ML20099E993
| ML20099E993 | |
| Person / Time | |
|---|---|
| Site: | Seabrook  |
| Issue date: | 03/26/1992 |
| From: | Caron P PUBLIC SERVICE CO. OF NEW HAMPSHIRE |
| To: | Murphy R CONNECTICUT, STATE OF |
| References | |
| NUDOCS 9208120064 | |
| Download: ML20099E993 (31) | |
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o 9 M.KACICH s March 26, 1992 APR - 91992
-yIA HAND DELIVERY RECEIVED Mr. Robert J. Murphy :~
Executive Secretary Department of Public Utilicy Control One Central Park Plaza New Britain, Connecticut 060S1-Ret Docket No. 90-07 Application of Public Service Company of New Hamyshire for Waiver of Approval to Issue Securities in Service Company'of New Hampshire by Northeast Util_
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Dear Mr. Murphy:
-4 On August 29, 1990, decision' General (the Statutes " Decision") pursuant to Section 43 that: cut e a of the Connecti
'(a)' approved the issuance of securities by Public
~("htep Two") of Northeast Utilities' proposso acquisitio
' approved-all other- transactions to effect Step Two. The Departreent's _
approvals
with the Order dated vere July 20.conditioned 1990 on the securities ,and and'other tran Cor=ission I notr that 64 ("NHPUC") and any Supplemental Order- thereto."by c Utilities the'New Hampshire Department's Draft Order dated March .(emphasis added).
reference tm 20,~1992 pointed out to the Dapartment by NU).dupplemental Orders" of the NHPJC (which echo NU's concern that I.am vriting for two reasons: (1) to the Final Order reinstate the Department's earlier acknowledgement that the.NHPUC must supplement its Order,
, 1990 July 20 and (2) to proyide to 1.0 the Step Twol financing.the Department the latest order of the NHPUC with respect-
'the NHPUC's . Attached to this March 19,=1992 letter for the Department's information is a copy of 91-193.-approving:the Step Two Repcrt and Order No. 20,416 in Docket No . DF financing.
Step Two financing package appeared consistentnancing with the fiThe Report and Order'no contemplated in the NHPUC's July 20,.1990 those-financings as consistent with.the public good (OrdOrder roved (Report at 4) and app er at 1).
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9200120064 920326 PDR c ADOCK 05000443 PDR
@S o W k pl 333 March Ave . Monchester.NH 03105 Telephone (603)668-130 1,0[. '{
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-Hr. Robert J. Murphy March 26~, 1992 Fage 2
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PSNH believes that NHPUC Order No. 20,416 is a " Supplemental Order" to
,s ; the NHPUC Order dated July 20, 1990, as contemplated by this Department's August- 29, 1990 Decision in the captioned docket. Accordingly, except for ,
reinstating the language in the Conclusion of the Final Decision that recognizes the need for " Supplemental Orders to the NHPUC's July 20, i)90 Order, no further. action.is required by the Department.
Please contact me at (603) 634-2560 if you require further information about this matter.
Ver,y truly yourr.,
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_ Pierre O. Caron Assistant-General Counsel Public Service Company of New Hampshire
.I cc: Leon E. Maginthlin, Jr.
- Gerald Garfield, Esq.
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'PUBLIC SERVICE COMPANY-OF NEW HAMPSHIRE, INC./ e I
'I NORTHEAST UTILITIES /
d NORTH ATLANTIC ENERGY CORPORATION l Il- l l
Order Approving Financing
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REPORT ,
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-4 Appearances: Rath, Young, Pignatel.11 and Oyer, by U William F.'Ardinger, Esq. and Day, Berry and Howard, by l
- I Robert Knickerbocker, Esq. for Northeast Utilities and
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= North-Atlantic Energy Corporation; Gerald M. Eaton, Esq. ;
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for Public Service Company of New Hampshire, Inc.; Shelley {
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1 A. Nelkens,.EEE gg; office of Consumer Advocate by Michael W. Holmes, Esq. for Residential Ratepayers; Amy L.
- Ignatius Esq. for.the staff of the New Hampshire Public d,
Utilities Commission. ,
- I. PROCEDUPALEHISTOPl By order of'Notico dated November 27, 1991, the New Hampshire Public. Utilities Commission (Commission) opened docket.DF 91-193 to consider the plan of financing jointly filed on November 18, 1993, by Public Service Company of New Hampshire, Inc. (PSNH), Northeast Utilities
'(NU) andLNorth Atlantic Energy Corporation (NAEC) . The ;
financing plan was submitted by PSHH, NU and NAEC in antic-ipation of' approval of the merger proposed between PSNC and NU. 'ShelleyiA. Nelkens was granted. leave to' intervene,
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- E > Robert lKnickerbocker, Esquire, . of Day, Berry and Howard, [
t counsel to NU.and NAEC, was granted permission to appear !
