[Federal Register Volume 60, Number 236 (Friday, December 8, 1995)]
[Notices]
[Pages 63110-63113]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-29918]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-26423]


Filing Under the Public Utility Holding Company Act of 1935, as 
Amended (``Act'')

December 1, 1995.
    Notice is hereby given that the following filing(s) has/have been 
made with the Commission pursuant to provisions of the Act and rules 
promulgated thereunder. All interested persons are referred to the 
application(s) and/or declaration(s) for complete statements of the 
proposed transaction(s) summarized below. The application(s) and/or 
declaration(s) and any amendments thereto is/are available for public 
inspection through the Commission's Office of Public Reference.
    Interested persons wishing to comment or request a hearing on the 
application(s) and/or declaration(s) should submit their views in 
writing by December 26, 1995, to the Secretary, Securities and Exchange 
Commission, Washington, D.C. 20549, and serve a copy on the relevant 
applicant(s) and/or declarant(s) at the address(es) specified below. 
Proof of service (by affidavit or, in case of an attorney at law, by 
certificate) should be filed with the request. Any request for hearing 
shall identify specifically the issues of fact or law that are 
disputed. A person who so requests will be notified of any hearing, if 
ordered, and will receive a copy of any notice or order issued in the 
matter. After said date, the application(s) and/or declaration(s), as 
filed or as amended, may be granted and/or permitted to become 
effective.

Eastern Utilities Associates, et al. (70-7287)

    Eastern Utilities Associates (``EUA''), a registered holding, and 
its wholly owned nonutility subsidiary company, EUA Cogenex, Corp. 
(``Cogenex''), both at P.O. 2333, Boston, Massachusetts 02107, have 
filed a post-effective amendment under sections 9(a) and 10 of the Act 
to their application-declaration previously filed under sections 6(a), 
7, 9(a), 10, 12(c), 12(f), and 13(b) of the Act and rules 42, 45, 87, 
90, and 91 thereunder.
    By prior order in this proceeding dated December 19, 1986, the 
Commission authorized EUA to acquire Cogenex (HCAR Release No. 24273). 
Subsequent orders of the Commission authorized Cogenex to engage in 
additional activities and removed restrictions on the amount of 
revenues Cogenex could receive from customers outside New England (see, 
e.g., HCAR Release Nos. 26232 (Feb. 15, 1995), 26135 (Sept. 30, 1994), 
25982 (Jan. 28, 1994), and 25636 (Sept. 17, 1992)).\1\

    \1\ Cogenex announced on September 28, 1995, that it was 
discontinuing one of its principal business segments involving small 
self-generation projects.
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    Cogenex designs, finances, installs and maintains energy 
conservation systems. Cogenex provides energy management services 
(``EMS'') directly to institutional commercial, industrial and 
governmental customers to reduce their energy costs and consumption. 
Cogenex employs energy efficiency technology and equipment in its EMS 
program through building automation, lighting modifications, boiler 
replacement, and other heat recovery methods to reduce electrical 
energy and fuel consumption and related energy costs of its customers. 
Cogenex earns fees for these services primarily through shared savings 
agreements under which Cogenex is paid a portion of the customers' 
energy savings.
    Cogenex also participates in demand side management (``DSM'') 
programs sponsored by electric utilities as a means to decrease base 
load and peak demand on the utilities' systems. In DSM programs, 
Cogenex provides EMS services to the utility's customers to reduce 
their energy demands. The utility pays Cogenex based on the reduction 
in demand, and Cogenex may also receive a portion of the customer's 
savings.
    Cogenex now proposes to provide services relating to the furnishing 
and conservation of water to the types of customers to whom it 
furnishes EMS services. Cogenex proposes to provide such water services 
packaged with its EMS services or on a stand alone basis.

