-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Io2OgZTZZeTPe8zzULhLtqgr/TQ2B+DjRYMBUuLuYYXkHsIR7B2A5LHVeVMSWuPz Qoj1K+47fVLaWMBkzwD+0g== 0000893220-00-000477.txt : 20000418 0000893220-00-000477.hdr.sgml : 20000418 ACCESSION NUMBER: 0000893220-00-000477 CONFORMED SUBMISSION TYPE: U-1/A PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20000417 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COLUMBIA ENERGY GROUP CENTRAL INDEX KEY: 0000022099 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS TRANSMISSION & DISTRIBUTION [4923] IRS NUMBER: 131594808 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: U-1/A SEC ACT: SEC FILE NUMBER: 070-09575 FILM NUMBER: 602890 BUSINESS ADDRESS: STREET 1: 13880 DULLES CORNER LANE STREET 2: SUITE 300 CITY: HENDERON STATE: VA ZIP: 20171-4600 BUSINESS PHONE: 7035616000 MAIL ADDRESS: STREET 1: 13880 DULLES CORNER LANE STREET 2: SUITE 300 CITY: HERNDON STATE: VA ZIP: 20171-4600 FORMER COMPANY: FORMER CONFORMED NAME: COLUMBIA GAS SYSTEM INC DATE OF NAME CHANGE: 19920703 U-1/A 1 AMENDMENT #1 TO FORM U-1/A 1 File No. 70-9575 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------------------------------ AMENDMENT NO. 1 FORM U-1/A APPLICATION-DECLARATION UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 ------------------------------------------------ COLUMBIA ENERGY GROUP 13880 Dulles Corner Lane Herndon, VA 20171-4600 ------------------------------------------------ (Names of company or companies filing this statement and addresses of principal executive offices) COLUMBIA ENERGY GROUP ------------------------------------------------ (Name of top registered holding company parent of each applicant or declarant) J. W. Trost, Vice President COLUMBIA ENERGY GROUP SERVICE CORPORATION 13880 Dulles Corner Lane Herndon, VA 20171-4600 ------------------------------------------------ (Name and address of agent for service) 2 Columbia Energy Group ("Columbia"), a registered holding company under the Public Utility Holding Company Act of 1935 (the "Act"), hereby submits for filing this Amendment No. 1 to its Application-Declaration on Form U-1, originally filed with the Securities and Exchange Commission on November 14, 1999. The amendment revises a paragraph in Item 1 and restates Item 6 to add and update the exhibits as follows: ITEM 1. DESCRIPTION OF PROPOSED TRANSACTION On page 9 of the original filing, revise paragraph (c) to read as follows: (c) The market's assessment of Columbia's future growth and earnings also compares favorably to other gas utility issuers. In 1998, Moody's Investors Service, Inc. ("Moody's") and Fitch Investors Service ("Fitch") each upgraded their ratings of Columbia's long-term debt to A3 and A, respectively. Columbia's long-term debt rating is BBB+ by Standard and Poor's Ratings Group ("S&P"). Columbia's commercial paper ratings are F-1 by Fitch, P-2 by Moody's and A-2 by S&P. As a result of the pending merger with NiSource Inc., Columbia's long-term debt ratings have been put on credit watch. * * * * * Restate Item 6 to read as follows: ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS (a) Exhibits A Letter of the Kentucky Public Service Commission B Letter of the Maryland Public Service Commission C Letter of the Public Utilities Commission of Ohio D Letter of the Pennsylvania Public Utility Commission (previously filed) E Letter of the Virginia State Corporation Commission F Opinion of Counsel G Proposed Notice (previously filed) 2 3 (b) Financial Statements Columbia Consolidated Financial Statements as of December 31, 1999 (incorporated by reference to the Annual Report on Form 10-K of Columbia for the fiscal year ended December 31, 1999). SIGNATURE Pursuant to the requirements of the Public Utility Holding Company Act of 1935, the undersigned companies have duly caused this Application-Declaration to be signed on their behalf by the undersigned thereunto duly authorized. COLUMBIA ENERGY GROUP DATE: April 17, 2000 by: //s//M. W. O'Donnell --------------------------------------- M. W. O'Donnell, Senior Vice President & Chief Financial Officer 3 4 EXHIBIT INDEX A Letter of the Kentucky Public Service