File No. 70-9825
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1 to FORM U-1
APPLICATION/DECLARATION
Under
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
NORTHEAST UTILITIES
174 Brush Hill Avenue
West Springfield, Massachusetts 08109
THE CONNECTICUT LIGHT AND POWER COMPANY
107 Selden Street
Berlin, Connecticut 06037
(Name of companies filing this statement and address of principal executive
offices)
NORTHEAST UTILITIES
(Name of top registered holding company)
Cheryl W. Grise, Esq.
Senior Vice President, Secretary and General Counsel
Northeast Utilities Service Company
P.O. Box 270
Hartford, Connecticut 06141-0270
(Name of address of agent for service)
The Commission is requested to mail signed copies of all orders, notices and
communications to:
Jeffrey C. Miller
Assistant General Counsel
Randy A. Shoop Richard M. Early, Esq.
Treasurer Senior Counsel
The Connecticut Light and Power Northeast Utilities Service
Company Company
P.O. Box 270 P.O. Box 270
Hartford, Connecticut 06141-0270 Hartford, Connecticut 06141-027
The Application/Declaration is amended and restated in its entirety to read as
follows:
ITEM 1. Description of Proposed Transaction
1. The purpose of this Application/Declaration is to seek the
Commission's order approving the sale by deed in lieu of condemnation of the
South Meadow electric generating station (the "Station") by The Connecticut
Light and Power Company ("CL&P") to the Connecticut Resources Recovery Authority
("CRRA"). CL&P is an electric company subsidiary of Northeast Utilities ("NU"),
a registered holding company. CRRA is a public instrumentality and political
subdivision of the State of Connecticut established by statute for the
performance of essential public and governmental functions involving handling
and disposal of solid waste, and resource recovery in Connecticut.
2. The proposed sale of the Station (the "Transaction") is documented in
a Title Transfer Agreement, a copy of which is attached as Exhibit B.1 to this
Application/Declaration. The Station generates electricity (a) from steam
derived from combustion of municipal solid waste in boilers owned by CRRA
turning two steam turbines owned by CL&P and (b) by use of four jet turbine
sets owned by CL&P. The capability of the Station is approximately
250 megawatts. As of November 30, 2000 the net book value (excluding
dismantlement reserves) of the Station was approximately $2.9 million,
as shown below:
Description Amount
Historical Cost $96,032,021
Accumulated Depreciation 93,106,687
Net Book Value $2,925,334
Dismantlement Reserves $5,075,961
Net Book Value, with Dismantlement ($2,150,627)
CRRA will pay CL&P $10 million for the property, plus a full assumption by CRRA
of all but $2 million of on-site environmental obligations. Minor amounts of
FERC-jurisdictional "transmission" assets will be included with the Station.
CL&P will retain either a fee interest or adequate easement rights for the
existing substation, switchyard and related transmission and distribution
facilities, which CL&P intends to retain. CRRA will continue to use the Station
to process municipal solid waste and to generate electricity for sale to CL&P
and in the New England competitive markets.
3. The Transaction is consistent with the Connecticut Electric
Restructuring Act ("Restructuring Act"), which requires CL&P to divest all
generating capacity. CL&P has effected the divestiture of its other non-nuclear
generating stations through competitively bid auctions, and had intended to do
so for the Station. However, CRRA, to protect its significant investment on
the Station site in municipal solid waste processing and combustion facilities,
sought and obtained approval of the Connecticut Department of Public Utility
Control ("DPUC") to take the Station by eminent domain. A copy of CRRA's
application to the DPUC is filed herewith as Exhibit D.1. The taking by CRRA
was approved by the DPUC by Decision in Docket No.99-06-27(September 1, 1999),
a copy of which is filed herewith as Exhibit D.2. As CRRA and CL&P negotiated
the details of the condemnation, they determined that it would substantially
simplify and expedite the transaction if CL&P tendered a deed in lieu of
condemnation to CRRA for the Station. CRRA and CL&P jointly requested DPUC
approval of this change in form of the transaction. A copy of this joint
request is filed herewith as Exhibit D.3. A copy of the DPUC's order
approving the request is filed herewith as Exhibit D.4. CL&P also sought
and obtained approval by the Federal Energy Regulatory Commission ("FERC")
under Section 203 of the Federal Power Act of CL&P's disposition of
FERC-jurisdictional assets, i.e., transmission facilities used in interstate
commerce. A copy of the FERC application is filed herewith as Exhibit D.5,
and a copy of the FERC order approving the disposition is filed herewith
as Exhibit D-6.
