File No. 70-5741
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 3 (POST EFFECTIVE) TO
FORM U-1
APPLICATION-DECLARATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
--------------------------------
SOUTHWESTERN ELECTRIC POWER COMPANY
428 Travis Street
Shreveport, Louisiana 71156-0001
PUBLIC SERVICE COMPANY OF OKLAHOMA
212 East Sixth Street
Tulsa, Oklahoma 74119-1212
CENTRAL POWER AND LIGHT COMPANY
539 North Carancahua Street
Corpus Christi, Texas 78401-2802
(Name of companies filing this statement and address
of principal executive office)
---------------------------------
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
Joris M. Hogan
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
(Names and addresses of agents for service)
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Southwestern Electric Power Company ("SWEPCO"), a Delaware
corporation, Public Service Company of Oklahoma ("PSO"), an Oklahoma
corporation, and Central Power and Light Company ("CPL" and, collectively with
SWEPCO and PSO, the "Applicants"), a Texas corporation, all wholly-owned
electric utility subsidiaries of Central and South West Corporation ("CSW"), a
Delaware corporation and a registered holding company under the Public Utility
Holding Company Act of 1935, as amended (the "1935 Act"), hereby file this
Amendment No. 3 to the Form U-1 Application-Declaration in File No. 70-5741 to
amend and restate Items 1, 2, 3 and 6 of the Application-Declaration. In all
other respects, the Application-Declaration as previously filed and amended
shall remain the same. Item 1. Description of Proposed Transaction.
The Applicants are seeking authority to extend the arrangement
between SWEPCO and PSO for the joint use of a unit train repair facility (the
"Repair Facility") near Alliance, Nebraska, and the sharing of costs related to
such joint use, to include CPL as an additional user of the Repair Facility. The
Applicants propose to execute a Revised Rail Car Maintenance Facility Agreement
(the "Revised Facility Agreement"), the terms of which are set forth below, to
govern their joint use of the Repair Facility. Specifically, the Applicants
request that the Securities and Exchange Commission (the "Commission")
authorize: (1) CPL to participate in the use of the Repair Facility; and (2) the
sharing of costs by the Applicants with respect to the maintenance and use of
the Repair Facility.
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Pursuant to orders (the "1976 Orders") of the Commission dated
April 6, 1976 and August 9, 1976 (HCAR Nos. 19468 and 19643), SWEPCO was
authorized to acquire, finance, construct and operate the Repair Facility. The
Repair Facility was initially used for the maintenance and repair of railroad
cars for the transportation of coal to SWEPCO's coal-fired electricity
generation plants. The order dated August 9, 1976 stated that no rail
transportation services using the subject cars shall be provided by SWEPCO for
any associated company except pursuant to a further order of the Commission.
Pursuant to an order (the "1979 Order") of the Commission
dated February 22, 1979, SWEPCO and PSO were authorized to enter into a Rail Car
Maintenance Facility Agreement (the "Facility Agreement"), which provides for
PSO's participation in the cost and use of the Repair Facility. As more fully
set forth below, the Facility Agreement provides for: (1) the payment by each
company of the direct labor and materials costs of maintaining its rail cars;
(2) the sharing of indirect costs according to the ratio of each company's
direct labor costs to total direct labor costs; (3) the sharing of costs of
improvements to the Repair Facility according to the companies' agreement; (4)
PSO having an option to purchase a portion of the Repair Facility when SWEPCO
obtains legal title to the Repair Facility; and (5) SWEPCO retaining all tax
benefits of its equitable ownership of the Repair Facility and PSO receiving a
share of such tax benefits based on a weighted average cost ratio for each
fiscal year. On August 1, 1996, the lease allowing SWEPCO to use the Repair
Facility expired and title to the Repair
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Facility reverted to SWEPCO. PSO has exercised its option to purchase a portion
of the Repair Facility and is now a minority owner of the Repair Facility.
CPL proposes to participate with SWEPCO and PSO in the costs
and use of the Repair Facility. CPL currently employs unit trains and rail cars
to transport coal to certain of its coal-fired electricity generation plants
from mines in Wyoming and Colorado, which are located more than 1,000 miles from
these plants. The rail car repair facility that CPL previously used to repair
its rail cars recently closed, and CPL now proposes to use the Repair Facility
to repair its rail cars. CPL's unit trains can be run over the same tracks
through Alliance, Nebraska as SWEPCO's and PSO's unit trains. The Repair
Facility can be expanded to furnish all of CPL's maintenance needs through the
addition of extra workers without the need to construct additional plant space.
Under the Revised Facility Agreement, SWEPCO will operate the
Repair Facility on behalf of itself, PSO and CPL, and allocate the cost of
operating the facility among the Applicants on a monthly basis. The method of
allocating direct and indirect costs under the Revised Facility Agreement will
parallel the method under the Facility Agreement. The Applicants propose to
share according to a formula the general operation and maintenance costs and all
other costs which would be capitalized according to generally accepted
accounting principles (the "Indirect Costs"). The Applicants propose that
Indirect Costs be shared among them on the basis of a cost ratio (the "Cost
Ratio"), which is equal to the ratio of each Applicant's direct
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labor costs for its rail cars actually repaired or inspected at the Repair
Facility to the total direct labor costs for all rail cars owned by the
Applicants and repaired at the Repair Facility. The Cost Ratio will be
determined on the last day of each calendar month and apply to costs incurred
during that month. Each Applicant will pay the actual direct costs of inspection
and maintenance of its own rail cars, including parts, maintenance, labor and
other expenses capable of direct assignment to a specific rail car. All costs to
the Applicants will be determined in accordance with Rule 91 under the 1935 Act.
As under the Facility Agreement, the cost of improvements to
the Repair Facility will be allocated among the Applicants under the Revised
Facility Agreement. In the event improvements are made to the Repair Facility in
the future, the Applicants will share the costs of such improvements on such
terms and conditions as are agreed to by the Applicants at the time of such
improvements and approved by further order of the Commission. In reaching such
agreement, the Applicants will consider the degree to which each Applicant's
increased usage of the Repair Facility necessitated the improvements.
