Utility Money Pool if such party determines that it can (and is authorized
to) effect such borrowing at lower cost directly from banks or through the
sale of its own commercial paper.
Section 1.5 Interest. Each party receiving a loan shall accrue
interest monthly on the unpaid principal amount of such loan to the Utility
Money Pool from the date of such loan until such principal amount shall be
paid in full.
(a) If only Internal Funds comprise the funds available in the
Utility Money Pool, the interest rate applicable to loans of such Internal
Funds shall be the CD yield equivalent of the 30-day Federal Reserve "AA"
Industrial Commercial Paper Composite Rate (or, if no such Composite Rate is
established for that day, then the applicable rate shall be the Composite Rate
for the next preceding day for which such Composite Rate was established).
(b) If only External Funds comprise the funds available in the
Utility Money Pool, the interest rate applicable to loans of such External
Funds shall be equal to the lending party's cost for such External Funds (or,
if more than one party had made available External Funds on such day, the
applicable interest rate shall be a composite rate, equal to the weighted
average of the cost incurred by the respective parties for such External
Funds).
(c) In cases where both Internal Funds and External Funds are
concurrently borrowed through the Utility Money Pool, the rate applicable to
all loans comprised of such "blended" funds shall be a composite rate, equal
to the weighted average of the (i) cost of all Internal Funds contributed by
parties (as determined pursuant to Section 1.5(a) above) and (ii) the cost of
all such External Funds (as determined pursuant to Section 1.5(b) above);
provided, that in circumstances where Internal Funds and External Funds are
available for loans through the Utility Money Pool, loans may be made
exclusively from Internal Funds or External Funds, rather than from a "blend"
of such funds, to the extent it is expected that such loans would result in a
lower cost of borrowing.
Section 1.6 Certain Costs. The cost of compensating balances and
fees paid to banks to maintain credit lines by parties lending External Funds
to the Utility Money Pool shall initially be paid by the party maintaining
such line. A portion of such costs shall be retroactively allocated every
month to the parties borrowing such External Funds through the Utility Money
Pool in proportion to their respective daily outstanding borrowings of such
External Funds.
Section 1.7 Repayment. Each party receiving a loan hereunder shall
repay the principal amount of such loan, together with all interest accrued
thereon, on demand and in any event within 365 days of the date on which such
loan was made. All loans made through the Utility Money Pool may be prepaid
by the borrower without premium or penalty.
Section 1.8 Form of Loans to parties. Loans to the parties through
the Utility Money Pool will be made pursuant to open-account advances,
repayable upon demand and in any event not later than one year after the date
of the advance; provided, that each lending party shall at all times be
entitled to receive upon demand one or more promissory notes evidencing any
and all loans by such lender. Any such note shall: (a) be substantially in
the form filed as Exhibit 4 to the Form U-1 Application-Declaration in File
No. 70-8587, (b) be dated as of the date of the initial borrowing, (c) mature
on demand or on a date agreed by the parties to the transaction, but in any
event not later than one year after the date of the applicable borrowing, and
(d) be repayable in whole at any time or in part from time to time, without
premium or penalty.
ARTICLE II
OPERATION OF UTILITY MONEY POOL
Section 2.1 Operation. Operation of the Utility Money Pool,
including record keeping and coordination of loans, will be handled by CINergy
Services under the authority of the appropriate officers of the parties.
CINergy Services shall be responsible for the determination of all applicable
interest rates and charges to be applied to advances outstanding at any time
hereunder, shall maintain records of all advances, interest charges and
accruals and interest and principal payments for purposes hereof, and shall
prepare periodic reports thereof for the parties. CINergy Services will
administer the Utility Money Pool on an "at cost" basis. Separate records
shall be kept by CINergy Services for the money pool established by this
agreement and any other money pool administered by CINergy Services.
Section 2.2 Investment of Surplus Funds in the Utility Money Pool.
Funds not required to meet Utility Money Pool loans (with the exception of
funds required to satisfy the Utility Money Pool's liquidity requirements)
will ordinarily be invested in one or more short-term investments, including:
(i) interest-bearing accounts with banks; (ii) obligations issued or
guaranteed by the U.S. government and/or its agencies and instrumentalities,
including obligations under repurchase agreements; (iii) obligations issued or
guaranteed by any state or political subdivision thereof, provided that such
obligations are rated not less than A by a nationally recognized rating
agency; (iv) commercial paper rated not less than A-1 or P-1 or their
equivalent by a nationally recognized rating agency; (v) money market funds;
(vi) bank certificates of deposit; (vii) Eurodollar funds; and (viii) such
other investments as are permitted by Section 9(c) of the Act and Rule 40
thereunder.
Section 2.3 Allocation of Interest Income and Investment Earnings.
The interest income and other investment income earned by the Utility Money
Pool on loans and investment of surplus funds will be allocated among the
parties in accordance with the proportion each party's contribution of funds
in the Utility Money Pool bears to the total amount of funds in the Utility
Money Pool and the cost of any External Funds provided to the Utility Money
Pool by such party. Interest and other investment earnings will be computed
on a daily basis and settled once per month.
Section 2.4 Event of Default. If any party shall generally not pay
its debts as such debts become due, or shall admit in writing its inability to
pay its debts generally, or shall make a general assignment for the benefit of
creditors, or any proceeding shall be instituted by or against any party
seeking to adjudicate it a bankrupt or insolvent, then the other parties may
declare the unpaid principal amount of any loans to such party, and all
interest thereon, to be forthwith due and payable and all such amounts shall
forthwith become due and payable.
ARTICLE III
MISCELLANEOUS
Section 3.1 Amendments. No amendment to this Agreement shall be
adopted except in a writing executed by the parties.
(a) Prior to filing any amendment to this Agreement with the SEC,
the parties will file with the Indiana Utility Regulatory Commission (the
"IURC") and the Public Utilities Commission of Ohio (the "PUCO" and, together
with the IURC, the "State Commissions") and provide to the Indiana and Ohio
Utility Consumer Counselors (and, upon request, to appropriate parties) a copy
of such amendment.
(b) In the event that an amendment is finally rejected or
disapproved or found to be unreasonable by one or more of the State
Commissions prior to filing with the SEC, the amendment will not become
effective and the parties will not request SEC approval of the amendment.
(c) In the event that an amendment is rejected or disapproved or
found to be unreasonable by one or more of the State Commissions after it has
been filed with the SEC but before it has been approved by the SEC, the
amendment will be terminated and the parties agree to request withdrawal of
the filing.
(d) Notwithstanding paragraphs (b) and (c) above, in the event that
an amendment is rejected, disapproved or found to be unreasonable by one or
more of the State Commissions before it has been approved by the SEC, the
parties shall have the right to request further revisions of the amendment in
order to cure or remove the cause of the State Commission's rejection,
disapproval or finding of unreasonableness. Upon request by a party, the
other parties agree promptly to negotiate in good faith to revise the
amendment, and thereafter to file for any necessary regulatory authorization
of the renegotiated amendment. If the parties are unable to reach agreement
satisfactory to each of them and to each affected State Commission after good
faith negotiations, then paragraphs (b) and (c) above, as applicable, will
apply.
(e) In the event that each State Commission has previously approved
an amendment prior to SEC approval, paragraph (f) below shall not apply.
(f) In the event that an amendment has become effective and is
subsequently rejected, disapproved or found to be unreasonable by one or more
of the State Commissions, the parties will make a good faith effort to
terminate, amend or modify the amendment in a manner which remedies the State
Commission's adverse findings without adverse impact on any of the parties.
The parties will request to meet with representatives of the State Commissions
and make a good faith attempt to resolve any differences in the affected
states regarding the subject amendment. If agreement can be reached to
terminate, amend or modify the amendment in a manner satisfactory to the
contracting parities and to the representatives of each State Commission, the
parties shall file such amended contract with the appropriate state and
federal regulatory agencies, seeking all necessary regulatory authorizations.
If the parties are unable to reach agreement satisfactory to each of them and
to each affected State Commission, after good faith negotiations, then they
shall be under no obligation to further amend the amendment.
(g) Nothing in this Section 3.1 is intended to amend, modify or
alter the authority of the SEC under the Act.
Section 3.2 Legal Responsibility. Nothing herein contained shall
render any party liable for the obligations of any other party hereunder and
the rights, obligations and liabilities of the parties are several in
accordance with their respective obligations, and not joint.
Section 3.3 Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Ohio.
Section 3.4 Certain Conditions. This Agreement is conditioned upon
the following:
(a) CG&E and CINergy will not seek to overturn, reverse, set aside,
change or enjoin, whether through appeal or the initiation or maintenance of
any action in any forum, a decision or order of the PUCO which pertains to
recovery, disallowance, allowance, deferral, or ratemaking treatment of any
expense, charge, cost, or allocation incurred or accrued by CG&E in or as a
result of a contract, agreement, arrangement, or transaction with any
affiliate, associate, holding, mutual service or subsidiary company on the
basis that such expense, charge, cost, or allocation has itself been filed
with or approved by the SEC, or was incurred pursuant to a contract,
arrangement, agreement, or allocation method which was filed with or approved
by the SEC.
(b) PSI Energy and CINergy will not seek to overturn, reverse, set
aside, change or enjoin, whether through appeal or the initiation or
maintenance of any action in any forum, a decision or order of the IURC which
pertains to recovery, disallowance, allowance, deferral, or ratemaking
treatment of any expense, charge, cost, or allocation incurred or accrued by
PSI Energy in or as a result of a contract, agreement, arrangement, or
transaction with any affiliate, associate, holding, mutual service or
subsidiary company on the basis that such expense, charge, cost, or allocation
has itself been filed with or approved by the SEC, or was incurred pursuant to
a contract, arrangement, agreement, or allocation method which was filed with
or approved by the SEC.
