-----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, Tofz994c7pEOrt7BN+mjCDqI7liGswUko0kIF7qGKBdvrez0rmOHM57vPTaU3jqN sfiE6h8EAlmYIZ/Vm6J2WA== 0000023426-04-000009.txt : 20040628 0000023426-04-000009.hdr.sgml : 20040628 20040628151017 ACCESSION NUMBER: 0000023426-04-000009 CONFORMED SUBMISSION TYPE: U-1/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20040628 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/A SEC ACT: 1935 Act SEC FILE NUMBER: 070-09905 FILM NUMBER: 04884606 BUSINESS ADDRESS: STREET 1: SELDEN STREET CITY: BERLIN STATE: CT ZIP: 06037-1616 BUSINESS PHONE: 8606655000 U-1/A 1 clpu1a062404.txt CL&P U-1-A EXH. NO. 4062804 File No. 70-9905 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 AMENDMENT NO. 4 TO FORM U-1 APPLICATION/DECLARATION WITH RESPECT TO CERTAIN TRANSACTIONS RELATING TO THE EXTENSION OF AN ACCOUNTS RECEIVABLE PURCHASE AND SALE PROGRAM Under THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 THE CONNECTICUT LIGHT AND POWER COMPANY CL&P RECEIVABLES CORPORATION 107 Selden Street Berlin, Connecticut 06037-5457 (Name of companies filing this statement and address of principal executive offices) NORTHEAST UTILITIES (Name of top registered holding company parent of declarant) Gregory B. Butler, Esq. Senior 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: Randy A. Shoop Jane P. Seidl Treasurer Senior Counsel The Connecticut Light and Power Company Northeast Utilities P.O. Box 270 Service Company Hartford, Connecticut 06141-0270 P.O. Box 270 Hartford, Connecticut 06141-0270 The Application/Declaration in this File No. 70-9905, as heretofore amended, is hereby amended by filing the following exhibits: (a) Exhibits D.2 Copy of the Order of the DPUC with respect to the extension of CL&P's proposed transactions. F. Opinion of Counsel. [SIGNATURE PAGE TO FOLLOW] SIGNATURES Pursuant to the requirements of the Public Utility Holding Company Act of 1935, as amended, the undersigned have duly caused this statement to be signed on their behalf by the undersigned thereunto duly authorized. Dated: June 28, 2004 THE CONNECTICUT LIGHT AND POWER COMPANY CL&P RECEIVABLES CORPORATION By: /s/ Randy A. Shoop Randy A. Shoop Treasurer EX-99 2 clpu1exhf062804.txt EXH. F LEG. OPINION EXHIBIT F June 28, 2004 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Re: File No. 70-9905 Application/Declaration of The Connecticut Light and Power Company and CL&P Receivables Corporation Related to an Accounts Receivable Purchase and Sale Program Ladies and Gentlemen: I am Assistant General Counsel of Northeast Utilities Service Company ("NUSCO"), the service company subsidiary of Northeast Utilities ("NU"), and I am furnishing this opinion as Exhibit F to the Application/Declaration, as amended, on Form U-1 (the "Declaration") of The Connecticut Light and Power Company ("CL&P"), a subsidiary of NU, to the Commission with respect to the extension of CL&P's accounts receivable purchase and sale program, as more fully set forth in the Declaration. In connection with this opinion, I have examined or caused to be examined by counsel associated with or engaged by me, including counsel who are employed by NUSCO, such papers, documents, and records, and have made such examination of law and have satisfied myself as to such other matters as I have deemed relevant or necessary for the purpose of this opinion. I have assumed the authenticity of all documents submitted to me as originals, the genuineness of all signatures, the legal capacity of natural persons, and the conformity to originals of all documents submitted to me as copies. The opinions set forth herein are limited to the laws of the State of Connecticut and the federal laws of the United States. I am a member of the bar of the State of New York. I am not a member of the bar of the State of Connecticut, and do not hold myself out as an expert in the laws of such jurisdiction, although I have made a study of relevant laws of such jurisdiction. In expressing opinions about matters governed by the laws of the State of Connecticut, I have consulted with counsel who are employed by NUSCO and are members of the bars of such jurisdiction. The opinions set forth in paragraph (b) below are subject to the effect of bankruptcy, insolvency, moratorium and other similar laws affecting creditors rights generally and general principles of equity. June 28, 2004 Page Two Based upon and subject to the foregoing, and if the proposed transactions contemplated by the Declaration are carried out in accordance therewith, I am of the opinion that: (a) all Connecticut laws applicable to the proposed transactions will have been complied with; (b) (i) CRC will be validly organized and duly existing under the laws of the State of Connecticut, and (ii) insofar as any interests in receivables sold by CRC as part of such transactions are regulated