POS AMC 1 CL&P POST-EFFECTIVE AMENDMENT 2 TO FORM U-1 File No. 70-7320 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 POST-EFFECTIVE AMENDMENT NO. 2 TO FORM U-1 APPLICATION/DECLARATION WITH RESPECT TO CREDIT FACILITY SUBSTITUTION under THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 THE CONNECTICUT LIGHT AND POWER COMPANY SELDEN STREET BERLIN, CONNECTICUT 06037 (Name of companies filing this statement and address of principal executive office) NORTHEAST UTILITIES (Name of top registered holding company parent of declarant) Robert P. Wax, Esq. Vice President, Secretary and General Counsel Northeast Utilities Service Company P.O. Box 270 Hartford, CT 06141-0270 (Name and address of agent for service) The Commission is requested to mail signed copies of all orders, notices, and communication to David R. McHale Jane P. Seidl, Esq. Manager-Project and Short-Term Finance Senior Counsel Northeast Utilities Northeast Utilities Service Company Service Company P.O. Box 270 P.O. Box 270 Hartford, CT 06141-0270 Hartford, CT 06141-0270 The Application/Declaration in this proceeding, as previously amended, is hereby further amended as follows: 1. It is proposed that the following new paragraph be added at the end of Part I of the Application/Declaration (capitalized terms used herein being used as defined above and in the Application/Declaration), and that such paragraph amend and restate in full the paragraph previously set forth in Item 2 of Post-Effective Amendment No. 1 to this Application/Declaration: "CL&P seeks authority (a) to replace The Long-Term Credit Bank of Japan, Limited, New York Branch (Bank) Letter of Credit and the Bank Reimbursement Agreement with a new Letter of Credit and Reimbursement Agreement (Substitute LOC Agreement), (b) to replace the Letter of Credit provided by the Bank with a new Letter of Credit (Substitute LOC), and (c) subsequently thereto, to extend, modify or replace the Substitute LOC Agreement and the Substitute LOC from time to time during the term of the Bonds supported thereby. The terms of any such extensions, modifications or replacements, including the Substitute LOC and the Substitute LOC Agreement, shall provide that (A) the total amount available to be drawn under any such extended, modified, or replacement letter of credit does not exceed $16,200,000, representing principal in the amount of $15,400,000 and interest in the amount of $800,000 (accumulated at the maximum rate of 15% for 123 days), (B) the annual letter of credit costs applicable to any such extension, modification, or replacement do not exceed 1.00% per annum of the total amount available to be drawn under the extended, modified or replacement letter of credit, (C) the reimbursement agreement applicable to any such extension, modification or replacement shall provide (or shall afford CL&P the option to elect) that Tender Advances bear interest until paid at a rate not to exceed the higher of (1) the prime rate plus 2.00% or (2) the federal funds rate plus 2.00%, (D) such extension, modification, or replacement is otherwise on terms that are substantially similar in all material respects to those applicable to the Substitute LOC and the Substitute LOC Agreement (or previous extensions or modifications thereof or replacements therefor) proposed to be entered into in connection with the replacement of the Bank, the forms of which are attached hereto as Exhibit B.5.1., and the Pledge Agreement, between CL&P and the bank to be named (Exhibit B to Exhibit B.5.1), and (E) CL&P shall have obtained all necessary State Commission approvals applicable to such extension, modification or replacement." 2. The following exhibit is filed herewith: D.6.1 Application to Connecticut Department of Public Utility Control SIGNATURES Pursuant to the requirements of the Public Utility Holding Company Act of 1935, as amended, the undersigned applicant has duly caused this Post- Effective Amendment No. 2 to be signed on its behalf by the undersigned thereunto duly authorized. Dated: June 30, 1994 THE CONNECTICUT LIGHT AND POWER COMPANY By /s/ Jane P. Seidl Jane P. Seidl, Esq. Senior Counsel Northeast Utilities Service Company Its Attorney EX-99 2 EXHIBIT TO POST-EFFECT. AMENDMENT 2 TO FORM U-1 Exhibit D.6.1 June 8, 1994 Mr. Robert J. Murphy Executive Secretary Connecticut Department of Public Utility Control One Central Park Plaza New Britain, CT 06051 Re: Application of The Connecticut Light and Power Company for Modification of Decision with Respect to Approval of Financing for Pollution Control and/or Sewage or Solid Waste Disposal