File No. 70-8427
SECURITIES AND EXCHANGE COMMISSION
450 FIFTH STREET, N.W.
WASHINGTON, D. C. 20549
__________________________________________
POST-EFFECTIVE AMENDMENT NO. 3
TO
FORM U-1 APPLICATION-DECLARATION
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
Vice President and Treasurer
Cinergy Corp.
(address above)
(Name and address of agent of service)
Applicant requests that the Commission send copies of all notices, orders
and communications in connection herewith to:
Jerome A. Vennemann William T. Baker, Jr.
Associate General Counsel Thelen Reid & Priest LLP
Cinergy Corp. 40 West 57th Street
(address above) New York, New York 10019
PAGE
<PAGE>
This post-effective amendment amends Post-Effective Amendment No.
2 in this proceeding, filed on February 6, 1998, in the following
respects:
1. Item 1.C, "Description of Proposed Transactions/ 1994 Nonutility
Interests of CG&E and PSI," is hereby restated in its entirety to read as
follows:
C. 1994 Nonutility Interests of CG&E and PSI
1. Requested Action
Subsequent events have partially mooted the issues associated with
the reservation of jurisdiction in the Merger Order over the nonutility
interests of CG&E and PSI. In particular,
- certain of those interests have been sold or dissolved/1/ (or
are being dissolved/2/);
- certain others are "energy-related companies" under rule 58
(each, a "rule 58 company"), and Cinergy has made the requisite
filings with the Commission claiming that status for
those companies;/3/and
- in 1995 and then again in 1996, Cinergy received Commission
authorization to organize or otherwise acquire securities of
special purpose subsidiaries ("EWG /FUCO Project Parents")
dedicated to acquiring and holding, and/or providing services
to, exempt wholesale generators ("EWGs") and foreign utility
companies ("FUCOs" and, together with EWGs, "Exempt Projects")
in which Cinergy acquires ownership interests;/4/two of the
pre-merger nonutility companies are devoted to that end./5/
Cinergy now requests that the Commission release its jurisdiction
and grant Cinergy authority to retain the remaining nonutility interests
covered by the Merger Order ("Remaining Nonutility Interests").
Specifically, Cinergy requests authorization to retain the following
companies or interests: (1) Tri-State Improvement Company, (2) KO
Transmission Company, (3) certain CG&E "good citizen" limited partnership
investments (namely, North Rhine I Limited Partnership, North Rhine II
Limited Partnership, Franciscan Homes II Limited Partnership, Blue Chip
Capital Fund, L.P. and Blue Chip Opportunity Fund, L.P.), (4) South
Construction Company, Inc., (5) Cinergy Technology, Inc. (formerly PSI
Environmental Corp.), and (6) certain PSI Energy "good citizen" limited
partnership investments (namely, Cambridge Ventures, L.P., three private
equity funds organized by CID Partners - CID Partnership, L.P., CID
Ventures, L.P., and CID Equity Capital III, L.P. - and Circle Centre
Partners L.P.).
In addition, with regard to the limited partnership investments in
the Blue Chip Opportunity Fund, L.P. and CID Equity Capital III, L.P.,
Cinergy requests authorization to make additional investments in those
funds totaling $570,000 ($50,000 for the first, $520,000 for the second),
from time to time through December 31, 2002, in order to fulfill capital
commitments made prior to consummation of the Cinergy merger.
Cinergy will not seek recovery through higher rates to Cinergy
system utility customers to compensate Cinergy for any losses or inadequate
returns it may experience on capital invested in the Remaining Nonutility
Interests. Therefore, the investment risks associated with the Remaining
Nonutility Interests will continue to be borne exclusively by Cinergy's
shareholders.
2. Background: Merger Order /Nonutility Interests of CG&E
and PSI
The Merger Order reserved jurisdiction for three years over the
then-existing nonutility interests held directly or indirectly by CG&E and
PSI.
On the CG&E side, these nonutility interests were:
- Tri-State Improvement Company ("Tri-State"), an Ohio
corporation 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 connection with the
utility business of CG&E and its utility subsidiaries;
- KO Transmission Company ("KO"), a Kentucky corporation formed
in early 1994 to acquire an interest in an interstate natural
gas pipeline system located in Kentucky to which CG&E was
entitled under a settlement agreement with Columbia Gas
Transmission Corporation;
- Enertech Associates International, Inc. ("Enertech"), an Ohio
corporation formed as a vehicle for CG&E to offer utility
management consulting services and to pursue investment
opportunities in energy-related areas, including demand-side
management services, consulting, energy and fuel brokering,
engineering services, construction and/or operation of
generation, cogeneration, independent power production ("IPP")
facilities, and project development; prior to the Cinergy
merger, Enertech had acquired Bruwabel and its two Czech
subsidiaries, Power Development s.r.o. and Power International
s.r.o., to pursue design, engineering, and development work
involving energy privatization projects, primarily in the
Czech Republic;
- CG&E Resource Marketing, Inc. ("CG&E Resource Marketing"), a
Delaware corporation formed to hold CG&E's one-third general
partnership interest in U.S. Energy Partners, a gas marketing
partnership;
- CGE ECK, Inc. ("CGE ECK"), a Delaware corporation organized to
hold CG&E's one-third interest in a Czech electric utility
company, ECK s.r.o.;
- CGE Corp., a Delaware corporation formed to serve as a holding
company for certain of CG&E's nonutility investments; and
- CG& E limited partnership interests: CG&E also held small
"good citizen" investments in various local entities (i.e.,
North Rhine I Limited Partnership, North Rhine II Limited
Partnership, Franciscan Homes II Limited Partnership, Blue Chip Capital
Fund, L.P. and Blue Chip Opportunity Fund, L.P.)
The Commission noted that for the year ended December 31, 1993,
CG&E's nonutility subsidiaries accounted for less than 1% of CG&E's
consolidated revenues.
