Filings Under the Public Utility Holding Company Act of 1935, as Amended (“Act”), 33539-33562 [E5-2934]

Agencies

• SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 70, Number 109 (Wednesday, June 8, 2005)]
[Notices]
[Pages 33539-33562]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-2934]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27981]


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

June 2, 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 27, 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 27, 2005, the application(s) and/or 
declaration(s), as filed or as amended, may be granted and/or permitted 
to become effective.

American Transmission Company LLC, et al. (70-10302)

    American Transmission Company LLC (``ATC LLC''), an electric 
transmission public-utility company under the Act, ATC Management Inc. 
(``ATCMI''), a public-utility company and a public-utility holding 
company exempt from registration under section 3(a)(1) of the Act by 
rule 2, both located at N19 W23993 Ridgeview Parkway West, Waukesha, WI 
53188, and Alliant Energy Corporation (``Alliant''), a registered 
public-utility holding company and an indirect, partial owner of ATC 
LLC and ATCMI, located at 4902 N. Biltmore Lane, Madison, WI 53707 (ATC 
LLC and ATCMI together, ``Applicants''), have filed an application-
declaration, as amended (``Application''), with the Commission under 
sections 6(a), 7, 9(a), 10 and 12(b) of the Act and rule 54.
    Applicants seek authority to enter into financing and certain 
related transactions for the period beginning with an order in this 
matter through June 30, 2008 (``Authorization Period'').

I. Background and Summary of the Request

    ATC LLC is an electric transmission company, organized as limited 
liability company under Wisconsin law, with its sole purpose to plan, 
construct, operate, maintain and expand transmission facilities, to 
provide adequate and reliable transmission services and to support 
effective competition in energy markets. ATC LLC was formed after the 
State of Wisconsin enacted legislation in 1999, encouraging, among 
other things, formation of for-profit transmission companies (``Transco 
Legislation'').\1\
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    \1\ Applicants current financing authorization was received by 
order dated July 1, 2004 (``2004 Omnibus Financing Order''), 
American Transmission Company, et al., Holding Co. Act Release No. 
27871. Applicants received certain additional financing authority by 
order dated April 11, 2005. American Transmission Company, et al., 
Holding Co. Act Release No. 27958.
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    ATC LLC is operated and managed by ATCMI, a Wisconsin corporation 
that also owns a nominal interest in ATC LLC.\2\ A total of 28 
investor-owned and cooperative systems contributed some combinations of 
transmission assets or cash in the process of forming ATC LLC.\3\
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    \2\ ATC LLC, as a Wisconsin limited liability company, may elect 
to be ``member-managed'' or ``manager-managed'' and ATC LLC elected 
to be managed by ATCMI. Applicants state that ATCMI is structured as 
a corporation, rather than a limited liability company, to 
facilitate access to the public markets, including any potential 
public offering of ATCMI.
    \3\ See also Alliant Energy Corp., note 2 above. One of the 
initial members was Alliant (through its subsidiaries Wisconsin 
Power and Light Company (``WPL'') and South Beloit Water, Gas and 
Electric Company (``South Beloit''). WPL and South Beloit are both 
subsidiary companies of Alliant. WPL contributed transmission assets 
to ATC LLC, but member units were issued for the assets to WPL's 
subsidiary, WPL Transco LLC. Applicants state that neither ATC LLC 
nor ATCMI are wholly owned subsidiaries of Alliant; they are only 
partially owned by Alliant. There are a number of other equity 
investors that each hold over 10% of ATC LLC. Applicants state, in 
addition, Alliant owns 20% of the voting securities of ATCMI. 
Applicants state that they finance on their own balance sheets 
without credit support from Alliant or any upstream owners and they 
maintain an arm's length relationship with Alliant. They also state 
that all information regarding Alliant in this Application comes 
from Alliant's public filings.
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    Applicants propose, generally, to enter into the following 
financing transactions through the Authorization Period: \4\
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    \4\ See generally, Alliant Energy Corporation, et al., Holding 
Co. Act Release No. 27331 (Dec. 29, 2000). Applicants state that ATC 
LLC is obliged, under the Transco Legislation, to construct, 
operate, maintain and expand its transmission facilities to provide 
adequate, reliable transmission service under an open-access 
transmission tariff. Applicants state that, effective February 1, 
2002, ATC LLC transferred operational control of its facilities to 
the Midwest Independent Transmission System Operator, Inc.
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    (i) For ATC LLC, to issue unsecured short-term debt securities and 
secured and unsecured long-term debt securities in an aggregate amount 
of up to $1.6 billion at any one time outstanding during the 
Authorization Period;
    (ii) For ATC LLC, to issue member interests and, for ATCMI, to 
issue certain equity interests and preferred securities in an aggregate 
amount of up to $1.4 billion at any one time outstanding during the 
Authorization Period; \5\
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    \5\ Applicants state that, as of March 31, 2005, approximately 
$555.5 million of member interests and Class A and Class B Shares 
were outstanding.
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    (iii) For ATC LLC and ATCMI, to provide guarantees and other credit 
support in an aggregate amount not to exceed $200 million outstanding 
at any one time during the Authorization Period;
    (iv) For ATC LLC and ATCMI, to enter into various interest rate 
hedging transactions; and
    (v) For ATC LLC and ATCMI, to undertake transactions to extend the 
terms of or replace, refund or refinance existing obligations, as well 
as the issuance of new obligations in exchange for existing 
obligations, subject to the limits, terms and conditions that will be 
contained in the proposed authorization.

