SECURITIES AND EXCHANGE COMMISSION
(Release No. 35-27872; 70-10166)
American Electric Power Company, Inc. et al.
Order Authorizing the Issuance of Preferred Securities and Debt Securities by Registered Holding Company and Public Utility Subsidiaries, Formation of Financing Subsidiaries and Special Purpose Subsidiary Companies; Reservation of Jurisdiction
July 1, 2004
American Electric Power Company, Inc. ("AEP") a New York corporation and AEP Utilities, Inc., formerly Central and South West Corporation, a direct, wholly owned subsidiary of AEP and a Delaware corporation ("AEP Utilities"), both registered holding companies under the Public Utility Holding Company Act of 1935, as amended ("Act"); and the following direct and indirect subsidiaries of AEP: AEP Generating Company ("Generating"), AEP Texas Central Company, formerly Central Power and Light Company ("TCC"), AEP Texas North Company, formerly West Texas Utilities Company ("TNC"), Appalachian Power Company ("Appalachian"), 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"), and Wheeling Power Company ("Wheeling") (collectively, "Public Utility Subsidiaries"); Cedar Coal Company, Central Appalachian Coal Company, Central Coal Company, Colomet, Inc., Simco, Inc. Southern Appalachian Coal Company, Blackhawk Coal Company, Conesville Coal Preparation Company, (collectively, "Coal Companies"); Franklin Realty Inc.; Indiana Franklin Realty Company (collectively, "Real Estate Companies"); American Electric Power Service Corporation (together with Public Utility Subsidiaries, Coal Companies, and Real Estate Companies, "Utility Money Pool Participants"); AEP Houston Pipeline Company, LLC; AEP Texas POLR GP, LLC; AEP Coal Marketing LLC; AEP Emissions Marketing, LLC; CSW Orange, Inc.; CSW Mulberry, Inc.; Noah I Power G.P., Inc.; CSW Orange II, Inc.; CSW Mulberry II, Inc.; CSW Sweeny GP I, Inc.; CSW Sweeny GP II, Inc.; CSW Sweeny LP I, Inc.; CSW Sweeny LP II, Inc.; CSW Services International Inc.; Trent Wind Farm LP; AEP Wind LP, LLC; AEP Wind GP, LLC; HPL GP LLC; AEP Desert Sky LP II, LLC; AEPR Ohio LLC; AEP Wind LP II, LLC; and AEP Wind Holding, LLC (collectively,"New Nonutility Money Pool Participants"); and the nonutility subsidiaries listed in Appendix A as defined in Section IV.C below ("Prior Nonutility Money Pool Participants") (collectively, "Applicants")1 all located in Columbus, Ohio have filed an application-declaration ("Application") with the Securities and Exchange Commission ("Commission") under sections 6(a), 7, 9(a), 10, 12(b), 12(c), 32, and 33, and rules 43, 45, 46, 53 and 54 of Act. The Commission issued a notice of the proposed transactions on April 23, 2004 (HCAR No. 27839). On June 22, 2004, the Commission received comments from the Kentucky Public Service Commission explaining that it had jurisdiction over Kentucky Power providing guarantees in respect to securities or obligations of any other entity. The Commission did not receive a request for a hearing.
By Commission order dated December 18, 2002 (HCAR No. 27623) ("December Order"), AEP was authorized to conduct financing transactions until March 31, 2006, including among other things: the issuance of guarantees and other credit support; the creation of financing entities; the continuation of the public utilities' money pool; the creation of the nonutility money pool; and the payment of dividends out of capital or unearned surplus. AEP currently has authority to issue commercial paper, promissory notes and other forms of short-term indebtedness in an aggregate amount not to exceed $7.2 billion to fund the money pools and for its own requirements. In addition, AEP and any existing direct or indirect nonutility subsidiary (including any exempt wholesale generator under section 32 of the Act ("EWG"), a foreign utility company under section 33 of the Act ("FUCO") or an exempt telecommunications company under section 34 of the Act ("ETC"), and any rule 58 company ("Rule 58 Company")) were authorized in the December Order to participate in and form the nonutility money pool as a separate system of intercorporate borrowings. The nonutility money pool is administered in the same manner and subject to the same conditions as the utility money pool.
Prior to the December Order, the Commission by order dated April 11, 2002 (HCAR No. 27517) ("April Order"), authorized the formation of financing subsidiaries and special purpose subsidiaries through June 30, 2004 with the following limits:
II. Financing Requests
The Applicants request approval for a program of external financing activities, the provision of intrasystem financings, guarantees, and other matters through March 31, 2007 ("Authorization Period").
A. Financing Parameters
The Applicants propose that the following general terms will be applicable where appropriate to the financing transactions requested ("Financing Parameters"):
1. Investment Grade Requirements
Applicants represent that, except for securities issued for the purpose of funding the money pool operations, no guarantees or other securities, other than common stock, may be issued in reliance upon the authorization to be granted by the Commission, unless: (a) the security to be issued, if rated, is rated investment grade; (b) all outstanding securities of the issuer that are rated are rated investment grade; and (c) all outstanding securities of AEP and AEP Utilities that are rated are rated investment grade or comparable ratings for short-term debt ("Investment Grade Conditions"). For purposes of this Investment Grade Condition, a security will be deemed to be rated "investment grade" if it is rated investment grade 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, as amended. Except for securities issued for the purpose of funding the money pool operations, Applicants request that the Commission reserve jurisdiction over the issuance of any such securities that are rated below investment grade and Applicants further request that the Commission reserve jurisdiction over the issuances of any such guarantee or other such securities at anytime during the Authorization Period when the conditions set forth in causes (a) through (c) above are not satisfied.
