File No. 70-9145
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 COMPANY, INC.
AEP RESOURCES, INC.
1 Riverside Plaza, Columbus, Ohio 43215
(Name of company or 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
Jeffrey D. Cross, General Counsel
AEP RESOURCES, INC.
1 Riverside Plaza, Columbus, Ohio 43215
(Names and addresses of agents for service)
American Electric Power Company, Inc. ("American"), a
holding company registered under the Public Utility Holding
Company Act of 1935, as amended, and AEP Resources, Inc., a
wholly-owned non-utility subsidiary of American, hereby amend
their Application or Declaration on Form U-1 in File No. 70-9145
as follows:
1. The first paragraph of Item 1. Description of Proposed
Transaction is amended and restated:
"American Electric Power Company, Inc. ('American'), a
holding company registered under the Public Utility Holding
Company Act of 1935, as amended ('1935 Act'), and AEP Resources,
Inc. ('Resources'), a wholly-owned non-utility subsidiary of
American,
FN1 Resources invests in exempt wholesale generators and foreign
utility companies and other independent energy projects.
request authority (i) for Resources, or a wholly-owned
subsidiary, to enter into a joint venture ('Management Company')
with Conoco Inc. ('Conoco') that will provide energy services to
industrial, commercial and institutional customers; (ii) for
Resources, or a wholly-owned subsidiary, to enter into a joint
venture ('Capital Company') with Conoco and its parent, E. I. du
Pont de Nemours and Company ('DuPont') that will provide
financing for energy-related assets to customers of Management
Company; (iii) for American to guarantee the obligations of
Resources under the joint venture agreements; (iv) for American
or Resources to provide Management Company and its subsidiaries
with up to $100 million in guarantees through December 31, 2002;
(v) for Resources to form, and for American and Resources to
guarantee the obligations of, special purpose subsidiaries; (vi)
for Capital Company or Management Company to form, and guarantee
the obligations of, one or more subsidiaries; (vii) for Capital
Company, Management Company and their subsidiaries to issue
membership or partnership interests; and (viii) for Capital
Company and Management Company and their subsidiaries to pay
dividends out of capital or unearned surplus to the extent
permitted by applicable law. American and Resources on the one
hand and Conoco and DuPont on the other hand are sometimes
hereinafter referred to as the 'Parties'."
2. Sections 5 and 6 of Item 1 are amended and restated:
"(5) Guarantees
American may guarantee the obligations of Resources to
invest up to $250 million in the Capital Company and up to $50
million in the Management Company and the other obligations of
Resources under the joint venture agreements.
American or Resources may also guarantee the debt and
other obligations of Management Company. Debt financing of
Management Company which is guaranteed by American will not (i)
exceed a term of 15 years or (ii) (a) bear a floating interest
rate in excess of 2% over the prime rate, London Interbank
Offered Rate or other appropriate index in effect from time to
time or (b) bear a fixed interest rate in excess of 2.5% above
the yield at the time of issuance of United States Treasury
obligations of a comparable maturity. Nondebt obligations of
Management Company which may be guaranteed by American may take
the form of bid bonds or performance or other direct or indirect
guarantees of contractual or other obligations. The maximum
amount of these obligations that American or Resources proposes
to guarantee is $100 million. These guarantees are in addition
to those authorized in the Orders dated May 2, 1997 (HCAR No.
26713) and May 10, 1996 (HCAR No. 26516).
(6) Additional Subsidiaries
Resources may form special purpose subsidiaries to hold
its interests in Management Company and Capital Company.
American and Resources may guarantee the obligations of these
subsidiaries.
From time to time it may be advantageous for Capital
Company or Management Company to form subsidiaries to undertake
one or more of the activities described herein. These
subsidiaries may be organized (i) in order to facilitate the
making of proposals to a prospective customer; or (ii) after the
award of a bid proposal, in order to facilitate closing on the
purchase or financing of the underlying assets; or (iii) at any
time after the consummation of a transaction in order, among
other things, to comply with applicable federal or state laws; or
(iv) as part of tax planning, to limit exposure to U.S. and state
taxes; or (v) for other lawful business purposes. Capital
Company and Management Company may guarantee the debt and other
obligations of these subsidiaries."
3. Exhibit G-1, a revised Form of Notice, is filed
herewith.
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.
AEP RESOURCES, INC.
