File No. 70-10033
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
PRE-EFFECTIVE AMENDMENT NO. 1 TO
FORM U-1
APPLICATION/DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Northeast Utilities
107 Selden Street
Berlin, CT 06037
The Connecticut Light and Power Company
c/o Northeast Utilities
107 Selden Street
Berlin, CT 06037
Western Massachusetts Electric Company
c/o Northeast Utilities
107 Selden Street
Berlin, CT 06037
Public Service Company of New Hampshire
c/o Northeast Utilities
107 Selden Street
Berlin, CT 06037
Vermont Yankee Nuclear Power Corporation
185 Old Ferry Road
Brattleboro, VT 05703
(Names and principal executive offices of companies filing this statement
NORTHEAST UTILITIES
(Names of top registered holding company)
Jeffrey Miller, Esq.
Northeast Utilities Service Company
107 Selden Street
Berlin, CT 06037
(Name and address of agent for service)
The Commission is requested to send copies of all notices, orders and
communications in connection with this Application/Declaration to:
Hemmie Chang, Esq. Nancy S. Malmquist, Esq.
Ropes & Gray Downs, Rachlin & Martin
One International Place P.O. Box 99
Boston, MA 02110 90 Prospect Street
St. Johnsbury, VT 05819-0099
Denise Redmann, Esq.
Entergy Corporation
639 Loyola Avenue
New Orleans, LA 70113
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ITEM 1. Description of Proposed Transaction
A. Description of the Parties to the Application/Declaration:
Vermont Yankee Nuclear Power Corporation (the "Company" or "Vermont
Yankee"), a Vermont corporation, was organized by a group of New England
utilities (the "sponsoring utilities") in 1965 for the purpose of constructing
and operating a nuclear-powered electric generating plant (the "Plant") in
Vernon, Vermont. The Plant was licensed to operate by the U.S. Atomic Energy
Commission (now the Nuclear Regulatory Commission or "NRC") in 1972 and has
operated commercially as a base-load station since December 1, 1972. The output
of the Plant is shared pro rata by eight sponsoring utility companies (Central
Vermont Public Service Corporation, New England Power Company, Green Mountain
Power Corporation, The Connecticut Light and Power Company, Central Maine Power
Company, Public Service Company of New Hampshire, Western Massachusetts Electric
Company and Cambridge Electric Light Company) pursuant to cost-of-service Power
Contracts and Additional Power Contracts that have been approved by the Federal
Energy Regulatory Commission ("FERC"). For a description of the Company's prior
financings, see Declarations and Applications, as amended, and the Orders in
Commission Files No. 70-4435, 70-4951, 70-4653, 70-4611, 70-4898, 70-4909,
70-4968, 70-5006, 70-5138, 70-5186, 70-5223, 70-5284, 70-6349, 70-6405, 70-6475,
70-6911, 70-7007, 70-7141, 70-7196, 70-7264, 70-7382, 70-7537 and 70-7635 under
the Public Utility Holding Company Act of 1935, as amended (the "Act"). All of
the stock of the Company is owned by the eight sponsoring utilities as follows:
NAME PERCENTAGE OWNERSHIP
---- --------------------
Central Vermont Public Service Corporation 33.23%
New England Power Company 23.89%
Green Mountain Power Corporation 18.99%
The Connecticut Light and Power Company 10.09%
Central Maine Power Company 4.25%
Public Service Company of New Hampshire 4.25%
Western Massachusetts Electric Company 2.65%
Cambridge Electric Light Co. 2.66%
This Application/Declaration is also filed by Northeast Utilities, a
registered holding company. National Grid Group plc and National Grid USA (File
No. 70-10025) and Energy East Corporation (File No. 70-10070), all registered
holding companies, also have filed Applications/Declarations on Form U-1 with
respect to the transactions described herein.
