Filings Under the Public Utility Holding Company Act of 1935, as Amended (“Act”), 30979-30981 [E5-2725]
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Federal Register / Vol. 70, No. 103 / Tuesday, May 31, 2005 / Notices
Written statements may be
submitted by any of the following
methods:
SUBMISSIONS:
Electronic Statements
• Use the Commission’s Internet
submission form (https://www.sec.gov/
info/smallbus/acspc.shtml); or
• Send an e-mail message to rulecomments@sec.gov. Please include File
Number 265–23 on the subject line; or
• Use the Federal eRulemaking Portal
(https://www.regulations.gov). Follow the
instructions for submitting comments.
Paper Statements
• Send paper statements in triplicate
to Jonathan G. Katz, Secretary,
Securities and Exchange Commission,
450 Fifth Street, NW., Washington, DC
20549–0609.
All submissions should refer to File No.
265–23. This file number should be
included on the subject line if e-mail is
used. To help us process and review
your statement more efficiently, please
use only one method. The Commission
will post all statements on the
Commission’s Web site (https://
www.sec.gov./info/smallbus/
acspc.shtml).
Statements also will be available for
public inspection and copying in the
Commission’s Public Reference Room,
100 F Street, NE., Washington, DC
20549. All statements received will be
posted without change; we do not edit
personal identifying information from
submissions. You should submit only
information that you wish to make
available publicly.
Persons wishing to provide oral
testimony at the Friday session should
submit a request to testify to the SEC
staff contact person listed below by the
deadline given above. The SEC staff will
notify persons whom the Advisory
Committee Co-Chairs decide to invite to
provide oral testimony. Sufficient time
may not be available to accommodate all
those wishing to testify. The Co-Chairs
have reserved the right to select
witnesses and limit the time of
witnesses invited to testify. Persons
testifying are requested to submit a
written statement in accordance with
the instructions provided above.
FOR FURTHER INFORMATION CONTACT:
Kevin M. O’Neill, Special Counsel, at
(202) 551–3260 or oneillk@sec.gov,
Office of Small Business Policy,
Division of Corporation Finance,
Securities and Exchange Commission,
450 Fifth Street, NW., Washington, DC
20549–0310.
SUPPLEMENTARY INFORMATION: In
accordance with section 10(a) of the
Federal Advisory Committee Act, 5
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U.S.C. App. 1, § 10(a), Gerald J. Laporte,
Designated Federal Officer of the
Committee, has approved publication of
this notice at the request of the
Committee.
Dated: May 24, 2005.
Jonathan G. Katz,
Committee Management Officer.
[FR Doc. E5–2724 Filed 5–27–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
Sunshine Act Meeting
Notice is hereby given, pursuant to
the provisions of the Government in the
Sunshine Act, Pub. L. 94–409, that the
Securities and Exchange Commission
will hold the following meeting during
the week of May 30, 2005:
A Closed Meeting will be held on
Wednesday, June 1, 2005 at 10 a.m.
Commissioners, Counsel to the
Commissioners, the Secretary to the
Commission, and recording secretaries
will attend the Closed Meeting. Certain
staff members who have an interest in
the matters may also be present.
The General Counsel of the
Commission, or his designee, has
certified that, in his opinion, one or
more of the exemptions set forth in 5
U.S.C. 552b(c)(3), (5), (7), (9)(B), and
(10) and 17 CFR 200.402(a)(3), (5), (7),
9(ii) and (10), permit consideration of
the scheduled matters at the Closed
Meeting.
Commissioner Atkins, as duty officer,
voted to consider the items listed for the
closed meeting in closed session.
The subject matter of the Closed
Meeting scheduled for Wednesday, June
1, 2005, will be:
Formal orders of investigations;
Institution and settlement of
injunctive actions;
Institution and settlement of
administrative proceedings of an
enforcement nature; and
Adjudicatory matters.
At times, changes in Commission
priorities require alterations in the
scheduling of meeting items.
For further information and to
ascertain what, if any, matters have been
added, deleted or postponed, please
contact:
The Office of the Secretary at (202)
942–7070.
