Browse: Departments Dates Agencies
DOCUMENT ID: [Release No. 35-27767]
SUBJECT CATEGORY: Filings Under the Public Utility Holding Company Act of 1935, as Amended (``Act'')
DOCUMENT SUMMARY: November 21, 2003.
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 December 15, 2003, 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 December 15, 2003, the application(s) and/or declaration(s), as filed or as amended, may be granted and/or permitted to become effective.
Great Plains Energy Incorporated (``GPE''), a registered public
utility holding company; Kansas City Power & Light Company (``KCPL''),
a public utility subsidiary company of GPE; Great Plains Power
Incorporated (``GP Power'') a subsidiary company of GPE; \1\ Kansas
City Power & Light Receivables Company (``KCPL Receivables''), a
nonutility subsidiary of KCPL; \2\ all located at 1201 Walnut, Kansas
City, MO 64106; and KLT, Inc., an intermediate holding company of GPE
at 10740 Nall Street, Overland Park, KS 66211 (collectively,
``Applicants'') have filed an applicationdeclaration (``Application'')
under sections 6(a), 7, 9(a)(1), 10 and 12(c) of the Act and rules 45 and 46 under the Act.
\1\ GPE states that GP Power currently is not an independent
power producer (``IPP'') or an exempt wholesale generator (``EWG''),
and has no interests in IPPS. It is engaged in certain preliminary
project development and administrative activities, such as obtaining
options to purchase real estate for a potential plant site, filing
applications for air, wetlands and other preconstruction matters
and filing a marketbased rate schedule with the Federal Energy Regulatory Commission (``FERC'').
\2\ KCPL Receivables engages in accounts receivables management. I. Prior Authorization
By order dated September 7, 2001 (HCAR No. 27436) (``September Order''), the Commission authorized GPE and its subsidiaries, among other things, to engage in (A) a program of external financing, (B) intrasystem credit support arrangements, (C) interest rate hedging measures, and (D) other intrasystem transactions from time to time through December 31, 2004 (``Authorization Period''). In particular, the Commission authorized GPE to issue and sell common stock and, directly or indirectly, shortterm and longterm debt securities and other forms of preferred or equitylinked securities. The aggregate amount of all such securities issued by GPE during the Authorization Period was limited to $450 million under the conditions of the September Order, and the Commission reserved jurisdiction over (A) the retainability of KLT Investment II until October 1, 2004 and (B) payment of dividends by any nonexempt nonutility subsidiary. II. Current Requests
Applicants request that the current proposal supersede and replace the authorizations under the September Order through December 31, 2005 (``New Authorization Period'').
GPE requests authorization to issue and sell directly, or indirectly through financing subsidiaries, $1.2 billion in the aggregate amount of common stock, short term and long term debt securities and other forms of preferred or equitylinked securities. GPE may issue and sell common stock through underwriters or dealers, through agents, or directly to a limited number of purchasers or a single purchaser. Also, it requests authority to issue common stock, performance shares options, SARs, warrants or other stock purchase rights exercisable for common stock in public or privately negotiated transaction as consideration for the equity securities or assets of other existing companies, provided that the acquisition of any such equity securities or assets has been authorized in a separate proceeding or is exempt under the Act or the rules under the Act. GPE will directly issue preferred and equitylinked securities, including specifically, debt or preferred securities that are convertible, either manditorily or at the option of the holder, into common stock or GPE indebtedness and forward purchase contracts for common stock. Long term debt of GPE may be in the form of unsecured notes (``Debentures'') issued in one or more series. To provide for financing for general corporate purposes, other working capital requirements and investments in new enterprises until longterm financing can be obtained, GPE may sell, directly or indirectly through one or more financing subsidiaries, commercial paper or establish bank lines of credit.
KCPL requests authorization to issue and sell notes and other
evidence of indebtedness having a maturity of one year or less in an
aggregate principal amount outstanding at any one time not to exceed
$500 million, including without limitation commercial paper, bank lines of credit, and other debt securities.\3\
\3\ The issuance by KCPL of commercial paper and other short
term indebtedness having a maturity of less than 12 months will not
be exempt under rule 52(a) since it is not subject to approval by
its state regulatory commission; however, KCPL must obtain the
authorization of the Missouri Public Service commission for any
mortgage or other encumbrance of KCPL franchise, works, or system. [[Page 67233]]
GPE, the nonutility subsidiaries listed in Exhibit J (``Exhibit J Subsidiaries''), and any future nonutility subsidiaries request authority to make loans to any such associate company at interest rates and maturities designed to provide a return to the lending company of not less than its effective cost of capital when the borrowing Exhibit J Subsidiary is: (1) Not whollyowned directly or indirectly by GPE and (2) does not sell goods or services to KCPL.
GPE and, to the extent not exempt pursuant to rule 52, KCP&L, the Exhibit J Subsidiaries, and any future nonutility subsidiaries request authorization to enter into interest rate hedging transactions with respect to existing indebtedness, subject to certain limitations and restrictions, in order to reduce or manage interest rate cost. Interest Rate Hedges would only be entered into with counterparties whose senior debt ratings, or the senior debt ratings of the parent companies of the counterparties, as published by Standard and Poor's Ratings Group, are equal to or greater than BBB, or an equivalent rating from Moody's Investors Service, Fitch, or Duff and Phelps.
GPE proposes to enter into guarantees and other forms of support agreements on behalf or for the benefit of any subsidiary during the New Authorization Period in an aggregate principal amount not to exceed $600 million outstanding at any one time.
Applicants also request authorization for nonutility subsidiaries to provide credit support on behalf and for the benefit of other nonutility subsidiaries in an aggregate principal amount not to exceed $300 million outstanding at any one time, exclusive of any guarantees and other forms of credit support exempt under rule 45(b)(7) or rule 52(b).
Collectively the Applicants request authorization to: (1) Change any wholly owned Exhibit J Subsidiary's capital stock capitalization; (2) acquire, directly or indirectly, the equity securities of one or more corporations, trusts, partnerships or other entities created specifically for the purpose of facilitating the financing of the authorized and exempt activities (``Financing Subsidiaries''); (3) acquire, directly or indirectly through a nonutility subsidiary, the securities of one or more new intermediate subsidiary companies which may be organized exclusively for the purpose of acquiring, holding and/ or financing the acquisition of the securities of or other interest in one or more EWGs, foreign utility companies (``FUCOs''), exempt telecommunications companies, rule 58 companies or other nonutility subsidiaries (as authorized in this proceeding); and finally (4) on behalf of the following specified subsidiaries: GP Power; Innovative Energy Consultants Inc.; Home Service Solutions Inc.; Worry Free Service Inc.; KLT Inc., KLT Investments II Inc.; KLT Energy Services Inc.; Custom Energy Holdings, LLC; Strategic Energy LLC, KLT Gas Inc.; Apache Canyon Gas LLC; FAR Gas Acquisitions Corporation; Forest City, LLC; Forest City Gathering Company; and Patrick KLT Gas, LLC (collectively, ``Specified Subsidiaries'') that the Specified Subsidiaries be permitted to pay dividends out of capital and unearned surplus (including revaluation reserve), provided that no Specified Subsidiary at the time of payment derives any material part of its revenues from the sale of goods, services, electricity or natural gas to KCPL.
GPE states that the proposed increase in the authorized limit on issuing common stock, shortterm and longterm debt securities and other forms of preferred or equitylinked securities will enable it to (1) finance investments and capital expenditures by it and its subsidiaries, (2) to fund future investments in any exempt telecommunications company or energyrelated or gasrelated company within the meaning of rule 58, (3) to repay, redeem, refund or purchase by it or its subsidiaries of their respective securities, and (4) to finance the working capital requirements of it and its subsidiaries. GPE further states that the proposed increase in the authorized limit will provide additional liquidity to it and the ability to increase its equity to total capitalization ratio, which will strengthen its financial position and enhance its access to the capital markets. GPE does not request authority at this time to invest in EWGs or FUCOs.
More specifically, GPE requests authority to invest, directly or
indirectly, up to $10 million in the aggregate in GP Power to be used for the same types of preliminary project development and
administrative activities as described in the preceding paragraph
without obtaining further authorization of the Commission; provided
that if GP Power becomes an EWG, investments in GP Power may be made subject to the restrictions of rule 53 under the Act.\4\
\4\ GPE has invested, directly or indirectly, approximately $3.3 million in GP Power as of September 30, 2003.
E. Financing Parameters
The interest rate on longterm debt securities (debt securities having maturities of one year or more) issued to nonassociate companies pursuant to Commission authorization will not exceed at the time of issuance the greater of (1) 500 basis points of the yield to maturity of a U.S. Treasury security having a remaining term approximately equal to the term of such debt, or (2) competitive market rates for securities of comparable credit quality with similar terms and features. The interest rate on GPE bank lines of credit and short term debt securities (debt securities having maturities of less than one year) issued to nonassociate companies pursuant to Commission authorization will not exceed at the time of issuance the greater of (i) 500 basis points over the comparable term London Interbank Offered Rate (``LIBOR''), or (ii) a gross spread over LIBOR that is consistent with similar securities of comparable credit quality with similar terms and features.
Apart from securities issued either for intrasystem financings, or
by KCPL in the form of commercial paper or shortterm bank facilities,
no guarantees or other securities, other than common stock, may be
issued in reliance upon the authorization granted by the Commission
unless (1) the security to be issued, if rated, is rated investment
grade; (2) all outstanding securities of the issuer (except in the case
of GPE, its preferred stock) that are rated are rated investment grade;
and (3) all outstanding securities of GPE (except for GPE's preferred
stock) that are rated are rated investment grade. The preferred stock
of GPE currently is not rated investment grade. GPE currently has four
series of preferred stock outstanding, each of which was originally
issued by KCPL. These four series aggregate $39 million in face amount,
or approximately 0.2% of GPE's consolidated capitalization. The below
investment grade rating on the preferred stock is a result of the
rating agencies' methodology, which views preferred stock to be
structurally subordinated to any debt issued by GPE. It would not be economically efficient
[[Page 67234]]
for GPE to redeem the preferred stock at this time.
GPE & KCPL will not issue guarantees or other securities in reliance upon the authorization by the Commission unless, on a pro forma basis, taking into account the issuance of guarantees, or other securities up to $1.2 billion, the consolidated common equity capitalization of GPE and KCPL will remain at least 30%.
GPE requests authority for these new intermediate subsidiaries, as
well as existing intermediate subsidiaries (collectively, the
``Intermediate Subsidiaries''), to provide management, administrative,
project development and operating services to such entities at fair
market prices determined without regard to cost, and therefore requests
an exemption (to the extent that rule 90(d) does not apply) pursuant to
section 13(b) from the cost standards of rules 90 and 91 as applicable
to such transactions, in any case in which the nonutility subsidiary purchasing such goods or services is:
(1) A FUCO or foreign EWG that derives no part of its income,
directly or indirectly, from the generation, transmission, or
distribution of electric energy for sale within the United States;
(2) An EWG that sells electricity at marketbased rates which have
been approved by the FERC, provided that the purchaser is not KCPL;
(3) A ``qualifying facility'' (``QF'') within the meaning of the
Public Utility Regulatory Policies Act of 1978, as amended (``PURPA'')
that sells electricity exclusively (a) at rates negotiated at arms'
length to one or more industrial or commercial customers purchasing
such electricity for their own use and not for resale, and/or (b) to an
electric utility company at the purchaser's ``avoided cost'' as determined in accordance with the regulations under PURPA;
(4) A domestic EWG or QF that sells electricity at rates based upon
its cost of service, as approved by FERC or any state public utility
commission having jurisdiction, provided that the purchaser thereof is not KCPL; or
(5) A rule 58 subsidiary or any other nonutility subsidiary that
(a) is partiallyowned by GPE, provided that the ultimate purchaser of
such goods or services is not KCPL (or any other entity that GPE may
form whose activities and operations are primarily related to the
provision of goods and services to KCPL), (b) is engaged solely in the
business of developing, owning, operating and/or providing services or
goods to nonutility subsidiaries described in clauses (1) through (4)
immediately above, or (c) does not derive, directly or indirectly, any
material part of its income from sources within the United States and
is not a public utility company operating within the United States. Entergy Mississippi, Inc. (7010157)
Entergy Mississippi, Inc. (``Entergy Mississippi''), 308 East Pearl Street, Jackson, MI 39201, an electric utility subsidiary of Entergy Corporation, a registered holding company under the Act, has filed an applicationdeclaration under sections 6(a), 7, 9(a), 10, 12(c), 12(d), 12(e), 32 and 33 of the Act and rules 42, 53, and 54 under the Act.