B. Summary of Proposed Transaction:
Vermont Yankee: The on-going restructuring and deregulation of the
utility industry has caused the sponsoring utilities to re-evaluate their roles
and, in many cases, have required them to exit the generation business and to
divest themselves of their investments in electric generation assets. As a
result, Vermont Yankee also considered its future market position, given the
changing nature of its owners. In late 1997 after Vermont Yankee and its owners
concluded that a sale of the Plant on favorable terms would be desirable,
Vermont Yankee solicited expressions of interest from potential buyers. After
lengthy negotiations (which included
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competing offers from two interested parties), Vermont Yankee in November, 1999
entered into an agreement for the sale of substantially all of Vermont Yankee's
utility assets, including its operating Plant. The Public Service Board of the
State of Vermont ultimately did not approve that proposed sale, so that
transaction was terminated. See Application/Declaration in Commission File No.
70-9737, withdrawn April 18, 2001.
On March 16, 2001, Vermont Yankee's Board of Directors voted to proceed
with establishing an auction for the Plant and subsequently entered into an
agreement with J.P. Morgan Securities, Inc. ("JPM") by which JPM became Vermont
Yankee's agent to conduct the auction. Vermont Yankee's Board of Directors
authorized JPM to start the auction on April 12, 2001. Based on the result of
the auction and JPM's recommendation, Vermont Yankee's Board of Directors
decided to pursue negotiations with Entergy Nuclear Vermont Yankee, LLC
("ENVY"), a subsidiary of Entergy Corporation. On August 15, 2001, Vermont
Yankee and ENVY entered into a Purchase and Sale Agreement (the "PSA") for the
Plant (see Exhibit B-1).
The PSA contemplates that ENVY will pay a purchase price of $180
million, subject to closing adjustments, and will assume Vermont Yankee's
obligation for operating and decommissioning the Plant in exchange for the
transfer at the closing of the sale (the "Closing") of substantially all of the
assets comprising the Plant (located in Vernon, Vermont), the funds in Vermont
Yankee's Decommissioning Trust, which had a fair market value of approximately
$299.6 million as of September 30, 2001, Vermont Yankee's rights with respect to
the funds held by the State of Vermont in connection with the Texas Low-Level
Radioactive Waste Disposal Compact (the "Texas Compact"), certain human and site
assets related to the Plant, certain leases, easements, contracts, licenses and
permits related to the Plant, the Plant's switchyards and certain transmission
assets, and office property located in Brattleboro, Vermont.
The PSA also contemplates that Vermont Yankee will purchase from ENVY
100% of the output of the Plant (based on the Plant's current configuration and
capacity) after the Closing during the Plant's remaining licensed life (ending
March 21, 2012) pursuant to a Power Purchase Agreement between Vermont Yankee
and ENVY (the "PPA") (see Exhibit B-2). Vermont Yankee will resell that
output at wholesale to the sponsoring utilities pursuant to 2001 Amendatory
Agreements (see Exhibit B-3) with each of the sponsoring utilities that modify
the existing Power Contracts and Additional Power Contracts (collectively, as so
modified, the "Power Contracts") (all of which fall within the jurisdiction of
the Federal Energy Regulatory Commission ("FERC")) to reflect the proposed
transaction and provide for the payment by the sponsoring utilities of Vermont
Yankee's remaining unamortized net plant investment and Vermont Yankee's ongoing
costs after Closing.
In preparation for the Closing it will be necessary for Vermont Yankee
to redeem its outstanding First Mortgage Bonds and to repay the outstanding
indebtedness under its current Secured Credit Agreement. This Secured Credit
Agreement was entered into in a transaction exempt from Section 6(a) of the Act
pursuant to Rule 52 and on August 21, 2001 Vermont
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Yankee filed with the Commission a Certificate of Notification as required by
Rule 52 relating to the Secured Credit Agreement. The cash required to satisfy
these obligations will come from the cash proceeds to be paid by ENVY at the
Closing.
