File No. 70-10236
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________________
POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM U-1
APPLICATION-DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
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National Grid Transco plc New England Power Company
National Grid (US) Holdings Limited Massachusetts Electric Company
National Grid (US) Investments 4 The Narragansett Electric Company
National Grid (US) Partner 1 Limited Granite State Electric Company
National Grid (US) Partner 2 Limited Nantucket Electric Company
1-3 Strand New England Electric Transmission Corporation
London WC2N 5EH New England Hydro-Transmission Corporation
United Kingdom New England Hydro-Transmission Electric Co. Inc.
National Grid USA Service Company Inc.
National Grid General Partnership National Grid USA
c/o RL&F Service Corp. National Grid Holdings Inc.
One Rodney Square 25 Research Drive
Wilmington, Westborough, MA 01582
New Castle County, DE 19801
Niagara Mohawk Holdings, Inc.
And the direct and indirect nonutility subsidiary Niagara Mohawk Power Corporation
companies of National Grid Transco plc listed on 300 Erie Boulevard West
Exhibit A to the Application. Syracuse, New York 13202
________________________________________________
National Grid Transco plc
(Name of top registered holding company)
________________________________________________
Kirk L. Ramsauer
Deputy General Counsel
National Grid USA
25 Research Drive
Westborough, Massachusetts 01582
Telephone: (508) 389-2972
Facsimile: (508) 389-3518
(Name and address of agent for service)
The Commission is also requested to send copies
of any communication in connection with this matter to:
Markian M. W. Melnyk
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
1875 Connecticut Ave.
Washington, D.C. 20009-5728
Telephone: (202) 986-8212
Facsimile: (202) 986-8102
This Post-Effective Amendment No. 1 amends the Application originally filed
with the Securities and Exchange Commission (the "Commission") in File No.
70-10236 on July 15, 2004 and subsequently amended on August 30, 2004 and
September 30, 2004, to provide further information in Item 1 regarding National
Grid Transco plc's compliance with Rule 53(c) and to conform Items 2, 5 and 6.
Item 1. Description of the Proposed Transaction
A. Introduction.
National Grid Transco plc ("National Grid Transco"), a registered public
utility holding company under the Public Utility Holding Company Act of 1935
(the "Act") requests the Commission to release jurisdiction regarding National
Grid Transco's issuance of securities for the purpose of financing additional
investments in foreign utility companies ("FUCOs").
B. Discussion
1. Request for Release of Jurisdiction
By order dated September 30, 2004, Holding Co. Act Release No. 27898
("September Order"), the Commission authorized National Grid Transco and the
direct and indirect National Grid Transco subsidiaries identified on the cover
page and in Exhibit A of the Application (collectively, the "Applicants") to
engage in certain financing and other transactions described in the September
Order and the Application in SEC File No. 70-10236, as amended. The September
Order authorized the Applicants to engage in the transactions proposed in the
Application but reserved jurisdiction over, among other things, National Grid
Transco's issuance of securities to finance an additional USD 20 billion of FUCO
investments, pending completion of the record. National Grid Transco now
supplements the record with additional information regarding its compliance with
Rule 53(c) under the Act and requests that, based on this supplementary
information, the Commission find that the additional FUCO investment
authorization proposed in the Application may be granted.
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2. Analysis Under Rule 53(c)
In determining whether to approve the issuance or sale of a security by a
registered holding company to finance a FUCO investment, the Commission
typically considers the circumstances surrounding the proposed issuance and, in
particular, the effect of the proposed investments on the financial soundness of
the registered holding company system. If the securities issuance cannot qualify
for the safe harbor in Rule 53(a) of the Act, the Applicants must demonstrate
under Rule 53(c) that the proposed FUCO financing will not (i) have a
substantial adverse impact upon the financial integrity of the registered
holding company system, and (ii) have an adverse impact on any utility
subsidiary of the registered holding company, or its customers, or on the
ability of state commissions to protect such subsidiary or customers.
As reported in its Certificate of Notification under Rule 24 filed on
November 24, 2004, as of September 30, 2004, National Grid Transco's current
aggregate investment in FUCOs was GBP 10,635 million (USD 19,143 million).
Combined with the additional FUCO investment authorization of $20 billion
requested in this Application, National Grid Transco's aggregate investment in
FUCOs could grow to USD 39,143 million during the Authorization Period. Although
this investment exceeds the Rule 53(a) safe harbor, National Grid Transco
satisfies the conditions of Rule 53(c). As demonstrated in the Application,
National Grid Transco's proposed issuance and sale of securities to finance
additional FUCO investments will not adversely affect its financial integrity.