American Electric Power Company, Inc., et al. (70-8307)

    American Electric Power Company, Inc. (``AEP''), a registered 
holding company, and its nonutility subsidiary company, AEP Energy 
Services, Inc. (``AEPES'') (collectively, ``Applicants''), both at 1 
Riverside Plaza, Columbus, Ohio 43215, have filed a post-effective 
amendment to their application-declaration filed under sections 6(a), 
7, 9(a), 10, 12(b), and 13(b) of the Act and rules 45, 54, 87, 90, and 
91 thereunder.
    AEPES is engaged in the business of selling management, technical 
and training expertise both to certain AEP affiliates and to non-
affiliates. AEPES requests authorization to make financial and/or 
technical contributions to assist research and development efforts of 
non-affiliated entities. As a result of such contributions, AEPES may 
receive a license to use and/or a right to sublicense intellectual 
property developed by those entities (``Non-Affiliate Intellectual 
Property''). If AEPES became entitled to receive an equity interest in 
a non-affiliated entity to which such contributions were made, AEPES 
would sell the interest to an affiliate, AEP Investments, Inc., at its 
fair market value, subject to the receipt of any required regulatory 
approvals.
    AEPES is also engaged in, among other things, the business of 
selling or otherwise providing access to intellectual property 
developed by AEP affiliates for their own use. Currently, AEPES pays to 
any such affiliate in perpetuity a certain portion of the revenues 
realized from any disposition of such intellectual property. 
Specifically, AEPES pays the affiliate (a) 70% of the revenues from the 
intellectual property until the affiliate recovers its direct costs of 
making the property available and (b) 20% of such revenues thereafter. 
Additionally, AEPES makes intellectual property it develops available 
to AEP affiliates without charge, except for actual expenses incurred 
by AEPES in connection with making such intellectual property so 
available.
    AEP and AEPES propose that, if AEPES disposes of intellectual 
property developed by an affiliate for its own use and which such 
affiliate retains a right to use, AEPES would pay that affiliate an 
amount equal to the costs the affiliate directly incurred in making the 
property available to AEPES. For dispositions by AEPES of intellectual 
property developed by an AEP affiliate for its own use, but which that 
affiliate no longer would be able to use, AEPES would continue to 
reimburse that affiliate an amount equal to the affiliate's development 
costs. If an AEP affiliate developed intellectual property not for its 
own use but for use by AEPES, AEPES would also pay that affiliate an 
amount equal to the affiliate's development costs. AEPES additionally 
proposes that any disposition on Non-Affiliate Intellectual Property to 
an AEP affiliate would be at cost. Any intellectual property developed 
by AEPES would be made available to AEP affiliates at the direct cost 
of making such property available.
    Also, AEPES requests authority to provide or broker financing to 
customers in connection with and to support the sale of goods or 
provision of 

[[Page 63111]]
services through direct loan, installment purchase, operating or 
finance lease arrangements (including sublease arrangements) or loan 
guarantees. Interest on loans and imputed interest on lease payments 
will be at prevailing market rates. The obligations will have terms of 
one to thirty years and be secured or unsecured. AEPES also may assign 
obligations acquired from customers to banks or other financial 
institutions with or without recourse.
    In addition, AEP is authorized through December 31, 1995 to 
guarantee debt of AEPES to third parties in an amount not to exceed a 
total of $51,000,000. AEP proposes to extend this authority through 
December 31, 1998.

Public Service Company of Oklahoma (70-8711)