Entergy Mississippi seeks authorization to issue and sell, from time to time through March 31, 2007, up to $900 million combined aggregate principal amount of (a) its first mortgage bonds (``Bonds''), (b) its preferred stock (``Preferred Stock''), (c) unsecured longterm indebtedness (``Longterm Debt''), and, (d) directly or indirectly through one or more financing subsidiaries, other forms of preferred or equitylinked securities (``Equity Interests'') (collectively, ``Securities'').
The Bonds (a) may be subject to optional and/or mandatory redemption, in whole or in part, at par or at premiums above their principal amount, (b) may be entitled to mandatory or optional sinking fund provisions, (c) may be issued at fixed or floating rates of interest, (d) may provide for reset of the coupon under a remarketing arrangement, (e) may be called from existing investors by a third party, (f) may be backed by a bond insurance policy and (g) would have a maturity ranging from one year to 50 years. The maturity dates, interest rates, redemption and sinking fund provisions and conversion features, if any, with respect to the Bonds of a particular series, as well as any associated placement, underwriting or selling fees, commissions and discounts, if any, would be established by negotiation or competitive bidding. The maturity dates, interest rates, redemption and sinking fund provisions and conversion features, if any, with respect to Bonds of a particular series, as well as any associated placement, underwriting or selling agent fees, commissions and discounts, if any, would be established by negotiation or competitive bidding.
The Preferred Stock or Equity Interests may be issued in one or more series with whatever rights, preferences and priorities, including those related to redemption, are designated in the instrument creating each series. The Preferred Stock or Equity Interests may be redeemable or may be perpetual.
The Longterm Debt of a particular series (a) would be unsecured, (b) may be convertible into any other securities of Entergy Mississippi (except common stock), (c) would have a maturity ranging from one year to 50 years, (d) may be subject to optional and/or mandatory redemption, in whole or in part, at par or at premiums above its principal amount, (e) may be entitled to mandatory or optional sinking fund provisions, (f) may be issued at fixed or floating rates of interest, (g) may provide for reset of the coupon in accordance with a remarketing arrangement, and (h) may be called from existing investors by a third party. The maturity dates, interest rates, redemption and sinking fund provisions and conversion features, if any, with respect to Longterm Debt of a particular series, as well as any associated placement, underwriting or selling agent fees, commissions and discounts, if any, would be established by negotiation or competitive bidding. Entergy Mississippi states that it presently contemplates selling the Securities by competitive bidding, negotiated public offering or private placement.
Entergy Mississippi proposes to use the net proceeds derived from the issuance and sale of the Securities for general corporate purposes, including (a) financing its capital expenditures, (b) repaying, redeeming, refunding or purchasing any of its securities issued in accordance with rule 42 under the Act and/or those issued on Entergy Mississippi's behalf in accordance with section 9(c)(1) of the Act, and (c) financing its working capital requirements.
Entergy Mississippi also proposes to enter into arrangements to
finance or refinance on a taxexempt basis certain pollution control
facilities and/or sewage or solid waste disposal facilities
(``Facilities''). Entergy Mississippi proposes, from time to time
through March 31, 2007, to enter into one or more leases, subleases,
installment sale agreements, refunding agreements or other agreements
(``Agreements'') and/or supplements and/or amendments to those
Agreements (``Facilities Agreements'') with one or more issuing
governmental authorities (``Authorities''), under which the Authority
may issue one or more series of taxexempt bonds (``Taxexempt Bonds'')
in an aggregate principal amount not to exceed $50 million (including
the possible issuance and pledge by Entergy Mississippi of up to $55 million in aggregate principal
[[Page 67235]]
amount of Entergy Mississippi Collateral Bonds (as defined below),
which $55 million is not included in the $900 million referenced
above). The net proceeds from the sale of Taxexempt Bonds would be
applied to financing, or refinancing taxexempt bonds issued for the
purpose of financing, the Facilities. Entergy Mississippi further
proposes, under the Facilities Agreement, to purchase, acquire,
construct and install the Facilities unless the Facilities are already
in operation. Under the Facilities Agreements, Entergy Mississippi
would be obligated to make payments sufficient to pay the principal or
redemption price of, premium, if any, and the interest on, and other
amounts owing with respect to, the Taxexempt Bonds, together with related expenses.
The Taxexempt Bonds of a particular series (a) would have a maturity ranging from one year to 50 years, (b) may be subject to optional and/or mandatory redemption, in whole or in part, at par or at premiums above their principal amount, (c) may be entitled to mandatory or optional sinking fund provisions, (d) may be issued at fixed or floating rates of interest, (e) may provide for reset of the coupon under a remarketing arrangement, (f) may be called from existing investors by a third party, (g) may be backed by a municipal bond insurance policy, (h) may be supported by credit support such as a bank letter of credit and reimbursement agreement, (i) may be supported by a lien subordinate to EMI's Mortgage and Deed of Trust, as amended and supplemented both in the past and in the future (``Mortgage''), on the Facilities related to those Taxexempt Bonds and (j) may be supported by the issuance and pledge of Bonds issued as collateral security for those Taxexempt Bonds (``Collateral Bonds''). The maturity dates, interest rates, redemption and sinking fund provisions and conversion features, if any, with respect to Taxexempt Bonds of a particular series, as well as any associated placement, underwriting or selling agent fees, commissions and discounts, if any, would be established by negotiation or competitive bidding.
Entergy Mississippi also proposes to enter into arrangements to issue up to $300 million in aggregate principal amount of municipal securities (``Municipal Securities'') (including the possible issuance and pledge by Entergy Mississippi of up to $350 million in aggregate principal amount of Entergy Mississippi Municipal Collateral Bonds (as defined below), which $350 million is not included in the $900 million referenced above). Entergy Mississippi proposes, from time to time through March 31, 2007, to enter into one or more agreements, either directly or through an affiliate (``Municipal Securities Agreements''), with one or more issuing governmental authorities (``Municipal Entities''), under which a Municipal Entity could issue securities to the public on behalf of Entergy Mississippi or loan money to Entergy Mississippi through a bank, an affiliate of Entergy Mississippi, or other person. The net proceeds from the sale of Municipal Securities would be applied to finance certain costs of Entergy Mississippi. Under any Municipal Securities Agreement, Entergy Mississippi would be obligated to make payments sufficient to provide for payment by the Municipal Entity of the principal or redemption price of, premium, if any, and interest on, and other amounts owing with respect to the Municipal Securities, together with related expenses.
The Municipal Securities of a particular series (a) would have a maturity ranging from one year to fifty years, (b) may be subject to optional and/or mandatory redemption, in whole or in part, at par or at premiums above their principal amount, (c) may be entitled to mandatory or optional sinking fund provisions, (d) may be issued at fixed or floating rules of interest, (e) may provide for reset of the coupon under a remarketing arrangement, (f) may be called from existing investors by a third party, (g) may be backed by a municipal securities insurance policy, (h) may be supported by credit support such as a bank letter of credit and reimbursement agreement, (i) may be supported by a lien subordinate to the Mortgage on certain of EMI's facilities and other assets, and (j) may be supported by the issuance and pledge of Bonds issued as collateral security for them (``Municipal Collateral Bonds''). The maturity dates, interest rates, redemption and sinking fund provisions and conversion features, if any, with respect to Municipal Securities of a particular series as well as any associated placement, underwriting or selling agent fees, commissions and discounts, if any, would be established by negotiation or competitive bidding.
Entergy Mississippi also proposes to (a) acquire the equity securities of one or more financing subsidiaries and/or specialpurpose subsidiaries, organized solely to facilitate financing, (b) to guarantee the securities issued by those financing subsidiaries and/or special purpose subsidiaries, and (c) to have the financing subsidiaries and/or special purpose subsidiaries pay Entergy Mississippi, either directly or indirectly, dividends out of capital. Entergy Gulf States, Inc. (7010158)
Entergy Gulf States, Inc. (``Entergy Gulf States''), 350 Pine Street, Beaumont, Texas 77701, an electric utility subsidiary of Entergy Corporation, a registered holding company under the Act, has filed an applicationdeclaration under sections 6(a), 7, 9(a), 10, 12(c), 12(d), 12(e), 32 and 33 of the Act and rules 42, 53, and 54 under the Act.
Entergy Gulf States seeks authorization to issue and sell, from time to time through March 31, 2007, up to $2 billion combined aggregate principal amount of (a) its first mortgage bonds (``Bonds'') including first mortgage bonds of the medium term note series (``MTNs''), (b) its preferred stock (``Preferred Stock''), (c) its preference stock (``Preference Stock''), (d) unsecured longterm indebtedness (``Longterm Debt''), and (e) directly or indirectly through one or more financing subsidiaries, other forms of preferred or equitylinked securities (``Equity Interests'').
The Bonds and MTNs (a) may be subject to optional and/or mandatory redemption, in whole or in part, at par or at premiums above their principal amount, (b) may be entitled to mandatory or optional sinking fund provisions, (c) may be issued at fixed or floating rates of interest, (d) may provide for reset of the coupon under a remarketing arrangement, (e) may be called from existing investors by a third party, (f) may be backed by a bond insurance policy and (g) would have a maturity ranging from one year to fifty years. The maturity dates, interest rates, redemption and sinking fund provisions and conversion features, if any, of the Bonds of a particular series, as well as any associated placement, underwriting or selling fees, commissions and discounts, would be established by negotiation or competitive bidding. The maturity dates, interest rates, redemption and sinking fund provisions and conversion features, if any, of Bonds of a particular series, or MTNs of a particular subseries, as well as any associated placement, underwriting or selling agent fees, commissions and discounts, would be established by negotiation or competitive bidding.
The Preferred Stock or Equity Interests may be issued in one or more series with whatever rights, preferences and priorities, including those related to redemption, are designated in the instrument creating each series. The Preferred Stock or Equity Interests may be redeemable or may be perpetual.
The Longterm Debt (a) would be unsecured, (b) may be convertible into any other securities of Entergy Gulf States (except common stock), (c) would have a maturity ranging from one year to fifty years, (d) may be subject to optional and/or mandatory redemption, in whole or in part, at par or at premiums above its principal amount, (e) may be entitled to mandatory or optional sinking fund provisions, (f) may be issued at fixed or floating rates of interest, (g) may provide for reset of the coupon under a remarketing arrangement, and (h) may be called from existing investors by a third party. The maturity dates, interest rates, redemption and sinking fund provisions and conversion features, if any, with respect to Longterm Debt of a particular series, as well as any associated placement, underwriting or selling agent fees, commissions and discounts, would be established by negotiation or competitive bidding.
Entergy Gulf States proposes to use the net proceeds from the issuance and sale of Bonds, and/or MTNs and/or the Preferred Stock and/ or the Preference Stock and/or the Longterm Debt and/or the Equity Interests for general corporate purposes, including (a) financing its capital expenditures, (b) repaying, redeeming, refunding or purchasing any of its securities under rule 42 and/or those issued on Entergy Gulf States' behalf under section 9(c)(1), and (c) financing its working capital requirements.
Entergy Gulf States states that it contemplates selling the Bonds and/or MTNs and/or the Preferred Stock and/or the Preference Stock and/ or the Longterm Debt and/or the Equity Interests by competitive bidding, negotiated public offering or private placement.
Entergy Gulf States also proposes to enter into arrangements to finance or refinance on a taxexempt basis certain facilities eligible to be financed with taxexempt debt, including, but not limited to, sewage and/or solid waste disposal facilities (``Facilities''). Entergy Gulf States proposes, from time to time through March 31, 2007, to enter into one or more leases, subleases, installment sale agreements, refunding agreements or other agreements (``Agreements'') and/or supplements and/or amendments to those Agreements (``Facilities Agreements'') with one or more issuing governmental authorities (``Authorities''), under which the Authorities may issue one or more series of taxexempt bonds (``Taxexempt Bonds'') in an aggregate principal amount up to $500 million (including the possible issuance and pledge by Entergy Gulf States of up to $560 million in aggregate principal amount of Entergy Gulf States Collateral Securities (as defined below), which $560 million is not included in the $2 billion mentioned above). The net proceeds from the sale of Taxexempt Bonds would be applied to financing, or refinancing taxexempt bonds issued for the purpose of financing, the Facilities.
