File No. 70-9521
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 1 TO
APPLICATION-DECLARATION
ON FORM U-1 UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
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SCANA CORPORATION
1426 Main Street
Columbia, South Carolina 29201
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(Name of companies filing this statement and
address of principal executive offices)
SCANA CORPORATION
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(Name of top registered holding company parent)
Kevin B. Marsh
H. Thomas Arthur
SCANA CORPORATION
1426 Main Street
Columbia, South Carolina 29201
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(Name and address of agent for service)
The Commission is requested to mail copies of
all orders, notices and communications to:
William S. Lamb, Esq.
Sheri E. Bloomberg, Esq.
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
125 West 55th Street
New York, New York 10019
SCANA Corporation ("SCANA" or the "Applicant") hereby files this
post-effective amendment to its application/declaration on Form U-1 relating to
its acquisition of Public Service Company of North Carolina and retention of
specified non-utility operations (the "Application/Declaration") in order to
request that the Securities and Exchange Commission (the "Commission") approve
an extension until February 10, 2003 of the time period described in Holding Co.
Act Release No. 27133 (Feb. 9, 2000) (the "Merger Order") for SCANA to complete
the sale of the transit system in the City of Columbia, South Carolina (the
"Columbia Bus System"), and other properties to the City of Columbia, South
Carolina.
ITEM 1. DESCRIPTION OF PROPOSED TRANSACTIONS
A. Columbia Bus System
SCANA, through its subsidiary South Carolina Electric & Gas Company
("SCE&G") operates the Columbia Bus System. In the Merger Order, the Commission
did not find that the Columbia Bus System met the standards for retention set
forth in Section 11(b)(1) of the Public Utility Holding Company Act of 1935, as
amended (the "Act") as a non-utility business in a registered holding company
system. However, the Commission noted that SCANA agreed to dispose of the
Columbia Bus System within two years of the date SCANA registered as a holding
company under Section 5 of the Act. Specifically, in the Application/Declaration
whose requests were granted in the Merger Order, SCANA stated:
The [Columbia Bus System] does not fall within the bounds of the Rule 40
exemption from Section 9 because it is operated by a public utility
subsidiary company and SCANA recognizes that retention of the [Columbia Bus
System] is not consistent with Section 11 of the Act under the majority of
Commission precedent. See Cities Service Power & Light Co., 14 S.E.C. 28
(1943); Commonwealth & Southern Corp., 26 S.E.C. 464 (1947); Philadelphia
Co., 28 S.E.C. 35 (1948); contra Middle South Utilities, Inc., 35 S.E.C. 1
(1953). SCANA hereby requests, however, that the Commission authorize SCANA
to retain its interest in [Columbia Bus System] for a period of 2 years
following completion of the Preferred Second Merger and the registration of
SCANA under the Act to allow for an orderly disposition of these assets
consistent with the objectives of the Act within that 2 year period.
On February 24, 2000, the City of Columbia filed a post-order petition with the
Commission seeking clarification of the pre-emptive effect of the Merger Order
on state law in relation to the Columbia Bus System. SCANA responded to the
petition with, among other things, an undertaking not to assert any pre-emptive
effect of the Merger Order in any proceedings regarding the Columbia Bus System.
Additional filings were made with the Commission in April of 2000.
Because SCANA registered under Section 5 of the Act on February 10, 2000,
the 2 year disposition period granted in the Merger Order will expire on
February 10, 2002. Since the date of the Merger Order, SCANA and SCE&G have
negotiated in good faith with the City of Columbia to resolve this issue and
provide for the orderly disposition referred to in the Merger Order. Recently
significant progress (described below) has been made in this process and this
Application/Declaration seeks authorization of the Commission to extend the time
period for the disposition of the Columbia Bus System for one year until
February 10, 2003.
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In December 2001, negotiations between SCANA and SCE&G on the one hand and
the City of Columbia on the other reached agreement on basic terms for the
transfer of the Columbia Bus System and other properties to the City of Columbia
which were embodied in resolutions passed by the Mayor and City Council
(attached hereto as Exhibit B-1). The basic terms for this disposition are as
follows:
o The City of Columbia will relieve SCE&G of the obligation to provide a
public transit system in Columbia, South Carolina and the assets of
the Columbia Bus System will be transferred to the City of Columbia;
o SCE&G and the City of Columbia will enter into a 30-year electric and
gas franchise;
o SCE&G will pay the City of Columbia for the franchise an initial fee
of $15 million in four quarterly installments beginning at the time of
the transfer of the Columbia Bus System and an addition annual fee of
$2.47 million for the first seven years of the franchise;
o SCE&G will convey 6.98 acres of property currently used in connection
with the transit system as a parking facility for the buses, in a
condition compliant with current state and federal regulations;
o SCE&G will convey the historic Columbia Canal and Hydroelectric Plant
(the "Plant") to the City of Columbia and enter into collateral
agreements regarding the same; and
o SCE&G and the City of Columbia will enter into a new water contract
for withdrawals from Lake Murray for the terms of the electric and gas
franchise.