The Commission also reserved jurisdiction over the nonutility
interests then held directly or indirectly by PSI, namely:
- PSI Recycling, Inc. ("Recycling"), an Indiana corporation
dedicated to recycling paper, metal and other materials from
PSI Energy and other sources;
- Power Equipment Supply Company ("PESCO"), an Indiana
corporation that sold equipment and parts from a canceled PSI
Energy generating plant, the Marble Hill nuclear project;
PESCO also purchased equipment for resale, brokered equipment,
and sold equipment on consignment for others;
- Wholesale Power Services, Inc. ("Wholesale Power Services"),
an Indiana corporation formed to broker power, emissions
allowances, electricity futures and related products and
services and to provide consulting services in the wholesale
power-related markets; through its "IPEX" (International Power
Exchange) division, Wholesale Power Services also created,
marketed and maintained an electronic bulletin board for the
bulk power market;
- South Construction Company, Inc. ("South Construction"), an
Indiana corporation devoted to holding legal title to
interests in real estate not used and useful in the conduct of
PSI Energy's business or having some defect in title
unacceptable to PSI Energy;
- PSI Investments, Inc. ("PSI Investments"), an Indiana
corporation formed to hold certain nonutility interests of
PSI, including a number of then-inactive companies formed
under Indiana law - specifically, PSI Power Resource
Development, Inc. ("PSI Power Resource Development"), PSI
Power Resource Operations, Inc. ("PSI Power Resource
Operations"), PSI International, Inc. ("PSI International")
and PSI Sunnyside, Inc. ("PSI Sunnyside"), each of which was
formed to develop, operate and maintain IPP or cogeneration
projects; PSI Environmental Corp. ("PSI Environmental"),
formed to provide energy-related environmental services; and,
finally, PSI T&D International, Inc. ("PSI T&D International")
and its wholly-owned subsidiary, PSI Yacyreta, Inc. ("PSI
Yacyreta"), each of which was formed to acquire, directly or
indirectly, interests in FUCOs;
- Argentine subsidiaries: Through several subsidiaries (namely,
PSI Energy Argentina, Inc., PSI Argentina, Inc. and Costanera
Power Corporation), PSI was a member of two consortia that
participated in the privatization of certain electric
generation and distribution assets in Argentina./6/ PSI also
had established Energy Services Inc. of Buenos Aires ("Energy
Services of Buenos Aires") to provide operating and consulting
services; and
- PSI limited partnership interests: PSI Energy also held "good
citizen" investments in various local funds or partnerships
(namely, Cambridge Ventures, L.P. and three private venture
capital funds organized by CID Equity Partners, all of these
four entities having been formed to raise capital for
investments in start-up or early stage Indiana and other
midwestern companies, and Circle Centre Partners L.P., a
Delaware limited partnership formed to invest in Circle
Centre, a retail shopping mall then under construction in
downtown Indianapolis).
The Commission noted that PSI's nonutility investments were
insubstantial, accounting for less than 1% of PSI's 1993 operating
revenues.
3. Status of 1994 Nonutility Interests
The following updates information for each of the nonutility
interests over which the Commission reserved jurisdiction in the Merger
Order. At and for the 12 months ended September 30, 1997, the balance of
the nonutility companies and interests still under Cinergy ownership
(including rule 58 companies) comprised less than 1% of Cinergy's
consolidated assets and revenues.
a. CG&E Nonutility Interests: Tri-State Improvement Company
Tri-State is a direct subsidiary of CG&E and its business remains
the acquisition and holding of property in Ohio, Kentucky and Indiana for
substations, electric and gas rights of way, office space, and other uses
in connection with the utility business of CG&E and its utility
subsidiaries. At September 30, 1997 and for the 12 months then ended,
Tri-State had total assets of approximately $37 million and operating
revenues
of approximately $1.5 million./7/
b. CG&E Nonutility Interests: KO Transmission Company
KO, a FERC-regulated pipeline subsidiary of CG&E, was formed in
early 1994 for the specific purpose of acquiring an interest in an
interstate gas pipeline system located in Kentucky to which CG&E was
entitled under a litigation settlement with Columbia Gas Transmission Corp.
("Columbia Gas").
Pursuant to a 1989 FERC-approved "global" offer of settlement, and
the FERC's February 1996 order granting KO a certificate of public
convenience and necessity under the Natural Gas Act together with a blanket
certificate to offer firm and interruptible transportation service,/8/ KO
acquired from Columbia Gas (1) an undivided approximate one-third interest
(equivalent to 221,000 Dekatherms per day ("Dth/d")) in certain natural gas
facilities of Columbia Gas known as the "Kentucky System," consisting of
various pipeline, looping and related equipment, which extends northward
about 90 miles from an interconnection with Columbia Gulf Transmission
Company in Menifee County, Kentucky to a terminus at the Cold Spring
Station interconnection with ULH&P in northern Kentucky; and (2) a 100%
interest in another, much shorter interstate gas pipeline facility of
Columbia Gas, Line AM-4, which extends northwesterly about 3 miles from the
Cold Spring Station interconnection to an interconnection with CG&E's
natural gas facilities at the Kentucky-Ohio border on the Ohio River.
On June 1, 1996, KO commenced its business of transporting natural
gas in interstate commerce over the facilities acquired from Columbia Gas.
All or most of KO's entitlement to capacity on the Kentucky System has been
contracted to CG&E and ULH&P on a firm basis to help meet their gas supply
obligations. At September 30, 1997 and for the 12 months then ended, KO
had total assets of approximately $1.6 million and operating revenues of
approximately $946,000./9/
c. CG&E Nonutility Interests: Enertech Associates, Inc.
(formerly Enertech Associates International, Inc.)
Enertech, a direct subsidiary of Cinergy Investments, was formed as
a vehicle for CG&E to offer utility management consulting services and to
pursue investment opportunities in energy-related areas, including
demand-side management services, consulting, energy and fuel brokering,
engineering services, construction and/or operation of generation,
cogeneration, independent power production ("IPP") facilities, and project
development. In 1996 Cinergy sold to a non-associate all of Enertech's
subsidiaries, that is, Bruwabel and its two Czech subsidiaries. Other than
in connection with the litigation noted below, and this sale, Enertech has
been inactive since October 1995. (In 1997, Enertech changed its name to
"Enertech Associates, Inc.") In light of the activities from which its
revenues would derive if it were to resume active operations, Enertech is a
rule 58 company.
On October 25, 1995, a suit was filed in the Federal District Court
for the Southern District of Ohio by three former employees of Enertech,
naming as defendants Enertech, Cinergy, Cinergy Investments and certain
senior officers of those companies. The lawsuit, which stemmed from the
termination of employment of the three former employees, alleged that they
entered into employment contracts with Enertech based on the opportunity to
participate in potential profits from future investments in energy projects
in central and eastern Europe. The suit alleged causes of action based on,
among other theories, breach of contract related to the events surrounding
the termination of their employment and fraud and misrepresentation related
to the level of financial support for future projects. The suit alleged
compensatory and punitive damages. In the spring of 1998 the lawsuit was
settled and dismissed by the court.
With the lawsuit now settled, Cinergy currently anticipates that
after Enertech collects various claims due from vendors or other third
parties, this company will be dissolved. Pending any such potential
dissolution, Cinergy expects that Enertech will remain essentially
inactive.
At September 30, 1997 and for the 12 months then ended, Enertech
had total assets of approximately $5 million and net income of
approximately $2 million.
d. CG&E Nonutility Interests: Cinergy Resources, Inc.
