(Release No. 35-27731; 70-9635)
Xcel Energy, Inc., et al.
Order Authorizing Various Financing Transactions; Issuance of Common Stock and Long-Term Securities; Intrasystem Financing and Guarantee Authorities; Implementation of Money Pool for Utility Subsidiaries; and Reservation of Jurisdiction
September 30, 2003
Xcel Energy Inc. ("Xcel"), a holding company registered under the Act, and certain subsidiaries,1 (collectively, "Applicants"2) have filed a post-effective amendment to an application-declaration ("Application") previously filed with the Commission under sections 6(a), 7, 9(a), 10, 12(b), 12(c), 12(f), 32 and 33 of the Act and rules 43, 45, 46, 53 and 54 under the Act. The Commission issued a notice of the filing of the Application on September 5, 2003 (Holding Co. Act Release No. 27720).
Applicants request authority to extend the time period in which to engage in a variety of financing transactions and other related proposals, as more fully discussed below, commencing on the effective date of an order issued under this Application and ending June 30, 2005 ("Requested Authorization Period"). Applicants also request certain revisions to the terms and conditions for intrasystem financings and guarantees, including the implementation of a utility money pool, and the terms and conditions relating to the formation and operation of financing subsidiaries.
By order dated August 22, 2000 (HCAR No. 27218) ("August 2000 Order"), the Commission authorized Xcel to, among other things, issue and sell common stock and long-term debt securities during a period through September 30, 2003 ("Original Authorization Period"), provided that the aggregate proceeds of these issuances, together with any long-term debt and preferred securities issued by financing entities established by Xcel, did not exceed $2.0 billion. In the August 2000 Order, the Commission reserved jurisdiction over Xcel's request to use the proceeds of financings to make investments in exempt wholesale generators ("EWGs"), as defined in section 32 of the Act, and foreign utility companies ("FUCOs"), as defined in section 33 of the Act, in excess of $1.2 billion. By order dated March 7, 2002 (HCAR No. 27494) ("100% Order", and together with the August 2000 Order, "Original Financing Orders"), the Commission released that reservation of jurisdiction. By order dated May 29, 2003 (HCAR No. 27681), the Commission authorized Xcel's request to declare and pay dividends out of capital and unearned surplus in an aggregate amount not to exceed $152 million ("Supplemental Financing Order" and, together with the Original Financing Orders, the "Financing Orders").
Applicants request that the Commission release its reservation of jurisdiction in the Supplemental Financing Order so as to authorize an increase in the aggregate amount of common stock and long-term debt securities that Xcel can issue during the Requested Authorization Period from $2.0 billion, as authorized in the August 2000 Order, to $2.5 billion. Applicants also request that the financing authority granted by this Application be subject to certain general terms and conditions.
A. Financing Orders
In the Original Financing Orders, the Commission authorized the following transactions ("Financing Authority"):
In the Supplemental Financing Order, the Commission authorized Xcel to declare and pay two quarterly dividends out of capital and unearned surplus on its common stock and its preferred stock, in an aggregate amount of up to $152 million and the Commission reserved jurisdiction over Xcel's request to increase the aggregate amount of common stock and long-term debt securities that it may issue during the Original Authorization Period from the $2.0 billion (authorized by the August 2000 Order) to $2.5 billion. Applicants request that the Commission release that reserved jurisdiction.
II. Modifications to the Financing Parameters
Applicants request certain modifications to the financing conditions contained in the Financing Orders. Applicants request that the financing authority granted by the Application be subject to the following general terms and conditions, where appropriate:
Effective Cost of Money. The effective cost of money on debt and preferred securities issued to non-associate companies pursuant to authorization in the Financing Orders and/or an order in this matter will not exceed competitive market rates for securities of comparable credit quality with similar terms and features.
Maturity of Debt. The maturity of authorized indebtedness will not exceed 50 years.
