30650 Federal Register / Vol. 65, No. 93 / Friday, May 12, 2000 / Notices

1These assets include approximately 127 MW of

net generating capacity (with book value of $26

million net of deferred taxes) to be transferred by

Delmarva to CDG that may be transferred to a

nonassociate exempt wholesale generator (‘‘EWG’’)

in exchange for like-kind assets under a like-kind

exchange agreement. In addition, ACE and

Delmarva intend to transfer certain other generating

assets to EWGs and propose in another filing, S.E.C.

File NO. 70–9607, to transfer certain generating

assets to nonassociate non-EWGs.

2Applicants propose to use ACE–REIT as an

intermediate holding company over the ACE

Generation Assets in order to minimize the tax

consequences of the transfer.

3Applicants note that the capital dividend by

Delmarva of the CDG common stock will cause its

common equity to total capitalization ratio to fall

below 30% until the sale of other generation assets

to third parties is completed. The closing of this

sale is scheduled for September 1, 2000 subject to

the prior receipt of certain state regulatory

approvals. The capital dividend by ACE will also

cause the common equity to total capitalization

ratio for ACE to fall below 30%.

4CEH will not be an operating company, will

have no employees and will function as an

intermediary holding company that will be a utility

holding company until such time as CDG and CAG

are qualified as EWGs. Applicants state that

following authorization by the Commission, CEH

will issue a nominal number of shares of equity to

Conectiv in exchange for a nominal amount of cash

not to exceed $1000.

5Conectiv intends for CEH to invest in one or

more EWGs and to consolidate or dispose of

ownership interests in any such EWG so long as the

aggregate limitation on such investments, imposed

by rule 53 or other applicable order, is not

exceeded. Separately, Conectiv intends to

contribute to CEH the equity securities of a rule 58

company engaged in energy marketing, Conectiv

Energy Supply, Inc.

fairly intended by the policy and

provisions of the Act, and that,

therefore, the Commission should grant

the requested order.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–11959 Filed 5–11–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 35–27174]

Filings Under the Public Utility Holding

Company Act of 1935, As Amended

(‘‘Act’’)

May 5, 2000.

Notice is hereby given that the

following filing(s) has/have been made

with the Commission pursuant to

provisions of the Act and rules

promulgated under the Act. All

interested persons are referred to the

application(s) and/or declaration(s) for

complete statements of the proposed

transaction(s) summarized below. The

application(s) and/or declaration(s) and

any amendment(s) is/are available for

public inspection through the

Commission’s Branch of Public

Reference.

Interested persons wishing to

comment or request a hearing on the

application(s) and/or declaration(s)

should submit their views in writing by

May 30, 2000, to the Secretary,

Securities and Exchange Commission,

Washington, DC 20549–0609, and serve

a copy on the relevant applicant(s) and/

or declarant(s) at the address(es)

specified below. Proof of service (by

affidavit or, in the case of an attorney at

law, by certificate) should be filed with

the request. Any request for hearing

should identify specifically the issues of

facts or law that are disputed. A person

who so requests will be notified of any

hearing, if ordered, and will receive a

copy of any notice or order issued in the

matter. After May 30, 2000, the

application(s) and/declaration(s), as

filed or as amended, may be granted

and/or permitted to become effective.

Conectiv, et al. (70–9655)

Conectiv, a registered public utility

holding company; Atlantic City Electric

Company (‘‘ACE’’), and Delmarva Power

& Light Company (‘‘Delmarva’’), each a

public utility subsidiary of Conectiv;

ACE–REIT, Inc. (‘‘ACE–REIT’’),

Conectiv Atlantic Generation, LLC

(‘‘CAG’’), nonutility subsidiaries of ACE;

and Conectiv Delmarva Generation, Inc.

(‘‘CDG’’), a nonutility subsidiary of

Delmarva (collectively, ‘‘Applicants’’),

all located at 800 King Street,

Wilmington, Delaware 19899, have filed

an application-declaration under

sections 6(a), 7, 9(a), 10, 12(c), 12(d) and

32 of the Act and rules 43, 45, 46 and

54 under the Act.

