SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM U-1 APPLICATION-DECLARATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
------------------------------
CENTAL POWER AND LIGHT COMPANY
539 North Carancahua Street
Corpus Christi, Texas 78401-2802
PUBLIC SERVICE COMPANY OF OKLAHOMA
212 East Sixth Street
Tulsa, Oklahoma 74119-1212
SOUTHWESTERN ELECTRIC POWER COMPANY
428 Travis Street
Shreveport, Louisiana 71156-0001
WEST TEXAS UTILITIES COMPANY
301 Cypress Street
Abilene, Texas 79601-5820
CENTRAL AND SOUTH WEST SERVICES, INC.
Williams Tower 2
2 West 2nd Street
Tulsa, Oklahoma 74103
(Names of companies filing this statement and addresses
of principal executive offices)
---------------------------
CENTRAL AND SOUTH WEST CORPORATION
(Name of top registered holding company parent)
-----------------------------
Wendy G. Hargus, Treasurer
Central and South West Corporation
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
Joris M. Hogan, Esq.
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005-1413
(Names and addresses of agents for service)
<PAGE>
Central Power and Light Company, Public Service Company of
Oklahoma, Southwestern Electric Power Company and West Texas Utilities Company
(the "Operating Companies"), wholly owned public utility subsidiaries of Central
and South West Corporation ("CSW"), a registered holding company under the
Public Utility Holding Company Act of 1935, as amended (the "Act"), and Central
and South West Services, Inc., a wholly owned subsidiary of CSW that is
authorized to provide services to associate companies pursuant to Section 13(b)
of the Act and rules of the Securities and Exchange Commission (the
"Commission") promulgated thereunder (the "Service Company"), hereby submit for
filing this Application on Form U-1. By this Application, the Operating
Companies seek authority to offer to their customers warranty plans for the
servicing and repair of appliances, in conjunction with one or more unrelated
parties, and to conduct the related activities described herein.
Item 1. Description of Proposed Transactions.
The Operating Companies, directly or through the Service
Company, propose to enter into arrangements with one or more providers of
warranty plans ("Plan Providers") for the servicing and repair of electric and
gas appliances, including kitchen and laundry appliances, heating, ventilation
and air conditioning systems, personal computer systems and home entertainment
video and audio systems (the "Plans") and to offer the Plans to their customers.
All such arrangements would include the following features:
1. The Plans would be offered to customers of the Operating
Company using marketing materials designed by the Operating
Companies (or designed by the Plan Providers and approved by
the Operating Companies) and mailed to customers as billing
inserts, or directly, using the billing and mailing systems of
the Operating Companies.
2. The Plans would be legal obligations of the Plan Providers,
underwritten by such insurance arrangements as the Operating
Companies might require.
3. The Plan Providers would be responsible for responding to
customers' calls for service and for making arrangements with
adequately licensed and insured service contractors to perform
the services covered by the Plans. In certain cases, the
Operating Companies might qualify as service contractors under
the Plans.
4. The Operating Companies would bill customers that enrolled in
the Plans monthly fees for coverages selected by them and
remit the fees to the Plan Providers. The Plan Providers would
either pay a service and administration fee to the Operating
Companies or the Operating Companies would retain such a fee
out of the monthly fees paid by customers. The Operating
Companies would not have any responsibility for ensuring the
payment of the monthly fees by their customers.
It is currently estimated that the Plans could generate gross
revenues to the Operating Companies of $50,000, $980,000 and $1,137,500 during
1997 (assuming a September 1 start-up date), 1998 and 1999 and expenses
(including start-up expenses) during those years of $100,000, $150,000 and
$175,000, respectively.
Rule 54 promulgated under the Act states that in determining
whether to approve the issue or sale of a security by a registered holding
company for purposes other than the acquisition of an exempt wholesale generator
("EWG") or a foreign utility company ("FUCO"), or other transactions by such
registered holding company or its subsidiaries other than with respect to EWGs
or FUCOs, the Commission shall not consider the effect of the capitalization or
earnings of any subsidiary which is an EWG or a FUCO upon the registered holding
company system if Rule 53(a), (b) and (c) are satisfied. As set forth below, all
applicable conditions sent forth in Rule 53(a) are, and, assuming the
consummation of the transactions proposed herein, will be, satisfied and none of
the conditions set forth in Rule 53(b) exist or will exist as a result of the
transactions proposed herein.