    Public Service Company of Oklahoma (``PSOK''), located at 212 East 
6th Street, Tulsa, Oklahoma 74119-1212, a wholly-owned public-utility 
subsidiary company of Central and South West Corporation, a registered 
holding company, has filed an application under sections 9(a) and 10 of 
the Act and rule 54 thereunder.
    PSOK requests authorization to make equity and debt investments 
totaling $3,500,000 in four Oklahoma limited liability companies, RIKA 
Management Company, L.L.C (``RIKA''), Universal Power Products Company, 
L.L.C (``Universal''), Automated Substation Development Company, L.L.C 
(``Automated'') and RC Training, L.L.C, (Training'') (collectively, the 
``RIKA Companies''), engaged in the development and commercialization 
of computer automation technology for the electric power industry.
    The predecessor to the RIKA Companies, Relay Concepts, Inc. 
(``Relay''), reorganized its corporate structure into the four limited 
liability RIKA Companies referred to above on July 17, 1995. As a 
consequence of this reorganization, the RIKA Companies will acquire 
Relay's three existing lines of business:
    (1) relay testing software,\2\ (2) electrical substation automation 
systems,\3\ and (3) personnel training services.\4\ The RIKA Companies 
will derive substantially all of their revenues from the development 
and commercialization of software that enhances the efficiency of 
substation operation and maintenance, and from the sale of training 
courses relating to all phases of automated testing and maintenance 
systems as well as on-site training and consulting services. Universal 
will be the primary marketing and sales arm of the RIKA Companies. 
Automated will be a research and development company, with no sales or 
support function, and will license Universal to market and sell the 
products it develops. Training will develop, market and operate 
training programs as a separate business. RIFA will provide management 
oversight and administrative support and control of the RIKA Operating 
Companies. RIKA will charge each of the RIKA Operating Companies for 
all direct and allocated costs plus a management fee equal to 5% of all 
cost billings.

    \2\ Relay developed a protective relay testing software package, 
known as Ultratest, which is the first automated relay testing 
software capable of communicating with and controlling the testing 
instruments made by most major relay manufacturers.
    \3\ Relay had begun the definition phase of a substation 
automation project that will combine off-the-shelf hardware with 
specially developed software to provide improved substation 
communications, maintenance support and testing.
    \4\ Relay established a training facility named Power Industry 
Learning Center (``PILC''). Located in Phoenix, Arizona, PILC will 
provide training to electric utility personnel relating to automated 
systems for relays, substations and other electric utility 
facilities as well as certain basic courses in electric generating 
and distribution systems. At present, all of the formal training 
programs developed by PILC relate to products developed by the RIKA 
companies.
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    On July 17, 1995, PSOK and RIKA entered into a Software Application 
Development Agreement (``Development Agreement'') pursuant to which the 
RIKA Companies will develop certain substation automation software 
applications for PSOK (``Software'').\5\ Under the Development 
Agreement, PSOK and RIKA each have, with certain limitations, a 
perpetual, non-exclusive and unrestricted license to use, modify, 
sublicense, sell or otherwise transfer the Software. Notwithstanding 
its rights under the Development Agreement, PSOK states that it does 
not intend to license the Software to non-affiliates and is not 
requesting authority from this Commission to engage in such activity. 
PSOK further states that its right to license the Software to third 
parties will be terminated upon consummation of the transactions, 
described below, for which it is seeking authorization (see footnote 
5). Inconsideration for RIKA's services under the Development 
Agreement, PSOK has agreed to pay RIKA up to $3,050,000 to be made 
available to RIKA in periodic installments, commencing upon the 
execution of the Development Agreement and continuing through March 31, 
1996. As of October 30, 1995, PSOK had paid RIKA $1,500,000 of this 
amount.

    \5\ PSOK notes that PSOK or a device manufacturer could develop 
the Software independently, but states that development by RIKA 
assures a more widely acceptable product. It suggests that software 
developed by PSOK would only be suitable for the devices currently 
in use in the CSW system and that a device manufacturer would have 
difficulty getting the proprietary protocols of a competitor.
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    Subject to approval of the investments by the Commission, the 
Development Agreement calls for PSOK and RIKA to execute a Member 
Agreement (``Member Agreement'') in accordance with which the 
$3,050,000 payable to RIKA under the Development Agreement to fund 
development of the Software would be converted into a $750,000 capital 
contribution to Automated and a loan to RIKA of up to $2,300,000. PSOK 
would also make a $450,000 capital contribution to Universal.\6\ Like 
the original $3,050,000, the money for this additional $450,000 
investment would come from internally generated funds. In return, PSOK 
would receive RIKA's promissory note (``Promissory Note''), 50% of 
RIKA's outstanding units of membership,\7\ 71% of Automated's 
outstanding units of membership,\8\ 48% of Universal's outstanding 
units of membership, and 48% of Training's outstanding units of 
membership.

