No-Action Letter under:
Public Utility Holding Company Act -
Section 2(a)(7)

Western Farmers Electric Cooperative

February 23, 2001

RESPONSE OF THE OFFICE OF PUBLIC UTILITY REGULATION DIVISION OF INVESTMENT MANAGEMENT

Our Ref. No. 01-1-OPUR Western Farmers Electric Cooperative File No. 132-3

Based on the facts and representations in your letter of February 22, 2001, we would not recommend any enforcement action to the Commission under the Public Utility Holding Company Act of 1935, including sections 2(a)(7), 2(a)(10) and 2(a)(11), against Western Farmers Electric Cooperative ("WFEC") or any of the individual cooperative Members of WFEC, if the transaction described in your letter takes place in the manner and under the circumstances described in your letter.

You should note that facts or conditions different from those presented in your letter might require a different conclusion. Further, this response expresses only the Division's position on enforcement action. It does not purport to express any legal conclusion on the questions presented.

David G. LaRoche
Special Counsel

February 23, 2001

Paul B. Turner, Esq.
Sutherland Asbill & Brennan LLP
1275 Pennsylvania Avenue, NW
Washington, DC 20004-2415

Re: Western Farmers Electric Cooperative
File No. 132-3

Dear Mr. Turner:

Enclosed is our response to your letter of February 22, 2001. By incorporating our answer in the enclosed copy of your letter, we avoid having to recite or summarize the facts involved.

Very truly yours,

David G. LaRoche
Special Counsel

Enclosure

Incoming Letter

Paul B. Turner
DIRECT DIAL: 202.383.0119
Internet: pturner@sablaw.com

February 22, 2001

VIA FEDERAL EXPRESS

Ms. Catherine Fisher
Assistant Director
Division of Investment Management
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Re: Request for No Action Letter Concerning the Interpretation of Section 2(a) of the Public Utility Holding Company Act of 1935

Dear Ms. Fisher:

We are counsel to Western Farmers Electric Cooperative ("WFEC"), an Oklahoma generation and transmission cooperative. We are writing on behalf of WFEC to respectfully request your assurance that the Staff of the Office of Public Utility Regulation (the "Staff") of the Division of Investment Management would not recommend that the Securities and Exchange Commission (the "SEC" or "Commission") take any enforcement action against WFEC or its 19 distribution cooperative members pursuant to the Public Utility Holding Company Act of 1935 ("PUHCA" or "Act") on account of the transaction described below.

I. Background

A. Description of WFEC System

WFEC is an electric generation and transmission cooperative incorporated in the State of Oklahoma and engaged in the generation and transmission of electric energy. WFEC is entirely owned by its 19 cooperative members (each, a "Member" and, collectively, the "Members"). Each Member is an electric distribution cooperative incorporated in Oklahoma and engaged primarily in the distribution of electric energy on a cooperative basis to its consumer-members. Each Member is entirely owned by its member-owner electric energy consumers. In addition, WFEC serves Altus Air Force Base ("Altus"), a United State Air Force base, on a cooperative basis.¹ Altus also is a member of WFEC; since March 2000, Altus has been a non-voting member of WFEC, but Altus otherwise has the same rights as any other member of WFEC.

WFEC's principal business is providing wholesale electric service on a cooperative basis to the Members and to Altus (collectively, the "Patrons"). Each Patron currently provides retail electric service to residential, commercial and industrial consumers. Since WFEC's formation, it has provided generation, transmission and related services to each Member in full satisfaction of each Member's system requirements for electric energy.

Currently, WFEC owns and operates facilities in Oklahoma for the generation and transmission of electric energy and the distribution substations through which it serves its Members and Altus. Each Patron owns and operates facilities for the distribution of electric energy. Sixteen distribution Members own and operate facilities only in Oklahoma, two own and operate facilities in Oklahoma and Texas, and one owns and operates facilities in Oklahoma and Kansas.

