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

Federal RegisterNov 2, 1998

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-26932]

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

Amended (``Act'')

October 23, 1998.

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

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

promulgated under the Act. All interested persons are referred to the

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

proposed transaction(s) and any amendment 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 summit their views in

writing by November 17, 1998, to the Secretary, Securities and Exchange

Commission, Washington, DC 20549, and serve a copy on the relevant

applicant(s) and/or declarants(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

should 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 issued in the matter.

After November 17, 1998, the application(s) and/or declaration(s), as

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

effective.

IES Utilities, Inc. (70-9375)

IES Utilities, Inc. (``IES''), doing business as Alliant Utilities,

Alliant Tower, Cedar Rapids, Iowa 52401, an electric utility subsidiary

company of Interstate Energy Corporation, a registered holding company,

has filed an application-declaration under sections 6(a), 7, 9(a), 10,

and 12(c) of the Act and rules 42 and 54 under the Act.

IES proposed, from time to time through December 31, 2000, to: (1)

issue and sell one or more series of one or a combination of the

following securities--(a) trust bonds (``Trust Bonds''), (b) senior

unsecured debentures (``Senior Debentures''), and (c) unsecured

subordinated debt securities (``Subordinated Debentures''); and (2)

enter into an agreement or agreements (``Agreement'') for the issuance

and sale of one or more series of tax-exempt bonds (``Tax-Exempt

Bonds'') for the financing or refinancing of certain air and water

pollution control facilities and sewage and solid waste disposal

facilities (``Facilities''). As security for IPC's obligations under

the Agreement or security or credit enhancement for the Tax-Exempt

Bonds, IES also proposes, through December 30, 2000, one or a

combination of the following transactions: (1) issuance of a non-

negotiable promissory note (``Note'') to evidence a loan to IES of the

proceeds of the Tax-Exempt Bonds from the issuer of the Tax-Exempt

Bonds; (2) conveyance of a subordinated security interest in the

Facilities or other property of IES as security for IES's obligations

under the Agreement and

[[Page 58798]]

the Note; (3) issuance and pledge of one or more new series of Trust

Bonds as collateral for the Tax-Exempt Bonds (``Tax-Exempt Collateral

Bonds''); (4) acquisition of a letter of credit and execution of a

reimbursement agreement to secure this letter of credit guaranteeing

payment of the Tax-Exempt Bonds; (5) acquisition of an insurance policy

guaranteeing the payment of the Tax-Exempt Bonds; and (6) guarantee of

the payment of principal, premium, if any, and interest on the Tax-

Exempt Bonds.

The aggregate principal amount of the Trust Bonds, Senior

Debentures, Subordinated Debentures, and Tax-Exempt Bonds shall not

exceed $200 million. This amount excludes the principal amount of the

Tax-Exempt Collateral Bonds and any other forms of security or credit

enhancement related to the Tax-Exempt Bonds. The aggregate principal

amount of the Tax-Exempt Collateral Bonds shall not exceed an amount

equal to the sum of the principal amount, plus interest, of the Tax-

Exempt Bonds.

The Trust Bonds will be issued under EIS's Indenture of Mortgage

and Deed of Thrust, dated September 1, 1993, to the First National Bank

of Chicago, as trustee (``Trustee'') as amended and supplemented and as

proposed to be further supplemented for one or more new series of Trust

Bonds (``1993 Indenture''). The Senior Debentures will be issued under

IES's Indenture (For Senior Unsecured Debt Securities), dated August 1,

1997, to the Trustee, as amended and supplemented and as proposed to be

further supplemented for one or more new series of Senior Debentures.

The Subordinated Debentures will be issued under IES's Indenture (For

Unsecured Subordinated Debit Securities), dated as of December 1, 1995,

to the Trustee, as amended and supplemented and as proposed to be

further supplemented for one or more new series of Subordinated

Debentures (``1995 Indenture'').

