Federal Register: June 26, 2000 (Volume 65, Number 123)
DOCID: FR Doc 00-16062
SECURITIES AND EXCHANGE COMMISSION
Securities and Exchange Commission
DOCUMENT ID: [Release No. 35-27189]
NOTICE: NOTICES
ACTION: Applications, hearings, determinations, etc.:
SUBJECT CATEGORY:
Filings Under the Public Utility Holding Company Act of 1935, as Amended (``Act'')
DOCUMENT SUMMARY:
June 20, 2000.
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 July 14, 2000, to the Secretary, Securities and Exchange Commission, Washington, DC 205490609, 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 July 14, 2000, the application(s) and/or declaration(s), as filed or as amended, may be granted and/or permitted to become effective.
Sierra Pacific Resources, et al. (709619)
Sierra Pacific Resources (``Sierra Pacific''), 6100 Neil Road, Reno, Nevada 89511, a public utility holding company claiming exemption from registration under section 3(a)(1) of the Act by rule 2, and Portland General Electric Company (``PGE''), 121 SW Salmon Street, Portland, Oregon 97204, a wholly owned electric public utility subsidiary company of Enron Corporation (``Enron''), a holding company also claiming exemption under section 3(a)(1) of the Act by rule 2, have filed a joint applicationdeclaration under sections 6(a), 7, 9(a), 10, and 11(b) of the Act and rule 54 under the Act.
Sierra Pacific proposes to acquire from Enron all of the issued and
outstanding common stock of PGE and PGH II, Inc. (``PHG II''), an
indirect subsidiary of Enron and an affiliate of PGE (the ``Merger'').
Sierra Pacific and PGE (collectively, the ``Applicants'') also request
authority to: (1) Continue to operate Sierra Pacific Power company
(``SPPC''), Sierra Pacific's wholly owned public utility subsidiary, as
a combination electric and gas public utility; (2) retain SPPC's
existing waterutility business; (3) retain Sierra Pacific's, PGE's and
PHG II's respective nonutility subsidiary businesses; and (4) issue
securities in order to finance the Merger. Following the Merger, Sierra Pacific will register under section 5 of the act.\1\
\1\ In a separate filing, Sierra Pacific also has asked the
Commission to approve the formation of a subsidiary service company
under section 13 of the Act and rules 88, 90 and 91 under the Act
See File No. 709621. This separate filing is being noticed contemporaneously with the Merger notice.
Under the terms of a Stock Purchase Agreement dated as of November
5, 1999 (``Stock Purchase Agreement'') by and between Sierra Pacific
and Enron, Enron will sell PGE and cause Portland General Holdings,
Inc., Enron's wholly owned subsidiary, to sell PGH II, to Sierra
Pacific for $2.1 billion in cash, reduced by the book value of certain
obligations of Enron under an order of the Oregon Public Utilities Commission
[[Page 39448]]
(``Oregon PUC'').\2\ Sierra Pacific will assume Enron's Merger Payment
Obligations (as defined in footnote 2) effective as of the Merger's closing date.
\2\ The Oregon PUC imposed these obligation on Enron (``Enron's
Merger Payment Obligations'') in its order dated June 4, 19997 approving Enron's acquisition of PGE.
A. Description of the Parties
1. Sierra Pacific
Sierra Pacific owns all of the common stock of two public utility companies: SPPC, a combination electric and gas public utility company based in Reno, Nevada; and Nevada Power Company (``Nevada Power''), an electric public utility company based in Las Vegas, Nevada. For the year ended December 31, 1999, Sierra Pacific's operating revenues on a consolidated basis were approximately $1.3 billion, of which $9.1 million are attributable to nonutility activities. Consolidated assets of Sierra Pacific at December 31, 1999 were approximately $5.2 billion, of which approximately $3.8 billion consisted of net utility plant and equipment. At December 31, 1999, Sierra Pacific and it subsidiary companies employed 3,250 employees, of which 1,430 were employed by SPPC and 1,677 by Nevada Power.
SPPC provides electric service to approximately 302,000 retail customers in northern Nevada and northeastern California. SPPC also sells electric power at wholesale. In the Reno/Sparks area of northwestern Nevada, SPPC distributes natural gas at retail to approximately 110,000 customers. For the year ended December 31, 1999, SPPC had total consolidated assets of approximately $2.1 billion, including net utility plant in service of $1.6 billion, consolidated utility operating revenues of approximately $764 million, and consolidated net income of approximately $66 million. During 1999, 83.9% of SPPC's revenues were from retail sales of electricity, natural gas and water in Nevada, 5.1% from retail sales of electricity in California, and 9.9% from wholesale sales of electricity and gas. SPPC's 1999 electric and gas operating revenues, which totaled $709 million, were comprised of its electric business ($609 million, or 86%) and its natural gas business ($100 million, or 14%). Of these 1999 electric and gas operating revenues, $644 million, or 91%, were from sales n Nevada and $65 million, or 9% were from sales in California. SPPC is subject to regulation by the Public Utilities Commission of Nevada (``Nevada PUC''), the California Public Utilities Commission (``California PUC''), and the Federal Energy Regulatory Commission (``FERC'') under the Federal Power Act.
SPPC also provides water service to about 71,000 customers. SPPC's 1999 water business operating revenues were $54.3 million.
Nevada Power provides retail electric service to approximately 566,700 customers in Clark county, Nevada, with limited additional service provided to the Federal Department of Energy (U.S. Government Test Site) in Nye County, Nevada. Nevada Power also sells electric power at wholesale. For the year ended December 31, 19991, Nevada Power and its subsidiary companies had total consolidated assets of approximately $3.4 billion, of which approximately $2.4 billion consisted of net electric plant and equipment, consolidated utility operating revenues of approximately $977 million, resulting in a net income of approximately $52 million. Nevada Power is subject to regulation by the Nevada PUC and the FERC.
Sierra Pacific is engaged in nonutility business through the
following active subsidiary companies: Tuscarora Gas Pipeline Company
(``Tuscarora''); Sierra Energy Company d/b/a e.three (``e.three''),
Lands of Sierra, Inc.'' (``LOS''); Sierra Pacific Communications
(``SPC''); Sierra Pacific Energy Company (``SPEC''); Commonsite Inc.
(``Commonsite''); NVP Capital I (``NVP I''); NVP Capital II (NVP II);
Nevada Electric Investment Company (``NEICO''); Northwind Las Vegas,
LLC (``Northwind Las Vegas''); \3\ Northwind Aladdin, LLC (``Northwind
Aladdin''),\4\ and e.three Custom Energy Solutions, LLC (``e.three CES'').\5\
\3\ NEICO owns 50% of Northwind Las Vegas. UTT Nevada, Inc., an affiliate of Unicom, owns the other 50%.
\4\ NEICO owns 25% of Northwind Aladdin and UTT Nevada, Inc. owns the other 75%.
\5\ NEICO owns 50% of e.three CES and ethree owns the other half.