Although the PSA provides that Vermont Yankee may be required to make a
"top-off" payment to the Decommissioning Trust, any such payment is contingent
on several factors. First, if the value of the assets of the Decommissioning
Trust at Closing meets or exceeds the Nuclear Regulatory Commission ("NRC")
required minimum, no top-off will be required. Second, any top-off payment will
be capped at $5.4 million, which represents the difference between the amount
that would have been collected by Vermont Yankee before the recent settlement in
a FERC proceeding relating to secondary purchaser issues ($16.8 million) and the
amount that would be collected pursuant to that settlement ($11.4 million).
Based on an analysis of all relevant factors at the time of execution of the
PSA, Vermont Yankee does not anticipate that it will have to make a top-off
payment at the Closing, although this expectation could change based on a change
in circumstances.
It is currently anticipated that the Closing under the PSA will be held
in July 2002, after all required regulatory approvals, including that of the
Commission, have been obtained.
As discussed above, since 1968 Vermont Yankee has had cost-of-service
Power Contracts with its sponsoring utilities pursuant to which Vermont Yankee
currently sells the output of the plant to the sponsoring utilities. Upon
consummation of the transaction, Vermont Yankee will purchase the output of the
plant from ENVY, an exempt wholesale generator, pursuant to the PPA and will
resell such output to the sponsoring utilities pursuant to the Power Contracts
(as amended effective as of the Closing). Vermont Yankee will pass the cost of
the power purchased under the PPA on to the sponsoring utilities pursuant to the
terms of those Power Contracts. In addition, under the Power Contracts the
sponsoring utilities will be obligated to pay to Vermont Yankee the ongoing
administrative costs of Vermont Yankee, any remaining unamortized net plant
investment, certain Department of Energy fees relating to prior spent fuel and
clean up costs that are retained by Vermont Yankee under the PSA, and any costs
associated with any other residual obligations under the PSA. Thus, the Power
Contracts between Vermont Yankee and each sponsoring utility are necessary not
only to provide for payment of the power costs under the PPA but also to provide
for payment of other ongoing Vermont Yankee costs separate from those PPA power
costs.1
As noted above, the Power Contracts fall within the jurisdiction of the
FERC and will continue to be subject to FERC jurisdiction after the Closing. See
Order of FERC, Exhibit D-7. Because the Power Contracts are within the
jurisdiction of the FERC and have been accepted by the FERC, the sponsoring
utilities will be permitted to include Power Contract payments in the
calculation of rates to their customers. If the sponsoring utilities were to
enter into Power Contracts directly with ENVY, their ability to include those
Power Contract payments in their rate calculations would be uncertain and they
still would need to have a separate contract with Vermont Yankee to cover other
ongoing Vermont Yankee costs, including unamortized net plant investment and
residual obligations under the PSA.
After the Closing, Vermont Yankee will continue its existence as a
corporation, but its operations will be limited to purchasing power under the
PPA and reselling that power to the sponsoring utilities and to related
administrative activities. Consistent with these limited operations, after the
Closing Vermont Yankee's assets will consist primarily of its rights under the
PPA with ENVY and its rights under the Power Contracts with its sponsoring
utilities, in addition to cash on hand.
Because of Vermont Yankee's limited operations and assets after
Closing, as part of the sale transaction ENVY is requiring Vermont Yankee to
provide financial security with respect to Vermont Yankee's continuing
obligations under the PPA and PSA.2 In order to provide this financial security
to ENVY, Vermont Yankee will pledge to ENVY, pursuant to a Security Agreement
between Vermont Yankee and ENVY (See Exhibit B-4), Vermont Yankee's rights to
the payments that it is entitled to receive from the sponsoring utilities in
respect of payments for power and payments for PSA obligations under the Power
Contracts.3 In addition, pursuant to the PPA, if ENVY has commercially
reasonable grounds for insecurity (determined in accordance with commercial
standards as set forth in Section 2-609 of the Vermont Uniform Commercial Code)
concerning the ability of one or more of the sponsoring utilities to pay Vermont
Yankee for its entitlement to the output of the Plant, ENVY may request adequate
assurances from Vermont Yankee as to that sponsoring utility's due performance
of its payment obligations. Vermont Yankee in turn has the right, pursuant to
the 2001 Amendatory Agreements, in those circumstances to request adequate
assurances from such sponsoring utility.
