File No. 70-8733
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 13
Post-Effective Amendment No. 10)
to
APPLICATION OR DECLARATION
on
FORM U-1
under
The Public Utility Holding Company Act of 1935
THE SOUTHERN COMPANY SOUTHERN ENERGY INC.
270 Peachtree Street, N.W. 900 Ashwood Parkway
Atlanta, Georgia 30303 Suite 500
Atlanta, Georgia 30338
SOUTHERN ENERGY RESOURCES, INC.
900 Ashwood Parkway
Suite 500
Atlanta, Georgia 30338
(Name of company or companies filing this statement and addresses of principal
executive offices)
THE SOUTHERN COMPANY
(Name of top registered holding company parent of each applicant or declarant)
Tommy Chisholm, Secretary Marce Fuller, President
The Southern Company Southern Energy, Inc.
270 Peachtree Street, N.W. 900 Ashwood Parkway
Atlanta, Georgia 30303 Suite 500
Atlanta, Georgia 30338
(Names and addresses of agents for service)
The Commission is requested to mail signed copies of all orders, notices and
communications to:
W.L. Westbrook Marce Fuller, President
Financial Vice-President Southern Energy, Inc.
The Southern Company 900 Ashwood Parkway
270 Peachtree Street, N.W. Suite 500
Atlanta, Georgia 30303 Atlanta, Georgia 30338
John D. McLanahan
Robert P. Edwards, Jr.
Troutman Sanders LLP
600 Peachtree Street, N.E.
Suite 5200
Atlanta, Georgia 30308-2216
<PAGE>
Item 1. Description of the Transaction
The Application in this file is amended solely to extend the
effectiveness of the authority of Southern Energy, Inc. (formerly SEI Holdings,
Inc.) and its authorized subsidiaries, none of which are public utility
companies, to pay dividends from unearned surplus from June 30, 2000 until
October 15, 2002. The reasons stated in the Application in the file and in HCAR
No.26738 ( July 2, 1997) and HCAR No. 26543 (July 17,1996) for this authority
continue to apply, in particular the need to manage unrestricted cash of
Southern Energy, Inc. and its intermediate and special purpose subsidiaries
efficiently. Accordingly Item 1.2 as filed in Amendment No. 8 (Post-Effective
No. 5) is hereby amended to read as follows:
"1.2 Proposed Modification to Supplemental Order
Southern Energy, Inc. ( formerly SEI Holdings, Inc.,) now requests a
modification of and an extension to the Supplemental Order which would permit
Southern Energy, Inc. and each current and future subsidiary of Southern Energy,
Inc. none of which are public utility companies under the Act to pay dividends
with respect to the securities of such companies, from time to time through
October 15, 2002, out of capital or unearned surplus( including revaluation
reserve), to the extent permitted under applicable law."
Item 3. Applicable Statutory Provisions
Item 3 is hereby amended by replacing the Rule 54 analysis filed in
Amendment No. 9 ( Post-Effective Amendment No. 6) with the following:
"The proposed transactions are also subject to Rule 54, which provides
that, in determining whether to approve an application which does not relate to
any EWG or FUCO, the Commission shall not consider the effect of the
capitalization or earnings of any such EWG or FUCO which is a subsidiary of a
registered holding company if the requirements of Rule 53(a), (b) and (c) are
satisfied.
Southern currently meets all of the conditions of Rule 53(a), except
for clause (1). At January 31, 2000, Southern's "aggregate investment," as
defined in Rule 53(a)(1), in EWGs and FUCOs was approximately $2.742 billion, or
about 66.95% of Southern's "consolidated retained earnings," also as defined in
Rule 53(a)(1), for the year ended December 31, 1999 ($4.096 billion). With
respect to Rule 53(a)(1), however, the Commission has determined that Southern's
financing of investments in EWGs and FUCOs in an amount greater than the amount
that would otherwise be allowed by Rule 53(a)(1) would not have either of the
adverse effects set forth in Rule 53(c). See The Southern Company, Holding
Company Act Release No. 26501, dated April 1, 1996 (the "Rule 53(c) Order"); and
Holding Company Act Release No. 26646, dated January 15, 1997 (order denying
request for reconsideration and motion to stay).
