SECURITIES AND EXCHANGE COMMISSION
(Release No. 35-27925; 70-10241)
Rochester Gas and Electric Corporation
Order Authorizing Payment of Dividends out of Capital or Unearned Surplus
December 16, 2004
Rochester Gas and Electric Corporation ("RG&E"), a New York corporation and a wholly owned subsidiary of RGS Energy Group, Inc. ("RGS"),1 Rochester, NY, which, in turn, is a wholly owned subsidiary of Energy East Corporation, ("Energy East") Albany, NY, a New York corporation and a registered holding company under the Public Utility Holding Company Act of 1935, as amended ("Act"). RG&E filed a Declaration seeking authorization, under section 12(c) of the Act and rules 42, 46 and 54 under the Act. RG&E is a public utility company engaged in the purchase, generation, transmission, distribution and sale of electricity and the purchase, distribution and sale of natural gas in New York.
In connection with the restructuring of the electric industry in New York, RG&E sold the Robert E. Ginna Nuclear Power Plant for approximately $420,000,000. According to RG&E it is in the interests of RG&E's security holders and ratepayers for RG&E to transfer by dividend up to $175 million to an associate company and to use the amount for the reduction of debt held by Energy East. RG&E states, among other things, that RG&E's revenues from operations are sufficient to fund its expenses and capital improvements, that its current equity as a percentage of its total capitalization is in excess of 45%, and that the New York Public Service Commission ("NYPSC") will not allow RG&E to earn a return on equity that is in excess of 45% of total capitalization. RG&E asserts that the better use of the funds represented by the proposed dividend is reducing debt within the Energy East holding company system. Accordingly, RG&E requests authority from the Commission for RG&E to declare or pay dividends out of capital or unearned surplus and for RG&E to acquire, retire or redeem its securities from an associate company.2
The estimated fees, commission and expenses incurred by RG&E in connection with the proposed transaction are expected to be approximately $30,000.
No state or federal commission, other than this Commission and the NYPSC, has jurisdiction over the proposed dividends. The NYPSC has authorized the proposed transaction and RG&E states that the transactions will be effected in accordance with that authorization.
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 the applicable standards of the Act and rules thereunder are satisfied and that no adverse findings are necessary.
IT IS ORDERED, pursuant to the applicable provisions of the Act and rules thereunder, that the Declaration be, and it hereby is, permitted to become effective forthwith, subject to the terms and conditions prescribed in rule 24.
For the Commission, by the Division of Investment Management, pursuant to delegated authority.
Margaret H. McFarland
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