Under the terms of the Facilities Agreements, Entergy Gulf States may commit to purchase, acquire, construct, install, operate and/or maintain the Facilities. Under the Facilities Agreements, Entergy Gulf States would be obligated to make payments sufficient to pay the principal or redemption price of, premium, if any, and the interest on, and other amounts owing with respect to, the Taxexempt Bonds, together with related expenses.
The Taxexempt Bonds (a) would have a maturity ranging from one year to fifty years, (b) may be subject to optional and/or mandatory redemption, in whole or in part, at par or at premiums above their principal amount, (c) may be entitled to mandatory or optional sinking fund provisions, (d) may be issued at fixed or floating rates of interest, (e) may provide for reset of the coupon under a remarketing arrangement, (f) may be called from existing investors by a third party, (g) may be backed by a municipal bond insurance policy, (h) may be supported by credit support such as a bank letter of credit and reimbursement agreement, (i) may be supported by a lien subordinate to Entergy Gulf States' Indenture of Mortgage (as before and later amended and supplemented) on the Facilities related to those Taxexempt Bonds and (j) may be supported by the issuance and pledge of Bonds issued as collateral security for those Taxexempt Bonds (``Collateral Securities''). The maturity dates, interest rates, redemption and sinking fund provisions and conversion features, if any, with respect to Taxexempt Bonds of a particular series, as well as any associated placement, underwriting or selling agent fees, commissions and discounts, would be established by negotiation or competitive bidding.
Entergy Gulf States also proposes to (a) acquire the equity securities of one or more financing subsidiaries and/or specialpurpose subsidiaries, organized solely to facilitate financing, (b) to guarantee the securities issued by those financing subsidiaries and/or special purpose subsidiaries, and (c) to have the financing subsidiaries and/or special purpose subsidiaries pay Entergy Gulf States, either directly or indirectly, dividends out of capital. Ameren Corporation, et al. (7010159)
Ameren Corporation (``Ameren''), a registered holding company, Ameren Energy, Inc., and Ameren's nonutility subsidiaries Ameren Development Company (``Ameren Development''), Ameren ERC, Inc. (``Ameren ERC''), Ameren Energy Resources Company (``Ameren Energy Resources''), Ameren Energy Marketing Company, Ameren Energy Fuels and Services Company, Illinois Materials Supply Co., Missouri Central Railroad Company, Union Electric Development Company (``UEDC''), AFS Development Company, LLC, all located at 1901 Chouteau Avenue, St. Louis, Missouri 63103, and nonutility subsidiaries CIPSCO Investment Company (``CIC''), 607 East Adams Street, Springfield, Illinois 62739, CILCORP Investment Management Inc., CILCORP Ventures Inc., CILCORP Energy Services, Inc., QST Enterprises Inc., CILCO Exploration and Development Company, and CILCO Energy Corporation, all located at 300 Liberty Street, Peoria, Illinois 61602, and nonutility subsidiaries AmerenEnergy Medina Valley Cogen (No. 4), L.L.C., AmerenEnergy Medina Valley Cogen (No. 2) L.L.C., AmerenEnergy Medina Valley Cogen, L.L.C., an exempt wholesale generator (``EWG'') and AmerenEnergy Medina Valley Operations, L.L.C., a nonutility subsidiary all at P.O. Box 230, Mossville, Illinois, 615520230 (collectively, ``Applicants'' and excluding Ameren ``Nonutility Subsidiaries'') have filed an applicationdeclaration (``Application'') under sections 6(a), 7, 9(a), 10, 12(b), 12(c) and 13(b) of the Act and rules 43, 45, 46, 90 and 91 under the Act.
By order dated July 23, 1999 (the ``1999 Order''),\5\ Ameren, Ameren Union Electric Company d/b/a AmerenUE, and certain direct and indirect nonutility subsidiaries of Ameren were authorized to engage in various transactions from time to time through December 31, 2003, relating generally to Ameren's reorganization of its nonutility subsidiary companies and the acquisition and ownership of new non utility subsidiaries.
In this Application, the Applicants are seeking to extend and
restate their current authorization under the 1999 Order for the period
through December 31, 2006 (the ``Authorization Period''), subject to a
continuation of the Commission's reservation of jurisdiction over certain specified proposals, as described below.
[[Page 67237]]
Ameren proposes to acquire, directly or indirectly through the
Nonutility Subsidiaries, the securities of one or more new subsidiaries
(``Intermediate Subsidiaries'') organized exclusively for the purpose
of acquiring, holding and/or financing the acquisition of the
securities of or other interest in EWGs, foreign utility companies
(``FUCOs''), exempt telecommunications companies'' (``ETCs'') under
section 34 of the Act, energyrelated companies'' under rule 58 (``Rule
58 Subsidiaries'') or other non utility companies the acquisition of
which has been expressly authorized by the Commission. Applicants state
that the Intermediate Subsidiaries would be organized exclusively for
the purpose of acquiring, holding and/or financing the acquisition of
the securities of or other interest in one or more of EWGs, FUCOs, ETCs
under section 34 of the Act, (collectively, ``Exempt Subsidiaries''),
Rule 58 Subsidiaries, or other current or future nonexempt
subsidiaries that have been authorized by the Commission (``NonExempt
Subsidiaries''), provided that Intermediate Subsidiaries may also
engage in Development Activities \6\ and Administrative Activities \7\ relating to such subsidiaries.
\6\ Development Activities are limited to due diligence and
design review; market studies; preliminary engineering; site
inspection; preparation of bid proposals, including, in connection
therewith, posting of bid bonds; application for required permits
and/or regulatory approvals; acquisition of site options and options
on other necessary rights; negotiation and execution of contractual
commitments with owners of existing facilities, equipment vendors,
construction firms, power purchasers, thermal ``hosts,'' fuel
suppliers and other project contractors; negotiation of financing
commitments with lenders and other thirdparty investors; and such
other preliminary activities as may be required in connection with
the purchase, acquisition or construction of facilities or the securities of other companies.
\7\ Administrative Activities include ongoing personnel,
accounting, engineering, legal, financial, and other support activities necessary to manage Development Activities and
investments in nonutility subsidiaries.
Applicants request authority to acquire, directly or indirectly, the equity securities of one or more new subsidiaries (``Financing Subsidiaries'') organized exclusively for the purpose of issuing long term debt or equity securities to investors other than Ameren in order to finance, in whole or in part, Ameren's direct or indirect acquisition of Exempt Subsidiaries and Rule 58 Subsidiaries created specifically for the purpose of facilitating the financing of the Applicants' authorized and exempt activities (including exempt and authorized acquisitions) through the issuance of longterm debt or equity securities to third parties and the transfer of the proceeds of such financings to the parent company of the Financing Subsidiary.
The amount and terms (i.e., interest rate, maturity, etc.) of any longterm debt or preferred equity securities issued by a Financing Subsidiary of Ameren will count against the limitation and comply with the specific terms applicable to that type of security under the any applicable order approving financing by Ameren. Ameren also proposes, if required, to guarantee or enter into expense agreements in respect of the obligations of any such Financing Subsidiaries. To avoid double counting, however, the guarantee of that security by Ameren would not also be counted against the then current limit on guarantees that Ameren is authorized to issue under any applicable order. Nonutility Subsidiaries may also provide guarantees and enter into expense agreements, if required, on behalf of such entities pursuant to rules 45(b)(7) and 52, as applicable. Ameren further requests authorization to issue its unsecured subordinated promissory notes (``Subordinated Notes'') to any Financing Subsidiary to evidence a loan of the proceeds of any financing by a Financing Subsidiary to Ameren. The amount and terms (i.e., interest rate, maturity, default provisions, prepayment terms, etc.) of any Subordinated Notes issued by Ameren to a Financing Subsidiary will be designed to parallel the amount and terms of the specific securities of a Financing Subsidiary in respect of which such Subordinated Notes are issued. Again, to avoid double counting, the amount of Subordinated Notes issued by Ameren to any Financing Subsidiary will not be counted against the then applicable limit on longterm debt and preferred equity securities that Ameren is authorized to issue.
Ameren requests authority to acquire, directly or indirectly
through a Nonutility Subsidiary, the equity securities of one or more
new subsidiaries (``Special Purpose Subsidiaries'') organized to
purchase or otherwise acquire any of the assets of or securities held
by UEDC and/or CIC at the time Ameren became a registered holding
company, and UEDC and CIC request authorization to sell or otherwise
transfer such assets or securities to Special Purpose Subsidiaries. In
addition, Special Purpose Subsidiaries may also be formed to engage in any of the following additional business activities:
(i) Making or guaranteeing loans to customers to finance the
purchase of home and business heating, ventilation and cooling
equipment; energy conservation and management equipment, products and
services; lighting equipment and supplies; and home and business
security systems. Ameren proposes that the aggregate principal amount
of loans, guarantees or customer installment obligations with respect
to which there is recourse to any Special Purpose Subsidiary shall not
exceed $300 million at any one time during the Authorization Period.
(ii) Development Activities and operations and maintenance,
construction and construction management, fuel procurement and other
types of services for or on behalf of any Nonutility Subsidiary. The
Applicants are requesting a continuation of their current authority to
expend up to $250 million in the aggregate outstanding at any time
during the Authorization Period on all Development Activities.
(iii) The marketing of energy bill payment insurance in Illinois
and Missouri, which would enable utility customers to pay their energy
bills in the event of unemployment, illness, disability or death. This
program would be underwritten and administered by an independent insurance company or companies.
(iv) The offering of economic development services for businesses
wishing to expand or relocate their facilities to anywhere within the
wholesale or retail service area of the Union Electric Company d/b/a
AmerenUE (``AmerenUE''), Central Illinois Public Service Company d/b/a
AmerenCIPS (``AmerenCIPS''), and Central Illinois Light Company, d/b/a
AmerenCILCO (``AmerenCILCO,'' and together with AmerenUE and
AmerenCIPS, the ``Utility Subsidiaries''), including consultation with
local economic development officials, building and site screening,
customized tax comparison studies and workforce analyses, liaison
services to identify financing and leasing sources for building
construction, equipment and working capital, and other similar
services. These services will be similar in scope to those which the
Utility Subsidiaries have in the past provided to relocating
businesses, often without charge. Ameren states that minimal capital
will be required to provide these types of services and that, without
further order of the Commission, it will not acquire any securities of or other interest in any industrial/commercial
[[Page 67238]]
development enterprise except as may be permitted by rule 40(a)(5).
(v) The offering of customer goodwill or retention programs, such
as packaged discounts on products for the home, travel, and health
services, prepaid phone cards or ``affinity'' cards to promote customer
goodwill, and programs to help customers stay informed and protect
their credit rating, driving record, and social security number.
(vi) The marketing of ``outage'' insurance, which would enable
customers to protect against lost revenues due to power interruptions,
and surge protection service. Ameren requests authorization to invest
in Special Purpose Subsidiaries an aggregate amount at any time outstanding not to exceed $250 million.
Nonutility Subsidiaries request authorization to provide guarantees
or other forms of credit support in respect of obligations of each
other in an aggregate principal amount at any time outstanding during
the Authorization Period not to exceed $300 million, in addition to any
guarantees that are exempt under rules 45(b) and 52(b), as applicable,
provided that any guaranty or other form of credit support outstanding
on December 31, 2006, shall remain in effect until it expires in accordance with its terms.
V. Sales of Services and Goods Among Nonutility Subsidiaries
Nonutility Subsidiaries request authorization to provide services
or sell goods to each other at fair market prices determined without
regard to cost, and therefore request an exemption pursuant to section
13(b) from the cost standard of rules 90 and 91 as applicable to such
transactions, in any case in which any of the following circumstances may apply:
(i) The client company is a FUCO or foreign EWG that derives no
part of its income, directly or indirectly, from the generation,
transmission, or distribution of electric energy for sale within the United States;
(ii) The client company is an EWG that sells electricity at market
based rates which have been approved by the Federal Energy Regulatory
Commission (``FERC''), provided that the purchaser thereof is not a Utility Subsidiary;
(iii) The client company is a ``qualifying facility'' (``QF'')
within the meaning of the Public Utility Regulatory Policies Act of
1978, as amended (``PURPA'') that sells electricity exclusively (a) at
rates negotiated at arms'length to one or more industrial or
commercial customers purchasing the electricity for their own use and
not for resale, and/or (ii) to an electric utility company (other than
a Utility Subsidiary) at the purchaser's ``avoided cost'' as determined in accordance with the regulations under PURPA;
(iv) The client company is a domestic EWG or QF that sells
electricity at rates based upon its cost of service, as approved by
FERC or any state public utility commission having jurisdiction,
provided that the purchaser thereof is not a Utility Subsidiary; or
(v) The client company is a Rule 58 Subsidiary or any other
Nonutility Subsidiary that (1) is partiallyowned, provided that the
ultimate purchaser of such goods or services is not a Utility
Subsidiary or Ameren Services Company (``Ameren Services''), a service
company subsidiary, (or any other entity within the Ameren system whose
activities and operations are primarily related to the provision of
goods and services to the Utility Subsidiaries, (2) is engaged solely
in the business of developing, owning, operating and/or providing
services or goods to Nonutility Subsidiaries described in paragraphs
(i) through (iv) immediately above, or (3) does not derive, directly or
indirectly, any material part of its income from sources within the
United States and is not a public utility company operating within the United States.