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- y prn haq vi.ce. The Commission scheduled an evidentiary l 3 l I r
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9F 9'l-193 ' 2 hearing-for January 14, 1992, which was subsequently re- l r '
scheduled to Fobruary'10, 1992. i i
Il i y II. FINANCING PROPOSAL '
1 l
ll NU, NAEC and PSNH (collectively referred to as j
' js I the companies) propose to finance the merger transaction t
l I between NU and PSNH by'means of a financing plan involving Il approximately $355 million in mortgage bonds at a projected j : Interest rate of 9.25% to 9.50% but- in no <avent greater i
1n than 11.5%, issuar.ce by NAEC of commun stock to NU to l
- provide approximately 20% equity component of NAEC's capi-
- talization to fund the costs of the morger, and issuanes by -
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PSNH of common stock.to provide. cash needed for the merger transaction. In addition, the companies intend to partici-q pate.in the.NU " money pool" by.which pool members -sy borrow'at rates lower than rates available to them as individual borrowers, and'for NU to make capital contribu- { ,
tions when necessary, particularly in order to maintein l 1 required debt ratios under borrowing agreements.
s At the February 18, 1992 hearing, the companies t
presented two financial ~ witnesses who testified to the 3
, components:oc the companies' financing proposal: Michael-
' Wiater, Manager'of NU's Corporate Financial Forecasting and E .
' Eugene Vertefeuille,,NU's Assistant Treasurer, responsible ;
jj for Short Term Financing. According to Mr. Winter and Mt. j i
ii Vertefeuille, the companies intend to market tbs mortgage l
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bonds upon final approval of all regulatory entities, ;
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!- (- - j including the Commission, the Connecticut Department of I 9 Public-Utility Control, the Securities and Exchange Commis-d-
y sion, and the Nuclear Regulatory Commission. Although the d decisions of some regulatory agencies may be appealed, the
~ t- o companies intend to proceed with the development of the financing package, unless.any appeal flied appears to fundamentally challenge the viability of the merger.
The companies submitted a Preliminary Request for Findings and Approvals on February 3, 1992, detailing the .;
components of the proposed financing. The proposed find- I ings are attached hereto as Appendix A. In additica, on i
February 14, 1992, the companies submitted to the Commis-sion a' letter requesting an additional approval of a letter j egreement between PSNH and NAEC dated February 13, 1992, ,
which explains the terms of the Seabrook Power Contract and '
the First Mortgage-Indenture and Deed of Trust regarding i
insurance proceeds in the event of condemnttion of the t
'Scabrook Plant. The February 13 letter agreement is at- i tached hereto as Appendix B. ,
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k III. COMMISSION ANALYSIS t
h The majer components of the financing package ,
1 i h' ' appear consistent with those components contemplated in the j i
Commission's decision in DR 89-244, 75 NH PUC 396 (1990), I
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though particular details have n,v changed. For example, !'
interest rates arc lower than anticipated in 1990, while i i
costs of the merger are higher due to the greater than ;
- anticipated length of time it has taken for the merger to reach the point of being financed. We do not find the l 1
changed circumstances to be detrimental to TTha ratepaye- '
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rs or to cause us to reconsider our approvar ~f the merger.
transaction. '
Based upon the current estimates of the rates at (
which the mortgage bonds can be issued (9.25% - 9.50%) and the rate of. return on equity that was -le md by the Federal Energy Regulatory Commission (FERC) of 12.53k, it appears that the overall cost of capital will be lower than was anticipated in ! ..
. Docket No. DR 89-244. ,
The following is a comparison of the current projec-tions as compared to those approved in D6 89-244:
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- j .CurI.e.nt_ Pro eetiont Docket 89-244 (000's) '
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ElMi HALC EltM NAEC .
Common Equity 0 390,000 S 157,300 $ 320,000 $ 140,000 Preferred Stock 125,000 0 127,551 0.
Long-term Debt 1.232,200 '549,600 1,150,805
-- s d 560,022l 1
Capitalization $1,747,200 $ 706,900 $1,598,356 S 700,000'!
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- Common Equity . 22.32% 22.25% 20.02% 20.00%!
7.98 0.00!
% Fre.%:~ed Stock 7.15 0.00
% Long-t<rm Debt 22.u12 77.75 72,00 12.1 1 i~
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-Total -100.00% 100.00% 100.00% 100.00%j 4
Embedded Cost l Cortcon Equity 13.254 12.53% 13.25% 13.75%
Freferred Stock 10.60* O 11.40 0 Long-term Debt 7.50* 12.01** 10.41 13.20,
.g Erichted Coct of Capital Common Equity 2.96% 2.78% 2.65% 2.75%
i . Preferred: Stock .76 .00 . 91 .00-i Long -term Debt k 16. jb.21 7_dQ 10.56-
' Total 9.08% '12.12% -11.06% 13.31%.
- Reflects the. actual embedded costs'from the Step 1 financings which occurred on~May 16, 1991 for the fixed rate securities and.an estimate of interest rates at the time of the merger for ,
- the' variable rate securities.
- Includes ths. assumption from PSNH at merger date of the existing'$205 million-of Seabrcok notes at 15.23% and the
.issusnce of!a projected new'NAEC $355 million first mortgage bond with'an estimate interest-rate of 9.5%. .
