[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]
-----------------------------------------------------------------------
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.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
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%.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
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
