Document:

x4-2.htm

Exhibit 4.2

 

GEORGIA POWER COMPANY

TO

THE BANK OF NEW YORK MELLON,

TRUSTEE

FORTY-NINTH SUPPLEMENTAL INDENTURE

DATED AS OF NOVEMBER 15, 2012

SERIES 2012D 0.625% SENIOR NOTES

DUE NOVEMBER 15, 2015

  

  

  

TABLE OF CONTENTS1

PAGE

 

	 	
 ARTICLE 1

 

	 1
	 	
 Series 2012D Senior Notes

 

	 1
	 	 	 SECTION 101.  Establishment	 1
	 	 	 SECTION 102.  Definitions	 2
	 	 	 SECTION 103.  Payment of Principal and Interest	 3
	 	 	 SECTION 104.  Denominations	 4
	 	 	 SECTION 105.  Global Securities	 4
	 	 	 SECTION 106.  Transfer	 4
	 	 	
 SECTION 107.  Redemption at the Company’s Option

 

	 5
	 	 
ARTICLE 2

 

	 5
	 	 	 Miscellaneous Provisions	 5
	 	 	 SECTION 201.  Recitals by Company	 5
	 	 	 SECTION 202.  Ratification and Incorporation of Original Indenture	 5
	 	 	 SECTION 203.  Executed in Counterparts	 5

 

EXHIBIT A                      Form of Series 2012D Note

 

EXHIBIT B                      Certificate of Authentication

 

 

  
    1This Table of Contents does not constitute part of the Indenture or have any bearing upon the interpretation of any of its terms and provisions.

 

 

 

 

 

i

  

  

 

THIS FORTY-NINTH SUPPLEMENTAL INDENTURE is made as of the 15th day of November, 2012, by and between GEORGIA POWER COMPANY, a Georgia corporation, 241 Ralph McGill Boulevard, N.E., Atlanta, Georgia 30308-3374 (the “Company”), and THE BANK OF NEW YORK MELLON, a New York banking corporation, 101 Barclay Street, Floor 8W, New York, New York  10286 (the “Trustee”).

 

W I T N E S S E T H:

 

WHEREAS, the Company has heretofore entered into a Senior Note Indenture, dated as of January 1, 1998 (the “Original Indenture”), with The Bank of New York Mellon (as successor to JPMorgan Chase Bank, N.A. (formerly known as The Chase Manhattan Bank)), as heretofore supplemented;

 

WHEREAS, the Original Indenture is incorporated herein by this reference and the Original Indenture, as heretofore supplemented and as further supplemented by this Forty-Ninth Supplemental Indenture, is herein called the “Indenture”;

 

WHEREAS, under the Original Indenture, a new series of Senior Notes may at any time be established by the Board of Directors of the Company in accordance with the provisions of the Original Indenture and the terms of such series may be described by a supplemental indenture executed by the Company and the Trustee;

 

WHEREAS, the Company proposes to create under the Indenture a new series of Senior Notes;

 

WHEREAS, additional Senior Notes of other series hereafter established, except as may be limited in the Original Indenture as at the time supplemented and modified, may be issued from time to time pursuant to the Indenture as at the time supplemented and modified; and

 

WHEREAS, all conditions necessary to authorize the execution and delivery of this Forty-Ninth Supplemental Indenture and to make it a valid and binding obligation of the Company have been done or performed.

 

NOW, THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

 

ARTICLE 1

 

Series 2012D Senior Notes

 

SECTION 101.  Establishment.  There is hereby established a new series of Senior Notes to be issued under the Indenture, to be designated as the Company’s Series 2012D 0.625% Senior Notes due November 15, 2015 (the “Series 2012D Notes”).

 

There are to be authenticated and delivered $400,000,000 principal amount of Series 2012D Notes, and such principal amount of the Series 2012D Notes may be increased from time to time 

 

 

  

  

  

 

pursuant to Section 301 of the Original Indenture.  All Series 2012D Notes need not be issued at the same time and such series may be reopened at any time, without the consent of any Holder, for issuances of additional Series 2012D Notes.  Any such additional Series 2012D Notes will have the same interest rate, maturity and other terms as those initially issued.  No Series 2012D Notes shall be authenticated and delivered in excess of the principal amount as so increased except as provided by Sections 203, 303, 304, 907 or 1107 of the Original Indenture.  The Series 2012D Notes shall be issued in fully registered form.

 

The Series 2012D Notes shall be issued in the form of one or more Global Securities in substantially the form set out in Exhibit A hereto.  The Depositary with respect to the Series 2012D Notes shall be The Depository Trust Company.

 

The form of the Trustee’s Certificate of Authentication for the Series 2012D Notes shall be in substantially the form set forth in Exhibit B hereto.

 

Each Series 2012D Note shall be dated the date of authentication thereof and shall bear interest from the date of original issuance thereof or from the most recent Interest Payment Date to which interest has been paid or duly provided for.

 

The Series 2012D Notes will not have a sinking fund.

 

SECTION 102.  Definitions.  The following defined terms used herein shall, unless the context otherwise requires, have the meanings specified below.  Capitalized terms used herein for which no definition is provided herein shall have the meanings set forth in the Original Indenture.

 

“Comparable Treasury Issue” means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term of the Series 2012D Notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Series 2012D Notes.

 

“Comparable Treasury Price” means, with respect to any Redemption Date, (i) the average of the Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (ii) if the Company obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations.

 

“Independent Investment Banker” means an independent investment banking institution of national standing appointed by the Company.

 

“Interest Payment Dates” means May 15 and November 15 of each year, commencing May 15, 2013.

 

“Original Issue Date” means November 15, 2012.

 

“Reference Treasury Dealer” means a primary U.S. Government securities dealer in the United States appointed by the Company.

 

 

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“Reference Treasury Dealer Quotation” means, with respect to a Reference Treasury Dealer and any Redemption Date, the average, as determined by the Company, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount and quoted in writing to the Company by such Reference Treasury Dealer at 5:00 p.m. on the third Business Day in New York City preceding such Redemption Date).

 

“Regular Record Date” means, with respect to each Interest Payment Date, the 15th calendar day preceding such Interest Payment Date (whether or not a Business Day).

 

“Stated Maturity” means November 15, 2015.

 

“Treasury Yield” means, with respect to any Redemption Date, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.

