File No. 70-8173
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 5
(Post-Effective Amendment No. 1)
to
Form U-1
APPLICATION OR DECLARATION
under
The Public Utility Holding Company Act of 1935
SOUTHERN COMPANY
270 Peachtree Street
Atlanta, Georgia 30303-1205
SOUTHERN DEVELOPMENT AND INVESTMENT GROUP, INC.
241 Ralph McGill Boulevard, N.E.
Atlanta, Georgia 30308-3374
(Name of company or companies filing this statement
and addresses of principal executive offices)
SOUTHERN COMPANY
(Name of top registered holding company parent
of each applicant or declarant)
Tommy Chisholm, Secretary
Southern Company
270 Peachtree Street
Atlanta, Georgia 30303-1205
(Name and address of agent for service)
The Commission is requested to mail signed copies of all orders, notices and
commissions to:
W. L. Westbrook Kevin J. Fletcher
Financial Vice President President
Southern Company Southern Development & Investment Group
270 Peachtree Street 241 Ralph McGill Boulevard, N.E.
Atlanta, Georgia 30308-3374 Atlanta, Georgia 30308-3374
John D. McLanahan, Esq.
Troutman Sanders
600 Peachtree Street, N.E.
Suite 5200 - NationsBank Plaza
Atlanta, Georgia 30308-3216
<PAGE>
INFORMATION REQUIRED
By order dated January 25, 1995 (HCAR No. 26221) ("Order"), the
Commission authorized, among other things, Southern Development and Investment
Group, Inc. ("Development") to invest the following amounts from time to time
through December 31, 1998, for the following purposes, as described in detail in
the Order: (a) $175 million to enable Development to develop, construct or
acquire a prototype energy management network; (b) $40 million to finance the
costs of equipment or provide customer financing of equipment in connection with
energy management and efficiency services provided by Development; (c) $20
million to fund the estimated costs of commercializing the POWERcall (TM)
technology; (d) $20 million for working capital in connection with its research
and development activities; (e) $10 million to pay development costs associated
with potential investments in energy and resource recovery facilities; (f) $5
million for technical consulting activities; and (g) $5 million to fund the
licensing of intellectual property to nonaffiliates.
By the same Order, the Commission authorized The Southern Company
("Southern") to invest up to an aggregate of $275 million outstanding at any one
time through December 31, 1998 through any combination of purchases of
Development's common stock, cash capital contributions or loans to Development,
conversions of any such loans to equity investments, guarantees of loans to
Development by banks or other lending institutions, or guarantees by Southern of
other recourse liabilities of Development.
By the same Order, the Commission authorized Development to provide
energy and resource recovery facilities, provided that no more than 50% of its
equity investments in those facilities are outside the four state area served by
the Operating Companies. By the same Order, the Commission authorized
Development to commercialize POWERcall (TM), provided that revenues derived from
that service outside of the Operating Companies' service territories do not
exceed those derived from within the territory. By the same Order, the
Commission authorized Development to engage in energy management services,
provided that revenues attributable to customers outside of Southern's service
territory do not exceed the revenues attributable to customers inside the
region.
By order dated June 20, 1995 (HCAR No. 26311), the Commission amended
Rule 52, which exempts certain transactions involving the securities of the
public-utility subsidiary companies of a registered public utility holding
company from the requirement of prior Commission approval, to exempt the
issuance and sale of certain types of securities of nonutility subsidiary
companies of a registered holding company in connection with routine financing
transactions. The Commission also amended Rule 45(b)(4) and Rule 45(a) to exempt
capital contributions and open account advances by a parent company to a
subsidiary company.
Although the amendments to Rule 52 and Rule 45 clearly remove any
restriction upon Southern's authority to invest in authorized activities by
Development, it is less clear that the amendments automatically remove
limitations on the authorized investment by Development in a line of business.
The previously authorized levels were based on then current business plans and
did not represent any financial, operating or public policy judgment requiring
those limitations. Although Development has not nearly exhausted the overall
authorization, the smaller individual authorizations , if effective, will
unnecessarily encumber Development's operations.
The lines of business Development participates in are designed to have
synergies with the operation of Southern's integrated electric utility system.
Initial market demand for those goods and services, however, may be in locations
other than the Southern electric service territory.
The Commission, by adopting Rule 58, has determined that geographic and
revenue restrictions should not apply to energy-related diversification by
registered holding companies. Although not all of Development's activities fall
within the scope of Rule 58, they all fall within the scope of permissible
diversification without geographic restriction. To the extent Development's
activities are not "energy-related," they are telecommunications services which
could be conducted by an Exempt Telecommunications Company pursuant to 15 U.S.C.
ss. 79z-SC (1997). There accordingly is no reason to retain revenue and
geographic restrictions in the programs authorized for Development.