II. The Requested Authority

A. Financing Parameters
    Applicants state that they propose that proceeds from the sale of 
securities in external financing transactions will

[[Page 33540]]

be used for general corporate purposes including (i) The financing of 
capital expenditures of ATC LLC and ATCMI; (ii) the financing of 
working capital requirements of ATC LLC and ATCMI; (iii) the 
refinancing or acquisition, retirement or redemption of securities 
previously issued by ATC LLC or ATCMI; (iv) to meet unexpected 
contingencies, payment and timing differences, and cash requirements; 
and (v) other lawful purposes.
    Applicants also propose that the requested authorizations will be 
subject to the following restrictions, among other things: (i) The 
maturity, of short-term debt, will not exceed 364 days and, of long-
term debt, will not exceed fifty years; (ii) any short-or long-term 
debt security or credit facility issued will have the designation, 
aggregate principal amount, interest rate(s) (or methods of determining 
interest rates), terms of payment of interest, collateral, redemption 
provisions, non-refunding provisions, sinking fund terms, conversion or 
put terms, and other terms and conditions as Applicants might determine 
at the time of issuance, provided that, in no event, however, will (i) 
the effective cost of money on short-term debt exceed 300 basis points 
over the London Interbank Offered Rate for maturities of one year or 
less in effect at the time; or (ii) the interest rate on long-term debt 
exceed 500 basis points over the yield-to-maturity of a U.S. Treasury 
security having a remaining term approximately equal to the average 
life of the debt; and (iii) the underwriting fees, commissions or other 
similar remuneration paid in connection with the non-competitive issue, 
sale or distribution, of securities under this Application will not 
exceed 7% of the principal or total amount of the securities being 
issued.
    Applicants also represent that ATCMI and ATC LLC each will maintain 
common equity of at least 30% of its consolidated capitalization 
(common equity, preferred stock, long-term and short-term debt). 
Applicants further represent that, other than Class A and Class B 
Shares and Member Interests, no security may be issued in reliance upon 
the requested order, unless: (i) The security to be issued, if rated, 
is rated investment grade; (ii) all outstanding rated securities of the 
issuer are rated investment grade; and (iii) all outstanding rated 
securities of ATCMI are rated investment grade. Applicants state that 
they will notify the Commission within five (5) business days of 
becoming aware of any downgrade in the securities of any registered 
holding company in the Alliant system and that the notice shall include 
a statement of whether the downgrade will affect Applicants' access to 
capital markets.\6\ For purposes of this condition, a security will be 
considered rated investment grade if it is rated investment grade 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 Securities Exchange Act of 1934. Applicants request 
that the Commission reserve jurisdiction over the issuance by them of 
any securities that are rated below investment grade. Applicants 
further request that the Commission reserve jurisdiction over the 
issuance of any guarantee or other securities at any time that the 
conditions set forth in clauses (i) through (iii) above are not 
satisfied.
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    \6\ Applicants note that the 30% common equity requirement and 
other financial conditions applicable to the Alliant system 
generally are contained in Alliant Energy Corp., et al., Holding Co. 
Act Release No. 27930 (Dec. 28, 2004). See also note 4 above.
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    Applicants also state that any convertible or equity-linked 
security they issue will be convertible into, or linked, only to 
securities that ATC LLC and ATCMI are otherwise authorized to issue, by 
rule or Commission order, and the amount of the securities will be 
counted against the authorized limits for securities obtained by this 
request.
B. The Proposed Transactions
    Applicants request, in addition to the transactions described 
specifically below, that they be authorized to undertake transactions 
to extend the terms of, or replace, refund or refinance existing 
obligations, as well as the issuance of new obligations in exchange for 
existing obligations, subject to the limits, terms and conditions that 
will be contained in the proposed authorization, during the 
Authorization Period.\7\
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    \7\ See note 1 above. Applicants were authorized, generally, to 
engage in the following transactions through June 30, 2005: (i) ATC 
LLC, to issue debt securities in an aggregate amount not to exceed 
$710 million at any one time outstanding, provided that the 
aggregate amount of short-term debt issued not exceed $200 million; 
(ii) ATC LLC, to issue Member Interests and, ATCMI, to issue equity 
interests and preferred securities in an aggregate amount of $500 
million at any one time outstanding, provided that the aggregate 
amount of Member Interests and Class A and Class B shares 
outstanding at any one time not exceed $393 million plus the value 
at that time of the Member Interests and Class A and Class B Shares 
outstanding as of the date of the 2004 Omnibus Financing Order; 
(iii) ATC LLC and ATCMI, to provide guarantees and other credit 
support in an aggregate amount not to exceed $125 million 
outstanding at any one time; (iv) ATC LLC and ATCMI, to enter into 
various interest rate hedging transactions; (v) ATC LLC and ATCMI, 
to undertake transactions to extend the terms of, or replace, refund 
or refinance, existing obligations, as well as the issuance of new 
obligations in exchange for existing obligations; and (vii) by order 
dated April 11, 2005, ATC LLC, $100 million in additional long-term 
financing authority, to issue debt securities in an aggregate amount 
not to exceed $810 million at any one time outstanding, provided 
that the aggregate amount of short-term debt issued not exceed $200 
million at any one time outstanding.
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B.1. Short- and Long-Term Debt Securities
    Applicants request that they be authorized to issue long- and 
short-term debt securities in an aggregate amount of up to $1.6 billion 
at any one time outstanding during the Authorization Period. 
Specifically, Applicants request that ATC LLC be authorized to issue 
unsecured short-term debt and that it include institutional borrowings, 
commercial paper and privately placed notes and that ATC LLC be 
authorized to sell commercial paper or privately placed notes 
(``commercial paper''), from time to time, in established commercial 
paper markets.\8\ Applicants also ask that ATC LLC be permitted to, 
without counting against the proposed limit, maintain back up lines of 
credit in connection with one or more commercial paper programs.\9\
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    \8\ Applicants state that the commercial paper may be sold at a 
discount or bear interest at a rate per annum prevailing at the date 
of issuance for commercial paper of a similarly situated company.
    \9\ Applicants propose that the credit lines will not be counted 
against the financing limit, that they may be utilized to obtain 
letters of credit or may be borrowed against, from time to time, as 
they deem appropriate or necessary.
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    Applicants request that ATC LLC be authorized to issue secured or 
unsecured long-term debt securities, including notes or debentures 
under one or more indentures, or long-term indebtedness under 
agreements with banks or other institutional lenders, directly or 
indirectly. In addition, Applicants request that ATC LLC be authorized 
to issue long-term debt that is convertible or exchangeable into forms 
of equity or indebtedness, or into other securities or assets.\10\
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    \10\ Applicants state that specific terms of any borrowings will 
be determined by ATCMI at the time of issuance and will comply in 
all regards with the general parameters set forth in above.
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B.2. Equity Interests
    Applicants also request authority, for ATC LLC, to issue Member 
Interests \11\ and, for ATCMI, to issue Class A and B Shares in an 
aggregate amount of up to of $1.4 billion at any one time outstanding 
during the Authorization Period. Applicants request, in addition,

