Long Island Lighting Co. ("LILCO")Feb. 19, 1980 INQUIRY LETTER 1LONG ISLAND LIGHTING COMPANY 250 OLD COUNTRY ROAD MINEOLA, NEW YORK 11501 January 09, 1980 Securities and Exchange Commission 500 North Capitol Street, N.W. Washington, D.C. 20549 Attention: Mr. David Kane Acting Branch Chief Re: Proposal Submitted by George M. Byers for Inclusion in the Proxy Statement for the 1980 Annual Meeting Gentlemen: George M. Byers, 23 Charleston Drive, Huntington, New York 11743, the owner of 73 shares of the Companys Common Stock, has requested that the Company include a proposal and supporting statement in its Proxy Statement for the 1980 Annual Meeting. Long Island Lighting Company intends to omit Mr. Byers proposal and supporting statement from its proxy solicitation materials for the 1980 Annual Meeting. The required five copies of the proposal, of the statement in support and of this statement setting forth the reasons why the omission of the proposal is proper are filed herewith. The proposal submitted by Mr. Byers with respect to undergrounding of transmission facilities is directed at two areas of the business operations of an electric utility: reliability of service, and maintenance and improvement of transmission and distribution facilities. We think it clear that both of these matters are not properly the concern of shareholders since they are within the ordinary course of an electric utility business. (Rule 14a-8(c)(7)). The management of every public utility must constantly strive to maintain what it considers to be a reliable level of service. What constitutes a satisfactory level of reliability, and the ultimate means and cost of achieving that level once it is determined, are clearly management questions not subject to shareholder approval. Both of these questions have been considered by the Company, and are presently being resolved through an ongoing program involving replacement of primary wire with heavier, impact resistant "tree-wire," the use of infrared scanning devices in mobile units to detect defective overhead lines, and the undergrounding of utility cable in those situations where this is practical, e.g., when underground construction work and installation or replacement of electrical lines coincides. Mr. Byers proposal is, of course, an alternate and much more expensive method of increasing reliability of service. The supposed advantages of undergrounding are not entirely certain either. The experience of undergrounding has shown that fewer outages occur, but they last much longer. The Company believes that such decisions as to the wisdom of alternate means of achieving an acceptable level of reliability of service or maintaining capital equipment are within the ordinary course of business of an electric utility. Mr. Byers proposal should also be excluded because a complete undergrounding of all existing transmission and distribution lines as suggested in the proposal is a practical impossibility for the Company and therefore beyond the power of the Company to effectuate (Rule 14a-8(c)(6)). This Company is subject to the jurisdiction of the Public Service Commission of the State of New York (the Commission). In Case 25352 before the Commission, extensive hearings were held on the matter of undergrounding. With respect to installation of new electric distribution and transmission facilities, statutory provisions and administrative rules and regulations have been adopted. (See attached copies of New York Public Service Law, Article VII, 47 McKinney (Supp. 1979); 16 NYCRR, Parts 100, 101, 102). No final order was rendered, however, with respect to existing facilities. Any such project relating to existing lines would also require the involvement of many local government units whose decisions are not binding upon each other. In many instances private homeowners and business would be required to pay substantial fees for installation of electrical connections to the new distribution lines. Even though the Commission has not chosen to render a decision as to undergrounding existing lines, such a project by the Company would require involvement by the Commission, consent and cooperation of local governing bodies in the service territory, and some means of assuring that costs attributable to new connections for individual, or groups of customers, will be paid directly by those persons benefited. In short, the diversity of local authorities having jurisdiction over this project, the tremendous number of consents required from public and private landowners and the Companys inability to compel monetary contributions from customers for new hookups, makes implementation of Mr. Byers proposal a practical impossibility. Mr. Byers statement in support is also somewhat ambiguous when viewed in conjunction with the proposal itself. In Clause 5 he states "It is suggested that the Board consider funding the cost of constructing a reliable underground power distribution service over a period ranging from 20 to 30 years." It should be obvious from the preceding discussions that the Company has in the past considered, and is now continuing to consider the problems and solutions which Mr. Byers has described. If this is the real thrust of his proposal, we submit that the proposal is moot and should be omitted