<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-K
----------------
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1993
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ________ to ________
----------------
<TABLE>
<CAPTION>
COMMISSION REGISTRANT; STATE OF INCORPORATION; I.R.S. EMPLOYER
FILE NUMBER ADDRESS; AND TELEPHONE NUMBER IDENTIFICATION NO.
----------- ----------------------------------- ------------------
<C> <S> <C>
1-3525 American Electric Power Company, Inc. 13-4922640
(A New York Corporation)
1 Riverside Plaza
Columbus, Ohio 43215
Telephone (614) 223-1000
0-18135 AEP Generating Company 31-1033833
(An Ohio Corporation)
1 Riverside Plaza
Columbus, Ohio 43215
Telephone (614) 223-1000
1-3457 Appalachian Power Company 54-0124790
(A Virginia Corporation)
40 Franklin Road, S.W.
Roanoke, Virginia 24011
Telephone (703) 985-2300
1-2680 Columbus Southern Power Company 31-4154203
(An Ohio Corporation)
215 North Front Street
Columbus, Ohio 43215
Telephone (614) 464-7700
1-3570 Indiana Michigan Power Company 35-0410455
(An Indiana Corporation)
One Summit Square
P.O. Box 60
Fort Wayne, Indiana 46801
Telephone (219) 425-2111
1-6858 Kentucky Power Company 61-0247775
(A Kentucky Corporation)
1701 Central Avenue
Ashland, Kentucky 41105
Telephone (606) 327-1111
1-6543 Ohio Power Company 31-4271000
(An Ohio Corporation)
301 Cleveland Avenue, S.W.
Canton, Ohio 44702
Telephone (216) 456-8173
</TABLE>
----------------
AEP Generating Company, Columbus Southern Power Company and Kentucky Power
Company meet the conditions set forth in General Instruction J(1)(a) and (b) of
Form 10-K and are therefore filing this Form 10-K with the reduced disclosure
format specified in General Instruction J(2) to such Form 10-K.
----------------
Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. Yes X . No .
---- ----
<PAGE>
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
REGISTRANT TITLE OF EACH CLASS ON WHICH REGISTERED
---------- ------------------- ---------------------
<C> <S> <C>
AEP Generating Company None
American Electric Power Common Stock,
Company, Inc. $6.50 par value............... New York Stock Exchange
Appalachian Power Cumulative Preferred Stock,
Company Voting, no par value:
4 1/2%....................... Philadelphia Stock Exchange
4.50%........................ Philadelphia Stock Exchange
7.40%........................ New York Stock Exchange
Columbus Southern None
Power Company
Indiana Michigan Cumulative Preferred Stock,
Power Company Non-Voting, $100 par value:
4 1/8%....................... Midwest Stock Exchange
7.08%........................ New York Stock Exchange
Kentucky Power Company None
Ohio Power Company Cumulative Preferred Stock,
Voting, $100 par value:
7.60%........................ New York Stock Exchange
7 6/10%...................... New York Stock Exchange
8.04%........................ New York Stock Exchange
</TABLE>
Indicate by check mark if disclosure of delinquent fil ers pursuant to Item
405 of Regulation S-K ((S)229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in the definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. X
-----
<PAGE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
<TABLE>
<CAPTION>
REGISTRANT TITLE OF EACH CLASS
---------- -------------------
<S> <C>
AEP Generating Company None
American Electric Power None
Company, Inc.
Appalachian Power None
Company
Columbus Southern None
Power Company
Indiana Michigan None
Power Company
Kentucky Power Company None
Ohio Power Company 4 1/2% Cumulative Preferred Stock, Voting, $100 par
value
</TABLE>
<TABLE>
<CAPTION>
AGGREGATE MARKET VALUE NUMBER OF SHARES
OF VOTING STOCK HELD OF COMMON STOCK
BY NON-AFFILIATES OF OUTSTANDING OF
THE REGISTRANTS AT THE REGISTRANTS AT
FEBRUARY 4, 1994 FEBRUARY 4, 1994
---------------------- ------------------
<S> <C> <C>
AEP Generating Company None 1,000
($1,000 par value)
American Electric Power $6,296,000,000 184,535,000
Company, Inc. ($6.50 par value)
Appalachian Power Company 43,000,000 13,499,500
(no par value)
Columbus Southern None 16,410,426
Power Company (no par value)
Indiana Michigan None 1,400,000
Power Company (no par value)
Kentucky Power Company None 1,009,000
($50 par value)
Ohio Power Company 154,000,000 27,952,473
(no par value)
</TABLE>
NOTE ON MARKET VALUE OF VOTING STOCK HELD BY NON-AFFILIATES
All of the common stock of AEP Generating Company, Appalachian Power Company,
Columbus Southern Power Company, Indiana Michigan Power Company, Kentucky Power
Company and Ohio Power Company is owned by American Electric Power Company,
Inc. (see Item 12 herein). The voting stock owned by non-affiliates of (i)
Appalachian Power Company consists of 555,365 shares of Cumulative Preferred
Stock, no par value; and (ii) Ohio Power Company consists of 1,712,403 shares
of Cumulative Preferred Stock, $100 par value. Some of the series of Cumulative
Preferred Stock are not regularly traded. The aggregate market value of the
Cumulative Preferred Stock is based on the average of the high and low prices
on the closest trading date to February 4, 1994 for series traded on the New
York or Philadelphia Stock Exchange, or the most recent reported bid prices for
those series not recently traded. Where recent market price information was not
available with respect to a series, the market price for such series is based
on the price of a recently traded series with an adjustment related to any
difference in the current yields of the two series.
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
<TABLE>
<CAPTION>
PART OF FORM 10-K
INTO WHICH DOCUMENT
DESCRIPTION IS INCORPORATED
----------- -------------------
<S> <C>
Portions of Annual Reports of the following companies for
the fiscal year ended December 31, 1993: Part II
AEP Generating Company
American Electric Power Company, Inc.
Appalachian Power Company
Columbus Southern Power Company
Indiana Michigan Power Company
Kentucky Power Company
Ohio Power Company
Portions of Proxy Statement of American Electric Power
Company, Inc., dated March 10, 1994, for Annual Meeting
of Shareholders Part III
Portions of Information Statements of the following
companies for 1994 Annual Meeting of Shareholders, to be filed
within 120 days after December 31, 1993: Part III
Appalachian Power Company
Ohio Power Company
</TABLE>
----------------
THIS COMBINED FORM 10-K IS SEPARATELY FILED BY AEP GENERATING COMPANY,
AMERICAN ELECTRIC POWER COMPANY, INC., APPALACHIAN POWER COMPANY, COLUMBUS
SOUTHERN POWER COMPANY, INDIANA MICHIGAN POWER COMPANY, KENTUCKY POWER COMPANY
AND OHIO POWER COMPANY. INFORMATION CONTAINED HEREIN RELATING TO ANY INDIVIDUAL
REGISTRANT IS FILED BY SUCH REGISTRANT ON ITS OWN BEHALF. EXCEPT FOR AMERICAN
ELECTRIC POWER COMPANY, INC., EACH REGISTRANT MAKES NO REPRESENTATION AS TO
INFORMATION RELATING TO THE OTHER REGISTRANTS.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C> <C>
Glossary of Terms............................................... i
Part I
Item 1. Business............................................. 1
Item 2. Properties........................................... 37
Item 3. Legal Proceedings.................................... 42
Item 4. Submission of Matters to a Vote of Security
Holders............................................. 44
Executive Officers of the Registrants............... ......... 44
Part II
Item 5. Market for Registrants' Common Equity and
Related Stockholder Matters......................... 47
Item 6. Selected Financial Data.............................. 47
Item 7. Management's Discussion and Analysis of Results
of Operations and Financial Condition............... 48
Item 8. Financial Statements and Supplementary Data.......... 48
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure.............. 49
Part III
Item 10. Directors and Executive Officers of the
Registrants......................................... 50
Item 11. Executive Compensation............................... 51
Item 12. Security Ownership of Certain Beneficial Owners
and Management...................................... 55
Item 13. Certain Relationships and Related Transactions....... 56
Part IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K................................. 57
Signatures...................................................... 59
Index to Financial Statement Schedules.......................... S-1
Independent Auditors' Report.................................... S-2
Exhibit Index................................................... E-1
</TABLE>
<PAGE>
GLOSSARY OF TERMS
When the following terms and abbreviations appear in the text of this report,
they have the meanings indicated below.
<TABLE>
<CAPTION>
TERM MEANING
---- -------
<C> <S>
AEGCo.................... AEP Generating Company, an electric utility subsidiary of AEP.
AEP...................... American Electric Power Company, Inc.
AEP System or the System. The American Electric Power System, an integrated electric
utility system, owned and operated by AEP's electric utility
subsidiaries.
AFUDC.................... Allowance for funds used during construction. Defined in
regulatory systems of accounts as the net cost of borrowed
funds used for construction and a reasonable rate of return
on other funds when so used.
APCo..................... Appalachian Power Company, an electric utility subsidiary of
AEP.
Buckeye.................. Buckeye Power, Inc., an unaffiliated corporation.
CCD Group................ CSPCo, CG&E and DP&L.
CG&E..................... The Cincinnati Gas & Electric Company, an unaffiliated utility
company.
Cook Plant............... The Donald C. Cook Nuclear Plant, owned by I&M.
CSPCo.................... Columbus Southern Power Company, an electric utility
subsidiary of AEP.
DOE...................... United States Department of Energy.
DP&L..................... The Dayton Power and Light Company, an unaffiliated utility
company.
Federal EPA.............. United States Environmental Protection Agency.
FERC..................... Federal Energy Regulatory Commission (an independent
commission within the DOE).
I&M...................... Indiana Michigan Power Company, an electric utility subsidiary
of AEP.
IURC..................... Indiana Utility Regulatory Commission.
KEPCo.................... Kentucky Power Company, an electric utility subsidiary of AEP.
KPSC..................... Kentucky Public Service Commission.
MPSC..................... Michigan Public Service Commission.
NEIL..................... Nuclear Electric Insurance Limited.
NPDES.................... National Pollutant Discharge Elimination System.
NRC...................... Nuclear Regulatory Commission.
Ohio EPA................. Ohio Environmental Protection Agency.
OPCo..................... Ohio Power Company, an electric utility subsidiary of AEP.
OVEC..................... Ohio Valley Electric Corporation, an electric utility company
in which AEP and CSPCo own a 44.2% equity interest.
PCB's.................... Polychlorinated biphenyls.
PFBC..................... Pressurized fluidized-bed combustion, a process in which
sulfur is removed during coal combustion and nitrogen oxide
formation is minimized.
PUCO..................... The Public Utilities Commission of Ohio.
RCRA..................... Resource Conservation and Recovery Act of 1976.
Rockport Plant........... A generating plant, consisting of two 1,300,000-kilowatt coal-
fired generating units, near Rockport, Indiana.
SEC...................... Securities and Exchange Commission.
Service Corporation...... American Electric Power Service Corporation, a service
subsidiary of AEP.
TVA...................... Tennessee Valley Authority.
VEPCo.................... Virginia Electric and Power Company, an unaffiliated utility
company.
Virginia SCC............. State Corporation Commission of Virginia.
West Virginia PSC........ Public Service Commission of West Virginia.
Zimmer or Zimmer Plant... Wm. H. Zimmer Generating Station, commonly owned by CSPCo,
CG&E and DP&L.
</TABLE>
i
<PAGE>
PART I -------------------------------------------------------------------
Item 1.BUSINESS
- --------------------------------------------------------------------------------
GENERAL
AEP was incorporated under the laws of the State of New York in 1906 and
reorganized in 1925. It is a public utility holding company which owns,
directly or indirectly, all of the outstanding common stock of its operating
electric utility subsidiaries. Substantially all of the operating revenues of
AEP and its subsidiaries are derived from the furnishing of electric service.
The service area of AEP's electric utility subsidiaries covers portions of
the states of Indiana, Kentucky, Michigan, Ohio, Tennessee, Virginia and West
Virginia. The generating and transmission facilities of AEP's 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, 1993, the subsidiaries of AEP had a total of 20,007 employees. AEP, as
such, has no employees. The principal operating subsidiaries of AEP are:
APCo (organized in Virginia in 1926), which is engaged in the generation,
purchase, transmission and distribution of electric power to approximately
838,000 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, 1993, APCo and its wholly owned subsidiaries had 4,587
employees. A generating subsidiary of APCo, Kanawha Valley Power Company,
which owns and operates under Federal license three hydroelectric
generating stations located on Government lands adjacent to Government-
owned navigation dams on the Kanawha River in West Virginia, sells its net
output to APCo. Among the principal industries served by APCo are coal
mining, primary metals, chemicals, textiles, paper, stone, clay, glass and
concrete products and furniture. In addition to its AEP System
interconnection, APCo also is interconnected with the following
unaffiliated utility companies: Carolina Power & Light Company, Duke Power
Company and VEPCo. A comparatively small part of the properties and
business of APCo is located in the northeastern end of the Tennessee
Valley. APCo has several points of interconnection with TVA and has entered
into agreements with TVA under which APCo and TVA interchange and transfer
electric power over portions of their respective systems.
CSPCo (organized in Ohio in 1937, the earliest direct predecessor company
having been organized in 1883), which is engaged in the generation,
purchase, transmission and distribution of electric power to approximately
578,000 customers in 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, 1993, CSPCo had 2,143 employees.
CSPCo's service area is comprised of two areas in Ohio, which include
portions of twenty-five counties. One area includes the City of Columbus
and the other is a predominantly rural area in south central Ohio.
Approximately 80% of CSPCo's retail revenues are derived from the Columbus
area. Among the principal industries served are food processing, chemicals,
primary metals, electronic machinery and paper products. In addition to its
AEP System interconnection, CSPCo also is interconnected with the following
unaffiliated utility companies: CG&E, DP&L and Ohio Edison Company.
I&M (organized in Indiana in 1925), which is engaged in the generation,
purchase, transmission and distribution of electric power to approximately
525,000 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, 1993, I&M had 3,944
1
<PAGE>
employees. Among the principal industries served are transportation
equipment, primary metals, fabricated metal products, electrical and
electronic machinery, rubber and miscellaneous plastic products and
chemicals and allied products. Since 1975, I&M has leased and operated the
assets of the municipal system of the City of Fort Wayne, Indiana. In
addition to its AEP System interconnection, I&M also is interconnected with
the following unaffiliated utility companies: Central Illinois Public
Service Company, CG&E, Commonwealth Edison Company, Consumers Power
Company, Illinois Power Company, Indianapolis Power & Light Company,
Louisville Gas and Electric Company, Northern Indiana Public Service
Company, PSI Energy Inc. and Richmond Power & Light Company.
KEPCo (organized in Kentucky in 1919), which is engaged in the
generation, purchase, transmission and distribution of electric power to
approximately 161,000 customers in an area in eastern Kentucky, and in
supplying electric power at wholesale to other utilities and municipalities
in Kentucky. At December 31, 1993, KEPCo had 842 employees. In addition to
its AEP System interconnection, KEPCo also is interconnected with the
following unaffiliated utility companies: Kentucky Utilities Company and
East Kentucky Power Cooperative Inc. KEPCo is also interconnected with TVA.
Kingsport Power Company (organized in Virginia in 1917), which provides
electric service to approximately 41,000 customers in Kingsport and eight
neighboring communities in northeastern Tennessee. Kingsport Power Company
has no generating facilities of its own. It purchases electric power
distributed to its customers from APCo. At December 31, 1993, Kingsport
Power Company had 102 employees.
OPCo (organized in Ohio in 1907 and reincorporated in 1924), which is
engaged in the generation, purchase, transmission and distribution of
electric power to approximately 657,000 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, 1993, OPCo and its wholly owned subsidiaries had 5,749
employees. Among the principal industries served by OPCo are primary
metals, stone, clay, glass and concrete products, rubber and plastic
products, petroleum refining, chemicals and metal and wire products. In
addition to its AEP System interconnection, OPCo also is interconnected
with the following unaffiliated utility companies: CG&E, The Cleveland
Electric Illuminating Company, DP&L, Duquesne Light Company, Kentucky
Utilities Company, Monongahela Power Company, Ohio Edison Company, The
Toledo Edison Company and West Penn Power Company.
Wheeling Power Company (organized in West Virginia in 1883 and
reincorporated in 1911), which provides electric service to approximately
41,000 customers in northern West Virginia. Wheeling Power Company has no
generating facilities of its own. It purchases electric power distributed
to its customers from OPCo. At December 31, 1993, Wheeling Power Company
had 143 employees.
Another principal electric utility subsidiary of AEP is AEGCo, which was
organized in Ohio in 1982 as an electric generating company. AEGCo sells power
at wholesale to I&M, KEPCo and VEPCo. AEGCo has no employees.
See Item 2 for information concerning the properties of the subsidiaries of
AEP.
The Service Corporation provides accounting, administrative, computer,
engineering, financial, legal and other services at cost to the AEP System
companies. The executive officers of AEP are all employees of the Service
Corporation.
COST REDUCTION PROGRAM
On November 5, 1992, AEP announced a major cost-control program. The program
outlined plans to combine certain operations of CSPCo and OPCo, focusing on the
functions performed in the headquarters of each company, and to restructure and
downsize the operations of the Service Corporation in Columbus, Ohio. The
program has resulted in the elimination of over 1,000 positions.
2
<PAGE>
REGULATION
General
AEP and its subsidiaries are subject to the broad regulatory provisions of
the Public Utility Holding Company Act of 1935 administered by the SEC. The
public utility subsidiaries' retail rates and certain other matters are subject
to regulation by the public utility commissions of the states in which they
operate. Such subsidiaries are also subject to regulation by the FERC under the
Federal Power Act in respect of rates for interstate sale at wholesale and
transmission of electric power, accounting and other matters and construction
and operation of hydroelectric projects. I&M is subject to regulation by the
NRC under the Atomic Energy Act of 1954, as amended, with respect to the
operation of the Cook Plant.
Conflict of Regulation
Public utility subsidiaries of AEP can be subject to regulation of the same
subject matter by two or more jurisdictions. In such situations, it is possible
that the decisions of such regulatory bodies may conflict or that the decision
of one such body may affect the cost of providing service and so the rates in
another jurisdiction. In a recent case involving OPCo, the U.S. Court of
Appeals for the District of Columbia held that the determination of costs to be
charged to associated companies by the SEC under the Public Utility Holding
Company Act of 1935 precluded the FERC from determining that such costs were
unreasonable for ratemaking purposes. The U.S. Supreme Court also has held that
a state commission may not conclude that a FERC approved wholesale power
agreement is unreasonable for state ratemaking purposes. Certain actions that
would overturn these decisions or otherwise affect the jurisdiction of the SEC
and FERC are under consideration by the U.S. Congress and these regulatory
bodies. Such conflicts of jurisdiction often result in litigation and if
resolved adversely to a public utility subsidiary of AEP could have a material
adverse effect on the results of operations or financial condition of such
subsidiary or AEP.
CLASSES OF SERVICE
The principal classes of service from which the major electric utility
subsidiaries of AEP derive revenues and the amount of such revenues (from
kilowatt-hour sales) during the year ended December 31, 1993 are as follows:
<TABLE>
<CAPTION>
AEP
AEGCO APCO CSPCO I&M KEPCO OPCO SYSTEM (A)
----- ---- ----- --- ----- ---- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Retail
Residential
Without Electric
Heating................ $ -- $ 242,177 $284,593 $ 205,315 $ 43,325 $ 256,547 $1,052,233
With Electric Heating.. -- 308,242 100,185 97,568 54,139 132,606 728,569
-------- ---------- -------- ---------- -------- ---------- ----------
Total Residential..... -- 550,419 384,778 302,883 97,464 389,153 1,780,802
Commercial............. -- 273,147 328,854 220,938 53,892 241,426 1,153,207
Industrial............. -- 359,946 137,460 250,939 90,501 609,140 1,514,691
Miscellaneous.......... -- 30,627 14,689 5,593 808 8,107 62,879
-------- ---------- -------- ---------- -------- ---------- ----------
Total Retail.......... -- 1,214,139 865,781 780,353 242,665 1,247,826 4,511,579
Wholesale (sales for
resale)................. 229,196 289,187 74,942 404,910 48,399 438,855 687,072
-------- ---------- -------- ---------- -------- ---------- ----------
Total from KWH Sales.. 229,196 1,503,326 940,723 1,185,263 291,064 1,686,681 5,198,651
Provision for Revenue
Refunds................. -- (331) -- (755) -- -- (926)
-------- ---------- -------- ---------- -------- ---------- ----------
Total Net of Provision
for
Revenue Refunds...... 229,196 1,502,995 940,723 1,184,508 291,064 1,686,681 5,197,725
Other Operating
Revenues................ 77 16,109 12,929 18,135 3,188 21,896 71,117
-------- ---------- -------- ---------- -------- ---------- ----------
Total Electric
Operating
Revenues............. $229,273 $1,519,104 $953,652 $1,202,643 $294,252 $1,708,577 $5,268,842
======== ========== ======== ========== ======== ========== ==========
</TABLE>
- --------
(a) Includes revenues of other subsidiaries not shown and elimination of
intercompany transactions.
3
<PAGE>
AEP SYSTEM POWER POOL, OFF-SYSTEM POWER SALES AND TRANSMISSION SERVICES
AEP's electric utility subsidiaries operate their generating plants and
transmission lines as a single interconnected and coordinated electric utility
system. APCo, CSPCo, I&M, KEPCo and OPCo are parties to the Interconnection
Agreement, dated July 6, 1951, as amended (the Interconnection Agreement),
defining how they share the costs and benefits associated with the System's
generating plants. This sharing is based upon each company's "member-load-
ratio," which is calculated monthly on the basis of each company's maximum
peak demand in relation to the sum of the maximum peak demands of all five
companies during the preceding 12 months.
The following table shows the net credits or (charges) allocated among the
parties under the Interconnection Agreement during the years ended December
31, 1991, 1992 and 1993:
<TABLE>
<CAPTION>
1991 1992 1993
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
APCo........................................... $(235,000) $(243,000) $(260,000)
CSPCo.......................................... (142,000) (118,000) (141,000)
I&M............................................ 148,000 71,000 183,000
KEPCo.......................................... 15,000 26,000 1,000
OPCo........................................... 214,000 264,000 217,000
</TABLE>
In addition, APCo, CSPCo, I&M, KEPCo and OPCo are parties to the
Transmission Agreement, dated April 1, 1984, as amended (the Transmission
Agreement), defining how they share the benefits and burdens associated with
their extra-high-voltage transmission system (facilities rated 345 kv and
above) and certain facilities operated at lower voltages (138 kv and above).
Like the Interconnection Agreement, this sharing is based upon each company's
"member-load-ratio."
The following table shows the net credits or (charges) allocated among the
parties to the Transmission Agreement during the years ended December 31,
1991, 1992 and 1993:
<TABLE>
<CAPTION>
1991 1992 1993
---- ---- ----
<S> <C> <C> <C>
(IN THOUSANDS)
APCo................................................ $ (7,000) $(8,000) $(3,200)
CSPCo............................................... (31,400) (29,900) (31,200)
I&M................................................. 46,200 48,200 47,400
KEPCo............................................... 5,700 4,200 3,800
OPCo................................................ (13,500) (14,500) (16,800)
</TABLE>
AEGCo, APCo, CSPCo, I&M, KEPCo and OPCo also sell electric power on a
wholesale basis to non-affiliated electric utilities. Such sales are either
made by the AEP System and then allocated among APCo, CSPCo, I&M, KEPCo and
OPCo based on member-load-ratios or made by individual companies pursuant to
various long-term power agreements. The following table shows the amounts
contributed to operating income of the various companies from such sales
during the years ended December 31, 1991, 1992 and 1993:
<TABLE>
<CAPTION>
1991(A) 1992(A) 1993(A)
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
AEGCo(b)............................................. $ 33,900 $ 33,000 $ 32,500
APCo(c).............................................. 23,600 18,100 23,600
CSPCo(c)............................................. 12,500 9,100 12,000
I&M(c)(d)............................................ 35,600 31,300 35,300
KEPCo(c)............................................. 4,800 3,700 4,900
OPCo(c).............................................. 21,500 15,700 20,700
-------- -------- --------
Total System......................................... $131,900 $110,900 $129,000
======== ======== ========
</TABLE>
- --------
(a) Such sales do not include wholesale sales to entities such as municipal
agencies that may be full/partial requirement customers of AEP System
companies within their service areas. See the table under Classes of
Service for revenues from wholesale sales.
(b) All amounts for AEGCo are from sales made pursuant to a long-term power
agreement. See AEGCo--Unit Power Agreements.
(c) All amounts are from System sales which are allocated among APCo, CSPCo,
I&M, KEPCo and OPCo based upon member-load-ratio. All System sales made in
1991, 1992 and 1993 were made on a short-term basis, except that
$7,300,000, $11,500,000 and $16,800,000, respectively, of the contribution
to operating income for the total System were from long-term System sales.
(d) In addition to its allocation of System sales, the 1990, 1991 and 1992
amounts for I&M includes $21,100,000, $20,800,000 and $21,600,000 from a
long-term agreement to sell 250 megawatts of power scheduled to terminate
in 2009.
4
<PAGE>
The AEP System has long-term system agreements to sell 100 megawatts of
electric power through 1997 and to sell at times up to 200 megawatts of peaking
power for at least five years through March 1997 to unaffiliated utilities. The
AEP System continues to seek appropriate long-term wholesale power agreements
and will sell available power on a short-term basis. The future results of
operations of AEP and its operating companies will be affected by their ability
to make cost-effective wholesale sales or, if such sales are reduced, their
ability to timely raise retail rates.
APCo, CSPCo, I&M, KEPCo, OPCo and other System companies also provide
transmission services for non-affiliated companies. The following table shows
the amounts contributed to operating income of the various companies from such
services during the years ended December 31, 1991, 1992 and 1993:
<TABLE>
<CAPTION>
1991 1992 1993
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
APCo.................................................... $ 2,800 $ 3,000 $ 2,900
CSPCo................................................... 2,400 2,500 2,500
I&M..................................................... 6,400 6,600 7,700
KEPCo................................................... 500 600 600
OPCo.................................................... 9,800 10,100 9,900
------- ------- -------
Total System(a)......................................... $22,600 $23,500 $24,200
======= ======= =======
</TABLE>
- --------
(a) Includes revenues of other System companies not shown.
The Energy Policy Act of 1992 amended the Federal Power Act to authorize the
FERC under certain conditions to order utilities which own transmission
facilities to provide wholesale transmission services for other utilities and
entities generating electric power. See Rates--APCo for discussion of a current
proceeding in which certain municipal customers seek the FERC to order the AEP
System to provide certain transmission services.
OVEC
AEP, CSPCo and several unaffiliated utility companies jointly own OVEC, which
supplies the power requirements of a uranium enrichment plant near Portsmouth,
Ohio owned by the DOE. The aggregate equity participation of AEP and CSPCo in
OVEC is 44.2%. The DOE demand under OVEC's power agreement, which is subject to
change from time to time, is 1,929,000 kilowatts and is scheduled to remain at
about that level through the remaining term of the contract. The proceeds from
the sale of power by OVEC, aggregating $271,000,000 in 1993, are designed to be
sufficient for OVEC to meet its operating expenses and fixed costs and to
provide a return on its equity capital. APCo, CSPCo, I&M and OPCo, as
sponsoring companies, are entitled to receive from OVEC, and are obligated to
pay for, the power not required by DOE in proportion to their power
participation ratios, which averaged 42.1% in 1993. The power agreement with
DOE terminates on December 31, 2005, subject to early termination by DOE on not
less than three years notice. The power agreement among OVEC and the sponsoring
companies expires by its terms on March 12, 2006. The Clinton Administration is
considering closing either the Portsmouth, Ohio uranium enrichment plant or
DOE's other enrichment plant in Kentucky.
BUCKEYE
Contractual arrangements among OPCo, Buckeye and other investor-owned
electric utility companies in Ohio provide for the transmission and delivery,
over facilities of OPCo and of other investor-owned utility companies, of power
generated by the two units at the Cardinal Station owned by Buckeye and back-up
power to which Buckeye is entitled from OPCo under such contractual
arrangements, to facilities owned by 27 of the rural electric cooperatives
which operate in the State of Ohio at 297 delivery points. Buckeye is entitled
under such arrangements to receive, and is obligated to pay for, the excess of
its maximum one-hour coincident peak demand plus a 15% reserve margin over the
1,226,500 kilowatts of capacity of the generating units which Buckeye currently
owns in the Cardinal Station. Such demand, which occurred on January 18, 1994,
was recorded at 1,146,933 kilowatts.
5
<PAGE>
CERTAIN INDUSTRIAL CONTRACTS
Ravenswood Aluminum Corporation and Ormet Corporation operate major aluminum
reduction plants in the Ohio River Valley at Ravenswood, West Virginia, and in
the vicinity of Hannibal, Ohio, respectively. OPCo supplies all of the power
requirements of these plants pursuant to long-term contracts with such
companies which, subject to certain curtailment provisions, terminate in 1997
in the case of Ormet and 1998 in the case of Ravenswood. The power requirements
of such plants presently aggregate approximately 880,000 kilowatts. Because the
price of electricity to Ravenswood and Ormet is based on generation costs at
the Muskingum River and Kammer Plants, respectively, the implementation of the
Clean Air Act Amendments of 1990 or an unfavorable resolution of the stack
height regulation litigation (in the case of Kammer Plant) and administrative
proceedings, described under Environmental and Other Matters, could result in a
decrease in operations or closure of Ravenswood's and Ormet's aluminum
reduction plants. See Legal Proceedings for a discussion of litigation
involving Ormet.
AEGCO
Since its formation, AEGCo's business has consisted of the ownership and
financing of its 50% interest in the Rockport Plant and, more recently, leasing
of its 50% interest in Unit 2 of the Rockport Plant. The operating revenues of
AEGCo are derived from the sale of capacity and energy associated with its
interest in the Rockport Plant to I&M, KEPCo and VEPCo, pursuant to unit power
agreements. Pursuant to these unit power agreements, AEGCo is entitled to
recover its full cost of service from the purchasers and will be entitled to
recover future increases in such costs, including increases in fuel and capital
costs. See Unit Power Agreements. Pursuant to a capital funds agreement, AEP
has agreed to provide cash capital contributions, or in certain circumstances
subordinated loans, to AEGCo, to the extent necessary to enable AEGCo, among
other things, to provide its proportionate share of funds required to permit
continuation of the commercial operation of the Rockport Plant and to perform
all of its obligations, covenants and agreements under, among other things, all
loan agreements, leases and related documents to which AEGCo is or becomes a
party. See Capital Funds Agreement.
Unit Power Agreements
A unit power agreement between AEGCo and I&M (the I&M Power Agreement)
provides for the sale by AEGCo to I&M of all the power (and the energy
associated therewith) available to AEGCo at the Rockport Plant. I&M is
obligated, whether or not power is available from AEGCo, to pay as a demand
charge for the right to receive such power (and as an energy charge for any
associated energy taken by I&M) such amounts, as when added to amounts received
by AEGCo from any other sources, will be at least sufficient to enable AEGCo to
pay all its operating and other expenses, including a rate of return on the
common equity of AEGCo as approved by FERC, currently 12.16%. The I&M Power
Agreement will continue in effect until the date that the last of the lease
terms of Unit 2 of the Rockport Plant has expired unless extended in specified
circumstances.
Pursuant to an assignment between I&M and KEPCo, and a unit power agreement
between KEPCo and AEGCo, AEGCo sells KEPCo 30% of the power (and the energy
associated therewith) available to AEGCo from both units of the Rockport Plant.
KEPCo has agreed to pay to AEGCo in consideration for the right to receive such
power the same amounts which I&M would have paid AEGCo under the terms of the
I&M Power Agreement for such entitlement. The KEPCo unit power agreement
expires on December 31, 1999, unless extended.
A unit power agreement among AEGCo, I&M, VEPCo, and APCo provides for, among
other things, the sale of 70% of the power and energy available to AEGCo from
Unit 1 of the Rockport Plant to VEPCo by AEGCo from January 1, 1987 through
December 31, 1999. VEPCo has agreed to pay to AEGCo in consideration for the
right to receive such power those amounts which I&M would have paid AEGCo under
the terms of the I&M Power Agreement for such entitlement. Approximately 37% of
AEGCo's operating revenue in 1993 was derived from its sales to VEPCo.
6
<PAGE>
Capital Funds Agreement
AEGCo and AEP have entered into a capital funds agreement pursuant to which,
among other things, AEP has unconditionally agreed to make cash capital
contributions, or in certain circumstances subordinated loans, to AEGCo to the
extent necessary to enable AEGCo to (i) maintain such an equity component of
capitalization as required by governmental regulatory authorities, (ii) provide
its proportionate share of the funds required to permit commercial operation of
the Rockport Plant, (iii) enable AEGCo to perform all of its obligations,
covenants and agreements under, among other things, all loan agreements, leases
and related documents to which AEGCo is or becomes a party (AEGCo Agreements),
and (iv) pay all indebtedness, obligations and liabilities of AEGCo (AEGCo
Obligations) under the AEGCo Agreements, other than indebtedness, obligations
or liabilities owing to AEP. The Capital Funds Agreement will terminate after
all AEGCo Obligations have been paid in full.
INDUSTRY PROBLEMS
The electric utility industry, including the operating subsidiaries of AEP,
has encountered at various times in the last 15 years significant problems in a
number of areas, including: delays in and limitations on the recovery of fuel
costs from customers; proposed legislation, initiative measures and other
actions designed to prohibit construction and operation of certain types of
power plants under certain conditions and to eliminate or reduce the extent of
the coverage of fuel adjustment clauses; inadequate rate increases and delays
in obtaining rate increases; jurisdictional disputes with state public
utilities commissions regarding the interstate operations of integrated
electric systems; requirements for additional expenditures for pollution
control facilities; increased capital and operating costs; construction delays
due, among other factors, to pollution control and environmental considerations
and to material, equipment and fuel shortages; the economic effects on net
income (which when combined with other factors may be immediate and adverse)
associated with placing large generating units and related facilities in
commercial operation, including the commencement at that time of substantial
charges for depreciation, taxes, maintenance and other operating expenses, and
the cessation of AFUDC with respect to such units; uncertainties as to
conservation efforts by customers and the effects of such efforts on load
growth; depressed economic conditions in certain regions of the United States;
increasingly competitive conditions in the wholesale and retail markets;
proposals to deregulate certain portions of the industry, revise the rules and
responsibilities under which new generating capacity is supplied and open
access to an electric utility's transmission system; and substantial increases
in construction costs and difficulties in financing due to high costs of
capital, uncertain capital markets, charter and indenture limitations
restricting conventional financing, and shortages of cash for construction and
other purposes.
SEASONALITY
Sales of electricity by the AEP System tend to increase during warmer summer
and cooler winter seasons because of the use of electricity by customers for
cooling and heating.
FRANCHISES
The operating companies of the AEP System hold franchises to provide electric
service in various municipalities in their service areas. These franchises have
varying provisions and expiration dates. In general, the operating companies
consider their franchises to be adequate for the conduct of their business.
COMPETITION
Retail
The public utility subsidiaries of AEP generally have the exclusive right to
sell electric power at retail within their service areas. However, they do
compete with self-generation and with distributors of alternative sources of
energy, such as natural gas, fuel oil and coal, within their service areas. The
primary factors in such competition are price, reliability of service and the
capacity of customers to utilize sources of energy other than electric power.
With respect to self-generation, the public utility subsidiaries of AEP believe
that they maintain a favorable competitive position on the basis of all of
these factors. With respect to alternative
7
<PAGE>
sources of energy, the public utility subsidiaries of AEP believe that the
reliability of their service and the limited ability of customers to substitute
other sources for electric power place them in a favorable competitive
position, even though their price may be higher than some such alternative
sources of energy.
Significant changes in the global economy in recent years have led to
increased price competition for industrial companies in the United States,
including those served by the AEP System. Such industrial companies have
requested price reductions from their suppliers, including their suppliers of
electric power. In addition, industrial companies which are downsizing or
reorganizing often close a facility based upon its costs, which include, among
other things, the cost of electric power. The public utility subsidiaries of
AEP cooperate with such customers to meet their business needs through, for
example, various off-peak or interruptible supply options and believe that, as
low cost suppliers of electric power, they will not be materially adversely
affected by this competition and may be benefitted by attracting new industrial
customers to their service territories.
The legislatures and/or the regulatory commissions in several states have
considered or are considering "retail wheeling" which, in general terms, means
the transmission by an electric utility of energy produced by another entity
over its transmission and distribution system to a retail customer in such
utility's service territory. A requirement to transmit directly to retail
customers would have the result of permitting retail customers to purchase
electric power, at the election of such customers, not only from the electric
utility in whose service area they are located but from any other electric
utility or independent power producer.
The MPSC began a proceeding on September 11, 1992 to investigate a proposal
by certain industrial companies for an experiment in retail wheeling in certain
service territories in Michigan, not including those of I&M. On August 27,
1993, an administrative law judge recommended that the MPSC authorize such
retail wheeling on a voluntary basis and that the proposal had not been shown
to be in the public interest, could harm other ratepayers and did not
adequately address the issues of stranded investment and utilities' obligation
to serve. The MPSC has not yet issued an order in this proceeding. In addition,
a retail wheeling bill was introduced in the Ohio House of Representatives in
February 1994.
Because adoption of retail wheeling would require resolution of complex
issues, such as who would pay for the unused generating plant of the utility
wheeling such power, it is not clear what effects will flow from its adoption
in any state. However, if retail wheeling is adopted, the public utility
subsidiaries of AEP believe that they have a favorable competitive position
because of their relatively low costs.
Wholesale
The public utility subsidiaries of AEP, like the electric industry generally,
face increasing competition to sell available power on a wholesale basis,
primarily to other public utilities. The Energy Policy Act of 1992 was
designed, among other things, to foster competition in the wholesale market (a)
through amendments to the Public Utility Holding Company Act of 1935,
facilitating the ownership and operation of generating facilities by "exempt
wholesale generators" (which may include independent power producers as well as
affiliates of electric utilities) and (b) through amendments to the Federal
Power Act, authorizing the FERC under certain conditions to order utilities
which own transmission facilities to provide wholesale transmission services
for other utilities and entities generating electric power. The principal
factors in competing for such sales are price (including fuel costs),
availability of capacity and reliability of service. The public utility
subsidiaries of AEP believe that they maintain a favorable competitive position
on the basis of all of these factors. However, because of the availability of
capacity of other utilities and the lower fuel prices in recent years, price
competition has been, and is expected for the next few years to be,
particularly important.
New Generation
When the AEP System needs new generation, the public utility subsidiaries of
AEP which wish to provide it will have to compete with exempt wholesale
generators, independent power producers and other
8
<PAGE>
utilities. Although the specific guidelines for such competition have not yet
been developed and may vary from jurisdiction to jurisdiction (see the
discussion below), significant factors will include price and reliability. AEP
and its subsidiaries believe that they can be competitive as to both of these
factors. However, no additional baseload generating capacity is expected to be
constructed by the AEP System for some time. See Construction and Financing
Program.
Indiana: On June 30, 1993, the IURC issued a notice of proposed rulemaking
for integrated resource planning which among other things would permit a
utility to acquire additional generation through bidding programs or other
means. The proposed rules would permit the utility to participate in the
bidding process. The Indiana Electric Association, on behalf of a group of
utilities including I&M, filed comments that support competitive bidding as an
optional method to acquire new generation.
Michigan: The MPSC has adopted guidelines governing the acquisition of new
capacity by large Michigan electric utilities. The guidelines do not apply to
I&M.
Ohio: On December 17, 1992, the PUCO issued an order proposing rules for
competitive bidding for new generating capacity, including transmission access
for winning bidders. The proposed rules would establish a rebuttable
presumption of prudence where new generating capacity is acquired through
competitive bidding and provide other incentives to use competitive bidding.
The proposed rules also contain procedures to ensure that bidders for a
utility's new capacity will have open access to certain transmission facilities
and prohibit the utility acquiring new capacity from withholding Clean Air Act
emission allowances from potential bidders. CSPCo and OPCo filed comments on
the proposed rules generally supporting promulgation of rules governing
competitive bidding but stating that the rules should not address access to
transmission facilities or emission allowances, because existing federal laws
address such concerns.
Virginia: The Virginia SCC has adopted minimum requirements for any electric
utility that elects to acquire new generation through a bidding program. An
electric utility is not required to use the bidding process and may participate
in the bidding process.
West Virginia: On October 8, 1993, the West Virginia PSC issued an order
proposing rules that generally require electric utilities to procure
competitively all new sources of generation. APCo and Wheeling Power Company
filed comments stating that the rules should not require competitive bidding
and should permit the utility to participate in the bidding process.
NEW BUSINESS DEVELOPMENT
AEP continues to consider new business opportunities, particularly those
which allow use of its expertise. These endeavors began in 1982 and are
conducted through AEP Energy Services, Inc. ("AEPES") and AEP Resources, Inc.
("Resources").
Resources' primary business focus is international and domestic cogeneration,
the independent power market, and the privatization of generation facilities in
the international market.
AEPES has continued to offer consulting services and market AEP System
expertise both domestically and internationally. AEPES contracts with other
public utilities, commercial concerns and government agencies for the rendition
of services and the licensing of intellectual property.
These continuing efforts to invest in and develop new business opportunities
offer the potential of earning returns which may exceed those of rate-regulated
operations. However, because of the absence of any assured return or rate of
return, they also involve a higher degree of risk which must be carefully
considered and assessed. AEP may make substantial investments in these and
other new businesses.
CONSTRUCTION AND FINANCING PROGRAM
The AEP System companies are engaged in a continuing construction program,
involving selection of sites, design and acquisition of equipment, and
installation of the generating, transmission, distribution and other facilities
necessary to provide for growing demands for electric service. However, AEP's
current load forecast indicates no need for new coal-fired baseload generation
until sometime after the year 2005. For many
9
<PAGE>
years System companies' loads grew at such a rate as to warrant efforts to
achieve major economies of scale, and thus reduce or limit the unit cost of the
power and energy supplied to the System's customers. From time to time, as the
System companies have encountered the industry problems described above, such
companies also have encountered limitations on their ability to secure the
capital necessary to finance construction expenditures.
The System construction program is reviewed continuously and is revised from
time to time in response to changes in estimates of customer demand, business
and economic conditions, the cost and availability of capital, environmental
requirements and other factors. The extent and timing of construction
expenditures and the nature of future financing activities may be dependent on,
among other things, the timing and amount of additional rate relief received.
See Rates.
PFBC Projects
Tidd Plant: In November 1990, OPCo began operating a 70,000 kilowatt PFBC
demonstration plant at the deactivated Tidd Plant on the Ohio River at
Brilliant, Ohio. The specific goal of the project is to demonstrate that the
combined-cycle PFBC technology is a cost-effective, reliable, and
environmentally superior alternative to conventional coal-fired electric power
generation with a flue-gas desulfurization system. Through December 31, 1993,
the Tidd Plant achieved 5,530 hours of coal-fired operation while demonstrating
the viability of the PFBC process in the reduction of targeted sulfur dioxide
and nitrogen oxide emissions. See Environmental and Other Matters for
information regarding restrictions on sulfur dioxide and nitrogen oxide
emissions from coal-fired power plants in the AEP System. Original funding for
the Tidd Plant project included provisions for a three-year test period
extending through February 1994. At this time, planned funding for the Tidd
Plant project contemplates an additional year of operation extending through
February 1995. However, if additional testing is required, the test period
could be extended past February 1995. The plant is planned to be deactivated at
the conclusion of the test program.
Total Tidd Plant construction costs (including PFBC development costs) and
total Tidd operating costs incurred through December 31, 1993 were $181,898,000
and $25,076,000, respectively. At such date, OPCo had received funding from DOE
and the State of Ohio in the aggregate amounts of $59,548,000 and $10,000,000,
respectively, and had recovered $123,186,000 from its retail customers. The
estimated total construction and operating costs of the Tidd Plant project are
$185,000,000 and $40,000,000, respectively, and OPCo expects to receive
additional funding from DOE so that the aggregate amount received from it will
be $60,200,000. OPCo is currently recovering approximately $500,000 per month
from its Ohio electric fuel component jurisdictional customers for costs
associated with the Tidd Plant project that are not recovered from DOE or the
State of Ohio and incurred after December 1, 1986. The PUCO, however, may
consider distributing such costs over total OPCo sales which may result in a
prospective reduction in the amount recoverable by OPCo.
PFBC Utility Demonstration Project: DOE is cost sharing with APCo development
of a 340,000 kilowatt commercial-size PFBC plant adjacent to APCo's Mountaineer
Plant in New Haven, West Virginia. DOE has agreed to continue funding the
design of the plant through at least January 1996. The present four-year effort
to refine the PFBC design extends through January 1996. The ultimate decision
to proceed with the construction of the commercial PFBC plant will hinge on the
confirmation of the need for new coal-fired baseload capacity, the readiness of
PFBC technology, and state regulatory commission approval.
Construction Expenditures
The following table shows the construction expenditures by AEGCo, APCo,
CSPCo, I&M, KEPCo, OPCo and the AEP System and their respective consolidated
subsidiaries during 1991, 1992 and 1993 and their current estimate of 1994
construction expenditures, in each case including AFUDC but excluding nuclear
fuel and other assets acquired under leases. The construction expenditures for
the years 1991-1993 were applied, and it is anticipated that the estimated
construction expenditures for 1994 will be applied, approximately as follows to
construction of the following classes of assets:
10
<PAGE>
<TABLE>
<CAPTION>
1991 1992 1993 1994
ACTUAL ACTUAL ACTUAL ESTIMATE
-------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
AEGCO
Generating plant and facilities............. $ 3,700 $ 3,600 $ 3,100 $ 4,300
-------- -------- -------- --------
TOTAL..................................... $ 3,700 $ 3,600 $ 3,100 $ 4,300
======== ======== ======== ========
APCO
Generating plant and facilities (a)......... $ 33,800 $ 34,400 $ 51,200 $ 64,200
Transmission lines and facilities........... 42,500 54,200 36,700 45,800
Distribution lines and facilities........... 102,200 91,600 98,200 92,400
General plant and other facilities.......... 12,300 11,500 4,800 17,300
-------- -------- -------- --------
TOTAL..................................... $190,800 $191,700 $190,900 $219,700
======== ======== ======== ========
CSPCO
Generating plant and facilities............. $ 49,800 $ 21,900 $33,300 $ 39,500
Transmission lines and facilities........... 11,300 11,600 10,100 4,600
Distribution lines and facilities........... 42,900 40,800 40,700 46,400
General plant and other facilities.......... 3,300 1,100 2,200 8,200
-------- -------- -------- --------
TOTAL..................................... $107,300 $ 75,400 $ 86,300 $ 98,700
======== ======== ======== ========
I&M (b)
Generating plant and facilities............. $ 48,200 $ 66,400 $ 50,200 $ 55,800
Transmission lines and facilities .......... 31,700 17,300 10,100 20,000
Distribution lines and facilities........... 38,800 39,200 41,300 42,000
General plant and other facilities.......... 5,000 3,500 6,700 5,200
-------- -------- -------- --------
TOTAL..................................... $123,700 $126,400 $108,300 $123,000
======== ======== ======== ========
KEPCO
Generating plant and facilities............. $ 5,300 $ 4,100 $ 8,100 $ 25,000
Transmission lines and facilities........... 4,000 8,700 6,700 9,400
Distribution lines and facilities........... 19,900 17,500 20,300 19,900
General plant and other facilities.......... 0 1,500 0 4,100
-------- -------- -------- --------
TOTAL..................................... $ 29,200 $ 31,800 $ 35,100 $ 58,400
======== ======== ======== ========
OPCO
Generating plant and facilities (c)(d)...... $132,900 $124,900 $112,700 $ 77,800
Transmission lines and facilities........... 19,500 18,900 28,600 34,300
Distribution lines and facilities........... 41,500 42,800 46,000 47,000
General plant and other facilities.......... 10,000 5,900 10,500 11,300
-------- -------- -------- --------
TOTAL..................................... $203,900 $192,500 $197,800 $170,400
======== ======== ======== ========
AEP SYSTEM
Generating plant and facilities (a)(c)(d)... $273,700 $255,300 $258,600 $266,600
Transmission lines and facilities........... 110,000 111,900 92,800 115,100
Distribution lines and facilities........... 250,800 237,700 252,300 255,800
General plant and other facilities.......... 30,700 23,700 24,400 46,500
-------- -------- -------- --------
TOTAL..................................... $665,200 $628,600 $628,100 $684,000
======== ======== ======== ========
</TABLE>
- --------
(a) Excludes expenditures for PFBC Utility Demonstration Project. See PFBC
Projects.
(b) Reflects restatement for 1991 to include effect of merging Michigan Power
Company into I&M.
(c) Includes expenditures for Tidd Plant which have been or are expected to be
funded through Federal/state grants and the fuel clause mechanism. See
PFBC Projects.
(d) Excludes expenditures associated with flue-gas desulfurization system
being constructed by a non-affiliate at the Gavin Plant which OPCo has
agreed to lease upon completion of construction. Actual expenditures for
1991, 1992 and 1993 and the current estimate for 1994 are $18,683,000,
$93,653,000, $256,673,000 and $230,000,000, respectively. See
Environmental and Other Matters--CAAA-AEP System Compliance Plan.
11
<PAGE>
Reference is made to the footnotes to the financial statements entitled
Commitments and Contingencies incorporated by reference in Item 8, for further
information with respect to the construction plans of AEP and its operating
subsidiaries for the next three years. If the System receives adequate rate
relief in future periods, and is able to finance additional construction
expenditures, and if the loads which are served by the System increase above
the levels currently projected, additional expenditures may be incurred in
subsequent years in amounts which would be substantial but which cannot be
accurately predicted at this time.
Changes in construction schedules and costs, and in estimates and projections
of needs for additional facilities, as well as variations from currently
anticipated levels of net earnings, Federal income and other taxes, and other
factors affecting cash requirements, may increase or decrease the estimates of
capital requirements for the System's construction program.
Proposed Transmission Facilities: On March 23, 1990, APCo and VEPCo announced
plans, subject to regulatory approval, for major new transmission facilities.
APCo will construct approximately 115 miles of 765,000-volt line from APCo's
Wyoming station in southern West Virginia to APCo's Cloverdale station near
Roanoke, Virginia. VEPCo will construct approximately 102 miles of 500,000-volt
line from APCo's Joshua Falls station east of Lynchburg, Virginia to VEPCo's
Ladysmith station north of Richmond, Virginia. The construction of the
transmission lines and related station improvements will provide needed
reinforcement for APCo's internal load, reinforce the ability to exchange
electric energy between the two companies and relieve present constraints on
the transmission of electric energy from potential independent power producers
in the APCo service area to VEPCo. APCo's cost is estimated at $245,000,000
while VEPCo's cost is estimated at $164,000,000. Completion of the project is
presently scheduled for 1998 but the actual service date will be dependent upon
the time necessary to meet various regulatory requirements.
Hearings before the Virginia SCC were concluded in September 1993. A report
was issued by the hearing examiner in December 1993 which recommended that the
Virginia SCC grant APCo approval to construct the proposed 765,000-volt line. A
decision by the Virginia SCC is pending.
APCo refiled with the West Virginia PSC in February 1993 its application for
certification. An application filed in June 1992 was withdrawn at the request
of the West Virginia PSC to permit additional time for review by the West
Virginia PSC. The West Virginia PSC rejected APCo's application for
certification in May 1993, directing APCo to supplement its line siting
information. APCo intends to refile its application with the West Virginia PSC.
Hearings are expected to be held in late 1994 with a decision expected in early
1995.
The Jefferson National Forest (JNF) is directing the preparation of an
Environmental Impact Statement (EIS) which will be required prior to the
granting of special use permits for crossing Federal lands. The present
schedule of the JNF calls for completion of the draft EIS in September 1994 and
the final EIS in February 1995.
Environmental Expenditures: Expenditures related to compliance with air and
water quality standards, included in the gross additions to plant of the
System, during 1991, 1992 and 1993 and the current estimate for 1994 are shown
below. Substantial expenditures in addition to the amounts set forth below may
be required by the System in future years in connection with the modification
and addition of facilities at generating plants for environmental quality
controls in order to comply with air and water quality standards which may have
been or may be adopted.
<TABLE>
<CAPTION>
1991 1992 1993 1994
ACTUAL ACTUAL ACTUAL ESTIMATE
-------- ------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
AEGCo......................................... $ 0 $ 0 $ 0 $ 900
APCo (a)...................................... 7,100 11,200 16,800 22,100
CSPCo......................................... 7,100 6,500 15,800 23,900
I&M........................................... 100 0 0 3,700
KEPCo......................................... 200 100 1,000 9,000
OPCo (b)(c)................................... 56,700 61,600 31,600 24,500
------- ------- ------- -------
AEP System (a)(b)(c).......................... $71,200 $79,400 $65,200 $84,100
======= ======= ======= =======
</TABLE>
12
<PAGE>
- --------
(a) Excludes expenditures for PFBC Utility Demonstration Project. See PFBC
Projects.
(b) Includes expenditures for Tidd Plant which have been or are expected to be
funded through Federal/state grants and the fuel clause mechanism. See
PFBC Projects.
(c) Excludes expenditures associated with flue-gas desulfurization system
being constructed by a non-affiliate at the Gavin Plant which OPCo has
agreed, subject to PUCO approval, to lease upon completion of
construction. Actual expenditures for 1991, 1992 and 1993 and the current
estimate for 1994 are $18,683,000, $93,653,000, $256,673,000 and
$230,000,000, respectively. See Environmental and Other Matters--CAAA-AEP
System Compliance Plan.
Financing
It has been the practice of AEP's operating subsidiaries to finance current
construction expenditures in excess of available internally generated funds by
initially issuing unsecured short-term debt, principally commercial paper and
bank loans, at times up to levels authorized by regulatory agencies, and then
to reduce the short-term debt with the proceeds of subsequent sales by such
subsidiaries of long-term debt securities and preferred stock, and cash
capital contributions by AEP to the subsidiaries. It has been the practice of
AEP, in turn, to finance cash capital contributions to the common stock
equities of the operating subsidiaries by issuing unsecured short-term debt,
principally commercial paper, and then to sell additional shares of Common
Stock of AEP for the purpose of retiring the short-term debt previously
incurred. Since 1985, however, AEP has sold no shares of Common Stock. If
necessary, AEP will issue shares of Common Stock pursuant to its Dividend
Reinvestment and Stock Purchase Plan. Although prevailing interest costs of
short-term bank debt and commercial paper generally have been lower than
prevailing interest costs of long-term debt securities, whenever interest
costs of short-term debt exceed costs of long-term debt, the companies might
be adversely affected by reliance on the use of short-term debt to finance
their construction and other capital requirements.
During the period 1991-1993, external funds from financings and capital
contributions by AEP amounted, with respect to APCo, CSPCo and KEPCo to
approximately 37%, 38% and 31%, respectively, of the aggregate construction
expenditures shown above. During this same period, the amount of funds used to
retire long-term and short-term debt and preferred stock of AEGCo, I&M and
OPCo exceeded the amount of funds from financings and capital contributions by
AEP.
The ability of AEP and its operating subsidiaries to issue short-term debt
is limited by regulatory restrictions and, in the case of most of the
operating subsidiaries, by provisions contained in their charters and in
certain debt and other instruments. The approximate amounts of short-term debt
which the companies estimate that they were permitted to issue under the most
restrictive such restriction, at January 1, 1994, and the respective amounts
of short-term debt outstanding on that date, on a corporate basis, are shown
in the following tabulation:
<TABLE>
<CAPTION>
TOTAL
SHORT-TERM DEBT AEP AEGCO APCO CSPCO I&M KEPCO OPCO AEP SYSTEM(A)
---------------- ---- ------ ----- ------ ---- ------ ----- --------------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Amount authorized.... $150 $50 $215 $140 $127 $100 $222 $1,054
==== === ==== ==== ==== ==== ==== ======
Amount outstanding:
Notes payable...... $ -- $15 $ -- $ 12 $ -- $26 $ -- $ 63
Commercial paper... 65 -- 36 13 50 12 38 214
---- --- ---- ---- ---- ---- ---- ------
$ 65 $15 $ 36 $ 25 $ 50 $38 $ 38 $ 277
==== === ==== ==== ==== ==== ==== ======
</TABLE>
- --------
(a) Includes short-term debt of other subsidiaries not shown.
Reference is made to the footnotes to the financial statements incorporated
by reference in Item 8 for further information with respect to unused short-
term bank lines of credit.
In order to issue additional long-term debt and preferred stock, it is
necessary for APCo, CSPCo, I&M, KEPCo and OPCo to comply with earnings
coverage requirements contained in their respective mortgages, debenture
indentures and charters. The most restrictive of these provisions in each
instance generally requires
13
<PAGE>
(1) for the issuance of additional long-term debt by APCo, I&M and OPCo, for
purposes other than the refunding of outstanding long-term debt securities, a
minimum, before income tax, earnings coverage of twice the pro forma annual
interest charges on long-term debt, (2) for the issuance of first mortgage
bonds by CSPCo and KEPCo for purposes other than the refunding of outstanding
first mortgage bonds, a minimum, before income tax, earnings coverage of twice
the pro forma annual interest charges on first mortgage bonds and (3) for the
issuance of additional preferred stock by APCo, I&M and OPCo, a minimum, after
income tax, gross income coverage of one and one-half times pro forma annual
interest charges and preferred stock dividends, in each case for a period of
twelve consecutive calendar months within the fifteen calendar months
immediately preceding the proposed new issue. In computing such coverages, the
companies include as a component of earnings revenues collected subject to
refund (where applicable) and, to the extent not limited by the instrument
under which the computation is made, AFUDC, including amounts positioned and
classi-fied as an allowance for borrowed funds used during construction. These
coverage provisions have from time to time restricted the ability of one or
more of the above subsidiaries of AEP to issue senior securities in the amounts
considered to be desirable.
The respective long-term debt and preferred stock coverages of APCo, CSPCo,
I&M, KEPCo and OPCo under their respective debenture indenture, mortgage and
charter provisions, calculated on the foregoing basis and in accordance with
the respective amounts then recorded in the accounts of the companies, assuming
the respective short-term debt of the companies at those dates were to remain
outstanding for a twelve-month period at the respective rates of interest
prevailing at those dates, were at least those stated in the following table:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------
1991 1992 1993
---- ---- ----
<S> <C> <C> <C>
APCo
Debt coverage.................................................. 3.76 3.50 3.62
Preferred stock coverage....................................... 2.08 1.99 2.04
CSPCo
Mortgage coverage.............................................. 1.49 2.16 2.91
I&M
Debt coverage.................................................. 4.10 3.55 4.59
Preferred stock coverage....................................... 2.24 2.06 2.48
KEPCo
Mortgage coverage.............................................. 4.50 3.34 2.19
OPCo
Debt coverage.................................................. 3.95 3.36 4.65
Preferred stock coverage....................................... 2.24 2.22 2.88
</TABLE>
Although certain other subsidiaries of AEP either are not subject to any
coverage restrictions or are not subject to restrictions as constraining as
those to which APCo, CSPCo, I&M, KEPCo and OPCo are subject, their ability to
finance substantial portions of their construction programs may be subject to
market limitations and other constraints unless other assurances are furnished.
AEP believes that the ability of its operating subsidiaries to issue short-
and long-term debt securities and preferred stock in the amounts required to
finance their respective construction programs depends upon the timely approval
of pending and future rate increase applications. If one or more of the
operating subsidiaries are unable to continue the issuance and sale of
securities on an orderly basis, such company or companies will be required to
consider the use of alternative financing arrangements, if available, which may
be more costly or the curtailment of construction and other outlays.
AEP's subsidiaries have also utilized, and expect to continue to utilize,
additional financing arrangements, such as leasing arrangements, including the
leasing of utility assets, coal mining and
14
<PAGE>
transportation equipment and facilities and nuclear fuel. Pollution control
revenue bonds have been used in the past and may be used in the future in
connection with the construction of pollution control facilities; however,
Federal tax law has limited the utilization of this type of financing except
for purposes of certain financing of solid waste disposal facilities and of
certain refunding of outstanding pollution control revenue bonds issued before
August 16, 1986.
Shares of AEP Common Stock may be sold by AEP from time to time at prices
below the then current book value per share and repurchased by AEP at prices
above book value. Such sales or purchases, if any, would have a dilutive effect
on the book value of then outstanding shares but are not expected to have a
material adverse effect on AEP's business including its future financing plans
or capabilities and pending construction projects.
CONSERVATION AND LOAD MANAGEMENT
For some years, the AEP System has put in place a series of customer programs
for encouraging electric conservation and load management (CLM). The CLM
programs also are referred to in the electric utility industry as "demand-side
management" programs (DSM) since they affect the demand for electricity as
opposed to electricity supply. The AEP System is committed to integrated
resource planning and has in place a detailed analysis procedure in which
effective demand-side and supply-side options are both considered in order to
determine the least cost approach to provide reliable electric service for its
customers, taking into account environmental and other considerations. Recovery
of demand-side program expenditures through rates is being reviewed by AEP's
respective regulatory commissions as discussed below in Rates.
RATES
General
In recent years the operating subsidiaries of AEP have filed a series of rate
increase applications with their respective state commissions and the FERC and
expect that they will continue to do so whenever necessary as increases in
operating, construction and capital costs exceed increases in revenues
resulting from previously granted rate increases and increased customer demand.
All of the seven states served by the AEP System, as well as the FERC, either
permit the incorporation of fuel adjustment clauses in a utility company's
rates and tariffs, which are designed to permit upward or downward adjustments
in revenues to reflect increases or decreases in fuel costs above or below the
designated base cost of fuel set forth in the particular rate or tariff, or
permit the inclusion of specified levels of fuel costs as part of such rate or
tariff.
AEP cannot predict the timing or probability of approvals regarding
applications for additional rate changes, the outcome of action by regulatory
commissions or courts with respect to such matters, or the effect thereof on
the earnings and business of the AEP System.
FERC Regulatory Matters: On March 31, 1993, the FERC issued its final rules,
effective January 1, 1993, regarding accounting for allowances under the Clean
Air Act Amendments of 1990. The rules provide for the use of "fair value" in
the valuation of allowances traded between affiliates and establishment of FERC
accounts to record regulatory assets and liabilities. See Environmental and
Other Matters--Air Pollution Control.
APCo
FERC: On February 14, 1992, APCo filed with the FERC applications for an
increase in its wholesale rates to Kingsport Power Company and non-affiliated
customers in the amounts of approximately $3,933,000 and $4,759,000,
respectively. APCo began collecting the rate increases, subject to refund, on
September 15, 1992. In addition, the Financial Accounting Standards Board has
issued Statement of Financial Accounting Standards No. 106, Employers'
Accounting for Postretirement Benefits Other Than Pensions (SFAS 106) which
requires employers, beginning in 1993, to accrue for the costs of retiree
benefits other than pensions. These rates include the higher level of SFAS 106
costs. On November 9, 1993, the administrative law judge issued an initial
decision recommending, among other things, the higher level of postretirement
benefits other than pensions under SFAS 106. FERC action on APCo's applications
is pending.
15
<PAGE>
In June 1993, certain municipal customers filed an application with the FERC
for an order requiring the AEP System to provide transmission service for 50
megawatts (mw) of base load power purchased from an unaffiliated utility and
the reduction by 50 mw of the power these customers purchase from APCo under
existing 10-year Electric Service Agreements ("ESAs"). APCo maintains that its
agreements with these customers are full-requirements contracts which preclude
the customers from purchasing power from third parties. On December 1, 1993,
the administrative law judge issued an initial decision that the ESAs are not
full requirements contracts and that the ESAs give these municipal wholesale
customers the option of substituting alternative sources of power for energy
purchased from APCo. The proposed 50 mw reduction would reduce net non-fuel
revenue by $16,900,000 over the period April 1994 through June 1997 (end of
ESAs). On February 10, 1994, the FERC issued orders (1) affirming, in part, the
administrative law judge's initial decision and (2) instituting a proceeding to
determine the appropriate rate and terms for the transmission of this power to
the municipal customers. On March 11, 1994, AEP System companies filed a
petition for rehearing of the FERC's order affirming the administrative law
judge's decision.
Virginia: On December 4, 1992, APCo filed with the Virginia SCC a request to
increase rates by approximately $31,377,000 annually. APCo's filing requests,
among other things, approval to establish a capacity charge tracking mechanism
to track changes in its capacity charges from the AEP System Power Pool,
increased West Virginia allocated business and occupation taxes discussed below
and increased SFAS 106 costs. On December 29, 1992, the Virginia SCC issued an
order suspending APCo's proposed rates until May 3, 1993. In June 1993, the
Virginia SCC staff recommended a $10,500,000 annual rate increase and, after
hearings in July 1993, the Hearing Examiner issued a report recommending a
$7,800,000 annual rate increase. A Virginia SCC order is pending.
On March 27, 1992, the Virginia SCC issued a final order regarding its
investigation of CLM programs of Virginia's utilities. The Virginia SCC adopted
rules regarding the rate recovery of promotional allowances designed to achieve
energy conservation, load reduction or improved energy efficiency. Rate
recovery for such promotions will be allowed only for cost-effective CLM
programs, and not for those designed primarily to increase load or market
share, unless a company proves that the program is cost-effective and serves
the overall public interest. The Virginia SCC also directed Virginia utilities
to submit their CLM programs for formal review and approval.
In accordance with the March 27, 1992 order of the Virginia SCC, in order to
promote the goals of cost-effective utility conservation, efficiency and load
management, on October 16, 1992, APCo filed an application with the Virginia
SCC for approval to implement six demand side management pilot programs in its
service territory, including a residential rate experiment. On March 4, 1993,
the Virginia SCC issued an order approving implementation of five of the six
programs. The storage water heater program was transferred to APCo's pending
Virginia retail rate case discussed above for adjudication. Rate recovery for
all of these programs is also being sought in the Virginia rate case.
The Virginia SCC, in its order of March 27, 1992, also directed its staff to
determine the appropriate methods for evaluating the cost-effectiveness of CLM
programs and to submit an interim report outlining the scope and procedure of
the investigation. The staff submitted its Report on the Cost/Benefit Analysis
of Demand Side Management Programs on February 9, 1993. Therein the staff
stated that a multi-perspective approach to determining the cost and benefits
of demand-side management programs is needed in order to evaluate the full
impact of programs on a utility and its customers. The staff stated that
programs should be evaluated from the perspective of the program participant,
the non-participant, the utility and all ratepayers.
On June 28, 1993, the Virginia SCC issued an order promulgating rules on the
proper cost/benefit tests to be conducted on proposed DSM programs. The rules
provide that utilities shall analyze a proposed DSM program from a multi-
perspective approach considering, at a minimum, the quantifiable benefits and
costs of a program to the participating customer, the cost of the DSM program
incurred by the utility, the difference between the change in total revenues
paid to the utility and the change in total costs to a utility resulting from
the DSM program, and the cost of a program as a resource option to the utility
and its ratepayers as a whole. The order specifies minimum guidelines to
provide direction to utilities in developing applications for
16
<PAGE>
approval of DSM programs. Utilities must seek Virginia SCC approval of pilot or
experimental programs that involve rates or promotional allowances, but other
limited pilot or experimental programs may be conducted without prior approval.
West Virginia: In January 1992, APCo filed with the Supreme Court of Appeals
of West Virginia a petition for appeal which sought a review and reversal of
the West Virginia PSC's November 1, 1991 order which disallowed recovery of
$12,700,000 annually relating to the allocation treatment of business and
occupation taxes. In April 1992, the court issued an order denying APCo's
appeal. APCo has received recovery of the non-West Virginia jurisdictional
share of these taxes in its Virginia and FERC jurisdictions.
On February 22, 1993, the West Virginia PSC approved an increase in APCo's
Expanded Net Energy Cost (ENEC) rates of $24,400,000 annually. ENEC rates are
approved annually as part of the West Virginia PSC's review of APCo's power
supply costs which include fuel, purchased power and AEP System Power Pool
capacity charges and credits for APCo's share of Power Pool generation costs
and wholesale sales. In approving the new rates, the West Virginia PSC placed
APCo on notice that the annual review process, including the traditional fuel
elements of the review and deferred accounting with prospective actual cost
recoveries, would be closely examined at the next review.
On October 28, 1993, the West Virginia PSC approved, with certain
modifications, a settlement agreement among the parties to the ENEC proceeding.
The approved agreement temporarily suspended the annual ENEC recovery
proceedings, reduced ENEC rates by $8,000,000 annually effective November 1,
1993, and froze current base rates and the reduced ENEC rate for a three-year
period ending October 31, 1996. Deferral accounting will not be used for new
ENEC cost variances incurred from November 1993 through October 1996. The ENEC
actual underrecovery balance on October 31, 1993 of $13,300,000 will be
collected through a component of the revised ENEC rates over the three-year
period ending October 31, 1996. The agreement also provides for a net decrease
in West Virginia depreciation expense of $4,300,000 annually (with no change to
base rates) effective November 1, 1995. APCo also agreed to invest at least
$90,000,000 in distribution facilities in West Virginia between October 13,
1993 and October 31, 1996.
On November 5, 1992, APCo filed an application with the West Virginia PSC for
approval to implement seven demand-side management programs. On February 8,
1993, the West Virginia PSC issued an order approving the seven demand side
management programs, but limited availability of one program to only existing
electric water heating customers. On April 14, 1993, the West Virginia PSC by
order clarified the availability to customers with electric water heating and
new customers with all-electric homes.
CSPCo
Zimmer Plant: The Zimmer Plant was placed in commercial operation as a 1,300-
megawatt coal-fired plant on March 30, 1991. CSPCo owns 25.4% of the Zimmer
Plant with the remainder owned by two unaffiliated companies, CG&E (46.5%) and
DP&L (28.1%) (collectively, the Owners).
Zimmer Plant--Rate Recovery: On April 2, 1991, CSPCo filed a request with the
PUCO to increase rates $202,500,000 on an annual basis principally to recover
its share of the costs of operation of the Zimmer Plant and a return on its
investment. On May 12, 1992, the PUCO issued an order on CSPCo's rate request.
The order provided for a phased-in rate increase of $123,000,000 to be
implemented in three steps over a two-year period and excluded from rate base
$165,000,000 of Zimmer Plant costs composed of an allowance for funds used
during construction accrued from February 1984 through February 1986, nuclear
wind-down costs and a loss on the sale of nuclear fuel. The order also provided
for the recovery of deferred post in-service operating expenses over 10 years.
CSPCo requested a rehearing with the PUCO which was denied except for rehearing
of certain minor rate design and accounting related issues. CSPCo and the PUCO
staff signed a stipulation agreement resolving the minor issues for which the
PUCO granted rehearing. On August 20, 1992, the PUCO approved the stipulation
which provided CSPCo with approximately $1,500,000 of additional revenues
annually.
17
<PAGE>
CSPCo filed an appeal with the Ohio Supreme Court on September 1, 1992
regarding the $165,000,000 excluded from rate base and challenging the PUCO's
authority to order a phased-in rate plan. CSPCo's appeal stated (1) that the
PUCO failed to abide by the terms of a PUCO-approved 1985 stipulation agreement
regarding CSPCo's investment in the Zimmer Plant and (2) that the PUCO did not
have authority to order phased-in rates.
In November 1993, the Supreme Court issued a decision on CSPCo's appeal
affirming the disallowance and finding that the PUCO did not have statutory
authority to order phased-in rates. The court instructed the PUCO to fix rates
to provide gross annual revenues in accordance with the law and to provide a
mechanism to recover the revenues deferred under the phase-in order which
through December 31, 1993 totaled $93,900,000.
As a result of the ruling, 1993 net income was reduced by $144,500,000 after
tax to reflect the disallowance and in January 1994, the PUCO approved a 7.11%
or $57,167,000 rate increase effective February 1, 1994. The increase is
comprised of a 3.72% base rate increase and a temporary 3.39% surcharge, which
will be in effect until the phase-in plan deferrals are recovered, estimated to
be for a period of less than four and one-half years. The recovery of deferrals
and the increase in rates to the full rate level will not affect net income.
Other Ohio Regulatory Matters: On April 30, 1992, CSPCo and OPCo filed their
individual 1992 long-term forecast reports and integrated resource plans. On
September 23, 1993, the PUCO issued its opinion and order approving CSPCo's and
OPCo's long-term forecast reports. The PUCO order directs CSPCo and OPCo to
proceed with a number of specific demand-side management programs and any other
programs determined to be cost-effective.
Reference is made to Environmental and Other Matters--Clean Air Act
Amendments of 1990 for a discussion of emission allowances. On January 9, 1992,
the PUCO issued an entry opening a generic docket to investigate trading and
usage of, and accounting treatment for, emission allowances by electric
utilities in Ohio. On January 20, 1993 the PUCO issued proposed guidelines
concerning emission allowances, including the guideline that gains or losses on
transactions involving emission allowances created by rate base assets should
generally flow through to ratepayers. On March 25, 1993, the PUCO issued its
final guidelines concerning emission allowances. The final guidelines state
that the PUCO expects that Ohio utilities will take advantage of the allowance
trading market, and encourages all trades that can be economically justified.
The final guidelines include the proposed guideline that gains or losses on
transactions involving emission allowances created by rate base assets should
generally flow through to ratepayers. The final guidelines also provide that
allowance plans, procedures, practices, trading activity, and associated costs
should be reviewed annually in the electric fuel component since the cost of
these allowances are part of the acquisition and delivery costs of fuel.
On September 17, 1993, CSPCo and OPCo filed an Application for
Conservation/Renewable Reserve Allowances. The application requested an award
of 18 allowances and was certified by the PUCO on September 3, 1993. On January
27, 1994, Federal EPA notified AEP that it would defer awarding allowances to
CSPCo and OPCo pending further documentation from the PUCO of CSPCo's and
OPCo's compliance with appropriate eligibility requirements.
Reference is made to the caption Environmental and Other Matters--Clean Air
Amendments of 1990--AEP System Compliance Plan for information regarding AEP's
compliance plan which has been filed with the PUCO.
In October 1991, the PUCO announced that the Governor of Ohio and the Ohio
General Assembly directed the PUCO to develop a long-term energy strategy for
the State of Ohio. On December 4, 1992, the PUCO, on behalf of the Interagency
Ohio Energy Strategy (OES) Task Force, released its interim report. CSPCo and
OPCo jointly filed comments on February 15, 1993.
18
<PAGE>
On September 3, 1992 the PUCO began an investigation into incentive based
ratemaking under Ohio's existing ratemaking statutes. Joint comments were filed
in November 1992 by CSPCo and OPCo.
I&M
FERC: In June 1990 an initial decision was issued by a FERC administrative
law judge regarding a complaint filed by a wholesale customer concerning the
reasonableness of I&M's coal costs from an unaffiliated supplier who leased a
Utah mining operation from I&M in 1986 and the coal transportation charges of
affiliates. In February 1993 the FERC reversed the decision of the
administrative law judge and dismissed the complaint. In December 1993 the
wholesale customer appealed the FERC order to the U.S. Court of Appeals,
District of Columbia Circuit.
Indiana: In April 1992 I&M filed testimony and exhibits with the IURC seeking
a $44,800,000 increase in annual rates to recover, among other things,
increased operating costs including expenses associated with nuclear operation
and maintenance, an increase in the provision for the cost of decommissioning
the Cook Plant, increased accruals for the cost of postretirement benefits
other than pensions as mandated by SFAS 106 and revised depreciation accrual
rates. On November 12, 1993, the IURC issued an order granting a $34,700,000
annual rate increase. The IURC approved substantially all of I&M's proposals
including, among other things, increased operation and maintenance expenses
associated with the Cook Plant with an increase in the provision for nuclear
decommissioning costs, increased accruals for the cost of postretirement
benefits other than pensions and an increase in depreciation expense based on
revised accrual rates (including costs for the demolition of I&M's fossil-fired
generating stations at the end of their useful lives).
In June 1993 the IURC issued a notice of proposed rulemaking for integrated
resource planning (IRP) guidelines, including consideration of demand-side
management, resource bidding and independent power producers. In October 1993,
the Indiana Electric Association filed the joint comments of some of its
members, including I&M, indicating their support for the IURC's efforts to
develop new guidelines relating to IRP.
Michigan: On February 21, 1992, I&M submitted to the MPSC Staff its three-
year conservation plan. After settlement discussions, I&M submitted to Staff a
revised three-year conservation plan that reflects demand-side management
program costs and an incentive package and that establishes I&M's next Michigan
retail rate case as the forum to consider recovery of lost revenues. The MPSC
approved a settlement agreement in September 1993 which established recovery of
DSM program expenses and an incentive plan.
In October 1993, the MPSC approved a settlement agreement authorizing I&M to
increase its annual provision for the cost to decommission the Cook Plant from
approximately $2,800,000 to a level of $4,000,000, effective November 1, 1993,
with further increases to annual levels of $5,100,000 and $6,000,000, six and
twelve months later, respectively.
KEPCo
FERC: On October 28, 1993, KEPCo filed an application to begin serving the
City of Vanceburg as a full requirements customer, effective January 1, 1994,
which will yield annual revenues of $1,448,000.
On August 15, 1991, the KPSC issued an order which initiated its
investigation of the compliance strategies of electric utilities related to the
Clean Air Act Amendments of 1990. On September 4, 1991, KEPCo filed its
preliminary plan for compliance which is the same systemwide compliance report
filed with the PUCO discussed under the caption CAAA-AEP System Compliance
Plan. KEPCo's Big Sandy Plant is not subject to Phase I emission requirements;
however, KEPCo may incur a portion of the costs of Phase I compliance for the
AEP System through the AEP System Power Pool. On March 30, 1992, the KPSC
issued an order requiring all electric utilities with Phase I affected units to
file their complete acid rain permit applications filed with Federal EPA or
explain why such permit applications are not being filed. On April 6, 1993,
KEPCo responded by letter that KEPCo has no generating units which are Phase I-
affected; however,
19
<PAGE>
AEP's Phase I permit applications were provided. On August 18, 1993, the KPSC
issued an order which indicated utilities should be prepared to explain their
actions regarding extension and bonus allowances. For unreasonable activities,
cost disallowances would occur. Appropriate ratemaking treatment of allowance
trading and use will be determined on a case-by-case basis.
On July 24, 1992, the KPSC began an investigation into the feasibility of
implementing demand-side management cost recovery and incentive mechanisms.
OPCo
Reference is made to Rates--CSPCo regarding generic proceedings by the PUCO
relating to demand-side management programs, emission allowance trading, the
review of OPCo's long-term forecast report, the Ohio Energy Strategy Task Force
and incentive-based ratemaking.
In April 1991, the municipal wholesale customers of OPCo filed a complaint
with the FERC seeking refunds back to 1982 for alleged overcharges for certain
affiliated fuel costs. The complaint contends that the price of coal from two
of OPCo's affiliated mines violated the FERC's market price requirement for
affiliate coal pricing. In February 1993, FERC issued an order dismissing the
complaint and, in September 1993, the wholesale customers appealed the FERC
order to the U.S. Court of Appeals for the Sixth Circuit.
On November 25, 1992, the PUCO issued an order approving a stipulation
agreement with OPCo, the staff of the PUCO and the Ohio Consumers' Counsel. The
agreement provided for, among other things, a predetermined price of $1.64 per
million Btus for coal consumed by OPCo at four of its generating stations for
the three-year period ended November 30, 1994; a subsequent 15-year
predetermined price of $1.575 per million Btus for coal consumed at the Gavin
Plant with quarterly price adjustments; and a limit on the recoverable cost for
the Gavin scrubbers which is discussed under Environmental and Other Matters-
Clean Air Act Amendments of 1990-AEP System Compliance Plan. After November 30,
2009, the price that OPCo can recover for coal from its affiliated Meigs mine
will be limited to the lower of cost or the then-current market price. The
predetermined prices will provide OPCo with an opportunity to accelerate
recovery of its investment in and the liabilities of its Meigs mining operation
attributable to its Ohio jurisdiction to the extent the actual cost of coal
burned at the four plants is below the predetermined prices. In March 1993, the
Industrial Energy Consumers of OPCo and The Sierra Club appealed the PUCO order
to the Supreme Court of Ohio. OPCo has participated in these proceedings.
OPCo has restructured its Meigs mining operation to operate at a reduced
level of production. As a result, OPCo will purchase replacement coal under
long-term contracts and on the spot market. It is expected that the replacement
coal will be at prices below the Meigs production costs. Management reviewed
the potential impact of the stipulation and restructuring to determine OPCo's
ability to recover the cost of its Meigs mining operation. Based on the
estimated future cost of coal for the Gavin Plant, management believes that
OPCo should be able to recover the Ohio jurisdictional cost of its Meigs mining
operation under the terms of the stipulation agreement.
In November 1992, the municipal wholesale customers of OPCo filed two
complaints. One complaint was filed with the FERC requesting an investigation
of OPCo's July 1992 sale of the Martinka mining operation to an unaffiliated
company. The FERC dismissed this complaint in June 1993. The other complaint
was filed with the SEC requesting an investigation of the Martinka sale and an
investigation into the pricing of OPCo's affiliated coal purchases back to
1986. OPCo has filed a response with the SEC seeking to dismiss this complaint.
The PUCO is reviewing the Martinka sale and related unaffiliated fuel contracts
in OPCo's current fuel clause proceedings.
If additional regulatory actions further limit recovery of affiliated coal
costs, results of operations could continue to be adversely impacted and the
continued operation of some or all of OPCo's affiliated coal mines could be
adversely impacted. The inability to recover affiliated coal costs and, if
necessary, any future cost of
20
<PAGE>
mine closure, including the investment in and cost to maintain the facilities
shutdown, leased asset buy-outs, employee benefit costs and required
reclamation costs, through the rate-making process or through the disposition
of assets could have a material adverse effect on results of operations and
financial condition.
Reference is made to Construction and Financing Program-PFBC Projects-Tidd
Plant for information concerning the recovery through rates of certain Tidd
Plant project costs.
Reference is made to the caption Environmental and Other Matters--CAAA-AEP
System Compliance Plan for information regarding the AEP System's plan to
comply with the Clean Air Act Amendments of 1990.
FUEL SUPPLY
The following table shows the sources of power generated by the AEP System:
<TABLE>
<CAPTION>
1990 1991 1992 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Coal................................................... 90% 86% 93% 86%
Nuclear................................................ 9% 13% 6% 13%
Hydroelectric and other................................ 1% 1% 1% 1%
</TABLE>
Variations in the generation of nuclear power are primarily related to
refueling outages and, in 1992, a forced outage at Cook Plant Unit 2. See Cook
Nuclear Plant.
Coal
The Clean Air Act Amendments of 1990 provide for the issuance of annual
allowance allocations covering sulfur dioxide emissions at levels below
historic emission levels for many coal-fired generating units of the AEP
System. Phase I of this program must be met by 1995 and Phase II must be met by
2000, with both phases requiring significant changes in coal supplies and
suppliers. The full extent of such changes, particularly in regard to Phase II,
however, has not been determined. See Environmental and Other Matters--Air
Pollution Control--CAAA-AEP System Compliance Plan for the current compliance
plan.
In order to meet emission standards for existing and new emission sources,
the AEP System companies will, in any event, have to obtain coal supplies, in
addition to coal reserves now owned by System companies, through the
acquisition of additional coal reserves and/or by entering into additional
supply agreements, either on a long-term or spot basis, at prices and upon
terms which cannot now be predicted.
No representation is made that any of the coal rights owned or controlled by
the System will, in future years, produce for the System any major portion of
the overall coal supply needed for consumption at the coal-fired generating
units of the System. Although AEP believes that in the long run it will be able
to secure coal of adequate quality and in adequate quantities to enable
existing and new units to comply with emission standards applicable to such
sources, no assurance can be given that coal of such quality and quantity will
in fact be available. No assurance can be given either that statutes or
regulations limiting emissions from existing and new sources will not be
further revised in future years to specify lower sulfur contents than now in
effect or other restrictions. See Environmental and Other Matters herein.
The FERC has adopted regulations relating, among other things, to the
circumstances under which, in the event of fuel emergencies or shortages, it
might order electric utilities to generate and transmit electric energy to
other regions or systems experiencing fuel shortages, and to rate-making
principles by which such electric utilities would be compensated. In addition,
the Federal Government is authorized, under prescribed conditions, to allocate
coal and to require the transportation thereof, for the use of power plants or
major fuel-burning installations. What regulatory actions, if any, may result
from the foregoing, or from further legislative actions relating to a national
energy crisis cannot be predicted, but such actions could adversely affect the
revenues, operations and properties of AEP.
21
<PAGE>
System companies have developed programs to conserve coal supplies at System
plants which involve, on a progressive basis, limitations on sales of power and
energy to neighboring utilities, appeals to customers for voluntary limitations
of electric usage to essential needs, curtailment of sales to certain
industrial customers, voltage reductions and, finally, mandatory reductions in
cases where current coal supplies fall below minimum levels. Such programs have
been filed and reviewed with officials of Federal and state agencies and, in
some cases, the state regulatory agency has prescribed actions to be taken
under specified circumstances by System companies, subject to the jurisdiction
of such agencies.
The mining of coal reserves is subject to Federal requirements with respect
to the development and operation of coal mines, and to state and Federal
regulations relating to land reclamation and environmental protection,
including Federal strip mining legislation enacted in August 1977. Continual
evaluation and study is given to possible closure of existing coal mines and
divestiture or acquisition of coal properties in light of Federal and state
environmental and mining laws and regulations which may affect the System's
need for or ability to mine such coal.
Western coal purchased by System companies is transported by rail to a
terminal on the Ohio River for transloading to barges for delivery to
generating stations on the river. Subsidiaries of AEP lease approximately 3,200
coal hopper cars to be used in unit train movements, as well as 17 towboats,
295 jumbo barges and 198 standard barges. Subsidiaries of AEP also own or lease
coal transfer facilities at various locations on the river.
The System generating companies procure coal from coal reserves which are
owned or mined by subsidiaries of AEP, and through purchases pursuant to long-
term contracts, or on a spot purchase basis, from unaffiliated producers. The
following table shows the amount of coal delivered to the AEP System during the
past five years, the proportion of such coal which was obtained either from
coal-mining subsidiaries, from unaffiliated suppliers under long-term contracts
or through spot or short-term purchases, and the average delivered price of
spot coal purchased by System companies:
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Total coal delivered to
AEP operated plants (thousands of
tons)............................... 45,025 52,087 45,232 44,738 40,561
Sources (percentage):
Subsidiaries........................ 25% 25% 28% 25% 20%
Long-term contracts.................. 56% 58% 62% 65% 66%
Spot or short-term purchases......... 19% 17% 10% 10% 14%
Average price per ton of spot-purchased
coal.................................. $25.17 $26.75 $25.40 $23.88 $23.55
</TABLE>
The average cost of coal consumed during the past five years by all AEP
System companies, AEGCo, APCo, CSPCo, I&M, KEPCo and OPCo is shown in the
following tables:
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993
------ ------ ------ ------ ------
DOLLARS PER TON
<S> <C> <C> <C> <C> <C>
AEP System Companies......................... $37.05 $35.23 $35.16 $34.31 $33.57
AEGCo........................................ 24.33 21.05 20.65 20.11 17.74
APCo......................................... 39.52 39.77 41.99 43.00 42.65
CSPCo........................................ 35.50 37.01 35.18 33.87 33.87
I&M.......................................... 32.14 27.18 25.57 24.23 23.80
KEPCo........................................ 29.03 30.71 31.38 30.24 27.08
OPCo......................................... 40.04 40.13 40.18 38.36 38.12
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993
------ ------ ------ ------ ------
CENTS PER MILLION BTU'S
<S> <C> <C> <C> <C> <C>
AEP System Companies.................... 162.44c 158.10c 158.88c 154.41c 150.89c
AEGCo................................... 149.75 126.21 123.33 120.90 107.71
APCo.................................... 160.27 160.94 169.48 173.05 173.32
CSPCo................................... 153.77 159.83 152.55 143.94 143.66
I&M..................................... 162.67 143.43 139.16 135.11 129.39
KEPCo................................... 122.92 129.72 132.25 126.92 113.90
OPCo.................................... 172.25 171.10 171.65 163.89 161.25
</TABLE>
The coal supplies at AEP System plants vary from time to time depending on
various factors, including customers' usage of electric energy, space
limitations, the rate of consumption at particular plants, labor unrest and
weather conditions which may interrupt deliveries. At December 31, 1993, the
System's coal inventory was approximately 58 days of normal System usage. This
estimate assumes that the total supply would be utilized by increasing or
decreasing generation at particular plants.
The following tabulation shows the total consumption during 1993 of the coal-
fired generating units of AEP's principal operating subsidiaries, coal
requirements of these units over the remainder of their useful lives and the
average sulfur content of coal delivered in 1993 to these units. Reference is
made to Environmental and Other Matters for information concerning current
emissions limitations in the AEP System's various jurisdictions and the effects
of the Clean Air Act Amendments.
<TABLE>
<CAPTION>
AVERAGE SULFUR CONTENT
ESTIMATED REQUIREMENTS OF DELIVERED COAL
TOTAL CONSUMPTION FOR REMAINDER OF -----------------------------
DURING 1993 USEFUL LIVES POUNDS OF SO/2/
(IN THOUSANDS OF TONS) (IN MILLIONS OF TONS)(A) BY WEIGHT PER MILLION BTU'S
------------------------ -------------------------- ---------- ------------------
<S> <C> <C> <C> <C>
AEGCo (b)............... 5,077 220 0.3% 0.7
APCo.................... 8,339 321 0.7% 1.1
CSPCo (c)............... 5,406 182 3.2% 5.4
I&M (d)................. 6,572 255 0.7% 1.6
KEPCo................... 2,292 73 1.1% 1.9
OPCo.................... 17,419 538 2.8% 4.8
</TABLE>
- --------
(a)Preliminary estimates of the effects of the Clean Air Act Amendments of 1990
are included.
(b)Reflects AEGCo's 50% interest in the Rockport Plant.
(c)Includes coal requirements for CSPCo's interest in Beckjord, Stuart and
Zimmer Plants.
(d)Includes I&M's 50% interest in the Rockport Plant.
AEGCo: See Fuel Supply--I&M for a discussion of the coal supply for the
Rockport Plant.
APCo: APCo, or its subsidiaries formerly engaged in coal mining, control coal
reserves in the State of West Virginia which contain approximately 42,000,000
tons of clean recoverable coal, ranging in sulfur content between 1.0% and 3.5%
sulfur by weight (weighted average, 2.6% sulfur by weight).
Substantially all of the coal consumed at APCo's generating plants is
obtained from unaffiliated suppliers under long-term contracts or on a spot
purchase basis.
The average sulfur content by weight of the coal received by APCo at its
generating stations approximated 0.7% during 1993, whereas the maximum sulfur
content permitted, for emission standard purposes, for existing plants in the
regions in which APCo's generating stations are located ranged between 0.78%
and 2% by weight depending in some circumstances on the calorific value of the
coal which can be obtained for some generating stations.
CSPCo: CSPCo owns an undivided one-half interest in 24,000,000 tons of clean
recoverable deep-mineable coal in the State of Ohio which is located in the
vicinity of its decommissioned Poston Plant and
23
<PAGE>
has an average sulfur content of 2.4% by weight. Peabody Coal Company
(Peabody), which owns the remaining one-half interest, has the right to mine
and sell all of the jointly owned coal to any party on terms negotiated by
Peabody. CSPCo has an option and right of first refusal (exercisable within a
specified period after tender by Peabody) which will permit it to purchase this
coal on the same terms as those of any contract which Peabody may negotiate
with a third party. In the event that CSPCo does not exercise such right, it is
entitled to receive a royalty on the coal from this reserve which Peabody sells
to others. However, in such a case, this coal will not be available for CSPCo's
use.
CSPCo also owns coal reserves in eastern and southeastern Ohio which contain
approximately 46,000,000 tons of clean recoverable coal with a sulfur content
of approximately 4.5% sulfur by weight and reserves that contain approximately
10,000,000 tons of clean recoverable coal with a sulfur content of
approximately 2.4% sulfur by weight.
CSPCo has entered into a coal supply agreement with an unaffiliated supplier
for the delivery of 1,600,000 tons of coal per year from 1992 through March
2011. Such coal contains approximately 5% sulfur by weight and is washed to
improve its quality and consistency for use principally at Units 1 through 4 of
the Conesville Plant.
CSPCo has been informed by CG&E and DP&L that, with respect to the CCD Group
units partly owned but not operated by CSPCo, sufficient coal has been
contracted for or is believed to be available for the approximate lives of the
respective units operated by them. Under the terms of the operating agreements
with respect to CCD Group units, each operating company is contractually
responsible for obtaining the needed fuel.
I&M: I&M has acquired surface ownership interest in lands in Wyoming which,
it is estimated, are underlaid by approximately 730,000,000 tons of clean
recoverable coal with an average sulfur content by weight of approximately
0.5%. Federal and state coal leases which would provide the rights and
authorization to extract this coal have not been obtained. I&M is attempting to
sell its interest in these lands.
I&M has entered into coal supply agreements with unaffiliated suppliers
pursuant to which the suppliers are delivering low sulfur coal from surface
mines in Wyoming principally for consumption by the Rockport Plant. Under these
agreements, the suppliers will sell to I&M, for consumption by I&M at the
Rockport Plant or consignment to other System companies, approximately
175,000,000 tons of coal with an average sulfur content not exceeding 1.2
pounds of sulfur dioxide per million Btu's of heat input. A contract for
100,000,000 tons expires on December 31, 2014 and a contract for 75,000,000
tons expires on December 31, 2004.
I&M or its subsidiaries own or control coal reserves in Carbon County, Utah
which are estimated to contain 227,000,000 tons of clean recoverable coal with
an average sulfur content by weight of approximately 0.5% sulfur. In 1986, I&M
and its two subsidiaries signed agreements under which certain of such coal
rights, land, and related mining and preparation equipment and facilities were
leased or subleased on a long-term basis to unaffiliated interests. In 1993,
the remainder of those land and coal rights containing approximately
108,000,000 tons of clean recoverable coal were leased on a long-term basis to
unaffiliated interests. Mining operations in Carbon County formerly conducted
by I&M were suspended in 1984.
KEPCo: Substantially all of the coal consumed at KEPCo's Big Sandy Plant is
obtained from unaffiliated suppliers under long-term contracts or on a spot
purchase basis. KEPCo has entered into coal supply agreements with unaffiliated
suppliers pursuant to which KEPCo will receive approximately 2,211,000 tons of
coal in 1994. To the extent that KEPCo has additional coal requirements, it may
purchase coal from the spot market and/or suppliers under contract to supply
other System companies.
OPCo: OPCo and certain of its coal-mining subsidiaries own or control coal
reserves in the State of Ohio which contain approximately 234,000,000 tons of
clean recoverable coal, which ranges in sulfur content
24
<PAGE>
between 3.4% and 4.5% sulfur by weight (weighted average, 3.8%), which can be
recovered based upon existing mining plans and projections and employing
current mining practices and techniques. OPCo and certain of its mining
subsidiaries own an additional 113,000,000 tons of clean recoverable coal in
Ohio which ranges in sulfur content between 2.4% and 3.4% sulfur by weight
(weighted average 2.7%). Recovery of this coal would require substantial
development.
OPCo and certain of its coal-mining subsidiaries also own or control coal
reserves in the State of West Virginia which contain approximately 108,000,000
tons of clean recoverable coal ranging in sulfur content between 1.4% and 3.3%
sulfur by weight (weighted average, 2.1%) of which approximately 31,000,000
tons can be recovered based upon existing mining plans and projections and
employing current mining practices and techniques.
On July 1, 1992, a coal-mining subsidiary of OPCo sold its Martinka mining
operations and most of its related coal reserves to an unaffiliated company for
approximately $139,000,000 and the assumption of certain future liabilities.
Concurrently OPCo entered into a 20-year agreement with an affiliate of the
buyer of the Martinka mine to purchase up to 2,500,000 tons of low sulfur coal
annually, including coal that will enable OPCo to comply with the Clean Air Act
Amendments. The Martinka sale did not have a significant impact on results of
operations and financial condition. The Martinka mining operation represented
approximately 20% of affiliated coal deliveries to OPCo.
Nuclear
I&M has made commitments to meet certain of the nuclear fuel requirements of
the Cook Plant. The nuclear fuel cycle consists of the mining and milling of
uranium ore to uranium concentrates; the conversion of uranium concentrates to
uranium hexafluoride; the enrichment of uranium hexafluoride; the fabrication
of fuel assemblies; the utilization of nuclear fuel in the reactor; and the
reprocessing or other disposition of spent fuel. Steps currently are being
taken, based upon the planned fuel cycles for the Cook Plant, to review and
evaluate I&M's requirements for the supply of nuclear fuel beyond the existing
contractual commitments shown in the following table. I&M has made and will
make purchases of uranium in various forms in the spot market until it decides
that deliveries under long-term supply contracts are warranted. The following
table shows the year through which contracts have been entered into to provide
the requirements of the units for the various segments of the nuclear fuel
cycle.
<TABLE>
<CAPTION>
URANIUM
CONCENTRATES CONVERSION ENRICHMENT (1) FABRICATION REPROCESSING (2)
-------------- ----------- --------------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
Unit 1.................. -- -- 2000 1998 --
Unit 2.................. -- -- 2000 1998 --
</TABLE>
- --------
(1) I&M has a requirements-type contract with DOE. I&M has partially terminated
the contract, subject to revocation of the termination, so that it may
procure enrichment services cost-effectively from the spot market. I&M also
has a contract with Cogema, Inc. for the supply of enrichment services
through 1995, depending on market conditions.
(2) No reprocessing facility in the United States currently is in operation.
I&M has contracted for reprocessing services at a facility on which
construction has been halted. Lack of reprocessing services has resulted in
the need to increase on-site storage capacity for spent fuel.
For purposes of the storage of high-level radioactive waste in the form of
spent nuclear fuel, I&M has completed modifications to its spent nuclear fuel
storage pool to permit normal operations through 2010.
I&M's costs of nuclear fuel consumed do not assume any residual or salvage
value for residual plutonium and uranium.
Nuclear Waste
The Nuclear Waste Policy Act of 1982, as amended, establishes Federal
responsibility for the permanent off-site disposal of spent nuclear fuel and
high-level radioactive waste. Disposal costs are paid by fees assessed
25
<PAGE>
against owners of nuclear plants and deposited into the Nuclear Waste Fund
created by the Act. In 1983 I&M entered into a contract with DOE for the
disposal of spent nuclear fuel. Under terms of the contract, for the disposal
of nuclear fuel consumed after April 6, 1983 by I&M's Cook Plant, I&M is paying
to the fund a fee of one mill per kilowatt-hour, which I&M is currently
recovering from customers. For the disposal of nuclear fuel consumed prior to
April 7, 1983, I&M must pay the U.S. Treasury a fee estimated at approximately
$71,964,000, exclusive of interest of $75,845,000 at December 31, 1993. I&M
deferred this amount plus accrued interest on its balance sheet pending
recovery through the rate-making process. I&M has received regulatory approval
for the recovery of this amount and is reducing the amount deferred as it is
being recovered. Because of the current uncertainties surrounding DOE's program
to provide for permanent disposal of spent nuclear fuel, I&M has not yet
commenced paying this fee. At December 31, 1993, funds collected from customers
to dispose of spent nuclear fuel and related earnings totaled $133,000,000.
I&M has received regulatory approval from all of its jurisdictions to recover
an approved level of decommissioning costs in revenues which amounted to
$13,000,000 in 1993, $12,000,000 in 1992 and $11,000,000 in 1991. An aggregate
amount of $170,000,000 had been set aside by I&M for nuclear decommissioning at
December 31, 1993. The recoveries were approved by I&M's state regulatory
commissions after the commissions reviewed studies by an independent consulting
firm employed by I&M (FERC recovery is based on an earlier study). The most
recent study estimates, based on changed conditions (related to delays in DOE's
program for disposal of spent nuclear fuel and other factors), that the cost of
post-shutdown fuel storage and decommissioning at the Cook Plant is in the
range of $588,000,000 to $1.102 billion in 1991 dollars for the cases studied.
The substantial increase is primarily due to the possible need to store spent
nuclear fuel at the plant site for an extended time after the plant ceases
operation, delaying the commencement of dismantling activities. Variables in
the length of time spent nuclear fuel must be stored at the plant subsequent to
ceasing operations, which is dependent on future developments in DOE's program
for disposal of spent nuclear fuel, have widened the range of the estimate. I&M
will continue to reevaluate periodically the cost of decommissioning and to
seek regulatory approval to revise its rates as necessary.
Funds recovered through the rate-making process for disposal of spent nuclear
fuel consumed prior to April 7, 1983 and for nuclear decommissioning have been
segregated and deposited in external funds for the future payment of such
costs.
The ultimate cost of radiological decommissioning may be materially different
from the amounts derived from the estimates contained in the site-specific
study as a result of (a) the type of decommissioning plan selected, (b) the
escalation of various cost elements (including, but not limited to, general
inflation), (c) the further development of regulatory requirements governing
decommissioning, (d) limited experience to date in decommissioning such
facilities and (e) the technology available at the time of decommissioning
differing significantly from that assumed in these studies. Accordingly,
management is unable to provide assurance that the ultimate cost of
decommissioning the Cook Plant will not be significantly greater than current
projections.
In recent years, costs associated with nuclear plants have increased and
become less predictable, in large part due to changing regulatory requirements.
Nuclear industry-wide and Cook Plant initiatives have contributed to slowing
the growth of operating and maintenance costs. However, the ability of I&M to
obtain adequate and timely recovery of costs associated with the Cook Plant,
including replacement power and retirement costs, has become more uncertain.
The Low-Level Waste Policy Act of 1980 (LLWPA) mandates that the
responsibility for the disposal of low-level waste rests with the individual
states. Low-level radioactive waste consists largely of ordinary trash and
other items that have come in contact with radioactive materials. To facilitate
this approach, the LLWPA authorized states to enter into regional compacts for
low-level waste disposal subject to Congressional approval. The LLWPA also
specified that, beginning in 1986, approved compacts may prohibit the
importation of low-level waste from other regions, thereby providing a strong
incentive for states to enter
26
<PAGE>
into compacts. As 1986 approached it became apparent that no new disposal
facilities would be operational, and enforcement of the LLWPA would leave no
disposal capacity for the majority of the low-level waste generated in the
United States. Congress, therefore, passed the Low-Level Waste Policy
Amendments Act of 1985 in conjunction with approval of seven regional compacts,
including the Midwest Compact which governed the region in which the Cook Plant
is located.
In 1990, Nevada, South Carolina and Washington, the three states with
operating disposal sites, determined that Michigan was out of compliance with
milestones established by the LLWPA which were designed to force development of
new disposal sites by the end of 1992. Failure of a state or compact region to
have met a milestone could result in denial of access to operating sites for
waste generators within the state. Since November 1990, the Cook Plant has been
denied access to these operating sites. The Cook Plant's low-level radioactive
waste is currently being stored on-site. I&M has completed construction of an
on-site radioactive material storage facility at the Cook Plant for temporary
preshipment storage of the plant's low-level radioactive waste. The facility
can hold as much low-level waste as the Cook Plant is expected to produce
through approximately 2001, and the building could be expanded to accommodate
the storage of such waste through approximately 2017. Currently, the Cook Plant
produces about 7,000 cubic feet of low-level waste annually.
Management is unable to predict when a permanent disposal site for Michigan
low-level waste will be available.
Energy Policy Act--Nuclear Fees
The Energy Policy Act of 1992 (Energy Act), contains a provision to fund the
decommissioning and decontamination of DOE's existing uranium enrichment
facilities from a combination of sources including assessments against electric
utilities which purchased enrichment services from DOE facilities. I&M's
assessment is estimated to be approximately $58,320,000 subject to inflation
adjustments and is payable in annual assessments over 15 years commencing in
1993. I&M recorded a provision as a regulatory asset concurrent with the
recording of the liability. The first year estimated assessment has been
recorded as fuel expense and, under the provisions of the Energy Act, the
expense is being recovered in I&M's fuel rate adjustment proceedings.
ENVIRONMENTAL AND OTHER MATTERS
AEP's subsidiaries are subject to regulation by Federal, state and local
authorities with regard to air- and water-quality control and other
environmental matters, and are subject to zoning and other regulation by local
authorities.
It is expected that costs related to environmental requirements will
eventually be reflected in the rates of AEP's operating subsidiaries and that,
in the long term, AEP's operating subsidiaries will be able to provide for such
environmental controls as are required. However, some customers may curtail or
cease operations as a consequence of higher energy costs. There can be no
assurance that all such costs will be recovered.
Except as noted herein, AEP's subsidiaries which own or operate generating
facilities generally are in compliance with pollution control laws and
regulations.
Air Pollution Control
Clean Air Act Amendments of 1990: For the AEP System, compliance with the
Clean Air Act Amendments of 1990 (CAAA) is expected to require substantial
expenditures for which management intends to seek recovery through increases in
the rates of AEP's operating subsidiaries. OPCo is expected to incur a major
portion of such costs. There can be no assurance that all such costs will be
recovered. See Construction and Financing Program--Construction Expenditures.
27
<PAGE>
The CAAA creates an emission allowance program pursuant to which utilities
are authorized to emit a designated quantity of sulfur dioxide, measured in
tons per year, on a system wide or aggregate basis. A utility or utility system
will be deemed to operate in compliance with the legislation if its aggregate
annual emissions do not exceed the total number of allowances that are
allocated to the utility or utility system by the Federal government and net
acquisitions through purchases. Effective January 1, 2000, the legislation
establishes a maximum national aggregate ceiling on allowances allocated to
fossil fuel-fired units larger than 25 MW. The allowance cap is set at 8.95
million tons.
Emission reductions are required by virtue of the establishment of annual
allowance allocations at a level below historical emission levels for many
utility units. For units that emitted sulfur dioxide above a rate of 2.5 pounds
per million Btu heat input in 1985, the CAAA establishes sulfur dioxide
allowance limitations (caps or ceilings on emissions) premised upon sulfur
dioxide emissions at a rate of 2.5 pounds as of the Phase I deadline of January
1, 1995. The following AEP System plants are Phase I-affected units: I&M's
Breed Plant and Tanners Creek Unit 4; CSPCo's Beckjord Unit 6, Conesville Units
1-4 and Picway Unit 5; OPCo's Gavin Units 1-2, Muskingum River Units 1-5,
Cardinal Unit 1, Mitchell Units 1-2 and Kammer Units 1-3.
In the aggregate, these Phase I-affected units must annually limit emissions to
no more than Phase I allowances held beginning in 1995. Phase I-affected units
which are retrofitted with flue-gas desulfurization equipment (scrubbers) with
a removal efficiency of 90% or greater prior to January 1, 1997 may be
allocated a sufficient number of reserve allowances to provide a two-year
extension to comply with Phase I allowance limitations.
On January 11, 1993, Federal EPA published final regulations in the Federal
Register which cover the Acid Rain Permit Program, Allowance System, Continuous
Emission Monitoring, Excess Emissions Penalties and Offset Plans and Appeal
Procedures. These regulations included allocation of allowances for Phase I
sources. On March 12, 1993, several environmental groups, the State of New York
and a number of utilities (including APCo, CSPCo, I&M, KEPCo and OPCo) filed
petitions in the United States Court of Appeals for the District of Columbia
Circuit seeking a review of the regulations. Oral argument has been scheduled.
Phase I permit applications and compliance plans were filed for all Phase I-
affected units in the AEP System and Phase I permits have been issued for
Gavin, Muskingum River, Kammer and Breed plants. Proposed permits were issued
for Cardinal, Tidd, Mitchell, Conesville and Picway plants and for Amos Units 1
and 2, Big Sandy Unit 2, Glen Lyn Unit 6, Rockport Unit 1 and Tanners Creek
Unit 4. Pursuant to regulations promulgated by Federal EPA under Title IV of
the CAAA, Phase II affected units may be designated as substitution units in
Acid Rain Permit compliance plans. A Phase II substitution unit achieving the
applicable Phase I NOx emission limit in 1995 is exempt from any more stringent
Phase II NOx emission limits. Phase II units designated as substitution units
in AEP system compliance plans included Amos Units 1 and 2, Glen Lyn Unit 6,
Rockport Unit 1, Big Sandy Unit 2 and Tidd. Federal EPA is proposing to approve
substitution plans for certain of these units for the year 1995 only. For the
years 1996-1999, action would be taken based upon regulations then in effect.
On September 10, 1993, APCo, CSPCo, I&M, KEPCo and OPCo and a group of
unaffiliated utilities filed a petition in the U.S. Court of Appeals for the
District of Columbia Circuit seeking a review of the determination by Federal
EPA that it had authority to defer action on acid rain compliance plans.
Federal EPA has filed a motion to dismiss the appeal. On November 18, 1993,
Federal EPA published proposed rule revisions governing substitution and
reduced utilization plans which are generally more restrictive than those
currently in effect and would apply to Phase I substitution and compensating
unit plans for the years 1996-1999.
OPCo has filed an Early Ranking Application with Federal EPA for Gavin Units
1 and 2 seeking issuance of extension reserve allowances for both units based
on installation of scrubbers. Because of expected oversubscription of these
allowances, OPCo and other unaffiliated utilities formed an emission allowance
pool
28
<PAGE>
to assure receipt of a portion of the allowances. In March 1993, Federal EPA
conducted a lottery to determine order of receipt of the allowances. OPCo's
application for Gavin Plant received a full allotment of the requested
allowances. Based on participation in the emission allowance pool, OPCo will
receive approximately 88% of the total allowances it requested.
All fossil fuel-fired generating units with capacity greater than 25 MW are
affected in Phase II of the acid rain control program. All Phase II-affected
units are allocated allowances with which compliance must be accomplished no
later than January 1, 2000. The basis for Phase II allowance allocation
depends on 1985 sulfur dioxide emission rates--if a unit emitted sulfur
dioxide in 1985 at a rate in excess of 1.2 pounds per million Btu heat input,
the allowance allocation is premised upon an emission rate of 1.2 pounds as of
the Phase II deadline of January 1, 2000; if a unit emitted sulfur dioxide in
1985 at a rate of less than 1.2 pounds, the allowance allocation is in most
instances premised upon the actual 1985 emission rate.
The CAAA contemplates four general methods of compliance: (i) fuel
switching; (ii) technological methods of control such as scrubbers; (iii)
capacity utilization adjustments; and (iv) acquisition of allowances to cover
anticipated emissions levels. The AEP System permit application and compliance
plan filings reflect, to some extent, each method of compliance.
The acid rain title also contains provisions concerning nitrogen oxides
emissions. On March 1, 1994, the Federal EPA Administrator signed final
regulations governing nitrogen oxides emissions from tangentially fired and
dry bottom wall-fired boilers at Phase I units. For tangentially fired boilers
and dry bottom wall-fired boilers (other than units applying cell burner
technology), the proposed emission limitations are 0.45 pounds nitrogen oxides
per million Btu heat input and 0.50 pounds nitrogen oxides per million Btu
heat input, respectively, and must be achieved no later than January 1, 1995.
The five AEP System units which are subject to the January 1, 1995 Phase I
deadline are OPCo's Mitchell Units 1-2 and CSPCo's Conesville Units 3 and 4
and Picway Unit 5. With the exception of Conesville Unit 4 for which no
retrofit controls are deemed necessary to achieve Phase I NOx emission
limitations, the above units will be retrofitted to achieve these limits.
Capital expenditures for these activities are included as a component of the
cost of compliance with all Phase I requirements applicable to these units.
For wet bottom wall-fired boilers, cyclone boilers, units applying cell
burner technology and all other types of boilers, emission limitations
comparable in cost to the controls applicable to tangentially fired boilers
and non-cell burner dry bottom wall-fired boilers are to be adopted no later
than January 1, 1997. The 1997 nitrogen oxides emission limitations are
required to be met by Phase II-affected sources as of January 1, 2000.
The CAAA contains additional provisions, other than the acid rain title,
which could require reductions in emissions of nitrogen oxides from fossil
fuel-fired power plants. Title I, dealing generally with nonattainment of
ambient air quality standards, establishes a tiered system for classifying
degrees of nonattainment with air quality standards for ozone and mandates
that Federal EPA in cooperation with the states issue, within 240 days of
enactment, ozone "attainment" or "nonattainment" designations for airsheds
throughout the country. Depending upon the severity of nonattainment within a
given nonattainment area, reductions in nitrogen oxides emissions from fossil
fuel-fired power plants may be required as part of a state's plan for
achieving attainment with ozone air quality standards. The deadlines for
submission of new state plans and the accomplishment of mandated emission
reductions, as well as the nature of stationary source nitrogen oxides control
requirements, also depend upon the severity of a given airshed's
nonattainment. While ozone nonattainment is largely restricted to urban areas,
several AEP System generating stations could be determined to be affecting
ozone concentrations and may therefore eventually be required to reduce
nitrogen oxides emissions pursuant to Title I. Plants currently located in
areas being evaluated for imposition of additional emission controls include
Zimmer and Beckjord Unit 6 (both partially owned by CSPCo), I&M's Tanners
Creek Plant, KEPCo's Big Sandy Plant, OPCo's Gavin Plant and APCo's Amos,
Sporn, Kanawha River and Mountaineer plants. On February 25, 1994, the West
Virginia Department of Environmental Protection issued a Consent Order for
APCo's Amos Units 1 and 2, requiring reductions in nitrogen oxides emissions
from these units after June 1, 1995. The reduction in nitrogen oxides
emissions will be less than that required under Title IV of the CAAA but will
be required at an earlier time.
29
<PAGE>
Utility boilers are potentially subject to additional control requirements
under Title III of the CAAA governing hazardous air pollutant emissions.
Federal EPA is directed to conduct studies concerning the potential public
health impacts of pollutants identified by the legislation as hazardous in
connection with their emission from electric utility steam generating units.
Federal EPA was required to report the results of this study to Congress by
November 1993 and is required to regulate emission of these pollutants from
electric utility steam generating units if it is determined that such
regulation is necessary and appropriate, based on the results of the study.
Federal EPA has informed Congress that completion of this study will be delayed
significantly beyond the November 1993 deadline. Additionally, Federal EPA is
directed to study the deposition of hazardous pollutants to the Great Lakes,
the Chesapeake Bay, Lake Champlain and other coastal waters. As part of this
assessment, Federal EPA is authorized to adopt regulations by November 1995 to
prevent serious adverse effects to public health and serious or widespread
environmental effects. It is possible that emissions from electric utility
generating units may be regulated under this water body deposition assessment
program.
The CAAA expands the enforcement authority of the Federal government by
increasing the range of civil and criminal penalties for violations of the
Clean Air Act and enhancing administrative civil provisions, adding a citizens
suit provision and imposing a national operating permit system, emission fee
program and enhanced monitoring, record keeping and reporting requirements for
existing and new sources.
CAAA-AEP System Compliance Plan: Management reviewed the provisions of the
CAAA and evaluated various compliance strategies on a systemwide basis. The
selection of any compliance alternatives for the AEP System's generating plants
was dependent on the method of compliance selected for OPCo's Gavin Plant, one
of the AEP System's largest plants (2,600 mw) which emits about 25 percent of
the System's total sulfur dioxide emissions and about 44 percent of emissions
from OPCo's plants in Ohio. Alternatives considered for the Gavin Plant were
switching to low-sulfur coal which would come from mines outside Ohio or
installation of scrubbers which would allow the continued burning of high-
sulfur coal.
A systemwide Phase I CAAA compliance report was filed with the PUCO in 1991
comparing preliminary estimates of revenue requirements for the two compliance
alternatives at Gavin. Although the preliminary compliance report showed lower
projected AEP System revenue requirements for fuel switching rather than
installing OPCo-owned scrubbers, the PUCO issued an order which strongly
encouraged OPCo to keep both the fuel switching and scrubbing options open.
OPCo continued to study the alternatives and in April 1992 filed a Phase I CAAA
compliance plan.