Investment Grade Ratings. Applicants further represent that apart from securities issued for the purpose of Intrasystem Financings, no guarantees or other securities, other than common stock, may be issued in reliance upon the authorization granted by the Commission pursuant to the Application, unless (i) the security to be issued, if rated, is rated investment grade; (ii) all outstanding securities of the issuer (except in the case of Xcel, Xcel's preferred stock) that are rated are rated investment grade; and (iii) all outstanding securities of Xcel (except for Xcel's preferred stock)8 that are rated are rated investment grade. For purposes of this provision, a security will be deemed to be rated investment grade if it is rated investment grade by at least one nationally recognized statistical rating organization. Xcel's preferred stock is not rated investment grade. Applicants request that the Commission reserve jurisdiction over the issuance by Xcel of preferred stock and/or any other 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. For purposes of this provision, a security will be deemed to be rated investment grade if it is rated investment grade by at least one nationally recognized statistical rating organization.
Capitalization Ratios. Xcel's common equity, as reflected on its most recent Form 10-K or Form 10-Q and as adjusted to reflect subsequent events that affect capitalization, will be at least 30% of consolidated total capitalization (the "Xcel 30% Test");9 provided that in any event when Xcel does not satisfy the Xcel 30% Test, Xcel may issue common stock under this authorization. Similarly, the common stock equity of each Utility Subsidiary will be at least 30% of that Utility Subsidiary's total capitalization. Xcel requests that the Commission reserve jurisdiction over Xcel's authority to engage in the financing transactions authorized in the Financing Orders and in this proceeding at a time when Xcel does not satisfy the Xcel 30% Test.
Fees, Commissions and Other Remuneration. The underwriting fees, commissions and other similar remuneration paid in connection with the non-competitive issuance of any security issued by Xcel will not exceed the greater of (A) 5% of the principal or total amount of the securities being issued or (B) issuances expenses that are paid at the time in respect of the issuance of securities having the same or reasonably similar terms and conditions issued by similar companies of reasonably comparable credit quality.
Use of Proceeds. Applicants state that the proceeds from the financings authorized by the Commission pursuant to the Application will be used for the same purposes authorized in the August 2000 Order, which are general corporate purposes, including (i) financing investments by and capital expenditures of Xcel and its Subsidiaries, (ii) the repayment, redemption, refunding or purchase by Xcel or any of its Subsidiaries of securities issued by companies without the need for prior Commission approval pursuant to rule 42 or a successor rule, (iii) financing working capital requirements of Xcel and its Subsidiaries, and (iv) other lawful general purposes. In addition, any use of proceeds to make investments in any "energy-related company," as defined in rule 58 under the Act, will be subject to the investment limitation of the rule, and any use of proceeds to make investments in any EWG or FUCO will be subject to the investment limitation and other conditions in the 100% Order or any order amending or replacing the 100% Order. Xcel further commits that no financing proceeds will be used to acquire the equity securities of any new subsidiary unless the acquisition has been approved by the Commission in this proceeding or in a separate proceeding or is in accordance with an available exemption under the Act or the rules.
Xcel requests that the Commission release jurisdiction reserved in the Supplemental Financing Order over Xcel's request to increase the aggregate amount of common stock and long-term debt securities that it may issue from $2.0 billion to $2.5 billion. Specifically, Xcel requests authorization, subject to the financing parameters in the Application, to issue and sell common stock and/or long-term debt securities for the uses described herein, provided that the aggregate proceeds received during the Requested Authorization Period upon issuance of common stock (exclusive of the issuance of common stock specifically authorized in the Financing Orders with respect to employee benefit plans and dividend reinvestment plans, the issuance of common stock specifically authorized in the NRG Order and the issuance of common stock pursuant to NRG's Plan of Reorganization) and the aggregate principal amount of long-term debt issued and outstanding at any one time during the Requested Authorization Period, together with any long-term debt or preferred securities issued by Financing Subsidiaries established by Xcel, shall not exceed $2.5 billion.