Facilities Docket No. 86-11-10 Dear Mr. Murphy: Enclosed herewith for filing are the original and twenty-two (22) copies of an Application of The Connecticut Light and Power Company (the "Company") for approval by the Connecticut Department of Public Utility Control (the "Department") of a proposed modification of the Decision rendered by the Department in the above-referenced docket. Pursuant to this Application, the Company is seeking authority (i) to replace the existing letter of credit issued to support the pollution control bonds by delivery of a substitute credit facility and (ii) to obtain further extensions and modifications of and replacements for the letter of credit during the term of the bonds supported thereby. As indicated in the Application, the credit facility substitution proposed thereunder must be approved by the Securities and Exchange Commission (the "SEC") under the Public Utility Holding Company Act of 1935 and the SEC may decline to render such approval until it has received a copy of the Decision of the Department. Consequently, final approval of the Application by the Department is respectfully requested by July 12, 1994. Please acknowledge receipt of the enclosed Application by stamping the enclosed copy of this letter, and returning it to me with our messenger. Sincerely, /s/Jane P. Seidl Jane P. Seidl Senior Counsel Enclosures cc: (w/encs.) David McHale Larry P. Kromidas Jeffrey C. Miller, Esq. STATE OF CONNECTICUT DEPARTMENT OF PUBLIC UTILITY CONTROL APPLICATION OF THE CONNECTICUT LIGHT AND POWER COMPANY FOR MODIFICATION OF DECISION WITH RESPECT TO APPROVAL OF FINANCING FOR POLLUTION CONTROL AND/OR SEWAGE OR SOLID WASTE DISPOSAL FACILITIES DOCKET NO. 86-11-10 I. Description of Proposed Modification 1. The Connecticut Light and Power Company ("CL&P"), a public service company within the meaning of Section 16-1 of the General Statutes of Connecticut, Revision of 1958, as amended (the "Connecticut General Statutes"), hereby applies to the Department of Public Utility Control (the "Department") pursuant to Section 16-43 of the Connecticut General Statutes for approval of a modification of the Department's decision dated December 16, 1986 (the "Decision") in Docket No. 86-11-10, "Application of The Connecticut Light and Power Company for Approval of Financing for Pollution Control and/or Sewage or Solid Waste Disposal Facilities" (the "Application"). Pursuant to Order No. 1 of the Decision, prior approval of the Department is required for any material modifications of the terms and conditions under which the Bonds (as hereinafter defined) were issued and sold. 2. In the Decision, the Department approved CL&P's proposed financing of pollution control and/or sewage or solid waste disposal facilities at the Seabrook Station No. 1 nuclear electric generating plant (the "Facilities"). The cost of acquiring, constructing and installing the Facilities was financed by CL&P through its use of the net proceeds from the sale by the Industrial Development Authority of the State of New Hampshire ("IDA") of its pollution control revenue bonds ("Bonds") in the principal amount of $15,400,000. The Bonds were issued pursuant to an Indenture of Trust between the IDA and Baybank Middlesex, as trustee (the "Trustee"), and the proceeds of the issuance of the Bonds were loaned to CL&P pursuant to a financing agreement (the "Loan Agreement"). 3. As set forth in the Application, in order to obtain the benefits of a high quality rating for the Bonds, CL&P's obligations under the Loan Agreement are secured by an irrevocable letter of credit (the "Letter of Credit") in the amount of $16,200,000 issued by The Long Term Credit Bank of Japan, Limited, New York Branch (the "Bank") in favor of the Trustee. The purpose of this application for modification of the Decision is to seek authority for CL&P to replace the Letter of Credit provided by the Bank, as permitted by Section 3.13 of the Loan Agreement, by delivery of a substitute credit facility, consisting of a Letter of Credit, and related agreements, to be provided by a substitute bank to be chosen by CL&P ("Substitute Bank"). 