Federal Register / Vol. 66, No. 90 / Wednesday, May 9, 2001 / Notices 23747

registered holding company system if

rule 53(a), (b), and (c) are met. NU

states, for purposes of rule 54, that it

meets all of the conditions of rule 53

under the Act, except for rule 53(a)(1).

By order dated March 7, 2000 (HCAR

No. 27148)(‘‘EWG Investment Order’’),

the Commission determined that NU’s

financing of its investment in Northeast

Generation Company (‘‘NGC’’), NU’s

only current EWG or FUCO investment,

in an amount not to exceed 83% of its

‘‘average consolidated retained

earnings,’’ would not have the adverse

effects set forth in rule 53(c) based on

the representations NU set forth at that

time. As of December 31, 2000, NU’s

‘‘aggregate investment,’’ as defined in

rule 53(a)(1) (‘‘Aggregate Investment’’),

in EWGs and FUCOs was approximately

$469.5 million, or about 76.1% of NU’s

consolidated retained earnings (‘‘CRE’’).

For the four quarters ending December

31, 2000, NU’s CRE was $617.3 million.

The proposed transactions are subject

to rule 54. Under rule 54, because NU

does not meet rule 53(a)(1), the

Commission must consider the effect of

the capitalization and earnings of EWGs

and FUCOs. Applicants state the

proposed transactions, considered in

conjunction with the effect of the

capitalization and earnings of NU’s

EWGs and FUCOs, would not have a

material adverse effect on the financial

integrity of the NU system, or an

adverse impact on NU’s public-utility

subsidiaries, their customers, or the

ability of state commissions to protect

such public-utility customers. NU’s

consolidated capitalization ratio and its

retained earnings, both have improved

since the date of the EWG Investment

Order. NU’s consolidated capitalization

consists of 36.1% common equity and

63.9% debt (including long- and shortterm debt, preferred stock, capital leases

and guarantees). NU’s consolidated

retained earnings have decreased from

$581.8 million as of the December 31,

1999 to 495.9 million as of December

31, 2000. NU’s interest in NGC has

made a positive contribution to earnings

in that time by contributing $26.4

million to NU’s retained earnings with

revenues of $108.5 million and net

income of $26.4 million. The

capitalization and earnings attributable

to NU’s investments in EWGs and

FUCOs has not had an adverse impact

on NU’s financial integrity.

Fees, commissions, and expenses to

be incurred in connection with the

solicitation of proxies are estimated not

to exceed $70,000. NU states that no

state or federal commission, other than

this Commission, has jurisdiction over

the proposed transactions.

It Is Ordered, under rule 62 under the

Act, that the declaration to the extent

that it relates to the proposed

solicitation of proxies is permitted to

become effective immediately, subject to

the terms and conditions contained in

rule 24 under the Act.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–11639 Filed 5–8–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 35–27394]

Filings Under the Public Utility Holding

Company Act of 1935, as amended

(‘‘Act’’

May 4, 2001.

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 24, 2001, 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 24, 2001, the

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

filed or as amended, may be granted

and/or permitted to become effective.

Northeast Utilities (70–9853

Northeast Utilities (‘‘NU’’), 174 Brush

Hill Road, West Springfield,

Massachusetts 01089, a registered

holding company, has filed a

declaration under sections 6(a), 7, and

12(b) and rules 45 and 54 under the Act.

By prior Commission orders dated

November 9, 1988, December 20, 1990,

December 3, 1992, and December 29,

1994 (HCAR Nos. 24742, 25219, 25692,

and 26208, respectively) (collectively,

‘‘Prior Orders’’), Holyoke Water Power

Company (‘‘HWP’’), a utility subsidiary

of NU, was authorized, among other

things, to issue and sell notes, in an

aggregate outstanding amount not

exceeding $38.3 million, in connection

with the issuance and sale of pollution

control revenue bonds (‘‘Bonds’’) and to

enter into a series of related

reimbursement agreements

(‘‘Reimbursement Agreements’’) with

various banking institutions (‘‘Banks’’)

in exchange for the issuance of

irrevocable letters of credit (‘‘LOCs’’). In

addition, in connection with each of the

Reimbursement Agreements, NU

entered into equity support agreements

on behalf of HWP. These agreements

were in the nature of contractual

undertakings on the part of NU to

maintain specified ownership levels in

HWP and to cause HWP to maintain a

minimum common equity to

capitalization ratio.

In accordance with provisions in each

of the Reimbursement Agreements,

HWP agreed, among other things, that,

so long as the LOCs were outstanding,

HWP would not allow the ratio of its

common equity to total capitalization to

fall below 30%. As of December 31,

2000, HWP recognized a reduction in

the carrying value of certain of its assets.

Accordingly, its common equity ratio

failed to meet certain consolidated

common equity maintenance covenants

contained in each of the Reimbursement

Agreements. The Banks have consented

to the decline in HWP’s common equity

ratio provided that NU provide further

assurances that HWP will meet its

obligations under the Reimbursement

Agreements.

Consequently, NU now proposes,

through June 30, 2004 (‘‘Authorization

Period’’) to issue guarantees and other

forms of credit support (collectively,

‘‘Guarantees’’), in an aggregate amount

not to exceed $45 million, in order to

guarantee HWP’s obligations under the

Reimbursement Agreements. NU states

that the Guarantees may take the form

of NU agreeing to undertake

reimbursement obligations or to assume

liabilities or other obligations with

respect to the LOCs. NU also states that

the Guarantees will be without recourse

to any other operating company in the

NU system.

