[Federal Register: April 17, 2003 (Volume 68, Number 74)]
[Notices]
[Page 19039-19041]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17ap03-130]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-27666]
Filings Under the Public Utility Holding Company Act of 1935, as
Amended (``Act'')
April 11, 2003.
Notice is hereby given that the following filing(s) has/have been
made with the Commission pursuant to provisions of the Act and rules
promulgated under the Act. All interested persons are referred to the
application(s) and/or declaration(s) for complete statements of the
proposed transaction(s) summarized below. The application(s) and/or
declaration(s) and any amendment(s) is/are available for public
inspection through the Commission's Branch of Public Reference.
Interested persons wishing to comment or request a hearing on the
application(s) and/or declaration(s) should submit their views in
writing by May 6, 2003, to the Secretary, Securities and Exchange
Commission, Washington, DC 20549-0609, and serve a copy on the relevant
applicant(s) and/or declarant(s) at the address(es) specified below.
Proof of service (by affidavit or, in the case of an attorney at law,
by certificate) should be filed with the request. Any request for
hearing should identify specifically the issues of facts or law that
are disputed. A person who so requests will be notified of any hearing,
if ordered, and will receive a copy of any notice or order issued in
the matter. After May 6, 3003, the application(s) and/or
declaration(s), as filed or as amended, may be granted and/or permitted
to become effective.
Vermont Yankee Nuclear Power Corporation
[70-10104]
Vermont Yankee Nuclear Power Corporation (``Vermont''), 185 Old
Ferry
[[Page 19040]]
Road, Brattleboro, Vermont 05301, an indirect subsidiary of National
Grid USA, National Grid Transco Plc and Northeast Utilities, which are
registered holding companies under the Act, has filed a declaration
with the Commission under section 12(c) of the Act and rules 42, 46 and
54 under the Act.
Vermont, a Vermont corporation, operated a nuclear powered electric
generating plant in Vernon, Vermont (``Plant'') from 1972 to July 2002,
when the Plant was sold to Entergy Nuclear Vermont Yankee LLC
(``ENVY''). Eight sponsoring utilities (``Sponsors'') own the entire
common capital stock of Vermont. The Sponsors have each entered into
power contracts with Vermont dated February 1, 1968, as amended,
February 1, 1984, and September 21, 2001 (collectively, ``Power
Contracts'') that entitle and obligate them to pay the operating costs
of Vermont and to repurchase from Vermont the output of the Plant
according to certain entitlement percentages.\1\
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\1\ The Sponsors, the percentage of stock each holds in Vermont,
and their entitlement percentages are as follows: Central Vermont
Public Service Corporation, 33.23% of stock, 35% entitlement; Green
Mountain Power Corporation, 18.99% of stock, 20% entitlement; New
England Power Company, a subsidiary of National Grid USA and
National Grid Transco Plc, 23.90% of stock; 22.5% entitlement;
Connecticut Light and Power Company, a subsidiary of Northeast
Utilities, 10.09% of stock, 9.5% entitlement; Central Maine Power
Company, a subsidiary of Energy East Corporation, 4.25% of stock, 4%
entitlement; Public Service Company of New Hampshire, a subsidiary
of Northeast Utilities, 4.25% of stock, 4% entitlement; Western
Massachusetts Electric Company, a subsidiary of Northeast Utilities,
2.65% of stock, 2.5% entitlement; Cambridge Electric Light Company,
2.66% of stock, 2.5% entitlement.
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Vermont, having sold substantially all its assets and anticipating
a decreased level of business operations in the future, proposes to
issue dividends out of capital and repurchase stock as the final step
in the restructuring mandated for these utilities designed to disengage
them from nuclear generation. Vermont proposes to declare and pay one
or more dividends out of capital in the aggregate amount of up to
$43,000,000 in order to reduce its equity capital to a level more
commensurate with its activities. Vermont intends to declare and pay
these aggregate dividends in one or more steps with all dividends to be
declared and paid by December 31, 2003. In addition, Vermont proposes
to offer to repurchase and to repurchase, again out of available cash,
the shares of its common stock held by New England Power Company,
Connecticut Light and Power Company, Public Service Company of New
Hampshire and Western Massachusetts Electric Company (collectively,
``Non-Vermont Sponsors'') at their then stated value, estimated at the
time the declaration was filed to be $23.03 per share at the time of
repurchase. Vermont intends to carry out the repurchase transaction in
one or more steps over the next year, with all repurchases to be
completed by December 31, 2003. Vermont Yankee will maintain minimum
equity until it ultimately prepares to liquidate and wrap up its
affairs after March 21, 2012.
