<PAGE> File No. 70-8777
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________
AMENDMENT NO. 3
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:
"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. Because the realignment
increases the amount of services rendered by the Service
Corporation, it is expected that the absolute amount of the
Service Corporation billings to the Electric Utility Companies
will increase. But this increase will be more than offset by
savings from staff reductions so that the Electric Utility
Companies overall costs will be lower. Annual labor savings
related to staff reductions will exceed the one-time costs of the
realignment within a year. Thereafter, 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. (See Exhibit 7.)
These savings from staff reductions will be offset by
additional expenses for contractors and for other improvements in
operations of those business units, neither of which can be
quantified at this time. The resultant net savings are then
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. As a
result of the more efficient operations and proposed new
investments, consumers will benefit from the realignment.Initial
staff reductions are not expected in Energy Transmission and
Distribution. Staff increases are expected in Corporate
Development and Marketing."
2. By adding the following exhibits:
Exhibit B-2 Form of Amendment to Service Agreement
Exhibit 7 Chart showing Net Impact of
Restructuring
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/ A. A. Pena_______________
A. A. Pena
Vice President - Finance and Treasurer
July 24, 1996
Exhibit B-2
AMENDMENT NO. 1 TO
SERVICE AGREEMENT
THIS AMENDMENT, made and entered into as of the ______ day
of ____________, ____, between AMERICAN ELECTRIC POWER SERVICE
CORPORATION, a New York corporation (hereinafter called the
"Company") and [ ELECTRIC UTILITY COMPANY ], a ____________
corporation (hereinafter called the "Client"), to the Service
Agreement dated as of January 1, 1980 between the Company and the
Client (the "Service Agreement").
WITNESSETH:
WHEREAS, the Company and the Client are parties to the
Service Agreement, pursuant to which the Company has agreed to
provide, and the Client to pay for, certain services, properties
and other resources, when and as requested by the Client in
accordance with such Service Agreement, which was authorized by
the Securities and Exchange Commission under the Public Utility
Holding Company Act of 1935 in its Order dated February 19, 1981
(HCAR No. 21922); and
WHEREAS, the Company and the Client now wish to amend said
Service Agreement in accordance with an Order of the Securities
and Exchange Commission dated _______________, ____;
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements herein, the Company and the Client hereby agree
to amend the Service Agreement by substituting the Schedule A
attached hereto for the Schedule A attached to the Service
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed as of the date and year first above
written.
AMERICAN ELECTRIC POWER SERVICE CORPORATION
By____________________________
[ ELECTRIC UTILITY COMPANY ]
By____________________________
Exhibit 7
REALIGNMENT - NET IMPACT
<TABLE>
<CAPTION>
Estimated
Labor Had Estimated
Employees Labor After Billing
Electric Not Been Transfer of Impact
Utility No. of Transferred Employees Increase No. of Annual Labor Net Increase
Company Employees to AEPSC to AEPSC (Decrease) Terminations Reduction (Decrease)
(a) (b) (c) (d) (e)
<S> <C> <C> <C> <C> <C> <C> <C>
APCo 467 $25,706,441 22,760,234 (2,946,207) 231 12,189,583 ( 15,135,790)
CSPCo 264 19,526,952 10,768,574 (8,758,378) 89 4,969,217 ( 13,727,595)
I&M 224 12,170,411 13,079,099 908,688 281(f) 17,431,846(f) ( 16,523,158)
KPCo 51 2,646,814 3,590,203 943,389 83 4,370,513 ( 3,427,124)
KgPCo 4 341,387 605,885 264,498 264,498
OPCo 526 24,425,702 33,836,577 9,410,875 386 20,418,110 ( 11,007,235)
WPCo 5 357,183 534,318 177,135 177,135
TOTAL 1,541 $85,174,890 $85,174,890 $ 0 1,070 $59,379,269 ($59,379,269)
(a) Employees transferred to Service Corporation from Electric Utility Companies after
12/15/96. Includes estimated 370 accounting personnel expected to be transferred by
2000.
SERVICE CORPORATION EMPLOYEES
12/31/94 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,064
Transfers to Service Corporation from Electric Utility Companies . . . . 1,541
Net change due to nuclear transfers, expected
and actual layoffs, terminations, retirements, etc. . . . . . . . . . . (406)
After Realignment 3,199
(b) Estimated average 12 month wage.
(c) Based on March and April Service Corporation wage bills except for Northern and
Southern Regional Service Organizations. Since these Organizations are traveling
maintenance groups, their charges will vary, depending on the maintenance work
performance. This schedule used the 1996 O&M budget for these groups to estimate
1996 billings. Billings will fluctuate between companies from year to year based on
the maintenance work performed. For 1996, OPCo's O&M budget is expected to be higher
than for some other years due to expected maintenance work to be performed by the
Regional Service Organizations.
(d) Estimated Accounting, Power Generation and Nuclear Generation personnel terminations.
Accounting terminations of approximately 180 personnel are expected to occur through
2000. Because all of their time was charged to I&M, 50 personnel employed by Service
Corporation in Nuclear Generation are included with I&M terminations. No other
terminations were Service Corporation staff.
(e) Twelve months of wages and medical and dental benefits based on the salary used to
determine the severance accruals.
(f) 46 terminations and $2,379,398 of annual labor reduction are associated with AEGCo's
share of Rockport Generating Station.
</TABLE>
REALIGNMENT
PAYBACK PERIOD FOR SEVERANCE COSTS
<TABLE>
<CAPTION>
Electric
Utility Severance Annual Labor Payback Period
Company Costs Savings (Years)
(a) (b)
<S> <C> <C> <C>
APCo 7,130,354 15,135,790 .47
CSPCo 3,167,930 13,727,595 .23
I&M 9,048,080 16,523,158 .55
KPCo 1,757,165 3,427,124 .51
KgPCo 0 (264,498) --
OPCo 11,049,847 11,007,235(c) 1.00
WPCo 0 (177,135) --
TOTAL $32,153,376 $59,379,269 0.54
</TABLE>
(a) Based on the recorded severance accruals for steam and
nuclear generation personnel and estimated severance for the
accounting personnel.
(b) Based on estimated 12 months of wages that were used to
calculate severance accruals.
(c) For 1996, OPCo's O&M budget is expected to be higher than
for some other years due to expected outage maintenance; as
a result, its annual labor savings may exceed this amount in
some future years.
