Filings Under the Public Utility Holding Company Act of 1935, As Amended (``Act'')

SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-26535]

Filings Under the Public Utility Holding Company Act of 1935, As

Amended (``Act'')

June 21, 1996.

Notice is hereby given that the following filing(s) has/have been

made with the Commission pursuant to provisions of the Act and rules

promulgated thereunder. All interested persons are referred to the

application(s) and/or declaration(s) for complete statements of the

proposed transaction(s) summarized below. The application(s) and/or

declaration(s) and any amendments thereto is/are available for public

inspection through the Commission's Office of Public Reference.

Interested persons wishing to comment or request a hearing on the

application(s) and/or declaration(s) should submit their views in

writing by July 15, 1996, to the Secretary, Securities and Exchange

Commission, Washington, D.C. 20549, and serve a copy on the relevant

applicant(s) and/or declarant(s) at the address(es) specified below.

Proof of service (by affidavit or, in case of an attorney at law, by

certificate) should be filed with the request. Any request for hearing

shall identify specifically the issues of fact or law that are

disputed. A person who so requests will be notified of any hearing, if

ordered, and will receive a copy of any notice of order issued in the

matter. After said date, the application(s) and/or declaration(s), as

filed or as amended, may be granted and/or permitted to become

effective.

Alabama Power Company, et al. (70-8461)

Alabama Power Company, 600 North 18th Street, Birmingham, Alabama

35291 (``Alabama''), Georgia Power Company, 333 Piedmont Avenue, N.E.,

Atlanta, Georgia 30308 (``Georgia''), Gulf Power Company, 500 Bayfront

Parkway, Pensacola, Florida 32501 (``Gulf''), Mississippi Power

Company, 2992 West Beach, Gulfport, Mississippi 39501 (``Mississippi'')

and Savannah Electric and Power Company, 600 East Bay Street, Savannah,

Georgia 31401 (``Savannah'') (together, ``Operating Companies''),

electric public utility subsidiaries of The Southern Company, a

registered holding company, have filed a post-effective amendment to

their application-declaration under sections 6(a), 7, 9(a), 10 and

12(b) of the Act and rules 45 and 54 thereunder.

By order dated December 15, 1994 (HCAR No. 26187) (``December

Order'') each Operating Company was authorized to organize a separate

special purpose subsidiary as: (1) a statutory business trust; (2) a

limited liability company under the Limited Liability Company Act; and

(3) a limited partnership under the Revised Uniform Limited Partnership

Act of any state in which they respectively are organized to do

business or are incorporated, or of the State of Delaware or other

jurisdiction considered advantageous by any of the Operating Companies

(``Special Purpose Subsidiaries''). The Special Purpose Subsidiaries

then could issue and sell their preferred securities (``Preferred

Securities''), with a par or stated value or liquidation preference of

up to $100 per security, at any time or from time-to-time, in one or

more series through December 31, 1997. The Preferred Securities would

be sold by the respective Special Purpose Subsidiaries in the following

aggregate par or stated value or liquidation preference amounts: (1) up

to $175 million in the case of Alabama; (2) up to $300 million in the

case of Georgia; (3) up to $15 million in the case of Gulf; (4) up to

$15 million in the case of Mississippi; and (5) up to $10 million in

the case of Savannah.

Further, the December Order authorized each Operating Company to

acquire all of the common stock (``Common Securities'') or all of the

general partnership interests, as the case may be, of its Special

Purpose Subsidiary for an amount up to 21% of the total equity

capitalization from time-to-time of such Special Purpose Subsidiary

(``Equity Contribution''). Each Operating Company may issue and sell to

its Special Purpose Subsidiary, at any time or from time-to-time in one

or more series, subordinated debentures, promissory notes or other debt

instruments (``Notes'') governed by an indenture or other document, and

the Special Purpose Subsidiary will apply both the Equity Contribution

and the proceeds from the sale of Preferred Securities to purchase

Notes of such Operating Company. Alternatively, each Operating Company

may enter into a loan agreement or agreements with its Special Purpose

Subsidiary under which it will loan to the Operating Company

(``Loans'') both the Equity Contribution and the proceeds from the sale

of the Preferred Securities evidenced by Notes. Each Operating Company

may also guarantee (``Guaranties'') the payment of dividends or

distributions on the Preferred Securities, payments to the Preferred

Securities holders of amounts due upon liquidation or redemption of the

Preferred Securities and certain additional amounts that may be payable

regarding the Preferred Securities.