    \6\ The Member Agreement would also memorialize the respective 
rights and obligations of PSOK and the RIKA Companies regarding the 
development of the Software and the management of the businesses in 
which the RIKA Companies are engaged or intend to engage. Among 
other things, it would assure PSOK of the right to purchase a non-
exclusive license to use the Software under the same terms and 
conditions as the license RIKA will offer to non-affiliated 
utilities. Such license would be a perpetual, unrestricted license 
to use and modify the Software at a fee no greater than the fee RIKA 
will pay Automated for the right to market the Software to non-
affiliated utilities, and would result in the termination of PSOK's 
right to license the Software to third parties.
    \7\ Equity in a limited liability company is represented by 
units of membership rather than shares of company stock, and holders 
of the units are referred to as members rather than shareholders. An 
Oklahoma limited liability company is controlled by managers rather 
than by a board of directors.
    \8\ After payment in full of the Promissory Note, PSOK's 
membership interest in Automated will be reduced from 71% to 48%.
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    Absent an event of default (``Event of Default'') as defined in the 
Member Agreement, PSOK would hold 4% of the voting rights of each of 
the RIKA Companies and have the right to designate one of the two 
managers of RIKA.\9\ Upon the occurrence of an Event of Default, RIKA 
would hold one hundred percent (100%) of the voting rights of 
Universal, Automated and Training, the holder of a majority of the 

[[Page 63112]]
voting rights of RIKA would be entitled to designate both managers of 
RIKA, and the voting rights of RIKA would be apportioned among the 
members of RIKA so that the voting rights held by PSOK on the one hand, 
and the other RIKA members on the other hand, would be in proportion to 
the amounts of principal and interest then outstanding under the 
Promissory Note and any RIKA promissory notes held by the other RIKA 
members, respectively.\10\

    \9\ Management of each of the RIKA Companies would be vested in 
two managers, who, in the case of the RIKA Companies other than 
RIKA, would be elected by majority vote of the voting rights of the 
members of such RIKA Company at an annual or special meeting called 
for that purpose.
    \10\ PSOK states that, under certain circumstances following an 
Event of Default, PSOK could possibly obtain a majority of the 
voting rights of RIKA and/or be in a position to direct the 
management and affairs of one or more of the RIKA Companies.
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Mississippi Power Company (70-8737)

