File No. 70-10025
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
PRE-EFFECTIVE
AMENDMENT NO. 1
TO
FORM U-1
APPLICATION/DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
National Grid Group plc
15 Marylebone Road
London NW1 5JD
United Kingdom
National Grid USA
25 Research Drive
Westborough, MA 01582
New England Power Company
25 Research Drive
Westborough, MA 01582
Vermont Yankee Nuclear Power Corporation
185 Old Ferry Road
Brattleboro, VT 05703
(Names and principal executive offices of companies filing this statement)
NATIONAL GRID GROUP plc
(Names of top registered holding company)
Richard P. Sergel
Group Director - North America
National Grid Group plc
c/o National Grid USA
25 Research Drive
Westborough, MA 01582
(Name and address of agent for service)
The Commission is requested to send copies of all notices, orders and
communications in connection with this Application/Declaration to:
Hemmie Chang, Esq. Kirk L. Ramsauer, Esq.
Ropes & Gray National Grid USA
One International Place 25 Research Drive
Boston, MA 02110 Westborough, MA 01582
Denise Redmann, Esq. Nancy S. Malmquist, Esq.
Entergy Corporation Downs, Rachlin & Martin
639 Loyola Avenue P.O. Box 99
New Orleans, LA 70113 90 Prospect Street
St. Johnsbury, VT 05819-0099
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ITEM 1. Description of Proposed Transaction
A. Description of the Parties to the Application/Declaration:
Vermont Yankee Nuclear Power Corporation (the "Company" or "Vermont
Yankee"), a Vermont corporation, was organized by a group of New England
utilities (the "sponsoring utilities") in 1965 for the purpose of constructing
and operating a nuclear-powered electric generating plant (the "Plant") in
Vernon, Vermont. The Plant was licensed to operate by the U.S. Atomic Energy
Commission (now the Nuclear Regulatory Commission or "NRC") in 1972 and has
operated commercially as a base-load station since December 1, 1972. The output
of the Plant is shared pro rata by eight sponsoring utility companies (Central
Vermont Public Service Corporation, New England Power Company, Green Mountain
Power Corporation, The Connecticut Light and Power Company, Central Maine Power
Company, Public Service Company of New Hampshire, Western Massachusetts Electric
Company and Cambridge Electric Light Company) pursuant to cost-of-service Power
Contracts and Additional Power Contracts that have been approved by the Federal
Energy Regulatory Commission ("FERC"). For a description of the Company's prior
financings, see Declarations and Applications, as amended, and the Orders in
Commission Files No. 70-4435, 70-4951, 70-4653, 70-4611, 70-4898, 70-4909,
70-4968, 70-5006, 70-5138, 70-5186, 70-5223, 70-5284, 70-6349, 70-6405, 70-6475,
70-6911, 70-7007, 70-7141, 70-7196, 70-7264, 70-7382, 70-7537 and 70-7635 under
the Public Utility Holding Company Act of 1935, as amended (the "Act").
All of the stock of the Company is owned by the eight sponsoring utilities as
follows:
NAME PERCENTAGE OWNERSHIP
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Central Vermont Public Service Corporation 33.23%
New England Power Company 23.89%
Green Mountain Power Corporation 18.99%
The Connecticut Light and Power Company 10.09%
Central Maine Power Company 4.25%
Public Service Company of New Hampshire 4.25%
Western Massachusetts Electric Company 2.65%
Cambridge Electric Light Co. 2.66%
This Application/Declaration is also filed by National Grid USA(1) and
National Grid Group plc, both registered holding companies. Northeast Utilities
(File No. 70-10033) and Energy East Corporation (File No. 70-10070), both
registered holding companies, also have filed Applications/Declarations on Form
U-1 with respect to the transactions described herein.
