File No. 70-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________________________
FORM U-1 APPLICATION-DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
____________________________________________
Cinergy Corp.
Cinergy Investments, Inc.
Cinergy Services, Inc.
The Cincinnati Gas & Electric Company
The Union Light, Heat and Power Company
The West Harrison Gas and Electric Company
Lawrenceburg Gas Company
Miami Power Corporation
Tri-State Improvement Company
KO Transmission Company
139 East Fourth Street
Cincinnati, Ohio 45202
PSI Energy, Inc.
1000 East Main Street
Plainfield, Indiana 46168
(Name 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.
(address above)
(Name and address of agent of service)
Applicants request that the Commission send copies of all notices, orders
and communications in connection herewith to:
Jerome A. Vennemann William T. Baker
Associate General Counsel Reid & Priest LLP
Cinergy Corp. 40 West 57th
(address above) New York, New York 10019
Item 1. Description of Proposed Transactions
A. August 1995 Order
By order dated August 25, 1995 (Release No. 35-26362) ("August 1995
Order"), Cinergy Corp. ("Cinergy"), a registered holding company under the
Public Utility Holding Company Act of 1935, as amended ("Act"), and certain
of its direct and indirect subsidiary companies - The Cincinnati Gas &
Electric Company ("CG&E"), PSI Energy, Inc. ("PSI"), The Union Light,
Heat and Power Company ("ULH&P"), The West Harrison Gas and Electric
Company ("West Harrison"), Lawrenceburg Gas Company ("Lawrenceburg"),
Miami Power Corporation ("Miami"),Cinergy Services, Inc. ("Cinergy
Services"), Tri-State Improvement Company ("Tri-State") and KO Transmission
Company ("KO")/1/ - were authorized to engage in the following transactions
through May 31, 1997: (1) PSI, ULH&P, Lawrenceburg, West Harrison and Miami
were authorized to incur short-term borrowings from banks and, in PSI's case,
through the issuance and sale of commercial paper; (2) Cinergy was
authorized to issue guarantees and provide letters of credit in connection
with short-term bank borrowings of its utility and nonutility subsidiaries;
and (3) all of the foregoing companies, together with CG&E, Cinergy
Services, Tri-State and KO, were authorized to implement a money pool
("Money Pool") to coordinate and provide for their short-term cash and
working capital requirements.
The proceeds of such short-term borrowings were to be utilized by PSI,
ULH&P, Lawrenceburg, West Harrison and Miami for general corporate purposes
including (1) interim financing of capital requirements, (2) working
capital needs, (3) repayment, redemption or refinancing of debt or
preferred stock, and (4) loans through the Money Pool. The August 1995
Order limited the aggregate principal amount of short-term borrowings at
any one time outstanding (whether through the Money Pool or from banks or
the sale of commercial paper) to the following amounts: PSI, $400 million;
ULH&P, $35 million; West Harrison, $200,000; Lawrenceburg, $3 million; and
Miami, $100,000. Finally, the August 1995 Order limited the maximum amount
of guarantees and letters of credit issued or obtained by Cinergy to a $375
million aggregate limitation imposed by the Commission in another
proceeding (Release No. 35-26215, January 11, 1995), which limitation was
later raised to $1 billion (Release No. 35-26488, March 12, 1996) ("March
1996 Order")./2/
B. Summary of Requested Authorizations
Applicants herein seek authority to engage in the following proposed
transactions, in each case through December 31, 2002:
1. In connection with the continued use of the Money Pool, (a)
PSI, ULH&P, Lawrenceburg, West Harrison and Miami propose to make loans to
and incur borrowings from one another thereunder, and (b) Cinergy, Cinergy
Services, CG&E, Tri-State and KO propose to make loans to PSI, ULH&P,
Lawrenceburg, West Harrison and Miami thereunder;
2. PSI, ULH&P, Lawrenceburg, West Harrison and Miami propose to
incur short-term bank borrowings and PSI proposes to issue and sell
commercial paper; and
3. Cinergy and Cinergy Investments, Inc., Cinergy's nonutility
holding company subsidiary ("Investments"), propose to guarantee the debt
or other obligations of certain existing Cinergy system companies and
companies whose securities may be acquired by Cinergy or any subsidiary
thereof from time to time through December 31, 2002 pursuant to and in
accordance with rule 58 (Release No. 35-26667, February 14, 1997).
Proceeds of any short-term borrowings by PSI, ULH&P, Lawrenceburg,
West Harrison and Miami (whether from banks, the Money Pool or, in PSI's
case, through the sale of commercial paper) would be used by such companies
for general corporate purposes, including (1) interim financing of capital
requirements; (2) working capital needs; (3) repayment, redemption,
refinancing of debt or preferred stock; (4) cash requirements to meet
unexpected contingencies and payment and timing differences; (5) loans
through the Money Pool; and (6) other transactions relating to these
Applicants' utility businesses.
Under the authority requested herein, the maximum principal amount of
short-term borrowings outstanding at any one time by PSI, ULH&P,
Lawrenceburg, West Harrison and Miami (whether from banks, the Money Pool
or, in PSI's case, through the sale of commercial paper) (each, a
"Borrowing Limitation") would not exceed the following amounts: PSI, $400
million; ULH&P, $50 million; West Harrison, $200,000; Lawrenceburg, $3
million; and Miami, $100,000. PSI's and ULH&P's estimated capital
requirements for 1997 are approximately $447 million and $33 million,
respectively.