 

SECTION 103.  Payment of Principal and Interest.  The principal of the Series 2012D Notes shall be due at Stated Maturity (unless earlier redeemed).  The unpaid principal amount of the Series 2012D Notes shall bear interest at the rate of 0.625% per annum until paid or duly provided for.  Interest shall be paid semiannually in arrears on each Interest Payment Date to the Person in whose name the Series 2012D Notes are registered at the close of business on the Regular Record Date for such Interest Payment Date, provided that interest payable at the Stated Maturity or on a Redemption Date as provided herein will be paid to the Person to whom principal is payable.  Any such interest that is not so punctually paid or duly provided for will forthwith cease to be payable to the Holders on such Regular Record Date and may either be paid to the Person or Persons in whose name the Series 2012D Notes are registered at the close of business on a Special Record Date for the payment of such defaulted interest to be fixed by the Trustee, notice whereof shall be given to Holders of the Series 2012D Notes not less than ten (10) days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange, if any, on which the Series 2012D Notes shall be listed, and upon such notice as may be required by any such exchange, all as more fully provided in the Original Indenture.

 

Payments of interest on the Series 2012D Notes will include interest accrued to but excluding the respective Interest Payment Dates.  Interest payments for the Series 2012D Notes shall be computed and paid on the basis of a 360-day year of twelve 30-day months.  In the event that any date on which interest is payable on the Series 2012D Notes is not a Business Day, then payment of the interest payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay), with the same force and effect as if made on the date the payment was originally payable.

 

Payment of the principal and interest due at the Stated Maturity or earlier redemption of the Series 2012D Notes shall be made upon surrender of the Series 2012D Notes at the Corporate Trust Office of the Trustee.  The principal of and interest on the Series 2012D Notes shall be paid in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.  Payments of interest (including interest on any Interest Payment Date) will be made, subject to such surrender where applicable, at the option of the Company, (i) by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register or (ii) by wire transfer or other electronic transfer at such place 

 

 

 

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and to such account at a banking institution in the United States as may be designated in writing to the Trustee at least sixteen (16) days prior to the date for payment by the Person entitled thereto.

 

SECTION 104.  Denominations.  The Series 2012D Notes may be issued in denominations of $1,000, or any integral multiple thereof.

 

SECTION 105.  Global Securities.  The Series 2012D Notes will be issued in the form of one or more Global Securities registered in the name of the Depositary (which shall be The Depository Trust Company) or its nominee.  Except under the limited circumstances described below, Series 2012D Notes represented by one or more Global Securities will not be exchangeable for, and will not otherwise be issuable as, Series 2012D Notes in definitive form.  The Global Securities described above may not be transferred except by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or to a successor Depositary or its nominee.

 

Owners of beneficial interests in such a Global Security will not be considered the Holders thereof for any purpose under the Indenture, and no Global Security representing a Series 2012D Note shall be exchangeable, except for another Global Security of like denomination and tenor to be registered in the name of the Depositary or its nominee or to a successor Depositary or its nominee.  The rights of Holders of such Global Security shall be exercised only through the Depositary.

 

Subject to the procedures of the Depositary, a Global Security shall be exchangeable for Series 2012D Notes registered in the names of persons other than the Depositary or its nominee only if (i) the Depositary notifies the Company that it is unwilling or unable to continue as a Depositary for such Global Security and no successor Depositary shall have been appointed by the Company, or if at any time the Depositary ceases to be a clearing agency registered under the Securities Exchange Act of 1934, as amended, at a time when the Depositary is required to be so registered to act as such Depositary and no successor Depositary shall have been appointed by the Company, in each case within 90 days after the Company receives such notice or becomes aware of such cessation, (ii) the Company in its sole discretion determines that such Global Security shall be so exchangeable, or (iii) there shall have occurred an Event of Default with respect to the Series 2012D Notes.  Any Global Security that is exchangeable pursuant to the preceding sentence shall be exchangeable for Series 2012D Notes registered in such names as the Depositary shall direct.

 

Neither the Company, the Trustee nor any agent of the Company or the Trustee shall have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in a Global Security or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.

 

SECTION 106.  Transfer.  No service charge will be made for any transfer or exchange of Series 2012D Notes, but payment will be required of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith.

 

The Company shall not be required (a) to issue, register the transfer of or exchange any Series 2012D Notes during a period beginning at the opening of business fifteen (15) days before the day of the mailing of a notice pursuant to Section 1104 of the Original Indenture identifying the serial numbers of the Series 2012D Notes to be called for redemption, and ending at the close of business on the day of the mailing, or (b) to register the transfer of or exchange any Series 2012D 

 

 

 

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Notes theretofore selected for redemption in whole or in part, except the unredeemed portion of any Series 2012D Notes redeemed in part.

 

SECTION 107.  Redemption at the Company’s Option.  The Series 2012D Notes will be subject to redemption at the option of the Company, in whole or in part, at any time and from time to time, upon not less than 30 nor more than 60 days’ notice, at redemption prices equal to the greater of (1) 100% of the principal amount of the Series 2012D Notes being redeemed and (2) the sum of the present values of the remaining scheduled payments of principal of and interest on the Series 2012D Notes being redeemed (not including any portion of such payments of interest accrued to the Redemption Date) discounted (for purposes of determining present value) to the Redemption Date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at a discount rate equal to the Treasury Yield plus 5 basis points (each, a “Redemption Price”), plus, in each case, accrued interest thereon to the Redemption Date.

 

In the event of redemption of the Series 2012D Notes in part only, a new Series 2012D Note or Notes for the unredeemed portion will be issued in the name or names of the Holders thereof upon the surrender thereof.

 

Notice of redemption shall be given as provided in Section 1104 of the Original Indenture except that any such notice of redemption shall not specify the Redemption Price but only the manner of calculation thereof.  The Trustee shall not be responsible for the calculation of the Redemption Price.  The Company shall calculate the Redemption Price and promptly notify the Trustee thereof.

 

Any redemption of less than all of the Series 2012D Notes shall, with respect to the principal thereof, be divisible by $1,000.

 

ARTICLE 2

 

Miscellaneous Provisions

 

SECTION 201.  Recitals by Company.  The recitals in this Forty-Ninth Supplemental Indenture are made by the Company only and not by the Trustee, and all of the provisions contained in the Original Indenture in respect of the rights, privileges, immunities, powers and duties of the Trustee shall be applicable in respect of Series 2012D Notes and of this Forty-Ninth Supplemental Indenture as fully and with like effect as if set forth herein in full.

 

SECTION 202.  Ratification and Incorporation of Original Indenture.  As supplemented hereby, the Original Indenture is in all respects ratified and confirmed, and the Original Indenture as supplemented by this Forty-Ninth Supplemental Indenture shall be read, taken and construed as one and the same instrument.

 

SECTION 203.  Executed in Counterparts.  This Forty-Ninth Supplemental Indenture may be simultaneously executed in several 

 

 

 

 

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counterparts, each of which shall be deemed to be an original, and such counterparts shall together constitute but one and the same instrument.