B. Summary of Proposed Transaction:
Vermont Yankee: The on-going restructuring and deregulation of the
utility industry has caused the sponsoring utilities to re-evaluate their roles
and, in many cases, have required them to exit the generation business and to
divest themselves of their investments in electric generation assets. As a
result, Vermont Yankee also considered its future market position, given the
changing nature of its owners. In late 1997 after Vermont Yankee and its owners
concluded that a sale of the Plant on favorable terms would be desirable,
Vermont Yankee solicited expressions of interest from potential buyers. After
lengthy negotiations (which included
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(1) National Grid USA previously operated as the New England Electric
System ("NEES"). On March 22, 2000, in conjunction with the acquisition of NEES
by National Grid Group plc, NEES was reorganized as a Delaware corporation and
renamed National Grid USA.
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competing offers from two interested parties), Vermont Yankee in November, 1999
entered into an agreement for the sale of substantially all of Vermont Yankee's
utility assets, including its operating Plant. The Public Service Board of the
State of Vermont ultimately did not approve that proposed sale, so that
transaction was terminated. See Application/Declaration in Commission File No.
70-9737, withdrawn April 18, 2001.
On March 16, 2001, Vermont Yankee's Board of Directors voted to proceed
with establishing an auction for the Plant and subsequently entered into an
agreement with J.P. Morgan Securities, Inc. ("JPM") by which JPM became Vermont
Yankee's agent to conduct the auction. Vermont Yankee's Board of Directors
authorized JPM to start the auction on April 12, 2001. Based on the result of
the auction and JPM's recommendation, Vermont Yankee's Board of Directors
decided to pursue negotiations with Entergy Nuclear Vermont Yankee, LLC
("ENVY"), a subsidiary of Entergy Corporation. On August 15, 2001, Vermont
Yankee and ENVY entered into a Purchase and Sale Agreement (the "PSA") for
the Plant (see Exhibit B-1).
The PSA contemplates that ENVY will pay a purchase price of $180
million, subject to closing adjustments, and will assume Vermont Yankee's
obligation for operating and decommissioning the Plant in exchange for the
transfer at the closing of the sale (the "Closing") of substantially all of the
assets comprising the Plant (located in Vernon, Vermont), the funds in Vermont
Yankee's Decommissioning Trust, which had a fair market value of approximately
$299.6 million as of September 30, 2001, Vermont Yankee's rights with respect to
the funds held by the State of Vermont in connection with the Texas Low-Level
Radioactive Waste Disposal Compact (the "Texas Compact"), certain human and site
assets related to the Plant, certain leases, easements, contracts, licenses and
permits related to the Plant, the Plant's switchyards and certain transmission
assets, and office property located in Brattleboro, Vermont.
The PSA also contemplates that Vermont Yankee will purchase from
ENVY 100% of the output of the Plant (based on the Plant's current
configuration and capacity) after the Closing during the Plant's remaining
licensed life (ending March 21, 2012) pursuant to a Power Purchase Agreement
between Vermont Yankee and ENVY (the "PPA") (see Exhibit B-2). Vermont Yankee
will resell that output at wholesale to the sponsoring utilities pursuant to
2001 Amendatory Agreements (see Exhibit B-3) with each of the sponsoring
utilities that modify the existing Power Contracts and Additional Power
Contracts (collectively, as so modified, the "Power Contracts") (all of which
fall within the jurisdiction of the Federal Energy Regulatory Commission
("FERC")) to reflect the proposed transaction and provide for the payment by the
sponsoring utilities of Vermont Yankee's remaining unamortized net plant
investment and Vermont Yankee's ongoing costs after Closing.
In preparation for the Closing it will be necessary for Vermont Yankee
to redeem its outstanding First Mortgage Bonds and to repay the outstanding
indebtedness under its current Secured Credit Agreement. This Secured Credit
Agreement was entered into in a transaction exempt from Section 6(a) of the Act
pursuant to Rule 52 and on August 21, 2001 Vermont
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Yankee filed with the Commission a Certificate of Notification as required by
Rule 52 relating to the Secured Credit Agreement. The cash required to satisfy
these obligations will come from the cash proceeds to be paid by ENVY at the
Closing.