Guaranties issued (i) by Cinergy would remain subject to the $1
billion aggregate limitation specified in the March 1996 Order (subject to
any increases in that authorization that Cinergy may obtain pursuant to one
or more further orders of the Commission), and (ii) by Investments would
not exceed $250 million at any one time outstanding.
C. Money Pool
Subject to the respective Borrowing Limitations, from time to time
through December 31, 2002, PSI, ULH&P, Lawrenceburg, West Harrison and
Miami propose to make loans to each other, and Cinergy, Cinergy Services,
CG&E, Tri-State and KO propose to make loans to PSI, ULH&P, Lawrenceburg,
West Harrison and Miami, all pursuant to and in accordance with the Money
Pool./3/ Applicants propose no changes to the Money Pool as authorized in
the August 1995 Order and embodied in the related Money Pool Agreement./4/
Under the Money Pool, funds are made available from the following
sources from time to time for short-term loans to Money Pool Participants:
(1) surplus treasury funds of Money Pool Participants ("Internal Funds")
and (2) proceeds from bank borrowings by Money Pool Participants or the
sale of commercial paper by Cinergy, CG&E or PSI ("External Funds"). Funds
are made available from such sources in such order as Cinergy Services, as
administrator of the Money Pool, determines would result in a lower cost of
borrowing, consistent with the individual borrowing needs and financial
standing of the companies providing funds to the Money Pool. Companies
that borrow from the Money Pool borrow pro rata from each lending company,
in the proportion that the total amount loaned by each such lending company
bears to the total amount then loaned through the Money Pool. On any day
when more than one fund source with different rates of interest is used to
fund loans through the Money Pool, each borrowing company borrows pro rata
from each such 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 Money Pool. No Money Pool Participant is required to
borrow through the Money Pool if it determines that it could borrow at a
lower cost directly from banks or through the sale of commercial paper.
Cinergy may not borrow from the Money Pool.
Fees paid to banks to maintain credit lines by Money Pool Participants
lending External Funds to the Money Pool are paid by the Money Pool
Participant maintaining the line quarterly. A portion of those costs are
allocated to the companies borrowing such External Funds through the Money
Pool in proportion to their outstanding borrowings of such External Funds.
When only Internal Funds comprise the funds available in the Money
Pool, the interest rate applicable to loans thereof is the CD yield
equivalent of the 30-day Federal Reserve "AA" Industrial Commercial Paper
Composite Rate, which rate parallels the lenders' effective cost of capital
with respect to such internal funds. When only External Funds comprise the
funds available in the Money Pool, the interest rate applicable to loans
thereof is equal to the lending company's cost for such External Funds (or
a composite rate equal to the weighted average of the of the costs incurred
by the respective Money Pool Participants for such External Funds, if more
than one Money Pool Participant had made available External Funds on such
day).
In circumstances where both Internal Funds and External Funds are
concurrently borrowed through the Money Pool, the rate applicable to all
loans comprised of such "blended" funds is a composite rate equal to the
weighted average of (a) the cost of all such Internal Funds and (b) the
cost of all such External Funds. Where both Internal Funds and External
Funds are available for loans through the Money Pool, loans may be made
exclusively from Internal Funds or External Funds, rather than from a
"blending" of such funds, to the extent it is determined that such loans
would result in a lower cost of borrowing.
Money Pool loans are in the form of open-account advances documented
and evidenced on the books of the Money Pool Participants, although each
lending party is entitled upon demand to receive from any Money Pool
Participant to whom it advances funds one or more promissory notes
evidencing any or all of its advances. Each party receiving a Money Pool
loan is required to repay the principal amount of such loan, together with
all interest accrued thereon, upon demand and in any event not later than
one year from the date of the advance. All Money Pool loans are prepayable
by the borrower in whole or in part at any time without premium or penalty.
Money Pool advances accrue interest monthly.
Funds not required to make Money Pool loans (other than funds required
to satisfy the Money Pool's liquidity requirements) may be invested in one
or more short-term investments, including (1) interest-bearing accounts
with banks, (2) obligations issued or guaranteed by the U.S. Government or
its agencies and instrumentalities, including obligations under repurchase
agreements, (3) obligations issued or guaranteed by any state or political
subdivision thereof rated not less than "A" by a nationally recognized
rating agency, (4) commercial paper rated not less than "A-1" or "P-1" or
their equivalent by a nationally recognized rating agency, (5) money market
funds, (6) bank certificates of deposit, (7) Eurodollar time deposits and
certificates of deposit, and (8) such other investments as are permitted by
section 9(c) of the Act and rule 40 thereunder.
Interest income and investment income earned on loans and investments
of surplus funds are allocated among the Money Pool Participants in
accordance with the proportion each participant's contribution bears to the
total amount of funds in the Money Pool and the cost of funds provided to
the Money Pool by such participant.
Operation of the Money Pool, including record-keeping and coordination
of loans, is administered by Cinergy Services on an "at cost" basis under
the authority of the appropriate officers of the Money Pool Participants.
