FILE NO. 70-9755
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 8
(AMENDMENT NO. 12)
TO FORM U-1
APPLICATION/DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Northeast Utilities Holyoke Water Power Company
Western Massachusetts Electric Company 107 Selden Street
One Federal Street, Building 111-4 Berlin, CT 06037
Springfield, MA 01105
The Connecticut Light and Power Company Public Service Company
NU Enterprises, Inc. of New Hampshire
Northeast Generation Services Company North Atlantic Energy
E. S. Boulos Company Corporation
Woods Network Services, Inc. Energy Park
Woods Electrical Co., Inc. 780 North Commercial Street
Northeast Generation Company Manchester, NH 03101
Select Energy, Inc.
Select Energy New York, Inc. Select Energy Services, Inc.
Mode 1 Communications, Inc. 24 Prime Parkway
Northeast Utilities Service Company Natick, MA 01760
107 Selden Street
Berlin, CT 06037
Yankee Energy System, Inc. The Rocky River Realty Company
Yankee Gas Services Company The Quinnehtuk Company
Yankee Energy Financial Services Northeast Nuclear Energy
Company Company
NorConn Properties, Inc. Properties, Inc.
Yankee Energy Services Company 107 Selden Street
107 Selden Street Berlin, CT 06037
Berlin, CT 06037
(Name of companies filing this statement and addresses of
principal executive offices)
NORTHEAST UTILITIES
(Name of top registered holding company)
Gregory B. Butler, Esq.
Senior Vice President, Secretary and General Counsel
Northeast Utilities Service Company
P.O. Box 270
Hartford, CT 06141-0270
(860) 665-3181
(Name and address of agent for service)
The Commission is requested to mail signed copies of all orders,
notices and communications to
Jeffrey C. Miller Randy A. Shoop
Assistant General Counsel Assistant Treasurer- Finance
Northeast Utilities Northeast Utilities
Service Company Service Company
P.O. Box 270 P.O. Box 270
Hartford, CT 06141-0270 Hartford, CT 06141-0270
(860) 665-3532 (860) 665-3258
millejc@nu.com shoopra@nu.com
The Application/Declaration in this file, as heretofore amended,
is further amended and restated as follow:
ITEM 1
DESCRIPTION OF PROPOSED TRANSACTION
BACKGROUND
1. Northeast Utilities ("NU"), a public utility holding company
registered under the Public Utility Holding Company Act of 1935,
as amended (the "Act"), located at One Federal Street,
Springfield Massachusetts, 01105; Yankee Energy System, Inc.
("YES"), a public utility holding company subsidiary of NU,
exempt from registration under the Act, and Northeast Utilities
Service Company, NU's service company subsidiary, both located at
107 Selden Street, Berlin, CT 06037; NU's direct and indirect
public utility subsidiaries, The Connecticut Light and Power
Company ("CL&P") and Yankee Gas Services Company ("Yankee Gas"),
located at 107 Selden Street, Berlin, CT 06037, Western
Massachusetts Electric Company, located at One Federal Street,
Springfield Massachusetts, 01105, ("WMECO" and with CL&P and
Yankee Gas, the "Utility Borrowers"), Public Service Company of
New Hampshire, located at Energy Park, 780 North Commercial
Street, Manchester, NH 03101 ("PSNH"), and Holyoke Water Power
Company, located at 107 Selden Street, Berlin, CT 06037; and NU's
direct and indirect nonutility subsidiaries, Northeast Nuclear
Energy Company, The Rocky River Realty Company, The Quinnehtuk
Company, Properties, Inc., Yankee Energy Financial Services
Company, Yankee Energy Services Company, NorConn Properties,
Inc., NU Enterprises, Inc., Northeast Generation Company,
Northeast Generation Services Company, E. S. Boulos Company,
Woods Electrical Company, Inc., Woods Network Services, Inc.,
Select Energy, Inc. and Mode 1 Communications, Inc., all located
at 107 Selden Street, Berlin, CT 06037, North Atlantic Energy
Corporation , located at 780 North Commercial Street, Manchester,
NH 03101, Select Energy New York, Inc., located at 507 Plum
Street, Syracuse, NY 13204 and Select Energy Services, Inc.,
located at 24 Prime Parkway, Natick, MA 01760 (all collectively,
the "Applicants") submit this amendment to the
application/declaration in this File (the "Amendment") pursuant
to Sections 6(a) and 7 of the Act with respect to the increase of
short-term debt authorizations granted by the Commission in a
prior Commission order.
