File No. 070-10128
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM U-1/A
POST-EFFECTIVE AMENDMENT NO. 4
TO
APPLICATION/DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
CenterPoint Energy, Inc.
1111 Louisiana
Houston, Texas 77002
Utility Holding, LLC
200 West Ninth Street Plaza
Suite 411
Wilmington, Delaware 19801
CenterPoint Energy Houston Electric, LLC
1111 Louisiana
Houston, Texas 77002
(Name of companies filing this statement and address of
principal executive offices)
CenterPoint Energy, Inc.
1111 Louisiana
Houston, Texas 77002
(Name of top registered holding company parent of each applicant or declarant)
Rufus S. Scott
Vice President, Deputy General Counsel and Assistant Corporate Secretary
CenterPoint Energy, Inc.
1111 Louisiana
Houston, Texas 77002
(713) 207-7451
The Commission is also requested to send copies
of any communications in connection with this matter to:
James R. Doty, Esq. Margo S. Scholin, Esq.
Joanne C. Rutkowski, Esq. Baker Botts L.L.P.
Baker Botts L.L.P. 3000 One Shell Plaza
The Warner Houston, Texas 77002-4995
1299 Pennsylvania Avenue, N.W. (713) 229-1234
Washington, D.C. 20004-2400
(202) 639-7700
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
From time to time, we make statements concerning our
expectations, beliefs, plans, objectives, goals, strategies, future events or
performance and underlying assumptions and other statements, that are not
historical facts. These statements are "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Actual results
may differ materially from those expressed or implied by these statements. You
can generally identify our forward-looking statements by the words
"contemplate," "may," "propose," "should," "will," "would" or other similar
words.
We have based our forward-looking statements on our
management's beliefs and assumptions based on information available to our
management at the time the statements are made. We caution you that assumptions,
beliefs, expectations, intentions and projections about future events may and
often do vary materially from actual results. Therefore, we cannot assure you
that actual results will not differ materially from those expressed or implied
by our forward-looking statements.
The following are some of the factors that could cause actual
results to differ materially from those expressed or implied in forward-looking
statements:
o state and federal legislative and regulatory actions or
developments, including deregulation, re-regulation and
restructuring of the electric utility industry, constraints
placed on our activities or business by the Public Utility
Holding Company Act of 1935 (the "1935 Act" or the "Act"),
changes in or application of laws applicable to other aspects of
our business with respect to:
o recovery of stranded costs;
o allowed rates of return;
o rate structures;
o recovery of investments; and
o operation and construction of facilities;
o changes in business strategy or development plans;
o changes in interest rates or rates of inflation;
o unanticipated changes in operating expenses and capital
expenditures;
o commercial bank and financial market conditions, our access to
capital, the cost of such capital, receipt of certain approvals
under the 1935 Act, and the results of our financing and
refinancing efforts, including availability of funds in the debt
capital markets;
o actions by rating agencies; and
o other factors we discuss under "Risk Factors" beginning on page
59 in Item 5 of Part II of the Quarterly Report of CenterPoint on
Form 10-Q for the period ended June 30, 2003 and in Exhibit 99.1
of CenterPoint Energy, Inc.'s Current Report on Form 8-K dated
May 12, 2003, including those outlined under "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" and in this Form U-1, as amended.
The reader should not place undue reliance on forward-looking
statements. Each forward-looking statement speaks only as of the date of the
particular statement, and we undertake no obligation to publicly update or
revise any forward-looking statements.
TABLE OF CONTENTS
PAGE
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ITEM 1. DESCRIPTION OF POSSIBLE TRANSACTION.................................1
A. Requested Authorization........................................1
B. Background.....................................................1
ITEM 2. FEES, COMMISSIONS AND EXPENSES......................................3
ITEM 3. APPLICABLE STATUTORY PROVISIONS.....................................3
A. Applicable Provisions..........................................3
B. Rule 54 Analysis...............................................4
ITEM 4. REGULATORY APPROVAL.................................................4
ITEM 5. PROCEDURE...........................................................4
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS...................................5
A. Exhibits.......................................................5
B. Financial Statements...........................................5
ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS.............................6
ITEM 1. DESCRIPTION OF POSSIBLE TRANSACTION
A. Requested Authorization
CenterPoint Energy, Inc. ("CenterPoint"), Utility Holding, LLC
and CenterPoint Energy Houston Electric, LLC (the "T&D Utility") (together, the
"Applicants") hereby file this Post-Effective Amendment No. 4, amending and
restating Post-Effective Amendment No. 2. The Applicants are asking the
Commission to modify the authority granted under the order dated June 30, 2003
(HCAR No. 27692 (the "Omnibus Financing Order")) as supplemented by the order
dated August 1, 2003 (HCAR No. 27705 (the "Supplemental Order")). Those orders
authorized the T&D Utility to issue up to $500 million in incremental external
debt securities through June 30, 2005 (the "Authorization Period") such that the
amount of T&D Utility external debt does not exceed $3.603 billion at any one
time outstanding during the Authorization Period. The T&D Utility has issued
$300 million of debt securities pursuant to such authority as described below.
