Registration No. 333-______
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
Ohio Power Company
(Exact name of registrant as specified in its charter)
Ohio 31-4271000
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1 Riverside Plaza
Columbus, Ohio 43215
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (614) 716-1000
GEOFFREY S. CHATAS, Treasurer
JEFFREY D. CROSS, Senior Vice President and General Counsel
AMERICAN ELECTRIC POWER SERVICE CORPORATION
1 Riverside Plaza
Columbus, Ohio 43215
(614) 716-1580
(Name, address and telephone number, including
area code, of agent for service)
It is respectfully requested that the Commission send copies of
all notices, orders and communications to:
Simpson Thacher & Bartlett LLP Dewey Ballantine LLP
425 Lexington Avenue 1301 Avenue of the Americas
New York, NY 10017-3909 New York, NY 10019-6092
Attention: James M. Cotter Attention: E. N. Ellis, IV
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Approximate date of commencement of proposed sale to the public: As soon
as practicable after the effective date of the Registration Statement.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, please check the following box. [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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Title of
Each Class Proposed Proposed
Of Maximum Maximum
Securities Amount Offering Aggregate
to be to be Price Offering Amount of
Registered Registered Per Unit* Price* Registration Fee
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Unsecured
Notes $650,000,000 100% $650,000,000 $52,585
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*Estimated solely for purpose of calculating the registration fee.
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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The information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and is not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED JUNE 18, 2003
PROSPECTUS
OHIO POWER COMPANY
1 Riverside Plaza
Columbus, Ohio 43215
614-716-1000
$650,000,000
UNSECURED NOTES
TERMS OF SALE
A prospectus supplement or pricing supplement will include the final terms
for each note. If we decide to list upon issuance any note or notes on a
securities exchange, a prospectus supplement or pricing supplement will identify
the exchange and state when we expect trading could begin. The following terms
may apply to the notes that we may sell at one or more times.
- Mature 9 months to 50 years
- Fixed or floating interest rate
- Remarketing features
- Certificate or book-entry form
- Subject to redemption
- Not convertible, amortized or subject to a sinking fund
- Interest paid on fixed rate notes quarterly or semi-annually
- Interest paid on floating rate notes monthly, quarterly, semi-annually,
or annually
- Issued in multiples of a minimum denomination
- Issued with original issue discount
INVESTING IN THESE NOTES INVOLVES RISKS. SEE THE SECTION ENTITLED "RISK
FACTORS" BEGINNING ON PAGE 2 FOR MORE INFORMATION.
The notes have not been approved or disapproved by the Securities and Exchange
Commission or any state securities commission, nor have these organizations
determined that this prospectus is accurate or complete. Any representation to
the contrary is a criminal offense.
The date of this prospectus is ____________, 2003.
THE COMPANY
We generate, sell, purchase, transmit and distribute electric power. We
serve approximately 702,000 customers in Ohio. We also sell and transmit power
at wholesale to other electric utilities, municipalities, electric cooperatives
and non-utility entities engaged in the wholesale power market. Our principal
executive offices are located at 1 Riverside Plaza, Columbus, Ohio 43215
(telephone number 614-716-1000). We are a subsidiary of American Electric Power
Company, Inc. ("AEP"), a public utility holding company, and we are a part of
the American Electric Power integrated utility system. The executive offices of
AEP are located at 1 Riverside Plaza, Columbus, Ohio 43215 (telephone number
614-716-1000).
RISK FACTORS
RISKS RELATED TO OUR REGULATED BUSINESS AND EVOLVING REGULATION
We may need regulatory or other approval to remain functionally separated; if we
are unable to remain functionally separated, we need SEC approval.
We currently operate as a functionally separated electric utility and no
longer charge bundled rates for our retail sales of electricity. Ohio has
enacted restructuring legislation (S.B.3) that provides for the legal separation
of our generation-related assets from our electric transmission and distribution
assets (Transmission and Distribution Business). The Public Utilities Commission
of Ohio (PUCO) has approved our transition plan to legally separate our
Transmission and Distribution Business as provided by Ohio restructuring
legislation. We are currently determining, however, the regulatory feasibility
of complying with restructuring legislation through continued functional
separation. Assuming regulatory compliance, it is currently our intention to
remain functionally separated.
Our compliance with restructuring legislation through continued functional
separation during the market development period provided for in S.B.3
(Development Period) may require the approval of or notification to the PUCO; it
may also require notification to the Federal Energy Regulatory Commission (FERC)
and the Securities and Exchange Commission (SEC). Furthermore, following the end
of the Development Period, given the current uncertainty with respect to the
method by which default service market rates will be determined, there is some
question as to whether we would be required under S.B.3 to legally separate.
Further action by the PUCO may be necessary to resolve this question. We can
give no assurance that we can remain functionally separated.
If we are unable to remain functionally separated and we are required to
legally separate, we would still need SEC approval to legally separate. We can
give no assurance that the SEC would not impose material adverse terms as a
condition to approving our legal separation.
We operate in a changing regulatory environment.
Our business plan is based on the provision of distribution services at
PUCO-established rates and the provision of transmission services at
FERC-established rates and assumes that deregulated generation in Ohio will not
be re-regulated. There can be no assurance that Ohio will not reverse or revise
its current regulatory initiatives, and there can be no assurance that recent
federal legislative and regulatory initiatives, which have been designed to
facilitate competition in the energy sector, will continue or will not be
reversed. Alteration of the regulatory landscape in which we operate will impact
the effectiveness of our business plan and may harm our financial condition and
results of operations.
RISKS RELATED TO OUR TRANSMISSION AND DISTRIBUTION BUSINESS
Our Transmission and Distribution Business is operating in a new market
environment in which our Transmission and Distribution Business and others have
little operating experience.
The competitive electric market in Ohio is new. Our Transmission and
Distribution Business has not had any significant operating history under the
market framework created by the Ohio restructuring legislation. While to date
the transition has not resulted in material difficulties, unforeseen
difficulties could develop which could become material. Additionally, structural
changes adopted to address any such difficulties could materially adversely
affect our Transmission and Distribution Business' revenues and results of
operations.
Rate regulation of our Transmission and Distribution Business may delay or deny
full recovery of costs.
Our Transmission and Distribution Business currently provides distribution
service to retail customers in Ohio at rates effectively frozen through December
31, 2007 and approved by the PUCO. These rates are regulated by the PUCO based
on an analysis of our expenses incurred in a test year. Thus, the rates we are
allowed to charge may or may not match our expenses at any given time. While
rate regulation in Ohio is premised on providing a reasonable opportunity to
earn a reasonable rate of return on invested capital, there can be no assurance
that the PUCO will judge all of our Transmission and Distribution Business'
costs to have been prudently incurred or that the regulatory process in which
rates are determined will always result in rates that will produce full recovery
of our Transmission and Distribution Business' costs.
Disruptions at power generation facilities owned by affiliates or third parties
could interrupt our Transmission and Distribution Business' sale of distribution
and transmission services.
