-----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, GM99CL+P2f2oYFdZm06PmnfQDb6FcOkYddYb10r8oCmyY8NDxkhRSvT937PRpSvu lY+Fpo0fHQ4jEeVg/LWGuA== 0001015402-01-503699.txt : 20020412 0001015402-01-503699.hdr.sgml : 20020412 ACCESSION NUMBER: 0001015402-01-503699 CONFORMED SUBMISSION TYPE: U-1 PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20011130 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DUKE ENERGY CORP CENTRAL INDEX KEY: 0000030371 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 560205520 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: U-1 SEC ACT: 1935 Act SEC FILE NUMBER: 070-10013 FILM NUMBER: 1804276 BUSINESS ADDRESS: STREET 1: 526 SOUTH CHURCH STREET CITY: CHARLOTTE STATE: NC ZIP: 28201-1006 BUSINESS PHONE: 7045946200 MAIL ADDRESS: STREET 1: 422 S CHURCH ST CITY: CHARLOTTE STATE: NC ZIP: 28242 FORMER COMPANY: FORMER CONFORMED NAME: DUKE POWER CO /NC/ DATE OF NAME CHANGE: 19920703 U-1 1 doc1.txt FILE NO. _______ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM U-1 APPLICATION/DECLARATION UNDER SECTION 3(b) AND RULE 10 OF THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 -------------------------------------------- DUKE ENERGY CORPORATION 526 S. Church Street Charlotte, North Carolina 28202 (Name of the company filing this application and address of its principal executive office) --------------------------------------------- David L. Hauser Senior Vice President and Treasurer Duke Energy Corporation 526 S. Church Street Charlotte, North Carolina 28202 (Name and address of agent for service) Please also submit copies of all correspondence to: Adam Wenner, Esq. Catherine O'Harra, Esq. Vinson & Elkins L.L.P. The Willard Office Building 1455 Pennsylvania Avenue, N.W. Washington, D.C. 20004-1008 J. Curtis Moffatt, Esq. Van Ness Feldman A Professional Corporation 1050 Thomas Jefferson St. Washington, D.C. 20007-3877 ITEM 1. DESCRIPTION OF PROPOSED TRANSACTION Applicant Duke Energy Corporation ("Duke"), a North Carolina corporation, has entered into a Combination Agreement with Westcoast Energy Inc. ("Westcoast"), a corporation organized under the laws of Canada, pursuant to which Duke will acquire the stock of Westcoast in exchange for $3.5 billion in cash and stock and the assumption of approximately $4 billion in Westcoast debt (the "Acquisition"). Duke hereby applies under Section 3(b) of the Public Utility Holding Company Act of 1935, as amended ("1935 Act"), for an order exempting from all provisions of the 1935 Act certain foreign companies and intermediate companies that will be acquired by Duke in conjunction with the Acquisition. Westcoast has two subsidiaries that are public-utility companies operating exclusively outside the United States. Both are Canadian utilities which, prior to and after the Acquisition, serve no customers in the United States and derive no income directly or indirectly from sources within the United States. Westcoast's Canadian utility subsidiaries ("Canadian Utilities") are as follows: 1. Union Gas Limited ("Union Gas"), a wholly-owned, direct subsidiary of Westcoast, is engaged in the transportation and storage of natural gas and the distribution of natural gas to residential, commercial and industrial customers in Ontario; and 2. Pacific Northern Gas Ltd. ("Pacific Northern"), a 41%-owned, direct subsidiary of Westcoast, is engaged in the transportation of natural gas and the distribution of natural gas to residential, commercial, and industrial customers in British Columbia. Westcoast directly owns 100% of the voting shares and 41% of the non-voting shares of Pacific Northern, without intermediate subsidiaries. Westcoast directly owns a 100% share of Union Gas, without intermediate subsidiaries. Upon and after the effective date of the Acquisition, Duke may, for tax, legal, regulatory or administrative reasons, restructure the corporate organization described above. APPLICANT'S STATEMENTS IN SUPPORT OF APPLICATION In support hereof, the Applicant states: (1) Duke is a publicly held corporation organized under North Carolina law with its principal offices located at 526 S. Church Street, Charlotte, North Carolina 28202. Duke engages directly and indirectly in the generation, transmission, distribution and sale of electric energy to retail and wholesale customers in the states of North Carolina and South Carolina. Duke is a public-utility company as defined in the 1935 Act. (2) Union Gas is organized under the laws of Ontario. Pacific Northern is organized under the laws of British Columbia. The Canadian Utilities will not engage in any business other than the acquisition of Canadian public-utility companies, the supervision of Duke's investments in Canada, and the participation in the management and operation of Canadian public-utility companies. 2 (3) The Canadian Utilities derive no income, either directly or indirectly, from sources within the United States. The Canadian Utilities are not qualified to do business in any state of the United States, nor is any Canadian Utility a public-utility company operating in the United States. The Canadian Utilities have no plan to derive any income from United States operations, from any company qualified to do business in any state of the United States, or from any public-utility company operating in the United States. (4) Section 3(b) of the 1935 Act provides that the Commission "shall exempt any subsidiary company, as such, from any provision or provisions of [the 1935... Act if such subsidiary company derives no material part of its income, directly or indirectly, from sources within the United States, and neither it nor any of its subsidiary companies is a public-utility company operating in the United States," provided that the Commission finds that the application of the 1935 Act to such subsidiary company is "not necessary in the public interest or for the protection of investors." (5) Neither Canadian Utility is a public-utility company operating in the United States. The proposed investment will not affect the Canadian Utilities' status as public utility companies subject to regulation by the laws of the jurisdiction in which the Canadian Utilities are organized and operate. The Canadian Utilities do not derive any income from United States operations or sources within the United States. As explained below, regulation of the Canadian Utilities under the 1935 Act is not necessary in the public interest, or for the protection of investors or consumers. Therefore, as in the following cases, each of the Canadian Utilities satisfies the standards of section 3(b) and should be accorded an unqualified exemption, as a subsidiary company, from all provisions of the 1935 Act. See Public Service Company of Colorado, HCAR No. 26671 (Feb. 19, 1997) ("PSC Colorado"); UtiliCorp United, Inc., HCAR No. 26353 (Aug. 7, 1995) ("UtiliCorp 1995"); UtiliCorp United, Inc., HCAR No. 26918 (Sept. 28, 1998) ("UtiliCorp 1998"). (6) Although the Canadian Utilities would satisfy the requirements under section 33(a)(3) of the 1935 Act and become a "foreign utility company" ("FUCO") as defined therein upon the filing of a notice on Form U-57, the capitalization limits established by section 33(f) would restrict the ability of Duke to finance the acquisition of the Canadian Utilities as FUCOs. The Commission has previously recognized that section 3(b) provides an alternative route for foreign acquisitions in identical circumstances. See PSC Colorado, UtiliCorp 1995; UtiliCorp 1998. (These opinions were issued after October 24, 1992, the date upon which section 33 was added to the 1935 Act.) (7) The legislative history of the Energy Policy Act of 1992, through which section 33 became law, makes clear that section 33 was to be read in a permissive-not a restrictive-manner. Senator Donald Reigle, the Chairman of the Senate Banking Committee and a primary Senate proponent of the section 33 legislation, stated that "[w]hile section 33 is important, we must remember that international activities by utilities is permitted by current law. Specifically, under current law, the Securities and Exchange Commission has the authority to permit, on a case-by-case basis, utility functions outside the United States... The provisions of section 33 supplement these foreign options for utility operations and do not in any way limit the ability to pursue the SEC approval under current law... We must remember that the purpose of section 33 is to facilitate foreign investment, not burden it." Congressional Record, 102nd Cong., 3 Oct. 8, 1992, 138 Cong. Rec. S. 17625 (emphasis supplied). See also Energy Policy Act of 1992, H.R. Conf. Report No. 102-1018 at 388, 1992 U.S.C.C.A.N. 2472, 2479 (1992); Entergy Corp., HCAR No. 25706 (Dec. 14, 1992). (8) Duke will not seek recovery through higher rates to its domestic regulated utility customers for any possible loss it might sustain by reason of the proposed investment in the Canadian Utilities or for any inadequate returns on that investment. Duke's domestic utility customers will not be put at risk of any adverse financial effects resulting from the operations of the Canadian Utilities, nor will the ability of the state public utility commissions of North Carolina and South Carolina, which have regulatory jurisdiction over Duke's retail rates, to protect the interests of consumers in their respective states be adversely affected. (9) Duke has filed herewith, as Exhibits 3 and 4, respectively, its October 10, 2001 application to the North Carolina Utilities Commission and its October 12, 2001 application to the Public Service Commission of South Carolina (the "State Commissions"), as amended. Both applications seek approval of the Acquisition and the issuance of Duke stock in connection with the Acquisition. Among other things, these applications seek (i) approval of Duke's acquisition of Westcoast and its indirect acquisition of the Canadian Utilities, and (ii) a determination by the State Commissions that Duke's stock issuance will be compatible with the public interest, will be necessary and appropriate for, and consistent with, the proper performance by Duke of its service to the public as a utility, will not impair its ability to perform that service, and will be reasonably necessary and appropriate for such purpose. Duke will supplement this Application/Declaration with the State Commissions' rulings once they are issued. (10) Both the North Carolina and South Carolina Public Service Commissions have previously issued letters to the Commission with regard to Duke, certifying that each Commission "has the authority and resources to protect ratepayers subject to its jurisdiction and that it intends to exercise its authority."(1) The Commission has relied on similar certifications in granting exemptions under section 3(b) of the 1935 Act. See, e.g., PSC Colorado. (11) Duke's domestic utility operations are, and will continue to be, fully separated from Duke's foreign operations. Moreover, since Duke is a publicly-traded company subject to the continuous disclosure requirements of the Securities Exchange Act of 1934, as amended, regulation under the federal securities laws offers significant additional protections for the interest of investors. Hence, regulation of the Canadian Utilities as subsidiaries of a holding company is not necessary for either the public interest or for the protection of investors. (12) Duke will maintain separate books of account for the Canadian Utilities and any of its subsidiaries that may control the Canadian Utilities and will commit to provide access to those books and records to each state commission with retail rate jurisdiction to the extent not already required under state law. - ------------------------- (1) See Duke Energy Form U-57, Notification of Foreign Utility Company Status, July 15, 1998, adopted by reference in subsequent Duke Form U-57 filings and filed herewith as Exhibit 6. 4 (13) On the basis of the facts set forth in this Application/ Declaration, the Commission should grant the Canadian Utilities the exemption without qualification provided for by section 3(b) of the 1935 Act. (14) If the Canadian Utilities are exempt without qualification under Section 3(b) of the 1935 Act, then Duke and its intermediate subsidiaries would be entitled to the exemption provided for by Rule 10 of the 1935 Act. Duke and its subsidiary companies that are parent entities of the Canadian Utilities will rely upon Rule 10(a)(1) to provide an exemption insofar as each is a holding company. Duke and each subsidiary company will rely upon Rule 11(b)(1) to provide an exemption from the approval requirements of sections 9(a)(2) and 10 to which they would otherwise be subject. (15) In addition, if the Canadian Utilities and Duke's intermediate subsidiaries are exempt under Section 3(b) of the 1935 Act, then Duke would be entitled under Rule 11(b)(1) to an exemption from Section 9(a)(2) of the Act. (16) Duke hereby consents to include, in its annual report on Form U-33-S, all relevant and appropriate information regarding the Canadian Utilities. ITEM 2. FEES, COMMISSIONS AND EXPENSES An estimate of the fees and expenses to be paid or incurred by the Applicants in connection with the proposed transaction is set forth below: Counsel Fees. . . . . . . . . . . . . . . . . . . . $10,000 Total. . . . . . . . . . . . . . . . . . . . . . . . $10,000 ITEM 3. APPLICABLE STATUTORY PROVISIONS Sections 3(b), 9(a)(2), and 10(a)(1) and Rules 10 and 11(b)(1) of the 1935 Act are or may be applicable to the proposed transaction described herein. To the extent any other sections of the 1935 Act may be applicable to the proposed transaction, Applicant hereby requests appropriate orders thereunder. ITEM 4. REGULATORY APPROVAL In addition to the approval of the Commission under Section 3(b) requested in this Application/Declaration, Duke will seek approval by the State Commissions for Duke's acquisition of Westcoast, its indirect acquisition of the Canadian Utilities, and its issuance of stock in order to carry out the Acquisition. Duke's applications to the State Commissions are provided at Exhibits 3 and 4. In addition, Applicant is applying to the New York Public Service Commission for approval of the indirect acquisition by Duke of Westcoast's subsidiary Empire State Pipeline, an intrastate natural gas pipeline located in New York State that does not serve any retail distribution customer (see Exhibit 5). 5 ITEM 5. PROCEDURE It is requested that the Commission issue and publish no later than January 9, 2002 the requisite notice under Rule 23 with respect to the filing of this Application/Declaration, such notice to specify a date not later than February 8, 2002 as the date after which an order granting and permitting this Application/Declaration to become effective may be entered by the Commission and that the Commission enter not later than February 22, 2002 an appropriate order granting and permitting this Application/Declaration to become effective. Duke hereby waives a hearing with respect to this Application/Declaration and requests that there be no 30-day waiting period between the issuance of the Commission's order and the date on which it is to become effective. Duke hereby waives a recommended decision by a hearing officer or other responsible officer of the Commission and hereby consents that the Division of Investment Management may assist in the preparation of the Commission's decision and/or order. ITEM 6. EXHIBITS The following exhibits are hereby filed as a part of this Application/Declaration: EXHIBIT 1 Form of Notice (attached). EXHIBIT 2 Opinion of Counsel [to be filed with the certificate of notification]. EXHIBIT 3 Application of Duke to the North Carolina Utilities Commission, dated October 10, 2001, as amended (attached). EXHIBIT 4 Application of Duke to the Public Service Commission of South Carolina, dated October 12, 2001, as amended (attached). EXHIBIT 5 Joint Petition of Duke, Westcoast and 3946509 Canada Inc. for Approval of Stock Acquisition to the New York State Public Service Commission, filed October 16, 2001 (attached, except for certain exhibits, to be filed by amendment or incorporated by reference). EXHIBIT 6 Duke Energy Form U-57, Notification of Foreign Utility Company Status, July 15, 1998. EXHIBIT 7 Order of the North Carolina Utilities Commission (to be filed by amendment). EXHIBIT 8 Order of the Public Service Commission of South Carolina (to be filed by amendment). EXHIBIT 9 Order of the New York State Public Service Commission (to be filed by amendment). 