2. By order dated June 30, 2004 (Holding Co. Act Release No. 35-
27870) issued by the Commission in this File No. 70-9755 (the
"2004 Order"), the Commission granted authority for NU, YES, and
the Utility Borrowers to issue and sell notes or commercial paper
to unaffiliated third parties to evidence short-term debt through
June 30, 2007 ("Authorization Period") up to the following
aggregate outstanding principal amounts: NU, $450 million; YES,
$50 million, CL&P, $450 million; WMECO, $200 million; and Yankee
Gas, $150 million (each limit, "Aggregate Short-Term Debt Limit")
and for NU, YES and the Utility Borrowers to engage in interest
rate hedges through the Authorization Period. The 2004 Order
also authorized the continued operation of the NU Money Pool
through the Authorization Period subject to the applicable
Aggregate Short-Term Debt Limit, if applicable.
3. NU now seeks authorization to increase the amount of its
Aggregate Short-term Debt Limit that it may incur through the
Authorization Period from $450 million to $500 million. No
further authorizations are being requested by this Amendment and
all terms and conditions in the 2004 Order remain applicable.
DESCRIPTION OF THE APPLICANTS
4. NU is a registered holding company under the Act and is the
parent company of the Northeast Utilities system (the NU system).
The NU system furnishes franchised retail electric service to
over 1.8 million customers in 420 cities and towns in
Connecticut, New Hampshire and western Massachusetts through
three of NU's wholly-owned electric utilities under the Act,
CL&P, PSNH and WMECO. CL&P, PSNH and WMECO furnish retail
franchise electric service in 149, 201 and 59 cities and towns in
Connecticut, New Hampshire and Massachusetts, respectively. CL&P
provides retail franchise service to approximately 1.2 million
customers in Connecticut, PSNH provides retail service to
approximately 450,000 customers in New Hampshire and WMECO serves
approximately 200,000 retail customers in Massachusetts. The NU
system also furnishes franchised retail natural gas service in a
large part of Connecticut through Yankee Gas, a gas utility under
the Act, owned by YES, a public utility holding company
subsidiary of NU exempt from registration under the Act by
section 3(a)(1), Yankee Gas is the largest natural gas
distribution company in Connecticut serving approximately 192,000
residential, commercial and industrial customers in 71 cities and
towns in Connecticut, including large portions of the central and
southwest sections of the state. Holyoke Water Power Company,
although not an electric utility under Massachusetts state law,
owns approximately 147 mw of coal-fired generation in Holyoke, MA
and is an electric utility under the Act. NU also owns,
directly or indirectly, various non-utility companies, including,
NU Enterprises, Inc., the system's nonutility holding company,
Northeast Generation Company ("NGC"), an exempt wholesale
generator, Select Energy Services, Inc., an energy services
company acquired pursuant to Commission Order, and Northeast
Generation Services Company and Select Energy, Inc., companies
formed pursuant to Rule 58 under the Act.
EXTERNAL SHORT-TERM DEBT OF NU
5. The 2004 Order authorized NU to issue up to an aggregate of
$450 million of short-term debt at any one time outstanding
through the Authorization Period. In this Amendment, NU seeks an
order of the Commission increasing the amount of external short-
term debt that it may issue and sell from time to time during the
Authorization Period from $450 million to an aggregate principal
amount at any time outstanding not to exceed $500 million.
