[Federal Register Volume 63, Number 64 (Friday, April 3, 1998)]
[Notices]
[Pages 16601-16604]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-8718]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-26851]


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

March 27, 1998.
    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 April 21, 1998, 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.

Central and South West Services, Inc. (70-8531)

    Central and South West Services, Inc. (``CSWS''), 1616 Woodall 
Rodgers Freeway, P.O. Box 660164, Dallas, Texas 75266, a service 
company subsidiary of Central and South West Corporation (``CSW''), a 
registered holding company, has filed a post-effective amendment to an 
application under sections 9(a) and 10 of the Act and rule 54 under the 
Act.
    By orders dated April 26, 1995 (HCAR No. 26280) and December 11, 
1997 (HCAR No. 26794) (``Orders''), the Commission authorized CSWS to 
use excess resources in its engineering and construction department, 
not needed to provide services to associates within the CSW system at 
any given time, to provide power plant control system procurement, 
integration and programming services, and power plant engineering and 
construction services to nonassociate utilities through December 31, 
2002.
    CSWS now proposes to expand the authority granted in the Orders to 
more clearly identify the excess engineering and construction 
services\1\ and provide related environmental\2\ and equipment 
maintenance services\3\ to nonassociate companies.
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    \1\ The engineering and construction services will relate to: 
consulting; design engineering; power quality; predictive 
maintenance; energy efficiency; field construction support and field 
construction; control system integration and engineering; project 
development (small cogeneration, steam production and renewable 
resources); production facilities operation; instrument engineering; 
electrical engineering; mechanical engineering; civil engineering 
and procurement activities.
    \2\ The environmental services activities will relate to: Gas 
emission equipment; continuous emission monitoring system; 
environmental laboratory; environmental & occupational health 
strategic planning; environmental & occupational health permitting; 
environmental & occupational health management systems; and 
environmental & occupational health compliance management.
    \3\ The equipment maintenance services (``Equipment Services'') 
will be limited to equipment used by CSW and its subsidiaries in 
their core utility business. The Equipment Services will consist of: 
repair, overhaul, and upgrades to equipment; machine shop services; 
vibration analysis and equipment balancing; welding and fabrication; 
field consulting and machining.
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American Electric Power Co., et al. (70-8693)

    American Electric Power Company, Inc. (``AEP''), 1 Riverside Plaza, 
Columbus, Ohio, 43215, a registered holding company, and its eight 
wholly owned electric utility subsidiary companies, Appalachian Power 
Company (``Appalachian''), Kingsport Power Company (``Kingsport''), 
both at 40 Franklin Road, S.W., Roanoke, Virginia, 24011, Columbus 
Southern Power Company (``Columbus''), 215 North Front Street, 
Columbus, Ohio, 43215, Indiana Michigan Power Company (``Indiana''), 
One Summit Square, P.O. Box 60, Fort Wayne, Indiana, 46801, Kentucky 
Power

[[Page 16602]]

Company (``Kentucky''), 1701 Central Avenue, Ashland, Kentucky, 41101, 
Ohio Power Company (``Ohio''), 301 Cleveland Avenue, S.W., Canton, 
Ohio, 44701, AEP Generating Company (``Generating''), 1 Riverside 
Plaza, Columbus, Ohio, 43215, and Wheeling Power Company 
(``Wheeling''), 51 Sixteenth St., Wheeling, West Virginia, 26003, have 
filed a post-effective amendment to a declaration filed under sections 
6(a), 7 and 12(b) of the Act and rules 45 and 54 under the Act.
    By order dated December 8, 1995, (HCAR No. 26424) (``Order''), the 
Commission authorized AEP, Appalachian, Columbus, Indiana, Kentucky and 
Ohio to issue and sell, through December 31, 2000, short-term notes to 
banks and commercial paper. The Order also authorized Generating, 
Kingsport, and Wheeling to issue and sell, through December 21, 2000, 
short-term notes to banks.
    The Order authorized short-term notes and/or commercial paper in 
amounts not to exceed:

------------------------------------------------------------------------
                        Company                              Amount     
------------------------------------------------------------------------
AEP...................................................      $150,000,000
Appalachian...........................................       250,000,000
Columbus..............................................       175,000,000
Indiana...............................................       175,000,000
Kentucky..............................................       150,000,000
Generating............................................       100,000,000
Kingsport.............................................        30,000,000
Ohio..................................................       250,000,000
Wheeling..............................................        30,000,000
                                                       -----------------
    Total.............................................     1,310,000,000
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    Applicants now request that the Order be amended to authorize 
short-term notes (``Notes'') and commercial paper (``Commercial 
Paper'') in the following increased amounts:

