File No. 70-8867
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________________________
AMENDMENT NO. 1
TO
FORM U-1 APPLICATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
____________________________________________
Cinergy Corp.
139 East Fourth Street
Cincinnati, Ohio 45202
(Name of company filing this statement
and address of principal executive offices)
Cinergy Corp.
(Name of top registered holding company parent)
William L. Sheafer
Treasurer
Cinergy Corp.
(address above)
(Name and address of agent of service)
The Commission is requested to send copies of all notices, orders and
communications in connection with this Application to:
Cheryl M. Foley
Vice President, General Counsel
and Corporate Secretary
Cinergy Corp.
(address above)
1. Item 1.A ("Description of Proposed Transactions /Requested
Authorization") is hereby amended by adding a new sentence at the end
thereof; as so amended Item 1.A reads in its entirety as follows:
"Cinergy Corp. ("Cinergy"), a registered holding company under
the Public Utility Holding Company Act of 1935 ("Act"), proposes to
invest a total of $10 million from time to time through December 31,
2002 to acquire up to a 20% limited partnership interest in Nth Power
Technologies Fund I, L.P. ("Fund" or "Partnership"), a California
limited partnership formed to invest in energy technology companies.
To fund its proposed investment in the Fund, Cinergy intends to borrow
funds under an existing credit facility (see Rel. No. 35-26488, March
12, 1996)."
2. Item 1.B ("Description of Proposed Transactions /The Fund Investments
in Energy Technology Companies") is amended in the following respects.
a. The first paragraph thereunder is restated in its entirety to
read as follows:
"The goal of the Fund is both to create competitive advantages
for its investing partners by identifying and investing in companies
in the process of developing and commercializing energy technologies
and to generate superior investment returns. The strategic benefits
are anticipated to stem largely from the fact that Fund investors will
have access to information about the portfolio companies and their
products and exposure to their technologies before others. As
competition takes root in the energy industry, and utility companies
strive to retain existing and attract new customers, the ability not
merely to provide low-cost service but also to master technologies to
differentiate products and services from competitors will become
increasingly important. Accordingly, Cinergy believes that both its
shareholders and system utility customers will benefit from the
proposed investment in the Fund."
b. The third paragraph thereunder is amended by deleting the first
sentence thereof and replacing that sentence with the following text:
"The Fund will invest in companies (none of which will consist of
any affiliate of Cinergy) engaged in developing and commercializing
electric and gas energy technologies in one or more of the following
categories."
c. The heading thereunder captioned "Generation and Storage"
is revised to read "Electricity Generation and Storage."
d. The heading thereunder captioned "Power Quality" is revised to
read "Electric Power Quality."
e. The text under and including the heading "Communications, Control
and Information Technologies" is restated in its entirety to read as
follows:
"3. Energy-Related Communications, Control and Information
Technologies
This category includes opportunities that will make practicable
the delivery of advanced energy services and the realization of energy
savings. For example, information technologies may be incorporated in
a broad range of energy-efficient end-use products facilitating
customer choices while optimizing the use of electricity and gas, such
as integrated residential automation, energy security,/1/ and energy
management hardware and software. Additional opportunities may arise
in connection with sensors and control algorithms/2/ as well as in
connection with electric and gas-related telecommunications and fiber
optic services, such as remote meter reading, data gathering and
utility customer services, and related specialized software./3/
Products of internal interest to electric and gas utilities may
include artificial intelligence-based monitoring and control systems,
automated billing systems, and sophisticated productivity tools (such
as advanced energy network planning and optimization software tools
that will improve reliability and lower costs of operation)."
f. The text under and including the heading "End-Use Products" is
deleted in its entirety and the following inserted in lieu thereof:
"4. Energy-Savings End-Use Products
This category consists of energy-savings versions of traditional
products (such as lighting and HVAC) as well as new products
intended to save energy. Opportunities in this category will be in
companies that offer innovative energy-savings products (in such areas
as advanced lighting systems and controls, mechanical drives, drying
processes, industrial furnaces, materials processing, environmental
controls, refrigeration, HVAC, advanced domestic appliances, and
energy storage technologies and other component parts with respect to
the development and commercialization of energy-efficient electric,
hybrid and natural gas vehicles) that will compete with products from
large established manufacturers. Portfolio companies in this category
may develop and commercialize products involving an enhancement or
retrofit of an existing larger product or system already commercially
available, intended to render that product or system energy-efficient
and to realize associated energy savings. On the other hand,
portfolio companies in this category may also develop and
commercialize (including by manufacture) products that are not
enhancements or retrofits of an existing larger product or system, but
rather are more appropriately characterized as stand-alone or
replacement products or systems; in all these instances, the
overriding purpose of the product would be to compete against existing
generically similar products or systems on the basis of the product's
superior energy-efficiency technologies and potential for realizing
energy savings.
A practical example of such an energy-savings driven, stand-alone
end-use product - rather than an "enhancement" or "retrofit" of an
existing larger end-use product or system - concerns ductwork for
residential HVAC. At the present time, the large HVAC companies
(Carrier, Trane, Lennox, etc.) produce air conditioning equipment, but
do not produce ductwork. Ductwork components are traditionally made
of sheet metal by regional manufacturers. These duct components tend
to leak, generally accounting for over half of the energy
inefficiencies in an HVAC system. The Fund may realize opportunities
to invest in start-up and other private companies (see second
paragraph under Item 1.B for basic parameters as to size and nature of
potential Fund companies) that manufacture more efficient,
significantly less leak-prone plastic ducting systems for residential
HVAC - a revolutionary concept, analogous to the introduction of
plastic pipes to the plumbing industry, that may yield very large
energy savings."