Dated: May 25, 2005.
Jonathan G. Katz,
Secretary.
[FR Doc. 05–10791 Filed 5–27–05; 4:09 pm]
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30979
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 35–27973]
Filings Under the Public Utility Holding
Company Act of 1935, as Amended
(‘‘Act’’)
May 24, 2005.
Notice is hereby given that the
following filing(s) has/have been made
with the Commission pursuant to
provisions of the Act and rules
promulgated under the Act. All
interested persons are referred to the
application(s) and/or declaration(s) for
complete statements of the proposed
transaction(s) summarized below. The
application(s) and/or declaration(s) and
any amendment(s) is/are available for
public inspection through the
Commission’s Branch of Public
Reference.
Interested persons wishing to
comment or request a hearing on the
application(s) and/or declaration(s)
should submit their views in writing by
June 20, 2005 to the Secretary,
Securities and Exchange Commission,
Washington, DC 20549–0609, and serve
a copy on the relevant applicant(s) and/
or declarant(s) at the address(es)
specified below. Proof of service (by
affidavit or, in the case of an attorney at
law, by certificate) should be filed with
the request. Any request for hearing
should identify specifically the issues of
facts or law that are disputed. A person
who so requests will be notified of any
hearing, if ordered, and will receive a
copy of any notice or order issued in the
matter. After June 20, 2005, the
application(s) and/or declaration(s), as
filed or as amended, may be granted
and/or permitted to become effective.
KeySpan Corporation, et al. (70–10245)
KeySpan Corporation (‘‘KeySpan’’), a
registered holding company under the
Act, and its direct subsidiaries, KeySpan
Corporate Services LLC (‘‘KCS’’),
KeySpan Utility Services LLC (‘‘KUS’’)
and KeySpan Engineering & Survey, Inc.
(‘‘KENG’’) each located at One
MetroTech Center, Brooklyn, New York
(together, ‘‘Applicants’’) have filed a
declaration (‘‘Declaration’’) under
section 13 of the Act and rules 54, 87,
88, 90, 91, 93 and 94. KCS, KUS and
KENG (collectively, ‘‘Service
Companies’’) provide various services to
KeySpan and its subsidiaries, as
described below.
A. Background and Authority
Requested
KeySpan registered as a holding
company under the Act on November 8,
2000, as a result of KeySpan’s
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Federal Register / Vol. 70, No. 103 / Tuesday, May 31, 2005 / Notices
acquisition of Eastern Enterprises (now
known as KeySpan New England, LLC)
and its indirect acquisition of
EnergyNorth Inc. which were
authorized by the Commission in orders
issued on November 7, 2000 (Holding
Company Act Release Nos. 27269 and
27271), as modified by order issued on
December 1, 2000 (Holding Company
Act Release No. 27287).1 In addition, on
November 8, 2000, the Commission
issued an order (Holding Company Act
Release No. 27272), as modified by the
order issued on December 1, 2000
(Holding Company Act Release No.
27286) (collectively, ‘‘Service Company
Order’’), that, among other things,
reserved jurisdiction over the allocation
methodologies proposed in the service
agreements of the Service Companies
and over the use of KCS and KUS as
separate service companies. In the
Declaration, Applicants request that the
Commission: (1) Approve the proposed
allocation methodologies of each of the
Service Companies; and (2) continue to
reserve jurisdiction over the use of KCS
and KUS as separate service companies,
pending approval by the New York
Public Service Commission, upon
KeySpan’s petition, to eliminate the
need to utilize KUS as a separate service
company.