Applicants ask the Commission to modify this existing
authority to permit the T&D Utility to issue an additional $300 million in
incremental external debt securities during the Authorization Period, such that
the amount of T&D Utility external debt will not exceed $3.903 billion at any
one time outstanding during the Authorization Period.
It is contemplated that approximately $50 million of the
requested additional authorization may be necessary to permit the refunding of
outstanding tax-exempt debt, as contemplated by the Omnibus Financing Order.
Applicants seek current authority only with respect to that amount. They ask the
Commission to reserve jurisdiction over the remainder of the requested
additional authority, pending completion of the record.
B. Background
1. Existing Authority
The Omnibus Financing Order authorized CenterPoint and its
Subsidiaries to engage in certain financing and related transactions during the
Authorization Period.(1) Of interest here, the Omnibus Financing Order as
supplemented by the Supplemental Order authorized the T&D Utility to issue up to
$500 million in incremental external debt securities during the Authorization
Period, and to enter into obligations with respect to tax-exempt debt issued on
its behalf by governmental authorities in connection with the refunding of
outstanding tax-exempt debt assumed by CenterPoint in connection with the
Electric Restructuring.
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(1) The term "Subsidiaries" refers to each direct or indirect subsidiary
company of CenterPoint as listed on the cover page hereto, as well as any direct
or indirect subsidiary companies that CenterPoint may form with the approval of
the Commission or in reliance on rules or statutory exemptions.
On September 9, 2003, the T&D Utility issued $300 million of
external debt securities, and so has remaining authority to issue up to $200
million in incremental external debt securities during the Authorization
Period.(2)
2. Tax-Exempt Debt Refundings
Prior to the August 31, 2002 restructuring (the "Electric
Restructuring") by which CenterPoint and Utility Holding, LLC became holding
companies for the T&D Utility, Reliant Energy, Incorporated (and its predecessor
companies, known variously as Houston Industries Incorporated and Houston
Lighting & Power Company) (together, the "vertically-integrated utility" or
"utility") had entered into agreements with certain governmental authorities
(the "Authorities") for the issuance of pollution control bonds by those
Authorities. Under these agreements, the proceeds of bonds issued by the
Authorities were used by the vertically-integrated utility to finance qualifying
pollution control facilities used in its business or to refund bonds previously
issued for that purpose. The vertically-integrated utility committed to make
payments to support and retire the bonds issued by the Authorities. In some
cases, the obligations were insured by third party insurers and/or secured by
mortgage bonds issued by the utility.
In connection with the Electric Restructuring, (i) CenterPoint
assumed the installment payment obligations of the vertically-integrated
utility;(3) (ii) the mortgage bonds that secured certain of these obligations
remained with the T&D Utility as corporate successor to the
vertically-integrated utility; and (iii) the T&D Utility issued promissory notes
payable to CenterPoint with payment terms equivalent to CenterPoint's
installment payment obligations for each series of secured bonds.
Certain of these currently outstanding revenue refunding bonds
are or soon will become callable. The Applicants believe, on the basis of
currently available information, including current interest rates and other
factors, that it would be in the best interest of the T&D Utility to cause some
or all of these revenue refunding bonds to be refunded prior to their maturity.
In connection with any refunding, the T&D Utility would request the relevant
Authorities to issue new series of revenue refunding bonds, the proceeds of
which would
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(2) The proceeds from the $300 million T&D Utility debt issuance were
used to repay intrasystem borrowings and obligations in connection with the
refinancing of CenterPoint's obligations under its $3.85 billion credit facility
(the "CenterPoint Facility"). As noted in the Supplemental Order, the
transactions associated with the refinancing of the CenterPoint Facility did
"not increase the overall amount of debt or adversely affect the capital
structure of any entity of the CenterPoint System as a whole."