Management believes that such an increase is necessary at this
time to continue to support the credit and liquidity requirements of
its regulated and competitive businesses and meet increasing
demands from NU counterparties for cash or letter of credit
support for various power and energy and other transactions. This
increase in demand for credit assurances reflects an industry
trend as opposed to any company-specific concern. In
addition, Standard and Poor's, one of NU's credit rating
agencies, has imposed reporting requirements industry-wide for
its new liquidity tests. Standard and Poor's liquidity tests
demonstrate that NU needs additional credit capacity to support
its businesses in the event of certain hypothetical adverse
developments affecting forward prices of energy commodity
products and credit ratings.
6. As stated in the Application, external short-term debt
issued by NU has taken and may take a variety of forms, including
commercial paper issuances and/or unsecured notes with banks or
other institutional lenders under credit facilities on terms that
are generally available to borrowers with comparable credit
ratings. All short-term debt issued by NU will have maturities
of less than one year from the date of issuance. NU will not
issue any secured debt. Commercial paper issued by NU hereunder
may be issued manually or through The Depository Trust Company in
the form of book entry notes in denominations of not less than
$50,000 of varying maturities. Such commercial paper would
typically be sold to dealers at the discount rate prevailing at
the date of issuance for commercial paper of comparable quality
and maturities sold to commercial paper dealers generally. It is
expected that the dealers acquiring the commercial paper will
reoffer it at a discount to corporate and institutional
investors. No commercial paper will be issued by NU unless the
issuer believes that the effective interest cost to it will be
equal to or less than the effective interest rate at which it
could issue short-term notes in an amount at least equal to the
principal amount of such commercial paper. The commercial paper
will be publicly issued and sold without registration under the
Securities Exchange Act of 1933 in reliance upon one or more
applicable exemptions from registration thereunder.
7. The effective cost of money on all external short-term debt
of NU 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 companies of comparable
credit quality, provided that in no event will the effective cost
of capital exceed 300 basis points over the comparable term
London Interbank Offered Rate. Issuance expenses in connection
with any non-competitive offering of short-term debt will not
exceed 5% of the principal amount thereof. Specific terms of any
short-term debt will be determined by NU at the time of issuance
and will comply in all regards to the parameters of financing
authorizations set forth above. A copy of any new note or loan
agreement executed pursuant to this Authorization will be filed
under cover of the next quarterly report under Rule 24. Subject
to the NU Aggregate Short-term Debt Limit, NU intends to renew
and extend outstanding short-term debt as it matures, to refund
such short-term debt with other similar short-term debt, to repay
such short-term debt or to increase the amount of their short-
term debt from time to time through the Authorization Period.
INVESTMENT GRADE RESTRICTIONS
8. NU commits that, apart from the securities issued for the
purpose of funding money pool operations, no securities may be
issued in reliance upon the Order issued in this file during the
Authorization Period, unless: (i) the security to be issued, if
rated, is rated investment grade; and (ii) all outstanding
securities of NU that are rated, are rated investment grade. For
purposes of this condition, a security will be considered
investment grade if it is so rated by at least one nationally
recognized statistical rating organization, as that term is used
in paragraphs (c)(2)(vi)(E), (F) and (H) of Rule 15c3-1 under the
Securities Exchange Act of 1934. NU requests that the Commission
reserve jurisdiction over the issuance by NU of any securities
that do not meet these conditions.
9. NU commits that at all times during the Authorization
Period, it will maintain common equity of at least 30% of its
consolidated capitalization (common equity, preferred stock, long-
term debt and short-term debt) as reflected in the most recent
Form 10-K or Form 10-Q filed with the Commission, adjusted to
reflect changes in capitalization since the balance sheet date
therein.
10. Current Financial Condition
For the twelve (12) months ended December 31, 2003,
NU's consolidated gross revenues and net income were
approximately $6.1 billion and $116.4 million, respectively. As
of December 31, 2003, NU's consolidated capitalization consisted
of 33.5% common equity, 1.7% preferred stock, 25.6% of Rate
Reduction Bonds , and 39.2% long-term and short-term debt.
