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File No. 70-7671
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 8 (POST-EFFECTIVE) TO
FORM U-1 APPLICATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
____________________
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)
____________________
Shirley Briones, Treasurer
Central and South West Services, Inc.
1616 Woodall Rodgers Freeway
P.O. Box 660164
Dallas, Texas 75266
Stephen J. McDonnell, Treasurer
Central and South West Corporation
1616 Woodall Rodgers Freeway
P.O. Box 660164
Dallas, Texas 75266
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 registered holding company under the Public Utility Holding Company Act of
1935, as amended (the "Act"), and Central and South West Services, Inc.
("CSWS"), a wholly owned nonutility subsidiary of CSW, hereby amend the Form
U-1 Application in File No. 70-7671 in the following respects. In all other
respects the Application as previously filed will remain the same.
Item 1. Description of Proposed Transaction.
By Order of the Commission dated August 10, 1990 (HCAR No. 25132;
70-7671)(the "1990 Order"), CSWS was authorized to license and sell to
nonassociate entities, from time to time through December 31, 1992,
specialized computer programs, and provide certain support services to
licensees and purchasers of such software. Such support services were to
include program enhancements, training and problem resolution.
The software was developed in connection with the services rendered
by CSWS to CSW and its public utility subsidiaries. CSWS was authorized to
license and sell the specialized computer software programs in order to offset
the cost of their development and modification. The profits from licenses and
sales of the programs were to be credited to the CSW companies in accordance
with their respective contributions to the funds required for the initial
development of the programs. The programs were to include specialized
computer software for the analysis of financial data and specialized computer
software acquired from third parties for particular applications.
The 1990 Order provided that CSWS would not increase its staff or
equipment in connection with its efforts to license and sell the specialized
computer software programs. It also provided that CSWS's annual expenditures
to license and sell the programs and to develop or modify the programs would
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not exceed $100,000. Finally, the 1990 Order provided that CSWS would account
for it receipts for licenses and sales in accordance with the Uniform System
of Accounts for Mutual Service Companies and Subsidiary Service Companies and
would annually file a Form U-13-60 with the Commission.
By Order of the Commission dated December 18, 1992 (HCAR No. 25714;
70-7671) (the "1992 Order"), CSWS was authorized to license and sell to
nonassociate entities, from time to time, through December 31, 1994,
specialized computer programs, and provide certain support services to
licensees and purchasers of such software. Such support services under no
circumstances were to be sold to a nonassociate company at an amount less than
cost. Since inception of the program, revenues and costs associated with
development of nonassociate business from software sales and related services
have totalled approximately $36,000 and $9,700, respectively. Proceeds from
sales of software are credited or returned to the operating companies who
support the original development of the product for internal use in the same
ratio as the expenses were charged. As a result, the proceeds help defray the
initial development expenses incurred.
As an adjunct to its providing services, CSWS continues to develop
and cooperates with other members of the CSW System in developing many types
of software and data which are utilized by CSW's electric utility and other
subsidiaries to support their core business operations. Such activities are
continuous, since CSWS develops new projects to enable CSW and its
subsidiaries, among other things, to contend with changes in the electric
utility and related industries. The electric utility industry, like other
industries, is becoming increasingly computer intensive in all areas of
operations. In most instances, CSWS and its associate electric utility
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companies have found that the industry-specific software available in the
marketplace is inadequate to meet its needs. Accordingly, CSWS in cooperation
with its associates must develop such software itself. As a result, CSWS
believes that the specialized software it develops is among the most well-
adapted software available in the industry.
From time to time, as previously set forth in Amendment No. 2, CSWS
receives many inquiries from nonassociate entities, primarily municipalities,
other utilities, and customers of CSW's electric utility subsidiaries,
expressing an interest in CSWS's software and data. In many cases, such
entities would be forced to develop comparable software and data themselves,
at considerable expense, if it were unavailable for purchase from CSWS.