B. Services Provided by Each Service
Company
KCS provides the following services
to all KeySpan system companies:
accounting, tax, auditing, treasury and
finance services, risk management,
financial planning, investor relations
and shareholder services, information
1 KeySpan directly or indirectly owns seven
public-utility companies in the northeastern United
States. The Brooklyn Union Gas Company, d/b/a
KeySpan Energy Delivery New York, distributes
natural gas at retail to residential, commercial and
industrial customers in the New York City
Boroughs of Brooklyn, Staten Island and Queens;
KeySpan Gas East Corporation, d/b/a KeySpan
Energy Delivery Long Island, distributes natural gas
at retail to customers in New York State located in
the counties of Nassau and Suffolk on Long Island
and the Rockaway Peninsula in Queens County;
KeySpan Generation LLC owns and operates
electric generation capacity located on Long Island
that is sold at wholesale to the Long Island Power
Authority; Boston Gas Company, d/b/a KeySpan
Energy Delivery New England, distributes natural
gas to customers located in Boston and other cities
and towns in eastern and central Massachusetts;
Essex Gas Company, d/b/a KeySpan Energy
Delivery New England, distributes natural gas to
customers in eastern Massachusetts; Colonial Gas
Company, d/b/a KeySpan Energy Delivery New
England, distributes natural gas to customers
located in northeastern Massachusetts and on Cape
Cod; and EnergyNorth Natural Gas, Inc., d/b/a
KeySpan Energy Delivery New England, distributes
natural gas to customers located in southern and
central New Hampshire and the City of Berlin
located in northern New Hampshire. KeySpan,
through its subsidiaries, also engages in energy
related non-utility activities.
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technology, communications and
computer services, legal and regulatory,
corporate secretary functions, human
resources, environmental services,
strategic planning and corporate
performance, customer services and
communications and customer strategy,
materials management and purchasing,
facilities management, fleet
management, security, corporate affairs,
and executive and administrative
services. KCS provides the following
services to all KeySpan system
companies except for the Brooklyn
Union Gas Company and KeySpan Gas
East Corporation (collectively, ‘‘New
York Utilities’’): gas supply services,
management and administrative
functions relating to gas operations,
operations support services relating to
gas operations, field services relating to
gas operations, transmission and
delivery system planning services, and
gas marketing and sales services.
KUS provides the following services
to the New York Utilities, over which
the New York Public Service
Commission (‘‘NYPSC’’) has
jurisdiction: Gas and electric
transmission and distribution systems
planning, research and development,
fuel management, marketing and sales
services, meter operations, and
executive and administrative services.2
KUS also provides certain sales call
center services to the New York Utilities
as well as to Boston Gas Company,
Essex Gas Company, Colonial Gas
Company and EnergyNorth Natural Gas,
Inc. (each company does business as
KeySpan Energy Delivery New England)
(collectively, ‘‘New England Utilities’’).
The sales call center avoids duplication
of resources and call system
technologies. The sales call center
handles call responses for lead inquiries
in responses to advertising and
mailings; calls to find out the
availability of gas; calls for additional
information on gas products; calls for
technical questions and inquiries; calls
to request appointments with sales
representatives and/or plumbers; and
calls to order meter sets from customers,
plumbers and builders.
KENG provides to KCS and certain
other KeySpan subsidiaries general
engineering services and executive and
administrative services.3
2 KUS also provides these services to KeySpan
Generation LLC, KeySpan Electric Services LLC,
and KeySpan Energy Trading Services LLC. These
companies either provide services to the Long
Island Power Authority or are not subject to the
jurisdiction of the NYPSC.
3 According to the Applicants, KeySpan is
compelled to utilize KENG due to Title VIII, Article
145 of the New York Education Law which
generally restricts a public service corporation from
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C. Allocation Methodologies Used by
the Service Companies
Applicants state that the Service
Companies allocate all their costs to
associated regulated and non-utility
companies through a tiered approach.
All costs are allocated and billed at cost
in accordance with section 13 and rules
90 and 91 of the Act. Costs are first
billed directly whenever practicable,
including instances when more than
one associate company is receiving the
same goods or service at the same time.
Amounts that cannot be directly
assigned will be allocated to client
companies by means of equitable
allocation formulae, which to the extent
possible will be based on cost-causation
relationships. All other allocations will
be broad based. In some instances, each
of the Service Companies’ cost centers
that perform work for other service
company cost centers may use a
surrogate allocation method that mimics
the allocations of the receiver cost
center. Each formula will have an
appropriate basis, such as meters and
square footage.
