Federal Register / Vol. 66, No. 38 / Monday, February 26, 2001 / Notices 11613

The Commission estimates that the

cost burden for preparing and filing a

post-effective amendment on proposed

Form N–6 will be $7,500. Thus, the total

annual cost burden for preparing and

filing post-effective amendments would

be $1,500,000 (200 post-effective

amendments annually times $7,500 per

amendment). The Commission estimates

that the cost burden for preparing and

filing an initial registration statement on

proposed Form N–6 will be $20,000.

Thus, the annual cost burden for

preparing and filing initial registration

statements would be $1,000,000 (50

initial registration statements annually

times $20,000 per registration

statement). The total annual cost burden

for proposed Form N–6, therefore, is

estimated to be $2,500,000 ($1,500,000

for post-effective amendments plus

$1,000,000 for initial registration

statements).

The hour and cost burdens would be

offset by a decrease in the burdens

attributable to Forms N–8B–2 and S–6

because separate accounts registering on

Form N–6 would no longer be required

to register on Forms N–8B–2 and S–6.

The Commission expects that the

aggregate burden imposed by Forms N–

6, S–6, and N–8B–2 after Form N–6 is

adopted will be no greater, and may be

less, than the burden currently imposed

by Forms S–6 and N–8B–2.

Form N–6 has not yet been adopted,

and therefore no variable life separate

accounts are currently using Form N–6

to register pursuant to the Securities Act

and the Investment Company Act.

The information collection

requirements that would be imposed by

Form N–6 are mandatory. Responses to

the collection of information will not be

kept confidential. An agency may not

conduct or sponsor, and a person is not

required to respond to, a collection of

information unless it displays a

currently valid control number.

Written comments are invited on: (a)

Whether the proposed collection of

information is necessary for the proper

performance of the functions of the

agency, including whether the

information will have practical utility;

(b) the accuracy of the agency’s estimate

of the burden of the collection of

information; (c) ways to enhance the

quality, utility, and clarity of the

information collected; and (d) ways to

minimize the burden of the collection of

information on respondents, including

through the use of automated collection

techniques or other forms of information

technology. Consideration will be given

to comments and suggestions submitted

in writing within 60 days of this

publication.

Please direct your written comments

to Michael E. Bartell, Associate

Executive Director, Office of

Information Technology, Securities and

Exchange Commission, 450 5th Street,

NW., Washington, DC 20549.

Dated: February 16, 2001.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–4650 Filed 2–23–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 35–27347]

Filings Under the Public Utility Holding

Company Act of 1935, as Amended

(‘‘Act’’)

February 16, 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

March 13, 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 March 13, 2001, the

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

filed or as amended, may be granted

and/or permitted to become effective.

Dominion Resources, Inc., et al. (70–

9807)

Dominion Resources, Inc. (‘‘DRI’’), a

registered public utility holding

company under the Act, and is wholly

owned electric utility company

subsidiary, Virginia Electric and Power

Company (‘‘Vepco’’), both located at 120

Tredegar Street, Richmond, VA 23219,

have filed an application under sections

9(a)(1) and 10 of the Act.

DRI and Vepco request approval of

Vepco’s proposed acquisition of three

generating facilities (‘‘Generating

Facilities’’) located in Hopewell,

Altavista, and Southampton County,

Virginia, within Vepco’s service area.

Vepco would effect the acquisition by

purchasing all of the partnership

interests in each of the three limited

partnerships that currently own the

facilities.

Each of the three Generating Facilities

is currently both a ‘‘qualifying facility’’

(‘‘QF’’) under the Public Utility

Regulatory Policies Act of 1978, as

amended (‘‘PURPA’’), and an ‘‘exempt

wholesale generator’’ (‘‘EWG’’) under

section 32 of the Act. Each comprises a

stoker coal-fired cogeneration facility

with a maximum net power production

capacity of 62.7 MW and related

interconnection facilities that is

interconnected with Vepco, to whom it

sells all of its energy and capacity

through long term power purchase and

operating agreements, at the high

voltage (115 kV) side of its main stepup transformer. Upon consummation of

the proposed acquisition, the Generating

Facilities will no longer meet the

criteria for QFs and PURPA and for

EWGs under the Act. The Generating

Facilities would then be operated in the

same manner as the rest of Vepco’s

facilities, and their production would be

controlled by the same mechanism that

drive the dispatch of Vepco’s other

facilities. The same system operator

responsible for coordination and control

of Vepco’s other generating units will

also be responsible for the Generating

Facilities, and their dispatch order will

be based on their relative operating

expenses compared with the rest of

Vepco’s generating units, and their

capacity and energy will be available for

Vepco’s native load.

Three California general partnerships

(‘‘Partnerships’’), LG&E—Westmoreland

Southampton (‘‘Southampton’’), LG&E—

Westmoreland Altavista (‘‘Altavista’’)

and LG&E—Westmoreland Hopewell

(‘‘Hopewell’’) currently own and operate

the Generating Facilities. The

Partnerships are owned by six limited

partnerships and three corporations

(‘‘Seller’’): Westpower-Franklin, L.P., a

Virginia limited partnership, LG&E

Southampton, L.P., a California limited

partnership, LG&E Power 11

Incorporated, a California corporation,

Westpower—Altavista, L.P., a Virginia

limited partnership, LG&E Altavista,

L.P., a California limited partnership,

LG&E Power 12 Incorporated, a

California corporation, WestpowerHopewell, L.P., a Virginia limited

11614 Federal Register / Vol. 66, No. 38 / Monday, February 26, 2001 / Notices

1Borrowings by ESI and SFI from Entergy and

commercial banks are now exempt from prior

Commission approval under rules 45 and 52.

2Section 3.10 of the Operating Agreement of

American Transmission Company LLC provides

that:

(a) The Company shall use its best efforts to issue,

within 90 days following the Operations Date, longterm debt in an amount equal to approximately

50% of its total initial capitalization.

(b) The net proceeds of such financing shall be

distributed to the Members that contributed

Transmission Assets in accordance with their

respective Percentage Interests, exclusive of the

Percentage Interests held by Members that did not

contribute Transmission Assets, and the Corporate

Manager shall revise Schedule A to reflect such

distribution. Members Units redeemed shall be

valued at the initial value, as set forth in the

definition of Member Unit.

partnership, LG&E Hopewell, L.P., a

California limited partnership, and

LG&E Power 13 Incorporated, a

California corporation.

The acquisition would be effected

through a Put and Call Agreement dated

November 22, 2000 (‘‘Agreement’’) that

Vepco has entered into with the Sellers.

Under the terms of that Agreement,

Vepco grants Sellers an absolute right

and option to require Vepco to purchase

and accept the transfer of the Sellers’

interests in the Partnerships (the ‘‘Put’’).

The Sellers may exercise the Put at any

time from and after January 5, 2001 and

before September 30, 2001. The Sellers

also grant to Vepco an absolute and

exclusive right and option to require

Sellers to sell and transfer to the

Company Sellers’ interests in the

partnerships (the ‘‘Call’’). Vepco may

exercise the Call at any time on or after

March 1, 2001 and before September 30,

2001. Through either the Put or the Call,

Vepco may acquire the entirety of the

Sellers’ interests in the Partnerships.

When Vepco acquires the Sellers’

interests in the Partnerships, the

Partnerships will dissolve as a matter of

law, and Vepco will directly hold title

to the Generation Facilities.