(formerly CG&E Resource Marketing)
In the summer of 1995, CG&E Resource Marketing withdrew from its
gas marketing partnership with Public Service Electric & Gas Company,
conducted under the name U.S. Energy Partners, in which CG&E held a
one-third interest. Renamed Cinergy Resources, Inc. ("Cinergy Resources"),
this company has continued in the gas marketing business on a stand-alone
basis, serving residential, commercial and industrial customers in Ohio,
Indiana and Kentucky. In connection with its retail gas marketing
business, Cinergy Resources acquires gas supplies and related
transportation capacity.
In 1997, Cinergy Resources expanded its business to include retail
marketing of electricity. Cinergy Resources is participating in the pilot
program in Pennsylvania under which electric customers throughout the state
will have the right to choose their electricity supplier. Cinergy
Resources began delivering power to Pennsylvania customers in December
1997.
Cinergy Resources is a rule 58 company and direct subsidiary of
Cinergy Investments. For further information concerning Cinergy Resources,
including financial information, see Cinergy's quarterly reports on Form
U-9C-3.
e. CG&E Nonutility Interests: CGE ECK, Inc.
As noted above, CGE ECK was created to hold CG&E's one-third
interest in a Czech electric utility company, ECK s.r.o. After the Cinergy
merger CGE ECK reduced its ownership interest in ECK s.r.o. In mid 1997
CGE ECK sold what remained of its interest in ECK s.r.o and was dissolved
effective December 31, 1997.
f. CG&E Nonutility Interests: CGE Corp.
As contemplated in the Merger Order, CGE Corp. was merged with and
into Cinergy Investments on October 24, 1994, the date the Cinergy merger
was consummated. The separate corporate existence of CGE Corp. thereupon
ceased and Cinergy Investments succeeded to ownership of the nonutility
interests held by CGE Corp.
g. CG&E Nonutility Interests: "Good Citizen" Limited
Partnership Investments
The Merger Order reserved jurisdiction over five small "good
citizen" limited partnership investments of CG&E: three investments in
limited partnerships dedicated to investing in, owning, rehabilitating and
maintaining apartment buildings for low-income people within the CG&E
service territory: North Rhine I Limited Partnership ("North Rhine I");
North Rhine II Limited Partnership ("North Rhine II"); and Franciscan Homes
II Limited Partnership ("Franciscan Homes"). In addition, CG&E held small
minority interests in two limited partnerships formed to invest in small
and minority- or female-owned businesses in the service territories of CG&E
and its subsidiaries: Blue Chip Capital Fund, L.P. ("Blue Chip Capital")
and Blue Chip Opportunity Fund, L.P. ("Blue Chip Opportunity").
As of September 30, 1997, CG&E's aggregate investments and
corresponding limited partnership interests in these funds were
approximately as follows: North Rhine I - $9,000 investment, 2% interest;
North Rhine II - $86,000 investment, 6% interest; Franciscan Homes - $2,000
investment, 2% interest; Blue Chip Capital - $509,000 investment, 2%
interest; and Blue Chip Opportunity - $400,000 investment, 4% interest.
At the end of January 1998, pursuant to CG&E's original $500,000
capital commitment which predated the Cinergy merger, Cinergy made an
additional investment in Blue Chip Opportunity on CG&E's behalf, raising
CG&E's total investment therein to $450,000.
Cinergy requests authority, through December 31, 2002, to fund the
balance of CG&E's remaining capital commitment to the Blue Chip Opportunity
fund - $50,000.
Any further investments by Cinergy or CG&E or any associate company
in this or any other of the funds described above would only be made
pursuant to a separate order or orders from the Commission or as permitted
by rule 40(a)(5).
h. PSI Nonutility Interests: PSI Recycling, Inc.
In August 1996, Cinergy Investments sold substantially all the
assets of Recycling to a non-associate company. In December 1997,
Recycling was dissolved.
i. PSI Nonutility Interests: Power Equipment Supply Company
In late 1995, PESCO sold the assets of its North American Machinery
Division to a nonaffiliated buyer. PESCO discontinued operations in 1996
and was dissolved effective December 31, 1997.
j. PSI Nonutility Interests: Cinergy Capital & Trading,
Inc. (formerly Wholesale Power Services, Inc.)
In 1995, Wholesale Power Services received authorization from the
FERC to sell electricity to non-associates at market-based rates, but was
otherwise inactive./10/ In 1996, Wholesale Power Services discontinued its
IPEX Division, established to operate an electronic bulletin board for the
bulk power market. In January 1997, Wholesale Power Services was renamed
"Cinergy Capital & Trading, Inc." ("Cinergy Capital & Trading").
In June 1997, Cinergy Capital & Trading acquired the assets of
Greenwich Energy Partners, a limited partnership based in Connecticut
engaged in the business of trading and marketing natural gas and oil and
derivative commodity instruments. With the acquisition of Greenwich
Energy, Cinergy Capital & Trading resumed limited active operations. At
year-end 1997, Cinergy Capital & Trading had not yet commenced power
trading activities. Cinergy Capital & Trading will market and trade
electricity and natural gas and other energy commodities, together with
derivative commodity instruments, on a nationwide basis. Cinergy Capital &
Trading also markets related technical consulting services.
Cinergy Capital & Trading is a rule 58 company and direct
subsidiary of Cinergy Investments. For further information on Cinergy
Capital & Trading, including financial information, see Cinergy's quarterly
reports on Form U-9C-3.
k. PSI Nonutility Interests: South Construction Company,
Inc.
South Construction is a direct subsidiary of PSI Energy and
functionally similar to Tri-State, CG&E's real estate subsidiary. Like
Tri-State, South Construction is devoted to holding title to interests in
real estate in connection with the utility business of PSI Energy.
However, in its case, it holds title to interests in real estate either not
used and useful in the conduct of PSI Energy's business or having some
defect in title unacceptable to PSI Energy. At September 30, 1997 and for
the 12 months then ended, South Construction had no assets and no net
income or loss.
l. PSI Nonutility Interests: PSI Investments, Inc.
In connection with the formation of Cinergy Investments, this
former nonutility subholding company of PSI was merged out of existence,
with Cinergy Investments succeeding to its nonutility interests. See
discussion above of CGE Corp.
m. PSI Nonutility Interests: PSI Power Resource
Development, Inc.
As previously noted, this inactive company, a direct subsidiary of
Cinergy Investments, is being dissolved.
n. PSI Nonutility Interests: Cinergy-Cadence, Inc.
(formerly PSI Power Resource Operations, Inc.)