[[Page 33541]]

that ATCMI be authorized to issue, to each new member of ATC LLC, Class 
A Shares in an amount that is proportional to that member's interest in 
ATC LLC.\12\ ATCMI also seeks authority to issue preferred stock or 
other types of preferred securities (including convertible preferred 
securities).\13\
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    \11\ Applicants request that Member Interests be permitted in 
the form of member interests, preferred member interests or 
convertible member interests and that ATC LLC be permitted to issue 
Member Interests in exchange for cash or transfer of transmission 
facilities to ATC LLC by current or future members or to purchase 
facilities from members or others.
    \12\ Applicants anticipate that facilities purchased would be 
financed through the issuance of new debt and equity and that equity 
required for these purchases may be received from existing or new 
members.
    \13\ Applicants state that preferred stock or other types of 
preferred securities may be issued in one or more series with 
rights, preferences and priorities as may be designated in the 
instrument creating each series, as determined by ATCMI. In 
addition, the preferred securities may be redeemable or may be 
perpetual in duration. Applicants also state, among other things, 
that dividends or distributions on preferred securities will be made 
periodically and to the extent funds are legally available for such 
purpose, but may be made subject to terms which allow Applicants to 
defer dividend payments for specified periods, and that preferred 
securities may be convertible into forms of equity or debt, or into 
other securities or assets, with the dividend rate on any series of 
preferred securities not exceeding 500 basis points over the yield 
to maturity of a U.S. Treasury security having a remaining term 
equal to the term of that series of preferred securities at the time 
of issuance.
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B.3. Guarantees
    Applicants request authorization to enter into guarantees, obtain 
letters of credit, enter into expense agreements, or otherwise provide 
credit support, of the obligations of their affiliates or members in 
the ordinary course of business, in an amount not to exceed $200 
million outstanding at any one time during the Authorization 
Period.\14\ Applicants state, as an example, guarantees may be given, 
for generation or distribution interconnections, to bolster third party 
financing for equipment that Applicants would ultimately own under an 
interconnection agreement or for distribution customers for purchase 
and installation of equipment attaching to the distribution system that 
would enhance operation of the transmission grid. Applicants also state 
that they would not make any upstream guarantees to Alliant or its 
subsidiary companies.
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    \14\ Applicants state that certain of the guarantees may be for 
obligations not capable of exact quantification and that, in these 
cases, they will determine the exposure of the guarantee by 
appropriate means including estimations based on loss experience or 
projected potential payment amounts and in accordance with U.S. 
generally accepted accounting principles (``U.S. GAAP'') and/or 
sound financial practices and reevaluated periodically.
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B.4. Interest Rate Hedging Transactions
    Applicants also seek authority to enter into interest rate hedging 
transactions with respect to existing indebtedness (``Interest Rate 
Hedges''),\15\ subject to certain limitations and restrictions, in 
order to reduce or manage interest rate cost. Applicants state that 
Interest Rate Hedges will 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, or Fitch (``Approved 
Counterparties''). Applicants state that the transactions will be for 
fixed periods and stated notional amounts and that fees, commissions 
and other amounts payable to the counterparty or exchange, as 
applicable (excluding, however, the swap or option payments). in 
connection with an Interest Rate Hedge will not exceed those generally 
obtainable in competitive markets for parties of comparable credit 
quality.
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    \15\ Applicants state that the Interest Rate Hedges will involve 
the use of financial instruments commonly used in today's capital 
markets, such as interest rate swaps, caps, collars, floors, and 
structured notes (i.e., a debt instrument in which the principal 
and/or interest payments are indirectly linked to the value of an 
underlying asset or index), or transactions involving the purchase 
or sale, including short sales, of U.S. Treasury obligations.
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    Applicants also seek authority to enter into interest rate hedging 
transactions with respect to anticipated debt offerings (``Anticipatory 
Hedges''), subject to certain limitations and restrictions. Applicants 
state that Anticipatory Hedges will only be entered into with Approved 
Counterparties and will be utilized to fix and/or limit the interest 
rate risk associated with any new issuance.\16\
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    \16\ Applicants state that Anticpatory Hedges will be entered 
into through (i) a forward sale of exchange-traded U.S. Treasury 
futures contracts, U.S. Treasury obligations and/or a forward swap 
(each, ``Forward Sale''), (ii) the purchase of put options on U.S. 
Treasury obligations (``Put Options Purchase''), (iii) a Put Options 
Purchase in combination with the sale of call options on U.S. 
Treasury obligations (``Zero Cost Collar''), (iv) transactions 
involving the purchase or sale, including short sales, of U.S. 
Treasury obligations, or (v) some combination of a Forward Sale, Put 
Options Purchase, Zero Cost Collar and/or other derivative or cash 
transactions, including, but not limited to, structured notes, caps 
and collars, appropriate for the Anticipatory Hedges.
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    Applicants state that they will comply with Statement of Financial 
Accounting Standard (``SFAS'') 133 (Accounting for Derivative 
Instruments and Hedging Activities) and SFAS 138 (Accounting for 
Certain Derivative Instruments and Certain Hedging Activities) or other 
standards relating to accounting for derivative transactions as are 
adopted and implemented by the Financial Accounting Standards Board. 
Applicants also state that they will comply with existing and future 
financial disclosure requirements of the Financial Accounting Standards 
Board associated with hedging transactions and that these hedging 
transactions will qualify for hedge accounting treatment under U.S. 
GAAP. Applicants further state that they will not engage in speculative 
transactions; that all transactions in financial instruments and 
products will be matched to an underlying business requirement; and, 
that in no case will the notional principal amount of any hedging 
instrument exceed that of the underlying instrument and related 
interest rate exposure.

Exelon Corporation, et al. (70-10296)

