[Federal Register Volume 61, Number 116 (Friday, June 14, 1996)]
[Notices]
[Pages 30266-30267]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-15111]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-26530]


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

June 7, 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 July 1, 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 
should 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.

New England Electric System (70-8819)

    New England Electric System (``NEES''), 25 Research Drive, 
Westborough, Massachusetts 05182, a registered holding company, has 
filed an application-declaration under sections 6(a), 7, 9(a), 10, 12, 
and 13(b) of the Act and rules 45, 90 and 91 thereunder.
    The Federal Energy Regulatory Commission (``FERC'') has recently 
promulgated guidelines setting forth requirements for open and 
comparable transmission access. In response, NEES seeks to establish a 
subsidiary to be named NEES Transmission Services, Inc. (``NEES 
Trans''), for the purpose of operating the transmission assets owned 
by, or subject to the control of, NEES' utility subsidiaries (``NEES 
Transmission Assets'').
    In operating these assets, NEES will serve as the interface between 
wholesale electric customers and the NEES transmission system as the 
transmission service provider. NEES Trans will serve both associates 
and nonassociates and will charge the same tariff to each. NEES Trans 
will make no retail sales of electricity.
    Rights to operational control over the NEES Transmission Assets 
will be provided by a Transmission and Support Agreement 
(``Agreement'') among NEES, NEES Trans, and NEES' utility subsidiaries 
Massachusetts Electric Company (``MEC''), The Narragansett Electric 
Company (``NERC''), Granite State Electric Company (together with MEC 
and NEC, ``Retail Companies'') and New England Power Company (``NEP''). 
Pursuant to the Agreement, NEES Trans will have operational control 
over the NEES Transmission Assets only to the extent necessary to 
accomplish a FERC-jurisdictional transmission transaction. The 
Agreement also grants NEES Trans use of the distribution systems of the 
Retail Companies as they may be needed to support wholesale 
transactions.
    NEES does not propose to transfer ownership of the NEES 
Transmission Assets to NEES Trans at this time. However, NEES will have 
the responsibility of planning the expansion of the transmission system 
and will notify NEP of the need for additions to the system. NEES Trans 
will have the obligation to expand transmission capacity as needed, to 
arrange for NEES affiliates to license, engineer and construct the 
necessary additions, and to provide operational services necessary to 
maintain transmission system reliability.
    NEES proposes to provide initial financing for NEES Trans by the 
purpose of one thousand shares of common stock, par value $1.00 per 
share, for a total purchase price of $1,000. NEES then proposes to make 
capital contributions and/or loans to NEES Trans from time to time, in 
amounts not to exceed $10 million in the aggregate outstanding at any 
one time. Any such loans will be in the form of non-interest bearing 
subordinated notes payable in twenty years or less from the date of 
issue. NEES requests authority to make such investments through 
December 31, 1999.
    NEES Trans additionally seeks authority through October 31, 1997 to 
borrow and lend money in the NEES Money Pool, the terms of which are 
described in an order of the Commission dated October 25, 1995 (HCAR 
No. 25399), and to borrow from banks on a short-term basis. NEES 
proposes that NEES Trans have access to the NEES Money Pool on the same 
priority as the Retail Companies. The aggregate principal amount of 
debt outstanding under this authority will not at any time exceed $15 
million. Amounts owed under the Money Pool would be payable on demand. 
Amounts owned to banks for short-term borrowings would be payable 
within one year.
    The proceeds from the proposed borrowings are to be used (i) to pay 
then outstanding notes initially issued to banks and/or borrowings from 
the Money Pool and (ii) for other cooperate purposes relating to 
ordinary business operations, including working capital, and funds to 
cover timing differences in payments received and payments due.
    NEES' utility subsidiaries and NEES' service company subsidiary, 
New England Power Service Company, may assign certain technical and 
support staff personnel to NEES Trans to work on NEES Trans operations. 
Not more than two percent of the total employees of such companies 
would be assigned to NEES Trans in any one year. All costs associated 
with such staff (including compensation, overheads, and benefits) would 
be fully reimbursed by NEES Trans in accordance with rules 90 and 91 of 
the Act.

Central Power and Light Company, et al. (70-8869)

    Central Power and Light Company (``CPL''), 539 North Carancahua 
Street, Corpus Christi, Texas 78401-2802, Public Service Company of 
Oklahoma (``PSO''), 212 East Sixth Street, Tulsa, Oklahoma 74119-1212, 
and West Texas Utilities Company (``WTU''), 301 Cypress, Abilene, Texas 
79601 (collectively, ``Applicants''), each a

[[Page 30267]]