Although the PSA provides that Vermont Yankee may be required to make a
"top-off" payment to the Decommissioning Trust, any such payment is contingent
on several factors. First, if the value of the assets of the Decommissioning
Trust at Closing meets or exceeds the Nuclear Regulatory Commission ("NRC")
required minimum, no top-off will be required. Second, any top-off payment will
be capped at $5.4 million, which represents the difference between the amount
that would have been collected by Vermont Yankee before the recent settlement in
a FERC proceeding relating to secondary purchaser issues ($16.8 million) and the
amount that would be collected pursuant to that settlement ($11.4 million).
Based on an analysis of all relevant factors at the time of execution of the
PSA, Vermont Yankee does not anticipate that it will have to make a top-off
payment at the Closing, although this expectation could change based on a change
in circumstances.
It is currently anticipated that the Closing under the PSA will be held
in July 2002, after all required regulatory approvals, including that of the
Commission, have been obtained.
As discussed above, since 1968 Vermont Yankee has had cost-of-service
Power Contracts with its sponsoring utilities pursuant to which Vermont Yankee
currently sells the output of the plant to the sponsoring utilities. Upon
consummation of the transaction, Vermont Yankee will purchase the output of the
plant from ENVY, an exempt wholesale generator, pursuant to the PPA and will
resell such output to the sponsoring utilities pursuant to the Power Contracts
(as amended effective as of the Closing). Vermont Yankee will pass the cost of
the power purchased under the PPA on to the sponsoring utilities pursuant to the
terms of those Power Contracts. In addition, under the Power Contracts the
sponsoring utilities will be obligated to pay to Vermont Yankee the ongoing
administrative costs of Vermont Yankee, any remaining unamortized net plant
investment, certain Department of Energy fees relating to prior spent fuel and
clean up costs that are retained by Vermont Yankee under the PSA, and any costs
associated with any other residual obligations under the PSA. Thus, the Power
Contracts between Vermont Yankee and each sponsoring utility are necessary not
only to provide for payment of the power costs under the PPA but also to provide
for payment of other ongoing Vermont Yankee costs separate from those PPA power
costs.(2)
As noted above, the Power Contracts fall within the jurisdiction of the
FERC and will continue to be subject to FERC jurisdiction after the Closing. See
Order of FERC, Exhibit D-7. Because the Power Contracts are within the
jurisdiction of the FERC and have been accepted by the FERC, the sponsoring
utilities will be permitted to include Power Contract payments in the
calculation of rates to their customers. If the sponsoring utilities were to
enter into Power Contracts directly with ENVY, their ability to include those
Power Contract payments in their rate calculations would be uncertain and they
still would need to have a separate contract with Vermont Yankee to cover other
ongoing Vermont Yankee costs, including unamortized net plant investment and
residual obligations under the PSA.
After the Closing, Vermont Yankee will continue its existence as a
corporation, but its operations will be limited to purchasing power under the
PPA and reselling that power to the sponsoring utilities and to related
administrative activities. Consistent with these limited operations, after the
Closing Vermont Yankee's assets will consist primarily of its rights under the
PPA with ENVY and its rights under the Power Contracts with its sponsoring
utilities, in addition to cash on hand.
Because of Vermont Yankee's limited operations and assets after
Closing, as part of the sale transaction ENVY is requiring Vermont Yankee to
provide financial security with respect to Vermont Yankee's continuing
obligations under the PPA and PSA.(3) In order to provide this financial
security to ENVY, Vermont Yankee will pledge to ENVY, pursuant to a Security
Agreement between Vermont Yankee and ENVY (See Exhibit B-4), Vermont Yankee's
rights to the payments that it is entitled to receive from the sponsoring
utilities in respect of payments for power and payments for PSA obligations
under the Power Contracts.(4) In addition, pursuant to the PPA, if ENVY has
commercially reasonable grounds for insecurity (determined in accordance with
commercial standards as set forth in Section 2-609 of the Vermont Uniform
Commercial Code) concerning the ability of one or more of the sponsoring
utilities to pay Vermont Yankee for its entitlement to the output of the Plant,
ENVY may request adequate assurances from Vermont Yankee as to that sponsoring
utility's due performance of its payment obligations. Vermont Yankee in turn has
the right, pursuant to the 2001 Amendatory Agreements, in those circumstances to
request adequate assurances from such sponsoring utility.