3. Item 1.C ("Description of Proposed Transactions /Terms of Limited
Partnership Agreement") is amended in the following respects.
a. The first sentence thereunder is restated in its entirety to read
as follows:
"Pursuant to the terms of a limited partnership agreement to be
executed by and among the Fund's general partner, Cinergy, and the
other limited partners ("Agreement"), Cinergy proposes to acquire up
to a 20% limited partner interest in the Fund by investing a total of
$10 million from time to time through December 31, 2002."
b. The fourth paragraph thereunder is restated in its entirety to
read as follows:
"Profits and losses with respect to investment securities of the
Partnership will be allocated 80% to all limited partners on the basis
of committed capital and 20% to the general partner, provided that any
losses generally will not reduce the general partner's capital account
to less than 1% of aggregate capital accounts (Article V).
Distributions of cash representing net short-term investment income of
the Partnership will be made within 90 days after the end of each
calendar year during the term of the Partnership and allocated in
proportion to committed capital (Section 7.6). Distributions in cash
(other than cash representing net short-term investment income of the
Partnership) or in securities of portfolio companies that are covered
by an effective registration statement or traded on a national
securities exchange or over-the-counter will be made at the discretion
of the general partner. Any such cash distributions will be allocated
80% to the limited partners on the basis of committed capital and 20%
to the general partner to the extent of net profits and, thereafter,
99% to the limited partners and 1% to the general partner. Any such
distributions of securities of portfolio companies will be allocated
80% to the limited partners on the basis of committed capital and 20%
to the general partner. (Sections 7.4, 7.5) Unless it obtains
Commission approval to retain such securities, Cinergy will undertake
to sell such securities as soon as practicable."
4. Item 3 ("Applicable Statutory Provisions") is amended in the following
respects.
a. The last sentence of the third paragraph thereunder is restated
in its entirety to read as follows:
"Finally, because its capital commitment to and corresponding limited
partnership interest in the Fund will be relatively small, and actions
of the Fund's limited partners require the assent of at least a
majority in interest thereof (and often a supermajority vote of the
limited partners), Cinergy will have no practical ability - assuming
it were so disposed - unilaterally to direct or otherwise control the
action of the Fund's limited partners with respect to those isolated
matters over which the limited partners exercise voting rights."
b. The last paragraph thereunder is restated in its entirety to read
as follows:
"In the alternative, if the Commission determines that the
proposed transaction is not exempt from Section 9(a) by reason of
Section 9(c)(3), Cinergy requests an order under Section 10 approving
the proposed transaction. For the reasons stated above, Cinergy's
proposed modest investment in the Fund - whose purpose is to invest
exclusively in companies that develop energy-related technologies - is
manifestly both "reasonably incidental, or economically necessary or
appropriate" to Cinergy's core utility business and "necessary or
appropriate in the public interest or for the protection of investors
or consumers and not detrimental to the proper functioning" of
Cinergy's utility business. The investment objectives of the Fund are
similar to those of the EnviroTech Partnership with respect to which
the Commission has issued a number of orders authorizing limited
partnership investments by other registered holding companies (see
Rel. Nos. 35-26240, Feb. 28, 1995 (Southern Company); 35-26230,
February 8, 1995 (General Public Utilities Corporation); 35-26225,
Feb. 1, 1995 (Allegheny Power System, Inc.); 35-26222, January 26,
1995 (American Electric Power Company, Inc.)). Both funds were or are
being formed to invest in companies - wherever located, without regard
to the service territory of the registered holding company system -
devoted to commercializing energy-related technologies, with the
EnviroTech fund having a particular focus on companies commercializing
electrotechnologies and renewable energy technologies that promote
environmental and economic responsibility."
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the undersigned company has
duly caused this document to be signed on its behalf by the undersigned
thereunto duly authorized.
Dated: June 17, 1996
Cinergy Corp.
By: /s/ William L. Sheafer
Treasurer
<PAGE>
ENDNOTES
/1/ Security and safety products would include the incorporation into the
utility communications network of energy-related safety monitoring features
such as gas leak, carbon monoxide, smoke and fire detectors that
automatically report to the utility's central monitoring system; the
utility will then use the same security system to dispatch to emergency
agencies, as well as to turn off gas and electricity at the affected
location.
/2/ Many products and processes waste energy because they are controlled in
unsophisticated ways. Investment opportunities for the Fund may arise as
microelectronic technologies are developed that bring increasing levels of
sophistication to energy processes. For example, heating and air
conditioning systems are traditionally controlled by means of simple
thermostats, because thermostats have long been commercially available.
However, great improvements will result when more sophisticated control
devices become available, sensing such variables as humidity, carbon
dioxide, carbon monoxide, etc. Combined with new control algorithms (i.e.,
software), these new devices will greatly improve the operation of air
conditioning, resulting in greater levels of occupant comfort as well as
considerable energy savings.
/3/ Telecommunications technologies will become increasingly important as a
utility's customers become increasingly geographically dispersed. In the
past, the utility industry has been characterized by contiguous customers
in discrete service territories, which served to mitigate or avoid entirely
communications problems. However, utilities are now moving towards
national and even global market strategies, and so economical and reliable
communications is becoming increasingly important. For example, a utility
may decide to offer a special energy savings rate plan to residential
customers all over the Midwest, which might provide for lower rates if the
customer would shift large appliance loads to the early morning or late
evening, resulting in environmental benefits as well as economic benefits
to the customer. However, such an energy savings rate plan necessarily
assumes that the utility has the means to measure both the amount and time
of energy consumption. A telecommunications-based technology that would
facilitate these measuring and communications tasks would be of great
benefit to the utility and its customers.
