File No. 70-9119
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 TO
FORM U-1 APPLICATION-DECLARATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
--------------------------------
CENTRAL AND SOUTH WEST CORPORATION
1616 Woodall Rodgers Freeway
P.O. Box 660164
Dallas, Texas 75266
CENTRAL AND SOUTH WEST SERVICES, INC.
1616 Woodall Rodgers Freeway
P.O. Box 660164
Dallas, Texas 75266
(Name of company filing this statement and address
of principal executive office)
---------------------------------
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
P.O. Box 660164
Dallas, Texas 75266-0164
Joris M. Hogan, Esq.
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
(Names and addresses of agents for service)
Central and South West Corporation ("CSW"), a Delaware corporation and
a registered holding company under the Public Utility Holding Company Act
of 1935, as amended (the "Act"), and Central and South West Services, Inc.
("Services" and, together with CSW, the "Applicants"), a Texas corporation
and a wholly-owned service company subsidiary of CSW, hereby file this
Amendment No. 1 (this "Amendment") to the Form U-1 Application in File No.
70-9119 (the "Application") for the purpose of amending and restating in
its entirety the Application to clarify and refine the Applicants' request
for authority to engage in the electric vehicle business as described
herein. Specifically, the Applicants request authority to (a) permit
Services to engage in the business of marketing, selling, leasing and
renting to consumers electric bicycles, electric tricycles, electric
skateboards and electric scooters ("Electric Vehicles" or "EVs"), as well
as retrofit kits to convert traditional bicycles to electric bicycles, each
of which is described in Exhibit 1 attached hereto (collectively referred
to herein as "EV Sales & Leasing"); (b) permit Services to provide
financing to, or guarantee borrowings by, creditworthy non-commercial
customers in connection with their purchase or lease of EVs ("EV Customer
Financing"), utilizing funds available to Services through its
participation in the CSW money pool system; and (c) permit CSW to use
borrowings from the CSW money pool
system to finance the EV Business by making loans and providing
guarantees and other credit support through Services up to an aggregate
amount outstanding at any time of $25 million ("EV Business Financing", and
together with EV Sales & Leasing and EV Customer Financing, the "EV
Business"). Applicants request authority to engage in the EV Business
through December 31, 2003.
Item 1. Description of Proposed Transaction.
EV Sales & Leasing.
As part of their effort to increase the demand for electricity and to
prepare for retail competition, the Applicants propose to engage in EV
Sales & Leasing and EV Customer Financing to promote the development of
Electric Vehicles as viable alternative energy vehicles and the creation of
a market for such Electric Vehicles. Specifically, Services proposes to
engage in the business of marketing, selling, leasing and renting to
consumers those electric bicycles, electric tricycles, electric skateboards
and electric scooters, which are described in Exhibit 1 attached to this
Amendment. Services proposes to provide such EV Sales & Leasing activities
to sporting equipment stores, bicycle shops, non-commercial entities such
as universities and government organizations and, on a smaller scale, to
individuals via the Internet. In connection with EV Sales & Leasing, CSW
proposes to provide EV
Business Financing through Services to support the purchase of
Electric Vehicles and thereby encourage public utilization of Electric
Vehicles for transportation. Such EV Business Financing would be
coordinated by CSW through use of the CSW money pool system, as authorized
by Commission orders dated March 31, 1993, September 28, 1993, March 18,
1994, June 15, 1994, February 1, 1995, March 21, 1995, March 28, 1997 and
April 3, 1998 (HCAR Nos. 25777, 25897, 26007, 26066, 26226, 26254, 26697
and 26854, respectively).
By increasing the availability of Electric Vehicles through their
sales and financing efforts, the Applicants hope to aid in the advancement
of new electro-technologies and the use of electricity as an alternative
source of fuel for vehicles. Electric Vehicles offer customers a
functional, efficient and affordable method of using electricity as a fuel
source. For example, the sale of electric bicycles which are equipped with,
and may be powered by rechargeable batteries, the most developed market of
the Electric Vehicles included in this Amendment, may either be pedaled
like a normal bike or powered by a rechargeable battery. Electric bicycles
also feature the latest technological innovations, including advanced
batteries with improved performance and weight/energy densities and new
solid state control circuits. With the assistance from the Applicants
described in this Amendment, Applicants expect to
facilitate further development of new technologies to improve the
overall efficiency, performance and cost to customers of electric
bicycles and other Electric Vehicles.