------------------------------------------------------------------------
                        Company                              Amount     
------------------------------------------------------------------------
AEP...................................................      $500,000,000
Appalachian...........................................       325,000,000
Columbus..............................................       300,000,000
Indiana...............................................       300,000,000
Kentucky..............................................       150,000,000
Generating............................................       100,000,000
Kingsport.............................................        30,000,000
Ohio..................................................       400,000,000
Wheeling..............................................        30,000,000
                                                       -----------------
    Total.............................................     2,135,000,000
------------------------------------------------------------------------

    Applicants also request that the Commission extend its 
authorization through December 31, 2003. Finally, AEP requests 
authorization to guarantee up to $40 million in short-term debt of 
American Electric Power Service Corporation. The debt AEP requests 
authority to guarantee matures within 270 days.
    The Notes will mature within 270 days. The Commercial Paper will be 
in the form of promissory notes in denominations of not less than 
$50,000 and will mature within 270 days.
    Applicants also request authorization to issue unsecured promissory 
notes or other evidence of their reimbursement obligations in respect 
of letters of credit issued on their behalf by certain banks. All 
promissory notes or other evidence of reimbursement obligations, 
together with other short-term indebtedness authorized, would be in an 
aggregate amount not to exceed the above-itemized aggregate amounts 
authorized for each Applicant and would mature within 270 days.

New England Electric System, et al. (70-9089)

    New England Electric System (``NEES''), a registered holding 
company, and its subsidiary companies, Massachusetts Electric Company, 
Narragansett Energy Resources Company, New England Electric 
Transmission Corporation, New England Energy Incorporated, New England 
Hydro-Transmission Electric Company, Inc., New England Hydro-
Transmission Corporation, New England Power Company (``NEP''), and New 
England Power Service Company, all located at 25 Research Drive, 
Westborough, Massachusetts 01582, and Granite State Electric Company, 
407 Miracle Mile, Suite 1, Lebanon, New Hampshire 03766, Nantucket 
Electric Company, 25 Fairgrounds Road, Nantucket, Massachusetts 02554, 
and The Narragansett Electric Company, 280 Melrose Street, Providence 
Rhode Island 02901 (collectively, ``Applicants''), have filed a post-
effective amendment to their application-declaration under sections 
6(a), 7, 9(a), 10, and 12(b) of the Act and rules 43 and 45 under the 
Act.
    By order dated October 29, 1997 (HCAR No. 26768) (``October 1997 
Order''), the Commission, among other things, authorized, for the 
period from November 1, 1997 through October 31, 2001: (1) NEP to 
borrow from the NEES intrasystem money pool (``Money Pool''); (2) any 
one Applicant, or a combination of several Applicants, to loan money to 
one or more of the Applicants through the Money Pool under the current 
terms of the Money Pool; (3) NEP to borrow from banks; and/or (4) NEP 
to issue commercial paper. The October 1997 Order authorized NEP to 
borrow money and/or issue commercial paper in an amount up to $375 
million.
    Applicants now propose that NEP be authorized to increase from $375 
million to $750 million the total amount of the short-term borrowing 
authorized by the October 1997 Order. As of March 1, 1998, NEP had $209 
million of short-term debt outstanding in the form of commercial paper 
and money pool borrowings. In addition, NEP has $372 million of 
variable rate tax-exempt mortgage bonds outstanding (``Bonds''). Under 
the terms of these Bonds, NEP is obligated to repurchase the bonds in 
the event they cannot be remarketed to investors. NEP has a $205 
million bond purchase facility to support this obligation. Thus, NEP 
requires $376 million to support the remaining Bonds plus the 
authorized level of short-term debt.
    NEP currently has 1,100 megawatts of purchased power contracts. NEP 
may have opportunities to negotiate or buy out these purchased power 
contracts, which may require lump sum, up front payments. Also, upon 
divestiture of its non-nuclear generation assets, NEP is required to 
defease by either first call or maturity its outstanding mortgage bonds 
($711 million of which support fixed or variable rate tax-exempt 
mortgage bonds and $240 million of which are publicly held). The 
repurchase of some of these publicly held bonds through a tender offer 
or open market purchases may achieve cost savings. Therefore, NEP seeks 
to increase its short-term borrowing authority by an additional $375 
million.

