Document ID: SEC-2005-0028-0001
Agency: sec
Document Type: Notice
Title: Public Utility Holding Company Act of 1935 filings
Posted Date: 2005-09-28T04:00Z

[Federal Register: September 28, 2005 (Volume 70, Number 187)]
[Notices]               
[Page 56751-56754]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28se05-203]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-28034]

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

September 21, 2005.
    Notice is hereby given that the following filing has been made with 
the Commission pursuant to provisions of the Act and rules promulgated 
under the Act. All interested persons are referred to the Declaration 
for complete statements of the proposed transactions summarized below. 
The Declaration and any amendments are available for public inspection 
through the Commission's Branch of Public Reference.
    Interested persons wishing to comment or request a hearing on the 
Declaration should submit their views in writing by October 17, 2005, 
to the Secretary, Securities and Exchange Commission, Washington, DC 
20549-0609, and serve a copy on the declarants at the addresses 
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 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 this matter. After October 17, 2005, the Declaration, as 
filed or as amended, may be granted or/or permitted to become 
effective.

Northeast Utilities, et al. (70-10315)

    Northeast Utilities (``NU''), a public utility holding company 
registered under the Act, located at One Federal Street, Springfield 
Massachusetts, 01105; has filed a Declaration seeking authorization 
under sections 6(a) and 7 of the Act and rules 53 and 54 under the Act 
for debt and equity financing and related transactions. NU is the 
parent of a number of companies comprising the NU system (the 
``System'') and is not itself an operating company. The System 
furnishes franchised retail electric service in Connecticut, New 
Hampshire and western Massachusetts through three of NU's wholly-owned 
subsidiaries, The Connecticut Light and Power Company, Public Service 
Company of New Hampshire and Western Massachusetts Electric Company. In 
addition, NU owns Holyoke Water Power Company (``HWP''), a utility for 
purposes of the Act. HWP owns a 147 megawatt coal-fired plant in 
Holyoke, Massachusetts and sells all of the output of its generation 
assets directly to a non-utility affiliate, Select Energy, Inc., under 
a wholesale contract.
    NU is also the parent of Yankee Energy System, Inc. (``YES''), an 
exempt gas utility holding company. YES is primarily engaged in the 
retail distribution of natural gas through its wholly-owned subsidiary, 
Yankee Gas Services Company, a Connecticut retail gas distribution 
company, and also has several nonutility subsidiaries.
    NU Enterprises, Inc. (``NUEI''), a wholly-owned subsidiary of NU, 
acts as the holding company for NU's unregulated businesses. NUEI has 
numerous direct and indirect nonutility subsidiaries, including, Select 
Energy, Inc.; Northeast Generation Company (``NGC''), the system's only 
exempt wholesale generator (``EWG''); Mode 1 Communications, Inc. and 
Woods Network Services, Inc., exempt telecommunications companies as 
defined in Section 34 of the Act; Select Energy Services, Inc., a 
nonutility subsidiary whose securities NUEI acquired pursuant to 
express Commission authorization (see Holding Co. Act Release No. 
26939, November 12, 1998); and other ``energy-related companies'' as 
defined in Rule 58 under the Act, such as E.S. Boulos Company and 
Northeast Generation Services Company.
    The current authorization of NU to engage in long-term financing 
transactions and other related transactions is set forth in Release No. 
35-27659, 70-10051 (March 18, 2003) (the ``Prior Order''). The Prior 
Order authorized NU to issue up to $600 million in long-term debt and 
to enter into hedging transactions with respect to existing 
indebtedness of NU and its nonutility subsidiaries (``Nonutility 
Subsidiaries'') \1\ and enter into hedging transactions with respect to 
future expected debt issuances of NU and its Nonutility Subsidiaries 
through June 30, 2005. Under the Prior Order, NU, in March 2003 
executed two rate swaps from fixed to floating rates on $263 million of 
7.25% Senior notes, Series A, due 2012, and in June 2003, NU issued 
$150 million of 3.30% Senior Notes, Series B, due 2008. On June 30, 
2004 (Release No. 35-27870, File No. 70-9755), the Commission 
authorized NU to issue up to $450 million in short-term debt through 
June 30, 2007 and to also enter into interest rate hedges on such debt.
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    \1\ Nonutility Subsidiaries include companies formed according 
to rule 58 of the Act, EWGs, foreign utility companies, as defined 
in the Act, exempt telecommunications companies and other 
competitive direct or indirect subsidiaries of NU, the acquisition 
of which has been authorized by Commission orders.
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    NU requests approval for a program of external financing and other 
related proposals for the period commencing upon the issuance of the 
Commission order sought through this Declaration and extending through 
February 8, 2006 (``Authorization Period''). Specifically, NU is 
requesting authorization:
    (i) To issue and sell, from time to time during the Authorization 
Period, any combination of the following types of securities, provided 
that the aggregate amount of all such new securities issued during the 
Authorization Period shall not exceed $750 million outstanding at any 
time: (A) common shares (including options and warrants exercisable for 
common shares), share purchase contracts (``Share Purchase 
Contracts''), share units consisting of a Share Purchase Contract 
coupled with a debt security or preferred security of NU or an 
affiliated entity (``Share Purchase Units'') and/or other equity or 
equity-linked securities of types generally sold in the current 
marketplace (collectively, ``Equity Securities''), (B) preferred 
securities (including without limitation preferred stock and monthly 
income preferred trust securities) (``Preferred Securities''), and (C) 
long-term debt securities having maturities of one to fifty years 
(``Long-term Debt''); and
    (ii) To the extent not exempt under Rule 52, to enter into various 
risk management instruments commonly used in today's capital markets to 
manage equity price and credit risk (``Equity Hedges''), to manage 
interest rate risk with respect to existing indebtedness of NU and its 
Nonutility Subsidiaries (``Interest Rate Hedges'' and collectively with 
Equity Hedges, ``Hedges''), and to enter into hedging transactions 
(``Anticipatory Hedges'') with respect to anticipatory debt issuances 
of NU and its Nonutility Subsidiaries in order to lock in current 
interest rates and/or manage interest rate risk exposure.

