File No. 70-7601
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 2 (Post-Effective)
to
FORM U-1 APPLICATION
under
The Public Utility Holding Company Act of 1935
-----------------------------
PUBLIC SERVICE COMPANY OF OKLAHOMA
212 East 6th Street
Tulsa, Oklahoma 74102
(Name of company filing this statement and
address of principal executive office)
-----------------------------
CENTRAL AND SOUTH WEST CORPORATION
(Name of top registered holding company parent
of each applicant/declarant)
Wendy G. Hargus, Treasurer
Central and South West Corporation
Public Service Company of Oklahoma
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
Joris M. Hogan, Esq.
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
(Names and addresses of agents for service)
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Public Service Company of Oklahoma ("PSO"), an Oklahoma corporation and
a wholly owned public utility subsidiary of Central and South West Corporation,
a Delaware corporation and a registered holding company under the Public Utility
Holding Company Act of 1935, as amended (the "Act"), hereby submits for filing
this Amendment No. 2 (Post-Effective) to its Form U-1 Application, File No.
70-7601. By Order of the Securities and Exchange Commission (the "Commission")
dated March 29, 1989 (Release No. 35-24848), the Commission authorized PSO to
purchase power conditioning products and ancillary marketing and technical
consulting services from The Bayboro Corporation and to market such products to
its customers. By this Amendment, PSO seeks authority to purchase power
conditioning products from Meter Treater, Inc., A.E. Products, Inc., EDCO
Telecommunications and Data Communications and any other suppliers that PSO
determines to be competitive with the aforementioned suppliers in terms of
quality or price (in lieu of The Bayboro Corporation). PSO also seeks authority
to make arrangements with Kenick Incorporated (and any other vendors that PSO
determines to be competitive with Kenick Incorporated in terms of service
quality or price) to maintain inventory and to provide installation, training
and inquiry response services to customers. The Application is hereby amended in
its entirety as follows:
Item 1. Description of Proposed Transactions.
PSO proposes to purchase power conditioning products from
Meter Treater, Inc. and A.E. Products, Inc., which manufacture
the Meter-Treater brand of power surge protectors, installed
<PAGE>
between the electric power line and the electric meter, and from EDCO
Telecommunications and Data Communications, which manufactures power surge
protectors, installed at electrical outlets (such power surge protection
products, as the same may be further developed or changed by the suppliers
thereof, being referred to herein as the "Products"). The Products provide
protection to equipment (including computers, appliances and telecommunications
and manufacturing equipment) in the event of power surges caused by lightning or
other disturbances in or to the production, transmission and distribution of
electricity. PSO may in the future purchase Products from suppliers other than
Meter-Treater, Inc., A.E. Products, Inc. and EDCO Telecommunications and Data
Communications if PSO determines that such suppliers are competitive with the
aforementioned suppliers in terms of Product quality or price.
The Products would be marketed by PSO through direct mail and other
advertisements and telemarketing conducted by PSO personnel or independent
telemarketing firms. PSO would enter into arrangements whereby Kenick
Incorporated ("Kenick") would provide (directly and through subcontractors) for
the maintenance and control of Product inventory, the installation of Products
ordered by customers, training and technical assistance to PSO, customers and
subcontractors as needed, and responses to customer inquiries as to service,
Product performance and related matters. In addition to or in lieu of Kenick's
performance of such services, PSO may engage in such activities directly or make
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arrangements with other vendors that PSO determines to be competitive with
Kenick in terms of service quality or price.
Kenick or other vendors will charge PSO for services at rates agreed
upon from time-to-time. PSO will offer customers purchase options and
lease/purchase options at varying rates depending on the equipment ordered and
payment plan selected.
PSO currently anticipates that it will make expenditures of
approximately $700,000 (including start-up expenses), $1,100,000 and $1,200,000
during the first three years of marketing and selling the Products and will
realize revenues in those periods of approximately $600,000, $1,150,000 and
$1,200,000.
PSO believes that implementation of the proposed power conditioning
program described above will enable it to provide systems and services to solve
its customers' power quality problems. In addition, PSO believes that the
proposed power conditioning program can be operated at margins that would
provide PSO with a positive cash flow and a reasonable rate of return.