SWEPCO will file in quarterly reports pursuant to Rule 24
under the 1935 Act the following information as to activities during each
quarter: (1) the total number of rail cars serviced each month for each of
SWEPCO, PSO and CPL; (2) the amount of expenditures each month for direct labor
cost, direct material cost and Indirect Costs for each of SWEPCO, PSO and CPL;
(3) a computation for each month of allocated cost to be shared by SWEPCO, PSO
and CPL on the basis of the Cost Ratio; and
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(4) copies of the monthly reports furnished by SWEPCO to PSO and CPL detailing
the work and charges associated with SWEPCO's, PSO's and CPL's rail cars which
were repaired during the previous month at the Repair Facility. Item 2. Fees,
Commissions and Expenses.
An estimate of the fees and expenses to be paid or
incurred by the Applicants in connection with the proposed
transactions follows:
Counsel Fees:
Milbank, Tweed, Hadley & McCloy ..... $ 7,000
Miscellaneous and incidental expenses
including travel, telephone and
postage ............................. 1,000
Total .................................... $ 8,000
The fees and expenses include those charges incurred for the
services of Central and South West Services, Inc., an affiliate mutual service
company of CSW operating pursuant to Section 13 of the 1935 Act and the rules
thereunder.
Item 3. Applicable Statutory Provisions.
Sections 9(a), 10 and 13(b) of the 1935 Act and Rules 86, 87,
90 and 91 thereunder are or may be applicable with respect to the proposed
transactions. To the extent that the proposed transactions are considered by the
Commission to require authorization, approval or exemption under any section of
the 1935 Act or provision of the rules or regulations other than those
specifically referred to herein, request for such authorization, approval or
exemption is hereby made.
The Applicants believe that the entry of CPL into the Revised
Facility Agreement is not jurisdictional under section
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9(a) of the 1935 Act because the repair of rail cars used for the transportation
of fuel for electricity generation is within the core business of an electric
utility. This conclusion is fully consistent with paragraph (b)(1)(vii) of Rule
58 which would permit the Applicants to provide fuel procurement delivery and
management services developed in the course of utility operations to third
parties through an energy-related company subsidiary. This exemption recognizes
that fuel procurement and related activities, such as the rail car repair at
issue herein, constitute utility operations. As such, the Applicants believe
that rail car repair is not jurisdictional under section 9(a) of the 1935 Act.
However, to the extent that the Commission believes that the Applicants require
authority under sections 9(a) and 10 of the 1935 Act to enter into the Revised
Facility Agreement and jointly use the Repair Facility, the Applicants request
such authority.
Each Applicant will enter into the Revised Facility Agreement
for the purpose of jointly using the Repair Facility and, through such joint use
under the Revised Facility Agreement, may be deemed to provide services to the
other Applicants. Section 13(b) provides that it shall be unlawful for any
subsidiary company of a registered holding company to enter into a contract in
which it undertakes to provide services to an associate company except in
accordance with rules and regulations prescribed by the Commission. Rule
87(b)(3) under the 1935 Act provides that Commission approval under section
13(b) need not be obtained, subject to compliance with Rule 90, if a subsidiary
company that provides services to an associate company is
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primarily engaged in the business of an operating electric or gas utility
company and provides such services to the associate company incidentally to such
business. Each of the Applicants is primarily engaged in the business of an
operating electric utility company and any services to another Applicant will be
performed in connection with its core business. The Applicants believe that the
servicing of rail cars by any Applicant is part of its fuel procurement function
in support of, and incidental to, each such Applicant's utility business. Thus,
the Applicants believe that the provision of services by any Applicant in
connection with its use of the Repair Facility does not require Commission
approval under section 13(b) and Rule 87 so long as costs are allocated in
compliance with Rules 90 and 91.
The Applicants believe that the methods prescribed in the
Revised Facility Agreement for the allocation of the costs of operating the
Repair Facility and the cost of improvements to the Repair Facility comply with
the at-cost provisions of Rule 90. Rule 90 is satisfied because such methods
will yield a fair and equitable allocation of expenses related to the joint use
of the Repair Facility under Rule 91. Under the Revised Facility Agreement, as
required by Rule 91(b), direct charges to each Applicant are made to the extent
that costs can be identified and related to the particular transactions involved
without excessive effort or expense. Other elements of cost are fairly and
equitably allocated among the Applicants. Notwithstanding the foregoing, to the
extent that the Commission believes that the Applicants require authority under
section 13(b) of the 1935 Act and Rule 86 thereunder to enter into the Revised
Facility
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Agreement and jointly use the Repair Facility, the Applicants request such
authority.
Rule 54
No proceeds from the proposed transactions will be used by CSW
or any subsidiary thereof for the direct or indirect acquisition of an interest
in an exempt wholesale generator, as defined in Section 32 of the 1935 Act
("EWG"), or a foreign utility company, as defined in Section 33 of the 1935 Act
("FUCO"). Rule 54 promulgated under the 1935 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 EWG or a 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 Rule 53(a), (b) and (c) are satisfied.
As set forth below, all applicable conditions set 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.
CSW's "aggregate investment" (as defined under Rule 53(a) of
the 1935 Act) in EWGs and FUCOs as of April 24, 1997 was approximately $891
million, or about 46% of CSW's "consolidated retained earnings" as of December
31, 1996. CSW thus satisfies Rule 53(a)(1). CSW will maintain and make available
the books and records required by Rule 53(a)(2). No more than 2% of the
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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). 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 6. Exhibits and Financial Statements
Exhibit 1 -- Preliminary opinion of Milbank, Tweed, Hadley &
McCloy, counsel to the Applicants (previously filed).
Exhibit 2 -- Final or "past tense" opinion of Milbank, Tweed,
Hadley & McCloy, counsel to the Applicants (to be
filed with Certificate of
Notification).