[[Page 56752]]

    NU's request is for authority to issue and sell directly from time 
to time during the Authorization Period, (i) Equity Securities, (ii) 
Preferred Securities, and (iii) Long-term Debt, provided that the 
aggregate amount of all such new securities issued during the 
Authorization Period shall not exceed $750 million at any time 
outstanding.
    All securities issued by NU in accordance with the authorization 
requested in the Declaration, including, without limitation, securities 
issued for the purpose of refunding or retiring outstanding securities, 
will comply with the applicable parameters set forth below.
    NU contemplates that such securities will be issued and sold 
directly to the public in one or more offerings registered under the 
Securities Act of 1933, as amended (the ``1933 Act'') either (i) 
through underwriters selected by negotiation or competitive bidding or 
(ii) through a selling agent acting either as agent or as principal for 
resale to the public either directly or through dealers, or to one or 
more purchasers in privately-negotiated transactions or to one or more 
investment banking or underwriting firms or other entities who would 
resell such securities without registration under the 1933 Act in 
reliance upon one or more applicable exemptions from registration under 
the 1933 Act. All such securities sales will be at rates or prices and 
under conditions negotiated or based upon, or otherwise determined by, 
competitive capital markets.
    Equity Securities issued and sold by NU under the authorization 
sought in the Declaration may be issued and sold according to 
underwriting agreements of a type generally standard in the industry. 
Equity Securities may take the form of Common Shares, Share Purchase 
Contracts, Share Purchase Units and other equity or equity-linked 
securities products of types then offered in the marketplace. Public 
distributions may be accomplished through private negotiation with 
underwriters, dealers or agents, as discussed below, or effected 
through competitive bidding among underwriters. In addition, sales may 
be made through private placements or other non-public offerings to one 
or more persons. If underwriters are used in the sale of such 
securities, such securities will be acquired by the underwriters for 
their own account and may be resold from time to time in one or more 
transactions, including negotiated transactions, at a fixed public 
offering price or at varying prices determined at the time of sale. 
Such securities may be offered to the public either through 
underwriting syndicates (which may be represented by a managing 
underwriter or underwriters designated by NU) or directly by one or 
more underwriters acting alone, or may be sold directly by NU or 
through agents designated by NU from time to time. If dealers are used 
in the sale of such securities, NU will sell such securities to the 
dealers, as principals. Any dealer may then resell such securities to 
the public at varying prices to be determined by such dealer at the 
time of resale. If Equity Securities are being sold in an underwritten 
offering, NU may grant the underwriters thereof an option permitting 
the purchase from NU of additional Equity Securities at the same price 
then being offered. The price applicable to additional shares sold in 
any such transaction will be based on several factors, including the 
current market price of the common stock and prevailing capital market 
conditions. These transactions could occur in connection with forward 
sales of NU's common shares.
    Share Purchase Contracts would obligate holders to purchase from 
NU, and NU to sell to the holders, a variable or specified number of 
Common Shares at a future date or dates (typically between three and 
five years after the date of issuance). The price per share of Common 
Shares may be fixed at the time the Share Purchase Contracts are issued 
or may be determined by reference to a specific formula set forth in 
the Share Purchase Contracts. Share Purchase Contracts may be issued 
separately or as a part of Share Purchase Units (a form of ``equity-
linked'' security), which would consist of a Share Purchase Contract 
and/or debt securities of NU or its affiliates and/or debt obligations 
of third parties, including U.S. Treasury securities and/or preferred 
securities, securing the holders' obligations to purchase the Common 
Shares under the Share Purchase Contracts. Share Purchase Contracts may 
require NU to make periodic payments to the holders of some or all of 
the Share Purchase Units or vice versa, and such payments may be 
unsecured or prefunded on some basis. The Share Purchase Contracts may 
require holders to secure their obligations under these Share Purchase 
Contracts in a specified manner.\2\
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    \2\ The Commission has previously authorized registered holding 
companies to issue and sell Share Purchase Contracts and Share 
Purchase Units (sometimes referred to as equity-linked securities). 
See Dominion Resources, Inc., Holding Company Release No. 27927, 
December 22, 2004; Ameren Corporation, Holding Company Release No. 
27860 (June 18, 2004); American Electric Power Company, Inc., 
Holding Company Act Release No. 27517 (Apr. 11, 2004); NiSource 
Inc., Holding Co. Act Release No. 27789 (Dec. 30, 2003).
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    Preferred Securities sold under the authorization sought in the 
Declaration may be issued in one or more series with such rights, 
preferences, and priorities as may be designated in the instrument 
creating each such series, as determined by NU's Board of Trustees. 
Dividends or distributions on Preferred Securities will be made 
periodically and to the extent funds are legally available for such 
purpose, but may be made subject to terms which allow the issuer to 
defer dividend payments or distributions for specified periods or may 
be non-cumulative. Preferred Securities may be convertible or 
exchangeable into shares of Common Shares or other securities that NU 
is authorized to issue. The liquidation preference, dividend or 
distribution rates, redemption provisions, voting rights, sinking fund 
provisions, maturities, conversion or exchange rights, and other terms 
and conditions of a particular series of preferred securities, as well 
as any associated placement, underwriting, structuring or selling agent 
fees, commissions and discounts, if any, will be established by 
negotiation or competitive bidding and reflected in the applicable 
certificate of designation, purchase agreement or underwriting 
agreement, and other relevant instruments setting forth such terms.
    Long-term Debt may be issued in one or more series in the form of 
unsecured notes or debentures with such rights, preferences, and 
priorities as may be designated in the instrument creating each such 
series, as determined by NU's Board of Trustees. Long-term Debt of a 
particular series (a) may be convertible into any other securities that 
NU is authorized to issue, (b) may be subject to optional and/or 
mandatory redemption, in whole or in part, at par or at various 
premiums above the principal amount thereof, (c) may be entitled to 
mandatory or optional sinking fund provisions, and (d) may provide for 
reset of the coupon pursuant to a remarketing arrangement. The maturity 
dates, interest rates, redemption and sinking fund provisions and 
conversion features, if any, with respect to the Long-term Debt of a 
particular series, as well as any associated placement, underwriting or 
selling agent fees, commissions and discounts, if any, will be 
established by negotiation or competitive bidding.
    The following general terms will be applicable where appropriate to 
the proposed external financing activities of

[[Page 56753]]