By_/s/ A. A. Pena_____________________
Treasurer
Dated: January 26, 1998
Exhibit G-1
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. :
AEP RESOURCES, INC. :
1 Riverside Plaza :
Columbus, Ohio 43215 :
:
(70-9145) :
_________________________________________:
NOTICE OF PROPOSED FINANCING OF POWER PROJECTS
American Electric Power Company, Inc. ("American"), a registered
holding company, and AEP Resources, Inc. ("Resources"), a wholly-
owned non-utility subsidiary of American, (American and Resources
sometimes hereinafter collectively referred to as the "Applicants")
have filed with the Commission an Application or Declaration pursuant
to the Public Utility Holding Company Act of 1935 (the "Act"),
designating Sections 6, 7, 9, 10 and 12 and Rules 45, 46, 52 and 54
promulgated thereunder as applicable the proposed transactions.
American and Resources request authority (i) for Resources, or a
wholly-owned subsidiary, to enter into a joint venture ("Management
Company") with Conoco Inc. ("Conoco") that will provide energy
services to industrial, commercial and institutional customers; (ii)
for Resources, or a wholly-owned subsidiary, to enter into a joint
venture ("Capital Company") with Conoco and its parent, E. I. du Pont
de Nemours and Company ("DuPont") that will provide financing for
energy-related assets to customers of Management Company; (iii) for
American to guarantee the obligations of Resources under the joint
venture agreements; (iv) for American or Resources to provide
Management Company and its subsidiaries with up to $100 million in
guarantees through December 31, 2002; (v) for Resources to form, and
for American and Resources to guarantee the obligations of,
subsidiaries; (vi) for Capital Company or Management Company to form,
and guarantee the obligations of, one or more subsidiaries; (vii)
for Capital Company, Management Company and their subsidiaries to
issue membership or partnership interests; and (viii) for Capital
Company and Management Company and their subsidiaries to pay
dividends out of capital or unearned surplus to the extent permitted
by applicable law. American and Resources on the one hand and Conoco
and DuPont on the other hand are sometimes hereinafter referred to
as the "Parties".
(1) The Ventures
Resources and Conoco/DuPont intend, through Capital Company and
Management Company (collectively, "Ventures"), to develop a new
business that will provide energy management and capital for Energy
Facilities. "Energy Facilities" include facilities and equipment
that are used by industrial, commercial and institutional entities
to produce, convert, store and distribute (i) thermal energy
products, such as process steam, heat, hot water, chilled water, and
air conditioning, (ii) electricity, (iii) compressed air, (iv)
process and potable water, (v) industrial gases, such as nitrogen,
and (vi) other similar products. Energy Facilities also include
related facilities that transport, handle and store fuel, such as
coal handling and oil storage tanks, and facilities that treat waste
for these entities, such as scrubbers, precipitators, cooling towers
and water treatment facilities.
Their goal is to allow a customer to focus its management and capital
on its core businesses and allow the Ventures to manage and finance
the energy requirements of the customer. As permitted by applicable
law, Management Company intends to provide Energy Facilities
Management Services, Energy Conservation Services, Procurement
Services, Other Energy Services and Incidental Services as described
below. Capital Company intends to provide lease and other financing
for the Energy Facilities of Management Company's customers.
The Ventures initially will finance and manage Energy Facilities
used at 16 manufacturing sites for DuPont's industrial production.
Similar assets at 17 additional DuPont and Conoco manufacturing sites
also have been identified as potential projects for the Ventures.
The Ventures will seek additional customers not affiliated with
DuPont.
American will not seek recovery through higher rates to the
Utility Subsidiaries' customers in order to compensate American for
any possible losses that it may sustain on investment in Ventures
or for any inadequate returns on such investments. The seven
electric utility subsidiaries in the AEP System are Appalachian Power
Company, Columbus Southern Power Company, Indiana Michigan Power
Company, Kentucky Power Company, Kingsport Power Company, Ohio Power
Company and Wheeling Power Company (collectively, the "Utility
Subsidiaries"). American also owns all of the common stock of AEP
Generating Company, which sells power at wholesale to various AEP
System companies and others, and minority interests in Ohio Valley
Electric Corporation and its subsidiary, Indiana Kentucky Electric
Corporation, which supply power to certain government facilities.
Neither Management Company nor Capital Company will be a public
utility company as defined in the 1935 Act, and without further
Commission approval, neither company will undertake any activity if,
as a result, it would become a public utility company as defined in
the 1935 Act. Without further authorization of this Commission, the
Ventures will not provide their services outside the United States.
(2) Management Company
Management Company will provide the following services:
(a) "Energy Facility Management Services" include the day-
to-day operations, maintenance, and management, and other technical
and administrative services required to operate, maintain and manage
the Energy Facilities, as well as long-term planning and budgeting
for and evaluation of improvements to Energy Facilities.
