EXHIBIT G-1
New Century Energies, Inc., et al. (70- )
New Century Energies, Inc. ("NCE"), it service company subsidiary, New
Century Services, Inc., and its non-utility holding company subsidiary, New
Century Enterprises, Inc., together with, Public Service Company of Colorado, a
Colorado public utility company ("PSCo"), Cheyenne Light, Fuel and Power Company
("Cheyenne"), WestGas Interstate Inc., e prime, inc. and its subsidiary
companies ("e prime"), PS Colorado Credit Corporation ("PSCC"), Natural Fuels
Corporation, PSRI Investments, Inc., Green & Clear Lakes Company, 1480 Xxxxxx,
Inc., each of 0000 Xxxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxx 00000 and Southwestern
Public Service Company, a New Mexico public utility company ("SPS" and together
with PSCo and Cheyenne, the "Utility Subsidiaries"), Utility Engineering
Corporation and its subsidiary companies and Quixx Corporation and its
subsidiary companies ("Quixx"), each of Tyler at Sixth, Amarillo, Texas 79101
(together, "Applicants")(all subsidiaries, "Subsidiaries")(all subsidiary
companies, excluding the Utility Subsidiaries, the "Non-Utility Subsidiaries")
have filed a joint application/declaration under sections 6, 7, 9, 10, 12(b),
12(c), 12(e), 12(f), 32 and 33 and rules 42, 43, 45, 53 and 62 thereunder.
The Applicants are seeking, for the period from the effective date of
an order in this matter through December 31, 2002 (the "Authorization Period"),
as more fully described below, Commission authorization for: (1) external
financings by
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NCE, including (a) equity financing, (b) short-term financing, (c)
interest rate and equity swaps and (d) the issuance of other securities; (2)
financing by the Utility Subsidiaries, including (a) short-term debt, (b)
interest rate swaps and (c) the issuance of other securities; (3) financing by
the Non-Utility Subsidiaries; (4) intrasystem financing of Subsidiaries,
including (a) open account advances, long term loans and/or capital stock
purchases and (b) guarantees; (5) changes in capital stock of the Subsidiaries;
(6) the formation and retention of financing entities; (7) certain existing
financing arrangements; (8) the establishment of two money pool arrangements
through December 31, 2002, including (a) a Utility Money Pool and (b) a
Non-Utility Money Pool; (9) financing for the purpose of acquiring exempt
wholesale generators ("EWGs") and foreign utility companies ("FUCOs"); (10) the
acquisition, redemption or retirement of securities; and (11) the solicitation
of proxies, consents or authorizations to seek shareholder approval.
The Applicants request authority to engage in various financing and
related transactions, for a period from the effective date of an order in this
matter through December 31, 2002, for which the specific terms and conditions
are not at this time known. The authorization is sought subject to the following
conditions: (1) NCE's (and each Utility Subsidiary's) common equity will be at
least 30% of its consolidated capitalization; (2) any long-term debt issued to
unaffiliated
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persons pursuant to an authorization in this proceeding will be, or will meet
the qualifications for being, investment grade; (3) the effective cost of money
on financings authorized in this proceeding will not exceed, for long-term debt,
300 basis points over the rate borne by comparable term U.S. Treasury
securities, and for short-term debt, 300 basis points over the London interbank
offered rate; (4) the effective cost of money for preferred stock and other
fixed income oriented securities will not exceed 500 basis points over the
interest rate borne by 30 year term U.S. Treasury securities; (5) the maturity
of authorized indebtedness will not exceed 50 years; (6) issuance expenses in
connection with an offering of securities, including any underwriting fees,
commissions or other similar compensation, may not exceed 5% of the total amount
of the securities being issued; (7) the aggregate amount of external financing
will not exceed $10 billion, the aggregate amount of intrasystem financing will
not exceed $4 billion and the aggregate amount of intrasystem guarantees and
other credit support will not exceed $4 billion; (9) the proceeds of the
proposed financings will be used for general and corporate purposes including:
(a) capital expenditures of NCE and its Subsidiaries, (b) the repayment,
redemption, refunding or repurchase of debt and capital stock of NCE or its
Subsidiaries, (c) financing working capital requirements, and (d) other lawful
general purposes. Financing may not be used to invest in an EWG or a FUCO
unless, at the time of each financing transaction, NCE is in compliance with the
requirements of rules 53 and 54 under the Act. Any
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deviation from these conditions would require further Commission approval.
The proposed transactions and the proposed participation of the
various Applicants are described below.