L The company also furnishcd theEfollowirg information ,
b i related to the . transactions whicb .will occut if the merger were j d i L' ,
to occur on April 1, 1492. PSNH would reqaire une following l
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- i cash requirements
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_ j. .: DF 91A193 I; 6 TV - 1 -
) Hillions l Purchase of PSNH. Common' Stock- S 771.1 I
CSsl Q% ) Transfer Tax' 7.9 I
- r -- Reimbursement of NU Expenses 45.0 '
l} . Reduction of Term Loan 52.0 Reduction of Short-term Debt 46.3 d Cash Requirement (4/1/92) S 992.3 The sources of funds needed to satisfy the I
$922.3 million requirement are as follows: '
Millions Capital stock purchases by NU to PSNH $ 410.0 ,
Capital stock purchases by NH to- l North Atlantic 157.3
., North Atlantic First Mertgage Bonds 355.Q 1 Total $ 922.3
- Upon consummation of the merger North Atlantic will i t
. provide.PSNH with the funds obtained from the sale of the first -
);q mortgage bonds and the capital contribution from NU, along with ~
the assumption. of $205 million of Seabrook notes in return for . '-
the Seabrook asset. '
One financial transaction not contemplated by
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the Commission'in DR 89-244 is the NU money pool. Participa- i tion in'the money pool, according to'the companies' witnesses, '
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'is voluntary on the part of each member; members are free to 1 ,
borrow -from and extend loans to the pool if they .so wish; at no point-are-they required to do so. a ecause members would be able-to borrow. money.at lower rates than they could obttin
,; elsewhere,.-which inures to the benefit of ra+.epayers, we tind j u !
- j that- the participation' of the companies in the NU money pool tol l>e consistent with the public' good and an acceptable component
.of the financing proposal.
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-' ' In addition, our order in DR 89-244 did not j
I contemplate capital contributions from NU to maintain required ll -
'I debt ratios. The-companies testified that they intend to undertake such borrowing only in the event it is necessary to- '
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.Y^ maintain required debt ratios or in other emergency situations,
.I and in most circumstances the companies would notify the Com-mission staff following such contributions. When this is not
'j possible, the companies have cgreed to notify the staff immedi-!
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]. ately after.such contributions. Given the companies' commit- j i
g ment to involve the Commission staff in all circumstances
- i except emergencias, and the representation of the companies >
l that they anticipate a need.for emergency contributions to be extremely raro, we find the capital contributions proposal to
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be consistent with the public good and an acceptable component i of the financing. j l :
Finally, the companies have submitted a letter l 4 -agreement explaining the operation of the Seabrook Power Con-
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- tract-and insurance proceeds in the event of condemnation of ,
the Seabrook Plant. We find that the letter agreement is
, consistent with our understanding of the Seabrook Power Con- ,
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, tract and in th( public good and, therefore, an acceptable component of the financing.
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j our order will issue accordingly.
l -Concurring
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- March 19, 1992 l u' t '!
i 7' -l<;! _ Eruce B. El l s wo rt h__ Linda G. Bisson ll. _ Commissioner Commissioner l li I d
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DF 91-193 PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE, INC./
j NORTHEAST UTILITIES /
NORTH ~ ATLANTIC ENERGY CORPORATION l'
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t Order Approving Financing s . ;
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9BDEB HQ. 20,416 l i 'i d
l In consideration of the foregoing report, '
I which is made a part hereof / it la hereby i ORDERED, that the financing proposal presented l f' by Northeast Utilities, North Atlantic Energy Corporation l
(NAEC) and Public Service Company of New Hampshire, Inc. (PSNH)t i
(collectively the' companies) is consistent with the public good; and hereby approved; and it is
'; FURTHER ORDERED, that the Preliminary Request '
I for' Findings and Approvals proposed by the companies and at-r
'tached to the Report;as Appendix A is hereby. accepted; and.it l
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FURTHER ORDERED,-that the letter agreement i
.between NAEC and PSNH dated February 13, 1992, interpreting the Seabrook Power Contract and describing paymentlof insurance
' proceeds in'the event of condemnation of the Seabrook Plant, attached to the Report as' Appendix B, is hereby accepted.
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& _y,91 193 ,
By order of the New Hampshire Public Utilities
- Commission this nineteenth day of March,1992.
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i Brued B. Ellsworth ' Lihd'a G. pisson Commissioner Commissioner i
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" APPENDIX A"-
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, .' n 12v STATE.OT NEW--HAMPSHIRE 1 s
iBETORE THE PdBLIC UTILITIES C01CiISSION-y
- Tinancing-PetitionLof. Northeast _
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Utilities,'Public_ Service Conpany _
) Docket No. DF 91-193 s
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of.New Harpshire and; _)
- j. Nerth . Atlantic' Energy Corporation- ).
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PRELIMINARY REQUEST FOR FINDINGS AND APPROVALS _
' >At-a prehearing conference held;before the New Harpshire- ,
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Publicitsilities Comission-on Decenber 17,--1991, Northeast
. Utilities d"NU"),_Publ-ic: Service Conpany,of New Hampshire .
O- :(upsygn)fand NorthfAtlantic Energy Corporation:("NAEC")
b _-(collectivelyF the.i" Petitioners") agreed to submit a' list of
, lb < 1 prelininary_iequests for.1 findings.to be nade:by the Comissien at 4 ' theSclose ofith'e< hearing in the Jabove'-referenced natter, and'a 1 . - .
