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File No. 70-8531
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2 TO
FORM U-1 APPLICATION-DECLARATION
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 or companies filing this statement and
addresses of principal executive offices)
_________________________
CENTRAL AND SOUTH WEST CORPORATION
(Name of top registered holding company parent)
_________________________
Shirley S. 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 Services, Inc., a Texas corporation ("CSWS"),
is a wholly owned nonutility subsidiary of 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"). CSWS hereby files this Amendment No. 2 to the Form U-1 Application
in this File No. 70-8531 for the purpose of amending and restating Item 1
and Item 6 of the Application as follows. In all other respects, the
Application as previously filed and as heretofore amended will remain the
same.
1. In Item 1 ("Description of Proposed Transaction"):
(a) The first sentence of the third paragraph is amended by
inserting the words ", through December 31, 1997," after the word
"authority".
(b) The fifth paragraph of Item 1 is amended by adding to it the
following sentences:
"It is anticipated that a substantial portion of the Services
will be priced on a time and materials basis. It is the
intention of CSWS to price the Services to non-associates in
a manner that will result in an after-tax profit margin of
15%. In order properly to account for the Services,
individual work orders will be opened for all Service
contracts with non-associates. These work orders will be
processed in accordance with the CSWS Work Order System, which
will capture the costs of all CSWS personnel and areas that
work on projects for non-associates. The costs and any profit
or loss will be recorded for the account of Central and South
West Corporation.
(c) Item 1 is amended by adding to it the following new sixth
paragraph:
"The provision of Services to non-associates will not be
engaged in for the purpose of financing the acquisition of an
exempt wholesale generator ("EWG") or a foreign utility
company ("FUCO") as defined in Sections 32 and 33 of the Act.
None of CSW, CSWS or any other subsidiary of CSW has a direct
or indirect ownership interest in an EWG or FUCO. Therefore,
Rule 54 under the Act does not apply."
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2. Item 6 ("Exhibits and Financial Statements") is amended by:
(a) deleting the parenthetical "(to be filed by amendment)" after the
description of Exhibit 2 ("Estimated Annual Revenues and Costs from and for
Services") and Exhibit 3 ("Preliminary Opinion of Milbank, Tweed, Hadley &
McCloy, counsel to CSWS"); and (b) adding the parenthetical "(previously
filed)" after the description of Exhibit 1 ("CSW Engineering and
Construction Services"), Exhibit 4 ("Proposed Notice of Proceeding") and
Exhibit 5 ("Financial Statements of CSWS and CSW, per books and pro forma as
of September 30, 1994"). As amended, Item 1 and Item 6 read in their
entireties as set forth below:
Item 1. Description of Proposed Transaction.
CSWS currently operates an engineering and construction department
which provides power plant control system procurement, integration and
programming services, and power plant engineering and construction services
(collectively, "Services") to CSW associates, including CSW's electric
utility subsidiaries and CSW Energy, Inc. ("CSWE"). The Services, which are
provided both for existing facilities and new facilities, are an integral
part of the core utility business of the CSW System. CSWS has assembled a
highly qualified engineering and construction staff that is respected
throughout the electric utility industry. The depth of the engineering and
construction staff's experience in all facets of power engineering,
including power plant construction, start-up, operations, and maintenance
allows the CSWS engineering staff to provide cost-effective solutions to
power engineering problems.
Even though CSWS's engineering and construction staff has been
planned to meet needs from within the CSW System, excess resources are
available from time to time. CSW System needs are not capable of perfect
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estimation. Current CSW System integrated resource planning policy, as well
as the difficult to predict engineering and construction needs of CSWE,
require CSWS to have flexible staffing capabilities with knowledgeable
personnel. Not only do load growth projections within the service
territories of CSW's utility subsidiaries change from time to time, but also
CSWE's needs for Services change rapidly according to the results of its
development activities for nonutility power projects.
CSWS, therefore, hereby requests authority, through December 31,
1997, to provide Services to non-associate entities. CSWS already provides
to associate electric utilities all of the Services it plans to provide to
non-associates. Such Services are specified on Exhibit 1 hereto. CSWS
already has been approached by non-associate utilities who are interested in
hiring CSWS to provide Services in connection with continuous emissions
monitoring and power plant control systems projects, among others.
In providing Services to non-associates, CSWS believes it will be
serving the public interest as well as most efficiently utilizing its power
engineering resources. For instance, CSWS has developed unique expertise in
power plant control systems and continuous emissions monitoring. Making its
expertise in power plant control systems available to non-associates will
enable utilities, municipalities or others to gain operating efficiencies
resulting in cost and other savings that will inure to the benefit of
consumers. CSWS's making continuous emissions monitoring expertise
available to non-associates will assist them to comply with the Title IV
requirements under the Clean Air Amendments of 1990 and achieve the
resultant benefits to the environment.
