ML20136J089

Forwards Amend 2 to Sec Form U-1,providing Addl Info Re Proposed Affiliation Between Cleveland Electric Illuminating Co & Toledo Edison Co

ML20136J089
Person / Time
Site:	Beaver Valley, Davis Besse, Perry, 05000000
Issue date:	01/08/1986
From:	Silberg J CLEVELAND ELECTRIC ILLUMINATING CO., DUQUESNE LIGHT CO., SHAW, PITTMAN, POTTS & TROWBRIDGE, TOLEDO EDISON CO.
To:	Harold Denton Office of Nuclear Reactor Regulation
References
NUDOCS 8601130191
Download: ML20136J089 (20)

Text

t SHAW, PITTMAN, PoTTs & TROWBRIDGE A PARTNERSMlp OF PROFESSIONAL CORPORATIONS 1800 M STREET, N. W.

WASHINGTON, D. C. 20036 TELECOPtER saOai saa-soes ,. saa-stee TELEM 89-2693 iSMAWLAW WSHI caste wtAw*

TELEPHONE JAY E. SIL BERO. P.C. saOat saa-sosa January 8, 1986

<Mr. Harold R. Denton, Director

. Office of Nuclear-Reactor Regulation U. S. Nuclear Regulatory Commission Washington, D. C. 20555

.Re: Cleveland Electric Illuminating Company (Perry Nuclear Power Plant, Unite 1 and 2)

Docket Nos. 50-440 and 50-441 Duquesne' Light Company (Beaver Valley ~ Power Station, Unit 2)

Docket No. 50-412 Toledo Edison Company (Davis-Besse Nuclear Power Plant)

Docket No. 50-346 Dear Sir My letters of August 14, 1985 and November 13, 1985 trans-mitted to you three documents (Form U-1, Amendment No. I to Form U-1, and Form S-4) that had been filed with the Securities and~ Exchange Commission in connection with the proposed affili-ation between The Cleveland Electric Illuminating Company and The Toledo Edison Company. Enclosed for your information is Amendment No. 2 to Form U-l which was recently filed with the SEC to provide additional information concerning the proposed affiliation.

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Enclosure 0 8601130191 860 346 PDR ADOCK O 1

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,n File'No. 70-7149

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SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 AMENDMENT NO. 2 to FORM U-l APPLICATION l

UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 p

CENTERIOR ENERGY CORPORATION (formerly North Holding Company) c/o Squire, Sanders & Dempsey.

1800 Huntington Building Cleveland, Ohio 44115 (Name of company filing this statement and and address of principal executive offices)

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None (Name of top registered holding company parent of each applicant or declarant). ,

Paul M. Smart, Secretary and Treasurer Centerior Energy Corporation 300 Madison Avenue Toledo, Ohio 43652

-(Name and address of agent for service)

The Commission-is requested to mail copies of all orders, notices and communication to:

James P. Murphy, Esq. Gerry D. Osterland, Esq.

Squire, Sanders & Dempsey Jones, Day, Reavis & Pogue 1201 Pennsylvania Avenue, N.W. 2300 LTV Center Washington, D. C. 20004 2001 Ross Avenue 202-626-6793 Dallas, Texas 75201 214-969-3722

o-O Centerior Energy Corporation ("Centerior"), is filing this Amendment No. 2 to its-Form U-l Application (File No. 70-7149) for-the purpose of.providing additional information and filing additional exhibits.

Item 1. Description of Transaction.

Centerior and the Office of the Consumers' Counsel ("OCC")

have reached an agreement dated January 6, 1985 (the " Agreement")

related to certain future actions by Centerior. The Agreement is filed as Exhibit W to this application. 'Centerior hereby requests that the Commission incorporate by reference the terms and conditions of the Agreement in the ordering provision of any order granting this Application. The following are the terms and conditions of the Agreement:

1. Centerior will provide to the Public Utilities Commission of. Ohio ("pUCO") and to the OCC its initial, and thereafter its annual, exemption statement submitted on Form U-3A-2 and filed pursuant to 17 C.F.R. Section 250.2 and all other documents filed with the Commission pursuant to the 1935 Act and rules promulgated thereunder. In the event that Centerior should ever request exempt status by order under Section 3(a)(1) of the 1935 Act and as a result of such action is not required to make a Form U-3A-2 filing, it will prepare,and submit annually to the PUCO and the OCC an annual statement containing the same information which is required to be contained in the Form U-3A-2.

