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U.S. Securities and Exchange Commission

SECURITIES AND EXCHANGE COMMISSION

(Release No. 35-27743; 70-10128)

CenterPoint Energy, Inc., et. al.

Supplemental Order Authorizing Release of Jurisdiction over the Issuance of an Additional $50 Million Principal Amount of Debt by CenterPoint Energy Resources Corp.; and Reservation of Jurisdiction

October 28, 2003

CenterPoint Energy, Inc. ("CenterPoint"), Houston, Texas, a registered holding company under the Public Utility Holding Company Act of 1935, as amended (the "Act"); its subsidiary, Utility Holding, LLC,1 Wilmington, Delaware; and CenterPoint Energy Resources Corp. ("GasCo"), Houston, Texas, an indirect gas public utility subsidiary of CenterPoint (together, the "Applicants") have filed with the Securities and Exchange Commission ("Commission") a post-effective amendment under sections 6 and 7 of the Act and rules 44 and 54 under the Act, to their previously filed application-declaration ("Declaration").

By order dated June 30, 2003 (Holding Company Act Release No. 35-27692) ("Omnibus Financing Order") the Commission authorized CenterPoint and its subsidiaries, including GasCo, to engage in certain financing and related transactions through June 30, 2005 (the "Authorization Period"). The Commission reserved jurisdiction, pending completion of the record, over GasCo's issuance of external debt securities in an incremental amount of $500 million.2 In the Declaration, Gasco requests the Commission to release jurisdiction over the issuance by GasCo of up to $50 million, out of the $500 million, in incremental external debt securities.

GasCo has outstanding $140 million in 6 3/8% Term Enhanced ReMarketable Securities (the "TERMS") that either mature or are required to be remarketed on November 1, 2003.

The Applicants believe, on the basis of currently available information, including current interest rates and other factors, that it would be in the best interest of GasCo to refinance the TERMS prior to their maturity, rather than permit them to be remarketed. In connection with such refinancing, GasCo may issue debt securities ("Notes") in a total amount of up to $50 million in excess of the principal amount of TERMS outstanding to pay the costs of the refinancing, including the costs to terminate a remarketing option associated with the TERMS. The precise amount of costs will not be known until the refinancing is complete but the fees and terms and conditions of the refinancing will comply with the terms and conditions established in the Omnibus Financing Order.

Because the amount of additional Notes to be issued above the principal amount of the TERMS cannot be determined prior to the refinancing, GasCo is asking the Commission to release jurisdiction over the issuance of an incremental $50 million of external debt such that the amount of GasCo external debt securities will not exceed $2.587 billion at any one time outstanding during the Authorization Period.

The refinancing will be subject to the terms and conditions set forth in the Omnibus Financing Order. In particular, GasCo will continue to comply with the requirement that at all times it must maintain common equity of at least 30% of its consolidated capitalization (common equity, preferred stock, long-term debt and short-term debt) as reflected in the most recent Form 10-K or Form 10-Q filed with the Commission adjusted to reflect changes in capitalization since the balance sheet date, unless otherwise authorized.

The proposed transaction is subject to rule 54 under the Act, which provides that, in determining whether to approve an application which does not relate to any "exempt wholesale generator" ("EWG") or "foreign utility company" ("FUCO"), the Commission shall not consider the effect of the capitalization or earnings of any EWG or FUCO which is a subsidiary of a registered holding company if the requirements of rule 53(a), (b) and (c) under the Act are satisfied.

As a result of the restructuring authorized in the order dated July 5, 2002 (Holding Company Act Release No. 27548 (the "July Order")), CenterPoint has negative retained earnings. Thus, although CenterPoint's aggregate investment (as defined in rule 53(a)(1)(i) under the Act), in EWGs and FUCOs as of December 31, 2002 was approximately $8 million, the Company is not currently in compliance with the requirements of rule 53(a)(1) under the Act. As a result, the Commission has considered the effect on the CenterPoint system of the capitalization or earnings of any CenterPoint subsidiary that is an EWG or FUCO, as each is defined in sections 32 and 33 of the Act. Further, CenterPoint is attempting to dispose of its remaining interests in EWGs and FUCOs and is not planning to invest any more monies in those businesses.

CenterPoint complies with, and will continue to comply with, the record-keeping requirements of rule 53(a)(2) under the Act, the limitation under rule 53(a)(3) under the Act on the use of domestic public-utility company personnel to render services to EWGs and FUCOs, and the requirements of rule 53(a)(4) under the Act concerning the submission of copies of certain filings under the Act to retail regulatory commissions. Further, none of the circumstances described in rule 53(b) under the Act has occurred or is continuing. Rule 53(c) under the Act is by its terms inapplicable to the proposed transaction as it does not involve the issue and sale of securities (including guarantees) to finance an acquisition of an EWG or FUCO.

Applicants state that no state or federal commission, other than this Commission, has jurisdiction over the proposed transaction. Applicants state that the expenses to be incurred in connection with the preparation and filing of the Declaration are estimated to be approximately $20,000, plus the fees paid to refinance the TERMS as discussed above.

Due notice of the filing of the Declaration 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, as to the $50 million of Notes to be issued, 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 the Declaration is permitted to become effective immediately, subject to the terms and conditions prescribed in rule 24 under the Act.

IT IS FURTHER ORDERED, that jurisdiction continues to be reserved over GasCo's issuance and sale of the incremental amount of $450 million of long-term and short-term debt securities so that the total amount of GasCo external debt will not exceed $3.037 billion at any one time outstanding during the Authorization Period.

IT IS FURTHER ORDERED, that jurisdiction continues to be reserved, pending completion of the record, over the other matters listed in the Omnibus Financing Order.

For the Commission, by the Division of Investment Management, pursuant to delegated authority.


Margaret H. McFarland
Deputy Secretary


Endnotes:


http://www.sec.gov/divisions/investment/opur/filing/35-27743.htm

Modified: 10/31/2003