File No. 70-10088
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Amendment No. 2
to
FORM U-1
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APPLICATION OR DECLARATION
Under
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
***
AMERICAN ELECTRIC POWER COMPANY, INC.
AEP GENERATING COMPANY
AMERICAN ELECTRIC POWER SERVICE CORPORATION
APPALACHIAN POWER COMPANY
CENTRAL AND SOUTH WEST CORPORATION
CENTRAL POWER AND LIGHT COMPANY
COLUMBUS SOUTHERN POWER COMPANY
INDIANA MICHIGAN POWER COMPANY
KENTUCKY POWER COMPANY
KINGSPORT POWER COMPANY
OHIO POWER COMPANY
PUBLIC SERVICE COMPANY OF OKLAHOMA
SOUTHWESTERN ELECTRIC POWER COMPANY
WEST TEXAS UTILITIES COMPANY
WHEELING POWER COMPANY
CEDAR COAL CO.
CENTRAL APPALACHIAN COAL CO.
CENTRAL COAL CO.
COLOMET, INC.
SIMCO, INC.
SOUTHERN APPALACHIAN COAL CO.
BLACKHAWK COAL CO.
CONESVILLE COAL PREPARATION COMPANY
FRANKLIN REAL ESTATE COMPANY
INDIANA FRANKLIN REALTY COMPANY and
additional subsidiaries identified on Signature Page.
1 Riverside Plaza, Columbus, Ohio 43215
(Name of company or companies filing this state-
ment and address of principal executive offices)
***
AMERICAN ELECTRIC POWER COMPANY, INC.
1 Riverside Plaza, Columbus, Ohio 43215
(Name of top registered holding company parent
of each applicant or declarant)
***
A.A. Pena, Treasurer
AMERICAN ELECTRIC POWER SERVICE CORPORATION
1 Riverside Plaza, Columbus, Ohio 43215
Jeffrey D. Cross, General Counsel
AMERICAN ELECTRIC POWER SERVICE CORPORATION
1 Riverside Plaza, Columbus, Ohio 43215
(Names and addresses of agents for service)
American Electric Power Company, Inc., a New York corporation ("AEP") and
Central and South West Corporation, a Delaware corporation ("CSW"), both
registered holding companies under the Public Utility Holding Company Act of
1935, as amended (the "Act") and the direct and indirect subsidiaries of AEP
("Subsidiaries"), including the following public utility subsidiaries: AEP
Generating Company ("Generating"), Appalachian Power Company ("Appalachian"),
Central Power and Light Company ("CPL"), Columbus Southern Power Company
("Columbus"), Indiana Michigan Power Company ("Indiana"), Kentucky Power Company
("Kentucky"), Kingsport Power Company ("Kingsport"), Ohio Power Company
("Ohio"), Public Service Company of Oklahoma ("PSO"), Southwestern Electric
Power Company ("SWEPCO"), West Texas Utilities Company ("West Texas"), and
Wheeling Power Company ("Wheeling") (collectively, "the Public Utility
Subsidiaries") and the following nonutility subsidiaries which are currently
participants in the AEP utility money pool and are applicants in this
proceeding: Cedar Coal Co., Central Appalachian Coal Co., Central Coal Co.,
Colomet, Inc., Simco, Inc., Southern Appalachian Coal Co., Blackhawk Coal Co.,
Conesville Coal Preparation Company, all coal mining companies and Franklin Real
Estate Company, and Indiana Franklin Realty Company, both real estate companies,
are applicants in this filing.
In addition, the following entities are applicants in this filing as they
seek to be participants in the Nonutility Money Pool:
Entity Description
AEP Coal, Inc. Coal Mining Operations in midwest
AEP Power Marketing, Inc. Power Marketing
AEP Pro Serv, Inc. Professional Services for industrial and energy customers
AEP Retail Energy, LLC Gas and electric retail marketing
AEP T&D Services, LLC Professional Services for transmission and distribution
AEP Credit, Inc. Factoring AEP operating companies
Industry and Energy Associates LLC Professional Services for industrial and energy customers
AEP C&I Company, LLC Gas and electric commercial and industrial retail marketing
AEP Gas Power System GP, LLC Gas and electric commercial and industrial retail marketing
AEP Gas Power GP, LLC Gas and electric commercial and industrial retail marketing
AEP Retail Energy Gas and electric commercial and industrial retail marketing
AEP Texas Commercial & IndustrialRetail GP, LLC Gas and electric commercial and industrial retail marketing
AEP Communications, Inc. Telecom and fiber optics company
AEP Communications, LLC Telecom and fiber optics company
C3 Networks GP, LLC Telecom and fiber optics company
C3 Networks Limited Partnership Telecom and fiber optics company
C3 Networks & Communications LP Telecom and fiber optics company
AEP Fiber Venture, LLC Telecom and fiber optics company
C3 Communications, Inc. Telecom and fiber optics company
AEP Energy Services, Inc. Energy trading operations
AEP EmTech, LLC Owns and manages intellectual property
AEP Investments, Inc. Owns and manages intellectual property
Ventures Lease Co., LLC 100% owned by AEP Resources
AEP Resource Services, LLC Service company
AEP Resources, Inc. Service company
AEP Delaware Investment Company II 1% owner of AEP holdings
AEP Delaware Investment Company III Holding company
AEP MEMCO LLC Barge operations
AEP Elmwood LLC Barge maintenance
United Sciences Testing, Inc. Emissions testing systems
AEP Energy Services Gas Holding Company Gas marketing
Mid-Texas Pipeline Company Gas marketing
Jefferson Island Storage & Hub L.L.C. Gas marketing
AEP Acquisition, L.L.C. Gas marketing
AEP Energy Services Investments, Inc. Gas marketing
LIG, Inc. Gas marketing
LIG Pipeline Company Gas marketing
Tuscaloosa Pipeline Company Gas marketing
LIG Liquids Company, L.L.C. Gas marketing
Louisiana Intrastate Gas Company, L.L.C. Gas marketing
LIG Chemical Company Gas marketing
Houston Pipe Line Company, LP Gas marketing
AEP Gas Marketing LP Gas marketing
HPL Holdings, Inc. Gas marketing
AEP Resources International, Limited Foreign power plant operations
AEP Resources Project Management Company, Ltd. Foreign power plant operations
AEP Pushan Power, LDC Foreign power plant operations
CSW International, Inc. Foreign IPP's
AEP Delaware Investment Company III Energy management
AEP Holdings I CV Holding company
AEP Holdings II CV Dutch holding co
AEP Energy Services UK Gen Ltd European power generation
AEP Energy Services Limited European trading operations
CSW Energy, Inc. Domestic IPP's
CSW Power Marketing, Inc. Power marketing
CSW Ft. Lupton, Inc. Power plant operations
Newgulf Power Venture Power plant operations
CSW Development I, Inc. Power plant operations
Eastex Cogeneration LP Power plant operations
CSW Eastex LP I, Inc. Power plant operations
CSW Energy Services, Inc. Energy Marketer
EnerShop Inc. Retail Sales
Mutual Energy SWEPCO L.P. Retail electric provider
REP Holdco Inc. Retail electric provider
Mutual Energy CPL, LP Retail electric provider
REP General Partner L.L.C. Retail electric provider
Mutual Energy WTU, LP Retail electric provider
Mutual Energy Service Company, L.L.C. Service operations for retail companies
AEP Ohio Commercial & Industrial Retail Co, LLC Retail electric provider
AEP Ohio Retail Energy LLC Retail electric provider
Mutual Energy L.L.C. Retail electric provider
AEP Texas Retail GP, LLC Retail electric provider of last resort
POLR Power, L.P. Retail electric provider of last resort
Dolet Hills Lignite Company, LLC Coal Mining operations in LA
AEP Desert Sky GP, LLC Wind generation operations
AEP Desert Sky LP LLC Wind generation operations
Universal Supercapacitators, LLC Supercapacitator operations
For purposes hereof "Subsidiaries" shall also include other direct or
indirect subsidiaries that AEP may form pursuant to the Rule 58 exception or
pursuant to Sections 32, 33 or 34 of the Act. All of AEP's direct and indirect
Subsidiaries, other than Public Utility Subsidiaries, are herein called
"Nonutility Subsidiaries." All subsidiaries and AEP and CSW are sometimes
referred to collectively as the "Companies".
The Applicants propose to amend the Application/Declaration on Form U-1, as
amended by this Amendment No. 2 in this File No. 70-10088 as follows:
1. By amending and restating ITEM 1. DESCRIPTION OF PROPOSED TRANSACTIONS in its
entirety to read as follows:
A. Introduction and General Request
AEP and its Subsidiaries seek the authorization and approval of the
Commission with respect to the ongoing financing activities, the provision of
intrasystem services and guarantees and other matters pertaining to AEP and its
Subsidiaries as set forth herein. Specifically, this Application-Declaration
seeks the following authorizations and approvals of the Commission:
(i) In order to ensure that the AEP system is able to meet its capital
requirements and plan its future financing, AEP and its Subsidiaries hereby
request authorization for financing transactions for the period beginning
with the effective date of an order issued pursuant to this filing and
continuing, unless otherwise specified in this Application, until March 31,
2006 (the "Authorization Period");
(ii) SWEPCO and Wheeling request authorization to issue long-term debt in
amounts not to exceed $350 million and $40 million, respectively;
(iii) AEP, CSW and the Public Utility Subsidiaries request that the
Commission approve an aggregate financing request in the amount of $7.2
billion outstanding in short-term financing capacity for AEP, CSW and the
Public Utility Subsidiaries as more fully described in the
Application-Declaration;
(iv) CPL, Columbus, Ohio and West Texas, companies affected by
restructuring, seek authority to issue short and long-term debt in an
amount not to exceed $3.9 billion. Any short-term debt issued by CPL,
Columbus, Ohio and West Texas will be included in the aggregate short-term
financing amount of $7.2 billion outstanding described at (iii) above. If
long-term debt issued by CPL, Columbus, Ohio and West Texas to the fullest
amount of the $3.9 billion authority sought under this order, then no
short-term debt authority will be available under this order for these four
companies, and additional short-term debt authority would be sought, if
necessary;
(v) Public Utility subsidiaries seek authorization to organize financing
entities for certain types of inancings;
(vi) AEP, CSW and the Subsidiaries which are participants in the Utility
Money Pool request the continuation of the Money Pool through the
Authorization Period;
(vii) AEP and its Nonutility Subsidiaries request authority to form and
continue a Nonutility Money Pool on substantially the same terms and
conditions as the Utility Money Pool;
(viii) AEP requests the Commission approve the issuance by AEP and its
Subsidiaries of guarantees and other forms of credit support in an
aggregate amount not to exceed $900 million outstanding at any time in
exposure as more fully described below; and
(ix) AEP and its Nonutility Subsidiaries request authorization for the
Subsidiaries to pay dividends out of capital or unearned surplus to the
fullest extent of the law.