    Exelon Corporation, a Pennsylvania Corporation (``Exelon''), Exelon 
Ventures Company (``Ventures''), Exelon Enterprises Company, LLC 
(``Enterprises''), Exelon Generation Company, LLC (``Exelon 
Generation'') and Exelon Energy Delivery Company, LLC (``Delivery''), 
each located at 10 South Dearborn Street, 37th Floor, Chicago, Illinois 
60603 filed an application-declaration (``Application'') under sections 
6, 7, 9, 10, 11, 12, 13 32, 33 and 34 of the Act and rules 42, 43, 52, 
53, 54, 58, 90 and 91 under the Act.
    Exelon and its Subsidiaries (as defined below) seek authority to 
continue to undertake activities related to Exelon's otherwise 
permitted investments including in exempt wholesale generators 
(``EWGs''), foreign utility companies (``FUCOs''), exempt 
telecommunications companies (``ETCs''), investments permitted under 
rule 58 (``Rule 58 Subsidiaries'') and investments in businesses 
engaged in energy related activities (``Non-U.S. Energy Related 
Subsidiaries'') that, but for being conducted outside the United 
States, would constitute rule 58 exempt activities.\17\
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    \17\ On December 20, 2004, Exelon announced a proposed merger 
with Public Service Enterprise Group Incorporated (``PSEG''). Exelon 
filed on March 15, 2005 for Commission approval of that transaction 
in File No. 70-10294. Contingent on the Commission's approval and 
the closing of the transaction, PSEG's only public utility company, 
Public Service Electric and Gas Company (``PSE&G'') will be 
considered a ``Utility Subsidiary'' for purposes of this 
Application. Each of PSEG's non-utility subsidiaries will constitute 
a Non-Utility Subsidiary. Permitted Non-Utility Investments will 
include those investments authorized to be retained in the Exelon/
PSEG merger order, subject to any further orders of the Commission 
to the contrary. (``Utility Subsidiary'', ``Non-Utility 
Subsidiary'', and ``Permitted Non-Utility Investments'' are defined 
below.)
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    Investments in EWGs, FUCOs, ETCs and Rule 58 Subsidiaries are 
permitted pursuant to the terms of the Act and rules 53 and 58. No 
authorization is

[[Page 33542]]

sought in the Application for investments in these entities in excess 
of what is authorized by statute or rule or existing Commission order 
applicable to Exelon. As described below, the Application seeks 
approval to continue to make investments in Non-U.S. Energy Related 
Subsidiaries through June 30, 2008 (``Authorization Period''). These 
permitted investments in EWGs, FUCOs, ETCs, Rule 58 Subsidiaries and 
(assuming continued Commission approval) Non-U.S. Energy Related 
Subsidiaries (whether existing on the date of the Application acquired 
after the date of the Application) are collectively referred to as 
``Permitted Non-Utility Investments.'' \18\
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    \18\ ``Permitted Non-Utility Investments'' also includes those 
Non-Utility Subsidiaries that Exelon currently owns, those approved 
for retention by Holding Co. Act Release No. 27256 (Oct. 19, 2000) 
at the time Exelon became a registered holding company and Non-
Utility Subsidiaries acquired later.
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    Exelon has four operating public utility company subsidiaries 
(``Utility Subsidiaries''): \19\
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    \19\ On April 1, 2004, the Commission issued an order 
authorizing among other things, de-registration of Exelon Generation 
and PECO Energy Power Company (PEPCO) under Section 5(d) of the Act. 
The order states that PEPCO, previously an electric utility company 
and a registered holding company, along with its public utility 
subsidiary Susquehanna Power Company and Exelon Generation's public 
utility subsidiary, Susquehanna Electric Company were converted into 
EWGs. As a result, Exelon Generation and PEPCO no longer have any 
public utility company subsidiaries as of March 22, 2004. See Exelon 
Corporation, et al., Holding Co. Act Release No. 35-27830 (April 1, 
2004).
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     PECO Energy Company (``PECO''), a Pennsylvania corporation 
and a public utility company engaged (i) in the transmission, 
distribution and sale of electricity and (ii) in the purchase and sale 
of natural gas in Pennsylvania;
     Commonwealth Edison Company (``ComEd''), an Illinois 
corporation and a public utility company engaged in the transmission, 
distribution and sale of electricity in Illinois;
     Exelon Generation, a Pennsylvania limited liability 
company and a public utility company engaged in the generation and sale 
of electricity in Pennsylvania, Illinois and elsewhere and also engaged 
in electricity and energy commodities marketing and brokering 
activities and development and ownership of EWGs; and
     Commonwealth Edison Company of Indiana (``ComEd 
Indiana''), an Indiana corporation that owns certain transmission 
facilities in Indiana. ComEd Indiana has no retail customers and only 
provides wholesale transmission services.\20\
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    \20\ Exelon does not currently own any FUCOs. Exelon Generation 
may also invest in Rule 58 Subsidiaries and Non-U.S. Energy Related 
Subsidiaries.
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    Exelon and its Subsidiaries request authority to engage, directly 
or through subsidiaries (``Subsidiaries'') \21\ in the following 
general matters through the Authorization Period, all more specifically 
described below: (i) To expend $500 million directly or through Non-
Utility Subsidiaries and Exelon Generation on preliminary development 
activities (``Development Activities'') and administrative and 
management activities (``Administrative Activities'') in each case 
relating to Permitted Non-Utility Investments, (ii) to invest directly 
or through Non-Utility Subsidiaries and Exelon Generation up to $500 
million to construct and acquire energy assets (``Energy Assets'') that 
are incidental and related to the business of an electricity and energy 
commodities marketer and broker, (iii) to acquire directly or through 
Subsidiaries the securities of one or more corporations, trusts, 
partnerships, limited liability companies or entities (``Intermediate 
Subsidiaries'') which would be created and organized exclusively for 
the purpose of acquiring, holding, and/or financing or facilitating the 
acquisition of Permitted Non-Utility Investments, (iv) to undertake 
internal reorganizations of then existing and permitted Subsidiaries 
and businesses, for example by moving a Permitted Non Utility 
Subsidiary to be a subsidiary of a different parent, and (v) to engage 
though Non-Utility Subsidiaries and Exelon Generation in energy related 
activities that, but for being conducted outside the United States, 
would constitute rule 58 exempt activities. No authority is sought in 
the Application for additional financing authority.
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    \21\ Exelon states that for purpose of the Application the term 
``Subsidiaries'' shall also include other direct or indirect 
subsidiaries that Exelon may form or acquire after the date of the 
filing of the Application with the approval of the Commission, 
pursuant to the rule 58 exemption or pursuant to sections 32, 33, or 
34 of the Act or, to the extent approved in an order in this docket, 
as Non-U.S. Energy Related Subsidiaries.
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    In connection with existing and future Permitted Non-Utility 
Investments, Exelon requests authority to engage directly and through 
Non-Utility Subsidiaries and Exelon Generation in Development 
Activities and Administrative Activities associated with such 
investments. Intermediate Subsidiaries may also engage in Development 
Activities and Administrative Activities. Development Activities and 
Administrative Activities include preliminary activities designed to 
result in a Permitted Non-Utility Investment such as an EWG or FUCO; 
however, such preliminary activities may not qualify for such status 
until the project is more fully developed. Development Activities and 
Administrative Activities will be provided ``at cost'' in accordance 
with section 13(b) and rules 90 and 91 under the Act.
    Development Activities will include due diligence and design 
review; market studies; preliminary engineering; site inspection; 
preparation of bid proposals, including, in connection with those 
activities, 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 third-party investors; and such other 
preliminary activities as may be required in connection with the 
purchase, acquisition, financing or construction of facilities or the 
securities of other companies. Development Activities will be designed 
to eventually result in a Permitted Non-Utility Investment.
    Exelon proposes to expend directly or through Non-Utility 
Subsidiaries and Exelon Generation up to $500 million in the aggregate 
outstanding at any time during the Authorization Period on all such 
Development Activities.\22\ Exelon proposes the continued use of a 
``revolving fund'' concept for permitted Development Activities. To the 
extent a Subsidiary for which such amounts were expended for 
Development Activities becomes an EWG, FUCO, Rule 58 Subsidiary or Non-
U.S. Energy Related Subsidiary, the amount so expended will cease to be 
Development Activities and then be considered as part of the 
``aggregate investment'' in such entity and will then count against the 
limitation on such aggregate investment under rules 53 or 58, as 
modified by Commission order applicable to Exelon.
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    \22\ Expenditures in EWGs, FUCOs, Rule 58 Subsidiaries and Non-
U.S. Energy Related Subsidiaries which count against the ``aggregate 
investment'' limitation of rule 53 or rule 58, as modified by 
Commission orders applicable to Exelon, will not count against the 
$500 million limitation. Under section 34 of the Act, there is no 
limitation on the amount Exelon may invest in ETCs.
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    According to Exelon, the approval sought in the Application will 
not increase the authorized amount of aggregate investment in EWGs and 
FUCOs permitted in the Commission order dated April 1, 2004 (Holding 
Co.

