SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
* * *
AMENDMENT NO. 1
TO
FORM U-1
APPLICATION OR DECLARATION
under the
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
* * *
AMERICAN ELECTRIC POWER COMPANY, INC.
1 Riverside Plaza, Columbus, Ohio 43215
and
CENTRAL AND SOUTH WEST CORPORATION
1616 Woodall Rodgers Freeway, Dallas Texas 75266
(Name of companies and top registered holding company
parents filing this statement and address
of principal executive offices)
* * *
Armando A. Pena Wendy G. Hargus
Treasurer Treasurer
American Electric Power Company, Inc. Central and South West Corporation
1 Riverside Plaza 1616 Woodall Rodgers Freeway
Columbus, OH 43215 Dallas, TX 75266
Susan Tomasky Jeffrey D. Cross
Senior Vice President and General Counsel Vice President and General Counsel
American Electric Power Company, Inc. American Electric Power Company, Inc.
1 Riverside Plaza 1 Riverside Plaza
Columbus, OH 43215 Columbus, OH 43215
Marianne Smythe Joris M. Hogan
Wilmer, Cutler & Pickering Milbank, Tweed, Hadley & McCloy
2445 M Street, N.W. 1 Chase Manhattan Plaza
Washington, DC 20037-1420 New York, NY 10005
(Names and addresses of agents for service)
American Electric Power Company, Inc. ("AEP"), a New York
corporation, and Central and South West Corporation ("CSW"), a
Delaware corporation, registered holding companies under the Public
Utility Holding Company Act of 1935 (the "1935 Act"),
(collectively, "Applicants"), hereby amend their joint Application
or Declaration on Form U-1 in File No. 70-9381 as follows:
1. By amending and restating the fourth paragraph of Item
1.A. as follows:
"The Merger Agreement provides for a business combination
of AEP and CSW in which Merger Sub will be merged into CSW.
CSW will be the surviving corporation and will become a wholly
owned subsidiary of AEP. Immediately following the Merger,
the Combined Company will be a holding company with respect to
CSW, which, in turn, will be a holding company with respect to
the electric utility subsidiaries and other subsidiaries it
currently owns (with the exception of CSWS, which will be
merged into AEPSC, and CSW Credit, which will be directly held
by the Combined Company). AEP's utility and non-utility
subsidiaries will remain subsidiaries of AEP, and CSW's
utility and non-utility subsidiaries, which will continue to
be owned by CSW, will become indirect subsidiaries of AEP
(except for CSWS and CSW Credit). The final ownership
structure has not yet been determined."
2. By amending and restating the second paragraph of Item
3.B.1.c. as follows:
"Immediately following the Merger, AEP will be a holding
company with respect to CSW, which, in turn, will be a holding
company with respect to the electric utility subsidiaries and
other subsidiaries it currently owns (with the exception of
CSWS, which will be merged into AEPSC, and CSW Credit, which
will be directly held by the Combined Company). See Exhibit
E-6. Although it is intended that these interests will be
restructured, the final ownership structure has not yet been
determined. Accordingly, Applicants request the Commission to
reserve jurisdiction over this issue for a period of eight
years after the consummation of the Merger to permit the
Combined Company to effect the necessary restructuring,
subject to such further regulatory approval as may be
required."
3. By amending and restating Item 3.D. as follows:
"D. INTRA-SYSTEM FINANCING AND OTHER COMMISSION
AUTHORIZATIONS
In order to maximize the efficiencies resulting from the
Merger, the Applicants seek authority for the Combined Company
to reorganize, consolidate and, where necessary, restate
certain of the intra-system financing and other authorizations
previously issued by this Commission to each of AEP, CSW, and
their respective subsidiaries, as discussed in more detail
below.
Applicants request approval, effective upon consummation
of the Merger, to merge CSWS with and into AEPSC. Applicants
request that, upon the merger of CSWS into AEPSC, AEPSC
succeed to certain of the authority of CSWS as set forth in
various Commission orders (which orders are summarized in
Exhibit I-1 attached hereto) and that such activities with
respect to CSWS include AEPSC.
Certain of the non-utility businesses of CSW (each a 'CSW
Non-utility Business') conduct activities that are
substantially equivalent to the activities of one or more non-
utility subsidiaries of AEP (each an 'AEP Non-utility
Business'). Applicants request approval, as deemed
appropriate by management, for the Combined Company to
directly or indirectly acquire, and for CSW to transfer to the
Combined Company, CSW Non-utility Businesses through: (1)
merger of one or more CSW Non-utility Businesses with one or
more wholly owned non-utility subsidiaries (either presently
existing and performing substantially equivalent activities or
to be formed, if appropriate) of the Combined Company (each a
'Combined Non-utility Business'), (2) the dividending or
distribution of the common stock of one or more CSW Non-
utility Businesses from CSW to the Combined Company, or (3)
the acquisition of the assets or common stock of one or more
CSW Non-utility Businesses by one or more Combined Non-utility
Businesses. Applicants request approval, if management deems
appropriate, to consolidate each CSW Non-utility Business with
its corresponding AEP Non-utility Business into a single
Combined Non-utility Business directly or indirectly owned by
the Combined Company. Applicants request approval for the
Combined Company to transfer to CSW, and CSW to acquire, any
AEP Non-utility Business or to consolidate any AEP Non-utility
businesses with and into any like CSW Non-utility Business
consistent with the foregoing principles and authority.
Applicants request that upon consolidation, each resulting
Combined Non-utility Business succeed to all of the authority
of each corresponding CSW Non-utility Business and AEP Non-
utility Business, respectively, as set forth in previously
issued Commission orders. The determination of the
appropriate corporate structure of the Combined Company is the
subject of currently convoked Merger transition teams.
Pursuant to American Elec. Power Co., HCAR No. 26864
(Apr. 27, 1998) and American Elec. Power Co., HCAR No. 26516
(May 10, 1996), this Commission authorized AEP to issue and
sell securities up to 100% of its consolidated retained
earnings for investment in EWGs and FUCOs. Pursuant to
Central and South West Corp. et al., HCAR No. 26653 (Jan. 24,
1997), this Commission authorized CSW to issue and sell
securities up to 100% of its consolidated retained earnings
for investment in EWGs and FUCOs. Applicants propose that,
upon consummation of the Merger, the authority of CSW to issue
and sell securities in an amount up to 100% of its
consolidated retained earnings for investment in EWGs and
FUCOs as provided by Central and South West Corp. et al., HCAR
No. 26653 (Jan. 24, 1997) shall cease. To the extent that AEP
and CSW were authorized, pursuant to Sections 32 and 33 of the
1935 Act and the rules thereunder, to invest up to 100% of
their consolidated retained earnings in EWG and FUCO
interests, the Combined Company should also be authorized to
invest up to 100% of its combined consolidated retained
earnings in EWG and FUCO interests. Applicants therefore
propose that, upon consummation of the Merger, the authority
of the Combined Company to issue and sell securities in an
amount up to 100% of its consolidated retained earnings for
investment in EWGs and FUCOs shall be the same as that
provided by American Elec. Power Co., HCAR No. 26864 (Apr. 27,
1998) and American Elec. Power Co., HCAR No. 26516 (May 10,
1996), except that for purposes of determining the amount of
consolidated retained earnings as contemplated by American
Elec. Power Co., HCAR No. 26864 (Apr. 27, 1998) and American
Elec. Power Co., HCAR No. 26516 (May 10, 1996), 'consolidated
retained earnings' shall consist of the consolidated retained
earnings of the Combined Company.
