UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM U-1/A
POST-EFFECTIVE AMENDMENT NO. 2
TO
APPLICATION/DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
CenterPoint Energy, Inc.
1111 Louisiana
Houston, Texas 77002
Utility Holding, LLC
200 West Ninth Street Plaza
Suite 411
Wilmington, Delaware 19801
CenterPoint Energy Houston Electric, LLC
1111 Louisiana
Houston, Texas 77002
(Name of companies filing this statement
and address of principal executive offices)
CenterPoint Energy, Inc.
1111 Louisiana
Houston, Texas 77002
(Name of top registered holding company parent of each applicant or declarant)
Rufus S. Scott
Vice President, Deputy General Counsel and Assistant Corporate Secretary
CenterPoint Energy, Inc.
1111 Louisiana
Houston, Texas 77002
(713) 207-7451
The Commission is also requested to send copies
of any communications in connection with this matter to:
James R. Doty, Esq. Margo S. Scholin, Esq.
Joanne C. Rutkowski, Esq. Baker Botts L.L.P.
Baker Botts L.L.P. 3000 One Shell Plaza
The Warner Houston, Texas 77002-4995
1299 Pennsylvania Avenue, N.W. (713) 229-1234
Washington, D.C. 20004-2400
(202) 639-7700
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
From time to time, we make statements concerning our expectations,
beliefs, plans, objectives, goals, strategies, future events or performance and
underlying assumptions and other statements, that are not historical facts.
These statements are "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Actual results may differ
materially from those expressed or implied by these statements. You can
generally identify our forward-looking statements by the words "contemplate,"
"may," "propose," "should," "will," "would" or other similar words.
We have based our forward-looking statements on our management's
beliefs and assumptions based on information available to our management at the
time the statements are made. We caution you that assumptions, beliefs,
expectations, intentions and projections about future events may and often do
vary materially from actual results. Therefore, we cannot assure you that actual
results will not differ materially from those expressed or implied by our
forward-looking statements.
The following are some of the factors that could cause actual results
to differ materially from those expressed or implied in forward-looking
statements:
o state and federal legislative and regulatory actions or
developments, including deregulation, re-regulation and
restructuring of the electric utility industry, constraints placed
on our activities or business by the Public Utility Holding
Company Act of 1935 (the "1935 Act" or the "Act"), changes in or
application of laws applicable to other aspects of our business
with respect to:
o recovery of stranded costs;
o allowed rates of return;
o rate structures;
o recovery of investments; and
o operation and construction of facilities;
o changes in business strategy or development plans;
o changes in interest rates or rates of inflation;
o unanticipated changes in operating expenses and capital e
expenditures;
o commercial bank and financial market conditions, our access to
capital, the cost of such capital, receipt of certain approvals
under the 1935 Act, and the results of our financing and
refinancing efforts, including availability of funds in the debt
capital markets;
o actions by rating agencies; and
o other factors we discuss under "Risk Factors" beginning on page 59
in Item 5 of Part II of the Quarterly Report of CenterPoint on
Form 10-Q for the period ended June 30, 2003 and in Exhibit 99.1 of
CenterPoint Energy, Inc.'s Current Report on Form 8-K dated
May 12, 2003, including those outlined under "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" and in this Form U-1, as amended.
The reader should not place undue reliance on forward-looking
statements. Each forward-looking statement speaks only as of the date of the
particular statement, and we undertake no obligation to publicly update or
revise any forward-looking statements.
TABLE OF CONTENTS
PAGE
ITEM 1. DESCRIPTION OF POSSIBLE TRANSACTION......................1
A. REQUESTED AUTHORIZATION.........................1
B. BACKGROUND......................................1
ITEM 2. FEES, COMMISSIONS AND EXPENSES...........................3
ITEM 3. APPLICABLE STATUTORY PROVISIONS..........................3
A. APPLICABLE PROVISIONS...........................3
B. RULE 54 ANALYSIS................................3
ITEM 4. REGULATORY APPROVAL......................................4
ITEM 5. PROCEDURE................................................4
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS........................4
A. EXHIBITS........................................4
B. FINANCIAL STATEMENTS............................5
ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS..................5
ITEM 1. DESCRIPTION OF POSSIBLE TRANSACTION
A. Requested Authorization
CenterPoint Energy, Inc. ("CenterPoint"), Utility Holding, LLC and
CenterPoint Energy Houston Electric, LLC (the "T&D Utility") (together, the
"Applicants") hereby file this Post-Effective Amendment No. 2 asking the
Commission to modify the authority granted under the order dated June 30, 2003
(HCAR No. 27692 (the "Omnibus Financing Order")) as supplemented by the order
dated August 1, 2003 (HCAR No. 27705 (the "Supplemental Order")). Those orders
authorized the T&D Utility to issue up to $500 million in incremental external
debt securities through June 30, 2005 (the "Authorization Period") such that the
amount of T&D Utility external debt does not exceed $3.603 billion at any one
time outstanding during the Authorization Period. The T&D Utility has issued
$300 million of debt securities pursuant to such authority as described below.
