File No. 70-10088
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
Amendment No. 1
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
Universal Supercapacitators, LLC Supercapacitator operations
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 & Industrial Retail 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 & Comm 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 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 Holding company
AEP Holdings II 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
CSWE/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
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 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 and its 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 and its Public Utility
Subsidiaries as more fully described in the Application-Declaration;
(iv) CPL, Columbus, Ohio and West Texas, companies affected by
restructuring, seek interim authority until restructuring is implemented,
to issue short and long-term debt in an amount not to exceed $3.9 billion;
(v) Subsidiaries seek authorization to organize financing entities for
certain types of financings;
(vi) Applicants seek authority to make tender offers for their securities
and repurchase of their own securities from affiliates;
(vii) AEP and its Subsidiaries which are participants in the Utility Money
Pool request the continuation of the Money Pool through the Authorization
Period;
(viii) 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;
(ix) 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
(x) 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. It is
possible that an order in this matter will not be issued until after December
31, 2002, and interim financing authority for these companies will be required
pending issuance of the restructuring order.
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 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 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. Except
in accordance with a further order of the Commission in this proceeding, 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 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, other than the refinancing of outstanding securities which
will not be limited, 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.
Pre-restructuring the breakdown of the $7.2 billion is as follows:
Utility: $5.0bil
AEP: .7bil
Nonutility: 1.5bil
$7.2bil
Post-restructuring the breakdown will be as follows:
Utility: $3.5bil
AEP: 1.2bil
Nonutility: 2.5bil
$7.2bil
(c) Interim Limits
If the Restructuring Order referred to above is not obtained by December
31, 2002, the companies affected by restructuring will need continued interim
authority to issue debt, including both long and short term debt, both on the
external market or from the Utility Money Pool, until restructuring is
implemented as described in File No. 70-9785:
Company Debt Limits
CPL $1,400,000,000
Columbus $800,000,000
Ohio $1,200,000,000
West Texas $500,000,000
6. Financial Condition
AEP states that it will maintain during the authorization period for itself
and for all the Public Utility Subsidiaries common equity of 30% of consolidated
capital (inclusive of short-term debt); 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 attached as Exhibit A.
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 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 CPL and West Texas with the
Restructuring Application and in Section (c) Interim Limits above. SWEPCO and
Wheeling seek long-term debt authority in an amount not to exceed $350 million
and $40 million.
Any long-term debt or other security 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 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 and the public utility subsidiaries seek authorization for
the issuance of short-term debt in the form of bank loans, commercial paper
programs and other products in the amount set forth in Borrowing Limits above,
as well as direct issuance from AEP.
Commercial paper would be sold in established domestic or European
commercial paper markets. Short-term borrowings will have maturities of less
than one year from the date of issuance.
Flexibility - AEP requires flexibility in the types of short-term debt by
which it borrows externally to take advantage of new 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 (See Footnote 1), and other new products to provide
alternate backup liquidity for commercial paper and short-term notes.
AEP and the Participants 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.
(d) Financing Entities
The 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. 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 Subsidiaries to a financing entity in return for the
proceeds of the financing and (ii) the acquisition by a Subsidiary of voting
interests or equity securities issued by the financing entity to establish the
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 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 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) Tender Offers and Repurchase of Securities
AEP and the Subsidiaries may determine to acquire outstanding securities
(the "Outstanding Securities") through tender offers to the holders of such
Outstanding Securities. Tender offers may be conditioned upon receipt of a
certain percentage of the Outstanding Securities. The tender offer price would
be based on a number of factors, including the coupon rate of the Outstanding
Securities, the date of expiration of the refunding protection of the
Outstanding Securities, the redemption price on such expiration date and the
then current market rates for similar securities, all of which are relevant to
the decision of an informed holder as to whether to hold or sell Outstanding
Securities. Holders of Outstanding Securities may be offered a fixed price for
their Outstanding Securities, or the tender offer may be a "fixed spread" offer
pursuant to which the Applicants will offer a price based upon a fixed spread
over comparable U.S. Treasury securities. Any tender offer will be conducted in
accordance with standard market practice, i.e., the length of time the offer
will be held open, the method of solicitation, etc., at the time of the tender
offer.
