UNITED STATES
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 earliest event reported: June 18, 1999
Date of report: July 2, 1999
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, Texas 75202-1234
(214) 777-1000
0-346 Central Power and Light Company 74-0550600
(A Texas Corporation)
539 North Carancahua Street
Corpus Christi, Texas 78401-2802
(512) 881-5300
0-343 Public Service Company of Oklahoma 73-0410895
(An Oklahoma Corporation)
212 East 6th Street
Tulsa, Oklahoma 74119-1212
(918) 599-2000
1-3146 Southwestern Electric Power Company 72-0323455
(A Delaware Corporation)
428 Travis Street
Shreveport, Louisiana 71156-0001
(318) 222-2141
0-340 West Texas Utilities Company 75-0646790
(A Texas Corporation)
301 Cypress Street
Abilene, Texas 79601-5820
(915) 674-7000
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GLOSSARY OF TERMS
The following abbreviations or acronyms used in this text are defined below:
Abbreviation or Acronym Definition
AEP........................American Electric Power Company, Inc., Columbus, Ohio
AEP Merger.................Proposed merger between AEP and CSW where CSW would
become a wholly-owned subsidiary of AEP
CSW........................Central and South West Corporation, Dallas, Texas
CSW System.................CSW and its subsidiaries
SWEPCO.....................Southwestern Electric Power Company, Shreveport,
Louisiana
SWEPCO's Cajun Asset
Proposal..................SWEPCO's Joint Reorganization Plan for Cajun Electric
Power Cooperative, Inc., as amended
Texas Electric Restructuring
Legislation..............Senate Bill 7, June 18, 1999, effective September 1,
1999
FORWARD-LOOKING INFORMATION
This report made by CSW and certain of its subsidiaries contains forward-looking
statements within the meaning of Section 21E of the Exchange Act. Although CSW
and each of its subsidiaries believe that their expectations are based on
reasonable assumptions, any such statements may be influenced by factors that
could cause actual outcomes and results to be materially different from those
projected. Important factors that could cause actual results to differ
materially from those in the forward-looking statements include, but are not
limited to:
- - the impact of general economic changes in the United States and in
countries in which CSW either currently has made or in the future may
make investments,
- - the impact of the proposed AEP Merger including any regulatory
conditions imposed on the merger, the inability to consummate the AEP
Merger, or other merger and acquisition activity including SWEPCO's
Cajun Asset Proposal,
- - the impact of deregulation on the United States electric utility
business, especially in the States comprising the CSW System's service
territory
- - increased competition and electric utility industry restructuring in
the United States,
- - federal and state regulatory developments and changes in law which may
have a substantial adverse impact on the value of CSW System generating
and other assets,
- - timing and adequacy of rate relief,
- - adverse changes in electric load and customer growth,
- - climatic changes or unexpected changes in weather patterns,
- - changing fuel prices, generating plant and distribution facility
performance.
<PAGE>
ITEM 5. OTHER EVENTS
Texas Electric Restructuring Legislation
On June 18, 1999, legislation was signed into law in Texas that will
restructure the electric utility industry in that state. The new law gives Texas
customers of investor-owned utilities the opportunity to choose their electric
provider beginning on January 1, 2002. The legislation also provides a rate
freeze until then followed by a 6 percent rate reduction for residential and
small commercial customers, additional rate reductions for low income customers
and a number of customer protections. Rural electric cooperatives and municipal
electric systems can choose whether to participate in retail competition.
Some of the key provisions of the legislation include:
- - Beginning January 1, 2002, retail customers of investor-owned electric
companies will be able to choose their electric provider. The affiliated
retail electric provider of the utility that serves the customer on
December 31, 2001 will continue to serve the customer unless the customer
chooses another retail electric provider. Delivery of the electricity
will continue to be the responsibility of the local electric utility
company at regulated prices. Each utility must unbundle its business
activities into a retail electric provider, a power generation company and
a transmission and distribution utility.
- - Retail electric cooperatives and municipal electric systems can choose
whether to participate in retail competition.
- - Investor-owned utilities must freeze their rates effective September 1,
1999, through the start of competition on January 1, 2002. Investor-owned
utilities will then lower rates for residential and small commercial
customers by 6 percent. This reduced rate is known as the "Price to Beat",
which will be available to those customers for five years.
- - The legislation establishes a System Benefit Fund for low-income
customer assistance, customer education and to offset reductions in
school property tax revenues. The fund will be funded through a charge
on retail electric providers that can be set by the Public Utility
Commission of Texas at up to 65 cents per megawatt-hour.