OPCo's compliance plan filing was made under an Ohio law enacted in 1991 that
provides utilities with an opportunity to obtain advance PUCO approval of a
compliance plan provided that, among other things, the PUCO determines that it
represents a least-cost approach. Once approved by the PUCO, such plans are
deemed prudent for subsequent PUCO rate proceedings. On November 25, 1992, the
PUCO issued orders approving (i) OPCo's stipulation agreement with the PUCO
staff and the Ohio Consumers' Counsel regarding the predetermined price of coal
discussed below and in Rates and (ii) OPCo's compliance plan. The actual rate
treatment of costs associated with the compliance plan will be determined in a
future rate case. In March 1993, the Industrial Energy Consumers of OPCo (IEC)
and The Sierra Club each appealed the PUCO orders regarding the stipulation
agreement and compliance plan to the Supreme Court of Ohio. The IEC and Sierra
Club seek to overturn the PUCO decisions. OPCo has participated in these
proceedings.
The compliance plan sets forth, as part of an AEP System least-cost strategy,
compliance measures for the AEP System's affected generating units including
the installation of scrubbers at the Gavin Plant. In order to lower the cost of
compliance, the plan proposed to lease the scrubbers which are to be installed
at the Gavin Plant early in 1995. The plan also provides for Gavin to burn Ohio
high-sulfur coal supplied, in part, by OPCo's affiliated Meigs mine which will
operate at reduced capacity and in part by new long-term contracts with
unaffiliated sources and spot market purchases.
30
<PAGE>
Under the terms of the compliance plan, OPCo's Muskingum River Unit 5 will
switch to low-sulfur coal by 1995 and Kammer Units 1-3 will switch to moderate
sulfur coal. The PUCO also indicated that management should take steps to have
Cardinal Unit 1 available for fuel switching for Phase I compliance. The PUCO
is examining in OPCo's current fuel clause proceeding whether it would be a
lower-cost alternative to fuel-switch Cardinal Unit 1 in Phase I rather than
Phase II as specified in AEP's compliance plan. CSPCo's Conesville Units 1-3
will be modified to enable these units to burn coal or natural gas to comply.
Actual fuel choice will depend on the cost and availability of gas. Although
the compliance plan originally contemplated that CSPCo's Picway Unit 5 also
would be modified to enable this unit to burn coal or natural gas to comply,
this proposed modification has been indefinitely deferred. Beckjord Unit 6
(owned with CG&E and DP&L) will switch to moderate sulfur coal. Current plans
call for I&M's Tanners Creek Unit 4 to switch to moderate sulfur coal and for
retirement of I&M's Breed Plant in 1994. Eight additional units are subject to
Phase I rules, but no operating or fuel changes are planned, because they will
hold allowances sufficient for compliance.
Since the approved plan reflects fuel switching to comply at OPCo's
Muskingum River Plant and Cardinal Unit 1, mining operations at OPCo's other
wholly-owned coal-mining subsidiaries, Central Ohio Coal Company and Windsor
Coal Company, could be shut down. Central Ohio Coal Company and Windsor Coal
Company supply coal to Muskingum River Plant and Cardinal Plant, respectively.
The current plan for Central Ohio Coal Company provides for continuing at the
current operating level until mid-1994, and then reducing to approximately a
50% operating level until 1999. The cost of affiliated mine shutdowns would be
substantial. Shutdown costs for Central Ohio Coal Company and Windsor Coal
Company include investments in the mines, leased asset buy-outs, reclamation
and employee benefits and were estimated to be approximately $250,000,000 at
December 31, 1993. Management expects to recover costs of compliance with the
CAAA from ratepayers. Lack of recovery of the cost of CAAA compliance,
including the lease cost of the Gavin scrubbers and the investment in and cost
of closing affected affiliated mining operations, could materially adversely
affect AEP's and OPCo's results of operations and financial condition.
In August 1992 OPCo signed a stipulation agreement with the PUCO staff and
the Ohio Consumers' Counsel which provides that, among other things, the
recoverable cost of the Gavin scrubbers is not to exceed $815,000,000. The
scrubbers are currently under construction. See Construction and Financing
Program. Management expects that the cost of the scrubbers will be at least
10% less than this amount.
In September 1992 OPCo entered into an agreement for the lease of scrubbers
at the Gavin Plant with JMG Funding, Limited Partnership, an unaffiliated
entity. Under the terms of the agreement for lease, OPCo, as agent for JMG,
will build the scrubbers and upon completion, subject to certain conditions,
will lease the scrubbers from JMG. The agreement for lease provides for JMG to
pay the cost of construction. The lease will be accounted for as an operating
lease. On December 9, 1993, the PUCO approved the terms of the lease
agreement.
With respect to the construction of the scrubbers at the Gavin Plant, OPCo
has received a permit from the U.S. Army Corps of Engineers to conduct certain
activities in the navigable waters and affecting wetlands. Other
environmentally related permits have been received from state agencies or are
being sought.
Global Climate Change: Increasing concentrations of "greenhouse gases,"
including carbon dioxide (CO/2/), in the atmosphere have led to concerns about
the potential for the earth's climate to change. As a result of the AEP
System's historical practice of using low-cost indigenous coal supplies to
produce electricity, AEP System power plants are significant sources of CO/2/
emissions. The proponents of the theory of global climate change maintain that
the increasing concentrations of man-made greenhouse gases will cause some of
the sun's energy that is normally radiated back into space to be trapped in
the atmosphere and that, as a result, the global temperature will increase.
Management is working to support further efforts to properly study the issue
of global climate change to define the extent, if any, to which it poses a
threat to the environment before new restrictions are imposed. Management is
concerned that new laws may be passed or new regulations promulgated without
sufficient scientific study and support.
31
<PAGE>
At the Earth Summit in Rio de Janeiro, Brazil in June 1992, over 150
nations, including the United States, signed a global climate change treaty.
Each country that ratifies the treaty commits itself to a process of achieving
the aim of reducing greenhouse gas emissions, including CO/2/, to their 1990
level by the year 2000. On October 7, 1992, the U.S. Senate ratified the
treaty. The treaty goes into effect on March 21, 1994.
In accordance with the obligations set forth in the global climate change
treaty, on April 21, 1993, President Clinton committed the United States to
reducing greenhouse gas emissions to 1990 levels by the year 2000. On October
19, 1993, the President unveiled the Administration's Climate Change Action
Plan for meeting his emission reduction target. The plan emphasizes reductions
in fossil fuel use, the largest source of CO/2/ emissions, primarily through
reliance on voluntary energy efficiency programs and voluntary partnerships
between the Federal government and U.S. industry. One such collaboration is
between the electric utility industry and the U.S. Department of Energy. Known
as the Utility Climate Challenge, this initiative is intended to identify
voluntary, cost-effective measures to limit or offset future greenhouse gas
emissions. Although AEP is participating in this effort, such actions will not
be undertaken if they threaten the AEP System's economic competitiveness or if
they are unacceptable to its regulators.
Since the AEP System is a major emitter of carbon dioxide, its financial
condition and results of operations could be materially adversely affected by
the imposition of controls on carbon dioxide emissions if the compliance costs
incurred are not fully recovered from ratepayers. In addition, any program to
stabilize or reduce carbon dioxide emissions is expected to impose substantial
costs on industry and society, and could seriously erode the economic base
that AEP's operations serve.
Ohio: On July 29, 1988, Federal EPA issued a notice of violation alleging
that OPCo's Muskingum River Plant operated in violation of Ohio EPA's
regulation governing visible emissions during 1987. At a November 1988
enforcement conference pursuant to Clean Air Act Section 113, OPCo
representatives presented evidence to Federal EPA indicating that the notice
of violation was not supported by factual evidence nor by law. Federal EPA has
yet to take further action.
On March 9, 1993, Federal EPA, Region V, issued a notice of violation
alleging that Stuart Station (owned by CSPCo, CG&E and DP&L) was in violation
of Ohio's State Implementation Plan rules relating to opacity. This notice of
violation has been resolved without penalty.
West Virginia: The West Virginia Air Pollution Control Commission
promulgated sulfur dioxide limitations effective February 1978. Federal EPA
has approved these regulations as they apply to APCo's and OPCo's plants,
except for OPCo's Mitchell and Kammer Plants. The emission limitations for the
Mitchell Plant have been approved by Federal EPA for primary ambient air
quality (health-related) standards only. The West Virginia Air Pollution
Control Commission is obliged to reanalyze sulfur dioxide emission limits for
the Mitchell Plant with respect to secondary ambient air quality (welfare-
related) standards. Because of the lengthy time and uncertainty associated
with the stack height rulemaking and litigation discussed in detail below, it
is not certain when Federal EPA will take dispositive action regarding the
Mitchell and Kammer Plants.
Stack Height Regulations: On June 27, 1985, Federal EPA issued stack height
regulations pursuant to an order of the United States Court of Appeals for the
District of Columbia Circuit. These regulations were appealed by a number of
states, environmental groups and investor-owned electric utilities (including
APCo, CSPCo, I&M, KEPCo and OPCo), along with three electric utility trade
associations. OPCo also filed a separate petition for review to raise issues
unique to its Kammer Plant. Various petitions for reconsideration filed with
and denied by Federal EPA were also appealed. This litigation was consolidated
into a single case.
On January 22, 1988, the U.S. Court of Appeals issued a decision in part
upholding the June 1985 stack height rules and remanding certain of the June
1985 rules to Federal EPA for further consideration. With respect to Kammer
Plant, the January 1988 court decision rejected OPCo's appeal, holding that
Federal EPA acted lawfully in revoking stack height credit previously granted
for Kammer Plant in October 1982. OPCo
32
<PAGE>
is in the process of initiating administrative proceedings under the 1985 stack
height rules with the State of West Virginia and Federal EPA in an effort to
preserve stack height credit for Kammer Plant. Federal EPA has yet to commence
administrative proceedings to incorporate changes in the 1985 stack height
rules as mandated by the January 1988 court decision.
While it is not possible to state with particularity the ultimate impact of
the final rules on AEP System operations, at present it appears that the most
likely AEP System plants at which the final rules could possibly result in
substantially more stringent emission limitations are CSPCo's Conesville Plant,
AEGCo's and I&M's Rockport Plant, I&M's Tanners Creek Plant and OPCo's Gavin
and Kammer plants. Gavin and Rockport plants were not affected by Federal EPA's
stack height rules as issued in June 1985. However, the provision exempting
these plants was remanded to Federal EPA in the January 1988 court decision.
Accordingly, the ultimate impact of the stack height rules on Gavin and
Rockport plants will not be known until Federal EPA completes administrative
proceedings on remand and reissues final stack height rules. OPCo and AEGCo and
I&M intend to participate in the remand rulemaking affecting Gavin and Rockport
plants, respectively.
State air pollution control agencies will be required to implement the stack
height rules by revising emission limitations for sources subject to the rules
and submitting such revisions to Federal EPA.
On June 1, 1989, Ohio EPA adopted a rule concerning CSPCo's Conesville Plant
in response to Federal EPA's stack height rules adopted in 1985. Under Federal
EPA policy published in January 1988, emission reductions required by the stack
height rules may be obtained at plants other than the plant directly affected
by the rules, and thereafter credited to the directly affected plant. Under
Ohio EPA's June 1 rule, the sulfur dioxide emission limitations for Conesville
Units 5 and 6 remain at 1.2 pounds sulfur dioxide per million Btu heat input as
long as the emission rate at CSPCo's retired Poston Units 1-4 remains at 0.0
pounds sulfur dioxide per million Btu heat input. Federal EPA has yet to take
action concerning Ohio EPA's June 1 rule.
Administrative Developments Regarding Sulfur Dioxide: Federal EPA, in the
Federal Register dated April 26, 1988, issued a "provisional" decision that
proposed to retain present national ambient air quality standards for sulfur
dioxide and did not propose adoption of a new, more restrictive, short-term
primary (health-related) standard. Federal EPA is expected to issue a final
rule after its review of public comments filed in response to the proposed
rule. In the context of this sulfur dioxide standard rulemaking, Federal EPA is
considering a number of significant policy changes in the rules governing
sulfur dioxide emissions. Principal among these possible regulatory changes is
the adoption of a new, short-term primary national ambient air quality standard
for sulfur dioxide. Adoption of any of these changes could require substantial
reductions in sulfur dioxide emissions from the System's coal-fired generating
plants which would entail substantial capital and operating costs.
Life Extension: On July 21, 1992, Federal EPA published final regulations in
the Federal Register governing application of new source rules to generating
plant repairs and pollution control projects undertaken to comply with the
Clean Air Act Amendments of 1990. Generally, the rule provides that plants
undertaking pollution control projects will not trigger new source review
requirements. The Natural Resource Defense Council and a group of utilities,
including five AEP System companies, have filed petitions in the U.S. Court of
Appeals for the District of Columbia Circuit seeking a review of the
regulations.
Water Pollution Control
Under the Clean Water Act, effluent limitations requiring application of the
best available technology economically achievable are to be applied, and those
limitations require that no pollutants be discharged if Federal EPA finds
elimination of such discharges is technologically and economically achievable.
The Clean Water Act provides citizens with a cause of action to enforce
compliance with its pollution control requirements. Since 1982, many such
actions against NPDES permit holders have been filed. To date, no AEP System
plants have been named in such actions.
33
<PAGE>
All System Plants are operating with NPDES permits. These will expire during
the time period 1994-96, except for Breed Plant's permit which has expired, but
for which a timely renewal application was filed. Under EPA's regulations,
operation under an expired NPDES permit is authorized provided an application
is filed at least 180 days prior to expiration. Renewal applications are being
prepared or have been filed for renewal of NPDES permits which expire in 1994.
The NPDES permits generally require that certain thermal impact study
programs be undertaken. These studies have been completed for all System
plants. Thermal variances are in effect for all plants with once-through
cooling water, except for Conesville and Muskingum River Plants for which
thermal variances expired on May 1, 1993. Requests for revised thermal
variances for these two plants have been made but the permitting agency has not
made a final determination on the requests. If thermal variances for these
plants are not renewed, the plants could be required to reduce generation,
particularly in late summer months.
Certain mining operations conducted by System companies as discussed under
Fuel Supply are also subject to Federal and state water pollution control
requirements, which may entail substantial expenditures for control facilities,
not included at present in the System's construction cost estimates set forth
herein. See Item 3. Legal Proceedings--Meigs Mine with respect to litigation
regarding certain discharges from OPCo's Meigs Mines.
The Federal Water Quality Act of 1987 requires states to adopt stringent
water quality standards for a large category of toxic pollutants and to
identify specialized control measures for dischargers to waters where water
quality standards are not being met. Implementation of these provisions could
result in significant costs to the AEP System if biological monitoring
requirements and water quality-based effluent limits are placed in NPDES
permits.
Hazardous Substances and Wastes
Section 311 of the Clean Water Act imposes substantial penalties for spills
of Federal EPA-listed hazardous substances into water and for failure to report
such spills. The Comprehensive Environmental Response, Compensation, and
Liability Act expanded the reporting requirements to cover the release of
hazardous substances generally into the environment, including water, land and
air. AEP's subsidiaries store and use some of these hazardous substances,
including PCB's contained in certain capacitors and transformers, but the
occurrence and ramifications of a spill or release of such substances cannot be
predicted. The Comprehensive Environmental Response, Compensation, and
Liability Act provides governmental agencies with the authority to require
clean-up of hazardous waste sites and releases of hazardous substances into the
environment. Since liability under this Act is strict and can be applied
retroactively, AEP System companies which previously disposed of PCB-containing
electrical equipment and other hazardous substances may be required to
participate in remedial activities at such disposal sites should environmental
problems result. AEP System companies are presently identified as parties
responsible for clean-up at nine federal sites, including I&M at five sites,
KEPCo at one site, OPCo at two sites and Wheeling Power Company at one site.
I&M also has been named as a party responsible for clean-up at one state site.
The companies' share of clean-up costs, however, is not expected to be
significant. AEP System companies, including I&M and OPCo, also have been named
as defendants in contribution lawsuits for two additional sites.
In addition to handling hazardous substances, the System companies generate
solid waste associated with the combustion of coal, the vast majority of which
is fly ash, bottom ash and flue gas desulfurization wastes. These wastes
presently are considered to be non-hazardous under RCRA and applicable state
law and the wastes are treated and disposed in surface impoundments or
landfills in accordance with state permits or authorization. As required by
RCRA, EPA evaluated whether high volume coal combustion wastes (such as fly
ash, bottom ash and flue gas desulfurization wastes) should be regulated as
hazardous waste. In August, 1993 EPA issued a regulatory determination that
such high volume coal combustion wastes should not be regulated as hazardous
waste. For low volume coal combustion wastes, such as metal and boiler cleaning
wastes, Federal EPA will gather additional information and make a regulatory
determination by April 1998.
34
<PAGE>
Until that time, these low volume wastes are provisionally excluded from
regulation under the hazardous waste provisions of RCRA. All presently
generated hazardous waste is being disposed of at permitted off-site facilities
in compliance with applicable Federal and state laws and regulations. For
System facilities which generate such wastes, System companies have filed the
requisite notices and are complying with RCRA and applicable state regulations
for generators. Nuclear waste produced at the Cook Plant is excluded from
regulation under RCRA.
Federal EPA's technical requirements for underground storage tanks containing
petroleum will require retrofitting or replacement of an appreciable number of
tanks. Compliance costs for tank replacement and site remediation have not been
significant to date.
Electric and Magnetic Fields (EMF)
EMF is found everywhere there is electricity. Electric fields are created by
the presence of electric charges. Magnetic fields are produced by the flow of
those charges. This means that EMF is created by electricity flowing in
transmission and distribution lines, or being used in household wiring and
appliances.
A number of studies in the past several years have examined the possibility
of adverse health effects from EMF. While some of the epidemiological studies
have indicated some association between exposure to EMF and health effects, the
majority of studies have indicated no such association. The epidemiological
studies that have received the most public attention reflect a weak correlation
between surrogate or indirect estimates of EMF exposure and certain cancers.
Studies using direct measurements of EMF exposure show no such association.
In addition, the research has not shown any causal relationship between EMF
exposure and cancer, or any other adverse health effects. Additional studies,
which are intended to provide a better understanding of the subject, are
continuing.
Federal EPA is currently studying whether exposure to EMF is associated with
cancer in humans. In 1990, Federal EPA issued a draft report on EMF, received
interagency review and public comment, and is in the process of preparing its
final report. A December 1992 brochure from Federal EPA, Questions And Answers
About Electric And Magnetic Fields (EMFs), states at page 3, "The bottom line
is that there is no established cause and effect relationship between EMF
exposure and cancer or other disease."
The Energy Policy Act of 1992 established a coordinated Federal EMF research
program. The program funding is $65,000,000 over five years, half of which is
to be provided by private parties including utilities. AEP has committed to
contribute $446,571 over the five-year period.
AEP's participation is a continuation of its efforts to support further
research and to communicate with its customers about this issue. Its operating
company subsidiaries provide their residential customers with information and
field measurements on request, although there is no scientific basis for
interpreting such measurements.
A number of lawsuits based on EMF-related grounds have been filed in recent
years against electric utilities. A suit was filed on May 23, 1990 against I&M
involving claims that EMF from a 345 KV transmission line caused adverse health
effects. No specific amount has been requested for damages in this case and no
trial date has been set.
Some states have enacted regulations to limit the strength of magnetic fields
at the edge of transmission line rights-of-way. No state which the AEP System
serves has done so. On March 22, 1993, The Ohio Power Siting Board issued its
amended rules providing for additional consideration of the possible effects of
EMF in the certification of electric transmission facilities. Under the amended
EMF rules, persons seeking approval to build electric transmission lines would
have to provide estimates of EMF from transmission lines under a
35
<PAGE>
variety of conditions. In addition, applicants would be required to address
possible health effects and discuss the consideration of design alternatives
with respect to EMF.
In April 1993, the State of Indiana enacted a law which provides that the
IURC shall determine, based on the preponderance of evidence in the scientific
literature, whether rules are necessary to protect the public health from EMF.
If the IURC determines that such rules are necessary, the IURC is required to
adopt rules that reasonably protect the public health from EMF.
Management cannot predict the ultimate impact of the question of EMF exposure
and adverse health effects. If further research shows that EMF exposure
contributes to increased risk of cancer or other health problems, or if the
courts conclude that EMF exposure harms individuals and that utilities are
liable for damages, or if states limit the strength of magnetic fields to such
a level that the current electricity delivery system must be significantly
changed, then the results of operation and financial condition of AEP and its
operating subsidiaries could be materially adversely affected unless these
costs can be recovered from rate payers.
RESEARCH AND DEVELOPMENT
AEP and its subsidiaries are involved in a number of research projects which
are directed towards developing more efficient methods of burning coal,
reducing the contaminants resulting from combustion of coal, and improving the
efficiency and reliability of power transmission and distribution, including
load management. See Construction and Financing Program--PFBC Projects.
AEP System operating companies have elected to join the Electric Power
Research Institute (EPRI), a nonprofit organization that manages research and
development on behalf of the U.S. electric utility industry. EPRI, founded in
1973, manages technical research and development programs for its members to
improve power production, delivery and use. Approximately 700 utilities are
members. EPRI has agreed to a membership program with AEP whereby dues will be
phased in over four years. AEP's operating companies intend to seek recovery of
these dues through rates, which recovery is anticipated to closely relate to
each company's membership date.
Total research and development expenditures by AEP and its subsidiaries were
approximately $13,700,000 for the year ended December 31, 1993, $14,200,000 for
the year ended December 31, 1992 and $15,100,000 for the year ended December
31, 1991 including $10,900,000, $11,700,000 and $11,900,000, respectively, for
Tidd Plant and related PFBC costs.
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<PAGE>
Item 2.PROPERTIES
- --------------------------------------------------------------------------------
At December 31, 1993, subsidiaries of AEP owned (or leased where indicated)
generating plants with the net power capabilities (winter rating) shown in the
following table:
<TABLE>
<CAPTION>
NET
OWNER, KILOWATT
PLANT TYPE AND NAME LOCATION (NEAR) CAPABILITY
--------------------- ---------------- -----------
<S> <C> <C>
AEP Generating Company:
Steam -- Coal-Fired:
Rockport Plant (AEGCo share) Rockport, Indiana 1,300,000(a)
----------
Appalachian Power Company:
Steam -- Coal-Fired:
John E. Amos, Units 1 & 2 St. Albans, West Virginia 1,600,000
John E. Amos, Unit 3 (APCo share) St. Albans, West Virginia 433,000(b)
Clinch River Carbo, Virginia 705,000
Glen Lyn Glen Lyn, Virginia 335,000
Kanawha River Glasgow, West Virginia 400,000
Mountaineer New Haven, West Virginia 1,300,000
Philip Sporn, Units 1 & 3 New Haven, West Virginia 308,000
Hydroelectric -- Conventional:
Buck Ivanhoe, Virginia 10,000
Byllesby Byllesby, Virginia 20,000
Claytor Radford, Virginia 76,000
Leesville Leesville, Virginia 40,000
Niagara Roanoke, Virginia 3,000
Reusens Lynchburg, Virginia 12,000
Hydroelectric -- Pumped Storage:
Smith Mountain Penhook, Virginia 565,000
----------
5,807,000
----------
Columbus Southern Power Company:
Steam -- Coal-Fired:
Beckjord, Unit 6 New Richmond, Ohio 53,000(c)
Conesville, Units 1-3, 5 & 6 Coshocton, Ohio 1,165,000
Conesville, Unit 4 Coshocton, Ohio 339,000(c)
Picway, Unit 5 Columbus, Ohio 100,000
Stuart, Units 1-4 Aberdeen, Ohio 608,000(c)
Zimmer Moscow, Ohio 330,000(c)
----------
2,595,000
----------
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
NET
OWNER, KILOWATT
PLANT TYPE AND NAME LOCATION (NEAR) CAPABILITY
--------------------- ---------------- -----------
<S> <C> <C>
Indiana Michigan Power Company:
Steam -- Coal-Fired:
Breed Sullivan, Indiana 325,000(d)
Rockport Plant (I&M share) Rockport, Indiana 1,300,000(a)
Tanners Creek Lawrenceburg, Indiana 995,000
Steam -- Nuclear:
Donald C. Cook Bridgman, Michigan 2,110,000
Gas Turbine:
Fourth Street Fort Wayne, Indiana 18,000(e)
Hydroelectric -- Conventional:
Berrien Springs Berien Springs, Michigan 3,000
Buchanan Buchanan, Michigan 2,000
Constantine Constantine, Michigan 1,000
Elkhart Elkhart, Indiana 1,000
Mottville Mottville, Michigan 1,000
Twin Branch Mishawaka, Indiana 3,000
----------
4,759,000
----------
Kanawha Valley Power Company:
Hydroelectric -- Conventional:
London Montgomery, West Virginia 16,000
Marmet Marmet, West Virginia 16,000
Winfield Winfield, West Virginia 19,000
----------
51,000
----------
Kentucky Power Company:
Steam -- Coal-Fired:
Big Sandy Louisa, Kentucky 1,060,000
----------
Ohio Power Company:
Steam -- Coal-Fired:
John E. Amos, Unit 3 (OPCo share) St. Albans, West Virginia 867,000(b)
Cardinal, Unit 1 Brilliant, Ohio 600,000
General James M. Gavin Cheshire, Ohio 2,600,000
Kammer Captina, West Virginia 630,000
Mitchell Captina, West Virginia 1,600,000
Muskingum River Beverly, Ohio 1,425,000
Philip Sporn, Units 2, 4 & 5 New Haven, West Virginia 742,000
Hydroelectric -- Conventional:
Racine Racine, Ohio 48,000
----------
8,512,000
----------
Total Generating
Capability............. 24,084,000
==========
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
NET
OWNER, KILOWATT
PLANT TYPE AND NAME LOCATION (NEAR) CAPABILITY
- --------------------- ---------------- -----------
<S> <C> <C>
Summary:
Total Steam --
Coal-Fired..................................................... 21,120,000
Nuclear........................................................ 2,110,000
Total Hydroelectric --
Conventional................................................... 271,000
Pumped Storage................................................. 565,000
Other........................................................... 18,000
----------
Total Generating Capability..................... 24,084,000
==========
</TABLE>
- --------
(a) Unit 1 of the Rockport Plant is owned one-half by AEGCo and one-half by
I&M. Unit 2 of the Rockport Plant is leased one-half by AEGCo and one-half
by I&M. The leases terminate in 2022 unless extended.
(b) Unit 3 of the John E. Amos Plant is owned one-third by APCo and two-thirds
by OPCo.
(c) Represents CSPCo's ownership interest in generating units owned in common
with CG&E and DP&L.
(d) I&M plans to close the Breed Plant on March 31, 1994.
(e) Leased from the City of Fort Wayne. Indiana. Since 1975, I&M has leased and
operated the assets of the municipal system of the City of Fort Wayne,
Indiana under a 35-year lease with a provision for an additional 15-year
extension at the election of I&M.
See Item 1 under Fuel Supply, for information concerning coal reserves owned
or controlled by subsidiaries of AEP.
The following table sets forth the total circuit miles of transmission and
distribution lines of the AEP System, APCo, CSPCo, I&M, KEPCo and OPCo and that
portion of the total representing 765,000-volt lines:
<TABLE>
<CAPTION>
TOTAL CIRCUIT MILES
OF TRANSMISSION AND CIRCUIT MILES OF
DISTRIBUTION LINES 765,000-VOLT LINES
-------------------- -------------------
<S> <C> <C>
AEP System (a) 123,357(b) 2,022
APCo 48,190 641
CSPCo (a) 13,937 --
I&M 20,634 614
KEPCo 9,735 258
OPCo 27,941 509
</TABLE>
- --------
(a)Includes jointly owned lines.
(b)Includes lines of other AEP System companies not shown.
TITLES
The AEP System's electric generating stations are generally located on lands
owned in fee simple. The greater portion of the transmission and distribution
lines of the System has been constructed over lands of private owners pursuant
to easements or along public highways and streets pursuant to appropriate
statutory authority. The rights of the System in the realty on which its
facilities are located are considered by it to be adequate for its use in the
conduct of its business. Minor defects and irregularities customarily found in
title to properties of like size and character may exist, but such defects and
irregularities do not materially impair the use of the properties affected
thereby. System companies generally have the right of eminent domain whereby
they may, if necessary, acquire, perfect or secure titles to or easements on
privately-held lands used or to be used in their utility operations.
Substantially all the physical properties of APCo, CSPCo, I&M, KEPCo and OPCo
are subject to the lien of the mortgage and deed of trust securing the first
mortgage bonds of each such company.
39
<PAGE>
SYSTEM TRANSMISSION LINES AND FACILITY SITING
Legislation in the states of Indiana, Kentucky, Michigan, Ohio, Virginia, and
West Virginia requires prior approval of sites of generating facilities and/or
routes of high-voltage transmission lines. Delays and additional costs in
constructing facilities have been experienced as a result of proceedings
conducted pursuant to such statutes, as well as in proceedings in which
operating companies have sought to acquire rights-of-way through condemnation,
and such proceedings may result in additional delays and costs in future years.
PEAK DEMAND
The AEP System is interconnected through 119 high-voltage transmission
interconnections with 29 neighboring electric utility systems. The all-time and
1993 one-hour peak demands were 25,174,000 and 22,142,000 kilowatts,
respectively, (including 6,459,000 and 4,043,000 kilowatts, respectively, of
scheduled deliveries to unaffiliated systems which the System might, on
appropriate notice, have elected not to schedule for delivery) and occurred on
January 18, 1994 and July 26, 1993, respectively. The net dependable capacity
to serve the System load on such dates, including power available under
contractual obligations, was 24,202,000 and 23,896,000 kilowatts, respectively.
The all-time and 1993 one-hour internal peak demands were 19,236,000 and
18,085,000 kilowatts, respectively, and occurred on January 19, 1994 and July
28, 1993, respectively. The net dependable capacity to serve the System load on
such dates, including power available under contractual arrangements, was
24,202,000 and 23,896,000 kilowatts, respectively. The all-time one-hour
integrated and internal net system peak demands and 1993 peak demands for AEP's
generating subsidiaries are shown in the following tabulation:
<TABLE>
<CAPTION>
ALL-TIME ONE-HOUR INTEGRATED 1993 ONE-HOUR INTEGRATED
NET SYSTEM PEAK DEMAND NET SYSTEM PEAK DEMAND
----------------------------- -----------------------------
(IN THOUSANDS)
NUMBER OF NUMBER OF
KILOWATTS DATE KILOWATTS DATE
----------- ----- ----------- ----
<S> <C> <C> <C> <C>
APCo 8,203 January 19, 1994 6,472 July 7, 1993
CSPCo 3,778 January 18, 1994 3,740 July 9, 1993
I&M 4,700 February 12, 1986 4,312 August 26, 1993
KEPCo 1,575 January 19, 1994 1,340 July 26, 1993
OPCo 7,034 January 18, 1994 6,271 July 26, 1993
<CAPTION>
ALL-TIME ONE-HOUR INTEGRATED 1993 ONE-HOUR INTEGRATED
NET INTERNAL PEAK DEMAND NET INTERNAL PEAK DEMAND
----------------------------- -----------------------------
(IN THOUSANDS)
NUMBER OF NUMBER OF
KILOWATTS DATE KILOWATTS DATE
----------- ----- ----------- ----
<S> <C> <C> <C> <C>
APCo 6,887 January 19, 1994 5,906 February 19, 1993
CSPCo 3,167 August 30, 1993 3,167 August 30, 1993
I&M 3,513 August 17, 1988 3,468 August 27, 1993
KEPCo 1,309 January 19, 1994 1,218 February 19, 1993
OPCo 5,436 January 21, 1994 5,302 August 27, 1993
</TABLE>
HYDROELECTRIC PLANTS
Licenses for hydroelectric plants, issued under the Federal Power Act,
reserve to the United States the right to take over the project at the
expiration of the license term, to issue a new license to another entity, or to
relicense the project to the existing licensee. In the event that a project is
taken over by the United States or licensed to a new licensee, the Federal
Power Act provides for payment to the existing licensee of its "net investment"
plus severance damages. Licenses for six System hydroelectric plants expired in
1993 and applications for new licenses for these plants were filed in 1991. The
existing licenses for these plants were extended on an annual basis and will be
renewed automatically until new licenses are issued. No competing license
applications were filed. One new license was issued in March 1994.
40
<PAGE>
COOK NUCLEAR PLANT
Unit 1 of the Cook Plant, which was placed in commercial operation in 1975,
has a nominal net electric rating of 1,020,000 kilowatts. Unit 1's availability
factor was 100% during 1993 and 64.8% during 1992. Unit 2, of slightly
different design, has a nominal net electrical rating of 1,090,000 kilowatts
and was placed in commercial operation in 1978. Unit 2's availability factor
was 96.6% during 1993 and 19.5% during 1992. The availability of Units 1 and 2
was affected in 1992 by outages to refuel and Unit 2 main turbine/generator
vibrational problems.
Units 1 and 2 are licensed by the NRC to operate at 100% of rated thermal
power to October 25, 2014 and December 23, 2017, respectively.
NUCLEAR INSURANCE
The Price-Anderson Act limits public liability for a nuclear incident at any
nuclear plant in the United States to $9.4 billion. I&M has insurance coverage
for liability from a nuclear incident at its Cook Plant. Such coverage is
provided through a combination of private liability insurance, with the maximum
amount available of $200,000,000, and mandatory participation for the remainder
of the $9.4 billion liability, in an industry retrospective deferred premium
plan which would, in case of a nuclear incident, assess all licensees of
nuclear plants in the U.S. Under the deferred premium plan, I&M could be
assessed up to $158,600,000 payable in annual installments of $20,000,000 in
the event of a nuclear incident at Cook or any other nuclear plant in the U.S.
There is no limit on the number of incidents for which I&M could be assessed
these sums.
I&M also has property damage, decontamination and decommissioning insurance
for loss resulting from damage to the Cook Plant facilities in the amount of
$2.75 billion. Nuclear insurance pools provide $1.265 billion of coverage and
Nuclear Electric Insurance Limited (NEIL) and Energy Insurance Bermuda (EIB)
provide the remainder. If NEIL's and EIB's losses exceed their available
resources, I&M would be subject to a total retrospective premium assessment of
up to $15,327,023. NRC regulations require that, in the event of an accident,
whenever the estimated costs of reactor stabilization and site decontamination
exceed $100,000,000, the insurance proceeds must be used, first, to return the
reactor to, and maintain it in, a safe and stable condition and, second, to
decontaminate the reactor and reactor station site in accordance with a plan
approved by the NRC. The insurers then would indemnify I&M for property damage
up to $2.5 billion less any amounts used for stabilization and decontamination.
The remaining $250,000,000, as provided by NEIL (reduced by any stabilization
and decontamination expenditures over $2.5 billion), would cover
decommissioning costs in excess of funds already collected for decommissioning.
See Fuel Supply--Nuclear Waste.
NEIL's extra-expense program provides insurance to cover extra costs
resulting from a prolonged accidental outage of a nuclear unit. I&M's policy
insures against such increased costs up to approximately $3,500,000 per week
(starting 21 weeks after the outage) for one year, $2,350,000 per week for the
second and third years, or 80% of those amounts per unit if both units are down
for the same reason. If NEIL's losses exceed its available resources, I&M would
be subject to a total retrospective premium assessment of up to $8,929,456.
POTENTIAL UNINSURED LOSSES
Some potential losses or liabilities may not be insurable or the amount of
insurance carried may not be sufficient to meet potential losses and
liabilities, including liabilities relating to damage to the Cook Plant and
costs of replacement power in the event of a nuclear incident at the Cook
Plant. Future losses or liabilities which are not completely insured, unless
allowed to be recovered through rates, could have a material adverse effect on
results of operation and the financial condition of AEP, I&M and other AEP
System companies.
41
<PAGE>
Item 3.LEGAL PROCEEDINGS
- --------------------------------------------------------------------------------
In February 1990 the Supreme Court of Indiana overturned an order of the
IURC, affirmed by the Indiana Court of Appeals, which had awarded I&M the right
to serve a General Motors Corporation light truck manufacturing facility
located in Fort Wayne. In August 1990 the IURC issued an order transferring the
right to serve the GM facility to an unaffiliated local distribution utility.
In October 1990 the local distribution utility sued I&M in Indiana under a
provision of Indiana law that allows the local distribution utility to seek
damages equal to the gross revenues received by a utility that renders retail
service in the designated service territory of another utility. On November 30,
1992, the DeKalb Circuit Court granted I&M's motion for summary judgment to
dismiss the local distribution utility's complaint. The local distribution
utility has begun an appeal to the Indiana Court of Appeals. I&M received
revenues of approximately $29,000,000 from serving the GM facility. It is not
clear whether the plaintiffs claim will be upheld on appeal because the service
was rendered in accordance with an IURC order I&M believed in good faith to be
valid.
On April 4, 1991, then Secretary of Labor Lynn Martin announced that the U.S.
Department of Labor ("DOL") had issued a total of 4,710 citations to operators
of 847 coal mines who allegedly submitted respirable dust sampling cassettes
that had been altered so as to remove a portion of the dust. The cassettes were
submitted in compliance with DOL regulations which require systematic sampling
of airborne dust in coal mines and submission of the entire cassettes (which
include filters for collecting dust particulates) to the Mine Safety and Health
Administration ("MSHA") for analysis. The amount of dust contained on the
cassette's filter determines an operator's compliance with respirable dust
standards under the law. OPCo's Meigs No. 2, Meigs No. 31, Martinka, and
Windsor Coal mines received 16, 3, 15 and 2 citations, respectively. MSHA has
assessed civil penalties totalling $56,900 for all these citations. OPCo's
samples in question involve about 1 percent of the 2,500 air samples that OPCo
submitted over a 20-month period from 1989 through 1991 to the DOL. OPCo is
contesting the citations before the Federal Mine Safety and Health Review
Commission. An administrative hearing was held before an administrative law
judge with respect to all affected coal operators. On July 20, 1993, the
administrative law judge rendered a decision in this case holding that the
Secretary of Labor failed to establish that the presence of a "white center" on
the dust sampling filter indicated intentional alteration. The administrative
law judge has set for trial the case of an unaffiliated mine to determine if
there was an intentional alteration of the dust sampling filter. All remaining
cases, including the citations involving OPCo's mines, have been stayed.
On September 21, 1993, CSPCo was served with a complaint issued by Region V,
Federal EPA which alleged violations by Conesville Plant of the Toxic
Substances Control Act and proposed a penalty of $41,000. On October 4, 1993,
I&M was served with a complaint issued by Region V, Federal EPA which alleged
violations by Breed Plant of the Clean Water Act and proposed a penalty of
$70,000. On October 4, 1993, OPCo was served with a complaint issued by Region
V, Federal EPA which alleged violations by OPCo's General Service Center
(Canton, Ohio) of the Toxic Substances Control Act and proposed a penalty of
$24,000. Settlement discussions have been held in each of these cases and it is
expected that these matters will be resolved shortly.
On June 18, 1993, OPCo was served with a complaint issued by Region V,
Federal EPA which alleged violations by Muskingum River Plant of the Toxic
Substances Control Act and proposed a penalty of $87,000. In February 1994,
OPCo paid a penalty of $12,185 and agreed to undertake supplemental
environmental projects in 1994 valued at $61,547.
On February 28, 1994, Ormet Corporation filed a complaint in the U.S.
District Court, Northern District of West Virginia, against AEP, OPCo, the
Service Corporation and two of its employees, Federal EPA and the Administrator
of Federal EPA. Ormet is the operator of a major aluminum reduction plant in
Ohio and is a customer of OPCo. See Certain Industrial Contracts. Pursuant to
the Clean Air Act Amendments of 1990, OPCo received sulfur dioxide emission
allowances for its Kammer Plant. See Environmental and Other
42
<PAGE>
Matters. Ormet's complaint seeks a declaration that it is the owner of
approximately 89% of the Phase I and Phase II allowances issued for use by the
Kammer Plant. OPCo believes that since it is the owner and operator of Kammer
Plant and Ormet is a contract power customer, Ormet is not entitled to any of
the allowances attributable to the Kammer Plant.
See Item 1 for a discussion of certain environmental and rate matters.
Meigs Mine--On July 11, 1993, water from an adjoining sealed and abandoned
mine owned by Southern Ohio Coal Company ("SOCCo"), a mining subsidiary of
OPCo, entered Meigs 31 mine, one of two mines currently being operated by
SOCCo. Ohio EPA approved a plan to pump water from the mine to certain Ohio
River tributaries under stringent conditions for biological and water quality
monitoring and restoring the streams after pumping.
On July 30, pumping commenced in accordance with the Ohio EPA approved plan.
Since September 16, 1993, SOCCo has processed all water removed from the mine
through its expanded treatment system and is in compliance with the effluent
limitations in its water discharge permit. Pumping has removed most of the
water that entered the mine on July 11 and the mine was returned to service in
February 1994.
On July 26, 1993, the Ohio Department of Natural Resources Division of
Reclamation issued an administrative order directing SOCCo to cease pumping due
to that agency's concern over possible environmental harm. On July 26, 1993,
following SOCCo's appeal of the cessation order, the chairman of the
Reclamation Board of Review issued a temporary stay pending a hearing by the
full Reclamation Board. On January 14, 1994, the administrative proceeding was
settled on the basis of agreements by the Division of Reclamation to dismiss
the administrative order and by SOCCo to treat all water removed from the mine
in accordance with its discharge permit and to pay certain expenses of the
Division of Reclamation.
On August 19, 1993, the U.S. District Court for the Southern District of Ohio
granted SOCCo's motion for a preliminary injunction against the Federal Office
of Surface Mining Reclamation and Enforcement ("OSM") and Federal EPA
preventing them from exercising jurisdiction to issue orders to cease pumping.
On August 30, 1993, the U.S. Court of Appeals for the Sixth Circuit denied
OSM's motion for a stay of the District Court's preliminary injunction but
granted Federal EPA's motion for a stay in part which allowed Federal EPA to
investigate and make findings with respect to alleged violations of the Clean
Water Act and thereafter to exercise its enforcement authority under the Clean
Water Act if a violation was identified. On September 2, 1993, Federal EPA
issued an administrative order requiring a partial cessation of pumping, the
effect of which was delayed by Federal EPA until September 8, 1993. On
September 8, 1993, the District Court granted SOCCo's motion requesting that
enforcement of the Federal EPA order be stayed. On September 23, 1993, the
Court of Appeals ruled that the District Court could not review the Federal EPA
order in the absence of a civil enforcement action and lifted the stay. A
further decision of the Court of Appeals with respect to the appeal of the
preliminary injunction is pending.
On January 3, 1994, the District Court held that the complaint filed by SOCCo
should not be dismissed and concluded that sufficient legal and factual grounds
existed for the court to consider SOCCo's claim that Federal EPA could not
override Ohio EPA's authorization for SOCCo to bypass its water treatment
system on an emergency basis during pumping activities. In a separate opinion,
the District Court denied Federal EPA's request that the District Court defer
consideration of SOCCo's motion involving a request for a Declaration of Rights
with respect to the mine water releases into area streams.
The West Virginia Division of Environmental Protection ("West Virginia DEP")
has proposed fining SOCCo $1,800,000 for violations of West Virginia Water
Quality Standards and permitting requirements alleged to have resulted from the
release of mine water into the Ohio River. SOCCo is meeting with the West
Virginia DEP in an attempt to resolve this matter.
Although management is unable to predict what enforcement action Federal EPA
or OSM may take, the resolution of the aforementioned litigation, environmental
mitigation costs and mine restoration costs are not expected to have a material
adverse impact on results of operations or financial condition.
43
<PAGE>
Item 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- --------------------------------------------------------------------------------
AEP, APCO, I&M AND OPCO. None.
AEGCO, CSPCO AND KEPCO. Omitted pursuant to Instruction J(2)(c).
----------------
EXECUTIVE OFFICERS OF THE REGISTRANTS
AEP
The following persons are, or may be deemed, executive officers of AEP. Their
ages are given as of March 15, 1994.
<TABLE>
<CAPTION>
NAME AGE OFFICE (A)
---- --- ----------
<C> <C> <S>
E. Linn Draper, Jr... 52 Chairman of the Board, President and Chief
Executive Officer of AEP and of the Service
Corporation
Peter J. DeMaria..... 59 Treasurer of AEP; Executive Vice President-
Administration and Chief Accounting Officer of the
Service Corporation
William J. Lhota..... 54 Executive Vice President of the Service Corporation
A. Joseph Dowd....... 64 Secretary of AEP; Senior Vice President, General
Counsel and Assistant Secretary of the Service
Corporation
Charles A. Ebetino, Senior Vice President-Fuel Supply of the Service
Jr.................. 41 Corporation
Gerald P. Maloney.... 61 Vice President of AEP; Executive Vice President-
Chief Financial Officer of the Service Corporation
James J. Markowsky... 49 Executive Vice President--Engineering &
Construction of the Service Corporation
</TABLE>
- --------
(a) All of the executive officers listed above have been employed by the
Service Corporation or System companies in various capacities (AEP, as
such, has no employees) during the past five years, except E. Linn Draper,
Jr. who was Chairman of the Board, President and Chief Executive Officer of
Gulf States Utilities Company from 1987 until 1992 when he joined AEP and
the Service Corporation. All of the above officers are appointed annually
for a one-year term by the board of directors of AEP, the board of
directors of the Service Corporation, or both, as the case may be.
APCO
The names of the executive officers of APCo, the positions they hold with
APCo, their ages as of March 15, 1994, and a brief account of their business
experience during the past five years appears below. The directors and
executive officers of APCo are elected annually to serve a one-year term.
<TABLE>
<CAPTION>
NAME AGE POSITION (A) PERIOD
---- --- ------------ ------
<C> <C> <S> <C>
E. Linn Draper, Jr... 52 Director 1992-Present
Chairman of the Board and Chief
Executive Officer 1993-Present
Vice President 1992-1993
Chairman of the Board, President and
Chief Executive Officer of AEP and
the Service Corporation 1993-Present
President of AEP 1992-1993
President and Chief Operating
Officer of the Service Corporation 1992-1993
Chairman of the Board, President and
Chief Executive Officer of Gulf
States Utilities Company 1987-1992
Joseph H. Vipperman.. 53 Director 1985-Present
President and Chief Operating
Officer 1990-Present
Executive Vice President 1989-1990
Vice President 1985-1989
Executive Vice President-Operations
of the Service Corporation 1984-1989
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
NAME AGE POSITION (A) PERIOD
---- --- ------------ ------
<C> <C> <S> <C>
Peter J. DeMaria......... 59 Director 1988-Present
Vice President 1991-Present
Treasurer 1978-Present
Treasurer of AEP 1978-Present
Executive Vice President-
Administration and Chief
Accounting Officer of the
Service Corporation 1984-Present
Treasurer of the Service
Corporation 1989-1990
A. Joseph Dowd........... 64 Director and Vice President 1977-Present
Secretary of AEP 1974-Present
Senior Vice President and General
Counsel of the Service
Corporation 1975-Present
Assistant Secretary of the
Service Corporation 1969-Present
William J. Lhota......... 54 Director 1990-Present
Vice President 1989-Present
Executive Vice President of the
Service Corporation 1993-Present
Executive Vice President-
Operations of the Service
Corporation 1989-1993
President and Chief Operating
Officer of CSPCo 1987-1989
Gerald P. Maloney........ 61 Director and Vice President 1970-Present
Vice President of AEP 1974-Present
Executive Vice President-Chief
Financial Officer of the Service
Corporation 1991-Present
Senior Vice President-Finance of
the Service Corporation 1974-1990
James J. Markowsky....... 49 Director 1993-Present
Executive Vice President-
Engineering and Construction of
the Service Corporation 1993-Present
Senior Vice President and Chief
Engineer of the Service
Corporation 1988-1993
Senior Vice President-Fuel Supply
Charles A. Ebetino, Jr. . 41 of the Service Corporation 1993-Present
Vice President-Fuel Procurement
and Transportation of the
Service Corporation 1990-1993
Managing Director-Coal
Procurement of the Service
Corporation 1986-1990
</TABLE>
- --------
(a)Positions are with APCo unless otherwise indicated.
OPCO
The names of the executive officers of OPCo, the positions they hold with
OPCo, their ages as of March 15, 1994, and a brief account of their business
experience during the past five years appear below. The directors and executive
officers of OPCo are elected annually to serve a one-year term.
<TABLE>
<CAPTION>
NAME AGE POSITION (A) PERIOD
---- --- ------------ ------
<C> <C> <S> <C>
E. Linn Draper, Jr. . 52 Director 1992-Present
Chairman of the Board and Chief
Executive Officer 1993-Present
Vice President 1992-1993
Chairman of the Board, President and
Chief Executive Officer of AEP and
the Service Corporation 1993-Present
President of AEP 1992-1993
President and Chief Operating
Officer of the Service Corporation 1992-1993
Chairman of the Board, President and
Chief Executive Officer of Gulf
States Utilities Company 1987-1992
Director, President and Chief
Carl A. Erikson...... 43 Operating Officer 1993-Present
Vice President 1990-1992
Vice President of the Service
Corporation and Executive Assistant
to E. Linn Draper, Jr. 1992-Present
Assistant to Executive Vice
President-Operations of the Service
Corporation 1989-1990
Peter J. DeMaria..... 59 Director and Treasurer 1978-Present
Vice President 1991-Present
Treasurer of AEP 1978-Present
Executive Vice President-
Administration and Chief Accounting
Officer of the Service Corporation 1984-Present
Treasurer of the Service Corporation 1989-1990
</TABLE>
45
<PAGE>
<TABLE>
<CAPTION>
NAME AGE POSITION (A) PERIOD
---- --- ------------ ------
<C> <C> <S> <C>
A. Joseph Dowd....... 64 Director and Vice President 1977-Present
Secretary of AEP 1974-Present
Senior Vice President and General
Counsel of the Service Corporation 1975-Present
Assistant Secretary of the Service
Corporation 1969-Present
William J. Lhota..... 54 Director and Vice President 1989-Present
Executive Vice President of the
Service Corporation 1993-Present
Executive Vice President-Operations
of the Service Corporation 1989-1993
President and Chief Operating
Officer of CSPCo 1987-1989
Gerald P. Maloney.... 61 Director 1973-Present
Vice President 1970-Present
Vice President of AEP 1974-Present
Executive Vice President-Chief
Financial Officer of the Service
Corporation 1991-Present
Senior Vice President-Finance of the
Service Corporation 1974-1990
James J.Markowsky.... 49 Director 1989-Present
Executive Vice President-Engineering
and Construction of the Service
Corporation 1993-Present
Senior Vice President and Chief
Engineer of the Service Corporation 1988-1993
Charles A. Ebertino, Senior Vice President-Fuel Supply of
Jr.................. 41 the Service Corporation 1993-Present
Vice President-Fuel Procurement and
Transportation of the Service
Corporation 1990-1993
Managing Director-Coal Procurement
of the Service Corporation 1986-1990
</TABLE>
- --------
(a)Positions are with OPCo unless otherwise indicated.
46
<PAGE>
PART II
---------------------------------------------------------------------
Item 5.MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
- --------------------------------------------------------------------------------
AEP. AEP Common Stock is traded principally on the New York Stock Exchange.
The following table sets forth for the calendar periods indicated the high and
low sales prices for the Common Stock as reported on the New York Stock
Exchange Composite Tape and the amount of cash dividends paid per share of
Common Stock.
<TABLE>
<CAPTION>
PER SHARE
---------------
QUARTER ENDED MARKET PRICE
- ------------- ---------------
HIGH LOW DIVIDEND(1)
------- ------- -----------
<S> <C> <C> <C>
March 1992.......................................... $34 1/4 $30 3/8 $.60
June 1992........................................... 32 5/8 30 3/8 .60
September 1992...................................... 35 1/4 31 3/4 .60
December 1992....................................... 33 3/8 30 3/4 .60
March 1993.......................................... 37 32 .60
June 1993........................................... 38 1/2 33 3/8 .60
September 1993...................................... 40 3/8 37 1/4 .60
December 1993....................................... 39 5/8 34 5/8 .60
</TABLE>
- --------
(1) See Note 5 of the Notes to the Consolidated Financial Statements of AEP for
information regarding restrictions on payment of dividends.
At December 31, 1993, AEP had approximately 194,000 shareholders of record.
AEGCO, APCO, CSPCO, I&M, KEPCO AND OPCO. The information required by this
item is not applicable as the common stock of all these companies is held
solely by AEP.
Item 6.SELECTED FINANCIAL DATA
- --------------------------------------------------------------------------------
AEGCO. Omitted pursuant to Instruction J(2)(a).
AEP. The information required by this item is incorporated herein by
reference to the material under Selected Consolidated Financial Data in the AEP
1993 Annual Report (for the fiscal year ended December 31, 1993).
APCO. The information required by this item is incorporated herein by
reference to the material under Selected Consolidated Financial Data in the
APCo 1993 Annual Report (for the fiscal year ended December 31, 1993).
CSPCO. Omitted pursuant to Instruction J(2)(a).
I&M. The information required by this item is incorporated herein by
reference to the material under Selected Consolidated Financial Data in the I&M
1993 Annual Report (for the fiscal year ended December 31, 1993).
KEPCO. Omitted pursuant to Instruction J(2)(a).
OPCO. The information required by this item is incorporated herein by
reference to the material under Selected Consolidated Financial Data in the
OPCo 1993 Annual Report (for the fiscal year ended December 31, 1993).
47
<PAGE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
- --------------------------------------------------------------------------------
AEGCO. Omitted pursuant to Instruction J(2)(a). Management's narrative
analysis of the results of operations and other information required by
Instruction J(2)(a) is incorporated herein by reference to the material under
Management's Narrative Analysis of Results of Operations in the AEGCo 1993
Annual Report (for the fiscal year ended December 31, 1993).
AEP. The information required by this item is incorporated herein by
reference to the material under Management's Discussion and Analysis of Results
of Operations and Financial Condition in the AEP 1993 Annual Report (for the
fiscal year ended December 31, 1993).
APCO. The information required by this item is incorporated herein by
reference to the material under Management's Discussion and Analysis of Results
of Operations and Financial Condition in the APCo 1993 Annual Report (for the
fiscal year ended December 31, 1993).
CSPCO. Omitted pursuant to Instruction J(2)(a). Management's narrative
analysis of the results of operations and other information required by
Instruction J(2)(a) is incorporated herein by reference to the material under
Management's Narrative Analysis of Results of Operations in the CSPCo 1993
Annual Report (for the fiscal year ended December 31, 1993).
I&M. The information required by this item is incorporated herein by
reference to the material under Management's Discussion and Analysis of Results
of Operations and Financial Condition in the I&M 1993 Annual Report (for the
fiscal year ended December 31, 1993).
KEPCO. Omitted pursuant to Instruction J(2)(a). Management's narrative
analysis of the results of operations and other information required by
Instruction J(2)(a) is incorporated herein by reference to the material under
Management's Narrative Analysis of Results of Operations in the KEPCo 1993
Annual Report (for the fiscal year ended December 31, 1993).
OPCO. The information required by this item is incorporated herein by
reference to the material under Management's Discussion and Analysis of Results
of Operations and Financial Condition in the OPCo 1993 Annual Report (for the
fiscal year ended December 31, 1993).
Item 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
AEGCO. The information required by this item is incorporated herein by
reference to the financial statements and supplementary data described under
Item 14 herein.
AEP. The information required by this item is incorporated herein by
reference to the financial statements and supplementary data described under
Item 14 herein.
APCO. The information required by this item is incorporated herein by
reference to the financial statements and supplementary data described under
Item 14 herein.
CSPCO. The information required by this item is incorporated herein by
reference to the financial statements and supplementary data described under
Item 14 herein.
I&M. The information required by this item is incorporated herein by
reference to the financial statements and supplementary data described under
Item 14 herein.
48
<PAGE>
KEPCO. The information required by this item is incorporated herein by
reference to the financial statements and supplementary data described under
Item 14 herein.
OPCO. The information required by this item is incorporated herein by
reference to the financial statements and supplementary data described under
Item 14 herein.
Item 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
- --------------------------------------------------------------------------------
AEGCO, AEP, APCO, CSPCO, I&M, KEPCO AND OPCO. None.
49
<PAGE>
PART III --------------------------------------------------------------------
Item 10.DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS
- --------------------------------------------------------------------------------
AEGCO. Omitted pursuant to Instruction J(2)(c).
AEP. The information required by this item is incorporated herein by
reference to the material under Nominees for Director and Share Ownership of
Directors and Executive Officers of the definitive proxy statement of AEP,
dated March 10, 1994, for the 1994 annual meeting of shareholders. Reference
also is made to the information under the caption Executive Officers of the
Registrants in Part I of this report.
APCO. The information required by this item is incorporated herein by
reference to the material under Election of Directors of the definitive
information statement of APCo for the 1994 annual meeting of stockholders, to
be filed within 120 days after December 31, 1993. Reference also is made to the
information under the caption Executive Officers of the Registrants in Part I
of this report.
CSPCO. Omitted pursuant to Instruction J(2)(c).
I&M. The names of the directors and executive officers of I&M, the positions
they hold with I&M, their ages as of March 15, 1994, and a brief account of
their business experience during the past five years appear below. The
directors and executive officers of I&M are elected annually to serve a one-
year term.
<TABLE>
<CAPTION>
NAME AGE POSITION (A)(B)(C) PERIOD
---- --- ------------------ ------
<C> <C> <S> <C>
E. Linn Draper, Jr. . 52 Director 1992-Present
Chairman of the Board and Chief 1993-Present
Executive Officer
Vice President 1992-1993
Chairman of the Board, President and 1993-Present
Chief Executive Officer of AEP
and of the Service Corporation
President of AEP 1992-1993
President and Chief Operating 1992-1993
Officer of the Service Corporation
Chairman of the Board, President and 1987-1992
Chief Executive Officer of Gulf
States Utilities Company
Richard C. Menge..... 58 Director 1976-Present
President and Chief Operating 1989-Present
Officer
Mark A. Bailey....... 41 Director and Vice President 1989-Present
Peter J. DeMaria..... 59 Director 1992-Present
Vice President 1991-Present
Treasurer 1978-Present
Treasurer of AEP 1978-Present
Executive Vice President- 1984-Present
Administration and Chief Accounting
Officer of the Service Corporation
Treasurer of the Service Corporation 1989-1990
William N. D'Onofrio. 45 Director and Vice President 1984-Present
A. Joseph Dowd....... 64 Director 1993-Present
Vice President 1977-Present
Secretary of AEP 1974-Present
Senior Vice President and General 1975-Present
Counsel of the Service Corporation
Assistant Secretary of the Service 1969-Present
Corporation
</TABLE>
50
<PAGE>
<TABLE>
<CAPTION>
NAME AGE POSITION (A)(B)(C) PERIOD
---- --- ------------------ ------
<C> <C> <S> <C>
William J. Lhota..... 54 Director and Vice President 1989-Present
Executive Vice President of the 1993-Present
Service Corporation
Executive Vice President-Operations 1989-1993
of the Service Corporation
Gerald P. Maloney.... 61 Director 1978-Present
Vice President 1970-Present
Vice President of AEP 1974-Present
Executive Vice President-Chief 1991-Present
Financial Officer of the Service
Corporation
Senior Vice President-Finance of the 1974-1990
Service Corporation
R. E. Prater......... 43 Director 1993-Present
Division Manager 1989-Present
D. B. Synowiec....... 50 Director 1993-Present
Plant Manager 1990-1993
Assistant Plant Manager 1983-1990
W. E. Walters........ 46 Director 1991-Present
Executive Assistant to President 1987-Present
Charles A. Ebetino, Senior Vice President-Fuel Supply of 1993-Present
Jr. ................. 41 the Service Corporation
Vice President-Fuel Procurement & 1990-1993
Transportation of the Service
Corporation
Managing Director-Coal Procurement 1986-1990
of the Service Corporation
Vice President 1993-Present
James J. Markowsky... 49 Executive Vice President-Engineering 1993-Present
& Construction of the Service
Corporation
Senior Vice President and Chief 1988-1993
Engineer of the Service Corporation
</TABLE>
- --------
(a)Positions are with I&M unless otherwise indicated.
(b)Dr. Draper is a director of Pacific Nuclear Systems, Inc. and Mr. Lhota is
a director of Huntington Bancshares Incorporated.
(c)Messrs. DeMaria, Dowd, Draper, Lhota and Maloney are directors of AEGCo,
APCo, CSPCo, KEPCo and OPCo. Messrs. DeMaria, Dowd, Draper and Maloney are
also directors of AEP.
KEPCO. Omitted pursuant to Instruction J(2)(c).
OPCO. The information required by this item is incorporated herein by
reference to the material under the heading Election of Directors of the
definitive information statement of OPCo for the 1994 annual meeting of
shareholders, to be filed within 120 days after December 31, 1993. Reference
also is made to the information under the caption Executive Officers of the
Registrants in Part I of this report.
Item 11.EXECUTIVE COMPENSATION
- -------------------------------------------------------------------------------
AEGCO. Omitted pursuant to Instruction J(2)(c).
AEP. The information required by this item is incorporated herein by
reference to the material under Compensation of Directors, Executive
Compensation and the performance graph of the definitive proxy statement of
AEP, dated March 10, 1994, for the 1994 annual meeting of shareholders.
APCO. The information required by this item is incorporated herein by
reference to the material under Executive Compensation of the definitive
information statement of APCo for the 1994 annual meeting of stockholders, to
be filed within 120 days after December 31, 1993.
CSPCO. Omitted pursuant to Instruction J(2)(c).
KEPCO. Omitted pursuant to Instruction J(2)(c).
51
<PAGE>
OPCO. The information required by this item is incorporated herein by
reference to the material under Executive Compensation of the definitive
information statement of OPCo for the 1994 annual meeting of shareholders, to
be filed within 120 days after December 31, 1993.
I&M Certain executive officers of I&M are employees of the Service
Corporation. The salaries of these executive officers are paid by the Service
Corporation and a portion of their salaries has been allocated and charged to
I&M. The following table shows for 1993, 1992 and 1991 the compensation earned
from all AEP System companies by (i) the chief executive officer and four
other most highly compensated executive officers (as defined by regulations of
the SEC) of I&M at December 31, 1993 and (ii) a chief executive officer and
executive officer, both of whom retired in 1993.
Summary Compensation Table
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------------------
ALL OTHER
SALARY BONUS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($)(1) ($)(2)
--------------------------- ---- ------- ------- ------------
<S> <C> <C> <C> <C>
E. LINN DRAPER, JR.--Chairman of the board 1993 538,333 148,742 18,180
and chief executive officer of I&M; chairman 1992 395,833 8,730 63,700
of the board, president and chief executive
officer of AEP and the Service Corporation;
chairman of the board and chief executive
officer of other AEP System companies (3)
RICHARD E. DISBROW--Chairman of the board and 1993 200,000 55,260 102,753
chief executive officer of I&M, AEP, the 1992 600,000 13,234 17,676
Service Corporation and other AEP System 1991 540,000 86,994 17,272
companies (3)
PETER J. DEMARIA--Vice president, treasurer 1993 280,000 77,364 17,811
and director of I&M; treasurer and director 1992 273,000 6,021 15,576
of AEP; executive vice president- 1991 258,000 41,564 14,987
administration and chief accounting officer
and director of the Service Corporation;
vice president, treasurer and director of
other AEP System companies
JOHN E. KATLIC--Senior vice president-fuel 1993 279,167 74,677 45,452
supply and director of the Service 1992 325,000 6,400 9,396
Corporation; president, chief operating 1991 300,000 38,419 9,402
officer and director of coal mining
subsidiaries (retired October 31, 1993)
G. P. MALONEY--Vice president and director of 1993 269,000 74,325 18,000
I&M; vice president of AEP; executive vice 1992 261,000 5,757 17,036
president-chief financial officer and 1991 246,000 39,631 16,662
director of the Service Corporation; vice
president and director of other AEP System
companies
A. JOSEPH DOWD--Vice president and director 1993 268,000 61,707 15,760
of I&M; secretary and director of AEP; 1992 260,000 4,779 13,876
senior vice president, general counsel, 1991 245,000 32,891 14,002
assistant secretary and director of the
Service Corporation; vice president and
director of other AEP System companies
WILLIAM J. LHOTA--Vice president and director 1993 249,000 68,799 17,160
of I&M; executive vice president and 1992 230,000 5,073 15,116
director of the Service Corporation; vice 1991 210,000 33,831 14,385
president and director of other AEP System
companies
</TABLE>
- --------
(1) Reflects payments under the AEP Management Incentive Compensation Plan
("MICP") in which individuals in key management positions with AEP System
companies participate. Amounts for 1993 are estimates but should not
change significantly. For 1991 and 1993, these amounts included both cash
paid and a portion deferred in the form of restricted stock units. These
units are paid out in cash after three years based on the price of AEP
Common Stock at that time. Dividend equivalents are paid during the three-
year period. At December 31, 1993, Dr. Draper and Messrs. DeMaria,
Maloney, Dowd and Lhota held 813, 746, 715, 593 and 639 units having a
value of $30,177, $27,701, $26,526, $22,020 and $23,730, respectively,
based upon a $37 1/8 per share closing price of AEP's Common Stock as
reported on the New York Stock Exchange. For 1992, MICP payments were made
entirely in cash.
52
<PAGE>
(2) Includes amounts contributed by AEP System companies under the American
Electric Power System Employees Savings Plan on behalf of their employee
participants. For 1993 this amount was $7,075 for Dr. Draper and Messrs.
Katlic, Maloney, Dowd and Lhota and $6,000 for Mr. Disbrow and $7,006 for
Mr. DeMaria. The AEP System Savings Plan is available to all employees of
AEP System companies (except for employees covered by certain collective
bargaining agreements) who have met minimum service requirements.
Includes director's fees for AEP System companies. For 1993 these fees were:
Dr. Draper, $11,105; Mr. Disbrow, $3,580; Mr. DeMaria, $10,805; Mr. Katlic,
$2,300; Mr. Maloney, $10,925; Mr. Dowd, $8,685; and Mr. Lhota, $10,085.
Includes payments of $93,173 and $36,077 for unused accrued vacation which
Messrs. Disbrow and Katlic, respectively, received upon their retirement.
(3) Dr. Draper was elected chairman of the board and chief executive officer
of I&M and other AEP System companies and chairman of the board, president
and chief executive officer of AEP and the Service Corporation, succeeding
Mr. Disbrow, who retired, effective April 28, 1993.
Retirement Benefits
The American Electric Power System Retirement Plan provides pensions for all
employees of AEP System companies (except for employees covered by certain
collective bargaining agreements), including the executive officers of I&M.
The Retirement Plan is a noncontributory defined benefit plan.
The following table shows the approximate annual annuities under the
Retirement Plan that would be payable to employees in certain higher salary
classifications, assuming retirement at age 65 after various periods of
service. The amounts shown in the table are the straight life annuities
payable under the Plan without reduction for the joint and survivor annuity.
Retirement benefits listed in the table are not subject to any deduction for
Social Security or other offset amounts. The retirement annuity is reduced 3%
per year in the case of retirement between ages 60 and 62 and further reduced
6% per year in the case of retirement between ages 55 and 60. If an employee
retires after age 62, there is no reduction in the retirement annuity.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF ACCREDITED SERVICE
-----------------------------------------------------
HIGHEST AVERAGE
ANNUAL EARNINGS 15 20 25 30 35 40
- --------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$250,000................. $ 58,155 $ 77,540 $ 96,925 $116,310 $135,695 $152,230
350,000................. 82,155 109,540 136,925 164,310 191,695 214,970
450,000................. 106,155 141,540 176,925 212,310 247,695 277,620
550,000................. 130,155 173,540 216,925 260,310 303,695 340,270
700,000................. 166,155 221,540 276,925 332,310 387,695 434,245
</TABLE>
Compensation upon which retirement benefits are based consists of the
average of the 36 consecutive months of the employee's highest salary, as
listed in the Summary Compensation Table, out of the employee's most recent 10
years of service. With respect to Messrs. Disbrow and Katlic, since they
retired in 1993, the amounts of $600,000 and $316,944, respectively, are the
actual salaries upon which their retirement benefits are based. Mr. Disbrow's
retirement benefit was enhanced by computing his benefit based on his 1992
base salary. As of December 31, 1993, the number of full years of service
credited under the Retirement Plan to each of the executive officers of I&M
named in the Summary Compensation Table were as follows: Dr. Draper, 1 year;
Mr. Disbrow, 39 years; Mr. DeMaria, 34 years; Mr. Katlic, 10 years; Mr.
Maloney, 38 years; Mr. Dowd, 31 years; and Mr. Lhota, 29 years.
Dr. Draper's employment agreement described below provides him with a
supplemental retirement annuity that credits him with 24 years of service in
addition to his years of service credited under the Retirement Plan less his
actual pension entitlement under the Retirement Plan and any pension
entitlements from prior employers.
53
<PAGE>
Mr. Katlic has a contract with the Service Corporation under which the
Service Corporation agrees to provide him with a supplemental retirement
annuity equal to the annual pension that Mr. Katlic would have received with
service of 30 years under the AEP System Retirement Plan as then in effect,
less his actual annual pension entitlement under the Retirement Plan. Mr.
Katlic commenced receiving his supplemental annuity upon his retirement
effective October 31, 1993.
AEP has determined to pay supplemental retirement benefits to 23 AEP System
employees (including Messrs. Disbrow, DeMaria, Maloney and Lhota) whose
pensions may be adversely affected by amendments to the Retirement Plan made as
a result of the Tax Reform Act of 1986. Such payments, if any, will be equal to
any reduction occurring because of such amendments. Upon his retirement on
April 28, 1993, Mr. Disbrow began receiving an annual supplemental benefit of
$2,642. Assuming retirement of the remaining eligible employees in 1994, none
would be eligible to receive supplemental benefits.
AEP made available a voluntary deferred-compensation program in 1982 and
1986, which permitted certain executive employees of AEP System companies to
defer receipt of a portion of their salaries. Under this program, an executive
was able to defer up to 10% or 15% annually (depending on the terms of the
program offered), over a four-year period, of his or her salary, and receive
supplemental retirement or survivor benefit payments over a 15-year period. The
amount of supplemental retirement payments received is dependent upon the
amount deferred, age at the time the deferral election was made, and number of
years until the executive retires. The following table sets forth, for the
executive officers named in the Summary Compensation Table, the amounts of
annual deferrals and, assuming retirement at age 65, annual supplemental
retirement payments under the 1982 and 1986 programs.
<TABLE>
<CAPTION>
1982 PROGRAM 1986 PROGRAM
------------------------- -------------------------
ANNUAL ANNUAL AMOUNT OF ANNUAL ANNUAL AMOUNT OF
AMOUNT SUPPLEMENTAL AMOUNT SUPPLEMENTAL
DEFERRED RETIREMENT DEFERRED RETIREMENT
(4-YEAR PAYMENT (4-YEAR PAYMENT
NAME PERIOD) (15-YEAR PERIOD) PERIOD) (15-YEAR PERIOD)
- ---- -------- ---------------- -------- ----------------
<S> <C> <C> <C> <C>
Mr. Disbrow................. $15,000 $54,375 -- --
Mr. DeMaria................. 10,000 52,000 $13,000 $53,300
Mr. Katlic.................. 15,000 24,500 -- --
Mr. Maloney................. 15,000 67,500 16,000 56,400
Mr. Dowd.................... 10,000 34,000 10,000 25,500
</TABLE>
Employment Agreement
Dr. Draper has a contract with AEP and the Service Corporation which provides
for his employment for an initial term from no later than March 15, 1992 until
March 15, 1997. Dr. Draper commenced his employment with AEP and the Service
Corporation on March 1, 1992. AEP or the Service Corporation may terminate the
contract at any time and, if this is done for reasons other than cause and
other than as a result of Dr. Draper's death or permanent disability, the
Service Corporation must pay Dr. Draper's then base salary through March 15,
1997, less any amounts received by Dr. Draper from other employment.
--------------
Directors of I&M receive a fee of $100 for each meeting of the Board of
Directors attended in addition to their salaries.
--------------
The AEP System is an integrated electric utility system and, as a result, the
member companies of the AEP System have contractual, financial and other
business relationships with the other member companies, such as participation
in the AEP System savings and retirement plans and tax returns, sales of
electricity, transportation and handling of fuel, sales or rentals of property
and interest or dividend payments on the securities held by the companies'
respective parents.
54
<PAGE>
Item 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- -------------------------------------------------------------------------------
AEGCO. Omitted pursuant to Instruction J(2)(c).
AEP. The information required by this item is incorporated herein by
reference to the material under Share Ownership of Directors and Executive
Officers of the definitive proxy statement of AEP, dated March 10, 1994, for
the 1994 annual meeting of shareholders.
APCO. The information required by this item is incorporated herein by
reference to the material under Share Ownership of Directors and Executive
Officers in the definitive information statement of APCo for the 1994 annual
meeting of stockholders, to be filed within 120 days after December 31, 1993.
CSPCO. Omitted pursuant to Instruction J(2)(c).
I&M. All 1,400,000 outstanding shares of Common Stock, no par value, of I&M
are directly and beneficially held by AEP. Holders of the Cumulative Preferred
Stock of I&M generally have no voting rights, except with respect to certain
corporate actions and in the event of certain defaults in the payment of
dividends on such shares.
The table below shows the number of shares of AEP Common Stock that were
beneficially owned, directly or indirectly, as of December 31, 1993, by each
director and nominee of I&M and each of the executive officers of I&M named in
the summary compensation table, and by all directors and executive officers of
I&M as a group. It is based on information provided to I&M by such persons. No
such person owns any shares of any series of the Cumulative Preferred Stock of
I&M. Unless otherwise noted, each person has sole voting power and investment
power over the number of shares of AEP Common Stock set forth opposite his
name. Fractions of shares have been rounded to the nearest whole share.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP (A)
------------------------
<S> <C>
Mark A. Bailey................................. 594
Peter J. DeMaria............................... 5,789(b)(c)
Richard E. Disbrow............................. 9,822(b)
William N. D'Onofrio........................... 2,948
A. J. Dowd..................................... 4,707
E. Linn Draper, Jr............................. 951(b)
J. E. Katlic................................... 2,290
William J. Lhota............................... 6,673(b)(c)
Gerald P. Maloney.............................. 4,227(b)(c)
Richard C. Menge............................... 2,652(b)
R. E. Prater................................... 1,609
D. B. Synowiec................................. 1,808
W. E. Walters.................................. 3,729
All directors and executive officers as a group
(13 persons).................................. 125,076(c)(d)
</TABLE>
- --------
(a) The amounts include shares held by the trustee of the AEP Employees
Savings Plan, over which directors, nominees and executive officers have
voting power, but the investment/disposition power is subject to the terms
of such Plan, as follows: Mr. Bailey, 550 shares; Mr. DeMaria, 2,081
shares; Mr. Disbrow, 4,027 shares; Mr. D'Onofrio, 2,889 shares; Mr.
Katlic, 2,230 shares; Mr. Lhota, 5,245 shares; Mr. Maloney, 2,142 shares;
Mr. Menge, 2,566 shares; Mr. Prater, 1,561 shares; Mr. Synowiec, 1,754
shares; Mr. Walters, 3,685 shares; and all directors and executive
officers as a group, 33,806 shares. Messrs. Disbrow's, Dowd's and
Maloney's holdings include 85 shares each; Messrs. Bailey's, DeMaria's,
D'Onofrio's, Katlic's, Lhota's, Menge's, Prater's, Synowiec's, and
Walter's holdings include 44, 83, 59, 60, 60, 62, 48, 53 and 45 shares,
respectively; and the holdings of all directors and executive officers as
a group include 738 shares, each held by the trustee of the AEP Employee
Stock Ownership Plan, over which shares such persons have sole voting
power, but the investment/disposition power is subject to the terms of
such Plan.
55
<PAGE>
(b) Includes shares with respect to which such directors, nominees and
executive officers share voting and investment power as follows: Mr.
DeMaria, 3,624 shares; Mr. Disbrow, 283 shares; Mr. Draper, 115 shares;
Mr. Lhota, 1,368 shares; Mr. Maloney, 2,000 shares; Mr. Menge, 24 shares;
and all directors and executive officers as a group, 7,883 shares. Mr.
DeMaria disclaims beneficial ownership of 807 shares.
(c) 85,231 shares in the American Electric Power System Educational Trust
Fund, over which Messrs. DeMaria, Lhota and Maloney share voting and
investment power as trustees (they disclaim beneficial ownership of such
shares), are not included in their individual totals, but are included in
the group total.
(d) Represents less than 1 percent of the total number of shares outstanding
on December 31, 1993.
KEPCO. Omitted pursuant to Instruction J(2)(c).
OPCO. The information required by this item is incorporated herein by
reference to the material under Share Ownership of Directors and Executive
Officers in the definitive information statement of OPCo for the 1994 annual
meeting of shareholders, to be filed within 120 days after December 31, 1993.
Item 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- -------------------------------------------------------------------------------
AEP. The information required by this item is incorporated herein by
reference to the material under Transactions With Management of the definitive
proxy statement of AEP, dated March 10, 1994, for the 1994 annual meeting of
shareholders.
APCO, I&M AND OPCO. None.
AEGCO, CSPCO, AND KEPCO. Omitted pursuant to Instruction J(2)(c).
56
<PAGE>
PART IV -------------------------------------------------------------------
Item 14.EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
- --------------------------------------------------------------------------------
(a) The following documents are filed as a part of this report:
<TABLE>
<S> <C>
1. Financial Statements: PAGE
----
The following financial statements have been incorporated herein by
reference pursuant to Item 8.
AEGCo:
Independent Auditors' Report; Statements of Income for the years ended
December 31, 1993, 1992 and 1991; Statements of Retained Earnings for
the years ended December 31, 1993, 1992 and 1991; Balance Sheets as
of December 31, 1993 and 1992; Statements of Cash Flows for the years
ended December 31, 1993, 1992 and 1991; Notes to Financial
Statements.
AEP and its subsidiaries consolidated:
Consolidated Statements of Income for the years ended December 31,
1993, 1992 and 1991; Consolidated Statements of Retained Earnings for
the years ended December 31, 1993, 1992 and 1991; Consolidated
Statements of Cash Flows for the years ended December 31, 1993, 1992
and 1991; Consolidated Balance Sheets as of December 31, 1993 and
1992; Notes to Consolidated Financial Statements; Schedule of
Cumulative Preferred Stocks of Subsidiaries at December 31, 1993 and
1992; Schedule of Consolidated Long-term Debt Outstanding at December
31, 1993 and 1992; Independent Auditors' Report.
APCo:
Independent Auditors' Report; Consolidated Statements of Income for the
years ended December 31, 1993, 1992 and 1991; Consolidated Balance
Sheets as of December 31, 1993 and 1992; Consolidated Statements of
Cash Flows for the years ended December 31, 1993, 1992 and 1991;
Consolidated Statements of Retained Earnings for the years ended
December 31, 1993, 1992 and 1991; Notes to Consolidated Financial
Statements.
CSPCo:
Independent Auditors' Report; Consolidated Statements of Income for the
years ended December 31, 1993, 1992 and 1991; Consolidated Balance
Sheets as of December 31, 1993 and 1992; Consolidated Statements of
Cash Flows for the years ended December 31, 1993, 1992 and 1991;
Consolidated Statements of Retained Earnings for the years ended
December 31, 1993, 1992 and 1991; Notes to Consolidated Financial
Statements.
I&M:
Independent Auditors' Report; Consolidated Statements of Income for the
years ended December 31, 1993, 1992 and 1991; Consolidated Balance
Sheets as of December 31, 1993 and 1992; Consolidated Statements of
Cash Flows for the years ended December 31, 1993, 1992 and 1991;
Consolidated Statements of Retained Earnings for the years ended
December 31, 1993, 1992 and 1991; Notes to Consolidated Financial
Statements.
KEPCo:
Independent Auditors' Report; Statements of Income for the years ended
December 31, 1993, 1992 and 1991; Statements of Retained Earnings for
the years ended December 31, 1993, 1992 and 1991; Statements of Cash
Flows for the years ended December 31, 1993, 1992 and 1991; Balance
Sheets as of December 31, 1993 and 1992; Notes to Financial
Statements.
</TABLE>
57
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
OPCo:
Independent Auditors' Report; Consolidated Statements of Income for the
years ended December 31, 1993, 1992 and 1991; Consolidated Balance
Sheets as of December 31, 1993 and 1992; Consolidated Statements of
Cash Flows for the years ended December 31, 1993, 1992 and 1991;
Consolidated Statements of Retained Earnings for the years ended
December 31, 1993, 1992 and 1991; Notes to Consolidated Financial
Statements.
2. Financial Statement Schedules:
Financial Statement Schedules are listed in the Index to Financial
Statement Schedules (Certain schedules have been omitted because the
required information is contained in the notes to financial statements
or because such schedules are not required or are not applicable.)...... S-1
Independent Auditors' Report............................................. S-2
3. Exhibits:
Exhibits for AEGCo, AEP, APCo, CSPCo, I&M, KEPCo and OPCo are listed in
the Exhibit Index and are incorporated herein by reference.............. E-1
</TABLE>
(b) No Reports on Form 8-K were filed during the quarter ended December 31,
1993.
58
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED. THE SIGNATURE OF
THE UNDERSIGNED COMPANY SHALL BE DEEMED TO RELATE ONLY TO MATTERS HAVING
REFERENCE TO SUCH COMPANY AND ANY SUBSIDIARIES THEREOF.
AEP Generating Company
By: /s/ G. P. Maloney
---------------------------------
(G. P. MALONEY, VICE PRESIDENT)
Date: March 23, 1994
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED. THE SIGNATURE OF
EACH OF THE UNDERSIGNED SHALL BE DEEMED TO RELATE ONLY TO MATTERS HAVING
REFERENCE TO THE ABOVE-NAMED COMPANY AND ANY SUBSIDIARIES THEREOF.
SIGNATURE TITLE DATE
--------- ----- ----
(I) PRINCIPAL EXECUTIVE OFFICER:
*E. Linn Draper, Jr. President, Chief
Executive Officer
and Director
(II) PRINCIPAL FINANCIAL OFFICER:
/s/ G. P. Maloney Vice President and March 23, 1994
- ------------------------------------- Director
(G. P. MALONEY)
(III) PRINCIPAL ACCOUNTING OFFICER:
/s/ P. J. DeMaria Vice President, March 23, 1994
- ------------------------------------- Treasurer and
(P. J. DEMARIA) Director
(IV) A MAJORITY OF THE DIRECTORS:
*A. Joseph Dowd
*Henry Fayne
*John R. Jones, III
*Wm. J. Lhota
*James J. Markowsky
/s/ G. P. Maloney
*By:
---------------------------------- March 23, 1994
(G. P. MALONEY, ATTORNEY-IN-FACT)
59
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
American Electric Power Company, Inc.
By: /s/ G. P. Maloney
---------------------------------
(G. P. MALONEY, VICE PRESIDENT)
Date: March 23, 1994
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
--------- ----- ----
(I) PRINCIPAL EXECUTIVE OFFICER:
*E. Linn Draper, Jr. Chairman of the
Board, President,
Chief Executive
Officer and Director
(II) PRINCIPAL FINANCIAL OFFICER:
/s/ G. P. Maloney Vice President and March 23, 1994
- ------------------------------------- Director
(G. P. MALONEY)
(III) PRINCIPAL ACCOUNTING OFFICER:
/s/ P. J. DeMaria Treasurer and March 23, 1994
- ------------------------------------- Director
(P. J. DEMARIA)
(IV) A MAJORITY OF THE DIRECTORS:
*A. Joseph Dowd
*Robert M. Duncan
*Arthur G. Hansen
*Lester A. Hudson, Jr.
*Angus E. Peyton
*Toy F. Reid
*W. Ann Reynolds
*Linda Gillespie Stuntz
*Morris Tanenbaum
*Ann Haymond Zwinger
*By: /s/ G. P. Maloney
---------------------------------- March 23, 1994
(G. P. MALONEY, ATTORNEY-IN-FACT)
60
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED. THE SIGNATURE OF
THE UNDERSIGNED COMPANY SHALL BE DEEMED TO RELATE ONLY TO MATTERS HAVING
REFERENCE TO SUCH COMPANY AND ANY SUBSIDIARIES THEREOF.
Appalachian Power Company
By: /s/ G. P. Maloney
---------------------------------
(G. P. MALONEY, VICE PRESIDENT)
Date: March 23, 1994
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED. THE SIGNATURE OF
EACH OF THE UNDERSIGNED SHALL BE DEEMED TO RELATE ONLY TO MATTERS HAVING
REFERENCE TO THE ABOVE-NAMED COMPANY AND ANY SUBSIDIARIES THEREOF.
SIGNATURE TITLE DATE
--------- ----- ----
(I) PRINCIPAL EXECUTIVE OFFICER:
*E. Linn Draper, Jr. Chairman of the Board,
Chief Executive
Officer and Director
(II) PRINCIPAL FINANCIAL OFFICER:
/s/ G. P. Maloney Vice President and March 23, 1994
- ------------------------------------- Director
(G. P. MALONEY)
(III) PRINCIPAL ACCOUNTING OFFICER:
/s/ P. J. DeMaria Vice President, March 23, 1994
- ------------------------------------- Treasurer and
(P. J. DEMARIA) Director
(IV) A MAJORITY OF THE DIRECTORS:
*A. Joseph Dowd
*Luke M. Feck
*Wm. J. Lhota
*James J. Markowsky
*J. H. Vipperman
*By: /s/ G. P. Maloney
---------------------------------- March 23, 1994
(G. P. MALONEY, ATTORNEY-IN-FACT)
61
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED. THE SIGNATURE OF
THE UNDERSIGNED COMPANY SHALL BE DEEMED TO RELATE ONLY TO MATTERS HAVING
REFERENCE TO SUCH COMPANY AND ANY SUBSIDIARIES THEREOF.
Columbus Southern Power Company
By: /s/ G. P. Maloney
---------------------------------
(G. P. MALONEY, VICE PRESIDENT)
Date: March 23, 1994
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED. THE SIGNATURE OF
EACH OF THE UNDERSIGNED SHALL BE DEEMED TO RELATE ONLY TO MATTERS HAVING
REFERENCE TO THE ABOVE-NAMED COMPANY AND ANY SUBSIDIARIES THEREOF.
SIGNATURE TITLE DATE
--------- ----- ----
(I) PRINCIPAL EXECUTIVE OFFICER:
*E. Linn Draper, Jr. Chairman of the Board,
Chief Executive
Officer and Director
(II) PRINCIPAL FINANCIAL OFFICER:
/s/ G. P. Maloney Vice President and March 23, 1994
- ------------------------------------- Director
(G. P. MALONEY)
(III) PRINCIPAL ACCOUNTING OFFICER:
Vice President, March 23, 1994
/s/ P. J. DeMaria Treasurer and
- ------------------------------------- Director
(P. J. DEMARIA)
(IV) A MAJORITY OF THE DIRECTORS:
*A. Joseph Dowd
*C. A. Erikson
*Henry Fayne
*Wm. J. Lhota
*James J. Markowsky
*By: /s/ G. P. Maloney
---------------------------------- March 23, 1994
(G. P. MALONEY, ATTORNEY-IN-FACT)
62
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED. THE SIGNATURE OF
THE UNDERSIGNED COMPANY SHALL BE DEEMED TO RELATE ONLY TO MATTERS HAVING
REFERENCE TO SUCH COMPANY AND ANY SUBSIDIARIES THEREOF.
Indiana Michigan Power Company
By: /s/ G. P. Maloney
---------------------------------
(G. P. MALONEY, VICE PRESIDENT)
Date: March 23, 1994
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED. THE SIGNATURE OF
EACH OF THE UNDERSIGNED SHALL BE DEEMED TO RELATE ONLY TO MATTERS HAVING
REFERENCE TO THE ABOVE-NAMED COMPANY AND ANY SUBSIDIARIES THEREOF.
SIGNATURE TITLE DATE
--------- ----- ----
(I) PRINCIPAL EXECUTIVE OFFICER:
*E. Linn Draper, Jr. Chairman of the Board,
Chief Executive
Officer and Director
(II) PRINCIPAL FINANCIAL OFFICER:
/s/ G. P. Maloney Vice President and March 23, 1994
- ------------------------------------- Director
(G. P. MALONEY)
(III) PRINCIPAL ACCOUNTING OFFICER:
/s/ P. J. DeMaria Vice President, March 23, 1994
- ------------------------------------- Treasurer and
(P. J. DEMARIA) Director
(IV) A MAJORITY OF THE DIRECTORS:
*Mark A. Bailey
*W. N. D'Onofrio
*A. Joseph Dowd
*Wm. J. Lhota
*Richard C. Menge
*R. E. Prater
*D. B. Synowiec
*W. E. Walters
*By: /s/ G. P. Maloney March 23, 1994
----------------------------------
(G. P. MALONEY, ATTORNEY-IN-FACT)
63
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED. THE SIGNATURE OF
THE UNDERSIGNED COMPANY SHALL BE DEEMED TO RELATE ONLY TO MATTERS HAVING
REFERENCE TO SUCH COMPANY AND ANY SUBSIDIARIES THEREOF.
Kentucky Power Company
By: /s/ G. P. Maloney
---------------------------------
(G. P. MALONEY, VICE PRESIDENT)
Date: March 23, 1994
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED. THE SIGNATURE OF
EACH OF THE UNDERSIGNED SHALL BE DEEMED TO RELATE ONLY TO MATTERS HAVING
REFERENCE TO THE ABOVE-NAMED COMPANY AND ANY SUBSIDIARIES THEREOF.
SIGNATURE TITLE DATE
--------- ----- ----
(I) PRINCIPAL EXECUTIVE OFFICER:
*E. Linn Draper, Jr. Chairman of the Board,
Chief Executive
Officer and Director
(II) PRINCIPAL FINANCIAL OFFICER:
/s/ G. P. Maloney Vice President and March 23, 1994
- ------------------------------------- Director
(G. P. MALONEY)
(III) PRINCIPAL ACCOUNTING OFFICER:
/s/ P. J. DeMaria Vice President, March 23, 1994
- ------------------------------------- Treasurer and
(P. J. DEMARIA) Director
(IV) A MAJORITY OF THE DIRECTORS:
*C. R. Boyle, III
*A. Joseph Dowd
*Wm. J. Lhota
*Ronald A. Petti
*By: /s/ G. P. Maloney
--------------------------------- March 23, 1994
(G. P. MALONEY, ATTORNEY-IN-FACT)
64
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED. THE SIGNATURE OF
THE UNDERSIGNED COMPANY SHALL BE DEEMED TO RELATE ONLY TO MATTERS HAVING
REFERENCE TO SUCH COMPANY AND ANY SUBSIDIARIES THEREOF.
Ohio Power Company
By: /s/ G. P. Maloney
---------------------------------
(G. P. MALONEY, VICE PRESIDENT)
Date: March 23, 1994
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED. THE SIGNATURE OF
EACH OF THE UNDERSIGNED SHALL BE DEEMED TO RELATE ONLY TO MATTERS HAVING
REFERENCE TO THE ABOVE-NAMED COMPANY AND ANY SUBSIDIARIES THEREOF.
SIGNATURES TITLE DATE
---------- ----- ----
(I) PRINCIPAL EXECUTIVE OFFICER:
*E. Linn Draper, Jr. Chairman of the Board,
Chief Executive
Officer and Director
(II) PRINCIPAL FINANCIAL OFFICER:
/s/ G. P. Maloney Vice President and March 23, 1994
- ------------------------------------- Director
(G. P. MALONEY)
(III) PRINCIPAL ACCOUNTING OFFICER:
/s/ P. J. DeMaria Vice President, March 23, 1994
- ------------------------------------- Treasurer and
(P. J. DEMARIA) Director
(IV) A MAJORITY OF THE DIRECTORS:
*A. Joseph Dowd
*C. A. Erikson
*Henry Fayne
*Wm. J. Lhota
*James J. Markowsky
*By: /s/ G. P. Maloney March 23, 1994
----------------------------------
(G. P. MALONEY, ATTORNEY-IN-FACT)
65
<PAGE>
INDEX TO FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
PAGE
----
<C> <C> <S> <C>
INDEPENDENT AUDITORS' REPORT.............................................. S-2
The following financial statement schedules for the years ended December
31, 1993, 1992 and
1991 are included in this report on the pages indicated.
<CAPTION>
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
<C> <C> <S> <C>
Schedule V -- Property, Plant and Equipment........................ S-3
Schedule VI -- Accumulated Depreciation and Amortization
of Property, Plant and Equipment..................... S-4
Schedule VIII -- Valuation and Qualifying Accounts and Reserves....... S-5
Schedule IX -- Short-term Borrowings................................ S-6
AEP GENERATING COMPANY
Schedule V -- Property, Plant and Equipment........................ S-7
Schedule VI -- Accumulated Depreciation
of Property, Plant and Equipment..................... S-8
Schedule IX -- Short-term Borrowings................................ S-9
APPALACHIAN POWER COMPANY AND SUBSIDIARIES
Schedule V -- Property, Plant and Equipment........................ S-10
Schedule VI -- Accumulated Depreciation and Amortization
of Property, Plant and Equipment..................... S-11
Schedule VIII -- Valuation and Qualifying Accounts and Reserves....... S-12
Schedule IX -- Short-term Borrowings................................ S-13
COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES
Schedule V -- Property, Plant and Equipment........................ S-14
Schedule VI -- Accumulated Depreciation
of Property, Plant and Equipment..................... S-15
Schedule VIII -- Valuation and Qualifying Accounts and Reserves....... S-16
Schedule IX -- Short-term Borrowings................................ S-17
INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES
Schedule V -- Property, Plant and Equipment........................ S-18
Schedule VI -- Accumulated Depreciation and Amortization
of Property, Plant and Equipment..................... S-19
Schedule VIII -- Valuation and Qualifying Accounts and Reserves....... S-20
Schedule IX -- Short-term Borrowings................................ S-21
KENTUCKY POWER COMPANY
Schedule V -- Property, Plant and Equipment........................ S-22
Schedule VI -- Accumulated Depreciation and Amortization
of Property, Plant and Equipment..................... S-23
Schedule VIII -- Valuation and Qualifying Accounts and Reserves....... S-24
Schedule IX -- Short-term Borrowings................................ S-25
OHIO POWER COMPANY AND SUBSIDIARIES
Schedule V -- Property, Plant and Equipment........................ S-26
Schedule VI -- Accumulated Depreciation and Amortization
of Property, Plant and Equipment..................... S-27
Schedule VIII -- Valuation and Qualifying Accounts and Reserves....... S-28
Schedule IX -- Short-term Borrowings................................ S-29
</TABLE>
S-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
American Electric Power Company, Inc. and Subsidiaries:
We have audited the consolidated financial statements of American Electric
Power Company, Inc. and its subsidiaries and the financial statements of
certain of its subsidiaries, listed in Item 14 herein, as of December 31, 1993
and 1992, and for each of the three years in the period ended December 31,
1993, and have issued our reports thereon dated February 22, 1994; such
financial statements and reports are included in your respective 1993 Annual
Report to Shareowners and are incorporated herein by reference. Our audits also
included the financial statement schedules of American Electric Power Company,
Inc. and its subsidiaries and of certain of its subsidiaries, listed in Item
14. These financial statement schedules are the responsibility of the
respective Company's management. Our responsibility is to express an opinion
based on our audits. In our opinion, such financial statement schedules, when
considered in relation to the corresponding basic financial statements taken as
a whole, present fairly in all material respects the information set forth
therein.
Deloitte & Touche
Columbus, Ohio
February 22, 1994
S-2
<PAGE>
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES SCHEDULE V --
PROPERTY, PLANT AND EQUIPMENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN F COLUMN F COLUMN F COLUMN F
- --------------------------------------------------------------------------------
1993 1992 1991 1990
----------- ----------- ----------- -----------
BALANCE AT BALANCE AT BALANCE AT BALANCE AT
END OF END OF END OF END OF
CLASSIFICATION PERIOD PERIOD PERIOD PERIOD
- --------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ELECTRIC UTILITY PLANT:
Production:
Steam -- Fossil-fired....... $ 7,595,258 $ 7,663,103 $ 7,562,339 $ 6,598,477
Steam -- Nuclear............ 1,483,872 1,454,541 1,442,892 1,401,648
Transmission................. 3,169,347 3,108,787 3,001,159 2,898,426
Distribution................. 3,743,047 3,549,332 3,362,168 3,196,734
General (including mining as-
sets and nuclear fuel)...... 1,406,159 1,443,436 1,485,322 1,429,040
Construction Work in Pro-
gress....................... 314,489 290,547 294,258 1,128,399
----------- ----------- ----------- -----------
Total Electric Utility
Plant...................... 17,712,172 17,509,746 17,148,138 16,652,724
NONUTILITY PROPERTY AND OTHER
PROPERTY INVESTMENTS.......... 399,182 392,348 357,543 361,593
----------- ----------- ----------- -----------
Total....................... $18,111,354 $17,902,094 $17,505,681 $17,014,317
=========== =========== =========== ===========
</TABLE>
Total additions of $676,404,000 in 1993, $718,154,000 in 1992 and
$733,909,000 in 1991 were less than 10% of the total as of the respective year-
ends. Retirements or sales of $278,435,000 in 1993, $297,460,000 in 1992 and
$198,352,000 in 1991 were less than 10% of the total as of the respective year-
ends. There were no additions to individual accounts in excess of two percent
of total assets other than transfers from Construction Work in Progress.
Amortization of nuclear fuel of $41,325,000 in 1993, $19,343,000 in 1992 and
$50,124,000 in 1991 was credited directly to the property account and charged
to fuel expense. In 1993 other charges include a reduction of $157,535,000 to
reflect the PUCO disallowance of a portion of the Zimmer Plant investment as
discussed in Note 3 of the Notes to Consolidated Financial Statements.
The methods used to compute the annual provisions for depreciation are
described in Note 1 of the Notes to Consolidated Financial Statements. The
current provisions were determined using the following composite rates for
functional classes of property:
<TABLE>
<CAPTION>
FUNCTIONAL CLASS OF PROPERTY COMPOSITE ANNUAL RATE
- --------------------------------------------------------------------------------
<S> <C>
Production:
Steam -- Fossil-fired................................. 3.2% to 4.6%
Steam -- Nuclear...................................... 3.4%
Transmission........................................... 1.7% to 2.7%
Distribution........................................... 3.4% to 4.2%
General................................................ 1.7% to 3.8%
</TABLE>
S-3
<PAGE>
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES SCHEDULE VI --
ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- --------------------------------------------------------------------------------
ADDITIONS OTHER
BALANCE AT CHARGED TO CHANGES -- BALANCE AT
BEGINNING COSTS AND RETIREMENTS ADD END OF
DESCRIPTION OF PERIOD EXPENSES OR SALES (DEDUCT) PERIOD
- --------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1993
ACCUMULATED DEPRECIA-
TION AND
AMORTIZATION OF
ELECTRIC UTILITY
PLANT:
Production:
Steam -- Fossil-
fired.................. $3,031,186 $266,379 $102,831 $(10,299) $3,184,435
Steam -- Nuclear.. 691,605 57,274 26,196 1 722,684
Transmission........ 988,745 61,924 14,346 2,128 1,038,451
Distribution........ 1,060,477 131,114 72,527 1,693 1,120,757
General............. 509,247 72,205 56,792 21,144 545,804
---------- -------- -------- -------- ----------
Total........... $6,281,260 $588,896 $272,692 $ 14,667 $6,612,131
========== ======== ======== ======== ==========
ACCUMULATED DEPRECIA-
TION AND
AMORTIZATION OF NON-
UTILITY PROPERTY AND
OTHER PROPERTY IN-
VESTMENTS........... $ 112,089 $ 10,924 $ 12,196 $ 8,283 $ 119,100
========== ======== ======== ======== ==========
YEAR ENDED DECEMBER 31,
1992:
ACCUMULATED DEPRECIA-
TION AND
AMORTIZATION OF
ELECTRIC UTILITY
PLANT:
Production:
Steam -- Fossil-
fired.................. $2,852,539 $260,053 $ 83,573 $ 2,167 $3,031,186
Steam -- Nuclear.. 638,563 54,842 1,800 691,605
Transmission........ 940,326 60,390 11,705 (266) 988,745
Distribution........ 1,010,778 126,184 77,317 832 1,060,477
General............. 509,978 76,441 95,332 18,160 509,247
---------- -------- -------- -------- ----------
Total........... $5,952,184 $577,910 $269,727 $ 20,893 $6,281,260
========== ======== ======== ======== ==========
ACCUMULATED DEPRECIA-
TION AND
AMORTIZATION OF NON-
UTILITY PROPERTY AND
OTHER PROPERTY IN-
VESTMENTS........... $ 100,293 $ 10,064 $ (178) $ 1,554 $ 112,089
========== ======== ======== ======== ==========
YEAR ENDED DECEMBER 31,
1991:
ACCUMULATED DEPRECIA-
TION AND
AMORTIZATION OF
ELECTRIC UTILITY
PLANT:
Production:
Steam -- Fossil-
fired.................. $2,659,971 $249,507 $ 57,998 $ 1,059 $2,852,539
Steam -- Nuclear.. 589,526 55,140 6,033 (70) 638,563
Transmission........ 904,357 59,073 22,706 (398) 940,326
Distribution........ 953,193 120,499 64,364 1,450 1,010,778
General............. 481,296 78,059 62,429 13,052 509,978
---------- -------- -------- -------- ----------
Total........... $5,588,343 $562,278 $213,530 $ 15,093 $5,952,184
========== ======== ======== ======== ==========
ACCUMULATED DEPRECIA-
TION AND
AMORTIZATION OF NON-
UTILITY PROPERTY AND
OTHER PROPERTY IN-
VESTMENTS........... $ 95,070 $ 11,232 $ 7,282 $ 1,273 $ 100,293
========== ======== ======== ======== ==========
</TABLE>
S-4
<PAGE>
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES SCHEDULE VIII --
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- -----------------------------------------------------------------------------------------
ADDITIONS
-----------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING COSTS AND OTHER END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
- -----------------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1993:
DEDUCTED FROM ASSETS:
Accumulated Provision
for
Uncollectible Ac-
counts............ $ 7,287 $ 14,237 $ 4,163(a) $21,639(b) $ 4,048
======== ======== ======= ======= ========
NOT SHOWN ELSEWHERE:
Operating Reserves:
Maintenance........ $ 8,123 $(1,036) $ 184(c) $ 3,918(d) $ 3,353
Nuclear Plant
Decommissioning
Costs.......... 146,451 23,255(e) -0- -0- 169,706
Uranium Enrichment
Decontamination
and
Decommissioning
Fund Assess-
ment........... 45,500 -0- -0- 10,517(d) 34,983
Workers' Compensa-
tion and Other. 60,348 24,762 2,521 29,591(d,f) 58,040
-------- -------- ------- ------- --------
Total............ $260,422 $ 46,981 $ 2,705 $44,026 $266,082
======== ======== ======= ======= ========
YEAR ENDED DECEMBER 31,
1992:
DEDUCTED FROM ASSETS:
Accumulated Provision
for
Uncollectible Ac-
counts............ $ 9,599 $ 12,888 $ 4,096(a) $19,296(b) $ 7,287
======== ======== ======= ======= ========
NOT SHOWN ELSEWHERE:
Operating Reserves:
Maintenance........ $ 12,874 $ (878) $ 385(c) $ 4,258(d) $ 8,123
Nuclear Plant
Decommissioning
Costs.......... 125,716 20,735(e) -0- -0- 146,451
Uranium Enrichment
Decontamination
and
Decommissioning
Fund Assess-
ment........... -0- -0- 45,500 -0- 45,500
Workers' Compensa-
tion and Other. 52,987 29,012 12,956 34,607(d) 60,348
-------- -------- ------- ------- --------
Total............ $191,577 $48,869 $58,841 $38,865 $260,422
======== ======== ======= ======= ========
YEAR ENDED DECEMBER 31,
1991:
DEDUCTED FROM ASSETS:
Accumulated Provision
for
Uncollectible Ac-
counts............ $ 11,827 $12,517 $ 3,625(a) $18,370(b) $ 9,599
======== ======== ======= ======= ========
NOT SHOWN ELSEWHERE:
Operating Reserves:
Maintenance........ $ 20,831 $ (1,531) $ 221(c) $ 6,647(d) $ 12,874
Nuclear Plant
Decommissioning
Costs.......... 106,632 19,084(e) -0- -0- 125,716
Workers' Compensa-
tion and Other. 47,142 29,449 2,987 26,591(d) 52,987
-------- -------- ------- ------- --------
Total............ $174,605 $47,002 $ 3,208 $33,238 $191,577
======== ======== ======= ======= ========
</TABLE>
- --------
(a)Recoveries on accounts previously written off.
(b)Uncollectible accounts written off.
(c)Billings to others.
(d)Payments and accrual adjustments.
(e)Includes interest on trust funds.
(f)Adjust royalty provision.
S-5
<PAGE>
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES SCHEDULE IX --
SHORT-TERM BORROWINGS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- ----------------------------------------------------------------------------------
MAXIMUM AVERAGE WEIGHTED
CATEGORY OF WEIGHTED AMOUNT AMOUNT AVERAGE
AGGREGATE BALANCE AT AVERAGE OUTSTANDING OUTSTANDING INTEREST RATE
SHORT-TERM END OF INTEREST DURING THE DURING THE DURING THE
BORROWINGS PERIOD RATE PERIOD PERIOD (A) PERIOD (B)
- ----------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1993:
Notes Payable......... $ 65,526 3.5% $ 70,425 $ 47,282 3.3%
Commercial Paper...... 213,450 3.7 256,950 141,829 3.3
YEAR ENDED DECEMBER 31,
1992:
Notes Payable......... $ 79,150 4.0% $115,875 $ 72,889 3.9%
Commercial Paper...... 174,004 4.1 314,355 167,328 4.2
YEAR ENDED DECEMBER 31,
1991:
Notes Payable......... $ 76,783 5.3% $149,970 $ 82,886 6.3%
Commercial Paper...... 335,600 5.4 335,600 170,528 6.3
</TABLE>
- --------
(a)Sum of month-end short-term borrowings divided by number of months
outstanding.
(b)Interest for the period divided by average amount outstanding.
S-6
<PAGE>
AEP GENERATING COMPANY SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN F COLUMN F COLUMN F COLUMN F
- -------------------------------------------------------------------------------
1993 1992 1991 1990
---------- ---------- ---------- ----------
BALANCE AT BALANCE AT BALANCE AT BALANCE AT
END OF END OF END OF END OF
CLASSIFICATION PERIOD PERIOD PERIOD PERIOD
- -------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ELECTRIC UTILITY PLANT:
Production -- Steam -- Fossil-
fired............................. $627,502 $622,274 $619,728 $616,469
General.......................... 1,757 1,774 1,809 1,830
Construction Work in Progress.... 1,773 3,933 3,762 4,654
-------- -------- -------- --------
Total.......................... $631,032 $627,981 $625,299 $622,953
======== ======== ======== ========
</TABLE>
Total additions of $4,089,000 in 1993, $4,512,000 in 1992 and $3,796,000 in
1991 were less than 10% of the total as of the respective year-ends.
Retirements or sales of $1,038,000 in 1993, $1,830,000 in 1992 and $1,450,000
in 1991 were less than 10% of the total as of the respective year-ends. There
were no additions to individual accounts in excess of two percent of total
assets.
The methods used to compute the annual provisions for depreciation are
described in Note 1 of the Notes to Financial Statements. The current
provisions were determined using the following composite rates for functional
classes of property:
<TABLE>
<CAPTION>
FUNCTIONAL CLASS OF PROPERTY COMPOSITE ANNUAL RATE
- --------------------------------------------------------------------------------
<S> <C>
Production -- Steam-- Fossil-fired.................. 3.5%
General............................................. 3.8%
</TABLE>
S-7
<PAGE>
AEP GENERATING COMPANY SCHEDULE VI -- ACCUMULATED DEPRECIATION OF PROPERTY,
PLANT AND EQUIPMENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- --------------------------------------------------------------------------------
ADDITIONS OTHER
BALANCE AT CHARGED TO CHANGES -- BALANCE AT
BEGINNING COSTS AND RETIREMENTS ADD END OF
DESCRIPTION OF PERIOD EXPENSES OR SALES (DEDUCT) PERIOD
- --------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1993:
ACCUMULATED DEPRECIA-
TION
OF ELECTRIC UTILITY
PLANT:
Production --
Steam-- Fossil-
fired........... $160,443 $21,899 $ 980 $-0- $181,362
General............. 215 40 30 225
-------- ------- ------ ---- --------
Total............. $160,658 $21,939 $1,010 $-0- $181,587
======== ======= ====== ==== ========
YEAR ENDED DECEMBER 31,
1992:
ACCUMULATED DEPRECIA-
TION
OF ELECTRIC UTILITY
PLANT:
Production --
Steam-- Fossil-
fired........... $140,465 $21,679 $1,701 $-0- $160,443
General............. 201 45 31 215
-------- ------- ------ ---- --------
Total............. $140,666 $21,724 $1,732 $-0- $160,658
======== ======= ====== ==== ========
YEAR ENDED DECEMBER 31,
1991:
ACCUMULATED DEPRECIA-
TION
OF ELECTRIC UTILITY
PLANT:
Production --
Steam-- Fossil-
fired........... $120,447 $21,506 $1,491 $ 3 $140,465
General............. 156 59 11 (3) 201
-------- ------- ------ ---- --------
Total............. $120,603 $21,565 $1,502 $-0- $140,666
======== ======= ====== ==== ========
</TABLE>
S-8
<PAGE>
AEP GENERATING COMPANY SCHEDULE IX -- SHORT-TERM BORROWINGS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- ----------------------------------------------------------------------------------
MAXIMUM AVERAGE WEIGHTED
CATEGORY OF WEIGHTED AMOUNT AMOUNT AVERAGE
AGGREGATE BALANCE AT AVERAGE OUTSTANDING OUTSTANDING INTEREST RATE
SHORT-TERM END OF INTEREST DURING THE DURING THE DURING THE
BORROWINGS PERIOD RATE PERIOD PERIOD (A) PERIOD (B)
- ----------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1993:
Notes Payable......... $15,250 3.5% $15,250 $15,250 3.4%
YEAR ENDED DECEMBER 31,
1992:
Notes Payable......... $ -0- --% $ -0- $ -0- --%
YEAR ENDED DECEMBER 31,
1991:
Notes Payable......... $ -0- --% $ -0- $ -0- --%
</TABLE>
- --------
(a)Sum of month-end short-term borrowings divided by number of months
outstanding.
(b)Interest for the period divided by average amount outstanding.
S-9
<PAGE>
APPALACHIAN POWER COMPANY AND SUBSIDIARIES SCHEDULE V -- PROPERTY, PLANT AND
EQUIPMENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN F COLUMN F COLUMN F COLUMN F
- --------------------------------------------------------------------------------
1993 1992 1991 1990
---------- ---------- ---------- ----------
BALANCE AT BALANCE AT BALANCE AT BALANCE AT
END OF END OF END OF END OF
CLASSIFICATION PERIOD PERIOD PERIOD PERIOD
- --------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ELECTRIC UTILITY PLANT:
Production:
Steam -- Fossil-fired.......... $1,631,038 $1,605,660 $1,589,041 $1,550,486
Hydro.......................... 149,967 146,048 144,971 143,482
Transmission..................... 987,147 956,169 893,110 857,490
Distribution..................... 1,225,436 1,153,799 1,086,706 1,021,681
General.......................... 140,942 131,654 112,648 93,342
Construction Work in Progress.... 59,170 45,405 58,357 54,034
---------- ---------- ---------- ----------
Total Electric Utility Plant... 4,193,700 4,038,735 3,884,833 3,720,515
NONUTILITY PROPERTY AND OTHER PROP-
ERTY INVESTMENTS.................. 86,275 87,908 87,059 85,791
---------- ---------- ---------- ----------
Total.......................... $4,279,975 $4,126,643 $3,971,892 $3,806,306
========== ========== ========== ==========
</TABLE>
Total additions of $201,169,000 in 1993, $198,116,000 in 1992 and
$196,937,000 in 1991 were less than 10% of the total as of the respective year-
ends. Retirements or sales of $47,254,000 in 1993, $42,926,000 in 1992 and
$32,428,000 in 1991 were less than 10% of the total as of the respective year-
ends. There were no additions to individual accounts in excess of two percent
of total assets other than transfers from Construction Work in Progress.
The methods used to compute the annual provisions for depreciation are
described in Note 1 of the Notes to Consolidated Financial Statements. The
current provisions were determined using the following composite rates for
functional classes of property:
<TABLE>
<CAPTION>
FUNCTIONAL CLASS OF PROPERTY COMPOSITE ANNUAL RATE
- --------------------------------------------------------------------------------
<S> <C>
Production:
Steam -- Fossil-fired............................... 3.6%
Hydro............................................... 2.5%
Transmission........................................... 2.2%
Distribution........................................... 3.5%
General................................................ 3.3%
</TABLE>
S-10
<PAGE>
APPALACHIAN POWER COMPANY AND SUBSIDIARIES SCHEDULE VI -- ACCUMULATED
DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- --------------------------------------------------------------------------------
ADDITIONS OTHER
BALANCE AT CHARGED TO CHANGES -- BALANCE AT
BEGINNING COSTS AND RETIREMENTS ADD END OF
DESCRIPTION OF PERIOD EXPENSES OR SALES (DEDUCT) PERIOD
- --------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1993:
ACCUMULATED DEPRECIA-
TION AND
AMORTIZATION OF
ELECTRIC UTILITY
PLANT:
Production:
Steam -- Fossil-
fired.................. $ 770,638 $ 57,009 $17,212 $1,081 $ 811,516
Hydro............. 68,895 3,356 376 (2) 71,873
Transmission........ 255,010 20,202 5,459 116 269,869
Distribution........ 341,780 40,966 27,966 (129) 354,651
General............. 40,755 7,346 5,774 619 42,946
---------- -------- ------- ------ ----------
Total............. $1,477,078 $128,879 $56,787 $1,685 $1,550,855
========== ======== ======= ====== ==========
ACCUMULATED
DEPRECIATION AND
AMORTIZATION
OF NONUTILITY
PROPERTY AND OTHER
PROPERTY
INVESTMENTS......... $ 35,874 $ 1,844 $ 512 $ 664 $ 37,870
========== ======== ======= ====== ==========
YEAR ENDED DECEMBER 31,
1992:
ACCUMULATED DEPRECIA-
TION AND
AMORTIZATION OF
ELECTRIC UTILITY
PLANT:
Production:
Steam -- Fossil-
fired.................. $ 727,961 $ 53,934 $12,262 $1,005 $ 770,638
Hydro............. 66,603 2,717 425 68,895
Transmission........ 241,793 19,141 5,912 (12) 255,010
Distribution........ 330,855 40,110 29,196 11 341,780
General............. 37,862 6,676 4,028 245 40,755
---------- -------- ------- ------ ----------
Total............. $1,405,074 $122,578 $51,823 $1,249 $1,477,078
========== ======== ======= ====== ==========
ACCUMULATED DEPRECIA-
TION AND AMORTIZA-
TION
OF NONUTILITY PROP-
ERTY AND
OTHER PROPERTY IN-
VESTMENTS........... $ 32,865 $ 1,858 $ 4 $1,155 $ 35,874
========== ======== ======= ====== ==========
YEAR ENDED DECEMBER 31,
1991:
ACCUMULATED DEPRECIA-
TION AND
AMORTIZATION OF
ELECTRIC UTILITY
PLANT:
Production:
Steam -- Fossil-
fired.................. $ 684,633 $ 52,686 $10,339 $ 981 $ 727,961
Hydro............. 64,154 2,701 253 1 66,603
Transmission........ 229,699 18,113 5,426 (593) 241,793
Distribution........ 312,964 37,621 20,328 598 330,855
General............. 36,859 5,448 4,891 446 37,862
---------- -------- ------- ------ ----------
Total............. $1,328,309 $116,569 $41,237 $1,433 $1,405,074
========== ======== ======= ====== ==========
ACCUMULATED DEPRECIA-
TION AND AMORTIZA-
TION
OF NONUTILITY PROP-
ERTY AND
OTHER PROPERTY IN-
VESTMENTS........... $ 30,214 $ 1,868 $ 155 $ 938 $ 32,865
========== ======== ======= ====== ==========
</TABLE>
S-11
<PAGE>
APPALACHIAN POWER COMPANY AND SUBSIDIARIES SCHEDULE VIII -- VALUATION AND
QUALIFYING ACCOUNTS AND RESERVES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ----------------------------------------------------------------------------------
ADDITIONS
---------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING COSTS AND OTHER END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
- ----------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1993:
DEDUCTED FROM ASSETS:
Accumulated Provi-
sion for
Uncollectible Ac-
counts........... $ 724 $3,392 $627(a) $3,399(b) $ 1,344
======= ====== ==== ====== =======
NOT SHOWN ELSEWHERE:
Operating Reserves
for
Workers' Compen-
sation and Other. $ 9,159 $6,021 $738 $3,940(c) $11,978
======= ====== ==== ====== =======
YEAR ENDED DECEMBER 31,
1992:
DEDUCTED FROM ASSETS:
Accumulated Provi-
sion for
Uncollectible Ac-
counts........... $ 987 $1,810 $672(a) $2,745(b) $ 724
======= ====== ==== ====== =======
NOT SHOWN ELSEWHERE:
Operating Reserves
for
Workers' Compensa-
tion and Oth-
er........... $ 9,033 $3,486 $518 $3,878(c) $ 9,159
======= ====== ==== ====== =======
YEAR ENDED DECEMBER 31,
1991:
DEDUCTED FROM ASSETS:
Accumulated Provi-
sion for
Uncollectible Ac-
counts........... $ 989 $2,036 $527(a) $2,565(b) $ 987
======= ====== ==== ====== =======
NOT SHOWN ELSEWHERE:
Operating Reserves
for
Workers' Compensa-
tion and Oth-
er........... $10,822 $3,397 $490 $5,676(c) $ 9,033
======= ====== ==== ====== =======
</TABLE>
- --------
(a) Recoveries on accounts previously written off.