The Applicants also anticipate that the marketing and sale of new
technologies associated with the Electric Vehicles will increase customer
awareness of other potential uses of electricity, resulting in an increase
in overall demand for electric service, both within the states in CSW's
service areas and in surrounding regions. CSW has four operating company
subsidiaries--Public Service Company of Oklahoma, Southwestern Electric
Power Company, West Texas Utilities and Central Power & Light Company (the
"Operating Companies")--which service portions of Texas, Oklahoma,
Louisiana and Arkansas (the "Service Areas"). The promotion of a new market
for Electric Vehicles will spur demand for electricity and help the
Operating Companies make a successful transition from a regulated industry
to a competitive one. EV Sales & Leasing activities are also expected to
enhance CSW's name recognition and customer loyalty.
In addition, the Applicants request authority to facilitate the sale
of a "critical mass" of Electric Vehicles through the use of EV Customer
Financing to creditworthy non-commercial entities like large universities
and government organizations. Applicants will check the creditworthiness of
such non-commercial entities by requesting information
concerning the size of a university's endowment available to support
operations and the credit-rating of state and local government entities
that seek financing from Applicants. The Applicants believe that EV
Customer Financing will expedite the growth of ownership and use of EVs and
increase public familiarity with the new electro-technologies associated
with them. EV Customer Financing provided by Services may take the form of
guarantees, capital leases, operating leases or promissory notes with terms
of one to five years, with pricing to be competitive with that readily
available in the market for similar financial instruments. Loans made by
Services directly or, with respect to which Services is providing a
guarantee, will have an average annual interest rate not to exceed prime
plus 7%. Such loans may be unsecured or secured by a lien or other security
interest in the Electric Vehicle or other real or personal property other
than utility assets. Services will obtain funding through its participation
in the CSW money pool system. The Applicants expect that most of the EV
Customer Financing will be placed by Services with third party lenders and
leasing companies.
Scope of EV Business.
The Applicants request that they be permitted to engage in the EV
Business both within the Service Areas of the CSW Operating Companies and
in all other areas of the United
States (the "Target Market"). During the twelve-month period beginning
on the first day of January in the year following the date the Applicants
commence the EV Business pursuant to the approval of the Commission, and
for each subsequent calendar year thereafter, total revenues of Services
derived from the EV Business in the states comprising the Service Areas
will exceed total revenues of Services derived from the EV Business in all
other states.
Services proposes to engage in EV Sales & Leasing directly with
sporting equipment stores, bicycle shops and non-commercial entities such
as universities and government organizations, in each case, in the Target
Market. The Applicants also propose to create a computer web page for
informational viewing by and sales to the general public. The Applicants
propose to offer EV Customer Financing to non-commercial entities, such
financing to be on the terms and conditions set forth above.
The Applicants propose to engage in EV Sales & Leasing and EV Customer
Financing through Services. The Applicants will treat the EV Business as a
separate cost and revenue center for accounting purposes. CSW proposes to
provide EV Business Financing to Services in an aggregate amount
outstanding at any time of up to $25 million, with financing to be
coordinated by CSW through Services' participation in the CSW money pool
system. These funds would be designated for specific use by Services in
support of the EV Business. CSW further proposes to guarantee or to act as
surety on bonds, indebtedness and performance and other obligations
undertaken by Services in connection with its EV Business. Such guarantees
or arrangements may be made from time to time through December 31, 2002,
and will expire or terminate no later than December 31, 2003. The total
amount of all loans and guarantees for which authorization is sought will
not exceed $25 million at any time outstanding. The Applicants will obtain
funds to finance the EV Business through the CSW money pool system as
authorized by Commission orders dated March 31, 1993, September 28, 1993,
March 18, 1994, June 15, 1994, February 1, 1995, March 21, 1995, March 28,
1997 and April 3, 1998 (HCAR Nos. 25777, 25897, 26007, 26066, 26226, 26254,
26697 and 26854, respectively).
The Applicants state that Services currently has an insufficient staff
to engage in the EV Business as described in this Amendment and will hire
outside individuals or firms to conduct the EV Business activities. Such
hiring will be done on a contract basis, and such persons will be deemed
independent contractors of Services. Such independent contractors shall be
paid by Applicants through commissions only and will receive no salary or
employee benefits from Applicants. Through the date of this Amendment,
Applicants have executed one agreement with a
manufacturer of Electrical Vehicles pursuant to which Applicants have the
right to market, sell, lease and rent Electric Vehicles in several states
within the Target Market.