Charges for Services to a non-associate will be accumulated under
the same work order system used for associates and will be billed as agreed
between CSWS and the non-associate. CSWS estimates that total annual
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billings to non-associates for Services and the costs thereof will be as set
forth on Confidential Exhibit 2. It is anticipated that a substantial
portion of the Services will be priced on a time and materials basis. It is
the intention of CSWS to price the Services to non-associates in a manner
that will result in an after-tax profit margin of 15%. In order properly to
account for the Services, individual work orders will be opened for all
Service contracts with non-associates. These work orders will be processed
in accordance with the CSWS Work Order System, which will capture the costs
of all CSWS personnel and areas that work on projects for non-associates.
The costs and any profit or loss will be recorded for the account of Central
and South West Corporation.
The provision of Services to non-associates will not be engaged in
for the purpose of financing the acquisition of an exempt wholesale
generator ("EWG") or a foreign utility company ("FUCO") as defined in
Sections 32 and 33 of the Act. None of CSW, CSWS or any other subsidiary of
CSW has a direct or indirect ownership interest in an EWG or FUCO.
Therefore, Rule 54 under the Act does not apply.
Item 6. Exhibits and Financial Statements.
Exhibit 1 - CSW Engineering and Construction Services (previously
filed).
Exhibit 2 - Estimated Annual Revenues and Costs from and for
Services.
Exhibit 3 - Preliminary Opinion of Milbank, Tweed, Hadley &
McCloy, counsel to CSWS.
Exhibit 4 - Proposed Notice of Proceeding (previously filed).
Exhibit 5 - Financial Statements of CSWS and CSW, per books and
pro forma, as of September 30, 1994 (previously
filed).
Exhibit 6 - Final of "Past Tense" opinion of Milbank, Tweed,
Hadley & McCloy, counsel to CSWS (to be filed with
Certificate of Notification).
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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: March 10, 1995
CENTRAL AND SOUTH WEST SERVICES, INC.
By: /s/ SHIRLEY S. BRIONES
Shirley S. Briones
Treasurer
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EXHIBIT INDEX
Exhibit Transmission
Number Exhibit Method
- ------- ------- ------------
1 CSW Engineering and Construction ---
Services (previously filed).
2 Estimated Annual Revenues and Costs Electronic
from and for Services.
3 Preliminary Opinion of Milbank, Electronic
Tweed, Hadley & McCloy, counsel to
CSWS.
4 Proposed Notice of Proceeding
(previously filed).
5 Financial Statements of CSWS and CSW, ---
per books and pro forma, as of
September 30, 1994 (previously filed).
6 Final of "Past Tense" opinion of ---
Milbank, Tweed, Hadley & McCloy,
counsel to CSWS (to be filed with
Certificate of Notification).
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EXHIBIT 2
---------
The following chart indicates the anticipated revenue
and profit from providing service to non-affiliates:
Year Billables Costs Profits
--- ---------- ---------- --------
1995 $ 250,000 $ 190,000 $ 60,000
1996 1,040,000 800,000 240,000
1997 2,080,000 1,600,000 480,000
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EXHIBIT 3
---------
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
March 10, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Central and South West Services, Inc.
Form U-1 Application-Declaration
File No. 70-8531
Dear Sirs:
We refer to the Form U-1 Application-Declaration (the
"Application") under the Public Utility Holding Company Act of 1935, as
amended (the "Act"), filed by Central and South West Services, Inc., a
Texas corporation ("CSWS") and a wholly-owned non-utility subsidiary of
Central and South West Corporation, a Delaware corporation and a
registered holding company. The Application relates to CSWS' request for
authority under the Act to provide to non-associate entities, through its
engineering and construction department, power plant control system
procurement, integration and programming services, and power plant
engineering and construction services (collectively, the "Services"), all
as more fully described in the Application. We have acted as special
counsel for CSWS 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 CSWS in connection with the proposed provision of the Services
as described in the Application.
We have examined originals, or copies certified to our
satisfaction, of such corporate records of CSWS, certificates of public
officials, certificates of officers and representatives of CSWS and other
documents as we have deemed necessary to require 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 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 CSWS and other
appropriate persons and statements contained in the Application.
Based upon the foregoing, and having regard to legal
considerations which we deem relevant, we are of the opinion that, in the
event that CSWS provides the Services in accordance with the Application,
as it may be amended, and subject to the assumptions and conditions set
forth below:
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1. All state laws applicable to the provision of the Services
as described in the Application will have been complied with.
2. The provision of the Services as described in the
Application will not violate the legal rights of the holders of
any securities issued by CSWS or any associate company of CSWS.
The opinions expressed above in respect of the provision of the
Services described in the Application are subject to the following
assumptions or conditions:
a. The provision of the Services shall have been duly
authorized and approved to the extent required by state law by
the Board of Directors of CSWS.
b. The Securities and Exchange Commission shall have duly
entered an appropriate order or orders granting and permitting
the Application to become effective with respect to the
provision of the Services.
c. The Services shall be provided in accordance with
required approvals, authorizations, consents, certificates and
orders of any state commission or regulatory authority with
respect to the provision of the Services 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 provision of the
Services shall be satisfactory to us, including the receipt in
satisfactory form of opinions of other counsel qualified to
practice in jurisdictions pertaining to the Services 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
GWG/RBW