Commission B Letter of the Maryland Public Service Commission C Letter of the Public Utilities Commission of Ohio E Letter of the Virginia State Corporation Commission F Opinion of Counsel 4 EX-99.A 2 LETTER OF THE KENTUCKY PUBLIC SERVICE COMMISSION 1 EXHIBIT A STATE SEAL PAUL E. PATTON, GOVERNOR COMMONWEALTH OF KENTUCKY B. J. HELTON PUBLIC SERVICE COMMISSION CHAIRMAN RONALD MCCLOUD, SECRETARY 211 SOWER BOULEVARD PUBLIC PROTECTION AND POST OFFICE BOX 615 EDWARD J. HOLMES REGULATION CABINET VICE CHAIRMAN FRANKFORT, KENTUCKY 40602-0615 MARTIN J. HUELEMANN WWW.PSC.STATE.KY.US EXECUTIVE DIRECTOR (502) 564-3940 GARY W. CLIFFS PUBLIC SERVICE COMMISSION FAX (502) 564-3460 COMMISSIONER
March 9, 2000 Honorable Arthur Levitt, Chairman Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Re: Columbia Energy Group/SEC File No. 70-9575 Dear Chairman Levitt: Columbia Gas of Kentucky ("Columbia KY"), a Kentucky gas distribution utility and subsidiary of Columbia Energy Group ("Columbia EG"), a registered public utility holding company, has advised this Commission that Columbia EG has filed an application-declaration on Form U-1 in the above docket ("the U-1") pursuant to the Public Utility Holding Company Act of 1935 ("PUHCA") requesting greater authority to invest in exempt wholesale generators ("EWGs") and foreign utility companies ("FUCOs"). Specifically, we understand that Columbia EG is requesting to increase its aggregate investment authority in EWGs and FUCOs from fifty percent of Columbia EG's consolidated retained earnings to one hundred percent of Columbia EG's consolidated retained earnings. Columbia EG has requested that we certify to you that such increased investment authority in EWGs and FUCOs will not impair the ability of the Kentucky Public Service Commission to regulate Columbia KY or protect its retail customers in Kentucky. As the State commission having jurisdiction over the retail gas rates of Columbia EG's Kentucky public utility subsidiary, Columbia KY, please be advised that based on: (1) this Commission's statutory authority to supervise and regulate gas utilities and all matters relating to the performance of their public duties and their charges therefor, and to correct any abuses of such utilities, 5 2 (2) the representations set forth in the U-1, including but not limited to the representations that the assets of Columbia KY will not be pledged or encumbered and that Columbia KY will not seek higher rates for potential losses or inadequate returns arising from any EWG and FUCO investments, and (3) the commitments set forth in Columbia EG's letter of February 24, 2000 (copy attached hereto), this Commission is of the view that Columbia EG's proposal will not impair the ability of this Commission to regulate Columbia KY or protect its retail customers in Kentucky. The foregoing opinion of this Commission is expressly conditioned on and is subject to being revised or withdrawn by this Commission, if it deems that action to be appropriate. Columbia EG has represented that it will timely inform this Commission when Columbia EG actually acquires ownership in EWGs or FUCOs pursuant to its proposal. Sincerely, B. J. Helton, Ph.D. Chairman Attachment RGR:v 6 3 COLUMBIA ENERGY GROUP 13880 DULLES CORNER LANE HERNDON, VIRGINIA 20171-4600 February 24, 2000 Dr. B.J. Helton, Chair Kentucky Public Service Commission 211 Sower Boulevard Frankfort, KY 40602 Re: Columbia Energy Group SEC File No. 70-9575 Dear Chairwoman Helton: This letter is in response to discussions with your staff regarding the solicitation by the Securities and Exchange Commission of your views with respect to the captioned matter. Columbia Energy Group ("Columbia") will continue to provide Columbia Gas of Kentucky, Inc. ("CKY") the necessary capital to ensure that CKY continues to provide safe, reliable service and growth of profitable new gas service at reasonable rates. CKY pledges to continue to aggressively pursue betterment and remediation of older plant, while conforming to all underground pipeline safety regulations. Columbia represents that the investments to be authorized in the captioned proceeding will not