The Applicants will file certificates pursuant to Rule 24 under the Act
within 60 days after the end of each calendar quarter setting forth the
following information: (1) the dollar amount of revenues from each of EV
Sales & Leasing and EV Customer Financing during the quarter, including a
separate calculation of dollar amount revenues from the EV Business in the
states comprising the Service Areas and in all other states; (2) the type
and dollar amount of any EV Business Financing by CSW in support of the EV
Business during the quarter; (3) the aggregate outstanding amount of EV
Customer Financing as of the end of the quarter; and (4) with respect to
Services, an unaudited profit and loss statement for the quarter and a
statement of accounts as of the end of the quarter for the EV Business. The
Applicants will also provide a description of any State utility commission
findings concerning the EV Business or related transactions and will file
as exhibits copies of all applications to, or orders issued by, State
utility commissions pertaining to the EV Business or related transactions.
Item 2. Fees, Commissions and Expenses.
An estimate of the fees and expenses to be paid or incurred by the
Applicants in connection with the proposed transactions set forth in this
Amendment is set forth below:
Amount
Counsel fees:
Milbank,Tweed, Hadley & McCloy
New York, New York....................................$15,000
Miscellaneous and incidental expenses
including travel, telephone and
postage.................................................$1,000
-----
Total $16,000
======
Item 3. Applicable Statutory Provisions. Sections 6(a), 7, 9(a), 10,
11 and 12(b) of the Act and Rule 54 thereunder are or may be applicable to
the transactions proposed in this Amendment. Section 9(a) of the Act makes
unlawful the acquisition by a subsidiary of a registered holding company of
"any securities . . . or any other interest in any business" without the
prior approval of the Commission under Section 10. Under Section 10(c)(1),
the Commission may not approve an acquisition of securities or any other
interest in any business if the proposed acquisition is "detrimental to the
carrying out of the provisions of Section 11." Under Section 11(b)(1), the
Commission must limit the operations of public utility holding companies
and their subsidiaries to such other businesses as are reasonably
incidental, or economically necessary or appropriate, to the operations of
an integrated public-utility system. The Commission may permit as
reasonably incidental, or economically necessary or appropriate, to the
operations of one or more integrated public-utility systems 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 or systems.
The proposed establishment of an EV Business satisfies the two-pronged
"functional relationship" test of Section 11 as articulated in Michigan
Consolidated Gas Co. v. SEC, 444 F.2d 913 (D.C. Cir. 1971), a case often
used by the Commission in applying Section 11(b)(1) of the Act. Under the
"functional relationship" test, an integrated public-utility system may
acquire or retain an interest in another business if (i) the additional
business is "reasonably incidental or economically necessary or
appropriate" to the integrated system, and (ii) the retention of the
additional business is in the public interest. Michigan Consolidated at
916. The Applicants' engagement in the EV Business is reasonably incidental
and economically appropriate to the core business of CSW, namely the
generation, distribution and transmission of electricity to customers. The
Applicants will use their staff, facilities, knowledge and
expertise helping to create and maintain a market for Electric Vehicles,
which Applicants believe will increase demand for electricity--the very
heart of CSW's business.
The Applicants' proposal represents an integrated effort to open a
new, potentially large market for electricity consumption by
commercializing cutting-edge electro-technology in Electric Vehicles.
Additionally, the Applicants' indirect participation in the manufacturing
and promotion of more efficient electro-technologies in connection with
Electric Vehicles enhances the possibility for new uses of electricity in
the future. Moreover, entrance into the EV Business may ease the transition
of Operating Companies into the world of electric service competition by
creating a new way in which customers may take advantage of the electricity
services offered by the CSW system. The Applicants also hope to create
enhanced brand identification and loyalty for CSW and its Operating
Companies through EV Sales & Leasing, which Applicants believe will support
the CSW system as it moves into a competitive marketplace.
The Applicants believe that they need to be able to sell and lease EVs
directly because no current participant in the transportation market has a
strong incentive to vigorously promote the EV Business and the new
electro-technology associated with it. Indeed, the EV Business might be
viewed
as disruptive to the existing transportation market due to the potential
displacement of existing primary businesses of current market participants.
Electric utilities have been identified by Electric Vehicle manufacturers,
such as ZAP ("Zero Air Pollution") Power Systems, as their natural partners
in the EV Business because of the potential for higher long-term
electricity demand and enhanced brand identification for the participating
electric utility.
Public policy also supports Applicants in their bid to enter the EV
Business. In accordance with the aims of Congress, as embodied in the
Energy Policy Act of 1992, the Applicants' proposed EV Business is designed
to actively encourage the use of electricity as an alternative to
conventional fuel sources, which are often both harmful to the environment
and of finite supply. See Energy Policy Act of 1992, 42 USCS ss.13201, et.
seq. (West Supp 1997) (advocating and encouraging use of alternative fuels
and alternative fuel vehicles). The proposed EV Business is aimed at making
Electric Vehicles more affordable and easily accessible to the public, so
that the environmental benefits of Electric Vehicles over conventional
fuels and vehicles can be realized by the public. Indeed, the EVs produced
by ZAP Power Systems are designed to significantly reduce air pollution.
