File No. 70-9353
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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POST-EFFECTIVE AMENDMENT NO. 3
TO
FORM U-1
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APPLICATION OR DECLARATION
under the
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
* * *
AMERICAN ELECTRIC POWER COMPANY, INC.
AEP RESOURCES, INC.
AEP ENERGY SERVICES, INC.
1 Riverside Plaza, Columbus, Ohio 43215
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(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
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(Name of top registered holding company
parent of each applicant or declarant)
A. A. Pena, Senior Vice President and Treasurer
AMERICAN ELECTRIC POWER SERVICE CORPORATION
1 Riverside Plaza, Columbus, Ohio 43215
* * *
Susan Tomasky, General Counsel
AMERICAN ELECTRIC POWER SERVICE CORPORATION
1 Riverside Plaza, Columbus, Ohio 43215
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(Names and addresses of agents for service)
American Electric Power Company, Inc. ("AEP"), a holding company
registered under the Public Utility Holding Company Act of 1935, as amended
("1935 Act"), AEP Energy Services, Inc. ("AEPES") and AEP Resources, Inc.
("Resources"), wholly-owned non-utility subsidiaries of AEP, hereby amend the
Form U-1 Application-Declaration in File No. 70-9353 and restate the
Application-Declaration in the following respects. In all other respects the
Application-Declaration as previously filed and amended will remain the same.
ITEM 1. DESCRIPTION OF PROPOSED TRANSACTIONS
Pursuant to an order of the Commission dated November 2, 1998 (HCAR No.
26933), with respect to the Application-Declaration, Applicants were authorized
to acquire in one or more transactions from time to time through December 31,
2003 (the "Authorization Period"), non-utility energy assets in the United
States, including, without limitation, natural gas production, gathering,
processing, storage and transportation facilities and equipment, liquid oil
reserves and storage facilities, and associated facilities (collectively,
"Energy Assets"), that would be incidental to and would assist Applicants and
their subsidiaries (or any other energy trading, marketing or brokering
subsidiary hereafter acquired by Applicants) in connection with energy
marketing, brokering and trading. Applicants were authorized to invest up to
$800 million (the "Investment Limitation") during the Authorization Period in
such Energy Assets or in the equity securities of companies substantially all of
whose physical properties consist of such Energy Assets.1 Pursuant to such
order, Applicants acquired midstream gas assets, including an intrastate
pipeline system in Louisiana, natural gas processing plants and storage
facilities. Such Energy Assets (or equity securities of companies owning Energy
Assets) could be acquired for cash or in exchange for common stock of AEP or
other securities of Applicants or could include the assumption of debt of the
seller of such Energy Assets, or any combination of the foregoing. If common
stock of AEP was used as consideration in connection with any such acquisition,
the market value thereof on the date of issuance will be counted against the
proposed Investment Limitation. Under no circumstances, however, would
Applicants acquire, directly or indirectly, any assets or properties the
ownership or operation of which would cause such companies to be considered an
"electric utility company" or "gas utility company" as defined under the 1935
Act.
Applicants hereby request that the Commission authorize increasing the
Investment Limitation from $800 million to $2.0 billion. This increased
authority is needed to enable Applicants and such subsidiaries to continue to
add non-utility, marketing-related assets as and when market conditions warrant,
whether through acquisitions of specific assets or groups of assets that are
offered for sale, or by acquiring existing companies (for example, other gas
marketing companies which own significant physical assets in the areas of gas
production, processing, storage, and transportation). At the current time,
Applicants are investigating several opportunities to acquire other Energy
Assets, the value of which could exceed existing Investment Limitation.
ITEM 2. FEES, COMMISSIONS and EXPENSES
The fees, commissions and expenses incurred or expected to be incurred in
connection with the transactions proposed in this Post-Effective Amendment are
estimated not to exceed $2,000, including fees and expenses to be billed at cost
by American Electric Power Service Corporation.
ITEM 3. APPLICABLE STATUTORY PROVISIONS
Sections 6, 7, 9, 10 and 12 and Rule 45 under the 1935 Act may be
applicable with respect to the proposed activities.
To the extent that the proposed transactions are considered by the
Commission to require authorization, approval or exemption under any section of
the 1935 Act or provision of the rules or regulations other than those
specifically referred to herein, request for such authorization, approval or
exemption is hereby made.