Our Transmission and Distribution Business could depend on power
generation facilities owned by our affiliates through 2005, and following that
time, possibly third parties to provide the electric power which our
Transmission and Distribution Business transmits and distributes to our
Transmission and Distribution Business' customers. If legal separation occurs,
that entity will not own or operate any power generation facilities. If power
generation is disrupted or if power generation capacity is inadequate, our
Transmission and Distribution Business' services may be interrupted, and our
revenues, financial condition and results of operations may be adversely
affected.
Our Transmission and Distribution Business' revenues and results of operations
are subject to risks that are beyond its control.
Unless mitigated by timely and adequate regulatory recovery, the cost of
repairing damage to our Transmission and Distribution Business' facilities due
to storms, natural disasters, wars, terrorist acts and other catastrophic
events, in excess of reserves established for such repairs, may adversely impact
our Transmission and Distribution Business' revenues, operating and capital
expenses and results of operations.
Uncertainty exists regarding FERC proposed security standards.
In July 2002, the FERC published for comment its proposed security
standards as part of the Standards for Market Design. These standards are
intended to ensure all market participants have a basic security program that
effectively protects the electric grid and related market activities and require
compliance by January 1, 2004. The impact of these proposed standards is
far-reaching and has significant penalties for non-compliance. These standards
apply to marketers, transmission owners and power producers, including our
Transmission and Distribution Business. Compliance with these standards would
represent a significant effort that would impact our Transmission and
Distribution Business. Unless the cost can be recovered from customers, results
of operations and cash flows would be adversely affected.
The different regional power markets in which we compete or will compete in the
future have changing transmission regulatory structures, which could affect our
performance in these regions.
Our Transmission and Distribution Business' results are likely to be
affected by differences in the market and transmission regulatory structures in
various regional power markets. Problems or delays that may arise in the
formation and operation of new regional transmission organizations, or RTOs, may
restrict our ability to sell power produced by our generating capacity to
certain markets if there is insufficient transmission capacity otherwise
available. The rules governing the various regional power markets may also
change from time to time which could affect our costs or revenues. Because it
remains unclear which companies will be participating in the various regional
power markets, or how RTOs will develop or what regions they will cover, our
Transmission and Distribution Business is unable to assess fully the impact that
these power markets may have on its business.
In May 2002, AEP announced an agreement with the Pennsylvania-New
Jersey-Maryland RTO (the PJM) Interconnection to pursue terms for participation
in its RTO. In July 2002, the FERC tentatively approved the decision of certain
AEP subsidiaries, including us, to join PJM subject to certain conditions being
met. The performance of these conditions is only partially under AEP's control.
In October 2002, PJM announced that the referenced AEP subsidiaries and other
unaffiliated utilities planned to turn functional control of their transmission
lines over to PJM during the first quarter of 2003 and were scheduled to become
full members by May 2003. Legislation adopted in a jurisdiction in which one of
our affiliates operates and other regulatory considerations have delayed our
participation in PJM.
Management is unable to predict the outcome of the legislative and
regulatory actions and proceedings or their impact on the timing and operation
of RTOs, our Transmission and Distribution Business' operations or future
results of operations and cash flows.
RISKS RELATED TO OUR GENERATION AND RELATED ASSETS
We have limited ability to pass on to our customers our costs of production.
We are exposed to risk from changes in the market prices of coal used to
generate power. The protection afforded by retail fuel clause recovery
mechanisms was eliminated effective January 1, 2001 by the implementation of
customer choice in Ohio. Because the risk of fuel price increases, increased
environmental compliance costs and generating unit outage cannot be passed
through to customers during the Development Period in Ohio (which will end no
later than December 31, 2005), we retain these risks.
Until the end of the Development Period, our Transmission and Distribution
Business is required to provide power at capped rates, which may be below
current market rates, to retail customers that do not choose an alternative
power generation supplier. We currently provide the power that our Transmission
and Distribution Business is required to provide to non-switching customers.
This means that we bear the risk of fuel and power price increases, increased
costs of environmental compliance and generating unit outage. Following the end
of the Development Period, there is no obligation to sell to such customers at
capped generation rates. By law, the cost of generation service for customers
that do not choose an alternative power generation supplier must be at market
rates. The determination of what constitutes market rates has not been resolved
by the PUCO. If, following the end of the Development Period, our costs to
acquire or provide generation service to such customers exceed what is
determined to be market rates, our financial condition and results of operations
would be adversely affected.
Our default service does not restrict customers from switching power suppliers.
Those default service customers that we serve may choose to purchase power
from alternative suppliers. Should they choose to switch from us, our sales of
power may decrease. Customers originally choosing alternative suppliers may
later switch to our default service obligations. This may increase demand above
our facilities' available capacity. Thus, any such switching by customers could
have an adverse effect on our results of operations and financial position.
Conversely, to the extent the power sold by us to meet the default service
obligations could have been sold to third parties at more favorable wholesale
prices, we will have incurred potentially significant lost opportunity costs.
Changes in commodity prices may increase our cost of producing power or decrease
the amount we receive from selling power, harming our financial performance.
We are heavily exposed to changes in the price and availability of coal
because virtually all of our generating capacity is coal-fired. We have
contracts of varying durations for the supply of coal for most of our existing
generation capacity, but as these contracts end, we may not be able to purchase
coal on terms as favorable as the current contracts.
Changes in the cost of coal and changes in the relationship between such
cost and the market price of power will affect our financial results. Since the
price we obtain for power may not change at the same rate as the change in coal
costs, we may be unable to pass on the changes in costs to our customers. In
addition, the price we can charge our retail customers in Ohio is frozen through
December 31, 2005.
In addition, actual power prices and fuel costs will differ from those
assumed in financial projections used to initially value our trading and
marketing transactions, and those differences may be material. As a result, our
financial results may be diminished in the future as those transactions are
marked to market.
We may not be able to respond effectively to competition from other generation
companies.
We may not be able to respond in a timely or effective manner to the many
changes in the power industry that may occur as a result of regulatory
initiatives to increase competition. To the extent that competition increases,
our profit margins may be negatively affected. Industry deregulation may not
only continue to facilitate the current trend toward consolidation in the
utility industry but may also encourage the disaggregation of other vertically
integrated utilities into separate generation, transmission and distribution
businesses. As a result, additional competitors in our industry may be created,
and we may not be able to maintain our revenues and earnings levels.
While demand for power is generally increasing throughout the United
States, the rate of construction and development of new, more efficient electric
generation facilities may exceed increases in demand in some regional electric
markets. The start-up of new facilities in our regional markets could increase
competition in the wholesale power market in our region, which could harm our
business, results of operations and financial condition. Also, industry
restructuring in our region could affect our operations in a manner that is
difficult to predict, since the effects will depend on the form and timing of
the restructuring.
Our costs of compliance with environmental laws are significant, and the cost of
compliance with future environmental laws could harm our cash flow and
profitability.
Our operations are subject to extensive federal, state and local
environmental statutes, rules and regulations relating to air quality, water
quality, waste management, natural resources and health and safety. Compliance
with these legal requirements requires us to commit significant capital toward
environmental monitoring, installation of pollution control equipment, emission
fees and permits at all of our facilities. These expenditures have been
significant in the past, and we expect that they will increase in the future.
