File No. 070-10128
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM U-1/A
POST-EFFECTIVE AMENDMENT NO. 15
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.
Some of the factors that could cause actual results to differ
materially from those expressed or implied in forward-looking statements are
discussed under "Risk Factors" in Item 1 of Part I of the Annual Report of
CenterPoint Energy, Inc. on Form 10-K for the fiscal year ended December 31,
2003 and the Annual Report of CenterPoint Energy Houston Electric, LLC on Form
10-K for the fiscal year ended December 31, 2003.
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
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ITEM 1. DESCRIPTION OF PROPOSED TRANSACTION............................................................. 1
A. Requested Authorization................................................................ 1
B. Background............................................................................. 1
C. Proposed Transaction................................................................... 2
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
Amendment No. 14 to the Application/Declaration previously filed in
this proceeding is hereby amended and restated to read as follows:
ITEM 1. DESCRIPTION OF PROPOSED TRANSACTION
A. REQUESTED AUTHORIZATION
CenterPoint Energy, Inc. ("CenterPoint"), Utility Holding, LLC and
CenterPoint Energy Houston Electric, LLC ("CEHE")1 (together, the "Applicants")
hereby file this Post-Effective Amendment No. 15. The Applicants are 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 orders
dated August 1, 2003 (HCAR No. 27705) and December 19, 2003 (HCAR No. 27778)
(together, the "Supplemental Orders").
These orders authorized CEHE to issue up to $550 million in incremental
external debt securities through June 30, 2005 (the "Authorization Period") such
that the amount of CEHE external debt does not exceed $3.653 billion at any one
time outstanding during the Authorization Period, and reserved jurisdiction over
CEHE's request to issue an additional $250 million in incremental external debt
securities through the Authorization Period. In addition, these orders
authorized CenterPoint to issue incremental external debt securities through the
Authorization Period such that the amount of CenterPoint external debt does not
exceed $5.369 billion at any one time outstanding during the Authorization
Period, and reserved jurisdiction over CenterPoint's request to issue an
additional $478 million in incremental external debt securities through the
Authorization Period.
Applicants ask the Commission to release jurisdiction over $200 million of
CEHE's additional financing authority to enable it to put in place a dedicated
revolving credit facility (the "Facility"). As explained more fully herein, the
Facility is intended to provide a lower cost source of working capital for CEHE.
Further, CEHE will continue to comply with all of the financing parameters in
the Omnibus Financing Order, including the investment grade and equity
capitalization criteria set forth in the Omnibus Financing Order.2 In connection
with this, Applicants also request authority to reduce the amount of
CenterPoint's authorized external debt by $200 million so that it does not
exceed $5.169 billion at any one time outstanding during the Authorization
Period.
B. BACKGROUND
The Omnibus Financing Order authorized CenterPoint and its subsidiary
companies to engage in certain financing and related transactions during the
Authorization Period. Of interest here, the Omnibus Financing Order authorized
CEHE to issue up to $250
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(1) CEHE has been referred to as the "T&D Utility" in previous filings and
may be referred to as such in certain of the exhibits to this Amendment.
(2) In particular, CEHE would continue to maintain a minimum of 30% common
equity (net of securitization debt), as required by the Omnibus Financing Order.
(In a separate application to be filed shortly, Applicants will request
authority to issue securitization bonds in connection with the recovery of
stranded costs, as was contemplated in the Omnibus Financing Order.)
million in incremental external debt securities during the Authorization Period,
such that the amount of CEHE external debt did not exceed $3.353 billion at any
one time outstanding during the Authorization Period, and reserved jurisdiction
over $250 million of the requested authority. The Omnibus Financing Order also
authorized CEHE to borrow from the Money Pool in an amount of up to $600 million
at any one time outstanding during the Authorization Period.
By order dated August 1, 2003 (HCAR No. 27705), the Commission
released jurisdiction over the reserved $250 million in incremental financing
authority, and so increased to $3.603 billion the limit on the amount of CEHE
external debt at any one time outstanding during the Authorization Period.
By order dated December 19, 2003 (HCAR No. 27778), the Commission
authorized the issuance by CEHE of an additional $50 million principal amount of
external debt securities during the Authorization Period, such that the amount
of CEHE external debt did not exceed $3.653 billion at any one time outstanding
during the Authorization Period, and reserved jurisdiction over $250 million of
the requested authority.
C. PROPOSED TRANSACTION
1. CEHE Revolving Credit Facility
CenterPoint traditionally has had a revolving credit facility in
place at each of its utility subsidiary companies. CEHE had previously had a
dedicated facility that was terminated in connection with a 2002 corporate
restructuring. Based on the current favorable market conditions, CenterPoint
considers it prudent to establish a new $200 million dedicated five-year
revolving credit facility at CEHE.
The proposed Facility is intended to provide CEHE a source of
working capital at rates that are lower than those associated with intra-system
borrowings through the Money Pool. The transaction will not increase the overall
amount of CEHE debt relative to the amount that CEHE could currently incur under
existing authority through a combination of external debt and Money Pool
borrowings. The Applicants undertake that the total amount of CEHE borrowings
under the Facility and from the Money Pool, at any one time outstanding during
the Authorization Period, will not exceed $600 million, the amount of CEHE Money
Pool borrowing authorized under the Omnibus Financing Order.