The financial security that Vermont Yankee will provide to ENVY amounts
to a pass-through to ENVY of Vermont Yankee's right to certain payment
obligations that the sponsoring utilities will have under the Power Contracts.
As set forth in the Security Agreement, if Vermont Yankee fails to pay ENVY
directly, then ENVY will have the right to receive from the sponsoring utilities
the payments under the Power Contracts that the sponsoring utilities would
otherwise pay to Vermont Yankee in respect of PPA and PSA costs.
It is important to note that the Security Agreement is not a guarantee,
however, and does not create any additional obligations on the part of the
sponsoring utilities (and, in fact, the sponsoring utilities are not parties to
the Security Agreement). Under the Security Agreement, ENVY would have only
those rights that Vermont Yankee has under the Power Contracts to receive
payments from the sponsors for power and PSA obligations. The Security Agreement
also does not impose additional financial obligations on Vermont Yankee. In
essence, the Security Agreement merely gives ENVY the legal right, after certain
default events, to enforce the pass-through nature of certain Power Contract
payments by allowing ENVY to collect those Power Contract payments directly from
the sponsoring utilities without going through Vermont Yankee.
Registered Holding Companies: New England Power Company(5), a
subsidiary of each of National Grid USA and National Grid Group plc, both
registered holding companies, owns
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(2) Currently under the Power Contracts the sponsoring utilities are
liable for the cost of decommissioning the Plant. After the Closing, however,
under the terms of the Power Contracts the sponsoring utilities will no longer
be liable for the cost of decommissioning the Plant.
(3) Financial security is a typical aspect of transactions of this
type. See, e.g., Application/Declaration in Commission File No. 70-9737 (the
"Proposed Prior Transaction"). In the Proposed Prior Transaction, the potential
purchaser had required a more complicated and costly financial security package,
including the formation of a bankruptcy remote special purpose financing entity
and the provision by Vermont Yankee of a surety bond, the premium for which
would have been approximately $7 million.
(4) The pledge by Vermont Yankee pursuant to the Security Agreement has
been submitted to, and has been approved by, the Vermont Public Service Board.
See Exhibit D-2, Petition to PSB, and Exhibit D-3, Order of PSB.
(5) NEP is also a holding company because it owns more than 10 percent
of the outstanding voting securities of Vermont Yankee Nuclear Power
Corporation, the licensed operator of the Vermont Yankee nuclear facility. NEP
also has interests in Yankee Atomic Electric Company, Maine Yankee Atomic Power
Company and Connecticut Yankee Atomic Power Company, all of which have
permanently ceased operations. NEP is an exempt holding company under the Act.
Yankee Atomic Electric Company, Holding Co. Act Release No. 13048 (Nov. 25,
1955); Connecticut Yankee Atomic Power Company, Holding Co. Act Release No.
14768 (Nov. 15, 1963).
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23.89% of the outstanding common stock of Vermont Yankee. Therefore, Vermont
Yankee is an indirect subsidiary of those registered holding companies and the
sale by Vermont Yankee of substantially all its assets, including the operating
plant, constitutes an indirect sale of utility assets by National Grid USA and
National Grid Group plc.
Legislation in the several New England states in which the subsidiaries
of the applicant registered holding companies do business is restructuring the
utility business in those jurisdictions and strongly encourages the divestiture
of generation assets. The proposed sale of Vermont Yankee's assets is consistent
with that mandate and is the result of a competitive auction process. The PSA
transfers the assets and liabilities of Vermont Yankee to ENVY. As discussed
above, while the PSA provides for a potential top-off payment by Vermont Yankee
to the Decommissioning Trust, based on an analysis of all relevant factors at
the time of execution of the PSA, Vermont Yankee does not anticipate that any
such payment will be required, although this expectation could change based on a
change of circumstances.