WFEC also provides wholesale electric service to a limited number of other non-Patrons in accordance with certain power sales and interchange agreements. In 1999, WFEC sold 4,552,887 megawatt-hours ("MWh") of electricity to its Members and Altus,² and 1,146,515 MWh under negotiated, arms-length transactions to wholesale non-Member purchasers, consisting of neighboring investor-owned and municipal utilities (e.g., Oklahoma Gas & Electric, Public Service Company of Oklahoma, and Oklahoma Municipal Power Authority) as well as institutional buyers such as power marketers.³ These non-Member sales thus accounted for only approximately 20.1% of WFEC's sales in 1999. In 2000, WFEC's sales to non-Members (904,300 MWh) were only approximately 15% of its total sales (5,872,478 MWh).⁴ In accordance with state law, WFEC engages in no retail sales of electric power.

B. Financial Matters

WFEC operates on a cooperative, not-for-profit basis. To date, its major source of funding has been loans made by the Federal Financing Bank and guaranteed by the United States of America acting through the Rural Electrification Administration and its successor, the Rural Utilities Service (the "RUS"). Through its rates, which are subject to approval by the RUS, WFEC seeks only to generate revenues sufficient to recover its cost of service and to generate margins sufficient to establish reasonable reserves and meet certain financial coverage requirements established by its mortgage with the RUS. Revenues in excess of current period costs in any year are designated in WFEC's statements of revenues and expenses and patronage capital as net margin.

C. Membership Interests

WFEC is obligated by its bylaws to account on a patronage basis to all its Patrons.⁵ No interest or dividends, other than "patronage dividends," may be paid or be payable by WFEC on any capital furnished by its Patrons.⁶ WFEC is obligated to pay by credits to a capital account for each Patron all such patronage dividends. All amounts received by WFEC from the Patrons in excess of losses and deductions at the moment of receipt by WFEC are received with the understanding that they are furnished by the Patrons as capital.⁷ All amounts credited to the capital account of any Patron shall have the same status as though they had been paid to the Patron in cash in pursuance of a legal obligation to do so and the Patron had then furnished WFEC corresponding amounts of capital.⁸

In the event of dissolution or liquidation of WFEC, after all outstanding indebtedness of WFEC has been paid, outstanding capital credits are required to be retired without priority on a pro rata basis before any payments are made on account of property rights of Patrons. If, at any time prior to dissolution or liquidation, the WFEC Board of Trustees determines that the financial condition of WFEC will not be impaired, the capital then credited to Patrons' accounts may be retired in full or in part. Any such retirement of capital is required to be made in order of priority according to the year in which the capital was furnished and credited, the capital first received by WFEC being first retired.⁹

Membership in WFEC is non-transferable, except that membership may be vested in a corporate successor to a Member provided the successor is eligible for membership and pays the membership fee (if any) as determined by resolution of the WFEC Board of Trustees.¹⁰ Upon the cessation of existence, expulsion or withdrawal of a Member, the membership of such Member shall terminate.¹¹ Each Member also is entitled (i) to purchase electric energy from WFEC, and (ii) to vote on all matters on which Members have a vote according to law.¹² In connection with all matters on which Members have a vote, each Member has one vote.¹³ Capital credited to the account of a Patron is assignable only on the books of WFEC and only to successors in interest to the business or physical assets of the Patron (unless the Board of Trustees, acting under policies of general application, shall determine otherwise).¹⁴

D. WFEC Subsidiaries

WFEC is the sole member and owner of WFEC ENERGYCO, L.L.C., an Oklahoma limited liability company ("ENERGYCO"). ENERGYCO is the sole member and owner of WFEC GENCO, L.L.C., also an Oklahoma limited liability company ("GENCO"). Other than GENCO, ENERGYCO does not have any subsidiaries. The Federal Energy Regulatory Commission (the "FERC") has determined GENCO to be an exempt wholesale generator under Section 32 of PUHCA.¹⁵ GENCO has no subsidiaries. WFEC also owns all of the stock of WFEC Railroad Company, an Oklahoma railroad corporation, which assists in the transportation of coal to one of WFEC's electric generating plants.

