File No. 70-10256
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1 to
FORM U-1
APPLICATION /DECLARATION UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
With Respect To Trustee Compensation Program
***
Northeast Utilities
One Federal Street, Building 111-4
Springfield, Massachusetts 01105
(Name of company filing this statement and
address of principal executive office)
***
Northeast Utilities
(Name of top registered holding company parent
of each applicant or declarant)
***
Gregory B. Butler, Esq.
Senior Vice President, Secretary and General Counsel
Northeast Utilities
P.O. Box 270
Hartford, CT 06141-0270
(860) 665-3181 phone; butlegb@nu.com e-mail
(Name and address of agent for service)
The Commission is requested to mail signed copies of all orders,
notices, and communications to:
Jeffrey C. Miller
Assistant General Counsel
Northeast Utilities Service Company
P.O. Box 270
Hartford, CT 06141-0270
(860) 665-3532 phone; millejc@nu.com e-mail
Richard M. Early
Senior Counsel
Northeast Utilities Service Company
P.O. Box 270
Hartford, CT 06141-0270
(860) 665-3031 phone; earlyrm@nu.com e-mail
ITEM 1. DESCRIPTION OF PROPOSED TRANSACTIONS.
A. Item 1 of the Application is amended in its entirety to read
as follows:
ITEM 1. DESCRIPTION OF PROPOSED TRANSACTIONS.
1. Northeast Utilities ("NU"), a registered holding company,
hereby submits to the Commission an application/declaration (the
"Application") pursuant to Sections 6(a) and 7 of the Public
Utility Holding Company Act of 1935 (the "Act").
2. The Application relates to the issuance of up to 275,000
Northeast Utilities Common Shares, $5.00 par value ("Common
Shares") through December 31, 2014 to non-employee trustees of NU
as a portion of their fees. These Common Shares would be
purchased on the open market by or on behalf of NU and
transferred to the recipient.
3. In File No. 70-8080 (See Holding Co. Act Rel. No. 35-26368,
September 5, 1995) ("1995 Order"), the Commission approved the
issuance by NU of up to 50,000 Common Shares prior to April 30,
2005 for purposes of compensating its non-employee trustees for
their services. These shares would be and have been purchased on
the open market by NU or Northeast Utilities Service Company
("NUSCO"), a subsidiary service company of NU, on NU's behalf.
4. When the Commission issued the 1995 Order, each non-employee
trustee received 250 shares annually as part of his or her
retainer. These shares were either purchased on the open market
and immediately delivered to the trustee or receipt of the shares
was deferred, at the option of the recipient. In 2000, NU
increased this annual share payment to 500 shares, and in 2002,
increased it to 1,000 shares. In 2004, this annual grant of
shares to be purchased on the open market was replaced with a
restricted share unit grant under the Northeast Utilities
Incentive Plan (the "Incentive Plan").
5. Non-employee trustees also have the option to elect to take
all or a portion of their cash compensation in the form of Common
Shares and to receive or defer receipt of all or part of these
Common Shares. The number of trustees so electing and the number
of Common Shares paid to such Trustees as a result of such
elections has varied from year to year. To date, trustees have
deferred receipt of approximately 25,000 Common Shares.
6. NU requests authority in the Application to issue up to
275,000 Common Shares during the period beginning with the date
of the order through December 31, 2014, inclusive. This figure
is based on a projected need of not more than 25,000 Common
Shares per year from 2005 through 2014, plus the 25,000 shares
currently needed to satisfy deferred shares obligations. NU
expects to adapt its trustee compensation program from time to
time in the future as necessary or desirable to take into account
trends in director compensation, regulatory and tax changes and
business needs.
OTHER MATTERS
7. Except in accordance with the Act, neither NU nor any
subsidiary thereof (a) has acquired an ownership interest in an
EWG or a FUCO, as defined in Sections 32 and 33 of the Act, or
(b) now is or as a consequence of the transactions proposed
herein will become a party to, or has or will as a consequence of
the transactions proposed herein have a right under, a service,
sales, or construction contract with an EWG or a FUCO. None of
the proceeds from the transactions proposed herein will be used
by NU and its subsidiaries to acquire any securities of, or any
interest in, an EWG or a FUCO.
