FILE NO. 70-9755
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 4
(AMENDMENT NO. 7)
TO FORM U-1
APPLICATION/DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Northeast Utilities Holyoke Water Power Company
Western Massachusetts Electric Company One Canal Street
174 Brush Hill Avenue Holyoke, MA 01040
West Springfield, MA 01090-0010
The Connecticut Light and Power Company Public Service Company
NU Enterprises, Inc. of New Hampshire
Northeast Generation Service Company North Atlantic Energy
E.S. Boulos Company Corporation
Woods Network Services, Inc. Energy Park
Woods Electrical Co., Inc. 780 North Commercial Street
Northeast Generation Company Manchester, NH 03101
Select Energy, Inc. Select Energy Services, Inc.
Select Energy New York, Inc. 24 Prime Parkway
Mode 1 Communications, Inc. Natick, MA 01760
Northeast Utilities Service Company
107 Selden Street
Berlin, CT 06037
Yankee Energy System, Inc. The Rocky River Realty Company
Yankee Gas Services Company The Quinnehtuk Company
Yankee Energy Financial Services Company Northeast Nuclear Energy
NorConn Properties, Inc. Company
Yankee Energy Services Company 107 Selden Street
107 Selden Street Berlin, CT 06037
Berlin, Connecticut 06037
Name of companies filing this statement and addresses of principal
executive offices)
NORTHEAST UTILITIES
(Name of top registered holding company)
Gregory B. Butler, Esq.
Vice President, Secretary and General Counsel
Northeast Utilities Service Company
P.O. Box 270
Hartford, CT 06141-0270
(Name and address of agent for service)
The Commission is requested to mail signed copies of all orders,
notices and communications to
Jeffrey C. Miller David R. McHale
Assistant General Counsel Vice President and Treasurer
Northeast Utilities Northeast Utilities
Service Company Service Company
P.O. Box 270 P.O. Box 270
Hartford, CT 06141-0270 Hartford, CT 06141-0270
The Application/Declaration in this file, as heretofore amended,
is further amended and restated as follow:
A. Paragraphs 8 through 10 are restated in their entirety as
follows:
"8. NU and the Utility Borrowers commit that, apart from the
securities issued for the purpose of funding money pool operations,
no securities may be issued in reliance upon this Order during the
Authorization Period, unless: (i) the security to be issued, if rated,
is rated investment grade; (ii) all outstanding securities that are
rated are rated investment grade; and (iii) all outstanding securities
of NU that are rated, are rated investment grade. For purposes of this
condition, a security will be considered investment grade if it is so
rated by at least one nationally recognized statistical rating
organization, as that term is used in paragraphs (c)(2)(vi)(E), (F)
and (H) of Rule 15c3-1 under the 1934 Act. NU and the Utility
Borrowers request that the Commission reserve jurisdiction over the
issuance by NU of any securities that do not meet these conditions.
Except in the case of CL&P and PSNH, NU and the Utility Borrowers commit
that at all times during the Authorization Period, each will maintain
common equity of at least 30% of its consolidated capitalization
(common equity, preferred stock, long-term debt and short-term debt)
as reflected in the most recent Form 10-K or Form 10-Q filed with the
Commission, adjusted to reflect changes in capitalization since the
balance sheet date therein. In the case of CL&P and PSNH, in Holding
Co. Act Release No. 35-27147 (March 7, 2000), the Commission noted
that both companies, along with others at that time, would be below the
of 30% ratio when their respective Rate Reduction Bonds were included
in the calculation of capitalization. The Commission found that because
of the exceptional circumstance of the state's restructuring legislation,
as follows, the effect of being below the 30% test as a result of the
Rate Reduction Bonds was mitigated: (1) that CL&P, PSNH and WMECO have
investment grade ratings of BBB-or better; (2) that CL&P, PSNH and
WMECO's financial integrity would not be impaired by the proposed
transaction; (3) that CL&P, PSNH and WMECO have and will continue
to have, adequate cash and access to working capital facilities to
meet and support their normal business operations; and (4) that
the proposed transaction would be in the public's interest because
both investors and consumers will benefit. CL&P and PSNH represent
that such factors continue to be present and will continue through
the Authorization Period.