1. External Financing by NCE. During the Authorization Period NCE
proposes from time to time to issue and sell capital stock, short-term debt and
other securities and to engage in interest rate and equity swaps. Securities may
be sold through underwriters or dealers, directly to a limited number of
purchasers, or through agents.
a. Capital Stock. NCE proposes to issue and sell preferred stock or
common stock, including stock issued upon the exercise of convertible debt or
pursuant to rights, options, warrants and similar securities and income
preferred securities.1
NCE may also buy back shares of such stock or such other securities
during the Authorization Period.
NCE also proposes to issue and/or sell its common stock under certain
employee benefit plans and dividend reinvestment plans to be adopted. Such
shares may be newly issued shares, treasury shares or shares purchased in the
open market.
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1 In connection with issuance of such securities, NCE proposes to form
financing entities, as described below, and to issue debt to such
entities to back up obligations under securities issued by such
entities.
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Applicants also request authority to solicit proxies, consents or
authorizations in connection with employee benefit plans for employees of NCE or
its Subsidiaries. Such solicitations shall be within the exemption provided by
Rule 65.
b. Short-term Debt. NCE proposes to issue and sell commercial paper in
established domestic or European commercial paper markets to dealers at the
discount rate prevailing at the date of issuance for comparable commercial
paper. The dealers would reoffer such commercial paper at a discount to
investors. NCE also proposes to establish back-up lines of credit providing for
borrowings from time to time when it is impracticable to issue commercial paper.
Such lines of credit would be in an aggregate principal amount not to exceed the
amount of authorized commercial paper, and borrowings under these lines would
mature not more than one year from the date of borrowing. NCE also proposes to
engage in other types of short-term financing generally available to borrowers
with investment grade credit ratings as it may deem appropriate.
c. Interest Rate and Equity Swaps. NCE proposes to engage in interest
rate swaps involving its interest obligations existing at the date of the swap.
NCE also proposes to engage in equity swaps in which it would exchange one
equity investment market risk for another or would exchange fixed or floating
rate interest income from an investment for payments
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based on a stock index.2 Interest rate and equity swaps would be limited to
obligations and investments existing at the time of the swap.
NCE requests reservation of jurisdiction over the use of equity swaps
pending completion of the record as to the exact form of transactions. NCE also
undertakes to file a post-effective amendment in this proceeding which will
describe the general terms of each such equity swap and request a supplemental
order of the Commission authorizing the issuance thereof by NCE. Such
supplemental order may be issued by the Commission without further public notice
in the Federal Register.
d. Other Securities. In addition to the specific securities for which
authorization is sought, NCE also proposes to issue other types of securities
that it deems appropriate during the period of the Commission's authorization.
NCE requests that the Commission reserve jurisdiction over the issuance of
additional types of securities. NCE also undertakes that it will file a
post-effective amendment in this proceeding describing the general terms of each
such security and obtain a supplemental order of the Commission authorizing the
issuance thereof by NCE. Such supplemental orders may be issued by the
Commission without further public notice in the Federal Register.
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2 NCE states that equity swaps could be used to hedge earnings from its
domestic or international investments, but would not be used to
transfer title to the equity securities owned by it that are used in
the swap transaction.
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2. Utility Subsidiary Financings. The Utility Subsidiaries request
authorization to engage in certain external financings which are outside the
scope of the Rule 52 exemption for financings of utility companies, interest
rate swaps and other securities.
a. Short-term debt. These may include short-term debt financings of
PSCo and Cheyenne (less than 12 month maturity) and SPS (less than 18 month
maturity) which may be granted but do not require approval by state regulators.
Each of these companies may issue commercial paper in established domestic or
European commercial paper markets in a manner similar to NCE discussed above.
b. Interest Rate Swaps. Each Utility Subsidiary may engage in interest
rate swaps to the same extent, and under the same conditions, as NCE.
c. Other Securities. Each Utility Subsidiary may issue other
securities in the same manner, and subject to the same conditions, as NCE.
3. Non-Utility Subsidiary Financings. Each of the Non-Utility
Subsidiaries propose to issue other types of securities that are not exempted by
Rule 52 from the requirement of Commission approval and that they deem
appropriate during the
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period of the Commission's authorization. These Applicants request that the
Commission reserve jurisdiction over the issuance of additional types of
securities and also undertake that they will cause a post-effective amendment to
be filed in this proceeding describing the general terms of each such security
and obtain a supplemental order of the Commission authorizing the issuance
thereof by such Applicants. Such supplemental orders may be issued by the
Commission without further public notice in the Federal Register.
4. Intrasystem Financing. The Applicants propose various financing
transactions between NCE and its subsidiaries and between certain subsidiaries.