B. Background and Existing Authority
By Order dated December 30, 1997 (Release No. 35-26811, in file No.
70-9107), CSW and its electric public utility subsidiary companies, CPL, PSO,
SWEPCO, WTU and Central and South West Services, Inc., were authorized to engage
in various financing and related transactions through December 31, 2002.
By Order dated June 14, 2000 (Release No. 35-27186 in File No. 70-9381),
AEP was authorized to acquire by merger all of the outstanding common stock of
CSW. By that order, AEP, its operating subsidiaries and certain other
subsidiaries were added to the CSW Money Pool.
By Order dated October 26, 2001 (Release No. 27457 in File No. 70-9937) the
Money Pool authority was extended to December 31, 2002 and certain sublimits
relating to restructuring were established.
AEP, AEPSC, CSW, CPL, Columbus, Ohio, SWEPCO and West Texas have pending
before this Commission an application to restructure their operations pursuant
to deregulation statutes in Texas and Ohio which will result in the separation
of the generation and energy delivery functions of CPL, Columbus, Ohio, and West
Texas ("Restructuring Application") [File No. 70-9785]. This authority includes
the issuance of short and long-term debt by the new generation, distribution and
transmission entities and guarantees relating to these enterprises.
C. Overview of the Request
The Applicants hereby request authorization to engage in the transactions
set forth herein during the Authorization Period. The financing transactions
relate to:
(1) external issuances by AEP, CSW and the Public Utility Subsidiaries of
short-term debt;
(2) external issuances by SWEPCO and Wheeling of common stock, preferred
securities; short-term debt financing; long-term debt financing, such
as first mortgage bonds, pollution control revenue bonds, notes
(secured and unsecured) and debentures; sales of tax-advantaged
preferred securities; and borrowings under Credit Agreements with
banks; credit enhancements and other financial institutions in each
case not subject to Rule 52;
(3) entering into by SWEPCO and Wheeling of hedging transactions to the
extent not exempt by Rule 52;
(4) continuation of the Utility Money Pool;
(5) implementation of a Nonutility Money Pool;
(6) authorization of issuance of intrasystem and other guarantees.
All debt issued by AEP or CSW pursuant to authority granted in this file
will be unsecured.
D. Parameters of Financings
The Applicants request authority to engage in financing transactions for
which the specific terms and conditions are not currently known, subject to
certain conditions concerning the financial condition of the Applicants. The
Applicants will not publicly issue any long-term debt unless such securities are
rated at the time of issuance at the investment grade level as established by at
least one "nationally recognized statistical rating organization," as that term
is used in paragraphs (c)(2)(vi)(E)(F) and (H) of Rule 15c3-1 under the
Securities Exchange Act of 1934. The Commercial paper will have at least an
investment grade corporate or senior unsecured debt rating by at least one
nationally recognized rating agency. Short-term borrowings will have maturities
of less than one year from the date of issuance. The general conditions for
financing without further prior approval are set forth below.
1. Effective Cost of Money on Debt Securities and Borrowings Under Credit
Agreements
The effective cost of money on long term debt borrowings issued pursuant to
this Application will not exceed the greater of (i) 450 basis points over
comparable term U.S. Treasury securities, or (ii) a gross spread over U.S.
Treasury securities which is consistent with similar securities of comparable
credit quality and maturities issued by other companies.
2. Maturity of Debt
The maturity of indebtedness will not exceed 50 years.
3. Issuance Expenses
The underwriting fees, commissions, or other similar expenses paid in
connection with the issue, sale or distribution of a security pursuant to the
Application will not exceed 5% of the principal or total amount of the
financing.
4. Use of Proceeds
The proceeds from the sale of securities in external financing transactions
by the Applicants will be added to their respective treasuries and subsequently
used principally for general corporate purposes including:
(i) the financing, in part, of capital expenditures;
(ii) the financing of working capital requirements;
(iii)the acquisition, retirement or redemption of securities previously
issued by AEP or its Subsidiaries without the need for prior
Commission approval; and
(iv) other lawful purposes, including direct or indirect investment in Rule
58 companies by AEP, other subsidiaries approved by the Commission,
EWGs and FUCOs.
5. Borrowing Limits
The aggregate amount of outstanding external financing effected by the
Applicants pursuant to the authorization requested hereunder during the
Authorization Period will not exceed:
(a) Long-term debt limits:
SWEPCO $350,000,000
Wheeling $40,000,000
(b) Short-term borrowing limits for public utility companies through the
Money Pool or external borrowings, or borrowings from AEP, are as follows:
Company Amount
------- ------
Appalachian $600,000,000
Indiana $500,000,000
Kentucky $200,000,000
Generating $125,000,000
Kingsport $40,000,000
PSO $300,000,000
SWEPCO $350,000,000
Wheeling $40,000,000
AEP requires an amount of authority for short-term borrowings sufficient to
fund the Utility Money Pool and the Nonutility Money Pool as well as its own
requirements in an amount not to exceed $7,200,000,000. If restructuring
companies listed in subsection (c) below issue short-term debt, such issuances
are included within the $7.2 billion authority.
Pre-restructuring the breakdown of the $7.2 billion is as follows:
Utility: $5.0bil
AEP or CSW: .7bil
Nonutility: 1.5bil
$7.2bil
Post-restructuring the breakdown will be as follows:
Utility: $3.5bil
AEP or CSW: 1.2bil
Nonutility: 2.5bil
$7.2bil
(c) Restructuring Companies
The companies affected by restructuring will need continued authority to
issue debt, including both long and short term debt, both on the external market
or from the Utility Money Pool, as follows:
Company Debt Limits
------- -----------
CPL $1,400,000,000
Columbus $800,000,000
Ohio $1,200,000,000
West Texas $500,000,000
Any short-term debt issued by CPL, Columbus, Ohio and West Texas will be
included in the aggregate short-term financing amount of $7.2 billion
outstanding described above. If long-term debt is issued by CPL, Columbus, Ohio
and West Texas pursuant to authority in this filing to the fullest amount of the
$3.9 billion authority sought under this order, then no short-term debt
authority will be available under this order for these four companies, and
additional short-term debt authority would be sought, if necessary.
6. Financial Condition
AEP hereby represents that it will maintain during the authorization period
for itself and for all the Public Utility Subsidiaries a minimum 30% common
equity as a percentage of consolidated capital (inclusive of short-term debt and
inclusive of securitization bonds); however CPL requests that it be permitted to
maintain a common equity ratio of 25% for so long as securitization bonds are
outstanding. A table showing equity ratios is filed as Exhibit A-1. The 25%
common equity as a percentage of consolidated capital is required only because
of the issuance of securitization bonds. An amortization table relating to the
CPL securitization bonds is filed as Exhibit A-2.
E. Description of Specific Types of Financing
1. External Financing - All external financing will be at rates or prices
and under conditions based upon, or otherwise determined, by competitive capital
markets.
The Applicants request authority to sell securities covered by this
Application in any of the following ways: (i) through underwriters or dealers;
(ii) directly to a limited number of purchasers or to a single purchaser, or
(iii) through agents or dealers. If underwriters are used in the sale of the
securities, such securities will be acquired by the underwriters for their own
account and may be resold from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering price or at
varying prices determined at the time of sale. The securities may be offered to
the public either through underwriting syndicates (which may be represented by
managing underwriters) or directly by one or more underwriters acting alone. The
securities may be sold directly by AEP, CSW or a Subsidiary or through agents
designated from time to time. If dealers are used in the sale of any securities,
such securities will be sold to the dealers as principal. Any dealer may then
resell such securities to the public at varying prices to be determined by such
dealer at the time of resale.
If debt securities are being sold, they may be sold pursuant to "delayed
delivery contracts" which permit the underwriters to locate buyers who will
agree to buy the debt at the same price but at a later date than the date of the
closing of the sale to the underwriters. Debt securities may also be sold
through the use of medium-term note and similar programs, including in
transactions covered by Rule 144A under the Securities Act of 1933. Pollution
control revenue bonds may be sold either currently or in forward refundings
where the price of the securities is established currently for delivery at a
future date.
(a) Long-Term Debt
Under current law, the public utility commission in the states of Indiana,
Virginia, Tennessee, Ohio, Oklahoma and Kentucky approve the issuance of
long-term securities by public utility companies. Therefore, Rule 52(a) provides
an exemption from this Commission for the issuances of long term debt securities
by all of AEP's public utility subsidiaries except CPL, SWEPCO, West Texas and
Wheeling.
Financing authorization is being sought for SWEPCO, Wheeling, CPL, Columbus
Ohio and West Texas as described in Borrowing Limits above.
Any long-term debt would have such designations, aggregate principal
amount, maturity, interest rate(s) or methods of determining the same, interest
payment terms, redemption provisions, non-refunding provisions, sinking fund
terms, conversion or put terms and other terms and conditions in accordance with
parameters set forth above as the Applicants may at the time of issuance
determine.
(b) Short-term Debt
The public utility direct or indirect subsidiaries of AEP are members of
the AEP System Money Pool and make short-term borrowings from the Money Pool.
The Money Pool is funded by AEP currently through a commercial paper program. No
participant in the Money Pool ("Particpants") may borrow from the Money Pool if
the borrowing Company could borrow more cheaply directly from banks or through
the issuance of its own commercial paper. The Companies also require authority
for short term borrowing in the event funds are not available from the Money
Pool. Therefore, AEP, CSW and the Public Utility Subsidiaries seek authorization
for the issuance of short-term debt in the form of bank loans and commercial
paper programs in the amount set forth in Borrowing Limits above.
Commercial paper would be sold in established domestic or European
commercial paper markets. AEP, CSW or the Public Utility Subsidiaries may,
without counting against its limits, maintain back up lines of credit in
connection with a commercial paper program in an aggregate amount not to exceed
the amount of authorized commercial paper.
AEP and CSW require flexibility in the types of short-term debt by which
each of them borrows externally to take advantage of new commercial paper
products being offered in the market for short-term securities, including but
not limited to, the extendible commercial notes program currently being offered
by certain commercial paper dealers(1), and other new products to provide
alternate backup liquidity for commercial paper and short-term notes.
AEP, CSW and the Public Utility Subsidiaries believe that by having
flexibility to allocate short-term borrowings between sales of notes and sales
of commercial paper, they will be able to realize economies in meeting their
short-term financing requirements, and such companies propose, in general,
taking appropriate long and short-term considerations into account, to utilize
the most economical means available at any time to meet their short-term
financing requirements.