III. Common Stock and Long-Term Debt
Applicants propose that the issuance of common stock10 and long-term debt of Xcel would be subject to the following general terms and conditions:
Common Stock. Subject to the limits described above and the other conditions described in the Application, Xcel may issue and sell common stock, options, warrants and stock purchase rights exercisable for common stock, or other equity-linked securities or contracts to purchase common stock. Financings may be effected pursuant to underwriting agreements of a type generally standard in the industry. Public distributions may be pursuant to private negotiation with underwriters, dealers or agents, as discussed below, or effected through competitive bidding among underwriters. In addition, sales may be made through private placements or other non-public offerings to one or more persons. All common stock sales will be at rates or prices and under conditions negotiated or based upon, or otherwise determined by, competitive capital markets.
Xcel may also issue common stock in public or privately-negotiated transactions in exchange for the equity securities or assets of other companies, provided that the acquisition of any equity securities or assets has been authorized in this proceeding or in a separate proceeding or is exempt under the Act.
Long-Term Debt. The long-term debt to be issued by Xcel under the authorization will be unsecured. Subject to the limits described above and the other conditions described in the Application, Xcel's long-term debt (a) may be subordinated in right of payment to other debt and other obligations of Xcel, (b) may be convertible into any other securities of Xcel, (c) will 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 interest rate pursuant to a remarketing arrangement, and (g) may be called from existing investors by a third party. In addition, Xcel may have the right from time to time to defer the payment of interest on all or a portion of its long-term debt (which may be fixed or floating or "multi-modal", i.e., where the interest is periodically reset, alternating between fixed and floating interest rates for each reset period).
Xcel states that long-term debt securities would be issued and sold directly to one or more purchasers in privately-negotiated transactions or to one or more investment banking or underwriting firms or other entities who would resell securities without registration under the Securities Act of 1933, as amended, in reliance upon one or more applicable exemptions from registration, or to the public either (i) through underwriters selected by negotiation or competitive bidding or (ii) through selling agents acting either as agent or as principal for resale to the public either directly or through dealers.
IV. Intrasystem Financings and Guarantees
Applicants request authority for Xcel to enter into guarantees, obtain letters of credit, enter into expense agreements or otherwise provide credit support ("Guarantees") with respect to the obligations of Utility Subsidiaries as may be appropriate to enable the Utility Subsidiaries to carry on in the ordinary course of their respective businesses, and Xcel and its Nonutility Subsidiaries to enter into Guarantees with respect to the obligations of Nonutility Subsidiaries as may be appropriate to enable Nonutility Subsidiaries to carry on in the ordinary course of their respective businesses; provided that the aggregate principal amount of intrasystem financings and Guarantees pursuant to this paragraph shall not exceed $1.0 billion outstanding at any one time during the Requested Authorization Period. The $1.0 billion excludes any Guarantees that are exempt pursuant to rules 45(b) and 52. The authorization requested will permit issuances of guarantees in situations where the exemptions provided by rules 45(b) and 52 are not applicable.
Xcel may charge each Subsidiary a fee for each Guarantee provided on behalf of the Subsidiary that is determined by multiplying the amount of any guarantee by Xcel by the cost of obtaining the liquidity necessary to perform the guarantee (for example, bank line commitment fees or letter of credit fees) for the period of time the guarantee remains outstanding. Nonutility Subsidiaries may also charge each Nonutility Subsidiary a fee for each guarantee provided on its behalf determined in the same manner as specified above. Applicants also request authorization for Xcel to finance its Nonutility Subsidiaries and its Nonutility Subsidiaries to finance other Nonutility Subsidiaries in an aggregate principal amount outstanding at any one time during the Requested Authorization Period of not to exceed $400 million. This $400 million excludes any financings that are exempt pursuant to rules 45(b) and 52.
In the case of loans by Xcel or a Nonutility Subsidiary to a Nonutility Subsidiary, the company making the loan or extending the credit may charge interest at the same effective rate of interest as the daily weighted average effective rate of commercial paper, revolving credit and/or other short-term borrowings of the lending company, including an allocated share of commitment fees and related expenses. If no borrowings are outstanding, then the interest rate shall be predicated on the Federal Funds' effective rate of interest as quoted daily by the Federal Reserve Bank of New York. In the limited circumstances where the Nonutility Subsidiary effecting the borrowing is not wholly-owned by Xcel, directly or indirectly, authority is requested under the Act for Xcel or a Nonutility Subsidiary to make the loans to the subsidiaries at interest rates and maturities designed to provide a return to the lending company of not less than its effective cost of capital. If loans are made to a Nonutility Subsidiary which is not wholly-owned, the Nonutility Subsidiary will not provide any services to any associate Subsidiary except a company which meets one of the conditions for rendering of services on a basis other than "at cost", as authorized in HCAR No. 27212 (August 16, 2000).