4. The Transaction is the result of arm's length negotiations, has been
reviewed and approved by the DPUC and found to be in the public interest, is
subject to additional DPUC review and should be approved by the Commission. As
the DPUC determined, this transaction will not only provide CL&P with a payment
of $10 million, it will also relieve CL&P of significant environmental
liabilities for the Station, which the record of the DPUC proceedings estimates
as being worth an additional $20-$30 million, in addition to the cash
consideration. The Transaction is in compliance with the Restructuring Act and
will enable CL&P to complete the required divestiture of its non-nuclear
generating capacity. The net proceeds of the Transaction will be invested in the
Northeast Utilities System Money Pool (as approved in File No. 70-9755, HCAR No.
35-27328, December 28, 2000) and/or other short-term investments until later in
2001 when the proceeds will be used to reduce CL&P's short-term debt drawn down
to meet working capital requirements, including tax payments due on the sale of
the Millstone generating station. Exhibit I presents CL&P's journal entries to
record the effect of the sale
ITEM 2. Fees, Commissions, and Expenses
5. The fees, commissions and expenses of the Applicants expected to be
paid or incurred, directly or indirectly, in connection with the transactions
described above are estimated as follows:
Northeast Utilities Service Company
(Legal, Financial, Accounting and Other Services) Not in excess of $10,000
Outside Support (Legal, Environmental and
Other Services) approximately $350,000
ITEM 3. Applicable Statutory Provisions
6. The sections of the Act and the related regulations of the Commission
which are or may be applicable to the transactions as herein proposed are set
forth below:
(i) Sale of utility assets Section 12(d), Rule 44
To the extent any other sections of the Act or rules thereunder may be
applicable to the proposed transactions, the Applicants request appropriate
orders thereunder.
ITEM 4. Regulatory Approval
7. Additional approvals are required from the DPUC and the FERC as
described in Item 1.3 above.
ITEM 5. Procedure
8. 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.1. 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 but in any event not later than February 15, 2001. 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
9. Except in accordance with the Act, neither NU nor any subsidiary
thereof (a) has acquired an ownership interest in an exempt wholesale generator
("EWG") or a foreign utility company ("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.
10. NU currently meets all of the conditions of Rule 53(a), except for
clause (1). At December 31, 2000, NU's "aggregate investment," as defined in
Rule 53(a)(1), in EWGs and FUCOs was approximately $469.5 million, or
approximately 76.1% of NU's average "consolidated retained earnings," also
as defined in Rule 53(a)(1), for the four quarters ended December 31, 2000
($617.3 million). With respect to Rule 53(a)(1), however, the Commission has
determined that NU's financing of its investment in Northeast Generation
Company ("NGC"), NU's only current EWG or FUCO in an amount not to exceed
$481 million or 83% of its "average consolidated retained earnings" would
not have either of the adverse effects set forth in Rule 53(c). See Northeast
Utilities, Holding Company Act Release No. 27148, dated March 7, 2000
(the "Rule 53(c) Order"). NU continues to assert that its EWG investment
in NGC will not adversely affect the System.
11. 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 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 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.