& _ listfeffapprovals needed-to.inplementitheJfinancings1(the " Step 2 <
Tfinancings") required.to.consunnate.the;rergerf-(the'" Merger")1cf G ~ 'PSNHiandCan NULsub'sidiaryLin accordancefwith-the: Third A ended 1 SJoint ' Plan- of ' Reorganization dated December 28, 1989,.preposed by In' 1varicusi parties. to :the- PSNH! bankruptcy T (the " Joint Plan") . -
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- submitting (this-freguest, Petitioners understand that:they nay addt
- m. ' . additional..requestsifor findings and approvals as nay be U -
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- k' A. -Prcoesed General Findines of Fact
- 1. In reviewing and approving the Rate Agreenent and the c PSNH reorganization proposal contained in the Joint Plan in DR 89-244, the Cor,alrsion considered the Step 2 financings, including, inter .alia., NAEC's first nortgage bonds and the PSNH and-NAEC con =en stock, based upon the infor ation and projections available to the Connission in the record at that tire, including:
- a. .for the first nortgage' bonds, an aggregate principal arount of approximately $355 nillion, a naturity of up to ten years.and a projected interest rate of 11.5
_-t.
percent; b.. the issuance by NAEC of its common stock to NU to provide the approximately 20 percent equity corpenent of NAEC's. initial capitalization required to fund the Leosts, determined in accordance with'the forrula set-cut in Section 2 of the Rate Agreement, of the acquisition by NAEC of PSNH's Seabrook Interest; and
- c. 1the issuance by PSNH of-its common stock in accordance with the Merger Agreement to provide the amount of cash needed (after taking into account the amount to be I' received on the transfer:of the Seabrook Interest to
- NAEC)
- to satisfy PS!!H's obligations under the Merger I
Agreement, including the amount needed to cash cut the l
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-shares'offthe existing PSMH common stock paid or accrued as stock dividends _ prior to the Merger in accordance with the Joint Plan.
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- 2. In DR 89-244, the Co* lission found that these
' financings, as components of the overall financing pla , are essential to the censummation of the Merger and to implementaticn of-the Joint Plan, are reasonable, permit resolution of the PSSH tznkruptcy, fare supported by the rates prcvided for in the Rate u;re ment, and, based upon the infornation available at that time asoto the Step 2 financings, were conceptually consistent with the public.gcod and lent support to the Commission's findings as to the Rate Agreement under RSA 362-C:3. _
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- 3. The-Ccanission further found in DR 89-244 that the rates',-both those anticipated'under the Rate. Agreement for the .
seven-year fixed rate period and the range of rates projected fer the years after the fixed rate period, are affordable, reasonably
. balance-the competing interests of consumers and investors so-
. that investors 1w1111 realize a reasonable return and ratepayers
- will net. suffer an unduo burden,- and will permit PSNH to- support its:anticipatedJeapitalization for such years.
4.- With respect to the-issuance of the securities and other financings of-PSNH and.NAEC contemplated by the' Joint Plan
-(including,' inter alia, NAEC's first nortgage bonds and the PSNH and NAEC common stock), the Commission found in DR 89-244 that:
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- a. the resulting capitalizations of these utilities are reasonable,-pernit resolution of.the PSSH bankruptcy are suprarted by the rates provided
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for in the Rate Agreement and are in the public good;
- b. the res 1 ting capital structures of these utilities will not exceed the fair cost of the preperty reasonably requisite for present and future use to supply reliable electric service in the future to the New Hanpshire ratepayers and its ecenery; and
- c. the resulting capitalization ratios and capital l' ' ' structures are reasenable and are justified by the special. circumstances of the case. .,
- 15. -Based:upen the c connission's review in this docket of the specific preposals:for the step 2 financings-as the Merger is becening imminent, as centerplated in DR 89-244, the:Connissien finds:the specific financing proposals herein are consistent with
'the'Connission's understanding of such financings at the time ef
--itslReport and Order No. 19,889 in'DR 89-244, including, withcut limitaticn,jthofamount,.naturity and naxinun cost of NAEC's fi:st nortgage tends,1the .anount -(taking into account variables for cashirequirements of!the Mercer that change over time as
- discussed in the Comnissicas' findings herein) and cost cf cormon y
stock.to be-issued by PSHH and UAEC, and-the resulting
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J capitalizations and capital structures, and the Con.nission's findings and approvals in said Report and Order No. 19:889 with
-respect to the public good are accordingly reconfirned herein.
B.- Procosed Findines With Respect to Specific Financinos First Mortgage Bonds
- 1. The NAEC'first nortgage bonds will be issued i, an aggregate principal arount of approximately $355 million, with a
- proposed naturity not to exceed ten years, and at an interest u
' rate.which is expected not to exceed 11.5 percent.
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- 2. Becau'se the interest rate on the first nortgege bonds
'will be no higher thanf the 11.5 percent projected in DR 89-244 (and nay-be lower), and the aggregate principal-arount and naturity are consistent 1with the projections considered by the Connissien;at thest tine, no naterial adverse-change has occurred since DR.69-244 and the Connission need not repeat the detailed
' inquiry.nade at that time.