Cinergy, CG&E and PSI expressly acknowledge in the Money Pool
Agreement that none of such companies will 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 Public
Utilities Commission of Ohio ("PUCO") or the Indiana Utility Regulatory
Commission ("IURC") which pertains to recovery, disallowance, allowance,
deferral or ratemaking treatment of any expense, charge, cost or allocation
incurred or accrued by CG&E or PSI 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 Securities and Exchange Commission or was incurred pursuant to a
contract, arrangement or allocation method which was filed with or approved
by the Securities and Exchange Commission.
D. Short-Term Bank Borrowings and Commercial Paper
Subject to the respective Borrowing Limitations, from time to time
through December 31, 2002, (a) PSI, ULH&P, Lawrenceburg, West Harrison and
Miami propose to borrow short-term funds from banks or other financial
institutions pursuant to formal or informal credit facilities, and (b) PSI
proposes to issue and sell commercial paper to commercial paper dealers.
1. Bank Borrowings
Bank borrowings would be evidenced by promissory notes, each of which
would be issued on or before December 31, 2002 and would mature no later
than one year from the date of issuance (except in the case of borrowings
by ULH&P, which would mature no later than two years from the date of
issuance)/5/, would bear interest at a rate no higher than the prime rate
for commercial bank loans prevailing on the date of such borrowing, and may
require fees to the lender not to exceed 50 basis points per annum on the
total commitment.
2. Commercial Paper
Subject to the Borrowing Limitation applicable to it, from time to
time through December 31, 2002, PSI also proposes to issue and sell
commercial paper to one or more dealers (or directly to financial
institutions if the resulting cost of money is equal to or less than that
available from dealer-placed commercial paper).
PSI proposes to issue and sell the commercial paper at market rates
with varying maturities not to exceed 270 days. The commercial paper will
be in the form of book-entry unsecured promissory notes with varying
denominations of not less than $25,000 each. No commission or fee will be
payable in connection with the issue and sale of the commercial paper.
However, the purchasing dealer will re-offer the commercial paper at a rate
less than the rate to PSI. The discount rate to dealers will not exceed
the maximum discount rate per annum prevailing at the date of issuance for
commercial paper of comparable quality and the same maturity. The
purchasing dealer will re-offer the commercial paper in such a manner as
not to constitute a public offering within the meaning of the Securities
Act of 1933.
E. Cinergy/Investments Guarantees
Subject in the case of Cinergy to the $1 billion aggregate limitation
set forth in the March 1996 Order (including any increase in such
limitation pursuant to one or more further orders of the Commission), and
in the case of Investments to an aggregate limitation at any one time
outstanding not to exceed $250 million, Cinergy and Investments seek
authorization from time to time through December 31, 2002 to guarantee the
debt and other obligations of (1) certain existing Cinergy system companies
and (2) any "energy-related companies" whose securities Cinergy or any
subsidiary thereof may acquire from time to time pursuant to and in
accordance with rule 58. (The companies referenced in clauses (1) and (2)
are collectively referred to as "Primary Obligors.")
The existing Cinergy system companies as to which Cinergy and
Investments seek authorization to issue guarantees are (as to Cinergy only)
Cinergy Services and (as to both Cinergy and Investments) certain
nonutility subsidiaries of Cinergy and Investments, namely, KO, Tri-State,
Cinergy Resources, Inc. (formerly CG&E Resource Marketing, Inc.), Cinergy
Capital & Trading, Inc. (formerly Wholesale Power Services, Inc.),
Cinergy Technology, Inc. (formerly PSI Environmental Corp.) and Enertech
Associates, Inc. (formerly Power International, Inc.).
Debt financing of any Primary Obligor which is so guaranteed will not
exceed 30 years and will bear interest either at a floating rate not in
excess of 200 basis points over the prime rate, applicable LIBOR or other
appropriate index in effect from time to time or at a fixed rate not in
excess of 300 basis points above the yield at the time of issuance of U.S.
Treasury obligations of a comparable maturity. Any commitment or other
fees on the debt will not exceed 100 basis points on the total amount of
debt financing.
Obligations (other than debt) of Primary Obligors that Cinergy and
Investments propose to receive authorization to guarantee or otherwise act
as indemnitor or surety would involve a Primary Obligor's obligation to
perform under contracts with sellers or customers. Guarantees issued by
Cinergy or Investments in these circumstances may take the form of
procuring bid bonds and the like; guaranteeing a Primary Obligor's
performance; or other similar direct or indirect guarantees of a Primary
Obligor's contractual obligations. These arrangements may be necessary in
order for a Primary Obligor to satisfy a seller or a customer that it has
adequate support for its contractual obligations.
F. Reporting Obligations
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 the following
information with respect to the preceding calendar quarter: (i) each
Applicant's maximum principal amount of external short-term borrowings
outstanding at any one time outstanding (i.e., bank borrowings and, in
PSI's case, commercial paper); (ii) with respect to the operation of the
Money Pool, (a) the average annual interest rate applicable to borrowings
through the Money Pool, (b) the maximum principal amount of Money Pool
borrowings by the respective Applicants outstanding at any one time, and
(c) the maximum principal amount of funds loaned through the Money Pool by
the respective Applicants outstanding at any one time; and (iii) a summary
of any guarantees issued by Cinergy or Investments.
