File No. 70-8423
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 11 (POST-EFFECTIVE) TO
FORM U-1 APPLICATION-DECLARATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
CENTRAL AND SOUTH WEST CORPORATION
1616 Woodall Rodgers Freeway
P.O. Box 660164
Dallas, Texas 75202
CSW ENERGY, INC.
1616 Woodall Rodgers Freeway
P.O. Box 660789
Dallas, Texas 75202
CSW INTERNATIONAL, INC.
1616 Woodall Rodgers Freeway
P.O. Box 660789
Dallas, Texas 75202
(Names of companies filing this statement and
addresses of principal executive offices)
CENTRAL AND SOUTH WEST CORPORATION
(Name of top registered holding company parent)
Wendy G. Hargus
Treasurer
Central and South West Corporation
1616 Woodall Rodgers Freeway
P.O. Box 660164
Dallas, Texas 75202
Terry D. Dennis
President
CSW Energy, Inc.
1616 Woodall Rodgers Freeway
P.O. Box 660789
Dallas, Texas 75202
Terry D. Dennis
President
CSW International, Inc.
1616 Woodall Rodgers Freeway
P.O. Box 660789
Dallas, Texas 75202
Joris M. Hogan
Milbank, Tweed, Hadley & McCloy
One Chase Manhattan Plaza
New York, NY 10005-1413
(Names and addresses of agents for service)
Respectfully request that copies be sent to:
Edwin F. Feo
Milbank, Tweed, Hadley & McCloy
601 South Figueroa Street
30th Floor
Los Angeles, California 90017
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Central and South West Corporation, a Delaware corporation
("CSW") and a registered holding company under the Public Utility Holding
Company Act of 1935, as amended (the "Act"), CSW Energy, Inc., a Texas
corporation and wholly-owned nonutility subsidiary of CSW ("Energy"), and CSW
International, Inc., a Delaware corporation and wholly-owned nonutility
subsidiary of CSW ("CSWI"), hereby file this Amendment No. 11 (post-effective)
to the Form U-1 Application-Declaration (the "Application-Declaration") to amend
and restate in its entirety Amendment No. 10 (post-effective) to the
Application-Declaration, the effect of which is to amend the
Application-Declaration in the manner described below. Except as provided in
this Amendment No. 11, the Application-Declaration remains as previously filed.
Each capitalized term used and not otherwise defined in this Amendment No. 11
shall have the meaning assigned to such term in the Application-Declaration as
previously filed.
CSW and Energy received authority of the Commission by order
dated November 3, 1994 (HCAR No. 26156) and a supplemental order dated September
27, 1995 (HCAR No. 26383) making effective the application-declaration in File
No. 70-8423 (collectively, the "Orders"), among other things, (i) to organize
CSWI and certain other subsidiaries meeting certain specifications set forth in
the application-declaration in File No. 70-8423 (the "Project Parents") to
invest in Exempt Projects in an amount up to 50% of CSW's "consolidated retained
earnings" as determined in accordance with Rule 53(a)(1)(ii) under the Act for
such investments for which there is recourse to CSW (which has since been
increased to an amount up to 100% of CSW's "consolidated retained earnings,"
pursuant to HCAR 35-26693, dated January 24, 1997, as described below) and up to
$3 billion for such investments for which there is not recourse to CSW, (ii) to
fund such investments from time to time through issuances by CSW, CSWI and/or
Project Parents of stock, partnership interests, promissory notes, commercial
paper or other debt or equity securities (except, with respect to CSWI and/or
Project Parents, for the issuance of securities otherwise exempt from the
requirements of Commission approval, pursuant to Rule 52(b) under the Act) and
(iii) for CSW to provide guarantees of, and to arrange for letters of credit,
bid bonds or similar credit support arrangements (collectively, the
"Guarantees") concerning CSWI's or Project Parents' activities permitted under
the Orders. In addition, the Orders in such file authorize CSW, directly or
indirectly, to provide design, construction, engineering, operation,
maintenance, management, administration, employment, tax, accounting, economic,
financial, fuel, environmental, communications, energy conservation, demand side
management, overhead efficiency, utility performance and electronic data
processing services and software development and support services in connection
therewith to Exempt Projects and (except for operation) to foreign electric
utility enterprises that are not Exempt Projects (collectively, "Service
Activities"). Such authorization expires on December 31, 1997.
