-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BvRBkDjnWCxmsIi+RaEzMla+v/2kTPu1MvOam4w9BvusSxjUjy5lml2gA+O9yI2L d6NmeAQr5CW2wimaDXo7WA== 0000023426-03-000006.txt : 20030903 0000023426-03-000006.hdr.sgml : 20030903 20030903161717 ACCESSION NUMBER: 0000023426-03-000006 CONFORMED SUBMISSION TYPE: U-1 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20030903 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONNECTICUT LIGHT & POWER CO CENTRAL INDEX KEY: 0000023426 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 060303850 STATE OF INCORPORATION: CT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: U-1 SEC ACT: 1935 Act SEC FILE NUMBER: 070-10163 FILM NUMBER: 03879376 BUSINESS ADDRESS: STREET 1: SELDEN STREET CITY: BERLIN STATE: CT ZIP: 06037-1616 BUSINESS PHONE: 8606655000 U-1 1 clpu1cover090303.txt CL&P U-1 090403 File No. 70- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM U-1 APPLICATION/DECLARATION Under THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 THE CONNECTICUT LIGHT AND POWER COMPANY 107 Selden Street Berlin, CT 06037 (Name of companies filing this statement and address of principal executive offices) NORTHEAST UTILITIES (Name of top registered holding company) Gregory Butler, Esq. Vice President, Secretary and General Counsel Northeast Utilities Service Company P.O. Box 270 Hartford, Connecticut 06141-0270 (Name of address of agent for service) The Commission is requested to mail signed copies of all orders, notices and communications to: David R. McHale Jeffrey C. Miller Vice President and Treasurer Assistant General Counsel Northeast Utilities Service Northeast Utilities Service Company Company 107 Selden Street 107 Selden Street Berlin, CT 06037 Berlin, CT 06037 Item 1. DESCRIPTION OF PROPOSED TRANSACTIONS Introduction 1. The Connecticut Light and Power Company ("CL&P"), a wholly-owned subsidiary of Northeast Utilities ("NU"), a registered holding company, hereby submits to the Securities and Exchange Commission (the "Commission") an application/declaration pursuant to the Public Utility Holding Company Act of 1935 (the "1935 Act") with respect to (a) solicitation of proxies on behalf of the Board of Directors of CL&P ("Proxy Solicitation") for use at a special meeting of the holders of the Preferred Stock of CL&P (the "CL&P Preferred Stock") on or about November 25, 2003 (the "Shareholders' Meeting"), and (b) the proposals to be considered and acted upon at such special meeting, namely a proposal (i) to amend the Certificate of Incorporation of CL&P (herein referred to as the "Charter") to eliminate the provisions therein imposing limitations on the incurrence or assumption of unsecured indebtedness (the "Unsecured Debt Restrictions") (subject to subsequent approval of the Connecticut Department of Public Utility Control (the "DPUC"), if required) ("Proposal 1"), or (ii) in the alternative, if the required shareholder approval is not obtained or the DPUC approval, if required, is not obtained, to continue the current waiver of the 10 percent limit contained in the Unsecured Debt Restrictions for an additional ten-year period ("Proposal 2"). Subsequent to the implementation of Proposal 1, CL&P proposes to make a special cash payment (the "Cash Payment") to each holder of CL&P Preferred Stock who voted his or her shares of CL&P Preferred Stock in favor of Proposal 1. 2. CL&P requests that the Commission issue a public notice of the proposed transactions and an order authorizing the Proxy Solicitation (the "Proxy Solicitation Order") by September 19, 2003 thereby affording CL&P sufficient time to solicit proxies in advance of the Special Meeting. CL&P further requests that as soon as practicable after the Proxy Solicitation Order, but in any event not later than October 31, 2003, the Commission issue an order authorizing the amendment to the Charter proposed by Proposal 1 and the Cash Payment. 3. As discussed herein, the purpose of the Proxy Solicitation is to obtain the required approval of CL&P's shareholders to eliminate the Unsecured Debt Restriction in CL&P's Charter. As a result of utility restructuring in Connecticut, CL&P's capitalization has become smaller and its unsecured debt has become a greater proportion of CL&P's total capitalization. CL&P believes that eliminating the Unsecured Debt Restriction will provide CL&P with more financial flexibility to lower its financing costs as it issues debt to fund its planned construction and improvement program. CL&P believes that the financing flexibility and cost benefits resulting from the elimination of these provisions outweigh the one-time cost of the Proxy Solicitation and one-time payment to consenting shareholders. The same general considerations apply to continuing the waiver of the 10 percent limit for an additional ten-year period. Background 4. CL&P has outstanding 6,035,205 shares of common stock, $10 par value per share ("Common Stock"), all of which are held by NU. The CL&P Preferred Stock consists of 2,324,000 shares of cumulative preferred stock, $50 par value per share, issued in 13 series (each, a "CL&P Series"). The Common Stock and the CL&P Preferred Stock are entitled to one vote per share on the matters described in Proposal 1 and vote as separate classes. They constitute CL&P's only outstanding securities entitled to vote on Proposal 1. Only holders of the CL&P Preferred Stock are entitled to vote on Proposal 2. CL&P has outstanding no other class of equity securities. 5. Section 4(1) of Section VI of Part Two under Article IV of the Charter currently provides that, except with the consent of the holders of a majority of the CL&P Preferred Stock then outstanding, and providing that holders of one-third (1/3) of the aggregate voting rights represented by shares of CL&P Preferred Stock then outstanding do not dissent in writing or vote against such action, CL&P may not issue or assume any unsecured debt if immediately after such issuance or assumption (a) the total outstanding principal amount of all unsecured debt of CL&P will thereby exceed 20% of the aggregate of all outstanding secured debt and the capital stock, premium and surplus of CL&P, as stated on its books ("Capitalization") or (b) the total outstanding principal amount of all unsecured debt of CL&P having maturities of less than ten years will then exceed 10 percent of such capitalization. 6. At a shareholders' meeting held on December 15, 1993, CL&P obtained authorization from the holders of the CL&P Preferred Stock and CL&P's Class A Preferred Stock to issue or assume unsecured indebtedness with a maturity of less than 10 years in excess of the 10 percent limitation for a ten-year period, expiring March 31, 2004, provided that all unsecured indebtedness would not exceed 20 percent of total capitalization. Approval of the Commission of the proxy solicitation was set forth in an order dated October 20, 1993 (HCA Rel. No. 25910) and, of the waiver itself, February 24, 1994 (HCA Rel. No. 25992). CL&P has periodically obtained similar waivers since 1971. Proposed Transactions 7. CL&P now proposes to submit to the holders of the CL&P Preferred Stock (there are currently no shares of Class A Preferred Stock outstanding) and the holder of its Common Stock, NU, voting as holders of separate classes of capital stock, for consideration at the Shareholders' Meeting to be held on or about November 25, 2003, Proposal 1 to amend its Charter to delete the Unsecured Debt Restriction and to submit for consideration to the holders of the CL&P Preferred Stock only, as an alternative, Proposal 2 as herein described. A vote of the holders of at least two-thirds of its Common Stock and the holders of at least two-thirds of the CL&P Preferred Stock outstanding, voting as separate classes, is required to approve Proposal 1. A vote of the majority of holders of CL&P Preferred Stock in favor of Proposal 2 is required to adopt Proposal 2, provided that the holders of one-third of the CL&P Preferred Stock do not vote against or abstain from Proposal 2. 