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2. Neither Centerior, Cleveland Electric Illuminating Company ("CEI"), the Toledo Edison Company ("TE"), nor any other company directly.or indirectly controlled by Centerior will object in the context of a proceeding before the PUCO to a request for discovery of. books, records or other documents in the possession of Centerior or any of its subsidiaries on the grounds that the particular person or entity having possession of the same is not subject to.the PUCO's jurisidiction.

3. Centerio;r,CEIandTEagreethat for a period of five (5) years following consummation of the Affiliation, Centerior will not permit a minority common stock ownership interest to be held in either CEI or TE.

4.- CEI and TE agree that neither shall invest in, lend funds to,: guarantee the obligations of or otherwise finance any entity in the Centerior system before January 1, 1987 unless they have received. authorization from the PUCO to do so. After January 1, 1987 such authorization shall not be required of the PUCO disclaims jurisdiction over the transaction presented for approval. It is understood that this limitation does not apply to transactions in the ordinary course of the companies' business operations in which CEI or TE acts on behalf of, or with respect to,.the other.

5. Centerior will provide to the PUCO and to the OCC, on an annual basis, financial statements of its Service Company using

o the same form that the Commission currently requires or in the future may require, to be filed by regit.tered holding company systems pursuant to the 1935-Act.

6. Centerior, TE and CEI shall, for a period of five (5) years commencing'with the issuance of the Commission order in File No. 70-7149, individually or jointly sponsor testimony in all TE and CEI base rate and annual electric fuel component proceedings before the pUCO setting forth information regarding the implementation of the reorganization and the benefits and costs derived as a result of the Affiliation, however, neither Centerior, CEI nor TE shall be required to do so more than once in any calendar year.

7. Centerior agrees to notify the OCC, at least sixty (60) days prior to the implementation of any amendment to the Service Company agreement, of such change, to enter into good faith discussions with the OCC regarding any objections it may have to such change and to recognize the right of the pUCO to examine in the course of a base rate case or annual electric fuel component proceeding any such change to the extent it affects charges being made by the Service Company to CEI or TE.

8. For a period of five (5) years commencing with the issuance of the Commission Order in File No. 70-7149, Centerior, L

CEI and TE agree that not more than thirty-three and one-third

. percent (33-1/3*s) of the combined debt and equity issued by

L Centerior will constitute debt and that Centerior will not issue convertible debt.

9. Centerior shall not cause its total investment, including loans, in its subsidiaries, affiliates or associates other than CEI, TE, and any other public utility subsidiaries or affiliates which 'it may subsequently create or acquire, to exceed, at the time such investments are made, fifteen percent (15%) of its aggregate capitalization on a consolidated basis, before January 1, 1987, unless it has received authorization from the PUCO to do so. After January 1, 1987 such authorization shall not be required if PUCO disclaims jurisdiction over the transaction presented for approval.

10. CEI and TE shall not transfer any assets to any affiliate within the Centerior system, other than another public utility regulated by the PUCO, before January 1, 1987, unless they have received authorization from the PUCO to do so. After January 1, 1987 such authorization shall not be required if the PUCO disclaims jurisdiction over the transaction presented for ,

approval. In presenting such proposed transfers to the PUCO for approval, CEI and TE agree to request that the PUCO delay final action for at least forty-five (45) days after filing of the application in order to afford interested persons the opportunity to submit objections and request a public hearing.

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s The Agreement shall terminate in the event the 1935 Act is repealed or in the event Centerior becomes a registered holding company under the'1935 Act. -In addition, except as may be expressly provided in the Agreement nothing in the Agreement is intended to or shall at any time be interpreted as imposing

. greater. restrictions or requirements on the operations or other activities of Centerior than would be the case were Centerior a

registered holding company pursuant' to the 1935 Act as it now exists or may be hereinafter' amended.

Centerior-and Ohio Edison Company have had discussions regarding the CEI'and TE use of the CApCO transmission lines contemplated after the affiliation and attached as Exhibit X is a letter previously sent to the Commission by the Ohio Edison Company.

Item 6. Exhibits and Financial Statements <

Exhibit W.. -Agreement among the OCC, Centerior, CEI "

and TE dated January 6, 1986.

Exhibit X. Ohio Edison-letter to the Commission dated December 19, 1985.

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o SIGNATURE

-Pursuant to-the requirements of the Public Utility Holding Company Act of 1935, the undersigned company has duly caused this statement (or amendment) to be signed on its behalf by the undersigned thereunto duly authorized.

