-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Eq1RKwJ9+K8gZ+4FTYFKJ8S+MOVERJioNjmcfDhtrkaodcmuD/p0TOLNSWtfYlSV 7JGj0P18g5qiRtM35kGkLQ== 0000071297-94-000041.txt : 19941003 0000071297-94-000041.hdr.sgml : 19941003 ACCESSION NUMBER: 0000071297-94-000041 CONFORMED SUBMISSION TYPE: U-1 PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19940930 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEW ENGLAND ELECTRIC SYSTEM CENTRAL INDEX KEY: 0000071297 STANDARD INDUSTRIAL CLASSIFICATION: 4911 IRS NUMBER: 041663060 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: U-1 SEC ACT: 1935 Act SEC FILE NUMBER: 070-08475 FILM NUMBER: 94551148 BUSINESS ADDRESS: STREET 1: 25 RESEARCH DR CITY: WESTBOROUGH STATE: MA ZIP: 01581 BUSINESS PHONE: 5083669011 U-1 1 File No. 70- SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM U-1 APPLICATION/DECLARATION UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 NEW ENGLAND ELECTRIC SYSTEM and NEW ENGLAND ELECTRIC RESOURCES, INC. (Name of company filing this statement) 25 Research Drive, Westborough, Massachusetts 01582 (Address of principal executive offices) NEW ENGLAND ELECTRIC SYSTEM (Name of top registered holding company parent in system) Michael E. Jesanis Robert King Wulff Treasurer Corporation Counsel 25 Research Drive 25 Research Drive Westborough, Massachusetts 01582 Westborough, Massachusetts 01582 (Names and addresses of agents for service) New England Electric Resources, Inc. (NEERI), a wholly-owned, non- utility subsidiary of New England Electric System (NEES), was organized for the purpose of pursuing new business opportunities. By its order dated September 4, 1992, the Commission specifically authorized NEERI to perform consulting services on electric utility matters for non-affiliates (Release No. 35-25621). NEES is a registered holding company under the Public Utility Holding Company Act of 1935 (the Act) owning electric utility subsidiaries, New England Power Service Company (NEPSCO, a service company subsidiary), and an energy company subsidiary (collectively, the System). Neither NEES nor any subsidiary has an ownership interest in an exempt wholesale generator (EWG) or foreign utility company (FUCO) as defined in Sections 32 and 33 of the Act. Additionally, neither NEES nor any subsidiary is a party to, or has any rights under, a service, sales or construction agreement with an EWG or FUCO. By its Order dated April 1, 1994, the Commission specifically authorized NEERI to perform electrical related services for non-affiliates (Release No. 35-26017). Such services include designing, engineering, installing, constructing and/or procuring electrical related materials. By its Order dated May 25, 1994, the Commission specifically authorized NEERI to invest in Quality Power Systems, Inc., a start-up company formed to develop, manufacture and market a low harmonic distortion uninterruptible power supply (Release No. 35-26057). In the Application/Declaration on Form U-1, File No. 70-7950, the Applicants made the following statement: "To the extent that NEERI desires to take advantage of new business opportunities outside of the consulting service area, further authorization from the Commission would be sought". By the present filing, NEERI seeks to obtain Commission approval to enter into a new business participating in a project with a company which processes coal ash produced as a by-product of electrical generation. Item 1. Description of Proposed Transaction: - --------------------------------------------- NEERI is pursuing a joint arrangement with Separation Technologies, Inc. (STI), the developer of a process for separating unburned carbon from coal ash. In connection with this joint arrangement, NEERI will be called on to invest in STI projects and to provide certain consulting services to STI. In New England, a large amount of electrical generation is coal-fired, resulting in coal ash waste products. Ash from burning coal and oil accounts for the largest volume of solid wastes produced by generating facilities owned by New England Power Company (NEP), an affiliate of NEERI. Given this large quantity of ash, it is highly desirable to encourage the development of recycling techniques to convert this ash waste to productive uses. As part of NEESPLAN 4, the System's latest planning study, the System has established coal ash recycling as a key initiative and has a stated goal of recycling 100% of its coal ash by the year 2000. NEP has entered into a contract with STI to permit STI to process ash waste from its Salem Harbor generating station and is negotiating a contract with STI for its Brayton Point generating station. NEP's contracts with STI do not involve any equity participation by NEP and NEP is not interested in pursuing such participation. Although NEP desires the continued development of coal ash recycling technology, NEP does not believe that this development would be an appropriate risk to be supported by its electric customers. STI has developed a system of economically separating unburned carbon from coal (or fly) ash produced by utility generating plants. The separated carbon can be reburned by the utility. The processed ash can be sold as a cement substitute in the manufacture of concrete. In order to be viable as a cement substitute, processed ash must have a carbon content of 3% or less; STI's