In summary, the Applicants seek a supplemental order of the
Commission (i) to extend the authorization under the Orders until December 31,
2002, (ii) under Sections 6(a), 7 and 12(b) of the Act, and Rule 43 thereunder,
that authorizes Energy and/or CSWI, in connection with proposed investments by
CSW, Energy and CSWI in direct or indirect subsidiaries of Energy or CSWI
organized pursuant to authority (a) under Rule 58 ("Rule 58 Companies"), each of
which subsidiaries will be an energy-related company, as such term is defined in
Rule 58 under the Act, or (b) under the Orders, each of which subsidiaries will
engage in Service Activities outside the United States ("Foreign Service
Companies"), to guaranty the securities, or performance of payment obligations
under agreements, of Rule 58 Companies and Foreign Service Companies1 in an
aggregate amount not to exceed $200 million, (iii) under Sections 6(a), 7, 9(a),
10 and 12(b) of the Act and Rules 43, 45 and 51 thereunder that authorizes CSW,
Energy and/or CSWI to acquire the securities of direct or indirect subsidiaries
of CSW, Energy or CSWI that will hold the securities of Rule 58 Companies and
Foreign Service Companies, and (iv) under Section 13(b) of the Act, and Rules
83, 86, 87, 88, 90, 91 and 94 thereunder, that authorizes Rule 58 Companies and
Foreign Service Companies to enter into contracts or agreements for services to
be rendered by Central and South West Services, Inc. ("CSW Services") or the
domestic operating utility subsidiaries of CSW (collectively, the "Operating
Subsidiaries"), each in accordance with the terms, conditions and restrictions
set forth in Section 7 of Item 1 of the Application-Declaration, except that (in
accordance with Rule 83 under the Act) Foreign Service Companies seek to offer
services to its affiliates that do not derive, directly or indirectly, any
material part of its income from sources within the United States without regard
to any of the restrictions of Rule 90(a)(2) under the Act. Under the current
limitations set forth in Rule 58 under the Act, no Foreign Service Company will
become a Rule 58 Company without further Commission approval or authorization.
As of the date of this Amendment No. 11 (post-effective), the
Applicants have engaged (directly or indirectly) in domestic activities such as
certain of those activities in which Rule 58 Companies will be engaged and in
international activities such as certain of the Service Activities in which
Foreign Service Companies will be engaged. Such domestic activities include
(among others) performing operation and maintenance services for two related QFs
in Florida in a manner that has resulted in high capacity factor, low cost
operations of such QFs; design, engineering and construction management services
to a QF in Texas in a manner that was on budget and on schedule; and
refurbishing, operation and management services to an EWG in Texas in a manner
that was on budget and on schedule. International activities include (among
others) overseeing the management and the operation of a regional electric
company in England in a manner that used CSW's experience managing the operation
of domestic operating utility to realize certain operating efficiencies for such
FUCO; designing, engineering, managing construction and providing operating
services to a greenfield FUCO in Mexico; consulting with a government agency in
New Zealand to operate a coal-fired electric generation plant in a more
efficient, cost-effective manner; and acting as the lead investigator to perform
the due diligence and evaluate the management and operation services of existing
utility enterprises in connection with a joint bid in Turkey and Australia. Item
1. Description of the Proposed Transaction.
The Application-Declaration is hereby amended to replace the
date "December 31, 1997" at each place that it occurs therein with the date
"December 31, 2002."
Section 7 of Item 1 is hereby amended to delete the last
sentence thereof in its entirety and replace such sentence with the following:
"Energy does not and, without the prior approval or authority of the Commission,
will not provide services to CSW Services or the Operating Subsidiaries."
Item 1 of the Application-Declaration is hereby amended to add the
following section at the end thereof:
"(11) Request for O&M Guarantee Authority. Energy and
CSWI propose to hold the securities of direct or indirect subsidiaries
of Energy or CSWI organized pursuant to authority (a) under Rule 58
("Rule 58 Companies"), each of which subsidiaries will be an
energy-related company, as such term is defined in Rule 58 under the
Act, or (b) under authority of the Commission by order dated November
3, 1994 (HCAR No. 26156) and a supplemental order dated September 27,
1995 (HCAR No. 26383) making effective the application-declaration in
File No. 70-8423 (collectively, the "Orders"), each of which
subsidiaries will engage in Service Activities outside the United
States ("Foreign Service Companies"), either directly or indirectly
through subsidiaries ("O&M Holding Companies"). O&M Holding Companies
will be special purpose subsidiaries that will hold the securities of
Rule 58 Companies and Foreign Service Companies but will not engage in
the activities to be performed by Rule 58 Companies or Foreign Service
Companies. The Applicants will establish O&M Holding Companies to
insulate CSW, Energy and CSWI from potential liability that may arise
from the activities of Rule 58 Companies or Foreign Service Companies
(e.g., potential personal injury liability, environmental liability,
etc.). In addition, the Applicants may desire to consolidate certain
accounting, legal and other overhead activities shared by Rule 58
Companies and Foreign Service Companies. O&M Holding Companies will
maintain records sufficient to keep overhead charges applicable to Rule
58 Companies separate from Foreign Service Companies and to ensure that
accurate Rule 24 reports may be made to the Commission in accordance
with the Orders.