(b) Uncollectible accounts written off.
(c) Payments and transfers.
S-12
<PAGE>
APPALACHIAN POWER COMPANY AND SUBSIDIARIES SCHEDULE IX -- SHORT-TERM BORROWINGS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- -----------------------------------------------------------------------------------
MAXIMUM AVERAGE WEIGHTED
CATEGORY OF WEIGHTED AMOUNT AMOUNT AVERAGE
AGGREGATE BALANCE AT AVERAGE OUTSTANDING OUTSTANDING INTEREST RATE
SHORT-TERM END OF INTEREST DURING THE DURING THE DURING THE
BORROWINGS PERIOD RATE PERIOD PERIOD (A) PERIOD (B)
- -----------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1993:
Notes Payable......... $ 3,400 3.6% $19,000 $ 5,021 3.3%
Commercial Paper...... 36,100 3.4 78,050 49,548 3.2
YEAR ENDED DECEMBER 31,
1992:
Notes Payable......... $ 4,300 4.0% $ 5,050 $ 4,692 4.1%
Commercial Paper...... 75,550 3.9 80,500 46,665 4.5
YEAR ENDED DECEMBER 31,
1991:
Notes Payable......... $ 5,150 5.1% $17,950 $ 7,523 6.3%
Commercial Paper...... 93,900 5.2 93,900 36,584 6.7
</TABLE>
- --------
(a) Sum of month-end short-term borrowings divided by number of months
outstanding.
(b) Interest for the period divided by average amount outstanding.
S-13
<PAGE>
COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES SCHEDULE V -- PROPERTY, PLANT
AND EQUIPMENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN F COLUMN F COLUMN F COLUMN F
- --------------------------------------------------------------------------------
1993 1992 1991 1990
---------- ---------- ---------- ----------
BALANCE AT BALANCE AT BALANCE AT BALANCE AT
END OF END OF END OF END OF
CLASSIFICATION PERIOD PERIOD PERIOD PERIOD
- --------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ELECTRIC UTILITY PLANT:
Production -- Steam -- Fossil-
fired.............................. $1,443,506 $1,586,554 $1,581,389 $ 712,451
Transmission..................... 295,539 292,125 282,610 267,777
Distribution..................... 755,342 719,781 685,486 652,894
General.......................... 97,874 94,599 93,262 89,617
Construction Work in Progress.... 52,794 31,447 24,512 852,760
---------- ---------- ---------- ----------
Total Electric Utility Plant... 2,645,055 2,724,506 2,667,259 2,575,499
NONUTILITY PROPERTY AND OTHER PROP-
ERTY INVESTMENTS.................. 20,465 19,253 18,219 17,900
---------- ---------- ---------- ----------
Total.......................... $2,665,520 $2,743,759 $2,685,478 $2,593,399
========== ========== ========== ==========
</TABLE>
Total additions of $97,455,000 in 1993, $80,279,000 in 1992 and $111,856,000
in 1991 were less than 10% of the total as of the respective year-ends.
Retirements or sales of $18,161,000 in 1993, $21,999,000 in 1992 and
$19,773,000 in 1991 were less than 10% of the total as of the respective year-
ends. There were no additions to individual accounts in excess of two percent
of total assets other than transfers from Construction Work in Progress. In
1993 other charges include a reduction of $157,535,000 to reflect the PUCO
disallowance of a portion of the Zimmer Plant investment as discussed in Note 2
of the Notes to Consolidated Financial Statements.
The methods used to compute the annual provisions for depreciation are
described in Note 1 of the Notes to Consolidated Financial Statements. The
current provisions were determined using the following composite rates for
functional classes of property:
<TABLE>
<CAPTION>
FUNCTIONAL CLASS OF PROPERTY COMPOSITE ANNUAL RATE
- --------------------------------------------------------------------------------
<S> <C>
Production -- Steam -- Fossil-fired..................... 3.2%
Transmission............................................ 2.3%
Distribution............................................ 3.7%
General................................................. 3.5%
</TABLE>
S-14
<PAGE>
COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES SCHEDULE VI -- ACCUMULATED
DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- -----------------------------------------------------------------------------------
ADDITIONS OTHER
BALANCE AT CHARGED TO CHANGES -- BALANCE AT
BEGINNING COSTS AND RETIREMENTS ADD END OF
DESCRIPTION OF PERIOD EXPENSES OR SALES (DEDUCT) PERIOD
- -----------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1993:
ACCUMULATED DEPRECIA-
TION
OF ELECTRIC UTILITY
PLANT:
Production --
Steam -- Fossil-fired... $336,754 $48,779 $ 6,847 $(10,213)(a) $368,473
Transmission........ 117,462 6,351 586 123,227
Distribution........ 272,536 27,043 8,392 (4) 291,183
General............. 27,615 5,398 4,083 4 28,934
-------- ------- ------- -------- --------
Total............. $754,367 $87,571 $19,908 $(10,213) $811,817
======== ======= ======= ======== ========
ACCUMULATED DEPRECIA-
TION
OF NONUTILITY PROP-
ERTY AND
OTHER PROPERTY IN-
VESTMENTS........... $ 932 $ 120 $ 221 $ -0- $ 831
======== ======= ======= ======== ========
YEAR ENDED DECEMBER 31,
1992:
ACCUMULATED DEPRECIA-
TION
OF ELECTRIC UTILITY
PLANT:
Production --
Steam -- Fossil-fired... $298,466 $50,423 $12,135 $336,754
Transmission........ 112,456 6,493 1,061 $ (426) 117,462
Distribution........ 254,597 26,250 8,737 426 272,536
General............. 27,566 4,602 4,508 (45) 27,615
-------- ------- ------- -------- --------
Total............. $693,085 $87,768 $26,441 $ (45) $754,367
======== ======= ======= ======== ========
ACCUMULATED DEPRECIA-
TION
OF NONUTILITY PROP-
ERTY AND
OTHER PROPERTY IN-
VESTMENTS........... $ 777 $ 160 $ 50 $ 45 $ 932
======== ======= ======= ======== ========
YEAR ENDED DECEMBER 31,
1991:
ACCUMULATED DEPRECIA-
TION
OF ELECTRIC UTILITY
PLANT:
Production --
Steam -- Fossil-fired... $265,452 $43,051 $10,037 $298,466
Transmission........ 106,471 6,760 753 $ (22) 112,456
Distribution........ 236,574 25,759 7,758 22 254,597
General............. 30,644 4,348 7,395 (31) 27,566
-------- ------- ------- -------- --------
Total............. $639,141 $79,918 $25,943 $ (31) $693,085
======== ======= ======= ======== ========
ACCUMULATED DEPRECIA-
TION
OF NONUTILITY PROP-
ERTY AND
OTHER PROPERTY IN-
VESTMENTS........... $ 877 $ 142 $ 287 $ 45 $ 777
======== ======= ======= ======== ========
</TABLE>
- --------
(a) Reflects the write-off of accumulated depreciation related to a portion
of the Zimmer Plant investment that was disallowed by the PUCO as discussed in
Note 2 of the Notes to Consolidated Financial Statements.
S-15
<PAGE>
COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES SCHEDULE VIII -- VALUATION AND
QUALIFYING ACCOUNTS AND RESERVES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ----------------------------------------------------------------------------------
ADDITIONS
---------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING COSTS AND OTHER END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
- ----------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1993:
DEDUCTED FROM ASSETS:
Accumulated Provi-
sion for
Uncollectible
Accounts........ $1,332 $4,167 $2,106(a) $6,614(b) $ 991
====== ====== ====== ====== ======
NOT SHOWN ELSEWHERE:
Operating Reserves
for
Workers' Compen-
sation and Oth-
er.............. $3,226 $2,026 $ 207 $ 432 $5,027
====== ====== ====== ====== ======
YEAR ENDED DECEMBER 31,
1992:
DEDUCTED FROM ASSETS:
Accumulated Provi-
sion for
Uncollectible
Accounts........ $1,134 $4,593 $1,981(a) $6,376(b) $1,332
====== ====== ====== ====== ======
NOT SHOWN ELSEWHERE:
Operating Reserves
for
Workers' Compen-
sation and Oth-
er.............. $3,779 $ (63) $ 123 $ 613(c) $3,226
====== ====== ====== ====== ======
YEAR ENDED DECEMBER 31,
1991:
DEDUCTED FROM ASSETS:
Accumulated Provi-
sion for
Uncollectible
Accounts........ $1,272 $4,407 $1,753(a) $6,298(b) $1,134
====== ====== ====== ====== ======
NOT SHOWN ELSEWHERE:
Operating Reserves
for
Workers' Compen-
sation and Oth-
er.............. $1,620 $2,704 $ 59 $ 604(c) $3,779
====== ====== ====== ====== ======
</TABLE>
- --------
(a) Recoveries on accounts previously written off.
(b) Uncollectible accounts written off.
(c) Payments.
S-16
<PAGE>
COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES SCHEDULE IX -- SHORT-TERM
BORROWINGS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- -----------------------------------------------------------------------------------
MAXIMUM AVERAGE WEIGHTED
CATEGORY OF WEIGHTED AMOUNT AMOUNT AVERAGE
AGGREGATE BALANCE AT AVERAGE OUTSTANDING OUTSTANDING INTEREST RATE
SHORT-TERM END OF INTEREST DURING THE DURING THE DURING THE
BORROWINGS PERIOD RATE PERIOD PERIOD (A) PERIOD (B)
- -----------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1993:
Notes Payable......... $12,500 3.6% $37,250 $22,861 3.3%
Commercial Paper...... 12,725 3.8 60,250 21,756 3.3
YEAR ENDED DECEMBER 31,
1992:
Notes Payable......... $34,750 3.9% $71,600 $36,534 3.8%
Commercial Paper...... 19,069 4.2 73,910 45,251 4.1
YEAR ENDED DECEMBER 31,
1991:
Notes Payable......... $15,725 5.2% $52,275 $31,583 6.2%
Commercial Paper...... 50,475 5.6 50,475 26,929 6.3
</TABLE>
- --------
(a) Sum of month-end short-term borrowings divided by number of months
outstanding.
(b) Interest for the period divided by average amount outstanding.
S-17
<PAGE>
INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES SCHEDULE V -- PROPERTY, PLANT
AND EQUIPMENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN F COLUMN F COLUMN F COLUMN F
- -------------------------------------------------------------------------------
1993 1992 1991 1990
---------- ---------- ---------- ---------- ---
BALANCE AT BALANCE AT BALANCE AT BALANCE AT
END OF END OF END OF END OF
CLASSIFICATION PERIOD PERIOD PERIOD PERIOD
- -------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ELECTRIC UTILITY PLANT:
Production:
Steam -- Fossil-fired...... $1,118,655 $1,105,364 $1,085,337 $1,074,214
Steam -- Nuclear........... 1,483,872 1,454,541 1,442,892 1,401,648
Transmission................. 839,198 829,507 815,742 786,206
Distribution................. 608,752 576,309 551,055 520,988
General (including nuclear
fuel)......................... 152,470 182,414 157,340 185,781
Construction Work in Pro-
gress......................... 88,010 118,345 83,454 97,390
---------- ---------- ---------- ----------
Total Electric Utility
Plant......................... 4,290,957 4,266,480 4,135,820 4,066,227
NONUTILITY PROPERTY AND OTHER
PROPERTY INVESTMENTS.......... 193,493 191,743 190,518 200,405
---------- ---------- ---------- ----------
Total...................... $4,484,450 $4,458,223 $4,326,338 $4,266,632
========== ========== ========== ==========
</TABLE>
Total additions of $125,247,000 in 1993, $175,728,000 in 1992 and
$149,187,000 in 1991 were less than 10% of the total as of the respective year-
ends. Retirements or sales of $61,586,000 in 1993, $25,301,000 in 1992 and
$40,396,000 in 1991 were less than 10% of the total as of the respective year-
ends. There were no additions to individual accounts in excess of two percent
of total assets other than transfers from Construction Work in Progress.
Amortization of nuclear fuel of $41,325,000 in 1993, $19,343,000 in 1992 and
$50,124,000 in 1991 was credited directly to the property account and charged
to fuel expense.
The methods used to compute the annual provisions for depreciation are
described in Note 1 of the Notes to Consolidated Financial Statements. The
current provisions were determined using the following composite rates for
functional classes of property:
<TABLE>
<CAPTION>
FUNCTIONAL CLASS OF PROPERTY COMPOSITE ANNUAL RATE
- --------------------------------------------------------------------------------
<S> <C>
Production:
Steam -- Fossil-fired................................. 4.6%
Steam -- Nuclear...................................... 3.4%
Transmission............................................ 1.9%
Distribution............................................ 4.2%
General................................................. 3.8%
</TABLE>
S-18
<PAGE>
INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES SCHEDULE VI -- ACCUMULATED
DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- ---------------------------------------------------------------------------------------------------
ADDITIONS OTHER
BALANCE AT CHARGED TO CHANGES -- BALANCE AT
BEGINNING COSTS AND RETIREMENTS ADD END OF
DESCRIPTION OF PERIOD EXPENSES OR SALES (DEDUCT) PERIOD
- ---------------------------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1993:
ACCUMULATED DEPRECIATION AND
AMORTIZATION OF ELECTRIC UTILITY
PLANT:
Production:
Steam -- Fossil-fired.............. $ 447,978 $ 42,417 $14,608 $ 6 $ 475,793
Steam -- Nuclear................... 691,605 57,274 26,196 1 722,684
Transmission......................... 277,512 17,316 1,717 (17) 293,094
Distribution......................... 180,363 21,710 11,179 17 190,911
General.............................. 33,980 5,610 7,228 (15) 32,347
---------- -------- ------- ------ ----------
Total............................ $1,631,438 $144,327 $60,928 $ (8) $1,714,829
========== ======== ======= ====== ==========
ACCUMULATED DEPRECIATION AND
AMORTIZATION
OF NONUTILITY PROPERTY AND OTHER
PROPERTY INVESTMENTS................. $ 62,766 $ 7,992 $ 9,615 $7,616 $ 68,759
========== ======== ======= ====== ==========
YEAR ENDED DECEMBER 31, 1992:
ACCUMULATED DEPRECIATION AND
AMORTIZATION OF ELECTRIC UTILITY
PLANT:
Production:
Steam -- Fossil-fired.............. $ 419,455 $ 40,964 $12,427 $ (14) $ 447,978
Steam -- Nuclear................... 638,563 54,842 1,800 691,605
Transmission......................... 259,890 17,076 (446) 100 277,512
Distribution......................... 171,809 20,349 11,690 (105) 180,363
General.............................. 31,632 5,126 2,795 17 33,980
---------- -------- ------- ------ ----------
Total............................ $1,521,349 $138,357 $28,266 $ (2) $1,631,438
========== ======== ======= ====== ==========
ACCUMULATED DEPRECIATION AND
AMORTIZATION OF NONUTILITY PROPERTY AND
OTHER PROPERTY INVESTMENTS............ $ 55,028 $ 7,296 $ (93) $ 349 $ 62,766
========== ======== ======= ====== ==========
YEAR ENDED DECEMBER 31, 1991:
ACCUMULATED DEPRECIATION AND
AMORTIZATION OF ELECTRIC UTILITY
PLANT:
Production:
Steam -- Fossil-fired.............. $ 386,116 $ 40,567 $ 7,302 $ 74 $ 419,455
Steam -- Nuclear................... 589,526 55,140 6,033 (70) 638,563
Transmission......................... 251,438 16,767 8,369 54 259,890
Distribution......................... 163,965 19,424 11,582 2 171,809
General.............................. 30,240 5,259 3,775 (92) 31,632
---------- -------- ------- ------ ----------
Total............................ $1,421,285 $137,157 $37,061 $ (32) $1,521,349
========== ======== ======= ====== ==========
ACCUMULATED DEPRECIATION AND
AMORTIZATION OF NONUTILITY PROPERTY
AND OTHER PROPERTY INVESTMENTS........ $ 52,730 $ 8,767 $ 6,759 $ 290 $ 55,028
========== ======== ======= ====== ==========
</TABLE>
S-19
<PAGE>
INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES SCHEDULE VIII -- VALUATION AND
QUALIFYING ACCOUNTS AND RESERVES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ------------------------------------------------------------------------------------------
ADDITIONS
-----------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING COSTS AND OTHER END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
- ------------------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1993:
DEDUCTED FROM ASSETS:
Accumulated Provision
for
Uncollectible Ac-
counts............ $ 562 $ 1,380 $ 624(a) $ 2,062(b) $ 504
======== ======= ======= ======= ========
NOT SHOWN ELSEWHERE:
Operating Reserves:
Maintenance........ $ 2,162 $ 685 $ -0- $ 2,847(d) $ -0-
Nuclear Plant
Decommissioning
Costs........... 146,451 23,255(e) -0- 169,706
Uranium Enrichment
Decontamination
and
Decommissioning
Fund Agreement. 45,500 -0- -0- 10,517(d) 34,983
Workers'
Compensation,
Coal Inventory
Adjustment, and
Other.......... 9,348 1,197 1,619 6,894(d)(f) 5,270
-------- ------- ------- ------- --------
Total............ $203,461 $25,137 $ 1,619 $20,258 $209,959
======== ======= ======= ======= ========
YEAR ENDED DECEMBER 31,
1992:
DEDUCTED FROM ASSETS:
Accumulated Provision
for
Uncollectible Ac-
counts............ $ 629 $ 1,736 $ 650(a) $ 2,453(b) $ 562
======== ======= ======= ======= ========
NOT SHOWN ELSEWHERE:
Operating Reserves:
Maintenance........ $ 4,466 $ 356 $ -0- $ 2,660(d) $ 2,162
Nuclear Plant
Decommissioning
Costs........... 125,716 20,735(e) -0- -0- 146,451
Uranium Enrichment
Decontamination
and
Decommissioning
Fund Agreement. -0- -0- 45,500 -0- 45,500
Workers'
Compensation,
Coal Inventory
Adjustment, and
Other.......... 15,184 2,065 1,296 9,197(d) 9,348
-------- ------- ------- ------- --------
Total............ $145,366 $23,156 $46,796 $11,857 $203,461
======== ======= ======= ======= ========
YEAR ENDED DECEMBER 31,
1991:
DEDUCTED FROM ASSETS:
Accumulated Provision
for
Uncollectible Ac-
counts............ $ 714 $ 1,674 $ 645(a) $ 2,404(b) $ 629
======== ======= ======= ======= ========
NOT SHOWN ELSEWHERE:
Operating Reserves:
Maintenance........ $ 7,551 $ -0- $ 118(c) $ 3,203(d) $ 4,466
Nuclear Plant
Decommissioning
Costs........... 106,632 19,084(e) -0- -0- 125,716
Workers'
Compensation,
Coal Inventory
Adjustment, and
Other.......... 9,489 9,418 2,607 6,330(d) 15,184
-------- ------- ------- ------- --------
Total............ $123,672 $28,502 $ 2,725 $ 9,533 $145,366
======== ======= ======= ======= ========
</TABLE>
- --------
(a) Recoveries on accounts previously written off.
(b) Uncollectible accounts written off.
(c) Billings to others.
(d) Payments and accrual adjustments.
(e) Includes interest on trust funds.
(f) Adjust Royalty Provision.
S-20
<PAGE>
INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES SCHEDULE IX -- SHORT-TERM
BORROWINGS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- -----------------------------------------------------------------------------------
MAXIMUM AVERAGE WEIGHTED
CATEGORY OF WEIGHTED AMOUNT AMOUNT AVERAGE
AGGREGATE BALANCE AT AVERAGE OUTSTANDING OUTSTANDING INTEREST RATE
SHORT-TERM END OF INTEREST DURING THE DURING THE DURING THE
BORROWINGS PERIOD RATE PERIOD PERIOD (A) PERIOD (B)
- -----------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1993:
Notes Payable......... $ -0- -- % $17,200 $17,200 3.3%
Commercial Paper...... 50,075 3.6 50,075 27,832 3.3
YEAR ENDED DECEMBER 31,
1992:
Notes Payable......... $ -0- -- % $23,800 $12,431 3.9%
Commercial Paper...... 44,200 4.3 44,200 25,509 4.0
YEAR ENDED DECEMBER 31,
1991:
Notes Payable......... $14,850 5.4% $32,325 $14,810 6.4%
Commercial Paper...... 36,100 5.5 36,100 15,010 6.4
</TABLE>
- --------
(a) Sum of month-end short-term borrowings divided by number of months
outstanding.
(b) Interest for the period divided by average amount outstanding.
S-21
<PAGE>
KENTUCKY POWER COMPANY SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN F COLUMN F COLUMN F COLUMN F
- --------------------------------------------------------------------------------
1993 1992 1991 1990
---------- ---------- ---------- ----------
BALANCE AT BALANCE AT BALANCE AT BALANCE AT
END OF END OF END OF END OF
CLASSIFICATION PERIOD PERIOD PERIOD PERIOD
- --------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ELECTRIC UTILITY PLANT:
Production -- Steam -- Fossil-
fired........................... $211,617 $205,771 $204,045 $201,362
Transmission..................... 249,966 243,002 239,138 231,346
Distribution..................... 281,834 267,280 254,146 241,053
General.......................... 54,637 54,397 50,927 48,334
Construction Work in Progress.... 9,374 10,406 8,453 11,020
-------- -------- -------- --------
Total Electric Utility Plant... 807,428 780,856 756,709 733,115
NONUTILITY PROPERTY AND OTHER PROP-
ERTY INVESTMENTS.................. 6,846 7,249 7,217 7,217
-------- -------- -------- --------
Total.......................... $814,274 $788,105 $763,926 $740,332
======== ======== ======== ========
</TABLE>
Total additions of $37,808,000 in 1993, $35,203,000 in 1992 and $31,369,000
in 1991 were less than 10% of the total as of the respective year-ends.
Retirements or sales of $12,000,000 in 1993, $11,352,000 in 1992 and $8,092,000
in 1991 were less than 10% of the total as of the respective year-ends. There
were no additions to individual accounts in excess of two percent of total
assets other than transfers from Construction Work in Progress.
The methods used to compute the annual provisions for depreciation are
described in Note 1 of the Notes to Financial Statements. The current
provisions were determined using the following composite rates for functional
classes of property:
<TABLE>
<CAPTION>
FUNCTIONAL CLASS OF PROPERTY COMPOSITE ANNUAL RATE
- --------------------------------------------------------------------------------
<S> <C>
Production -- Steam -- Fossil-fired.................... 3.8%
Transmission........................................... 1.7%
Distribution........................................... 3.5%
General................................................ 2.5%
</TABLE>
S-22
<PAGE>
KENTUCKY POWER COMPANY SCHEDULE VI -- ACCUMULATED DEPRECIATION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- --------------------------------------------------------------------------------
ADDITIONS OTHER
BALANCE AT CHARGED TO CHANGES -- BALANCE AT
BEGINNING COSTS AND RETIREMENTS ADD END OF
DESCRIPTION OF PERIOD EXPENSES OR SALES (DEDUCT) PERIOD
- --------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1993:
ACCUMULATED DEPRECIA-
TION AND
AMORTIZATION OF
ELECTRIC UTILITY
PLANT:
Production --
Steam -- Fossil-fired... $116,273 $ 7,853 $ 4,849 $-0- $119,277
Transmission........ 57,652 4,168 1,221 (1) 60,598
Distribution........ 52,542 9,405 5,233 9 56,723
General............. 11,875 2,329 2,103 (26) 12,075
-------- ------- ------- ---- --------
Total............. $238,342 $23,755 $13,406 $(18) $248,673
======== ======= ======= ==== ========
ACCUMULATED DEPRECIA-
TION
OF NONUTILITY PROP-
ERTY AND
OTHER PROPERTY IN-
VESTMENTS........... $ 828 $ 83 $ -0- $-0- $ 911
======== ======= ======= ==== ========
YEAR ENDED DECEMBER 31,
1992:
ACCUMULATED DEPRECIA-
TION AND
AMORTIZATION OF
ELECTRIC UTILITY
PLANT:
Production --
Steam -- Fossil-fired... $110,714 $ 7,739 $ 2,184 $ 4 $116,273
Transmission........ 54,759 4,030 1,131 (6) 57,652
Distribution........ 49,640 8,966 6,064 52,542
General............. 11,096 2,181 1,369 (33) 11,875
-------- ------- ------- ---- --------
Total............. $226,209 $22,916 $10,748 $(35) $238,342
======== ======= ======= ==== ========
ACCUMULATED DEPRECIA-
TION
OF NONUTILITY PROP-
ERTY AND
OTHER PROPERTY IN-
VESTMENTS........... $ 740 $ 88 $ -0- $-0- $ 828
======== ======= ======= ==== ========
YEAR ENDED DECEMBER 31,
1991:
ACCUMULATED DEPRECIA-
TION AND
AMORTIZATION OF
ELECTRIC UTILITY
PLANT:
Production --
Steam -- Fossil-fired... $104,631 $ 7,524 $ 1,441 $-0- $110,714
Transmission........ 51,827 4,102 1,133 (37) 54,759
Distribution........ 47,370 8,531 6,292 31 49,640
General............. 9,808 1,811 493 (30) 11,096
-------- ------- ------- ---- --------
Total............. $213,636 $21,968 $9,359 $(36) $226,209
======== ======= ======= ==== ========
ACCUMULATED DEPRECIA-
TION
OF NONUTILITY PROP-
ERTY AND
OTHER PROPERTY IN-
VESTMENTS........... $ 663 $ 77 $ -0- $-0- $ 740
======== ======= ======= ==== ========
</TABLE>
S-23
<PAGE>
KENTUCKY POWER COMPANY SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS AND
RESERVES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ---------------------------------------------------------------------------------
ADDITIONS
---------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING COSTS AND OTHER END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
- ---------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1993:
DEDUCTED FROM ASSETS:
Accumulated Provi-
sion for
Uncollectible
Accounts........ $ 248 $ 390 $179(a) $ 609(b) $ 208
====== ====== ==== ====== ======
NOT SHOWN ELSEWHERE:
Operating Reserves
for
Workers' Compen-
sation
and Other....... $2,023 $1,323 $(22) $ 692(c) $2,632
====== ====== ==== ====== ======
YEAR ENDED DECEMBER 31,
1992:
DEDUCTED FROM ASSETS:
Accumulated Provi-
sion for
Uncollectible
Accounts........ $ 352 $ 630 $106(a) $ 840(b) $ 248
====== ====== ==== ====== ======
NOT SHOWN ELSEWHERE:
Operating Reserves
for
Workers' Compen-
sation
and Other....... $1,962 $1,162 $(34) $1,067(c) $2,023
====== ====== ==== ====== ======
YEAR ENDED DECEMBER 31,
1991:
DEDUCTED FROM ASSETS:
Accumulated Provi-
sion for
Uncollectible
Accounts........ $ 148 $ 645 $ 84(a) $ 525(b) $ 352
====== ====== ==== ====== ======
NOT SHOWN ELSEWHERE:
Operating Reserves
for
Workers' Compen-
sation
and Other....... $1,240 $1,309 $121 $ 708(c) $1,962
====== ====== ==== ====== ======
</TABLE>
- --------
(a) Recoveries on accounts previously written off.
(b) Uncollectible accounts written off.
(c) Payments.
S-24
<PAGE>
KENTUCKY POWER COMPANY SCHEDULE IX -- SHORT-TERM BORROWINGS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- -----------------------------------------------------------------------------------
MAXIMUM AVERAGE WEIGHTED
CATEGORY OF WEIGHTED AMOUNT AMOUNT AVERAGE
AGGREGATE BALANCE AT AVERAGE OUTSTANDING OUTSTANDING INTEREST RATE
SHORT-TERM END OF INTEREST DURING THE DURING THE DURING THE
BORROWINGS PERIOD RATE PERIOD PERIOD (A) PERIOD (B)
- -----------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1993:
Notes Payable......... $26,250 3.5% $26,250 $ 7,240 3.4%
Commercial Paper...... 11,900 3.8 35,300 19,394 3.4
YEAR ENDED DECEMBER 31,
1992:
Notes Payable......... $ 5,350 4.2% $13,000 $ 6,845 4.1%
Commercial Paper...... 11,550 4.2 11,550 4,350 3.8
YEAR ENDED DECEMBER 31,
1991:
Notes Payable......... $18,500 5.0% $20,525 $11,675 7.9%
Commercial Paper...... -0- -- 21,200 8,908 6.8
</TABLE>
- --------
(a) Sum of month-end short-term borrowings divided by number of months
outstanding.
(b) Interest for the period divided by average amount outstanding.
S-25
<PAGE>
OHIO POWER COMPANY AND SUBSIDIARIES SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN F COLUMN F COLUMN F COLUMN F
- --------------------------------------------------------------------------------
1993 1992 1991 1990
---------- ---------- ---------- ----------
BALANCE AT BALANCE AT BALANCE AT BALANCE AT
END OF END OF END OF END OF
CLASSIFICATION PERIOD PERIOD PERIOD PERIOD
- --------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ELECTRIC UTILITY PLANT:
Production -- Steam -- Fossil-
fired............................. $2,412,973 $2,391,432 $2,337,827 $2,300,012
Transmission..................... 767,548 758,134 741,085 727,159
Distribution..................... 766,639 731,559 689,588 668,259
General (including mining as-
sets)............................. 754,347 773,122 879,533 826,522
Construction Work in Progress.... 100,820 79,535 113,323 102,125
---------- ---------- ---------- ----------
Total Electric Utility Plant... 4,802,327 4,733,782 4,761,356 4,624,077
NONUTILITY PROPERTY AND OTHER PROP-
ERTY INVESTMENTS.................. 89,558 83,953 52,748 49,179
---------- ---------- ---------- ----------
Total.......................... $4,891,885 $4,817,735 $4,814,104 $4,673,256
========== ========== ========== ==========
</TABLE>
Total additions of $197,089,000 in 1993, $201,737,000 in 1992 and
$228,500,000 in 1991 were less than 10% of the total as of the respective year-
ends. Retirements or sales of $128,775,000 in 1993, $191,662,000 in 1992 and
$90,472,000 in 1991 were less than 10% of the total as of the respective year-
ends. There were no additions to individual accounts in excess of two percent
of total assets other than transfers from Construction Work in Progress.
The methods used to compute the annual provisions for depreciation are
described in Note 1 of the Notes to Consolidated Financial Statements. The
current provisions for other than mining assets were determined using the
following composite rates for functional classes of property:
<TABLE>
<CAPTION>
FUNCTIONAL CLASS OF PROPERTY COMPOSITE ANNUAL RATE
- --------------------------------------------------------------------------------
<S> <C>
Production -- Steam -- Fossil-fired..................... 3.6%
Transmission............................................ 1.7%
Distribution............................................ 3.9%
General................................................. 2.1%
</TABLE>
The current provisions for mining assets were calculated by use of the
following methods:
<TABLE>
<CAPTION>
DESCRIPTION METHOD
------------------------------- ----------------------------------------
<C> <S>
Mining Structures and Equipment Straight-Line method (original
lives range from 1 to 30 years)
Coal Interests and Mine Units-of-production method (based on
Development Costs estimated recoverable tonnages; current
rate averages 55 cents per ton)
</TABLE>
S-26
<PAGE>
OHIO POWER COMPANY AND SUBSIDIARIES SCHEDULE VI -- ACCUMULATED DEPRECIATION AND
AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- --------------------------------------------------------------------------------
ADDITIONS OTHER
BALANCE AT CHARGED TO CHANGES -- BALANCE AT
BEGINNING COSTS AND RETIREMENTS ADD END OF
DESCRIPTION OF PERIOD EXPENSES OR SALES (DEDUCT) PERIOD
- --------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1993:
ACCUMULATED DEPRECIA-
TION AND AMORTIZA-
TION
OF ELECTRIC UTILITY
PLANT:
Production --
Steam-- Fossil-fired... $1,130,205 $ 85,065 $ 57,958 $ (1,172) $1,156,140
Transmission........ 265,418 13,130 5,261 2,029 275,316
Distribution........ 180,959 28,503 18,480 1,750 192,732
General (including
mining assets)......... 339,429 38,022 30,100 20,543 367,894
---------- -------- -------- -------- ----------
Total............. $1,916,011 $164,720 $111,799 $ 23,150 $1,992,082
========== ======== ======== ======== ==========
ACCUMULATED DEPRECIA-
TION OF
NONUTILITY PROPERTY
AND OTHER
PROPERTY INVEST-
MENTS............... $ 11,467 $ 800 $ 1,652 $ (2) $ 10,613
========== ======== ======== ======== ==========
YEAR ENDED DECEMBER 31,
1992:
ACCUMULATED DEPRECIA-
TION AND AMORTIZA-
TION
OF ELECTRIC UTILITY
PLANT:
Production --
Steam-- Fossil-fired... $1,088,875 $ 82,596 $ 42,438 $ 1,172 $1,130,205
Transmission........ 255,931 12,903 3,493 77 265,418
Distribution........ 172,672 27,180 19,357 464 180,959
General (including
mining assets)......... 354,233 45,633 78,384 17,947 339,429
---------- -------- -------- -------- ----------
Total............. $1,871,711 $168,312 $143,672 $ 19,660 $1,916,011
========== ======== ======== ======== ==========
ACCUMULATED DEPRECIA-
TION OF
NONUTILITY PROPERTY
AND OTHER
PROPERTY INVEST-
MENTS............... $ 10,740 $ 588 $ (139) $ -0- $ 11,467
========== ======== ======== ======== ==========
YEAR ENDED DECEMBER 31,
1991:
ACCUMULATED DEPRECIA-
TION AND AMORTIZA-
TION
OF ELECTRIC UTILITY
PLANT:
Production --
Steam-- Fossil-fired... $1,034,539 $ 81,472 $ 27,136 $ -0- $1,088,875
Transmission........ 250,219 12,600 7,093 205 255,931
Distribution........ 162,754 25,983 16,780 715 172,672
General (including
mining assets)......... 328,787 51,907 39,192 12,731 354,233
---------- -------- -------- -------- ----------
Total............. $1,776,299 $171,962 $ 90,201 $ 13,651 $1,871,711
========== ======== ======== ======== ==========
ACCUMULATED DEPRECIA-
TION OF
NONUTILITY PROPERTY
AND OTHER
PROPERTY INVEST-
MENTS............... $ 10,473 $ 347 $ 80 $ -0- $ 10,740
========== ======== ======== ======== ==========
</TABLE>
S-27
<PAGE>
OHIO POWER COMPANY AND SUBSIDIARIES SCHEDULE VIII -- VALUATION AND QUALIFYING
ACCOUNTS AND RESERVES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ------------------------------------------------------------------------------------
ADDITIONS
---------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING COSTS AND OTHER END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
- ------------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1993:
DEDUCTED FROM ASSETS:
Accumulated Provi-
sion for
Uncollectible Ac-
counts........... $ 4,353 $ 4,812 $ 549(a) $ 8,754(b) $ 960
======= ======= ======= ======= =======
NOT SHOWN ELSEWHERE:
Operating Reserves:
Maintenance....... $ 5,961 $(1,721) $ 184(c) $ 1,071(d) $ 3,353
Reclamation....... 8,537 7,508 -0- 7,313(d) 8,732
Workers' Compensa-
tion and Oth-
er........... 20,302 5,790 (91) 9,327(d) 16,674
------- ------- ------- ------- -------
Total........... $34,800 $11,577 $ 93 $17,711 $28,759
======= ======= ======= ======= =======
YEAR ENDED DECEMBER 31,
1992:
DEDUCTED FROM ASSETS:
Accumulated Provi-
sion for
Uncollectible Ac-
counts........... $ 4,815 $ 4,084 $ 618(a) $ 5,164(b) $ 4,353
======= ======= ======= ======= =======
NOT SHOWN ELSEWHERE:
Operating Reserves:
Maintenance....... $ 8,336 $(1,239) $ 297(c) $ 1,433(d) $ 5,961
Reclamation....... 9,089 7,456 -0- 8,008(d) 8,537
Workers' Compensa-
tion and Oth-
er........... 7,938 11,690 11,026 10,352(d) 20,302
------- ------- ------- ------- -------
Total........... $25,363 $17,907 $11,323 $19,793 $34,800
======= ======= ======= ======= =======
YEAR ENDED DECEMBER 31,
1991:
DEDUCTED FROM ASSETS:
Accumulated Provi-
sion for
Uncollectible Ac-
counts........... $ 8,540 $ 2,042 $ 557(a) $ 6,324(b) $ 4,815
======= ======= ======= ======= =======
NOT SHOWN ELSEWHERE:
Operating Reserves:
Maintenance....... $11,532 $(1,531) $ 56(c) $ 1,721(d) $ 8,336
Reclamation....... 13,121 2,329 -0- 6,361(d) 9,089
Workers' Compensa-
tion and Oth-
er........... 6,873 9,355 (295) 7,995(d) 7,938
------- ------- ------- ------- -------
Total........... $31,526 $10,153 $ (239) $16,077 $25,363
======= ======= ======= ======= =======
</TABLE>
- --------
(a) Recoveries on accounts previously written off.
(b) Uncollectible accounts written off.
(c) Billings to others.
(d) Payments.
S-28
<PAGE>
OHIO POWER COMPANY AND SUBSIDIARIES SCHEDULE IX -- SHORT-TERM BORROWINGS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- -----------------------------------------------------------------------------------
MAXIMUM AVERAGE WEIGHTED
CATEGORY OF WEIGHTED AMOUNT AMOUNT AVERAGE
AGGREGATE BALANCE AT AVERAGE OUTSTANDING OUTSTANDING INTEREST RATE
SHORT-TERM END OF INTEREST DURING THE DURING THE DURING THE
BORROWINGS PERIOD RATE PERIOD PERIOD (A) PERIOD (B)
- -----------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1993:
Notes Payable......... $ 2,251 3.1% $ 45,650 $10,564 3.2%
Commercial Paper...... 38,000 3.6 68,700 33,033 3.4
YEAR ENDED DECEMBER 31,
1992:
Notes Payable......... $ -0- --% $ 26,000 $14,167 4.2%
Commercial Paper...... -0- -- 102,945 70,711 4.2
YEAR ENDED DECEMBER 31,
1991:
Notes Payable......... $ 1,208 6.0% $ 45,995 $13,065 6.0%
Commercial Paper...... 132,325 5.4 132,325 77,492 6.3
</TABLE>
- --------
(a) Sum of month-end short-term borrowings divided by number of months
outstanding.
(b) Interest for the period divided by average amount outstanding.
S-29
<PAGE>
EXHIBIT INDEX
Certain of the following exhibits, designated with an asterisk(*), are filed
herewith. The exhibits not so designated have heretofore been filed with the
Commission and, pursuant to 17 C.F.R. (S)201.24 and (S)240.12b-32, are
incorporated herein by reference to the documents indicated in brackets
following the descriptions of such exhibits. Exhibits, designated with a dagger
(+), are management contracts or compensatory plans or arrangements required to
be filed as an exhibit to this form pursuant to Item 14(c) of this report.
AEGCO
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
3(a) -- Copy of Articles of Incorporation of AEGCo [Registration
Statement on Form 10 for the Common Shares of AEGCo, File No.
0-18135, Exhibit 3(a)].
3(b) -- Copy of the Code of Regulations of AEGCo [Registration
Statement on Form 10 for the Common Shares of AEGCo, File No.
0-18135, Exhibit 3(b)].
10(a) -- Copy of Capital Funds Agreement dated as of December 30, 1988
between AEGCo and AEP [Registration Statement No. 33-32752,
Exhibit 28(a)].
10(b)(1) -- Copy of Unit Power Agreement dated as of March 31, 1982
between AEGCo and I&M, as amended [Registration Statement No.
33-32752, Exhibits 28(b)(1)(A) and 28(b)(1)(B)].
10(b)(2) -- Copy of Unit Power Agreement, dated as of August 1, 1984,
among AEGCo, I&M and KEPCo [Registration Statement No. 33-
32752, Exhibit 28(b)(2)].
10(b)(3) -- Copy of Agreement, dated as of October 1, 1984, among AEGCo,
I&M, APCo and Virginia Electric and Power Company
[Registration Statement No. 33-32752, Exhibit 28(b)(3)].
10(c)(1)(A) -- Copy of Lease Agreement (AEGCO Trust 1), dated as of December
1, 1989, between AEGCo and Wilmington Trust Company
[Registration Statement No. 33-32752, Exhibit 28(c)(1)(C)].
*10(c)(1)(B) -- Copy of Lease Supplement No. 1 (AEGCO Trust 1), dated as of
October 15, 1990.
10(c)(2)(A) -- Copy of Lease Agreement (AEGCO Trust 2), dated as of December
1, 1989, between AEGCo and Wilmington Trust Company
[Registration Statement No. 33-32752, Exhibit 28(c)(2)(C)].
*10(c)(2)(B) -- Copy of Lease Supplement No. 1 (AEGCO Trust 2), dated as of
October 15, 1990.
10(c)(3)(A) -- Copy of Lease Agreement (AEGCO Trust 3), dated as of December
1, 1989, between AEGCo and Wilmington Trust Company
[Registration Statement No. 33-32752, Exhibit 28(c)(3)(C)].
*10(c)(3)(B) -- Copy of Lease Supplement No. 1 (AEGCO Trust 3), dated as of
October 15, 1990.
10(c)(4)(A) -- Copy of Lease Agreement (AEGCO Trust 4), dated as of December
1, 1989, between AEGCo and Wilmington Trust Company
[Registration Statement No. 33-32752, Exhibit 28(c)(4)(C)].
*10(c)(4)(B) -- Copy of Lease Supplement No. 1 (AEGCO Trust 4), dated as of
October 15, 1990.
10(c)(5)(A) -- Copy of Lease Agreement (AEGCO Trust 5), dated as of December
1, 1989, between AEGCo and Wilmington Trust Company
[Registration Statement No. 33-32752, Exhibit 28(c)(5)(C)].
*10(c)(5)(B) -- Copy of Lease Supplement No. 1 (AEGCO Trust 5), dated as of
October 15, 1990.
10(c)(6)(A) -- Copy of Lease Agreement (AEGCO Trust 6), dated as of December
1, 1989, between AEGCo and Wilmington Trust Company
[Registration Statement No. 33-32752, Exhibit 28(c)(6)(C)].
*10(c)(6)(B) -- Copy of Lease Supplement No. 1 (AEGCO Trust 6), dated as of
October 15, 1990.
*13 -- Copy of those portions of the AEGCo 1993 Annual Report (for
the fiscal year ended December 31, 1993) which are
incorporated by reference in this filing,
*24 -- Power of Attorney.
</TABLE>
E-1
<PAGE>
AEGCO (continued)
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
AEP++
3(a) -- Copy of Restated Certificate of Incorporation of AEP, dated
April 26, 1978 [Registration Statement No. 2-62778, Exhibit
2(a)].
3(b)(1) -- Copy of Certificate of Amendment of the Restated Certificate
of Incorporation of AEP, dated April 23, 1980 [Registration
Statement No. 33-1052, Exhibit 4(b)].
3(b)(2) -- Copy of Certificate of Amendment of the Restated Certificate
of Incorporation of AEP, dated April 28, 1982 [Registration
Statement No. 33-1052, Exhibit 4(c)].
3(b)(3) -- Copy of Certificate of Amendment of the Restated Certificate
of Incorporation of AEP, dated April 25, 1984 [Registration
Statement No. 33-1052, Exhibit 4(d)].
3(b)(4) -- Copy of Certificate of Change of the Restated Certificate of
Incorporation of AEP, dated July 5, 1984 [Registration
Statement No. 33-1052, Exhibit 4(e)].
3(b)(5) -- Copy of Certificate of Amendment of the Restated Certificate
of Incorporation of AEP, dated April 27, 1988 [Registration
Statement No. 33-1052, Exhibit 4(f)].
3(c) -- Composite copy of the Restated Certificate of Incorporation
of AEP, as amended. [Registration Statement No. 33-1052,
Exhibit 4(g)].
3(d) -- Copy of By-Laws of AEP, as amended through July 26, 1989
[Annual Report on Form 10-K of AEP for the fiscal year ended
December 31, 1989, File No. 1-3525, Exhibit 3(d)].
10(a) -- Interconnection Agreement, dated July 6, 1951, among APCo,
CSPCo, KEPCo, OPCo and I&M and with the Service Corporation,
as amended [Registration Statement No. 2-52910, Exhibit
5(a); Registration Statement No. 2-61009, Exhibit 5(b); and
Annual Report on Form 10-K of AEP for the fiscal year ended
December 31, 1990, File No. 1-3525, Exhibit 10(a)(3)].
10(b) -- Copy of Transmission Agreement, dated April 1, 1984, among
APCo, CSPCo, I&M, KEPCo, OPCo and with the Service
Corporation as agent, as amended [Annual Report on Form 10-K
of AEP for the fiscal year ended December 31, 1985, File No.
1-3525, Exhibit 10(b); and Annual Report on Form 10-K of AEP
for the fiscal year ended December 31, 1988, File No. 1-
3525, Exhibit 10(b)(2)].
+10(c)(1) -- AEP Deferred Compensation Agreement for certain executive
officers [Annual Report on Form 10-K of AEP for the fiscal
year ended December 31, 1985, File No. 1-3525, Exhibit
10(e)].
+10(c)(2) -- Amendment to AEP Deferred Compensation Agreement for certain
executive officers [Annual Report on Form 10-K of AEP for
the fiscal year ended December 31, 1986, File No. 1-3525,
Exhibit 10(d)(2)].
+10(d) -- AEP Deferred Compensation Agreement for directors, as
amended, effective October 24, 1984 [Annual Report on Form
10-K of AEP for the fiscal year ended December 31, 1984,
File No. 1-3525, Exhibit 10(e)].
+10(e) -- AEP Accident Coverage Insurance Plan for directors [Annual
Report on Form 10-K of AEP for the fiscal year ended
December 31, 1985, File No. 1-3525, Exhibit 10(g)].
+10(f) -- AEP Retirement Plan for directors [Annual Report on Form 10-
K of AEP for the fiscal year ended December 31, 1986, File
No. 1-3525, Exhibit 10(g)].
*+10(g)(1)(A) -- Excess Benefits Plan.
+10(g)(1)(B) -- Guaranty by AEP of the Service Corporation Excess Benefits
Plan [Annual Report on Form 10-K of AEP for the fiscal year
ended December 31, 1990, File No. 1-3525, Exhibit
10(h)(1)(B)].
*+10(g)(2) -- AEP System Supplemental Savings Plan (Non-Qualified).
*+10(g)(3) -- Service Corporation Umbrella Trust(TM) for Executives.
</TABLE>
E-2
<PAGE>
AEP++ (continued)
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
+10(h)(1) -- Employment Agreement between E. Linn Draper, Jr. and AEP and
the Service Corporation [Annual Report on Form 10-K of AEGCo
for the fiscal year ended December 31, 1991, File No. 0-
18135, Exhibit 10(g)(3)].
+10(h)(2) -- Employment Agreement between John E. Katlic and the Service
Corporation [Annual Report on Form 10-K of AEGCo for the
fiscal year ended December 31, 1990, File No. 0-18135,
Exhibit 10(g)(2)].
*+10(i)(1) -- AEP Management Incentive Compensation Plan.
*+10(i)(2) -- American Electric Power System Performance Share Incentive
Plan.
10(j)(1)(A) -- Copy of Lease Agreement (AEGCO Trust 1), dated as of December
1, 1989, between AEGCo and Wilmington Trust Company
[Registration Statement No. 33-32752, Exhibit 28(c)(1)(C)].
10(j)(1)(B) -- Copy of Lease Supplement No. 1 (AEGCO Trust 1), dated as of
October 15, 1990. [Annual Report on Form 10-K of AEGCo for
the fiscal year ended December 31, 1993, File No. 0-18135,
Exhibit 10(c)(1)(B)].
10(j)(2)(A) -- Copy of Lease Agreement (AEGCO Trust 2), dated as of December
1, 1989, between AEGCo and Wilmington Trust Company
[Registration Statement No. 33-32752, Exhibit 28(c)(2)(C)].
10(j)(2)(B) -- Copy of Lease Supplement No. 1 (AEGCO Trust 2), dated as of
October 15, 1990. [Annual Report on Form 10-K of AEGCo for
the fiscal year ended December 31, 1993, File No. 0-18135,
Exhibit 10(c)(2)(B)].
10(j)(3)(A) -- Copy of Lease Agreement (AEGCO Trust 3), dated as of December
1, 1989, between AEGCo and Wilmington Trust Company
[Registration Statement No. 33-32752, Exhibit 28(c)(3)(C)].
10(j)(3)(B) -- Copy of Lease Supplement No. 1 (AEGCO Trust 3), dated as of
October 15, 1990. [Annual Report on Form 10-K of AEGCo for
the fiscal year ended December 31, 1993, File No. 0-18135,
Exhibit 10(c)(3)(B)].
10(j)(4)(A) -- Copy of Lease Agreement (AEGCO Trust 4), dated as of December
1, 1989, between AEGCo and Wilmington Trust Company
[Registration Statement No. 33-32752, Exhibit 28(c)(4)(C)].
10(j)(4)(B) -- Copy of Lease Supplement No. 1 (AEGCO Trust 4), dated as of
October 15, 1990. [Annual Report on Form 10-K of AEGCo for
the fiscal year ended December 31, 1993, File No. 0-18135,
Exhibit 10(c)(4)(B)].
10(j)(5)(A) -- Copy of Lease Agreement (AEGCO Trust 5), dated as of December
1, 1989, between AEGCo and Wilmington Trust Company
[Registration Statement No. 33-32752, Exhibit 28(c)(5)(C)].
10(j)(5)(B) -- Copy of Lease Supplement No. 1 (AEGCO Trust 5), dated as of
October 15, 1990. [Annual Report on Form 10-K of AEGCo for
the fiscal year ended December 31, 1993, File No. 0-18135,
Exhibit 10(c)(5)(B)].
10(j)(6)(A) -- Copy of Lease Agreement (AEGCO Trust 6), dated as of December
1, 1989, between AEGCo and Wilmington Trust Company
[Registration Statement No. 33-32752, Exhibit 28(c)(6)(C)].
10(j)(6)(B) -- Copy of Lease Supplement No. 1 (AEGCO Trust 6), dated as of
October 15, 1990. [Annual Report on Form 10-K of AEGCo for
the fiscal year ended December 31, 1993, File No. 0-18135,
Exhibit 10(c)(6)(B)].
10(j)(7)(A) -- Copy of Lease Agreement (I&M Trust 1), dated as of December
1, 1989, between I&M and Wilmington Trust Company
[Registration Statement No. 33-32753, Exhibit 28(a)(1)(C)].
</TABLE>
E-3
<PAGE>
AEP++ (continued)
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10(j)(7)(B) -- Copy of Lease Supplement No. 1 (I&M Trust 1), dated as of
October 15, 1990 [Annual Report on Form 10-K of I&M for the
fiscal year ended December 31, 1993, File No. 1-3570,
Exhibit 10(e)(1)(B)]
10(j)(8)(A) -- Copy of Lease Agreement (I&M Trust 2), dated as of December
1, 1989, between I&M and Wilmington Trust Company
[Registration Statement No. 33-32753, Exhibit 28(a)(2)(C)].
10(j)(8)(B) -- Copy of Lease Supplement No. 1 (I&M Trust 2), dated as of
October 15, 1990 [Annual Report on Form 10-K of I&M for the
fiscal year ended December 31, 1993, File No. 1-3570,
Exhibit 10(e)(2)(B)].
10(j)(9)(A) -- Copy of Lease Agreement (I&M Trust 3), dated as of December
1, 1989, between I&M and Wilmington Trust Company
[Registration Statement No. 33-32753, Exhibit 28(a)(3)(C)].
10(j)(9)(B) -- Copy of Lease Supplement No. 1 (I&M Trust 3), dated as of
October 15, 1990 [Annual Report on Form 10-K of I&M for the
fiscal year ended December 31, 1993, File No. 1-3570,
Exhibit 10(e)(3)(B)].
10(j)(10)(A) -- Copy of Lease Agreement (I&M Trust 4), dated as of December
1, 1989, between I&M and Wilmington Trust Company
[Registration Statement No. 33-32753, Exhibit 28(a)(4)(C)].
10(j)(10)(B) -- Copy of Lease Supplement No. 1 (I&M Trust 4), dated as of
October 15, 1990 [Annual Report on Form 10-K of I&M for the
fiscal year ended December 31, 1993, File No. 1-3570,
Exhibit 10(e)(4)(B)].
10(j)(11)(A) -- Copy of Lease Agreement (I&M Trust 5), dated as of December
1, 1989, between I&M and Wilmington Trust Company
[Registration Statement No. 33-32753, Exhibit 28(a)(5)(C)].
10(j)(11)(B) -- Copy of Lease Supplement No. 1 (I&M Trust 5), dated as of
October 15, 1990 [Annual Report on Form 10-K of I&M for the
fiscal year ended December 31, 1993, File No. 1-3570,
Exhibit 10(e)(5)(B)].
10(j)(12)(A) -- Copy of Lease Agreement (I&M Trust 6), dated as of December
1, 1989, between I&M and Wilmington Trust Company
[Registration Statement No. 33-32753, Exhibit 28(a)(6)(C)].
10(j)(12)(B) -- Copy of Lease Supplement No. 1 (I&M Trust 6), dated as of
October 15, 1990 [Annual Report on Form 10-K of I&M for the
fiscal year ended December 31, 1993, File No. 1-3570,
Exhibit 10(e)(6)(B)].
10(k) -- Copy of Agreement for Lease, dated as of September 17, 1992,
between JMG Funding, Limited Partnership and OPCo [Annual
Report on Form 10-K of OPCo for the fiscal year ended
December 31, 1992, File No. 1-6543, Exhibit 10(l)].
*13 -- Copy of those portions of the AEP 1993 Annual Report (for
the fiscal year ended December 31, 1993) which are
incorporated by reference in this filing.
*21 -- List of subsidiaries of AEP.
*23 -- Consent of Deloitte & Touche.
*24 -- Power of Attorney.
APCO++
3(a) -- Copy of Restated Articles of Incorporation of APCo, and
amendments thereto to March 24, 1992 [Registration Statement
No. 33-50163; Exhibit 4(a)].
*3(b) -- Copy of Articles of Amendment to the Restated Articles of
Incorporation of APCo dated October 4, 1993 and October 28,
1993.
*3(c) -- Composite copy of the Restated Articles of Incorporation of
APCo, as amended.
3(d) -- Copy of By-Laws of APCo [Annual Report on Form 10-K of APCo
for the fiscal year ended December 31, 1990, File No. 1-3457
Exhibit 3(d)].
</TABLE>
E-4
<PAGE>
APCO++ (continued)
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
4(a) -- Copy of Mortgage and Deed of Trust, dated as of December 1,
1940, between APCo and Bankers Trust Company and R. Gregory
Page, as Trustees, as amended and supplemented to May 15, 1993
[Registration Statement No. 2-7289, Exhibit 7(b); Registration
Statement No. 2-19884, Exhibit 2(1); Registration Statement No.
2-24453, Exhibit 2(n); Registration Statement No. 2-60015,
Exhibits 2(b)(2), 2(b)(3), 2(b)(4), 2(b)(5), 2(b)(6), 2(b)(7),
2(b)(8), 2(b)(9), 2(b)(10), 2(b)(12), 2(b)(14), 2(b)(15),
2(b)(16), 2(b)(17), 2(b)(18), 2(b)(19), 2(b)(20), 2(b)(21),
2(b)(22), 2(b)(23), 2(b)(24), 2(b)(25), 2(b)(26), 2(b)(27) and
2(b)(28); Registration Statement No. 2-64102, Exhibit 2(b)(29);
Registration Statement No. 2-66457, Exhibits (2)(b)(30) and
2(b)(31); Registration Statement No. 2-69217, Exhibit 2(b)(32);
Registration Statement No. 2-86237, Exhibit 4(b); Registration
Statement No. 33-11723, Exhibit 4(b); Registration Statement No.
33-17003, Exhibit 4(a)(ii); Registration Statement No. 33-30964,
Exhibit 4(b); Registration Statement No. 33-40720, Exhibit 4(b);
Registration Statement No. 33-45219, Exhibit 4(b); Registration
Statement No. 33-46128, Exhibits 4(b) and 4(c); Registration
Statement No. 33-53410, Exhibit 4(b); Registration Statement No.
33-59834, Exhibit 4(b); Registration Statement No. 33-50229,
Exhibits 4(b) and 4(c)].
*4(b) -- Copy of Indentures Supplemental dated October 1, 1993 and
November 1, 1993 to Mortgage and Deed of Trust.
10(a)(1) -- Copy of Power Agreement, dated October 15, 1952, between OVEC
and United States of America, acting by and through the United
States Atomic Energy Commission, and, subsequent to January 18,
1975, the Administrator of the Energy Research and Development
Administration, as amended [Registration Statement No. 2-60015,
Exhibit 5(a); Registration Statement No. 2-63234, Exhibit
5(a)(1)(B); Registration Statement No. 2-66301, Exhibit
5(a)(1)(C); Registration Statement No. 2-67728, Exhibit
5(a)(1)(D); Annual Report on Form 10-K of APCo for the fiscal
year ended December 31, 1989, File No. 1-3457, Exhibit
10(a)(1)(F); and Annual Report on Form 10-K of APCo for the
fiscal year ended December 31, 1992, File No. 1-3457, Exhibit
10(a)(1)(B)].
10(a)(2) -- Copy of Inter-Company Power Agreement, dated as of July 10,
1953, among OVEC and the Sponsoring Companies, as amended
[Registration Statement No. 2-60015, Exhibit 5(c); Registration
Statement No. 2-67728, Exhibit 5(a)(3)(B); and Annual Report on
Form 10-K of APCo for the fiscal year ended December 31, 1992,
File No. 1-3457, Exhibit 10(a)(2)(B)].
10(a)(3) -- Copy of Power Agreement, dated July 10, 1953, between OVEC and
Indiana-Kentucky Electric Corporation, as amended [Registration
Statement No. 2-60015, Exhibit 5(e)].
10(b) -- Copy of Interconnection Agreement, dated July 6, 1951, among
APCo, CSPCo, KEPCo, OPCo and I&M and with the Service
Corporation, as amended [Registration Statement No. 2-52910,
Exhibit 5(a); Registration Statement No. 2-61009, Exhibit 5(b);
Annual Report on Form 10-K of AEP for the fiscal year ended
December 31, 1990, File No. 1-3525, Exhibit 10(a)(3)].
10(c) -- Copy of Transmission Agreement, dated April 1, 1984, among APCo,
CSPCo, I&M, KEPCo, OPCo and with the Service Corporation as
agent, as amended [Annual Report on Form 10-K of AEP for the
fiscal year ended December 31, 1985, File No. 1-3525, Exhibit
10(b); Annual Report on Form 10-K of AEP for the fiscal year
ended December 31, 1988, File No. 1-3525, Exhibit 10(b)(2)].
+10(d)(1) -- AEP Deferred Compensation Agreement for certain executive
officers [Annual Report on Form 10-K of AEP for the fiscal year
ended December 31, 1985, File No. 1-3525, Exhibit 10(e)].
+10(d)(2) -- Amendment to AEP Deferred Compensation Agreement for certain
executive officers [Annual Report on Form 10-K of AEP for the
fiscal year ended December 31, 1986, File No. 1-3525, Exhibit
10(d)(2)].
+10(e)(1) -- Management Incentive Compensation Plan [Annual Report on Form
10-K of AEP for the fiscal year ended December 31, 1993, File
No. 1-3525, Exhibit 10(i)].
</TABLE>
E-5
<PAGE>
APCO++ (continued)
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
+10(e)(2) -- American Electric Power System Performance Share Incentive
Plan [Annual Report on Form 10-K of AEP for the fiscal year
ended December 31, 1993, File No. 1-3525, Exhibit 10(i)(2)].
+10(f)(1) -- Excess Benefits Plan [Annual Report on Form 10-K of AEP for
the fiscal year ended December 31, 1993, File No. 1-3525,
Exhibit 10(g)(1)(A)].
+10(f)(2) -- AEP System Supplemental Savings Plan (Non-Qualified) [Annual
Report on Form 10-K of AEP for the fiscal year ended December
31, 1993, File No. 1-3525, Exhibit 10(g)(2)].
+10(f)(3) -- Umbrella Trust(TM) for Executives [Annual Report on Form 10-K
of AEP for the fiscal year ended December 31, 1993, File No.
1-3525, Exhibit 10(g)(3)].
+10(g)(1) -- Employment Agreement between E. Linn Draper, Jr. and AEP and
the Service Corporation [Annual Report on Form 10-K of AEGCo
for the fiscal year ended December 31, 1991, File No. 0-
18135, Exhibit 10(g)(3)].
+10(g)(2) -- Employment Agreement between John E. Katlic and the Service
Corporation [Annual Report on Form 10-K of AEGCo for the
fiscal year ended December 31, 1990, File No.
0-18135, Exhibit 10(g)(2)].
*12 -- Statement re: Computation of Ratios
*13 -- Copy of those portions of the APCo 1993 Annual Report (for
the fiscal year ended December 31, 1993) which are
incorporated by reference in this filing.
21 -- List of subsidiaries of APCo [Annual Report on Form 10-K of
AEP for the fiscal year ended December 31, 1993, File No. 1-
3525, Exhibit 22].
*23 -- Consent of Deloitte & Touche
*24 -- Power of Attorney
CSPCO++
3(a) -- Copy of Amended Articles of Incorporation of CSPCo
[Registration Statement No. 33-45950, Exhibit 4(a)].
3(b)(1) -- Copy of Certificate of Amendment to Amended Articles of
Incorporation of CSPCo, dated November 19, 1990 [Registration
Statement No. 33-45950, Exhibit 4(b)].
3(b)(2) -- Copy of Certificate of Amendment to Amended Articles of
Incorporation of CSPCo, dated March 6, 1992 [Certificate of
Notification on Form U-6B-2, dated March 23, 1992].
3(c) -- Composite copy of Amended Articles of Incorporation of CSPCo,
as amended [Annual Report on Form 10-K of CSPCo for the
fiscal year ended December 31, 1991, File No. 1-2680, Exhibit
3(c)].
3(d) -- Copy of Code of Regulations and By-Laws of CSPCo [Annual
Report on Form 10-K of CSPCo for the fiscal year ended
December 31, 1987, File No. 1-2680, Exhibit 3(d)].
4(a) -- Copy of Indenture of Mortgage and Deed of Trust, dated
September 1, 1940, between CSPCo and City Bank Farmers Trust
Company (now Citibank, N.A.), as trustee, as supplemented and
amended [Registration Statement No. 2-59411, Exhibits 2(B)
and 2(C); Registration Statement No. 2-80535, Exhibit 4(b);
Registration Statement No. 2-87091, Exhibit 4(b);
Registration Statement No. 2-93208, Exhibit 4(b);
Registration Statement No. 2-97652, Exhibit 4(b);
Registration Statement No. 33-7081, Exhibit 4(b);
Registration Statement No. 33-12389, Exhibit 4(b);
Registration Statement No. 33-19227, Exhibits 4(b), 4(e),
4(f), 4(g) and 4(h); Registration Statement No. 33-35651,
Exhibit 4(b); Registration Statement No. 33-46859, Exhibits
4(b) and 4(c); Registration Statement No. 33-50316, Exhibits
4(b) and 4(c); Registration Statement No. 33-60336; Exhibits
4(b), 4(c) and 4(d); Registration Statement No. 33-50447,
Exhibits 4(b) and 4(c)].
*4(b) -- Copy of Supplemental Indentures dated October 1, 1993,
January 1, 1994 and March 1, 1994 to Indenture of Mortgage
and Deed of Trust.
</TABLE>
E-6
<PAGE>
CSPCO++ (continued)
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10(a)(1) -- Copy of Power Agreement, dated October 15, 1952, between OVEC
and United States of America, acting by and through the United
States Atomic Energy Commission, and, subsequent to January 18,
1975, the Administrator of the Energy Research and Development
Administration, as amended [Registration Statement No. 2-60015,
Exhibit 5(a); Registration Statement No. 2-63234, Exhibit
5(a)(1)(B); Registration Statement No. 2-66301, Exhibit
5(a)(1)(C); Registration Statement No. 2-67728, Exhibit
5(a)(1)(B); Annual Report on Form 10-K of APCo for the fiscal
year ended December 31, 1989, File No. 1-3457, Exhibit
10(a)(1)(F); and Annual Report on Form 10-K of APCo for the
fiscal year ended December 31, 1992, File No. 1-3457, Exhibit
10(a)(1)(B)].
10(a)(2) -- Copy of Inter-Company Power Agreement, dated July 10, 1953,
among OVEC and the Sponsoring Companies, as amended
[Registration Statement No. 2-60015, Exhibit 5(c); Registration
Statement No. 2-67728, Exhibit 5(a)(3)(B); and Annual Report on
Form 10-K of APCo for the fiscal year ended December 31, 1992,
File No. 1-3457, Exhibit 10(a)(2)(B)].
10(a)(3) -- Copy of Power Agreement, dated July 10, 1953, between OVEC and
Indiana-Kentucky Electric Corporation, as amended [Registration
Statement No. 2-60015, Exhibit 5(e)].
10(b) -- Copy of Interconnection Agreement, dated July 6, 1951, among
APCo, CSPCo, KEPCo, OPCo and I&M and the Service Corporation, as
amended [Registration Statement No. 2-52910, Exhibit 5(a);
Registration Statement No. 2-61009, Exhibit 5(b); and Annual
Report on Form 10-K of AEP for the fiscal year ended December
31, 1990, File No. 1-3525, Exhibit 10(a)(3)].
10(c) -- Copy of Transmission Agreement, dated April 1, 1984, among APCo,
CSPCo, I&M, KEPCo, OPCo, and with the Service Corporation as
agent, as amended [Annual Report on Form 10-K of AEP for the
fiscal year ended December 31, 1985, File No. 1-3525, Exhibit
10(b); and Annual Report on Form 10-K of AEP for the fiscal year
ended December 31, 1988, File No. 1-3525, Exhibit 10(b)(2)].
*12 -- Statement re: Computation of Ratios.
*13 -- Copy of those portions of the CSPCo 1993 Annual Report (for the
fiscal year ended December 31, 1993) which are incorporated by
reference in this filing.
21 -- List of subsidiaries of CSPCo [Annual Report on Form 10-K of AEP
for the fiscal year ended December 31, 1993, File No. 1-3525,
Exhibit 22].
*23 -- Consent of Deloitte & Touche.
*24 -- Power of Attorney.
I&M++
*3(a) -- Copy of the Amended Articles of Acceptance of I&M and amendments
thereto.
*3(b) -- Composite Copy of the Amended Articles of Acceptance of I&M, as
amended.
3(c) -- Copy of the By-Laws of I&M [Annual Report on Form 10-K of I&M
for the fiscal year ended December 31, 1990, File No 1-3570,
Exhibit 3(d)].
</TABLE>
E-7
<PAGE>
I&M++ (continued)
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
4(a) -- Copy of Mortgage and Deed of Trust, dated as of June 1, 1939,
between I&M and Irving Trust Company (now The Bank of New
York) and various individuals, as Trustees, as amended and
supplemented [Registration Statement No. 2-7597, Exhibit
7(a); Registration Statement No. 2-60665, Exhibits 2(c)(2),
2(c)(3), 2(c)(4), 2(c)(5), 2(c)(6), 2(c)(7), 2(c)(8),
2(c)(9), 2(c)(10), 2(c)(11), 2(c)(12), 2(c)(13), 2(c)(14),
2(c)(15), (2)(c)(16), and 2(c)(17); Registration Statement
No. 2-63234, Exhibit 2(b)(18); Registration Statement No. 2-
65389, Exhibit 2(a)(19); Registration Statement No. 2-67728,
Exhibit 2(b)(20); Registration Statement No. 2-85016, Exhibit
4(b); Registration Statement No. 33-5728, Exhibit 4(c);
Registration Statement No. 33-9280, Exhibit 4(b);
Registration Statement No. 33-11230, Exhibit 4(b);
Registration Statement No. 33-19620, Exhibits 4(a)(ii),
4(a)(iii), 4(a)(iv) and 4(a)(v); Registration Statement No.
33-46851, Exhibits 4(b)(i), 4(b)(ii) and 4(b)(iii);
Registration Statement No. 33-54480, Exhibits 4(b)(i) and
4(b)(ii); Registration Statement No. 33-60886, Exhibit
4(b)(i); Registration Statement No. 33-50521, Exhibits
4(b)(i), 4(b)(ii) and 4(b)(iii)].
*4(b) -- Copy of Indentures Supplemental dated October 15, 1993 and
February 1, 1994 to Mortgage and Deed of Trust.
10(a)(1) -- Copy of Power Agreement, dated October 15, 1952, between OVEC
and United States of America, acting by and through the
United States Atomic Energy Commission, and, subsequent to
January 18, 1975, the Administrator of the Energy Research
and Development Administration, as amended [Registration
Statement No. 2-60015, Exhibit 5(a); Registration Statement
No. 2-63234, Exhibit 5(a)(1)(B); Registration Statement No.
2-66301, Exhibit 5(a)(1)(C); Registration Statement No. 2-
67728, Exhibit 5(a)(1)(D); Annual Report on Form 10-K of APCo
for the fiscal year ended December 31, 1989, File No. 1-3457,
Exhibit 10(a)(1)(F); and Annual Report on Form 10-K of APCo
for the fiscal year ended December 31, 1992, File No. 1-3457,
Exhibit 10(a)(1)(B)].
10(a)(2) -- Copy of Inter-Company Power Agreement, dated as of July 10,
1953, among OVEC and the Sponsoring Companies, as amended
[Registration Statement No. 2-60015, Exhibit 5(c);
Registration Statement No. 2-67728, Exhibit 5(a)(3)(B);
Annual Report on Form 10-K of APCo for the fiscal year ended
December 31, 1992, File No. 1-3457, Exhibit 10(a)(2)(B)].
10(a)(3) -- Copy of Power Agreement, dated July 10, 1953, between OVEC
and Indiana-Kentucky Electric Corporation, as amended
[Registration Statement No. 2-60015, Exhibit 5(e)].
10(b) -- Copy of Interconnection Agreement, dated July 6, 1951,
between APCo, CSPCo, KEPCo, I&M, and OPCo and with the
Service Corporation, as amended [Registration Statement No.
2-52910, Exhibit 5(a); Registration Statement No. 2-61009,
Exhibit 5(b); and Annual Report on Form 10-K of AEP for the
fiscal year ended December 31, 1990, File No. 1-3525, Exhibit
10(a)(3)].
10(c) -- Copy of Transmission Agreement, dated April 1, 1984, among
APCo, CSPCo, I&M, KEPCo, OPCo and with the Service
Corporation as agent, as amended [Annual Report on Form 10-K
of AEP for the fiscal year ended December 31, 1985, File No.
1-3525, Exhibit 10(b); and Annual Report on Form 10-K of AEP
for the fiscal year ended December 31, 1988, File No. 1-3525,
Exhibit 10(b)(2)].
*10(d) -- Copy of Nuclear Material Lease Agreement, dated as of
December 1, 1990, between I&M and DCC Fuel Corporation.
10(e)(1)(A) -- Copy of Lease Agreement (I&M Trust 1), dated as of December
1, 1989, between I&M and Wilmington Trust Company
[Registration Statement No. 33-32753, Exhibit 28(a)(1)(C)].
*10(e)(1)(B) -- Copy of Lease Supplement No. 1 (I&M Trust 1), dated as of
October 15, 1990.
</TABLE>
E-8
<PAGE>
I&M++ (continued)
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10(e)(2)(A) -- Copy of Lease Agreement (I&M Trust 2), dated as of December
1, 1989, between I&M and Wilmington Trust Company
[Registration Statement No. 33-32753, Exhibit 28(a)(2)(C)].
*10(e)(2)(B) -- Copy of Lease Supplement No. 1 (I&M Trust 2), dated as of
October 15, 1990.
10(e)(3)(A) -- Copy of Lease Agreement (I&M Trust 3), dated as of December
1, 1989, between I&M and Wilmington Trust Company
[Registration Statement No. 33-32753, Exhibit 28(a)(3)(C)].
*10(e)(3)(B) -- Copy of Lease Supplement No. 1 (I&M Trust 3), dated as of
October 15, 1990.
10(e)(4)(A) -- Copy of Lease Agreement (I&M Trust 4), dated as of December
1, 1989, between I&M and Wilmington Trust Company
[Registration Statement No. 33-32753, Exhibit 28(a)(4)(C)].
*10(e)(4)(B) -- Copy of Lease Supplement No. 1 (I&M Trust 4), dated as of
October 15, 1990.
10(e)(5)(A) -- Copy of Lease Agreement (I&M Trust 5), dated as of December
1, 1989, between I&M and Wilmington Trust Company
[Registration Statement No. 33-32753, Exhibit 28(a)(5)(C)].
*10(e)(5)(B) -- Copy of Lease Supplement No. 1 (I&M Trust 5), dated as of
October 15, 1990.
10(e)(6)(A) -- Copy of Lease Agreement (I&M Trust 6), dated as of December
1, 1989, between I&M and Wilmington Trust Company
[Registration Statement No. 33-32753, Exhibit 28(a)(6)(C)].
*10(e)(6)(B) -- Copy of Lease Supplement No. 1 (I&M Trust 6), dated as of
October 15, 1990.
*12 -- Statement re: Computation of Ratios
*13 -- Copy of those portions of the I&M 1993 Annual Report (for the
fiscal year ended December 31, 1993) which are incorporated
by reference in this filing.
21 -- List of subsidiaries of I&M [Annual Report on Form 10-K of
AEP for the fiscal year ended December 31, 1993, File No. 1-
3525, Exhibit 22].
*23 -- Consent of Deloitte & Touche.
*24 -- Power of Attorney.
KEPCO
3(a) -- Copy of Restated Articles of Incorporation of KEPCo [Annual
Report on Form 10-K of KEPCo for the fiscal year ended
December 31, 1991, File No. 1-6858, Exhibit 3(a)].
3(b) -- Copy of By-Laws of KEPCo [Annual Report on Form 10-K of KEPCo
for the fiscal year ended December 31, 1990, File No. 1-6858,
Exhibit 3(b)].
4(a)(1) -- Copy of Mortgage and Deed of Trust, dated May 1, 1949,
between KEPCo and Bankers Trust Company, as supplemented and
amended [Registration Statement No. 2-65820, Exhibits
2(b)(1), 2(b)(2), 2(b)(3), 2(b)(4), 2(b)(5), and 2(b)(6);
Registration Statement No. 33-39394, Exhibits 4(b) and 4(c);
Registration Statement No. 33-53226, Exhibits 4(b) and 4(c);
Registration Statement No. 33-61808, Exhibits 4(b) and 4(c)].
*4(a)(2) -- Copy of Indentures Supplemental dated May 1, 1993, June 1,
1993 and June 15, 1993 to Mortgage and Deed of Trust.
10(a) -- Copy of Interconnection Agreement, dated July 6, 1951, among
APCo, CSPCo, KEPCo, I&M and OPCo and with the Service
Corporation, as amended [Registration Statement No. 2-52910,
Exhibit 5(a); Registration Statement No. 2-61009, Exhibit
5(b); and Annual Report on Form 10-K of AEP for the fiscal
year ended December 31, 1990, File No. 1-3525, Exhibit
10(a)(3)].
</TABLE>
E-9
<PAGE>
KEPCO (continued)
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <C> <S>
10(b) -- Copy of Transmission Agreement, dated April 1, 1984, among APCo,
CSPCo, I&M, KEPCo, OPCo and with the Service Corporation as
agent, as amended [Annual Report on Form 10-K of AEP for the
fiscal year ended December 31, 1985, File No. 1-3525, Exhibit
10(b); and Annual Report on Form 10-K of AEP for the fiscal year
ended December 31, 1988, File No. 1-3525, Exhibit 10(b)(2)].
*12 -- Statement re: Computation of Ratios.
*13 -- Copy those portions of the KEPCo 1993 Annual Report (for the
fiscal year ended December 31, 1993) which are incorporated by
reference in this filing.
*23 -- Consent of Deloitte & Touche.
*24 -- Power of Attorney.
OPCO++
3(a) -- Copy of Amended Articles of Incorporation of OPCo, and
amendments thereto to April 6, 1993 [Registration Statement No.
33-50139, Exhibit 4(a)].
*3(b) -- Copy of Certificates of Amendment to the Amended Articles of
Incorporation of OPCo, dated October 4, 1993 and October 28,
1993.
*3(c) -- Composite copy of the Amended Articles of Incorporation of OPCo,
as amended.
3(d) -- Copy of Code of Regulations of OPCo [Annual Report on Form 10-K
of OPCo for the fiscal year ended December 31, 1990, File No. 1-
6543, Exhibit 3(d)].
4(a) -- Copy of Mortgage and Deed of Trust, dated as of October 1, 1938,
between OPCo and Manufacturers Hanover Trust Company (now
Chemical Bank), as Trustee, as amended and supplemented
[Registration Statement No. 2-3828, Exhibit B-4; Registration
Statement No.
2-60721, Exhibits 2(c)(2), 2(c)(3), 2(c)(4), 2(c)(5), 2(c)(6),
2(c)(7), 2(c)(8), 2(c)(9), 2(c)(10), 2(c)(11), 2(c)(12),
2(c)(13), 2(c)(14), 2(c)(15), 2(c)(16), 2(c)(17), 2(c)(18),
2(c)(19), 2(c)(20), 2(c)(21), 2(c)(22), 2(c)(23), 2(c)(24),
2(c)(25), 2(c)(26), 2(c)(27), 2(c)(28), 2(c)(29), 2(c)(30), and
2(c)(31); Registration Statement No. 2-83591, Exhibit 4(b);
Registration Statement No. 33-21208, Exhibits 4(a)(ii),
4(a)(iii) and 4(a)(vi); Registration Statement No. 33-31069,
Exhibit 4(a)(ii); Registration Statement No. 33-44995, Exhibit
4(a)(ii); Registration Statement No. 33-59006, Exhibits
4(a)(ii), 4(a)(iii) and 4(a)(iv); Registration Statement No. 33-
50373, Exhibits 4(a)(ii), 4(a)(iii) and 4(a)(iv)].
*4(b) -- Copy of Indentures Supplemental dated October 1, 1993, November
1, 1993 and December 1, 1993.
10(a)(1) -- Copy of Power Agreement, dated October 15, 1952, between OVEC
and United States of America, acting by and through the United
States Atomic Energy Commission, and, subsequent to January 18,
1975, the Administrator of the Energy Research and Development
Administration, as amended [Registration Statement No. 2-60015,
Exhibit 5(a); Registration Statement No. 2-63234, Exhibit
5(a)(1)(B); Registration Statement No. 2-66301, Exhibit
5(a)(1)(C); Registration Statement No. 2-67728, Exhibit
5(a)(1)(D); Annual Report on Form 10-K of APCo for the fiscal
year ended December 31, 1989, File No. 1-3457, Exhibit
10(a)(1)(F); Annual Report on Form 10-K of APCo for the fiscal
year ended December 31, 1992, File No. 1-3457, Exhibit
10(a)(1)(B)].
10(a)(2) -- Copy of Inter-Company Power Agreement, dated July 10, 1953,
among OVEC and the Sponsoring Companies, as amended
[Registration Statement No. 2-60015, Exhibit 5(c); Registration
Statement No. 2-67728, Exhibit 5(a)(3)(B); Annual Report on Form
10-K of APCo for the fiscal year ended December 31, 1992, File
No. 1-3457, Exhibit 10(a)(2)(B)].
10(a)(3) -- Copy of Power Agreement, dated July 10, 1953, between OVEC and
Indiana-Kentucky Electric Corporation, as amended [Registration
Statement No. 2-60015, Exhibit 5(e)].
</TABLE>
E-10
<PAGE>
OPCO++ (continued)
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10(b) -- Copy of Interconnection Agreement, dated July 6, 1951, between
APCo, CSPCo, KEPCo, I&M and OPCo and with the Service
Corporation, as amended [Registration Statement No. 2-52910,
Exhibit 5(a); Registration Statement No. 2-61009, Exhibit 5(b);
Annual Report on Form 10-K of AEP for the fiscal year ended
December 31, 1990, File 1-3525, Exhibit 10(a)(3)].
10(c) -- Copy of Transmission Agreement, dated April 1, 1984, among APCo,
CSPCo, I&M, KEPCo, OPCo and with the Service Corporation as
agent [Annual Report on Form 10-K of AEP for the fiscal year
ended December 31, 1985, File No. 1-3525, Exhibit 10(b); Annual
Report on Form 10-K of AEP for the fiscal year ended December
31, 1988, File No. 1-3525, Exhibit 10(b)(2)].
10(d) -- Copy of Agreement, dated June 18, 1968, between OPCo and Kaiser
Aluminum & Chemical Corporation (now known as Ravenswood
Aluminum Corporation) and First Supplemental Agreement thereto
[Registration Statement No. 2-31625, Exhibit 4(c); Annual Report
on Form 10-K of OPCo for the fiscal year ended December 31,
1986, File No. 1-6543, Exhibit 10(d)(2)].
*10(e) -- Copy of Power Agreement, dated November 16, 1966, between OPCo
and Ormet Generating Corporation and First Supplemental
Agreement thereto.
*10(f) -- Copy of Amendment No. 1, dated October 1, 1973, to Station
Agreement dated January 1, 1968, among OPCo, Buckeye and
Cardinal Operating Company, and amendments thereto.
+10(g)(1) -- AEP Deferred Compensation Agreement for certain executive
officers [Annual Report on Form 10-K of AEP for the fiscal year
ended December 31, 1985, File No. 1-3525, Exhibit 10(e)].
+10(g)(2) -- Amendment to AEP Deferred Compensation Agreement for certain
executive officers [Annual Report on Form 10-K of AEP for the
fiscal year ended December 31, 1986, File No. 1-3525, Exhibit
10(d)(2)].
+10(h)(1) -- Management Incentive Compensation Plan [Annual Report on Form
10-K of AEP for the fiscal year ended December 31, 1993, File
No. 1-3525, Exhibit 10(i)].
+10(h)(2) -- American Electric Power System Performance Share Incentive Plan
[Annual Report on Form 10-K of AEP for the fiscal year ended
December 31, 1993, File No. 1-3525, Exhibit 10(i)(2)].
+10(i)(1) -- Excess Benefits Plan [Annual Report on Form 10-K of AEP for the
fiscal year ended December 31, 1993, File No. 1-3525, Exhibit
10(g)(1)(A)].
+10(i)(2) -- AEP System Supplemental Savings Plan (Non-Qualified) [Annual
Report on Form 10-K of AEP for the fiscal year ended December
31, 1993, File No. 1-3525, Exhibit 10(g)(2)].
+10(i)(3) -- Umbrella Trust (TM) for Executives [Annual Report on Form 10-K
of AEP for the fiscal year ended December 31, 1993, File No. 1-
3525, Exhibit 10(g)(3)].
+10(j)(1) -- Employment Agreement between E. Linn Draper, Jr. and AEP and the
Service Corporation [Annual Report on Form 10-K of AEGCo for the
fiscal year ended December 31, 1991, File No. 0-18135, Exhibit
10(g)(2)].
+10(j)(2) -- Employment Agreement between John E. Katlic and the Service
Corporation [Annual Report on Form 10-K of AEGCo for the fiscal
year ended December 31, 1990, File No. 0-18135, Exhibit
10(g)(2)].
10(k) -- Agreement for Lease dated as of September 17, 1992 between JMG
Funding, Limited Partnership and OPCo [Annual Report on Form 10-
K of OPCo for the fiscal year ended December 31, 1992, File No.
1-6543, Exhibit 10(l)].
*12 -- Statement re: Computation of Ratios.
*13 -- Copy of those portions of the OPCo 1993 Annual Report (for the
fiscal year ended December 31, 1993) which are incorporated by
reference in this filing.
</TABLE>
E-11
<PAGE>
OPCO++ (continued)
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
21 -- List of subsidiaries of OPCo [Annual Report on Form 10-K of AEP
for the fiscal year ended December 31, 1993, File No. 1-3525,
Exhibit 22].
*23 -- Consent of Deloitte & Touche.
*24 -- Power of Attorney.
</TABLE>
--------------
++Certain instruments defining the rights of holders of long-term debt of the
registrants included in the financial statements of registrants filed herewith
have been omitted because the total amount of securities authorized thereunder
does not exceed 10% of the total assets of registrants. The registrants hereby
agree to furnish a copy of any such omitted instrument to the SEC upon request.
E-12
<PAGE>
CERTIFICATE OF AMENDMENT
TO AMENDED ARTICLES OF INCORPORATION OF
OHIO POWER COMPANY
BY THE BOARD OF DIRECTORS
The undersigned, Vice President and Assistant Secretary, of
Ohio Power Company, an Ohio corporation, with its principal office
located in Canton, Ohio, do hereby certify that a meeting of the
Board of Directors of said corporation was duly called and held on
the 21st day of September, 1993, at which meeting a quorum of such
Directors was present, and that at such meeting the following
Resolution of Amendment to Amended Articles of Incorporation was
duly adopted under authority of subdivision (B)(l) of Ohio Revised
Code Section 1701.70:
RESOLVED, that Article Fourth of the Amended Articles of
Incorporation of Ohio Power Company, dated and filed in the
office of the Secretary of State of the State of Ohio on March
7, 1977, subsequently as amended, be further amended, by the
addition thereto of the following new paragraphs (41) and
(42), which new paragraphs shall read as follows:
(41) The Corporation hereby classifies $40,000,000 par
value of the Cumulative Preferred Stock ($100 non-voting) as
a series of such Cumulative Preferred Stock ($100 non-voting),
which shall be designated as "6.02% Cumulative Preferred
Stock", consisting of 400,000 shares of the par value of $100
per share.
(42) The preferences, rights, restrictions or
qualifications and the description and terms of the 6.02%
Cumulative Preferred Stock, in the respects in which the
shares of such series vary from shares of other series of the
Cumulative Preferred Stock, ($100 non-voting), shall be as
follows:
(a) The annual dividend rate for such series shall
be 6.02% per annum, which dividend shall be calculated,
per share, at such percentage multiplied by $100.
Dividends on all shares of said series issued prior to
the record date for the initial dividend payable on all
shares of such series shall be cumulative from the date
of initial issuance of the shares of such series.
(b) Such series shall not be subject to redemption
prior to October 1, 2003; the regular redemption price
for shares of such series shall be $100 per share on or
after October 1, 2003, plus an amount equal to accrued
and unpaid dividends to the date of redemption.
(c) The preferential amounts to which the holders
of shares of such series shall be entitled upon any
voluntary or involuntary liquidation, dissolution or
winding up of the Corporation shall be $100 per share,
plus an amount equal to accrued and unpaid dividends.
(d)(1) A sinking fund shall be established for
the retirement of the shares of such series. So long as
there shall remain outstanding any shares of such series,
the Corporation shall, to the extent permitted by law, on
December 1, 2003, and on each December 1 thereafter to
and including December 1, 2007, redeem as and for a
sinking fund requirement, out of funds legally available
therefor, a number of shares equal to 5% of the total
number of shares initially classified in Paragraph 41
hereof, at a sinking fund redemption price of $100 per
share plus accrued and unpaid dividends to the date of
redemption. The remaining shares of such series
outstanding on December 1, 2008 will be redeemed as a
final sinking fund requirement, to the extent permitted
by law, out of funds legally available therefor, on such
date at a sinking fund redemption price of $100 per share
plus accrued and unpaid dividends to the date of
redemption. The sinking fund requirement shall be
cumulative so that if on any such December 1 the sinking
fund requirement shall not have been met, then such
sinking fund requirement, to the extent not met, shall
become an additional sinking fund requirement for the
next succeeding December 1 on which such redemption may
be effected.
(2) The Corporation shall be entitled, at its
election, to credit against the sinking fund requirement
due on December 1 of any year pursuant to clause (d)(1)
of this Paragraph 42, shares of such series theretofore
purchased or otherwise acquired by the Corporation and
not previously credited against any such sinking fund
requirement.
(e) The shares of such series shall not have any
rights to convert the same into and/or purchase stock of
any other series or class or any other securities, or any
special rights other than those specified herein.
FURTHER RESOLVED, that a certificate signed by the
Chairman of the Board, the President, or a Vice President and
the Secretary or an Assistant Secretary of the Corporation,
containing a copy of this resolution and a statement of the
manner of its adoption, be filed in the Office of the
Secretary of State of the State of Ohio.
IN WITNESS WHEREOF, the undersigned Vice President and
Assistant Secretary of Ohio Power Company, acting for and on behalf
of said corporation, have hereunto subscribed their names and
caused the seal of said corporation to be hereunto affixed this 4th
day of October, 1993.
OHIO POWER COMPANY
By__/s/ G. P. MALONEY_____________
Vice President
By__/s/ JEFFREY D. CROSS__________
Assistant Secretary
<PAGE> CERTIFICATE OF AMENDMENT
TO AMENDED ARTICLES OF INCORPORATION OF
OHIO POWER COMPANY
BY THE BOARD OF DIRECTORS
The undersigned, Vice President and Assistant Secretary, of
Ohio Power Company, an Ohio corporation, with its principal office
located in Canton, Ohio, do hereby certify that a meeting of the
Board of Directors of said corporation was duly called and held on
the 14th day of October, 1993, at which meeting a quorum of such
Directors was present, and that at such meeting the following
Resolution of Amendment to Amended Articles of Incorporation was
duly adopted under authority of subdivision (B)(l) of Ohio Revised
Code Section 1701.70:
RESOLVED, that Article Fourth of the Amended Articles of
Incorporation of Ohio Power Company, dated and filed in the
office of the Secretary of State of the State of Ohio on March
7, 1977, subsequently as amended, be further amended, by the
addition thereto of the following new paragraphs (43) and
(44), which new paragraphs shall read as follows:
(43) The Corporation hereby classifies $45,000,000 par
value of the Cumulative Preferred Stock ($100 voting) as a
series of such Cumulative Preferred Stock ($100 voting), which
shall be designated as "5.90% Cumulative Preferred Stock",
consisting of 450,000 shares of the par value of $100 per
share.
(44) The preferences, rights, restrictions or
qualifications and the description and terms of the 5.90%
Cumulative Preferred Stock, in the respects in which the
shares of such series vary from shares of other series of the
Cumulative Preferred Stock ($100 voting), shall be as follows:
(a) The annual dividend rate for such series shall
be 5.90% per annum, which dividend shall be calculated,
per share, at such percentage multiplied by $100.
Dividends on all shares of said series issued prior to
the record date for the initial dividend payable on all
shares of such series shall be cumulative from the date
of initial issuance of the shares of such series.
(b) Such series shall not be subject to redemption
prior to November 1, 2003; the redemption price for
shares of such series shall be $100 per share on or after
November 1, 2003, plus an amount equal to accrued and
unpaid dividends to the date of redemption.
(c) The preferential amounts to which the holders
of shares of such series shall be entitled upon any
voluntary or involuntary liquidation, dissolution or
winding up of the Corporation shall be $100 per share,
plus an amount equal to accrued and unpaid dividends.
(d)(1) A sinking fund shall be established for
the retirement of the shares of such series. So long as
there shall remain outstanding any shares of such series,
the Corporation shall, to the extent permitted by law, on
January 1, 2004, and on each January 1 thereafter to and
including January 1, 2008, redeem as and for a sinking
fund requirement, out of funds legally available
therefor, a number of shares equal to 5% of the total
number of shares initially classified in Paragraph 43
hereof, at a sinking fund redemption price of $100 per
share plus accrued and unpaid dividends to the date of
redemption. The remaining shares of such series
outstanding on January 1, 2009 will be redeemed as a
final sinking fund requirement, to the extent permitted
by law, out of funds legally available therefor, on such
date at a sinking fund redemption price of $100 per share
plus accrued and unpaid dividends to the date of
redemption. The sinking fund requirement shall be
cumulative so that if on any such January 1 the sinking
fund requirement shall not have been met, then such
sinking fund requirement, to the extent not met, shall
become an additional sinking fund requirement for the
next succeeding January 1 on which such redemption may be
effected.
(2) The Corporation shall be entitled, at its
election, to credit against the sinking fund requirement
due on January 1 of any year pursuant to clause (d)(1) of
this Paragraph 44, shares of such series theretofore
purchased or otherwise acquired by the Corporation and
not previously credited against any such sinking fund
requirement.
(e) The shares of such series shall not have any
rights to convert the same into and/or purchase stock of
any other series or class or any other securities, or any
special rights other than those specified herein.
FURTHER RESOLVED, that a certificate signed by the
Chairman of the Board, the President, or a Vice President and
the Secretary or an Assistant Secretary of the Corporation,
containing a copy of this resolution and a statement of the
manner of its adoption, be filed in the Office of the
Secretary of State of the State of Ohio.
IN WITNESS WHEREOF, the undersigned Vice President and
Assistant Secretary of Ohio Power Company, acting for and on behalf
of said corporation, have hereunto subscribed their names this 28th
day of October, 1993.
OHIO POWER COMPANY
By__/s/ G. P. MALONEY_____________
Vice President
By__/s/ JEFFREY D. CROSS__________
Assistant Secretary
<PAGE>
[COMPOSITE]
AMENDED ARTICLES OF INCORPORATION
OF
OHIO POWER COMPANY
OHIO POWER COMPANY, a corporation for profit, heretofore
organized and now existing under the laws of the State of Ohio,
makes and files these Amended Articles of Incorporation and states:
FIRST: The name of the Corporation shall be Ohio Power
Company.
SECOND: The place in Ohio where the principal office of
the Corporation is to be located is 301 Cleveland Avenue,
S.W., Canton, Ohio.
THIRD: The purposes for which the Corporation is
formed are:
To produce, buy, acquire, lease, use, furnish,
supply, sell, transmit, and distribute light, heat and power
generated by means of gas, electricity, steam, hot water or
other sources of energy, or any or all of them, for public and
private use, and in connection therewith to acquire, purchase,
own, construct, use, sell, lease, operate or manage any works,
plants, constructions or parts thereof for the production,
use, transmission, distribution, regulation, control or
application of gas, electricity, steam, hot water or other
sources of energy and to do any and all things necessary or
convenient in the exercise of such powers;
To acquire, buy, hold, own, sell, lease, exchange,
dispose of, finance, deal in, construct, build, equip,
improve, use, operate, maintain and work upon:
(a) Any and all kinds of plants and systems for the
manufacture, production, storage, utilization, purchase,
sale, supply, transmission, distribution, or disposition
of electricity, gas, water or steam, or power produced
thereby, or of ice and refrigeration of any and every
kind;
(b) Any and all kinds of telephone, telegraph,
radio, wireless and other systems, facilities and devices
for the receipt and transmission of sounds and signals,
any and all kinds of interurban, city and street railways
and railroads and bus lines for the transportation of
passengers and/or freight, transmission lines, systems,
appliances, equipment and devices and tracks, stations,
buildings and other structures and facilities;
(c) Any and all kinds of works, power plants,
manufacture, structures, substations, systems, tracks,
machinery, generators, motors, lamps, poles, pipes,
wires, cables, conduits, apparatus, devices, equipment,
supplies, articles and merchandise of every kind
pertaining to or in anywise connected with the
construction, operation or maintenance of telephone,
telegraph, radio, wireless and other systems, facilities
and devices for the receipt and transmission of sounds
and signals, or of interurban, city and street railways
and railroads and bus lines, or in anywise connected with
or pertaining to the manufacture, production, purchase,
use, sale, supply, transmission, distribution,
regulation, control or application of electricity, gas,
water, steam, ice, refrigeration and power or any other
purposes;
To acquire, buy, hold, own, sell, lease, exchange,
dispose of, transmit, distribute, deal in, use, manufacture,
produce, furnish and supply street and interurban railway and
bus service, electricity, gas, light, heat, ice,
refrigeration, water and steam in any form and for any
purposes whatsoever, and any power or force or energy in any
form and for any purposes whatsoever;
To maintain and operate stores and commissaries for
the buying and selling of and to buy, sell and generally deal
in general merchandise, hardware, special merchandise,
machinery, supplies and any and all kinds of manufactured and
agricultural products;
To do a general mercantile business;
To acquire, organize, assemble, develop, build up
and operate constructing and operating and other organizations
and systems, and to hire, sell, lease, exchange, turn over,
deliver and dispose of such organizations and systems in whole
or in part and as going organizations and systems and
otherwise, and to enter into and perform contracts, agreements
and undertakings of any kind in connection with any or all of
the foregoing powers;
To do a general contracting business;
To purchase, acquire, develop, mine, explore, drill,
hold, own and dispose of lands, interests in and rights with
respect to lands and waters and fixed and movable property;
To borrow money and contract debts when necessary
for the transaction of the business of the Corporation or for
the exercise of its corporate rights, privileges or franchises
or for any other lawful purpose of its incorporation; to issue
bonds, promissory notes, bills of exchange, debentures and
other obligations and evidences of indebtedness payable at a
specified time or times or payable upon the happening of a
specified event or events, whether secured by mortgage, pledge
or otherwise, or unsecured, for money borrowed or in payment
for property purchased or acquired or any other lawful
objects;
To guarantee, purchase, hold, sell, assign,
transfer, mortgage, pledge or otherwise dispose of the shares
of the capital stock of, or any bonds, securities or evidences
of indebtedness created by, any other corporation or
corporations of the State of Ohio or any other state or
government and, while the owner of such stock, to exercise all
the rights, powers and privileges of ownership, including the
right to vote thereon;
To aid in any manner any corporation or association,
domestic or foreign or any firm or individual, any shares of
stock in which or any bonds, debentures, notes, securities,
evidences of indebtedness, contracts, or obligations of which
are held by or for the Corporation or in which or in the
welfare of which the Corporation shall have any interest, and
to do any acts designed to protect, preserve, improve or
enhance the value of any property at any time held or
controlled by the Corporation, or in which it may be at any
time interested; and to organize or promote or facilitate the
organization of subsidiary companies;
To conduct business at one or more offices and hold,
purchase, mortgage and convey real and personal property in
the State of Ohio and in any of the several states,
territories, possessions and dependencies of the United
States, the District of Columbia and foreign countries;
In any manner to acquire, enjoy, utilize and to
dispose of patents, copyrights and trademarks and any licenses
or other rights or interests therein and thereunder;
To purchase, acquire, hold, own and dispose of
franchises, concessions, consents, privileges and licenses
necessary for and in its opinion useful or desirable for or in
connection with the foregoing powers;
To do any or all things herein set forth to the same
extent and as fully as natural persons might or could do, in
any part of the world, and as principal agent, contractor, or
otherwise, and either alone or in conjunction with any other
individuals, firms, associations, corporations, syndicates or
bodies politic;
To do any and all things necessary and proper for
the accomplishment of the objects herein enumerated or
necessary or incidental to the protection and benefit of the
Corporation, and in general to carry on any lawful business
necessary or incidental to the attainment of the purposes of
the Corporation, whether such business is similar in nature to
the objects and powers set forth in these Articles or any
amendment thereof;
To conduct its business in the State of Ohio, other
states, the District of Columbia, the territories, colonies
and possessions of the United States and in foreign countries.
The Corporation may not construct a steam or
electric railroad in more than one County or State.
The objects and purposes specified in the foregoing
clauses of this Article Third shall, except where other-wise
expressed, be in no way limited or restricted by reference to
or inference from the terms of any other clause of this or any
other Article of these Articles. The objects and purposes
specified in each of the clauses of these Articles shall be
regarded as independent objects and purposes and shall be
construed as powers as well as objects and purposes.
FOURTH: The maximum number of shares of stock which the
Corporation is authorized to have outstanding is forty-seven
million seven hundred sixty-two thousand four hundred three
(47,762,403) shares, divided into four classes as follows:
(a) two million seven hundred sixty-two thousand four hundred
three (2,762,403) shares are Cumulative Preferred Stock of the
par value of One Hundred Dollars ($100) each (hereinafter
sometimes referred to as "Cumulative Preferred Stock ($100
voting)"); (b) one million (1,000,000) shares are Cumulative
Preferred Stock, $100 Non-Voting of the par value of One
Hundred Dollars ($100) each (hereinafter sometimes referred to
as "Cumulative Preferred Stock ($100 non-voting)"); (c) four
million (4,000,000) shares are Cumulative Preferred Stock, $25
Non-Voting of the par value of Twenty-five Dollars ($25) each
(hereinafter sometimes referred to as "Cumulative Preferred
Stock ($25 non-voting)"); and (d) forty million (40,000,000)
shares are Common Stock without par value. The description of
the different classes of stock and the express terms of each
of such classes of stock and of the existing series of
Cumulative Preferred Stock are set forth in the following
paragraphs of this Article Fourth. All of the express terms
set forth below in the preamble and paragraphs (1) through
(10) under the heading "Cumulative Preferred Stock" shall be
equally applicable to the Cumulative Preferred Stock ($100
voting), to the Cumulative Preferred Stock ($100 non-voting)
and to the Cumulative Preferred Stock ($25 non-voting), and
such terms shall be deemed to state the express terms of all
shares of each of said classes, except to the extent that any
of such terms are expressly stated to be applicable only to
shares of one class or shares of one or more series of a
class, and whenever herein the words "Cumulative Preferred
Stock" without any prefix or parenthetical qualification shall
be used, they shall be deemed to refer to each of said
classes.
CUMULATIVE PREFERRED STOCK
Subject to and in accordance with the provisions of the
following paragraphs (1) through (34) hereof, the Board of
Directors is hereby authorized to cause shares of each class
of Cumulative Preferred Stock to be issued in series with such
variations in respect thereof (except in the case of the
shares of the series of Cumulative Preferred Stock ($100
voting) the express terms of which are set forth in paragraphs
(11) through (34) hereof) as may be determined by an amendment
to these Articles adopted by the Board of Directors prior to
the issue thereof:
(1) The shares of the Cumulative Preferred Stock of
each series of a class may vary as to:
(a) The distinctive series designations and
number of shares of such series;
(b) The rate of dividends (within such limits
as shall be permitted by law) payable on the shares
of the particular series;
(c) The dates from which such dividends shall
be cumulative as hereinafter in paragraph (2)
provided;
(d) The prices (not less than the amount
limited by law) and terms upon which the shares of
the particular series may be redeemed;
(e) The amount or amounts which shall be paid
to the holders of the shares of the particular
series in case of voluntary or involuntary
dissolution or any distribution of assets;
(f) The sinking fund requirements (if any)
for the purchase or redemption of the shares of the
particular series;
(g) The rights (if any) to convert the shares
of the particular series into and/or purchase stock
of any other series or class or other securities.
Except for the variations permitted in this paragraph,
the shares of all series of each class of the Cumulative
Preferred Stock shall in all other respects be identical.
(2) The holders of each series of the Cumulative
Preferred Stock at the time outstanding shall be entitled
to receive, but only when and as declared by the Board of
Directors, out of funds legally available for the payment
of dividends, cumulative preferential dividends, at the
annual dividend rate for the particular series fixed
therefor as herein provided, payable quarter-yearly on
the first days of March, June, September and December in
each year, to stockholders of record on the respective
dates, not exceeding thirty (30) days and not less than
ten (10) days preceding such dividend payment dates,
fixed for the purpose by the Board of Directors. No
dividends shall be declared on any series of the
Cumulative Preferred Stock in respect of any quarter-
yearly dividend period unless there shall likewise be
declared on all shares of all series of the Cumulative
Preferred Stock at the time outstanding, like
proportionate dividends, ratably, in proportion to the
respective annual dividend rates fixed therefor, in
respect of the same quarter-yearly dividend period, to
the extent that such shares are entitled to receive
dividends for such quarter-yearly dividend period. The
dividends on shares of all series of the Cumulative
Preferred Stock shall be cumulative. In the case of all
shares of each particular series, the dividends on shares
of such series shall be cumulative:
(a) If issued prior to the record date for
the first dividends on the shares of such series,
then from the date for the particular series fixed
therefor as herein provided;
(b) If issued during the period commencing
immediately after a record date for a dividend and
terminating at the close of the payment date for
such dividend, then from such dividend payment
date; and
(c) Otherwise from the quarter-yearly
dividend payment date next preceding the date of
issue of such shares;
so that unless dividends on all outstanding shares of
each series of the Cumulative Preferred Stock, at the
annual dividend rate and from the dates for accumulation
thereof fixed as herein provided shall have been paid for
all past quarter-yearly dividend periods, but without
interest on cumulative dividends, no dividends shall be
paid or declared and no other distribution shall be made
on the Common Stock, and no Common Stock shall be
purchased or otherwise acquired for value by the
Corporation; provided that during any period when the
Corporation shall be in default as to any obligation of
the Corporation with respect to any sinking fund for the
benefit of the shares of any series of the Cumulative
Preferred Stock, no dividend shall be paid or declared
and no other distribution shall be made on the Common
Stock or any other shares of capital stock of the
Corporation ranking junior to the Cumulative Preferred
Stock, and no Common Stock or shares of such capital
stock shall be purchased or otherwise acquired for value
by the Corporation, unless all shares of the Cumulative
Preferred Stock then outstanding shall concurrently be
redeemed, purchased or otherwise acquired or unless the
declaration or payment of such dividend, or such
distribution, purchase or acquisition shall have been
ordered, permitted or approved by the Securities and
Exchange Commission, or by any successor agency thereto,
under the Public Utility Holding Company Act of 1935 or
any legislation enacted in substitution therefor. The
holders of the Cumulative Preferred Stock of any series
shall not be entitled to receive any dividends thereon
other than the dividends referred to in this paragraph
(2).
(3) The Corporation, by action of its Board of
Directors, may redeem the whole or any part of any series
of the Cumulative Preferred Stock, at any time or from
time to time, by paying in cash the redemption price of
the shares of the particular series, fixed therefor as
herein provided, together with a sum in the case of each
share of each series so to be redeemed, computed at the
annual dividend rate for the series of which the
particular share is a part, from the date from which
dividends on such share became cumulative to the date
fixed for such redemption, less the aggregate of the
dividends theretofore or on such redemption date paid
thereon. Notice of every such redemption shall be given
by publication at least once in one daily newspaper
printed in the English language and of general
circulation in Canton, Ohio, and in one daily newspaper
printed in the English language and of general
circulation in the Borough of Manhattan, The City of New
York, the first publication in such newspapers to be at
least thirty (30) days and not more than sixty (60) days
prior to the date fixed for such redemption. At least
thirty (30) days and not more than sixty (60) days
previous notice of every such redemption shall also be
mailed to the holders of record of the shares of the
Cumulative Preferred Stock so to be redeemed, at their
respective addresses as the same shall appear on the
books of the Corporation; but not failure to mail such
notice nor any defect therein or in the mailing thereof
shall affect the validity of the proceedings for the
redemption of any shares of the Cumulative Preferred
Stock so to be redeemed. In case of the redemption of a
part only of any series of the Cumulative Preferred Stock
at the time outstanding, the Corporation shall select by
lot the shares so to be redeemed. The Board of Directors
shall have full power and authority, subject to the
limitations and provisions herein contained, to prescribe
the manner in which, and the terms and conditions upon
which, the shares of the Cumulative Preferred Stock shall
be redeemed from time to time. If such notice of
redemption shall have been duly given by publication, and
if on or before the redemption date specified in such
notice all funds necessary for such redemption shall have
been set aside by the Corporation, separate and apart
from its other funds, in trust for the account of the
holders of the shares to be redeemed, so as to be and
continue to be available therefor, then, notwithstanding
that any certificate for such shares so called for
redemption shall not have been surrendered for
cancellation, from and after the date fixed for
redemption, the shares represented thereby shall no
longer be deemed outstanding, the right to receive
dividends thereon shall cease to accrue and all rights
with respect to such shares so called for redemption
shall forthwith on such redemption date cease and
terminate, except only the right of the holders thereof
to receive, out of the funds so set aside in trust, the
amount payable upon redemption thereof, without interest;
provided, however, that the Corporation may, after giving
notice by publication of any such redemption as
hereinbefore provided or after giving to the bank or
trust company hereinafter referred to irrevocable
authorization to give such notice by publication, and at
any time prior to the redemption date specified in such
notice, deposit in trust, for the account of the holders
of the shares to be redeemed, so as to be and continue to
be available therefor, funds necessary for such
redemption with a bank or trust company in good standing,
organized under the laws of the United States of American
or of the State of New York, doing business in the
Borough of Manhattan, The City of New York, and having
capital, surplus and undivided profits aggregating at
least $5,000,000 or organized under the laws of the State
of Ohio, doing business in the City of Cleveland, Ohio,
and having capital, surplus and undivided profits
aggregating at least $5,000,000, designated in such
notice of redemption, and, upon such deposit in trust,
all shares with respect to which such deposit shall have
been made shall no longer be deemed to be outstanding,
and all rights with respect to such shares shall
forthwith cease and terminate, except only the right of
the holders thereof to receive at any time from and after
the date of such deposit, the amount payable upon the
redemption thereof, without interest. Nothing herein
contained shall limit any right of the Corporation to
purchase or otherwise acquire any shares of the
Cumulative Preferred Stock; provided, however, that the
Corporation shall not redeem (whether through operation
of any sinking fund or otherwise), purchase or otherwise
acquire any shares of any series of the Cumulative
Preferred Stock during any period when the Corporation
shall be in default in the payment of dividends on any
shares of any series of the Cumulative Preferred Stock,
unless all shares of Cumulative Preferred Stock then
outstanding shall concurrently be so redeemed, purchased
or otherwise acquired or unless such redemption, purchase
or acquisition shall have been ordered, permitted or
approved by the Securities and Exchange Commission, or by
any successor commission thereto, under the Public
Utility Holding Company Act of 1935 or any legislation
enacted in substitution therefor.
(4) Before any amount shall be paid to, or any
assets distributed among, the holders of the Common Stock
upon any liquidation, dissolution or winding up of the
Corporation, and after paying or providing for the
payment of all creditors of the Corporation, the holders
of each series of the Cumulative Preferred Stock at the
time outstanding shall be entitled to be paid in cash the
amount for the particular series fixed therefor as herein
provided, together with a sum in the case of each share
of each series, computed at the annual dividend rate for
the series of which the particular share is a part, from
the date from which dividends on such share became
cumulative to the date fixed for the payment of such
distributive amount ,less the aggregate of the dividends
theretofore or on such date paid thereon; but no payments
on account of such distributive amounts shall be made to
the holders of any series of the Cumulative Preferred
Stock unless there shall likewise be paid at the same
time to the holders of each other series of the
Cumulative Preferred Stock at the time outstanding like
proportionate distributive amounts, ratably, in
proportion to the full distributive amounts to which they
are respectively entitled as herein provided. The
holders of the Cumulative Preferred Stock of any series
shall not be entitled to receive any amounts with respect
thereto upon any liquidation, dissolution or winding up
of the Corporation other than the amounts referred to in
this paragraph. Neither the consolidation or merger of
the Corporation with any other corporation or
corporations, nor the sale or transfer by the Corporation
of all or any part of its assets, shall be deemed to be
a liquidation, dissolution or winding up of the
Corporation.
(5) Whenever the full dividends on all series of
the Cumulative Preferred Stock at the time out-standing
for all past quarter-yearly dividend periods shall have
been paid or declared and set apart for payment, then,
subject to the provisions of paragraph (2) and
subparagraph (7)(B)(c) hereof, such dividends (payable in
cash, stock or otherwise) as may be determined by the
Board of Directors may be declared and paid on the Common
Stock, but only out of funds legally available for the
payment of dividends; provided, however, that so long as
any shares of the Cumulative Preferred Stock of any
series are outstanding, the Corporation shall not declare
or pay any dividends on the Common Stock of the
Corporation except as follows:
(a) If and so long as the Common Stock Equity
at the end of the calendar month immediately
preceding the date on which a dividend on Common
Stock is declared is, or as a result of such
dividend would become, less than 20% of total
capitalization, the Corporation shall not declare
such dividend in an amount which, together with all
other dividends on Common Stock paid within the
year ending with and including the date on which
such dividend is payable, exceeds 50% of the net
income of the Corporation available for dividends
on the Common Stock (less any Depreciation
Deficiency) for the twelve full calendar months
immediately preceding the month in which such
dividend is declared, except in an amount not
exceeding the aggregate of dividends on Common
Stock which could have been, but have not been,
declared under this clause (a); and
(b) If and so long as the Common Stock Equity
at the end of the calendar month immediately
preceding the date on which a dividend on Common
Stock is declared is, or as a result of such
dividend would become, less than 25% but not less
than 20% of total capitalization, the Corporation
shall not declare such dividend in an amount which,
together with all other dividends on Common Stock
paid within the year ending with and including the
date on which such dividend is payable, exceeds 75%
of the net income of the Corporation available for
dividends on the Common Stock (less any
Depreciation Deficiency) for the twelve full
calendar months immediately preceding the month in
which such dividend is declared, except in an
amount not exceeding the aggregate of dividends on
Common Stock which could have been, but have not
been, declared under clause (a) above and this
clause (b); and
(c) At any time when the Common Stock Equity
is 25% or more of total capitalization, the
Corporation may not declare dividends on shares of
the Common Stock which would reduce the Common
Stock Equity below 25% of total capitalization,
except to the extent provided in clause (a) and
clause (b) above.
For the purposes of this paragraph (5) only:
(i) The term "Common Stock Equity"
shall mean the sum of the par value of, or
stated value or capital represented by, the
shares of Common Stock of the Corporation
outstanding, and the surplus, earned, capital,
and paid-in, of the Corporation (including any
premiums on Common Stock but excluding any
premiums on the Cumulative Preferred Stock)
whether or not available for the payment of
dividends on the Common Stock; provided,
however, that there shall be deducted from
such sum (I) the amount of any Depreciation
Deficiency for the period from December 31,
1952 to the end of the calendar month
immediately preceding the date on which a
dividend on Common Stock is declared and (II)
the amount, if any, by which the aggregate of
all amounts payable upon the involuntary
dissolution, liquidation or winding up of the
Corporation to the holders of the Cumulative
Preferred Stock and of any other class of
stock ranking prior to or on a parity with the
Cumulative Preferred Stock as to dividends or
distributions exceeds the aggregate of the
capital of the Corporation applicable to such
Cumulative Preferred Stock and class of stock
ranking prior to or on a parity with the
Cumulative Preferred Stock as to dividends or
distributions;
(ii) The term "total capitalization"
shall mean the sum of the par value of, or
stated value or capital represented by, the
capital stock of all classes of the
Corporation outstanding, the surplus, earned,
capital and paid-in, of the Corporation
(including any premiums on any such capital
stock), whether or not available for the
payment of dividends on the Common Stock, and
the principal amount of all debt of the
Corporation outstanding, maturing more than
twelve months after the date of the
determination of the total capitalization,
less any amount required to be deducted in the
determination of Common Stock Equity as in
clause (i) above provided;
(iii) The term "dividends on Common
Stock" shall embrace dividends on Common Stock
of the Corporation (other than dividends
payable only in shares of such Common Stock),
distributions on, and purchases or other
acquisitions for value of any Common Stock of
the Corporation; and
(iv) The term "Depreciation Deficiency"
shall mean, as to any specified period, the
amount by which the aggregate of (I) all
amounts credited to the depreciation reserve
account of the Corporation through charges to
operating revenue deductions or otherwise as
provided in the Uniform System of Accounts
prescribed for Public Utilities and Licensees
by the Federal Power Commission and of (II)
all charges for maintenance, shall have been
less than 15% of all operating revenues of the
Corporation (excluding therefrom non-operating
income and revenues derived directly from pro-
perties leased to the Corporation), less all
charges to income made by the Corporation for
purchased power and for the net amount of
electric energy received by the Corporation
through interchange.