Vermont Yankee has calculated that the benefit of the transaction with
ENVY has a net present value to Vermont Yankee and its owners that is about
$250 million more favorable than continued ownership and operation of the Plant.
In addition, the provisions of the PSA are favorable to those owners and their
ratepayers because the PSA caps their exposure for the ultimate decommissioning
costs of the Plant and relieves them of the operating risks inherent in the
continued ownership of a nuclear Plant (including employee-benefit liabilities,
potential environmental liabilities, potential nuclear liabilities and
liabilities related to spent nuclear fuel other than funds for pre-1983 spent
fuel), all of which are financial risks that would otherwise be borne by those
owners, and ultimately their ratepayers, under their cost-of-service Power
Contracts with Vermont Yankee. As noted below, these transactions will also have
been approved by the regulatory bodies having jurisdiction in each of the states
where the subsidiaries of the applicant registered holding companies do
business. Therefore, the proposed sale of the utility assets to ENVY will be
for reasonable consideration and otherwise satisfy the requirements of Section
12(d) of the Act.
C. Rule 54 Analysis
Pursuant to Rule 54, in "determining whether to approve the issue or
sale of a security by a registered holding company for purposes other than the
acquisition of an exempt wholesale generator or a foreign utility company, or
other transactions by such registered holding company or its subsidiaries other
than with respect to exempt wholesale generators or foreign utility companies,
the Commission shall not consider the effect of the capitalization or earnings
of any subsidiary which is an exempt wholesale generator or a foreign utility
company upon the registered holding company system if Rules 53(a), (b) and (c)
are satisfied." National Grid does not hold any interests in exempt wholesale
generators ("EWGs"), although it does hold interests in foreign utility
companies ("FUCOs"). National Grid currently meets all of the conditions of Rule
53(a), except for clauses (1) and (2).(6) Consequently, under Rule 54 the
Commission may consider the effect of the capitalization or earnings of any
subsidiary which is a FUCO in connection with the authorization requested
herein.
National Grid's aggregate investment, as defined in Rule 53(a), in
FUCOs as of September 30, 2001 was $3,092 million.(7) As of that date National
Grid's consolidated retained earnings calculated in accordance with U.S. GAAP
was $3,549 million. Consequently, National Grid's aggregate investment in FUCOs
as a percentage of its consolidated retained earnings was 88% as of September
30, 2001. In Holding Co. Act Release No. 27490 (Jan. 16, 2002) (the "January
Order") National Grid was authorized to issue and sell securities for the
purpose of financing investments in FUCOs in an amount up to $5.406 billion.
On April 22, 2002, National Grid and the Lattice Group plc ("Lattice")
agreed to the terms of a merger of equals in which National Grid shareholders
will retain their shares in National Grid (to be renamed National Grid Transco
plc ("Grid Transco")), and Lattice shareholders will receive for each Lattice
share 0.375 Grid Transco shares. Lattice will register as a foreign utility
company ("FUCO") prior to consummation of the merger. On June 7, 2002, National
Grid filed an application on Form U-1 (SEC File No. 70-10067, the "FUCO
Application") requesting authorization to increase the amount of securities it
may issue to fund FUCO investments so that National Grid may complete the
proposed merger with Lattice. In the FUCO Application, National Grid provides a
full description of its investments in FUCOs and arguments in support of
additional FUCO financing authorization. To supplement the Rule 54 analysis in
this application for authorization to sell Vermont Yankee's assets, applicants
incorporate by reference herein the discussion on Rule 53 included in the FUCO
Application.
In addition, in SEC File No. 70-9849, the application corresponding to
the January Order, National Grid represented that during the authorization
period defined in the January Order, any long-term debt or preferred stock
issued by National Grid in a public offering will, when issued, be rated
investment grade by a nationally recognized statistical rating organization.
National Grid has not proposed to modify that representation in this declaration
or in the FUCO Application.
The lack of any adverse effect associated with National Grid's current
financing plan was demonstrated in National Grid's application in SEC File No.