8. If Proposal 1 is adopted, CL&P proposes, effective upon the amendment of the Charter, to make a Cash Payment of 1% of par value per share to each holder of CL&P Preferred Stock whose shares are properly voted at the Special Meeting (in person by ballot or by proxy) in favor of Proposal 1. After obtaining an approving vote, CL&P will apply to the DPUC, if necessary, for approval to amend its Charter accordingly. 9. In the event Proposal 1 fails to receive the necessary two-thirds vote, or in the event Proposal 1 is approved but the DPUC fails or declines to issue the necessary order, CL&P seeks authority from holders of the CL&P Preferred Stock in Proposal 2 to continue the authorizations received in 1993 to issue or assume unsecured indebtedness with a maturity of 10 years or less in excess of the 10 percent limitation (but not in excess of 20 percent) for a ten-year period, ending March 31, 2014. Proposal 2 requires the affirmative vote of a majority of the CL&P Preferred Stock outstanding, provided that holders of one-third (1/3) of the aggregate voting rights represented by shares of CL&P Preferred Stock then outstanding do not dissent in writing or vote against such action. Holders of CL&P Preferred Stock voting in favor of Proposal 1 will be deemed to have voted in favor of Proposal 2 should Proposal 1 fail to be approved by either the holders of Preferred Stock or by the DPUC unless such holder affirmatively votes against Proposal 2. No action by the sole Common Stockholder, NU, is required with respect to Proposal 2. 10. CL&P believes that adoption of the Proposal 1, or in the alternative, Proposal 2, is critical to obtaining the financial flexibility and capital cost reduction necessary to carry out its financing program. Historically, CL&P's debt financing has been accomplished through the issuance of long-term first mortgage bonds, a modest amount of short-term debt and long-term installment purchase contracts for pollution control bonds. First mortgage bonds have a first priority lien and mortgage on substantially all of CL&P's assets. The Mortgage and Deed of Trust between CL&P and its bondholders contains certain restrictive covenants with respect to, among other things, the disposition of assets and the ability to issue additional first mortgage bonds. 11. Unsecured debt generally has fewer restrictions than first mortgage bonds. Short-term debt, a low cost form of debt available to CL&P, represents one type of unsecured indebtedness. Pollution control bond financing, a favorable type of financing due to its tax-exempt status, is available only for very limited purposes. It is CL&P's intention to attain flexibility in the mix of its outstanding debt and therefore have the option to use more short and long-term unsecured debt and fewer first mortgage bonds. As indicated above, utility restructuring in Connecticut has caused CL&P's capitalization to become smaller than it has traditionally been and its unsecured debt has become a greater proportion of its total capitalization. CL&P believes that eliminating the Unsecured Debt Restriction will provide it with more financial flexibility to lower its financing costs as it issues debt to fund infrastructure refurbishment programs presently contemplated. 12. Recently, several other utilities with the same or similar charter restrictions as the Restriction Provisions have successfully eliminated such provisions by soliciting their shareholders for the same or similar amendments to that for which authorization is being sought herein. 13. Reference is made to Exhibits B-1, (draft Proxy Statement), B-2 (draft Notice of Special Meeting) and B-3 (draft form of Proxy) for more detailed information with respect to the Proxy Solicitation and Proposals and with respect to the benefits of the Proposals. Proxy Solicitation 14. CL&P proposes to submit the proposals described above to the holders of CL&P Preferred Stock for approval at the aforementioned Shareholders' Meeting. In connection therewith, CL&P proposes, on behalf of the Board of Directors, to solicit proxies from the holders of the CL&P Preferred Stock through the use of the applicable solicitation materials, filed herewith as B-1, B-2 and B-3, and in accordance with all applicable Securities Exchange Act of 1934 (the "Exchange Act') rules. Solicitations will be made by mail and by officers or employees of CL&P or of Northeast Utilities Service Company ("NUSCO"), an associate service company. In addition, CL&P has retained the services of Morrow & Co. to assist in the solicitation of proxies. 15. Under the applicable provisions of the Charter, adoption of Proposal 1 requires the affirmative vote of two-thirds of the total number of outstanding shares of its Common Stock and the CL&P Preferred Stock, each voting as a single class. 16. Adoption of Proposal 2 requires the affirmative vote of a majority of shares of the CL&P Preferred Stock, provided that holders of one-third (1/3) of the aggregate voting rights represented by shares of CL&P Preferred Stock then outstanding do not dissent in writing or vote against such action. No director or common shareholder action is required with respect to Proposal 2. 17. No associate company or affiliate of CL&P or any affiliate of any such associate company has any material interest, directly or indirectly, in the proposed transactions, except as stated herein. Item 2. FEES, COMMISSIONS AND EXPENSES 1. The estimated fees, commissions and expenses, paid or incurred, or to be paid or incurred, directly or indirectly, in connection with the proposed transactions are stated in Exhibit G hereto. 