Vermont was organized in 1966 for the purpose of constructing and
operating the Plant and selling its electrical output to the Sponsors.
With the trend toward restructuring of the utility industry in the
1990s, the Sponsors and Vermont began a search for a purchaser of the
Plant in 1997, which culminated in a purchase and sale agreement with
ENVY, dated August 15, 2001 (``Purchase Agreement''). The closing under
the Purchase Agreement also involved Vermont entering into a power
purchase agreement, dated September 6, 2001, with ENVY, which required
Vermont to purchase from ENVY for resale at wholesale the output of the
Plant through March 21, 2012. Under the Power Contracts each Sponsor
agreed to repurchase at cost from Vermont its entitlement percentage of
that output and to pay its aliquot share of Vermont's other operating
expenses, including any liabilities under the Purchase Agreement. The
Power Contracts have been approved as wholesale tariffs by the Federal
Energy Regulatory Commission (``FERC'').
As of July 31, 2002, Vermont's current capital (including Other
Paid-In Capital, Capital Stock Expense, and Retained Earnings)
consisted of $55,911,468 of equity, evidenced by 369,149 shares of
common stock, $100 par value per share, which are held by the eight
Sponsors in the proportions described at footnote 1. As a single
purpose utility corporation, Vermont's economic life has been, and will
continue to be, primarily keyed to the operating licensed life (March
21, 2012) of the Plant.
Balance sheet adjustments must be made so that all assets are
appropriately characterized consistent with rate recovery. The
unamortized balance of all assets of Vermont is being amortized as
regulatory assets as authorized by FERC over the original operating
licensed life of the Plant. The recoveries of all investments and
assets have been approved by FERC and should be recovered in cost of
service rates by March 21, 2012. In the event additional costs of
service (operating and/or expense) requirements are needed at any
future period, the Power Contracts impose a non-cancelable obligation
on the Sponsors to pay these costs of service expenses.
The record states that Vermont's common equity as of September 30,
2002, was $57,249,189. This equity capital was appropriate so long as
Vermont owned and operated substantial generating assets. However,
after the closing of the Purchase Agreement, Vermont has become a pass-
through entity for the purchase and resale at wholesale of the output
of the Plant. Because less capital funds will be required to amortize
any of the remaining regulatory assets or to fund any of those
remaining end of life obligations, Vermont believes that appropriate
steps should be taken to reduce Vermont's outstanding equity
contemporaneously with its write-down of its assets.
To accomplish the reduction of equity, Vermont proposes a process
with two components: (1) Vermont will declare and pay one or more
dividends, payable out of capital, up to an aggregate of $116.48 per
share (or up to an aggregate of $43,000,000 for all dividends); and (2)
Vermont will offer to repurchase and will repurchase (in one or more
steps) the shares of its common stock held by its Non-Vermont Sponsors
at their then stated value of $23.03 per share. The repurchase price
would also be paid out of capital and would reduce the stated capital
of Vermont to approximately $4,500,000 (assuming that all shares are
repurchased from the Non-Vermont Sponsors and that the maximum
aggregate dividends proposed are paid). Vermont intends to maintain
approximately this level of equity capital throughout the remainder of
its life and then would return any remaining equity to its stockholders
upon dissolution.
Vermont believes that the amount of equity capital needed to carry
on its business will be less than was historically required because of
the decreased role it will play during the balance of the term of its
Power Contracts with its Sponsors. Vermont does not intend to engage in
any business other than that of a purchaser and reseller at wholesale
of the power produced by the Plant. Vermont will be involved with the
payment of certain retained liabilities and the collection of certain
potential claims under the Purchase Agreement. The two Vermont
Sponsors, Central Vermont Public Service Corporation and Green Mountain
Power Corporation, have agreed to remain as stockholders of Vermont
during this period, either directly or through their respective
[[Page 19041]]
wholly owned subsidiaries. Vermont expects to be able to satisfy its
needs for cash with revenues paid to it under the Power Contracts.
Accordingly, Vermont believes that the amount of capital that will
remain after consummation of the transactions proposed will be
sufficient to meet its ongoing business needs.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-9475 Filed 4-16-03; 8:45 am]
BILLING CODE 8010-01-P