Exhibit 3 -- Financial statements per books as of March 31,
1997 (incorporated by reference to the Applicants'
combined Quarterly Report on Form 10-Q for the
quarter ended March 31, 1997).
Exhibit 4 -- Proposed Notice of Proceeding (previously
filed).
Exhibit 5 -- Rail Car Maintenance Facility Agreement between
Southwestern Electric Power Company and Public
Service Company of Oklahoma.
Exhibit 6 -- Form of Rail Car Maintenance Facility
Agreement to be executed by Southwestern
Electric Power Company, Public Service
Company of Oklahoma and Central Power and
Light Company.
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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 27, 1997
SOUTHWESTERN ELECTRIC POWER COMPANY
PUBLIC SERVICE COMPANY OF OKLAHOMA
CENTRAL POWER AND LIGHT COMPANY
By: /s/ WENDY G. HARGUS
Wendy G. Hargus
Treasurer
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INDEX OF EXHIBITS
EXHIBIT TRANSMISSION
NUMBER EXHIBITS METHOD
1 Preliminary opinion of Milbank, Electronic
Tweed, Hadley & McCloy, counsel
to the Applicants (previously
filed).
2 Final or "past tense" opinion of ---
Milbank, Tweed, Hadley & McCloy,
counsel to the Applicants (to be
filed with the Certificate of
Notification).
3 Financial statements per books Incorp. by
as of March 31, 1997. Reference
4 Proposed Notice of Proceeding Electronic
(previously filed).
5 Rail Car Maintenance Facility Paper
Agreement between Southwestern
Electric Power Company and Public
Service Company of Oklahoma.
6 Form of Rail Car Maintenance Electronic
Facility Agreement to be executed
by Southwestern Electric Power
Company, Public Service Company
of Oklahoma and Central Power and
Light Company.
RAIL CAR MAINTENANCE FACILITY AGREEMENT
Between
SOUTHWESTERN ELECTRIC POWER COMPANY
and
CENTRAL POWER AND LIGHT COMPANY
and
PUBLIC SERVICE COMPANY OF OKLAHOMA
This Agreement, made, executed and delivered in Dallas, Texas, this
______day of May 1997, by and between Southwestern Electric Power Company
(SWEPCO), a Delaware corporation with principal offices in Shreveport,
Louisiana, Central Power and Light (CPL), a Delaware corporation with principal
offices in corpus Christi, Texas and Public Service Company of Oklahoma (PSO),
an Oklahoma corporation with principal offices in Tulsa, Oklahoma.
WITNESSETH:
WHEREAS, the parties to this Agreement, hereinafter called "Parties"
collectively or "Party" singularly, presently have coal-fired electric power
generating facilities installed on their systems for the generation of electric
power in pursuit of their business of generation, transmission and sale of
electric energy, and
WHEREAS, the Parties have a substantial number of rail cars for the
purpose of equipping unit trains for the hauling of coal for use in the
above-referenced generating stations, and
WHEREAS, the Parties have need of a rail car maintenance facility to
provide for the routine maintenance of the rail cars utilized, and
WHEREAS, SWEPCO origninally undertook to provide such a facility for
itself near Alliance, Nebraska, and
WHEREAS, SWEPCO has additional capability in said facility sufficient
to provide similar services for CPL and is currently providing such service to
PSO.
NOW THEREFORE, in consideration of the mutual promises and covenants
herein contained, this Agreement is entered into on the date first hereinabove
written and the Parties hereby agree as follows:
ARTICLE I
Scope
1.1 The unit train rail car maintenance facility, hereinafter called the
"Facility", shall consist of the real property near Alliance, Nebraska,
presently owned by SWEPCO and PSO, plus all buildings, maintenance
equipment, tools and other property used and useful for the maintenance
of rail cars, including all rail sidings, excluding, however, the
inventory of spare parts for rail cars.
1.2 It is recognized by parties that SWEPCO and PSO will continue in the
ownership position they now have and SWEPCO will operate the Facility
on behalf of itself, CPL and PSO as hereinafter set forth, and shall
have and is hereby given plenary power, discretion and authority in all
respects and in every detail for the modification, operation and
maintenance of the Facility, except as hereinafter limited.
1.3 It is recognized that due to the size of the Facility, substantial
savings can be affected by parties in providing for the maintenance
requirements of rail cars at the Facility, and therefore, it is the
intent of SWEPCO, CPL and PSO to share the common costs of acquisition,
general operation and maintenance of the Facility and all other costs
related to ownership. Actual maintenance charges on the individual cars
will be borne by the respective owner of such cars.
ARTICLE II
Ownership
2.1 SWEPCO is the majority owner and PSO holds a minority ownership
position in the Facility.
2.2 All lease payments, additions thereto, or reductions therefrom, and all
other costs capitalized according to generally accepted accounting
principles which have been or may be incurred with respect to the
Facility shall be shared between the Parties in proportion equal to the
ratio that each Party's direct labor costs for it's railcars actually
repaired or inspected at the facility bears to the total direct labor
cost for all cars owned by the Parties repaired at the Facility as set
forth in the statements provided pursuant to Section 10.1 of this
Agreement (the "Cost Ratio"). The cost ratio will be determined as of
the last day of each calendar month commencing the month of delivery
and assignment to the Facility for maintenance of CPL and PSO rail
cars.
2.3 CPL shall begin paying its pro rata share of the prior month's costs as
set forth in Section 2.2, beginning the tenth day of the month
following the month in which CPL's first unit train is placed in
operation and shall continue month to month thereafter as long as this
Agreement is in effect. PSO will continue paying its pro rata share of
the prior month's costs as set forth in Section 2.2.
2.4 The Parties agree that they will share the costs of all Facility
improvements, including financing costs, which are made after the
execution of this Agreement based on such terms and conditions as are
agreed to by the Parties at the time of such improvements. In reaching
such agreement, the Parties will give full consideration to which
Party's rail cars necessitated the facility improvements.