4. As stated in the Application, delivery of the original Letter of Credit to the Trustee obtained for the Bonds a rating equivalent to the credit rating of the Bank. After the Bonds were issued, the Bank's rating in the financial markets deteriorated. In addition, CL&P has been advised by remarketing agents for the Bonds that (i) many institutional investors that otherwise would be interested in purchasing the Bonds will not purchase securities secured by letters of credit issued by the Bank and (ii) those investors that are still willing to purchase the Bonds are demanding an interest rate premium that is causing CL&P's effective interest cost to be higher than it would have otherwise been using a bank with a better rating. Accordingly, CL&P seeks authority to replace the Letter of Credit with a new letter of credit ("Substitute LOC") to be issued by the Substitute Bank. The Substitute LOC would be issued under a new Letter of Credit and Reimbursement Agreement ("New LOC Agreement") substantially identical to the Letter of Credit and Reimbursement Agreement dated as of September 1, 1993 among CL&P, Deutsche Bank AG, New York Branch, Issuing Bank and Agent, and various co- agents and participating banks, as approved by the Department in Docket No. 93-06-23. 5. Furthermore, CL&P seeks authority hereunder to obtain from time to time new letters of credit from the same or different banks and further extensions and modifications of and replacements for the New LOC Agreement with such banks from time to time during the term of the Bonds supported thereby, in accordance with the provisions of the Loan Agreement and provided that (A) the total amount available to be drawn under any such extended, modified, or replacement letter of credit does not exceed $16,200,000, (B) the annual letter of credit costs applicable to any such extension, modification, or replacement do not exceed 1.00% per annum of the total amount available to be drawn under the extended, modified or replacement letter of credit, (C) the reimbursement agreement applicable to any such extension, modification or replacement shall provide (or shall afford CL&P the option to elect) that tender advances bear interest until paid at a rate not to exceed the higher of (1) the prime rate plus 2.00% or (2) the federal funds rate plus 2.00%, (D) such extension, modification, or replacement is otherwise on terms that are substantially similar in all material respects to those applicable to the Letter of Credit and the Reimbursement Agreement (or previous extensions or modifications thereof or replacements therefor) proposed to be entered into in connection with the replacement of the Bank, the form of which is attached hereto as Exhibit 1, and the Pledge Agreement between CL&P and the bank to be named (Exhibit B to Exhibit 1), and (E) CL&P shall have obtained all necessary approvals applicable to such extension, modification or replacement. The Department has previously granted CL&P authority to obtain extensions of, and replacements for, its letters of credit and reimbursement agreements from time to time during the terms of certain of its pollution control revenue bonds in Docket No. 93-06-23. II. Additional Information The following additional information is supplied as part of this Application: A. The exact legal name of the applicant and its principal place of business: The Connecticut Light and Power Company 107 Selden Street Berlin, Connecticut 06037 CL&P is a corporation specially chartered by the General Assembly of the State of Connecticut. B. The name, title, address and telephone number of the attorney and other person to whom correspondence or communications in regard to this application are to be addressed: Mr. David R. McHale Manager - Project and Short-Term Finance Northeast Utilities Service Company P.O. Box 270 Hartford, Connecticut 06141-0270 Telephone: 665-5601 and Jane P. Seidl, Esq. Senior Counsel Northeast Utilities Service Company P.O. Box 270 Hartford, Connecticut 06141-0270 Telephone: 665-5051 C. A concise and explicit statement of facts on which the Department is expected to rely in granting this application: 1. Delivery of a Letter of Credit is expected to secure ratings on the Bonds equivalent to the credit rating of the issuing bank. At the time of the original issuance, CL&P had chosen to obtain a Letter of Credit to improve the credit rating for the Bonds because it had been advised that the marketplace is accustomed to seeing variable rate securities supported by a letter of credit, and that without such support the Bonds would be unmarketable. CL&P had elected to cause the issuance of variable rate securities because of the significant interest savings under current market conditions that it expected to derive from the variable rates and because of the flexibility that this type of security offers. The flexibility of affording CL&P the right to direct the redemption of Bonds at par when permitted and CL&P's option to be able to cause the New Bonds to be converted to another interest rate mode (i.e., commercial paper, multiannual, fixed) also make these securities highly attractive. 