The Trust Bonds will be secured primarily by: (1) first mortgage

bonds issued under IES's Indenture of Mortgage and Deed of Trust, dated

August 1, 1940, as amended and supplemented (``1940 Indenture''), to

The First National Bank of Chicago, as trustee, and delivered to the

trustee under the 1993 Indenture; (2) first mortgage bonds issued under

IES's Indenture or Deed of Trust, dated February 1, 1923, as amended

and supplemented (``1923 Indenture''), to The Northern Trust Company

(The First National Bank of Chicago, successor) and Harold H. Rockwell

(Richard D. Manella, successor), as trustees, and delivered to the

trustee under the 1993 Indenture; and (3) the lien of the 1993

Indenture on IES's properties used in the generation, purchase,

transmission, distribution or sale of electric energy by IES, or in the

manufacture of manufactured gas, or in the purchase, transportation,

distribution or sale of steam and hot water, which lien is junior to

the liens of the 1940 Indenture and the 1923 Indenture. The Senior

Debentures will be unsecured obligations of IES and will rank on a

parity with all other unsecured and unsubordinated debt of IES. The

Subordinated Debentures will be unsecured, subordinated obligations of

IES. The 1995 Indenture provides that payment of the principal of,

premium, if any, and interest on Subordinated Debentures is

subordinated and subject in right of payment to the prior payment in

full of all senior indebtedness of IES.

Each new series of Trust Bonds and each series of Senior Debentures

and Subordinated Debentures will be sold at the price, bear interest at

the rate or rates, and mature on the date or dates determined at the

time of sale or when the agreement to sell is entered into, as the case

may be. No series of Trust Bonds will be issued at rates in excess of

the lower of 15% per annum or those rates generally obtainable at the

time of pricing for sales of mortgage bonds having the same reasonably

similar maturities, issued by companies of the same or reasonably

comparable credit quality and having reasonably similar terms,

conditions and features (``Ceiling Rate''). None of any series of

Senior Debentures or Subordinated Debentures will be sold if their

fixed interest rate or initial adjustable interest rate exceeds the

Ceiling Rate.

As to each series of Trust Bonds, Senior Debentures, and

Subordinated Debentures having an adjustable interest rate, the initial

interest rate will be negotiated among IES and the purchasers and will

be based upon the current market rate for comparable securities.

Thereafter, the interest rate on these Trust Bonds, Senior Debentures,

and Subordinated Debentures will be adjusted according to a pre-

established formula or method of determination (in each case,

``Floating Rate Trust Bonds,'' ``Floating Rate Senior Debentures,'' and

``Floating Rate Subordinated Debentures,'' respectively), or will be

that rate which, when set, would be sufficient to remarket the Trust

Bonds, Senior Debentures, and Subordinated Debentures at their

principal amount (in each case, ``Remarketed Trust Bonds,''

``Remarketed Senior Debentures,'' and ``Remarketed Subordinated

Debentures,'' respectively). After the initial interest rate period,

none of the Floating Rate Trust Bonds, Floating Rate Senior Debentures,

Floating Rate Subordinated Debentures, Remarketed Trust Bonds,

Remarketed Senior Debentures, or Remarketed Subordinated Debentures

will bear an interest rate exceeding 15% per annum.

The price, exclusive of accrued interest, to be paid to IES for

each new series of Trust Bonds, Senior Debentures, and Subordinated

Debentures to be sold at competitive bidding will be within a range (to

be specified by IES to prospective purchasers) of 95% to 105% of the

principal amount of each series of Trust Bonds, Senior Debentures, and

Subordinated Debentures. Each series of Trust Bonds, Senior Debentures,

and Subordinated Debentures will mature not later than 30 years from

the day of issuance.

IES anticipates that the issuance and sale of each series of Trust

Bonds, Senior Debentures, and Subordinated Debentures will be by means

of competitive bidding or negotiated public offering or private

placement with institutional investors in order to secure the

advantages of an advance marketing effort and/or the best available

terms. Each sale of Trust Bonds, Senior Debentures, and Subordinated

Debentures is a separate transaction not contingent upon another sale

of securities.