2.5 The transfer, sale or assignment of the rights and obligations of a
Party hereto during the contract period to any other entity shall not
be made without such transfer, sale or assignment being first tendered
to the other Parties, except when such transfer, sale or assignment:
(a) is to a trustee or mortgagee under a mortgage or deed of trust of
either Party or (b) is to a corporation resulting from a reorganization
or consolidation of a Party with another corporation which corporation
is owned or controlled by a Party or is a corporation owning or
controlling a Party. In the event a Party declines to exercise its
right of purchase pursuant to this Section, the transfer, sale or
assignment of the Facility to a third party may only be made if such
third party assumes in writing the obligations and duties of its
assignor under this Agreement.
ARTICLE III
Services Provided
3.1 SWEPCO will perform or cause to be performed all required maintenance
of rail cars owned or leased by CPL, PSO and SWEPCO which have been
assigned to the Facility.
3.2 SWEPCO will provide at the Facility, adequate equipment and tools for
the maintenance of rail cars to be owned or leased by CPL, PSO and
SWEPCO.
3.3 Management of the Facility, including staffing, maintenance and repair
of the Facility, tools and equipment shall be the responsibility of
SWEPCO.
3.4 The rail car maintenance services to be provided by SWEPCO shall
consist of but are not limited to the following:
Provide an adequate supply of repair parts and material and sufficient
labor force to expedite rail car repair and maintenance to keep
out-of-service time to a minimum;
Provide required Federal Railroad Administration and Association of
American Railroad applicable certifications, inspections, wreck
inspections off-site, and carry out negotiations with railroads
regarding wreck or running repair;
Arrange for and assure proper completion of contract work for those
necessary repairs which the Facility is unable to accomplish;
Provide adequate records and books of account to allocate Facility and
rail car repair costs to SWEPCO, CPL and PSO.
ARTICLE IV
Liability
4.1 SWEPCO will perform its obligations hereunder with due diligence and a
high degree of care in accordance with generally prevailing industry
practice, but shall not be liable to CPL or PSO except for action taken
constituting gross negligence.
ARTICLE V
Off-Set
5.1 In the event that the Parties agree at some future date that the
Facility is to be used to service cars owned by any third party, SWEPCO
will levy charges which will provide for recovery of at least costs for
such service, including Facility-related costs, and the net proceeds,
therefore, shall be allocated to the owners of the facility, subject to
the approval of any Regulatory Commission having jurisdiction, at or
prior to the time of receipt of any such payments.
ARTICLE VI
Operation
6.1 The costs incurred by SWEPCO in the general operation and maintenance
of the Facility, including insurance, utilities, tools, general and
administrative costs, and all other non-capitalized indirect expense
shall be shared between CPL, PSO and SWEPCO in accordance with the Cost
Ratio for the computation period and shall be determined and applied
consistent with the principles set out in Appendix A attached hereto.
6.2 The actual cost of inspection and maintenance of individual rail cars,
including parts, material, and labor, and other expenses directly
assignable to a specific rail car shall be paid by the Party owning
such rail car.
ARTICLE VII
Inspection and Information
7.1 CPL and PSO shall have the right, but not the duty, to inspect the
Facility and any books and records relating thereto or to charges
thereunder. SWEPCO will keep CPL and PSO advised of any significant
developments affecting the operation of the Facility or charges to
parties.
7.2 SWEPCO shall furnish a monthly report to CPL and PSO detailing the work
and charges associated with CPL and PSO rail cars assigned to the
Facility which was repaired during the previous month.
ARTICLE VIII
Term
8.1 This Agreement shall, unless sooner terminated by mutual agreement,
continue in effect until December 31, 2010.
ARTICLE IX
Management
9.1 SWEPCO has and will undertake the responsibility for itself, for CPL
and for PSO to manage the Facility or to contract for the management of
the facility, such management to include operation, maintenance and
retirement of the Facility; and the provisions for manning, supervision
and control of rail car inspection, maintenance, and repair.
9.2 SWEPCO, as majority owner and manager, shall negotiate, execute and
enforce contracts, including, but not limited to, purchase order
contracts, providing for the purchase of materials, equipment and
services for the modification and operation of the Facility.
9.3 SWEPCO is authorized, in its sole and final discretion, to make all
decisions and choices and do all things and take all action in
connection with modification, operation, maintenance, sale, lease and
retirement of the Facility and related facilities as in the opinion of
SWEPCO may be proper and justified, including but not limited to the
making of all contracts and the selection and purchase of all
components, materials, equipment, and services rendered for the
modification, operation, maintenance, and retirement of the Facility.
9.4 In the event that SWEPCO should become unable to continue management of
the Facility, subject to necessary regulatory approvals, PSO shall have
the right to assume such management. Should PSO decline to manage the
facility, CPL shall have the right to assume such management, also
subject to necessary regulatory approvals. In such event, SWEPCO agrees
to cooperate with the new manager by continuing to share expenses and
use of the Facility insofar as is practical and manager agrees to
attempt to mitigate any and all increased expenses which may be
incurred due to SWEPCO's inability to continue its management
responsibilities for the Facility.
ARTICLE X
Billing and Payments
10.1 SWEPCO shall submit to CPL and PSO as soon as practicable after the end
of each month, statements covering each Party's costs incurred pursuant
to Sections 2.3, 2.4, 6.1 and 6.2. The statements will separately set
forth the direct labor costs incurred to repair and inspect rail cars.
10.2 All statements rendered for payment of costs incurred hereunder shall
be due and payable upon receipt and shall become past due if payment is
not received within fifteen (15) days of date of statement. Overdue
bills shall accrue interest at the then effective rate of interest
approved by the Securities and Exchange Commission for intra-company
loans for Central and South West Corporation and its subsidiaries.
10.3 Statements which have been rendered by SWEPCO which are in good faith
disputed by CPL or PSO shall be paid in full under protest as
submitted. In the event of a protest, such protest will be lodged in
writing, establishing the Party's position as to the reason of protest.