Tuscarora was formed in 1993 for the purpose of entering into a partnership (the Tuscarora Gas Transmission Company, or ``TGTC'') with a subsidiary of TransCanada, a nonaffiliated Canadian natural gas transportation company, to develop, construct and operate a natural gas pipeline to serve an expanding gas market in Reno, northern Nevada and northeastern California. In 1995, completed construction and began service of its 229mile pipeline extending from Malin, Oregon to Reno, Nevada. As an interstate pipeline, TGTC provides only transmission service. Sierra Pacific has an investment of approximately $13.3 million in this subsidiary. During 1999, SPCC was the largest customer of TGTC, contributing 95% of TGTC's revenues of $19.3 million.
e.three provides energyrelated products and services in commercial
and industrial markets both inside and outside SPPC's service
territory. e.three's services include: technology and efficiency
improvements to lighting, heating, ventilation and airconditioning
equipment; installation or retrofit of controls and power quality
systems; energy performance contracting; enduse services; and ongoing
energy monitoring and verification services. LOS develops and manages SPPC nonutility property in Nevada and California.\6\
\6\ In recent years, Sierra Pacific has sold several of the LOS
properties. The properties remaining include only vacant land in Nevada and land leases in the Lake Tahoe region.
SPC was created to examine and pursue telecommunications
opportunities that leverage existing skill sets of installing and
deploying pipe and wire infrastructure. SPC presently has fiber optic
assets deployed in the cities of Reno and Las Vegas. Sierra Pacific has
filed an application with the Federal Communications Commission
(``FCC'') to qualify SPC as an ``exempt telecommunications company'' under section 34 of the Act.\7\
\7\ The FCC did not issue an order denying SPC's application
within sixty days of the application filing date. Therefore, under
47 CFR section 1.5004, the application is deemed granted with no further action by the FCC.
SPEC was formed to market a package of technology and energy related products and services in Nevada. For the year ended December 31, 1999, SPEC incurred net losses of $3.6 million.
Commonsite, NVPI and NVP II are nonprofit subsidiary companies
created to assist other business activities of Sierra Pacific.
Commonsite is a Nevada corporation that owns the real estate occupied
by Reid Gardner 4, a coal fired power plant owned jointly by Nevada
Power and the California Department of Water Resources. NVP I and NVP
II are Delaware trusts formed by Nevada Power for financing
purposes.\8\ NEICO is a Nevada corporation that has been inactive for
several years. In recent months, it has obtained ownership intersts in:
Northwind Las Vegas; Northwind Aladdin, and e.three CES. Northwind Las
Vegas develops opportunities for district heating and cooling within
Nevada. As discussed above, Northwind Aladdin will construct, own and
operate district heating and cooling facilities at the Aladdin casino complex, currently under construction. e.three CES was
[[Page 39449]]
formed to enter into performance contracts and similar energyrelated services in southern Nevada.
\8\ NVP I and NVP II were used by Nevada Power to issue Quarterly Income Preferred Securities.
Sierra Pacific also has the following inactive nonutility
subsidiary companies, all of which are incorporated in Nevada: Sierra
Water Development Company, formerly engaged in water exploration;
Sierra Gas Holdings Company, formerly engaged in gas and oil
exploration; Great Basin Energy Company, which was formed to hold real
estate for a proposed power plant that was never constructed; Genwal
Coal Co.; Castle Valley Resources Inc., formerly the sales arm of Genwal Coal Co.; and Alkan Mining Company.\9\
\9\ Nevada Power recently created several Nevada limited
liability companies that have conducted no business activities but
are in good standing. They are: Nevada Power Services, LLC; Nevada
Power Choices, LLC; Nevada Power Solutions, LLC; Las Vegas Energy,
LLC; Nevada Solutions, LLC; Power Choice, LLC; Nevada Power Energy
Services, LLC; and Nevada Choices, LLC. It is anticipated that one
or more of these companies will engage in competitive energy markets.
2. PGE
PGE provides retail electric service to approximately 719,000 customers in northwestern Oregon. PGE also sells electric power at wholesale. For the year ended December 31, 1999, PGE had consolidated assets of approximately $3.2 billion, of which approximately $1.9 billion consisted of net electric plant and equipment, consolidated utility operating revenues of approximately $1.4 billion, and net income of approximately $128 million. At December 31, 1999, PGE employed approximately 2,787 employees. PGE is subject to regulation by the Oregon PUC and the FERC.
PGE owns all of the common stock of the following nonutility subsidiary companies, all of which are Oregon corporations: 121 SW Salmon Street Corporation (``Salmon Street''); Portland General Transport Corp. (``Portland General Transport''); and Salmon Springs Hospitality Group (``Salmon Springs'').
Salmon Street was formed in order to lease an office complex at the World Trade Center in Portland, Oregon and to sublease the complex to PGE to serve as PGE's headquarters. A wholly owned subsidiary of Salmon Street, World Trade Center Northwest Corporation, is an Oregon corporation that managers the World Trade Center and promotes international commerce. Portland General Transport was formed to sell segmented gas pipeline capacity and is currently inactive. Salmon Springs provides operations and catering services to PGE and, to the extent available, to third parties in meeting facilities of the World Trade Center Building Two.
3. PGH II
PGH II is engaged in developing several nonutility lines of business. As of December 31, 1999, PGH II had total assets of $1,560,000, revenues of $54,000, and a net less of $2,894.000.
PGH II holds a 99% ownership interest in the following companies,
all of which the Oregon limited liability companies \10\: Columbia
Pacific Distribution Services Company, LLC (``ColumbiaPacific'');
Enron Distribution Services Company, LLC (``EDS''); and Portland Energy Solutions Company, LLC (``PES'').
\10\ The remaining 1% interest is held by Portland General
Distribution Company, a wholly owned direct subsidiary of PGH II described below.
ColumbiaPacific, currently inactive, was established to provide operation and maintenance service for utility distributions systems. EDS, currently inactive, was established to hold investments in transmission and distribution services companies to be acquired. PES was established to develop opportunities in district heating and cooling in downtown Portland, Oregon.
PGH II also holds all the outstanding common stock of the following subsidiary companies and currently generate no material revenue and hold de minimis assets: ColumbiaWillamette Development Company (``ColumbiaWillamette''); Enron MicroClimates, Inc. (``Eron MicroClimates''); Portland General Distribution Company (``PGD''); Portland General Operations Company, Inc. (``PGO''); and Tule Hub Services Company (``Tule Hub'').
ColumbiaWillamette formerly engaged in real estate development and is currently inactive. Enron MicroClimates was formed to design, own and operate heating, cooling and network infrastructure. PGD was formed to invest in companies providing distribution and network services, including operation and maintenance services for utility distribution systems. PGO provides consulting services to global markets regarding design, maintenance, management, and financing for electric and telecommunications facilities. Tule Hub was formed to engage in electric trading hub transaction information management, and is currently inactive.
B. Description of the Merger
Under the Stock Purchase Agreement described above, Sierra Pacific will acquire from Enron all of the issued and outstanding common stock of PGE and PGH II for a consideration of $2.1 billion in an allcash transaction. The Merger is not subject to the approval of the shareholders of PGE, PHG II, Enron or Sierra Pacific.
Sierra Pacific's acquisition of PGE and PGH II will result in a substantial level of goodwill equal to the excess of consideration to be paid to Enron over the net value of assets acquired. Sierra Pacific estimates this goodwill to be approximately $845 million, which will be amortized at the holding company level over a fortyyear period. C. Description of MergerRelated Financing
Sierra Pacific proposes to finance the purchase price of PGE and
PGH II through a combination of various types of shortterm debt, long
term debt, and other financing transactions.\11\ Specifically, for a
period beginning with the effective date of the Commission's Order in
this matter and ending one year from the date of that Order
(``Authorization Period''), Sierra Pacific request authority to: (1)
Issue longterm debt securities, shortterm debt securities, commercial
paper, hybrid securities, and other debt securities for cash; (2) enter into transactions to manage interest rate risk (``hedging
transactions''); and (3) enter into credit facilities or loan
agreements with commercial or investment banks, both for purposes of
direct borrowings and as backup for commercial paper programs. The
aggregate amount of shortterm and longterm debt outstanding at any
one time to finance the Merger will not exceed $2.1 billion.