Allocation percentages will be
calculated on historical data where
appropriate and updated annually.4 The
method of assignment or allocation of
costs shall be reviewed annually or
more frequently if appropriate. If the use
of a basis of allocation would result in
an inequity because of a change in
operation or organization, then the
Service Companies may adjust the basis
to effect an equitable distribution.
Applicants state that the cost of
service will be determined in
providing any engineering or survey services to
third parties, including affiliates. Nevertheless, the
New York Education Law does provide certain
‘‘grandfather’’ exemptions that allow these services
to be provided by business corporations that have
been lawfully practicing engineering or land
surveying and were organized and existing under
the laws of the State of New York on April 15, 1935
and have existed continuously thereafter. KENG
satisfies the requirements of the ‘‘grandfathering’’
provisions. Accordingly, KeySpan utilizes KENG as
a separate service company to allow for the
centralized provision of engineering and surveying
services.
4 Due to the unique nature of KeySpan’s
relationship with the Long Island Power Authority
(‘‘LIPA’’), the revenues and assets managed on its
behalf will be included in the basis, with the
appropriate client company’s data, in order to
determine appropriate allocations. KeySpan Electric
Services LLC provides to LIPA all operation,
maintenance and construction services and
significant administrative services relating to the
Long Island electric transmission and distribution
system, supplies LIPA with generating capacity,
energy conversion and ancillary services, and
manages all aspects of the fuel supply for
KeySpan’s generating facilities, as well as all
aspects of the capacity and energy owned by or
under contract to LIPA. KeySpan Electric Services
LLC also purchases energy, capacity and ancillary
services in the open market on LIPA’s behalf.
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accordance with the Act and will
include all costs of doing business
incurred by the Service Companies,
including a reasonable return on capital
which will reflect a capitalization of the
Service Companies of no more than ten
percent equity, and all associated taxes.
Applicant’s state that each Service
Company will maintain an accounting
system for accumulating all costs on a
project, activity or other appropriate
basis. Expenses for the department will
include salaries and wages of
employees, materials, and supplies and
all other expenses attributable to the
department. Labor costs will be loaded
for fringe benefits and payroll taxes.
Time records of hours worked by all
Service Company employees, including
all officers of the company (i.e., Chief
Executive Officer, President and Vice
Presidents) will be kept by project and
activity.
Each client company will take agreed
upon services and such additional,
general, or special services as the client
company may request and which the
particular Service Company concludes
it is able to perform. No amendment,
alteration or rescission of an activity or
project shall release a client company
from liability for all costs already
incurred by, or contracted for, the
applicable Service Company pursuant to
the project or activity regardless of
whether the services associated with the
costs have been completed.
Applicants state that each of the
Service Companies’ accounting and cost
allocation methods and procedures have
been structured so as to comply with the
‘‘Uniform System of Accounts for
Mutual Service Companies’’ established
by the Commission for holding
company systems. Moreover, each of the
Service Companies will file the annual
report required by the Commission
pursuant to rule 94 under the Act.
Applicants represent that no change
in the organization of a Service
Company, the type and character of the
companies to be serviced, the methods
of allocating cost to associate companies
or the scope or character of the services
to be rendered subject to section 13 of
the Act, or any rule, regulation, or order
thereunder, shall be made until the
Service Company shall first have given
the Commission notice of the proposed
change not less than 60 days prior to the
proposed effectiveness. If, upon the
receipt of a notice, the Commission
shall notify the Service Company within
the 60 day period that a question exists
as to whether the proposed change is
consistent with the provisions of section
13 of the Act, or of any rule, regulation,
or order thereunder, then the proposed
change shall not become effective unless
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and until the Service Company shall
have filed with the Commission an
appropriate declaration regarding the
proposed change and the Commission
shall have permitted the declaration to
become effective.
D. Reservation of Jurisdiction Over the
Use of KCS and KUS as Separate
Service Companies Pending Dissolution
of KUS
Applicants state that in 1998, as a
condition of the NYPSC’s approval of
the formation of KeySpan as utility
holding company, the NYPSC required
KeySpan to form KCS and KUS in order
to provide the services noted above.