AEP and the Subsidiaries would, in connection with any tender offer, retain
one or more investment banking firms experienced in such matters to act as
tender agent and dealer-manager. The dealer-manager will act as the agent in
disseminating the tender offer and receiving responses thereto. As a
dealer-manager, the investment banking firm will not itself become obligated to
purchase or sell any of the Outstanding Securities. The dealer-manager's fee
will be determined following negotiation and investigation of fees in similar
transactions and will include reasonable out-of-pocket expenses and attorney's
fees. It is expected that the Applicant will be required, as is customary, to
indemnify the dealer-manager for certain liabilities. The Applicant may also
retain a depositary to hold the tendered Outstanding Securities pending the
purchase thereof and/or an information agent to assist in the tender offer.
AEP and the Public Utility Subsidiaries also seek authority to repurchase
their own securities issued to affiliates.
(f) Hedging Transactions
Interest rate hedging transactions with respect to existing indebtedness
("Interest Rate Hedges"), subject to certain limitations and restrictions, 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 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. 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 (See Footnote 2) as participants in
the AEP System Money Pool (the "Participants") and established borrowing limits
for all Participants.
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. AEP will not 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.
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 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 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 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 or future direct or indirect nonutility subsidiary
(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.
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.
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: (See Footnote 3). 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 and its 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 and its Public
Utility Subsidiaries as more fully described in the
Application-Declaration;
(iv) CPL, Columbus, Ohio and West Texas, companies affected by
restructuring, seek interim authority until restructuring is
implemented, to issue short and long-term debt in an amount not to
exceed $3.9 billion;
(v) Applicants seek authorization to organize financing entities for
certain types of financings;
(vi) Applicants seek authority to make tender offers for their securities
and to repurchase their own securities from affiliates;
(vii)AEP and its Subsidiaries which are participants in the Utility Money
Pool request the continuation of the Money Pool through the
Authorization Period;
(viii) 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;
(ix) 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
(x) 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 June 30, 2002, AEP's "aggregate investment", as defined in Rule
53(a)(1), in EWGs and FUCOs was approximately $3.049 billion, or about 95.1% of
AEP's "consolidated retained earnings", also as defined in Rule 53(a)(1), for
the four quarters ended June 30, 2002 ($3.206 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 June 30, 2002, AEP's
consolidated capitalization consisted of 60.4% debt, 35.2% common and preferred
equity (consisting of 347,833,712 shares of common stock representing 34.6% and
$145 million principal amount of preferred stock representing 0.6%), $321
million principal amount of Trust Preferred Securities representing 1.3% and
$750 million minority interest in finance subsidiary representing 3.1%.
Since the date of the Rule 53(c) Order, there has been a reduction in AEP's
consolidated equity capitalization ratio; however, it remains within acceptable
ranges and limits of rating agencies for strong investment grade corporate
credit ratings. In addition, 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 June 30, 2002, 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, 2001, Standard & Poor's rating of secured debt for
CSW's Operating Subsidiaries was as follows: CPL, A-; PSO, A; SWEPCO, A; and
WTU, A-.
Reporting
AEP and the Participants will report quarterly to the Commission pursuant
to Rule 24 under the Act within 30 days after the end of each calendar quarter.
2. By amending and restating ITEM 6. Exhibits and Financial Statements as
follows:
(a) Exhibits:
Exhibit A - Capitalization Table.
Exhibit F - Opinion of counsel (to be filed by amendment)
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act of
1935, the undersigned company has duly caused this Amendment No. 1 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.
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 & Comm 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
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 DELAWARE INVESTMENT COMPANY II
AEP DELAWARE INVESTMENT COMPANY III
AEP HOLDINGS I
AEP HOLDINGS II
AEP ENERGY SERVICES UK GEN LTD
AEP ENERGY SERVICES LIMITED
CSW ENERGY, INC.
CSW POWER MARKETING, INC.
CSWE/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 COMPANY, 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: November 19, 2002
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 additional 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 million) for Rule 58 companies and 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 $250 million investment in Sweeney Cogen Project.
