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Notice

Filings Under the Public Utility Holding Company Act of 1935, as Amended (“Act”)

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Start Preamble May 31, 2002.

Notice is hereby given that the following filings have been made with the Commission pursuant to provisions of the Act and rules promulgated under the Act. All interested persons are referred to the application(s) and/or declaration(s) for complete statements of the proposed transaction(s) summarized below. The application(s) and/or declaration(s) and any amendment(s) is/are available for public inspection through the Commission's Branch of Public Reference.

Interested persons wishing to comment or request a hearing on the application(s) and/or declaration(s) should submit their views in writing by June 24, 2002 to the Secretary, Securities and Exchange Commission, Washington, DC 20549-0609, and serve a copy on the relevant applicant(s) and/or declarant(s) at the address(es) specified below. Proof of service (by affidavit or, in the case of an attorney at law, by certificate) should be filed with the request. Any request for hearing should identify specifically the issues of facts or law that are disputed. A person who so requests will be notified of any hearing, if ordered, and will receive a copy of any notice or order issued in the matter. After June 24, 2002, the application(s) and/or declaration(s), as filed or as amended, may be granted and/or permitted to become effective.

Energy East Corporation, et al. (70-9901)

Energy East Corporation (“Energy East”), a registered holding company, Eagle Merger Corporation (“Eagle”), both located at P.O. Box 12904, Albany, New York 12212-2904, and RGS Energy Group, Inc. (“RGS”), 89 East Avenue, Rochester, New York 14649-0001 (together, “Applicants”), have filed with the Commission a joint application under sections 3(a)(1), 9(a), 10, and 11(b) of the Act and rule 54 under the Act.

I. Summary of Proposal

As described in more detail below, Energy East proposes that the Commission approve: (a) Energy East's acquisition, by means of the merger described below (“Merger”), all of the issued and outstanding common stock of RGS (“RGS Common Stock”); (b) Energy East's indirect acquisition of all Start Printed Page 39074of the nonutility activities, businesses and investments of RGS; (c) Energy East's retention of RGS as an intermediate holding company; (d) the operation of post-Merger Energy East as a combination electric and gas utility company; (e) the acquisition of shares of common stock of New York State Electric & Gas Corporation (“NYSEG”), a wholly owned combination gas and electric utility subsidiary of Energy East, by RGS; (f) the acquisition by Eagle of RGS; (g) the acquisition of Eagle's shares by Energy East; and (h) the exemption of RGS from registration as a holding company under section 3(a)(1) of the Act.

Under the terms of an Agreement and Plan of Merger (“Merger Agreement”), dated February 16, 2001,[1] RGS will be merged with and into Eagle, a New York corporation, which will be a wholly-owned subsidiary of Energy East at the effective time of the Merger, with Eagle being the surviving corporation. Eagle will continue to conduct RGS's businesses under the name “RGS Energy Group, Inc.” as a direct, whollyowned subsidiary of Energy East.

Energy East would purchase all common shares of RGS for: (i) $39.50 in cash per share; (ii) shares of Energy East common stock valued at $39.50 (subject to restrictions on the maximum and minimum number of shares of Energy East common stock to be issued); or (iii) a combination of cash and Energy East common stock. Each RGS shareholder would be able to elect the form of consideration that the shareholder wishes to receive, subject to proration, so that 55 percent of RGS shares would be exchanged for cash and 45 percent would be exchanged for Energy East common stock.[2] Each RGS share converted into Energy East common stock would receive not less than 1.7626 and not more than 2.3838 shares of Energy East common stock, depending on the average closing price of Energy East common stock during a 20-day trading period ending two trading days prior to the effective time of the Merger.[3] In addition, Applicants state that Energy East will assume approximately $1.0 billion of RGS's debt.

As a result of these transactions, RGS will become a direct subsidiary of Energy East. Rochester Gas & Electric Corporation (“RG&E”), a gas and electric utility company and subsidiary of RGS, and the nonutility subsidiaries of RGS will continue as subsidiaries of RGS and will become indirect subsidiaries of Energy East. Applicants state that as soon as practicable after the effective time of the Merger (but in no event later than five days following the effective time), Energy East will transfer all of NYSEG's common stock to RGS, so that NYSEG and RG&E can be operated under a combined management structure.