American Electric Power Company, Inc., et al. (70-9145)

    American Electric Power Company, Inc. (``AEP''), a registered 
holding company, and its wholly owned nonutility subsidiaries AEP 
Resources, Inc. (``AEPR''), AEP Energy Services, Inc. (``AEPES''), and 
AEP Resources Services company (``Resco''), all located at 1 Riverside 
Plaza, Columbus, Ohio 43215, have filed an application-declaration 
under sections 6(a), 7, 9(a), 10, 12(b), 12(c) and 13(b) of the Act and 
rules 45, 46, 54, 87 and 90 under the Act.
    AEPR requests authority to enter, either directly or indirectly, 
into a joint venture (``Management Company'') with Conoco Inc. 
(``Conoco''), a subsidiary of E.I. du Pont de Nemours and Company 
(``DuPont''). The Management Company would provide energy-related 
services to industrial, commercial and institutional customers. AEPR 
also requests authority to enter, either directly or indirectly, into a 
joint venture (``Capital Company'') with Conoco and DuPont that would 
provide financing to Management Company customers for energy-related 
assets and for the purchase of services from Management Company.

[[Page 16603]]

    The energy-related services to be provided by Management Company 
would include energy facility management services, energy conservation 
services, procurement services, other energy services and incidental 
services. These services would be provided either directly by 
Management Company or by special purpose subsidiaries established to 
conduct these activities.
    Energy facility management services include the day-to-day 
operations, maintenance, and management, and other technical and 
administrative services required to operate, maintain and manage 
certain energy-related assets (``Energy Facilities''), as well as long-
term planning and budgeting for and evaluation of improvements to those 
assets. ``Energy Facilities'' include facilities and equipment that are 
used by industrial, commercial and institutional entities to produce, 
convert, store and distribute (i) thermal energy products, such as 
processed steam, heat, hot water, chilled water, and air conditioning, 
(ii) electricity, (iii) compressed air, (iv) processed and potable 
water, (v) industrial gases, such as nitrogen, and (vi) other similar 
products. Energy Facilities also include related facilities that 
transport, handle and store fuel, such as coal handling and oil storage 
tanks, and facilities that treat waste for these entities, such as 
scrubbers, precipitators, cooling towers and water treatment 
facilities.

National Fuel Gas Company, et al. (70-9175)