Costs of compliance with environmental regulations could harm our industry, our
business and our results of operations and financial position, especially if
emission and/or discharge limits are tightened, more extensive permitting
requirements are imposed, additional substances become regulated and the number
and types of assets we operate increase.
We anticipate that we will incur considerable capital costs for environmental
compliance.
Virtually all of our generating capacity is coal burning. We plan to
install new emissions control equipment and may be required to upgrade existing
equipment, purchase emissions allowances or reduce operations. We expect to
spend between $495 and $824 million (of which $404 million had been expended as
of March 31, 2003) in connection with the installation of emission control
equipment at our facilities to comply with the new nitrogen oxide emission rules
under the Clean Air Act. Moreover, environmental laws are subject to change,
which may materially increase our costs of compliance or accelerate the timing
of these capital expenditures. Our compliance strategy, although reasonably
based on the information available to us today, may not successfully address the
relevant standards and interpretations of the future.
Governmental authorities may assess penalties on us for failures to comply with
environmental laws and regulations.
If we fail to comply with environmental laws and regulations, even if
caused by factors beyond our control, that failure may result in the assessment
of civil or criminal penalties and fines against us. Recent lawsuits by the U.S.
Environmental Protection Agency (EPA) and various states filed against us
highlight the environmental risks faced by generating facilities, in general,
and coal-fired generating facilities, in particular.
Since 1999, we and some of our affiliates have been involved in litigation
regarding generating plant emissions under the Clean Air Act. EPA and a number
of states alleged that we and eleven unaffiliated utilities modified certain
units at coal-fired generating plants in violation of the Clean Air Act. EPA
filed complaints against us and some of our affiliated public utility
subsidiaries in U.S. District Court for the Southern District of Ohio. A
separate lawsuit initiated by certain special interest groups was consolidated
with the EPA case. The alleged modification of the generating units occurred
over a 20 year period.
If these actions are resolved against us, substantial modifications of our
existing coal-fired power plants would be required. In addition, we could be
required to invest significantly in additional emission control equipment,
accelerate the timing of capital expenditures, pay penalties and/or halt
operations at certain plants. Moreover, our results of operations could be
reduced and our financial position could suffer due to the consequent
distraction of management and the expense of ongoing litigation.
We are unlikely to be able to pass on the cost of environmental compliance to
our customers.
Most of our contracts with wholesale customers do not permit us to recover
additional capital and other costs incurred by us to comply with new
environmental regulations. Due to the deregulation of generation in Ohio, we
cannot currently recover through increased rates additional capital and other
costs incurred by us to comply with new environmental regulations with respect
to our generation previously regulated in Ohio.
Our operating results may fluctuate on a seasonal and quarterly basis
reflecting, in part, weather conditions.
Electric power generation is generally a seasonal business. In many parts
of the country, demand for power peaks during the hot summer months, with market
prices also peaking at that time. In other areas, power demand peaks during the
winter. As a result, our overall operating results in the future may fluctuate
substantially on a seasonal basis. The pattern of this fluctuation may change
depending on the terms of power sale contracts we enter into. In addition, we
have historically sold less power, and consequently earned less income, when
weather conditions are milder. We expect that unusually mild weather in the
future could diminish our results of operations and harm our financial
condition.
Changes in technology may significantly affect our business by making our power
plants less competitive.
A key element of our business model is that generating power at central
power plants achieves economies of scale and produces power at relatively low
cost. There are other technologies that produce power, most notably fuel cells,
microturbines, windmills and photovoltaic (solar) cells. It is possible that
advances in technology will reduce the cost of alternative methods of producing
power to a level that is competitive with that of most central power station
electric production. If this were to happen and if these technologies achieved
economies of scale, our market share could be eroded, and the value of our power
plants could be reduced. Changes in technology could also alter the channels
through which retail electric customers buy power, thereby harming our financial
results.
RISKS RELATED TO OUR POWER TRADING AND WHOLESALE BUSINESSES
In October 2002, AEP announced its plans to reduce the exposure to energy
trading markets of its subsidiaries that trade power (including us) and to
downsize the trading and wholesale marketing operations conducted on behalf of
such subsidiaries. Our power trading and marketing operations are limited to
risk management around our generation assets and those of our regulated
affiliates. Management is unable to predict the effect this downsizing of our
trading operations will have on our future results of operations and cash flows.
The following risk factors appearing under this subheading should be read in
light of the announcements discussed in this paragraph.
Our revenues and results of operations are subject to market risks that are
beyond our control.
We sell a portion of the power from our generation facilities into the
spot market or other competitive power markets or on a contractual basis. We
also enter into contracts to purchase and sell electricity as part of our power
marketing and trading operations. With respect to such transactions, we are not
guaranteed any rate of return on our capital investments through regulated
rates, and our revenues and results of operations are likely to depend, in large
part, upon prevailing market prices for power in our regional markets and other
competitive markets. These market prices may fluctuate substantially over
relatively short periods of time. It is reasonable to expect that trading
margins may erode as markets mature and that there may be diminished
opportunities for gain should volatility decline. In addition, the FERC, which
has jurisdiction over wholesale power rates, as well as independent system
operators that oversee some of these markets, may impose price limitations,
bidding rules and other mechanisms to address some of the volatility in these
markets. Fuel prices may also be volatile, and the price we can obtain for power
sales may not change at the same rate as changes in fuel costs. These factors
could reduce our margins and therefore diminish our revenues and results of
operations.
Volatility in market prices for fuel and power may result from:
weather conditions;
seasonality;
power usage;
illiquid markets;
transmission or transportation constraints or inefficiencies;
availability of competitively priced alternative energy sources;
demand for energy commodities;
natural gas, crude oil and refined products, and coal production levels;
natural disasters, wars, embargoes and other catastrophic events; and
federal, state and foreign energy and environmental regulation and
legislation.
Our power trading (including fuel procurement and power marketing) and risk
management policies cannot eliminate the risk associated with these activities.
Our power trading (including fuel procurement and power marketing)
activities expose us to risks of commodity price movements. We attempt to manage
our exposure through enforcement of established risk limits and risk management
procedures. These risk limits and risk management procedures may not always be
followed or may not work as planned and cannot eliminate the risks associated
with these activities. As a result, we cannot predict the impact that our power
trading and risk management decisions may have on our business, operating
results or financial position.
We routinely have open trading positions in the market, within established
guidelines, resulting from the management of our trading portfolio. To the
extent open trading positions exist, fluctuating commodity prices can improve or
diminish our results of operations and financial position.
Our power trading and risk management activities, including our power
sales agreements with counterparties, rely on projections that depend heavily on
judgments and assumptions by management of factors such as the future market
prices and demand for power and other energy-related commodities. These factors
become more difficult to predict and the calculations become less reliable the
further into the future these estimates are made. Even when our policies and
procedures are followed and decisions are made based on these estimates, results
of operations may be diminished if the judgments and assumptions underlying
those calculations prove to be wrong or inaccurate.
Our financial performance may be adversely affected if we are unable to
successfully operate our electric generating facilities.