Applicants seek the flexibility to provide a dedicated revolving
credit facility for CEHE. Although a parent company facility could provide the
same total credit capacity for CenterPoint and its subsidiaries, the existence
of a revolving credit facility at CEHE would provide two alternatives for CEHE,
which could meet its short-term borrowing needs either from the Money Pool or
from its own revolver. As a utility, CEHE may be able to obtain modestly more
attractive borrowing rates for its short-term borrowings than could be achieved
by the parent. If it is able to obtain lower rates for its own revolving credit
facility, CEHE thus may be able to achieve lower borrowing costs while still
having access to the parent company's Money Pool. It is contemplated that the
requested revolving credit facility would allow CEHE to borrow at a lower cost
than borrowing through the Money Pool. CEHE will only draw down funds from
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the revolving credit facility if the cost of borrowing from such facility is in
fact less than the cost of borrowing from the Money Pool.
In addition, CenterPoint believes that the rating agencies and other
members of the financial community would view favorably the implementation of an
independent credit facility at CEHE, as opposed to the alternative under which
CEHE would continue to rely upon Money Pool borrowings to meet its short term
cash needs. Furthermore, the proposed transaction will not adversely affect the
capital structure of the CenterPoint system.
2. Requested Authority
Applicants ask the Commission to release jurisdiction over CEHE's
request to issue an additional $200 million in incremental external debt
securities, such that the total amount of T&D Utility external debt does not
exceed $3.853 billion at any one time outstanding during the Authorization
Period. Applicants also ask the Commission to reduce the amount of CenterPoint's
external debt authorization by $200 million so that its external debt does not
exceed $5.169 billion at any one time outstanding during the Authorization
Period.
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, plus the
arrangement and coordination fees, and upfront fees to bank participants
described in Exhibit FS-23 to be paid in connection with the proposed
transaction.
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 company which is an EWG or FUCO if Rule 53(a), (b)
and (c) under the Act are satisfied. Texas Genco, LP has been qualified as an
EWG, but CenterPoint does not intend to seek any long-term financing authority
in connection therewith.
CenterPoint has no investments in FUCOs. It holds its EWG investment
in Texas Genco, LP through a wholly-owned indirect subsidiary company, Texas
Genco Holdings, Inc.
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("Texas Genco"). The investment in Texas Genco, LP is CenterPoint's only EWG
investment. As of September 30, 2004, CenterPoint's aggregate investment in
Texas Genco was approximately $2.331 billion. At that time, CenterPoint held an
81% ownership interest in Texas Genco, which then owned both the fossil and
nuclear generating assets of Texas Genco, LP. In December 2004, Texas Genco and
Texas Genco, LP completed the sale of all of Texas Genco, LP's fossil generation
assets to a third party for approximately $2.2 billion. In the second step of
the transaction, which is subject to regulatory approvals and which is expected
to be completed in the first half of 2005, the buyers will acquire Texas Genco
and the remaining nuclear generation assets for approximately $700 million.
As a result of the restructuring authorized in the Commission order
dated July 5, 2002 (HCAR No. 27548), CenterPoint had negative retained earnings
as of December 31, 2003, and so is not in compliance with Rule 53(a)(1).
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
F-1 Opinion of Counsel (to be filed by amendment)
F-2 Past Tense Opinion of Counsel (to be filed by amendment)
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B. FINANCIAL STATEMENTS
FS-2 Consolidated Balance Sheets of CenterPoint as of September 30, 2004
(unaudited) and Statements of Consolidated Income and Statements of Consolidated
Cash Flows for the nine months ended September 30, 2004 (unaudited)
(incorporated by reference to CenterPoint's Quarterly Report on Form 10-Q for
the three months ended September 30, 2004 (File No. 1-31447)).
FS-5 Consolidated Balance Sheets of CenterPoint Energy Houston Electric, LLC as
of September 30, 2004 (unaudited) and Statements of Consolidated Income and
Statements of Consolidated Cash Flows for the nine months ended September 30,
2004 (unaudited) (incorporated by reference to CenterPoint Energy Houston
Electric, LLC's Quarterly Report on Form 10-Q for the three months ended
September 30, 2004 (File No. 1-03187)).
FS-13 CenterPoint consolidated financials (forecasts through 2008) (filed in
connection herewith with a request for confidential treatment).
FS-14 CenterPoint Energy Houston Electric, LLC financials (forecasts through
2008) (filed in connection herewith with a request for confidential treatment).
FS-18 CenterPoint equity percentages (forecasts through 2008) (filed in
connection herewith with a request for confidential treatment).
FS-19 CenterPoint Energy Houston Electric, LLC equity percentages (forecasts
through 2008) (filed in connection herewith with a request for confidential
treatment).
FS-23 Additional CenterPoint and CenterPoint Energy Houston Electric, LLC
financial information (filed in connection herewith with a request for
confidential treatment).
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.
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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: February 25, 2005
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.
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