The financial security that Vermont Yankee will provide to ENVY amounts
to a pass-through to ENVY of Vermont Yankee's right to certain payment
obligations that the sponsoring utilities will have under the Power Contracts.
As set forth in the Security Agreement, if Vermont Yankee fails to pay ENVY
directly, then ENVY will have the right to receive from the sponsoring utilities
the payments under the Power Contracts that the sponsoring utilities would
otherwise pay to Vermont Yankee in respect of PPA and PSA costs.
It is important to note that the Security Agreement is not a guarantee,
however, and does not create any additional obligations on the part of the
sponsoring utilities (and, in fact, the sponsoring utilities are not parties to
the Security Agreement). Under the Security Agreement, ENVY would have only
those rights that Vermont Yankee has under the Power Contracts to receive
payments from the sponsors for power and PSA obligations. The Security Agreement
also does not impose additional financial obligations on Vermont Yankee. In
essence, the Security Agreement merely gives ENVY the legal right, after certain
default events, to enforce the pass-through nature of certain Power Contract
payments by allowing ENVY to collect those Power Contract payments directly from
the sponsoring utilities without going through Vermont Yankee.
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(1) Currently under the Power Contracts the sponsoring utilities are
liable for the cost of decommissioning the Plant. After the Closing, however,
under the terms of the Power Contracts the sponsoring utilities will no longer
be liable for the cost of decommissioning the Plant.
(2) Financial security is a typical aspect of transactions of this
type. See, e.g., Application/Declaration in Commission File No. 70-9737 (the
"Proposed Prior Transaction"). In the Proposed Prior Transaction, the potential
purchaser had required a more complicated and costly financial security package,
including the formation of a bankruptcy remote special purpose financing entity
and the provision by Vermont Yankee of a surety bond, the premium for which
would have been approximately $7 million.
(3) The pledge by Vermont Yankee pursuant to the Security Agreement has
been submitted to, and has been approved by, the Vermont Public Service Board.
See Exhibit D-2, Petition to PSB, and Exhibit D-3, Order of PSB.
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Registered Holding Company: The Connecticut Light and Power Company, Western
Massachusetts Electric Company and Public Service Company of New Hampshire,
subsidiaries of Northeast Utilities, a registered holding company, own an
aggregate of approximately 17% of the outstanding common stock of Vermont
Yankee. Therefore, Vermont Yankee is an indirect subsidiary of Northeast
Utilities and the sale by Vermont Yankee of substantially all its assets,
including the operating plant, constitutes an indirect sale of utility assets by
Northeast Utilities.
Legislation in the several New England states in which the subsidiaries
of the applicant registered holding companies do business is restructuring the
utility business in those jurisdictions and strongly encourages the divestiture
of generation assets. The proposed sale of Vermont Yankee's assets is consistent
with that mandate and is the result of a competitive auction process. The PSA
transfers the assets and liabilities of Vermont Yankee to ENVY. As discussed
above, while the PSA provides for a potential top-off payment by Vermont Yankee
to the Decommissioning Trust, based on an analysis of all relevant factors at
the time of execution of the PSA, Vermont Yankee does not anticipate that any
such payment will be required, although this expectation could change based on a
change of circumstances.
Vermont Yankee has calculated that the benefit of the transaction with
ENVY has a net present value to Vermont Yankee and its owners that is about
$250 million more favorable than continued ownership and operation of the Plant.
In addition, the provisions of the PSA are favorable to those owners and their
ratepayers because the PSA caps their exposure for the ultimate decommissioning
costs of the Plant and relieves them of the operating risks inherent in the
continued ownership of a nuclear Plant (including employee-benefit liabilities,
potential environmental liabilities, potential nuclear liabilities and
liabilities related to spent nuclear fuel other than funds for pre-1983 spent
fuel), all of which are financial risks that would otherwise be borne by those
owners, and ultimately their ratepayers, under their cost-of-service Power
Contracts with Vermont Yankee. As noted below, these transactions will also have
been approved by the regulatory bodies having jurisdiction in each of the states
where the subsidiaries of the applicant registered holding companies do
business. Therefore, the proposed sale of the utility assets to ENVY will be
for reasonable consideration and otherwise satisfy the requirements of Section
12(d) of the Act.