2. None of such fees, commissions or expenses are to be paid to any associate company or affiliate of CL&P, or any affiliate of any such associate company, except for other services to be performed, at cost, by NUSCO. Item 3. APPLICABLE STATUTORY PROVISIONS Section 12(e) of the Act and Rules 62 and 65 thereunder are applicable to the Proxy Solicitations. Section 12(e) of the Act and Rule 65 thereunder are and Section 6(a)(2) may be deemed applicable to Cash Payments. Section 6(a)(2) of the Act is applicable to the proposed amendments to the Charter. To the extent that the Commission's "Statement of Policy Regarding Preferred Stock Subject to the Public Utility Holding Company Act of 1935" may be applicable to the Proposals, CL&P hereby requests that an exception for such Statement of Policy be granted. Item 4. REGULATORY APPROVAL No consent or approval of any state commission or any federal commission (other than the Securities and Exchange Commission) is required for the transactions proposed herein, other than such approvals, if any, as may be required under state blue sky laws in connection with the proxy solicitation and other than any approvals that may be required of the DPUC to amend the Charter of CL&P. Such approval will be requested subsequent to the Shareholders' Meeting (assuming the required vote to amend the Charter is attained) to either disclaim jurisdiction or, in the alternative, if required, to approve the amendment to the Charter. CL&P will comply fully with all requirements of the Exchange Act and the rules and regulations thereunder applicable to the Proxy Solicitations, and acknowledges that any Commission authorization granted under the 1935 Act is conditioned upon such compliance. Item 5. PROCEDURE 1. As stated in Item 1, the Shareholders' Meeting is scheduled to take place on or about November 25, 2003. In order to afford CL&P sufficient time in advance of the Shareholders' Meeting to solicit proxies and to maximize the prospect for adoption of Proposal 1 at the Shareholders' Meeting, CL&P requests that the Commission issue and publish not later than September 19, 2003 the requisite notice under Rule 23 with respect to the filing of this Application-Declaration, together with an order under Section 12(e) and Rule 62 permitting CL&P to solicit proxies pursuant to the Proxy Solicitations. 2. CL&P further requests that the Proxy Solicitation Order specify a date not later than October 31, 2003 as the date after which the Commission may issue an order granting and permitting to become effective the other transactions for which authorization is sought herein, namely, Proposal 1 and Proposal 2. CL&P requests that the Commission issue this second order as soon as practicable after such date. 3. CL&P respectfully requests the Commission's approval, pursuant to this Application, of all transactions described herein, whether under the sections of the Act and Rules thereunder enumerated in Item 3 or otherwise. Additionally, CL&P (i) requests that there not be any recommended decision by a hearing officer or by any responsible officer of the Commission, (ii) consents to the Office of Public Utility Regulation within the Division of Investment Management assisting in th e preparation of the Commission's decision, and (iii) waives the 30-day waiting period between the issuance of the Commission's order and the date on which it is to become effective, since it is desired that the Commission's order, when issued, become effective immediately. Other Matters 1. Except in accordance with the Act, neither NU nor any subsidiary thereof (a) has acquired an ownership interest in an EWG or a 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 NU and its subsidiaries to acquire any securities of, or any interest in, an EWG or a FUCO. 2. NU currently meets all of the conditions of Rule 53(a), except for clause (1). At June 30, 2003, NU's "aggregate investment," as defined in Rule 53(a)(1), in EWGs and FUCOs was approximately $448.2 million, or approximately 57.8% of NU's average "consolidated retained earnings," also as defined in Rule 53(a)(1), for the four quarters ended June 30, 2003 ($775 million). With respect to Rule 53(a)(1), however, the Commission has determined that NU's financing of its investment in Northeast Generation Company ("NGC"), NU's 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 Co. Act Release No. 27148, dated March 7, 2000 (the "Rule 53(c) Order"). NU continues to assert that its EWG investment in NGC will not adversely affect the System. 3. In addition, NU 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, NU has undertaken to provide the Commission access to such books and records and financial statements, as it may request; (ii) No employees of NU's public utility subsidiaries have rendered services to NGC; (iii) NU 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 NU's public utility subsidiaries; (iv) Neither NU 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) NU's average CREs 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, NU did not report operating losses attributable to its investment in EWGs/FUCOs exceeding 3 percent of NU's consolidated retained earnings. 4. The proposed transactions, considered in conjunction with the effect of the capitalization and earnings of NU's EWGs and FUCOs, would not have a material adverse effect on the financial integrity of the NU system, or an adverse impact on NU's 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 NU's overall financial condition which took into account, among other factors, NU's consolidated capitalization ratio and its retained earnings, both of which have improved since the date of the order. NU's EWG investment (it has no FUCO investment) has been profitable for all quarterly periods ending June 30, 2000 through June 30, 2003 (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, NU's 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 NU, 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 5. The consolidated capitalization ratios of NU as of June 30, 2003, with consolidated debt including all short-term debt and non-recourse debt of the EWG, were as follows: As of June 30, 2003 (thousands of dollars) % Common shareholders' equity $2,214,494 32.9 Preferred stock 116,200 1.8 Long-term and short-term debt 2,586,828 38.4 Rate Reduction Bonds 1,816,998 27.0 $6,734,520 100.0% If Rate Reduction Bonds are excluded the consolidated capitalization ratio of NU as of June 30, 2003 is as follows: As of June 30, 2003 (thousands of dollars) % Common shareholders' equity $2,214,494 45.0 Preferred stock 116,200 2.4 Long-term and short-term debt 2,586,828 52.3 $4,917,522 100.0% 6. NGC has made a positive contribution to earnings by contributing $135.4 million in revenues in the 12-month period ending June 30, 2003 and net income of $34.6 million for the same period. Although since the date of the Rule 53(c) Order, the common equity ratio of NU on a consolidated basis has decreased, it still remains at a financially healthy level, above the 30% benchmark required by the Commission, and if Rate Reduction Bonds are excluded, the consolidated common equity ratio has increased. Accordingly, NU's investment in its EWG has not had an adverse impact on NU's financial integrity. Item 6 EXHIBITS AND FINANCIAL STATEMENTS 1. The following additional exhibits and financial statements are filed herewith: (a) Exhibits B-1 Draft Proxy Statement B-2 Draft Notice of Special Meeting B-3 Draft form of Proxy F* Opinion of Counsel G* Fees, Commissions and Expenses H Form of Notice * Exhibits to be filed by amendment (b) Financial Statements Pro Forma Financial Statements are omitted since they are not necessary to the proper disposition of the transactions contemplated herein. Financial Statements for The Connecticut Light and Power Company for the year ended December 31, 2002 are included in its Form 10-k on file with the Commission for such year and its unaudited financial statements for the quarters ended March 30, 2003 and June 30, 2003 are included in