2. CL&P has elected to replace the current letter of credit facility provider of the Bonds at this time for several reasons. The rating in the financial markets of the Bank has deteriorated since the issuance of the Bonds and CL&P is concerned that such deterioration may continue. CL&P has been advised that, due to such deterioration, (i) many institutional investors that otherwise would be interested in purchasing the Bonds will not purchase securities secured by letters of credit issued by the Bank and (ii) those investors that are still willing to purchase the Bonds are demanding an interest rate premium that is causing CL&P's effective interest costs to be higher that they would otherwise be. The Substitute Bank will be a higher rated financial institution than the Bank and CL&P believes that it will realize lower effective interest costs because of this credit rating difference. CL&P also expects to realize letter of credit savings by replacement of the Bank through its negotiations for a lower annual fee rate. The annual letter of credit fee paid to the Bank under the existing Letter of Credit is 55 basis points. CL&P currently contemplates that the annual letter of credit fee to be paid under the Substitute LOC will be less than 50 basis points. These savings will also apply for an extended period of time, as the Substitute LOC will have a three-year term while the existing Letter of Credit expires in two years. Exhibit 2 filed herewith sets forth certain information with respect to the Bank, including the Bank's credit rating and the annual commissions payable with respect to the Letter of Credit. CL&P has invited six banks to submit proposals to provide the Substitute LOC. CL&P will accept the proposal which has the lowest effective interest cost to CL&P, after giving effect to any bank fee, commission, trading premium (if any), or other compensation. Information with respect to the Substitute LOC supporting the Bonds (and any extension, modification or replacement thereof) will be filed by amendment as Exhibit 3. 3. In support of this Application, CL&P hereby also submits herewith and incorporates herein the exhibits listed in Appendix I hereto, and reference is made to the information contained therein. D. Explanation of any unusual circumstances involved in this application: The Department's attention is directed to the fact that the modifications proposed hereunder must be approved by the Securities and Exchange Commission (the "SEC") under the Public Utility Holding Company Act of 1935 and that such approval may not be granted until the SEC has received a certified copy of the Decision of this Department. Final approval of this application by the Department is therefore respectfully requested on or before July 12, 1994. III. Exhibits CL&P is filing herewith (or, as indicated, will file by amendment) the exhibits listed in Appendix I hereto. This Application and Appendix I set forth all exhibits required to be filed by CL&P and which CL&P deems necessary or desirable to support the granting of this application. CL&P, however, hereby reserves the right to file such additional testimony and exhibits as it may consider to be necessary or desirable. IV. Requests for Approval CL&P respectfully requests the Department's approval, pursuant to Section 16-43 of the General Statutes of Connecticut, of the transactions described herein. Dated this 8th day of June, 1994. Respectfully submitted, THE CONNECTICUT LIGHT AND POWER COMPANY By/s/Jane P. Seidl Jane P. Seidl Senior Counsel Northeast Utilities Service Company Its Attorney APPLICATION OF THE CONNECTICUT LIGHT AND POWER COMPANY FOR MODIFICATION OF DECISION WITH RESPECT TO APPROVAL OF FINANCING FOR POLLUTION CONTROL AND/OR SEWAGE OR SOLID WASTE DISPOSAL FACILITIES APPENDIX I - EXHIBITS 1. Draft of Reimbursement Agreement, including drafts of the related Letter of Credit and the related Pledge Agreement. (To be filed by amendment.) 2. Information with respect to Letter of Credit. 3. Information with respect to Substitute Letter of Credit. (To be filed by amendment.) 4. Resolutions of Board of Directors of The Connecticut Light and Power Company. (To be filed by amendment.) 5. Estimated Expenses of the Proposed Refinancing. (To be filed by amendment.) Exhibit 2 Information with Respect to CL&P/Long Term Credit Bank of Japan Letter of Credit Bank Rating December 1986: AAA June 1994: A- Expiration of LOC: November 21, 1996 Annual Letter of Credit Fee in Basis Points: 55