The completion of this transfer is subject to (i) execution of definitive
agreements between the parties and completion of additional due diligence by the
City of Columbia and (ii) receipt of any necessary approvals from the
Commission, the South Carolina Public Service Commission, and the Federal Energy
Regulatory Commission. Although SCANA and SCE&G intend to proceed as
expeditiously as practicable to complete the transfer, given the time that will
be required to finalize the documentation and for various regulatory agencies to
take action, the Applicant does not expect that the transfer will be completed
on or before February 10, 2002. The Applicant does believe that the interests of
its shareholders and customers as well as the public interest in general will be
best served if the proposed transfer is allowed to proceed in an orderly fashion
and therefore requests that the time period for the disposition of the Columbia
Bus System by SCANA be extended for one year until February 10, 2003. In the
event that the necessary actions are unable to be completed on the terms
outlined above, Applicant will continue to work toward an alternative
disposition. The Applicant undertakes to inform the Commission as to any
material developments relating to this matter, including if and when the
transfer is completed.
In the Merger Order, the Commission effectively approved the disposition of
the Columbia Bus System. Applicant does not believe that the substantive terms
of the transfer require further approval from the Commission. Specifically, the
conveyance of the Plant to the City of Columbia is exempt from the requirement
of the Act for advance Commission approval
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of direct or indirect sales of utility assets by a registered holding company
(Section 12(d) and Rule 44(a)).
To begin with, the value of this Plant is below $5 million, and the
transfer qualifies for the exemption from Commission approval in Rule 44(b).
Rule 44(b) provides an exemption for sales of utility assets in an aggregate
amount of up to $5 million in a one year period, as long as the acquisition of
the assets is also exempt. Applicant notes that the disposition of the Plant is
part of an overall settlement arrangement and the consideration for the
disposition of this particular asset as part of the whole settlement cannot be
measured in a specific dollar amount. As a result, the Applicant believes the
value of the Plant is the relevant measure to determine whether the disposition
qualifies for the Rule 44(b) exemption. As of December 31, 2001, the net value
of the Plant on SCE&G's books was $2,747,004.16. Applicant believes that the net
book value of the Plant is the correct measure of the value of the asset being
transferred, because this amount is reflected in SCE&G's cost of service as
reviewed by the South Carolina Public Service Commission, and the book value
should equal or exceed fair market value./1/ It should be noted that the
acquisition of the Plant by the City of Columbia is exempt from prior approval
requirements under the Act because the City is exempt from all provisions of the
Act under Section 2(c) thereof./2/
Even if the value of the Plant is not viewed as equivalent to the amount of
the sale, Applicant believes that both technically and from a policy perspective
Commission approval for the disposition of this Plant is not required. First,
under Section 12(d) as implemented under Rule 44(a), Commission approval is
required for a registered system to sell utility assets to any "person" as
defined in the Act. Because the City of Columbia, as a political subdivision, is
not a company or individual (as person is defined in the Act), and, as noted
above, is exempt from all provisions of the Act (including Section 2(a))
pursuant to Section 2(c), approval is technically not required./3/ Moreover, the
purpose of Section 12(d) and Rule 44(a) is "to prevent piecemeal evasion of the
reorganization safeguards set up in section 11 and to prevent the sacrifice of
the investors' equity"./4/ The transfer of the Plant to the City of Columbia is
consistent with the purpose of Section 12(d) and Rule 44 both because it is part
of the overall plan to divest a non-retainable business as required by Section
11 and because the value of the plant is such that the transfer will not have a
material adverse impact on investors' equity in SCANA
Additionally, none of the conveyance of the property used for bus
parking facilities, the granting of a new franchise and payment of franchise
fees, and the execution of the related collateral agreements constitute sales of
securities or utility assets, or the entry into a new line of
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1 SCE&G did receive an offer to purchase the Plant from an unaffiliated party
4-5 years ago and that offer was below the book value of the Plant at that
time.
2 The Commission has previously treated city or municipal governments as
exempt under Section 2(c). See, Louis Dreyfus Electric Power, SEC No-Action
Letter (April 8, 1996); LG&E Energy Corp., SEC No-Action Letter (July 13,
1998).
3 Applicant notes that in an older precedent under the Act, the Ninth Circuit
held in the context of a sale pursuant to a Section 11(b) divestiture order
over which the Commission has jurisdiction pursuant to 44(c) that a sale to
a public utility district that arguably qualified as a Section 2(c) exempt
entity was still subject to the Commission's authority. Public Utility
District No. 1 v. SEC, 195 F.2d 727 (9th Cir. 1952). Applicant believes
that this precedent does not apply to the case at hand since the 1952 case
involved a registered company subject to a Section 11(b) order and Rule
44(c) states that no registered holding company may sell any assets
pursuant to a Section 11(b) order without notifying the Commission and
giving the Commission the opportunity to require an application be filed.
Because Applicant is not subject to a Section 11(b) order from the
Commission, Rule 44(c) is applicable.
4 Holding Co. Act Release No. 25668 (Nov. 4, 1992).
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business by the SCANA holding company system. Therefore, no further Commission
approval is required.