its Forms 10-Q on file with the Commission for such quarters. Item 7 INFORMATION AS TO ENVIRONMENTAL EFFECTS 1. None of the matters that are the subject of this Application involve a "major federal action" nor do they "significantly affect the quality of the human environment" as those terms are used in Section 102(2)(C) of the National Environmental Policy Act. None of the proposed transactions that are the subject of this Application will result in changes in the operation of CL&P that will have an impact on the environment. CL&P is not aware of any federal agency which has prepared or is preparing an environmental impact statement with respect to the transactions proposed herein." SIGNATURE Pursuant to the requirements of the Public Utility Holding Company Act of 1935, The Connecticut Light and Power Company has duly caused this Application-Declaration to be signed on its behalf by the undersigned thereunto duly authorized. September 3, 2003 THE CONNECTICUT LIGHT AND POWER COMPANY By: /s/ Randy A. Shoop Name: Randy A. Shoop Title: Assistant Treasurer-Finance Northeast Utilities Service Company as Agent - ------------------------------------------------------------ The Series of CL&P Preferred Stock outstanding are as follows: $1.90 Series of 1947; $2.00 Series of 1947; $2.04 Series of 1949; $2.20 Series of 1949; 3.90% Series of 1949; $2.06 Series E of 1954; $2.09 Series F of 1955; 4.50% Series of 1956; 4.96% Series of 1958; 4.50% Series of 1963; 5.28% Series of 1967; $3.24 Series G of 1968; and 6.56% Series of 1968. The Commission has authorized utility subsidiaries of registered holding companies to solicit their shareholders for similar charter amendments with respect to unsecured debt limitations. See, e.g., The Southern Company, HCA Rel. No. 35-26791 (December 5, 1997); Central and South West Corporation, HCA Rel. No. 35-26701 (April 10, 1997); American Electric Power Company, Inc., HCA Rel. No. 35-26675 (February 27, 1997); Cinergy, HCA Rel. No. 35-26569 (September 11, 1996). - ------------------------------------------------------------ EX-99 3 clpuwexhibitb1proxy.txt EXHIBIT B-1 - DRAFT PROXY STATEMENT Exhibit B-1 DRAFT THE CONNECTICUT LIGHT AND POWER COMPANY ______________ PROXY STATEMENT ______________ INTRODUCTION The accompanying proxy is solicited on behalf of the Board of Directors of The Connecticut Light and Power Company (the "Company") for use at a special meeting of the holders of the Company's outstanding Common Stock and its Preferred Stock to be held on November 25, 2003, and at any and all adjournments thereof. Please read this proxy statement and promptly vote and submit your proxy by phone, by internet, or by completing, signing, dating and returning your proxy form in the enclosed envelope. The proxy may be revoked at any time before it is voted by a writing filed with the Secretary of the Company or by a duly executed proxy bearing a later date. Properly executed proxies not revoked will be voted according to their terms. Only holders of the Company's Common Stock and Preferred Stock of record at the close of business on September 30, 2003 (the "Record Date"), or persons obtaining a proxy from the holders of record on the Record Date are entitled to notice of and to vote by proxy or in person at the special meeting. If Proposal 1 (as described herein) is approved and adopted by the Company's shareholders, the Company will make, subsequent to the amendment to its Amended and Restated Certificate of Incorporation, a special cash payment in the amount equal to 1% of the par value per share for each share of Preferred Stock properly voted in favor of Proposal 1 ("Cash Payment"). If a holder of Preferred Stock votes against Proposal 1 or abstains, such holder shall not be entitled to the Cash Payment. This Proxy Statement is first being mailed to holders of Preferred Stock on or about [October 7,] 2003. VOTING SHARES September 30, 2003 has been fixed as the Record Date for the determination of shareholders entitled to notice of and to vote at the special meeting. On that date, 6,035,205 shares of Common Stock and 2,324,000 shares of Preferred Stock were outstanding. The Preferred Stock consists of cumulative preferred stock, $50 par value per share, issued in 13 series. All series of Preferred Stock will vote together as one class at this special meeting. The Common Stock and the Preferred Stock are entitled to one vote per share on the matters described in Proposal 1 and vote as separate classes. They constitute CL&P's only outstanding securities entitled to vote on Proposal 1. Only holders of the Preferred Stock are entitled to vote on Proposal 2. No person is known by the Company to be the beneficial owner of more than 5% of the Preferred Stock of the Company. The principal office of the Company is located at 107 Selden Street, Berlin, Connecticut (mailing address: Post Office Box 270, Hartford, Connecticut 06141-0270). The proxy statement and the accompanying form of proxy are being mailed to holders of Common Stock and Preferred Stock commencing [October 7], 2003. VOTING REQUIREMENTS AND PROCEDURES Under the applicable provisions of the Company's Charter, adoption of Proposal 1 requires the affirmative vote of two-thirds of the total number of outstanding shares of Common Stock and Preferred Stock, each voting as a single class. Abstentions and broker non-votes will have the effect of votes against Proposal 1. NORTHEAST UTILITIES, THE OWNER OF ALL OF THE OUTSTANDING SHARES OF COMMON STOCK OF THE COMPANY, HAS ADVISED THE COMPANY THAT IT INTENDS TO VOTE ALL OF THE OUTSTANDING SHARES OF COMMON STOCK OF THE COMPANY IN FAVOR OF PROPOSAL 1. Proposal 2 requires the affirmative vote of a majority of the total number of outstanding shares of Preferred Stock voting as a single class, provided that holders of one-third (1/3) of the aggregate voting rights represented by shares of Preferred Stock then outstanding do not dissent in writing or vote against such action. Each vote in favor of Proposal 1 will be deemed to be a vote in favor of Proposal 2 unless the holder expressly votes "Against" or "Abstains" as to Proposal 2. Only holders of record of the Company's voting securities at the close of business on the Record Date or persons obtaining a proxy from the holders of record on the Record Date will be entitled to vote in person or by proxy at the special meeting. Any beneficial holder of Preferred Stock who is not the registered holder of such shares as of the Record Date (as would be the case for any beneficial holder whose shares are registered in the name of such holder's broker, dealer, commercial bank, trust company or other nominee) must arrange with the record holder of such Preferred Stock to execute and deliver a proxy form on such beneficial owner's behalf. If a beneficial holder of Preferred Stock intends to attend the special meeting and vote in person, such beneficial holder must obtain a legal proxy form from his or her broker, dealer, commercial bank, trust company or other nominee. PROXIES THE ENCLOSED PROXY IS SOLICITED BY THE COMPANY'S BOARD OF DIRECTORS, WHICH RECOMMENDS VOTING FOR PROPOSAL 1. NU HAS ADVISED THE COMPANY THAT IT INTENDS TO VOTE ALL SHARES OF THE COMPANY'S COMMON STOCK IN FAVOR