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- 3. The issuance cost for the first nortgage bonds is not z
expected to exceed.S9.4-million.
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-4. Under RSA 369:1, 2 and 4, the issuance and sale to underwriters,.at a price equal to the principal amount and with issuance costs not exceeding $9.4 nillion, of approxinately $355
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n1111cn '.n aggregate principal amount of first nortgage bonds by MAEC at the effectivo date of the Merger pursuant to the terns of an indenture (the " Indenture") substantially in the forn
- subnitted to the Cornission and in accordance with testimony subnitted to the Cennission, with a tern to naturity of not nere '
than ten Saars and an interest rate of not nore than 11.5% per annan, is in the public good.
- 5. Under RSA 369:2, the propossJ first nortgage to be granted by NAIC in accordance wi' ti . , Indenture of certain present and feture property, both tengible and intangible, and including franchises, relating to the Seabrook Interest, to l eccure paynent of its first certgage bonts is in the public gecd.
- 6. Thu pledging and assignnent to the trustee undar the Indenture of NAIC's rights under the Seabrook Power Contract as 5
security f or SAIC's first nortgage bonds pursuant to the terns cf th. Indenture is in the public good.
EAIC Corren Stock
- 7. Pursuant to the Joint Plan, the UAEC connon stock Will be issued to KU for an anount deternined based on a connon equity percentage of 20 percent and the $700 million value initially assigned to Seabrook, plus an amount of equity reflecting the
! Investnent Return, Deferred Capital Expense and AFUDC (each as defined in Schedule I to Exhibit A of the Rate Agreement) accrued
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- - - - _ _ = _ _ _ -_- _ _ _ _ _ . - - ___ - -_ _ _____ - __ - __ _ _ _ _
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. between May 16, 1991 a.ed the Merger date. The approxinate dollar arount of the common equity issuance would be $150 nillion if the Merger had occurred on January 1, 1992, $160 million if the derger occurs on April 1992, and $165 nillion if the Merger '
. .b occurs en July 1, 1992.
l B. The issuance cost is net expected te exceed $5,250. '
- 9. BecatJse the issuance of common stock by NAEC at- the '
ef fecti.'s date of the Kerger is pursuant to and in accordance with the terns ox* the Joint Plan and thero has been no raterial change in the projecticns that the NAEC common stock will be issued without an uncerwriter at low issuance cost and NAIC's q'
- initial capitalitatien will be approxicately 80-percent debt and 1
20 percent onuity, the Cornission need not repeat' the detailed inquiry nade in DR 59-244.
- 10. Under RSA 369:1 and 4, the issuance of common stock by -
NAEC in an arount as deternined in accordance with the formula h ~
. set outlin pa.'agraph 7 above and at an issuance cost of approxicately $5,250 is in'the public good.
- 11. - Under RSA1374:33, acquisition by NU of the shares cf zconnon stockLissued by NAEC at the effective dato of the Verger is an the public good.
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- 22. Forsuant-to the Joint Plan, at the Merger, PSNH will 7 issue connen stock to NU for an anount of cash necessary to satisfy P5NH's obligation to provide the cash requirenents of the Merger, after takino into acccunt the amount to be received on the transfer of the Seabrock Interest to NAIC.
- 13. The cash requirer.cnts cf the Merger consist of the amount to be paid to existing PSNH connon stockholders for their t sharts, including all st :k dividends paid or accrued prior to the Merger in accordance with the Joint Plan, plus up to 552
.i nillien to reduce PSNH'O tern loan, plus $45 nillion to reimburse NU for expenses associated with the Merger, plus approxinately L $7.3 nillion.to be paid to the State of New Harpshire fcr the l
transfer tax O' the transfer of the Seabrook Interest, plus an as
.yet undeternint+ arount (approxicately-$50 nillion as of Jans.ry 1, 1992) _ to reduce PSNH's short-tern debt undar its Revolving Credit Agreement. These cash requirenents will change over time both (1) becausa cf the requirenent of the Joint Plan that PSNH accrue'and pay 3 percent connon stock dividends each quarter prior to.the Merger, and (ii) the objective, which the Cornission approves and which will-require : reassessnent by HU and PSNH of PSNH's future borrewing needs at the time of the Herger in light L
of PSNH's actual and forecasted revenues and expenses, of L
- l. . bringing PSNH's revolving credit borrowing at the Merger date-
- Y down to a level-which will provide reasonablo '.surance that .
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revolving credit borrowings thereaf ter will not exceed approxinately $107 Fillion at any tire during the remaining tern of PSNH's Revolving Credit Agreement authorized in DR 89-244.
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-14. On the basis of current forecasts of revenue and
' expenses,_the approxinate dollar amount of PSNH's connon equity would be $390 nillion if the Merger had cecurred on January 3, 1992, $430 nillion if the Merger occurs on April 1, 1992 and $440 s nillion if the Morgur occurs _ on July 1, 1992.