Currently, the CSW System uses short-term debt, primarily
commercial paper, to meet working capital requirements and
other interim capital needs. In addition, to improve
efficiency, CSW has established a system money pool (the
'Money Pool') to coordinate short-term borrowings for CSW, its
U.S. electric utility subsidiary companies and CSWS, as set
forth in various Commission orders (which orders are
summarized in Exhibit I-2 attached hereto). AEP has no
equivalent to the Money Pool. Applicants hereby request
authorization, upon consummation of the Merger and on the same
terms and conditions as set forth in the orders summarized in
Exhibit I-2, to permit: (1) the Combined Company, AEP's U.S.
electric subsidiary companies and AEPSC to participate in the
Money Pool, and (2) the Combined Company to manage and to fund
the Money Pool. Exhibit I-2 summarizes the existing authority
associated with the Money Pool and states the additional
authority requested for the Money Pool upon consummation of
the Merger. Applicants request that following the Merger,
both the Combined Company and CSW (for a transitional period)
will have in aggregate the authority that CSW has with respect
to those orders summarized in Exhibit I-2.
CSW Credit purchases, without recourse, the accounts
receivable of CSW's U.S. electric utility subsidiary companies
and certain non-affiliated utility companies. The sale of
accounts receivable provides CSW's U.S. electric utility
subsidiary companies with cash immediately, thereby reducing
working capital needs and revenue requirements. In addition,
because CSW Credit's capital structure is more highly
leveraged than that of the CSW U.S. electric utility
subsidiaries and due to CSW Credit's higher short-term debt
ratings, CSW's overall cost of capital is lower. CSW Credit
issues commercial paper to meet its financing needs.
Applicants hereby request approval, effective upon
consummation of the Merger, for the Combined Company to
directly acquire, and for CSW to transfer to the Combined
Company, the business of CSW Credit through: (1) the merger
of CSW Credit with a subsidiary of the Combined Company to be
formed, if appropriate, (2) the dividending or distribution of
the common stock of CSW Credit from CSW to the Combined
Company, or (3) the acquisition of the assets or common stock
of CSW Credit by a subsidiary of the Combined Company to be
formed, if appropriate. Applicants request that, upon the
acquisition of the business of CSW Credit by the Combined
Company, the resulting company ('New Credit') succeed to all
of the authority of CSW Credit as set forth in various
Commission orders (which orders are summarized in Exhibit I-3
attached hereto). Exhibit I-3 summarizes the existing
authority of CSW Credit and states the authority requested for
New Credit.
CSW has supported the financing and other activities of
its subsidiaries through obtaining Commission approval to
issue and guarantee certain indebtedness. After the Merger it
may be more efficient or even commercially necessary for the
Combined Company to support certain of the financing
arrangements and business activity previously supported by
CSW. Applicants hereby request approval for the Combined
Company, upon consummation of the Merger, to support those
financing and other activities presently supported by CSW,
including the issuance and guaranteeing of indebtedness,
pursuant to those orders of the Commission summarized in
Exhibit I-4. Exhibit I-4 describes the existing authority of
CSW which Applicants seek to duplicate in favor of the
Combined Company. It is Applicants' intention that, following
the Merger, both the Combined Company and CSW will
simultaneously have in aggregate the authority that CSW
currently has with respect to those orders summarized in
Exhibit I-4. The Combined Company does not seek to widen such
authority which will necessarily remain limited to the orders
described in Exhibit I-4. The practical effect of this
approval would be to insert the Combined Company alongside CSW
in virtually all instances where CSW is mentioned in such
orders.
Pursuant to Central and South West Corp., HCAR No. 26616
(Nov. 27, 1996), this Commission confirmed previous authority
and granted additional authority such that CSW was authorized,
through December 31, 2001, to offer 10,000,000 shares of CSW
Common Stock pursuant to its Dividend Reinvestment and Stock
Purchase Plan, of which approximately 2,000,000 remain
unissued. Pursuant to American Elec. Power Co., HCAR No.
26553 (Aug. 13, 1996) this Commission confirmed previous
authority and granted additional authority such that AEP was
authorized, through December 31, 2000, to offer 54,000,000
shares of AEP Common Stock pursuant to its Dividend
Reinvestment and Direct Stock Purchase Plan. Applicants hereby
request that, as soon as practicable upon consummation of the
Merger, (1) the authority of CSW's Dividend Reinvestment and
Stock Purchase Plan be terminated, and (2) the Combined
Company be authorized to issue 55,200,000 shares of AEP Common
Stock through December 31, 2000 pursuant to its Dividend
Reinvestment and Direct Stock Purchase Plan consistent
otherwise with all the terms and conditions set forth in
American Elec. Power Co., HCAR No. 26553 (Aug. 13, 1996).
Pursuant to Central and South West Corp., HCAR No. 26413
(Nov. 21, 1995), this Commission confirmed previous authority
and granted additional authority such that CSW was authorized
to issue and sell a total of 5,000,000 shares of CSW Common
Stock to the trustee of the Central and South West Thrift
Plan, of which approximately 4,400,000 remain unissued.
Pursuant to American Elec. Power Co., HCAR No. 26786 (Dec. 1,
1997), this Commission confirmed previous authority and
granted additional authority such that AEP was authorized,
through December 31, 2001, to sell 8,800,000 shares of AEP
Common Stock to the trustee of the American Electric Power
System Employees Savings Plan. Applicants hereby request
that, upon consummation of the Merger, (1) the authority of
CSW to issue shares of CSW Common Stock to the Central and
South West Thrift Plan be terminated, and (2) the Combined
Company be authorized to issue 11,440,000 shares of AEP Common
Stock through December 31, 2001 in connection with the
American Electric Power System Employees Savings Plan and the
Central and South West Thrift Plan (for a transitional period)
consistent otherwise with all the terms and conditions set
forth in American Elec. Power Co., HCAR No. 26786 (Dec. 1,
1997) and Central and South West Corp., HCAR No. 26413 (Nov.
21, 1995), respectively.
Pursuant to Central and South West Corp., HCAR No. 25511
(Apr. 7, 1992), this Commission authorized CSW to adopt the
Central and South West Corporation 1992 Long Term Incentive
Plan pursuant to which certain key employees would be
eligible, through December 31, 2001, to receive certain
performance and equity-based awards including (a) stock
options, (b) stock appreciation rights, (c) performance units,
(d) phantom stock, and (e) restricted shares of common stock.
Applicants hereby request that, upon consummation of the
Merger, the Combined Company succeed to the authority of CSW
to permit it (i) to honor the awards granted by CSW prior to
the consummation of the Merger, (ii) to administer the plan
(subject to any necessary shareholder or regulatory approval)
on a Combined Company basis and grant any remaining awards,
and (iii) to reserve and issue sufficient shares of AEP Common
Stock pursuant to subparagraphs (i) and (ii) above in
connection with the Central and South West Corporation 1992
Long Term Incentive Plan consistent otherwise with all the
terms and conditions set forth in Central and South West
Corp., HCAR No. 25511 (Apr. 7, 1992)."
4. By filing the following exhibits:
Exhibits Description
E-6 Amended and Restated Combined Company
corporate chart after the Merger (filed
herewith on Form SE)
H Amended and Restated Form of Notice
I-1 CSWS Authorizations
I-2 Short-Term Borrowing Program
I-3 CSW Credit Authorizations
I-4 CSW Guarantee Authorizations
SIGNATURE
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, the undersigned companies have duly caused
this statement to be signed on their behalf by the undersigned
thereunto duly authorized.
AMERICAN ELECTRIC POWER COMPANY, INC.
By_/s/ A. A. Pena______________
Treasurer
CENTRAL AND SOUTH WEST CORPORATION
By_/s/ Wendy G. Hargus_________
Treasurer
Dated: November 9, 1998
Exhibit H
UNITED STATES OF AMERICA
before the
SECURITIES AND EXCHANGE COMMISSION
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Release No. / , 1998
__________________________________________
:
In the Matter of :
:
AMERICAN ELECTRIC POWER COMPANY, INC. :
1 Riverside Plaza :
Columbus, Ohio 43215 :
:
CENTRAL AND SOUTH WEST CORPORATION :
1616 Woodall Rodgers Freeway :
Dallas, TX 75266 :
:
(70-9381) :
__________________________________________:
American Electric Power Company, Inc. ("AEP") and Central and
South West Corporation ("CSW"), registered holding companies
collectively, ("Applicants"), have filed with the Commission an
Application or Declaration pursuant to the Public Utility Holding
Company Act of 1935 (the "1935 Act"), designating Sections 6, 7, 9,
10, 11, 12, 13, 32 and 33 of the 1935 Act and Rules promulgated
thereunder as applicable to the proposed combination of AEP and
CSW.