AEP, CSW and the Public Utility Subsidiaries may engage in other types of
short-term financing generally available to borrowers with comparable credit
ratings as each individual entity may deem appropriate in light of its needs and
market conditions at the time of issuance.
(c) Credit Enhancement
Applicants may obtain credit enhancement for the securities covered by this
Application, which could include insurance, a letter of credit or a liquidity
facility. The Applicants anticipate they may be required to provide credit
enhancement if they were to issue floating rate securities, whereas credit
enhancement would be a purely economic decision for fixed rate securities. The
Applicants anticipate that even though they would be required to pay a premium
or fee to obtain the credit enhancement, they would realize a net benefit
through a reduced interest rate on the new securities. Applicants will obtain
credit enhancement only if it is economically beneficial to do so taking into
consideration fees required to obtain the product.
(d) Financing Entities
The Public Utility Subsidiaries seek authority to organize new
corporations, trusts, partnerships or other entities to be created for the
purpose of facilitating certain types of financings such as the issuance of tax
advantaged preferred securities in an amount set forth in Exhibit B. Request is
also made for these financing entities to issue such securities to third
parties. Additionally, request is made for authorization with respect to (i) the
issuance of debentures or other evidences of indebtedness by the Public Utility
Subsidiaries to a financing entity in return for the proceeds of the financing
and (ii) the acquisition by a Public Utility Subsidiary of voting interests or
equity securities issued by the financing entity to establish the Public Utility
Subsidiary's ownership of the financing entity (the equity portion of the entity
generally being created through a capital contribution or the purchase of equity
securities, such as shares of stock or partnership interests, involving an
amount usually ranging from 1 to 25 percent of the capitalization of the
financing entity). The Public Utility Subsidiaries also request authorization to
enter into expense agreements with their respective financing entities, pursuant
to which they would agree to pay all expenses of such entity.
The Public Utility Subsidiaries may also guarantee (i) payment of interest,
dividends or distributions on the securities issued by their subsidiary
financing entities if and to the extent such financing entities declare
dividends or distributions or pay interest out of funds legally available
therefor; (ii) payments to the holders of the securities issued by such entities
of amounts due upon liquidation of such entities or redemption of the securities
of such entities; and (iii) certain additional amounts that may be payable in
respect of such securities.
(e) Hedging Transactions
Interest rate hedging transactions with respect to existing indebtedness
("Interest Rate Hedges"), subject to the limitations and restrictions set forth
herein, would be entered into in order to reduce or manage interest rate cost or
risk. Interest Rate Hedges would only be entered into with counterparties
("Approved Counterparties") whose senior debt ratings, or whose parent
companies' senior debt ratings, as published by Standard and Poor's Ratings
Group, are equal to or greater than BBB, or an equivalent rating from Moody's
Investors' Service or Fitch Investor Service. Interest Rate Hedges will involve
the use of financial instruments and derivatives commonly used in today's
capital markets, such as interest rate swaps, options, caps, collars, floors,
and structured notes (i.e., a debt instrument in which the principal and/or
interest payments are indirectly linked to the value of an underlying asset or
index), or transactions involving the purchase or sale, including short sales,
of U.S. Treasury obligations. The transactions would be for fixed periods and
stated notional amounts. In no case will the notional principal amount of any
interest rate swap exceed that of the underlying debt instrument and related
interest rate exposure. Applicants will not engage in speculative transactions.
Fees, commissions and other amounts payable to the counterparty or exchange
(excluding the swap or option payments) in connection with an Interest Rate
Hedge will not exceed those generally obtainable in competitive markets for
parties of comparable credit quality.
Interest rate hedging transactions with respect to anticipated debt
offerings (the "Anticipatory Hedges") and subject to certain limitations and
restrictions as set forth herein would only be entered into with Approved
Counterparties, and would be utilized to fix and/or limit the interest rate risk
associated with any new issuance through (i) a forward sale of exchange-traded
U.S. Treasury futures contracts, U.S. Treasury obligations and/or a forward swap
(each a "Forward Sale"); (ii) the purchase of put options on U.S. Treasury
obligations (a "Put Options Purchase"); (iii) a Put Options Purchase in
combination with the sale of call options on U.S. Treasury obligations (a "Zero
Cost Collar"); (iv) transactions involving the purchase or sale, including short
sales, of U.S. Treasury obligations; or (v) some combination of a Forward Sale,
Put Options Purchase, Zero Cost Collar and/or other derivative or cash
transactions, including, but not limited to structured notes, options, caps and
collars, appropriate for the Anticipatory Hedges. Anticipatory Hedges may be
executed on-exchange ("On-Exchange Trades") with brokers through the opening of
futures and/or options positions traded on the Chicago Board of Trade or the
Chicago Mercantile Exchange, the opening of over-the-counter positions with one
or more counterparties ("Off-Exchange Trades"), or a combination of On-Exchange
Trades and Off-Exchange Trades. Each Applicant will determine the optimal
structure of each Anticipatory Hedge transaction at the time of execution.
Applicants may decide to lock in interest rates and/or limit its exposure to
interest rate increases. Applicants represent that each Interest Rate Hedge and
Anticipatory Hedge will be treated for accounting purposes under generally
accepted accounting principles. Applicants will comply with the then existing
financial disclosure requirements of the Financial Accounting Standards Board
associated with hedging transactions (currently SFAS 133 and SFAS 138). The
proposed terms and conditions of the Interest Rate Hedges and Anticipatory
Hedges are substantially the same as the Commission has approved in other cases.
See Entergy Corporation, HCAR No. 27371 (April 3, 2001); New Century Energies,
Inc., et al., HCAR No. 27000 (April 7, 1999); and Ameren Corp., et al., HCAR No.
27053 (July 23, 1999).
F. Extension of Authority for Utility Money Pool
1. Background.
By Order dated December 30, 1976 (HCAR No. 19829; 70-5930) and in
subsequent Orders, the Commission authorized Central and South West Corporation
("CSW"), a Delaware corporation and a registered holding company under the Act
and a wholly owned subsidiary of AEP, to establish and utilize a system money
pool ("Money Pool") to co-ordinate short-term borrowings for CSW, its electric
subsidiary companies and Central and South West Services, Inc. as set forth in
Central and South West Corp., HCAR No. 26697 (Mar. 28, 1997, 70-8557) HCAR No.
24855 (April 5, 1989, 70-7643), HCAR No. 26254 (March 21, 1995, 70-8557), HCAR
No. 26854 (Apr. 3, 1998, 70-8557).
In its Order dated June 14, 2000 in File 70-9381 (HCAR No. 27186), the
Commission authorized AEP to continue the Money Pool and to add its utility
subsidiaries and certain other subsidiaries(2) as participants in the AEP System
Money Pool (the "Participants") and established borrowing limits for all
Participants. A copy of the AEP System Money Pool Agreement dated January 18,
2001 executed by participants in the Utility Money Pool is filed as Exhibit C.
By Order dated October 26, 2001 (HCAR No. 35-27457), AEP was authorized to
increase its external borrowing from $5 billion to $6.910 billion through
December 31, 2002, through the issuance and sale of short-term notes and
commercial paper.
2. Current Operations.
All short-term borrowing needs of the Participants may be met by funds in
the Money Pool to the extent such funds are available. Each Participant shall
have the right to borrow from the Money Pool from time to time, subject to the
availability of funds and the limitations and conditions set forth in orders of
this Commission; provided, however, that the aggregate amount of all loans
requested by any Participant approved hereunder shall not exceed the applicable
borrowing limits set forth in orders of the Commission and other regulatory
authorities, and agreements binding upon such Participant. No Participant shall
be obligated to borrow from the Money Pool if lower cost funds can be obtained
from its own external borrowing. Neither AEP nor CSW will borrow funds from the
Money Pool or any Participant.
AEPSC, a Rule 88 subsidiary service company, acts as administrative agent
of the Money Pool. Each Participant and AEP determine the amount of funds it has
available for contribution to the Money Pool. The determination of whether a
Participant or AEP at any time has surplus funds, or shall lend such funds to
the Money Pool, will be made by such Participant treasurer, or by a designee
thereof, on the basis of cash flow projections and other relevant factors, in
such Participant's sole discretion. Each Participant may withdraw any of its
funds at any time upon notice to AEPSC.
Each Participant may borrow from the Money Pool to the extent of Borrowing
Limits for short-term debt.
3. Sources of Funds.
The Money Pool is composed from time to time of funds from the following
sources: (i) surplus funds of AEP; (ii) surplus funds of any of the
Participants; or (iii) short-term borrowings by AEP or CSW.
AEPSC administers the Money Pool by matching up, to the extent possible,
short-term cash surpluses and loan requirements of AEP and the various
Participants. Participants' requests for short-term loans are met first from
surplus funds of other Participants which are available to the Money Pool and
then from AEP corporate funds to the extent available. To the extent that
Participant contributions of surplus funds to the Money Pool are insufficient to
meet Participant requests for short-term loans, borrowings are made from outside
the system.
Funds which are loaned from Participants into the Money Pool which are not
required to satisfy borrowing needs of other Participants will be invested by
AEP on the behalf of the lending Participants in one or more short-term
instruments.
4. Use of Proceeds.
The Money Pool makes funds available to Participants for the interim
financing of their capital expenditure programs and their other working capital
needs, and to AEP to loan and to make capital contributions to any of the
Participants and in both instances to repay previous borrowings incurred for
such purposes. External borrowings by AEP or CSW will not be made unless there
are no surplus funds in the treasuries of the Participants sufficient to meet
borrowing needs. However, no loan will be made by AEP or CSW or any Participant
if the borrowing company could borrow more cheaply directly from banks or
through the sale of its own commercial paper. When more than one Participant is
borrowing, each borrowing Participant will borrow pro rata from each fund source
in the same proportion that the amount of funds provided by that fund source
bears to the total amount of short-term funds available to the Money Pool.
5. Interest Rate.
The interest rate applicable on any day to then outstanding loans through
the Money Pool will be the composite weighted average daily effective cost
incurred by AEP or CSW for short-term borrowings from external sources. If there
are no borrowings outstanding then the rate would be the certificate of deposit
yield equivalent of the 30- day Federal Reserve "A2/P2" Non Financial Commercial
Paper Composite Rate ("Composite"), or if no composite is established for that
day then the applicable rate will be the Composite for the next preceding day
for which the Composite is established.
If the Composite shall cease to exist, then the rate would be the composite
which then most closely resembles the Composite and/or most closely mirrors the
pricing AEP would expect if it had external borrowings.
Interest income related to external investments will be calculated daily
and allocated back to lending parties on the basis of their relative
contribution to the investment pool funds on that date.
