Filings Under the Public Utility Holding Company Act of 1935, as Amended (“Act”), 67206-67209 [E5-6105]
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67206
Federal Register / Vol. 70, No. 213 / Friday, November 4, 2005 / Notices
its investment adviser, Roulston &
Company, Inc.
Filing Date: The application was filed
on October 11, 2005.
Applicant’s Address: 3636 Euclid
Ave., Cleveland, OH 44115.
INVESCO Variable Investment Funds,
Inc. [File No. 811–8038]
Summary: Applicant seeks an order
declaring that it has ceased to be an
investment company. On April 30,
2004, applicant transferred its assets to
AIM Variable Insurance Funds, based
on net asset value. Expenses of $784,640
incurred in connection with the
reorganization were paid by applicant
and applicant’s investment adviser,
INVESCO Funds Group, Inc.
Filing Dates: The application was
filed on May 6, 2005, and amended on
August 9, 2005.
Applicant’s Address: 11 Greenway
Plaza, Suite 100, Houston, TX 77046–
1173.
WT Investment Trust I [File No. 811–
8067]
Summary: Applicant, a master fund in
a master-feeder structure, seeks an order
declaring that it has ceased to be an
investment company. On July 1, 2005,
each of applicant’s series made a
liquidating distribution in kind to its
feeder funds, based on net asset value.
Expenses of $13,205 incurred in
connection with the liquidation were
paid by applicant’s respective feeder
funds.
Filing Date: The application was filed
on October 14, 2005.
Applicant’s Address: 1100 North
Market, Wilmington, DE 19890.
John Hancock Variable Series Trust
[File No. 811–4490]
Summary: Applicant seeks an order
declaring that it has ceased to be an
investment company. On April 29,
2005, Applicant made a distribution of
its assets in connection to its
shareholders in connection with its
merger with John Hancock Trust.
Expenses of $3,436,531 were incurred in
connection with the merger. These
expenses were generally allocated
among and paid by each portfolio of
Applicant (‘‘Acquired Fund’’) and the
portfolio of John Hancock Trust into
that portfolio of Applicant was merged
(‘‘Acquiring Fund’’) on an asset
weighted basis, with the Acquired and
Acquiring Fund in any combination
bearing the expenses of that
combination in proportion to their
relative net assets as of June 30, 2004.
Filing Dates: The application was
filed on August 3, 2005.
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Applicant’s Address: John Hancock
Life Insurance Company, 601 Congress
Street, Boston, Massachusetts 02210.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. E5–6106 Filed 11–3–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 35–28051]
Filings Under the Public Utility Holding
Company Act of 1935, as Amended
(‘‘Act’’)
October 28, 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
November 22, 2005, to the Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–9303, 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
November 22, 2005, the application(s)
and/or declaration(s), as filed or as
amended, may be granted and/or
permitted to become effective.
FirstEnergy Corp., et al. (70–10322)
FirstEnergy Corp., (‘‘FirstEnergy’’), a
registered holding company; and certain
of its public utility subsidiaries: Ohio
Edison Company, an Ohio corporation
(‘‘Ohio Edison’’); The Cleveland Electric
Illuminating Company, an Ohio
corporation (‘‘Cleveland Electric’’); The
Toledo Edison Company, an Ohio
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corporation (‘‘Toledo Edison’’); and
Pennsylvania Power Company, a
Pennsylvania corporation and wholly
owned subsidiary of Ohio Edison,
(‘‘Penn Power’’; Ohio Edison, Cleveland
Electric, Toledo Edison and Penn Power
collectively referred to as ‘‘Utility
Subsidiaries’’); and FirstEnergy Nuclear
Generating Corp. (‘‘FE Nuclear’’), a
newly-incorporated Ohio corporation
that would become a public utility
subsidiary of FirstEnergy, all of 76
South Main Street, Akron, Ohio 44308,
have filed an application-declaration, as
amended (‘‘Application’’) under
sections 6(a), 7, 9(a), 10, 12(b), 12(c),
12(d), and 12(f) of the Act and rules 43,
44, 45, 46 and 54 under the Act.
FirstEnergy, the Utility Subsidiaries and
FE Nuclear are referred to as
‘‘Applicants.’’
FirstEnergy directly owns all of the
outstanding common stock of Ohio
Edison, Cleveland Electric, Toledo
Edison, and indirectly through Ohio
Edison owns all of the outstanding
common stock of Penn Power.1 Ohio
Edison was organized under the laws of
the State of Ohio in 1930 and owns
property and does business as an
electric public utility in that state. Ohio
Edison also has ownership interests in
certain generating facilities located in
the Commonwealth of Pennsylvania.
Ohio Edison engages in the generation,
distribution and sale of electric energy
to communities in a 7,500 square mile
area of central and northeastern Ohio
having a population of approximately
2.8 million.
Ohio Edison owns all of Penn Power’s
outstanding common stock. Penn Power
was organized under the laws of the
Commonwealth of Pennsylvania in 1930
and owns property and does business as
an electric public utility in that state.
Penn Power engages in the generation,
distribution and sale of electric energy
in a 1,500 square mile-area of western
Pennsylvania having a population of
approximately 300,000. Penn Power is
also authorized to do business and owns
property in the State of Ohio.
Cleveland Electric was organized
under the laws of the State of Ohio in
1892 and does business as an electric
public utility in that state. Cleveland
Electric engages in the generation,
distribution and sale of electric energy
in an area of approximately 1,700 square
miles in northeastern Ohio having a
1 FirstEnergy’s other public utility subsidiaries
are Jersey Central Power & Light Company,
Pennsylvania Electric Company, Metropolitan
Edison Company, York Haven Power Company, The
Waverly Electric Power & Light Company and
American Transmission Systems, Incorporated.
These companies are not applicants in this
proceeding.
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Federal Register / Vol. 70, No. 213 / Friday, November 4, 2005 / Notices
population of approximately 1.9
million. It also has ownership interests
in certain generating facilities located in
Pennsylvania.
