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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-26717]

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

Amended (``Act'')

May 9, 1997.

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 June 2, 1997, 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.

New England Electric System, et al. (70-8783)

New England Electric System (``NEES''), a registered holding

company, and its nonutility subsidiary company, New England Electric

Resources, Inc. (``NEERI'') (together, ``Applicants''), both located at

25 Research Drive, Westborough, Massachusetts 01582, have filed a post-

effective amendment to their application-declaration under sections

6(a), 7, 9(a), 10, 12(b), 13(b), 32, and 33 of the Act and rules 45 and

53 thereunder.

By order dated April 15, 1996 (HCAR No. 26504) (``Order''), the

Commission authorized NEES and/or NEERI to acquire interests in,

finance the acquisition, and hold the securities, of one or more exempt

wholesale generators (``EWGs'') and foreign utility companies

(``FUCOs'') (together, Exempt Companies''), as those terms are defined

respectively in sections 32 and 33 of the Act (``NEES Investments''),

either directly or indirectly, through a project entity (``Project

Parent''). The Project Parents may issue securities to NEES and/or

NEERI and NEES and/or NEERI may acquire the securities. The NEES

Investments may take the form of capital stock or shares, debt

securities, trust certificates, capital contributions, open account

advances and partnership interests or other equity or participation

interests, bid bonds or other credit support to secure obligations

incurred by NEERI and/or Project Parents in connection with Exempt

Company investments or of NEERI's undertaking to contribute equity to a

Project Parent. The Order authorized NEES and/or NEERI to make up to

$60 million in NEES Investments, provided that the investments would

not cause NEES' ``aggregate investment'', as defined in rule 53(a)(i),

in EWGs and FUCOs to exceed 50% of the NEES system's ``consolidated

retained earnings'', as defined in rule 53(a)(ii).

NEES and NEERI now propose to remove the $60 million limitation on

NEES Investments. NEES and NEERI also propose to, from time-to-time

through December 31, 1998: (1) Guarantee the indebtedness or other

obligations of one or more Exempt Companies; (2) assume the liabilities

of one or more Exempt Companies; and/or (3) enter into guarantees and

letters of credit reimbursement agreements in support of equity

contribution obligations or otherwise in connection with project

development activities for one or more Exempt Companies.

As proposed, NEES Investments may be made from NEES to NEERI and/or

Project Parents directly or indirectly. Any open account advance made

by NEES will be non-interest bearing and shall have a maturity not

exceeding one year. Any promissory note issued to NEES by NEERI or a

Project Parent, or to NEERI by a Project Parent, and any promissory

note or other similar evidence of indebtedness issued by a Project

Parent to a person other than NEES or NEERI with respect to which NEES

or NEERI may issue a guarantee, would mature not later than 30 years

after the date of issuance. It would bear interest at a rate not

greater than the prime rate of a bank to be designated by NEES in the

case of a promissory note issued to NEES or NEERI. In the case of any

note or similar evidence of indebtedness issued to a person other than

NEES or NEERI and guaranteed by NEES or NEERI, the rate would not

exceed: (a) The greater of 250 basis points above the lending bank's or

other recognized prime rate and 50 basis points above the federal funds

rate; (b) 400 basis points above the specified London Interbank Offered

Rate plus any applicable reserve requirement; or (c) a negotiated fixed

rate 500 basis points above the 30 years ``current coupon'' treasury

bond rate if such note or other indebtedness in U.S. dollar

denominated. If such note or other indebtedness is denominated in the

currency of a foreign nation, the interest rate will not exceed a fixed

or floating rate which, when adjusted for the prevailing rate of

inflation, would be equivalent to a rate on a U.S. dollar denominated

borrowing of identical average life that does not exceed 10% over the

highest rate set forth above.

NEES may enter into reimbursement agreements with banks to support

letters of credit delivered as security for NEES' or NEERI's equity

contribution obligation to a Project Parent or otherwise in connection

with a Project Parent's or NEERI's Exempt Company project development

activities. Any reimbursement agreement supporting a letter of credit

would have a term not in excess of 30 years. Drawings under any such

letter of credit would bear interest at not more than 5% above the

prime rate of the letter of credit bank as in effect from time-to-time,

and letter of credit fees would not exceed 1% annually of the face

amount of the letter of credit.

DQE, Inc., et al. (70-9027)

DQE, Inc., Cherrington Corporate Center, Suite 100, 500 Cherrington

Parkway, Coraopolis, Pennsylvania, 15108-3184 (``DQE''), a public

utility holding company exempt under section 3(a)(1) and rule 2 from

all provisions of the Act except section 9(a)(2), and its energy

services subsidiary, DQE Energy Services, Inc., One North Shore Center,

12 Federal Street, Suite 200, Pittsburgh, Pennsylvania 15212 (``Energy

Services'') and Energy Services' subsidiary, DH Energy, Inc., One North

Shore Center, 12 Federal Street, Suite 200, Pittsburgh, Pennsylvania

15212 (``DH Energy'') collectively, ``Applicants''), have filed an

application under sections under 9(a)(2) and 10 of the Act.

By order dated March 24, 1995 (HCAR No. 26257), Allegheny

Development Corporation (``ADC''), an indirect public utility energy

services subsidiary of DQE, was authorized to acquire utility assets to

provide energy services to the Midfield Terminal Complex at the Greater

Pittsburgh International Airport. The energy services provided by ADC

are generated by four boilers and seven chillers to provide hot and

cold water to the complex and three capacitors

[[Page 27080]]

connecting DQE's generating facilities to the airport facilities.

DQE and Energy Services now propose to cause the execution of an

Operation and Maintenance Services Agreement (``O&M Agreement'')

between ADC and an entity that will be formed as a subsidiary of Energy

Services (``Newco''). The term of the O&M Agreement will be 5 years and

Newco will receive compensation in the approximate amount of $4.5

million. Under the O&M Agreement, Newco will serve as operator of ADC's

electrical and thermal energy facility located at the Midfield Terminal

Complex.

On January 22, 1997, ADC entered into: (1) The Heinz Facility Lease

(``Lease'') between Heinz USA (``Heinz'') and ADC; and (2) the Energy

Supply Agreement (``Supply Agreement''), among Heinz, ADC and Duquesne

Energy, Inc., a subsidiary of Energy Services. Both agreements provided

for the assignment of all of ADC's rights and obligations to DH Energy.

The Applicants now propose to have ADC assign to DH Energy all of ADC's

rights and obligations under the two agreements.

The Lease provides, among other things, that DH Energy will lease,

operate and maintain an inside the fence energy facility (``Facility'')

for Heinz that will provide energy in the form of steam, electricity

and compressed air. The Facility has two 3 MV steam turbine generators

capable of generating 40 million kilowatt hours of electricity per year

and coal/gas fired boilers capable of generating one billion pounds of

steam per year. Under the Supply Agreement, DH Energy will be obligated

to sell to Heinz electricity and steam produced by the Facility for use

in Heinz' manufacturing processes.

Following the consummation of the transactions, the Applicants

state that DQE and Energy Services will be exempt public utility

holding companies under section 3(a)(1) and rule 2 of the Act.

For the Commission, by the Division of Investment Management,

pursuant to delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97-12823 Filed 5-15-97; 8:45 am]

BILLING CODE 8010-01-M