 

 

 

 

6

  

  

 

 

IN WITNESS WHEREOF, each party hereto has caused this instrument to be signed in its name and behalf by its duly authorized officers, all as of the day and year first above written.

	
ATTEST:

 

 

By:   /s/Melissa K. Caen                                                    

Melissa K. Caen

Assistant Secretary

 

 

 

 

 

	
GEORGIA POWER COMPANY

 

 

By:      /s/Ronnie R. Labrato                                                          

Ronnie R. Labrato

Executive Vice President,

Chief Financial Officer and Treasurer

 

 

 

 

	
ATTEST:

 

 

By:     /s/Rafael A. Herrera                                                 

Rafael A. Herrera

Authorized Signatory

 

	
THE BANK OF NEW YORK MELLON, as Trustee

 

 

By:  /s/Elaine P. Mah                                                              

Elaine P. Mah

Authorized Signatory

 

  

  

  

EXHIBIT A

FORM OF SERIES 2012D NOTE

A-1

  

  

 

	 NO. ___ 	 CUSIP NO. 373334 JZ5

 

 

GEORGIA POWER COMPANY

SERIES 2012D 0.625% SENIOR NOTE

DUE NOVEMBER 15, 2015

 

	
Principal Amount:

	
$__________________

	
Regular Record Date:

	
15th calendar day prior to the applicable Interest Payment Date (whether or not a Business Day)

	
Original Issue Date:

	
November 15, 2012

	
Stated Maturity:

	
November 15, 2015

	
Interest Payment Dates:

	
May 15 and November 15

	
Interest Rate:

	
0.625% per annum

	
Authorized Denominations:

	
$1,000 or any integral multiple thereof

 

Georgia Power Company, a Georgia corporation (the “Company”, which term includes any successor corporation under the Indenture referred to on the reverse hereof), for value received, hereby promises to pay to ______________, or registered assigns, the principal sum of ______________ DOLLARS ($_________) on the Stated Maturity shown above (or upon earlier redemption), and to pay interest thereon from the Original Issue Date shown above, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semiannually in arrears on each Interest Payment Date as specified above, commencing on May 15, 2013, and on the Stated Maturity (or upon earlier redemption) at the rate per annum shown above until the principal hereof is paid or made available for payment and at such rate on any overdue principal and on any overdue installment of interest.  The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date (other than an Interest Payment Date that is the Stated Maturity or on a Redemption Date) will, as provided in such Indenture, be paid to the Person in whose name this Note (the “Note”) is registered at the close of business on the Regular Record Date as specified above next preceding such Interest Payment Date, provided that any interest payable at the Stated Maturity or on any Redemption Date will be paid to the Person to whom principal is payable.  Except as otherwise provided in the Indenture, any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Note is registered at the close of business on a Special Record Date for the payment of such defaulted interest to be fixed by the Trustee, notice whereof shall be given to Holders of Notes of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not 

 

 

 

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inconsistent with the requirements of any securities exchange, if any, on which the Notes of this series shall be listed, and upon such notice as may be required by any such exchange, all as more fully provided in the Indenture.

 

Payments of interest on this Note will include interest accrued to but excluding the respective Interest Payment Dates.  Interest payments for this Note shall be computed and paid on the basis of a 360-day year of twelve 30-day months.  In the event that any date on which interest is payable on this Note is not a Business Day, then payment of the interest payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay), with the same force and effect as if made on the date the payment was originally payable.  A “Business Day” shall mean any day other than a Saturday or a Sunday or a day on which banking institutions in New York City are authorized or required by law or executive order to remain closed or a day on which the Corporate Trust Office of the Trustee is closed for business.

 

Payment of the principal of and interest due at the Stated Maturity or earlier redemption of the Series 2012D Notes shall be made upon surrender of the Series 2012D Notes at the Corporate Trust Office of the Trustee.  The principal of and interest on the Series 2012D Notes shall be paid in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.  Payment of interest (including interest on an Interest Payment Date) will be made, subject to such surrender where applicable, at the option of the Company, (i) by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register or (ii) by wire transfer or other electronic transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Trustee at least 16 days prior to the date for payment by the Person entitled thereto.

 

REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.

 

Unless the certificate of authentication hereon has been executed by the Trustee by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

 

 

 

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IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal.

Dated:

	  	
GEORGIA POWER COMPANY

 

 

 

By:                                                                         

Title:

 

Attest:

                                                                     

Title:

{Seal of GEORGIA POWER COMPANY appears here}

  

  

  

CERTIFICATE OF AUTHENTICATION

This is one of the Senior Notes referred to in the within-mentioned Indenture.

	  	
THE BANK OF NEW YORK MELLON,

as Trustee

 

 

By:                                                                 

Authorized Signatory

 

 

 

 

 

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(Reverse Side of Note)

 

This Note is one of a duly authorized issue of Senior Notes of the Company (the “Notes”), issued and issuable in one or more series under a Senior Note Indenture, dated as of January 1, 1998, as supplemented (the “Indenture”), between the Company and The Bank of New York Mellon (as successor to JPMorgan Chase Bank, N.A. (formerly known as The Chase Manhattan Bank)), as Trustee (the “Trustee,” which term includes any successor trustee under the Indenture), to which Indenture and all indentures incidental thereto reference is hereby made for a statement of the respective rights, limitation of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Notes issued thereunder and of the terms upon which said Notes are, and are to be, authenticated and delivered.  This Note is one of the series designated on the face hereof as Series 2012D 0.625% Senior Notes due November 15, 2015 (the “Series 2012D Notes”) which is unlimited in aggregate principal amount.  Capitalized terms used herein for which no definition is provided herein shall have the meanings set forth in the Indenture.

 

The Series 2012D Notes will be subject to redemption at the option of the Company in whole or in part, at any time and from time to time, upon not less than 30 nor more than 60 days’ notice at redemption prices equal to the greater of (i) 100% of the principal amount of the Series 2012D Notes being redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal of and interest on the Series 2012D Notes being redeemed (not including any portion of such payments of interest accrued to the Redemption Date) discounted (for purposes of determining present value) to the Redemption Date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at a discount rate equal to the Treasury Yield plus 5 basis points (each, a “Redemption Price”), plus, in each case, accrued interest thereon to the Redemption Date.

 

“Treasury Yield” means, with respect to any Redemption Date, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.

 

“Comparable Treasury Issue” means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term of the Series 2012D Notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Series 2012D Notes.

 

“Comparable Treasury Price” means, with respect to any Redemption Date, (i) the average of the Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (ii) if the Company obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations.