\11\ Sierra Pacific will file a separate applicationdeclaration
to request additional financing authority to maintain existing
financing facilities after the Merger and to meet the capital
requirements for the Sierra Pacific system after the Merger (``Financing Application'').
1. General Conditions of Financing
Sierra Pacific requests authority to engage in various financing
and related transactions during the Authorization Period for which the
specific terms and conditions are not at this time known. The
authorization is sought subject to the conditions stated above and to
the following conditions: (1) The effective cost of money on longterm
debt borrowing occurring under this authorization will not exceed 300
basis points over the comparable term U.S. Treasury securities; (2) the
effective cost of money on shortterm debt borrowing occurring under
this authorization will not exceed 300 basis point over the comparable
term London Interbank Offered Rate (``LIBOR''); (3) the maturity [[Page 39450]]
of indebtness will not exceed 50 years; (4) the underwriting fees,
commissions, or other similar remuneration paid in connection with the
noncompetitive issue, sale or distribution of a security in this
matter will not exceed 5% of the principal or total amount of the
security being issued; and (5) the proceeds from the sale of securities
issued under this authorization will be used (a) to pay the
consideration required in order to consummate the Merger, (b) to
refinance shortterm debt originally incurred to raise all or a portion
of the Merger consideration; or (c) for general corporate purposes. 2. ShortTerm Debt Financing
Sierra Pacific requests Commission authorization during the
Authorization Period to issue shortterm debt securities in an amount
not to exceed $2.1 billion, consisting of financing for the Merger
consideration. Sierra Pacific anticipates that most of the Merger
consideration will be funded temporarily through the use of shortterm
debt.\12\ The shortterm debt will consist of one or more of the
following: bank borrowings, commercial paper, money market notes, floating rate or variable notes, all as described below.
\12\ This shortterm debt will be paid off in part with the
proceeds of the planned divestiture of SPPC's and Nevada Power's
electric generation assets, and the sale of common equity or certain noncore assets, with the balance refinanced within the
Authorization Period through longterm debt exclusively to refinance
shortterm debt or other securities from the divestiture of certain
noncore assets. Sierra Pacific will request authority to issue additional common equity in its Financing Application.
Sierra Pacific currently maintains a committed line of credit for $300 million under an unsecured revolving credit facility with Mellon Bank, First Union National Bank and Wells Fargo, as syndication agents (``Credit Facility''). This Credit Facility, the amount of which is included in the overall authorization requested above, may be used for working capital and general corporate purposes, including for commercial paper backup. It is anticipated that all or a portion of the shortterm debt used to fund the Merger will be borrowed by Sierra Pacific either through this credit Facility or through one or more new facilities to be entered into prior to the Merger.
Sierra Pacific also may sell commercial paper in established domestic or European commercial paper markets to provide temporary funding of the Merger consideration. This commercial paper would be sold to dealers at the discount rate or the coupon rate per annum 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 commercial paper from Sierra Pacific will reoffer such paper at a discount to corporate, institutional and, with respect to European commercial paper, individual investors. The commercial paper programs will be backed up by the Credit Facility and by any new credit facilities to be entered into by Sierra Pacific, as discussed above.
Sierra Pacific also may incur shortterm debt through the issuance of instruments customarily referred to as ``money market notes,'' ``floating rate notes'' or ``variable rate notes.'' This type of debt is usually issued under a fiscal and paying agency agreement or similar type of agreement, rather than through an indenture, and bears an interest rate that is either (a) tied to a customary interest rate index such as LIBOR which is adjusted on a periodic basis or (b) set by an auction process. The maturity of these notes may vary from less than one year to up to three years. Consequently, Sierra Pacific may also issue these notes as longterm debt. The specific terms of any notes issued under this authorization will be determined by Sierra Pacific at the time of issuance.
3. LongTerm Debt Financing
Sierra Pacific requests Commission authorization during the Authorization Period to issue longterm debt securities in an amount not to exceed $2.1 billion, as stated above. Sierra Pacific intends to use this longterm debt exclusively to refinance shortterm debt originally incurred to finance the Merger. These longterm debt securities would include (a) unsecured notes, debentures, mediumterm notes, or other debt securities issued under an indenture (``Sierra Pacific Indenture'') \13\, (b) instruments customarily referred to as ``money market notes,'' ``floating rate notes,'' or ``variable rate notes,'' as described above, if those notes have a maturity of greater than one year \14\, or (c) longterm loans from commercial or investment banks under credit facilities or loan agreements.\15\ \13\ Sierra Pacific filed a form of the Sierra Pacific Indenture with the Commission as part of a universal shelf registration on June 8, 1999 (Registration No. 33380149). Applicants state that the Sierra Pacific Indenture will permit the issuance of a wide variety of unsecured debt securities in one or more series. The Sierra Pacific Indenture will contain numerous variable terms, such as principal amount, interest rate, redemption terms, sinking funds, currency of payment, denominations, and events of default. The Sierra Pacific Indenture contains no negative covenants or restrictions.
On May 9, 2000, Sierra Pacific issued of $300 million of notes
under this shelf registration. Proceeds from this issuance were used
to retire the remaining balance of shortterm debt incurred to
complete the merger of Sierra Pacific and Nevada Power. Sierra
Pacific expects to file a new universal shelf registration for the
issuance of longterm debt authorized under this application
declaration and may continue to use the Sierra Pacific Indenture for any such issuance.
\14\ On April 20, 2000, Sierra Pacific also issued $300 million
of floating rate notes that are not related to this authorization
request. The proceeds of this issuance were used: (1) to reduce
Nevada Power's debt and strengthen its capitalization; and (2) to
reduce short term debt at the holding company level incurred to complete the merger of Sierra Pacific and Nevada Power.
\15\ Borrowings from banks and other financial institutions will
be unsecured debt and will rank in pari passu with debt securities
issued under the Sierra Pacific Indenture and the shortterm credit
facilities described above. Specific terms of any borrowings will be
determined by Sierra Pacific at the time of issuance and will comply
with the parameters on financing authorization set forth above. 4. Other Securities
In addition to the specific securities described above, Sierra Pacific may also find it necessary or desirable to minimize financing costs or to obtain new capital under thenexisting market conditions to issue and sell other types of securities during the Authorization Period. The issuance of any of these securities would be subject to the aggregate $2.1 billion limit on shortterm and longterm debt and to the overall conditions on financing authorization discussed above. 5. Interest Rate Risk Management Devices
Sierra Pacific requests authority to enter into, perform, purchase
and sell financial instruments intended to manage the volatility of
interest rates, including but not limited to interest rate swaps, caps,
floors, collars and forward agreements or any other similar agreements.