E. Proposed Transaction

GENCO is developing a 90 megawatt electric generating plant (the "Facility"). Under a tolling agreement with a third-party marketer,¹⁶ the marketer will supply natural gas for the generation of electricity at the Facility and the marketer will take the electric power produced by the Facility. However, under the tolling agreement, GENCO retains certain rights to recall electric capacity from the Facility to supply the additional power requirements of WFEC, should WFEC require additional power in the future. By enabling WFEC to acquire capacity and energy supplies from the Facility for its future load growth, the transaction provides WFEC, its Members and Altus, and, ultimately, the consumers they serve an economical and reliable source of electric power. In particular WFEC has structured the transaction so as to give it a right to recall power on an incremental basis to serve its future load growth as a reasonable means for WFEC to obtain needed power without undertaking the responsibility for marketing additional excess capacity.

In connection with the development of the Facility, GENCO and WFEC have undertaken certain obligations to finance the development of the Facility, including borrowing funds from various lenders (the "Lenders"). As a condition to their consent to GENCO's exercise of its recall right, the Lenders have requested that WFEC obtain a no-action letter from Staff that WFEC and its Members are not holding companies, nor affiliates or associate companies of WFEC by virtue of the Members' membership interests in WFEC.

II. Discussion

We are requesting a no-action letter that, under the Act and based upon the foregoing facts, the Staff will not recommend enforcement under the Act to regulate WFEC's Members as "holding companies" under the Act or as "affiliates" or "associate companies" of WFEC. Our request rests on our conclusions that: (i) the Commission does not view a membership interest in a cooperative to be a "voting security" under PUHCA Section 2(a)(17); (ii) neither WFEC nor any of its member cooperatives are part of a "holding-company system" under PUHCA Section 2(a)(9); and (iii) WFEC is not an "affiliate" or "associate company" of its Members.

A. WFEC and its Cooperative Members are Electric Utility Companies

The Act defines an "electric utility company" as "any company which owns or operates facilities used for the generation, transmission, or distribution of electric energy for sale . . . ." PUHCA § 2(a)(3). After the closing of the transaction discussed above, both WFEC and its cooperative Members will continue to own and operate their electric facilities as described above. For purposes of this request, therefore, it should be assumed that WFEC and each of its Members are electric utility companies for purposes of the Act. Because these cooperatives are electric utility companies under the Act, they also are "public-utility companies" for purposes of PUHCA. See PUHCA § 2(a)(5) (defining "public-utility company" as an electric utility company or a gas utility company).

B. Cooperative Membership Interests in WFEC are not "Voting Securities"

PUHCA defines "voting security" as "any security presently entitling the owner or holder thereof to vote in the direction or management of the affairs of the company, or any security issued under or pursuant to any trust, agreement, or arrangement whereby a trustee or trustees or agent or agents for the owner or holder of such security are presently entitled to vote in the direction or management of the affairs of a company." PUHCA § 2(a)(17). Under this definition, in order for there to be a voting security, there must be a security. Under the Act, "security" is defined as "any note, draft, stock, treasury stock, bond, debenture, certificate of interest or participation in any profit-sharing agreement or in an any oil, gas, other mineral royalty or lease, any collateral-trust certificate, or, in general, any instrument commonly known as a `security'; or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guaranty of, assumption of liability on, or warrant or right to subscribe to or purchase, any of the foregoing." PUHCA § 2(a)(16).

In several previous no-action letters involving membership interests in public-utility companies organized as cooperative corporations, the Staff granted the no-action relief requested and stated that it would not recommend any enforcement action under the Act against the owners of such interests.¹⁷ In each of these cases, the cooperatives had concluded that a membership interest in a cooperative corporation was not a "security" or "voting security" within the meaning of the Act. Consequently, they reasoned, the owner of such membership interests in a public utility company was not a "holding company" under the Act.