Each Participant receiving a loan hereunder shall repay the principal
amount of such loan, together with all interest accrued thereon, on demand and
in any event not later than the expiration date of the SEC authorization for the
operation of the Money Pool. All loans made through the Money Pool may be
prepaid by the borrower without premium or penalty.
G. Nonutility Money Pool
AEP and any existing direct or indirect nonutility subsidiary named herein
(including any exempt wholesale generator under Section 32 of the Act, a foreign
utility company under Section 33 of the Act or an exempt telecommunications
company under Section 34 of the Act) and including any Rule 58 company
(collectively the "Nonutility Subsidiaries") propose to form and participate in
a separate system of intercorporate borrowings (the "Nonutility Money Pool").
The Nonutility Money Pool would be established and administered in the same
manner and subject to the same conditions as the Utility Money Pool. Neither AEP
nor CSW will borrow from the nonutility Money Pool.
The participation of the Nonutility Subsidiaries in the Nonutility Money
Pool would permit their available cash and/or short-term borrowing requirements
to be matched on a daily basis with those of the other participants in the
Nonutility Money Pool, thereby minimizing the need of the AEP system for
external short-term borrowing. If the Nonutility Subsidiaries are authorized to
participate in the Nonutility Money Pool, funds will be loaned from the
Nonutility Money Pool in the form of open account advances under the same terms
and limitations as currently authorized for the Utility Money Pool. Participants
in the Nonutility Money Pool will not engage in lending and borrowing
transactions with Participants in the Utility Money Pool. Neither Money Pool
will borrow from the other Money Pool. A form of AEP System Nonutility Money
Pool Agreement is filed as Exhibit D.
H. Guarantee of Indebtedness/Obligations
The provision of parent guarantees by holding companies to affiliates in
the generation and power marketing business is a standard industry practice. AEP
requests authorization herein to enter into guarantees, obtain letters of
credit, enter into support or expense agreements or otherwise provide credit
support from time to time through March 31, 2006 on behalf of any of its direct
or indirect Subsidiaries up to $900,000,000. AEP also requests authority to
guarantee the obligations of its direct or indirect subsidiaries as may be
appropriate or necessary to enable the subsidiaries to carry on the ordinary
course of their businesses. Each of the Public Utility Subsidiaries seeks
authorization to enter into guarantees and other credit support with respect to
obligations of each of its subsidiaries.
Nonutility subsidiaries also request authority for each nonutility
subsidiary to provide guarantees and other forms of credit support to other
nonutility subsidiaries. Certain of the guarantees referred to above may be in
support of the obligations of Subsidiaries which are not capable of exact
quantification. In such cases, AEP will determine the exposure of the instrument
for purposes of measuring compliance with the total guarantee limit.
The aggregate amount of the guarantees will not exceed $900 million (not
taking into account obligations exempt pursuant to Rule 45 and under other
Commission orders in these file:[3]). It is anticipated that approximately $450
million will be used by AEP to provide credit support to its subsidiaries; $150
million will be sued by AEP to provide other support, including performance
guarantee, to its subsidiaries in the ordinary course of their businesses; $125
million will be sued by Public Utility Subsidiaries to support these
subsidiaries and $175 million will be used by nonutility subsidiaries to
guarantee obligations of other nonutility subsidiaries. A portion of this
authority replaces current authority which expires at or near year end. The
Order in File 70-9083 authorized guarantees by CSW in an aggregate amount up to
$250 million through December 31, 2002 to support energy-related companies. The
Order in File No. 70-8205 authorized guarantees in an aggregate amount up to
$75,000,000 through March 31, 2003 in connection with qualifying cogeneration
facilities, small private production facilities and independent power facilities
including energy wholesale generators.
I. Payments of Dividends out of Capital or Unearned Surplus
Section 12 of the Act and Rule 46 thereunder generally prohibit the payment
of dividends out of capital or unearned surplus except pursuant to an order of
the Commission. AEP and the Nonutility Subsidiaries hereby request authority for
the direct and indirect Nonutility Subsidiaries to pay dividends out of capital
or unearned surplus to the fullest extent of the law.
J. Summary of Requests
(i) Applicants in this file request authorization for financing
transactions for the period beginning with the effective date of an order
issued pursuant to this filing and continuing until March 31, 2006 unless
otherwise provided;
(ii) SWEPCO and Wheeling request authorization to issue long-term debt in
amounts not to exceed $350 million and $40 million, respectively;
(iii) AEP, CSW and the Public Utility Subsidiaries request that the
Commission approve an aggregate financing request in the amount of $7.2
billion outstanding in short-term financing capacity for AEP, CSW and the
Public Utility Subsidiaries as more fully described in the
Application-Declaration;
(iv) CPL, Columbus, Ohio and West Texas, companies affected by
restructuring, seek authority to issue short and long-term debt in an
amount not to exceed $3.9 billion;
(v) The Public Utility Subsidiaries seek authorization to organize
financing entities for certain types of financings;
(vi) AEP, CSW and its Subsidiaries which are participants in the Utility
Money Pool request the continuation of the Money Pool through the
Authorization Period;
(vii) AEP and its Nonutility Subsidiaries request authority to form and
continue a Nonutility Money Pool on substantially the same terms and
conditions as the Utility Money Pool;
(viii) AEP requests the Commission approve the issuance by AEP and its
Subsidiaries of guarantees and other forms of credit support in an
aggregate amount not to exceed $900 million outstanding at any time in
exposure; and
(ix) AEP and its Nonutility Subsidiaries request authorization for the
Subsidiaries to pay dividends out of capital or unearned surplus to the
fullest extent of the law.
***
K. Compliance with Rule 54
Sections 9(a), 10 and 11 of the Act and Rule 54 thereunder are or may be
applicable to the transactions proposed herein. To the extent that any other
sections of the Act may be applicable to the proposed transactions, the Company
hereby requests appropriate authority thereunder.
The proposed transactions are subject to Rule 54, which provides that, in
determining whether to approve an application which does not relate to any EWG
or FUCO, the Commission shall not consider the effect of the capitalization or
earnings of any such EWG or FUCO which is a subsidiary of a registered holding
company if the requirements of Rule 53(a), (b) and (c) are satisfied.
AEP consummated the merger with Central and South West Corporation ("CSW")
on June 15, 2000 pursuant to an order dated June 14, 2000 (HCAR No. 27186),
which further authorized AEP to invest up to 100% of its consolidated retained
earnings, with consolidated retained earnings to be calculated on the basis of
the combined consolidated retained earnings of AEP and CSW (as extended pursuant
to HCAR No. 27316, December 26, 2000, the "Rule 53(c) Order").
AEP currently meets all of the conditions of Rule 53(a), except for clause
(1). At September 30, 2002, AEP's "aggregate investment", as defined in Rule
53(a)(1), in EWGs and FUCOs was approximately $1.923 billion, or about 61.9% of
AEP's "consolidated retained earnings", also as defined in Rule 53(a)(1), for
the four quarters ended September 30, 2002 ($3.106 billion). With respect to
Rule 53(a)(1), however, the Commission has determined that AEP's financing of
investments in EWGs and FUCOs in an amount greater than the amount that would
otherwise be allowed by Rule 53(a)(1) would not have either of the adverse
effects set forth in Rule 53(c). See the Rule 53(c) Order.
In addition, AEP has complied and will continue to comply with the
record-keeping requirements of Rule 53(a)(2), the limitation under Rule 53(a)(3)
on the use of operating company personnel to render services to EWGs and FUCOs,
and the requirements of Rule 53(a)(4) concerning the submission of copies of
certain filings under the Act to retail rate regulatory commissions. Further,
none of the circumstances described in Rule 53(b) has occurred.
Moreover, even if the effect of the capitalization and earnings of EWGs and
FUCOs in which AEP has an ownership interest upon the AEP holding company system
were considered, there would be no basis for the Commission to withhold or deny
approval for the proposal made in this Application-Declaration. The action
requested in the instant filing would not, by itself, or even considered in
conjunction with the effect of the capitalization and earnings of AEP's EWGs and
FUCOs, have a material adverse effect on the financial integrity of the AEP
system, or an adverse impact on AEP's public-utility subsidiaries, their
customers, or the ability of State commissions to protect such public-utility
customers. The Rule 53(c) Order was predicated, in part, upon an assessment of
AEP's overall financial condition which took into account, among other factors,
AEP's consolidated capitalization ratio and the recent growth trend in AEP's
retained earnings.
As of December 31, 1999, the most recent period for which financial
statement information was evaluated in the 53(c) Order, AEP's consolidated
capitalization (including CSW on a pro forma basis) consisted of 37.3% common
and preferred equity, 61.3% debt and $335 million principal amount of certain
subsidiary obligated mandatorily redeemable preferred securities of subsidiary
trusts holding solely junior subordinated debentures of such subsidiaries
("Trust Preferred Securities") representing 1.4%. As of September 30, 2002,
AEP's consolidated capitalization consisted of 55.5% debt, 38.2% common and
preferred equity (consisting of 347,835,212 shares of common stock representing
37.6% and $145 million principal amount of preferred stock representing 0.6%),
$371 million of equity unit senior notes representing 1.6%, $321 million
principal amount of Trust Preferred Securities representing 1.4% and $750
million minority interest in finance subsidiary representing 3.3%.
Since the date of the Rule 53(c) Order, the operating subsidiaries, which
will have a significant influence on the determination of the AEP corporate
rating, continue to show strong financial statistics as measured by the rating
agencies.
As of December 31, 1999, Standard & Poor's rating of secured debt for AEP's
operating subsidiaries was as follows: APCo, A; CSP, A-; I&M, A-; KPCo, A; and
OPCo, A-. As of December 31, 1999, Standard & Poor's rating of secured debt for
CSW's operating subsidiaries was as follows: CPL, A; PSO, AA-; SWEPCO, AA-; and
WTU, A.
As of September 30, 2002, Standard & Poor's rating of secured debt for
AEP's operating subsidiaries was as follows: APCo, BBB+; CSP, BBB+; I&M, BBB+;
KPCo, BBB+ and OPCo, BBB+. As of December 31, 2001, Standard & Poor's rating of
secured debt for CSW's Operating Subsidiaries was as follows: CPL, BBB+; PSO,
BBB+; SWEPCO, BBB+; and WTU, BBB+.
Reporting
AEP and the Participants will report quarterly to the Commission pursuant
to Rule 24 under the Act within 60 days after the end of each calendar quarter.