adversely impact the availability of long-term capital to CKY or the spending priorities related to underground pipeline safety and customer service. It is Columbia's opinion that its proposal for increased investment in exempt wholesale generators (EWGs") and foreign utility companies ("FUCOs") will not have a detrimental effect on the cost of capital of Columbia or CKY. Columbia represents that it will prudently manage the proposed increase in EWGs and FUCOs and it is not expected to cause a detrimental effect on the cost of capital of Columbia or CKY. Columbia and CKY will not seek recovery through higher rates or increased expenses to Kentucky ratepayers to compensate for any possible losses or increased expenses that may be sustained on investment in EWGs or FUCOs, or for any inadequate return on such investments. However, Columbia and CKY agree that if the credit rating of Columbia's debt is downgraded by a major credit rating agency (i.e., S&P, Moody's, or Fitch) due, in the opinion of the credit agency, wholly or in part to Columbia's investment in EWGs or FUCOs, Columbia and CKY pledge to notify the Commission within ten days of any such downgrade. As a part of that notice, Columbia and CKY will provide a detailed explanation of why the downgrade occurred and what plans exist to address and restore the previous credit rating. Columbia and CKY will further provide a detailed explanation of how Kentucky ratepayers can be prevented from paying higher rates due to increased costs as a result of the credit downgrading. The explanation will identify in detail the rate case methodologies for determining debt costs which ensure Kentucky ratepayers will not pay higher costs should Columbia's credit rating fall below the current rating due to EWG or FUCO investments, consistent with the SEC financing authority. Columbia's long-term debt rating is "BBB+" from S&P, an "A3" rating from Moody's and "A" from Fitch; however, following an unsolicited tender offer made by NiSource, Inc., some of these credit agencies have placed Columbia's long-term debt ratings on their review list for a possible change. In addition, Columbia and CKY agree to, and will observe, the following reporting requirements: 7 4 1. Provide to the Kentucky Public Service Commission ("Commission") all SEC forms filed in the public domain for reporting information related to EWG and FUCO investments no later than 10 days after such forms are provided to the SEC. 2. Provide the following upon request of the Commission: a) upon execution of a confidentiality agreement, Columbia will provide to the Commission, upon request, all SEC forms designated confidential for reporting information related to EWG and FUCO investments. b) a copy of the general corporate objectives regarding diversification and foreign utility investments and the specific objectives of such activities. c) reasonable access to relevant books and records and financial statements of Columbia and its affiliated interests. Columbia Energy Group By_______________________ Michael W. O'Donnell Senior Vice President and Chief Financial Officer Columbia Gas of Kentucky, Inc. By_______________________ Robert C. Skaggs, Jr. President and Chief Executive Officer 8 EX-99.B 3 LETTER OF THE MARYLAND PUBLIC SERVICE COMMISSION 1 EXHIBIT B STATE OF MARYLAND Commissioners [SEAL] BRYAN G. MOORHOUSE GENERAL COUNSEL GLENN F. IVEY DANIEL P. GAHAGAN CHAIRMAN EXECUTIVE SECRETARY CLAUDE M. LIGON GREGORY V. CARMEAN E. MASON HENDRICKSON EXECUTIVE DIRECTOR SUSANNE BROGAN GERALD L. THORPE PUBLIC SERVICE COMMISSION WILLIAM DONALD SCHAEFER TOWER 6 ST. PAUL STREET BALTIMORE, MARYLAND 21202-6806 (410) 767-8000 FAX NUMBER (410) 333-6495 (34, 6/24/98AM; ML#62034; S-345) June 26, 1998 The Honorable Jonathan G. Katz Secretary, Securities & Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Dear Secretary Katz: Columbia Gas of Maryland, Inc. ("CMD"), a subsidiary of Columbia Energy Group ("CEG"), a registered public utility holding company, has advised this Commission that CED is considering investment opportunities in Foreign Utility Companies ("FUCos") and Exempt Wholesale Generators ("EWGs"). In