G. Rule 54 Statement
Under Rule 54, in determining whether to approve the issue or sale of
a security by a registered holding company for purposes other than the
acquisition of an EWG or a FUCO other transactions by such registered
holding company or its subsidiaries other than with respect to EWGs and
FUCOs, the Commission shall not consider the effect of the capitalization
or earnings of any subsidiary which is an EWG or a FUCO if the conditions
in Rule 53(a), (b) and (c) are satisfied.
As set forth below, all applicable conditions of Rule 53(a) are and,
upon consummation of the proposed transactions, will be satisfied, and none
of the conditions specified in Rule 53(b) exists or, as a result of the
proposed transactions, will exist.
Rule 53(a)(1): At December 31, 1996, Cinergy had invested, directly
or indirectly, an aggregate of approximately $487 million in EWGs and
FUCOs. The average of the consolidated retained earnings of Cinergy
reported on Form 10-K or Form 10-Q, as applicable, for the four consecutive
quarters ended December 31, 1996 was $990 million. Accordingly, based on
Cinergy's "consolidated retained earnings" at December 31, 1996, and taking
into account EWG /FUCO investments as of that date, the current Rule 53
aggregate investment limitation is approximately $8 million (i.e., 50% of
"consolidated retained earnings" - $495 million - minus "aggregate
investment" at December 31, 1996 - $487 million).
Rule 53(a)(2): Cinergy maintains 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, in English, 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): No more than 2% of the employees of Cinergy's
operating utility subsidiaries will, at any one time, directly or
indirectly, render services to EWGs and FUCOs.
Rule 53(a)(4): Cinergy will simultaneously submit a copy of this
statement and of any Rule 24 certificate hereunder, as well as a copy of
Cinergy's Form U5S and Exhibits H and I thereto, to each public utility
commission having jurisdiction over the retail rates of any Cinergy utility
subsidiary.
Rule 53(b): The provisions of Rule 53(a) are not made inapplicable to
the authorization herein requested by reason of the provisions of Rule
53(b).
Rule 53(b)(1): Neither Cinergy nor any subsidiary thereof is the
subject of any pending bankruptcy or similar proceeding.
Rule 53(b)(2): Cinergy's average consolidated retained earnings for
the four quarters ended December 31, 1996 are $990 million, versus $926
million for the four quarters ended December 31, 1995, a difference of
approximately $64 million (representing an increase of 6.9%).
Rule 53(b)(3): For the twelve months ended December 31, 1996, Cinergy
did not report operating losses attributable to its direct and indirect
investments in EWGs and FUCOs aggregating in excess of 5% of consolidated
retained earnings.
Item 2. Fees, Commissions and Expenses
The fees, commissions and expenses ("Fees") to be incurred, directly
or indirectly, by Applicants or any associate companies thereof in
connection with the proposed transactions are estimated as follows:
Fees of Cinergy Services $15,000
Fees of Reid & Priest $5,000
TOTAL $20,000
Item 3. Applicable Statutory Provisions
Applicants consider that sections 6(a), 7, 9(a), 10 and 12(b) of the
Act and rules 40, 43, 45, 52 and 54 thereunder are or may be applicable to
the proposed transactions.
Item 4. Regulatory Approval
No state or federal regulatory agency other than the Commission under
the Act has jurisdiction over the proposed transactions.
With respect to the exemption from the proposed transactions afforded
by rule 52, CG&E currently has authorization from the PUCO in Case No. 96-488-
GE-AIS to issue up to $400 million of short-term debt including
commercial paper outstanding at any one time through June 30, 1997 and to
apply the proceeds thereof to refund CG&E's obligations, including high-cost
debt or preferred stock; to temporarily finance CG&E's construction
program; to acquire property; to make loans to other participants in the
Money Pool; and to provide funds for working capital and other general
corporate purposes, including CG&E's participation in the Money Pool. CG&E
is in the process of renewing that authorization.
Item 5. Procedure
Applicants request that the Commission issue and publish by not later
than March 28, 1997 the requisite notice under Rule 23 with respect to the
filing of this Application-Declaration. Applicants further request that
such notice specify a date not later than April 21, 1997 as the date after
which the Commission may issue an order granting and permitting to become
effective this Application-Declaration, and that the Commission issue such
order as soon as practicable thereafter.
Applicants waive a recommended decision by a hearing officer or other
responsible officer of the Commission; consent that the Staff of the
Division of Investment Management may assist in the preparation of the
Commission's order; and request that there be no waiting period between the
issuance of the Commission's order and its effectiveness.
Item 6. Exhibits and Financial Statements
(a) Exhibits:
A-1 Form of note evidencing borrowings from banks (incorporated
by reference from File No. 70-8587).
A-2 Form of commercial paper note of PSI (incorporated by
reference from File No. 70-8587).
A-3 Form of note evidencing borrowings under Money Pool
(incorporated by reference from File No. 70-8587).
B Form of Money Pool Agreement (incorporated by reference from
File No. 70-8587).