Our performance depends on the successful operation of our electric
generating facilities. Operating electric generating facilities involves many
risks, including:
o operator error and breakdown or failure of equipment or processes;
o operating limitations that may be imposed by environmental or other
regulatory requirements;
o labor disputes;
o fuel supply interruptions; and
o catastrophic events such as fires, earthquakes, explosions, floods or
other similar occurrences.
A decrease or elimination of revenues from power produced by our electric
generating facilities or an increase in the cost of operating the facilities
would adversely affect our results of operations.
Parties with whom we have contracts may fail to perform their obligations, which
could harm our results of operations.
We are exposed to the risk that counterparties that owe us money or power
will breach their obligations. Should the counterparties to these arrangements
fail to perform, we may be forced to enter into alternative hedging arrangements
or honor underlying commitments at then-current market prices that may exceed
our contractual prices, which would cause our financial results to be diminished
and we might incur losses. As reported in the national press, the credit
downgrades of numerous participants in this market would suggest that credit
rating agencies have concluded that the risk of default by such participants has
increased. Although our estimates take into account the expected probability of
default by a counterparty, our actual exposure to a default by a counterparty
may be greater than the estimates predict if defaults by counterparties exceed
our estimates.
We rely on electric transmission facilities that we do not own or control. If
these facilities do not provide us with adequate transmission capacity, we may
not be able to deliver our wholesale electric power to the purchasers of our
power.
We depend on transmission facilities owned and operated by other
unaffiliated power companies to deliver the power we sell at wholesale. This
dependence exposes us to a variety of risks. If transmission is disrupted, or
transmission capacity is inadequate, we may not be able to sell and deliver our
wholesale power. If a region's power transmission infrastructure is inadequate,
our recovery of wholesale costs and profits may be limited. If restrictive
transmission price regulation is imposed, the transmission companies may not
have sufficient incentive to invest in expansion of transmission infrastructure.
The FERC has issued electric transmission initiatives that require
electric transmission services to be offered unbundled from commodity sales.
Although these initiatives are designed to encourage wholesale market
transactions for electricity, access to transmission systems may in fact not be
available if transmission capacity is insufficient because of physical
constraints or because it is contractually unavailable. We also cannot predict
whether transmission facilities will be expanded in specific markets to
accommodate competitive access to those markets.
We do not fully hedge against price changes in commodities.
We routinely enter into contracts to purchase and sell electricity as part
of our power marketing and trading operations and to procure fuel. In connection
with these trading activities, we routinely enter into financial contracts,
including futures and options, over-the-counter options, swaps and other
derivative contracts. These activities expose us to risks from price movements.
If the values of the financial contracts change in a manner we do not
anticipate, it could harm our financial position or reduce the financial
contribution of our trading operations.
We manage our exposure by establishing risk limits and entering into
contracts to offset some of our positions (i.e., to hedge our exposure to
demand, market effects of weather and other changes in commodity prices).
However, we do not always hedge the entire exposure of our operations from
commodity price volatility. To the extent we do not hedge against commodity
price volatility, our results of operations and financial position may be
improved or diminished based upon our success in the market.
We are unable to predict the course, results or impact, if any, of current or
future energy market investigations.
In February 2002, the FERC issued an order directing its staff to conduct
a fact-finding investigation into whether any entity, including Enron Corp.,
manipulated short-term prices in electric energy or natural gas markets in the
West or otherwise exercised undue influence over wholesale prices in the West,
for the period January 1, 2000, forward. In April 2002, AEP furnished certain
information to the FERC in response to their related data request.
Pursuant to the FERC's February order, on May 8, 2002, the FERC issued
further data requests, including requests for admissions, with respect to
certain trading strategies engaged in by Enron Corp. and, allegedly, traders of
other companies active in the wholesale electricity and ancillary services
markets in the West, particularly California, during the years 2000 and 2001.
This data request was issued to AEP as part of a group of over 100 entities
designated by the FERC as all sellers of wholesale electricity and/or ancillary
services to the California Independent System Operator and/or the California
Power Exchange.
The May 8, 2002 FERC data request required senior management to conduct an
investigation into AEP's trading activities during 2000 and 2001 and to provide
an affidavit as to whether AEP engaged in certain trading practices that the
FERC characterized in the data request as being potentially manipulative. AEP's
senior management complied with the order and denied its involvement with those
trading practices.
On May 21, 2002, the FERC issued a further data request with respect to
this matter to AEP and over 100 other market participants requesting information
for the years 2000 and 2001 concerning "wash," "round trip" or "sale/buy back"
trading in the Western System Coordinating Council (WSCC), which involves the
sale of an electricity product to another company together with a simultaneous
purchase of the same product at the same price (collectively, wash sales).
Similarly, on May 22, 2002, the FERC issued an additional data request with
respect to this matter to AEP and other market participants requesting similar
information for the same period with respect to the sale of natural gas products
in the WSCC and Texas. After reviewing its records, AEP responded to the FERC
that it did not participate in any "wash sale" transactions involving power or
gas in the relevant market. AEP further informed the FERC that certain of its
traders did engage in trades on the Intercontinental Exchange, an electronic
electricity trading platform owned by a group of electricity trading companies,
including AEP, on September 21, 2001, the day on which all brokerage commissions
for trades on that exchange were donated to charities for the victims of the
September 11, 2001 terrorist attacks, which do not meet the FERC criteria for a
"wash sale" but do have certain characteristics in common with such sales.
The Public Utility Commission of Texas, which has jurisdiction over
several of our affiliates, also issued similar data requests to us and other
power marketers. We responded to such data request by the July 2, 2002 response
date. The U.S. Commodity Futures Trading Commission (CFTC) issued a subpoena to
us on June 17, 2002 requesting information with respect to "wash sale" trading
practices. We responded to the CFTC.
In August 2002, AEP received an informal data request from the SEC asking
it to voluntarily provide documents related to "round-trip" or "wash" trades and
AEP has provided the requested information to the SEC. In March 2003, we
received a subpoena from the SEC. The subpoena seeks additional information and
is part of the SEC's formal investigative process. We responded to the subpoena
in April 2003. AEP recently completed a review of its trading activities in the
United States for the last three years involving sequential trades with the same
terms and counterparties. The revenue from such trading is not material to
either our financial statements or AEP's. We believe that substantially all
these transactions involve economic substance and risk transference and do not
constitute "wash sales".
Management is unable to predict the course or outcome of these or any
future energy market investigations or their impact, if any, on power commodity
trading generally or, more specifically, on our trading operations or future
results of operations and cash flows.
Diminished liquidity in the wholesale power markets could negatively impact our
earnings.
The Enron Corp. bankruptcy and enhanced regulatory scrutiny have
contributed to more rigorous credit rating review of wholesale power market
participants. Credit downgrades of numerous other market participants have
significantly reduced such participants' participation in the wholesale power
markets. Likewise, numerous market participants have announced material scaling
back of or exit from the wholesale power market business. These events are
causing a decrease in the number of significant participants in the wholesale
power markets, at least temporarily, which has resulted and could continue to
result in a decrease in the volume and liquidity in the wholesale power markets.
We are unable to predict the impact of such developments on our power marketing
and trading business.