Toledo Edison was organized under
the laws of the State of Ohio in 1901
and does business as an electric public
utility in that state. Toledo Edison
engages in the generation, distribution
and sale of electric energy in an area of
approximately 2,500 square miles in
northwestern Ohio having a population
of approximately 800,000. It also has
interests in certain generating facilities
located in Pennsylvania.
authorization to merge with GPU, Inc.
(‘‘GPU’’).2 In addition, FirstEnergy and
FE Nuclear are requesting authorization
to engage in financing and other related
transactions for the period through
February 8, 2006 (the ‘‘Authorization
Period’’).
Requested Authorization
The Utility Subsidiaries are
requesting authorization to transfer
ownership of their respective interests
in certain nuclear generating plants and
related assets and liabilities to FE
Nuclear. These asset transfers are in
furtherance of FirstEnergy’s Ohio and
Pennsylvania corporate separation
plans, which were described in
FirstEnergy’s application/declaration for
Transfer of Nuclear Generating Plants to
FE Nuclear
The Utility Subsidiaries own, as
tenants in common, interests in the
following nuclear generating plants:
Plant
Location
Beaver Valley 1 ...........................................
Beaver Valley 2 ...........................................
Shippingport, PA .........................................
Shippingport, PA .........................................
821
831
Davis-Besse ................................................
Oak Harbor, OH .........................................
883
Perry ............................................................
North Perry Village, OH ..............................
1,260
The Utility Subsidiaries propose to
sell or otherwise transfer their
respective ownership interests in the
nuclear plants to FE Nuclear by means
of the following transactions, all of
which would be carried out
concurrently: 3
Transfer of Nuclear Plants by Penn
Power. Pursuant to the terms of a
Subscription and Capital Contribution
Agreement (‘‘Penn Power Contribution
Agreement’’), Penn Power would
acquire 100 shares of common stock of
FE Nuclear in consideration for Penn
Power’s contribution to FE Nuclear of
its undivided interests in the two Beaver
Valley units and Beaver Valley common
facilities and its undivided interest in
Perry Unit 1, together with associated
decommissioning funds. In connection
with such contribution, FE Nuclear
would assume Penn Power’s obligations
in respect of $64 million aggregate
principal amount of pollution control
revenue bonds (‘‘PCRBs’’) and certain
other liabilities associated with the
transferred units. The parties to the
Penn Power Contribution Agreement
have agreed that the value of the
contributed assets would be the net
book value thereof as of the end of the
fiscal quarter immediately preceding the
closing. Simultaneously, Penn Power
would receive from FE Nuclear a
2 See
HCAR No. 27459 (October 29, 2001).
Utility Subsidiaries do not propose to
transfer to FE Nuclear their remaining percentage
ownership interests in certain of the nuclear
facilities that are currently subject to sale and
leaseback arrangements with third parties
4 Following the contribution to FE Nuclear, Penn
Power would distribute the stock of FE Nuclear as
3 The
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67207
MW
Ownership %
Ohio Edison 35%; Penn Power 65%.
Ohio Edison 20.22%; Penn Power
13.74%; Cleveland Electric 24.47%; Toledo Edison 1.65%.
Cleveland Electric 51.38%; Toledo Edison
48.62%.
OES Nuclear 17.42%; Penn Power
5.245%; Toledo Edison 19.91%; Cleveland Electric 44.85%.
promissory note (‘‘FE Nuclear Note’’) in
respect of the book value of certain
related assets, including construction
work in progress, nuclear fuel,
inventories and spare parts and
accounts receivable, determined as of
the end of the quarter immediately
preceding the closing. The FE Nuclear
Note would bear interest at a rate equal
to Penn Power’s weighted average cost
of long-term debt, would mature 20
years after its date of issuance, and
would be prepayable at any time, in
whole or in part, by FE Nuclear.4
Transfer of Nuclear Plants by Ohio
Edison. Pursuant to the terms of a
Capital Contribution Agreement (‘‘Ohio
Edison Contribution Agreement’’), Ohio
Edison would contribute its undivided
interests in the two Beaver Valley units
and Beaver Valley common facilities
and the common stock of OES Nuclear
Incorporated (‘‘OES Nuclear’’), a
wholly-owned subsidiary of Ohio
Edison, which holds an undivided
interest in Perry Unit 1, together with
associated decommissioning funds and
its interests in other assets, inventories,
fuel, spare parts, equipment, supplies
and contract rights relating to the
transferred units, to FE Nuclear as an
additional capital contribution to FE
Nuclear. In connection with such
transfer, FE Nuclear would assume Ohio
Edison’s obligations in respect of $116
million aggregate principal amount of
PCRB obligations and certain other
liabilities associated with the
transferred units. An additional $295
million of Ohio Edison’s PCRBs are
expected to be assumed by FE Nuclear
after the distribution described in the
next paragraph. The parties to the Ohio
Edison Contribution Agreement have
agreed that the value of the contributed
assets would be the net book value
thereof as of the end of the fiscal quarter
immediately preceding the closing.
Following the transfer of Ohio
Edison’s nuclear assets to FE Nuclear,
Applicants state that it is anticipated
that OES Nuclear would be merged with
and into FE Nuclear, and Ohio Edison
would distribute the stock of FE Nuclear
as a dividend to its parent, FirstEnergy,
such that FE Nuclear would become a
direct wholly-owned subsidiary of
FirstEnergy.
If the transactions described above
had occurred on March 31, 2005,
Applicants represent that Ohio Edison’s
cost basis for the stock of FE Nuclear
would have been equal to the net book
value of the transferred interests in the
Beaver Valley and Perry units and
associated assets (approximately $712
million), less the initial PCRB
obligations to be assumed ($116 million)
a dividend to its parent, Ohio Edison, such that FE
Nuclear would become, momentarily, a direct
wholly-owned subsidiary of Ohio Edison. If the
transactions described in the previous paragraph
had occurred on March 31, 2005, Applicants state
that Penn Power’s cost basis for the stock of FE
Nuclear would have been equal to the net book
value of the transferred interests in the Beaver
Valley and Perry units and associated assets
(approximately $542 million), less the PCRB
obligations ($64 million) and agreed upon value of
other liabilities assumed by FE Nuclear
(approximately $401 million), and the distribution
of the stock of FE Nuclear to Ohio Edison would
have resulted in a charge to Penn Power’s retained
earnings of $77 million.