Rule 54 under the Act is satisfied because Rules 53(a), (b)
and (c) are satisfied. As of March 31, 1997, CSW has invested approximately
$894.2 million in EWGs and FUCOs or approximately 46% of CSW's "consolidated
retained earnings" of $1,939 million as of the end of its four fiscal quarters
ended March 31, 1997, thus satisfying Rule 53(a)(1). CSW maintains in conformity
with United States generally accepted accounting principles and makes available
the books and records required by Rule 53(a)(2). No more than 2% of the
employees of CSW's operating subsidiaries will, at any one time, directly or
indirectly, render services to an EWG or FUCO in which CSW directly or
indirectly owns an interest, satisfying Rule 53(a)(3). And lastly, CSW will
submit a copy of Item 9 and Exhibits G and H of CSW's Form U5S to each of the
public service commissions having jurisdiction over the retail rates of CSW's
operating utility subsidiaries, satisfying Rule 53(a)(4). None of the conditions
described in Rule 53(b) exist with respect to CSW or any of its subsidiaries,
thereby satisfying said Rule and making Rule 53(c) inapplicable.
Item 2. Fees, Commissions and Expenses.
The estimate of the approximate amount of fees and expenses payable in
connection with the transaction is as follows:
Holding Company Act filing fee $2,000*
Counsel fees
Milbank, Tweed, Hadley & McCloy $3,500
Miscellaneous and incidental
expenses including travel,
telephone and postage 500
------
TOTAL $6,000
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* Actual amount.
Item 3. Applicable Statutory Provisions.
Sections 9(a), 10 and 11(b) of the Act are or may be
applicable to the proposed transactions. To the extent any other sections of the
Act may be applicable to the proposed transactions, the Operating Companies and
the Service Company hereby request appropriate orders thereunder. Section 9(a)
of the Act makes unlawful the acquisition by a subsidiary of a registered
holding company of "any . . . interest in any business" without the prior
approval of the Commission under Section 10 of the Act. Under Section 10(c)(1),
the Commission may not approve the acquisition of any interest in any business
if the proposed acquisition is "detrimental to the carrying out of the
provisions of Section 11" of the Act. Under Section 11(b)(1), the Commission
must limit the operations of a public utility holding company and its
subsidiaries to a single integrated public utility system, and to such other
businesses as are reasonably incidental, or economically necessary or
appropriate, to the operations of such integrated public utility system. The
Commission may permit as reasonably incidental, or economically necessary or
appropriate, to the operations of an integrated public utility system the
retention of an interest in any business (other than the business of a public
utility company as such) which the Commission shall find necessary or
appropriate in the public interest or for the protection of investors or
consumers and not detrimental to the proper functioning of such system.
The Operating Companies believe that the offering of Plans to
their customers will result in enhanced reliability, safety and energy
efficiency of the appliances that consume electric energy furnished by the
Operating Companies. Therefore, the proposed offering of the Plans are closely
related to the core business of the Operating Companies and should easily pass
the "functional relationship" test in respect of Section 11(b) of the Act
enunciated by the Commission in Michigan Consolidated Gas Co., 44 S.E.C. 361
(1970), aff'd, 444 F.2d 913 (D.C. Cir. 1971), and in many orders subsequently
issued. In this connection, it is noted that Rule 58 under the Act exempts from
Section 9(a) of the Act the acquisition by a registered holding company or a
subsidiary thereof of the securities of a company that derives substantially all
of its revenues from the sale of electric and gas appliances and the
installation and servicing thereof, and Rule 48 under the Act provides various
exemptions for the financing by public utility companies, subsidiaries thereof
and associate service companies thereof of purchases (whether from such public
utility companies, associate companies thereof, or from dealers) of standard
electric or gas appliances.