(c) CG&E will continue not to issue short-term debt without
authorization from the PUCO.
IN WITNESS WHEREOF, the undersigned companies have duly caused this
document to be signed on their behalf on the date first written above by the
undersigned thereunto duly authorized.
CINergy CORP.
By________________________________
Name:
Title:
CINergy SERVICES, INC.
By_________________________________
Name:
Title:
PSI ENERGY, INC.
By_________________________________
Name:
Title:
THE CINCINNATI GAS & ELECTRIC
COMPANY
By________________________________
Name:
Title:
THE UNION LIGHT, HEAT AND POWER CO.
By_________________________________
Name:
Title:
THE WEST HARRISON GAS AND ELECTRIC CO.
By________________________________
Name:
Title:
LAWRENCEBURG GAS CO.
By_________________________________
Name:
Title:
MIAMI POWER CORP.
By________________________________
Name:
Title:
TRI-STATE IMPROVEMENT CO.
By________________________________
Name:
Title:
KO TRANSMISSION CO.
By________________________________
Name:
Title:
File No. 70-8587
Exhibit 8.1
PSI Energy
Legal Department
1000 East Main Street
Plainfield, Indiana 46168
VIA HAND DELIVERY
June 29, 1995
Mr. Robert C. Glazier
Indiana Utility Regulatory Commission
302 West Washington Street, Room E306
Indiana Government Center South
Indianapolis, Indiana 46204
Re: PSI Energy, Inc. and CINergy Corp.
Affiliate Guidelines
Utility Money Pool Agreement
SEC Form U-1; SEC File No. 70-8587
Dear Bob:
Reference is made to our telephone conference call of June 27, 1995
concerning the above-referenced matter.
This correspondence will confirm the agreement of PSI Energy, Inc.
("PSI") and CINergy Corp. ("CINergy") as follows:
(1) PSI will provide the Indiana Utility Regulatory Commission ("IURC")
with a copy of each report which CINergy Services, Inc. files with the
Securities and Exchange Commission ("SEC") pursuant to Item 1.D of the Form
U-1 which PSI and the other Applicants filed with the SEC concerning the
proposed Utility Money Pool Agreement ("Agreement"); such reports will be
filed with the SEC on a quarterly basis within 45 days after the end of the
calendar quarter and will set forth (i) each Applicant's maximum principal
amount of short-term borrowings outstanding, (ii) the average rate of the
money pool over the period, and (iii) the maximum amount outstanding during
the period for each source of outside borrowings; PSI will provide the IURC
with a copy of each such report when it is filed with the SEC.
(2) Representatives of PSI, CINergy and CINergy Services, Inc. will meet
with representatives of the IURC Staff following the filing with the SEC of
the first report under Paragraph (1) above and discuss the information set
forth in such report and the accounting for transactions under the Agreement;
PSI understands that following such meeting the IURC Staff may require PSI to
submit to the IURC Staff additional information concerning such transactions
beyond the information set forth in such report.
It is my understanding that the agreements in the two immediately
preceding paragraphs resolve any concerns or questions that the IURC Staff may
have with respect to the Agreement submitted by PSI for IURC Staff review
pursuant to Section IV(B) of PSI's Affiliate Guidelines (see Section 5 of
PSI's Retail Electric Tariff). If my understanding is correct, then please
confirm in writing that the IURC Staff clears the Agreement for filing by PSI
with the IURC and the SEC.
Please contact me if you should have any comments or questions
concerning this matter.
Sincerely,
/s/Ronald J. Brothers
File No. 70-8587
Exhibit 8.2
July 19, 1995
Ronald J. Brothers
Associate General Counsel
PSI Energy
1000 East Main Street
Plainfield, IN 46168
RE: PSI Energy, Inc. - Affiliate Guidelines - Utility Money Pool Agreement
Dear Ron:
The Commission's staff has completed its review of the affiliate contract
entitled "Utility Money Pool Agreement" provided to the staff on April 4,
1995 by PSI Energy and the agreement is now cleared for filing with the IURC
and the SEC in accordance with PSI's Affiliate Guidelines (see section 5 of
PSI's Retail Electric Tariff). The staff has cleared this contract for filing
based on PSI's answers to questions posed by the commission's staff. In
clearing this contract the staff is specifically relying on agreements made by
PSI and CINergy in a letter to me dated June 29, 1995 signed by yourself.
We apologize for the length of time it took the staff to review this contract
and clear it for filing. Future contracts will be handled more efficiently.
Very truly yours,
/s/Robert C. Glazier
Director of Utilities
RCG/lc
cc: Randy Clemens, General Counsel
Bob Pauley, Chief Economist
Jerry Webb, Chief Engineer
Mike Gallagher, Chief Accountant
Karen McKinney, Assistant Chief Economist
File 70-8587
Exhibit 10.1
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, NY 10005
July 27, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Form U-1 Application-Declaration
Dear Sirs:
We refer to the Form U-1 Application-Declaration, as amended and
restated by Amendment No. 2 thereto (the "Amended and Restated Application-
Declaration"), filed by CINergy Corp. ("CINergy"), a Delaware corporation and
a registered public utility holding company under the Public Utility Holding
Company Act of 1935, as amended (the "Act"), and its subsidiary companies PSI
Energy, Inc. ("PSI Energy"), The Union Light, Heat and Power Co. ("ULH&P"),
The West Harrison Gas and Electric Co. ("West Harrison"), Lawrenceburg Gas Co.
("Lawrenceburg"), and Miami Power Corp. ("Miami"). Capitalized terms not
defined herein shall have the meanings ascribed to such terms in the Amended
and Restated Application-Declaration.
The Amended and Restated Application-Declaration requests: (a)
authorization (i) for PSI Energy, ULH&P, Lawrenceburg, West Harrison and Miami
to issue notes in connection with short-term borrowings with maturities of 12
months or less from banks and bank trust departments as set forth in Item
1.A.3 of the Amended and Restated Application-Declaration and through a
Utility Money Pool as set forth in Item 1.A.5 of the Amended and Restated
Application-Declaration, (ii) for CINergy, in connection with borrowings by
its subsidiary companies from banks and bank trust departments pursuant to the
authorization requested in the preceding clause or applicable rules of the
Commission, to issue guarantees and letters of credit as set forth in Item
1.A.3.b of the Amended and Restated Application-Declaration, and (iii) for PSI
Energy to issue commercial paper as set forth in Item 1.A.4 of the Amended and
Restated Application-Declaration; and (b) an order of the Commission declaring
that U.S. Energy Partners ("Energy Partners"), a partnership in which CINergy
holds an interest, is not a "subsidiary company" of CINergy within the meaning
of Section 2(a)(8) of the Act (collectively, the "Transactions"). We have
acted as special counsel for CINergy in connection with the Transactions and,
as such counsel, we are familiar with the corporate proceedings taken and to
be taken by CINergy in connection with the Transactions as described in the
Amended and Restated Application-Declaration.
We have examined originals, or copies certified to our satisfaction,
of such corporate records of CINergy, certificates of public officials,
certificates of officers and representatives of CINergy, and other documents
as we have deemed it necessary to require as a basis for the opinions
hereinafter expressed. In such examination we have assumed the genuineness of
all signatures and the authenticity of all documents submitted to us as
originals and the conformity with the originals of all documents submitted to
us as copies. As to various questions of fact material to such opinions we
have, when relevant facts were not independently established, relied upon
certificates by officers of CINergy and other appropriate persons and
statements contained in the Amended and Restated Application-Declaration.
The opinions expressed below in respect of the Transactions
described in the Amended and Restated Application-Declaration are subject to
the following assumptions or conditions:
a. The Transactions shall have been duly authorized and approved to
the extent required by state law by the Board of Directors of CINergy, PSI
Energy, ULH&P, Lawrenceburg, West Harrison and Miami.
b. The Securities and Exchange Commission shall have duly entered
an appropriate order or orders granting the Amended and Restated
Application-Declaration and permitting the Amended and Restated
Application-Declaration to become effective with respect to the Transactions.
c. The Transactions shall have been accomplished in accordance with
all approvals, authorizations, consents, certificates and orders of any
applicable state commission or regulatory authority required for the
consummation of the Transactions, and all such required approvals,
authorizations, consents, certificates and orders shall have been obtained and
remain in effect.
d. The commercial paper and other notes proposed to be issued by
PSI Energy to non-associate companies, and the notes proposed to be issued by
borrowing Applicants to lending Applicants, shall be substantially in the
forms attached as exhibits to the Amended and Restated Application-Declaration
and shall be properly completed and executed and, where required,
countersigned.
e. The rates of interest on the commercial paper and notes that are
the subject of the Amended and Restated Application-Declaration shall not
exceed the interest rates permitted by applicable state and federal law.
f. Borrowings will not exceed those levels permitted from time to
time by the borrowing Applicant's Articles or Certificate of Incorporation or
other governing corporate documents and debt instruments and agreements to
which the borrowing Applicant is a party or by which its property is bound,
and applicable laws and orders of governmental and regulatory authorities with
jurisdiction over such borrowing Applicant.
g. No act or event other than as described herein shall have
occurred subsequent to the date hereof which would change the opinions
expressed above.
h. The consummation of the Transactions shall be conducted under
our supervision, and all legal matters incident thereto shall be satisfactory
to us, including the receipt in satisfactory form of such opinions of other
counsel, qualified to practice in jurisdictions pertaining to such
transactions in which we are not admitted to practice, as we may deem
appropriate.