The aggregate amount of all such financing would not exceed $4.0 billion
excluding amounts exempt pursuant to Rules 45 and 52.
a. General. NCE proposes to make to its Subsidiaries and certain
Subsidiaries propose to make to other Subsidiaries open-account advances,
long-term loans and/or capital stock purchases, as determined by NCE and its
respective Subsidiaries to be appropriate. These borrowings would be made on a
revolving basis and would bear interest at a rate equal to the weighted average
effective interest rate of NCE's short-term borrowings or, if no such borrowings
are outstanding, at a rate based on the Federal Funds effective rate of interest
quoted daily by the Federal Reserve Bank of New York. Such advances may be made
through the Money Pools.
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In addition, the Non-Utility Subsidiaries propose to issue and NCE or
other Non-Utility Subsidiaries propose to acquire other types of securities that
are not exempted by Rule 52 from the requirement of Commission approval but that
are considered by such companies to be appropriate during the period of the
Commissions authorization. These Applicants request that the Commission reserve
jurisdiction over the issuance of additional types of securities and also
undertake that they will cause a post-effective amendment to be filed in this
proceeding describing the general terms of each such security and obtain a
supplemental order of the Commission authorizing the issuance and acquisition
thereof. Such supplemental orders may be issued by the Commission without
further public notice in the Federal Register.
b. Guarantees. The Applicants propose to enter into guarantee
arrangements, obtain letters of credit, enter into expense agreements and
otherwise provide credit support with respect to the obligations of the other
Applicants to third parties. NCE proposes to enter into such arrangements with
respect to the obligations of any Subsidiary and any Subsidiary proposes to
enter into such arrangements with respect to any other Subsidiary. The aggregate
amount of all such arrangements would not exceed $4.0 billion outstanding at any
one time, except to the extent the same are exempt pursuant to Rule 52 and are
in addition to the $10.0 billion limit on ex
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ternal financing for NCE and its Subsidiaries and the $4.0 billion limit on
intrasystem financing.
5. Changes in Capital Stock of Subsidiaries. The portion of an
individual Subsidiary's aggregate financing through the sale of stock to NCE or
other immediate parent company cannot be ascertained at this time. NCE and its
Subsidiaries request authority to increase such Subsidiary's authorized capital
stock and to change the amount or terms of any such Subsidiary's capital stock
capitalization by an amount deemed appropriate by NCE or other immediate parent
company and to change or eliminate the par value of such stock without further
Commission approval. The Applicants also seek authority to solicit proxies,
consents or authorizations to obtain shareholder approval regarding changes in
their capital stock which may be required under Section 12(e) and Rule 62
thereunder. Such solicitations shall be within the exemption provided by
Rule 65.
6. Financing Entities. In connection with the issuance of income
preferred securities or other securities authorized in this proceeding, the
Applicants seek authorization to organize new corporations, trusts, partnerships
or other entities created for the purpose of facilitating such financings..
Request is also made for these financing entities to issue such
securities to third parties in the event such transactions involving financing
by the Applicants are not exempt pursuant to Rule 52. Additionally, request is
made for authorization with respect to (i) the issuance of debentures or
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other evidences of indebtedness by any of the Applicants to a financing entity
in return for the proceeds of the financing, (ii) the acquisition by any of the
Applicants of voting interests or equity securities issued by the financing
entity to establish any such Applicant's ownership of the financing entity (the
equity portion of the entity generally being created through a capital
contribution or the purchase of equity securities, ranging from 1 to 3 percent
of the capitalization of the financing entity) and (iii) the guarantee by the
Applicants of such financing entity's obligations in connection therewith. Each
of the Applicants and the Subsidiaries also request authorization to enter into
expense agreements with its respective financing entity, pursuant to which it
would agree to pay all expenses of such entity. Any amounts issued by such
financing entities to third parties pursuant to this authorization will be
included in the overall external financing limitation authorized herein for the
immediate parent of such financing entity, however, the indebtedness issued by
an Applicant to a financing entity will not count against the intrasystem
financing limit set forth herein. Applicants also request that SPS be authorized
to retain Southwestern Public Service Capital I, a wholly owned trust, that
issued trust preferred securities and loaned the proceeds to SPS.
7. Existing Financing Arrangements. The Applicants propose to retain
such financing arrangements as were in
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place prior to the Merger and which are not otherwise exempted from the
provisions of the Act.