12. The proposed transactions, considered in conjunction with the effect of
the capitalization and earnings of NU's EWGs and FUCOs, 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
Rule 53(c) Order was predicated, in part, upon an assessment of NU's overall
financial condition which took into account, among other factors, NU's
consolidated capitalization ratio and its retained earnings, both of which have
improved since the date of the order. NU's EWG investment (it has no FUCO
investment) has been profitable for the periods beginning March 7, 2000 and
ending March 31, 2000, June 30, 2000, September 30, 2000, and December 31, 2000,
respectively. As of December 31, 1999, the most recent period for which
financial statement information was evaluated in the Rule 53(c) Order, NU's
consolidated capitalization consisted of 35.3% common equity and 64.7% debt
(including long and short-term debt, preferred stock, capital leases and
guarantees). As of June 30, 2000, the end of the first quarter after the
issuance of the Rule 53(c) Order, the consolidated capitalization ratios of NU,
with consolidated debt including all short-term debt and non-recourse debt of
the EWG was as follows:
As of June 30, 2000
(thousands %
of dollars)
Common shareholders' equity 2,365,854 36.9
Preferred stock 277,700 4.3
Long-term and short-term debt 3,768,353 58.8
6,411,907 100.0
The consolidated capitalization ratios of NU as of September 30, 2000, with
consolidated debt including all short-term debt and non-recourse debt of the
EWG was as follows:
As of September 30, 2000
(thousands %
of dollars)
Common shareholders' equity 2,413,785 37.9
Preferred stock 277,700 4.3
Long-term and short-term debt 3,683,667 57.8
6,375,152 100.0
The consolidated capitalization ratios of NU as of December 31, 2000, with
consolidated debt including all short-term debt and non-recourse debt of the
EWG was as follows:
As of December 31, 2000
(thousands %
of dollars)
Common shareholders' equity 2,218,583 36.1
Preferred stock 276,968 4.5
Long-term and short-term debt 3,653,843 59.4
6,149,394 100.0
NU's consolidated retained earnings have decreased from $581.8 million
as of December 31, 1999 to $495.9 million as of December 31, 2000. NU's
interest in NGC (its only EWG or FUCO) has made a positive contribution to
earnings in that time by contributing $26.4 million to NU's retained earnings
with revenues of $108.5 million and net income of $26.4 million. Accordingly,
since the date of the Rule 53(c) Order, the capitalization and earnings
attributable to NU's investments in EWGs and FUCOs has not had an adverse
impact on NU's financial integrity.
ITEM 6. Exhibits and Financial Statements
13. The following exhibits and financial statements are filed herewith:
(a) Exhibits
B.1 Form of Title Transfer Agreement*
D.1 Application to Connecticut Department of Public Utility Control
("DPUC")*
D.2 Order of the DPUC*
D.3 Joint request to DPUC*
D.4 Order of the DPUC**
D.5 Application to Federal Energy Regulatory Commission**
D.6 Order of Federal Energy Regulatory Commission**
E. Map***
F. Opinion of Counsel**
H Form of Notice*
I. Journal Entries to Record Effect of Sale**
* Filed with the original Application/Declaration
** Filed with this Amendment No. 1.
*** Filed with this Amendment No. 1 under cover of Form SE.
(b) Financial Statements
See Paragraph 4 of Item I above
[FN]
The provision for depreciation is calculated using the straight-line
method based on the estimated remaining useful lives of depreciable utility
plant-on-service, adjusted for salvage value and removal costs, as approved
by the appropriate regulatory agency where applicable. Except for major
facilities, depreciation rates are applied to the average plant-in-service
during the period. Major facilities are depreciated from the time they are
placed in service. When plant is retired from service, the original cost of
the plant, including costs of removal less salvage, is charged to the
accumulated provision for depreciation. The costs of closure and removal
of nonnuclear facilities are accrued over the life of the plant as a
component of depreciation.
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act of 1935,
the undersigned companies have duly caused this amendment to be signed on their
behalf by the undersigned officer or attorney thereunto duly authorized.
Date: April 19, 2001
NORTHEAST UTILITIES
By: /S/ Randy A. Shoop
Randy A. Shoop
Its Assistant Treasurer - Finance
THE CONNECTICUT LIGHT AND POWER COMPANY
By: /S/ Randy A. Shoop
Randy A. Shoop
Its Treasurer