C Not applicable
E Not applicable
F Preliminary opinion of counsel (to be filed by amendment)
G Form of Federal Register notice
(b) Financial Statements:
FS-1 Cinergy Consolidated Financial Statements, dated December
31, 1996 (to be filed by amendment)
FS-2 Cinergy Financial Statements, dated December 31, 1996 (to be
filed by amendment)
FS-3 Investments Consolidated Financial Statements, dated
December 31, 1996 (to be filed by amendment)
FS-4 Cinergy Services Financial Statements, dated December 31,
1996 (to be filed by amendment)
FS-5 CG&E Consolidated Financial Statements, dated December 31,
1996 (to be filed by amendment)
FS-6 ULH&P Financial Statements, dated December 31, 1996 (to be
filed by amendment)
FS-7 West Harrison Financial Statements, dated December 31, 1996
(to be filed by amendment)
FS-8 Lawrenceburg Financial Statements, dated December 31, 1996
(to be filed by amendment)
FS-9 Miami Financial Statements, dated December 31, 1996 (to be
filed by amendment)
FS-10 Tri-State Financial Statements, dated December 31, 1996
(to be filed by amendment)
FS-11 KO Financial Statements, dated December 31, 1996 (to be
filed by amendment)
FS-12 PSI Consolidated Financial Statements, dated December
31, 1996 (to be filed by amendment)
FS-13 Cinergy Consolidated Financial Data Schedule (to be
included as part of electronic submission only)
FS-14 Cinergy Financial Data Schedule (to be included as part
of electronic submission only)
FS-15 Investments Consolidated Financial Data Schedule (to be
included as part of electronic submission only)
FS-16 Cinergy Services Financial Data Schedule (to be
included as part of electronic submission only)
FS-17 CG&E Consolidated Financial Data Schedule (to be
included as part of electronic submission only)
FS-18 ULH&P Financial Data Schedule (to be included as part
of electronic submission only)
FS-19 West Harrison Financial Data Schedule (to be included
as part of electronic submission only)
FS-20 Lawrenceburg Financial Data Schedule (to be included as
part of electronic submission only)
FS-21 Miami Financial Data Schedule (to be included as part
of electronic submission only)
FS-22 Tri-State Financial Data Schedule (to be included as
part of electronic submission only)
FS-23 KO Financial Data Schedule (to be included as part of
electronic submission only)
FS-24 PSI Consolidated Financial Data Schedule (to be
included as part of electronic submission only)
Item 7. Information as to Environmental Effects
(a) The Commission's action in this matter will not constitute major
federal action significantly affecting the quality of the human
environment.
(b) No other federal agency has prepared or is preparing an
environmental impact statement with regard to the proposed transactions.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the undersigned companies
have duly caused this statement to be signed on their behalf by the
undersigned thereunto duly authorized.
Dated: March 7, 1997
CINERGY CORP.
By: /s/ William L. Sheafer
Treasurer
CINERGY INVESTMENTS, INC.
By: /s/ William L. Sheafer
Treasurer
CINERGY SERVICES, INC.
By: /s/ William L. Sheafer
Treasurer
The Cincinnati Gas & Electric Company
By: /s/ William L. Sheafer
Treasurer
The Union Light, Heat and Power Company
By: /s/ William L. Sheafer
Treasurer
The West Harrison Gas and Electric
Company
By: /s/ William L. Sheafer
Treasurer
Lawrenceburg Gas Company
By: /s/ William L. Sheafer
Treasurer
Miami Power Corporation
By: /s/ William L. Sheafer
Treasurer
Tri-State Improvement Company
By: /s/ William L. Sheafer
Treasurer
KO Transmission Company
By: /s/ William L. Sheafer
Treasurer
PSI Energy, Inc.
By: /s/ William L. Sheafer
Treasurer
ENDNOTES
/1/ PSI, an Indiana corporation, is engaged in the production,
transmission, distribution and sale of electricity in north central,
central and southern Indiana and serves an estimated population of two
million people located in 69 of Indiana's 92 counties, including the cities
of Bloomington, Columbus, Kokomo, Lafayette, New Albany and Terre Haute.
CG&E and its subsidiaries ULH&P, Lawrenceburg and West Harrison provide
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 and includes the
cities of Cincinnati and Middletown in Ohio, Covington and Newport in
Kentucky, and Lawrenceburg in Indiana. Miami owns a 138 kV transmission
line running from Miami Fort Power Station to a point near Madison,
Indiana. KO, a Kentucky corporation, transports gas between Kentucky and
Ohio by means of an interstate pipeline located almost entirely in Kentucky
in which it has a one-third ownership interest. Tri-State, an Ohio
corporation, acquires and holds property in Ohio, Kentucky and Indiana for
substations, electric and gas rights of way, office space and other uses in
connection with CG&E's and its subsidiaries' utility operations. Cinergy
Services is a service company that provides various services exclusively
to associate companies.
/2/ The March 1996 Order authorized Cinergy to incur short-term bank
borrowings, issue and sell commercial paper and obtain letters of credit in
an aggregate principal amount at any one time outstanding not to exceed $1
billion through December 31, 1999.
/3/ Any borrowings by Cinergy Services, CG&E, Tri-State and KO from each
other under the Money Pool or from the other Money Pool Participants
thereunder will be exempt (together with the corresponding loans) pursuant
to rule 52.