2. Common Equity
AEP hereby represents that it will maintain during the Authorization Period for itself and for all the Public Utilities a minimum of 30% common equity as a percentage of consolidated capital (inclusive of short-term debt and inclusive of securitization bonds for the recovery of regulatory assets in connection with state-mandated utility restructuring); however TCC seeks authority to maintain a common equity ratio of 25% for so long as securitization bonds are outstanding. The 25% common equity as a percentage of consolidated capital is being sought because of the issuance of securitization bonds. Securitization bonds are expected to be outstanding until the currently outstanding TCC Transition Funding securitization bond issue is scheduled to be fully retired by January 15, 2016. However, TCC is anticipating an additional issuance which would remain outstanding for approximately 15 years after it is issued.
3. Effective Cost of Money
The effective cost of capital on preferred stock, equity-linked securities, preferred securities, long-term debt and short-term debt will not exceed competitive market rates available at the time of issuance for securities having the same or reasonably similar terms and conditions issued by similar companies of reasonably comparable credit quality. Applicants state that in no event will the effective cost of capital (a) on any series of long-term debt, preferred stock, or preferred securities exceed 500 basis points over a U.S. Treasury security having a remaining term equal to the term of such series, (b) on any series of equity-linked securities, exceed 600 basis points over a U.S. Treasury security having a remaining term equal to the term of such series, and (c) on short-term debt, exceed 300 basis points over the London Interbank Offered Rate ("LIBOR") for maturities of less than one year
Maturity of long-term indebtedness will not exceed 50 years. Preferred securities and equity-linked securities will be redeemed no later than 50 years after the issuance, unless converted into common stock. Preferred stock issued directly by AEP may be perpetual in duration. Short-term borrowings will have maturities of less than one year from the date of issuance. The ability to extend the maturity of commercial paper notes is a feature of an extendible commercial notes ("ECM"). The maturity of commercial paper notes issued under an ECM program is 365 days or less; however, if the principal of any commercial paper note is not paid at maturity, the maturity of the commercial paper note will automatically be extended to 390 days from the date of original issuance.
5. 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 the greater of (a) 5% of the principal or total amount of the securities being issued, or (b) issuance expenses that are generally paid at the time of the pricing for sales of the particular issuance, having the same or reasonably similar terms and conditions issued by similar companies of reasonably comparable credit quality.
6. Borrowing Limits
Borrowing limits for the aggregate amount of outstanding financing effected by the Applicants during the Authorization Period, excluding securities issued for the purposes of refunding or replacing other outstanding securities where capitalization is not increased will not exceed:
a. Long-term debt limits:
b. Short-term debt limits:
i. Public Utility Subsidiaries through the money pool or external borrowings, or borrowings from AEP or from a Financing Subsidiary, are as follows:
ii. AEP requires an amount of authority for short-term borrowings sufficient to fund the utility money pool and the nonutility money pool, to make loans to other Subsidiaries, as well as for its own requirements in an amount not to exceed $7,200,000,000.
iii. AEP Utilities, requests authority to borrow up to $100,000,000 outstanding at any one time from external sources or from AEP, but not from either money pool.
7. 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:
AEP requests that the Commission reserve jurisdiction over the use of proceeds of any issuance of securities to finance an investment by AEP or any of its subsidiaries in any new2 EWGs and FUCOs in excess of $150,000,000 during the Authorization Period. The Applicants represent that no such financing proceeds will be used to acquire a new Subsidiary unless such financing is consummated in accordance with an order of the Commission or an available exemption under the Act.
B. AEP External Financing
AEP seeks authority to increase its capitalization by issuing and selling from time to time during the Authorization Period up to $3 billion in any combination of securities including: (1) directly, additional common stock ("Common Stock") or options, warrants, equity-linked securities or stock purchase contracts convertible into or exercisable for common stock and preferred stock ("Preferred Stock"); (2) indirectly through one or more financing subsidiaries as described in Section III.D ("Financing Subsidiaries"), other forms of preferred securities (including trust preferred securities) (collectively "Preferred Securities"); (3) directly or indirectly through one or more Financing Subsidiaries new long term debt securities ("Long-Term Debt"), (excluding securities issued for purposes of refunding or replacing other outstanding securities where AEP's capitalization is not increased) as more fully described below.
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 in any of the following ways: (a) through underwriters or dealers; (b) directly to a limited number of purchasers or to a single purchaser, or (c) through agents or dealers. 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.
Common Stock. AEP seeks authority to issue and sell Common Stock and to issue and sell options, warrants, equity-linked securities or other stock purchase rights exercisable for Common Stock. The aggregate amount of financing obtained by AEP during the Authorization Period from issuance and sale of Common Stock (other than for employee benefit plans or stock purchase and dividend reinvestment plans), when combined with issuances of Preferred Stock, Preferred Securities, equity linked securities, and Long-Term Debt, as described in this section, and other than for refunding or replacement of securities where capitalization is not increased, shall not exceed $3 billion. Any refunding or replacement of securities where capitalization is not increased from that in place at September 30, 2003, will be through the issuance of securities of the type and under the same terms and conditions authorized in this Application. Common Stock financings may be effected through underwriting agreements of a type generally standard in the industry. Public distributions may be through private negotiation with underwriters, dealers or agents as discussed below or effected through competitive bidding among underwriters. In addition, sales may be made through private placements or other non-public offerings to one or more persons. All such Common Stock sales will be at rates or prices and under conditions negotiated or based upon, or otherwise determined by, competitive capital markets.
