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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27066]

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

Amended (``Act'')

August 23, 1999.

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 under the Act. 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 is/are available for public

inspection through the Commission's Branch 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 September 21, 1999, to the Secretary, Securities and

Exchange Commission, Washington, D.C. 20549-0609, and serve a copy on

the relevant applicant(s) and/or declaration(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 facts 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 September 21, 1999, the application(s) and/

or declaration(s), as filed or as amended, may be granted and/or

permitted to become effective.

Eastern Utilities Associates (70-9527)

Eastern Utilities Associates (``EUA''), One Liberty Square, P.O.

Box 2333, Boston, Massachusetts 02107, a registered holding company,

Eastern Edison Company (``Eastern Edison''), 750 West Center Street,

West Bridgewater, Massachusetts 02379, an electric utility subsidiary

of EUA, and Montaup Electric Company (``Montaup''), 750 West Center

Street, West Bridgewater, Massachusetts 02379, a nonutility subsidiary

of Eastern Edison, have filed an application-declaration under sections

6(a)(2), 7, 9(a), 10, and 12(c) of the Act and rules 43 and 46 under

the Act.

EUA proposes to acquire from Eastern Edison, and Eastern Edison

proposes to transfer to EUA, the securities of Montaup, including: (1)

preferred stock; (2) common stock; and (3) debentures (``Montaup

Securities''). The transfer of the Montaup Securities to EUA by Eastern

Edison will take the form of, and it is also proposed that Eastern

Edison make, a special dividend payment comprising all remaining

capitalization of Montaup. Eastern Edison further proposes to make the

dividend payment out of retained earnings to the maximum extent

possible and, thereafter, out of paid-in capital and unearned surplus.

Eastern Edison proposes that the dividend payment take the form of a

redemption of its common stock, which will be funded with Montaup

Securities.

Prior to executing the transactions proposed above (and subject to

Commission authorization and the consent of Eastern Edison, as sole

shareholder of Montaup), Montaup proposes to amend its corporate

charter to eliminate its status as a Section 9A company under Chapter

164 of the Massachusetts General Laws so that its ability to transmit

and sell electricity will not be tied to its sole shareholder.

Cinergy Corp., et al. New Century Energies, Inc., et al. (70-9531)

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

at 139 East Fourth Street, Cincinnati, Ohio 45202, New Century

Energies, Inc. (``NCE''), a registered holding company located a 1225

17th Street Denver, Colorado 80202, and Cadence Network LLC

(``Cadence'' and together with Cinergy and NCE, ``Applicants''), a

nonutility company and subsidiary of each of Cinergy and NCE, located

at 105 East Fourth Street, Suite 200 Cincinnati, Ohio 45202, have filed

a joint application under sections 6(a), 7, 9(a) and 10 of the Act and

rule 54 under the Act.

Cinergy and NCE acquired their ownership interests in Cadence in

September 1997 under rule 58. Each of Cinergy and NCE indirectly holds

a one-third ownership interest in Cadence. Cinergy holds its one-third

interest in Cadence through its wholly owned, special-purpose

nonutility subsidiary, Cinergy-Cadence, Inc. (``Cinergy-Cadence''); NCE

holds its one-third interest in Cadence through its wholly owned,

special-purpose nonutility subsidiary, New Century-Cadence, Inc. (``New

Century-Cadence''). Both of these subsidiaries were formed under rule

58 in order to acquire and hold Cinergy's and NCE's respective

interests in Cadence.

Applicants state that Cadence uses information to reduce energy-

related costs for commercial businesses that own and operate families

of chain stores or other multi-location retail establishments. Cadence

collects, centralizes and redistributes to customers relevant cost

information using sophisticated technology. Through The Cadence Network

(``Network''), an Internet-based interactive reporting tool developed

by Cadence, Cadence's are able to track and manage electricity, natural

gas and related costs incurred at their facilities (e.g., with respect

to heating ventilation and air conditioning, water/sewage, telephone,

cable, and trash collection). The Network anchors other services

offered by Cadence that are specifically targeted at reducing the

customers's energy-related costs. Currently these services consist of

bill verification and

[[Page 47202]]

correction,\1\ ``best rate'' assurance,\2\ and consulting with respect

to gas and electric commodity purchasing \3\ and energy efficiency

projects.\4\ Customers compensate Cadence on a fixed fee or shared

savings basis. At June 30, 1999, Cadence was serving customers with

operations in all 50 states.

