File No. 70-8617
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 6
to
FORM U-1
APPLICATION-DECLARATION WITH RESPECT TO
PARTICIPATION BY
EUA ENERGY INVESTMENT CORPORATION AND ITS SUBSIDIARIES
IN A JOINT VENTURE TO DEVELOP AND COMMERCIALIZE
A BIOMASS-FIRED COMBUSTION TURBINE POWER GENERATION FACILITY
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
EUA ENERGY INVESTMENT CORPORATION
P.O. Box 2333, Boston, Massachusetts 02107
EUA BIOTEN, INC.
750 West Center Street, West Bridgewater, MA 02379
(Names of companies filing this statement
and addresses of principal executive offices)
EASTERN UTILITIES ASSOCIATES
(Name of top registered holding company
parent of applicant or declarant)
CLIFFORD J. HEBERT, JR., TREASURER
EASTERN UTILITIES ASSOCIATES
P.O. Box 2333, Boston, Massachusetts 02107
(Name and address of agent for service)
The Commission is requested to mail signed copies
of all orders, notices and communications to:
ARTHUR I. ANDERSON, P.C.
McDermott, Will & Emery
75 State Street
Boston, Massachusetts 02109
This Post-Effective Amendment No. 6 ("Post-Effective Amendment #6") amends
and restates, in its entirety, Post-Effective Amendment No. 5 filed by EUA
Energy Investment Corporation ("EEIC") and EUA BIOTEN, Inc. ("EUA BIOTEN")
dated January 12, 1998, a nd supplements and amends the Application-
Declaration on Form U-1 filed by EEIC on April 27, 1995, as subsequently
amended by Amendment No. 1 dated May 17, 1995, Amendment No. 2 dated June 19,
1995, Amendment No. 3 dated June 21, 1995, Post-Effective Amendment No. 1
dated October 4, 1996, Post-Effective Amendment No. 2 dated November 8, 1996
and Post-Effective Amendment No. 3 dated November 14, 1996 (as amended and
restated in Post-Effective Amendment No. 4 dated November 24, 1997) (the
"Application-Declaration"). EUA BIOTEN, a Massachusetts corporation and a
wholly-owned subsidiary of EEIC, hereby joins as an additional Applicant in
this Application-Declaration. EEIC and EUA BIOTEN are sometimes referred to
hereinafter each as an "Applicant" and collectively as the "Applicants".
ITEM 1. Description of Proposed Transactions.
I. Introduction.
A. Prior Authorizations. By order dated June 21, 1995 (Release
No. 35-26314), the Commission authorized (i) EEIC to form EUA BIOTEN, and
(ii) upon its formation, EUA BIOTEN to participate as one of two general
partners in BIOTEN Partner ship, a then to-be-formed partnership for the
development and commercialization of biomass-fired combustion turbine power
generation facilities and products and/or services offered in connection with
such facilities, including the manufacture, fabrication, marketing, sale and
delivery of such facilities (collectively, "Business Opportunities"). The
Applicants intend to exploit the Business Opportunities by using and/or
licensing the use of proprietary technology and improvements thereon together
with certain related contract rights and equipment including, without
limitation, the document index and revision status log, the commercial
prototype plant ("CPP") design criteria log, the BIOTEN drawing log and the
CPP drawing log, of which BIOTEN Partnership owns all right, title and
interest to, and full rights to unrestricted use of certain patents and
patent rights (collectively, the "BIOTEN Technology"). Additionally, the
Commission authorized EEIC (a) to make up to $3.907 million of capital
contributions to BIOTEN Partnership upon its formation, $1.907 million of
which would be disbursed in connection with the testing and development of a
commercial prototype plant, and $2 million of which would be an additional
capital contribution payable at EEIC's sole discretion, and (b) to provide
BIOTEN Partnership, from time to time through December 31, 1998, with a
working capital line of credit of up to $3 million, at an annual interest
rate equal to the prime lending rate as announced by The First National Bank
of Boston, N.A. ("Prime") plus 6% before EEIC's receipt of payment in full of
EEIC's "Priority Return", and Prime plus 2% thereafter, but in no event to
exceed 16% per annum. The Priority Return, taking into account the
transactions contemplated by this Post-Effective Amendment #6, will be
increased by $2 million, which amount will be distributed to EUA BIOTEN
pursuant to the terms of the Partnership Agreement (defined below). EEIC (on
behalf of the then to-be-formed EUA BIOTEN) committed to own at all times no
more than a 9.9% voting interest in BIOTEN Partnership. By order dated
November 14, 1996 (Release No. 35-26604), the Commission authorized EEIC to
increase the working capital line of credit it provides to BIOTEN Partnership
from $3 million to $6 million.