II. Parties to the Merger

A. Energy East and Subsidiaries

Energy East is a registered public utility holding company, which, through its subsidiaries, is an energy services and delivery company with operations in New York, Connecticut, Massachusetts, Maine, and New Hampshire, serving approximately 1,419,000 electricity customers and approximately 614,000 natural gas customers. Energy East has corporate offices in New York and Maine. Energy East's common stock is publicly traded on the New York Stock Exchange under the symbol “EAS.”

Energy East holds direct or indirect interests in eight public utility companies, each of which is wholly owned by companies within the Energy East system unless otherwise noted: (1) NYSEG ; [4] (2) Central Maine Power (“Central Maine”); (3) Maine Electric Power Company, Inc. (“MEPCo”) (Central Maine owns 78.3% voting interest in MEPCo); [5] (4) NORVARCO (NORVARCO holds a 50% general partnership interest in Chester SVC Partnership, a general partnership which owns a static var compensator located in Chester, Maine, adjacent to MEMPCo's transmission interconnection; [6] an electric utility company under the Act); (5) Maine Natural Gas, Corporation, (6) Connecticut Natural Gas Corporation (“CNGC”); (7) The Berkshire Gas Company (“Berkshire Gas”); and (8) The Southern Connecticut Gas Company [7] (collectively, “Energy East Utility Subsidiaries”). Energy East also has a number of direct and indirect nonutility subsidiaries, the retention of which were either approved or jurisdiction was reserved in the Merger Order.[8]

For the year ended December 31, 2001, electric revenues of approximately $2,504,896,000 and natural gas revenues of approximately $1,026,124,000 accounted for approximately 67% and 27%, respectively, of Energy East's gross operating revenues. Energy East's utility operating income and utility net income available for common stock were $642,939,000 and $246,720,000, respectively. Consolidated assets of Energy East and its subsidiaries as of December 31, 2001, were approximately $7.3 billion, consisting of $3.6 billion in net utility plant and $3.7 billion in other utility and nonutility assets. For the year ended December 31, 2001, consolidated operating revenues, operating income and net income for Energy East and its subsidiaries were approximately $3,759,787,000, $636,888,000, and $187,607,000, respectively.

B. RGS and Subsidiaries

RGS is the parent company of Rochester Gas & Electric Corporation (“RG&E”), a gas and electric utility company serving upstate New York. Incorporated in 1998 in the State of New York, RGS became the holding company Start Printed Page 39075for RG&E on August 2, 1999.[9] RGS is a public utility holding company by virtue of its owning all of the common shares of stock of RG&E, a public utility company as defined in the Act. RGS, through its subsidiaries, is an energy generation and delivery, products and services company with operations in New York. RGS's common stock is publicly traded on the New York Stock Exchange under the symbol “RGS.” Pursuant to Commission order granting its request for an exemption under section 3(a)(1) of the Act, RGS is currently exempt from registration as a holding company.[10] Applicants request in this filing that the Commission find that RGS continues to be exempt from registration as a holding company under section 3(a)(1) of the Act, following the consummation of the Merger and its acquisition of NYSEG.

RG&E is engaged principally in the business of generating, purchasing, transmitting and distributing electricity, and purchasing, transporting and distributing natural gas. RG&E's service territory includes nine counties in upstate New York. RG&E's service territory has an area of approximately 2,700 square miles and a population of one million people. RG&E provides delivery service to approximately 353,000 electric customers and 289,000 natural gas customers. The larger cities in which RG&E serves both electric and natural gas customers are Rochester and Canandaigua. As of December 31, 2001, RG&E had 1,993 employees.

In addition to its utility subsidiary, RGS has the following direct and indirect nonutility subsidiary companies: (1) Energetix, Inc., (“Energetix”)[11] a wholly-owned subsidiary of RGS, which offers electricity and natural gas services to retail customers throughout New York; and (2) RGS Development Corporation which pursues unregulated business opportunities in the energy marketplace and provides energy systems development and management services.

RGS also holds Griffith Oil Company (“Griffith”), a wholly owned subsidiary of Energetix, which sells propane, heating oil and gasoline to approximately 123,000 customers in New York.

RGS has the following indirect nonutility subsidiaries that are currently inactive:[12] New York Nuclear Operating Company LLC (“NYNOC”),[13] a partially owned subsidiary of RG&E formed to investigate the operation of nuclear power plants; Moore Brothers, a wholly owned subsidiary of Griffith, formed to import petroleum products into New Jersey; McKee Road, a wholly owned subsidiary of Griffith formed to hold terminal property and other real estate property related to utility operations; [14] Griffith Energy, a wholly owned subsidiary of Griffith, and Sugar Creek Corporation, a wholly owned subsidiary of Energetix acquired in conjunction with RGS's acquisition of Griffith.