Sierra Pacific would employ interest rate swaps as a means of prudently
managing the risk associated with any of its outstanding debt issued
under this authorization by, in effect, synthetically (a) covering
variable rate debt to fixed rate debt; (b) covering fixed rate debt to
variable rate debt; (c) limiting the impact of changes in interest
rates resulting from variable rate debt; and (d) providing an option to
enter into interest rate swap transactions in future periods for
planned issuances of debt securities. In no case will the notional
principal amount of any interest rate swap exceed that of the
underlying debt instrument and related interest rate exposure.\16\
\16\ Sierra Pacific will only enter into interest rate swap
agreements with counter parties whose senior debt ratings, as
published by Standard & Poor's, a Division of The McGrawHill
Companies, are greater than or equal to ``BBB+'', or an equivalent
rating from Moody's Investors Service, Inc., Fitch IBCA, Inc., or Duff & Phelps Credit Rating Co.
[[Page 39451]]
Sierra Pacific Resources (709621)
Sierra Pacific Resources (``Sierra Pacific''), 6100 Neil Road, Reno, Nevada 89511, a public utility holding company claiming exemption from registration under section 3(a)(1) of the Act by rule 2 (``Applicant''), has filed an application under section 13(b) of the Act and rules 87, 88, 90, and 91 under the Act.
In this filing, Sierra Pacific requests the Commission to authorize: (1) The designation of Sierra Pacific Resource Services Company (``SPRSC'') as a subsidiary service company in accordance with rule 88 under the Act; (2) the provision of services by SPRSC to the Sierra Pacific system following Sierra Pacific's proposed merger with Portland General Electric Company (``PGE'') (described below) and the registration of Sierra Pacific as a holding company under the Act; and (3) certain lease transactions among associate companies within the Sierra Pacific system after the Merger, as described below. Sierra Pacific further requests that the Commission find that SPRSC is organized and will conduct its operations so as to meet the requirements of section 13 of the Act and the rules under the Act.\17\ \17\ In addition, Sierra Pacific requests that the Commission find that this application is deemed to constitute a filing on Form U131 for purposes of rule 88 under the Act, or, alternatively, that the filing of a Form U131 is not necessary under the Act.
In a separate filing, Sierra Pacific and PGE, a wholly owned
electric public utility subsidiary company of Enron Corporation, a
public utility holding company claiming exemption from registration
under section 3(a)(1) of the Act by rule 2, seek approvals relating to
the proposed acquisition by Sierra Pacific of PGE and PGE's affiliate,
PGH II, Inc. (``PGH II'') (``Merger U1'') \18\ Sierra Pacific will
register as a holding company under the Act upon the consummation of the acquisition (``Merger'') described in the Merger U1.
\18\ See File No. 709619. The Commission's notice describing this filing is included elsewhere in this Release.
Following the consummation of the Merger, Sierra Pacific proposes to have three operating public utility company subsidiaries (the ``Utility Subsidiaries''): (1) Sierra Pacific Power Company (``SPPC''), a public utility company that provides retail electric service in Nevada and northeastern California, sells electric power at wholesale, distributes natural gas at retail in northwestern Nevada, and provides water service; (2) Nevada Power Company (``Nevada Power''), a public utility company that provides retail electric service predominantly to the residents of Clark County, Nevada, provides limited service to the Federal Department of Energy (U.S. Government Test Site) in Nye County, Nevada, and sells electric power at wholesale; and (3) PGE, a public utility company that provides retail electric power service in northwestern Oregon and sells electric power at wholesale.\19\ \19\ A more complete description of the Utility Subsidiaries is set forth in the Merger U1.
Sierra Pacific's direct and indirect nonutility subsidiary
companies following the Merger are to include the following: PGH II;
\20\ Tuscarora Gas Pipeline Company; Sierra Energy Company d/b/a
e.three (``e.three''); Lands of Sierra, Inc.; Sierra Pacific
Communications Company; Sierra Pacific Energy Company; Commonsite Inc.
(``Commonsite''); NVP Capital I (``NPV I''); NVP Capital II (``NVP
II''); Nevada Electric Investment Company (``NEICO''); Northwind Las
Vegas, LLC (``Northwind Las Vegas'') \21\; Northwind Aladdin, LLC
(``Northwind Aladdin'') \22\; e.three CES Custom Energy Solutions, LLC
(``e.three CES'').\23\; 121 SW Salmon Street Corporation; Portland
General Transport Corp.; and Salmon Springs Hospitality Group
(collectively, with the Utility Subsidiaries, the ``Subsidiaries'').
\20\ PGH II is engaged in developing several nonutility
businesses through the following subsidiary companies: Columbia
Willamette Development Company; Enron MicroClimates, Inc.; Portland
General Distribution Company; Portland General Operations Company,
Inc.; and Tule Hub Services Company. These subsidiary companies
currently generate no material revenue and hold de minimis assets.
PGH II also holds a 99% ownership interest in the following limited
liability companies: ColumbiaPacific Distribution Services Company,
LLC; Eron Distribution Services Company, LLC; and Portland Energy Solutions Company.
\21\ NEICO owns 50% of Northwind Las Vegas. UTT Nevada. Inc., an
affiliate of Unicom Thermal Technologies, Inc., owns the other 50%.
\22\ NEICO owns 25% of Northwind Aladdin and UTT Nevada. Inc. owns the other 75%.
\23\ NEICO owns 50% of e.three CES and ethree owns the other half.
Sierra Pacific also owns the following inactive subsidiary companies: Sierra Water Development Company; Sierra Gas Holdings Company; Great Basin Energy Company; Genwal Coal Co.; Castle Valley Resources, Inc.; and Alkan Mining Company. In addition, Nevada Power recently created several Nevada limited liability companies that have conducted no business activities but are in good standing. They are: Nevada Power Services, LLC; Nevada Power Choices, LLC; Nevada Power Solutions, LLC; Las Vegas Energy, LLC; Nevada Solutions, LLC; Power Choice, LLC; Nevada Power Energy Services, LLC; and Nevada Choices, LLC.
After the Merger, SPRSC proposes to provide the Sierra Pacific
system companies with a variety of administrative, management,
enegineering, construction, environmental and support services, either
directly or through agreements with associate or nonassociate
companies, as needed.\24\ SPRSC will enter into a services agreement
with each of the Subsidiaries (the ``Services Agreement''). The
Services Agreement will be administered in accordance with the Act and
the rules under the Act, and the cost of services payable to SPRSC
under the Services Agreement will be computed in accordance with the
applicable rules under the Act and with appropriate accounting
standards. Sierra Pacific presently expects that SPRSC will be staffed
with personnel drawn from Sierra Pacific, SPPC, Nevada Power, and PGE.
Sierra Pacific has not yet determined the numbers of SPRSC personnel that will be drawn from each of these companies.
\24\ Before the consummation of the Merger, SPRSC will be
incorporated in the State of Nevada to serve as the service company for the Sierra Pacific system.
SPRSC's authorized capital stock will consist of 100 shares of common stock, no par value per share, issued to Sierra Pacific for $1,000. upon consummation of the Merger, Sierra Pacific will hold all issued and outstanding shares of SPRSC common stock. Sierra Pacific will describe any debt financing for SPRSC in a separate application declaration to be filed with the Commission dealing with the financing of the postMerger Sierra Pacific holding company system.
Sierra Pacific further requests authorization under section 13(b) of the Act for the Subsidiaries to enter, from time to time, into leases of office or other space with other associate companies. These leases will comply with the requirements of rules 87, 90 and 91 under the Act. The Utility Subsidiaries may also provide to one another any services, construction, or goods as are reasonably required to meet a breakdown or other emergency in accordance with the standards of rule 87(b)(2) under the Act. These services will be provided at cost in accordance with the standards of the Act and rules 87, 90 and 91 under the Act.