C. Rule 54 Analysis
Except in accordance with the Act, neither Northeast Utilities nor any
subsidiary thereof (a) has acquired an ownership interest in an electric
wholesale generator ("EWG") or a foreing utility company ("FUCO"), as defined in
Sections 32 and 33 of the Act, or (b) now is or as a consequence of the
transactions proposed herein will become a party to, or has or will as a
consequence of the transactions proposed herein have a right under, a service,
sales, or construction contract with an EWG or a FUCO. None of the proceeds from
the transactions proposed herein will be used by Northeast Utilities and its
subsidiaries to acquire any securities of, or any interest in, an EWG or a FUCO.
Northeast Utilities currently meets all of the conditions of Rule
53(a), except for clause (1). At March 31, 2002, Northeast Utilities' "aggregate
investment," as defined in Rule 53(a)(1), in EWGs and FUCOs was approximately
$448.2 million, or approximately 69% of Northeast Utilities' average
"consolidated retained earnings," also as defined in Rule 53(a)(1), for the four
quarters ended March 31, 2002 ($653.6 million). With respect to Rule 53(a)(1),
however, the Commission has determined that Northeast Utilities' financing of
its investment in Northeast Generation Company ("NGC"), Northeast Utilities'
only current EWG or FUCO, in an amount not to exceed $481 million or 83% of its
"average consolidated retained earnings" would not have either of the adverse
effects set forth in Rule 53(c). See Northeast Utilities, Holding Company Act
Release No. 27148, dated March 7, 2000 (the "Rule 53(c) Order"). Northeast
Utilities continues to assert that its EWG investment in NGC will not adversely
affect the Northeast Utilities system.
In addition, Northeast Utilities and its subsidiaries are in compliance
and will continue to comply with the other provisions of Rule 53(a) and (b), as
demonstrated by the following determinations:
(i) NGC maintains books and records, and prepares financial statements,
in accordance with Rule 53(a)(2). Furthermore, Northeast Utilities has
undertaken to provide the Commission access to such books and records and
financial statements, as it may request;
(ii) No employees of Northeast Utilities' public utility subsidiaries
have rendered services to NGC;
(iii) Northeast Utilities has submitted (a) a copy of each Form U-1 and
Rule 24 certificate that has been filed with the Commission under Rule 53 and
(b) a copy of Item 9 of the Form U5S and Exhibits G and H thereof to each state
regulator having jurisdiction over the retail rates of Northeast Utilities'
public utility subsidiaries;
(iv) Neither Northeast Utilities nor any subsidiary has been the
subject of a bankruptcy or similar proceeding unless a plan of reorganization
has been confirmed in such proceeding;
(v) Northeast Utilities' average consolidated retained earnings for the
four most recent quarterly periods have not decreased by 10% or more from the
average for the previous four quarterly periods; and
(vi) In the previous fiscal year, Northeast Utilities did not report
operating losses attributable to its investment in EWGs/FUCOs exceeding 3
percent of Northeast Utilities' consolidated retained earnings.