As described in more detail below, AEP proposes: (1) to
acquire, by means of the merger described below all of the issued
and outstanding common stock of CSW ("CSW Common Stock"), and
through this acquisition (i) all of the issued and outstanding
common stock of Central and South West Services, Inc. "CSWS"), (ii)
all of the issued and outstanding common stock of CSW's direct
electric utility subsidiary companies, Central Power and Light
Company ("CPL"), Public Service Company of Oklahoma ("PSO"),
Southwestern Electric Power Company ("SWEPCO") and West Texas
Utilities Company ("WTU"), and (iii) all of the issued and
outstanding common stock of CSW's nonutility subsidiaries, CSW
Credit, Inc. ("CSW Credit"), CSW Energy, Inc. ("CSW Energy"), CSW
Energy Services, Inc. ("CSW Energy Services"), CSW International,
Inc. ("CSW International"), CSW Leasing, Inc. ("CSW Leasing"), C3
Communications, Inc. ("C3 Communications") and EnerShop, Inc.
("EnerShop"); (2) to capitalize a special purpose subsidiary and
issue AEP common stock ("AEP Common Stock") to effect the proposed
transactions; (3) to provide loans and guarantees to CSW's
nonutility subsidiaries; (4) that its service corporation, American
Electric Power Service Corporation ("AEPSC") render services to
AEP's and CSW's utility and nonutility subsidiaries; and (5) the
retention of CSW's non-utility businesses.
AEP, a New York corporation, has its principal executive
offices at 1 Riverside Plaza, Columbus, Ohio. AEP was incorporated
under the laws of the State of New York in 1906 and reorganized in
1925. AEP is a registered public utility holding company that owns
all of the outstanding shares of common stock of seven U.S.
electric utility operating subsidiaries: Appalachian Power Company
("APCo"), Columbus Southern Power Company ("CSPCo"), Indiana
Michigan Power Company ("I&M"), Kentucky Power Company ("KPCo"),
Kingsport Power Company ("KgPCo"), Ohio Power Company ("OPCo") and
Wheeling Power Company ("WPCo"). Most of the operating revenues of
AEP and its subsidiaries are derived from sales of electricity.
AEP also owns, either directly or indirectly, all of the common
stock of four material non-utility businesses -- AEP Resources,
Inc. ("AEP Resources"), AEP Resources Service Company ("AEPRESCO"),
AEP Communications, LLC ("AEPC"), and AEP Energy Services, Inc.
("AEPES") -- and all of the common stock of two other businesses --
AEP Generating Company ("AEGCo") and American Electric Power
Service Corporation ("AEPSC"). AEP indirectly owns 50% of the
outstanding share capital of Yorkshire Electricity Group plc
("Yorkshire Electricity").
AEP and its subsidiaries are subject to the broad regulatory
provisions of the 1935 Act administered by the Commission. Various
of its subsidiaries are also subject to regulation by the Federal
Energy Regulatory Commission ("FERC") under the Federal Power Act
("FPA") with respect to rates for interstate sale at wholesale and
transmission of electric power, accounting and other matters and
construction and operation of hydroelectric projects.
AEP's electric utility operating subsidiaries serve
approximately 3 million customers in Indiana, Kentucky, Michigan,
Ohio, Tennessee, Virginia and West Virginia. The generating and
transmission facilities of these subsidiaries are physically
interconnected, and their operations are coordinated, as a single
integrated electric utility system. Transmission networks are
interconnected with extensive distribution facilities in the
territories served.
At December 31, 1997, the U.S. subsidiaries of AEP had a total
of 17,844 employees. AEP, as such, has no employees. The electric
utility operating subsidiaries of AEP are each described below:
APCo (organized in Virginia in 1926) is engaged in the
generation, sale, purchase, transmission and distribution of
electric power to approximately 877,000 customers in the
southwestern portion of Virginia and southern West Virginia,
and in supplying electric power at wholesale to other electric
utility companies and municipalities in those states and in
Tennessee. At December 31, 1997, APCo had 3,877 employees.
Among the principal industries served by APCo are coal mining,
primary metals, chemicals and textile mill products. A
comparatively small part of the properties and business of
APCo is located in the northeastern end of Tennessee. APCo's
retail rates and certain other matters are subject to
regulation by the West Virginia Public Service Commission
("West Virginia Commission") and the State Corporation
Commission of Virginia.
CSPCo (organized in Ohio in 1937, the earliest direct
predecessor company having been organized in 1883) is engaged
in the generation, sale, purchase, transmission and
distribution of electric power to approximately 621,000
customers in central and southern Ohio, and in supplying
electric power at wholesale to other electric utilities and to
municipally owned distribution systems within its service
area. At December 31, 1997, CSPCo had 1,802 employees. Among
the principal industries served by CSPCo are food processing,
chemicals, primary metals, electronic machinery and paper
products. CSPCo's retail rates and certain other matters are
subject to regulation by the Public Utilities Commission of
Ohio ("Ohio Commission").
I&M (organized in Indiana in 1925) is engaged in the
generation, sale, purchase, transmission and distribution of
electric power to approximately 549,000 customers in northern
and eastern Indiana and southwestern Michigan, and in
supplying electric power at wholesale to other electric
utility companies, rural electric cooperatives and
municipalities. At December 31, 1997, I&M had 3,306
employees. Among the principal industries served by I&M are
primary metals, transportation equipment, electrical and
electronic machinery, fabricated metal products, rubber and
miscellaneous plastic products and chemicals and allied
products. I&M's retail rates and certain other matters are
subject to regulation by the Indiana Utility Regulatory
Commission and the Michigan Public Service Commission. I&M
also is subject to regulation by the Nuclear Regulatory
Commission ("NRC") under the Atomic Energy Act of 1954, as
amended ("Atomic Energy Act") with respect to the operation of
its nuclear generation plant.
KPCo (organized in Kentucky in 1919) is engaged in the
generation, sale, purchase, transmission and distribution of
electric power to approximately 168,000 customers in eastern
Kentucky, and in supplying electric power at wholesale to
other utilities and municipalities in Kentucky. At December
31, 1997, KPCo had 731 employees. The principal industries
served by KPCo include coal mining, petroleum refining,
primary metals and chemicals. KPCo's retail rates and
certain other matters are subject to regulation by the
Kentucky Commission.
KgPCo (organized in Virginia in 1917) provides electric
service to approximately 43,000 customers in Kingsport and
eight neighboring communities in northeastern Tennessee.
KgPCo has no generating facilities of its own. It purchases
electric power distributed to its customers from APCo. At
December 31, 1997, KgPCo had 85 employees. The principal
industries served by KgPCo include chemicals and allied
products, paper products, stone, clay, glass and concrete
products, textiles and printing products. KgPCo's retail
rates and certain other matters are subject to regulation by
the Tennessee Regulatory Authority.
OPCo (organized in Ohio in 1907 and reincorporated in
1924) is engaged in the generation, sale, purchase,
transmission and distribution of electric power to
approximately 679,000 customers in the northwestern, east
central, eastern and southern sections of Ohio, and in
supplying electric power at wholesale to other electric
utility companies and municipalities. At December 31, 1997,
OPCo and its wholly owned subsidiaries had 4,376 employees.