6 ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS The proposed transaction does not involve major federal action having a significant effect on the environment and to the best of the Applicant's knowledge, no federal agency has prepared or is preparing an environmental impact statement with respect to the proposed transaction. It is requested that copies of all orders, notices and communications with respect to the above Application/Declaration be served as follows: David L. Hauser Vice President and Treasurer Duke Energy Corporation 526 S. Church Street Charlotte, North Carolina 28202 Adam Wenner, Esq. J. Curtis Moffatt, Esq. Catherine O'Harra, Esq. Van Ness Feldman Vinson & Elkins L.L.P. 1050 Thomas Jefferson St. The Willard Office Building Washington, D.C. 20007-3877 1455 Pennsylvania Avenue, N.W. Washington, D.C. 20004-1008 WHEREFORE, Duke respectfully requests that the Commission issue an order herein determining (i) that the Canadian Utilities are entitled to the exemption without qualification provided for by Section 3(b) of the 1935 Act and (ii) that Duke and its intermediate subsidiaries that directly or indirectly own voting securities of the Canadian Utilities are entitled to the exemption provided by Rules 10 and 11(b)(1) of the 1935 Act. 7 SIGNATURE Pursuant to the requirements of the Public Utility Holding Company Act of 1935, the undersigned company has duly caused this Application/Declaration to be signed on its behalf by the undersigned thereunto duly authorized. Respectfully submitted, DUKE ENERGY CORPORATION By: --------------------------------- David L. Hauser Vice President and Treasurer Dated: November 30, 2001 8 EX-1 3 doc2.txt Exhibit 1 [Form of Notice] Notice is hereby given that Applicant Duke Energy Corporation, a North Carolina corporation ("Duke"), has entered into a Combination Agreement with Westcoast Energy Inc. ("Westcoast"), a corporation organized under the laws of Canada, pursuant to which Duke will acquire the stock of Westcoast in exchange for $3.5 billion in cash and stock and the assumption of approximately $4 billion in Westcoast debt (the "Acquisition"). Applicant has applied under Section 3(b) of the Public Utility Holding Company Act of 1935, as amended ("1935 Act"), for an order exempting certain foreign public-utility companies that will be acquired by Duke in conjunction with the Acquisition. Pursuant to such exemption, Duke and its intermediate subsidiaries would become exempt from all obligations as a holding company under Rule 10, promulgated by the Commission under the 1935 Act, and exempt from Section 9(a)(2) of the 1935 Act pursuant to Rule 11(b)(1) promulgated thereunder. All interested persons are referred to the application, which is summarized below, for a complete statement of the facts. The Applicant states that Westcoast has two subsidiaries that are public-utility companies operating exclusively outside the United States. Both are Canadian utilities which, prior to and after the Acquisition, will serve no customers in the United States and will derive no income directly or indirectly from sources within the United States. Westcoast's Canadian utility subsidiaries ("Canadian Utilities") are listed by Applicant as follows: 1. Union Gas Limited ("Union Gas"), a wholly-owned, direct subsidiary of Westcoast, is engaged in the transportation and storage of natural gas and the distribution of natural gas to residential, commercial and industrial customers in Ontario; and 2. Pacific Northern Gas Ltd. ("Pacific Northern"), a 41%-owned, direct subsidiary of Westcoast, is engaged in the transportation of natural gas and distribution of natural gas to residential, commercial, and industrial customers in British Columbia. The Applicant states that Westcoast directly owns 100% of the voting shares and 41% of the non-voting shares of Pacific Northern, without intermediate subsidiaries. Union Gas is wholly-owned by Westcoast, without intermediate subsidiaries. Upon and after the effective date of the Acquisition, Duke may, for tax, legal, regulatory or administrative reasons, restructure the corporate organization described above. The Applicant states that Union Gas is organized under the laws of Ontario. Pacific Northern is organized under the laws of British Columbia. The Canadian Utilities will not engage in any business other than the acquisition of Canadian public-utility companies, the supervision of Duke's investments in Canada, and the participation in the management and operation of Canadian public-utility companies. The Applicant asserts that the Canadian Utilities derive no income from United States operations. The Canadian Utilities are not qualified to do business in any state of the United States, nor is any Canadian Utility a public-utility company operating in the United States. The Canadian Utilities have no plan to derive any income from United States operations, from any i company qualified to do business in any state of the United States, or from any public-utility company operating in the United States. It is asserted that the operations of the Canadian Utilities are and will be exclusively in Canada and that Duke's domestic utility customers will not be put at risk of any adverse financial effects resulting from the operations of the Canadian Utilities, nor will the ability of the state commissions of North Carolina and South Carolina to protect the interests of consumers in their respective states be adversely affected. The Applicant asserts that the Canadian Utilities are entitled to the exemption without qualification provided for by Section 3(b) of the 1935 Act, and accordingly that Duke and its intermediate subsidiaries are entitled to the exemption from all obligations as a holding company provided for by Rule 10(a)(1) of the 1935 Act. The Applicant asserts that if the Canadian Utilities are exempt without qualification under Section 3(b) of the 1935 Act, then Duke would be entitled to the exemption provided for by Rule 10 of the 1935 Act. The Applicant also asserts that if the Canadian Utilities are exempt under Section 3(b) of the 1935 Act, then Duke and its intermediate subsidiaries would be entitled under Rule 11(b)(1) to an exemption from Section 9(a)(2) of the Act. Notice is further given that any interested person may, not later than _________, 2002, request in writing that a hearing be held in respect of the request for exemption, relating to the nature of his interest and the reasons for each request, and the issues of fact or law which he decides to controvert; or he may request that he be notified should the Commission order a hearing herein. Any such request should be addressed: Secretary, Securities and Exchange Commission, Washington, DC 20549. At any time after said date, the Commission may grant the exemption requested, or take such other action as it deems appropriate. ii EX-3 4 doc3.txt Exhibit 3 BEFORE THE NORTH CAROLINA UTILITIES COMMISSION DOCKET NO. E-7, SUB 700 Application of Duke Energy Corporation ) for authorization under North Carolina ) General Statute Section 62-161 to Issue ) APPLICATION Common Stock in connection with the ) Acquisition of Westcoast Energy Inc. ) Duke Energy Corporation ("Duke Energy"), pursuant to Section 62-161 of the North Carolina General Statutes and the rules and regulations thereunder, hereby makes application for authorization to issue shares of its common stock ("Common Stock") as part of the consideration to be paid in connection with the acquisition of Westcoast Energy Inc. ("Westcoast"). Westcoast, a Canadian corporation headquartered in Vancouver, British Columbia, is a leading North American energy company with assets of approximately $10 billion. Its interests include natural gas gathering, processing, transmission, storage and distribution, as well as power generation, international energy businesses, and financial, information technology and energy services businesses. Duke Energy seeks approval to issue its Common Stock upon exchange of shares of Westcoast common stock, to a trustee as contemplated in the Voting and Exchange Trust Agreement, upon exchange of certain exchangeable shares issued by its wholly owned Canadian subsidiary, and upon exercise of employee stock options granted or to be granted to Westcoast employees, and to reserve shares of its Common Stock for such purposes, all in the manner hereinafter described. The maximum total number of shares to be issued and reserved is calculated as set forth in Exhibit D-1, as further described in Section 7 below. In support of this Application, Duke Energy respectfully shows unto the Commission: 1. NAME AND ADDRESS OF DUKE ENERGY The name and post office address of Duke Energy are Duke Energy Corporation, Post Office Box 1244, Charlotte, North Carolina 28201-1244. 2. NOTICES AND COMMUNICATIONS The names and addresses of Duke Energy's attorneys who are authorized to receive notices and communications with respect to this application are: William L. Porter Deputy General Counsel Duke Energy Corporation P. O. Box 1244 Charlotte, North Carolina 28201-1244 Robert W. Kaylor 225 Hillsborough Street Hillsborough Place, Suite 480 Raleigh, North Carolina 27603 3. DESCRIPTION OF DUKE ENERGY Duke Energy is a corporation duly organized and existing under the laws of the State of North Carolina. It is duly authorized by its Articles of Incorporation to engage in the business of generating, transmitting, distributing and selling electric power and energy. It holds a certificate of authority to transact business in the State of South Carolina and is authorized to conduct and carry on business, and is conducting and carrying on the businesses above mentioned, in each of said States. It is a public utility under the laws of North Carolina, and in its operations in this State is subject to the jurisdiction of this Commission. It is also a public utility under the laws of the State of South Carolina, and in its operations in that State is subject to the jurisdiction of The Public Service Commission of South Carolina. It is a public utility under the Federal Power Act, 2 and certain of its operations are subject to the jurisdiction of the Federal Energy Regulatory Commission. In addition, Duke Energy's subsidiaries and affiliates engage in a broad range of energy and energy-related businesses worldwide. 4. AUTHORIZED CAPITAL STOCK Duke Energy's authorized capital stock as of June 30, 2001 consisted of Common Stock, Preferred Stock, Preferred Stock A and Preference Stock. (a) Common Stock. The amount of Common Stock authorized by Duke Energy's ------------- Articles of Incorporation is 2,000,000,000 shares, without nominal or par value. The amount of Common Stock issued and outstanding as of June 30, 2001, was approximately 775,000,000 shares, which were recorded in the capital account for Common Stock on Duke Energy's books on said date in the total amount of approximately $6,132,000,000. As contemplated by the Commission's order in Docket No. E-7, Sub 636, each share of Common Stock outstanding, including the Common Stock to be issued pursuant to the Commission's order in this docket, includes one-half of one Preference Stock Purchase Right under Duke Energy's Rights Agreement. (b) Preferred Stock. The amount of Preferred Stock authorized by Duke ---------------- Energy's Articles of Incorporation is 12,500,000 shares of the par value of $100 per share. The total amount issued and outstanding as of June 30, 2001, was 2,284,984 shares, which were recorded in the capital account for Preferred Stock on Duke Energy's books at the par value of $100 per share, or a total par value of $228,500,000. 3 (c) Preferred Stock A. The amount of Preferred Stock A authorized by Duke ------------------- Energy's Articles of Incorporation is 10,000,000 shares of the par value of $25 per share. The total amount issued and outstanding as of June 30, 2001, was 2,057,185 shares, which were recorded in the capital account for Preferred Stock A on Duke Energy's books at the par value of $25 per share, or a total par value of $51,430,000. (d) Preference Stock. The amount of Preference Stock authorized by Duke ----------------- Energy's Articles of Incorporation is 1,500,000 shares of the par value of $100 per share. As of June 30, 2001, no shares of such Preference Stock were issued and outstanding. 5. DESCRIPTION OF THE PROPOSED STOCK ISSUANCE Duke Energy, certain of its affiliates and Westcoast have entered into a Combination Agreement dated September 20, 2001 (the "Combination Agreement"), filed herewith as Exhibit C. The transaction will be effected through a court-approved plan of arrangement in Canada (the "Plan of Arrangement") and is subject to, among other things, approval by the holders of Westcoast common shares and options as well as obtaining regulatory approvals. A form of the Plan of Arrangement is attached as Schedule E to the Combination Agreement filed herewith. As described in the Plan of Arrangement, the transaction provides for the acquisition of all outstanding common shares of Westcoast by an indirect, wholly owned Canadian subsidiary of Duke Energy in exchange for a combination of cash, shares of Common Stock and exchangeable shares of a Canadian subsidiary of Duke Energy. The issuance of the stock portion of the consideration is the subject of this Application. Duke Energy plans to finance the cash portion of this transaction largely by the issuance of equity-linked securities, pursuant to authority granted by this Commission. The terms of the transaction relating to the stock issuance are more specifically described below. 4 Under the terms of the Plan of Arrangement, each common share of Westcoast would be exchanged, at the election of each Westcoast shareholder, for (i) Cdn$43.80 in cash or (ii) a portion of a share, based on an exchange ratio, of either Common Stock or exchangeable shares of a newly created Canadian subsidiary of Duke Energy that are exchangeable for Common Stock (the "Exchangeable Shares") or (iii) a combination of such consideration. Elections to receive cash, stock or a combination will be subject to proration so that the aggregate consideration will consist of approximately 50 percent cash and approximately 50 percent stock. For common shares of Westcoast exchanged for stock, the exchange ratio will be determined based on the 20-day weighted average trading price of Common Stock on the New York Stock Exchange during a trading period prior to the closing of the acquisition, subject to (i) a maximum exchange ratio of 0.7711 if the weighted average trading price of the Common Stock is equal to or less than $36.88; and (ii) a minimum exchange ratio of 0.6119 if the weighted average trading price of the Common Stock is equal to or more than $46.48. The precise number of shares of Common Stock to be issued in the transaction will be determined at the end of the 20 day trading period and prior to closing. Exhibit D-2 contains an illustration of the calculation of the exchange ratio. A Westcoast shareholder who is a Canadian resident and desires stock consideration can elect to receive either Common Stock or Exchangeable Shares . The Exchangeable Shares are the economic and voting equivalent of Common Stock and provide the opportunity for a tax-deferred exchange under the Plan of Arrangement for holders of Westcoast common stock that are Canadian residents. A Westcoast shareholder who is not a Canadian resident and desires stock consideration may only receive Common Stock. The Exchangeable Shares are more fully described in the next section below. 