Based upon the foregoing, and having regard to legal considerations
which we deem relevant, we are of the opinion that, in the event that the
proposed Transactions are consummated in accordance with the Amended and
Restated Application-Declaration, as it may be amended, and subject to the
assumptions and conditions set forth above:
1. CINergy will be validly organized and duly existing under the
laws of the State of Delaware. PSI Energy, Lawrenceburg, West Harrison and
Miami will be validly organized and duly existing under the laws of the State
of Indiana. ULH&P will be validly organized and duly existing under the laws
of the Commonwealth of Kentucky.
2. All state laws applicable to the proposed Transactions will have
been complied with.
3. The lending Applicants will legally acquire any promissory notes
of the borrowing Applicants issued in connection with the proposed
Transactions.
4. The commercial paper and notes proposed to be issued by
Applicants to non-associate companies, and the notes proposed to be issued by
Applicants to other Applicants, will be valid and binding obligations of the
issuing Applicant, enforceable in accordance with their terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors'
rights generally and the application of general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
5. The consummation of the proposed Transactions will not violate
the legal rights of the holders of any securities issued by any Applicant.
We hereby consent to the use of this opinion as an exhibit to the
Amended and Restated Application-Declaration. The opinions set forth herein
are issued and expressed as of the date hereof. We do not assume or undertake
any responsibility to advise you of changes in either fact or law which may
come to our attention after the date hereof.
Very truly yours,
Milbank, Tweed, Hadley & McCloy
MDD/RBW
File 70-8587
Exhibit 14
FINANCIAL STATEMENTS
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM U-1
FILE NO. 70-8587
CINERGY CORP.
CONSOLIDATED
AS OF DECEMBER 31, 1994
(Unaudited)
Pages 1 through 6
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
TWELVE MONTHS ENDED DECEMBER 31, 1994
Pro Forma
Actual Adjustments Pro Forma
(in thousands, except per share amounts)
<S> <C> <C> <C>
OPERATING REVENUES
Electric. . . . . . . . . . . . . . . $2 481 779 $ $2 481 779
Gas . . . . . . . . . . . . . . . . . 442 398 442 398
2 924 177 2 924 177
OPERATING EXPENSES
Fuel used in electric production. . . 725 985 725 985
Gas purchased . . . . . . . . . . . . 248 293 248 293
Purchased and exchanged power . . . . 62 332 62 332
Other operation . . . . . . . . . . . 563 650 563 650
Maintenance . . . . . . . . . . . . . 200 959 200 959
Depreciation. . . . . . . . . . . . . 294 395 294 395
Post-in-service deferred operating
expenses - net. . . . . . . . . . . (5 998) (5 998)
Phase-in deferred depreciation. . . . (2 161) (2 161)
Income taxes. . . . . . . . . . . . . 152 181 (4 814) 147 367
Taxes other than income taxes . . . . 244 051 244 051
2 483 687 (4 814) 2 478 873
OPERATING INCOME . . . . . . . . . . . 440 490 4 814 445 304
OTHER INCOME AND EXPENSES - NET
Allowance for equity funds used
during construction . . . . . . . . 6 201 6 201
Post-in-service carrying costs. . . . 9 780 9 780
Phase-in deferred return. . . . . . . 15 351 15 351
Income taxes. . . . . . . . . . . . . 10 609 10 609
Other - net . . . . . . . . . . . . . (28 444) (28 444)
13 497 13 497
INCOME BEFORE INTEREST AND
OTHER CHARGES. . . . . . . . . . . . 453 987 4 814 458 801
INTEREST AND OTHER CHARGES
Interest on long-term debt. . . . . . 219 248 219 248
Other interest. . . . . . . . . . . . 20 370 13 753 34 123
Allowance for borrowed funds used
during construction . . . . . . . . (12 332) (12 332)
Preferred dividend requirements
of subsidiaries . . . . . . . . . . 35 559 35 559
262 845 13 753 276 598
NET INCOME . . . . . . . . . . . . . . $ 191 142 $(8 939) $ 182 203
AVERAGE COMMON SHARES OUTSTANDING. . . 147 426 147 426
EARNINGS PER COMMON SHARE. . . . . . . $1.30 $1.24
DIVIDENDS DECLARED PER COMMON SHARE. . $1.50
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
PRO FORMA CONSOLIDATED BALANCE SHEET
AT DECEMBER 31, 1994
ASSETS
Pro Forma
Actual Adjustments Pro Forma
(dollars in thousands)
<S> <C> <C> <C>
UTILITY PLANT - ORIGINAL COST
In service
Electric . . . . . . . . . . . . . . . . $8 292 625 $ $8 292 625
Gas. . . . . . . . . . . . . . . . . . . 645 602 645 602
Common . . . . . . . . . . . . . . . . . 185 718 185 718
9 123 945 9 123 945
Accumulated depreciation . . . . . . . . . 3 163 802 3 163 802
5 960 143 5 960 143
Construction work in progress. . . . . . . 238 750 238 750
Total utility plant. . . . . . . . . . 6 198 893 6 198 893
CURRENT ASSETS
Cash and temporary cash investments. . . . 71 880 220 278 292 158
Restricted deposits. . . . . . . . . . . . 11 288 11 288
Accounts receivable less accumulated
provision of $9,716,000 for doubtful
accounts . . . . . . . . . . . . . . . . 299 509 299 509
Materials, supplies, and fuel -
at average cost
Fuel for use in electric production. . 156 028 156 028
Gas stored for current use . . . . . . 31 284 31 284
Other materials and supplies . . . . . 92 880 92 880
Property taxes applicable to
subsequent year. . . . . . . . . . . . . 112 420 112 420
Prepayments and other. . . . . . . . . . . 36 416 36 416
811 705 220 278 1 031 983
OTHER ASSETS
Regulatory assets
Post-in-service carrying costs and
deferred operating expenses. . . . . . 185 280 185 280
Phase-in deferred return and
depreciation . . . . . . . . . . . . . 100 943 100 943
Deferred demand-side management costs. . 104 127 104 127
Amounts due from customers -
income taxes . . . . . . . . . . . . . 408 514 408 514
Deferred merger costs. . . . . . . . . . 49 658 49 658
Unamortized costs of reacquiring debt. . 70 424 70 424
Other. . . . . . . . . . . . . . . . . . 86 017 86 017
Other. . . . . . . . . . . . . . . . . . . 134 281 134 281
1 139 244 1 139 244
$8 149 842 $220 278 $8 370 120
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
PRO FORMA CONSOLIDATED BALANCE SHEET
AT DECEMBER 31, 1994
CAPITALIZATION AND LIABILITIES
Pro Forma
Actual Adjustments Pro Forma
(dollars in thousands)
<S> <C> <C> <C>
COMMON STOCK EQUITY
Common stock - $.01 par value;
authorized shares - 600,000,000;
outstanding shares - 155,198,038. . . . . . $ 1 552 $ $ 1 552
Paid-in capital . . . . . . . . . . . . . . . 1 535 658 1 535 658
Retained earnings . . . . . . . . . . . . . . 877 061 (8 939) 868 122
Total common stock equity . . . . . . . . 2 414 271 (8 939) 2 405 332
CUMULATIVE PREFERRED STOCK OF SUBSIDIARIES
Not subject to mandatory redemption . . . . . 267 929 267 929
Subject to mandatory redemption . . . . . . . 210 000 210 000
LONG-TERM DEBT . . . . . . . . . . . . . . . . 2 715 269 2 715 269
Total capitalization . . . . . . . . . . 5 607 469 (8 939) 5 598 530
CURRENT LIABILITIES
Long-term debt due within one year. . . . . . 60 400 60 400
Notes payable . . . . . . . . . . . . . . . . 228 900 229 217 458 117
Accounts payable . . . . . . . . . . . . . . 266 467 266 467
Refund due to customers . . . . . . . . . . . 15 482 15 482
Litigation settlement . . . . . . . . . . . . 80 000 80 000
Accrued taxes . . . . . . . . . . . . . . . . 258 041 258 041
Accrued interest. . . . . . . . . . . . . . . 58 504 58 504
Other . . . . . . . . . . . . . . . . . . . . 36 610 36 610
1 004 404 229 217 1 233 621
OTHER LIABILITIES
Deferred income taxes . . . . . . . . . . . . 1 071 104 1 071 104
Unamortized investment tax credits . . . . . 195 878 195 878
Accrued pension and other postretirement
benefit costs . . . . . . . . . . . . . . . 133 578 133 578
Other . . . . . . . . . . . . . . . . . . . . 137 409 137 409
1 537 969 1 537 969
$8 149 842 $220 278 $8 370 120
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
PRO FORMA CONSOLIDATED STATEMENT OF CHANGES IN RETAINED EARNINGS
TWELVE MONTHS ENDED DECEMBER 31, 1994
Pro Forma
Actual Adjustments Pro Forma
(in thousands)
<S> <C> <C> <C>
BALANCE DECEMBER 31, 1993 . . . . . . . . . $ 907 802 $ $ 907 802
Net income . . . . . . . . . . . . . . . 191 142 (8 939) 182 203
Dividends on common stock . . . . . . . . (221 362) (221 362)
Other . . . . . . . . . . . . . . . . . . (521) (521)
BALANCE DECEMBER 31, 1994 . . . . . . . . . $ 877 061 $(8 939) $ 868 122
</TABLE>
<PAGE>
CINERGY CORP.
