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 December 12, 2000, to the Secretary, Securities and Exchange Commission, Washington, D.C. 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 December 12, 2000, the application(s) and/or declaration(s), as filed or as amended, may be granted and/or permitted to become effective.
Wisconsin Energy Corporation, et al. (70-9741)
Wisconsin Energy Corporation (“WEC”), a holding company exempt from registration under section 3(a)(1) of the Act, and its wholly owned public utility subsidiary Wisconsin Electric Power Company (“Wisconsin Electric”), both located at 231 West Michigan Street, P.O. Box 2949, Milwaukee, Wisconsin 53201 (together, “Applicants”), have filed an application (“Application”) under sections 9(a)(2) and 10 of the Act requesting authorization for a transaction in which: (1) Wisconsin Electric and Edison Sault Electric Company (“Edison Sault”), a wholly owned electric utility subsidiary of WEC, will transfer ownership of and control over their transmission assets (“Transmission Assets”) to American Transmission Company LLC (“Transco”), a Wisconsin limited liability company, which will be a single-purpose transmission company; (2) Wisconsin Electric and Edison Sault will receive member units of the Transco in proportion to the value of the Transmission Assets; (3) Wisconsin Electric will purchase Class A shares of ATC Management Inc. (“Corporate Manager”), a Wisconsin corporation, in proportion to the value of the Transmission Assets; and (4) Wisconsin Electric will purchase one Class B share of the Corporate Manager. In addition, WEC requests an order from the Commission affirming its continued section 3(a)(1) exemption from registration under the Act.
The Commission granted WEC an exemption under section 3(a)(1) of the Act by order dated April 10, 2000. See Holding Co. Act Release No. 27163.
WEC owns directly all of the common stock of two public utility companies: Wisconsin Electric, a combination electric and gas utility company, and Edison Sault, an electric utility company. In addition, WEC owns all of the common stock of WICOR, Inc. (“WICOR”), a public utility holding company incorporated under the laws of the State of Wisconsin, which also is exempt from registration under section 3(a)(1) of the Act by order of the Commission. WICOR has one wholly owned public utility subsidiary, Wisconsin Gas Company (“Wisconsin Gas”), which is a gas utility company organized under the laws of the State of Wisconsin.
Applicants state that Edison Sault currently is not an “affiliate” of any public utility company for purposes of section 9(a)(2) of the Act. Under section 9(a)(2), any person seeking to acquire, directly or indirectly, any security of any public utility company must apply to the Commission for approval “if such person is an affiliate, under clause (A) of paragraph (11) of subsection (a) of section 2, of such company and of any other public utility or holding company, or will by virtue of such acquisition become such an affiliate”. Because Edison Sault will not become such an “affiliate” until after its acquisition of Transco's member units, its proposed transaction is not subject to approval under section 9(a)(2).
See note 1, supra.
Wisconsin Electric generates, transmits, distributes, and sells electric energy in southeastern, east central and northern Wisconsin and in the Upper Peninsula of Michigan. As of December 31, 1999, Wisconsin Electric had approximately 1.0 million electric customers. During 1999, Wisconsin Electric had electric operating revenues of $1.69 billion, total operating revenues of $2.02 billion, and net income of $212 million, after dividends on preferred stock.
In 1999, the State of Wisconsin enacted legislation (“Transco Legislation”) that facilitates the formation of Transco. The Transco Legislation, among other things, encourages public utility affiliates of Wisconsin holding companies, including Wisconsin Electric, to transfer ownership of their transmission assets to Transco by beneficially adjusting the calculation of an existing limit on the amount of unregulated investments these holding companies and their affiliates can make, after the transfer of their transmission assets to Transco. Transco will be managed by the Corporate Manager, which will also own a portion of Transco's membership units. All Transco participants will ultimately own a direct or indirect interest in Transco and the Corporate Manager in proportion to the value of the transmission assets each participant contributes to Transco. Transco is expected to transfer operational control of its assets to the Midwest Independent System Operator, Inc. by November 1, 2001.
Edison Sault and another participant in Transco, South Beloit Water, Gas and Electric Company are not expected to receive shares in the Corporate Manager.
Applicants expect that the firms taking interests in Transco and the Corporate Manager will include, in addition to Wisconsin Electric and Edison Sault: Wisconsin Public Service Corporation (“WPSC”), a wholly-owned subsidiary of WPS Resources Corporation (“WPSR”), a public utility company claiming exemption from registration under section 3(a)(1) of the Act by rule 2; Wisconsin Power and Light Company (“WP&L”); South Beloit Water, Gas and Electric Company (“South Beloit”), a wholly owned subsidiary of WP&L with transmission assets in Illinois; Wisconsin Public Power Inc. (“WPPI”), a municipal electric utility company owned by 30 Wisconsin municipalities; and Madison Gas and Electric Company (collectively, “Member Utilities”).
WPPI, and any other transmission-dependent tax-exempt entity that participates in Transco, will not be contributing transmission assets to Transco. Applicants state that, because the participation of these entities will reduce the transmission revenue otherwise received by Transco, these entities will purchase their interests for a price that is designed to keep the other participants in Transco whole.
