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): July 10, 1995
Commission Registrant, State of Incorporation, I.R.S. Employer
File Number Address and Telephone Number Identification No.
1-1443 Central and South West Corporation 51-0007707
(A Delaware corporation)
1616 Woodall Rodgers Freeway
Dallas, TX 75202-1234
(214) 777-1000
0-340 West Texas Utilities Company 75-0646790
(A Texas corporation)
301 Cypress Street
Abilene, TX 79601-5820
(915) 674-7000
This combined Form 8-K is separately filed by Central
and South West Corporation and West Texas Utilities
Company. Information contained herein relating to an
individual company is filed by such company on its own
behalf. Each company makes no representation as to
information relating to the other company.
ITEM 5. OTHER EVENTS
WEST TEXAS UTILITIES COMPANY (WTU) REGULATORY MATTERS
WTU Deferred Accounting - Docket No. 7289
Background of Docket No. 7289
In September 1987, WTU received an order (1987 Order)
from the Public Utility Commission of Texas (Texas
Commission) in Docket No. 7289, Application of WTU for
Deferred Accounting Treatment of Certain Oklaunion - Related
Costs. The 1987 Order authorized WTU to defer operating
expenses and carrying costs associated with Oklaunion Power
Station Unit No. 1 (Oklaunion) incurred subsequent to its
December 1986 commercial operation date until December 1987
(the deferral period) when retail rates including Oklaunion
in WTU's rate base became effective. As a result, WTU
originally recorded approximately $32 million of Oklaunion
deferred costs, of which approximately $25 million were
carrying costs, to be recovered and amortized over the
remaining life of the plant.
Following a series of appeals challenging the 1987
Order, the Supreme Court of Texas in October 1994 remanded
WTU's deferred accounting case to the Texas Commission to
make a formal finding whether the deferral of Oklaunion
costs was necessary to protect WTU's financial integrity
during the deferral period as opposed to the measurable harm
standard used in the 1987 Order to conclude that deferral of
the Oklaunion costs was appropriate.
Recent Developments
On July 10, 1995, the Administrative Law Judge (ALJ) in
WTU's proceeding before the Texas Commission, entitled
Petition of WTU for Approval of Deferred Accounting
Treatment of Certain Oklaunion-Related Costs upon Remand
(Docket No. 13949), issued a Proposal for Decision (PFD) and
Proposed Order. In the PFD, the ALJ recommended that the
1987 Order be reversed and WTU's request for deferred
accounting treatment for Oklaunion be denied.
In recommending denial of deferred accounting treatment
for WTU, the ALJ claimed that deferred accounting was not
necessary to protect WTU's financial integrity. If the
Texas Commission upholds the ALJ's recommendation, WTU would
be required to write off the $26.5 million current balance
of unamortized deferred accounting costs related to
Oklaunion.
Further, WTU has been recovering deferred accounting
costs since December 1987 through rates approved in Texas
rate case proceeding Docket No. 7510. The final Texas
Commission order in Docket No. 7510 has been the subject of
several legal proceedings and the issue of deferred
accounting in Docket No. 7510 remains on appeal.
Specifically, the Court of Appeals in February 1995 remanded
Docket No. 7510 to the Texas Commission to reexamine the
issue of deferred costs in light of the remand of Docket No.
7289 discussed above. WTU and other parties to the
proceeding have since filed an Application for Writ of Error
with the Supreme Court of Texas seeking discretionary review
by that court of among other things, the Court of Appeals
decision to remand the deferred accounting issue to the
Texas Commission.
If the Texas Commission adopts the PFD as proposed, WTU
may be required to refund to customers deferred accounting
costs recovered in rates since December 1987. However, due
to uncertainties inherent in the regulatory process, WTU is
unable to predict the timing or the amount, if any, of a
refund to customers that could result.
WTU's estimate of the maximum potential amounts its
earnings could be impacted are set forth in the following
table:
Pre-tax After-tax
($ millions at June 30, 1995)
Write-off of 6/30/95 balance of unamortized
deferred accounting costs $26.5 $20.4
Maximum potential refund of previously
collected deferred accounting costs
(including interest of approximately
$7.1 million) 37.3 24.2
The Texas Commission is scheduled to consider the ALJ's
recommendation at its Final Order Meeting to be held on
August 2, 1995. The timing of the resolution of WTU's
currently pending rate case, Docket No. 13369, could be
impacted by the resolution of remanded Docket No. 13949.
While management can give no assurances as to the
outcome of the remanded proceeding, management believes
that all of the Oklaunion deferred costs were necessary to
preserve WTU's financial integrity during the deferral
period and, accordingly, that the 1987 Order should be
upheld. Although WTU will continue to pursue its position
vigorously before the Texas Commission, WTU can give no
assurance as to what action the Texas Commission will take
or the results of any appeals that may arise therefrom. If
WTU's deferred accounting treatment is ultimately reversed
and not favorably resolved, WTU could experience a material
adverse effect on its results of operations and financial
condition and CSW could experience a material adverse effect
on its consolidated results of operations in the year
recorded but not on its continuing consolidated results of
operations or financial condition.
Deferred Accounting for Central Power and Light Company (CPL)
CPL, a wholly owned subsidiary of CSW, was granted
deferred accounting treatment for certain South Texas
Project Nuclear Generating Station costs (STP Costs) by
Texas Commission orders issued in October 1990 and December
1990, respectively. In 1994, the Supreme Court of Texas
sustained deferred accounting as an appropriate mechanism
for the Texas Commission to use in preserving the financial
integrity of CPL. Because the Texas Commission formally
concluded that deferred accounting treatment with respect to
the STP Costs was necessary to preserve the financial
integrity of CPL, the WTU deferred accounting proceedings
discussed above are not expected to affect CPL's continued
use of deferred accounting with respect to the STP Costs.
Additional Information
Deferred accounting for CPL and WTU has been the
subject of various regulatory and legal proceedings. For
further information and earlier developments related to
CPL's and WTU's deferred accounting matters and WTU's
pending rate case, reference is made to CSW's, CPL's and
WTU's combined 1994 Annual Report on Form 10-K and combined
Quarterly Report on Form 10-Q for the quarter ended March
31, 1995.
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, each of the registrants has duly caused this
report to be signed on its behalf by the undersigned
hereunto duly authorized. The signature for each
undersigned registrant shall be deemed to relate only to
matters having reference to such registrant or its
subsidiaries.
CENTRAL AND SOUTH WEST CORPORATION
Date: July 18, 1995
By: /s/ Wendy G. Hargus
Wendy G. Hargus
Controller
WEST TEXAS UTILITIES COMPANY
Date: July 18, 1995
By: /s/ R. Russell Davis
R. Russell Davis
Controller