VI. Sale of Certain Goods and Services by Rule 58 Subsidiaries and Special Purpose Subsidiaries Outside the United States
Rule 58 Subsidiaries and Special Purpose Subsidiaries request
authority to sell goods and services to customers both within and
outside the United States. These goods and services include:
(i) The brokering and marketing of electricity, natural gas and other energy commodities;
(ii) Energy Management Services, which include the marketing, sale,
installation, operation and maintenance of various products and
services related to energy management and demandside management,
including energy and efficiency audits; facility design and process
control and enhancements; construction, installation, testing, sales
and maintenance of (and training client personnel to operate) energy
conservation equipment; design, implementation, monitoring and
evaluation of energy conservation programs; development and review of
architectural, structural and engineering drawings for energy
efficiencies, design and specification of energy consuming equipment;
and general advice on programs; the design, construction, installation,
testing, sales and maintenance of new and retrofit heating,
ventilating, and air conditioning (``HVAC''), electrical and power
systems, alarm and warning systems, motors, pumps, lighting, water,
waterpurification and plumbing systems, and related structures, in
connection with energyrelated needs; and the provision of services and
products designed to prevent, control, or mitigate adverse effects of power disturbances on a customer's electrical systems;
(iii) Performance contracting services aimed at assisting customers
in realizing energy and other resource efficiency goals in the areas of
process control, fuel management, and asset management services
(including operation and maintenance services) in respect of energy
related systems, facilities and equipment located on or adjacent to the
premises of a customer and used by that customer in connection with
business activities, including: (a) Distribution systems and
substations, (b) transmission, storage and peakshaving facilities, (c)
gas supply and/or electrical generation facilities (i.e., standby
generators and selfgeneration facilities), (d) boilers and chillers,
(e) alarm/warning systems, (f) HVAC, water and lighting systems, and
(g) environmental compliance, energy supply and building automation systems and controls;
(iv) Technical Support Services, which include technology
assessments, power factor correction and harmonics mitigation analysis,
meter reading and repair, rate schedule design and analysis,
environmental services, engineering services, billing services
(including consolidation billing and bill disaggregation tools), risk
management services, communications systems, information systems/data
processing, system planning, strategic planning, finance, feasibility studies, and other similar services;
(v) Certain retail services, including the provision of centralized
bill payment centers for payment of all utility and municipal bills and
related services; annual inspection, maintenance and replacement of
energyrelated equipment and appliances; service line repair and
extended warranties with respect to all of the utility or energy
related service lines internal and external to a customer's premises;
provision of surge protection equipment and services; marketing
services to associate and nonassociate businesses in the form of bill insert; and automated meterreading services;
[[Page 67239]]
(vi) Sale of monitoring and response goods and services, which
include products used in connection with energy and gasrelated
activities that enhance safety, increase energy/process efficiency;
sale of energyrelated information, as well as repair services, in
connection with such problems as carbon monoxide leaks and faulty
equipment wiring; operation of call/dispatch centers on behalf of
associate and nonassociate companies in connection with the proposed
sale of goods and services or with activities that Nonutility
Subsidiaries are otherwise authorized to engage in under the Act;
(vii) Sale of energypeaking services via propaneair or liquefied
natural gas (``LNG''), which involves the provision of backup
electricity or gas supply in periods of high or ``peak'' energy demand
using a propaneair mixture or LNG as fuel sources for such backup services; and
(viii) Project development and ownership activities, which involves
the installation and ownership of gasfired turbines for onsite generation and consumption of electricity.
In addition, Nonutility Subsidiaries request authorization to provide other energyrelated goods and services that may not be permitted under Rule 58. These include incidental goods and services closely related to the consumption of energy and the maintenance of energy consuming property by customers, provided that the proposed incidental goods and services would not involve the manufacture of energy consuming equipment but could be related to, among other things, the maintenance, financing, sale or installation of such equipment.
The Applicants request that the Commission (1) authorize
electricity and energy commodity brokering and marketing activities in
Canada and reserve jurisdiction over such activities outside the United
States and Canada pending completion of the record in this proceeding,
(2) authorize the proposed sale of Energy Management Services and
Technical Support Services and related customer financing anywhere
outside the United States, and (3) continue to reserve jurisdiction
over sale of the remaining goods and services described above outside the United States, pending completion of the record.
VII. Sale of Agency Services by Ameren Energy and AE Marketing to Utility Subsidiaries
Ameren Energy requests authorization to continue to act as agent for AmerenUE in connection with the brokering and marketing of electricity and other energy commodities by AmerenUE. Such services include negotiation and administration of power sales agreements with third parties and negotiation of associated credit support and risk management documents. Ameren Energy will provide agency and any other incidental services at cost, determined in accordance with rules 90 and 91. Ameren Energy Marketing Company (``AE Marketing''), an ``energy related company'' under rule 58, requests authorization to provide similar agency services to AmerenEnergy Resources Generating Company (f/k/a Central Illinois Generation, Inc.) (``AERG''), in connection with brokering and marketing of electricity produced by AERG. VIII. Investments in Energy Assets
Ameren, indirectly through one or more Nonutility Subsidiaries (including any Rule 58 Subsidiary), requests authorization to acquire or construct nonutility energy assets in the United States, including, without limitation, natural gas production, gathering, processing, storage and transportation facilities and equipment, liquid oil reserves and storage facilities, and associated facilities (collectively, ``Energy Assets''), that would be incidental or functionally related to energy marketing, brokering and trading. Ameren requests authorization to invest up to $400 million at any one time during the Authorization Period (the ``Investment Limitation'') in Energy Assets or in the equity securities of existing or new companies substantially all of whose physical properties consist or will consist of Energy Assets. Such Energy Assets (or equity securities of companies owning Energy Assets) may be acquired for cash or in exchange for common stock or other securities of Ameren or any Nonutility Subsidiary. If common stock of Ameren is used as consideration in connection with any such acquisition, the market value of the stock on the date of issuance will be counted against the proposed Investment Limitation. The stated amount or principal amount of any other securities issued as consideration in any such transaction will also be counted against the Investment Limitation. Under no circumstances will Ameren Energy or any marketing subsidiary acquire, directly or indirectly, any assets or properties the ownership or operation of which would cause such companies to be considered an ``electric utility company'' or ``gas utility company'' as defined under the Act. IX. Payment of Dividends Out of Capital and Unearned Surplus
Ameren, on behalf of its direct or indirect Nonutility
Subsidiaries, requests that these Nonutility Subsidiaries be permitted
to pay dividends with respect to the securities of these Nonutility
Subsidiaries and/or reacquire their securities that are held by any
associate company, from time to time through the Authorization Period,
out of capital and unearned surplus (including revaluation reserve), to
the extent permitted under applicable corporate law, provided that,
without further approval of the Commission, no Nonutility Subsidiary
will declare or pay any dividend out of capital or unearned surplus if
that Nonutility Subsidiary derives any material part of its revenues
from sales of goods, services, electricity or natural gas to any of the
Utility Subsidiaries or if, at the time of such declaration or payment, such Nonutility Subsidiary has negative retained earnings.
X. Anticipatory Interest Rate Hedges by Nonutility Subsidiaries
Nonutility Subsidiaries request authorization to enter into
interest rate hedging transactions with respect to anticipated debt
offerings (``Anticipatory Hedges''), subject to certain limitations and
restrictions. These Anticipatory Hedges would only be entered into with
counterparties whose senior debt ratings, or the senior debt ratings of
the parent companies of the counterparties, as published by Standard
and Poor's Ratings Group, are equal to or greater than BBB, or an
equivalent rating from Moody's Investors Service, Fitch Investor Service or Duff and Phelps.
XI. Changes in Capitalization of NonUtility Subsidiaries; Subsequent Internal Reorganizations of NonUtility Subsidiaries
Applicants request authorization to change the terms of any Nonutility Subsidiary's authorized capitalization by an amount deemed appropriate by Ameren or other parent company, provided that, if a Nonutility Subsidiary is not wholly owned, the consent of all other shareholders has been obtained for such change. Thus, a Nonutility Subsidiary would be able to increase the number of its authorized shares of capital stock, change the par value of its capital stock, change between par value and nopar value stock, or convert from one form of business organization to another without additional Commission approval.
In addition, to the extent that such transactions are not otherwise exempt under the Act or rules under the Act, Ameren requests approval to consolidate, sell, transfer or otherwise reorganize all or any part of its direct and indirect ownership interests in Nonutility Subsidiaries, as well as investment interests in entities that are not subsidiary companies. To effect any such consolidation or other reorganization, Ameren may wish to either contribute the equity securities of one Nonutility Subsidiary to another Nonutility Subsidiary (including a newly formed Intermediate Subsidiary) or sell (or cause a Nonutility Subsidiary to sell) the equity securities or all or part of the assets of one Nonutility Subsidiary to another one. Such transactions may also take the form of a Nonutility Subsidiary selling or transferring the equity securities of a subsidiary or all or part of such subsidiary's assets as a dividend to an Intermediate Subsidiary or to another Nonutility Subsidiary, and the acquisition, directly or indirectly, of the equity securities or assets of such subsidiary, either by purchase or by receipt of a dividend. The purchasing Nonutility Subsidiary in any transaction structured as an intrasystem sale of equity securities or assets may execute and deliver its promissory note evidencing all or a portion of the consideration given. Ameren may also liquidate or merge Nonutility Subsidiaries. Ohio Valley Electric Corporation (7010160)
Ohio Valley Electric Corporation (``OVEC''), 3932 U.S. Route 23, P.O. Box 468, Piketon, Ohio 45661, an electric public utility subsidiary of American Electric Power Company, Inc. (``AEP''), Allegheny Energy, Inc. (``Allegheny''), and FirstEnergy Corporation (``FirstEnergy''), each a registered public utility holding company under the Act, has filed a declaration (``Declaration'') under sections 6 and 7 of the Act and rule 54 under the Act.
By order dated December 6, 1999 (Holding Company Act Release No. 3527109) OVEC was authorized to incur shortterm indebtedness through the issuance and sale of notes to banks or other financial institutions in an aggregate principal amount not to exceed $100 million outstanding at any one time, from timetotime, through December 31, 2003, provided that no note would mature later than June 30, 2004.
OVEC requests authorization to incur shortterm indebtedness through the issuance and sale of notes (``Notes'') to banks or other financial institutions in an aggregate principal amount not to exceed $200 million outstanding at any one time, from timetotime, through December 31, 2006, provided that no note shall mature later than June 30, 2007. OVEC requests that the Commission reserve jurisdiction over the issuance of $100 million principal amount of Notes, out of the $200 million principal amount of debt authority requested, until completion of the record.
OVEC and its whollyowned subsidiary, IndianaKentucky Electric
Company, own two generating stations located in Ohio and Indiana with a
combined electric production capability of approximately 2,256
megawatts. OVEC is owned by AEP, Allegheny, FirstEnergy and other
utilities.\8\ AEP owns directly and indirectly 44.2% of OVEC, of which
4.35% is owned by its subsidiary Columbus Southern Power Company.
FirstEnergy owns indirectly 20.5% of OVEC through its subsidiaries Ohio
Edison Company (16.5%) and The Toledo Edison Company (4.0%). Allegheny
owns directly 12.5% of OVEC. The owners, or their affiliates, purchase
power from OVEC according to the terms of an intercompany power agreement.