B. Background. On June 26, 1995, pursuant to a 1995 Agreement
of General Partnership (the "Partnership Agreement"), EUA BIOTEN and BIOTEN
LLC, a Tennessee limited liability company ("BIOTEN LLC"), formed BIOTEN
Partnership, a Tennessee general partnership ("BIOTEN Partnership").
Pursuant to the terms of the Partnership Agreement and based upon additional
contributions made and increases in the working capital provided to BIOTEN
Partnership by the Applicants, all as authorized by t he Commission orders
described in Paragraph I.A above, EUA BIOTEN currently owns a 49.5% profits
interest and a 9.9% voting interest in BIOTEN Partnership.
II. Overview of Proposed Transactions.
A. Initial Business Opportunity in India. The Applicants
propose to develop a Business Opportunity in India by designing,
constructing, installing, operating and maintaining two biomass-fired
combustion turbine power generation facilities using the BIOTEN Technology,
each comprising a combustion turbine offset combustor, electric generator and
other associated equipment (each such facility, a "BIOTEN Unit"), as provided
in that certain draft Memorandum of Understanding dated January __, 1998 (the
"Memorandum of Understanding") by and between BIOTEN Partnership and a Co-
operative Society located in the State of Maharashtra, India and registered
with the Registrar of Co-operatives, Government of Maharashtra ("First
Customer"). The Memorandum of Understanding is filed under request for
confidential treatment as Exhibit B-4 hereto. Each BIOTEN Unit to be
purchased by First Customer in accordance with the terms of the Memorandum of
Understanding would be rated 6.0 MWe, would be fueled by First Customer's
available biomass in the form of bagasse (a sugar cane by-product), and would
be completely installed, tested, demonstrated and purchased on a turnkey,
fixed price basis for the price set forth in the Memorandum of Understanding,
such purchase price to be paid in installments based upon the completion of
agreed upon milestones and subject to upwards and downwards adjustments based
upon actual performance deviations from commercial performance guarantees,
all as provided in the Memorandum of Understanding. Except as described
below, First Customer will be responsible for obtaining financing for the
entire cost of each BIOTEN Unit.
The first BIOTEN Unit would serve as a demonstration facility (the
"Demo Unit"). The Demo Unit would be financed by BIOTEN Partnership or an
entity to be formed by BIOTEN Partnership to do business in India, and the
obligations to pay the purchase price to BIOTEN Partnership or to such to-be-
formed entity would be secured by a promissory note from First Customer in
favor of BIOTEN Partnership or such entity, the value of which promissory
note would increase at specified milestones to simulate the making of
progress payments that are financed by the promissory note (the "First
Customer Promissory Note"). Title to the Demo Unit would be transferred to
First Customer upon completion of the Demo Unit. BIOTEN Partnership would
operate and maintain the Demo Unit on behalf of First Customer, pursuant to a
separate operation and maintenance agreement, during a demonstration period
of up to twelve months following the completion of the Demo Unit and
thereafter. First Customer shall pay a to-be-negotiated fee to BIOTEN
Partnership for such operation and maintenance services, which fee shall
include, but not be limited to, reimbursement to BIOTEN Partnership of the
costs of operating the Demo Unit during such Demonstration Period . BIOTEN
Partnership expects that construction of the Demo Unit will be completed and
acceptance testing performed within twenty-four months following the
execution and commencement of funding under a definitive construction
agreement. Subject to t he Demo Unit meeting the minimum agreed upon
performance criteria, work on the remaining BIOTEN Unit would commence in
May, 2000 and is expected to be completed within twelve months. Title to the
second BIOTEN Unit would be transferred to First Customer upon full payment
of the purchase price for such unit. The final installment payment for each
BIOTEN UNIT shall be made no later than upon completion of a demonstration
period for such BIOTEN Unit. Upon First Customer's acceptance of the Demo
Unit, First Customer would assist BIOTEN Partnership's promotion of the
BIOTEN Technology worldwide by permitting site visits and participating in
other such activities as appropriate. In the event the Demo Unit does not
satisfy the agreed upon minimum performance criteria, BIOTEN Partnership
would be obligated to remove the Demo Unit at its expense, First Customer
would have no obligation to purchase either BIOTEN Unit, and First Customer's
obligations under the First Customer Promissory Note would be cancelled.