that connection, CMD and CEG have requested the Public Service Commission of Maryland to provide you with the certification contemplated by Section 33(a)(2) of the Public Utility Holding company Act, as added by the Energy Policy Act of 1992 (15 U.S.C. Section 79z-5(b)(a)(2)). The Public Service Company of Maryland certifies that it has the statutory authority and the resources to protect the ratepayers of CMD and intends to exercise that authority. This certification is considered applicable with respect to CEG's investment and acquisition of ownership in FUCos and EWGs. This certification is expressly 9 2 conditioned on and is subject to being revised or withdrawn by the Commission on a prospective basis, if it deems that action to be appropriate. By Direction of the Commission, Donald P. Eveleth Acting Executive Secretary jrb Enclosure 10 EX-99.C 4 LETTER OF THE PUBLIC UTILITIES COMMISSION OF OHIO 1 EXHIBIT C BOB TAFT, GOVERNOR ALAN R. SCHRIBER, CHAIRMAN PUCO The Public Utilities Commission of Ohio Commissioners Ronda Hartman Fergus Craig A. Glazer January 27, 2000 Judy A. Jones Donald L. Mason Honorable Arthur Levitt, Chairman Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Dear Chairman Levitt: RE: Columbia Energy Group (SEC File No. 70-9575) Exempt Wholesale Generator/Foreign Utility Company Certification Columbia Energy Group (Columbia) has advised the Public Utilities Commission of Ohion (PUCO) that Columbia will be requesting the approval of your Commission for increased investments in exempt wholesale generators (EWGs) and foreign utility companies (FUCOs) beyond that currently permitted under existing Columbia orders and Rule 53 under the Public Utilities Holding Company Act. Columbia has a wholly owned subsidiary, Columbia Gas of Ohio, Inc., which is a public utility subject to the regulatory authority of the PUCO. Columbia has requested that the PUCO certify to you that such increased investment authority in EWGs and FUCOs will not impair the ability of the PUCO to regulate Columbia Gas of Ohio, Inc. or to protect its ratepayers. As the State commission having jurisdiction over the retail rates of Columbia Gas of Ohio, Inc., please be advised that, based on: (1) the PUCO's statutory authority and jurisdiction, which is unaffected by this application, to supervise and regulate Columbia Gas of Ohio, Inc. and all matters relating to the performance of its public duties and its rates and charges and to protect the ratepayers of Columbia Gas of Ohio, Inc., and 11 2 (2) the representation that the assets of Columbia Gas of Ohio, Inc. will not be encumbered, the PUCO is of the view that Columbia's proposal will not impair the ability of the PUCO to regulate Columbia Gas of Ohio, Inc. or to protect its retail customers in Ohio. This opinion of the PUCO on Columbia's proposal is expressly conditioned on the provisions 1 and 2 above as well as the representations set forth in Columbia's application and is subject to being revised or withdrawn by the PUCO in the future, if the PUCO deems that action to be appropriate. Columbia has represented that it will timely inform the PUCO when Columbia actually acquires ownership in FUCOs or EWGs pursuant to its proposal. Sincerely, Alan R. Schriber Chairman cc: Catherine A. Fisher, Assistant Director, Office of Public Utility Regulation Robert P. Wason, Chief Financial Analyst, Office of Public Utility Regulation 12 EX-99.E 5 LETTER OF THE VIRGINIA STATE CORP. COMMISSION 1 EXHIBIT E COMMONWEALTH OF VIRGINIA STATE SEAL STATE CORPORATION COMMISSION OFFICE OF SOLICITOR GENERAL BOX 1197, RICHMOND, VIRGINIA 23218 (804) 371-9778 FAX: (804) 371-9376 December 14, 1999 Mr. Mark F. Vilardo Senior Counsel Securities and Exchange Commission 450 Fifth Street, N.W. Washington, DC 20549 Re: Columbia Energy Group SEC File No. 70-9575 Dear Mr. Vilardo: This letter is in reply to yours of November 10, 1999, addressed to Chairman Theodore V. Morrison, Jr. of this Commission regarding the above application. In that application, Columbia Energy Group ("CEG") has requested Securities and Exchange Commission ("SEC") approval for an increase in its authority