The proposed transactions, considered in conjunction with the effect of
the capitalization and earnings of Northeast Utilities' EWGs and FUCOs, would
not have a material adverse effect on the financial integrity of the Northeast
Utilities system, or an adverse impact on Northeast Utilities' public-utility
subsidiaries, their customers, or the ability of State commissions to protect
such public-utility customers. The Rule 53(c) Order was predicated, in part,
upon an assessment of Northeast Utilities' overall financial condition which
took into account, among other factors, Northeast Utilities' consolidated
capitalization ratio and its retained earnings, both of which have improved
since the date of the order. Northeast Utilities' EWG investment (it has no FUCO
investment), has been profitable for all quarterly periods ending June 30, 2000
through March 31, 2002 (NGC was acquired in March 2000). As of December 31,
1999, the most recent period for which financial statement information was
evaluated in the Rule 53(c) Order, Northeast Utilities' consolidated
capitalization consisted of 35.3% common equity and 64.7% debt (including long
and short-term debt, preferred stock, capital leases and guarantees). As of June
30, 2000, the end of the first quarter after the issuance of the Rule 53(c)
Order, the consolidated capitalization ratios of Northeast Utilities, with
consolidated debt including all short-term debt and non-recourse debt of the
EWG, were as follows:
As of June 30, 2000
-----------------------------
(thousands
of dollars) %
----------- -----
Common shareholders' equity 2,365,854 36.9
Preferred stock 277,700 4.3
Long-term and short-term debt 3,768,353 58.8
6,411,907 100.0
The consolidated capitalization ratios of Northeast Utilities as of
March 31, 2002, with consolidated debt including all short-term debt and
non-recourse debt of the EWG, were as follows:
As of March 31, 2002
----------------------------
(thousands
of dollars) %
----------- ----
Common shareholders' equity 2,138,845 31.1
Preferred stock 116,200 1.7
Long-term and short-term debt 2,566,968 37.3
Rate Reduction Bonds 2,051,807 29.9
6,873,820 100.0
Northeast Utilities' consolidated retained earnings increased from
$581.8 million as of December 31, 1999 to $678.4 million as of December 31, 2001
to $680.9 million as of March 31, 2002. NGC has made a positive contribution to
earnings by contributing approximately $128.7 million in revenues in the twelve
months period ended March 31, 2002 and net income of $38.3 million for the same
period. Accordingly, since the date of the Rule 53(c) Order, Northeast
Utilities' investment in EWGs and FUCOs has not had an adverse impact on
Northeast Utilities' financial integrity.
D. Scope of Application/Declaration
This Application/Declaration relates to the sale of utility assets,
including the Plant and related transmission assets, by Vermont Yankee and the
indirect sale of those utility assets by the applicant registered holding
company. It also relates to the transfer of the cash and securities in the
Vermont Yankee Decommissioning Trust and the transfer of Vermont Yankee's
interest in the moneys relating to the Texas Compact held by the State of
Vermont.
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The Commission is respectfully requested to take appropriate action on
the following matters:
Approval of the sale of utility assets, including the Plant and the
transmission assets, by Vermont Yankee to ENVY and the indirect sale
of such utility assets by Northeast Utilities. Approval of the transfer
of cash and securities in the Vermont Yankee Decommissioning Trust and
Vermont Yankee's interest in the amount relating to the Texas Compact
held by the State of Vermont.
ITEM 2. Fees, Commissions and Expenses
The estimated fees, commissions and expenses paid or to be paid,
directly or indirectly, in connection with the transactions described in this
Application/Declaration are as follows:
Legal and financial advisory fees and expenses $6,750,000
Accounting fees and expenses 100,000
Other expenses 250,000
Total $7,100,000
==========
ITEM 3. Applicable Statutory Provisions
Vermont Yankee is an indirect subsidiary of Northeast Utilities.
The PSA provides for the sale of utility assets by Vermont Yankee and,
therefore, the indirect sale of utility assets by Northeast Utilities. That
aspect of the proposed transaction requires the approval of the Commission
pursuant to Section 12(d) of the Act and Rule 44 thereunder.
The redemption and repayment of Vermont Yankee's First Mortgage Bonds
and Secured Credit Agreement are exempted from the requirements of Section 12(c)
of the Act pursuant to Rule 42 thereunder.
ITEM 4. Regulatory Approvals
The following regulatory approvals are required in connection with the
transactions described in this Application/Declaration (references to particular
provisions of statutes, codes, rules or regulations are deemed to include other
provisions of statutes, codes, rules or regulations referred to therein or
related thereto):
The Vermont Public Service Board has jurisdiction over certain aspects
of Vermont Yankee as a public utility company doing business in Vermont.