The Sellers will receive

approximately $206 million in

consideration in exchange for their

partnership interests. Vepco will

initially finance the acquisition through

commercial paper issuances, which at

some later date, and possibly combined

with other outstanding commercial

paper may be refinanced with long-term

debt under currently approved issuance

authority. Vepco received authorization

to issue securities in an amount

sufficient to cover the costs of the

acquisition in an order from the Virginia

State Corporation Commission (PUF

000016, May 26, 2000), that was

registered with the Commission on June

8, 2000 (SEC File No. 333–38510).

Accordingly, all financings for the

acquisition will be accomplished in

compliance with rule 52.

Entergy Corporation, et al. (70–8899)

Entergy Corporation (‘‘Entergy’’), a

registered holding company, 639 Loyola

Avenue, New Orleans, Louisiana 70113,

and its retail public utility subsidiary

companies, Entergy Arkansas, Inc., 425

West Capitol Avenue, Little Rock,

Arkansas 72201, Entergy Gulf States,

Inc., 350 Pine Street, Beaumont, Texas

77701, Entergy Louisiana, Inc. 4809

Jefferson Highway, Jefferson Louisiana

70121, Entergy Mississippi, Inc.

(‘‘Mississippi’’), 308 East Pearl Street,

Jackson, Mississippi 39201, Entergy

New Orleans, Inc. (‘‘New Orleans’’),

1600 Perdido Building, New Orleans,

Louisiana 70112, as well as Entergy’s

service company subsidiary, Entergy

Services, Inc. (‘‘ESI’’), 639 Loyola

Avenue, New Orleans, Louisiana 70113,

System Energy Resources, Inc., a

generating public utility subsidiary

company of Entergy, Entergy

Operations, Inc., a nuclear management

public utility of Entergy, both located at

1340 Echelon Parkway, Jackson,

Mississippi 39213, and System Fuels,

Inc. (‘‘SFI’’), a nonutility subsidiary, 350

Pine Street, Beaumont, Texas 77701

(Mississippi, New Orleans, ESI and SFI,

collectively, ‘‘Applicants’’), have filed a

post-effective amendment to their

application-declaration under sections

6(a), 7, 9(a), 10, and 12(b) of the Act and

rules 43, 45 and 54 under the Act.

In Entergy Corp, et al., Holding Co.

Act Release No. 26617 (November 27,

1996) (‘‘1996 Order’’), the Commission,

among other things, authorized

Applicants to engage in short-term

borrowings through November 30, 2001

(‘‘Authorization Period’’) in the

following amounts: (1) $103 million for

Mississippi; (2) $35 million for New

Orleans; (3) $150 million for ESI; and (4)

$95 million for SFI 1

Applicants now request increases in

their short-term borrowing limits by the

following amounts: (1) $57 million, for

a total of $160 million for Mississippi;

(2) $35 million, for a total of $60 million

for New Orleans; (3) $50 million, for a

total of $200 million for ESI; and (4)

$105 million, for a total of $200 million

for SFI.

The short-term borrowings may take

the form of borrowings from the Entergy

intrasystem money (‘‘Money Pool’’) and

in the case of Mississippi and New

Orleans, issuance and sale of short term

notes and commercial paper to banks

and dealers in commercial paper. The

terms of the commercial paper, bank

borrowings, and Money Pool borrowings

will remain unchanged from the 1996

Order. Applicants request the proposed

increases because of increased fuel

costs, increased capital spending on

transmission and distribution facilities

to improve system reliability, and other

general corporate purposes.

Alliant Energy Corporation et al. (70–

9735)

Alliant Energy Corporation

(‘‘Alliant’’), a registered public utility

holding company and its wholly owned

utility subsidiaries, Wisconsin Power &

Light Company (‘‘WPL’’) and South

Beloit Water, Gas & Electric Company

(‘‘South Beloit’’), each with principal

executive offices N16 W23217 Stone

Ridge Drive, Waukesha, Wisconsin

53187, American Transmission

Company LLC (‘‘Transco’’), a Wisconsin

limited liability transmission utility

subsidiary company of WPL, and ATC

Management Inc., a Wisconsin

subsidiary corporation of WPL

(‘‘Corporate Manager’’, and together

with Alliant, WPL, South Beloit and

Transco, ‘‘Applicants’’), with principal

executive offices at 231 W. Michigan

Street, Milwaukee, Wisconsin 53203,

have filed a post-effective amendment

under sections 6(a), 7, 9(a), 10, and 12

of the Act and rules 43, 44, and 54

under the Act to an applicationdeclaration previously filed.

In the original application, filed on

September 25, 2000, Applicants sought

various grants of authority, including

authority to incur short-term debt under

a credit agreement between Transco and

Bank One, N.A., as agent (‘‘Credit

Facility’’) and through the sale of

commercial paper in an aggregate

amount not to exceed $125 million

outstanding at any time. Transco was

also authorized to incur long-term debt

consisting of debentures, bank

borrowing and other forms of long-term

financing. Transco was authorized to

issue short-term and long-term debt in

an aggregate amount not to exceed $400

million outstanding at any time.

Applicants were authorized to use the

proceeds from these financings for

‘‘general corporate purposes, including

working capital requirements, and to

fund construction spending to

undertake large scale capital

improvements to the Wisconsin

transmission system necessary to

maintain reliability.’’

Applicants now request that the

Commission expressly authorize them

to engage in the transactions set forth in

Section 3.10 of the Operating Agreement

of American Transmission Company

LLC.2 As contemplated by this

provision, Applicants intend to use the

proceeds from the issuance of the

securities authorized in the Order to

redeem Member Units from certain

Federal Register / Vol. 66, No. 38 / Monday, February 26, 2001 / Notices 11615

3O&R is a holding company for Rockland Electric

Company and Pike County Light & Power Company.

O&R is exempt by order under section 3(a)(2) of the

Act. See Rockland Light and Power Co., 1 S.E.C. 354

(1936) (Rockland Light and Power Company

subsequently became O&R); Consolidated Edison,

Inc., Holding Co. Act Release No. 27021 (May 13,

1999) (authorizing CEI’s acquisition of O&R and

continuation of O&R’s exemption under section

3(a)(2)).

4By order dated January 31, 2000, Northeast

Utilities, (Holding Co. Act Release No. 27127), the

Commission approved NU’s acquisition of YES.

YES is the holding company of Yankee Gas and is

currently claiming an exemption from registration

under section 3(a)(1) of the Act by rule 2.

5The Commission issued a notice of the Merger

Application on August 11, 2000 (‘‘Merger Notice’’).

See Consolidated Edison, Inc. and Northeast

Utilities, (Holding Co. Act Release No. 27211).

6A listing and description of the Nonutility

Subsidiaries may be found in the Merger Notice.

Members as described in Section 3.10 of

the Operating Agreement. Additionally,

WPL and South Beloit request authority

to sell the interests in Transco which

Transco seeks to redeem. The

redemption is designed to reduce the

amount of Transco’s equity

capitalization and will bring Transco’s

common equity ratio to approximately

fifty percent, which is more congruent

with industry standards than its current

100% ratio.

Consolidated Edison, Inc., et al. (70–

9711)

Consolidated Edison, Inc. (‘‘CEI’’), a

New York corporation and a public

utility holding company claiming

exemption from registration under

section 3(a)(1) by rule 2 under the Act,

and Consolidated Edison, Inc. (‘‘New

CEI’’), a Delaware corporation and a

wholly owned subsidiary of CEI, both

located at 4 Irving Place, New York,

New York 10003; CEI’s utility

subsidiaries, Consolidated Edison

Company of New York, Inc.

