NO. 70-9839
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
AMENDMENT NO. 2
TO
APPLICATION/DECLARATION
ON
FORM U-1
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Northeast Utilities
Western Massachusetts Electric Company
174 Brush Hill Road
West Springfield, MA 01089
The Connecticut Light and Power Company
107 Selden Street
Berlin, CT 06037
(Names of companies filing this statement and addresses of
principal executive offices)
NORTHEAST UTILITIES
(Name of top registered holding company)
Cheryl W. Grise
Senior Vice President, Secretary and General Counsel
Northeast Utilities Service Company
107 Selden Street
Berlin, CT 06037
(Name and address of agent for service)
The Commission is requested to mail signed copies of all orders, notices
and communications to:
Jeffrey C. Miller, Esq. David R. McHale
Assistant General Counsel Vice President and Treasurer
Northeast Utilities Service Company Northeast Utilities Service Company
107 Selden Street 107 Selden Street
Berlin, CT 06037 Berlin, CT 06037
The Application/Declaration in this File is hereby amended as follows:
(a) The last sentence of paragraph 1 is deleted and replaced with the
following:
"The senior debt ratings of CL&P and WMECO issued by Standard & Poor's
were upgraded to "BBB+" on January 31, 2001 while the senior debt ratings of
CL&P and WMECO issued by Moody's Investor Service, Inc. were upgraded to
"Baa1" on January 23, 2001."
(b) Paragraph 16 is hereby deleted and replaced with the following:
"Inability to meet the Commission's 30% Common Equity Ratio Test
In the Use of Proceeds Filing, the Utilities noted that the addition of
the then anticipated securitization debt to the balance sheets of CL&P and
WMECO on a pro forma basis with the reduced capitalization of the Utilities
as a result of the authorization granted in such file, would cause the
Utilities (and NU on a consolidated basis) to fail the Commission's benchmark
of 30% common equity-to-capitalization test, with their respective pro forma
common equity ratios at 19.1% and 16.6% and NU at 29.1%. As indicated in the
Use of Proceeds Filing, however, the ratings of the respective senior debt
securities of CL&P and WMECO will be unaffected or will be improved by the
issuance of the rate reduction bonds, as such bonds are not considered
obligations of the Utilities by the ratings agencies. As indicated earlier
herein, both CL&P and WMECO have used proceeds from the sale of non-nuclear
generating assets to reduce their respective capitalization but no RRBs have
yet been issued. After giving effect to the sale of Millstone, the issuance
of the RRBs and the paydown of debt and equity with the proceeds, the pro
forma common equity ratios of CL&P and WMECO (and NU on a consolidated
basis), as of September 30, 2000, (without including the issuance of the RRBs
as debt of the companies) would remain above 30%, with CL&P at 41%, WMECO at
40% and NU consolidated at 40%. Giving effect to the Millstone transactions,
the issuance of the RRBs and including the issuance of the RRBs as debt of
the respective companies, the respective pro forma common equity ratios as of
September 30, 2000 of CL&P, and WMECO would fall below the 30% benchmark with
CL&P at 20% and WMECO at 28%. However, the companies will adhere to any
state commission order requiring a higher equity ratio (see Item 4 hereof).
The transactions described herein and the issuance of the RRBs would not
cause NU on a consolidated basis to fall below 30%. However, NU expects that
other events in the NU consolidated system, including the issuance of RRBs by
Public Service Company of New Hampshire ("PSNH") and a $225 million after-tax
write-off taken by PSNH in the fourth quarter of 2000 as a result of
restructuring in New Hampshire, would cause NU on a consolidated basis to
fall below 30%. (See Exhibit K.1 hereto). CL&P and WMECO presently
anticipate that the debt associated with the RRBs will have been amortized by
no later than twelve years after the respective date when such company has
issued the maximum principal amount of RRBs which it intends to issue ("Full
Securitization"). Thus CL&P's and WMECO's common equity ratios will exceed
30% by no later than the end of such period. In all likelihood, a sufficient
amount of securitization debt will be amortized prior to the end of such
twelve year period to restore both CL&P's and WMECO's common equity ratio to
over 30% prior to that date. Based on the expected terms and amortizations
of the RRBs to be issued by CL&P (and assuming the RRBs issued by WMECO are
issued on similar terms) the Applicants believe that the common equity ratio
of CL&P will be above 30% by December 31, 2008 and that of WMECO will be
above 30% by December 31, 2003 (See Exhibit L hereto) It is also expected
that NU's common equity ratio on a consolidated basis will be above 30% by
December 31, 2002. If by December 31, 2002, in the case of NU, or by the end
of the Authorization Period in the case of the Utilities, the respective
company is not above 30% common equity, further authorization from the
Commission will be required."