5 6. THE EXCHANGEABLE SHARES At the consummation of the transaction, Duke Energy will issue a number of shares of Common Stock equivalent to the number of Exchangeable Shares issued pursuant to the elections of the Westcoast shareholders, subject to the proration provisions of the Plan of Arrangement, to be held in trust pursuant to the Voting and Exchange Trust Agreement as described below. Upon the exchange, retraction or redemption of any Exchangeable Shares for Common Stock, the trustee will concurrently therewith distribute an equivalent number of shares of Common Stock held by the trustee to Duke Energy for issuance to the former holder of the Exchangeable Shares such that the number of shares of Common Stock held by the trustee will at all times equal the number of Exchangeable Shares outstanding. The terms of the Exchangeable Shares, and Duke Energy's obligations with respect to those shares, are more fully described in the Combination Agreement and the forms of the Support Agreement and the Voting and Exchange Trust Agreement attached to the Combination Agreement as Schedules F and G, respectively. Also attached as Exhibit E to this Application is a summary of the significant terms of the Support Agreement and the Voting and Exchange Trust Agreement. 7. EFFECTS, PURPOSES AND COMPATIBILITY WITH PUBLIC INTEREST As described further in Exhibit D-1, a total of between approximately 37,754,000 and approximately 49,852,000 shares of Common Stock will be issued under the Plan of Arrangement, representing a maximum of approximately 6.4% of the currently outstanding Common Stock. Duke Energy will also assume Westcoast employee stock options outstanding at the effective time of the transaction, which stock options will cover up to between 6 approximately 5,093,000 and 7,077,000 additional shares of Westcoast common stock. Duke Energy would therefore reserve up to 5,457,354 shares of Common Stock for stock options. The number of shares of Common Stock issued and reserved is subject to change prior to the effective time of the Plan of Arrangement depending upon the exchange ratio as determined at such time, options granted and exercised, and shares of Westcoast common stock issued under its dividend reinvestment plan. Duke Energy will not issue or reserve more shares of Common Stock under the authority granted in this Docket than required under the Plan of Arrangement. As a result of the transaction, the former Westcoast shareholders will become shareholders of Duke Energy (or holders of Exchangeable Shares), and an indirect, wholly owned Canadian subsidiary of Duke Energy will become the sole shareholder of Westcoast. The transaction will be accounted for as a purchase. The estimated expenses to be incurred as a result of the Common Stock issuance are $20 million, or less than 0.6% of the value of the consideration Duke Energy will pay to acquire Westcoast. Because the transaction will result in an increase of less than 20% in the outstanding Common Stock, it will not require any vote by the Duke Energy shareholders. Duke Energy will file a Registration Statement on Form S-3 with the U.S. Securities and Exchange Commission ("SEC") with respect to shares of Common Stock to be issued from time to time upon exchange of the Exchangeable Shares. Duke Energy will also file a Registration Statement on Form S-8 with the SEC with respect to shares of Common Stock to be issued from time to time upon exercise of employee stock options granted or to be granted to Westcoast employees. The issuance of shares of Common Stock upon the closing of the transaction will be exempt from registration under the Securities Act of 1933, as amended, pursuant to Section 3(a)(10) thereof. 7 At closing, which will occur only after receipt of all required Canadian, U.S. state and U.S. federal approvals, Duke Energy will retain its current corporate form and will continue to own all its pre-acquisition assets. There will be no change of control of Duke Energy nor will there be any sale, assignment, pledge, transfer or lease of Duke Energy's public utility franchise. Westcoast's debt will remain the obligation of Westcoast, without any guarantees of such debt from Duke Energy. The acquisition will not adversely affect Duke Energy's ability to provide electric service to its North Carolina customers at reasonable rates. Duke Energy's acquisition of Westcoast will expand Duke Energy's strength in its natural gas transmission, storage and related services businesses, and will combine the financial strengths of both companies. The transaction will benefit Duke Energy's North Carolina customers by lowering Duke Energy's business risk through increased geographic diversification and a broader asset base. The issuance of the Common Stock in connection with the acquisition described herein will not adversely affect Duke Energy's North Carolina retail electric operations or customers. The transaction will have a positive effect on Duke Energy's consolidated financial condition, and on its ability to continue to thrive in a rapidly changing and competitive energy environment. The purposes of the Common Stock issuance described herein are lawful objects within the corporate purposes of Duke Energy, and are within the limits of authority and purposes set forth in its Articles of Incorporation, as amended, which is on file with this Commission. For the reasons set forth above, the issuance of the Common Stock as described herein will be compatible with the public interest, will be necessary and appropriate for, and consistent with, the proper performance by Duke Energy of its service to the public as a utility, will not 8 impair its ability to perform that service, and will be reasonably necessary and appropriate for such purpose. 8. FINANCIAL CONDITION AND OPERATING REPORTS The financial condition of Duke Energy and its previous operations are shown by Duke Energy's Annual Reports to the Commission and by other records of the Commission relating to Duke Energy. 9. EXHIBITS Exhibits in support of the Application include: EXHIBIT A Copy of Duke Energy's Restated Articles of Incorporation dated as of June 18, 1997. This exhibit is on file with the Commission in Docket No. E-7, Sub 596, and amendments thereto are on file in Docket No. E-7, Sub 589. EXHIBIT B Annual Reports of Duke Energy to the Commission and other records of the Commission relating to Duke Energy. Reference is made to these reports and records on file with the Commission. EXHIBIT C Combination Agreement dated September 20, 2001, among Duke Energy Corporation, 3058368 Nova Scotia Company, 3946509 Canada Inc. and Westcoast Energy Inc., with schedules thereto. EXHIBIT D-1 Calculation of Maximum Amount of Shares to be Issued and Reserved in connection with Acquisition of Westcoast. EXHIBIT D-2 Summary of calculation of Exchange Ratio. EXHIBIT E Summary of significant terms of Support Agreement and Voting and Exchange Trust Agreement. EXHIBIT F Unconsolidated Balance Sheet of Duke Energy as of June 30, 2001, including pro forma effects of proposed issuance. EXHIBIT G Unconsolidated Statement of Income of Duke Energy for the year ended June 30, 2001, including pro forma effects of proposed issuance. 9 EXHIBIT H Unconsolidated Statements of Cash Flows for the six months ended June 30, 2001; and Statement of Retained Earnings of Duke Energy for the six months ended June 30, 2001. EXHIBIT I Unconsolidated Statement of Capitalization of Duke Energy at June 30, 2001, including pro forma effects of proposed issuance. EXHIBIT J Preferred Stocks With and Without Sinking Fund Requirements at June 30, 2001. 10 WHEREFORE, Duke Energy respectfully prays that the issuance of Common Stock in the manner herein set forth, be authorized and approved by the Commission. Respectfully submitted, this 10th day of October, 2001. DUKE ENERGY CORPORATION /s/ Paul R. Newton ----------------------------------- Vice President and General Counsel, Duke Power [CORPORATE SEAL] STATE OF NORTH CAROLINA COUNTY OF MECKLENBURG PAUL R. NEWTON, being first duly sworn, deposes and says: That he is an officer of DUKE ENERGY CORPORATION, applicant in the above-entitled Application, to wit, its Vice President and General Counsel, Duke Power; that he has read the foregoing Application and knows the contents thereof, and that the same is true of his own knowledge. /s/ Paul R. Newton ------------------------------- Paul R. Newton Sworn to and subscribed before me this 10th day of October, 2001. /s/ Phoebe P. Elliott - ----------------------------------- Notary Public My Commission Expires: June 26, 2006 [SEAL] 11 EXHIBIT D-1 Calculation of Maximum Amount of Shares to be Issued and Reserved In Connection with Acquisition of Westcoast(1) A. Shares Issuable Under Plan of Arrangement (2) -------------------------------------------------- Westcoast Shares outstanding x 129,301,017 x 0.7711 = 99,704,014 Maximum Exchange Ratio Divide by 2 99,704,014 / 2 = 49,852,007 TOTAL ISSUED SHARES B. Shares Reserved for Stock Plans(3) -------------------------------------- 1. Options outstanding x 5,092,893 x 0.7711 = 3,927,130 Maximum Exchange Ratio 2. Shares reserved for issuance 1,984,469 x 0.7711 = 1,530,224 under option plan x Maximum Exchange Ratio Total of 1 and 2: 5,457,354 - ----------------------- (1) Reference is made to Westcoast representations in Section 3.2 of the Combination Agreement regarding capitalization. Calculations also assume no dissenting shareholders and that Duke Energy does not hold any Westcoast shares prior to closing of the acquisition. (2) Total Westcoast shares outstanding may increase between the date of the Combination Agreement and the closing of the acquisition due to exercises of stock options and issuances under the Westcoast Dividend Reinvestment Plan, for which shares have been reserved. Additional stock options may also be issued during such period. Reference is made to Section 5.1(a)(ii) of the Combination Agreement for a description of certain allowable changes in capitalization of Westcoast. These calculations assume that no options are exercised for Westcoast common shares prior to closing and that all Westcoast common shares available under the Westcoast dividend reinvestment plan are purchased prior to closing. All Westcoast common shares may be exchanged for either Common Stock or Exchangeable Shares at closing of the acquisition. (3) Assumes all options available for issuance are issued but not exercised prior to closing. All outstanding options to purchase Westcoast common shares are automatically converted into options to purchase Common Stock. EXHIBIT D-2 Calculation of Exchange Ratio Set forth below is a description of the mechanics used to calculate the Exchange Ratio under the form of Plan of Arrangement (the "Plan of Arrangement") attached to the Combination Agreement dated September 20, 2001 (the "Combination Agreement"), among Duke Energy Corporation ("Duke Energy"), 3058368 Nova Scotia Company, 3946509 Canada Inc. ("Exchangeco") and Westcoast Energy Inc. as Schedule E. This is a summary only. The detailed provisions in the Plan of Arrangement that should be consulted if additional information is required. Capitalized terms not otherwise defined herein shall have the meaning ascribed to such terms in the Plan of Arrangement. 1. DETERMINATION OF "WEIGHTED AVERAGE TRADING PRICE OF THE DUKE ENERGY COMMON SHARES": This calculation determines the weighted average trading price for Duke Energy Common Shares on the New York Stock Exchange as reported by Bloomberg for a period of twenty (20) consecutive trading days ending on the day that is two Business Days prior to the Election Deadline. The Election Deadline is two Business Days prior to the Effective Date (which is the day of closing). The Weighted Average Trading Price of the Duke Energy Common Shares is calculated by dividing (i) the aggregate sale price of all Duke Energy Common Shares sold on the New York Stock Exchange during the period described above by (ii) the total number of Duke Energy Common Shares sold during that same period, expressed to the fourth decimal point. 2. DETERMINATION OF "DUKE ENERGY AVERAGE PRICE": The Duke Energy Average Price is calculated by multiplying (i) 1.54 by (ii) the Weighted Average Trading Price of the Duke Energy Common Shares (calculated in 1 above), expressed to the fourth decimal point. 3. DETERMINATION OF "EXCHANGE RATIO": The Exchange Ratio is calculated by dividing (i) Cdn.$43.80 by (ii) the Duke Energy Average Price (calculated in 2 above), expressed to the fourth decimal point. Notwithstanding the foregoing, in the event that the Weighted Average Trading Price of the Duke Energy Common Shares is equal to or less than $36.88, the Exchange Ratio will be 0.7711; and in the event that the Weighted Average Trading Price of the Duke Energy Common Shares is equal to or greater than $46.48, the Exchange Ratio will be 0.6119. 4. APPLICATION OF THE EXCHANGE RATIO: Each outstanding Westcoast Common Share will be transferred to, and acquired by, Exchangeco in exchange for such number of Exchangeable Shares or Duke Energy Common Shares, as the case may be, as is equal to the Exchange Ratio. The collar has the effect of providing that so long as the Weighted Average Trading Price of Duke Energy Common Shares is between $36.88 and $46.48,each holder of Westcoast Common Shares that elects or is deemed to have elected to receive stock consideration will receive Cdn.$43.80 worth of stock (subject to changes in the currency exchange ratio) for each Westcoast Common Share held by such holder in the exchange. In the event that the Weighted Average Trading Price of Duke Energy Common Shares is at or below $36.88 or at or above $46.48, holders of Westcoast Common Shares that elect or are deemed to have elected to receive stock consideration will receive stock with a value equivalent to the Exchange Ratio multiplied by the Weighted Average Trading Price of Duke Energy Common Shares as of two Business Days prior to the Election Deadline, which value may be less or more, respectively, than Cdn$43.80. EXHIBIT E Support Agreement and Voting and Exchange Trust Agreement Summary of Significant Terms Set forth below are brief summaries of the form of Support Agreement and the form of Voting and Exchange Trust Agreement attached to the Combination Agreement dated September 20, 2001 (the "Combination Agreement"), among Duke Energy Corporation ("Duke Energy"), 3058368 Nova Scotia Company ("Callco"), 3946509 Canada Inc. ("Exchangeco") and Westcoast Energy Inc. as Schedule F and Schedule G, respectively. These are summaries only. The detailed provisions in the form of Support Agreement and the form of Voting and Exchange Trust Agreement should be consulted if additional information is required. Capitalized terms not otherwise defined herein shall have the meaning ascribed to such terms in the respective agreement. FORM OF SUPPORT AGREEMENT - ---------------------------- The form of Support Agreement among Duke Energy, Callco and Exchangeco (the "Support Agreement") is primarily intended to ensure that the Exchangeable Shares to be issued by Exchangeco are economically equivalent to Duke Energy Common Shares. The Support Agreement prohibits Duke Energy from declaring any dividend on Duke Energy Common Shares or taking any other action with respect to Duke Energy Common Shares (such as a stock dividend or subdivision) unless Exchangeco pays an economically equivalent dividend on the Exchangeable Shares or takes an economically equivalent action with respect to the Exchangeable Shares. Duke Energy also agrees to do such things as are reasonably necessary or desirable to enable and permit Exchangeco and Callco, in accordance with applicable law, to meet their obligations under the Exchangeable Share Provisions and the Plan of Arrangement. Duke Energy further agrees to reserve a sufficient number of Duke Energy Common Shares to enable and permit Duke Energy, Callco and Exchangeco to meet their obligations under the Exchangeable Share Provisions, the Plan of Arrangement and the Voting and Exchange Trust Agreement to deliver Duke Energy Common Shares in connection with the exchange, redemption or