\8\ The other utilities that own OVEC are: The Cincinnati Gas &
Electric Company (9.0%), a subsidiary of Cinergy Corp.; Louisville
Gas and Electric Company (4.9%) and Kentucky Utilities Company
(2.5%), both subsidiaries of E.ON AG; The Dayton Power and Light
Company (4.9%), a subsidiary of DPL Inc.; and Southern Indiana Gas
and Electric Company (1.5%), a subsidiary of Vectren Corp. Both
Cinergy and E.ON AG are registered public utility holding companies under the Act.
The operation of OVEC's generating stations requires the storage of substantial quantities of coal to ensure the availability of power to pay its customers. OVEC has used short term debt to finance the coal inventory at its plants, to purchase SO2 allowances, to purchase material supplies and inventory, to provide interim financing of capital improvements pending the issuance of longterm debt, and for cash management to pay general obligations. The proceeds of the short term debt incurred by OVEC will be used to pay for these and other general obligations and for other corporate purposes.
The Notes will mature not more than 365/366 days after the date of issuance or renewal, provided that no Note will mature later than June 30, 2007. Notes will be offered at terms consistent with those of similar companies and will bear interest at an annual rate not greater than the prime commercial rate of Citibank, N.A. (or any successor) in effect from timetotime. Any credit arrangements may require payment of a fee that is not greater than \1/2\ of 1% of the size of the line of credit made available by the bank and the maintenance of additional balances of not greater than 20% of the line of credit. Any other line of credit fees will be consistent with fees paid for like transactions. The maximum effective annual interest cost under the above arrangements, assuming full use of the line of credit, will not exceed 125% of the prime commercial rate in effect from time to time or not more than 7.5% on the basis of a prime commercial rate of 6%. NiSource, Inc., et al. (7010169)
NiSource Inc. (``NiSource''), a registered publicutility holding company, Northern Indiana Public Service Company (``Northern Indiana''), Kokomo Gas and Fuel Company (``Kokomo'') and its subsidiary, Northern Indiana Fuel and Light Company, Inc. (``NIFL''), all publicutility company subsidiaries of NiSource, and its subsidiary, EnergyUSA, Inc., and its subsidiaries, PEI Holdings, Inc. (f/k/a Primary Energy, Inc.), NiSource Capital Markets, Inc. (``Capital Markets''), NiSource Corporate Services Company (``NiSource Services''), a subsidiary service company, NiSource Finance Corp. (``NiSource Finance''), Granite State Transmission, Inc., Crossroads Pipeline Company, NiSource Development Company, Inc., and its subsidiaries, NI Energy Services, Inc., and its subsidiaries, NiSource Energy Technologies, Inc., IWC Resources Corporation and its subsidiaries; Columbia Energy Group (``Columbia''), a registered publicutility holding company, Columbia Atlantic Trading Corpo
SUMMARY: Public Utility Holding Company Act of 1935 filings,
DOCUMENT BODY 2: November 21, 2003.
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 December 15, 2003, 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 December 15, 2003, the application(s) and/or declaration(s), as filed or as amended, may be granted and/or permitted to become effective.
Great Plains Energy Incorporated (``GPE''), a registered public
utility holding company; Kansas City Power & Light Company (``KCPL''),
a public utility subsidiary company of GPE; Great Plains Power
Incorporated (``GP Power'') a subsidiary company of GPE; \1\ Kansas
City Power & Light Receivables Company (``KCPL Receivables''), a
nonutility subsidiary of KCPL; \2\ all located at 1201 Walnut, Kansas
City, MO 64106; and KLT, Inc., an intermediate holding company of GPE
at 10740 Nall Street, Overland Park, KS 66211 (collectively,
``Applicants'') have filed an applicationdeclaration (``Application'')
under sections 6(a), 7, 9(a)(1), 10 and 12(c) of the Act and rules 45 and 46 under the Act.
\1\ GPE states that GP Power currently is not an independent
power producer (``IPP'') or an exempt wholesale generator (``EWG''),
and has no interests in IPPS. It is engaged in certain preliminary
project development and administrative activities, such as obtaining
options to purchase real estate for a potential plant site, filing
applications for air, wetlands and other preconstruction matters
and filing a marketbased rate schedule with the Federal Energy Regulatory Commission (``FERC'').
\2\ KCPL Receivables engages in accounts receivables management. I. Prior Authorization
By order dated September 7, 2001 (HCAR No. 27436) (``September Order''), the Commission authorized GPE and its subsidiaries, among other things, to engage in (A) a program of external financing, (B) intrasystem credit support arrangements, (C) interest rate hedging measures, and (D) other intrasystem transactions from time to time through December 31, 2004 (``Authorization Period''). In particular, the Commission authorized GPE to issue and sell common stock and, directly or indirectly, shortterm and longterm debt securities and other forms of preferred or equitylinked securities. The aggregate amount of all such securities issued by GPE during the Authorization Period was limited to $450 million under the conditions of the September Order, and the Commission reserved jurisdiction over (A) the retainability of KLT Investment II until October 1, 2004 and (B) payment of dividends by any nonexempt nonutility subsidiary. II. Current Requests
Applicants request that the current proposal supersede and replace the authorizations under the September Order through December 31, 2005 (``New Authorization Period'').
GPE requests authorization to issue and sell directly, or indirectly through financing subsidiaries, $1.2 billion in the aggregate amount of common stock, short term and long term debt securities and other forms of preferred or equitylinked securities. GPE may issue and sell common stock through underwriters or dealers, through agents, or directly to a limited number of purchasers or a single purchaser. Also, it requests authority to issue common stock, performance shares options, SARs, warrants or other stock purchase rights exercisable for common stock in public or privately negotiated transaction as consideration for the equity securities or assets of other existing companies, provided that the acquisition of any such equity securities or assets has been authorized in a separate proceeding or is exempt under the Act or the rules under the Act. GPE will directly issue preferred and equitylinked securities, including specifically, debt or preferred securities that are convertible, either manditorily or at the option of the holder, into common stock or GPE indebtedness and forward purchase contracts for common stock. Long term debt of GPE may be in the form of unsecured notes (``Debentures'') issued in one or more series. To provide for financing for general corporate purposes, other working capital requirements and investments in new enterprises until longterm financing can be obtained, GPE may sell, directly or indirectly through one or more financing subsidiaries, commercial paper or establish bank lines of credit.
KCPL requests authorization to issue and sell notes and other
evidence of indebtedness having a maturity of one year or less in an
aggregate principal amount outstanding at any one time not to exceed
$500 million, including without limitation commercial paper, bank lines of credit, and other debt securities.\3\
\3\ The issuance by KCPL of commercial paper and other short
term indebtedness having a maturity of less than 12 months will not
be exempt under rule 52(a) since it is not subject to approval by
its state regulatory commission; however, KCPL must obtain the
authorization of the Missouri Public Service commission for any
mortgage or other encumbrance of KCPL franchise, works, or system. [[Page 67233]]
GPE, the nonutility subsidiaries listed in Exhibit J (``Exhibit J Subsidiaries''), and any future nonutility subsidiaries request authority to make loans to any such associate company at interest rates and maturities designed to provide a return to the lending company of not less than its effective cost of capital when the borrowing Exhibit J Subsidiary is: (1) Not whollyowned directly or indirectly by GPE and (2) does not sell goods or services to KCPL.
GPE and, to the extent not exempt pursuant to rule 52, KCP&L, the Exhibit J Subsidiaries, and any future nonutility subsidiaries request authorization to enter into interest rate hedging transactions with respect to existing indebtedness, subject to certain limitations and restrictions, in order to reduce or manage interest rate cost. Interest Rate Hedges would only be entered into with counterparties whose senior debt ratings, or the senior debt ratings of the parent companies of the counterparties, as published by Standard and Poor's Ratings Group, are equal to or greater than BBB, or an equivalent rating from Moody's Investors Service, Fitch, or Duff and Phelps.
GPE proposes to enter into guarantees and other forms of support agreements on behalf or for the benefit of any subsidiary during the New Authorization Period in an aggregate principal amount not to exceed $600 million outstanding at any one time.
Applicants also request authorization for nonutility subsidiaries to provide credit support on behalf and for the benefit of other nonutility subsidiaries in an aggregate principal amount not to exceed $300 million outstanding at any one time, exclusive of any guarantees and other forms of credit support exempt under rule 45(b)(7) or rule 52(b).
Collectively the Applicants request authorization to: (1) Change any wholly owned Exhibit J Subsidiary's capital stock capitalization; (2) acquire, directly or indirectly, the equity securities of one or more corporations, trusts, partnerships or other entities created specifically for the purpose of facilitating the financing of the authorized and exempt activities (``Financing Subsidiaries''); (3) acquire, directly or indirectly through a nonutility subsidiary, the securities of one or more new intermediate subsidiary companies which may be organized exclusively for the purpose of acquiring, holding and/ or financing the acquisition of the securities of or other interest in one or more EWGs, foreign utility companies (``FUCOs''), exempt telecommunications companies, rule 58 companies or other nonutility subsidiaries (as authorized in this proceeding); and finally (4) on behalf of the following specified subsidiaries: GP Power; Innovative Energy Consultants Inc.; Home Service Solutions Inc.; Worry Free Service Inc.; KLT Inc., KLT Investments II Inc.; KLT Energy Services Inc.; Custom Energy Holdings, LLC; Strategic Energy LLC, KLT Gas Inc.; Apache Canyon Gas LLC; FAR Gas Acquisitions Corporation; Forest City, LLC; Forest City Gathering Company; and Patrick KLT Gas, LLC (collectively, ``Specified Subsidiaries'') that the Specified Subsidiaries be permitted to pay dividends out of capital and unearned surplus (including revaluation reserve), provided that no Specified Subsidiary at the time of payment derives any material part of its revenues from the sale of goods, services, electricity or natural gas to KCPL.
GPE states that the proposed increase in the authorized limit on issuing common stock, shortterm and longterm debt securities and other forms of preferred or equitylinked securities will enable it to (1) finance investments and capital expenditures by it and its subsidiaries, (2) to fund future investments in any exempt telecommunications company or energyrelated or gasrelated company within the meaning of rule 58, (3) to repay, redeem, refund or purchase by it or its subsidiaries of their respective securities, and (4) to finance the working capital requirements of it and its subsidiaries. GPE further states that the proposed increase in the authorized limit will provide additional liquidity to it and the ability to increase its equity to total capitalization ratio, which will strengthen its financial position and enhance its access to the capital markets. GPE does not request authority at this time to invest in EWGs or FUCOs.
More specifically, GPE requests authority to invest, directly or
indirectly, up to $10 million in the aggregate in GP Power to be used for the same types of preliminary project development and
administrative activities as described in the preceding paragraph
without obtaining further authorization of the Commission; provided
that if GP Power becomes an EWG, investments in GP Power may be made subject to the restrictions of rule 53 under the Act.\4\
\4\ GPE has invested, directly or indirectly, approximately $3.3 million in GP Power as of September 30, 2003.
E. Financing Parameters
The interest rate on longterm debt securities (debt securities having maturities of one year or more) issued to nonassociate companies pursuant to Commission authorization will not exceed at the time of issuance the greater of (1) 500 basis points of the yield to maturity of a U.S. Treasury security having a remaining term approximately equal to the term of such debt, or (2) competitive market rates for securities of comparable credit quality with similar terms and features. The interest rate on GPE bank lines of credit and short term debt securities (debt securities having maturities of less than one year) issued to nonassociate companies pursuant to Commission authorization will not exceed at the time of issuance the greater of (i) 500 basis points over the comparable term London Interbank Offered Rate (``LIBOR''), or (ii) a gross spread over LIBOR that is consistent with similar securities of comparable credit quality with similar terms and features.
Apart from securities issued either for intrasystem financings, or
by KCPL in the form of commercial paper or shortterm bank facilities,
no guarantees or other securities, other than common stock, may be
issued in reliance upon the authorization granted by the Commission
unless (1) the security to be issued, if rated, is rated investment
grade; (2) all outstanding securities of the issuer (except in the case
of GPE, its preferred stock) that are rated are rated investment grade;
and (3) all outstanding securities of GPE (except for GPE's preferred
stock) that are rated are rated investment grade. The preferred stock
of GPE currently is not rated investment grade. GPE currently has four
series of preferred stock outstanding, each of which was originally
issued by KCPL. These four series aggregate $39 million in face amount,
or approximately 0.2% of GPE's consolidated capitalization. The below
investment grade rating on the preferred stock is a result of the
rating agencies' methodology, which views preferred stock to be
structurally subordinated to any debt issued by GPE. It would not be economically efficient
[[Page 67234]]
for GPE to redeem the preferred stock at this time.