AEP may sell Common Stock in any one of the following ways: (i) through underwriters or dealers; (ii) through agents; or (iii) directly through a limited number of purchasers or a single purchaser. If underwriters are used in the sale of the securities, the 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 a managing underwriter or underwriters designated by AEP) or directly by one or more underwriters acting alone. If Common Stock is being sold in an underwritten offering, AEP may grant the underwriters a "green shoe" option permitting the purchase from AEP at the same price of additional shares then being offered solely for the purpose of covering over-allotments.
Preferred Securities. AEP seeks to have the flexibility to issue Preferred Stock or other types of Preferred Securities (including, without limitation, trust preferred securities or monthly income preferred securities) directly or indirectly through one or more special-purpose Financing Subsidiaries organized by AEP specifically for such purpose as described. The aggregate amount of financing obtained by AEP during the Authorization Period from issuance and sale of Preferred Stock, Preferred Securities and equity linked securities, when combined with issuances of Common Stock (other than for employee benefit plans or stock purchase and dividend reinvestment plans), and Long-term Debt shall not exceed $3 billion. Any refunding or replacement of securities where capitalization is not increased from that in place at September 30, 2003, will be through the issuance of securities of the type authorized in this Application.
Preferred Stock or other types of Preferred Securities may be issued in one or more series with such rights, preferences and priorities as may be designated in the instrument creating each such series, as determined by AEP's Board of Directors. Dividends or distributions on Preferred Securities will be made periodically and to the extent funds are legally available for such purpose, but may be made subject to terms which allow the issuer to defer dividend payments for specified periods. Preferred Securities may be convertible or exchangeable into shares of AEP Common Stock or indebtedness. Equity linked securities will be exercisable or exchangeable for or convertible, either mandatorily or at the option of the holder, into Common Stock or indebtedness or allow the holder to surrender to the issuer or apply the value of a security issued by AEP as approved by the Commission to such holder's obligation to make a payment on another security of AEP issued as permitted by the Commission. Any convertible or equity linked securities will be convertible into or linked to Common Stock, Preferred Securities or unsecured debt that AEP is otherwise authorized to issue by Commission order directly, or indirectly through Financing Subsidiaries on behalf of AEP.
Long-Term Debt. AEP requests Commission authorization during the Authorization Period to issue unsecured Long-Term Debt securities in an aggregate principal amount outstanding at any time, when combined with issuances of common stock (other than for benefit plans or stock purchase and dividend reinvestment plans) preferred stock, Preferred Securities, and equity linked securities as described in this section, and other than for refunding or replacement of securities where capitalization is not increased as a result thereof from that in place at September 30, 2003, not to exceed $3 billion. Any refunding or replacement of securities where capitalization is not increased will be through the issuance of securities of the type authorized in this Application.
AEP may issue directly unsecured Long-Term Debt or indirectly issue unsecured Long-Term Debt through one or more Financing Subsidiaries. Long-Term Debt will take the form of bonds, notes, medium-term notes or debentures under one or more indentures or long-term indebtedness under agreements with banks or other institutional lenders. Each series of Long-Term Debt issued directly by AEP would have such designation, aggregate principal amount, maturity, interest rate(s) or methods of determining the same, terms of payment of interest, redemption provisions, sinking fund terms and other terms and conditions as AEP may determine at the time of issuance. Specific terms of any Long-Term Debt will be determined by AEP at the time of issuance and will comply in all regards with the Financing Parameters. Indirectly issued Long-term Debt would be designed to parallel the terms of the security issued by any Financing Subsidiary to which the Long-Term Debt relates.
Any Long-Term Debt (a) may be convertible into any other securities of AEP, (b) will have maturities up to 50 years, (c) may be subject to optional and/or mandatory redemption, in whole or in part, at par or at various premiums above the principal amount thereof, (d) may be entitled to mandatory or optional sinking fund provisions, (e) may provide for reset of the coupon pursuant to a remarketing arrangement, (f) may be subject to tender or the obligation of the issuer to repurchase at the election of the holder or upon the occurrence of a specified event, (g) may be called from existing investors by a third party and (h) may be entitled to the benefit of affirmative or negative financial or other covenants.
The maturity dates, interest rates, redemption and sinking fund provisions, tender or repurchase and conversion features, if any, with respect to the Long-Term Debt of a particular series, as well as any associated placement, underwriting or selling agent fees, commissions and discounts, if any, will be established by negotiation or competitive bidding.
Short-Term Debt. AEP also seeks authority to issue and sell directly or indirectly through a Financing Subsidiary commercial paper, promissory notes and other forms of unsecured short-term indebtedness having maturities of less than one year ("Short-Term Debt") in an aggregate amount not to exceed $7.2 billion to fund the Money Pools, to make loans to Subsidiaries and for its own corporate purposes. Commercial paper would be sold in established domestic or European commercial paper markets. Commercial paper would be sold to dealers at the discount rate or the coupon rate per annum prevailing at the date of issuance for commercial paper of comparable quality and maturities sold to commercial paper dealers generally. It is expected that the dealers acquiring commercial paper from AEP and the Financing Subsidiaries will re-offer such paper at a discount to corporate and institutional investors. Institutional investors are expected to include commercial banks, insurance companies, pension funds, investment trusts, foundations, colleges and universities and finance companies.
AEP also proposes to establish and maintain back-up credit lines with banks or other institutional lenders to support its commercial paper program(s) and to establish other credit arrangements and/or borrowing facilities generally available to borrowers with comparable credit ratings as it may deem appropriate in light of its needs and existing market conditions. Only the amounts drawn and outstanding under these agreements and facilities will be counted against the proposed limit on Short-Term Debt.