    Mississippi Power Company (``Mississippi''), 2992 West Beach, 
Gulfport, Mississippi 39501, a wholly owned electric public-utility 
subsidiary company of The Southern Company, a registered holding 
company, has filed an application-declaration under sections 6(a), 7, 
9(a), 10, and 12(d) of the Act and rules 44, 53, and 54 thereunder.
    Mississippi proposes to incur obligations, from time to time on or 
before December 31, 2002, in connection with the issuance and sale by 
public instrumentalities of one or more series of pollution control 
revenue bonds (``Revenue Bonds'') in an aggregate principal amount of 
up to $75 million.
    The Revenue Bonds will be issued for the financing or refinancing 
of the costs of certain air and water pollution control facilities and 
sewage and solid waste disposal facilities at one or more of 
Mississippi's electric generating plants or other facilities located in 
various counties. It is proposed that each such county or appropriate 
public body or instrumentality (``County'') will issue its Revenue 
Bonds to finance or refinance the costs of the acquisitions, 
construction, installation and equipping of said facilities at the 
plant or other facility located in its jurisdiction (``Project'').
    The Revenue Bonds will mature from one to 40 years from the first 
day of the month in which they are initially issued and may, if it is 
deemed advisable for purposes of the marketability of the Revenue 
Bonds, be entitled to the benefit of a mandatory redemption sinking 
fund calculated to retire a portion of the aggregate principal amount 
of the Revenue Bonds prior to maturity.
    Mississippi proposes to enter into a Loan or Installment Sale 
Agreement with the County (``Agreement'') pursuant to each issue of the 
Revenue Bonds, and Mississippi may issue a Note therefor, or the County 
will undertake to purchase and sell the related Project to Mississippi. 
The proceeds from the sale of the Revenue Bonds will be deposited with 
a trustee (``Trustee'') under an indenture to be entered into between 
the County and such Trustee (``Trust Indenture''), pursuant to which 
such Revenue Bonds are to be issued and secured, and will be applied by 
Mississippi to payment of the cost of construction of the Project or to 
refund outstanding pollution control revenue obligations.
    The Trust Indenture and the Agreement may give the holders of the 
Revenue Bonds the right, during such time as the Revenue Bonds bear 
interest at a fluctuating rate, to require Mississippi to purchase the 
Revenue Bonds from time-to-time, and arrangements may be made for the 
remarketing of any such Revenue Bonds through a remarketing agent. 
Mississippi also may be required to purchase the Revenue Bonds, or the 
Revenue Bonds may be subject to mandatory redemption, at any time if 
the interest thereon is determined to be subject to federal income tax. 
Also in the event of taxability, interest on the Revenue Bonds may be 
effectively converted to a higher variable or fixed rate, and 
Mississippi also may be required to indemnify the bondholders against 
any other additions to interest, penalties and additions to tax.
    In order to obtain the benefit of ratings for the Revenue Bonds 
equivalent to the rating of Mississippi's first mortgage bonds 
outstanding under the indenture dated as of September 1, 1941 between 
Mississippi and Bankers Trust Company, as successor trustee, as 
supplemented and amended (``Mortgage''), Mississippi may determine to 
secure its obligations under the Note and/or Agreement by delivering to 
the Trustee, to be held as collateral, a series of its first mortgage 
bonds (``Collateral Bonds''). The aggregate principal amount of the 
Collateral Bonds would be equal to either: (1) the principal amount of 
the Revenue Bonds; or (2) the sum of such principal amount of the 
Revenue Bonds plus interest payments thereon for a specified period.
    As a further alternative to, or in conjunction with, securing its 
obligations through the issuance of the Collateral Bonds, Mississippi 
may: (1) cause an irrevocable letter of credit (``Letter of Credit'') 
to be delivered to the Trustee; and/or (2) cause an insurance company 
to issue a policy (``Policy'') guaranteeing the payment of the Revenue 
Bonds. In the event that either the Letter of Credit is delivered to 
the Trustee or the Policy is issued, Mississippi may also convey to the 
County a subordinated security interest in the Project or other 
property of Mississippi as further security for Mississippi's 
obligations under the Agreement and/or the Note. However, in the event 
that Mississippi is unable or determines not to issue the Collateral 
Bonds, deliver the Letter of Credit to the Trustee or cause the Policy 
to be issued, it proposes that it may guarantee the payment of the 
principal of, premium, if any, and interest on the Revenue Bonds.
    Mississippi also proposes to issue and sell, at any time on or 
before December 31, 2002: (1) one or more series of its (a) first 
mortgage bonds (``Bonds''), having a maturity of more than 40 years and 
(b) one or more series of preferred stock (``Preferred'') in an 
aggregate of up to $400 million in any combination thereof.
    The Bonds will be issued pursuant to the Mortgage, as to be further 
supplemented, and sold for the best price obtainable, but for a price 
to Mississippi of not less than 98% nor more than 101\3/4\% of the 
principal amount thereof, plus accrued interest (if any), which may be 
an adjustable interest rate determined on a periodic basis, or a fixed 
interest rate. The Bonds and/or the Preferred may be subject to a 
mandatory or optional cash sinking fund. Mississippi may enhance the 
marketability of the Bonds by purchasing an insurance policy to 
guarantee the payment when due of the Bonds.
    Mississippi seeks authority to deviate from the provisions of the 
Commission's Statement of Policy Regarding First Mortgage Bonds and 
Preferred Stock (HCAR Nos. 13105 and 13106, February 16, 1956, as 
amended by HCAR Nos. 16369 and 16758, May 8, 1969 and June 22, 1970, 
respectively) with respect to the issuance of the Bonds and Preferred.