The Applicants anticipate that each of the Rule 58
Companies and Foreign Service Companies will require the ability to
provide guarantees, letters of credit, bid bonds or other credit
support to compete effectively in the marketplace and secure contracts
to engage in energy-related activities and Service Activities,
respectively. The inability of Rule 58 Companies and Foreign Service
Companies to provide such guarantees, letters of credit, bid bonds or
other credit support on a timely basis will variously prevent, hinder
or make more costly CSW's participation in the markets for
energy-related activities and Service Activities, respectively.
Energy and CSWI therefore request authority under
this Application-Declaration to provide such guarantees of, and to
arrange for letters of credit, bid bonds or similar credit support
arrangements (collectively, "O&M Guarantees") concerning the
performance and undertaking of obligations, directly or indirectly, to
be incurred by Rule 58 Companies from time to time in connection with
their performance of energy-related activities or Foreign Service
Companies from time to time in connection with their performance of
Service Activities in an aggregate amount not to exceed $200 million.
The terms of, and any fees or interest payable in respect of, O&M
Guarantees will be substantially on the terms of the Guarantees. The
amount of any O&M Guarantees issued on behalf of any Rule 58 Company
will be included in the calculation of CSW's "aggregate investment" in
"energy-related companies," as each such term is defined in Rule 58(b)
under the Act. The amount of any O&M Guarantees issued on behalf of any
Foreign Service Company will not be included in the calculation of
CSW's "aggregate investment" as defined under Rule 53(a)(1)(i) under
the Act because such Foreign Service Companies will be neither an EWG
nor a FUCO, and because the O&M Guarantees will be issued by Energy or
CSWI, not CSW, and there will be no recourse to CSW under such O&M
Guarantees.
The Applicants believe that, based on their current
analysis of the domestic and international market for activities to be
performed by Rule 58 Companies and Foreign Service Companies, many
opportunities exist for CSW to market its expertise gained in the
operation of the Operating Companies and its domestic and international
nonutility enterprises. Under the privatization and deregulation
underway or currently considered, both domestically and
internationally, many older generating stations will have to be
repowered to stay competitive, requiring expertise in design,
engineering, construction management and low-cost operation and
management of such generating stations. In addition, the privatization
and deregulation of both domestic and international energy markets will
provide opportunities for the marketing of expertise such as
refurbishing boilers and other large industrial machinery with which
CSW and its affiliates have substantial expertise due to their utility
and nonutility operations.
The Applicants believe that authority to issue up to
$200 million of such O&M Guarantees may not be required in the first
two years of marketing such services, but as privatization,
deregulation and decentralization of energy markets, both domestically
and internationally, come to fruition, the market for such services
will be greatly increased. The Applicants desire to build a strong
presence in the domestic and international markets today, to better
seize opportunities and exploit a favorable reputation at such time.
Currently, the Applicants believe that the market for such services is
primarily in the international market, but believe that in a few years,
with deregulation and competition, substantial activity should be
expected domestically.
The Applicants seek authority of the Commission
pursuant to Section 13(b) of the Act and Rules 83, 86, 87, 88, 90, 91
and 94 thereunder for CSW Services and the Operating Subsidiaries from
time to time to enter into agreements to provide services to Rule 58
Companies and/or Foreign Service Companies. Such services will be
provided in accordance with the terms, conditions and restrictions set
forth in Section 7 of this Item 1 applicable to agreements for services
to be provided by CSW Services or the Operating Subsidiaries to CSWI,
CSWdM or CSWdM Servicios, except that (in accordance with Rule 83 under
the Act) Foreign Service Companies may offer services to its affiliates
that do not derive, directly or indirectly, any material part of its
income from sources within the United States without regard to any of
the restrictions of Rule 90(a)(2) under the Act. Without limiting the
foregoing, (i) no more than 2% of the employees of the Operating
Subsidiaries will at any time be providing services to CSWI, CSWdM,
CSWdM Servicios, any EWG or FUCO held directly or indirectly by CSW or
any Foreign Service Company, (ii) in no event will the provision of
such services adversely affect the rate base or the costs to ratepayers
of any such Operating Subsidiary and (iii) the Applicants will report
to the Commission information in respect of such services on the Rule
24 Report to be provided under Section 7 of this Item 1 in accordance
therewith.