    National Fuel Gas Company (``National''), a registered holding 
company, and its wholly owned nonutility subsidiary, National Fuel Gas 
Supply Corporation (``Supply''), both located at 10 Lafayette Square, 
Buffalo, New York 14203, have filed an application-declaration under 
sections 6(a), 7, 9(a) and 10 of the Act and rule 43 under the Act.\4\
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    \4\ National and its subsidiaries are collectively referred to 
as the ``National Fuel Gas System.'' In addition to Supply, 
National's subsidiaries consist of National Fuel Gas Distribution 
Corporation (``Distribution''), Seneca Resources Corporation, 
Utility Constructors, Inc., Leidy Hub, Inc., Horizon Energy 
Development, Inc., Data-Track Account Services, Inc., National Fuel 
Resources, Inc., Highland Land & Minerals, Inc., Niagara Trading 
Inc., Niagara Independence Marketing Company, and Seneca 
Independence Pipeline Company. Distribution, National's only utility 
subsidiary, sells natural gas and provides natural gas 
transportation services through a local distribution system located 
in an area in western New York and northwestern Pennsylvania that 
includes Buffalo, Niagara Falls and Jamestown, New York and Erie and 
Sharon, Pennsylvania. Neither National nor any of its subsidiaries 
currently has an ownership interest in an exempt wholesale generator 
or foreign utility company as defined, respectively, in sections 32 
and 33 of the Act.
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    Supply is engaged in the interstate transportation and storage of 
natural gas subject to the jurisdiction of the Federal Energy 
Regulatory Commission. Cunningham Natural Gas Corporation 
(``Cunningham''), a New York corporation that is not associated with 
the National Fuel Gas System, is a nonutility company that operates two 
natural gas wells, one in Allegany County, New York, and the other in 
Potter County, Pennsylvania.\5\
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    \5\ Cunningham also operates a number of shallow oil wells in 
Pennsylvania.
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    Supply and Cunningham have entered into an Asset Purchase and 
Reorganization Agreement dated October 8, 1997 (``Agreement''), under 
which Supply, subject to certain conditions including Commission 
approval under the Act, will acquire substantially all the assets of 
Cunningham (``Assets''). the Assets to be acquired by supply include 
the following:
    (1) Cunningham's two natural gas wells, and related pipeline's, 
equipment, vehicles, leases, sales agreements and other property used 
in the production of natural gas;
    (2) Cunningham's cash, cash equivalents and receivables (except as 
identified in footnote 4, below);
    (3) Approximately 640 acres of undeveloped timber property in 
Allegany County, New York;
    (4) Any marketable securities that remain in Cunningham's accounts 
with two investment brokers \6\ at the time the Exchange (as defined 
below) is consummated (``Closing'').\7\
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    \6\ One account is with Salomon Smith Barney, and the other is 
with Edward Jones. At this time, these accounts consist entirely of 
money funds and certificates of deposit.
    \7\ The following assets of Cunningham will be excluded from the 
Exchange: (1) Cunningham's oil wells and any equipment or other 
property used by Cunningham in the production and sale of oil, which 
will be sold to one or more other parties in separate transactions; 
(2) an amount of cash or cash equivalents (not to exceed $300,000) 
retained by Cunningham to pay deferred compensation obligations 
predating the Agreement; and (3) two pickup trucks and one brine 
truck, which will be sold to one or more other parties in separate 
transactions.
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    In exchange for the Assets, Cunningham will receive registered 
shares of National's common voting stock, $1 par value (``Shares''), 
having an aggregate market value (``Consideration'') as of the end of 
the last business day immediately preceding the Closing (``Valuation 
Date'') equal to the sum of the following: (1) the cash and cash 
equivalents to be transferred to Supply; (2) the market value as of the 
Valuation Date of any securities to be transferred to Supply (although 
it is expected that no securities will be transferred); (3) the unpaid 
balance of Cunningham's receivables from its gas sales customer; (4) 
the fair market value of the real property owned by Cunningham 
according to appraisals to be commissioned by Supply and Cunningham; 
and (5) an agreed-upon amount of additional consideration. Applicants 
have estimated that the sum of the above five asset categories will be 
approximately $3.158 million. A final determination of the exact value 
of the Consideration for the Assets and the precise number of Shares 
given in exchange for them will be made on the Valuation Date.
    Applicants state that, based on pro forma financial states, if the 
exchange of Assets for Shares (``Exchange'') had been consummated on 
November 30, 1997, Cunningham would have received 67,641 Shares, or 
less than \2/10\ of 1% of the 38,251,307 shares of National's common 
stock issued and outstanding as of March 17, 1998, and the market value 
of the Shares ($3.158 million) would also have amounted to a small 
fraction of 1% of the total assets of national and its subsidiaries, 
which totaled $2,350,588,000 as of November 30, 1997. Applicants state 
that the Exchange is expected to qualify for nonrecognition of gain or 
loss under section 368 of the Internal Revenue Code.
    The Shares to be exchanged for Cunningham's Assets will be 
registered with the Commission under the Securities Act of 1933, issued 
in compliance with any applicable state Blue Sky Laws, and listed on 
the New York Stock Exchange. The Shares will be exchanged without 
preference over any outstanding common stock of National as to 
dividends or distribution, and will have equal voting rights with, all 
outstanding common stock of National. In order to effectuate the 
Exchange, National will issue the Shares to Supply, and Supply will, in 
turn, pay National an amount equal to the Consideration for the 
Shares.\8\ Supply will then exchange the Shares for the Assets.\9\
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    \8\ Supply plans to finance this payment to National through 
borrowings from the National Fuel Gas System money pool. See Holding 
Co. Act Release No. 26443 (December 28, 1995).
    \9\ The Agreement contemplates that, following the Exchange, 
Cunningham would wind up its affairs under a plan of liquidation, 
where its shareholders would receive the Shares in exchange for 
their Cunningham common stock.
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    Applicants state that section 2(b) of the Gas Related Activities 
Act of 1990 (``GRAA'') is applicable to the proposed acquisition of 
Cunningham's natural gas

[[Page 16604]]

properties for purposes of determining whether the functional 
relationship requirement of section 11(b)(1) of the Act is 
satisfied.\10\ In this regard, Applicants state that the proposed 
acquisition is expected to improve operations of Supply's underground 
natural gas storage facilities in Allegany and Steuben Counties, New 
York, and will be: (1) in the interest of Supply's direct and indirect 
transportation and storage customers, including Distribution, 
National's public utility subsidiary and its customers; and (2) 
nondetrimental to its customers, the public interest, investors or the 
proper functioning of the National Fuel Gas System.
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    \10\ Section 2(b) of the GRAA provides that the functional 
relationship requirement of section 11(b)(1) of the Act will be 
deemed satisfied if the Commission determines that ``(1) * * * such 
acquisition is in the interest of consumers of each gas utility 
company of [the] registered company or consumers of any other 
subsidiary of such registered company; and (2) *  *  * such 
acquisition will not be detrimental to the interest of consumers of 
any such gas utility company or other subsidiary or to the proper 
functioning of the registered holding company system.''
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    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-8718 Filed 4-2-98; 8:45 am]
BILLING CODE 8010-01-M