BIOTEN Partnership would itself or through one or more to-be-formed
incorporated or unincorporated special purpose subsidiaries or joint
ventures (each, a "Provider") with nonassociate local stock corporations,
co-operatives or other entities or associations, contract with First
Customer and other purchasers of BIOTEN Units to provide engineering,
procurement and construction services, sales, installation and long term
operation and maintenance services, equipment and training support, a nd
promotion and marketing services in connection with the BIOTEN Units
(collectively, "Services"). BIOTEN Partnership would itself or through one
or more Providers contract with local entities to manufacture components for
the BIOTEN Units, subject to appropriate licensing arrangements with respect
to the BIOTEN Technology ("Manufacturing of Goods"). For the reasons set
forth in Section IV below and because the purchasers of the BIOTEN Units
would retain significant and principal responsibility in connection with the
operation of the BIOTEN Units, none of the Services or Manufacturing of
Goods to be provided by BIOTEN Partnership and/or the Providers would
constitute ownership or operation of an electric utility company within the
meaning of Section 2(a)(3) of the Act. First Customer would remain
responsible, among other things, for the following in connection with the
operation and maintenance of the BIOTEN Units purchased by it: (i)
obtaining and maintaining all necessary permits and approvals required by
cooperative sugar mills in Maharashtra State (including, without limitation,
Vasantdata Sugar Institute-Pune and National Federation of Cooperative Sugar
Mills approvals, "Tender Offer" approval by the Sugar Commission of
Cooperative Mills, appropriate licenses to generate power from the Industry
Ministry, No Objection Certificates with respect to compliance with
Maharashtra State emissions standards, water consumption and land use/zoning
changes, and approval of foreign exchange transactions by the Foreign
Investment Promotion Board), (ii) providing bagasse or other fuel sufficient
to satisfy the agreed upon performance criteria, (iii) maintaining a water
supply sufficient for the operation of the First Customer BIOTEN Units, (iv)
disposing of ash by-product, (v) paying taxes, (vi) maintaining and paying
the premiums for insurance at agreed upon levels, (vii) scheduling
maintenance, (viii) scheduling load and output requirements, and (ix) selling
excess electricity to private third parties and/or exporting it to the
Maharashtra State Electricity Board grid. First Customer would also be
responsible for the preparation of bid documents and participation in bidding
processes in connection with the First Customer BIOTEN Units, and would be
required to obtain financing for the second BIOTEN Unit purchased by it.
B. Development of Additional Business Opportunities. Upon
satisfactory completion of the Demo Unit and without further Commission
authorization, the Applicants propose to develop additional Business
Opportunities in India as well as in other countries throughout the world, on
terms and conditions similar to those for the First Customer BIOTEN Units,
subject to the working capital and capital contribution authorizations
requested in Section III below. Such activities may include (i ) the
financing of one or more demonstration facilities on substantially the terms
and conditions set forth in Section II.A above with respect to the Demo Unit,
and (ii) one or more of the Services and/or Manufacturing of Goods in
furtherance of such Business Opportunities, all in accordance with the
Applicants' Financial Forecast (1998 - 2002) filed under a request for
confidential treatment as Financial Statement b-3 hereto.
III. Requests for Authorizations.
A. Capital Contributions and Working Capital Lines of Credit.
To accomplish the transactions described in Sections II.A and B above, the
Applicants seek Commission authorization, through December 31, 2002, (i) to
increase the amount of the working capital line of credit which EEIC is
currently authorized to provide to BIOTEN Partnership pursuant to the
Commission's Order dated November 14, 1996 from "up to $6 million" by an
additional $7 million (the "Additional Loans and/or Advances") for a total
authorized working capital line of credit of up to $13 million, which funds
may be provided by EEIC or EUA BIOTEN, (ii) to charge interest rates on such
working capital line of credit, including any Additional Loans and/or
Advances made thereunder, at rates of interest not to exceed those previously
authorized pursuant to the June 21, 1995 Order, which rates exceed the
Applicants' effective cost of capital, and (iii) to make additional capital
contributions to BIOTEN Partnership in an aggregate amount of up to $5
million, for a total authorized aggregate capital contribution of up to
$8.907 million, as a result of which increased capital contributions EUA
BIOTEN would increase its voting interest and profits interest in BIO TEN
Partnership to seventy-nine and eight tenths percent (79.8%) each, EUA BIOTEN
would become entitled to the increased Priority Return, and BIOTEN
Partnership would become a subsidiary of EUA BIOTEN within the meaning of
Section 2(a)(8) of the Act.
