As filed with the Securities and Exchange Commission on September 26, 2003
File No.70-10119
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 3 TO
FORM U-1 APPLICATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
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Energy East Corporation
Energy East Management Corporation
P.O. Box 12904
Albany, NY 12212-2904
(Name of company filing this statement and
address of principal executive offices)
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Energy East Corporation
(Name of top registered holding company parent)
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Kenneth M. Jasinski
Executive Vice President and Chief Financial Officer
Energy East Corporation
P.O. Box 12904
Albany, NY 12212-2904
(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:
Frank Lee, Esq. Tia S. Barancik
Huber Lawrence & Abell LeBoeuf, Lamb, Greene & MacRae, L.L.P.
605 Third Avenue 125 West 55th Street
New York, New York 10158 New York, NY 10019-5389
Telephone: (212) 682-6200 Telephone: (212) 424-8455
Facsimile: (212) 424-8500
Energy East Corporation, a New York corporation ("Energy East"), a
registered holding company under the Public Utility Holding Company Act of 1935,
as amended (the "Act") hereby supplements its Application in File No. 70-10119
as follows:
ITEM 3. APPLICABLE STATUTORY PROVISIONS
Sections 6, 7, 9, 10 and 13(b) of the Act and Rules 87, 88, 90 and 91
are considered applicable to the proposed transactions.
To the extent that the proposed transactions are considered by the
Commission to require authorization, exemption or approval under any section of
the Act or the rules and regulations other than those set forth above, request
for such authorization, exemption or approval is hereby made.
Under Rule 87, a subsidiary of a registered holding company may perform
services or construction for, or sell goods to, associate companies thereof, if
the subsidiary providing the services is principally engaged in the business of
an operating electric or gas utility company, or any business or businesses
other than that of selling goods to associate companies, that of performing
services or construction, that of a holding company or fiscal or financing
agency of a holding company, or that of an investment company or investment
trust; and which, incidentally to such business, performs such services, or
construction, or sells such goods. Rule 87(a)(3).
Accordingly, a public utility company that is not also a holding
company or other entity restricted under the rule may provide services when the
utility's principal business is that of a public utility company and its service
activities are incidental to its utility business. The utility must comply with
the pricing provisions of Rule 90 under the Act in the provision of services to
associate companies. In particular, Rule 90 generally requires that services
should be provided at not more than cost as determined under Rule 91. Exhibit
B-4 hereto describes the services that Energy East's subsidiaries other than
EEMC and Shared Services propose to provide to each other.
Except as heretofore specifically authorized by the Commission in
Exhibit B-4, Energy East does not anticipate or expect that its public utility
subsidiaries will provide services to Shared Services except on an incidental;
i.e., non-recurring, short-term project specific/8 or emergency, basis, in
compliance with applicable rules of the Commission, including Rule
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8 For example, Shared Services may from time to time seek to access the
expertise of personnel at the different Utility Subsidiaries for discrete
one-time projects such as the review of a new product or a new process
that Shared Services is considering deploying across the Energy East
system, or, at the request of EEMC, Shared Services may seek input from
Utility Subsidiary personnel as to the preferred means of centralizing a
particular function or service in accordance with policies of the Energy
East system. Shared Services, and EEMC in certain situations, would have
an appropriate need to evaluate whether such a new product or process
would enhance system efficiencies and be beneficial to its Utility
Subsidiary customers and to the Energy East system as a whole. To the
extent Utility Subsidiary personnel are required to be made available to
Shared Services for such a review, Shared Services will issue a work order
to such effect and will compensate the Utility Subsidiaries for the use of
their personnel as set forth in such work order. Shared Services will
describe each such work order and amounts paid pursuant thereto in detail
in an addendum to its Form U-13-60 filed with the Commission. Such
addendum will include a breakdown of each project undertaken and the
amount billed to each company for each project.
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87(a)(3). It is possible, however, that as functions are transferred to Shared
Services some services may be performed for a limited period of time after the
effective date of such transfer by utility company personnel until such
personnel and their positions are formally transferred to Shared Services./9
To the extent that Rule 87(a)(3) does not apply, Energy East requests,
on behalf of the Utility Subsidiaries, authority for them to provide services to
each other and to Shared Services as described in this Application.
The transactions proposed herein are also subject to Rule 54, which
provides that the Commission shall not consider the effect of the capitalization
or earnings of any subsidiary of a registered holding company that is an "exempt
wholesale generator" ("EWG") or a "foreign utility company" ("FUCO") in
determining whether to approve any transaction that is unrelated to the
financing of any EWG or FUCO if Rule 53(a), (b) and (c) are satisfied. These
standards are met.
Rule 53(a)(1): As of June 30, 2003, Energy East's "aggregate
investment" in EWGs and FUCOs is approximately $20 million, or approximately
1.7% of Energy East's "consolidated retained earnings" at June 30, 2003
(approximately $1.2 billion).
Rule 53(a)(2): Energy East will maintain books and records enabling it
to identify investments in and earnings from each EWG and FUCO in which it
directly or indirectly acquires and holds an interest. Energy East will cause
each domestic EWG in which it acquires and holds an interest, and each foreign
EWG and FUCO that is a majority-owned subsidiary, to maintain its books and
records and prepare its financial statements in conformity with U.S. generally
accepted accounting principles ("GAAP"). All of such books and records and
financial statements will be made available to the Commission, in English, upon
request.
Rule 53(a)(3): No more than 2% of the employees of the Utility
Subsidiaries will, at any one time, directly or indirectly, render services to
EWGs and FUCOs.
Rule 53(a)(4): Energy East will submit a copy of any Application filed
with the Commission and each amendment thereto, and will submit copies of any
Rule 24 certificates as well as a copy of Energy East's Annual Report on Form
U5S, to each of the public service commissions having jurisdiction over the
retail rates of the Utility Subsidiaries, in each case as required by Rule 53.
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9 For example, once it has been determined that an additional function is
ready to be transferred to Shared Services and the effective date for the
transfer to Shared Services has occurred, system personnel will begin to
report to Shared Services personnel and perform the particular function on
a centralized basis. However, it may not be administratively possible to
transfer all employee positions to Shared Services on the same calendar
day (particularly if the effective date of such transfer occurs during a
payroll period or if physical relocation of employees is required).
Therefore, it is anticipated that some personnel will remain employees of
a Utility Subsidiary until their transfer to Shared Services can be
completed, a process which should be completed within two to four months
in each case (including any necessary 60-day notice to the Commission).
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In addition, Energy East states that the provisions of Rule 53(a) are
not made inapplicable to the authorization herein requested by reason of the
occurrence or continuance of any of the circumstances specified in Rule 53(b).
Rule 53(c) is inapplicable by its terms.
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SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, the undersigned Applicants have duly caused this Amendment to an
Application to be signed on their behalf by the undersigned thereunto duly
authorized.
ENERGY EAST CORPORATION
/s/ Robert E. Rude
By: ________________________
Name: Robert E. Rude
Title: Vice President and Controller
Date: September 26, 2003
ENERGY EAST MANAGEMENT
CORPORATION
/s/ Robert E. Rude
By: _________________________
Name: Robert E. Rude
Title: Vice President and Controller
Date: September 26, 2003
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