retraction of Exchangeable Shares. Finally, Duke Energy agrees to remain the direct or indirect beneficial owner of all issued and outstanding voting shares in the capital of Exchangeco and Callco so long as any Exchangeable Shares not held by Duke Energy or any of its Affiliates remain outstanding. FORM OF VOTING AND EXCHANGE TRUST AGREEMENT - ------------------------------------------------- The form of Voting and Exchange Trust Agreement among Duke Energy, Exchangeco and a trustee to be designated prior to Effective Date (as defined in the Combination Agreement) (the "Voting and Exchange Trust Agreement") sets forth the mechanism by which holders of Exchangeable Shares may vote together with holders of Duke Energy Common Shares as though such holders of Exchangeable Shares were holders of Duke Energy Common Shares. Under the Voting and Exchange Trust Agreement, Duke Energy agrees to issue to the trustee from time to time a number of Duke Energy Common Shares equal to the number of Exchangeable Shares outstanding as of that time (other than Exchangeable Shares held by Duke Energy and its Affiliates). Whenever a holder of Duke Energy Common Shares is entitled to vote on a matter or sign a consent, each holder of Exchangeable Shares may instruct the trustee to vote the number of Duke Energy Common Shares equal to the number of Exchangeable Shares held by such holder in the manner instructed by such holder. Any mailings or information provided to the holders of Duke Energy Common Shares must also be provided to the holders of Exchangeable Shares as though such holders were holders of Duke Energy Common Shares. In the event that any Exchangeable Shares are exchanged, redeemed or retracted for Duke Energy Common Shares, the trustee shall concurrently therewith distribute to Duke the corresponding number of Duke Energy Common Shares so that the number of Duke Energy Common Shares held by the trustee will at all times equal the number of Exchangeable Shares outstanding. Finally, the Voting and Exchange Trust Agreement sets forth (i) an Exchange Right whereupon Duke Energy agrees to purchase (with Duke Energy Common Shares) all outstanding Exchangeable Shares upon an Insolvency Event of Exchangeco and (ii) an Automatic Exchange Right whereupon each outstanding Exchangeable Share automatically converts into a Duke Energy Common Share upon the liquidation, dissolution or winding-up of Duke Energy or the distribution of Duke Energy's assets to its shareholders. BEFORE THE NORTH CAROLINA UTILITIES COMMISSION DOCKET NO. E-7, SUB 700 Application of Duke Energy Corporation ) DUKE ENERGY'S AMENDMENT TO for authorization under North Carolina ) APPLICATION TO INCLUDE REQUEST General Statute Section 62-161 to Issue ) FOR AUTHORIZATION UNDER Common Stock in connection with the ) N.C.G.S. SECTION 62-111(a) AND Acquisition of Westcoast Energy Inc. ) REQUEST FOR WAIVER On October 10, 2001, Duke Energy Corporation ("Duke Energy") filed its application in this docket pursuant to Section 62-161 of the North Carolina General Statutes and the rules and regulations thereunder, for authorization to issue shares of its common stock as part of the consideration to be paid in connection with the acquisition of Westcoast Energy Inc. ("Westcoast"). As required by the Commission's order in this docket dated November 7, 2001, Duke Energy hereby amends its application to include a request for approval under Section 62-111(a) of the North Carolina General Statutes of the business combination described in the original application, and to request a waiver of the filing requirements set forth in the Commission's order of November 2, 2000 in Docket No. M-100, Sub 129 (the "Sub 129 Order"). This amendment is filed under protest, and Duke Energy respectfully objects to and reserves an exception from the Commission's order in this docket dated November 7, 2001, which required the filing of this amendment. Notwithstanding Duke Energy's objection and exception, and without waiver thereof, Duke Energy submits this amendment and respectfully shows unto the Commission: 1. PUBLIC CONVENIENCE AND NECESSITY For the reasons set forth in the original application in this docket, including in particular Section 7 thereof, Duke Energy's acquisition of Westcoast as described in the application is justified by the public convenience and necessity. 2. REQUEST FOR WAIVER Duke Energy respectfully requests that the Commission's order acting upon its application in this docket include a waiver of the filing requirements outlined in the Sub 129 Order. The Sub 129 Order requires any applicant seeking authority to engage in mergers or other business combinations within the electric or natural gas industries to file, on the same date that its application is filed, a Market Power Analysis and a Cost-Benefit Analysis, as further described in the Sub 129 Order. Duke Energy submits that the Commission may properly waive these requirements in this docket because the analyses required by the Sub 129 Order are not relevant to Duke Energy's acquisition of Westcoast. Because Westcoast is primarily a gas pipeline company based in Vancouver, British Columbia, as further described in Duke Energy's original application in this docket, and is therefore in no way connected to the provision of electricity or natural gas in North Carolina, market power concerns are not germane to the Commission's inquiry into whether the proposed acquisition meets the statutory standard of NCGS 62-111(a). Similarly, as described in the application in this docket, there are no costs related to the acquisition that are expected to be passed on to the North Carolina electric ratepayers, and therefore a cost-benefit analysis would not provide meaningful information relevant to meeting the statutory standard. Duke Energy notes that the Sub 129 Order includes a number of references to the "merging utilities," and submits that the acquisition of Westcoast does not involve any merger of any entity holding a utility franchise. For the reasons set forth above, Duke 2 Energy submits that the Sub 129 Order is inapplicable to the Westcoast acquisition and therefore requests that the Commission grant the requested waiver. WHEREFORE, Duke Energy respectfully prays, pursuant to its application in this docket as amended hereby, that its acquisition of Westcoast and its issuance of common stock, in the manner set forth in the application, as amended, be authorized and approved by the Commission, and further prays that the Commission's order granting such authority include a waiver of all of the filing requirements set forth in the Commission's Order dated November 2, 2000, in Docket No. M-100, Sub 129. Respectfully submitted, this 8th day of November, 2001. DUKE ENERGY CORPORATION [CORPORATE SEAL] ---------------------------------- Vice President, Rates & Regulatory Affairs, Duke Power - ----------------------------------- Robert W. Kaylor 225 Hillsborough Street Hillsborough Place, Suite 480 Raleigh, North Carolina 27603 3 STATE OF NORTH CAROLINA COUNTY OF MECKLENBURG STEVEN K. YOUNG, being first duly sworn, deposes and says: That he is an officer of DUKE ENERGY CORPORATION, applicant in the above-entitled Amendment to Application, to wit, its Vice President, Rates & Regulatory Affairs, Duke Power; that he has read the foregoing Amendment to Application and knows the contents thereof, and that the same is true of his own knowledge. ------------------------------- Steven K. Young Sworn to and subscribed before me this 8th day of November, 2001. - ------------------------------------ Notary Public My Commission Expires: August 1, 2004 [SEAL] 4 EX-4 5 doc4.txt Exhibit 4 BEFORE THE PUBLIC SERVICE COMMISSION OF SOUTH CAROLINA DOCKET NO. 2001-___-E Application of Duke Energy Corporation ) for authorization under Article 13, ) Chapter 27 of Title 58 of the Code of ) APPLICATION Laws of South Carolina, 1976 to Issue ) Common Stock in connection with the ) Acquisition of Westcoast Energy Inc. ) Duke Energy Corporation ("Duke Energy"), pursuant to Article 13, Chapter 27 of Title 58 of the Code of Laws of South Carolina, 1976 and the rules and regulations thereunder, hereby makes application for authorization to issue shares of its common stock ("Common Stock") as part of the consideration to be paid in connection with the acquisition of Westcoast Energy Inc. ("Westcoast"). Westcoast, a Canadian corporation headquartered in Vancouver, British Columbia, is a leading North American energy company with assets of approximately $10 billion. Its interests include natural gas gathering, processing, transmission, storage and distribution, as well as power generation, international energy businesses, and financial, information technology and energy services businesses. Duke Energy seeks approval to issue its Common Stock upon exchange of shares of Westcoast common stock, to a trustee as contemplated in the Voting and Exchange Trust Agreement, upon exchange of certain exchangeable shares issued by its wholly owned Canadian subsidiary, and upon exercise of employee stock options granted or to be granted to Westcoast employees, and to reserve shares of its Common Stock for such purposes, all in the manner hereinafter described. The maximum total number of shares to be issued and reserved is calculated as set forth in Exhibit D-1, as further described in Section 7 below. In support of this Application, Duke Energy respectfully shows unto the Commission: 1. NAME AND ADDRESS OF DUKE ENERGY The name and post office address of Duke Energy are Duke Energy Corporation, Post Office Box 1244, Charlotte, North Carolina 28201-1244. 2. NOTICES AND COMMUNICATIONS The names and addresses of Duke Energy's attorneys who are authorized to receive notices and communications with respect to this application are: William L. Porter Deputy General Counsel Duke Energy Corporation P. O. Box 1244 Charlotte, North Carolina 28201-1244 William F. Austin Austin, Lewis & Rogers, P.A. P. O. Box 11716 Columbia, South Carolina 29211-1716 3. DESCRIPTION OF DUKE ENERGY Duke Energy is a corporation duly organized and existing under the laws of the State of North Carolina. It is duly authorized by its Articles of Incorporation to engage in the business of generating, transmitting, distributing and selling electric power and energy. It holds a certificate of authority to transact business in the State of South Carolina and is authorized to conduct and carry on business, and is conducting and carrying on the businesses above mentioned, in each of said States. It is a public utility under the laws of South Carolina, and in its operations in this State is subject to the jurisdiction of this Commission. It is also a public utility under the laws of 2 the State of North Carolina, and in its operations in that State is subject to the jurisdiction of the North Carolina Utilities Commission. It is a public utility under the Federal Power Act, and certain of its operations are subject to the jurisdiction of the Federal Energy Regulatory Commission. In addition, Duke Energy's subsidiaries and affiliates engage in a broad range of energy and energy-related businesses worldwide. 4. AUTHORIZED CAPITAL STOCK Duke Energy's authorized capital stock as of June 30, 2001 consisted of Common Stock, Preferred Stock, Preferred Stock A and Preference Stock. (a) Common Stock. The amount of Common Stock authorized by Duke Energy's ------------- Articles of Incorporation is 2,000,000,000 shares, without nominal or par value. The amount of Common Stock issued and outstanding as of June 30, 2001, was approximately 775,000,000 shares, which were recorded in the capital account for Common Stock on Duke Energy's books on said date in the total amount of approximately $6,132,000,000. As contemplated by the Commission's order in Docket No. 2000-605-E, each share of Common Stock outstanding, including the Common Stock to be issued pursuant to the Commission's order in this docket, includes one-half of one Preference Stock Purchase Right under Duke Energy's Rights Agreement. (b) Preferred Stock. The amount of Preferred Stock authorized by Duke ---------------- Energy's Articles of Incorporation is 12,500,000 shares of the par value of $100 per share. The total amount issued and outstanding as of June 30, 2001, was 2,284,984 shares, which 3 were recorded in the capital account for Preferred Stock on Duke Energy's books at the par value of $100 per share, or a total par value of $228,500,000. (c) Preferred Stock A. The amount of Preferred Stock A authorized by Duke ------------------- Energy's Articles of Incorporation is 10,000,000 shares of the par value of $25 per share. The total amount issued and outstanding as of June 30, 2001, was 2,057,185 shares, which were recorded in the capital account for Preferred Stock A on Duke Energy's books at the par value of $25 per share, or a total par value of $51,430,000. (d) Preference Stock. The amount of Preference Stock authorized by Duke ----------------- Energy's Articles of Incorporation is 1,500,000 shares of the par value of $100 per share. As of June 30, 2001, no shares of such Preference Stock were issued and outstanding. 5. DESCRIPTION OF THE PROPOSED STOCK ISSUANCE Duke Energy, certain of its affiliates and Westcoast have entered into a Combination Agreement dated September 20, 2001 (the "Combination Agreement"), filed herewith as Exhibit C. The transaction will be effected through a court-approved plan of arrangement in Canada (the "Plan of Arrangement") and is subject to, among other things, approval by the holders of Westcoast common shares and options as well as obtaining regulatory approvals. A form of the Plan of Arrangement is attached as Schedule E to the Combination Agreement filed herewith. As described in the Plan of Arrangement, the transaction provides for the acquisition of all outstanding common shares of Westcoast by an indirect, wholly owned Canadian subsidiary of Duke Energy in exchange for a combination of cash, shares of Common Stock and exchangeable shares of a Canadian subsidiary of Duke Energy. The issuance of the stock portion of the consideration is the subject of this Application. Duke Energy plans to finance the cash portion of this transaction largely by the issuance of equity-linked securities, pursuant to authority granted 4 by this Commission. The terms of the transaction relating to the stock issuance are more specifically described below. Under the terms of the Plan of Arrangement, each common share of Westcoast would be exchanged, at the election of each Westcoast shareholder, for (i) Cdn$43.80 in cash or (ii) a portion of a share, based on an exchange ratio, of either Common Stock or exchangeable shares of a newly created Canadian subsidiary of Duke Energy that are exchangeable for Common Stock (the "Exchangeable Shares") or (iii) a combination of such consideration. Elections to receive cash, stock or a combination will be subject to proration so that the aggregate consideration will consist of approximately 50 percent cash and approximately 50 percent stock. For common shares of Westcoast exchanged for stock, the exchange ratio will be determined based on the 20-day weighted average trading price of Common Stock on the New York Stock Exchange during a trading period prior to the closing of the acquisition, subject to (i) a maximum exchange ratio of 0.7711 if the weighted average trading price of the Common Stock is equal to or less than $36.88; and (ii) a minimum exchange ratio of 0.6119 if the weighted average trading price of the Common Stock is equal to or more than $46.48. The precise number of shares of Common Stock to be issued in the transaction will be determined at the end of the 20 day trading period and prior to closing. Exhibit D-2 contains an illustration of the calculation of the exchange ratio. A Westcoast shareholder who is a Canadian resident and desires stock consideration can elect to receive either Common Stock or Exchangeable Shares . The Exchangeable Shares are the economic and voting equivalent of Common Stock and provide the opportunity for a tax-deferred exchange under the Plan of Arrangement for holders of Westcoast common stock that are Canadian residents. A Westcoast shareholder who is not a Canadian resident and desires stock 5 consideration may only receive Common Stock. The Exchangeable Shares are more fully described in the next section below. 