/4/ Cinergy, Cinergy Services, CG&E, Tri-State, KO, PSI, ULH&P,
Lawrenceburg, West Harrison and Miami are sometimes herein collectively
referred to as the "Money Pool Participants." The August 1995 Order also
approved a proposal to establish a similar money pool arrangement for
nonutility companies in the Cinergy system. However, Cinergy has not
implemented this other money pool arrangement.
/5/ The Kentucky Public Service Commission does not have securities
issuance jurisdiction over short-term borrowings by ULH&P and other
Kentucky utilities with maturities of two years or less. By contrast, the
IURC has jurisdiction over short-term borrowings by Indiana utilities (such
as PSI, Lawrenceburg and West Harrison) with maturities of greater than one
year; the IURC does not have jurisdiction over short-term borrowings by
Indiana utilities with maturities of one year or less. With respect to the
securities issuance jurisdiction of the PUCO, CG&E has committed that it
will obtain the PUCO's prior approval for all of CG&E's short-term
borrowings, whether exempt from PUCO jurisdiction under Ohio law or
otherwise.
<PAGE>
Exhibit G
SECURITIES AND EXCHANGE COMMISSION
(Release No. 35- _____________)
Cinergy Corp., a registered holding company ("Cinergy"); Cinergy
Investments, Inc., its subsidiary nonutility holding company
("Investments"); The Cincinnati Gas & Electric Company, Cinergy's wholly-owned
electric and gas utility subsidiary ("CG&E"); CG&E's utility
subsidiaries: Lawrenceburg Gas Company ("Lawrenceburg"), The West Harrison
Gas and Electric Company ("West Harrison") and Miami Power Corporation
("Miami"); CG&E's nonutility subsidiaries: Tri-State Improvement Company
("Tri-State") and KO Transmission Company ("KO"), all located at 139 East
Fourth Street, Cincinnati Ohio 45202, and PSI Energy, Inc., an electric
utility subsidiary of Cinergy located at 1000 East Main Street, Plainfield,
Indiana 46168 ("PSI" and, together with the other named companies, the
"Applicants), have filed an application-declaration ("Application") under
sections 6(a), 7, 9(a), 10 and 12(b) of the Act and rules 40, 43, 52 and 54
thereunder.
By order dated August 25, 1995 (Release No. 35-26362) ("August 1995
Order"), Cinergy and the other Applicants except for Investments were
authorized to engage in the following transactions through May 31, 1997:
(1) PSI, ULH&P, Lawrenceburg, West Harrison and Miami were authorized to
incur short-term borrowings from banks and, in PSI's case, through the
issuance and sale of commercial paper; (2) Cinergy was authorized to issue
guarantees and provide letters of credit in connection with short-term bank
borrowings of its utility and nonutility subsidiaries; and (3) all of the
foregoing companies, together with CG&E, Cinergy Services, Tri-State and
KO, were authorized to implement a money pool ("Money Pool") to coordinate
and provide for their short-term cash and working capital requirements.
The proceeds of such short-term borrowings were to be utilized by PSI,
ULH&P, Lawrenceburg, West Harrison and Miami for general corporate purposes
including (1) interim financing of capital requirements, (2) working
capital needs, (3) repayment, redemption or refinancing of debt or
preferred stock, and (4) loans through the Money Pool. The August 1995
Order limited the aggregate principal amount of short-term borrowings at
any one time outstanding (whether through the Money Pool or from banks or
the sale of commercial paper) as follows: PSI, $400 million; ULH&P, $35
million; West Harrison, $200,000; Lawrenceburg, $3 million; and Miami,
$100,000. Finally, the August 1995 Order limited the maximum amount of
guarantees and letters of credit issued or obtained by Cinergy to a $375
million aggregate limitation imposed by the Commission in another
proceeding (Release No. 35-26215, January 11, 1995), which limitation was
later raised to $1 billion (Release No. 35-26488, March 12, 1996) ("March
1996 Order").
Applicants now propose to engage in the following transactions, in
each case through December 31, 2002: (1) In connection with the continued
use of the Money Pool, (a) PSI, ULH&P, Lawrenceburg, West Harrison and
Miami propose to make loans to and incur borrowings from one another
thereunder, and (b) Cinergy, Cinergy Services, CG&E, Tri-State and KO
propose to make loans to PSI, ULH&P, Lawrenceburg, West Harrison and Miami
thereunder; (2) PSI, ULH&P, Lawrenceburg, West Harrison and Miami propose
to incur short-term bank borrowings and PSI proposes to issue and sell
commercial paper; and (3) Cinergy and Investments propose to guarantee the
debt or other obligations of certain existing Cinergy system companies and
companies whose securities may be acquired by Cinergy or any subsidiary
thereof from time to time through December 31, 2002 pursuant to and in
accordance with rule 58 (Release No. 35-26667, February 14, 1997).
