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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 7, 1994
CENTRAL AND SOUTH WEST CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
1-1443 51-0007707
(Commission File Number) (IRS Employer
Identification No.)
1616 Woodall Rodgers Freeway, Dallas TX 75202
(Address of principal executive offices) (zip code)
(214) 777-1000
(Registrant's telephone number, including area code)
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Item 5. Other Events
CPL Rate Cases
New Developments
A scheduling and procedural settlement agreement (Agreement) between
Central Power and Light Company (CPL), a wholly owned subsidiary of Central and
South West Corporation (Corporation), and the other parties to rate proceedings
primarily related to the South Texas Project (STP) Electric Generating Station
outage was approved April 1, 1994 by a Public Utility Commission of Texas
(Texas Commission) administrative law judge. The Agreement allows CPL more time
to prepare a rate case defending its rates as reasonable and its earnings as
being within established regulatory guidelines. The Agreement will move the
filing deadline for the rate case from April 11, 1994 to July 1, 1994 and the
start of the hearings from June 8, 1994 to October 31, 1994.
The Agreement was reached in connection with rate litigation initiated by
several parties seeking to reduce rates due to the STP outage. Both generating
units of STP were shut down in February 1993. Unit 1 has restarted and is
proceeding with power-ascension testing at 90 percent power. Unit 2 is in the
early stages of the restart process, having been reloaded with fuel, and is
scheduled to restart in late May 1994.
The parties also agreed that the CPL's existing rates will remain in
effect until the Texas Commission's final order in the case. The other parties
thus agreed not to pursue lower interim rates in an interim rate proceeding. As
part of the Agreement, CPL agreed that any reductions in rates, if any are
implemented as a result of the rate case, would be effective retroactive to June
15, 1994. CPL also agreed not to seek a base rate increase in the proceeding.
The rate case will be based on a test year ending September 30, 1993.
CPL expects that a Texas Commission decision will occur near the end of
the first quarter of 1995.
The Agreement, filed with the Texas Commission March 31, 1994, was
executed by CPL and each of the eight parties to the proceedings. The eight
parties are: a group of 11 cities in CPL's service area (Cities), the Texas
Commission General Counsel, the Office of Public Utility Counsel (OPUC), Texas
Industrial Energy Consumers, the Lower Colorado River Authority, Occidental
Chemical Corporation, the H.E. Butt Grocery Company and James O. Bryant, a CPL
customer.
Background
During December 1993 and January 1994, several of the Cities which
together account for approximately 40% of CPL's base revenues, exercised their
rights to require CPL to file rate cases to determine if its rates are fair,
just and reasonable. The Cities informed CPL that this rate review was
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precipitated by the outage at STP, leading the Cities to question whether STP
should continue to be included in CPL's rate base. The governing bodies of
these Cities have original jurisdiction over rates only within their
incorporated limits.
In February and March 1994, certain Cities passed resolutions ordering
CPL to reduce rates by amounts ranging from $73 million to $137 million, if
applied on a total company basis. The rate reductions are based on removal
of a portion of STP costs from base rates. The orders only affect the rates
of customers who take service within these Cities' limits. CPL has appealed
all of these actions, and intends to timely appeal any others to the Texas
Commission, which has authority to stay their effectiveness.
Similar challenges to CPL's rates were filed with the Texas Commission
by OPUC, the Texas Commission General Counsel, and affected customers
(collectively Customer Cases). In its complaint, OPUC has alleged CPL is
overearning by amounts ranging from $16 million to $214 million, if applied
on a total company basis, based on a range of returns on common equity,
removal of the investment in STP Unit 2 from rate base and certain other
matters. The Texas Commission has exclusive original jurisdiction over the
rates and services of CPL in the areas outside municipal limits of cities who
retain original jurisdiction.
On March 25, 1994, a Texas Commission administrative law judge
consolidated CPL's appeals of the Cities Cases with the Customer Cases filed at
the Texas Commission.
CPL contends that both units of STP belong in rate base because STP Unit
1 has returned to service and STP Unit 2 should soon return to service and
because of the long-term benefits nuclear generation provides to customers.
There are no Texas Commission precedents addressing the removal of a nuclear
plant from rate base. CPL's base rates were last set in 1990. Based on
inclusion of both units of STP in rate base, CPL believes it is not collecting
excessive revenues, even when considering market rates of return on common
equity that are generally lower than they were in 1990 when base rates were last
set. If CPL ultimately is unsuccessful in maintaining its rates at their
current level, the Corporation could experience a material adverse effect on its
consolidated results of operations or financial condition.
Management cannot predict the ultimate outcome of these rate filings,
although management believes that their ultimate resolution will not have
a material adverse effect on the Corporation's results of operations or
financial condition.
See the Corporation's annual report on Form 10-K for the year ended
December 31, 1993, for additional information relating to STP and regulation and
rates.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CENTRAL AND SOUTH WEST CORPORATION
Date: April 7, 1994
By: WENDY G. HARGUS
Wendy G. Hargus
Controller
