File No. 70-08635
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM U-1/A
AMENDMENT NO. 2
TO
APPLICATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
SIGCORP, INC.
20 N.W. Fourth Street
Evansville, Indiana 47741-0001
(Name of company filing this statement and address
of principal executive office)
A.E. GOEBEL
Southern Indiana Gas and Electric Company
20 N.W. Fourth Street
Evansville, Indiana 47741-0001
(Name and address of agent for service)
Copies to:
John H. Byington, Jr., Esq.
Winthrop, Stimson, Putnam & Roberts
One Battery Park Plaza
New York, New York 10004-1490
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This Amendment No. 2 to SIGCORP, Inc.'s Application on Form
U-1 (File No. 70-08635) is being filed for the purpose amending and restating
Item 4 thereof and supplementing Item 6 thereof as follows:
ITEM 4. REGULATORY APPROVAL
Under Section 203 of the Federal Power Act, FERC has
jurisdiction over the proposed restructuring. SIGECO and SIGCORP filed a joint
petition with FERC for authority to consummate the restructuring on June 23,
1995, a copy of which was filed as Exhibit D-1 hereto. On November 7, 1995, FERC
issued its order authorizing the restructuring. A copy of such order is filed
herewith as Exhibit D-2. Other than such authorization of FERC and the apporval
of the Commission hereunder, no other regulatory approvals are required for the
proposed transaction.
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS
D-2 Order Authorizing Disposition of
Jurisdictional Facilities and Corporate
Reorganization, dated November 7, 1995 of
the Federal Energy Regulatory Commission
(Docket No. EC95-15-00).
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SIGNATURE
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, the undersigned, as Applicant, has duly caused this
amendment to be signed on its behalf by the undersigned thereunto duly
authorized.
Date: November 17, 1995
SIGCORP, INC.
By:/s/ A.E. GOEBEL
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Name: A.E. Goebel
Title: Secretary and Treasurer
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EXHIBIT D-2
Southern Indiana Gas and Electric Company
Docket No. EC95-15-000
FEDERAL ENERGY REGULATORY COMMISSION - OFFICE DIRECTOR
73 F.E.R.C. P62,090; 1995 FERC LEXIS 2238
ORDER AUTHORIZING DISPOSITION OF JURISDICTIONAL FACILITIES
AND CORPORATE REORGANIZATION
NOVEMBER 7, 1995
OPINION:
On June 23, 1995, Southern Indiana Gas and Electric Company
(Southern Indiana) filed an application pursuant to section 203 of the Federal
Power Act1 for Commission authorization to implement a plan of corporate
restructuring which will result in the formation of a holding company. As a
result of the proposed restructuring, Southern Indiana will become a
wholly-owned subsidiary of a holding company, SIGCORP, Inc. (SIGCORP).
Description of Southern Indiana's Current Corporate Structure:
Southern Indiana is a public utility within the meaning of the
Federal Power Act2 and owns and operates jurisdictional facilities in
southwestern Indiana. Southern Indiana has five wholly-owned subsidiaries:
Southern Indiana Properties, Inc. (Southern Properties); Energy Systems Group,
Inc. (Energy Systems); Southern Indiana Minerals, Inc. (Southern Minerals);
Southern Indiana Network Communications, Inc. (Southern Communications); and
Lincoln Natural Gas Company (Lincoln Gas)3 Southern Indiana also has formed
SIGCORP as a
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1 16 U.S.C. ss. 824b (1988).
2 See 16 U.S.C. ss. 824(e) (1988).
3 Southern Properties engages in partnership investment activity (primarily
real estate). Energy Systems installs controls and equipment for energy
management. Southern Minerals processes and markets combustion by-products
from Southern Indiana's power plants. Southern Communications participates
in investment activities that are outside the scope of Southern Indiana's
other subsidiaries. Lincoln Gas is a gas distribution company that provides
service to the City of Rockport, Indiana. Application at Exhibit B.
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wholly-owned subsidiary for the purposes of establishing a holding company
structure.
Southern Indiana owns 33 percent of the outstanding capital
stock of Community Natural Gas Company, which provides natural gas distribution
service in southwestern Indiana. Southern Indiana also owns 1.5 percent of the
outstanding capital stock of Ohio Valley Electric Corporation (OVEC), a
corporation established in the early 1950's to furnish electric power to the
Federal Government's gaseous diffusion plant near Portsmouth, Ohio.
Description of the Proposed Restructuring:
To facilitate the restructuring into a holding company
organization, Southern Indiana has formed SIGCORP as a wholly-owned subsidiary.
The corporate restructuring will be achieved through a share exchange in which
the holders of Southern Indiana common stock will become holders of common stock
in SIGCORP.4 The exchange will be accomplished pursuant to an Agreement and Plan
of Exchange (Exchange Agreement) dated January 13, 1995. Pursuant to the terms
of the Exchange Agreement, SIGCORP will become the sole holder of Southern
Indiana common stock. In addition, with the exception of Lincoln Gas, Southern
Indiana's wholly-owned subsidiaries will become wholly-owned subsidiaries of
SIGCORP. Lincoln Gas will remain a subsidiary of Southern Indiana.