Each Note will have a term, including extensions, of up to 50

years. Prior to maturity, each Operating Company will pay only interest

on its Notes at a rate equal to the dividend or distribution rate on

the related series of Preferred Securities. The dividend or

distribution rate may be either fixed or adjustable, determined on a

periodic basis by auction or remarketing procedures, in accordance with

a formula or formulae based upon certain reference rates, or by other

predetermined methods. Such interest payments will constitute each

Special Purpose Subsidiary's only income and will be used by it to pay

monthly dividends or distributions on the Preferred Securities issued

by it and dividends or distributions on the common stock or the general

partnership interests of such Special Purpose Subsidiary.

Dividend payments or distributions on the Preferred Securities will

be made monthly, will be cumulative and must be made to the extent that

funds are legally available. However, each Operating Company will have

the right to defer payment of interest on its Notes for up to five

years, provided that, if dividends or distributions on the Preferred

Securities of any series are not paid for up to 18 consecutive months,

then the holders of the Preferred Securities of such series may have

the right to appoint a trustee, special general partner or other

special

[[Page 33552]]

representative to enforce the Special Purpose Subsidiary's rights under

the related Note and Guaranty. Each Special Purpose Subsidiary will

have the parallel right to defer dividend payments or distributions on

the related series of Preferred Securities for up to five years. The

dividend or distribution rates, payment dates, redemption and other

similar provisions of each series of Preferred Securities will be

substantially identical to the interest rates, payment dates,

redemption and other provisions of the related Note issued by the

Operating Company.

The Notes and related Guaranties of each Operating Company will be

subordinate to all other existing and future indebtedness for borrowed

money of such Operating Company and will have no cross-default

provisions with respect to other indebtedness of the Operating Company.

However, each Operating Company may not declare and pay dividends on

its outstanding preferred or common stock unless all payments due under

its Notes and Guaranties have been made.

It is expected that each Operating Company's interest payments on

the Notes issued by it will be deductible for federal income tax

purposes and that its Special Purpose Subsidiary will be treated as a

partnership for federal income tax purposes. Consequently, holders of

the Preferred Securities will be deemed to have received partnership

distributions in respect of their dividends or distributions from the

respective Special Purpose Subsidiary and will not be entitled to any

``dividends received deduction'' under the Internal Revenue Code.

The Preferred Securities are optionally redeemable by the Special

Purpose Subsidiary at a price equal to their par or stated value or

liquidation preference, plus any accrued and unpaid dividends or

distributions, at any time after a specified date not later than 10

years from their date of issuance or upon the occurrence of certain

events. The Preferred Securities of any series may also be subject to

mandatory redemption upon the occurrence of certain events. Each

Operating Company also may have the right in certain cases to exchange

the Preferred Securities of its Special Purpose Subsidiary for the

Notes or other junior subordinated debt of the Operating Company.

In the event that any Special Purpose Subsidiary is required to

withhold or deduct certain amounts in connection with dividend,

distribution or other payments, it may also have the obligation to

``gross up'' such payments so that the holders of the Preferred

Securities will receive the same payment after such withholding or

deduction as they would have received if no such withholding or

deduction were required. In such event, the related Operating Company's

obligations under its Note and Guaranty may also cover such ``gross

up'' obligation. In addition, if any Special Purpose Subsidiary is

required to pay taxes on income derived from interest payments on the

Notes, the related Operating Company may be required to pay additional

interest equal to the tax payment. Each Operating Company,

individually, expects to apply the net proceeds of the Loans to the

repayment of outstanding short-term debt, for construction purposes,

and for other general corporate purposes, including the redemption or

other retirement of outstanding senior securities.