See also, Energy Policy Act of 1992, 42 USCS ss.ss.13212 and 13235, (West
Supp 1997) (mandating federal use of alternative fuel
vehicle fleets and funding state programs to encourage EV use).
Additionally, CSW customers and investors will benefit because Applicants'
entrance into the EV Business will assist CSW Operating Companies in
transitioning to a competitive market and will create jobs for the economy.
See Executive Order No. 12844, Apr. 21, 1993, 50 F.R. 21885, as amended,
Executive Order No. 12974, Sept. 29, 1995, 60 F.R. 51875 (stating that the
use of alternative fuels and alternative fuel vehicles increases domestic
economic activity and stimulates job creation).
As originally proposed, Rule 58, paragraph (b)(1)(iii), would have
exempted from Section 9(a) of the Act the sale of Electric Vehicles, but
the Commission chose to exclude the sale of EVs because it had not yet
approved such activities by order. The Commission's initial inclusion of
EVs, however, suggests that it views the activities as logically connected
to the core business of a registered holding company system, even though
such activities were eventually excluded from the rule for procedural
reasons related to the statutory provision under which the rule was
promulgated.
In addition, the Applicants' proposal to conduct EV Sales & Leasing is
comparable to the proposal by Consolidated Natural Gas Company ("CNG") to
finance customers' purchases of equipment within and outside of the states
of its service area to promote new natural gas technologies and enable the
use of
natural gas as an alternative fuel, which the Commission approved by order
in HCAR No. 26234 (Feb. 23, 1995) (File No. 70-7508) (the "First CNG
Order"). The Commission determined that CNG's proposed activities satisfied
the functional relationship test because the activities encouraged the sale
of energy through the development, promotion and financing of gas or
electric appliances or equipment that had not yet received widespread
public acceptance and promoted competition of electricity and gas with
other types of fuel.
Similarly, the Commission authorized General Public Utilities
Corporation ("GPU") to make an investment in a company that promoted and
marketed electrical equipment employing a new "vortex fan." See HCAR No.
15184 (Feb. 9, 1965) (File No. 70-4239) (the "GPU Order") (cited by CNG in
the First CNG Order). GPU's primary justification for its investment was
its belief that the use of vortex fans in electrical products would
significantly increase the consumption of electricity both within and
outside the service area of the GPU system and that the encouragement of
the use of electricity is functionally related to the core business of the
GPU system.
The Commission also granted CNG authority to (1) buy and resell or
lease natural gas conversion equipment, (2) install and maintain conversion
equipment and provide training with respect to such equipment and (3)
design, construct, own, lease, sell and maintain refueling stations and
provide training with respect to such stations. See CNG, HCAR No. 25615
(Aug. 27, 1992) (File No. 70-7845) (the "Second CNG Order"). The rationale
behind each of the CNG Orders and the GPU Order applies equally to the
Applicants' proposed EV Sales & Leasing activities and supports favorable
action by the Commission.
EV Customer Financing is similar in purpose, terms and conditions to
the financing offered by CNG and approved by the Commission in the First
CNG Order. In that order, CNG was authorized to finance customer purchases
of equipment, either through loans or guarantees of loans, to promote new
technologies that used natural gas or enabled the use of natural gas as an
alternative fuel.
Rule 54
No proceeds from the proposed transactions will be used by CSW or any
subsidiary thereof for the direct or indirect acquisition of an interest in
an exempt wholesale generator, as defined in Section 32 of the Act, or a
foreign utility company, as defined in Section 33 of the Act. 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 EWG or a 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 Rules 53(a), (b) and (c) are
satisfied. As set forth below, all applicable conditions set 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,
thereby satisfying such provision and making Rule 53(c) inapplicable.
CSW's "aggregate investment" (as defined under Rule 53(a) of the Act)
in EWGs and FUCOs as of February 28, 1998 was approximately $926 million,
or about 49.6% of $1,868 million, CSW's average consolidated retained
earnings for the four quarterly periods ended December 31, 1997. CSW thus
satisfies Rule 53(a)(1). CSW will maintain and make 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). To the extent
that any other sections of the Act may be applicable to the proposed
transactions, the Company hereby requests appropriate authority thereunder.
Item 4. Regulatory Approval.
No federal or state regulatory authority, other than the Commission
under the Act, has any jurisdiction over the proposed transactions.
