File No. 70-8557
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 8 (POST-EFFECTIVE) TO
FORM U-1 APPLICATION-DECLARATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
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CENTRAL AND SOUTH WEST CORPORATION SOUTHWESTERN ELECTRIC POWER COMPANY
1616 Woodall Rodgers Freeway 428 Travis Street
Dallas, Texas 75202 Shreveport, Louisiana 71156-0001
CENTRAL POWER AND LIGHT COMPANY WEST TEXAS UTILITIES COMPANY
539 North Carancahua Street 301 Cypress Street
Corpus Christi, Texas 78401-2802 Abilene, Texas 79601-5820
PUBLIC SERVICE COMPANY OF OKLAHOMA CENTRAL AND SOUTH WEST
212 East Sixth Street SERVICES, INC.
Tulsa, Oklahoma 74119-1212 1616 Woodall Rodgers Freeway
Dallas, Texas 75202
CSW ENERGY SERVICES, INC. ENERSHOP, INC.
1616 Woodall Rodgers Freeway 1616 Woodall Rodgers Freeway
Dallas, Texas 75202 Dallas, Texas 75202
(Names of companies filing this statement and addresses
of principal executive offices)
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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
(Names and addresses of agents for service)
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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 its subsidiary companies
Central Power and Light Company ("CPL"), Public Service Company of Oklahoma
("PSO"), Southwestern Electric Power Company ("SWEPCO"), West Texas Utilities
Company ("WTU"), Central and South West Services, Inc. ("CSWS"), EnerShop, Inc.
("EnerShop") and CSW Energy Services, Inc. ("ESI"), each referred to as a
"Subsidiary" and collectively referred to as the "Subsidiaries", hereby file
this Post-Effective Amendment No. 8 (this "Amendment") to amend Items 1 and 3 of
the Form U-1 Application-Declaration in File No. 70-8557 to request authority:
(i) to increase the aggregate amount of authorized borrowings (a) by CSW from
$1.2 billion to $2.5 billion, (b) by CPL from $300 million to $600 million, (c)
by PSO from $125 million to $300 million, (d) by SWEPCO from $150 million to
$250 million, (e) by WTU from $65 million to $165 million, and (f) by CSWS from
$110 million to $210 million; and (ii) either (a) for EnerShop, ESI and any
other existing or future CSW first tier subsidiary (other than an exempt
wholesale generator under Section 32 of the Act, a foreign utility company under
Section 33 of the Act or an exempt telecommunications company under Section 34
of the Act) or Rule 58 company that CSW may wish to include (collectively, the
"New Participants") to participate in the system of intercorporate borrowings
under the CSW system money pool (the "System Money Pool") or (b) for CSW and the
New Participants to, currently or in the future, form and participate in a
separate system of intercorporate borrowings (the "New Participants Money Pool")
should CSW deem proper the formation of a separate money pool based on then
existing regulatory or business considerations. The Subsidiaries together with
CSW are referred to herein collectively as the "Applicants".
Item 1. Description of Proposed Transaction.
CSW and the Subsidiaries propose to expand the System Money Pool, as
previously authorized by orders HCAR Nos. 25777 (Mar. 31, 1993), 25897 (Sept.
28, 1993), 26007 (Mar. 18, 1994), 26066 (June 15, 1994), 26226 (Feb. 1, 1995),
26254 (Mar. 21, 1995) and 26697 (Mar. 28, 1997), by increasing the borrowing
limits of the existing participants and by permitting the New Participants to
participate in the System Money Pool by making loans to, and borrowing from, the
System Money Pool. In addition, CSW and the New Participants request authority
to form and participate in a New Participants Money Pool should CSW deem proper
the formation of a separate money pool based on then existing regulatory or
business considerations, in which case both the System Money Pool and the New
Participants Money Pool will be supported by CSW's increased authorized
borrowing level hereunder.
New Participants
EnerShop is an energy-related company under Rule 58 and is
primarily engaged in the business of providing demand-side management services
to industrial and commercial customers of both associate and nonassociate
companies. EnerShop proposes to use System Money Pool borrowings for general
corporate purposes, and as interim financing for the expansion of its business
and investments in energy-related companies under Rule 58 under the Act.