Compliance with Rule 54
Rule 54 provides that in determining whether to approve certain
transactions other than those involving an exempt wholesale generator ("EWG") or
a foreign utility company ("FUCO"), as defined in the 1935 Act, the Commission
will not consider the effect of the capitalization or earnings of any subsidiary
which is an EWG or FUCO if Rule 53(a), (b) and (c) are satisfied. All applicable
conditions of Rule 53(a) are currently satisfied except for clause (1). As of
June 30, 2000, AEP, through its subsidiaries, had an aggregate investment in
EWGs and FUCOs of $1,920,829,000. This investment represents approximately 54.2%
of $3,544,649,000, the average of the consolidated retained earnings of AEP
reported on Forms 10-Q and 10-K for the four consecutive quarters ended June 30,
2000. However, AEP was authorized to invest up to 100% of its consolidated
retained earnings in EWGs and FUCOs (HCAR No. 26864, April 27, 1998) (the "100%
Order") in File No. 70-9021. Although AEP's aggregate investment exceeds the 50%
'safe harbor' limitation contained in Rule 53, AEP's aggregate investment is
below the 100% limitation authorized under the 100% Order.
As of September 30, 1997, the most recent period for which financial
statement information was evaluated in the 100% Order, AEP's consolidated
capitalization consisted of 47.4% common and preferred equity and 52.6% debt. As
of June 30, 2000, AEP's consolidated capitalization consisted of 36.2% common
and preferred equity and 63.8% debt. The requested authorization will have no
impact on AEP's consolidated capitalization ratios on a pro forma basis. AEP
believes this ratio remains within acceptable ranges and limits. Further, AEP's
interests in EWGs and FUCOs have contributed positively to its consolidated
earnings.
AEP will continue to maintain in conformity with United States generally
accepted accounting principles and make available the books and records required
by Rule 53(a)(2). AEP does, and will continue to, comply with the requirement
that no more than 2% of the employees of AEP's electric utility operating
subsidiaries shall, at any one time, directly or indirectly, render services to
an EWG or FUCO in which AEP directly or indirectly owns an interest, satisfying
Rule 53(a)(3). And lastly, AEP will continue to submit a copy of Item 9 and
Exhibits G and H of AEP's Form U5S to each of the public service commissions
having jurisdiction over the retail rates of AEP's electric utility operating
subsidiaries, satisfying Rule 53(a)(4). Rule 53(c) is inapplicable by its terms
because the proposals contained herein do not involve the issue and sale of
securities (including any guarantees) to finance an acquisition of an EWG or
FUCO.
Rule 53(b). (i) Neither AEP nor any subsidiary of AEP is the subject of
any pending bankruptcy or similar proceeding; (ii) AEP's average consolidated
retained earnings for the four most recent quarterly periods ($3,544,649,000)
represented an increase of approximately $40,644,000 (or 1.2%) in the average
consolidated retained earnings from the previous four quarterly periods
($1,693,698,000); and (iii) for the fiscal year ended December 31, 1999, AEP did
not report operating losses attributable to AEP's direct or indirect investments
in EWGs and FUCOs.
As noted, AEP was authorized to invest up to 100% of its consolidated
retained earnings in EWGs and FUCOs. In connection with its consideration of
AEP's application for the 100% Order, the Commission reviewed AEP's procedures
for evaluating EWG or FUCO investments. Based on projected financial ratios and
on procedures and conditions established to limit the risks to AEP involved with
investments in EWGs and FUCOs, the Commission determined that permitting AEP to
invest up to 100% of its consolidated retained earnings in EWGs and FUCOs would
not have a substantial adverse impact upon the financial integrity of the AEP,
nor would it have an adverse impact on any of its electric utility operating
subsidiaries or their customers, or on the ability of state commissions to
protect the electric utility operating subsidiaries or their customers.
ITEM 4. REGULATORY APPROVAL
No Federal or State commission or regulatory body, other than this
Commission, has jurisdiction over the proposed transactions for which
authorization is requested herein.
ITEM 5. PROCEDURE
The Commission is requested to publish a notice under Rule 23 with respect
to the filing of this Application or Declaration as soon as practicable.
Applicants request that the Commission's Order be issued as soon as the rules
allow, and that there should not be a 30-day waiting period between issuance of
the Commission's order and the date on which the order is to become effective.