NU requested to be authorized (including, without limitation, 
securities issued for the purpose of refinancing or refunding 
outstanding securities of the issuer): \3\
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    \3\ The Commission has previously authorized financing 
transactions subject to these same general parameters. See e.g., 
Dominion Resources, Inc., Holding Co. Act Release No. 27927, 
December 22, 2004; AGL Resources Inc., et al., Holding Co. Act 
Release No. 27828 (Apr. 1, 2004); Exelon Corporation, et al., 
Holding Co. Act Release No. 27830 (Apr. 1, 2004); Ameren 
Corporation, et al., Holding Co. Release No. 27860 (June 18, 2004).
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    (a) The effective cost of capital (i.e., the aggregate of all 
payments, including interest, dividend distributions and other periodic 
payments) in respect of Share Purchase Contracts, Share Purchase Units, 
Long-term Debt and Preferred Securities will not exceed competitive 
market rates available at the time of issuance for securities having 
the same or reasonably similar terms and conditions issued by similar 
companies of reasonably comparable credit quality; provided that, in no 
event will the effective cost of capital (i) on any series of Share 
Purchase Contracts or Share Purchase Units exceed at the time of 
issuance 700 basis points over the yield to maturity of comparable-term 
U.S. Treasury securities; (ii) on any series of Long-term Debt exceed 
at the time of issuance 500 basis points over the yield to maturity of 
comparable-term U.S. Treasury securities if the interest rate on such 
Long-term Debt securities is a fixed rate or, if the rate on such Long-
term Debt securities is a floating rate, 500 basis points over the 
London Interbank Offered Rate (``LIBOR''); and (iii) on any series of 
Preferred Securities, exceed at the time of issuance 600 basis points 
over the yield to maturity of comparable-term U.S. Treasury securities.
    (b) The maturity of Long-term Debt will be between one year and 50 
years after the issuance of the debt instrument.
    (c) The underwriting fees, commissions or other similar 
remuneration paid in connection with any non-competitive issuance, sale 
or distribution of securities under to the authorization requested in 
this Declaration will not exceed the greater of (a) 700 basis points of 
the principal or face amount of the securities being issued or (b) 
issuance expenses that are generally paid at the time of the pricing 
for sales of similar securities having the same or reasonably similar 
terms and conditions issued by similar companies of reasonably 
comparable credit quality.
    (d) NU states that it and its public utility subsidiaries are 
financially sound and each has investment-grade ratings from major 
national rating agencies on its senior secured or unsecured debt. NU 
commits that at all times during the Authorization Period, it will 
maintain at least an investment-grade senior unsecured long-term debt 
rating by at least one nationally recognized rating agency and will 
maintain common equity (as reflected, in the most recent Form 10-K or 
Form 10-Q filed with the Commission) of at least 30% of its 
consolidated capitalization; provided that NU will in any event be 
authorized to issue Common Shares to the extent authorized in this 
matter. The term ``consolidated capitalization'' is defined to include, 
where applicable, common stock equity (comprised of common stock, 
additional paid in capital, retained earnings, accumulated other 
comprehensive income or loss and/or treasury stock), minority 
interests, preferred stock, preferred securities, equity linked 
securities, long-term debt, short-term debt and current maturities, 
with the term ``debt'' deemed to include rate reduction bonds and rate 
reduction certificates; except that, whether or not common stock equity 
comprises 30% of NU's consolidated capitalization, NU may issue common 