 

“Independent Investment Banker” means an independent investment banking institution of national standing appointed by the Company.

 

 

 

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“Reference Treasury Dealer” means a primary U.S. Government securities dealer in the United States appointed by the Company.

 

“Reference Treasury Dealer Quotation” means, with respect to a Reference Treasury Dealer and any Redemption Date, the average, as determined by the Company, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount and quoted in writing to the Company by such Reference Treasury Dealer at 5:00 p.m. on the third Business Day in New York City preceding such Redemption Date).

 

The Trustee shall not be responsible for the calculation of the Redemption Price.  The Company shall calculate the Redemption Price and promptly notify the Trustee thereof.

 

In the event of redemption of this Note in part only, a new Note or Notes of this series for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the surrender hereof.

 

The Series 2012D Notes will not have a sinking fund.

 

If an Event of Default with respect to the Notes of this series shall occur and be continuing, the principal of the Notes of this series may be declared due and payable in the manner, with the effect and subject to the conditions provided in the Indenture.

 

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Notes of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than a majority in principal amount of the Notes at the time Outstanding of each series to be affected.  The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Notes of each series at the time Outstanding, on behalf of the Holders of all Notes of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences.  Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note.

 

No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Note at the times, place and rate, and in the coin or currency, herein prescribed.

 

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note is registrable in the Security Register, upon surrender of this Note for registration of transfer at the office or agency of the Company for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar and duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes of this series, of authorized denominations and of like tenor and for the same aggregate principal amount, will be issued to the designated transferee or transferees.  No service charge shall be made for any such registration of transfer or exchange, but the Company 

 

 

 

A-7

  

  

 

 

may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

 

Prior to due presentment of this Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for all purposes, whether or not this Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

 

The Notes of this series are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof.  As provided in the Indenture and subject to certain limitations therein set forth, Notes of this series are exchangeable for a like aggregate principal amount of Notes of this series of a different authorized denomination, as requested by the Holder surrendering the same upon surrender of the Note or Notes to be exchanged at the office or agency of the Company.

 

This Note shall be governed by, and construed in accordance with, the internal laws of the State of New York.

 

A-8

  

  

ABBREVIATIONS

 

The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations:

 

	
TEN COM-     as tenants in

common

	
UNIF GIFT MIN ACT- _______ Custodian ________

(Cust)                             (Minor)

	
TEN ENT-       as tenants by the

entireties

	  
	
JT TEN-           as joint tenants

with right of

survivorship and

not as tenants

in common

 

	
under Uniform Gifts to

Minors Act

 

________________________

(State)

Additional abbreviations may also be used

though not on the above list.

FOR VALUE RECEIVED, the undersigned hereby sell(s) and transfer(s) unto

_______________________________________________________________________________

(please insert Social Security or other identifying number of assignee)

_______________________________________________________________________________

PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE OF ASSIGNEE

_______________________________________________________________________________

_______________________________________________________________________________

the within Note and all rights thereunder, hereby irrevocably constituting and appointing

_______________________________________________________________________________

_______________________________________________________________________________

agent to transfer said Note on the books of the Company, with full power of substitution in the premises.

	
Dated: ____________

	
________________________________________________

 

________________________________________________

NOTICE:  The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular without alteration or enlargement, or any change whatever.

 

 

 

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EXHIBIT B

CERTIFICATE OF AUTHENTICATION

This is one of the Senior Notes referred to in the within-mentioned Indenture.

	  	
THE BANK OF NEW YORK MELLON,

as Trustee

 

 

By:                                                                           

Authorized Signatory

 

 

 

 

B-1Exhibit 10.1 - MPUC Order

Exhibit 10.1

STATE OF MAINE                        Docket No. 2012-00365
PUBLIC UTILITIES COMMISSION            
November 7, 2012

BIDDEFORD & SACO WATER COMPANY        ORDER APPROVING 
And The MAINE WATER COMPANY             STIPULATION
Request for Approval of Reorganization            
And Approval of Affiliate Agreement        
            
WELCH, Chairman; LITTELL and VANNOY, Commissioners

		
	I.
	  SUMMARY

Through this Order, we approve a Stipulation filed on October 23, 2012 by Biddeford & Saco Water Company (BSWC), The Maine Water Company, the Office of Public Advocate, and the City of Biddeford and thus approve the acquisition of BSWC by Connecticut Water Service through the purchase of BSWC’s outstanding stock.   This approval is subject to BSWC’s shareholder approval of the transaction.  We also approve affiliate agreements between BSWC and The Maine Water Company and an affiliate agreement between BSWC and Connecticut Water Service. 

		
	II.
	  PROCEDURAL HISTORY

On July 24, 2012, BSWC and The Maine Water Company (MWC), jointly filed a petition pursuant to 35-A. M.R. S.A. § 1103(1) and 35-A M.R.S.A. §708(2)(A) requesting Commission approval of proposed reorganization.  The proposed transaction, as described by the Merger Agreement attached to BSWC’s filing, would merge OAC, Inc., a Maine corporation and wholly owned subsidiary of CTWS, with BSWC.  Upon completion of the merger; shares of OAC, Inc. will be converted to common stock of BSWC; the unissued stock of BSWC will be retired; and issued stocks of BSWC will be converted to CTWS common stocks, resulting in BSWC surviving the transaction as a wholly owned subsidiary of CTWS.

Additionally, BSWC and MWC requested approval of two affiliated agreements pursuant to 35-A M.R.S.A. § 707(3).  The first agreement, between BSWC and CTWS, includes, among other items, terms for the provision and compensation of CTWS-wide services, such as the purchase, administration, and design of employee benefits plans; national purchasing and leasing programs; risk management and insurance; and provision of a public market for common equity investment.  The second agreement, between BSWC and MWC, describes terms for the provision and compensation of management, capital planning, and regulatory services.

Order Approving Stipulation                    2                           Docket No. 2012-00365

On August 6, 2012, the Commission issued a Notice of Proceeding.  The Commission received petitions to intervene from the Office of the Public Advocate (OPA) and the City of Biddeford (the City), both of which were granted by the Hearing Examiner.  A case conference was held on August 20, 2102, to discuss intervention and schedules for the case.  During an initial round of discovery, the Staff, OPA and the City all filed data requests and received responses from BSWC.  A technical conference on the initial round of data requests and responses was held on September 27, 2012.  Subsequently, on October 1, 2012, BSWC and MWC filed an Integration Plan describing how BSWC and CTWS would integrate their operations and the level of MWC’s involvement in that process.  A second technical conference was held on October 10, 2010.

On October 23, 2012, BSWC filed a Stipulation between BSWC, MWC, the OPA and the City resolving all issues in this proceeding.