CENTER - ENERGY CORPORATION

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By Robert 4.f'Ginn President and Chief Executive Officer Date: January _7, 1986 1

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EXHIBIT W AGREEMENT In connection with the Office of the Consumers' Counsel's ("OCC") withdrawal of its request for a hearing in ECenterior Eneray Corporation, Securities and Exchange Commission ("SEC") File No. 70-7149, and OCC's agreement not to

object'to Centerior's initial request to obtain exempt status under Section 3(a)(1) of the Public Utility Holding Company Act of,1935 ("1935 Act"), Centerior Energy Corporation

("Centerior"), The Cleveland Electric Illuminating Company

-("CEI") and The Toledo Edison Company (" Toledo Edison") agree that Centerior will b'y' amendment to its U-1 application request that the SEC incorporate by reference in an ordering provision in any order issued granting the application, the following

' terms and conditions:

1. Centerior will provide to the Public Utilities Commission of Ohio ("pUCO") and to the OCC its initial, and thereafter its annual, exemption statement submitted on Form U-3A-2 and filed pursuant to 17 C.F.R. Section 250.2 and all other documents filed with the SEC pursuant to the 1935 Act and rules promulgated thereunder. In the event that Centerior should ever request exempt status by order under Section 3(a)(1) of the 1935 Act and as a result of such action is not i

required to make a Form U-3A-2 filing, it will prepare and submit annually to the PUCO and the OCC an annual statement l-containing.the same information which is required to be contained in the Form U-3A-2.

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2. Neither Centerior, CEI, Toledo Edison, nor any other. company directly or indirectly controlled by Centerior

-will object in the context of a proceeding before the PUCO to a requestJfor discovery of books, records or other documents in the-possession of Centerior.or any of its subsidiaries on the

' grounds that the particular person or entity having possession of the same is not subject to the PUCO's jurisdiction.

3.- Centerior, CEI and Toledo Edison agree that for a period of five (5) years following consummation of the

_ Affiliation, Centerior will not permit a minority common stock ownership interest to be held in either CEI or Toledo Edison. 1

4. CEI and Toledo Edison agree that neither shall invest in, lend funds to, guarantee the obligations of or otherwise finance any entity in the Centerior system before January 1, 1987 unless they have received authorization from the PUCO to do so. After January 1, 1987 such authorization shall not be required if the PUCO disclaims jurisdiction over the transaction presented for approval. It is understood that this limitation does not apply to transactions in the ordinary course'of the Companies' business operations in which CEI or i Toledo Edison acts on behalf of, or with respect to, the other.

5. Centerior will provide to the PUCO and to the OCC, I on an annual basis, financial statements of its Service Company using the same form that the SEC currently requires or in the future may require, to be filed by. registered holding company systems pursuant to the 1935 Act.

i

6. Centerior, Toledo Edison and CEI shall, for a

-period of five (5) years commencing with the issuance of the i

'. 3 SEC order in File No. 70-7149, individually or jointly sponsor testimony in all Toledo Edison and CEI base rate and annual electric-fuel component proceedings before the PUCO setting forth information regarding the implementation of the reorganization and the benefits and costs derived as a result of the Affiliation; however, neither Centerior, CEI nor Toledo Edison shall be required to do so more than once in any calendar year. ,

7. Centerior agrees to notify the OCC, at least sixty (60) days prior to the implementation of any amendment to the Service Company agreement, of such change, to enter into good faith discussions with the OCC regarding any objections it may have to such change and to recognize the right of the PUCO to examine in the course of a base rate case or annual electric fuel component proceeding any such change to the extent it affects charges being made by the Service Company to CEI or Toledo Edison.

8. For a period of five (5) years commencing with the issuance of the SEC Order in File No. 70-7149, Centerior, CEI and Toledo Edison agree that not more than thirty-three and one-third per cent (33 1/3%) of the combined debt and equity issued by Centerior will constitute debt and that Centerior will not issue convertible debt.

9. Centerior shall not cause its total investment, including loans, in its subsidiaries, affiliates or associates other than CEI, Toledo Edison, and any other public utility subsidiaries or affiliates which it may subsequently create or

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acquire, to exceed, at the time such investments are made, fifteen percent (15%) of its aggregate capitalization on a consolidated basis, before January 1, 1987, unless it has received authorization from the PUCO to do so. After January 1, 1987 such authorization shall not be required if the PUCO disclaims jurisdiction over the transaction presented for approval.