As early as 1974, for example, the Staff concurred in the Distribution Cooperatives' view that the membership interests in the cooperative were not voting securities, because the membership interest were non-assignable and the cooperatives operated on a non-profit basis. ¹⁸ Similarly, the Staff granted Associated Electric Cooperative's letter request that none of Associated Electric Cooperative, its cooperative members, nor Federated Electric Cooperative be treated as holding companies or subsidiary companies, where the cooperatives involved each operated on a non-profit basis to supply electricity primarily to its members, and neither the certificates nor the incidents of membership were transferable. ¹⁹ Even when there was weighted voting among the distribution members of Oglethorpe in the process of nominating directors, the Staff reached the same conclusion as Oglethorpe that its cooperative members did not own voting securities in Oglethorpe.²⁰ In each of these no-action letter requests, the membership interest entitled the member to various voting rights in the governance of the cooperatives, as governed by the respective cooperatives' bylaws.

The Commission Staff also has adopted a similar, consistent view that membership interests in a cooperative are not securities in numerous no-action letters involving the Securities Act of 1933 and the Securities Exchange Act of 1934.²¹

WFEC has operated since its formation in 1941 under the cooperative ownership structure described above. As an RUS borrower, WFEC is not subject to regulation as a "public utility" by the FERC under the Federal Power Act.²² Based on its cooperative ownership structure, WFEC is not a holding company under PUHCA. It has operated in reliance on these exemptions from FERC and PUHCA regulation for six decades.

C. WFEC and its members are not Holding Companies under PUHCA Section 2(a)(7)

Similar to the cooperatives previously granted no-action relief by the Staff, WFEC's Members do not have voting securities in WFEC. WFEC, as discussed, is organized as a cooperative corporation under the laws of Oklahoma. It is operated on a non-profit basis and primarily supplies electric energy and transmission to its Members.²³ Neither membership in WFEC nor the benefits of such membership are transferable, except as noted above. We believe, therefore, that WFEC's Members do not own, control, or hold with power to vote a voting security in WFEC. Therefore, none of WFEC's Members is a holding company, as defined in the Act. Additionally, neither of WFEC's subsidiaries (ENERGYCO and GENCO) is a public-utility company, as defined in the Act: ENERGYCO does not own or operate any generation, transmission or distribution facilities and thus is not an "electric utility company," and GENCO is an exempt wholesale generator ("EWG"), which the Act excludes from the definition of "electric utility company."²⁴ Consequently, WFEC is not a holding company for purposes of the Act. ²⁵

D. WFEC's Cooperative Members are not Affiliate Companies

Based on the same rationale - that a membership interest in a cooperative such as WFEC is not a voting security - we do not believe that WFEC's Members are "affiliates" of WFEC.²⁶ The Act defines an "affiliate" of a specified company as "any person that directly or indirectly owns, controls, or holds with power to vote, 5 per centum or more of the outstanding voting securities of such specified company." PUHCA § 2(a)(11)(A). Because the Members' interests in WFEC are not considered to be "securities" and because neither membership in WFEC nor the benefits of such membership are transferable (except in the limited circumstances discussed above), we believe that WFEC's Members do not own, control, or hold power to vote a voting security in WFEC. Accordingly, the Members should not be deemed to be "affiliates" of WFEC under paragraph (A) of the definition of "affiliate."

The Act also defines an "affiliate" of a specified company to include "any company 5 per centum or more of whose outstanding voting securities are owned, controlled, or held with power to vote, directly or indirectly, by such specified company." PUHCA § 2(a)(11)(B). For the same reasons as discussed with respect to paragraph (A) of the definition of "affiliate," we believe that WFEC's Members do not own, control, or hold power to vote a voting security in WFEC. Therefore, WFEC should not be deemed to be an "affiliate" of any of its Members under paragraph (B) of the definition of "affiliate."

Nor should the Members and WFEC be deemed to be "affiliates" under paragraph (D) of the definition of "affiliate." See PUHCA § 2(a)(11)(D). As discussed, WFEC is organized as a cooperative corporation under the laws of Oklahoma. It is operated on a non-profit basis and primarily supplies electric energy and transmission to its Members. Because the consumer-members served by the Members are the ultimate owners of both the Members and WFEC, it is not necessary or appropriate in the public interest to regulate the Members for the protection of their consumer-members.