wholly owned subsidiary company of Central and South West Corporation, 
a registered holding company, have filed an application-declaration 
under sections 6(a), 7, 9(a), 10 and 12(d) of the Act and rule 44 
thereunder.
    Applicants propose, through December 31, 1999, to: (i) incur 
obligations in connection with the proposed issuance by Red River 
Authority of Texas (``Red River'') of up to $113.3 million aggregate 
principal amount of pollution control revenue bonds (``New Bonds'') in 
one or more series; (ii) obtain credit enhancement for the New Bonds, 
with could include bond insurance, a letter of credit or a liquidity 
facility;\1\ (iii) issue first mortgage bonds (``First Mortgage 
Bonds'') as security for the payment of the New Bonds; (iv) deviate 
from the Commission's Statement of Policy Regarding First Mortgage 
Bonds (``Statement of Policy'');\2\ and (v) use hedging products to 
manage interest rate risk or lower their interest rate costs.
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    \1\ Applicants anticipate that they would be required to pay a 
premium or fee to obtain the credit enhancement.
    \2\ HCAR No. 13105, as supplemented by HCAR No. 16369.
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    Of the total aggregate principal amount of New Bonds to be issued, 
(i) up to $63.3 million aggregate principal amount may be pollution 
control revenue refunding bonds (``Refunding Bonds''), and (ii) up to 
$50 million aggregate principal amount may be new money revenue bonds 
(``New Money Bonds''). The issuance of New Money Bonds may be combined 
with the issuance of Refunding Bonds.
    The Refunding Bonds will be used to reacquire all or a portion of 
$63.3 million of outstanding 7\7/8\ Pollution Control Revenue Bonds 
Series 1984 issued by Red River (``Old Bonds'').\3\ The New Bonds will 
be used to reimburse the Applicants' treasuries for any expenditures 
made that qualify for tax-exempt financing or for current solid waste 
expenditures.
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    \3\ The Old Bonds may not be redeemed prior to their first 
redemption date and thereafter may be redeemed at the then 
applicable redemption price plus accrued interest to the redemption 
date. The Old Bonds will be redeemable on September 15, 1996 at 103% 
of principal amount.
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    Applicants and Red River entered into an installment sale agreement 
(``Sale Agreement'') to provide for the issuance of the Old Bonds. The 
proceeds from the Old Bonds were used to acquire, construct and improve 
certain air and water pollution control and solid waste disposal 
facilities at the Oklaunion Electric Generating Plant, located near 
Vernon, Texas, in which CPL, PSO and WTU own 7.8%, 15.6% and 54.7% 
undivided interests, respectively. In connection with the issuance of 
the New Bonds, Applicants will (i) amend or supplement the Sale 
Agreement, (ii) enter into an agreement with substantially the same 
terms as the Sale Agreement and/or (iii) enter into a new installment 
sale agreement.
    The New Bonds will bear interest at a fixed or floating rate, may 
or may not be secured with First Mortgage Bonds and will mature in not 
more than forty years. The interest rate, redemption provisions and 
other terms and conditions applicable to the New Bonds will be 
determined by negotiations between the Applicants and one or more 
investment banking firms or other entities that will purchase or 
underwrite the New Bonds (``Purchasers''). It is anticipated that: (i) 
the New Bonds will be redeemable at any time in whole at the option of 
the Applicants at the principal amount thereof plus accrued interest, 
upon the occurrence of various extraordinary events specified in the 
Amended Sale Agreement; (ii) the New Bonds will be subject to optional 
redemption in whole or in part at times and with premiums to be 
determined by negotiations between the Applicants and the Purchasers; 
and (iii) the New Bonds will be subject to special mandatory 
redemption, in whole or in part, at the principal amount thereof plus 
accrued interest, in the event the interest on the New Bonds becomes 
subject to federal income tax.
    Pursuant to the Sale Agreement, Applicants transferred the 
Facilities to Red River, which financed the acquisitions and related 
costs thereof with the proceeds of the Old Bonds. The Sale Agreement 
contains commitments by the Applicants to pay to Red River at specified 
times amounts sufficient to enable Red River to pay debt service on the 
Old Bonds, including principal, interest and redemption premium, if 
any.
    Applicants also request authority to issue First Mortgage Bonds as 
security for the payment of the New Bonds, at its option, depending 
upon market conditions at the time of issuance of the New Bonds. The 
First Mortgage Bonds will be held by the Trustee solely for the benefit 
of the holders of the New Bonds and will not be transferable except to 
a successor Trustee. The First Mortgage Bonds will be issued in the 
exact amounts and have substantially the same terms as the New Bonds.
    Applicants also state that the First Mortgage Bonds and the New 
Bonds may include: (i) up to a 15 year optional redemption limitation; 
(ii) an omission of sinking fund provisions; and (iii) a limitation on 
dividends to a percentage of net income available for dividends on 
common stock if the Applicant's common stock equity is not maintained 
at a certain percentage of total capitalization. Applicants request 
that the Commission authorize these deviations from the Statement of 
Policy.
    The proceeds of the offering of the New Bonds will be used to: (i) 
redeem the Old Bonds pursuant to the terms of the Indenture; and (ii) 
reimburse the Applicant's treasuries for any expenditures made that 
qualify for tax-exempt financing or to provide for current solid waste 
expenditures. The proceeds of any offering may also be used to 
reimburse the Applicants' treasuries for Old Bonds previously acquired.
    Applicants may be required to deposit the proceeds of the New Bonds 
with the Trustee in connection with the Redemption of the Old Bonds. 
Any additional funds required to pay for the redemption of Old Bonds 
and the costs of issuance of the New Bonds will be provided by the 
Applicants from internally generated funds and short-term borrowings 
pursuant to orders of the Commission dated March 31, 1993, September 
28, 1993, March 18, 1994, June 15, 1994 and March 21, 1995 (HCAR Nos. 
25777, 25897, 26007, 26066 and 26254, respectively), or subsequent 
orders.
    Applicants propose to manage interest rate risk and/or lower their 
interest costs through the use of hedging products, including fixed-
for-floating interest rate swaps, forward swaps (i.e., where a swap 
agreement is entered into but the exchange of fixed and floating 
payments does not begin until a future date, which is generally the 
call date on outstanding bonds), caps and collars and through forward 
transactions. Applicants also request authorization to enter into 
revenue (or offsetting) interest rate swap arrangements, or other 
contractual arrangements, in order to limit the impact of anticipated 
movements in interest rates or offset the effect of existing interest 
rate swap agreements.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-15111 Filed 6-13-96; 8:45 am]
BILLING CODE 8010-01-M