9. Subject to the applicable Short-term Debt Limits, NU and the
Utility Borrowers intend to renew and extend outstanding short-
term debt as it matures, to refund such short-term debt with
other similar short-term debt, to repay such short-term debt or
to increase the amount of their short-term debt from time to
time.
10. Current Financial Condition
(a) NU
For the twelve (12) months ended March 31, 2003, NU's
consolidated gross revenues and net income were approximately
$5.2 billion and $193 million, respectively. As of March 31,
2003, NU's consolidated capitalization consisted of 33.4% common
equity, 1.7% preferred stock, 27.8% of Rate Reduction Bonds, and
37.1% debt. When the Rate Reduction Bonds are excluded, NU's
consolidated capitalization consisted of 46.2% common equity,
2.4% preferred stock and 51.3% debt.
NU Credit Ratings (Senior Unsecured Debt)
Moody's S&P
Baa1 BBB
(b) The Utility Borrowers
The Connecticut Light and Power Company ("CL&P")
As of March 31, 2003, CL&P's consolidated capitalization
consisted of 24.8% common equity, 4.0% preferred stock, 42.3% of
Rate Reduction Bonds, and 28.9% of long-term and short-term debt.
When the Rate Reduction Bonds are excluded, CL&P's
consolidated capitalization consisted of 42.9% common equity,
7.0% preferred stock and 50.5% debt. The credit rating for
senior debt of CL&P is BBB+ by Standard and Poor's and A3 by
Moody's.
Western Massachusetts Electric Company ("WMECO")
As of March 31, 2003, WMECO's consolidated capitalization
consisted of 33.2% common equity, 29.1% of Rate Reduction Bonds,
and 37.7% of long-term and short-term debt. When the Rate
Reduction Bonds are excluded, WMECO's consolidated capitalization
consisted of 46.9% common equity and 53.1% debt. The credit
rating for senior unsecured debt of WMECO is BBB+ by Standard and
Poor's and A3 by Moody's.
Public Service Company of New Hampshire ("PSNH")
As of March 31, 2003, PSNH's consolidated capitalization
consisted of 26.8% common equity, 40.4% of Rate Reduction Bonds
issued pursuant to state law, and 32.8% of long-term and short-
term debt. When the Rate Reduction Bonds are excluded,
PSNH's consolidated capitalization consisted of 45% common equity
and 55% debt. The credit rating for senior secured debt of PSNH
is BBB+ by Standard and Poor's and A3 by Moody's.
Yankee Energy System, Inc. ("YES")
As of March 31, 2003, YES's consolidated capitalization
consisted of 78.1% common equity and 21.9% debt. YES is not
currently rated by Standard and Poor's, Moody's or Fitch.
Yankee Gas Services Company ("Yankee Gas")
As of March 31, 2003, Yankee Gas' consolidated
capitalization consisted of 77.3% common equity and 22.7% of
debt. Yankee Gas is not currently rated by Standard and Poor's,
Moody's or Fitch."
B. Item 5 is restated in its entirety as follows:
"ITEM 5
PROCEDURE
1. The Applicants hereby request that the Commission publish a
notice under Rule 23 with respect to the filing of this
Application as soon as practicable and that the Commission's
order be issued as soon as possible. A form of notice suitable
for publication in the Federal Register is attached hereto as
Exhibit H.2. The Applicants respectfully request the
Commission's approval, pursuant to this Application, of all
transactions described herein, whether under the sections of the
Act and Rules thereunder enumerated in Item 3 or otherwise. It
is further requested that the Commission issue an order
authorizing the transactions proposed herein at the earliest
practicable date, but not later than June 30, 2003 as that is the
date the Prior Order expires. Additionally, the Applicants (i)
request that there not be any recommended decision by a hearing
officer or by any responsible officer of the Commission, (ii)
consent to the Office of Public Utility Regulation within the
Division of Investment Management assisting in the preparation of
the Commission's decision, and (iii) waive the 30-day waiting
period between the issuance of the Commission's order and the
date on which it is to become effective, since it is desired that
the Commission's order, when issued, become effective
immediately.