When the Rate Reduction Bonds are excluded, NU's consolidated
capitalization consisted of 45.0% common equity, 2.3% preferred
stock and 52.7% debt. For the nine (9) months ended
September 30, 2004, NU's consolidated gross revenues and net
income were approximately $5.0 billion and $129 million,
respectively. As of September 30, 2004, NU's consolidated
capitalization consisted of 33.3% common equity, 1.7% preferred
stock, 22.9% of Rate Reduction Bonds, and 42.1% long-term and
short-term debt. When the Rate Reduction Bonds are excluded,
NU's consolidated capitalization as of September 30, 2004
consisted of 43.2% common equity, 2.2% preferred stock and 54.6%
debt.
As of the date of this Amendment, the corporate credit
rating for NU is BBB+ by Standard and Poor's and Baa1 by Moody's
and the ratings issued for NU's Senior Unsecured Debt were Baa1
by Moody's, and BBB by Standard and Poor's and Fitch.
USE OF PROCEEDS
11. The use of proceeds from the short-term debt of NU
authorized by the Commission pursuant to this Amendment will be
the same as set forth in the Application: proceeds will be used
for (i) general corporate purposes, including investments by and
capital expenditures of NU and its subsidiaries, including,
without limitation, the funding of future investments in exempt
wholesale generators ("EWG"), Foreign Utility Companies ("FUCO")
(each to the extent permitted under the Act or Commission order),
Rule 58 Subsidiaries (to the extent permitted under the Act or
Commission order), and exempt telecommunications companies
("ETC"), (ii) the repayment, redemption, refunding or purchase by
NU or any subsidiary of any of its own securities from non-
affiliates pursuant to Rule 42, and (iii) financing working
capital requirements of NU and its subsidiaries.
12. NU represents that no financing proceeds will be used to
acquire the securities of, or other interests in, any company
unless such acquisition has been approved by the Commission in
this or a separate proceeding or is in accordance with an
available exemption under the Act or rules thereunder, including
Sections 32 and 33 and Rules 53, 54 and 58. NU states that the
aggregate amount of proceeds of financing approved by the
Commission in this proceeding used to fund investments in EWGs
and FUCOs will not, when added to NU's "aggregate investment" (as
defined in Rule 53) in all such entities at any point in time,
exceed 50% of NU's average "consolidated retained earnings" (also
as defined in Rule 53), except as permitted and authorized by the
Commission. Further, NU represents that proceeds of
financing utilized to fund investments in Rule 58 Subsidiaries
will adhere to the limitations of that rule or Commission
Order.
ITEM 2
FEES, COMMISSIONS AND EXPENSES
1. In addition to fees associated with specific borrowing or
issuances of commercial paper as set forth in Item 1 above, the
fees, commissions and expenses of the Applicants expected to be
paid or incurred, directly or indirectly, in connection with this
Amendment is as follows:
Northeast Utilities Service Company
(Legal, Financial, Accounting and
Other Services) Not in excess of $10,000
ITEM 3
APPLICABLE STATUTORY PROVISIONS
1. The Applicants believe that Sections 6 and 7 of the Act are
applicable to the transactions contemplated by this Amendment.
ITEM 4
REGULATORY APPROVALS
1. No regulatory approvals, other than those of the
Commission requested herein, are required for the proposed
activities for which Commission authorization is sought herein.
ITEM 5
PROCEDURE
1. The Applicants hereby request that the Commission publish a
notice under Rule 23 with respect to the filing of this
Application as soon as practicable and that the Commission's
order be issued as soon as possible. A form of notice suitable
for publication in the Federal Register is attached hereto as
Exhibit H.4. The Applicants respectfully request the
Commission's approval, pursuant to this Application, of all
transactions described herein, whether under the sections of the
Act and Rules thereunder enumerated in Item 3 or otherwise. It
is further requested that the Commission issue an order
authorizing the transactions proposed herein at the earliest
practicable date. Additionally, the Applicants (i) request that
there not be any recommended decision by a hearing officer or by
any responsible officer of the Commission, (ii) consent to the
Office of Public Utility Regulation within the Division of
Investment Management assisting in the preparation of the
Commission's decision, and (iii) waive the 30-day waiting period
between the issuance of the Commission's order and the date on
which it is to become effective, since it is desired that the
Commission's order, when issued, become effective immediately.
