Filings Under the Public Utility Holding Company Act of 1935, as amended (``Act'')

SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-26550]

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

amended (``Act'')

August 2, 1996.

Notice is hereby given that the following filing(s) summarized

below. The application(s) and/or declaration(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 August 26, 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 or 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.

The Columbia Gas System, Inc. (70-8801)

The Columbia Gas System, Inc. (``Columbia''), 20 Montchanin Road,

Wilmington, Delaware 19807, a registered public utility holding

company, has filed an amendment to its application-declaration with

this Commission under sections 6(a), 7, 9(a), 10 and 12(b) of the Act

and rules 45 and 54 thereunder.\1\

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\1\ A notice of Columbia's original proposal, filed February 15,

1996 in this application-declaration was issued by the Commission on

March 1, 1996 (HCAR No. 26480). On July 10, 1996, Columbia filed

Amendment No. 1 to the application-declaration, substantially

revising its proposal. This notice supersedes the March notice.

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Columbia proposes: (1) to acquire the common stock of one or more

existing or new direct or indirect subsidiaries through December 31,

1997; (2) to engage, through such subsidiaries or one or more new joint

ventures, in marketing and/or brokering of various energy commodities;

(3) to provide guarantees, through August 31, 2001, to any such

subsidiary or joint venture; and (4) that such subsidiaries utilize

market hedging and certain other techniques in order to minimize their

financial exposure and Columbia's exposure from its guarantees.

By orders of the Commission dated September 26, 1986 and April 22,

1993 (HCAR Nos. 24199 and 25802, respectively), Columbia was authorized

to establish, respectively, TriStar Ventures Corporation and its

subsidiaries (collectively, ``TriStar'') (to invest in and operate

electric cogeneration facilities) and Columbia Energy Services

Corporation (``CES'') to market natural gas products and services).

Columbia now proposes to market and broker other forms of energy either

through TriStar or CES, through one or more new direct or indirect

subsidiaries of Columbia (any one an ``Energy Products Company'') or

through a joint venture entity to be formed with a third party.\2\

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\2\ Columbia requests authorization for Energy Products

Companies to invest funds for the development of joint venture

entities, subject to a reservation of jurisdiction over the

acquisition by an Energy Products Company of any ownership interest

in a joint venture entity. It is proposed that such a joint venture

engage in the marketing or brokering of energy commodities in the

same manner in which an Energy Products Company would be authorized.

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The services provided by Energy Products Companies will include the

marketing and/or brokering of electric energy at wholesale, and, to the

extent permitted by state law, at retail. In addition, it is proposed

that Energy Products Companies market any form of natural gas or

manufactured gas, propane, natural gas liquids, oil, refined petroleum

and petroleum products, coal, food products, compressed air, hot or

chilled water, or steam. It is also requested that Energy Products

company market emission allowances. Columbia states that authorization

to market a broad array of energy products will enable Energy Products

Companies to compete effectively with other energy suppliers.

Energy Products Companies will initially concentrate their efforts

in those states currently served by the Columbia System's natural gas

pipeline and local distribution companies (generally Kentucky,

Maryland, New Jersey, New York, North Carolina, Ohio, Pennsylvania,

Virginia and West Virginia). Columbia states that an Energy Products

Company's potential customer base may include individuals and entities

located outside of this geographic area.

Columbia proposes to provide Energy Products Coompanies with up to

$5 million in funding through December 31, 1997, through the purchase

from time to time of shares of common stock of Energy Products

Companies, $25 par value, at a purchase price at or above par value. In

addition, Columbia proposes to provide guarantees, through August 31,

2001, to Energy Products Companies and/or to any joint venture in which

an Energy Products Company is a participant, so long as such

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guarantees in the aggregate do not exceed $100 million at any time

outstanding.

To minimize financial exposure of Energy Products Companies and of

Columbia resulting from its guarantees, it is proposed that Energy

Products Companies utilize market hedging techniques (including the use

of futures contracts, options of futures, and price swap agreements),

the matching of obligations to market prices, contractual limitation of

damages and volume limitations, and relatively short-term contracts.

Energy Products Companies will use market hedging measures solely to

minimize risk and will limit hedging activity to no more than the total

amount of commodities of Energy Products Companies that are subject to

market price fluctuation.

Columbia states that Energy Products Companies will not own or

operate facilities used for the distribution of gas at retail or

facilities used for the generation, transmission, or distribution of

electric energy for sale. Furthermore, Energy Products Companies will

limit their activities to ensure they do not come within the

definitions of either ``electric utility company'' or ``gas utility

company,'' as defined by sections 2(a)(3) and 2(a)(4) of the Act,

respectively.