Applicants now request that the
Commission continue to reserve
jurisdiction over the use of KCS and
KUS as separate service companies
pending and subject to approval by the
NYPSC, upon KeySpan’s petition, to
eliminate the need to utilize KUS as a
separate service company. KeySpan
proposes to petition the NYPSC to allow
Applicants to eliminate the need to
utilize KUS as a separate service
company. The petition will generally
request authorization to utilize KCS as
the single service company that would
provide to the entire KeySpan system
both corporate administrative services
as well as gas marketing, gas supply, gas
and electric distribution planning, meter
repair operations, and all other services
currently being provided by KUS and
KCS. Key Span proposes to file this
NYPSC petition on or before December
31, 2005 and anticipates that the NYPSC
will act on this petition on or before
December 31, 2006.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5–2725 Filed 5–27–05; 8:45 am]
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–51733; File No. SR–CBOE–
2005–19]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Order Granting Approval
to Proposed Rule Change as Amended
By Amendment Nos. 1, 2, and 3
Thereto Relating to an Interpretation of
Paragraph (b) of Article Fifth of Its
Certificate of Incorporation and an
Amendment to Rule 3.16(b)
May 24, 2005.
I. Introduction
On March 7, 2005, the Chicago Board
Options Exchange, Incorporated
(‘‘CBOE’’ or the ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) a
proposed rule change pursuant to
Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Exchange
Act’’) 1 and Rule 19b–4 thereunder,2 to
adopt an interpretation of paragraph (b)
of Article Fifth of the Certificate of
Incorporation of the CBOE (‘‘Article
Fifth(b)’’) pertaining to the right of the
1,402 Full Members of the Board of
Trade of the City of Chicago, Inc.
(‘‘CBOT’’) to become members of the
CBOE without having to purchase a
CBOE membership. On March 28, 2005,
the Exchange submitted Amendment
No. 1 to the proposed rule change.3 The
proposed rule change, as amended, was
published for notice and comment in
the Federal Register on April 7, 2005.4
The Commission received three
comment letters in response to the
proposal as published in the Federal
Register.5 On April 20, 2005, the CBOE
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 Due to a motion to reconsider the Commission’s
approval of SR–CBOE–2004–16, which was
pending at the time the notice was published for
comment in the Federal Register, Amendment No.
1 removed certain language from the text of CBOE
Rule 3.16(b) that was included with the original
filing to reflect the stay of effectiveness of the text
added by SR–CBOE–2004–16 pending a final
Commission determination of the motion to
reconsider. Amendment No. 1 also added Exhibit
3d to the filing, consisting of an opinion letter from
the CBOE’s special Delaware counsel pertaining to
the proposed rule change.
4 See Securities Exchange Act Release No. 51463
(Mar. 31, 2005), 70 FR 17732 (Apr. 7, 2005).
5 See Letter from Marshall Spiegel and Donald
Cleven to Jonathan G. Katz, Secretary, Commission,
dated April 28, 2005 (‘‘Spiegel & Cleven April 28th
Letter’’); Letter from Thomas A. Bond, Norman
Friedland, Gary P. Lahey, Anthony Arciero, and
Marshall Spiegel to Jonathan G. Katz, Secretary,
Commission, dated April 27, 2005 (‘‘Joint Letter’’);
and Letter from Marshall Spiegel to William
Brodsky, Chairman, CBOE, dated April 26, 2005
(this letter was also provided to the Commission as
2 17
Continued
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Agencies
[Federal Register Volume 70, Number 103 (Tuesday, May 31, 2005)]
[Notices]
[Pages 30979-30981]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-2725]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-27973]
Filings Under the Public Utility Holding Company Act of 1935, as
Amended (``Act'')
May 24, 2005.
