What Is SEC Form U-7D?

SEC form U-7D is a document that must be filed when a utility holding company leases a utility facility to an operating public utility company. It is a required filing by the Securities and Exchange Commission (SEC).

Key Takeaways

  • SEC Form U-7D must be filed after the execution of any lease of a utility facility to an operating public utility company.
  • The Form is pursuant to Rules 7(d), 21, and 22 under the Public Utility Holding Act of 1935.
  • Form U-7D must be filed in triplicate within 30 days of execution of an applicable lease.

Understanding SEC Form U-7D

Form U-7D is required by rule 7(d) of the Public Utility Holding Company Act of 1935. The Public Utility Holding Company Act was put into effect to protect the public and investors from the oligopoly created by the small number of utilities holding companies that owned and operated a large majority of the country's utility companies.

Three copies of the form must be filed within 30 days of lease execution. Holding companies that do not do so are in violation of the Public Utility Holding Company Act of 1935. 

SEC form U-7D is essentially a certificate that summarizes the leasing arrangements. The SEC Form U-7D contains a breakdown of the cost of the facility, as well as financing terms and a description of the facility itself. The term of the lease must also be included, and estimations or substitutions can be made if definitive information is not yet available. An amended form must be filed within 30 days if there is a change of name of the entity, a transfer of beneficial interest, or the lease is changed or terminated.

Information Required in Event of a Lease

According to the Form's instructions, the initial term of a lease is to be stated in years from the date the facility is delivered to the lessee or the date fixed in the lease for the purpose of computing rent if it does not differ materially from the delivery date. Lessee’s obligations to make interim payments prior to delivery’ may be disregarded if they are equivalent to interest for the delay. Renewal options, if any, should be summed concisely and remote contingencies may be ignored.

For example, “May be extended for two 5-year periods at lessee’s election” would be sufficient. . The description of the facility should state merely its nature and an indication of its capacity. Such descriptions as the following would be sufficient:

  • Two turbo generators 50,000 kW
  • Two LNG storage tanks 100,000 MCF nuclear fuel assembly

The cost of the facility is the cost to the lessors. If the lease specifies a cost, that figure may be used if it does not differ materially from the lessors’ total expenditures, including borrowed funds. If the lease states a basic rent, that amount may be shown if it does not differ materially from the foregoing. If the basic rent defined in the lease is stated in terms of a percentage of cost, the form should show an amount computed by applying that percentage to the cost shown, whether actual or estimated.