Any refunds subsequently paid when a protest is finally settled, if
more than thirty (30) days from day of protest, shall bear interest at
the rate set forth in Section 10.2
ARTICLE XI
Audits and Controls
11.1 SWEPCO shall maintain an adequate and comprehensive accounting system
which will ensure that adequate procedures and records are maintained
in accordance with acceptable standards of the industry, requirements
of the Federal Energy Regulatory Commission, and any other regulatory
bodies having jurisdiction, such records to be in sufficient detail to
permit complete analysis and substantiation of all costs and billings.
11.2 An annual audit of such accounting records of SWEPCO which pertain to
the recording and development of costs used for billing purposes shall
be made for the purpose of verifying the accuracy of such accounts.
ARTICLE XII
Insurance
12.1 SWEPCO shall obtain and maintain liability and property insurance
policies with respect to the Facility, which shall afford protection
against those insurable hazards and risks which good utility operating
practices require.
12.2 Any uninsured losses, damage or liability arising pursuant to this
Agreement shall be initially borne by SWEPCO, however, CPL and PSO
shall reimburse SWEPCO for their share of any such loss in an amount to
be determined by multiplying the amount of the loss by the applicable
Cost Ratio.
12.3 SWEPCO shall settle all losses, but shall not, without prior written
consent of CPL and PSO, settle any loss where the amount to be paid in
settlement exceeds one million dollars ($1,000,000).
ARTICLE XIII
Force Majeure
13.1 SWEPCO, CPL and PSO shall not be held responsible for or liable for any
loss or damage resulting from failure to perform their obligations
hereunder due to any cause beyond their control which the Party could
not reasonably be expected to avoid, including acts of God, fire,
explosion, failure of facilities not due to lack of proper care and
maintenance, civil disturbance, labor dispute, sabotage, war, national
emergency, restraint by court or public authority, or other causes
beyond the control of the affected party which such Party could not
reasonably have been expected to avoid by exercise of due diligence and
foresight. Any party affected by such a force majeure shall use due
diligence to place himself in a position to fulfill his obligations
hereunder, and if unable to fulfill any obligation by reason thereof,
such party shall exercise due diligence to remove such disability with
reasonable dispatch. Nothing contained herein shall be construed so as
to require a Party to settle any strike or labor dispute in which it
may be involved.
ARTICLE XIV
Default
14.1 In the event of default by any party in any obligation pursuant to this
Agreement, the other Parties shall be free to invoke such remedies at
law or in equity as may be deemed appropriate.
14.2 Failure by a party to insist on any occasion upon strict performance of
any provision of this Agreement or to take advantage of any rights
hereunder shall not be construed as a waiver thereof of that right or
as a waiver in the future of the same right or a similar right.
ARTICLE XV
Severability of Provisions
15.1 A holding by any court or governmental agency having jurisdiction
herein that any provision of this Agreement is invalid shall not result
in invalidation of the entire Agreement, but all remaining terms shall
remain in full force and effect.
ARTICLE XVI
Amendment
16.1 This Agreement may be amended from time to time by an instrument in
writing executed by the Parties.
16.2 In the event any provision of this Agreement is determined to be
invalid under or in conflict with any applicable statute or any
regulation or order of any regulatory agency having jurisdiction
herein, the Parties shall attempt by mutual agreement to arrive at an
amendment of this Agreement which eliminates such invalidity or
conflict while at the same time permitting the accomplishment of the
objectives and intent of this Agreement.
ARTICLE XVII
Applicable Law
17.1 This Agreement is made under and shall be governed by the laws of the
State of Oklahoma, and other states where applicable.
ARTICLE XVIII
Notices
18.1 Any notice, demand, or request made to any Party pursuant to any
provision of this Agreement shall be made in writing and shall be
delivered either in person, by prepaid telegram, or by postage-paid
certified mail, return receipt requested, addressed as follows:
If to Southwestern Electric Power Company:
If to Central Power and Light:
If to Public Service Company of Oklahoma:
or at such other address as may from time to time by written notice by
a Party be given to the other Parties.
ARTICLE XIX
General
19.1 This Agreement shall be binding on successors and assigns of each Party
and insofar as permitted by law on any receiver or trustees in
bankruptcy, receivership, or reorganization of any Party.
19.2 Each Party shall, upon request of the other Parties, execute and
deliver to such Party any document reasonably required to implement any
provisions of this Agreement.
19.3 Any number of counterparts of this Agreement may be executed and each
shall have the same force and effect as the original.
ARTICLE XX
Approvals
20.1 This Agreement and any obligations herein assumed by any Party are
subject to the regulation or approval of all regulatory bodies or
required approving authority having jurisdiction hereof and shall not
become binding until submitted and approved by such body or authority,
which submissions shall be promptly undertaken. Any additional
agreements or amendments to this Agreement shall be subject to
regulation or approval with any regulatory body or required approving
authority having jurisdiction thereof and shall not become binding
until submitted and approved or accepted by such body or authority,
which submission shall be promptly undertaken.
ARTICLE XXI
Equal Employment Opportunity
21.1 The Parties agree to comply with all applicable provisions of and
amendments to:
(1) the Civil Rights Act of 1964, Title VII, Section 701;
(2) Presidential Executive Order No. 11246, 30 Fed. Reg. 12319
(September 24, 1965), as amended by:
(3) the Rehabilitation Act of 1973, Section 503;
(4) Presidential Executive Order No. 11701, 38 Fed. Reg. 2675
(January 29, 1973);
(5) the Vietnam Era Veterans' Readjustment Assistance Act of 1972;
(6) the Rules and Regulations of the Office of Federal Contract
Compliance Programs,41 C.F.R. Section 60-1.1 et seq.; and
(7) all other applicable laws, regulations and orders now or
hereinafter in force pertaining to equal employment
opportunity.
The applicable provisions, sections, and amendments of said acts,
executive orders, rules and regulations concerning equal employment
opportunity are incorporated by reference herein and are made a part
hereof.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed by respective authorized officers and respective
corporate seals to be affixed hereto as of the date first hereinabove
written.