stock at any time during the Authorization Period, subject to the other 
applicable terms and conditions in the Declaration.
    (e) NU states that (a) within four business days after the 
occurrence of a Ratings Event, NU will notify the Commission of its 
occurrence (by means of a letter, via fax, e-mail or overnight mail to 
the Office of Public Utility Regulation), and (b) within 30 days after 
the occurrence of a Ratings Event, NU will submit a post-effective 
amendment to this Declaration explaining the material facts and 
circumstances relating to that Ratings Event (including the basis on 
which, taking into account the interests of investors, consumers and 
the public as well as other applicable criteria under the Act, it 
remains appropriate for NU to issue the securities for which 
authorization has been requested in this Declaration, so long as NU 
continues to comply with the other applicable terms and conditions 
specified in the Commission's order authorizing the transactions 
requested in this Declaration). Furthermore, no securities authorized 
as a result of this Declaration will be issued following the 60th day 
after a Ratings Event (other than common stock) by NU if it has 
experienced a Ratings Event. NU also requests that the Commission 
reserve jurisdiction, through the remainder of the Authorization 
Period, over the issuance of any authorized securities in this 
Declaration (other than common stock) the issuance of which is 
prohibited after the 60th day following a Ratings Event. NU's senior 
unsecured long-term debt securities are currently rated BBB- by 
Standard & Poor's Inc., Baa2 by Moody's Investors Service and BBB by 
Fitch. None of NU's other securities are rated. For these purposes, (a) 
a security will be deemed ``investment grade'' if it is rated 
investment grade by any of Moody's Investors Service, Standard & 
Poor's, Fitch Ratings or any other nationally recognized statistical 
rating agency (as defined by the Commission in rules adopted under the 
Securities Exchange Act of 1934, as amended) and (b) a ``Ratings 
Event'' will be deemed to have occurred if, during the Authorization 
Period, (i) any outstanding security of NU is downgraded below 
investment grade; or (ii) any security issued by NU upon original 
issuance is rated below investment grade.
    (f) No security will be issued under the authorization sought in 
this Declaration after the last day of the Authorization Period 
(February 8, 2006).
    (g) The proceeds from the financings authorized by the Commission 
under this Declaration will be used for general corporate purposes, 
including (i) financing, in part, investments by and capital 
expenditures of NU and its subsidiaries, (ii) the acquisition, 
retirement or redemption by NU of any of its own securities under Rule 
42, (iii) financing working capital requirements of NU and its 
subsidiaries, including by making contributions to the NU Money Pool, 
and/or (iv) the acquisition of the securities or assets of other 
companies, as may be authorized by the Commission in a separate 
proceeding or as otherwise permissible under law. NU represents that no 
financing proceeds will be used to acquire the equity securities of any 
new subsidiary unless the acquisition has been approved by the 
Commission in this proceeding or in a separate proceeding or is 
permissible in accordance with an exemption under the Act or rules 
under the Act, including Sections 32 and 33 and Rule 58. None of the 
proceeds from the transactions proposed in this Declaration will be 
used by NU or its subsidiaries to acquire any securities of, or any 
interest in, an EWG or a foreign utility company (``FUCO'').
    Subject to the terms of this Declaration, NU requests authorization 
to enter into hedging transactions in connection with the issuance and 
sale of securities to manage equity price and credit risk of the 
securities and to enter into hedging transaction to manage interest 
rate risk with respect to existing