The authority requested under this Section 11 shall
expire on December 31, 2002, provided that the Applicants request that
no additional authority of the Commission be required to maintain any
O&M Guarantee issued on or before December 31, 2002 beyond such date.
The Applicants believe that the $200 million authority sought in this
Section will be sufficient to support the activities of Rule 58
Companies and Foreign Service Companies through such date.
Each of CSWI and Energy (on behalf of itself and its
subsidiary companies) will provide the Commission on a quarterly basis,
within 60 days of the end of each calendar quarter, a certificate of
notification pursuant to Rule 24 under the Act ("Certificate"). Each
Certificate will state the amount and type of each investment made by
CSWI or Energy, directly or indirectly, in CSWdM, CSWdM Services, any
Foreign Service Company or any Project Parent in the previous quarter,
and (under a confidential exhibit if not otherwise public) generally
identify the facility with respect to which that Project Parent was
organized. Each Certificate will also describe in reasonable detail the
amount, type and (under a confidential exhibit) terms of securities
issued by any Project Parent or any Foreign Service Company to third
persons. Disclosure of these terms will include interest rate and
maturity and the exchange rate conversion in the case of non-recourse
indebtedness denominated in any currency other than U.S. dollars. In
addition, each Certificate will include a balance sheet and quarterly
income statement as of the relevant quarterly reporting date and
information on intercompany service transactions with CSWI and its
domestic subsidiaries. Information on intercompany service transactions
will include the name of each domestic associate company providing
services, a listing of services provided, the total number of employees
provided and the total dollar amount of services provided, broken down
by associate company. Further, each Certificate will indicate the
aggregate outstanding amount, as of the relevant quarterly reporting
date, of all guarantees issued by or for the account of CSW, CSWI,
Energy and CSWdM under this Application-Declaration. No information
otherwise required to be provided in a Certificate shall need to be
reported therein if such information is being provided by CSWI or
Energy to the Commission pursuant to an existing order (including the
Orders) or is otherwise required to be reported on Form U-9C-3."
In addition to the authority under the Orders, CSW, Energy and
CSWI received authority of the Commission by a Memorandum Opinion and Order
Amendment Prior Orders to Modify Limitation on Use of Proceeds of Financing
Transactions for Investment in Exempt Wholesale Generators and Foreign Utility
Companies and Guarantees of Obligations Thereof, dated January 24, 1997 (HCAR
35-26653), in File No. 70-8809, to invest in Exempt Projects in an aggregate
amount up to 100% of CSW's "consolidated retained earnings" as determined in
accordance with Rule 53(a)(1)(ii) under the Act for such investments for which
there is recourse to CSW, to fund such investments from time to time through
issuances by CSW, CSWI and/or Project Parents of stock, partnership interests,
promissory notes, commercial paper or other debt or equity securities and for
CSW to provide guarantees of, and to arrange for letters of credit, bid bonds or
similar credit support arrangements in connection therewith.
Item 2. Fees, Commissions and Expenses.
The estimate of the approximate amount of fees and expenses
payable in connection with this Amendment No. 11 (post-effective) is as follows:
Counsel fees
Milbank, Tweed, Hadley & McCloy............. 15,000.00
Miscellaneous and incidental expenses
including travel, telephone,
postage and copying................ 5,000.00
Total.....................$20,000.00
Item 3. Applicable Statutory Provisions.
Sections 6(a), 7, 12(b) and 13(b) of the Act, and Rules 43,
83, 86, 87, 88, 90, 91 and 94 thereunder, are or may be applicable to the
transactions proposed by this Amendment No. 10 (post-effective). Specifically,
Sections 6(a), 7 and 12(b) of the Act and Rule 43 thereunder are or may be
applicable to the issuance by Energy or CSWI of the O&M Guarantees. Sections
6(a), 7, 9(a), 10 and 12(b) of the Act and Rules 43, 45 and 51 thereunder are or
may be applicable to the issuance by O&M Holding Companies, and the acquisition
by CSW, Energy or CSWI, directly or indirectly, of the securities of O&M Holding
Companies. Section 13(b) of the Act and Rules 83, 86, 87, 88, 90, 91 and 94
thereunder are or may be applicable to the rendering of services by CSW Services
or the Operating Subsidiaries to a Rule 58 Company or Foreign Service Company.
To the extent any other sections of the Act, or rules thereunder, may be
applicable to the proposed transactions, each of the Applicants hereby requests,
for itself and its respective subsidiaries and associates, appropriate orders
thereunder.