(6) In the event of any liquidation, dissolution or
winding up of the Corporation, all assets and funds of
the Corporation remaining after paying or providing for
the payment of all creditors of the Corporation and after
paying or providing for the payment to the holders of
shares of all series of the Cumulative Preferred Stock of
the full distributive amounts to which they are
respectively entitled as herein provided, shall be
divided among and paid to the holders of the Common Stock
according to their respective rights and interests.
(7)(A) So long as any shares of the Cumulative
Preferred Stock are outstanding, the Corporation shall
not, without the consent (given by vote at a meeting
called for that purpose) of the holders of at least two-
thirds of the total number of votes which holders of the
outstanding shares of Cumulative Preferred Stock are
entitled to cast, voting together for such purpose as a
single class:
(a) Increase the total authorized amount of
the Cumulative Preferred Stock; or
(b) Create or authorize any shares of any
class of stock ranking prior to the Cumulative
Preferred Stock as to dividends or assets or issue
any shares of any such prior ranking stock more
than twelve months after the date as of which the
Corporation was empowered to create or authorize
such prior ranking stock; or
(c) Amend, alter, change or repeal any of the
express terms of the Cumulative Preferred Stock or
of any series of the Cumulative Preferred Stock
then outstanding in a manner substantially
prejudicial to the holders thereof; provided,
however, that if any such amendment, alteration,
change or repeal would be substantially prejudicial
to the holders of one or more, but not all, of the
series of the Cumulative Preferred Stock at the
time outstanding, only the consent of the holders
of two-thirds of the total number of votes which
holders of the shares of each series prejudicially
affected are entitled to cast shall be required,
voting for such purpose as a single class.
(B) So long as any shares of the Cumulative
Preferred Stock are outstanding, the Corporation shall
not, without the consent (given by vote at a meeting
called for that purpose) of the holders of a majority of
the total number of votes which holders of the
outstanding shares of Cumulative Preferred Stock are
entitled to cast, voting together for such purpose as a
single class:
(a) Merge or consolidate with or into any
other corporation or corporations, or sell or
otherwise dispose of all or substantially all of
its properties, unless such merger or
consolidation, or the issuance and assumption of
all securities to be issued or assumed in
connection with any such merger or consolidation,
or such sale or disposition, shall have been
ordered, approved or permitted by the Securities
and Exchange Commission, or by any successor agency
thereto, under the provisions of the Public Utility
Holding Company Act of 1935 or any legislation
enacted in substitution therefor; provided that the
provisions of this clause (a) shall not apply to a
purchase or other acquisition by the Corporation of
franchises or assets of another corporation in any
manner which does not involved a merger or
consolidation; or
(b) Issue or assume any unsecured debt
securities for purposes other than
(i) the reacquisition, redemption or
other retirement of any evidences of
indebtedness theretofore issued or assumed by
the Corporation, or
(ii) the reacquisition, redemption or
other retirement of all outstanding shares of
the Cumulative Preferred Stock,
if immediately after such issue or assumption, the
total principal amount of all unsecured debt
securities (other than the principal amount of all
long-term unsecured debt securities not in excess
of 10% of the Capitalization of the Corporation)
issued or assumed by the Corporation and then
outstanding would exceed 10% of the Capitalization
of the Corporation.
For the purposes of this subparagraph (b)
only:
(I) "unsecured debt securities" shall be
deemed to mean any unsecured notes,
debentures, or other securities representing
unsecured indebtedness, but shall not include
contractual commitments and agreements for the
purchase of property, materials or equipment
to be used or consumed in the ordinary course
of the Corporation's business;
(II) "long-term unsecured debt
securities" shall be deemed to mean all
unsecured debt securities, which, at the time
of issuance or assumption by the Corporation,
matured by their terms on a date ten or more
years subsequent to such issuance or
assumption to the extent that, as of any
specified time of computation, such unsecured
debt securities do not mature by their terms
and are not required to be redeemed,
reacquired or otherwise retired, through
sinking fund or other debt retirement
provision, on a date less than five years
subsequent to such time of computation; and
(III) the "Capitalization of the
Corporation" shall be deemed to mean, as of
any specified time of computation, an amount
equal to the sum of the total principal amount
of all bonds or other debt securities
representing secured indebtedness issued or
assumed by the Corporation and then to be
outstanding, and the aggregate of the par
value of, or stated capital represented by,
the outstanding shares of all classes of stock
and of the surplus of the Corporation, paid
in, earned and other, if any.
(c) Issue, sell or otherwise dispose of any
shares of the Cumulative Preferred Stock or of any
other class of stock ranking prior to or on a
parity with the Cumulative Preferred Stock as to
dividends or distributions, unless (i) the net
income of the Corporation, determined in accordance
with generally accepted accounting practices to be
available for the payment of dividends for a period
of twelve (12) consecutive calendar months within
the fifteen (15) calendar months immediately
preceding the issuance, sale or disposition of such
stock (but less any Depreciation Deficiency for
such period), shall have been at least equal to
twice the annual dividend requirements on all
outstanding shares of the Cumulative Preferred
Stock and of al other classes of stock ranking
prior to or on a parity with the Cumulative
Preferred Stock as to dividends or distributions,
including the shares proposed to be issued; (ii)
the gross income of the Corporation for said
period, determined in accordance with generally
accepted accounting practices (but in any event
after deducting the amount for said period charged
by the Corporation on its books to depreciation
expense and in addition thereto any Depreciation
Deficiency for said period) to be available for the
payment of interest, shall have been at least one
and one-half times the sum of (I) the annual
interest charges on all interest bearing
indebtedness of the Corporation and (II) the annual
dividend requirements on all outstanding shares of
the Cumulative Preferred Stock and of all other
classes of stock ranking prior to or on a parity
with the Cumulative Preferred Stock as to dividends
or distributions, including the shares proposed to
be issued; and (iii) the aggregate of the capital
of the Corporation applicable to the Common Stock
and of the surplus of the Corporation immediately
after such issuance, sale or other disposition,
less any Depreciation Deficiency for the period
from December 31, 1952 to such date, shall be not
less than the amount payable upon the involuntary
dissolution, liquidation or winding up of the
Corporation to the holders of the Cumulative
Preferred Stock and of such other class of stock,
excluding from the foregoing computation all stock
which is to be retired in connection with such
additional issue; provided, that the Corporation
shall not thereafter pay any dividends on the
Common Stock unless immediately thereafter the
aggregate of the capital of the Corporation
applicable to the Common Stock and of the surplus
of the Corporation, less any Depreciation
Deficiency for the period from December 31, 1952 to
such date, shall be not less than the amount
payable upon the involuntary dissolution,
liquidation or winding up of the Corporation to the
holders of the Cumulative Preferred Stock and of
such other class of stock.
For the purposes of this subparagraph (c)
only, the term "Depreciation Deficiency" shall
mean, as to any specified period, the amount by
which the aggregate of (i) all amounts credited to
the depreciation reserve account of the Corporation
through charges to operating revenue deductions or
otherwise as provided in the Uniform System of
Accounts prescribed for Public Utilities and
Licensees by the Federal Power Commission and of
(ii) all charges for maintenance, shall have been
less than 15% of all operating revenues of the
Corporation (excluding therefrom non-operating
income and revenues derived directly from
properties leased to the Corporation), less all
charges to income made by the Corporation for
purchased power and for the net amount of electric
energy received by the Corporation through
interchange.
(8) No holder of shares of any series of the
Cumulative Preferred Stock shall be entitled as such as
a matter of right to subscribe for or purchase any part
of any new or additional issue of stock, or securities
convertible into stock of any class whatsoever, whether
now or hereafter authorized, and whether issued for cash,
property, services, by way of dividends, or otherwise.
(9)(A) Except as otherwise provided in this
paragraph (9) or in paragraph (7) hereof, or as otherwise
required by the laws of the State of Ohio;
(i) Every holder of Cumulative Preferred
Stock ($100 voting) shall be entitled to cast one
vote for each share of Cumulative Preferred Stock
($100 voting) held by him for the election of
Directors and upon all other matters;
(ii) The holders of Cumulative Preferred
Stock ($100 non-voting) and Cumulative Preferred
Stock ($25 non-voting) shall not be entitled to
vote; and
(iii) Every holder of Common Stock shall be
entitled to cast one vote for each share of Common
Stock held by him for the election of Directors and
upon all other matters.
Whenever, pursuant to the provisions of this paragraph
(9) or paragraph (7) hereof, the holders of Cumulative
Preferred Stock ($100 voting), Cumulative Preferred Stock
($100 non-voting) and Cumulative Preferred Stock ($25
non-voting) shall be entitled to vote together as a
single class for the election of Directors or on any
other matter, every holder of shares of Cumulative
Preferred Stock ($100 voting) or Cumulative Preferred
Stock ($100 non-voting) shall be entitled to cast one
vote for each such share held by him and every holder of
Cumulative Preferred Stock ($25 non-voting) shall be
entitled to cast one-quarter of one vote for each such
share held by him. In addition to any provisions herein,
whenever the consent or the affirmative vote of the
holders of any class of the Cumulative Preferred Stock,
voting as a single class, shall be required for the
adoption of any amendment to these Articles pursuant to
any provision of law, the consent or affirmative vote of
the holders of at least a majority of the total number of
shares of such class then outstanding shall be required
for such purpose. Except when some mandatory provision
of law shall be controlling and except as otherwise
provided in subparagraphs (7)(A)(c), 12(c), (14)(c) and
(16)(c) hereof, whenever shares of two or more series of
any class of Cumulative Preferred Stock are outstanding,
no particular series of such class shall be entitled to
vote as a separate series on any matter.
(B) If and when dividends payable on the
Cumulative Preferred Stock shall be in default in an
amount equivalent to four full quarter-yearly dividends
on all shares of all series of the Cumulative Preferred
Stock at the time outstanding, and until all dividends in
default on the Cumulative Preferred Stock shall have been
paid, the holders of all shares of the Cumulative
Preferred Stock, voting separately as one class, shall be
entitled to elect the smallest number of Directors
necessary to constitute a majority of the full Board of
Directors, and the holders of the Common Stock, voting
separately as a class, shall be entitled to elect the
remaining Directors of the Corporation. The terms of
office of all persons who may be Directors of the
Corporation at the time shall terminate upon the election
of a majority of the Board of Directors by the holders of
the Cumulative Preferred Stock, except that if the
holders of the Common Stock shall not have elected the
remaining Directors of the Corporation, then, and only in
that event, the Directors of the Corporation in office
just prior to the election of a majority of the Board of
Directors by the holders of the Cumulative Preferred
Stock shall elect the remaining Directors of the
Corporation.
(C) If and when all dividends then in default on
the Cumulative Preferred Stock at the time outstanding
shall be paid (and such dividends shall be declared and
paid out of any funds legally available therefor as soon
as reasonably practicable), the Cumulative Preferred
Stock shall thereupon be divested of any special right
with respect to the election of Directors provided in
subparagraph (B) hereof, and the voting power of the
Cumulative Preferred Stock and the Common Stock shall
revert to the status existing before the occurrence of
such default; but always subject to the same provisions
for vesting such special rights in the Cumulative
Preferred Stock in case of further like default or
defaults in dividends thereon. Upon the termination of
any such special right the terms of office of all persons
who may have been elected Directors of the Corporation by
vote of the holders of the Cumulative Preferred Stock, as
a class, pursuant to such special right shall forthwith
terminate.
(D) In case of any vacancy in the Board of
Directors occurring among the Directors elected by the
holders of the Cumulative Preferred Stock, as a class,
pursuant to subparagraph (B) hereof, the holders of the
Cumulative Preferred Stock then outstanding and entitled
to vote may elect a successor to hold office for the
unexpired term of the Director whose place shall be
vacant. In case of a vacancy in the Board of Directors
occurring among the Directors elected by the holders of
the Common Stock, as a class, or by the Directors in
office just prior to the election of a majority of the
Board of Directors by the holders of the Cumulative
Preferred Stock, pursuant to subparagraph (B) hereof, the
holders of the Common Stock then outstanding and entitled
to vote may elect a successor to hold office for the
unexpired term of the Director whose place shall be
vacant. In all other cases, any vacancy occurring among
the Directors shall be filled by the vote of a majority
of the remaining Directors.
(E) Whenever the holders of the Cumulative
Preferred Stock, as a class, become entitled, to elect
Directors of the Corporation pursuant to either
subparagraphs (B) or (D) hereof, it shall be the duty of
the president, a vice-president or the secretary of the
Corporation forthwith to call, and to cause notice to be
given to the stockholders entitled to vote at, a meeting
to be held at such time as the Corporation's officers may
fix, not less than thirty nor more than sixty days after
the accrual of such right, for the purpose of electing
Directors. The notice so given shall be mailed to each
holder of record of the Cumulative Preferred Stock at his
address as it appears upon the records of the Corporation
and shall set forth, among other things, (i) that by
reason of the fact that dividends payable on the
Cumulative Preferred Stock are in default in an amount
equivalent to four full quarter-yearly dividends or more
per share, the holders of the Cumulative Preferred Stock,
voting separately as a class, have the right to elect the
smallest number of Directors necessary to constitute a
majority of the full Board of Directors of the
Corporation, (ii) that any holder of the Cumulative
Preferred Stock has the right, at any reasonable time, to
inspect, and make copies of, the list or lists of holders
of the Cumulative Preferred Stock maintained at the
principal office of the Corporation or at the office of
any Transfer Agent of the Cumulative Preferred Stock, and
(iii) either the entirety of this paragraph or the
substance thereof with respect to the number of shares of
the Cumulative Preferred Stock required to be represented
at any meeting, or adjournment thereof, called for the
election of Directors of the Corporation. At the first
meeting of stockholders held for the purpose of electing
Directors during such time as the holders of the
Cumulative Preferred Stock shall have the special right,
voting separately as a class, to elect Directors, the
presence in person or by proxy of the holders of a
majority of the outstanding Common Stock shall be
required to constitute a quorum of such class for the
election of Directors, and the presence in person or by
proxy of the holders of a majority of the total number of
votes which holders of the outstanding shares of
Cumulative Preferred Stock are entitled to cast shall be
required to constitute a quorum of such class for the
election of Directors; provided, however, that in the
absence of a quorum of the holders of the Cumulative
Preferred Stock, no election of Directors shall be held,
but a majority of the holders of the Cumulative Preferred
Stock who are present in person or by proxy shall have
power to adjourn the election of the Directors to a date
not less than fifteen nor more than fifty days from the
giving of the notice of such adjourned meeting
hereinafter provided for; and provided, further, that at
such adjourned meeting, the presence in person or by
proxy of the holders of 35% of the total number of votes
which holders of the outstanding shares of Cumulative
Preferred Stock are entitled to cast shall be required to
constitute a quorum of such class for the election of
Directors. In the event such first meeting of
stockholders shall be so adjourned, it shall be the duty
of the president, a vice-president or the secretary of
the Corporation, within ten days from the date on which
such first meeting shall have been adjourned, to cause
notice of such adjourned meeting to be given to the
stockholders entitled to vote thereat, such adjourned
meeting to be held not less than fifteen days nor more
than fifty days from the giving of such second notice.
Such second notice shall be given in the form and manner
hereinabove provided for with respect to the notice
required to be given of such first meeting of
stockholders, and shall further set forth that a quorum
was not present at such first meeting and that the
holders of 35% of the total number of votes which holders
of the outstanding shares of Cumulative Preferred Stock
are entitled to cast shall be required to constitute a
quorum of such class for the election of Directors at
such adjourned meeting. If the requisite quorum of
holders of the Cumulative Preferred Stock shall not be
present at said adjourned meeting, then the Directors of
the Corporation then in office shall remain in office
until the next Annual Meeting of the Corporation, or
special meeting in lieu thereof, and until their
successors shall have been elected and shall qualify.
Neither such first meeting nor such adjourned meeting
shall be held on a date within sixty days of the date of
the next Annual Meeting of the Corporation or special
meeting in lieu thereof. At each Annual Meeting of the
Corporation, or special meeting in lieu thereof, held
during such time as the holders of the Cumulative
Preferred Stock, voting separately as a class, shall have
the right to elect a majority of the Board of Directors,
the foregoing provisions of this subparagraph shall
govern such Annual Meeting, or special meeting in lieu
thereof, as if said Annual Meeting or special meeting
were the first meeting of stockholders held for the
purpose of electing Directors after the right of the
holders of the Cumulative Preferred Stock, voting
separately as a class, to elect a majority of the Board
of Directors, should have accrued with the exception
that, until the holders of the Cumulative Preferred Stock
shall have elected a majority of the Board of Directors,
if at any adjourned Annual Meeting, or special meeting in
lieu thereof, holders of 35% of the total number of votes
which holders of the outstanding shares of Cumulative
Preferred Stock are entitled to cast are not present in
person or by proxy, all the Directors to be elected shall
be elected by a vote of the holders of a majority of the
Common Stock of the Corporation present or represented at
the meeting.
(F) So long as any shares of the Cumulative
Preferred Stock of any series are outstanding, the Board
of Directors of the Corporation shall consist of not less
than three (3) persons and not more than the number of
persons set forth in the Corporation's Code of
Regulations.
(10) The Corporation may, at any time and from time
to time, issue and dispose of any of the authorized and
unissued shares of the Cumulative Preferred Stock and
Common Stock for such consideration as may be fixed by
the Board of Directors, subject to any provisions of law
then applicable, and subject to the provisions of any
resolutions of the stockholders of the Corporation
relating to the issue and disposition of such shares.
(11) The Corporation hereby classifies $20,240,300
par value of the Cumulative Preferred Stock ($100 voting)
as a series of such Cumulative Preferred Stock ($100
voting), which shall be designated as "4-1/2% Cumulative
Preferred Stock," consisting of 202,403 shares of the par
value of $100 per share.
(12) The preferences or restrictions or qualifica-
tions and the descriptions and terms of the shares of the
4-1/2% Cumulative Preferred Stock, in the respects in
which the shares of such series may vary from shares of
other series of the Cumulative Preferred Stock ($100
voting), shall be as follows:
(a) The annual dividend rate for such series
shall be 4-1/2% per annum and the date from which
dividends on all shares of such series issued prior
to the record date for the dividend payable June 1,
1941, shall be cumulative, shall be March 1, 1941;
(b) The redemption price for such series
shall be $112.50 per share until March 1, 1946; on
and after March 1, 1946 and until March 1, 1951,
$111 per share; and on and after March 1, 1951,
$110 per share;
(c) The preferential amounts to which the
holders of shares of such series shall be entitled
upon any liquidation, dissolution or winding up of
the Corporation shall be:
$110 per share, upon any voluntary
liquidation, dissolution or winding up of the
Corporation, except that if such voluntary
liquidation, dissolution or winding up of the
Corporation shall have been approved by the
vote in favor thereof of the holders of a
majority of the total number of shares of the
4-1/2% Cumulative Preferred Stock then
outstanding, given at a meeting called for
that purpose, the amount so payable on such
voluntary liquidation, dissolution, or winding
up shall be $100 per share; or
$100 per share, in the event of any
involuntary liquidation, dissolution or
winding up of the Corporation;
(d) There shall not be any sinking fund
provided for the purchase or redemption of shares
of the 4-1/2% Cumulative Preferred Stock; and
(e) The shares of the 4-1/2% Cumulative
Preferred Stock shall not have any rights to
convert the same into and/or purchase stock of any
other series or class or other securities, or any
special rights other than those specified herein.
(13) The Corporation hereby classifies $10,000,000
par value of the Cumulative Preferred Stock ($100 voting)
as a series of such Cumulative Preferred Stock ($100
voting), which shall be designated as "4.40% Cumulative
Preferred Stock," consisting of 100,000 shares of the par
value of $100 per share.
(14) The preferences or restrictions or qualifica-
tions and the descriptions and terms of the shares of the
4.40% Cumulative Preferred Stock, in the respects in
which the shares of such series may vary from shares of
other series of the Cumulative Preferred Stock ($100
voting), shall be as follows:
(a) The annual dividend rate for such series
shall be 4.40% per annum and the date from which
dividends on all shares of such series issued prior
to the record date for the dividend payable March
1, 1953, shall be cumulative, shall be the date of
issuance of the shares of such series;
(b) The redemption price for such series
shall be $107.50 per share on or prior to January
1, 1960; $106.00 per share after January 1, 1960
but on or prior to January 1, 1965; $105.00 per
share after January 1, 1965 but on or prior to
January 1, 1970; and $104.00 per share thereafter.
(c) The preferential amounts to which the
holders of shares of such series shall be entitled
upon any liquidation, dissolution or winding up of
the Corporation shall be:
The redemption price in effect at the
date of any voluntary liquidation, dissolution
or winding up of the Corporation, except that
if such voluntary liquidation, dissolution or
winding up of the Corporation shall have been
approved by the vote in favor thereof of the
holders of a majority of the total number of
shares of the 4.40% Cumulative Preferred Stock
then outstanding, given at a meeting called
for that purpose, the amount so payable on
such voluntary liquidation, dissolution, or
winding up shall be $100 per share; or
$100 per share, in the event of any
involuntary liquidation, dissolution or
winding up of the Corporation;
(d) There shall not be any sinking fund
provided for the purchase or redemption of shares
of the 4.40% Cumulative Preferred Stock; and
(e) The shares of the 4.40% Cumulative
Preferred Stock shall not have any rights to
convert the same into and/or purchase stock of any
other series or class or any other securities, or
any special rights other than those specified
herein.
(15) The Corporation hereby classifies $5,000,000
par value of the Cumulative Preferred Stock ($100 voting)
as a series of such Cumulative Preferred Stock ($100
voting), which shall be designated as "4.08% Cumulative
Preferred Stock," consisting of 50,000 shares of the par
value of $100 per share.
(16) The preferences or restrictions or qualifica-
tions and the descriptions and terms of the shares of the
4.08% Cumulative Preferred Stock, in the respects in
which the shares of such series may vary from shares of
other series of the Cumulative Preferred Stock ($100
voting), shall be as follows:
(a) The annual dividend rate for such series
shall be 4.08% per annum and the date from which
dividends on all shares of such series issued prior
to the record date for the dividend payable June 1,
1954, shall be cumulative, shall be the date of
issuance of the shares of such series;
(b) The redemption price of such series shall
be $106 per share on or prior to April 1, 1959;
$105 per share after April 1, 1959 but on or prior
to April 1, 1964; $104 per share after April 1,
1964 but on or prior to April 1, 1969; and $103 per
share thereafter;
(c) The preferential amounts to which the
holders of shares of such series shall be entitled
upon any liquidation, dissolution or winding up of
the Corporation shall be:
The redemption price in effect at the
date of any voluntary liquidation, dissolution
or winding up of the Corporation, except that
if such voluntary liquidation, dissolution or
winding up of the Corporation shall have been
approved by the vote in favor thereof of the
holders of a majority of the total number of
shares of the 4.08% Cumulative Preferred Stock
then outstanding, given at a meeting called
for that purpose, the amount so payable on
such voluntary liquidation, dissolution, or
winding up shall be $100 per share; or
$100 per share, in the event of any
involuntary liquidation, dissolution or
winding up of the Corporation;
(d) There shall not be any sinking fund
provided for the purchase or redemption of shares
of the 4.08% Cumulative Preferred Stock; and
(e) The shares of the 4.08% Cumulative
Preferred Stock shall not have any rights to
convert the same into and/or purchase stock of any
other series or class or any other securities, or
any special rights other than those specified
herein.
(17) The Corporation hereby classifies $6,000,000
par value of the Cumulative Preferred Stock ($100 voting)
as a series of such Cumulative Preferred Stock ($100
voting), which shall be designated as "4.20% Cumulative
Preferred Stock," consisting of 60,000 shares of the par
value of $100 per share.
(18) The preferences or restrictions or qualifica-
tions and the descriptions and terms of the shares of the
4.20% Cumulative Preferred Stock, in the respects in
which the shares of such series may vary from shares of
other series of the Cumulative Preferred Stock ($100
voting), shall be as follows:
(a) The annual dividend rate for such series
shall be 4.20% per annum and the date from which
dividends on all shares of such series issued prior
to the record date for the dividend payable
December 1, 1955, shall be cumulative, shall be the
date of issuance of the shares of such series;
(b) The redemption price for such series
shall be $105.20 per share on or prior to September
1, 1960; $104.20 per share after September 1, 1960
but on or prior to September 1, 1965; and $103.20
per share after September 1, 1965;
(c) The preferential amounts to which the
holders of shares of such series shall be entitled
upon any liquidation, dissolution or winding up of
the Corporation shall be the redemption price in
effect at the date of any voluntary liquidation,
dissolution or winding up of the Corporation; or
$100 per share, in the event of any involuntary
liquidation, dissolution or winding up of the
Corporation;
(d) There shall not be any sinking fund
provided for the purchase or redemption of shares
of the 4.20% Cumulative Preferred Stock; and
(e) The shares of the 4.20% Cumulative
Preferred Stock shall not have any rights to
convert the same into and/or purchase stock of any
other series or class or any other securities, or
any special rights other than those specified
herein.
(19) The Corporation hereby classifies $15,000,000
par value of the Cumulative Preferred Stock ($100 voting)
as a series of such Cumulative Preferred Stock ($100
voting), which shall be designated as "8.04% Cumulative
Preferred Stock," consisting of 150,000 shares of the par
value of $100 per share.
(20) The preferences or restrictions or qualifica-
tions and the descriptions and terms of the shares of the
8.04% Cumulative Preferred Stock, in the respects in
which the shares of such series may vary from shares of
other series of the Cumulative Preferred Stock ($100
voting), shall be as follows:
(a) The annual dividend rate for such series
shall be 8.04% per annum and the date from which
dividends on all shares of such series issued prior
to the record date for the dividend payable June 1,
1971, shall be cumulative, shall be the date of
issuance of the shares of such series;
(b) The redemption price for such series
shall be $109.81 per share prior to March 1, 1976;
$107.80 per share on and after March 1, 1976 but
prior to March 1, 1981; $105.79 per share on and
after March 1, 1981 but prior to March 1, 1986;
$103.78 per share on and after March 1, 1986 but
prior to March 1, 1991; and $102.58 per share on
March 1, 1991 and thereafter; provided, however,
that no share of such series shall be redeemed
prior to March 1, 1976 if such redemption is for
the purpose or in anticipation of refunding such
share, directly or indirectly, through the
incurring of debt, or through the issuance of
capital stock ranking equally with or prior to the
shares of such series as to dividends or assets, if
such debt has an effective interest cost to the
Corporation (computed in accordance with generally
accepted financial practice), or such capital stock
has an effective dividend cost to the Corporation
(so computed), of less than 8.02% per annum;
(c) The preferential amounts to which the
holders of shares of such series shall be entitled
upon any liquidation, dissolution or winding up of
the Corporation shall be the redemption price in
effect at the date of any voluntary liquidation,
dissolution or winding up of the Corporation; or
$100 per share, in the event of any involuntary
liquidation, dissolution or winding up of the
Corporation;
(d) There shall not be any sinking fund
provided for the purchase or redemption of shares
of such series; and
(e) The shares of such series shall not have
any rights to convert the same into and/or purchase
stock of any other series or class or any other
securities, or any special rights other than those
specified herein.
(21) The Corporation hereby classifies $10,000,000
par value of the Cumulative Preferred Stock ($100 voting)
as a series of such Cumulative Preferred Stock ($100
voting), which shall be designated as "7.72% Cumulative
Preferred Stock," consisting of 100,000 shares of the par
value of $100 per share.
(22) The preferences or restrictions or qualifica-
tions and the descriptions and terms of the shares of the
7.72% Cumulative Preferred Stock, in the respects in
which the shares of such series may vary from shares of
other series of the Cumulative Preferred Stock ($100
voting), shall be as follows:
(a) The annual dividend rate for such series
shall be 7.72% per annum and the date from which
dividends on all shares of such series issued prior
to the record date for the dividend payable June 1,
1971, shall be cumulative, shall be the date of
issuance of the shares of such series;
(b) The redemption price for such series
shall be $109.30 per share prior to April 1, 1976;
$107.37 per share on and after April 1, 1976 but
prior to April 1, 1981; $105.44 per share on and
after April 1, 1981 but prior to April 1, 1986;
$103.51 per share on and after April 1, 1986 but
prior to April 1, 1991; and $102.35 per share on
April 1, 1991 and thereafter; provided, however,
that no share of such series shall be redeemed
prior to April 1, 1976 if such redemption is for
the purpose or in anticipation of refunding such
share, directly or indirectly, through the
incurring of debt, or through the issuance of
capital stock ranking equally with or prior to the
shares of such series as to dividends or assets, if
such debt has an effective interest cost to the
Corporation (computed in accordance with generally
accepted financial practice), or such capital stock
has an effective dividend cost to the Corporation
(so computed), of less than 7.69% per annum;
(c) The preferential amounts to which the
holders of shares of such series shall be entitled
upon any liquidation, dissolution or winding up of
the Corporation shall be the redemption price in
effect at the date of any voluntary liquidation,
dissolution or winding up of the Corporation; or
$100 per share, in the event of any involuntary
liquidation, dissolution or winding up of the
Corporation;
(d) There shall not be any sinking fund
provided for the purchase or redemption of shares
of such series; and
(e) The shares of such series shall not have
any rights to convert the same into and/or purchase
stock of any other series or class or any other
securities, or any special rights other than those
specified herein.
(23) The Corporation hereby classifies $35,000,000
par value of the Cumulative Preferred Stock ($100 voting)
as a series of such Cumulative Preferred Stock ($100
voting), which shall be designated as "7.60% Cumulative
Preferred Stock," consisting of 350,000 shares of the par
value of $100 per share.
(24) The preferences or restrictions or qualifica-
tions and the descriptions and terms of the shares of the
7.60% Cumulative Preferred Stock, in the respects in
which the shares of such series may vary from shares of
other series of the Cumulative Preferred Stock ($100
voting), shall be as follows:
(a) The annual dividend rate for such series
shall be 7.60% per annum and the date from which
dividends on all shares of such series issued prior
to the record date for the dividend payable
December 1, 1971, shall be cumulative, shall be the
date of issuance of the shares of such series;
(b) The redemption price for such series
shall be $109.10 per share prior to October 1,
1976; ($107.20 per share on or after October 1,
1976 but prior to October 1, 1981; $105.30 per
share on and after October 1, 1981 but prior to
October 1, 1986; $103.40 per share on and after
October 1, 1986 but prior to October 1, 1991; and
$102.26 per share on October 1 1991 and thereafter;
provided, however, that no share of such series
shall be redeemed prior to October 1, 1976 if such
redemption is for the purpose or in anticipation of
refunding such share, directly or indirectly,
through the incurring of debt, or through the
issuance of capital stock ranking equally with or
prior to the shares of such series as to dividends
or assets, if such debt has an effective interest
cost to the Corporation (computed in accordance
with generally accepted financial practice), or
such capital stock has an effective dividend cost
to the Corporation (so computed), of less than
7.57% per annum;
(c) The preferential amounts to which the
holders of shares of such series shall be entitled
upon any liquidation, dissolution or winding up of
the Corporation shall be the redemption price in
effect at the date of any voluntary liquidation,
dissolution or winding up of the Corporation; or
$100 per share, in the event of any involuntary
liquidation, dissolution or winding up of the
Corporation;
(d) There shall not be any sinking fund
provided for the purchase or redemption of shares
of such series; and
(e) The shares of such series shall not have
any rights to convert the same into and/or purchase
stock of any other series or class or any other
securities, or any special rights other than those
specified herein.
(25) The Corporation hereby classifies $35,000,000
par value of the Cumulative Preferred Stock ($100 voting)
as a series of such Cumulative Preferred Stock ($100
voting), which shall be designated as "7-6/10% Cumulative
Preferred Stock," consisting of 350,000 shares of the par
value of $100 per share.
(26) The preferences or restrictions or qualifica-
tions and the descriptions and terms of the shares of the
7-6/10% Cumulative Preferred Stock, in the respects in
which the shares of such series may vary from shares of
other series of the Cumulative Preferred Stock ($100
voting), shall be as follows:
(a) The annual dividend rate for such series
shall be 7-6/10% per annum and the date from which
dividends on all shares of such series issued prior
to the record date for the dividend payable June 1,
1972, shall be cumulative, shall be the date of
issuance of the shares of such series;
(b) The redemption price for such series
shall be $108.95 per share prior to April 1, 1977;
$107.05 per share on and after April 1, 1977 but
prior to April 1, 1982; $105.15 per share on and
after April 1, 1982 but prior to April 1, 1987;
$103.25 per share on and after April 1, 1987 but
prior to April 1, 1992; and $102.11 per share on
April 1, 1992 and thereafter; provided, however,
that no share of such series shall be redeemed
prior to April 1, 1977 if such redemption is for
the purpose or in anticipation of refunding such
share, directly or indirectly, through the
incurring of debt, or through the issuance of
capital stock ranking equally with or prior to the
shares of such series as to dividends or assets, if
such debt has an effective interest cost to the
Corporation (computed in accordance with generally
accepted financial practice), or such capital stock
has an effective dividend cost to the Corporation
(so computed), of less than 7.58% per annum;
(c) The preferential amounts to which the
holders of shares of such series shall be entitled
upon any liquidation, dissolution or winding up of
the Corporation shall be the redemption price in
effect at the date of any voluntary liquidation,
dissolution or winding up of the Corporation; or
$100 per share, in the event of any involuntary
liquidation, dissolution or winding up of the
Corporation;
(d) There shall not be any sinking fund
provided for the purchase or redemption of shares
of such series; and
(e) The shares of such series shall not have
any rights to convert the same into and/or purchase
stock of any other series or class or any other
securities, or any special rights other than those
specified herein.
(27) The Corporation hereby classifies $45,000,000
par value of the Cumulative Preferred Stock ($100 voting)
as a series of such Cumulative Preferred Stock ($100
voting), which shall be designated as "7.76% Cumulative
Preferred Stock," consisting of 450,000 shares of the par
value of $100 per share.
(28) The preferences or restrictions or qualifica-
tions and the descriptions and terms of the shares of the
7.76% Cumulative Preferred Stock, in the respects in
which the shares of such series may vary from shares of
other series of the Cumulative Preferred Stock ($100
voting), shall be as follows:
(a) The annual dividend rate for such series
shall be 7.76% per annum and the date from which
dividends on all shares of such series issued prior
to the record date for the dividend payable
December 1, 1972, shall be cumulative, shall be the
date of issuance of the shares of such series;
(b) The redemption price for such series
shall be $109.20 per share prior to October 1,
1977; $107.26 per share on and after October 1,
1977 but prior to October 1, 1982; $105.32 per
share on and after October 1, 1982 but prior to
October 1, 1987; $103.38 per share on and after
October 1, 1987 but prior to October 1, 1992; and
$102.22 per share on October 1, 1992 and
thereafter; provided, however, that no share of
such series shall be redeemed prior to October 1,
1977 if such redemption is for the purpose or in
anticipation of refunding such share, directly or
indirectly, through the incurring of debt, or
through the issuance of capital stock ranking
equally with or prior to the shares of such series
as to dividends or assets, if such debt has an
effective interest cost to the Corporation
(computed in accordance with generally accepted
financial practice), or such capital stock has an
effective dividend cost to the Corporation (so
computed), of less than 7.74% per annum;
(c) The preferential amounts to which the
holders of shares of such series shall be entitled
upon any liquidation, dissolution or winding up of
the Corporation shall be the redemption price in
effect at the date of any voluntary liquidation,
dissolution or winding up of the Corporation; or
$100 per share, in the event of any involuntary
liquidation, dissolution or winding up of the
corporation;
(d) There shall not be any sinking fund
provided for the purchase or redemption of shares
of such series; and
(e) The shares of such series shall not have
any rights to convert the same into and/or purchase
stock of any other series or class or any other
securities, or any special rights other than those
specified herein.
(29) The Corporation hereby classifies $30,000,000
par value of the Cumulative Preferred Stock ($100 voting)
as a series of such Cumulative Preferred Stock ($100
voting), which shall be designated as "8.48% Cumulative
Preferred Stock," consisting of 300,000 shares of the par
value of $100 per share.
(30) The preferences or restrictions or qualifications
and the descriptions and terms of the shares of 8.48%
Cumulative Preferred Stock, in the respects in which the
shares of such series may vary from shares of other series of
the Cumulative Preferred Stock ($100 voting), shall be as
follows:
(a) The annual dividend rate for such series
shall be 8.48% per annum and the date from which
dividends on all shares of such series issued prior
to the record date for the dividend payable
September 1, 1973 shall be cumulative, shall be the
date of issuance of the shares of such series;
(b) The redemption price for such series
shall be $110.03 per share prior to August 1, 1978;
$107.91 per share on and after August 1, 1978 but
prior to August 1, 1983; $105.79 per share on and
after August 1, 1983 but prior to August 1, 1988;
$103.67 per share on and after August 1, 1988 but
prior to August 1, 1993; and $102.40 per share on
August 1, 1993 and thereafter; provided, however,
that no share of such series shall be redeemed
prior to August 1, 1978 if such redemption is for
the purpose or in anticipation of refunding such
share, directly or indirectly, through the
incurring of debt, or through the issuance of
capital stock ranking equally with or prior to the
shares of such series as to dividends or assets, if
such debt has an effective interest cost to the
Corporation (computed in accordance with generally
accepted financial practice), or such capital stock
has an effective divided cost to the Corporation
(so computed), of less than 8.45% per annum;
(c) The preferential amounts to which the
holders of shares of such series shall be entitled
upon any liquidation, dissolution or winding up of
the Corporation shall be the redemption price in
effect at the date of any voluntary liquidation,
dissolution or winding up of the Corporation; or
$100 per share, in the event of any involuntary
liquidation, dissolution or winding up of the
Corporation;
(d) There shall not be any sinking fund
provided for the purchase or redemption of shares
of such series; and
(e) The shares of such series shall not have
any rights to convert the same into and/or purchase
stock of any other series or class or any other
securities, or any special rights other than those
specified herein.
(31) The Corporation hereby classifies $25,000,000
par value of the Cumulative Preferred Stock ($100 voting)
as a series of such Cumulative Preferred Stock ($100
voting), which shall be designated as "14% Cumulative
Preferred Stock," consisting of 250,000 shares of the par
value of $100 per share.
(32) The preferences or restrictions or qualifica-
tions and the descriptions and terms of the shares of the
14% Cumulative Preferred Stock, in the respects in which
the shares of such series may vary from shares of other
series of the Cumulative Preferred Stock ($100 voting),
shall be as follows:
(a) The annual dividend rate for such series
shall be 14% per annum and in the case of each
share of such series issued prior to the record
date for the first dividend payable on the shares
of such series, the date from which dividends on
such share of such series shall be cumulative shall
be the date of issuance of such share, and in the
case of each other share of such series, as
otherwise provided in this Article.
(b) The redemption prices at which shares of
such series may be redeemed at the option of the
Corporation shall be an amount per share equal to
(i) 101% of the sum of $100 and the annual dividend
prior to March 1, 1985, (ii) $100 plus 50% of the
annual dividend on or after March 1, 1985 but prior
to March 1, 1990, (iii) $100 plus 25% of the annual
dividend on or after March 1, 1990 but prior to
March 1, 1995, and (iv) $100 plus 10% of the annual
dividend on or after March 1, 1995; provided,
however, that no share of such series shall be
redeemed prior to March 1, 1980 if such redemption
is for the purpose or in anticipation of refunding
such share, directly or indirectly, through the
incurring of debt, or through the issuance of
capital stock ranking equally with or prior to the
shares of said series as to dividends or assets, if
such debt has an effective interest cost to the
Corporation (computed in accordance with generally
accepted financial practices), or such capital
stock has an effective dividend cost to the
Corporation (so computed), of less than 14.6% per
annum.
(c) The preferential amounts to which the
holders of shares of such series shall be entitled
upon any liquidation, dissolution or winding up of
the Corporation shall be the redemption price
provided in subparagraph (b) of this paragraph (32)
in effect at the date of any voluntary liquidation,
dissolution or winding up of the Corporation; or
$100 per share, in the event of any involuntary
liquidation, dissolution or winding up of the
Corporation.
(d)(1) A sinking fund shall be established
for the retirement of the shares of such series.
So long as there shall remain outstanding any
shares of such series, the Corporation shall, to
the extent permitted by law on March 1 in each year
commencing with the year 1980, redeem as and for a
sinking fund requirement, out of funds legally
available therefor, 12,500 shares, at a redemption
price of $100 per share. The sinking fund
requirement shall be cumulative so that if on any
such March 1 the sinking fund requirement shall not
have been met, then such sinking fund requirement,
to the extent not met, shall become an additional
sinking fund requirement for the next succeeding
March 1 on which such redemption may be effected.
(2) The Corporation shall have the non-
cumulative option, on any sinking fund date as
provided in subparagraph (d)(1) hereof, to redeem
at a redemption price of $100 per share, an
additional 12,500 shares. No redemption made
pursuant to this subparagraph (d)(2) shall be
deemed to fulfill any sinking fund requirement
established pursuant to subparagraph (d)(1).
(3) The Corporation shall be entitled, at its
election, to credit against any sinking fund
requirement due on March 1 of any year pursuant to
subparagraph (d)(1) of this paragraph (32), shares
of such series theretofore purchased or otherwise
acquired by the Corporation.
(e) The shares of such series shall not have
any rights to convert the same into and/or purchase
stock of any other series or class or any other
securities, or any special rights other than those
specified herein.
(33) The Corporation hereby classifies $40,000,000
par value of the Cumulative Preferred Stock ($100 voting)
as a series of such Cumulative Preferred Stock ($100
voting), which shall be designated as "14% Cumulative
Preferred Stock, Series A," consisting of 400,000 shares
of the par value of $100 per share.
(34) The preferences or restrictions or qualifica-
tions and the descriptions and terms of the shares of the
14% Cumulative Preferred Stock, Series A, in the respects
in which the shares of such series may vary from shares
of other series of the Cumulative Preferred Stock ($100
voting), shall be as follows:
(a) The annual dividend rate for such series
shall be 14% per annum and in the case of each
shares of such series issued prior to the record
date for the first dividend payable on the shares
of such series, the date from which dividends on
such share of such series shall be cumulative shall
be the date of issuance of such share, and in the
case of each other share of such series, as
otherwise provided in this Article.
(b) The redemption prices at which shares of
such series may be redeemed at the option of the
Corporation shall be an amount per share equal to
(i) $100.00 plus the annual dividend prior to June
1, 1985, (ii) $100.00 plus 50% of the annual
dividend on or after June 1, 1985 but prior to June
1, 1990, (iii) $100.00 plus 25% of the annual
divided on or after June 1, 1990 but prior to June
1, 1995, and (iv) $100.00 plus 10% of the annual
dividend on or after June 1, 1995; provided,
however, that no share of such series shall be
redeemed prior to June 1, 1980 if such redemption
is for the purpose or in anticipation of refunding
such share, directly or indirectly, through the
incurring of debt, or through the issuance of
capital stock ranking equally with or prior to the
shares of said series as to dividends or assets, if
such debt has an effective interest cost to the
Corporation (computed in accordance with generally
accepted financial practice), or such capital stock
has an effective dividend cost to the Corporation
(so computed), of less than 14.63% per annum.
(c) The preferential amounts to which the
holders of shares of such series shall be entitled
upon any liquidation, dissolution or winding up of
the Corporation shall be the redemption price
provided in subparagraph (b) of this paragraph (34)
in effect at the date of any voluntary liquidation,
dissolution or winding up of the Corporation; or
$100 pe share, in the event of any involuntary
liquidation, dissolution or winding up of the
Corporation.
(d)(1) A sinking fund shall be established
for the retirement of the shares of such series.
So long as there shall remain outstanding any
shares of such series, the Corporation shall, to
the extent permitted by law on June 1 in each year
commencing with the year 1980, redeem as and for a
sinking fund requirement, out of funds legally
available therefor, a number of shares equal to 5%
of the total number of shares classified in para-
graph (33) hereof, at a redemption price of $100
per share. The sinking fund requirement shall be
cumulative so that if on any such June 1 the
sinking fund requirement shall not have been met,
then such sinking fund require-ment, to the extent
not met, shall become an additional sinking fund
requirement for the next succeeding June 1 on which
such redemption may be effected.
(2) The Corporation shall have the non-
cumulative option, on any sinking fund date as
provided in subparagraph (d)(1) hereof, to redeem
at a redemption price of $100 per share an
additional number of shares equal to 5% of the
total number of shares classified in paragraph (33)
hereof. No redemption made pursuant to this
subparagraph (d)(2) shall be deemed to fulfill any
sinking fund requirement established pursuant to
subparagraph (d)(1).
(3) The Corporation shall be entitled, at
its election, to credit against any sinking fund
requirement due on June 1 of any year pursuant to
subparagraph (d)(1) of this para-graph (34), shares
of such series theretofore purchased or otherwise
acquired by the Corporation.
(e) The shares of such series shall not have
any rights to convert the same into and/or purchase
stock of any other series or class or any other
securities, or any special rights other than those
specified herein.
(35) The Corporation hereby classifies $40,000,000 par
value of the Cumulative Preferred Stock ($25 non-voting) as a
series of such Cumulative Preferred Stock ($25 non-voting),
which shall be designated as "$2.27 Cumulative Preferred
Stock", consisting of 1,600,000 shares of the par value of $25
per share.
(36) The preferences or restrictions or qualifications
and the descriptions and terms of the shares of the $2.27
Cumulative Preferred Stock, in the respects in which the
shares of such series may vary from shares of other series of
the Cumulative Preferred Stock ($25 non-voting), shall be as
follows:
(a) The annual dividend rate for such series
shall be $2.27 per annum and in the case of each
share of such series issued prior to the record
date for the first dividend payable on the shares
of such series, the date from which dividends on
such share of such series shall be cumulative shall
be the date of issuance of such share, and in the
case of each other share of such series, as
otherwise provided in this Article.
(b) The redemption prices at which shares of
such series may be redeemed at the option of the
Corporation shall be an amount per share equal to
(i) $25 plus the annual dividend prior to March 1,
1983, (ii) $25 plus 75% of the annual dividend on
or after March 1, 1983 but prior to March 1, 1988,
(iii) $25 plus 50% of the annual dividend on or
after March 1, 1988 but prior to March 1, 1993,
(iv) $25 plus 25% of the annual dividend on or
after March 1, 1993 but prior to March 1, 1998, and
(v) $25 plus 10% of the annual dividend on or after
March 1, 1998; provided, however, that no share of
such series shall be redeemed prior to March 1,
1983 if such redemption is for the purpose or in
anticipation of refunding such share, directly or
indirectly, through the incurring of debt, or
through the issuance of capital stock ranking
equally with or prior to the shares of said series
as to dividends or assets, if such debt has an
effective interest cost to the Corporation
(computed in accordance with generally accepted
financial practice), or such capital stock has an
effective dividend cost to the Corporation (so
computed), of less than $9.46% per annum.
(c) The preferential amounts to which the
holders of shares of such series shall be entitled
upon any liquidation, dissolution or winding up of
the Corporation shall be the redemption price
provided in subparagraph (b) of this paragraph (36)
in effect at the date of any voluntary liquidation,
dissolution or winding up of the Corporation; or
$25 per share, in the event of any involuntary
liquidation, dissolution or winding up of the
Corporation.
(d) There shall not be any sinking fund
provided for the purchase or redemption of shares
of such series.
(e) The shares of such series shall not have
any rights to convert the same into and/or purchase
stock of any other series or class or any other
securities, or any special rights other than those
specified herein.
(37) The corporation hereby classifies $30,000,000
par value of the Cumulative Preferred Stock ($25 non-
voting) as a series of such Cumulative Preferred Stock
($25 non-voting), which shall be designated as "$3.75
Cumulative Preferred Stock", consisting of 1,200,000
shares of the par value of $25 per share.
(38) The preferences or restrictions or qualifica-
tions and the descriptions and terms of the shares of the
$3.75 Cumulative Preferred Stock, in the respects in
which the shares of such series may vary from shares of
other series of the Cumulative Preferred Stock ($25 non-
voting), shall be as follows:
(a) The annual dividend rate for such series
by $3.75 per annum and in the case of each share of
such series issued prior to the record date for the
first dividend payable on the shares of such
series, the date from which dividends on such share
of such series shall be cumulative shall be the
date of issuance of such share, and in the case of
each other share of such series, as otherwise
provided in this Article.
(b) The redemption prices at which shares of
such series may be redeemed at the option of the
Corporation shall be an amount per share equal to
(i) $25 plus the annual dividend prior to March 1,
1987, (ii) $25 plus 75% of the annual dividend on
or after March 1, 1987 but prior to March 1, 1992,
(iii) $25 plus 50% of the annual dividend on or
after March 1, 1992 but prior to March 1, 1997,
(iv) $25 plus 25% of the annual dividend on or
after March 1, 1997 but prior to March 1, 2002, and
(v) $25 plus 10% of the annual dividend on or after
March 1, 2002; provided, however, that no share of
such series shall be redeemed prior to March 1,
1987 if such redemption is for the purpose or in
anticipation of refunding such share, directly or
indirectly, through the incurring of debt, or
through the issuance of capital stock ranking
equally with or prior to the shares of said series
as to dividends or assets, if such debt has an
effective interest cost to the Corporation
(computed in accordance with generally accepted
financial practice), or such capital stock has an
effective dividend cost to the Corporation (so
computed), of less than 15.34% per annum.
(c) The preferential amounts to which the
holders of shares of such series shall be entitled
upon any liquidation, dissolution or winding up of
the Corporation shall be the redemption price pro-
vided in subparagraph (b) of this paragraph (38) in
effect at the date of any voluntary liquidation,
dissolution or winding up of the Corporation; or
$25 per share, in the event of any involuntary
liquidation, dissolution or winding up of the
Corporation.
(d)(1) A sinking fund shall be established
for the retirement of the shares of such series.
So long as there shall remain outstanding any
shares of such series, the Corporation shall, to
the extent permitted by law on March 1 in each year
commencing with the year 1987, redeem as and for a
sinking fund requirement, out of funds legally
available therefor, a number of shares equal to 5%
of the total number of shares designated as $3.75
Cumulative Preferred Stock in paragraph (37) hereof
at a redemption price of $25 per share. The
sinking fund requirement shall be cumulative so
that if on any such March 1 the sinking fund
requirement shall not have been met, then such
sinking fund requirement, to the extent not met,
shall become an additional sinking fund requirement
for the next succeeding March 1 on which such
redemption may be effected.
(2) The Corporation shall have the non-
cumulative option, on any sinking fund date as
provided in subparagraph (d)(1) hereof, to redeem
at a redemption price of $25 per share, an
additional number of shares equal to 5% of the
total number of shares designated as $3.75
Cumulative Preferred Stock in paragraph (37)
hereof. No redemption made pursuant to this sub-
paragraph (d)(2) shall be deemed to fulfill any
sinking fund requirement established pursuant to
subparagraph (d)(1).
(3) The Corporation shall be entitled, at
its election, to credit against the sinking fund
requirement due on March 1 of any year pursuant to
subparagraph (d)(1) shares of such series
theretofore purchased or otherwise acquired by the
Corporation.
(e) The shares of such series shall not have
any rights to convert the same into and/or purchase
stock of any other series or class or any other
securities, or any special rights other than those
specified herein.
(39) The Corporation hereby classifies $30,000,000
par value of the Cumulative Preferred Stock ($100 non-
voting) as a series of such Cumulative Preferred Stock
($100 non-voting), which shall be designated as "6.35%
Cumulative Preferred Stock", consisting of 300,000 shares
of the par value of $100 per share.
(40) The preferences, rights, restrictions or
qualifications and the description and terms of the 6.35%
Cumulative Preferred Stock, in the respects in which the
shares of such series vary from shares of other series of
the Cumulative Preferred Stock, ($100 non-voting), shall
be as follows:
(a) The annual dividend rate for such series
shall be 6.35% per annum, which dividend shall be
calculated, per share, at such percentage
multiplied by $100. Dividends on all shares of
said series issued prior to the record date for the
initial dividend payable on all shares of such
series shall be cumulative from the date of initial
issuance of the shares of such series.
(b) Such series shall not be subject to
redemption prior to April 1, 2003; the regular
redemption price for shares of such series shall be
$100 per share on or after April 1, 2003, plus an
amount equal to accrued and unpaid dividends to the
date of redemption.
(c) The preferential amounts to which the
holders of shares of such series shall be entitled
upon any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation shall
be $100 per share, plus an amount equal to accrued
and unpaid dividends to the date of redemption.
(d)(1) A sinking fund shall be established
for the retirement of the shares of such series.
So long as there shall remain outstanding any
shares of such series, the Corporation shall, to
the extent permitted by law, on June 1, 2003, and
on each June 1 thereafter to and including June 1,
2007, redeem as and for a sinking fund requirement,
out of funds legally available therefor, a number
of shares equal to 5% of the total number of shares
initially classified in Paragraph 39 hereof, at a
sinking fund redemption price of $100 per share
plus accrued and unpaid dividends to the date of
redemption. The sinking fund requirement shall be
cumulative so that if on any such June 1 the
sinking fund requirement shall not have been met,
then such sinking fund requirement, to the extent
not met, shall become an additional sinking fund
requirement for the next succeeding June 1 on which
such redemption may be effected.
(2) The remaining shares of such series
outstanding on June 1, 2008 will be redeemed, to
the extent permitted by law, by mandatory
redemption, out of funds legally available
therefor, on such date at a mandatory redemption
price of $100 per share plus accrued and unpaid
dividends to the date of redemption.
(3) The Corporation shall be entitled, at
its election, to credit against the sinking fund
requirement due on June 1 of any year pursuant to
clause (d)(1) of this Paragraph 40, shares of such
series theretofore purchased or otherwise acquired
by the Corporation and not previously credited
against any such sinking fund requirement.
(e) The shares of such series shall not have
any rights to convert the same into and/or purchase
stock of any other series or class or any other
securities, or any special rights other than those
specified herein.
(41) The Corporation hereby classifies $40,000,000
par value of the Cumulative Preferred Stock ($100 non-
voting) as a series of such Cumulative Preferred Stock
($100 non-voting), which shall be designated as "6.02%
Cumulative Preferred Stock", consisting of 400,000 shares
of the par value of $100 per share.
(42) The preferences, rights, restrictions or
qualifications and the description and terms of the 6.02%
Cumulative Preferred Stock, in the respects in which the
shares of such series vary from shares of other series of
the Cumulative Preferred Stock, ($100 non-voting), shall
be as follows:
(a) The annual dividend rate for such series
shall be 6.02% per annum, which dividend shall be
calculated, per share, at such percentage
multiplied by $100. Dividends on all shares of
said series issued prior to the record date for the
initial dividend payable on all shares of such
series shall be cumulative from the date of initial
issuance of the shares of such series.
(b) Such series shall not be subject to
redemption prior to October 1, 2003; the regular
redemption price for shares of such series shall be
$100 per share on or after October 1, 2003, plus an
amount equal to accrued and unpaid dividends to the
date of redemption.
(c) The preferential amounts to which the
holders of shares of such series shall be entitled
upon any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation shall
be $100 per share, plus an amount equal to accrued
and unpaid dividends.
(d)(1) A sinking fund shall be established
for the retirement of the shares of such series.
So long as there shall remain outstanding any
shares of such series, the Corporation shall, to
the extent permitted by law, on December 1, 2003,
and on each December 1 thereafter to and including
December 1, 2007, redeem as and for a sinking fund
requirement, out of funds legally available
therefor, a number of shares equal to 5% of the
total number of shares initially classified in
Paragraph 41 hereof, at a sinking fund redemption
price of $100 per share plus accrued and unpaid
dividends to the date of redemption. The remaining
shares of such series outstanding on December 1,
2008 will be redeemed as a final sinking fund
requirement, to the extent permitted by law, out of
funds legally available therefor, on such date at a
sinking fund redemption price of $100 per share
plus accrued and unpaid dividends to the date of
redemption. The sinking fund requirement shall be
cumulative so that if on any such December 1 the
sinking fund requirement shall not have been met,
then such sinking fund requirement, to the extent
not met, shall become an additional sinking fund
requirement for the next succeeding December 1 on
which such redemption may be effected.
(2) The Corporation shall be entitled, at
its election, to credit against the sinking fund
requirement due on December 1 of any year pursuant
to clause (d)(1) of this Paragraph 42, shares of
such series theretofore purchased or otherwise
acquired by the Corporation and not previously
credited against any such sinking fund requirement.
(e) The shares of such series shall not have
any rights to convert the same into and/or purchase
stock of any other series or class or any other
securities, or any special rights other than those
specified herein.
(43) The Corporation hereby classifies $45,000,000
par value of the Cumulative Preferred Stock ($100 voting)
as a series of such Cumulative Preferred Stock ($100
voting), which shall be designated as "5.90% Cumulative
Preferred Stock", consisting of 450,000 shares of the par
value of $100 per share.
(44) The preferences, rights, restrictions or
qualifications and the description and terms of the 5.90%
Cumulative Preferred Stock, in the respects in which the
shares of such series vary from shares of other series of
the Cumulative Preferred Stock ($100 voting), shall be as
follows:
(a) The annual dividend rate for such series
shall be 5.90% per annum, which dividend shall be
calculated, per share, at such percentage
multiplied by $100. Dividends on all shares of
said series issued prior to the record date for the
initial dividend payable on all shares of such
series shall be cumulative from the date of initial
issuance of the shares of such series.
(b) Such series shall not be subject to
redemption prior to November 1, 2003; the
redemption price for shares of such series shall be
$100 per share on or after November 1, 2003, plus
an amount equal to accrued and unpaid dividends to
the date of redemption.
(c) The preferential amounts to which the
holders of shares of such series shall be entitled
upon any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation shall
be $100 per share, plus an amount equal to accrued
and unpaid dividends.
(d)(1) A sinking fund shall be established
for the retirement of the shares of such series.
So long as there shall remain outstanding any
shares of such series, the Corporation shall, to
the extent permitted by law, on January 1, 2004,
and on each January 1 thereafter to and including
January 1, 2008, redeem as and for a sinking fund
requirement, out of funds legally available
therefor, a number of shares equal to 5% of the
total number of shares initially classified in
Paragraph 43 hereof, at a sinking fund redemption
price of $100 per share plus accrued and unpaid
dividends to the date of redemption. The remaining
shares of such series outstanding on January 1,
2009 will be redeemed as a final sinking fund
requirement, to the extent permitted by law, out of
funds legally available therefor, on such date at a
sinking fund redemption price of $100 per share
plus accrued and unpaid dividends to the date of
redemption. The sinking fund requirement shall be
cumulative so that if on any such January 1 the
sinking fund requirement shall not have been met,
then such sinking fund requirement, to the extent
not met, shall become an additional sinking fund
requirement for the next succeeding January 1 on
which such redemption may be effected.
(2) The Corporation shall be entitled, at
its election, to credit against the sinking fund
requirement due on January 1 of any year pursuant
to clause (d)(1) of this Paragraph 44, shares of
such series theretofore purchased or otherwise
acquired by the Corporation and not previously
credited against any such sinking fund requirement.
(e) The shares of such series shall not have
any rights to convert the same into and/or purchase
stock of any other series or class or any other
securities, or any special rights other than those
specified herein.
COMMON STOCK
Each share of the Common Stock shall be equal in all respects
to every other share of the Common Stock.
No holder of shares of Common Stock shall be entitled as such
as a matter of right to subscribe for or purchase any part of any
new or additional issue of stock, or securities convertible into
stock, of any class whatsoever, whether now or hereafter
authorized, and whether issued for cash, property, services, by way
of dividends or otherwise.
FIFTH: These Amended Articles of Incorporation supersede
and take the place of the heretofore existing Agreement of
Merger, dated January 21, 1955, between the Corporation and
Central Ohio Light & Power Company and any and all amendments
thereto.
<PAGE>
Indenture Supplemental
TO
Mortgage and Deed of Trust
(Dated as of October 1, 1938)
Executed by
OHIO POWER COMPANY
TO
CHEMICAL BANK,
As Trustee
Dated as of October 1, 1993
$25,000,000 First Mortgage Bonds,
Designated Secured Medium Term Notes,
6.00% Series due November 1, 2003
$25,000,000 First Mortgage Bonds,
Designated Secured Medium Term Notes,
7.10% Series due November 1, 2023
TABLE OF CONTENTS
Page
Parties 1
Recitals 1
Execution of Original Indenture 1
Termination of Individual Trustee 2
Acquisition of property rights and property 2
Provision for issuance of bonds in one or more series 2
Issuance of First Mortgage Bonds 3
Creation of new First Mortgage Bonds of the 48th Series 3
Creation of new First Mortgage Bonds of the 49th Series 4
Compliance with legal requirements 4
Granting Clauses 4
Appurtenances, etc. 5
Habendum 6
Grant in Trust 6
Sec. 1. Supplement to Original Indenture by addition 6
of new Section 20VV thereto
Sec. 2. Supplement to Original Indenture by addition 9
of New Section 20WW thereto
Sec. 3. Supplement to Original Indenture by addition 12
of new Article IIIAAAA thereto
Sec. 4. Supplement to Original Indenture by addition 12
of new Article IIIAAAB thereto
Sec. 5. Provision for record date for meetings of 13
bondholders
Sec. 6. Original Indenture and the Fourth 1993
Supplemental Indenture same instrument 13
Sec. 7. Limitation of rights 13
Sec. 8. Execution of Counterparts 14
Testimonium 14
Signatures and Seals 14
Acknowledgments 16
Schedule I I-1
Schedule II II-1
SUPPLEMENTAL INDENTURE, dated as of the 1st day of October,
1993, made and entered into by and between Ohio Power Company, a
corporation of the State of Ohio, the corporate title of which was,
prior to July 16, 1954, The Ohio Power Company (hereinafter
sometimes called the Company), party of the first part, and
Chemical Bank, a corporation of the State of New York having its
principal office in the County of New York, State of New York,
successor by merger to Manufacturers Hanover Trust Company,
successor by merger to The Hanover Bank, the corporate title of
which was, prior to June 30, 1951, Central Hanover Bank and Trust
Company (hereinafter sometimes called the Corporate Trustee or
Trustee), as Trustee, party of the second part;
Whereas, the Company has heretofore executed and delivered its
Mortgage and Deed of Trust, dated as of October 1, 1938, an
Indenture Supplemental to Mortgage and Deed of Trust, dated as of
April 1, 1941, a Supplemental Mortgage and Deed of Trust, dated as
of April 1, 1944, a Supplemental Mortgage and Deed of Trust, dated
as of April 1, 1947, an Indenture Supplemental to Mortgage and Deed
of Trust, dated as of April 1, 1948, an Indenture Supplemental to
Mortgage and Deed of Trust, dated as of October 1, 1951, an
Indenture Supplemental to Mortgage and Deed of Trust, dated as of
January 1, 1953, an Indenture Supplemental to Mortgage and Deed of
Trust, dated as of April 1, 1954, a Supplemental Mortgage and Deed
of Trust, dated as of February 1, 1955, an Indenture Supplemental
to Mortgage and Deed of Trust, dated as of September 1, 1955, an
Indenture Supplemental to Mortgage and Deed of Trust, dated as of
November 1, 1956, an Indenture Supplemental to Mortgage and Deed of
Trust, dated as of November 1, 1957, an Indenture Supplemental to
Mortgage and Deed of Trust, dated as of April 1, 1959, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of April 1,
1965, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of January 1, 1966, an Indenture Supplemental to Mortgage
and Deed of Trust, dated as of August 1, 1967, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of March 1,
1968, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of March 1, 1969, an Indenture Supplemental to Mortgage
and Deed of Trust, dated as of December 1, 1969, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of December 1,
1970, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of April 1, 1971, an Indenture Supplemental to Mortgage
and Deed of Trust, dated as of October 1, 1971, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of April 1,
1972, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of October 1, 1972, an Indenture Supplemental to Mortgage
and Deed of Trust, dated as of August 1, 1973, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of June 1,
1974, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of November 1, 1974, an Indenture Supplemental to Mortgage
and Deed of Trust, dated as of November 1, 1975, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of May 1,
1976, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of November 1, 1976, an Indenture Supplemental to Mortgage
and Deed of Trust, dated as of April 1, 1977, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of March 1,
1978, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of September 1, 1979, an Indenture Supplemental to
Mortgage and Deed of Trust, dated as of March 1, 1981, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of October 1,
1981, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of March 1, 1982, an Indenture Supplemental to Mortgage
and Deed of Trust, dated as of June 1, 1983, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of July 1,
1983, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of June 1, 1988, an Indenture Supplemental to Mortgage and
Deed of Trust, dated as of August 1, 1990, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of June 1,
1991, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of February 1, 1992, an Indenture Supplemental to Mortgage
and Deed of Trust, dated as of March 1, 1992, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of June 1,
1992, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of March 1, 1993, an Indenture Supplemental to Mortgage
and Deed of Trust, dated as of June 1, 1993 and an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of August 1,
1993 (which Mortgage and Deed of Trust, as amended and supplemented
by said Indentures Supplemental to Mortgage and Deed of Trust, is
hereinafter called the Original Indenture), to the Trustee for the
security of all bonds of the Company outstanding thereunder, and by
said Original Indenture has conveyed to the Trustee, upon certain
trusts, terms and conditions, and with and subject to certain
provisos and covenants therein contained, all and singular the
property, rights and franchises which the Company then owned or
should thereafter acquire, excepting any property expressly
excepted by the terms of the Original Indenture; and
Whereas, effective April 13, 1988, pursuant to Section 106A of
the Original Indenture, the Individual Trustee resigned and all
powers of the Individual Trustee then terminated, as did the
Individual Trustee's right, title and interest in and to the trust
estate, and without appointment of a new trustee as successor to
said Individual Trustee, all the right, title and powers of the
Trustees thereupon devolved upon the Corporate Trustee and its
successors alone; and
Whereas, in addition to the property described in the Original
Indenture, the Company has acquired certain property rights and
property hereinafter described and has covenanted in Section 42 of
the Original Indenture to execute and deliver such further
instruments and do such further acts as may be necessary or proper
to make subject to the lien thereof any property thereafter
acquired and intended to be subject to such lien; and
Whereas, the Original Indenture provides that bonds issued
thereunder may be issued in one or more series and further provides
that, with respect to each series, the rate of interest, the date
or dates of maturity, the dates for the payment of interest, the
terms of optional redemption and other terms and conditions not
inconsistent with the Original Indenture may be established, prior
to the issue of bonds of such series, by an indenture supplemental
to the Original Indenture; and
Whereas, the Company has heretofore issued, in accordance with
the provisions of the Original Indenture, bonds of currently
outstanding series entitled and designated as hereinafter set
forth, in the respective aggregate principal amounts indicated:
Principal
Series Amount
First Mortgage Bonds, 5% Series due 1996 $ 50,000,000
First Mortgage Bonds, 6-1/2% Series due 1997 50,000,000
First Mortgage Bonds, 6-3/4% Series due 1998 60,000,000
First Mortgage Bonds, 7-3/4% Series due 1999 70,000,000
First Mortgage Bonds, 7-5/8% Series due 2002 25,000,000
First Mortgage Bonds, 7-3/4% Series due 2002 25,000,000
First Mortgage Bonds, 8-3/8% Series due 2003 40,000,000
First Mortgage Bonds, 9% Series due 2007 40,000,000
First Mortgage Bonds, 9-7/8% Series due 2020 50,000,000
First Mortgage Bonds, Designated Secured Medium
Term Notes, 9.625% Series due June 1, 2021 50,000,000
First Mortgage Bonds, Designated Secured Medium
Term Notes, 8.10% Series due February 15, 2002 50,000,000
First Mortgage Bonds, Designated Secured Medium
Term Notes, 8.80% Series due February 10, 2022 50,000,000
First Mortgage Bonds, Designated Secured Medium
Term Notes, 8.25% Series due March 15, 2002 50,000,000
First Mortgage Bonds, Designated Secured Medium
Term Notes, 8.75% Series due June 1, 2022 50,000,000
First Mortgage Bonds, Designated Secured Medium
Term Notes, 6.75% Series due April 1, 2003 40,000,000
First Mortgage Bonds, Designated Secured Medium
Term Notes, 7.75% Series due April 1, 2023 40,000,000
First Mortgage Bonds, Designated Secured Medium
Term Notes, 6.875% Series due June 1, 2003 40,000,000
First Mortgage Bonds, Designated Secured Medium
Term Notes, 7.85% Series due June 1, 2023 40,000,000
First Mortgage Bonds, Designated Secured Medium
Term Notes, 6.55% Series due October 1, 2003 40,000,000
First Mortgage Bonds, Designated Secured Medium
Term Notes, 7.375% Series due October 1, 2023 40,000,000
and
Whereas, the Company, by appropriate corporate action in
conformity with the terms of the Original Indenture, has duly
determined to create a series of bonds under the Original Indenture
to be entitled and designated as "First Mortgage Bonds, Designated
Secured Medium Term Notes, 6.00% Series due November 1, 2003"
(hereinafter sometimes referred to as the "bonds of the 48th
Series"); and
Whereas, each of the bonds of the 48th Series is to be
substantially in the form set forth in Schedule I to this
Supplemental Indenture (hereinafter sometimes referred to as the
"Fourth 1993 Supplemental Indenture"); and
Whereas, the Company, by appropriate corporate action in
conformity with the terms of the Original Indenture, has duly
determined to create a series of bonds under the Original Indenture
to be entitled and designated as "First Mortgage Bonds, Designated
Secured Medium Term Notes, 7.10% Series due November 1, 2023"
(hereinafter sometimes referred to as the "bonds of the 49th
Series"); and
Whereas, each of the bonds of the 49th Series is to be
substantially in the form set forth in Schedule II to the Fourth
1993 Supplemental Indenture; and
Whereas, the Company, in the exercise of the powers and
authorities conferred upon and reserved to it under and by virtue
of the provisions of the Original Indenture, and pursuant to
resolutions of its Board of Directors, has duly resolved and
determined to make, execute and deliver to the Trustee a
supplemental indenture, in the form hereof, for the purposes herein
provided; and
Whereas, all conditions and requirements necessary to make
this Fourth 1993 Supplemental Indenture a valid, binding and legal
instrument in accordance with its terms have been done, performed
and fulfilled, and the execution and delivery thereof have been in
all respects duly authorized;
Now, therefore, this Indenture Witnesseth:
That Ohio Power Company, in consideration of the premises and
of the purchase and acceptance of the bonds by the holders thereof
and of the sum of One Dollar ($1) and other good and valuable
consideration paid to it by the Trustee at or before the ensealing
and delivery of these presents, receipt whereof is hereby
acknowledged, and in order to secure the payment both of the
principal of and interest and premium, if any, on the bonds from
time to time issued under and secured by the Original Indenture and
this Fourth 1993 Supplemental Indenture, according to their tenor
and effect, and the performance of all the provisions of the
Original Indenture and this Fourth 1993 Supplemental Indenture
(including any further indenture or indentures supplemental to the
Original Indenture and any modification or alteration made as in
the Original Indenture provided) and of said bonds, has bargained,
granted, sold, released, conveyed, assigned, transferred,
mortgaged, pledged, set over and confirmed, and by these presents
doth bargain, grant, sell, release, convey, assign, transfer,
mortgage, pledge, set over and confirm unto Chemical Bank, as
Trustee, and to its successor or successors in said trust, and to
its and their assigns forever, all of the property and interests in
property, including all the electric generating plants of the
Company, all the electric transmission lines of the Company and
related equipment, all electric distribution systems and related
equipment, all electric substations, switching stations and sites,
all office buildings, service buildings, garages, and related
facilities, all facilities for the handling and storage of fuel
including coal handling and related facilities, and all other real
property of the Company and all interests therein of every nature
and description (except such property as is hereinafter expressly
excepted from the lien and operation of this Fourth 1993
Supplemental Indenture) constructed or otherwise acquired by the
Company and not heretofore described in the Original Indenture and
not heretofore released from the lien of the Original Indenture,
together with all and singular tenements, hereditaments and
appurtenances, whatsoever belonging or in any wise appertaining to
the aforesaid property or a part thereof; and the reversion and
reversions, remainder and remainders, and (subject to the
provisions of Section 57 of the Original Indenture) the incomes,
rents, issues and profits thereof, and of every part and parcel
thereof; and all of the estate, right, title, interest, property,
claim and demand of every nature and kind whatsoever of the Company
at law, in equity or otherwise howsoever, of, in and to the same
and every part and parcel thereof.
Also, the Company's interest in any other property, real,
personal and mixed (except such property as is hereinafter
expressly excepted from the lien and operation of this Fourth 1993
Supplemental Indenture) of whatsoever kind and character and all
appurtenances thereto, including (but without limiting the
generality of the foregoing) all and singular its corporate,
municipal and other franchises, permits, ordinances, consents,
privileges, immunities and licenses of every kind, description and
character.
It is hereby agreed by the Company that all the property,
rights and franchises acquired by the Company after the date hereof
(except any hereinafter expressly excepted) shall be as fully
embraced within the lien hereof as if such property, rights and
franchises were now owned by the Company and were specifically
described herein and conveyed hereby.
Provided that the following are not and are not intended to be
bargained, granted, sold, released, conveyed, assigned,
transferred, mortgaged, pledged, set over or confirmed hereunder
and are hereby expressly excepted from the lien and operation of
the Original Indenture and this Fourth 1993 Supplemental Indenture,
viz.: (1) cash, shares of stock and obligations (including bonds,
notes and other securities) not hereinafter or in the Original
Indenture specifically pledged, or deposited or delivered hereunder
or thereunder, or hereinafter or therein covenanted so to be;
(2) any goods, wares, merchandise, equipment, materials or supplies
acquired for the purpose of sale or resale in the usual course of
business or for consumption in the operation of any properties of
the Company; (3) all judgments, accounts and choses in action, the
proceeds of which the Company is not obligated as hereinafter
provided or as provided in the Original Indenture to deposit with
the Trustee hereunder or thereunder, and all contracts, leases and
operating agreements not hereinafter specifically pledged, or
deposited or delivered hereunder or under the Original Indenture,
or hereinafter or in the Original Indenture covenanted so to be;
and (4) all electric energy and other material or products
generated, manufactured, produced or purchased by the Company for
sale, distribution or use in the ordinary course of its business;
provided, however, that the property and rights expressly excepted
from the lien and operation of the Original Indenture and this
Fourth 1993 Supplemental Indenture in the above subdivisions
(2) and (3) shall (to the extent permitted by law) cease to be so
excepted in the event that the Trustee or a receiver or trustee
shall enter upon and take possession of the mortgaged and pledged
property in the manner provided in Article XII of the Original
Indenture, by reason of the occurrence of a completed default, as
defined in said Article XII.
To have and to hold all such properties, real, personal and
mixed, bargained, granted, sold, released, conveyed, assigned,
transferred, mortgaged, pledged, set over or confirmed by the
Company as aforesaid, or intended so to be, unto the Trustee and
its successors in the trust.
Subject, however, to the reservations, exceptions, limitations
and restrictions contained in the several deeds, leases,
servitudes, franchises and contracts or other instruments through
which the Company acquired and/or claims title to and/or enjoys the
use of the aforesaid properties; and subject also to encumbrances
of the character defined in Section 6 of the Original Indenture as
"excepted encumbrances", in so far as the same may attach to any of
the property embraced herein.
In trust nevertheless, upon the terms and trusts in the
Original Indenture and in this Fourth 1993 Supplemental Indenture
set forth, for the benefit and security of those who shall hold the
bonds and coupons issued and to be issued hereunder and under the
Original Indenture, or any of them, in accordance with the terms of
the Original Indenture and of this Fourth 1993 Supplemental
Indenture, without preference, priority or distinction as to lien
of any of said bonds or coupons over any others thereof by reason
of priority in the time of issue or negotiation thereof, or
otherwise howsoever, subject, however, to the conditions,
provisions and covenants set forth in the Original Indenture and in
this Fourth 1993 Supplemental Indenture.
And this Indenture further Witnesseth:
That in further consideration of the premises and for the
considerations aforesaid, the Company, for itself and its
successors and assigns, hereby covenants and agrees to and with the
Trustee, and its successor or successors in such trust, as follows:
Section 1. The Original Indenture is hereby supplemented by
adding immediately after Section 20UU, a new Section 20VV, as
follows:
Section 20VV. The Company hereby creates a forty-eighth
series of bonds to be issued under and secured by this
Indenture, to be designated and to be distinguished from the
bonds of all other series by the title "First Mortgage Bonds,
Designated Secured Medium Term Notes, 6.00% Series due
November 1, 2003" (herein called bonds of the 48th Series).
The form of the bonds of the 48th Series shall be
substantially as set forth in Schedule I to the Fourth 1993
Supplemental Indenture.
Bonds of the 48th Series shall mature on the date
specified in their title. Unless otherwise determined by the
Company, the bonds of the 48th Series shall be issued in fully
registered form without coupons in denominations of $1,000 and
integral multiples thereof; the principal of and premium (if
any) and interest on each said bond to be payable at the
office or agency of the Company in the Borough of Manhattan,
The City of New York, in lawful money of the United States of
America, provided that at the option of the Company interest
may be mailed to registered owners of the bonds at their
respective addresses that appear on the register thereof; and
the rate of interest shall be the rate per annum specified in
the title thereof, payable semi-annually on the first days of
April and October of each year (commencing April 1, 1994) and
on their maturity date.
The person in whose name any bond of the 48th Series is
registered at the close of business on any record date (as
hereinbelow defined) with respect to any regular semi-annual
interest payment date (other than interest payable upon
redemption) shall be entitled to receive the interest payable
on such interest payment date notwithstanding the cancellation
of such bond of the 48th Series upon any registration of
transfer or exchange thereof (including any exchange effected
as an incident to a partial redemption thereof) subsequent to
the record date and prior to such interest payment date,
except, if and to the extent that the Company shall default in
the payment of the interest due on such interest payment date,
then the registered holders of bonds of the 48th Series on
such record date shall have no further right to or claim in
respect of such defaulted interest as such registered holders
on such record date, and the persons entitled to receive
payment of any defaulted interest thereafter payable or paid
on any bonds of the 48th Series shall be the registered
holders of such bonds of the 48th Series (or any bond or bonds
issued, directly or after intermediate transactions upon
transfer or exchange or in substitution thereof) on the date
of payment of such defaulted interest. Interest payable upon
redemption or maturity shall be payable to the person to whom
the principal is paid. The term "record date" as used in this
Section 20VV, and in the form of the bonds of the 48th Series,
with respect to any regular semi-annual interest payment date
(other than interest payable upon redemption) applicable to
the bonds of the 48th Series, shall mean the March 20 next
preceding an April 1 interest payment date or the September 20
next preceding an October 1 interest payment date, as the case
may be, or, if such March 20 or September 20 is not a Business
Day (as defined hereinbelow), the next preceding Business Day.
The term "Business Day" with respect to any bond of the 48th
Series shall mean any day, other than a Saturday or Sunday,
which is not a day on which banking institutions or trust
companies in The City of New York, New York or the city in
which is located any office or agency maintained for the
payment of principal of or premium, if any, or interest on
such bond of the 48th Series are authorized or required by
law, regulation or executive order to remain closed.
Every registered bond of the 48th Series shall be dated
the date of authentication ("Issue Date") and shall bear
interest computed on the basis of a 360-day year consisting of
twelve 30-day months from its Issue Date or from the latest
semi-annual interest payment date to which interest has been
paid on the bonds of the 48th Series preceding the Issue Date,
unless such Issue Date be an interest payment date to which
interest is being paid on the bonds of the 48th Series, in
which case it shall bear interest from its Issue Date or
unless the Issue Date be the record date for the interest
payment date first following the date of original issuance of
bonds of the 48th Series (the "Original Issue Date"), or a
date prior to such record date, then from the Original Issue
Date; provided, that, so long as there is no existing default
in the payment of interest on said bonds, the holder of any
bond authenticated by the Trustee between the record date for
any regular semi-annual interest payment date (other than
interest payable upon redemption) and such interest payment
date shall not be entitled to the payment of the interest due
on such interest payment date and shall have no claim against
the Company with respect thereto; provided, further, that, if
and to the extent the Company shall default in the payment of
the interest due on such interest payment date, then any such
bond shall bear interest from the April 1 or October 1, as the
case may be, next preceding its Issue Date, to which interest
has been paid or, if the Company shall be in default with
respect to the interest payment date first following the
Original Issue Date, then from the Original Issue Date.
If any semi-annual interest payment date, redemption date
or the maturity date is not a Business Day, payment of amounts
due on such date may be made on the next succeeding Business
Day, and, if such payment is made or duly provided for on such
Business Day, no interest shall accrue on such amounts for the
period from and after such interest payment date, redemption
date or the maturity date, as the case may be, to such
Business Day.
Notwithstanding the provisions of Section 14 of this
Indenture, the bonds of the 48th Series shall be executed on
behalf of the Company by its Chairman of the Board, by its
President or by one of its Vice Presidents or by one of its
officers designated by the Board of Directors of the Company
for such purpose, whose signature may be a facsimile, and its
corporate seal shall be thereunto affixed or printed thereon
and attested by its Secretary or one of its Assistant
Secretaries, and the provisions of the penultimate sentence of
said Section 14 shall be applicable to such bonds of the 48th
Series.
The Bonds of the 48th Series are redeemable in accordance
with Article X of this Indenture and as further set forth in
the form of the bond contained in Schedule I to the Fourth
1993 Supplemental Indenture.
The Company shall not be required to make transfers or
exchanges of the bonds of the 48th Series for a period of
eleven days next preceding any selection of bonds of the 48th
Series to be redeemed or to make transfers or exchanges of any
bonds of the 48th Series designated in whole or in part for
redemption. Notwithstanding the provisions of Section 12 of
this Indenture, the Company shall not be required to make
transfers or exchanges of bonds of the 48th Series for a
period of eleven days next preceding any interest payment
date.
Registered bonds of the 48th Series shall be transferable
upon presentation and surrender thereof, for cancellation, at
the office or agency of the Company in the Borough of
Manhattan, The City of New York, and at such other office or
agency of the Company as the Company may designate, by the
registered holders thereof, in person or by duly authorized
attorney, in the manner and upon payment, if required by the
Company, of the charges prescribed in this Indenture. In the
manner and upon payment, if required by the Company, of the
charges prescribed in this Indenture, registered bonds of the
48th Series may be exchanged for a like aggregate principal
amount of registered bonds of the 48th Series of other
authorized denominations, upon presentation and surrender
thereof, for cancellation, at the office or agency of the
Company in the Borough of Manhattan, The City of New York and
at such other office or agency of the Company as the Company
may designate.
Section 2. The Original Indenture is hereby supplemented by
adding immediately after Section 20VV, a new Section 20WW, as
follows:
Section 20WW. The Company hereby creates a forty-ninth
series of bonds to be issued under and secured by this
Indenture, to be designated and to be distinguished from the
bonds of all other series by the title "First Mortgage Bonds,
Designated Secured Medium Term Notes, 7.10% Series due
November 1, 2023" (herein called bonds of the 49th Series).
The form of the bonds of the 49th Series shall be
substantially as set forth in Schedule II to the Fourth 1993
Supplemental Indenture.
Bonds of the 49th Series shall mature on the date
specified in their title. Unless otherwise determined by the
Company, the bonds of the 49th Series shall be issued in fully
registered form without coupons in denominations of $1,000 and
integral multiples thereof; the principal of and premium (if
any) and interest on each said bond to be payable at the
office or agency of the Company in the Borough of Manhattan,
The City of New York, in lawful money of the United States of
America, provided that at the option of the Company interest
may be mailed to registered owners of the bonds at their
respective addresses that appear on the register thereof; and
the rate of interest shall be the rate per annum specified in
the title thereof, payable semi-annually on the first days of
April and October of each year (commencing April 1, 1994) and
on their maturity date.
The person in whose name any bond of the 49th Series is
registered at the close of business on any record date (as
hereinbelow defined) with respect to any regular semi-annual
interest payment date (other than interest payable upon
redemption) shall be entitled to receive the interest payable
on such interest payment date notwithstanding the cancellation
of such bond of the 49th Series upon any registration of
transfer or exchange thereof (including any exchange effected
as an incident to a partial redemption thereof) subsequent to
the record date and prior to such interest payment date,
except, if and to the extent that the Company shall default in
the payment of the interest due on such interest payment date,
then the registered holders of bonds of the 49th Series on
such record date shall have no further right to or claim in
respect of such defaulted interest as such registered holders
on such record date, and the persons entitled to receive
payment of any defaulted interest thereafter payable or paid
on any bonds of the 49th Series shall be the registered
holders of such bonds of the 49th Series (or any bond or bonds
issued, directly or after intermediate transactions upon
transfer or exchange or in substitution thereof) on the date
of payment of such defaulted interest. Interest payable upon
redemption or maturity shall be payable to the person to whom
the principal is paid. The term "record date" as used in this
Section 20WW, and in the form of the bonds of the 49th Series,
with respect to any regular semi-annual interest payment date
(other than interest payable upon redemption) applicable to
the bonds of the 49th Series, shall mean the March 20 next
preceding an April 1 interest payment date or the September 20
next preceding an October 1 interest payment date, as the case
may be, or, if such March 20 or September 20 is not a Business
Day (as defined hereinbelow), the next preceding Business Day.
The term "Business Day" with respect to any bond of the 49th
Series shall mean any day, other than a Saturday or Sunday,
which is not a day on which banking institutions or trust
companies in The City of New York, New York or the city in
which is located any office or agency maintained for the
payment of principal of or premium, if any, or interest on
such bond of the 49th Series are authorized or required by
law, regulation or executive order to remain closed.
Every registered bond of the 49th Series shall be dated
the date of authentication ("Issue Date") and shall bear
interest computed on the basis of a 360-day year consisting of
twelve 30-day months from its Issue Date or from the latest
semi-annual interest payment date to which interest has been
paid on the bonds of the 49th Series preceding the Issue Date,
unless such Issue Date be an interest payment date to which
interest is being paid on the bonds of the 49th Series, in
which case it shall bear interest from its Issue Date or
unless the Issue Date be the record date for the interest
payment date first following the date of original issuance of
bonds of the 49th Series (the "Original Issue Date"), or a
date prior to such record date, then from the Original Issue
Date; provided, that, so long as there is no existing default
in the payment of interest on said bonds, the holder of any
bond authenticated by the Trustee between the record date for
any regular semi-annual interest payment date (other than
interest payable upon redemption) and such interest payment
date shall not be entitled to the payment of the interest due
on such interest payment date and shall have no claim against
the Company with respect thereto; provided, further, that, if
and to the extent the Company shall default in the payment of
the interest due on such interest payment date, then any such
bond shall bear interest from the April 1 or October 1, as the
case may be, next preceding its Issue Date, to which interest
has been paid or, if the Company shall be in default with
respect to the interest payment date first following the
Original Issue Date, then from the Original Issue Date.
If any semi-annual interest payment date, redemption date
or the maturity date is not a Business Day, payment of amounts
due on such date may be made on the next succeeding Business
Day, and, if such payment is made or duly provided for on such
Business Day, no interest shall accrue on such amounts for the
period from and after such interest payment date, redemption
date or the maturity date, as the case may be, to such
Business Day.
Notwithstanding the provisions of Section 14 of this
Indenture, the bonds of the 49th Series shall be executed on
behalf of the Company by its Chairman of the Board, by its
President or by one of its Vice Presidents or by one of its
officers designated by the Board of Directors of the Company
for such purpose, whose signature may be a facsimile, and its
corporate seal shall be thereunto affixed or printed thereon
and attested by its Secretary or one of its Assistant
Secretaries, and the provisions of the penultimate sentence of
said Section 14 shall be applicable to such bonds of the 49th
Series.
The Bonds of the 49th Series are redeemable in accordance
with Article X of this Indenture and as further set forth in
the form of the bond contained in Schedule II to the Fourth
1993 Supplemental Indenture.
The Company shall not be required to make transfers or
exchanges of the bonds of the 49th Series for a period of
eleven days next preceding any selection of bonds of the 49th
Series to be redeemed or to make transfers or exchanges of any
bonds of the 49th Series designated in whole or in part for
redemption. Notwithstanding the provisions of Section 12 of
this Indenture, the Company shall not be required to make
transfers or exchanges of bonds of the 49th Series for a
period of eleven days next preceding any interest payment
date.
Registered bonds of the 49th Series shall be transferable
upon presentation and surrender thereof, for cancellation, at
the office or agency of the Company in the Borough of
Manhattan, The City of New York, and at such other office or
agency of the Company as the Company may designate, by the
registered holders thereof, in person or by duly authorized
attorney, in the manner and upon payment, if required by the
Company, of the charges prescribed in this Indenture. In the
manner and upon payment, if required by the Company, of the
charges prescribed in this Indenture, registered bonds of the
49th Series may be exchanged for a like aggregate principal
amount of registered bonds of the 49th Series of other
authorized denominations, upon presentation and surrender
thereof, for cancellation, at the office or agency of the
Company in the Borough of Manhattan, The City of New York and
at such other office or agency of the Company as the Company
may designate.
Section 3. The Original Indenture is hereby supplemented by
adding thereto the following new Article IIIAAAA, to be added after
Article IIIAAZ of the Original Indenture:
ARTICLE IIIAAAA
Initial Issuance of Bonds of the 48th Series.
Section 21AAAA. In accordance with and upon compliance with
such provisions of this Indenture as shall be selected for such
purpose by the officers of the Company duly authorized to take such
action, bonds of the 48th Series in an aggregate principal amount
not exceeding $25,000,000 shall forthwith be executed by the
Company and delivered to the Trustee and shall be authenticated by
the Trustee and delivered to or upon the order of the Company
(without awaiting the filing or recording of the Fourth 1993
Supplemental Indenture except to the extent required by subdivision
(9) of Section 28 of this Indenture).
Section 4. The Original Indenture is hereby supplemented by
adding thereto the following new Article IIIAAAB, to be added after
Article IIIAAAA of the Original Indenture:
ARTICLE IIIAAAB
Initial Issuance of Bonds of the 49th Series.
Section 21AAAB. In accordance with and upon compliance with
such provisions of this Indenture as shall be selected for such
purpose by the officers of the Company duly authorized to take such
action, bonds of the 49th Series in an aggregate principal amount
not exceeding $25,000,000 shall forthwith be executed by the
Company and delivered to the Trustee and shall be authenticated by
the Trustee and delivered to or upon the order of the Company
(without awaiting the filing or recording of the Fourth 1993
Supplemental Indenture except to the extent required by subdivision
(9) of Section 28 of this Indenture).
Section 5. At any meeting of bondholders held as provided for
in Article XVIII of the Original Indenture at which holders of
bonds of the 48th Series or of the 49th Series are entitled to
vote, all holders of bonds of the 48th Series or of the 49th Series
at the time of such meeting shall be entitled to vote thereat;
provided, however, that the Trustee may, and upon request of the
Company or of a majority of the bondholders of the 48th Series or
of the 49th Series shall, fix a day not exceeding ninety days
preceding the date for which the meeting is called as a record date
for the determination of holders of bonds of the 48th Series or of
the 49th Series entitled to notice of and to vote at such meeting
and any adjournment thereof and only such registered owners who
shall have been such registered owners on the date so fixed, and
who are entitled to vote such bonds of the 48th Series or of the
49th Series at the meeting, shall be entitled to receive notice of
such meeting.
Section 6. As supplemented by this Fourth 1993 Supplemental
Indenture, the Original Indenture is in all respects ratified and
confirmed, and the Original Indenture and this Fourth 1993
Supplemental Indenture shall be read, taken and construed as one
and the same instrument. The bonds of the 48th Series and the 49th
Series are the original debt secured by this Fourth 1993
Supplemental Indenture and the Original Indenture, and this Fourth
1993 Supplemental Indenture and the Original Indenture shall be,
and be deemed to be, the original lien instrument securing the
bonds of the 48th Series and the 49th Series.
Section 7. Nothing in this Fourth 1993 Supplemental Indenture
contained shall, or shall be construed to, confer upon any person
other than the holders of bonds issued under the Original Indenture
and this Fourth 1993 Supplemental Indenture, the Company and the
Trustee, any right to avail themselves of any benefit of any
provisions of the Original Indenture or of this Fourth 1993
Supplemental Indenture.
Section 8. This Fourth 1993 Supplemental Indenture may be
simultaneously executed in any number of counterparts, each of
which when so executed shall be deemed to be an original; but such
counterparts shall together constitute but one and the same
instrument.
In Witness Whereof, Ohio Power Company, party of the first
part, has caused this instrument to be signed in its name and
behalf by its President, a Vice President or an Assistant
Treasurer, and its corporate seal to be hereunto affixed and
attested by its Secretary or an Assistant Secretary, and Chemical
Bank, the party hereto of the second part, in token of its
acceptance of the trust hereby created, has caused this instrument
to be signed in its name and behalf by a Vice President, and its
corporate seal to be hereunto affixed and attested by a Trust
Officer. Executed and delivered in The City of New York, New York,
as of the day and year first above written.
Ohio Power Company
[Seal]
/s/ B. M. Barber
(B. M. Barber)
Attest: Assistant Treasurer
/s/ Jeffrey D. Cross
(Jeffrey D. Cross)
Assistant Secretary
Signed, sealed, acknowledged and delivered by
Ohio Power Company in the presence of:
/s/ A. A. Pena
(A. A. Pena)
/s/ John M. Adams, Jr.
(John M. Adams, Jr.)
[Seal]
Chemical Bank
/s/ W. B. Dodge
(W. B. Dodge)
Vice President
Attest:
/s/ G. John Kirsch
(G. John Kirsch)
Trust Officer
Signed, sealed, acknowledged and delivered by
Chemical Bank in the presence of:
/s/ Bruce Zydel
(Bruce Zydel)
/s/ Philip G. Thorogood
(Philip G. Thorogood)
This instrument was prepared by JEFFREY D. CROSS,
1 Riverside Plaza, Columbus, Ohio 43215
State of Ohio }
County of Franklin, } ss:
On this 5th day of October, 1993, personally appeared before
me, a Notary Public within and for said County in the State
aforesaid, B. M. BARBER and JEFFREY D. CROSS, to me known and known
to me to be respectively an Assistant Treasurer and Assistant
Secretary of OHIO POWER COMPANY, one of the corporations named in
and which executed the foregoing instrument, who severally
acknowledged that they did sign and seal said instrument as such
Assistant Treasurer and Assistant Secretary for and on behalf of
said corporation and that the same is their free act and deed as
such Assistant Treasurer and Assistant Secretary, respectively, and
the free and corporate act and deed of said corporation.
In Witness Whereof, I have hereunto set my hand and notarial
seal this 5th day of October, 1993.
[Notarial Seal]
/s/ Mary M. Soltesz
Mary M. Soltesz
Notary Public, State of Ohio
My Commission Expires July 13, 1994
State of New York }
County of New York, } ss:
Be it remembered, that on this 6th day of October, 1993,
personally appeared before me the undersigned, a Notary Public
within and for said County and State, CHEMICAL BANK, one of the
corporations named in and which executed the foregoing instrument,
by W. B. Dodge, one of its Vice Presidents, and by G. John Kirsch,
one of its Trust Officers, to me known and known by me to be such
Vice President and Trust Officer, respectively, who severally duly
acknowledged the signing and sealing of the foregoing instrument to
be their free act and voluntary deed, and the free act and
voluntary deed of each of them as such Vice President and Trust
Officer, respectively, and the free act and voluntary deed of said
corporation, for the uses and purposes therein expressed and
mentioned.
My Commission expires August 31, 1994.
In Witness Whereof, I have hereunto set my hand and notarial
seal this 6th day of October, 1993.
/s/ James M. Foley
James M. Foley
Notary Public, State of New York
No. 31-6348400
Qualified in New York County
[Seal]
State of New York }
County of New York, } ss:
I, James M. Foley, a Notary Public of, in and for the said
County of New York, do certify that W. B. Dodge, who signed the
writing above and hereto annexed bearing date as of the 1st day of
October, 1993, for CHEMICAL BANK, a corporation, has this day in my
said County before me acknowledged the said writing to be the act
and deed of said corporation.
Given under my hand and official notarial seal this 6th day of
October, 1993.
My Commission expires August 31, 1994.
/s/ James M. Foley
James M. Foley
Notary Public, State of New York
No. 31-6348400
Qualified in New York County
[Seal]
SCHEDULE I
OHIO POWER COMPANY
FIRST MORTGAGE BOND, DESIGNATED
SECURED MEDIUM TERM NOTE, 6.00%
SERIES DUE NOVEMBER 1, 2003
Bond No.
Original Issue Date: October 13, 1993
Principal Amount:
Semi-annual Interest Payment Dates: April 1 and October 1
Record Dates: March 20 and September 20
CUSIP No: 67741M AM6
OHIO POWER COMPANY, a corporation of the State of Ohio
(hereinafter called the "Company"), for value received, hereby
promises to pay to ____________, or registered assigns, the
Principal Amount set forth above on the maturity date specified in
the title of this bond in lawful money of the United States of
America, at the office or agency of the Company in the Borough of
Manhattan, The City of New York, and to pay to the registered
holder hereof interest on said amount from the date of
authentication of this bond (herein called the "Issue Date") or
latest semi-annual interest payment date to which interest has been
paid on the bonds of this series preceding the Issue Date, unless
the Issue Date be an interest payment date to which interest is
being paid, in which case from the Issue Date or unless the Issue
Date be the record date for the interest payment date first
following the Original Issue Date set forth above or a date prior
to such record date, then from the Original Issue Date (or, if the
Issue Date is between the record date for any interest payment date
and such interest payment date, then from such interest payment
date, provided, however, that if and to the extent that the Company
shall default in the payment of the interest due on such interest
payment date, then from the next preceding semi-annual interest
payment date to which interest has been paid on the bonds of this
series, or if such interest payment date is the interest payment
date first following the Original Issue Date set forth above, then
from the Original Issue Date), until the principal hereof shall
have become due and payable, at the rate per annum specified in the
title of this bond, payable on April 1 and October 1 of each year
(commencing April 1, 1994) and on the maturity date specified in
the title of this bond; provided that, at the option of the
Company, such interest may be paid by check, mailed to the
registered owner of this bond at such owner's address appearing on
the register hereof.
This bond is one of a duly authorized issue of bonds of
the Company, issuable in series, and is one of a series known as
its First Mortgage Bonds, of the series designated in its title,
all bonds of all series issued and to be issued under and equally
secured (except in so far as any sinking fund, established in
accordance with the provisions of the Mortgage hereinafter
mentioned, may afford additional security for the bonds of any
particular series) by a Mortgage and Deed of Trust (herein,
together with any indentures supplemental thereto, called the
Mortgage), dated as of October 1, 1938, executed by the Company to
CENTRAL HANOVER BANK AND TRUST COMPANY (now CHEMICAL BANK), as
Trustee, to which Mortgage reference is made for a description of
the property mortgaged and pledged, the nature and extent of the
security, the rights of the holders of the bonds and of the Trustee
in respect thereof, the duties and immunities of the Trustee, and
the terms and conditions upon which the bonds are secured. With
the consent of the Company and to the extent permitted by and as
provided in the Mortgage, the rights and obligations of the Company
and/or of the holders of the bonds and/or coupons and/or the terms
and provisions of the Mortgage and/or of any instruments
supplemental thereto may be modified or altered by affirmative
vote, or written consent, of the holders of at least seventy-five
per centum (75%) in principal amount of the bonds affected by such
modification or alteration then outstanding under the Mortgage
(excluding bonds disqualified from voting by reason of the
Company's interest therein as provided in the Mortgage); provided
that, without the consent of the holder hereof, no such
modification or alteration shall permit the extension of the
maturity of the principal of or interest on this bond or the
reduction in the rate of interest hereon or any other modification
in the terms of payment of such principal or interest or the
creation of a lien on the mortgaged and pledged property ranking
prior to or on a parity with the lien of the Mortgage or the
deprivation of the holder of a lien upon such property or reduce
the above percentage.
As provided in said Mortgage, said bonds may be for
various principal sums and are issuable in series, which may mature
at different times, may bear interest at different rates and may
otherwise vary as therein provided, and this bond is one of a
series entitled "First Mortgage Bonds, Designated Secured Medium
Term Notes, 6.00% Series due November 1, 2003" (herein called
"bonds of the 48th Series") created by an Indenture Supplemental to
Mortgage and Deed of Trust dated as of October 1, 1993 (the "Fourth
1993 Supplemental Indenture"), as provided for in said Mortgage.
The interest payable on any April 1 or October 1 (other
than interest payable upon redemption) will, subject to certain
exceptions provided in said Fourth 1993 Supplemental Indenture, be
paid to the person in whose name this bond is registered at the
close of business on the record date, which shall be the March 20
or September 20, as the case may be, next preceding such interest
payment date, or, if such March 20 or September 20 is not a
Business Day (as hereinbelow defined), the next preceding Business
Day. Interest payable upon redemption or maturity shall be payable
to the person to whom the principal is paid. The term "Business
Day" means any day, other than a Saturday or Sunday, which is not
a day on which banking institutions or trust companies in The City
of New York, New York or the city in which is located any office or
agency maintained for the payment of principal of or premium, if
any, or interest on bonds of the 48th Series are authorized or
required by law, regulation or executive order to remain closed.
If any semi-annual interest payment date, redemption date
or the maturity date is not a Business Day, payment of amounts due
on such date may be made on the next succeeding Business Day, and,
if such payment is made or duly provided for on such Business Day,
no interest shall accrue on such amounts for the period from and
after such interest payment date, redemption date or the maturity
date, as the case may be, to such Business Day.
The Company and the Trustee may deem and treat the person
in whose name this bond is registered as the absolute owner hereof
for the purpose of receiving payment of or on account of principal
or (subject to the provisions hereof) interest hereon and for all
other purposes and the Company and the Trustee shall not be
affected by any notice to the contrary.
The Company shall not be required to make transfers or
exchanges of bonds of the 48th Series for a period of eleven days
next preceding any interest payment date, or next preceding any
selection of bonds of the 48th Series to be redeemed, and the
Company shall not be required to make transfers or exchanges of any
bonds of the 48th Series designated for redemption in whole or in
part.
Any or all of the bonds of the 48th Series may be
redeemed by the Company on or after November 1, 1998, at its
option, or by the operation of various provisions of the Mortgage,
in whole at any time or in part from time to time upon not less
than 30 but not more than 90 days' previous notice given by mail to
the registered holders of the bonds to be redeemed, all as provided
in the Mortgage (a) if redeemed otherwise than by the use or
application of cash deposited pursuant to the maintenance and
replacement provisions contained in Part II and/or Part II(a) of
Section 20 of the Mortgage and otherwise than by use of proceeds of
released property or the proceeds of insurance, at an amount equal
to a percentage of the principal amount thereof determined as set
forth in Annex A hereto under the heading "Regular Redemption
Price" together in each case with accrued interest to the date
fixed for redemption; or (b) if redeemed by the use or application
of cash deposited pursuant to the maintenance and replacement
provisions contained in Part II and/or Part II(a) of Section 20 of
the Mortgage or by the use of proceeds of released property or the
proceeds of insurance, at an amount equal to 100% of the principal
amount thereof together in each case with accrued interest to the
date fixed for redemption.
The principal hereof may be declared or may become due
prior to the express date of the maturity hereof on the conditions,
in the manner and at the time set forth in the Mortgage, upon the
occurrence of a completed default as in the Mortgage provided.
This bond is transferable as prescribed in the Mortgage
by the registered owner hereof in person, or by his duly authorized
attorney, at the office or agency of the Company in the Borough of
Manhattan, The City of New York, and at such other office or agency
of the Company as the Company may designate, upon surrender and
cancellation of this bond and upon payment, if the Company shall
require it, of the transfer charges prescribed in the Mortgage,
and, thereupon, a new registered bond or bonds of authorized
denominations of the same series for a like principal amount will
be issued to the transferee in exchange herefor as provided in the
Mortgage. In the manner and upon payment, if the Company shall
require it, of the charges prescribed in the Mortgage registered
bonds of this series may be exchanged for a like aggregate
principal amount of registered bonds of other authorized
denominations of the same series, upon presentation and surrender
thereof, for cancellation, at the office or agency of the Company
in the Borough of Manhattan, The City of New York, or at such other
office or agency of the Company as the Company may designate.
No recourse shall be had for the payment of the principal
of or interest on this bond against any incorporator or any past,
present or future stockholder, officer or director, as such, of the
Company, or any successor corporation, either directly or through
the Company or any successor corporation, under any rule of law,
statute or constitution or by the enforcement of any assessment or
otherwise, all such liability of incorporators, stockholders,
officers and directors, as such, being waived and released by the
holder or owner hereof by the acceptance of this bond and being
likewise waived and released by the terms of the Mortgage.
This bond shall not become valid or obligatory for any
purpose until CHEMICAL BANK, the Trustee under the Mortgage, or its
successor thereunder, shall have signed the form of Authentication
Certificate endorsed hereon.
In Witness Whereof, Ohio Power Company has caused this
bond to be executed in its name by the signature of its Chairman of
the Board, its President or one of its Vice Presidents and its
corporate seal to be impressed or imprinted hereon and attested by
the signature of its Secretary or one of its Assistant Secretaries.
Dated: OHIO POWER COMPANY
By________________________
Vice President
(SEAL)
Attest:___________________
Assistant Secretary
TRUSTEE'S AUTHENTICATION CERTIFICATE
This bond is one of the bonds,
of the series herein designated,
described in the within-mentioned
Mortgage.
CHEMICAL BANK, as Trustee,
By______________________________
Authorized Officer
ANNEX A TO FIRST MORTGAGE BOND,
DESIGNATED SECURED MEDIUM TERM NOTE,
6.00% SERIES DUE NOVEMBER 1, 2003
(If redeemed during the
twelve months beginning Regular
November 1) Redemption
Year Price
1998 101.72%
1999 100.86
2000 100.00
2001 100.00
2002 100.00
FOR VALUE RECEIVED, the undersigned hereby sell(s),
assign(s) and transfer(s) unto
(PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE)
_______________________________________
________________________________________________________________
________________________________________________________________
(PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF
________________________________________________________________
ASSIGNEE) the within Bond and all rights thereunder, hereby
________________________________________________________________
irrevocably constituting and appointing such person attorney to
________________________________________________________________
transfer such Bond on the books of the Issuer, with full power of
________________________________________________________________
substitution in the premises.
Dated: ______________________ ____________________________
NOTICE: The signature to this assignment must correspond with the
name as written upon the face of the within Bond in every
particular without alteration or enlargement or any
change whatsoever.
SCHEDULE II
OHIO POWER COMPANY
FIRST MORTGAGE BOND, DESIGNATED
SECURED MEDIUM TERM NOTE, 7.10%
SERIES DUE NOVEMBER 1, 2023
Bond No.
Original Issue Date: October 13, 1993
Principal Amount:
Semi-annual Interest Payment Dates: April 1 and October 1
Record Dates: March 20 and September 20
CUSIP No: 67741M AN4
OHIO POWER COMPANY, a corporation of the State of Ohio
(hereinafter called the "Company"), for value received, hereby
promises to pay to ____________, or registered assigns, the
Principal Amount set forth above on the maturity date specified in
the title of this bond in lawful money of the United States of
America, at the office or agency of the Company in the Borough of
Manhattan, The City of New York, and to pay to the registered
holder hereof interest on said amount from the date of
authentication of this bond (herein called the "Issue Date") or
latest semi-annual interest payment date to which interest has been
paid on the bonds of this series preceding the Issue Date, unless
the Issue Date be an interest payment date to which interest is
being paid, in which case from the Issue Date or unless the Issue
Date be the record date for the interest payment date first
following the Original Issue Date set forth above or a date prior
to such record date, then from the Original Issue Date (or, if the
Issue Date is between the record date for any interest payment date
and such interest payment date, then from such interest payment
date, provided, however, that if and to the extent that the Company
shall default in the payment of the interest due on such interest
payment date, then from the next preceding semi-annual interest
payment date to which interest has been paid on the bonds of this
series, or if such interest payment date is the interest payment
date first following the Original Issue Date set forth above, then
from the Original Issue Date), until the principal hereof shall
have become due and payable, at the rate per annum specified in the
title of this bond, payable on April 1 and October 1 of each year
(commencing April 1, 1994) and on the maturity date specified in
the title of this bond; provided that, at the option of the
Company, such interest may be paid by check, mailed to the
registered owner of this bond at such owner's address appearing on
the register hereof.
This bond is one of a duly authorized issue of bonds of
the Company, issuable in series, and is one of a series known as
its First Mortgage Bonds, of the series designated in its title,
all bonds of all series issued and to be issued under and equally
secured (except in so far as any sinking fund, established in
accordance with the provisions of the Mortgage hereinafter
mentioned, may afford additional security for the bonds of any
particular series) by a Mortgage and Deed of Trust (herein,
together with any indentures supplemental thereto, called the
Mortgage), dated as of October 1, 1938, executed by the Company to
CENTRAL HANOVER BANK AND TRUST COMPANY (now CHEMICAL BANK), as
Trustee, to which Mortgage reference is made for a description of
the property mortgaged and pledged, the nature and extent of the
security, the rights of the holders of the bonds and of the Trustee
in respect thereof, the duties and immunities of the Trustee, and
the terms and conditions upon which the bonds are secured. With
the consent of the Company and to the extent permitted by and as
provided in the Mortgage, the rights and obligations of the Company
and/or of the holders of the bonds and/or coupons and/or the terms
and provisions of the Mortgage and/or of any instruments
supplemental thereto may be modified or altered by affirmative
vote, or written consent, of the holders of at least seventy-five
per centum (75%) in principal amount of the bonds affected by such
modification or alteration then outstanding under the Mortgage
(excluding bonds disqualified from voting by reason of the
Company's interest therein as provided in the Mortgage); provided
that, without the consent of the holder hereof, no such
modification or alteration shall permit the extension of the
maturity of the principal of or interest on this bond or the
reduction in the rate of interest hereon or any other modification
in the terms of payment of such principal or interest or the
creation of a lien on the mortgaged and pledged property ranking
prior to or on a parity with the lien of the Mortgage or the
deprivation of the holder of a lien upon such property or reduce
the above percentage.
As provided in said Mortgage, said bonds may be for
various principal sums and are issuable in series, which may mature
at different times, may bear interest at different rates and may
otherwise vary as therein provided, and this bond is one of a
series entitled "First Mortgage Bonds, Designated Secured Medium
Term Notes, 7.10% Series due November 1, 2023" (herein called
"bonds of the 49th Series") created by an Indenture Supplemental to
Mortgage and Deed of Trust dated as of October 1, 1993 (the "Fourth
1993 Supplemental Indenture"), as provided for in said Mortgage.
The interest payable on any April 1 or October 1 (other
than interest payable upon redemption) will, subject to certain
exceptions provided in said Fourth 1993 Supplemental Indenture, be
paid to the person in whose name this bond is registered at the
close of business on the record date, which shall be the March 20
or September 20, as the case may be, next preceding such interest
payment date, or, if such March 20 or September 20 is not a
Business Day (as hereinbelow defined), the next preceding Business
Day. Interest payable upon redemption or maturity shall be payable
to the person to whom the principal is paid. The term "Business
Day" means any day, other than a Saturday or Sunday, which is not
a day on which banking institutions or trust companies in The City
of New York, New York or the city in which is located any office or
agency maintained for the payment of principal of or premium, if
any, or interest on bonds of the 49th Series are authorized or
required by law, regulation or executive order to remain closed.
If any semi-annual interest payment date, redemption date
or the maturity date is not a Business Day, payment of amounts due
on such date may be made on the next succeeding Business Day, and,
if such payment is made or duly provided for on such Business Day,
no interest shall accrue on such amounts for the period from and
after such interest payment date, redemption date or the maturity
date, as the case may be, to such Business Day.
The Company and the Trustee may deem and treat the person
in whose name this bond is registered as the absolute owner hereof
for the purpose of receiving payment of or on account of principal
or (subject to the provisions hereof) interest hereon and for all
other purposes and the Company and the Trustee shall not be
affected by any notice to the contrary.
The Company shall not be required to make transfers or
exchanges of bonds of the 49th Series for a period of eleven days
next preceding any interest payment date, or next preceding any
selection of bonds of the 49th Series to be redeemed, and the
Company shall not be required to make transfers or exchanges of any
bonds of the 49th Series designated for redemption in whole or in
part.
Any or all of the bonds of the 49th Series may be
redeemed by the Company on or after November 1, 2003, at its
option, or by the operation of various provisions of the Mortgage,
in whole at any time or in part from time to time upon not less
than 30 but not more than 90 days' previous notice given by mail to
the registered holders of the bonds to be redeemed, all as provided
in the Mortgage (a) if redeemed otherwise than by the use or
application of cash deposited pursuant to the maintenance and
replacement provisions contained in Part II and/or Part II(a) of
Section 20 of the Mortgage and otherwise than by use of proceeds of
released property or the proceeds of insurance, at an amount equal
to a percentage of the principal amount thereof determined as set
forth in Annex A hereto under the heading "Regular Redemption
Price" together in each case with accrued interest to the date
fixed for redemption; or (b) if redeemed by the use or application
of cash deposited pursuant to the maintenance and replacement
provisions contained in Part II and/or Part II(a) of Section 20 of
the Mortgage or by the use of proceeds of released property or the
proceeds of insurance, at an amount equal to 100% of the principal
amount thereof together in each case with accrued interest to the
date fixed for redemption.
The principal hereof may be declared or may become due
prior to the express date of the maturity hereof on the conditions,
in the manner and at the time set forth in the Mortgage, upon the
occurrence of a completed default as in the Mortgage provided.
This bond is transferable as prescribed in the Mortgage
by the registered owner hereof in person, or by his duly authorized
attorney, at the office or agency of the Company in the Borough of
Manhattan, The City of New York, and at such other office or agency
of the Company as the Company may designate, upon surrender and
cancellation of this bond and upon payment, if the Company shall
require it, of the transfer charges prescribed in the Mortgage,
and, thereupon, a new registered bond or bonds of authorized
denominations of the same series for a like principal amount will
be issued to the transferee in exchange herefor as provided in the
Mortgage. In the manner and upon payment, if the Company shall
require it, of the charges prescribed in the Mortgage registered
bonds of this series may be exchanged for a like aggregate
principal amount of registered bonds of other authorized
denominations of the same series, upon presentation and surrender
thereof, for cancellation, at the office or agency of the Company
in the Borough of Manhattan, The City of New York, or at such other
office or agency of the Company as the Company may designate.
No recourse shall be had for the payment of the principal
of or interest on this bond against any incorporator or any past,
present or future stockholder, officer or director, as such, of the
Company, or any successor corporation, either directly or through
the Company or any successor corporation, under any rule of law,
statute or constitution or by the enforcement of any assessment or
otherwise, all such liability of incorporators, stockholders,
officers and directors, as such, being waived and released by the
holder or owner hereof by the acceptance of this bond and being
likewise waived and released by the terms of the Mortgage.
This bond shall not become valid or obligatory for any
purpose until CHEMICAL BANK, the Trustee under the Mortgage, or its
successor thereunder, shall have signed the form of Authentication
Certificate endorsed hereon.
In Witness Whereof, Ohio Power Company has caused this
bond to be executed in its name by the signature of its Chairman of
the Board, its President or one of its Vice Presidents and its
corporate seal to be impressed or imprinted hereon and attested by
the signature of its Secretary or one of its Assistant Secretaries.
Dated: OHIO POWER COMPANY
By________________________
Vice President
(SEAL)
Attest:___________________
Assistant Secretary
TRUSTEE'S AUTHENTICATION CERTIFICATE
This bond is one of the bonds,
of the series herein designated,
described in the within-mentioned
Mortgage.