The December Order authorized Georgia to enter into certain

transactions regarding the issuance and sale of $100 million of

Preferred Securities, but the Commission reserved jurisdiction over all

remaining transactions pending completion of the record. By subsequent

supplemental order dated January 17, 1996 (HCAR No. 26452), Alabama was

authorized to enter into certain transactions regarding the issuance

and sale of $97 million of Preferred Securities, and the Commission

again reserved jurisdiction over all remaining transactions pending

completion of the record.

The Operating Companies now propose to increase the aggregate par

or stated value or liquidation preference of preferred securities that

may be issued by the Special Purpose Subsidiaries of Alabama, Georgia,

Gulf, Mississippi and Savannah in respective aggregate amounts of up to

$250 million, $500 million, $60 million, $60 million and $35 million.

The Operating Companies propose also to extend the time in which the

transactions may be effected through December 31, 2001.

HEC Inc., et al. (70-8831)

HEC Inc. (``HEC''), 24 Prime Parkway, Natick, Massachusetts 01760,

a nonutility subsidiary of Northeast Utilities (``Northeast''), a

registered holding company, and HEC's two nonutility subsidiary

companies, HEC Energy Consulting Canada Inc. (``HEC Canada''), 285

Yorkland Boulevard, Willowdale, Ontario, M2J 1S5, and HEC International

Corporation (``HEC International''), 24 Prime Parkway, Natick,

Massachusetts 01760 (collectively, the ``Applicants''), have filed an

application-declaration under sections 6(a), 7, 9, 10, 12 and 13(b) of

the Act and rules 45, 54, 90 and 91 thereunder. The Applicants propose

to provide additional energy related services to associate and

nonassociate companies and to enter joint ventures with utilities

located outside New York and New England.

By order dated July 27, 1990 (HCAR No. 25114-A) (``1990 Order''),

the Commission authorized HEC to provide various energy management

services and demand side management services (``DSM'') to customers in

New England and New York (the ``Region'') and, to a lesser extent,

outside the Region.

By order dated September 30, 1993 (HCAR No. 25900) (``1993

Order''), the Commission authorized HEC to expand its energy management

and DSM services and to provide consulting services on energy related

matters. In addition the 1993 Order authorized HEC to design and market

intellectual property, and also provided that, when HEC sold or

licensed intellectual property that had been developed by a Northeast

system company, the associate company would receive 70% of the revenues

until it recovered its development costs, after which the associate

company would receive 20% of the such revenues.

By order dated August 19, 1994 (HCAR) No. 26108) (``1994 Order''),

the Commission authorized HEC to organize and acquire HEC Canada and

HEC International. HEC Canada provides energy management, DSM and

consulting services to customers located in Canada. HEC International

was organized to participate, on a 50/50 basis, in a joint venture to

form HECI, a subsidiary of HEC International. HECI was formed to

provide energy management, DSM and consulting services to customers

located in the western United States and foreign countries (excluding

Canada).

By order dated July 19, 1995 (HCAR No. 26335) (``1995 Order''), the

Commission authorized HEC and its direct and indirect subsidiaries to

provide EMS and DSM services to customers without regard to prior

restrictions limiting revenues attributable to customers outside the

Region.