Among the principal industries served by OPCo are primary
metals, rubber and plastic products, stone, clay, glass and
concrete products, petroleum refining and chemicals. OPCo's
retail rates and certain other matters are subject to
regulation by the Ohio Commission.
WPCo (organized in West Virginia in 1883 and
reincorporated in 1911) provides electric service to
approximately 42,000 customers in northern West Virginia.
WPCo has no generating facilities of its own. It purchases
electric power distributed to its customers from OPCo. At
December 31, 1997, WPCo had 94 employees. The principal
industries served by WPCo include chemicals, coal mining and
primary metal products. WPCo's retail rates and certain other
matters are subject to regulation by the West Virginia
Commission.
AEGCo was organized in Ohio in 1982 as an electric generating
company. AEGCo sells power at wholesale to I&M, KPCo and Virginia
Electric and Power Company, an unaffiliated public utility. AEGCo
has no employees.
AEPSC provides, at cost, accounting, administrative,
information systems, engineering, financial, legal, maintenance and
other services to the AEP companies. The executive officers of AEP
and its public utility subsidiaries are all employees of AEPSC.
AEP, primarily through AEP Resources, AEPRESCO, AEPC, and
AEPES, pursues new non-utility business opportunities, particularly
those which allow use of its expertise. These subsidiaries are
described below:
AEP Resources' primary business is development of, and
investment in, exempt wholesale generators ("EWGs"), foreign
utility companies ("FUCOs"), qualifying cogeneration
facilities and other energy-related domestic and international
investment opportunities and projects.
AEP Resources indirectly owns 50% of the outstanding
share capital of Yorkshire Electricity. Yorkshire Electricity
is principally engaged in the distribution of electricity to
approximately 2.1 million customers in its authorized service
territory which is comprised of 3,860 square miles and located
centrally on the east coast of England.
AEP Resources' indirect subsidiary, AEP Pushan Power,
LDC, has a 70% interest in Nanyang Electric, a joint venture
organized to develop and build two 125 MW coal-fired
generating units near Nanyang City in the Henan Province of
The Peoples' Republic of China. Funding for the construction
of the generating units has commenced and will continue
through completion thereof, which is expected to occur
sometime before the end of 1999.
A subsidiary of AEP Resources also has an equity
interest, which, subject to certain conditions, could reach
20%, in Pacific Hydro Limited, an Australian company that
develops and operates hydroelectric facilities.
AEP received approval from the Commission under the 1935
Act to issue and sell securities in an amount up to 100% of
its consolidated retained earnings (approximately
$1,645,000,000 at June 30, 1998) for investment in EWGs and
FUCOs through AEP Resources. American Elec. Power Co., HCAR
No. 26864 (Apr. 27, 1998).
AEPRESCO offers engineering, construction, project
management and other consulting services for projects
involving transmission, distribution or generation of electric
power both domestically and internationally.
AEPC was formed in 1997 to pursue opportunities in the
telecommunications field. AEPC operates a fiber optic line
that runs through Kentucky, Ohio, Virginia and West Virginia.
This fiber optic line is capable of providing high speed
telecommunications capacity to other telecommunications
companies. In addition to establishing and providing fiber
optic services, AEPC also made investments in two companies
engaged in providing digital personal communications services,
the West Virginia PCS Alliance, LLC and the Virginia PCS
Alliance, LLC.
AEPES is authorized to engage in energy-related
activities, including marketing electricity, gas and other
energy commodities. AEPES is an energy-related company under
Rule 58.
AEP's consolidated operating revenues for the twelve months
ended June 30, 1998, after eliminating intercompany transactions,
were $8,195,575,000. Consolidated assets of AEP and its
subsidiaries as of June 30, 1998, were approximately $17.8 billion,
consisting of $11.6 billion in net electric utility property, plant
and equipment and $6.2 billion in other corporate assets.
CSW, incorporated under the laws of Delaware in 1925, has its
principal executive offices at 1616 Woodall Rodgers Freeway,
Dallas, Texas. CSW is a public utility holding company registered
under the 1935 Act that owns all of the common stock of four U.S.
electric utility operating subsidiaries: CPL, PSO, SWEPCO, and WTU.
CSW also owns all of the common stock of CSWS, CSW Energy, CSW
International, C3 Communications, EnerShop, CSW Energy Services,
and CSW Credit, and indirectly owns all of the outstanding share
capital of SEEBOARD. In addition, CSW owns 80% of the outstanding
shares of common stock of CSW Leasing.
CSW's electric utility subsidiaries are public utility
companies engaged in generating, purchasing, transmitting,
distributing and selling electricity. CSW's U.S. electric utility
operating subsidiaries serve approximately 1.7 million customers in
portions of Texas, Oklahoma, Louisiana and Arkansas. These
companies serve a mix of residential, commercial and diversified
industrial customers.
CSW and its subsidiaries are subject to the broad regulatory
provisions of the 1935 Act administered by the Commission. Various
of the subsidiaries are also subject to regulation by the FERC
under the FPA with respect to rates for interstate sale at
wholesale and transmission of electric power, accounting and other
matters and construction and operation of hydroelectric projects.
At December 31, 1997, the U.S. subsidiaries of CSW had 7,254
employees. CSW, as such, has no employees. The electric utility
operating subsidiaries of CSW are described below:
CPL (organized in Texas in 1945) is engaged in the
generation, sale, purchase, transmission and distribution of
electric power to approximately 628,000 customers in portions
of south Texas, and in supplying electric power at wholesale
to other electric utility companies and municipalities. At
December 31, 1997, CPL had 1,668 employees. The principal
industries served by CPL include manufacturing, mining,
agricultural, transportation and public utilities sectors.
The Public Utility Commission of Texas ("Texas Commission")
has original jurisdiction over retail rates in the
unincorporated areas and appellate jurisdiction over retail
rates in the incorporated areas served by CPL. CPL is also
subject to regulation by the NRC under the Atomic Energy Act
with respect to the operation of its ownership interest in a
nuclear generating plant.
PSO (organized in Oklahoma in 1913) is engaged in the
generation, sale, purchase, transmission and distribution of
electric power to approximately 481,000 customers in portions
of eastern and southwestern Oklahoma, and in supplying
electric power at wholesale to other electric utility
companies and municipalities. At December 31, 1997, PSO had
1,273 employees. The principal industries served by PSO
include natural gas and oil production, oil refining, steel
processing, aircraft maintenance, paper manufacturing and
timber products, glass, chemicals, cement, plastics,
aerospace, telecommunications and rubber goods. PSO is
subject to the jurisdiction of the Corporation Commission of
the State of Oklahoma with respect to retail rates.
SWEPCO (organized in Delaware in 1912) is engaged in the
generation, sale, purchase, transmission and distribution of
electric power to approximately 416,000 customers in portions
of northeastern Texas, northwestern Louisiana and western
Arkansas, and in supplying electric power at wholesale to
other electric utility companies and municipalities. At
December 31, 1997, SWEPCO had 1,529 employees. The principal
industries served by SWEPCO include mining, manufacturing,
chemical products, petroleum products, agriculture and
tourism. SWEPCO is subject to the jurisdiction of the
Arkansas Public Service Commission and the Louisiana Public
Service Commission with respect to retail rates, as well as
the Texas Commission as set forth in the description of the
regulation of CPL above.
WTU (organized in Texas in 1927) is engaged in the
generation, sale, purchase, transmission and distribution of
electric power to approximately 187,000 customers in portions
of central west Texas, and in supplying electric power at
wholesale to other electric utility companies and municipali-
ties. At December 31, 1997, WTU had 907 employees. WTU
serves manufacturing and processing plants producing cotton
seed products, oil products, electronic equipment, precision
and consumer metal products, meat products, gypsum products
and carbon fiber products. The territory also has several
military installations and state correctional institutions.
WTU is subject to the jurisdiction of the Texas Commission as
set forth in the description of the regulation of CPL above.