ESI is an energy-related company under Rule 58 and is
primarily engaged in the business of marketing and brokering energy commodities,
as well as other activities permitted by Rule 58. ESI proposes to use System
Money Pool borrowings for general corporate purposes and as interim financing
for the expansion of its business and investments in other energy-related
businesses permitted under Rule 58.
CSW system companies may from time to time organize additional
Rule 58 companies, and CSW may from time to time organize additional first tier
subsidiaries pursuant to an exemption under the Act or further Commission
authorization. In either case, CSW proposes that EnerShop and ESI as well as any
such new subsidiaries would be eligible to participate as New Participants in
the System Money Pool or the New Participants Money Pool, as the case may be, so
long as no such new subsidiary is an EWG, a foreign utility company under
Section 33 of the Act (a "FUCO") or an exempt telecommunications company under
Section 34 of the Act.
Borrowing Limits
CSW requests that the maximum aggregate amount of its
short-term borrowings be increased from $1.2 billion to $2.5 billion for the
following purposes:
(i) to cover incremental borrowings of the New Participants.
(ii) to provide authority for CSW to issue commercial paper
for interim financing of acquisitions and investments consistent with
the conversion of CSW's commercial paper program from one based upon
the exemption provided by Section 3(a)(3) of the Securities Act of 1933
to a program based upon the Section 4(2) exemption thereunder (the
"Money Pool Conversion"). Under Section 3(a)(3), CSW could only issue
commercial paper for purposes of "current transactions", which limited
its ability to use the System Money Pool as a source of interim
financing for acquisitions and investments. In contrast, under Section
4(2), the amount of commercial paper that CSW can issue is not limited,
nor are the use of proceeds. The Applicants propose to use commercial
paper issuances and other borrowings that may be authorized by the
Commission in this file as a source of interim financing for
acquisitions and investments (other than for EWGs, FUCOs or exempt
telecommunications companies under Section 34 of the Act) by CSW and
the participants in the System Money Pool.
(iii) to allow CSW to utilize its proposed additional
borrowing capacity as a source of interim funding for open market
repurchases of its common stock; and
(iv) to support the proposed increased limits of the existing
parties to the System Money Pool. CPL seeks to increase its limit on
System Money Pool borrowings from $300 million to $600 million, PSO
seeks to increase its limit on System Money Pool borrowings from $125
million to $300 million, SWEPCO seeks to increase its limit on System
Money Pool borrowings from $150 million to $250 million, WTU seeks to
increase its limit on System Money Pool borrowings from $65 million to
$165 million, and CSWS seeks to increase its limit on System Money Pool
borrowings from $110 million to $210 million. CPL, PSO, SWEPCO and WTU
each may utilize their proposed additional borrowing capacity for
general corporate purposes and as a source of interim financing for the
reacquisition of their respective securities. CSWS may utilize its
proposed additional borrowing capacity for general corporate purposes
and to refinance currently outstanding bank borrowings.
As set forth hereinabove, CSW and the existing parties to the
System Money Pool shall have authorized aggregate borrowing limits at the
following levels:
CSW $ 2,500,000,000
CPL $ 600,000,000
PSO $ 300,000,000
SWEPCO $ 250,000,000
WTU $ 165,000,000
CSWS $ 210,000,000
System Money Pool borrowings by the New Participants are limited by the
aggregate investment limit under Rule 58.
Separate Money Pool for New Participants
The electric utility industry is experiencing rapid changes in
its regulatory environment. Many states are in the process of adopting
comprehensive legislation regulating electric utilities within their
jurisdictions. In addition, proposals to repeal the Act are currently pending in
both houses of Congress. Given the uncertainty of the regulatory environment,
CSW would like the flexibility to establish a New Participants Money Pool,
either upon receipt of an Order hereunder or in the future, if then existing
regulatory or other business considerations warrant. If and when a New
Participants Money Pool is established, the New Participants would not
participate in the System Money Pool, but CSW would rely on its increased
authorized borrowing levels hereunder to support the System Money Pool and the
New Participants Money Pool.