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Federal Register / Vol. 70, No. 213 / Friday, November 4, 2005 / Notices
and the agreed upon value of other
liabilities assumed by FE Nuclear
(approximately $596 million), resulting
in no charge to Ohio Edison’s retained
earnings.
Sale of Nuclear Plants by Cleveland
Electric and Toledo Edison. Cleveland
Electric and Toledo Edison have each
entered into a Nuclear Purchase and
Sale Agreement with FE Nuclear
(‘‘Nuclear PSA’’), under which FE
Nuclear has agreed to purchase
Cleveland Electric’s and Toledo
Edison’s respective undivided
ownership interests in Beaver Valley
Unit 2, Perry Unit 1 and Davis-Besse for
a purchase price equal to the net book
value thereof, determined as of the end
of the fiscal quarter immediately
preceding the closing, together with the
respective interests of Cleveland Electric
and Toledo Edison in nuclear
decommissioning trust funds associated
with those plants and their respective
right, title and interest in and to all
contracts, fuel, spare parts, inventories,
equipment, supplies and other assets
associated with each transferred unit,
less the amount of obligations of
Cleveland Electric and Toledo Edison
under PCRBs associated with the
transferred units ($367 million and $284
million, respectively, at March 31,
2005), and the agreed upon value of
certain other liabilities associated with
the transferred units.
At closing, FE Nuclear would pay the
purchase price, determined as described
in the previous paragraph, by delivering
to Cleveland Electric and Toledo Edison
FE Nuclear Notes secured by a lien on
the transferred assets. Each FE Nuclear
Note would bear interest at a rate per
annum based on the average weighted
cost of long-term debt of Cleveland
Electric and Toledo Edison, as the case
may be, would mature 20 years after the
date of issuance, and would be
prepayable at any time, in whole or in
part, at the option of FE Nuclear,
without penalty.5
Repurchases of Common Stock of
Cleveland Electric, Toledo Edison and
Penn Power. FirstEnergy states that, in
connection with the transfer of the
nuclear plants to FE Nuclear,
FirstEnergy would make a cash capital
contribution to FE Nuclear of up to $700
million. FE Nuclear would use the
proceeds of this investment at or
subsequent to closing to prepay a like
amount of the FE Nuclear Notes
delivered at closing to Penn Power,
5 If the transactions described above had been
consummated at March 31, 2005, Applicants state
that the principal amounts of the FE Nuclear Notes
delivered to Cleveland Electric and Toledo Edison
would have been approximately $469 million and
$307 million, respectively.
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Cleveland Electric and Toledo Edison.
In turn, Penn Power, Cleveland Electric
and Toledo Edison would apply the
proceeds of such prepayment of the FE
Nuclear Notes to repay outstanding
borrowings under the FirstEnergy
system utility money pool. To the extent
that there are any remaining
prepayment proceeds, the Applicants
request authorization for Cleveland
Electric and Toledo Edison to
repurchase shares of their common
stock that are held by FirstEnergy and
Penn Power requests authorization to
repurchase shares of its common stock
that are held by Ohio Edison.
Applicants state that the purpose of
these transactions is to adjust (i.e.,
reduce) the equity and debt
capitalization of Cleveland Electric,
Toledo Edison and Penn Power to
mirror their smaller asset base after the
transfer of their undivided interests in
the nuclear plants to FE Nuclear.
Financing by FE Nuclear
External Debt Financing by FE
Nuclear. FE Nuclear is requesting
authorization to issue and sell to
unaffiliated lenders, from time to time
during the period through the
Authorization Period, long-term debt
securities having maturities of up to 50
years (‘‘Long-term Debt’’) and short-term
debt securities having maturities of less
than one year (‘‘Short-term Debt’’) in an
aggregate amount at any time
outstanding not to exceed $1.5 billion
(the ‘‘FE Nuclear Debt Limit’’). The
following general terms would be
applicable where appropriate to Longterm Debt and Short-term Debt of FE
Nuclear:
(a) Effective Cost of Money. The
effective cost of capital (i.e., the
aggregate of all payments, including
interest, dividend distributions and
other periodic payments) in respect of
Long-term Debt and Short-term Debt of
FE Nuclear would not exceed
competitive market rates available at the
time of issuance for securities having
the same or reasonably similar terms
and conditions issued by similar
companies of reasonably comparable
credit quality; provided that, in no event
would the effective cost of capital (i) on
Long-term Debt exceed at the time of
issuance 500 basis points over the yield
to maturity of comparable-term U.S.
Treasury securities if the interest rate on
such Long-term Debt securities is a fixed
rate or, if the rate on such Long-term
Debt securities is a floating rate, 500
basis points over the London Interbank
Offered Rate (‘‘LIBOR’’) for maturities of
less than one year; and (ii) on Shortterm Debt exceed at the time of
issuance, (A) in the case of commercial
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paper or any other short-term borrowing
that is not tied to a reference rate, 300
basis points over LIBOR, and (B) in the
case of any short-term borrowing that is
tied to a reference rate, either (1) 300
basis points over LIBOR, (2) 50 basis
points over the prime rate, as
announced from time to time by
CitiBank, or any successor thereto, or (3)
100 basis points over the Federal Funds
Rate, whichever reference rate is
applicable.
(b) Issuance Expenses. The
underwriting fees, commissions or other
similar remuneration paid in connection
with the non-competitive issue, sale or
distribution of any security (not
including any original issue discount)
would not exceed 5% of the principal
or total amount of the security being
issued.
(c) Use of Proceeds. The proceeds
from the sale of securities in external
financing transactions would be used
for general corporate purposes,
including financing, in part, of the
capital expenditures of FE Nuclear,
financing of working capital
requirements of FE Nuclear, the
acquisition, retirement or redemption of
securities (including PCRB obligations)
previously issued by or on behalf FE
Nuclear, and other lawful purposes.