Rule 54 promulgated under the Act states that in determining whether to
approve the issue or sale of a security by a registered holding company for
purposes other than the acquisition of an exempt wholesale generator ("EWG") or
a foreign utility company ("FUCO"), or other transactions by such registered
holding company or its subsidiaries other than with respect to EWGs or FUCOs,
the Commission shall not consider the effect of the capitalization or earnings
of any subsidiary which is an EWG or a FUCO upon the registered holding company
system if
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Rule 53(a), (b) and (c) are satisfied. As set forth below, all applicable
conditions sent forth in Rule 53(a) are, and, assuming the consummation of the
transactions proposed herein, will be, satisfied and none of the conditions set
forth in Rule 53(b) exist or will exist as a result of the transactions proposed
herein.
Rule 54 under the Act is satisfied because Rules 53(a), (b) and (c) are
satisfied. As of December 31, 1996, CSW has invested approximately $880 million
in EWGs and FUCOs or approximately 45% of CSW's "consolidated retained earnings"
of $1,963 million as of December 31, 1996, thus satisfying Rule 53(a)(1). CSW
maintains in conformity with United States generally accepted accounting
principles and makes available the books and records required by Rule 53(a)(2).
No more than 2% of the employees of CSW's operating subsidiaries will, at any
one time, directly or indirectly, render services to an EWG or FUCO in which CSW
directly or indirectly owns an interest, satisfying Rule 53(a)(3). And lastly,
CSW will submit a copy of Item 9 and Exhibits G and H of CSW's Form U5S to each
of the public service commissions having jurisdiction over the retail rates of
CSW's operating utility subsidiaries, satisfying Rule 53(a)(4). 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 2. Fees, Commissions and Expenses.
The estimate of the approximate amount of fees and expenses payable in
connection with the transaction is as follows:
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Holding Company Act filing fee $2,000*
Counsel fees
Milbank, Tweed, Hadley & McCloy $2,500
Miscellaneous and incidental
expenses including travel,
telephone and postage 500
------
TOTAL $5,000
------
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* Actual amount.
Item 3. Applicable Statutory Provisions.
Sections 9(a), 10 and 11(b) of the Act are or may be applicable to the
proposed transactions. To the extent any other sections of the Act may be
applicable to the proposed transactions, PSO hereby requests appropriate orders
thereunder. The proposed activities and the Products are very closely related to
the core business of PSO, if not a part thereof, as they enable customers to
ensure more completely the quality and safety of the electric service the
provision of which is the core business of PSO. As such, the proposed activities
easily pass the "functional relationship" test in respect of Section 11(b) of
the Act enunciated by the Commission in Michigan Consolidated Gas Co., 44 S.E.C.
361 (1970), aff'd, 444 F.2d 913 (D.C. Cir. 1971) and in many orders subsequently
issued. In addition to the authorization previously granted by the Commission in
respect of the Application to which this Amendment relates, precedent for the
authorization sought by this Amendment can be found in Cinergy Corp., Release
No. 35-26662 (February 7, 1997), under
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which, among other things, Cinergy Solutions, Inc. was authorized to market
"Consumer Services" to residential and small commercial customers, including
meter-based and plug-in equipment to protect customer household appliances and
electronic equipment from power surges, including due to lightning.
Item 4. Regulatory Approval.
No state regulatory authority and no federal regulatory authority,
other than the Commission under the Act, have jurisdiction over the proposed
transactions.
Item 5. Procedure.
It is requested that the Commission issue and publish not later than
May 16, 1997 the requisite notice under Rule 23 with respect to the filing of
this Application, such notice to specify a date not later than June 6, 1997 as
the date after which an order granting and permitting this Application to become
effective may be entered by the Commission and the Commission enter not later
than June 9, 1997 an appropriate order granting and permitting this Application
to become effective.
PSO respectfully requests that appropriate and timely action be taken
by the Commission in this matter.
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. There should be no thirty-day waiting
period between the issuance and the effective date of any order
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issued by the Commission in this matter, and it is respectfully requested that
any such order be made effective immediately upon the entry thereof.
Item 6. Exhibits and Financial Statements.