This formerly inactive subsidiary was activated and renamed
Cinergy-Cadence, Inc. ("Cinergy Cadence") to hold Cinergy's one-third
equity interest in Cadence Network LLC ("Cadence Network"), a joint venture
company formed in September, 1997 by Cinergy, New Century Energies and
Florida Progress to market a variety of energy-related products and
services - including billing, information and pricing services, energy
management services, and commodity procurement - to commercial customers
that operate in multiple locations across the country. The sole purpose
and activity of Cinergy Cadence, which is a direct subsidiary of Cinergy
Investments, is to hold Cinergy's interest in Cadence Network, a rule 58
company. Accordingly, Cinergy Cadence itself is a rule 58 company. For
financial and additional information concerning Cinergy Cadence and Cadence
Network, see Cinergy's quarterly reports on Form U-9C-3.
o. PSI Nonutility Interests: Cinergy International, Inc.
(formerly PSI International, Inc.)
As previously noted, this inactive company, a direct subsidiary of
Cinergy Investments, is being dissolved.
p. PSI Nonutility Interests: PSI Sunnyside, Inc.
As previously noted, this inactive company, a direct subsidiary of
Cinergy Investments, is being dissolved.
q. PSI Nonutility Interests: Cinergy Technology, Inc.
(formerly PSI Environmental Corp.)
This company, a direct subsidiary of Cinergy Investments, was
activated in 1995 to pursue business opportunities in the United States
relating primarily to the commercialization of electrotechnologies. These
are activities that, but for the Enertech litigation, Enertech would have
pursued.
Cinergy Technology is a party to a marketing arrangement with a
manufacturer pursuant to which Cinergy Technology receives royalty payments
from the manufacturer's sale of certain portable electronic meters (whose
technology Cinergy Technology personnel helped to develop) that record a
variety of energy-related measurements which can be downloaded to a
personal computer for analysis. In the third quarter of 1997, Cinergy
Technology made a minor investment pursuant to rule 58 in a small,
privately held company established to patent and commercially develop
non-polluting energy production technologies, including those involving the
generation of electricity from low energy induced reactions in solids.
Cinergy Technology has also been working with outside parties to develop
and commercialize stationary electric power generation systems employing
fuel cell technology, as well as a silicon transfer switch capable of
transferring a customer's normal electric service to an alternate circuit
in a small number of milliseconds. In 1997 Cinergy Technology also
investigated the possibility of investing in another small, privately-held
company that holds a patented technology relating to power conversion and
control.
Cinergy Technology is also a party to several contracts, all of
which predate the Telecommunications Act of 1996, relating to the provision
of telecommunications services and products in the Cincinnati area.
Negotiations are underway with the counterparties to remove Cinergy
Technology from these contracts. Cinergy expects that Cinergy Technology
will have relinquished these contracts by not later than September 1, 1998
or shortly thereafter.
In 1996 Cinergy Technology made an investment pursuant to rule
40(a)(5) under the Act in the Cincinnati Equity Fund, a private fund
established to assist in efforts to rejuvenate and promote the downtown
Cincinnati area through real estate development.
At September 30, 1997 and for the 12 months then ended, Cinergy
Technology had total assets of approximately $1.2 million and operating
revenues of approximately $500,000.
r. PSI Nonutility Interests: PSI T&D International,
Inc./PSI Yacyreta, Inc.
As previously noted, both of these companies are being dissolved.
PSI Yacyreta is a direct subsidiary of PSI T&D International, which is a
direct subsidiary of Cinergy Investments.
s. PSI Nonutility Interests: Argentine Subsidiaries (PSI
Energy Argentina, Inc., PSI Argentina, Inc., Costanera
Power Corporation and Energy Services Inc. of Buenos
Aires)
As previously noted, PSI Energy Argentina, Inc. ("PSI Energy
Argentina") was formed to acquire and hold PSI's interest in Edesur, S.A.,
an Argentine electric distribution company. (See PSI Resources, et al.,
Release No. 35-25570, July 2, 1992.) PSI Energy Argentina, which is a
direct subsidiary of PSI Energy, continues to hold the Cinergy system's
interest in Edesur. Accordingly, PSI Energy Argentina is an EWG /FUCO
Project Parent and therefore retainable under the Project Parent Orders (if
not under the Commission's 1992 order as well).
PSI Argentina, Inc. ("PSI Argentina"), a direct subsidiary of
Cinergy Investments, and its wholly-owned subsidiary, Costanera Power
Corporation ("Costanera Power"), were originally formed to acquire and hold
PSI's interest in Central Costanera, S.A., an Argentine electric generation
company. (See PSI Resources, Inc., et al., Release No. 35-25674, November
13, 1992.) In 1995 Cinergy sold its interest in Central Costanera, S.A. to
a non-associated company and relinquished the EWG certifications previously
granted by the FERC to PSI Argentina and Costanera Power. Cinergy intends
to use these companies to hold interests in other South American Exempt
Projects in which Cinergy may invest; accordingly, both PSI Argentina and
Costanera Power are EWG /FUCO Project Parents and retainable under the
Project Parent Orders.
Energy Services Inc. of Buenos Aires was dissolved in January 1995.
t. PSI Nonutility Interests: "Good Citizen" Limited
Partnership Investments
Like CG&E, PSI Energy held a number of small "good citizen" limited
partnership investments over which the Commission reserved jurisdiction in
the Merger Order.
PSI Energy had invested in Cambridge Ventures, L.P. ("Cambridge
Ventures"), a private fund licensed by the U.S. Small Business
Administration as a small business investment company, dedicated to making
investments in start-up Indiana companies. PSI Energy also had invested in
three private equity funds organized by CID Equity Partners - CID
Partnership, L.P. ("CID Partnership"), CID Ventures, L.P. ("CID Ventures")
and CID Equity Capital III, L.P. ("CID Equity Capital") - dedicated to
venture capital investments in start-up and early stage companies with an
exclusive focus on the Midwest. CID Partnership invested in start-ups,
expansion financings and buy-outs of a total of 20 Indiana companies in the
medical technology, manufacturing, business services and information
technology industries before concluding new investment activity in 1992.
CID Ventures was created to provide equity capital for growth companies
located throughout the Midwest and invested in 14 companies before
concluding new investment activity in 1993. Its industry concentrations
were similar to those of CID Partnership, but with slightly different
emphases. CID Ventures made follow-on investments in existing portfolio
companies through 1995. CID Equity Capital was formed in 1992 to provide
equity capital for Midwest growth companies. It invested in 16 companies
before concluding new investment activity in 1995. CID Equity Capital
continues to make follow-on investments in existing portfolio companies.
The fund's investments are concentrated in information technology
companies.