(d) Common Equity Ratio. FE Nuclear
and each of the Utility Subsidiaries
commits that it would maintain
common equity as a percentage of
consolidated capitalization (common
stock equity, long-term debt and shortterm debt, including current maturities
of long-term debt) at 30% or higher.
(e) Ratings Event. With respect to the
securities issuance for which
authorization is requested: (a) Within
four business days after the occurrence
of a Ratings Event,6 Applicants would
notify the Commission of its occurrence
(by means of a letter, via fax, e-mail or
overnight mail to the Office of Public
Utility Regulation), and (b) within 30
days after the occurrence of a Ratings
Event, Applicants would submit a posteffective amendment to this Application
explaining the material facts and
circumstances relating to that Ratings
Event (including the basis on which,
taking into account the interests of
6 A ‘‘Ratings Event’’ will be deemed to have
occurred if, during the Authorization Period, (i) any
security issued by FE Nuclear or FirstEnergy upon
original issuance, if rated, is rated below investment
grade, or (ii) any outstanding security of FirstEnergy
or FE Nuclear that is rated is downgraded below
investment grade. For purposes of this provision, a
security will be deemed ‘‘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 of the Securities Exchange Act of
1934, as amended).
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Federal Register / Vol. 70, No. 213 / Friday, November 4, 2005 / Notices
investors, consumers and the public as
well as other applicable criteria under
the Act, it remains appropriate for FE
Nuclear to issue the securities for which
authorization has been requested, so
long as FE Nuclear continues to comply
with the other applicable terms and
conditions specified in the
Commission’s order authorizing the
transactions requested in this
Application). Furthermore, except in
accordance with a further order of the
Commission, no such securities would
be issued following the 60th day after a
Ratings Event (other than Short-term
Debt) if the downgraded rating(s) has or
have not been upgraded to investment
grade. Applicants request that the
Commission reserve jurisdiction,
through the remainder of the
Authorization Period, over the issuance
of any securities (other than Short-term
Debt) that FE Nuclear is prohibited from
issuing as a result of the occurrence of
a Ratings Event if no revised rating
reflecting an investment grade rating has
been issued.
Description of Specific Types of
External Debt Securities of FE Nuclear
Long-term Debt. Each series of Longterm Debt would have such designation,
aggregate principal amount, maturity,
interest rate(s) or methods of
determining the same, terms of payment
of interest, redemption provisions,
sinking fund terms and other terms and
conditions as FE Nuclear may determine
at the time of issuance. Any Long-term
Debt (a) may be secured or unsecured,
(b) may be senior or subordinated, (c)
would have maturities ranging from one
to 50 years, (d) may be subject to
optional and/or mandatory redemption,
in whole or in part, at par or at various
premiums above the principal amount
thereof, (e) may be entitled to
mandatory or optional sinking fund
provisions, (f) may provide for reset of
the coupon pursuant to a remarketing
arrangement, (g) may be subject to
tender or the obligation of the issuer to
repurchase at the election of the holder
or upon the occurrence of a specified
event, (h) may be called from existing
investors by a third party, and (i) may
be entitled to the benefit of affirmative
or negative financial or other covenants.
Long-term Debt may also be in the
form of agreements between FE Nuclear
and one or more industrial development
authorities (‘‘IDAs’’) pursuant to which
an IDA agrees to issue PCRBs for the
purpose of financing or refinancing
pollution control revenue facilities
relating to FE Nuclear’s nuclear power
plants. Under the terms of any such
agreement, payments to the issuing IDA
would be designed to match payments
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of principal of and interest on the
PCRBs to which such agreement relates.
As security for FE Nuclear’s
obligations under any agreement
relating to any series of PCRBs, FE
Nuclear requests authority to (1) issue
its promissory note or notes to evidence
the loan to FE Nuclear of the proceeds
of the PCRBs by the issuing IDA, (2)
acquire and deliver a letter of credit
(‘‘LOC’’) guaranteeing payment of the
PCRBs and enter into reimbursement
agreements with respect to any such
LOC, (3) acquire insurance policies
guaranteeing payment of the PCRBs,
and/or (4) pledge its first mortgage
bonds as collateral for its obligations to
the issuing IDA, any trustee, LOC bank
or PCRB insurer. To avoid double
counting, FE Nuclear proposes that the
amount of any note or notes issued by
FE Nuclear to evidence the loan to FE
Nuclear of the proceeds of any PCRBs or
first mortgage bonds issued by FE
Nuclear as collateral security for PCRB
obligations not count against the FE
Nuclear Debt Limit.
Short-term Debt. Short-term Debt of
FE Nuclear may be in the form of
commercial paper, promissory notes
and/or other forms of unsecured shortterm indebtedness. FE Nuclear may
establish from time to time new
committed bank lines of credit,
provided that only the principal amount
of any outstanding borrowings would be
counted against the proposed FE
Nuclear Debt Limit. Credit lines may be
set up for use by FE Nuclear for general
corporate purposes in addition to credit
lines to support commercial paper as
described in this subsection. FE Nuclear
would borrow and repay under such
lines of credit, from time to time, as it
is deemed appropriate or necessary. FE
Nuclear may also engage in other types
of short-term financing, including
borrowings under uncommitted lines,
generally available to borrowers with
comparable credit ratings as it may
deem appropriate in light of its needs
and market conditions at the time of
issuance.
Commercial paper would be sold in
established domestic or European
commercial paper markets from time to
time. Such commercial paper would be
sold to dealers at the discount rate or
the coupon rate per annum prevailing at
the date of issuance for commercial
paper of comparable quality and
maturities sold to commercial paper
dealers generally. It is expected that the
dealers acquiring commercial paper
from FE Nuclear would reoffer such
paper at a discount to corporate,
institutional and, with respect to
European commercial paper, individual
investors. Institutional investors are
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67209
expected to include commercial banks,
insurance companies, pension funds,
investment trusts, foundations, colleges
and universities and finance companies.
Intrasystem Financing Transactions.