- 15. 'Because the issuance of connon stock by PSNH at the effective date of the Merger in the amount required to neet the t
casis requironents of the Merger (af ter taking into accour.t the .
arount to be received on the transfer of the Seabrook Interest to NAIC) is pursuanc.to and in accordance with the terns of the Joint Plan and the Merger Agreenent, the Connission need not repea;-the detailed inquiry nede in DR 89-244.
- 16. The issuance cost of the PSNH connon-stock ir not L
expectedito exceed $5,250.
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- 17. Under'RSA 369:1.and-4, the_ issuance of common stock by l
' ~NH in- a dollar. anount deternined purwuant to the Joint Plan and y .the testinonyfin this proceeding at an issuance cost of .
j approximately $5,250 is-in the public good.
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e i i.' 18. Under RSA 374:33, acquisition by NU of the shares of ;
connon stock issued by PSNH in accordance with the Merger Agreement is in the public good.
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-NU Money Pool
- 19. - The NU Money Pool arrangenent, which was not specifically conterplated in DR 89-244, is likely to enable PSNH and HAEC to obtain short-tern credit at terns that are nere favorable-to the r,orpanies than could otherwise be obtained,-and acecrdincly in'just, reasonable and in the public good.
2 0. : Tho contribution by PSNH or PAIC of excess cash, if
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- any, to the NU Money Pool: In order to earn interest on such cash
- . is just, reasonable and in the public good. .
- 21. .. The terns of the NU Honey Fool, substantially as described"in Exhibit 12 to the application herein and the
'testinony~f subnitted to the Connission, are jurt, reasonable and iln ,.the public~ good. -
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- Tuture Capital Contributions _
- 22. The naking of equity capital contributions from tire to
-. tine hereinafter by NU to PSNH Without further Connission authcrization in the event that they are (and in such snounts as are) necessary to raintain PONH's mininun anount of equity under PSNH's tank agreenents is in the public good.
Eyeuested Approvals 1 -- C..
-1. TheLissuance at the effective date of the Merger of
-approxinately-$355 nillion in aggregate princi pal anount of the t .first ncrtgage bends by NAEC in accordance with the Joint Plan, .
pursuant to the terns of the Indenture and in accordance with testinony . submitted to the connission, at a price equal to the principal amount and with_ issuance costs'not exceeding $9.4 .
nillion, with a tern to naturity of not nore than ten. years and on interest rate of-rete more than 11.5% per annun, is approved as in the~public good. NAEC_is hereby autF?rized to:
. i
- c. enter into the~ Indenture;
- b. -grant the:first nortgage-in accordance with the-Indenture of certain present and future property, _
both tangible and intangible, and including franchises, relating to-the Seabrook Interest to secure;paynent of its first'nortgage bonos; i
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s c.. pledge and assign to the trustee under the Indenture, NAEC's rights under the Seabrook Power Contract'as security for NAEC's first nortgage
- . bonds pursuant to the terms of the Indenture; and
- d. Assue and sell the first nortgage bonds at the principal anount to one or more underwriters, e 2. Under RSA 369:1 and 4, the' issuance by NAEC of its connen stock to NU in accordance with the Joint Plan for an amount determined based on a common equity percentage of 20 percent end.the 5700 million value initially assigned to Seabrcok,-plus.an amount of equity reflecting the Investnent Return,.raferred Capital Expense.and AFUDC accrued between May 16, 1991 and the Merger _date, such anount not to exceed S175
.nillion, at an issuance l cost of approximately.$5,250 is approved
- as in the public good, and NAEC is hereby authorized to effect
-such issuance.
- 3. -Under RSA 374:33, acquisition by KU of the shares'of coinen stock-issued by NAEC ct the effectisa date of the Merger
. issin_the pub 13c good,:and NU is hereby uuthorized to acquire such stock._ ,
- 4. -Under RSA 369il and 4, the issuance by PSNH to NU
.through NUAC.at'the Merger, in accordance_with the Merger p _ Agreenent, of an amount of equity to y:vvide the cash
" , requirements'of the Merger, after taking into account the amount L
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l to be received- on the sale of the Seabrook Interest to NAEC, at f I
an issuance cost of approxinately $5.,250, is approved as in the public good, and PSNH is hereby authorized to effect such I
s issuance. I
. )' l S. 'Under.ESA 374:37, acquisition by HU through NUAC of the shares'cf cennon stock issued by PSNH in accordance with the
. Merger =Agreenent is approved as in the public good, and NU is hereby authorized-to acquire such shares in said nanner.
3
'6. The torns of the NU Money Pool, substantially as described in Exhibit 12 to the applicatien herein and the ,
testir.ony submitted to the Cennission, are just, reasonable and . .
in the public good and accordingly the NU Money Pool is approved L
an an affiliate contract pursuant to RSA 366 5. PSNH and NAEC
.are'ench hereby authorized to enter into the NU Money Pool arrangenent, toLcontribute. excess cash,.if any,-to the-NU Money Poc1 and.to'obtain short-tern credit from the NU Money Pcol-consistent-with the N.H. Admin. 9ule Puc 312.01.
i bd 17 . The naking of equity capital contributions fron time to time hereinafter by NU to'PSNH without further Connission
?nuthorization;in the event.that they'are (and in such arounts as a re)E necessary to naintain PSNH's mininun amount of- equity under p
'PSNH#s" bank agreenents is in the public good and is approved r
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Without further Comission authorization. 1:U is hereby autherized to rake and PSNH is hereby authorizot to receive such capital contributions.