Finally, the Commission reserved jurisdiction over PSI Energy's
limited partnership investment in Circle Centre Partners L.P. ("CCP"), a
Delaware limited partnership formed to invest in Circle Centre, a retail
shopping mall in downtown Indianapolis, Indiana, then under construction.
The 19 limited partners of CCP collectively have a 63% equity interest in
CCP; the remaining 37% equity interest is held by Circentre Incorporated,
as general partner. The CCP limited partners include some of the largest
businesses in Indiana. In addition to PSI Energy, investors include
Ameritech Indiana, Banc One Indiana Corporation, Bankers National Life
Insurance Company (a subsidiary of Canseco, Inc.), LRP Master Trust (a
retirement plan trust for Eli Lily and Company), MPP Development Company
(an affiliate of Marsh Supermarkets, Inc. Retirement Plan Trust) and IPALCO
Enterprises, Inc. CCP has an 85% interest in Circle Centre Development
Company ("CCDC"), an Indiana general partnership that is the official
developer and operator of Circle Centre and leases the realty and buildings
from the City of Indianapolis. Simon Property Group, L.P. has the
remaining 15% interest in CCDC and acts as the managing general partner of
CCDC.
Opened in September 1995, Circle Centre is an 800,000 square foot
retail shopping mall located one block south of Monument Circle, the center
of downtown Indianapolis. It has two anchor department stores, 85 smaller
shops, and an entertainment component that includes a multi-screen cinema,
nightclubs and restaurants. The mall incorporates and preserves nine
historic facades and parts of two other historic structures.
Conceived in the 1980s to stem declining retail sales in downtown
Indianapolis, Circle Centre reflects a public/private partnership between
the City of Indianapolis and the Indianapolis business community. The site
was assembled by the City and included several historic structures. It sat
vacant for much of the 1980s while financing alternatives were canvassed
and discussions with potential tenants proceeded. Ultimately, the City
provided over half the project's financing through "tax-increment" bonds,
the Indianapolis business community supplied one-quarter of the financing,
and a construction loan furnished the balance of the needed funds.
Specifically, the City provided approximately 60% ($187 million) of the
$307.5 million cost of the project through the sale of tax-increment bonds;
almost a quarter of the overall financing cost ($75 million) was furnished
through equity raised by CCDC ($40 million of which was supplied by the 19
limited partners of CCP); and the remainder of the project cost
(approximately $45 million) was raised with the proceeds of a bank
construction loan.
Since opening, Circle Centre has proved a success for the developer
and the City of Indianapolis. In the first year of commercial operations,
retail sales exceeded $400 per square foot. Circle Centre has sparked new
development in the downtown area, and downtown hotel occupancy rates and
convention center bookings have increased./11/
As of September 30, 1997, PSI Energy's aggregate investments and
corresponding limited partnership interests in Circle Centre and the other
partnerships described above was approximately as follows: Cambridge
Ventures - $525,000 investment, 9% interest; CID Partnership - $314,000
investment, 3% interest; CID Ventures - $656,000 investment, 3% interest;
CID Equity Capital - $2.6 million, 8% interest; and Circle Centre Partners
- - $3,015,000 investment, 5% interest.
Cinergy requests authority, through December 31, 2002, to fund the
balance of PSI Energy's remaining commitment to CID Equity Capital -
$520,000. This commitment was made in connection with PSI Energy's initial
investment in the fund prior to the Cinergy merger.
Any further investments by Cinergy or PSI Energy or any associate
company in this or the other funds described above would only be made
pursuant to a separate order or orders from the Commission or as permitted
by rule 40(a)(5).
2. Item 1.D, "Description of Proposed Transactions/ Rule 54 Analysis," is
hereby restated in its entirety to read as follows:
The proposed transactions are subject to rule 54, which provides
that 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, 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 a FUCO upon the registered holding company
system if the conditions of rule 53(a), (b) and (c) are satisfied.
At March 31, 1998, Cinergy met all the requirements of rule 53(a),
other than clause (1) (limiting "aggregate investment" to 50% of
"consolidated retained earnings"). At that date, as previously reported by
Cinergy in a quarterly filing with the Commission pursuant to rule 24 and
HCAR No. 26848, dated March 23, 1998 (the "100% Order"), Cinergy's
consolidated retained earnings were approximately $977 million and its
aggregate investment approximately $546 million (or about 56% of
consolidated retained earnings).
Such incremental aggregate investment above 50% but not in excess
of 100% of consolidated retained earnings is specifically permitted by the
100% Order wherein the Commission found that Cinergy satisfied the
applicable standards of rule 53(c) (i.e., clauses (1) and (2) thereof).
The transactions proposed herein - retention of CG&E's gas properties and
certain nonutility interests over which the Commission reserved
jurisdiction in 1994 - are irrelevant to the analysis performed by the
Commission in the 100% Order. As noted above, Cinergy supplies the
Commission with relevant financial information (capitalization ratios,
growth in retained earnings, market-to-book ratio, etc.) in quarterly
filings pursuant to rule 24 and HCAR No. 26848.
Cinergy has complied and will continue to comply with the
record-keeping requirements of rule 53(a)(2), the limitation under rule
53(a)(3)
on the use of operating company personnel in rendering services to EWGs and
FUCOs, and the requirements of rule 53(a)(4) concerning submission of
specified filings under the Act to retail rate regulatory agencies. In
addition, none of the conditions in rule 53(b) has occurred.
3. Item 3.B, "Applicable Statutory Provisions /Legal Analysis: Retention
of 1994 Nonutility Interests," is hereby restated in its entirety to read
as follows:
B. Legal Analysis: Retention of 1994 Nonutility Interests
Cinergy's proposed acquisition and retention of the Remaining
Nonutility Interests is or may be subject to sections 9(a)(1), 9(c)(3),
10(c)(1) and 11(b)(1) of the Act and rules 40(a)(5), 54 and 58 thereunder.
Section 9(a)(1) requires prior Commission approval for a registered
holding company acquisition of an interest in any "other business."
Section 10(c)(1) precludes approval of an acquisition "detrimental to the
carrying out of the provisions of section 11." Section 11(b)(1) limits the
nonutility interests of a registered holding company to those that are
"reasonably incidental, or economically necessary or appropriate" to the
company's utility operations, including interests the Commission finds
"necessary or appropriate in the public interest or for the protection of
investors or consumers and not detrimental to the proper functioning of
such [integrated public utility] system." The Commission has construed
these standards to require a "functional" relationship between the
nonutility interests and the utility business.
Section 9(c)(3) exempts from sections 9(a)(1) and 10 acquisitions
of "such commercial paper and other securities, within such limitations as
the Commission may by rules and regulations or order prescribe as
appropriate in the ordinary course of business of a registered holding
company or subsidiary company thereof and as not detrimental to the public
interest or the interest of investors or consumers."