AEP may, without counting against their borrowing 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 the Financing Subsidiaries propose to 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. Public Utility Subsidiaries' Financing
Kingsport, SWEPCO, TCC, TNC, and Wheeling seek authority to issue secured or unsecured long-term debt to AEP and third parties in an amount not to exceed $50 million, $600 million, $600 million, $250 million, and $50 million, respectively, including the issuance of long-term debt to AEP,3 and to enter into hedging transactions. This authorization would include any new pollution control financing by SWEPCO. Kingsport, SWEPCO, TCC, TNC, and Wheeling seek authorization to issue long-term debt to AEP at a rate designed to parallel AEP's effective cost of capital. 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 the Financing Parameters set forth in Section II.A.
The Public Utility Subsidiaries seek authority to issue short-term debt to the extent of the borrowing limits as set forth in Section II.A through the Utility Money Pool, which is more fully described below, through external borrowings, or from AEP or a Financing Subsidiary. It is expected that the dealers acquiring commercial paper from the Public Utility Subsidiaries will re-offer such paper at a discount to corporate and institutional investors. Institutional investors are expected to include commercial banks, insurance companies, pension funds, investment trusts, foundations, colleges and universities and finance companies.
The Public Utility Subsidiaries may, without counting against their borrowing 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.
D. AEP Utilities' Financing
AEP Utilities seeks authority to issue unsecured short-term debt in an amount up to $100,000,000 from external sources or from its parent AEP for its general corporate purposes under the terms described in Section II. This authority would not be used to fund the Utility Money Pool. AEP Utilities will not borrow from either the Utility Money Pool or the Nonutility Money Pool.
It is expected that the dealers acquiring commercial paper from AEP Utilities will re-offer such paper at a discount to corporate and institutional investors. Institutional investors are expected to include commercial banks, insurance companies, pension funds, investment trusts, foundations, colleges and universities and finance companies.
AEP Utilities may, without counting against their borrowing 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.
E. Financing Subsidiaries
AEP and the Subsidiaries request authority to acquire, directly or indirectly, the equity securities of one or more Financing Subsidiaries. Financing Subsidiaries may be corporations, trusts, partnerships or other entities created specifically for the purpose of facilitating the financing of the authorized and exempt activities (including exempt and authorized acquisitions) of AEP and the Subsidiaries through the issuance of long-term debt, short-term debt, including commercial paper, or Preferred Securities, to third parties and the transfer of the proceeds of such financings to AEP or the Subsidiaries in the case of the transfer of proceeds to the respective participants in the Nonutility Money Pool and Utility Money Pool. AEP and the Subsidiaries request authorization to issue their subordinated unsecured notes ("Subordinated Notes") to their respective Financing Subsidiary to evidence the transfer of financing proceeds by a Financing Subsidiary to its respective parent company. The terms (e.g. interest rate, maturity, amortization, pre-payment terms etc.) of the Subordinated Notes would be designed to parallel the terms of the securities issued by the Financing Subsidiary to which the Subordinated Note relates. The amount of securities issued by any Financing Subsidiary to third parties under the authorization requested will be included in the overall external financing limitation authorized for the parent company of such Financing Subsidiary. However, the amount of Subordinated Notes issued by a parent company to its Financing Subsidiary will not be counted against such external financing limitation.
AEP may, if required, guarantee or enter into support or expense agreements in respect of the obligations of any Financing Subsidiaries. Subsidiaries may also provide guarantees and enter into support or expense agreements, if required, on behalf of their respective Financing Subsidiaries. However, to avoid double counting, the guarantees of securities issued by Financing Subsidiaries shall not be counted against the limitation on AEP guarantees and Subsidiary guarantees.
F. Credit Enhancement
Applicants request authority to obtain credit enhancement for the securities covered by this Application, which could include insurance, a letter of credit or a liquidity facility, if they were to issue floating rate securities, whereas the credit enhancement would be a purely economic decision for fixed rate securities. Applicants anticipate that they would be required to pay a premium or fee to obtain the credit enhancement, but a net benefit through a reduced interest rate would be realized. Applicants would obtain credit enhancement only if it is economically beneficial to do so taking into consideration the fees required.
AEP requests authorization, directly or indirectly through one or more Financing Subsidiaries, to enter into guarantees, obtain letters of credit, enter into support or expense agreements, or otherwise provide credit support with respect to debt securities or other contractual obligations of any Subsidiary from time to time through the Authorization Period on behalf of any of its direct or indirect Subsidiaries up to $5 billion, provided however, that the amount of any parent guarantees in respect of obligations of any subsidiaries shall also be subject to the limitations of rule 53(a)(1) or rule 58(a)(i), as applicable. AEP also requests authority to guarantee the performance obligations of its direct or indirect Subsidiaries
AEP Utilities seeks authority to provide guarantees and other credit support with respect to its direct or indirect subsidiaries in an amount not to exceed $1 billion outstanding at any one time.
Each of the Public Utility Subsidiaries seeks authorization to enter into guarantees and other credit support with respect to obligations of each of their respective Subsidiaries in an aggregate amount not to exceed $125 million outstanding at any one time. AEP requests that the Commission reserve jurisdiction over the issuance of any guarantees pending receipt of a necessary order from the Kentucky Public Service Commission.
Nonutility Subsidiaries also request authority for each Nonutility Subsidiary to provide guarantees of indebtedness or contractual obligations and other forms of credit support to other Nonutility Subsidiaries in an aggregate principal amount not to exceed $2 billion outstanding at any one time, exclusive of any guarantees and other forms of credit support that are exempt pursuant to rule 45(b) and rule 52(b), provided however, that the amount of Nonutility Subsidiary guarantees in respect of obligations of any Rule 58 Companies shall remain subject to the limitations of rule 58(a)(i).