Each certificate will set forth the following information:
1. The amount and terms of any long-term debt issued by CPL, SWEPCO, West
Texas or Wheeling issued pursuant to this authority;
2. If a guarantee is issued during the quarter pursuant to this
authority, the name of the guarantor, the name of the beneficiary of
the guarantee and the amount of the guarantee;
3. The amount and terms of any short-term debt issued by AEP, CSW or any
of the Public Utility Subsidiaries during the quarter;
4. The notional amount and principal terms of any hedge instruments or
Anticipatory Hedges entered into during the quarter and the identity
of the other parties thereto;
5. The name, parent company and the amount invested in any financing
entity during the quarter;
6. A table showing at the end of each quarter a capitalization chart for
AEP and each of the Public Utility Subsidiaries similar to the table
attached as Exhibit A-1 hereto;
7. With respect to each participant in the Utility Money Pool and each
participant in the Nonutility Money Pool, the maximum borrowings from
and loans to the respective Money Pool during the quarter and the
interest rate applied to borrowings and loans;
8. A list of Form U-6B-2 statements filed with the Commission, including
the name of the filing entity and the date of the filing.
9. The date, amount and payee of dividends out of capital or unearned
surplus paid by any Nonutility Subsidiary.
2. By amending and restating ITEM 4. Regulatory Approval as follows:
No state and regulatory authority which has not already been obtained
and no federal regulatory authority, other than the Commission under the
Act, has jurisdiction over the proposed transactions. The Virginia State
Corporation Commission and the West Virgina Public Services Commission have
approved Appalachian's participation in the Utility Money Pool. No other
approvals are required.
3. By amending and restating ITEM 6. Exhibits and Financial Statements as
follows to file:
(a) Exhibits:
Exhibit A-1 - Capitalization Table as of September 30, 2002
Exhibit A-2 - CPL Amortization Schedule
Exhibit B - Financing Entities and Limits
Exhibit C - Copy of AEP System Money Pool Agreement
Exhibit D - Form of AEP System Nonutility Money Pool Agreement
Exhibit F - Opinion of counsel
(b) Financial Statements:
Balance Sheets as of September 30, 2002 and Statements of Income and
Retained Earnings for the 12 months ended September 30, 2002 of American and its
subsidiaries consolidated.
_____________________________
Footnotes:
(1) Commercial paper dealers routinely offer new products such as extendible
commercial paper products which have a maturity beyond 270 days and could be
automatically renewed. This product extended beyond the previously authorized
program which was limited to 270 days.
(2) The addtional subsidiaries are Cedar Coal Co., Central Appalachian Coal Co.,
Central Coal Co., Colomet, Inc., Simco, Inc., Southern Appalachian Coal Co.,
Blackhawk Coal Co., Conesville Coal Preparation Company, Franklin Real Estate
Company and Indiana Franklin Realty Company.
(3) Current orders providing authority for parent guarantees:
File Expiriration Authority
------------ --------------- ---------------------------------------------------
70-8779 3/30/04 Debt ($600 million) and other obligations ($600 d
million) for Rule 58 companies an other non-utility
trading companies.
------------ --------------- ---------------------------------------------------
70-8307 6/30/04 On behalf of AEP Pro Serv, Inc. for debt and other
obligations up to $800 million.
------------ --------------- ---------------------------------------------------
70-8693 12/31/03 For American Electric Power Service Corporation up
to $40 million short-term debt and $20 million
long-term debt.
------------ --------------- ---------------------------------------------------
70-9021 6/30/03 To guarantee indebtedness and other financial
commitments of AEP Resources, Inc., Project
Parents and Power Projects up to 100% of
consolidated retained earnings of AEP.
------------ --------------- ---------------------------------------------------
70-9353 12/31/03 - Guarantee authority in connection with
acquisitions of nonutility energy-related assets in
connection with energy marketing, brokering and
trading ventures in an amount up to $2 billion.
- Pending application in this file to acquire
through June 30, 2004 nonutility energy-related
assets up to $4 billion and related guarantees.
------------ --------------- ---------------------------------------------------
70-9119 12/31/03 Guarantees of CSW Energy Services in connection
with electric vehicles.
------------ --------------- ---------------------------------------------------
70-8469 $250 million investment in Sweeney Cogen Project.
------------ --------------- ---------------------------------------------------
70-6591 Misc. insurance, workers comp.,guarantee authority.
70-6645
70-6845
70-6965
70-7183
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act of
1935, the undersigned company has duly caused this Amendment No. 2 to its Form
U-1 to be signed on its behalf by the undersigned thereunto duly authorized.
AMERICAN ELECTRIC POWER COMPANY, INC.
And
AEP GENERATING COMPANY
AMERICAN ELECTRIC POWER SERVICE CORPORATION
APPALACHIAN POWER COMPANY
CENTRAL AND SOUTH WEST CORPORATION
CENTRAL POWER AND LIGHT COMPANY
COLUMBUS SOUTHERN POWER COMPANY
INDIANA MICHIGAN POWER COMPANY
KENTUCKY POWER COMPANY
KINGSPORT POWER COMPANY
OHIO POWER COMPANY
PUBLIC SERVICE COMPANY OF OKLAHOMA
SOUTHWESTERN ELECTRIC POWER COMPANY
WEST TEXAS UTILITIES COMPANY
WHEELING POWER COMPANY
BLACKHAWK COAL CO.
CEDAR COAL CO.
CENTRAL APPALACHIAN COAL CO.
CENTRAL COAL CO.
COLOMET, INC.
CONESVILLE COAL PREPARATION COMPANY
FRANKLIN REAL ESTATE COMPANY
INDIANA FRANKLIN REALTY COMPANY
SIMCO, INC.
SOUTHERN APPALACHIAN COAL CO.
UNIVERSAL SUPERCAPACITATORS, LLC
AEP COAL, INC.
AEP POWER MARKETING, INC.
AEP PRO SERV, INC.
AEP RETAIL ENERGY, LLC
AEP T&D Services, LLC
AEP Credit, Inc.
Industry and Energy Associates LLC
AEP C&I Company, LLC
AEP Gas Power System GP, LLC
AEP Gas Power GP, LLC
AEP Retail Energy
AEP Texas Commercial & Industrial Retail GP, LLC
AEP COMMUNICATIONS, INC.
AEP COMMUNICATIONS, LLC
C3 NETWORKS GP, LLC
C3 NETWORKS LIMITED PARTNERSHIP
C3 NETWORKS & COMMUNICATIONS LP
AEP FIBER VENTURE, LLC
C3 COMMUNICATIONS, INC.
AEP ENERGY SERVICES, INC.
AEP EMTECH, LLC
AEP INVESTMENTS, INC.
VENTURES LEASE CO., LLC
AEP RESOURCE SERVICES, LLC
AEP RESOURCES, INC.
AEP DELAWARE INVESTMENT COMPANY II
AEP DELAWARE INVESTMENT COMPANY III
AEP MEMCO LLC
AEP Elmwood LLC
United Sciences Testing, Inc.
AEP Energy Services Gas Holding Company
HOUSTON PIPELINE COMPANY, LP
Mid-Texas Pipeline Company
Jefferson Island Storage & Hub L.L.C.
AEP Acquisition, L.L.C.
AEP Energy Services Investments, Inc.
LIG, Inc.
LIG Pipeline Company
TusCALOOSA PIPELINE Company LIG
Liquids Company, L.L.C.
Louisiana Intrastate Gas Company, L.L.C.
LIG Chemical Company
Houston Pipe Line Company
AEP Gas Marketing LP
HPL Holdings, Inc.
AEP Resources International, Limited
AEP Resources Project Management Company, Ltd.
AEP Pushan Power, LDC
CSW International, Inc.
AEP Holdings I
AEP Holdings II
AEP ENERGY SERVICES UK GEN LTD.
AEP ENERGY SERVICES LIMITED
CSW Energy, Inc.
CSW Power Marketing, Inc.
CSW Ft. Lupton, Inc.
NEWGULF POWER VENTURE
CSW Development I, Inc.
Eastex Cogeneration LP
CSW Eastex LP I, Inc.
CSW Energy Services, Inc.
EnerShop Inc.
Mutual Energy SWEPCO L.P.
REP Holdco Inc.
Mutual Energy CPL, LP
REP General Partner L.L.C.
Mutual Energy WTU, LP
Mutual Energy Service Company, L.L.C.
AEP ohio commercial & industrial retail co., llc
AEP ohio retail energy llc
Mutual Energy L.L.C.
AEP Texas Retail GP, LLC
POLR Power, L.P.