(‘‘CECONY’’), 4 Irving Place, New York,

New York 10003, Orange and Rockland

Utilities, Inc. (‘‘O&R’’),3 Rockland

Electric Company (‘‘RECO’’), and Pike

County Light & Power Company

(‘‘Pike’’), all located at 1 Blue Hill Plaza,

Pearl River, New York 10965; CEI’s

nonutility subsidiaries, Consolidated

Edison Solutions, Inc. and Consolidated

Edison Energy, Inc., both located at 701

Westchester Avenue, Suite 201 West,

White Plains, New York 10604,

Consolidated Edison Communications,

Inc., 132 West 31st Street, 13th Floor,

New York, New York 10001,

Consolidated Edison Development, Inc.

(‘‘CEDI’’), CED/SCS Newington, LLC,

CED Generation Holding Company,

LLC, CED Management Company, Inc.,

CED Operating Company, L.P.,

Consolidated Edison Energy

Massachusetts, Inc., CED–GTM, LLC,

CED Ada, Inc., Lakewood Cogeneration,

L.P., CED Lakewood, Inc., CED

Generation Lakewood Company, all

located at 111 Broadway, 16th Floor,

New York, New York 10006; Northeast

Utilities (‘‘NU’’), a registered public

utility holding company, 107 Selden

Street, Berlin, Connecticut 06037; NU’s

utility subsidiaries, Connecticut Light

and Power Company (‘‘CL&P’’), 107

Selden Street, Berlin, Connecticut

06037, Public Service Company of New

Hampshire (‘‘PSNH’’), North Atlantic

Energy Corporation (‘‘NAEC’’), both

located at 1000 Elm Street, Manchester,

New Hampshire 03105, Western

Massachusetts Electric Company

(‘‘WMECO’’), 174 Brush Hill Road, West

Springfield, Massachusetts 01089,

Holyoke Water Power Company

(‘‘HWP’’), 1 Canal Street, Holyoke,

Massachusetts 01040, and; NU’s

nonutility subsidiaries, Northeast

Utilities Service Company (‘‘NUSCO’’),

Northeast Nuclear Energy Company

(‘‘NNECO’’), NU Enterprises, Northeast

Generation Company (‘‘NGC’’),

Northeast Generation Services Company

(‘‘NGCS’’), Select Energy, Inc., Mode 1

Communications, Inc., The Rocky River

Realty Company, Select Energy Portland

Pipeline, Inc., and Charter Oak Energy,

each located at 107 Selden Street,

Berlin, Connecticut 06037, North

Atlantic Energy Services (‘‘NAESCO’’),

1000 Elm Street, Manchester, New

Hampshire 03105, The Quinnehtuck

Company, 174 Brush Hill Road, West

Springfield, Massachusetts 01089, HEC,

Inc., and Reeds Ferry, Inc., both located

at 24 Prime Parkway, Natick,

Massachusetts 01760; and Yankee

Energy System, Inc. (‘‘YES’’),4 a

subsidiary exempt gas utility holding

company of NU, 107 Selden Street,

Berlin, Connecticut 06037; YES’s utility

subsidiary, Yankee Gas Services

Company (‘‘Yankee Gas’’), 599 Research

Parkway, Meriden, Connecticut 06405;

YES’s nonutility subsidiaries, Yankee

Energy Financial Services Company and

NorConn Properties, Inc., both located

at 599 Research Parkway, Meriden,

Connecticut 06450, Yankee Energy

Services Company, 148 Norton Street,

P.O. Box 526 Milldale, Connecticut

06467, and R.M. Services, Inc. (‘‘RMS’’),

located at 639 Research Parkway,

Meriden, Connecticut 06450

(collectively, ‘‘Applicants’’) have filed

an application-declaration under

sections 6(a), 7, 9, 10, 12, 13, 32, and 33

of the Act and rules 42, 43, 44, 45, 53,

54, and 80–92 under the Act.

I. Background and Summary

CEI and NU have previously filed an

application-declaration (‘‘Merger

Application’’) 5 seeking approvals

related to the proposed merger of CEI

and NU (‘‘Merger’’). CEI, NU, New CEI,

and N Acquisition LLC, a Massachusetts

limited liability company, which is

directly and indirectly owned by New

CEI, have entered into an amended and

restated plan of merger dated as of

January 11, 2000 (‘‘Merger Agreement’’).

Under the Merger Agreement, CEI will

be merged with and into New CEI, with

New CEI being the surviving entity

(‘‘New CEI Merger’’), and NU will be

merged with N Acquisition, with NU

being the surviving entity (‘‘NU

Merger’’). Upon consummation of the

Merger, New CEI will own all of the

assets of CEI and NU will become a

wholly owned subsidiary of New CEI.

Applicants now request authority with

respect to financing in connection with

the Merger, ongoing financings, and

other matters pertaining to New CEI and

its subsidiaries after giving effect to the

Merger.

Upon completion of the Merger, New

CEI will wholly own, directly or

indirectly, interests in the following

twelve public utility companies: (1)

CECONY; (2) O&R; (3) RECO; (4) Pike;

(5) CL&P; (6) WMECO; (7) PSNH; (8)

NAEC; (9) HWP; (10) Holyoke Power

and Electric Company; (11) Yankee Gas;

and (12) NNECO (collectively, ‘‘Utility

Subsidiaries’’).

As explained more fully in the Merger

Application, New CEI has proposed to

retain O&R as a subsidiary exempt

holding company, NU as a subsidiary

registered holding company, and YES as

a subsidiary of NU and as an exempt

public utility holding company

(collectively, ‘‘Intermediate Holding

Companies’’).

Upon completion of the Merger, New

CEI will also own interests in four

companies owning nuclear power

plants: Maine Yankee Atomic Power Co.

(‘‘Maine Yankee’’), Yankee Atomic

Electric Company, (‘‘Yankee Atomic,’’)

Connecticut Yankee Atomic Power

Company (‘‘Connecticut Yankee’’), and

Connecticut and Vermont Yankee

Nuclear Power Company (‘‘Connecticut

and Vermont Yankee’’). Maine Yankee,

Yankee Atomic and Connecticut Yankee

have permanently shut down their

plants. Connecticut and Vermont

Yankee has contracted to sell its nuclear

power plant.

Additionally, upon completion of the

Merger, New CEI will own, directly or

indirectly, approximately 50 other

active nonutility subsidiary companies

(‘‘Nonutility Subsidiaries’’).6

Collectively, the Utility Subsidiaries,

the Intermediate Holding Companies

and the Nonutility Subsidiaries are

11616 Federal Register / Vol. 66, No. 38 / Monday, February 26, 2001 / Notices

7See Northeast Utilities, et al., Holding Co. Act

Release No. 27328 (Dec. 28, 2000).

8See Northeast Utilities, et al., Holding Co. Act

Release No. 27127 (Jan. 31, 2000).

9See Northeast Utilities, et al., Holding Co. Act

Release No. 27093 (Oct. 21, 1999).

referred to as the ‘‘Subsidiaries.’’ The

term ‘‘Subsidiaries’’ shall also include

entities that become subsidiaries of New

CEI after the consummation of the

Merger.