Certain of the guarantees referred to above may be in support of the obligations of subsidiaries or associate companies that 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 by appropriate means including estimation of exposure based on loss experience or projected potential payment amounts. If appropriate, these estimates will be made in accordance with Generally Accepted Accounting Principles ("GAAP") and these estimates will be re-evaluated periodically. With regard to financial guarantees, the terms of the securities of the subsidiaries or associate companies for which a guarantee is issued will comply with the Financing Parameters. Any guarantee that is outstanding at the end of the Authorization Period shall remain in force until it expires or terminates in accordance with its terms. AEP or a Subsidiary issuing a guarantee, as the case may be, proposes to charge each Subsidiary a fee for each guarantee provided on its behalf that is not greater than the costs, if any, of obtaining the liquidity necessary to perform the guarantee for the period of time the guarantee remains outstanding.
The aggregate amount of all guarantees as set forth above, will not exceed $8.125 billion (not taking into account obligations exempt pursuant to rule 45 and under other outstanding Commission orders).
AEP and the subsidiaries seek authority to enter into and perform interest rate hedging transactions ("Interest Rate Hedges"). Interest Rate Hedges would only be entered into with counterparties ("Approved Counterparties") whose 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 ("Anticipatory Hedges") and subject to certain limitations and restrictions as set forth 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 ("Forward Sale"); (ii) the purchase of put options on U.S. Treasury obligations ("Put Options Purchase"); (iii) a Put Options Purchase in combination with the sale of call options on U.S. Treasury obligations ("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 GAAP. The Applicants will comply with Statement of Financial Accounting Standard ("SFAS") 133 (Accounting for Derivative Instruments and Hedging Activities) and SFAS 138 (Accounting for Certain Derivative Instruments and Certain Hedging Activities) or other standards relating to accounting for derivative transactions as are adopted and implemented by the Financial Accounting Standards Board ("FASB"). The Applicants represent that each Interest Rate Hedge and each Anticipatory Hedge will qualify for hedge accounting treatment under the current FASB standards in effect and as determined as of the date the Interest Rate Hedge or Anticipatory hedge is entered into. The Applicants will also comply with any future FASB financial disclosure requirements associated with hedging transactions.
III. Intrasystem Financing Requests
AEP and the participants in each of the money pools request authorization to (A) continue to participate in the money pools and (B) establish Financing Subsidiaries to fund the money pools under the following terms during the Authorization Period.
A. Money Pool Operations
Participants in either the utility money pool ("Utility Money Pool") or the nonutility money pool ("Nonutility Money Pool") will make unsecured short-term borrowings from its applicable money pool, contribute surplus funds to its applicable money pool and lend to and or extend credit to other participants in its applicable money pool. All short-term borrowing needs of the participants may be met by funds in the money pools to the extent funds are available. The money pools are 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, any Financing Subsidiary or, in the case of the Utility Money Pool, AEP Utilities, Inc. All debt issued in connection with the money pools will be unsecured. AEP funds made available to the money pools will be used first to fund the Utility Money Pool and thereafter to fund the Nonutility Money Pool.
Each participant shall have the right to borrow from the respective money pool from time to time, subject to the availability of funds and the applicable borrowing limits set forth in orders of the Commission and other regulatory authorities, and agreements binding upon such participant. Each participant may borrow from the Utility Money Pool to the extent of its borrowing limits for short-term debt. 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. 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 AEP Utilities will borrow funds from either of the money pools or any participant. From the date of any order issued in this file, EWG's and FUCO's, which are participants in the Nonutility Money Pool, will only be lenders to, not borrowers from, the Nonutility Money Pool. The following EWG's and/or FUCO's had outstanding loans from the Nonutility Money Pool, which are now repaid:
Each participant will borrow pro rata from each funding source in the same proportion that the amount of funds provided by that funding source bears to the total amount of short-term funds available to the money pool. Funds which are loaned from participants into the applicable money pool which are not required to satisfy borrowing needs of other participants will be invested on the behalf of the respective money pool in one or more short-term instruments, including: (i) interest-bearing accounts with banks; (ii) obligations issued or guaranteed by the U.S. government and/or its agencies and instrumentalities, including obligations under repurchase agreements; (iii) obligations issued or guaranteed by any state or political subdivision thereof, provided that such obligations are rated not less than "A" by a nationally recognized rating agency; (iv) commercial paper rated not less than "A-1" or "P-1" or their equivalent by a nationally recognized rating agency; (v) money market funds; (vi) bank certificates of deposit, (vii) Eurodollar funds; (viii) short-term debt securities rated AA or above by Standard & Poor's, Aa or above by Moody's Investors Service, or AA or above by Fitch Ratings; (ix) short-term debt securities issued or guaranteed by an entity rated AA or above by Standard & Poor's, Aa or above by Moody's Investors Service, or AA or above by Fitch Ratings; and (x) such other investments as are permitted by section 9(c) of the Act and Rule 40 thereunder. No funds from the Utility Money Pool or Nonutility Money Pool will be invested in EWG's, FUCO's, or exempt telecommunications company under section 34 of the Act.
The interest rate applicable on any day to then outstanding loans through the money pools will be the composite weighted average daily effective cost incurred by AEP, AEP Utilities, Inc. or any Financing Subsidiary for short-term borrowings from external sources for that money pool. 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.
Each participant receiving a loan 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 authorization for the operation of the money pool. All loans made through the applicable money pool may be prepaid by the borrower without premium or penalty. If the money pool is in an invested position, 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.