WPSR and WPSC filed a separate application under the Act seeking approval of WPSC's proposed participation in Transco on October 12, 2000 (SEC File No. 70-9767). WPSC's and WPSR's filing is being noticed contemporaneously with this notice. In addition, Alliant Energy Corporation, WP&L, South Beloit, Transco and Corporate Manager filed a separate application-declaration under the Act seeking approval of WP&L's proposed participation in Transco, certain intrasystem transactions, and various financing transactions (SEC File No. 70-9735).
Other transmission-owning utilities may, in the future, decide to become members of the Transco.
Applicants expect that the initial participants in Transco will contribute their transmission assets to Transco on or about January 1, 2001 (“Operations Date”). For purposes of establishing relative shares, the Transmission Assets will be valued at their contribution value (“Contribution Value”), which is defined as original cost less accumulated depreciation as adjusted on a dollar-for-dollar basis for deferred taxes, excess deferred taxes and deferred investment credits. Applicants expect that Wisconsin Electric's and Edison Sault's Contribution Value at December 31, 2000 will be approximately $252 million, and their aggregate initial interest in Transco will approximate 50.8%. Applicants further state that this percentage may fluctuate based on various factors, including the number of participants in Transco.
The Transmission Assets proposed to be transferred include: (1) Transmission lines and transmission substations; (2) transformers providing transformation within the bulk transmission system and between the bulk and area transmission systems; (3) lines connecting to generation sources and step-up substations; (4) radial taps from the transmission system up to, but not including, the facilities that establish the final connection to distribution facilities or retail customers; (5) substations that provide primarily a transmission function; and (6) voltage control devices and power flow control devices directly connected to the transmission system. Applicants expect that, as of December 31, 2000, the original cost of the Transmission Assets of Wisconsin Electric and Edison Sault will be approximately $442.9 million and $41 million, respectively. The net book value of the Transmission Assets of Wisconsin Electric and Edison Sault at December 31, 2000 is expected to be approximately $223.8 million and $31.4 million, respectively.
“Net book value” is defined as original cost less accumulated depreciation.
Applicants state that the transmission-owning Member Utilities and Transco expect to enter into various agreements (“Agreements”) under which the Member Utilities will provide Transco with operations and maintenance services, control area operations, and other services. Any services provided or received by Applicants under any of these Agreements will be provided at cost, unless authorized or directed by appropriate governmental or regulatory authority in accordance with rules 90 and 91 under the Act.
WPS Resources Corporation, et al. (70-9767)
WPS Resources Corporation (“WPSR”), a public utility holding company claiming exemption under section 3(a)(1) of the Act by rule 2, and Wisconsin Public Service Corporation (“WPSC”, and together with WPSR, “Applicants”), WPSR's wholly owned public utility subsidiary, both located at 700 North Adams Street, Green Bay, Wisconsin 54301, have filed an application (“Application”) under sections 9(a) and 10 of the Act.
WPSC is also a holding company because it owns an interest in another subsidiary of WPSR, Wisconsin River Power Company. WPSC claims exemption from registration under section 3(a)(2) of the Act by rule 2 under the Act.
Applicants request authorization for: (1) WPSC, or a limited liability company of which WPSC will be the sole member (“WPSC-NEWCO”), to receive a proportionate share of the membership interests of American Transmission Company, LLC, a Wisconsin limited liability company (“Transco”) in exchange for the transfer of WPSC's transmission facilities, associated substations and real property interests (the “WPSC Transmission Assets”) to Transco; (2) WPSC to purchase Class A shares of ATC Management Inc., a Wisconsin corporation created a manage Transco (“Manager”); (3) WPSC to purchase one Class B Share of Manager; and (4) WPSC to acquire all of WPSC-NEWCO's membership interests in exchange for cash.
Applicants' proportional share in the Transco will be based on the book value of the WPSC Transmission Assets contributed relative to that contributed by other utility companies that are to become members of the Transco.
Applicants state that it may be necessary to effect the proposed transfer of transmission assets through WPSC-NEWCO as a result of certain limitations imposed by WPSC's mortgage indenture. Accordingly, WPSC also requests authority to form WPSC-NEWCO and to acquire all of WPSC-NEWCO's membership interests in exchange for one or more cash payments to WPSC-NEWCO. After WPSC-NEWCO receives Transco's member units, it will pay to the trustee under the WPSC mortgage indenture cash in an amount approximately equal to WPSC's corresponding cash payment to WPSC-NEWCO.
WPSR's public-utility subsidiaries are: WPSC; Upper Peninsula Power Company; and Wisconsin River Power Company. WPSC is engaged principally in the generation, purchase, distribution and sale of electric power in northeastern and central Wisconsin and in a portion of the Upper Peninsula of Michigan. WPSC also is engaged in the purchase, distribution and sale of natural gas in northeastern and central Wisconsin and in a portion of the Upper Peninsula of Michigan. As of December 31, 1999, WPSC provided retail electric service to approximately 388,000 customers and retail gas service to approximately 230,000 customers. WPSC provides wholesale electric service to various customers including municipal utilities, rural electrification cooperatives, energy marketers, other investor owned utilities and a municipal joint action agency. At and for the twelve months ended September 30, 2000, WPSR's consolidated assets, operating revenue and net income were $2,188,504, $1,528,310, and $66,407 respectively. At and for the twelve months ended September 30, 2000, WPSC's consolidated assets, operating revenue and earnings available for common stock were $1,420,591, $749,412 and $71,988 respectively.