B. BIOTEN Partnership Requests for Authorization. The
Applicants hereby request Commission authorization, through December 31,
2002, for BIOTEN Partnership, upon becoming a subsidiary of EUA BIOTEN, (i)
to provide financing for the construction of the Demo Unit and for such other
demonstration facilities as are contemplated by the Financial Forecast set
forth in Financial Statement b-3, within the capitalization and financing
authorizations set forth in Section III.A above; (ii) to form special purpose
subsidiaries and/or to enter into one or more joint ventures with Provider(s)
in connection with the development of Business Opportunities; and (iii) for
an exemption pursuant to Section 13(b) for BIOTEN Partnership to perform
Services or Manufacturing of Goods at greater than cost to the Providers.
Because the Providers will be special purpose entities formed to provide
specific services in connection with BIOTEN Units in diverse geographic
settings, the Applicants request the flexibility to negotiate provisions
appropriate to each such Provider without further Commission authorization,
subject to the limitations of the financing authorizations requested in this
Post-Effective Amendment #6.
IV. Analysis.
For the reasons set forth in paragraphs IV.A through IV.C below, the
Applicants believe that the transactions proposed in this Post-Effective
Amendment #6 should be authorized.
A. By orders dated June 21, 1995 (Release No. 35-26314) and
November 14, 1996 (Release No. 35-26604), EEIC was authorized, through its
nonutility subsidiary, EUA BIOTEN, and indirectly through BIOTEN Partnership,
to develop and commercialize technology relating to biomass-fired combustion
turbine power generation facilities and related products and services. The
November 14, 1996 order states BIOTEN Partnership's anticipation of
"significant market opportunities for small biomass plants within the United
States to provide an economic means to dispose sawdust, and overseas to
provide an inexpensive source of electricity where fossil fuels are expensive
or unavailable." The Applicants believe that the Business Opportunities are
consistent with, and in furtherance of, the purposes set forth in Section
1201 of Title XII ("Renewable Energy") of the Energy Policy Act of 1992.
B. Section 13(b) provides that the Commission may exempt,
conditionally or unconditionally, transactions pursuant to which a company
undertakes to perform services or construction work for, or sell goods to,
any associate company thereof which does not derive, directly or indirectly,
any material part of its income from sources within the United States and
which is not a public utility company operating within the United States.
Each of the proposed Providers will be formed with the specific purpose of
providing local services to one or more facilities developed by BIOTEN
Partnership in foreign countries and, as such, will derive of all its income
(except, possibly, de minimis interest income from bank accounts located
within the United States) from sources outside the United States.
Furthermore, by virtue of their foreign locations, none of the proposed
facilities will be public utility companies operating within the United
States.
C. Because the proposed activities and services of BIOTEN
Partnership and the Providers will not constitute ownership or operation of
an electric utility company, an exempt wholesale generator or a foreign
utility company and will be functionally related within the meaning of the
Act, the proposed activities and services should not be regulated activity.
Section 2(a)(3) of the Act defines an "electric utility company" as "any
company which owns or operates facilities for the generation, transmission or
distribution of electric energy for sale, other than sale to tenants or
employees of the company operating such facilities for their own use and not
for resale." Although First Customer has expressed its desire to resell a
port ion of the electric energy to be generated by the First Customer BIOTEN
Units, neither BIOTEN Partnership nor the to-be-formed Providers will
maintain an ownership interest in any BIOTEN Unit (other than BIOTEN
Partnership's initial ownership interest in the Demo Unit, which interest
shall be transferred to First Customer upon completion of the Demo Unit and
which transfer shall precede any resale of electricity to be generated by the
Demo Unit, and BIOTEN Partnership's initial ownership interest in another
demonstration facility, if any, as contemplated by this Post-Effective
Amendment #6). Additionally, neither BIOTEN Partnership nor any Provider
will have full operating responsibility for any foreign BIOTEN Unit (See the
third paragraph of Section II.A above for a list of the operation
responsibilities which are to be reserved to First Customer; similar
reservations will be made for future purchasers of BIOTEN Units). In
accordance with the reasoning set forth in the Commission's No Action letters
under Section 2(a)(3) of the Act (see, e.g., Kenetech Windpower, Inc., April
10, 1994; Ebasco Services, Inc., August 17, 1982; Colstrip Energy Limited
Partnership, December 7, 1989; and University Technical Services, Inc. and
JWP Maintenance and Services, Inc., November 22, 1994), because BIOTEN
Partnership and the Providers will not have full operational responsibility
for the foreign BIOTEN Units, their activities should not be subject to
regulation pursuant to Section 2(a)(3 ) of the Act.