In summary, Applicants request

authority for a period through

September 30, 2004 (‘‘Authorization

Period’’), unless otherwise noted, for: (1)

New CEI to issue unsecured debt and

hybrid debt securities (‘‘Acquisition

Debt’’) and to refund and replace the

Acquisition Debt; (2) New CEI to issue

New CEI stock to NU shareholders; (3)

Applicants to maintain, amend, and/or

refinance existing financing

arrangements; (4) New CEI to engage in

external financing; (5) New CEI and NU

to engage in guaranties of other

Nonutility Subsidiaries; (6) the Utility

Subsidiaries and the Intermediate

Holding Companies to issue short-term

debt; (7) the Nonutilities to issue debt

and equity securities; (8) New CEI to

acquire financing subsidiaries; (9) New

CEI and the Subsidiaries to establish a

New CEI system money pool (‘‘Money

Pool’’); (10) New CEI to consolidate or

otherwise reorganize one or more of the

Nonutility Subsidiaries; (11) the

Nonutility Subsidiaries to pay

dividends to each subsidiaries’ direct

parent; (12) New CEI to form two

subsidiary service companies; (13)

certain Subsidiaries to provide sales and

services to certain other Subsidiaries

under an exemption from the at cost

requirements of section 13(b); (14)

Nonutility Subsidiaries to engage in

certain categories of energy-related

activities outside the United States; (15)

New CEI and certain of the Subsidiaries

to enter into hedging and derivative

transaction for existing and anticipated

debt; and (16) the allocation of

consolidated income tax liabilities

among New CEI and the Subsidiaries.

NU received Commission

authorization to issue up to $400

million in short-term debt through June

30, 2002 (‘‘NU Short-term Debt’’).7 New

CEI and NU request authorization for

NU to continue being able to issue the

NU Short-term Debt from time to time

through the Authorization Period. NU

also received Commission authorization

to issue up to $275 million in short- or

long-term debt for the purpose of

acquiring YES (the ‘‘YES Acquisition

Debt’’) through June 30, 2002.8 New CEI

and NU request authorization for NU to

amend, renew, extend, and/or replace

the YES Acquisition Debt through the

Authorization Period.

In addition, NU intends to continue to

provide guaranties and other forms of

credit support with respect to the

securities or other obligations (‘‘NU

Guaranties’’) of the nonutility

subsidiaries of NU in an aggregate

amount not to exceed $500 million, as

authorized through December 31, 2002.9

NU seeks authority to continue to be

able to issue NU Guaranties up to such

amount through the Authorization

Period.

New CEI requests authority to issue

and sell from time to time preferred

stock (‘‘Preferred Stock’’) of up to $750

million. New CEI also requests authority

to tissue secured or unsecured

indebtedness having maturities of one

year or less (‘‘Short-term Debt’’), and

secured or unsecured long-term debt

(‘‘Debentures’’) with an aggregate

principal amount at any time

outstanding (including debt incurred to

acquire NU, ‘‘Acquisition Debt’’) of not

more than $4.75 billion. New CEI

requests authority to issue Short-term

Debt and Debentures in place of NU’s

authorized Short-term Debt and YES

Acquisition Debt. If New CEI substitutes

the NU Short-term Debt and the YES

Acquisition Debt with New CEI

issuances, then New CEI’s aggregate

debt limit will increase to up to $5.245

billion (‘‘New CEI Debt Limit’’).

Applicants state that any New CEI shortor long-term debt that will be secured

debt will not be secured by shares of

stock or other securities or property of

the Utility Subsidiaries.

New CEI also requests authority to

provide guaranties and other forms of

credit support (‘‘New CEI Guaranties’’)

with respect to the securities or other

obligations of its Nonutility Subsidiaries

in an aggregate principal amount not to

exceed $2.5 billion at any one time

outstanding. New CEI also requests

authority to undertake an additional

$500 million of guaranties so that it may

assume any of the NU Guaranties it

deems necessary and appropriate to

acquire. As a result, the New CEI

Guaranties could aggregate up to $3.0

billion.

The Utility Subsidiaries and

Intermediate Holding Companies

request authority to issue, sell and have

outstanding at any time Short-term Debt

in the following aggregate principal

amounts: CECONY, $800 million; O&R,

$113 million; Pike, $2 million; RECO,

$60 million; CL&P, $375 million;

WMECO, $250 million; PSNH, $225

million; NAEC, $260 million; Yankee

Gas, $100 million; HWP, $5 million;

NNECO, $75 million; NU, $400 million;

and YES, $50 million.

Applicants propose that the requested

financings will be subject to the limits

set forth in the paragraphs above and

the following limitations (collectively,

‘‘Financing Conditions’’), unless

otherwise indicated: (1) The cost of

money relative to the requested Shortterm financing shall not exceed 500

basis points over LIBOR for comparable

short term or variable rate debt; (2) the

effective cost of money on long-term

debt will not exceed at issuance 500

basis points over comparable term U.S.

Treasury Securities; (3) the maturity of

the debt will not exceed 50 years from

date of issuance; (4) New CEI will only

issue long-term debt that is at the

investment grade level; (5) New CEI’s

common stock equity will be at least

30% of its consolidated capitalization;

(6) the common stock equity of NU and

each of the Utility Subsidiaries will be

at least 30% of the total capitalization,

except that under certain circumstances

set forth in Northeast Utilities, et al.,

Holding Co. Act Release No. 27147

(March 7, 2000), NU’s consolidated

common equity ratio, and the common

equity ratios of the NU’s utility

subsidiaries may decline below 30%; (7)

NU’s consolidated common equity ratio

will be restored above 30% prior to

December 31, 2002; and (8) the

underwriting fees, commissions, or

other similar remuneration paid in

connection with the non-competitive

issue, sale or distribution of a security

under authority granted to this

application-declaration will not exceed

5% of the principal amount of the

financing.

The proceeds from the financings will

be used for general corporate purposes,

including: (1) The refunding of the

Acquisition Debt and the YES

Acquisition Debt; (2) the financing, in

part, of investments made by and capital

expenditures of New CEI and its

Subsidiaries, including, the funding of

future investments in exempt wholesale

generators (‘‘EWGs’’), foreign utility

companies (‘‘FUCOs’’), subsidiaries that

engage in nonutility businesses

permitted by rule 58 under the Act

(‘‘Rule 58 Subsidiaries’’), and exempt

telecommunications companies

(‘‘ETCs’’); (3) the repayment,

redemption, refunding or purchase by

New CEI or any Subsidiary of any of its

own securities by non-affiliates under

rule 42; and (4) financing working

capital requirements of New CEI and its

Subsidiaries.

Federal Register / Vol. 66, No. 38 / Monday, February 26, 2001 / Notices 11617

10Any CEI common shares held by CEI as

treasury shares or owned by New CEI will be

canceled without payment for those shares.

11See the Merger Application and its notice

(Holding Co. Act Release No. 27211) for a more

detailed description of the exchange ratio.

12These are described in Appendix A to the

notice. 13Within 90 days following completion of the

Merger, New CEI will, under rule 24, notify the

Commission of all financing arrangements that CEI

entered into prior to the Merger, that will remain

in effect upon closing of the Merger and that New

CEI will assume.

14New CEI requests that this number be adjusted

to reflect any stock split.

15See Appendix A to this notice for a discussion

of these guarantees.

II. Merger Financing and Outstanding

CEI Financing

A. Securities Issued in Connection With

the Merger

New CEI is authorized under its

Amended and Restated Certificate of

Incorporation to issue 510,000,000

shares consisting of 500,000,000 shares

of common stock, par value $.10 per

share (‘‘Common Stock’’) and

10,000,000 shares of preferred stock, par

value $.01 per share (‘‘Preferred Stock’’).

The Merger Agreement provides that

each CEI common share outstanding

immediately prior to closing of the

Merger will, at closing, be converted

into one share of New CEI common

stock.10 NU common shareholders may

elect to receive, in connection with the

Merger, a fraction of a share of New CEI

stock or cash.11 The election for the

stock or cash consideration will be

subject to allocation procedures.

Accordingly, New CEI will incur debt to

finance cash payments to NU

shareholders who elect the cash

consideration.