IES proposes to use the net proceeds derived from the issuance and

sale of Trust Bonds, Senior Debentures, and Subordinated Debentures for

general corporate purposes, including the conduct of its business as a

utility, the repayment of outstanding securities when due, or the

possible redemption, acquisition, or refunding of certain outstanding

securities prior to their stated maturity or due date.

IES also proposes to enter into one or more Agreements, which may

be loan or installment sales agreements, relating to the issuance and

sale of Tax-Exempt Bonds for the financing or refinancing of certain

Facilities. Under the Agreement, IES may be loaned the proceeds of the

sale of the Tax-Exempt Bonds, and IES may issue a Note, or the issuer

of the Tax-Exempt Bonds will undertake to purchase and sell the

Facilities to IES. While the actual amount of Tax-Exempt Bonds to be

issued has not yet been determined, this amount will be based upon the

cost of refunding outstanding bonds or the cost of the Facilities. The

Tax-Exempt Bonds will mature not more than 30 years from the first day

of the month in which they are initially issued.

[[Page 58799]]

In order to obtain the benefit of ratings for the Tax-Exempt Bonds

equivalent to the rating of the Trust Bonds outstanding under the 1993

Indenture, which ratings IES has been advised may be attained, IES may

determine to secure its obligations under the Note and the Agreement by

delivering to the trustee, a series of Tax-Exempt Collateral Bonds in

principal amount either (1) equal to the principal amount of the Tax-

Exempt Bonds or (2) equal to the sum of the principal amount of the

Tax-Exempt Bonds plus interest payments thereon for a specified period.

The series Tax-Exempt Collateral Bonds will be issued under an

indenture supplemental to the 1993 Indenture (``Supplemental

Indenture''), will mature on the maturity date of the Tax-Exempt Bonds

and will be non-transferable by the trustee. The Tax-Exempt Collateral

Bonds, in the case of clause (1) above, will bear interest at a rate or

rates equal to the interest rate or rates to be borne by the related

Tax-Exempt Bonds and, in the case of clause (2) above, would be non-

interest bearing.

The Supplemental Indenture will provide, however, that the

obligation of IES to make payments with respect to the Tax-Exempt

Collateral Bonds will be satisfied to the extent that payments are made

under the Note or the Agreement sufficient to meet payments when due in

respect of the related Tax-Exempt Bonds. The Supplemental Indenture

will provide that, upon acceleration by the trustee of the principal

amount of all related outstanding Tax-Exempt Bonds under the trust

indenture, the trustee may demand the mandatory redemption of the

related Tax-Exempt Collateral Bonds then held by it as collateral at a

redemption price equal to the principal amount thereof plus accrued

interest, if any, to the date fixed for redemption. The Supplemental

Indenture may also provide that, upon the optional redemption of the

Tax-Exempt Bonds, in whole or in part, a related principal amount of

the Tax-Exempt Collateral Bonds will be redeemed at the redemption

price of the Tax-Exempt Bonds.

In the case of interest bearing Tax-Exempt Collateral Bonds,

because interest accrues in respect of the Tax-Exempt Collateral Bonds

until satisfied by payments under the Note or the Agreement, ``annual

interest charges'' in respect of the Tax-Exempt Collateral Bonds will

be included in computing the ``interest earnings requirement'' of the

1993 Indenture which restricts the amount of Trust Bonds which may be

issued and sold to the public in relation to IES's net earnings. In the

case of non-interest bearing Tax-Exempt Collateral Bonds, since no

interest would accrue in respect of the Tax-Exempt Collateral Bonds,

the ``interest earnings requirement'' would be unaffected.

As an alternative to or in conjunction with IES's securing its

obligations through the issuance of the Tax-Exempt Collateral Bonds,

IES may acquire an irrevocable letter of credit or other credit

facility (``Letter of Credit'') of a bank or other financial

institution (``Bank'') and enter into a reimbursement agreement

(``Reimbursement Agreement'') for any payments under the Letter of

Credit. Any borrowing by IES under the Reimbursement Agreement will

have a term of up to ten years and bear interest at a rate not

exceeding: (1) the London Interbank Offered Rate plus up to 2%, (2) the

Bank's certificate of deposit rate plus up to 1\3/4\%, or (3) a rate

not to exceed the prime rate plus 1%.