FE Nuclear further requests
authorization to make direct long-term
and short-term borrowings from
FirstEnergy (‘‘Direct Borrowings’’). All
such Direct Borrowings would be
evidenced by FE Nuclear’s promissory
notes and would be prepayable at any
time without premium or penalty at FE
Nuclear’s option. The aggregate
principal amount of Direct Borrowings
by FE Nuclear at any time outstanding
would be counted against and would in
no event exceed the FE Nuclear Debt
Limit. The interest rate and maturity of
any Direct Borrowings would be
designed to parallel the terms (i.e,
effective cost of funds and maturity) of
similar debt securities issued by
FirstEnergy, as authorized by the
Commission by order dated June 30,
2003 (HCAR No. 27694) (the ‘‘2003
Financing Order’’).
In addition, FE Nuclear requests
authorization to become a participant in
and to make borrowings under the
FirstEnergy system nonutility money
pool agreement (‘‘Nonutility Money
Pool’’) subject to terms and conditions
previously approved by the Commission
in the 2003 Financing Order.7 FE
Nuclear requests authorization to
borrow up to $1 billion at any time
outstanding under the Nonutility Money
Pool. Borrowings by FE Nuclear under
the Nonutility Money Pool would also
be counted against the proposed FE
Nuclear Debt Limit.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. E5–6105 Filed 11–3–05; 8:45 am]
BILLING CODE 8010–01–P
SOCIAL SECURITY ADMINISTRATION
The Ticket To Work and Work
Incentives Advisory Panel Meeting
AGENCY:
Social Security Administration
(SSA).
Notice of Quarterly and
Strategic Planning meeting.
ACTION:
November 16, 2005—1:30 p.m. to
6 p.m., November 17, 2005—9 a.m. to
DATES:
7 Under the 2003 Financing Order, FirstEnergy is
authorized to maintain and make loans to its
nonutility subsidiaries through the Nonutility
Money Pool.
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[Federal Register Volume 70, Number 213 (Friday, November 4, 2005)]
[Notices]
[Pages 67206-67209]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-6105]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-28051]
Filings Under the Public Utility Holding Company Act of 1935, as
Amended (``Act'')
October 28, 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 November 22, 2005, to the Secretary, Securities and Exchange
Commission, 100 F Street, NE., Washington, DC 20549-9303, 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 November 22, 2005, the
application(s) and/or declaration(s), as filed or as amended, may be
granted and/or permitted to become effective.
FirstEnergy Corp., et al. (70-10322)
FirstEnergy Corp., (``FirstEnergy''), a registered holding company;
and certain of its public utility subsidiaries: Ohio Edison Company, an
Ohio corporation (``Ohio Edison''); The Cleveland Electric Illuminating
Company, an Ohio corporation (``Cleveland Electric''); The Toledo
Edison Company, an Ohio corporation (``Toledo Edison''); and
Pennsylvania Power Company, a Pennsylvania corporation and wholly owned
subsidiary of Ohio Edison, (``Penn Power''; Ohio Edison, Cleveland
Electric, Toledo Edison and Penn Power collectively referred to as
``Utility Subsidiaries''); and FirstEnergy Nuclear Generating Corp.
(``FE Nuclear''), a newly-incorporated Ohio corporation that would
become a public utility subsidiary of FirstEnergy, all of 76 South Main
Street, Akron, Ohio 44308, have filed an application-declaration, as
amended (``Application'') under sections 6(a), 7, 9(a), 10, 12(b),
12(c), 12(d), and 12(f) of the Act and rules 43, 44, 45, 46 and 54
under the Act. FirstEnergy, the Utility Subsidiaries and FE Nuclear are
referred to as ``Applicants.''
FirstEnergy directly owns all of the outstanding common stock of
Ohio Edison, Cleveland Electric, Toledo Edison, and indirectly through
Ohio Edison owns all of the outstanding common stock of Penn Power.\1\
Ohio Edison was organized under the laws of the State of Ohio in 1930
and owns property and does business as an electric public utility in
that state. Ohio Edison also has ownership interests in certain
generating facilities located in the Commonwealth of Pennsylvania. Ohio
Edison engages in the generation, distribution and sale of electric
energy to communities in a 7,500 square mile area of central and
northeastern Ohio having a population of approximately 2.8 million.
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\1\ FirstEnergy's other public utility subsidiaries are Jersey
Central Power & Light Company, Pennsylvania Electric Company,
Metropolitan Edison Company, York Haven Power Company, The Waverly
Electric Power & Light Company and American Transmission Systems,
Incorporated. These companies are not applicants in this proceeding.
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Ohio Edison owns all of Penn Power's outstanding common stock. Penn
Power was organized under the laws of the Commonwealth of Pennsylvania
in 1930 and owns property and does business as an electric public
utility in that state. Penn Power engages in the generation,
distribution and sale of electric energy in a 1,500 square mile-area of
western Pennsylvania having a population of approximately 300,000. Penn
Power is also authorized to do business and owns property in the State
of Ohio.
Cleveland Electric was organized under the laws of the State of
Ohio in 1892 and does business as an electric public utility in that
state. Cleveland Electric engages in the generation, distribution and
sale of electric energy in an area of approximately 1,700 square miles
in northeastern Ohio having a
[[Page 67207]]
population of approximately 1.9 million. It also has ownership
interests in certain generating facilities located in Pennsylvania.
Toledo Edison was organized under the laws of the State of Ohio in
1901 and does business as an electric public utility in that state.
Toledo Edison engages in the generation, distribution and sale of
electric energy in an area of approximately 2,500 square miles in
northwestern Ohio having a population of approximately 800,000. It also
has interests in certain generating facilities located in Pennsylvania.
Requested Authorization
The Utility Subsidiaries are requesting authorization to transfer
ownership of their respective interests in certain nuclear generating
plants and related assets and liabilities to FE Nuclear. These asset
transfers are in furtherance of FirstEnergy's Ohio and Pennsylvania
corporate separation plans, which were described in FirstEnergy's
application/declaration for authorization to merge with GPU, Inc.