Item 5. Procedure
The Applicants respectfully request that the Commission issue no later
than June 19, 1998 the requisite notice under Rule 23 with respect to the
filing of this Amendment, such notice to specify a date not later than July
24, 1998, as the date after which an order granting and permitting this
Amendment to become effective may be entered by the Commission and the
Commission enter not later than July 27, 1998, an appropriate order
granting and permitting this Amendment to become effective.
No recommended decision by a hearing officer or any 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
30-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 - EV Descriptions.
Exhibit 2 - Preliminary Opinion of Milbank, Tweed, Hadley &
McCloy, counsel to the Applicants.
Exhibit 3 - Financial Statements of each of the Applicants per
books and pro forma, as of December 31, 1997.
Exhibit 4 - Proposed Notice of Proceeding.
S I G N A T U R E
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, each of the undersigned Applicants have duly caused
this document to be signed on their behalf by the undersigned thereunto
duly authorized.
Dated: June 12, 1998
CENTRAL AND SOUTH WEST CORPORATION
CENTRAL AND SOUTH WEST SERVICES, INC.
By /s/WENDY G. HARGUS
Wendy G. Hargus
Treasurer
INDEX OF EXHIBITS
EXHIBIT TRANSMISSION
NUMBER REVISED EXHIBITS METHOD
1 EV Descriptions. Electronic
2 Preliminary Opinion of Milbank, Tweed, Electronic
Hadley & McCloy, counsel to the
Applicants.
3 Proposed Notice of Proceeding. Electronic
4 Financial Statements of each of ---------
the Applicants per books and pro
forma, as of December 31, 1997.
EXHIBIT 1
Electric bicycles1
ElectriCruizer(TM)/ElectriCruizer Step-thru(TM)
Frame: High Tensile Steel
Fork: Rigid, High Tensile Steel
Power System: Dual Motor, Rear Drive
Battery Pack:2 17 Amp Hour
Charger: 6 Amp, 110 VAC or 220 VAC
Headset: 1" Steel-Threaded
Handlebar: Swept-Back, Mid-Rise
Derailleurs: Front: N/A, Rear: Shimano
Shift Levers: Grip-Shift, 6-Speed
Crankset: OPC-Steel
Freewheel: Index Compatible, 6-Speed
Brakes: Alloy Cantilever, Front & Rear
Hubs: Nutted Alloy, Front & Rear
Tires: 26x2.125, White Walls
Rims: Double-Wall Alloy, 36 Hole
Saddle: Dual Spring, Comfort Saddle
Options: Fenders, Double Baskets, Q/R Seat
Clamp
ZapFlash(TM)
Frame: Full Butted Cro-Moly
Fork: Rock Shox, Indy-C
Power System: Dual Motor, Rear Drive
Battery Pack: 17 Amp Hour, Quick Release
Charger: 6 Amp, 110 VAC or 220 VAC
Headset: 1 1/8" Direct-Connect
Handlebar: Alloy, Flat 6 Degree Bend
Derailleurs: Shimano STX-RC, Front & Rear
Shift Levers: Grip-Shift, 24-Speed
Crankset: Shimano STX-Triple
Freewheel: Shimano, 8-Speed
Brakes: Shimano Alivio Cantilever, Front &
Rear
Hubs: STX-RC, Quick Release, Front & Rear
Tires: 26x1.6, Zap Power Tires
Rims: Double-Wall Alloy, 32 Hole
Saddle: Gel ATB
Options: Fuel Gauge, Dual Beam Headlights
Zap Patrol Bike
Frame: Full Aluminum
Fork: Rock Shox, Indy-C
Power System: Dual Motor, Rear Drive
Battery Pack: 17 Amp Hour, Quick Release
Charger: 6 Amp, 110 VAC or 220 VAC
Headset: 1 1/8" Direct-Connect
Handlebar: Alloy, Flat 6 Degree Bend
Derailleurs: Front: Shimano STX, Rear: Shimano XT
Shift Levers: Shimano, Rapid-Fire SL, 24-Speed
Crankset: Sugino Impel-Triple, 175 mm
Freewheel: Shimano, 8-Speed
Brakes: Shimano LX, V Brakes
Hubs: STX-RC, Quick Release, Front & Rear
Tires: 26x1.6, Zap Power Tires
Rims: Double-Wall Alloy, 36 Hole
Saddle: Gel ATB
Options: Rack Top Bag, Fuel Gauge
PowerBike(TM)
Frame: 4130 Cro-Moly, Main Tubes
Fork: Rigid, High Tensile Steel
Power System: Dual Motor, Rear Drive
Battery Pack: 17 Amp Hour, Quick Release
Charger: 6 Amp, 110 VAC or 220 VAC
Headset: 1" Steel-Threaded
Handlebar: Steel, Flat 6 Degree Bend
Derailleurs: Front: Sunrace, Rear: Shimano Altus
Shift Levers: Grip Shift, 21-Speed
Crankset: Tracer Triple, 170 mm
Freewheel: Index Compatible, 7-Speed
Brakes: Alloy Cantilever, Front & Rear
Hubs: Alloy, Quick-Release Front, Nutted
Rear