[[Page 33543]]

Act Release No. 27830) or increase the permitted aggregate investment 
authorized under rule 58.
    Exelon requests authority to expend directly or through its Non-
Utility Subsidiaries and Exelon Generation up to $500 million to 
construct or acquire Energy Assets that are incidental and related to 
its business as an electricity and energy commodities marketer and 
broker, or to acquire the securities of one or more existing or new 
companies substantially all of whose physical properties consist or 
will consist of Energy Assets; provided that the acquisition and 
ownership of such Energy Assets would not cause any Subsidiary to be or 
become an ``electric utility company'' or ``gas utility company,'' as 
defined in sections 2(a)(3) and 2(a)(4) of the Act. Energy Assets will 
not constitute additional investments in EWGs or FUCOs.
    Exelon proposes to create and acquire directly or indirectly 
through Subsidiaries the securities of one or more Intermediate 
Subsidiaries. Intermediate Subsidiaries may be corporations, trusts, 
partnerships, limited liability companies or other entities. 
Intermediate Subsidiaries will be organized exclusively for the purpose 
of acquiring and holding the securities of, or financing or 
facilitating Exelon's investments in, other direct or indirect 
Permitted Non-Utility Investments. Intermediate Subsidiaries that are 
subsidiaries of Non-Utility Subsidiaries or Exelon Generation may also 
engage in Development Activities and Administrative Activities.
    Exelon and its Subsidiaries state that there are several legal and 
business reasons for the use of Intermediate Subsidiaries in connection 
with making investments in Permitted Non-Utility Investments. For 
example, the formation and acquisition of limited purpose subsidiaries 
is often necessary or desirable to facilitate financing the acquisition 
and ownership of a FUCO, an EWG or another non-utility enterprise. 
Furthermore, the laws of some foreign countries may require that the 
bidder in a privatization program be organized in that country. In such 
cases, it would be necessary to form a foreign Non-Utility Subsidiary 
as the entity (or participant in the entity) that submits the bid or 
other proposal. In addition, the interposition of one or more 
Intermediate Subsidiaries may allow Exelon to defer the repatriation of 
foreign source income, or to take full advantage of favorable tax 
treaties among foreign countries, or otherwise to secure favorable U.S. 
and foreign tax treatment that would not otherwise be available. In 
particular, use of Intermediate Subsidiaries can achieve tax efficient 
corporate structures which will result in minimizing state or federal 
taxes for Exelon or its Subsidiaries.
    Exelon and its Subsidiaries propose that an Intermediate Subsidiary 
may be organized, among other things: (1) In order to facilitate the 
making of bids or proposals to develop or acquire an interest in any 
EWG, FUCO, ETC, or other non-utility company which, upon acquisition, 
would qualify as a Rule 58 Subsidiary or Non-U.S. Energy Related 
Subsidiary; (2) after the award of such a bid proposal, in order to 
facilitate closing on the purchase or financing of such acquired 
company; (3) at any time subsequent to the consummation of an 
acquisition of an interest in any such company in order, among other 
things, to effect an adjustment in the respective ownership interests 
in such business held by the Exelon System and non-affiliated 
investors; (4) to facilitate the sale of ownership interests in one or 
more acquired Permitted Non-Utility Investments; (5) to comply with 
applicable laws of foreign jurisdictions limiting or otherwise relating 
to the ownership of domestic companies by foreign nationals; (6) as a 
part of tax planning in order to limit Exelon's exposure to U.S. and 
foreign taxes; (7) to further insulate Exelon and the Utility 
Subsidiaries from operational or other business risks that may be 
associated with investments in non-utility companies; or (8) for other 
lawful business purposes.
    Exelon and its Subsidiaries further state that investments in 
Intermediate Subsidiaries may take the form of any combination of the 
following: (1) Purchases of capital shares, partnership interests, 
member interests in limited liability companies, trust certificates or 
other forms of voting or non-voting equity interests; (2) capital 
contributions; (3) open account advances without interest; (4) loans; 
and (5) guarantees issued, provided or arranged in respect of the 
securities or other obligations of any Intermediate Subsidiaries.
    Funds for any direct or indirect investment in any Intermediate 
Subsidiary will be derived from Exelon's available funds. No authority 
is sought for additional financing authority.
    To the extent that Exelon provides funds directly or indirectly to 
an Intermediate Subsidiary which are used for the purpose of making an 
investment in any EWG or FUCO or a Rule 58 Subsidiary or Non-U.S. 
Energy Related Subsidiary, the amount of such funds will be included in 
Exelon's ``aggregate investment'' in such entities, as calculated in 
accordance with rule 53 or rule 58, as applicable and as modified by 
Commission order applicable to Exelon.
    The authority requested for Intermediate Subsidiaries is intended 
to allow for the corporate structuring alternatives outlined above and 
will not allow any increase in aggregate investment in EWGs, FUCOs, 
Rule 58 Subsidiaries, approved Non-U.S. Energy Related Subsidiaries or 
any other business subject to an investment limitation under the Act.
    Exelon currently engages directly or through Subsidiaries in 
certain non-utility businesses. Exelon seeks authority to engage in 
internal corporate reorganizations to better organize its current and 
future Non-Utility Subsidiaries and investments.
    Exelon and Subsidiaries request authority, to the extent needed, to 
sell or to cause any Subsidiary to sell or otherwise transfer (i) such 
businesses, (ii) the securities of current Subsidiaries engaged in some 
or all of these businesses or (iii) investments which do not involve a 
Subsidiary (i.e. less than 10% voting interest) to a different 
Subsidiary, and, to the extent approval is required, Exelon requests, 
on behalf of the Subsidiaries, authority to acquire the assets of such 
businesses, Subsidiaries or other then existing investment interests. 
Alternatively, transfers of such securities or assets may be affected 
by share exchanges, share distributions, dissolutions or dividends 
followed by contribution of such securities or assets to the receiving 
entity. In the future, Exelon may determine to transfer securities or 
the assets of Non-Utility Subsidiaries to other Subsidiaries as 
described in the preceding sentence. Exelon may also liquidate or 
dissolve Non-Utility Subsidiaries or merge a Non-Utility Subsidiary 
into any other Subsidiary.
    According to Exelon and its Subsidiaries, such internal 
transactions would be undertaken in order to eliminate corporate 
complexities, to combine related business segments for staffing and 
management purposes, to eliminate administrative costs, to achieve tax 
savings, or for other ordinary and necessary business purposes. Exelon 
requests authority to engage in such transactions, to the extent that 
they are not exempt under the Act and rules under the Act, through the 
Authorization Period.
    Exelon and its Subsidiaries state that the transactions proposed 
under this heading will not involve the sale or other disposition of 
any utility assets of the Utility Subsidiaries and will not involve any 
change in the corporate