Northeast Utilities, et al. (70-8875)

Northeast Utilities (``NU''), 174 Brush Hill Avenue, West

Springfield, Massachusetts 01809, a registered holding company, and its

wholly owned subsidiary companies (``Subsidiaries''), Holyoke Water

Power Company (``HWP''), Canal Street, Holyoke, Massachusetts 01040,

Western Massachusetts Electric Company (``WMECO''), 174 Brush Hill

Avenue, West Springfield, Massachusetts 01809, Public Service Company

of New Hampshire (``PSHN'') and North Atlantic Energy Corporation

(``NAEC''), both of 1000 Elm Street, Manchester, New Hampshire 03015

and The Connecticut Light & Power Company (``CL&P''), 107 Selden

Street, Berlin, Connecticut 06037 (all companies collectively,

``Applicants''), have filed an application-declaration under sections

6(a), 7, 9(a), 10 and 12(b) of the Act and rules 43, 45 and 54

thereunder.

By order dated December 28, 1994 (HCAR No. 26207) (``December 1994

Order''), the Commission authorized, through December 31, 1996: (1) NU

to make open account advances to its subsidiary companies; (2) the

continuation of the Northeast Utilities System Money Pool (``Money

Pool''); (3) the issuance of short-term notes pursuant to lines of

credit by NU, (4) the issuance and sale of commercial paper by NU, CL&P

and WMECO, CL&P, PSNH and HWP; and WMECO. The funds from those short-

term borrowings were to be utilized by NU's subsidiary companies for

operational, maintenance and construction expenses and to meet certain

cash needs. The December 1994 Order limited the aggregate amount of all

short-term borrowing, whether through the issuance of short-term notes,

commercial paper, open account advances, borrowing from the Money Pool,

or through existing revolving credit agreements, to the following

maximum amounts: NU, $150 million; WMECO, $60 million; CL&P, $325

million; PSNH, $175 million; NAEC, $50 million and HWP, $5 million.

The Applicants now propose: (1) to make short-term borrowings from

time to time through December 31, 2000, evidenced (i) in the case of

NU, CL&P, WMECO and PSNH by short-term notes (``Short-Term Notes'')

issued to lending institutions through formal and informal credit

lines, and (ii) in the case of NU, WMECO and CL&P, by commercial paper

(``Commercial Paper''); (2) the continued use, through December 31,

2000, of the Money Pool to assist in meeting the short-term borrowing

needs of the Applicants and certain other NU subsidiaries; (3) in the

case of all Applicants by borrowing under the existing revolving credit

agreements until those agreements are terminated; and (4) that NU make

open account advances, through December 31, 2000, to PSNH, HWP,

Northeast Nuclear Energy Company, NAEC, the Quinnehtuk Company, Rocky

River Realty Company and HEC, Inc.

NU, CL&P and WMECO propose to enter into a revolving credit

facility (``Facility'') permitting borrowings aggregating up to $450

million with certain lending institutions. The Facility will be used to

repay outstanding borrowings and for working capital and other

corporate purposes. The Facility will be unsecured unless, subject to

some exceptions, an Applicant incurs any secured indebtedness or

secures any outstanding indebtedness which is now unsecured in which

event such Applicant must cause the Facility to be secured equally and

ratably with such other indebtedness.

The Applicants state that one or more of the banks which lend to

the Applicants and other NU subsidiaries under existing revolving

credit agreements may want to continue their present lending

arrangements rather than becoming lenders under the Facility. In that

event, such bank would not be lenders under the Facility until their

existing credit agreements are terminated.

The Applicants will pay interest on any borrowings under the

Facility at a rate determined, at their election, by reference to the

base rate of certain reference banks, the federal funds rate, or the

London interbank offering rate (``LIBOR''), in each case plus a margin

which will depend on the lower of the Standard & Poor's or Moody's

rating of the borrowing Applicant's long-term senior debt. In no event

will the margin exceed 1% above the base rate, 1\1/2\% above the

federal fund rate, or 2% above LIBOR, unless the loan is in default.

The Applciants will pay an annual facility fee based on each lender's

pro-rata share of the commitment, whether used or unused. The amount of

the fee will depend on the credit rating of the borrowing applicant but

will not exceed .75%.

The aggregate amount of all short-term borrowings through December

31, 2000, whether through the issuance of Short-Term Notes, Commercial

Paper or borrowings from the Money Pool or revolving credit facilities

or pursuant to open account advances, will not exceed $200 million for

NU, $375 million for CL&P, $150 million for WMECO, $225 million for

PSNH, $5 million for HWP, and $50 million for NAEC.

Short-Term Notes will be issued by NU, CL&P, WMECO and PSNH both on

a transactional basis (``Transactional Notes''), with a separate note

evidencing each loan, and on a ``grid-note'' basis (``Grid Notes'').

Each Transactional Note will be dated the date of issue, will have a

maximum term of 270 days, and will bear interest at a fixed or floating

rate, as described below. Transactional Notes will be issued no later

than December 31, 2000, and will, with certain exceptions, be subject

to prepayment at any time at the borrower's option.