(``GPU'').\2\ In addition, FirstEnergy and FE Nuclear are requesting
authorization to engage in financing and other related transactions for
the period through February 8, 2006 (the ``Authorization Period'').
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\2\ See HCAR No. 27459 (October 29, 2001).
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Transfer of Nuclear Generating Plants to FE Nuclear
The Utility Subsidiaries own, as tenants in common, interests in
the following nuclear generating plants:
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Plant Location MW Ownership %
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Beaver Valley 1............. Shippingport, 821 Ohio Edison
PA. 35%; Penn
Power 65%.
Beaver Valley 2............. Shippingport, 831 Ohio Edison
PA. 20.22%; Penn
Power 13.74%;
Cleveland
Electric
24.47%; Toledo
Edison 1.65%.
Davis-Besse................. Oak Harbor, OH. 883 Cleveland
Electric
51.38%; Toledo
Edison 48.62%.
Perry....................... North Perry 1,260 OES Nuclear
Village, OH. 17.42%; Penn
Power 5.245%;
Toledo Edison
19.91%;
Cleveland
Electric
44.85%.
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The Utility Subsidiaries propose to sell or otherwise transfer
their respective ownership interests in the nuclear plants to FE
Nuclear by means of the following transactions, all of which would be
carried out concurrently: \3\
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\3\ The Utility Subsidiaries do not propose to transfer to FE
Nuclear their remaining percentage ownership interests in certain of
the nuclear facilities that are currently subject to sale and
leaseback arrangements with third parties.
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Transfer of Nuclear Plants by Penn Power. Pursuant to the terms of
a Subscription and Capital Contribution Agreement (``Penn Power
Contribution Agreement''), Penn Power would acquire 100 shares of
common stock of FE Nuclear in consideration for Penn Power's
contribution to FE Nuclear of its undivided interests in the two Beaver
Valley units and Beaver Valley common facilities and its undivided
interest in Perry Unit 1, together with associated decommissioning
funds. In connection with such contribution, FE Nuclear would assume
Penn Power's obligations in respect of $64 million aggregate principal
amount of pollution control revenue bonds (``PCRBs'') and certain other
liabilities associated with the transferred units. The parties to the
Penn Power Contribution Agreement have agreed that the value of the
contributed assets would be the net book value thereof as of the end of
the fiscal quarter immediately preceding the closing. Simultaneously,
Penn Power would receive from FE Nuclear a promissory note (``FE
Nuclear Note'') in respect of the book value of certain related assets,
including construction work in progress, nuclear fuel, inventories and
spare parts and accounts receivable, determined as of the end of the
quarter immediately preceding the closing. The FE Nuclear Note would
bear interest at a rate equal to Penn Power's weighted average cost of
long-term debt, would mature 20 years after its date of issuance, and
would be prepayable at any time, in whole or in part, by FE Nuclear.\4\
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\4\ Following the contribution to FE Nuclear, Penn Power would
distribute the stock of FE Nuclear as a dividend to its parent, Ohio
Edison, such that FE Nuclear would become, momentarily, a direct
wholly-owned subsidiary of Ohio Edison. If the transactions
described in the previous paragraph had occurred on March 31, 2005,
Applicants state that Penn Power's cost basis for the stock of FE
Nuclear would have been equal to the net book value of the
transferred interests in the Beaver Valley and Perry units and
associated assets (approximately $542 million), less the PCRB
obligations ($64 million) and agreed upon value of other liabilities
assumed by FE Nuclear (approximately $401 million), and the
distribution of the stock of FE Nuclear to Ohio Edison would have
resulted in a charge to Penn Power's retained earnings of $77
million.
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Transfer of Nuclear Plants by Ohio Edison. Pursuant to the terms of
a Capital Contribution Agreement (``Ohio Edison Contribution
Agreement''), Ohio Edison would contribute its undivided interests in
the two Beaver Valley units and Beaver Valley common facilities and the
common stock of OES Nuclear Incorporated (``OES Nuclear''), a wholly-
owned subsidiary of Ohio Edison, which holds an undivided interest in
Perry Unit 1, together with associated decommissioning funds and its
interests in other assets, inventories, fuel, spare parts, equipment,
supplies and contract rights relating to the transferred units, to FE
Nuclear as an additional capital contribution to FE Nuclear. In
connection with such transfer, FE Nuclear would assume Ohio Edison's
obligations in respect of $116 million aggregate principal amount of
PCRB obligations and certain other liabilities associated with the
transferred units. An additional $295 million of Ohio Edison's PCRBs
are expected to be assumed by FE Nuclear after the distribution
described in the next paragraph. The parties to the Ohio Edison
Contribution Agreement have agreed that the value of the contributed
assets would be the net book value thereof as of the end of the fiscal
quarter immediately preceding the closing.
Following the transfer of Ohio Edison's nuclear assets to FE
Nuclear, Applicants state that it is anticipated that OES Nuclear would
be merged with and into FE Nuclear, and Ohio Edison would distribute
the stock of FE Nuclear as a dividend to its parent, FirstEnergy, such
that FE Nuclear would become a direct wholly-owned subsidiary of
FirstEnergy.
If the transactions described above had occurred on March 31, 2005,
Applicants represent that Ohio Edison's cost basis for the stock of FE
Nuclear would have been equal to the net book value of the transferred
interests in the Beaver Valley and Perry units and associated assets
(approximately $712 million), less the initial PCRB obligations to be
assumed ($116 million)
[[Page 67208]]
and the agreed upon value of other liabilities assumed by FE Nuclear
(approximately $596 million), resulting in no charge to Ohio Edison's
retained earnings.
Sale of Nuclear Plants by Cleveland Electric and Toledo Edison.