PUBLIC SERVICE COMPANY OF OKLAHOMA
By: ________________________________________
Title:
ATTEST:
By: _______________________________________
CENTRAL POWER AND LIGHT COMPANY
By: ________________________________________
Title:
ATTEST:
By: _______________________________________
SOUTHWESTERN ELECTRIC POWER COMPANY
By: ________________________________________
Title:
ATTEST:
By: _______________________________________
<PAGE>
APPENDIX A
CHART OF ACCOUNTS
FOR
ALLIANCE
MAINTENANCE FACILITY AND RAIL CARS
<PAGE>
Leasing costs, costs of acquisition, and costs incurred in the operation and
maintenance of the Alliance Rail Car Facility fall into two categories as
described in general terms below and in detail in the attached Chart of
Accounts. The detailed Chart of Accounts will be amended to include CPL upon
implementation of this agreement.
I. COSTS DIRECTLY ASSIGNABLE
The actual cost of labor with associated payroll taxes such as FICA,
Unemployment Insurance contributions and fringe benefits. The actual
cost of parts, materials and other expenses which are assignable to
SWEPCO, CPL or PSO.
II. ALLOCATED COSTS TO BE SHARED
A. Direct
Leasing costs, costs of acquisition, and costs incurred in the
general operation and maintenance of the facility such as
utilities, insurance, property taxes, supplies, general office
overhead cost (General Office employees' salaries, expenses
and fringe benefits not charged directly to SWEPCO, CPL or PSO
Personnel, Safety, Audition, Taxes, Plant Accounting, General
Accounting, Purchasing and Power Departments), etc., which are
to be shared between SWEPCO, CPL and PSO and which will be
allocated to each company based upon applicable cost ratio.
Also included in this category is recovery of capital and
weighted average cost of capital in connection with SWEPCO's
maintenance facility expenditures not covered by a lease
agreement.
B. Indirect
To be added to the above costs of operation and maintenance
of the facility and the inspection and maintenance of the
rail cars will be any reasonable and justifiable expense
attributable to the Facility such as but not limited to such
items as:
1. Legal expenses.
2. Auditors' fees for any audit of SWEPCO records related to
the Facility.
3. Any outside consultative services deemed necessary.
4. Labor negotiation expenses.
5. Any other expenses which are incurred as a result of
maintaining the facility not provided for herein.
These costs are to be shared between SWEPCO, CPL and PSO based upon the
applicable cost ratio.
<PAGE>
<TABLE>
APPENDIX A
SOUTHWESTERN ELECTRIC POWER COMPANY
UNIFORM SYSTEM OF ACCOUNTS
<CAPTION>
- --------------------------------------------------------------------------- ----------- -------- -------- -------- -------
Gen'l
Account Title Ledger Area Loc. Acc't Sub.
No.
- --------------------------------------------------------------------------- ----------- -------- -------- -------- -------
----------- ======== -------- -------- -------
<S> <C> <C> <C> <C>
Alliance Maintenance Facility and Coal Cars 186.4 xxx 186 400
Material
Direct Material to SWEPCO Coal Cars 001
Direct Material to PSO Coal Cars 002
Shop Material 010
Small Tools 011
Facilities Maintenance 012
Sale of Scrap (Cr.) 013
Inventory Carrying Charges - PSO 015
Switch Engine Operation & Maintenance 016
Equipment Operation and Maintenance 017
Stores Salvage - SWEPCO 018
Stores Salvage - PSO 019
Stores Salvage - Joint 020
Labor
Direct Labor to SWEPCO Coal Cars 101
Direct Labor to PSO Coal Cars 102
Remanufacturing - SWEPCO 104
Remanufacturing - PSO 103
Supervision 110
Clerical 111
Training & Safety 112
General Shop Labor 113
Facilities Maintenance 114
Switch Engine Operation & Maintenance 116
Other Expenses
Ad Valorem Taxes - Facility 201
Ad Valorem Taxes - Coal Cars - SWEPCO 202
Taxes - Other 203
Data Processing Charges 206
- --------------------------------------------------------------------------- =========== -------- -------- -------- -------
Gen'l
Account Title Ledger Area Loc. Acc't Sub.
No.
- --------------------------------------------------------------------------- =========== -------- -------- -------- -------
<S> <C> <C> <C> <C>
Other Expenses
General Office Overhead (Personnel & Safety, 186.4 207 186 400
Auditing, Tax, Plant Accounting, General
Accounting, Accounts Payable, Power Department,
Data Processing, Purchasing, etc.
Employee Activities 210
Employee Expenses 211
Employee Fringe Benefits 212
Employee Fringe Benefits - Direct Labor - SWEPCO 213
Employee Fringe Benefits - Direct Labor - PSO 214
Employee Sick Benefits 215
Injuries and Damages 220
Insurance - Facility 221
Maintenance of Facilities (Contracted) 225
Office Supplies and Expenses 226
Payroll Taxes (FICA & UC) Direct Labor - SWEPCO 230
Payroll Taxes (FICA & UC) Direct Labor - PSO 231
Payroll Taxes (FICA & UI and LI) - Other than 232
Direct Labor
Special Services 233
Utilities - Heat, Light, Power and Water 234
Utilities - Telephone 235
Vehicle Expenses 236
Depreciation Expense 237
Depreciation Expense - SWEPCO 238
Depreciation Expense - PSO 239
Miscellaneous 250
Lease - Basic - Coal Cars - SWEPCO 261
Lease - Basic - All except Coal Cars 262
<PAGE>
- --------------------------------------------------------------------------- =========== -------- -------- -------- -------
Gen'l
Account Title Ledger Area Loc. Acc't Sub.
No.