By order dated July 27, 1995 (HCAR 26342), the Commission amended an
earlier order to remove a 50% limitation upon Entergy SASI's energy management
services business. The initial order had allowed Entergy SASI to serve customers
outside its affiliated operating companies' states only provided that no more
than 50%of the company's annual revenues would be derived from activities
outside that region.
Development now proposes to post-effectively amend the
application-declaration in this proceeding as follows:
<PAGE>
Dollar Limits on Financing By Southern
Item 1.
The entire second paragraph of Item 1.2, Summary of Requested
Authorization, which begins "In connection with the foregoing" and ends "as well
as to pay other general ad administrative expenses" is hereby deleted, and in
lieu thereof, the following is added:
"Southern is proposing herein to make additional investments in
Development from time to time in accordance with the Commission's Rule 52,
promulgated under the Public Utilities Holding Company Act of 1934, found at 17
CFR ss. 250.52. Southern will seek Commission approval for any investments for
which approval would be required under Rule 52."
Item 2.
The first sentence of the sixth paragraph of Item 1.3(d) which states
"In addition, Development requests authority to use up to $35 million of the
funds provided by Southern, as discussed in Item 1.4(b), below, to make equity
investments in energy efficiency and conservation assets and/or loans to
customers to enable such customers to finance the purchase of such assets," is
hereby deleted, and in lieu thereof, the following is added:
"Development requests authority to make equity investments in energy
efficiency and conservation assets and/or loans to customers to enable such
customers to finance the purchase of such assets."
Item 3.
The fourth to the last sentence of the second to last paragraph in Item
1.3(g), which states, "All investments in these projects of partnerships beyond
development of the projects will be the subject of additional filings with the
Commission, as will permanent financings and related matters," is hereby
deleted, and in lieu thereof, the following is added:
"All financing for these projects by Southern will be made in
compliance with the Commission's Rule 52, promulgated under the Public Utility
Holding Company Act of 1935, found at 17 CFR ss. 250.52. Southern will seek
Commission approval for any investments for which approval would be required
under Rule 52."
Item 4.
The entire Item 1.4, Requested Financing Authority, which begins
"Southern hereby requests authority to commit up to an aggregate of
$275,000,000" and ends "In order to conduct the activities set forth in Item
1.3(g) hereof" is hereby deleted, and in lieu thereof, the following is added:
"All financing by Southern for use by Development will be made in
compliance with the Commission's Rule 52, promulgated under the Public Utility
Holding Company Act of 1935, found at 17 CFR ss. 250.52. Southern will seek
Commission approval for any investments for which approval would be required
under Rule 52."
Item 5.
The second sentence of the sixth paragraph of Item 1.5,
Indemnification's and Guarantees, which states, "This authority is in addition
to the $275,000,000 financing authority set forth in Item 1.4 above" is hereby
deleted, and in lieu thereof, the following is added:
"This authority is in addition to any financing authority which
Southern may have under law, under future Commission orders, or pursuant to Item
1.4 above."
Geographic Limitations on Revenue and Investment
Item 6.
The entire fifth paragraph of Item 1.3(d), which begins "Development
requests authority to provide the energy management" and ends "HCA Rel No.
35-24348 (March 18, 1987)" is hereby deleted, and in lieu thereof, the following
is added:
"Development requests authority to provide the energy management and
DSM services described above to customers, without limitation, located both
within and outside of the Southern system service territory, to fully utilize
its resources and skills and to profit from attractive opportunities to employ
its excess resources. See Entergy Corporation, et. al Memorandum Opinion and
order Amending Prior Order to Remove 50% Limitation upon Activities of Energy
Management Subsidiary, HCAR 26342 (July 27, 1995)."
<PAGE>
Item 7.
The third sentence of the second to last paragraph of Item 1, which
states, "The applicants propose that such activities be subject to a 50 percent
revenue restriction" is hereby deleted.
Item 8.
The last sentence of the second to last paragraph of Item 1, which
states, "Southern has agreed to a 50 percent revenue restriction so that the
activities can be presumed, consistent with CSW Credit, to be primarily of the
integrated electric utility system" is hereby deleted.
Item 9.
The second to last sentence of the last paragraph of Item 1, which
states, "Again, to avoid any misunderstanding on that point, Southern has agreed
to a 50 percent revenue restriction" is hereby deleted.