Applicants state that Conectiv intends

to convert Delmarva and ACE into

subsidiaries that provide only regulated

electric transmission and distribution

services and, in the case of Delmarva,

regulated gas distribution services. As

part of this plan, Convectiv is

implementing a strategy of divesting

baseload generating facilities and

retaining ‘‘mid-merit’’ facilities, e.g.,

those facilities that can quickly increase

or decrease their KW per hour output

level on an economic basis. In

connection with this strategy, Delmarva

and ACE intend to transfer ownership of

certain generating facilities to a special

purpose holding company, Conectiv

Energy Holding Company (‘‘CEH’’), that

Conectiv proposes to establish and own,

to hold these facilities. The Delmarva

facilities have approximately 1,364 MW

of net generating capacity, with an

approximate value of $301.4 million net

of deferred taxes (‘‘Delmarva Generation

Assets’’).1 The ACE facilities have

approximately 502 MW of net

generating capacity valued at

approximately $77.2 million net of

deferred taxes (‘‘ACE Generation

Assets’’). Applicants request several

authorizations to accomplish this

transfer and for other related matters.

Transfer of ACE and Delmarva

Generation Assets

ACE proposes to acquire additional

ownership interests in its subsidiary,

CAG, which is currently inactive, and to

transfer the ACE Generation Assets to

CAG, in exchange for those interests.

ACE also requests authority to acquire

additional common stock of its

subsidiary, ACE–REIT, which is also

inactive, and to transfer to ACE–REIT its

ownership interest in CAG in exchange

for that common stock.2 ACE proposes

to issue a dividend to Conectiv of ACE–

REIT’s common stock.

Similarly, Delmarva proposes to

acquire additional common stock of its

subsidiary, CDG, which is currently

inactive, and to transfer the Delmarva

Generation Assets to CDG in exchange

for that common stock. Delmarva

proposes to issue a dividend to Conectiv

of CDG’s common stock. In accordance

with generally accepted accounting

principles: The dividends by ACE of

ACE–REIT common stock and by

Delamarva of CDG common stock will

be treated as dividends out of capital

surplus.3

In addition, Conectiv requests

authority to establish and acquire all of

the common shares of CEH 4 as an

intermediate holding company that

would hold the equity securities of

CDG, ACE–REIT and indirectly, CAG.5

Accordingly, Applicants request

authority for Conectiv to contribute the

equity securities of CDG and ACE–REIT

and, indirectly, CAG to CEH. These

transactions would make CDG and

ACE–REIT direct subsidiaries and CAG

and indirect subsidiary of CEH.

Applicants also request that the

Commission deem ACE–REIT not to be

a utility holding company solely for

purposes of section 11(b)(2) of the Act.

Financings

Applicants request authority for CEH,

ACE–REIT, CAG and CDG to engage in

certain financings until such time as

CAG and CDG qualify as EWGs and the

financing of the companies can be

accomplished through rule 52 or until

March 31, 2000, whichever first occurs

(‘‘Authorized Period’’). Specifically,

CEH requests authority to issue equity

or long- or short-term debt securities to

Federal Register / Vol. 65, No. 93 / Friday, May 12, 2000 / Notices 30651

6The economic interest is derived solely from

approximately 9.9% of the voting stock and shares

of nonvoting convertible preferred stock of ONEOK.

The staff of the Commission issued a no-action

letter in 1997 on the proposition that ONEOK is not

a subsidiary of WRI and that WRI does not control

ONEOK. (See Western Resources, Inc., SEC NoAction Letter (Nov. 24, 1997).

Conectiv to finance its ongoing business

needs through the Authorization Period.

Any debt will bear interest at a rate

designed to approximate Conectiv’s cost

of money and will mature in 30 years

or less. Conectiv also requests

authorization for CEH to participate in

the Conectiv system money pool

(‘‘Money Pool’’). The total debt and

equity proposed to be issued by CEH,

either directly to Conectiv or through

the Money Pool, will not exceed $750

million, less the amount of any debt

issued by a CEH subsidiary directly to

Conectiv, as described below.

In addition, ACE–REIT, CAG and CDG

request authority to issue equity or longor short-term debt securities to CEH or

Conectiv through the Authorization

Period. Any debt issued will mature in

30 years or less and will bear interest at

a rate designed to approximate the

lender’s cost of money. Also, Applicants

request authority for CAG, CDG, and

ACE–REIT to participate in the Money

Pool. Applicants propose that the total

amount of debt and equity securities

issued, either directly to Conectiv or

through the Money Pool, by CDG will

not exceed $150 million and by ACE–

REIT and CAG will not exceed $100

million each.

Like Kind Exchange

Applicants anticipate that facilities

having approximately 127 MW of net

generating capacity owned by Delmarva

to be transferred to CDG, will be subject

to an obligation to transfer these assets

to a nonassociate in a like-kind

exchange (‘‘To Be Transferred Assets’’).