CHEMICAL BANK, as Trustee,
By______________________________
Authorized Officer
ANNEX A TO FIRST MORTGAGE BOND,
DESIGNATED SECURED MEDIUM TERM NOTE,
7.10% SERIES DUE NOVEMBER 1, 2023
(If redeemed during the
twelve months beginning Regular
November 1) Redemption
Year Price
2003 103.55%
2004 103.20
2005 102.84
2006 102.49
2007 102.13
2008 101.78
2009 101.42
2010 101.07
2011 100.71
2012 100.36
2013 100.00
2014 100.00
2015 100.00
2016 100.00
2017 100.00
2018 100.00
2019 100.00
2020 100.00
2021 100.00
2022 100.00
FOR VALUE RECEIVED, the undersigned hereby sell(s),
assign(s) and transfer(s) unto
(PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE)
_______________________________________
________________________________________________________________
________________________________________________________________
(PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF
________________________________________________________________
ASSIGNEE) the within Bond and all rights thereunder, hereby
________________________________________________________________
irrevocably constituting and appointing such person attorney to
________________________________________________________________
transfer such Bond on the books of the Issuer, with full power of
________________________________________________________________
substitution in the premises.
Dated: ______________________ ____________________________
NOTICE: The signature to this assignment must correspond with the
name as written upon the face of the within Bond in every
particular without alteration or enlargement or any
change whatsoever.
<PAGE>
Indenture Supplemental
TO
Mortgage and Deed of Trust
(Dated as of October 1, 1938)
Executed by
OHIO POWER COMPANY
TO
CHEMICAL BANK,
As Trustee
Dated as of November 1, 1993
$50,000,000 First Mortgage Bonds,
Designated Secured Medium Term Notes,
6.15% Series due December 1, 2003
TABLE OF CONTENTS
Page
Parties 1
Recitals 1
Execution of Original Indenture 1
Termination of Individual Trustee 2
Acquisition of property rights and property 2
Provision for issuance of bonds in one or more series 3
Issuance of First Mortgage Bonds 3
Creation of new First Mortgage Bonds of the 50th Series 4
Compliance with legal requirements 4
Granting Clauses 4
Appurtenances, etc. 5
Habendum 6
Grant in Trust 6
Sec. 1. Supplement to Original Indenture by addition 7
of new Section 20XX thereto
Sec. 2. Supplement to Original Indenture by addition 10
of new Article IIIAAAC thereto
Sec. 3. Provision for record date for meetings of 10
bondholders
Sec. 4. Original Indenture and the Fifth 1993
Supplemental Indenture same instrument 10
Sec. 5. Limitation of rights 10
Sec. 6. Execution of Counterparts 11
Testimonium 11
Signatures and Seals 11
Acknowledgments 13
Schedule I I-1
SUPPLEMENTAL INDENTURE, dated as of the 1st day of November,
1993, made and entered into by and between Ohio Power Company, a
corporation of the State of Ohio, the corporate title of which was,
prior to July 16, 1954, The Ohio Power Company (hereinafter
sometimes called the Company), party of the first part, and
Chemical Bank, a corporation of the State of New York having its
principal office in the County of New York, State of New York,
successor by merger to Manufacturers Hanover Trust Company,
successor by merger to The Hanover Bank, the corporate title of
which was, prior to June 30, 1951, Central Hanover Bank and Trust
Company (hereinafter sometimes called the Corporate Trustee or
Trustee), as Trustee, party of the second part;
Whereas, the Company has heretofore executed and delivered its
Mortgage and Deed of Trust, dated as of October 1, 1938, an
Indenture Supplemental to Mortgage and Deed of Trust, dated as of
April 1, 1941, a Supplemental Mortgage and Deed of Trust, dated as
of April 1, 1944, a Supplemental Mortgage and Deed of Trust, dated
as of April 1, 1947, an Indenture Supplemental to Mortgage and Deed
of Trust, dated as of April 1, 1948, an Indenture Supplemental to
Mortgage and Deed of Trust, dated as of October 1, 1951, an
Indenture Supplemental to Mortgage and Deed of Trust, dated as of
January 1, 1953, an Indenture Supplemental to Mortgage and Deed of
Trust, dated as of April 1, 1954, a Supplemental Mortgage and Deed
of Trust, dated as of February 1, 1955, an Indenture Supplemental
to Mortgage and Deed of Trust, dated as of September 1, 1955, an
Indenture Supplemental to Mortgage and Deed of Trust, dated as of
November 1, 1956, an Indenture Supplemental to Mortgage and Deed of
Trust, dated as of November 1, 1957, an Indenture Supplemental to
Mortgage and Deed of Trust, dated as of April 1, 1959, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of April 1,
1965, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of January 1, 1966, an Indenture Supplemental to Mortgage
and Deed of Trust, dated as of August 1, 1967, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of March 1,
1968, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of March 1, 1969, an Indenture Supplemental to Mortgage
and Deed of Trust, dated as of December 1, 1969, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of December 1,
1970, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of April 1, 1971, an Indenture Supplemental to Mortgage
and Deed of Trust, dated as of October 1, 1971, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of April 1,
1972, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of October 1, 1972, an Indenture Supplemental to Mortgage
and Deed of Trust, dated as of August 1, 1973, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of June 1,
1974, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of November 1, 1974, an Indenture Supplemental to Mortgage
and Deed of Trust, dated as of November 1, 1975, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of May 1,
1976, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of November 1, 1976, an Indenture Supplemental to Mortgage
and Deed of Trust, dated as of April 1, 1977, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of March 1,
1978, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of September 1, 1979, an Indenture Supplemental to
Mortgage and Deed of Trust, dated as of March 1, 1981, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of October 1,
1981, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of March 1, 1982, an Indenture Supplemental to Mortgage
and Deed of Trust, dated as of June 1, 1983, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of July 1,
1983, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of June 1, 1988, an Indenture Supplemental to Mortgage and
Deed of Trust, dated as of August 1, 1990, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of June 1,
1991, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of February 1, 1992, an Indenture Supplemental to Mortgage
and Deed of Trust, dated as of March 1, 1992, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of June 1,
1992, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of March 1, 1993, an Indenture Supplemental to Mortgage
and Deed of Trust, dated as of June 1, 1993, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of August 1,
1993 and an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of October 1, 1993 (which Mortgage and Deed of Trust, as
amended and supplemented by said Indentures Supplemental to
Mortgage and Deed of Trust, is hereinafter called the Original
Indenture), to the Trustee for the security of all bonds of the
Company outstanding thereunder, and by said Original Indenture has
conveyed to the Trustee, upon certain trusts, terms and conditions,
and with and subject to certain provisos and covenants therein
contained, all and singular the property, rights and franchises
which the Company then owned or should thereafter acquire,
excepting any property expressly excepted by the terms of the
Original Indenture; and
Whereas, effective April 13, 1988, pursuant to Section 106A of
the Original Indenture, the Individual Trustee resigned and all
powers of the Individual Trustee then terminated, as did the
Individual Trustee's right, title and interest in and to the trust
estate, and without appointment of a new trustee as successor to
said Individual Trustee, all the right, title and powers of the
Trustees thereupon devolved upon the Corporate Trustee and its
successors alone; and
Whereas, in addition to the property described in the Original
Indenture, the Company has acquired certain property rights and
property hereinafter described and has covenanted in Section 42 of
the Original Indenture to execute and deliver such further
instruments and do such further acts as may be necessary or proper
to make subject to the lien thereof any property thereafter
acquired and intended to be subject to such lien; and
Whereas, the Original Indenture provides that bonds issued
thereunder may be issued in one or more series and further provides
that, with respect to each series, the rate of interest, the date
or dates of maturity, the dates for the payment of interest, the
terms of optional redemption and other terms and conditions not
inconsistent with the Original Indenture may be established, prior
to the issue of bonds of such series, by an indenture supplemental
to the Original Indenture; and
Whereas, the Company has heretofore issued, in accordance with
the provisions of the Original Indenture, bonds of currently
outstanding series entitled and designated as hereinafter set
forth, in the respective aggregate principal amounts indicated:
Principal
Series Amount
First Mortgage Bonds, 5% Series due 1996 $ 50,000,000
First Mortgage Bonds, 6-1/2% Series due 1997 50,000,000
First Mortgage Bonds, 6-3/4% Series due 1998 60,000,000
First Mortgage Bonds, 7-3/4% Series due 1999 70,000,000
First Mortgage Bonds, 7-5/8% Series due 2002 25,000,000
First Mortgage Bonds, 7-3/4% Series due 2002 25,000,000
First Mortgage Bonds, 8-3/8% Series due 2003 40,000,000
First Mortgage Bonds, 9-7/8% Series due 2020 50,000,000
First Mortgage Bonds, Designated Secured Medium
Term Notes, 9.625% Series due June 1, 2021 50,000,000
First Mortgage Bonds, Designated Secured Medium
Term Notes, 8.10% Series due February 15, 2002 50,000,000
First Mortgage Bonds, Designated Secured Medium
Term Notes, 8.80% Series due February 10, 2022 50,000,000
First Mortgage Bonds, Designated Secured Medium
Term Notes, 8.25% Series due March 15, 2002 50,000,000
First Mortgage Bonds, Designated Secured Medium
Term Notes, 8.75% Series due June 1, 2022 50,000,000
First Mortgage Bonds, Designated Secured Medium
Term Notes, 6.75% Series due April 1, 2003 40,000,000
First Mortgage Bonds, Designated Secured Medium
Term Notes, 7.75% Series due April 1, 2023 40,000,000
First Mortgage Bonds, Designated Secured Medium
Term Notes, 6.875% Series due June 1, 2003 40,000,000
First Mortgage Bonds, Designated Secured Medium
Term Notes, 7.85% Series due June 1, 2023 40,000,000
First Mortgage Bonds, Designated Secured Medium
Term Notes, 6.55% Series due October 1, 2003 40,000,000
First Mortgage Bonds, Designated Secured Medium
Term Notes, 7.375% Series due October 1, 2023 40,000,000
First Mortgage Bonds, Designated Secured Medium
Term Notes, 6.00% Series due November 1, 2003 25,000,000
First Mortgage Bonds, Designated Secured Medium
Term Notes, 7.10% Series due November 1, 2023 25,000,000
and
Whereas, the Company, by appropriate corporate action in
conformity with the terms of the Original Indenture, has duly
determined to create a series of bonds under the Original Indenture
to be entitled and designated as "First Mortgage Bonds, Designated
Secured Medium Term Notes, 6.15% Series due December 1, 2003"
(hereinafter sometimes referred to as the "bonds of the 50th
Series"); and
Whereas, each of the bonds of the 50th Series is to be
substantially in the form set forth in Schedule I to this
Supplemental Indenture (hereinafter sometimes referred to as the
"Fifth 1993 Supplemental Indenture"); and
Whereas, the Company, in the exercise of the powers and
authorities conferred upon and reserved to it under and by virtue
of the provisions of the Original Indenture, and pursuant to
resolutions of its Board of Directors, has duly resolved and
determined to make, execute and deliver to the Trustee a
supplemental indenture, in the form hereof, for the purposes herein
provided; and
Whereas, all conditions and requirements necessary to make
this Fifth 1993 Supplemental Indenture a valid, binding and legal
instrument in accordance with its terms have been done, performed
and fulfilled, and the execution and delivery thereof have been in
all respects duly authorized;
Now, therefore, this Indenture Witnesseth:
That Ohio Power Company, in consideration of the premises and
of the purchase and acceptance of the bonds by the holders thereof
and of the sum of One Dollar ($1) and other good and valuable
consideration paid to it by the Trustee at or before the ensealing
and delivery of these presents, receipt whereof is hereby
acknowledged, and in order to secure the payment both of the
principal of and interest and premium, if any, on the bonds from
time to time issued under and secured by the Original Indenture and
this Fifth 1993 Supplemental Indenture, according to their tenor
and effect, and the performance of all the provisions of the
Original Indenture and this Fifth 1993 Supplemental Indenture
(including any further indenture or indentures supplemental to the
Original Indenture and any modification or alteration made as in
the Original Indenture provided) and of said bonds, has bargained,
granted, sold, released, conveyed, assigned, transferred,
mortgaged, pledged, set over and confirmed, and by these presents
doth bargain, grant, sell, release, convey, assign, transfer,
mortgage, pledge, set over and confirm unto Chemical Bank, as
Trustee, and to its successor or successors in said trust, and to
its and their assigns forever, all of the property and interests in
property, including all the electric generating plants of the
Company, all the electric transmission lines of the Company and
related equipment, all electric distribution systems and related
equipment, all electric substations, switching stations and sites,
all office buildings, service buildings, garages, and related
facilities, all facilities for the handling and storage of fuel
including coal handling and related facilities, and all other real
property of the Company and all interests therein of every nature
and description (except such property as is hereinafter expressly
excepted from the lien and operation of this Fifth 1993
Supplemental Indenture) constructed or otherwise acquired by the
Company and not heretofore described in the Original Indenture and
not heretofore released from the lien of the Original Indenture,
together with all and singular tenements, hereditaments and
appurtenances, whatsoever belonging or in any wise appertaining to
the aforesaid property or a part thereof; and the reversion and
reversions, remainder and remainders, and (subject to the
provisions of Section 57 of the Original Indenture) the incomes,
rents, issues and profits thereof, and of every part and parcel
thereof; and all of the estate, right, title, interest, property,
claim and demand of every nature and kind whatsoever of the Company
at law, in equity or otherwise howsoever, of, in and to the same
and every part and parcel thereof.
Also, the Company's interest in any other property, real,
personal and mixed (except such property as is hereinafter
expressly excepted from the lien and operation of this Fifth 1993
Supplemental Indenture) of whatsoever kind and character and all
appurtenances thereto, including (but without limiting the
generality of the foregoing) all and singular its corporate,
municipal and other franchises, permits, ordinances, consents,
privileges, immunities and licenses of every kind, description and
character.
It is hereby agreed by the Company that all the property,
rights and franchises acquired by the Company after the date hereof
(except any hereinafter expressly excepted) shall be as fully
embraced within the lien hereof as if such property, rights and
franchises were now owned by the Company and were specifically
described herein and conveyed hereby.
Provided that the following are not and are not intended to be
bargained, granted, sold, released, conveyed, assigned,
transferred, mortgaged, pledged, set over or confirmed hereunder
and are hereby expressly excepted from the lien and operation of
the Original Indenture and this Fifth 1993 Supplemental Indenture,
viz.: (1) cash, shares of stock and obligations (including bonds,
notes and other securities) not hereinafter or in the Original
Indenture specifically pledged, or deposited or delivered hereunder
or thereunder, or hereinafter or therein covenanted so to be;
(2) any goods, wares, merchandise, equipment, materials or supplies
acquired for the purpose of sale or resale in the usual course of
business or for consumption in the operation of any properties of
the Company; (3) all judgments, accounts and choses in action, the
proceeds of which the Company is not obligated as hereinafter
provided or as provided in the Original Indenture to deposit with
the Trustee hereunder or thereunder, and all contracts, leases and
operating agreements not hereinafter specifically pledged, or
deposited or delivered hereunder or under the Original Indenture,
or hereinafter or in the Original Indenture covenanted so to be;
and (4) all electric energy and other material or products
generated, manufactured, produced or purchased by the Company for
sale, distribution or use in the ordinary course of its business;
provided, however, that the property and rights expressly excepted
from the lien and operation of the Original Indenture and this
Fifth 1993 Supplemental Indenture in the above subdivisions (2) and
(3) shall (to the extent permitted by law) cease to be so excepted
in the event that the Trustee or a receiver or trustee shall enter
upon and take possession of the mortgaged and pledged property in
the manner provided in Article XII of the Original Indenture, by
reason of the occurrence of a completed default, as defined in said
Article XII.
To have and to hold all such properties, real, personal and
mixed, bargained, granted, sold, released, conveyed, assigned,
transferred, mortgaged, pledged, set over or confirmed by the
Company as aforesaid, or intended so to be, unto the Trustee and
its successors in the trust.
Subject, however, to the reservations, exceptions, limitations
and restrictions contained in the several deeds, leases,
servitudes, franchises and contracts or other instruments through
which the Company acquired and/or claims title to and/or enjoys the
use of the aforesaid properties; and subject also to encumbrances
of the character defined in Section 6 of the Original Indenture as
"excepted encumbrances", in so far as the same may attach to any of
the property embraced herein.
In trust nevertheless, upon the terms and trusts in the
Original Indenture and in this Fifth 1993 Supplemental Indenture
set forth, for the benefit and security of those who shall hold the
bonds and coupons issued and to be issued hereunder and under the
Original Indenture, or any of them, in accordance with the terms of
the Original Indenture and of this Fifth 1993 Supplemental
Indenture, without preference, priority or distinction as to lien
of any of said bonds or coupons over any others thereof by reason
of priority in the time of issue or negotiation thereof, or
otherwise howsoever, subject, however, to the conditions,
provisions and covenants set forth in the Original Indenture and in
this Fifth 1993 Supplemental Indenture.
And this Indenture further Witnesseth:
That in further consideration of the premises and for the
considerations aforesaid, the Company, for itself and its
successors and assigns, hereby covenants and agrees to and with the
Trustee, and its successor or successors in such trust, as follows:
Section 1. The Original Indenture is hereby supplemented by
adding immediately after Section 20WW, a new Section 20XX, as
follows:
Section 20XX. The Company hereby creates a fiftieth
series of bonds to be issued under and secured by this
Indenture, to be designated and to be distinguished from the
bonds of all other series by the title "First Mortgage Bonds,
Designated Secured Medium Term Notes, 6.15% Series due
December 1, 2003" (herein called bonds of the 50th Series).
The form of the bonds of the 50th Series shall be
substantially as set forth in Schedule I to the Fifth 1993
Supplemental Indenture.
Bonds of the 50th Series shall mature on the date
specified in their title. Unless otherwise determined by the
Company, the bonds of the 50th Series shall be issued in fully
registered form without coupons in denominations of $1,000 and
integral multiples thereof; the principal of and premium (if
any) and interest on each said bond to be payable at the
office or agency of the Company in the Borough of Manhattan,
The City of New York, in lawful money of the United States of
America, provided that at the option of the Company interest
may be mailed to registered owners of the bonds at their
respective addresses that appear on the register thereof; and
the rate of interest shall be the rate per annum specified in
the title thereof, payable semi-annually on the first days of
April and October of each year (commencing April 1, 1994) and
on their maturity date.
The person in whose name any bond of the 50th Series is
registered at the close of business on any record date (as
hereinbelow defined) with respect to any regular semi-annual
interest payment date (other than interest payable upon
redemption) shall be entitled to receive the interest payable
on such interest payment date notwithstanding the cancellation
of such bond of the 50th Series upon any registration of
transfer or exchange thereof (including any exchange effected
as an incident to a partial redemption thereof) subsequent to
the record date and prior to such interest payment date,
except, if and to the extent that the Company shall default in
the payment of the interest due on such interest payment date,
then the registered holders of bonds of the 50th Series on
such record date shall have no further right to or claim in
respect of such defaulted interest as such registered holders
on such record date, and the persons entitled to receive
payment of any defaulted interest thereafter payable or paid
on any bonds of the 50th Series shall be the registered
holders of such bonds of the 50th Series (or any bond or bonds
issued, directly or after intermediate transactions upon
transfer or exchange or in substitution thereof) on the date
of payment of such defaulted interest. Interest payable upon
redemption or maturity shall be payable to the person to whom
the principal is paid. The term "record date" as used in this
Section 20XX, and in the form of the bonds of the 50th Series,
with respect to any regular semi-annual interest payment date
(other than interest payable upon redemption) applicable to
the bonds of the 50th Series, shall mean the March 20 next
preceding an April 1 interest payment date or the September 20
next preceding an October 1 interest payment date, as the case
may be, or, if such March 20 or September 20 is not a Business
Day (as defined hereinbelow), the next preceding Business Day.
The term "Business Day" with respect to any bond of the 50th
Series shall mean any day, other than a Saturday or Sunday,
which is not a day on which banking institutions or trust
companies in The City of New York, New York or the city in
which is located any office or agency maintained for the
payment of principal of or premium, if any, or interest on
such bond of the 50th Series are authorized or required by
law, regulation or executive order to remain closed.
Every registered bond of the 50th Series shall be dated
the date of authentication ("Issue Date") and shall bear
interest computed on the basis of a 360-day year consisting of
twelve 30-day months from its Issue Date or from the latest
semi-annual interest payment date to which interest has been
paid on the bonds of the 50th Series preceding the Issue Date,
unless such Issue Date be an interest payment date to which
interest is being paid on the bonds of the 50th Series, in
which case it shall bear interest from its Issue Date or
unless the Issue Date be the record date for the interest
payment date first following the date of original issuance of
bonds of the 50th Series (the "Original Issue Date"), or a
date prior to such record date, then from the Original Issue
Date; provided, that, so long as there is no existing default
in the payment of interest on said bonds, the holder of any
bond authenticated by the Trustee between the record date for
any regular semi-annual interest payment date (other than
interest payable upon redemption) and such interest payment
date shall not be entitled to the payment of the interest due
on such interest payment date and shall have no claim against
the Company with respect thereto; provided, further, that, if
and to the extent the Company shall default in the payment of
the interest due on such interest payment date, then any such
bond shall bear interest from the April 1 or October 1, as the
case may be, next preceding its Issue Date, to which interest
has been paid or, if the Company shall be in default with
respect to the interest payment date first following the
Original Issue Date, then from the Original Issue Date.
If any semi-annual interest payment date, redemption date
or the maturity date is not a Business Day, payment of amounts
due on such date may be made on the next succeeding Business
Day, and, if such payment is made or duly provided for on such
Business Day, no interest shall accrue on such amounts for the
period from and after such interest payment date, redemption
date or the maturity date, as the case may be, to such
Business Day.
Notwithstanding the provisions of Section 14 of this
Indenture, the bonds of the 50th Series shall be executed on
behalf of the Company by its Chairman of the Board, by its
President or by one of its Vice Presidents or by one of its
officers designated by the Board of Directors of the Company
for such purpose, whose signature may be a facsimile, and its
corporate seal shall be thereunto affixed or printed thereon
and attested by its Secretary or one of its Assistant
Secretaries, and the provisions of the penultimate sentence of
said Section 14 shall be applicable to such bonds of the 50th
Series.
The Bonds of the 50th Series are redeemable in accordance
with Article X of this Indenture and as further set forth in
the form of the bond contained in Schedule I to the Fifth 1993
Supplemental Indenture.
The Company shall not be required to make transfers or
exchanges of the bonds of the 50th Series for a period of
eleven days next preceding any selection of bonds of the 50th
Series to be redeemed or to make transfers or exchanges of any
bonds of the 50th Series designated in whole or in part for
redemption. Notwithstanding the provisions of Section 12 of
this Indenture, the Company shall not be required to make
transfers or exchanges of bonds of the 50th Series for a
period of eleven days next preceding any interest payment
date.
Registered bonds of the 50th Series shall be transferable
upon presentation and surrender thereof, for cancellation, at
the office or agency of the Company in the Borough of
Manhattan, The City of New York, and at such other office or
agency of the Company as the Company may designate, by the
registered holders thereof, in person or by duly authorized
attorney, in the manner and upon payment, if required by the
Company, of the charges prescribed in this Indenture. In the
manner and upon payment, if required by the Company, of the
charges prescribed in this Indenture, registered bonds of the
50th Series may be exchanged for a like aggregate principal
amount of registered bonds of the 50th Series of other
authorized denominations, upon presentation and surrender
thereof, for cancellation, at the office or agency of the
Company in the Borough of Manhattan, The City of New York and
at such other office or agency of the Company as the Company
may designate.
Section 2. The Original Indenture is hereby supplemented by
adding thereto the following new Article IIIAAAC, to be added after
Article IIIAAAB of the Original Indenture:
ARTICLE IIIAAAC
Initial Issuance of Bonds of the 50th Series.
Section 21AAAC. In accordance with and upon compliance with
such provisions of this Indenture as shall be selected for such
purpose by the officers of the Company duly authorized to take such
action, bonds of the 50th Series in an aggregate principal amount
not exceeding $50,000,000 shall forthwith be executed by the
Company and delivered to the Trustee and shall be authenticated by
the Trustee and delivered to or upon the order of the Company
(without awaiting the filing or recording of the Fifth 1993
Supplemental Indenture except to the extent required by subdivision
(9) of Section 28 of this Indenture).
Section 3. At any meeting of bondholders held as provided for
in Article XVIII of the Original Indenture at which holders of
bonds of the 50th Series are entitled to vote, all holders of bonds
of the 50th Series at the time of such meeting shall be entitled to
vote thereat; provided, however, that the Trustee may, and upon
request of the Company or of a majority of the bondholders of the
50th Series shall, fix a day not exceeding ninety days preceding
the date for which the meeting is called as a record date for the
determination of holders of bonds of the 50th Series entitled to
notice of and to vote at such meeting and any adjournment thereof
and only such registered owners who shall have been such registered
owners on the date so fixed, and who are entitled to vote such
bonds of the 50th Series at the meeting, shall be entitled to
receive notice of such meeting.
Section 4. As supplemented by this Fifth 1993 Supplemental
Indenture, the Original Indenture is in all respects ratified and
confirmed, and the Original Indenture and this Fifth 1993
Supplemental Indenture shall be read, taken and construed as one
and the same instrument. The bonds of the 50th Series are the
original debt secured by this Fifth 1993 Supplemental Indenture and
the Original Indenture, and this Fifth 1993 Supplemental Indenture
and the Original Indenture shall be, and be deemed to be, the
original lien instrument securing the bonds of the 50th Series.
Section 5. Nothing in this Fifth 1993 Supplemental Indenture
contained shall, or shall be construed to, confer upon any person
other than the holders of bonds issued under the Original Indenture
and this Fifth 1993 Supplemental Indenture, the Company and the
Trustee, any right to avail themselves of any benefit of any
provisions of the Original Indenture or of this Fifth 1993
Supplemental Indenture.
Section 6. This Fifth 1993 Supplemental Indenture may be
simultaneously executed in any number of counterparts, each of
which when so executed shall be deemed to be an original; but such
counterparts shall together constitute but one and the same
instrument.
In Witness Whereof, Ohio Power Company, party of the first
part, has caused this instrument to be signed in its name and
behalf by its President, a Vice President or an Assistant
Treasurer, and its corporate seal to be hereunto affixed and
attested by its Secretary or an Assistant Secretary, and Chemical
Bank, the party hereto of the second part, in token of its
acceptance of the trust hereby created, has caused this instrument
to be signed in its name and behalf by a Vice President, and its
corporate seal to be hereunto affixed and attested by a Trust
Officer. Executed and delivered in The City of New York, New York,
as of the day and year first above written.
Ohio Power Company
[Seal]
/s/ B. M. Barber
(B. M. Barber)
Attest: Assistant Treasurer
/s/ Jeffrey D. Cross
(Jeffrey D. Cross)
Assistant Secretary
Signed, sealed, acknowledged and delivered by
Ohio Power Company in the presence of:
/s/ A. A. Pena
(A. A. Pena)
/s/ John M. Adams, Jr.
(John M. Adams, Jr.)
[Seal]
Chemical Bank
/s/ W. B. Dodge
(W. B. Dodge)
Vice President
Attest:
/s/ Andrew M. Deck
(Andrew M. Deck)
Trust Officer
Signed, sealed, acknowledged and delivered by
Chemical Bank in the presence of:
/s/ Bruce Zydel
(Bruce Zydel)
/s/ Philip G. Thorogood
(Philip G. Thorogood)
This instrument was prepared by JEFFREY D. CROSS,
1 Riverside Plaza, Columbus, Ohio 43215
State of New York }
County of New York } ss:
On this 3rd day of November, 1993, personally appeared before
me, a Notary Public within and for said County in the State
aforesaid, B. M. BARBER and JEFFREY D. CROSS, to me known and known
to me to be respectively an Assistant Treasurer and Assistant
Secretary of OHIO POWER COMPANY, one of the corporations named in
and which executed the foregoing instrument, who severally
acknowledged that they did sign and seal said instrument as such
Assistant Treasurer and Assistant Secretary for and on behalf of
said corporation and that the same is their free act and deed as
such Assistant Treasurer and Assistant Secretary, respectively, and
the free and corporate act and deed of said corporation.
In Witness Whereof, I have hereunto set my hand and notarial
seal this 3rd day of November, 1993.
/s/ Patricia M. Carillo
Patricia M. Carillo
Notary Public, State of New York
No. 41-4747732
Qualified in Queens County
Certificate filed in New York County
Commission expires May 31, 1995
[SEAL]
State of New York }
County of New York, } ss:
Be it remembered, that on this 4th day of November, 1993,
personally appeared before me the undersigned, a Notary Public
within and for said County and State, CHEMICAL BANK, one of the
corporations named in and which executed the foregoing instrument,
by W. B. Dodge, one of its Vice Presidents, and by Andrew M. Deck,
one of its Trust Officers, to me known and known by me to be such
Vice President and Trust Officer, respectively, who severally duly
acknowledged the signing and sealing of the foregoing instrument to
be their free act and voluntary deed, and the free act and
voluntary deed of each of them as such Vice President and Trust
Officer, respectively, and the free act and voluntary deed of said
corporation, for the uses and purposes therein expressed and
mentioned.
My Commission expires August 31, 1994.
In Witness Whereof, I have hereunto set my hand and notarial
seal this 4th day of November, 1993.
/s/ James Foley
James Foley
Notary Public, State of New York
No. 31-6348400
Qualified in New York County
[Seal]
State of New York }
County of New York, } ss:
I, James Foley, a Notary Public of, in and for the said County
of New York, do certify that W. B. Dodge, who signed the writing
above and hereto annexed bearing date as of the 1st day of
November, 1993, for CHEMICAL BANK, a corporation, has this day in
my said County before me acknowledged the said writing to be the
act and deed of said corporation.
Given under my hand and official notarial seal this 4th day of
November, 1993.
My Commission expires August 31, 1994.
/s/ James Foley
James Foley
Notary Public, State of New York
No. 31-6348400
Qualified in New York County
[Seal]
SCHEDULE I
OHIO POWER COMPANY
FIRST MORTGAGE BOND, DESIGNATED
SECURED MEDIUM TERM NOTE, 6.15%
SERIES DUE DECEMBER 1, 2003
Bond No.
Original Issue Date: November 10, 1993
Principal Amount:
Semi-annual Interest Payment Dates: April 1 and October 1
Record Dates: March 20 and September 20
CUSIP No: 67741M AP9
OHIO POWER COMPANY, a corporation of the State of Ohio
(hereinafter called the "Company"), for value received, hereby
promises to pay to ____________, or registered assigns, the
Principal Amount set forth above on the maturity date specified in
the title of this bond in lawful money of the United States of
America, at the office or agency of the Company in the Borough of
Manhattan, The City of New York, and to pay to the registered
holder hereof interest on said amount from the date of
authentication of this bond (herein called the "Issue Date") or
latest semi-annual interest payment date to which interest has been
paid on the bonds of this series preceding the Issue Date, unless
the Issue Date be an interest payment date to which interest is
being paid, in which case from the Issue Date or unless the Issue
Date be the record date for the interest payment date first
following the Original Issue Date set forth above or a date prior
to such record date, then from the Original Issue Date (or, if the
Issue Date is between the record date for any interest payment date
and such interest payment date, then from such interest payment
date, provided, however, that if and to the extent that the Company
shall default in the payment of the interest due on such interest
payment date, then from the next preceding semi-annual interest
payment date to which interest has been paid on the bonds of this
series, or if such interest payment date is the interest payment
date first following the Original Issue Date set forth above, then
from the Original Issue Date), until the principal hereof shall
have become due and payable, at the rate per annum specified in the
title of this bond, payable on April 1 and October 1 of each year
(commencing April 1, 1994) and on the maturity date specified in
the title of this bond; provided that, at the option of the
Company, such interest may be paid by check, mailed to the
registered owner of this bond at such owner's address appearing on
the register hereof.
This bond is one of a duly authorized issue of bonds of
the Company, issuable in series, and is one of a series known as
its First Mortgage Bonds, of the series designated in its title,
all bonds of all series issued and to be issued under and equally
secured (except in so far as any sinking fund, established in
accordance with the provisions of the Mortgage hereinafter
mentioned, may afford additional security for the bonds of any
particular series) by a Mortgage and Deed of Trust (herein,
together with any indentures supplemental thereto, called the
Mortgage), dated as of October 1, 1938, executed by the Company to
CENTRAL HANOVER BANK AND TRUST COMPANY (now CHEMICAL BANK), as
Trustee, to which Mortgage reference is made for a description of
the property mortgaged and pledged, the nature and extent of the
security, the rights of the holders of the bonds and of the Trustee
in respect thereof, the duties and immunities of the Trustee, and
the terms and conditions upon which the bonds are secured. With
the consent of the Company and to the extent permitted by and as
provided in the Mortgage, the rights and obligations of the Company
and/or of the holders of the bonds and/or coupons and/or the terms
and provisions of the Mortgage and/or of any instruments
supplemental thereto may be modified or altered by affirmative
vote, or written consent, of the holders of at least seventy-five
per centum (75%) in principal amount of the bonds affected by such
modification or alteration then outstanding under the Mortgage
(excluding bonds disqualified from voting by reason of the
Company's interest therein as provided in the Mortgage); provided
that, without the consent of the holder hereof, no such
modification or alteration shall permit the extension of the
maturity of the principal of or interest on this bond or the
reduction in the rate of interest hereon or any other modification
in the terms of payment of such principal or interest or the
creation of a lien on the mortgaged and pledged property ranking
prior to or on a parity with the lien of the Mortgage or the
deprivation of the holder of a lien upon such property or reduce
the above percentage.
As provided in said Mortgage, said bonds may be for
various principal sums and are issuable in series, which may mature
at different times, may bear interest at different rates and may
otherwise vary as therein provided, and this bond is one of a
series entitled "First Mortgage Bonds, Designated Secured Medium
Term Notes, 6.15% Series due December 1, 2003" (herein called
"bonds of the 50th Series") created by an Indenture Supplemental to
Mortgage and Deed of Trust dated as of November 1, 1993 (the "Fifth
1993 Supplemental Indenture"), as provided for in said Mortgage.
The interest payable on any April 1 or October 1 (other
than interest payable upon redemption) will, subject to certain
exceptions provided in said Fifth 1993 Supplemental Indenture, be
paid to the person in whose name this bond is registered at the
close of business on the record date, which shall be the March 20
or September 20, as the case may be, next preceding such interest
payment date, or, if such March 20 or September 20 is not a
Business Day (as hereinbelow defined), the next preceding Business
Day. Interest payable upon redemption or maturity shall be payable
to the person to whom the principal is paid. The term "Business
Day" means any day, other than a Saturday or Sunday, which is not
a day on which banking institutions or trust companies in The City
of New York, New York or the city in which is located any office or
agency maintained for the payment of principal of or premium, if
any, or interest on bonds of the 50th Series are authorized or
required by law, regulation or executive order to remain closed.
If any semi-annual interest payment date, redemption date
or the maturity date is not a Business Day, payment of amounts due
on such date may be made on the next succeeding Business Day, and,
if such payment is made or duly provided for on such Business Day,
no interest shall accrue on such amounts for the period from and
after such interest payment date, redemption date or the maturity
date, as the case may be, to such Business Day.
The Company and the Trustee may deem and treat the person
in whose name this bond is registered as the absolute owner hereof
for the purpose of receiving payment of or on account of principal
or (subject to the provisions hereof) interest hereon and for all
other purposes and the Company and the Trustee shall not be
affected by any notice to the contrary.
The Company shall not be required to make transfers or
exchanges of bonds of the 50th Series for a period of eleven days
next preceding any interest payment date, or next preceding any
selection of bonds of the 50th Series to be redeemed, and the
Company shall not be required to make transfers or exchanges of any
bonds of the 50th Series designated for redemption in whole or in
part.
Any or all of the bonds of the 50th Series may be
redeemed by the Company on or after December 1, 1998, at its
option, or by the operation of various provisions of the Mortgage,
in whole at any time or in part from time to time upon not less
than 30 but not more than 90 days' previous notice given by mail to
the registered holders of the bonds to be redeemed, all as provided
in the Mortgage (a) if redeemed otherwise than by the use or
application of cash deposited pursuant to the maintenance and
replacement provisions contained in Part II and/or Part II(a) of
Section 20 of the Mortgage and otherwise than by use of proceeds of
released property or the proceeds of insurance, at an amount equal
to a percentage of the principal amount thereof determined as set
forth in Annex A hereto under the heading "Regular Redemption
Price" together in each case with accrued interest to the date
fixed for redemption; or (b) if redeemed by the use or application
of cash deposited pursuant to the maintenance and replacement
provisions contained in Part II and/or Part II(a) of Section 20 of
the Mortgage or by the use of proceeds of released property or the
proceeds of insurance, at an amount equal to 100% of the principal
amount thereof together in each case with accrued interest to the
date fixed for redemption.
The principal hereof may be declared or may become due
prior to the express date of the maturity hereof on the conditions,
in the manner and at the time set forth in the Mortgage, upon the
occurrence of a completed default as in the Mortgage provided.
This bond is transferable as prescribed in the Mortgage
by the registered owner hereof in person, or by his duly authorized
attorney, at the office or agency of the Company in the Borough of
Manhattan, The City of New York, and at such other office or agency
of the Company as the Company may designate, upon surrender and
cancellation of this bond and upon payment, if the Company shall
require it, of the transfer charges prescribed in the Mortgage,
and, thereupon, a new registered bond or bonds of authorized
denominations of the same series for a like principal amount will
be issued to the transferee in exchange herefor as provided in the
Mortgage. In the manner and upon payment, if the Company shall
require it, of the charges prescribed in the Mortgage registered
bonds of this series may be exchanged for a like aggregate
principal amount of registered bonds of other authorized
denominations of the same series, upon presentation and surrender
thereof, for cancellation, at the office or agency of the Company
in the Borough of Manhattan, The City of New York, or at such other
office or agency of the Company as the Company may designate.
No recourse shall be had for the payment of the principal
of or interest on this bond against any incorporator or any past,
present or future stockholder, officer or director, as such, of the
Company, or any successor corporation, either directly or through
the Company or any successor corporation, under any rule of law,
statute or constitution or by the enforcement of any assessment or
otherwise, all such liability of incorporators, stockholders,
officers and directors, as such, being waived and released by the
holder or owner hereof by the acceptance of this bond and being
likewise waived and released by the terms of the Mortgage.
This bond shall not become valid or obligatory for any
purpose until CHEMICAL BANK, the Trustee under the Mortgage, or its
successor thereunder, shall have signed the form of Authentication
Certificate endorsed hereon.
In Witness Whereof, Ohio Power Company has caused this
bond to be executed in its name by the signature of its Chairman of
the Board, its President or one of its Vice Presidents and its
corporate seal to be impressed or imprinted hereon and attested by
the signature of its Secretary or one of its Assistant Secretaries.
Dated: OHIO POWER COMPANY
By________________________
Vice President
(SEAL)
Attest:___________________
Assistant Secretary
TRUSTEE'S AUTHENTICATION CERTIFICATE
This bond is one of the bonds,
of the series herein designated,
described in the within-mentioned
Mortgage.
CHEMICAL BANK, as Trustee,
By______________________________
Authorized Officer
ANNEX A TO FIRST MORTGAGE BOND,
DESIGNATED SECURED MEDIUM TERM NOTE,
6.15% SERIES DUE DECEMBER 1, 2003
(If redeemed during the
twelve months beginning Regular
December 1) Redemption
Year Price
1998 101.76%
1999 100.88
2000 100.00
2001 100.00
2002 100.00
FOR VALUE RECEIVED, the undersigned hereby sell(s),
assign(s) and transfer(s) unto
(PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE)
_______________________________________
________________________________________________________________
________________________________________________________________
(PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF
________________________________________________________________
ASSIGNEE) the within Bond and all rights thereunder, hereby
________________________________________________________________
irrevocably constituting and appointing such person attorney to
________________________________________________________________
transfer such Bond on the books of the Issuer, with full power of
________________________________________________________________
substitution in the premises.
Dated: ______________________ ____________________________
NOTICE: The signature to this assignment must correspond with the
name as written upon the face of the within Bond in every
particular without alteration or enlargement or any
change whatsoever.
<PAGE>
Indenture Supplemental
TO
Mortgage and Deed of Trust
(Dated as of October 1, 1938)
Executed by
OHIO POWER COMPANY
TO
CHEMICAL BANK,
As Trustee
Dated as of December 1, 1993
$25,000,000 First Mortgage Bonds,
Designated Secured Medium Term Notes,
7.30% Series due April 1, 2024
TABLE OF CONTENTS
Page
Parties 1
Recitals 1
Execution of Original Indenture 1
Termination of Individual Trustee 2
Acquisition of property rights and property 2
Provision for issuance of bonds in one or more series 3
Issuance of First Mortgage Bonds 3
Creation of new First Mortgage Bonds of the 51st Series 4
Compliance with legal requirements 4
Granting Clauses 4
Appurtenances, etc. 5
Habendum 6
Grant in Trust 6
Sec. 1. Supplement to Original Indenture by addition 7
of new Section 20YY thereto
Sec. 2. Supplement to Original Indenture by addition 10
of new Article IIIAAAD thereto
Sec. 3. Provision for record date for meetings of 10
bondholders
Sec. 4. Original Indenture and the Sixth 1993
Supplemental Indenture same instrument 10
Sec. 5. Limitation of rights 10
Sec. 6. Execution of Counterparts 11
Testimonium 11
Signatures and Seals 11
Acknowledgments 13
Schedule I I-1
SUPPLEMENTAL INDENTURE, dated as of the 1st day of December,
1993, made and entered into by and between Ohio Power Company, a
corporation of the State of Ohio, the corporate title of which was,
prior to July 16, 1954, The Ohio Power Company (hereinafter
sometimes called the Company), party of the first part, and
Chemical Bank, a corporation of the State of New York having its
principal office in the County of New York, State of New York,
successor by merger to Manufacturers Hanover Trust Company,
successor by merger to The Hanover Bank, the corporate title of
which was, prior to June 30, 1951, Central Hanover Bank and Trust
Company (hereinafter sometimes called the Corporate Trustee or
Trustee), as Trustee, party of the second part;
Whereas, the Company has heretofore executed and delivered its
Mortgage and Deed of Trust, dated as of October 1, 1938, an
Indenture Supplemental to Mortgage and Deed of Trust, dated as of
April 1, 1941, a Supplemental Mortgage and Deed of Trust, dated as
of April 1, 1944, a Supplemental Mortgage and Deed of Trust, dated
as of April 1, 1947, an Indenture Supplemental to Mortgage and Deed
of Trust, dated as of April 1, 1948, an Indenture Supplemental to
Mortgage and Deed of Trust, dated as of October 1, 1951, an
Indenture Supplemental to Mortgage and Deed of Trust, dated as of
January 1, 1953, an Indenture Supplemental to Mortgage and Deed of
Trust, dated as of April 1, 1954, a Supplemental Mortgage and Deed
of Trust, dated as of February 1, 1955, an Indenture Supplemental
to Mortgage and Deed of Trust, dated as of September 1, 1955, an
Indenture Supplemental to Mortgage and Deed of Trust, dated as of
November 1, 1956, an Indenture Supplemental to Mortgage and Deed of
Trust, dated as of November 1, 1957, an Indenture Supplemental to
Mortgage and Deed of Trust, dated as of April 1, 1959, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of April 1,
1965, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of January 1, 1966, an Indenture Supplemental to Mortgage
and Deed of Trust, dated as of August 1, 1967, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of March 1,
1968, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of March 1, 1969, an Indenture Supplemental to Mortgage
and Deed of Trust, dated as of December 1, 1969, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of December 1,
1970, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of April 1, 1971, an Indenture Supplemental to Mortgage
and Deed of Trust, dated as of October 1, 1971, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of April 1,
1972, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of October 1, 1972, an Indenture Supplemental to Mortgage
and Deed of Trust, dated as of August 1, 1973, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of June 1,
1974, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of November 1, 1974, an Indenture Supplemental to Mortgage
and Deed of Trust, dated as of November 1, 1975, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of May 1,
1976, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of November 1, 1976, an Indenture Supplemental to Mortgage
and Deed of Trust, dated as of April 1, 1977, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of March 1,
1978, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of September 1, 1979, an Indenture Supplemental to
Mortgage and Deed of Trust, dated as of March 1, 1981, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of October 1,
1981, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of March 1, 1982, an Indenture Supplemental to Mortgage
and Deed of Trust, dated as of June 1, 1983, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of July 1,
1983, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of June 1, 1988, an Indenture Supplemental to Mortgage and
Deed of Trust, dated as of August 1, 1990, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of June 1,
1991, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of February 1, 1992, an Indenture Supplemental to Mortgage
and Deed of Trust, dated as of March 1, 1992, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of June 1,
1992, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of March 1, 1993, an Indenture Supplemental to Mortgage
and Deed of Trust, dated as of June 1, 1993, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of August 1,
1993, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of October 1, 1993 and an Indenture Supplemental to
Mortgage and Deed of Trust, dated as of November 1, 1993 (which
Mortgage and Deed of Trust, as amended and supplemented by said
Indentures Supplemental to Mortgage and Deed of Trust, is
hereinafter called the Original Indenture), to the Trustee for the
security of all bonds of the Company outstanding thereunder, and by
said Original Indenture has conveyed to the Trustee, upon certain
trusts, terms and conditions, and with and subject to certain
provisos and covenants therein contained, all and singular the
property, rights and franchises which the Company then owned or
should thereafter acquire, excepting any property expressly
excepted by the terms of the Original Indenture; and
Whereas, effective April 13, 1988, pursuant to Section 106A of
the Original Indenture, the Individual Trustee resigned and all
powers of the Individual Trustee then terminated, as did the
Individual Trustee's right, title and interest in and to the trust
estate, and without appointment of a new trustee as successor to
said Individual Trustee, all the right, title and powers of the
Trustees thereupon devolved upon the Corporate Trustee and its
successors alone; and
Whereas, in addition to the property described in the Original
Indenture, the Company has acquired certain property rights and
property hereinafter described and has covenanted in Section 42 of
the Original Indenture to execute and deliver such further
instruments and do such further acts as may be necessary or proper
to make subject to the lien thereof any property thereafter
acquired and intended to be subject to such lien; and
Whereas, the Original Indenture provides that bonds issued
thereunder may be issued in one or more series and further provides
that, with respect to each series, the rate of interest, the date
or dates of maturity, the dates for the payment of interest, the
terms of optional redemption and other terms and conditions not
inconsistent with the Original Indenture may be established, prior
to the issue of bonds of such series, by an indenture supplemental
to the Original Indenture; and
Whereas, the Company has heretofore issued, in accordance with
the provisions of the Original Indenture, bonds of currently
outstanding series entitled and designated as hereinafter set
forth, in the respective aggregate principal amounts indicated:
Principal
Series Amount
First Mortgage Bonds, 5% Series due 1996 $ 50,000,000
First Mortgage Bonds, 6-1/2% Series due 1997 50,000,000
First Mortgage Bonds, 6-3/4% Series due 1998 60,000,000
First Mortgage Bonds, 7-5/8% Series due 2002 25,000,000
First Mortgage Bonds, 7-3/4% Series due 2002 25,000,000
First Mortgage Bonds, 9-7/8% Series due 2020 50,000,000
First Mortgage Bonds, Designated Secured Medium
Term Notes, 9.625% Series due June 1, 2021 50,000,000
First Mortgage Bonds, Designated Secured Medium
Term Notes, 8.10% Series due February 15, 2002 50,000,000
First Mortgage Bonds, Designated Secured Medium
Term Notes, 8.80% Series due February 10, 2022 50,000,000
First Mortgage Bonds, Designated Secured Medium
Term Notes, 8.25% Series due March 15, 2002 50,000,000
First Mortgage Bonds, Designated Secured Medium
Term Notes, 8.75% Series due June 1, 2022 50,000,000
First Mortgage Bonds, Designated Secured Medium
Term Notes, 6.75% Series due April 1, 2003 40,000,000
First Mortgage Bonds, Designated Secured Medium
Term Notes, 7.75% Series due April 1, 2023 40,000,000
First Mortgage Bonds, Designated Secured Medium
Term Notes, 6.875% Series due June 1, 2003 40,000,000
First Mortgage Bonds, Designated Secured Medium
Term Notes, 7.85% Series due June 1, 2023 40,000,000
First Mortgage Bonds, Designated Secured Medium
Term Notes, 6.55% Series due October 1, 2003 40,000,000
First Mortgage Bonds, Designated Secured Medium
Term Notes, 7.375% Series due October 1, 2023 40,000,000
First Mortgage Bonds, Designated Secured Medium
Term Notes, 6.00% Series due November 1, 2003 25,000,000
First Mortgage Bonds, Designated Secured Medium
Term Notes, 7.10% Series due November 1, 2023 25,000,000
First Mortgage Bonds, Designated Secured Medium
Term Notes, 6.15% Series due December 1, 2003 50,000,000
and
Whereas, the Company, by appropriate corporate action in
conformity with the terms of the Original Indenture, has duly
determined to create a series of bonds under the Original Indenture
to be entitled and designated as "First Mortgage Bonds, Designated
Secured Medium Term Notes, 7.30% Series due April 1, 2024"
(hereinafter sometimes referred to as the "bonds of the 51st
Series"); and
Whereas, each of the bonds of the 51st Series is to be
substantially in the form set forth in Schedule I to this
Supplemental Indenture (hereinafter sometimes referred to as the
"Sixth 1993 Supplemental Indenture"); and
Whereas, the Company, in the exercise of the powers and
authorities conferred upon and reserved to it under and by virtue
of the provisions of the Original Indenture, and pursuant to
resolutions of its Board of Directors, has duly resolved and
determined to make, execute and deliver to the Trustee a
supplemental indenture, in the form hereof, for the purposes herein
provided; and
Whereas, all conditions and requirements necessary to make
this Sixth 1993 Supplemental Indenture a valid, binding and legal
instrument in accordance with its terms have been done, performed
and fulfilled, and the execution and delivery thereof have been in
all respects duly authorized;
Now, therefore, this Indenture Witnesseth:
That Ohio Power Company, in consideration of the premises and
of the purchase and acceptance of the bonds by the holders thereof
and of the sum of One Dollar ($1) and other good and valuable
consideration paid to it by the Trustee at or before the ensealing
and delivery of these presents, receipt whereof is hereby
acknowledged, and in order to secure the payment both of the
principal of and interest and premium, if any, on the bonds from
time to time issued under and secured by the Original Indenture and
this Sixth 1993 Supplemental Indenture, according to their tenor
and effect, and the performance of all the provisions of the
Original Indenture and this Sixth 1993 Supplemental Indenture
(including any further indenture or indentures supplemental to the
Original Indenture and any modification or alteration made as in
the Original Indenture provided) and of said bonds, has bargained,
granted, sold, released, conveyed, assigned, transferred,
mortgaged, pledged, set over and confirmed, and by these presents
doth bargain, grant, sell, release, convey, assign, transfer,
mortgage, pledge, set over and confirm unto Chemical Bank, as
Trustee, and to its successor or successors in said trust, and to
its and their assigns forever, all of the property and interests in
property, including all the electric generating plants of the
Company, all the electric transmission lines of the Company and
related equipment, all electric distribution systems and related
equipment, all electric substations, switching stations and sites,
all office buildings, service buildings, garages, and related
facilities, all facilities for the handling and storage of fuel
including coal handling and related facilities, and all other real
property of the Company and all interests therein of every nature
and description (except such property as is hereinafter expressly
excepted from the lien and operation of this Sixth 1993
Supplemental Indenture) constructed or otherwise acquired by the
Company and not heretofore described in the Original Indenture and
not heretofore released from the lien of the Original Indenture,
together with all and singular tenements, hereditaments and
appurtenances, whatsoever belonging or in any wise appertaining to
the aforesaid property or a part thereof; and the reversion and
reversions, remainder and remainders, and (subject to the
provisions of Section 57 of the Original Indenture) the incomes,
rents, issues and profits thereof, and of every part and parcel
thereof; and all of the estate, right, title, interest, property,
claim and demand of every nature and kind whatsoever of the Company
at law, in equity or otherwise howsoever, of, in and to the same
and every part and parcel thereof.
Also, the Company's interest in any other property, real,
personal and mixed (except such property as is hereinafter
expressly excepted from the lien and operation of this Sixth 1993
Supplemental Indenture) of whatsoever kind and character and all
appurtenances thereto, including (but without limiting the
generality of the foregoing) all and singular its corporate,
municipal and other franchises, permits, ordinances, consents,
privileges, immunities and licenses of every kind, description and
character.
It is hereby agreed by the Company that all the property,
rights and franchises acquired by the Company after the date hereof
(except any hereinafter expressly excepted) shall be as fully
embraced within the lien hereof as if such property, rights and
franchises were now owned by the Company and were specifically
described herein and conveyed hereby.
Provided that the following are not and are not intended to be
bargained, granted, sold, released, conveyed, assigned,
transferred, mortgaged, pledged, set over or confirmed hereunder
and are hereby expressly excepted from the lien and operation of
the Original Indenture and this Sixth 1993 Supplemental Indenture,
viz.: (1) cash, shares of stock and obligations (including bonds,
notes and other securities) not hereinafter or in the Original
Indenture specifically pledged, or deposited or delivered hereunder
or thereunder, or hereinafter or therein covenanted so to be;
(2) any goods, wares, merchandise, equipment, materials or supplies
acquired for the purpose of sale or resale in the usual course of
business or for consumption in the operation of any properties of
the Company; (3) all judgments, accounts and choses in action, the
proceeds of which the Company is not obligated as hereinafter
provided or as provided in the Original Indenture to deposit with
the Trustee hereunder or thereunder, and all contracts, leases and
operating agreements not hereinafter specifically pledged, or
deposited or delivered hereunder or under the Original Indenture,
or hereinafter or in the Original Indenture covenanted so to be;
and (4) all electric energy and other material or products
generated, manufactured, produced or purchased by the Company for
sale, distribution or use in the ordinary course of its business;
provided, however, that the property and rights expressly excepted
from the lien and operation of the Original Indenture and this
Sixth 1993 Supplemental Indenture in the above subdivisions (2) and
(3) shall (to the extent permitted by law) cease to be so excepted
in the event that the Trustee or a receiver or trustee shall enter
upon and take possession of the mortgaged and pledged property in
the manner provided in Article XII of the Original Indenture, by
reason of the occurrence of a completed default, as defined in said
Article XII.
To have and to hold all such properties, real, personal and
mixed, bargained, granted, sold, released, conveyed, assigned,
transferred, mortgaged, pledged, set over or confirmed by the
Company as aforesaid, or intended so to be, unto the Trustee and
its successors in the trust.
Subject, however, to the reservations, exceptions, limitations
and restrictions contained in the several deeds, leases,
servitudes, franchises and contracts or other instruments through
which the Company acquired and/or claims title to and/or enjoys the
use of the aforesaid properties; and subject also to encumbrances
of the character defined in Section 6 of the Original Indenture as
"excepted encumbrances", in so far as the same may attach to any of
the property embraced herein.
In trust nevertheless, upon the terms and trusts in the
Original Indenture and in this Sixth 1993 Supplemental Indenture
set forth, for the benefit and security of those who shall hold the
bonds and coupons issued and to be issued hereunder and under the
Original Indenture, or any of them, in accordance with the terms of
the Original Indenture and of this Sixth 1993 Supplemental
Indenture, without preference, priority or distinction as to lien
of any of said bonds or coupons over any others thereof by reason
of priority in the time of issue or negotiation thereof, or
otherwise howsoever, subject, however, to the conditions,
provisions and covenants set forth in the Original Indenture and in
this Sixth 1993 Supplemental Indenture.
And this Indenture further Witnesseth:
That in further consideration of the premises and for the
considerations aforesaid, the Company, for itself and its
successors and assigns, hereby covenants and agrees to and with the
Trustee, and its successor or successors in such trust, as follows:
Section 1. The Original Indenture is hereby supplemented by
adding immediately after Section 20XX, a new Section 20YY, as
follows:
Section 20YY. The Company hereby creates a fifty-first
series of bonds to be issued under and secured by this
Indenture, to be designated and to be distinguished from the
bonds of all other series by the title "First Mortgage Bonds,
Designated Secured Medium Term Notes, 7.30% Series due April
1, 2024" (herein called bonds of the 51st Series). The form
of the bonds of the 51st Series shall be substantially as set
forth in Schedule I to the Sixth 1993 Supplemental Indenture.
Bonds of the 51st Series shall mature on the date
specified in their title. Unless otherwise determined by the
Company, the bonds of the 51st Series shall be issued in fully
registered form without coupons in denominations of $1,000 and
integral multiples thereof; the principal of and premium (if
any) and interest on each said bond to be payable at the
office or agency of the Company in the Borough of Manhattan,
The City of New York, in lawful money of the United States of
America, provided that at the option of the Company interest
may be mailed to registered owners of the bonds at their
respective addresses that appear on the register thereof; and
the rate of interest shall be the rate per annum specified in
the title thereof, payable semi-annually on the first days of
April and October of each year (commencing April 1, 1994) and
on their maturity date.
The person in whose name any bond of the 51st Series is
registered at the close of business on any record date (as
hereinbelow defined) with respect to any regular semi-annual
interest payment date (other than interest payable upon
redemption or maturity) shall be entitled to receive the
interest payable on such interest payment date notwithstanding
the cancellation of such bond of the 51st Series upon any
registration of transfer or exchange thereof (including any
exchange effected as an incident to a partial redemption
thereof) subsequent to the record date and prior to such
interest payment date, except, if and to the extent that the
Company shall default in the payment of the interest due on
such interest payment date, then the registered holders of
bonds of the 51st Series on such record date shall have no
further right to or claim in respect of such defaulted
interest as such registered holders on such record date, and
the persons entitled to receive payment of any defaulted
interest thereafter payable or paid on any bonds of the 51st
Series shall be the registered holders of such bonds of the
51st Series (or any bond or bonds issued, directly or after
intermediate transactions upon transfer or exchange or in
substitution thereof) on the date of payment of such defaulted
interest. Interest payable upon redemption or maturity shall
be payable to the person to whom the principal is paid. The
term "record date" as used in this Section 20YY, and in the
form of the bonds of the 51st Series, with respect to any
regular semi-annual interest payment date (other than interest
payable upon redemption or maturity) applicable to the bonds
of the 51st Series, shall mean the March 20 next preceding an
April 1 interest payment date or the September 20 next
preceding an October 1 interest payment date, as the case may
be, or, if such March 20 or September 20 is not a Business Day
(as defined hereinbelow), the next preceding Business Day.
The term "Business Day" with respect to any bond of the 51st
Series shall mean any day, other than a Saturday or Sunday,
which is not a day on which banking institutions or trust
companies in The City of New York, New York or the city in
which is located any office or agency maintained for the
payment of principal of or premium, if any, or interest on
such bond of the 51st Series are authorized or required by
law, regulation or executive order to remain closed.
Every registered bond of the 51st Series shall be dated
the date of authentication ("Issue Date") and shall bear
interest computed on the basis of a 360-day year consisting of
twelve 30-day months from its Issue Date or from the latest
semi-annual interest payment date to which interest has been
paid on the bonds of the 51st Series preceding the Issue Date,
unless such Issue Date be an interest payment date to which
interest is being paid on the bonds of the 51st Series, in
which case it shall bear interest from its Issue Date or
unless the Issue Date be the record date for the interest
payment date first following the date of original issuance of
bonds of the 51st Series (the "Original Issue Date"), or a
date prior to such record date, then from the Original Issue
Date; provided, that, so long as there is no existing default
in the payment of interest on said bonds, the holder of any
bond authenticated by the Trustee between the record date for
any regular semi-annual interest payment date (other than
interest payable upon redemption or maturity) and such
interest payment date shall not be entitled to the payment of
the interest due on such interest payment date and shall have
no claim against the Company with respect thereto; provided,
further, that, if and to the extent the Company shall default
in the payment of the interest due on such interest payment
date, then any such bond shall bear interest from the April 1
or October 1, as the case may be, next preceding its Issue
Date, to which interest has been paid or, if the Company shall
be in default with respect to the interest payment date first
following the Original Issue Date, then from the Original
Issue Date.
If any semi-annual interest payment date, redemption date
or the maturity date is not a Business Day, payment of amounts
due on such date may be made on the next succeeding Business
Day, and, if such payment is made or duly provided for on such
Business Day, no interest shall accrue on such amounts for the
period from and after such interest payment date, redemption
date or the maturity date, as the case may be, to such
Business Day.
Notwithstanding the provisions of Section 14 of this
Indenture, the bonds of the 51st Series shall be executed on
behalf of the Company by its Chairman of the Board, by its
President or by one of its Vice Presidents or by one of its
officers designated by the Board of Directors of the Company
for such purpose, whose signature may be a facsimile, and its
corporate seal shall be thereunto affixed or printed thereon
and attested by its Secretary or one of its Assistant
Secretaries, and the provisions of the penultimate sentence of
said Section 14 shall be applicable to such bonds of the 51st
Series.
The Bonds of the 51st Series are redeemable in accordance
with Article X of this Indenture and as further set forth in
the form of the bond contained in Schedule I to the Sixth 1993
Supplemental Indenture.
The Company shall not be required to make transfers or
exchanges of the bonds of the 51st Series for a period of
eleven days next preceding any selection of bonds of the 51st
Series to be redeemed or to make transfers or exchanges of any
bonds of the 51st Series designated in whole or in part for
redemption. Notwithstanding the provisions of Section 12 of
this Indenture, the Company shall not be required to make
transfers or exchanges of bonds of the 51st Series for a
period of eleven days next preceding any interest payment
date.
Registered bonds of the 51st Series shall be transferable
upon presentation and surrender thereof, for cancellation, at
the office or agency of the Company in the Borough of
Manhattan, The City of New York, and at such other office or
agency of the Company as the Company may designate, by the
registered holders thereof, in person or by duly authorized
attorney, in the manner and upon payment, if required by the
Company, of the charges prescribed in this Indenture. In the
manner and upon payment, if required by the Company, of the
charges prescribed in this Indenture, registered bonds of the
51st Series may be exchanged for a like aggregate principal
amount of registered bonds of the 51st Series of other
authorized denominations, upon presentation and surrender
thereof, for cancellation, at the office or agency of the
Company in the Borough of Manhattan, The City of New York and
at such other office or agency of the Company as the Company
may designate.
Section 2. The Original Indenture is hereby supplemented by
adding thereto the following new Article IIIAAAD, to be added after
Article IIIAAAC of the Original Indenture:
ARTICLE IIIAAAD
Initial Issuance of Bonds of the 51st Series.
Section 21AAAD. In accordance with and upon compliance with
such provisions of this Indenture as shall be selected for such
purpose by the officers of the Company duly authorized to take such
action, bonds of the 51st Series in an aggregate principal amount
not exceeding $25,000,000 shall forthwith be executed by the
Company and delivered to the Trustee and shall be authenticated by
the Trustee and delivered to or upon the order of the Company
(without awaiting the filing or recording of the Sixth 1993
Supplemental Indenture except to the extent required by subdivision
(9) of Section 28 of this Indenture).
Section 3. At any meeting of bondholders held as provided for
in Article XVIII of the Original Indenture at which holders of
bonds of the 51st Series are entitled to vote, all holders of bonds
of the 51st Series at the time of such meeting shall be entitled to
vote thereat; provided, however, that the Trustee may, and upon
request of the Company or of a majority of the bondholders of the
51st Series shall, fix a day not exceeding ninety days preceding
the date for which the meeting is called as a record date for the
determination of holders of bonds of the 51st Series entitled to
notice of and to vote at such meeting and any adjournment thereof
and only such registered owners who shall have been such registered
owners on the date so fixed, and who are entitled to vote such
bonds of the 51st Series at the meeting, shall be entitled to
receive notice of such meeting.
Section 4. As supplemented by this Sixth 1993 Supplemental
Indenture, the Original Indenture is in all respects ratified and
confirmed, and the Original Indenture and this Sixth 1993
Supplemental Indenture shall be read, taken and construed as one
and the same instrument. The bonds of the 51st Series are the
original debt secured by this Sixth 1993 Supplemental Indenture and
the Original Indenture, and this Sixth 1993 Supplemental Indenture
and the Original Indenture shall be, and be deemed to be, the
original lien instrument securing the bonds of the 51st Series.
Section 5. Nothing in this Sixth 1993 Supplemental Indenture
contained shall, or shall be construed to, confer upon any person
other than the holders of bonds issued under the Original Indenture
and this Sixth 1993 Supplemental Indenture, the Company and the
Trustee, any right to avail themselves of any benefit of any
provisions of the Original Indenture or of this Sixth 1993
Supplemental Indenture.
Section 6. This Sixth 1993 Supplemental Indenture may be
simultaneously executed in any number of counterparts, each of
which when so executed shall be deemed to be an original; but such
counterparts shall together constitute but one and the same
instrument.
In Witness Whereof, Ohio Power Company, party of the first
part, has caused this instrument to be signed in its name and
behalf by its President, a Vice President or an Assistant
Treasurer, and its corporate seal to be hereunto affixed and
attested by its Secretary or an Assistant Secretary, and Chemical
Bank, the party hereto of the second part, in token of its
acceptance of the trust hereby created, has caused this instrument
to be signed in its name and behalf by a Vice President, and its
corporate seal to be hereunto affixed and attested by a Trust
Officer. Executed and delivered in The City of New York, New York,
as of the day and year first above written.
Ohio Power Company
[Seal]
/s/ B. M. Barber
(B. M. Barber)
Attest: Assistant Treasurer
/s/ Jeffrey D. Cross
(Jeffrey D. Cross)
Assistant Secretary
Signed, sealed, acknowledged and delivered by
Ohio Power Company in the presence of:
/s/ A. A. Pena
(A. A. Pena)
/s/ John M. Adams, Jr.
(John M. Adams, Jr.)
[Seal]
Chemical Bank
/s/ W. B. Dodge
(W. B. Dodge)
Vice President
Attest:
/s/ Andrew M. Deck
(Andrew M. Deck)
Trust Officer
Signed, sealed, acknowledged and delivered by
Chemical Bank in the presence of:
/s/ Bruce Zydel
(Bruce Zydel)
/s/ Philip G. Thorogood
(Philip G. Thorogood)
This instrument was prepared by JEFFREY D. CROSS,
1 Riverside Plaza, Columbus, Ohio 43215
State of Ohio }
County of Franklin } ss:
On this 14th day of December, 1993, personally appeared before
me, a Notary Public within and for said County in the State
aforesaid, B. M. BARBER and JEFFREY D. CROSS, to me known and known
to me to be respectively an Assistant Treasurer and Assistant
Secretary of OHIO POWER COMPANY, one of the corporations named in
and which executed the foregoing instrument, who severally
acknowledged that they did sign and seal said instrument as such
Assistant Treasurer and Assistant Secretary for and on behalf of
said corporation and that the same is their free act and deed as
such Assistant Treasurer and Assistant Secretary, respectively, and
the free and corporate act and deed of said corporation.
In Witness Whereof, I have hereunto set my hand and notarial
seal this 14th day of December, 1993.
/s/ Mary M. Soltesz
Mary M. Soltesz
Notary Public, State of Ohio
My Commission expires July 13, 1994
[SEAL]
State of New York }
County of New York, } ss:
Be it remembered, that on this 14th day of December, 1993,
personally appeared before me the undersigned, a Notary Public
within and for said County and State, CHEMICAL BANK, one of the
corporations named in and which executed the foregoing instrument,
by W. B. Dodge, one of its Vice Presidents, and by Andrew M. Deck,
one of its Trust Officers, to me known and known by me to be such
Vice President and Trust Officer, respectively, who severally duly
acknowledged the signing and sealing of the foregoing instrument to
be their free act and voluntary deed, and the free act and
voluntary deed of each of them as such Vice President and Trust
Officer, respectively, and the free act and voluntary deed of said
corporation, for the uses and purposes therein expressed and
mentioned.
My Commission expires August 31, 1994.
In Witness Whereof, I have hereunto set my hand and notarial
seal this 14th day of December, 1993.
/s/ James Foley
James Foley
Notary Public, State of New York
No. 31-6348400
Qualified in New York County
[Seal]
State of New York }
County of New York, } ss:
I, James Foley, a Notary Public of, in and for the said County
of New York, do certify that W. B. Dodge, who signed the writing
above and hereto annexed bearing date as of the 1st day of
December, 1993, for CHEMICAL BANK, a corporation, has this day in
my said County before me acknowledged the said writing to be the
act and deed of said corporation.
Given under my hand and official notarial seal this 14th day
of December, 1993.
My Commission expires August 31, 1994.
/s/ James Foley
James Foley
Notary Public, State of New York
No. 31-6348400
Qualified in New York County
[Seal]
SCHEDULE I
OHIO POWER COMPANY
FIRST MORTGAGE BOND, DESIGNATED
SECURED MEDIUM TERM NOTE, 7.30%
SERIES DUE APRIL 1, 2024
Bond No.
Original Issue Date: December 22, 1993
Principal Amount:
Semi-annual Interest Payment Dates: April 1 and October 1
Record Dates: March 20 and September 20
CUSIP No: 67741M AQ7
OHIO POWER COMPANY, a corporation of the State of Ohio
(hereinafter called the "Company"), for value received, hereby
promises to pay to ____________, or registered assigns, the
Principal Amount set forth above on the maturity date specified in
the title of this bond in lawful money of the United States of
America, at the office or agency of the Company in the Borough of
Manhattan, The City of New York, and to pay to the registered
holder hereof interest on said amount from the date of
authentication of this bond (herein called the "Issue Date") or
latest semi-annual interest payment date to which interest has been
paid on the bonds of this series preceding the Issue Date, unless
the Issue Date be an interest payment date to which interest is
being paid, in which case from the Issue Date or unless the Issue
Date be the record date for the interest payment date first
following the Original Issue Date set forth above or a date prior
to such record date, then from the Original Issue Date (or, if the
Issue Date is between the record date for any interest payment date
and such interest payment date, then from such interest payment
date, provided, however, that if and to the extent that the Company
shall default in the payment of the interest due on such interest
payment date, then from the next preceding semi-annual interest
payment date to which interest has been paid on the bonds of this
series, or if such interest payment date is the interest payment
date first following the Original Issue Date set forth above, then
from the Original Issue Date), until the principal hereof shall
have become due and payable, at the rate per annum specified in the
title of this bond, payable on April 1 and October 1 of each year
(commencing April 1, 1994) and on the maturity date specified in
the title of this bond; provided that, at the option of the
Company, such interest may be paid by check, mailed to the
registered owner of this bond at such owner's address appearing on
the register hereof.
This bond is one of a duly authorized issue of bonds of
the Company, issuable in series, and is one of a series known as
its First Mortgage Bonds, of the series designated in its title,
all bonds of all series issued and to be issued under and equally
secured (except in so far as any sinking fund, established in
accordance with the provisions of the Mortgage hereinafter
mentioned, may afford additional security for the bonds of any
particular series) by a Mortgage and Deed of Trust (herein,
together with any indentures supplemental thereto, called the
Mortgage), dated as of October 1, 1938, executed by the Company to
CENTRAL HANOVER BANK AND TRUST COMPANY (now CHEMICAL BANK), as
Trustee, to which Mortgage reference is made for a description of
the property mortgaged and pledged, the nature and extent of the
security, the rights of the holders of the bonds and of the Trustee
in respect thereof, the duties and immunities of the Trustee, and
the terms and conditions upon which the bonds are secured. With
the consent of the Company and to the extent permitted by and as
provided in the Mortgage, the rights and obligations of the Company
and/or of the holders of the bonds and/or coupons and/or the terms
and provisions of the Mortgage and/or of any instruments
supplemental thereto may be modified or altered by affirmative
vote, or written consent, of the holders of at least seventy-five
per centum (75%) in principal amount of the bonds affected by such
modification or alteration then outstanding under the Mortgage
(excluding bonds disqualified from voting by reason of the
Company's interest therein as provided in the Mortgage); provided
that, without the consent of the holder hereof, no such
modification or alteration shall permit the extension of the
maturity of the principal of or interest on this bond or the
reduction in the rate of interest hereon or any other modification
in the terms of payment of such principal or interest or the
creation of a lien on the mortgaged and pledged property ranking
prior to or on a parity with the lien of the Mortgage or the
deprivation of the holder of a lien upon such property or reduce
the above percentage.
As provided in said Mortgage, said bonds may be for
various principal sums and are issuable in series, which may mature
at different times, may bear interest at different rates and may
otherwise vary as therein provided, and this bond is one of a
series entitled "First Mortgage Bonds, Designated Secured Medium
Term Notes, 7.30% Series due April 1, 2024" (herein called "bonds
of the 51st Series") created by an Indenture Supplemental to
Mortgage and Deed of Trust dated as of December 1, 1993 (the "Sixth
1993 Supplemental Indenture"), as provided for in said Mortgage.
The interest payable on any April 1 or October 1 (other
than interest payable upon redemption or maturity) will, subject to
certain exceptions provided in said Sixth 1993 Supplemental
Indenture, be paid to the person in whose name this bond is
registered at the close of business on the record date, which shall
be the March 20 or September 20, as the case may be, next preceding
such interest payment date, or, if such March 20 or September 20 is
not a Business Day (as hereinbelow defined), the next preceding
Business Day. Interest payable upon redemption or maturity shall
be payable to the person to whom the principal is paid. The term
"Business Day" means any day, other than a Saturday or Sunday,
which is not a day on which banking institutions or trust companies
in The City of New York, New York or the city in which is located
any office or agency maintained for the payment of principal of or
premium, if any, or interest on bonds of the 51st Series are
authorized or required by law, regulation or executive order to
remain closed.
If any semi-annual interest payment date, redemption date
or the maturity date is not a Business Day, payment of amounts due
on such date may be made on the next succeeding Business Day, and,
if such payment is made or duly provided for on such Business Day,
no interest shall accrue on such amounts for the period from and
after such interest payment date, redemption date or the maturity
date, as the case may be, to such Business Day.
The Company and the Trustee may deem and treat the person
in whose name this bond is registered as the absolute owner hereof
for the purpose of receiving payment of or on account of principal
or (subject to the provisions hereof) interest hereon and for all
other purposes and the Company and the Trustee shall not be
affected by any notice to the contrary.
The Company shall not be required to make transfers or
exchanges of bonds of the 51st Series for a period of eleven days
next preceding any interest payment date, or next preceding any
selection of bonds of the 51st Series to be redeemed, and the
Company shall not be required to make transfers or exchanges of any
bonds of the 51st Series designated for redemption in whole or in
part.
Any or all of the bonds of the 51st Series may be
redeemed by the Company on or after April 1, 2004, at its option,
or by the operation of various provisions of the Mortgage, in whole
at any time or in part from time to time upon not less than 30 but
not more than 90 days' previous notice given by mail to the
registered holders of the bonds to be redeemed, all as provided in
the Mortgage (a) if redeemed otherwise than by the use or
application of cash deposited pursuant to the maintenance and
replacement provisions contained in Part II and/or Part II(a) of
Section 20 of the Mortgage and otherwise than by use of proceeds of
released property or the proceeds of insurance, at an amount equal
to a percentage of the principal amount thereof determined as set
forth in Annex A hereto under the heading "Regular Redemption
Price" together in each case with accrued interest to the date
fixed for redemption; or (b) if redeemed by the use or application
of cash deposited pursuant to the maintenance and replacement
provisions contained in Part II and/or Part II(a) of Section 20 of
the Mortgage or by the use of proceeds of released property or the
proceeds of insurance, at an amount equal to 100% of the principal
amount thereof together in each case with accrued interest to the
date fixed for redemption.
The principal hereof may be declared or may become due
prior to the express date of the maturity hereof on the conditions,
in the manner and at the time set forth in the Mortgage, upon the
occurrence of a completed default as in the Mortgage provided.
This bond is transferable as prescribed in the Mortgage
by the registered owner hereof in person, or by his duly authorized
attorney, at the office or agency of the Company in the Borough of
Manhattan, The City of New York, and at such other office or agency
of the Company as the Company may designate, upon surrender and
cancellation of this bond and upon payment, if the Company shall
require it, of the transfer charges prescribed in the Mortgage,
and, thereupon, a new registered bond or bonds of authorized
denominations of the same series for a like principal amount will
be issued to the transferee in exchange herefor as provided in the
Mortgage. In the manner and upon payment, if the Company shall
require it, of the charges prescribed in the Mortgage registered
bonds of this series may be exchanged for a like aggregate
principal amount of registered bonds of other authorized
denominations of the same series, upon presentation and surrender
thereof, for cancellation, at the office or agency of the Company
in the Borough of Manhattan, The City of New York, or at such other
office or agency of the Company as the Company may designate.
No recourse shall be had for the payment of the principal
of or interest on this bond against any incorporator or any past,
present or future stockholder, officer or director, as such, of the
Company, or any successor corporation, either directly or through
the Company or any successor corporation, under any rule of law,
statute or constitution or by the enforcement of any assessment or
otherwise, all such liability of incorporators, stockholders,
officers and directors, as such, being waived and released by the
holder or owner hereof by the acceptance of this bond and being
likewise waived and released by the terms of the Mortgage.
This bond shall not become valid or obligatory for any
purpose until CHEMICAL BANK, the Trustee under the Mortgage, or its
successor thereunder, shall have signed the form of Authentication
Certificate endorsed hereon.
In Witness Whereof, Ohio Power Company has caused this
bond to be executed in its name by the signature of its Chairman of
the Board, its President or one of its Vice Presidents and its
corporate seal to be impressed or imprinted hereon and attested by
the signature of its Secretary or one of its Assistant Secretaries.
Dated: OHIO POWER COMPANY
By________________________
Vice President
(SEAL)
Attest:___________________
Assistant Secretary
TRUSTEE'S AUTHENTICATION CERTIFICATE
This bond is one of the bonds,
of the series herein designated,
described in the within-mentioned
Mortgage.
CHEMICAL BANK, as Trustee,
By______________________________
Authorized Officer
ANNEX A TO FIRST MORTGAGE BOND,
DESIGNATED SECURED MEDIUM TERM NOTE,
7.30% SERIES DUE APRIL 1, 2024
(If redeemed during the
twelve months beginning Regular
April 1) Redemption
Year Price
2004 103.65%
2005 103.29
2006 102.92
2007 102.56
2008 102.19
2009 101.83
2010 101.46
2011 101.10
2012 100.73
2013 100.37
2014 100.00
2015 100.00
2016 100.00
2017 100.00
2018 100.00
2019 100.00
2020 100.00
2021 100.00
2022 100.00
2023 100.00
FOR VALUE RECEIVED, the undersigned hereby sell(s),
assign(s) and transfer(s) unto
(PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE)
_______________________________________
________________________________________________________________
________________________________________________________________
(PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF
________________________________________________________________
ASSIGNEE) the within Bond and all rights thereunder, hereby
________________________________________________________________
irrevocably constituting and appointing such person attorney to
________________________________________________________________
transfer such Bond on the books of the Issuer, with full power of
________________________________________________________________
substitution in the premises.
Dated: ______________________ ____________________________
NOTICE: The signature to this assignment must correspond with the
name as written upon the face of the within Bond in every
particular without alteration or enlargement or any
change whatsoever.
<PAGE>
POWER AGREEMENT
BETWEEN
ORMET CORPORATION
AND
OHIO POWER COMPANY
------------------------
Dated: November 16, 1966
------------------------
POWER AGREEMENT
POWER AGREEMENT dated November 16, 1966, between ORMET
CORPORATION (Ormet), a Delaware corporation, and OHIO POWER COMPANY
(Ohio), an Ohio corporation.
As of June 1st, 1957, the parties hereto and certain other
parties, entered into a series of agreements, relating (a) to the
construction, ownership, fueling and operation of Kammer Generating
Station, a generating station, presently consisting of three
nominally rated 225 megawatt generating units and appurtenant
general facilities, (b) to the transformation and transmission of
certain power therein generated by Ormet Generating Corporation
(Generating), a Delaware corporation wholly owned by Ormet, to
facilities for the production of aluminum adjoining the Ohio River
near Hannibal, Ohio and (c) to back-up of such power. Kammer
Generating Station is partly owned by Ohio and partly owned by
Generating, said ownership being delineated in an agreement
entitled "Station Agreement" between Ohio and Generating, being one
of the agreements of June 1, 1957, hereinbefore referred to.
An expansion of said aluminum production facilities is
presently being undertaken which will result in a power requirement
in excess of Generating's generating capacity at Kammer Generating
Station. In order to facilitate the obtaining of such expanded
power requirements, Ormet and Ohio have entered into arrangements
under a Master Agreement of even date herewith among Ormet and Ohio
and the other parties named therein pursuant to which Generating
will transfer to Ohio all of Generating's right, title and interest
in Kammer Generating Station on the agreement that Ohio shall
furnish the power requirements to such facilities for the
production of aluminum on the terms and conditions of an Interim
Agreement (Exhibit C to the Master Agreement) until the Effective
Date of this agreement, as defined herein, and thereafter as
provided in this agreement; and the agreements as of June 1,1957
among the various parties will be terminated or modified as in the
Master Agreement provided.
NOW THEREFORE, the parties set forth their agreement as
follows:
ARTICLE ONE
DEFINITIONS
1.01. The following terms when used herein shall have the
meanings specified:
American Electric Power System means as of any time the then
holding company system of American Electric Power Company, Inc., a
New York corporation, as the term "holding company system" is
defined in the Public Utility Holding Company Act of 1935.
Average Production Cost Per Kilowatthour at Ohio's Major
Generating Stations means for any month the average production
expenses computed in the following manner:
(a) The net monthly generation of the Ohio's Major Generating
Stations shall be determined by cumulating the amounts of net
kilowatthour generation recorded for such month for each of Ohio's
Major Generating Stations in the Report of Manufacture, Form S-68,
prepared by Ohio for each such station; and
(b) the adjusted production expenses incurred at the Ohio's
Major Generating Stations for such month shall be determined by
taking the sum of the total monthly production expenses recorded
for such month for each of the Ohio's Major Generating Stations in
said Form S-68, and adding to the sum so obtained an amount in
dollars determined by multiplying the total dollars of payroll cost
at Ohio's Major Generating Stations for such month as recorded in
said Form S-68 by the ratio of (i) Total Labor Overheads for Ohio
for such month to (ii) total dollars of payroll for Ohio for such
month, and
(c) the average adjusted production expenses for Ohio's Major
Generating Stations shall be determined by dividing the total
dollar amount determined pursuant to (b) above by the total net
kilowatt-hours determined by (a) above; and
(d) the Average Production Cost per Kilowatthour at Ohio's
Major Generating Stations for such month shall be the average
production expenses determined pursuant to (c) above adjusted for
average transmission losses of Ohio for such month.
Contract Capability means in respect of any Initial Kammer
Unit 227,500 kilowatts; and in respect of Kammer Unit No. 4 or the
Revised Measurement Unit means the maximum permissible continuous
loading of the respective unit in kilowatts, measured as of the
high-voltage station busses to which such unit is electrically
connected, under average normal operating conditions and with all
regularly operated equipment in service, which is consistent with
good and safe operating practice. The Contract Capability of the
Kammer Unit No. 4 or the Revised Measurement Unit, as the case may
be, shall be taken to be the nominal capacity rating thereof during
the first twelve calendar months following the Date of Commercial
Operation thereof, and shall thereafter be the greater of (i) such
amount in kilowatts as shall be specified therefor from time to
time by the Engineering Department of the American Electric Power
Service Corporation, an Ohio Associate, and (ii) the nominal
capacity rating thereof.
Date of Commercial Operation means for any unit that date
which immediately follows a period of preliminary operation of such
unit during which major items of equipment are tested to determine
their efficiency, performance and design capability; and during
which adjustments and/or alterations are made to the equipment to
insure its safe and dependable operation. Ohio shall promptly
inform Ormet in writing when it or Ohio Associate, as the case may
be, deems that an applicable unit is ready for commercial
operation, and the date so specified shall be the Date of
Commercial Operation of such unit.
Delivery Facilities means the two double circuit 138-Kv steel
tower lines extending from the high-voltage busses at the Kammer
Substation Facilities to the Point of Delivery at the Ormet
Substation, which lines are owned in part by Ohio and in part by
Wheeling Electric Company (an Ohio Associate).
Delivery Facilities Investment means as of the end of each
calendar month, for purposes of the computations to be made
pursuant to this Agreement, the total dollars of actual gross
investment at original cost of the portion or portions of the
Delivery Facilities then owned by Ohio and Wheeling Electric
Company (an Ohio Associate) as recorded in the books of Ohio and
Wheeling Electric Company under Accounts 350, 351 and Accounts 352
through 359 (adjusted from time to time for retirements,
replacements and/or additions made in respect thereof).
Delivery Service Charge Rate for any month means .011667
during any month when the combined normal tax rate and surtax rate
(effective tax rate) of the corporate federal income tax rate in
effect is 48% or lower, .011775 when such effective tax rate is 50%
or higher, and shall be determined by interpolation for any
effective tax rate between 48% and 50%.
Effective Capability for any unit means, as of any time during
the term hereof, the total net capability as of its generating
station's high-voltage busses of such generating unit adjusted for
conditions of circulating water temperature, fuel quality,
equipment outages, etc., prevailing during such period.
Effective Date means the date on which Ormet Additional
Reduction Facilities shall have commenced operation.
Energy Generated for Ormet (EGO) means for any period the
total kilowatt-hours generated and metered for Ormet in such period
as recorded by the Metering Facilities, without adjustment for
kilowatthour transmission losses between the Metering Point and the
Point of Delivery.
Gross Plant Investment Value (GIV) means for the respective
below named facilities, as of the close of each calendar month,
amounts in dollars determined as follows:
(a) for Kammer Units No. 1 and No. 2 (GIV-a), 105.2% of
the net value thereof plus the net value of the undivided
two-thirds interest of Generating in the Kammer Station General
Facilities after depreciation in each case as shown on the books of
Generating as of December 31, 1966;
(b) for Kammer Unit No. 3 (GIV-b), 105.2% of the original
cost thereof plus the original cost of the undivided one-third
interest of Ohio in the Kammer Station General Facilities as shown
on the books of Ohio as of December 31, 1966;
(c) for Kammer Unit No. 4 (GIV-c), or the Revised
Measurement Unit (GIV-d), as the case may be, 105.2% of the total
dollars of actual gross investment at original cost (net of any
investment credit benefit) as shown in Accounts 310 through 316,
391 and 392 of the books of account of Ohio, or Ohio Associate,
less any Major Spare Parts included therein, at the close of the
earlier of (i) such month and 12 months after the close of the
month in which the Date of Commercial Operation of such unit
occurs.
(d) If at any time during the RMU Period, Kammer Unit No.
4 shall be in Commercial Operation and any portion of the Kammer
Station General Facilities shall be necessary to the operation of
Kammer Unit No. 4, the Gross Plant Investment Value of Kammer Units
No. 1 and No. 2 shall be reduced by an amount equal to the
difference between (a) the net value after depreciation of an
undivided two-thirds interest in such portion as shown on the books
of Generating on December 31, 1966, and (b) the net value after
depreciation on December 31, 1966 of the same undivided fractional
interest in such portion as the ratio of the aggregate Contract
Capability of Kammer Units No. 1 and No. 2 to the aggregate
Contract Capability of Kammer Units No. 1, No. 2, No. 3 and No. 4;
in addition, the Gross Plant Investment Value of Kammer Unit No. 3
shall be reduced by an amount equal to the difference between (a)
the original cost of an undivided one-third interest in such
portion as shown on the books of Ohio as of December 31, 1966, and
(b) the original cost as of December 31, 1966 of the same undivided
fractional interest therein as the ratio of the Contract Capability
of Kammer Unit No. 3 to the aggregate Contract Capability of Kammer
Units No. 1, No. 2, No. 3 and No. 4.
In the event that any Pollution Control Facilities shall be
added to any of the Initial Kammer Units, Kammer Unit No. 4 or the
Revised Measurement Unit, as the case may be, there shall be added
to the Gross Plant Investment Value of the applicable unit as of
the Date of Commercial Operation of such Pollution Control
Facilities the Pollution Control Investment in respect thereof.
Incremental Power Ratio (IPR) means for any month the ratio
that is obtained by dividing (a) the difference between (i) the
Ormet Total Contract Demand then in effect and (ii) 455,000
kilowatts by (b) the sum of (i) 227,500 kilowatts and (ii) after
the Modification Date the Contract Capability of Kammer Unit No. 4
except during the RMU Period the Contract Capability of the Revised
Measurement Unit.
Initial Kammer Units means the three nominally rated
225,000-Kw steam-electric generating units presently in commercial
operation at Kammer Generating Station, plus such additions and
replacements as may hereafter be added thereto and less such
retirements as may be deleted therefrom. The Initial Kammer Units
comprise all items of property, exclusive of Major Spare Parts,
presently at Kammer Generating Station (plus additions and
replacements and less retirements) other than Kammer Station
General Facilities and Kammer Station Substation Facilities. The
Initial Kammer Units are sometimes more specifically referred to
herein in the singular, as Kammer Unit No. 1, Kammer Unit No. 2 and
Kammer Unit No. 3, Kammer Unit No. 1 being the unit nearest the
Ohio River and Kammer Unit No. 3 being the unit farthest from the
Ohio River.
Kammer Fuel Expense means for any month the actual expenses
associated with the purchase, testing, measuring, unloading,
storing and handling of all fuel utilized for the generation of
electric power and energy at Kammer Generating Station during such
month (less net amounts received from the sale of residuals) as
recorded for such month in the books of Ohio under Account 501 of
the Uniform System of Accounts.
Kammer Generating Station means the steam-electric generating
station owned by Ohio on the Effective Date adjoining the Ohio
River near Moundsville, West Virginia and consisting of (a) the
Initial Kammer Units, (b) Kammer Station General Facilities, (c)
Kammer Substation Facilities and (d) a future steam-electric
generating unit (Kammer Unit No. 4) which Ohio may elect to install
subsequent to the Effective Date hereof. Kammer Generating Station
is located on a generating station site of approximately 145 acres
of land which is completely allocated among the Initial Kammer
Units, Kammer Station General Facilities and Kammer Substation
Facilities, and a part of which may be later allocated to Kammer
Unit No. 4.
Kammer Insurance Cost means from the Effective Date until the
Modification Date the net insurance costs of Ohio (after deduction
of dividends) allocable in respect of the Initial Kammer Units,
Kammer Substation Facilities and Kammer Station General Facilities
in order to insure such facilities against fire and other hazards
to the extent and against which the American Electric Power System
insures such kinds of facilities. After the Date of Commercial
Operation of Kammer Unit No. 4 such cost shall be diminished by any
amount thereof in respect of Kammer Station General Facilities
allocable to Kammer Unit No. 4.
From the Modification Date, except during the RMU Period, if
any, Kammer Insurance Cost means Ohio's net cost of such insurance
in respect of the Initial Kammer Units, Kammer Unit No. 4, Kammer
Substation Facilities and Kammer Station General Facilities.
During the RMU Period, if any, Kammer Insurance Cost means
Ohio's net cost of such insurance in respect of the Initial Kammer
Units, Kammer Substation Facilities other than Kammer Substation
Facilities attributable to Kammer Unit No. 4, and Kammer Station
General Facilities other than any interest in Kammer Station
General Facilities attributable to Kammer Unit No. 4.
Kammer Operation Expense means for any month the actual
expenses associated with the operation of all facilities at the
Kammer Generating Station (other than substation facilities not
part of Kammer Substation Facilities) during such month and shall
specifically mean for such month the dollar amount equal to the sum
of:
(a) the total net production operation expenses for
operations at Kammer Generating Station as recorded for such month
in the books of Ohio under Accounts 500 through 507, less Account
501, of the Uniform System of Accounts;
(b) the total actual expenses for operation of the
control facilities at Kammer Generating Station as recorded for
such month in the books of Ohio under Account 556 of the Uniform
System of Accounts;
(c) the total actual expenses for operation of Kammer
Substation Facilities as recorded for such month in the books of
Ohio under Accounts 561 and 562, and Accounts 566 and 567, of the
Uniform System of Accounts;
(d) an amount for operating labor overheads equal to the
product of (i) that portion of the total payroll of Kammer
Generating Station included in items (a) through (c) above, and
(ii) the ratio of (x) the Total Labor Overheads of Kammer
Generating Station to (y) the total Kammer Generating Station
payroll, such ratio being computed for such month or for a
representative prior period to be mutually agreed upon;
(e) an amount equal to the credits, if any, included in
items (a) through (c) above to Kammer Generating Station from
carrying charges for Major Spare Parts;
and less the sum of
(f) the amounts, if any, included in items (a) through
(c) above for property insurance and/or property taxes; and
(g) an amount equal to the charges, if any, included in
items (a) through (c) above to Kammer Generating Station for
carrying charges for Major Spare Parts.
Kammer Generating Station will bear its share of Ohio's
engineering costs on the basis of the allocation principles
presently in effect provided, however, that in the event that any
regulatory agency having jurisdiction in the premises shall require
a change in such principles, then Kammer Generating Station shall
bear its share of such expense in accordance with such changed
principles.
Kammer Maintenance Expense means for any month the actual
expenses associated with the maintenance of all facilities at the
Kammer Generating Station during such month and shall specifically
mean for such month the dollar amount equal to the sum of:
(a) the total actual production maintenance expenses
(including costs relating to repairing, handling and shipping of
Major Spare Parts on the same basis as in use throughout the
American Electric Power System) at Kammer Generating Station equal
to the sum of the dollar amounts recorded for such month in the
books of Ohio under Accounts 510 through 514 and 932 of the Uniform
System of Accounts;
(b) the total actual Kammer Substation Facilities
maintenance expenses equal to the sum of the dollar amounts
recorded for such month in the books of Ohio under Accounts 568
through 570 of the Uniform System of Accounts;
(c) an amount for maintenance labor overheads equal to
the product of (i) the portion of the total labor payroll of Kammer
Generating Station included in items (a) through (b) above and (ii)
the ratio of (x) Total Labor Overheads of Kammer Generating Station
to (y) total Kammer Generating Station payroll, such ratio being
computed for such month or for a representative prior period to be
mutually agreed upon.
Kammer Substation Accrual Credit means (a) for any month prior
to the Modification Date and during the RMU Period, if any, the
product of (i) $6,126,196, (ii) the number of months from March 31,
1959 to such month, and (z) 1/144th of one per cent (1/14400), and
(b) for any month after the Modification Date when there is no RMU
Period, the sum of (i) the product of (x) $6,126,196, (y) the
number of months from March 31, 1959 to the Modification Date, and
(z) 1/144th of one percent (1/14400), and (ii) the product of (x)
the sum of $6,126,196 and the Kammer Substation Facilities
Investment as of the later of the Modification Date and the Date of
Commercial Operation of Kammer Unit No. 4 for facilities not deemed
to be Kammer Substation Facilities prior to the Modification Date
and during the RMU Period, if any, pursuant to the second paragraph
of the definition thereof in this Agreement, (y) the number of
months from the later of the Modification Date and the Date of
Commercial Operation of Kammer Unit No. 4 to such month, and (z)
1/144th of one per cent (1/14400).
Kammer Station General Facilities means all items of property
(exclusive of Major Spare Parts and any items classified under
Accounts 350 through 359 and Account 397 of the Uniform System of
Accounts) at Kammer Generating Station which are useful and/or
necessary for operation or maintenance of Kammer Generating Station
and which cannot be properly associated specifically with any one
of the Initial Kammer Units or with Kammer Unit No. 4. The Kammer
Station General Facilities shall initially be all items of property
at Kammer Generating Station defined as General Facilities under
the Station Agreement plus any additions and replacements thereto
and less any re therefrom, and shall include after the Date of
Commercial Operation of Kammer Unit No. 4 similarly determined
items of property which were provided and/or installed with Kammer
Unit No. 4 plus any additions or replacements thereto and less any
retirements therefrom.
Kammer Substation Facilities means all items of property
associated with the Initial Kammer Units and Kammer Unit No. 4 such
as generator transformers, auto-transformers, oil circuit breakers,
disconnect switches, lightning arrestors, conductors, meters,
relays and protective devices, fire protection system, 138-Kv
busses, 345-Kv busses, 765-Kv busses, substation and/or switchyard
structures, etc. (less Major Spare parts, if any), which are
located on the generating station site and which are properly
classifiable under Accounts 350 through 359 and Account 397 of the
Uniform System of Accounts. Anything herein to the contrary
notwithstanding, transmission lines owned by Ohio, or an Ohio
Associate, which are used electrically to connect the Kammer
Substation Facilities with any facilities not located on the site
of Kammer Generating Station shall not be a part of Kammer
Substation Facilities even though parts of such transmission lines
may be located on said generating station site.
To the extent that any facilities are hereafter used or
installed at the Kammer Substation Facilities for the express
purpose of electrically connecting Kammer Unit No. 4 with the
high-voltage busses of Kammer Generating Station, such facilities
shall not be deemed Kammer Substation Facilities prior to the
Modification Date and during the RMU Period, if any.
To the extent that any additions are hereafter made to the
Kammer Substation Facilities, not necessary for the express purpose
of electrically connecting Kammer Unit No. 4 with the high-voltage
busses of Kammer Generating Station, different in function or
purpose from any of the existing (as of the date of this Agreement)
Kammer Substation Facilities, such additions shall not be deemed
Kammer Substation Facilities without Ormet's consent; provided,
however, that Ormet's consent shall not be unreasonably withheld.
To the extent that any additions to the Kammer Substation
Facilities are made by Ohio for the purpose of providing stub-line
electric service to a customer of Ohio other than Ormet, Olin or
Revere, such additions shall not be included in the Kammer
Substation Facilities until such date, if any, when such facilities
may be used for purposes other than the purpose of providing
stub-like electric service to said customer and or another customer
than Ormet, Olin and/or Revere.
Kammer Substation Facilities Investment means, as of the close
of each month, the total dollars of actual gross investment at
original cost (net of any investment tax credit benefit) of all
parts of the Kammer Substation Facilities, including land, as shown
by Accounts 350 through 359 and Account 397 on Ohio's books as of
the close of such month.
Kammer Unit No. 4 means a steam-electric generating unit, with
all necessary appurtenant equipment, which Ohio may install at
Kammer Generating Station.
Major Spare Parts means the following pool of Major Spare
Parts interchangeable with the equivalent items of the Initial
Kammer Units:
1 -- Spare High Pressure Turbine Rotor,
1 -- Spare High Pressure Generator Rotor,
1 -- Spare Low Pressure Turbine Rotor-Turbine End,
1 -- Spare Low Pressure Turbine Rotor-Generator End,
1 -- Spare Low Pressure Generator Rotor,
1 -- 1/2 Set Spare High Pressure Stator Bars,
1 -- 1/2 Set Spare Low Pressure Stator Bars,
1 -- Spare High Pressure Exciter Armature,
1 -- Spare Low Pressure Exciter Armature,
1 -- Spare Boiler Feed Pump Rotor-Turbine End,
1 -- Special Rotor Carriage,
1 -- Spare 700-HP Motor for Coal Crusher,
1 -- Spare 5000-HP Motor for Forced Draft Fan,
1 -- Spare High Pressure Turbine Nozzle 9th Stage
Appurtenant Accessories such as wedges, clips and shims
for any of the above.
Major Spare Parts shall also include spare parts which Ohio
and Ormet hereafter agree be added to the above list. Ormet will
not unreasonably withhold such agreement.
After the Modification Date, the pool of Major Spare Parts
will be expanded to include items of equipment (such as, but not
limited to, turbine rotors, generator rotors, generator exciter
rotors, stator coil sets, motors and transformers) useable on
Kammer Unit No. 4, or the Revised Measurement Unit during the RMU
Period, and other similar generating units on the American Electric
Power System.
Major Spare Parts Ratio means for any month the ratio of the
number of items of any equipment at Kammer Generating Station but
prior to the Modification Date and during the RMU Period, if any,
not relating to Kammer Unit No. 4, and during the RMU Period
relating to the Revised Measurement Unit (but less any Major Spare
Parts, at Kammer Generating Station relating to Kammer Unit No. 4)
which can be interchanged with a particular item of equipment of
Major Spare Parts to the total number of the items of equipment at
the generating stations of the American Electric Power System which
can be interchanged with the same particular item of equipment of
Major Spare Parts. A Major Spare Parts Ratio is applicable for
each and every item of Major Spare Parts.
Metering Facilities means a 138-Kv metering installation owned
by Ohio and located at and being a part of the Kammer Substation
Facilities, equipped with all the necessary metering transformers,
meters, and instruments in order accurately to meter and record all
the necessary electrical quantities with respect to the delivery of
and accounting for power and energy hereunder.
Metering Point means the location of the Metering Facilities
located at the Kammer Substation Facilities.
Modification Date means the earlier of (i) the Date of
Commercial Operation of Kammer Unit No. 4, if Kammer No. 4 has a
nominal rating of 800,000 kilowatts or greater, and (ii) January 1,
1972.
In the event that Ormet shall advise Ohio on or prior to
January 1, 1972, in writing, that there shall be no Modification
Date, there shall be no Modification Date under this Agreement and
all the terms and conditions of this Agreement, as provided prior
to the Modification Date, shall continue in effect after what would
otherwise have been the Modification Date until the termination of
this Agreement.
Normalized Kammer Maintenance Expense means for any month the
Kammer Maintenance Expense normalized for the calendar year in
which such month falls on the basis of forecasts made by Ohio prior
to the beginning of each such calendar year, and as may be
subsequently adjusted during such year so that the total amounts so
charged will be equal to the aggregate of the monthly Kammer
Maintenance Expense for such calendar year.
Ohio Associate means any company other than Ohio in the
American Electric Power System.
Ohio's Major Generating Stations means Ohio's presently
operating Muskingum River Station, Tidd Station, Philo Station and
Kammer Generating Station, and the portion of Cardinal Station and
Sporn Station owned by Ohio. When any such station ceases to be a
major generating station, it shall be deleted. Future additions
made to the major generating capacity of Ohio, whether at existing
stations or new stations, will be included as Ohio's Major
Generating Stations as of the first day of the month following the
month in which the Date of Commercial Operation of such new
generating capacity shall occur; provided, however, that new
generating capacity installed by Ohio which is substantially
different in design and operating characteristics or which shall
have been installed by Ohio as a result of unusual circumstances
shall not be included as part of Ohio's Major Generating Stations
for purposes of this Agreement except by mutual agreement of the
parties.
Omal Facilities means the aggregate facilities of Ormet, Olin
Mathieson Chemical Corporation (Olin) and Revere Copper and Brass
Incorporated (Revere) for the reduction of aluminum and for the
rolling and/or fabrication of aluminum, adjoining the Ohio River
near Hannibal, Ohio.
Ormet Additional Reduction Facilities means the sixth potline
of approximately 40,000 tons annual capacity at the aluminum
reduction plant near Hannibal, Ohio.
Ormet Energy Ratio (OER) means for any month the ratio that is
obtained by dividing (a) the Energy Generated for Ormet for such
month diminished by the cumulative Premium Kilowatthours for such
month by (b) the sum of (i) the Total Net Generation for such month
of Kammer Generating Station diminished prior to the Modification
Date by the Total Net Generation of Kammer Unit No. 4, if any, plus
(ii) during the RMU Period the Total Net Generation for such month
of the Revised Measurement Unit, diminished by the Total Net
Generation of Kammer Unit No. 4, if any.
Ormet Firm Power Reservation means for any month the highest
demand in kilowatts previously specified by Ormet for any month
prior to and including such month that Ohio is obligated to
provide, subject to the terms and conditions of this Agreement, at
the Metering Point, except as otherwise specifically provided for
in Section 2.02.
Ormet Metering Point Demand means for any period the highest
simultaneous integrated load in kilowatts measured by the Metering
Facilities at the Metering Point, without adjustment for
transmission losses between the Metering Point and the Point of
Delivery, during any thirty-minute period starting on the clock
hour or half-hour in the period under consideration.
Ormet Power Ratio (OPR) means for any month the ratio that is
obtained by dividing (a) the Ormet Total Contract Demand then in
effect by (b) the sum of (i) the Contract Capability of the Initial
Kammer Units (Kammer Units No. 1, No. 2 and No. 3) and after the
Modification Date (ii) the Contract Capability of Kammer Unit No.
4 except during the RMU Period the Contract Capability of the
Revised Measurement Unit.
Ormet Substation means the facilities now or hereafter owned
by Ormet and located at the Omal Facilities, including 138-Kv line
terminal positions with circuit breakers and all necessary related
equipment for switching, for protection and operation of the
Delivery Facilities.
Ormet Total Contract Demand means for any month the sum of (i)
the Ormet Firm Power Reservation in effect for such month and (ii)
fifteen percent (15%) of the Ormet Firm Power Reservation.
Point of Delivery means the point of connection of the
Delivery Facilities with the Ormet Substation.
Pollution Control Facilities means for any Initial Kammer
Unit, Kammer Unit No. 4 or Revised Measurement Unit, as the case
may be, any facilities, other than facilities put into service on
the Date of Commercial Operation of such unit, including any stack
alterations, replacements or additions, provided and installed by
Ohio or Ohio Associate, as the case may be, in compliance with
requirements of governmental authority having jurisdiction in the
premises, relating to atmospheric and water pollution abatement or
control.
Pollution Control Investment means, as of the close of each
calendar month, for any Initial Kammer Unit, Kammer Unit No. 4 or
Revised Measurement Unit, as the case may be, 105.2% of the total
dollars of actual gross investment at original cost made by Ohio or
Ohio Associate for Pollution Control Facilities associated with
such unit, at the close of the earlier of (i) such month and (ii)
12 months after the close of the month in which the Date of
Commercial Operation of such Pollution Control Facilities occurs.
Power Demand Rate for any month means .0091667 during any
month when the combined normal tax rate and surtax rate (effective
tax rate) of the corporate federal income tax rate in effect is 48%
or lower, .0093750 when such effective tax rate is 50% or higher,
and shall be determined by interpolation for any effective tax rate
between 48% and 50%.
Premium Kilowatthours for any hour means the following:
(a) prior to the Modification Date the number of kilowatthours
by which the Energy Generated for Ormet for such hour exceeds the
Total Net Generation of the Initial Kammer Units for such hour.
(b) during the RMU Period, if any, the number of kilowatthours
by which the Energy Generated for Ormet for such hour exceeds the
Total Net Generation of the Initial Kammer Units and the Revised
Measurement Unit for such hour.
(c) after the Modification Date and except during the RMU
Period the number of kilowatthours by which the Energy Generated
for Ormet for such hour exceeds the Total Net Generation of Kammer
Generating Station for such hour.
Property Unit means either (i) a unit of property as such
units are defined in the Property Unit List, or (ii) an item of
property, the investment in which at the time of commercial
operation thereof is in excess of $25,000, unless Ormet and Ohio
shall mutually agree that such item of property shall not be a
Property Unit.
Property Unit List means the publication entitled "List of
Property Units" kept by Ohio in accordance with Order No. 45 of the
Federal Power Commission adopted January 13, 1937 and heretofore
delivered to Ormet by Ohio. Upon any revision of the Property Unit
List, the revised Property Unit List shall be substituted for the
Property Unit List then in effect unless Ormet shall, within twenty
(20) days after delivery to it of notice of such revision, advise
Ohio that it objects thereto.
Revised Measurement Unit means the most recently installed (as
of January 1, 1972) fossil fuel burning steam-electric generating
unit nominally rated at 800,000 Kw., or higher, other than Kammer
Unit No. 4, owned and commercially operated by Ohio or an Ohio
Associate, either directly or indirectly, provided, however, that
if at such date there shall be no such unit, Ormet may designate
the then highest nominally rated fossil fuel burning steam-electric
unit so owned as the Revised Measurement Unit. The Revised
Measurement Unit shall consist of all items of property
attributable to such unit up to the generator terminals
classifiable under Accounts 310 through 316, 391 and 392 of the
Uniform System of Accounts, including such interest in the general
facilities of any multi-unit generating station of which such unit
forms a part as are used for the operation of more than one unit at
such station, including the Revised Measurement Unit, and cannot be
properly associated with any individual unit thereof, in the
proportion which the nominally rated capacity of the Revised
Measurement Unit bears to the aggregate nominal rating of all units
at such station to which such part is applicable.
RMU Fuel Expense means for any month the actual expenses
associated with the purchase, testing, measuring, storing and
handling of all fuel utilized for the generation of electrical
energy (less net amounts received from sales of residuals) by the
Revised Measurement Unit as entered for such month on the books of
Ohio or Ohio Associate, as the case may be, under Account 501 of
the Uniform System of Accounts.
RMU Maintenance Expense means for any month the actual
expenses associated with the maintenance of the Revised Measurement
Unit and of the RMU Substation Facilities during such month and
shall include the dollar amounts recorded for such month on the
books of Ohio or Ohio Associate, as the case may be, in respect of
such unit under Accounts 510 through 514, 568 through 570, and 932,
plus an amount for labor overheads equal to the portion of the
payroll of the generating station at which the Revised Measurement
Unit is located applicable to such maintenance expense multiplied
by the ratio of Total Labor Overheads of Ohio or of Ohio Associate,
as the case may be, to the total payroll of Ohio or of Ohio
Associate, for a representative period to be mutually agreed upon.
In the event that the Revised Measurement Unit forms a unit in
a power station consisting of steam-electric units, all of which
were constructed after the date of this Agreement and all of which
are of substantially the same or of more nominal capacity than the
Revised Measurement Unit, the RMU Maintenance Expense shall be
determined by computing the maintenance expense of the entire
station as recorded in Accounts 510 through 514, 568 through 570,
and 932, plus applicable labor overheads and allocating such
expense to the Revised Measurement Unit and RMU Substation
Facilities in the ratio of its total net generation to the
station's total net generation.
RMU Operation Expense means for any month the actual expenses
associated with the operation of the Revised Measurement Unit and
RMU Substation Facilities during such month and shall include the
dollar amounts recorded for such month on the books of Ohio or Ohio
Associate, as the case may be, in respect of such unit under
Accounts 500 through 507, other than Account 501 (fuel), Accounts
556, 561, 562, 566 and 567, plus an amount for labor overheads
equal to the portion of the payroll of the generating station at
which the Revised Measurement Unit is located applicable to such
operation expense multiplied by the ratio of Total Labor Overheads
of Ohio or of Ohio Associate, as the case may be, to the total
payroll of Ohio or of Ohio Associate, for a representative period
to be mutually agreed upon. There shall be added to the above an
amount equal to any credits relating to carrying charges for Major
Spare Parts, and there shall be deleted from the above an amount
equal to the amounts, if any, included for property insurance and
for property taxes and an amount equal to any carrying charges for
Major Spare Parts.
In the event that the Revised Measurement Unit forms a unit in
a power station consisting of steam-electric units, all of which
were constructed after the date of this Agreement and all of which
are substantially the same or of more nominal capacity than the
Revised Measurement Unit, the RMU Operation Expense shall be
determined by computing the operation expense of the entire station
and allocating such expenses to the Revised Measurement Unit and
RMU Substation Facilities in the ratio of its Contract Capability
to the aggregate Contract Capability of the entire station.
RMU Period means a period commencing on the Modification Date,
if the Date of Commercial Operation of an 800,000-kilowatt or
higher Kammer Unit No. 4 has not then occurred, and ending on the
Date of Commercial Operation of such a Kammer Unit No. 4 if such
date is prior to June 30, 1972, or if such Date of Commercial
Operation of such a Kammer Unit No. 4 does not take place on or
before June 30, 1972, then on the Date of Commercial Operation of
Kammer Unit No. 4, provided that Ormet shall have agreed in writing
to the termination of the RMU Period effective as of the Date of
Commercial Operation of Kammer Unit No. 4 not later than ninety
(90) days after the date on which Ohio's board of directors shall
have unconditionally authorized the immediate construction of
Kammer Unit No. 4. If Ormet does not so agree, the RMU Period
shall continue for the balance of this Agreement and any extension
or renewal thereof. In the event that Kammer Unit No. 4 is other
than a fossil fuel burning steam-electric generating unit the RMU
Period shall not in any event terminate on the Date of Commercial
Operation of Kammer Unit No. 4 unless Ormet and Ohio shall have
agreed prior thereto upon the methods for allocation of capital
costs and production expenses in respect thereof.
RMU Substation Facilities means all items of property related
to the transformation of electrical energy from the generator
terminals to the transmission lines associated with the Revised
Measurement Unit such as generator transformers, auto-transformers,
oil circuit breakers, disconnect switches, lightning arrestors,
conductors, meters, relay and protective devices, fire protection
system, 138-Kv busses, 345-Kv busses, 765-Kv busses, substation
and/or switchyard structures, etc., which are classifiable under
Accounts 350 through 359 and Account 397 of the Uniform System of
Accounts. In the event that such facilities are useful for two or
more units an allocation shall be deemed made in proportion to the
nominal ratings of the two or more units. Anything herein to the
contrary notwithstanding, transmission lines owned by Ohio or an
Ohio Associate which are used to electrically connect the RMU
Substation Facilities with any facilities not located on the
generating station site at which the Revised Measurement Unit is
installed shall not be a part of the RMU Substation Facilities even
though parts of such transmission lines may be located on such
generating station site.
Anything in the foregoing to the contrary notwithstanding, the
RMU Substation Facilities shall not include any item which would
not have been necessary as a substation facility had the Revised
Measurement Unit been built as the fourth steam-electric generating
unit at Kammer Generating Station.
RMU Substation Facilities Investment means as of the close of
each month, 103.5% of the total dollars of actual gross investment
at original cost (net of any investment tax credit benefit) of the
RMU Substation Facilities, including land, as shown by Accounts 350
through 359 and Account 397 on the books of Ohio or Ohio Associate,
as the case may be, at the close of the earlier of (i) such month
and (ii) 12 months after the month in which the Date of Commercial
Operation of the Revised Measurement Unit occurs.
Total Gross Investment in any Major Spare Part means the
aggregate purchase price including freight and excise taxes.
Total Labor Overheads means the cost of labor overheads such
as group retirement annuities, group life insurance and
hospitalization insurance, Workmen's Compensation insurance, state
and federal unemployment and federal social security taxes, public
liability insurance, safety programs, recreation programs and
employee publications which are not accounted for and reported as
a direct part of the production expenses of the generating station.
Total Net Generation, in connection with any generating unit
or combination of generating units in a generating plant, means,
during the period being considered, the electrical output of the
generator, or generators of such unit or units, as the case may be,
measured in kilowatt hours reduced by (a) the energy used by
auxiliaries for the unit, or units, during such period, and (b) the
transformation losses between the generator terminals of such unit
or units and the high-voltage busses of the generating station
involved. Transformation losses will be measured by suitable
instruments, or by any alternative method agreed upon by Ohio and
Ormet.
Uniform System of Accounts means the uniform system of
accounts prescribed for Ohio by the Public Utilities Commission of
Ohio as in effect on the date of this Agreement.
Working Capital Charge Rate for any month means .008658 during
any month when the combined normal tax rate and surtax rate
(effective tax rate) of the corporate federal income tax rate in
effect is 48% or lower, .0088763 when such effective tax rate is
50% or higher, and shall be determined by interpolation for any
effective tax rate between 48% and 50%.
Working Capital and Stores Requirement at any time means an
amount of dollars for each month that is equal to the net sum of
(a) one-twelfth (1/12) of the sum obtained by adding for each of
the twelve (12) preceding months the net amount of:
(i) the original cost of materials and supplies (other
than Major Spare Parts and coal) in stock at Kammer Generating
Station except that prior to the Modification Date and during the
RMU Period materials and supplies allocable to Kammer Unit No. 4,
if any, shall be deleted, and that during the RMU Period materials
and supplies allocable to the Revised Measurement Unit shall be
added; plus
(ii) any prepaid expense items other than insurance and
taxes, similarly determined as for (i) above, relating to Kammer
Generating Station and/or the Revised Measurement Unit; less
(iii) accounts payable included under (i) above; and
(b) the amount of cash in dollars reasonably required for payroll
purposes for the operation and maintenance of Kammer Generating
Station except that prior to the Modification Date and during the
RMU Period cash reasonably required for payroll allocable to Kammer
Unit No. 4, if any, shall be deleted, and that during the RMU
Period the cash reasonably required for payroll allocable to the
Revised Measurement Unit shall be added.
