[Federal Register Volume 61, Number 101 (Thursday, May 23, 1996)]
[Notices]
[Pages 25930-25932]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-13024]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-26518]


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

May 17, 1996.
    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 June 10, 1996, to the Secretary, Securities and Exchange 
Commission, Washington, DC 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.

Southern Company Services, Inc., et al. (70-8821)

    Southern Company Services, Inc. (``SCS''), 64 Perimeter Center 
East, Atlanta, Georgia 30346, a wholly-owned subsidiary service company 
of The Southern Company (``Southern''), a registered holding company, 
and five electric utility subsidiary companies of Southern (``Operating 
Companies'')--Alabama Power Company, 600 North 18th Street, Birmingham, 
Alabama 35291; Georgia Power Company, 333 Piedmont Avenue, N.E., 
Atlanta, Georgia 30308; Gulf Power Company, 500 Bayfront Parkway, 
Pensacola, Florida 32501; Mississippi Power Company, 2992 West Beach, 
Gulfport, Mississippi 39501; and Savannah Electric and Power Company, 
600 Bay Street East, Savannah, Georgia 31401--have filed an application 
under sections 9(a) and 10 of the Act and rule 54 thereunder for 
authorization to engage in brokering and marketing activities relative 
to electric power and energy commodities (``Activities'').
    Through the Operating Companies, Southern provides retail electric 
service in much of Georgia and Alabama and in parts of Florida and 
Mississippi. Southern also provides firm wholesale service to 
municipalities and rural electric cooperatives within the territories 
served by the Operating Companies. The Operating Companies buy and sell 
wholesale electric power in transactions with other electric utility 
companies that are directly interconnected with one or more Operating 
Companies (``Tier 1 Utilities'') or electric utility companies that are 
directly interconnected with Tier 1 Utilities (``Tier 2 Utilities'') 
within a defined region (``Sales Region''), which includes the 
territories served by the Operating Companies.\1\ On occasion, the 
Operating Companies also engage in wholesale electric power 
transactions outside the Sales Region.
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    \1\ The Tier 1 and Tier 2 Utilities include all member utilities 
of the Southeastern Electric Reliability Council, the Entergy 
Corporation system, and certain other utility systems to the west 
and northwest of the Southern system.
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    When the Operating Companies have excess electric power generation, 
SCS, as agent for the Operating Companies, attempts to market this 
surplus to other customers. SCS, as agent for the Operating Companies, 
also seeks out the most economic sources of electric power. These 
transactions often involve base load capacity purchases and sales. In 
the course of these activities, SCS and the Operating Companies have 
developed extensive knowledge about the loads and resources of other 
electric power sources throughout and outside the Sales Region.
    The Activities would include (i) brokering of electric power by SCS 
between third-party sellers and buyers (``Power Brokering''); (ii) 
marketing of electric power, largely within the Sales Region, in 
transactions that do not involve Southern system generation or Southern 
system transmission (``Power Marketing''); and (iii) marketing and 
brokering of other forms of energy commodities by SCS or the Operating 
Companies (``Commodities Transactions'').
    With respect to Power Brokering, there would be no price exposure 
or significant financial risk for SCS because SCS would neither buy nor 
sell electric power. Power Brokering would be incidental to its 
principal business of centralized administrative and management 
services to Southern system companies.
    Power Brokering would be carried on by personnel employed by SCS 
who engage in the day-to-day power marketing and system supply 
activities on behalf of the Operating Companies. Revenues derived from 
Power Brokering will be credited entirely to reduce the cost of 
operation of SCS, which will, in turn, reduce its cost of service to 
the Operating Companies and other system subsidiaries.
    With respect to Power Marketing, SCS, as agent for one or more of 
the Operating Companies, would enter into separate contracts with 
prospective electric power suppliers and customers, either or both of 
which usually are located within the Sales Region.\2\
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    \2\ Southern, through Southern Energy Marketing, Inc. 
(``SEMI''), an ``exempt wholesale generator'' under section 32 of 
the Act, engages in wholesale electric power marketing to 
unaffiliated third parties. SEMI also is authorized to engage 
through other indirect subsidiaries in electric power marketing and 
brokering transactions. HCAR No. 26468 (Feb. 2, 1996). However, SCS 
and the Operating Companies may not provide to other Southern 
marketing subsidiaries non-public information on actual or potential 
wholesale customers or on prices or other terms of electric power to 
such wholesale customers. This prohibition is part of the ``Codes of 
Conduct'' filed with FERC that are applicable to SCS, the Operating 
Companies and other Southern subsidiaries. Southern Company 
Services, Inc., 72 FERC para. 61,324 (1995), order in reh'g, 74 FERC 
para. 61,141 (1996).
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    With respect to Commodities Transactions, SCS and the Operating 
Companies would, in connection with the sale of electric power, serve 
as a single source of gas, oil or coal as well. SCS and the Operating 
Companies would not broker or market other energy commodities except in 
conjunction with making an electricity sale.
    All of the Activities would be carried on by personnel employed by 
SCS who engage in the day-to-day power marketing and fuel procurement 
activities of the Southern system. Except in the case of Power 
Brokering, SCS would act as agent for the account of those Operating 
Companies that are directly related to the customer involved and will 
therefore have no beneficial interest in the revenues from the 
Activities. The Operating Companies would act as principals and

