(Release No. 35-27730; 70-9343)
Northeast Utilities, et al.
Supplemental Order Authorizing an Extension of Time to Issue Guarantees
September 30, 2003
Northeast Utilities ("NU"), West Springfield, Massachusetts, a registered holding company, NU's wholly owned nonutility subsidiary, NU Enterprises, Inc. ("NUEI"), and Northeast Utilities Service Company, both located in Berlin, Connecticut, (collectively, the "Applicants") have filed a post-effective amendment ("Declaration") with the Securities and Exchange Commission ("Commission") under section 12(b) of the Public Utility Holding Company Act of 1935, as amended ("Act") and rules 45 and 54 under the Act amending Applicants' previously filed application-declaration. The Commission issued a notice of the filing of the Declaration on August 15, 2003 (Holding Company Act Release No. 27712).
By order dated November 12, 1998 (HCAR No. 26939) ("Prior Order"), the Commission authorized NU and NUEI to, among other things, issue guarantees or provide similar forms of credit support or enhancements (collectively, "Guarantees") to, or for the benefit of NUEI, NUEI's nonutility subsidiaries, or NU's other to-be-formed direct or indirect energy-related companies, as defined in rule 58 of the Act. The Commission, through subsequent orders in this file,1 authorized an increase in this Guarantee authority to $500 million and the extension of the date through which Guarantees may be provided through September 30, 2003, under the terms and conditions of the Prior Order. Applicants now request to maintain the Guarantee authority at $500 million and to extend the date through which the Guarantees may be provided through June 30, 2004 ("Authorization Period"), under the terms and conditions of the Prior Order.
NU represents that it will maintain common equity as a percentage of its consolidated capitalization (inclusive of short-term debt) at 30 percent or above during the Authorization Period. NU incorporates by reference the Investment Grade Condition set forth in the Commission's order dated June 30, 2003.2
Applicants state that NU cannot comply with all of the requirements of rule 53(a), but none of the adverse conditions described in rule 53(b) exist. As of March 31, 2003, NU's "aggregate investment," as defined in rule 53(a)(1), in exempt wholesale generators ("EWGs") and foreign utility companies ("FUCOs") as those terms are respectively defined in sections 32 and 33 of the Act was approximately $448.2 million, or approximately 60 percent of NU's average "consolidated retained earnings," as defined in rule 53(a)(1). Although NU's current aggregate investment in EWGs and FUCOs exceeds the limit described in rule 53(a), the company is still below the previously established aggregate investment limit.3 This investment amount exceeds the 50 percent "safe harbor" limitation contained in rule 53(a). Applicants state that, since the Commission issued the EWG/FUCO Order, these types of investments have not had a material adverse impact on NU's consolidated capitalization. In addition, although NU's common stock equity ratio has slightly decreased since the issuance of the EWG/FUCO Order, it is currently above 30 percent.4 Applicants also state that, since the EWG/FUCO Order was issued, NU's level of earnings from its investments in EWGs and FUCOs has not materially changed. Applicants further state that NU satisfies all of the other conditions of paragraphs (a) and (b) of rule 53.
No additional fees or expenses are expected to be incurred in connection with these transactions. NU states that no other state or federal commission, other than this Commission, has jurisdiction over the proposed transactions. Due notice of the filing of the Declaration has been given in the manner prescribed in rule 23 under the Act, and no hearing has been requested of or ordered by the Commission. On the basis of the facts in the record, it is hereby found, that the applicable standards of the Act and rules under the Act are satisfied, and that no adverse findings are necessary.
IT IS ORDERED, under the applicable provisions of the Act and rules under the Act, that the Declaration, as amended, be and hereby is, granted and permitted to become effective immediately, subject to the terms and conditions prescribed in rule 24 under the Act.
For the Commission, by the Division of Investment Management, pursuant to delegated authority.
Margaret H. McFarland