70-9849 and confirmed by the Commission in the January Order. National Grid is
financially sound. At March 31, 2000, National Grid's capitalization consisted
of approximately 38% equity and 62% debt, preferred stock and minority
interests. At March 31, 2001, the ratios were 41% and 59%, respectively and at
March 31, 2002, they were approximately 32% equity and 68% debt, preferred stock
and minority interests. Following the proposed merger with Lattice, National
Grid's consolidated pro forma capitalization is expected to be approximately 40%
equity and 60% debt, preferred stock and minority interests. During that time
National Grid was consistently rated investment grade by the nationally
recognized statistical rating organizations. It is currently rated A2, P-1 by
Moody's Investors Service and A, A-1 by Standard and Poor's.
National Grid is operating within the limits of the January Order.
Accordingly, since the authorization sought herein will not increase National
Grid's authorized level of investment in FUCOs and will not have a direct effect
upon National Grid's investment in FUCOs, no adverse findings under Rule 54
should be made and the Commission should approve the authorization requested in
this application.
D. Scope of Application/Declaration
This Application/Declaration relates to the sale of utility assets,
including the Plant and related transmission assets, by Vermont Yankee and the
indirect sale of those utility assets by the applicant registered holding
companies. It also relates to the transfer of the cash and securities in the
Vermont Yankee Decommissioning Trust and the transfer of Vermont Yankee's
interest in the moneys relating to the Texas Compact held by the State of
Vermont.
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(6) As the Commission noted in THE NATIONAL GRID GROUP PLC, Holding Co. Act
Release No. 27154 (March 15, 2000), National Grid has preexisting foreign
operations and cannot at this time commit to maintain the books and records of
these interests in conformity with U.S. GAAP. National Grid will, however,
comply fully with the substantive provisions of Rule 53.
(7) Aggregate investment is defined in Rule 53 under the Act to include all
amounts invested, or committed to be invested, in exempt wholesale generators
and FUCOs, for which there is recourse, directly or indirectly to National Grid.
This limit is applied on a net basis and to the extent National Grid's previous
investments or guarantees have been repaid or have expired, those investments
are netted from the total aggregate investment.
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The Commission is respectfully requested to take appropriate action on
the following matters:
Approval of the sale of utility assets, including the Plant and the
transmission assets, by Vermont Yankee to ENVY and the indirect sale
of such utility assets by National Grid USA and National Grid Group
plc. Approval of the transfer of cash and securities in the Vermont
Yankee Decommissioning Trust and Vermont Yankee's interest in the
amount relating to the Texas Compact held by the State of Vermont.
ITEM 2. Fees, Commissions and Expenses
The estimated fees, commissions and expenses paid or to be paid,
directly or indirectly, in connection with the transactions described in this
Application/Declaration are as follows:
Legal and financial advisory fees and expenses $6,750,000
Accounting fees and expenses 100,000
Other expenses 250,000
Total $7,100,000
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ITEM 3. Applicable Statutory Provisions
Vermont Yankee is an indirect subsidiary of National Grid USA and
National Grid Group plc. The PSA provides for the sale of utility assets by
Vermont Yankee and, therefore, the indirect sale of utility assets by National
Grid USA and National Grid Group plc. That aspect of the proposed transaction
requires the approval of the Commission pursuant to Section 12(d) of the Act and
Rule 44 thereunder.
The redemption and repayment of Vermont Yankee's First Mortgage Bonds
and Secured Credit Agreement are exempted from the requirements of Section 12(c)
of the Act pursuant to Rule 42 thereunder.
ITEM 4. Regulatory Approvals
The following regulatory approvals are required in connection with the
transactions described in this Application/Declaration (references to particular
provisions of statutes, codes, rules or regulations are deemed to include other
provisions of statutes, codes, rules or regulations referred to therein or
related thereto):
The Vermont Public Service Board has jurisdiction over certain aspects
of Vermont Yankee as a public utility company doing business in Vermont.