For the Commission by the Division of Investment Management, pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 0016062 Filed 62300; 8:45 am]
BILLING CODE 801001M
SUMMARY:
Public utility holding company filings,
DOCUMENT BODY 2:
June 20, 2000.
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 July 14, 2000, to the Secretary, Securities and Exchange Commission, Washington, DC 205490609, 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 July 14, 2000, the application(s) and/or declaration(s), as filed or as amended, may be granted and/or permitted to become effective.
Sierra Pacific Resources, et al. (709619)
Sierra Pacific Resources (``Sierra Pacific''), 6100 Neil Road, Reno, Nevada 89511, a public utility holding company claiming exemption from registration under section 3(a)(1) of the Act by rule 2, and Portland General Electric Company (``PGE''), 121 SW Salmon Street, Portland, Oregon 97204, a wholly owned electric public utility subsidiary company of Enron Corporation (``Enron''), a holding company also claiming exemption under section 3(a)(1) of the Act by rule 2, have filed a joint applicationdeclaration under sections 6(a), 7, 9(a), 10, and 11(b) of the Act and rule 54 under the Act.
Sierra Pacific proposes to acquire from Enron all of the issued and
outstanding common stock of PGE and PGH II, Inc. (``PHG II''), an
indirect subsidiary of Enron and an affiliate of PGE (the ``Merger'').
Sierra Pacific and PGE (collectively, the ``Applicants'') also request
authority to: (1) Continue to operate Sierra Pacific Power company
(``SPPC''), Sierra Pacific's wholly owned public utility subsidiary, as
a combination electric and gas public utility; (2) retain SPPC's
existing waterutility business; (3) retain Sierra Pacific's, PGE's and
PHG II's respective nonutility subsidiary businesses; and (4) issue
securities in order to finance the Merger. Following the Merger, Sierra Pacific will register under section 5 of the act.\1\
\1\ In a separate filing, Sierra Pacific also has asked the
Commission to approve the formation of a subsidiary service company
under section 13 of the Act and rules 88, 90 and 91 under the Act
See File No. 709621. This separate filing is being noticed contemporaneously with the Merger notice.
Under the terms of a Stock Purchase Agreement dated as of November
5, 1999 (``Stock Purchase Agreement'') by and between Sierra Pacific
and Enron, Enron will sell PGE and cause Portland General Holdings,
Inc., Enron's wholly owned subsidiary, to sell PGH II, to Sierra
Pacific for $2.1 billion in cash, reduced by the book value of certain
obligations of Enron under an order of the Oregon Public Utilities Commission
[[Page 39448]]
(``Oregon PUC'').\2\ Sierra Pacific will assume Enron's Merger Payment
Obligations (as defined in footnote 2) effective as of the Merger's closing date.
\2\ The Oregon PUC imposed these obligation on Enron (``Enron's
Merger Payment Obligations'') in its order dated June 4, 19997 approving Enron's acquisition of PGE.
A. Description of the Parties
1. Sierra Pacific
Sierra Pacific owns all of the common stock of two public utility companies: SPPC, a combination electric and gas public utility company based in Reno, Nevada; and Nevada Power Company (``Nevada Power''), an electric public utility company based in Las Vegas, Nevada. For the year ended December 31, 1999, Sierra Pacific's operating revenues on a consolidated basis were approximately $1.3 billion, of which $9.1 million are attributable to nonutility activities. Consolidated assets of Sierra Pacific at December 31, 1999 were approximately $5.2 billion, of which approximately $3.8 billion consisted of net utility plant and equipment. At December 31, 1999, Sierra Pacific and it subsidiary companies employed 3,250 employees, of which 1,430 were employed by SPPC and 1,677 by Nevada Power.
SPPC provides electric service to approximately 302,000 retail customers in northern Nevada and northeastern California. SPPC also sells electric power at wholesale. In the Reno/Sparks area of northwestern Nevada, SPPC distributes natural gas at retail to approximately 110,000 customers. For the year ended December 31, 1999, SPPC had total consolidated assets of approximately $2.1 billion, including net utility plant in service of $1.6 billion, consolidated utility operating revenues of approximately $764 million, and consolidated net income of approximately $66 million. During 1999, 83.9% of SPPC's revenues were from retail sales of electricity, natural gas and water in Nevada, 5.1% from retail sales of electricity in California, and 9.9% from wholesale sales of electricity and gas. SPPC's 1999 electric and gas operating revenues, which totaled $709 million, were comprised of its electric business ($609 million, or 86%) and its natural gas business ($100 million, or 14%). Of these 1999 electric and gas operating revenues, $644 million, or 91%, were from sales n Nevada and $65 million, or 9% were from sales in California. SPPC is subject to regulation by the Public Utilities Commission of Nevada (``Nevada PUC''), the California Public Utilities Commission (``California PUC''), and the Federal Energy Regulatory Commission (``FERC'') under the Federal Power Act.
SPPC also provides water service to about 71,000 customers. SPPC's 1999 water business operating revenues were $54.3 million.
Nevada Power provides retail electric service to approximately 566,700 customers in Clark county, Nevada, with limited additional service provided to the Federal Department of Energy (U.S. Government Test Site) in Nye County, Nevada. Nevada Power also sells electric power at wholesale. For the year ended December 31, 19991, Nevada Power and its subsidiary companies had total consolidated assets of approximately $3.4 billion, of which approximately $2.4 billion consisted of net electric plant and equipment, consolidated utility operating revenues of approximately $977 million, resulting in a net income of approximately $52 million. Nevada Power is subject to regulation by the Nevada PUC and the FERC.
Sierra Pacific is engaged in nonutility business through the
following active subsidiary companies: Tuscarora Gas Pipeline Company
(``Tuscarora''); Sierra Energy Company d/b/a e.three (``e.three''),
Lands of Sierra, Inc.'' (``LOS''); Sierra Pacific Communications
(``SPC''); Sierra Pacific Energy Company (``SPEC''); Commonsite Inc.
(``Commonsite''); NVP Capital I (``NVP I''); NVP Capital II (NVP II);
Nevada Electric Investment Company (``NEICO''); Northwind Las Vegas,
LLC (``Northwind Las Vegas''); \3\ Northwind Aladdin, LLC (``Northwind
Aladdin''),\4\ and e.three Custom Energy Solutions, LLC (``e.three CES'').\5\
\3\ NEICO owns 50% of Northwind Las Vegas. UTT Nevada, Inc., an affiliate of Unicom, owns the other 50%.
\4\ NEICO owns 25% of Northwind Aladdin and UTT Nevada, Inc. owns the other 75%.
\5\ NEICO owns 50% of e.three CES and ethree owns the other half.
Tuscarora was formed in 1993 for the purpose of entering into a partnership (the Tuscarora Gas Transmission Company, or ``TGTC'') with a subsidiary of TransCanada, a nonaffiliated Canadian natural gas transportation company, to develop, construct and operate a natural gas pipeline to serve an expanding gas market in Reno, northern Nevada and northeastern California. In 1995, completed construction and began service of its 229mile pipeline extending from Malin, Oregon to Reno, Nevada. As an interstate pipeline, TGTC provides only transmission service. Sierra Pacific has an investment of approximately $13.3 million in this subsidiary. During 1999, SPCC was the largest customer of TGTC, contributing 95% of TGTC's revenues of $19.3 million.
e.three provides energyrelated products and services in commercial
and industrial markets both inside and outside SPPC's service
territory. e.three's services include: technology and efficiency
improvements to lighting, heating, ventilation and airconditioning
equipment; installation or retrofit of controls and power quality
systems; energy performance contracting; enduse services; and ongoing
energy monitoring and verification services. LOS develops and manages SPPC nonutility property in Nevada and California.\6\
\6\ In recent years, Sierra Pacific has sold several of the LOS
properties. The properties remaining include only vacant land in Nevada and land leases in the Lake Tahoe region.
