File No. 70-8429
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 4
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.
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)
* * *
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 registered holding
company under the Public Utility Holding Company Act of 1935, as amended ("1935
Act"), and its subsidiary, AEP Resources, Inc. ("Resources"), hereby amend their
Application-Declaration on Form U-1 in File No. 70-8429 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.
1. By order dated December 22, 1994 (HCAR No. 26200) ("1994 Order"), the
Commission authorized AEP and Resources to issue and sell up to $300 million
("1994 Investment Limit") in debt and/or equity securities through June 30, 1997
and to invest the proceeds in "exempt wholesale generators" ("EWGs"), as defined
in section 32 of the 1935 Act, and in "foreign utility companies" ("FUCOs"), as
defined in section 33 of the 1935 Act. The 1994 Order also authorized AEP and
Resources to acquire the securities of one or more companies ("Project Parents")
that directly or indirectly, but exclusively, hold the securities of one or more
FUCOs or EWGs ("Power Projects"). The 1994 Order also authorized (i) AEP to
guarantee the debt securities and other commitments of Resources; (ii) AEP and
Resources to guarantee the securities of one or more Project Parents or Power
Projects; and (iii) Project Parents to guarantee the securities of their Power
Projects, through June 30, 1997, in an aggregate amount which, with the
securities issued, would never exceed the 1994 Investment Limit.
By order dated May 10, 1996 (HCAR No. 26516) ("1996 Order"), the
Commission authorized an increase in the 1994 Investment Limit to an amount
that, when added to the other direct or indirect investments in EWGs or FUCOs of
AEP, was equal to 50% of the consolidated retained earnings of AEP determined in
accordance with Rule 53 ("1996 Investment Limit"). The Commission further
authorized in the 1996 Order an extension through December 31, 2000 of the
authority granted in the 1994 Order: (i) to issue and sell debt and equity
securities; (ii) for Resources and the Project Parents to acquire the securities
of new Project Parents; and (iii) for AEP, Resources and the Project Parents to
guarantee securities. In addition, the Commission authorized the issuance and
sale by AEP of up to 10 million additional shares of its common stock par value
$ 6.50 per share, which were authorized but unissued or were treasury shares,
provided the gross proceeds from the sale of such stock would not exceed the
1996 Investment Limit.
By order dated January 24, 1997 (HCAR No. 26653) ("1997 Order"), the
Commission authorized Central and South West Corporation ("CSW") to issue and
sell securities in an amount up to 100% of its consolidated retained earnings
for investment in EWGs or FUCOs.
By order dated April 27, 1998 (HCAR No. 26864) ("1998 Order"), the
Commission authorized an increase in the 1996 Investment Limit to an amount
that, when added to the other direct or indirect investments in EWGs or FUCOs of
AEP, was equal to 100% of the consolidated retained earnings of AEP determined
in accordance with Rule 53 ("1998 Investment Limit").
By order dated June 14, 2000 (HCAR No. 27186) ("Merger Order"), the
Commission, among other things contemplated by the merger of a wholly owned
subsidiary of AEP with and into CSW ("Merger"), terminated the 1997 Order upon
consummation of the Merger and authorized AEP to issue and sell securities in an
amount of up to 100% of its consolidated retained earnings for investment in
EWGs and FUCOs, with consolidated retained earnings to be calculated on the
basis of the combined consolidated retained earnings of AEP after giving effect
to the Merger.
Applicants now request that the authority granted in the 1994 Order, 1996
Order, 1998 Order (each as modified by any subsequent order summarized herein)
and the Merger Order be extended from December 31, 2000 to June 30, 2004.
Applicants do not seek an expansion of the 1998 Investment Limit, as further
explained in the Merger Order, instead, only an extension of the authorized
period is requested.
Applicants have complied, and will remain in compliance, with the
requirements of Rule 53(a)(2) concerning books, records and financial reports of
EWGs and FUCOs; Rule 53(a)(3), concerning the use of employees to provide
services of EWGs and FUCOs; and Rule 53(a)(4), concerning delivery of copies of
filings to state regulators.1
AEP will continue to file certificates under to Rule 24 within 60 days
after the end of each calendar quarter setting forth:
(1) a computation in accordance with Rule 53(a) (as modified by the 1998 Order)
of its aggregate investment in EWGs and FUCOs;
(2) a statement of such aggregate investment as a percentage of the
following total capitalization, net utility plant, total
consolidated assets, and market value of common equity, all as of
the end of such quarter;
(3) consolidated capitalization ratios as of the end of such quarter,
with consolidated debt to include all short-term debt and
non-recourse debt of EWGs and FUCOs to the extent normally
consolidated under applicable financial reporting rules;
(4) the market-to-book ratio of AEP's common stock at the end of such quarter;
(5) an analysis of the growth in consolidated retained earnings which
segregates total earnings growth attributable to EWGs and FUCOs from
that attributable to other subsidiaries of AEP; and
(6) a statement of revenues and net income of each EWG and FUCO for the
twelve months ended as of the end of such quarter.