8. Establishment of Money Pools. The Applicants propose to establish
(i) the Utility Money Pool and the Utility Subsidiaries, to the extent not
exempted by Rule 52, also request authorization to make borrowings and to
contribute to the Utility Money Pool and (ii) the Non-Utility Money Pool in
which the Non-Utility Subsidiaries as well as any other newly formed Non-Utility
Subsidiaries, may participate. The Non-Utility Money Pool activities of all of
the Non-Utility subsidiaries except PSCCC are exempt from the prior approval
requirements of the Act under Rule 52. Applicants propose PSCCC participate in
the Non-Utility Money Pool. Applicants also propose NCE contribute surplus funds
and lend and extend credit to (a) the Utility Subsidiaries through the Utility
Money Pool and (b) the Non-Utility Subsidiaries through the Non-Utility Money
Pool. Funds made available by NCE for loans through the money pools will be made
available first for loans through the Utility Money Pool and thereafter for
loans through the Non-Utility Money Pool. No loans through the Utility Money
Pool would be made to, and no borrowings through the Utility Money Pool would be
made by, NCE.
The maximum amount of Money Pool borrowings outstanding for each
Subsidiary will be determined by NCE and the Subsidiaries in accordance with
business needs. Actual short-term financing would be issued based on working
capital requirements
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and any interim financing needed to bridge between issuances of long-term
capital.
NC Services will operate and administer the Utility and Non-Utility
Money Pools on an "at cost" basis and will maintain separate records for each
money pool. Surplus funds of the Utility Money Pool and the Non-Utility Money
Pool may be combined in common short-term investments, but separate records of
such funds shall be maintained by NC Services as administrator of the pools, and
interest thereon shall be separately allocated, on a daily basis, to each Money
Pool in accordance with the proportion that the amount of each Money Pool's
surplus funds bears to the total amount of surplus funds available for
investment from both Money Pools and will be similarly allocated among the
Participants.
a. Utility-Money Pool. Under the proposed terms of the Utility Money
Pool, funds would be available for short-term loans to the Utility Subsidiaries
from time to time. The maximum short-term debt under the Utility Money Pool to
be issued by PSCo, SPS and Cheyenne will not exceed 40% of their total
capitalization.
Utility Money Pool participants that borrow would borrow pro rata from
each company that lends, in the proportion that the total amount loaned by each
such lending company bears to the total amount then loaned through the Utility
Money Pool. On any day when more than one fund source (e.g., surplus treas-
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ury funds of NCE and other Utility Money Pool participants ("Internal Funds")
and proceeds from bank borrowings or commercial paper sales by the Utility
Subsidiaries or NCE ("External Funds")), with different rates of interest, is
used to fund loans through the Utility Money Pool, each borrower would borrow
pro rata from each such fund source in the Utility Money Pool in the same
proportion that the amount of funds provided by that fund source bears to the
total amount of short-term funds available to the Utility Money Pool.
The interest rate applicable and payable to or by subsidiaries for all
loans of Internal Funds will be the rates for high-grade unsecured 30-day
commercial paper sold through dealers by major corporations as quoted in The
Wall Street Journal. The interest rate applicable to loans of such External
Funds would be equal to the lending company's cost for such External Funds (or,
if more than one Utility Money Pool participant had made available External
Funds on such day, the applicable interest rate would be a composite rate equal
to the weighted average of the cost incurred by the respective Utility Money
Pool participants for such External Funds). In cases where both Internal Funds
and External Funds are concurrently borrowed through the Utility Money Pool, the
rate applicable to all loans comprised of such "blended" funds would be a
composite rate.
Funds not required by the Utility Money Pool to make loans (with the
exception of funds required to satisfy the
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Utility Money Pool's liquidity requirements) would ordinarily be invested in one
or more short-term investments.
b. Non-Utility Money Pool. The Non-Utility Money Pool will be operated
on the same terms and conditions as the Utility Money Pool. All contributions
to, and borrowings from, the Non-Utility Money Pool are exempt pursuant to the
terms of Rule 52 under the Act, except contributions and extensions of credit by
NCE and PSCCC and short-term borrowings by PSCCC in an amount not to exceed 40%
of its total capitalization, authorization for which is hereby requested.
9. Financing of EWGs and FUCOs. NCE's Non-Utility Subsidiaries, e
prime and Quixx and their subsidiaries, currently own investments in EWGs.
Sections 32 and 33 of the Act permit a registered holding company to acquire and
maintain interests in one or more EWGs or FUCOs without the need to apply for or
receive approval from the Commission. To the extent that funds for one or more
projects are required in excess of internally generated funds, NCE hereby
requests Commission authorization to invest proceeds from the financings
authorized hereby in EWGs and FUCOs in compliance with Rule 53(a)(1) such that
NCE's aggregate investment at any one time during the period covered by this
Application will not exceed 50% of its "consolidated retained earnings", as
defined in Rule 53(a)(1)(ii).
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For the Commission, by the Division of Investment Management, pursuant
to delegated authority.