Dolet Hills Lignite Company, LLC
AEP Desert Sky gP, LLC
AEP DESERT SKY LP LLC
By: /s/ Armando A. Pena
Treasurer of all the above-listed companies
Dated: December 17, 2002
EXHIBIT A-1
CAPITALIZATION STRUCTURE
(as of 9/30/02)
-----------------------------------------------------------------------------------------------------------------------------
Company
($ in Common Equity Preferred Stock Long-Term Debt** Short-Term Debt Total Capitalization
thousands) Amount % Amount % Amount % Amount % Amount %
-----------------------------------------------------------------------------------------------------------------------------
AEP * 8,666,000 37.6% 1,275,000 5.5% 9,865,000 42.8% 3,234,000 14.0% 23,040,000 100.0%
-----------------------------------------------------------------------------------------------------------------------------
AEG 40,603 47.5% 0 0.0% 44,800 52.5% 0 0.0% 85,403 100.0%
-----------------------------------------------------------------------------------------------------------------------------
APCo 1,187,176 38.2% 28,650 0.9% 1,723,911 55.5% 165,177 5.3% 3,104,914 100.0%
-----------------------------------------------------------------------------------------------------------------------------
CSW 2,712,731 33.7% 18,276 0.2% 3,431,438 42.6% 1,897,851 23.5% 8,060,295 100.0%
-----------------------------------------------------------------------------------------------------------------------------
CPL 1,049,835 30.5% 5,941 0.2% 1,630,461 47.4% 752,648 21.9% 3,438,885 100.0%
-----------------------------------------------------------------------------------------------------------------------------
CSP 887,870 48.8% 0 0.0% 642,065 35.3% 290,000 15.9% 1,819,935 100.0%
-----------------------------------------------------------------------------------------------------------------------------
I&M 1,040,476 40.5% 73,048 2.8% 1,455,815 56.7% 0 0.0% 2,569,339 100.0%
-----------------------------------------------------------------------------------------------------------------------------
KPCo 258,003 35.0% 0 0.0% 385,915 52.4% 92,591 12.6% 736,509 100.0%
-----------------------------------------------------------------------------------------------------------------------------
Kinsport 24,700 45.4% 0 0.0% 20,000 36.8% 9,666 17.8% 54,366 100.0%
-----------------------------------------------------------------------------------------------------------------------------
OPCo 1,285,994 47.8% 25,498 0.9% 1,067,177 39.7% 310,682 11.6% 2,689,351 100.0%
-----------------------------------------------------------------------------------------------------------------------------
PSO 463,73 37.9% 5,267 0.4% 526,360 43.0% 228,638 18.7% 1,223,997 100.0%
-----------------------------------------------------------------------------------------------------------------------------
SWEPCo 704,675 46.5% 4,701 0.3% 803,499 53.0% 3,723 0.2% 1,516,598 100.0%
-----------------------------------------------------------------------------------------------------------------------------
WTU 225,701 38.2% 2,367 0.4% 167,483 28.4% 195,174 33.0% 590,725 100.0%
-----------------------------------------------------------------------------------------------------------------------------
Wheeling 28,502 57.8% 0 0.0% 20,000 40.5% 830 1.7% 49,332 100.0%
-----------------------------------------------------------------------------------------------------------------------------
* Preferred stock include $759 million minority interest and $371 million equity unit senior notes
** LT Debt includes Trust Preferred Stock and Securitization Bond
CAPITALIZATION STRUCTURE
(as of 9/30/02)
-----------------------------------------------------------------------------------------------------------------------------
Company
$ in Common Equity Preferred Stock Long-Term Debt** Short-Term Debt Total Capitalization
thousands) Amount % Amount % Amount % Amount % Amount %
-----------------------------------------------------------------------------------------------------------------------------
AEP * 8,666,000 39.0% 1,275,000 5.7% 9,068,000 40.8% 3,234,000 14.5% 22,243,000 100.0%
-----------------------------------------------------------------------------------------------------------------------------
CSW 2,712,731 37.3% 18,276 0.3% 2,634,438 36.3% 1,897,851 26.1% 7,263,295 100.0%
-----------------------------------------------------------------------------------------------------------------------------
CPL 1,049,835 39.7% 5,941 0.2% 833,461 31.5% 752,648 28.5% 2,641,885 100.0%
-----------------------------------------------------------------------------------------------------------------------------
* Preferred stock include $759 million minority interest and $371 million equity unit senior notes
** LT Debt includes Trust Preferred Stock but excludes Securitization Bond
EXHIBIT A-2
CENTRAL POWER & LIGHT
SECURITIZATION BONDS EXPECTED AMORTIZATION SCHEDULE*
Outstanding Principal Balance
Class A-1 Class A-2 Class A3 Class A-4 Class A-5 Sum of
Payment Date Balance Balance Balance Balance Balance Balance
-----------------------------------------------------------------------------------------------------------------------------------
Closing Date $128,950,233 $154,506,810 $107,094,258 $214,926,738 $191,856,858 $797,334,897
01/15/2003 97,133,531 154,506,810 107,094,258 214,926,738 191,856,858 765,518,195
07/15/2003 77,937,455 154,506,810 107,094,258 214,926,738 191,856,858 746,322,119
01/15/2004 49,128,416 154,506,810 107,094,258 214,926,738 191,856,858 717,513,080
07/15/2004 29,386,451 154,506,810 107,094,258 214,926,738 191,856,858 697,771,115
01/15/2005 0 154,506,810 107,094,258 214,926,738 191,856,858 668,384,664
07/15/2005 0 133,913,828 107,094,258 214,926,738 191,856,858 647,791,682
01/15/2006 0 103,272,491 107,094,258 214,926,738 191,856,858 617,150,345
07/15/2006 0 81,649,042 107,094,258 214,926,738 191,856,858 595,526,896
01/15/2007 0 49,523,804 107,094,258 214,926,738 191,856,858 563,401,658
07/15/2007 0 28,919,685 107,094,258 214,926,738 191,856,858 542,797,539
01/15/2008 0 0 107,094,258 214,926,738 191,856,858 513,877,854
07/15/2008 0 0 85,906,616 214,926,738 191,856,858 492,690,212
01/15/2009 0 0 55,016,428 214,926,738 191,856,858 461,800,024
07/15/2009 0 0 32,279,500 214,926,738 191,856,858 439,063,096
01/15/2010 0 0 0 214,926,738 191,856,858 406,783,596
07/15/2010 0 0 0 214,926,738 191,856,858 406,783,596
01/15/2011 0 0 0 190,631,083 191,856,858 382,487,941
07/15/2011 0 0 0 156,759,473 191,856,858 348,616,331
01/15/2012 0 0 0 130,670,070 191,856,858 322,526,928
07/15/2012 0 0 0 95,071,985 191,856,858 286,928,843
01/15/2013 0 0 0 67,236,582 191,856,858 259,093,440
07/15/2013 0 0 0 29,655,892 191,856,858 221,512,750
01/15/2014 0 0 0 0 152,143,608 152,143,608
07/15/2014 0 0 0 0 120,262,573 120,262,573
01/15/2015 0 0 0 0 78,412,359 78,412,359
07/15/2015 0 0 0 0 44,198,278 44,198,278
01/15/2016 0 0 0 0 0 0
* This is the amortization schedule of the current bonds outstanding.
CPL has a True-Up proceeding with the PUCT in 2004 which may result in
the issuance of additional Securitization Bonds
EXHIBIT B
Public Utilities Subsidiaries Financing Entities and Limits
--------------------------------------------------------
Company Limits
--------------------------------------------------------
($ in thousands)
--------------------------------------------------------
APCo $ 150,000
--------------------------------------------------------
CPL $ 100,000
--------------------------------------------------------
CSP $ 100,000
--------------------------------------------------------
I&M $ 150,000
--------------------------------------------------------
KPCo $ 50,000
--------------------------------------------------------
OPCo $ 100,000
--------------------------------------------------------
PSO $ 100,000
--------------------------------------------------------
SWEPCo $ 150,000
--------------------------------------------------------
WTU $ 50,000
--------------------------------------------------------
EXHIBIT C
AEP SYSTEM
MONEY POOL AGREEMENT
This MONEY POOL AGREEMENT ("Agreement") is made and entered into this
18th day of January, 2001 by and among American Electric Power Company, Inc.
("AEP"), a New York corporation and a registered holding company under the
Public Utility Holding Company Act of 1935, as amended (the "Act"), and certain
of its direct or indirect subsidiaries, each of which are signatories hereto, or
which subsequently become signatories hereto and agree to abide by the terms
herein (each direct or indirect subsidiary, a "Party" and collectively, the
"Parties").
WHEREAS, the Parties from time to time have need to borrow funds on a
short-term basis; and
WHEREAS, some of the Parties from time to time are expected to have
funds available to loan on a short-term basis; and
WHEREAS, AEP and the Parties desire to establish a pool (the "Money
Pool") to coordinate and provide for certain of the Parties' short-term cash
requirements;
NOW THEREFORE, in consideration of the premises, and the mutual
promises set forth herein, the Parties and AEP hereto agree as follows:
ARTICLE I
CONTRIBUTIONS AND BORROWINGS
Section 1.1. Contributions to the Money Pool.
American Electric Power Service Corporation ("AEPSC") shall act as
administrative agent of the Money Pool. Each Party and AEP will determine from
time to time, the amount of funds it has available for contribution to the Money
Pool. The determination of whether a Party or AEP at any time has surplus funds,
or shall lend such funds to the Money Pool, will be made by such Party's
treasurer, or by a designee thereof, on the basis of cash flow projections and
other relevant factors, in such Party's sole discretion. Each Party may withdraw
any of its funds at any time upon notice to AEPSC.
Section 1.2 Rights to Borrow.
(a) Subject to the provisions of Section 1.4(b) of this Agreement, all
short-term borrowing needs of the Parties may be met by funds in the Money Pool
to the extent such funds are available. Each Party shall have the right to
borrow from the Money Pool from time to time, subject to the availability of
funds and the limitations and conditions set forth herein and in the applicable
orders of the Securities and Exchange Commission ("SEC") and other regulatory
authorities. Each Party may request loans from the Money Pool from time to time
during the period from the date hereof until this Agreement is terminated by
written agreement of the Parties and AEP; provided, however, that the aggregate
amount of all loans requested by any Party hereunder shall not exceed the
applicable borrowing limits set forth in applicable orders of the SEC and other
regulatory authorities, resolutions of such Party's shareholders and Board of
Directors, such Party's governing corporate documents, and agreements binding
upon such Party. No Party shall be obligated to borrow from the Money Pool if
lower cost funds can be obtained from its own external borrowing.
(b) AEP will not borrow funds from the Money Pool or any Party.
Section 1.3 Source of Funds.
(a) Funds will be available through the Money Pool from the following
sources for use by the Parties from time to time: (i) surplus funds in the
treasuries of the Parties; (ii) surplus funds in the treasury of AEP; and (iii)
external borrowings by AEP from the sale of commercial paper notes and/or other
instruments authorized by the SEC, and/or bank borrowings ("External Funds"),
the proceeds of which would be added to AEP's treasury funds, in each case to
the extent permitted by applicable laws and regulatory orders. Funds will be
made available from such sources in such stated order of priority.
(b) Each borrowing Party will borrow pro rata from each fund source in
the same proportion that the amount of funds provided from that fund source
bears to the total amount of short-term funds available to the Money Pool.
Section 1.4 Authorization.
(a) The determination of whether a Party or AEP has at any time surplus
funds to lend to the Money Pool will be made by its treasurer, or by a designee
thereof.
(b) Any loan from the Money Pool to a Party shall be authorized by the
borrowing Party's treasurer, or by a designee thereof. No Party shall be
required to effect a borrowing through the Money Pool if such Party determines
that it can (and is authorized to) effect such borrowing at lower cost through
the sale of its own commercial paper or other instruments, or borrowing directly
from banks.
Section 1.5 External Investment of Investment Pool Funds.
Funds which are loaned from Parties into the Money Pool which are not
required to satisfy borrowing needs of other Parties ("Investment Pool") will be
invested by AEP on the behalf of the lending Parties in one or more short-term
instruments ("External Investments").
Section 1.6 Money Pool Interest.
The interest rate applicable on any day to then outstanding loans
through the Money Pool, whether or not evidenced by a promissory demand note,
will be the composite weighted average daily effective cost incurred by AEP for
External Funds outstanding on that date. If there are no External Funds
outstanding on that date, then the rate would be the certificate of deposit
yield equivalent of the 30-day Federal Reserve "AA" Non-Financial Commercial
Paper Composite Rate (the "Composite"), or if no Composite is established for
that day, then the applicable rate will be the Composite for the next preceding
day for which a composite is established. If the Composite shall cease to exist,
then the rate would be the composite which then most closely resembles the
Composite and/or most closely mirrors the pricing AEP would expect if it had
External Funds.
Section 1.7 Investment Pool Interest.
Interest income related to External Investments will be calculated
daily and allocated back to lending Parties on the basis of their relative
contribution to the Investment Pool funds on that date.
Section 1.8 Repayment.