CSWS performs, at cost, various accounting, engineering, tax,
legal, financial, electronic data processing, centralized economic
dispatching of electric power and other services for the CSW
companies, primarily for CSW's U.S. electric utility subsidiaries.
After the Merger, services performed by CSWS will be performed by
AEPSC.
CSW's material non-utility businesses are conducted through
CSW Energy, CSW International, CSW Energy Services, C3
Communications, CSW Credit, EnerShop and CSW Leasing. These
subsidiaries are described below:
CSW Energy develops, owns and operates independent power
production and cogeneration facilities within the U.S.
Currently, CSW Energy has ownership interests in seven
projects, six in operation and one in development.
CSW International engages in international activities,
including developing, acquiring, financing and owning EWGs and
FUCOs, either alone or with local or other partners. CSW
International indirectly owns all of the outstanding share
capital of SEEBOARD plc ("SEEBOARD"). CSW acquired indirect
control of SEEBOARD in April 1996. SEEBOARD's principal
regulated businesses are the distribution and supply of
electricity. SEEBOARD is engaged in other businesses,
including gas supply, electricity generation and electrical
contracting. SEEBOARD's service area covers approximately
3,000 square miles in southeast England. The service area
extends from the outlying areas of London to the English
Channel.
CSW received approval from the Commission under the 1935
Act to issue and sell securities in an amount up to 100% of
its consolidated retained earnings (approximately
$1,732,000,000 at June 30, 1998) for investment in EWGs and
FUCOs through CSW Energy and CSW International. Central and
South West Corp., et al., HCAR No. 26653 (January 24, 1997).
CSW Energy Services, an energy-related company under Rule
58, was formed to compete in restructured electric utility
markets and serves as an energy service provider to wholesale
and retail customers. It also engages in the business of
marketing, selling, and leasing to certain consumers
throughout the United States certain electric vehicles and
retrofit kits subject to limitations imposed by the
Commission.
C3 Communications has two main lines of business. C3
Communications' Utility Automation Division specializes in
providing automated meter reading and related services to
investor-owned municipal and cooperative electric utilities.
C3 Communications also offers systems to aggregate meter data
from a variety of technologies and vendor products that span
multiple communication mode infrastructures including
broadband, wireless network, power line carrier and telephony-
based systems. C3 Communications is an "exempt
telecommunication company" under the 1935 Act.
CSW Credit was originally formed to purchase, without
recourse, accounts receivable from the CSW electric utility
subsidiaries to reduce working capital requirements. Because
CSW Credit's capital structure is more highly leveraged than
that of the CSW electric utility subsidiaries, CSW's overall
cost of capital is lower. Subsequent to its formation, under
the 1935 Act, CSW Credit's business has expanded to include
the purchase, without recourse, of accounts receivable from
certain non-affiliated parties subject to limitations imposed
by the Commission.
EnerShop, an energy-related company under Rule 58,
provides energy services to commercial, industrial,
institutional and governmental customers in Texas. These
services help reduce a customer's operating costs through
increased energy efficiencies and improved equipment
operations. EnerShop utilizes the skills of local trade
allies in offering services that include facility analysis;
project management; engineering design; equipment procurement;
and construction and performance monitoring.
CSW Leasing, approved by the Commission in 1985, is a
joint venture with CIT Group/Capital Equipment Financing. It
was formed to invest in leveraged leases.
CSW's consolidated operating revenues for the twelve months
ended June 30, 1998, after eliminating intercompany transactions,
were approximately $5.4 billion. Consolidated assets of CSW and
its subsidiaries as of June 30, 1998 were approximately $13.8
billion, consisting of $8.4 billion in net electric utility
property, plant and equipment and $5.4 billion in other corporate
assets.
An Agreement and Plan of Merger, dated as of December 21, 1997
("Merger Agreement") among AEP, CSW and Augusta Acquisition
Corporation, a wholly owned subsidiary that AEP has incorporated
under Delaware law ("Merger Sub"), provides for a combination of
AEP and CSW in which Merger Sub will be merged with and into CSW
("Merger"), with CSW as the surviving corporation.
Merger Sub was organized solely for the purpose of the Merger
and has not conducted any activities other than in connection with
the Merger. Merger Sub has no subsidiaries. Each share of common
stock of Merger Sub, par value $0.01 per share, to be issued to AEP
and outstanding immediately before the consummation of the Merger
will be converted into one share of CSW Common Stock, upon
consummation of the Merger. Thus, the sole purpose for Merger Sub
is to serve as an acquisition subsidiary of AEP for purposes of
effecting the Merger. Approval of this Application-Declaration
will constitute approval of the acquisition by AEP of the common
stock of Merger Sub.
AEP requests authority to issue shares of AEP Common Stock to
consummate the Merger. Each share of CSW Common Stock (other than
shares of CSW Common Stock owned by AEP, Merger Sub or any other
direct or indirect subsidiary of AEP and shares of CSW Common Stock
that are owned by CSW or any direct or indirect subsidiary of CSW,
in each case not held on behalf of third parties) issued and
outstanding immediately prior to the effective date of the Merger
will be converted into the right to receive, and become
exchangeable for, 0.60 shares of AEP Common Stock. The former
holders of CSW Common Stock will own approximately 40% of the
outstanding shares of AEP Common Stock after the Merger.
After the Merger, CSW will be a wholly owned subsidiary of
AEP. AEP's utility and nonutility subsidiaries will remain
subsidiaries of AEP. CSW's utility and nonutility subsidiaries
will become indirect subsidiaries of AEP, other than CSWS, which
will be merged into AEPSC, and CSW Credit, which will be held
directly by AEP.
In order to maximize the efficiencies resulting from the
Merger, the Applicants seek authority for the Combined Company to
reorganize, consolidate and, where necessary, restate certain of
the intra-system financing and other authorizations previously
issued by this Commission to each of AEP, CSW, and their respective
subsidiaries, as discussed in more detail below.
Applicants request approval, effective upon consummation of
the Merger, to merge CSWS with and into AEPSC. Applicants request
that, upon the merger of CSWS into AEPSC, AEPSC succeed to certain
of the authority of CSWS as set forth in various Commission orders
and that such activities with respect to CSWS include AEPSC.
Certain of the non-utility businesses of CSW (each a "CSW Non-
utility Business") conduct activities that are substantially
equivalent to the activities of one or more non-utility
subsidiaries of AEP (each an "AEP Non-utility Business").
Applicants request approval, as deemed appropriate by management,
for the Combined Company to directly or indirectly acquire, and for
CSW to transfer to the Combined Company, CSW Non-utility Businesses
through: (1) merger of one or more CSW Non-utility Businesses with
one or more wholly owned non-utility subsidiaries (either presently
existing and performing substantially equivalent activities or to
be formed, if appropriate) of the Combined Company (each a
"Combined Non-utility Business"), (2) the dividending or
distribution of the common stock of one or more CSW Non-utility
Businesses from CSW to the Combined Company, or (3) the acquisition
of the assets or common stock of one or more CSW Non-utility
Businesses by one or more Combined Non-utility Businesses.
Applicants request approval, if management deems appropriate, to
consolidate each CSW Non-utility Business with its corresponding
AEP Non-utility Business into a single Combined Non-utility
Business directly or indirectly owned by the Combined Company.
Applicants request approval for the Combined Company to transfer to
CSW, and CSW to acquire, any AEP Non-utility Business or to
consolidate any AEP Non-utility businesses with and into any like
CSW Non-utility Business consistent with the foregoing principles
and authority. Applicants request that upon consolidation, each
resulting Combined Non-utility Business succeed to all of the
authority of each corresponding CSW Non-utility Business and AEP
Non-utility Business, respectively, as set forth in previously
issued Commission orders. The determination of the appropriate
corporate structure of the Combined Company is the subject of
currently convoked Merger transition teams.