SPC was created to examine and pursue telecommunications
opportunities that leverage existing skill sets of installing and
deploying pipe and wire infrastructure. SPC presently has fiber optic
assets deployed in the cities of Reno and Las Vegas. Sierra Pacific has
filed an application with the Federal Communications Commission
(``FCC'') to qualify SPC as an ``exempt telecommunications company'' under section 34 of the Act.\7\
\7\ The FCC did not issue an order denying SPC's application
within sixty days of the application filing date. Therefore, under
47 CFR section 1.5004, the application is deemed granted with no further action by the FCC.
SPEC was formed to market a package of technology and energy related products and services in Nevada. For the year ended December 31, 1999, SPEC incurred net losses of $3.6 million.
Commonsite, NVPI and NVP II are nonprofit subsidiary companies
created to assist other business activities of Sierra Pacific.
Commonsite is a Nevada corporation that owns the real estate occupied
by Reid Gardner 4, a coal fired power plant owned jointly by Nevada
Power and the California Department of Water Resources. NVP I and NVP
II are Delaware trusts formed by Nevada Power for financing
purposes.\8\ NEICO is a Nevada corporation that has been inactive for
several years. In recent months, it has obtained ownership intersts in:
Northwind Las Vegas; Northwind Aladdin, and e.three CES. Northwind Las
Vegas develops opportunities for district heating and cooling within
Nevada. As discussed above, Northwind Aladdin will construct, own and
operate district heating and cooling facilities at the Aladdin casino complex, currently under construction. e.three CES was
[[Page 39449]]
formed to enter into performance contracts and similar energyrelated services in southern Nevada.
\8\ NVP I and NVP II were used by Nevada Power to issue Quarterly Income Preferred Securities.
Sierra Pacific also has the following inactive nonutility
subsidiary companies, all of which are incorporated in Nevada: Sierra
Water Development Company, formerly engaged in water exploration;
Sierra Gas Holdings Company, formerly engaged in gas and oil
exploration; Great Basin Energy Company, which was formed to hold real
estate for a proposed power plant that was never constructed; Genwal
Coal Co.; Castle Valley Resources Inc., formerly the sales arm of Genwal Coal Co.; and Alkan Mining Company.\9\
\9\ Nevada Power recently created several Nevada limited
liability companies that have conducted no business activities but
are in good standing. They are: Nevada Power Services, LLC; Nevada
Power Choices, LLC; Nevada Power Solutions, LLC; Las Vegas Energy,
LLC; Nevada Solutions, LLC; Power Choice, LLC; Nevada Power Energy
Services, LLC; and Nevada Choices, LLC. It is anticipated that one
or more of these companies will engage in competitive energy markets.
2. PGE
PGE provides retail electric service to approximately 719,000 customers in northwestern Oregon. PGE also sells electric power at wholesale. For the year ended December 31, 1999, PGE had consolidated assets of approximately $3.2 billion, of which approximately $1.9 billion consisted of net electric plant and equipment, consolidated utility operating revenues of approximately $1.4 billion, and net income of approximately $128 million. At December 31, 1999, PGE employed approximately 2,787 employees. PGE is subject to regulation by the Oregon PUC and the FERC.
PGE owns all of the common stock of the following nonutility subsidiary companies, all of which are Oregon corporations: 121 SW Salmon Street Corporation (``Salmon Street''); Portland General Transport Corp. (``Portland General Transport''); and Salmon Springs Hospitality Group (``Salmon Springs'').
Salmon Street was formed in order to lease an office complex at the World Trade Center in Portland, Oregon and to sublease the complex to PGE to serve as PGE's headquarters. A wholly owned subsidiary of Salmon Street, World Trade Center Northwest Corporation, is an Oregon corporation that managers the World Trade Center and promotes international commerce. Portland General Transport was formed to sell segmented gas pipeline capacity and is currently inactive. Salmon Springs provides operations and catering services to PGE and, to the extent available, to third parties in meeting facilities of the World Trade Center Building Two.
3. PGH II
PGH II is engaged in developing several nonutility lines of business. As of December 31, 1999, PGH II had total assets of $1,560,000, revenues of $54,000, and a net less of $2,894.000.
PGH II holds a 99% ownership interest in the following companies,
all of which the Oregon limited liability companies \10\: Columbia
Pacific Distribution Services Company, LLC (``ColumbiaPacific'');
Enron Distribution Services Company, LLC (``EDS''); and Portland Energy Solutions Company, LLC (``PES'').
\10\ The remaining 1% interest is held by Portland General
Distribution Company, a wholly owned direct subsidiary of PGH II described below.
ColumbiaPacific, currently inactive, was established to provide operation and maintenance service for utility distributions systems. EDS, currently inactive, was established to hold investments in transmission and distribution services companies to be acquired. PES was established to develop opportunities in district heating and cooling in downtown Portland, Oregon.
PGH II also holds all the outstanding common stock of the following subsidiary companies and currently generate no material revenue and hold de minimis assets: ColumbiaWillamette Development Company (``ColumbiaWillamette''); Enron MicroClimates, Inc. (``Eron MicroClimates''); Portland General Distribution Company (``PGD''); Portland General Operations Company, Inc. (``PGO''); and Tule Hub Services Company (``Tule Hub'').
ColumbiaWillamette formerly engaged in real estate development and is currently inactive. Enron MicroClimates was formed to design, own and operate heating, cooling and network infrastructure. PGD was formed to invest in companies providing distribution and network services, including operation and maintenance services for utility distribution systems. PGO provides consulting services to global markets regarding design, maintenance, management, and financing for electric and telecommunications facilities. Tule Hub was formed to engage in electric trading hub transaction information management, and is currently inactive.
B. Description of the Merger
Under the Stock Purchase Agreement described above, Sierra Pacific will acquire from Enron all of the issued and outstanding common stock of PGE and PGH II for a consideration of $2.1 billion in an allcash transaction. The Merger is not subject to the approval of the shareholders of PGE, PHG II, Enron or Sierra Pacific.
Sierra Pacific's acquisition of PGE and PGH II will result in a substantial level of goodwill equal to the excess of consideration to be paid to Enron over the net value of assets acquired. Sierra Pacific estimates this goodwill to be approximately $845 million, which will be amortized at the holding company level over a fortyyear period. C. Description of MergerRelated Financing
Sierra Pacific proposes to finance the purchase price of PGE and
PGH II through a combination of various types of shortterm debt, long
term debt, and other financing transactions.\11\ Specifically, for a
period beginning with the effective date of the Commission's Order in
this matter and ending one year from the date of that Order
(``Authorization Period''), Sierra Pacific request authority to: (1)
Issue longterm debt securities, shortterm debt securities, commercial
paper, hybrid securities, and other debt securities for cash; (2) enter into transactions to manage interest rate risk (``hedging
transactions''); and (3) enter into credit facilities or loan
agreements with commercial or investment banks, both for purposes of
direct borrowings and as backup for commercial paper programs. The
aggregate amount of shortterm and longterm debt outstanding at any
one time to finance the Merger will not exceed $2.1 billion.