Pursuant to Section 109 of Title
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30 of the Vermont Statutes Annotated, the consent of the Vermont Public Service
Board is required for Vermont Yankee to sell ten percent or more of its utility
assets (as contemplated by the PSA). Pursuant to Section 108 of Title 30 of the
Vermont Statutes Annotated the consent of the Vermont Public Service Board is
required for Vermont Yankee's pledge of its assets to another corporation. The
proposed pledge of Vermont Yankee's right to receive certain payments under the
Power Contracts to Entergy pursuant to the Security Agreement, which is the
subject matter of this Application/Declaration, falls within the parameters of
those statutory sections. Appropriate proceedings were instituted before the
Vermont Public Service Board by giving the required notice on August 22, 2001
and by formal petition dated September 27, 2001. See Exhibits D-1 and D-2. The
order of the Vermont Public Service Board was issued on June 13, 2002. See
Exhibit D-3.
The sale of jurisdictional assets to ENVY pursuant to the PSA and
approval of the 2001 Amendatory Agreements have been submitted for approval to
the FERC. Appropriate proceedings were instituted before FERC by giving the
required notice on October 17, 2001. See Exhibit D-4. The order of the FERC was
issued on February 1, 2002. See Exhibit D-5.
The sale of the Plant pursuant to the PSA will also require the
transfer to ENVY of the NRC Operating License currently held by Vermont
Yankee. The transfer of an operating license requires the consent of the NRC
pursuant to Section 184 of the Atomic Energy Act, as amended, and the
regulations promulgated thereunder, 10 CFR Sections 50.80 and 50.92. Appropriate
proceedings were instituted before the NRC by application filed on October 5,
2001. See Exhibit D-6. The order of the NRC was issued on May 17, 2002. See
Exhibit D-7.
In addition, the PSA provides that certain private letter rulings be
obtained from the United States Internal Revenue Service with respect to certain
tax aspects of the proposed transactions as preconditions to the Closing under
the PSA.
Certain of the sponsoring utilities, including certain sponsoring
utilities that are subsidiaries of the parties to this Application/Declaration,
also require consents, approvals or waivers of jurisdiction by their respective
state regulatory commissions with respect to their indirect participation in the
transactions that are the subject matter of this Application/Declaration.
No other state commission or any Federal commission, other than the
Securities and Exchange Commission and those named above, has jurisdiction over
the applicants' participation in the proposed transactions.
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ITEM 5. Procedure
(a) Vermont Yankee and Northeast Utilities do not request a hearing on
this Application/Declaration and, because of the urgency of obtaining all the
required regulatory approvals involved in the proposed transaction, request that
the Commission's order be issued as soon as practicable and no later than
June 30, 2002 and that the authority granted remain in effect until
December 31, 2002.
(b) Without prejudice to their right to modify the same if a hearing
should be ordered on this Application/Declaration, the applicants hereby make
the following specifications required by paragraph (b) of Item 5 of Form U-1:
(i), (ii) There should not be a recommended decision by a hearing
officer or any other responsible officer of the Commission.
(iii) The Division of Investment Management may assist in the
preparation of the Commission's decision.
(iv) There should not be a 30-day waiting period between issuance of
the Commission's order and the date on which it is to become effective.
It is requested that the Commission send copies of all communications
to counsel for the applicants as follows: Vermont Yankee: Hemmie Chang, Esq.,
Ropes & Gray, One International Place, Boston, Massachusetts 02110 and Nancy
Malmquist, Esq., Downs Rachlin & Martin PLLC, P.O. Box 99, 90 Prospect Street,
St. Johnsbury, Vermont 05819-0099; and Northeast Utilities: Jeffrey Miller,
Esq., Northeast Utilities Service Company, 107 Selden Street, Berlin,
Connecticut 06037.
ITEM 6. Exhibits and Financial Statements
(a) Exhibits:
A Not Applicable
B-1 Purchase and Sale Agreement. (Previously filed as an exhibit
to the Application/Declaration on Form U-1 (File No. 70-10033)
filed with the Securities and Exchange Commission on January
11, 2002).
