FERC Issues Letter Authorizing Southwestern Electric Power Company to Issue Secured and Unsecured, Long-term Debt Securities That Consist of First Mortgage Bonds, Pollution Control Revenue Bonds, etc. Under ES14-24
WASHINGTON, Feb. 26 -- The U.S. Department of Energy'sFederal Energy Regulatory Commission issued the text of the following delegated order:
In Reply Refer To:
Docket Nos. ES14-24-000
February 26, 2014
Southwestern Electric Power Company
Attention: Ms. Renee V. Hawkins
1 Riverside Plaza
Columbus, Ohio 43215
Dear Ms. Hawkins:
On January 24, 2014, as supplemented on February 12, 2014, you filed an application pursuant to section 204 of the Federal Power Act, 16 U.S.C. section 824c (2012), requesting that the Commission authorize Southwestern Electric Power Company (Southwestern Electric) to issue secured and unsecured, long-term debt securities that consist of first mortgage bonds, pollution control revenue bonds, notes (secured and unsecured), debentures and preferred securities in an aggregate principal amount not to exceed $400 million. Southwestern Electric also requests authorization to issue long-term debt to its corporate parent American Electric Power Company, Inc. (AEP). Your application is granted as detailed in the authorization section of this letter.
Southwestern Electric states that the securities will be issued at an interest rate based upon the 30-year treasury rate as referenced at www.treasury.gov, plus up to 350 basis points.
Southwestern Electric also requests a waiver of the Commission's competitive bidding and negotiated placement requirements at 18 C.F.R. section 34.2.
On February 21, 2003, the Commission issued an order announcing four restrictions on all future public utility issuances of secured and unsecured debt. First, public utilities seeking authorization to issue debt backed by a utility asset must use the proceeds of the debt for utility purposes. Second, if any utility assets that secure debt issuances are divested or "spun off," the debt must follow the asset and also be divested or "spun off." Third, if any of the proceeds from unsecured debt are used for non-utility purposes, the debt must follow the non-utility assets. Specifically, if the non-utility assets are divested or "spun-off," then a proportionate share of the debt must follow the divested or "spun-off" non-utility asset. Finally, if utility assets financed by unsecured debt are divested or "spun-off" to another entity, then a proportionate share of the debt must also be divested or "spun off."
Notices of the filings were published in the Federal Register, with protests or interventions due on or before February 14, 2014 and February 24, 2014. No interventions or protests opposing the granting of the requested authorization were filed.
Southwestern Electric is authorized to issue secured and unsecured, long-term debt securities that consist of first mortgage bonds, pollution control revenue bonds, notes (secured and unsecured), debentures and preferred securities in an aggregate principal amount not to exceed $400 million, including issuances of such long-term debt securities to AEP. The securities will be issued at an interest rate based upon the 30-year treasury rate as referenced at www.treasury.gov, plus up to 350 basis points. Southwestern Electric is authorized to issue such long-term debt, upon the terms and conditions and for the purposes specified in the application subject to the following conditions:
This authorization is effective as of the date of this letter order and terminates on February 28, 2016
The securities are subject to the Commission's restrictions on secured and unsecured debt as outlined above and in Westar.
Southwestern Electric is granted waiver from compliance with the Commission's competitive bidding and negotiated placement requirements at 18 C.F.R. section 34.2 (2013).
Southwestern Electric must file a Report of Securities Issued, under 18 C.F.R. sections 34.9 and 131.43, no later than 30 days after the sale or placement of long-term debt or equity securities or the entry into guarantees or assumptions of liabilities pursuant to authority granted under this part.
This authorization is without prejudice to the authority of the Commission or any other regulatory body with respect to rates, service, accounts, valuation, estimates or determination of cost or any other matter whatsoever now pending or which may come before this Commission.
Nothing in this letter order shall be construed to imply any guarantee or obligation on the part of the United States with respect to any security to which this letter order relates.
Authority to act on this matter is delegated to the Director, Division of Tariffs and Market Development - West, under 18 C.F.R. section 375.307 (2013). This order constitutes final agency action. Requests for rehearing by the Commission may be filed within thirty (30) days of the date of issuance of this order, pursuant to 18 C.F.R. section 385.713 (2013).
If you have any questions concerning this letter order, please contact Tina C. Briscoe at (202) 502-8751 or Andrew P. Mosier, Jr. at (202) 502-6274.
Steve P. Rodgers, Director
Division of Electric Power Regulation - West
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