6. THE EXCHANGEABLE SHARES At the consummation of the transaction, Duke Energy will issue a number of shares of Common Stock equivalent to the number of Exchangeable Shares issued pursuant to the elections of the Westcoast shareholders, subject to the proration provisions of the Plan of Arrangement, to be held in trust pursuant to the Voting and Exchange Trust Agreement as described below. Upon the exchange, retraction or redemption of any Exchangeable Shares for Common Stock, the trustee will concurrently therewith distribute an equivalent number of shares of Common Stock held by the trustee to Duke Energy for issuance to the former holder of the Exchangeable Shares such that the number of shares of Common Stock held by the trustee will at all times equal the number of Exchangeable Shares outstanding. The terms of the Exchangeable Shares, and Duke Energy's obligations with respect to those shares, are more fully described in the Combination Agreement and the forms of the Support Agreement and the Voting and Exchange Trust Agreement attached to the Combination Agreement as Schedules F and G, respectively. Also attached as Exhibit E to this Application is a summary of the significant terms of the Support Agreement and the Voting and Exchange Trust Agreement. 7. EFFECTS, PURPOSES AND COMPATIBILITY WITH PUBLIC INTEREST As described further in Exhibit D-1, a total of between approximately 37,754,000 and approximately 49,852,000 shares of Common Stock will be issued under the Plan of Arrangement, representing a maximum of approximately 6.4% of the currently outstanding Common Stock. Duke Energy will also assume Westcoast employee stock options outstanding 6 at the effective time of the transaction, which stock options will cover up to between approximately 5,093,000 and 7,077,000 additional shares of Westcoast common stock. Duke Energy would therefore reserve up to 5,457,354 shares of Common Stock for stock options. The number of shares of Common Stock issued and reserved is subject to change prior to the effective time of the Plan of Arrangement depending upon the exchange ratio as determined at such time, options granted and exercised, and shares of Westcoast common stock issued under its dividend reinvestment plan. Duke Energy will not issue or reserve more shares of Common Stock under the authority granted in this Docket than required under the Plan of Arrangement. As a result of the transaction, the former Westcoast shareholders will become shareholders of Duke Energy (or holders of Exchangeable Shares), and an indirect, wholly owned Canadian subsidiary of Duke Energy will become the sole shareholder of Westcoast. The transaction will be accounted for as a purchase. The estimated expenses to be incurred as a result of the Common Stock issuance are $20 million, or less than 0.6% of the value of the consideration Duke Energy will pay to acquire Westcoast. Because the transaction will result in an increase of less than 20% in the outstanding Common Stock, it will not require any vote by the Duke Energy shareholders. Duke Energy will file a Registration Statement on Form S-3 with the U.S. Securities and Exchange Commission ("SEC") with respect to shares of Common Stock to be issued from time to time upon exchange of the Exchangeable Shares. Duke Energy will also file a Registration Statement on Form S-8 with the SEC with respect to shares of Common Stock to be issued from time to time upon exercise of employee stock options granted or to be granted to Westcoast employees. The issuance of shares of Common Stock upon the closing of 7 the transaction will be exempt from registration under the Securities Act of 1933, as amended, pursuant to Section 3(a)(10) thereof. At closing, which will occur only after receipt of all required Canadian, U.S. state and U.S. federal approvals, Duke Energy will retain its current corporate form and will continue to own all its pre-acquisition assets. There will be no change of control of Duke Energy nor will there be any sale, assignment, pledge, transfer or lease of Duke Energy's public utility franchise. Westcoast's debt will remain the obligation of Westcoast, without any guarantees of such debt from Duke Energy. The acquisition will not adversely affect Duke Energy's ability to provide electric service to its South Carolina customers at reasonable rates. Duke Energy's acquisition of Westcoast will expand Duke Energy's strength in its natural gas transmission, storage and related services businesses, and will combine the financial strengths of both companies. The transaction will benefit Duke Energy's South Carolina customers by lowering Duke Energy's business risk through increased geographic diversification and a broader asset base. The issuance of the Common Stock in connection with the acquisition described herein will not adversely affect Duke Energy's South Carolina retail electric operations or customers. The transaction will have a positive effect on Duke Energy's consolidated financial condition, and on its ability to continue to thrive in a rapidly changing and competitive energy environment. The purposes of the Common Stock issuance described herein are lawful objects within the corporate purposes of Duke Energy, and are within the limits of authority and purposes set forth in its Articles of Incorporation, as amended, which is on file with this Commission. For the reasons set forth above, the issuance of the Common Stock as described herein will be compatible with the public interest, will be necessary and appropriate for, and consistent 8 with, the proper performance by Duke Energy of its service to the public as a utility, will not impair its ability to perform that service, and will be reasonably necessary and appropriate for such purpose. 8. FINANCIAL CONDITION AND OPERATING REPORTS The financial condition of Duke Energy and its previous operations are shown by Duke Energy's Annual Reports to the Commission and by other records of the Commission relating to Duke Energy. 9. EXHIBITS Exhibits in support of the Application include: EXHIBIT A Copy of Duke Energy's Restated Articles of Incorporation dated as of June 18, 1997. This exhibit is on file with the Commission in Docket No. 1996-383-E, and amendments thereto are on file in Docket No. 1999-240-E. EXHIBIT B Annual Reports of Duke Energy to the Commission and other records of the Commission relating to Duke Energy. Reference is made to these reports and records on file with the Commission. EXHIBIT C Combination Agreement dated September 20, 2001, among Duke Energy Corporation, 3058368 Nova Scotia Company, 3946509 Canada Inc. and Westcoast Energy Inc., with schedules thereto. EXHIBIT D-1 Calculation of Maximum Amount of Shares to be Issued and Reserved in connection with Acquisition of Westcoast. EXHIBIT D-2 Summary of calculation of Exchange Ratio. EXHIBIT E Summary of significant terms of Support Agreement and Voting and Exchange Trust Agreement. EXHIBIT F Unconsolidated Balance Sheet of Duke Energy as of June 30, 2001, including pro forma effects of proposed issuance. EXHIBIT G Unconsolidated Statement of Income of Duke Energy for the year ended June 30, 2001, including pro forma effects of proposed issuance. 9 EXHIBIT H Unconsolidated Statements of Cash Flows for the six months ended June 30, 2001; and Statement of Retained Earnings of Duke Energy for the six months ended June 30, 2001. EXHIBIT I Unconsolidated Statement of Capitalization of Duke Energy at June 30, 2001, including pro forma effects of proposed issuance. EXHIBIT J Preferred Stocks With and Without Sinking Fund Requirements at June 30, 2001. 10 WHEREFORE, Duke Energy respectfully prays: A. That the issuance of Common Stock in the manner herein set forth, be authorized and approved by the Commission; and B. That this Commission (i) determine that the purpose of the issue of Common Stock is proper, (ii) value the property to be acquired by the issue, and (iii) find and determine that the amount of such Common Stock prepared to be issued is reasonably necessary for the purpose for which it is to be issued; and C. That this Commission issue a certificate of authority stating: 1. The amount of such Common Stock reasonably necessary for the purpose for which it is to be issued and the character of the same; and 2. The value of the property to be acquired thereby; and D. That this Commission grant such other and further relief as it may find just and proper. Respectfully submitted, this 12th day of October, 2001. DUKE ENERGY CORPORATION ----------------------------------- Vice President and General Counsel, Duke Power [CORPORATE SEAL] 11 STATE OF NORTH CAROLINA COUNTY OF MECKLENBURG PAUL R. NEWTON, being first duly sworn, deposes and says: That he is an officer of DUKE ENERGY CORPORATION, applicant in the above-entitled Application, to wit, its Vice President and General Counsel, Duke Power; that he has read the foregoing Application and knows the contents thereof, and that the same is true of his own knowledge. ------------------------------ Paul R. Newton Sworn to and subscribed before me this 12th day of October, 2001. - ------------------------------------ Notary Public My Commission Expires: June 26, 2006 [SEAL] 12 EXHIBIT D-1 Calculation of Maximum Amount of Shares to be Issued and Reserved In Connection with Acquisition of Westcoast(1) A. Shares Issuable Under Plan of Arrangement (2) -------------------------------------------------- Westcoast Shares outstanding x 129,301,017 x 0.7711 = 99,704,014 Maximum Exchange Ratio Divide by 2 99,704,014 / 2 = 49,852,007 TOTAL ISSUED SHARES B. Shares Reserved for Stock Plans(3) -------------------------------------- 1. Options outstanding x 5,092,893 x 0.7711 = 3,927,130 Maximum Exchange Ratio 2. Shares reserved for issuance 1,984,469 x 0.7711 = 1,530,224 under option plan x Maximum Exchange Ratio Total of 1 and 2: 5,457,354 - ----------------------- 1 Reference is made to Westcoast representations in Section 3.2 of the Combination Agreement regarding capitalization. Calculations also assume no dissenting shareholders and that Duke Energy does not hold any Westcoast shares prior to closing of the acquisition. 2 Total Westcoast shares outstanding may increase between the date of the Combination Agreement and the closing of the acquisition due to exercises of stock options and issuances under the Westcoast Dividend Reinvestment Plan, for which shares have been reserved. Additional stock options may also be issued during such period. Reference is made to Section 5.1(a)(ii) of the Combination Agreement for a description of certain allowable changes in capitalization of Westcoast. These calculations assume that no options are exercised for Westcoast common shares prior to closing and that all Westcoast common shares available under the Westcoast dividend reinvestment plan are purchased prior to closing. All Westcoast common shares may be exchanged for either Common Stock or Exchangeable Shares at closing of the acquisition. 3 Assumes all options available for issuance are issued but not exercised prior to closing. All outstanding options to purchase Westcoast common shares are automatically converted into options to purchase Common Stock. EXHIBIT D-2 Calculation of Exchange Ratio Set forth below is a description of the mechanics used to calculate the Exchange Ratio under the form of Plan of Arrangement (the "Plan of Arrangement") attached to the Combination Agreement dated September 20, 2001 (the "Combination Agreement"), among Duke Energy Corporation ("Duke Energy"), 3058368 Nova Scotia Company, 3946509 Canada Inc. ("Exchangeco") and Westcoast Energy Inc. as Schedule E. This is a summary only. The detailed provisions in the Plan of Arrangement that should be consulted if additional information is required. Capitalized terms not otherwise defined herein shall have the meaning ascribed to such terms in the Plan of Arrangement. 1. DETERMINATION OF "WEIGHTED AVERAGE TRADING PRICE OF THE DUKE ENERGY COMMON SHARES": This calculation determines the weighted average trading price for Duke Energy Common Shares on the New York Stock Exchange as reported by Bloomberg for a period of twenty (20) consecutive trading days ending on the day that is two Business Days prior to the Election Deadline. The Election Deadline is two Business Days prior to the Effective Date (which is the day of closing). The Weighted Average Trading Price of the Duke Energy Common Shares is calculated by dividing (i) the aggregate sale price of all Duke Energy Common Shares sold on the New York Stock Exchange during the period described above by (ii) the total number of Duke Energy Common Shares sold during that same period, expressed to the fourth decimal point. 2. DETERMINATION OF "DUKE ENERGY AVERAGE PRICE": The Duke Energy Average Price is calculated by multiplying (i) 1.54 by (ii) the Weighted Average Trading Price of the Duke Energy Common Shares (calculated in 1 above), expressed to the fourth decimal point. 3. DETERMINATION OF "EXCHANGE RATIO": The Exchange Ratio is calculated by dividing (i) Cdn.$43.80 by (ii) the Duke Energy Average Price (calculated in 2 above), expressed to the fourth decimal point. Notwithstanding the foregoing, in the event that the Weighted Average Trading Price of the Duke Energy Common Shares is equal to or less than $36.88, the Exchange Ratio will be 0.7711; and in the event that the Weighted Average Trading Price of the Duke Energy Common Shares is equal to or greater than $46.48, the Exchange Ratio will be 0.6119. 4. APPLICATION OF THE EXCHANGE RATIO: Each outstanding Westcoast Common Share will be transferred to, and acquired by, Exchangeco in exchange for such number of Exchangeable Shares or Duke Energy Common Shares, as the case may be, as is equal to the Exchange Ratio. The collar has the effect of providing that so long as the Weighted Average Trading Price of Duke Energy Common Shares is between $36.88 and $46.48, each holder of Westcoast Common Shares that elects or is deemed to have elected to receive stock consideration will receive Cdn.