Notice is hereby given that the following filing(s) has/have been
made with the Commission pursuant to provisions of the Act and rules
promulgated under the Act. All interested persons are referred to the
application(s) and/or declaration(s) for complete statements of the
proposed transaction(s) summarized below. The application(s) and/or
declaration(s) and any amendment(s) is/are available for public
inspection through the Commission's Branch of Public Reference.
Interested persons wishing to comment or request a hearing on the
application(s) and/or declaration(s) should submit their views in
writing by June 20, 2005 to the Secretary, Securities and Exchange
Commission, Washington, DC 20549-0609, and serve a copy on the relevant
applicant(s) and/or declarant(s) at the address(es) specified below.
Proof of service (by affidavit or, in the case of an attorney at law,
by certificate) should be filed with the request. Any request for
hearing should identify specifically the issues of facts or law that
are disputed. A person who so requests will be notified of any hearing,
if ordered, and will receive a copy of any notice or order issued in
the matter. After June 20, 2005, the application(s) and/or
declaration(s), as filed or as amended, may be granted and/or permitted
to become effective.
KeySpan Corporation, et al. (70-10245)
KeySpan Corporation (``KeySpan''), a registered holding company
under the Act, and its direct subsidiaries, KeySpan Corporate Services
LLC (``KCS''), KeySpan Utility Services LLC (``KUS'') and KeySpan
Engineering & Survey, Inc. (``KENG'') each located at One MetroTech
Center, Brooklyn, New York (together, ``Applicants'') have filed a
declaration (``Declaration'') under section 13 of the Act and rules 54,
87, 88, 90, 91, 93 and 94. KCS, KUS and KENG (collectively, ``Service
Companies'') provide various services to KeySpan and its subsidiaries,
as described below.
A. Background and Authority Requested
KeySpan registered as a holding company under the Act on November
8, 2000, as a result of KeySpan's
[[Page 30980]]
acquisition of Eastern Enterprises (now known as KeySpan New England,
LLC) and its indirect acquisition of EnergyNorth Inc. which were
authorized by the Commission in orders issued on November 7, 2000
(Holding Company Act Release Nos. 27269 and 27271), as modified by
order issued on December 1, 2000 (Holding Company Act Release No.
27287).\1\ In addition, on November 8, 2000, the Commission issued an
order (Holding Company Act Release No. 27272), as modified by the order
issued on December 1, 2000 (Holding Company Act Release No. 27286)
(collectively, ``Service Company Order''), that, among other things,
reserved jurisdiction over the allocation methodologies proposed in the
service agreements of the Service Companies and over the use of KCS and
KUS as separate service companies. In the Declaration, Applicants
request that the Commission: (1) Approve the proposed allocation
methodologies of each of the Service Companies; and (2) continue to
reserve jurisdiction over the use of KCS and KUS as separate service
companies, pending approval by the New York Public Service Commission,
upon KeySpan's petition, to eliminate the need to utilize KUS as a
separate service company.
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\1\ KeySpan directly or indirectly owns seven public-utility
companies in the northeastern United States. The Brooklyn Union Gas
Company, d/b/a KeySpan Energy Delivery New York, distributes natural
gas at retail to residential, commercial and industrial customers in
the New York City Boroughs of Brooklyn, Staten Island and Queens;
KeySpan Gas East Corporation, d/b/a KeySpan Energy Delivery Long
Island, distributes natural gas at retail to customers in New York
State located in the counties of Nassau and Suffolk on Long Island
and the Rockaway Peninsula in Queens County; KeySpan Generation LLC
owns and operates electric generation capacity located on Long
Island that is sold at wholesale to the Long Island Power Authority;
Boston Gas Company, d/b/a KeySpan Energy Delivery New England,
distributes natural gas to customers located in Boston and other
cities and towns in eastern and central Massachusetts; Essex Gas
Company, d/b/a KeySpan Energy Delivery New England, distributes
natural gas to customers in eastern Massachusetts; Colonial Gas
Company, d/b/a KeySpan Energy Delivery New England, distributes
natural gas to customers located in northeastern Massachusetts and
on Cape Cod; and EnergyNorth Natural Gas, Inc., d/b/a KeySpan Energy
Delivery New England, distributes natural gas to customers located
in southern and central New Hampshire and the City of Berlin located
in northern New Hampshire. KeySpan, through its subsidiaries, also
engages in energy related non-utility activities.