Pro Forma Consolidated Journal Entries to Give Effect to the
Borrowing of Up to $438,300,000 from Banks
Entry No. 1
Cash and temporary cash investments. . . $229,217,000
Notes payable . . . . . . . . . . . . . . . . . . . $229,217,000
To record the issuance of notes payable net of $229,217,000 of notes
outstanding at December 31, 1994.
Entry No. 2
Other interest . . . . . . . . . . . . . $13,753,020
Cash and temporary cash investments . . . . . . . . $13,753,020
To record interest on $229,217,000 of notes payable at 6%.
Entry No. 3
Cash and temporary cash investments . . . $4,813,557
Income taxes . . . . . . . . . . . . . . . . . . . . $4,813,557
To record the reduction in income taxes due to increased other interest costs
($13,753,020 at an assumed tax rate of 35%).
<PAGE>
FINANCIAL STATEMENTS
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM U-1
FILE NO. 70-8587
CINERGY CORP.
AS OF DECEMBER 31, 1994
(Unaudited)
Pages 1 through 5
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
PRO FORMA STATEMENT OF INCOME
TWELVE MONTHS ENDED DECEMBER 31, 1994
Pro Forma
Actual Adjustments* Pro Forma
(in thousands, except per share amounts)
<S> <C> <C> <C>
OPERATING EXPENSES
Other operation . . . . . . . . . . . $ 643 $ $ 643
Income taxes. . . . . . . . . . . . . (925) (925)
Taxes other than income taxes . . . . (10) (10)
(292) (292)
OPERATING INCOME . . . . . . . . . . . 292 292
OTHER INCOME AND EXPENSES - NET
Equity in earnings of subsidiaries. . 196 300 196 300
Income taxes. . . . . . . . . . . . . 2 219 2 219
Other - net . . . . . . . . . . . . . (5 100) (5 100)
. . . 193 419 193 419
INCOME BEFORE INTEREST . . . . . . . . 193 711 193 711
INTEREST . . . . . . . . . . . . . . . 2 569 2 569
NET INCOME . . . . . . . . . . . . . . $191 142 $ $191 142
* No adjustments are applicable.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
PRO FORMA BALANCE SHEET
AT DECEMBER 31, 1994
ASSETS
Pro Forma
Actual Adjustments* Pro Forma
(dollars in thousands)
<S> <C> <C> <C>
CURRENT ASSETS
Cash and temporary cash investments. . . . $ 11 430 $ $ 11 430
Accounts receivable. . . . . . . . . . . . 55 145 55 145
66 575 66 525
OTHER ASSETS
Investment in subsidiaries . . . . . . . . 2 424 196 2 424 196
Other. . . . . . . . . . . . . . . . . . . 160 160
2 424 356 2 424 356
$2 490 931 $ $2 490 931
CAPITALIZATION AND LIABILITIES
COMMON STOCK EQUITY
Common stock - $.01 par value;
authorized shares - 600,000,000;
outstanding shares - 155,198,038 . . . . $ 1 552 $ $ 1 552
Paid-in capital. . . . . . . . . . . . . . 1 535 658 1 535 658
Retained earnings. . . . . . . . . . . . . 877 061 877 061
Total common stock equity. . . . . . . 2 414 271 2 414 271
CURRENT LIABILITIES
Notes payable. . . . . . . . . . . . . . . 75 000 75 000
Accounts payable . . . . . . . . . . . . . 1 000 1 000
Accrued interest . . . . . . . . . . . . . 917 917
76 917 76 917
OTHER LIABILITIES
Deferred income taxes. . . . . . . . . . . (258) (258)
Other. . . . . . . . . . . . . . . . . . . 1 1
(257) (257)
$2 490 931 $ $2 490 931
* No adjustments are applicable.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
PRO FORMA STATEMENT OF CHANGES IN RETAINED EARNINGS
TWELVE MONTHS ENDED DECEMBER 31, 1994
Pro Forma
Actual Adjustments* Pro Forma
(in thousands)
<S> <C> <C> <C>
BALANCE DECEMBER 31, 1993 . . . . . . . . . $ 907 802 $ $ 907 802
Net income. . . . . . . . . . . . . . . . 191 142 191 142
Dividends on common stock . . . . . . . . (221 362) (221
362)
Other . . . . . . . . . . . . . . . . . . (521) (521)
BALANCE DECEMBER 31, 1994 . . . . . . . . . $ 877 061 $ $ 877 061
* No adjustments are applicable.
</TABLE>
<PAGE>
CINERGY CORP.
Pro Forma Journal Entries*
* No adjustments are applicable.
<PAGE>
FINANCIAL STATEMENTS
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM U-1
FILE NO. 70-8587
PSI ENERGY, INC.
CONSOLIDATED
AS OF DECEMBER 31, 1994
(Unaudited)
Pages 1 through 6
<PAGE>
<TABLE>
<CAPTION>
PSI ENERGY, INC.
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
TWELVE MONTHS ENDED DECEMBER 31, 1994
Pro Forma
Actual Adjustments Pro Forma (in thousands)
<S> <C> <C> <C>
OPERATING REVENUES . . . . . . . . . . $1 126 504 $ $1 126 504
OPERATING EXPENSES
Fuel. . . . . . . . . . . . . . . . . 400 515 400 515
Purchased and exchanged power . . . . 41 400 41 400
Other operation . . . . . . . . . . . 213 122 213 122
Maintenance . . . . . . . . . . . . . 94 149 94 149
Depreciation. . . . . . . . . . . . . 137 719 137 719
Post-in-service deferred depreciation (9 288) (9 288)
Income taxes. . . . . . . . . . . . . 50 366 (4 335) 46 031
Taxes other than income taxes . . . . 46 335 46 335
974 318 (4 335) 969 983
OPERATING INCOME . . . . . . . . . . . 152 186 4 335 156 521
OTHER INCOME AND EXPENSES - NET
Allowance for equity funds used
during construction . . . . . . . . 4 230 4 230
Post-in-service carrying costs . . . 9 780 9 780
Income taxes. . . . . . . . . . . . . (1 312) (1 312)
Other - net . . . . . . . . . . . . . (7 893) (7 893)
4 805 4 805
INCOME BEFORE INTEREST . . . . . . . . 156 991 4 335 161 326
INTEREST
Interest on long-term debt. . . . . . 68 862 68 862
Other interest. . . . . . . . . . . . 15 292 12 385 27 677
Allowance for borrowed funds used
during construction . . . . . . . . (9 355) (9 355)
74 799 12 385 87 184
NET INCOME . . . . . . . . . . . . . . 82 192 (8 050) 74 142
PREFERRED DIVIDEND REQUIREMENT . . . . 13 182 13 182
INCOME APPLICABLE TO COMMON STOCK. . . $ 69 010 $(8 050) $ 60 960
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PSI ENERGY, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
AT DECEMBER 31, 1994
ASSETS
Pro Forma
Actual Adjustments Pro Forma
(dollars in thousands)
<S> <C> <C> <C>
ELECTRIC UTILITY PLANT - ORIGINAL COST
In service . . . . . . . . . . . . . . . . $3 789 785 $ $3 789 785
Accumulated depreciation . . . . . . . . . 1 550 297 1 550 297
2 239 488 2 239 488
Construction work in progress. . . . . . . 163 761 163 761
Total electric utility plant . . . . . 2 403 249 2 403 249
CURRENT ASSETS
Cash and temporary cash investments. . . . 6 341 198 377 204 718
Restricted deposits. . . . . . . . . . . . 11 190 11 190
Accounts receivable less accumulated
provision of $440,000 for doubtful
accounts . . . . . . . . . . . . . . . . 36 061 36 061
Materials, supplies, and fuel -
at average cost
Fuel . . . . . . . . . . . . . . . . . 113 861 113 861
Other materials and supplies . . . . . 29 363 29 363
Prepayments and other. . . . . . . . . . . 4 758 4 758
201 574 198 377 399 951
OTHER ASSETS
Regulatory assets
Post-in-service carrying costs and
deferred depreciation. . . . . . . . . 30 142 30 142
Deferred demand-side management costs. . 94 125 94 125
Amounts due from customers -
income taxes . . . . . . . . . . . . . 27 134 27 134
Deferred merger costs. . . . . . . . . . 37 645 37 645
Unamortized costs of reacquiring debt. . 36 998 36 998
Other. . . . . . . . . . . . . . . . . . 30 030 30 030
Other. . . . . . . . . . . . . . . . . . . 84 027 84 027
340 101 340 101
$2 944 924 $198 377 $3 143 301
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PSI ENERGY, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
AT DECEMBER 31, 1994
CAPITALIZATION AND LIABILITIES
Pro Forma
Actual Adjustments Pro Forma
(dollars in thousands)
<S> <C> <C> <C>
COMMON STOCK EQUITY
Common stock - without par value;
$.01 stated value; authorized
shares - 60,000,000; outstanding
shares - 53,913,701 . . . . . . . . . . . . $ 539 $ $ 539
Paid-in capital . . . . . . . . . . . . . . . 389 309 389 309
Accumulated earnings subsequent to
November 30, 1986 quasi-reorganization. . . 493 103 (8 050) 485 053
Total common stock equity . . . . . . . . 882 951 (8 050) 874 901
CUMULATIVE PREFERRED STOCK - NOT SUBJECT TO
MANDATORY REDEMPTION. . . . . . . . . . . . . 187 929 187 929
LONG-TERM DEBT . . . . . . . . . . . . . . . . 877 512 877 512
Total capitalization . . . . . . . . . . 1 948 392 (8 050) 1 940 342
CURRENT LIABILITIES
Long-term debt due within one year . . . . . 60 400 60 400
Notes payable . . . . . . . . . . . . . . . . 193 573 206 427 400 000
Accounts payable . . . . . . . . . . . . . . 142 775 142 775
Refund due to customers . . . . . . . . . . . 15 482 15 482
Litigation settlement . . . . . . . . . . . . 80 000 80 000
Accrued taxes . . . . . . . . . . . . . . . . 30 784 30 784
Accrued interest. . . . . . . . . . . . . . . 25 685 25 685
Other . . . . . . . . . . . . . . . . . . . . 3 202 3 202
551 901 206 427 758 328
OTHER LIABILITIES
Deferred income taxes . . . . . . . . . . . . 324 738 324 738
Unamortized investment tax credits . . . . . 60 461 60 461
Accrued pension and other postretirement
benefit costs . . . . . . . . . . . . . . . 31 324 31 324
Other . . . . . . . . . . . . . . . . . . . . 28 108 28 108
444 631 444 631
$2 944 924 $198 377 $3 143 301
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PSI ENERGY, INC.
