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File No. 70-8345
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 3 TO
FORM U-1 APPLICATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
____________________
CENTRAL POWER AND LIGHT COMPANY
539 North Carancahua Street
Corpus Christi, Texas 78401
PUBLIC SERVICE COMPANY OF OKLAHOMA
212 East 6th Street
Tulsa, Oklahoma 74119
SOUTHWESTERN ELECTRIC POWER COMPANY
428 Travis Street
Shreveport, Louisiana 71156
WEST TEXAS UTILITIES COMPANY
301 Cypress
Abilene, Texas 79601
(Names of companies filing this statement and addresses
of principal executive offices)
____________________
CENTRAL AND SOUTH WEST CORPORATION
(Name of top registered holding company parent)
____________________
Stephen J. McDonnell, 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 Power and Light Company, a Texas corporation ("CPL"), Public
Service Company of Oklahoma, an Oklahoma corporation ("PSO"), Southwestern
Electric Power Company, a Delaware corporation ("SWEPCO"), and West Texas
Utilities Company, a Texas corporation ("WTU"), are electric 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"). CPL, PSO, SWEPCO and WTU are referred to collectively
herein as the "CSW Companies." The CSW Companies hereby file this Amendment
No. 3 to the Form U-1 Application in this File No. 70-8345 for the purpose of
amending and restating Item 1 in its entirety and filing Exhibit 1 thereto.
In all other respects, the Application as previously filed and as heretofore
amended will remain the same.
In Item 1 ("Description of Proposed Transaction"):
(a) the fourth paragraph (beginning with the words "Lease terms") is
hereby amended to add the following three sentences after the last sentence:
"PSO's leasing activity was high in the fourth quarter of 1993 due to the
flooding that occurred in the mid-western United States during 1993. During
the flooding numerous companies and plants could not receive coal deliveries.
Once the flooding subsided, shipments of coal to this region increased,
providing PSO an opportunity to lease railcars that would not occur under
normal circumstances."
(b) the sixth paragraph (beginning with the words "the CSW Companies
anticipate") is hereby amended to add the following two sentences after the
first sentence: "The CSW Companies will only sublease railcars if revenue
generated by the sublease will cover all variable costs and make a
contribution to fixed costs. The reduction in fixed costs would benefit
customers."
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Item 1. Description of Proposed Transaction.
Item 1 is hereby restated in its entirety to read as follows:
The CSW Companies hereby request authority through July 1, 1999, to
lease owned unit trains and railcars to nonaffiliated third parties. By
orders dated March 22, 1989 (HCAR No. 24844; 70-7563), June 29, 1989 (HCAR No.
24914; 70-7656) and May 4, 1990 (HCAR No. 25085; 70-7683) (the "Orders"), the
Commission authorized CPL, SWEPCO and PSO, respectively, to lease owned unit
trains and railcars to nonaffiliated third parties from time to time on a
short-term basis when not needed by CPL, PSO and SWEPCO through March 1, 1994,
June 1, 1994 and September 30, 1994, respectively. The unit trains and
railcars are used by CPL, PSO and SWEPCO to transport coal to CPL's Coleto
Creek electric generating plant located in Fannin, Texas, PSO's Northeastern
Power Station located in Oologah, Oklahoma, and SWEPCO's Welsh Power Plant
located near Cason, Texas and Flint Creek Power Plant located near Gentry,
Arkansas (the "Plants").
From time to time, the CSW Companies have been approached by other
utilities and by railroads seeking to enter into short-term leases of unit
trains and railcars, and the CSW Companies desire to take advantage of such
opportunities. On those occasions when coal inventory temporarily exceeds its
requirements or at such times when the Plants are inoperative for scheduled
maintenance, the CSW Companies do not need 100% of their unit trains and
railcars.
Lease terms will cover those periods during which the CSW Companies
do not need the unit trains and railcars for operations. Such periods will
generally range from as short as the time it takes to make one trip from the
location of a coal source to a Plant to as long as two months; however, if the
Plants were to be out of service, either for scheduled maintenance or for some
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other unforeseen reason, such periods could extend up to ten months. Any
leases will provide for lease rates at or near market rates at the time such
leases are entered into.
The CSW Companies' forecast of excess railcar capacity for 1994 is:
CPL PSO SWEPCO WTU
--- --- ------ ---
Current
number of
railcars 381 791 1472 0
Number of
railcars
to be leased
during 1994 0 2 1 0
The low projected number of excess cars during 1994 reflects current coal
inventories and maintenance schedules. The number of excess cars could be
significantly higher from time to time depending on these and other factors.
Recent railcar leasing experience for PSO and SWEPCO is as follows:
1992 and 1993 Leasing Summary:
PSO SWEPCO
--- ------
1992 0 0
1993 10/12 - 10/31 116 111 4th qtr
11/01 - 11/30 115
12/01 - 12/31 227
During the 1992-1993 period, CPL leased no railcars. WTU had no authority to
lease railcars during 1992 and 1993. PSO's leasing activity was high in the
fourth quarter of 1993 due to the flooding that occurred in the mid-western
United States during 1993. During the flooding numerous companies and plants
could not receive coal deliveries. Once the flooding subsided, shipments of
coal to this region increased, providing PSO an opportunity to lease railcars
that would not occur under normal circumstances.