Potential for disruption exists if the delay of a FERC market power mitigation
order is lifted.
A FERC order on AEP's triennial market based wholesale power rate
authorization update required certain mitigation actions that certain AEP
subsidiaries, including us, would need to take for sales/purchases within its
control area and required AEP to post information on its website regarding its
power systems status. As a result of a request for rehearing filed by AEP and
other market participants, FERC issued an order delaying the effective date of
the mitigation plan until after a planned technical conference on market power
determination. No such conference has been held and management is unable to
predict the timing of any further action by the FERC or its affect on future
results of our operations and cash flows.
RISKS RELATED TO MARKET OR ECONOMIC VOLATILITY
We are subject to risks associated with a changing economic environment.
In response to the occurrence of several recent events, including the
September 11, 2001 terrorist attack on the United States, the ongoing war
against terrorism by the United States and the bankruptcy of Enron Corp., the
financial markets have been disrupted in general, and the availability and cost
of capital for our business and that of our competitors has been at least
temporarily harmed. In addition, following the bankruptcy of Enron Corp., the
credit ratings agencies initiated a thorough review of the capital structure and
earnings power of energy companies, including us. These events could constrain
the capital available to our industry and could limit our access to funding for
our operations. Our business is capital intensive, and we are dependent upon our
ability to access capital at rates and on terms we determine to be attractive.
If our ability to access capital becomes significantly constrained, our interest
costs will likely increase and our financial condition and results of operations
could be adversely affected.
The insurance industry has also been disrupted by these events. As a
result, the availability of insurance covering risks we and our competitors
typically insure against may decrease. In addition, the insurance we are able to
obtain may have higher deductibles, higher premiums and more restrictive policy
terms.
A downgrade in our credit rating or that of AEP could negatively affect our
ability to access capital and/or to operate our power trading businesses.
Standard & Poor's and Moody's rate our senior, unsecured debt at BBB and
A3, respectively. If Moody's or Standard & Poor's were to downgrade our
long-term rating, particularly below investment grade, our borrowing costs would
increase, which would diminish our financial results. In addition, we would
likely be required to pay a higher interest rate in future financings, and our
potential pool of investors and funding sources could decrease.
On February 10, 2003, Moody's downgraded AEP's short-term debt rating to
P-3 (with stable outlook) from P-2. On March 7, 2003, Standard & Poor's affirmed
AEP's short-term rating of A-2 with stable outlook. As a result of the Moody's
downgrade, AEP's access to the commercial paper market may be limited and our
short-term debt borrowing costs may increase because we conduct our short-term
borrowing through AEP and on the same terms available to AEP.
Our power trading business relies on the investment grade ratings of our
senior, unsecured debt. Most of our counterparties require the creditworthiness
of an investment grade entity to stand behind transactions. If our rating were
to decline below investment grade, our ability to profitably operate our power
trading business would be diminished, because we would likely have to deposit
cash or cash related instruments, which would reduce our profits.
PROSPECTUS SUPPLEMENTS
We may provide information to you about the notes in up to three separate
documents that progressively provide more detail: (a) this prospectus provides
general information some of which may not apply to your notes, (b) the
accompanying prospectus supplement provides more specific terms of your notes,
and (c) if not in the accompanying prospectus supplement, the pricing supplement
will provide the final terms of your notes. It is important for you to consider
the information contained in this prospectus, the prospectus supplement and the
pricing supplement in making your investment decision.
RATIO OF EARNINGS TO FIXED CHARGES
The Ratio of Earnings to Fixed Charges for each of the periods indicated
is as follows:
Twelve Months Ended Ratio
December 31, 1998 3.28
December 31, 1999 3.43
December 31, 2000 2.75
December 31, 2001 2.77
December 31, 2002 3.55
March 31, 2003 3.73
For purposes of computing this ratio (a) earnings consist of income before
provision for income taxes and fixed charges and (b) fixed charges consist of
interest expense, amortization of debt expense and pretax preferred stock
dividend requirements.
For current information on the Ratio of Earnings to Fixed Charges, please
see our most recent Form 10-K and 10-Q. See Where You Can Find More Information.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a registration statement we filed with the SEC.
We also file annual, quarterly and special reports and other information with
the SEC. You may read and copy any document we file at the SEC's Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call
the SEC at 1-800-SEC-0330 for further information on the Public Reference Room.
You may also examine our SEC filings through the SEC's web site at
http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information that we file
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings made
with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934 until we sell all the notes.
Annual Report on Form 10-K for the year ended December 31, 2002;
Quarterly Report on Form 10-Q for the quarter ended March 31, 2003; and
Current Reports on Form 8-K filed February 5, 2003 and May 14, 2003.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Mr. R. Todd Rimmer
American Electric Power Service Corporation
1 Riverside Plaza
Columbus, Ohio 43215
614-716-1000
You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement. We have not authorized anyone
else to provide you with different information. We are not making an offer of
these notes in any state where the offer is not permitted. You should not assume
that the information in this prospectus or any supplement is accurate as of any
date other than the date on the front of those documents.
USE OF PROCEEDS
Unless otherwise stated in a prospectus supplement, the net proceeds from
the sale of the notes will be used for general corporate purposes relating to
our utility business. These purposes include redeeming or repurchasing
outstanding debt, including short-term debt, advances from affiliates or
preferred stock and replenishing working capital. If we do not use the net
proceeds immediately, we temporarily invest them in short-term, interest-bearing
obligations. We estimate that our construction costs in 2003 will approximate
$241,000,000. We had $239,328,000 of advances from affiliates outstanding as of
March 31, 2003.
DESCRIPTION OF THE NOTES
General
We will issue the notes under the Indenture dated September 1, 1997 (as
previously supplemented and amended) between us and the Trustee, Deutsche Bank
Trust Company Americas, formerly known as Bankers Trust Company. This prospectus
briefly outlines some provisions of the Indenture. If you would like more
information on these provisions, you should review the Indenture and any
supplemental indentures or company orders that we have filed or will file with
the SEC. See Where You Can Find More Information on how to locate these
documents. You may also review these documents at the Trustee's offices at 60
Wall Street, New York, New York.
The Indenture does not limit the amount of notes that may be issued. The
Indenture permits us to issue notes in one or more series or tranches upon the
approval of our board of directors and as described in one or more company
orders or supplemental indentures. Each series of notes may differ as to their
terms. The Indenture also gives us the ability to reopen a previous issue of a
series of notes and issue additional notes of such series.
The notes are unsecured and will rank equally with all our unsecured
unsubordinated debt. Substantially all of our fixed properties and franchises
are subject to the lien of our first mortgage bonds issued under and secured by
a Mortgage and Deed of Trust, dated as of October 1, 1938 (as previously
supplemented and amended) between us and JPMorgan Chase Bank, formerly The Chase
Manhattan Bank, as Trustee. For current information on our debt outstanding see
our most recent Form 10-K and 10-Q. See Where You Can Find More Information.