(c) Item 4 is hereby deleted and replaced with the following:
"ITEM 4
REGULATORY APPROVALS
28. The Connecticut Department of Public Utility Control (the "DPUC") has
jurisdiction over CL&P's plan of divestiture of Millstone, and in its order
approving the divestiture plan, the DPUC required that within 180 days
following the closing, CL&P file information regarding the disposition of the
proceeds, including an itemization of costs that will be netted against the
proceeds and detailed tax calculations. On March 16, 2001, the DPUC issued a
temporary order requiring CL&P to use the proceeds in a way to result in a
common equity ratio (not including the RRBs as debt) for CL&P between 45% and
50%. (See Exhibit D attached hereto). The Massachusetts Department of
Telecommunications and Energy (DTE) has jurisdiction over WMECO's use of
proceeds from the Millstone sale. In approving the sale of WMECO's share of
Millstone, the DTE stated that it was not ruling on the use of proceeds and
would examine that issue in an annual transition charge reconciliation
proceeding after the sale is completed.. No other state or Federal regulatory
approval, other than the approval of the Commission pursuant to this
Application, is required to consummate the transactions described herein.
The transactions described herein will be effected in compliance with all
applicable state and federal laws and regulations."
(d) Item 6 is hereby deleted and replaced with the following:
"ITEM 6
EXHIBITS AND FINANCIAL STATEMENTS
(asterisked (*) items have already been filed in this Application)
** - to be filed by amendment
30. (a) Exhibits
D. Temporary Order of the Connecticut Department of Public Utility
Control dated March 16, 2001**
F. Opinion of Counsel*
H. Proposed Form of Notice*
J. CL&P Mortgage Indenture Dividend Covenant*
K. Common Equity Ratios*
K.1 Revised Common Equity Ratios
L. Amortization Schedule for RRBs
(b) Financial Statements
1 Northeast Utilities and Subsidiaries (consolidated)
1.1 Balance Sheet, per books and pro forma, as of September 30, 2000.
1.2 Statement of Income, per books and pro forma, for 12 months
September 30, 2000 and capital structure, per books and pro
forma, as of September 30, 2000.
2 The Connecticut Light and Power Company
2.1 Balance Sheet, per books and pro forma, as of September 30, 2000
2.2 Statement of Income and Surplus, per books and pro forma, for 12
months ended September 30, 2000 and capital structure, per books
and pro forma, as of September 30, 2000.
3 Western Massachusetts Electric Company
3.1 Balance Sheet, per books and pro forma, as of September 30, 2000.
3.2 Statement of Income and Surplus, per books and pro forma, for 12
months ended September 30, 2000 and capital structure, per books
and pro forma, as of September 30, 2000.
SIGNATURES
Pursuant to the requirements of the Public Utility Holding Company Act of 1935,
as amended, the undersigned companies have duly caused this statement to be
signed on their behalf by the undersigned thereunto duly authorized.
NORTHEAST UTILITIES
WESTERN MASSACHUSETTS ELECTRIC COMPANY
THE CONNECTICUT LIGHT AND POWER COMPANY
By: /s/ Cheryl W. Grise
-------------------
Name: Cheryl W. Grise
Title: Senior Vice President, Secretary and General Counsel
Northeast Utilities Service Company
as Agent for the above named companies.
Date: March 18, 2001