Pursuant to Section 109 of Title
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30 of the Vermont Statutes Annotated, the consent of the Vermont Public Service
Board is required for Vermont Yankee to sell ten percent or more of its utility
assets (as contemplated by the PSA). Pursuant to Section 108 of Title 30 of the
Vermont Statutes Annotated the consent of the Vermont Public Service Board is
required for Vermont Yankee's pledge of its assets to another corporation. The
proposed pledge of Vermont Yankee's right to receive certain payments under the
Power Contracts to Entergy pursuant to the Security Agreement, which is the
subject matter of this Application/Declaration, falls within the parameters of
those statutory sections. Appropriate proceedings were instituted before the
Vermont Public Service Board by giving the required notice on August 22, 2001
and by formal petition dated September 27, 2001. See Exhibits D-1 and D-2. The
order of the Vermont Public Service Board was issued on June 13, 2002. See
Exhibit D-3.
The sale of jurisdictional assets to ENVY pursuant to the PSA and
approval of the 2001 Amendatory Agreements have been submitted for approval to
the FERC. Appropriate proceedings were instituted before FERC by giving the
required notice on October 17, 2001. See Exhibit D-4. The order of the FERC was
issued on February 1, 2002. See Exhibit D-5.
The sale of the Plant pursuant to the PSA will also require the
transfer to ENVY of the NRC Operating License currently held by Vermont
Yankee. The transfer of an operating license requires the consent of the NRC
pursuant to Section 184 of the Atomic Energy Act, as amended, and the
regulations promulgated thereunder, 10 CFR Sections 50.80 and 50.92. Appropriate
proceedings were instituted before the NRC by application filed on October 5,
2001. See Exhibit D-6. The order of the NRC was issued on May 17, 2002. See
Exhibit D-7.
In addition, the PSA provides that certain private letter rulings be
obtained from the United States Internal Revenue Service with respect to certain
tax aspects of the proposed transactions as preconditions to the Closing under
the PSA.
Certain of the sponsoring utilities, including certain sponsoring
utilities that are subsidiaries of the parties to this Application/Declaration,
also require consents, approvals or waivers of jurisdiction by their respective
state regulatory commissions with respect to their indirect participation in the
transactions that are the subject matter of this Application/Declaration.
No other state commission or any Federal commission, other than the
Securities and Exchange Commission and those named above, has jurisdiction over
the applicants' participation in the proposed transactions.
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ITEM 5. Procedure
(a) Vermont Yankee, National Grid USA and National Grid Group plc
do not request a hearing on this Application/Declaration and, because of the
urgency of obtaining all the required regulatory approvals involved in the
proposed transaction, request that the Commission's order be issued as soon as
practicable and no later than June 30, 2002 and that the authority granted
remain in effect until December 31, 2002.
(b) Without prejudice to their right to modify the same if a hearing
should be ordered on this Application/Declaration, the applicants hereby make
the following specifications required by paragraph (b) of Item 5 of Form U-1:
(i), (ii) There should not be a recommended decision by a hearing
officer or any other responsible officer of the Commission.
(iii) The Division of Investment Management may assist in the
preparation of the Commission's decision.
(iv) There should not be a 30-day waiting period between issuance of
the Commission's order and the date on which it is to become effective.
It is requested that the Commission send copies of all communications
to counsel for the applicants as follows: Vermont Yankee: Hemmie Chang, Esq.,
Ropes & Gray, One International Place, Boston, Massachusetts 02110 and Nancy
Malmquist, Esq., Downs Rachlin & Martin PLLC, P.O. Box 99, 90 Prospect Street,
St. Johnsbury, Vermont 05819-0099; and National Grid USA and National Grid Group
plc: Kirk L. Ramsauer, Esq., 25 Research Drive, Westborough, Massachusetts
01582.
ITEM 6. Exhibits and Financial Statements
(a) Exhibits:
A Not Applicable
B-1 Purchase and Sale Agreement. (Previously filed as an exhibit
to the Application/Declaration on Form U-1 (File No. 70-10025)
filed with the Securities and Exchange Commission on January
11, 2002.)
B-2 Power Purchase Agreement. (Previously filed as an exhibit
to the Application/Declaration on Form U-1 (File No. 70-10025)
filed with the Securities and Exchange Commission on January
11, 2002.)