technology is capable of consistently and economically producing processed ash of this quality. NEERI's participation in this joint arrangement with STI is functionally related to the System in that it will promote the continued development of technology for reducing waste ash disposal costs, and will reduce fuel costs through the reburning of carbon. NEERI's work with STI will also enable the System to further its solid waste recycling efforts committed to as part of its NEESPLAN 4 planning study. As part of its joint arrangement with STI, NEERI proposes to enter into a project with STI involving the processing of coal ash at an electric generation facility in the New England/New York region (the NE/NY Project) owned by a non-affiliated electric company (Owner). NEERI plans to invest $700,000 in the NE/NY Project in return for a percentage of the NE/NY Project revenue stream. STI proposes to collaterally assign to NEERI certain payments to be made to STI by Owner under a contract to process ash waste. NEERI expects to recover its investment in STI over a seven to ten year period. This contract with Owner is still being negotiated. In addition, NEERI will provide to STI consulting services for a fee. The consulting services would include marketing and engineering advice. STI will be responsible for processing the ash at the Owner's facility. NEERI proposes to enter into similar joint arrangements with STI at other locations where STI equipment will be installed. NEERI's investment in these other utility locations is anticipated to range between $0.5 and $2.0 million per installation. NEERI and STI intend to perform research to further refine the carbon- rich and low carbon processed waste stream and to find other applications for the STI separation process in recycling. Such further refinement of the waste streams is expected to improve the value of those waste streams and the profitability of the STI process investments. Examples of such higher value waste stream products include particle size classification for higher strength concrete products, substitutes for plastics fillers materials, and substitutes for carbon black products. Research in recycling will involve the use of the STI process in plastics recycling. NEERI requests authorization for the following activities: a. to participate in the NE/NY Project with STI; b. to invest up to $700,000 in the NE/NY Project with STI. c. to invest up to $2,000,000 per project in other utility coal ash separation projects with STI with a cumulative investment not to exceed $10 million. d. to perform research and development activities in high value product development and recycling in an amount not to exceed $1 million. NEERI intends to offer marketing and engineering advice and consulting services to STI. In connection with projects which exceed the funding limits in item (c) above, NEERI will seek further authority from the Commission prior to investing any equity funds in such other projects. NEERI may use existing authority to explore and develop these other projects. NEERI believes that its investment in STI meets the criteria set forth by the Commission for ownership of a non-utility functionally related business (see CSW Credit Inc. HCAR No. 25995 and Jersey Central Power & Light HCAR No. 24348) as follows: NEERI's investment will evolve from the overall electric utility business of the NEES system; NEERI's investment in STI will not be significant in relation to the NEES system's total financial resources; and the successful development, manufacture and marketing of STI's ash processing technology has the potential to benefit electric customers of NEERI's affiliates as well as be a beneficial investment for NEERI. As described above, the STI technology should be a valuable tool in addressing the solid waste disposal concerns of NEERI's affiliates. As NEERI enters into additional projects with STI, NEERI shall provide details of these projects in its quarterly filings with the Commission under Rule 24. NEERI will also break down the STI investments from its other investments in its quarterly financials filed at that time. Financing by NEES The Commission originally granted authority for NEES to provide financing to NEERI in an amount not to exceed $1 million. (See Order dated September 4, 1992, Release 35-25621.) The Commission later granted authority for NEES to provide additional financing to NEERI in the amount of $1 million (see Order dated April 1, 1994, Release No. 35-26017) and in the amount of $250,000 (See Order dated May 25, 1994, Release No. 35-26057.) NEES proposes to provide additional financing for NEERI by making capital contributions up to an additional $11,700,000 and/or by lending to NEERI from time to time additional amounts not to exceed $11,700,000 at any one time, such loans to be in the form of non-interest bearing subordinated notes. The aggregate amount of all investments (including amounts previously authorized by the Commission) by NEES in NEERI shall not exceed $13.95 million. Item 2. Fees, Commissions and Expenses - --------------------------------------- Services incidental to the transactions described herein will be performed by NEPSCO and billed to NEERI at the actual cost thereof. NEPSCO is an affiliated service company operating pursuant to Section 13 of the Act and the Commission's