

[Federal Register: October 6, 2005 (Volume 70, Number 193)]
[Notices]               
[Page 58494-58496]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06oc05-171]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-28041]

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

September 30, 2005.
    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 October 21, 2005, 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 filed with the request. Any request for 
hearing should identify specifically the issues of facts or law 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 October 21, 2005, the application(s) and/or 
declaration(s), as filed or as amended, may be granted and/or permitted 
to become effective.

Northeast Utilities, et al. (70-9755)

    Northeast Utilities (``NU''), a public utility holding company 
registered under the Act, Building 111-4, One Federal Street, 
Springfield, Massachusetts 01105; Yankee Energy System, Inc. (``YES''), 
a public utility holding company subsidiary of NU, exempt from 
registration under section 3(a)(1) of the Act by rule 2, and Northeast 
Utilities Service Company, NU's service company subsidiary, 107 Selden 
Street, Berlin, Connecticut 06037; NU's direct and indirect public 
utility subsidiaries, The Connecticut Light and Power Company 
(``CL&P'') and Yankee Gas Services Company (``Yankee Gas''), 107 Selden 
Street, Berlin, Connecticut 06037, Western Massachusetts Electric 
Company, Building 111-4, One Federal Street, Springfield, Massachusetts 
01105 (``WMECO'' and with CL&P and Yankee Gas, the ``Utility 
Borrowers''), Public Service Company of New Hampshire, Energy Park, 780 
North Commercial Street, Manchester, New Hampshire 03101 (``PSNH''), 
and Holyoke Water Power Company (``HWP''), 107 Selden Street, Berlin, 
Connecticut 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., Select Energy New York, Inc., and Mode 1 Communications, Inc., 
107 Selden Street, Berlin, Connecticut 06037, and North Atlantic Energy 
Corporation, North Atlantic Energy

[[Page 58495]]

Service Corporation (``NAESC''), Energy Park, 780 North Commercial 
Street, Manchester, New Hampshire, 03101; and Select Energy Services, 
Inc., 24 Prime Parkway, Natick, Massachusetts 01760 (all of the above 
named companies collectively the ``Applicants'') have filed a post-
effective amendment to an application/declaration (``Amendment'') under 
sections 6(a) and 7 of the Act.
    Applicants state that by order dated June 30, 2004 (Holding Co. Act 
Release No. 27870) (``2004 Order''), the Commission granted authority 
for NU, YES and the Utility Borrowers to issue short-term debt 
securities, subject to certain conditions. NU was authorized to issue 
up to an aggregate of $450 million of short-term debt at any one time 
outstanding through June 30, 2007 (``Authorization Period''). The 2004 
Order also authorized continued operation of the NU Money Pool through 
the Authorization Period, based, in part, on the commitment by NU, YES 
and the Utility Borrowers that, apart from the securities issued for 
the purpose of funding money pool operations, no securities would be 
issued under the authority obtained under the 2004 Order unless: (i) 
The security to be issued, if rated, is rated investment grade; (ii) 
all outstanding securities of the issuer that are rated are rated 
investment grade; and (iii) all outstanding securities of NU and YES 
that are rated, are rated investment grade (``Investment Grade 
Conditions''). The 2004 Order also approved a Money Pool borrowing 
limit for HWP of $10 million.
    With this Amendment, the Applicants seek the following 
authorizations: to increase the amount of short-term debt that NU may 
incur through the Authorization Period from $450 million to $700 
million; to delete the Investment Grade Conditions on issuance of 
certain securities by NU, YES and the Utility Borrowers; to add NAESC 
as a participant in the NU Money Pool; and to increase HWP's Money Pool 
limit from $10 million to $35 million. Applicants state that no further 
authorizations are being requested by the Amendment and all other terms 
and conditions in the 2004 Order will remain applicable.
    According to the Applicants, management believes that the increase 
is necessary at this time to continue to support the credit and 
liquidity requirements of its regulated and competitive businesses. The 
Applicants also state that NU needs the additional liquidity to meet 
possible near-term, temporary cash needs, such as cash payments to buy 
our or buy down certain wholesale contracts, associated with the 
holding company's previously announced exit from the wholesale 
competitive energy business. In addition, a number of Select Energy's 
energy contracts require, according to Applicants, the posting of 
additional collateral in the form of cash or letters of credit in the 
event NU's credit ratings were to decline and in increasing amounts 
dependent upon the severity of the decline. Were NU's unsecured ratings 
to decline to sub-investment grade, Select Energy states that it could, 
under its present contracts, be asked to provide, as of March 31, 2005, 
approximately $500 million of collateral or letters of credit to 
various unaffiliated counterparties and approximately $154 million to 
several independent system operators and unaffiliated local 
distribution companies, which, management states, NU would currently be 
able to provide. In addition, according to Applicants, Standard and 
Poor's credit rating agency, has imposed reporting requirements 
industry-wide for its new liquidity tests. Standard and Poor's 
liquidity tests demonstrate, according to Applicants, that NU needs 
additional credit capacity to support its businesses in the event of 
certain hypothetical adverse developments affecting credit ratings and 
forward prices of energy commodity products.
    According to the Applicants, the external short-term debt which NU 
is requesting authority to issue may take a variety of forms, including 
commercial paper and unsecured notes with banks or other institutional 
lenders under credit facilities that are generally available to 
borrowers with comparable credit ratings. All short-term debt issued by 
NU as a result of this Amendment will have maturities of less than one 
year from the date of issuance. NU states that it will not issue any 
secured debt.
    Commercial paper issued by NU 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. This 
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. The Applicants expect that the dealers acquiring the 
commercial paper will reoffer it at a discount to corporate and 
institutional investors. The Applicants state that no commercial paper 
will be issued by NU unless the issuer believes that the effective 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 the 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 under that Act.
    According to NU, the effective cost of money on the short-term debt 
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 will not exceed 5% of the principal amount of the securities. 
NU states that specific terms of the short-term debt will be determined 
by NU at the time of issuance but that those terms will comply in all 
regards to the parameters of financings authorizations set forth in the 
Amendment. A copy of all new notes or loan agreements executed as a 
result of the authority requested will be filed under cover of the next 
quarterly report under rule 24. NU states that, 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.
    In a recent order issued by the Commission (Pepco Holdings, Inc., 
Holding Co. Act Release No. 27991, June 30, 2005), the Commission 
modified the investment grade conditions applicable to the issuance of 
securities by holding companies and their public utility subsidiaries, 
including the elimination of investment grade requirements for the 
issuance of short-term debt. Since the 2004 Order only authorized the 
issuance of short-term debt and interest rate hedges, the Applicants 
request that the Commission eliminate the Investment Grade Conditions 
set forth in the 2004 Order.
    According to the Applicants, HWP has embarked on a capital spending 
program which will require it, among other things, to install 
additional pollution control equipment at its Mt. Tom generating 
facility. This program, expected to cost approximately $17 million, 
plus contingencies and other requirements associated with ongoing 
remediation of site contamination at Mt. Tom, necessitates an increase 
in HWP's borrowing capacity. It has no external sources of funds at 
present and is close