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\1\ Under this service option, Cadence audits and otherwise

reviews and monitors individual invoices and invoicing patterns for

electricity, natural gas and water/sewage service furnished to

customer sites. Cadence also identifies clusters of likely savings

and provides comparative reports. Once errors are detected,

Cadence's utility billing experts isolate the cause and negotiate on

the client's behalf directly with the utility supplier for refunds

and credits.

\2\ Under this service option, Cadence assures that the client's

high priority facilities are being assessed optimal utility rates

for electricity and natural gas service. Cadence scrutinizes and

verifies facility load data and utility rate schedules and

negotiates or renegotiates directly with the utility supplier to

ensure application of the optimal rates to these high-priority

customer facilities. In connection with this program, clients can

also authorize Cadence to conduct a national rate assessment,

identifying and prioritizing tariff-based rate savings opportunities

for electric and natural gas service with respect to all of the

customer's sites throughout the United States.

\3\ Under this service option, Cadence assists its customers in

shopping for electric and natural gas supplies. Cadence can help

secure the most attractive commodity rates possible through custom

proposals and proposal reviews. After Cadence determines which

facilities are most likely to profit from electric and gas

deregulation and other competitive purchasing opportunities, Cadence

uses the Network to aggregate load information and create the custom

request for proposals necessary to shop for the commodity supply.

Cadence then reviews proposals from the various marketers, analyzes

rate pricing option, and helps to negotiate the contractual terms.

Throughout this process, Cadence acts as a consultant for the

customer. Cadence does not take title to the commodity nor act as a

broker for the buyer or seller.

\4\ Under this service option, Cadence helps implement energy

efficiency projects to realize further cost savings for its

customers. Using the detailed data captured from the Network,

Cadence can begin to identify high-cost facilities that cannot be

corrected by better rates or more accurate billing. To identify the

most likely targets for cost reduction, Cadence conducts internal

benchmarking, drawing on internal data-mining techniques. Once it

has identified the problem and likely solution, Cadence prepares

proposals for national energy-efficiency projects and develop

comprehensive strategies. Cadence develops the implementation plan,

recommends the proposed application, and negotiates for project

procurement. In this regard, Cadence acts as a project facilitator

or overseer, rather than a contractors.

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As an ``energy-related company,'' as defined under rule 58,

substantially all of Cadence's revenues must derive, and, according to

Applicants, have derived, from permissible energy-related activities

carried out within the United States. However, Applicants assert that

this geographical restriction imposes significant business and

competitive disadvantages on Cadence, noting, among other things, that

certain of Cadence's customers have locations outside of the United

States for which they would like Cadence to provide services consistent

with the services Cadence provides them in the United States.

Applicants propose that Cadence be permitted to market its utility-

related cost reporting and reduction services anywhere outside the

United States, without restriction on the amount or proportion of

revenues derived from these activities outside the United States. In

connection with this proposal, Cinergy and NCE request authority to

retain their ownership interests in Cadence, Cinergy-Cadence and New

Century-Cadence previously acquired under rule 58. In addition,

Applicants propose that this authority cover not merely the utility-

related cost reporting and reduction services now in place, but include

additional similar and complementary energy-related services that

Cadence may develop and seek to offer to customers in future, both in

the United States and abroad, provided that in no event would these

future services be broader in scope than the energy management services

and consulting services approved for Cinergy's nonutility subsidiary,

Cinergy Solutions, Inc.\5\ Applicants further request that Cadence be

granted the flexibility to provide its services directly or indirectly

through one or more special-purpose subsidiaries, formed as

corporations, partnerships, limited liability companies or other legal

entities, as applicable business, legal, tax, accounting or strategic

considerations dictate.\6\ Cinergy and NCE commit that they will not

seek recovery through higher rates to customers of their utility

subsidiaries for any losses or inadequate returns arising from the

proposed transactions.

\5\ See Cinergy Corp., Holding Co. Act Release No. 26662

(February 7, 1997).

\6\ Cinergy and NCE anticipate that they will meet their

allocable shares of Cadence's financing needs through capital

contributions or loans exempt under rules 45 and 52. In addition,

Cadence may issue its securities to outside parties to finance its

business in transactions exempt under rule 52. To the extent

necessary, any Cinergy guarantees in respect to Cadence securities

would be issued under the authority granted to Cinergy in Holding

Co. Act Release No. 26984 (March 1, 1999). Likewise, any NCE

guarantees in respect of Cadence securities would be issued under

the authority granted to NCE in Holding Co. Act Release No. 27000

(April 7, 1999).

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For the Commission by the Division of Investment Management,

under delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 99-22425 Filed 8-27-99; 8:45 am]

BILLING CODE 8010-01-M