rules thereunder. The cost of such services to be paid by NEERI is not expected to exceed $5,000, to be incurred primarily by the Corporate Department (including attorneys) and the Treasury Department (including accountants). These amounts include a $2,000 filing fee paid by wire transfer to the Commission at the time of filing this application/declaration. Item 3. Applicable Statutory Provisions - ---------------------------------------- Sections 6(a) and 7 are believed to be applicable to the issuance of additional notes by NEERI; Sections 9(a), 10, 12, and Rule 45 are believed to be applicable to the acquisition by NEES of additional notes of NEERI and the making of additional capital contributions by NEES to NEERI. Item 4. Regulatory Approval - ---------------------------- No Federal or state commission or regulatory body, other than the Commission, has jurisdiction over the proposed transactions. Item 5. Procedure - ------------------ The Applicants request that the Commission take action with respect to this Application/Declaration without a hearing being held, on or before December 1, 1994. The Applicants (i) do not request a recommended decision by a hearing officer, (ii) do not request a recommended decision by any other responsible officer of the Commission, (iii) hereby specify that the Division of Investment Management may assist in the preparation of the Commission's decision, and (iv) hereby request that there be no 30-day waiting period between the date of issuance of the Commission's Order and the date on which it is to become effective. Item 6. Exhibits: - ------------------ (a) Exhibits *B Agreement(s) with STI *F Opinion of Counsel H Proposed Form of Notice *To be filed by amendment (b) Financial Statements NEERI financial statements are filed quarterly with the Commission with a Certificate of Notification pursuant to Rule 24. Financial Statements for NEES have been omitted because the proposed transaction is not material to NEES. Item 7. Environmental Effects - ------------------------------ The transactions proposed by this Application/Declaration do not involve a major Federal action significantly affecting the quality of the human environment. SIGNATURE Pursuant to the requirements of the Public Utility Holding Company Act of 1935, the undersigned companies have duly caused this Application/Declaration on Form U-1 to be signed on their behalf, as indicated by the undersigned officers thereunto duly authorized by such companies. NEW ENGLAND ELECTRIC SYSTEM By: s/Michael E. Jesanis __________________________________________ Michael E. Jesanis, Treasurer NEW ENGLAND ELECTRIC RESOURCES, INC. By: s/John G. Cochrane __________________________________________ John G. Cochrane, Treasurer Dated: September 30, 1994 The name "New England Electric System" means the trustee or trustees for the time being (as trustee or trustees but not personally) under an agreement and declaration of trust dated January 2, 1926, as amended, which is hereby referred to, and a copy of which as amended has been filed with the Secretary of the Commonwealth. Any agreement, obligation or liability made, entered into or incurred by or on behalf of New England Electric System binds only its trust estate, and no shareholder, director, trustee, officer or agent thereof assumed or shall be held to any liability therefore. EX-99 2 EXHIBIT INDEX Exhibit No. Description Page B Agreement(s) with STI To be filed by amendment F Form of Opinion To be filed by amendment H Proposed Form of Notice Filed herewith EX-99 3 EXHIBIT H PROPOSED FORM OF NOTICE New England Electric System (NEES), a registered holding company, and its subsidiary New England Electric Resources, Inc. (NEERI), have filed Form U-1 Application/Declaration File No. 70- under Sections 6(a), 7, 9(a), 10, and 12 of the Public Utility Holding Company Act of 1935 and Rule 45 thereunder. By Order dated September 4, 1992 (Release No. 35-25621), NEERI was authorized to enter into the business of performing consulting services on electric utility matters for non-affiliates. NEES' investment in NEERI was also authorized. By Order dated April 1, 1994 (Release No. 35-26017), NEERI was authorized to provide electrical related services for non-affiliates; NEES was authorized to make an additional investment in NEERI. By Order dated May 25, 1994 (Release No. 35-26057), NEERI was authorized to invest in a start-up company formed to develop, manufacture and market a low harmonic distortion uninterruptible power supply; NEES was authorized to make additional investments in NEERI. NEERI now seeks authorization to invest $700,000 in a coal ash processing project at an electric generation facility located in the New England/New York region, and authority to invest up to $10,000, 000 in other coal ash processing and recycling projects, with a company that has developed a technology for separating carbon from the coal-ash waste products of electrical generation plants. NEERI also seeks authorization to invest up to $1,000,000 in research and development activities in connection with higher value coal ash waste stream products and recycling. NEES seeks authority to provide additional financing for NEERI in an amount not to exceed $11,700,000 through non- interest bearing subordinated loans or capital contributions. -----END PRIVACY-ENHANCED MESSAGE-----