Pursuant to section 9(c)(3), the Commission has adopted Rule 58,
exempting from sections 9(a)(1) and 10 acquisitions of interests in
"energy-related companies," subject to certain investment limitations and
reporting requirements.
Rule 40(a)(5) was also adopted pursuant to section 9(c)(3) and
exempts small investments in local economic development or other nonutility
enterprises where no affiliate relationship results. Under the rule, in
any calendar year a registered holding company or its subsidiary may
acquire (i) up to $5 million of the securities of local economic
development corporations created under specific state laws promoting
economic development, and (ii) up to $1 million of the securities of local
industrial or nonutility enterprises.
Cinergy's acquisition and retention of the Remaining Nonutility
Interests (including the rule 58 companies) satisfies the standards just
described. In each case retention is supported by previous orders of the
Commission approving similar nonutility activities or investments and/or by
the express terms of rule 58 or rule 40(a)(5).
C. Legal Analysis: Retention of CG&E Remaining Nonutility
Interests
1. Tri-State Improvement Company
Tri-State's function is to acquire and hold real estate to support
the utility business of CG&E and its subsidiaries. Tri-State is therefore
"functionally" related to CG&E's utility business and retainable. The
Commission recently authorized New Century Energies to retain a
functionally similar nonutility company called "1480 Welton, Inc."/12/
2. KO Transmission Company
If the Commission authorizes Cinergy to retain CG&E's gas business,
Cinergy should also be permitted to retain KO - a CG&E gas pipeline
subsidiary whose facilities physically interconnect with those of both CG&E
and ULH&P, and which transports natural gas for both of those companies in
connection with their gas supply businesses. The Commission recently
authorized New Century Energies to retain a functionally similar
subsidiary, West Gas Interstate, Inc./13/
3. Enertech Associates, Inc. (formerly Enertech Associates
International, Inc.)
Currently inactive, Enertech was formed to offer utility management
consulting services and to pursue investment opportunities in
energy-related areas, including demand-side management services,
consulting,
energy and fuel brokering, engineering services, construction and/or
operation of generation, cogeneration, IPP facilities, and project
development. Enertech is a rule 58 company./14/
4. Cinergy Resources, Inc. (formerly CG&E Resource
Marketing)
Cinergy Resources derives substantially all of its revenues from
the retail marketing of natural gas or electricity to residential,
commercial and industrial customers in Ohio, Indiana and Kentucky and
Pennsylvania. Cinergy Resources is a rule 58 company./15/
5. CG&E "Good Citizen" Limited Partnership Investments
The Commission retained jurisdiction over five small "good citizen"
limited partnership investments of CG&E: North Rhine I, North Rhine II and
Franciscan Homes (dedicated to owning, rehabilitating and maintaining
apartment buildings for low-income people within the CG&E service
territory) and the two "Blue Chip" partnerships (investments in small and
minority- or female-owned businesses in the service territories of CG&E and
its subsidiaries). CG&E is a small (often very small) investor in these
partnerships: North Rhine I - $9,000, 2% limited partnership interest;
North Rhine II - $86,000 investment, 6% interest; Franciscan Homes - $2,000
investment, 2% interest; Blue Chip Capital - $721,000 investment, 2%
interest; and Blue Chip Opportunity - $450,000 investment, 4% interest. In
all these investments, CG&E is a passive investor; day-to-day management
and control is vested exclusively in the general partner. Any approval
rights held by CG&E as a limited partner concern only those fundamental
matters affecting the partnership (such as changes in investment policy or
replacement of the general partner) over which limited partners customarily
retain consent rights.
In short, the foregoing investments - intended to boost economic
development in the communities CG&E serves; small in amount; and not
involving the creation of any affiliate relationship - are classic "good
citizen" investments of the type previously approved by order under section
9(c)(3)/16/ and, depending on the aggregate amount of annual investments,
eligible for the exemption afforded by rule 40(a)(5).
D. Legal Analysis: Retention of PSI Remaining Nonutility
Interests
1. Cinergy Capital & Trading, Inc. (formerly Wholesale Power
Services, Inc.)
Cinergy Capital & Trading derives or will derive substantially all
of its revenues from the marketing and trading of energy commodities and
associated derivatives throughout the United States as well as through
related technical consulting services (such as with respect to economic
restructuring of long-term power purchase arrangements). Cinergy Capital &
Trading is a rule 58 company./17/
2. South Construction Company, Inc.
South Construction is retainable on the same basis as Tri-State:
the primary purpose of each company is to acquire and hold realty in
connection with the utility businesses of their operating company
affiliates.
3. Cinergy-Cadence, Inc. (formerly PSI Power Resource
Operations, Inc.)
The sole activity of Cinergy Cadence (formerly an inactive
subsidiary, PSI power Resource Operations) is to hold Cinergy's one-third
equity interest in the Cadence Network joint venture with New Century
Energies and Florida Progress. As discussed, Cadence Network will market a
variety of energy-related products and services - including billing,
information and pricing services, energy management services, and commodity
procurement - to retail commercial customers that operate in multiple
locations across the country. Since Cadence Network is a rule 58
company,/18/ Cinergy Cadence is also a rule 58 company./19/
4. Cinergy Technology, Inc. (formerly PSI Environmental Corp.)
The primary focus of this company is to commercialize and market
electrotechnologies. For example, as previously discussed, Cinergy
Technology receives royalty payments from a third-party manufacturer for
sales of certain portable electronic meters that can be used to record a
variety of energy-related measurements, and has been working with certain
other outside parties on commercializing certain stationary or
"distributed" electric generation systems based on fuel cell technology.
Upon its removal (anticipated to occur by not later than September 1, 1998
or shortly thereafter) from the telecomm contracts to which Cinergy
Technology is now a party, Cinergy Technology will constitute a rule 58
company./20/ In any event, existing precedent confirms that in its present
posture Cinergy Technology is functionally related and retainable./21/
5. PSI Energy Argentina, Inc., PSI Argentina, Inc. and
Costanera Power Corporation
As previously discussed, PSI Energy Argentina holds Cinergy's
interest in Edesur, S.A., an Argentine FUCO in which PSI acquired an
interest in 1992. Cinergy continues to hold that interest./22/
PSI Argentina and its wholly-owned subsidiary, Costanera Power,
formerly were EWGs in respect of Central Costanera, S.A., an Argentine
electric generating company in which PSI acquired an interest in 1992. As
noted above, following Cinergy's 1995 sale of all of its interest in
Central Costanera, these two companies relinquished their EWG status. In
the future Cinergy intends to deploy PSI Argentina and Costanera Power to
hold one or more potential investments in Exempt Project located in South
America.