OTHER MATTERS
1. Except in accordance with the Act, neither NU nor any
subsidiary thereof (a) has acquired an ownership interest in an
EWG or a FUCO, as defined in Sections 32 and 33 of the Act, or
(b) now is or as a consequence of the transactions proposed
herein will become a party to, or has or will as a consequence of
the transactions proposed herein have a right under, a service,
sales, or construction contract with an EWG or a FUCO. None of
the proceeds from the transactions proposed herein will be used
by NU and its subsidiaries to acquire any securities of, or any
interest in, an EWG or a FUCO.
2. NU currently meets all of the conditions of Rule 53(a),
except for clause (1). At March 31, 2003, NU's "aggregate
investment," as defined in Rule 53(a)(1), in EWGs and FUCOs was
approximately $448.2 million, or approximately 60% of NU's
average "consolidated retained earnings," also as defined in Rule
53(a)(1), for the four quarters ended March 31, 2003 ($744.9
million). With respect to Rule 53(a)(1), however, the Commission
has determined that NU's financing of its investment in Northeast
Generation Company ("NGC"), NU's only current EWG or FUCO, in an
amount not to exceed $481 million or 83% of its "average
consolidated retained earnings" would not have either of the
adverse effects set forth in Rule 53(c). See Northeast Utilities,
Holding Co. Act Release No. 27148, dated March 7, 2000 (the "Rule
53(c) Order"). NU continues to assert that its EWG investment in
NGC will not adversely affect the System.
3. In addition, NU and its subsidiaries are in compliance and
will continue to comply with the other provisions of Rule 53(a)
and (b), as demonstrated by the following determinations:
(i) NGC maintains books and records, and prepares
financial statements, in accordance with Rule 53(a)(2).
Furthermore, NU has undertaken to provide the
Commission access to such books and records and
financial statements, as it may request;
(ii) No employees of NU's public utility subsidiaries
have rendered services to NGC;
(iii) NU has submitted (a) a copy of each Form U-1 and
Rule 24 certificate that has been filed with the
Commission under Rule 53 and (b) a copy of Item 9 of
the Form U5S and Exhibits G and H thereof to each state
regulator having jurisdiction over the retail rates of
NU's public utility subsidiaries;
(iv) Neither NU nor any subsidiary has been the subject
of a bankruptcy or similar proceeding unless a plan of
reorganization has been confirmed in such proceeding;
(v) NU's average CREs for the four most recent
quarterly periods have not decreased by 10% or more
from the average for the previous four quarterly
periods; and
(vi) In the previous fiscal year, NU did not report
operating losses attributable to its investment in
EWGs/FUCOs exceeding 3 percent of NU's consolidated
retained earnings.