Indiana Michigan Power Company et al. (70-8747)

    Indiana Michigan Power Company (``I&M''), One Summit Square, P.O. 
Box 60, Fort Wayne, Indiana 46801, an electric public utility 
subsidiary company of American Electric Power Company, Inc. (``AEP''), 
a registered holding company, and Blackhawk Coal Company 
(``Blackhawk''), c/o American Electric Power Service Corporation, 161 
West Main Street, Lancaster, Ohio 43130, a coal-mining subsidiary of 
I&M, have filed an application under sections 9(a) and 10 of the Act 
and rule 54 thereunder.
    By order dated September 20, 1985 (HCAR No. 23834), the Commission 

[[Page 63113]]
    authorized I&M and Blackhawk to enter into transactions to implement a 
settlement agreement, executed on January 9, 1985 by AEP, its associate 
companies and the staff of the Federal Energy Regulatory Commission 
(``FERC'') (``Settlement Agreement''), concerning certain coal mining 
properties located in Carbon County, Utah, including coal reserves 
located west of the Price River, together with existing surface 
facilities located east of the Price River for processing, handling and 
shipping coal (``Western Reserves''). The Settlement Agreement was 
intended to dispose of all issues remaining to be resolved in an 
investigation by FERC of the coal procurement and pricing policies of 
AEP and its associate companies.
    By subsequent order dated May 1, 1986 (HCAR No. 24080), the 
Commission authorized Blackhawk to transfer its coal mining operations 
with respect to the Western Reserves to Castle Gate Coal Company 
(``Castle Gate'') and Meadowlark, Utah, Inc. (``Meadowlark''), 
subsidiaries of AMAX, Inc. (``AMAX''). This transfer was accomplished 
by means of a set of transactions involving leases, subleases, 
conveyances and assignments with respect to the various surface 
interests, fee coal, coal preparation facilities, federal and state 
leases, structures, equipment, permits and water rights associated with 
the Western Reserves.
    Subsequent to May 30, 1986, Castle Gate merged into its affiliate, 
Amax Coal Company (``Amax Coal''); Meadowlark changed its name to Amax 
Land Company (``Amax Land''); and AMAX merged into Cyprus Amax Minerals 
Company (``CyprusAmax'').
    Blackhawk, Amax Land and Amax Coal now propose to amend the Lease 
Transaction Agreement to provide for the exercise by Amax Land and Amax 
Coal of the purchase options for four of the leases entered into 
pursuant to this authority prior to the end of the initial terms of the 
leases. The four leases will be terminated, Amax Land and/or Amax Coal 
will take title to all of the properties and/or equipment being leased 
under the four leases. In lieu of the obligation to make the remaining 
quarterly lease payments, as partial consideration for the purchase, 
Amax Land and Amax Coal will execute promissory notes in the same 
amounts and at the same dates as the remaining lease payments under the 
four leases. The notes will be guaranteed by Cyprus-Amax. Payment of 
the consideration for the purchase of the properties will be in the 
form of $5,700,000 in cash at closing and four promissory notes, 
totalling approximately $31.4 million. The promissory notes will be 
secured initially by a mortgage and security interest in the properties 
transferred.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-29918 Filed 12-7-95; 8:45 am]
BILLING CODE 8010-01-M