Each Party receiving a loan hereunder shall repay the principal amount
of such loan, together with all interest accrued thereon, on demand and in any
event not later than the expiration date of the SEC authorization for the
operation of the Money Pool. All loans made through the Money Pool may be
prepaid by the borrower without premium or penalty.
Section 1.9 Form of Loans to Parties.
Loans to the Parties through the Money Pool will be made pursuant to
open-account advances, although any lending Party would at all times be entitled
to receive upon demand a promissory note evidencing the transaction. Any such
note shall: (a) be substantially in the form attached herewith as Exhibit A; (b)
be dated as of the date of the initial borrowing; (c) mature on demand or on a
date mutually agreed to by the Parties to the transaction, but in any event not
later than the expiration date of the SEC authorization for the operation of the
Money Pool; and (d) be repayable in whole at any time or in part from time to
time, without premium or penalty.
ARTICLE II
OPERATION OF THE MONEY POOL
Section 2.1 Operation.
Operation of the Money Pool, including record keeping and coordination
of loans, will be handled by AEPSC under the authority of the treasurer of AEP
and/or AEPSC. AEPSC shall be responsible for the determination of all applicable
interest rates and charges to be applied to any loans from the Money Pool and
earnings to be applied to any loans to the Money Pool and/or Investment Pool
outstanding at any time hereunder, shall maintain records of all advances,
interest charges and accruals and interest and principal payments for purposes
hereof, and shall prepare periodic reports thereof for the Parties.
Section 2.2 Certain Costs.
The cost of fees and/or compensating balances paid to banks to maintain
credit lines will initially be allocated to the Parties and AEP on the basis of
prior calendar year relative maximum non-coincidental borrowings, and such costs
will be retroactively reallocated at the end of each calendar year on the basis
of that year's actual relative maximum non-coincidental borrowings of the
Parties and AEP.
Section 2.3 Event of Default.
If any Party shall generally not pay its debts as such debts become
due, or shall admit in writing its inability to pay its debts generally, or
shall make a general assignment for the benefit of creditors, or any proceeding
shall be instituted by or against any Party seeking to adjudicate it a bankrupt
or insolvent, then the other Parties may declare the unpaid principal amount of
any loans to such Party, and all interest thereon, to be forthwith due and
payable and all such amounts shall forthwith become due and payable.
ARTICLE III
MISCELLANEOUS
Section 3.1 Amendments.
No amendment to this Agreement shall be effective unless the same be in
writing and signed by Parties thereto.
Section 3.2 Legal Responsibility.
Nothing herein contained shall render AEP or any Party liable for the
obligations of any other Party(ies) hereunder and the rights, obligations and
liabilities of AEP and the Parties are several in accordance with their
respective obligations, and not joint.
Section 3.3 Governing Law.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York.
IN WITNESS WHEREOF, the undersigned companies have duly caused this
document to be signed on their behalf on the date first written above by the
undersigned thereunto duly authorized.
AMERICAN ELECTRIC POWER COMPANY, INC.
AMERICAN ELECTRIC POWER SERVICE CORPORATION
AEP GENERATING COMPANY
APPALACHIAN POWER COMPANY
BLACKHAWK COAL COMPANY
CEDAR COAL COMPANY
CENTRAL APPALACHIAN COAL COMPANY
CENTRAL COAL COMPANY
CENTRAL OHIO COAL COMPANY
CENTRAL POWER AND LIGHT COMPANY
COLOMET, INC.
COLUMBUS SOUTHERN POWER COMPANY
CONESVILLE COAL PREPARATION COMPANY
FRANKLIN REAL ESTATE COMPANY
INDIANA FRANKLIN REALTY COMPANY
INDIANA MICHIGAN POWER COMPANY
KENTUCKY POWER COMPANY
KINGSPORT POWER COMPANY
OHIO POWER COMPANY
PUBLIC SERVICE COMPANY OF OKLAHOMA
WHEELING POWER COMPANY
SIMCO INC.
SOUTHERN APPALACHIAN COAL COMPANY
SOUTHERN OHIO COAL COMPANY
SOUTHWESTERN ELECTRIC POWER COMPANY
WEST VIRGINIA POWER COMPANY
WEST TEXAS UTILITIES COMPANY
WINDSOR COAL COMPANY
By: /a/ A. A. Pena
Treasurer
EXHIBIT A TO EXHIBIT C
FORM OF MONEY POOL NOTE
TO BE EXECUTED BY BORROWING PARTIES
TO AEP OR OTHER PARTIES
___________________, 20__
FOR VALUE RECEIVED, the undersigned, ____________________ (the
"Borrower"), hereby promises to pay to the order of _____________________ (the
"Lender") at its principal office in ____________________, on demand or on
_____________________, 20__, or at the option of the Borrower, whichever first
occurs, but in any event not later than the expiration date of the SEC
authorization for the operation of the Money Pool, the principal sum set forth
on the attachment hereto as "Principal Amount Outstanding." This note may be
paid in full at any time or in part from time to time without premium or
penalty. The Principal Amount Outstanding shall bear interest, calculated daily,
at a rate equal to AEP's weighted average daily effective cost for all External
Borrowings outstanding on that date. If there are no External Borrowings
outstanding on that date, then the rate would be the CD yield equivalent of the
30-day Federal Reserve "AA" Non-Financial Commercial Paper Composite Rate (the
"Composite"), or if no Composite is established for that day, then the
applicable rate will be the Composite for the next preceding day for which a
Composite is established.
This Note shall be governed by, and construed and interpreted in
accordance with, the Laws of the State of New York.
IN WITNESS WHEREOF, the undersigned, pursuant to due authorization, has
caused this Note to be executed in its name and on its behalf by its duly
authorized officer.
(Name of Borrower)
By: _______________________________
Name:
Title:
Principal
Loan Amount
Date (Repayment) Outstanding Rate Interest
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EXHIBIT D
AEP SYSTEM NONUTILITY
MONEY POOL AGREEMENT
This NONUTILITY MONEY POOL AGREEMENT ("Agreement") is made and entered
into this ____ day of December, 2002 by and among American Electric Power
Company, Inc. ("AEP"), a New York corporation and a registered holding company
under the Public Utility Holding Company Act of 1935, as amended (the "Act"),
and certain of AEP's direct or indirect subsidiaries, each of which are
signatories hereto, or which subsequently become signatories hereto and agree to
abide by the terms herein (each direct or indirect subsidiary, a "Party" and
collectively, the "Parties").
WHEREAS, the Parties from time to time have need to borrow funds on a
short-term basis; and
WHEREAS, some of the Parties from time to time are expected to have
funds available to loan on a short-term basis; and
WHEREAS, AEP and the Parties desire to establish a pool (the "Money
Pool") to coordinate and provide for certain of the Parties' short-term cash
requirements;
NOW THEREFORE, in consideration of the premises, and the mutual
promises set forth herein, the Parties and AEP hereto agree as follows:
ARTICLE I
CONTRIBUTIONS AND BORROWINGS
Section 1.1. Contributions to the Money Pool.
American Electric Power Service Corporation ("AEPSC") shall act as
administrative agent of the Money Pool. Each Party and AEP will determine from
time to time, the amount of funds it has available for contribution to the Money
Pool. The determination of whether a Party or AEP at any time has surplus funds,
or shall lend such funds to the Money Pool, will be made by such Party's
treasurer, or by a designee thereof, on the basis of cash flow projections and
other relevant factors, in such Party's sole discretion. Each Party may withdraw
any of its funds at any time upon notice to AEPSC.
Section 1.2 Rights to Borrow.
(a) Subject to the provisions of Section 1.4(b) of this Agreement, all
short-term borrowing needs of the Parties may be met by funds in the Money Pool
to the extent such funds are available. Each Party shall have the right to
borrow from the Money Pool from time to time, subject to the availability of
funds and the limitations and conditions set forth herein and in the applicable
orders of the Securities and Exchange Commission ("SEC") and other regulatory
authorities. Each Party may request loans from the Money Pool from time to time
during the period from the date hereof until this Agreement is terminated by
written agreement of the Parties; provided, however, that the aggregate amount
of all loans requested by any Party hereunder shall not exceed the applicable
borrowing limits set forth in applicable orders of the SEC and other regulatory
authorities, resolutions of such Party's shareholders and Board of Directors,
such Party's governing corporate documents, and agreements binding upon such
Party. No Party shall be obligated to borrow from the Money Pool if lower cost
funds can be obtained from its own external borrowing.
(b) AEP will not borrow funds from the Money Pool or any Party.
Section 1.3 Source of Funds.
(a) Funds will be available through the Money Pool from the following
sources for use by the Parties from time to time: (i) surplus funds in the
treasuries of the Parties; (ii) surplus funds in the treasury of AEP; and (iii)
external borrowings by AEP from the sale of commercial paper notes and/or other
instruments authorized by the SEC, and/or bank borrowings ("External Funds"),
the proceeds of which would be added to AEP's treasury funds, in each case to
the extent permitted by applicable laws and regulatory orders. Funds will be
made available from such sources in such stated order of priority.
(b) Each borrowing Party will borrow pro rata from each fund source in
the same proportion that the amount of funds provided from that fund source
bears to the total amount of short-term funds available to the Money Pool.
Section 1.4 Authorization.
(a) The determination of whether a Party or AEP has at any time surplus
funds to lend to the Money Pool will be made by its treasurer, or by a designee
thereof.
(b) Any loan from the Money Pool to a Party shall be authorized by the
borrowing Party's treasurer, or by a designee thereof. No Party shall be
required to effect a borrowing through the Money Pool if such Party determines
that it can (and is authorized to) effect such borrowing at lower cost through
the sale of its own commercial paper or other instruments, or borrowing directly
from banks.
Section 1.5 External Investment of Investment Pool Funds.
Funds which are loaned from Parties into the Money Pool which are not
required to satisfy borrowing needs of other Parties ("Investment Pool") will be
invested by AEP on the behalf of the lending Parties in one or more short-term
instruments ("External Investments").
Section 1.6 Money Pool Interest.
The interest rate applicable on any day to then outstanding loans
through the Money Pool, whether or not evidenced by a promissory demand note,
will be the composite weighted average daily effective cost incurred by AEP for
External Funds outstanding on that date. If there are no External Funds
outstanding on that date, then the rate would be the certificate of deposit
yield equivalent of the 30-day Federal Reserve "AA" Non-Financial Commercial
Paper Composite Rate (the "Composite"), or if no Composite is established for
that day, then the applicable rate will be the Composite for the next preceding
day for which a composite is established. If the Composite shall cease to exist,
then the rate would be the composite which then most closely resembles the
Composite and/or most closely mirrors the pricing AEP would expect if it had
External Funds.
Section 1.7 Investment Pool Interest.
Interest income related to External Investments will be calculated
daily and allocated back to lending Parties on the basis of their relative
contribution to the Investment Pool funds on that date.