New CEI anticipates that the cash

portion of the consideration given for

the NU shares will initially be financed

through New CEI’s issuance of

approximately $2.2 billion of unsecured

debt or a mix of unsecured debt and

hybrid debt securities, the Acquisition

Debt, or a combination of the

Acquisition Debt and Preferred Stock

and cash on hand. The hybrid

securities, which are considered debt for

financial statement purposes, would be

structured to have characteristics of

both debt and equity and may have

maturities ranging up to 50 years. New

CEI requests authorization to issue

Acquisition Debt from time to time

through the Authorization Period to

satisfy the cash portion of the

consideration in connection with the

NU Merger and to refund and replace

any and all Acquisition Debt initially

issued. The application states that the

Acquisition Debt may include short or

long term notes, debentures, mediumterm notes and hybrid securities and/or

borrowings from banks and other

financial institutions. Any long-term

debt security will have the designations,

aggregate principal amounts, maturities,

interest rate(s) or methods of

determining the same, terms of payment

of interest, redemption provisions, nonrefunding provisions, sinking fund

terms and other terms and conditions

that will be established by negotiation

or competitive bidding. The proposed

issuance and/or refunding and replacing

the Acquisition Debt will be subject to

the Financing Conditions.

New CEI also requests authority to

issue up to 60 million shares of its

Common Stock to NU shareholders to

satisfy the stock portion of the Merger

consideration.

B. Other Outstanding Securities and

Obligations of CEI

Applicants request authorization, to

the extent not exempt under rule 52, to

maintain in effect through the

Authorization Period existing financing

arrangements of CEI and the

Subsidiaries as of the date of the

completion of the Merger,12 as well as

any additional financing arrangements

entered into before completion of the

Merger,13 and to enter into Refinancing.

Any Refinancing that occurs after

completion of the Merger and that is

subject to Commission approval under

the Act will comply with the Financing

Conditions.

III. Requested and Other Transactions

After the Merger

A. Preferred Stock and Long-Term Debt

New CEI requests authority to issue

and sell from time to time up to $750

million of Preferred Stock subject to the

Financing Conditions.

New CEI requests authority to issue

and sell from time to time Debentures,

subject to the Financing Conditions.

B. Short-Term Debt

New CEI requests authority to issue

and sell from time to time unsecured

indebtedness having maturities of one

year or less (‘‘Short-term Debt’’), subject

to the Financing Conditions.

C. Common Stock

New CEI proposes during the

Authorization Period to issue and/or

acquire up to 50 million shares 14 of new

CEI Common Stock under New CEI’s

dividend reinvestment and cash

payment plan, certain incentive

compensation plans and certain other

employee benefit plans and

employment or other agreements, as

described below.

Both CEI and NU also currently

maintain dividend reinvestment plans

with a direct stock purchase feature.

New CEI will have a similar plan (‘‘New

CEI DRIP’’). Participants in the current

CEI and NU plans will be eligible to

become participants in the New CEI

DRIP.

CEI and NU currently maintain

employee stock option plans. NU also

maintains an incentive compensation

plan under which stock options and

restricted shares may be granted. Upon

completion of the Merger, New CEI will

assume the CEI and NU stock option

plans and each outstanding CEI and NU

stock option issued under the various

CEI and NU plans. It is currently

anticipated that prior to the Merger, CEI

will adjust its employee stock options to

provide that the options will constitute

options to acquire shares of New CEI

common stock, on the same terms and

conditions as apply to the CEI stock

options. Prior to the Merger NU will

adjust the terms of all outstanding NU

employee stock options to provide that

the options will constitute options to

acquire, on the same terms and

conditions as apply to the NU employee

stock options, the same number of

shares of New CEI common stock

(rounded down to the nearest whole

share) as the holder of the option would

have received in the NU Merger had the

holder exercised the option in full

immediately prior to the NU Merger.

The amount of the exercise price per

share of New CEI common stock

(rounded to the nearest cent) under any

option will be equal to the aggregate

amount of the exercise price of the NU

common shares subject to the NU option

divided by the total number of shares of

New CEI common stock to be subject to

the option.

Both CEI and NU maintain various

stock plans for employees and directors,

including investments in company stock

through the employee’s 401(k) plan.

New CEI has not yet decided what

specific plans will be maintained for

employees or directors subsequent to

the Merger.

In addition, CEI, prior to the Merger,

or New CEI, subsequent to the Merger,

may enter into employment or other

agreements with certain of its officers

and employees that may provide for

grants of stock options and/or restricted

stock or units, which would be satisfied

through open market purchases.

D. Guaranties

In addition to New CEI’s request to

maintain in place existing guaranties at

the time of the Merger,15 New CEI

requests authorization for the period

11618 Federal Register / Vol. 66, No. 38 / Monday, February 26, 2001 / Notices

16PSNH and NAEC only seek short-term debt

authorization for amounts up to 10% of each

company’s respective net fixed plant. Short-term

debt in excess of such amount requires approval of

the New Hampshire Public Utility Commission

(‘‘NHPUC’’).

17Consolidated Edison, Inc. Service Company

and any FUCO subsidiary of New CEI will not be

participants in the Money Pool.

from and after the Merger through the

Authorization Period to provide

additional guaranties or other credit

support for the Nonutility Subsidiaries

(‘‘New CEI Guaranties’’) within the

parameters of the Financing Conditions.

E. Utility Subsidiary and Intermediate

Holding Companies Financing

The Utility Subsidiaries and

Intermediate Holding Companies

request authority to issue, sell and have

outstanding at any time Short-term Debt

in the following aggregate principal

amounts: CECONY, $800 million; O&R,

$113 million; Pike, $2 million; RECO,

$60 million; CL&P, $375 million;

WMECO, $250 million; PSNH, $225

million; NAEC, $260 million; Yankee

Gas, $100 million; HWP, $5 million;

NNECO, $75 million; NU, $400 million;

and YES, $50 million (collectively,

‘‘Utility Short-term Debt Limits’’),

subject to the Financing Conditions.16

The parent of a Financing Subsidiary

may, if required, guarantee or enter into

support or expense agreements in

respect of the obligations of its

Financing Subsidiaries. Any amounts

issued by a Financing Subsidiary to

third parties will be included in the

proposed financing limit, if any,

applicable to its immediate parent.

However, if a parent guarantees these

issuances by the Financing Subsidiary,

the guaranties would not be counted

against the proposed limits on New CEI

Guaranties of NU Guaranties. In other

cases, in which the parent company is

not authorized to issue similar types of

securities, the amount of any guaranty

not exempt under rules 45(b)(7) and 52

that the parent company enters into

with respect to securities that its

Financing Subsidiary issues will be

counted against the limitation on New

CEI Guaranties of NU Guaranties.

G. New CEI Money Pool

New CEI and the Subsidiaries (‘‘Pool

Participants’’) 17 request authorization to

establish a Money Pool. Applicants

propose that the Money Pool will

principally consist of surplus funds in

the treasury of Pool Participants,

including New CEI (‘‘Internal Funds’’).

A Pool Participant’s chief financial

officer or treasurer, or a designee, will

determine on the basis of cash flow

projections and other relevant factors,

whether a Pool Participant at any time

has surplus funds to lend to the Money

Pool. Borrowings from the Money Pool

would also require the authorization of

the borrower’s chief financial officer or

treasurer, or a designee. The funds

available to the Money Pool will be

loaned on a short-term basis to those

Subsidiaries, other than any public

utility holding company, EWG, FUCO,

or ETC (collectively, ‘‘Nonborrowing

Companies’’). No loans or borrowings

through the Money Pool would be made

to the Nonborrowing Companies. Under

Massachusetts law, WMECO may not

invest in its affiliates through the money

pool without specific Massachusetts

Department of Telecommunication and

Energy approval. The Applicants

request that the Commission authorize

the participation of WMECO in the

Money Pool, but reserve jurisdiction

over any contributions of funds by

WMECO to the Money Pool, pending

completion of the record.