Pursuant to American Elec. Power Co., HCAR No. 26864 (Apr. 27,
1998) and American Elec. Power Co., HCAR No. 26516 (May 10, 1996),
this Commission authorized AEP to issue and sell securities up to
100% of its consolidated retained earnings for investment in EWGs
and FUCOs. Pursuant to Central and South West Corp. et al., HCAR
No. 26653 (Jan. 24, 1997), this Commission authorized CSW to issue
and sell securities up to 100% of its consolidated retained
earnings for investment in EWGs and FUCOs. Applicants propose
that, upon consummation of the Merger, the authority of CSW to
issue and sell securities in an amount up to 100% of its
consolidated retained earnings for investment in EWGs and FUCOs as
provided by Central and South West Corp. et al., HCAR No. 26653
(Jan. 24, 1997) shall cease. To the extent that AEP and CSW were
authorized, pursuant to Sections 32 and 33 of the 1935 Act and the
rules thereunder, to invest up to 100% of their consolidated
retained earnings in EWG and FUCO interests, the Combined Company
should also be authorized to invest up to 100% of its combined
consolidated retained earnings in EWG and FUCO interests.
Applicants therefore propose that, upon consummation of the Merger,
the authority of the Combined Company to issue and sell securities
in an amount up to 100% of its consolidated retained earnings for
investment in EWGs and FUCOs shall be the same as that provided by
American Elec. Power Co., HCAR No. 26864 (Apr. 27, 1998) and
American Elec. Power Co., HCAR No. 26516 (May 10, 1996), except
that for purposes of determining the amount of consolidated
retained earnings as contemplated by American Elec. Power Co., HCAR
No. 26864 (Apr. 27, 1998) and American Elec. Power Co., HCAR No.
26516 (May 10, 1996), "consolidated retained earnings" shall
consist of the consolidated retained earnings of the Combined
Company.
Currently, the CSW System uses short-term debt, primarily
commercial paper, to meet working capital requirements and other
interim capital needs. In addition, to improve efficiency, CSW has
established a system money pool (the "Money Pool") to coordinate
short-term borrowings for CSW, its U.S. electric utility subsidiary
companies and CSWS, as set forth in various Commission orders. AEP
has no equivalent to the Money Pool. Applicants hereby request
authorization, upon consummation of the Merger and on the same
terms and conditions as set forth in certain Commission orders, to
permit: (1) the Combined Company, AEP's U.S. electric subsidiary
companies and AEPSC to participate in the Money Pool, and (2) the
Combined Company to manage and to fund the Money Pool. Applicants
request that following the Merger, both the Combined Company and
CSW (for a transitional period) will have in aggregate the
authority that CSW has with respect to the above-referenced orders.
CSW Credit purchases, without recourse, the accounts
receivable of CSW's U.S. electric utility subsidiary companies and
certain non-affiliated utility companies. The sale of accounts
receivable provides CSW's U.S. electric utility subsidiary
companies with cash immediately, thereby reducing working capital
needs and revenue requirements. In addition, because CSW Credit's
capital structure is more highly leveraged than that of the CSW
U.S. electric utility subsidiaries and due to CSW Credit's higher
short-term debt ratings, CSW's overall cost of capital is lower.
CSW Credit issues commercial paper to meet its financing needs.
Applicants hereby request approval, effective upon consummation of
the Merger, for the Combined Company to directly acquire, and for
CSW to transfer to the Combined Company, the business of CSW Credit
through: (1) the merger of CSW Credit with a subsidiary of the
Combined Company to be formed, if appropriate, (2) the dividending
or distribution of the common stock of CSW Credit from CSW to the
Combined Company, or (3) the acquisition of the assets or common
stock of CSW Credit by a subsidiary of the Combined Company to be
formed, if appropriate. Applicants request that, upon the
acquisition of the business of CSW Credit by the Combined Company,
the resulting company ("New Credit") succeed to all of the
authority of CSW Credit as set forth in various Commission orders.
CSW has supported the financing and other activities of its
subsidiaries through obtaining Commission approval to issue and
guarantee certain indebtedness. After the Merger it may be more
efficient or even commercially necessary for the Combined Company
to support certain of the financing arrangements and business
activity previously supported by CSW. Applicants hereby request
approval for the Combined Company, upon consummation of the Merger,
to support those financing and other activities presently supported
by CSW, including the issuance and guaranteeing of indebtedness,
pursuant to certain orders of the Commission. It is Applicants'
intention that, following the Merger, both the Combined Company and
CSW will simultaneously have in aggregate the authority that CSW
currently has with respect to those orders. The Combined Company
does not seek to widen such authority.
Pursuant to Central and South West Corp., HCAR No. 26616 (Nov.
27, 1996), this Commission confirmed previous authority and granted
additional authority such that CSW was authorized, through December
31, 2001, to offer 10,000,000 shares of CSW Common Stock pursuant
to its Dividend Reinvestment and Stock Purchase Plan, of which
approximately 2,000,000 remain unissued. Pursuant to American
Elec. Power Co., HCAR No. 26553 (Aug. 13, 1996) this Commission
confirmed previous authority and granted additional authority such
that AEP was authorized, through December 31, 2000, to offer
54,000,000 shares of AEP Common Stock pursuant to its Dividend
Reinvestment and Direct Stock Purchase Plan. Applicants hereby
request that, as soon as practicable upon consummation of the
Merger, (1) the authority of CSW's Dividend Reinvestment and Stock
Purchase Plan be terminated, and (2) the Combined Company be
authorized to issue 55,200,000 shares of AEP Common Stock through
December 31, 2000 pursuant to its Dividend Reinvestment and Direct
Stock Purchase Plan consistent otherwise with all the terms and
conditions set forth in American Elec. Power Co., HCAR No. 26553
(Aug. 13, 1996).
Pursuant to Central and South West Corp., HCAR No. 26413 (Nov.
21, 1995), this Commission confirmed previous authority and granted
additional authority such that CSW was authorized to issue and sell
a total of 5,000,000 shares of CSW Common Stock to the trustee of
the Central and South West Thrift Plan, of which approximately
4,400,000 remain unissued. Pursuant to American Elec. Power Co.,
HCAR No. 26786 (Dec. 1, 1997), this Commission confirmed previous
authority and granted additional authority such that AEP was
authorized, through December 31, 2001, to sell 8,800,000 shares of
AEP Common Stock to the trustee of the American Electric Power
System Employees Savings Plan. Applicants hereby request that,
upon consummation of the Merger, (1) the authority of CSW to issue
shares of CSW Common Stock to the Central and South West Thrift
Plan be terminated, and (2) the Combined Company be authorized to
issue 11,440,000 shares of AEP Common Stock through December 31,
2001 in connection with the American Electric Power System
Employees Savings Plan and the Central and South West Thrift Plan
(for a transitional period) consistent otherwise with all the terms
and conditions set forth in American Elec. Power Co., HCAR No.
26786 (Dec. 1, 1997) and Central and South West Corp., HCAR No.
26413 (Nov. 21, 1995), respectively.
Pursuant to Central and South West Corp., HCAR No. 25511 (Apr.
7, 1992), this Commission authorized CSW to adopt the Central and
South West Corporation 1992 Long Term Incentive Plan pursuant to
which certain key employees would be eligible, through December 31,
2001, to receive certain performance and equity-based awards
including (a) stock options, (b) stock appreciation rights, (c)
performance units, (d) phantom stock, and (e) restricted shares of
common stock. Applicants hereby request that, upon consummation of
the Merger, the Combined Company succeed to the authority of CSW to
permit it (i) to honor the awards granted by CSW prior to the
consummation of the Merger, (ii) to administer the plan (subject to
any necessary shareholder or regulatory approval) on a Combined
Company basis and grant any remaining awards, and (iii) to reserve
and issue sufficient shares of AEP Common Stock pursuant to
subparagraphs (i) and (ii) above in connection with the Central and
South West Corporation 1992 Long Term Incentive Plan consistent
otherwise with all the terms and conditions set forth in Central
and South West Corp., HCAR No. 25511 (Apr. 7, 1992).