\11\ Sierra Pacific will file a separate applicationdeclaration
to request additional financing authority to maintain existing
financing facilities after the Merger and to meet the capital
requirements for the Sierra Pacific system after the Merger (``Financing Application'').
1. General Conditions of Financing
Sierra Pacific requests authority to engage in various financing
and related transactions during the Authorization Period for which the
specific terms and conditions are not at this time known. The
authorization is sought subject to the conditions stated above and to
the following conditions: (1) The effective cost of money on longterm
debt borrowing occurring under this authorization will not exceed 300
basis points over the comparable term U.S. Treasury securities; (2) the
effective cost of money on shortterm debt borrowing occurring under
this authorization will not exceed 300 basis point over the comparable
term London Interbank Offered Rate (``LIBOR''); (3) the maturity [[Page 39450]]
of indebtness will not exceed 50 years; (4) the underwriting fees,
commissions, or other similar remuneration paid in connection with the
noncompetitive issue, sale or distribution of a security in this
matter will not exceed 5% of the principal or total amount of the
security being issued; and (5) the proceeds from the sale of securities
issued under this authorization will be used (a) to pay the
consideration required in order to consummate the Merger, (b) to
refinance shortterm debt originally incurred to raise all or a portion
of the Merger consideration; or (c) for general corporate purposes. 2. ShortTerm Debt Financing
Sierra Pacific requests Commission authorization during the
Authorization Period to issue shortterm debt securities in an amount
not to exceed $2.1 billion, consisting of financing for the Merger
consideration. Sierra Pacific anticipates that most of the Merger
consideration will be funded temporarily through the use of shortterm
debt.\12\ The shortterm debt will consist of one or more of the
following: bank borrowings, commercial paper, money market notes, floating rate or variable notes, all as described below.
\12\ This shortterm debt will be paid off in part with the
proceeds of the planned divestiture of SPPC's and Nevada Power's
electric generation assets, and the sale of common equity or certain noncore assets, with the balance refinanced within the
Authorization Period through longterm debt exclusively to refinance
shortterm debt or other securities from the divestiture of certain
noncore assets. Sierra Pacific will request authority to issue additional common equity in its Financing Application.
Sierra Pacific currently maintains a committed line of credit for $300 million under an unsecured revolving credit facility with Mellon Bank, First Union National Bank and Wells Fargo, as syndication agents (``Credit Facility''). This Credit Facility, the amount of which is included in the overall authorization requested above, may be used for working capital and general corporate purposes, including for commercial paper backup. It is anticipated that all or a portion of the shortterm debt used to fund the Merger will be borrowed by Sierra Pacific either through this credit Facility or through one or more new facilities to be entered into prior to the Merger.
Sierra Pacific also may sell commercial paper in established domestic or European commercial paper markets to provide temporary funding of the Merger consideration. This commercial paper would be sold to dealers at the discount rate or the coupon rate per annum 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 commercial paper from Sierra Pacific will reoffer such paper at a discount to corporate, institutional and, with respect to European commercial paper, individual investors. The commercial paper programs will be backed up by the Credit Facility and by any new credit facilities to be entered into by Sierra Pacific, as discussed above.
Sierra Pacific also may incur shortterm debt through the issuance of instruments customarily referred to as ``money market notes,'' ``floating rate notes'' or ``variable rate notes.'' This type of debt is usually issued under a fiscal and paying agency agreement or similar type of agreement, rather than through an indenture, and bears an interest rate that is either (a) tied to a customary interest rate index such as LIBOR which is adjusted on a periodic basis or (b) set by an auction process. The maturity of these notes may vary from less than one year to up to three years. Consequently, Sierra Pacific may also issue these notes as longterm debt. The specific terms of any notes issued under this authorization will be determined by Sierra Pacific at the time of issuance.
3. LongTerm Debt Financing
Sierra Pacific requests Commission authorization during the Authorization Period to issue longterm debt securities in an amount not to exceed $2.1 billion, as stated above. Sierra Pacific intends to use this longterm debt exclusively to refinance shortterm debt originally incurred to finance the Merger. These longterm debt securities would include (a) unsecured notes, debentures, mediumterm notes, or other debt securities issued under an indenture (``Sierra Pacific Indenture'') \13\, (b) instruments customarily referred to as ``money market notes,'' ``floating rate notes,'' or ``variable rate notes,'' as described above, if those notes have a maturity of greater than one year \14\, or (c) longterm loans from commercial or investment banks under credit facilities or loan agreements.\15\ \13\ Sierra Pacific filed a form of the Sierra Pacific Indenture with the Commission as part of a universal shelf registration on June 8, 1999 (Registration No. 33380149). Applicants state that the Sierra Pacific Indenture will permit the issuance of a wide variety of unsecured debt securities in one or more series. The Sierra Pacific Indenture will contain numerous variable terms, such as principal amount, interest rate, redemption terms, sinking funds, currency of payment, denominations, and events of default. The Sierra Pacific Indenture contains no negative covenants or restrictions.
On May 9, 2000, Sierra Pacific issued of $300 million of notes
under this shelf registration. Proceeds from this issuance were used
to retire the remaining balance of shortterm debt incurred to
complete the merger of Sierra Pacific and Nevada Power. Sierra
Pacific expects to file a new universal shelf registration for the
issuance of longterm debt authorized under this application
declaration and may continue to use the Sierra Pacific Indenture for any such issuance.
\14\ On April 20, 2000, Sierra Pacific also issued $300 million
of floating rate notes that are not related to this authorization
request. The proceeds of this issuance were used: (1) to reduce
Nevada Power's debt and strengthen its capitalization; and (2) to
reduce short term debt at the holding company level incurred to complete the merger of Sierra Pacific and Nevada Power.
\15\ Borrowings from banks and other financial institutions will
be unsecured debt and will rank in pari passu with debt securities
issued under the Sierra Pacific Indenture and the shortterm credit
facilities described above. Specific terms of any borrowings will be
determined by Sierra Pacific at the time of issuance and will comply
with the parameters on financing authorization set forth above. 4. Other Securities
In addition to the specific securities described above, Sierra Pacific may also find it necessary or desirable to minimize financing costs or to obtain new capital under thenexisting market conditions to issue and sell other types of securities during the Authorization Period. The issuance of any of these securities would be subject to the aggregate $2.1 billion limit on shortterm and longterm debt and to the overall conditions on financing authorization discussed above. 5. Interest Rate Risk Management Devices
Sierra Pacific requests authority to enter into, perform, purchase
and sell financial instruments intended to manage the volatility of
interest rates, including but not limited to interest rate swaps, caps,
floors, collars and forward agreements or any other similar agreements.
Sierra Pacific would employ interest rate swaps as a means of prudently
managing the risk associated with any of its outstanding debt issued
under this authorization by, in effect, synthetically (a) covering
variable rate debt to fixed rate debt; (b) covering fixed rate debt to
variable rate debt; (c) limiting the impact of changes in interest
rates resulting from variable rate debt; and (d) providing an option to
enter into interest rate swap transactions in future periods for
planned issuances of debt securities. In no case will the notional
principal amount of any interest rate swap exceed that of the
underlying debt instrument and related interest rate exposure.\16\
\16\ Sierra Pacific will only enter into interest rate swap
agreements with counter parties whose senior debt ratings, as
published by Standard & Poor's, a Division of The McGrawHill
Companies, are greater than or equal to ``BBB+'', or an equivalent
rating from Moody's Investors Service, Inc., Fitch IBCA, Inc., or Duff & Phelps Credit Rating Co.