In addition, Southern 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 to render services to EWGs and FUCOs,
and the requirements of Rule 53(a)(4) concerning the submission of copies of
certain filings under the Act to retail rate regulatory commissions. Further,
none of the circumstances described in Rule 53(b) has occurred.
Moreover, even if the effect of the capitalization and earnings of EWGs
and FUCOs in which Southern has an ownership interest upon the Southern holding
company system were considered, there would be no basis for the Commission to
withhold or deny approval for the proposal made in this Application-Declaration.
The action requested in the instant filing would not, by itself, or even
considered in conjunction with the effect of the capitalization and earnings of
Southern's EWGs and FUCOs, have a material adverse effect on the financial
integrity of the Southern system, or an adverse impact on Southern's
public-utility subsidiaries, their customers, or the ability of State
commissions to protect such public-utility customers.
The Rule 53(c) Order was predicated, in part, upon an assessment of
Southern's overall financial condition which took into account, among other
factors, Southern's consolidated capitalization ratio and the recent growth
trend in Southern's retained earnings. As of December 31, 1995, the most recent
fiscal year preceding the Rule 53(c) Order, Southern's consolidated
capitalization consisted of 49.3% equity (including mandatorily redeemable
preferred securities) and 50.7% debt (including $1.68 billion of long-term,
non-recourse debt and short-term debt related to EWGs and FUCOs). Southern's
consolidated capitalization as of December 31, 1999 was 42.3% equity, 57.7% debt
including all non-recourse debt, and 56.5% equity and 43.5% debt excluding all
non-recourse debt. On a pro forma basis, the proposed transactions contemplated
in this filing have no effect on consolidated capitalization. The common equity
component of Southern's pro forma consolidated capitalization represents 34.2%
of total capitalization at December 31, 1999.
Thus, since the date of the Rule 53(c) Order, there has been no
material change in Southern's consolidated capitalization ratio, which remains
within acceptable ranges and limits of rating agencies as evident by the
continued "A" corporate credit rating of Southern. Specifically, in January 1997
Standard & Poor's assigned Southern its corporate credit rating of "A," which
was consistent with the implied corporate rating previously held by Southern.
This implied rating had been in effect since May 1995. Therefore, since the
April 1996 issue of the Rule 53(c) Order, the Southern consolidated credit
rating has remained at "A" thereby demonstrating Southern's continued strong
financial integrity. In addition, the underlying ratings of the affiliated
operating companies, which have a strong influence on the Southern corporate
rating, are all "A+" or better. As a point of reference, the percentage of debt
in the total capital structure of the Southern domestic operating utility
companies was 45.1% at December 31, 1999, which is lower than the average for
Standard & Poor's "A" rated vertically integrated utilities. At September 30,
1999, according to Standard & Poor's, the average total debt (both long-term and
short-term) for "A" rated electric utilities was 54.1% of total capitalization.
Southern's consolidated retained earnings grew on average approximately
5.9% per year over the last five years. Excluding the $111 million one-time
windfall profits tax imposed on SWEB in 1997 and the write down of assets in
1998 and 1999, the average growth would be 7.7%. In 1999, consolidated retained
earnings increased $354 million, or 9.1%. Southern's interests in EWGs and FUCOs
have made a positive contribution to earnings in the four calendar years ending
after the Rule 53(c) order.
Accordingly, since the date of the Rule 53(c) Order, the capitalization
and earnings attributable to Southern's investments in EWGs and FUCOs has not
had any adverse impact on Southern's financial integrity."
<PAGE>
Item 6. Exhibits and Financial Statements
(a) Exhibits
G. -Form of Federal Register Notice (to be filed by amendment)
(b) Financial Statements
Not applicable
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, the undersigned companies have duly caused this statement to be signed
on their behalf by the undersigned thereunto duly authorized.
Dated: March 29, 2000
THE SOUTHERN COMPANY
By: /s/Tommy Chisholm
Tommy Chisholm
Secretary
SOUTHERN ENERGY, INC.
By: /s/Tommy Chisholm
Tommy Chisholm
Assistant Secretary
SOUTHERN ENERGY RESOURCES, INC.
By: /s/Tommy Chisholm
Tommy Chisholm
Assistant Secretary