as the issuance of securities, such securities will be valid and binding obligations of CRC in accordance with their terms; and (c) the consummation of the proposed transactions by CL&P and CRC will not violate the legal rights of the holders of any securities issued by CL&P or CRC or any associate company thereof. Very truly yours, /s/ Jeffrey C. Miller Jeffrey C. Miller EX-99 3 clpu1exhd2062404.txt EXH. D.2 CT DPUC DECISION Exhibit D.2 STATE OF CONNECTICUT DEPARTMENT OF PUBLIC UTILITY CONTROL TEN FRANKLIN SQUARE NEW BRITAIN, CT 06051 DOCKET NO. 96-05-24RE05 APPLICATION OF THE CONNECTICUT LIGHT AND POWER COMPANY REQUESTING APPROVAL OF THE SALE OF ACCOUNTS RECEIVABLE - EXTENSION OF RECEIVABLES PROGRAM June 16, 2004 By the following Commissioners: Jack R. Goldberg Anne C. George John W. Betkoski, III DECISION -------- DECISION -------- I. INTRODUCTION A. Summary In this Decision, the Department of Public Utility Control extends The Connecticut Light and Power Company's Receivables Program through July 3, 2007. The Receivables Program provides additional financial flexibility at a cost lower than the Company's primary source of alternate short-term funding. B. Petition By supplemental application filed March 25, 2004, in above captioned Docket, The Connecticut Light and Power Company (CL&P or Company) requested approval of the Department of Public Utility Control (Department) for the extension of the Company's Receivable Program until July 3, 2007. C. Background of the Proceeding By Decision dated June 5, 1996, in above captioned Docket, the Department of Public Utility Control (Department) approved the sale from time to time of up to $200 million fractional undivided ownership interests in billed and unbilled accounts receivable (Receivables Program) of The Connecticut Light and Power Company (CL&P or Company), pursuant to Section 16-43 of the General Statutes of Connecticut (Conn. Gen. Stat.). In a supplemental application dated June 30, 1997 (Supplemental Application), filed pursuant to Conn. Gen. Stat. Section 16-43, CL&P requested that the Department approve the formation of CL&P Receivables Corporation (CRC) and the restructuring of the Receivables Program from a one-step to a two-step sales transaction. By Decision dated September 10, 1997 (Supplemental Decision), the Department approved the formation of CRC and the restructuring of the Receivables Program; and set forth, among others, Order Nos. 4 and 6 as follows: 4. No later than October 15, 1997, the Company shall submit a monthly report documenting the sale of the Receivables. Such report shall include the dollar value of all transactions between the Company, CRC, CAFCO and the Banks. The report shall also include a calculation of the all-in interest rate and the Receivables discount applicable to each transaction. 6. Commencing September 30, 1997, the Company shall submit a quarterly report itemizing all expenses actually incurred to CL&P and CRC in the sale of the Receivables. Such report shall include but not be limited to all costs of maintaining CRC, and compensation, if any, of any CL&P and/or NU employees for their services to CRC. Further, in a supplemental application (Supplemental Application ll) dated September 29, 1998, CL&P requested the Department's approval for an increase in the facility fee payable under the Receivables Program. By Decision dated November 25, 1998 (Supplemental Decision ll), the Department approved an increase in facility fees payable under CL&P's Receivables program from 0.25% to 0.375%. By Decision dated December 13, 2000, the Department reopened this docket for the limited purpose of considering the termination of reporting requirements under such Order Nos. 4 and 6 above. By Decision dated February 21, 2001, the Department terminated the reporting requirements under Order Nos. 4 and 6 referenced above. By Decision dated July 11, 2001, the Department re-opened this Docket for the limited purpose of considering the extension of the Receivables Program until July 8, 2004. By Decision dated August 31, 2001, the Department approved the extension of the Receivables program until July 8, 2004. By Decision dated April 28, 2004, and as allowed under Conn. Gen. Stat. 16-9, the Department re-opened this Docket for the limited purpose of considering the extension of the Receivables Program until July 3, 2007. D. Conduct Of The Proceeding By Notice of Hearing dated June 3, 2004, the Department scheduled a public hearing on this matter on June 11, 2004. Since no person or interested party requested that the hearing be held, and the Department did not require a hearing, said hearing was cancelled as of June 9, 2004. E. Parties And Intervenors The Connecticut Light and Power Company, P.O. Box 270, Hartford, Connecticut 06141-0270; and the Office of Consumer Counsel (OCC), Ten Franklin Square, New