Currently the Company is waiting for the Security and Exchange Commission processes to be completed to allow the Company to move forward with the shareholder vote to authorize the transaction.  

		
	III.
	  STIPULATION

The Stipulation contains the following provisions:  

1.    The parties agree that the "reorganizations" that will occur upon the acquisition by CTWS of the stock of BTWS are consistent with the interests of the ratepayers and investors and should be approved pursuant to 35-A M.R.S.A. (708).

2.    The parties agree that the two affiliate agreements between BSWC and CTWS and MWC, respectively (the "Agreement" between BSWC and CTWS, and the "Management Services Agreement" between BSWC and MWC) are not adverse to the public interest and should be approved pursuant to 35-A M.R.S.A. §707(3).

3.    BSWC and CTWS agree that they have no plans to, and do not intend to, use the water resource of the Saco River for purposes other than providing water to ratepayers in the communities served by BSWC. Specifically, but without limitation, BSWC and CTWS will not bottle water from the Saco River for commercial sales outside of BSWC service territory.

4.    BSWC and CTWS agree that they have no plans to, and will not, use or sell any BSWC real property along the Saco River (Lot 2-40) or adjacent to South Street (Lot 2-19) or adjacent to the Andrews Road (Lot 2-19-1) for commercial development, other than the development of such property for public utility purposes, such as the use of the property for water mains, pump stations, treatment facilities, or other public utility facilities.

5.    BSWC will provide water meter reading information to the City of Biddeford for purposes of its wastewater billing.

Order Approving Stipulation                    3                           Docket No. 2012-00365

6.    BSWC will implement a program whereby it will meet, no less than quarterly for two years beginning January 1, 2013, and thereafter no less often than semi-annually, with public works departments, fire departments and municipal engineers in each community served by BSWC, to coordinate yearly capital programs, hear and address operations issues, set priorities for the annual work program, and collaborate on projects where efficiencies can be achieved (e.g. coordination of paving).

7.    BSWC will form a Customer Advisory Committee, with up to two representatives from each community served by BSWC, to identify issues and set priorities for capital investment and infrastructure improvement. The Customer Advisory Committee will meet no less than quarterly for two years beginning January 1, 2013, and thereafter no less than semi-annually, and may not be discontinued without Commission approval.

8.    BSWC will work with a consulting engineering firm for the completion of an engineering study that will assess the existing water system, including the water treatment plant and the distribution system (including fire hydrants), and make recommendations for replacement and upgrades for the long term sustainability of the entire system and support of the communities’ needs. This report will be shared with the Customer Advisory Committee, the City Manager in each municipality served by BSWC, and the Public Advocate, and will become a primary tool to set priorities for infrastructure replacement and capital spending. 

9.    As a separate corporation, BSWC will be maintained as a separate ratemaking entity.

10.    BSWC will not seek, in any future rate proceeding, to recover any "acquisition adjustment" arising out of the transaction.

11.    BSWC, MWC and CTWS will track separately both the transition and transaction costs related to the acquisition.

12.    BSWC, MWC and CTWS will not seek recovery of transaction costs that are incurred and related to the acquisition. 

13.    BSWC and CTWS will specifically describe in any rate proceeding occurring over the next three years (2013, 2014, and 2015) costs that have been incurred as a direct result of the acquisition. In those rate proceedings, the Commission will determine whether such transaction costs will be the responsibility of BSWC stockholders and/or ratepayers, and will make that determination based on the CTWS, MWC and BSWC representation in this proceeding that, as a result of the transaction, there will be no short term rate or service adverse impacts on either BSWC or MWC water customers, and no long or short term adverse impact on rates or service as a direct result of the acquisition. 

14.    BSWC will amortize the curtailment liability, if any, for the pension and post retirement benefit plans in a manner consistent with actuarial rules.

15.    If, during a period of two years subsequent to the acquisition, CTWS requires additional employee(s) to implement the transition and/or provide existing 

Order Approving Stipulation                    4                           Docket No. 2012-00365

services to BSWC, then all the costs associated with those additional employee(s) will be assumed by CTWS. 

16.    BSWC will work with community conservation commissions and land trusts to protect and preserve land that BSWC owns on the Saco River.

The Stipulation also specifically states that neither ratepayers nor investors will be adversely affected by the acquisition of BSWC's stock by CTWS. There will be no change in BSWC's rates or its terms and conditions of service as a direct result of this transaction. The Stipulation further states that through the record in this case, MWC and BSWC have shown that the main benefit of the transaction is the substantially enhanced ability of BSWC to obtain capital on more favorable terms, which is necessary to sustain and improve BSWC's water system and service in Biddeford, Saco, Old Orchard Beach and Scarborough.  CTWS states that it has ready access to the capital markets, and is committed to investing equity into BSWC as necessary to sustain and improve BSWC system. Further, MWC and BSWC state that the record shows demonstrable net savings to BSWC which are expected to be realized as a result of the acquisition. The Stipulation between the parties projects annual savings of $ 145,612 (See the Integration Plan at 12 (Paragraph III.J) and supporting calculations provided in response to ODR-001-001)   However, as discussed in more detail below, we find the approximate savings in operational costs to be $5,000 when comparing BSWC’s current operational costs to likely operational costs after the acquisition.    However, this does not take into consideration any potential changes in rates due to investment in infrastructure.

		
	IV.
	  STANDARD OF APPROVAL

BSWC is seeking approval of a reorganization through the purchase of BSWC’s stock under 35-A M.R.S.A. §708.  Section 708 states that “no reorganization may be approved by the Commission unless it is established by the applicant for approval that the reorganization is consistent with the interest of the utility’s ratepayers and investors.”  In past cases, the Commission has construed the “consistent with interests” as a “no harm” standard in which the applicant must establish that the transaction will not adversely affect ratepayers and investors.  See, e.g. New England Telephone and Telegraph and NYNEX, Docket No. 96-388 at 7-8 (Feb. 6, 1997).

In addition, as we have stated on prior occasions, to approve a stipulation the Commission must find that:

1.    The parties joining the stipulation represent a sufficiently broad spectrum of interests that the Commission can be sure that there is no appearance or reality of disenfranchisement;

Order Approving Stipulation                    5                           Docket No. 2012-00365

		
	2.
	The process that led to the stipulation was fair to all parties; and,

		
	3.
	The stipulated result is reasonable and not contrary to legislative mandate.

See Central Maine Power Company, Proposed Increase in Rates, Docket No. 92-345(II), Detailed Opinion and Subsidiary Findings (Me. P.U.C. Jan. 10, 1995), and Maine Public Service Company, Proposed Increase in Rates (Rate Design), Docket No. 95-052, Order (Me. P.U.C. June 26, 1996).