10. CEI and Toledo Edison shall not transfer any assets to any affiliate within the Centerior system, other than another public utility regulated by the PUCO, before January 1, 1987, unless they have received authorization from the PUCO to do so. After January 1, 1987 such authorization shall not be required if the PUCO disclaims jurisdiction over the transaction presented for approval. In presenting such proposed transfers to the PUCO for approval, CEI and Toledo Edison agree to request that the PUCO delay final action for at least forty-five (45) days after filing of the application in order to afford interested persons the opportunity to submit objections and request a public hearing.

As soon as possible, but not more than five business days after OCC has been provided with a copy of the amended U-l incorporating the terms and conditions set forth herein, and assuming that this amendment does not contain any new materials that would constitute the grounds for a bona fide objection, OCC will file with the SEC a letter indicating that OCC's request for a hearing should be considered withdrawn and that it has no_ objection to the granting of the application if the

'. 5 terms and conditions, as previously set forth herein, are incorporated in an ordering provision of the SEC's order granting the application.

Anything in the foregoing to the contrary notwithstanding:

(a) This agreement shall terminate and be of no further effect in the event the 1935 Act is repealed or in the event Centerior becomes a registered holding company under the 1935 Act; and (b) Except as may be expressly provided herein, nothing in this agreement is intended to or shall at any time be interpreted as imposing greater restrictions or requirements on the operations or other activities of Centerior than would be the case were Centerior a registered holding company pursuant to the 1935 Act as it now exists or may be hereinafter ,

amended. ,

s CENT ENERGY RATION OFFICE OF THE CONSUMERS' COUNSEL By ' 4_ ,

By k[vIt's Attorney e

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THE CLEVELAND ELECTRIC ILLUMINATING

' COMP By l * * "

Its Attorney THE TO DISON COMPANY f \

By f#  ! L Its Attorney Date: January 6, 1986

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p .As Introduced

'116th General Assembly Regular Session p 1985-1986 H.B. No.

Mr.

A BILL To amend sections 4905.05, 4905.06 and 4905.46 of the Revised Code to extend the jurisdiction of the Public Utilities Commission with' respect to certain affiliated companies which are exempt from the Public Utility Holding Company Act of 1935, Land-to declare an emergency.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1. That sections 4905.05, 4905.06 and 4905.46 of the Revised Code be amended to read as follows:

" Sec. 4905.05. The jurisdiction, supervision, powers and duties of the public utilities commission extend to every public utility and rail.oad, the plant or property of which lies wholly within this state and when the property of a

public utility or railroad lies partly within and partly

s without this state to that part of such plant or property which lies within this state, and to the persons or companies owning, leasing or operating such public utilities and railroads, and to the records and accounts of the business thereof done within this state, AND TO THE RECORDS AND ACCOUNTS OF ANY COMPANIES WHICH ARE PART OF AN ELECTRIC UTILITY HOLDING COMPANY SYSTEM EXEMPT UNDER SECTIONS 3(a)(1) OR 3(a)(2) OF THE PUBLIC HOLDING COMPANY ACT OF 1935, 15 U.S.C. 79a ET SEQ., AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER, INSOFAR AS SUCH RECORDS AND ACCOUNTS MAY IN ANY WAY AFFECT OR RELATE TO THE DIRECT OR INDIRECT COSTS ASSOCIATED WITH THE PROVISION OF ELECTRIC UTILITY SERVICE BY ANY PUBLIC UTILITY OPERATING IN THIS STATE AND PART OF SUCH HOLDING COMPANY SYSTEM.'

Sec. 4905.06. The public utilities commission shall have general supervision over all public utilities within its jurisdiction as defined in section 4905.05 of the Revised Code, and shall have power to examine such public utilities and keep informed as to their general condition, capitalization, and franchise, and as to the manner in which their properties are leased, operated, managed, and conducted with respect to the adequacy or accommodation afforded by their service, the safety and security of the public and their employees, and their compliance with all laws, orders of the commission, franchises and charter requirements. THE PUBLIC UTILITIES COMMISSION SHALL HAVE GENERAL SUPERVISION OVER ALL OTHER COMPANIES 14 ..s

' REFERRED TO IN SECTION.4905.05 REVISED CODE TO THE EXTENT OF ITS-JURISDICTION AS DEFINED THEREIN, AND SHALL-HAVE POWER TO EXAMINE SUCH COMPANIES AND KEEP INFORMED AS TO THEIR GENERAL CONDITION, AND CAPITALIZATION, AND AS TO THE MANNER IN WHICH THEIR. PROPERTIES ARE LEASED, OPERATED, MANAGED, AND CONDUCTED WITH RESPECT TO THE ADEQUACY OR ACCOMMODATION AFFORDED BY THEIR