The soundness of National Grid Transco's capital structure is demonstrated by
its high credit rating. National Grid Transco's senior unsecured debt is
currently rated A- by S&P and Baa1 by Moody's. In addition to the company's
investment grade rating, National Grid Transco's financial soundness is shown by
its equity market value to book value ratios and stock price to earnings ratios
over several years. Also, as described in the
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Application, National Grid Transco subjects FUCO investment proposals to careful
and stringent reviews by senior management and directors. For these reasons,
National Grid Transco satisfies the conditions of Rule 53(c)(1).
Under Rule 53(c)(2), National Grid Transco must demonstrate that the
proposed use of financing proceeds to invest in FUCOs will not have an adverse
impact on any utility subsidiary of the registered holding company, or its
customers, or on the ability of the affected state commissions to protect such
subsidiary or customers. National Grid Transco's public utility subsidiary
companies (defined in the Application as the "Utility Subsidiaries") and their
customers will not be adversely impacted by the proposed FUCO investment based
on the following:
(a) All of National Grid Transco's investments in FUCOs will be segregated
from the Utility Subsidiaries and none of the Utility Subsidiaries
will provide financing for, extend credit to, or sell or pledge its
assets directly or indirectly to any FUCO in which National Grid
Transco owns any interest;
(b) Investments in FUCOs will not have any negative impact on the ability
of the Utility Subsidiaries to fund operations and growth. The Utility
Subsidiaries will continue to have financial facilities in place or
access to National Grid Transco financing facilities that will
adequately support their operations;
(c) National Grid Transco will comply with the requirements of Rule
53(a)(3) regarding the limitation on the use of the Utility
Subsidiaries' employees in connection with providing services to
FUCOs; and
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(d) National Grid Transco will comply with Rule 53(a)(4) regarding the
provision of FUCO related information to every federal, state and
local regulator having jurisdiction over the retail rates, as
applicable, of the Utility Subsidiaries.
In addition, the proposed FUCO financing authorization will not have an
adverse impact on the ability of any state commission to protect the Utility
Subsidiaries or their customers. All state commissions with jurisdiction over
the retail rates of the Utility Subsidiaries have provided the Commission with
statements in support of this finding. Each of the affected state commissions
has confirmed that National Grid Transco's proposed FUCO investment will not
have an adverse impact on the ability of the state commissions to protect
National Grid Transco's utility subsidiaries subject to their jurisdiction or
the subsidiaries' customers.
In particular, the New York Public Service Commission ("NYPSC"), in its
letter dated December 1, 2004, has acknowledged that National Grid Transco's
"proposed investments will not have an adverse impact on Niagara Mohawk Power
Corporation, or its respective customers, or the ability of the [NYPSC] to
protect Niagara Mohawk Power Corporation or its ratepayers in New York." The
NYPSC also confirmed that it has the authority and resources to protect New York
ratepayers and intends to continue exercising that authority.\1 Similarly, the
Rhode Island Public Utility Commission ("RIPUC") in its September 23, 2004
letter to the Commission concluded that "[National Grid Transco's] proposed
investments will not have an adverse impact on Narragansett Electric [Company],
or its respective customers, or the ability of the [RIPUC] to
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1 The NYPSC letter references a November 3, 2004 letter from Kirk L. Ramsauer,
Deputy General Counsel, National Grid to Hon. William M. Flynn, Chair of the
NYPSC, clarifying that National Grid Transco will restrict any guarantees issued
by Niagara Mohawk Holdings, Inc. ("NIMO Holdings") to obligations of NIMO
Holdings' direct and indirect subsidiaries.
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protect ratepayers in Rhode Island. The [RIPUC] is of the view that it has the
authority and resources to protect Rhode Island ratepayers and it intends to
continue exercising that authority."
The New Hampshire Public Utility Commission ("NHPUC"), in a letter dated
September 30, 2004 raised concerns about the potential impact of National Grid
Transco's application on the utilities over which the NHPUC has jurisdiction.\2
In its letter dated November 29, 2004, the NHPUC indicates that representatives
of the NHPUC and National Grid Transco met to discuss these concerns and the
NHPUC has been assured that it would continue to have the jurisdictional
authority it currently holds over the National Grid Transco retail utility
subsidiaries, including the NHPUC's standards regarding long and short term
debt. The NHPUC further expressed its satisfaction that "approval by the
Securities and Exchange Commission of the Form U-1 Application [of National Grid
Transco] will not infringe upon [the NHPUC's] regulatory authority."