Examples of software and data developed in recent years include: (i) utility
accounting, tax, rate, and graphical analysis software, and (ii) databases of
utility financial and operating statistics and chemical label information for
chemicals used in utility operations. Additional state-of-the-art software is
being developed for utility customer billing and metering as well as demand-
side-management and pricing systems. These programs and databases are of
substantial value, much of which would be lost if CSWS were unable to sell to
nonassociates. Incidental to such activities, CSWS believes that it is
important in order to preserve the integrity and reputation of its software
and databases for it to provide support services, such as program
enhancements, training, problem resolution and data management.
CSWS also is seeking authority to sell reserve computer capacity and
provide data management services to nonassociates. In large part, CSWS would
seek to serve municipalities and other customers of CSW's electric utility
subsidiaries with these services and computer capacity and enhance these
subsidiaries' business and industrial development activities.
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CSWS believes that the current limitations on its authority for the
above activities no longer provide it with adequate authority given the scope,
complexity and magnitude of the software and related activities it must
conduct in the ordinary course of business to serve core business needs of its
associated electric utility companies. It therefore requests somewhat
expanded limitations to the authority previously granted by the Commission:
CSWS requests authority to make expenditures up to $1,000,000 per calendar
year and $250,000 per project to develop or change software for third parties
or to market software, services or reserve computer capacity; and, to add up
to ten employees for the purpose of supporting the above activities. In
addition, CSWS would limit CSWS computer capacity sales to nonassociates to no
more than 50 percent of total CSWS computer capacity.
CSWS proposes, and hereby requests authority from the Commission, to
continue to license and sell to non-associate entities as described above,
specialized computer software programs and data bases and excess computer
capacity, as well as to authorize CSWS to continue to provide those entities
with various support services in connection with the software and data,
including without limitation program enhancements, training, problem
resolution and data management services. Such authority is requested through
December 31, 1999.
Fees and expenses in the amount of $8,000 are anticipated in
connection with the proposed transactions.
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Item 2. Fees, Commissions and Expenses.
An estimate of fees and expenses to be paid or incurred by CSWS in
connection with the proposed transaction is set forth below:
Holding Company Act filing fee .................. $2,000*
Counsel Fees:
Milbank, Tweed, Hadley & McCloy
New York, New York .......................... 5,000
Miscellaneous and incidental
expenses, including travel,
telephone, copying and
postage ....................................... 1,000
------
TOTAL ...................................... $8,000
======
_______________
* Actual Amount.
Item 3. Applicable Statutory Provisions.
Sections 9(a) and 10 of the Act and Rule 23 thereunder are or may be
applicable to the proposed transaction. To the extent any other provisions of
the Act or the rules promulgated thereunder may be applicable to the proposed
transaction, CSWS hereby requests appropriate orders thereunder.
The proposed transaction is almost identical to that approved in the
seminal Jersey Central order. Jersey Central Power & Light Company, 37 S.E.C.
Docket 1243 (HCAR No. 35-24348)(1987). Like the licensing to nonassociates of
"theft of service" software authorized in Jersey Central, the instant case
involves a business which has (1) evolved in connection with the system's
utility business, (2) entails an investment which is not significant in
relation to the system's total financial resources, and (3) has the potential
to produce benefits for investors and consumers. Moreover, as stated above,
the Commission has previously authorized CSWS to pursue this type of activity.
The Commission, therefore, should summarily approve the proposed transaction.
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Item 4. Regulatory Approval.
No state regulatory authority and no federal regulatory authority,
other than the Commission under the Act, has jurisdiction over the proposed
transaction.
Item 5. Procedure.
CSWS requests that the Commission issue and publish not later than
October 28, 1994, the requisite notice under Rule 23 with respect to the
filing of this Application, such notice to specify a date not later than
November 21, 1994 as the date after which an order granting and permitting
this Application to become effective may be entered by the Commission, and
that the Commission enter, not later than November 22, 1994, an appropriate
order granting and permitting this Application to become effective.
CSWS respectfully requests that appropriate and timely action be
taken by the Commission in this matter so that the authority will be extended
as provided herein prior to the current authority's expiration on December 31,
1994.
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 CSWS respectfully requests
that any such order be made effective immediately upon the entry thereof.