$43.80 worth of stock (subject to changes in the currency exchange ratio) for each Westcoast Common Share held by such holder in the exchange. In the event that the Weighted Average Trading Price of Duke Energy Common Shares is at or below $36.88 or at or above $46.48, holders of Westcoast Common Shares that elect or are deemed to have elected to receive stock consideration will receive stock with a value equivalent to the Exchange Ratio multiplied by the Weighted Average Trading Price of Duke Energy Common Shares as of two Business Days prior to the Election Deadline, which value may be less or more, respectively, than Cdn$43.80. EXHIBIT E Support Agreement and Voting and Exchange Trust Agreement Summary of Significant Terms Set forth below are brief summaries of the form of Support Agreement and the form of Voting and Exchange Trust Agreement attached to the Combination Agreement dated September 20, 2001 (the "Combination Agreement"), among Duke Energy Corporation ("Duke Energy"), 3058368 Nova Scotia Company ("Callco"), 3946509 Canada Inc. ("Exchangeco") and Westcoast Energy Inc. as Schedule F and Schedule G, respectively. These are summaries only. The detailed provisions in the form of Support Agreement and the form of Voting and Exchange Trust Agreement should be consulted if additional information is required. Capitalized terms not otherwise defined herein shall have the meaning ascribed to such terms in the respective agreement. FORM OF SUPPORT AGREEMENT - ---------------------------- The form of Support Agreement among Duke Energy, Callco and Exchangeco (the "Support Agreement") is primarily intended to ensure that the Exchangeable Shares to be issued by Exchangeco are economically equivalent to Duke Energy Common Shares. The Support Agreement prohibits Duke Energy from declaring any dividend on Duke Energy Common Shares or taking any other action with respect to Duke Energy Common Shares (such as a stock dividend or subdivision) unless Exchangeco pays an economically equivalent dividend on the Exchangeable Shares or takes an economically equivalent action with respect to the Exchangeable Shares. Duke Energy also agrees to do such things as are reasonably necessary or desirable to enable and permit Exchangeco and Callco, in accordance with applicable law, to meet their obligations under the Exchangeable Share Provisions and the Plan of Arrangement. Duke Energy further agrees to reserve a sufficient number of Duke Energy Common Shares to enable and permit Duke Energy, Callco and Exchangeco to meet their obligations under the Exchangeable Share Provisions, the Plan of Arrangement and the Voting and Exchange Trust Agreement to deliver Duke Energy Common Shares in connection with the exchange, redemption or retraction of Exchangeable Shares. Finally, Duke Energy agrees to remain the direct or indirect beneficial owner of all issued and outstanding voting shares in the capital of Exchangeco and Callco so long as any Exchangeable Shares not held by Duke Energy or any of its Affiliates remain outstanding. FORM OF VOTING AND EXCHANGE TRUST AGREEMENT - ------------------------------------------------- The form of Voting and Exchange Trust Agreement among Duke Energy, Exchangeco and a trustee to be designated prior to Effective Date (as defined in the Combination Agreement) (the "Voting and Exchange Trust Agreement") sets forth the mechanism by which holders of Exchangeable Shares may vote together with holders of Duke Energy Common Shares as though such holders of Exchangeable Shares were holders of Duke Energy Common Shares. Under the Voting and Exchange Trust Agreement, Duke Energy agrees to issue to the trustee from time to time a number of Duke Energy Common Shares equal to the number of Exchangeable Shares outstanding as of that time (other than Exchangeable Shares held by Duke Energy and its Affiliates). Whenever a holder of Duke Energy Common Shares is entitled to vote on a matter or sign a consent, each holder of Exchangeable Shares may instruct the trustee to vote the number of Duke Energy Common Shares equal to the number of Exchangeable Shares held by such holder in the manner instructed by such holder. Any mailings or information provided to the holders of Duke Energy Common Shares must also be provided to the holders of Exchangeable Shares as though such holders were holders of Duke Energy Common Shares. In the event that any Exchangeable Shares are exchanged, redeemed or retracted for Duke Energy Common Shares, the trustee shall concurrently therewith distribute to Duke the corresponding number of Duke Energy Common Shares so that the number of Duke Energy Common Shares held by the trustee will at all times equal the number of Exchangeable Shares outstanding. Finally, the Voting and Exchange Trust Agreement sets forth (i) an Exchange Right whereupon Duke Energy agrees to purchase (with Duke Energy Common Shares) all outstanding Exchangeable Shares upon an Insolvency Event of Exchangeco and (ii) an Automatic Exchange Right whereupon each outstanding Exchangeable Share automatically converts into a Duke Energy Common Share upon the liquidation, dissolution or winding-up of Duke Energy or the distribution of Duke Energy's assets to its shareholders. BEFORE THE PUBLIC SERVICE COMMISSION OF SOUTH CAROLINA DOCKET NO. 2001-441-E Application of Duke Energy Corporation ) for authorization under Article 13, ) DUKE ENERGY'S AMENDMENT TO Chapter 27 of Title 58 of the Code of ) APPLICATION TO INCLUDE REQUEST Laws of South Carolina, 1976 to Issue ) FOR AUTHORIZATION UNDER SOUTH Common Stock in connection with the ) CAROLINA CODE SECTION 58-27-1300 Acquisition of Westcoast Energy Inc. ) On October 12, 2001, Duke Energy Corporation ("Duke Energy") filed its application in this docket pursuant to Article 13, Chapter 27 of Title 58 of the Code of Laws of South Carolina, 1976 and the rules and regulations thereunder, for authorization to issue shares of its common stock as part of the consideration to be paid in connection with the acquisition of Westcoast Energy Inc. ("Westcoast"). As required by a letter to William F. Austin, counsel to Duke Energy, from F. David Butler, General Counsel of the Commission, dated November 16, 2001, Duke Energy hereby amends its application to include a request for approval under South Carolina Code Section 58-27-1300 of the business combination described in the original application. This amendment is filed under protest, and Duke Energy respectfully objects to and reserves an exception from Mr. Butler's letter, which required the filing of this amendment. Further, Duke Energy respectfully requests that the Commission, in its order in this Docket, either affirm or reject the position taken by Mr. Butler in his letter as to the applicability of Section 58-27-1300 to the Westcoast acquisition. A Commission order on this issue is critical to bring certainty to future transactions. Notwithstanding Duke Energy's objection and exception, and without waiver thereof, Duke Energy submits this amendment and respectfully shows unto the Commission, that, for the reasons set forth in the original application in this docket, including in particular Section 7 thereof, Duke Energy's acquisition of Westcoast as described in the application will not adversely affect Duke Energy's South Carolina retail electric rates, operations or customers. WHEREFORE, Duke Energy respectfully prays, pursuant to its application in this docket as amended hereby: A. That its acquisition of Westcoast and its issuance of common stock in the manner set forth in the application, as amended, be authorized and approved by the Commission; and B. That this Commission (i) determine that the purpose of the issue of Common Stock is proper, (ii) value the property to be acquired by the issue, and (iii) find and determine that the amount of such Common Stock prepared to be issued is reasonably necessary for the purpose for which it is to be issued; and C. That this Commission issue a certificate of authority stating: 1. The amount of such Common Stock reasonably necessary for the purpose for which it is to be issued and the character of the same; and 2. The value of the property to be acquired thereby; and D. That this Commission grant such other and further relief as it may find just and proper. Respectfully submitted, this 20th day of November, 2001. DUKE ENERGY CORPORATION ----------------------------------- Vice President and General Counsel, Duke Power [CORPORATE SEAL] 2 STATE OF NORTH CAROLINA COUNTY OF MECKLENBURG PAUL R. NEWTON, being first duly sworn, deposes and says: That he is an officer of DUKE ENERGY CORPORATION, applicant in the above-entitled Application, to wit, its Vice President and General Counsel, Duke Power; that he has read the foregoing Application and knows the contents thereof, and that the same is true of his own knowledge. ----------------------------------- Paul R. Newton Sworn to and subscribed before me this 20th day of November, 2001. - ----------------------------------- Notary Public My Commission Expires: June 26, 2006 [SEAL] 3 EX-5 6 doc5.txt Exhibit 5 BEFORE THE NEW YORK STATE PUBLIC SERVICE COMMISSION - -------------------------------------------------------------------------------- JOINT PETITION OF DUKE ENERGY CORPORATION, WESTCOAST ENERGY INC. AND 3946509 CANADA INC. FOR APPROVAL OF STOCK ACQUISITION - -------------------------------------------------------------------------------- October 15, 2001 TABLE OF CONTENTS Page ---- I. INTRODUCTION AND SUMMARY 1 II. THE COMMISSION SHOULD ACT EXPEDITIOUSLY 1 III. DESCRIPTION OF PROPOSED TRANSACTION 3 A. Terms of the Arrangement 3 B. Post Acquisition Operations and Management 4 IV. DESCRIPTION OF PETITIONERS AND EMPIRE 4 A. Duke Energy 4 B. Westcoast Energy 5 C. 3946509 Canada Inc. 5 D. Empire State Pipeline 5 V. THE ARRANGEMENT IS IN THE PUBLIC INTEREST 6 VI. REQUESTED AUTHORIZATIONS 7 VII. DESCRIPTION OF OTHER REGULATORY FILINGS 8 A. Securities and Exchange Commission 8 B. Hart-Scott-Rodino 8 C. Public Utilities Commissions - Other States 8 D. Federal Energy Regulatory Commission 9 E. Foreign Approvals 9 VIII.REQUIRED INFORMATION 9 A. Certificates of Incorporation and Board Resolutions 9 B. Organizational Charts 9 C. Financial Condition 10 D. Environmental Assessment 10 i IX. COMMUNICATIONS AND NOTICES 11 X. CONCLUSION 11 EXHIBITS EXHIBIT 1 COMBINATION AGREEMENT WITH SCHEDULES EXHIBIT 2 CERTIFICATES OF INCORPORATION 2-1 - Certified Copy of Duke Energy Corporation Certificate of Incorporation 2-2 - Certified Copy of Westcoast Energy Inc. Certificate of Incorporation 2-3 - Certified Copy of 3946509 Canada Inc. Certificate of Incorporation EXHIBIT 3 RESOLUTIONS 3-1 - Duke Energy Board Resolutions 3-2 - Westcoast Energy Board Resolutions EXHIBIT 4 ORGANIZATIONAL CHARTS 4-1 - Duke Energy 4-2 - Westcoast Energy 4-3 - Post Closing EXHIBIT 5 DUKE ENERGY STATEMENT OF FINANCIAL CONDITION 5-1 - Form 8-K (2001) 5-2 - Form 10Q (First Quarter 2001) 5-3 - Form 10K (2000) 5-4 - Annual Report (2000) EXHIBIT 6 WESTCOAST ENERGY STATEMENT OF FINANCIAL CONDITION 6-1 - Westcoast Energy Material Change Report 6-2 - Quarterly Reports (2001) 6-3 - Annual Information Form (2001) 6-4 - Annual Report (2000) 6-5 - Westcoast Energy Management Discussion & Analysis EXHIBIT 7 ENVIRONMENTAL ASSESSMENT FORM ii JOINT PETITION OF DUKE ENERGY CORPORATION, WESTCOAST ENERGY INC. AND 3946509 CANADA INC. FOR APPROVAL OF STOCK ACQUISITION I. INTRODUCTION AND SUMMARY On September 20, 2001, Duke Energy Corporation ("Duke Energy") entered into a Combination Agreement (the "Agreement") to acquire Westcoast Energy Inc. ("Westcoast Energy"). See Exhibit 1 for a copy of the transaction documents. --- Duke Energy will acquire one hundred percent (100%) of the outstanding capital stock of Westcoast Energy. As described more fully below, the shares of Westcoast Energy will be exchanged for a combination of cash, Duke Energy common shares and exchangeable shares of 3946509 Canada Inc. ("CI"), an indirect wholly-owned subsidiary of Duke Energy. Pursuant to Section 70 of the Public Service Law ("PSL"), this transaction may be subject to New York State Public Service Commission ("Commission" or "PSC") approval because subsidiaries of Westcoast Energy own the Empire State Pipeline ("Empire"), an intrastate gas pipeline located in New York State. By this Petition, Duke Energy, Westcoast Energy and CI (collectively, the "Petitioners") request authorization to effect the indirect acquisition of Empire by Duke Energy. II. THE COMMISSION SHOULD ACT EXPEDITIOUSLY Petitioners respectfully request that the PSC process the instant Petition and approve the transaction on an expedited basis. In its January 29, 2001 Untitled Order approving the acquisition of stock(1), the PSC Staff recommended approval of such acquisition within 60 days of the filing of the petition ("Untitled Order")(2). There have been no material adverse changes involving Westcoast Energy or Empire since that time, and the PSC certainly is familiar with the financial strength and operational capabilities of Duke Energy as a result of its indirect ownership of Texas Eastern Transmission Corporation and Algonquin Gas Transmission Company. Therefore, it should be feasible to conclude the review of this Petition and grant approval within a similarly expeditious time frame. Indeed, because this transaction involves an extremely indirect acquisition of Empire, Westcoast Energy is the great-great-great-great-great-grandparent of Empire, and requires no jurisdictional changes in the structure or operations of Empire, the level of scrutiny that might be required for a complex, extensive acquisition, merger or restructuring or for entities that are not familiar to the PSC is not warranted here. Further, approval of this Petition will not have any adverse impact on the rates, services or operations of Empire, nor will it affect the Commission's regulatory authority over Empire. Accordingly, Petitioners request that approval of the transactions contemplated by the Agreement pursuant to Section 70, together with any other authorization the PSC - ------------------------------ (1) See Case 00-M-1988, Petition of Empire State Pipeline on its Own Behalf and --- on Behalf of its Co-tenants Empire State Pipeline Company, Inc. and St. Clair Pipeline Company, Inc. for Approval of Empire State Pipeline Company's Transfer of its Stock and Co-tenant Interests in Empire State Pipeline's Certificate of Environmental Compatibility and Public Need to an Affiliate of St. Clair Pipeline Company, Westcoast Energy Enterprises (U.S.) Inc., Untitled Order -------------- (issued January 29, 2001). The acquisition was completed on March 27, 2001. (2) The Commission considered the Staff's recommendation and approved it at the January 24, 2001 session. 2 may determine to be required, be granted no later than at the Commission's December 2001 public session, now scheduled for December 19th. III. DESCRIPTION OF PROPOSED TRANSACTION A. TERMS OF THE ARRANGEMENT Duke Energy will acquire all of the outstanding capital stock of Westcoast Energy in exchange for a combination of cash, Duke Energy common stock and exchangeable shares of CI, the wholly-owned Canadian subsidiary of Duke Energy, such that fifty percent (50%) of the consideration will be paid in cash and fifty percent (50%) will be paid in stock. At the present time, Duke Energy does not hold any capital stock or other securities of Westcoast Energy. The proposed acquisition will be accomplished in accordance with the Plan of Arrangement which is attached as Schedule E to the Agreement set forth in Exhibit 1. Under the terms of the arrangement, each share of Westcoast Energy common stock will be exchanged, at the election of each shareholder,(3) for (i) Canadian $43.80 in cash or (ii) a portion of a share, based on an exchange ratio,(4) of Duke Energy common stock or exchangeable shares of a wholly-owned Canadian subsidiary of Duke Energy - --------------------------- (3) Dissenting shareholders have the rights set out in the transaction documents. (4) Exchange ratio means the number, calculated to four decimal places, equal to Canadian $43.80 divided by the Duke Energy Average Price. The Duke Energy Average Price means 1.54 multiplied by the Weighted Average Trading Price of the Duke Energy common stock. The Weighted Average Trading Price of Duke Energy common stock is the amount determined by dividing the aggregate sale price of all Duke Energy common stock sold on the New York Stock Exchange for the 20 consecutive trading days ending on the day that is two (2) business days prior to the election deadline by the total number of Duke Energy common stock sold on the New York Stock Exchange during such period. If the Weighted Average Trading Price of Duke Energy common stock is equal to or less than $36.88, the exchange ratio shall be 0.7711, and if such price is equal to or greater than $46.48 the exchange ratio shall be 0.6119. See Agreement, Schedule E. --- 3 that are exchangeable for Duke Energy common stock or(iii) a combination of such consideration. Elections to receive cash, stock or a combination will be subject to proration so that the overall consideration will consist of approximately fifty percent (50%) cash and approximately fifty percent (50%) stock. The exchange ratio for shares of Westcoast Energy exchanged for stock will be determined based on the 20-day weighted average trading price of Duke Energy common stock during a trading period prior to the closing of the acquisition. A Westcoast Energy shareholder who is a Canadian resident can elect either Duke Energy common stock or, for tax deferral purposes, exchangeable stock of CI. If a Westcoast Energy shareholder is not a Canadian resident, any such shareholder electing stock consideration may only elect Duke Energy common stock. B. POST ACQUISITION OPERATIONS AND MANAGEMENT Upon completion of the acquisition, Empire will continue to be owned by Empire State Pipeline Company, Inc. ("ESPC") and St. Clair Pipeline Company, Inc. ("St. Clair") and operated by ESPC, and will be subject to the continuing jurisdiction of the PSC. ESPC and St. Clair will continue to be owned by Westcoast Energy Enterprises (U.S.) Inc. ("WEE"). IV. DESCRIPTION OF PETITIONERS AND EMPIRE A. DUKE ENERGY Duke Energy, headquartered in Charlotte, North Carolina, is a multinational energy company, which owns and manages an extensive portfolio of natural gas and electric supply, delivery and trading businesses. Duke Energy's areas of expertise also include risk management, gas and power development, portfolio management, acquisition 4 and management of energy facilities, and processing, producing and storing of gas liquids, crude oil and refined products. B. WESTCOAST ENERGY Westcoast Energy, a Canadian corporation headquartered in Vancouver, British Columbia, is a leading natural gas company in North America, engaged in the purchase, distribution and transportation of natural gas, and operates major transmission linkages from Canada into northeastern United States markets. In addition, Westcoast Energy provides a variety of other services, including, energy marketing services, retail energy services, information technology services and financial services. WEE is an indirect wholly-owned subsidiary of Westcoast Energy, and ESPC and St. Clair are wholly-owned subsidiaries of WEE.