OF PROPOSAL 1. Shares of the Company's outstanding preferred stock represented by properly executed proxies received at or prior to the special meeting will be voted in accordance with the instructions thereon. If no instructions are indicated, duly executed proxies will be voted in accordance with the recommendation of the Board. It is not anticipated that any matters other than Proposal 1 and Proposal 2 will be brought before the special meeting. However, the enclosed proxy gives discretionary authority to the proxy holders named therein should any other matters be presented at the special meeting, and it is the intention of the proxy holders to act on any other matters in their discretion. Execution of a proxy will not prevent a shareholder from attending the special meeting and voting in person. Any shareholder giving a proxy may revoke it at any time before it is voted by delivering to the Secretary of the Company written notice of revocation bearing a later date than the proxy, by delivering a duly executed proxy bearing a later date, or by voting in person by ballot at the special meeting. The cost of soliciting proxies on behalf of management from holders of the Preferred Stock will be borne by the Company. In addition to the use of the mails, proxies may be solicited by personal interview, telephone, facsimile or telegraph by directors, officers or employees of the Company or its associate company, Northeast Utilities Service Company, or by an independent company, Morrow & Co., which has been retained to assist in the solicitation of proxies from banks, brokerage firms, nominees and individual holders of Preferred Stock for a fee of $________, plus reimbursement for expenses. Arrangements will be made to reimburse brokerage firms, nominees, custodians and fiduciaries for expenses incurred in forwarding solicitation materials to the beneficial owners of shares Preferred Stock held of record by such persons. The solicitation of proxies has been approved by the Securities and Exchange Commission under the Public Utility Holding Company Act of 1935 (the "Holding Company Act"). An application has been filed with the Commission under the Holding Company Act requesting approval of the Proposals. If the required affirmative vote of the holders of Common Stock and Preferred Stock is obtained on Proposal 1, the Company intends to request from the Connecticut Department of Public Utility Control ("DPUC") a disclaimer of jurisdiction over the amendment of the Charter, or in the alternative, if required, the approval of the DPUC. Proposal 1 will not become effective until any and all required regulatory approvals have been received CASH PAYMENTS Subject to the terms and conditions set forth in this Proxy Statement, if (but only if) Proposal 1 is approved and adopted by the shareholders of the Company and the Charter is amended as set forth in such proposal, the Company will make a Cash Payment to each holder of Preferred Stock who voted in favor of Proposal 1, in person by ballot or by proxy, at the special meeting in the amount equal to 1% of the par value per share for each share of Preferred Stock held by such shareholder which is so voted. CASH PAYMENTS WILL BE MADE TO HOLDERS OF PREFERRED STOCK AS OF THE RECORD DATE ONLY IN RESPECT OF EACH SHARE WHICH IS VOTED FOR THE ADOPTION OF PROPOSAL 1. If Proposal 1 is approved and adopted and the Charter is so amended, Cash Payments will be paid out of CL&P's general funds, promptly after the amendment to the Charter shall have become effective. However, no accrued interest will be paid on the Cash Payments regardless of any delay in making such payments. Cash Payments will be treated as fees for voting in favor of Proposal 1 and will constitute ordinary income to United States holders receiving such Cash Payments. Such holders, whether or not they receive Cash Payments, will not recognize any taxable income or loss with respect to the shares as a result of the amendment to the Charter set forth in Proposal 1. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT As noted above, NU owns all the outstanding Common Stock of the Company. Pursuant to Section 13(d) of the Exchange Act, a beneficial owner of a security is any person who directly or indirectly has or shares voting or investment power over such security. No person or group is known by management of the Company to be the beneficial owner of more than 5% of the shares of the Company's Preferred Stock as of September 30, 2003. BUSINESS TO COME BEFORE THE SPECIAL MEETING The following Proposals are the only items of business expected to be presented at the special meeting: Proposal 1 -- Amend the Amended and Restated Certificate of Incorporation of the Company (herein referred to as the "Charter") to eliminate, in its entirety, Section 4(1) of Section VI of Part Two under Article IV of the Charter limiting CL&P's ability to issue unsecured indebtedness (the "Unsecured Debt Restriction"); Proposal 2 -- in the alternative, if the required shareholder approval for Proposal 1 is not obtained or other regulatory approvals, if required, are not obtained, continue the current waiver of the 10 percent limit contained in the Unsecured Debt Restriction for an additional ten-year period through March 31, 2014. A vote in favor of Proposal 1 will be deemed to be a vote in favor of Proposal 2 unless the holder expressly votes "Against" or "Abstains" as to Proposal 2. EXPLANATION OF THE PROPOSALS Section 4(1) of Section VI of Part Two under Article IV of the Company's Charter provides that, except with the required vote of the holders of the Preferred Stock then outstanding, the amount of unsecured indebtedness of the Company having maturities of less than ten years that the Company may issue shall not exceed 10% of the sum of the principal amount of all secured indebtedness and the capital stock, premium and surplus of the Company, and that all unsecured indebtedness issued by the Company of any maturity shall not exceed 20% of such sum. Based on the capitalization of the Company as of June 30, 2003, the estimated 10% unsecured borrowing limitation would be $258.4 million and the estimated 20% limitation would be $516.8 million. At June 30, 2003, of the Company's $61.7 million of unsecured indebtedness, $46.4 million consisted of three series of Pollution Control Revenue Bonds with maturities exceeding ten years (2016, 2018 and 2022) and the balance ($15.2 million) consisted of unsecured borrowings through the NU system money pool. Since 1971 and periodically thereafter, preferred stockholders have authorized the Company to incur unsecured indebtedness having maturities of less than ten years in excess of 10% of its capital stock, premium, surplus and secured indebtedness, provided that all unsecured indebtedness issued by the Company did not exceed 20% of such sum. The date of the last approval was December 15, 1993, and it allowed the Company to issue such indebtedness on or before March 31, 2004, with maturities as to such indebtedness of not later than March 31, 2005. Earlier proposals submitted to holders of the Preferred Stock sought authority to ease the limitations on unsecured indebtedness for five-year periods. The proposal approved in 