V. Quarterly Reports to be filed with the Commission.
EEIC will file quarterly reports with the Commission within ninety
(90) days following the end of each calendar quarter. These reports will
include the following information:
(1) A description of BIOTEN Partnership's activities;
(2) A statement of the amount of funds invested and open account
advances made by EEIC in and to BIOTEN Partnership during
the quarter and cumulative to date;
(3) A description of the services provided by the Applicants and
EUA Service Corporation if any, during the quarter and the
type and number of personnel assigned by EUA Service to
achieve the reported activities;
(4) Financial statements including a balance sheet of BIOTEN
Partnership as of the quarterly reporting date, an income
statement for the quarter reporting, and a statement of cash
flows.
Additionally, the Applicants agree to cause each of BIOTEN
Partnership and the to-be-formed Providers, if any, to make their respective
books and records available for inspection in the United States by the
Commission.
VI. EWGs and FUCOs.
Any amount invested by EEIC or EUA BIOTEN in an exempt wholesale
generator ("EWG") or foreign utility company ("FUCO"), in connection with the
transactions contemplated hereby, shall not when added to Eastern Utilities
Associates' "aggregate investment" in all EWGs and FUCOs, exceed 50% of
Eastern Utilities Associates' "consolidated retained earnings", each as
defined in Rule 53 under the Act. At the time of each such investment in an
EWG or FUCO, Eastern Utilities Associates shall be i n compliance with the
other requirements of Rule 53(a) and none of the conditions contained in Rule
53(b) exist or will exist as a result of the proposed transactions making
Rule 53(c) inapplicable.
ITEM 2. Fees, Commissions, and Expenses. The fees, commissions and expenses
of the Applicants expected to be paid or incurred, directly or indirectly, in
connection with this Post-Effective Amendment #6 are estimated as follows:
EUA System Expenses * $
Legal Fees * $
TOTAL * $
* To be filed by amendment.
ITEM 3. Applicable Statutory Provisions. The sections of the Act and rules
or exemptions thereunder that the Applicants consider applicable to the
proposed transactions are set forth below:
Capital contributions, and Section 12(b) and Rule
loans and open account advances 45(a).
at interest rates greater than
the Applicants' effective cost
of capital, by the Applicants
to BIOTEN Partnership.
Acquisition by EUA BIOTEN of Sections 9(a), 10 and
additional voting and profits 12(b); Rule 45(a).
interests in BIOTEN Partnership.
Acquisition by BIOTEN Partnership Sections 6(a) and 7 and
of initial ownership interest in Rule 43(a).
Demo Unit.
Formation of Providers Section 9(a) and 10.
by BIOTEN Partnership.
Performance of Services and Section 13(b); Rules
Manufacturing of Goods by the 87(b)(1), 90 and 91.
Applicants and EUA Service
Corporation for the Providers.
ITEM 4. Regulatory Approvals.
No consent or approval of any state commission or any federal
commission other than the Commission is necessary for the transactions which
are the subject of this Post-Effective Amendment #6.
ITEM 5. Procedure.
(a) In order to enable the Applicant(s) to enter into the
proposed transactions promptly, the Applicants hereby request that this Post-
Effective Amendment #6 be granted and made effective at the earliest
convenient date.
(b) It is not considered necessary that there be a recommended
decision by a hearing officer or by any other responsible office of the
Commission. The Office of Public Utility Regulation may assist in the
preparation of the decision of t he Commission, and it is believed that a
thirty (30) day waiting period between the issuance of the order of the
Commission and the day on which the order is to become effective would not be
appropriate.
ITEM 6. Exhibits and Financial Statements.
(+ Confidential treatment requested.)
The following new exhibits are hereby added:
+Exhibit B-4 Draft Memorandum of Understanding dated January __, 1998 by
and between BIOTEN Partnership and First Customer (filed under confidential
treatment request dated January 9, 1998)
Exhibit H-1 Proposed Form of Notice (filed January 12, 1998)
Financial Statements
+ b-3 Financial Forecast of BIOTEN Partnership (1998 -2002) (filed
under confidential treatment request dated January 9, 1998)
ITEM 7. Information as to Environmental Effects.
The transactions described in Item 1 do not involve major federal
actions significantly affecting the quality of the human environment. No
federal agency has prepared or is preparing an environmental impact statement
with respect to the proposed transaction.
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company
Act of 1935, each of the undersigned Applicants has duly caused this
statement to be signed on its behalf by the undersigned duly authorized
individual.
EUA ENERGY INVESTMENT CORPORATION
EUA BIOTEN, INC.
By: /s/ Clifford J. Hebert, Jr.
Clifford J. Hebert, Jr.
Their Treasurer
Dated: February 3, 1998
