<PAGE> File No. 70-8777
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________
AMENDMENT NO. 2
TO
FORM U-1
__________________________________
APPLICATION OR DECLARATION
under the
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
* * *
AMERICAN ELECTRIC POWER SERVICE CORPORATION
1 Riverside Plaza, Columbus, Ohio 43215
(Name of companies filing this statement and
addresses of principal executive offices)
* * *
AMERICAN ELECTRIC POWER COMPANY, INC.
1 Riverside Plaza, Columbus, Ohio 43215
(Name of top registered holding company
parent of each applicant or declarant)
* * *
G. P. Maloney, Executive Vice President
AMERICAN ELECTRIC POWER SERVICE CORPORATION
1 Riverside Plaza, Columbus, Ohio 43215
John F. Di Lorenzo, Jr., Associate General Counsel
AMERICAN ELECTRIC POWER SERVICE CORPORATION
1 Riverside Plaza, Columbus, Ohio 43215
(Names and addresses of agents for service)
American Electric Power Service Corporation ("Service
Corporation"), a subsidiary service corporation of American
Electric Power Company, Inc. ("American") hereby amends its
Application or Declaration on Form U-1 in File No. 70-8777 as
follows:
1. By amending and restating the fifth paragraph of Section
C. Reasons for the Realignment of ITEM 1. DESCRIPTION OF PROPOSED
TRANSACTIONS to read as follows:
"As a result of the realignment, the Service Corporation and
Electric Utility Companies expect to provide improved services more
efficiently. Power Generation, Nuclear Generation and Accounting
are expected to perform their functions with a total of
approximately 1,080 fewer staff. These staff reductions are
expected to reduce annual salary and benefit expenses by
$50,000,000 beginning in 1997, and by an additional $9,000,000
phased-in from 1997 to 2000, and continuing for the foreseeable
future. Although overall savings from the staff reductions are
expected, they cannot be quantified at this time, because savings
from staff reductions will be offset by additional expenses for
contractors and for other improvements in operations of those
business units. Any overall savings then are expected to be
invested in information systems, employee training and development,
customer call centers, and other areas which will facilitate
efficient operations. The overall operating and maintenance budget
of the Electric Utility Companies, including savings from staff
reductions and additional expenses to improve operations, for the
years 1996 through 1999 is expected to remain level; the operating
and maintenance budgets of each Electric Utility Company, however,
may vary from year to year. Initial staff reductions are not
expected in Energy Transmission and Distribution. Staff increases
are expected in Corporate Development and Marketing."
2. By amending and restating the first paragraph of Section
D. Services Affected by the Realignment of ITEM 1. DESCRIPTION OF
PROPOSED TRANSACTIONS to read as follows:
"Some management, engineering, maintenance and a variety of
administrative and support functions previously performed by the
Electric Utility Companies are being rendered after the realignment
by the Service Corporation. These services are being provided by
the Service Corporation, because the group that performs the
services renders them to units of two or more Electric Utility
Companies. Certain personnel that provide services to units of two
companies may be on the payroll of an Electric Utility Company, if
services are primarily performed for one Electric Utility Company
and incidentally for another. The personnel performing such
services are on the payroll of the company for whom services are
primarily performed. The cost of these services will be determined
in accordance with Rules 90 and 91 under the 1935 Act and billed to
in accordance with a cost sharing agreement. As compared to
December 31, 1994, the realignment is expected to result in net
transfer of approximately 1,135 employees to the Service
Corporation from the Electric Utility Companies. (See Exhibit 5.)
This transfer will not increase overall employment of the Service
Corporation and the Electric Utility Subsidiaries which is expected
to decrease as described in Section C. Reasons for the Realignment
above."
3. By amending and restating the first paragraph of Section
E. Changes to Schedule A in ITEM 1. DESCRIPTION OF PROPOSED
TRANSACTIONS to read as follows:
"The realignment of the Service Corporation and the Electric
Utility Companies requires numerous changes to Schedule A. These
changes will revise the structure of the groups set forth in the
Schedule as well as the allocation ratios. With the centralization
of management of the Electric Utility Companies, the review and
approval of new work orders and monthly billings is changing. The
Proposed Amendment will be executed by authorized officers of the
Service Corporation and the other subsidiaries of American and will
substitute the Schedule A filed as Exhibit B-1 hereto for Schedule
A to the Service Agreements."