In addition, the Commission has approved various applications
under the Act for authority to offer appliance service warranties: PSI Energy,
Inc., Release No. 35-26412 (November 21, 1995) and Release No. 35-26637
(December 30, 1996), authorizing the sale of appliances furnished by an
unrelated vendor and extended service warranties covering the appliances
purchased, such warranties either to be purchased from such vendor or to be
issued by PSI Energy, Inc. with any warranty work to be performed by the vendor;
Consolidated Natural Gas Company ("CNG"), Release No. 35-26363 (August 28,
1995), authorizing the formation of a new subsidiary to offer to customers of
CNG's local distribution companies and unaffiliated utilities, among other
services, "Appliance Guard", an extended service warranty covering the cost of
repairing customers' appliances, "Routine Furnace Services", routine furnace
inspection and repair, and "One-Package Appliance Inspection and Replacement",
the annual inspection, maintenance or replacement of any appliance, including
hot water heaters); The Columbia Gas System, Inc. ("Columbia"), Release No.
35-26498 (March 25, 1996), authorizing the establishment of one or more direct
or indirect subsidiaries to offer to customers of Columbia's local distribution
companies or other local distribution companies served by Columbia's interstate
natural gas transmission companies, among other services, "Appliance Repair
Warranty", an appliance repair service for customers' heating and air
conditioning systems and major appliances, and "Commercial Equipment Service", a
repair warranty program that would respond to faulty commercial equipment; and
Cinergy Corp., Release No. 35-26662 (February 7, 1997), authorizing the
formation of a new subsidiary, Cinergy Solutions, Inc., to offer, among other
things, energy-related services and products exclusively to residential and
small commercial operators of heating, ventilation and air conditioning and
other energy related household appliances and, in connection therewith or
separately, to offer appliance inspection and repair services and extended
service warranties covering the cost of repairing customers' appliances.
Finally, the Operating Companies believe that their proposed
arrangements with Plan Providers, as described in Item 1 above, are structured
so as to provide prudent limitations on the potential financial risk exposure of
the Operating Companies in respect of the Plans.
Item 4. Regulatory Approval.
Except as noted below in this Item 4, no state regulatory
authority and no federal regulatory authority, other than the Commission under
the Act, have jurisdiction over the proposed transactions. The approvals of the
Arkansas Public Service Commission and the Louisiana Public Service Commission
would be required prior to offering the Plans to customers in those states, and
no offering in either state would be made prior to obtaining the approval of
that state's Commission.
Item 5. Procedure.
It is requested that the Commission issue and publish not
later than July 18, 1997 the requisite notice under Rule 23 with respect to the
filing of this Application, such notice to specify a date not later than August
8, 1997 as the date after which an order granting and permitting this
Application to become effective may be entered by the Commission and the
Commission enter not later than August 9, 1997 an appropriate order granting and
permitting this Application to become effective.
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 the 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.
Exhibit 1 - Preliminary opinion of Milbank, Tweed, Hadley &
McCloy, counsel to PSO.
Exhibit 2 - Final or "Past Tense" opinion of Milbank, Tweed,
Hadley & McCloy, counsel to PSO (to be filed with
Certificate of Notification).
Exhibit 3 - Financial Statements as of March 31, 1997 (to be
filed by Amendment).
Exhibit 4 - Proposed notice of proceeding.
Item 7. Environmental Effects.
The proposed transactions do not involve major Federal action
having a significant effect on the human environment. No Federal agency has
prepared or is preparing an environmental impact statement with respect to the
proposed program.
<PAGE>
S I G N A T U R E
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, as amended, the undersigned company has duly caused this
document to be signed on its behalf by the undersigned thereunto duly
authorized.
Dated: July 14, 1997.
CENTRAL POWER AND LIGHT COMPANY
By:/s/WENDY G. HARGUS
Wendy G. Hargus
Treasurer
PUBLIC SERVICE COMPANY OF OKLAHOMA
By:/s/ WENDY G. HARGUS
Wendy G. Hargus
Treasurer
SOUTHWESTERN ELECTRIC POWER COMPANY
By: /s/ WENDY G. HARGUS
Wendy G. Hargus
Treasurer
WEST TEXAS UTILITIES COMPANY
By: /s/ WENDY G. HARGUS
Wendy G. Hargus
Treasurer
CENTRAL AND SOUTH WEST SERVICES,
INC.