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
March 31, 2000, AEP, through its subsidiary, Resources, had aggregate investment
in FUCOs of $918,907,000. This investment represents approximately 53.2% of
$1,727,264,000, the average of the consolidated retained earnings of AEP
reported on Forms 10-Q and 10-K for the four consecutive quarters ended March
31, 2000. However, in the 1998 Order AEP was authorized to invest up to 100% of
its consolidated retained earnings in EWGs and FUCOs. 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 1998
Order.
As of September 30, 1997, the most recent period for which financial
statement information was evaluated in the 1998 Order, AEP's consolidated
capitalization consisted of 47.4% common and preferred equity and 52.6% debt. As
of March 31, 2000, AEP's consolidated capitalization consisted of 38.1% common
and preferred equity and 61.9% 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 operating utility subsidiaries2
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 operating utility 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 ($1,727,264,000)
represented an increase of approximately $33,566,000 (or 2.0%) 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 1998 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 the utility subsidiaries or their
customers, or on the ability of state commissions to protect the utility
subsidiaries or their customers.
2. The following statement is added to the end of ITEM 2. FEES,
COMMISSIONS AND EXPENSES:
"No additional expenses are expected to be incurred in connection with
this Post-Effective Amendment No. 4."
3. Exhibit H-1, 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____________
A. A. Pena
Treasurer
Dated: August 24, 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
----------------------------------------
:
In the Matter of :
:
AMERICAN ELECTRIC POWER COMPANY, INC. :
AEP RESOURCES, INC. :
1 Riverside Plaza :
Columbus, Ohio 43215 :
70-8429 :
----------------------------------------:
American Electric Power Company, Inc. ("AEP") a registered holding
company, and AEP Resources, Inc. ("Resources"), a subsidiary 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.
By order dated December 22, 1994 (HCAR No. 26200) ("1994 Order"), the
Commission authorized AEP and Resources to issue and sell up to $300 million
("1994 Investment Limit") in debt and/or equity securities through June 30, 1997
and to invest the proceeds in "exempt wholesale generators" ("EWGs"), as defined
in section 32 of the 1935 Act, and in "foreign utility companies" ("FUCOs"), as
defined in section 33 of the 1935 Act. The 1994 Order also authorized AEP and
Resources to acquire the securities of one or more companies ("Project Parents")
that directly or indirectly, but exclusively, hold the securities of one or more
FUCOs or EWGs ("Power Projects"). The 1994 Order also authorized (i) AEP to
guarantee the debt securities and other commitments of Resources; (ii) AEP and
Resources to guarantee the securities of one or more Project Parents or Power
Projects; and (iii) Project Parents to guarantee the securities of their Power
Projects, through June 30, 1997, in an aggregate amount which, with the
securities issued, would never exceed the 1994 Investment Limit.
By order dated May 10, 1996 (HCAR No. 26516) ("1996 Order"), the
Commission authorized an increase in the 1994 Investment Limit to an amount
that, when added to the other direct or indirect investments in EWGs or FUCOs of
AEP, was equal to 50% of the consolidated retained earnings of AEP determined in
accordance with Rule 53 ("1996 Investment Limit"). The Commission further
authorized in the 1996 Order an extension through December 31, 2000 of the
authority granted in the 1994 Order: (i) to issue and sell debt and equity
securities; (ii) for Resources and the Project Parents to acquire the securities
of new Project Parents; and (iii) for AEP, Resources and the Project Parents to
guarantee securities. In addition, the Commission authorized the issuance and
sale by AEP of up to 10 million additional shares of its common stock par value
$ 6.50 per share, which were authorized but unissued or were treasury shares,
provided the gross proceeds from the sale of such stock would not exceed the
1996 Investment Limit.
By order dated January 24, 1997 (HCAR No. 26653) ("1997 Order"), the
Commission authorized Central and South West Corporation ("CSW") to issue and
sell securities in an amount up to 100% of its consolidated retained earnings
for investment in EWGs or FUCOs.