Applicants propose that Consolidated

Edison, Inc. Service Company

(‘‘CEISCO’’) administer and maintain

the Money Pool at cost and under the

direction of an officer in the CEISCO

Treasury Organization.

In addition to surplus funds, New CEI

proposes to borrow funds through the

issuance of short-term notes, selling of

commercial paper, or through other

borrowings (collectively, ‘‘External

Funds’’) as a source of funds for making

loans or open account advances to

certain of its Subsidiaries through the

Money Pool. These borrowings will be

subject to the proposed New CEI Shortterm debt limits. The Pool Participants,

excluding the Nonborrowing

Companies, are the potential recipients

of the open account advances.

The aggregate outstanding amount of

borrowings that each Utility subsidiary

may incur will count against the

proposed Utility Short-term Debt Limits.

Applicants request that, to the extent

borrowings from the Money Pool by the

Nonutility Subsidiaries are not exempt

under rule 52, there be no limitation on

the borrowings of the Nonutility

Subsidiaries.

Applicants state that they anticipate

that the short-term borrowing

requirements of the Subsidiaries (other

than the Nonborrowing Companies) will

be met first with the proceeds of

borrowings available through the Money

Pool, and thereafter, with the proceeds

of external short-term borrowings. Pool

Participants that do not have access to

the commercial paper market will have

priority over other Money Pool

borrowers. No Pool Participant would

be required to borrow through the

Money Pool if it is determined that it

could effect a borrowing at a lower cost

directly through banks or through the

sale of its own commercial paper. All

borrowings from and contributions to

the Money Pool, including the open

account advances, will be documented

and will be evidenced on the books of

each Participant that is borrowing from

or contributing surplus funds to the

Money Pool. Any Participant

contributing funds to the Money Pool

may withdraw those funds at any time

without notice to satisfy its daily need

for funds. Loans made by the Pool will

be open account advances for periods of

less than twelve months, although the

agent may receive upon demand a

promissory note evidencing the

transaction. All loans made by the

Money Pool from surplus funds are

payable on demand by the agent. The

interest rate applicable to the loans of

External Funds would be equal to New

CEI’s cost for those External Funds.

These loans cannot be prepaid unless

New CEI is made whole for any

additional costs that may be incurred

because of such prepayment. Applicants

propose that New CEI be fully

reimbursed for all costs that it incurs in

relation to loans made to the other Pool

Participants.

Funds not required by the Money

Pool to make loans (with the exception

of funds not required by the Money

Pool’s liquidity requirements) would

ordinarily be invested in one of more

short-term investments, including: (1)

Interest-bearing accounts with banks; (2)

obligations issued or guaranteed by the

U.S. government and/or its agencies and

instrumentalities, including obligations

under repurchase agreements; (3)

obligations issued or guaranteed by any

state or political subdivision of the state,

provide the obligations are not rated less

than ‘‘A,’’ ‘‘A–1’’ or ‘‘P–1’’ or their

equivalent by a nationally recognized

rating agency; (4) commercial paper

rated not less than ‘‘A–1’’ or ‘‘P–1’’ or

their equivalent by a nationally

recognized rating agency; (5) money

market funds; (6) bank certificates of

deposit; (7) Eurodollar funds; or (8) such

other investments as are permitted by

section 9(c) of the Act and rule 40 under

the Act, and, with respect to

contributions from WMECO, approved

by the Massachusetts Department of

Telecommunications and Energy.

Applicants proposed that CEISCO, as

agent for the Money Pool, will invest the

funds not required by the Money Pool

to make loans as described above and

allocate the earnings on the investments

among the Pool Participants that

provided the excess funds on a pro rata

Federal Register / Vol. 66, No. 38 / Monday, February 26, 2001 / Notices 11619

18See Northeast Utilities, et al., Holding Co. Act

Release No. 27147 (March 7, 2000).

19Applicants state that New CEI is setting up two

service companies in accordance with the order of

the NHPUC. See NHPUC Order No. 23,594, Docket

No. DE 00–009, Dec. 6, 2000, slip op. at 117.

20 In addition, New CEI requests that the

Commission find that the application-declaration is

deemed to constitute a filing by CEISCO and

Nonutility ServCo on Form U–13–1 for purposes of

rule 88 under the Act, or, alternatively, that the

filing on Form U–13–1 is not necessary under the

Act.

21This request does not include NGSC’s proposal

to provide services to NGC at other than cost, which

is a subject of S.E.C. file No. 70–9543.

basis, according to the amount of funds

a subsidiary provided.

H. Consolidation and Reorganization of

Nonutility Subsidiaries

New CEI’s nonutility businesses will

be conducted principally through

Nonutility Holding Company, a new

wholly owned subsidiary of New CEI.

The Nonutility Subsidiaries are

principally involved in energy-related

and telecommunications businesses.

New CEI requests authorization under

the Act to consolidate or otherwise

reorganize, under one or more new or

existing subsidiaries, New CEI’s

ownership interests in one or more

Nonutility Subsidiaries not currently

owned, directly or indirectly, by a

utility company, or sell the equity

securities of one or more Nonutility

Subsidiaries to a new or existing

subsidiary. Alternatively, a Nonutility

Subsidiary could dividend the securities

of one or more Nonutility Subsidiaries

to a new or existing subsidiary. To the

extent that such transactions are not

exempt under the Act or otherwise

authorized or permitted by rule under

the Act, New CEI requests authorization

to consolidate or otherwise reorganize,

under one or more new or existing

subsidiaries, New CEI’s ownership

interests in one or more of Nonutility

Subsidiaries that are not currently

owned directly or indirectly, by a utility

company, the acquisition of the

securities of which is exempt from

Commission approval under the Act.

I. Payment of Dividends

New CEI requests authorization on

behalf of CEI’s current and New CEI’s

future nonexempt Nonutility

Subsidiaries (other than Nonutility

Subsidiaries that are subsidiaries of

public utility companies) to pay

dividends to each subsidiaries’ direct

parent with respect to the securities of

the companies, from time to time

through the Authorization Period, out of

capital and unearned surplus.

NU has already been granted

authority for certain of its utilities and

nonutilities to pay dividends out of

capital or unearned surplus.18 The

Applicants request that this authority

remain in effect after the Merger, but

only through the Authorization Period.

J. Establishment of Service Companies;

Service Agreements; Sales and Services

New CEI intends to form two

subsidiary service companies to perform

services for the companies in the New

CEI System.19 Subsequent to the Merger,

New CEI seeks approval for NU to

transfer to New CEI, through sale at

book value, all the stock of NUSCO,

which will be renamed CEISCO.

Additionally, prior to the closing of the

Merger, New CEI will establish one new

subsidiary service company, Nonutility

ServCo. CEISCO will be a direct

subsidiary of New CEI and Nonutility

ServCo will be a direct subsidiary of the

proposed Nonutility Holding Company.

Initially, Nonutility Holding Company

will issue 1000 shares of common stock,

at no or nominal par value, all of which

will be subscribed to by New CEI at a

price of $1 per share. CEISCO and

Nonutility ServCo will, subsequent to

the Merger, assume from CECONY, O&R

and NUSCO, all of the service functions

currently performed for affiliates by

CECONY, O&R, and NUSCO.20

Applicants request, however, a

transition period of fifteen months from

the date of the order issued in this filing

to study and effectuate these changes.