4. The proposed transactions, considered in conjunction with
the effect of the capitalization and earnings of NU's EWGs and
FUCOs, would not have a material adverse effect on the financial
integrity of the NU system, or an adverse impact on NU's public-
utility subsidiaries, their customers, or the ability of State
commissions to protect such public-utility customers. The Rule
53(c) Order was predicated, in part, upon an assessment of NU's
overall financial condition which took into account, among other
factors, NU's consolidated capitalization ratio and its retained
earnings, both of which have improved since the date of the
order. NU's EWG investment (it has no FUCO investment) has been
profitable for all quarterly periods ending June 30, 2000 through
March 31, 2003 (NGC was acquired in March 2000). As of December
31, 1999, the most recent period for which financial statement
information was evaluated in the Rule 53(c) Order, NU's
consolidated capitalization consisted of 35.3% common equity and
64.7% debt (including long and short-term debt, preferred stock,
capital leases and guarantees). As of June 30, 2000, the end of
the first quarter after the issuance of the Rule 53(c) Order, the
consolidated capitalization ratios of NU, with consolidated debt
including all short-term debt and non-recourse debt of the EWG,
were as follows:
As of June 30, 2000
(thousands
of dollars) %
Common shareholders' equity $2,365,854 36.9
Preferred stock 277,700 4.3
Long-term and short-term debt 3,768,353 58.8
$6,411,907 100.0
5. The consolidated capitalization ratios of NU as of
March 31,2003, with consolidated debt including all short-term
debt and non-recourse debt of the EWG, were as follows:
As of March 31, 2003
(thousands
of dollars) %
Common shareholders' equity $2,229,564 33.4
Preferred stock 116,200 1.7
Long-term and short-term debt 2,475,181 37.1
Rate Reduction Bonds 1,856,411 27.8
$6,677,356 100.0
If Rate Reduction Bonds are excluded, the consolidated
capitalization ratio of NU as of March 31, 2003 is as follows:
As of March 31, 2003
(thousands
of dollars) %
Common shareholders' equity $2,229,564 46.2
Preferred stock 116,200 2.4
Long-term and short-term debt 2,475,181 51.3
$4,820,945 100.0%
6. NGC has made a positive contribution to earnings by
contributing $134.3 million in revenues in the 12-month period
ending March 31, 2003 and net income of $33.6 million for the
same period. Although since the date of the Rule 53(c) Order,
the common equity ratio of NU on a consolidated basis has
decreased, it still remains at a financially healthy level, above
the 30% benchmark required by the Commission, and if Rate
Reduction Bonds are excluded, the consolidated common equity
ratio has increased. Accordingly, NU's investment in its EWG has
not had an adverse impact on NU's financial integrity."
SIGNATURE
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, the Applicants have duly caused this
Application-Declaration to be signed on their behalf by the
undersigned thereunto duly authorized.
June 30, 2003
Northeast Utilities
Northeast Utilities Service Company
The Connecticut Light and Power Company
Western Massachusetts Electric Company
Public Service Company of New Hampshire
North Atlantic Energy Corporation
Holyoke Water Power Company
Northeast Nuclear Energy Company
Yankee Energy System, Inc.
Yankee Gas Services Company
The Rocky River Realty Company
The Quinnehtuk Company
NU Enterprises, Inc.
Northeast Generation Company
Northeast Generation Service Company
Woods Electrical Co., Inc.
Woods Network Services, Inc.
E. S. Boulos Company
Select Energy, Inc.
Select Energy New York, Inc.
Mode 1 Communications, Inc.
Select Energy Services, Inc.
Yankee Energy Financial Services Company
Yankee Energy Services Company
NorConn Properties, Inc.
By: /s/ Gregory B. Butler
Name: Gregory B. Butler
Title: Vice President, Secretary and General Counsel
Northeast Utilities Service Company as Agent for
all of the above-named Applicants
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In Holding Co. Act Release No. 35-27147 (March 7,
2000), the Commission noted that NU, CL&P, WMECO and PSNH would
all be below the Commission's benchmark of 30% common equity-to-
total capitalization ratio if Rate Reduction Bonds expected to be
issued were included in the calculation. The Commission found
that because of the exceptional circumstance of the state's
restructuring legislation, the following representations
mitigated the fact that the utilities were below the 30% test:
(1) that CL&P, PSNH and WMECO had investment grade ratings of BBB-
or better; (2) that CL&P, PSNH and WMECO's financial integrity
would not be impaired by the payment of dividends; (3) that CL&P,
PSNH and WMECO have and will continue to have, following the
consummation of the transactions, adequate cash and access to
working capital facilities to meet and support their normal
business operations; and finally (4) that it is in the public's
interest because both investors and consumers benefited. See also
Holding Co. Act. Release No. 35-27529 (May 11, 2002).
Id.
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