OTHER MATTERS
1. Except in accordance with the Act, neither NU nor any
subsidiary thereof (a) has acquired an ownership interest in an
EWG or a FUCO, as defined in Sections 32 and 33 of the Act, or
(b) now is or as a consequence of the transactions proposed
herein will become a party to, or has or will as a consequence of
the transactions proposed herein have a right under, a service,
sales, or construction contract with an EWG or a FUCO. None
of the proceeds from the transactions proposed herein will be
used by NU and its subsidiaries to acquire any securities of, or
any interest in, an EWG or a FUCO.
2. NU currently meets all of the conditions of Rule 53(a),
except for clause (1). At September 30, 2004, NU's "aggregate
investment," as defined in Rule 53(a)(1), in EWGs and FUCOs was
approximately $448.2 million, or approximately 53% of NU's
average "consolidated retained earnings," also as defined in Rule
53(a)(1), for the four quarters ended September 30, 2004 ($846.3
million). With respect to Rule 53(a)(1), however, the Commission
has determined that NU's financing of its investment in EWGs in
an amount not to exceed $1 billion would not have either of the
adverse effects set forth in Rule 53(c). (See the 2004 Order). NU
continues to assert that its EWG investments will not adversely
affect the System.
3. In addition, NU and its subsidiaries are in
compliance and will continue to comply with the other provisions
of Rule 53(a) and (b), as demonstrated by the following
determinations:
(i) NGC, NU's only EWG, maintains books and records,
and prepares financial statements, in accordance with Rule
53(a)(2). Furthermore, NU has undertaken to provide the
Commission access to such books and records and financial
statements, as it may request;
(ii) No employees of NU's public utility subsidiaries have
rendered services to NGC;
(iii) NU has submitted (a) a copy of each Form U-1 and Rule
24 certificate that has been filed with the Commission
under Rule 53 and (b) a copy of Item 9 of the Form U5S and
Exhibits G and H thereof to each state regulator having
jurisdiction over the retail rates of NU's affected public
utility subsidiaries;
(iv) Neither NU nor any subsidiary has been the subject of a
bankruptcy or similar proceeding unless a plan of
reorganization has been confirmed in such proceeding;
(v) NU's average CREs for the four most recent quarterly
periods have not decreased by 10% or more from the average
for the previous four quarterly periods; and
(vi) In the previous fiscal year, NU did not report
operating losses attributable to its investment in
EWGs/FUCOs exceeding 3 percent of NU's consolidated
retained earnings.
4. The proposed transactions, considered in conjunction with the
effect of the capitalization and earnings of NU's EWG, would not
have a material adverse effect on the financial integrity of the NU
system, or an adverse impact on NU's public-utility subsidiaries,
their customers, or the ability of State commissions to protect
such public-utility customers. The 2004 Order concerning EWG
investments was predicated, in part, upon an assessment of NU's
overall financial condition which took into account, among other
factors, NU's consolidated capitalization, the growth of consolidated
retained earnings and credit ratings. NU's current EWG investment,
NGC (it has no FUCO investment) has been profitable for all quarterly
periods since its acquisition in March 2000.