AEP requests that the Commission reserve jurisdiction over the issuance and the
sale of securities by AEP or any Special Purpose Finance Subsidiary (other than
shares of common stock, guarantees or short-term debt) pending completion of the
file. Applicants hereby waive a recommended decision by a hearing officer or any
other responsible officer of the Commission and consents that the Division of
Investment Management may assist in the preparation of the Commission's decision
and/or order, unless the Division opposes the matters proposed herein.
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS
Exhibit F-1 Opinion of Counsel (To be filed by amendment)
Exhibit H-1 Form of Notice
ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS
As described in Item 1, the proposed transactions are of a routine and
strictly financial nature in the ordinary course of AEP's business. Accordingly,
the Commission's action in this matter will not constitute any major federal
action significantly affecting the quality of the human environment. No other
federal agency has prepared or is preparing an environmental impact statement
with regard to the proposed transactions.
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 ENERGY SERVICES, INC.
AEP RESOURCES, INC.
By: /s/ A. A. Pena
A. A. Pena
Treasurer
Dated: September 12, 2000
Exhibit H-1
UNITED STATES OF AMERICA
before the
SECURITIES AND EXCHANGE COMMISSION
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Release No. /September , 2000
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:
In the Matter of :
:
AMERICAN ELECTRIC POWER COMPANY, INC. :
AEP ENERGY SERVICES, INC. :
AEP RESOURCES, INC. :
1 Riverside Plaza :
Columbus, Ohio 43215 :
70-9353 :
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American Electric Power Company, Inc. ("AEP") a registered holding
company, AEP Energy Services, Inc. and AEP Resources, Inc., wholly-owned
non-utility subsidiaries of AEP, have filed a post-effective amendment to their
application-declaration previously filed and amended pursuant to the Public
Utility Holding Company Act of 1935, as amended ("1935 Act"), designating
Sections 6(a), 7, 9(a), 10, 12(b), 12(c), 12(f), 32 and 33 of the 1935 Act and
Rules 45 and 53 thereunder as applicable to the proposed transaction.
Pursuant to an order of the Commission dated November 2, 1998 (HCAR No.
26933), with respect to the Application-Declaration, Applicants were authorized
to acquire in one or more transactions from time to time through December 31,
2003 (the "Authorization Period"), non-utility energy assets in the United
States, including, without limitation, natural gas production, gathering,
processing, storage and transportation facilities and equipment, liquid oil
reserves and storage facilities, and associated facilities (collectively,
"Energy Assets"), that would be incidental to and would assist Applicants and
their subsidiaries (or any other energy trading, marketing or brokering
subsidiary hereafter acquired by Applicants) in connection with energy
marketing, brokering and trading. Applicants were authorized to invest up to
$800 million (the "Investment Limitation") during the Authorization Period in
such Energy Assets or in the equity securities of companies substantially all of
whose physical properties consist of such Energy Assets.2 Pursuant to such
order, Applicants acquired midstream gas assets, including an intrastate
pipeline system in Louisiana, natural gas processing plants and storage
facilities. Such Energy Assets (or equity securities of companies owning Energy
Assets) could be acquired for cash or in exchange for common stock of AEP or
other securities of Applicants or could include the assumption of debt of the
seller of such Energy Assets, or any combination of the foregoing. If common
stock of AEP was used as consideration in connection with any such acquisition,
the market value thereof on the date of issuance will be counted against the
proposed Investment Limitation. Under no circumstances, however, would
Applicants acquire, directly or indirectly, any assets or properties the
ownership or operation of which would cause such companies to be considered an
"electric utility company" or "gas utility company" as defined under the 1935
Act.
Applicants hereby request that the Commission authorize increasing the
Investment Limitation from $800 million to $2.0 billion. This increased
authority is needed to enable Applicants and such subsidiaries to continue to
add non-utility, marketing-related assets as and when market conditions warrant,
whether through acquisitions of specific assets or groups of assets that are
offered for sale, or by acquiring existing companies (for example, other gas
marketing companies which own significant physical assets in the areas of gas
production, processing, storage, and transportation).
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 October __, 2000 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 Division of Investment Management, pursuant to
delegated authority.
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1 Companies whose physical properties consist of Energy Assets may also be
currently engaged in energy (gas or electric or both) marketing or trading
activities. To the extent necessary, Applicants request authorization to
continue such activities in the event they acquire such companies.
2 Companies whose physical properties consist of Energy Assets may also be
currently engaged in energy (gas or electric or both) marketing or trading
activities. To the extent necessary, Applicants request authorization to
continue such activities in the event they acquire such companies.