RGS also has an indirect subsidiary outside the United States, Burnwell Gas Corporation of Canada (“Burnwell”), which is a wholly owned subsidiary of Griffith. Burnwell, located in Stevensville, Ontario, is a company through which various Burnwell subsidiaries purchase propane. Avrimac Corporation (“Avrimac”), a wholly-owned subsidiary of Griffith, through its subsidiaries (Seimax Gas, Burnwell Gas of Red Creek, Burnwell Gas of Alden, Burnwell Gas Distributors, Burnwell Gas of Franklinville, Burnwell Gas of Dansville and Burnwell Gas of Newark), sells propane and a limited selection of electric gas appliances in Western and Central New York. Seimax Garage Corporation, another Avrimac subsidiary, provides repair services to the Burnwell Companies' truck fleet.

For the year ended December 31, 2001, electric revenues of approximately $728,099,000 and gas revenues of approximately $311,377,000 accounted for approximately 70% and 30%, respectively, of RGS's consolidated gross utility revenues. RGS's utility operating income and utility net income available for common stock were $134,565,000 and $69,950,000, respectively. Consolidated assets of RGS and its subsidiaries as of December 31, 2001, were approximately $2.5 billion, consisting of $1.2 billion in net utility plant and $1.3 billion in other utility and nonutility assets. For the year ended December 31, 2001, consolidated operating revenues, operating income and net income for RGS and its subsidiaries were approximately $1,530,492,000, $137,328,000 and $73,040,000, respectively.

III. Proposed Merger and Subsequent Corporate Structure

Pursuant to the Merger Agreement, RGS will merge with and into Eagle, with Eagle being the surviving corporation. Eagle will continue to conduct RGS's businesses under the name “RGS Energy Group, Inc.” as a direct, wholly owned subsidiary of Energy East.

As a result of Applicants' proposed transactions, RGS will become a direct subsidiary of Energy East. RG&E and RGS's nonutility subsidiaries will continue as subsidiaries of RGS and will become indirect subsidiaries of Energy East. As soon as practicable after the effective time of the Merger (but in no event later than five days following the effective time), Energy East will transfer all of NYSEG's common stock to RGS and NYSEG and RG&E will be operated under a combined management structure.

Energy East expects to pay RGS shareholders approximately $750 million in cash consideration. Energy East intends to fund the cash consideration with the proceeds from the issuance of long-term debt and trust preferred securities.[15]

Cinergy Corp. (70-10015)

Cinergy Corp. (“Cinergy”), 139 East Fourth Street, 24AT2, Cincinnati, Ohio 45202, a Delaware corporation and registered holding company, has filed an application-declaration (“Application”) under sections 6(a), 7, 9(a), 10, and 11(b)(1) of the Act and rule 54 under the Act.

Cinergy requests authority through March 31, 2007 (“Authorization Period”) to (A) engage, indirectly through new or existing nonutility subsidiaries [16] to provide infrastructure services (as described below) (“Infrastructure Services”) both within and outside the United States, and (B) specifically Cinergy proposes to invest up to $500 million from time to time through the Authorization Period in one or more new or existing companies that derive or will derive substantially all of their operating revenues from the sale of Infrastructure Services (“IS Start Printed Page 39076Subsidiaries”). Infrastructure Services will specifically include:

  • Design, construction, retrofit and maintenance of utility transmission and distribution systems, including erection of transmission towers and poles, trenching and burying of underground conduits, construction and maintenance of substations and electrical vaults, storm restoration services involving electrical transmission and distribution systems, and splicing, installation and repair of electrical conductors;
  • Installation and maintenance of natural gas pipelines and laterals, water and sewer pipelines, and underground and overhead telecommunications networks; and
  • Installation and servicing of meter reading devices and related communications networks, including fiber optic cable.

Cinergy requests that the Commission reserve jurisdiction over any such sales of Infrastructure Services in any country other than the United States and Canada pending completion of the record. Investments in any IS Subsidiary may take the form of an acquisition, directly or indirectly, of the stock or other equity securities of a new subsidiary or of an existing company and any subsequent purchases of additional equity securities and any loans or cash capital contributions to any such company. In addition, any guarantee provided by Cinergy in respect of any payment or performance obligation of any IS Subsidiary will be counted against the proposed investment limit. Cinergy will fund investments in IS Subsidiaries using available cash or the proceeds of financing, as authorized by Commission order dated June 23, 2000 (HCAR No. 27190) (“June 2000 Order”). Any guarantees provided by Cinergy in respect of any IS Subsidiary would also count against Cinergy's current guarantee authority in the June 2000 Order.