As a further alternative to, or in conjunction with, securing its

obligations under the Agreement and Notes, IES may acquire a policy of

insurance guaranteeing the payment when due of the principal of and

interest on the series of the Tax-Exempt Bonds. This insurance policy

would extend for the term of the related Tax-Exempt Bonds and would be

non-cancelable by the insurance company for any reason.

In the event that a Letter of Credit or an insurance policy is

issued as an alternative to the issuance of the Tax-Exempt Collateral

Bonds, IES may convey a subordinated security interest in the

Facilities or other property of IES as further security for IES's

obligations under the Agreement and the Note. This subordinated

security interest would be assigned to the trustee. IES also proposes

to guarantee the payment of the principal of, premium, if any, and

interest on the Tax-Exempt Bonds.

Unless otherwise specifically stated in IES's proposal, any Tax-

Exempt Collateral Bonds, Letter of Credit or any related subordinated

security interest, coverage under any insurance policy, or guarantee

acquired by or issued by IES as a security or credit enhancement for

the Tax-Exempt Bonds shall be in an aggregate amount no greater than

the principal amount of the Tax-Exempt Bonds plus interest and will be

designed to reflect the payment terms and conditions of the Tax-Exempt

Bonds.

It is contemplated that the Tax-Exempt Bonds will be sold under

arrangements with one or more purchasers, placement agents or

underwriters. In accordance with applicable state laws, the interest

rate to be borne by the Tax-Exempt Bonds will be approved by the issuer

and will be either a fixed rate, which fixed rate may be convertible to

a rate which will fluctuate in accordance with a specified prime or

base rate or rates or may be determined by certain remarketing or

auction procedures, or a fluctuating rate, which fluctuating rate may

be convertible to a fixed rate.

IES also proposes that it may enter into arrangements providing for

the delayed or future delivery of Tax-Exempt Bonds to one or more

purchasers or underwriters. The obligations of the purchasers or

underwriters to purchase Tax-Exempt Bonds under any of these

arrangements may be secured by U.S. Treasury securities, letters of

credit, or other collateral. The effective cost to IES of any series of

the Tax-Exempt Bonds will not exceed the yield on U.S. Treasury

securities having a maturity comparable to that of the series of Tax-

Exempt Bonds. This effective costs will reflect the applicable interest

rate or rates and any underwriters' discount or commission.

The premium (if any) payable upon the redemption of any Tax-Exempt

Bonds at the option of IES will not exceed the greater (1) 5% of the

principal amount of the Tax-Exempt Bonds so to be redeemed, or (2) a

percentage of the principal amount equal to the rate of interest per

annum borne by the Tax-Exempt Bonds.

The purchase price payable by or on behalf of IES is respect of

Tax-Exempt Bonds tendered for purchase at the option of the holders

will not exceed 100% of the principal amount, plus accrued interest to

the purchase date.

Interstate Power Company (70-9377)

Interstate Power Company (``IPC''), 1000 Main Street, P.O. Box 769,

Dubuque, Iowa 52004-7691, an electric utility subsidiary company of

Interstate Energy Corporation, a registered holding company, has filed

an application-declaration under sections 6(a), 7, 9(a), 10, and 12(c)

of the Act and rules 42 and 54 under the Act.

IPC proposes, from time to time through December 31, 2000, to: (1)

issue and sell one or more series of one or a combination of the

following securities--(a) first mortgage bonds (``First Mortgage

Bonds''), (b) senior unsecured debentures (``Senior Debentures''), and

Debentures''); and (2) enter into an agreement or agreements

(``Agreement'') for the issuance and sale of one or more series of tax-

exempt bonds (``Tax-Exempt Bonds'') for the

[[Page 58800]]