Exhibit G A Form of Notice is submitted herewith.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, the undersigned companies have duly caused this amendment
to be signed on their behalf by the undersigned thereunto duly authorized.
January 23, 1998 THE SOUTHERN COMPANY
By: /s/Tommy Chisholm
Tommy Chisholm
Secretary
THE SOUTHERN DEVELOPMENT AND
INVESTMENT GROUP, INC.
BY: /s/Tommy Chisholm
Tommy Chisholm
Secretary
EXHIBIT G
FORM OF NOTICE
The Southern Company, a registered holding company, 270 Peachtree
Street, N.W., Atlanta, Georgia 30303 and its non-utility subsidiary, Southern
Development and Investment Group, Inc., 241 Ralph McGill Boulevard, N.E.,
Atlanta, Georgia 30308-3374, have filed a post-effective amendment to an
application-declaration filed pursuant to Sections 6, 7, 9(a), 12(b); 13 and
Rules 40(a), 45, 81, 87, 90, 91 and 92 promulgated thereunder.
By order dated January 25, 1995 (HCAR No. 26221) (the "Original Order")
Applicants were authorized to form Development and Development was authorized to
engage in certain non-utility businesses of a predominantly energy-related
nature, but also including telecommunications businesses. Specifically,
Development was authorized to invest the following amounts through December 31,
1998, for the following purposes as described in the Original Order: (a) $175
million to enable Development to develop, construct or acquire a prototype
energy management network; (b) $40 million to finance the costs of equipment or
provide customer financing of equipment in connection with energy management and
efficiency services provided by Development; (c) $20 million to fund the
estimated costs of commercializing the POWERcall (TM) technology; (d) $20
million for working capital in connection with its research and development
activities; (e) $10 million to pay development costs associated with potential
investments in energy and resource recovery facilities; (f) $5 million for
technical consulting activities; and (g) $5 million to fund the licensing of
intellectual property to nonaffiliates. The Original Order authorized The
Southern Company ("Southern") to invest up to an aggregate of $275 million
outstanding at any one time through December 31, 1998. The Original Order
authorized Development to provide energy and resource recovery facilities,
provided that no more than 50% of its equity investments in those facilities are
outside the four state area served by the Operating Companies. The Original
Order authorized Development to commercialize POWERcall (TM), provided that
revenues derived from that service outside of the Operating Companies' service
territories do not exceed those derived from within the territory. The Original
Order authorized Development to engage in energy management services, provided
that revenues attributable to customers outside of Southern's service territory
do not exceed the revenues attributable to customers inside the region.
By order dated June 20, 1995 (HCAR No. 26311), the Commission amended
Rule 52, which exempts certain financing transaction involving the securities of
the public-utility subsidiary companies of a registered public utility holding
company from the requirement of prior Commission approval, to exempt the
issuance and sale of certain types of securities of nonutility subsidiary
companies of a registered holding company in connection with routine financing
transactions. The Commission also amended Rule 45(b)(4) and Rule 45(a) to exempt
capital contributions and open account advances by a parent company to a
subsidiary company. Although the amendments to Rule 52 and Rule 45 clearly
remove any restriction upon Southern's authority to invest in authorized
activities by Development, Applicants state that it is less clear that the
amendments to the Commission's rules automatically remove limitations on the
authorized investment by Development in these lines of business. Further, the
Original Order imposed geographic and customer restrictions. Applicants note
that the Commission, by adopting Rule 58, has determined that geographic and
revenue restrictions should not apply to energy-related diversification by
registered holding companies. Although not all of Development's activities fall
within the scope of Rule 58, Applicants state that they all fall within the
scope of permissible diversification without geographic restriction. To the
extent Development's activities are not "energy-related," they are
telecommunications services which could be conducted by an Exempt
Telecommunications Company pursuant to 15 U.S.C. ss. 79z-SC (1997). Applicants
note that by order dated July 27, 1995 (Entergy Corporation, HCAR 26342), the
Commission amended an earlier order to remove a 50% limitation upon Entergy
SASI's energy management services business. Applicants now propose to
post-effectively amend the application-declaration in this proceeding to make
Applicants authority consistent with current Commission practice and recent
procedures and specifically to eliminate the investment amount restrictions and
geographic and revenue restrictions in a fashion Applicants assert is consistent
with current Commission precedent under Rule 52 and Rule 58. Applicants proposed
to make investments from time to time solely in the lines of business approved
in the Original Order, in accordance with Rule 52 as now effective, 17 C.F.R.
ss. 250.52.
