[Federal Register Volume 61, Number 81 (Thursday, April 25, 1996)]
[Notices]
[Pages 18451-18452]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-10242]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-26508]


Filings Under the Public Utility Holding Company Act of 1935, as 
Amended (``Act'')

April 19, 1996.
    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 thereunder. 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 amendments thereto is/are available for public 
inspection through the Commission's Office 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 13, 1996, to the Secretary, Securities and Exchange 
Commission, Washington, D.C. 20549, 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 case of an attorney at law, by 
certificate) should be filed with the request. Any request for hearing 
shall identify specifically the issues of fact 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 said date, the application(s) and/or declaration(s), as 
filed or as amended, may be granted and/or permitted to become 
effective.

SEI Holdings, Inc. (70-8823)

    SEI Holdings, Inc. (``Holdings''), 900 Ashwood Parkway, Suite No. 
500, Atlanta, Georgia, 30338, a wholly-owned non-utility subsidiary of 
The Southern Company (``Southern''), a registered holding company, has 
filed an application pursuant to sections 9(a) and 10 of the Act and 
rule 54 thereunder.
    By order dated February 2, 1996 (HCAR No. 26468) (``Order''), 
Holdings was authorized, through December 31, 2000, to acquire 
directly, or indirectly through one or more other subsidiaries 
(``Intermediate Subsidiaries''), the securities of or other interests 
in one or more energy-related businesses or facilities (``Energy-
Related Companies''). The Energy-Related Companies could include 
companies that derive substantially all of their revenues from 
brokering or marketing of electric power, provided that the purchaser 
or seller, or both the purchaser and seller, were located within the 
Southeastern Electric Reliability Council (``SERC'').\1\
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    \1\ As a practical matter, the ability of Holdings to compete, 
through Energy-Related Companies in wholesale electric power markets 
in the Southern system's franchised service territories is limited 
by the Codes of Conduct submitted to the Federal Energy Regulatory 
Commission (``FERC'') in connection with the market-based wholesale 
rate application filed by Southern Energy Marketing, Inc. 
(``Southern Energy''), a subsidiary of Holdings and an exempt 
wholesale generator. In addition, under current FERC interpretations 
of section 32 of the Act, Southern Energy cannot engage in fuel 
marketing or in other expanded fuel-related activities.
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    Holdings now requests that the Commission eliminate the restriction 
imposed under the Order on the geographic region in which such 
marketing and brokering activities may be conducted. Holdings also 
requests that the Commission expand the terms of the Order to allow 
Holdings, through one or more Energy-Related Companies (``Marketing 
Subsidiaries''), to broker or market other forms of energy commodities, 
in addition to electric power, to include, without limitation, natural 
gas, oil and coal, and to provide related services to customers. No 
other modification to the Order is requested.
    In particular, Holdings proposes to engage in wholesale electric 
power marketing on a national scale. Holdings also proposes to provide 
related ``value added'' services to customers, such as fuel management, 
storage and procurement services. Although the Marketing Subsidiaries 
might acquire physical assets that are necessary and appropriate to the 
conduct of such business, such as oil and storage facilities, gas 
reserves, gas pipeline facilities and coal, Holdings represents that no 
Marketing Subsidiary will acquire any assets if, as a result thereof, 
it would be or become an ``electric utility company'' or a ``gas 
utility company'' under the Act.
    The Marketing Subsidiaries would engage in various types of 
marketing activities. These activities would include (i) electric power 
and/or fuel arbitrage transactions, which involve simple exchanges of 
fuel for electric power; (ii) dispatch control of energy assets, which 
involves fixed-price electric power in exchange for dispatch control of 
electric power generation facilities; (iii) sales of options on 
capacity or energy; and (iv) national energy supply agreements, which 
involve retail sales to large energy consumers, with facilities in many 
different locations, that wish to ``outsource'' all of their energy 
needs to achieve volume discounts and to eliminate the high cost of 
separate procurement programs.
    Holdings proposes that the Marketing Subsidiaries be authorized to 
engage in such activities without regard to location or identity of 
customers provided that the customers exclude the electric public 
utilities within the Southern system and Southern Company Services, 
Inc., a subsidiary service company of Southern. Holdings also states 
that the Marketing Subsidiaries will not sell electric power at retail 
unless such sale is approved or allowed under applicable state law.
    All activities, to include the fuel-for-energy and energy commodity 
brokering and marketing activities, will generally be carried on by 
personnel employed by Southern Electric International, Inc., a wholly-
owned subsidiary of Holdings. Those personnel are already experienced 
in the day-to-day electric power marketing activities of Southern 
Energy and fuel procurement activities of associate independent power 
projects owned by Holdings.
    It is anticipated that in the normal course of business the 
Marketing Subsidiaries would take appropriate measures to hedge the 
risk associated with electric power and fuel purchase or sales 
contracts. Such measures could include matches between long-term firm 
or variable price electric power sales contracts and long-term firm or 
variable price fuel purchase contracts. The Marketing Subsidiaries 
might may also hedge fuel price risk through the

[[Page 18452]]

purchase of fuel or fuel reserves or options on fuel reserves.
    In addition, the Marketing Subsidiaries might use available hedging 
tools, such as gas futures contracts and options on gas futures, 
similar to those traded on the New York Mercantile Exchange, and gas 
and oil price swap agreements and other, primarily commodity based, 
derivative instruments. Holdings represents that the Marketing 
Subsidiaries will not deal in derivative products for purposes of 
speculative trading.
    Holdings might also offset price risk exposure under a purchase or 
sales contract through an opposite position to that purchase or sale. 
Similarly, in a portfolio of purchase and sales contracts, risk could 
also be limited through an appropriate mix of long-term and short-term 
contracts.
    Ultimately, the Marketing Subsidiaries will seek to manage a 
``book'' of various energy contracts involving purchases, sales and 
trades of oil, gas and electric power. The Marketing Subsidiaries will 
seek to hedge the risk associated with these contracts through a 
combination of physical assets, balanced physical purchases and sales, 
purchases and sales on futures markets, or other derivative risk 
management tools.
    The aggregate investment made by Southern to finance the 
investments of Holdings in the Marketing Subsidiaries will be subject 
to all of the limitations applicable to investments in Energy-Related 
Companies imposed by the Order. Similarly, Holdings anticipates that 
guarantees of performance by the Marketing Subsidiaries could be 
required from time to time. Holdings will count the amount of such 
guarantees against the overall limitation set forth in the Order to the 
extent that the guarantees are directly or indirectly made by Southern 
itself.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 96-10242 Filed 4-24-96; 8:45 am]
BILLING CODE 8010-01-M