4. By adding Section F at the end of ITEM 1. DESCRIPTION OF
PROPOSED TRANSACTIONS:
"F. Compliance with Rule 54
Rule 54 provides that in determining whether to approve
certain transactions other than those involving exempt wholesale
generators ('EWG') or foreign utility companies ('FUCO'), as
defined in the 1935 Act, the Commission will not consider the
effect of the capitalization or earnings of any subsidiary which is
an EWG or FUCO if Rule 53(a), (b) and (c) are satisfied. The
requirements of Rule 53(a), (b) and (c) are satisfied.
Rule 53(a)(1). AEP Resources International, Limited
('AEPRI'), an indirect subsidiary of American, is an EWG. As of
March 31, 1996, American, through its subsidiary, AEP Resources,
Inc., had invested $365,000 in AEPRI. This investment represents
less than 1% of $1,406,191,000, the average of the consolidated
retained earnings of American reported on Form 10-K or Form 10-Q,
as applicable, for the four consecutive quarters ended March 31,
1996.
Rule 53(a)(2). AEPRI will maintain books and records and make
available the books and records required by Rule 53(a)(2).
Rule 53(a)(3). No more than 2% of the employees of the
Electric Utility Companies will, at any one time, directly or
indirectly, render services to AEPRI.
Rule 53(a)(4). American has submitted and will submit a copy
of Item 9 and Exhibits G and H of American's Form U5S to each of
the public service commissions having jurisdiction over the retail
rates of the Electric Utility Companies.
Rule 53(b). (i) Neither American nor any subsidiary of
American is the subject of any pending bankruptcy or similar
proceeding; (ii) American's average consolidated retained earnings
for the four most recent quarterly periods ($1,406,191,000)
represented an increase of approximately $74,946,000 (or 5.6%) in
the average consolidated retained earnings from the previous four
quarterly periods ($1,331,245,000); and (iii) for the year ended
December 31, 1995, there were no losses attributable to American's
investments in AEPRI other than $93,000 in preliminary development
and start-up costs.
Rule 53(c). Rule 53(c) is inapplicable because the
requirements of Rule 53(a) and (b) have been satisfied."
5. Exhibit F, an Opinion of Counsel as to the proposed
transactions, is filed herewith.
SIGNATURE
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, the undersigned company has duly caused this
statement to be signed on its behalf by the undersigned thereunto
duly authorized.
AMERICAN ELECTRIC POWER SERVICE CORPORATION
By:_/s/ G. P. Maloney____________
G. P. Maloney
Executive Vice President
May 21, 1996
Exhibit F
614/223-1632
Securities and Exchange Commission
Office of Public Utility Regulation
450 Fifth Street, N.W.
Washington, D.C. 20549
May 21, 1996
Re: American Electric Power Service Corporation
SEC File No. 70-8777
Gentlemen:
Regarding the transactions proposed and described in the
Application or Declaration on Form U-1 filed by American Electric
Power Service Corporation ("Service Corporation") with this
Commission in the captioned proceeding in connection with the
proposed amendment of Schedule A ("Proposed Amendment") to its
Service Agreements with American Electric Power Company, Inc.
("American") and the direct and indirect subsidiaries of
American, I am of the opinion that:
(a) subject to the following paragraph, all state laws
applicable to the Proposed Amendment will have been
complied with;
(b) the Service Corporation is a validly organized and duly
existing corporation; and
(c) the Proposed Amendment will not violate the legal
rights of the holders of any securities issued by the
Service Corporation or any associate company thereof.
In rendering my opinion in paragraph (a) above, I have assumed
that, with respect to the Proposed Amendment, (i) there will be
no adverse action by the Indiana Utility Regulatory Commission in
the case of the Service Agreements between the Service
Corporation and AEP Generating Company and the Service
Corporation and Indiana Michigan Power Company; and (ii)
appropriate action will have taken place by both the Virginia
State Corporation Commission and the West Virginia Public Service
Commission in the case of the Service Agreement between
Appalachian Power Company and the Service Corporation, and by the
West Virginia Public Service Commission in the case of the
Service Agreement between Wheeling Power Company and the Service
Corporation.
I hereby consent to the filing of this opinion as an exhibit to
the above-mentioned Application or Declaration.
Very truly yours,
/s/ John M. Adams, Jr.
John M. Adams, Jr.
Counsel for
American Electric Power
Service Corporation
opincoun.u-1