B-3 2001 Amendatory Agreement. (Previously filed as an exhibit
to the Application/Declaration on Form U-1 (File No. 70-10025)
filed with the Securities and Exchange Commission on January
11, 2002.)
B-4 Form of Security Agreement. (Previously filed as an exhibit
to the Application/Declaration on Form U-1 (File No. 70-10025)
filed with the Securities and Exchange Commission on January
11, 2002.)
C Not Applicable
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D-l Letter dated August 22, 2001 giving notice of proposed
transactions to Vermont Public Service Board ("PSB").
(Previously filed as an exhibit to the Application/
Declaration on Form U-1 (File No. 70-10025) filed with the
Securities and Exchange Commission on January 11, 2002.)
D-2 Petition to PSB. (Previously filed as an exhibit to the
Application/Declaration on Form U-1 (File No. 70-10025)
filed with the Securities and Exchange Commission on January
11, 2002.)
D-3 Order of PSB.
D-4 Petition to FERC. (Previously filed as an exhibit to the
Application/Declaration on Form U-1 (File No. 70-10025)
filed with the Securities and Exchange Commission on January
11, 2002.)
D-5 Order by FERC.
D-6 Application to NRC. (Redacted) (Previously filed as an exhibit
to the Application/Declaration on Form U-1 (File No. 70-10025)
filed with the Securities and Exchange Commission on January
11, 2002.)
D-7 Order by NRC.
E Not Applicable
F-1 Opinions of counsel as to matters required by Instructions
F-(1) as to Exhibits to Form U-1. To be filed by amendment.
G Not applicable
H Proposed Form of Notice. (Previously filed as an exhibit to
the Application/Declaration on Form U-1 (File No. 70-10025)
filed with the Securities and Exchange Commission on January
11, 2002.)
(b) Financial Statements:
J-1 Audited Balance Sheet of Vermont Yankee as at December 31,
2000. (Previously filed as an exhibit to the Application/
Declaration on Form U-1 (File No. 70-10025) filed with the
Securities and Exchange Commission on January 11, 2002.)
J-2 Unaudited Balance Sheet of Vermont Yankee as at September 30,
2001. (Previously filed as an exhibit to the Application/
Declaration on Form U-1 (File No. 70-10025) filed with the
Securities and Exchange Commission on January 11, 2002.)
J-3 Audited Statement of Income for Vermont Yankee for the year
ended December 31, 2000. (Previously filed as an exhibit to
the Application/Declaration on Form U-1 (File No. 70-10025)
filed with the Securities and Exchange Commission on
January 11, 2002.)
J-4 Unaudited Statement of Income for Vermont Yankee for the
nine-months ended September 30, 2001. (Previously filed as an
exhibit to the Application/Declaration on Form U-1 (File
No. 70-10025) filed with the Securities and Exchange
Commission on January 11, 2002.)
Financial Statements of the top registered companies, National Grid
USA and National Grid Group plc, have been omitted as not being necessary to a
consideration of this application.
Item 7 - Information as to Environmental Effects.
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(a) In view of the nature of the proposed transaction described herein,
the Commission's action in this matter will not constitute any major federal
action significantly affecting the quality of the human environment.
(b) No other federal agency has prepared or is preparing an
environmental impact statement with regard to the proposed transaction.
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Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, the applicants named herein have duly caused this statement
to be signed on their behalf by the undersigned thereunto duly authorized.
NATIONAL GRID USA
By /s/ Kirk L. Ramsauer
-----------------------------------------------
Name: Kirk L. Ramsauer
Title: Deputy General Counsel
NATIONAL GRID GROUP PLC
By /s/ Kirk L. Ramsauer
-----------------------------------------------
Name: Kirk L. Ramsauer
Title: Deputy General Counsel
VERMONT YANKEE NUCLEAR POWER
CORPORATION
By /s/ Bruce W. Wiggett
-----------------------------------------------
Name: Bruce W. Wiggett
Title: Sr. Vice President of Finance & Admin.
Date: June 25, 2002
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