(b) "Energy Conservation Services" include (1)
identification (through energy audits or otherwise) of energy and
other resource (water, labor, maintenance, materials, etc.) cost
reduction or efficiency opportunities; (2) design of facility or
process modifications or enhancements to realize such opportunities;
(3) management, or direct construction or installation, of energy
conservation or efficiency equipment; (4) training of customer
personnel in the operation of equipment; (5) maintenance of energy
systems, (6) design, management or direct construction and
installation of new and retrofit heating, ventilating, and air
conditioning ("HVAC"), electrical and power systems, motors, pumps,
lighting, water and plumbing systems, and related structures, to
realize energy and other resource efficiency goals or to otherwise
meet a customer's energy-related needs; (7) system commissioning
(i.e., monitoring the operation of an installed system to ensure that
it meets design specifications); (8) reporting of system results;
(9) design of energy conservation programs; (10) implementation of
energy conservation programs; (11) provision of conditioned power
services (i.e., services designed to prevent, control or mitigate
adverse effects of power disturbances on a customer's electrical
system to ensure the level of power quality required by the customer,
particularly with respect to sensitive electronic equipment); and
(12) other similar or related activities.
(c) "Procurement Services" include arranging as agent or
broker for a customer to purchase electricity, natural gas, oil,
propane, industrial gases and other commodities and supplies used
by or distributed through Energy Facilities ("Energy Commodities").
Procurement Services also include the purchase and sale, as
principal, of electricity and natural gas, to the extent permitted
by state law and state commission orders, and other Energy
Commodities, but Management Company will not take positions in, or
trade, Energy Commodities for a profit.
(d) "Other Energy Services" including development, design,
construction, ownership, operation, and sale, and providing other
managerial and technical services for, Energy Facilities and
equipment used in and improvements to Energy Facilities.
(e) "Incidental Services" include products and services
that are incidental to Energy Facilities Management Services, Energy
Conservation Services, Procurement Services and Other Energy
Services. These incidental products and services will be closely
related to the consumption of energy and/or the maintenance of Energy
Facilities.
These services will be provided to DuPont, Conoco, any
other affiliate of Management Company (other than American, any other
registered holding company and any subsidiaries of either) and any
nonaffiliate at market-based prices. Payment for services will vary
by project and may include fee-for-service, fixed price, time and
materials, progress payments, turnkey payment, Capital Company or
third-party financing arrangements, performance contracts with a
savings guarantee or payment based on the energy or other resource
savings achieved, the output of equipment (for example, steam, water,
chilled water, air or heat), commissions, and other payment
structures.
American and Conoco will contribute equal amounts of equity
capital to Management Company for the purpose of providing working
capital for Management Company. Management Company may also obtain
debt financing from American or Resources, Conoco or unaffiliated
third parties such as commercial banks. Loans from American or
Resources to Management Company would be made at the cost of funds
incurred by American or Resources in accordance with Rule 52.
Management Company will be staffed primarily by current
employees of DuPont and Conoco at the facilities. It is expected
that initially not more than 25 employees of American Electric Power
Service Corporation, a service company ("AEPSC"), and the Utility
Subsidiaries will be transferred to Management Company. In addition,
AEPSC, the Utility Subsidiaries, AEP Resources Service Company
("RESCo"), AEP Energy Services, Inc. ("AEPES") and Conoco and its
affiliates may provide services or sell goods to Management Company.
In accordance with Rules 87(a) and 90, services and goods provided
by AEPSC or the Utility Subsidiaries to Management Company will be
at cost. Services and goods may be provided by RESCo and AEPES at
other than cost in accordance with Rules 87(b)(1) and 90(d)(1). In
no event will more than 2% of the total employees of AEPSC and the
Utility Subsidiaries render services to Management Company at any
one time.
(3) Capital Company
Capital Company will offer financing for existing energy assets
and improvements and provide new capital for customers of Management
Company through sale and leaseback, project financing or other
creative financing facilities. Assets financed by Capital Company
generally will be managed by Management Company. In addition,
Capital Company will make its financing services available to
customers of Management Company to assist Management Company in
connection with its program to provide energy management and related
services to its customers.
Capital Company anticipates purchasing from DuPont and Conoco
the Energy Facilities located at 33 of their industrial and refining
facilities at their fair market value, estimated to be approximately
$1 billion. Capital Company will lease the facilities back to DuPont
and Conoco.