Thereafter, on October 7, 2003, CenterPoint replaced the CenterPoint Facility
with a three-year facility composed of a revolving credit facility of $1.4
billion funded by a 12-bank syndicate and a $925 million term loan from
institutional investors. The new facility matures on October 7, 2006. Borrowings
under the revolver bear interest based on LIBOR rates under a pricing grid tied
to CenterPoint's credit ratings. At CenterPoint's current ratings, the interest
rate for borrowings under the revolver is LIBOR plus 300 basis points. The
interest rate for borrowings under the term loan is LIBOR plus 350 basis points.
(3) These obligations migrated to CenterPoint under the terms of the
relevant agreements.
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ultimately be used to redeem up to approximately $250 million of revenue
refunding bonds supported by CenterPoint installment payment obligations. The
new series of refunding bonds would be issued by the applicable governmental
Authority on behalf of the T&D Utility, and supported by credit support in the
form of (i) T&D Utility installment payment obligations, (ii) possibly, separate
series of T&D Utility first mortgage bonds or general mortgage bonds and,
possibly, (iii) bond insurance. As noted above, the T&D Utility has outstanding
promissory notes payable to CenterPoint for each series of outstanding bonds.
The proceeds of the new series of refunding bonds would be used to redeem the
bonds that are being refunded. The associated intercompany notes owed to
CenterPoint would be "deemed paid" when the old revenue refunding bonds are
redeemed. In addition, the redemption of the old bonds would result in a
corresponding satisfaction of the related series of currently outstanding
mortgage bonds.
The precise amount of costs will not be known until the
refinancing is complete but the fees and terms and conditions of the refinancing
will comply with the terms and conditions established in the Omnibus Financing
Order. Among other things, Applicants would continue to comply with the
investment grade and equity capitalization criteria set forth therein.(4)
3. Reservation of Jurisdiction
Although Applicants currently anticipate an immediate possible
need for only approximately $50 million of the requested incremental authority,
they ask the Commission to notice the full amount of the request and to reserve
jurisdiction over the requested incremental authority in excess of that needed
to complete the above-described refunding transactions. Applicants would seek a
release of jurisdiction to the extent additional authority may be required,
either for use in connection with additional refundings or new financing
transactions. It is contemplated that any such request would be subject to the
investment grade and equity capitalization criteria and other terms and
conditions as set forth in the Omnibus Financing Order.
ITEM 2. FEES, COMMISSIONS AND EXPENSES.
The fees, commissions and expenses paid or incurred or to be
incurred in connection with this Amendment are estimated to be $20,000, plus the
fees paid in connection with the proposed refunding transactions.
ITEM 3. APPLICABLE STATUTORY PROVISIONS.
A. Applicable Provisions
Sections 6(a) and 7 of the Act and Rule 54 thereunder are
considered applicable to the proposed transactions. To the extent that the
proposed transactions are considered by the Commission to require
authorizations, exemption or approval under any section of the Act or the
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(4) In particular, the T&D Utility would continue to maintain a minimum of
30% common equity, as required by the Omnibus Financing Order.
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rules and regulations thereunder other than those set forth above, request for
such authorization, exemption or approval is hereby made.
B. RULE 54 ANALYSIS.
The proposed transactions are subject to Rule 54 under the
Act, which refers to Rule 53. Rule 54 under the Act provides that in determining
whether to approve certain transactions other than those involving exempt
wholesale generators ("EWGs") or foreign utility companies ("FUCOs"), as defined
in the Act, the Commission will not consider the effect of the capitalization or
earnings of any Subsidiary which is an EWG or FUCO if Rule 53(a), (b) and (c)
under the Act are satisfied.
As a result of the Restructuring authorized in the order dated
July 5, 2002 (HCAR No. 27548 (the "July Order")) (as such term is defined in the
July Order), CenterPoint had negative retained earnings as of December 31, 2002.
Thus, although CenterPoint's aggregate investment (as defined in Rule
53(a)(1)(i) under the Act), in EWGs and FUCOs as of December 31, 2002 was
approximately $8 million, the Company is not currently in compliance with the
requirements of Rule 53(a)(1) under the Act. As previously explained,
CenterPoint is attempting to dispose of its remaining interests in EWGs and
FUCOs and is not planning to invest any more monies in those businesses.(5)
CenterPoint complies with, and will continue to comply with,
the record-keeping requirements of Rule 53(a)(2) under the Act, the limitation
under Rule 53(a)(3) under the Act on the use of domestic public-utility company
personnel to render services to EWGs and FUCOs, and the requirements of Rule
53(a)(4) under the Act concerning the submission of copies of certain filings
under the Act to retail regulatory commissions. Further, none of the
circumstances described in Rule 53(b) under the Act has occurred or is
continuing. Rule 53(c) under the Act is by its terms inapplicable to the
transactions proposed herein that do not involve the issue and sale of
securities (including guarantees) to finance an acquisition of an EWG or FUCO.