Applicants ask the Commission to modify this existing authority to
permit the T&D Utility to issue an additional $300 million in incremental
external debt securities during the Authorization Period, such that the amount
of T&D Utility external debt will not exceed $3.903 billion at any one time
outstanding during the Authorization Period.
It is contemplated that approximately $50 million of the requested
additional authorization may be necessary to permit the refunding of outstanding
tax-exempt debt, as contemplated by the Omnibus Financing Order. Applicants seek
current authority only with respect to that amount. They ask the Commission to
reserve jurisdiction over the remainder of the requested additional authority,
pending completion of the record.
B. Background
1. Existing Authority
The Omnibus Financing Order authorized CenterPoint and its Subsidiaries
to engage in certain financing and related transactions during the Authorization
Period.(1) Of interest here, the Omnibus Financing Order as supplemented by the
Supplemental Order authorized the T&D Utility to issue up to $500 million in
incremental external debt securities during the Authorization Period, and to
enter into obligations with respect to tax-exempt debt issued on its behalf by
governmental authorities in connection with the refunding of outstanding
tax-exempt debt assumed by CenterPoint in connection with the Electric
Restructuring.
---------------------
1 The term "Subsidiaries" refers to each direct or indirect subsidiary
company of CenterPoint as listed on the cover page hereto, as well as any direct
or indirect subsidiary companies that CenterPoint may form with the approval of
the Commission or in reliance on rules or statutory exemptions.
On September 9, 2003, the T&D Utility issued $300 million of external
debt securities, and so has remaining authority to issue up to $200 million in
incremental external debt securities during the Authorization Period.(2)
2. Tax-Exempt Debt Refundings
Prior to the August 31, 2002 restructuring (the "Electric
Restructuring") by which CenterPoint and Utility Holding, LLC became holding
companies for the T&D Utility, Reliant Energy, Incorporated (and its predecessor
companies, known variously as Houston Industries Incorporated and Houston
Lighting & Power Company) (together, the "vertically-integrated utility" or
"utility") had entered into agreements with certain governmental authorities
(the "Authorities") for the issuance of pollution control bonds by those
Authorities. Under these agreements, the proceeds of bonds issued by the
Authorities were used by the vertically-integrated utility to finance qualifying
pollution control facilities used in its business or to refund bonds previously
issued for that purpose. The vertically-integrated utility committed to make
payments to support and retire the bonds issued by the Authorities. In some
cases, the obligations were insured by third party insurers and/or secured by
mortgage bonds issued by the utility.
In connection with the Electric Restructuring, (i) CenterPoint assumed
the installment payment obligations of the vertically-integrated utility;(3)
(ii) the mortgage bonds that secured certain of these obligations remained with
the T&D Utility as corporate successor to the vertically-integrated utility; and
(iii) the T&D Utility issued promissory notes payable to CenterPoint with
payment terms equivalent to CenterPoint's installment payment obligations for
each series of secured bonds.
In connection with any refunding, the T&D Utility would request the
relevant Authorities to issue new series of revenue refunding bonds, the
proceeds of which would ultimately be used to redeem approximately $250 million
of revenue refunding bonds supported by CenterPoint installment payment
obligations. The new series of refunding bonds would be issued by the applicable
governmental Authority on behalf of the T&D Utility, and supported by credit
support in the form of (i) T&D Utility installment payment obligations, (ii)
possibly, separate series of T&D Utility first mortgage bonds or general
mortgage bonds and, possibly, (iii) bond insurance. As noted above, the T&D
Utility has outstanding promissory notes payable to CenterPoint for each series
of outstanding bonds. The proceeds of the new series of refunding bonds would be
used to redeem the bonds that are being refunded. The associated intercompany
notes owed to CenterPoint would be "deemed paid" when the old revenue refunding
bonds are
--------------------
2 The proceeds from the $300 million T&D Utility debt issuance were used
to repay intrasystem borrowings and obligations in connection with the
refinancing of CenterPoint's obligations under its $3.85 billion credit facility
(the "CenterPoint Facility"). As noted in the Supplemental Order, the
transactions associated with the refinancing of the CenterPoint Facility did
"not increase the overall amount of debt or adversely affect the capital
structure of any entity of the CenterPoint System as a whole."