The Applicants now wish to expand the energy management and demand

side management services that they provide to nonassociates, including

customers of Northeast's electric utility operating companies

(``Operating Companies''), and associate companies in the Northeast

system. Specifically, they propose to provide the following new energy

related services: (1) identifying energy and other resource efficient

applications of technologies (the application of which may improve and

even increase end-use services,

[[Page 33553]]

such as lighting or ventilation, although overall costs may not be

reduced); (2) designing facility and process modifications and/or

enhancements to increase energy and resource efficiencies (which may

not only improve but also increase end-use services of facilities or

processes, such as lighting or ventilation); (3) designing, managing or

directing construction of, and/or installing mechanical, water and

electrical systems, energy and other resource consuming equipment, and

equipment that controls or monitors energy consumption and related

equipment; (4) implementing operational and maintenance techniques and

measures related to energy and other resource consumption; (5)

recommending acquisition of, and/or brokering cost effective energy,

including electric, gas, oil, propane, wood chips and refuse-derived

fuels (the Applicants state they will not recommend acquisitions of, or

broker, electricity for the Operating Companies and their customers),

or marketing of energy fuels (but not electricity); \1\ (6) provide

marketing expertise and related technical support to Northeast system

companies and nonassociate companies that want to sell energy related

products and services; (7) constructing, owning, maintaining, and/or

operating energy consuming systems and related support equipment and

structures, such as central heating and chilling plants, compressed air

systems, energy management systems, pumps, motors, and lighting systems

(but not systems for the generation of electric energy); (8) designing,

constructing and/or maintaining cogeneration and self-generation

systems, up to 10 megawatts in capacity, that will be owned and

operated by associates and nonassociates; (9) conducting preliminary

development work on cogeneration and self-generation projects up to 10

megawatts in capacity; (10) training related to energy services the

Applicants are authorized to provide; (11) monitoring, tracking and

reporting of system or program results; and (12) designing and/or

marketing energy-related proprietary and/or intellectual property (such

as processes, programs, techniques, or computer software), and energy

management system monitoring programs and reports. In the event the

Applicants sell or license intellectual property developed by an

associate company, the associate company will be paid in accordance

with the terms stated in the 1993 Order.

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\1\ In providing energy brokering services, the Applicants would

function as intermediaries to bring energy buyers and sellers

together. Marketing energy fuels would involve the contracting, by

Applicants, to acquire energy fuels on behalf of their customers.

Specifically, the Applicants state they would identify and analyze

alternative options available to meet their customers' needs, select

the most beneficial options and execute contracts to purchase energy

fuels and resell such fuels to their customers. In providing such

services, the Applicants state they will not acquire energy

production, transportation or storage facilities.

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The Applicants also propose to expand their consulting and

engineering services provided to associates and nonassociates to

include energy efficiency and associated technologies, such as indoor

air quality and environmental compliance. They state such services

include consulting on development or evaluation of energy conservation

and energy efficiency measurement protocols and standards, general

technical advice concerning the use, benefits, planning and

administration of energy management or energy services programs, and

requisites for permits concerning installation of a new boiler or

waste-heat recovery system.

Payment for all the Applicants' proposed services will vary by

project and may include fee-for-service, fixed price, time and

materials, progress payments, turnkey payment, third-party financing

arrangements, performance contracts with a savings guarantee or payment

based on the energy or other resource savings achieved, the output of

equipment (for example, steam, water, chilled water, air, or heat),

commissions, and other payment structures. The Applicants state that

services provided to any associate Northeast system companies will be

provided at cost. They also state that they will not use other

Northeast system company employees in providing services to the

Operating Companies.

The Applicants also seek authority to extend, through June 30,

2001, the authority to form and finance joint ventures with utilities

to serve customers in areas outside the Region. Each joint venture will

service customers within a specific region that would include, but not

be limited to, the service area of the participating utility. The joint

ventures will provide all of the services that the Applicants currently

are authorized to provide, as well as the proposed services, if

subsequently authorized. The joint ventures would enter into agreements

with the Applicants and the participating utility to obtain

administrative, marketing and engineering services, which would be

provided by the Applicants at cost.

The Applicants propose to acquire equity interests, notes or other

forms of indebtedness of joint ventures. Subsequently, the Applicants

propose to make capital contributions, loans or advances of money,

property or other contributions (including direct payments of expenses)

to the joint ventures. The rate of interest on loans or advances from

the Applicants will equal HEC's cost of money; advances from the

respective utility will not exceed the utility's cost of money. The

Applicants state that their investment in any one joint venture,

including the value of all contributions, will not exceed $1 million,

and that their aggregate investments in all such joint ventures will

not exceed $8 million, absent further Commission authorization. The

participating utility may invest up to $1 million in a joint venture.