By order dated April 27, 1998 (HCAR No. 26864) ("1998 Order"), the
Commission authorized an increase in the 1996 Investment Limit to an amount
that, when added to the other direct or indirect investments in EWGs or FUCOs of
AEP, was equal to 100% of the consolidated retained earnings of AEP determined
in accordance with Rule 53 ("1998 Investment Limit").
By order dated June 14, 2000 (HCAR No. 27186) ("Merger Order"), the
Commission, among other things contemplated by the merger of a wholly owned
subsidiary of AEP with and into CSW ("Merger"), terminated the 1997 Order upon
consummation of the Merger and authorized AEP to issue and sell securities in an
amount of up to 100% of its consolidated retained earnings for investment in
EWGs and FUCOs, with consolidated retained earnings to be calculated on the
basis of the combined consolidated retained earnings of AEP after giving effect
to the Merger.
Applicants now request that the authority granted in the 1994 Order, 1996
Order, 1998 Order (each as modified by any subsequent order summarized herein)
and the Merger Order be extended from December 31, 2000 to June 30, 2004.
Applicants do not seek an expansion of the 1998 Investment Limit, as further
explained in the Merger Order, instead, only an extension of the authorized
period is requested.
Applicants have complied, and will remain in compliance, with the
requirements of Rule 53(a)(2) concerning books, records and financial reports of
EWGs and FUCOs; Rule 53(a)(3), concerning the use of employees to provide
services of EWGs and FUCOs; and Rule 53(a)(4), concerning delivery of copies of
filings to state regulators.3
AEP will continue to file certificates under to Rule 24 within 60 days
after the end of each calendar quarter setting forth:
(1) a computation in accordance with Rule 53(a) (as modified by the 1998 Order)
of its aggregate investment in EWGs and FUCOs;
(2) a statement of such aggregate investment as a percentage of the
following total capitalization, net utility plant, total
consolidated assets, and market value of common equity, all as of
the end of such quarter;
(3) consolidated capitalization ratios as of the end of such quarter,
with consolidated debt to include all short-term debt and
non-recourse debt of EWGs and FUCOs to the extent normally
consolidated under applicable financial reporting rules;
(4) the market-to-book ratio of AEP's common stock at the end of such quarter;
(5) an analysis of the growth in consolidated retained earnings which
segregates total earnings growth attributable to EWGs and FUCOs from
that attributable to other subsidiaries of AEP; and
(6) a statement of revenues and net income of each EWG and FUCO for the
twelve months ended as of the end of such quarter.
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 September , 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 Rule 53(a)(2) requires that a registered holding company maintain books and
records to identify investments in and earnings from EWGs and FUCOs, and that
the books and records and financial statements of EWGs and FUCOs be kept in
conformity with stated standards and be made available to the Commission. Rule
53(a)(3) requires that no more than 2% of the employees of the utility
subsidiaries of a registered system provide services to EWGs and FUCOs at any
one time. Rule 53(a)(4) requires that copies of filings with the Commission with
respect to EWGs and FUCOs be submitted to each regulatory commission with
jurisdiction over the retail rates of an affected utility company.
2 Appalachian Power Company, Columbus Southern Power Company, Kentucky Power
Company, Kingsport Power Company, Indiana Michigan Power Company, Ohio Power
Company and Wheeling Power Company, electric utility subsidiaries of AEP
(sometimes collectively referred to herein as "Operating Companies"). AEP is
primarily engaged, through the Operating Companies, in the generation,
transmission and distribution of electric energy. The Operating Companies
operate an integrated public utility system that provides service in Indiana,
Kentucky, Michigan, Ohio, Tennessee, Virginia and West Virginia.
3 Rule 53(a)(2) requires that a registered holding company maintain books and
records to identify investments in and earnings from EWGs and FUCOs, and that
the books and records and financial statements of EWGs and FUCOs be kept in
conformity with stated standards and be made available to the Commission. Rule
53(a)(3) requires that no more than 2% of the employees of the utility
subsidiaries of a registered system provide services to EWGs and FUCOs at any
one time. Rule 53(a)(4) requires that copies of filings with the Commission with
respect to EWGs and FUCOs be submitted to each regulatory commission with