PRO FORMA CONSOLIDATED STATEMENT OF CHANGES IN RETAINED EARNINGS
TWELVE MONTHS ENDED DECEMBER 31, 1994
Pro Forma
Actual Adjustments Pro Forma
(in thousands)
<S> <C> <C> <C>
BALANCE DECEMBER 31, 1993 . . . . . . . . . $483 242 $ $483 242
Net income. . . . . . . . . . . . . . . . 82 192 (8 050) 74 142
Dividends on preferred stock. . . . . . . (13 182) (13 182)
Dividends on common stock . . . . . . . . (59 142) (59 142)
Other . . . . . . . . . . . . . . . . . . (7) (7)
BALANCE DECEMBER 31, 1994 . . . . . . . . . $493 103 $(8 050) $485 053
<PAGE>
PSI ENERGY, INC.
Pro Forma Consolidated Journal Entries to Give Effect to the
Borrowing of Up to $400 Million from Banks
Entry No. 1
Cash and temporary cash investments. . . . $206,427,000
Notes payable. . . . . . . . . . . . . . . . . . . . . $206,427,000
To record the issuance of notes payable net of $193,573,000 notes outstanding
as of December 31, 1994.
Entry No. 2
Other interest . . . . . . . . . . . . . . $12,385,620
Cash and temporary cash investments. . . . . . . . . . $12,385,620
To record interest on $206,427,000 of notes payable at 6%.
Entry No. 3
Cash and temporary cash investments. . . . $4,334,967
Income taxes . . . . . . . . . . . . . . . . . . . . . $4,334,967
To record the reduction in income taxes due to increased other interest costs
($12,385,620 at an assumed tax rate of 35%).
<PAGE>
FINANCIAL STATEMENTS
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM U-1
FILE NO. 70-8587
THE UNION LIGHT, HEAT AND POWER COMPANY
AS OF DECEMBER 31, 1994
(Unaudited)
Pages 1 through 6
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
THE UNION LIGHT, HEAT AND POWER COMPANY
PRO FORMA STATEMENT OF INCOME
TWELVE MONTHS ENDED DECEMBER 31, 1994
Pro Forma
Actual Adjustments Pro Forma
<S> <C> <C> <C> (in
thousands)
OPERATING REVENUES
Electric. . . . . . . . . . . . . . . $177 564 $ $177 564
Gas . . . . . . . . . . . . . . . . . 71 971 71 971
249 535 249 535
OPERATING EXPENSES
Electricity purchased from parent
company for resale. . . . . . . . . 134 887 134 887
Gas purchased . . . . . . . . . . . . 40 508 40 508
Other operation . . . . . . . . . . . 32 289 32 289
Maintenance . . . . . . . . . . . . . 5 473 5 473
Depreciation. . . . . . . . . . . . . 10 644 10 644
Income taxes. . . . . . . . . . . . . 5 342 (431) 4 911
Taxes other than income taxes . . . . 4 002 4 002
233 145 (431) 232 714
OPERATING INCOME . . . . . . . . . . . 16 390 431 16 821
OTHER INCOME AND EXPENSES - NET
Allowance for equity funds used
during construction . . . . . . . . 78 78
Other - net . . . . . . . . . . . . . 292 292
370 370
INCOME BEFORE INTEREST . . . . . . . . 16 760 431 17 191
INTEREST
Interest on long-term debt. . . . . . 8 161 8 161
Other interest. . . . . . . . . . . . 395 1 230 1 625
Allowance for borrowed funds used
during construction . . . . . . . . (183) (183)
8 373 1 230 9 603
NET INCOME . . . . . . . . . . . . . . $ 8 387 $ (799) $ 7 588
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE UNION LIGHT, HEAT AND POWER COMPANY
PRO FORMA BALANCE SHEET
AT DECEMBER 31, 1994
ASSETS
Pro Forma
Actual Adjustments Pro Forma
(dollars in thousands)
<S> <C> <C> <C>
UTILITY PLANT - ORIGINAL COST
In service
Electric . . . . . . . . . . . . . . . . $179 098 $ $179 098
Gas. . . . . . . . . . . . . . . . . . . 134 103 134 103
Common . . . . . . . . . . . . . . . . . 19 122 19 122
332 323 332 323
Accumulated depreciation . . . . . . . . . 104 113 104 113
228 210 228 210
Construction work in progress. . . . . . . 8 638 8 638
Total utility plant. . . . . . . . . . 236 848 236 848
CURRENT ASSETS
Cash and temporary cash investments. . . . 1 071 19 701 20 772
Accounts receivable less accumulated
provision of $457,429 for doubtful
accounts . . . . . . . . . . . . . . . . 33 892 33 892
Materials, supplies, and fuel -
at average cost
Gas stored for current use . . . . . . 6 216 6 216
Other materials and supplies . . . . . 1 406 1 406
Property taxes applicable to
subsequent year. . . . . . . . . . . . . 2 200 2 200
Prepayments and other. . . . . . . . . . . 593 593
45 378 19 701 65 079
OTHER ASSETS
Deferred merger costs. . . . . . . . . . . 1 785 1 785
Other. . . . . . . . . . . . . . . . . . . 3 117 3 117
4 902 4 902
$287 128 $19 701 $306 829
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE UNION LIGHT, HEAT AND POWER COMPANY
PRO FORMA BALANCE SHEET
AT DECEMBER 31, 1994
CAPITALIZATION AND LIABILITIES
Pro Forma
Actual Adjustments Pro Forma
(dollars in thousands)
<S> <C> <C> <C>
COMMON STOCK EQUITY
Common stock - $15.00 par value;
authorized shares - 1,000,000;
outstanding shares - 585,333. . . . . . . . $ 8 780 $ $ 8 780
Paid-in capital . . . . . . . . . . . . . . . 18 839 18 839
Retained earnings . . . . . . . . . . . . . . 74 203 (799) 73 404
Total common stock equity . . . . . . . . 101 822 (799) 101 023
LONG-TERM DEBT. . . . . . . . . . . . . . . . . 89 238 89 238
Total capitalization. . . . . . . . . . . 191 060 (799) 190 261
CURRENT LIABILITIES
Notes payable . . . . . . . . . . . . . . . . 14 500 20 500 35 000
Accounts payable. . . . . . . . . . . . . . . 21 655 21 655
Accrued taxes . . . . . . . . . . . . . . . . 2 876 2 876
Accrued interest. . . . . . . . . . . . . . . 2 123 2 123
Other . . . . . . . . . . . . . . . . . . . . 4 123 4 123
45 277 20 500 65 777
OTHER LIABILITIES
Deferred income taxes . . . . . . . . . . . . 23 226 23 226
Unamortized investment tax credits . . . . . 5 364 5 364
Accrued pension and other postretirement
benefit costs . . . . . . . . . . . . . . . 10 356 10 356
Income taxes refundable through rates . . . . 4 282 4 282
Other . . . . . . . . . . . . . . . . . . . . 7 563 7 563
50 791 50 791
$287 128 $19 701 $306 829
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE UNION LIGHT, HEAT AND POWER COMPANY
PRO FORMA STATEMENT OF CHANGES IN RETAINED EARNINGS
TWELVE MONTHS ENDED DECEMBER 31, 1994
Pro Forma
Actual Adjustments Pro Forma
(in thousands)
<S> <C> <C> <C>
BALANCE DECEMBER 31, 1993 . . . . . . . . . $69 327 $ $69 327
Net income. . . . . . . . . . . . . . . . 8 387 (799) 7 588
Dividends on common stock . . . . . . . . (3 511) (3 511)
BALANCE DECEMBER 31, 1994 . . . . . . . . . $74 203 $(799) $73 404
</TABLE>
<PAGE>
THE UNION LIGHT, HEAT AND POWER COMPANY
Pro Forma Journal Entries to Give Effect to the Borrowing
of Up to $35 Million from Banks
Entry No. 1
Cash and temporary cash investments. . . $20,500,000
Notes payable . . . . . . . . . . . . . . . . . . . $20,500,000
To record the issuance of notes payable net of $14,500,000 of notes
outstanding at December 31, 1994.
Entry No. 2
Other interest . . . . . . . . . . . . . $1,230,000
Cash and temporary cash investments . . . . . . . . $1,230,000
To record interest on $20,500,000 of notes payable at 6%.
Entry No. 3
Cash and temporary cash investments . . $430,500
Income taxes . . . . . . . . . . . . . . . . . . . $430,500
To record the reduction in income taxes due to increased other interest costs
($1,230,000 at an assumed tax rate of 35%).