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B. Services Provided by Each Service Company
KCS provides the following services to all KeySpan system
companies: accounting, tax, auditing, treasury and finance services,
risk management, financial planning, investor relations and shareholder
services, information technology, communications and computer services,
legal and regulatory, corporate secretary functions, human resources,
environmental services, strategic planning and corporate performance,
customer services and communications and customer strategy, materials
management and purchasing, facilities management, fleet management,
security, corporate affairs, and executive and administrative services.
KCS provides the following services to all KeySpan system companies
except for the Brooklyn Union Gas Company and KeySpan Gas East
Corporation (collectively, ``New York Utilities''): gas supply
services, management and administrative functions relating to gas
operations, operations support services relating to gas operations,
field services relating to gas operations, transmission and delivery
system planning services, and gas marketing and sales services.
KUS provides the following services to the New York Utilities, over
which the New York Public Service Commission (``NYPSC'') has
jurisdiction: Gas and electric transmission and distribution systems
planning, research and development, fuel management, marketing and
sales services, meter operations, and executive and administrative
services.\2\ KUS also provides certain sales call center services to
the New York Utilities as well as to Boston Gas Company, Essex Gas
Company, Colonial Gas Company and EnergyNorth Natural Gas, Inc. (each
company does business as KeySpan Energy Delivery New England)
(collectively, ``New England Utilities''). The sales call center avoids
duplication of resources and call system technologies. The sales call
center handles call responses for lead inquiries in responses to
advertising and mailings; calls to find out the availability of gas;
calls for additional information on gas products; calls for technical
questions and inquiries; calls to request appointments with sales
representatives and/or plumbers; and calls to order meter sets from
customers, plumbers and builders.
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\2\ KUS also provides these services to KeySpan Generation LLC,
KeySpan Electric Services LLC, and KeySpan Energy Trading Services
LLC. These companies either provide services to the Long Island
Power Authority or are not subject to the jurisdiction of the NYPSC.
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KENG provides to KCS and certain other KeySpan subsidiaries general
engineering services and executive and administrative services.\3\
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\3\ According to the Applicants, KeySpan is compelled to utilize
KENG due to Title VIII, Article 145 of the New York Education Law
which generally restricts a public service corporation from
providing any engineering or survey services to third parties,
including affiliates. Nevertheless, the New York Education Law does
provide certain ``grandfather'' exemptions that allow these services
to be provided by business corporations that have been lawfully
practicing engineering or land surveying and were organized and
existing under the laws of the State of New York on April 15, 1935
and have existed continuously thereafter. KENG satisfies the
requirements of the ``grandfathering'' provisions. Accordingly,
KeySpan utilizes KENG as a separate service company to allow for the
centralized provision of engineering and surveying services.
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C. Allocation Methodologies Used by the Service Companies
Applicants state that the Service Companies allocate all their
costs to associated regulated and non-utility companies through a
tiered approach. All costs are allocated and billed at cost in
accordance with section 13 and rules 90 and 91 of the Act. Costs are
first billed directly whenever practicable, including instances when
more than one associate company is receiving the same goods or service
at the same time. Amounts that cannot be directly assigned will be
allocated to client companies by means of equitable allocation
formulae, which to the extent possible will be based on cost-causation
relationships. All other allocations will be broad based. In some
instances, each of the Service Companies' cost centers that perform
work for other service company cost centers may use a surrogate
allocation method that mimics the allocations of the receiver cost
center. Each formula will have an appropriate basis, such as meters and
square footage.
Allocation percentages will be calculated on historical data where
appropriate and updated annually.\4\ The method of assignment or
allocation of costs shall be reviewed annually or more frequently if
appropriate. If the use of a basis of allocation would result in an
inequity because of a change in operation or organization, then the
Service Companies may adjust the basis to effect an equitable
distribution.