Grid Notes will be issued to a particular lending institution at or

prior to the first borrowing under the Grid Note from that lender. Each

repayment and reborrowing subsequent to the first borrowing will be

recorded on a schedule to the note without the necessity of issuing

additional notes. Also recorded on a schedule to the Grid Note at the

time of a borrowing will be the date of the borrowing, the maturity

(which may not exceed 270 days from the date of the borrowing), the

number of days the borrowing is outstanding, the interest rate or

method of determining the interest rate, the amount of interest due,

and the date of the payment. Except as described below, borrowings on a

Grid Note basis will be subject to prepayment at any time at the

borrower's option.

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The interest rate on all Short-Term Notes will be determined on the

basis of competitive quotations from several lending institutions, and

will either be at a fixed interest rate or a floating interest rate

determined with reference to an agreed-upon index (such as a lending

institution's prime rate, LIBOR certificate of deposit rates, money

market rates or commercial paper rates). The interest rate in any case

will not exceed two percentage points above the Federal Funds Effective

Rate. The Applicants will select the lending institution(s) from which

to make a particular short-term borrowing and determine whether to

borrow at a fixed or a floating rate on the basis of the lowest

expected effective interest cost for borrowings of comparable sizes and

maturities.

Borrowings bearing floating interest rates will generally be

subject to prepayment at the borrower's option. In order to realize the

benefits of fixed interest rates when a fixed-rate borrowing is

evaluated to be the lowest cost borrowing available, the Applicants may

from time to time agree with individual lenders that such borrowings

may not be prepaid or may only be prepaid if the lender is made whole

for its losses (including lost profits) as a result of the prepayment.

NU, CL&P, WMECO and PSNH propose to secure both formal and informal

credit lines with a number of lending institutions. Formal credit lines

may be subject to compensating balance and/or fee requirements and will

therefore be used only when an Applicant determines that such a credit

line offers advantages as compared with other available credit options.

Compensating balance requirements will not exceed 5% of the committed

credit line amount, and fees will not exceed 0.30% per annum. Each

Applicant participating in a credit line would be able to draw funds to

the exclusion of the other Applicants. The Applicants may change their

credit lines and may obtain additional lines over time. The continued

availability of such credit lines is subject to the continuing review

of the lending institutions.

CL&P, WMECO and NU propose to sell Commercial Paper publicly. Such

Commercial Paper will be issued through The Depository Trust Company in

the form of book entry notes in denominations of not less than $50,000,

of varying maturities, with no maturity more than 270 days after the

date of issue. The Commercial Paper will not be repayable prior to

maturity. The Commercial Paper will be sold through a placement agent

or agents in a co-managed commercial paper program at either the

discount rate per annum or the interest rate per annum prevailing at

the date of issuance for commercial paper of comparable quality and of

the particular maturity sold by public utility issuers thereof. No

Commercial Paper will be issued unless the issuing Applicant believes

that the effective interest cost to the Applicant will be equal to or

less than the effective interest rate at which the Applicant could

issue Short-Term Notes in an amount at least equal to the principal

amount of such Commercial Paper. The placement agent or agents will

receive a commission for the sale of the Commercial Paper of not more

than \1/8\ of 1% per annum on a discounted basis.

The Applicants also propose the continued use, through December 31,

2000, of the Money Pool, which is composed of available funds loaned by

the NU and participating subsidiaries and borrowed by those

subsidiaries to assist in meeting their respective short-term borrowing

needs. Another potential component of the Money Pool is funds borrowed

by NU through the issuance of Short-Term Notes, by selling Commercial

Paper or by borrowing through the Facility (or existing revolving

credit agreements if all are not terminated when the new Facility

becomes effective) for the purpose of making open account advances

through the Money Pool. NU requests that its authority for such

borrowings be extended through December 31, 2000. The amounts to be

borrowed by NU for the purpose of making open account advances and to

be borrowed through the Money Pool by the recipients set forth above

will also be subject to the short-term limits on aggregate amount

outstanding for which approval is sought in this filing.

All borrowings from and contributions to the Money Pool, including

the open account advances, will be documented and will be evidenced on

the books of each Applicant that is borrowing from or contributing

surplus funds to the Money Pool. Except for loans from the proceeds of

external borrowings by NU, all loans made under the Money Pool will

bear interest for both the borrower and lender, payable monthly, equal

to the daily Federal Funds Effective Rate as quoted by the Federal

Reserve Bank of New York. Loans from the proceeds of external

borrowings by NU will bear interest at the same rate paid by NU on the

borrowings, and no such loans may be prepaid (unless NU is made whole

for any additional costs that may be incurred because of such

prepayment). To the extent that there are any excess funds available in

the Money Pool, such funds will be invested with the earnings allocated

on a pro rata basis.

For the Commission, by the Division of Investment Management,

pursuant to delegated authority.

Jonathan G. Katz,

Secretary.

[FR Doc. 96-20347 Filed 8-8-96; 8:45 am]

BILLING CODE 8010-01-M