B-2 Power Purchase Agreement. (Previously filed as an exhibit
to the Application/Declaration on Form U-1 (File No. 70-10033)
filed with the Securities and Exchange Commission on January
11, 2002).
B-3 2001 Amendatory Agreement. (Previously filed as an exhibit
to the Application/Declaration on Form U-1 (File No. 70-10033)
filed with the Securities and Exchange Commission on January
11, 2002).
B-4 Form of Security Agreement. (Previously filed as an exhibit
to the Application/Declaration on Form U-1 (File No. 70-10033)
filed with the Securities and Exchange Commission on January
11, 2002).
C Not Applicable
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D-l Letter dated August 22, 2001 giving notice of proposed
transactions to Vermont Public Service Board ("PSB").
(Previously filed as an exhibit to the Application/Declaration
on Form U-1 (File No. 70-10033) filed with the Securities and
Exchange Commission on January 11, 2002).
D-2 Petition to PSB. (Previously filed as an exhibit
to the Application/Declaration on Form U-1 (File No. 70-10033)
filed with the Securities and Exchange Commission on January
11, 2002).
D-3 Order of PSB.
D-4 Petition to FERC. (Previously filed as an exhibit
to the Application/Declaration on Form U-1 (File No. 70-10033)
filed with the Securities and Exchange Commission on January
11, 2002).
D-5 Order by FERC.
D-6 Application to NRC. (Redacted) (Previously filed as an exhibit
to the Application/Declaration on Form U-1 (File No. 70-10033)
filed with the Securities and Exchange Commission on January
11, 2002).
D-7 Order by NRC.
E Not Applicable
F-1 Opinions of counsel as to matters required by Instructions
F-(1) as to Exhibits to Form U-1.
G Not applicable
H Proposed Form of Notice. (Previously filed as an exhibit
to the Application/Declaration on Form U-1 (File No. 70-10033)
filed with the Securities and Exchange Commission on January
11, 2002).
(b) Financial Statements:
J-1 Audited Balance Sheet of Vermont Yankee as at December 31,
2000. (Previously filed as an exhibit to the Application/
Declaration on Form U-1 (File No. 70-10033) filed with the
Securities and Exchange Commission on January 11, 2002).
J-2 Unaudited Balance Sheet of Vermont Yankee as at September 30,
2001. (Previously filed as an exhibit to the Application/
Declaration on Form U-1 (File No. 70-10033) filed with the
Securities and Exchange Commission on January 11, 2002).
J-3 Audited Statement of Income for Vermont Yankee for the year
ended December 31, 2000. (Previously filed as an exhibit
to the Application/Declaration on Form U-1 (File No. 70-10033)
filed with the Securities and Exchange Commission on January
11, 2002).
J-4 Unaudited Statement of Income for Vermont Yankee for the
nine-months ended September 30, 2001. (Previously filed as an
exhibit to the Application/Declaration on Form U-1 (File
No. 70-10033) filed with the Securities and Exchange
Commission on January 11, 2002).
Financial Statements of Northeast Utilities have been omitted as not
being necessary to a consideration of this application.
Item 7 - Information as to Environmental Effects.
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(a) In view of the nature of the proposed transaction described herein,
the Commission's action in this matter will not constitute any major federal
action significantly affecting the quality of the human environment.
(b) No other federal agency has prepared or is preparing an
environmental impact statement with regard to the proposed transaction.
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Pursuant to the requirements of the Public Utility Holding Company Act of
1935, as amended, the applicants named herein have duly caused this statement to
be signed on their behalf by their respective officers on their thereunto duly
authorized.
NORTHEAST UTILITIES
By /s/ John B. Keane
-----------------------------------------------
Name: John B. Keane
Title: Vice President - Administration of
Northeast Utilities Service Company,
as Agent for Northeast Utilities
VERMONT YANKEE NUCLEAR POWER
CORPORATION
By /s/ Bruce W. Wiggett
-----------------------------------------------
Name: Bruce W. Wiggett
Title: Sr. Vice President of Finance & Admin.
Date: June 25, 2002
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