[[Page 58496]]

to its authorized Money Pool limit. The Money Pool represents an 
economic alternative for HWP's short-term funding needs. Applicants 
request an increase in HWP's Money Pool limit from $10 million to $35 
million.
    NAESC, which seeks authority to participate in the NU Money Pool, 
formerly operated the Seabrook Nuclear Station, which was sold in 2002. 
NAESC currently retains cash against certain future obligations, and 
Applicants state that NU's cash management system will be enhanced by 
the addition of NAESC to the NU Money Pool on the terms and conditions 
set forth in the 2004 Order.
    NU states that at all times during the Authorization Period it will 
maintain common equity (as reflected in the most recent Form 10-K or 
Form 10-Q filed with the Commission) of at least 30% of its 
consolidated capitalization (net of securitization debt). The term 
``consolidated capitalization'' is defined to include, where 
applicable, common stock equity (comprised of common stock, additional 
paid in capital, retained earnings, accumulated other comprehensive 
income or loss, and/or treasury stock), minority interest, preferred 
stock, preferred securities, equity linked securities, long-term debt, 
short-term debt and current maturities (net of securitization debt).
    NU states that, as of June 30, 2005, NU's consolidated 
capitalization (net of securitization debt) consisted of 38.6% common 
equity, 2.1% preferred stock, 59.3% long-term and short-term debt. When 
securitization debt (Rate Reduction Bonds) is included, NU's 
consolidated capitalization as of June 30, 2005, was 30.5% common 
equity, 1.7% preferred stock and 46.8% debt, 21.0% Rate Reduction 
Bonds.
    The proceeds from the issuance of short-term debt as requested in 
this Amendment 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 (``EWGs''), foreign utility 
companies (``FUCOs'') (each to the extent permitted under the Act or 
Commission order), energy-related companies (``Rule 58 Subsidiaries'') 
to the extent permitted under the Act or Commission order, and exempt 
telecommunications companies (``ETCs''), (ii) the repayment, 
redemption, refunding or purchase by NU or any subsidiary of any of its 
own securities from non-affiliates under rule 42, and (iii) financing 
working capital requirements of NU and its subsidiaries.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Jonathan G. Katz,
Secretary.
 [FR Doc. E5-5475 Filed 10-5-05; 8:45 am]

BILLING CODE 8010-01-P