By: /s/ WENDY G. HARGUS
Wendy G. Hargus
Treasurer
<PAGE>
Exhibit Index
Exhibit Transmission
Number Exhibit Method
- ------ ------- -------------
1 Preliminary opinion of
Milbank, Tweed, Hadley &
McCloy, counsel to PSO. Electronic
2 Final or "Past Tense"
opinion of Milbank, Tweed,
Hadley & McCloy, counsel
to PSO (to be filed with
the Certificate of Notification). __
3 Financial Statements as
of March 31, 1997 (to
be filed by amendment). __
4 Proposed notice of
proceeding. Electronic
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, NY 10005
July 14, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Form U-1 Application-Declaration
(File No. 70-_________)
Dear Sirs:
We refer to the Application on Form U-1 (the "Application")
under the Public Utility Holding Company Act of 1935, as amended (the "Act"),
filed by Central Power and Light Company, Public Service Company of Oklahoma,
Southwestern Electric Power Company and West Texas Utilities Company (the
"Operating Companies"), which are wholly owned public utility subsidiaries of
Central and South West Corporation ("CSW"), a registered holding company, and
Central and South West Services, Inc., a wholly owned subsidiary of CSW that is
authorized to provide services to associate companies pursuant to Section 13(b)
of the Act and the rules of the Securities and Exchange Commission (the
"Commission") promulgated thereunder (the "Service Company"). The Application
relates to the proposed offering by the Operating Companies to their customers
of warranty plans for the servicing and repair of appliances, in conjunction
with one or more unrelated parties, and the conduct by the Operating Company and
the Service Company of related activities, all as described in the Application
(the "Transactions"). We have acted as special counsel for the Operating
Companies and the Service Company in connection with the Transactions and, as
such counsel, we are familiar with the corporate proceedings taken and to be
taken by the Operating Companies and the Service Company in connection with the
Transactions.
We have examined originals, or copies certified to our
satisfaction, of such corporate records of the Operating Companies and the
Service Company, certificates of public officials, certificates of officers and
representatives of the Operating Companies and the Service Company and other
documents as we have deemed it necessary to require as a basis for the opinions
hereinafter expressed. In such examination we have assumed the genuineness of
all signatures and the authenticity of all documents submitted to us as
originals and the conformity with the originals of all documents submitted to us
as copies. As to various questions of fact material to such opinions we have,
when relevant facts were not independently established, relied upon certificates
by officers of the Operating Companies and the Service Company and other
appropriate persons and statements contained in the Application.
Based upon the foregoing, and having regard to legal
considerations which we deem relevant, we are of the opinion that, in the event
that the proposed Transactions are consummated in accordance with the
Application, as it may be amended, and subject to the assumptions and conditions
set forth below:
1. All state laws applicable to the proposed
Transactions will have been complied with.
2. The consummation of the proposed Transactions will
not violate the legal rights of the holders of any
securities issued by the Operating Companies or the
Service Company or any associate company thereof.
The opinions expressed above in respect of the Transactions
described in the Application are subject to the following assumptions or
conditions:
a. The Transactions shall have been duly authorized and
approved to the extent required by state law by the
Boards of Directors of the Operating Companies and
the Service Company.
b. The Commission shall have duly entered an appropriate
order or orders granting and permitting the
Application to become effective with respect to the
Transactions described therein.
c. The Transactions shall have been accomplished in
accordance with required approvals, authorizations,
consents, certificates and orders of any state
commission or regulatory authority with respect to
the consummation of the Transactions and all such
required approvals, authorizations, consents,
certificates and orders shall have been obtained and
remain in effect.
d. No act or event other than as described herein shall
have occurred subsequent to the date hereof which
would change the opinions expressed above.
In rendering the opinions hereinabove expressed, we will rely
upon opinions of other counsel to the Operating Companies and the Service
Company who are qualified to practice in jurisdictions pertaining to the
Transactions in which we are not admitted to practice. We do not express any
opinion as to matters governed by any laws other than the Federal laws of the
United States of America, the laws of the State of New York and, to the extent
hereinabove stated, the laws of other jurisdictions pertaining to the
Transactions in reliance upon said opinions of counsel to the Operating
Companies and the Service Company.