Southern Indiana indicates that the primary purpose of forming
a holding company are (1) to establish a more appropriate corporate structure
for the pursuit of unregulated non-utility business activities, and (2) to
provide a structure that will accommodate the segregation of Southern Indiana's
generation function from the rest of its electric utility business. According to
Southern Indiana, the proposed restructuring will: (1) allow Southern Indiana's
affiliates to compete with other non-regulated companies to furnish
energy-related services; (2) enhance economic growth in its service area by
virtue of its ability to offer a wide range of competitive energy services to
new and existing customers; (3) fully separate utility and non-utility
businesses thereby shielding the utility customers from the risks associated
with non-regulated businesses; and (4) permit Southern Indiana's capital
structure to be managed efficiently.5
Notice of the application was published in the Federal
Register with comments due on or before July 20, 1995. No comments were
received.
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4 Southern Indiana's common stock will be exchanged on a one-for-one basis for
SIGCORP common stock. Southern Indiana's outstanding preferred stock and
debt will not be affected by the exchange.
5 Application at 6-8.
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Discussion:
In Central Vermont Public Service Corporation (Central
Vermont),6 the Commission concluded that the transfer of ownership and control
of jurisdictional facilities, through a transfer of a public utility's common
stock from existing shareholders to a newly created holding company, constitutes
a disposition of jurisdictional facilities requiring prior Commission approval
under section 203. Consistent with the Commission's holding in Central Vermont,
because Southern Indiana's proposed restructuring involves the transfer of
ownership of its common stock from existing shareholders to SIGCORP, the
restructuring is subject to the requirements of section 203.
It is determined that Southern Indiana's proposed
restructuring will be consistent with the public interest. As noted above,
Southern Indiana has stated that the restructuring will allow the reorganized
company to meet new business opportunities, provide latitude in responding to
growing competition in the energy industry, and better insulate Southern
Indiana's ratepayers from the risks and costs associated with business
activities of unregulated subsidiaries.
After the reorganization, Southern Indiana will continue to be
subject to retail rate regulation by the Indiana Utility Regulatory Commission
and this Commission will maintain its regulatory authority to consider any and
all wholesale rate-related issues arising form the reorganization.
As noted above, the proposed restructuring involves the
conversion of each share of Southern Indiana common stock into a share of
SIGCORP common stock. Therefore, the proportion of each shareholder's ownership
will remain unchanged.
While SIGCORP is not proposing to merge with another holding
company at this time, it is possible that in the future such a merger may take
place. In an order approving a similar holding company formation by Illinois
Power Company, the Commission clarified its jurisdiction under section 203
regarding the effect that mergers of public utility holding companies have on
their public utility subsidiaries.7 While noting that it does not have
jurisdiction over public holding company mergers or consolidations, the
Commission concluded that, ordinarily when public utility holding companies
merge, an indirect merger involving their public utility subsidiaries also takes
place, and that Commission approval under section 203 would be required.
Consequently, the Commission stated:
We therefore will presume, subject to rebuttal, that mergers
between public utility holding companies also accomplish an indirect
merger of their
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6 39 FERC P61,295 (1987).
7 Illinois Power Company, 67 FERC P61,136 (1994).
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public utility subsidiaries. If the public utilities can rebut the
presumption, we will find that jurisdiction will not attach until such
time as the public utility subsidiaries formally merge or consolidate
their facilities. If the public utilities cannot rebut the presumption,
section 203 approval of the indirect merger of the public utilities
will be required.(footnote omitted)8
Accordingly, Southern Indiana is advised that, in the event
SIGCORP should seek to merge with another public utility holding company,
Southern Indiana and any other affected public utility are required to file
under section 203 evidence to rebut the presumption that such a merger would not
also result in an indirect merger of the public utility subsidiaries, or,
alternatively, for approval of an indirect merger of the public utilities.
Based on the foregoing analysis and in the absence of
opposition to the application, it is concluded that the disposition of
jurisdictional facilities of Southern Indiana in the above-described corporate
restructuring is consistent with the public interest and is hereby authorized,
subject to the following conditions:
(1) The proposed transaction is authorized upon the terms and
conditions and for the purposes set forth in the application;
(2) The Commission retains authority under section 203(b) of
the Federal Power Act to issue supplemental orders as appropriate;
(3) The foregoing authorization is without prejudice to the
authority of the Commission or any other regulatory body with respect to rates,
service, accounts, valuation, estimates or determinations of cost or any other
matter whatsoever now pending or which may come before the Commission;
(4) Nothing in this order shall be construed to imply
acquiescence in any estimate or determination of cost or any valuation of
property claimed or asserted;
(5) Southern Indiana shall submit a filing to the Commission's
Chief Accountant requesting approval of its accounting for the costs of
restructuring, including complete information on the nature and amount of all
costs incurred; and
(6) In the event SIGCORP should seek to merge with another
public utility holding company, the public utilities of those companies are
required to file under section 203 of the Federal Power Act evidence to rebut a
presumption that a merger of the holding companies would not also result in an
indirect merger of the public utility subsidiaries, or alternatively for
approval of an indirect merger of the public utilities.
Authority to act on this matter is delegated to the Director,
Division of Opinions and Systems Analysis, pursuant to 18 C.F.R. ss. 375.308.
This order
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8 FERC at 61,354-55.
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constitutes final agency action. Requests for rehearing by the Commission may be
filed within thirty (30) days of the date of issuance of this order, pursuant to
18 C.F.R. ss. 385.713.
Robert E. Cackowski
Director, Division of Opinions and
Systems Analysis
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