The notes will be denominated in U.S. dollars and we will pay principal
and interest in U.S. dollars. Unless an applicable pricing or prospectus
supplement states otherwise, the notes will not be subject to any conversion,
amortization, or sinking fund. We expect that the notes will be "book-entry,"
represented by a permanent global note registered in the name of The Depository
Trust Company, or its nominee. We reserve the right, however, to issue note
certificates registered in the name of the noteholders.
In the discussion that follows, whenever we talk about paying principal on
the notes, we mean at maturity or redemption. Also, in discussing the time for
notices and how the different interest rates are calculated, all times are New
York City time and all references to New York mean the City of New York, unless
otherwise noted.
The following terms may apply to each note as specified in the applicable
pricing or prospectus supplement and the note.
Redemptions
If we issue redeemable notes, we may redeem such notes at our option
unless an applicable pricing or prospectus supplement states otherwise. The
pricing or prospectus supplement will state the terms of redemption. We may
redeem notes in whole or in part by delivering written notice to the noteholders
no more than 60, and not less than 30, days prior to redemption. If we do not
redeem all the notes of a series at one time, the Trustee selects the notes to
be redeemed in a manner it determines to be fair.
Remarketed Notes
If we issue notes with remarketing features, an applicable pricing or
prospectus supplement will describe the terms for the notes including: interest
rate, remarketing provisions, our right to redeem notes, the holders' right to
tender notes, and any other provisions.
Book-Entry Notes - Registration, Transfer, and Payment of Interest and Principal
Unless otherwise stated in a prospectus supplement, book-entry notes of a
series will be issued in the form of a global note that the Trustee will deposit
with The Depository Trust Company, New York, New York ("DTC"). This means that
we will not issue note certificates to each holder. One or more global notes
will be issued to DTC who will keep a computerized record of its participants
(for example, your broker) whose clients have purchased the notes. The
participant will then keep a record of its clients who purchased the notes.
Unless it is exchanged in whole or in part for a note certificate, a global note
may not be transferred; except that DTC, its nominees, and their successors may
transfer a global note as a whole to one another.
Beneficial interests in global notes will be shown on, and transfers of
global notes will be made only through, records maintained by DTC and its
participants.
DTC has provided us the following information: DTC is a limited-purpose
trust company organized under the New York Banking Law, a "banking organization"
within the meaning of the New York Banking Law, a member of the United States
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code and a "clearing agency" registered under the
provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds
securities that its participants ("Direct Participants") deposit with DTC. DTC
also records the settlement among Direct Participants of securities
transactions, such as transfers and pledges, in deposited securities through
computerized records for Direct Participants' accounts. This eliminates the need
to exchange note certificates. Direct Participants include securities brokers
and dealers, banks, trust companies, clearing corporations and certain other
organizations.
Other organizations such as securities brokers and dealers, banks and
trust companies that work through a Direct Participant also use DTC's book-entry
system. The rules that apply to DTC and its participants are on file with the
SEC.
A number of its Direct Participants and the New York Stock Exchange, Inc.,
The American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. own DTC.
We will wire principal and interest payments to DTC's nominee. We and the
Trustee will treat DTC's nominee as the owner of the global notes for all
purposes. Accordingly, we, the Trustee and any paying agent will have no direct
responsibility or liability to pay amounts due on the global notes to owners of
beneficial interests in the global notes.
It is DTC's current practice, upon receipt of any payment of principal or
interest, to credit Direct Participants' accounts on the payment date according
to their respective holdings of beneficial interests in the global notes as
shown on DTC's records. In addition, it is DTC's current practice to assign any
consenting or voting rights to Direct Participants whose accounts are credited
with notes on a record date. The customary practices between the participants
and owners of beneficial interests will govern payments by participants to
owners of beneficial interests in the global notes and voting by participants,
as is the case with notes held for the account of customers registered in
"street name." However, payments will be the responsibility of the participants
and not of DTC, the Trustee or us.
According to DTC, the foregoing information with respect to DTC has been
provided to the Direct Participants and other members of the financial community
for informational purposes only and is not intended to serve as a
representation, warranty or contract modification of any kind.
Notes represented by a global note will be exchangeable for note
certificates with the same terms in authorized denominations only if:
o DTC notifies us that it is unwilling or unable to continue as depositary
or if DTC ceases to be a clearing agency registered under applicable law
and a successor depositary is not appointed by us within 90 days; or
o we determine not to require all of the notes of a series to be represented
by a global note and notify the Trustee of our decision.
Note Certificates-Registration, Transfer, and Payment of Interest and Principal
If we issue note certificates, they will be registered in the name of the
noteholder. The notes may be transferred or exchanged, pursuant to
administrative procedures in the indenture, without the payment of any service
charge (other than any tax or other governmental charge) by contacting the
paying agent. Payments on note certificates will be made by check.
Original Issue Discount
We may issue the notes at an original issue discount, bearing no interest
or bearing interest at a rate that, at the time of issuance, is below market
rate, to be sold at a substantial discount below their stated principal amount.
Generally speaking, if the notes are issued at an original issue discount and
there is an event of default or acceleration of their maturity, holders will
receive an amount less than their principal amount. Tax and other special
considerations applicable to original issue discount debt will be described in
the prospectus supplement in which we offer those notes.
Interest Rate
The interest rate on the notes will either be fixed or floating. The
interest paid will include interest accrued to, but excluding, the date of
maturity or redemption. Interest is generally payable to the person in whose
name the note is registered at the close of business on the record date before
each interest payment date. Interest payable at maturity or redemption, however,
will be payable to the person to whom principal is payable.
If we issue a note after a record date but on or prior to the related
interest payment date, we will pay the first interest payment on the interest
payment date after the next record date. We will pay interest payments by check
or wire transfer, at our option.
Fixed Rate Notes
A pricing or prospectus supplement will designate the record dates,
payment dates and the fixed rate of interest payable on a note. We will pay
interest monthly, quarterly or semi-annually, and upon maturity or redemption.
Unless an applicable pricing or prospectus supplement states otherwise, if any
payment date falls on a day that is not a business day, we will pay interest on
the next business day and no additional interest will be paid. Interest payments
will be the amount of interest accrued to, but excluding, each payment date.
Interest will be computed using a 360-day year of twelve 30-day months.
Floating Rate Notes
Each floating rate note will have an interest rate formula. The applicable
pricing supplement will state the initial interest rate or interest rate formula
on each note effective until the first interest reset date. The applicable
pricing or prospectus supplement will state the method and dates on which the
interest rate will be determined, reset and paid.
Events of Default
"Event of Default" means any of the following:
- failure to pay for three business days the principal of (or premium, if any,
on) any note of a series when due and payable;
- failure to pay for 30 days any interest on any note of any series when due
and payable;
- failure to perform any other requirements in such notes, or in the Indenture
in regard to such notes, for 90 days after notice;
- certain events of bankruptcy or insolvency; or any other event of default
specified in a series of notes.