1993 sought such approval for a ten-year period. Proposal 1 seeks approval to amend the Charter of the Company to permanently eliminate the limitations on incurring or assuming unsecured debt by deleting Section 4(1) of Section VI of Part Two under Article IV of the Charter, which imposes such limitations. In the alternative, in the event the required shareholders approval is not obtained or any required regulatory approvals are not obtained, Proposal 2 seeks an extension of the ten year period in which it is authorized to incur or assume unsecured debt in excess of 10% of its capital stock, premium, surplus and secured indebtedness, provided that all unsecured indebtedness issued by the Company did not exceed 20% of such sum. REASONS FOR THE PROPOSALS Management believes that the permanent elimination of the restriction will increase the Company's flexibility in planning and financing its business activities and achieve cost savings for the Company by avoiding the costs of soliciting votes of the holders of Preferred Stock and convening a meeting of such shareholders after any limited extension period. The extension of the ten-year period for an additional ten-year term will have similar benefits in increasing the Company's flexibility in planning and financing its business activities but would force the Company to incur the costs of holding a meeting of shareholders in ten years to extend the period further. Since the original authorization in 1971, the Company has periodically incurred unsecured debt with maturities of less than 10 years in excess of the 10% limitation. The ability to incur such indebtedness has permitted the Company to effect a more orderly and cost-effective financing of its capital requirements, which include its construction program. The Company wishes to maintain this ability because it foresees for an indefinite period a continuation of the same factors and conditions which led it to seek these waivers in the first place. Management believes that the prudent use of short-term and medium-term unsecured debt may provide cost savings and increased efficiency in the management of its business. Due to future uncertainties from continued restructuring in the utility industry and the changing regulatory environment, cost containment, fluctuations in the financial market and a large construction program expected in the next few years, management wishes to retain its current flexibility. The Company also wishes to maintain and increase the flexibility in long-term financial planning that the past authorizations have provided. Although the Company's earnings are currently sufficient to meet the earnings coverage tests that must be satisfied before the Company can issue additional first mortgage bonds and Preferred Stock, there have been periods in the past three decades when, because of inadequate rate relief and high interest rates, the Company was unable to issue first mortgage bonds or Preferred Stock. To protect the Company's ability to meet its financial obligations, the Company must be able to temporarily finance its capital requirements by means of shorter term borrowings until earnings improve to the point that the coverage ratios meet the requirements of the mortgage indenture and the Preferred Stock provisions. The Company plans to use unsecured borrowings to continue to finance a portion of its construction program and for other general corporate purposes. The Company's projected construction program expenditures for the period 2004 through 2013, including allowance for funds used during construction are substantial. These are estimated to be approximately $454 million for 2004, $435 million for 2005, $390 million for 2006, $355 million for 2007 and $363 million for 2008. Funds required by the Company to finance its construction program and for other corporate purposes could at times require unsecured borrowings with maturities of less than ten years in excess of the 10% limitation. The adoption of Proposal 1 will permanently eliminate the 10% limitation on unsecured debt with maturities of less than ten years and the 20% limitation on unsecured borrowings of any maturity. The text of the portion of the Company's Charter proposed to be deleted is set forth as Exhibit A. In the event Proposal 1 fails to be adopted due to not attaining the required affirmative two-thirds vote of the Preferred Stock, or the Company fails to obtain any necessary regulatory approvals, Proposal 2, if adopted, will continue the elimination of the 10% limitation for an additional ten-year period expiring March 31, 2014. Thus, under Proposal 2, it is proposed that holders of the Preferred Stock vote to authorize the Company to issue or assume such short-term unsecured indebtedness in excess of the 10% limitation, provided that (i) such indebtedness shall be issued or assumed on or before March 31, 2014, (ii) such indebtedness shall have maturities of not later than March 31, 2019 and (iii) the 20% limitation on all unsecured indebtedness of the Company of any maturity contained in the Charter shall remain in effect. The provisions of the Company's Charter which limit the amount of unsecured indebtedness that the Company may incur were originally adopted in response to the Securities and Exchange Commission's "Statement of Policy Regarding Preferred Stock Subject to the Public Utility Holding Company Act of 1935." In considering these proposals, holder of Preferred Stock might wish to consider the Commission's stated reason for requiring such a limitation, which is to protect the payment of preferred dividends by avoiding excessive levels of unsecured debt with heavy interest payments and early maturities. Management of the Company believes that these proposals will not result in excessive levels of unsecured debt and that the greater financial flexibility for the Company that would result from adoption of these proposals is beneficial to the interests of holders of Preferred Stock. The Board of Directors Recommends that Holders of Preferred Stock Vote FOR both Proposals . The Connecticut Light and Power Company's Annual Report on Form 10-K for the year ended December 31, 2002, its Forms 10-Q for the quarters ended March 31, 2003 and June 30, 2003, and its Forms 8-K dated May 14, 2003 have been filed with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934 and together with all other documents filed by the Company pursuant to Sections 13(a) and (c), 14 or 15(d) of such Act, are hereby incorporated in this proxy statement by reference The Company will provide holders of Preferred Stock with copies of such documents, including the financial statements and schedules thereto, without charge, upon receipt of a written request sent to: Mr. Jeffrey Kotkin Investor Relations Northeast Utilities Service Company P.O. Box 270 Hartford, Connecticut 06141-0270 The Board of Directors knows of no matter other than the foregoing to come before the meeting. If any other matters properly come before the meeting, however, the persons designated as proxies in the enclosed proxy will vote in their discretion with respect to such other matters. EX-99 4 clpu1exhb2proxy090303.txt EXHIBIT B-2 DRAFT NOTICE OF SPEC. MTG. Exhibit B-2 DRAFT THE CONNECTICUT