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Item 6. Exhibits and Financial Statements.
Exhibit 1 - Preliminary opinion of Milbank, Tweed, Hadley & McCloy,
counsel to CSWS (to be filed by amendment).
Exhibit 2 - Financial Statements as of September 30, 1994, of
Central and South West Corporation and consolidated
subsidiaries (to be filed by amendment).
Exhibit 3 - Proposed Notice of Proceeding.
Item 7. Environmental Effects.
The proposed transaction does not involve major federal action having
a significant effect on the human environment. To the best of CSWS's
knowledge no federal agency has prepared or is preparing an environmental
impact statement with respect to the proposed transactions.
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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 company has duly caused this document
to be signed on its behalf by the undersigned thereunto duly authorized.
Dated: October 25, 1994
CENTRAL AND SOUTH WEST SERVICES,INC.
By: SHIRLEY BRIONES
Shirley Briones
Treasurer
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EXHIBIT INDEX
Exhibit Transmission
Number Exhibit Method
- ------- ------- ------------
1 Preliminary opinion of Milbank, Tweed, ---
Hadley & McCloy, counsel to CSWS (to
be filed by amendment).
2 Financial Statements per books and ---
pro forma as of September 30, 1994 of
CSW and consolidated subsidiaries (to
be filed by amendment).
3 Proposed Notice of Proceeding Electronic
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EXHIBIT 3
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SECURITIES AND EXCHANGE COMMISSION
(Release No. 35- )
Filings Under the Public Utility Holding Company Act of 1935 ("Act")
_________________, 1994
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 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
____________, 1994, 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 addresses 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 as amended, may be granted and/or permitted to
become effective.
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Central and South West Services Inc. (File No. 70-7671)
Central and South West Services, Inc. ("CSWS"), 1616 Woodall Rodgers
Freeway, Dallas, Texas, 75202, a wholly owned, non-utility subsidiary of
Central and South West Corporation, a registered holding company, has filed an
application with the Commission pursuant to Sections 9(a) and 10 of the Act
and Rule 23 thereunder.
By Order of the Commission dated August 10, 1990 (HCAR No. 25132;
70-7671)(the "1990 Order"), CSWS was authorized to license and sell to
nonassociate entities, from time to time, through December 31, 1992,
specialized computer programs, as well as provide certain support services to
licensees and purchasers of such software. By Order of the Commission dated
December 18, 1992 (HCAR No. 25714; 70-7671) (the "1992 Order"), CSWS was
authorized to license and sell to nonassociate entities, from time to time,
through December 31, 1994 specialized computer programs, as well as provide
certain support services to licensees and purchasers of such software. Under
no circumstances were support services to be sold to a nonassociate company at
an amount less than cost.
Since inception of the program, revenues and costs associated with
development of nonassociate business from software sales and related services
have totalled approximately $36,000 and $9,700, respectively. Proceeds from
sales of software are returned to the operating companies who support the
original development of the product for internal use in the same ratio as the
expenses were charged. As a result, the proceeds help defray the initial
development expenses incurred.
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CSWS states that the current limitations on its authority for the
above activities are no longer adequate given the scope, complexity and
magnitude of its ordinary course software activities. It therefore has
requested lesser restrictions upon the authority previously granted by the
Commission: CSWS requests authority to make expenditures up to $1,000,000 per
calendar year and $250,000 per project to develop or change software for third
parties or to market software, services or reserve computer capacity; and, to
add up to 10 employees for the purpose of supporting the above activities. In
addition, CSWS would limit CSWS computer capacity sales to nonassociates to no
more than 50% of total CSWS computer capacity.
Further, CSWS has requested authority from the Commission to
continue to license and sell to non-associate companies specialized computer
software programs and data bases and excess computer capacity, and to provide
those companies with various support services in connection with the software
and data, including without limitation program enhancements, training, problem
resolution and data management services. Such authority is requested through
December 31, 1999.
Fees and expenses in the amount of $8,000 are anticipated in
connection with the proposed transactions.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Jonathan G. Katz
Secretary