Because of the circumstances under which opportunities to enter into
the proposed leases arise, the CSW Companies cannot anticipate when unit
trains and railcars will be available for leasing in sufficient time to seek
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specific authority from the Commission. Requiring such authority would
preclude the CSW Companies from taking advantage of short-term opportunities
to lease excess unit train and railcar capacity. Accordingly, the CSW
Companies request general authority to enter into lease transactions under the
circumstances described herein.
The CSW Companies anticipate that leases of owned unit trains and
railcars to nonaffiliated third parties will be a small percentage not
expected to exceed an annual average of 50% of owned railcars for each CSW
Company. The CSW Companies will only sublease railcars if revenue generated
by the sublease will cover all variable costs and make a contribution to fixed
costs. The reduction in fixed costs would benefit customers. Rental income
received from the leasing of unit trains and railcars as proposed will be
recorded as a credit to fuel stock account number 151 and will go to offset
the depreciation of railcars and unit trains which is charged to this account,
thus reducing the overall cost of fuel to the CSW Companies customers. Any
leasing income in excess of the amount of depreciation charged to account
number 151 will be credited to rental income account number 454.
The CSW Companies will file within 60 days after the end of each
calendar quarter pursuant to Rule 24 the following information for each CSW
Company: (1) period of time the railcars are leased; (2) number of railcars
leased; (3) revenues earned by month from leasing railcars to nonaffiliates;
(4) average number of railcars leased during the period and (5) average number
of railcars owned during the period.
Item 6. Exhibits and Financial Statements.
Item 6 is hereby amended to file the following exhibit:
Exhibit 1 - Preliminary Opinion of Milbank, Tweed, Hadley & McCloy,
special counsel to CSW and the CSW Companies.
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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: May 2, 1994
CENTRAL POWER AND LIGHT COMPANY
By: /s/ DAVID P. SARTIN
David P. Sartin
Controller
PUBLIC SERVICE COMPANY OF OKLAHOMA
By: /s/ DAVID M. THOMISON
David M. Thomison
Treasurer
SOUTHWESTERN ELECTRIC POWER COMPANY
By: /s/ A. G. HAMMETT, III
A. G. Hammett, III
Treasurer
WEST TEXAS UTILITIES COMPANY
By: /s/ SHIRLEY BRIONES
Shirley Briones
Treasurer
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EXHIBIT INDEX
Exhibit Transmission
Number Exhibit Method
- ------- ------- ------------
1 Preliminary Opinion of Milbank, Tweed, Electronic
Hadley & McCloy, special counsel to CSW
and the CSW Companies.
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EXHIBIT 1
---------
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, N.Y. 10005
May 2, 1994
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Form U-1 Application
(File No. 70-8345)
Dear Sirs:
We refer to the Form U-1 Application (File No. 70-8345), as
amended (the "Application"), under the Public Utility Holding Company Act of
1935, as amended (the "Act") filed by Central Power and Light Company, a Texas
corporation, Public Service Company of Oklahoma, an Oklahoma corporation,
Southwestern Electric Power Company, a Delaware corporation and West Texas
Utilities Company, a Texas corporation (collectively, the "CSW Companies"),
each a wholly-owned electric utility subsidiary of Central and South West
Corporation ("CSW"), a Delaware corporation and a registered holding company.
The Application relates to the CSW Companies' request for authority under the
Act to lease their unit trains and railcars from time to time to unaffiliated
third parties (the "Leases") on a short-term basis when not needed by the CSW
Companies, all as more fully described in the Application. We have acted as
special counsel for each of the CSW Companies in connection with the filing of
the Application and, as such counsel, we are familiar with the corporate
proceedings taken and to be taken by the CSW Companies in connection with the
proposed Leases.
We have examined originals, or copies certified to our
satisfaction, of such corporate records of each of the CSW Companies,
certificates of public officials, certificates of officers and representatives
of each of the CSW Companies 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 each of
the CSW Companies and other appropriate persons and statements contained in
the Application.
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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 Leases 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 Leases as described in the
Application will have been complied with.
2. The Leases will not violate the legal rights of the holders of
any securities issued by any of the CSW Companies or any associate
company of any of the CSW Companies.
The opinions expressed above in respect of the transactions
described in the Application are subject to the following assumptions or
conditions:
a. Any and all Leases executed by any of the CSW Companies
shall have been duly authorized and approved to the extent
required by state law by the Board of Directors of any such CSW
Company.
b. The Securities and Exchange Commission (the "Commission")
shall have duly entered an appropriate order or orders granting
and permitting the Application to become effective with respect to
the proposed transactions described therein.
c. The Leases shall have been made 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.
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.
e. All legal matters incident to the consummation of the
Leases shall be satisfactory to us, including the receipt in
satisfactory form of opinions of other counsel qualified to
practice in jurisdictions pertaining to the Leases in which we are
not admitted to practice.
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
RBW/GJF