LIGHT AND POWER COMPANY ________________ Notice of Special Meeting of Holders of Common Stock and Preferred Stock to be held on November 25, 2003 ________________ To the Holders of Common Stock and Preferred Stock of The Connecticut Light and Power Company: A special meeting of holders of Common Stock and Preferred Stock of The Connecticut Light and Power Company will be held at the offices of Northeast Utilities Service Company, 107 Selden Street, Berlin, Connecticut, on Tuesday, November 25, 2003 at 10:30 a.m. for the following purposes: (1) To authorize an amendment to the Company's Amended and Restated Certificate of Incorporation ("Charter") to eliminate those portions of the Charter which (a) prohibit the Company from issuing or assuming unsecured indebtedness with a maturity of less than ten years in excess of a 10% of capitalization limitation on the issuance of such indebtedness and (b) limit the total amount of unsecured indebtedness of whatever maturity to 20% of capitalization, as set forth in Section VI, Section 4(1) of Part Two under Article IV of the Company's Charter ("Proposal 1") (a copy of the Section of the Charter proposed to be deleted is attached as Exhibit A to the Proxy Statement). If Proposal 1 is adopted, CL&P proposes, subsequent to the amendment of the Charter, to make a cash payment of 1% of par value per share to each holder of Preferred Stock whose shares are properly voted at the special meeting (in person by ballot or by proxy) in favor of Proposal 1; (2) In the event Proposal 1 fails to receive the necessary affirmative vote, or the Company fails to receive the necessary regulatory approvals to amend its Charter as proposed in Proposal 1, to authorize the Company to continue for a ten-year period, expiring March 31, 2014, to issue or assume unsecured indebtedness of any maturity in an amount up to 20% of aggregate capitalization, notwithstanding the 10% limitation set forth in the Charter ("Proposal 2"); and (3) To transact such other business as may properly come before the meeting or any adjournment thereof. Holders of Common Stock and Preferred Stock of record at the close of business on September 30, 2003 are entitled to notice of and to vote at the meeting or any adjournment thereof. You are cordially invited to be present at the meeting and vote. If you are unable to attend the meeting, you can be sure your shares are represented at the meeting by promptly voting and submitting your proxy by phone, by internet, or by completing, signing, dating and returning your proxy form in the enclosed. By order of the Board of Directors, Gregory B. Butler Secretary 107 Selden Street Berlin, Connecticut Mailing Address: Post Office Box 270 Hartford, Connecticut 06141-1651 [October 7], 2003 IMPORTANT Holders of Preferred Stock can help avoid the necessity and expense of follow-up letters to ensure that a quorum is present at the special meeting by promptly voting and submitting your proxy by phone, by internet, or by completing, signing, dating and returning your proxy form in the enclosed envelope. The enclosed envelope requires no postage if mailed in the United States. EX-99 5 clpu1exhb3proxycard.txt EXHIBIT B-3 DRAFT FORM OF PROXY Exhibit B-3 DRAFT THE CONNECTICUT LIGHT AND POWER COMPANY Berlin, Connecticut Special Meeting of Preferred Shareholders November 25, 2003 [VOTE BY INTERNET, TELEPHONE OR MAIL 24 Hours a Day, 7 Days a Week INTERNET https://www. Use the Internet to vote your proxy. Have your Proxy Form in hand when you access the website. You will be prompted to enter your control number, located in the box below, to create an electronic ballot. OR TELEPHONE Use any touch-tone telephone to vote your proxy. Have your Proxy Form in hand when you call. You will be prompted to enter your control number, located in the box below, and then follow the simple directions. OR MAIL Mark, sign and date your Proxy Form and return it in the postage-paid envelope we have provided. CONTROL NUMBER -------------------------- / / /_________________/ If you vote by the Internet or by Telephone, do not return your Proxy Form by mail. DETACH PROXY CARD HERE IF YOU ARE NOT VOTING BY INTERNET OR TELEPHONE] P R O X Y THE CONNECTICUT LIGHT AND POWER COMPANY P R O X Y Berlin, Connecticut Proxy for Special Meeting of Preferred Shareholders November 25, 2003 The undersigned appoints MICHAEL G. MORRIS and GREGORY B. BUTLER, and either of them, proxies of the undersigned, with the power of substitution, to act for and to vote all shares of Preferred Stock of the undersigned at the Special Meeting of Preferred Shareholders of The Connecticut Light and Power Company to be held at the office of Northeast Utilities Service Company, 107 Selden Street, Berlin, Connecticut on November 25, 2003, and any adjournment thereof, upon the matters set forth in the notice of said meeting as indicated below. The proxies are further authorized to vote, in their discretion, upon such other business as may properly come before the meeting or any adjournment thereof. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1. 1. Amend Certificate of Incorporation as it relates to issuance or assumption of unsecured indebtedness ____ FOR ____ AGAINST ____ ABSTAIN THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 2. 2. Consent to issuance or assumption of unsecured indebtedness ____ FOR ____ AGAINST ____ ABSTAIN THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS (over) When properly executed, this proxy will be voted as specified by the undersigned. Unless otherwise instructed, this proxy will be voted FOR Proposal 1. A vote FOR Proposal 1 will be deemed a vote FOR Proposal 2 in the event the required vote is not obtained for Proposal 1, unless you expressly vote "Against" or "Abstain" as to Proposal 2. The undersigned hereby acknowledged receipt of notice of said meeting and the related proxy statement. Date _______________, 2003 Signed________________________________ Signed________________________________ Please sign in the same form as name appears hereon. If the shares are registered in more than one name, each joint owner or fiduciary should sign. Fiduciaries and corporate officers should indicate their titles. EX-99 6 clpu1exhh090303.txt EXHIBIT H - FORM OF NOTICE Exhibit H - Form of Notice Filings Under the Public Utility Holding Company Act of 1935, as amended ("Act") SECURITIES AND EXCHANGE COMMISSION Release No. 35- September , 2003 Notice is hereby given that the following filing(s) has/have been made with the Commission pursuant to provisions of the Act and rules promulgated thereunder. 