A New Participants Money Pool would be established and
administered in the same manner and subject to the same conditions as the System
Money Pool. The aggregate borrowing limits under the New Participants Money Pool
and the System Money Pool would not exceed the aggregate borrowing limit under
the System Money Pool in effect immediately prior to establishment of the New
Participants Money Pool.
Benefits
The participation of the New Participants in the System Money
Pool would permit their available cash and/or short-term borrowing requirements
to be matched on a daily basis with those of the other participants in the
System Money Pool, thereby minimizing the need of the CSW system for external
short-term borrowing. If the New Participants are authorized to participate in
the System Money Pool, funds will be loaned from the System Money Pool in the
form of open account advances under the same terms and limitations as currently
authorized.
The Applicants respectfully request that the Commission
reserve jurisdiction over the participation of the New Participants in the
System Money Pool and over the formation of, and participation of the New
Participants in, the New Participants Money Pool pending completion of the
record.
Item 3. Applicable Statutory Provisions.
Sections 6(a), 7, 9(a), 10, and 12(b) and Rules 43 and 45
thereunder 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 Applicants hereby request appropriate orders thereunder.
The Applicants believe the Commission's supplemental order dated July
18, 1997 in favor of Consolidated Natural Gas Company, et al. (HCAR No. 26742;
File No. 70-7258) provides precedent for the participation of non-utility
subsidiaries in the system money pool of a registered holding company.
Rule 54. No proceeds from the securities issuances that are
proposed to be made under the authority requested herein will be used by CSW or
any subsidiary thereof for the direct or indirect acquisition of an interest in
an EWG or a FUCO.
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 Rule 53(a), (b) and (c) are satisfied.
As set forth below, all applicable conditions set forth in Rule 53(a) are
currently satisfied and none of the conditions set forth in Rule 53(b) exist or
will exist as a result of the transactions proposed herein.
CSW's "aggregate investment" (as defined under Rule 53(a) of
the Act) in EWGs and FUCOs as of December 31, 1997 was approximately $920
million, or about 48% of $1,934 million, CSW's average "consolidated retained
earnings" for the four consecutive quarterly periods ended September 30, 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
domestic 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 such rule and
making Rule 53(c) inapplicable.
CSW was authorized in the Financing Order to invest up to 100%
of its consolidated retained earnings in EWGs and FUCOs. In connection with its
consideration of CSW's application for the Financing Order, the Commission
reviewed CSW's procedures for evaluating EWG or FUCO investments. Based on
projected financial ratios and on procedures and conditions established to limit
the risks to CSW involved with investments in EWGs and FUCOs, the Commission
determined that permitting CSW to invest up to 100% of its consolidated retained
earnings in EWGs and FUCOs would not have a substantial adverse impact upon the
financial integrity of the CSW system, nor would it have an adverse impact on
any of the Subsidiaries or their customers, or on the ability of State
commissions to protect the Subsidiaries or their customers. Since similar
considerations are involved hereunder with respect to Rule 54, Applicants should
not be required to make subsequent Rule 54 filings once CSW's aggregate
investment in EWGs and FUCOs exceeds 50% of its consolidated retained earnings.
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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 companies have duly caused this
document to be signed on their behalf by the undersigned thereunto duly
authorized.
Dated: January 13, 1998
CENTRAL AND SOUTH WEST CORPORATION
CENTRAL POWER AND LIGHT COMPANY
PUBLIC SERVICE COMPANY OF OKLAHOMA
SOUTHWESTERN ELECTRIC POWER COMPANY
WEST TEXAS UTILITIES COMPANY
CENTRAL AND SOUTH WEST SERVICES, INC.
ENERSHOP, INC.
CSW ENERGY SERVICES, INC.
By: /s/WENDY G. HARGUS
Wendy G. Hargus
Treasurer
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INDEX OF EXHIBITS
EXHIBIT TRANSMISSION
NUMBER EXHIBIT METHOD
- ------- ------- ------------
1 Preliminary opinion of Milbank, --------
Tweed, Hadley & McCloy,
counsel to the Applicants
(previously filed).
2 Financial statements as of --------
June 30, 1997 of CSW and
Subsidiaries (previously
filed).
3 Proposed Notice of Proceeding --------
(previously filed).