B. Update regarding Palmetto Lime
In the Merger Order, the Commission reserved jurisdiction over SCANA's
retention of a 49% membership interest in Palmetto Lime L.L.C. ("Palmetto
Lime"). Palmetto Lime is engaged in the sale of lime, including to SCANA utility
subsidiaries which use the lime for environmental remediation and energy-related
activities. SCANA would like to inform the Commission that it has recently
entered into negotiations for the sale of SCANA's ownership interest in Palmetto
Lime such that, upon consummation of the sale, Palmetto Lime will not longer be
part of the SCANA holding company system. SCANA's utility subsidiaries will
continue to purchase lime for environmental remediation and are expected to
enter into a 10-year supply agreement with the purchaser of Palmetto Lime for
their current and potential lime requirements. SCANA will further inform the
Commission if this sale is consummated.
ITEM 2. FEES, COMMISSIONS AND EXPENSES
The fees, commissions and expenses of the Applicants are expected to be
paid or incurred, directly or indirectly, in connection with the transactions
described above are estimated as follows:
Legal fees..................................$15,000
Miscellaneous............................... $5,000
Total.......................................$20,000
ITEM 3. APPLICABLE STATUTORY PROVISIONS
Sections 11(b)(i) and 12(d) of the Act and Rule 44 promulgated thereunder
are considered applicable to the proposed transactions. To the extent that the
proposed transaction is considered by the Commission to require authorization,
approval or exemption under any section of the Act or provision of rules or
regulations other than those specifically referred to herein, request for such
authorization, approval or exemption is hereby made.
ITEM 4. REGULATORY APPROVALS
The approval of the South Carolina Public Service Commission is required
for the transfer of the Columbia Bus System and the Plant, and the grant of the
30 year franchise by the City of Columbia to SCANA. The transfer of the Plant
must also be approved by the Federal Energy Regulatory Commission.
No other state or federal commission other than the Commission has
jurisdiction with respect to any of the proposed transactions described in this
Application-Declaration.
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ITEM 5. PROCEDURE
The notice issued by the Commission in connection with the original
Application/Declaration on August 31, 1999 (Holding Co. Act Release No. 27071)
included notice that SCANA held interests in the Columbia Bus System and
Palmetto Lime. As noted above, the specific terms of the transfer of the
Columbia Bus System do not require Commission approval, nor does the lifting of
a reservation of jurisdiction. Therefore, the Applicants do not believe that
further notice is required prior to granting an order pursuant to this
Application/Declaration.
The request for clarification filed by the City of Columbia after the
Merger Order was issued relates solely to the legal issue of pre-emption, which
is mooted by SCANA's undertaking regarding pre-emption described above and by
the subject matter of this Application/Declaration (as it would transfer of
assets in question, the Columbia Bus System, to the City of Columbia). The City
of Columbia's request for clarification therefore should not be treated as a
formal intervention for purposes of issuing any order pursuant hereto.
The Applicant respectfully requests that appropriate and timely action be
taken by the Commission in this matter. No recommended decision by a hearing
officer or other responsible officer of the Commission is necessary or required
in this matter. The Division of Investment Management of the Commission may
assist in the preparation of the Commission's decision in this matter. There
should be no thirty-day waiting period between the issuance and effective date
of any order issued by the Commission in this matter, and it is respectfully
requested that any such order be made effective immediately upon the entry
thereof.
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS
a) Exhibits
Exhibit No. Description of Exhibit
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B-1 Resolution of the Mayor and City Counsel of the
City of Columbia
F-1 Opinion of Counsel
F-2 "Past Tense" Opinion of Counsel (to be filed by
amendment)
ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS
None of the matters that are the subject of this Application-Declaration
involve a "major federal action" nor do they "significantly affect the quality
of the human environment" as those terms are used in Section 102(2)(C) of the
National Environmental Policy Act. None of the proposed transactions that are
the subject of this Application-Declaration will result in changes in the
operation of the Applicants that will have an impact on the environment. The
Applicants are not aware of any federal agency which has prepared or is
preparing an environmental impact statement with respect to the transactions
proposed herein.
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SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act of
1935, the Applicants have duly caused this Application-Declaration to be signed
on their behalf by the undersigned thereunto duly authorized.
Dated: January 22, 2002
SCANA CORPORATION
By: /s/ H. Thomas Arthur
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Name: H. Thomas Arthur
Title: Senior Vice President and
General Counsel
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CERTIFICATE OF SERVICE
I, Sheri E. Bloomberg, hereby certify that I have this day served a true
and correct copy of this Application/Declaration by United States mail to:
James. S. Meggs, Esq.
Office of the City Attorney
P.O. Box 667
Columbia, S.C. 29202
Robert C. McDairmid
Daniel I. Davidson
William S. Huang
Spiegel & McDairmid
1350 New York Avenue, N.W.
Suite 1100 Washington, D.C. 20005-4798
This 22nd day of January, 2002
/s/ Sheri E. Bloomberg
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Sheri E. Bloomberg
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
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