- --------------------------------------------------------------------------- =========== -------- -------- -------- -------
<S> <C> <C> <C> <C>
Other Expenses (continued)
Lease - Supplemental Expenses - SWEPCO l86.4 263 186 400
Lease - Supplemental Expenses - Facility 264
Outside Maintenance of Coal Cars - SWEPCO 270
Outside Maintenance of Coal Cars - PSO 271
Switching Fees - SWEPCO 272
Switching Fees - PSO 273
Rental - Outside Coal Cars - SWEPCO 275
Credits for Distribution
Distributed to Welsh Power Plant 401
Distributed to PSO 402
Distributed to Flint Creek Power Plant 403
Receipt of Damages
Coal Cars - SWEPCO 501
Land 520
Building 530
Equipment 540
Sale of Crops 601
</TABLE>
ALLIANCE RAIL CAR MAINTENANCE FACILITY
The establishment of the sub-account (186.4) under miscellaneous deferred debits
(186) was intended to allow for a monthly accumulation of all charges which
would arise from the operation and maintenance of the Alliance rail car facility
and coal cars.
Further sub-accounts under (186.4) were selected for major areas of expense as
well as to capture all direct costs which could be billed to Public Service
Company of Oklahoma, should they participate. Having accounted for all monthly
costs to maintain the facility and to operate the coal cars, the (186.4) account
will then be cleared monthly to coal inventory for that portion of SWEPCO
expense and/or billed to PSO for direct costs and their portion of indirect
costs.
Account title and a description of charges under each sub-account in 186.4
follows:
DIRECT MATERIAL TO SWEPCO COAL CARS - 001-186.400
Material issued for the repair of SWEPCO cars from account 154; Stores Inventory
(Requisition on stores - Form 1201A). Also includes S.F.&H. expenses loaded
directly to material from account 163.702, Stores Expense Undistributed -
Alliance Facility.
This account would contain the majority of the material applied to the SEPX coal
cars such as wheels, axles, roller bearings, springs, couplers, and wear plates.
DIRECT MATERIAL TO PSO COAL CARS - 002-186.400
Material issued for the repair of PSO cars from account 154, Stores Inventory
(Requisition on stores - Form 1201A). Also includes S.F.&H. expenses loaded
directly to material from account 163.702, Stores Expense Undistributed -
Alliance Facility.
This account would contain the majority of the material applied to the PSO coal
cars such as wheels, axles, roller bearings, springs, couplers, and wear plates.
* SHOP MATERIAL - 010-186.400
Shop material is to be charged to this account as purchased. Shop material
consists of low cost material fasteners such as cotter keys, inexpensive bolts,
oxygen, acetylene and lubricating discs used by both companies' cars.
* SMALL TOOLS - 011-186.400
Account is charged when item is purchased. Includes any tool that costs
less than $50 per tool or a life of 2 years or less.
<PAGE>
* FACILITY MAINTENANCE MATERIAL - 012-186.400
Includes material items such as rugs, mops, cleaning supplies, buffer pads,
light bulbs, etc.
* SALE OF SCRAP (Cr.) - 013-186.400
Money recovered from the sale of non-salvageable material. Checks are to be
forwarded to Treasurer of Company for deposit and preparation of Form 422 for
charging this account.
INVENTORY CARRYING CHARGES - PSO - 015-186.400
Includes interest carrying charges on PSO's share of stores inventory based upon
SWEPCO's cost of capital.
* SWITCH ENGINE OPERATION AND MAINTENANCE - 016-186.400
Includes diesel fuel, oil and repair materials for the switch engine.
* EQUIPMENT OPERATION AND MAINTENANCE - 017-186.400
Includes cost of fuel to operate forklift and pettibone, plus the cost of normal
operating repairs to the forklift, pettibone, and tools.
STORES SALVAGE - SWEPCO - 018-186.400
Expenses of remanufacturing of a part or recontouring of wheel surface for SEPX
cars. This account would be credited for the estimated value of this reworked
part which would be transferred back into the inventory account. Includes
freight and handling charges on reworked material.
STORES SALVAGE - PSO - 019-186.400
Expenses of remanufacturing of a part or recontouring of wheel surface for PSO
cars. This account would be credited for the estimated value of this reworked
part which would be transferred back into the inventory account. Includes
freight and handling charges on reworked material.
DIRECT LABOR TO SWEPCO COAL CARS - 101-186.400
Direct labor charges of the car mechanics working on SEPX coal cars.
<PAGE>
DIRECT LABOR TO PSO COAL CARS - 102-186.400
Direct labor charges of the car mechanics working on PSO coal cars.
* SUPERVISION - 110-186.400
This account includes supervisory labor at the Alliance maintenance facility.
* CLERICAL - 111-186.400
Includes clerical and secretarial help at the Alliance maintenance facility.
* TRAINING AND SAFETY - 112-186.400
Includes labor incurred in safety meetings and training sessions. Is based on
time charged to these sessions by the car mechanics.
* GENERAL SHOP LABOR - 113-186.400
This account would include time spent on research and development of tools and
procedures and small maintenance items that are not worth breaking down the time
on.
* FACILITIES MAINTENANCE LABOR - 114-186.400
This includes janitorial salaries and would also include labor charges for time
spent on maintaining tracks, grounds and the building.
* SWITCH ENGINE OPERATION AND MAINTENANCE - 116-186.400
Includes labor to operate the switch engine and make necessary repairs and
maintenance required by the switch engine. Supervisory time spent in this
operation is not anticipated to be charged to this account.
* AD VALOREM TAXES - FACILITY - 201-186.400
Includes real estate taxes on land and property. Also includes taxes on personal
property such as tax on equipment.
AD VALOREM TAXES - COAL CARS - SWEPCO - 202-186.400
Ad Valorem taxes for coal cars owned by SWEPCO.
* TAXES - OTHER - 203-186.400
This account includes franchise and occupation taxes and any other taxes not
provided for herein.
* DATA PROCESSING CHARGES - 206-186.400
This includes supplies, computer rental and associated costs.
* GENERAL OFFICE OVERHEAD - 207-186.400
This account includes salaries and expenses of General Office personnel who are
assisting in maintaining the Alliance Facility. These costs include departments
such as: Personnel, Safety, Auditing, Taxes, Plant Accounting, General
Accounting, Accounts Payable, Power, Purchasing, and Data Processing. Includes
fringe benefits, FICA, UC, etc., of these employees as well as costs such as
General Office space, office machines, telephone (including monthly telephone
charges), office furniture, supplies, etc.