Tires: Front: All Terrain, Rear: Zap Power
Tire
Rims: Alloy, 36 Hole
Saddle: Ultrasoft
Options: Fuel Gauge, Headlights
<PAGE>
Electric skateboard
Zappy(TM)
Frame: 1-Part Folding, Steel Tube
Fork: Rigid Steel
Power System: Rear Single Motor Belt Drive
Roll-N-Go
Battery Pack: 17 Amp Hour
Charger: 3.5 Amp, 110 VAC or 220 VAC
Headset: 1" Threadless
Handlebar: Flat Bar, Quick Release Height
Adjustment
Derailleurs: ---
Shift Levers: ---
Crankset: ---
Freewheel: ---
Brakes: Rear Drum Brake
Hubs: Sealed Bearing
Tires: 6.5" Solid Core
Rims: Glass Fiber Reinforced
Saddle: ---
Options: 6 Amp, Quick Charger
Electric tricycle
ZapTrike(TM)
Frame: High Tensile Steel
Fork: Rigid, High Tensile Steel
Power System: Dual Motor, Front Drive
Battery Pack: 33 Amp Hour
Charger: 6 Amp, 110 VAC or 220 VAC
Headset: 1" Steel Threaded
Handlebar: High Rise, Chrome-Plated
Derailleurs: ---
Shift Levers: ---
Crankset: OPC Steel
Freewheel: Single Free Wheel
Brakes: Alloy Cantilever, Front
Hubs: Nutted Steel, Front & Rear
Tires: 20x1.75 Blackwalls
Rims: Steel, Chrome-Plated
Saddle: Comfort Saddle
Options: Headlights
<PAGE>
Retrofit Kits
Zap Power System
Motor: Ceramic, magnet, dual motor system.
Direct current, 400 watts/.6
horsepower peak output, 5500 rpm
peak
Battery: 12 Volt, 17 Amp Hour, sealed lead-
acid dry-cell (starved electrolyte),
recyclable
Charger: 6 Amp, portable automatic charger
Charge time: Maximum 3 hours. Automatic trickle
charge when battery is fully charged
Controller: Two speed with regenerative function
Up to 40 Amps can be generated.
Spring loaded on/off trigger
Engagement: Two modes; automatic or manual motor
lockdown
Range: Up to 15 miles when pedal assisted
U.S. Pro Drive(TM) Electric Power System
Motor: 24-volt DC brushless motor
Battery: Dual 12 Volt, 12 Amp Hour sealed
lead acid
Charger: Information not available
Charge time: 6-8 hours (basic unit); 3 hours with
optional charger
Controller: Electronic pulse-width modulated
(PWM) motor controller
Engagement: Information not available
Range: 20 miles approximately on level
ground (30 miles with nominal
pedaling)
1 All electric bicycles, tricycles and skateboards detailed herein range in
speed from 10-18 mph and in distance from 8-20 miles.
2 All batteries are sealed
lead-acid dry cell (starved electrolyte) and recyclable.
EXHIBIT 2
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
_____________, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Central and South West Corporation and Central and South West
Services, Inc.
Amendment No. 1 to the Form U-1 Application in File No. 70-9119
Dear Sirs:
We refer to Amendment No. 1 (the "Amendment") to the Form U-1
Application in File No. 70-9119 (the "Application") under the Public
Utility Holding Company Act of 1935, as amended (the "1935 Act"), filed by
Central and South West Corporation ("CSW"), a Delaware Corporation and a
registered holding company under the 1935 Act and Central and South West
Services, Inc. ("CSWS" and, collectively with CSW, the "Applicants"), a
Texas corporation and a service company subsidiary of CSW, seeking
authority to (a) permit CSWS to engage in the business of selling, leasing
and renting to consumers electric bicycles, electric tricycles, electric
skateboards and electric scooters ("EVs"), as well as retrofit kits to
convert traditional bicycles to electric bicycles; (b) permit CSWS to
provide financing to, or guarantee the borrowings by, creditworthy
non-commercial customers in connection with their purchase or lease of EVs
utilizing funds available to CSWS through its participation in the CSW
money pool system; and (c) permit CSW to use borrowings from the CSW money
pool system to finance the EV Business by making loans and providing
guarantees and other credit support to CSWS up to an aggregate amount
outstanding at any time of $25 million (collectively, the "Transactions"),
as more fully described in the Amendment. We have acted as counsel for the
Applicants in connection with the filing of the Amendment.