to invest in exempt wholesale generators and foreign utility companies beyond that permitted under its existing SEC authority. In connection with such proposal, you have requested that the Virginia State Corporation Commission ("SCC") provide the SEC with a statement of its views concerning its ability to protect the ratepayers of Columbia Gas of Virginia ("CGV") in regard to CEG's proposed transaction. This Commission has jurisdiction over the retail electric rates in Virginia of CEG's public utility subsidiary, CGV, and has the statutory authority to supervise and regulate such gas utilities in all matters relating to the performance of their public duties and their charges therefor. Please be advised that, based upon CEG's and CGV's letter of November 10, 1999, to the SCC, copy enclosed, and upon CEG's above filing with the SEC and representations and agreements made by CEG and CEV in such documents, the SCC is of the opinion that CEG's proposal will not impair the ability of the SCC to protect CGV and its ratepayers in the Commonwealth of Virginia. This Commission has the authority and resources to protect ratepayers subject to its jurisdiction, and it intends to exercise its authority. This statement of the SCC is expressly subject to being revised or withdrawn by the SCC if it deems such action to be appropriate in the future. Sincerely, /s/ Stewart E. Farrar Solicitor General 13 2 SEF/ Enclosure cc: Chairman Theodore V. Morrison, Jr. Commissioner Hullihen Williams Moore Commissioner Clinton Miller Michael W. O'Donnell, Columbia Energy Group Anthony Trubisz, Jr., Columbia Gas of Virginia 14 3 COLUMBIA ENERGY GROUP 13880 DULLES CORNER LANE HERNDON, VIRGINIA 20171-4600 November 10, 1999 The Honorable I. Clinton Miller The Honorable Hullihen Williams Moore The Honorable Theodore V. Morrison, Jr. Commonwealth of Virginia State Corporation Commission Tyler Building 1300 East Main Street Richmond, Virginia 23219-3630 RE: COLUMBIA ENERGY GROUP SEC FILE NO. 70-9575 Dear Commissioners: This letter is in response to discussions with your staff regarding the solicitation by the Securities and Exchange Commission of your views with respect to the captioned matter. Your staff expressed several concerns relating to Columbia Gas of Virginia, Inc.'s ("CGV") access to long-term capital from the Columbia Energy Group ("Columbia"). Columbia will continue to provide CGV the necessary capital to ensure that CGV continues to provide safe, reliable service and growth of profitable new gas service at reasonable rates. CGV pledges to continue to aggressively pursue betterment and remediation of older plant, while conforming to all underground pipeline safety regulations. CGV pledges to further improve customer service and better inform Staff of its plans for improvement of customer service delivery. Columbia represents that the investments to be authorized in the captioned proceeding will not adversely impact the availability of long-term capital to CGV or the spending priorities related to underground pipeline safety and customer service. It is Columbia's opinion that its proposal for increased investment in exempt wholesale generators ("EWGs") and foreign utility companies ("FUCOs") will not have a detrimental effect on the cost of capital of Columbia or CGV. Columbia represents that it will prudently manage the proposed increase in EWGs and FUCOs and it is not expected to cause a detrimental effect on the cost of capital of Columbia or CGV. Columbia and CGV will not seek recovery through higher rates or increased expenses to Virginia ratepayers to compensate for any possible losses or increased expenses that may be sustained on investment in EWGs or FUCOs, or for any inadequate return on such investments. However, Columbia and CGV agree that if the credit rating of Columbia's debt is downgraded by a major credit rating agency (i.e., S&P, Moody's, or Fitch) due, in the opinion of the credit agency, wholly or in part to Columbia's investment in EWGs or FUCOs, Columbia and CGV pledge to notify the Commission with ten days of any such downgrade. As a part of that notice, Columbia an CGV will provide a