In addition, FERC has granted market-based rate authority to GENCO for its electric power sales.²⁷ A pre-condition to obtaining such authority is a showing to FERC that GENCO, ENERGYCO and WFEC lack market power in the relevant markets. WFEC's third-party purchasers are not captive customers over which WFEC can exercise market power; rather, those purchasers have access to alternative power suppliers. FERC also requires the transmission-owning affiliates of a market-based seller like GENCO to offer open, non-discriminatory service over its transmission lines. WFEC, GENCO's transmission-owning affiliate, has satisfied this criterion by placing the administration of transmission service on its transmission facilities under the control of the Southwest Power Pool ("SPP"), a non-profit regional organization which provides open, non-discriminatory transmission service under a FERC-approved open access transmission tariff.²⁸ Because WFEC lacks market power over electric power sales, offers open, non-discriminatory transmission service over its system, and thus satisfies FERC's criteria for market-based rate authority as if it were a FERC-regulated public utility, there is thus no need for the regulation of WFEC's sales to third parties for their protection. For the foregoing reasons, it is not necessary or appropriate in the public interest to regulate WFEC's sales to non-Members under the Act for their protection. Accordingly, WFEC and its Members should not be deemed to be "affiliates" under paragraph (D).²⁹

E. WFEC's Cooperative Members are not Associate Companies

We further believe that WFEC and its Members are not associate companies. Under PUHCA, an "associate company" of a company is "any company in the same holding-company system with such company." PUHCA § 2(a)(10). The Act further defines "holding-company system" as "any holding company, together with all its subsidiary companies, and all mutual service companies . . . of which such holding company or any subsidiary company thereof is a member company . . . ." PUHCA § 2(a)(9). As we discussed, none of WFEC, its Members, or any of WFEC's subsidiaries is, in our opinion, a holding company under the Act. Nor is WFEC, any of its Members, or any of its subsidiaries a member of an association or group of companies mutually served by a mutual service company. As a consequence, none of WFEC, its Members, or any of its subsidiaries is part of a holding-company system. Therefore, we do not believe that WFEC and its Members are associate companies for purposes of the Act.

III. Conclusion

We are of the opinion that the individual cooperative Members of Western Farmers Electric Cooperative are neither "associate companies" of WFEC, "affiliates" of WFEC, or holding companies, as those terms are defined by the Public Utility Holding Company Act of 1935. Likewise, we are of the opinion that WFEC is not an associate company or an affiliate of its cooperative Members. We respectfully request that the Staff not recommend enforcement action under the Act on the grounds that: (i) no Member is a holding company by virtue of its ownership interest in WFEC; (ii) no Member is an affiliate or associate company of WFEC by virtue of its ownership interest in WFEC; or (iii) WFEC is not an affiliate or associate company of its Members by virtue of the Members' ownership interests in WFEC. If, for any reason, you do not concur with any of the views expressed herein, we respectfully request an opportunity to confer with you prior to any written response.

The Staff's assurances are a critical element to the implementation of the transaction discussed herein. A no-action ruling is required in order for WFEC to obtain the consent of the Lenders for the exercise of GENCO's right to recall the power produced by GENCO, should it so need. The Lenders have indicated that they will withhold such consent out of concern for WFEC's ability to resell the recalled capacity to its Members, absent a no-action letter ruling from Staff on the "affiliate" and "associate company" issues discussed herein. To ensure GENCO's ability to exercise those rights, we respectfully request a response to this letter request prior to January 31, 2001. Thank you, in advance, for your attention to this matter. If you have any questions or should require any further information, please do not hesitate to contact us directly - either Paul Turner at (202) 383-0119 or Barrett Hawks at (404) 853-8164.