Consolidated Natural Gas Company (70-8853)

Consolidated Natural Gas Company (``CNG''), CNG Tower, 625 Liberty

Avenue, Pittsburgh, Pennsylvania 15222-3199, a registered holding

company, has filed a declaration under sections 12(b) and 32 of the Act

and rules 45, 53 and 54 thereunder.

CNG's wholly owned subsidiary, CNG Power Services Corporation

(``Power Services''), is an exempt wholesale generator (``EWG'') under

section 32 of the Act and is engaged in the purchase and sale of

electricity at wholesale. CNG proposes to guarantee, through March 31,

2001, obligations incurred by Power Services under electric power

purchase and sales contracts, for amounts not to exceed $250 million

outstanding at any time.

Power Services plans to use risk-management tools to reduce the

electric price volatility risk to CNG through the guarantees. Such

tools would include electric futures contracts, options on electric

futures contracts, and swap agreements. Additionally, CNG would make no

new guarantees of Power Services' sales obligations if there are

current defaults by Power Services on any of its delivery obligations.

CNG will not make any guarantee to the extent that it would cause CNG's

investment in EWGs and foreign utility companies (as defined in the

Act) to exceed 50% of CNG's consolidated retained earnings.

Cinergy Corp. (70-8867)

Cinergy Corp. (``Cinergy''), a registered holding company, located

at 139 East Fourth Street, Cincinnati, Ohio 45202, has filed an

application-declaration under section 9(c)(3) of the Act or, in the

alternative, sections 9(a) and 10 of the Act, and rule 54 thereunder.

Cinergy requests authorization to invest a total of $10 million

from time to time through December 31, 2002 to

[[Page 33554]]

acquire up to a 20% limited partnership interest in Nth Power

Technologies Fund I, L.P. (``NPT Fund'' or ``Partnership''), a

California limited partnership formed to invest in energy technology

companies.\2\ Cinergy intends to use funds borrowed under an existing

credit facility (see Holding Company Act Release No. 26488, March 12,

1996) to make the proposed investment.

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\2\ Applicant expects that the aggregate amount of capital

invested in the NPT Fund by all investors will not be less than $50

million (in which case Cinergy will have a 20% limited partnership

interest) nor more than $75 million (in which case Cinergy will have

a 13% limited partnership interest).

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Cinergy states that the NPT Fund will invest in companies

(``Portfolio Companies''), none of which will be affiliates of Cinergy,

engaged in developing and commercializing electric and gas energy

technologies in one or more of the following categories: (1)

Electricity Generation and Storage (including fuel conversion

technology, fuel cells, semiconductor generators and kinetic, thermal

and electrochemical storage technologies); (2) Electric Power Quality

(including a wide range of products ranging from substation-level

storage and voltage improvement products to end-use load protection

devices); (3) Energy-Related Communications, Control and Information

Technologies (including (a) a broad range of energy-efficient end-use

products which enable customer choice while optimizing the use of gas

and electricity, such as integrated residential automation, energy

security and energy management hardware and software, (b) products of

internal interest to gas and electric utilities such as artificial

intelligence-based monitoring and control systems, automated billing,

and sophisticated productivity tools, such as advanced energy network

planning and optimization software tools that will improve reliability

and lower costs of operation, (c) sensors and control algorithms, and

(d) electric and gas-related telecommunications and fiber optic

services, such as remote meter reading, data gathering and utility

customer services, and related specialized software); (4) Energy-Saving

End-Use Products \3\ (consisting of energy-saving versions of

traditional products and processes as well as new products and

processes intended to save energy, such as advanced lighting and

lighting controls, mechanical drives, drying processes, industrial

furnaces, materials processing technology, environmental controls,

refrigeration, HVAC, advanced domestic appliances, and energy storage

technologies and other component parts with respect to the development

and commercialization of energy efficient electric, hybrid and natural

gas vehicles); and (5) Transmission and Distribution (including

technologies to minimize power losses or reduce operational costs,

power switching technologies, distribution automation,

superconductivity, specialized metering technology and noise and EMF

abatement and other environmental concerns). No more than 10% of the

NPT Fund's committed capital will be invested in any one Portfolio

Company.