[[Page 25931]]

would hold the beneficial interest in the electric power subject of the 
arrangement. All Power Marketing opportunities would be associated with 
one or more of the Operating Companies, which would therefore be 
credited with all revenues from, and would bear all costs and risks 
associated with, such transactions.
    SCS personnel engaged in the Activities would account for their 
time through the regular Southern system time accounting system and 
would thus charge their time to specific ``activity codes'' established 
for the affected Southern companies. Overheads and ancillary expenses 
would be similarly charged. The Operating Companies may also engage 
directly in the Activities for their own account, individually or in 
cooperation with other Operating Companies, and with or without the 
assistance of SCS.
    The Operating Companies do not anticipate the need for financial 
support from Southern or independent sources of capital to engage in 
the Activities. SCS would be indemnified by the Operating Companies for 
claims or losses that result from its involvement, as agent for the 
Operating Companies, in the Activities.
    It is anticipated that in the ordinary course of business the 
Operating Companies would take appropriate steps to hedge risk through 
the purchase of options, puts, futures and other similar risk 
management measures. In addition, the Operating Companies may offset 
price risk exposure under a purchase or sale contract through an 
opposite position to that purchase or sale. Similarly, in a portfolio 
of purchase and sales contracts, risk may also be limited through an 
appropriate mix of long-term and short-term contracts. SCS, as agent 
for the Operating Companies, would negotiate the terms of such 
instruments and manage overall portfolio risk.

General Public Utilities Corporation (70-8843)

    General Public Utilities Corporation (``GPU''), 100 Interpace 
Parkway, Parsippany, New Jersey 07054, a registered holding company, 
has filed a declaration under sections 6(a), 7, 32 and 33 of the Act 
and rules 53 and 54 thereunder.
    GPU proposes to issue and sell for cash from time to time through 
December 31, 2001 up to $300,000,000 aggregate principal amount of 
unsecured debentures (the ``Debentures''). The debentures will be 
issued under an indenture to be entered into with United States Trust 
Company of New York, as trustee, and will have terms ranging from one 
year to up to 40 years. In addition, the Debentures may be subject to 
optional and/or mandatory redemption, in whole or in part, by GPU at 
par or at various premiums above the principal amount thereof. The 
Debentures may also be entitled to mandatory or optional sinking fund 
provisions.
    GPU will utilize the net proceeds (after deduction of commissions 
and expenses) from the sale of the debentures to (a) fund the 
acquisition of interests, and to make investments, in exempt wholesale 
generators, foreign utility companies and qualifying facilities, (b) 
make cash capital contributions to its electric operating subsidiaries, 
Jersey Central Power & Light Company, Metropolitan Edison Company and 
Pennsylvania Electric Company (``Operating Subsidiaries''), (c) to 
repay outstanding GPU indebtedness, (d) for other GPU corporate 
purposes, and (e) reimburse GPU's treasury for funds previously 
expended for such purposes.
    The Operating Subsidiaries will use proceeds of the proposed 
issuance of Debentures contributed to them (a) to repay outstanding 
indebtedness, (b) to redeem outstanding senior securities in accordance 
with the optional redemption provisions thereof or reacquire such 
securities in open market transactions (c) for construction purposes, 
(d) for other corporate purposes, and (e) to reimburse their treasuries 
for funds previously expended for such purposes.

Southwestern Electric Power Company, (70-8847)