Proceeds of any short-term borrowings by PSI, ULH&P, Lawrenceburg,
West Harrison and Miami (whether from banks, the Money Pool or, in PSI's
case, through the sale of commercial paper) would be used by such companies
for general corporate purposes, including (1) interim financing of capital
requirements; (2) working capital needs; (3) repayment, redemption,
refinancing of debt or preferred stock; (4) cash requirements to meet
unexpected contingencies and payment and timing differences; (5) loans
through the Money Pool; and (6) other transactions relating to these
Applicants' utility businesses. Under the authority requested in the
Application the maximum principal amount of short-term borrowings
outstanding at any one time by PSI, ULH&P, Lawrenceburg, West Harrison and
Miami (whether from banks, the Money Pool or, in PSI's case, through the
sale of commercial paper) (each, a "Borrowing Limitation") would not exceed
the following amounts: PSI, $400 million; ULH&P, $50 million; West
Harrison, $200,000; Lawrenceburg, $3 million; and Miami, $100,000.
Guaranties issued by (i) Cinergy would remain subject to the $1 billion
aggregate limitation specified in the March 1996 Order (subject to any
increases in that authorization that Cinergy may obtain pursuant to one or
more further orders of the Commission), and (ii) by Investments would not
exceed $250 million at any one time outstanding.
1. Money Pool
Subject to the respective Borrowing Limitations, from time to time
through December 31, 2002, PSI, ULH&P, Lawrenceburg, West Harrison and
Miami propose to make loans to each other, and Cinergy, Cinergy Services,
CG&E, Tri-State and KO propose to make loans to PSI, ULH&P, Lawrenceburg,
West Harrison and Miami (collectively, the "Money Pool Participants"),
pursuant to and in accordance with the Money Pool. Applicants propose no
changes to the Money Pool as authorized in the August 1995 Order and
embodied in the related Money Pool Agreement. Applicants assert that
borrowings by Cinergy Services, CG&E, Tri-State and KO will also continue
to borrow from each other under the Money Pool or from and the other Money
Pool Participants thereunder are exempt (together with the corresponding
loans) . Such borrowings and associated loans are exempt pursuant tounder
rule 52.
Under the Money Pool, funds are made available from the following
sources from time to time for short-term loans to Money Pool Participants:
(1) surplus treasury funds of Money Pool Participants ("Internal Funds")
and (2) proceeds from bank borrowings by Money Pool Participants or the
sale of commercial paper by Cinergy, CG&E or PSI ("External Funds"). Funds
are made available from such sources in such order as Cinergy Services, as
administrator of the Money Pool, determines would result in a lower cost of
borrowing, consistent with the individual borrowing needs and financial
standing of the companies providing funds to the Money Pool. Companies
that borrow from the Money Pool borrow pro rata from each lending company,
in the proportion that the total amount loaned by each such lending company
bears to the total amount then loaned through the Money Pool. On any day
when more than one fund source with different rates of interest is used to
fund loans through the Money Pool, each borrowing company borrows pro rata
from each such 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 Money Pool. No Money Pool Participant is required to
borrow through the Money Pool if it determines that it could borrow at a
lower cost directly from banks or through the sale of commercial paper.
Cinergy may not borrow from the Money Pool.
Fees paid to banks to maintain credit lines by Money Pool Participants
lending External Funds to the Money Pool are paid by the Money Pool
Participant maintaining the line quarterly. A portion of those costs are
allocated to the companies borrowing such External Funds through the Money
Pool in proportion to their outstanding borrowings of such External Funds.
When only Internal Funds comprise the funds available in the Money
Pool, the interest rate applicable to loans thereof is the CD yield
equivalent of the 30-day Federal Reserve "AA" Industrial Commercial Paper
Composite Rate, which rate parallels the lenders' effective cost of capital
with respect to such internal funds. When only External Funds comprise the
funds available in the Money Pool, the interest rate applicable to loans
thereof is equal to the lending company's cost for such External Funds (or
a composite rate equal to the weighted average of the of the costs incurred
by the respective Money Pool Participants for such External Funds, if more
than one Money Pool Participant had made available External Funds on such
day).
In circumstances where both Internal Funds and External Funds are
concurrently borrowed through the Money Pool, the rate applicable to all
loans comprised of such "blended" funds is a composite rate equal to the
weighted average of (a) the cost of all such Internal Funds and (b) the
cost of all such External Funds. Where both Internal Funds and External
Funds are available for loans through the Money Pool, loans may be made
exclusively from Internal Funds or External Funds, rather than from a
"blending" of such funds, to the extent it is determined that such loans
would result in a lower cost of borrowing.
Money Pool loans are in the form of open-account advances documented
and evidenced on the books of the Money Pool Participants, although each
lending party is entitled upon demand to receive from any Money Pool
Participant to whom it advances funds one or more promissory notes
evidencing any or all of its advances. Each party receiving a Money Pool
loan is required to repay the principal amount of such loan, together with
all interest accrued thereon, upon demand and in any event not later than
one year from the date of the advance. All Money Pool loans are prepayable
by the borrower in whole or in part at any time without premium or penalty.
Money Pool advances accrue interest monthly.
Funds not required to make Money Pool loans (other than funds required
to satisfy the Money Pool's liquidity requirements) may be invested in one
or more short-term investments, including (1) interest-bearing accounts
with banks, (2) obligations issued or guaranteed by the U.S. Government or
its agencies and instrumentalities, including obligations under repurchase
agreements, (3) obligations issued or guaranteed by any state or political
subdivision thereof rated not less than "A" by a nationally recognized
rating agency, (4) commercial paper rated not less than "A-1" or "P-1" or
their equivalent by a nationally recognized rating agency, (5) money market
funds, (6) bank certificates of deposit, (7) Eurodollar time deposits and
certificates of deposit, and (8) such other investments as are permitted by
section 9(c) of the Act and rule 40 thereunder.