23748 Federal Register / Vol. 66, No. 90 / Wednesday, May 9, 2001 / Notices

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4.

3See Letter to Alden S. Adkins, Senior Vice

President and General Counsel, NASD Regulation

from Belinda Blaine, Associate Director, Division of

Market Regulation, SEC, dated July 24, 2000.

Revisions to the Series 26 Examination were

originally filed with the Commission in SR–NASD–

99–51. NASD Regulation has withdrawn SR–

NASD–99–51 and refiled the revisions in the

instant proposed rule change.

4 15 U.S.C. 78s(b)(3)(A)(i).

5 17 CFR 240.19b–4(f)(1).

6The revised examination specifications were

filed with the Commission under separate cover

pursuant to a request by NASD Regulation for

confidential treatment. See 17 CFR 240.24b–2.

7 15 U.S.C. 78o–3(g)(3).

8See telephone conversation between Rebekah

Liu, Special Counsel, SEC, Cyndi Nguyen, Attorney,

SEC and Eric Moss, Office of General Counsel,

NASD Regulation on May 3, 2001.

9 15 U.S.C. 78o–3(b)(6).

10 15 U.S.C. 78o–3(g)(3).

11 15 U.S.C. 78s(b)(3)(A)(i).

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–11707 Filed 5–8–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–44249; File No. SR–NASD–

2001–22]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

National Association of Securities

Dealers Regulation, Inc. Revising the

Investment Company Products/

Variable Contracts Limited Principal

(Series 26) Examination

May 3, 2001.

Pursuant to section 19(b)(1) of the

Securities Exchange Act of 1934

(‘‘Act’’) 1 and Rule 19b–4 thereunder,2

notice is hereby given that on March 27,

2001, the National Association of

Securities Dealers, Inc. (‘‘NASD’’ or

‘‘Association’’), through its wholly

owned subsidiary, NASD Regulation,

Inc. (‘‘NASD Regulation’’), filed with the

Securities and Exchange Commission

(‘‘SEC’’ or ‘‘Commission’’) the proposed

rule change as described in Items I, II,

and III below, which Items have been

prepared by NASD Regulation.3 NASD

Regulation has designated this proposed

rule change as constituting a stated

policy, practice, or interpretation with

respect to the meaning, administration,

or enforcement of an existing rule of the

self-regulatory organization under

section 19(b)(3)(A)(i) of the Act 4 and

Rule 19b–4(f)(1),5 which renders the

rule effective upon filing with the

Commission. The Commission is

publishing this notice to solicit

comments on the proposed rule change

from interested persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

NASD Regulation is proposing

revisons to the Investment Company

Products/Variable Contracts Limited

Principal (Series 26) examination.6 The

proposed revisions consist of general

revisions to update the examination to

reflect changes in the rules, regulations,

and practices covered by the

examination. The text of the Study

Outline for the Series 26 examination is

available at NASD Regulation and at the

Commission.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

NASD Regulation included statements

concerning the purpose of and basis for

the proposed rule change and discussed

any comments it received on the

proposed rule change. The text of these

statements may be examined at the

places specified in Item IV below.

NASD Regulation has prepared

summaries, set forth in Sections A, B,

and C below, of the most significant

aspects of such statements.

A. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

1. Purpose

Pursuant to section 15A(g)(3) of the

Act,7 which requires the NASD to

prescribe standards of training,

experience, and competence for persons

associated with NASD members, the

NASD has developed examinations, and

administers examinations developed by

other self-regulatory organizations, that

are designed to establish that persons

associated with NASD members have

attained specified levels of competence

and knowledge. NASD Regulation

periodically reviews the contents of the

examinations to determine whether

revisions are necessary or appropriate in

view of changes pertaining to the

subject matter covered by the

examinations.

The NASD’s Series 26 Limited

Principal examination qualifies

individuals to function as a principal in

a member’s securities business limited

to investment company products and

variable contracts. This examination

tests a candidate’s knowledge of

securities industry rules and regulations

pertinent to such products.

A committee of industry

representatives, in conjunction with

NASD Regulation staff, recently

undertook a review of the Series 26

examination. As a result of this review,

NASD Regulation is proposing revisions

to the Series 26 test selection

specifications, study outline, and

question bank to reflect changes in

relevant laws, rules, and regulations and

the development of new products, and

to more accurately reflect the duties and

responsibilities of a Series 26 principal.

The examination also has been revised

to focus more closely on the supervision

of sales activities. In addition, the

material has been reorganized into five

substantive categories of critical

functions that a Series 26 principal may

be required to perform. These categories

are: hiring and qualification; training of

representatives; supervision; sales

practices; and business processing and

record-keeping. In order to adequately

test the material on the revised Series 26

examination, the number of questions

will be increased to 110 questions from

100 questions. The allowed testing time

will change to 21⁄2 hours from 2 hours.

The passing score for the examination

will continue to be 70 percent.8

2. Statutory Basis

NASD Regulation believes that the

proposed revisions are consistent with

the provisions of sections 15A(b)(6) 9

and 15A(g)(3) of the Act,10 which

authorize the NASD to prescribe

standards of training, experience, and

competence for persons associated with

NASD members.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

NASD Regulation does not believe

that the proposed rule change will result

in any burden on competition that is not

necessary or appropriate in furtherance

of the purpose of the Act.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants, or Others

Written comments were neither

solicited nor received.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

The proposed rule change has become

effective pursuant to section

19(b)(3)(A)(i) of the Act 11 and

subparagraph (f)(1) of Rule 19b–4