GPE & KCPL will not issue guarantees or other securities in reliance upon the authorization by the Commission unless, on a pro forma basis, taking into account the issuance of guarantees, or other securities up to $1.2 billion, the consolidated common equity capitalization of GPE and KCPL will remain at least 30%.
GPE requests authority for these new intermediate subsidiaries, as
well as existing intermediate subsidiaries (collectively, the
``Intermediate Subsidiaries''), to provide management, administrative,
project development and operating services to such entities at fair
market prices determined without regard to cost, and therefore requests
an exemption (to the extent that rule 90(d) does not apply) pursuant to
section 13(b) from the cost standards of rules 90 and 91 as applicable
to such transactions, in any case in which the nonutility subsidiary purchasing such goods or services is:
(1) A FUCO or foreign EWG that derives no part of its income,
directly or indirectly, from the generation, transmission, or
distribution of electric energy for sale within the United States;
(2) An EWG that sells electricity at marketbased rates which have
been approved by the FERC, provided that the purchaser is not KCPL;
(3) A ``qualifying facility'' (``QF'') within the meaning of the
Public Utility Regulatory Policies Act of 1978, as amended (``PURPA'')
that sells electricity exclusively (a) at rates negotiated at arms'
length to one or more industrial or commercial customers purchasing
such electricity for their own use and not for resale, and/or (b) to an
electric utility company at the purchaser's ``avoided cost'' as determined in accordance with the regulations under PURPA;
(4) A domestic EWG or QF that sells electricity at rates based upon
its cost of service, as approved by FERC or any state public utility
commission having jurisdiction, provided that the purchaser thereof is not KCPL; or
(5) A rule 58 subsidiary or any other nonutility subsidiary that
(a) is partiallyowned by GPE, provided that the ultimate purchaser of
such goods or services is not KCPL (or any other entity that GPE may
form whose activities and operations are primarily related to the
provision of goods and services to KCPL), (b) is engaged solely in the
business of developing, owning, operating and/or providing services or
goods to nonutility subsidiaries described in clauses (1) through (4)
immediately above, or (c) does not derive, directly or indirectly, any
material part of its income from sources within the United States and
is not a public utility company operating within the United States. Entergy Mississippi, Inc. (7010157)
Entergy Mississippi, Inc. (``Entergy Mississippi''), 308 East Pearl Street, Jackson, MI 39201, an electric utility subsidiary of Entergy Corporation, a registered holding company under the Act, has filed an applicationdeclaration under sections 6(a), 7, 9(a), 10, 12(c), 12(d), 12(e), 32 and 33 of the Act and rules 42, 53, and 54 under the Act.
Entergy Mississippi seeks authorization to issue and sell, from time to time through March 31, 2007, up to $900 million combined aggregate principal amount of (a) its first mortgage bonds (``Bonds''), (b) its preferred stock (``Preferred Stock''), (c) unsecured longterm indebtedness (``Longterm Debt''), and, (d) directly or indirectly through one or more financing subsidiaries, other forms of preferred or equitylinked securities (``Equity Interests'') (collectively, ``Securities'').
The Bonds (a) may be subject to optional and/or mandatory redemption, in whole or in part, at par or at premiums above their principal amount, (b) may be entitled to mandatory or optional sinking fund provisions, (c) may be issued at fixed or floating rates of interest, (d) may provide for reset of the coupon under a remarketing arrangement, (e) may be called from existing investors by a third party, (f) may be backed by a bond insurance policy and (g) would have a maturity ranging from one year to 50 years. The maturity dates, interest rates, redemption and sinking fund provisions and conversion features, if any, with respect to the Bonds of a particular series, as well as any associated placement, underwriting or selling fees, commissions and discounts, if any, would be established by negotiation or competitive bidding. The maturity dates, interest rates, redemption and sinking fund provisions and conversion features, if any, with respect to Bonds of a particular series, as well as any associated placement, underwriting or selling agent fees, commissions and discounts, if any, would be established by negotiation or competitive bidding.
The Preferred Stock or Equity Interests may be issued in one or more series with whatever rights, preferences and priorities, including those related to redemption, are designated in the instrument creating each series. The Preferred Stock or Equity Interests may be redeemable or may be perpetual.
The Longterm Debt of a particular series (a) would be unsecured, (b) may be convertible into any other securities of Entergy Mississippi (except common stock), (c) would have a maturity ranging from one year to 50 years, (d) may be subject to optional and/or mandatory redemption, in whole or in part, at par or at premiums above its principal amount, (e) may be entitled to mandatory or optional sinking fund provisions, (f) may be issued at fixed or floating rates of interest, (g) may provide for reset of the coupon in accordance with a remarketing arrangement, and (h) may be called from existing investors by a third party. The maturity dates, interest rates, redemption and sinking fund provisions and conversion features, if any, with respect to Longterm Debt of a particular series, as well as any associated placement, underwriting or selling agent fees, commissions and discounts, if any, would be established by negotiation or competitive bidding. Entergy Mississippi states that it presently contemplates selling the Securities by competitive bidding, negotiated public offering or private placement.
Entergy Mississippi proposes to use the net proceeds derived from the issuance and sale of the Securities for general corporate purposes, including (a) financing its capital expenditures, (b) repaying, redeeming, refunding or purchasing any of its securities issued in accordance with rule 42 under the Act and/or those issued on Entergy Mississippi's behalf in accordance with section 9(c)(1) of the Act, and (c) financing its working capital requirements.
Entergy Mississippi also proposes to enter into arrangements to
finance or refinance on a taxexempt basis certain pollution control
facilities and/or sewage or solid waste disposal facilities
(``Facilities''). Entergy Mississippi proposes, from time to time
through March 31, 2007, to enter into one or more leases, subleases,
installment sale agreements, refunding agreements or other agreements
(``Agreements'') and/or supplements and/or amendments to those
Agreements (``Facilities Agreements'') with one or more issuing
governmental authorities (``Authorities''), under which the Authority
may issue one or more series of taxexempt bonds (``Taxexempt Bonds'')
in an aggregate principal amount not to exceed $50 million (including
the possible issuance and pledge by Entergy Mississippi of up to $55 million in aggregate principal
[[Page 67235]]
amount of Entergy Mississippi Collateral Bonds (as defined below),
which $55 million is not included in the $900 million referenced
above). The net proceeds from the sale of Taxexempt Bonds would be
applied to financing, or refinancing taxexempt bonds issued for the
purpose of financing, the Facilities. Entergy Mississippi further
proposes, under the Facilities Agreement, to purchase, acquire,
construct and install the Facilities unless the Facilities are already
in operation. Under the Facilities Agreements, Entergy Mississippi
would be obligated to make payments sufficient to pay the principal or
redemption price of, premium, if any, and the interest on, and other
amounts owing with respect to, the Taxexempt Bonds, together with related expenses.
The Taxexempt Bonds of a particular series (a) would have a maturity ranging from one year to 50 years, (b) may be subject to optional and/or mandatory redemption, in whole or in part, at par or at premiums above their principal amount, (c) may be entitled to mandatory or optional sinking fund provisions, (d) may be issued at fixed or floating rates of interest, (e) may provide for reset of the coupon under a remarketing arrangement, (f) may be called from existing investors by a third party, (g) may be backed by a municipal bond insurance policy, (h) may be supported by credit support such as a bank letter of credit and reimbursement agreement, (i) may be supported by a lien subordinate to EMI's Mortgage and Deed of Trust, as amended and supplemented both in the past and in the future (``Mortgage''), on the Facilities related to those Taxexempt Bonds and (j) may be supported by the issuance and pledge of Bonds issued as collateral security for those Taxexempt Bonds (``Collateral Bonds''). The maturity dates, interest rates, redemption and sinking fund provisions and conversion features, if any, with respect to Taxexempt Bonds of a particular series, as well as any associated placement, underwriting or selling agent fees, commissions and discounts, if any, would be established by negotiation or competitive bidding.
Entergy Mississippi also proposes to enter into arrangements to issue up to $300 million in aggregate principal amount of municipal securities (``Municipal Securities'') (including the possible issuance and pledge by Entergy Mississippi of up to $350 million in aggregate principal amount of Entergy Mississippi Municipal Collateral Bonds (as defined below), which $350 million is not included in the $900 million referenced above). Entergy Mississippi proposes, from time to time through March 31, 2007, to enter into one or more agreements, either directly or through an affiliate (``Municipal Securities Agreements''), with one or more issuing governmental authorities (``Municipal Entities''), under which a Municipal Entity could issue securities to the public on behalf of Entergy Mississippi or loan money to Entergy Mississippi through a bank, an affiliate of Entergy Mississippi, or other person. The net proceeds from the sale of Municipal Securities would be applied to finance certain costs of Entergy Mississippi. Under any Municipal Securities Agreement, Entergy Mississippi would be obligated to make payments sufficient to provide for payment by the Municipal Entity of the principal or redemption price of, premium, if any, and interest on, and other amounts owing with respect to the Municipal Securities, together with related expenses.
The Municipal Securities of a particular series (a) would have a maturity ranging from one year to fifty years, (b) may be subject to optional and/or mandatory redemption, in whole or in part, at par or at premiums above their principal amount, (c) may be entitled to mandatory or optional sinking fund provisions, (d) may be issued at fixed or floating rules of interest, (e) may provide for reset of the coupon under a remarketing arrangement, (f) may be called from existing investors by a third party, (g) may be backed by a municipal securities insurance policy, (h) may be supported by credit support such as a bank letter of credit and reimbursement agreement, (i) may be supported by a lien subordinate to the Mortgage on certain of EMI's facilities and other assets, and (j) may be supported by the issuance and pledge of Bonds issued as collateral security for them (``Municipal Collateral Bonds''). The maturity dates, interest rates, redemption and sinking fund provisions and conversion features, if any, with respect to Municipal Securities of a particular series as well as any associated placement, underwriting or selling agent fees, commissions and discounts, if any, would be established by negotiation or competitive bidding.
Entergy Mississippi also proposes to (a) acquire the equity securities of one or more financing subsidiaries and/or specialpurpose subsidiaries, organized solely to facilitate financing, (b) to guarantee the securities issued by those financing subsidiaries and/or special purpose subsidiaries, and (c) to have the financing subsidiaries and/or special purpose subsidiaries pay Entergy Mississippi, either directly or indirectly, dividends out of capital. Entergy Gulf States, Inc. (7010158)
Entergy Gulf States, Inc. (``Entergy Gulf States''), 350 Pine Street, Beaumont, Texas 77701, an electric utility subsidiary of Entergy Corporation, a registered holding company under the Act, has filed an applicationdeclaration under sections 6(a), 7, 9(a), 10, 12(c), 12(d), 12(e), 32 and 33 of the Act and rules 42, 53, and 54 under the Act.
Entergy Gulf States seeks authorization to issue and sell, from time to time through March 31, 2007, up to $2 billion combined aggregate principal amount of (a) its first mortgage bonds (``Bonds'') including first mortgage bonds of the medium term note series (``MTNs''), (b) its preferred stock (``Preferred Stock''), (c) its preference stock (``Preference Stock''), (d) unsecured longterm indebtedness (``Longterm Debt''), and (e) directly or indirectly through one or more financing subsidiaries, other forms of preferred or equitylinked securities (``Equity Interests'').
The Bonds and MTNs (a) may be subject to optional and/or mandatory redemption, in whole or in part, at par or at premiums above their principal amount, (b) may be entitled to mandatory or optional sinking fund provisions, (c) may be issued at fixed or floating rates of interest, (d) may provide for reset of the coupon under a remarketing arrangement, (e) may be called from existing investors by a third party, (f) may be backed by a bond insurance policy and (g) would have a maturity ranging from one year to fifty years. The maturity dates, interest rates, redemption and sinking fund provisions and conversion features, if any, of the Bonds of a particular series, as well as any associated placement, underwriting or selling fees, commissions and discounts, would be established by negotiation or competitive bidding. The maturity dates, interest rates, redemption and sinking fund provisions and conversion features, if any, of Bonds of a particular series, or MTNs of a particular subseries, as well as any associated placement, underwriting or selling agent fees, commissions and discounts, would be established by negotiation or competitive bidding.
The Preferred Stock or Equity Interests may be issued in one or more series with whatever rights, preferences and priorities, including those related to redemption, are designated in the instrument creating each series. The Preferred Stock or Equity Interests may be redeemable or may be perpetual.