Capital Company expects to maintain (i) a debt to total
capitalization ratio of approximately 75% and (ii) an investment
grade rating. All debt financing obtained by Capital Company will
be non-recourse to American, Resources, DuPont and Conoco. American
will contribute cash to fund its portion of the equity contributions
required by Capital Company. DuPont and Conoco will contribute cash
or assets to fund their portion of the equity contributions.
Capital Company may have a small staff, initially less than ten
employees; Management Company will most likely provide it with many
services. In addition, AEPSC, the Utility Subsidiaries, RESCo, AEPES
and Conoco and its affiliates may provide services to Capital
Company.
(4) Guarantees
American may guarantee the obligations of Resources to invest
up to $250 million in the Cpaital Company and up to $50 million in
the Management Company and the other obligations of Resources under
the joint venture agreements.
American or Resources may also guarantee the debt and other
obligations of Management Company. Debt financing of Management
Company which is guaranteed by American will not (i) exceed a term
of 15 years or (ii) (a) bear a floating interest rate in excess of
2% over the prime rate, London Interbank Offered Rate or other
appropriate index in effect from time to time or (b) bear a fixed
interest rate in excess of 2.5% above the yield at the time of
issuance of United States Treasury obligations of a comparable
maturity. Nondebt obligations of Management Company which may be
guaranteed by American may take the form of bid bonds or performance
or other direct or indirect guarantees of contractual or other
obligations. The maximum amount of these obligations that American
or Resources proposes to guarantee is $100 million. These guarantees
are in addition to those authorized in the Orders dated May 2, 1997
(HCAR No. 26713) and May 10, 1996 (HCAR No. 26516).
(5) Additional Subsidiaries
Resources may form special purpose subsidiaries to hold its
interests in Management Company and Capital Company. American and
Resources may guarantee the obligations these subsidiaries.
From time to time it may be advantageous for Capital Company
or Management Company to form subsidiaries to undertake one or more
of the activities described herein. These subsidiaries may be
organized (i) in order to facilitate the making of proposals to a
prospective customer; or (ii) after the award of a bid proposal, in
order to facilitate closing on the purchase or financing of the
underlying assets; or (iii) at any time after the consummation of
a transaction in order, among other things, to comply with applicable
federal or state laws; or (iv) as part of tax planning, to limit
exposure to U.S. and state taxes; or (v) for other lawful business
purposes. Capital Company and Management Company may guarantee the
debt and other obligations of these subsidiaries.
(6) Issuance of Membership Interests
It is anticipated that Capital Company and Management Company
will be limited liability companies which will issue membership
interests to Resources, DuPont and Conoco. In addition, subsidiaries
of Capital Company or Management Company may be limited liability
companies or partnerships which will issue membership or partnership
interests. Capital Company, Management Company and their
subsidiaries request authority to issue membership or partnership
interests, as the case may be.
The Management Company Operating Agreement will provide for
initial contributions by the members to the Management Company of
$1,000 and such additional amounts as may determined by the
Management Committee. The Capital Company Operating Agreement will
provide for initial contributions by the members to the Capital
Company of $1,000 and such additional amounts as may determined by
the Management Committee. Membership interests may be issued to
third parties by Management or Capital Company on terms to be agreed
by the members. Membership or partnership interests may be issued
by subsidiaries of Management or Capital Company on terms to be
decided.
(7) Dividends Out of Capital
It is requested that Management Company, Capital Company and
their subsidiaries be authorized to declare and pay dividends to
their parent companies from time to time out of capital or unearned
surplus to the extent permitted by applicable law.
It is expected that situations will arise where Management
Company, Capital Company or one or more of their subsidiaries will
have unrestricted cash available for distribution in excess of
current and retained earnings. Consequently, in these situations
the declaration and payment of a dividend would have to be charged,
in whole or in part, to capital or unearned surplus.
One such situation could result if Management Company or Capital
Company were to sell a portion of its equity in a subsidiary to a
third party for cash. It then would have substantial unrestricted
cash available for upstream distribution, but (assuming no profit
on the sale) would not have available current earnings and therefore
could not, without prior Commission approval, declare and pay a
dividend to the Parties out of such cash proceeds.
Any dividend actually declared and paid by Management Company,
Capital Company or a subsidiary out of capital or unearned surplus
pursuant to the authority requested herein will conform to applicable
law of the respective company's jurisdiction of organization and
applicable covenant restrictions in loan or other financing
agreements.
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 March , 1998 to
the Secretary, Securities and Exchange Commission, Washington, D.C.
20549, and serve a copy on the declarant at the address 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