<PAGE>
FINANCIAL STATEMENTS
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM U-1
FILE NO. 70-8587
THE WEST HARRISON GAS AND ELECTRIC COMPANY
AS OF DECEMBER 31, 1994
(Unaudited)
Pages 1 through 6
<PAGE>
<TABLE>
<CAPTION>
THE WEST HARRISON GAS AND ELECTRIC COMPANY
PRO FORMA STATEMENT OF INCOME
TWELVE MONTHS ENDED DECEMBER 31, 1994
Pro Forma
Actual Adjustments Pro Forma
(in thousands)
<S> <C> <C> <C>
ELECTRIC OPERATING REVENUES. . . . . . $483 $ $483
OPERATING EXPENSES
Electricity purchased from parent
company for resale. . . . . . . . . 344 344
Other operation . . . . . . . . . . . 68 68
Maintenance . . . . . . . . . . . . . 14 14
Depreciation. . . . . . . . . . . . . 17 17
Income taxes. . . . . . . . . . . . . 9 (3) 6
Taxes other than income taxes . . . . 13 13
465 (3) 462
OPERATING INCOME . . . . . . . . . . . 18 3 21
INTEREST . . . . . . . . . . . . . . . 5 10 15
NET INCOME . . . . . . . . . . . . . . $ 13 $(7) $ 6
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE WEST HARRISON GAS AND ELECTRIC COMPANY
PRO FORMA BALANCE SHEET
AT DECEMBER 31, 1994
ASSETS
Pro Forma
Actual Adjustments Pro Forma
(dollars in thousands)
<S> <C> <C> <C>
ELECTRIC UTILITY PLANT - ORIGINAL COST
In service . . . . . . . . . . . . . . . . $528 $ $528
Accumulated depreciation . . . . . . . . . 160 160
Total electric utility plant . . . . . 368 368
CURRENT ASSETS
Cash . . . . . . . . . . . . . . . . . . . 21 158 179
Accounts receivable. . . . . . . . . . . . 79 79
100 158 258
OTHER ASSETS
Amounts due from customers -
income taxes . . . . . . . . . . . . . . 13 13
$481 $158 $639
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE WEST HARRISON GAS AND ELECTRIC COMPANY
PRO FORMA BALANCE SHEET
AT DECEMBER 31, 1994
CAPITALIZATION AND LIABILITIES
Pro Forma
Actual Adjustments Pro Forma
(dollars in thousands)
<S> <C> <C> <C>
COMMON STOCK EQUITY
Common stock - $10.00 par value;
authorized shares - 10,000;
outstanding shares - 2,000. . . . . . . . . $ 20 $ $ 20
Retained earnings . . . . . . . . . . . . . . 248 (7) 241
Total capitalization. . . . . . . . . . . 268 (7) 261
CURRENT LIABILITIES
Notes payable . . . . . . . . . . . . . . . . 165 165
Accounts payable to associated
companies - net . . . . . . . . . . . . . . 109 109
Other . . . . . . . . . . . . . . . . . . . . 8 8
117 165 282
OTHER LIABILITIES
Deferred income taxes . . . . . . . . . . . . 67 67
Unamortized investment tax credits . . . . . 15 15
Accrued pension and other postretirement
benefit costs . . . . . . . . . . . . . . . 11 11
Other . . . . . . . . . . . . . . . . . . . . 3 3
96 96
$481 $158 $639
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE WEST HARRISON GAS AND ELECTRIC COMPANY
PRO FORMA STATEMENT OF CHANGES IN RETAINED EARNINGS
TWELVE MONTHS ENDED DECEMBER 31, 1994
Pro Forma
Actual Adjustments Pro Forma
(in thousands)
<S> <C> <C> <C>
BALANCE DECEMBER 31, 1993 . . . . . . . . . $235 $ $235
Net income. . . . . . . . . . . . . . . . 13 (7) 6
BALANCE DECEMBER 31, 1994 . . . . . . . . . $248 $(7) $241
</TABLE>
<PAGE>
THE WEST HARRISON GAS AND ELECTRIC COMPANY
Pro Forma Journal Entries to Give Effect to the Borrowing
of Up to $200,000 from Banks
Entry No. 1
Cash . . . . . . . . . . . . . . . . . . $165,000
Notes payable. . . . . . . . . . . . . . . . . . . $165,000
To record the issuance of notes payable net of $35,000 of inter-company loans
and open-account balances as of December 31, 1994.
Entry No. 2
Other interest . . . . . . . . . . . . . $9,900
Cash . . . . . . . . . . . . . . . . . . . . . . . $9,900
To record interest on $165,000 of notes payable at 6%.
Entry No. 3
Cash . . . . . . . . . . . . . . . . . . $3,465
Income taxes . . . . . . . . . . . . . . . . . . . $3,465
To record the reduction in income taxes due to increased other interest costs
($9,900 at an assumed tax rate of 35%).
<PAGE>
FINANCIAL STATEMENTS
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM U-1
FILE NO. 70-8587
LAWRENCEBURG GAS COMPANY
AS OF DECEMBER 31, 1994
(Unaudited)
Pages 1 through 6
<PAGE>
<TABLE>
<CAPTION>
LAWRENCEBURG GAS COMPANY
PRO FORMA STATEMENT OF INCOME
TWELVE MONTHS ENDED DECEMBER 31, 1994
Pro Forma
Actual Adjustments Pro Forma
(in thousands)
<S> <C> <C> <C>
OPERATING REVENUES . . . . . . . . . . $7 077 $ $7 077
OPERATING EXPENSES
Gas purchased . . . . . . . . . . . . 3 969 3 969
Other operation . . . . . . . . . . . 1 574 1 574
Maintenance . . . . . . . . . . . . . 121 121
Depreciation. . . . . . . . . . . . . 370 370
Income taxes. . . . . . . . . . . . . 219 (43) 176
Taxes other than income taxes . . . . 276 276
6 529 (43) 6 486
OPERATING INCOME . . . . . . . . . . . 548 43 591
OTHER INCOME AND EXPENSES - NET. . . . (10) (10)
INCOME BEFORE INTEREST . . . . . . . . 538 43 581
INTEREST . . . . . . . . . . . . . . . 178 122 300
NET INCOME . . . . . . . . . . . . . . $ 360 $(79) $ 281
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LAWRENCEBURG GAS COMPANY
PRO FORMA BALANCE SHEET
AT DECEMBER 31, 1994
ASSETS
Pro Forma
Actual Adjustments Pro Forma
(dollars in thousands)
<S> <C> <C> <C>
UTILITY PLANT - ORIGINAL COST
In service . . . . . . . . . . . . . . . . $13 108 $ $13 108
Accumulated depreciation . . . . . . . . . 3 283 3 283
9 825 9 825
Construction work in progress. . . . . . . 270 270
Total utility plant. . . . . . . . . . 10 095 10 095
CURRENT ASSETS
Cash . . . . . . . . . . . . . . . . . . . 110 1 946 2 056
Accounts receivable. . . . . . . . . . . . 1 138 1 138
Gas stored for current use . . . . . . . . 15 15
Prepayments. . . . . . . . . . . . . . . . 23 23
1 286 1 946 3 232
OTHER ASSETS . . . . . . . . . . . . . . . . 524 524
$11 905 $1 946 $13 851
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
LAWRENCEBURG GAS COMPANY
PRO FORMA BALANCE SHEET
AT DECEMBER 31, 1994
CAPITALIZATION AND LIABILITIES
Pro Forma
Actual Adjustments Pro Forma
(dollars in thousands)
<S> <C> <C> <C>
COMMON STOCK EQUITY
Common stock - without par value;
$50.00 stated value; authorized shares -
11,000; outstanding shares - 10,768 . . . . $ 539 $ $ 539
Retained earnings . . . . . . . . . . . . . . 4 497 (79) 4 418
Total common stock equity . . . . . . . . 5 036 (79) 4 957
LONG-TERM DEBT . . . . . . . . . . . . . . . . 1 200 1 200
Total capitalization . . . . . . . . . . 6 236 (79) 6 157
CURRENT LIABILITIES
Notes payable . . . . . . . . . . . . . . . . 2 025 2 025
Accounts payable . . . . . . . . . . . . . . 455 455
Accounts payable to associated
companies - net . . . . . . . . . . . . . . 1 544 1 544
Accrued taxes . . . . . . . . . . . . . . . . 315 315
Accrued interest. . . . . . . . . . . . . . . 32 32
Accrued employee benefits . . . . . . . . . . 51 51
Other . . . . . . . . . . . . . . . . . . . . 81 81
2 478 2 025 4 503
OTHER LIABILITIES
Deferred income taxes . . . . . . . . . . . . 635 635
Unamortized investment tax credits . . . . . 247 247
Accrued pension and other postretirement
benefit costs . . . . . . . . . . . . . . . 400 400
Income taxes refundable through rates . . . . 126 126
Accrued environmental costs . . . . . . . . . 750 750
Refunds from gas suppliers received . . . . . 682 682
Other . . . . . . . . . . . . . . . . . . . . 351 351
3 191 3 191
$11 905 $1 946 $13 851
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LAWRENCEBURG GAS COMPANY
PRO FORMA STATEMENT OF CHANGES IN RETAINED EARNINGS
TWELVE MONTHS ENDED DECEMBER 31, 1994
Pro Forma
Actual Adjustments Pro Forma
(in thousands)
<S> <C> <C> <C>
BALANCE DECEMBER 31, 1993 . . . . . . . . . $4 137 $ $4 137
Net income. . . . . . . . . . . . . . . . 360 (79) 281
BALANCE DECEMBER 31, 1994 . . . . . . . . . $4 497 $(79) $4 418
</TABLE>
<PAGE>
LAWRENCEBURG GAS COMPANY
Pro Forma Journal Entries to Give Effect to the Borrowing
of Up to $3 Million from Banks
Entry No. 1
Cash . . . . . . . . . . . . . . . . . . $2,025,000
Notes payable. . . . . . . . . . . . . . . . . . . $2,025,000
To record the issuance of notes payable net of $975,000 of inter-company loans
and open-account balances as of December 31, 1994.