[[Page 33544]]

ownership, or involve any restructuring of, the Utility Subsidiaries. 
The approval sought does not extend to the acquisitions of any new 
businesses or activities.
    Exelon requests authority to acquire directly or indirectly Non-
U.S. Energy Related Subsidiaries. Exelon believes the following list of 
energy related activities are substantially identical to activities 
that have been approved for other registered holding companies outside 
the United States. Approval is sought for Non-U.S. Energy Related 
Subsidiaries to engage in sales of the following goods and services 
outside the United States:
     Energy Management Services. Energy management services, 
including the marketing, sale, installation, operation and maintenance 
of various products and services related to energy management and 
demand-side management, including energy and efficiency audits; meter 
data management, 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, 
operation and maintenance of new and retrofit heating, ventilating, and 
air conditioning (``HVAC''), electrical and power systems, alarm, 
security, access control and warning systems, motors, pumps, lighting, 
water, water-purification and plumbing systems, building automation and 
temperature controls, installation and maintenance of refrigeration 
systems, building infrastructure wiring supporting voice, video, data 
and controls networks, environmental monitoring and control, 
ventilation system calibration and maintenance, piping and fire 
protection systems, and design, sale, engineering, installation, 
operation and maintenance of emergency or distributed power generation 
systems, and related structures, in connection with energy-related 
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.
     Consulting Services. Consulting services with respect to 
energy- and gas-related matters for associate and nonassociate 
companies, as well as for individuals. Such consulting services would 
include technical and consulting services involving 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 or centralized billing, bill disaggregation 
tools and bill inserts), risk management services, communications 
systems, information systems/data processing, system planning, 
strategic planning, finance, general management consulting including 
training activities, feasibility studies, and other similar related 
services.
     Energy Marketing. The brokering and marketing of 
electricity, natural gas and other energy commodities, as well as 
providing incidental related services, such as fuel management, storage 
and procurement.
    Exelon and its Subsidiaries state that consistent with existing 
precedent, Exelon requests authority to conduct Energy Management 
Services and Consulting Services anywhere outside the United States. 
Also consistent with precedent, Exelon requests authority to conduct 
Energy Marketing activities in Canada and Mexico. Furthermore, Exelon 
requests that the Commission reserve jurisdiction over the conduct of 
Energy Marketing activities in any other country pending completion of 
the record.

The Southern Company, et al. (70-10293)

    The Southern Company (``Southern''), a registered holding company, 
and its wholly owned public-utility company subsidiary Southern Power 
Company (``Southern Power''), both at 270 Peachtree Street, NW., 
Atlanta, GA 30303, have filed an application-declaration 
(``Application'') under sections 6(a), 7, 9(a), 10, 12(b) and 12(f) of 
the Act and rules 43, 44, 45 and 54 under the Act.

I. Background

    By order dated December 27, 2000 (HCAR No. 27322, ``Prior Order''), 
the Commission authorized the formation of Southern Power. Southern 
Power is an electric utility company that constructs, owns and manages 
electric generation facilities and sells the output, under long-term 
contracts, to affiliated public-utility companies and unaffiliated 
wholesale purchasers. Accordingly, Southern Power is subject to 
regulation by the Federal Energy Regulatory Commission but is not 
regulated by any State commission. Currently, the securities issued by 
Southern Power are rated as follows: unsecured debt: rated Baa1 by 
Moody's, BBB+ by Standard & Poors (``S&P''), and BBB+ by Fitch; and 
commercial paper: rated P-2 by Moody's, A-2 by S&P, and F-2 by Fitch.
    By the Prior Order, the Commission also authorized Southern to fund 
Southern Power in an aggregate amount not to exceed $1.7 million, to 
obtain independent financing in an aggregate amount not to exceed $2.5 
billion, the proceeds of which would be used to, among other things, 
invest in exempt wholesale generators (``EWGs''). As discussed below, 
by the Application, Southern and Southern Power (collectively, 
``Applicants'') request a modification and extension of Southern 
Power's financing authority.