(5) C. 3946509 CANADA INC. CI is a Canadian corporation formed by Duke Energy solely for the purpose of completing the acquisition of Westcoast Energy. Such corporation provides Canadian residents the opportunity for a tax-deferred exchange of Westcoast Energy common stock for exchangeable shares of CI. CI has no employees or business operations. D. EMPIRE STATE PIPELINE Empire, a regulated intrastate gas transmission pipeline extending from Buffalo to Syracuse, began operating in 1993, and provides natural gas to major industrial companies, utilities and power producers in the western New York area. As noted above, Empire is owned by ESPC and St. Clair, which are in turn owned by WEE. On January 29, 2001, the Commission approved the sale of the stock of ESPC to WEE.(6) Empire is - --------------------------- (5) See Untitled Order. --- (6) See id. --- --- 5 operated pursuant to a Certificate of Environmental Compatibility and Public Need which is and will continue to be held by Empire. V. THE ARRANGEMENT IS IN THE PUBLIC INTEREST Empire, operated by ESPC, was certificated by the PSC on the basis of, inter alia, the need for additional pipeline capacity in Western New York, and the introduction of competition and choices in the transportation of natural gas to western and central New York. ESPC has operated Empire to those ends. Duke Energy's acquisition of Westcoast Energy, and its indirect acquisition of Empire, is in the public interest in that it will cause no adverse impact for Empire's customers. This acquisition will support the continued development of competitive markets. In the last few years, the PSC and industry participants have been involved in the transition to competitive electric and gas wholesale and retail markets in New York State. This acquisition, which will combine Westcoast Energy's strategically placed assets in growing supply regions with Duke Energy's aggressive merchant skills, market knowledge and desire to be a leader in the development of new transportation infrastructure will strengthen the connection between the energy supply and energy markets in Canada and the United States thereby enhancing development of competitive markets. Further, when the transaction is completed, the acquisition presents employees with the opportunity to enhance their careers as a result of being part of a growth-oriented, well-managed multinational energy services company. Safety, as well as reliability, may be enhanced with the integration of operations. Optimal work crew deployment and the availability of a larger pool of resources can only help Empire to overcome operational difficulties more efficiently and expeditiously. 6 The combination of the factors mentioned above, can lead only to the conclusion that the proposed acquisition is in the public interest. Petitioners are confident that, upon examination of this Petition, the Commission will concur and grant its approval. VI. REQUESTED AUTHORIZATIONS The Petitioners request approval of this transaction pursuant to Section 70 of the PSL. Specifically, the Petitioners seek the PSC's consent to the indirect acquisition of one hundred percent (100%) of Empire, as described in this Petition. Because of the indirect nature of Duke Energy's acquisition of Empire, the fact that no structural change in Empire is contemplated, and that the regulated entity is neither issuing stock nor undertaking long-term debt in connection with the transaction, the Petitioners believe that no additional Commission approvals are required. In the event, however, that any approvals should be required, the Petitioners request the Commission to issue such authorization as part of its action on this Petition. To proceed with this transaction, the Petitioners are required to seek and obtain other authorizations from a number of regulatory, governmental and other agencies and entities located in the United States, Canada and Mexico. Some of those agencies and entities may defer issuing approvals until after the Commission issues its consent. Consequently, a delay in the PSC's treatment of this Petition may result in delays in receiving other required approvals or authorizations. It is critical, therefore, that the PSC process and approve this Petition expeditiously. Petitioners are prepared to cooperate 7 with the PSC and to comply with an appropriate schedule to create an appropriate record for Commission action in December 2001.(7) VII. DESCRIPTION OF OTHER REGULATORY FILINGS To effectuate the transaction, certain other regulatory approvals must be sought and obtained. They include the following: A. SECURITIES AND EXCHANGE COMMISSION Duke Energy is required to obtain approval from the SEC prior to effectuating the transaction under Section 3(b) of the Public Utilities Holding Company Act ("PUHCA"), exempting public utility subsidiary companies with the result being that Duke Energy will be an exempt holding company under PUHCA. B. HART-SCOTT-RODINO Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, the transaction may not be consummated until the necessary notifications and report forms have been filed with the United States Department of Justice and the Federal Trade Commission, and the statutorily prescribed waiting periods have expired. C. PUBLIC UTILITIES COMMISSIONS - OTHER STATES Aside from seeking approval from the PSC, Duke Energy is required to petition for authority to issue stock in connection with the transaction from the Public Service Commission of South Carolina and the North Carolina Utilities Commission in accordance with the respective statutes of those states. - ------------------------- (7) Petitioners are anticipating closing the transaction in January, 2002 and will need Commission approval not later that December, 2001 to meet such deadline, particularly if other agencies delay their approvals until all required regulatory approvals have been received. 8 D. FEDERAL ENERGY REGULATORY COMMISSION Petitioners are currently reviewing the necessity of filing for authority to transfer a power marketing certificate under Section 203 of the Federal Power Act, and if it is determined that a filing is required, an appropriate application will be made. E. FOREIGN APPROVALS The transaction discussed herein is subject to approvals by various governmental and regulatory agencies in Canada and Mexico, including the Canadian Competition Bureau for antitrust review, the British Columbia Utilities Commission for approval to acquire the stock of Westcoast Energy and the Mexico Competition Commission for antitrust review. VIII. REQUIRED INFORMATION A. CERTIFICATES OF INCORPORATION AND BOARD RESOLUTIONS Petitioners submit, pursuant to Section 17.1 et seq. of Title 16 of the New York Code, Rules and Regulations ("NYCRR"), the certificates of incorporation and board resolutions authorizing Petitioners to enter into the Agreement. Attached hereto and made a part hereof as Exhibit 2 are the certificates of incorporation, and all amendments thereto of Duke Energy, Westcoast Energy and CI. The board resolutions of Duke Energy and Westcoast Energy are attached hereto and made a part hereof as Exhibit 3. B. ORGANIZATIONAL CHARTS Attached as Exhibit 4 are the abbreviated current corporate structures of Duke Energy and Westcoast Energy, and the abbreviated proposed corporate structure of Duke Energy subsequent to the consummation of the transaction. 9 C. FINANCIAL CONDITION In support of this Petition, and pursuant to Section 31.1 et seq. of Title 16 of the NYCRR, the documents reflecting the financial conditions of Duke Energy and Westcoast Energy are attached hereto and made a part hereof as Exhibit 5 and Exhibit 6, respectively. D. ENVIRONMENTAL ASSESSMENT Petitioners submit, that, aside from approval by the Commission of the transaction which is the subject of this Petition, no other New York State or local permits or approvals are required. Under the State Environmental Quality Review Act ("SEQRA")(8) transfer of stock does not meet the definitions of either Type I or Type II actions, and, therefore, it is properly classified as an "unlisted" action requiring SEQRA review. Accordingly, it is proper for the Commission as lead agency to conduct an environmental assessment and to determine the significance of the actions proposed. To facilitate such assessment, attached hereto and made a part hereof as Exhibit 7 is a completed short environmental assessment form describing and disclosing the likely impact of the proposed transactions. There will be no change to the operation of Empire, and, therefore, no action is proposed that would result in a significant adverse environmental impact. Petitioners respectfully submit that the actions proposed by this Petition will not have a significant effect on the environment based on the criteria for determining significance listed in Section 617.7(c) of Title 6 of the NYCRR, and request the Commission to issue pursuant to SEQRA a determination of non-significance for this transaction. - ---------------------------- (8) New York Environmental Conservation Law, Article 8 (McKinney 1997). 10 IX. COMMUNICATIONS AND NOTICES All communications and notices in relation to this proceeding should be addressed to: (1) Richard J. Kruse, Senior Vice President, Duke Energy Gas Transmission Corporation, 5400 Westheimer Ct., Houston, Texas 77056, whose telephone number is (713) 627-5368; (2) William J. Cronin, Esq., c/o Huber Lawrence & Abell, 605 Third Avenue - 27th Floor, New York, New York 10158, whose telephone number is (212) 455-5506 and email address is Wcronin@huberlaw.com; -------------------- and (3) Adam Wenner, Esq., c/o Vinson & Elkins L.L.P., 1455 Pennsylvania Avenue, N.W., The Willard Office Building, Washington, D.C. 20004-1005, whose telephone number is (202) 639-6533 and email address is awenner@velaw.com. ----------------- X. CONCLUSION The indirect acquisition of Empire by Duke Energy will provide tangible benefits to customers of Empire. In addition to providing a stronger base to support the operations of Empire, this combination will enable the companies to maximize their human and physical resources to maintain, on both a routine and an emergency basis, the utility systems that serve markets in both Canada and the United States, and to continue providing service at stable rates. An expeditious treatment of this Petition would more quickly provide the customers of Duke Energy, Empire and Westcoast Energy the benefits described in this Petition. It is critical, therefore, that the PSC act promptly on this application. A schedule calling for a decision to be made at the Commission's regularly scheduled December 2001 public session would provide a full opportunity for review. 11 For these and all of the other reasons presented in this Petition, the Petitioners respectfully submit that this transaction is in the public interest and that an Order granting the Commission's consent, together with any other necessary authorizations, should be issued expeditiously. Respectfully submitted, ------------------------------- Huber Lawrence & Abell Attorneys for Joint Petitioners William J. Cronin, Esq. Rosa Pietanza, Esq. Huber Lawrence & Abell 605 Third Avenue New York, NY 10158 (212) 682-6200 12 DUKE ENERGY CORPORATION (before combination) --------------------------------- | DUKE ENERGY CORPORATION | --------------------------------- | 100% --------------------------------- 100% | DUKE CAPITAL CORPORATION | --------------------------------- - --------------------------------- | | 3059703 NOVA SCOTIA COMPANY | | 90% - --------------------------------- | 10% --------------------------------- | 3058368 NOVA SCOTIA COMPANY | --------------------------------- | 100% --------------------------------- | 3946509 CANADA INC | --------------------------------- WESTCOAST ENERGY INC. (before combination) --------------------------------- | WESTCOAST ENERGY INC. | --------------------------------- | 100% --------------------------------- | WESTCOAST GAS HOLDINGS INC. | --------------------------------- | 100% --------------------------------- | WESTCOAST GAS INC. | --------------------------------- | 100% --------------------------------- | UEI HOLDINGS INC. | --------------------------------- | 100% --------------------------------- | WESTCOAST ENTERPRISE | | HOLDINGS LIMITED | --------------------------------- | 100% --------------------------------- | WESTCOAST ENERGY | | ENTERPRISES | | (U.S.) INC. | --------------------------------- | 100% | 100% ------------------------ ------------------------ | EMPIRE STATE | | ST. CLAIRE | | PIPLINE | | PIPELINE | | COMPANY, INC. | | COMPANY, INC. | ------------------------ ------------------------ 50% | | 50% --------------------------------- | EMPIRE STATE | | PIPELINE | --------------------------------- DUKE ENERGY CORPORATION (after combination) --------------------------------- | DUKE ENERGY CORPORATION | --------------------------------- | 100% --------------------------------- | DUKE CAPITAL CORPORATION | 100% --------------------------------- - --------------------------------- | | 3059703 NOVA SCOTIA COMPANY | | 90% - --------------------------------- | 10% --------------------------------- | 3058638 NOVA SCOTIA COMPANY | --------------------------------- | 100% --------------------------------- | 3946509 CANADA INC | --------------------------------- | 100% --------------------------------- | WESTCOAST ENERGY INC. | --------------------------------- | 100% --------------------------------- | WESTCOAST GAS HOLDINGS INC. | --------------------------------- | 100% --------------------------------- | WESTCOAST GAS INC. | --------------------------------- | 100% --------------------------------- | UEI HOLDINGS INC. | --------------------------------- | 100% --------------------------------- | WESTCOAST ENTERPRISE | | HOLDINGS LIMITED | --------------------------------- | 100% --------------------------------- | WESTCOAST ENERGY | | ENTERPRISES | | (U.S.) INC. | --------------------------------- 100% | | 100% ----------------- ----------------- | EMPIRE STATE | | ST. CLAIRE | | PIPLINE | | PIPELINE | | COMPANY, INC. | | COMPANY, INC. | ----------------- ----------------- 50% | | 50% ----------------------------- | EMPIRE STATE | | PIPELINE | ----------------------------- 14-16-4 (11195)-Text 12 SEQR - ----------------------------- |PROJECT I.D. NUMBER | | | - ----------------------------- 617.20 Appendix C State Environmental Quality Review SHORT ENVIRONMENTAL ASSESSMENT FORM For UNLISTED ACTIONS Only PART I-PROJECT INFORMATION (To be completed by Applicant or Project sponsor) - -------------------------------------------------------------------------------- 