Entry No. 2
Interest . . . . . . . . . . . . . . . . $121,500
Cash . . . . . . . . . . . . . . . . . . . . . . . $121,500
To record interest on $2,025,000 of notes payable at 6%.
Entry No. 3
Cash . . . . . . . . . . . . . . . . . . $42,525
Income taxes . . . . . . . . . . . . . . . . . . . $42,525
To record the reduction in income taxes due to increased interest costs
($121,500 at an assumed tax rate of 35%).
<PAGE>
FINANCIAL STATEMENTS
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM U-1
FILE NO. 70-8587
MIAMI POWER CORPORATION
AS OF DECEMBER 31, 1994
(Unaudited)
Pages 1 through 5
<PAGE>
<TABLE>
<CAPTION>
MIAMI POWER CORPORATION
PRO FORMA STATEMENT OF INCOME (LOSS)
TWELVE MONTHS ENDED DECEMBER 31, 1994
Pro Forma
Actual Adjustments Pro Forma
(in thousands)
<S> <C> <C> <C>
ELECTRIC OPERATING REVENUES. . . . . . $45 $ $45
OPERATING EXPENSES
Other operation. . . . . . . . . . . 34 34
Maintenance . . . . . . . . . . . 2 2
Depreciation . . . . . . . . . . . 1 1
Income taxes . . . . . . . . . . . . 1 (2) (1)
Taxes other than income taxes. . . . 5 5
43 (2) 41
OPERATING INCOME . . . . . . . . . . . 2 2 4
INTEREST . . . . . . . . . . . . . . . 6 6
NET INCOME (LOSS). . . . . . . . . . . $ 2 $(4) $(2)
<PAGE>
MIAMI POWER CORPORATION
PRO FORMA BALANCE SHEET
AT DECEMBER 31, 1994
Pro Forma
Actual Adjustments Pro Forma
(dollars in thousands)
<S> <C> <C> <C>
ASSETS
ELECTRIC UTILITY PLANT - ORIGINAL COST
In service. . . . . . . . . . . . . . . . . . $563 $ $563
Accumulated depreciation. . . . . . . . . . 552 552
Total electric utility plant. . . . . . . 11 11
CURRENT ASSETS
Cash. . . . . . . . . . . . . . . . . . . . . 30 96 126
Accounts receivable from associated
companies - net . . . . . . . . . . . . . . 1 1
31 96 127
OTHER ASSETS
Accumulated deferred income taxes - net . . . 33 33
$ 75 $ 96 $171
CAPITALIZATION AND LIABILITIES
COMMON STOCK EQUITY
Common stock - without par value; $1 stated
value; authorized shares - 10,000;
outstanding shares - 1,000. . . . . . . . . $ 1 $ $ 1
Retained earnings . . . . . . . . . . . . . . 34 (4) 30
Total capitalization. . . . . . . . . . . 35 (4) 31
CURRENT LIABILITIES
Notes payable . . . . . . . . . . . . . . . . 100 100
Accrued taxes . . . . . . . . . . . . . . . . 3 3
3 100 103
OTHER LIABILITIES
Unamortized investment tax credits. . . . . . 1 1
Income taxes refundable through rates . . . . 32 32
Accrued pension and other postretirement
benefit costs . . . . . . . . . . . . . . . 4 4
37 37
$ 75 $ 96 $171
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MIAMI POWER CORPORATION
PRO FORMA STATEMENT OF CHANGES IN RETAINED EARNINGS
TWELVE MONTHS ENDED DECEMBER 31, 1994
Pro Forma
Actual Adjustments Pro Forma
(in thousands)
<S> <C> <C> <C>
BALANCE DECEMBER 31, 1993 . . . . . . . . . $35 $ $35
Net income (loss) . . . . . . . . . . . . 2 (4) (2)
Dividends on common stock . . . . . . . . (3) (3)
BALANCE DECEMBER 31, 1994 . . . . . . . . . $34 $(4) $30
</TABLE>
<PAGE>
MIAMI POWER CORPORATION
Pro Forma Journal Entries to Give Effect to the Borrowing
of Up to $100 Thousand from Banks
Entry No. 1
Cash . . . . . . . . . . . . . . . . . . $100,000
Notes payable. . . . . . . . . . . . . . . . . . . $100,000
To record the issuance of notes payable.
Entry No. 2
Interest . . . . . . . . . . . . . . . . $6,000
Cash . . . . . . . . . . . . . . . . . . . . . . . $6,000
To record interest on $100,000 of notes payable at 6%.
Entry No. 3
Cash . . . . . . . . . . . . . . . . . . $2,100
Income taxes . . . . . . . . . . . . . . . . . . . $2,100
To record the reduction in income taxes due to increased interest costs
($6,000 at an assumed tax rate of 35%).
File No. 70-8587
Exhibit 16
Memorandum
Re: CINergy Corp. et al. (File No. 70-8587) --
Request for order under Section 2(a)(8)
with respect to U.S. Energy Partners
This memorandum is submitted to the Securities and Exchange Commission
(the "Commission") in support of the request of CINergy Corp. ("CINergy") for
an order declaring that U.S. Energy Partners ("Energy Partners") is not a
"subsidiary company" of CINergy within the meaning of the Public Utility
Holding Company Act of 1935, as amended (the "Act").
Statutory Standards
Section 2(a)(8)(A) of the Act defines the term "subsidiary company" to
include "any company 10 per centum or more of the outstanding voting
securities of which are directly or indirectly owned, controlled, or held with
power to vote, by such holding company (or by a company that is a subsidiary
company of such holding company by virtue of this clause or clause (B)),
unless the Commission . . . by order declares such company not to be a
subsidiary company of such holding company."
Under Section 2(a)(8), "the Commission, upon application, shall by order
declare that a company is not a subsidiary company of a specified holding
company under clause (A) if the Commission finds that (i) the applicant is not
controlled, directly or indirectly, by such holding company (either alone or
pursuant to an arrangement or understanding with one or more other persons)
either through one or more intermediary persons or by any means or device
whatsoever, (ii) the applicant is not an intermediary company through which
such control of another company is exercised, and (iii) the management or
policies of the applicant are not subject to a controlling influence, directly
or indirectly, by such holding company (either alone or pursuant to an
arrangement or understanding with one or more other persons) so as to make it
necessary or appropriate in the public interest or for the protection of
investors or consumers that the applicant be subject to the obligations,
duties, and liabilities, imposed in this title upon subsidiary companies of
holding companies."
As established below, CINergy does not "control" Energy Partners or
possess a "controlling influence" over its management or policies within the
meaning of the Act, and it is neither necessary nor appropriate in the public
interest or for the protection of investors or consumers that Energy Partners
be subject to the obligations, duties, and liabilities, imposed by the Act
upon subsidiary companies of holding companies./1/
Analysis
Energy Partners is a Delaware general partnership consisting of two
partners, Public Service Gas Marketing Company ("PSGMC"), an indirect
subsidiary of Public Service Electric & Gas Company, which holds a two-thirds
interest in the partnership, and CG&E Resource Marketing, Inc., an indirect
subsidiary of CINergy, which holds a one-third interest in the partnership.
Management and control of the partnership are governed by the terms of an
agreement, the U.S. Energy Partners General Partnership Agreement dated as of
January 1, 1994 (the "Partnership Agreement"), a copy of which is filed as
Exhibit 15 to the Application-Declaration of CINergy in File No. 70-8587./2/
Although the Partnership Agreement establishes a general partnership, the
Partnership Agreement provides that "[e]xcept through its representative on
the Management Committee, the Partners shall take no part in the management or
control of the Partnership's business" and shall not "transact any business in
the Partnership's name or have the power to execute documents for, or
otherwise bind, the Partnership."/3/ Under the Partnership Agreement,
"ultimate control and management oversight" of the partnership are "vested in
the Management Committee,"/4/ which is given "exclusive authority" over the
"major policies" of the partnership and is intended to "function in a manner
comparable to that of a Board of Directors of a corporation."/5/ Day- to-day
management is the responsibility of a Manager appointed by the Management
Committee./6/
Although CINergy is entitled to representation on the Management
Committee,/7/ the members of the Management Committee do not have one vote or
equal votes, but rather vote in accordance with their corresponding
partnership interests/8/ -- two-thirds of which are held by PSGMC. In
addition, the chairman of the Management Committee, who presides over
Management Committee meetings, is designated by the partner with the largest
interest -- i.e., by PSGMC./9/ In general, Management Committee decisions
require only a "Majority Vote" -- i.e., the vote of PSGMC's representative --
including decisions regarding the appointment and dismissal of the Manager,
agreements with the Manager and the scope of the Manager's authority to act on
behalf of the partnership, approval of annual budgets and business plans,
requests for capital contributions and credit support, financing agreements
(including pledging of partnership assets), partnership tax policies,
selection of accountants and depositories, limits on financial exposure for
the partnership under contractual undertakings, and timing and amounts of
distributions to partners. /10/ The only decisions requiring a vote of more
than two-thirds of the partnership interests -- and therefore the only
decisions requiring CINergy's concurrence -- are extraordinary transactions
such as mergers, sale of substantial assets, liquidation or dissolution, and
removal of a partner (which require more than two-thirds approval) and certain
changes in ownership interests and the scope or general nature of the
partnership's business (which require unanimous approval)/11/.