In approving stipulations, the Commission is also obligated to ensure that the overall stipulated result is in the public interest. See Northern Utilities, Inc., Proposed Environmental Response Cost Recovery, Docket No. 96-678, Order Approving Stipulation (Me. P.U.C. April 28, 1997).  

		
	V.
	  DISCUSSION AND DECISION

This Stipulation was entered into by BSWC, MWC, the OPA and the City.  In past cases, we have found that a stipulation between the utility and the OPA constitute a sufficiently broad spectrum on interests in that the OPA represents the interests of ratepayers and is therefore institutionally inclined to challenge assertions made by the utility.  See Public Utilities Commission, Investigation of Stranded Cost Recovery, Transmission and distribution Utility Revenue Requirements and Rate Design of Bangor Hydro-Electric Company (Phase II), Docket No. 99-185, Order Approving Stipulation at 3 (Aug. 11, 2000); Central Maine Power Co. Chapter 120 Information (Post ARP 2000) Transmission and Distribution Revenue Requirement and Rate Design and Request for ARP, Docket No. 2007-215, Order Approving Stipulation (July 1, 2008).  In addition, the participation of the City in the case and the ultimate Stipulation ensures that its interests and concerns were met.   

Based upon the record before us, we find the proceeding was appropriately noticed and the process that led to the Stipulations was fair and open.  The process of discovery and the technical conferences allowed all parties to gather information regarding the proposed transaction.  Accordingly, we conclude that the second criterion for approval has also been satisfied with respect to the Stipulation.  

We conclude that the overall result of the Stipulation is reasonable, not contrary to legislative mandate and consistent with the public interest.  Pursuant to 35-A M.R.S.A. § 708, to approve the proposed transaction through the adoption of the Stipulation, we must find that the proposed reorganization and stock transaction will not 

Order Approving Stipulation                    6                           Docket No. 2012-00365

adversely affect ratepayers and investors, and is in the public interest.  Therefore, in considering the approval of the Stipulation, we must consider the potential benefits of the proposed transaction against possible harms to ratepayers, and determine whether, on balance, the proposed transaction, as conditioned by the provisions in the Stipulation, will not adversely affect ratepayers and will be in the public interest. 

We find that the proposed transaction will not result in immediate changes to either the service provided by BSWC or the rates charged to customers.  The projected savings of $145,612 stated in the Stipulation are based on the assumption that BSWC would have filed for a rate change to increase its rates and add an additional percentage point to its approved return on equity.  However, we find the likely operational savings will be $5,000 when calculated using last year’s actual operating costs.  We note that the Stipulation does not include any stay-out provision.  We are not disturbed by this because the Stipulation does state that CTWS will be making investments in BSWC’s infrastructure as necessary.  Infrastructure investment and rate moratoriums do not usually go hand in hand, especially in a capital-intensive endeavor such as the provision of water service by a public utility.  It is likely that investments in infrastructure would lead BSWC to file for approval to increase its rates to recover the costs of such investment.  BSWC has stated that while it will work with MWC to develop best practices, any managerial changes will have no detrimental effect upon customers.  Accordingly, we find that the rates and services of BSWC will not be adversely affected by the proposed transaction and that the acquisition of BSWC by CTWS and the resulting affiliation with MWC will provide operational benefits to BSWC and its customers.  

The record in this matter shows that the primary benefit of this transaction is increased access to the capital markets for BSWC.  BSWC currently is at a disadvantage due to its size and the terms of certain of its prior borrowings which limit debt to a specific percentage of its capital structure, thus limiting the prospective borrowing by BSWC.  BSWC was able to alleviate this to some degree by its earlier equity issuance, however, because that issuance was not fully subscribed; BSWC’s limited access to capital limited its ability to prioritize and complete capital repair and replacement.  CTWS has indicated that it will make equity investments as necessary to allow BSWC to move forward with appropriate infrastructure improvements.  We believe that CTWS has sufficient access to capital markets to support our finding that no harm will result to customers as a result of this transaction.  The provisions in the Stipulation that prohibit the recovery of any acquisition premium or transaction costs from ratepayers further minimize the risks from the proposed transaction.  Accordingly, we find that this transaction is in the public interest and approve the proposed reorganization and merger as described in the Stipulation filed on October 23, 2012 pursuant to Sections 708 and 1103.

Similarly, 35-A M.R.S.A. § 707 requires the Commission to find that agreements between affiliates receive approval from the Commission.  In granting such approval, the Commission is must find that such contracts or arrangements are not adverse to the public interest.  As described above, the primary benefit of this transaction to BSWC, and its customers, is the enhanced ability that BSWC will have to gain capital for infrastructure improvements through access to capital markets.  This access will inherently require the type of arrangement that implicates Section 707.  As we found above, this enhanced access to capital is in the public interest and supports the 

Order Approving Stipulation                    7                           Docket No. 2012-00365

approval of the affiliated agreement with CTWS just as it supports approval of the reorganization.  To a lesser degree, although not insignificantly, the affiliate agreement with MWC will allow greater integration of the two entities, thus increasing BSWC’s access to administrative resources, expertise, and other economies of scope and scale.  Accordingly, we find both affiliate agreements are in the public interest and approve them.

We note that BSWC’s shareholders must authorize this transaction and therefore, our approval is conditioned upon that authorization being received.  BSWC should file evidence of this approval within 15 days of the vote.  

Order Approving Stipulation                    8                           Docket No. 2012-00365

Accordingly, we 

O R D E R 

(a)    That the Stipulation filed on October 23, 2012 and attached to this Order is hereby approved; 

(b)    That the affiliated agreements between Biddeford & Saco Water Company and Connecticut Water Services Company and the Management Services Agreement between Biddeford & Saco Water Company and The Maine Water Company are not adverse to the public interest and are approved pursuant to 35-A M.R.S.A. §707(3); and 

3.    That Biddeford & Saco Water Company shall file with the Commission evidence of its shareholder approval of this transaction within 15 days of the vote.  

Dated at Hallowell, Maine, this 7th day of November, 2012.

BY ORDER OF THE COMMISSION

            /s/ Karen Geraghty
_______________________________
Karen Geraghty
Administrative Director

COMMISSIONERS VOTING FOR:    Welch
Littell
Vannoy

Order Approving Stipulation                    9                           Docket No. 2012-00365

NOTICE OF RIGHTS TO REVIEW OR APPEAL

            5 M.R.S.A. § 9061 requires the Public Utilities Commission to give each party to an adjudicatory proceeding written notice of the party's rights to review or appeal of its decision made at the conclusion of the adjudicatory proceeding.  The methods of review or appeal of PUC decisions at the conclusion of an adjudicatory proceeding are as follows:

            1.         Reconsideration of the Commission's Order may be requested under Section 1004 of the Commission's Rules of Practice and Procedure (65-407 C.M.R.110) within 20 days of the date of the Order by filing a petition with the Commission stating the grounds upon which reconsideration is sought.  Any petition not granted within 20 days from the date of filing is denied.