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 amendments thereto is/are available for public inspection through the Commission's Office 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 _______________ to the Secretary, Securities and Exchange Commission, Washington, D.C. 20549, 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 case of an attorney at law, by certificate) should be filed with the request. Any request for hearing shall identify specifically the issues of fact 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 said date, the application(s) and/or declaration(s), as filed or as amended, may be granted and/or permitted to become effective. The Connecticut Light and Power Company (70- ) Notice of Proposal to Amend Articles of Incorporation; Order Authorizing Solicitation of Proxies The Connecticut Light and Power Company ("CL&P"), 107 Selden Street, Berlin, CT 06037, a public utility company subsidiary of Northeast Utilities ("NU"), a registered holding company under the Act, has filed an application-declaration under sections 6(a) and 12(b) - (e) of the Act and rules 62 and 65 thereunder. CL&P has outstanding 6,035,205 shares of common stock, $10 par value per share ("Common Stock"), all of which are held by NU. CL&P also has outstanding 2,324,000 shares of cumulative preferred stock, $50 par value per share (the "CL&P Preferred Stock"), issued in 13 series (each, a "CL&P Series"). The Common Stock and the CL&P Preferred Stock are entitled to one vote per share. Section 4(1) of Section VI of Part Two under Article IV of CL&P's Certificate of Incorporation (the "Charter") currently provides that, except with the consent of the holders of a majority of the CL&P Preferred Stock then outstanding, and providing that holders of one-third (1/3) of the aggregate voting rights represented by shares of CL&P Preferred Stock then outstanding do not dissent in writing or vote against such action, CL&P may not issue or assume any unsecured debt if immediately after such issuance or assumption (a) the total outstanding principal amount of all unsecured debt of CL&P will thereby exceed 20% of the aggregate of all outstanding secured debt and the capital stock, premium and surplus of CL&P, as stated on its books or (b) the total outstanding principal amount of all unsecured debt of CL&P having maturities of less than ten years will then exceed 10 percent of such capitalization (the "Unsecured Debt Restriction"). CL&P now proposes to submit to the holders of the CL&P Preferred Stock and the holder of its Common Stock, NU, voting as holders of separate classes of capital stock, for consideration at the Shareholders' Meeting to be held on or about November 25, 2003, Proposal 1, to amend its Charter to delete the Unsecured Debt Restriction and to submit for consideration to the holders of the CL&P Preferred Stock only, as an alternative, Proposal 2, to waive such restriction for a period of ten years (the "Proxy Solicitation"). A vote of the holders of at least two-thirds of its Common Stock and the holders of at least two-thirds of the CL&P Preferred Stock outstanding, voting as separate classes, is required to approve Proposal 1. A vote of the majority of holders of CL&P Preferred Stock in favor of Proposal 2 is required to adopt proposal 2, provided that the holders of one-third of the CL&P Preferred Stock do not vote against or abstain from Proposal 2. If Proposal 1 is adopted, CL&P proposes, effective upon the amendment of the Charter, to make a Cash Payment of 1% of par value per share to each holder of CL&P Preferred Stock whose shares are properly voted at the Special Meeting (in person by ballot or by proxy) in favor of Proposal 1. After obtaining an approving vote, CL&P will apply to the Connecticut Department of Public Utility Control ("DPUC"), if necessary, for approval to amend its Charter accordingly. In the event Proposal 1 fails to receive the necessary two-thirds vote, or in the event Proposal 1 is approved but the DPUC fails or declines to issue the necessary order, CL&P, in proposal 2, seeks authority from holders of the CL&P Preferred Stock for CL&P to issue or assume unsecured indebtedness with a maturity of 10 years or less in excess of the 10 percent limitation (but not in excess of 20 percent) for a ten-year period, ending March 31, 2014. Holders of CL&P Preferred Stock voting in favor of Proposal 1 will be deemed to have voted in favor of Proposal 2 should Proposal 1 fail to be approved by either the holders of Preferred Stock or by the DPUC unless such holder affirmatively votes against Proposal 2. No action by the sole Common Stockholder, NU, is required with respect to Proposal 2. CL&P believes that adoption of the Proposal 1, or in the alternative, Proposal 2, is critical to obtaining the financial flexibility and capital cost reduction necessary to carry out its financing program. Historically, CL&P's debt financing has been accomplished through the issuance of long-term first mortgage bonds, a modest amount of short-term debt and long-term installment purchase contracts for pollution control bonds. Unsecured debt generally has fewer restrictions than first mortgage bonds. Short-term debt, a low cost form of debt available to CL&P, represents one type of unsecured indebtedness. Pollution control bond financing, a favorable type of financing due to its tax-exempt status, is available only for very limited purposes. It is CL&P's intention to attain flexibility in the mix of its outstanding debt and therefore have the option to use more short and long-term unsecured debt and fewer first mortgage bonds. As indicated above, utility restructuring in Connecticut has caused CL&P's capitalization to become smaller than it has traditionally been and its unsecured debt has become a greater proportion of its total capitalization. CL&P believes that eliminating the Unsecured Debt Restriction will provide it with more financial flexibility to lower its financing costs as it issues debt to fund infrastructure refurbishments programs presently contemplated. Applicants undertake to comply with all requirements of the Securities Exchange Act of 1934 and rules and regulations thereunder in connection with the Proxy Solicitation, and acknowledge that any authorization granted under the Act is conditioned upon such compliance. The applicants also request authorization to deviate from the preferred stock provisions of the Statement of Policy Regarding Preferred Stock Subject to the Public Utility Holding Company Act of 1935, HCAR No. 13106 (Feb. 16, 1956), to the extent applicable with respect to the Proposed Amendments. It appears to the Commission that the application-declaration, to the extent that it relates to the proposed Proxy Solicitation and the solicitation of proxies in connection with the Proposed Amendment should be granted and permitted to become effective forthwith pursuant to rule 62(d). IT IS ORDERED, that the application-declaration, to the extent that it relates to the proposed Proxy Solicitation and the solicitation of proxies in connection with the Proposed Amendment be, and it hereby is, permitted to become effective forthwith, pursuant to rule 62 and subject to the terms and conditions prescribed in rule 24 under the Act. For the Commission, by the Division of Investment Management, pursuant to delegated authority. - ------------------------------------------------------------------- The Series of CL&P Preferred Stock outstanding are as follows: $1.90 Series of 1947; $2.00 Series of 1947; $2.04 Series of 1949; $2.20 Series of 1949; 3.90% Series of 1949; $2.06 Series E of 1954; $2.09 Series F of 1955; 4.50% Series of 1956; 4.96% Series of 1958; 4.50% Series of 1963; 5.28% Series of 1967; $3.24 Series G of 1968; and 6.56% Series of 1968. - ------------------------------------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----