Accordingly, each of PSI Energy Argentina, PSI Argentina and
Costanera Power is a EWG /FUCO Project Parent and retainable under the
Project Parent Orders.
6. PSI Energy "Good Citizen" Limited Partnership Investments
As with the CG&E "good citizen" investments, these corresponding
investments of PSI Energy are small and intended to benefit the local
community: Cambridge Ventures and the CID Equity funds were established to
provide venture financing for start-up and early stage Indiana and other
Midwestern-based companies; Circle Centre Partners was formed to invest in
the Circle Centre mall in downtown Indianapolis. PSI Energy is a passive
investor in these funds; day-to-day operations and control are exercised
exclusively by the general partners.
The Commission has approved a number of similar passive investments
in local venture capital funds comparable to PSI Energy's investments in
Cambridge Ventures and the CID Equity funds./23/
As discussed earlier, Circle Centre mall represents an important
public/private partnership between the City of Indianapolis and the local
business community to boost economic development in downtown Indianapolis.
PSI Energy's service territory encircles the City; it has a vested interest
in the City's economic fortunes. This investment is comparable to Ameren's
investment in the Kiel Center in St. Louis and the St. Louis Blues Hockey
Club./24/
4. Item 6(a), "Exhibits and Financial Statements/ Exhibits," is hereby
restated in its entirety to read as follows:
(a) Exhibits:
A The constituent instruments of the Remaining
Nonutility Interests (including rule 58 companies) either have already been
or will be filed as exhibits to Cinergy's Registration Statement on Form
U5B and Cinergy's Annual Reports on Form U5S for the years ended December
31, 1995, 1996 and 1997, respectively, and are hereby incorporated by
reference.
B Not applicable
C Not applicable
D Not applicable
E Map showing Cinergy gas properties (incorporated by
reference from Exhibit E-1 to original application-declaration in File No.
70-8427 as amended through date of Merger Order (as so amended, the "1994
Application"))
F-1 Preliminary opinion of counsel (previously filed; see
exhibit F-1 to 1994 Application)
G Withdrawn
H-1 Revised Cinergy system corporate chart (as of December
31, 1997) (filed with Post-Effective Amendment No. 2)
H-2 Chart showing status of PSI/CG&E 1994 nonutility
interests as of April 30, 1998 (filed herewith)
I Analysis of the Economic Impact of a Divestiture of
the Gas Operations of Cinergy Corp., dated January 26, 1998 (supersedes
Exhibit J-1 to 1994 Application) (filed with Post-Effective Amendment No.
2)
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the undersigned company
has duly caused this statement to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: July 21, 1998
CINERGY CORP.
By: /s/ William L. Sheafer
Vice President & Treasurer
ENDNOTES
/1/The following companies have been sold to non-associate companies or
dissolved: (1) the subsidiary companies of Enertech Associates, Inc.
(formerly Enertech Associates International, Inc.) - namely, Beheer-En
Beleggingsmaatschappij Bruwabel B.V., a Dutch company ("Bruwabel"), and its
two Czech subsidiaries, Power Development s.r.o. and Power International
s.r.o., (2) CGE ECK, Inc. and its Czech subsidiary, ECK s.r.o., (3) CGE
Corp., (4) PSI Recycling, Inc., (5) Power Equipment Supply Company, (6) PSI
Investments, Inc. and (7) Energy Services Inc. of Buenos Aires.
/2/ As of May 1, 1998, Cinergy had commenced legal steps for the
dissolution (anticipated to be completed by September 1, 1998 or shortly
thereafter) of the following five inactive companies: (1) PSI Yacyreta,
Inc., (2) PSI Power Resource and Development, Inc., (3) PSI T & D
International, Inc., (4) PSI Sunnyside, Inc. and (5) Cinergy International,
Inc. (formerly PSI International, Inc.). Accordingly, Cinergy does not
request authority to retain any of these companies.
/3/ Specifically, (1) Cinergy Resources, Inc. (formerly CG&E Resource
Marketing, Inc.), (2) Cinergy Capital & Trading, Inc. (formerly Wholesale
Power Services, Inc.), (3) Cinergy-Cadence, Inc. (formerly PSI Power
Resource Operations, Inc.) and (4) Enertech Associates, Inc. (formerly
Enertech Associates International, Inc.).
/4/See orders dated September 21, 1995 and May 8, 1996 in File No. 70-8589
(Release Nos. 35-26367 and 35-26486, respectively) ("Project Parent
Orders").
/5/ Specifically, both PSI Argentina, Inc. and its wholly-owned
subsidiary,
Costanera Power Corp., are EWG /FUCO Project Parents and therefore
retainable under the Project Parent Orders.
/6/See PSI Resources, et al., Release No. 35-25570, July 2, 1992 (granting
section 3(b) exemptions to, inter alia, PSI Energy Argentina, Inc., an
Indiana corporation and wholly-owned subsidiary of PSI, in connection with
proposed investment in Edesur, S.A., an Argentine electric transmission and
distribution company); PSI Resources, Inc., et al., Release No. 35-25674,
November 13, 1992 (granting section 3(b) exemptions to, inter alia, PSI
Argentina, Inc. and its wholly-owned subsidiary, Costanera Power
Corporation, each Indiana corporations and direct or indirect wholly-owned
subsidiaries of PSI, in connection with proposed investment in Central
Costanera, S.A., an Argentine electric generating company).
/7/ For financial information covering 1996 and 1995 for Tri-State (and any
other nonutility interest still retained by Cinergy over which the
Commission reserved jurisdiction in the Merger Order), see Item 10 of
Cinergy's Annual Reports on Form U5S for the years ended December 31, 1996
and 1995; see also the financial statements included with Cinergy's various
1997 quarterly reports on Form U-9C-3 (for more recent financial
information concerning those of the 1994 nonutility interests that
constitute rule 58 companies).
/8/ KO Transmission Co., 74 FERC P61,101 (1996).
/9/In August 1997, pursuant to a separate 1995 rate settlement with
Columbia Gas approved by the FERC in early 1997, KO applied to the FERC
(Docket No. CP97-720-000) for a certificate of public convenience and
necessity to acquire and operate certain additional undivided interests in
discrete portions of Columbia Gas's Kentucky gas pipeline system. By order
dated April 22, 1998, the FERC issued KO a certificate of public
convenience and necessity to acquire from Columbia Gas these additional
ownership interests, namely, (i) an additional 12.62% interest (equating to
221,000 Dth/d) in that portion of the Kentucky system (a 70-mile segment)
extending from Columbia Gulf Transmission Company in Menifee County,
Kentucky to the Foster regulating station (raising KO's total ownership
interest in the 70-mile segment to 45.29% or 306,385 Dth/d), and (ii) an
additional 67.33% interest in the 20-mile segment extending from the Foster
station to an interconnection with ULH&P (raising KO's total ownership
interest in that segment to 100%).