First, Conectiv Energy, Inc. (‘‘CEI’’),

which owns certain generating assets

currently under construction (‘‘New Hay

Road Facilities’’), would be transferred

to a third party intermediary. Then, the

To Be Transferred Assets would be sold

to the nonassociate in exchange for the

acquisition by CDG of either: (a) the

New Hay Road Facilities at a time when

the investment in the New Hay Road

Facilities equals or approximates the

value of the To Be Transferred Assets;

or (b) other suitable generation assets

(either, ‘‘To Be Acquired Assets’’). If

CDG is not an EWG at the time of the

acquisition of the To Be Acquired

Assets, Applicants request authority to

acquire those assets as utility assets.

Western Resources, Inc. 70–9665

Western Resources, Inc. (‘‘WRI’’), 818

Kansas Avenue, Topeka, Kansas 66612,

a Kansas utility company and a public

utility holding company claiming an

exemption under section 3(a) by rule 2

from all provisions of the Act, except

section 9(a)(2), has filed an application

under sections 9(a)(2) and 10 of the Act

in connection with the acquisition of a

utility subsidiary.

WRI conducts utility operations

through its KPL division and its

subsidiary, Kansas Gas and Electric

Company (‘‘KGE’’), which together

provided approximately 628,000

customers in 471 communities in the

state of Kansas with electricity. In

addition, WRI has a 45% economic

interest in ONEOK, Inc., an Oklahoma

corporation that distributes natural gas

to more than 1.4 million customers with

natural gas.6 Through various other

subsidiaries, WRI is engaged in owning

interests in power plants and projects

and providing monitored security alarm

and home paging services. For the year

ending December 31, 1999, WRI

reported consolidated revenues of

approximately $2.0 million and net

income of $12.5 million and had $8.0

billion in consolidated assets at the end

of that period.

One nonutility subsidiary company,

Westar Generating II Inc. (‘‘WG’’), is

engaged in constructing two General

Electric combustion turbine generators

(‘‘CTs’’). The CTs are expected to be

rated for a capacity of approximately 74

MW of net dependable capacity at peak

conditions and are expected to become

commercially operational at a KGE

generating facility on June 1, 2000. Once

the construction is complete and

operation begins, WG will qualify as a

public utility under section 2(a)(3) of

the Act. Accordingly, WRI has requested

authority to acquire WG as a public

utility company.

WRI’s costs associated with the

acquisition of WG will be equal to that

of the equipment and construction costs

incurred by WG, which is expected to

be approximately $63 million. The CTs

will be connected to KGE at its

generating facility directly through a

new buss to be tied to a grid located at

the facility. Initially, WG intends to sell

all capacity and energy generated by the

CTs to WRI at a cost-based rate under a

power purchase agreement between

WRI and WG.

In addition, WRI intends to claim an

exemption as an intrastate holding

company under section 3(a) of the Act

and rule 2 with regards to the

ownership of WR as a public utility

company.

For the Commission by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–11961 Filed 5–11–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Rel. No. IC–2443; File No. 812–11858]

Valley Forge Life Insurance Company,

et al.

May 5, 2000.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’ or ‘‘Commission’’).

ACTION: Notice of Application for an

Order under Section 6(c) of the

Investment Company Act of 1940 (the

‘‘1940 Act’’ or ‘‘Act’’( granting

exemptions from the provisions of

Sections 2(a)(32), 22(c), and 27(i)(2)(A)

of the 1940 Act and Rule 22c–1

thereunder, to permit the recapture of

immediate interest payments applied to

purchase payments made under certain

deferred variable annuity contracts.

SUMMARY OF APPLICATION: Applicants

seek an order under Section 6(c) of the

1940 Act to the extent necessary to

permit, under specified circumstances,

the recapture of immediate interest

payments applied to purchase payments

made under deferred variable annuity

contracts (the ‘‘Contracts’’) that Valley

Forge Life Insurance Company (‘‘Valley

Forge’’) will issue through Valley Forge

Life Insurance Company Variable

Annuity Separate Account (‘‘VFL

Separate Account’’), as well as other

contracts that Valley Forge may issue in

the future through VFL Separate

Account or any other future separate

accounts of Valley Forge ‘‘Future

Accounts’’) that are substantially similar

in all material respects to the Contracts

(the ‘‘Future Contracts’’). Applicants

also request that the order being sought

extend to any other National

Association of Securities Dealers, Inc.

(‘‘NASD’’) member broker-dealer

controlling or controlled by, or under

common control with, Valley Forge,

whether existing or created in the

future, that serves as a distributor or

principal underwriter of the Contracts

or Future Contracts offered through VFL

Separate Account or any Future

Accounts (‘‘Valley Forge BrokerDealers(s)’’).

APPLICANTS: Valley Forge Life, VFL

Separate Account, the Future Accounts

and CNA Investor Services, Inc.

(collectively, ‘‘Applicants’’).