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Foreign Utility Investments are Questioned

Fortnightly Magazine - October 15 1997

Campaign for a Prosperous Georgia has asked the United States Court of Appeals for the Eleventh Circuit to reconsider and vacate orders by the Securities and Exchange Commission allowing Southern Co. to move forward with investments in foreign companies.

CPG claims that the SEC should have denied the utility's request to acquire foreign utilities using financing and guarantees of more than 50 percent of retained earnings. The company claimed that such acquisitions violate "safe harbor" limits. The filing points to the recent agreement by Southern Co. to buy an additional portion of Consolidated Electric Power Asia for $646 million, making Southern Co. the 99.9 percent owner of CEPA. The utility had acquired an 80-percent interest in January for $2.1 billion.

CPG in its filing alleged that Southern Co.'s foreign investment could harm domestic utility operations. CPG also referred to the announcement by Great Britain's Labour government that it would levy a one-time windfall tax on privatized utilities, including South Western Electricity. Southern owns 75 percent of South Western, and has said its liability under the tax is about $160 million.

Lori A. Burkhart is an associate legal editor with PUBLIC UTILITIES FORTNIGHTLY.


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