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-Respectfully submitted, N0kTHEAST 'JTILITIES b3 PUDLIC SERVICE COMPANY OF EE*,7 HAMPSHIRE T
NORTH ATLANTIC ENERGY CORPORATION By Their_ Attorneys, Rath, Young, pignatelli & Oyer, P.A.
2 Capital Plaza, P.O. Bcx S54 Concord, New Hetpshire 03302-0854 (603) 226-2600 By: "-f Cated: February'3, 1992
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111111an F. J. Ardinger CERTIFIC_ATION
'I.hereby certify that, on the date written below, I caused a copy of this Preliminary Request for Findings of Fact and B.equested Approvals to be sont by first class U.S. Mcil, pestage prepaid to the attached service list.
Dated: February 3. 1992
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111111am F. J..
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"MTENDIX B" iY NC.'TH ATLANTIC ENERGY CORPORATION 1000 Elm Street Manchester, New Hampshire 03105 '
.s i February 13, 1992 i Public Service Ccapany of New Har; shire 2003 Elm Strast Xanchester..New Ha.; shire 03:05 Re: Seabreck Insurance Arrangements Gentleren:
u In anticipatien of ycur-transfer to us of your interest in Seabro:< Unit 1 (the " Unit"), we are preparing to.effe:t an initial issuance of ene or more series of our first =crtgage bcnds to finance, in part, the purchase price. The initiel bcnds and any additicnal bends that up say subsequently he-issued (the "3 ends") are to be issucd under and secured by an open-end =crtgage indenture (the '
" Indenture") with a bank as trustee (the ' Trustee"),
which areng' ether. things, will include previsiens with respect,to the rebuilding of Seabrock Unit.1 (the " Unit")
-in the event of destructica er ccndemnatien and the use of insurance and condemnation proceeds to be deposited with
.the Trustee. J.t the-time cf the transfer we will also assume your .5.23%-Notes due 2000 (the " Notes") which were
. issued in. connection with your recrganizatien.
The proposed forci of the Ser. brock Fewer Contract
-("Seabr:ck.?cwer Centract") which is included as Exhibit A to your1 Rate _ Agreement. dated as of Novenher 22, 1959, as are.tded, with the Geverner-and Attorney General of New Mhn; shire, also' includes previsiens.with respect to the rebuilding:of the Unit in the event.of.destructicn or
-condemnatica and-the use of insura.ce er condemnatica proceeds. (Although Wa have' agreed that the for of the Seabrcek Power-Centract will be modified on certhin respects to update it and to reflect a decision of the Federal Energy Eegulatory Connission, ncne of the proposed
.revi.ciens affects-such provisiens.)
Ve'have discussed with you the relevant provisions of the prcp: sed Indenture and the procedures which wa will implement- under- the Seabrook Pcwer contract in order to ccafirn'that'these previsions and procedures are in accord .
with ycur understanding of the Seabrook Power Contract i
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public Service Conpany of h*ew har; shire February 13,1992 Page 2
..? requirerents. We understand that you concur that these previt'.cns and ;rc:adures satisfy the Seabrock Poi er Centract requirements. Acccrdingly this actter it Written to sun.rarize these provisiens and precedures and to ask you to cc:, fir your agree ent to them. _
lhe previsiens and precedures in questien are as fo11cws:
- 1. In order to give effect to the requirement in Sectica 6. cf the Seabrock Power Centract that you have the e richt to instruct ts as to how to vcte on any repair er replacanent of the Unit pursuant to the terms of the Ocint Cwner: hip Agreement ameng the $oint cwners of the Unit, we agree that we will notify you prenptly after ww becene aware that any vote is to be taken pursuant to the terms of
- the Ocia Cwnership Agreement en repair or replacement of the Unit and that we will cceply with any instructions .'
given to us by you as to hcw to vote on the repair er replacenent. In the event a determination is made to rebuild, repair or replace the Unit af ter a loss or condc. atien in acccrdance with the Joint Ownership A;reement, we shall prcvide our share of the cost therect and shall apply to the Truste.a for the withdrawal of any ,
preceeds depcsited with the Trustee w4.th respect to the Icss er cer.dennation to reitburse us for the cost.
- 2. The Indenture shall be deemed to be consistent with the requirements of the Seabrock Power Centract in 7 the e ent the Indenture includes the folicwing provisiens:
- a. A provision which requires (nat the Trustee he named as an additional insured under the pre;erty insurance policies with respect to the Unit and that any insurance proceeds received on a 1 css with respect to the Unit in excess of a specified minir.un
($1,000,000 or less) and an, proceeds received on the condemnatien of all cr a pertien of the Unit be paid to the Trustee to be held by it as part of the trust estate, e
b Previsions which, if no Event of Default has occurred and subject to certain ethegg conditions, permit us to withdraw insurance or condemnation proceeds deposited with the
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Public Service ccapany of New Earpshire
,Tebruary 13,1992 Pag 6 3
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Trustee to reimburse us for the cost of U rebtilding, repair or replacement of the j
/e Unit.