An Event of Default for a particular series of notes does not necessarily
mean that an Event of Default has occurred for any other series of notes issued
under the Indenture. If an Event of Default occurs and continues, the Trustee or
the holders of at least 33% of the principal amount of the notes of the series
affected may require us to repay the entire principal of the notes of such
series immediately ("Repayment Acceleration"). In most instances, the holders of
at least a majority in aggregate principal amount of the notes of the affected
series may rescind a previously triggered Repayment Acceleration. However, if we
cause an Event of Default because we have failed to pay (unaccelerated)
principal, premium, if any, or interest, Repayment Acceleration may be rescinded
only if we have first cured our default by depositing with the Trustee enough
money to pay all (unaccelerated) past due amounts and penalties, if any.
The Trustee must within 90 days after a default occurs, notify the holders
of the notes of the series of default unless such default has been cured or
waived. We are required to file an annual certificate with the Trustee, signed
by an officer, concerning any default by us under any provisions of the
Indenture.
Subject to the provisions of the Indenture relating to its duties in case
of default, the Trustee shall be under no obligation to exercise any of its
rights or powers under the Indenture at the request, order or direction of any
holders unless such holders offer the Trustee reasonable indemnity. Subject to
the provisions for indemnification, the holders of a majority in principal
amount of the notes of any series may direct the time, method and place of
conducting any proceedings for any remedy available to, or exercising any trust
or power conferred on, the Trustee with respect to such notes.
Modification of Indenture
Under the Indenture, our rights and obligations and the rights of the
holders of any notes may be changed. Any change affecting the rights of the
holders of any series of notes requires the consent of the holders of not less
than a majority in aggregate principal amount of the outstanding notes of all
series affected by the change, voting as one class. However, we cannot change
the terms of payment of principal or interest, or a reduction in the percentage
required for changes or a waiver of default, unless the holder consents. We may
issue additional series of notes and take other action that does not affect the
rights of holders of any series by executing supplemental indentures without the
consent of any noteholders.
Consolidation, Merger or Sale
We may merge or consolidate with any corporation or sell substantially all
of our assets as an entirety as long as the successor or purchaser expressly
assumes the payment of principal, and premium, if any, and interest on the
notes.
Legal Defeasance
We will be discharged from our obligations on the notes of any series at
any time if:
o we deposit with the Trustee sufficient cash or government securities to
pay the principal, interest, any premium and any other sums due to the
stated maturity date or a redemption date of the note of the series, and
o we deliver to the Trustee an opinion of counsel stating that the federal
income tax obligations of noteholders of that series will not change as a
result of our performing the action described above.
If this happens, the noteholders of the series will not be entitled to the
benefits of the Indenture except for registration of transfer and exchange of
notes and replacement of lost, stolen or mutilated notes.
Covenant Defeasance
We will be discharged from our obligations under any restrictive covenant
applicable to the notes of a particular series if we perform both actions
described above. See Legal Defeasance. If this happens, any later breach of that
particular restrictive covenant will not result in Repayment Acceleration. If we
cause an Event of Default apart from breaching that restrictive covenant, there
may not be sufficient money or government obligations on deposit with the
Trustee to pay all amounts due on the notes of that series. In that instance, we
would remain liable for such amounts.
Governing Law
The Indenture and notes of all series will be governed by the laws of the
State of New York.
Concerning the Trustee
We and our affiliates use or will use some of the banking services of the
Trustee and other services of its affiliates in the normal course of business.
PLAN OF DISTRIBUTION
We may sell the notes (a) through agents; (b) through underwriters or
dealers; or (c) directly to one or more purchasers.
By Agents
Notes may be sold on a continuing basis through agents designated by us.
The agents will agree to use their reasonable efforts to solicit purchases for
the period of their appointment.
The Agents will not be obligated to make a market in the notes. We cannot
predict the amount of trading or liquidity of the notes.
By Underwriters
If underwriters are used in the sale, the underwriters will acquire the
notes for their own account. The underwriters may resell the notes in one or
more transactions, including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of sale. The obligations of
the underwriters to purchase the notes will be subject to certain conditions.
The underwriters will be obligated to purchase all the notes of the series
offered if any of the notes are purchased. Any initial public offering price and
any discounts or concessions allowed or re-allowed or paid to dealers may be
changed from time to time.
Direct Sales
We may also sell notes directly. In this case, no underwriters or agents
would be involved.
General Information
Underwriters, dealers, and agents that participate in the distribution of
the notes may be underwriters as defined in the Securities Act of 1933 (the
"Act"), and any discounts or commissions received by them from us and any profit
on the resale of the notes by them may be treated as underwriting discounts and
commissions under the Act.
We may have agreements with the underwriters, dealers and agents to
indemnify them against certain civil liabilities, including liabilities under
the Act.
Underwriters, dealers and agents may engage in transactions with, or
perform services for, us or our affiliates in the ordinary course of their
businesses.
LEGAL OPINIONS
Our counsel, Simpson Thacher & Bartlett LLP, New York, NY, and one of our
lawyers will each issue an opinion about the legality of the notes for us. Dewey
Ballantine LLP, New York, NY will issue an opinion for the agents or
underwriters. From time to time, Dewey Ballantine LLP acts as counsel to our
affiliates for some matters.
EXPERTS
The financial statements of the Company incorporated in this prospectus by
reference from the Company's Current Report on Form 8-K dated May 14, 2003 have
been audited by Deloitte & Touche LLP, independent auditors, as stated in their
report which is incorporated herein by reference (which report expresses an
unqualified opinion and includes an explanatory paragraph relating to the
realignment of segments for financial reporting purposes).
The financial statement schedule of the Company incorporated by reference
in this prospectus from the Company's Annual Report on Form 10-K (as updated by
the Company's Current Report on Form 8-K dated May 14, 2003) has been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report, which is
incorporated herein by reference.
The aforementioned reports have been so incorporated in reliance upon such
firm given their authority as experts in accounting and auditing.
Table of Contents
THE COMPANY........................ 2
RISK FACTORS....................... 2
PROSPECTUS SUPPLEMENTS............. 14
RATIO OF EARNINGS TO
FIXED CHARGES................... 14
WHERE YOU CAN FIND MORE
INFORMATION ................... 14
USE OF PROCEEDS ................... 15 $650,000,000 UNSECURED NOTES
DESCRIPTION OF THE NOTES .......... 16
General ....................... 16
Redemptions .................... 16
Remarketed Notes............. 17
Book-Entry Notes - Registration,
Transfer, and Payment of PROSPECTUS
Interest and Principal .... 17
Note Certificates - Registration,
Transfer, and Payment of
Interest and Principal .... 18
Original Issue Discount......... 18
Interest Rate .................. 19 The date of this
Fixed Rate Notes ............ 19 Prospectus is __________, 2003
Floating Rate Notes ... 19
Events of Default............ 19
Modification of Indenture.... 20
Consolidation, Merger or Sale. 20
Legal Defeasance.............. 21
Covenant Defeasance........... 21
Governing Law................. 21
Concerning the Trustee........ 21
PLAN OF DISTRIBUTION............... 21
By Agents.................... 21
By Underwriters.............. 22
Direct Sales................. 22
General Information.......... 22
LEGAL OPINIONS..................... 22
EXPERTS............................ 22
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.*
Estimation based upon the issuance of all of the unsecured notes in
two issuances:
Securities and Exchange Commission Filing Fees....................$ 52,585
Printing Registration Statement, Prospectus, etc.................. 60,000
Independent Auditors' fees........................................ 34,000
Charges of Trustee (including counsel fees)....................... 45,000
Legal fees........................................................ 200,000
Rating Agency fees................................................ 250,000
Miscellaneous expenses............................................ 100,000
--------
Total........................................................ $741,585
========
* Estimated, except for filing fees.