We have examined originals, or copies certified to our satisfaction,
of such corporate records of the Applicants,
<PAGE>
certificates of public officials, certificates of officers and
representatives of the Applicants 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 Applicants and other appropriate persons and statements
contained in the Amendment.
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
and Amendment, as both may be amended, and subject to the assumptions and
conditions set forth below:
1. All state laws applicable to the proposed Transactions as described
in the Application and the Amendment will have been complied with.
2. The consummation of the proposed Transactions as described in the
Application and the Amendment will not violate the legal rights of the
lawful holders of any securities issued by the Applicants or any associate
company of the Applicants.
3. Any debt securities issued or guaranteed by CSW or CSWS in
accordance with an order permitting the Application and Amendment to become
effective will be valid and binding obligations of CSW or CSWS, as the case
may be, in accordance with their terms, except to the extent such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement
of creditors' rights generally or by applicable principles of equity
(regardless of whether such enforceability is sought in a proceeding at law
or in equity).
4. Each of CSW and CSWS is validly incorporated and duly existing
under the law of its respective state of incorporation.
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The opinions expressed above in respect of the proposed Transactions
as described in the Application and the Amendment 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
Board of Directors of the Applicants.
b. The Securities and Exchange Commission shall have
duly entered an appropriate order or orders ganting
and permitting the Application and Amendment 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
thereto and all such required approvals,
authorizations, consents, certificates and orders
shall have been obtained and remain in effect at the
closing thereof.
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.
We hereby consent to the use of this opinion as an exhibit to the
Amendment.
Very truly yours,
MILBANK, TWEED, HADLEY & McCLOY
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EXHIBIT 3
SECURITIES AND EXCHANGE COMMISSION
(Release No. 35 - _______________)
Filings Under the Public Utility Holding Company Act of 1935 ("Act")
________________, 1998
Notice is hereby given that the following filing(s) has/have been made
with the Commission pursuant to the 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 amendment(s) 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 __________, 1998 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 the 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
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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 as amended, may be granted and/or permitted to
become effective.
Central and South West Corporation (70-9119)
Central and South West Corporation ("CSW"), a registered holding
company, and Central and South West Services, Inc. ("Services" and,
collectively with CSW, the "Applicants"), a service company subsidiary of
CSW, have filed a Post-Effective Amendment No. 1 (the "Amendment") to a
Form U-1 Application-Declaration in this file under Sections 6(a), 7, 9(a),
10, 11 and 12(b) of the Act, and Rule 54 thereunder.
Specifically, the Applicants request authority to (a) permit Services
to engage in the business of marketing, selling, leasing and renting to
consumers electric bicycles, electric tricycles, electric skateboards and
electric scooters ("Electric Vehicles" or "EVs"), as well as retrofit kits
to convert traditional bicycles to electric bicycles, each of which is
described in Exhibit 1 attached thereto (collectively referred to herein as
"EV Sales & Leasing"); (b) permit Services to provide financing to, or
guarantee borrowings by, creditworthy non-commercial customers in
connection with their purchase or
<PAGE>
lease of EVs ("EV Customer Financing") utilizing funds available to
Services through its participation in the CSW money pool system; and (c)
permit CSW to use borrowings from the CSW money pool system to finance the
EV Business by making loans and providing guarantees and other credit
support through Services up to an aggregate amount outstanding at any time
of $25 million ("EV Business Financing", and together with EV Sales &
Leasing and EV Customer Financing, the "EV Business"). Applicants request
authority to engage in the Ev Business through December 31, 2003.
Services proposes to provide EV Sales & Leasing activities to sporting
equipment stores, bicycle shops, non-commercial entities such as
universities and government organizations and, on a smaller scale, to
individuals via the Internet. In connection with EV Sales & Leasing, CSW
proposes to provide EV Business Financing through Services to support the
purchase of Electric Vehicles and thereby encourage public utilization of
Electric Vehicles for transportation. Such EV Business Financing would be
coordinated by CSW through use of the CSW money pool system, as authorized
by Commission orders dated March 31, 1993, September 28, 1993, March 18,
1994, June 15, 1994, February 1, 1995, March 21, 1995, March 28, 1997 and
April 3, 1998
<PAGE>
(HCARNos. 25777, 25897, 26007, 26066, 26226, 26254, 26697 and 26854,
respectively).