5. The consolidated capitalization ratios of NU as of
September 30, 2004, with consolidated debt including all
short-term debt and non-recourse debt of the EWG, were as follows:
As of September 30, 2004
(thousands
of dollars) %
Common shareholder's equity $ 2,318,909 33.3
Preferred stock 116,200 1.7
Long-term and short-term debt 2,929,700 42.1
Rate reduction bonds 1,591,944 22.9
Total $ 6,956,753 100.0
If Rate Reduction Bonds are excluded the consolidated
capitalization ratio of NU as of September 30, 2004 is as
follows:
As of September 30, 2004
(thousands
of dollars) %
Common shareholders' equity $ 2,318,909 43.2
Preferred stock 116,200 2.2
Long-term and short-term debt 2,929,700 54.6
Total $ 5,364,809 100.0%
6. In addition, NGC has made a positive contribution to earnings
by contributing $153.3 million in revenues in the 12-month period
ending September 30, 2004 and net income of $40.8 million for the
same period.
ITEM 6
EXHIBITS AND FINANCIAL STATEMENTS
1. The following exhibits and financial statements are filed
herewith.
(a) Exhibits
H.4 Form of Notice
(b) Financial Statements
1. Northeast Utilities Consolidated Balance Sheets, as
of December 31, 2003, Consolidated Statements of
Income and Statement of Retained Earnings for the 12
months ended December 31, 2003 and Statement of
Capitalization as of December 31, 2003 (incorporated
by reference to NU Annual Report on Form 10K for the
year ended December 31, 2003 filed with the
Commission, File No. 1-5324).
2. Northeast Utilities Consolidated Balance Sheets, as
of March 31, 2004, June 30, 2004 and September 30,
2004, Consolidated Statements of Income and
Statement of Retained Earnings for the 3 months
periods ended March 31, 2004, June 30, 2004 and
September 30, 2004, and Statement of Capitalization
as of March 31, 2004, June 30, 2004 and September
30, 2004 (incorporated by reference to NU Quarterly
Report on Form 10-Q for the period ended March 31,
2004, June 30, 2004 and September 30, 2004 filed
with the Commission, File No. 1-5324).
ITEM 7
INFORMATION AS TO ENVIRONMENTAL EFFECTS
1. None of the matters that are the subject of this
Application involve a "major federal action" nor do they
"significantly affect the quality of the human environment" as
those terms are used in Section 102(2)(C) of the National
Environmental Policy Act. None of the proposed transactions that
are the subject of this Application will result in changes in the
operation of the Applicants that will have an impact on the
environment. The Applicants are not aware of any federal agency
which has prepared or is preparing an environmental impact
statement with respect to the transactions proposed herein."
[SIGNATURE PAGE TO FOLLOW]
SIGNATURE
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, the Applicants have duly caused this
Application-Declaration to be signed on their behalf by the
undersigned thereunto duly authorized.
November 30, 2004
Northeast Utilities
Northeast Utilities Service Company
The Connecticut Light and Power Company
Western Massachusetts Electric Company
Public Service Company of New Hampshire
North Atlantic Energy Corporation
Holyoke Water Power Company
Northeast Nuclear Energy Company
Yankee Energy System, Inc.
Yankee Gas Services Company
The Rocky River Realty Company
The Quinnehtuk Company
NU Enterprises, Inc.
Northeast Generation Company
Northeast Generation Service Company
Properties, Inc.
Woods Electrical Co., Inc.
Woods Network Services, Inc.
E. S. Boulos Company
Select Energy, Inc.
Select Energy New York, Inc.
Mode 1 Communications, Inc.
Select Energy Services, Inc.
Yankee Energy Financial Services Company
Yankee Energy Services Company
NorConn Properties, Inc.
By: /s/ Randy A. Shoop
Name: Randy A. Shoop
Title: Assistant Treasurer-Finance
Northeast Utilities Service Company as Agent for
all of the above-named Applicants
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Rate Reduction Bonds (including Rate Reduction
Certificates) are state-authorized bonds issued by special
purpose entities formed by CL&P, WMECO and PSNH, respectively,
and are non-recourse to each respective utility.
The Commission has, by order dated July 2, 2004 (HCAR No.
27868A), authorized NU to invest an amount not to exceed $1
billion in exempt wholesale generators.
The Commission has, by order dated July 2, 2004 (HCAR No.
27868A), authorized NU to invest up to $500 million in excess of
the Rule 58 limitations in Rule 58 companies.
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