            2.         Appeal of a final decision of the Commission may be taken to the Law Court by filing, within 21 days of the date of the Order, a Notice of Appeal with the Administrative Director of the Commission, pursuant to 35-A M.R.S.A. § 1320(1)-(4) and the Maine Rules of Appellate Procedure.

            3.         Additional court review of constitutional issues or issues involving the justness or reasonableness of rates may be had by the filing of an appeal with the Law Court, pursuant to 35-A M.R.S.A. § 1320(5).

Note:   The attachment of this Notice to a document does not indicate the Commission's view that the particular document may be subject to review or appeal.  Similarly, the failure of the Commission to attach a copy of this Notice to a document does not indicate the Commission's view that the document is not subject to review or appeal.
 

	
			
	STATE OF MAINE
PUBLIC UTILITIES COMMISSION

	 
	Docket No. 2012-00365

STIPULATION

	BIDDEFORD & SACO WATER COMPANY
Request for Approval of Reorganization Pertaining to Biddeford & Saco Water Company 
	 
	October 23, 2012

______________________________________________________________________

It is understood and agreed by and between Maine Water Company (MWC), Biddeford & Saco Water Company (BSWC), the City of Biddeford, and the Public Advocate as follows:
		
	I.
	Purpose

The purpose of this Stipulation is to settle all issues with respect to this proceeding, to eliminate the need to hold evidentiary hearings and to expedite the Public Utilities Commission’s consideration and resolution of this proceeding.  The provisions agreed to herein have been reached as a result of information gathered through the discovery process and discussions and negotiations with the companies.
		
	II.
	Procedural History

On July 24, 2012, MWC and BSWC filed a Request for Approval of Reorganization 
and Approval of Affiliate Agreements.  MWC and BSWC are Maine water utilities subject to regulation by the Commission.  The proposed transaction involved in this proceeding is the acquisition by Connecticut Water Service, Inc. (CTWS) of the outstanding stock of BSWC.   The transaction will result in the creation of new affiliated interests:
		
	a.
	CTWS will become an affiliated interest of BSWC, as it will own all of BSWC’s stock;

		
	b.
	The Connecticut Water Company, a wholly-owned subsidiary of CTWS and a Connecticut water utility regulated by the Connecticut Public Utilities Regulatory Authority, will become an affiliated interest of BSWC;

		
	c.
	MWC and BSWC will become affiliated interests of each other.

The Petition sought Commission approval of the creation of these new affiliated interests of MWC and BSWC.  The Petition also sought approval of an affiliated interest agreement between BSWC and CTWS, and an affiliated interest agreement between BSWC and MWC.  In support of their Petition, MWC and BWSC submitted the Merger Agreement between CTWS and BSWC, the proposed affiliated interest agreements, and the pre-filed Direct Testimony and Exhibits of Judy Wallingford, Jerry Mansfield, Eric Thornburg, and David Benoit.
The Public Advocate and the City of Biddeford intervened in the case.  Responses to data requests from the Advisors and the Public Advocate were provided by MWC and BSWC, a technical conference was held on September 24, 2012, and MWC and BSWC filed their Integration Plan on October 1, 2012.  Responses to data requests from the City of Biddeford were provided by MWC and BSWC, a second technical conference was held on October 10, 2012, and MWC responded to oral data requests on October 12, 2012.  Settlement discussions were held thereafter.
		
	III.
	Approvals and Findings

Based upon the record in this case, the parties to this Stipulation agree that the Petition, and the approvals and authorizations requested therein, satisfy the applicable statutory criteria and should be granted by the Commission by an order that approves, accepts and adopts this Stipulation and all of the provisions thereof, including the following findings and provisions:

		
	A.
	The granting of the Petition shall include all authorizations, approvals, and findings requested in the Petition, including specifically a finding that the reorganizations that will occur upon the acquisition by CTWS of the stock of BSWC are consistent with the interests of BSWC’s and MWC’s ratepayers and investors and are approved pursuant to 35-A M.R.S.A. §708.

		
	B.
	The granting of the Petition shall include a specific finding that the two affiliate agreements between BSWC and CTWS and MWC, respectively (the “Agreement” between BSWC and CTWS, and the “Management Services Agreement” between BSWC and MWC) are not adverse to the public interest and are approved pursuant to 35-A M.R.S.A. § 707(3).

		
	C.
	The Commission shall have reasonable access to the books, records, documents and other information relating to MWC and BSWC or any of their affiliated interests, including the books, records, documents and other information relating to CTWS or Connecticut Water Company, subject to those exceptions set forth in 35-A M.R.S. § 708(2)(A)(1).

		
	D.
	The Commission will retain all reasonable powers to detect, identify, review and approve or disapprove all transactions between MWC, BSWC and CTWS or the subsidiaries of CTWS.  

		
	E.
	MWC’s ability to attract capital on reasonable terms, and its ability to maintain a reasonable capital structure, will not be impaired, and BSWC’s ability to attract capital on reasonable terms, and its ability to maintain a reasonable capital structure, will be improved. 

		
	F.
	MWC’s and BSWC’s ability to provide safe, reasonable and adequate service to their customers will not be impaired.  MWC’s and BSWC’s customer service operations will continue to be performed by their respective personnel.  There is not expected to be any change, in the near term, in the software programs used by BSWC to open customer accounts, close customer accounts, respond to customer inquiries and complaints, and issue bills to customers.  In addition, BSWC (and CTWS) have represented to the Commission that they do not plan to make any changes in employees in BSWC as a result of the transaction, which will enable BSWC to continue to provide safe, reasonable and adequate service to its customers.

		
	G.
	MWC and BSWC will continue to be subject to applicable laws, principles and rules governing the regulation of public utilities in Maine.

		
	H.
	Neither MWC’s nor BSWC’s credit will be impaired or adversely affected.

		
	I.
	The Commission retains the ability to order divestiture pursuant to Maine law if necessary to protect the interest of MWC, BSWC, their ratepayers or investors.