[[Page 39451]]
Sierra Pacific Resources (709621)
Sierra Pacific Resources (``Sierra Pacific''), 6100 Neil Road, Reno, Nevada 89511, a public utility holding company claiming exemption from registration under section 3(a)(1) of the Act by rule 2 (``Applicant''), has filed an application under section 13(b) of the Act and rules 87, 88, 90, and 91 under the Act.
In this filing, Sierra Pacific requests the Commission to authorize: (1) The designation of Sierra Pacific Resource Services Company (``SPRSC'') as a subsidiary service company in accordance with rule 88 under the Act; (2) the provision of services by SPRSC to the Sierra Pacific system following Sierra Pacific's proposed merger with Portland General Electric Company (``PGE'') (described below) and the registration of Sierra Pacific as a holding company under the Act; and (3) certain lease transactions among associate companies within the Sierra Pacific system after the Merger, as described below. Sierra Pacific further requests that the Commission find that SPRSC is organized and will conduct its operations so as to meet the requirements of section 13 of the Act and the rules under the Act.\17\ \17\ In addition, Sierra Pacific requests that the Commission find that this application is deemed to constitute a filing on Form U131 for purposes of rule 88 under the Act, or, alternatively, that the filing of a Form U131 is not necessary under the Act.
In a separate filing, Sierra Pacific and PGE, a wholly owned
electric public utility subsidiary company of Enron Corporation, a
public utility holding company claiming exemption from registration
under section 3(a)(1) of the Act by rule 2, seek approvals relating to
the proposed acquisition by Sierra Pacific of PGE and PGE's affiliate,
PGH II, Inc. (``PGH II'') (``Merger U1'') \18\ Sierra Pacific will
register as a holding company under the Act upon the consummation of the acquisition (``Merger'') described in the Merger U1.
\18\ See File No. 709619. The Commission's notice describing this filing is included elsewhere in this Release.
Following the consummation of the Merger, Sierra Pacific proposes to have three operating public utility company subsidiaries (the ``Utility Subsidiaries''): (1) Sierra Pacific Power Company (``SPPC''), a public utility company that provides retail electric service in Nevada and northeastern California, sells electric power at wholesale, distributes natural gas at retail in northwestern Nevada, and provides water service; (2) Nevada Power Company (``Nevada Power''), a public utility company that provides retail electric service predominantly to the residents of Clark County, Nevada, provides limited service to the Federal Department of Energy (U.S. Government Test Site) in Nye County, Nevada, and sells electric power at wholesale; and (3) PGE, a public utility company that provides retail electric power service in northwestern Oregon and sells electric power at wholesale.\19\ \19\ A more complete description of the Utility Subsidiaries is set forth in the Merger U1.
Sierra Pacific's direct and indirect nonutility subsidiary
companies following the Merger are to include the following: PGH II;
\20\ Tuscarora Gas Pipeline Company; Sierra Energy Company d/b/a
e.three (``e.three''); Lands of Sierra, Inc.; Sierra Pacific
Communications Company; Sierra Pacific Energy Company; Commonsite Inc.
(``Commonsite''); NVP Capital I (``NPV I''); NVP Capital II (``NVP
II''); Nevada Electric Investment Company (``NEICO''); Northwind Las
Vegas, LLC (``Northwind Las Vegas'') \21\; Northwind Aladdin, LLC
(``Northwind Aladdin'') \22\; e.three CES Custom Energy Solutions, LLC
(``e.three CES'').\23\; 121 SW Salmon Street Corporation; Portland
General Transport Corp.; and Salmon Springs Hospitality Group
(collectively, with the Utility Subsidiaries, the ``Subsidiaries'').
\20\ PGH II is engaged in developing several nonutility
businesses through the following subsidiary companies: Columbia
Willamette Development Company; Enron MicroClimates, Inc.; Portland
General Distribution Company; Portland General Operations Company,
Inc.; and Tule Hub Services Company. These subsidiary companies
currently generate no material revenue and hold de minimis assets.
PGH II also holds a 99% ownership interest in the following limited
liability companies: ColumbiaPacific Distribution Services Company,
LLC; Eron Distribution Services Company, LLC; and Portland Energy Solutions Company.
\21\ NEICO owns 50% of Northwind Las Vegas. UTT Nevada. Inc., an
affiliate of Unicom Thermal Technologies, Inc., owns the other 50%.
\22\ NEICO owns 25% of Northwind Aladdin and UTT Nevada. Inc. owns the other 75%.
\23\ NEICO owns 50% of e.three CES and ethree owns the other half.
Sierra Pacific also owns the following inactive subsidiary companies: Sierra Water Development Company; Sierra Gas Holdings Company; Great Basin Energy Company; Genwal Coal Co.; Castle Valley Resources, Inc.; and Alkan Mining Company. In addition, Nevada Power recently created several Nevada limited liability companies that have conducted no business activities but are in good standing. They are: Nevada Power Services, LLC; Nevada Power Choices, LLC; Nevada Power Solutions, LLC; Las Vegas Energy, LLC; Nevada Solutions, LLC; Power Choice, LLC; Nevada Power Energy Services, LLC; and Nevada Choices, LLC.
After the Merger, SPRSC proposes to provide the Sierra Pacific
system companies with a variety of administrative, management,
enegineering, construction, environmental and support services, either
directly or through agreements with associate or nonassociate
companies, as needed.\24\ SPRSC will enter into a services agreement
with each of the Subsidiaries (the ``Services Agreement''). The
Services Agreement will be administered in accordance with the Act and
the rules under the Act, and the cost of services payable to SPRSC
under the Services Agreement will be computed in accordance with the
applicable rules under the Act and with appropriate accounting
standards. Sierra Pacific presently expects that SPRSC will be staffed
with personnel drawn from Sierra Pacific, SPPC, Nevada Power, and PGE.
Sierra Pacific has not yet determined the numbers of SPRSC personnel that will be drawn from each of these companies.
\24\ Before the consummation of the Merger, SPRSC will be
incorporated in the State of Nevada to serve as the service company for the Sierra Pacific system.
SPRSC's authorized capital stock will consist of 100 shares of common stock, no par value per share, issued to Sierra Pacific for $1,000. upon consummation of the Merger, Sierra Pacific will hold all issued and outstanding shares of SPRSC common stock. Sierra Pacific will describe any debt financing for SPRSC in a separate application declaration to be filed with the Commission dealing with the financing of the postMerger Sierra Pacific holding company system.
Sierra Pacific further requests authorization under section 13(b) of the Act for the Subsidiaries to enter, from time to time, into leases of office or other space with other associate companies. These leases will comply with the requirements of rules 87, 90 and 91 under the Act. The Utility Subsidiaries may also provide to one another any services, construction, or goods as are reasonably required to meet a breakdown or other emergency in accordance with the standards of rule 87(b)(2) under the Act. These services will be provided at cost in accordance with the standards of the Act and rules 87, 90 and 91 under the Act.
For the Commission by the Division of Investment Management, pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 0016062 Filed 62300; 8:45 am]
BILLING CODE 801001M