[[Page 56754]]

indebtedness of NU and its Nonutility Subsidiaries. Hedges would be 
accomplished through the entering into, purchasing and selling of 
various risk management instruments commonly used in today's capital 
markets, such as interest rate, credit and equity swaps, caps, collars, 
floors, options, forwards, futures, forward issuance agreements, the 
sale and/or purchase of various call or put options or warrants, or 
transactions involving the purchase or sale, including short sales, of 
U.S. Treasury Securities or U.S. government agency (e.g., Fannie Mae) 
obligations, or LIBOR-based swap instruments, and similar products 
designed to manage market price, credit and interest rate risks. Hedges 
would be used as a means of prudently managing the risk associated with 
the outstanding security (equity or debt) issued under the 
authorization requested in this Declaration. In no case will the 
notional principal amount of any Hedge exceed the face value of the 
underlying security except to the extent necessary to adjust for 
differing price movements between the underlying and hedged securities 
or to allow for the fees related to the transaction. Transactions will 
be entered into for a fixed or determinable period.
    Hedges would only be entered into with counterparties (``Approved 
Counterparties'') whose senior unsecured debt ratings, or the senior 
unsecured debt ratings of the parent companies of the counterparties, 
as published by S&P, are equal to or greater than BBB, or an equivalent 
rating from Moody's or Fitch Inc. NU will not engage in leveraged or 
speculative transactions under the authority sought in this 
Declaration. Fees, commissions and other amounts payable to the 
counterparty (excluding, however, the swap or option payments) in 
connection with any Hedge issued will not exceed those generally 
obtainable in competitive markets for parties of comparable credit 
quality.
    In addition, NU requests authorization to enter into interest rate 
hedging transactions with respect to anticipated debt of NU and its 
Nonutility Subsidiaries (the ``Anticipatory Hedges''), subject to 
certain limitations and restrictions. These Anticipatory Hedges 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 (i) a forward sale of exchange-traded U.S. 
Treasury futures contracts, U.S. Treasury Securities and/or a forward-
dated swap (each a ``Forward Sale''), (ii) the purchase of put options 
on U.S. Treasury Securities (a ``Put Options Purchase''), (iii) a Put 
Options Purchase in combination with the sale of call options on U.S. 
Treasury Securities (a ``Zero Cost Collar''), (iv) transactions 
involving the purchase or sale, including short sales, of U.S. Treasury 
Securities, or (v) 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 Hedges.
    According to NU, it will comply with Statement of Financial 
Accounting Standards (``SFAS'') 133 (``Accounting for Derivative 
Instruments and Hedging Activities'') and SFAS 138 (``Accounting for 
Certain Derivative Instruments and Certain Hedging Activities'') or 
other standards relating to accounting for derivative transactions as 
are adopted and implemented by the Financial Accounting Standards Board 
(``FASB''). NU represents that each Hedge and each Anticipatory Hedge 
will qualify for hedge accounting treatment under the current FASB 
standards in effect and as determined as of the date on which NU enters 
into each such Hedge or Anticipatory Hedge. NU will also comply with 
any future FASB financial disclosure requirements associated with 
hedging transactions.\4\
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    \4\ The proposed terms and conditions of the Hedges and 
Anticipatory Hedges are substantially the same as the Commission has 
approved in other cases. In addition to the October 2001 Order, see 
Dominion Resources, Holding Co. Act Release No. 27927 (December 22, 
2004); Ameren Corporation, Holding Co. Act Release No. 27860 (June 
18, 2004); NiSource Inc., Holding Co. Act Release No. 27789 (Dec. 
30, 2003); FirstEnergy Corp., Holding Co. Act Release No. 27694 
(June 30, 2003).

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Jonathan G. Katz,
Secretary.
 [FR Doc. E5-5248 Filed 9-27-05; 8:45 am]

BILLING CODE 8010-01-P