Respectfully yours,

____________________________
Paul B. Turner
Sutherland Asbill & Brennan LLP
1275 Pennsylvania Ave., N.W.
Washington, D.C. 20004

And

Barrett K. Hawks
Sutherland Asbill & Brennan LLP
999 Peachtree St., N.E.
Atlanta, GA 30309

Endnotes

1	Under PUHCA Section 2(c), the Act does not apply to or include Altus, a governmental entity.
2	Sales to Altus constituted 1.5% of WFEC's member sales in each of 1999 and 2000.
3	As explained below, see infra at nn.27-29 and accompanying text, WFEC lacks market power in the relevant markets and thus cannot exercise market power over such non-Member purchasers; they are not captive customers and have access to alternative power supplies. WFEC also is unable to use its transmission system to foreclose access by those purchasers to other power supplies and markets because it has transferred the administration of transmission service on its system to the Southwest Power Pool.
4	As explained below, see infra at n.23 and accompanying text, the level of WFEC's sales to non-Members is consistent with the level of non-member sales in Oglethorpe Power Corporation, et al., SEC No-Action Letter, 1996 SEC No-Act. Lexis 878 (Publ. Avail. November 7, 1996). WFEC's non-Member sales also are undertaken under circumstances similar to those described in Oglethorpe, i.e., they are sales of excess capacity and energy not currently needed to serve the needs of the Members. Based on its current assessment of its Members' and Altus's projected load growth, WFEC anticipates that it will not renew many of its non-Member contracts because it needs the energy currently sold thereunder to serve the load growth of its Members and Altus.
5	Bylaws, Art. VIII, Section 2. The Bylaws and Amendment thereto are included as Attachment A.
6	Bylaws, Art. VIII, Section 1.
7	Bylaws, Art. VIII, Section 2.
8	Id.
9	Id.
10	Bylaws, Art. I, Section 6.
11	Id.
12	Bylaws, Article I.
13	Bylaws, Art. II, Section 5. As indicated above, Altus is a non-voting member of WFEC. Although Altus has been a member of WFEC since 1961 and has voted as a WFEC member, in 2000, entirely on its own initiative, Altus requested that it become a non-voting member of WFEC but that it be permitted to have a representative attend WFEC Board meetings. At WFEC's March 15-16, 2000 Board meeting, the WFEC Board approved Altus's request. However, Altus otherwise has the same rights as any other member. For example, Altus receives patronage capital allocations under the same methodology as any other WFEC member.
14	Bylaws, Art. VIII.
15	WFEC GENCO, L.L.C., 93 FERC ¶ 62,037 (2000) (letter order).
16	Typically, under a tolling agreement, natural gas or other fuel is supplied by one party to the contract in exchange for the electricity generated by the other party by using such gas or other fuel. As payment for its generating service, the generating party may receive a fee, a portion of the electricity generated, or some other compensation.
17	See, e.g., Oglethorpe, supra; Associated Elec. Cooperative, Inc., SEC No-Action Letter, 1975 SEC No-Act. Lexis 2665 (Publ. Avail. February 17, 1975); Distribution Cooperative, SEC No-Action Letter, 1974 SEC No-Act. Lexis 4 (Publ. Avail. June 1, 1974).
18	See Distribution Cooperatives, supra.
19	See Associated Elec. Cooperative, Inc., supra.
20	See Oglethorpe, supra.
21	See, e.g., Professional Veterinary Prods., SEC No-Action Letter, 1996 SEC No-Act. Lexis 592 (Publ. Avail. July 12, 1996); Cap Rock Tel. Co., SEC No-Action Letter, 1994 SEC No-Act. Lexis 763 (Publ. Avail November 4, 1994); IAMO Tel. Co., SEC No-Action Letter, 1994 SEC No-Act. Lexis 619 (Publ. Avail. July 29, 1994); American Truckload Cooperative, Inc., SEC No Action Letter, 1993 SEC No-Act. Lexis 850 (Publ. Avail. July 1, 1993); Service Centers Corp., SEC No-Action Letter, 1993 SEC No-Act. Lexis 721 (Publ. Avail. May 21, 1993); Peer Mktg. Assocs., SEC No-Action Letter, 1993 SEC No-Act. Lexis 146 (Publ. Avail. February 3, 1993); Collision Automotive Repair Servs., SEC No-Action Letter, 1992 SEC No-Act. Lexis 841 (Publ. Avail. July 7, 1992); Sports Specialists Ltd., SEC No-Action Letter, 1991 SEC No-Act. Lexis 1119 (Publ. Avail. September 30, 1991); Kentucky Pharmacy Servs. Corp., SEC No-Action Letter, 1991 SEC No-Act. Lexis 768 (Publ. Avail. June 6, 1991): Producers Feed Co., SEC No-Action Letter, 1990 SEC No-Act. Lexis 999 (Publ. Avail. July 30, 1990); Club Paradise Cooperative, Inc., SEC No-Action Letter, 1988 SEC No-Act. Lexis 1621 (Publ. Avail. December 5, 1988).