Britain, Connecticut 06051 were recognized as parties to this proceeding. II. COMPANY'S EVIDENCE CL&P is requesting to extend its existing accounts receivable sales program (Receivables Program) through July 3, 2007. CL&P indicated that the Receivable Program will continue to operate on the same terms as previously approved by the Department. The Receivables Program is governed by two agreements. Under the Purchase and Contribution Agreement between CL&P and CRC (Company Agreement), CL&P sells or transfers Receivables as an equity contribution from time to time to CRC. Under the Receivables Purchase and Sale Agreement among CRC, CL&P, CAFCO, Citibank, N.A., and Citicorp North America, Inc. (CRC Agreement), CRC sells Receivable Interests to either CAFCO or Citibank, N.A. and any other bank or eligible financial institution that may become party to the CRC Agreement in accordance with its provisions. The size of the Receivable Interests are calculated according to a formula that includes reserves based on a multiple of historical losses, carrying costs and other costs associated with the agreements. Application, p. 2. As of March 31, 2001, the Company Agreement and the CRC Agreement were amended in connection with the issuance of rate reduction bonds (RRB) by Connecticut RRB Special Purpose Trust CL&P-1 with respect to certain of CL&P's stranded costs pursuant to Conn. Gen. Stat. 16-245e and 16-245f. Such amendments clarify that the RRB Charge authorized by the Department in its Decision dated November 8, 2000 and supplemented on December 12, 2000 and March 12, 2001, in Docket No. 00-05-01, Application of The Connecticut Light and Power Company for Approval of the Issuance of Rate Reduction Bonds and Related Transactions-Settlement Agreement, is not part of any Receivables or Receivable Interests sold in the Receivables Program. Application, p. 3. Such amendments also reduce the maximum amount of Receivable Interests that can be outstanding under the Program at any time from $200,000,000 to $100,000,000. Id. CL&P and CRC are obligated to reimburse the purchaser, the agent, and the banks for various costs and expenses associated with the Company Agreement and the CRC Agreement. The Company and CRC are also required to pay to the agent certain fees for services in connection with such agreements. Application, p. 4. CL&P as collection agent receives a fee from CRC and/or the Purchaser in an amount equal to 0.25% per annum on the average daily outstanding Invested Amount (as described in the CRC agreement). CL&P does not pay any fees to CRC. While CRC may realize a profit on these transactions, such profit will benefit CL&P since CL&P wholly owns CRC. Id. The Company believes that funding under the Receivables Program will continue to be more advantageous than other sources of funds available to CL&P. If the Receivables Program is fully utilized, its cost (which is based on current commercial paper rates) is approximately equal to the 30-day LIBOR rate plus 0.355% at the present time. Id. There are two fixed charges under the Receivables Program: 1) a liquidity fee of 0.175% (which is based on CL&P's current credit ratings), and 2) an investor fee of 0.01%. Additional fees of the Receivables Program are the program fee (0.15%) and purchaser fee (0.02%), both of which are usage-based. Id. By comparison, the cost of borrowing under CL&P's committed bank line is currently equal to the 30-day LIBOR rate plus a credit spread of 0.875% based on CL&P's current credit ratings (borrowing costs only, excluding fees), which is more costly than the Receivables Program at CL&P's current ratings with all costs considered. Application, p. 5. CL&P sells or transfers, as equity contributions, all of its accounts receivables to CRC. On a consolidated basis, the transactions taken as a whole, are accounted for as sales of accounts receivable on CL&P's consolidated financial statements. According to applicable accounting rules, utilization of the Receivables Program does not result in any increased leverage for CL&P. Application, p. 5. CL&P states the the Receivables Program has allowed the Company to accelerate its receipt of cash collections from accounts receivable and thereby increase its ability to meet its short term cash needs. The purchase and sale transactions will continue to provide CL&P with important financial flexibility. CL&P anticipates that the proceeds from the Receivables Program will be used for general corporate purposes, including repayment of outstanding debt. Id. III. DEPARTMENT ANALYSIS The Department has analyzed the evidence and finds that the Receivables Program should be extended through July 3, 2007, since the Receivables Program provides additional financial flexibility at a lower cost than the Company's other sources of short-term funding. The Department notes that no Parties or Intervenors commented in opposition to the Company's request for an extension. The Department finds that the extension of the Receivable Program as proposed is beneficial to CL&P by providing reliable short-term funding at competitive rates, but advocates that the Company continue to meet its short-term funding requirements through a combination of internally generated funds, borrowing under existing credit facilities, and external financing arrangements, such as this Receivables Program. The Department believes the Receivables Program continues to be a viable funding option to the Company. IV. FINDINGS OF FACT 1. The Receivables Program is governed by two agreements. 