EX-99.D12 9 h92233ex99-d12.txt APPLICATION TO THE OKLAHOMA COMMISSION EXHIBIT D-12 BEFORE THE CORPORATION COMMISSION OF OKLAHOMA IN THE MATTER OF THE APPLICATION ) OF RELIANT ENERGY ARKLA, A ) DIVISION OF RELIANT ENERGY ) RESOURCES CORP., FOR APPROVAL ) CAUSE NO. PUD_____________ OF A TRANSFER OF PROPERTY AS ) PART OF A CORPORATE ) RESTRUCTURING ) APPLICATION COMES NOW Reliant Energy Arkla, a division of Reliant Energy Resources Corp. ("Arkla" or "Applicant"), pursuant to the provisions of Oklahoma Administrative Code Section 165:45-3-5, and advises the Commission that there will be a corporate restructuring of the holding company system of which Arkla is a part. Applicant requests that the Commission issue an order granting such consents, approvals, and authorizations as may be required by the Commission's rules and regulations, to permit consummation of the transactions contemplated as part of the restructuring. In support of its Application, Applicant states as follows: THE APPLICANT 1. (a) Arkla is a natural gas distribution division of Reliant Energy Resources Corp. ("RERC"), operating over 2,738 miles of distribution main and serving approximately 111,000 residential, commercial, and industrial customers through facilities located in the State of Oklahoma. As such, Arkla is a public utility within the meaning of Okla. Stat. Ann. tit. 17 Section 151, and is subject to the jurisdiction of the Commission. Arkla's principal place of business and headquarters are located in Lawton, Oklahoma, and Houston, Texas, respectively. A certified copy of its Articles of Incorporation, with amendments, is on file with the Commission. -1- (b) Arkla's full name and address are: Reliant Energy Arkla, a division of Reliant Energy Resources Corp. 401 West Capitol Avenue Post Office Box 751 Little Rock, AR 72203 (c) The names, addresses, and telephone numbers of Arkla's attorneys are: Kenny W. Henderson Senior Counsel Reliant Energy Arkla, a division of Reliant Energy Resources Corp. 401 West Capitol Avenue P. O. Box 751 Little Rock, AR 72203 (501) 377-4850 Jack P. Fite White, Coffey, Galt & Fite, P.C. 6520 North Western, Suite 300 Oklahoma City, OK 73116 (405) 842-7545 (d) An Annual Report to Shareholders and Form 10-K of Reliant Energy, Incorporated, Arkla's ultimate parent, are attached to this Application as Exhibits A and B, respectively. ALLEGATION OF FACTS 2. RERC is a wholly-owned subsidiary of Reliant Energy, Incorporated ("REI"). REI is a Texas holding company, exempt from registration under the Public Utility Holding Company Act of 1935 (the "Act") pursuant to Section 3(a)(2) of the Act, 15 USCA Section 79c(a)(2). REI currently provides electric generation, transmission, and distribution service to customers in Texas through its unincorporated Reliant Energy HL&P division. In connection with the restructuring of the electric industry in Texas, REI is proposing a corporate restructuring, including the formation of a new, exempt holding company, to be called CenterPoint Energy, Inc. ("Regco") over REI's existing electric and gas utility operations, and the reorganization of -2- the utility operations along functional and geographic lines. As part of that reorganization, it is proposed that Arkla will become a stand alone corporation. Each of the other two divisions of RERC that operate as natural gas utilities in other states(1) will also become stand alone corporations. For tax purposes, Regco will hold Arkla and the other two utilities through a single-member limited liability company, Utility Holding, LLC. These restructurings are described in detail in the Form U-1/A Amendment No. 1 filed with the Securities and Exchange Commission on October 26, 2001, attached as Exhibit C, and the Master Separation Agreement attached as Exhibit D. 3. The corporate restructuring is being undertaken to comply with the requirements of Texas law that electric utilities separate their generation, transmission and distribution, and retail activities, in preparation for full retail competition in the electric industry in Texas beginning January 1, 2002. The corporate restructuring will be accomplished in a manner that will, after completion of the restructuring, permit Regco to be an exempt holding company under Section 3(a)(1) of the Act. 4. REI has formed Regco as a wholly-owned subsidiary. After conveying its electric assets to a new wholly-owned limited partnership subsidiary, REI will merge with a newly formed subsidiary of Regco, and Regco will then be the holding company for the regulated businesses, including RERC. REI will then provide only electric transmission and distribution service and will be a regulated utility in Texas. 