- c. -Previsiens which provide that (1) if the destrcyed, damaged or condemned prcperty is not to be rebuilt, repaired er replaced in accordance with the Joint Ownership h
> Agreenent, all insurance or condemnatica prcceeds deposited with the Trustee shall be used to purchase er redeen 3cnds in acccrdance.with the Indenture, (ii) if any '
insuranco cr_ccndemnatien proceeds.dapcsited with the Trustee are net to he used fer the cost of rebuilding, repairing or replacing such prcperty, such excess proceeds she?1 be '
usedLto purchase or redeem Hends in accordarce with the Indenture, and (iii) if all cr substantially all of the property is destroyed, dana;ed to the extent of being
. ccapletely-destroyed or substantially ,
cenpletely destroyed 'or condenz,ed, all 4nsurance or cendemnationipreceeds depcsited with the Trustee shall-he:tsed to redeem 5cnds in'accordance with the. Indenture.
- 3. . In1the event insurance or condemnation proceeds are received byf the cenpany orithe- Trustee with1 respect to -
.the Unit and are not used to rebuild. repair or replace the
- Unit cr_to purchase,cr redeem 3cnds, we shall, if so
-directed by you.s apply an amount equal to such proceeds to thecpurchase or redenptica cf Uctes-or t!.e repayment of
.any;cther. outstanding indebtedness.
- 4. To the' extent that insuranceJor cendermatica
'.jr proceeds.are l received by the Conpany cr .the Trustee with "O , .
respect to the Unitsand are not ap>11ed to rebuilding, crepair_or replacement of the Unit, or to_the purchase or
redenpitenlof Eonds.cr Ectes, or-the repayment of.other -i indebtedness, en_ amount equal'to such proceeds shall be paid to you iniacccrdance with the' requirements of Section z
6 or/Section 11.of the Essbrock Power Contract and your cbligatiens to make' payments under the Pcmer Contract
. g: 'shall continue withcut nodification. ,
- 5. In the event.any insurance or tendemnation R Lproceeds cre applied to the redenption or purchase of ;
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Fublic Service Ccapany of New Hampshire February 13, 1992 Page 4
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, .? Bends er Fotes, or to the repayrent of any other
- indebtedness, the Initial Plant Investment and Capital Additien Cost cf the Unit (in each case as defineo in Schedule I to the Seabrock Power Centract) shall be reduced by an ascunt equal to the proceeds so applied, effective as cf the time ci such a;;11catien, and the amcunt thereaf ter required to be paid by ycu under the Pcwcr Contract fcr depreciatien and inves6:ent return shall be appropriately adjusted to reflect such reduction.
S. We shall give notice to you each tire that insurance proceeds cr condemnation preceeds are received with respect to the Unit and shall infern you of the intended disposa:ic, cf such preceeds not less than 20 days before such dispos. n is made, In the event we are cb11 gated to pay alA er any pcrtion of such proceeds to ycu in accordance with these procedures we shall effset such payment premptly after we determine that such pay:ent is required. ,
- 7. It is egreed that cc pliance by us with the requirements of this letter shall satisfy cur obligatiens to you under Sectica 6 and 11 of the Seabroch Power Contract with respect to repair or replacement of the Unit and the use of insurance or cendemnation proceeds.
If we correctly stated the provisiens and procedures en which we have agreed, please confirm yeur agreerent by signing in the form provided below en a ccpy of this letter and returning it to.us.
Very truly yours, North Atlantic Enr. y Corpcraticn Ey, '
d N Its Seccar,u.y We confirm our agreement to the foregoing:
i Public Service Ccapany of New Hampshire 3y L v_ .
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New Hampshire Public Utilities Commission Public service company of Hav Hampshire / Northeast Utilities /
North Atlantic Energy Corporation Docket No. DR 91-193 I 4 "-
..J' SERVICE LIST Gerald M. Eston, Esq. Michani W. Holnes, Esq. '
Public Service Co. of N.H. Office of the consumer Advocato P.O. Box 330 8 Old Suncock Road l
' Manchester, NH 03105 Concord, NH 03301 Amy Ignatius, Gen. Counsel Sarah P. Voll., PhD.
NH Public Utilities Commission NH Pub)ic Utilities Commission 8 Old Suncook Road 8 Old Suncook Road ' '
Concord, NH 03301 Concord, NH 03301 R Eugeno F. Sullivan Robert P. Knickerbocker, Esq.
e NH Public Utilities cr tnission Day, Berry and Howard 8101d Suncock Road CityPlace Concord,-NH 033*.el Hartford, CT 06103 ,3499
?!* 'Willion:T.J. Ardinger, Esq. Shelley Nelkens
.Rath, Young, Pignatelli and P.C. Box 164 Oyer, P.A. Antrin, NH 03440 .
'3%'o Capital Plaza e P.O. Box B54 -
~ Concord, NH 03302-0854-
- North Atlantic. Energy Corporation-c/a Pierre 0. Caron
. Assistant' General Counssi Public Service Co. of N.H.
P.O. Box 330 Hanchester, NH 03105 i:.
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