2. CL&P sells or transfers Receivables as an equity contribution from time to time to CRC. 3. The size of the Receivable Interests are calculated according to a formula that includes reserves based on a multiple of historical losses, carrying costs and other costs associated with the agreements. 4. The maximum amount of Receivable Interests that can be outstanding under the Program at any time was reduced from $200,000,000 to $100,000,000. 5. CL&P and CRC are obligated to reimburse the purchaser, the agent, and the banks for various costs and expenses associated with the Company Agreement and the CRC Agreement. 6. CL&P as collection agent receives a fee from CRC and/or the Purchaser in an amount equal to 0.25% per annum on the average daily outstanding Invested Amount (as described in the CRC agreement). 7. If the Receivables Program is fully utilized, its cost (which is based on current commercial paper rates) is approximately equal to the 30-day LIBOR rate plus 0.355% at the present time. 8. There are two fixed charges under the Receivables Program: 1) a liquidity fee of 0.175% (which is based on CL&P's current credit ratings), and 2) an investor fee of 0.01%. 9. Additional fees of the Receivables Program are the program fee (0.15%) and purchaser fee (0.02%), both of which are usage- based. 10. By comparison, the cost of borrowing under CL&P's committed bank line is currently equal to the 30-day LIBOR rate plus a credit spread of 0.875% based on CL&P's current credit ratings (borrowing costs only, excluding fees), which is more costly than the Receivables Program at CL&P's current ratings with all costs considered. 11. According to applicable accounting rules, utilization of the Receivables Program does not result in any increased leverage for L&P. V. CONCLUSION AND ORDERS A. Conclusion Upon consideration of all the evidence presented in this proceeding, the Department finds the application to be in the public interest and hereby approves the extension of the Receivables Program through July 3, 2007, subject to the following Orders. B. Orders For the following Orders, submit an original and fifteen (15) copies of the requested material to the Executive Secretary, identified by docket Number, Title and Order Number. 1. The terms and conditions under the Receivables are to be sold under the Receivables Program shall be substantially as stated in this proceeding, and no further written material or oral supplements to or material modification of those terms and conditions shall be executed without prior approval of this Department. 2. Should the fixed fees under the Receivables Program be increased at any time through the extension period of July 3, 2007, the Department shall be notified as to such changes. 3. The proceeds from the sale of Receivables under the Receivables Program shall be used by the Company for the purposes specified in this proceeding. 4. Not later than 90 days following each calendar year-end, the Company shall submit an annual report documenting the sale of receivables, dollar value of all transactions between the Company, CRC, CAFCO, and the Banks, including a calculation of the all-in interest rate, the Receivables discount applicable to each transaction, and all expenses of the Receivables Program. This report shall reconcile with the sales of accounts receivable and accrued utility revenues, and the Receivables Program's expenses, recorded on CL&P's consolidated financial statements for the year. DOCKET NO. 96-05-24RE05 APPLICATION OF THE CONNECTICUT LIGHT AND POWER COMPANY REQUESTING APPROVAL OF THE SALE OF ACCOUNTS RECEIVABLE - EXTENSION OF RECEIVABLES PROGRAM This Decision is adopted by the following Commissioners: Jack R. Goldberg Anne C. George John W. Betkoski, III CERTIFICATE OF SERVICE The foregoing is a true and correct copy of the Decision issued by the Department of Public Utility Control, State of Connecticut, and was forwarded by Certified Mail to all parties of record in this proceeding on the date indicated. June 23, 2004 ------------------------- -------------- Louise E. Rickard Date Acting Executive Secretary Department of Public Utility Control -----END PRIVACY-ENHANCED MESSAGE-----