V. Utility Money Pool
In order to provide intrasystem financing to the Utility Subsidiaries, Applicants request authorization to operate a Utility Money Pool. The Utility Money Pool would include some or all of the Utility Subsidiaries as borrowers from and lenders to the pool. Xcel would participate in the Utility Money Pool, but only as a lender to the pool. Xcel Energy Services Inc. ("Xcel Services") will act as the administrator of the Utility Money Pool. To the extent not exempted by rule 52, the Utility Subsidiaries request authorization to make unsecured short-term borrowings from the Utility Money Pool and to contribute surplus funds to the Utility Money Pool and to lend and extend credit to (and acquire promissory notes from) one another through the Utility Money Pool. Xcel requests authorization to contribute surplus funds and to lend and extend credit to the Utility Subsidiaries through the Utility Money Pool. No loans through the Utility Money Pool would be made to, and no borrowings through the Utility Money Pool would be made by, Xcel
Applicants believe that the cost of the proposed borrowings through the Utility Money Pool will generally be more favorable to the borrowing participants than the comparable cost of external short-term borrowings, and the yield to the participants contributing available funds to the Utility Money Pool will generally be higher than the typical yield on short-term investments.
Under the proposed terms of the Utility Money Pool, short-term funds would be available from the following sources for short-term loans to each of the Utility Subsidiaries from time to time: (1) surplus funds in the treasuries of Utility Money Pool participants, (2) surplus funds in the treasury of Xcel, and (3) proceeds from bank borrowings by Utility Money Pool participants or the sale of commercial paper by the Utility Money Pool participants for loan to the Utility Money Pool ("External Funds"). The determination of whether a Utility Money Pool participant at any time has surplus funds to lend to the Utility Money Pool or shall borrow funds from the Utility Money Pool would be made by the participant's chief financial officer or treasurer, or by a designee thereof, on the basis of cash flow projections and other relevant factors, in that participant's sole discretion.
Utility Money Pool participants that borrow would borrow pro rata from each company that lends, in the proportion that the total amount loaned by each lending company bears to the total amount then loaned through the Utility Money Pool. On any day when more than one fund source (e.g., surplus treasury funds of Xcel and other Utility Money Pool participants ("Internal Funds") and External Funds), with different rates of interest, is used to fund loans through the Utility Money Pool, each borrower would borrow pro rata from each fund source in the Utility Money Pool in the same proportion that the amount of funds provided by that fund source bears to the total amount of short-term funds available to the Utility Money Pool.
Borrowings from the Utility Money Pool would require authorization by the borrower's chief financial officer or treasurer, or by a designee. No party would be required to effect a borrowing through the Utility Money Pool if it is determined that it could (and had authority to) effect a borrowing at lower cost directly from banks or through the sale of its own commercial paper. The cost of compensating balances, if any, and fees paid to banks to maintain credit lines and accounts by Utility Money Pool participants lending External Funds to the Utility Money Pool would initially be paid by the participant maintaining the line. A portion of these costs -- or all of the costs in the event a Utility Money Pool participant establishes a line of credit solely for purposes of lending any External Funds obtained into the Utility Money Pool -- would be retroactively allocated every month to the companies borrowing these External Funds through the Utility Money Pool in proportion to their respective daily outstanding borrowings of External Funds.
If only Internal Funds make up the funds available in the Utility Money Pool, the interest rate applicable and payable to or by the Utility Money Pool participants for all loans of Internal Funds outstanding on any day will be the rates for high-grade unsecured 30-day commercial paper sold through dealers by major corporations as quoted in The Wall Street Journal on the last business day of the prior calendar month. If only External Funds comprise the funds available in the Utility Money Pool, the interest rate applicable to loans of External Funds would be equal to the lending company's cost for External Funds (or, if more than one Utility Money Pool participant had made available External Funds on that day, the applicable interest rate would be a composite rate equal to the weighted average of the cost incurred by the respective Utility Money Pool participants for External Funds).