II. Requests for Authority

    As discussed below, Applicants seek authority for Southern to 
provide financial support to Southern Power, its public-utility company 
subsidiary, and for Southern Power to issue securities and enter into 
certain financial transactions on behalf of itself and its 
subsidiaries.
A. Support by Southern
    Applicants request authority through June 30, 2007 (``Authorization 
Period'') for Southern to: (1) Purchase common stock and debt 
securities issued by Southern Power; (2) purchase from or contribute to 
Southern Power various equity interests; (3) issue guarantees to 
support securities and other obligations of Southern Power, and 
provision of performance guarantees (collectively, ``Southern 
Guarantees'') to or for the benefit of Southern Power. The proceeds 
from these financings, including the Southern Guarantees, would be used 
to finance Southern Power's operations, including its acquisition, 
construction and operation of power generating facilities and 
investment in energy-related companies. The aggregate amount of 
financing provided by Southern to Southern Power in connection with 
these transactions would not exceed $1.2 billion (``Southern Power 
Aggregate Financing Limit'').
    The term of Southern's loans to Southern Power would not exceed 
seven years, and the interest on those loans would be designed to 
return to Southern its effective cost of capital.
    Southern Guarantees may take the form of Southern agreeing to 
guarantee, to undertake reimbursement obligations, to assume 
liabilities or to assume other obligations with respect to, or to act 
as surety on, bonds, letters of credit, evidences of indebtedness, 
equity commitments, performance and other

[[Page 33545]]

obligations undertaken by Southern Power. The terms and conditions of 
the Southern Guarantees would be established through arms-length 
negotiations based upon current market conditions. All Southern 
Guarantees issued would be without recourse to any of Southern's other 
subsidiaries. In no event would the effective cost of capital on any 
Southern Guarantee of debt of Southern Power exceed 500 basis points 
over a U.S. Treasury security having a term and an amount equal to the 
guaranteed amount.
B. Southern Power Financings
1. Guarantees
    Applicants request authority for Southern Power to provide 
guarantees and issue guarantees on behalf of its EWG and energy-related 
company subsidiaries (collectively, ``Exempt Subsidiaries''). Southern 
Power seeks the flexibility to hold its interests in and provide 
support for Exempt Subsidiaries indirectly. Therefore, Applicants also 
request authority: (1) For Southern Power to acquire interests in 
special-purpose subsidiaries (``Intermediate Companies'') organized to 
acquire and hold the securities of and finance the operation of Exempt 
Subsidiaries and engage in development activities; \23\ and (2) for the 
Intermediate Companies to: (a) Issue and sell to nonaffiliates debt 
securities that would have the same terms as the Long-Term Debt, Short-
Term Debt, Term Loan Notes and Commercial Paper proposed to be issued 
and sold by Southern Power (all described below); and (b) issue 
guarantees and enter into guarantee arrangements on behalf of Exempt 
Subsidiaries. The proposed debt securities to be issued by Intermediate 
Companies would be counted toward the Southern Power Aggregate 
Financing Limit. The total exposure of Southern Power and the 
Intermediate Companies under the guarantees and guarantee arrangements 
would not exceed $500 million at any one time (``Southern Power 
Guarantee Limit'').\24\
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    \23\ Development activities would include project due diligence 
and design review; market studies; site inspection; preparation of 
bid proposals, including, related postings of bid bonds, cash 
deposits or the like; application for requirement permits and/or 
regulatory approvals; acquisitions 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 ``host'' users, fuels 
suppliers and other project contractors; negotiation of financing 
commitments with lenders and equity co-investors; and other 
preliminary development activities as may be required in preparation 
for the acquisition or financing of a project.
    \24\ Those guarantees would not be counted against the Southern 
Power Aggregate Financing Limit.
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2. Other Securities
    Further, Applicants request authority through the Authorization 
Period for Southern Power to obtain financing through and in connection 
with the issuance and sale of securities. These financings would be 
counted toward and would not exceed the Southern Power Aggregate 
Financing Limit.
a. Common Stock
    Applicants request authority for Southern Power to issue and sell 
directly, and for Southern to acquire, shares of Southern Power's $0.01 
par value capital stock (``Common Stock'') to Southern. Southern would 
not pay less than the par value of the Common Stock as determined by 
Southern Power's board of directors.
b. Preferred Securities
    Applicants request authority for Southern Power to issue and sell 
preferred securities, directly or indirectly, to nonaffiliates. 
Southern Power may issue preferred securities indirectly through one or 
more special purpose financing subsidiaries (``Financing 
Subsidiaries''), and Applicants request authority for Southern Power to 
acquire Financing Subsidiaries for this purpose.
    Preferred securities would be issued in one or more series with 
such rights, preferences and priorities as may be designated in the 
instrument creating each such series, as determined by the board of 
directors of Southern Power. Preferred securities would have maturities 
of more than one year. Dividends or distributions on preferred 
securities would be made periodically and to the extent funds are 
legally available for such purpose, but might be made subject to the 
terms that would allow the issuer to defer dividend payments for 
specified periods.
    A Financing Subsidiary would lend, dividend or otherwise transfer 
to Southern Power, the proceeds of the preferred securities it issues, 
together with the equity contributed to the Financing Subsidiary. In 
turn, Southern Power would issue guarantees related to: (1) Payments of 
dividends or distributions on the preferred securities of any Financing 
Subsidiary if and to the extent that the Financing Subsidiary has funds 
legally available for this purpose; (2) payments to holders of the 
preferred securities of amounts due upon liquidation of the Financing 
Subsidiary or redemption of its preferred securities; and (3) certain 
additional amounts that may be payable in respect of the preferred 
securities (e.g., trustee's fees and expenses). Applicants request 
authority for Southern Power to issue these guarantees, which would be 
counted against the Southern Power Aggregate Financing Limit.
c. Preferred Stock
    Applicants request authority for Southern Power to issue and sell 
directly preferred stock or preference stock (collectively, ``Preferred 
Stock'') to nonaffiliates. Preferred Stock would have a specified par 
or stated value per share and, in accordance with applicable State law, 
would have such voting powers (if any), designations, preferences, 
rights and qualifications, limitations or restrictions as stated and 
expressed in the resolution or resolutions adopted by the board of 
directors of Southern Power.
d. Long-Term Debt
    Applicants request authority for Southern Power to issue and sell 
notes with maturities of between one and fifty years (``Long-Term 
Debt''). Long-Term Debt would be issued and sold to both nonaffiliated 
investors and Southern. Applicants request authority for Southern to 
acquire Long-Term Debt. These notes might be either senior or 
subordinated obligations, might be convertible or exchangeable into 
preferred stock, might have the benefit of a sinking fund and might be 
insured by an insurance policy that guarantees payment of the principal 
and interest.
e. Other Debt Securities
    Applicants request authority for Southern Power to issue and sell 
directly unsecured promissory notes with a term of one year or less 
(``Short-Term Debt''), unsecured promissory notes with terms of more 
than one year (``Term Loan Notes'') and commercial paper to 
nonaffiliated commercial lending institutions and/or to Southern. 
Correspondingly, Applicants also request authority for Southern to 
acquire Short-Term Debt, Term Loan Notes and Southern Power's 
commercial paper. Commercial paper would be issued in the form of 
promissory notes with varying maturities not to exceed one year.\25\
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    \25\ Maturities for these securities might be subject to 
extension to a final maturity not to exceed 390 days.
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f. Revenue Bond Arrangements
    Applicants request authority for Southern Power to enter into loan 
agreements (``Loan Agreements'') and installment sale agreements 
(``Installment Sale Agreements''). The Loan Agreements and/or 
Installment Sale Agreements would be entered into