/10/Wholesale Power Services, Inc., 72 FERC P61,284 (1995).
/11/ For further information regarding Circle Centre, see The Urban Land
Institute, Project Reference File, Vol. 26, No. 12 (July-September 1996).
/12/ New Century Energies, supra, Appendix A.
/13/Ibid.
/14/Rule 58(b)(1)(i), (vii) & (viii).
/15/ Rule 58(b)(1)(v).
/16/See, e.g., Ameren, supra, Appendix A (St. Louis Equity Fund; Housing
Missouri LLC; Illinois Equity Fund Limited Partnerships); Georgia Power
Co., Release No. 35-26220 (1995); East Ohio Gas Co., Release No. 35-25046
(1990) (securities of affordable housing partnerships); see also Georgia
Power Co., Release No. 35-25949 (1993); Hope Gas, Inc., Release No.
35-25739 (1993) (securities of local venture capital companies).
/17/ Rule 58(b)(1)(v) & (vii).
/18/Rule 58(b)(1)(i), (v) & (vii).
/19/Rule 58(b)(1)("energy-related company" defined as any company that
directly "or indirectly, through one or more affiliates" engages in
permitted activities).
/20/Rule 58(b)(1)(ii) (development and commercialization of
electrotechnologies related to energy conservation, storage and
conservation, energy efficiency, waste treatment, greenhouse gas reduction,
and similar innovations).
/21/Relative to commercialization of electrotechnologies, see, e.g., GPU
International, Inc., Release No. 35-26631 (1996) (investment in alliance to
develop, manufacture and market stationary electric power systems employing
fuel cell technology); Cinergy Corp., Release No. 35-26562 (1996)
(acquisition of limited partnership interest in fund formed to invest in
companies wherever located engaged in developing and commercializing
electric and gas technologies relating to electricity generation and
storage; electric power quality; energy-related communications, control and
information technologies; energy-saving end-use products; and transmission
and distribution).
Relative to ownership, sale, leasing or licensing of telecommunications
facilities and equipment (such as fiber optic lines, coaxial cable, or
other communications capacity, towers and tower sites and other similar
properties), see Southern Co., Release No. 35- 26211 (1994) (mobile radio
system); Appalachian Power Co., Release No. 35-24772 (1988) (lease of
optical fiber system); Consolidated Gas Transmission Corp., Release No.
35-23914 (1985) (lease of microwave radio facilities).
/22/For more information regarding Edesur and Cinergy's interest therein,
see Cinergy Corp. et al., Release No. 35-26848, March 23, 1998 (amending
prior orders to modify limitation on use of proceeds of financing
transactions for investments in Exempt Projects).
/23/See Ameren, supra, Appendix A (Civic Ventures LLC); Georgia Power Co.,
Release No. 35-25949 (1993); Hope Gas, Inc., Release No. 35-25739 (1993);
Northeast Utilities, Release No. 35-24585 (1988) (securities of local
venture capital funds or companies).
/24/Ameren, supra, Appendix A (Kiel Investments).
Exhibit H-2
to Post-Effective Amendment No. 3 in File No. 70-8427
Nonutility
Company<PAGE>
1994 Parent
Company
(CG&E or
PSI)<PAGE>
Status as of
4/30/98<PAGE>
Basis for
Retention <PAGE>
Tri-State
Improvement
Co. <PAGE>
CG&E Cinergy system
subsidiary <PAGE>
Applicable
Commission
precedent<PAGE>
KO
Transmission Co. <PAGE>
CG&E Cinergy system
subsidiary <PAGE>
Applicable
Commission
precedent<PAGE>
Enertech
Associates,
Inc.
(formerly
Enertech
Associates
International, Inc.)<PAGE>
CG&E Cinergy system
subsidiary <PAGE>
rule 58 Cinergy
Resources,
Inc. <PAGE>
CG&E Cinergy system
subsidiary <PAGE>
rule 58 CGE ECK,
Inc.<PAGE>
CG&E Dissolved N/A CGE Corp. CG&E Dissolved N/A CG&E "good
citizen"
limited
partnership
investments
<PAGE>
CG&E Held by CG&E Applicable
Commission
precedent<PAGE>
PSI
Recycling,
Inc.<PAGE>
PSI Dissolved N/A Power
Equipment
Supply Co.<PAGE>
PSI Dissolved N/A Cinergy
Capital &
Trading,
Inc.
(formerly
Wholesale
Power
Services,
Inc.) <PAGE>
PSI Cinergy system
subsidiary <PAGE>
rule 58 South
Construction Company,
Inc. <PAGE>
PSI Cinergy system
subsidiary <PAGE>
Applicable
Commission
precedent<PAGE>
PSI
Investments, Inc.<PAGE>
PSI Dissolved N/A PSI Power
Resource
Development, Inc.<PAGE>
PSI In process of
being dissolved<PAGE>
N/A Cinergy-Cadence,
Inc.
(formerly
PSI Power
Resource
Operations,
Inc.)<PAGE>
PSI Cinergy system
subsidiary <PAGE>
rule 58 Cinergy
International, Inc.
(formerly
PSI
International, Inc.)<PAGE>
PSI In process of
being dissolved <PAGE>
N/A PSI
Sunnyside,
Inc.<PAGE>
PSI In process of
being dissolved <PAGE>
N/A Cinergy
Technology,
Inc.
(formerly
PSI
Environmental Corp.)<PAGE>
PSI Cinergy system
subsidiary <PAGE>
Applicable
Commission
precedent <PAGE>
PSI T&D
International, Inc.<PAGE>
PSI In process of
being dissolved <PAGE>
N/A PSI
Yacyreta,
Inc.<PAGE>
PSI In process of
being dissolved <PAGE>
N/A PSI Energy
Argentina,
Inc.<PAGE>
PSI Cinergy system
subsidiary <PAGE>
EWG /FUCO
Project
Parent <PAGE>
PSI
Argentina,
Inc.<PAGE>
PSI Cinergy system
subsidiary <PAGE>
EWG /FUCO
Project
Parent <PAGE>
Costanera
Power Corp.<PAGE>
PSI Cinergy system
subsidiary <PAGE>
EWG /FUCO
Project
Parent <PAGE>
Energy
Services
Inc. of
Buenos Aires<PAGE>
PSI Dissolved N/A PSI Energy
"good
citizen"
limited
partnership
investments<PAGE>
PSI Energy Held by PSI
Energy
<PAGE>
Applicable
Commission
precedent <PAGE>
