SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Act of 1934
Date of Report (Date of earliest event reported): APRIL 17, 2003
TC PIPELINES, LP
(Exact name of registrant as specified in its charter)
DELAWARE 000-26091 52-2135448
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
110 TURNPIKE ROAD, SUITE 203 01581
WESTBOROUGH, MASSACHUSETTS (Zip Code)
(Address of principal executive offices)
(508) 871-7046
(Registrant's telephone number, including area code)
-1-
ITEM 5. OTHER EVENTS
TC PipeLines, LP owns a 30% general partner interest in Northern Border
Pipeline Company ("Northern Border Pipeline"). The remaining 70% is owned by
Northern Border Partners, L.P. ("Northern Border Partners"), a publicly traded
limited partnership controlled by affiliates of Enron Corp. On April 17, 2003,
Northern Border Pipeline filed with the Securities and Exchange Commission
("SEC") a current report on Form 8-K describing the possible effects of a
potential affirmation by the SEC of an initial decision ("Initial Decision") by
the administrative law judge ("ALJ") issued on February 6, 2003 denying Enron's
application for exemption from the requirements of the Public Utility Holding
Company Act ("PUHCA"). As set forth in more detail below, Enron has filed a
petition with the SEC requesting a reversal of the Initial Decision. Until the
SEC acts on this petition, the Initial Decision is stayed.
Two of Northern Border Partners' general partners, Northern Plains Natural
Gas Company ("Northern Plains") and Pan Border Gas Company ("Pan Border"), are
owned by Enron Corp. In addition, all of the common stock of Portland General
Electric Company ("PGE") is owned by Enron. As the owner of PGE's common stock,
Enron is a holding company for purposes of PUHCA. Following Enron's acquisition
of PGE in 1997, Enron annually filed a statement claiming an exemption from all
provisions of PUHCA (except the provision which addresses the acquisition of
public utility company affiliates) under Section 3(a)(1). Due to Enron's
bankruptcy filing in December 2001, Enron is no longer able to provide necessary
financial information needed to file the exemption statement. As a result, in
February 2002, Enron applied to the SEC for an order of exemption under Section
3(a)(1). To be eligible for this exemption, PGE's utility activities must, among
other things, be predominantly intrastate in character.
Following the submission of testimony by the parties to the proceeding, a
hearing on Enron's application was held on December 5, 2002. On February 6,
2003, the ALJ issued its Initial Decision holding that PGE does not meet the
criteria to be predominantly intrastate in character, thereby denying Enron's
application for exemption. On February 27, 2003, Enron filed a petition for
review with the SEC requesting that the SEC review the ALJ's Initial Decision,
reverse such Initial Decision, and find that Enron is entitled to an exemption
from PUHCA. Filing of the petition stays the effect of the Initial Decision
until such time as the SEC acts on the petition. As directed by the SEC, the
Division of Investment Management filed a response to the petition on March 25,
2003 urging the SEC to reject the petition and affirm the ALJ's Initial
Decision. The SEC could act on the petition at any time. Possible actions that
the SEC could take include setting the matter for further hearings before the
full Commission or summarily affirming, reversing or modifying the Initial
Decision. If the SEC affirms the Initial Decision, Enron would be required to
register as a holding company under PUHCA and Northern Plains and Pan Border
would presumptively become subsidiaries within the newly registered Enron
holding company system. Further, because of the voting interest held by Enron
through its general partner interests in Northern Border Partners, Northern
Border Partners and certain of its subsidiaries, including Northern Border
Pipeline, would also presumptively become subsidiaries within the Enron holding
company system.
PUHCA imposes a number of restrictions on the operation of registered
holding companies and their subsidiaries within the registered holding company
system, including the requirement of SEC approval of securities issuances and
certain restrictions on the ability to own or acquire businesses. PUHCA also
regulates transactions between companies in a holding company system.
Operations under PUHCA can become materially more expensive and cumbersome than
operations by companies that are not subject to, or exempt, from PUHCA. If
Northern Border Pipeline is unable to obtain an exemption from subsidiary status
under PUHCA, it would become subject to regulation by the SEC not only with
respect to the acquisition of the securities of public utilities, but also with
respect to, among other things, the acquisition of assets and interests in any
other business, declaration and payment of certain cash distributions;
intra-system borrowings or indemnifications; sales, services or construction
transactions with other holding company system companies; the issuance of debt
or equity securities; and borrowings under credit facilities. In its 8-K filing,
Northern Border Pipeline states that at this time, it cannot predict how
regulations under PUHCA would impact its operations, although if it receives the
exemptions or blanket forward-looking orders referred to below, it believes that
it will be able to conduct its operations in a manner consistent with its
current operations without material cost or delay.
In its 8-K filing, Northern Border Pipeline states that if Enron's
exemption application is denied by the SEC, Northern Border Pipeline cannot
estimate the amount of time that the SEC will provide for Enron to register as
-2-
a holding company under PUHCA at which time Enron and its holding company system
would become subject to PUHCA. Northern Border Pipeline further states that it
intends to seek blanket, forward-looking orders from the SEC that, if granted,
would minimize the impacts as described above of PUHCA on its operations.
Further, Northern Border Pipeline states that it may also seek exemptions for
its operations from regulation under PUHCA. Similar blanket, forward-looking
orders and exemptions are often granted by the SEC to operating subsidiaries of
a holding company under PUHCA. Northern Border Pipeline states that no assurance
can be given that it will be successful in obtaining all the blanket orders or
exemptions that it intends to seek or that its operations will not be subject to
the full regulatory impact of PUHCA.
TC PipeLines does not currently anticipate that the outcome of the SEC's
determination will have any material impact on its ability to conduct its
operations or to meet its obligations.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TC PipeLines, LP
By: TC PipeLines GP, Inc.,
its general partner
Dated: April 17, 2003 By: /S/ THERESA JANG
----------------------------------
Theresa Jang
Controller
-3-