Exhibit 1 - Preliminary opinion of Milbank, Tweed, Hadley &
McCloy, counsel to PSO.
Exhibit 2 - Final or "Past Tense" opinion of Milbank,
Tweed, Hadley & McCloy, counsel to PSO (to be
filed with Certificate of Notification).
Exhibit 3 - Financial Statements as of March 31, 1997 (to
be filed by amendment).
Exhibit 4 - Proposed notice of proceeding.
Item 7. Environmental Effects.
The proposed transactions do not involve major Federal action having a
significant effect on the human environment. No Federal agency has prepared or
is preparing an environmental impact statement with respect to the proposed
program.
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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.
Dated: May 13, 1997.
PUBLIC SERVICE COMPANY OF OKLAHOMA
By: /s/WENDY G. HARGUS
Wendy G. Hargus
Treasurer
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Exhibit Index
Exhibit Transmission
Number Exhibit Method
- ------ ------- -------------
1 Preliminary opinion of
Milbank, Tweed, Hadley &
McCloy, counsel to PSO. Electronic
2 Final or "Past Tense"
opinion of Milbank, Tweed,
Hadley & McCloy, counsel
to PSO (to be filed with
the Certificate of
Notification). __
3 Financial Statements as
of March 31, 1997 (to
be filed by amendment). __
4 Proposed notice of
proceeding. Electronic
<PAGE>
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, NY 10005
May 13, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Form U-1 Application-Declaration
Amendment No. 2 (Post-Effective)
File No. 70-7601
Dear Sirs:
We refer to Amendment No. 2 (Post-Effective) to the Form U-1
Application (File No. 70-7601) under the Public Utility Holding Company Act of
1935, as amended (the "Application"), filed by Public Service Company of
Oklahoma ("PSO"), an Oklahoma corporation and a wholly-owned public utility
subsidiary of Central and South West Corporation, a Delaware corporation and a
registered public utility holding company. The Application relates to the
proposed purchase by PSO and sale or lease thereof to its customers of power
surge protectors, including activities and arrangements for marketing,
installation and technical assistance related thereto, as described therein (the
"Transactions"). We have acted as special counsel for PSO in connection with the
Transactions and, as such counsel, we are familiar with the corporate
proceedings taken and to be taken by PSO in connection with the Transactions.
We have examined originals, or copies certified to our
satisfaction, of such corporate records of PSO, certificates of public
officials, certificates of officers and representatives of PSO and other
documents as we have deemed it necessary to require as a basis for the opinions
hereinafter expressed. In such examination we have assumed the genuineness of
all signatures and the authenticity of all documents submitted to us as
originals and the conformity with the originals of all documents submitted to us
as copies. As to various questions of fact material to such opinions we have,
when relevant facts were not independently established, relied upon certificates
by officers of PSO and other appropriate persons and statements contained in the
Application.
Based upon the foregoing, and having regard to legal
considerations which we deem relevant, we are of the opinion that, in the event
that the proposed Transactions are consummated
<PAGE>
in accordance with the Application, as it may be amended, and
subject to the assumptions and conditions set forth below:
1. All state laws applicable to the proposed
Transactions will have been complied with.
2. The consummation of the proposed Transactions will
not violate the legal rights of the holders of any
securities issued by PSO or any associate company
thereof.
The opinions expressed above in respect of the Transactions
described in the Application are subject to the following assumptions or
conditions:
a. The Transactions shall have been duly authorized
and approved to the extent required by state law
by the Boards of Directors of PSO.
b. The Securities and Exchange Commission shall have
duly entered an appropriate order or orders
granting and permitting the Application to become
effective with respect to the Transactions
described therein.
c. The Transactions shall have been accomplished in
accordance with required approvals,
authorizations, consents, certificates and orders
of any state commission or regulatory authority
with respect to the consummation of the
Transactions and all such required approvals,
authorizations, consents, certificates and orders
shall have been obtained and remain in effect.
d. No act or event other than as described herein shall
have occurred subsequent to the date hereof which
would change the opinions expressed above.