AEPSC is a service company that, pursuant to service
agreements with each of the subsidiary companies of AEP, provides
various technical, engineering, accounting, administrative,
financial, purchasing, computing, managerial, operational and legal
services to each of the AEP subsidiary companies. Pursuant to the
service agreements, these services are provided at cost.
Similarly, CSWS is a service company which, pursuant to
service agreements signed with each of the subsidiary companies of
CSW, provides various technical, engineering, accounting,
administrative, financial, purchasing, computing, managerial,
operational and legal services to each of the CSW subsidiary
companies. Pursuant to the service agreements, these services are
provided at cost.
Upon consummation of the Merger, CSWS will be merged with
AEPSC, and AEPSC will be the surviving service company for the
Combined System. Applicants intend that AEPSC will enter into an
amended service agreement with AEP's subsidiary companies and CSW's
subsidiary companies. Under the amended service agreement, AEPSC
will provide the services previously provided by the two service
companies, CSWS and AEPSC. The amended service agreement to be
entered into between AEPSC and the utility and nonutility
subsidiary companies of AEP and CSW, which, pending Commission
approval, will become effective upon the consummation of the
Merger, is similar to those service agreements currently in place.
Under the terms of the amended service agreement, AEPSC will
render to the subsidiary companies of the Combined Company, at
cost, various technical, engineering, accounting, administrative,
financial, purchasing, computing, managerial, operational and legal
services. AEPSC will account for, allocate and charge its costs of
the services provided on a full cost reimbursement basis under a
work order system consistent with the Uniform System of Accounts
for Mutual and Subsidiary Service Companies. Costs incurred in
connection with services performed for a specific subsidiary
company will be billed 100% to that subsidiary company. Costs
incurred in connection with services performed for two or more
subsidiary companies will be allocated in accordance with various
allocation factors. Indirect costs incurred by AEPSC which are not
directly allocable to one or more subsidiary companies will be
allocated and billed in proportion to how either direct salaries or
total costs are billed to the subsidiary companies depending on the
nature of the indirect costs themselves. The time AEPSC employees
spend working for each subsidiary will be billed to and paid by the
applicable subsidiary on a monthly basis, based upon time records.
Each subsidiary company will maintain separate financial records
and detailed supporting records. Applicants hereby request that
the Commission approve the amended service agreement between AEPSC
and the subsidiary companies of the Combined Company and the
related allocation factors. The expanded number of allocation
factors are based on cost-drivers emphasizing factors that
correlate to the volume of activity that is inherent in performing
certain services.
Applicants request authorization for CSW and CSW's nonutility
subsidiaries to borrow or obtain guarantees from AEP under the same
terms and conditions as CSW and the nonutility subsidiaries of CSW
are currently authorized by Commission orders.
The Application or Declaration and any amendments thereto are
available for public inspection through the Commission's Office of
Public Reference. Interested persons wishing to comment or request
a hearing should submit their views in writing by November , 1998
to the Secretary, Securities and Exchange Commission, Washington,
D.C. 20549, and serve a copy on the applicants at the addresses
specified above. Proof of service (by affidavit or, in case of any
attorney at law, by certificate) should be filed with the request.
Any request for a 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 this matter. After said date, the
Application or Declaration, as filed or as it may be amended, may
be permitted to become effective.
For the Commission, by the Office of Public Utility
Regulation, pursuant to delegated authority.
Jonathan G. Katz
Secretary
Exhibit I-1
CSWS Authorizations
Pursuant to Central Power and Light Co., et al., HCAR No.
26931 (Oct. 21, 1998), this Commission authorized CSW's utility
operating companies either directly or through CSWS to market the
Better Choice Home Mortgage Program to their customers in their
service territories.
Pursuant to Central and South West Services, Inc., HCAR No.
26898 (Jul. 21, 1998), this Commission affirmed and expanded
previous authority conferred on CSWS and authorized it to use
excess resources in its engineering and construction department to
provide services, including related environmental and equipment
maintenance services, to non-associated companies, and to provide
power plant control system procurement, integration and programming
services as well as power plant engineering and construction
services to associates of CSW, through December 31, 2002.
Pursuant to Central and South West Services, Inc., HCAR No.
26795 (Dec. 11, 1997), this Commission affirmed and expanded
previous authority conferred on CSWS and authorized it to license
and sell to non-associated entities specialized computer programs
and to provide support services to licensees and entities that
purchase the software through December 31, 2002.
Pursuant to Central Power and Light Corp., et al., HCAR No.
26771 (Oct. 31, 1997), this Commission authorized CSW's utility
operating companies, directly or through CSWS, to enter into
arrangements with one or more providers of warranty plans for the
servicing and repair of electric and gas appliances and to offer
the plans to their customers. The warranty plans would be legal
obligations of the plan providers, underwritten by insurance
arrangements. The utility operating companies would bill enrolled
customers for monthly fees and remit the fees to the warranty plan
providers. The utility operating companies would have no
responsibility for insuring payment of the monthly fees by their
customers.
The Applicants hereby request that, upon the merger of CSWS
with and into AEPSC, that AEPSC succeed to the authority of CSWS as
stated in the foregoing orders and that such activities with
respect to CSWS include AEPSC, and where applicable, the utility
operating companies and the service territories of the Combined
System.
Exhibit I-2
Short-Term Borrowing Program
Pursuant to Central and South West Corp., et al., HCAR No.
26697 (Mar. 28, 1997), this Commission granted an extension of
authority for CSW, CPL, PSO, SWEPCO, WTU and CSWS (the "Money Pool
Participants") to continue their short-term borrowing program
through March 31, 2002, including the sale of commercial paper by
CSW to commercial paper dealers and financial institutions, and the
sale of short-term notes to banks and their trust departments, by
the Money Pool Participants.
Pursuant to Central and South West Corp., et al., HCAR No.
26854 (Apr. 3, 1998), this Commission authorized increased short-
term borrowing limits for CSW and the Money Pool Participants as
follows:
CSW $2,500,000,000
CPL $ 600,000,000
PSO $ 300,000,000
SWEPCO $ 250,000,000
WTU $ 165,000,000
CSWS $ 210,000,000
Pursuant to American Elec. Power Co., et al., HCAR No. 26867
(May 4, 1998), this Commission authorized the following short-term
borrowing limits for AEP and certain of its subsidiaries identified
below (the "AEP Utility Subsidiaries"):
AEP $ 500,000,000
AEGCo $ 100,000,000
APCo $ 325,000,000
CSPCo $ 300,000,000
I&M $ 300,000,000
KPCo $ 150,000,000
KgPCo $ 30,000,000
OPCo $ 400,000,000
WPCo $ 30,000,000
Applicants hereby request authority, effective upon
consummation of the Merger, for the Combined Company to continue
the Money Pool and to manage and fund it consistent with all the
terms and conditions of Central and South West Corp., et al., HCAR
No. 26697 (Mar. 28, 1997); Central and South West Corp., et al.,
HCAR No. 26854 (Apr. 3, 1998) and all previous orders of this
Commission relating to the Money Pool subject to the following:
(1) CSW's $2,500,000,000 short-term borrowing authorization shall
transfer to the Combined Company and Combined Company's short-term
borrowing limit shall be increased from $500,000,000 to
$4,675,000,000 (such limit consisting of (a) $2,500,000,000
authorized for CSW, (b) $2,135,000,000 authorized for AEP and AEP
Utility Subsidiaries, and (c) $40,000,000 for AEPSC); (2) the
Combined Company and the AEP Utility Subsidiaries shall be added as
participants to the Money Pool and permitted to issue short term
debt up to the amounts specified in American Elec. Power Co., et
al., HCAR No. 26867 (May 4, 1998); and (3) AEPSC shall be added as
a participant to the Money Pool, although its borrowings would be
exempt under Rule 52(b).