Any Infrastructure Services performed by any IS Subsidiaries for any associate, utility companies (as such terms are defined under the Act) will be conducted at cost and otherwise in accordance with the service agreements approved by Commission order dated May 4, 1999 (HCAR No. 27016).

Start Signature

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

Margaret H. McFarland,

Deputy Secretary.

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Footnotes

1.  The shareholders of RGS approved the Merger with Energy East at a meeting held on June 15, 2001. Energy East and RGS have submitted applications requesting approval of the Merger and/or related matters to the appropriate state and federal regulators, including the New York Public Service Commission, the Federal Energy Regulatory Commission, the Nuclear Regulatory Commission, and the Federal Communications Commission. Applicants have also made the required filings with the Antitrust Division of the United States Department of Justice and the Federal Trade Commission under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. Applicants state that favorable responses have been received by the Applicants from each of these regulators.

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2.  If RGS shareholders owning more than 55% of RGS shares elect to receive cash, the number of RGS shares converted into cash will be less than the number elected. Similarly, if RGS shareholders owning more than 45% of RGS shares elect to receive Energy East shares, the number of RGS shares converted into stock will be less than the number elected. For tax reasons more fully explained in the Merger Agreement, Energy East may have to increase the number of RGS shares converted into Energy East shares and decrease the number of RGS shares converted into cash. In the alternative, RGS may elect under certain circumstances to have the Merger restructured so that Eagle would merge with and into RGS and RGS would be the surviving entity.

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3.  For example, based on Energy East's closing price of $19.14 on February 16, 2001, RGS shareholders who choose to receive Energy East common stock would receive 2.0637 Energy East shares for each RGS share.

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4.  NYSEG, a regulated public utility incorporated under the laws of the State of New York, is a combination electric and gas utility providing delivery service to approximately 829,000 electricity customers and approximately 250,000 natural gas customers. During the period 1999 through 2001, approximately 83% of NYSEG's operating revenue was derived from electricity deliveries, with the balance derived from natural gas service.

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5.  The remaining interests in MEPCo are held by Bangor Hydro Electric Company (“Bangor Hydro-Electric”) (approximately 14.2%) and Maine Public Service Company (approximately 7.5%).

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6.  The remaining 50% interest in Chester SVC Partnership is held by Bangor Var Company, a subsidiary of Bangor Hydro-Electric.

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7.  Southern Connecticut Gas is a utility subsidiary whollyowned by Connecticut Energy Corporation (“Connecticut Energy”), a direct subsidiary of Energy East. Connecticut Energy is an intermediate holding company subject to regulation under the Act as a subsidiary of a registered holding company and exempt from registration under section 3(a)(1) of the Act.

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8.  Energy East Corporation, et al. HCAR No. 27224 (August 31, 2000) (“Merger Order”).

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9.  Rochester Gas and Electric Holdco, HCAR No. 26991 (March 16, 1999).

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11.  Energetix has authorization from FERC to engage in sales for resale of electricity at market-based rates and it owns no generation, transmission or distribution facilities. Energetix's subsidiary companies are Griffith Oil Co., Inc., an oil and propane distribution company in New York, and Avrimac Corporation, which through its subsidiaries sells propane and a limited selection of electric and gas appliances in Western and Central New York. Energetix and its subsidiaries have 602 employees and operate 29 customer service centers.

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12.  In the event that Energy East seeks to reactivate any of the inactive companies after the consummation of the Merger, Energy East states that it will file a post-effective amendment seeking authorization to engage in the proposed activities if such authorization is required under the Act.

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13.  RG&E holds a 20.24% interest in NYNOC.

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14.  McKee Road currently holds no real property.

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15.  Applicants have filed a post-effective amendment with the Commission under the Act with respect to ongoing financing activities, intra-system services and other matters pertaining to Energy East and RGS after the Merger. (SEC File No. 70-9609).

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16.  Any such subsidiaries would be held as direct or indirect subsidiaries of Cinergy, provided that none of the subsidiaries would be held as direct or indirect subsidiaries of CG&E or PSI or any other Cinergy utility subsidiary.

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[FR Doc. 02-14203 Filed 6-5-02; 8:45 am]

BILLING CODE 8010-01-U