Upon closing of the Merger, New CEI

and the Subsidiaries (including the

Nonutility Subsidiaries) propose to

enter into a new single system wide

Service Agreement with CEISCO. The

Nonutility Subsidiaries also propose to

enter into a Nonutility Service

Agreement with Nonutility ServCo.

CEISCO will provide a variety of

administrative, management, and

support services. The Applicants state

that CEISCO’s accounting and cost

allocation methods will comply with

Commission standards for service

companies in a registered holding

company system, and that its billing

system will follow the Commission’s

Uniform System of Accounts for Mutual

Service Companies and Subsidiary

Service Companies. Additionally,

charges for all services provided by

CEISCO to affiliated companies will be

performed on an ‘‘at cost’’ basis in

accordance with rules 90 and 91.

Nonutility ServCo will provide

specified competitive services to the

Nonutility Subsidiaries, which will

include: employee recruiting,

engineering, hedging and financial

derivatives and arbitrage services,

electric purchasing for resale,

purchasing of electric transmission,

system operations and marketing.

New CEI also seeks approval for O&R

to provide services at cost to Pike and

RECO.

Nonutility ServCo and the Nonutility

Subsidiaries propose to provide services

to each other at cost or fair market

prices. Therefore, they request an

exemption from section 13(b) of the Act

from the ‘‘at cost’’ requirements of Rules

90 and 91 under the Act. Accordingly,

the Nonutility Subsidiaries 21 request

authorization to provide services to each

other at other than cost, provided that

no services will be rendered to an

associate power project unless one or

more of the following conditions is

satisfied: (1) The project is a FUCO or

an EWG which derives no part of its

income, directly or indirectly, from the

generation, transmission, or distribution

of electric energy for sale within the

United States; (2) the project is an EWG

which sells electricity at market-based

rates which have been approved by the

Federal Energy Regulatory Commission

(‘‘FERC’’), provided that the purchaser

is not one of the Utility Subsidiaries; (3)

the project is a ‘‘qualifying facility’’

(‘‘QF’’) within the meaning of the Public

Utility Regulatory Policies Act of 1978,

as amended (‘‘PURPA’’) that sells

electricity exclusively (a) at rates

negotiated at arms’-length to one or

more industrial or commercial

customers purchasing such electricity

for their own use and not for resale,

and/or (b) to an electric utility company

(other than a Utility Subsidiary) at the

purchaser’s ‘‘avoided cost’’ as

determined in accordance with the

regulations under PURPA; (4) the

project is a domestic EWG or QF that

sells electricity at rates based upon its

cost of service, as approved by FERC or

any state public utility commission

having jurisdiction, providing that the

purchaser of the electricity is not one of

the Utility Subsidiaries; or (5) the

project is a Rule 58 Subsidiary or any

other Nonutility Subsidiary that (a) is

partially-owned by New CEI, provided

that the ultimate purchaser of such

goods or services is not a Utility

Subsidiary (or any other entity that New

CEI may form whose activities and

operations are primarily related to the

provisions of goods and services to the

Utility Subsidiaries), (b) is engaged

solely in the business of developing,

owning, operating and/or providing

services or goods to Nonutility

Subsidiaries described in clauses (1)

through (4) immediately above, or (c)

does not derive, directly or indirectly,

any material part of its income from

11620 Federal Register / Vol. 66, No. 38 / Monday, February 26, 2001 / Notices

22Applicants state that they believe that this

credit facility will be extended or renegotiated as

well.

sources within the United States and is

not a public-utility company operating

within the United States.

K. Activities of Rule 58 Subsidiaries

Outside the United States

New CEI, on behalf of any current or

future Nonutility Subsidiaries, requests

authority to engage in the type of

business activities listed in rule 58

outside of the United States. These

activities would include: (1) The

brokering and marketing of electricity,

natural gas and other energy

commodities (‘‘Energy Marketing’’); (2)

energy management services (‘‘Energy

Management Services’’) including the

marketing, sale, installation, operation

and maintenance of various products

and services related to energy

management and demand-side

management; and (3) engineering,

consulting and other technical support

services (‘‘Consulting Serivces’’) with

respect to energy-related businesses and

for individuals.

New CEI requests that the

Commission: (1) Authorize Nonutility

Subsidiaries to engage in Energy

Marketing Activities in Canada and

reserve jurisdiction over Energy

Marketing activities outside the United

States and Canada, pending completion

of the record; and (2) authorize

Nonutility Subsidiaries to provide

Energy Management Services and

Consulting Services anywhere outside

the United States.

L. Hedging and Derivative Transactions

New CEI, and to the extent not

exempt under rule 52, the Subsidiaries,

request authorization to enter into

interest rate hedging transactions with

respect to outstanding indebtedness

(‘‘Interest Rate Hedges’’), subject to

certain limitations and restrictions, in

order to reduce or manage interest rate

costs. Interest Rate Hedges would only

be entered into with counterparties

(‘‘Approved Counterparties’’) whose

senior debt ratings, or the senior debt

ratings of the parent companies of the

counterparties, as published by

Standard and Poor’s, are equal to or

greater than BBB-, or an equivalent

rating from Moody’s Investors Service,

Fitch Investor Service or Duff and

Phelps.

Interest Rate Hedges will involve the

use of financial instruments commonly

used in today’s capital markets, such as

interest rate swaps, caps, collars, floors,

and structured notes (i.e., a debt

instrument in which the principal and/

or interest payments are indirectly

linked to the value of an underlying

asset or index), or transactions involving

the purchase or sale, including short

sales, of U.S. Treasury obligations.

In addition, New CEI and the

Subsidiaries request authorization to

enter into interest rate derivative

transactions with respect to anticipated

debt offerings (‘‘Anticipatory

Derivatives’’), subject to certain

limitations and restrictions.

Anticipatory Derivatives would only be

entered into with Approved

Counterparties, and would be utilized to

fix and/or limit the interest rate risk

associated with any new issuance

through (1) a forward sale of exchangetraded U.S. Treasury futures contracts,

U.S. Treasury obligations and/or a

forward swap (each a ‘‘Forward Sale’’),

(2) the purchase of put options on U.S.

Treasury obligations (a ‘‘Put Options

Purchase’’), (3) a Put Options Purchase

in combination with the sale of call

options on U.S. Treasury obligations (a

‘‘Zero Cost Collar’’), (4) transactions

involving the purchase or sale,

including short sales, of U.S. Treasury

obligations, or (5) some combination of

a Forward Sale, Put Options Purchase,

Zero Cost Collar and/or other derivative

or cash transactions, including, but not

limited to structured notes, caps and

collars, appropriate for the Anticipatory

Derivatives.

M. Tax Allocation Agreement

Applicants request approval of an

agreement for the allocation of

consolidated tax among New CEI and

the Subsidiaries (‘‘Tax Allocation

Agreement’’). Applicants state that they

require this approval because the

proposed Tax Allocation Agreement

may provide for the retention by New

CEI of certain payments for tax losses

incurred from time to time, rather than

the allocation of such losses to

Subsidiaries without payment as would

otherwise be required by rule 45(c)(5).

As a result of the Merger, New CEI will

be creating tax credits that are nonrecourse to the Subsidiaries. New CEI

believes that it should retain the

benefits of those tax credits. Applicants

request that the Commission reserve

jurisdiction over the Tax Allocation

Agreement, pending completion of the

record.

Appendix A

Outstanding Financing

CEI Debt and Guaranties

CEI currently maintains two revolving

credit agreements. The first is a $175 million

facility with seven major banks, which

terminates on December 3, 2003. The second

is a $175 million facility with thirteen major

banks, which terminates on November 28,

2001 (collectively, ‘‘CEI Credit Facility’’). CEI

may borrow directly against these facilities or

use them to support the issuance of

commercial paper, which is sold through

dealers to the market, at a discount from par.