As a result of PSGMC's two-thirds partnership interest and its control
over Management Committee decisions, it is evident that partnership decisions
are effectively controlled by PSGMC, and not by CINergy. Although the
partnership is in the form of a general partnership, CINergy's rights are more
akin to those of a limited partner or minority shareholder than a general
partner. Moreover, the Partnership Agreement contains an automatic "cutback"
provision, under which CINergy's voting interest will automatically be reduced
to less than 10 percent in the event that Energy Partners becomes subject to
regulation as a subsidiary company of CINergy under the Act./12/
The Commission's past decisions confirm that CINergy does not directly or
indirectly control Energy Partners or possess a controlling influence over its
management or policies within the meaning of the Act, and that Energy Partners
should not be treated as a subsidiary of CINergy.
In Canton Electric Light and Power Co., 12 SEC 36 (1942), a registered
holding company held 34.64 percent of a utility's outstanding voting
securities and, under state law, had a blocking position with respect to
certain major corporate action, including the mortgage of property, merger,
consolidation, dissolution and amendment of its charter. The remaining voting
interest was held by a dominant stockholder, which held 64.73 percent of the
utility's voting equity, and four other parties, each of which held less than
1 percent of the voting equity. In view of the 64.73 percent holder's
"dominant" interest, the Commission granted an order declaring that the
utility company was not a subsidiary of the registered holding company.
Other Commission decisions are to similar effect. In Panhandle Eastern
Pipe Line Co., 9 SEC 370 (1941), the applicant was held not to be a subsidiary
company of Missouri-Kansas Pipe Line Co. ("Mo-Kan"), even though Mo-Kan owned
42 percent of the applicant's common stock, on the ground that another party
held a dominant 50.1 percent interest./13/ In Allied Chemical & Dye Corp., 5
SEC 151 (1939), American Light & Traction Co. ("AL&T") was held not to be a
subsidiary company of Allied Chemical even though Allied Chemical held 43.8
percent of the preferred stock and 4.3 percent of the common stock
(representing in the aggregate approximately 10.7 percent of the total voting
power of AL&T) and held a blocking position over AL&T charter amendments, on
the grounds that more than 51 percent of the voting power of AL&T was held by
another company, United Light & Power Corp. See also Filtration Sciences
Corp., 44 SEC Docket 340 (Aug. 3, 1989) (order by the Division of Investment
Management under Section 2(a)(7), on delegated authority, finding that a
company was not a holding company even though it owned 14.06 percent of the
voting securities of a company that generated and sold electric power, on the
grounds that the applicant's minority voting interest was overshadowed by the
interest of a holder with 82.78 percent of the voting power and therefore did
not control or exert a controlling influence), citing Beebee Island Corp.,
Rel. No. 2239 (Aug. 15, 1940) (electric generating company not a subsidiary of
a 22.19 percent holder and a 14.06 percent holder, where a third party held
60.92 percent of the company's total voting securities).
These cases compel the conclusion that Energy Partners is not a
subsidiary of CINergy. Among other things, CINergy holds an even smaller
interest in Energy Partners than the registered holding companies held in
Canton and Panhandle Eastern. In addition, Canton, Allied, Filtration
Sciences and Beebee Island concerned interests in utility companies and
therefore implicated consumer interests and other core concerns of the Act
that are not implicated by Energy Partners, which is not a utility
company./14/
Conclusion
For the reasons set forth herein, it is respectfully submitted that
CINergy is entitled to an order pursuant to Section 2(a)(8) of the Act
declaring that Energy Partners is not a subsidiary company of CINergy. In
particular, CINergy's minority interest, its limited rights under the
Partnership Agreement, and the existence of an unaffiliated dominant partner
all indicate that Energy Partners is not controlled, directly or indirectly,
by CINergy, and that the management and policies of Energy Partners are not
subject to a controlling influence, directly or indirectly, by CINergy so as
to make it necessary or appropriate in the public interest or for the
protection of investors or consumers to subject Energy Partners to the
obligations, duties and liabilities imposed by the Act on subsidiary companies
of holding companies.
July 27, 1995
Respectfully submitted,
M. Douglas Dunn
Rodrigo J. Howard
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
Cheryl M. Foley
George Dwight II
CINergy Corp.
139 East Fourth Street
Cincinnati, Ohio 45202
<PAGE>
ENDNOTES
/1/ Because Energy Partners is not an "intermediary company", the provisions
of Section 2(a)(8)(ii) are inapplicable on their face and are not further
addressed herein.
/2/ The Partnership Agreement contemplated that a third party, Northeast Gas
Marketers, Inc. ("NGMI"), a subsidiary of Long Island Lighting Company, would
participate as a partner of Energy Partners, contingent upon receipt of any
necessary approval from the New York Public Service Commission on acceptable
terms. By letter dated July 5, 1994, in view of the inability to obtain such
regulatory approval, NGMI officially terminated its participation as a
potential partner.
/3/ Partnership Agreement Section 8.6.
/4/ Partnership Agreement Section 3.5.
/5/ Partnership Agreement Section 8.1.1.
/6/ Partnership Agreement Section 8.1.2.
/7/ Under Section 8.2.1. of the Partnership Agreement, "[t]he members of the
Management Committee shall consist of one representative of each Partner."
/8/ See Partnership Agreement Section 8.2.4, which provides that, with
certain exceptions, "the Management Committee shall act upon the affirmative
Majority Vote of the Partner's Percentages". "Majority Vote" in turn is
defined in Section 2.16 of the Partnership Agreement to mean 60 percent when,
as is the case here, the total number of partner is three or less. Since
PSGMC holds a two-thirds partnership interest, it holds sufficient voting
power to take Management Committee action, without CINergy's concurrence.
/9/ Indeed, PSGMC is explicitly given the right to designate the initial
chairman. Partnership Agreement Section 8.2.2.
/10/ Partnership Agreement Section 8.2.5(i).
/11/ Section 8.2.5(ii) provides that "the approval of the Management
Committee by a vote of greater than two thirds (2 3rds) of the Partners'
Percentages shall be necessary before any of the following actions can be
taken on behalf of the Partnership:
1. The sale, transfer, lease, licenses or other disposition of all or
a substantially part of the business or assets of the Partnership;
2. The merger or consolidation with any other person or entity;
3. The liquidation of dissolution of the Partnership; or
4. The removal or expulsion of any Partner for cause."
Section 8.2.5(iii) provides that "the approval of the Management
Committee by the unanimous vote of the Partners' Percentages shall be
necessary before any of the following actions can be taken on behalf of the
Partnership:
1. Any change in the respective percentage of ownership interests of
the Partners, including any modification, alteration, or amendment to
division of profits and losses among Partners, other than in accordance with
Section 4 of this Agreement; or
2. Any substantial alteration in the scope of business or the general
nature of the business conducted by the Partnership."
/12/ Partnership Agreement Section 11.7.3 provides that "If at any time a
registered public utility holding company, or any subsidiary or Affiliate
company thereof (each a "Regulated Entity") shall directly or indirectly own,
control or hold the power to vote, ten percent (10 percent) or more of the
outstanding voting securities (as defined in [the Act]) of the Partnership,
and the Partnership does not qualify for an exemption from regulation under
[the Act], whether pursuant to SEC Rule 16 or otherwise, the vote of such
Regulated Entity in the direction and management of the affairs of the
Partnership, including any vote on the Management Committee pursuant to
Section 8, shall be automatically reduced, and the other Partners' vote
proportionately increased, to the level necessary to ensure that neither the
Partnership nor any Partner (including any parent, subsidiary, or affiliate
company thereof) is or becomes subject to regulation under [the Act] as a
result of such ownership or control. Notwithstanding the foregoing, including
without limitation Section 11.7.2, any such adjustment in voting shall not
reduce or otherwise affect a Partner's interest in the assets or the
Partnership, or its right to receive its Partner's Percentage of the income,
gains, losses and deductions of the Partnership."
/13/ The remaining shares were held by a large number of small holders.
/14/ Because it is not a utility company, Energy Partners is not subject to
the sort of abusive inter-affiliate transactions that has led the Commission
to impose subsidiary status on minority-held companies in the past. Contrast,
e.g., Koppers United Co., et al., Holding Company Act Rel. No. 3812 (1942)
(23.87 percent voting interest made utility company a subsidiary where there
was no other single holder of 5 percent and applicant had substantial
transactions with the utility).
<TABLE> <S> <C>
<ARTICLE> OPUR1
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEETS AND STATEMENTS OF INCOME AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<CIK> 0000899652
<NAME> CINERGY CORP.
<SUBSIDIARY>
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<PERIOD-START> JAN-01-1994 JAN-01-1994
<PERIOD-END> DEC-31-1994 DEC-31-1994
<BOOK-VALUE> PER-BOOK PRO-FORMA
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<TOTAL-COMMON-STOCKHOLDERS-EQ> 2,414,271 2,405,332
210,000 210,000
267,929 267,929
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<OTHER-ITEMS-CAPITAL-AND-LIAB> 2,253,073 2,253,073
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<GROSS-OPERATING-REVENUE> 2,924,177 2,924,177
<INCOME-TAX-EXPENSE> 152,181 147,367
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35,559 35,559
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