70-6591 Misc. insurance, workers comp., guarantee authority
70-6645
70-6845
70-6965
70-7183
EXHIBIT A
CAPITALIZATION STRUCTURE
(as of 6/30/02)
Company Common Equity Preferred Stock Long-Term Debt* Short-Term Debt Total Capitalization
($ in thousands) Amount % Amount % Amount % Amount % Amount %
----------------------------------------------------------------------------------------------------------------------
AEP 8,384,000 35.7% 145,000 0.6% 11,921,000 50.7% 3,041,000 12.9% 23,491,000 100.0%
----------------------------------------------------------------------------------------------------------------------
AEG 39,706 42.1% 0 0.0% 44,798 47.5% 9,775 10.4% 94,279 100.0%
----------------------------------------------------------------------------------------------------------------------
AEPSC (8,573) (11.4%) 0 0.0% 57,100 75.6% 26,995 35.7% 75,522 100.0%
----------------------------------------------------------------------------------------------------------------------
APCo 1,166,194 36.4% 28,650 0.9% 2,005,031 62.7% 0 0.0% 3,199,875 100.0%
----------------------------------------------------------------------------------------------------------------------
CSW 3,413,126 32.6% 18,286 0.2% 5,213,047 49.9% 1,810,693 17.3% 10,455,152 100.0%
----------------------------------------------------------------------------------------------------------------------
CPL 995,199 29.8% 5,967 0.2% 2,036,641 61.0% 302,285 9.1% 3,340,092 100.0%
----------------------------------------------------------------------------------------------------------------------
CSP 834,642 44.2% 10,000 0.5% 792,034 42.0% 250,000 13.3% 1,886,676 100.0%
----------------------------------------------------------------------------------------------------------------------
I&M 881,141 33.6% 73,048 2.8% 1,654,500 63.1% 11,806 0.5% 2,620,495 100.0%
----------------------------------------------------------------------------------------------------------------------
KPCo 258,979 36.2% 0 0.0% 455,796 63.8% 0 0.0% 714,775 100.0%
----------------------------------------------------------------------------------------------------------------------
Kinsport 24,361 45.6% 0 0.0% 20,000 37.4% 9,080 17.0% 53,441 100.0%
----------------------------------------------------------------------------------------------------------------------
OPCo 1,240,160 45.1% 25,498 0.9% 1,199,200 43.6% 287,069 10.4% 2,751,927 100.0%
----------------------------------------------------------------------------------------------------------------------
PSO 445,379 37.4% 5,283 0.4% 526,283 44.2% 212,950 17.9% 1,189,895 100.0%
----------------------------------------------------------------------------------------------------------------------
SWEPCo 678,077 43.7% 4,704 0.3% 803,405 51.8% 65,073 4.2% 1,551,259 100.0%
----------------------------------------------------------------------------------------------------------------------
WTU 236,615 38.4% 2,482 0.4% 256,028 41.6% 120,439 19.6% 615,564 100.0%
----------------------------------------------------------------------------------------------------------------------
Wheeling 28,079 55.5% 0 0.0% 20,000 39.6% 2,474 4.9% 50,553 100.0%
----------------------------------------------------------------------------------------------------------------------
* LT Debt includes Trust Preferred Stock and Securitization Bond. CPL is the
only company that has issued securitization bonds. That issuance is
reflected in CSW's and AEP's numbers.
EXHIBIT B
CAPITALIZATION STRUCTURE
(as of 6/30/02)
Company Common Equity Preferred Stock Long-Term Debt* Short-Term Debt Total Capitalization
($ in thousands) Amount % Amount % Amount % Amount % Amount %
----------------------------------------------------------------------------------------------------------------------
AEP 8,384,000 36.9% 145,000 0.6% 11,124,000 49.0% 3,041,000 13.4% 22,694,000 100.0%
---------------------------------------------------------------------------------------------------------------------
CSW 3,413,126 35.3% 18,286 0.2% 4,416,047 45.7% 1,810,693 18.7% 9,658,152 100.0%
----------------------------------------------------------------------------------------------------------------------
CPL 995,199 39.1% 5,967 0.2% 1,239,641 48.7% 302,285 11.9% 2,543,092 100.0%
----------------------------------------------------------------------------------------------------------------------
* LT Debt includes Trust Preferred Stock but excludes Securitization Bond