-SERVICE, AND THEIR COMPLIANCE WITH ALL LAWS AND ORDERS OF THE COfttISSION,-INSOFAR AS ANY OF SUCH MATTERS RELATE, DIRECTLY OR INDIRECTLY, TO THE PROVISION OF ELECTRIC UTILITY SERVICE BY PUBLIC' UTILITIES IN THIS STATE WHICH ARE AFFILIATED WITH SUCH COMPANIES. The commission, through the public utilities 1 commissioners or' inspectors or employees of the commission authorised.by it, may enter in or upon, for purposes of inspection, any property, equipment, building, plant, factory,

office, apparatus, machinery, device, and lines of any public utility. The public utilities commission shall inspect, for the purposes of the public safety, all gas and natural gas pipelines owned, operated, or controlled by public utilities as defined by sections 4905.02 and 4905.03 of the Revised Code, by municipalities, or by utilities operated not for profit. The power to inspect shall include the power to prescribe any rule or order that the public utilities commission finds necessary for protection of the public safety. -

Sec.'4905.46.(A) No public utility or railroad shall

declare any stock, bond, or scrip dividend or divide the proceeds of the sale of any stock, bond, or scrip among its

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stockholders, unless it is authorized to do so by the public utilities commission.

(B) UNLESS IT IS AUTHORIZED TO DO SO BY THE'PUBLIC UTILITIES COMMISSION:

(1) NO PUBLIC UTILITY WHICH IS A PART OF AN ELECTRIC UTILITY HOLDING COMPANY SYSTEM EXEMPT UNDER SECTIONS 3(a)(1) OR 3(a)(2) OF THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935, 15 U.S.C. 79a ET SEQ., AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER, SHALL DECLARE ANY STOCK, BOND, OR SCRIP DIVIDEND OR DIVIDE THE PROCEEDS OF,THE SALE OF ANY STOCK, BOND OR SCRIP AMONG ITS STOCKHOLDERS, INVEST IN, LEND FUNDS TO, GUARANTEE THE OBLIGATIONS OF, OR OTHERWISE FINANCE, ANY COMPANY AFFILIATED WITH IT IN THE SAME HOLDING COMPANY SYSTEM, OR TRANSFER ASSETS TO ANY COMPANY AFFILIATED WITH IT IN THE SAME HOLDING COMPANY SYSTEM WHICH IS NOT A PUBLIC UTILITY AS DEFINED IN SECTION 4905.02 REVISED CODE. THE FOREGOING LIMITATION ON INVESTMENTS, LOANS, GUARANTEES OR OTHER FINANCINGS IS NOT INTENDED TO APPLY TO TRANSACTIONS IN THE ORDINARY COURSE OF THE COMPANIES' PUBLIC UTILITIES BUSINESS OPERATIONS IN WHICH ONE ENTITY ACTS ON BEHALF OF, OR WITH RESPECT TO, ANOTHER WITHIN THE HOLDING COMPANY SYSTEM.

(2) NO ELECTRIC UTILITY HOLDING COMPANY EXEMPT UNDER SECTION 3(a) (1) or SECTION 3(a) (2) OF THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935, 15 U.S.C. 79a ET SEQ., AND THE l .

• RULES AND REGULATIONS PROMULGATED THEREUNDER, WHICH DIRECTLY OWNS, CONTROLS OR HOLDS WITH THE POWER TO VOTE 10 PER CENTUM (10%) OR MORE OF THE OUTSTANDING VOTING SECURITIES OF AN ELECTRIC LIGHT COMPANY, SHALL CAUSE ITS TOTAL INVESTMENT, INCLUDING LOANS, IN SUBSIDIARIES, AFFILIATES OR ASSOCIATES OTHER THAN ITS PUBLIC UTILITY SUBSIDIARIES TO EXCEED, AT THE TIME SUCH INVESTMENTS ARE MADE, FIFTEEN PER CENTUM (15%) OF THE AGGREGATE CAPITALIZATION OF THE HOLDING COMPANY ON A CONSOLIDATED BASIS.