In 1999, the State of Wisconsin enacted legislation (“Transco Legislation”) that facilitates the formation of Transco, which will be a for-profit single-purpose transmission company. The Transco Legislation, among other things, encourages public utility affiliates of Wisconsin holding companies, including WPSC, to transfer ownership of their transmission assets to Transco by beneficially adjusting the calculation of an existing limit on the amount of unregulated investments these utilities and their affiliates can make, after the transfer of their assets to Transco. Manager will manage Transco and will also hold a portion of Transco's membership interests. All Transco participants will ultimately own direct or indirect interests in Transco and Manager in proportion to the value of the transmission assets and/or cash each participant contributes to Transco. Transco is expected to transfer operational control of its assets to the Midwest Independent System Operator, Inc. by November 1, 2001.
It is expected that the participation in Transco and Manager will include in addition to WPSR and WPSC: Wisconsin Power and Light Company (“WP&L”); South Beloit Water, Gas and Electric Company (“South Beloit”) a wholly owned subsidiary of WP&L with transmission assets in Illinois; Wisconsin Energy Corporation (“WEC”), an exempt holding company; Wisconsin Electric Power Co. (“Wisconsin Electric”), a wholly owned subsidiary of WEC; and Edison Sault Electric Company (“ESE”), a wholly owned subsidiary of WEC with transmission assets in Michigan; Wisconsin Public Power, Inc. (“WPPI”), a municipal electric company owned by 30 Wisconsin municipalities; and Madison Gas & Electric Company (collectively, “Member Utilities'”). Other transmission-owning utilities may, in the future, decide to become members of Transco.
Neither ESE nor South Beloit will receive shares in Manager.
WPPI, and any other transmission-dependent tax-exempt entity that participates in Transco, may not contribute transmission assets to Transco. Applicants state that, because the participation of these entities will reduce the transmission revenue otherwise received by Transco, these entities will purchase their interests for a price that is designated to keep the other participants in Transco whole.
WEC and Wisconsin Electric filed a separate application under the Act seeking approval of WPSC's and ESE's proposed participation in Transco on August 25, 2000 (SEC File No. 70-9741). WEC's and Wisconsin Electric's filing is being noticed contemporaneously with this notice. In addition, Alliant Energy Corporation, WP&L, South Beloit, Transco and Manager filed a separate application-declaration under the Act seeking approval of WP&L's proposed participation in Transco, certain intrasystem transactions, and various financing transactions (SEC File NO. 70-9735).
Applicants' final percentage ownership interest in Transco, as well as the definitive number of Transco member units and Manager Class A shares to be acquired will depend upon the actual number of participants in Transco and the contribution value (“Contribution Value”) of the transmission assets transferred to Transco by those participants. It is expected that WPSC's Contribution Value as of December 31, 2000 will be approximately $63 million, and its initial interest in Transco will be approximately 12.62%. WPSR, the other participating Wisconsin utilities, and South Beloit intend to contribute their transmission assets to Transco on or about January 1, 2001 (the “Operations Date”). Depending on the number of initial members of the Transco, it is expected that Applicants' interest in Transco and Manager will be between 10% and 15% of each entity. The Transco's other participants will make similar initial contributions.
Contribution Value is defined as original cost less accumulated depreciation, as adjusted on a dollar-for-dollar basis for deferred taxes, excess deferred taxes, and deferred investment tax credits.
The WPSC Transmission Assets proposed to be transferred include: (1) Transmission lines and transmission substations; (2) transformers providing transformation within the bulk transmission system and between the bulk and area transmission systems; (3) lines connecting to generation sources and step-up substations; (4) radial taps from the transmission system up to, but not including, the facilities that establish the final connection to distribution facilities or retail customers; (5) substations that provide primarily a transmission function; and (6) voltage control devices and power flow control devices directly connected to the transmission system. Applicants expect that, as of December 31, 2000, the original cost of the WPSC Transmission Assets will be approximately $139 million. The net book value of the WPSC Transmission Assets at December 31, 2000 is expected to be approximately $70 million.
“Net book value” is defined as original cost less accumulated depreciation.
Applicants state that the transmission-owning Member Utilities and Transco expect to enter into various agreements (“Agreements”) under which the Member Utilities will provide Transco with operations and maintenance services, control area operations, and other services. Any services provided or received by Applicants under any of these Agreements will be provided at cost in accordance with rules 90 and 91 under the Act, unless authorized or directed by appropriate governmental or regulatory authority.
Applicants state that certain of the Agreements may provide for certain services between Transco and affiliates of WPSR, including WPSC, to be rendered at market rates, without regard to cost.
For the Commission, by the Division of Investment Management, under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-30133 Filed 11-24-00; 8:45 am]
BILLING CODE 8010-01-M