In cases where both Internal Funds and External Funds are concurrently borrowed through the Utility Money Pool, the rate applicable to all loans comprised of "blended" funds would be a composite rate equal to the weighted average of (a) the cost of all Internal Funds contributed by Utility Money Pool participants (as determined pursuant to the second-preceding paragraph above) and (b) the cost of all External Funds (as determined pursuant to the immediately preceding paragraph, above).
Funds not required by the Utility Money Pool to make loans (with the exception of funds required to satisfy the Utility Money Pool's liquidity requirements) would ordinarily be invested in one or more short-term investments, including: (i) interest-bearing accounts with banks; (ii) obligations issued or guaranteed by the U.S. government and/or its agencies and instrumentalities, including obligations under repurchase agreements; (iii) obligations issued or guaranteed by any state or political subdivision, provided that obligations are rated not less than "A" by a nationally recognized rating agency; (iv) commercial paper rated not less than "A-1" or "P- 1" or their equivalent by a nationally recognized rating agency; (v) money market funds; (vi) bank certificates of deposit; (vii) Eurodollar funds; and (viii) other investments as are permitted by section 9(c) of the Act and rule 40 under the Act.
The interest income and investment income earned on loans and investments of surplus funds would be allocated among the participants in the Utility Money Pool in accordance with the proportion each participant's contribution of funds bears to the total amount of funds in the Utility Money Pool. Each Applicant receiving a loan through the Utility Money Pool would be required to repay the principal amount of the loan, together with all interest accrued, on demand. All loans made through the Utility Money Pool may be prepaid by the borrower without premium or penalty. Operation of the Utility Money Pool, including record keeping and coordination of loans, will be handled by Xcel Services under the authority of the appropriate officers of the participating companies. Xcel Services will administer the Utility Money Pool on an "at cost" basis.
Proceeds from the Utility Money Pool may be used by each Utility Subsidiary (i) for the interim financing of its construction and capital expenditure programs, (ii) for its working capital needs, (iii) for the repayment, redemption or refinancing of its debt and preferred stock, (iv) to meet unexpected contingencies, payment and timing differences and cash requirements, and (v) to otherwise finance its own business and for other lawful general corporate purposes. The Utility Subsidiaries request authority to borrow up to an amount at any one time outstanding from the Utility Money Pool as set forth below:
Loans to Cheyenne and Black Mountain through the money pool will be counted against their respective $40 million limits applicable to short-term debt
VI. Financing Subsidiaries.
For the Requested Authorization Period, Applicants request that the terms and conditions in respect of Financing Subsidiaries be modified. Applicants request authority for Xcel and its Subsidiaries to acquire, directly or indirectly, the equity securities of one or more corporations, trusts, partnerships or other entities ("Financing Subsidiaries") created specifically for the purpose of facilitating the financing of the authorized and exempt activities (including exempt and authorized acquisitions) of Xcel and the Subsidiaries through the issuance of debt or preferred securities, including but not limited to monthly income preferred securities, to third parties and the loaning of the proceeds of financings to Xcel or Subsidiaries. The proceeds of any securities issuance by a Financing Subsidiary would be loaned, dividended or otherwise transferred to Xcel or the Subsidiary that established a Financing Subsidiary. The proceeds of any securities issuances by a Financing Subsidiary would count against any applicable authorization limit of Xcel or a Subsidiary establishing a Financing Subsidiary as though Xcel or the Subsidiary had undertaken the issuance directly. Xcel or the Subsidiary that established a Financing Subsidiary, as applicable, may, if required, guarantee all or part of the obligations of a Financing Subsidiary under any securities issued by the Financing Subsidiary. Xcel or the Subsidiary that established a Financing Subsidiary, as applicable, also may enter into expense arrangements in respect of the obligations of the Financing Subsidiary. However, the amount of any guarantee by Xcel or a Subsidiary would not be counted against the authorization limit in respect of intra-system financings and guarantees discussed above.