We hereby consent to the use of this opinion as an exhibit to
the Application.
Very truly yours,
/s/ MILBANK, TWEED, HADLEY & MCCLOY
Milbank, Tweed, Hadley & McCloy
EXHIBIT 4
SECURITIES AND EXCHANGE COMMISSION
(Release No. 35- )
Filings Under the Public Utility Holding Company Act of 1935 ("Act")
____________, 1997
Notice is hereby given that the following filing(s) has/have
been made with the Commission pursuant to provisions of the Act and rules
promulgated thereunder. All interested persons are referred to the
application(s) and/or declaration(s) for complete statements of the proposed
transaction(s) summarized below. The application(s) and/or declaration(s) and
any amendments thereto is/are available for public inspection through the
Commission's Office of Public Reference.
Interested persons wishing to comment or request a hearing on
the application(s) and/or declaration(s) should submit their views in writing by
__________, 1997 to the Secretary, Securities and Exchange Commission,
Washington, D.C. 20549, and serve a copy on the relevant applicant(s) and/or
declarant(s) at the address(es) specified below. Proof of service (by affidavit
or, in case of an attorney at law, by certificate) should be filed with the
request. Any request for hearing shall identify specifically the issues of fact
or law that are disputed. A person who so requests will be notified of any
hearing, if ordered, and will receive a copy of any notice or order issued in
the matter. After said date, the application(s) and/or declaration(s), as filed
or amended, may be granted and/or permitted to become effective.
Central Power and Light Company, Public Service Company of Oklahoma,
Southwestern Electric Power Company, West Texas Utilities Company and Central
and South West Services, Inc.
(70- )
Central Power and Light Company, Public Service Company of
Oklahoma, Southwestern Electric Power Company and West Texas Utilities Company,
wholly owned public utility subsidiaries of Central and South West Corporation
("CSW"), a registered holding company, and Central and South West Services,
Inc., a wholly owned subsidiary of CSW that is authorized to provide services to
associate companies in the CSW system, have filed an application on Form U-1
seeking authority to offer warranty plans for the servicing and repair of
appliances. The Operating Companies, directly or through the Service Company,
propose to enter into arrangements with one or more providers of warranty plans
("Plan Providers") for the servicing and repair of electric and gas appliances,
including kitchen and laundry appliances, heating, ventilation and air
conditioning systems, personal computer systems and home entertainment video and
audio systems (the "Plans"), and to offer the Plans to their customers.
All such arrangements would include the following features:
1. The Plans would be offered to customers of the Operating
Company using marketing materials designed by the Operating
Companies (or designed by the Plan Providers and approved by
the Operating Companies) and mailed to customers as billing
inserts, or directly, using the billing and mailing systems of
the Operating Companies.
2. The Plans would be legal obligations of the Plan Providers,
underwritten by such insurance arrangements as the Operating
Companies might require.
3. The Plan Providers would be responsible for responding to
customers' calls for service and to making arrangements with
adequately licensed and insured service contractors to perform
the services covered by the Plans. In certain cases, the
Operating Companies might qualify as service contractors under
the Plans.
4. The Operating Companies would bill customers that enrolled in
the Plans monthly fees for coverages selected by them and
remit the fees to the Plan Providers. The Plan Providers would
either pay a service and administration fee to the Operating
Companies or the Operating Companies would retain such a fee
out of the monthly fees paid by customers. The Operating
Companies would not have any responsibility for ensuring the
payment of the monthly fees by their customers.
It is currently estimated that the Plans could generate gross
revenues to the Operating Companies of $50,000, $980,000 and $1,137,500 during
1997 (assuming a September 1 start-up date), 1998 and 1999 and expenses
(including start-up expenses) during those years of $100,000, $150,000 and
$175,000, respectively.
The Operating Companies believe that the offering of Plans to
their customers will result in enhanced reliability, safety and energy
efficiency of their customers' appliances.