The Working Capital and Stores Requirement shall be
established as of the close of the month immediately preceding the
Effective Date and may be reviewed and reestablished from time to
time during the term hereof at the request of either party, and in
addition, anything hereinabove to the contrary notwithstanding,
after the Modification Date the parties shall estimate the Working
Capital and Stores Requirement for the 12-month period immediately
following the Date of Commercial Operation of Kammer Unit No. 4 to
appropriately include the increased cash requirements and increased
requirements for materials and supplies other than coal
necessitated by the operation and maintenance of Kammer Unit No. 4.
In the event that Kammer Unit No. 4 shall have not been put in
commercial operation prior to or on the Modification Date, the
Working Capital and Stores Requirement for the Revised Measurement
Unit shall be established in the same manner as hereinabove
described for Kammer Unit No. 4.
ARTICLE TWO
POWER SUPPLY
2.01. Ohio shall, subject to the provisions of Section 8.06
hereof and the other terms and conditions of this Agreement, from
and after the Effective Date, deliver or cause to be delivered to
the Point of Delivery at all times during the term hereof power and
associated energy in amounts required by Ormet up to an Ormet
Metering Point Demand equal to the Ormet Firm Power Reservation as
from time to time in effect, less delivery losses between the
Metering Point and the Point of Delivery.
2.02. Ormet shall, prior to the Effective Date, deliver to
Ohio in writing its best estimate of the Ormet Firm Power
Reservation in kilowatts, rounded to the nearest 1,000 kilowatts,
as of the Effective Date; provided, however, that such initial
Ormet Firm Power Reservation shall not be less than 465,000
kilowatts and that by twelve months from the Effective Date the
Ormet Firm Power Reservation shall not be less than 475,000
kilowatts parties understand that in the operation of a new
aluminum reduction facility the amount of power necessary for the
most advantageous operation can be determined only after a
reasonable period of operating experience. Accordingly, Ormet
shall be entitled to make a downward adjustment of its estimate
Ormet Firm Power Reservation for the second, third, fourth, fifth
and sixth months following the Effective Date, to be effective as
of the first day of such month; provided, however, (a) the Ormet
Firm Power Reservation shall in no event be adjusted to an amount
less than the 465,000 kilowatts, and (b) the Ormet Firm Power
Reservation in effect for each of the six months following the
Effective Date shall be adjusted upward as of the first day of each
month to an amount equal to the highest Ormet Metering Point Demand
metered for such month, rounded to the next 1,000 kilowatts,
regardless of the amount that was estimated by Ormet for such
month.
Subsequent to the Effective Date and prior to the Modification
Date, Ormet may increase the Ormet Firm Power Reservation to a
maximum of 575,000 kilowatts, and subsequent to the Modification
Date to a maximum of 850,000 kilowatts by (i) increases of not less
than 2,000 kilowatts and not more than 10,000 kilowatts in any
month, to become effective as of the first day of such month, on
not less than thirty (30) days notice in writing to Ohio, or by
(ii) increases over 10,000 kilowatts to not more than 50,000
kilowatts in any month, to become effective as of the first day of
such month, on not less than ninety (90) days notice in writing to
Ohio, or by (iii) an increase of more than 50,000 kilowatts but not
more than 120,000 kilowatts in any month, to become effective as of
the first day of such month, on not less than one hundred eighty
(180) days notice to Ohio; provided, however, that Ormet may not
increase the Ormet Firm Power Reservation during any twenty-four
months period by more than 120,000 kilowatts by any combination of
notices made pursuant to (i), (ii) and (iii) above except as may be
otherwise agreed to by Ohio.
Anything in the foregoing provisions of this Section 2.02 to
the contrary notwithstanding, in the event that Ormet shall by
virtue of any technological advance or advances in the art of
aluminum reduction be able with a lesser reduction plant power
demand at any time or times during the term hereof to produce at
the Omal Facilities approximately the same amount of aluminum as it
had been able to produce prior to such technological advance(s),
Ormet, from time to time, may reduce the Ormet Firm Power
Reservation then in effect by an amount equal to its estimate of
the reduction in reduction plant power demand enabled by such
technological advance(s), provided, however, that if as to any such
reduction the amount of reduction shall be less than 10,000
kilowatts the change in the Ormet Firm Power Reservation shall not
take effect until sixty days after notice thereof to Ohio, or if
such reduction shall be 10,000 kilowatts or higher, until 120 days
after such notice to Ohio provided, however, that in no event shall
the Ormet Firm Power Reservation be reduced pursuant to this
provision to less than 475,000 kilowatts or by more than 5% of the
Ormet Firm Power Reservation in effect immediately prior to such
reduction, and provided further that in the event the actual
demonstrable reduction in reduction plant power demand for
approximately such same amount of aluminum shall be less than such
estimate the Ormet Firm Power Reservation shall be increased
retroactively to the date of such reduction by the difference
between such estimate and the actual reduction.
2.03. Ohio shall load Kammer Generating Station in any
calendar year, insofar as it may be physically practicable to do so
consistent with good and safe commercial practice, so that the
annual load factor on that portion of the available generating
capability of the station which is not being required to provide
the highest Ormet Firm Power Reservation for such year will not be
less than the average annual load factor on Ohio's Major Generating
Stations other than Kammer Generating Station; provided, however,
that Ohio shall not be obligated to carry an annual load factor on
Kammer Generating Station for any such year which shall be higher
than the annual load factor of the Ormet load for such year.
Annual load factor as used herein shall mean for (a) the portion of
Kammer Generating Station's capability which is not required to
provide the highest Ormet Firm Power Reservation for any year, the
ratio obtained by dividing (i) the Total Net Generation of Kammer
Generating Station other than for Ormet for such year by (ii) the
product of (x) the amount in kilowatts equal to the average
available Contract Capability of all of the Kammer Generating
Station's generating units for such year, less the highest Ormet
Firm Power Reservation for such year, and (y) the total hours in
such year; and (b) for Ohio's Major Generating Stations other than
Kammer Generating Station, the ratio obtained by dividing (i) the
Total Net Generation of all such generating stations for such year
by (ii) the product of (x) the average aggregate net capability
rating of all such generating stations for such year as reported by
the Statistical Department of the American Electric Power Service
Corporation to the Federal Power Commission, and (y) the total
hours in such year; and for (c) the Ormet load, the ratio obtained
by dividing (i) the total aggregate Energy Generated for Ormet
during such year by (ii) the product of (x) the highest Ormet Firm
Power Reservation for such year and (y) the total hours in such
year.
2.04. All electric service provided hereunder shall be
3-phase, 60-cycle, at a nominal voltage 138-Kv. Ormet and Ohio
shall cooperate with each other to regulate the voltage at the
138-Kv busses at Ormet Substation within plus or minus 5%.
2.05. Whenever it is necessary to measure any demand relative
to the power supplied hereunder, such demand shall be taken as the
highest simultaneous integrated load in kilowatts at the point of
determination during any 30-minute period starting on the hour or
half-hour in the period under consideration.
2.06. The power factor of Ormet's total load at any time, as
of the Point of Delivery, computed from meter readings at the
Metering Point by methods mutually agreed to, shall not be less
than ninety percent (90%) lagging. The parties agree that if
Ormet's maintaining a lower power factor shall become an undue
burden upon Ohio, Ohio shall be the sole judge of the measure or
extent of the corrective action necessary.
ARTICLE THREE
DEMAND CHARGES
3.01. Subsequent to the Effective Date of this Agreement Ormet
shall pay Ohio monthly for power demand the aggregate of the
following charges:
(a) the product of (i) the Gross Plant Investment Value
for Kammer Units No. 1 and No. 2, and (ii) the Power Demand Rate
for such month;
(b) the product of (i) the Gross Plant Investment Value
for Kammer Unit No. 3, (ii) the Power Demand Rate for such month
and (iii) the Incremental Power Ratio for such month;
(c) after the Modification Date, except during the RMU
Period, the product of (i) the Gross Plant Investment Value for
Kammer Unit No. 4, (ii) the Power Demand Rate for such month; and
(iii) the Incremental Power Ratio for such month;
(d) after the Modification Date and during the RMU
Period, if any, the product of (i) the Gross Plant Investment Value
for the Revised Measurement Unit, (ii) the sum of the Power Demand
Rate for such month and .001250, and (iii) the Incremental Power
Ratio for such month;
(e) a dollar amount equal to the product of (i) the total
amount accrued by Ohio in such month for payment of Kammer
Insurance Cost, and (ii) the Ormet Power Ratio in effect for such
month; except that during the RMU Period there shall be deleted
from (i) above that portion of the Kammer Insurance Cost
attributable to the Initial Kammer Units and the Kammer Station
General Facilities, and there shall be added a dollar amount equal
to the product of such deducted Kammer Insurance Cost and the sum
of (x) 2/3 and (y) 1/3 of the Incremental Power Ratio for such
month;
(f) an amount equal to the product of (i) the Ormet Power
Ratio in effect for such month, (ii) the Power Demand Rate for such
month, and (iii) the Kammer Substation Facilities Investment as of
the close of the next preceding month diminished by the lesser of
(x) the Kammer Substation Accrual Credit for such month or (y)
Ohio's aggregate investment in all existing replacements and
additions to the Kammer Substation Facilities made subsequent to
March 31, 1959;
(g) during the RMU Period, if any, an amount equal to the
product of (i) the RMU Substation Facilities Investment as of the
close of the next preceding month, and (ii) the Ormet Power Ratio
in effect for such month, and (iii) the sum of the Power Demand
Rate for such month and .001250;
(h) an amount in dollars equal to the sums of the
products of (i) the Total Gross Investment in each Major Spare
Part, as of the close of the next preceding month, (ii) the Major
Spare Parts Ratio in effect for such Major Spare Part for such
month, and (iii) the Power Demand Rate for such month plus .001250,
and (iv) the Ormet Power Ratio for such month;
(i) an amount in dollars equal to the product of (i)
Working Capital and Stores Requirement for such month, (ii) the
Working Capital Charge Rate, and (iii) the Ormet Power Ratio for
such month, provided, however, that in lieu of such monthly amount
Ormet may make a cash advance to Ohio in an amount of dollars from
time to time to be mutually agreed upon;
(j) a dollar amount equal to the sum of (1) the product
of (i) the Delivery Facilities Investment as of the close of the
next preceding month and (ii) the Delivery Service Charge Rate for
such month, and (2) an amount in dollars equal to the payment made
by Ohio to Wheeling for the next preceding month to reimburse
Wheeling for any amount of tax, other than federal income tax or
excess profits tax, ad valorem property tax, federal social
security tax, or state unemployment tax or workmen's compensation
tax, paid or payable by Wheeling for or in connection with the use
by Ohio of Delivery Facilities owned by Wheeling to deliver power
and energy at the Point of Delivery for the Omal Facilities. If
any other type of state or local tax is substituted for the ad
valorem tax on tangible property now imposed in Ohio and/or in West
Virginia on the Delivery Facilities owned by Ohio or Wheeling in
those states, respectively, the amount otherwise payable by Ormet
to Ohio under this subsection (j) shall be reduced in an amount
equal to one-twelfth of 1.25% of the Delivery Facilities Investment
of Ohio or of Wheeling, or of both, as the case may be, at the end
of the next preceding month.
(k) except during the RMU Period, a monthly amount equal
to the product of (a) the Kammer Operation Expense for such month,
provided however that if there shall be no Modification Date the
Kammer Operation Expense for such month shall be diminished by the
portion thereof, if any, attributable to Kammer Unit No. 4, the
substation facilities attributable to it and the Kammer Station
General Facilities allocable to Kammer Unit No. 4, and (b) the
Ormet Power Ratio for such month;
(l) during the RMU Period, if any, an amount equal to the
product of (a) the Kammer Operation Expense for such month
diminished by the portion thereof, if any, applicable to Kammer
Unit No. 4, the substation facilities attributable to it and the
Kammer Station General Facilities allocable to Kammer Unit No. 4,
plus the RMU Operation Expense for such month, and (b) the Ormet
Power Ratio for such month.
3.02. In addition to the above Ormet shall pay to Ohio for
power demand amounts equal to the product of (i) all ad valorem
taxes, state and local, paid by Ohio (for which the assessment and
lien date is subsequent to the Effective Date) on the following
tangible property, exclusive of Major Spare Parts included therein,
owned by Ohio:
(a) from the Effective Date to the Modification Date;
Initial Kammer Units, Kammer Station General Facilities, and Kammer
Substation Facilities diminished after the Date of Commercial
Operation of Kammer Unit No. 4 by any Kammer Station General
Facilities allocable to it, and (ii) the average monthly Ormet
Power Ratio for the July 1-June 30 period in which such taxes are
due and payable;
(b) after the Modification Date, except during the RMU
Period; Initial Kammer Units, Kammer Unit No. 4, Kammer Station
General Facilities and Kammer Substation Facilities, and (ii) the
average monthly Ormet Power Ratio for the July 1-June 30 period in
which such taxes are due and payable;
(c) during the RMU Period; Initial Kammer Units and
Kammer Station General Facilities other than those allocable to
Kammer Unit No. 4, and (ii) the sum of (x) 2/3 and (y) one-third of
the Incremental Power Ratio for the July 1-June 30 period in which
such taxes are due and payable;
(d) during the RMU Period; the Kammer Substation
Facilities and (ii) the average Ormet Power Ratio for the July
1-June 30 period in which such taxes are due and payable.
Ormet, as successor to Generating, shall pay the ad valorem
property taxes not yet due and payable for which the assessment and
lien dates are July 1, 1965 and July 1, 1966 on property at Kammer
Generating Station owned by Generating on such dates. Ohio shall
make payments to Ormet equal to the amounts of ad valorem taxes not
yet due and payable on real property owned by Generating at Kammer
Generating Station on such dates. Ormet shall pay to Ohio for
power demand amounts equal to such real property taxes.
3.03. If any other type of state or local tax is substituted
for the ad valorem tax on tangible property now imposed in West
Virginia, and after the Modification Date and during the RMU
Period, if any, the Revised Measurement Unit is located in West
Virginia, Ohio shall credit Ormet monthly with an amount equal to
the excess of (a) one-twelfth of 1.25% of the sum of (i) the Gross
Plant Investment Value for the Revised Measurement Unit for such
month multiplied by the Incremental Power Ratio for such month and
(ii) the RMU Substation Facilities Investment at the end of the
next preceding month multiplied by the Ormet Power Ratio for such
month, over (b) the increase, if any, in tax other than ad valorem
property tax payable by Ohio or an Ohio Associate in respect of the
production or sale during the next preceding month of power and
energy hereunder resulting from such substitution of tax; or, as
the case may be, Ormet shall pay to Ohio monthly an amount equal to
the excess of such increase in tax other than ad valorem property
tax payable by Ohio or an Ohio Associate over one-twelfth of 1.25%
of the sum of (i) the Gross Plant Investment Value for the Revised
Measurement Unit for such month multiplied by the Incremental Power
Ratio for such month and (ii) the RMU Substation Facilities
Investment at the end of the next preceding month multiplied by the
Ormet Power Ratio for such month.
ARTICLE FOUR
ENERGY CHARGES
4.01. Subsequent to the Effective Date of this Agreement Ormet
shall pay to Ohio monthly for energy an amount of money equal to
the sum of:
(a) except during the RMU Period, an amount in dollars
equal to the product of (i) the Normalized Kammer Maintenance
Expense for the month, provided, however, that if there shall be no
Modification Date, such expense for such month shall be diminished
by any such attributable to Kammer Unit No. 4, if any, and the
substation facilities and Kammer Station General Facilities
allocable to Kammer Unit No. 4, and (ii) the Ormet Energy Ratio for
such month; provided, however, that a recomputation shall be made
at the end of each 12-month period ending December 31st (or a
running 12-month average basis by mutual agreement of the parties),
which will allocate the aggregate Kammer Maintenance Expense for
such 12-month period to Ormet in the ratio that (x) the Energy
Generated for Ormet during such 12-month period bears to (y) the
Total Net Generation of Kammer Generating Station during such
12-month period, less prior to the Modification Date the Total Net
Generation of Kammer Unit No. 4, if any, and an appropriate charge
or credit will be made to Ormet to adjust the aggregate of the
Kammer Maintenance charged to Ormet during such 12-month period to
conform with the allocation thereof determined by the aforesaid
recomputation.
(b) during the RMU Period, if any, an amount of dollars
equal to the product of (i) the sum of (x) the Normalized Kammer
Maintenance Expense for the month, less any such expense
attributable to Kammer Unit No. 4, if any, and substation
facilities attributable to Kammer Unit No. 4 and Kammer Station
General Facilities allocable to it, and (y) the RMU Maintenance
Expense for such month, and (ii) the Ormet Energy Ratio for such
month; provided, however, that a recomputation shall be made at the
end of each 12-month period ending December 31st (or a running
12-month average basis by mutual agreement of the parties), which
will allocate the aggregate Kammer Maintenance Expense and RMU
Maintenance Expense for such 12-month period to Ormet in the ratio
that (x) the Energy Generated for Ormet during such 12-month period
bears to (y) the aggregate Total Net Generation of Kammer
Generating Station less Kammer Unit No. 4 plus the Revised
Measurement Unit for such 12-month period, and an appropriate
charge or credit will be made to Ormet to adjust the aggregate of
the Kammer Maintenance Expense and RMU Maintenance Expense charged
to Ormet during such 12-month period to conform with the allocation
thereof determined by the aforesaid recomputation.
(c) except during the RMU Period, if any, an amount in
dollars equal to the product of (i) Kammer Fuel Expense for the
month provided, however, that if there shall be no Modification
Date such expense attributable to Kammer Unit No. 4, and (ii) the
Ormet Energy Ratio for such month.
(d) during the RMU Period, if any, an amount in dollars
equal to the product of (i) the sum of (x) the Kammer Fuel Expense
for the month diminished by any of such fuel expense attributable
to Kammer Unit No. 4 and (y) the RMU Fuel Expense for such month,
and (ii) the Ormet Energy Ratio for such month.
(e) Prior to the Modification Date, an amount in dollars
equal to the product of (i) the Average Production Cost per
Kilowatthour at Ohio's Major Generating Stations for such month and
(ii) the cumulative number of kilowatthours for such month (System
Kilowatthours) equal to the balance, if any, for each hour thereof
of Premium Kilowatthours after deducting therefrom an amount of
kilowatthours equal to the Ormet Firm Power Reservation in effect
for such hour diminished by 395,000, plus an amount in dollars
equal to the product of (i) average cost of fuel and maintenance
per kilowatthour, as shown on Form S-68, at Ohio's Major Generating
Stations, for such month, adjusted for transmission losses and (ii)
the cumulative Premium Kilowatthours for such month diminished by
the System Kilowatthours for such month.
(f) after the Modification Date, if any, an amount in
dollars equal to the product of (i) the Average Production Cost per
Kilowatthour at Ohio's Major Generating Stations for such month and
(ii) the cumulative Premium Kilowatthours for such month.
ARTICLE FIVE
RETIREMENTS
5.01. The accounting for retirements, replacements and
additions by Ohio and/or Ohio Associate in respect of the Kammer
Substation Facilities and Delivery Facilities, shall be carried out
as hereinafter prescribed.
(a) When any part of the Kammer Substation Facilities or
Delivery Facilities constituting, a Property Unit is retired from
service, the investment in such Property Unit shall, for the
purposes of all computations under this Agreement, be removed from
the applicable plant investment accounts as of the out-of-service
date of such Property Unit.
(b) When any part of the Kammer Substation Facilities or
Delivery Facilities constituting a Property Unit is placed in
service replacing a retired Property Unit, or when a part of the
Kammer Substation Facilities or Delivery Facilities constituting a
Property Unit is placed in service but not as a replacement, the
original investment in such replacement or additional Property
Unit, as the case may be, shall, for the purposes of all
computations under this Agreement, be added to the applicable plant
investment account, as the case may be, as of the in-service date
of such Property Unit. Such replacements and additions shall be
subject to Ormet's approval and if the amount of the order or
requisition ordering any such replacements or additions is $100,000
or more, Ormet's approval shall be express and in writing; and if
the amount of the order or requisition is less than $100,000,
Ormet's approval shall be deemed granted by Ormet's failure to
object in writing within fifteen (15) days after the delivery to it
of a copy of such order or requisition. In any event, Ormet's
approval shall not be unreasonably withheld.
(c) A removal, change or supplement which consists of
less than an entire Property Unit shall not be deemed to constitute
a retirement, replacement or addition of a Property Unit, and any
expense involved therein shall constitute maintenance expense.
5.02. When a retirement occurs, for the reason that any part
of the Kammer Substation Facilities or Delivery Facilities
constituting a Property Unit is worn out, obsolete, inefficient,
uneconomical, not needed, or for other similar reasons (excluding
loss or damage resulting from accidents, fortuitous events or
occurrences such as fire, lightning, inherent explosion, windstorm,
insurrection, riot, civil commotion, malicious intent, flood, enemy
attack or earthquake) and in respect to which there are no
insurance proceeds, a retirement loss in respect of such part will
be computed to be the net amount of the following:
(a) Ohio's (or Ohio Associate's) investment in the part
so retired plus
(b) the cost of removal of such part and restoration of
the site to a good and safe condition, less
(c) any net salvage value realized from such part, and
less
(d) an amount equal to the product of (i) the number of
years from the in-service date of such part to the date of its
retirement, and (ii) .03 if such part is a part of Kammer
Substation Facilities, or .025 if such part is a part of Delivery
Facilities (except that such .025 shall be increased to .03 for any
in-service period prior to January 1, 1967), as the case may be,
and (iii) Ohio's (or Ohio Associate's) investment in such retired
part (item (a) above).
At the time of retirement of any such part of the Delivery
Facilities, Ormet shall pay to Ohio an amount equal to the
retirement loss relative to such part or parts, as the case may be,
determined as hereinabove prescribed.
At the time of retirement of any such part of Kammer
Substation Facilities, Ormet shall pay to Ohio an amount equal to
the product of (i) the retirement loss relative to such part
determined as hereinabove prescribed, and (ii) the average Ormet
Power Ratio (and for the period prior to January 1, 1967 115% of
the quotient of Power User's Firm Contract Demand over Total Net
Capability as defined in the Station Agreement), weighted with
respect to time over the period of commercial operation of such
part.
When a retirement occurs for any other reason than as
hereinbefore provided, any retirement loss shall be borne entirely
by Ohio without any payment of any part thereof by Ormet and Ormet
shall not share in any of the insurance proceeds which may be
received by Ohio with respect to such retirement.
Ohio may at any time during the term of this Agreement insure
all or any part or parts of the Kammer Substation Facilities and
Delivery Facilities for protection against loss resulting from
damage or destruction by flood, enemy attack, earthquake or by any
other occurrences against which Ohio does not presently insure such
facilities, in any reasonable amount that it deems adequate, and,
provided that such additional coverage shall have been adopted by
American Electric Power System generally for such facilities, Ormet
shall pay to Ohio each month as an additional power charge an
amount equal to the sum of (i) the product of (x) the allocable
cost of such insurance of the Kammer Substation Facilities and (y)
the Ormet Power Ratio, and (ii) the cost of such insurance of the
Delivery Facilities.
ARTICLE SIX
BILLINGS AND PAYMENT
6.01. As soon as possible after the close of each month Ohio
shall render a bill to Ormet for the total amounts due hereunder
during such month. Bills rendered shall be paid by Ormet within
ten (10) days after receipt thereof, but the bills shall be subject
to such subsequent corrections as may be appropriate as a result of
audits made for the purpose of verification or otherwise. Interest
shall be charged by Ohio to Ormet at the rate of 6% per annum on
any overdue amount and by Ormet to Ohio for any overpayment, but
this shall not apply to amounts arising out of differences between
estimated and final bills pursuant to Section 6.02.
6.02. Ohio and Ormet recognize that as many as fifteen days
may be required after the close of each calendar month to assemble
all the data required to compute and render such statements.
Accordingly, Ohio may, at its option, render an estimated statement
to Ormet promptly after the close of each month, in which event any
necessary adjustments to conform such estimated statement with the
final statement shall be added or credited against the statement
for the next succeeding month.
ARTICLE SEVEN
TERM
7.01. This Agreement shall be for an initial term ending
twenty-five (25) years after the Effective Date, unless terminated
earlier in accordance with the provisions of Section 7.02 or 7.03,
or extended in accordance with the provisions of Section 7.04.
Ormet may, at its option, extend this Agreement for an additional
term of five (5) years after the expiration of the initial term
upon giving Ohio at least three (3) years' written notice prior to
the end of the initial term.
7.02. This Agreement shall remain in force for the lesser of
(a) the initial term and any extended term hereof and (b) so long
as Ohio shall be able to furnish power and energy to Ormet under
the terms of the Interim Agreement and this Agreement and at the
rates charged thereunder and hereunder. In the event that Ohio
shall cease to continue to carry out this Agreement, and to keep
its charges within the charges herein provided, for any reason not
within its control including the action of regulatory agency having
jurisdiction in the premises, but not including the termination of
this Agreement by Ormet, and provided that such cessation shall
take place within a period beginning at the date hereof and ending
at twenty-one (21) years after the death of the last survivor of
the following persons, to wit: the children of Arthur M. Borden of
215 Soundview Avenue, White Plains, New York: Erica Borden, Ross
Jeremy Borden, Mark Gideon Borden, Anthony John Maxwell Borden,
Lindsay Borden and Andrew Poe Borden; and the children of Charles
C. Wise, Jr., of Charleston, West Virginia: Laura K. Wise, Mary
Rose Wise and John C. Wise, Ormet shall have the option for a
period of six (6) months from the date of such cessation, to
purchase, upon written notice to Ohio, all of the right, title and
interest in and to Kammer Generating Station conveyed by Generating
to Ohio by special warranty deed and bill of sale dated as of
January 1, 1967 recorded in the office of the Clerk of the Court of
Marshall County, West Virginia in Deed Book , at page , (and
any additions or replacements thereto), except that as to the
Kammer Station General Facilities the undivided interest therein to
be conveyed by Ohio to Ormet pursuant to this option shall bear the
same ratio to the totality thereof as the Contract Capability of
Generating's Initial Units bears to the aggregate Contract
Capability of all of the Kammer Generating Station's generating
units then utilizing such Kammer Station General Facilities, and
the parties agree, in the event such option is exercised by Ormet
or an Ormet subsidiary, to reinstate the arrangements in effect
prior to such transfer of assets to Ohio, including the
reinstitution of the Back-Up Agreement, Excess Capacity Agreement,
Operating Agreement, Performance Agreement, Station Agreement,
Substation Facilities Agreement and Transmission Line Agreement,
all dated July 1, 1957 (except that Ormet, or at Ormet's option a
subsidiary of Ormet, may be substituted as a party for Generating).
Ohio further agrees to execute, and to cause any Ohio Associate to
execute, such confirmatory agreements and instruments of transfer
as may be necessary to confirm such arrangements, and to enter at
Ormet's election into arrangements to supply the balance of the
Ormet Firm Power Reservation under such terms and conditions as may
be mutually agreed to by the parties and which shall be acceptable
to any regulatory agency or agencies having jurisdiction therein,
or at the lowest filed tariff of Ohio then available. Ormet agrees
upon such reconveyance to it or to any Ormet subsidiary of
Generating's interest in Kammer Generating Station, as hereinabove
provided, and execution of such confirmatory agreements and
instruments of transfer, to pay to Ohio an amount equal to the
purchase price at which Ohio purchased such right, title and
interest in Kammer Generating Station from Generating less
depreciation computed at the same percentage depreciation rate that
Ohio shall have used for making book depreciation charges in
respect of such facilities from the date of acquisition thereof by
Ohio, adjusted for replacements, additions and retirements and any
reallocation of the Kammer Station General Facilities in the event
of the addition of Kammer Unit No. 4 by such time.
7.03. In the event that Ormet shall decide to permanently shut
down its aluminum reduction plant forming part of the Omal
Facilities, Ormet may terminate this Agreement at any time after it
has been in effect for not less than fifteen (15) years by (a)
giving Ohio a three-year (3) advance notice of its intent to so
terminate, and by (b) paying to Ohio on such date of termination an
amount in dollars equal to the sum of the following amounts:
(i) the product of (x) the Gross Plant Investment for
Kammer Units No. 1 and No. 2, and (y) the applicable termination
penalty factor as determined by Schedule A of this Section 7.03;
(ii) the product of (x) the Gross Plant Investment Value
for Kammer Unit No. 3, (y) the highest Incremental Power Ratio in
effect for any month during the term of this Agreement, and (z) the
applicable termination penalty factor as determined by Schedule A
of this Section 7.03;
(iii) after the Modification Date, except during the RMU
Period, the product of (x) the Gross Plant Investment Value for
Kammer Unit No. 4, (y) the highest Incremental Power Ratio in
effect for any month during the term of this Agreement and (z) the
applicable termination penalty factor as determined by Schedule A
of this Section 7.03;
(iv) after the Modification Date and during the RMU
Period, if any, the product of (x) the Gross Plant Investment Value
for the Revised Measurement Unit, (y) the highest Incremental Power
Ratio in effect for any month during the term of this Agreement,
and (z) the applicable termination penalty factor as determined by
Schedule A of this Section 7.03;
(v) the product of (x) the Kammer Substation Facilities
Investment as of the close of the next preceding month, (y) the
highest Ormet Power Ratio in effect for any month during the term
of this Agreement, and (z) the applicable termination penalty
factor as determined by Schedule A of this Section 7.03;
(vi) during the RMU Period, if any, an amount equal to
the product of (x) the RMU Substation Facilities Investment as of
the close of the next preceding month, (y) the highest Ormet Power
Ratio in effect for any month during the term of this Agreement,
the applicable termination penalty factor determined by Schedule A
of this Section 7.03;
(vii) an amount in dollars equal to the retirement loss
in respect of the Delivery Facilities Investment computed by the
method prescribed in Section 5.02 of the Agreement.
SCHEDULE A
Years Elapsed to
Termination from Applicable Termination
Effective Date Penalty Factor
---------------- ----------------------
16 ....................................... 0.125
17 ....................................... 0.110
18 ....................................... 0.090
19 ....................................... 0.060
20 ....................................... 0.035
21 or more ............................... 0.000
7.04. In order to provide for flexibility in Ormet's demand
charge obligations in the event of a temporary reduction of the
market demand for primary aluminum product, or because of Ormet's
inability to utilize its entitlements hereunder for electric power
and energy by reasons of force majeure, Ormet may, under such
circumstances, and at its option, elect to curtail the Ormet Total
Contract Demand by giving Ohio not less than one (1) month's prior
notice in writing except that during the first eight years
following the Effective Date three (3) months prior notice shall be
required for the portion of any curtailment in excess of 75,000
kilowatts; provided, however, that in such event the initial term
of this Agreement shall be extended beyond twenty-five (25) years
after the Effective Date by the aggregate amount of kilowatt-months
of such curtailments. The cumulative amount of such curtailments,
expressed in accrued kilowatt-months from the Effective Date, shall
not at any time during the term hereof exceed the following amounts
in accrued kilowatt-months from the Effective Date stated as a
percentage of the Ormet Total Contract Demand in effect:
Through year 18 after Effective Date 3% of the Ormet Total
Contract Demand in effect
for each month from the
Effective Date through
year 18.
Year 19 and thereafter 3% of the Ormet Total
Contract Demand in effect
for each month from the
Effective Date through
year 18, plus 5% of the
Ormet Total Contract
Demand in effect for each
month from the beginning
of year 19.
ARTICLE EIGHT
GENERAL PROVISIONS
8.01. Power and energy supplied hereunder shall be used by
Ormet and/or by its parent corporations, Olin Mathieson Chemical
Corporation (Olin) and Revere Copper and Brass Incorporated
(Revere) only for the production of aluminum and the fabrication of
aluminum products at or adjacent to the Omal Facilities, and shall
not be resold or otherwise furnished by Ormet, Olin or Revere to
any other party.
8.02. Ohio shall maintain the Metering Facilities and any
other metering equipment at Kammer Generating Station necessary
and/or useful to provide complete information regarding the use of
power for dispatching and billing purposes hereunder. Ormet may,
at its option and expense, install check metering. Ohio shall make
periodic tests and inspections of the metering facilities and shall
adjust the same as may be necessary to maintain the highest
practicable standard of accuracy, and will advise Ormet promptly of
the results of any such test. Ormet shall be given notice of, and
may have representatives present at, all such tests and
inspections. Ohio shall make additional tests of any of the meters
at the Metering Facilities at the request of Ormet; provided,
however, that the expense relative to any such additional test made
within three months of a scheduled periodic test shall be borne by
Ormet unless such test shows the meter or meters tested to be
inaccurate by more than 1% slow or fast. If such periodic or
additional tests do not show any such meter to be more than 1% slow
or fast no correction shall be made in the various information and
statements heretofore furnished to Ormet hereunder. If any such
tests show that any such meter is inaccurate by more than 1% slow
or fast, corrections shall be made in the information and
statements furnished to Ormet for the previous month, or from the
date of the latest test for the previous month, or from the date of
the latest test if within the previous month, and for the elapsed
period in the month during which the test was made.
8.03. Ohio may make use of fuels other than coal at Kammer
Generating Station, or in connection with the Revised Measurement
Unit, if any, if available, to the extent it is economically
advantageous to do so. Ohio shall afford Ormet the opportunity to
review and discuss with it the price, terms and conditions of any
contract proposed to be made with any suppliers of coal or other
fuel to be furnished to Ohio for consumption at Kammer Generating
Station, or in connection with a Revised Measurement Unit owned by
Ohio, if any, and Ormet shall have the right of approval in respect
of any purchases of coal or other fuel (other than spot purchases
of coal for delivery within twelve months of order within
quantities and prices previously mutually agreed upon). Ohio shall
not without Ormet's consent relinquish any of its contractual
rights to purchase coal or other fuel for Kammer Generating Station
existing as of the date hereof or hereafter. Ormet shall not
unreasonably withhold any of the consents or approvals required of
Ormet. Nothing in the foregoing shall alter the intent of the
parties that the acquisition of an adequate, dependable and
economical coal supply shall be the responsibility of Ohio.
8.04. Ohio shall keep books of record and accounts in
accordance with the Uniform System of Accounts and such other
systems as are prescribed by other governmental regulatory
authorities having jurisdiction as may be applicable. In addition,
Ohio shall keep such records and memorandum accounts as may be
required for the computation of amounts payable by Ormet hereunder.
The Uniform System of Accounts prescribed for Ohio by the Public
Utilities Commission of Ohio, as of the date of this Agreement,
shall be used for the determination of any question relative to
costs and expenses arising under this Agreement except that where
specific methods of computations of amounts are required in this
Agreement such methods shall be employed in lieu of any other
method unless specifically prohibited by any governmental
regulatory authority having jurisdiction therein.
8.05. (a) Ormet shall have the right, at such reasonable times
as appropriate during the initial term hereof and any extension
thereof and for one year thereafter, to inspect all books, records
and accounts of Ohio pertaining to information necessary for the
purposes of this Agreement for five (5) years immediately preceding
such inspection, and to make such audits thereof as Ormet may deem
necessary to protect its interests.
(b) Ormet shall have the further right at such reasonable
times as appropriate during the initial term hereof and any
extension thereof, to inspect any and all of the facilities of Ohio
and/or Ohio Associate referred to herein, and in addition, Ohio
shall arrange at Ormet's request, for such inspections by any
agents or insurance inspectors designated by Ormet.
8.06. Ohio shall not be held responsible or liable for any
loss or damage to Ormet on account of non-delivery of energy
hereunder at any time caused by Act of God, fire, flood, explosion,
strike, civil or military authority, insurrection or riot, enemy
attack, malicious mischief, act of the elements, failure of
equipment, or for any other cause beyond its control, provided,
however, that, except as otherwise provided below in this Section
8.06, non-delivery on account of any such causes shall not relieve
from its obligation to pay Ohio any charges payable hereunder.
Notwithstanding the foregoing, firm power (and associated energy)
in the amount of the Firm Capacity Reservation shall be delivered
to Ormet by Ohio without interruption or curtailment unless: (i) by
reason of any of the causes set forth above, Ohio interrupts or
curtails delivery of firm power requirements of its customers
affected by such cause, in which event Ohio may interrupt or
curtail deliveries of firm power to Ormet hereunder to the same
extent as interruptions or curtailments of firm power requirements
of such other customers, or (ii) there is a failure in delivery
facilities which makes it impossible to deliver power to Ormet.
Any interruption in service shall be remedied with utmost dispatch.
If, by reason of any governmental priority allocation or other
governmental order, Ohio is required to reduce service to Ormet,
the demand charges shall be accordingly reduced during the period
of such reduction. However, Ohio will exert every reasonable
effort to assure the continuity of supply of the Ormet Firm Power
Reservation to Ormet, and when that amount of power is not
available because of the foregoing causes, Ohio will endeavor, upon
request of Ormet, to secure the necessary power from others at just
and reasonable rates, and supply it to Ormet at the Point of
Delivery at such rates adjusted for transmission losses from the
point of purchase to the Point of Delivery.
8.07. In the event, at any time during the term of this
Agreement, Ohio should determine in its sole judgment that any
energy being generated for Ormet at Kammer Generating Station
and/or by the Revised Measurement Unit, if any, could be generated
more economically at some other generating station and savings
realized by Ohio thereby, Ohio shall so notify Ormet, and Ohio and
Ormet shall endeavor jointly to work out a mutually acceptable plan
for the fair and equitable apportionment between Ohio and Ormet of
the net operating savings realized under such a plan.
8.08. The charges to Ormet under this Agreement have taken
into account the payment by Ohio or an Ohio Associate of federal
income tax and excess profits tax, ad valorem property taxes,
federal social security taxes, state unemployment taxes, and state
workmen's compensation taxes or costs. In addition to any other
amount to be paid by Ormet hereunder, Ormet shall pay to Ohio an
amount in dollars sufficient to reimburse Ohio for any amount of
federal, state or local tax, other than tax of a type referred to
in the preceding sentence, paid or payable by Ohio in respect of
the production of energy for Ormet hereunder or of the payment of
amounts by Ormet to Ohio hereunder, so as to enable Ohio, after
provision for such taxes, to realize net the other amounts payable
by Ormet under this Agreement. Amounts payable by Ormet to Ohio
under this section shall be included in Ohio's monthly billings to
Ormet.
8.09. (a) Ohio shall, in respect of Kammer Generating Station
and/or the Revised Measurement Unit, if any, follow the same
practices with respect to replacements and to maintenance, and to
the use of overtime and, as are followed generally on the American
Electric Power System in respect of its other comparable
properties.
(b) During the term hereof and any extension or renewal, Ohio
and Ohio's Associates shall keep the various facilities referred to
in this Agreement, insured against fire and other hazards to the
extent that and against which the American Electric Power System
insures similar facilities generally.
8.10. All notices under this Agreement shall be in writing,
and if to Ohio, shall be sufficient in all respects if delivered in
person to its President or Vice President or sent by registered
mail addressed to it at its offices at 301 Cleveland Avenue, S. W.,
Canton, Ohio, or at any subsequent address of which Ohio may notify
Ormet in writing; and if to Ormet, shall be sufficient in all
respects if delivered in person to its President or Vice President
or Secretary, or sent by registered mail addressed to Ormet at 460
Park Avenue, New York, N.Y., or at any subsequent address of which
Ormet may notify Ohio in writing.
8.11. The failure of either party to insist in any one or more
instances upon strict performance of any of the provisions of this
Agreement or to take advantage of any of its rights hereunder shall
not be construed as a waiver of any such provisions or the
relinquishment of any such rights, but the same shall continue and
remain in force and effect.
8.12. Any controversy, claim, counterclaim, defense, dispute,
difference or misunderstanding arising out of or relating to this
Agreement, or the breach thereof, shall be settled by arbitration
before three arbitrators, one of whom shall be named by Ormet, one
of which shall be named by Ohio and the third of whom shall be
named by the two arbitrators appointed by Ormet and Ohio,
respectively. In the event that the two arbitrators so appointed
shall fail to name a third arbitrator within thirty (30) days after
the date of appointment of the second of them, then any party to
the arbitration proceeding may upon written notice to the other
party or parties thereto apply to the person who is the senior
acting judge of the United States Court of Appeals for the 6th
Judicial Circuit for the appointment of a third arbitrator. Except
as above provided, the arbitration proceeding shall be conducted in
accordance with the Rules of the American Arbitration Association
then in effect, and judgment upon any award rendered by the
arbitrators may be entered in any court having jurisdiction
thereof. This provision shall survive the termination of this
Agreement. The parties expressly agree that this provision shall
constitute a condition precedent to the institution of any
proceeding in any court relating to the subject matter hereof.
8.13. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and
assigns, but this Agreement may not be assigned, except to a
successor to the entire business of such party, by either party
without the written consent of the other, which consent shall not
be unreasonably withheld.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
ORMET CORPORATION
(SEAL)
by /s/ M. L. HERZOG
President
ATTEST:
/s/ P. H. KASKELL
Secretary
OHIO POWER COMPANY
(SEAL)
by /s/ DONALD C. COOK
President
ATTEST:
/s/ EDWARD SMITH
Assistant Secretary
STATE OF NEW YORK ) To-wit:--
COUNTY OF NEW YORK )
I, E. DOROTHY JOHNSON, a Notary Public in and for the said
county and state, do hereby certify that M. L. HERZOG, President,
who signed the writing above and hereunto annexed, bearing date the
16th day of November, 1966, for ORMET CORPORATION, a corporation as
this day in my said country, before me, acknowledged the said
writing to be the act and deed of said corporation.
Given under my hand this 18th day of November, 1966.
/s/ E. DOROTHY JOHNSON
Notary Public
[SEAL] E. DOROTHY JOHNSON
Notary Public, State of New York
No. 31-7095000
Qualified in New York County
Commission Expires March 30, 1968
STATE OF NEW YORK ) To-wit:--
COUNTY OF NEW YORK )
I, KLAUS BERGMAN, a Notary Public in and for the said county
and state, do hereby certify that DONALD C. COOK, President, who
signed the writing above and hereunto annexed, bearing date the
16th day of November, 1966, for OHIO POWER COMPANY, a corporation,
has this day in my said county, before me, acknowledged the said
writing to be the act and deed of said corporation.
Given under my hand this 18th day of November, 1966.
/s/ KLAUS BERGMAN
Notary Public
[SEAL] KLAUS BERGMAN
Notary Public, State of New York
No. 30-5284055
Qualified in Nassau County
Cert. filed in New York County
Commission Expires March 30, 1968
<PAGE>
FIRST SUPPLEMENTAL AGREEMENT
Dated December 1, 1969
to
POWER AGREEMENT
between
ORMET CORPORATION and OHIO POWER COMPANY
Dated November 16, 1966
<PAGE>
FIRST SUPPLEMENTAL AGREEMENT
This First Supplemental Agreement dated this 1st day of
December, 1969, between Ormet Corporation (Ormet), a Delaware
corporation, and Ohio Power Company (Ohio), an Ohio corporation;
WITNESSETH THAT:
WHEREAS, the parties entered into a Power Agreement dated
November 16, 1966 (hereinafter called "Power Agreement") providing
for the sale by Ohio of electric power and energy to Ormet to
supply the requirements of aluminum production and fabricating
facilities (hereinafter called "Omal Facilities") adjoining the
Ohio River near Hannibal, Ohio; and
WHEREAS, Ohio has been furnishing firm power to Ormet
from the effective date of the Power Agreement up to the date
hereof, and the parties deem it desirable to provide for the
furnishing of a portion of Ormet's power requirement on a non-firm
basis under terms and conditions which are beneficial for each of
them; to modify the Power Agreement in the light of the operating
experience which has developed between November 16, 1966, and the
date hereof, and pursuant to Article Eight Section 8.07 of the
Power Agreement; and to arrange for the furnishing of power by Ohio
to Ormet for test operation of Omal Facilities over limited periods
of time.
NOW, THEREFORE, in consideration of the premises and for
the purposes hereinabove recited, and in consideration of the
mutual covenants hereinafter contained, the parties agree as
follows:
1. Article One of the Power Agreement is hereby amended as
follows:
A. Delete the definitions of:
(i) AVERAGE PRODUCTION COST PER KILOWATTHOUR AT
OHIO'S MAJOR GENERATING STATIONS and
(ii) PREMIUM KILOWATTHOURS.
B. Amend the following definitions to read as follows:
KAMMER FUEL EXPENSE means for any month prior to the
Modification Date and during the RMU Period the product of (a) the
actual expenses associated with purchasing, testing, measuring,
unloading, storing and handling of all fuel utilized for the
generation of electric energy at Kammer Station during such month
(as recorded for such month in the book of Ohio under Account 501
of the Uniform System of Accounts) and (b) the lesser of (x) unity
and (y) the quotient of 9,350 divided by the actual average Initial
Kammer Units' net heat rate (in Btu's per kilowatthour) for such
month and the eleven next preceding months as reported on the
Report of Manufacture (Form S-68), diminished by any net amounts
received from the sale of residuals.
ORMET ENERGY RATIO (OER) means for any month the ratio
that is obtained by dividing (a) the Energy Generated for Ormet for
such month by (b) the sum of (i) the Total Net Generation for such
month of Kammer Generating Station plus (ii) during the RMU Period
the Total Net Generation for such month of the Revised Measurement
Unit.
ORMET TOTAL CONTRACT DEMAND means for any month the sum
of (a) the Ormet Firm Power Reservation in effect for such month
and (b) fifteen percent (15%) of the difference obtained by
subtracting (i) 72,000 kilowatts (or such larger amount of non-firm
kilowatts as the parties may have mutually agreed upon to be
applicable for such month) from (ii) the Ormet Firm Power
Reservation in effect for such month.
RMU FUEL EXPENSE means for any month during the first
sixty months following the Date of Commercial Operation of the
Revised Measurement Unit the product of (a) the actual expenses
associated with purchasing, testing, measuring, unloading, storing
and handling of all fuel utilized for the generation of electric
energy by the Revised Measurement Unit during such month (as
recorded for such month on the books of Ohio or Ohio Associate, as
the case may be, under Account 501 of the Uniform System of
Accounts) and (b) the lesser of (x) unity and (y) the quotient of
9,000 divided by the actual average Revised Measurement Unit net
heat rate for such month as reported on the Report of Operation
(Form SO-4) and for all preceding months following the Date of
Commercial Operation of the Revised Measurement Unit, diminished by
any net amounts received from the sale of residuals. For the
balance of the RMU Period, RMU Fuel Expense shall be computed as
hereinbefore provided except that there shall be substituted as "y"
the quotient of the actual average net heat rate of the Revised
Measurement Unit in Btu's per kilowatthour for the sixty months
next following the Date of Commercial Operation of the Revised
Measurement Unit (as reported on Form SO-4) divided by the actual
average net heat rate of the Revised Measurement Unit for such
month (as reported on Form SO-4) and for the eleven next preceding
months.
C. Add the following new definitions:
ORMET MAINTENANCE RATIO means for any month prior to the
Modification Date the lesser of (a) unity and (b) the quotient of
(x) the Energy Generated for Ormet during such month and the eleven
months next preceding such month divided by (y) the larger of (i)
the Total Net Generation of the Initial Kammer Units during such
twelve month period and (ii) the sum of (p) the Energy Generated
for Ormet during such period and (q) the product of (e) the
difference between the Average Available Contract Capability of the
Initial Kammer Units during such twelve month period and the
weighted average Ormet Firm Power Reservation during such twelve
month period (f) .68 and (g) the total number of hours in such
twelve month period.
ORMET MAINTENANCE RATIO means for any month during the
RMU Period the lesser of (a) unity and (b) the quotient of (x) the
Energy Generated for Ormet during such month and the eleven months
next preceding such month (y) the larger of (i) the Total Net
Generation of the Initial Kammer Units and the Revised Measurement
Unit during such twelve month period and (ii) the sum of (p) the
Energy Generated for Ormet during such twelve month period and (q)
the product of (e) the difference between the Average Available
Contract Capability of the Initial Kammer Units and the Revised
Measurement Unit during such twelve month period and the weighted
average Ormet Firm Power Reservation during such twelve month
period (f) .68 and (g) the total number of hours in such twelve
month period.
AVERAGE AVAILABLE CONTRACT CAPABILITY of the Initial
Kammer Units or of the Initial Kammer Units and the Revised
Measurement Unit, as the case may be, means for any month an amount
of kilowatts equal to the sum obtained by adding the amounts of
Average Available Contract Capability for each such generating unit
each of which is separately determined by multiplying (a) the
Contract Capability of each such unit during such month and the
eleven months next preceding, by (b) the ratio obtained by dividing
(i) the sum of (x) the number of hours in such twelve month period,
as recorded for each month in the Report of Operation (Form SO-4)
prepared by Ohio, when each such unit was operated connected to
load and (y) the number of hours in such twelve month period, as
recorded for each month in the Report of Operation (Form SO-4)
prepared by Ohio, when each such unit was not operated connected to
load but was available for operation if needed, by (ii) the total
number of hours in such twelve month period.
2. Article Two of the Power Agreement is hereby amended by
deleting therefrom the single paragraph under Section 2.01 and
substituting in place thereof the following four (4) paragraphs.
Ohio shall, subject to the provisions of Section 8.06
hereof and the other terms and conditions of this Agreement, from
and after the Effective Date, deliver or cause to be delivered to
the Point of Delivery at all times, except as otherwise hereinafter
provided in this Section 2.01 and Section 2.02, during the term
hereof power and associated energy in amounts required by Ormet up
to an Ormet Metering Point Demand equal to the Ormet Firm Power
Reservation as from time to time in effect, less delivery losses
between the Metering Point and the Point of Delivery.
Ormet shall promptly adjust its power requirements at the
Point of Delivery, whenever Ohio gives notice to the Omal
Facilities by telephone, or otherwise, requesting a reduction
thereof by reason that an emergency condition has occurred in
respect of the generating capability of the American Electric Power
System, to an amount in kilowatts, which when adjusted for delivery
losses between the Metering Point and the Point of Delivery shall
establish an Ormet Metering Point Demand not larger than the
reduced amount thereof specified by Ohio, during any hour or
combination of hours between 8:00 A.M. and 10:00 P.M. specified by
Ohio; provided, however, that (i) any reduced amount so specified
by Ohio shall not be less than the Ormet Firm Power Reservation
then in effect minus 72,000 kilowatts (or such larger amount of
kilowatts as the parties may have mutually agree upon), (ii) the
total aggregate time of such reduction or reductions shall not
exceed nine (9) hours, whether consecutive or not, during any one
period from 8:00 A.M. to 10:00 P.M. and thirty (30) hours during
any calendar week, (iii) Ohio shall use its best efforts to
eliminate such limitation of supply to Ormet with utmost dispatch
and Ohio will not discriminate against Ormet in favor of any other
non-firm capacity customer. An emergency condition in respect of
the generating capability of the American Electric Power System
shall be deemed to have occurred for purposes of this paragraph
whenever the System Operating Department of the American Electric
Power System reasonably finds that the firm power commitments of
the American Electric Power System cannot be supplied by (x) the
full utilization of all available spinning reserves and the extra
loading of capabilities of the System's available generating units
and by (y) curtailments to the extent permissible of the
interruptible power customers of the American Electric Power
System, and to the extent permissible and practicable of the
non-critical generating station auxiliaries, captive coal mining
operations, lighting and air conditioning loads of Ohio and Ohio
Associates, and (z) by reasonable voltage reduction. It is
understood that the System Operating Department of the American
Electric Power System will expeditiously use its best efforts to
obtain power from other systems with which the American Electric
Power System is interconnected prior to reducing the Ormet load
and/or in order to limit any curtailment of the Ormet load subject
to this paragraph.
In the event that Ormet is required to reduce its power
requirement pursuant to the provisions of the second paragraph of
this Section 2.01 during any 8:00 A.M. to 10:00 P.M. period, Ohio
shall notify the Omal Facilities by telephone, or otherwise, as
soon after the end of such period as Ohio in its sole judgment
deems practicable, in which hours, if any, of the immediately
following twenty-four (24) hour period, and to what extent in
kilowatts, Ormet may establish, at its option, an Ormet Metering
Point Demand that is larger than the Ormet Firm Power Reservation
then in effect. The amount in kilowatts by which the Ormet
Metering Point Demand for any hour so designated by Ohio may exceed
the Ormet Firm Power Reservation then in effect shall not be more
than the smaller of (i) the amount in kilowatts specified by Ohio
as herein-above provided, and (ii) an amount in kilowatts equal to
ten percent (10%) of the Ormet Firm Power Reservation then in
effect, and the Ormet Metering Point Demand so established shall
not be used for the purpose of any billing computations made
hereunder.
Ormet may, at any time during the term of this Agreement and
during any extensions thereof, elect to terminate the provisions of
the second paragraph of this Section 2.01 in the manner and on the
terms and notice as hereinafter prescribed:
(a) Ormet shall notify Ohio in writing of its
election to terminate the provisions of the second paragraph of
Section 2.01, and such provisions shall be of no further force and
effect beginning with the date which falls thirty (30) days after
the delivery of such written notice to Ohio, and
(b) Upon such termination of the provisions of said
second paragraph, Article One shall be amended by deleting
therefrom the definition of Ormet Total Contract Demand as
established pursuant to this First Supplemental Agreement dated
December 1, 1969, and replacing therein the definition of Ormet
Total Contract Demand as it appeared in the Power Agreement prior
to December 1, 1969, and
(c) In the event that Ormet elects to terminate the
provisions of the second paragraph of Section 2.01 pursuant to the
terms and conditions of this fourth paragraph Ormet may
subsequently elect to reinstate the provisions of said second
paragraph by written notice of such election delivered to Ohio not
less than two (2) years prior to the effective date of such
reinstatement, unless the requirement for such notice is waived in
writing by Ohio.
3. Article Two of the Power Agreement is hereby amended by
deleting the last two sentences from the first paragraph of Section
2.02 and substituting in place thereof the following three
sentences:
The parties recognize and agree that in the operation of
aluminum reduction and fabricating facilities, which are served
from a common electric power source, the amount of power necessary
for the most advantageous operation of the combined facilities can
sometimes be determined only after a reasonable period of
experimental or test operation. Accordingly, Ormet shall have the
right to exceed the Ormet Firm Power Reservation in effect for any
calendar month by an amount not in excess or 6,000 kilowatts during
any test period of not more than six months duration mutually
agreed upon by the parties at least thirty (30) days prior to the
beginning thereof; provided, however, that Ohio shall by its sole
judgment determine if and when such test period can be arranged.
The maximum Ormet Metering Point Demand established by Ormet in any
month of such mutually agreed upon test period (up to the Ormet
Firm Power Reservation for such month plus 6,000 kilowatts) shall
be used in place of the Ormet Firm Power Reservation for purposes
of all computations under this Agreement for such month; provided,
however, that no such demand so used shall be less than the Ormet
Firm Power Reservation in effect for any such month.
4. Article Two of the Power Agreement is hereby amended by
deleting Section 2.03.
5. Article Four of the Power Agreement is hereby amended to
read as follows:
4.01 Ormet shall pay to Ohio monthly for energy an amount
of money equal to the sum of:
(a) prior to the Modification Date an amount in
dollars equal to the product of (i) the Normalized Kammer
Maintenance Expense for such month and (ii) the Ormet Maintenance
Ratio for such month; provided, however, that a recomputation shall
be made at the end of each twelve month period ending December 31st
(or a running twelve month average basis by mutual agreement of the
parties), which will allocate the aggregate Kammer Maintenance
Expense for such twelve month period to Ormet on the basis of the
weighted Ormet Maintenance Ratio over the said twelve month period
and an appropriate charge or credit will be made to Ormet to adjust
the aggregate of the Kammer Maintenance Expense charged to Ormet
during such twelve month period to conform with the allocation
thereof determined by the aforesaid recomputation;
(b) during the RMU Period, an amount in dollars
equal to the product of (i) the sum of (x) the Normalized Kammer
Maintenance Expense for the month and (ii) the Ormet Maintenance
Ratio; provided, however, that a recomputation shall be made at the
end of each twelve month period ending December 31st (or a running
twelve month average basis by mutual agreement of the parties),
which will allocate the aggregate Kammer Maintenance Expense and
RMU Maintenance Expense for such twelve month period to Ormet on
the basis of the weighted Ormet Maintenance Ratio over the said
twelve month period and an appropriate charge or credit will be
made to Ormet to adjust the aggregate of the Kammer Maintenance
Expense and RMU Maintenance Expense charged to Ormet during such
twelve month period to conform with the allocation thereof
determined by the aforesaid recomputation;
(c) except during the RMU Period, if any, an amount
in dollars equal to the product of (i) the Kammer Fuel Expense for
the month and (ii) the Ormet Energy Ratio for such month;
(d) during the RMU Period, if any, an amount in
dollars equal to the product of (i) the sum of (x) the Kammer Fuel
Expense for the month and (y) the RMU Fuel Expense for such month
and (ii) the Ormet Energy Ratio for such month.
6. Article Six of the Power Agreement is hereby amended by
deleting the words "ten (10) days" from the third line of Section
6.01 and substituting in place thereof the words "fifteen (15)
days."
7. Article Eight of the Power Agreement is hereby amended by
deleting from Section 8.06 thereof the first twenty-nine (29) words
of the second sentence and substituting in place thereof the
following part sentence:
Notwithstanding the foregoing, firm power (and associated
energy) in the amount of the Ormet Firm Power Reservation shall be
delivered to Ormet by Ohio without interruption or curtailment,
except in such amounts and under conditions as provided for in the
second paragraph of Section 2.01 hereof, unless:
8. Article Eight of the Power Agreement is hereby amended by
adding a new Subsection 8.09(c) as follows:
(c) Ohio shall, whenever a breakdown occurs in any
unit of Kammer Generating Station or in the Revised Measurement
Unit, repair and restore such unit to commercial operation with all
reasonable promptness.
9. This First Supplemental Agreement has been written on the
basis that Kammer Unit No. 4 will not be constructed and that there
will be a Revised Measurement Unit, it being understood that if
Kammer Unit No. 4 is in fact constructed this Agreement will be
modified to take into account the construction of Kammer Unit No.
4.
10. This First Supplemental Agreement shall become effective
on the later of (a) the date on which it is executed, and (b) such
date when all necessary approvals by regulatory agencies having
jurisdiction in the premises have been received.
11. This First Supplemental Agreement shall continue in force
until the end of the term of the Power Agreement, including any
extensions thereof.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed as of the day and year first above
written.
ORMET CORPORATION
BY /s/ M.D. Chandler
PRESIDENT
ATTEST: /s/ P.H. Kaskell
SECRETARY
OHIO POWER COMPANY
BY /s/ Donald C. Cook
PRESIDENT
ATTEST: /s/ D.M. Tinge
ASSISTANT TREASURER
<PAGE> AMENDMENT NO. 1
TO
STATION AGREEMENT
Amendment dated as of October 1, 1973, to Station Agreement
dated as of January 1, 1968, among OHIO POWER COMPANY, an Ohio
corporation (herein called "Ohio"), BUCKEYE POWER, INC., an Ohio
corporation not for profit (herein called "Buckeye"), and
CARDINAL OPERATING COMPANY, an Ohio corporation (herein called
"Operating Company").
W I T N E S S E T H :
WHEREAS Ohio is an electric utility company organized and
existing under the laws of the State of Ohio and is engaged in
the generation, transmission and distribution of electric energy
in said State; and
WHEREAS Buckeye is a corporation not for profit organized
and existing under the laws of the State of Ohio which provides a
source of electric power and energy for transmission,
distribution and use within the State of Ohio by its membership,
which presently consists of twenty-eight cooperatively organized
non-profit electric companies operating in said State; and
WHEREAS Ohio is the owner of a steam electric generating
unit at the Cardinal Station located near Brilliant, Ohio and
Buckeye is the owner of a second steam electric generating unit
at the Cardinal Station and Ohio and Buckeye own as tenants in
common certain interests in real property and general facilities
at the Cardinal Station; and
WHEREAS Operating Company is a corporation organized under
the laws of the State of Ohio by Ohio and Buckeye to operate and
maintain the Cardinal Station; and
WHEREAS Ohio, Buckeye and Operating Company have entered
into a Station Agreement dated as of January 1, 1968 with respect
to the operation of the Cardinal Station; and
WHEREAS by deed dated October 4, 1973 Ohio has conveyed to
Buckeye a certain parcel of land at the Cardinal Station upon
which an additional steam electric generating unit, to be owned
by Buckeye, is being constructed; and
WHEREAS, Ohio, Buckeye and Operating Company desire to amend
the Station Agreement in connection with the development of
arrangements for the construction of the additional steam
electric generating unit at the Cardinal Station and the
operation of the Cardinal Station prior to, and after, the
completion of construction of such generating unit;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the parties hereto do hereby
agree as follows:
ARTICLE ONE.
Definitions.
1. Effective as of the Effective Date of Amendment No. 1 to
the Station Agreement, delete Section 1.1 of the Station
Agreement in its entirety and in lieu thereof substitute the
following:
1.1 The following terms when used herein shall have the
meanings specified:
Additional Cardinal Station means the aggregate of (a)
Buckeye's Additional Land, (b) Buckeye's Additional Unit, (c)
Additional Common Facilities, and (d) Buckeye's Additional
Substation Facilities.
Additional Cardinal Station Coal Stock means the tons
of coal in storage at the Cardinal Station for the Additional
Cardinal Station.
Additional Common Facilities means all items of
property associated with Buckeye's Additional Unit which are
useful and/or necessary for operation of the then existing
Cardinal Station generating units, including replacements and/or
additions from time to time made in respect thereof, and which
cannot be properly associated specifically with the Initial
Units, Buckeye's Additional Unit, the Initial Substation
Facilities or Buckeye's Additional Substation Facilities.
Additional Common Facilities are more specifically described in
Part VII of Appendix A hereto, which description may be modified
or supplemented from time to time by mutual agreement among the
parties hereto.
Additional Plans means the drawings and descriptions
relating to the Additional Cardinal Station that are listed in
Appendix B hereto.
Additional Unit Monthly Coal Requirement means the
amounts of coal (tons) allocable to the Total Net Generation of
the Additional Cardinal Station during such month.
Additional Unit Monthly Fuel Handling Costs means the
total monthly costs incurred by Operating Company for such month
for handling all fuels and ashes for the Additional Cardinal
Station, excluding coal unloading and storing costs but including
the net costs of (or credit for amount realized from) the
disposal of ashes or other by-products of combustion.
Agreement means the Station Agreement, dated as of
January 1, 1968, among Ohio, Buckeye and Operating Company, as
the same shall from time to time be amended, modified, revised
and/or supplemented.
Back-up Energy means energy determined to be associated
with Back-up Power supplied in accordance with the provisions of
Article Nine.
Back-up Power means any capacity and associated energy
supplied by Ohio pursuant to Section 9.2(a) of this Agreement to
firm up Buckeye's Total Firm Reservation.
Bonds mean the bonds which have been, and from time to
time may in the future be, issued pursuant to the provisions of
the Buckeye Mortgage.
Buckeye Additional Cardinal Station Facilities means
the aggregate of (a) Buckeye's Additional Land, (b) Buckeye's
Additional Unit, (c) Buckeye's Additional Substation Facilities,
and (d) the respective portions of the Common Land, the Initial
Cardinal Station Common Facilities and the Additional Common
Facilities allocable to Buckeye's Additional Unit.
Buckeye's Additional Land means the parcels of land
described as Buckeye's Additional Land in the description of the
Cardinal Station Site contained in Part I of Appendix A hereto,
which descriptions may be modified or supplemented from time to
time by mutual agreement among the parties hereto.
Buckeye's Additional Substation Facilities means all
items of property owned by Buckeye which are located at Cardinal
Station appurtenant to Buckeye's Additional Unit and which are
required and/or useful to connect Buckeye's Additional Unit
electrically with the Cardinal Station high voltage busses which
are classified under Accounts 351 through 359 and Account 397 of
the Uniform System of Accounts. Buckeye's Additional Substation
Facilities are described in Part X of Appendix A hereto, which
description may be modified or supplemented from time to time by
mutual agreement among the parties hereto.
Buckeye's Additional Unit means the nominally rated
615,000 kw steam electric generating unit to be located on
Buckeye's Additional Land.
Buckeye's Additional Unit is described in Part IV of
Appendix A hereto, which description may be modified or
supplemented from time to time by mutual agreement among the
parties hereto.
Buckeye's Additional Unit Capacity Reservation for any
month means the amount of capacity that Buckeye must reserve from
Buckeye's Additional Unit after Buckeye's Initial Cardinal
Station Capacity Reservation is equal to 86.9565% of the then
Buckeye's Contractual Net Capability of Buckeye's Initial Unit,
in order that Buckeye's total reservation of capacity from the
generating units owned by it, up to Buckeye's maximum entitlement
thereto, shall not be less than the Buckeye Cardinal Peak Demand
established in any month prior to and including such month.
Buckeye's Additional Unit Capacity Reservation shall be
determined in accordance with the provisions of Section 8.4.
Buckeye Additional Unit Monthly Carrying Charge means
an amount equal to (A) the sum of the fixed charges applicable to
Buckeye's investment in Buckeye Additional Cardinal Station
Facilities (including in the case of additions and/or
replacements effected in accordance with Section 3.2 the cost of
any such additions and the net cost of any such replacements to
the extent not covered by insurance or by amounts recovered from
third parties, but excluding working capital and investments in
fuel stock, materials and supplies and spare parts) for any month
represented by (i) an amount equal to the portion properly
allocable to such month of the amount which Buckeye shall be
obligated pursuant to the Second Supplemental Indenture
comprising a part of the Buckeye Mortgage to apply to the
redemption or retirement of long term indebtedness of Buckeye
evidenced by Bonds (not exceeding $204,500,000) actually required
and employed to finance Buckeye Additional Cardinal Station
Facilities, or which Buckeye shall be obligated to apply to the
purchase, redemption or retirement of Bonds issued subsequent to
the date of the acquisition by Buckeye of Buckeye's Additional
Land upon refunding of any long term indebtedness then issued to
finance any portion of Buckeye Additional Cardinal Station
Facilities as aforesaid and outstanding; provided that the
maturity of the mortgage bonds so issued upon any such refunding
shall not be prior to January 1, 2010 and that the sinking fund,
if any, provided for the purchase, redemption or retirement of
such mortgage bonds shall not result in a retirement of such
mortgage bonds in an amount in any year greater than that which
would be effected under levelized debt service of such mortgage
bonds over a period commencing with the date of the
authentication and delivery thereof and terminating on the later
of (1) January 1, 2010 and (2) the date of the maturity of such
mortgage bonds, (ii) the amounts of interest properly chargeable
by Buckeye to Accounts 427 and 431 of the Uniform System of
Accounts in respect of Buckeye's long term indebtedness referred
to in subclause (i) of this clause (A), (iii) the amounts of
amortization of debt discount or premium and expenses properly
chargeable by Buckeye to Accounts 428 and 429 in respect of
Buckeye's long term indebtedness referred to in subclause (i) of
this clause (A), and (iv) the amounts of taxes and insurance
properly chargeable by Buckeye to Accounts 408 and 924 as
applicable to Buckeye's Additional Cardinal Station Facilities,
plus (B) an amount equal to the sum of (i) an amount as a credit
in respect of any capital invested by Buckeye in Buckeye's
portion of Buckeye Additional Cardinal Station Facilities in
excess of the capital invested therein evidenced by Buckeye's
long term indebtedness referred to in subclause (A)(i) above
(including in the case of additions and/or replacements effected
in accordance with Section 3.2 the cost of any such additions and
the net cost of any such replacements to the extent not covered
by insurance or by amounts recovered from third parties, but
excluding working capital and investments in fuel stock,
materials and supplies and spare parts) computed on the basis of
a thirty-five year semi-annual capital recovery factor as shown
in Column 6 under the heading "Partial Payment" in the Financial
Compound Interest and Annuity Tables published by the Financial
Publishing Company, Fourth Edition, 1969, for a rate of eight and
one-half per cent per annum, plus (ii) an amount sufficient to
reimburse Buckeye for any amount of taxes determined to be
attributable to receipt by Buckeye of that portion of the amount
computed as provided in subclause (i) of this clause (B)
applicable to capital contributed to Buckeye by the Buckeye
Members and invested by Buckeye in the Buckeye Additional
Cardinal Station Facilities as aforesaid, after giving effect to
any allowable deductions, and properly chargeable by Buckeye to
Account 409 of the Uniform System of Accounts, so as to enable
Buckeye, after provision for such taxes, to realize the net
amount included in the amount so computed in respect of such
contributed capital, minus (C) the amount of interest and
dividend income properly credited by Buckeye for such month to
Account 419 or Account 421 of the Uniform System of Accounts in
respect of amounts accumulated for payment of principal, premium
and interest on the long term indebtedness of Buckeye referred to
in subclause (A)(i) above.
Buckeye's Additional Unit Monthly Energy for any month means
that portion of the Total Net Generation of Buckeye's Additional
Unit allocated to Buckeye for such month in accordance with the
principles set forth in Article Eight hereof.
Buckeye Cardinal Hourly Demand for any hour means the
kilowatt demand at the Cardinal Station's high-voltage busses
which is equal to the product obtained by multiplying (a) the
Power Delivery Facilities Hourly Demand plus the Ohio Edison
Transfer Points Hourly Demand (in each case as defined in the
Power Delivery Agreement) for such hour by (b) the applicable
Transmission Loss Correction Factor (determined as provided in
the Power Delivery Agreement) for Ohio's Bulk Transmission
Facilities for such hour.
Buckeye Cardinal Hourly Energy for any hour means an amount
of kilowatthours of electric energy at the Cardinal Station
high-voltage busses which is numerically equal to the Buckeye
Cardinal Hourly Demand for such hour.
Buckeye Cardinal Monthly Demand for any month means the
kilowatt demand at the Cardinal Station high-voltage busses which
is equal to the maximum Buckeye Cardinal Hourly Demand for such
month.
Buckeye Cardinal Peak Demand for any month means the maximum
Buckeye Cardinal Monthly Demand established in any month prior to
and including such month.
Buckeye's Contractual Net Capability of Buckeye's Initial
Unit and Buckeye's Additional Unit at any time means an amount
equal to the average Total Net Capability thereof as determined
in accordance with the procedure set forth in Appendix C hereto
for the then effective Ohio Maximum Peak Requirement Quarter.
Buckeye's Excess Supplementary Power Demand means an amount
of capacity, as of the high-voltage Cardinal Station busses, to
be furnished to Buckeye by Ohio in excess of the maximum
permissible amount of Buckeye's Supplementary Power Demand,
determined as provided in Section 10.3(b).
Buckeye's Initial Cardinal Station Capacity Reservation
means an amount of capacity, as of the high-voltage Cardinal
Station busses, which shall be determined in accordance with the
provisions of Section 8.4.
Buckeye's Initial Land means the parcel of land described as
Buckeye's Initial Land in the description of the Cardinal Station
Site contained in Part I of Appendix A hereto, which description
may be modified or supplemented from time to time by mutual
agreement among the parties hereto.
Buckeye's Initial Substation Facilities means the items of
property to be located at the Initial Cardinal Station described
in Part IX of Appendix A hereto, which description may be
modified or supplemented from time to time by mutual agreement
among the parties hereto.
Buckeye's Initial Unit means the nominally rated 615,000 kw
steam electric generating unit, which commenced commercial
operation on July 1, 1967. Buckeye's Initial Unit is described in
Part III of Appendix A hereto, which description may be modified
or supplemented from time to time by mutual agreement among the
parties hereto.
Buckeye Initial Unit Monthly Carrying Charge means an amount
equal to (A) the sum of the fixed charges applicable to Buckeye's
investment in Buckeye's Portion of the Initial Cardinal Station
(including in the case of additions and/or replacements effected
in accordance with Section 3.2 the cost of any such additions and
the net cost of any such replacements to the extent not covered
by insurance or by amounts recovered from third parties, but
excluding working capital and investments in fuel stock,
materials and supplies and spare parts) for any month represented
by (i) an amount equal to the portion properly allocable to such
month of the amount which Buckeye shall be obligated pursuant to
Section 8.01 of the Buckeye Mortgage to apply to the redemption
or retirement of long term indebtedness of Buckeye evidenced by
Bonds of the 1997 Series issued under the Buckeye Mortgage, or
which Buckeye shall be obligated to apply to the purchase,
redemption or retirement of any long term indebtedness of Buckeye
evidenced by mortgage bonds issued subsequent to June 27, 1968
upon refunding of any long term indebtedness then issued and
outstanding as aforesaid; provided that the maturity of the
mortgage bonds so issued upon any such refunding shall not be
prior to April 1, 1997 and that the sinking fund, if any,
provided for the purchase, redemption or retirement of such
mortgage bonds shall not result in a retirement of such mortgage
bonds in an amount in any year greater than that which would be
effected under levelized debt service of such mortgage bonds over
a period commencing with the date of the authentication and
delivery thereof and terminating on the later of (1) April 1,
1997 and (2) the date of the maturity of such mortgage bonds,
(ii) the amounts of interest properly chargeable by Buckeye to
Accounts 427 and 431 of the Uniform System of Accounts in respect
of Buckeye's long term indebtedness referred to in subclause (i)
of this clause (A) and any other indebtedness for borrowed money
incurred by Buckeye on the Closing Date under the Purchase
Agreement dated as of January 1, 1968 between Buckeye and Ohio as
an incident to consummation of the transactions provided for
therein, (iii) the amounts of amortization of debt discount or
premium and expenses properly chargeable by Buckeye to Accounts
428 and 429 in respect of Buckeye's long term indebtedness
referred to in subclause (i) of this clause (A), (iv) the amounts
of taxes and insurance properly chargeable by Buckeye to Accounts
408 and 924 as applicable to Buckeye's Portion of the Initial
Cardinal Station, and (v) during such period as shall be required
to produce an amount equal to one year's requirement of debt
service on the Bonds of the 1997 Series referred to in subclause
(i) of this clause (A), an amount equal to 10% of the sum of the
amounts specified in subclauses (i) and (ii) of this clause (A),
plus (B) an amount equal to the sum of (i) an amount as a credit
in respect of any capital invested by Buckeye in Buckeye's
Portion of the Initial Cardinal Station in excess of the capital
invested therein evidenced by Buckeye's long term indebtedness
referred to in subclause (A)(i) above (including in the case of
additions and/or replacements effected in accordance with Section
3.2 the cost of any such additions and the net cost of any such
replacements to the extent not covered by insurance or by amounts
recovered from third parties, but excluding working capital and
investments in fuel stock, materials and supplies and spare
parts) computed on the basis of a thirty-five year semi-annual
capital recovery factor as shown in Column 6 under the heading
"Partial Payment" in the Financial Compound Interest and Annuity
Tables published by the Financial Publishing Company, Third
Edition, 1961, for a rate of six and three-quarters per cent per
annum, plus (ii) an amount sufficient to reimburse Buckeye for
any amount of taxes determined to be attributable to receipt by
Buckeye of that portion of the amount computed as provided in
subclause (i) of this clause (B) applicable to capital
contributed to Buckeye by the Buckeye Members and invested by
Buckeye in Buckeye's Portion of the Initial Cardinal Station as
aforesaid, after giving effect to any allowable deductions, and
properly chargeable by Buckeye to Account 409 of the Uniform
System of Accounts, so as to enable Buckeye, after provision for
such taxes, to realize the net amount included in the amount so
computed in respect of such contributed capital, minus (C) the
amount of interest and dividend income properly credited by
Buckeye for such month to Account 419 or Account 421 of the
Uniform System of Accounts in respect of amounts accumulated for
payment of principal, premium and interest on the long term
indebtedness of Buckeye referred to in subclause (A)(i) above,
including the debt service reserve to be established as
contemplated by subclause (A)(v) above.
Buckeye's Initial Unit Monthly Energy for any month means
Buckeye's portion of the Total Net Generation of Initial Cardinal
Station for such month determined in accordance with the
principles set forth in Article Eight hereof.
Buckeye's Interim Power Reservation means an amount of
capacity, as of the high-voltage Cardinal Station busses, which
shall be determined, for any month, in accordance with the
provisions of Section 11.1.
Buckeye's Interim Power means any capacity and associated
energy supplied to Buckeye by Ohio in excess of a maximum
entitlement of Buckeye's Initial Cardinal Station Capacity
Reservation during the Interim Period as provided in Article
Eleven.
Buckeye Member means (a) any one of the twenty-eight
electric companies organized and operated not for profit on a
cooperative basis which are operating in the State of Ohio at the
date of this Agreement and which together constitute the present
membership of Buckeye, (b) any electric company similarly
organized and operated which may hereafter be or become a member
of Buckeye, and (c) any successor to any existing Buckeye Member
or Buckeye Members except (i) a successor which is at the date of
this Agreement a public utility included as such under the
definition of that term contained in Section 4905.02 of the
Revised Code of Ohio or which is a successor to any such public
utility, or (ii) Buckeye or a successor to Buckeye, or (iii) a
successor which is a political subdivision of the State of Ohio
or a municipal corporation, bureau or department organized by or
serving any such political subdivision or any other governmental
agency or any successor to any of the foregoing.
Buckeye Monthly Carrying Charge means an amount equal to the
sum of the Buckeye Initial Unit Monthly Carrying Charge and the
Buckeye Additional Unit Monthly Carrying Charge. Buckeye agrees
to maintain accounts pursuant to the requirements of the Uniform
System of Accounts: provided, however, that nothing herein
contained shall be deemed to preclude Buckeye from maintaining
such other accounts and records as it, in its sole discretion,
shall determine.
Buckeye's Monthly Energy means the sum of Buckeye's Initial
Unit Monthly Energy and Buckeye's Additional Unit Monthly Energy.
Buckeye Mortgage means the Mortgage and Deed of Trust dated
as of April 1, 1968, as amended by the First Supplemental
Indenture and by the Second Supplemental Indenture thereto, made
by Buckeye with The Ohio National Bank as Trustee. Whenever
reference is made in this Agreement to the Trustees under the
Buckeye Mortgage, or to the corporate trustee under the Buckeye
Mortgage, such terms shall mean the corporations or corporation
which shall at the time in question be acting in such capacities
or capacity under the Buckeye Mortgage.
Buckeye's Portion of the Initial Cardinal Station means the
aggregate of (a) Buckeye's Initial Land, (b) Buckeye's Initial
Unit, (c) Buckeye's Initial Substation Facilities and (d) the
respective portions of the Common Land, Joint Land, Initial
Cardinal Station General Facilities and the Initial Cardinal
Station Common Facilities allocable to Buckeye's Initial Unit.
Buckeye Power Requirement means the aggregate requirements
of Buckeye for electric power and energy from time to time for
sale and delivery to the Buckeye Members and for resale and
delivery by the Buckeye Members to customers in the State of Ohio
for ultimate consumption within the State of Ohio or use by the
Buckeye Members within said State in the operation of their
respective facilities and systems; provided, however, that
consistent with the desire and objective of all parties to
minimize any unnecessary or uneconomic duplication of facilities,
there shall not be included in the Buckeye Power Requirement any
quantity of electric power and/or energy furnished to any
consumer when the furnishing of power and/or energy to such
consumer by a Buckeye Member is proscribed by the law of the
State of Ohio reflected in Section 4905.26.1, Revised Code of
Ohio, as said Section is in effect at the date of this Agreement.
It is understood and agreed that the term "consumer" as used in
said Section 4905.26.1 applies to any customer of a power and/or
energy supplier whether served at wholesale or at retail.
Buckeye's Summer Interim Power Reservation means Buckeye's
Interim Power Reservation in a Summer Period, as determined, for
any Summer Month, in accordance with the provisions of Section
11.1.
Buckeye's Supplementary Power means the additional capacity
and associated energy to be furnished to Buckeye by Ohio in
excess of a maximum entitlement of (a) Buckeye's Initial Cardinal
Station Capacity Reservation, plus (b) Buckeye's Additional Unit
Capacity Reservation, if any, determined as provided in Sections
10.3 and 10.4.
Buckeye's Supplementary Power Demand means an amount of
capacity, as of the high-voltage Cardinal Station busses, which
is available to Buckeye in excess of 86.9565% of Buckeye's
Contractual Net Capability of Buckeye's Initial Unit and
Buckeye's Additional Unit up to 50% of the Total Net Capability
of Buckeye's Units determined as provided in Section 10.3(a).
Buckeye's Total Cardinal Station Capacity Reservation means
an amount of capacity equal to the sum of (a) Buckeye's Initial
Cardinal Station Capacity Reservation, and (b) Buckeye's
Additional Unit Capacity Reservation, if any, and (c) Buckeye's
Supplementary Power Demand.
Buckeye's Total Firm Reservation means an amount of capacity
equal to the sum of (a) Buckeye's Total Cardinal Station Capacity
Reservation, and (b) Buckeye's Excess Supplementary Power Demand.
Buckeye's Units means Buckeye's Initial Unit and Buckeye's
Additional Unit.
Buckeye's Unrecovered Excess Capacity Account at any time
means the total amount in dollars by which the cumulative total
amount of settlements by Ohio to Buckeye for Contract Excess
Capacity to such time exceeds the cumulative total amount of
settlements by Buckeye to Ohio for Buckeye's Supplementary Power
Demand associated with Buckeye's Supplementary Power, computed
from time to time pursuant to the provisions of Section 10.3 in
effect at the particular time in question.
Buckeye's Winter Interim Power Reservation means Buckeye's
Interim Power Reservation in a Winter Period, as determined, for
any Winter Month, in accordance with the provisions of Section
11.1.
Cardinal Station means the steam electric generating station
located near Brilliant, Ohio, as from time to time modified or
expanded as contemplated by this Agreement or otherwise,
including the Initial Cardinal Station and the Additional
Cardinal Station.
Cardinal Station Monthly Maintenance Cost in any month means
the total maintenance expenses allocable to the Cardinal Station
for such month.
Cardinal Station Monthly Prorated Capacity Cost in any month
means the total expense charged to Operation and Maintenance
Expense Accounts of the Uniform System of Accounts, other than
expenses for fuel and maintenance, for such month allocable to
the Cardinal Station, which shall not include any part of either
Owner's administrative expenses, but shall include Cardinal
Station overhead consisting of (a) any administrative and general
expenses which are incurred directly by Operating Company and (b)
the costs to Operating Company for special services of the
character to be rendered by American Electric Power Service
Corporation under the agreement referred to in Section 14.11.
Cardinal Station Operating Committee means the committee
established as provided in Section 15.1.
Cardinal Station Site means the several parcels of land
described as the Cardinal Station Site in the description of the
Cardinal Station Site contained in Part I of Appendix A hereto,
which descriptions may be modified or supplemented from time to
time by mutual agreement among the parties hereto.
Cardinal Units means Ohio's Initial Unit, Buckeye's Initial
Unit and Buckeye's Additional Unit.
Common Land means the parcels of land jointly owned by
Buckeye and Ohio described as the Common Land in the description
of the Cardinal Station Site contained in Part I of Appendix A
hereto, which descriptions may be modified or supplemented from
time to time by mutual agreement among the parties hereto.
Company means any one of the Ohio utility companies
(including Ohio) which is a party to the Power Delivery
Agreement.
Contract Excess Capacity in any month means an amount of
capacity by which the total Buckeye's Contractual Net Capability
of Buckeye's Units in such month is in excess of an amount of
capacity equal to the sum of (a) 115% of Buckeye's Initial
Cardinal Station Capacity Reservation and (b) 115% of Buckeye's
Additional Unit Capacity Reservation, if any.
Date of Commercial Operation means February 1, 1967 in the
case of Ohio's Initial Unit, July 1, 1967 in the case of
Buckeye's Initial Unit, and such date as shall be determined (in
accordance with the Uniform System of Accounts) by mutual
agreement between Ohio and Buckeye in the case of Buckeye's
Additional Unit.
Effective Date of Amendment No. 1 to the Station Agreement
means the date on which Amendment No. 1 to the Station Agreement,
dated as of October 1, 1973, became effective pursuant to Section
18.1 of said Amendment No. 1.
General Facilities means all items of property at Cardinal
Station that comprise the Initial Cardinal Station General
Facilities, the Initial Cardinal Station Common Facilities and
the Additional Common Facilities.
Initial Cardinal Station means the aggregate of (a) Ohio's
Land, Buckeye's Initial Land and the Joint Land, (b) Buckeye's
Initial Unit, (c) Ohio's Initial Unit, (d) the Initial Cardinal
Station General Facilities, (e) Buckeye's Initial Substation
Facilities, (f) Ohio's Substation Facilities, including the
Substation Land, and (g) the respective portions of the Common
Land and the Initial Cardinal Station Common Facilities allocable
to Buckeye's Initial Unit and Ohio's Initial Unit.
Initial Cardinal Station Coal Stock means the tons of coal
in storage at the Cardinal Station for the Initial Cardinal
Station.
Initial Cardinal Station Common Facilities means all items
of property associated with the Initial Cardinal Station which
are useful and/or necessary for operation of the Cardinal Units
and which cannot be properly associated specifically with Ohio's
Initial Unit. Buckeye's Initial Unit, Ohio's Substation
Facilities, Buckeye's Initial Substation Facilities or Buckeye's
Additional Substation Facilities. The Initial Cardinal Station
Common Facilities are more specifically described in Part Vl of
Appendix A hereto, which description may be modified or
supplemented from time to time by mutual agreement among the
parties hereto.
Initial Cardinal Station General Facilities means all items
of property associated with the Initial Cardinal Station which
are useful and/or necessary for operation of the Initial Units
but not Buckeye's Additional Unit, and which cannot be properly
associated specifically with Ohio's Initial Unit. Buckeye's
Initial Unit, Ohio's Substation Facilities or Buckeye's Initial
Substation Facilities. The Initial Cardinal Station General
Facilities are more specifically described in Part V of Appendix
A hereto, which description may be modified or supplemented from
time to time by mutual agreement among the parties hereto.
Initial Plans mean the drawings and descriptions relating to
the Initial Cardinal Station that are listed in Appendix B
hereto.
Initial Unit means either Ohio's Initial Unit or Buckeye's
Initial Unit.
Initial Units Monthly Coal Requirement in any month means
the amounts of coal (tons) allocable to the Total Net Generation
of the Initial Cardinal Station during such month.
Initial Units Monthly Fuel Handling Cost in any month means
the total monthly costs incurred by Operating Company for such
month for handling all fuels and ashes for the Initial Cardinal
Station, excluding coal unloading and storing costs but including
the net cost of (or credit for amount realized from) the disposal
of ashes or other by-products of combustion.
Interim Period means, with respect to any period prior to
the Date of Commercial Operation of Buckeye's Additional Unit,
the period commencing on the date on which the balance of dollars
in Buckeye's Unrecovered Excess Capacity Account shall become
zero, and terminating on the earlier of (i) the Date of
Commercial Operation of Buckeye's Additional Unit or (ii) October
31, 1977.
Joint Land means the parcels of land jointly owned by
Buckeye and Ohio described as Joint Land in the description of
the Cardinal Station Site contained in Part I of Appendix A
hereto, which descriptions may be modified or supplemented from
time to time by mutual agreement among the parties hereto.
Major Spare Parts means the spare parts usable at the
Cardinal Station listed in Appendix E hereto and in any
subsequent addition to said Appendix E made in accordance with
the provisions of Section 4.1.
Maximum Permissible Continuous Loading means the maximum
continuous loading capability of any generating unit as
established in accordance with the procedure set forth in
Appendix C hereto.
Ohio Additional Unit Monthly Energy for any month means that
portion of the Total Net Generation of Buckeye's Additional Unit
allocated to Ohio for such month in accordance with the
principles set forth in Article Eight.
Ohio Associate means any company (other than (i) Ohio and
(ii) a company of which 50% or less of the outstanding voting
securities of which is owned, directly or indirectly, by American
Electric Power Company, Inc.) in the holding company system of
American Electric Power Company, Inc., as the term "holding
company system" is defined in the Public Utility Holding Company
Act of 1935.
Ohio's Average Excess Capacity Cost at any date means the
average adjusted cost to Ohio for Contract Excess Capacity at
such date determined as provided in Section 10.3(g).
Ohio's Back-up Stations means Ohio Generating Stations and
Ohio's Initial Unit.
Ohio's Bulk Transmission Facilities means the 138-kv, 345-kv
and 765-kv transmission facilities owned by Ohio, and such higher
voltage transmission facilities as Ohio may install and own
subsequent to the date hereof, which are to be made available by
Ohio within the State of Ohio pursuant to the Power Delivery
Agreement.
Ohio Generating Stations means Ohio's presently operating
Tidd Station, Philo Station and Muskingum River Station and the
Gavin Station presently under construction and owned by Ohio
Electric Company, a wholly owned subsidiary of Ohio. Other
future additions made to the major generating capacity of Ohio or
any wholly owned subsidiary of Ohio located within the State of
Ohio will be included as Ohio Generating Stations as of the first
day of the month following the month in which the date of
commercial operation of such new generating capacity shall occur;
provided, however, that new generating capacity installed by Ohio
which is substantially different in design and operating
characteristics from then existing steam generating capacity
constituting Ohio Generating Stations or which shall have been
installed by Ohio as a result of unusual circumstances shall not
be included as Ohio Generating Stations for purposes of this
Agreement except by mutual agreement between Ohio and Buckeye.
Generating capacity transferred to others or retired by Ohio or
held in cold reserve and generating capacity determined by mutual
agreement between Ohio and Buckeye no longer to constitute part
of the major generating capacity of Ohio within the State of Ohio
shall be excluded as Ohio Generating Stations.
Ohio's Initial Unit means the nominally rated 615,000 kw
steam electric generating unit which generating unit commenced
commercial operation on February 1, 1967. Ohio's Initial Unit is
described in Part 11 of Appendix A hereto, which description may
be modified or supplemented from time to time by mutual agreement
among the parties hereto.
Ohio's Initial Units Monthly Energy for any month means
Ohio's portion of the Total Net Generation of the Initial
Cardinal Station for such month determined in accordance with the
principles set forth in Article Eight hereof.
Ohio's Land means the parcel of land described as Ohio's
Land in the description of the Cardinal Station Site contained in
Part I of Appendix A hereto, which description may be modified or
supplemented from time to time by mutual agreement among the
parties hereto.
Ohio Maximum Peak Requirement in effect for any month means
the largest Ohio Monthly Peak Demand established in any month up
to and including such month.
Ohio Maximum Peak Requirement Quarter at any time means that
period of three consecutive calendar months which includes the
month in which the Ohio Maximum Peak Requirement then in effect
was established, the month immediately preceding and the month
immediately following, and shall become effective as of the month
in which such Ohio Maximum Peak Requirement was established.
Ohio's Monthly Energy means the sum of Ohio's Initial Units
Monthly Energy and Ohio Additional Unit Monthly Energy.
Ohio Monthly Peak Demand for any month means the largest
kilowatt demand of Ohio for such month as reported by the
American Electric Power Service Corporation in its Daily Summary
of Generation and Load for Ohio under the caption or heading
"Ohio System Load" or on such other form as may hereafter be used
by Ohio or the American Electric Power Service Corporation in
lieu thereof to report such information.
Ohio Stations Average Fuel and Maintenance Cost for any
month shall be determined for such month by dividing (a) the sum
of (i) the aggregate fuel expenses for the Ohio Back-up Stations
as recorded on line 2 of Form S-68 for each such station,
prepared by the Statistical Department of American Electric Power
Service Corporation, or its successor, and (ii) the aggregate
maintenance expenses at the Ohio Back-up Stations as recorded on
line 8 of such Form S-68 for each such station, by (b) the
aggregate net kilowatthour generation recorded for such month for
the Ohio Back-up Stations as recorded on line 7 of the AEP System
Power Production and Control Generating Plant Performance Data
Report for each such station. The Form S-68 and the AEP System
Power Production and Control Generating Plant Performance Data
Report, and the lines thereof, referred to in this paragraph
shall be deemed to include any form or reports, and the lines
thereof, which may be substituted therefor which contains
information from which such data can be derived.
Ohio's Substation Facilities means the items of property
located at the Initial Cardinal Station described in Part VIII of
Appendix A hereto, which description may be modified or
supplemented from time to time by mutual agreement among the
parties hereto.
Operating Company means Cardinal Operating Company, an Ohio
corporation organized by Ohio and Buckeye to operate Cardinal
Station as herein provided.
Owner means either Ohio or Buckeye or their respective
successors in interest at the Cardinal Station, as the case may
be.
Owners means Ohio and Buckeye or their respective successors
in interest at the Cardinal Station collectively.
Power Delivery Agreement means that certain agreement dated
as of January 1, 1968 among the Ohio utility companies (including
Ohio) named therein and Buckeye, relating, among other things, to
the delivery of electric power and energy to Buckeye for sale by
Buckeye to the Buckeye Members.
Property Unit means either (i) a unit of property as such
units are defined in the Retirement Unit List, or (ii) an item of
property, the investment in which at the time of commercial
operation thereof is in excess of $25,000, unless the Owners
shall mutually agree that such item of property shall not be a
Property Unit.
Replacement Power means power which Ohio shall supply,
pursuant to the provisions of Section 9.2(d) of this Agreement,
during any period in a calendar year when (i) the capability of
Buckeye's Initial Unit and/or Buckeye's Additional Unit shall be
curtailed, and/or Buckeye's Initial Unit and/or Buckeye's
Additional Unit shall be removed from service, for any reason,
including preventative maintenance and/or repairs, shortages of
fuels, or as a result of laws and/or rules and regulations
affecting emissions of pollutants, discharge of wastes, or other
environmental conditions, and (ii) Buckeye shall not have any
entitlement to Back-up Power under Section 9.2(a) of this
Agreement.
Retirement Unit List means the publication listing
retirement units for steam production property kept by Ohio in
accordance with applicable requirements of regulatory authorities
and heretofore delivered to Buckeye by Ohio or any revised
Retirement Unit List substituted therefor pursuant to Section
3.4.
Summer Month means any calendar month in a Summer Period.
Summer Period means the period from May 1 through October 31
of any year.
Substation Land means the parcel of land described as
Substation Land in the description of the Cardinal Station Site
contained in Part I of Appendix A hereto, which description may
be modified or supplemented from time to time by mutual agreement
among the parties hereto.
Surplus Capacity in any month means an amount of capacity by
which 85% of the sum of Buckeye's Initial Cardinal Station
Capacity Reservation and Buckeye's Additional Unit Capacity
Reservation as in effect for such month is in excess of the
maximum Buckeye Cardinal Monthly Demand established in any month
during the 15 month period ending with and including such month:
provided, however, that there shall not be taken into account in
determining the quantity of Surplus Capacity in any month any
reduction in Buckeye's demand for electric power and energy for
sale and delivery by Buckeye to the Buckeye Members hereunder
resulting from the sale or other disposition of facilities or the
abandonment of facilities by a Buckeye Member or from other
action voluntarily taken by a Buckeye Member which has the effect
of reducing its requirements for electric power and energy,
whether or not the sale, disposition or abandonment of facilities
or other action resulting in such reduction in demand was
consented to by Buckeye.
Total Net Available Capability of any unit at the
Cardinal Station for any hour means the Total Net Capability of
such unit, adjusted for circulating water temperature, fuel
quality, equipment condition and outages and other factors
affecting capability that may prevail in such hour.
Total Net Capability of any generating unit or
combination of generating units means the total net capability of
such unit or units in kilowatts as of the high voltage Cardinal
Station busses determined in accordance with the provisions of
Appendix C hereto.
Total Net Generation in any month, as applied to any
generating unit or combination of generating units, means the net
electrical output of such unit or units during such month as of
the high-voltage busses of Cardinal Station, determined in
accordance with the provisions of Appendix C hereto.
Uniform System of Accounts means the uniform system of
accounts prescribed for Ohio by the Public Utilities Commission
of the State of Ohio as in effect on January 1, 1968.
Winter Month means any calendar month in a Winter
Period.
Winter Period means the period from November 1 of any
year through April 30 of the succeeding year.
provided, however, that notwithstanding the foregoing provisions
of this Section 1 of Amendment No. 1 to the Station Agreement,
the definitions contained in Section 1.1 of the Station
Agreement, dated as of January 1, 1968, among Ohio Buckeye and
Operating Company, shall be used during the period between the
Effective Dale of Amendment No. 1 to the Station Agreement and
the Date of Commercial Operation of Buckeye's Additional Unit for
the purpose of making allocations and effecting determinations
pursuant to the provisions of Articles Four, Five, Seven, Eight,
Nine and Ten of the Station Agreement.
ARTICLE TWO.
Ownership of Facilities.
2. Effective as of the Effective Date of Amendment No. 1 to
the Station Agreement, delete Section 2.1, 2.2, 2.3, 2.4, 2.5,
2.6, 2.7, 2.8, 2.9 and 2.10 of the Station Agreement in their
entirety and in lieu thereof substitute the following:
2.1 (a) Buckeye's Initial Land and Buckeye's Initial Unit
located thereon and Buckeye's Additional Land and Buckeye's
Additional Unit to be located thereon shall be owned by Buckeye
and Buckeye's Initial Unit and Buckeye's Additional Unit shall be
operated by Operating Company in accordance with the provisions
of this Agreement.
(b) Ohio's Land and Ohio's Initial Unit located thereon
shall he owned by Ohio, and Ohio's Initial Unit shall be operated
by Operating Company in accordance with the provisions of this
Agreement.
(c) Substation Land shall be owned by Ohio subject to the
right of Buckeye to own any of Buckeye's Initial Substation
Facilities and Buckeye's Additional Substation Facilities located
thereon.
(d) Buckeye's Initial Substation Facilities and Buckeye's
Additional Substation Facilities shall be owned by Buckeye and
shall be located on Buckeye's Initial Land, Buckeye's Additional
Land, Joint Land and Substation Land.
(e) Ohio's Substation Facilities shall be owned by Ohio and
shall be located on Ohio's Land, Joint Land and Substation Land.
(f) The Joint Land and the Initial Cardinal Station General
Facilities shall be owned by Buckeye and Ohio as tenants in
common of the whole thereof, and each of them shall have an
undivided one-half interest therein. The ownership of the
Initial Cardinal Station General Facilities, the Initial Cardinal
Station Common Facilities and the Additional Common Facilities,
by Buckeye and Ohio as tenants in common shall exist regardless
of whether in fact any one or more parts of the Initial Cardinal
Station General Facilities, the Initial Cardinal Station Common
Facilities or the Additional Common Facilities shall be affixed
to real property owned by either Buckeye or Ohio.
(g) The Common Land, the Initial Cardinal Station Common
Facilities and the Additional Common Facilities shall be owned by
Buckeye and Ohio as tenants in common of the whole thereof. Ohio
shall have an undivided one-half interest in the Common Land, the
Initial Cardinal Station Common Facilities and the Additional
Common Facilities and Buckeye shall have an undivided one-half
interest in the Common Land, the Initial Cardinal Station Common
Facilities and the Additional Common Facilities. Buckeye and
Ohio recognize that, although each is to have an undivided
one-half ownership interest in the Additional Common Facilities,
the property constituting such Additional Common Facilities will
not only be useful and/or necessary for operation of Buckeye's
Additional Unit, but will also be useful and/or necessary for
operation of Buckeye's Initial Unit and/or Ohio's Initial Unit,
and accordingly agree that the construction costs of such
Additional Common Facilities will be allocated between Buckeye
and Ohio in such manner as will reflect the relationships of such
Additional Common Facilities to the three generating units
involved.
(h) Ohio and Buckeye will execute and deliver any and all
such instruments and documents as may from time to time be
reasonably requested by one from the other to confirm their
respective property rights and interests in and to the several
parcels of real property constituting the Cardinal Station Site
and in and to the facilities constituting the Cardinal Station,
or any of them, including requisite easements for access thereto,
as contemplated by the Power Delivery Agreement or as herein
provided.
2.2 Buckeye and Ohio hereby agree to grant to each other
appropriate permanent easements to utilize such coal storage
facilities, circulating water tunnels, salt storage basins, water
treatment facilities and such other facilities as may be the
property of one Owner and are necessary for the operation of the
other Owner's Initial Unit and/or Buckeye's Additional Unit, to
the extent that such use will not impair the operation of either
Owner's Initial Unit and/or Buckeye's Additional Unit.
2.3 Ohio hereby agrees to grant to Buckeye and/or Operating
Company from time to time easements permitting Buckeye to come
upon lands owned by Ohio and constituting part of the site of
Ohio's existing Tidd Station for purposes of ingress or egress to
or from the Cardinal Station and/or for such other purposes as
may be necessary and/or useful to either of them, as the case may
be, for carrying out their respective responsibilities in respect
of ownership and/or operation of any facilities at the Cardinal
Station, provided that such entering upon such lands owned by
Ohio shall not interfere with the placement of any facilities by
Ohio upon such lands or with the operation of the Tidd Station.
2.4 Buckeye hereby agrees to grant to Ohio from time to time
easements permitting Ohio to place upon portions of the Cardinal
Station Site owned by Buckeye or by Buckeye and Ohio as tenants
in common, such ash disposal lines, water wells and water lines
and sewerage and/or drain lines as may be necessary and/or useful
in connection with the operation of Ohio's existing Tidd Station,
and to come upon any such parts of the Cardinal Station Site for
the purposes of ingress or egress to or from the Tidd Station
and/or for the operation of the Tidd Station, provided that the
placement of any such facilities and the entering by Ohio upon
such lands shall not interfere with the operation of any
facilities owned by Buckeye, or by Buckeye and Ohio as tenants in
common, at the Cardinal Station.
2.5 Neither Ohio nor Buckeye shall, so long as this
Agreement shall remain in effect, bring any action for partition
in respect of the Joint Land, the Common Land and/or the property
described in Appendix A as Initial Cardinal Station General
Facilities, as Initial Cardinal Station Common Facilities, and as
Additional Common Facilities.
2.6 (a) Ohio shall pay any property taxes applicable to
Ohio's Land, and to its improvements thereon, and Buckeye shall
pay any property taxes applicable to Buckeye's Initial Land and
Buckeye's Additional Land, and to its improvements thereon. Ohio
and Buckeye shall pay the property taxes applicable to their
respective ownership interests in the Joint Land, the Common
Land, and any improvements thereon, and in the General
Facilities. Ohio shall pay any property taxes applicable to the
Substation Land and to its improvements thereon, and Buckeye
shall pay any property taxes applicable to its improvements
located on the Substation Land.
(b) Each Owner agrees adequately to insure its respective
properties and property interests at the Cardinal Station,
whether held by it in its individual capacity or as tenant in
common with the other, with mutually agreeable coverage against
public liability losses resulting from fire, machinery breakdown,
explosion of pressure vessels and other risks customarily insured
against in the case of comparable power plant facilities and each
policy of insurance obtained by either Owner shall name the other
Owner and Operating Company as persons insured thereunder.
2.7 In the event that any adverse claim should be asserted
by any third party against the Cardinal Station Site or any part
thereof, whether owned by Ohio or Buckeye or Ohio and Buckeye as
tenants in common, which is based or purports to be based on an
alleged defect in title to the property constituting the subject
of such claim, Ohio and Buckeye shall cooperate in taking such
action as may be required to defend against such claim and shall
share equally all costs and expenses incurred in connection with
such claim and defense.
2.8 (a) In the event that the quantity of Surplus Capacity
which Ohio shall become obligated to purchase from Buckeye
pursuant to Section 10.2 shall equal or exceed 25% of Buckeye's
Additional Unit Capacity Reservation at the time in effect and if
at the beginning of any calendar quarter the sum of the Buckeye
Cardinal Monthly Demands for the preceding twelve calendar months
is less than 75% of the sum of the Buckeye Cardinal Monthly
Demands for the twelve calendar months ending with the month in
which the then effective Buckeye Cardinal Peak Demand was
established, then Ohio shall have the right and option,
exercisable at any time during the calendar quarter at the
beginning of which the aforesaid conditions existed to acquire
the property, property interests and facilities owned by Buckeye
and constituting part of the Cardinal Station at a price
determined as provided in subsection (e) of this Section. In the
event that the right and option granted to Ohio by this
subsection (a) shall mature at the beginning of any calendar
quarter and shall not be exercised by Ohio prior to the end of
such calendar quarter as herein provided, then the right to
exercise such right and option by reason of the conditions
existing at the beginning of such calendar quarter shall expire,
but the failure of Ohio to exercise such right and option on the
basis of conditions existing at the beginning of any particular
calendar quarter shall not affect its right to exercise such
right and option on the basis of conditions existing at the
beginning of any subsequent calendar quarter. The right and
option granted to Ohio by this subsection (a) shall terminate
upon termination of the obligation of Ohio to purchase Surplus
Capacity hereunder, whether such obligation be terminated by
termination of this Agreement, by mutual agreement between Ohio
and Buckeye, pursuant to Section 10.2 of this Agreement, or
otherwise, and, if Buckeye shall release Ohio from its obligation
to purchase Surplus Capacity hereunder, then Ohio may not, so
long as such release shall remain in effect, exercise the right
and option granted to it by this subsection (a). If the quantity
of Surplus Capacity to be purchased by Ohio hereunder shall equal
or exceed 25% of any theretofore established Buckeye Cardinal
Peak Demand, Buckeye may at any time and from time to time
release Ohio from its obligation to purchase such Surplus
Capacity, upon delivery of notice in writing to Ohio not less
than thirty nor more than ninety days prior to the effective date
of such notice, and any such release by Buckeye shall remain in
effect for not less than thirty-six months from the effective
date of the notice so given and may be terminated only by notice
in writing to Ohio not less than thirty-six months from the date
specified by Buckeye for termination thereof. In the event that
Ohio shall exercise the right and option granted to it by this
subsection (a) as herein provided, settlement shall be made, or
performance tendered, within sixty days after the date of such
exercise.
(b) In the event that either Buckeye's Initial Unit or
Buckeye's Additional Unit, or both, including associated
facilities, owned by Buckeye at the Cardinal Station is no longer
being utilized and is no longer intended to be utilized for the
purpose of furnishing electric power and energy required by the
Buckeye Members, and Buckeye shall have notified Ohio to that
effect and to the effect that it desires to dispose thereof, then
Ohio shall have the right and option, exercisable at any time
during the twelve-month period following the date of such notice,
to acquire such generating unit or units and associated
facilities at a price determined as provided in subsection (e) of
this Section; provided, however, that if at the date of any
notice given by Buckeye to Ohio as aforesaid all or any part of
the generating unit or units, including associated facilities, to
which such notice relates, is subject to the lien of the Buckeye
Mortgage or to any other lien securing indebtedness of Buckeye
for money borrowed, then such notice shall further state that
such generating unit or units and any such associated facilities
will be transferred and conveyed by Buckeye to Ohio upon exercise
by Ohio of the right and option granted to Ohio by this
subsection (b) free and clear of the lien of the Buckeye Mortgage
or of any such other lien; and provided further that the failure
of Buckeye to transfer such generating unit or units and such
associated facilities free and clear of the lien of the Buckeye
Mortgage or of any such other lien shall render null and void any
notice given by Buckeye to Ohio as aforesaid so that both Ohio
and Buckeye shall be restored to their respective positions prior
to the giving of such notice in all respects as though such
notice had not been given. In the event that the right and option
granted to Ohio by this subsection (b) shall mature as to any
generating unit owned by Buckeye at the Cardinal Station and
shall not be exercised by Ohio within the twelve-month period
herein specified for that purpose, then such right and option
shall terminate as to such generating unit following expiration
of said twelve-month period. The right and option granted to
Ohio by this subsection (b) shall run with the generating units
and associated facilities owned by Buckeye at the Cardinal
Station, shall be binding upon successors in title, shall survive
the termination of this Agreement for any reason and shall
continue in full force and effect until terminated as provided in
subsection (g) of this Section.
(c) In the event that the net worth of Buckeye shall, at any
time, fail to equal at least the amount, if any, by which the
price payable by Ohio for the property, property interests and
facilities properly recorded by Buckeye in Account 101 of the
Uniform System of Accounts determined as provided in subsection
(e) of this Section shall be less than the total amount
(including accrued interest, if any) which Buckeye would then be
required to pay to redeem, at the principal amount thereof and
the then applicable Regular Redemption Premium (as such term is
defined in the Buckeye Mortgage), all the bonds outstanding under
the Buckeye Mortgage, Ohio shall have the right and option,
exercisable within 150 days after the later of (i) the occurrence
of such event, and (ii) the date on which Ohio shall receive from
Buckeye the balance sheet or other financial statements referred
to below indicating the occurrence of such event, to purchase all
of the property, property interests and facilities owned by
Buckeye and recorded in said Account 101 at a price determined as
provided in subsection (e) of this Section; provided, however,
that this right and option shall not be exercisable by Ohio (I)
unless Ohio has first given written notice to Buckeye that it
proposes to exercise such option and Buckeye shall not have
established to the reasonable satisfaction of Ohio within 90 days
after receipt of such notice from Ohio that the deficiency in the
net worth of Buckeye giving rise to the right to exercise such
right and option has been remedied by Buckeye or (II) during any
period of time when Ohio is in default in the performance of its
obligations under any agreement to which it is a party and which
is part of the property mortgaged and pledged under the Buckeye
Mortgage and provided further that for the purposes of this
subsection (c) "net worth of Buckeye" shall mean as of any time
of computation, an amount equal to the aggregate amounts properly
recorded by Buckeye in the Proprietary Capital Accounts of the
Uniform System of Accounts after giving effect to the aggregate
of the credits or debits properly transferable from Accounts 433,
434, 435, 436, 437 and 438, exclusive of any charges arising from
amounts recorded in Account 114 by reason of acquisition of
Buckeye's Initial Unit by Buckeye as may be prescribed or allowed
by regulatory authority. The amount of income to be periodically
transferred to the Proprietary Capital Accounts is to be
calculated after provision for depreciation expense on the basis
of straight line depreciation of depreciable property at the rate
of three per cent per annum from the time of acquisition of such
property by Buckeye. Buckeye shall within 120 days after the end
of each fiscal year deliver to Ohio a balance sheet of Buckeye as
at the end of such fiscal year, certified by an independent
certified public accountant to have been prepared in accordance
with the Uniform System of Accounts, and accompanied by a
certificate of such independent certified public accountant
specifying the net worth of Buckeye as at the end of such fiscal
year, and shall also deliver to Ohio copies of all financial
statements delivered to the holders of bonds outstanding under
the Buckeye Mortgage pursuant to the Bond Purchase Agreements
dated April 1, 1968 between Buckeye and the purchasers of such
Bonds substantially concurrently with the delivery thereof by
Buckeye to such holders. In the event that Ohio shall exercise
the right and option granted to it by this subsection (c) as
herein provided settlement shall he made, or performance
tendered, within thirty days after the date of such exercise.
(d) In the event of the occurrence of a completed default
under the Buckeye Mortgage as such term is therein defined (other
than a completed default under subdivision (i) of Section 11.01
of the Buckeye Mortgage or default by Ohio in the performance of
its obligations under any agreement to which it is a party and
which is part of the property mortgaged and pledged under the
Buckeye Mortgage), Ohio shall have the right and option,
exercisable at any time during a period of thirty days commencing
with the sixty-first day and ending at the close of business on
the ninetieth day (or at the close of business on the next
business day following the ninetieth day if such day shall not he
a business day in either of New York City or Columbus, Ohio)
following the date of receipt by Ohio of a written notice from
(i) the Trustees under the Buckeye Mortgage, or either of them,
or (ii) any holder or holders of a majority in principal amount
of any series of bonds outstanding under the Buckeye Mortgage,
whichever such notice shall be earlier received, that said
Trustees, or either of them, propose to sell, or foreclose and
sell, all or a substantial part of the property, property
interests or facilities mortgaged and pledged under the Buckeye
Mortgage pursuant to the provisions of the Buckeye Mortgage, or
the provisions of applicable law, or otherwise, or that a
receiver, trustee in bankruptcy or comparable entity proposes to
sell all or a substantial part of the property, property
interests and facilities of Buckeye at public or private sale, to
acquire all of the property, property interests and facilities
owned by Buckeye at the Cardinal Station at a price determined as
provided in subsection (e) of this Section; provided, however,
that if at the date of receipt by Ohio of said written notice
Buckeye shall be contesting in good faith and by appropriate
legal proceedings the occurrence of such completed default under
the Buckeye Mortgage or the right of said Trustees, or either of
them, or such receiver, trustee in bankruptcy or comparable
entity, to sell all or any such part of such property, property
interests and facilities and shall give written notice to Ohio to
that effect not later than fifteen days after delivery of the
aforesaid notice from said Trustees, then the right and option
granted to Ohio by this subsection (d) shall be exercisable at
any time during a period of ninety days following the date of
receipt by Ohio of written notice from (a) said Trustees, or
either of them, or (b) any holder or holders of a majority in
principal amount of any series of bonds outstanding under the
Buckeye Mortgage, whichever notice shall be earlier received,
that (i) such proceedings have been terminated prior to the entry
of a final order therein under circumstances which will enable
the Trustees, or either of them, or such receiver, trustee in
bankruptcy or comparable entity, to proceed with such sale or
foreclosure and sale and that the Trustees, or either of them,
propose so to do, or (ii) an order in such proceedings
establishing the right of the Trustees, or either of them, or
such receiver, trustee in bankruptcy or comparable entity, to
proceed with such sale or foreclosure and sale, has become final
and is not subject to appeal, and that the Trustees, or either of
them, or such receiver, trustee in bankruptcy or comparable
entity, propose to proceed with such sale or such foreclosure and
sale; and provided, further, that, subject to the provisions of
subsection (g) of this Section, the right and option of Ohio
granted by this subsection (d) shall be automatically suspended
and shall not thereafter be exercisable on the basis of the
completed default or defaults under the Buckeye Mortgage giving
rise to the existence thereof in the event that prior to any
election by Ohio to exercise such option all such defaults under
the Buckeye Mortgage shall have been cured and full rights to
possession and use of such property shall have been restored to
Buckeye. In the event that Ohio shall exercise the right and
option granted to it by this subsection (d) as herein provided,
settlement shall be made, or performance tendered, within thirty
days after the date of such exercise.
(e) The price to be paid by Ohio for any property, property
interests and facilities acquired by it from Buckeye upon
exercise of any of the rights and options granted by subsections
(a), (b), (c) or (d) of this Section shall be that amount which
is equal to the sum of (i) the cost to Buckeye of any
non-depreciable assets included in the property, property
interests and facilities so to be acquired, and (ii) the
depreciated value, determined as provided in Appendix F hereto,
of the depreciable assets included therein. In the event that
Ohio does so purchase any such property, property interests or
facilities it shall also purchase Buckeye's fuel stock and
inventory of materials and supplies on hand at the Cardinal
Station at a price equal to the cost thereof to Buckeye. The
amounts payable by Ohio in respect of any of the foregoing
transactions shall be reduced by such amount as may be required
adequately to provide for the payment of any sales, excise or
documentary stamp taxes payable in connection therewith which are
required by law to be paid by Ohio, and all such taxes not so
required to be paid by Ohio shall be paid by Buckeye.
(f) Following termination of the right and option granted to
Ohio by subsection (b) of this Section as to any generating unit
owned by Buckeye at the Cardinal Station, whether by reason of
lapse of time or otherwise as provided in said subsection (b),
and so long thereafter until terminated as provided in subsection
(g) of this Section as Buckeye shall own one or more generating
units at the Cardinal Station, Ohio shall have a "right of first
refusal" in respect of any such generating unit, including
associated facilities, for which Buckeye shall have received an
offer to purchase by a third party which Buckeye is willing to
accept. In order to make effective the aforesaid "right of first
refusal", it is understood that any such offer to purchase (i)
must be submitted to Ohio on the basis of a purchase price
measured in dollars, payable either wholly in cash or permitting
of payment partly in cash and partly on a deferred cash payment
basis, (ii) must be accompanied when submitted to Ohio by a
representation of Buckeye that an offeror is prepared to enter
into a binding contract for the purchase of such facilities on
the terms stated, and (iii) shall specify the condition of title
to be delivered, except that if at the date such offer is
submitted by Buckeye to Ohio all or any part of the generating
unit or units, including associated facilities, to which such
offer relates is subject to the lien of the Buckeye Mortgage or
to any other lien securing indebtedness of Buckeye for money
borrowed, then the submission thereof to Ohio shall further
specify that such generating unit or units and any such
associated facilities will be transferred and conveyed by Buckeye
to Ohio upon exercise by Ohio of the "right of first refusal"
granted to Ohio by this subsection (f) free and clear of the lien
of the Buckeye Mortgage or of any such other lien, and, in such a
case, the failure of Buckeye to transfer such generating unit or
units and such associated facilities free and clear of the lien
of the Buckeye Mortgage or of any such other lien shall render
null and void any submission and notice by Buckeye to Ohio
relating thereto made as herein provided, so that both Ohio and
Buckeye shall be restored to their respective positions prior to
such submission and notice in all respects as though such
submission and notice had not been given. If and when Buckeye
shall receive an offer on terms of the character referred to
above which it is willing to accept, Buckeye shall notify Ohio to
that effect, specifying in detail the terms of such offer, and
Ohio shall have sixty days thereafter within which it may elect
to purchase the generating unit or units and associated
facilities to which such offer relates upon the same terms,
except as otherwise provided in this subsection (f). If Ohio
shall elect to purchase such generating unit or units and
associated facilities it shall notify Buckeye to that effect
within such sixty-day period and delivery of such notice by Ohio
to Buckeye shall constitute a binding contract between Buckeye
and Ohio for the sale and purchase thereof upon the terms
submitted to Ohio by Buckeye as aforesaid. The "right of first
refusal" granted to Ohio by this subsection (f) shall survive the
termination of this Agreement for any reason and shall continue
in full force and effect until terminated as provided in
subsection (g) of this Section.