Any long-term debt or preferred securities would be issued with terms and features negotiated or based upon, or otherwise determined by, competitive capital markets, and in any event consistent with the general terms set forth above for Xcel. Any preferred securities would have dividend rates or methods of determining the same, redemption provisions, conversion or put terms and other terms and conditions as Xcel may determine at the time of issuance. In addition, all issuances of preferred securities will be at rates or prices, and under conditions negotiated pursuant to, based upon, or otherwise determined by competitive capital markets.
Applicants state, for purposes of rule 54, that in determining whether to approve the issue or sale of a security by a registered holding company for purposes other than the acquisition of an EWG or a FUCO, or other transactions by a registered holding company or its subsidiaries other than with respect to EWGs or FUCOs, the Commission shall not consider the effect of the capitalization or earnings of any subsidiary which is an EWG or a FUCO upon the registered holding company system if rules 53(a), (b) and (c) are satisfied.
Xcel does not satisfy the requirements of rule 53(a)(1). In the 100% Order, the Commission authorized Xcel to invest up to 100% of its consolidated retained earnings, as defined in rule 53, in EWGs and FUCOs and found that an investment would not have either of the adverse effects set forth in rule 53(c). As of June 30, 2002, Xcel's "aggregate investment," as defined in rule 53(a)(l), was $2,406 million.11 Xcel's consolidated retained earnings, as defined in Rule 53, at June 30, 2002, was $2,521.0 million. These investments by Xcel were made in compliance with the 100% Order.
Xcel has made no additional investment in any EWGs or FUCOs since June 30, 2002. However, during the third quarter of 2002, Xcel Energy International Inc. sold its interest in Yorkshire Power Group Limited. As a result, Xcel's aggregate investment in EWGs and FUCOs was reduced by approximately $36.9 million. As a result of a significant loss in respect of impairment charges recorded by NRG in 2002, the consolidated retained earnings of Xcel have been reduced by more than $2.6 billion. Thus, at this time, Xcel has no capacity to make any additional investments in EWGs and FUCOs, without further authorization from the Commission.
Applicants state that Xcel currently complies with, and will comply with, the recordkeeping requirements of rule 53(a)(2), the limitation under rule 53(a)(3) on the use of the Xcel system's domestic public utility company personnel to render services to EWGs and FUCOs, and the requirements of rule 53(a)(4) concerning the submission of copies of certain filings under the Act to retail regulatory commissions.
Applicants further state that the circumstances described in rule 53(b)(1) have occurred. NRG filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code on May 14, 2003. The book value of NRG's assets exceed 10 percent of the consolidated retained earnings of Xcel. The circumstances described in rule 53(b)(2) have occurred. Xcel's retained earnings declined by more than $2.6 billion during the twelve months ended December 31, 2002 from impairment charges recorded at NRG and declined an additional $143.6 million during the six months ended June 30, 2003 from additional impairment charges and other losses at NRG. The average consolidated retained earnings of Xcel for the four quarterly periods ended June 30, 2003 was approximately $537,000, or a decrease of over 99.9% from the average of Xcel's consolidated retained earnings for the four quarterly periods ended June 30, 2002 of $2.5 billion. In addition, Xcel's "aggregate investment" in EWGs and FUCOs as of June 30, 2003 of $2.366 billion exceeded 2% of the total capital invested in utility operations.
Applicants state that the circumstances described in rule 53(b)(3) have also occurred. For calendar year 2002 Xcel reported operating losses attributable to its investment in NRG, which in turn has investments in exempt wholesale generators and foreign utility companies, which exceed an amount equal to 5% of consolidated retained earnings. NRG reported an operating loss (after tax) of approximately $3.5 billion for 2002. This amount is over 250% of the consolidated retained earnings (as defined in Rule 53(a)(1)) of Xcel for the four quarters ended December 31, 2002 of $1,297.5 million.