* EMPLOYEE ACTIVITIES - 210-186.400
Includes expenses attributable to the Alliance service award parties, safety
party, and any other company function involving the employees.
* EMPLOYEE EXPENSES - 211-186.400
Includes all travel expense incurred by Alliance employees attributable to items
such as travel to derailments, general office or to other locations to conduct
company business in connection with the operation of the facility or coal cars.
This account includes employees' dues and expenses while attending professional
and Civic Clubs and other approved meeting activities.
* EMPLOYEE FRINGE BENEFITS - 212-186.400
Includes charges for benefit programs such as pension, thrift, and insurance
plans in excess of employee contributions, one-half the cost of safety shoes,
and company furnished uniforms. Fringe benefits of Alliance employees are to be
charged this account from company percentage of benefits applied to base
payroll. This account excludes fringe benefits associated with direct labor.
These benefits are covered in accounts 213 (SWEPCO) and 214 (PSO) below.
EMPLOYEE FRINGE BENEFITS - DIRECT LABOR - SWEPCO - 213-186.400
This account includes all employee fringe benefits associated with direct labor
for SWEPCO Coal Cars. Benefits which cannot be associated with direct labor,
such as safety shoes and uniforms are to be included in account 212 above.
EMPLOYEE FRINGE BENEFITS - DIRECT LABOR - PSO - 214-186.400
This account includes all employee fringe benefits associated with direct labor
for PSO Coal Cars.
* EMPLOYEE SICK BENEFITS - 215-186.400
Benefits paid while employee is on disability.
* INJURIES AND DAMAGES - 220-186.400
Injuries and damage expenses incurred at the Alliance Facility and not covered
by insurance.
* INSURANCE - LIABILITY AND PROPERTY - 221-186.400
Insurance coverage for property and liability insurance.
* MAINTENANCE OF FACILITIES (CONTRACTED) - 225-186.400
This includes such items as sanitation pickup and any contracted janitorial
services, etc.
* OFFICE SUPPLIES AND EXPENSES - 226-186.400
Includes normal office supplies such as paper, books, manuals, etc. Also
includes Xerox supplies and rental.
PAYROLL TAXES (FICA & UC) - DIRECT LABOR - SWEPCO - 230-186.400
Including Social Security, Unemployment, Insurance Contributions, etc., of
Alliance employees charging payroll to SWEPCO direct labor.
PAYROLL TAXES (FICA & UC) DIRECT LABOR - PSO - 231-186.400
Including Social Security, Unemployment, Insurance Contributions, etc., of
Alliance employees charging payroll to PSO direct labor.
* PAYROLL TAXES (FICA & UC) - OTHER - 232-186.400
Includes Social Security, Unemployment, Insurance Contributions, etc., of
Alliance employees charging payroll to the facility, excluding payroll taxes
relating to direct labor.
* SPECIAL SERVICES - 233-186.400
Account includes special services which may be incurred as a result of
operations. At present, this account is being used to accumulate all expenses
attributable to TWX services.
* UTILITIES - HEAT, LIGHT, POWER AND WATER - 234-186.400
Self -explanatory.
* UTILITIES - TELEPHONE - 235-186.400
Self -explanatory.
* VEHICLE EXPENSES - 236-186.400
Gas, oil, repairs and maintenance attributable to any vehicles at Alliance.
* DEPRECIATION EXPENSE - 237-186.400
Depreciation of assets (capitalized items not covered in lease agreement).
DEPRECIATION EXPENSE - SWEPCO - 238-186.400
Depreciation of assets (capitalized items not covered in lease agreement).
DEPRECIATION EXPENSE - PSO - 239-186.400
Depreciation of assets (capitalized items not covered in lease agreement).
* MISCELLANEOUS - 250-186.400
Items not specifically covered in the above accounts.
LEASE - BASIC - COAL CARS - SWEPCO - 261-186.400
Lease payments that are being paid for SEPX coal cars.
<PAGE>
* LEASE - BASIC - ALL EXCEPT COAL CARS - 262-186.400
The portion of lease payments attributable to the cost of the building,
equipment and land at Alliance.
LEASE - SUPPLEMENTAL EXPENSES - SWEPCO - 263-186.400
Those additional expenses specified in the lease agreement.
* LEASE - SUPPLEMENTAL EXPENSES - FACILITY - 264-186.400
Those additional expenses specified in the lease agreement.
OUTSIDE MAINTENANCE OF COAL CARS - SWEPCO - 270-186.400
Those expenses for running maintenance of SEPX coal cars; primarily the billing
by the railroads by which we operate.
OUTSIDE MAINTENANCE OF COAL CARS - PSO - 271-186.400
Those expenses for running maintenance of PSO coal cars; primarily the billing
by the railroads by which PSO operates.
RENTAL - OUTSIDE COAL CARS - SWEPCO - 275-186.400
Includes charges for utilization of outside equipment which is not included in
the freight rate.
SWITCHING FEES - SWEPCO - 272-186.400
Charges from the railroad attributable to moving SWEPCO's coal cars.
SWITCHING FEES - PSO - 273-186.400
Charges from the railroad attributable to moving PSO's coal cars.
CREDITS FOR DISTRIBUTION
DISTRIBUTED TO WELSH POWER PLANTS - 401-186.400
Those charges attributable to SWEPCO allocated to the Welsh coal pile.
DISTRIBUTED TO PSO - 402-186.400
Those charges attributable to PSO in accordance with this agreement and any
amendments thereto.
DISTRIBUTED TO FLINT CREEK POWER PLANT - 403-186.400
Those charges attributable to SWEPCO allocated to the Flint Creek coal pile.
RECEIPT OF DAMAGES:
COAL CARS - SWEPCO - 501-186.400
LAND - 520-186.400
BUILDING - 530-186.400
EQUIPMENT - 540-186.400
Additions and deletions to these Chart of Accounts will be made as needed.
* Overhead items shared on the cost ratio as per Agreement.