The Longterm Debt (a) would be unsecured, (b) may be convertible into any other securities of Entergy Gulf States (except common stock), (c) would have a maturity ranging from one year to fifty years, (d) may be subject to optional and/or mandatory redemption, in whole or in part, at par or at premiums above its principal amount, (e) may be entitled to mandatory or optional sinking fund provisions, (f) may be issued at fixed or floating rates of interest, (g) may provide for reset of the coupon under a remarketing arrangement, and (h) may be called from existing investors by a third party. The maturity dates, interest rates, redemption and sinking fund provisions and conversion features, if any, with respect to Longterm Debt of a particular series, as well as any associated placement, underwriting or selling agent fees, commissions and discounts, would be established by negotiation or competitive bidding.
Entergy Gulf States proposes to use the net proceeds from the issuance and sale of Bonds, and/or MTNs and/or the Preferred Stock and/ or the Preference Stock and/or the Longterm Debt and/or the Equity Interests for general corporate purposes, including (a) financing its capital expenditures, (b) repaying, redeeming, refunding or purchasing any of its securities under rule 42 and/or those issued on Entergy Gulf States' behalf under section 9(c)(1), and (c) financing its working capital requirements.
Entergy Gulf States states that it contemplates selling the Bonds and/or MTNs and/or the Preferred Stock and/or the Preference Stock and/ or the Longterm Debt and/or the Equity Interests by competitive bidding, negotiated public offering or private placement.
Entergy Gulf States also proposes to enter into arrangements to finance or refinance on a taxexempt basis certain facilities eligible to be financed with taxexempt debt, including, but not limited to, sewage and/or solid waste disposal facilities (``Facilities''). Entergy Gulf States proposes, from time to time through March 31, 2007, to enter into one or more leases, subleases, installment sale agreements, refunding agreements or other agreements (``Agreements'') and/or supplements and/or amendments to those Agreements (``Facilities Agreements'') with one or more issuing governmental authorities (``Authorities''), under which the Authorities may issue one or more series of taxexempt bonds (``Taxexempt Bonds'') in an aggregate principal amount up to $500 million (including the possible issuance and pledge by Entergy Gulf States of up to $560 million in aggregate principal amount of Entergy Gulf States Collateral Securities (as defined below), which $560 million is not included in the $2 billion mentioned above). The net proceeds from the sale of Taxexempt Bonds would be applied to financing, or refinancing taxexempt bonds issued for the purpose of financing, the Facilities.
Under the terms of the Facilities Agreements, Entergy Gulf States may commit to purchase, acquire, construct, install, operate and/or maintain the Facilities. Under the Facilities Agreements, Entergy Gulf States would be obligated to make payments sufficient to pay the principal or redemption price of, premium, if any, and the interest on, and other amounts owing with respect to, the Taxexempt Bonds, together with related expenses.
The Taxexempt Bonds (a) would have a maturity ranging from one year to fifty years, (b) may be subject to optional and/or mandatory redemption, in whole or in part, at par or at premiums above their principal amount, (c) may be entitled to mandatory or optional sinking fund provisions, (d) may be issued at fixed or floating rates of interest, (e) may provide for reset of the coupon under a remarketing arrangement, (f) may be called from existing investors by a third party, (g) may be backed by a municipal bond insurance policy, (h) may be supported by credit support such as a bank letter of credit and reimbursement agreement, (i) may be supported by a lien subordinate to Entergy Gulf States' Indenture of Mortgage (as before and later amended and supplemented) on the Facilities related to those Taxexempt Bonds and (j) may be supported by the issuance and pledge of Bonds issued as collateral security for those Taxexempt Bonds (``Collateral Securities''). The maturity dates, interest rates, redemption and sinking fund provisions and conversion features, if any, with respect to Taxexempt Bonds of a particular series, as well as any associated placement, underwriting or selling agent fees, commissions and discounts, would be established by negotiation or competitive bidding.
Entergy Gulf States also proposes to (a) acquire the equity securities of one or more financing subsidiaries and/or specialpurpose subsidiaries, organized solely to facilitate financing, (b) to guarantee the securities issued by those financing subsidiaries and/or special purpose subsidiaries, and (c) to have the financing subsidiaries and/or special purpose subsidiaries pay Entergy Gulf States, either directly or indirectly, dividends out of capital. Ameren Corporation, et al. (7010159)
Ameren Corporation (``Ameren''), a registered holding company, Ameren Energy, Inc., and Ameren's nonutility subsidiaries Ameren Development Company (``Ameren Development''), Ameren ERC, Inc. (``Ameren ERC''), Ameren Energy Resources Company (``Ameren Energy Resources''), Ameren Energy Marketing Company, Ameren Energy Fuels and Services Company, Illinois Materials Supply Co., Missouri Central Railroad Company, Union Electric Development Company (``UEDC''), AFS Development Company, LLC, all located at 1901 Chouteau Avenue, St. Louis, Missouri 63103, and nonutility subsidiaries CIPSCO Investment Company (``CIC''), 607 East Adams Street, Springfield, Illinois 62739, CILCORP Investment Management Inc., CILCORP Ventures Inc., CILCORP Energy Services, Inc., QST Enterprises Inc., CILCO Exploration and Development Company, and CILCO Energy Corporation, all located at 300 Liberty Street, Peoria, Illinois 61602, and nonutility subsidiaries AmerenEnergy Medina Valley Cogen (No. 4), L.L.C., AmerenEnergy Medina Valley Cogen (No. 2) L.L.C., AmerenEnergy Medina Valley Cogen, L.L.C., an exempt wholesale generator (``EWG'') and AmerenEnergy Medina Valley Operations, L.L.C., a nonutility subsidiary all at P.O. Box 230, Mossville, Illinois, 615520230 (collectively, ``Applicants'' and excluding Ameren ``Nonutility Subsidiaries'') have filed an applicationdeclaration (``Application'') under sections 6(a), 7, 9(a), 10, 12(b), 12(c) and 13(b) of the Act and rules 43, 45, 46, 90 and 91 under the Act.
By order dated July 23, 1999 (the ``1999 Order''),\5\ Ameren, Ameren Union Electric Company d/b/a AmerenUE, and certain direct and indirect nonutility subsidiaries of Ameren were authorized to engage in various transactions from time to time through December 31, 2003, relating generally to Ameren's reorganization of its nonutility subsidiary companies and the acquisition and ownership of new non utility subsidiaries.
In this Application, the Applicants are seeking to extend and
restate their current authorization under the 1999 Order for the period
through December 31, 2006 (the ``Authorization Period''), subject to a
continuation of the Commission's reservation of jurisdiction over certain specified proposals, as described below.
[[Page 67237]]
Ameren proposes to acquire, directly or indirectly through the
Nonutility Subsidiaries, the securities of one or more new subsidiaries
(``Intermediate Subsidiaries'') organized exclusively for the purpose
of acquiring, holding and/or financing the acquisition of the
securities of or other interest in EWGs, foreign utility companies
(``FUCOs''), exempt telecommunications companies'' (``ETCs'') under
section 34 of the Act, energyrelated companies'' under rule 58 (``Rule
58 Subsidiaries'') or other non utility companies the acquisition of
which has been expressly authorized by the Commission. Applicants state
that the Intermediate Subsidiaries would be organized exclusively for
the purpose of acquiring, holding and/or financing the acquisition of
the securities of or other interest in one or more of EWGs, FUCOs, ETCs
under section 34 of the Act, (collectively, ``Exempt Subsidiaries''),
Rule 58 Subsidiaries, or other current or future nonexempt
subsidiaries that have been authorized by the Commission (``NonExempt
Subsidiaries''), provided that Intermediate Subsidiaries may also
engage in Development Activities \6\ and Administrative Activities \7\ relating to such subsidiaries.
\6\ Development Activities are limited to due diligence and
design review; market studies; preliminary engineering; site
inspection; preparation of bid proposals, including, in connection
therewith, posting of bid bonds; application for required permits
and/or regulatory approvals; acquisition of site options and options
on other necessary rights; negotiation and execution of contractual
commitments with owners of existing facilities, equipment vendors,
construction firms, power purchasers, thermal ``hosts,'' fuel
suppliers and other project contractors; negotiation of financing
commitments with lenders and other thirdparty investors; and such
other preliminary activities as may be required in connection with
the purchase, acquisition or construction of facilities or the securities of other companies.
\7\ Administrative Activities include ongoing personnel,
accounting, engineering, legal, financial, and other support activities necessary to manage Development Activities and
investments in nonutility subsidiaries.
Applicants request authority to acquire, directly or indirectly, the equity securities of one or more new subsidiaries (``Financing Subsidiaries'') organized exclusively for the purpose of issuing long term debt or equity securities to investors other than Ameren in order to finance, in whole or in part, Ameren's direct or indirect acquisition of Exempt Subsidiaries and Rule 58 Subsidiaries created specifically for the purpose of facilitating the financing of the Applicants' authorized and exempt activities (including exempt and authorized acquisitions) through the issuance of longterm debt or equity securities to third parties and the transfer of the proceeds of such financings to the parent company of the Financing Subsidiary.
The amount and terms (i.e., interest rate, maturity, etc.) of any longterm debt or preferred equity securities issued by a Financing Subsidiary of Ameren will count against the limitation and comply with the specific terms applicable to that type of security under the any applicable order approving financing by Ameren. Ameren also proposes, if required, to guarantee or enter into expense agreements in respect of the obligations of any such Financing Subsidiaries. To avoid double counting, however, the guarantee of that security by Ameren would not also be counted against the then current limit on guarantees that Ameren is authorized to issue under any applicable order. Nonutility Subsidiaries may also provide guarantees and enter into expense agreements, if required, on behalf of such entities pursuant to rules 45(b)(7) and 52, as applicable. Ameren further requests authorization to issue its unsecured subordinated promissory notes (``Subordinated Notes'') to any Financing Subsidiary to evidence a loan of the proceeds of any financing by a Financing Subsidiary to Ameren. The amount and terms (i.e., interest rate, maturity, default provisions, prepayment terms, etc.) of any Subordinated Notes issued by Ameren to a Financing Subsidiary will be designed to parallel the amount and terms of the specific securities of a Financing Subsidiary in respect of which such Subordinated Notes are issued. Again, to avoid double counting, the amount of Subordinated Notes issued by Ameren to any Financing Subsidiary will not be counted against the then applicable limit on longterm debt and preferred equity securities that Ameren is authorized to issue.
Ameren requests authority to acquire, directly or indirectly
through a Nonutility Subsidiary, the equity securities of one or more
new subsidiaries (``Special Purpose Subsidiaries'') organized to
purchase or otherwise acquire any of the assets of or securities held
by UEDC and/or CIC at the time Ameren became a registered holding
company, and UEDC and CIC request authorization to sell or otherwise
transfer such assets or securities to Special Purpose Subsidiaries. In
addition, Special Purpose Subsidiaries may also be formed to engage in any of the following additional business activities:
(i) Making or guaranteeing loans to customers to finance the
purchase of home and business heating, ventilation and cooling
equipment; energy conservation and management equipment, products and
services; lighting equipment and supplies; and home and business
security systems. Ameren proposes that the aggregate principal amount
of loans, guarantees or customer installment obligations with respect
to which there is recourse to any Special Purpose Subsidiary shall not
exceed $300 million at any one time during the Authorization Period.
(ii) Development Activities and operations and maintenance,
construction and construction management, fuel procurement and other
types of services for or on behalf of any Nonutility Subsidiary. The
Applicants are requesting a continuation of their current authority to
expend up to $250 million in the aggregate outstanding at any time
during the Authorization Period on all Development Activities.
(iii) The marketing of energy bill payment insurance in Illinois
and Missouri, which would enable utility customers to pay their energy
bills in the event of unemployment, illness, disability or death. This
program would be underwritten and administered by an independent insurance company or companies.
(iv) The offering of economic development services for businesses
wishing to expand or relocate their facilities to anywhere within the
wholesale or retail service area of the Union Electric Company d/b/a
AmerenUE (``AmerenUE''), Central Illinois Public Service Company d/b/a
AmerenCIPS (``AmerenCIPS''), and Central Illinois Light Company, d/b/a
AmerenCILCO (``AmerenCILCO,'' and together with AmerenUE and
AmerenCIPS, the ``Utility Subsidiaries''), including consultation with
local economic development officials, building and site screening,
customized tax comparison studies and workforce analyses, liaison
services to identify financing and leasing sources for building
construction, equipment and working capital, and other similar
services. These services will be similar in scope to those which the
Utility Subsidiaries have in the past provided to relocating
businesses, often without charge. Ameren states that minimal capital
will be required to provide these types of services and that, without
further order of the Commission, it will not acquire any securities of or other interest in any industrial/commercial
[[Page 67238]]
development enterprise except as may be permitted by rule 40(a)(5).