		
	J.
	Neither ratepayers nor investors will be adversely affected by the acquisition of BSWC’s stock by CTWS.  There will be no change in BSWC’s rates or its terms and conditions of service as a direct result of this transaction.  Through the record in this case, MWC and BSWC have shown that the main benefit of the transaction is the substantially enhanced ability of BSWC to obtain capital on more favorable terms, which is necessary to sustain and improve BSWC’s water system and service in Biddeford, Saco, Old Orchard Beach and Scarborough.  The Commission authorized BSWC in 2010 to issue up to 35,000 shares of common 

stock to increase equity investment by up to $2.1 million.  BSWC was unable to attract sufficient investment interest through the issuance, and generated gross proceeds of only $1,012,230 (net proceeds of $858,312).  CTWS has ready access to the capital markets, and is committed to investing equity into BSWC as necessary to sustain and improve the BSWC system.  In addition, MWC and BSWC have shown demonstrable net savings to BSWC which are expected to be realized as a result of the acquisition.  The total projected annual savings are $145,612 – savings that are expected to benefit the ratepayers in the short term and long term.
		
	K.
	BSWC and CTWS have represented that they have no plans to, and do not intend to, use the water resource of the Saco River for purposes other than providing water to ratepayers in the communities served by BSWC.  Specifically, but without limitation, BSWC and CTWS will not bottle water from the Saco River for commercial sales outside of the BSWC service territory.

		
	L.
	BSWC and CTWS have represented that they have no plans to, and will not, use or sell any BSWC real property along the Saco River (Lot 2-40) or adjacent to South Street (Lot 2-19) or adjacent to the Andrews Road (Lot 2-19-1) for commercial development, other than the development of such property for public utility purposes, such as the use of the property for water mains, pump stations, treatment facilities, or other public utility facilities.     

		
	M.
	BSWC will provide water meter reading information to the City of Biddeford for purposes of its wastewater billing.

		
	IV.
	Conditions of Approval

In addition to the findings, approvals and authorizations set forth above, the parties further agree to the following conditions of approval:
		
	A.
	BSWC will implement a program whereby it will meet regularly, no less than quarterly for  two years beginning January 1, 2013, and thereafter no less often than semi-annually, with public works departments, fire departments and municipal engineers in each community served by the Company, to coordinate yearly capital programs, hear and address operations issues, set priorities for the annual work program, and collaborate on projects where efficiencies can be achieved (e.g. coordination of paving).

		
	B.
	BSWC will form a Customer Advisory Committee, with up to two representatives from each community served by BSWC, to identify issues and set priorities for capital investment and infrastructure improvement.  The selection of the members will be decided by each community, although a diverse representation of municipal, residential, business and industrial customers is encouraged.  The Advisory Committee will meet no less than quarterly for two years beginning January 1, 2013, and thereafter no less than semi-annually, and may not be discontinued without Commission approval.  

		
	C.
	BSWC will work with a consulting engineering firm for the completion of an engineering study that will assess the existing water system, including the water treatment plant and the distribution system (including fire hydrants), and make recommendations for replacement and upgrades for the long term 

sustainability of the entire system and support of the communities’ needs. This report will be shared with the Customer Advisory Committee, the City Manager in each municipality served by BSWC, and the Public Advocate, and will become a primary tool to set priorities for infrastructure replacement and capital spending.  The target date for completion of the engineering study will be on or before June 30, 2013.
		
	D.
	After the acquisition by CTWS, BSWC and MWC will continue to comply with all Commission orders applicable to the Company as a whole or to any division of the Company.

		
	E.
	As a separate corporation, BSWC will be maintained as a separate ratemaking entity.

		
	F.
	BSWC will not seek, in any future rate proceeding, to recover any “acquisition adjustment” arising out of the transaction.

		
	G.
	BSWC, MWC and CTWS will track separately both the transition and transaction costs related to the acquisition.

		
	H.
	BSWC, MWC and CTWS will not seek recovery of transaction costs that are incurred and related to the acquisition.

		
	I.
	BSWC and CTWS will specifically outline in any rate proceeding occurring over the next three years (2013, 2014, and 2015) costs that have been incurred as a direct result of the acquisition.  In those rate proceedings, the Commission will determine whether such transaction costs will be the responsibility of BSWC stockholders and/or ratepayers, and will make that determination based on the CTWS, MWC and BSWC representation in this 

proceeding that, as a result of the transaction, there will be no short term rate or service adverse impacts on either BSWC or MWC water customers, and no long or short term adverse impact on rates or service as a direct result of the acquisition. 
		
	J.
	BSWC will amortize the curtailment liability, if any, for the pension and post retirement benefit plans in a manner consistent with actuarial rules.

		
	K.
	If, during a period of two years subsequent to the acquisition, CTWS requires additional employee(s) to implement the transition and/or provide existing services to BSWC, then all the costs associated with those additional employee(s) will be assumed by CTWS.

		
	L.
	BSWC will work with community conservation commissions and land trusts to protect and preserve land that BSWC owns on the Saco River.             

		
	V.
	Procedural Stipulations

		
	A.
	It is agreed that the record on which the Commission may base its determination in this matter shall consist of this Stipulation, the Petition and Exhibits, the Direct Testimony and Exhibits of Judy Wallingford, Jerry Mansfield, Eric Thornburg and David Benoit, all data requests and responses thereto, the record of the Technical Conferences, the Integration Plan filed on October 1, 2012, and any other material furnished by the Advisory Staff to the Commission, either orally or in writing, at the time of the Commission’s consideration of this proceeding.

		
	B.
	The parties to the Stipulation hereby waive any rights they have under 5 M.R.S. § 9062(4) and Section 742 of the Commission’s Rules of Practice and Procedure to the extent necessary to permit the Advisory Staff to discuss this Stipulation and 

the resolution of the case with the Commissioners and at scheduled deliberations, without providing to the parties an Examiners’ Report or the opportunity to file Exceptions.
		
	C.
	It is agreed that the Stipulation shall not be considered legal precedent, nor shall it preclude a party from raising issues that were identified during this proceeding in any other Commission proceeding or investigation.

		
	D.
	If this Stipulation is not accepted by the Commission in accordance with all of the provisions hereof and without modification, this Stipulation is voidable by any party hereto, and if voided it shall be of no further effect and shall not prejudice any position taken by any party before the Commission in this proceeding and shall not be admissible in evidence therein or in any other proceeding before the Commission.

Respectfully submitted this 23rd day of October, 2012.
THE MAINE WATER COMPANY

/s/ Judy Wallingford__________
Judy Wallingford, President

BIDDEFORD & SACO WATER
COMPANY

/s/ Jerry Mansfied        _____
Jerry Mansfield, President

PUBLIC ADVOCATE

/s/ William C. Black 10/23/2012__

Its Attorney

CITY OF BIDDEFORD

/s/ Keith R. Jacques        ____
Its Attorney

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