    Southwestern Electric power Company (``SWEPCO''), 428 Travis 
Street, Shreveport, Louisiana 71101, an electric utility subsidiary 
company of Central and South West Corporation, 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 and 54 promulgated 
thereunder.
    SWEPCO proposes, through December 31, 1999, to incur obligations in 
connection with the issuance by Sabine River Authority of Texas 
(``Sabine'' or ``Issuer''), in one or more series, of up to $131.7 
million aggregate principal amount of Pollution Control Revenue Bonds 
in connection with the Southwestern Electric Power Company Project. Of 
this amount, up to $81.7 million aggregate principal amount may be 
Pollution Control Revenue Refunding Bonds (``Refunding Bonds'') and up 
to $50 million aggregate principal amount may be new money Revenue 
Bonds (``New Money Bonds'' and, together with the Refunding Bonds, the 
``New Bonds''). The issuance of New Money Bonds may be combined with 
the issuance of Refunding Bonds.
    The purpose of the Refunding Bonds is to reacquire all or a portion 
of Sabine's $81.7 million of outstanding Series 1986, 8.20% Pollution 
Control Revenue Refunding Bonds, maturing on July 1, 2014 (``Old 
Bonds''). The purpose of the New Money Bonds is to reimburse SWEPCO for 
expenditures that qualify for tax-exempt financing or to provide for 
current solid waste expenditures.
    SWEPCO also seeks authorization to manage interest rate risk or 
lower its interest costs through the use of forward refinancing 
techniques and the use of hedging products, including interest rate 
swaps, forward swaps, caps, collars and floors during the life of the 
Old Bonds and/or New Bonds. SWEPCO requests authority to enter into the 
foregoing types of transactions from time-to-time either in connection 
with the Old Bonds or New Bonds.
    It is anticipated that any interest rate swap agreement entered 
into would provide that redemption, reacquisition or maturation of the 
corresponding Old Bonds and/or New Bonds would terminate SWEPCO's 
obligations to the counterparty under the swap agreement for a 
corresponding notional amount. If an interest rate swap with automatic 
termination is not available or economically appropriate, SWEPCO will 
enter into a swap permitting termination at SWEPCO's option and it 
would exercise such option for a corresponding notional amount upon the 
redemption, reacquisition or maturation of the corresponding Old Bonds 
and/or New Bonds. SWEPCO further requests authorization to enter into 
reverse (or offsetting) interest rate swap agreements, or other 
contractual arrangements, in order to limit the impact of anticipated 
movements in interest rates or offset the effect of an existing 
interest rate swap agreement.
    SWEPCO and the Issuer entered into an installment sale agreement 
(``Sale Agreement'') for the issuance of the Old Bonds. In connection 
with the issuance of the New Bonds, SWEPCO will amend the Sale 
Agreement, enter into agreements with substantially the same terms as 
the Sale Agreement and/or enter into new installment sales agreements 
(collectively ``Amended Sales Agreements'').
    The New Bonds will bear interest at a fixed or floating rate, may 
be secured with first mortgage bonds and will mature in not more than 
forty years. The interest rate, redemption provisions and other terms 
and conditions applicable to

[[Page 25932]]

the New Bonds will be determined by negotiations between SWEPCO and one 
or more investment banking firms or other entities that will purchase 
or underwrite the New Bonds (``Purchasers'').
    SWEPCO anticipates that the New Bonds will be redeemable at its 
option upon the occurrence of various events specified in the Amended 
Sales Agreements and the Indentures, which may be amended or 
supplemented (``Supplemental Indentures''), or a new indenture (``New 
Indenture''). The New Bonds will be subject to optional redemption with 
premiums to be determined by negotiations between SWEPCO and the 
Purchasers and will be subject to mandatory redemption if the interest 
on the New Bonds become subject to federal income tax.
    SWEPCO may obtain a credit enhancement for the New Bonds, which 
could include bond insurance, a letter of credit or a liquidity 
facility. SWEPCO anticipates it may be required to provide credit 
enhancement if it issues floating rate bonds. A premium or fee would be 
paid for the credit enhancement, which would still result in the net 
benefit through a reduced interest rate on the New Bonds. SWEPCO will 
not provide credit enhancement unless it is economically beneficial.
    SWEPCO also seeks authority to issue first mortgage bonds as 
security for the New Bonds, subject to applicable indenture 
restrictions under its Mortgage Indenture dated February 1, 1940 to the 
Continental Bank, National Association and M.J. Kruger (``Mortgage 
Indenture''). The First Mortgage Bonds will be held by the Trustee for 
the New Bonds for the benefit of the New Bond holders and will not be 
transferable, except to a successor trustee. The First Mortgage Bonds 
will be issued in the exact amount and have substantially the same 
terms as the New Bonds. The Supplemental Indenture or New Indenture for 
the New Bonds may provide that the New Bonds will cease to be secured 
by First Mortgage Bonds when all other First Mortgage Bonds have been 
retired. To the extend payments in respect of the New Bonds are made in 
accordance with their terms, corresponding payment obligations under 
the First Mortgage Bonds will be deemed satisfied.
    The proceeds of the offering of the New Bonds will be used to 
redeem the Old Bonds pursuant to the terms of the Indentures 
(``Redemption'') and reimburse SWEPCO for expenditures made that 
qualify for tax-exempt financing or to provide for current solid waste 
expenditures. The proceeds of any offering may also be used to 
reimburse SWEPCO for Old Bonds previously acquired. Additional funds 
required to pay for the Redemption and the cost of issuance of the New 
Bonds will be provided by SWEPCO from internally generated funds and 
short-term borrowings.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-13024 Filed 5-22-96; 8:45 am]
BILLING CODE 8010-01-M