Applicants state that the requirements of rule 53(c) are met. For the reason set forth below, Xcel believes that the requested authorization will not have a substantial adverse impact upon the financial integrity of Xcel and the Utility Subsidiaries. Xcel is not authorized to engage in financing transactions (other than issuance of common stock) in accordance with the authority requested in this Application during the Requested Authorization Period unless Xcel has a common equity ratio of at least 30%. Xcel's common equity ratio as of June 30, 2003 is over 39%. On a pro forma basis, further adjusting to take into account the additional financing authorization requested herein (i.e., up to $500 million of long-term debt or common stock), Xcel's common equity ratio as of June 30, 2003 would remain above 37%.
Applicants state that the Utility Subsidiaries and their customers will not be adversely impacted by the requested relief. The ratio of common equity to total capitalization of each of the public utility subsidiaries will continue to be maintained at not less than 30%. In fact, the common equity ratios of the primary public utility subsidiaries, NSP-M, NSP-W, SPS and PSCo, are each in excess of 44% as of June 30, 2003. Furthermore, the common equity ratios of the primary public utility subsidiaries will not be effected by the proposed transactions. In addition, each of the public utilities is subject to regulation by state commissions that are able to protect utility customers within their respective states.
Applicants state that even if the effect of the capitalization and earnings of EWGs and FUCOs in which Xcel has an ownership interest upon the Xcel system were considered, there would be no basis for the Commission to withhold or deny approval for the proposal made in this Application. The action requested in this Application would not, by itself, or even considered in conjunction with the effect of the capitalization and earnings of Xcel's EWGs and FUCOs, have a material adverse effect on the financial integrity of the Xcel system, or an adverse impact on Xcel's Utility Subsidiaries, their customers, or the ability of state commissions to protect public utility customers.
Fees and expenses to be incurred in connection with the proposed transaction are estimated to be approximately $50,000. The Utility Subsidiaries participating in the Utility Money Pool require approval from the respective state commissions with jurisdiction over the Utility Subsidiary in respect of (i) the incurrence of debt and issuance of securities and/or (ii) transactions with affiliates. No Utility Subsidiary will participate in the Utility Money Pool until it has received any necessary approvals from the applicable state commissions. The Federal Energy Regulatory Commission ("FERC") issued on June 26, 2003 interim rules implementing documentation requirements for FERC-regulated entities that participate in cash management programs. The Utility Subsidiaries participating in the Utility Money Pool will maintain the required documents, as applicable. Applicants state that, other than as stated above, no other state or federal commission other than the Commission has jurisdiction with respect to any of the proposed transactions described in this Application.
Due notice of the filing of the Application has been given in the manner prescribed by rule 23 under the Act, and no hearing has been requested of or ordered by the Commission. Based on the facts in the record, the Commission finds that the applicable standards of 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, except as to matters as to which jurisdiction has been reserved, the Application, as amended, is granted and permitted to become effective immediately, subject to the terms and conditions prescribed in rule 24 under the Act.
IT IS FURTHER ORDERED that Xcel will continue to file certificates under rule 24 with the Commission within 60 days after the end of the last calendar quarter in which transactions occur. The rule 24 certificates will contain the following information:
IT IS FURTHER ORDERED, that jurisdiction is reserved, pending completion of the record, over: (i) the issuance by Xcel of any preferred stock and/or any other securities that are rated below investment grade; and (ii) the issuance of any guarantee or other securities at any time that the following conditions are not satisfied: (a) the security to be issued, if rated, is rated investment grade; (b) all outstanding securities of the issuer (except in the case of Xcel, Xcel's preferred stock) that are rated are rated investment grade; and (c) all outstanding securities of Xcel (except for Xcel's preferred stock) that are rated are rated investment grade.
For the Commission, by the Division of Investment Management, pursuant to delegated authority.
Margaret H. McFarland
For purposes of this Application, the term "Subsidiaries" includes each of Xcel's utility subsidiaries and nonutility subsidiaries, except for NRG and its subsidiaries, as well as any future direct or indirect nonutility subsidiaries (other than of NRG or its subsidiaries) of Xcel whose equity securities may be acquired in accordance with an order of the Commission or in accordance with an exemption under the Act or the Commission's rules under the Act.