3 These obligations migrated to CenterPoint under the terms of the
relevant agreements.
2
redeemed. In addition, the redemption of the old bonds would result in
a corresponding satisfaction of the related series of currently outstanding
mortgage bonds.
Such financing transactions would be subject to the terms and
conditions set forth in the Omnibus Financing Order. Among other things,
Applicants would continue to comply with the investment grade and equity
capitalization criteria set forth therein.(4)
3. Reservation of Jurisdiction
Although Applicants currently anticipate an immediate possible need for
only approximately $50 million of the requested incremental authority, they ask
the Commission to notice the full amount of the request and to reserve
jurisdiction over the requested incremental authority in excess of that needed
to complete the above-described refunding transactions. Applicants would seek a
release of jurisdiction to the extent additional authority may be required,
either for use in connection with additional refundings or new financing
transactions. It is contemplated that any such request would be subject to the
investment grade and equity capitalization criteria and other terms and
conditions as set forth in the Omnibus Financing Order.
ITEM 2. FEES, COMMISSIONS AND EXPENSES.
The fees, commissions and expenses paid or incurred or to be incurred
in connection with this Amendment are estimated to be $20,000.
ITEM 3. APPLICABLE STATUTORY PROVISIONS.
A. Applicable Provisions
Sections 6(a) and 7 of the Act and Rule 54 thereunder are considered
applicable to the proposed transactions. To the extent that the proposed
transactions are considered by the Commission to require authorizations,
exemption or approval under any section of the Act or the rules and regulations
thereunder other than those set forth above, request for such authorization,
exemption or approval is hereby made.
B. RULE 54 ANALYSIS.
The proposed transactions are subject to Rule 54 under the Act, which
refers to Rule 53. Rule 54 under the Act provides that in determining whether to
approve certain transactions other than those involving exempt wholesale
generators ("EWGs") or foreign utility companies ("FUCOs"), as defined in the
Act, the Commission will not consider the effect of the capitalization or
earnings of any Subsidiary which is an EWG or FUCO if Rule 53(a), (b) and (c)
under the Act are satisfied.
--------------------
4 In particular, the T&D Utility would continue to maintain a minimum of
30% common equity, as required by the Omnibus Financing Order.
3
As a result of the Restructuring authorized in the order dated July 5,
2002 (HCAR No. 27548 (the "July Order")) (as such term is defined in the July
Order), CenterPoint had negative retained earnings as of December 31, 2002.
Thus, although CenterPoint's aggregate investment (as defined in Rule
53(a)(1)(i) under the Act), in EWGs and FUCOs as of December 31, 2002 was
approximately $8 million, the Company is not currently in compliance with the
requirements of Rule 53(a)(1) under the Act. As previously explained,
CenterPoint is attempting to dispose of its remaining interests in EWGs and
FUCOs and is not planning to invest any more monies in those businesses.(5)
CenterPoint complies with, and will continue to comply with, the
record-keeping requirements of Rule 53(a)(2) under the Act, the limitation under
Rule 53(a)(3) under the Act on the use of domestic public-utility company
personnel to render services to EWGs and FUCOs, and the requirements of Rule
53(a)(4) under the Act concerning the submission of copies of certain filings
under the Act to retail regulatory commissions. Further, none of the
circumstances described in Rule 53(b) under the Act has occurred or is
continuing. Rule 53(c) under the Act is by its terms inapplicable to the
transactions proposed herein that do not involve the issue and sale of
securities (including guarantees) to finance an acquisition of an EWG or FUCO.
ITEM 4. REGULATORY APPROVAL.
No state or federal commission other than the Commission has
jurisdiction with respect to any of the proposed transactions described in this
Amendment.
ITEM 5. PROCEDURE.
The Applicants request that the Commission's order be issued as soon as
possible, and that there should not be a 30-day waiting period between issuance
of the Commission's order and the date on which the order is to become
effective. The Applicants hereby waive a recommended decision by a hearing
officer or any other responsible officer of the Commission and consent that the
Division of Investment Management may assist in the preparation of the
Commission's decision and/or order, unless the Division opposes the matters
proposed herein.
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS.
A. EXHIBITS.
G-1 Principal amount of external debt and trust preferred securities of
CenterPoint and its Subsidiaries as of September 9, 2003 (incorporated by
reference to CenterPoint's Current Report on Form 8-K filed September 18, 2003).
H-1 Form of Notice
-------------------
5 CenterPoint is seeking to qualify Texas Genco as an EWG but does not
intend to seek any financing authority in connection therewith.