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\3\ Portfolio Companies in this category may develop and

commercialize products involving an enhancement or retrofit of an

existing larger product or system already commercially available,

intended to render that product or system energy-efficient and to

realize associated energy savings. On the other hand, Portfolio

Companies in this category may also develop and commercialize

(including by manufacture) products that are not enhancements or

retrofits of an existing larger product or system, but rather are

more appropriately characterized as stand-alone or replacement

products or systems; in all these instances, the overriding purpose

of the new product or system would be to compete against existing

generically similar products or systems on the basis of superior

energy-efficiency technology and the potential for realizing energy

savings.

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Cinergy states that the NPT Fund has the dual goals of (1) creating

competitive advantages for its investing partners by identifying and

investing in companies that are in the process of developing and

commercializing energy technologies \4\ and (2) generating superior

investment returns. Accordingly, Cinergy believes that both its system

utility customers and its shareholders will benefit from the proposed

investment in the Fund.

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\4\ Strategic and competitive benefits are expected to result

from the fact that Fund investors will have better access to

information about the Portfolio Companies and their products and

exposure to their technologies before others do.

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The sole general partner of the NPT Fund will be Nth Power

Technologies Partners, L.P., a California limited partnership whose

sole general partner in turn is Nth Power Technologies, Inc., a

California corporation (collectively ``Nth Power''). Cinergy states

that Nth Power's management has experience in energy technology,

finance and development, including, in the case of the principals, an

average of 20 years' experience in the energy, telecommunications and

related industries. The remaining limited partnership interests are

expected to be purchased principally by other utility companies or

similar entities involved in the energy industry. An initial closing

was scheduled to take place on or around June 15, 1996, with Cinergy's

participation contingent upon receipt of the authorization requested

herein.

In accordance with a limited partnership agreement to be executed

(``Agreement''), the Partnership's term will be limited to 10 years

from the later of the initial closing or the last date (generally, not

to exceed in either case, one year from the date of initial closing) on

which a limited partner is admitted to the Partnership or increases its

capital commitment, provided that the general partner may extend the

term for up to two additional two-year periods under certain

circumstances. Profits and losses with respect to investment securities

of the Partnership will be allocated 80% to all limited partners and

20% to the general partner, provided that any losses generally will not

reduce the general partner's capital account to less than 1% of

aggregate capital accounts. Through the seventh anniversary of the

initial closing date, the Partnership will pay the general partner,

quarterly in advance (and potentially subject to adjustment for changes

in the consumer price index-urban consumers), and annual management fee

equal to 2.5% of the aggregate committed capital; thereafter, the fee

will be determined based on an annual budget procedure, provided that

the fee shall not be less than 70% of the initial formula fee.

Under the terms of the Agreement, and applicable California law,

the general partner will have the sole and exclusive right to manage,

control and conduct the affairs of the Partnership, subject to limited

approval rights of the limited partners. Specifically, under the

Agreement, the approval of the limited partners is required only in the

following circumstances:

(a) The vote of a majority of the limited partners is required

(i) if capital commitments will exceed $75 million, (ii) for capital

drawdowns that occur after the first anniversary of the later of the

initial closing date or the last date on which a limited partner is

admitted or increases its commitment, (iii) to approve the general

partner's management fee if the term of the partnership is extended

beyond 10 years, (iv) to extend the term of the partnership for up

to two additional two-year periods, (v) to elect a successor tax

matters partner, and (vi) to terminate the Partnership if the

principals fail to devote substantially all of their business time

to the Partnership and other specified entities.