American Electric Power Service Company ("AEPSC"), a rule 88 subsidiary service company, will be the administrative agent of the money pools. AEPSC will administer the money pools on an "at cost" basis and will maintain separate records for each Money Pool. Each participant, any Financing Subsidiary and AEP will determine the amount of funds it has available for contribution to the money pools. 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's treasurer, any assistant 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.
B. Financing Subsidiaries to Fund Money Pools
AEP proposes to create two Financing Subsidiaries one to fund the Utility Money Pool ("Utility Money Pool FS", to be named AEP UF) and a separate Financing Subsidiary to fund the Nonutility Money Pool ("Nonutility Money Pool FS," to be named AEP-NUF). Both the Utility Money Pool FS and the Nonutility Money Pool FS will be limited liability corporate subsidiaries of AEP formed under Delaware law. Each Financing Subsidiary will have a separate bank account for the separate money pool it funds. Any funds transferred to the money pools will flow through this Financing Subsidiary bank account.
AEP states it seeks to modify its corporate borrowing program to separate more fully the operations of the Utility Money Pool and the Nonutility Money Pool to assure that there can be no cross-subsidization. This new structure will facilitate a separate external borrowing program for the Utility Money Pool.
The Utility Money Pool FS may obtain funds from external sources or from AEP or AEP Utilities. It is anticipated that the Utility Money Pool FS will have the ability to establish an external commercial paper program supported by the Public Utility Subsidiaries and should therefore obtain a higher credit rating than the AEP program currently has. AEP's current credit rating for commercial paper is A2/P3/F2 - and it is anticipated that the Utility Money Pool FS should initially be rated A2/P2/F2. This will result in lower financing costs depending on the market conditions.
When the Utility Money Pool FS directly issues commercial paper to dealers to fund the Utility Money Pool, each Public Utility Subsidiary that borrows from the Utility Money Pool FS must maintain comparable debt ratings to the Utility Money Pool FS and maintain requisite backup facilities with one or more financial institutions. Each Public Utility Subsidiary will pay all liabilities incurred by the Utility Money Pool FS relating to the offer and sale of the commercial paper the proceeds of which were used to make loans to that Public Utility Subsidiary and its pro rata share of other expenses and administrative costs of the Utility Money Pool FS in connection with its funding of the Utility Money Pool. No Public Utility Subsidiary will be liable for the borrowings of any other associate under the Money Pool. The proceeds from the borrowings of the Utility Money Pool FS will be used to repay its borrowings or be invested to continue funding the Utility Money Pool. The proceeds of borrowings by the Utility Money Pool FS will not be loaned to AEP.
The Utility Money Pool FS and Nonutility Money Pool FS that fund the money pools would be solely financial conduits. The Utility Money Pool FS and Nonutility Money Pool FS will not have any business purpose other than to fund the money pools. Commission approval will be sought if other types of transactions are contemplated.
AEP will continue to fund the Nonutility Money Pool with the sale of commercial paper. If it is determined that AEP can borrow money at a cheaper rate than that obtained by the Utility Money Pool FS that is funding the Utility Money Pool then AEP will fund the Utility Money Pool directly.
AEPSC administers the Money Pools 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 applicable money pool and then from AEP corporate funds to the extent available. To the extent that participant contributions of surplus funds to the applicable money pool are insufficient to meet participant requests for short-term loans, borrowings are made from outside the system.
C. Nonutility Money Pool Participants
AEP lists the Prior Nonutility Money Pool Participants in Appendix A, attached hereto, which request to continue to participate in the Nonutility Money Pool. The following entities will no longer be participants in the Nonutility Money Pool because they have been removed, dissolved, or sold: AEP Retail Energy LLC; AEP Credit, Inc.; Industry and Energy Associates LLC; AEP Gas Power Systems LLC; AEP Resource Services LLC; Mid-Texas Pipeline Company; Eastex Cogeneration LP; CSW Eastex LP I Inc.; Enershop Mutual Energy CPL LP; Mutual Energy CPL LP; Mutual Energy WTU LP; Mutual Energy Service Co., LLC; AEP Ohio Commercial & Industrial Retail Company LLC; Universal Supercapacitors, LIG, Inc., LIG Pipeline Company, Tuscaloosa Pipeline Company, and LIG Liquids Company, L.L.C., Louisiana Intrastate Gas Company, L.L.C., LIG Chemical Company. The New Nonutility Money Pool Participants seek authorization to participate in the Nonutility Money Pool.
D. Utility Money Pool Participants
Dolet Hills Lignite Company, currently a participant in the Nonutility Money Pool seeks to become a participant in the Utility Money Pool, which currently includes the Public Utilities, Coal Companies, and Real Estate Companies. Dolet Hills Lignite Company, a subsidiary of SWEPCO, seeks to become a participant in the Utility Money Pool because it is a mining company similar to the other mining companies, which are currently in the Utility Money Pool. It would no longer be a participant in the Nonutility Money Pool.
IV. Other Matters
A. Pollution Control Bonds.
The following Public Utility Subsidiaries seek authority to refund and reissue currently outstanding pollution control revenue bonds as follows: TCC $450,000,000, TNC $45,000,000, and SWEPCO $185,000,000. 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.