22	See Salt River Project Agricultural Improvement and Power Dist. v. FPC, 391 F.2d 470 (D.C. Cir. 1968) (RUS-borrower cooperative is not a "public utility" under Federal Power Act).
23	As noted above, for example, in 1999, WFEC sold 79.9% of its power to its Members and Altus, similar to the ratio of member and non-member sales in Oglethorpe, supra (noting that, in 1995, Oglethorpe's sales to non-members was 20.4% of its total power sales); WFEC's sales to the Members and Altus were approximately 85% of its total sales in 2000. WFEC projects its sales to the Members and Altus to be approximately 85% of its total sales in 2001. Thereafter, WFEC expects that the percentage of its sales to its Members and Altus relative to its total sales will remain approximately at or above these levels, and that the percentage of non-Member sales will not materially increase over time. If the Members' and Altus's loads increase, it is likely that the ratio of sales to non-Members to sales to the Members and Altus would decrease as a result of increased sales by WFEC to the Members and Altus to meet their expanding loads. As WFEC's non-Member contracts expire, WFEC anticipates that it will require much of the capacity and energy currently sold under those contracts, in addition to the power it is able to recall from the GENCO project, to meet its Members' and Altus's load growth needs. If the ratio of WFEC's sales to non-Members to WFEC's sales to its Members and Altus were to increase materially in the future, WFEC would seek from the SEC Staff further assurances similar to the no-action relief requested herein.
24	See PUHCA § 2(a)(3), (5) (definitions of electric utility company and public-utility company); PUHCA § 32(e) (EWGs excluded from definition of electric utility company).
25	See PUHCA § 2(a)(7)(A) (defining a holding company as "any company which directly or indirectly owns, controls, or holds with power to vote, 10 per centum or more of the outstanding voting securities of a public utility company").
26	Because Altus is a governmental entity, it is not an "affiliate" or "associate company" of WFEC or the Members. See n.1 supra.
27	See WFEC GENCO, L.L.C., FERC Docket No. ER01-388-000 (Nov. 30, 2000) (unpublished letter order granting market-based rate authorization). Unlike WFEC, GENCO is not an RUS borrower and thus will be regulated by FERC as a "public utility" by virtue of its wholesale sales of electric power and other FERC-jurisdictional activities.
28	Under FERC's open-access transmission rules, open, non-discriminatory transmission service permits a third-party customer to use a transmission owner's transmission facilities on a basis comparable to that which the transmission owner uses the facilities. The SPP, as agent for WFEC and the other transmission owners in the SPP, makes transmission service available to third-parties on a basis comparable to the transmission owners' usages of the system. WFEC's ownership of transmission facilities thus does not enable WFEC to foreclose its non-Member purchasers' access to alternative power supplies and markets.
29	Nor should WFEC and its Members be deemed to be "affiliates" under paragraph (C), which states that an "affiliate" of a specified company includes "any individual who is an officer or director of such specified company, or of any company which is an affiliate thereof under clause (A)." PUHCA § 2(a)(11)(C). WFEC and the Members are corporate entities, not individuals. Accordingly, paragraph (C) is inapplicable to the relationship between WFEC and its Members for purposes of determining whether they are "affiliates."

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