Item 15. Indemnification of Directors and Officers.
Section 1701.13(E) of the Ohio Revised Code gives a corporation
incorporated under the laws of Ohio the power and/or authority to indemnify any
person who is or has been a director, officer, agent or employee of that
corporation, or of another corporation, domestic or foreign, non-profit or for
profit, limited liability company or a partnership, joint venture or other
enterprise, at the request of that corporation, against expenses actually and
reasonably incurred by him in connection with any pending, threatened or
completed action, suit or proceeding, criminal or civil, to which he was, is or
may be made a party because of being or having been such director, officer or
employee, provided, in connection therewith, that such person is determined to
have acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, that, in the case of an action
or suit by or in the right of the corporation, (i) no negligence or misconduct
shall have been adjudged unless a court determines that such person is fairly
and reasonably entitled to indemnity, and (ii) the action or suit is not one in
which the only liability asserted against a director is pursuant to Section
1701.95 of the Ohio Revised Code, which relates to unlawful loans, dividends and
distributions of assets, and that, in the case of a criminal matter, such person
is determined to have had no reasonable cause to believe that his conduct was
unlawful. Section 1701.13(E) further provides that to the extent that such
person has been successful on the merits or otherwise in defense of any such
action, suit, or proceeding, or in defense of any claim, issue or matter
therein, he shall be indemnified against expenses, including attorneys' fees,
actually and reasonably incurred by him in connection therewith. Section
1701.13(E) further provides that unless the articles of incorporation or the
code of regulations of a corporation state by specific reference to Section
1701.13(E) that Section 1701.13(E) does not apply to the corporation, and unless
the only liability asserted against a director is pursuant to Section 1701.95,
expenses incurred by a director in defending such an action, suit or proceeding
shall be paid by the corporation as they are incurred in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking
(i) to repay such amounts if it is proved by clear and convincing evidence in a
court of competent jurisdiction that such director acted, or failed to act, with
deliberate intent to cause injury to the corporation or with reckless disregard
for the best interests of the corporation and (ii) reasonably to cooperate with
the corporation concerning said action, suit or proceeding. Section 1701.13(E)
also provides that the indemnification thereby permitted shall not be exclusive
of any other rights that directors, officers or employees may have, including
rights under insurance purchased by the corporation. The Company's Code of
Regulations provides for the indemnification of directors and officers of the
Company to the fullest extent permitted by law.
The above is a general summary of certain provisions of the Company's Code
of Regulations and of the Ohio Revised Code and is subject in all respects to
the specific and detailed provisions of the Company's Code of Regulations and
the Ohio Revised Code.
Reference is made to the Selling Agency Agreement and Underwriting
Agreement filed as Exhibits 1(a) and 1(b) hereto, respectively, which provide
for indemnification of the Company, certain of its directors and officers, and
persons who control the Company, under certain circumstances.
The Company maintains insurance policies insuring its directors and
officers against certain obligations that may be incurred by them.
Item 16. Exhibits.
Reference is made to the information contained in the Exhibit Index filed
as part of this Registration Statement.
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of unsecured notes offered (if the total dollar value
of unsecured notes offered would not exceed that which was registered) and
any deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) of the Securities Act of 1933 if, in the
aggregate, the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
Provided, however, that (i) and (ii) do not apply if the registration
statement is on Form S-3, Form S-8 or Form F-3, and the information required to
be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by the registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in this registration statement shall be deemed to be a
new registration statement relating to the unsecured notes offered, and the
offering thereof at that time shall be deemed to be the initial bona fide
offering thereof.
(5) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the laws of the State of Ohio, the
registrant's bylaws, or otherwise, the registrant has been advised that in the
opinion of the SEC such indemnification is against public policy as expressed in
said Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the unsecured notes, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in said Act and will be governed by the
final adjudication of such issue.
(6) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(7) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable cause to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this amendment to
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Columbus and State of Ohio, on the 17th day of
June, 2003.
OHIO POWER COMPANY
E. Linn Draper, Jr.*
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this amendment
to registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
(i) Principal Executive
Officer Chairman of the Board
and Chief Executive
E. Linn Draper, Jr.* Officer June 17, 2003
(ii) Principal Financial
Officer:
/s/ Susan Tomasky
Susan Tomasky Vice President June 17, 2003
(iii) Principal Accounting
Officer:
/s/ Joseph M. Buonaiuto Controller and Chief
Joseph M. Buonaiuto Accounting Officer June 17, 2003
(iv) A Majority of the Directors:
E. Linn Draper, Jr.*
Geoffrey S. Chatas*
Jeffrey D. Cross*
H. W. Fayne*
Thomas M. Hagan*
A. A. Pena*
Robert P. Powers*
Thomas V. Shockley, III*
Susan Tomasky June 17, 2003
*By_/s/ Susan Tomasky__
(Susan Tomasky, Attorney-in-Fact)
EXHIBIT INDEX
Certain of the following exhibits, designated with an asterisk (*), are
filed herewith. The exhibits not so designated have heretofore been filed with
the Commission and, pursuant to 17 C.F.R. Sections 201.24 and 230.411, are
incorporated herein by reference to the documents indicated following the
descriptions of such exhibits.
Exhibit No. Description
*1(a) Copy of proposed form of Selling Agency Agreement for the unsecured
notes.
*1(b) Copy of proposed form of Underwriting Agreement for the unsecured
notes.
4(a) Copy of Indenture, dated as of September 1, 1997, between the Company
and Bankers Trust Company, as Trustee [Registration Statement No.
333-49595, Exhibits 4(a), 4(b) and 4(c); Registration Statement No.
333-75783, Exhibits 4(b) and (c)].
*4(b) Copy of Company Order and Officers' Certificate, dated June 9, 1999,
establishing certain terms of the 6.75% Senior Notes, Series B, due
2004.
*4(c) Copy of Company Order and Officers' Certificate, dated September 1,
1999, establishing certain terms of the 7% Senior Notes, Series C,
due 2004.
*4(d) Copy of Company Order and Officers' Certificate, dated May 22, 2000,
establishing certain terms of the Floating Rate Notes, Series A, due
2001.
*4(e) Copy of proposed form of Company Order for the unsecured notes.
*5 Opinion of Simpson Thacher & Bartlett LLP with respect to the
unsecured notes.
12 Statement re Computations of Ratios [Quarterly Report on Form 10-Q of
the Company for the period ended March 31, 2003, File No. 1-6543,
Exhibit 12].
*23(a) Consent of Deloitte & Touche LLP.
23(b) Consent of Simpson Thacher & Bartlett LLP (included in Exhibit 5
filed herewith).
*24 Powers of Attorney and resolutions of the Board of Directors of the
Company.
*25 Form T-1 re eligibility of Deutsche Bank Trust Company Americas to act
as Trustee under the Indenture.