B. Payments of Dividends out of Capital or Unearned Surplus
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, provided, however, that without further approval of the Commission, no Nonutility Subsidiary will declare or pay any dividend out of capital or unearned surplus if such Nonutility Subsidiary derives any material part of its revenues from the sale of goods, services or electricity to any Public Utility Subsidiary. In addition, the Nonutility Subsidiary will not declare any dividend out of capital or unearned surplus unless it:
The proposed transactions are subject to the requirements of rules 53 and 54. Under rule 53(a), the Commission shall not make certain specified findings under sections 7 and 12 in connection with a proposal by a holding company to issue securities for the purpose of acquiring the securities of or other interest in an EWG, or to guarantee the securities of an EWG, if each of the conditions in paragraphs (a)(1) through (a)(4) thereof are met, provided that none of the conditions specified in paragraphs (b)(1) through (b)(3) of rule 53 exists.
AEP currently meets all of the conditions of rule 53(a), except for clause (1). At March 31, 2004, AEP's "aggregate investment", as defined in rule 53(a)(1), in EWGs and FUCOs was approximately $1.683 billion, or about 86.4% of AEP's "consolidated retained earnings", also as defined in rule 53(a)(1), for the four quarters ended March 31, 2004 ($1.947 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). By order dated June 14, 2000 (HCAR No. 27186), the Commission 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 ("Rule 53(c) Order").
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)(1) or (3) has occurred or is continuing. The circumstances described in rule 53(b)(2) have occurred. As a result of the recording of a loss with respect to impairment charges, AEP's consolidated retained earnings declined for the period ending March 31, 2004. The average consolidated retained earnings of AEP for the four quarterly periods ended December 31, 2003 was $1.947 billion, or a decrease of approximately 22.7% from the company's average consolidated retained earnings for the four quarterly periods ended March 31, 2004 of $2.519 billion. In addition, AEP's "aggregate investment" in EWGs and FUCOs as of March 31, 2004 exceeded 2% of the total capital invested in utility operations.
In the fourth quarter of 2003 AEP recorded pre-tax impairments of assets (including goodwill) and investments totaling $1.4 billion that reflected downturns in energy trading markets, projected long-term decreases in electricity prices, and other factors. The impairments consisted of $650 million related to asset impairments, $70 million related to investment value and other impairment losses, and $711 million related to discontinued operations. Of the discontinued operations, $577 million was attributable to the impairment of the fixed-asset carrying value of AEP's two coal-fired generation plants in the United Kingdom ("U.K. Generation"). AEP recorded a pre-tax impairment of $70 million on certain qualifying facilities as defined under the Public Utility Regulatory Policies Act of 1978, as amended ("QFs") in the third quarter of 2003.4 As a result of the decrease in retained earnings and that AEP's "aggregate investment" in EWGs and FUCOs as of March 31, 2004 exceeded 2% of the total capital invested in utility operations as noted in rule 53(b)(2), AEP has requested that the Commission reserve jurisdiction over the use of proceeds of any issuance of securities to finance an investment by AEP or any of its subsidiaries in any new EWGs or FUCOs in excess of $150,000,000 during the Authorization Period.
However, despite the conditions noted in rule 53(b)(2), Applicant submits that AEP meets the requirements of rule 53(c). 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 growth trend in AEP's retained earnings. AEP states, 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.
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. As of December 31, 1999, the most recent period for which financial statement information was evaluated in the Rule 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 March 31, 2004, AEP's consolidated capitalization consisted of 36.8% common and preferred equity (consisting of common stock representing 36.2% and $133 million principal amount of preferred stock representing 0.6%), and 63.2% debt. The ratio of common equity to total capitalization, net of securitization debt, of each of the Public Utility Subsidiaries will continue to be maintained at not less than 30% (except for TCC which will maintain 25% so long as securitization bonds are outstanding). In addition, each of the Public Utility Subsidiaries is subject to regulation by one or more state commissions that are able to protect utility customers within their respective states.
In addition, the Public Utility 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 and Poor's ("S&P") rating of secured debt for AEP's operating subsidiaries was as follows: Appalachian Power Company, A; Columbus Southern Power Company, A-; Indiana Michigan Power Company, A-; Kentucky Power Company, A; Ohio Power Company, A-; AEP Texas Central Company (formerly Central Power and Light Company), A; Public Service Company of Oklahoma, AA-; Southwestern Electric Power Company, AA-; and AEP Texas North Company, A. AEP did not have a long-term debt rating as of December 31, 1999.
As of March 31, 2004, S&P's rating of secured debt for AEP's Public Utility Subsidiaries was as follows: Appalachian Power Company, BBB; Columbus Southern Power Company, BBB; Indiana Michigan Power Company, BBB; Kentucky Power Company, BBB, Ohio Power Company, BBB, AEP Texas Central Company (formerly Central Power and Light Company), BBB; Public Service Company of Oklahoma, BBB; Southwestern Electric Power Company, BBB; and AEP Texas North Company (formerly, West Texas Utilities Company), BBB.
No state or federal regulatory authority, other than as described below, has jurisdiction over the proposed transactions. The Virginia State Corporation Commission ("VSCC") and the West Virginia Public Service Commission ("WVPSC") have jurisdiction over the organization of a Finance Subsidiary to provide services or funds for Appalachian or Wheeling. The VSCC and the WVPSC have approved the participation of Appalachian and Wheeling in the Utility Money Pool. Applications are being filed with VSCC and WVPS for authority to amend the Public Utility Subsidiaries' money pool agreement and to authorize Appalachian and Wheeling to enter into affiliate transactions (including loans) with the Utility Money Pool FS. Appalachian and Wheeling request that the Commission reserve jurisdiction over (i) any acquisition of securities by Appalachian and Wheeling of the Utility Money Pool FS, and (ii) the acquisition of securities by Appalachian and Wheeling of their respective wholly-owned Financing Subsidiaries pending receipt of appropriate orders from the VSCC and/or WVPSC. If a state commission provides that an affiliate contract may be disapproved if, after hearing, it is found not to be in the public interest, then the Applicant shall file with the Commission any order issued by the state commission. The Kentucky Public Service Commission has jurisdiction over certain guarantees issued by Kentucky Power Company. Kentucky requests the Commission to reserve jurisdiction over the issuance of any guarantees pending receipt of an order from the Kentucky Public Service Commission. Applicants state that the fees, commissions and expenses incurred in connection with the proposed transactions are not to exceed $2,000.