(g) Notwithstanding any of the provisions contained in
subsections (a), (b), (c), (d) and (f) of this Section, the
rights and options granted to Ohio thereby shall have no force or
effect (i) from and after the expiration of the period beginning
at the date of this Agreement and ending at a date 21 years after
the death of the last survivor of the following named persons, to
wit:
Deborah Ann Manning.................. Coshocton, Ohio
Tammy Wyckoff........................ Hillsboro, Ohio
Edson G. Kindler..................... Lancaster, Ohio
Andrew P. Mone....................... Columbus, Ohio
Kevin Erman.......................... Coshocton, Ohio
Michelle Legg........................ Hillsboro, Ohio
Victoria Lynn Wuchnick............... North Canton, Ohio
Valerie Lynn Fowler.................. Tiffin, Ohio
Linda Colloredo...................... Minerva, Ohio
Michael Scott Terry.................. Findlay, Ohio
Barry Smith.......................... Lima, Ohio
Mark Schonhar........................ Newark, Ohio
or (ii) from and after that date on which the right and option of
Ohio under subsection (d) of this Section shall expire in
accordance therewith; provided, however, that if the right and
option conferred upon Ohio by said subsection (d) shall be
suspended under the conditions therein specified, or if the
Trustees under the Buckeye Mortgage or a receiver, trustee in
bankruptcy or comparable entity shall not sell all or a
substantial part of the property, property interests and
facilities of Buckeye as proposed in the written notice delivered
to Ohio as therein provided for the reason that all completed
defaults under the Buckeye Mortgage shall have been cured or
waived in writing prior to completion of such sale, then the
rights and options granted to Ohio by subsections (a), (b), (c),
(d) and (f) of this Section shall again become effective and
shall continue in full force and effect in accordance with the
provisions of said subsections unless or until terminated as
provided in clause (i) or clause (ii) of this subsection.
(h) Buckeye agrees that it will not dispose of any
generating unit or units owned by it at the Cardinal Station
except (i) to Ohio upon exercise of either of the rights and
options granted to it by subsections (a), (b), (c) and (d) of
this Section or (ii) to Ohio in accordance with Ohio's "right of
first refusal" described in subsection (f) of this Section, or
(iii) to the offeror in accordance with the terms of an offer
first submitted to Ohio pursuant to Ohio's aforesaid "right of
first refusal" but not accepted by Ohio. If Ohio does not elect
to accept any offer submitted to it pursuant to Ohio's aforesaid
"right of first refusal" and the offeror fails thereafter to
complete the purchase on the terms specified in the notice
relating thereto given by Buckeye to Ohio within a period of one
year, then Buckeye shall notify Ohio to that effect and Ohio's
"right of first refusal" shall thereafter be effective in
accordance with the provisions of subsection (f) of this Section
in respect of such offer or any other offer to purchase the same
facilities upon terms which Buckeye may be willing to accept,
whether by such offeror or by another third party. The
provisions of this subsection shall not apply to the mortgaging
of the property, property interests and facilities of Buckeye
under the Buckeye Mortgage including the mortgaging of any such
property, property interests and facilities pursuant to the
after-acquired property clauses of the Buckeye Mortgage.
(i) Buckeye agrees that, concurrently with the acquisition
by Ohio from Buckeye of any property, property interests or
facilities upon exercise by Ohio of any of the rights and options
provided for in subsections (a), (c) and (d) of this Section,
Buckeye will make such payments to the Trustees under the Buckeye
Mortgage and will take such other and further action as may be
required to effect the release of such property, property
interests and facilities from the lien of the Buckeye Mortgage.
In the event that Buckeye should fail to make any such payment or
to take any such action, then Ohio shall be entitled, at its
election, (1) to make such payment or to take such action for the
account and on behalf of Buckeye and as attorney-in-fact for
Buckeye, its authorization and appointment to act as such
attorney-in-fact being hereby irrevocably confirmed, or (2) to
assume (provided that unsecured fixed interest obligations of
Ohio then constitute, under the New York Insurance Law,
permissible investments for mutual life insurance companies
domiciled in the State of New York (other than subdivision 17 of
Section 81 thereof or any other so-called "basket" or "leeway"
provisions thereof), by an instrument in writing delivered to the
Trustees under the Buckeye Mortgage on the settlement date, the
obligations of Buckeye to pay when due the principal of, premium,
if any, and accrued interest on all bonds outstanding under the
Buckeye Mortgage and to pay any other amount required to be paid
by Buckeye under the Buckeye Mortgage; provided that such
instrument shall be in form and substance satisfactory to the
holders of 66 2/3% in principal amount of each series of Bonds
outstanding under the Buckeye Mortgage and that the Trustees
under the Buckeye Mortgage shall have received (I) an opinion of
counsel in form and substance and of counsel satisfactory to such
holders that such instrument has been duly authorized, executed
and delivered by Ohio and constitutes the valid and binding
obligation of Ohio enforceable in accordance with its terms
(subject to applicable bankruptcy, insolvency or other laws
affecting creditors' rights generally) and (II) evidence in form
and substance satisfactory to such holders that unsecured fixed
interest obligations of Ohio then constitute, under the New York
Insurance Law, permissible investments for mutual life insurance
companies domiciled in the State of New York (other than
subdivision 17 of Section 81 thereof or any other so-called
"basket" or "leeway" provisions thereof). In the event that Ohio
shall, in any such case, assume pursuant to this subsection (i)
the obligations of Buckeye to pay when due the principal of,
premium, if any, and accrued unpaid interest on all bonds
outstanding under the Buckeye Mortgage and to pay any other
amount required to be paid by Buckeye under the Buckeye Mortgage,
(A) there shall be credited against the amount otherwise payable
by Ohio for the property, property interests, facilities, fuel
stock and inventory of materials and supplies to be acquired by
Ohio, determined as provided in subsection (e) of this Section,
the total amount (including premium, if any, and any accrued
interest) which Buckeye would then be required to pay to redeem,
pursuant to the provisions of the Buckeye Mortgage applicable in
the circumstances then obtaining, all of the bonds outstanding
under the Buckeye Mortgage and to effect the satisfaction and
discharge of the Buckeye Mortgage pursuant to the terms thereof,
such full amount being referred to below in this subsection (i)
as "Ohio's purchase price credit" and (B) Buckeye shall, upon
request by Ohio so to do, assign, transfer and convey to Ohio on
the settlement date subject to the rights of the Trustees, or
either of them, under the Buckeye Mortgage, all the right, title
and interest of Buckeye in, to and under, and in and to any funds
due or to become due under, this Agreement, the Power Delivery
Agreement, the Wholesale Power Agreements (as such term is
defined in the Power Delivery Agreement), the Buckeye Mortgage
and/or the bonds issued thereunder. Ohio shall be entitled to
recover from Buckeye and Buckeye shall be obligated to pay to
Ohio the full amount of any payment made by Ohio pursuant to
clause (1) above and the full amount of all expenses reasonably
incurred by Ohio in connection with the making of such payment or
the taking of any other action on behalf of Buckeye to effect the
release of the property, property interests and facilities so
acquired by Ohio from the lien of the Buckeye Mortgage pursuant
to the authority conferred upon Ohio hereby or in the event that
Ohio shall assume the obligations of Buckeye specified in clause
(2) above as therein provided and Ohio's purchase price credit
shall exceed the amount otherwise payable by Ohio for the
property, property interests, facilities, fuel stock and
inventory of materials and supplies so acquired by Ohio,
determined as provided in subsection (e) of this Section, the
full amount of such excess. Buckeye further agrees that it will
not, so long as the right and option granted to Ohio by
subsection (c) of this Section shall remain in effect, make any
distribution or other payment to any Buckeye Member under
circumstances such that the effect thereof will be to reduce the
net worth of Buckeye to an amount such that the right and option
granted to Ohio by said subsection (c) would then become
exercisable by Ohio and that, if Buckeye shall become obligated
to make any payment or payments to the Trustees under the Buckeye
Mortgage or to Ohio as provided in this subsection (i), it will
not make any distribution or other payment to any Buckeye Member
until all payments so required to be made shall have been paid in
full.
(j) The rights and options provided for in subsections (a),
(b), (c), (d) and (f) of this Section are and shall be subject
and subordinate in all respects to the lien of the Buckeye
Mortgage and, subject only to the condition that, in the case of
the right and option provided for in subsection (d) of this
Section, the subordination thereof to the lien of the Buckeye
Mortgage shall not be effective in the event that Ohio shall fail
to receive a written notice from the Trustees under the Buckeye
Mortgage, or either of them, or the holders of bonds outstanding
thereunder as specified in said subsection (d) in respect of any
proposed sale of all or a substantial part of the property
mortgaged and pledged under the Buckeye Mortgage, and the Buckeye
Mortgage shall constitute a lien on, and security interest in,
all of the property mortgaged and pledged thereunder until (i)
such property or part thereof shall be released from the lien of
the Buckeye Mortgage pursuant to the terms and provisions
thereof, or (ii) the Buckeye Mortgage shall be satisfied and
discharged as therein provided. This subsection shall be
self-operative and no further instrument evidencing the aforesaid
subordination shall be required. In confirmation of such
subordination, Ohio shall promptly execute and deliver any
instrument that the Trustees, or either of them, under the
Buckeye Mortgage may reasonably request to evidence such
subordination and Ohio hereby irrevocably appoints each said
Trustee the attorney-in-fact of Ohio to execute and deliver such
instrument on behalf of Ohio, should Ohio refuse or fail to do so
promptly after request. If the Trustees, or either of them, or a
receiver, trustee in bankruptcy or comparable entity, shall enter
into or take possession of the property, property interests and
facilities owned by Buckeye at the Cardinal Station under any
provision of the Buckeye Mortgage or of applicable law or
otherwise, such entering into or taking of possession shall not,
of itself, affect the options and rights provided for in
subsections (a), (b), (c), (d) and (f) of this Section, and,
provided that Ohio shall have complied with all terms and
conditions of this Agreement on Ohio's part to be kept, observed
and performed, Ohio shall continue to be entitled to the benefits
of said options and rights upon all the terms, covenants and
conditions set forth in this Agreement until termination thereof
as provided in subsection (g) of this Section.
(k) If the Buckeye Mortgage shall be executed, delivered and
recorded, and written notice of the assignment by Buckeye of this
Agreement to the corporate trustee under the Buckeye Mortgage
shall be delivered to Ohio, Ohio shall (unless it shall be
notified in writing by the corporate trustee under the Buckeye
Mortgage that the Buckeye Mortgage has been satisfied and
discharged of record) make any payment (Buckeye hereby consenting
to any such payment by Ohio) required to be made by Ohio pursuant
to the exercise by Ohio of any of the rights and options granted
by subsections (a), (b), (c), (d) and (f) of this Section
directly to such corporate trustee and, in such event, Ohio shall
not be responsible to Buckeye for any misuse or misapplication by
said corporate trustee of any funds so paid by Ohio directly to
said corporate trustee.
ARTICLE THREE.
Retirements, Replacements and Additions.
3. Effective as of the Effective Date of Amendment No. 1 to
the Station Agreement, delete Sections 3.1, 3.2, 3.3 and 3.4 of
the Station Agreement in their entirety and in lieu thereof
substitute the following:
3.1 (a) When a Property Unit is retired from service, the
investment in such Property Unit shall for the purpose of all
computations under this Agreement be removed from the applicable
plant investment account of the Owner thereof or the Owners, as
the case may be, and from any related reserve for depreciation,
as of the out-of-service date of such Property Unit.
(b) When a Property Unit is placed in service replacing a
retired Property Unit, or when a Property Unit is placed in
service but not as a replacement, the original investment in such
replacement or additional Property Unit, as the case may be,
shall for the purpose of all computations made under this
Agreement be added to the plant investment of the Owner thereof
or the Owners, as the case may be, as of the in-service date of
such Property Unit.
(c) A removal, change or supplement of an item of property
which, of itself, consists of less than an entire Property Unit
shall not be deemed to constitute a retirement, replacement or
addition of a Property Unit, and any expense involved therein
shall constitute maintenance expense.
3.2 Operating Company shall, from time to time, recommend to
the Owners action to be taken in connection with the retirement,
replacement or addition of Property Units to any portion of the
Cardinal Station and shall have the right, on behalf of the
Owners, to make or cause to be made recommended retirements,
replacements or additions of Property Units in their respective
portions of the Cardinal Station; provided, however, that no
single retirement, replacement or addition of a Property Unit
involving an investment exceeding $50,000 in amount shall be made
by Operating Company except with the prior approval of the Owner
or Owners, as the case may be, which approval shall not be
unreasonably withheld. Each Owner shall be obligated to make
such replacements and additions as shall be required by law. In
addition, either Owner may make other retirements, replacements
or additions of Property Units in its portion of the Cardinal
Station on its own responsibility and at its own expense, subject
to approval thereof by the other Owner. The cost of any
retirement, replacement or addition of a Property Unit in any
portion of the Cardinal Station other than the jointly owned
General Facilities shall be borne by the Owner thereof. The cost
of any retirement,replacement or addition of a Property Unit in
the General Facilities shall be shared by the Owners in
proportion to their then respective interests in the General
Facilities.
3.3 Any removal, change or supplement involving an item of
property which is not a Property Unit shall be the responsibility
of Operating Company and any expense involved therein shall
constitute maintenance expense.
3.4 Upon any revision of the Retirement Unit List, the
revised Retirement Unit List shall be substituted for the
Retirement Unit List then in effect unless Buckeye shall, within
twenty days after delivery to it of notice of such revision,
advise Ohio that it objects thereto.
ARTICLE FOUR
Major Spare Parts.
4. Effective as of the Date of Commercial Operation of
Buckeye's Additional Unit, delete Sections 4.1, 4.2, 4.3, 4.4,
4.5, 4.6 and 4.7 of the Station Agreement in their entirety and
in lieu thereof substitute the following:
4.1 Ohio shall purchase and own Major Spare Parts
interchangeable, to the extent specified in Appendix E hereto,
with equivalent parts of Ohio's Initial Unit and Buckeye's
Initial Unit and/or Buckeye's Additional Unit, and shall also
purchase and own such other spare parts as Ohio and Buckeye may
from time to time mutually agree to include in the category of
Major Spare Parts. Buckeye agrees that its approval of any such
inclusion shall not be unreasonably withheld.
4.2 Ohio agrees that, if and when any Ohio Associate
constructs and owns a generating unit (or units) for which parts
are interchangeable with the Major Spare Parts, or if and when
Ohio constructs and owns a generating unit (or Units) for which
parts are interchangeable with the Major Spare Parts, it will
arrange to interchange Major Spare Parts owned by it with such
interchangeable parts owned by such Ohio Associate so that
duplication of investment in expensive spare parts may be
minimized. Accordingly, when a Major Spare Part is owned by an
Ohio Associate, Ohio shall not be obligated under Section 4.1 to
purchase and own a duplicate thereof.
4.3 Ohio hereby extends to Buckeye the right to use any of
the Major Spare Parts for Buckeye's Units and it will extend to
Buckeye its rights and obligations in respect of any major spare
parts arrangements from time to time existing between Ohio and
Ohio Associates. Buckeye hereby agrees to accept such rights and
obligations, which it is understood shall be as follows.
(a) If at any time Buckeye has need of a Major Spare
Part to replace an equivalent item which has been damaged, the
owner of such Major Spare Part shall make such Major Spare Part
available for Buckeye's use (at the location where such Major
Spare Part is stored) as expeditiously as possible; provided,
however, that if Ohio or an Ohio Associate also develops a need
for such Major Spare Part prior to the time of the actual
installation thereof in one of the Buckeye Units, the owner of
the generating unit having the highest net capability for which
such Major Spare Part is required shall have prior claim to the
use of such Major Spare Part, and in the event such net
capabilities are equal, the owner of the item equivalent to such
Major Spare Part which was damaged earliest shall have prior
claim to the use of such Major Spare Part.
(b) If an Owner uses a Major Spare Part to replace an
equivalent item which has been damaged, such Owner shall have an
obligation to cause the repair of such damaged item, or to
acquire a new item in place thereof, if necessary, as
expeditiously as possible, and to transfer the repaired item, or
new item, as the case may be, to the original owner for such
Major Spare Part at its original location.
(c) If the damaged item can be repaired, the cost of
loading, freighting, unloading and freight charges in respect of
such Major Spare Part and/or damaged item, and the costs of
removal of, and repairs made to, such damaged item, together with
all incidental expenses related thereto, shall be a part of the
Cardinal Station Monthly Maintenance Cost.
(d) If the damaged item has been damaged beyond repair,
and if such damaged item is a Property Unit, the entire cost of
the retirement and replacement of such damaged item shall be
borne by Ohio and Buckeye in proportion to their respective
ownership interests in such Property Unit; if, however, such
damaged item is less than a Property Unit, the costs associated
with its removal, and the acquisition of a new item in place
thereof, shall be a part of the Cardinal Station Monthly
Maintenance Cost.
4.4 (a) Buckeye shall pay to Ohio in respect of the rights
extended by Ohio as provided in Section 4.3 a monthly charge for
each Major Spare Part associated with Buckeye's Initial Unit
equal to the product of (i) 0.011042, (ii) the total gross
investment (i.e., the aggregate purchase price including freight,
excise taxes, etc.) of Ohio and Ohio Associates in such Major
Spare Part, (iii) the quotient obtained by dividing the sum of
(A) 115% of Buckeye's Initial Cardinal Station Capacity
Reservation and (B) 115% of Buckeye's Supplementary Power Demand,
if any, by (C) the Total Net Capability of Buckeye's Initial
Unit, and (iv) the quotient of (D) one, divided by (E) the total
number of generating units of Ohio and any Ohio Associate which
are then in commercial operation, for which such Major Spare Part
is interchangeable, plus one.
(b) Commencing with the Date of Commercial Operation of
Buckeye's Additional Unit, Buckeye shall pay to Ohio in respect
of the rights extended by Ohio as provided in Section 4.3 a
monthly charge for each Major Spare Part associated with
Buckeye's Additional Unit equal to the product of (i) 0.011042,
(ii) the total gross investment (i.e., the aggregate purchase
price including franchise, excise taxes, etc.) of Ohio and Ohio
Associates in such Major Spare Part, (iii) the quotient obtained
by dividing the sum of (A) 115% of Buckeye's Additional Unit
Capacity Reservation and (B) 115% of Buckeye's Supplementary
Power Demand, if any, by (C) the Total Net Capability of
Buckeye's Additional Unit, and (iv) the quotient for such month
of (D) the number of items of equipment at the Additional
Cardinal Station which can be interchanged with a particular
Major Spare Part, divided by (E) the total number of the items of
equipment at the generating units of Ohio and any Ohio Associate
and at the Additional Cardinal Station which can be interchanged
with such Major Spare Part.
(c) In addition, Buckeye shall pay to Ohio an amount in
dollars sufficient to reimburse Ohio for any amounts paid or
payable by it as sales, excise or similar taxes (other than taxes
based on or measured by net income) in respect of the total
amount paid by Buckeye pursuant to this Section and to enable
Ohio, after provision for such taxes, to realize the net amount
payable by Buckeye as herein provided. Buckeye shall also make
available to the extent that it is practicable to do so space
within its portion of Cardinal Station for the storage of Major
Spare Parts. In the event that any amounts paid or payable by
Buckeye to Ohio pursuant to this Section shall at any time become
subject to any income or similar tax based on or measured by net
income levied by any State or subdivision thereof, then the
amount payable hereunder shall be increased by an additional
amount which, after provision for the payment of such tax, will
net the amount otherwise payable hereunder.
4.5 Ohio shall invoice Buckeye promptly for the monthly
charge to be paid by Buckeye pursuant to Section 4.4 and such
invoices shall be paid within fifteen (15) days after receipt
thereof by Buckeye. Interest shall be paid by Buckeye at the
rate of 6% per annum on any amount overdue.
4.6 Buckeye agrees that it will purchase and maintain a
suitable stock of spare parts for Buckeye's Initial Substation
Facilities and Buckeye's Additional Substation Facilities in
accordance with the practices employed by Ohio for the
maintenance of spare parts for comparable substation facilities
at other generating stations of Ohio.
ARTICLE FIVE.
Working Capital Requirements.
5. Effective as of the Date of Commercial Operation of
Buckeye's Additional Unit, delete Sections 5.1, 5.2, 5.3 and 5.4
of the Station Agreement in their entirety and in lieu thereof
substitute the following:
5.1 The Owners shall provide the funds required for use as
working capital in meeting payrolls and other expenses incurred
in the operation and maintenance of the Cardinal Station, and in
buying materials and supplies, and the Owners hereby authorize
Operating Company as their agent to draw upon such funds for
expenditures on their behalf necessary to operate and maintain
Cardinal Station.
5.2 Buckeye shall provide its appropriate share of working
capital requirements, other than for fuel, in the ratio of the
sum of (a) 115% of Buckeye's Initial Cardinal Station Capacity
Reservation and (b) 115% of Buckeye's Additional Unit Capacity
Reservation to the Total Net Capability of the Cardinal Units
and, subject to Section 5.3, Ohio shall provide the balance.
Each Owner shall make the requisite funds available by cash
payments directly to Operating Company, by deposits to bank
accounts established by Operating Company, by investing in
materials and supplies, by prepayments, by purchase of spare
parts, or by a combination of such methods as may be agreed to
between the Owners from time to time.
5.3 During any period in which Buckeye shall be purchasing
Buckeye's Supplementary Power from Ohio hereunder, Buckeye shall
provide, in addition to the portion of working capital
requirements to be provided by it pursuant to Section 5.2, a
further portion of such working capital requirements, other than
for fuel, in the ratio of 115% of Buckeye's Supplementary Power
Demand and Buckeye's Excess Supplementary Power Demand, if any,
to the Total Net Capability of the Cardinal Units, and Ohio shall
provide the balance in excess of the total of the amounts
provided by Buckeye in accordance with Section 5.2 and this
Section 5.3.
ARTICLE SIX.
Investment in Fuel.
6. Effective as of the Effective Date of Amendment No. 1 to
the Station Agreement, delete Sections 6.1, 6.2, 6.3, 6.4 and 6.5
of the Station Agreement in their entirety and in lieu thereof
substitute the following:
6.1 It is recognized by the Owners that a reasonable amount
of coal in stock is desirable for the Cardinal Station at all
times in order to provide adequate fuel reserves against
interruptions of normal fuel supply. The Owners agree to
establish and maintain such reserves of coal in stock of such
quality and in such quantities as Operating Company shall
determine to be required for that purpose, including reserves
required to be established prior to the Date of Commercial
Operation of Buckeye's Additional Unit.
6.2 Each Owner shall invest directly in a portion of coal in
stock for the Initial Cardinal Station as follows:
(a) Buckeye shall make such monthly investments in the
Initial Cardinal Station Coal Stock as are necessary to maintain
its ownership, after taking into account the consumption by
Buckeye of its share of the Initial Units Monthly Coal
Requirement, of that number of tons of coal in the storage pile
or piles equal to the product of (i) the ratio of the total
Buckeye's Initial Unit Monthly Energy for the preceding
twelve-month period to the Total Net Generation of the Initial
Units for the preceding twelve-month period, and (ii) the total
tons of coal in the Initial Cardinal Station Coal Stock.
(b) Ohio shall make such monthly investments in the
Initial Cardinal Station Coal Stock as are necessary to maintain
its ownership, after taking into account the consumption by Ohio
of its share of the Initial Units Monthly Coal Requirement, of
that number of tons of coal in the storage pile or piles equal to
the product of (i) the ratio of the total Ohio Initial Units
Monthly Energy for the preceding twelve-month period to the Total
Net Generation of the Initial Units for the preceding
twelve-month period, and (ii) the total tons of coal in the
Initial Cardinal Station Coal Stock.
6.3 Each Owner shall invest directly in a portion of coal in
stock for the Additional Cardinal Station as follows:
(a) Buckeye shall make such monthly investments in the
additional Cardinal Station Coal Stock as are necessary to
maintain its ownership, after taking into account the consumption
by Buckeye of its share of the Buckeye's Additional Unit Monthly
Coal Requirement, of that number of tons of coal in the storage
pile or piles equal to the product of (i) the ratio of the total
Buckeye's Additional Unit Monthly Energy for the preceding
twelve-month period to the Total Net Generation of Buckeye's
Additional Unit for the preceding twelve-month period, and (ii)
the total tons of coal in the Additional Cardinal Station Coal
Stock. In addition, Buckeye shall make the total investment in
the coal required for the generation of power by Buckeye's
Additional Unit during the test period prior to the Date of
Commercial Operation of Buckeye's Additional Unit.
(b) Ohio shall make such monthly investments in the
Additional Cardinal Station Coal Stock as are necessary to
maintain its ownership, after taking into account the consumption
by Ohio of its share of Buckeye's Additional Unit Monthly Coal
Requirement, of that number of tons of coal in the storage pile
or piles equal to the product of (i) the ratio of the total Ohio
Additional Unit Monthly Energy for the preceding twelve-month
period to the Total Net Generation of Buckeye's Additional Unit
for the preceding twelve-month period, and (ii) the total tons of
coal in the Additional Cardinal Station Coal Stock.
6.4 The parties recognize that under certain circumstances
it may be more equitable to establish the number of tons of coal
in stock for Buckeye and Ohio on the basis of twelve-month
forecasts of Buckeye's Initial Unit Monthly Energy and Buckeye's
Additional Unit Monthly Energy requirements and Ohio's Initial
Units Monthly Energy and Ohio Additional Unit Monthly Energy
requirements, respectively, instead of on the basis of the
preceding twelve-month period, and agree that the Operating
Company may from time to time employ such alternative method.
6.5 Fuel oil reserves and fuel oil charged to operation
shall be owned and accounted for between the Owners in the same
manner as coal by converting the quantities and costs of such
fuel oil to the basis of equivalent tons of coal.
6.6 Operating Company shall take such steps as are necessary
to keep the Initial Cardinal Station Coal Stock separate and
apart from the Additional Cardinal Coal Stock and shall keep
separate records of the respective investments of the Owners
therein.
ARTICLE SEVEN.
Apportionment of Station Costs.
7. Effective as of the Date of Commercial Operation of
Buckeye's Additional Unit, delete Sections 7.1, 7.2, 7.3, 7.4,
7.5 and 7.6 in their entirety and in lieu thereof substitute the
following:
7.1 Operating Company shall keep books of record and
accounts, on the same basis for each Owner, covering the sums of
money expended for the account of each Owner in operating and
maintaining Cardinal Station. The allocation of expenses between
the Owners shall be made in the manner set forth in Sections 7.2,
7.3 and 7.4, the actual allocation to be made by Operating
Company.
7.2 The allocation of all costs with respect to fuel supply
for the Cardinal Station shall be accounted for separately for
the Initial Cardinal Station and for the Additional Cardinal
Station.
(a) With respect to the Initial Cardinal Station:
(i) All coal delivered to each Owner during a calendar
month shall be charged to such Owner's fuel in stock at the
average delivered unit cost of all coal delivered to Initial
Cardinal Station during such month, and, in addition, each
Owner's fuel in stock shall be charged in each month with the
total coal unloading costs incurred by Operating Company for such
month in the ratio of tons of coal delivered for each Owner.
Each Owner's fuel in stock shall also be charged in each month
with the total coal storage costs incurred by Operating Company
in such month in the ratio of tons of coal in stock for each
Owner at the end of such month.
(ii) The Initial Units Monthly Coal Requirement shall
be divided between Buckeye and Ohio in the same ratio for each
month as Buckeye's Initial Unit Monthly Energy and Ohio's Initial
Units Monthly Energy, respectively, bear to the Total Net
Generation of the Initial Units for such month. Each Owner's
share of the Initial Units Monthly Coal Requirement shall be
separately converted into a dollar amount by using the average
cost per ton of coal in such Owner's fuel in stock at the close
of such month and such dollar amount will then be credited to
such Owner's fuel in stock and charged to such Owner's fuel
consumed.
(iii) The Initial Units Monthly Fuel Handling Costs
will be divided between Buckeye and Ohio in the same ratio for
each month as Buckeye's Initial Unit Monthly Energy and Ohio's
Initial Units Monthly Energy, respectively, bear to the Total Net
Generation of the Initial units for such month. Each Owner's
fuel consumed will be charged at the close of such month with
each Owner's share of the Initial Units Monthly Fuel Handling
Costs.
(b) With respect to the Additional Cardinal Station:
(i) All coal delivered to each Owner during a calendar
month shall be charged to such Owner's fuel in stock at the
average delivered unit cost of all coal delivered to the
Additional Cardinal Station during such month, and, in addition,
each Owner's fuel in stock shall be charged in each month with
the total coal unloading costs incurred by Operating Company for
such month in the ratio of tons of coal delivered for each Owner.
Each Owner's fuel in stock shall also be charged in each month
with the total coal storage costs incurred by Operating Company
in such month in the ratio of tons of coal in stock for each
Owner at the end of such month.
(ii) The Additional Unit Monthly Coal Requirement
shall be divided between Buckeye and Ohio in the same ratio for
each month as Buckeye's Additional Unit Monthly Energy and Ohio
Additional Unit Monthly Energy, respectively, bear to the Net
Generation of Buckeye's Additional Unit for such month. Each
Owner's share of the Additional Unit Monthly Coal Requirement
shall be separately converted into a dollar amount by using the
average cost per ton of coal in such Owner's fuel in stock at the
close of such month and such dollar amount will then be credited
to such Owner's fuel in stock and charged to such Owner's fuel
consumed.
(iii) The Additional Unit Monthly Fuel Handling Costs
will be divided between Buckeye and Ohio in the same ratio for
each month as Buckeye's Additional Unit Monthly Energy and Ohio
Additional Unit Monthly Energy, respectively, bear to the total
Net Generation of Buckeye's Additional Unit for such month. Each
Owner's fuel consumed will be charged at the close of such month
with each Owner's share of the Additional Unit Monthly Fuel
Handling Costs.
(c) Fuel oil reserves will be accounted for in the same
manner as coal stock, and fuel oil consumed will be charged to
the Owners in the same manner as coal consumed, by converting the
quantities and costs of such fuel oil to the basis of equivalent
tons of coal.
7.3 The Cardinal Station Monthly Maintenance Cost will be
divided between Buckeye and Ohio in the same ratio for each month
as Buckeye's Monthly Energy and Ohio's Monthly Energy,
respectively, bear to the Total Net Generation of the Cardinal
Units for such month; provided, however, that a recomputation
shall be made on a running twelve-months average basis which will
divide the aggregate Cardinal Station Monthly Maintenance Cost
for such twelve month period between Buckeye and Ohio in the same
ratios for such twelve month period as Buckeye's Monthly Energy
and Ohio's Monthly Energy, respectively, bear to the Total Net
Generation of the Cardinal Units for such period, and an
appropriate credit or charge will be made to each Owner to adjust
the aggregate of such Owner's twelve month charges hereunder over
such twelve month period to conform with the recomputation on
such twelve months basis. Any proceeds of insurance received by
either Owner in respect of any item of expense constituting
maintenance expense included or includible in the Cardinal
Station Monthly Maintenance Cost for any month shall be credited
thereto in the month in which such proceeds are received.
7.4 The Cardinal Station Monthly Prorated Capacity Cost will
be divided between the Owners so that Buckeye's share will be in
the ratio for each month of (a) the sum of (i) 115% of Buckeye's
Initial Cardinal Station Capacity Reservation and (ii) 115% of
Buckeye's Additional Unit Capacity Reservation and (iii) 115% of
Buckeye's Supplementary Power Demand, if any, and (iv) 115% of
Buckeye's Excess Supplementary Power Demand, if any, to (b) the
Total Net Capability of the Cardinal Units, and Ohio's share will
be the balance.
ARTICLE EIGHT.
Operation of Cardinal Station.
8. Effective as of the Date of Commercial Operation of
Buckeye's Additional Unit, delete Sections 8.1, 8.2, 8.3, 8.4,
8.5, 8.6 and 8.7 of the Station Agreement in their entirety and
in lieu thereof substitute the following:
8.1 The Cardinal Station shall be operated and maintained by
Operating Company as a single station in accordance with good
commercial practices, employed in a manner consistent with the
operating procedures employed by Ohio at the Ohio Generating
Stations, and otherwise in conformity with the terms and
conditions of this Agreement and the Power Delivery Agreement.
8.2 The Entitlement of Ohio and Buckeye in and to the use of
the Total Net Capability of the Cardinal Station shall be
determined as follows:
(a) Buckeye shall be entitled at any time to that
portion of the generating capacity then available at the Cardinal
Station to the extent required to supply the total amount of the
Buckeye Power Requirement at such time, up to a maximum
entitlement equal to 86.9565% of the total Buckeye's Contractual
Net Capability of Buckeye's Initial Unit and Buckeye's Additional
Unit.
(b) Ohio shall be entitled at any time to that portion
of the generating capacity then available at the Cardinal Station
in excess of the entitlement of Buckeye thereto at such time,
subject, however, to the rights of Buckeye to receive therefrom
Back-up Power and Buckeye's Supplementary Power as provided in
Articles Nine and Ten of this Agreement.
(c) In no event shall the entitlement of Buckeye
determined pursuant to subsection (a) above exceed the
requirements of the Buckeye Members for electric power and energy
to be consumed within the State of Ohio or the entitlement of
Ohio determined pursuant to subsection (b) above exceed the total
load of its retail customers within the State of Ohio.
8.3 In each hour during the term of this Agreement there
shall be delivered hereunder to Ohio's Bulk Transmission
Facilities for the account of Buckeye, to the extent that the
total output of electric power by the Cardinal Station in such
hour shall be sufficient for that purpose and otherwise subject
to the provisions of this Agreement, that number of kilowatts of
electric power equal to the lesser of (a) Buckeye's Total Firm
Reservation, or (b) the Buckeye Cardinal Hourly Demand for such
hour. Operating Company shall operate the Cardinal Station in
accordance with the provisions set forth in Sections 8.6 and 8.7.
8.4 Buckeye shall establish from time to time reservations
of capacity out of its entitlement in and to the use of the Total
Net Capability of the Cardinal Units as follows:
(a) Buckeye's Initial Cardinal Station Capacity
Reservation shall equal Buckeye's Cardinal Peak Demand as of the
first day of the month in which such Buckeye's Cardinal Peak
Demand is established; provided, however, that in no event shall
Buckeye's Initial Cardinal Station Capacity Reservation exceed at
any time 86.9565% of the then Buckeye's Contractual Net
Capability of Buckeye's Initial Unit. Buckeye shall use its best
efforts to inform Ohio at least 90 days in advance of any
anticipated increase in Buckeye's Initial Cardinal Station
Capacity Reservation.
(b) After the later of (1) the Date of Commercial
Operation of Buckeye's Additional Unit and (2) the Date when
Buckeye's Initial Cardinal Station Capacity Reservation shall
equal 86.9565% of the then Buckeye's Contractual Net Capability
of Buckeye's Initial Unit, Buckeye's Additional Unit Capacity
Reservation shall equal Buckeye's Cardinal Peak Demand less
Buckeye's Initial Cardinal Station Capacity Reservation;
provided, however, that in no event shall Buckeye's Additional
Unit Capacity Reservation exceed at any time 86.9565% of the then
Buckeye's Contractual Net Capability of Buckeye's Additional
Unit. In such circumstances, Buckeye's total reservation of
capacity at the Cardinal Station shall be the sum of (i)
Buckeye's Initial Cardinal Station Capacity Reservation and (ii)
Buckeye's Additional Unit Capacity Reservation, and Buckeye will
increase Buckeye's Additional Unit Capacity Reservation to the
extent necessary so that such sum shall not be less, for any
month, than Buckeye's Cardinal Peak Demand established at any
time prior to and including such month.
(c) In the event that Buckeye shall subsequent to June
27, 1968 arrange to obtain a supply of electric power and energy
from any source other than Buckeye's Initial Unit or Buckeye's
Additional Unit, then Buckeye's Total Cardinal Station Capacity
Reservation from and after the date on which such other source of
electric power and energy shall become available to Buckeye shall
for all purposes of this Agreement equal 86.9565% of the
Buckeye's Contractual Net Capability of Buckeye's Initial Unit
and Buckeye's Additional Unit as of such date without regard to
the amount of any Buckeye Cardinal Peak Demand established prior
to such date.
8.5 Ohio and Buckeye hereby agree that the Cardinal Station
shall be loaded in any calendar year, insofar as it may be
physically possible to do so consistent with good and safe
commercial practice, so that the ratio obtained by dividing (a)
the sum of (i) the Total Net Generation of Buckeye's Initial Unit
and Buckeye's Additional Unit, for such year and (ii) the Total
Net Generation of Ohio's Initial Unit for such year by (b) the
product of (i) the average combined Total Net Capability of all
such units for such year and (ii) 8,760, is not less than the
ratio obtained by dividing (c) the sum of (i) the total Buckeye
Initial Unit Monthly Energy for such year and (ii) the total
Buckeye Additional Unit Monthly Energy for such year and (iii)
the total Back-up Energy for such year, by (d) the product of (i)
the average of the Buckeye Cardinal Peak Demands in effect for
each month during such year and (ii) 8,760.
8.6 Subject to the provisions of Section 8.5 above, Ohio and
Buckeye agree that the Cardinal Units shall be loaded in any hour
as directed by Ohio, between the minimum and maximum operating
limits set forth in this Section and insofar as it may be
physically possible to do so consistent with good and safe
commercial practice according to principles of economic dispatch
employed by Ohio at the Ohio Generating Stations. The maximum
operating limit of each of the Cardinal Units shall be equal to
the Total Net Available Capability of such unit. The minimum
operating limit of each of the Cardinal Units shall be the lowest
level of operation that insures stability of combustion in the
steam generator of such unit at low firing rates.
8.7 Energy generated each month by Buckeye's Units, in
accordance with the provisions of Sections 8.5 and 8.6 shall be
allocated between Buckeye and Ohio as follows:
(a) Buckeye's Initial Unit Monthly Energy for any month
shall be determined by multiplying (i) Buckeye's total energy
requirement for such month (adjusted to the high voltage busses
at the Cardinal Station) less Back-up Energy, if any, less energy
associated with Replacement Power, if any, less energy associated
with Buckeye's Supplementary Power and Buckeye's Excess
Supplementary Power, if any, and, if Buckeye shall have arranged
to obtain a supply of electric power and energy from any source
other than Buckeye's Initial Unit and/or Buckeye's Additional
Unit, as contemplated by Section 8.4(c), less energy associated
with such supply, by (ii) the ratio of the Total Net Generation
of Buckeye's Initial Unit for that month to the sum of the Total
Net Generation of Buckeye's Units for such month.
(b) Buckeye's Additional Unit Monthly Energy for any
month shall be determined by multiplying (i) Buckeye's total
energy requirement for such month (adjusted to the high voltage
busses at the Cardinal Station) less Back-up Energy, if any, less
energy associated with Replacement Power, if any, less energy
associated with Buckeye's Supplementary Power and Buckeye's
Excess Supplementary Power, if any, and, if Buckeye shall have
arranged to obtain a supply of electric power and energy from any
source other than Buckeye's Initial Unit and/or Buckeye's
Additional Unit, as contemplated by Section 8.4(c), less energy
associated with such supply, by (ii) the ratio of the Total Net
Generation of Buckeye's Additional Unit for that month to the sum
of the Total Net Generation of Buckeye's Units for such month.
(c) Ohio's allocation of energy from Buckeye's Initial
Unit for any month shall be determined by deducting Buckeye's
Initial Unit Monthly Energy for that month from the Total Net
Generation of Buckeye's Initial Unit for such month.
(d) Ohio's allocation of energy from Buckeye's
Additional Unit for any month shall be determined by deducting
Buckeye's Additional Unit Monthly Energy for that month from the
Total Net Generation of Buckeye's Additional Unit for such month.
8.8 It is recognized that when Buckeye's Total Cardinal
Station Capacity Reservation reaches 86.9565% of the total
Buckeye's Contractual Net Capability of Buckeye's Initial Unit
and Buckeye's Additional Unit, and prior to the time when Buckeye
shall have depleted Buckeye's Unrecovered Excess Capacity
Account, Buckeye will be required to consider arrangements to
obtain an additional source or sources of electric power and
energy in order to enable it to satisfy the requirements of the
Buckeye Members therefor. Accordingly, reasonably in advance of
the time when forecasts prepared by Buckeye indicate that such
additional source or sources of electric power and energy may be
required. Buckeye may:
(a) negotiate with Ohio for another Buckeye generating
unit at a steam-electric generating station owned by Ohio in the
State of Ohio, or at a steam-electric generating station to be
built by Ohio in the State of Ohio; or
(b) negotiate and arrange to obtain electric power and
energy for delivery to the Buckeye Members (in excess of
Buckeye's then maximum entitlement in and to the use of the
capacity provided by the Cardinal Station) from any other source
or sources.
In the event that Buckeye shall enter into arrangements to obtain
an additional source or sources for the generation of electric
power and energy located within the State of Ohio, but otherwise
than with Ohio, as contemplated by subsection (b) of this
Section, and if in the judgment of Ohio and Buckeye it is
physically and economically feasible to operate such additional
source or sources for the generation of electric power and energy
in parallel with the Cardinal Station and Ohio's Bulk
Transmission Facilities, then Ohio and Buckeye will discuss and
explore such proposed parallel operation and attempt to negotiate
an agreement by which such parallel operation may be accomplished
on terms mutually acceptable to Ohio and Buckeye.
ARTICLE NINE.
Back-up of Buckeye Power Requirements.
9. Effective as of the Effective Date of Amendment No. 1 to
the Station Agreement, delete Section 9.2 of the Station
Agreement in its entirety and in lieu thereof substitute the
following Section 9.2 of the Station Agreement. Effective as of
the Date of Commercial Operation of Buckeye's Additional Unit,
delete Sections 9.1, 9.3, 9.4, 9.5, 9.6, 9.7 and 9.8 of the
Station Agreement in their entirety and in lieu thereof
substitute Sections 9.1, 9.3, 9.4 and 9.5 of the Station
Agreement as follows:
9.1 In order to assure that the Buckeye Power Requirement
may be supplied upon a basis which shall be as reliable as may
reasonably be provided, Ohio agrees to deliver Back-up Power from
the Ohio Back-up Stations upon the terms and conditions set forth
in this Article Nine.
9.2 Back-up Power and Back-up Energy (which term, during the
period between the Effective Date of Amendment No. 1 to the
Station Agreement and the Date of Commercial Operation of
Buckeye's Additional Unit shall, for purposes of this Article
Nine, include the terms Cardinal Station Back-up Energy and Ohio
System Back-up Energy, determined in accordance with the
provisions of Section 9.6 and Appendix D of this Agreement) shall
be provided by Ohio as follows:
(a) Ohio shall furnish Back-up Power, to the full extent
that it backs up firm contract demands of its own customers,
during such period or periods of time during any calendar year
when the capability of Buckeye's Initial Unit and/or Buckeye's
Additional Unit shall he curtailed and/or Buckeye's Initial Unit
and/or Buckeye's Additional Unit shall be removed from service,
for any reason, including preventative maintenance and/or
repairs, shortages of fuels, or as a result of laws and/or rules
and regulations affecting emissions of pollutants, discharge of
wastes or other environmental conditions, and no capacity charge
shall be made by Ohio to Buckeye for Back-up Power furnished
pursuant to the provisions of this subsection (a); provided,
however, that in no event shall Ohio be obligated to supply
Back-up Power during any one calendar year which in the aggregate
exceeds a number of kilowatthours of Back-up Energy equal to the
sum of (A) the product of (i) 0.130435, (ii) Buckeye's
Contractual Net Capability of Buckeye's Initial Unit, and (iii)
8760, and (B) the product of (i) the Applicable Percentage, (ii)
Buckeye's Contractual Net Capability of Buckeye's Additional
Unit, and (iii) 8760, except that when in any calendar year the
Back-up Energy furnished by Ohio to Buckeye shall aggregate a
number of kilowatthours that is less than the sum of (A) and (B)
above, the deficiency shall be carried forward to the succeeding
calendar year and added to the amount of Back-up Power which Ohio
shall be obligated, if required, to furnish in such year, and any
such amount of Back-up Power not being so supplied by Ohio in
such subsequent year shall be similarly carried forward into the
next succeeding subsequent calendar year until such deficiency
shall have been exhausted. The term Applicable Percentage, as
used in this subsection (a): (I) during the period between the
Date of Commercial Operation of Buckeye's Additional Unit and
December 31 of the first full calendar year succeeding such date
shall mean the product of (X) 0.130435 and (Y) a fraction the
denominator of which shall be 12 and the numerator of which shall
be the number of full calendar months between the Date of
Commercial Operation of Buckeye's Additional Unit and the
December 31 of the third full calendar year succeeding the Date
of Commercial Operation of Buckeye's Additional Unit, (II) during
the periods between January 1 and December 31 of the second, and
of the third, full calendar year succeeding the Date of
Commercial Operation of Buckeye's Additional Unit shall mean
0.000000 subject to the provision of this subsection (a)
permitting unused amounts applicable to prior years to be
accumulated and carried forward to subsequent years, and (III)
during each of the calendar years in the period subsequent to
December 31 of the third full calendar year succeeding the Date
of Commercial Operation of Buckeye's Additional Unit shall mean
0.130435 subject to the provisions of this subsection (a)
permitting unused amounts applicable to prior years to be
accumulated and carried forward to subsequent years.
(b) Buckeye shall pay Ohio for Back-up Energy furnished
in any month an amount equal to the product of (i) the total
kilowatthours of such Back-up Energy for such month, and (ii)
Ohio Stations Average Fuel and Maintenance Cost.
(c) Back-up Energy, for any hour, shall, subject to the
provisions of subsection (c) of Section 11.1 of this Agreement,
be equal to the amount by which (i) Buckeye's Cardinal Hourly
Demand exceeds (ii) the sum of (A) Total Net Available Capability
of Buckeye's Units for such hour, (B) energy associated with
Buckeye's Supplementary Power, if any, for such hour as
determined by the provisions of Section 10.3(j) of this
Agreement, and (C) energy associated with Buckeye's Excess
Supplementary Power, if any, for such hour as determined by the
provisions of Section 10.3(k) of this Agreement. Back-up Energy,
as determined for each hour, shall be accumulated and billed on a
calendar month basis.
(d) In the event that, at any time, in any calendar year
(i) the capability of Buckeye's Initial Unit and/or Buckeye's
Additional Unit shall be curtailed, and/or Buckeye's Initial Unit
and/or Buckeye's Additional Unit shall be removed from service
for any reason, including preventative maintenance and/or
repairs, shortages of fuels, or as a result of laws and/or rules
and regulations affecting emissions of pollutants, discharge or
wastes, or other environmental conditions, and (ii) Ohio shall
not at such time be obligated to furnish Back-up Power pursuant
to the provisions of subsection (a) of this Section 9.2. Ohio
shall, to the extent that it determines that it has electric
power and energy available from its own sources or can obtain
electric power and energy from systems with which it is directly
or indirectly interconnected, supply Replacement Power, and the
energy associated therewith, to the extent required to supply, in
addition to other power and energy then supplied by Ohio to
Buckeye under this Agreement, the Buckeye Power Requirement, and
Buckeye shall pay to Ohio for such Replacement Power and such
energy (i) if supplied from sources of Ohio, or an Ohio
Associate, the sum of (X) the product of (A) $4.00 and (B) the
largest number of kilowatts during any hour in such month when
Replacement Power, and such energy, shall be supplied from such
source by which the Buckeye Cardinal Hourly Demand for any hour
exceeds the sum of (i) the Total Net Available Capability of
Buckeye's Units during such hour, (ii) Buckeye's Supplementary
Power Demand, if any, during such hour, and (iii) Buckeye's
Excess Supplementary Power Demand during such hour and (Y) the
out-of-pocket costs which Ohio incurs in supplying such energy;
or (II) if obtained by Ohio from interconnected systems other
than the system of Ohio or the systems of Ohio Associates the sum
of (XX) the out-of-pocket costs which Ohio incurs for any demand
or capacity charges payable to such other systems in supplying
such Replacement Power and (YY) 1.15 times the out-of-pocket
costs which Ohio incurs for any energy charges payable to such
other systems in supplying energy associated with Replacement
Power. For purposes of this subsection, after Buckeye shall have
depleted Buckeye's Unrecovered Excess Capacity Account, Buckeye
Cardinal Hourly Demand shall not exceed a number of kilowatts
equal to 86.9565% of Buckeye's Contractual Net Capability of
Buckeye's Units.
(e) Energy associated with Replacement Power, for any
hour in which Ohio is not obligated to furnish Back-up Power,
shall, if Ohio supplies energy associated with Replacement Power,
subject to the provisions of subsection (c) of Section 11.1 of
this Agreement, be equal to the amount by which (i) Buckeye's
Cardinal Hourly Demand exceeds (ii) the sum of (A) Total Net
Available Capability of Buckeye's Units for such hour, (B) energy
associated with Buckeye's Supplementary Power, if any, for such
hour as determined by the provisions of Section 10.3(j) of this
Agreement, and (C) energy associated with Buckeye's Excess
Supplementary Power, if any, for such hour as determined by the
provisions of Section 10.3(k) of this Agreement. Energy
associated with Replacement Power, as determined for each hour,
shall he accumulated and billed on a calendar month basis.
9.3 If Buckeye's Initial Unit or Buckeye's Additional Unit
is out of service during any hour the auxiliary power
requirements, if any, for such unit shall be deemed to have been
supplied for such hour from the remaining Buckeye Unit if such
unit is in service during such hour and from the Ohio Back-up
Station if both Buckeye Units are out of service during that
hour.
9.4 In addition to any amounts to be paid by Buckeye
pursuant to this Article Nine, Buckeye shall pay to Ohio an
amount in dollars sufficient to reimburse Ohio for any amounts
paid or payable by it as sales, excise or similar taxes (other
than taxes based on or measured by net income) in respect of the
total amounts paid by Buckeye hereunder and to enable Ohio, after
provision for such taxes, to realize the net amounts payable by
Buckeye as herein provided.
9.5 As soon as practical after the end of any month in which
any Back-up Energy, and/or energy associated with Replacement
Power, is provided hereunder for which Buckeye is required to pay
Ohio, a statement in respect thereof will be rendered to Buckeye
by Operating Company on behalf of Ohio. Ohio shall furnish
Operating Company such computations as shall be necessary to
permit Operating Company to prepare such statement. Buckeye
shall pay Ohio within fifteen (15) days after the receipt of such
statement the amount charged therein. Interest shall be charged
by Ohio to Buckeye at the rate of 6% per annum on any overdue
amount.
ARTICLE TEN.
Excess, Surplus and Supplementary Capacity.
10. Effective as of the Effective Date of Amendment No. 1 to
the Station Agreement, delete Section 10.2 of the Station
Agreement in its entirety and in lieu thereof substitute the
following Section 10.2 of the Station Agreement. Effective as of
the Date of Commercial Operation of Buckeye's Additional Unit,
delete Sections 10.1, 10.3, 10.4, 10.5, 10.6 and 10.7 of the
Station Agreement in their entirety and in lieu thereof
substitute the following Sections 10.1, 10.3, 10.4, 10.5 and 10.6
of the Station Agreement:
10.1 The Total Net Capability of the Buckeye Units in excess
of the Buckeye Cardinal Hourly Demand for any hour shall be made
available to Ohio at any and all times subsequent to the Date of
Commercial Operation of Buckeye's. Additional Unit and Ohio
shall effect settlements with Buckeye for Contract Excess
Capacity as follows: Subsequent to and on the date on which
commercial operation of Buckeye's Additional Unit, shall
commence, Ohio shall effect settlements in the form of a dollar
amount of money, monthly, equal to the sum of (a) the product of
(i) Buckeye's Monthly Carrying Charge, and (ii) the ratio of
Contract Excess Capacity to the sum of Buckeye's Contractual Net
Capability of Buckeye's Initial Unit and Buckeye's Additional
Unit, and (b) an amount in dollars sufficient to reimbursement
Buckeye for any amounts paid or payable by it as sales, excise or
similar taxes (other than taxes based on or measured by net
income) in respect of the total amount paid by Ohio pursuant to
this section and to enable Buckeye, after provision for such
taxes, to realize the net amount payable by Ohio as herein
provided.
10.2 If at the beginning of any calendar month the sum of
the Buckeye Cardinal Monthly Demands for the preceding twelve
calendar months is less than 85% of the sum of the Buckeye
Cardinal Monthly Demands for the twelve calendar months ending
with the month in which the then effective Buckeye Cardinal Peak
Demand was established, Ohio will purchase from Buckeye any
Surplus Capacity available from Buckeye's Units during such
calendar month and will pay to Buckeye therefor, in addition to
any amount which Ohio may be obligated to pay to Buckeye as
provided in Section 10.1 for Contract Excess Capacity made
available to Ohio in such calendar month, a dollar amount of
money equal to the sum of (i) the product of the Buckeye Monthly
Carrying Charge, or before the Date of Commercial Operation of
Buckeye's Additional Unit, Buckeye Initial Unit Monthly Carrying
Charge, less the sum of (x) the amount included as a credit in
respect of contributed capital pursuant to clause (B) of the
definition of Buckeye Initial Unit Monthly Carrying Charge and
after the Date of Commercial Operation of Buckeye's Additional
Unit (y) the amount included as a credit in respect of
contributed capital pursuant to clause (B) of the definition of
Buckeye Additional Unit Monthly Carrying Charge, and the ratio of
the Surplus Capacity available during such calendar month from
Buckeye's Units to Buckeye's Contractual Net Capability of
Buckeye's Units, and (ii) an amount in dollars sufficient to
reimburse Buckeye for any amounts paid or payable by it as sales,
excise or similar taxes (other than taxes based on or measured by
net income) in respect of the total amount so paid by Ohio to
Buckeye and to enable Buckeye, after provision for such taxes, to
realize the net amount payable by Ohio for Surplus Capacity as
provided in this Section. After the date which is the earlier of
(a) the date on which 115% of Buckeye's Additional Unit Capacity
Reservation equals Buckeye's Contractual Net Capability of
Buckeye's Additional Unit, and (b) the date on which Buckeye's
Total Cardinal Station Capacity Reservation shall equal 86.9565%,
of the Buckeye's Contractual Net Capability of Buckeye's Initial
Unit and Buckeye's Additional Unit, Ohio shall have no further
obligation under this Agreement to acquire Surplus Capacity from
Buckeye or to pay Buckeye therefor.
10.3 Ohio shall make available to Buckeye from Ohio's
Initial Unit and/or the Ohio Generating Stations or any
combination of such sources, and Buckeye shall be entitled to
purchase from Ohio, Buckeye's Supplementary Power, and energy
associated therewith, on the following terms and conditions:
(a) Buckeye will establish after the Date of Commercial
Operation of Buckeye's Additional Unit and thereafter from time
to time increase Buckeye's Supplementary Power Demand to the
extent necessary to provide Buckeye's Supplementary Power, on
notice to Ohio as herein prescribed, to a maximum of 50% of the
Total Net Capability of Buckeye's Units. Buckeye shall use its
best efforts to keep Ohio informed at least 90 days in advance of
any anticipated increase in Buckeye's Supplementary Power Demand.
In the event that the Buckeye Cardinal Monthly Demand at the
Cardinal Station's high-voltage busses exceeds for any month
Buckeye's Total Cardinal Station Capacity Reservation then in
effect by one or more megawatts, then Buckeye's Supplementary
Power Demand shall be increased by the amount of such excess (up
to the maximum amount specified herein) beginning with the month
in which such excess occurred.
(b) In the event that Buckeye's Supplementary Power
Demand is increased to its maximum permissible amount (50% of the
Total Net Capability of Buckeye's Units) pursuant to subsection
(a) above, Buckeye may continue to obtain Buckeye's Supplementary
Power hereunder until such time as the entitlement of Buckeye
thereto shall terminate pursuant to the provisions of Section
10.4 and Ohio shall make available to Buckeye in any month as
Buckeye's Excess Supplementary Power Demand that number of
kilowatts of capacity which, when added to the sum of (i)
Buckeye's Initial Cardinal Station Capacity Reservation and (ii)
Buckeye's Additional Unit Capacity Reservation, and (iii)
Buckeye's maximum entitlement to Buckeye's Supplementary Power
Demand, shall establish Buckeye's Total Firm Reservation at not
less than Buckeye's Cardinal Peak Demand established in any month
prior to and including such month. Buckeye shall use its best
efforts to keep Ohio informed at least 90 days in advance of any
anticipated increase in Buckeye's Excess Supplementary Power
Demand. In the event that the Buckeye Cardinal Monthly Demand
exceeds for any month Buckeye's Total Firm Reservation in effect
as of the beginning of such month by one or more megawatts,
Buckeye's Excess Supplementary Power Demand shall be increased by
the amount of such excess beginning with the month in which such
excess occurred.
(c) Operating Company shall make a record at the close
of every month after the Date of Commercial Operation of
Buckeye's Additional Unit in which Contract Excess Capacity
and/or Surplus Capacity is provided to Ohio hereunder of (i) the
total number of kilowatt-months of Contract Excess Capacity that
were made available to Ohio in such month, (ii) the total dollar
amount payable by Ohio to Buckeye for that number of
kilowatt-months of Contract Excess Capacity specified in (i)
above, (iii) the total number of kilowatt-months of Surplus
Capacity purchased by Ohio in such month, and (iv) the total
dollar amount payable by Ohio to Buckeye for Surplus Capacity
purchased in such month. During the term of this Agreement,
Operating Company shall maintain permanent cumulative records of
(v) the total number of kilowatt-months of Contract Excess
Capacity made available to Ohio, (vi) the total dollar amount
paid by Ohio to Buckeye for such Contract Excess Capacity, and
(vii) the total number of kilowatt-months of Surplus Capacity
purchased by Ohio pursuant to Section 10.2.
(d) Operating Company shall make a record at the close
of every month in which Buckeye's Supplementary Power Demand is
required by Buckeye pursuant to subsection (a) above of (i) the
total kilowatts of Buckeye's Supplementary Power Demand in effect
for such month, and (ii) the total dollar amount payable by
Buckeye to Ohio in respect of Buckeye's Supplementary Power
Demand as provided in subsection (e) of this Section. During the
term of this Agreement, Operating Company shall maintain
permanent cumulative records of (iii) the total number of
kilowatt-months of Buckeye's Supplementary Power Demand required
by Buckeye pursuant to subsection (a) above and (iv) the dollar
amounts payable monthly by Buckeye to Ohio in respect of
Buckeye's Supplementary Power Demand.
(e) Buckeye shall pay Ohio for Buckeye's Supplementary
Power Demand in effect for any month after the Date of Commercial
Operation of Buckeye's Additional Unit an amount of dollars equal
to the sum of (i) the product of (A) Ohio's Average Excess
Capacity Cost (determined as provided in subsection (g) of this
Section) for such month, and (B) 115% of Buckeye's Supplementary
Power Demand in effect for such month, and (ii) an amount in
dollars sufficient to reimburse Ohio for any amounts paid or
payable by it as sales, excise or similar taxes (other than taxes
based on or measured by net income) in respect of the total
amount paid by Buckeye pursuant to this subsection (e) and to
enable Ohio, after provision for such taxes, to realize the net
amount payable by Buckeye as herein provided.
(f) Operating Company shall maintain a cumulative record
after Date of Commercial Operation of Buckeye's Additional Unit
wherein it shall deduct, monthly, the amount in dollars payable
by Buckeye to Ohio for Buckeye's Supplementary Power Demand
pursuant to subsection (e) above from the cumulative total amount
in dollars payable by Ohio to Buckeye for Contract Excess
Capacity as recorded pursuant to subsection (c) above, and the
balance remaining at any time in such record account shall
constitute Buckeye's Unrecovered Excess Capacity Account at such
time.
(g) Ohio's Average Excess Capacity Cost at any time
shall be determined by dividing (i) the total dollar amount paid
by Ohio to Buckeye for Contract Excess Capacity shown in the
cumulative record maintained by Operating Company pursuant to
clause (vi) of subsection (c) above, by (ii) the total number of
kilowatt-months of Contract Excess Capacity made available to
Ohio after the Date of Commercial Operation of Buckeye's
Additional Unit, as shown in the cumulative record maintained by
Operating Company pursuant to clause (v) of subsection (c) above
less the total number of kilowatt-months of Surplus Capacity
purchased by Ohio after the Date of Commercial Operation of
Buckeye's Additional Unit, as shown in the cumulative record
maintained by Operating Company pursuant to clause (vii) of
subsection (c) above.
(h) Buckeye shall pay Ohio for Buckeye's Excess
Supplementary Power Demand in effect for any month an amount in
dollars equal to the sum of (i) the product of (A) 1.1042% of
Ohio's average investment in the Ohio Generating Stations
(computed as provided in subsection (i) of this Section) for such
month, and (B) 115% of Buckeye's Excess Supplementary Power
Demand in effect for such month, and (ii) an amount in dollars
sufficient to reimburse Ohio for any amounts paid or payable by
it as sales, excise or similar taxes (other than taxes based on
or measured by net income) in respect of the total amount paid by
Buckeye pursuant to this subsection (h) and to enable Ohio, after
provision for such taxes, to realize the net amount payable by
Buckeye as herein provided.
(i) Ohio's average investment in the Ohio
Generating Stations for any month shall be computed as follows,
using values as of the end of the next preceding month:
(i) There shall be determined the sum of Ohio's
investment at each of the Ohio Generating Stations as shown by
Accounts 310 through 316 and Accounts 389 through 398 of the
Uniform System of Accounts.
(ii) There shall be determined the sum of the net
capability of each of the Ohio Generating Stations as reported by
the Statistical Department of American Electric Power Service
Corporation.
(iii) Ohio's average investment in the Ohio
Generating Stations will be equal to the sum determined pursuant
to clause (i) above divided by the sum determined pursuant to
clause (ii) above.
(j) Energy associated with Buckeye's Supplementary
Power in any month shall be determined for each hour and
accumulated on a calendar month basis and shall equal, for any
hour, the amount by which Buckeye Cardinal Hourly Demand exceeds
the sum of Total Net Available Capability of Buckeye's Units for
that hour, but shall not be greater than Buckeye Supplementary
Power Demand then effective. Buckeye shall pay Ohio for energy
associated with Buckeye's Supplementary Power Demand in any month
an amount equal to the product of (i) the total kilowatt hours of
such energy for such month, and (ii) Ohio Stations Average Fuel
and Maintenance Cost.
(k) Energy associated with Buckeye's Excess
Supplementary Power in any month shall be determined for each
hour and accumulated on a calendar month basis and shall equal,
for any hour, the amount by which Buckeye's Cardinal Hourly
Demand exceeds the sum of (i) Total Net Available Capability of
Buckeye's Units for that hour and (ii) Buckeye's Supplementary
Power Demand then effective, but shall not be greater than
Buckeye's Excess Supplementary Power Demand then effective.
Buckeye shall pay Ohio for energy associated with Buckeye's
Excess Supplementary Power Demand in any month an amount equal to
the product of (i) the total kilowatt hours of such energy for
such month, and (ii) Ohio Stations Average Fuel and Maintenance
cost.
10.4 Buckeye's right to obtain Buckeye's Supplementary Power
under the terms and conditions of this Agreement shall terminate
on the date after the Date of Commercial Operation of Buckeye's
Additional Unit when the balance of dollars in Buckeye's
Unrecovered Excess Capacity Account shall become zero, as to any
entitlement of Buckeye to Buckeye's Supplementary Power
theretofore established, and, upon the occurrence of such event,
Operating Company shall close out the cumulative records
maintained by Operating Company pursuant to the provisions of
subsection (c) of Section 10.3. Upon any such termination of the
right of Buckeye to obtain Buckeye's Supplementary Power
hereunder, Buckeye shall not thereafter have any right to obtain
any of Buckeye's Supplementary Power.
10.5 As soon as practicable after the end of any month in
which Contract Excess Capacity is made available by Buckeye to
Ohio hereunder, a statement in respect thereof will be rendered
to Ohio by Operating Company on behalf of Buckeye. Buckeye shall
furnish Operating Company such computations as shall be necessary
to permit Operating Company to prepare such statement. Ohio
shall pay Buckeye within fifteen (15) days after receipt of such
statement the amount specified as payable therein. Interest
shall be charged by Buckeye to Ohio at the rate of 6% per annum
on any overdue amount.
10.6 As soon as practicable after the end of any month in
which Buckeye's Supplementary Power or Buckeye's Excess
Supplementary Power is made available hereunder for which Buckeye
is required to pay Ohio, a statement in respect thereof will be
rendered to Buckeye by Ohio. Buckeye shall reimburse Ohio within
fifteen (15) days after receipt of any such statement for the
amounts specified as payable therein. Interest shall be charged
by Ohio to Buckeye at the rate of 6% per annum on any overdue
amounts.
ARTICLE ELEVEN.
Buckeye's Interim Power.
11. Effective as of the Effective Date of Amendment No. 1 to
the Station Agreement, delete Article Eleven of the Station
Agreement in its entirety and in lieu thereof substitute the
following:
11.1 Ohio shall make available to Buckeye from Ohio's
Initial Unit or the Ohio Generating Stations or any combination
of such sources, and Buckeye shall purchase from Ohio, Buckeye's
Interim Power on the following terms and conditions:
(a) Buckeye's Summer Interim Power Reservation shall be
initially established in the first Summer Month in the Interim
Period and shall be equal to the amount by which Buckeye's
Cardinal Monthly Demand in such month exceeds 86.9565% of
Buckeye's Contractual Net Capability of Buckeye's Initial Unit in
such month. In each succeeding Summer Month during the Interim
Period, Buckeye's Summer Interim Power Reservation shall equal
the greater of (i) Buckeye's Summer Interim Power Reservation for
the previous Summer Month or (ii) the difference between
Buckeye's Cardinal Monthly Demand in such month and 86.9565% of
Buckeye's Contractual Net Capability of Buckeye's Initial Unit in
such month.
(b) Buckeye's Winter Interim Power Reservation shall be
initially established in the first Winter Month in the Interim
Period and shall be equal to the amount by which Buckeye's
Cardinal Monthly Demand in such month exceeds 86.9565% of
Buckeye's Contractual Net Capability of Buckeye's Initial Unit in
such month. In each succeeding Winter Month during the Interim
Period. Buckeye's Interim Power Reservation shall equal the
greater of (i) Buckeye's Winter Interim Power Reservation for the
previous Winter Month or (ii) the difference between Buckeye's
Cardinal Monthly Demand in such month and 86.9565% of Buckeye's
Contractual Net Capability of Buckeye's Initial Unit in such
month.
(c) Buckeye's Interim Power shall be supplied by Ohio
to Buckeye, and Buckeye shall purchase Buckeye's Interim Power
from Ohio, during each month within the Interim Period to the
extent of Buckeye's Interim Power Reservation in such month.
Buckeye's Interim Power, and the energy associated therewith,
shall be purchased by Buckeye from Ohio, and shall be supplied by
Ohio to Buckeye, for such amount of money as, at any time in
question, results from the application to the billing
determinants of Buckeye of the then effective rate provisions of
any tariff or service schedule of Ohio, filed with and made
effective by the Federal Power Commission under the Federal Power
Act, for the supply by Ohio of "limited term power" from its
system to another electric system, as shall then be designated by
Ohio.
The energy associated with Buckeye's Interim Power for
any hour during the Interim Period shall equal the amount by
which the Buckeye Cardinal Hourly Demand exceeds 86.9565 percent
of Buckeye's Contractual Net Capability of Buckeye's Initial Unit
for that hour, but will not be greater than Buckeye's Interim
Power Reservation then effective.
For the purposes of classifying energy delivered during
the period between the Effective Date of Amendment No. 1 to the
Station Agreement and the Date of Commercial Operation of
Buckeye's Additional Unit, energy associated with Replacement
Power, as determined by the provisions of Article Nine of this
Agreement, shall be reduced in any month during the Interim
Period by the sum of the kilowatthours, for all hours of such
month, of energy associated with Buckeye's Interim Power; Ohio
System Back-up Energy, as determined by the provisions of
Appendix D hereto, shall be reduced in any month during the
Interim Period by the sum of the kilowatthours, for all hours of
such month, by which energy associated with Buckeye's Interim
Power exceeds the kilowatthours, for all hours of such month, of
energy associated with Replacement Power; Cardinal Station
Back-up Energy, as determined by the provisions of Appendix D
hereto, shall be reduced in any month during the Interim Period
by the sum of the kilowatthours, for all hours of such month, by
which energy associated with Buckeye's Interim Power exceeds the
sum of the kilowatthours, for all hours of such month, of energy
associated with Replacement Power and Ohio System Back-up Energy,
as determined by the provisions of Appendix D hereto; Buckeye's
Initial Unit Monthly Energy, as determined by the provisions of
Appendix D hereto, shall be reduced in any month during the
Interim Period by the sum of kilowatthours, for all hours of such
month, by which energy associated with Buckeye's Interim Power
exceeds the sum of energy associated with Replacement Power, Ohio
System Back-up Energy and Cardinal Station Back-up Energy, as
determined by the provisions of Appendix D hereto; Ohio's Initial
Unit Monthly Energy, as determined by the provisions of Appendix
D hereto, shall be increased in any month during the Interim
Period by the sum of kilowatthours, for all hours of such month,
by which energy associated with Buckeye's Interim Power exceeds
the sum of energy associated with Replacement Power, Ohio System
Back-up Energy and Cardinal Station Back-up Energy as determined
by the provisions of Appendix D hereto.
(d) In the event the Interim Period commences on a date
other than the first day of a calendar month, or terminates on a
date other than the last day of a calendar month, then Buckeye
shall be obligated to purchase, and Ohio shall be obligated to
sell, Interim Power only for the portion of such month that is
within the Interim Period, and the amount to be paid for such
Interim Power, determined in accordance with subsection (c)
above, shall be appropriately prorated.
ARTICLE TWELVE.
Delivery Service.
12. Effective as of the Effective Date of Amendment No. 1 to
the Station Agreement, delete Article Twelve of the Station
Agreement in its entirety and in lieu thereof substitute the
following:
12.1 Buckeye agrees that, notwithstanding the provisions of
subsection (c) of Section 4.3 of the Power Delivery Agreement,
Buckeye will not, in light of the obligations assumed by Ohio
hereunder, without the consent of Ohio, designate any location in
an area served by Ohio as a Delivery Point (as defined in said
Power Delivery Agreement) under the Power Delivery Agreement for
the purpose of meeting the requirements of a Buckeye Member
resulting from load growth and/or prospective load growth in the
affected area at such point of delivery where the Delivery Point
Monthly Demand (as defined in said Power Delivery Agreement),
will be less than 1,000 kw at the time such additional Delivery
Point is established; provided that, where in a particular case
the imposition of such a limitation is likely to limit unduly the
ability of such Buckeye Member to meet its requirements for its
load growth and/or its prospective load growth in such area, the
Delivery Point Monthly Demand may be less than 1,000 kw but not
less than 750 kw at the time such additional Delivery Point is
established.
12.2 Buckeye agrees that, notwithstanding the provisions of
subsection (b) of Section 4.4 of the Power Delivery Agreement,
Buckeye will, in light of the obligations assumed by Ohio
hereunder, if requested by Ohio, mutually agree with Ohio that
Delivery Service (as defined in said Power Delivery Agreement) to
a new Delivery Point designated by Buckeye in an area served by
Ohio shall be provided at a voltage of 138 kv, and Ohio agrees
that if requested by Buckeye, it will provide Delivery Service to
a new Buckeye Delivery Point in the area served by Ohio at a
voltage of 138 kv if such delivery voltage is reasonably
available and can be provided without undue burden to Ohio taking
into account the proximity of existing 138 kv transmission
facilities, physical conditions, costs and the requirements of
good engineering practices.
12.3 The parties hereto agree that, notwithstanding any
provision of Section 4.3 of the Power Delivery Agreement to the
contrary, if at any time Buckeye shall designate a location
(referred to in this Section 12.3 as the "Designated Location")
within the State of Ohio as a proposed new Delivery Point, or
shall request Ohio to establish at such Designated Location an
additional Ohio Edison Delivery Point by mutual agreement between
Ohio and Ohio Edison Company, and (1) such location is in an area
in which transmission and/or distribution facilities of Ohio
Edison Company are located, and (2) Ohio Edison Company shall,
upon being requested by Ohio to provide an additional Ohio Edison
Delivery Point at such Designated Location, advise Ohio that Ohio
Edison Company will take such action only under conditions where
Ohio pays, or agrees to pay, Ohio Edison Company special
compensation in addition to the facilities use charge payable by
Ohio to Ohio Edison pursuant to Section 8 of the agreement, dated
as of June 20, 1968, between Ohio and Ohio Edison Company, then:
(a) Ohio shall agree to pay to Ohio Edison Company upon
the establishment of such additional Ohio Edison Company Delivery
Point the special compensation requested by Ohio Edison Company,
and Buckeye shall, if requested by Ohio, reimburse Ohio for
one-half (1/2) of the special compensation payable by Ohio to
Ohio Edison Company forthwith upon payment, or any installment
thereof, unless (b) Ohio or, if Ohio shall have requested Buckeye
to reimburse Ohio for one-half (1/2) of the special compensation
payable by Ohio to Ohio Edison Company, Buckeye, shall consider
the amount and/or the terms of payment of such special
compensation to be unreasonable, then a Delivery Point shall be
established at the Designated Location, or at a point on the
Power Delivery Facilities of Ohio, or adjacent to Ohio's Bulk
Transmission Facilities (i) on such terms as shall be determined
by mutual agreement of Buckeye and Ohio, or (ii) failing such
mutual agreement, on such terms, fairly sharing the benefits and
burdens associated with the rendition of Delivery Service at such
Designated Location and taking into account all pertinent factors
including but not limited to costs, reliability of service, good
engineering practice, environmental factors and the long-range
plans of the parties, as shall be determined by arbitration
pursuant to Section 17.6 of this Agreement; provided, however,
that nothing contained in this subsection (b) or in Section 17.6
of this Agreement shall be deemed to preclude, in any such case,
Buckeye or Ohio from taking, in lieu of or to supersede an
arbitration proceeding (1) such action before The Public
Utilities Commission of Ohio in Case No. 34574, or otherwise, (2)
such action before the United States Atomic Energy Commission
pursuant to any condition contained in any operating license
issued by the United States Atomic Energy Commission to Ohio
Edison Company, or to Ohio Edison Company and one or more other
licensees, under the Atomic Energy Act of 1954, as amended, or
otherwise, (3) such action before the Federal Power Commission
pursuant to applicable provisions of the Federal Power Act, as
amended, or otherwise, (4) such action before the Power Siting
Commission of Ohio pursuant to Section 4906 of the Revised Code
of Ohio, as amended, or otherwise, (5) such action before such
other governmental agency or agencies having jurisdiction in the
premises, and/or (6) such action to institute, or participate in,
a proceeding or proceedings in court to review any order or
orders of any such agency or agencies, as may be considered
necessary or appropriate by Buckeye or Ohio, as the case may be,
to cause an additional Ohio Edison Delivery Point, or a new
Delivery Point, to be established, operated and maintained on
reasonable terms;
and provided that Ohio, recognizing that a case-by-case
arrangement evolved pursuant to the foregoing provisions of
subsections (a) and (b) of this Section 12.3 may not necessarily
afford, in Buckeye's view, the most desirable method, from a
system planning standpoint, of establishing Delivery Service in
the areas where transmission and distribution facilities of Ohio
Edison Company are located, agrees that, upon the request of
Buckeye, Ohio will consider, and negotiate in good faith with
respect to, alternative arrangements for providing on a long term
basis Delivery Service to Buckeye Members in such areas.
ARTICLE THIRTEEN
Classification of Energy.
13. Effective as of the Effective Date of Amendment No. 1 to
the Station Agreement, delete Article Thirteen of the Station
Agreement in its entirety and in lieu thereof substitute the
following:
13.1 It is the intention of the parties hereto that
operations hereunder and under the Power Delivery Agreement shall
be so conducted that (a) electric energy supplied to Buckeye or
the Buckeye Members from Cardinal Station shall be consumed
wholly within the State of Ohio, (b) electric energy supplied to
Buckeye or the Buckeye Members by Ohio pursuant to Articles Nine
and Ten hereof otherwise than from Cardinal Station shall be
supplied wholly from generation by Ohio or a wholly owned
subsidiary of Ohio within the State of Ohio, (c) electric energy
supplied to Buckeye or the Buckeye Members by Ohio under the
circumstances referred to in subsection (b) of this Section shall
be consumed wholly within the State of Ohio, and (d) electric
energy supplied to Ohio from Cardinal Station shall be consumed
wholly within the State of Ohio.
13.2 In accordance with the intention of the parties set
forth in Section 13.1, Ohio and Buckeye hereby agree that, during
any applicable period of measurement:
(a) Electric energy delivered to Buckeye and/or the
Buckeye Members as contemplated by this Agreement and by the
Power Delivery Agreement, plus transmission losses applicable
thereto, shall be classified as electric energy generated at
Cardinal Station whenever the aggregate of such electric energy
plus the aggregate of such losses is equal to or less than Total
Net Generation at the Cardinal Station.
(b) Electric energy delivered by Ohio to Buckeye and/or
the Buckeye Members pursuant to Articles Nine, Ten and Eleven of
this Agreement otherwise than from Cardinal Station, i.e.,
electric energy supplied to the extent required when the
aggregate of the electric energy delivered to Buckeye and/or the
Buckeye Members, plus transmission losses applicable thereto, is
greater than Total Net Generation at the Cardinal Station, shall
be classified as electric energy generated at other generating
stations of Ohio located within the State of Ohio.
(c) Electric energy delivered to Ohio from Cardinal
Station as contemplated by this Agreement shall be classified as
electric energy delivered to retail customers of Ohio within the
State of Ohio.
13.3 Ohio and Buckeye shall establish and carry out such
procedures as may be necessary to effectuate the provisions of
this Article Thirteen and to make any determination requisite for
that purpose.
ARTICLE FOURTEEN.
Functions of Operating Company.
14. Effective as of the Effective Date of Amendment No. 1 to
the Station Agreement, delete Article Fourteen of the Station
Agreement in its entirety and in lieu thereof substitute the
following:
14.1 Operating Company shall operate and maintain the
Cardinal Station in accordance with the provisions of this
Agreement and in conformity with the provisions of the Power
Delivery Agreement. In operating and maintaining the Cardinal
Station as aforesaid, Operating Company shall act without
compensation and only as agent for the Owners. All funds
received and disbursements made by Operating Company in
connection with the operation and maintenance of the Cardinal
Station shall be for the account of the Owners as their interests
and obligations shall appear hereunder.
14.2 Each Owner has purchased at the par value thereof 250
shares of capital stock of Operating Company, representing 50% of
the authorized number of such shares. Neither Owner shall sell,
assign or otherwise dispose of its share interest in Operating
Company except as an entirety to a successor to substantially all
its assets, property and business or to the other Owner for cash
in the amount of the par value thereof or, in the case of
Buckeye, to the Trustees, or either of them, under the Buckeye
Mortgage.
14.3 Each Owner shall be entitled to designate such number
of nominees for election as directors of Operating Company as
shall represent one-half of the authorized number of such
directors and shall also be entitled to designate nominees for
election to succeed any director previously nominated by it and
elected as contemplated hereby. Each Owner agrees that, in any
election of directors of Operating Company, including the
election of directors to fill vacancies from time to time
existing on the Board of Directors of Operating Company, it will
vote the shares of capital stock of Operating Company owned by it
for the election of the nominees designated by the other Owner to
the end that the Board of Directors of Operating Company shall at
all times consist equally of directors nominated by the
respective Owners.
14.4 Operating Company shall keep all necessary books of
record, books of account and memoranda of all transactions
involving the Cardinal Station and shall make daily, monthly and
annual computations and allocations on behalf of the respective
Owners as required under this Agreement and the Power Delivery
Agreement. The books of record, books of account and memoranda
shall be kept by Operating Company on the same basis for each of
the Owners and in such manner as to enable either of them to
conform, where so required, to the Uniform System of Accounts,
and to the rules and regulations of any regulatory body or bodies
having jurisdiction.
14.5 Operating Company shall perform all necessary invoicing
on behalf of the respective Owners as herein provided (whether
such invoicing shall be to the other Owner or to a third party)
when requested by them so to do.
14.6 Operating Company shall keep the Owners accurately
informed (by telephone communication in the case of emergencies)
of any operating conditions at the Cardinal Station which may
adversely affect its efficiency and reliability as a source of
power.
14.7 Operating Company shall maintain the metering equipment
at the Cardinal Station. Each Owner may, at its option and
expense, install check metering. Operating Company shall make
periodic tests and inspections of the meters (in accordance with
policy established by the Cardinal Station Operating Committee)
and shall adjust the meters as may be necessary to maintain the
same at the highest practicable commercial standard of accuracy.
Operating Company will advise the Owners promptly of the results
of any meter tests. Operating Company will give the Owners
notice of all tests and inspections, and the Owners shall be
entitled to have representatives present when such tests and
inspections are made. Operating Company shall make additional
tests of any of the meters at the request of either Owner. If
the periodic or additional tests to be made by Operating Company
do not show any meter to be less accurate than 1% slow or fast,
no correction shall be made in the various information and
statements therefore furnished to the Owners hereunder. If any
such tests show that a meter is inaccurate by more than 1% slow
or fast, corrections shall be made in the information and
statements based on readings derived therefrom furnished to the
Owners for the previous month and for the elapsed period in the
month during which the test was made, or from the date of the
latest test if within the previous month.
14.8 Funds required by Operating Company for performance of
its functions under this Agreement shall be provided by Buckeye
and Ohio in accordance with the provisions of Article Five
hereof. Operating Company shall establish such bank accounts as
it may from time to time require.
14.9 (a) As soon as practicable after the end of each month,
Operating Company shall furnish to Buckeye and to Ohio a
statement setting forth in reasonable detail the amounts to be
paid by Buckeye and Ohio to or for the account of Operating
Company hereunder. Buckeye and Ohio shall pay the amounts
respectively to be paid by them within fifteen (15) days after
receipt of such statement.
(b) Buckeye and Ohio recognize that as much as fifteen
(15) days may be required after the close of each calendar month
to assemble all the data required to compute and render a final
statement. Accordingly, Operating Company may, at its option, or
shall upon request by the Owners, render an estimated statement
to the Owners promptly after the close of each month, using the
then available data. In such event, any necessary adjustments to
conform such estimated statement to the final statement shall be
submitted at the time when the estimated statement is rendered
for the next succeeding month.
(c) In addition to any amounts required to be paid by
them to Operating Company hereunder, Buckeye and Ohio shall pay
Operating Company such amounts in dollars as shall be sufficient
to reimburse Operating Company for any amounts paid or payable by
Operating Company as sales, excise or similar taxes (other than
taxes based on or measured by net income) in respect of the total
amounts respectively paid by Ohio and Buckeye hereunder and to
enable Operating Company, after provision for such taxes, to
realize the net amounts payable by Ohio and Buckeye as herein
provided.
14.10 Buckeye and Ohio shall have the right, at any
reasonable times during the term of this Agreement, and any
extensions thereof, and for five years thereafter, to inspect all
books, records and accounts pertaining to the operations of
Cardinal Station for five years immediately preceding such
inspection, and to make such audits thereof as Buckeye and Ohio
may deem necessary in their respective interests.
14.11 Operating Company has entered into an agreement dated
as of January 1, 1968 with American Electric Power Service
Corporation, an Ohio Associate, to obtain special services
required as an incident to the operation of Cardinal Station.
14.12 Operating Company is hereby authorized to obtain
materials, labor and such other services as it considers
necessary in connection with the performance of the functions to
be performed by it hereunder from such sources or through such
subagents as it may designate.
ARTICLE FIFTEEN.
Cardinal Station Operating Committee.
15. Effective as of the Effective Date of Amendment No. 1 to
the Station Agreement, delete Article Fifteen of the Station
Agreement in its entirety and in lieu thereof substitute the
following:
15.1 There is established hereunder a Cardinal Station
Operating Committee consisting of five members to exercise the
responsibilities specified in Section 15.5 and to perform such
other duties as may from time to time be assigned to it by the
Board of Directors of Operating Company.
15.2 Each Owner shall appoint two authorized representatives
to act as members of the Cardinal Station Operating Committee and
shall designate alternates who may act in the absence of such
representatives, and each Owner shall, in alternate years,
appoint the fifth member, who shall serve as the Committee
Chairman. Each Owner shall evidence such appointments by written
notice to the other Owner and, by similar notice, either Owner
may change its representatives or its alternates on such
Committee at any time. Each member of the Cardinal Station
Operating Committee may invite one other person, who need not be
a member of his organization but shall be acting, as his personal
advisor, to attend certain meetings of the Cardinal Station
Operating Committee as such advisor for the purpose of assisting
him in respect of matters scheduled to be considered thereat by
prearranging such attendance with the Committee Chairman.
15.3 The expenses of each member of the Cardinal Station
Operating Committee shall be borne by the Owner he represents.
15.4 The Cardinal Station Operating Committee shall hold
regularly scheduled monthly meetings and may meet at other times
upon call of the Chairman of the Committee. Any regularly
scheduled meeting of the Committee may be omitted but only by
unanimous consent of all members thereof.
15.5 The responsibilities of the Cardinal Station Operating
Committee shall include periodic reviews of Cardinal Station
operation and performance with the plant manager thereof,
including any problems encountered by plant management in
connection therewith, review of the load patterns of Buckeye and
Ohio and load forecasts furnished by Buckeye and the Buckeye
Members and the collection of statistical data and other
information which will be of assistance in connection with
scheduling for increases in Buckeye's Total Cardinal Station
Capacity Reservation or Buckeye's Total Firm Reservation.
15.6 Operating Company shall make available to the Cardinal
Station Operating Committee studies, reports and recommendations
received upon the performance of engineering and special services
obtained by Operating Company pursuant to Section 14.11 and
14.12.
ARTICLE SIXTEEN
Term of Agreement.
16. Effective as of the Effective Date of Amendment No. 1 to
the Station Agreement, add in the Station Agreement immediately
following Article Fifteen thereof the following:
16.1 This Agreement shall continue for an initial term from
the date on which the Effective Date of Amendment No. 1 to the
Station Agreement shall occur to and until the close of business
on June 27, 2003; provided, however, that in the event that the
Date of Commercial Operation of Buckeye's Additional Unit shall
occur before January 1, 1979, then said initial term shall
continue for a period of thirty-five (35) years from such Date of
Commercial Operation of Buckeye's Additional Unit and, if such
Date of Commercial Operation of Buckeye's Additional Unit shall
occur on or after January 1, 1979, then said initial term shall
continue to January 1, 2014. Buckeye and Ohio shall commence
negotiations in respect of the extension of the initial term, or
termination, of this Amendment not less than seven (7) years
prior to the end of such initial term.
16.2 Notwithstanding the provisions of Section 16.1, this
Agreement shall terminate and be of no further force and effect
(a) upon purchase by Ohio of the property, property interests and
facilities owned by Buckeye at the Cardinal Station pursuant to
exercise by Ohio of any of the rights and options granted to it
by Buckeye in Section 2.8 and, if the Buckeye Mortgage shall then
constitute a lien on any property, property interests and
facilities so purchased, either the concurrent or substantially
concurrent satisfaction and discharge of the Buckeye Mortgage or
release of the property, property interests and facilities so
purchased from the lien thereof, or (b) at the election of Ohio,
upon purchase by Ohio of the property, property interests and
facilities owned by Buckeye at the Cardinal Station and the
assumption by Ohio pursuant to subsection (i) of Section 2.8, in
connection therewith, of the obligations of Buckeye to pay when
due the principal of, premium, if any, and accrued interest on
all bonds outstanding under the Buckeye Mortgage and to pay any
other amount required to be paid by Buckeye under the Buckeye
Mortgage and compliance with the conditions specified in said
subsection (i) relating to such assumption.
ARTICLE SEVENTEEN
General.
17. Effective as of the Effective Date of Amendment No. 1 to
the Station Agreement, add in the Station Agreement immediately
following Article Sixteen thereof the following:
17.1 The parties hereto recognize that this Agreement, the
Power Delivery Agreement, and any tariff or rate schedule which
shall embody or supersede either, are in certain respects subject
to the jurisdiction of The Public Utilities Commission of Ohio,
and in certain respects subject to the jurisdiction of the
Federal Power Commission under the Federal Power Act, and are
subject to such lawful action as any regulatory authority having
jurisdiction shall hereafter take with respect thereto. The
performance of any obligation of any party hereto shall be
subject to the receipt from time to time as required of such
authorizations or approvals of regulatory authorities having
jurisdiction as shall be required by law.
17.2 Ohio agrees to pay Buckeye for electric service
furnished to Ohio by Buckeye and for the right to receive the
same, and Buckeye agrees to pay Ohio for electric service
furnished to Buckeye and for the right to receive the same, in
accordance with the provisions of this Agreement, or any
applicable superseding tariff or rate schedule(s) accepted for
filing and made effective by such regulatory agency or agencies
as shall have jurisdiction in the premises, each of which is
incorporated herein by reference thereto, and service under this
Agreement, and/or under any such applicable superseding tariff or
rate schedule(s) shall be subject to all of the provisions of
this Agreement as the same may be changed or modified by any such
superseding tariff or rate schedule(s). It is expressly
understood that any party hereto shall be entitled, at any time
and from time to time, to make application for, or to take other
action, to submit for filing to any regulatory agency having
jurisdiction in the premises any tariff or rate schedule(s)
designed to supersede, in whole or in part, any provision of this
Agreement, or of any prior superseding tariff or rate
schedule(s), applicable to any electric service furnished under
this Agreement by such party to this Agreement to any other party
to this Agreement.
17.3 The parties hereto agree that, in the event that any
term or condition of this Agreement shall become the subject
(other than at the instance of a party to this Agreement) of a
proceeding before any regulatory agency, the parties will
cooperate and use their best efforts to defend the same;
provided, however, that if, after the Effective Date of Amendment
No. 1 to the Station Agreement, any term or condition of this
Agreement or the Power Delivery Agreement or any term or
condition under which electric service shall be provided by Ohio
to Buckeye, or by Buckeye to Ohio, shall be required to be
changed in any such proceeding pursuant to final order of a
regulatory authority having jurisdiction, then the parties hereto
shall, at the request of Buckeye or of Ohio, review the terms and
conditions of this Agreement and of the Power Delivery Agreement
in the light of such change and shall negotiate in good faith
with respect to any additional change or changes which either
Buckeye or Ohio shall consider necessary or desirable to restore,
in the light of such change, the relative relationships between
benefits and burdens under all of the interrelated conditions of
this Agreement and the Power Delivery Agreement which existed
prior to such change; and provided further that, in the event
that the parties hereto shall not agree to any additional change
or changes so requested, then any party hereto shall, upon
delivery of prior written notice to each other party hereto, be
entitled to take such action before, or make such filings with,
any regulatory authority having jurisdiction with respect to any
term or condition of this Agreement or of the Power Delivery
Agreement as such party shall deem appropriate and, in the event
of any such action by any party, the terms and conditions under
which service shall be rendered by any party hereto shall be the
terms and conditions as so changed or shall result from any
ensuing action by or before any regulatory authority having
jurisdiction.
17.4 All notices under this Agreement shall be in writing
and, if to Ohio, shall be sufficient in all respects if delivered
in person to its President, Executive Vice President or Vice
President or sent by registered mail or certified mail addressed
to it at its office at 301 Cleveland Avenue, S. W., Canton, Ohio
44702, or at any subsequent address of which Ohio may notify
Buckeye in writing; if to Buckeye, shall be sufficient in all
respects if delivered in person to its Executive Manager, or sent
by registered mail or certified mail to its office at 4302
Indianola Avenue, Columbus, Ohio 43214, or any subsequent address
of which Buckeye may notify Ohio in writing; and, if to Operating
Company, shall be sufficient in all respects if delivered in
person to its President or sent by registered mail or certified
mail to such address as Operating Company shall provide to
Buckeye and Ohio by notice given as herein provided.
17.5 If, at any time, there shall be a dispute or difference
of opinion between Buckeye and Ohio in respect of the amount of
any payment to be made by either of them hereunder, then on or
prior to the date herein fixed for such payment the billed party
shall pay the amount thereof which it admits to be due and at the
same time (a) may pay to the billing party under protest all or
any part of any amount in dispute, and (b) shall deliver to the
billing party a written statement of the reasons why any amount
claimed by the billing party to be due is disputed, and the
issues in connection therewith shall be submitted to arbitration
in accordance with the terms of Section 17.6. Upon determination
of the dispute, the billing party shall refund any portion of the
amount in dispute paid by the billed party in excess of the
amount held to have been due, and the billed party shall pay to
the billing party any amount by which the disputed amount paid,
if any, was less than the amount held to have been due. Interest
at 6% per annum shall be paid from the payment date to the date
of any subsequent payment or refund, as the case may be. The
payment by the billed party of any amount or disputed amount, or
the acceptance by the billing party of any amount or disputed
amount, as contemplated hereby prior to such arbitration shall
not be regarded as a waiver by either of them and shall not in
any way prejudice the rights of either of them to additional
payment or refund, as the case may be. No payment made or
received under this Section 17.5 shall be construed to effect a
waiver or release by any party or to prejudice the rights of any
party to additional payment or refund, as the case may be.
17.6 Any controversy, claim, counterclaim, defense, dispute,
difference or misunderstanding arising out of or relating to this
Agreement, or the breach thereof, shall be settled by arbitration
before three arbitrators one of whom shall be named by Buckeye,
one of whom shall be named by Ohio and the third of whom shall be
named by the two arbitrators appointed by Buckeye and Ohio,
respectively. In the event that the two arbitrators so appointed
shall fail to name a third arbitrator within thirty (30) days
after the date of the appointment of the second of them, then any
party to the arbitration proceeding may upon written notice to
the other party or parties thereto apply to the person who is the
senior acting judge of the United States Court of Appeals for the
6th Judicial Circuit for the appointment of a third arbitrator;
provided, however, that if, for any reason, there shall be no
such senior acting judge or if such a senior acting judge shall
fail, within thirty (30) days after such application, to make
such appointment, then the third arbitrator shall be appointed by
the American Arbitration Association. The arbitration proceeding
shall be conducted in accordance with the Rules of the American
Arbitration Association then in effect, and judgment upon any
award rendered by the arbitrators may be entered in any court
having jurisdiction thereof. This provision shall survive the
termination of this Agreement. The parties expressly agree that
this provision shall constitute a condition precedent to the
institution of any proceeding in any court relating to the
subject matter hereof, provided, however, that nothing herein
contained shall (a) preclude, or be deemed to preclude, any party
to this Agreement from taking action contemplated by this
Agreement before, or making such filings with, any regulatory
authority having jurisdiction with respect to any term or
condition of this Agreement or of the Power Delivery Agreement as
such party shall deem appropriate, or (b) require, or be deemed
to require, any such party to institute, or complete, an
arbitration proceeding under this Section 17.6 prior to the
taking of such action before, or the making of such filing with,
any such regulatory authority.
17.7 The failure of any party hereto to insist in any one or
more instances upon strict performance of any of the provisions
of this Agreement or to take advantage of its rights hereunder,
shall not be construed as a waiver of any such provisions, or the
relinquishment of any such rights, but the same shall continue to
remain in full force and effect.
17.8 (a) Ohio shall not be held responsible or liable for
any loss or damage to Buckeye or any Buckeye Member on account of
its failure to perform any obligation to be performed by it
hereunder at any time, caused by Act of God, fire, flood,
explosion, strike, civil or military authority, governmental
action or inaction, insurrection or riot, enemy attack, malicious
mischief, act of the elements, failure of equipment, or any other
cause beyond its control or failure of any portion of the Power
Delivery Facilities and/or Ohio's Bulk Transmission Facilities;
provided, however, that Ohio shall use its best efforts to resume
with utmost dispatch the performance of any obligation hereunder,
the performance of which is excused by this subsection. Failure
of Ohio to furnish Back-up Power and/or Replacement Power because
of the aforesaid conditions shall not relieve Buckeye of its
obligation to make available to Ohio the amounts of capacity
specified in Article Ten hereof and failure of Ohio to furnish
Buckeye's Supplementary Power because of the aforesaid conditions
shall not relieve Buckeye of its obligation to make available to
Ohio the amounts of capacity specified in Article Ten hereof.
(b) Buckeye shall not be held responsible or liable for
any loss or damage to Ohio on account of its failure to perform
any obligation to be performed by it hereunder at any time,
caused by Act of God, fire, flood, explosion, strike, civil or
military authority, governmental action or inaction, insurrection
or riot, enemy attack, malicious mischief, act of the elements,
failure of equipment, or any other beyond its control or failure
of any portion of its facilities of any Buckeye Member; provided,
however, that Buckeye shall use its best efforts to resume with
utmost dispatch the performance of any obligation hereunder, the
performance of which is excused by this subsection. Failure of
Buckeye to make capacity available to Ohio hereunder because of
the aforesaid conditions of this Agreement shall not relieve Ohio
of its obligations to furnish Back-up Power or Buckeye's
Supplementary Power or to make payments to Buckeye as herein
provided.
(c) Operating Company shall not be held responsible or
liable for any loss or damage to Ohio, Buckeye or to any Buckeye
Member on account of its failure to perform any obligation to be
performed by it hereunder at any time, caused by Act of God,
fire, flood, explosion, strike, civil or military authority,
governmental action or inaction, insurrection or riot, enemy
attack, malicious mischief, act of the elements, failure of
equipment, or any other cause beyond its control, or failure of
any portion of the Power Delivery Facilities and/or Ohio's Bulk
Transmission Facilities; provided, however, that Operating
Company shall use its best efforts to resume with utmost dispatch
the performance of any obligation hereunder, the performance of
which is excused by this subsection.
(d) The parties hereto hereby recognize that if either
Buckeye or Ohio shall be precluded by any of the reasons
specified in the foregoing force majeure provisions of this
Section 17.8 from carrying out its obligations under this
Agreement or any of the agreements referred to in this Agreement,
some alternative arrangement may be necessary for the delivery of
power to Buckeye Members and, in case such an alternative
arrangement becomes necessary under such conditions, it is the
intention of the parties hereto to negotiate in good faith some
alternative arrangement designed to provide for the delivery to
the Buckeye Members of their requirements in part from Buckeye's
entitlement in the Cardinal Station and in part from generating
stations of Ohio within the State of Ohio under terms
approximating, as nearly as practicable in the light of then
prevailing conditions, those contemplated herein and in the Power
Delivery Agreement.
17.9 (a) Buckeye shall make available to Ohio, and Ohio
shall purchase from Buckeye, all energy associated with test
power generated by Buckeye's Additional Unit during the test
period prior to the Date of Commercial Operation thereof.
(b) In any calendar month during such test period, Ohio
shall pay Buckeye for energy associated with test power generated
by Buckeye's Additional Unit, an amount of dollars equal to the
product of (i) the metered net kilowatthours of test power
generated by Buckeye's Additional Unit and delivered to Ohio's
Bulk Transmission Facilities during such month, and (ii) the sum
of (A) the average fuel cost per kilowatthour determined for the
Initial Cardinal Station for such month and (B) 50 percent of the
average maintenance cost per kilowatthour determined for the
Initial Cardinal Station for the twelve month period including
such month and the eleven months immediately preceding such
month.
(c) The total proceeds to Buckeye pursuant to Section
17.9(b) above shall be applied by Buckeye in reduction of costs
of construction of Buckeye's Additional Unit.
17.10 This Agreement shall not be assigned by either Buckeye
or Ohio, except to a successor to substantially all of its
assets, property and business, without the prior written consent
of the other party; provided that either Buckeye or Ohio, or
both, may assign its right, title and interest in, to and by
virtue of this Agreement, including any and all extensions,
renewals, amendments and supplements thereto, to a trustee or
trustees, individual or corporate, as security for bonds or other
obligations or securities, without such trustee or trustees
assuming or becoming in any respect obligated to perform any of
the obligations of the assignor, and, if any such trustee be a
corporation, without its being required by the parties hereto to
qualify to do business in the State of Ohio, and such trustee or
trustees may transfer, convey and assign all the right, title and
interest of the assigning party in, to or by virtue of this
Agreement in connection with any proceeding (whether or not
judicial) to realize on any security provided for said bonds or
other obligations or securities to any purchaser of any part of
such security. It is further expressly stipulated and provided
that no assignment by either Buckeye or Ohio to any other person
or party of any of their rights or interests under this contract
shall have the effect of relieving Buckeye or Ohio, as the case
may be, from full liability and financial responsibility for
performance (both before and after any such assignment) of all
the obligations and duties herein provided and imposed upon
Buckeye and Ohio, respectively, nor shall any such assignment by
Buckeye or Ohio have the effect of waiving or releasing or in any
manner altering or changing whatsoever the express restrictions
and covenants as to the use to be made of electric energy sold
and delivered hereunder as provided in this Agreement. This
Agreement shall not be assigned by Operating Company under any
circumstances without the prior written consent of Ohio and
Buckeye and of the Trustees under the Buckeye Mortgage. Subject
to the foregoing provisions of this Section, this Agreement shall
inure to the benefit of and be binding upon the parties hereto
and their respective successors and assigns.
17.11 In the event of any act or omission by Buckeye which
would give Ohio the right, immediately or after lapse of a period
of time, to cancel or terminate this Agreement, Ohio shall give
written notice of such act or omission to the Trustees under the
Buckeye Mortgage and shall not exercise such right against
Buckeye if, within 60 days after the receipt of such notice by
such Trustees, the corporate trustee under the Buckeye Mortgage
shall undertake in a written notice to Ohio that, from and after
the date of such written notice to Ohio, said corporate trustee
will be responsible for the performance of all of the obligations
of Buckeye under this Agreement and, to the extent that any act
or omission by Buckeye occurring prior to the date of the
delivery by Ohio of written notice thereof to said Trustees can
be remedied, will remedy the same, and that said corporate
trustee will promptly commence the performance of such
obligations. If any act or omission by Buckeye occurring prior
to the date of delivery by Ohio of written notice thereof to the
Trustees cannot be remedied, Ohio shall look solely to Buckeye
for redress in respect of such act or omission. In the event
that, after receipt by Ohio of a written notice from the
corporate trustee under the Buckeye Mortgage that said corporate
trustee will be responsible for the performance of all of the
obligations of Buckeye under this Agreement, an act or omission
by said corporate trustee occurs which would give Ohio the right,
immediately or after lapse of a period of time, to cancel or
terminate this Agreement, Ohio shall be entitled to exercise such
right with the same consequences as if said corporate trustee had
not substituted itself for Buckeye in the performance of
Buckeye's obligations under this Agreement.
17.12 It is understood and agreed by the parties hereto that
if any one or more provisions contained herein shall be finally
determined by any court of competent jurisdiction to contravene,
or be invalid under, any applicable provision of law, such
contravention or invalidity shall not invalidate this Agreement,
but this Agreement shall be construed as if not containing such
provision or provisions and the rights and obligations of the
parties shall be construed and enforced accordingly; provided,
however, that no obligation other than those herein provided
(except for changes in rates or charges) shall thereby be imposed
on any party; and provided further that to the extent that any
such provision or provisions shall constitute a part of any
effective rate schedule, or terms and conditions thereof, on file
with any regulatory agency having jurisdiction such provision or
provisions shall remain in full force and effect (i) unless and
until modified by valid final order of such regulatory agency or
(ii) unless and until such provision or provisions in such rate
schedule, or terms and conditions thereof, shall be finally
determined by any court of competent jurisdiction to contravene,
or be invalid under, any applicable provisions of law. In the
event that an occasion shall arise requiring that this Agreement
be construed as if not containing a particular provision or
provisions as aforesaid and the effect thereof shall be to impose
on any party an obligation other than those herein provided
(except for changes in rates or charges), the parties will
negotiate in good faith to provide a substitute for such
provision or provisions.
ARTICLE EIGHTEEN.
Effective Date of Amendment No. 1 to Station
Agreement.
18.1 This Amendment No. 1 to the Station Agreement shall
become effective, and the Effective Date of Amendment No. 1 to
the Station Agreement shall occur, on the date on which the last
of the following events shall have occurred:
(a) The Rural Electrification Administration (i) shall
have approved in writing this Amendment No. 1 to the Station
Agreement and (ii) shall have determined in writing that the
Construction Agreement between Ohio and Buckeye, dated as of
October 1, 1973 and this Amendment No. 1 to the Station Agreement
complies with all applicable requirements of the Equity
Contribution Agreement dated as of December 31, 1971, between the
United States of America (acting through the Administrator of the
Rural Electrification Administration), Buckeye and each of the
Buckeye Members;
(b) The Public Utilities Commission of Ohio shall have
issued an order, in Case No. 34573 or otherwise, authorizing and
approving the arrangements provided for in this Amendment No. 1
to the Station Agreement and such order shall have become
effective in accordance with such terms and conditions as may be
therein contained;
(c) This Amendment No. 1 to the Station Agreement
and/or any rate schedule, tariff or instrument specified in the
order referred to in clause (b) of this Section 18.1 shall have
been filed with The Public Utilities Commission of Ohio;
(d) This Amendment No. 1 to the Station Agreement shall
have been filed with, and accepted for filing without condition
by, the Federal Power Commission under the Federal Power Act as a
rate schedule, or as a supplement to Rate Schedule FPC Nos. 1;
1.1; and 1.2, of Buckeye, and as a rate schedule, or as a
supplement to Rate Schedule FPC Nos. 69; 69.1; and 69.2, of Ohio
under circumstances (x) where the Federal Power Commission shall
not have suspended this Amendment No. 1 to the Station Agreement
or any part thereof, and (y) where the Federal Power Commission
shall have issued an order under the Federal Power Act that (i)
all portions of this Amendment No. 1 to the Station Agreement
which by their terms are to become effective on the Effective
Date of Amendment No. 1 to the Station Agreement shall become
effective as such rate schedule or supplement under the Federal
Power Act on the later of (A) a date not later than ninety (90)
days subsequent to the date of the issuance of such order, and
(B) the Effective Date of Amendment No. 1 to the Station
Agreement, and (ii) all portions of this Amendment No. 1 to the
Station Agreement which by their terms are to become effective on
the date of Commercial Operation of Buckeye's Additional Unit,
shall become effective as such rate schedule or supplement under
the Federal Power Act, on such date of Commercial Operation of
Buckeye's Additional Unit and (iii) did not by its terms, or in a
separate order issued substantially concurrent with such order,
institute an investigation under the provisions of Section 206 of
the Federal Power Act into the justness and reasonableness of the
provisions of Amendment No. 1 to the Station Agreement, the Power
Delivery Agreement, or any other agreement to which Buckeye and
Ohio are parties involving the construction and/or operation of
the Cardinal Station;
(e) The expiration of a period which shall be equal to
the longer of (i) the period between the date of the issuance of
the order of the Federal Power Commission referred to in clause
(d) above and a date sixty (60) days after such date; and (ii)
the period between the date of the issuance of such order and the
date specified in such order pursuant to clause (d) (y) (i)
above;
(f) If the orders of the Federal Power Commission
referred to in clause (d) above shall have been entered in a
proceeding under the Federal Power Act in which any party or
parties in addition to Buckeye, Ohio and Operating Company
participated, such orders shall have become final and not subject
to review under Section 313 of the Federal Power Act;
(g) If proceedings to review the orders referred to in
clause (d) above shall have been initiated by any party, an order
of a court of competent jurisdiction affirming such orders in all
respects shall have become final and shall not be subject to
further review;
(h) The Federal Power Commission shall have issued an
order pursuant to Section 204 of the Federal Power Act
authorizing Buckeye to issue and sell additional Bonds under the
Buckeye Mortgage, in an aggregate principal amount not exceeding
$204,500,000 and on the terms contemplated by the Buckeye
Mortgage, and said order shall have become final and not subject
to review under Section 313 of the Federal Power Act;
(i) Buckeye, Cardinal and Ohio shall each have caused
this Amendment No. 1 to the Station Agreement to be executed by
their officers thereunto duly authorized; and
(j) Buckeye shall have executed and delivered the
Second Supplemental Indenture to the Buckeye Mortgage, shall have
received pursuant to the Equity Contribution Agreement the sum of
$17,000,000 in cash, representing contributions of the Buckeye
Members to the equity capital of Buckeye; Buckeye and the
respective purchasers shall have executed and delivered a Bond
Purchase Agreement, dated October 1, 1973 (in the form heretofore
delivered to Ohio) providing for the issue and sale by Buckeye of
up to $170,000,000 principal amount of its First Mortgage Bonds,
8 3/8% Series, and Buckeye and the United States of America,
acting through the Administrator of the Rural Electrification
Administration, shall have executed and delivered a Bond Purchase
Agreement, dated October 1, 1973 (in the form heretofore
delivered to Ohio) providing for the issue and sale by Buckeye of
up to $34,500,000 principal amount of its First Mortgage Bonds,
5% Series.
Each party hereto will use its best efforts to take or cause to
be taken all action requisite to the end that the foregoing
events shall occur and that this Amendment No. 1 to the Station
Agreement shall become effective as provided in this Section 18.1
at the earliest practical date.
18.2 This Amendment No. 1 to the Station Agreement
constitutes the entire agreement between the parties hereto with
respect to the matters covered herein. If for any reason one or
more of the events specified in Section 18.1 of this Amendment
No. 1 to the Station Agreement shall not have occurred before
July 1, 1974 then and in that event this Amendment No. 1 to the
Station Agreement shall, on and after July 1, 1974, terminate
with the result that at such time the Station Agreement, dated as
of January 1, 1968 among Ohio, Buckeye and Operating Company
shall continue in accordance with the terms thereof with the same
force and effect as if this Amendment No. 1 to the Station
Agreement had never been executed and delivered by the parties
hereto.
ARTICLE NINETEEN.
Appendices.
19.1 Effective as of the Effective Date of Amendment No. 1
to the Station Agreement delete Appendix A, Appendix B, Appendix
C, Appendix E and Appendix F to the Station Agreement in their
entirety; substitute in lieu thereof Appendix A, Appendix B,
Appendix C, Appendix E and Appendix F, in each case in the form
attached to Amendment No. 1 to the Station Agreement. Effective
as of the Date of Commercial Operation of Buckeye's Additional
Unit, delete Appendix D to the Station Agreement in its entirety.
IN WITNESS WHEREOF, the parties have caused this Amendment
No. 1 to the Station Agreement to be executed by their officers
thereunto duly authorized as of the date first above written.
OHIO POWER COMPANY
BY /s/ G. V. PATTERSON
Vice President
BUCKEYE POWER, INC.
BY /s/ HOWARD A. CUMMINS
Executive Manager
CARDINAL OPERATING COMPANY
BY /s/ CHARLIE F. JACK
Vice President
<PAGE>
AMENDMENT NO. 2
to
STATION AGREEMENT
Dated as of March 1, 1976
WHEREAS, Ohio Power Company (Ohio), Buckeye Power, Inc.
(Buckeye) and Cardinal Operating Company (Cardinal) have entered
into Amendment No. 1, dated as of October 1, 1973, to Station
Agreement dated as of January 1, 1968 (Amendment No. 1); and
WHEREAS, Buckeye proposes to execute and deliver a
Fourth Supplemental Mortgage and Deed of Trust, dated as of April
15, 1976 (the Fourth Supplemental Indenture), to the Mortgage and
Deed of Trust, dated as of April 1, 1968 between Buckeye and The
Ohio National Bank of Columbus, as Trustee, and
WHEREAS, the parties desire to modify the definitions
of certain terms as set forth in Amendment No. 1 to reflect the
execution and delivery of the Fourth Supplemental Indenture
proposed by Buckeye;
NOW, THEREFORE, in consideration of the premises and
other good and valuable consideration, the parties do hereby
agree as follows:
ARTICLE I
Modifications of Amendment No. 1
1. The reference in subclause (i) of clause (A) of the
definition of "Buckeye Additional Unit Monthly Carrying Charge"
contained in Section 1.1 of Amendment No. 1 to the "Second
Supplemental Indenture" shall be deemed to refer to and to
include the Second Supplemental Indenture and the Fourth
Supplemental Indenture.
2. The reference in said subclause (i) of clause (A)
to "Bonds (not exceeding $204,500,000)" shall be deemed to refer
to "Bonds" (not exceeding $269,500,000)."
3. The definition of "Buckeye Mortgage" contained in
said Section 1.1 shall be deemed to be the Mortgage and Deed of
Trust dated as of April 1, 1968, as amended by the First
Supplemental Indenture, the Second Supplemental Indenture, the
Third Supplemental Indenture and the Fourth Supplemental
Indenture thereto, made by Buckeye with The Ohio National Bank as
Trustee.
ARTICLE II
Effective Date of Amendment No. 2
This Amendment No. 2 shall become effective on the date on
which the last of the following events shall have occurred:
(a) The Rural Electrification Administration shall have
approved in writing this Amendment No. 2;
(b) The Public Utilities Commission of Ohio shall have
issued an order authorizing and approving this Amendment No. 2,
such order shall have become effective in accordance with such
terms and conditions as may be therein contained;
(c) This Amendment No. 2 shall have been filed with,
and accepted for filing without condition or suspension by, the
Federal Power Commission under the Federal Power Act as a rate
schedule, or as a supplement to Rate Schedule FPC No. 69 of Ohio
under circumstances where the Federal Power Commission did not
institute an investigation under the provisions of Section 206 of
the Federal Power Act into the justness and reasonableness of the
provisions of this Amendment No. 2 to the Station Agreement, or
any other agreement to which Buckeye and Ohio are parties
involving the construction and/or operation of the Cardinal
Station;
(d) Buckeye, Cardinal and Ohio shall each have caused
this Amendment No. 2 to be executed by their officers thereunto
duly authorized; and
(e) Buckeye shall have executed and delivered the Fourth
Supplemental Indenture to the Buckeye Mortgage, and Buckeye and
the Louisville Bank for Cooperatives shall have executed and
delivered a Loan Agreement, dated December 5, 1975 (in the form
heretofore delivered to Ohio) providing for the issue and sale by
Buckeye of up to $65,000,000 principal amount of its First
Mortgage Bonds, LBC Series.
Each party hereto will use its best efforts to take or cause to
be taken all action requisite to the end that the foregoing
events shall occur and that this Amendment No. 2 shall become
effective as provided in this Article II at the earliest
practical date.
IN WITNESS WHEREOF, the parties have caused this Amendment
No. 2 to be executed by their officers thereunto duly authorized
as of the date first above written.
OHIO POWER COMPANY
By /s/ G.P. Maloney
Vice President
BUCKEYE POWER, INC.
By /s/ Charlie F. Jack
Chief Engineer
CARDINAL OPERATING COMPANY
By /s/ G.V. Patterson
Vice President
<PAGE>
AMENDMENT NO. 3
to
STATION AGREEMENT
Dated as of March 1, 1977
WHEREAS, Ohio Power Company (Ohio), Buckeye Power, Inc.