Exhibit I-3
CSW Credit Authorizations
Pursuant to Central and South West Corp., et al., HCAR No.
24157 (July 31, 1986), this Commission required CSW Credit to limit
its acquisition of utility receivables from non-associate utilities
so that CSW Credit's aggregate purchases of accounts receivable
from non-associate companies does not exceed the purchases of
accounts receivable from affiliates (the "50% Restriction").
Pursuant to Central and South West Corp., et al., HCAR No.
25138 (Aug. 30, 1990), this Commission authorized CSW Credit to
reduce its equity ratio requirement to no less than 5%.
Pursuant to Central and South West Corp., et al., HCAR No.
25696 (Dec. 8, 1992), this Commission authorized CSW Credit to
borrow up to an additional $650,000,000 in the aggregate at any one
time to purchase the accounts receivable of Houston Lighting and
Power Company ("HL&P") during the 12 1/2 year term of the
settlement agreement with HL&P.
Pursuant to Central and South West Corp., et al., HCAR No.
25720 (Dec. 29, 1992), this Commission authorized CSW Credit to
sell to unaffiliated third parties an amount of HL&P accounts
receivable sufficient to ensure that the 50% Restriction is met.
Pursuant to Central and South West Corp., et al., HCAR No.
26627 (Dec. 13, 1996), this Commission authorized CSW Credit to
borrow, through December 31, 2000, $824,000,000, of which
$520,000,000 could be used to purchase the accounts receivable of
affiliated companies and $304,000,000 could be used to purchase the
accounts receivable of non-affiliated companies. The Commission
further authorized CSW to make equity investments in CSW Credit
through December 31, 2000 of up to an aggregate of $156,000,000, of
which $80,000,000 could be used to purchase the accounts receivable
of affiliated companies and $76,000,000 could be used to purchase
the accounts receivable of non-affiliated companies.
Pursuant to Central and South West Corp., et al., HCAR No.
26684 (Mar. 11, 1997), this Commission granted CSW Credit temporary
relief from the 50% Restriction and authorized CSW Credit to
purchase up to $450,000,000 of accounts receivable of HL&P and up
to $100,000,000 of accounts receivable of other non-affiliate
utility companies, as calculated on a 12-month rolling average
basis, through December 31, 2000 (this order is hereinafter
referred to as the "Temporary Exemption").
Applicants hereby request authority, effective upon
consummation of the Merger, for New Credit to continue the business
of CSW Credit consistent with all the terms and conditions of the
foregoing orders subject to the following: (1) CSW shall transfer,
and the Combined Company shall assume, CSW's equity investment
authorizations in CSW Credit, and (2) purchases of accounts
receivable of AEGCo, APCo, CSPCo, I&M, KPCo, KgPCo, OPCo and WPCo
by New Credit shall be deemed to be purchases of accounts
receivable from affiliates. Applicants submit that Rule 52(b)
exempts the issuance of securities by CSW Credit and that Rule
45(b) exempts contributions of capital to CSW Credit and,
therefore, the borrowing and equity investment limits stated in
Central and South West Corp., et al., HCAR No. 26627 (Dec. 13,
1996) and Central and South West Corp., et al., HCAR No. 25696
(Dec. 8, 1992) are no longer applicable. Furthermore, Applicants
submit the amount of borrowings and equity investments will
effectively be limited by the 50% Restriction stated in Central and
South West Corp., et al., HCAR No. 24157 (July 31, 1986) and the
related Temporary Exemption and with the capitalization ratio
requirements set forth in Central and South West Corp., et al.,
HCAR No. 25138 (Aug. 30, 1990).
Exhibit I-4
CSW Guarantee Authorizations
Pursuant to Central and South West Corp., et al., HCAR No.
26910 (Aug. 24, 1998), this Commission authorized, through December
31, 2003, CSW to fund the management, operations and administrative
costs of the electric vehicle business of CSW Energy Services (the
'EV Business') by making loans to CSW Energy Services and providing
guarantees and other credit support on behalf of CSW Energy
Services, up to an aggregate amount outstanding at any time of
$25,000,000 and to finance the EV Business by making loans and
providing guarantees and other credit support to commercial and
institutional customers of CSW Energy Services. Applicants hereby
request that, upon consummation of the Merger, the authority of CSW
as stated in Central and South West Corp., et al., HCAR No. 26910
(Aug. 24, 1998) be vested in both CSW and the Combined Company.
Pursuant to Central and South West Corp., et al., HCAR No.
26811 (Dec. 30, 1997), this Commission authorized, effective
through December 31, 2002, (i) external financing by CSW; (ii) CSW
to acquire common stock from its subsidiaries; (iii) the
subsidiaries to repurchase their common stock from CSW; (iv) credit
enhancement for the CSW subsidiaries' securities, including
guarantees by CSW; (v) CSW to repurchase its securities by means of
tender offers; and (vi) the issuance by CSW of other types of
securities not exempt under Rules 45 and 52. Applicants hereby
request that, upon consummation of the Merger, the guarantee
authority of CSW as stated in Central and South West Corp., et al.,
HCAR No. 26811 (Dec. 30, 1997) be vested in both CSW and the
Combined Company and that all other authority of CSW as stated in
Central and South West Corp., et al., HCAR No. 26811 (Dec. 30,
1997) be vested in the Combined Company.
Pursuant to Central and South West Corp., et al., HCAR No.
26767 (Oct. 21, 1997), this Commission confirmed certain previous
authority and granted additional authority such that CSW was
authorized, through December 31, 2002, to organize and invest in
EWGs and FUCOs, either directly or indirectly, to provide certain
operational and management services to EWGs and FUCOs, to provide
guarantees or other forms of credit support for the securities or
contractual obligations of the investees in connection with
permitted activities, and to fund these investments and obligations
under these guarantees in other forms of credit support through
issuances by CSW. Applicants hereby request that, upon
consummation of the Merger, the authority of CSW as stated in
Central and South West Corp., et al., HCAR No. 26767 (Oct. 21,
1997) be vested in both CSW and the Combined Company.
Pursuant to Central and South West Corp., et al., HCAR No.
26766 (Oct. 21, 1997), this Commission authorized CSW, through
December 31, 2002, to issue guarantees in an aggregate amount up to
$250,000,000 to support the debt and other obligations of
affiliated power marketers and Rule 58 companies. Applicants hereby
request that, upon consummation of the Merger, the authority of CSW
as stated in Central and South West Corp., et al., HCAR No. 26766
(Oct. 21, 1997) be vested in both CSW and the Combined Company.
Pursuant to American Elec. Power Co., HCAR No. 26572 (Sept. 19,
1996) this Commission authorized AEP, through December 31, 2000, to
form one or more gas marketing subsidiaries and to issue guarantees
of up to $50,000,000 of indebtedness and up to $200,000,000 of
other obligations in support of its gas marketing subsidiaries.
Pursuant to Central and South West Corp., et al., HCAR No.
26762 (Sept. 30, 1997), this Commission authorized CSW to
participate in the organization and operation of STP Operating.
Applicants hereby request that, upon consummation of the Merger,
the authority of CSW as stated in Central and South West Corp., et
al., HCAR No. 26762 (Sept. 30, 1997) be vested in both CSW and the
Combined Company.
Pursuant to Central and South West Corp., et al., HCAR No.
26522 (May 29, 1996), this Commission authorized CSW to provide up
to $250,000,000 in equity support to the Sweeny Project in the form
of the equity support agreement, guaranty or letter of credit to
the project lender. Applicants hereby request that, upon
consummation of the Merger, the authority of CSW as stated in
Central and South West Corp., et al., HCAR No. 26522 (May 29, 1996)
be vested in both CSW and the Combined Company.