8. NU currently meets all of the conditions of Rule 53(a),
except for clause (1). At September 30, 2004, NU's "aggregate
investment," as defined in Rule 53(a)(1), in EWGs and FUCOs was
approximately $448.2 million, or approximately 53% of NU's
average "consolidated retained earnings," also as defined in Rule
53(a)(1), for the four quarters ended September 30, 2004 ($846
million). With respect to Rule 53(a)(1), however, the Commission
has determined that NU's financing of its investment in EWGs in
an amount not to exceed $1 billion would not have either of the
adverse effects set forth in Rule 53(c). (See Holding Co. Act
Release No. 27868A, July 2, 2004 (the "2004 Order"). NU continues
to assert that its EWG investments will not adversely affect the
System.
9. In addition, NU and its subsidiaries are in compliance and
will continue to comply with the other provisions of Rule 53(a)
and (b), as demonstrated by the following determinations:
(i) NGC, NU's only EWG, maintains books and records, and
prepares financial statements, in accordance with Rule
53(a)(2). Furthermore, NU has undertaken to provide the
Commission access to such books and records and financial
statements, as it may request;
(ii) No employees of NU's public utility subsidiaries have
rendered services to NGC;
(iii) NU has submitted (a) a copy of each Form U-1 and Rule
24 certificate that has been filed with the Commission under
Rule 53 and (b) a copy of Item 9 of the Form U5S and
Exhibits G and H thereof to each state regulator having
jurisdiction over the retail rates of NU's affected public
utility subsidiaries;
(iv) Neither NU nor any subsidiary has been the subject of
a bankruptcy or similar proceeding unless a plan of
reorganization has been confirmed in such proceeding;
(v) NU's average CREs for the four most recent quarterly
periods have not decreased by 10% or more from the average
for the previous four quarterly periods; and
(vi) In the previous fiscal year, NU did not report
operating losses attributable to its investment in
EWGs/FUCOs exceeding 3 percent of NU's consolidated retained
earnings.
10. The proposed transactions, considered in conjunction with
the effect of the capitalization and earnings of NU's EWG, would
not have a material adverse effect on the financial integrity of
the NU system, or an adverse impact on NU's public-utility
subsidiaries, their customers, or the ability of State
commissions to protect such public-utility customers. The 2004
Order concerning EWG investments was predicated, in part, upon an
assessment of NU's overall financial condition which took into
account, among other factors, NU's consolidated capitalization.
NU's current EWG investment, NGC, (it has no FUCO investment) has
been profitable for all quarterly periods ending June 30, 2000
through September 30, 2004 (NGC was acquired in March 2000).
11. The consolidated capitalization ratios of NU as of
September 30, 2004, with consolidated debt including all short-
term debt and non-recourse debt of the EWG, were as follows:
As of September 30, 2004
(thousands
of dollars) %
Common shareholders' equity $ 2,318,909 33.3
Preferred stock 116,200 1.7
Long-term and short-term debt 2,929,700 42.1
Rate Reduction Bonds 1,591,944 22.9
$ 6,956,753 100.0
If Rate Reduction Bonds are excluded the consolidated
capitalization ratio of NU as of September 30, 2004 is as
follows:
As of September 30, 2004
(thousands
of dollars) %
Common shareholders' equity $ 2,318,909 43.2
Preferred stock 116,200 2.2
Long-term and short-term debt 2,929,700 54.6
$ 5,364,809 100.0
12. In addition, NGC has made a positive contribution to
earnings by contributing $153.3 million in revenues in the 12-
month period ending September 30, 2004 and net income of $40.8
million for the same period.
ITEM 2. FEES, COMMISSIONS, AND EXPENSES.
B. Item 2 of the Declaration is amended to read as follows
13. The estimated fees, commissions, and expenses paid or
incurred, or to be paid or incurred, directly or indirectly, in
connection with the proposed transactions are not expected to
exceed $20,000, consisting of commissions on the proposed open
market Common Share purchases and the expenses of preparing this
Declaration.
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS
C. The Exhibit List is amended by deleting Exhibit H. The
following Exhibit is filed herewith:
F. Opinion of Counsel.
SIGNATURES
Pursuant to the requirements of the Public Utility
Holding Company Act of 1935, as amended, the undersigned has duly
caused this amendment to be signed on its behalf by the
undersigned thereunto duly authorized.
NORTHEAST UTILITIES
By /s/ Randy A. Shoop
Randy A. Shoop
Its Assistant Treasurer - Finance
Dated: December 23, 2004
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The issuance of Common Shares under the NU Incentive Plan
was approved by the Commission in File No. 70-9185 (Holding Co.
Act Rel. No. 35-26865, April 29, 1998).
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