Cleveland Electric and Toledo Edison have each entered into a Nuclear
Purchase and Sale Agreement with FE Nuclear (``Nuclear PSA''), under
which FE Nuclear has agreed to purchase Cleveland Electric's and Toledo
Edison's respective undivided ownership interests in Beaver Valley Unit
2, Perry Unit 1 and Davis-Besse for a purchase price equal to the net
book value thereof, determined as of the end of the fiscal quarter
immediately preceding the closing, together with the respective
interests of Cleveland Electric and Toledo Edison in nuclear
decommissioning trust funds associated with those plants and their
respective right, title and interest in and to all contracts, fuel,
spare parts, inventories, equipment, supplies and other assets
associated with each transferred unit, less the amount of obligations
of Cleveland Electric and Toledo Edison under PCRBs associated with the
transferred units ($367 million and $284 million, respectively, at
March 31, 2005), and the agreed upon value of certain other liabilities
associated with the transferred units.
At closing, FE Nuclear would pay the purchase price, determined as
described in the previous paragraph, by delivering to Cleveland
Electric and Toledo Edison FE Nuclear Notes secured by a lien on the
transferred assets. Each FE Nuclear Note would bear interest at a rate
per annum based on the average weighted cost of long-term debt of
Cleveland Electric and Toledo Edison, as the case may be, would mature
20 years after the date of issuance, and would be prepayable at any
time, in whole or in part, at the option of FE Nuclear, without
penalty.\5\
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\5\ If the transactions described above had been consummated at
March 31, 2005, Applicants state that the principal amounts of the
FE Nuclear Notes delivered to Cleveland Electric and Toledo Edison
would have been approximately $469 million and $307 million,
respectively.
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Repurchases of Common Stock of Cleveland Electric, Toledo Edison
and Penn Power. FirstEnergy states that, in connection with the
transfer of the nuclear plants to FE Nuclear, FirstEnergy would make a
cash capital contribution to FE Nuclear of up to $700 million. FE
Nuclear would use the proceeds of this investment at or subsequent to
closing to prepay a like amount of the FE Nuclear Notes delivered at
closing to Penn Power, Cleveland Electric and Toledo Edison. In turn,
Penn Power, Cleveland Electric and Toledo Edison would apply the
proceeds of such prepayment of the FE Nuclear Notes to repay
outstanding borrowings under the FirstEnergy system utility money pool.
To the extent that there are any remaining prepayment proceeds, the
Applicants request authorization for Cleveland Electric and Toledo
Edison to repurchase shares of their common stock that are held by
FirstEnergy and Penn Power requests authorization to repurchase shares
of its common stock that are held by Ohio Edison. Applicants state that
the purpose of these transactions is to adjust (i.e., reduce) the
equity and debt capitalization of Cleveland Electric, Toledo Edison and
Penn Power to mirror their smaller asset base after the transfer of
their undivided interests in the nuclear plants to FE Nuclear.
Financing by FE Nuclear
External Debt Financing by FE Nuclear. FE Nuclear is requesting
authorization to issue and sell to unaffiliated lenders, from time to
time during the period through the Authorization Period, long-term debt
securities having maturities of up to 50 years (``Long-term Debt'') and
short-term debt securities having maturities of less than one year
(``Short-term Debt'') in an aggregate amount at any time outstanding
not to exceed $1.5 billion (the ``FE Nuclear Debt Limit''). The
following general terms would be applicable where appropriate to Long-
term Debt and Short-term Debt of FE Nuclear:
(a) Effective Cost of Money. The effective cost of capital (i.e.,
the aggregate of all payments, including interest, dividend
distributions and other periodic payments) in respect of Long-term Debt
and Short-term Debt of FE Nuclear would not exceed competitive market
rates available at the time of issuance for securities having the same
or reasonably similar terms and conditions issued by similar companies
of reasonably comparable credit quality; provided that, in no event
would the effective cost of capital (i) on Long-term Debt exceed at the
time of issuance 500 basis points over the yield to maturity of
comparable-term U.S. Treasury securities if the interest rate on such
Long-term Debt securities is a fixed rate or, if the rate on such Long-
term Debt securities is a floating rate, 500 basis points over the
London Interbank Offered Rate (``LIBOR'') for maturities of less than
one year; and (ii) on Short-term Debt exceed at the time of issuance,
(A) in the case of commercial paper or any other short-term borrowing
that is not tied to a reference rate, 300 basis points over LIBOR, and
(B) in the case of any short-term borrowing that is tied to a reference
rate, either (1) 300 basis points over LIBOR, (2) 50 basis points over
the prime rate, as announced from time to time by CitiBank, or any
successor thereto, or (3) 100 basis points over the Federal Funds Rate,
whichever reference rate is applicable.
(b) Issuance Expenses. The underwriting fees, commissions or other
similar remuneration paid in connection with the non-competitive issue,
sale or distribution of any security (not including any original issue
discount) would not exceed 5% of the principal or total amount of the
security being issued.
(c) Use of Proceeds. The proceeds from the sale of securities in
external financing transactions would be used for general corporate
purposes, including financing, in part, of the capital expenditures of
FE Nuclear, financing of working capital requirements of FE Nuclear,
the acquisition, retirement or redemption of securities (including PCRB
obligations) previously issued by or on behalf FE Nuclear, and other
lawful purposes.
(d) Common Equity Ratio. FE Nuclear and each of the Utility
Subsidiaries commits that it would maintain common equity as a
percentage of consolidated capitalization (common stock equity, long-
term debt and short-term debt, including current maturities of long-
term debt) at 30% or higher.
(e) Ratings Event. With respect to the securities issuance for
which authorization is requested: (a) Within four business days after
the occurrence of a Ratings Event,\6\ Applicants would notify the
Commission of its occurrence (by means of a letter, via fax, e-mail or
overnight mail to the Office of Public Utility Regulation), and (b)
within 30 days after the occurrence of a Ratings Event, Applicants
would submit a post-effective amendment to this Application explaining
the material facts and circumstances relating to that Ratings Event
(including the basis on which, taking into account the interests of
[[Page 67209]]
investors, consumers and the public as well as other applicable
criteria under the Act, it remains appropriate for FE Nuclear to issue
the securities for which authorization has been requested, so long as
FE Nuclear continues to comply with the other applicable terms and
conditions specified in the Commission's order authorizing the
transactions requested in this Application). Furthermore, except in
accordance with a further order of the Commission, no such securities
would be issued following the 60th day after a Ratings Event (other
than Short-term Debt) if the downgraded rating(s) has or have not been
upgraded to investment grade. Applicants request that the Commission
reserve jurisdiction, through the remainder of the Authorization
Period, over the issuance of any securities (other than Short-term
Debt) that FE Nuclear is prohibited from issuing as a result of the
occurrence of a Ratings Event if no revised rating reflecting an
investment grade rating has been issued.