Due notice of the filing of the Application has been given in the manner prescribed by rule 23 under the Act, and no hearing has been requested of or ordered by the Commission. Based on the facts in the record, the Commission finds that except with respect to those matters over which jurisdiction has been reserved, the applicable standards of the Act are satisfied and that no adverse findings are necessary.
IT IS ORDERED, under the applicable provisions of the Act and rules under the Act, except as to those matters over which jurisdiction has been reserved, that the Application be granted and permitted to become effective immediately, subject to the terms and conditions prescribed in rule 24, and in particular rule 24(c)(2), Applicants will report will report within 60 days after the end of each calendar quarter the following information:
1. The sales of any Common Stock by AEP and the purchase price per share of stock issued and sold pursuant to the Authority;
2. Amount and terms of any Long-Term Debt, Preferred Stock, Preferred Securities, equity-linked securities directly or indirectly issued by AEP;
3. The amount and terms of any long-term debt issued by Kingsport, SWEPCO, TCC, TNC or Wheeling issued pursuant to this authority;
4. The amount and terms of any pollution control refinancing issued pursuant to this Order;
5. 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;
6. The amount and terms of any short-term debt issued by AEP, AEP Utilities, AEP UF or AEP-NUF or any of the Public Utility Subsidiaries during the quarter;
7. 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;
8. Identification of any investments in any new EWG or FUCO counting against the $150,000,000 limit for such investments;
9. The name, parent company and the amount invested in any financing entity during the quarter;
10. 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 B of S.E.C. File No. 70-10166;
11. 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;
12. Upon the formation of any Financing Subsidiary to fund any Money Pool, a statement showing the name and date of formation of the Financing Subsidiary, to be supplied in the next Report, as well as the date of implementation or discontinuance of any of the Money Pool funding programs;
13. 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;
14. The date, amount and payee of dividends out of capital or unearned surplus paid by any Nonutility Subsidiary;
15. If any Subsidiaries are Variable Interest Entities ("VIEs") as that term is used in FASB Interpretation 46R, Consolidation of Variable Interest Entities, provide a description of any financing transactions conducted during the reporting period that were used to fund such VIEs;
16. If any financing proceeds are used for VIEs, a description of the accounting for such transaction under FASB Interpretation 46R;
17. Consolidated balance sheets as of the end of the quarter and separate balance sheets as of the end of the quarter for each company, including AEP that has engaged in jurisdictional financing transactions during the quarter;
18. A retained earnings analysis of AEP on a consolidated basis and of each Utility Subsidiary detailing gross earnings, goodwill amortization, dividends paid out of each capital account and the resulting capital account balances at the end of the quarter;
19. Future registration statements filed under the Securities Act of 1933 with respect to securities that are subject of the instant Application will be filed or incorporated by reference as exhibits to the next certificate filed under rule.
20. The sales of any Common Stock by AEP and the purchase price per share of stock issued and sold pursuant to the Authority;
21. Amount and terms of any Long-Term Debt, Preferred Stock, Preferred Securities, equity-linked securities directly or indirectly issued by AEP.
22. The amount and terms of any long-term debt issued by Kingsport, SWEPCO, TCC, TNC or Wheeling issued under this authority;
23. The amount and terms of any pollution control refinancing issued under this Order;
24. 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;
25. The amount and terms of any short-term debt issued by AEP, AEP Utilities, any Financing Subsidiary, the money pool financing subsidiaries (AEP UF or AEP-NUF) or any of the Public Utility Subsidiaries during the quarter;
26. 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;
27. The name, parent company and the amount invested in any financing entity during the quarter;
28. 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 B in S.E.C. File No. 70-10166;
29. 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;
30. Upon the formation of any Utility Money Pool FS and Nonutility Money Pool FS (i.e., AEP UF or AEP-NUF, respectively) to fund any Money Pool, a statement showing the name and date of formation of the Utility Money Pool FS and Nonutility Money Pool FS, to be supplied in the next Report, as well as the date of implementation or discontinuance of any of the Money Pool funding programs;
31. 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; and
32. The date, amount and payee of dividends out of capital or unearned surplus paid by any Nonutility Subsidiary.
IT IS FURTHER ORDERED that jurisdiction is reserved, pending completion of the record, over: (1) securities issued in reliance upon the authorization granted by the Commission pursuant to this Application where upon issuance the security is rated below investment grade; (2) the issuance of any guarantee or other securities at any time that the Investment Grade Conditions are not satisfied; (3) the authority to use the proceeds of any issuance of securities to finance an investment by AEP or any of its subsidiaries in any new EWG's or FUCO's in excess of $150,000,000 during the Authorization Period; (4) acquisition of securities by Appalachian and Wheeling of the Utility Money Pool FS; (5) acquisition of securities by Appalachian and Wheeling of their respective wholly-owned Financing Subsidiaries; and (6) issuance of guarantees by Kentucky.
For the Commission, by the Division of Investment Management, pursuant to delegated authority.
Margaret H. McFarland
Action as set forth or recommended herein
For The Division of Investment Management
NONUTILITY MONEY POOL PARTICIPANTS
The entities that are currently participants in the Nonutility Money Pool and Applicants are listed below.
|Home | Previous Page||