4
B. FINANCIAL STATEMENTS.
FS-2 Consolidated Balance Sheets of CenterPoint as of June 30, 2003 (unaudited)
and Statements of Consolidated Income and Statements of Consolidated Cash Flows
for the six months ended June 30, 2003 (unaudited) (incorporated by reference to
CenterPoint's Quarterly Report on Form 10-Q for the three months ended June 30,
2003 (File No. 1-31447)).
FS-3 Consolidated Balance Sheets of CenterPoint as of December 31, 2002, and
Statements of Consolidated Operations, Statements of Consolidated Comprehensive
Income and Statements of Consolidated Cash Flows for the year ended December 31,
2002 (incorporated by reference to the Current Report of CenterPoint on Form 8-K
dated as of May 12, 2003 (File No. 1-31447)).
FS-5 Consolidated Balance Sheets of CenterPoint Energy Houston Electric, LLC as
of June 30, 2003 (unaudited) and Statements of Consolidated Income and
Statements of Consolidated Cash Flows for the three months ended June 30, 2003
(unaudited) (incorporated by reference to CenterPoint Energy Houston Electric,
LLC's Quarterly Report on Form 10-Q for the three months ended March 31, 2003
(File No. 1-03187)).
FS-6 Consolidated Balance Sheets of CenterPoint Energy Houston Electric, LLC as
of December 31, 2002 and Statements of Consolidated Income, Statements of
Consolidated Comprehensive Income and Statements of Consolidated Cash Flows for
the year ended December 31, 2002 (incorporated by reference to the Current
Report of CenterPoint Energy Houston Electric, LLC on Form 8-K dated as of May
15, 2003 (File No. 1-03187)).
FS-13 CenterPoint consolidated financials (forecasts through 2007) (filed in
connection herewith with a request for confidential treatment).*
FS-14 CenterPoint Energy Houston Electric, LLC financials (forecasts through
2007) (filed in connection herewith with a request for confidential treatment).*
FS-18 CenterPoint equity percentages (forecasts through 2007) (filed in
connection herewith with a request for confidential treatment).*
FS-19 CenterPoint Energy Houston Electric, LLC equity percentages (forecasts
through 2007) (filed in connection herewith with a request for confidential
treatment).*
(to be filed by amendment)
ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS
The proposed transaction involves neither 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.
5
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, the Applicants have duly caused this Amendment to be signed
on their behalf by the undersigned thereunto duly authorized.
Date: October __, 2003
CENTERPOINT ENERGY, INC.
and its Subsidiaries
By: /s/ Rufus S. Scott.........
--------------------------------------
Rufus S. Scott
Vice President, Deputy General Counsel
and Assistant Corporate Secretary
CenterPoint Energy, Inc.
6
Exhibit H-1
Before the
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Release No. , 2003
-----------------------------------------
In the Matter of:
CenterPoint Energy, Inc.
1111 Louisiana
Houston, Texas 77002
Utility Holding, LLC
200 West Ninth Street Plaza
Suite 411
Wilmington, Delaware 19801
CenterPoint Energy, Inc., a registered holding company, and its
subsidiary companies, Utility Holding, LLC, also a registered holding company,
and CenterPoint Energy Houston Electric, LLC, an electric-utility company (the
"T&D Utility") (together, the "Applicants") have filed a Post-Effective
Amendment under the Public Utility Holding Company Act of 1935 asking the
Commission to modify the authority granted under the order dated June 30, 2003
(HCAR No. 27692) (the "Omnibus Financing Order") as supplemented by the order
dated August 1, 2003 (HCAR No. 27705) (the "Supplemental Order"). Those orders
authorized the T&D Utility to issue up to $500 million in incremental external
debt securities through June 30, 2005 (the "Authorization Period") such that the
amount of T&D Utility external debt does not exceed $3.603 billion at any one
time outstanding during the Authorization Period. The T&D Utility has issued
$300 million of debt securities pursuant to such authority. Applicants ask the
Commission to modify this existing authority to permit the T&D Utility to issue
an additional $300 million in incremental external debt securities during the
Authorization Period, such that the amount of T&D Utility external debt will not
exceed $3.903 billion at any one time outstanding during the Authorization
Period.
It is contemplated that approximately $50 million of the requested
additional authorization may be necessary to permit the refunding of outstanding
tax-exempt debt, as contemplated by the Omnibus Financing Order. Applicants seek
current authority only with respect to that amount. They ask the Commission to
reserve jurisdiction over the remainder of the requested additional authority,
pending completion of the record.
The filing and any amendments thereto are available for public
inspection through the Commission's Office of Public Reference. Interested
persons wishing to comment or request
7
a hearing should submit their views in writing by ______, 2003 to the Secretary,
Securities and Exchange Commission, 450 Fifth St., N.W., Washington, D.C. 20549.
8