5. After obtaining the approvals necessary from this Commission, and from the other state commissions having jurisdiction over the other natural gas utility divisions of RERC, the second step of the restructuring -- the separation of the three divisions of RERC into separate ---------- (1) Minnegasco provides natural gas service in Minnesota, and Entex provides service in Texas, Louisiana, and Mississippi. -3- entities -- will occur. Two new Delaware corporations, CenterPoint Arkla, Inc. ("New Co.") and CenterPoint Minnegasco, Inc., will be formed. Those two new companies will issue stock, all of which will be owned by Utility Holding, LLC, whose stock will, in turn, be owned by Regco. New Co.'s issuance of stock will not create a lien on, or otherwise encumber, any utility assets in Oklahoma. The RERC assets that are currently used by Arkla and Minnegasco, and the business of each of the companies, will be contributed to New Co. and CenterPoint Minnegasco, Inc., respectively. 6. After the assets and business of Arkla and Minnegasco are contributed to the two newly organized companies, the assets remaining in RERC will be those of Entex. RERC will be renamed "Entex" and will be reincorporated as a Texas corporation. 7. The existing debt will be retained by RERC in order to avoid refinancing costs; the debt of New Co. will therefore be established through intercompany borrowings. New Co.'s capital structure will be substantially the same as that used by this Commission in Arkla's last rate case. 8. The administrative functions that are now provided to Arkla and the other divisions of RERC by REI or RERC will continue to be provided on a centralized basis. The corporate allocations for those functions will not change as a result of the restructuring, and therefore the costs to Arkla of those administrative services will not increase. LEGAL AUTHORITY 9. In order to consummate the restructuring, the Applicant is, or may be, required to obtain consents, approvals, and authorizations from the Commission pursuant to OAC Section 165:45-3-5. 10. The transfer of Arkla's property to New Co. is consistent with the public interest and should be approved under OAC Section 165:45-3-5. The proposed transaction will have no -4- detrimental effect on the Commission's jurisdiction over Arkla or on its ability to regulate Arkla's operations. The proposed transaction, which will result in Arkla being a stand alone company, will give the Commission a clearly defined corporate entity over which to exercise jurisdiction. In addition, the proposed transaction will have no effect on, and will be transparent to, Arkla's customers. The proposed transaction will not result in any material change in Arkla's policies or operations, and will have no adverse effect on Arkla's continued ability to provide reliable and adequate service. New Co. will be managed in the same manner after the restructuring as Arkla is now, and Arkla's employees will continue to be employed by New Co. New Co. will adopt Arkla's tariffs, and the transaction will not, in and of itself, result in an increase in rates to customers. New Co. will maintain its books in accordance with the Commission's requirements, and will provide access to its books and records as required under the public utilities statutes. 11. In accordance with OAC Section 165:45-3-5, a file-stamped copy of this Application will be provided to the Commission's Pipeline Safety Department. 12. Given that the restructuring will be transparent to consumers, Arkla requests that the Commission waive a hearing and grant this Application expedited treatment. RELIEF SOUGHT WHEREFORE, Applicant respectfully requests that the Commission issue an order approving the various aspects of the proposed transaction as set forth in this Application. -5- Respectfully submitted, RELIANT ENERGY ARKLA, a division of Reliant Energy Resources Corp. By: ------------------------------------ Kathleen D. Alexander Senior Vice President Reliant Energy Arkla 401 West Capitol Avenue, Suite 102 Post Office Box 751 Little Rock, Arkansas 72203-0751 (501) 377-4858 Kenny W. Henderson Senior Counsel Reliant Energy Arkla 401 West Capitol Avenue, Suite 102 Post Office Box 751 Little Rock, Arkansas 72203-0751 (501) 377-4850 Paul Ruxin Jones, Day Reavis & Pogue 77 West Wacker, 35th Floor Chicago, Illinois 60601-1692 (312) 269-1546 and Jack P. Fite, OBA #2949 White, Coffey, Galt & Fite, P.C. 6520 North Western, Suite 300 Oklahoma City, OK 73116 (405) 842-7545 Its Attorney -6-