The Massachusetts Department of Telecommunications and Energy ("MDTE")
concluded, in its letter dated September 24, 2004, that National Grid Transco's
existing interest and proposed additional investments in FUCOs will not have an
adverse impact on the ability of the MDTE to protect Massachusetts Electric
Company or Nantucket Electric Company or their respective customers.\3 The MDTE
also stated that "pursuant to G.L. c. 164, the [MDTE] has the authority and
resources to protect ratepayers in Massachusetts and it intends to continue
exercising that authority."
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2 The New Hampshire jurisdictional utilities are Granite State Electric Company;
New England Hydro-Transmission Corporation; New England Power Company; and New
England Electric Transmission Corporation.
3 The MDTE provided its statement to the Commission before the filing of
pre-effective Amendment No. 2 to the Application on September 30, 2004.
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Based on the foregoing statements from the affected state commissions, the
Commission should find that the requirements of Rule 53(c) are satisfied and it
should release jurisdiction over National Grid Transco's issuance of securities
to finance additional FUCO investments. The release of jurisdiction would permit
National Grid Transco to issue securities to finance USD 20 billion of
additional investments in FUCOs in excess of the current USD 19.143 billion
aggregate FUCO investment during the Authorization Period, subject to compliance
with the parameters set forth in the Application and the September Order
applicable to the issuance of securities by National Grid Transco. The relief
requested is necessary for National Grid Transco to continue to finance and
operate permitted FUCO businesses in compliance with the Act.
Applicants request that the Commission continue to reserve jurisdiction
over: (a) the issuance of any guarantee or other securities in reliance upon the
authorization granted by the Commission under this Application at any time that
the Investment Grade Condition is not satisfied, and (b) the participation of
any National Grid Transco System company in the Money Pool, other than the
Utility Subsidiaries and ServiceCo, as a borrower.
Item 2. Fees, Commissions And Expenses
The fees, commissions and expenses to be paid or incurred by National Grid
Transco directly or indirectly in connection with the preparation of this
Post-effective Amendment No. 1 to the Application are estimated to be
approximately USD 8,000.
Item 3. Applicable Statutory Provisions
Rule 53(c) under the Act is applicable to the relief requested in this
Post-Effective Amendment.
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Item 4. Regulatory Approvals
No state commission and no federal commission, other than the Commission,
has jurisdiction over the relief requested in this Post-Effective Amendment.
Item 5. Procedure
The Commission issued a notice of the filing of the Application on August
30, 2004. A new notice of the instant request for a release of jurisdiction is
not required. The Commission is respectfully requested to issue an order
authorizing the relief requested herein forthwith.
A recommended decision by a hearing or other responsible officer of the
Commission is not needed for approval of the proposed release of jurisdiction.
The Division of Investment Management may assist in the preparation of the
Commission's decision. There should be no waiting period between the issuance of
the Commission's order and the date on which it is to become effective.
Item 6. Exhibits and Financial Statements
Exhibits
* * *
F Letter from the State of New York Department of Public Service, Public
Service Commission dated December 1, 2004 (including letter from Kirk L.
Ramsauer dated November 3, 2004).
G Letter from the State of Rhode Island Public Utilities Commission dated
September 23, 2004.
H Letters from the State of New Hampshire Public Utilities Commission dated
September 30, 2004 and November 29, 2004.
I Letter from the Commonwealth of Massachusetts Department of
Telecommunications and Energy dated September 24, 2004.
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Item 7. Information as To Environmental Effects
The proposed transaction neither involves a "major federal action" nor
"significantly affects the quality of the human environment" as those terms are
used in Section 102(2)(C) of the National Environmental Policy Act, 42 U.S.C.
Sec. 4321 et seq. No federal agency is preparing an environmental impact
statement with respect to this matter.
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SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act of
1935, the undersigned company has duly caused this Post-Effective Amendment to
its Application to be signed on its behalf by the undersigned thereunto duly
authorized. The signature of the applicants, through the undersigned, is
restricted to the information contained in this Amendment which is pertinent to
the Application.
Date: December 16, 2004 National Grid Transco plc and its subsidiaries
By: /s/ Kirk L. Ramsauer
Kirk L. Ramsauer
Deputy General Counsel
National Grid USA
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EXHIBIT INDEX
F Letter from the State of New York Department of Public Service, Public
Service Commission dated December 1, 2004 (including letter from Kirk L.
Ramsauer dated November 3, 2004).
G Letter from the State of Rhode Island Public Utilities Commission dated
September 23, 2004.
H Letters from the State of New Hampshire Public Utilities Commission dated
September 30, 2004 and November 29, 2004.
I Letter from the Commonwealth of Massachusetts Department of
Telecommunications and Energy dated September 24, 2004.
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