Section 1.8 Repayment.
Each Party receiving a loan hereunder shall repay the principal amount
of such loan, together with all interest accrued thereon, on demand and in any
event not later than the expiration date of the SEC authorization for the
operation of the Money Pool. All loans made through the Money Pool may be
prepaid by the borrower without premium or penalty.
Section 1.9 Form of Loans to Parties.
Loans to the Parties through the Money Pool will be made pursuant to
open-account advances, although any lending Party would at all times be entitled
to receive upon demand a promissory note evidencing the transaction. Any such
note shall: (a) be substantially in the form attached herewith as Exhibit A; (b)
be dated as of the date of the initial borrowing; (c) mature on demand or on a
date mutually agreed to by the Parties to the transaction, but in any event not
later than the expiration date of the SEC authorization for the operation of the
Money Pool; and (d) be repayable in whole at any time or in part from time to
time, without premium or penalty.
ARTICLE II
OPERATION OF THE MONEY POOL
Section 2.1 Operation.
Operation of the Money Pool, including record keeping and coordination
of loans, will be handled by AEPSC under the authority of the treasurer of AEP
and/or AEPSC. AEPSC shall be responsible for the determination of all applicable
interest rates and charges to be applied to any loans from the Money Pool and
earnings to be applied to any loans to the Money Pool and/or Investment Pool
outstanding at any time hereunder, shall maintain records of all advances,
interest charges and accruals and interest and principal payments for purposes
hereof, and shall prepare periodic reports thereof for the Parties.
Section 2.2 Certain Costs.
The cost of fees and/or compensating balances paid to banks to maintain
credit lines will initially be allocated to the Parties and AEP on the basis of
prior calendar year relative maximum non-coincidental borrowings, and such costs
will be retroactively reallocated at the end of each calendar year on the basis
of that year's actual relative maximum non-coincidental borrowings of the
Parties and AEP.
Section 2.3 Event of Default.
If any Party shall generally not pay its debts as such debts become
due, or shall admit in writing its inability to pay its debts generally, or
shall make a general assignment for the benefit of creditors, or any proceeding
shall be instituted by or against any Party seeking to adjudicate it a bankrupt
or insolvent, then the other Parties may declare the unpaid principal amount of
any loans to such Party, and all interest thereon, to be forthwith due and
payable and all such amounts shall forthwith become due and payable.
ARTICLE III
MISCELLANEOUS
Section 3.1 Amendments.
No amendment to this Agreement shall be effective unless the same be in
writing and signed by Parties thereto.
Section 3.2 Legal Responsibility.
Nothing herein contained shall render AEP or any Party liable for the
obligations of any other Party(ies) hereunder and the rights, obligations and
liabilities of AEP and the Parties are several in accordance with their
respective obligations, and not joint.
Section 3.3 Governing Law.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York.
IN WITNESS WHEREOF, the undersigned companies have duly caused this
document to be signed on their behalf on the date first written above by the
undersigned thereunto duly authorized.
AMERICAN ELECTRIC POWER COMPANY, INC.
CENTRAL AND SOUTHWEST CORPORATION
AMERICAN ELECTRIC POWER SERVICE CORPORATION
AEP Coal, Inc.
AEP Power Marketing, Inc.
AEP Pro Serv, Inc.
AEP Retail Energy, LLC
AEP T&D Services, LLC
AEP Credit, Inc.
Industry and Energy Associates LLC
AEP C&I Company, LLC
AEP Gas Power System GP, LLC
AEP Gas Power GP, LLC
AEP Retail Energy
AEP Texas Commercial & Industrial Retail GP, LLC
AEP Energy Services, Inc.
AEP EmTech, LLC
AEP Investments, Inc.
Ventures Lease Co., LLC
AEP Resource Services, LLC
AEP Resources, Inc.
AEP Delaware Investment Company II
AEP DELAWARE INVESTMENT COMPANY III
AEP MEMCO LLC
AEP Elmwood LLC
United Sciences Testing, Inc.
AEP Energy Services Gas Holding Company
Mid-Texas Pipeline Company
Jefferson Island Storage & Hub L.L.C.
AEP Acquisition, L.L.C.
AEP Energy Services Investments, Inc.
LIG, Inc.
LIG Pipeline Company
TusCALOOSA PIPELINE Company
LIG Liquids Company, L.L.C.
Louisiana Intrastate Gas Company, L.L.C.
LIG Chemical Company
Houston Pipe Line Company
AEP Gas Marketing LP
HPL Holdings, Inc.
AEP Resources International, Limited
AEP Resources Project Management Company, Ltd.
AEP Pushan Power, LDC
CSW International, Inc.
AEP Holdings I
AEP Holdings II
CSW Energy, Inc.
CSW Power Marketing, Inc.
CSWE/Ft. Lupton, Inc.
CSW Development I, Inc.
Eastex Cogeneration LP
CSW Eastex LP I, Inc.
CSW Energy Services, Inc.
EnerShop Inc.
Mutual Energy SWEPCO L.P.
REP Holdco Inc.
Mutual Energy CPL, LP
REP General Partner L.L.C.
Mutual Energy WTU, LP
Mutual Energy Service Company, L.L.C.
AEP Ohio Commercial & Industrial Retail Co., LLC
AEP Ohio Retail Energy LLC
Mutual Energy L.L.C.
AEP Texas Retail GP, LLC
POLR Power, L.P.
Dolet Hills Lignite Company, LLC
AEP Desert Sky gP, LLC
UNIVERSAL SUPERCAPACITORS, LLC
By: ________________________________
Treasurer
EXHIBIT A TO EXHIBIT D
FORM OF MONEY POOL NOTE
TO BE EXECUTED BY BORROWING PARTIES
TO AEP OR OTHER PARTIES
___________________, 20__
FOR VALUE RECEIVED, the undersigned, ____________________ (the
"Borrower"), hereby promises to pay to the order of _____________________ (the
"Lender") at its principal office in ____________________, on demand or on
_____________________, 20__, or at the option of the Borrower, whichever first
occurs, but in any event not later than the expiration date of the SEC
authorization for the operation of the Money Pool, the principal sum set forth
on the attachment hereto as "Principal Amount Outstanding." This note may be
paid in full at any time or in part from time to time without premium or
penalty. The Principal Amount Outstanding shall bear interest, calculated daily,
at a rate equal to AEP's weighted average daily effective cost for all External
Borrowings outstanding on that date. If there are no External Borrowings
outstanding on that date, then the rate would be the CD yield equivalent of the
30-day Federal Reserve "AA" Non-Financial Commercial Paper Composite Rate (the
"Composite"), or if no Composite is established for that day, then the
applicable rate will be the Composite for the next preceding day for which a
Composite is established.
This Note shall be governed by, and construed and interpreted in
accordance with, the Laws of the State of New York.
IN WITNESS WHEREOF, the undersigned, pursuant to due authorization, has
caused this Note to be executed in its name and on its behalf by its duly
authorized officer.
(Name of Borrower)
By: _______________________________
Name:
Title:
Principal
Loan Amount
Date (Repayment) Outstanding Rate Interest
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EXHIBIT F
December __, 2002
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Re: American Electric Power Company, Inc.
Application-Declaration on Form U-1
File No. 70-10088
Dear Sirs:
I am an attorney employed by American Electric Power Service
Corporation, a subsidiary of American Electric Power, Inc. ("AEP") and have
acted as counsel for American Electric Power Company, Inc. and its subsidiaries
(the "Subsidiaries") in connection with the filing of the
Application-Declaration on Form U-1, File No. 70-10088, as amended (the
"Application"), filed under the Public Utility Holding Company Act of 1935, as
amended (the "Act"), by AEP a registered holding company, and its Subsidiaries.
In the application, AEP and the Subsidiaries request authority under the Act to
engage in various financing and related transactions (the "Proposed
Transactions") through March 31, 2006.
I have examined originals, or copies certified to my satisfaction, of
such corporate records of AEP and the Subsidiaries, certificates of public
officials, certificates of officers and representatives of AEP and the
Subsidiaries and other documents as I have deemed necessary to require as a
basis for the opinions hereafter expressed. In such examination, I have assumed
the genuineness of all signatures and the authenticity of all documents
submitted to me 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 I have, when relevant facts were not independently established,
relied upon certificates by officers of AEP and other appropriate persons and
statements contained in the Application.
Based upon the foregoing, and having regard to legal considerations
which I deem relevant, I am of the opinion that, in the event that the Proposed
Transactions are consummated in accordance with the Application, and subject to
the assumptions and conditions set forth below:
1. AEP and each of the Subsidiaries are or will be validly organized and duly
existing under the laws of their states of incorporation.
2. All state laws applicable to the Proposed Transactions as
described in the Application (other than so-called "blue-sky" or
state securities laws as to which I express no opinion) will have
been complied with.
3. Any debt securities and any guarantees issued as contemplated in the
Application will be valid and binding obligations of AEP or the respective
Subsidiary in accordance with their terms, subject, as to enforcement,
to bankruptcy, insolvency, reorganization, moratorium or other similar
laws of general applicability relating to or affecting the enforcement of
creditors' rights generally and to the effects of general principles of
equity (regardless of whether enforceability is considered in a proceeding
in equity or at law), including without limitation (a) the possible
unavailability of specific performance, injunctive relief or any other
equitable remedies and (b) concepts of materiality, reasonableness, good
faith and fair dealing.
4. Any shares of common stock or preferred stock issued or sold by
the Subsidiaries as contemplated in the Application will be
validly issued, fully paid, and non-assessable and the holders
thereof will be entitled to the rights and privileges appertaining
thereto set forth in the charter or other documents defining such
rights and privileges.
5. The consummation by AEP and the Subsidiaries of the Proposed
Transactions will not violate the legal rights of the holders of
any securities issued by AEP or the Subsidiaries or any
"associate" company, as such term is defined in the Act, of AEP or
the Subsidiaries.
The opinions expressed above in respect of the Proposed Transactions
described in the Application are subject to the following assumptions
or conditions:
a. The Proposed Transactions shall have been duly authorized and approved
to the extent required by state law by the Boards of Directors of AEP and
the Subsidiaries.
b. The Securities and Exchange Commission shall have duly entered an
appropriate order or orders granting And permitting the Application to
become effective.
c. The Proposed Transactions shall be consummated in accordance
with any required approvals, authorizations, consents,
certificates and orders of any state commission or regulatory
authority and all such required approvals, authorizations,
consents, certificates and orders shall have been obtained and
remain in effect.
I hereby consent to the use of this opinion as an exhibit to the
Application.
Very truly yours,
/s/ Ann B. Graf
Counsel to American Electric Power
Company, Inc. and its Subsidiaries