from the Companys Proxy Statement under Rule 14a-8(c)(10). For the foregoing reasons, the Company proposes to omit Mr. Byers proposal. The Company plans to file the preliminary proxy materials for its 1980 Annual Meeting on February 28, 1980. Very truly yours, John J. Kearney, Jr. Secretary JJK:ja Enclosures cc: Mr. George M. Byers INQUIRY LETTER 2GEORGE M. BYERS E23 CHARLESTON DRIVE HUNTINGTON, NEW YORK 11743 Charles R. Pierce Chairman of the Board Long Island Lighting Company 250 Old Country Road Mineola, New York 11501 Dear Mr. Pierce: As a Common Stockholder of record, I request that the following proposal be included in the 1980 "Notice of Annual Meeting of Stockholders and Proxy Statement." It will be presented at the meeting. Resolved: That the stockholders of Long Island Lighting Company, assembled in annual meeting in person and by proxy, hereby recommend to the Board of Directors to take the necessary steps to introduce a long term program of burying all the power lines in our service area starting in 1981 and finishing in the year 2011. Reasons:1. In the past twenty-five years, the Companys service area of approximately 1200 square miles on Long Island has changed from a rural to an urban community. The population has increased from about one million to three million people. 2. Regardless of the seasons, ice, sleet, snow, wind, rain, out of control motor vehicles, and falling aircraft damage LILCOs electrical system causing massive destruction of whole sections of overhead lines involving thousands of individual outages. 3. "Newsdays" article of Monday, August 13, 1979, reports, "The sporadic outages, which a LILCO spokeswoman said were routine for a rainy and windy day, lasted only a short time in most cases." 4. It is the Boards obligation to stop this chaotic routine which lasted much longer than this press release would lead you to believe. 5. It is suggested that the Board consider funding the cost of constructing a reliable undergrounding power distribution service over a period ranging from 20 to 30 years. Cordially, George M. Byers GMB:me cc: W.E. Morley certified Mail STAFF REPLY LETTERFEBRUARY 19, 1980 John J. Kearney, Jr. Long Island Lighting Company 250 Old Country Road Mineola, New York 11501 Re: Long Island Lighting Company Dear Mr. Kearney: This is in regard to your letter dated January 9, 1980, which was received by the Commission on January 10, 1980, concerning a request made of Long Island Lighting Company (the "Company") by George M. Byers to include a shareholder proposal in the Companys proxy soliciting material for the 1980 annual meeting of security holders. Pursuant to Rule 14a-8(d) under the Securities Exchange Act of 1934, your letter indicated the managements intention to exclude this proposal from the Companys proxy material. The proposal, as submitted by the proponent, reads as follows: Resolved: That the stockholders of Long Island Lighting Company, assembled in annual meeting in person and by proxy, hereby recommend to the Board of Directors to take the necessary steps to introduce a long term program of burying all the power lines in our service area starting in 1981 and finishing in the year 2011. In your letter you have expressed the opinion that the proposal is excludable from the Companys proxy material under paragraphs (c)(7), (c)(6), and (c)(10) of Rule 14a-8, and you cite certain reasons in support of that opinion. There appears to be some basis for your opinion that the proposal may be omitted from the Companys proxy material under Rule 14a-8(c)(7), since the proposal deals with a matter relating to the conduct of the ordinary business operations of the issuer (i.e., burying (or "undergrounding") an electric utility companys transmission wires). Under the circumstances, this Division will not recommend any enforcement action to the Commission if the management omits the subject proposal from the Companys proxy material. In considering our enforcement alternatives, we have not found it necessary to reach the alternative bases for omission upon which you rely. As you may be aware, this Division believes its responsibility with respect to matters arising under Rule 14a-8, as with other matters under the proxy rules, is to aid those who must comply with these requirements by offering informal advice and suggestions and to determine, initially, whether it may be appropriate in a particular matter to recommend enforcement action to the Commission. In this context, we have reviewed the materials which you have furnished to us. The enforcement judgment the staff has reached does not and cannot purport to "adjudicate" the merits of the Companys posture in this matter. Only a district court can decide whether the Company is obligated to include the instant proposal in its proxy materials. Accordingly our discretionary determination not to recommend enforcement action to the Commission does not preclude the proponent, or any shareholder of the Company, from pursuing any rights he may have against the Company in a district court, should the management omit this proposal from the Companys proxy material. Sincerely, William E. Morley Special Counsel cc: George M. Byers 23 Charleston Drive Huntington, New York 11743 |
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