EV Customer Financing provided by Services may take the form of
guarantees, capital leases, operating leases or promissory notes with terms
of one to five years, with pricing to be competitive with that readily
available in the market for similar financial instruments. Loans made by
Services directly or, with respect to which Services is providing a
guarantee, will have an average annual interest rate not to exceed prime
plus 7%. Such loans may be unsecured or secured by a lien or other security
interest in the Electric Vehicle or other real or personal property other
than utility assets. Services will obtain funding through its participation
in the CSW money pool system. The Applicants expect that most of such
financing will be placed by Services with third party lenders and leasing
companies.
By increasing the availability of Electric Vehicles the Applicants
hope to aid in the advancement of new electro-technologies and the use of
electricity as an alternative source of fuel for vehicles. Electric
Vehicles offer customers a functional, efficient and affordable method of
using electricity as a fuel source.
<PAGE>
The Applicants also anticipate that the marketing and sale of new
technologies associated with the Electric Vehicles will increase customer
awareness of other potential uses of electricity, resulting in an increase
in overall demand for electric service, both within the states in CSW's
service areas and in surrounding regions. CSW has four operating company
subsidiaries--Public Service Company of Oklahoma, Southwestern Electric
Power Company, West Texas Utilities and Central Power & Light Company (the
"Operating Companies")--which service portions of Texas, Oklahoma,
Louisiana and Arkansas (the "Service Areas"). The promotion of a new market
for Electric Vehicles will spur demand for electricity and help the
Operating Companies make a successful transition from a regulated industry
to a competitive one. EV Sales & Leasing activities are also expected to
enhance CSW's name recognition and customer loyalty.
The Applicants request that they be permitted to engage in the EV
Business both within the Service Areas of the CSW Operating Companies
and in all other areas of the United States (the "Target Market").
During the twelve-month period beginning on the first day of January
in the year following the date the Applicants commence the EV Business
pursuant to the approval of the Commission, and for each subsequent
calendar year thereafter, total revenues of Services derived from the
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EV Business in the states the Service Areas will exceed total revenues of
Services derived from the EV Business in all other states.
The Applicants will treat its EV Business as a separate cost and
revenue center for accounting purposes.
CSW proposes to provide EV Business Financing to Services in an
aggregate amount outstanding at any time of up to $25 million. These
funds would be designated for specific use by Services in support of
the EV Business. CSW further proposes to guarantee or to act as surety
on bonds, indebtedness and performance and other obligations
undertaken by Services in connection with its EV Business. Such
guarantees or arrangements may be made from time to time through
December 31, 2002, and will expire or terminate no later than December
31, 2003. The total amount of all loans and guarantees for which
authorization is sought will not exceed $25 million at any time
outstanding. The Applicants will obtain funds to finance the EV
Business through the CSW money pool system, as authorized by
Commission orders dated March 31, 1993, September 28, 1993, March 18,
1994, June 15, 1994, February 1, 1995, March 21, 1995, March 28, 1997
and April 3, 1998 (HCAR Nos. 25777, 25897, 26007, 26066, 26226, 26254,
26697 and 26854, respectively).
<PAGE>
The Applicants state that Services currently has an insufficient
staff to engage in the EV Business as described herein and will hire
outside individuals or firms to conduct the EV Business activities.
Such hiring will be done on a contract basis, and such persons will be
deemed independent contractors of Services. Such independent
contractors shall be paid by Applicants through commissions only and
will receive no salary or employee benefits from Applicants. Through
the date of this Amendment, Applicants have executed one agreement
with a manufacturer of Electrical Vehicles pursuant to which
Applicants have the right to market, sell, lease and rent Electrical
Vehicles in several states within the Target Market.
The Applicants will file certificates pursuant to Rule 24 under
the Act within 60 days after the end of each calendar quarter setting
forth the following information: (1) the dollar amount of revenues
from each of EV Sales & Leasing and EV Customer Financing, including a
separate calculation of dollar amount revenues from the EV Business in
the states comprising the Service Areas and in all other states; (2)
the type and dollar amount of any EV Business Financing by CSW in
support of the EV Business during the quarter; (3) the aggregate
outstanding amount of EV Customer Financing as of the end of the
quarter; and (4) with respect to Services, an unaudited profit and
<PAGE>
loss statement for the quarter and a statement of accounts as of the end of
the quarter for the EV Business. The Applicants will also provide a
description of any State utility commission findings concerning the EV
Business or related transactions and will file as exhibits copies of all
applications to, or orders issued by, State utility commissions pertaining
to the EV Business or related transactions.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Jonathan G. Katz
Secretary
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