In addition to the financing facilities

described above, CEI also currently supports

the operations of its nonutility subsidiaries

through capital contributions, guarantees and

other support arrangements. As of December

31, 2000, CEI had approximately $700

million of guaranties, which guarantee

payment and performance obligations of the

Nonutility Subsidiaries under various

agreements.

CEI may also borrow funds from Hawkeye

Funding (‘‘Hawkeye’’). Hawkeye is a limited

partnership and is the lessor on a synthetic

lease of a generating station which is

currently under construction. This station

will be leased to Newington, LLC

(‘‘Newington’’), an indirect subsidiary of CEI.

Intermediate Holding Companies and the

Utility Subsidiaries

CECONY maintains two revolving credit

agreements. The first is a $375 million

facility with eight major banks that

terminates December 23, 2002. The second is

a $125 million facility with thirteen major

banks that terminates on November 28, 2001.

O&R maintains a $100 million facility with

thirteen major banks that terminates on

November 28, 2001.22 CECONY and O&R

may borrow directly against these facilities or

may use them to support the issuance of

commercial paper, which is sold through

dealers to the market, at discount from par.

These facilities do not include letters of

credit supporting CECONY and O&R taxexempt debt.

NU maintains a short-term Credit

Agreement dated as of November 17, 2000

(‘‘NU Credit Agreement’’), among NU and

several banks with the United Bank of

California as Administrative Agent. The NU

Credit Agreement provides a credit facility of

up to $400 million comprised of borrowing

commitments and letter of credit

commitments. The NU Credit Agreement has

a termination date of November 16, 2001.

NU also maintains a short-term credit

facility in the amount of $266 million for the

YES Acquisition Debt, which terminates

February 28, 2001.

Also outstanding is a short-term Credit

Agreement dated as of November 17, 2000

(‘‘Regulated Credit

Federal Register / Vol. 66, No. 38 / Monday, February 26, 2001 / Notices 11621

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

2 17 CFR 240.19b–4.

3See Securities Exchange Act Release No. 43204

(August 24, 2000), 65 FR 53065 (August 31, 2000)

(SR–CHX–00–22).

4The Exchange notes that following approval of

the pilot rule changes, which included changes to

the Exchange’s then-current price improvement

programs, the Commission approved the Exchange’s

proposed new price improvement program, called

SuperMAX 2000, which is a voluntary price

improvement program that will govern price

improvement of all orders for issues trading in

decimal price increments. See Securities Exchange

Act Release No. 43742 (December 19, 2000) 65 FR

83119 (December 29, 2000) (SR–CHX–00–37).

Because SuperMAX 2000 is intended to replace the

Exchange’s previous price improvement programs,

the Exchange is not requesting an extension of the

pilot rule changes that dealt with price

improvement.

5This proposal does not concern ‘‘typographical’’

amendments to CHX rules, where the sole change

that was proposed by the Exchange was the

substitution of a decimal price increment for the

fractional price increment set forth in certain CHX

rules. Those amendments were the subject of a

separate submission previously approved by the

Commission on a permanent basis. See Securities

Exchange Act Release No. 43256 (September 6,

2000), 65 FR 55659 (September 14, 2000) (SR–CHX–

00–25).

Agreement’’), among CL&P and WMECO on

the one hand and several banks with

Citibank, N.A. as Administrative Agent on

the other. The Regulated Credit Agreement

provides a credit facility of up to $500

million comprised of borrowing

commitments. The Regulated Credit

Agreement has a termination date of

November 16, 2001.

On November 9, 2000, NAEC entered into

an unsecured $200 million 364-day Term

Credit Agreement with four banks, which

was approved by the NHPUC.

Yankee Gas currently has a revolving line

of credit of $60 million, which terminates

November 16, 2001.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–4651 Filed 2–23–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

Sunshine Act Meeting

Notice is hereby given, pursuant to

the provisions of the Government in the

Sunshine Act, Pub. L. 94–409, that the

Securities and Exchange Commission

will hold the following meeting during

the week of February 26, 2001.

A closed meeting will be held on

Thursday, March 1, 2001, at 2:30 p.m.

Commissioners, Counsel to the

Commissioners, the Secretary to the

Commission, and recording secretaries

will attend the closed meeting. Certain

staff members who have an interest in

the matters may also be present.

The General Counsel of the

Commission, or his designee, has

certified that, in his opinion, one or

more of the exemptions set forth in 5

U.S.C. 552b(c)(4), (8), (9)(A), and (10)

and 17 CFR 200.402(a)(4), (8), (9)(A) and

(10), permit consideration of the

scheduled matters at the closed meeting.

The subject matters of the closed

meeting will be:

institution and settlement of injunctive

actions; and

institution and settlement of

administrative proceedings of an

enforcement nature.

At times, changes in Commission

priorities require alterations in the

scheduling of meeting items. For further

information and to ascertain what, if

any, matters have been added, deleted

or postponed, please contact:

The Office of the Secretary at (202)

942–7070.

Dated: February 22, 2001.

Jonathan G. Katz,

Secretary.

[FR Doc. 01–4747 Filed 2–22–01; 12:17 pm]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43974; File No. SR–CHX–

01–03]

Self-Regulatory Organizations; Notice

of Filing and Order Granting

Accelerated Approval of a Proposed

Rule Change by the Chicago Stock

Exchange, Incorporated Extending

Pilot Rules Relating to the Securities

Industry Transition to Decimal Pricing

February 16, 3001.

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 January

19, 2001, the Chicago Stock Exchange,

Incorporated (‘‘CHX’’ or ‘‘Exchange’’)

filed with the Securities and Exchange

Commission (‘‘Commission’’) the

proposed rule change, as described in

Items I and II below, which Items have

been prepared by the CHX. The

Commission is publishing this notice to

solicit comments on the proposed rule

change from interested persons and to

approve the proposed rule change on an

accelerated basis.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Exchange proposes to extend,

through July 9, 2001, pilot rule changes

amending certain CHX rules that have

been impacted by the securities industry

transition to decimal pricing.

Specifically, the pilot rule changes

amend portions of Article XX, Rule 37.

The pilot currently is due to expire on

February 28, 2001. The text of the

proposed rule change is available at the

Commission and the CHX.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission, the

CHX included statements concerning

the purpose of, and basis for, the

proposed rule change and discussed any

comments it received regarding the

proposed rule change. The text of these

statements may be examined at the

places specified in Item IV below. The

CHX 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

On August 24, 2000, the Commission

approved, on a pilot basis through

February 28, 2001, rule changes

amending certain CHX rules that were

impacted by the securities industry

transition to decimal pricing.3 The

Exchange proposes to extend the current

pilot through July 9, 2001.4

The Exchange proposes continued

pilot approval of three groups of

changes to Article XX, Rule 37, which

would: (1) Allow specialists to elect, on

an issue by issue basis, to either

manually or automatically execute limit

orders when a trade-through occurs in

the primary market; (2) remove the

‘‘pending auto-stop’’ functionality in the

Exchange’s systems; and (3) allow a

specialist, on an issue by issue basis, to

establish an auto execution guarantee

that is not dependent on the ITS Best

Bid or Offer (‘‘ITS BBO’’) or National

Best Bid or Offer (‘‘NBBO’’) size. The

Exchange believes that decimal pricing

is likely to continue to affect the CHX

trading environment, and the

interaction between the CHX and the

national market system, in a manner

that necessitates extension of these pilot

rule amendments, which are designed to

minimize any adverse impacts of

decimalization on trading operations.5

Manual or automatic execution of

limit orders when a trade-through