(b) The vote of two-thirds in interest of the limited partners

is required (i) to admit an additional general partner, (ii) to

admit additional limited partners after the first anniversary of the

initial closing date, (iii) for the distribution of non-marketable

securities, (iv) for the Partnership to borrow, and (v) for the

Partnership to exercise its right of first refusal upon certain

proposed transfers by limited partners.

[[Page 33555]]

(c) The vote of 75% in interest of the limited partners is

required to terminate the Partnership in certain events.

(d) The vote of all limited partners is required to extend the

term of the Partnership (except as described in (a)(iv) above).

In addition, under California law, the limited partners have the right

to vote on certain matters relating to the merger of the Partnership

with one or more other entities.\5\ Cinergy states that such limited

voting rights are customary for limited partners in a venture capital

fund and, in the aggregate, are less than those potentially available

to limited partners consistent with applicable California law. In

addition, Cinergy states that it will not consent to serve on the Fund

Committee and, therefore, will have fewer voting rights than those of

the other limited partners, who will be eligible to serve on that

committee and potentially to vote on the matters within the Committee's

purview.

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\5\ Cinergy notes that, since its capital commitment to and

corresponding limited partnership interest in the Fund will be

relatively small and actions of the Fund's limited partners will

require the assent of at least a majority (and often a

supermajority) in interest thereof, Cinergy will have no practical

ability--assuming it were so disposed--unilaterally to direct or

control the action of the Fund's limited partners with respect to

the few matters over which the limited partners exercise voting

rights.

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Entergy Corporation, et al. (70-8871)

Entergy Corporation (``Entergy''), 639 Loyola Avenue, New Orleans,

Louisiana 70113, a registered holding company, and its wholly owned

subsidiary company, Entergy Power Inc. (``EPI''), 900 South Shackleford

Road, Little Rock, Arkansas 72211 (collectively, ``Declarants''), have

filed a declaration under sections 12(c) and 12(d) of the Act and rules

44, 46 and 54 thereunder.

By order dated August 27, 1990 (HCAR No. 25136), EPI was formed to

supply electricity at wholesale to nonassociate companies and to

acquire ownership interests in Unit No. 2 of the Independence Steam

Electric Generating Station (``ISES 2'') \6\ and related assets, as

well as other utility assets. EPI currently owns a 31.5% unified

ownership interest in ISES 2, a 15.75% undivided ownership interest in

certain land and common facilities at the Independence Station, and a

15.75% undivided ownership interest in the Certificate of Environmental

Compatibility and Public Need (``Certificate'') for the Independence

Station. EPI also owned a 15.75% undivided ownership interest in

certain leases, mine facilities and mine equipment located in Wyoming

(``Wyoming Property'') used to supply coal to the Independence Station.

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\6\ The Independence Steam Electric Generating Station is a two-

unit, coal-fired electric generating facility (``Independence

Station'') located near Newark, Arkansas.

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EPI now proposes to sell, prior to December 31, 1997, a portion of

its interest in ISES 2 and related property to City Water & Light Plant

of Jonesboro (``City Water & Light'') for an approximate purchase price

of $37.8 million, representing an approximation of the depreciated book

value of the assets at the time of sale. Specifically, City Water &

Light will acquire from EPI (1) a 10% undivided ownership interest in

ISES 2 (equivalent to 84 megawatt of capacity); (2) a 5% undivided

ownership interest in the Certificate; (3) a 5% undivided ownership

interest in the land and common facilities at the Independence Station;

and (4) a 5% undivided ownership interest in the Wyoming Property.

EPI intends to apply the proceeds from the sale to its general

corporate purposes, including to reduce its operating and maintenance

expenses and to meet other working capital needs. EPI further proposes,

from time to time through December 31, 1998, to pay dividends to Energy

out of the unused proceeds from such sale.

For the Commission, by the Division of Investment Management,

pursuant to delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96-16452 Filed 6-26-96; 8:45 am]

BILLING CODE 8010-01-M