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\4\ Due to the unique nature of KeySpan's relationship with the
Long Island Power Authority (``LIPA''), the revenues and assets
managed on its behalf will be included in the basis, with the
appropriate client company's data, in order to determine appropriate
allocations. KeySpan Electric Services LLC provides to LIPA all
operation, maintenance and construction services and significant
administrative services relating to the Long Island electric
transmission and distribution system, supplies LIPA with generating
capacity, energy conversion and ancillary services, and manages all
aspects of the fuel supply for KeySpan's generating facilities, as
well as all aspects of the capacity and energy owned by or under
contract to LIPA. KeySpan Electric Services LLC also purchases
energy, capacity and ancillary services in the open market on LIPA's
behalf.
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Applicants state that the cost of service will be determined in
[[Page 30981]]
accordance with the Act and will include all costs of doing business
incurred by the Service Companies, including a reasonable return on
capital which will reflect a capitalization of the Service Companies of
no more than ten percent equity, and all associated taxes.
Applicant's state that each Service Company will maintain an
accounting system for accumulating all costs on a project, activity or
other appropriate basis. Expenses for the department will include
salaries and wages of employees, materials, and supplies and all other
expenses attributable to the department. Labor costs will be loaded for
fringe benefits and payroll taxes. Time records of hours worked by all
Service Company employees, including all officers of the company (i.e.,
Chief Executive Officer, President and Vice Presidents) will be kept by
project and activity.
Each client company will take agreed upon services and such
additional, general, or special services as the client company may
request and which the particular Service Company concludes it is able
to perform. No amendment, alteration or rescission of an activity or
project shall release a client company from liability for all costs
already incurred by, or contracted for, the applicable Service Company
pursuant to the project or activity regardless of whether the services
associated with the costs have been completed.
Applicants state that each of the Service Companies' accounting and
cost allocation methods and procedures have been structured so as to
comply with the ``Uniform System of Accounts for Mutual Service
Companies'' established by the Commission for holding company systems.
Moreover, each of the Service Companies will file the annual report
required by the Commission pursuant to rule 94 under the Act.
Applicants represent that no change in the organization of a
Service Company, the type and character of the companies to be
serviced, the methods of allocating cost to associate companies or the
scope or character of the services to be rendered subject to section 13
of the Act, or any rule, regulation, or order thereunder, shall be made
until the Service Company shall first have given the Commission notice
of the proposed change not less than 60 days prior to the proposed
effectiveness. If, upon the receipt of a notice, the Commission shall
notify the Service Company within the 60 day period that a question
exists as to whether the proposed change is consistent with the
provisions of section 13 of the Act, or of any rule, regulation, or
order thereunder, then the proposed change shall not become effective
unless and until the Service Company shall have filed with the
Commission an appropriate declaration regarding the proposed change and
the Commission shall have permitted the declaration to become
effective.
D. Reservation of Jurisdiction Over the Use of KCS and KUS as Separate
Service Companies Pending Dissolution of KUS
Applicants state that in 1998, as a condition of the NYPSC's
approval of the formation of KeySpan as utility holding company, the
NYPSC required KeySpan to form KCS and KUS in order to provide the
services noted above. Applicants now request that the Commission
continue to reserve jurisdiction over the use of KCS and KUS as
separate service companies pending and subject to approval by the
NYPSC, upon KeySpan's petition, to eliminate the need to utilize KUS as
a separate service company. KeySpan proposes to petition the NYPSC to
allow Applicants to eliminate the need to utilize KUS as a separate
service company. The petition will generally request authorization to
utilize KCS as the single service company that would provide to the
entire KeySpan system both corporate administrative services as well as
gas marketing, gas supply, gas and electric distribution planning,
meter repair operations, and all other services currently being
provided by KUS and KCS. Key Span proposes to file this NYPSC petition
on or before December 31, 2005 and anticipates that the NYPSC will act
on this petition on or before December 31, 2006.
For the Commission, by the Division of Investment Management,
under delegated authority.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5-2725 Filed 5-27-05; 8:45 am]
BILLING CODE 8010-01-P