ITEM 4. REGULATORY APPROVAL.
No state or federal commission other than the Commission has
jurisdiction with respect to any of the proposed transactions described in this
Amendment.
ITEM 5. PROCEDURE.
The Applicants request that the Commission's order be issued
as soon as possible, and that there should not be a 30-day waiting period
between issuance of the Commission's order and the date on which the order is to
become effective. The Applicants hereby waive a recommended decision by a
hearing officer or any other responsible officer of the Commission and consent
that the Division of Investment Management may assist in the preparation of the
Commission's decision and/or order, unless the Division opposes the matters
proposed herein.
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(5) CenterPoint is seeking to qualify Texas Genco as an EWG but does not
intend to seek any financing authority in connection therewith.
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ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS.
A. EXHIBITS.
G-1 Principal amount of external debt and trust preferred securities of
CenterPoint and its Subsidiaries as of September 9, 2003 (incorporated by
reference to CenterPoint's Current Report on Form 8-K filed September 18, 2003).
G-2 Description of Subject Securities (filed in connection herewith with a
request for confidential treatment).
H-1 Form of Notice (previously filed).
B. FINANCIAL STATEMENTS.
FS-2 Consolidated Balance Sheets of CenterPoint as of June 30, 2003 (unaudited)
and Statements of Consolidated Income and Statements of Consolidated Cash Flows
for the nine months ended September June 30, 2003 (unaudited) (incorporated by
reference to CenterPoint's Quarterly Report on Form 10-Q for the three months
ended September 30, 2003 (File No. 1-31447)).
FS-3 Consolidated Balance Sheets of CenterPoint as of December 31, 2002, and
Statements of Consolidated Operations, Statements of Consolidated Comprehensive
Income and Statements of Consolidated Cash Flows for the year ended December 31,
2002 (incorporated by reference to the Current Report of CenterPoint on Form 8-K
dated as of May 12, 2003 (File No. 1-31447)).
FS-5 Consolidated Balance Sheets of CenterPoint Energy Houston Electric, LLC as
of September 30, 2003 (unaudited) and Statements of Consolidated Income and
Statements of Consolidated Cash Flows for the nine months ended September 30,
2003 (unaudited) (incorporated by reference to CenterPoint Energy Houston
Electric, LLC's Quarterly Report on Form 10-Q for the three months ended
September 30, 2003 (File No. 1-03187)).
FS-6 Consolidated Balance Sheets of CenterPoint Energy Houston Electric, LLC as
of December 31, 2002 and Statements of Consolidated Income, Statements of
Consolidated Comprehensive Income and Statements of Consolidated Cash Flows for
the year ended December 31, 2002 (incorporated by reference to the Current
Report of CenterPoint Energy Houston Electric, LLC on Form 8-K dated as of May
15, 2003 (File No. 1-03187)).
FS-13 CenterPoint consolidated financials (forecasts through 2007) (filed in
connection herewith with a request for confidential treatment).
FS-14 CenterPoint Energy Houston Electric, LLC financials (forecasts through
2007) (filed in connection herewith with a request for confidential treatment).
FS-18 CenterPoint equity percentages (forecasts through 2007) (filed in
connection herewith with a request for confidential treatment).
FS-19 CenterPoint Energy Houston Electric, LLC equity percentages (forecasts
through 2007) (filed in connection herewith with a request for confidential
treatment).
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ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS
The proposed transaction involves neither a "major federal
action" nor "significantly affects the quality of the human environment" as
those terms are used in Section 102(2)(C) of the National Environmental Policy
Act, 42 U.S.C. Sec. 4321 et seq. No federal agency is preparing an environmental
impact statement with respect to this matter.
SIGNATURE
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, as amended, the Applicants have duly caused this Amendment
to be signed on their behalf by the undersigned thereunto duly authorized.
Date: November 24, 2003
CENTERPOINT ENERGY, INC.
and its Subsidiaries
By: /s/ Rufus S. Scott
--------------------------------------
Rufus S. Scott
Vice President, Deputy General Counsel and Assistant
Corporate Secretary CenterPoint Energy, Inc.
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