financing or refinancing of certain air and water pollution control

facilities and sewage and solid waste disposal facilities

(``Facilities''). As security for IPC's obligations under the Agreement

or security or credit enhancement for the payment of the Tax-Exempt

Bonds, IPC also proposes, through December 30, 2000, one or a

combination of the following transactions: (1) issuance of a non-

negotiable promissory note (``Note'') to evidence a loan of the

proceeds of the Tax-Exempt Bonds from the issuer of the Tax-Exempt

Bonds to IPC; (2) conveyance of a subordinated security interest in the

Facilities or other property of IPC as security for IPC's obligations

under the Agreement and the Note; (3) issuance and pledge of one or

more new series of First Mortgage Bonds (``Tax-Exempt Collateral

Bonds'') as collateral for the Tax-Exempt Bonds; (4) acquisition of a

letter of credit and executive of a reimbursement agreement to secure

this letter of credit to guarantee payment of the Tax-Exempt Bonds; (5)

acquisition of an insurance policy to guarantee payment of the Tax-

Exempt Bonds; and/or (6) guarantee the payment of principal, premium,

if any, and interest on the Tax-Exempt Bonds.

The aggregate principal amount of the First Mortgage Bonds, Senior

Debentures, Subordinated Debentures, and Tax-Exempt Bonds shall not

exceed $80 million. This amount excludes the principal amount of the

Tax-Exempt Collateral Bonds and any other forms of security and credit

enhancement related to the Tax-Exempt Bonds, including letters of

credit and any related subordinated security interests, guarantees and

insurance policies. The aggregate principal amount of the Tax-Exempt

Collateral Bonds shall not exceed an amount equal to the sum of the

principal amount of the Tax-Exempt Bonds plus interest.

The new series of First Mortgage Bonds will be issued under IPC's

Indenture, dated as of January 1, 1948, to The Chase Manhattan Bank and

C.J. Heinzelmann, as trustees, as supplemented and as proposed to be

further supplemented for one or more new series of First Mortgage Bonds

(``Mortgage''). The First Mortgage Bonds would be issued on the basis

of unfunded net property additions and/or previously retired bonds, as

permitted and authorized by the Mortgage. The Senior Debentures will be

issued under IPC's Indenture (For Senior Unsecured Debt Securities) to

The First National Bank of Chicago (or to another institution), as

trustee, as proposed to be supplemented for one or more new series of

Senior Debentures. The Subordinated Debentures will be issued under

IPC's Indebenture (For Unsecured Subordinated Debt Securities) to The

First National Bank of Chicago (or to another institution), as trustee,

as proposed to be supplemented for one or more new series of

Subordinated Debentures.

The First Mortgage Bonds will be issued on the basis of unfunded

net property additions and/or previously retired bonds, as permitted

and authorized by the Mortgage. The Senior Debentures will be unsecured

obligations of IPC and will rank on a parity with all other unsecured

and unsubordinated debt of IPC. The Subordinated Debentures will be

unsecured, subordinated obligations of IPC. The indenture for the

Subordinated Debentures will provide that payment of the principal of,

premium, if any, and interest on Subordinated Debentures will be

subordinated and subject in right of payment to the prior payment in

full of all senior indebtedness of IPC.

Each new series of First Mortgage Bonds and each series of Senior

Debentures and Subordinated Debentures will be sold at the price, bear

interest at the rate or rates, and mature on the date or dates

determined at the time of sale or when the agreement to sell is entered

into, as the case may be. No series of First Mortgage Bonds will be

issued at rates in excess of the lower of 15% per annum or those rates

generally obtainable at the time of pricing for sales of mortgage bonds

having the same or reasonably similar maturities, issued by companies

of the same or reasonably comparable credit quality and having

reasonably similar terms, conditions and features (``Ceiling Rate'').

None of any series of Senior Debentures or Subordinated Debentures will

be sold if their fixed interest rate or initial adjustable interest

rate exceeds the Ceiling Rate.

As to each series of First Mortgage Bonds, Senior Debentures, and

Subordinated Debentures having an adjustable interest rate, the initial

interest rate will be negotiated among IPC and the purchasers and will

be based upon the current market rate for comparable securities.

