Applications, hearings, and determinations, etc.: Public utility holding company filings,

[Federal Register: March 23, 2001 (Volume 66, Number 57)]

[Notices]

[Page 16303-16304]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr23mr01-156]

SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27359]

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

March 19, 2001.

Notice is hereby given that the following filing(s) has/have been made with the Commission pursuant to provisions of the Act and rules promulgated under the Act. All interested persons are referred to the application(s) and/or declaration(s) for complete statements of the proposed transaction(s) summarized below. The application(s) and/or declaration(s) and any amendment(s) is/are available for public inspection through the Commission's Branch of Public Reference.

Interested persons wishing to comment or request a hearing on the application(s) and/or declaration(s) should submit their views in writing by April 12, 2001, to the Secretary, Securities and Exchange Commission, Washington, DC 20549-0609, and serve a copy on the relevant applicant(s) and/or declarant(s) at the address(es) specified below. Proof of service (by affidavit or, in the case of an attorney at law, by certificate) should be filedwith the request. Any request for hearing should identify specifically the issues of facts or laws that are disputed. A person who so requests will be notified of any hearing, if ordered, and will receive a copy of any notice or order issued in the matter. After April 12, 2001, the

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application(s) and/or declaration(s), as filedor as amended, may be granted and/or permitted to become effective.

Northeast Utilities, et al. (70-9839)

Northeast Utilities (``NU''), a registered public utility holding company, Western Massachusetts Electric Company (``WEMCO''), an electric utility subsidiary of NU, both located at 174 Brush Hill Avenue, West Springfield, Massachusetts 01090 and Connecticut Light and Power Company (``CL&P''), an electric utility subsidiary of NU located at 107 Selden Street, Berlin, Connecticut 06037 (collectively, ``Applicants'') have filedan application-declaration under sections 6(a), 7, 9(a), 10 and 12(c) and rules 42, 43, 44, 46(a) and 54.

Applicants request authorization, through December 31, 2004, for: (1) CL&P to pay dividends to and/or repurchase stock from NU out of capital or unearned surplus in an amount not to exceed $100 million in using the proceeds from the sale of nuclear generating facilities (``Millstone''); (2) CL&P to pay dividends and/or repurchase stock in accordance with the provisions of CL&P's dividend covenant under its first mortgage indenture and deed of trust (``Mortgage Indenture'') \1\ dated May 1, 1921 to the Bankers Trust Company as trustee; and (3) WMECO to pay dividends to and/or repurchase stock from NU out of capital or unearned surplus in an amount not to exceed $21 million using proceeds from the sale of nuclear generating facilities.

\1\ The Mortgage Indenture provides, among other things, that cash dividends may not be paid on the capital stock of CL&P, or distributions made, or capital stock purchased by CL&P, in an aggregate amount which exceeds CL&P's earned surplus after December 31, 1966, plus the earned surplus of CL&P accumulated prior to January 1, 1967 in amount not exceeding $13,500,000, plus such additional amount as may be authorized or approved by the Commission under the Act.

Applicants note that each of the states in which CL&P and WMECO (collectively, ``Utilities'') operate, Connecticut and Massachusetts, has enacted restructuring legislation (``Restructuring Legislation'') that is intended to deregulate the electric utility industry and provide retail customers with a choice of electricity providers. The Restructuring Legislation strongly encourages the Utilities to, among other things, divest their nuclear and non-nuclear generating assets. The non-nuclear electric generating assets of CL&P and WMECO have been sold. The Utilities are in the process of selling Millstone, a nuclear generating asset. In addition to the proceeds raised from these sales of generating assets, CL&P and WMECO will also receive proceeds from the issuance of rate reduction bonds (``RRBs'') as part of the restructuring process. This application only deals with the use of proceeds from the sale of Millstone.

By order dated March 7, 2000 (HCAR No. 27147), the utility subsidiaries \2\ sought and were granted authorization, among other things, to pay dividends to, and/or repurchase shares of their respective stock from NU out of capital or unearned surplus using the proceeds from the sale of non-nuclear generating assets and the issuance of RRBs, despite the lack of sufficient retained earnings. Applicants state that the sale of nuclear assets was not foreseen at the time of the previous filing as resulting in any substantial net cash to the Utilities. However, as a result of the proposed sale of Millstone, the Utilities will experience a significant influx of cash without a corresponding increase in retained earnings. To achieve the cost reduction goals of the Restructuring Legislation, Applicants propose to reduce their common equity capitalizations using a portion of such proceeds.

\2\ In addition to CL&P and WMECO, North Atlantic Energy Corporation and Public Service Company of New Hampshire also requested authorization in HCAR No. 27147.

Applicants state the payment of dividends would not impair the financial integrity of CL&P or WMECO because, after the payment of these dividends, each Utility will still have adequate cash to operate its substantially smaller business. The senior debt ratings of CL&P and WMECO issued by Standard & Poor's were upgraded to ``BBB+'' on January 31, 2001 while the senior debt ratings of CL&P and WMECO issued by Moody's Investor Service Inc. were upgraded to ``Baa1'' on January 23, 2001.

Applicants note that as a result of the proposed transactions, the issuance of rate reduction bonds, and the accounting treatment of the debt relating to the rate reduction bonds, the equity-to-capitalization ratio of CL&P and of NU on a consolidated basis, is expected to fall below the Commission's 30% equity standard. Applicant represents that the companies will adhere to any state commission order requiring a higher equity ratio.\3\

\3\ On March 16, 2001, the Connecticut Department of Public Utility Control issued a temporary order requiring CL&P to use the proceeds in a way to result in a common equity ratio for CL&P between 45% and 50% (not including the rate reduction bonds as debt).

For the Commission, by the Division of Investment Management, pursuant to delegated authority. Margaret H. McFarland, Deputy Secretary.

[FR Doc. 01-7256Filed3-22-01; 8:45 am]

BILLING CODE 8010-01-M