Rule 54 under the Act is satisfied because Rules 53(a), (b)
and (c) are satisfied. As of June 30, 1997, CSW has invested approximately $910
million in the aggregate in Exempt Projects, or approximately 46% of $1,961
million, the average of CSW's consolidated retained earnings for the four
consecutive quarters ended March 31, 1997, thus satisfying Rule 53(a)(1). CSW
maintains in conformity with United States generally accepted accounting
principles and makes available the books and records and financial statements
required by Rule 53(a)(2). No more than 2% of the employees of CSW's domestic
public utility subsidiaries presently render services to any Exempt Project in
which CSW owns an interest, satisfying Rule 53(a)(3). CSW submitted those
documents required by Rule 53(a)(4) to be submitted. None of the conditions
described in Rule 53(b) exist with respect to CSW or any of its subsidiaries,
thereby satisfying such rule and making Rule 53(c) inapplicable.
Item 4. Regulatory Approval.
No state or federal regulatory authority, other than the
Commission under the Act, has jurisdiction over the proposed transaction.
Item 5. Procedure.
It is requested that the Commission issue and publish no later
than August 8, 1997, the requisite notice under Rule 23 with respect to the
filing of this Application-Declaration, such notice to specify a date not later
than September 2, 1997, as the date after which an order granting and permitting
this Application-Declaration to become effective may be entered by the
Commission and the Commission enter not later than September 3, 1997, an
appropriate order granting and permitting this Application-Declaration to become
effective.
The Applicants respectfully request that appropriate and
timely action be taken by the Commission in this matter in order that the
transactions contemplated by this Application-Declaration may take place in the
time period for the transactions contemplated hereby.
No recommended decision by a hearing officer or other
responsible officer of the Commission is necessary or required in this matter.
The Division of Investment Management of the Commission may assist in the
preparation of the Commission's decision in this matter, unless such Division
opposes the matters covered hereby. There should be no thirty-day waiting period
between the issuance and the effective date of any order issued by the
Commission in this matter, and it is respectfully requested that such order be
made effective immediately upon the entry thereof. Item 6. Exhibits and
Financial Statements.
Exhibit 1 - Proposed Notice of Proceeding (previously filed).
Exhibit 2 - Preliminary Opinion of Milbank, Tweed, Hadley &
McCloy, counsel for CSW, Energy and CSWI.
Exhibit 3 - Financial Statements per book and pro forma as of
June 30, 1997 of CSW and Subsidiaries
(consolidated), CSW, Energy and CSWI.
Item 7. Information as to Environmental Effects.
The proposed transactions do not involve major federal action
having a significant effect on the human environment. See Item 1. No federal
agency has prepared or is preparing an environmental impact statement with
respect to the proposed transaction.
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S I G N A T U R E
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, the undersigned company has duly caused this document to be
signed on its behalf by the undersigned thereunto duly authorized.
Date: September 30, 1997
CENTRAL AND SOUTH WEST CORPORATION
By:/s/WENDY G. HARGUS
Wendy G. Hargus
Treasurer
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S I G N A T U R E
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, the undersigned company has duly caused this document to be
signed on its behalf by the undersigned thereunto duly authorized.
Date: September 30, 1997
CSW ENERGY, INC.
By:/s/TERRY D. DENNIS
Terry D. Dennis
President and Chief Executive
Officer
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S I G N A T U R E
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, the undersigned company has duly caused this document to be
signed on its behalf by the undersigned thereunto duly authorized.
Date: September 30, 1997
CSW INTERNATIONAL, INC.
By:/s/TERRY D. DENNIS
Terry D. Dennis
President and Chief Executive
Officer
<PAGE>
INDEX OF EXHIBITS
EXHIBIT TRANSMISSION
NUMBER EXHIBIT METHOD
EXHIBIT
1 Proposed Notice of Proceeding
(previously filed). ---
2 Preliminary Opinion of Milbank, Tweed,
Hadley & McCloy, counsel for CSW, ---
Energy and CSWI (to be filed by amendment).
3 Financial Statements per book and pro ---
forma as of June 30, 1997 of CSW
and Subsidiaries (consolidated), CSW,
Energy and CSWI (to be filed by amendment).
_____________
1 CSW Services International, Inc., a Delaware corporation and a
wholly-owned subsidiary of CSW Energy, Inc., was organized as a Rule 58 Company.
As of the date of this Amendment No. 11 (post-effective), CSW owns no interest,
directly or indirectly, in a Foreign Service Company.