detailed explanation of why the downgrade occurred and what plans exist to address and restore the previous credit rating. Columbia and CGV will further provide a detailed explanation of how Virginia ratepayers can be prevented from paying higher rates due to increased costs as a result of the credit downgrading. The explanation will identify in detail the rate case methodologies for determining debt costs which ensure Virginia ratepayers will not pay higher costs should Columbia's credit rating fall below the current rating due to EWG or FUCO investments, consistent with the SEC financing authority. Columbia debt currently carries a 15 4 "BBB+" rating from S&P, an "A3" rating from Moody's, and an "A" rating from Fitch; however, in the second quarter of 1999, Moody's and Fitch announced that they placed Columbia's debt ratings on review for possible downgrade due to uncertainties surrounding the unsolicited tender offer made by NiSource, Inc. Fitch subsequently affirmed its rating. In addition, Columbia and CGV agree to, and will observe, the following reporting requirements: 1. Provide to the SCC's Division of Economics and Finance ("Division") all SEC forms filed in the public domain for reporting information related to EWG and FUCO investments no later than 10 days after such forms are provided to the SEC. 2. Provide the Division, by December 31 of each year, a copy of CGV's Gas Utility Five-Year Forecast, including a detailed five-year cash flow forecast, five-year projected capital structure balances and planned dividend payments from CGV to Columbia (see page 3 for a sample format), and descriptions of major improvements and reliability programs planned for each region/division of CGV, as well as regional/divisional/statewide customer service improvement programs. 3. Provide the following upon request of the Division: a) upon execution of a confidentiality agreement, Columbia will provide to the Division, upon request, all SEC forms designated confidential for reporting information related to EWG and FUCO investments. b) a copy of the general corporate objectives regarding diversification and foreign utility investments and the specific objectives of such activities. c) reasonable access to relevant books and records and financial statements of Columbia and its affiliated interests. Columbia Energy Group By:______________/s/_____________________ Michael V. O'Donnell Senior Vice President and Chief Financial Officer Columbia Gas of Virginia, Inc. By:______________/s/_____________________ Anthony Trubisz, Jr. President and Chief Executive Officer cc: Sherry H. Bridewell, Esq. [Sample format omitted] 16 EX-99.F 6 OPINION OF COUNSEL 1 EXHIBIT F April 17, 2000 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Re: Columbia Energy Group, File No. 70-9575 Dear Sirs: As counsel for Columbia Energy Group ("Columbia"), a holding company registered under the Public Utility Holding Company Act of 1935 (the "Act") I deliver to you this opinion for filing as Exhibit F to the Application-Declaration referenced above. Briefly stated, Columbia is seeking authority to invest in exempt wholesale generators and foreign utility companies in an amount up to 100% of its consolidated retained earnings as defined in Rule 53 under the Act. In connection with the above, I have examined: - - the Application-Declaration, as amended; and - - such other documents, records and matters of law as I deemed necessary to enable me to render this opinion. Based upon the foregoing and relying thereupon, I am of the opinion that if the above-referenced transactions are consummated in accordance with the Application-Declaration: - - all state and federal laws applicable to the proposed transactions will have been complied with; and - - the consummation of the proposed transactions will not violate the legal rights of the holders of any securities issued by Columbia, or by any associate company thereof. I hereby consent to the filing of this opinion as an exhibit to the Application-Declaration. Very truly yours, //s// Emanuel D. Strauss Columbia Energy Group Service Corporation 17 -----END PRIVACY-ENHANCED MESSAGE-----