1. APPLICANT /SPONSOR Duke Energy Corporation Westcoast Energy Inc., 3946509 Canada Inc. - -------------------------------------------------------------------------------- 2. PROJECT NAME Duke Energy Corporation Acquisition of stock of Westcoast Energy, Inc. - -------------------------------------------------------------------------------- 3. PROJECT LOCATION: See Attachment Items 3 and 4 See Attachment Items 3 and 4 Municipality County - -------------------------------------------------------------------------------- 4. PRECISE LOCATION (Street address and road intersections, prominent landmarks, etc., or provide map) See Attachment Items 3 and 4 - -------------------------------------------------------------------------------- 5. IS PROPOSED ACTION: [X] New [ ] Expansion [ ] Mortification/alteration - -------------------------------------------------------------------------------- 6. DESCRIBE PROJECT BRIEFLY: The proposed action is a request for Public Service Commission approval of the sale of Westcoast Energy Inc. capital stock to Duke Energy Corporation and 3946509 Canada Inc., and such other approvals as the Commission deems necessary. There are no planned sales of any existing facilities presently held by Empire State Pipeline, and no construction of new facilitties is planned in connection with the transaction. - -------------------------------------------------------------------------------- 7. AMOUNT OF LAND AFFECTED: Initially N/A acres N/A Ultimately N/A acres ----------- ----------- - -------------------------------------------------------------------------------- 8. WILL PROPOSED ACTION COMPLY WITH EXISTING ZONING OR OTHER EXISTING LAND USE RESTRICTIONS? The propsed action is [X] Yes [ ] No If No, describe briefly administrative in nature. It does not involve construction of new facilities or the alteration or removal of existing facilities. No short-term, long-term or adverse impacts to the land will occur as a result of the transaction. Empire State Pipeline will maintain existing permits, licenses and approvals. - -------------------------------------------------------------------------------- 9. WHAT IS PRESENT LAND USE IN VICINITY OF PROJECT? [ ] Residential [ ] Industrial [ ] Commercial [ ] Agriculture [ ] Park/Forest/Open space [ ] Other Describe: Not Applicable - -------------------------------------------------------------------------------- 10. DOES ACTION INVOLVE A PERMIT APPROVAL, OR FUNDING, NOW OR ULTIMATELY FROM ANY OTHER GOVERNMENTAL AGENCY (FEDERAL, STATE OR LOCAL)? [X] Yes [ ] No If yes, list agency(s) and permit approvals See Attachment Item 10 - -------------------------------------------------------------------------------- 11. DOES ANY ASPECT OF THE ACTION HAVE A CURRENTLY VALID PERMIT OR APPROVAL? [X] Yes [ ] No If yes, list agency name and permit approval See Attachment Item 11 - -------------------------------------------------------------------------------- 12. AS A RESULT OF PROPOSED ACTION WILL EXISTING PERMIT/APPROVAL REQUIRE MODIFICATION? [ ] Yes [X] No - -------------------------------------------------------------------------------- I CERTIFY THAT THE INFORMATION PROVIDED ABOVE IS TRUE TO THE BEST OF MY KNOWLEDGE Applicant/sponsor name: Duke Energy Corporation, Westcoast Energy Inc. and -------------------------------------------------------- 3946509 Canada Inc. Date: October 12, 2001 - --------------------- ----------------------- Signature: -------------------------------------------------------------------- ---------------------------------------------------------------- | If the action is in the Coastal Area, and you are | | a state agency, complete the Coastal Assessment | | Form before proceeding with this assessment | ---------------------------------------------------------------- OVER 1 PART II-ENVIRONMENTAL ASSESSMENT (To be completed by Agency) - -------------------------------------------------------------------------------- A. DOES ACTION EXCEED ANY TYPE 1 THRESHOLD IN 6 NYCRR PART 617.4? It yes, coordinate the review process and use the FULL EAF. [ ] Yes [ ] No - -------------------------------------------------------------------------------- B. WILL ACTION RECEIVE COORDINATED REVIEW AS PROVIDED FOR UNLISTED ACTIONS IN 6 NYCRR, PART 617.6? If No, a negative declaration may be superseded by another involved agency. [ ] Yes [ ] No - -------------------------------------------------------------------------------- C. COULD ACTION RESULT IN ANY ADVERSE EFFECTS ASSOCIATED WITH THE FOLLOWING: (Answers may be handwritten, if legible) C1. Existing air quality, surface or groundwater quality or quantity, noise levels, existing traffic patterns, solid waste production or disposal, potential for erosion, drainage or flooding problems? Explain briefly: C2. Aesthetic agricultural, archaeological, historic, or other natural or cultural resources; or community or neighborhood character? Explain briefly: C3. Vegetation or fauna, fish, shellfish or wildlife species, significant habitats, or threatened or endangered species? Explain briefly: C4. A community's existing plans or goals as officially adopted, or a change in use or intensity of use of land or other natural resources? Explain briefly C5. Growth, subsequent development, or related activities likely to be induced by the proposed action? Explain briefly. C6. Long term, short term, cumulative, or other effects not identified in C1-C5? Explain briefly. C7. Other impacts (including changes in use of either quantity or type of energy)? Explain briefly. - -------------------------------------------------------------------------------- D. WILL THE PROJECT HAVE AN IMPACT ON THE ENVIRONMENTAL CHARACTERISTICS THAT CAUSED THE ESTABLISHMENT OF A CEA? [ ] Yes [ ] No - -------------------------------------------------------------------------------- E. IS THERE, OR IS THERE LIKELY TO BE, CONTROVERSY RELATED TO POTENTIAL ADVERSE ENVIRONMENTAL IMPACTS? [ ] Yes [ ] No If Yes, explain briefly - -------------------------------------------------------------------------------- PART III-DETERMINATION OF SIGNIFICANCE (To be completed by Agency) INSTRUCTIONS: For each adverse effect identified above, determine whether it is substantial, large, important or otherwise significant. Each effect should be assessed in connection with its (a) setting (i.e. urban or rural); (b) probability of occurring; (c) duration; (d) irreversibility; (e) geographic scope; and (f) magnitude. If necessary, add attachments or reference supporting materials. Ensure that explanations contain sufficient detail to show that all relevant adverse impacts have been identified and adequately addressed. If question D of Part II was checked yes, the determination and significance must evaluate the potential impact of the proposed action on the environmental characteristics of the CEA. - -------------------------------------------------------------------------------- [ ] Check this box if you have identified one or more potentially large or significant adverse impacts which MAY occur. Then proceed directly to the FULL EAF and/or prepare a positive declaration. [ ] Check this box if you have determined, based on the information and analysis above and any supporting documentation, that the proposed action WILL NOT result in any significant adverse environmental impacts AND provide on attachments as necessary, the reasons supporting this determination: ----------------------------------------------------------------------- Name of Lead Agency ----------------------------------------------------------------------- Print or Type Name of Responsible Officer in Lead Agency ----------------------------------------------------------------------- Title of Responsible Officer ----------------------------------------------------------------------- Signature of Responsible Officer in Lead Agency ----------------------------------------------------------------------- Signature of Preparer (if different from responsible officer) ----------------------------------------------------------------------- Date ATTACHMENT TO SEQR SHORT FORM DUKE ENERGY CORPORATION ACQUISITION OF WESTCOAST ENERGY INC. SEQR FORM ITEMS 3 AND 4 Duke Energy Corporation, a North Carolina corporation, is a multinational energy company which owns and manages a portfolio of natural gas and electric supply, delivery and trading businesses. Westcoast Energy Inc., a Canadian corporation, is a leading natural gas company engaged in the purchase, sale, distribution and transportation of natural gas and electric power generation and operates major transmission interconnections from Canada into the United States. Through a series of subsidiaries, Westcoast Energy indirectly owns the Empire State Pipeline. Empire State Pipeline is an intrastate regulated gas transmission pipeline, certificated by the Public Service Commission, extending approximately 157 miles eastward from a point of interconnection on the border with Canada located in the Niagara River, Town of Grand Island, Erie County, to the Town of Schroeppel, Oswego County. 3946509 Canada Inc., a Canadian corporation, is a wholly-owned subsidiary of Duke Energy Corporation formed solely for the purpose of facilitating the acquisition of Westcoast Energy stock from Canadian residents. SEQR Form Item 10 Petitions will be made individually and jointly, as appropriate, for approval of the acquisition of stock to the following agencies of the United States, Canada and Mexico: New York State Public Service Commission Securities and Exchange Commission Hart-Scott Rodino (Federal Trade Commission and Department of Justice) North Carolina Utilities Commission South Carolina Public Service Commission Federal Energy Regulatory Commission ("FERC")(1) Supreme Court of British Columbia Investment Review Division of Industry Canada And Minister of Industry Competition Bureau of Canada British Columbia Utilities Commission Mexico Federal Competition Commission - ---------------------- (1) Petitioners are currently considering whether FERC approval for the transfer of a power marketing certificate is necessary. SEQR Form Item 11 The Public Service Commission, in Opinion No. 91-3, issued March 1, 1991, granted a Certificate of Environmental Compatibility and Public Need ("Certificate") for the operation of the Empire State Pipeline. The acquisition will not affect the operation of the Empire State Pipeline or change the holder of the Certificate. Empire State Pipeline will continue to operate in accordance with the Certificate and any other Federal, State or local permitting and regulatory requirements. EX-6 7 doc6.txt EXHIBIT 6 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM U-57 NOTIFICATION OF FOREIGN UTILITY COMPANY STATUS Filed Under Section 33(a) of the Public Utility Holding Company Act of 1935, as amended Electroquil, S.A. Duke Energy International Cia. Ltda. Duke Energy Electroquil Partners ------------------------------------ (Name of foreign utility company) DUKE ENERGY CORPORATION -------------------------------------------- (Name of filing company, if filed on behalf of a foreign utility company) Notification Duke Energy Corporation, a North Carolina corporation ("Duke Energy"), acting on behalf of Electroquil, S.A., an Ecuadorian corporation ("Electroquil"), Duke Energy International Cia. Ltda., an Ecuadorian limited liability company ("DEI"), and Duke Energy Electroquil Partners, a Delaware general partnership ("DEEP"), herewith files with the Securities and Exchange Commission (the "Commission") this Notification of Foreign Utility Company Status pursuant to Section 33(a) of the Public Utility Holding Company Act of 1935, as amended (the "Act"). ITEM 1 Names and Business Addresses: The names and business addresses of the entities claiming foreign utility company status are: Electroquil, S.A. Km. 19 Via a la Costa Guayaquil, Republica del Ecuador Duke Energy International Cia. Ltda. Km. 19 Via a la Costa Guayaquil, Republica del Ecuador Duke Energy Electroquil Partners 5400 Westheimer Court Houston, Texas 77056-5310 Facilities: The Facilities consist of a 168 megawatt, diesel- fired power generation facility located near Guayaquil, Ecuador. Electroquil sells electricity to Inecel, Ecuador's state power utility, under long-term power purchase agreements. Ownership: The outstanding voting stock of Electroquil is owned 51.500% by DEI, which is a wholly owned subsidiary of DEEP. A 1% interest in DEEP is owned by Duke Energy Services, Inc., a Delaware corporation ("DESI"), with the remaining 99% interest in DEEP being owned by Duke Energy Global Asset Development, Inc., a Nevada corporation and a wholly owned subsidiary of DESI. DESI is a wholly owned subsidiary of PanEnergy Corp, a Delaware corporation, which is a wholly owned subsidiary of Duke Capital Corporation, a Delaware corporation, which, in turn, is a wholly owned subsidiary of Duke Energy. The other persons or entities that own 5% or more of any class of the voting securities of Electroquil are: Ing. Oscar Orrantia Vernaza (8.600%) and Ing. Carlos Tama Corral (6.009%). 2 ITEM 2 Domestic Associate Public-Utility Companies of Electroquil, DEI and DEEP and their Relationship to Such Entities: Duke Energy and Nantahala Power and Light Company ("Nantahala") are domestic associate public-utility companies of Electroquil, DEI and DEEP, with Duke Energy being the parent holding company. Duke Energy's relationship to each of Electroquil, DEI and DEEP is that it indirectly owns 51.500%, 100% and 100%, respectively, of such entities. Nantahala is a wholly owned public-utility subsidiary of Duke Energy. Nantahala will not be involved in any way in the ownership, management, operation, or maintenance of the Electroquil facility. The purchase price of DEI's interest in Electroquil is $45 million. Exhibit A: Documents filed herewith: (1) North Carolina Utilities Commission certification letter dated June 23, 1997. (2) The Public Service Commission of South Carolina certification letter dated June 5, 1997. 3 SIGNATURE The undersigned company has duly caused this statement to be signed on its behalf by the undersigned thereunto duly authorized. DUKE ENERGY CORPORATION By: /s/ Richard J. Osborne ------------------------------- Richard J. Osborne Executive Vice President and Chief Financial Officer Date: July 15, 1998 4 (1) STATE OF NORTH CAROLINA UTILITIES COMMISSION Post Office Box 29510 Raleigh, NC 27626-0510 June 23, 1997 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Dear Sirs: We submit this letter to you pursuant to Section 33(a)(2) of the Public Utility Holding Company Act of 1935, as amended (the Act), which provides an exemption for foreign utility companies from certain provisions of the Act. The North Carolina Utilities Commission hereby certifies to you that it has the authority and resources to protect ratepayers subject to its jurisdiction and that it intends to exercise its authority. The North Carolina Utilities Commission has jurisdiction over the retail electric rates of Duke Power Company (to be renamed Duke Energy Corporation) and Nantahala Power & Light Company, each of which is a public utility company as such term is defined in the Act. Sincerely, /s/ Jo Anne Sanford Jo Anne Sanford Chair 5 (2) The Public Service Commission State of South Carolina June 5, 1997 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Dear Sirs: This letter is submitted to you pursuant to Section 33(a)(2) of the Public Utility Holding Company Act of 1935, as amended (the Act), which provides an exemption for foreign utility companies from certain provisions of the Act. The Public Service Commission of South Carolina hereby certifies to you that it has the authority and resources to protect ratepayers subject to its jurisdiction and that it intends to exercise its authority. We have jurisdiction over the retail electric rates of Duke Power Company (to be renamed Duke Energy Corporation), which is a public utility company as such term is defined in the Act. Sincerely, /s/ Guy Butler GUY BUTLER CHAIRMAN 6 -----END PRIVACY-ENHANCED MESSAGE-----