Thereafter, the interest rate on these First Mortgage Bonds, Senior

Debentures, and Subordinated Debentures will be adjusted according to a

pre-established formula or method of determination (in each case,

``Floating Rate First Mortgage Bonds,'' ``Floating Rate Senior

Debentures,'' and ``Floating Rate Subordinated Debentures,''

respectively) or will be that rate which, when set, would be sufficient

to remarket the First Mortgage Bonds, Senior Debentures, and

Subordinated Debentures at their principal amount (in each case,

``Remarketed First Mortgage Bonds,'' ``Remarketed Senior Debentures,''

and ``Remarketed Subordinated Debentures,'' respectively). After the

initial interest rate period, none of the Floating Rate First Mortgage

Bonds, Floating Rate Senior Debentures, Floating Rate Subordinated

Debentures, Remarketed First Mortgage Bonds, Remarketed Senior

Debentures, or Remarketed Subordinated Debentures will bear an interest

rate exceeding 15% per annum.

The price, exclusive of accrued interest, to be paid to IPC for

each new series of First Mortgage Bonds, Senior Debentures, and

Subordinated Debentures to be sold at competitive bidding will be

within a range (to be specified by IPC to prospective purchasers) of

95% to 105% of the principal amount of each series of First Mortgage

Bonds, Senior Debentures, and Subordinated Debentures. Each series of

First Mortgage Bonds will mature not later than 40 years from the day

of issuance. Each series of Senior Debentures and Subordinated

Debentures will mature not later than 30 years from the day of

issuance.

IPC anticipates that the issuance and sale of each series of First

Mortgage Bonds, Senior Debentures and Subordinated Debentures will be

by means of competitive bidding or negotiated public offering or

private placement with institutional investors in order to secure the

advantages of an advance marketing effort and/or the best available

terms. Each sale of First Mortgage Bonds, Senior Debentures and

Subordinated Debentures is a separate transaction not contingent upon

another sale of securities.

IPC proposes to use the net proceeds derived from the issuance and

sale of First Mortgage Bonds, Senior Debentures and Subordinated

Debentures for general corporate purposes, including the conduct of its

business as a utility, the repayment of outstanding securities when

due, or the possible redemption, acquisition, or refunding of certain

outstanding securities prior to their stated maturity or due date.

IPC also proposes to enter into one or more Agreements, which may

be loan or installment sales agreements, relating to the issuance and

sale of Tax-Exempt Bonds for the financing or refinancing of certain

Facilities. Under the Agreement, IPC may be loaned the proceeds of the

sale of the Tax-Exempt Bonds, the IPC may issue a Note, or the issuer

of the Tax-Exempt Bonds will undertake to purchase and sell the

Facilities to IPC. While the actual amount of Tax-Exempt

[[Page 58801]]

Bonds to be issued has not yet been determined, this amount will be

based upon the cost of refunding outstanding bonds or the cost of the

Facilities. The Tax-Exempt Bonds will mature not more than 30 years

from the first day of the month in which they are initially issued.

In order to obtain the benefit of ratings for the Tax-Exempt Bonds

equivalent to the rating of the First Mortgage Bonds outstanding under

the Mortgage, which ratings IPC has been advised may be attained, IPC

may determine to secure its obligations under the Note and the

Agreement by delivering to the trustee a series of Tax-Exempt

Collateral Bonds in principal amount either (1) equal to the principal

amount of the Tax-Exempt Bonds or (2) equal to the sum of the principal

amount of the Tax-Exempt Bonds plus interest payments thereon for a

specified period. This series of the Tax-Exempt Collateral Bonds will

be issued under an indenture supplemental to the Mortgage

(``Supplemental Indenture''), will mature on the maturity date of the

Tax-Exempt Bonds and will be non-transferable by the trustee. The Tax-

Exempt Collateral Bonds, in the case of clause (1) above, will bear

interest at a rate or rates equal to the interest rate or rates to be

borne by the related Tax-Exempt Bonds and, in the case of clause (2)

above, would be non-interest bearing.

The Supplemental Indenture will provide, however, that the

obligation of IPC to make payments with respect to the Tax-Exempt