[[Page 33546]]

in connection with one or more counties or other appropriate public 
bodies or instrumentalities (collectively, ``Counties'') issuing 
revenue bonds (``Revenue Bonds''), the proceeds of which would be used 
to either finance the costs of acquiring, constructing and/or equipping 
new sewage and solid waste disposal facilities (``Projects'') at 
certain of Southern Power's generating plants or refinance the debt 
previously incurred to acquire, construct and/or equip Southern's 
plants with Projects.
    Revenue Bonds would be sold by a County under arrangements with one 
or more purchasers, placement agents or underwriters. Southern Power 
may not be party to the purchase, placement or underwriting 
arrangements for the Revenue Bonds, but those such arrangements would 
provide that the terms of the Revenue Bonds and their sale by the 
County shall be satisfactory to Southern Power. The interest rate borne 
by the Revenue Bonds would be approved by the County, and would be 
either a fixed rate that may be converted to a rate that would 
fluctuate or a fluctuating rate that may be convertible to a fixed 
rate. The intent is that interest on the Revenue Bonds would generally 
be excludable from gross income for Federal income tax purposes, and 
Southern Power expects that, at the time of issuance, the interest 
rates on obligations, the interest on which is tax exempt, would be 
lower than the rates on similar obligations of comparable quality, 
interest on which is fully subject to Federal income taxation.
    Under the Loan Agreement, the County would loan to Southern Power 
the proceeds of the sale of the County's Revenue Bonds, and Southern 
Power may issue a non-negotiable promissory note (``Note''). Applicants 
request authority for Southern Power to issue and sell Notes in 
connection with Loan Agreements. Under the Installment Sale Agreement, 
the County would undertake to purchase and sell the related Project to 
Southern Power. The installment sale structure may be used if required 
by applicable state law or if it affords transactional advantages to 
Southern Power.
    Under either structure, the proceeds of the loan or purchase would 
be deposited with a trustee (``Trustee'') under an indenture agreement 
between the County and the Trustee (``Trust Indenture'') that provides 
for Revenue Bonds to be issued and secured. The Note, the Loan 
Agreement or the Installment Sale Agreement (as the case may be) would 
provide for payments to be made by Southern Power at times and in 
amounts that would correspond to the payments with respect to the 
principal of, premium, if any, and interest on the related Revenue 
Bonds whenever and in whatever manner the same shall become due, 
whether at stated maturity, upon redemption or declaration or 
otherwise.
    The Loan Agreement or the Installment Sale Agreement would provide 
for the assignment to the Trustee of the County's interest in, and of 
the monies receivable by the County under, the agreement or the Note. 
Both the Loan Agreement and the Installment Sale Agreement would 
obligate Southern Power to pay the fees and charges of the Trustee, and 
may allow Southern Power, at any time so long as it is not in default, 
prepay the amount due under the Loan Agreement or the Note, or the 
Installment Sale Agreement, in whole or in part, such payment to be 
sufficient to redeem or purchase outstanding Revenue Bonds in the 
manner and to the extent provided in the Trust Indenture.
    The Trust Indenture would provide that the Revenue Bonds may be 
redeemable on or after a specified date, in whole or in part at 
Southern Power's option, and may require the payment of a premium at a 
specified percentage of the principal amount, which may decline 
annually. The Trust Indenture would also provide that the Revenue Bonds 
would be redeemable in whole, at Southern Power's option, at the 
principal amount thereof plus accrued interest (but without premium) in 
certain other cases of undue burdens or excessive liabilities imposed 
with respect to the related Project, its destruction or damage beyond 
practicable or desirable repairability or condemnation or taking by 
eminent domain, or if operation of the related facility is enjoined and 
Southern Power determines to discontinue operation of it. The Revenue 
Bonds would mature not more than 40 years from the first day of the 
month in which they are initially issued and, if it is deemed advisable 
for marketability purposes, may be entitled to the benefit of a 
mandatory redemption sinking fund calculated to retire a portion of the 
aggregate principal amount of the Revenue Bonds prior to maturity.
    The Trust Indenture may give the holders of the Revenue Bonds the 
right, during such time as the Revenue Bonds bear interest at a 
fluctuating rate or otherwise, to require that the Revenue Bonds be 
repurchased from time to time and arrangements be made for the 
remarketing of the Revenue Bonds through a remarketing agent. Southern 
Power also may be required to purchase the Revenue Bonds, or the 
Revenue Bonds may be subject to mandatory redemption, at any time if 
the interest thereon is determined to be subject to federal income tax. 
The purchase price payable by or on behalf of Southern Power in respect 
of Revenue Bonds tendered for purchase at the option of the holders 
thereof would not exceed 100% of the principal amount thereof, plus 
accrued interest to the purchase date.
    In the event of taxability, interest on the Revenue Bonds may be 
effectively converted to a higher variable or fixed rate, and Southern 
Power may be required to indemnify the bondholders against any other 
additions to interest, penalties and additions to tax.
    To secure a better credit rating, Southern Power may cause an 
irrevocable letter of credit or other credit facility (``Letter of 
Credit'') of a bank or other financial institution (``Bank'') to be 
delivered to the Trustee.\26\ The Letter of Credit would oblige the 
Bank to pay to the Trustee, upon request, up to an amount necessary in 
order to pay principal of and accrued interest on the Revenue Bonds 
when due. Under a separate agreement with the Bank, Southern Power 
would agree to pay to the Bank all amounts that would be drawn under 
the Letter of Credit, as well as certain fees and expenses. In the 
event that the Letter of Credit is delivered to the Trustee, Southern 
Power may also convey to the County a subordinated security interest in 
the Project or other property of Southern Power as further security for 
Southern Power's obl