(Buckeye) and Cardinal Operating Company (Cardinal) have entered
into Amendment No. 1, dated as of October 1, 1973, to Station
Agreement dated as of January 1, 1968 (Amendment No. 1) and
Amendment No. 2, dated as of March 1, 1976, to said Station
Agreement (Amendment No. 2); and
WHEREAS, Buckeye has executed and delivered a Fifth
Supplemental Mortgage and Deed of Trust, dated as of February 1,
1977 (the Fifth Supplemental Indenture), to the Mortgage and Deed
of Trust, dated as of April 1, 1968 between Buckeye and The Ohio
National Bank of Columbus, as Trustee, and
WHEREAS, the parties desire to modify the definitions of
certain terms as set forth in Amendment No. 1, as heretofore
modified by Amendment No. 2, to reflect the execution and
delivery of the Fifth Supplemental Indenture;
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the parties do hereby agree as
follows:
ARTICLE I
Modifications of Amendment No. 1
as heretofore modified by Amendment No. 2
1. The reference in subclause (i) of clause (A) of the
definition of "Buckeye Additional Unit Monthly Carrying Charge"
contained in Section 1.1 of Amendment No. 1 to the "Second
Supplemental Indenture" shall be deemed to refer to and to
include the Second Supplemental Indenture, the Fourth
Supplemental Indenture and the Fifth Supplemental Indenture.
2. The reference in said subclause (i) of clause (A)
to "Bonds (not exceeding $269,500,000)" shall be deemed to refer
to "Bonds (not exceeding $310,000,000)."
3. The Definition of "Buckeye Mortgage" contained in
said Section 1.1 shall be deemed to be the Mortgage and Deed of
Trust dated as of April 1, 1968, as amended by the First
Supplemental Indenture, the Second Supplemental Indenture, the
Third Supplemental Indenture, the Fourth Supplemental Indenture
and the Fifth Supplemental Indenture thereto, made by Buckeye
with The Ohio National Bank of Columbus, as Trustee.
ARTICLE II
Effective Date of Amendment No. 3
This Amendment No. 3 shall become effective on the date on
which the last of the following events shall have occurred:
(a) The Rural Electrification Administration shall
have approved in writing this Amendment No. 3;
(b) The Public Utilities Commission of Ohio shall have
issued an order authorizing and approving this Amendment No. 3,
and such order shall have become effective in accordance with
such terms and conditions as may be therein contained;
(c) This Amendment No. 3 shall have been filed with,
and accepted for filing without condition or suspension by, the
Federal Power Commission under the Federal Power Act as a rate
schedule, or as a supplement to Rate Schedule FPC No. 69 of Ohio
under circumstances where the Federal Power Commission did not
institute an investigation under the provisions of Section 206 of
the Federal Power Act into the justness and reasonableness of the
provisions of this Amendment No. 3 to the Station Agreement, or
any other agreement to which Buckeye and Ohio are parties
involving the construction and/or operation of the Cardinal
Station;
(d) Buckeye, Cardinal and Ohio shall each have caused
this Amendment No. 3 to be executed by their officers thereunto
duly authorized; and
(e) Buckeye shall have executed and delivered the
Fifth Supplemental Indenture to the Buckeye Mortgage, and Buckeye
and the Louisville Bank for Cooperatives shall have executed and
delivered a Loan Agreement, dated January 25, 1977 (in the form
heretofore delivered to Ohio) providing for the issue and sale by
Buckeye of up to $31,650,000 principal amount of its First
Mortgage Bonds, LBC-B Series.
Each party hereto will use its best efforts to take or cause to
be taken all action requisite to the end that the foregoing
events shall occur and that this Amendment No. 3 shall become
effective as provided in this Article II at the earliest
practical date.
IN WITNESS WHEREOF, the parties have caused this Amendment
No. 3 to be executed by their officers thereunto duly authorized
as of the date first above written.
OHIO POWER COMPANY
By /s/ Frank N. Bien
Vice President
BUCKEYE POWER, INC.
By /s/ Howard A. Cummins
Executive Manager
CARDINAL OPERATING COMPANY
By /s/ G.V. Patterson
Vice President
<PAGE>
AMENDMENT NO. 4
to
STATION AGREEMENT
Dated as of December 1, 1977
WHEREAS, Ohio Power Company (Ohio), Buckeye Power, Inc.
(Buckeye) and Cardinal Operating Company (Cardinal) have entered
into Amendment No. 1, dated as of October 1, 1973, to Station
Agreement dated as of January 1, 1968 (Amendment No. 1), and
Amendment No. 2, dated as of March 1, 1976 (Amendment No. 2) and
Amendment No. 3, dated as of March 1, 1977 (Amendment No. 3), to
said Station Agreement; and
WHEREAS, the parties have waived the occurrence of the event
specified in paragraph (b) of Article II of Amendment No. 3,
which is hereby confirmed, and Amendment No. 3 has thereby become
effective as of September 20, 1977; and
WHEREAS, Buckeye contemplates executing and delivering a
Sixth Supplemental Indenture Mortgage and Deed of Trust, dated as
of November 15, 1977 (the Sixth Supplemental Indenture), to the
Mortgage and Deed of Trust, dated as of April 1, 1968 between
Buckeye and The Ohio National Bank of Columbus, as Trustee, and
WHEREAS, the parties desire to modify the definitions of
certain terms as set forth in Amendment No. 1, as heretofore
modified, to reflect the execution and delivery of the Sixth
Supplemental Indenture;
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the parties do hereby agree as
follows:
ARTICLE I
Modifications of Amendment No. 1
as heretofore modified
1. The reference in subclause (i) of clause (A) of the
definition of "Buckeye Additional Unit Monthly Carrying Charge"
contained in Section 1.1 of Amendment No. 1, as amended by
Amendments No. 2 and No. 3 to the "Second Supplemental Indenture"
shall be deemed to refer to and to include the Second
Supplemental Indenture, the Fourth Supplemental Indenture, the
Fifth Supplemental Indenture and the Sixth Supplemental
Indenture.
2. The reference in said subclause (i) of clause (A)
to "Bonds (not exceeding $310,000,000)" shall be deemed to refer
to "Bonds (not exceeding $340,000,000)."
3. The definition of "Buckeye Mortgage" contained in
said Section 1.1 shall be deemed to be the Mortgage and Deed of
Trust dated as of April 1, 1968, as amended by the First
Supplemental Indenture, the Second Supplemental Indenture, the
Third Supplemental Indenture, the Fourth Supplemental Indenture,
the Fifth Supplemental Indenture and the Sixth Supplemental
Indenture thereto, made by Buckeye with The Ohio National Bank of
Columbus, as Trustee.
ARTICLE II
Effective Date of Amendment No. 4
This Amendment No. 4 shall become effective on the date on
which the last of the following events shall have occurred:
(a) The Rural Electrification Administration shall
have approved in writing this Amendment No. 4;
(b) The Public Utilities Commission of Ohio shall have
issued an order authorizing and approving this Amendment No. 4
and such other shall have become effective in accordance with
such terms and conditions as may be therein contained;
(c) This Amendment No. 4 shall have been filed with,
and accepted for filing without condition or suspension by, the
Federal Energy Regulatory Commission under the Federal Power Act
as a rate schedule, or as a supplement to Rate Schedule FPC 69 of
Ohio under circumstances where the Federal Energy Regulatory
Commission did not institute an investigation under the
provisions of Section 206 of the Federal Power Act into the
justness and reasonableness of the provisions of this Amendment
No. 4 to the Station Agreement, or any other agreement to which
Buckeye and Ohio are parties involving the construction and/or
operation of the Cardinal Station;
(d) Buckeye, Cardinal and Ohio shall each have caused
this Amendment No. 4 to be executed by their officers thereunto
duly authorized; and
(e) Buckeye shall have executed and delivered the
Sixth Supplemental Indenture and shall have executed and
delivered on or more loan agreements with Louisville Bank of
Cooperatives or with another lender or lenders providing for the
issuance and sale of up to $30,000,000 principal amount of
additional first mortgage bonds maturing no earlier than the
maturity date of the LBC Series Bonds and providing for a sinking
fund or funds for the purchase, redemption or retirement of such
additional first mortgage bonds which shall not result in a
retirement of a percentage of such first mortgage bonds on any
sinking fund payment date greater than on the corresponding
sinking fund payment date for the LBC Series Bonds.
Each party hereto will use its best efforts to take or cause to
be taken all action requisite to the end that the foregoing
events shall occur and that this Amendment No. 4 shall become
effective as provided in this Article II at the earlier practical
date.
IN WITNESS WHEREOF, the parties have cause this Amendment
No. 4 to be executed by their officers thereunto duly authorized
as of the date first above written.
OHIO POWER COMPANY
By /s/ G.P. Maloney
Vice President
BUCKEYE POWER, INC.
By /s/ Ralph May
CARDINAL OPERATING COMPANY
By /s/ Frank N. Bien
Vice President
<PAGE>
AMENDMENT NO. 5
to
STATION AGREEMENT
Amendment dated as of April 15, 1980, to Station
Agreement dated as of January 1, 1968, among OHIO POWER COMPANY,
an Ohio corporation (herein called "Ohio"), BUCKEYE POWER, INC.,
an Ohio corporation not for profit (herein called "Buckeye"), and
CARDINAL OPERATION COMPANY, an Ohio corporation (herein called
"Operating Company").
W I T N E S S E T H :
WHEREAS Ohio, Buckeye and Operating Company have entered
into a Station Agreement dated as of January 1, 1968 and four
amendments thereto dated, respectively, as of October 1, 1973,
March 1, 1976, March 1, 1977 and December 1, 1977, with respect
to the operation of the Cardinal Station; and
WHEREAS, since the commencement of operations by Buckeye
in 1968, new Buckeye Members, including Buckeye Member
Cooperative Inc., have come into existence in addition to the
original Buckeye Members; and
WHEREAS the experience of the Buckeye Members in the
years since the commencement of operations by Buckeye in 1968
reflects, to a greater degree than originally contemplated, sharp
winter peak demands during relatively brief time periods
resulting from the increased utilization by customers of the
Buckeye Members of electric power and energy for home heating,
thus establishing Buckeye Cardinal Peak Demands under the Station
Agreement at successively higher levels while the loads served by
the Buckeye Members at other times of the year could be
substantially increased without increasing the Buckeye Cardinal
Peak Demand, and it is the desire of the Buckeye Members to sell
to the greatest extent practicable such off-peak power, and the
energy related thereto, without increasing the Buckeye Cardinal
Peak Demand, it being hoped that sales of such type could improve
Buckeye's utilization of Buckeye's Units and thereby be in the
best interests of Buckeye and its Buckeye Members; and
WHEREAS, Ohio, Buckeye and Operating Company desire to
effect further amendments to the Station Agreement to provide a
means pursuant to which the respective rights and obligations of
the parties may be further defined and clarified to facilitate,
among other purposes of the Agreement, the sale at wholesale of
off-peak power, and the energy related thereto, by the Buckeye
Members to electric utility systems;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the parties hereto do hereby
agree as follows:
ARTICLE ONE
Definitions.
1.1 Effective as of the Effective Date of Amendment No. 5
to the Station Agreement and at the end of Section 1.1. of the
Station Agreement add the following additional definitions:
Adjustment Period means the period of years commencing
with the calendar in which Amendment No. 5 to the Station
Agreement becomes effective and terminating at the end of the
calendar year in which the balance of dollars in Buckeye's
Unrecovered Excess Capacity Account shall become zero.
Buckeye Adjusted Reserve Factor means, for any calendar
year during the Adjustment Period in which the Buckeye Annual
Capacity Utilization Factor is greater than 0.89, the sum of (a)
0.15 and (b) the product of (i) 1.168539 and (ii) the amount by
which the Buckeye Annual Capacity Utilization Factor for such
year exceeds 0.89.
Buckeye Annual Capacity Utilization Factor means for any
calendar year the ratio that is obtained by dividing (a) the sum
obtained by adding the Buckeye Cardinal Monthly Demand for each
month of such calendar year by (b) the sum obtained by adding the
Buckeye Cardinal Peak Demand for each month of such calendar
year.
ARTICLE TWO
Operation of Cardinal Station.
2.1 Effective as of the Effective Date of Amendment No. 5
to the Station Agreement, delete Section 8.2 of the Station
Agreement in its entirety and substitute the following:
8.2 The entitlement of Ohio and Buckeye in and to the use
of the Total Net Capability of the Cardinal Station shall be
determined as follows:
(a) Buckeye shall be entitled at any time, subject to the
provisions of Subsection (b) of this Section 8.2 and to the
provisions of Section 12.5, to that portion of the generating
capacity then available at the Cardinal Station to the extent
required to supply the total amount of the Buckeye Power
Requirement at such time, up to a maximum entitlement equal to
86.9565% of the total Buckeye's Contractual Net Capability of
Buckeye's Initial Unit and Buckeye's Additional Unit.
(b) Buckeye shall take such action as is necessary to
provide reasonable assurance that the Buckeye Annual Capacity
Utilization Factor for any calendar year during the Adjustment
Period shall not exceed 0.89, provided, however, that in the
event that the Buckeye Annual Capacity Utilization Factor for any
calendar year during the Adjustment Period shall after the end of
such year be determined to have exceeded 0.89, the following
retroactive substitutions, recalculations and billing adjustments
shall be made for such year:
(1) The sum of (a) 100% and (b) the product of (i) 100
and (ii) the Buckeye Adjusted Reserve Factor for such year shall
be substituted for the figure 115%, as included in one or more
instances in the sections and definitions listed as follows:
The definition, in Section 1.1, of Contract Excess
Capacity.
Article Four, Sections 4.4(a) and 4.4(b).
Article Five, Sections 5.2 and 5.3.
Article Seven, Section 7.4.
Article Ten, Section 10.2, 10.3(e) and 10.3(h).
Appendix F. Sections A(4) and B(19).
(2) The product of (A) 100% and (B) the ratio that is
obtained by dividing (i) unity by (ii) the sum of (a) unity and
(b) the Buckeye Adjusted Reserve Factor for such year shall be
substituted for the figure 86.9565%, as included in one or more
instances in the sections and definitions listed as follows:
The definitions, in Section 1.1., of Buckeye's
Additional Unit Capacity Reservation, Adjustment Period and
Buckeye's Supplementary Power Demand.
Article Eight, Sections 8.2(a), 8.4(a), 8.4(b),
8.4(c), 8.8.
Article Nine, Section 9.2(d).
Article Ten, Section 10.2.
(3) The difference between (A) unity and (B) the ratio
that is obtained by dividing (i) unity by (ii) the sum of (a)
unity and (b) the Buckeye Adjusted Reserve Factor for such year
shall be substituted for the figure 0.130435, as included in
three instances in Article Nine, Section 9.2(a).
(4) All computations and billings under the Station
Agreement which are affected by the substitutions provided for in
this Subsection 8.2(b) shall be retroactively recalculated for
such year to take into account the effect of such substitutions,
and any resulting billing credits or charges shall be rendered to
Ohio and Buckeye.
(c) Ohio shall be entitled at any time to that portion
of the generating capacity then available at the Cardinal Station
in excess of the entitlement of Buckeye thereto at such time,
subject, however, to the rights of Buckeye to receive therefrom
Back-up Power and Buckeye's Supplementary Power as provided in
Articles Nine and Ten of this Agreement.
ARTICLE THREE
Back-up of Buckeye Power Requirements.
3.1 Effective as of the Effective Date of Amendment
No. 5 to the Station Agreement, delete Section 9.2(c) and Section
9.2(e) of the Station Agreement in their entirety and in lieu
thereof substitute Section 9.2(c) and Section 9.2(e) of the
Station Agreement as follows:
(c) Back-up Energy, for any hour, shall be equal to
the amount by which the lesser of (i) Buckeye's Cardinal Hourly
Demand or (ii) Buckeye's Total Firm Reservation, exceeds (iii)
the sum of (A) Total Net Available Capability of Buckeye's Units
for such hour, (B) energy associated with Buckeye's Supplementary
Power, if any, for such hour as determined by the provisions of
Section 10.3(j) of this Agreement, and (C) energy associated with
Buckeye's Excess Supplementary Power, if any, for such hour as
determined by the provisions of Section 10.3(k) of this
Agreement. Back-up Energy, as determined for each hour, shall be
accumulated and billed on a calendar month basis.
* * *
(e) Energy associated with Replacement Power, for any
hour in which Ohio is not obligated to furnish Back-up Power,
shall, if Ohio supplies energy associated with Replacement Power,
be equal to the amount by which the lesser of (i) Buckeye's
Cardinal Hourly Demand or (ii) Buckeye's Total Firm Reservation,
exceeds (iii) the sum of (A) Total Net Available Capability of
Buckeye's Units for such hour, (B) energy associated with
Buckeye's Supplementary Power, if any, for such hour as
determined by the provisions of Section 10.3(j) of this
Agreement, and (C) energy associated with Buckeye's Excess
Supplementary Power, if any, for such hour as determined by the
provisions of Section 10.3(k) of this Agreement. Energy
associated with Replacement Power, as determined for each hour,
shall be accumulated and billed on a calendar month basis.
ARTICLE FOUR
Delivery Service.
4.1 Effective as of the Effective Date of Amendment No.
5 to the Station Agreement, add at the end of Article Twelve of
the Station Agreement the following new Sections 12.4 and 12.5:
12.4 (a) In order to provide for the sale of off-peak
power, and the energy related thereto, by the Buckeye Members, at
wholesale to electric utility systems within the State of Ohio,
Buckeye Bulk Power Delivery Points, in addition to Delivery
Points as defined and provided for in the Power Delivery
Agreement, may be established at points on Ohio's Bulk
Transmission Facilities in Ohio as designated in accordance with
the procedures described in Subsections 12.4(b), 12.4(c) and
12.4(d) herein.
(b) Buckeye Bulk Power Delivery Points may be
established at points on Ohio's Bulk Transmission Facilities in
Ohio at which a portion of the Buckeye Power Requirement is to be
delivered to Buckeye for the ultimate purpose of sale at
wholesale to one or more electric utility systems within the
State of Ohio by a Buckeye Member either (i) at points where
Ohio's Bulk Transmission Facilities in Ohio interconnect with
bulk transmission facilities of electric utility systems in Ohio,
including Buckeye or any Buckeye Member, which are not otherwise
interconnected with any other electric system, or (ii) at (x)
points where Ohio's Bulk Transmission Facilities in Ohio
interconnect with bulk transmission facilities of electric
utility systems in Ohio which are otherwise interconnected in
turn with still other electric utility systems, or (y) at
facilities owned by Buckeye or any Buckeye Member which are
interconnected with bulk transmission facilities of other
electric utility systems in Ohio which are in turn interconnected
with still other electric utility systems.
(c) In the case of Buckeye Bulk Power Delivery Points
to be established under conditions described in subclause (i) of
Subsection 12.4(b) each such Buckeye Bulk Power Delivery Point
shall be established only at a location in the State of Ohio;
provided however, that (i) in no case shall such Buckeye Bulk
Power Delivery Point be established where the initial demand at
such point of delivery shall be less than 1500 kilowatts, (ii) in
each case, it shall be the responsibility of Buckeye, a Buckeye
Member, or its appropriate customer, to make all arrangements
necessary for receipts of power and energy delivered by Ohio to
Buckeye under this Agreement at such Buckeye Bulk Power Delivery
Point, (iii) in each case Buckeye, a Buckeye Member, or its
appropriate customer shall make all arrangements necessary for
the construction and maintenance of any necessary substation
equipment, including such control, switching, metering and
protective equipment as the established practice of Ohio requires
at similar locations on its system, and (iv) in no case shall
Ohio be required in establishing any such Buckeye Bulk Power
Delivery Point to provide any additions to Ohio's Bulk
Transmission Facilities or any of its other facilities including
the construction or installation of any connecting span or spans
of conductors to the facilities of Buckeye or such Buckeye Member
(except under circumstances where (x) Buckeye agrees to pay the
entire cost thereof, and (y) the physical arrangements shall be
mutually agreed upon in writing by Buckeye and Ohio, which
agreement shall not unreasonably be withheld).
(d) In the case of Buckeye Bulk Power Delivery Points to
be established under conditions described in subclause (ii) of
Subsection 12.4(b) hereinabove, each such Buckeye Bulk Power
Delivery Point shall be established only at a location in the
State of Ohio; provided, however, that (i) in no case shall such
Buckeye Bulk Power Delivery Point be established where the
initial demand at such point of delivery shall be less than 5000
kilowatts, (ii) in each case, it shall be the responsibility of
Buckeye, a Buckeye Member, or its appropriate customer, to make
all arrangements necessary for receipts of power and energy
delivered by Ohio to Buckeye under this Agreement at such Buckeye
Bulk Power Delivery Point, and (iii) in no case shall Ohio be
required, in establishing such Buckeye Bulk Power Delivery Point
to provide any additions to Ohio's Bulk Transmission Facilities,
or to any of its other facilities (except under circumstances
where (x) Buckeye agrees to pay the entire cost thereof, and (y)
the physical arrangements shall be mutually agreed upon in
writing by Buckeye and Ohio, which agreement shall not
unreasonably be withheld).
(e) Buckeye may, by giving Ohio such reasonable notice as
shall be mutually agreed upon by the parties, schedule hourly
amounts of power to be delivered by Ohio to Buckeye at each of
the Buckeye Bulk Power Delivery Points established under
conditions described in subclause (ii) of Subsection 12.4(b)
hereinabove and may, by mutual agreement, schedule hourly amounts
of power to be delivered by Ohio to Buckeye at one or more of the
Buckeye Bulk Power Delivery Points established under conditions
described in subclause (i) of Subsection 12.4(b) hereinabove.
The parties shall take all steps necessary to minimize deviations
between actual and scheduled deliveries of such power and energy.
(f) Buckeye Additional Scheduled Delivery Points Hourly
Demand for any hour shall mean the sum of (a) the total number of
kilowatts of demand scheduled for such hour by Buckeye for
delivery by Ohio to Buckeye in accordance with the provisions of
Subsection 12.4(e) hereinabove at the Buckeye Bulk Power Delivery
Points established under conditions described in subclauses (i)
and (ii) of Subsection 12.4(b), and (b) the total number of
kilowatts of demand established by Buckeye during such hour as
measured by suitable metering equipment at the Buckeye Bulk Power
Delivery Points established under conditions described in
subclause (i) of Subsection 12.4(b) hereinabove. In the event
scheduled service to any of the Buckeye Bulk Power Delivery
Points established under conditions described in subclauses (i)
and (ii) of Subsection 12.4(b) is interrupted or affected in any
hour for any reason, so that the total number of kilowatts of
power scheduled by Ohio to Buckeye at such Buckeye Bulk Power
Delivery Points for such hour cannot be delivered, the Buckeye
Additional Scheduled Delivery Points Hourly Demand at such
Buckeye Bulk Power Delivery Points shall equal that portion of
the scheduled amounts of power which can be delivered in such
hour.
(g) For all purposes of the Station Agreement, Buckeye
Additional Scheduled Delivery Points Hourly Demand shall be
considered to be included in the Power Delivery Facilities Hourly
Demand (as defined in the Power Delivery Agreement).
(h) The amounts of power and the associated amounts of
energy scheduled for delivery by Ohio to Buckeye in accordance
with the provisions of Subsection 12.4(e) hereinabove at the
Buckeye Bulk Power Delivery Points established under conditions
described in subclauses (i) and (ii) of Subsection 12.4(b), as
well as the metered power and associated energy delivered by Ohio
to Buckeye at the Buckeye Bulk Power Delivery Points established
under conditions described in subclause (i) of Subsection 12.4(b)
hereinabove shall, for all purposes of this Agreement, be
considered a portion of the Buckeye Power Requirement.
12.5 In order to preserve the respective entitlements
of Ohio and Buckeye as provided hereunder, Buckeye represents,
warrants and agrees that it will use its best efforts not to
schedule, except by mutual agreement, a Buckeye Additional
Scheduled Cardinal Hourly Demand under circumstances which it
could reasonably estimate would cause, as a result of such
scheduling, a new Buckeye Cardinal Peak Demand to be established
in any hour.
ARTICLE FIVE
Effective Date of Amendment No. 5
to Station Agreement.
5.1 This Amendment No. 5 to the Station Agreement and
the Station Agreement as modified by Amendments 1 through 5 shall
become effective on the date on which the last of the following
events shall have occurred:
(a) The Rural Electrification Administration shall
have approved in writing this Amendment No. 5 to the Station
Agreement;
(b) The Public Utilities Commission of Ohio shall have
issued an order authorizing and approving the arrangements
provided for in this Amendment No. 5 to the Station Agreement and
such order shall have become effective without condition;
(c) This Amendment No. 5 to the Station Agreement
shall have been filed with, and accepted for filing without
condition by, the Federal Energy Regulatory Commission (FERC)
under the Federal Power Act as a rate schedule, or as a
supplement to a rate schedule, of Ohio; and
(d) Buckeye, Operating Company and Ohio shall each
have caused this Amendment No. 5 to the Station Agreement to be
executed by their officers thereunto duly authorized.
Each party hereto will use its best efforts to take or cause to
be taken all action requisite to the end that the foregoing
events shall occur and that this Amendment No. 5 to the Station
Agreement shall become effective as provided in this Section 5.1
at the earliest practical date.
IN WITNESS WHEREOF, the parties have caused this
Amendment No. 5 to the Station Agreement to be executed by their
officers thereunto duly authorized as of the date first above
written.
OHIO POWER COMPANY
By /s/ A. Joseph Dowd
Vice President
BUCKEYE POWER, INC.
By /s/ Robert M. Cleveland
President
CARDINAL OPERATING COMPANY
By /s/ Frank N. Bien
Vice President
<PAGE>
AMENDMENT NO. 6
to
STATION AGREEMENT
Amendment dated as of June 1, 1981, to Station
Agreement dated as of January 1, 1968 among OHIO POWER COMPANY,
an Ohio corporation (herein called "Ohio"), BUCKEYE POWER, INC.,
an Ohio corporation not for profit (herein called "Buckeye"), and
CARDINAL OPERATING COMPANY, an Ohio corporation (herein called
"Operating Company").
W I T N E S S E T H :
WHEREAS, Ohio, Buckeye and Operating Company have
entered into a Station Agreement dated as of January 1, 1968 and
five amendments thereto dated, respectively, as of October 1,
1973, March 1, 1976, March 1, 1977, December 1, 1977 and April
15, 1980, with respect to the operation of the Cardinal Station;
and
WHEREAS, as indicated in the preambles to Amendment No.
5 to the Station Agreement, the experience of the Buckeye Members
in the years since the commencement of operations by Buckeye in
1968 reflects, to a greater degree than originally contemplated,
sharp winter peak demands during relatively brief time periods
resulting from the increased utilization by customers of the
Buckeye Members of electric power and energy for home heating,
thus establishing Buckeye Cardinal Peak Demands under the Station
Agreement at successively higher levels while the loads served by
the Buckeye Members at other times of the year could be
substantially increased without increasing the Buckeye Cardinal
Peak Demand, and it is the desire of the Buckeye Members to sell
to the greatest extent practicable such off-peak power, and the
energy related thereto, without increasing the Buckeye Cardinal
Peak Demand, it being hoped that sales of such type could improve
Buckeye's utilization of Buckeye's Units and thereby be in the
best interests of Buckeye and its Buckeye Members; and
WHEREAS, Ohio is an associate company in the holding
company system as defined in the Public Utility Holding Company
Act of 1935 (herein called the "1935 Act") of which American
Electric Power Company, Inc. (herein called "American"), a
corporation organized and existing under the laws of the State of
New York and also qualified to do business in the State of Ohio,
is the holding company; and
WHEREAS, Columbus and Southern Ohio Electric Company
(herein called "Columbus"), a corporation organized and existing
under the laws of the State of Ohio, became a subsidiary company,
as defined in the 1935 Act, of American in May 1980, and at such
time also became (i) an "associate company", as defined in the
1935 Act, in the holding company system in which American and
Ohio are, among other corporations, also associate companies and
(ii) an "Ohio Associate", as defined in the Station Agreement;
and
WHEREAS, Buckeye, Ohio, Operating Company and Columbus
desire, for the limited purpose of providing for the
establishment and operation of Buckeye Bulk Power Delivery Points
pursuant to Sections 12.4 and 12.5 of the Station Agreement, to
include the 138-kv and 345-kv transmission facilities owned by
Columbus within the State of Ohio (excluding any such facilities,
or interests therein, which are commonly owned by Columbus as a
tenant-in-common with other corporations or otherwise jointly
owned with other corporations which are not Ohio Associates as
defined in the Station Agreement) as part of the transmission
facilities which are defined as "Ohio's Bulk Transmission
Facilities" in connection with the establishment and operation of
one or more Buckeye Bulk Power Delivery Points pursuant to
Sections 12.4 and 12.5 of the Station Agreement; and
WHEREAS, Ohio, Buckeye and Operating Company desire to
effect an additional amendment to the Station Agreement to give
effect to the purpose described in the next preceding preamble of
this Amendment No. 6 to the Station Agreement;
NOW, THEREFORE, in consideration of the premises and
the mutual covenants herein contained, Ohio, Buckeye and
Operating Company do hereby agree as follows:
ARTICLE ONE
Inclusion of Bulk Transmission Facilities
of Columbus As A Part Of Ohio's Bulk
Transmission Facilities
1.1 Effective as of the date when this Amendment No. 6
to the Station Agreement shall initially become effective and (a)
so long as Columbus shall constitute an Ohio Associate, as
defined in Section 1.1 of the Station Agreement, of which this
Amendment No. 6 is a part, and (b) so long as the Station
Agreement as amended by Amendment Nos. 1 through 6, shall remain
in effect, or, if the provisions of this Amendment No. 6 to the
Station Agreement shall be amended with the prior written consent
of Columbus, so long as the Station Agreement, as so amended,
shall remain in effect, as herein provided, the 138-kv and 345-kv
transmission facilities which are owned by Columbus within the
State of Ohio (excluding any such facilities, or interests
therein, which are owned by Columbus as a tenant-in-common, or
otherwise jointly owned, with other corporations which are not
Ohio Associates) shall be, and be deemed to be, a part of Ohio's
Bulk Transmission Facilities under the Station Agreement for the
purposes of Section 12.4 and Section 12.5 of the Station
Agreement, and such other provisions of the Station Agreement as
are related to the establishment of, and operations related to
Buckeye Bulk Power Delivery Points; provided, however, that (i)
in no case shall the establishment of any Buckeye Bulk Power
Delivery Point impair the ability of Columbus or Ohio to supply
power and energy to other customers of Columbus or Ohio, and (ii)
in any case where a Buckeye Bulk Power Delivery Point involves a
connection with facilities owned by Columbus, Buckeye, or the
Buckeye Member involved, shall reimburse Columbus for such
necessary equipment (including expenses associated with the
operation of such equipment), as the established practice of
Columbus requires, to operate, control and meter delivery of
power and energy at such a Buckeye Bulk Power Delivery Point; and
provided further that, during the period between the date when
this Amendment No. 6 to the Station Agreement shall initially
become effective pursuant to Section 2.1 hereof, and the date
when this Amendment No. 6 to the Station Agreement shall become
fully effective as provided in Section 2.2 hereof, (i) no Buckeye
Bulk Power Delivery Point shall be established at any point on
Ohio's Bulk Transmission Facilities in Ohio, comprising any
138-kv and/or 345-kv transmission facilities of Columbus, which
would require any additions on any of Ohio's Bulk Transmission
Facilities, or any of its other facilities or those of Columbus,
or which would require the construction or installation of any
connecting span or spans of conductors to facilities of Buckeye,
a Buckeye Member, or a customer of either, and (ii) it shall be
the responsibility of Buckeye, a Buckeye Member, or its
appropriate customer, during such interim period to make with
Columbus all arrangements necessary for receipts of power and
energy delivered by Ohio to Buckeye under the Station Agreement
at such Buckeye Bulk Power Delivery Point, it being the purpose
and intent of Ohio, Buckeye and Operating Company that, until
Amendment No. 6 to the Station Agreement shall become fully
effective pursuant to Section 2.2 hereof, deliveries of power and
energy to Buckeye or a Buckeye Member, or to a customer of
Buckeye or such Buckeye Member, shall be effected over facilities
of Columbus which are currently interconnected with facilities of
some other electric system and which are, at the date of this
Amendment No. 6 to the Station Agreement installed and fully
capable of operation without the installation of any further
facilities of any nature; and further provided that, in the event
that this Amendment No. 6 to the Station Agreement shall not
become fully effective pursuant to Section 2.2 hereof prior to
November 1, 1981 this Amendment No. 6 shall no longer be
effective on and after November 1, 1981 except that Buckeye, any
Buckeye Member involved and Ohio shall make such arrangements and
adjustments as shall be necessary to eliminate any and all such
interconnections with the facilities of Columbus as a Buckeye
Bulk Power Delivery Point and to restore the parties, and
Columbus, to the respective positions they would have occupied if
the initial effective date of Amendment No. 6 to the Station
Agreement had never occurred. A Buckeye Bulk Power Delivery
Point established on the transmission facilities of Columbus
pursuant to the provisions of this Amendment No. 6 to the Station
Agreement shall not be deemed to be a Delivery Point established
pursuant to Article Four of the Power Delivery Agreement.
Nothing contained in this Amendment No. 6 to the Station
Agreement, however, shall be construed to restrict, limit or
waive, directly or by implication, any rights which (i) Buckeye
or (ii) Columbus or Ohio may have under the Power Delivery
Agreement.
ARTICLE TWO
Effective Date of Amendment No. 6
to Station Agreement
2.1 The initial effective date of this Amendment No. 6
to the Station Agreement shall be the date on which the last of
the following events shall have occurred:
(i) Buckeye, Operating Company and Ohio shall each
have completed the execution of this Amendment No. 6 to the
Station Agreement by their respective officers thereunto duly
authorized;
(ii) Columbus shall have completed by a duly
authorized officer the form of consent and agreement with the
foregoing provisions of this Amendment No. 6 to the Station
Agreement which is hereto attached; and
(iii) June 30, 1981.
2.2 This Amendment No. 6 to the Station Agreement, and
the Station Agreement as modified by Amendments 1 through 6,
shall become fully effective on the date on which the last of the
following events shall have occurred:
(a) The initial effective date of this Amendment No. 6
to the Station Agreement shall have occurred;
(b) The Rural Electrification Administration shall
have approved in writing this Amendment No. 6 to the Station
Agreement;
(c) The Public Utilities Commission of Ohio shall have
issued an order authorizing and approving the arrangements
provided for in this Amendment No. 6 to the Station Agreement and
such order shall have become effective without condition; and
(d) This Amendment No. 6 to the Station Agreement
shall have been filed with, and accepted for filing without
condition by, the Federal Energy Regulatory Commission under the
Federal Power Act as a rate schedule, or as a supplement to a
rate schedule, of Columbus or Ohio, or both.
Each party hereto will use its best efforts to take or cause to
be taken all action requisite to the end that the foregoing event
shall occur and that this Amendment No. 6 to the Station
Agreement shall become fully effective as provided in this
Section 2.2 at the earliest practical date.
IN WITNESS WHEREOF, the parties have caused this
Amendment No. 6 to the Station Agreement to be executed by their
officers thereunto duly authorized as of the date first above
written.
OHIO POWER COMPANY
By /s/ W.S. White
Chairman of the Board and
Chief Executive Officer
BUCKEYE POWER, INC.
By /s/ Robert N. Clinch, Jr.
President
CARDINAL OPERATING COMPANY
By /s/ Frank N. Bien
Vice President
Columbus and Southern Ohio Electric Company (herein called
"Columbus") intending to be legally bound, does hereby consent
to, and agree with, the foregoing provisions of Amendment No. 6
to the Station Agreement which is hereto attached to the same
extent as if Columbus were a party to the Station Agreement, as
so amended, on June 30, 1981.
COLUMBUS AND SOUTHERN OHIO
ELECTRIC COMPANY
By /s/ Ben T. Ray
President
<PAGE>
<TABLE>
EXHIBIT 12
OHIO POWER COMPANY
Computation of Consolidated Ratios of Earnings to Fixed Charges
and Earnings to Fixed Charges and Preferred Stock Dividend Requirements Combined
(in thousands except ratio data)
<CAPTION>
Year Ended December 31,
1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C>
Fixed Charges:
Interest on First Mortgage Bonds . . . . . . . . . . . . . . . $ 71,322 $ 67,079 $ 71,765 $ 83,572 $ 74,121
Interest on Other Long-term Debt . . . . . . . . . . . . . . . 29,403 28,425 28,575 26,611 24,510
Interest on Short-term Debt. . . . . . . . . . . . . . . . . . 2,362 4,943 5,973 2,711 1,122
Miscellaneous Interest Charges . . . . . . . . . . . . . . . . 3,011 3,177 3,237 2,800 2,958
Estimated Interest Element in Lease Rentals. . . . . . . . . . 22,900 25,000 22,800 22,800 15,300
Total Fixed Charges . . . . . . . . . . . . . . . . . . . 128,998 128,624 132,350 138,494 118,011
Preferred Stock Dividend Requirements (1) . . . . . . . . . . . 28,031 24,915 24,972 24,895 22,801
Total Fixed Charges and Preferred Stock
Dividend Requirements Combined. . . . . . . . . . . . . $157,029 $153,539 $157,322 $163,389 $140,812
Earnings:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . $208,178 $179,990 $166,102 $160,553 $185,770
Plus Federal Income Taxes. . . . . . . . . . . . . . . . . . . 118,040 72,816 78,480 75,783 64,244
Plus State Income Taxes. . . . . . . . . . . . . . . . . . . . 2,386 2,771 1,898 1,082 2,626
Plus Fixed Charges (as above). . . . . . . . . . . . . . . . . 128,998 128,624 132,350 138,494 118,011
Total Earnings. . . . . . . . . . . . . . . . . . . . . . $457,602 $384,201 $378,830 $375,912 $370,651
Ratio of Earnings to Rixed Charges . . . . . . . . . . . . . . 3.54 2.98 2.86 2.71 3.14
Ratio of Earnings to Fixed Charges and Preferred Stock
Dividend Requirements Combined. . . . . . . . . . . . . . . . 2.91 2.50 2.40 2.30 2.63
(1) Represents preferred stock dividend requirements less the effect of preferred stock dividend deduction for federal
income tax purposes ($872,000 in years ended December 31, 1989 through 1992 and $847,000 in year ended December
31, 1993) multiplied by the ratio of earnings before income taxes to net income with the preferred stock dividend
deduction added to the result of the calculation.
</TABLE>
<PAGE>
<TABLE>
Selected Consolidated Financial Data
<CAPTION>
Year Ended December 31,
1993 1992 1991 1990 1989
(in thousands)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENTS DATA:
Operating Revenues $1,708,577 $1,691,597 $1,679,168 $1,778,824 $1,835,934
Operating Expenses 1,440,390 1,439,826 1,412,961 1,510,112 1,534,868
Operating Income 268,187 251,771 266,207 268,712 301,066
Nonoperating Income 18,075 22,391 7,513 11,146 10,586
Income Before Interest Charges 286,262 274,162 273,720 279,858 311,652
Interest Charges 100,492 113,609 107,618 99,868 103,474
Net Income 185,770 160,553 166,102 179,990 208,178
Preferred Stock Dividend
Requirements 16,990 17,115 17,112 17,804 18,083
Earnings Applicable to Common
Stock $ 168,780 $ 143,438 $ 148,990 $ 162,186 $ 190,095
<CAPTION>
December 31,
1993 1992 1991 1990 1989
(in thousands)
<S> <C> <C> <C> <C> <C>
BALANCE SHEETS DATA:
Electric Utility Plant $4,802,327 $4,733,782 $4,761,356 $4,624,077 $4,511,533
Accumulated Depreciation and
Amortization 1,992,082 1,916,011 1,871,711 1,776,299 1,688,983
Net Electric Utility Plant $2,810,245 $2,817,771 $2,889,645 $2,847,778 $2,822,550
Regulatory Assets (a) $ 645,372 $ 132,020 $ 170,645 $ 165,731 $ 184,292
Total Assets $4,116,305 $3,722,354 $3,714,425 $3,613,761 $3,532,175
Common Stock and Paid-in
Capital $ 784,301 $ 786,108 $ 786,108 $ 786,110 $ 786,203
Retained Earnings 474,500 445,955 436,689 420,755 400,635
Total Common Shareowner's
Equity $1,258,801 $1,232,063 $1,222,797 $1,206,865 $1,186,838
Cumulative Preferred Stock:
Not Subject to Mandatory
Redemption $ 126,240 $ 232,978 $ 232,978 $ 233,133 $ 242,095
Subject to Mandatory
Redemption (b) 115,000 - - - -
Total Cumulative Preferred
Stock $ 241,240 $ 232,978 $ 232,978 $ 233,133 $ 242,095
Long-term Debt (b) $1,194,483 $1,366,221 $1,240,140 $1,198,314 $1,158,301
Obligations Under Capital
Leases (b) $ 97,329 $ 96,168 $ 112,802 $ 107,207 $ 110,862
Total Capitalization and
Liabilities $4,116,305 $3,722,354 $3,714,425 $3,613,761 $3,532,175
(a) Effective January 1, 1993 a new accounting standard Statement of
Financial Accounting Standards No. 109, Accounting for Income Taxes, was
adopted resulting in an increase in regulatory assets. (See Note 1 of
the Notes to Consolidated Financial Statements).
(b) Including portion due within one year.
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Net Income Increased
Net income increased 16% to $185.8 million in 1993 due mainly to improved
retail sales reflecting a return to normal weather, an improvement in the
industrial economy in the Company's service territory and decreased interest
expense due to refinancings and decreased borrowings. In 1992 net income
decreased 3% due to unseasonably mild weather, price competition in the
short-term wholesale energy market, and increased interest charges reflecting
the issuance of additional long-term debt.
Outlook
The electric utility industry is expected to undergo significant changes
for the remainder of the decade because of increasing competition in the
generation and sale of electricity and increasing energy flows resulting from
open transmission access. Although management believes that the Company is
well positioned, as a low cost producer, to compete, efforts will continue to
increase effectiveness and productivity through the restructuring and
combination of operations with an affiliate, Columbus Southern Power Company.
These efforts have eliminated over 200 positions of the Company and closed
duplicate and less productive distribution facilities.
The Company faces additional challenges recovering the cost of affiliated
coal-mining operations including the cost of eventual mine closures and
reclamation, the Clean Air Act Amendments of 1990 and other environmental
concerns that could affect future financial performance and possibly the
ability to meet financial obligations and commitments. While management
believes the Company is equipped to meet these challenges, future financial
performance is heavily dependent on the ability to obtain favorable rate-
making treatment to recover on a timely basis the Company's costs of service.
Future results of operations will also be affected by the continued
economic health of the Company's service territory, the weather, competition
for wholesale sales, the market price for unaffiliated coal vs. the cost
of affiliated coal, new environmental laws and regulations and the rate-
making policies of the Company's regulators. Many of these factors are not
generally within management's direct control yet every effort will be made to
work with regulators, government officials, and current and prospective
customers to positively influence these critical factors and to take
advantage of the opportunities increased competition will bring.
<PAGE>
Operating Revenues and Energy Sales
The slight increase in revenues in 1993 and 1992 was predominantly
attributable to increased retail sales in 1993 and increased wholesale sales
in 1992. The change in revenues in 1993 and 1992 can be analyzed as follows:
Increase (Decrease)
From Previous Year
(dollars in millions) 1993 1992
Amount % Amount %
Retail:
Price variance $ (6.6) $(10.7)
Volume variance 41.1 4.9
Fuel Cost Recoveries 7.2 7.0
41.7 3.5 1.2 0.1
Wholesale:
Price variance 13.4 (12.9)
Volume variance (38.2) 25.7
Fuel Cost Recoveries (0.7) (2.2)
(25.5) (5.5) 10.6 2.3
Other Operating Revenues 0.8 0.6
Total $ 17.0 1.0 $ 12.4 0.7
The increase in retail revenues in 1993 reflects a return to normal hot
summer weather, which increased sales to residential and commercial
customers, and continued improvement in industrial sales. The increase in
industrial sales was mainly due to improved business conditions which in-
creased the number of industrial customers and the sales to existing
customers.
Wholesale sales decreased in 1993 and increased in 1992 mainly as a result
of changes in demand from the American Electric Power System Power Pool
(Power Pool). The variation in deliveries to the Power Pool was mainly due
to the nuclear generating units of an affiliated company being out of service
for refueling and maintenance in 1992. Energy sales to the Power Pool are
priced to compensate the supplying Power Pool member for its out-of-pocket
costs. Partially offsetting the change in Power Pool sales in both years
were energy sales to unaffiliated utilities which increased in 1993 and
decreased in 1992. The upturn in 1993 sales to unaffiliated utilities was
mainly in short-term sales and was due to decreased availability of
unaffiliated generating units combined with the return to normal hot summer
weather. The decline in sales to unaffiliated utilities in 1992 was caused
by price competition in the wholesale electric energy market, increased
availability of unaffiliated utilities' generating units, the expiration of
certain wholesale contracts, the sluggish economy and mild weather.
Efforts to improve short-term wholesale sales are affected by the highly
competitive nature of the short-term energy market and other factors, such as
unaffiliated generating plant availability, the weather and the economy, that
are not generally within management's control. Future results of operations
will be affected by management's ability to make cost-effective wholesale
sales or, if such sales are reduced, the ability to timely raise retail
rates.
<PAGE>
Operating Expenses
Operating expenses were relatively unchanged in 1993 after increasing 2% in
1992. Changes in the components of operating expenses were as follows:
Increase (Decrease)
From Previous Year
(dollars in millions) 1993 1992
Amount % Amount %
Fuel $(22.1) (3.3) $ 26.0 4.1
Purchased Power 10.2 16.7 (15.4) (20.2)
Other Operation 9.3 4.4 9.5 4.7
Maintenance (14.4) (9.3) 5.8 3.9
Depreciation and
Amortization 4.2 3.4 2.4 2.0
Taxes Other Than Federal
Income Taxes 8.5 5.3 16.6 11.6
Federal Income Taxes 4.9 7.5 (18.0) (21.4)
Total Operating
Expenses $ 0.6 - $ 26.9 1.9
In 1993 fuel expense decreased due to a lower average cost of fuel consumed
and decreased generation reflecting reduced Power Pool demand. The increase
in fuel expense in 1992 was caused by increased generation to meet the
increased demand from the Power Pool and industrial customers, partly offset
by a lower average cost of fuel consumed.
Purchased power expense increased significantly in 1993 mainly due to an
increase in purchases from the Power Pool to meet the increased demand for
retail power. The decrease in purchased power in 1992 resulted mainly from a
decline in power purchased from unaffiliated utilities for pass-through sales
to other unaffiliated utilities and a decrease in Power Pool energy
purchases.
Reductions in scheduled power plant maintenance accounted for the decrease
in maintenance expense in 1993.
The increase in taxes other than federal income taxes in 1993 was mainly in
West Virginia business and occupation taxes and resulted from increased
generation at plants located in West Virginia. In 1992 taxes other than
federal income taxes increased due to the effect of favorable prior year
accrual adjustments recorded in 1991 associated with the closing of prior
years' business and occupation tax returns.
In 1993 federal income tax expense attributable to operations increased
primarily due to increased pre-tax operating income, offset in part by
unfavorable accrual adjustments recorded in 1992 for prior years' federal
income tax returns. The decrease in 1992 federal income tax expense
attributable to operations was due primarily to a decrease in pre-tax
operating income.
Nonoperating Income and Interest Charges
Nonoperating income declined in 1993 and increased significantly in 1992
mainly because of interest income recorded in 1992 on tax refunds from the
Internal Revenue Service in connection with the settlement of audits of prior
years' tax returns. Interest income was also recorded in 1992 on receivables
from customers for the collection of prior years' fuel costs resulting from
the favorable resolution of litigation regarding Federal Energy Regulatory
Commission (FERC) ordered revenue refunds which the Company made in 1988.
Interest charges decreased in 1993 after increasing in 1992. Debt
refinancings and retirements reduced interest in 1993. Interest charges in-
creased in 1992 largely due to the issuance of additional first mortgage
bonds used to repay short-term debt. Management intends to continue, where
possible, to refinance higher cost securities to take advantage of favorable
market interest rates.
Regulatory Assets and Deferred Tax Liabilities Increase
The Company prospectively adopted a new accounting standard for income
taxes on January 1, 1993. The new standard required, among other things,
that regulated entities record deferred tax liabilities on temporary
differences previously flowed-through for rate-making and book accounting.
Where rate-making provides for flow-through treatment, corresponding
regulatory assets were recorded. As a result total assets and liabilities
increased significantly while net income increased by only $3.6 million.
Construction Spending
Total plant and property additions decreased to $197 million in 1993 from
$222 million in 1992. Management estimates construction expenditures for the
next three years to be $484 million including expenditures necessary to meet
the requirements of the Clean Air Act Amendments of 1990. These amounts
exclude flue gas desulfurization systems (scrubbers) at the Company's two-
unit 2,600 megawatt (mw) Gavin Plant which are being constructed by an
unaffiliated entity and which will be leased under an operating lease. Funds
for construction of new facilities and improvement of existing facilities
come from a combination of internally generated funds, short-term and long-
term borrowings and equity investments by the Company's parent, American
Electric Power Company, Inc. (AEP Co., Inc.). Approximately 86% of the
construction expenditures for the next three years will be financed
internally with the remainder financed externally.
Debt and Preferred Stock Financing
The Company generally issues short-term debt to provide for interim
financing of capital expenditures that exceed internally generated funds. At
December 31, 1993, unused short-term lines of credit of $537 million shared
with other AEP System companies were available. Short-term borrowings in-
creased by $40 million in 1993. Regulatory provisions limit short-term
borrowing to $200 million; however, this limit may be raised. Outstanding
short-term debt is reduced periodically through the issuance of long-term
debt and preferred stock and through equity capital contributions by AEP Co.,
Inc.
The Company received or has requested regulatory approval to issue up to
$85 million of long-term debt and $85 million of preferred stock. Management
expects to use the resultant proceeds to retire short-term debt, refinance
higher cost and maturing long-term debt, refund cumulative preferred stock
and fund construction expenditures.
Unless the Company meets certain earnings or coverage tests, additional
long-term debt or preferred stock cannot be issued. In order to issue
certain long-term debt without refunding an equal amount of existing debt,
pre-tax earnings must be equal to at least twice the annual interest charges
on long-term debt after giving effect to the new debt. To issue additional
preferred stock, after-tax gross income must be at least equal to one and
one-half times annual interest and preferred stock dividend requirements
after giving effect to the new preferred stock. The Company presently
exceeds these minimum coverage requirements. At December 31, 1993, the long-
term debt and preferred stock coverage ratios were 4.65 and 2.88,
respectively.
Recently a major credit rating agency reevaluated the credit worthiness of
companies in the electric utility industry based on perceived risk from
deregulation, increased competition, reduced load growth, escalating nuclear
plant costs and environmental concerns. The agency lowered its ratings
outlook for approximately one-third of the companies but not for Ohio Power
which was regarded by the agency as being relatively well positioned to meet
future competitive challenges.
Competition
Since 1990 the short-term wholesale energy market has been extremely
competitive. With the passage of the Energy Policy Act of 1992, which
provides for greater ease of wholesale transmission access and reduces
certain regulatory restrictions for independent power producers (IPPs),
competition is expected to increase in the long-term wholesale market and in
the construction of new generating capacity. For example, IPPs are no longer
required to find an industrial host to utilize the steam by-product from the
generation of electricity to build a generating unit and avoid regulation
under the Public Utility Holding Company Act of 1935 (1935 Act). The Energy
Policy Act also exempts IPPs from requirements under the 1935 Act which,
among other things, permit IPPs to use greater amounts of lower cost debt
which may reduce overall cost of capital. Thus IPPs may have a competitive
advantage. Although the Energy Policy Act specifically prohibits FERC from
ordering retail transmission access, the states can do so and many believe
that the next logical step will be the extension of competition for existing
industrial customers which will present both opportunities and challenges for
the Company.
Although management believes that the Company is well positioned to compete
in this evolving competitive market because of its technical skills and
expertise and its position as a low cost producer, we intend to continue to
examine ways to improve the Company's competitive position. Efforts to
improve operations and reduce costs will continue in order to maintain and
enhance our position as a low cost producer.
Although management may have opportunities to improve shareholder value
through increased competition as a result of open transmission access and
other provisions of the Energy Policy Act of 1992, there is risk and
uncertainty, especially for retail ratepayers and shareholders, regarding
reliability of future transmission service and fair compensation for use of
the Company's extensive high voltage transmission facilities. Management's
goal is to ensure that, to the extent the Company's facilities are used by
others, there is fair and appropriate compensation.
Environmental Concerns and Cost Pressures
Clean Air Act
The Clean Air Act Amendments of 1990 (CAAA) require, among other things,
substantial reductions in sulfur dioxide and nitrogen oxides emitted from
electric generating plants. The AEP Systemwide compliance plan employs
various methods of compliance. The cornerstone of its least-cost strategy is
the installation of scrubbers on the Company's two-unit 2,600 mw Gavin Plant
which is responsible for about 25% of the System's total sulfur dioxide
emissions. The use of scrubbers allows Ohio high-sulfur coal including the
Company's affiliated Meigs mine coal to continue to be burned at the Gavin
Plant. The scrubbers will be leased from an unaffiliated company and are to
be completed by early 1995.
The Public Utilities Commission of Ohio (PUCO) approved the compliance plan
as a least-cost compliance strategy in November 1992. As a result, under
Ohio law the plan is deemed prudent for subsequent PUCO rate proceedings. In
connection with the approval of the plan, the PUCO approved a stipulation
agreement which limits the maximum recoverable cost of the scrubbers to $815
million and imposes a predetermined price for coal burned at certain Company
power plants including the Gavin Plant (discussed below under "Fuel Costs").
The scrubbers are currently estimated to cost at least 10% less than the $815
million cost cap. Based on the estimated cost to complete the scrubbers and
current estimates for Gavin fuel costs, management believes that the two
limits should not result in losses.
Under the approved plan, fuel switching will be the compliance method for
the Company's Muskingum River Plant generating units in 1995 and 2000 and the
Cardinal Plant units in 2000. The plants are currently supplied by wholly-
owned high-sulfur coal-mining subsidiaries, operating the Muskingum and
Windsor mines. Consequently, these affiliated mining operations could shut
down resulting in substantial costs to be recovered. Shutdown costs for the
Muskingum and Windsor mines include investments in the mines, leased asset
buy-outs, reclamation and employee benefits and are estimated to be
approximately $250 million at December 31, 1993.
Management intends to seek recovery through increased rates of the cost of
compliance with the CAAA. Since the Company will incur substantial
compliance costs, management is planning to file for a retail rate increase
in Ohio in 1994. While there can be no assurance that regulators will
provide for recovery of all such costs on a timely basis, every effort is
being made to work with the PUCO to obtain timely recovery of the compliance
cost. The cost of compliance with the CAAA, including potential mine closure
costs, will have an adverse effect on results of operations and financial
condition if not recovered from customers or through asset dispositions.
Global Warming
Concern about global climate change, or "the greenhouse effect" has been
the focus of intensive debate within the United States and around the world.
Much of the uncertainty about what effects greenhouse gas concentrations will
have on the global climate results from a myriad of factors that affect
climate. Based on the terms of a 1992 United Nations treaty that pledged the
United States to reduce greenhouse gas emissions, the Clinton Administration
developed a voluntary plan to reduce, by the year 2000, greenhouse gas
emissions to 1990 levels. The AEP System supports the plan and will work
with the U.S. Department of Energy and other electric utility companies to
formulate a cost effective framework for limiting future greenhouse gas
emissions.
The AEP System strongly supports a policy of proactive environmental
stewardship, whereby actions are taken that make economic and environmental
sense on their own merits, irrespective of the uncertain threat of global
climate change. To reduce emissions, we support energy conservation
programs, development of more efficient generation and end use technologies,
and forest management activities because they are cost effective and bring
long-term benefits to our service area. Should significant new measures to
control the burning of coal be enacted, they could affect the Company's
competitiveness and, if not recovered from customers, adversely impact
results of operations and financial condition.
EMF
Whether electric and magnetic fields (EMF) from transmission and
distribution facilities adversely affect the public health is being
extensively researched. Management continues to support EMF research to help
determine the extent, if any, to which EMF may adversely impact public
health. However, our concern is that new laws imposing EMF limits may be
passed or new regulations promulgated without sufficient scientific study and
evidence to support them. As long as there is uncertainty about EMF, we will
have difficulty finding acceptable sites for our transmission facilities,
which could hamper economic growth within our service area. If the present
energy delivery system must be changed because of EMF concerns, or if the
courts conclude that EMF exposure harms individuals and that utilities are
liable for damages, then results of operations and financial condition could
be adversely affected, unless the costs can be recovered from customers.
Hazardous Material
By-products from the generation of electricity include materials such as
ash, slag and sludge. In addition, generating plants and transmission and
distribution facilities have used asbestos, polychlorinated biphenyls (PCBs)
and other hazardous and non-hazardous materials. Substantial costs to store
and dispose of hazardous and non-hazardous materials have been and will
continue to be incurred. Significant additional costs could be incurred to
comply with new laws and regulations if enacted and to clean up disposal
sites under existing legislation.
The Superfund created by the Comprehensive Environmental Response
Compensation and Liability Act addresses cleanup of hazardous substance
disposal sites and authorizes the United States Environmental Protection
Agency (Federal EPA) to administer the cleanup programs. The Company has
been named by the Federal EPA as a "potentially responsible party" (PRP) for
two sites and has received information requests for four other sites.
Although the potential liability associated with each site must be evaluated
individually, several general statements can be made regarding such potential
liability.
Whether the Company disposed of hazardous substances at a particular site
is often unsubstantiated; the quantity of material disposed of at a site was
generally small; and the nature of the material generally disposed of was
non-hazardous. Typically, the Company is one of many parties named PRPs for
a site and, although liability is joint and several, generally at least some
of the other parties are financially sound enterprises. Therefore,
management does not anticipate material cleanup costs for identified disposal
sites. However, if for unknown reasons, significant costs are incurred for
the cleanup of disposal sites, results of operations and financial condition
would be adversely affected unless the costs can by recovered from insurance
proceeds and/or customers.
Regulatory Concerns
Fuel Costs
In recent years, the Company has experienced difficulties recovering all of
the costs of coal produced at its affiliated mines. A stipulation agreement
established, among other things, a predetermined price of $1.64 per million
Btu's for the three-year period ending November 30, 1994. This agreement
applies to four generating plants, three of which are burning affiliated
coal. An inflation adjusted 15-year predetermined price of $1.575 per
million Btu's for coal burned at the Gavin Plant was established beginning
December 1, 1994. After November 2009 the price that can be recovered for
coal from the affiliated Meigs mine, which supplies the Gavin Plant, will be
limited to the lower of cost or the then-current market price. The
predetermined prices provide the Company with an opportunity to accelerate
recovery of its Ohio jurisdictional investment in and liabilities of the
Meigs mining operation including reclamation and other closure costs to the
extent the actual cost of coal burned at the specified plants is less than
the predetermined prices.
In order to maximize acceleration of the recovery of its investment and
future mine closure costs, management restructured its Meigs mining
operation and purchased lower cost replacement coal under long-term
contracts and on the spot market. Restructuring the Meigs operation
reduced per unit production cost and tons produced. Management reviewed the
potential impact of the stipulation on the Company's ability to recover the
cost of the Ohio jurisdictional portion of its Meigs mining operation.
Based on the estimated future cost of coal at Gavin Plant we believe that
the Company should be able to recover, under the terms of the stipulation
agreement, the Ohio jurisdictional portion of the cost of the Meigs mining
operation including mine closure liabilities.
In July 1992 the affiliated Martinka mining operation was sold and the
Company concurrently entered into a 20-year coal contract with an affiliate
of the buyer. The contract will supply up to 2.5 million tons of low-sulfur
coal annually, including coal that will allow the Company to comply with the
CAAA. The Martinka sale did not have a significant impact on results of
operations or financial condition. The contract and sale are subject to PUCO
review in a current fuel clause proceeding.
After the expiration of the three-year predetermined price on November 30,
1994, the Company will pursue recovery of the full Ohio jurisdictional cost
of affiliated coal produced at its Muskingum and Windsor mines. Under the
stipulation agreement the parties agreed to negotiate any dispute concerning
the cost of affiliated fuel burned at the Muskingum River and Cardinal units
after November 30, 1994. As indicated above, compliance with the January 1,
2000 Phase II deadline of the CAAA may cause these mines to close. Manage-
ment intends to seek adequate and timely recovery of any closure costs for
the Muskingum and Windsor mining operations as well as for the cost of the
non-Ohio jurisdictional portion of the Meigs mining operation. In the event
the cost of closing affiliated mines and/or the cost of affiliated coal
cannot be recovered, results of operations and financial condition would be
adversely affected.
<PAGE>
Pending Litigation
Meigs Mine
In February 1994 a subsidiary, Southern Ohio Coal Company (SOCCo), returned
its Meigs 31 mine to service after it was inundated with water in July 1993
from an adjoining, sealed and abandoned mine owned by SOCCo. On July 26,
1993 the Ohio Environmental Protection Agency (Ohio EPA) approved a plan to
pump water from the mine and discharge it into Ohio River tributaries under
stringent conditions for biological and water quality monitoring and for
restoring the streams after pumping. Had SOCCo been required to fully treat
all of the water before discharge, it may have been impossible to pump the
water within a reasonable time period to limit damage to the mine and its
equipment and to return the miners to work. To date, pumping has removed
most of the water in the mine.
The Federal EPA and the Federal Office of Surface Mining Reclamation and
Enforcement (OSM) challenged Ohio EPA's jurisdiction and attempted to stop
the state approved pumping. SOCCo sought and received protection in the
federal courts from the attempts of the Federal EPA and OSM to stop the
pumping operation. Since September 16, 1993 all water pumped from the mine
has been treated and discharged in compliance with water discharge permits.
Note 3 of the Notes to Consolidated Financial Statements describes the
details of the litigation.
The outcome of pending litigation as to whether the Federal EPA and OSM had
jurisdiction to stop the pumping of water prior to September 16, 1993 cannot
be predicted. Therefore, it is not possible at this time to determine the
amount of any additional environmental mitigation costs and penalties
that might be imposed if SOCCo is unsuccessful in this litigation.
Management is advised by independent consultants that the damage to the
streams and biological life therein is minor. The mine was returned to
service in February 1994 and an insurance claim was filed for damage to the
mine's equipment. Based on the expected outcome of the litigation, the
amount of the insurance proceeds and status of required environmental
mitigation, management does not expect that the net cost of the Meigs 31 mine
restoration will materially affect results of operations.
Other Litigation
The Company is involved in a number of other legal proceedings and claims.
While management is unable to predict the outcome of such litigation, it is
not expected that the resolution of these other matters will have a material
adverse effect on financial condition.
New Accounting Standards
Two new accounting standards were issued in 1993 that were adopted in 1994.
The implementation of these new standards will not have a significant effect
on results of operations or financial condition.
Effects of Inflation
Inflation affects the cost of replacing utility plant and the cost of
operating and maintaining such plant. The rate-making process limits
recovery of the historical cost of assets resulting in economic losses when
the effects of inflation are not recovered from customers on a timely basis.
However, economic gains that result from the repayment of long-term debt with
inflated dollars partly offset such losses.<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Shareowners and Board of
Directors of Ohio Power Company:
We have audited the accompanying consolidated balance sheets of Ohio Power
Company and its subsidiaries as of December 31, 1993 and 1992, and the
related consolidated statements of income, retained earnings, and cash flows
for each of the three years in the period ended December 31, 1993. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Ohio Power Company and its
subsidiaries as of December 31, 1993 and 1992, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1993 in conformity with generally accepted accounting
principles.
As discussed in Notes 1 and 6 in Notes to Consolidated Financial Statements,
effective January 1, 1993, the Company changed its method of accounting for
income taxes to conform with Statement of Financial Accounting Standards No.
109 "Accounting for Income Taxes," and its method of accounting for
postretirement benefits other than pensions to conform with Statement of
Financial Accounting Standards No. 106 "Employers' Accounting for
Postretirement Benefits Other Than Pensions."
DELOITTE & TOUCHE
Columbus, Ohio
February 22, 1994
<PAGE>
<PAGE>
</TABLE>
<TABLE>
Consolidated Statements of Income
<CAPTION>
Year Ended December 31,
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
OPERATING REVENUES $1,708,577 $1,691,597 $1,679,168
OPERATING EXPENSES:
Fuel 640,963 663,120 637,129
Purchased Power 71,260 61,057 76,490
Other Operation 218,793 209,511 200,036
Maintenance 140,756 155,140 149,382
Depreciation and Amortization 128,668 124,461 122,054
Taxes Other Than Federal Income Taxes 168,772 160,295 143,641
Federal Income Taxes 71,178 66,242 84,229
Total Operating Expenses 1,440,390 1,439,826 1,412,961
OPERATING INCOME 268,187 251,771 266,207
NONOPERATING INCOME 18,075 22,391 7,513
INCOME BEFORE INTEREST CHARGES 286,262 274,162 273,720
INTEREST CHARGES 100,492 113,609 107,618
NET INCOME 185,770 160,553 166,102
PREFERRED STOCK DIVIDEND REQUIREMENTS 16,990 17,115 17,112
EARNINGS APPLICABLE TO COMMON STOCK $ 168,780 $ 143,438 $ 148,990
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
Consolidated Balance Sheets
<CAPTION>
December 31,
1993 1992
(in thousands)
<S> <C> <C>
ASSETS
ELECTRIC UTILITY PLANT:
Production $2,412,973 $2,391,432
Transmission 767,548 758,134
Distribution 766,639 731,559
General (including mining assets) 754,347 773,122
Construction Work in Progress 100,820 79,535
Total Electric Utility Plant 4,802,327 4,733,782
Accumulated Depreciation and Amortization 1,992,082 1,916,011
NET ELECTRIC UTILITY PLANT 2,810,245 2,817,771
OTHER PROPERTY AND INVESTMENTS 138,224 131,211
CURRENT ASSETS:
Cash and Cash Equivalents 20,803 71,056
Accounts Receivable:
Customers 118,133 113,498
Affiliated Companies 27,269 54,466
Miscellaneous 34,733 14,085
Allowance for Uncollectible Accounts (960) (4,353)
Fuel - at average cost 179,554 249,508
Materials and Supplies - at average cost 66,791 69,134
Accrued Utility Revenues 32,234 29,677
Prepayments 43,907 44,281
TOTAL CURRENT ASSETS 522,464 641,352
REGULATORY ASSETS:
Amounts Due From Customers For
Future Federal Income Taxes 433,822 -
Other 211,550 132,020
TOTAL REGULATORY ASSETS 645,372 132,020
TOTAL $4,116,305 $3,722,354
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
December 31,
1993 1992
(in thousands)
<S> <C> <C>
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Common Stock - No Par Value:
Authorized - 40,000,000 Shares
Outstanding - 27,952,473 Shares $ 321,201 $ 321,201
Paid-in Capital 463,100 464,907
Retained Earnings 474,500 445,955
Total Common Shareowner's Equity 1,258,801 1,232,063
Cumulative Preferred Stock:
Not Subject to Mandatory Redemption 126,240 232,978
Subject to Mandatory Redemption 115,000 -
Long-term Debt 1,189,086 1,343,324
TOTAL CAPITALIZATION 2,689,127 2,808,365
OTHER NONCURRENT LIABILITIES 104,172 110,108
CURRENT LIABILITIES:
Long-term Debt Due Within One Year 5,397 22,897
Short-term Debt 40,250 -
Accounts Payable:
General 114,002 66,425
Affiliated Companies 26,087 20,247
Taxes Accrued 168,095 169,406
Interest Accrued 20,862 24,059
Obligations Under Capital Leases 21,916 20,860
Other 107,592 80,358
TOTAL CURRENT LIABILITIES 504,201 404,252
DEFERRED FEDERAL INCOME TAXES 725,283 310,903
DEFERRED INVESTMENT TAX CREDITS 45,795 49,354
REGULATORY LIABILITIES AND DEFERRED CREDITS 47,727 39,372
COMMITMENTS AND CONTINGENCIES (Note 3)
TOTAL $4,116,305 $3,722,354
</TABLE>
<PAGE>
<PAGE>
<TABLE>
Consolidated Statements of Cash Flows
<CAPTION>
Year Ended December 31,
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net Income $ 185,770 $ 160,553 $ 166,102
Adjustments for Noncash Items:
Depreciation, Depletion and Amortization 144,292 143,960 143,325
Deferred Federal Income Taxes (19,607) 3,002 5,783
Deferred Investment Tax Credits (4,222) (4,138) (3,961)
Changes in Certain Current Assets and
Liabilities:
Accounts Receivable (net) (1,479) (67,141) (9,165)
Fuel, Materials and Supplies 72,297 53,036 (30,353)
Accrued Utility Revenues (2,557) 4,176 (2,208)
Accounts Payable 53,417 873 5,043
Other (net) (36,245) (12,565) (25,135)
Net Cash Flows From Operating Activities 391,666 281,756 249,431
INVESTING ACTIVITIES:
Construction Expenditures (161,052) (197,001) (177,096)
Proceeds from Sale of Property and Other 19,124 105,045 2,260
Net Cash Flows Used For Investing Activities (141,928) (91,956) (174,836)
FINANCING ACTIVITIES:
Issuance of Cumulative Preferred Stock 113,610 - -
Issuance of Long-term Debt 517,478 269,231 49,271
Retirement of Cumulative Preferred Stock (109,187) - (157)
Retirement of Long-term Debt (704,959) (145,461) (7,910)
Change in Short-term Debt (net) 40,250 (133,533) 44,968
Dividends Paid on Common Stock (140,042) (134,172) (133,054)
Dividends Paid on Cumulative Preferred Stock (17,141) (17,115) (17,114)
Net Cash Flows Used For Financing Activities (299,991) (161,050) (63,996)
Net Increase (Decrease) in Cash and Cash Equivalents (50,253) 28,750 10,599
Cash and Cash Equivalents January 1 71,056 42,306 31,707
Cash and Cash Equivalents December 31 $ 20,803 $ 71,056 $ 42,306
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
Consolidated Statements of Retained Earnings
<CAPTION>
Year Ended December 31,
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
Retained Earnings January 1 $445,955 $436,689 $420,755
Net Income 185,770 160,553 166,102
631,725 597,242 586,857
Deductions:
Cash Dividends Declared:
Common Stock 140,042 134,172 133,054
Cumulative Preferred Stock:
4.08% Series 204 204 204
4-1/2% Series 911 911 911
4.20% Series 252 252 252
4.40% Series 440 440 440
5.90% Series 199 - -
6.02% Series 321 - -
6.35% Series 1,196 - -
7.60% Series 2,660 2,660 2,660
7-6/10% Series 2,660 2,660 2,660
7.72% Series 691 772 772
7.76% Series 3,337 3,492 3,492
8.04% Series 1,206 1,206 1,206
8.48% Series 2,275 2,544 2,544
$2.27 Series 789 1,974 1,973
Total Dividends 157,183 151,287 150,168
Other 42 - -
Total Deductions 157,225 151,287 150,168
Retained Earnings December 31 $474,500 $445,955 $436,689
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES:
Organization
Ohio Power Company (the Company or OPCo) is a wholly-owned subsidiary of
American Electric Power Company, Inc. (AEP Co., Inc.), a public utility
holding company. The Company is engaged in the generation, purchase,
transmission and distribution of electric power in northwestern, east
central, eastern and southern sections of Ohio. As a member of the American
Electric Power (AEP) System Power Pool (Power Pool) and a signatory company
to the AEP Transmission Equalization Agreement, its facilities are operated
in conjunction with the facilities of certain other AEP Co., Inc. owned
utilities as an integrated system.
The Company has three coal-mining subsidiaries: Central Ohio Coal Company
(COCCo), Southern Ohio Coal Company (SOCCo) and Windsor Coal Company (WCCo)
which conduct mining operations at the Muskingum mine, Meigs mine and Windsor
mine, respectively. Coal produced by the coal-mining subsidiaries is sold to
the Company at cost plus a Securities and Exchange Commission (SEC) approved
return on investment.
Regulation
As a member of the AEP System, OPCo is subject to regulation by the SEC
under the Public Utility Holding Company Act of 1935 (1935 Act). Retail
rates are regulated by the Public Utilities Commission of Ohio (PUCO). The
Federal Energy Regulatory Commission (FERC) regulates wholesale rates.
Principles of Consolidation
The consolidated financial statements include OPCo and its wholly-owned
subsidiaries. Significant intercompany items were eliminated in consol-
idation.
Basis of Accounting
As a rate-regulated entity, OPCo's financial statements reflect the
actions of regulators that result in the recognition of revenues and expenses
in different time periods than enterprises that are not rate regulated. In
accordance with Statement of Financial Accounting Standards (SFAS) No. 71,
Accounting for the Effects of Certain Types of Regulation (SFAS 71),
regulatory assets and liabilities are recorded to defer expenses or revenues
reflecting such rate-making differences.
Utility Plant
Electric utility plant is stated at original cost and is generally subject
to first mortgage liens. Additions, major replacements and betterments are
added to the plant accounts. Retirements from the plant accounts and
associated removal costs, net of salvage, are deducted from accumulated
depreciation.
The costs of labor, materials and overheads incurred to operate and
maintain utility plant are included in operating expenses.
Allowance for Funds Used During Construction (AFUDC)
AFUDC is a noncash income item that is recovered over the service life of
utility plant through depreciation and represents the estimated cost of
borrowed and equity funds used to finance construction projects. The average
rates used to accrue AFUDC were 9.50% in 1993, 7.25% in 1992 and 6% in 1991,
and the amounts of AFUDC accrued were $5 million in 1993, $4 million in 1992
and $2 million in 1991.
Depreciation, Depletion and Amortization
Depreciation is provided on a straight-line basis over the estimated
useful lives of utility plant other than coal-mining property and is
calculated largely through the use of composite rates by functional class
(i.e., production, transmission, distribution, etc.). Amounts to be used for
plant demolition are presently recovered through depreciation charges
included in rates. Depreciation, depletion and amortization of coal-mining
assets are provided over their estimated useful lives and are calculated
using the straight-line method for mining structures and equipment and the
units-of-production method for coal rights and mine development costs and are
included in the cost of coal charged to fuel expense.
Cash and Cash Equivalents
Cash and cash equivalents include temporary cash investments with original
maturities of three months or less.
Operating Revenues
Revenues include an accrual for electricity consumed but unbilled at
month-end as well as billed revenues.
Fuel Costs
Changes in retail jurisdictional fuel cost are deferred until reflected in
revenues in later months through a PUCO fuel cost recovery mechanism.
Wholesale jurisdictional fuel cost changes are expensed and billed as
incurred.
Income Taxes
Effective January 1, 1993, the Company adopted the liability method of
accounting for income taxes as prescribed by SFAS 109, Accounting for Income
Taxes. Under this standard deferred federal income taxes are provided for
all temporary differences between the book cost and tax basis of assets and
liabilities which will result in a future tax consequence. In prior years
deferred federal income taxes were provided for differences between book and
taxable income except where flow-through accounting for certain differences
was reflected in rates. Flow-through accounting is a method whereby federal
income tax expense for a particular item is the same for accounting and rate-
making as in the federal income tax return. As a result of the adoption of
SFAS 109 significant additional deferred tax liabilities were recorded for
items afforded flow-through treatment in rates. In accordance with SFAS 71
significant corresponding regulatory assets were also recorded to reflect the
future recovery of additional taxes due when the temporary differences
reverse. As a result of this change in accounting effective January 1, 1993,
deferred federal income tax liabilities increased by $403.4 million and
regulatory assets by $407 million, and net income was increased by $3.6
million.
Investment tax credits utilized in prior years' federal income tax returns
were deferred and are being amortized over the life of the related plant
investment in accordance with rate-making treatment.
Debt and Preferred Stock
Gains and losses on reacquired debt are deferred and amortized over the
term of the reacquired debt. If the debt is refinanced the reacquisition
costs are deferred and amortized over the term of the replacement debt.
Debt discount or premium and debt issuance expenses are amortized over the
term of the related debt, with the amortization included in interest charges.
Redemption premiums paid to reacquire preferred stock are deferred and
amortized in accordance with rate-making treatment. The excess of par value
over costs of preferred stock reacquired to meet sinking fund requirements is
credited to paid-in capital.
Other Property and Investments
Other property and investments are generally stated at cost.
Reclassifications
Certain prior-period amounts were reclassified to conform with current-
period presentation.
2. RATE MATTERS:
Recovery of Fuel Costs
On June 24, 1993, the FERC issued an order to the Company authorizing
recovery of 1988 FERC ordered refunds to wholesale customers and foregone
fuel cost recoveries, including interest, related to the cost of coal from
the affiliated Martinka mining operations. With the favorable conclusion of
this litigation in December 1992, the favorable impact on results of
operations was recorded in 1992.
OPCo sold its affiliated Martinka mining operation in July 1992 and
concurrently entered into a 20-year coal-supply contract with an affiliate of
the buyer. Under the contract OPCo will purchase up to 2.5 million tons of
low-sulfur coal annually, including coal that will allow compliance with the
Clean Air Act Amendments of 1990 (CAAA). The Martinka sale did not have a
significant impact on results of operations or financial condition. The
contract and sale are subject to PUCO review in a current fuel clause
proceeding.
On September 1, 1993, the municipal wholesale customers appealed to the
U.S. Court of Appeals FERC orders that dismissed an April 1991 complaint.
This complaint involved the same issues that were favorably resolved in
litigation concerning FERC jurisdictional fuel recoveries from the Martinka
mine. Another complaint of the municipal wholesale customers filed with the
FERC in November 1992 requesting an investigation of the Martinka sale was
dismissed in June 1993. The municipal wholesale customers also filed a com-
plaint in November 1992 with the SEC requesting an investigation of the
Martinka sale and an investigation into the pricing of affiliated coal
purchases back to 1986. Since the SEC has not responded to the complaint,
the Company cannot predict the ultimate outcome of this matter.
Coal costs for four of the Company's generating plants, three of which
burn affiliated coal from the Muskingum, Windsor and Meigs mining operations,
are subject to a predetermined price of $1.64 per million Btu's for the
three-year period ending November 30, 1994. Beginning December 1, 1994 the
cost of coal burned at the Gavin Plant is subject to a 15-year predetermined
price of $1.575 per million Btu's with quarterly adjustments. After November
2009 the price that the Company can recover for coal from the affiliated
Meigs mine which supplies the Gavin Plant will be limited to the lower of
cost or the then-current market price. The predetermined prices provide an
opportunity to accelerate recovery of the investment in and the liabilities
of the Meigs mining operations attributable to the Ohio jurisdiction to the
extent the actual cost of coal burned at the four plants is below the prede-
termined prices.
Based on the estimated future cost of coal supplied to the Gavin Plant,
both Meigs and unaffiliated coal, management believes that the Ohio jurisdic-
tional portion of the cost of the Meigs mining operations including mine
closure liabilities will be recovered under the terms of the stipulation
agreement.
Recovery of the Ohio jurisdictional cost of coal produced at the
affiliated Muskingum and Windsor mines will be pursued after the expiration
of the three-year predetermined price in November 1994. In the stipulation
agreement the parties agreed to negotiate any dispute concerning the cost of
affiliated coal burned at the Company's Muskingum River and Cardinal units
after November 30, 1994. The Muskingum mine supplies Muskingum Plant and the
Windsor mine supplies the Cardinal Plant. As discussed in Note 3 under
"Clean Air" the Muskingum and Windsor mines may have to close as part of
compliance with the CAAA. Management believes that costs of compliance with
the CAAA should be recoverable from ratepayers and intends to seek adequate
and timely recovery of any closure costs for the Muskingum and Windsor mining
operations as well as for the non-Ohio jurisdictional portion of the Meigs
mining operation. Unless the cost of affiliated mine closures and/or the
cost of coal can be recovered from customers, results of operations and
financial condition would be adversely affected.
PFBC Demonstration Plant
The Company constructed a pressurized fluidized bed combustion (PFBC)
demonstration plant at a December 31, 1993 cost of $182 million to dem-
onstrate and further test this new technology for removing sulfur from coal.
A one year extension on the three-year test operation of the PFBC plant that
is scheduled to end March 1994 has been requested. The three-year test is
estimated to have cost $25 million, and the extension, if granted, will
require additional expenditures. The Company qualified for funding from the
U.S. Department of Energy (DOE) and the State of Ohio and received $59.5
million and $10 million, respectively. The Company has recovered from
ratepayers the PFBC plant costs which are not being funded by the DOE and the
State through its retail electric fuel component (EFC) at a rate of 1 mill
per kwh through November 1993 and a rate of 0.3228 mill per kwh thereafter.
Continued recovery through the EFC is subject to semi-annual review and
approval by the PUCO.
<PAGE>
3. COMMITMENTS AND CONTINGENCIES:
Construction and Other Commitments
Construction program expenditures for 1994-1996 are estimated to be $484
million and include capital costs for compliance with the CAAA except for the
cost of the flue gas desulfurization system (scrubbers) for the two-unit
2,600 megawatt Gavin Plant. In 1992, the Company entered into an agreement
for construction and lease of the Gavin Plant scrubbers with JMG Funding
Partnership, an unaffiliated company. The lease will be accounted for as an
operating lease.
In addition to fuel acquired from coal-mining subsidiaries and spot-
markets, the Company has long-term fuel supply contracts with unaffiliated
companies. The contracts generally contain clauses that provide for periodic
price adjustments. The Company's retail jurisdictional fuel clause mechanism
provides, with the regulator's review and approval, for deferred recovery of
changes in the cost of fuel except for contracts for coal received at four of
the Company's seven coal-fired generating plants through November 1994.
After November 1994 the exception will only apply to coal received at the
Gavin Plant. (See Note 2 for further details on the application of a
predetermined price). The contracts are for various terms, the longest of
which extends to 2012, and contain clauses that would release the Company
from its obligation under certain force majeure conditions.
Clean Air
The CAAA requires significant reductions in sulfur dioxide and nitrogen
oxides emitted from various AEP System generating plants. The law
established a deadline of 1995 for the first phase of reductions in sulfur
dioxide emissions (Phase I) and the year 2000 for the second phase (Phase II)
as well as a permanent nationwide cap on sulfur dioxide emissions after 1999.
In April 1992, the Company filed a systemwide Phase I CAAA compliance plan
with the PUCO. The selection of compliance alternatives for the AEP System's
generating plants was dependent upon the compliance method selected for the
Company's two-unit 2,600 megawatt Gavin Plant, which emits about 25% of the
System's total sulfur dioxide emissions. The compliance plan filing was made
under a 1991 Ohio law that provides an opportunity for utilities to obtain
advance PUCO approval of a least-cost approach compliance plan. Once ap-
proved, such plans are deemed prudent by state law for subsequent PUCO rate
proceedings. In November 1992, the PUCO issued an order approving the
Company's compliance plan and a related stipulation agreement with the PUCO
staff and the Ohio Consumers' Counsel.
The stipulation agreement with the PUCO staff and the Ohio Consumers'
Counsel limits the recoverable cost of the Gavin scrubbers to $815 million.
Management currently expects that the cost of the scrubbers will be at least
10% less than this cap.
The PUCO approved plan sets forth compliance measures for the System's
affected generating units, including: installation of leased scrubbers at the
Gavin Plant; burning Ohio high-sulfur coal at Gavin supplied by the
affiliated Meigs mine which will operate at reduced capacity and by replace-
ment coal from new long-term contracts with unaffiliated sources and spot
market purchases; and switching from high-sulfur coal to an alternate fuel at
other System units.
The planned fuel switching may result in the shutdown of the Company's
Muskingum and Windsor coal-mining operations. Shutdown costs for Muskingum
and Windsor include investments in the mines, leased asset buy-outs,
reclamation and employee benefits and are estimated to be approximately $250
million at December 31, 1993. Lack of recovery of the cost of CAAA
compliance, including the lease cost of the Gavin scrubbers and the
investment in and cost of closing affected affiliated mining operations,
would adversely affect results of operations and financial condition.
Management believes that costs of compliance with the CAAA should be
recoverable from rate-payers and intends to seek recovery in the near future.
Other Environmental Matters
The Company and its subsidiaries are subject to regulation by federal,
state and local authorities with respect to air and water quality and other
environmental matters.
The generation of electricity produces non-hazardous and hazardous by-
products. Asbestos, polychlorinated biphenyls (PCBs) and other hazardous
materials have been used in the generating plants and
transmission/distribution facilities. Substantial costs to store and dispose
of hazardous and non-hazardous materials have been incurred and will be
incurred. Significant additional costs could be incurred in the future to
meet the requirements of new laws and regulations, if enacted, and to clean
up existing disposal sites under existing legislation.
The Company has been named a "potentially responsible party" (PRP) by the
United States Environmental Protection Agency (Federal EPA) for two disposal
sites and has received information requests for four other sites. Although
the potential liability associated with each site must be evaluated indi-
vidually, several general statements can be made regarding such potential
liability.
Whether the Company disposed of hazardous substances at a particular site
is often unsubstantiated; the quantity of material disposed of at a site was
generally small; and the nature of the material generally disposed of was
non-hazardous. Typically, the Company is one of many parties named PRPs for
a site and, although liability is joint and several, generally at least some
of the other parties are financially sound enterprises. Therefore,
management does not anticipate material cleanup costs for identified disposal
sites. However, if for unknown reasons, significant costs are incurred for
cleanup, results of operations and financial condition would be adversely
affected unless the costs can be recovered from insurance proceeds and/or
customers.
Meigs Mine Litigation
On July 11, 1993, Meigs 31 mine, one of two underground mines owned by
SOCCo was inundated with water from an adjoining, sealed and abandoned mine
also owned by SOCCo. On July 26, 1993, the Ohio Environmental Protection
Agency (Ohio EPA) approved a plan to pump water from the mine.
The U.S. District Court for the Southern District of Ohio granted a motion
by SOCCo for a preliminary injunction against the Federal Office of Surface
Mining Reclamation and Enforcement (OSM) and Federal EPA preventing them from
exercising jurisdiction to issue orders to cease the pumping. In an appeal
by Federal EPA and OSM the U.S. Court of Appeals for the Sixth Circuit denied
OSM's motion for a stay of the District Court's preliminary injunction but
granted Federal EPA's motion for a stay in part which allowed Federal EPA to
investigate and make findings with respect to alleged violations of the Clean
Water Act and thereafter to exercise its enforcement authority under the
Clean Water Act if a violation was identified. Federal EPA issued an
administrative order requiring a partial cessation of pumping which was
extended until September 8, 1993. On September 8, 1993, the District Court
granted SOCCo's motion requesting that enforcement of the Federal EPA order
be stayed. On September 23, 1993, the Court of Appeals ruled that Federal
EPA had the right to issue the order, thereby overturning the District
Court's decision. Since September 16, 1993, SOCCo has processed all water
removed from the mine through its expanded treatment system and is in
compliance with the effluent limitations in its water discharge permits.
On January 3, 1994 the District Court held that the complaint filed by
SOCCo should not be dismissed and concluded that sufficient legal and factual
grounds existed for the court to consider SOCCo's claim that Federal EPA
could not override Ohio EPA's authorization for SOCCo to bypass its water
treatment system on an emergency basis during pumping activities. In a
separate opinion, the District Court denied Federal EPA's request that the
District Court defer consideration of SOCCo's motion involving a request for
a Declaration of Rights with respect to the mine water releases into area
streams.
The West Virginia Division of Environmental Protection has proposed fining
SOCCo $1.8 million for alleged violations resulting from the release of mine
water into the Ohio River.
Pumping has removed most of the water that inundated the mine. Meigs 31
mine returned to service in February 1994. The resolution of the
aforementioned litigation and environmental mitigation costs is not expected
to have a material adverse impact on results of operations or financial
condition.
Other Litigation
The Company is involved in a number of other legal proceedings and claims.
While management is unable to predict the outcome of litigation, it is not
expected that the resolution of these other matters will have a material
adverse effect on financial condition.
4. COMMON SHAREOWNER'S EQUITY:
Mortgage indentures, debentures, charter provisions and orders of
regulatory authorities place various restrictions on the use of retained
earnings for the payment of cash dividends on common stock. At December 31,
1993, $156.5 million of retained earnings were restricted. Regulatory
approval is required to pay dividends out of paid-in capital.
In 1993, charges to paid-in capital of $1.8 million represented the
issuance expense of new cumulative preferred stock and the write-off of
premiums on retired cumulative preferred stock. There were no other material
transactions affecting common stock and paid-in capital in 1993, 1992 or
1991.
<PAGE>
5. RELATED PARTY TRANSACTIONS:
Benefits and costs of the System's generating plants are shared by members
of the Power Pool. Under the terms of the System Interconnection Agreement,
capacity charges and credits are designed to allocate the cost of the
System's capacity among the Power Pool members based on their relative peak
demands and generating reserves. Power Pool members are compensated for the
out-of-pocket costs of energy delivered to the Power Pool and charged for
energy received from the Power Pool. The Company is a net supplier to the
pool and, therefore, receives net capacity credits from the Power Pool.
Operating revenues include $255.7 million in 1993, $291.9 million in 1992
and $255.6 million in 1991 for supplying energy and capacity to the Power
Pool. Purchased power expense includes charges of $38.9 million in 1993,
$29.1 million in 1992 and $34.8 million in 1991 for energy received from the
Power Pool.
Power Pool members share in wholesale sales to unaffiliated utilities made
by the Power Pool. The Company's share was included in operating revenues in
the amount of $97.3 million in 1993, $79.8 million in 1992 and $109.5 million
in 1991.
In addition, the Power Pool purchases power from unaffiliated companies
for immediate resale to other unaffiliated utilities. The Company's share of
these purchases was included in purchased power expense and totaled $19.8
million in 1993, $20.4 million in 1992 and $29.8 million in 1991. Revenues
from these transactions are included in the above Power Pool wholesale sales.
Purchased power expense includes energy bought from Ohio Valley Electric
Corporation, an affiliated company that is not a member of the Power Pool, in
the amounts of $7.1 million in 1993, $5.9 million in 1992 and $4.7 million in
1991.
Operating revenues include energy sold directly to Wheeling Power Company
in the amounts of $57.6 million in 1993, $62.1 million in 1992, and $62.8
million in 1991. Wheeling Power Company is an affiliated distribution
utility that is not a member of the Power Pool.
AEP System companies participate in a transmission equalization agreement.
This agreement combines certain AEP System companies' investments in
transmission facilities and shares the costs of ownership in proportion to
the System companies' respective peak demands. Pursuant to the terms of the
agreement, charges of $16.8 million, $14.5 million and $13.5 million were
recorded in other operation expense for transmission services in 1993, 1992
and 1991, respectively.
The Company purchased coal from its mining subsidiaries paying its
subsidiaries $331.7 million in 1993, $398.1 million in 1992 and $493 million
in 1991 for affiliated coal. Coal-transportation costs paid to an affiliated
company other than its coal-mining subsidiaries aggregate approximately $8.6
million, $4 million and $4.4 million in 1993, 1992 and 1991, respectively.
Fuel expense includes charges for the transportation of coal from an
affiliate and for the mining of coal from its subsidiaries. The prices
charged by the subsidiaries for coal and by the affiliate for coal
transportation services are computed generally in accordance with orders
issued by the SEC.
American Electric Power Service Corporation (AEPSC) provides certain
managerial and professional services to AEP System companies. The costs of
the services are determined by AEPSC on a direct-charge basis to the extent
practicable and on reasonable bases of proration for indirect costs. The
charges for services are made at cost and include no compensation for the use
of equity capital, which is furnished to AEPSC by AEP Co., Inc. Billings
from AEPSC are capitalized or expensed depending on the nature of the
services rendered. AEPSC and its billings are subject to the regulation of
the SEC under the 1935 Act.
6. BENEFIT PLANS:
AEP System Pension Plan
The Company and its subsidiaries participate in the AEP pension plan, a
trusteed, noncontributory defined benefit plan covering all employees meeting
eligibility requirements, except participants in the United Mine Workers of
America (UMWA) pension plans. Benefits are based on service years and
compensation levels. Effective January 1, 1992 employees may retire without
reduction of benefits at age 62 and with reduced benefits as early as age 55.
Pension costs are allocated by first charging each System company with its
service cost and then allocating the remaining pension cost in proportion to
its share of the projected benefit obligation. The funding policy is to make
annual trust fund contributions equal to the net periodic pension cost up to
the maximum amount deductible for federal income taxes, but not less than the
minimum contribution required by law.
The Company's share of net pension cost of the AEP System Pension Plan for
the years ended December 31, 1993, 1992 and 1991 was $5.9 million, $8 million
and $3.2 million, respectively.
AEP System Savings Plan
An employee savings plan is offered to non-UMWA employees which allows
participants to contribute up to 16% of their salaries into three investment
alternatives, including AEP Co., Inc. common stock. The Company contributes
an amount equal to one-half of the first 6% of the employees' contribution.
The Company's contribution is invested in AEP Co., Inc. common stock and
totaled $4.3 million in 1993, 1992 and 1991.
UMWA Pension Plans
The Company's coal-mining subsidiaries contribute to UMWA pension funds to
provide pension benefits for UMWA employees meeting eligibility requirements.
Benefits are based on age at retirement and years of service. As of June 30,
1993, the UMWA actuary estimates that the coal-mining subsidiaries' share of
the UMWA pension plans unfunded vested liabilities was approximately $44
million. In the event the coal-mining subsidiaries cease or significantly
reduce mining operations or contributions to the pension plans, a withdrawal
obligation may be triggered for all or a portion of their share of the
unfunded vested liability. Employer contributions are based on the number of
hours worked, are expensed when paid and totaled $1.6 million in 1993, $2.1
million in 1992 and $3 million in 1991.
Postretirement Benefits Other Than Pensions
The AEP System provides certain other benefits for retired employees.
Substantially all non-UMWA employees are eligible for health care and life
insurance benefits if they have at least 10 service years and, effective
January 1, 1992, are age 55 at retirement. Prior to 1993, net costs of these
benefits were recognized as an expense when paid and totaled $3.1 million and
$3.2 million in 1992 and 1991, respectively.
Medical benefits for the Company's UMWA retirees who retired after January
1, 1976 and the Company's active UMWA employees are the liability of the
coal-mining subsidiaries. UMWA employees are eligible for medical and life
insurance benefits if they have at least 10 service years and are at least
age 55 at retirement. Former UMWA employees become eligible at age 55 if
they have 20 service years. The cost of health care benefits for this group
was also expensed when paid in 1992 and 1991 and totaled $16.5 million in
both years.
SFAS 106, Employers' Accounting for Postretirement Benefits Other Than
Pensions, was adopted in January 1993 for the Company's aggregate
postretirement benefits other than pensions (OPEB) liability. SFAS 106
requires the accrual of the present value liability for OPEB costs during the
employee's service years. Prior service costs are being recognized as a
transition obligation over 20 years in accordance with SFAS 106. OPEB costs
are based on actuarially-determined stand alone costs for each System
company. The funding policy is to contribute incremental amounts recovered
through rates and cash generated by the corporate owned life insurance (COLI)
program. The annual accrued costs for 1993 required by SFAS 106 for
employees and retirees, which includes the recognition of one-twentieth of
the prior service transition obligation, was $34.2 million.
The Company received authority from the FERC and PUCO to defer the
increased OPEB costs which are not being currently recovered in rates.
Future recovery of the deferrals and the annual ongoing OPEB costs will be
sought in the next base rate filings. At December 31, 1993, $9 million of
such OPEB costs were deferred.
To reduce the impact of adopting SFAS 106, management took several
measures. First, a Voluntary Employees Beneficiary Association (VEBA) trust
fund for OPEB benefits for all non-UMWA employees was established. A $6.3
million advance contribution was made to the trust fund in 1990, the maximum
amount deductible for federal income tax purposes. In 1993, a $2.3 million
contribution was made to the VEBA trust fund from amounts recovered from
ratepayers. In addition, to help fund and reduce the future costs of OPEB
benefits, a COLI program was implemented, except where restricted by state
law. The insurance policies have a substantial cash surrender value which is
recorded, net of equally substantial policy loans, as other property and
investments. The policies generated cash of $2.5 million in 1993, $1.5
million in 1992 and $370,000 in 1991 inclusive of related tax benefits which
was contributed to the VEBA trust fund. In 1997 the premium will be fully
paid and the cash generated by the policies should increase significantly.
UMWA health plans pay the medical benefits for the Company's UMWA retirees
who retired before January 2, 1976 and their survivors plus retirees and
others whose last employer is no longer a signatory to the UMWA contract or
is no longer in business. The Energy Policy Act of 1992 secured lifetime
medical benefits for these retirees; reimposed funding obligations upon
companies who previously withdrew from the UMWA plans; eliminated the
withdrawal liability; eliminated the per-hour worked contribution feature for
the 1950 and 1974 UMWA Benefit Plans; assigned beneficiaries to their former
employers; and assigned to signatories on a pro rata basis those
beneficiaries who could not otherwise be assigned. In February 1993, the
1950 and 1974 UMWA Benefit Plans were merged into the UMWA Combined Benefit
Fund and a 1992 Benefit Plan was added. The Combined Fund is financed by
payments from current and former UMWA wage agreement signatories, the 1950
UMWA Pension Plan surplus and the Abandoned Mine Land Reclamation Fund
Surplus. Costs of the 1992 Benefit Plan are paid by signatories to 1988 and
prior years' UMWA contracts. Required annual payments to the UMWA health
funds made by the coal-mining subsidiaries were recognized as expense when
paid and totaled $1.2 million in 1993, $9.8 million in 1992 and $11.6 million
in 1991.
The recently negotiated 1993 National Bituminous Coal Wage Agreement
provides for establishment of the UMWA 1993 Benefit Plan for future orphaned
retirees not covered by the Energy Act. The 1993 Benefit Plan will be funded
by signatory operators with a per-hour-worked contribution during the
duration of the Agreement. Health benefits under this Plan are provided only
for the duration of the Agreement. In 1993 contributions under the Agreement
were not significant.
The Energy Act also permits recovery, within established limits, of excess
funding in the Black Lung Trust funds equal to the expense of certain
benefits other than pensions for those covered by the UMWA Combined Benefit
Fund. In 1993, $8 million of Black Lung surplus was applied in accordance
with the Energy Act to reimburse the coal companies for benefits paid in 1992
and the first nine months of 1993. The Company's coal subsidiaries' share of
Black Lung Trust excess funds at December 31, 1993 and 1992 was $17 million
and $25 million, respectively, and may be applied to reimburse the coal-
subsidiaries for benefits provided in the future.
<PAGE>
7. FEDERAL INCOME TAXES:
<TABLE>
The details of federal income taxes as reported are as follows:
<CAPTION>
Year Ended December 31,
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
Charged (Credited) to Operating Expenses (net):
Current $ 83,471 $57,487 $77,686
Deferred (10,477) 10,487 8,101
Deferred Investment Tax Credits (1,816) (1,732) (1,558)
Total 71,178 66,242 84,229
Charged (Credited) to Nonoperating Income (net):
Current 4,602 19,432 (1,028)
Deferred (9,130) (7,485) (2,318)
Deferred Investment Tax Credits (2,406) (2,406) (2,403)
Total (6,934) 9,541 (5,749)
Total Federal Income Taxes as Reported $ 64,244 $75,783 $78,480
The following is a reconciliation of the difference between the amount of
federal income taxes computed by multiplying book income before federal
income taxes by the statutory tax rate, and the amount of federal income
taxes reported.
<CAPTION>
Year Ended December 31,
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
Net Income $185,770 $160,553 $166,102
Federal Income Taxes 64,244 75,783 78,480
Pre-tax Book Income $250,014 $236,336 $244,582
Federal Income Taxes on Pre-tax Book Income at
Statutory Rate (35% in 1993 and 34% in 1992 and 1991) $ 87,505 $80,354 $83,158
Increase (Decrease) in Federal Income Taxes
Resulting From the Following Items:
Depreciation 9,644 10,179 8,349
Property Tax Accruals 69 (1,548) 6,049
Removal Costs (9,030) (5,651) (4,814)
Corporate Owned Life Insurance (9,318) (9,010) (5,238)
Investment Tax Credits (net) (4,221) (3,986) (4,311)
Sale of Martinka Mining Property - 7,825 -
Other (10,405) (2,380) (4,713)
Total Federal Income Taxes as Reported $ 64,244 $75,783 $78,480
Effective Federal Income Tax Rate 25.7% 32.1% 32.1%
</TABLE>
<PAGE>
<PAGE>
<TABLE>
The following are the principal components of federal income taxes as reported:
<CAPTION>
Year Ended December 31,
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
Current:
Federal Income Taxes $ 88,072 $76,767 $77,008
Investment Tax Credits 1 152 (350)
Total Current Federal Income Taxes 88,073 76,919 76,658
Deferred:
Depreciation 4,075 2,638 5,150
Tidd Pressurized Fluidized Bed Combustion
Research and Development (946) 1,257 (4,203)
Business and Occupation Tax Provision - - 5,001
Sale of Martinka Mining Property - (4,132) -
Martinka Fuel Cost Recoveries (9,580) 5,037 -
Postretirement Benefits Other Than Pensions (4,899) - -
Other (8,257) (1,798) (165)
Total Deferred Federal Income Taxes (19,607) 3,002 5,783
Total Deferred Investment Tax Credits (4,222) (4,138) (3,961)
Total Federal Income Taxes as Reported $ 64,244 $75,783 $78,480
</TABLE>
The Company and its subsidiaries join in the filing of a consolidated
federal income tax return with their affiliates in the AEP System. The
allocation of the AEP System's current consolidated federal income tax to the
System companies is in accordance with SEC rules under the 1935 Act. These
rules permit the allocation of the benefit of current tax losses and
investment tax credits utilized to the System companies giving rise to them
in determining their current tax expense. The tax loss of the System parent
company, AEP Co., Inc., is allocated to its subsidiaries with taxable income.
With the exception of the loss of the parent company, the method of
allocation approximates a separate return result for each company in the
consolidated group.
The AEP System settled with the Internal Revenue Service (IRS) all issues
from the audits of the consolidated federal income tax returns for the years
prior to 1988. Returns for 1988 through 1990 are being audited by the
IRS. In the opinion of management, the final settlement of open years will
not have a material effect on results of operations.
<PAGE>
The net deferred tax liability of $725.3 million at December 31, 1993 is
composed of deferred tax assets of $134.6 million and deferred tax
liabilities of $859.9 million. The significant temporary differences giving
rise to the net deferred tax liability are:
Deferred Tax Asset
(Liability)
(in thousands)
Property Related
Temporary Differences $(589,901)
Amounts Due From Customers
For Future Federal Income Taxes (151,838)
All Other (net) 16,456
Total Net Deferred Tax Liability $(725,283)
8. SUPPLEMENTARY INFORMATION:
Year Ended December 31,
1993 1992 1991
(in thousands)
Taxes Other Than Federal
Income Taxes include:
Real and Personal
Property $ 70,639 $ 69,623 $ 67,896
Gross Receipts 50,693 50,297 49,868
Business and
Occupation 32,447 26,901 11,498
Payroll 9,600 9,765 9,563
State Income 2,626 1,082 1,898
Other 2,767 2,627 2,918
Total $168,772 $160,295 $143,641
Fuel includes charges
relating to affiliated
coal-mining operations
as follows:
Maintenance $56,120 $ 72,194 $ 90,822
Depreciation,
Depletion and
Amortization 14,824 18,910 20,924
Taxes Other Than
Federal Income
Taxes 20,758 27,298 35,997
Total $91,702 $118,402 $147,743
Cash was paid for:
Interest (net of
capitalized
amounts) $101,659 $112,365 $104,460
Income Taxes $95,684 $83,164 $75,373
Noncash Acquisitions
Under Capital Leases
were $33,097 $23,036 $51,260
In connection with the 1992 sale of Martinka operations the Company is
receiving cash payments from the buyer of $77 million over a 13-1/2 year
period which had a net present value of $44.6 million at the time of the
sale.
9. LEASES:
Leases of property, plant and equipment are for periods up to 30 years and
require payments of related property taxes, maintenance and operating costs.
The majority of the leases have purchase or renewal options and will be
renewed or replaced by other leases.
Lease rentals are generally charged to operating expense in accordance
with rate-making treatment. The components of rentals are as follows:
Year Ended December 31,
1993 1992 1991
(in thousands)
Operating Leases $26,432 $43,209 $40,685
Amortization of
Capital Leases 20,352 20,034 24,790
Interest on
Capital Leases 6,539 8,371 9,217
Total Rental Payments $53,323 $71,614 $74,692
Properties under capital leases and related obligations recorded on
the Consolidated Balance Sheets are as follows:
December 31,
1993 1992
(in thousands)
Electric Utility Plant:
Production $ 5,248 $ 30,204
General (including mining assets) 160,929 173,246
Total Electric Utility Plant 166,177 203,450
Accumulated Amortization 84,400 107,282
Net Electric Utility Plant 81,777 96,168
Other Property 15,552 -
Net Property under
Capital Leases $ 97,329 $ 96,168
Obligations under Capital Leases $97,329 $96,168
Less Portion Due Within One Year 21,916 20,860
Noncurrent Liability $75,413 $75,308
Properties under operating leases and related obligations are not
included in the Consolidated Balance Sheets.
<PAGE>
Future minimum lease rentals, consisted of the following at December 31,
1993:
Non-
Cancelable
Capital Operating
Leases Leases
(in thousands)
1994 $ 28,180 $ 26,015
1995 23,409 24,386
1996 18,162 22,406
1997 13,807 19,970
1998 9,768 18,174
Later Years 21,645 154,017
Total Future Minimum Lease Rentals 114,971 $264,968
Less Estimated Interest Element 17,642
Estimated Present Value of
Future Minimum Lease Rentals $ 97,329
<PAGE>
<PAGE>
10. CUMULATIVE PREFERRED STOCK:
At December 31, 1993, authorized shares of cumulative preferred stock were
as follows:
Par Value Shares Authorized
$100 3,762,403
25 4,000,000
Unissued shares of the cumulative preferred stock may or may not possess
mandatory redemption characteristics upon issuance. The cumulative preferred
stock is callable at the price indicated plus accrued dividends. The
involuntary liquidation preference is par value.
<TABLE>
A. Cumulative Preferred Stock Not Subject to Mandatory Redemption:
<CAPTION>
Call Price Shares Amount
December 31, Par Number of Shares Redeemed Outstanding December 31,
Series 1993 Value Year Ended December 31, December 31, 1993 1993 1992
1993 1992 1991 (in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
4.08% $103 $100 - - - 50,000 $ 5,000 $ 5,000
4-1/2% 110 100 - - - 202,403 20,240 20,240
4.20% 103.20 100 - - - 60,000 6,000 6,000
4.40% 104 100 - - - 100,000 10,000 10,000
7.60% 102.26 100 - - - 350,000 35,000 35,000
7-6/10% 102.11 100 - - - 350,000 35,000 35,000
7.72% - 100 100,000 - - - - 10,000
7.76% - 100 450,000 - - - - 45,000
8.04% 102.58 100 - - - 150,000 15,000 15,000
8.48% - 100 300,000 - - - - 30,000
$2.27 - 25 869,500 - 6,200 - - 21,738
$126,240 $232,978
B. Cumulative Preferred Stock Subject to Mandatory Redemption:
<CAPTION>
Shares Amount
Par Outstanding December 31,
Series(a) Value December 31, 1993 1993 1992
(in thousands)
<S> <C> <C> <C> <C>
5.90% (b) $100 450,000 $ 45,000 -
6.02% (c) 100 400,000 40,000 -
6.35% (d) 100 300,000 30,000 -
$115,000 $ -
(a) Not callable until after 2002. There are no aggregate sinking fund provisions through 1998.
(b) Shares issued November 1993. Commencing in 2004 and continuing through the year 2008, a sinking fund for the 5.90%
cumulative preferred stock will require the redemption of 22,500 shares each year and the redemption of the remaining
shares outstanding on January 1, 2009, in each case at $100 per share.
(c) Shares issued October 1993. Commencing in 2003 and continuing through the year 2007, a sinking fund for the 6.02%
cumulative preferred stock will require the redemption of 20,000 shares each year and the redemption of the remaining
shares outstanding on December 1, 2008, in each case at $100 per share.
(d) Shares issued April 1993. Commencing in 2003 and continuing through the year 2007, a sinking fund for the 6.35%
cumulative preferred stock will require the redemption of 15,000 shares each year and the redemption of the remaining
shares outstanding on June 1, 2008, in each case at $100 per share.
</TABLE>
<PAGE>
11. LONG-TERM DEBT AND LINES OF CREDIT:
Long-term debt by major category was outstanding as follows:
December 31,
1993 1992
(in thousands)
First Mortgage Bonds $ 842,981 $ 998,771
Installment Purchase
Contracts 232,103 232,642
Notes Payable to Banks 95,000 110,000
Sinking Fund Debentures 17,884 17,895
Other 6,515 6,913
1,194,483 1,366,221
Less Portion Due Within
One Year 5,397 22,897
Total $1,189,086 $1,343,324
First mortgage bonds outstanding were as follows:
December 31,
1993 1992
(in thousands)
% Rate Due
9 1994 - December 1 $ - $ 80,000
5 1996 - January 1 38,759 38,759
6-1/2 1997 - August 1 46,620 46,620
6-3/4 1998 - March 1 55,661 55,661
9-7/8 1998 - June 1 - 100,000
7-3/4 1999 - March 1 - 67,786
8.10 2002 - February 15 50,000 50,000
8.25 2002 - March 15 50,000 50,000
7-5/8 2002 - April 1 16,910 16,910
9-1/4 2002 - April 1 - 72,500
7-3/4 2002 - October 1 24,000 24,000
6.75 2003 - April 1 40,000 -
6.875 2003 - June 1 40,000 -
8-3/8 2003 - August 1 - 40,000
6.55 2003 - October 1 40,000 -
6.00 2003 - November 1 25,000 -
6.15 2003 - December 1 50,000 -
9-1/4 2006 - November 1 - 80,000
9 2007 - April 1 - 40,000
9-1/4 2008 - March 1 - 38,000
9-7/8 2020 - August 1 50,000 50,000
9.625 2021 - June 1 50,000 50,000
8.80 2022 - February 10 50,000 50,000
8.75 2022 - June 1 50,000 50,000
7.75 2023 - April 1 40,000 -
7.85 2023 - June 1 40,000 -
7.375 2023 - October 1 40,000 -
7.10 2023 - November 1 25,000 -
7.30 2024 - April 1 25,000 -
Unamortized Discount (net) (3,969) (1,465)
842,981 998,771
Less Portion Due Within One year - 7,500
Total $842,981 $991,271
Certain indentures relating to the first mortgage bonds contain
improvement, maintenance and replacement provisions requiring the deposit of
cash or bonds with the trustee or, in lieu thereof, certification of unfunded
property additions.
Sinking fund debentures outstanding were as follows:
December 31,
1993 1992
(in thousands)
5-1/8% Series
due 1996 - January 1 $ 8,691 $ 8,691
6-5/8% Series
due 1997 - August 1 4,253 4,253
7-7/8% Series
due 1999 - March 1 4,905 4,905
Unamortized Premium 35 46
Total $17,884 $17,895
Prior to December 31, 1993 sufficient principal amounts of debentures had
been reacquired to satisfy all future sinking fund requirements. The Company
may make additional sinking fund payments of up to $1.5 million annually.
The notes payable to banks have due dates ranging from January 1994 to
January 1998 with interest payable quarterly at rates ranging from 5.79% to
8.01%. In January 1994, one of the subsidiaries entered into three term loan
agreements due January 2001 totaling $30 million with 6.20% fixed interest
rates and one $15 million variable interest rate term loan agreement due in
January 1999 with a 3.725% initial rate through July 1994. The proceeds were
used in January 1994 to pay at maturity two fixed interest rate term loans,
$20 million at 8.00% and $25 million at 8.01%. As a result, the $45 million
of term loans are reported as long-term in the financial statements.
<PAGE>
Installment purchase contracts have been entered into in connection with
the issuance of pollution control revenue bonds by governmental authorities
as follows:
December 31,
1993 1992
(in thousands)
Ohio Air Quality Development
7.4% Series B
due 2009 - August 1 $ 50,000 $ 50,000
Mason County, West Virginia:
7% Series A
due 2007 - June 1 - 50,000
5.45% Series B
due 2016 - December 1 50,000 -
Marshall County, West
Virginia:
6.95% Series A
due 2007 - December 1 - 50,000
7-1/4% Series B
due 2008 - June 1 - 35,000
5.45% Series B
due 2014 - July 1 50,000 -
5.90% Series D
due 2022 - April 1 35,000 -
6.85% Series C
due 2022 - June 1 50,000 50,000
Unamortized Discount (2,897) (2,358)
Total $232,103 $232,642
Under the terms of the installment purchase contracts, the Company is
required to pay amounts sufficient to enable the payment of interest on and
the principal (at stated maturities and upon mandatory redemption) of related
pollution control revenue bonds issued to finance the construction of
pollution control facilities at certain plants.
At December 31, 1993, annual consolidated long-term debt payments,
excluding premium or discount, are as follows:
Principal Amount
(in thousands)
1994 $ 5,397
1995 397
1996 56,166
1997 71,270
1998 72,739
Later Years 995,345
Total $1,201,314
Short-term debt borrowings are limited by provisions of the 1935 Act to
$200 million. Lines of credit are shared with AEP System companies and
at December 31, 1993 and 1992 were available in the amounts of $537 million
and $521 million, respectively. Commitment fees of approximately 3/16 of 1%
a year are paid to the banks to maintain the lines of credit. Outstanding
short-term debt consisted of $2.2 million of notes payable and $38 million of
commercial paper at December 31, 1993.
<PAGE>
13. FAIR VALUE OF FINANCIAL INSTRUMENTS:
The carrying amounts of cash and cash equivalents, accounts receivable,
short-term debt and accounts payable approximate fair value because of the
short-term maturity of these instruments. At December 31, 1993 and 1992 fair
values for long-term debt were $1.25 billion and $1.41 billion, respectively.
Fair value for preferred stock subject to mandatory redemption, issued in
1993, is $112.6 million. Fair values are based on quoted market prices for
the same or similar issues and the current dividend or interest rates offered
for instruments of the same remaining maturities.
14. UNAUDITED QUARTERLY FINANCIAL INFORMATION:
Quarterly Periods Operating Operating Net
Ended Revenues Income Income
(in thousands)
1993
March 31 $430,158 $68,965 $49,287
June 30 410,923 62,899 39,499
September 30 457,532 65,100 43,643
December 31 409,964 71,223 53,341
1992
March 31 439,537 67,778 41,624
June 30 394,739 53,288 26,641
September 30 436,914 62,703 38,573
December 31 420,407 68,002 53,715
Fourth quarter 1992 net income includes $15 million comprised of interest
on prior years federal income tax refunds, the resolution of the Martinka
mine fuel cost recovery litigation, discussed in Note 2, and cost reductions
due to favorable benefit plan experience.
Exhibit 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration
Statement Nos. 33-50373 and 33-50139 of Ohio Power Company on
Form S-3 of our reports dated February 22, 1994, appearing in and
incorporated by reference in this Annual Report on Form 10-K of
Ohio Power Company for the year ended December 31, 1993.
/s/ Deloitte & Touche
Deloitte & Touche
Columbus, Ohio
March 28, 1994
<PAGE> Exhibit 24
POWER OF ATTORNEY
OHIO POWER COMPANY
Annual Report on Form lO-K for the Fiscal Year Ended
December 31, 1993
The undersigned directors of OHIO POWER COMPANY, an Ohio
corporation (the "Company"), do hereby constitute and appoint E.
LINN DRAPER, JR., G. P. MALONEY, A. JOSEPH DOWD and P. J. DE MARIA,
and each of them, their attorneys-in-fact and agents, to execute
for them, and in their names, and in any and all of their
capacities, the Annual Report of the Company on Form lO-K, pursuant
to Section 13 of the Securities Exchange Act of 1934, for the
fiscal year ended December 31, 1993, and any and all amendments
thereto, and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform every act
and thing required or necessary to be done, as fully to all intents
and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned have signed these presents
this 24th day of February, 1994.
/s/ P. J. DeMaria /s/ Henry W. Fayne
P. J. DeMaria Henry W. Fayne
/s/ A. Joseph Dowd /s/ Wm. J. Lhota
A. Joseph Dowd Wm. J. Lhota
/s/ E. Linn Draper, Jr. /s/ G. P. Maloney
E. Linn Draper, Jr. G. P. Maloney
/s/ Carl A. Erikson /s/ James J. Markowsky
Carl A. Erikson James J. Markowsky