(C) THE PUBLIC UTILITIES COMMISSION SHALL NOT APPROVE A TRANSFER OF ASSETS SUBJECT TO DIVISION (B) (1) OF THIS SECTION FOR AT LEAST FORTY-FIVE (45) DAYS AFTER AN APPLICATION FOR APPROVAL HAS BEEN FILED WITH THE PUBLIC UTILITIES COMMISSION IN ORDER TO AFFORD INTERESTED PERSONS THE OPPORTUNITY TO SUBMIT OBJECTIONS TO APPROVAL OF THE APPLICATION AND TO REQUEST A PUBLIC HEARING; (D) NOTHING IN THIS SECTION SHALL ALTER OR AFFECT THE AUTHORITY OF A PUBLIC UTILITY OR RAILROAD TO PAY INTEREST OR DIVIDENDS ON, OR OTHERWISE ACT WITH RESPECT TO, STOCKS, BONDS, NOTES OR OTHER EVIDENCES OR INDEBTEDNESS ONCE ISSUED PURSUANT TO SECTIONS 4905.40 THROUGH 4905.42 REVISED CODE.

[ (E) No telephone company shall declare any cash, stock, bond, or scrip dividend or divide the proceeds of the sale of any stock, bond, or scrip among its common or voting

e shareholders while such telephone company is in violation of any order of the commissinn, or against which telephone company there exists a finding of inadequate service, except when the public utilities commission makes a finding after hearing and notice, as provided in section 4905.26 of the Revised Code.that such dividend will in no way postpone compliance with any order or affect the adequacy of service rendered or to be rendered by such telephone company. Provided that if a telephone company, while in violation of any order of the commission, or against which there exists a finding of inadequate service, desires to declare a cash divide'nd without the consent of the commission, it shall set aside .in a special reserve fund a sum of money equivalent to the amount necessary to pay the proposed dividend, which, while said company is in violation of said order or against which such finding exists, may be expended only with the consent of the commission.

Section 2. The existing sections 4905.05, 4905.06 and 4905.46 of the Revised Code are hereby repealed.

Section 3. This act is hereby declared to be an emergency measure necessary to protect the public interest in sound utility regulation. The reason for the necessity is that its enactment into law at the earliest possible time will ensure the prompt development of new utility enterprises and their sound regulation. Therefore, this act shall go into immediate' affect.

• 76 Soutn Ms n St.

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E.EIIBIT X Mussell J. 50etrino wee President and GenerelCounsel December 19, 1985 .

Secretary Securities and Exchange Commissicn Washington, D.C. 20549 Re: Release No. 35-23806; 70-7149 North Holding Company (now Centerior Ener8y Corporation);

Proposed Acquisition of The Cleveland Electric Illuminating Company ("CEI") and The Toledo Edison Company ("TE")

Dear Sir:

On September 12, 1985, I wrote to Mr. William C. Weeden, Assistant Director, Division of Invest =ent Management, Office of Public Utility Regulation with r,espect to the above-referenced matter and a copy of that letter was sent to you for inclusion

. in the Commission's file on the matter. In my letter, I pointed

-- out that the CEI service area and the TE service area, both of which are bounded on the north by Lake Erie, are separated by a portion of Ohio Edison Co=pany's ("0E") service area that extends north to Lake Erie. Consequently, CEI and TE are physically interconnected only to the extent that each is interconnected to high voltage transmission lines owned by CE which run across its service area. As pointed out in my letter, these transmission lines are subject to arrangements between the members of the Central Area Power Coordination Group ("CAPC0"), which members include CEI, TI and CE. CE interconnects with these lines at

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• 3 curitica ond Exchango Dsccaber 19, 1985

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, s the eastern boundary of OE's service area and TE interconnects with these lines at the western boundary of OE's service area.

CEI and TE might In my letter, I voiced my concern that intend to make use of the OE transmission lines in question (the "0E CAPCO Lines") based on interpretations of the CAPCO arrange-ments with which'OE could not agree. Since that time, we have had discussions with CEI and TE about the matter and have reached .

- agreement on the use that CEI and TE can make of the OE CAPCO Lines As a result, OE is under the CAPCO arrangements or otherwise.

now satisfied that the use that CEI and TE intend to make of the OE CAPCO Lines after their proposed affiliation will not violate either the spirit or the letter of the CAPCO arrangements. Based on the foregoing, CE hereby withdraws from any further participation in the

,above-referenced proceedings other than to state that it continues to support the proposed affiliation.

Very truly yours, bd1 co r , William C, Weeden, Assistant Director Division of Investment Management Off' ice of Public Utility Regulation Securities ard Exchange Commission James P. Murphy, Esq.

Squirg Sanders & Dempsey Attorneys for Centerior Energy Corporation L