Interest income and investment income earned on loans and investments
of surplus funds are allocated among the Money Pool Participants in
accordance with the proportion each participant's contribution bears to the
total amount of funds in the Money Pool and the cost of funds provided to
the Money Pool by such participant.
Operation of the Money Pool, including record-keeping and coordination
of loans, is administered by Cinergy Services on an "at cost" basis under
the authority of the appropriate officers of the Money Pool Participants.
Cinergy, CG&E and PSI expressly acknowledge in the Money Pool
Agreement that none of such companies will 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 Public
Utilities Commission of Ohio ("PUCO") or the Indiana Utility Regulatory
Commission ("IURC") which pertains to recovery, disallowance, allowance,
deferral or ratemaking treatment of any expense, charge, cost or allocation
incurred or accrued by CG&E or PSI 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 this Commission or was incurred pursuant to a contract, arrangement or
allocation method which was filed with or approved by this Commission.
2. Short-Term Bank Borrowings and Commercial Paper
Subject to the respective Borrowing Limitations, from time to time
through December 31, 2002, (a) PSI, ULH&P, Lawrenceburg, West Harrison and
Miami propose to borrow short-term funds from banks or other financial
institutions pursuant to formal or informal credit facilities, and (b) PSI
proposes to issue and sell commercial paper to commercial paper dealers.
Bank borrowings would be evidenced by promissory notes, each of which
would be issued on or before December 31, 2002 and would mature no later
than one year from the date of issuance (except in the case of borrowings
by ULH&P, which would mature no later than two years from the date of
issuance), would bear interest at a rate no higher than the prime rate for
commercial bank loans prevailing on the date of such borrowing, and may
require fees to the lender not to exceed 50 basis points per annum on the
total commitment.
Subject to the Borrowing Limitation applicable to it, from time to
time through December 31, 2002, PSI also proposes to issue and sell
commercial paper to one or more dealers (or directly to financial
institutions if the resulting cost of money is equal to or less than that
available from dealer-placed commercial paper).
PSI proposes to issue and sell the commercial paper at market rates
with varying maturities not to exceed 270 days. The commercial paper will
be in the form of book-entry unsecured promissory notes with varying
denominations of not less than $25,000 each. No commission or fee will be
payable in connection with the issue and sale of the commercial paper.
However, the purchasing dealer will re-offer the commercial paper at a rate
less than the rate to PSI. The discount rate to dealers will not exceed
the maximum discount rate per annum prevailing at the date of issuance for
commercial paper of comparable quality and the same maturity. The
purchasing dealer will re-offer the commercial paper in such a manner as
not to constitute a public offering within the meaning of the Securities
Act of 1933.
3. Cinergy /Investments Guarantees
Subject in the case of Cinergy to the $1 billion aggregate limitation
set forth in the March 1996 Order (including any increase in such
limitation pursuant to one or more further orders of the Commission), and
in the case of Investments to an aggregate limitation at any one time
outstanding not to exceed $250 million, Cinergy and Investments seek
authorization from time to time through December 31, 2002 to guarantee the
debt and other obligations of (1) certain existing Cinergy system companies
and (2) any "energy-related companies" whose securities Cinergy or any
subsidiary thereof may acquire from time to time pursuant to and in
accordance with rule 58. (The companies referenced in clauses (1) and (2)
are collectively referred to as "Primary Obligors.")
The existing Cinergy system companies as to which Cinergy and
Investments seek authorization to issue guarantees are (as to Cinergy only)
Cinergy Services and (as to both Cinergy and Investments) certain
nonutility subsidiaries of Cinergy and Investments, namely, KO, Tri-State,
Cinergy Resources, Inc. (formerly CG&E Resource Marketing, Inc.), Cinergy
Capital & Trading, Inc. (formerly Wholesale Power Services, Inc.),
Cinergy Technology, Inc. (formerly PSI Environmental Corp.) and Enertech
Associates, Inc. (formerly Power international, Inc.).
Debt financing of any Primary Obligor which is so guaranteed will not
exceed 30 years and will bear interest either at a floating rate not in
excess of 200 basis points over the prime rate, applicable LIBOR or other
appropriate index in effect from time to time or at a fixed rate not in
excess of 300 basis points above the yield at the time of issuance of U.S.
Treasury obligations of a comparable maturity. Any commitment or other
fees on the debt will not exceed 100 basis points on the total amount of
debt financing.
Obligations (other than debt) of Primary Obligors that Cinergy and
Investments propose to receive authorization to guarantee or otherwise act
as indemnitor or surety would involve a Primary Obligor's obligation to
perform under contracts with sellers or customers. Guarantees issued by
Cinergy or Investments in these circumstances may take the form of
procuring bid bonds and the like; guaranteeing a Primary Obligor's
performance; or other similar direct or indirect guarantees of a Primary
Obligor's contractual obligations. These arrangements may be necessary in
order for a Primary Obligor to satisfy a seller or a customer that it has
adequate support for its contractual obligations.
For the Commission, by the Division of Investment Management, pursuant
to delegated authority.