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\6\ A ``Ratings Event'' will be deemed to have occurred if,
during the Authorization Period, (i) any security issued by FE
Nuclear or FirstEnergy upon original issuance, if rated, is rated
below investment grade, or (ii) any outstanding security of
FirstEnergy or FE Nuclear that is rated is downgraded below
investment grade. For purposes of this provision, a security will be
deemed ``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 of the Securities Exchange Act of 1934, as amended).
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Description of Specific Types of External Debt Securities of FE Nuclear
Long-term Debt. Each series of Long-term Debt would have such
designation, aggregate principal amount, maturity, interest rate(s) or
methods of determining the same, terms of payment of interest,
redemption provisions, sinking fund terms and other terms and
conditions as FE Nuclear may determine at the time of issuance. Any
Long-term Debt (a) may be secured or unsecured, (b) may be senior or
subordinated, (c) would have maturities ranging from one to 50 years,
(d) may be subject to optional and/or mandatory redemption, in whole or
in part, at par or at various premiums above the principal amount
thereof, (e) may be entitled to mandatory or optional sinking fund
provisions, (f) may provide for reset of the coupon pursuant to a
remarketing arrangement, (g) may be subject to tender or the obligation
of the issuer to repurchase at the election of the holder or upon the
occurrence of a specified event, (h) may be called from existing
investors by a third party, and (i) may be entitled to the benefit of
affirmative or negative financial or other covenants.
Long-term Debt may also be in the form of agreements between FE
Nuclear and one or more industrial development authorities (``IDAs'')
pursuant to which an IDA agrees to issue PCRBs for the purpose of
financing or refinancing pollution control revenue facilities relating
to FE Nuclear's nuclear power plants. Under the terms of any such
agreement, payments to the issuing IDA would be designed to match
payments of principal of and interest on the PCRBs to which such
agreement relates.
As security for FE Nuclear's obligations under any agreement
relating to any series of PCRBs, FE Nuclear requests authority to (1)
issue its promissory note or notes to evidence the loan to FE Nuclear
of the proceeds of the PCRBs by the issuing IDA, (2) acquire and
deliver a letter of credit (``LOC'') guaranteeing payment of the PCRBs
and enter into reimbursement agreements with respect to any such LOC,
(3) acquire insurance policies guaranteeing payment of the PCRBs, and/
or (4) pledge its first mortgage bonds as collateral for its
obligations to the issuing IDA, any trustee, LOC bank or PCRB insurer.
To avoid double counting, FE Nuclear proposes that the amount of any
note or notes issued by FE Nuclear to evidence the loan to FE Nuclear
of the proceeds of any PCRBs or first mortgage bonds issued by FE
Nuclear as collateral security for PCRB obligations not count against
the FE Nuclear Debt Limit.
Short-term Debt. Short-term Debt of FE Nuclear may be in the form
of commercial paper, promissory notes and/or other forms of unsecured
short-term indebtedness. FE Nuclear may establish from time to time new
committed bank lines of credit, provided that only the principal amount
of any outstanding borrowings would be counted against the proposed FE
Nuclear Debt Limit. Credit lines may be set up for use by FE Nuclear
for general corporate purposes in addition to credit lines to support
commercial paper as described in this subsection. FE Nuclear would
borrow and repay under such lines of credit, from time to time, as it
is deemed appropriate or necessary. FE Nuclear may also engage in other
types of short-term financing, including borrowings under uncommitted
lines, generally available to borrowers with comparable credit ratings
as it may deem appropriate in light of its needs and market conditions
at the time of issuance.
Commercial paper would be sold in established domestic or European
commercial paper markets from time to time. Such commercial paper would
be sold to dealers at the discount rate or the coupon rate per annum
prevailing at the date of issuance for commercial paper of comparable
quality and maturities sold to commercial paper dealers generally. It
is expected that the dealers acquiring commercial paper from FE Nuclear
would reoffer such paper at a discount to corporate, institutional and,
with respect to European commercial paper, individual investors.
Institutional investors are expected to include commercial banks,
insurance companies, pension funds, investment trusts, foundations,
colleges and universities and finance companies.
Intrasystem Financing Transactions. FE Nuclear further requests
authorization to make direct long-term and short-term borrowings from
FirstEnergy (``Direct Borrowings''). All such Direct Borrowings would
be evidenced by FE Nuclear's promissory notes and would be prepayable
at any time without premium or penalty at FE Nuclear's option. The
aggregate principal amount of Direct Borrowings by FE Nuclear at any
time outstanding would be counted against and would in no event exceed
the FE Nuclear Debt Limit. The interest rate and maturity of any Direct
Borrowings would be designed to parallel the terms (i.e, effective cost
of funds and maturity) of similar debt securities issued by
FirstEnergy, as authorized by the Commission by order dated June 30,
2003 (HCAR No. 27694) (the ``2003 Financing Order'').
In addition, FE Nuclear requests authorization to become a
participant in and to make borrowings under the FirstEnergy system
nonutility money pool agreement (``Nonutility Money Pool'') subject to
terms and conditions previously approved by the Commission in the 2003
Financing Order.\7\ FE Nuclear requests authorization to borrow up to
$1 billion at any time outstanding under the Nonutility Money Pool.
Borrowings by FE Nuclear under the Nonutility Money Pool would also be
counted against the proposed FE Nuclear Debt Limit.
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\7\ Under the 2003 Financing Order, FirstEnergy is authorized to
maintain and make loans to its nonutility subsidiaries through the
Nonutility Money Pool.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. E5-6105 Filed 11-3-05; 8:45 am]
BILLING CODE 8010-01-P