(v) The offering of customer goodwill or retention programs, such
as packaged discounts on products for the home, travel, and health
services, prepaid phone cards or ``affinity'' cards to promote customer
goodwill, and programs to help customers stay informed and protect
their credit rating, driving record, and social security number.
(vi) The marketing of ``outage'' insurance, which would enable
customers to protect against lost revenues due to power interruptions,
and surge protection service. Ameren requests authorization to invest
in Special Purpose Subsidiaries an aggregate amount at any time outstanding not to exceed $250 million.
Nonutility Subsidiaries request authorization to provide guarantees
or other forms of credit support in respect of obligations of each
other in an aggregate principal amount at any time outstanding during
the Authorization Period not to exceed $300 million, in addition to any
guarantees that are exempt under rules 45(b) and 52(b), as applicable,
provided that any guaranty or other form of credit support outstanding
on December 31, 2006, shall remain in effect until it expires in accordance with its terms.
V. Sales of Services and Goods Among Nonutility Subsidiaries
Nonutility Subsidiaries request authorization to provide services
or sell goods to each other at fair market prices determined without
regard to cost, and therefore request an exemption pursuant to section
13(b) from the cost standard of rules 90 and 91 as applicable to such
transactions, in any case in which any of the following circumstances may apply:
(i) The client company is a FUCO or foreign EWG that derives no
part of its income, directly or indirectly, from the generation,
transmission, or distribution of electric energy for sale within the United States;
(ii) The client company is an EWG that sells electricity at market
based rates which have been approved by the Federal Energy Regulatory
Commission (``FERC''), provided that the purchaser thereof is not a Utility Subsidiary;
(iii) The client company is a ``qualifying facility'' (``QF'')
within the meaning of the Public Utility Regulatory Policies Act of
1978, as amended (``PURPA'') that sells electricity exclusively (a) at
rates negotiated at arms'length to one or more industrial or
commercial customers purchasing the electricity for their own use and
not for resale, and/or (ii) to an electric utility company (other than
a Utility Subsidiary) at the purchaser's ``avoided cost'' as determined in accordance with the regulations under PURPA;
(iv) The client company is a domestic EWG or QF that sells
electricity at rates based upon its cost of service, as approved by
FERC or any state public utility commission having jurisdiction,
provided that the purchaser thereof is not a Utility Subsidiary; or
(v) The client company is a Rule 58 Subsidiary or any other
Nonutility Subsidiary that (1) is partiallyowned, provided that the
ultimate purchaser of such goods or services is not a Utility
Subsidiary or Ameren Services Company (``Ameren Services''), a service
company subsidiary, (or any other entity within the Ameren system whose
activities and operations are primarily related to the provision of
goods and services to the Utility Subsidiaries, (2) is engaged solely
in the business of developing, owning, operating and/or providing
services or goods to Nonutility Subsidiaries described in paragraphs
(i) through (iv) immediately above, or (3) does not derive, directly or
indirectly, any material part of its income from sources within the
United States and is not a public utility company operating within the United States.
VI. Sale of Certain Goods and Services by Rule 58 Subsidiaries and Special Purpose Subsidiaries Outside the United States
Rule 58 Subsidiaries and Special Purpose Subsidiaries request
authority to sell goods and services to customers both within and
outside the United States. These goods and services include:
(i) The brokering and marketing of electricity, natural gas and other energy commodities;
(ii) Energy Management Services, which include the marketing, sale,
installation, operation and maintenance of various products and
services related to energy management and demandside management,
including energy and efficiency audits; facility design and process
control and enhancements; construction, installation, testing, sales
and maintenance of (and training client personnel to operate) energy
conservation equipment; design, implementation, monitoring and
evaluation of energy conservation programs; development and review of
architectural, structural and engineering drawings for energy
efficiencies, design and specification of energy consuming equipment;
and general advice on programs; the design, construction, installation,
testing, sales and maintenance of new and retrofit heating,
ventilating, and air conditioning (``HVAC''), electrical and power
systems, alarm and warning systems, motors, pumps, lighting, water,
waterpurification and plumbing systems, and related structures, in
connection with energyrelated needs; and the provision of services and
products designed to prevent, control, or mitigate adverse effects of power disturbances on a customer's electrical systems;
(iii) Performance contracting services aimed at assisting customers
in realizing energy and other resource efficiency goals in the areas of
process control, fuel management, and asset management services
(including operation and maintenance services) in respect of energy
related systems, facilities and equipment located on or adjacent to the
premises of a customer and used by that customer in connection with
business activities, including: (a) Distribution systems and
substations, (b) transmission, storage and peakshaving facilities, (c)
gas supply and/or electrical generation facilities (i.e., standby
generators and selfgeneration facilities), (d) boilers and chillers,
(e) alarm/warning systems, (f) HVAC, water and lighting systems, and
(g) environmental compliance, energy supply and building automation systems and controls;
(iv) Technical Support Services, which include technology
assessments, power factor correction and harmonics mitigation analysis,
meter reading and repair, rate schedule design and analysis,
environmental services, engineering services, billing services
(including consolidation billing and bill disaggregation tools), risk
management services, communications systems, information systems/data
processing, system planning, strategic planning, finance, feasibility studies, and other similar services;
(v) Certain retail services, including the provision of centralized
bill payment centers for payment of all utility and municipal bills and
related services; annual inspection, maintenance and replacement of
energyrelated equipment and appliances; service line repair and
extended warranties with respect to all of the utility or energy
related service lines internal and external to a customer's premises;
provision of surge protection equipment and services; marketing
services to associate and nonassociate businesses in the form of bill insert; and automated meterreading services;
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(vi) Sale of monitoring and response goods and services, which
include products used in connection with energy and gasrelated
activities that enhance safety, increase energy/process efficiency;
sale of energyrelated information, as well as repair services, in
connection with such problems as carbon monoxide leaks and faulty
equipment wiring; operation of call/dispatch centers on behalf of
associate and nonassociate companies in connection with the proposed
sale of goods and services or with activities that Nonutility
Subsidiaries are otherwise authorized to engage in under the Act;
(vii) Sale of energypeaking services via propaneair or liquefied
natural gas (``LNG''), which involves the provision of backup
electricity or gas supply in periods of high or ``peak'' energy demand
using a propaneair mixture or LNG as fuel sources for such backup services; and
(viii) Project development and ownership activities, which involves
the installation and ownership of gasfired turbines for onsite generation and consumption of electricity.
In addition, Nonutility Subsidiaries request authorization to provide other energyrelated goods and services that may not be permitted under Rule 58. These include incidental goods and services closely related to the consumption of energy and the maintenance of energy consuming property by customers, provided that the proposed incidental goods and services would not involve the manufacture of energy consuming equipment but could be related to, among other things, the maintenance, financing, sale or installation of such equipment.
The Applicants request that the Commission (1) authorize
electricity and energy commodity brokering and marketing activities in
Canada and reserve jurisdiction over such activities outside the United
States and Canada pending completion of the record in this proceeding,
(2) authorize the proposed sale of Energy Management Services and
Technical Support Services and related customer financing anywhere
outside the United States, and (3) continue to reserve jurisdiction
over sale of the remaining goods and services described above outside the United States, pending completion of the record.
VII. Sale of Agency Services by Ameren Energy and AE Marketing to Utility Subsidiaries
Ameren Energy requests authorization to continue to act as agent for AmerenUE in connection with the brokering and marketing of electricity and other energy commodities by AmerenUE. Such services include negotiation and administration of power sales agreements with third parties and negotiation of associated credit support and risk management documents. Ameren Energy will provide agency and any other incidental services at cost, determined in accordance with rules 90 and 91. Ameren Energy Marketing Company (``AE Marketing''), an ``energy related company'' under rule 58, requests authorization to provide similar agency services to AmerenEnergy Resources Generating Company (f/k/a Central Illinois Generation, Inc.) (``AERG''), in connection with brokering and marketing of electricity produced by AERG. VIII. Investments in Energy Assets
Ameren, indirectly through one or more Nonutility Subsidiaries (including any Rule 58 Subsidiary), requests authorization to acquire or construct nonutility energy assets in the United States, including, without limitation, natural gas production, gathering, processing, storage and transportation facilities and equipment, liquid oil reserves and storage facilities, and associated facilities (collectively, ``Energy Assets''), that would be incidental or functionally related to energy marketing, brokering and trading. Ameren requests authorization to invest up to $400 million at any one time during the Authorization Period (the ``Investment Limitation'') in Energy Assets or in the equity securities of existing or new companies substantially all of whose physical properties consist or will consist of Energy Assets. Such Energy Assets (or equity securities of companies owning Energy Assets) may be acquired for cash or in exchange for common stock or other securities of Ameren or any Nonutility Subsidiary. If common stock of Ameren is used as consideration in connection with any such acquisition, the market value of the stock on the date of issuance will be counted against the proposed Investment Limitation. The stated amount or principal amount of any other securities issued as consideration in any such transaction will also be counted against the Investment Limitation. Under no circumstances will Ameren Energy or any marketing subsidiary acquire, directly or indirectly, any assets or properties the ownership or operation of which would cause such companies to be considered an ``electric utility company'' or ``gas utility company'' as defined under the Act. IX. Payment of Dividends Out of Capital and Unearned Surplus
Ameren, on behalf of its direct or indirect Nonutility
Subsidiaries, requests that these Nonutility Subsidiaries be permitted
to pay dividends with respect to the securities of these Nonutility
Subsidiaries and/or reacquire their securities that are held by any
associate company, from time to time through the Authorization Period,
out of capital and unearned surplus (including revaluation reserve), to
the extent permitted under applicable corporate law, provided that,
without further approval of the Commission, no Nonutility Subsidiary
will declare or pay any dividend out of capital or unearned surplus if
that Nonutility Subsidiary derives any material part of its revenues
from sales of goods, services, electricity or natural gas to any of the
Utility Subsidiaries or if, at the time of such declaration or payment, such Nonutility Subsidiary has negative retained earnings.
X. Anticipatory Interest Rate Hedges by Nonutility Subsidiaries
Nonutility Subsidiaries request authorization to enter into
interest rate hedging transactions with respect to anticipated debt
offerings (``Anticipatory Hedges''), subject to certain limitations and
restrictions. These Anticipatory Hedges would only be entered into with
counterparties whose senior debt ratings, or the senior debt ratings of
the parent companies of the counterparties, as published by Standard
and Poor's Ratings Group, are equal to or greater than BBB, or an
equivalent rating from Moody's Investors Service, Fitch Investor Service or Duff and Phelps.
XI. Changes in Capitalization of NonUtility Subsidiaries; Subsequent Internal Reorganizations of NonUtility Subsidiaries
Applicants request authorization to change the terms of any Nonutility Subsidiary's authorized capitalization by an amount deemed appropriate by Ameren or other parent company, provided that, if a Nonutility Subsidiary is not wholly owned, the consent of all other shareholders has been obtained for such change. Thus, a Nonutility Subsidiary would be able to increase the number of its authorized shares of capital stock, change the par value of its capital stock, change between par value and nopar value stock, or convert from one form of business organization to another without additional Commission approval.
In addition, to the extent that such transactions are not otherwise exempt under the Act or rules under the Act, Ameren requests approval to consolidate, sell, transfer or otherwise reorganize all or any part of its direct and indirect ownership interests in Nonutility Subsidiaries, as well as investment interests in entities that are not subsidiary companies. To effect any such consolidation or other reorganization, Ameren may wish to either contribute the equity securities of one Nonutility Subsidiary to another Nonutility Subsidiary (including a newly formed Intermediate Subsidiary) or sell (or cause a Nonutility Subsidiary to sell) the equity securities or all or part of the assets of one Nonutility Subsidiary to another one. Such transactions may also take the form of a Nonutility Subsidiary selling or transferring the equity securities of a subsidiary or all or part of such subsidiary's assets as a dividend to an Intermediate Subsidiary or to another Nonutility Subsidiary, and the acquisition, directly or indirectly, of the equity securities or assets of such subsidiary, either by purchase or by receipt of a dividend. The purchasing Nonutility Subsidiary in any transaction structured as an intrasystem sale of equity securities or assets may execute and deliver its promissory note evidencin