In rendering the opinions hereinabove expressed, we will rely
upon opinions of other counsel to PSO who are qualified to practice in
jurisdictions pertaining to the Transactions in which we are not admitted to
practice. We do not express any opinion as to matters governed by any laws other
than the Federal laws of the United States of America, the laws of the State of
New York and, to the extent hereinabove stated, the laws of other jurisdictions
pertaining to the Transactions in reliance upon said opinions of counsel to PSO.
<PAGE>
We hereby consent to the use of this opinion as an exhibit to
the Application.
Very truly yours,
/s/ MILBANK, TWEED, HADLEY & MCCLOY
Milbank, Tweed, Hadley & McCloy
EXHIBIT 4
SECURITIES AND EXCHANGE COMMISSION
(Release No. 35- )
Filings Under the Public Utility Holding Company Act of 1935
("Act")
____________, 1997
Notice is hereby given that the following filing(s) has/have
been made with the Commission pursuant to provisions of the Act and rules
promulgated thereunder. All interested persons are referred to the
application(s) and/or declaration(s) for complete statements of the proposed
transaction(s) summarized below. The application(s) and/or declaration(s) and
any amendments thereto is/are available for public inspection through the
Commission's Office of Public Reference.
Interested persons wishing to comment or request a hearing on
the application(s) and/or declaration(s) should submit their views in writing by
__________, 1997 to the Secretary, Securities and Exchange Commission,
Washington, D.C. 20549, and serve a copy on the relevant applicant(s) and/or
declarant(s) at the address(es) specified below. Proof of service (by affidavit
or, in case of an attorney at law, by certificate) should be filed with the
request. Any request for hearing shall identify specifically the issues of fact
or law that are disputed. A person who so requests will be notified of any
hearing, if ordered, and will receive a copy of any notice or order issued in
the matter. After said date, the application(s) and/or
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declaration(s), as filed or amended, may be granted and/or
permitted to become effective.
Public Service Company of Oklahoma (70-7601)
Public Service Company of Oklahoma ("PSO") proposes to purchase power
conditioning products from Meter Treater, Inc. and A.E. Products, Inc., which
manufacture the Meter-Treater brand of power surge protectors, installed between
the electric power line and the electric meter, and from EDCO Telecommunications
and Data Communications, which manufactures power surge protectors, installed at
electrical outlets (such power surge protection products, as the same may be
further developed or changed by the manufacturers thereof, being referred to
herein as the "Products"). The Products provide protection to equipment
(including computers, appliances and telecommunications and manufacturing
equipment) in the event of power surges caused by lightning or other
disturbances in or to the production, transmission and distribution of
electricity. PSO may in the future purchase Products from suppliers other than
Meter-Treater, Inc., A.E. Products, Inc. and EDCO Telecommunications and Data
Communications if PSO determines that such other suppliers are competitive with
the aforementioned suppliers in terms of Product quality or price.
The Products would be marketed by PSO through direct mail and other
advertisements and telemarketing conducted by PSO personnel or independent
telemarketing firms. PSO would enter into arrangements whereby Kenick
Incorporated ("Kenick") would provide (directly and through subcontractors) for
the maintenance
<PAGE>
and control of Product inventory, the installation of Products ordered by
customers, training and technical assistance to PSO, customers and
subcontractors as needed, and responses to customer inquiries as to service,
Product performance and related matters. In addition to or in lieu of Kenick's
performance of such services, PSO may engage in such activities directly or make
arrangements with other vendors that PSO determines to be competitive with
Kenick in terms of service quality or price.
Kenick or other vendors will charge PSO for services at rates agreed
upon from time-to-time. PSO will offer customers purchase options and
lease/purchase options at varying rates depending on the equipment ordered and
payment plan selected.
PSO currently anticipates that it will make expenditures of
approximately $700,000 (including start-up expenses), $1,100,000 and $1,200,000
during the first three years of marketing and selling the Products and will
realize revenues in those periods of approximately $600,000, $1,150,000 and
$1,200,000.
PSO believes that implementation of the proposed power conditioning
program described above will enable it to provide systems and services to solve
its customers' power quality problems. In addition, PSO believes that the
proposed power conditioning program can be operated at margins that would
provide PSO with a positive cash flow and a reasonable rate of return.