- - Electric utilities are allowed to recover the reasonable excess costs over
market of assets that otherwise may not be recoverable in the future
competitive market. A majority of those regulatory assets and stranded
costs can be recovered through securitization, which is a financing
process to recover regulatory assets and stranded costs through the
use of debt that lowers the carrying cost of assets compared to
conventional utility financing methods.
- - Each year during the 1999 through 2001 rate freeze period, utilities with
stranded costs are required to apply any earnings in excess of the most
recently approved cost of capital (if issued on or after January 1, 1992)
to reduce stranded costs. Utilities without stranded costs must either
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flow such amounts back to customers or make capital expenditures to
improve transmission or distribution facilities or to improve air quality.
- - Investor-owned utilities will be required to auction entitlements
to at least 15 percent of their generating capacity for five years or
until 40 percent of the residential and small commercial consumption of
electricity in the utility's service area is provided by a
nonaffiliated retail electric provider.
- - Grandfathered power plants, those built or started prior to
implementation of the Texas Clean Air Act of 1972, must reduce
emissions of Nitrogen Oxide (NOx) by 50 percent and Sulfur Dioxide
(SO2) by 25 percent by May 2003. The law also requires an additional
2,000 megawatts of renewable power generation in Texas by 2009 from retail
electric providers, municipally owned utilities and electric cooperatives.
- - A Legislative Oversight Committee will be established to monitor the
implementation and effectiveness of electric utility restructuring and
make recommendations for any necessary further legislative action.
CSW is currently analyzing the impact of the Texas Electric Restructuring
Legislation on Central Power and Light Company, Southwestern Electric Power
Company and West Texas Utilities Company, its three regulated electric companies
that operate in Texas.
SWEPCO's Cajun Asset Proposal
On June 23, 1999, SWEPCO issued a news release related to SWEPCO's Joint
Reorganization Plan for Cajun Electric Power Cooperative, Inc., which is
attached as an exhibit and incorporated herein by reference.
As reported in the SWEPCO release, on June 22, 1999 SWEPCO amended its
plan to raise its base bid from $940.5 million to $990.5 million. On June 24,
1999 the other bidder, Louisiana Generating LLC, amended its plan to raise its
base bid from $960 million to $995 million. The bankruptcy court released the
schedule for final pleadings to be made in July 1999 in the Cajun bankruptcy but
did not indicate when a decision will be issued.
Proposed AEP Merger
On June 25, 1999, AEP issued a news release, which is attached as an
exhibit and incorporated herein by reference, announcing a plan to restart its
Cook Nuclear Plant.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits.
Exhibit 99.1 SWEPCO News Release dated June
23, 1999 related to SWEPCO's Joint Reorganization Plan for
Cajun Electric Power Cooperative, Inc.
Exhibit 99.2 AEP News Release dated June 25, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, each registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
CENTRAL AND SOUTH WEST CORPORATION
Date: July 2, 1999
By: /s/ Lawrence B. Connors
Lawrence B. Connors
Controller and Chief Accounting Officer
(Principal Accounting Officer)
CENTRAL POWER AND LIGHT COMPANY
PUBLIC SERVICE COMPANY OF OKLAHOMA
SOUTHWESTERN ELECTRIC POWER COMPANY
WEST TEXAS UTILITIES COMPANY
Date: July 2, 1999
By: /s/ R. Russell Davis
R. Russell Davis
Controller and Chief Accounting Officer
(Principal Accounting Officer)
SWEPCO Southwestern Electric Power Company
A Central and South West Company
News Release
FOR IMMEDIATE RELEASE Exhibit 99.1
CONTACTS: Peter Main for SWEPCO, 318-673-3530
Melanie Rovner Cohen for the Committee, 312-715-4040
John Sharp for the Committee, 225-755-1060
SWEPCO, Committee, WST Increase Proposed Purchase Price
in Cajun Electric Bankruptcy
SHREVEPORT, LA (June 23, 1999) - Southwestern Electric Power Company, the
Committee of Certain Members and Washington-St. Tammany Electric Cooperative
have increased the proposed purchase price in their joint reorganization plan
for Cajun Electric Power Cooperative.
The base bid has been increased to $990.5 million in a plan amendment
filed June 22. The previous bid of $940.5 million was submitted on April 16,
1999. The plan calls for an affiliate of SWEPCO to acquire Cajun's non-nuclear
assets and provide power to cooperatives through new, consensual, long-term
power supply agreements.
The new bid exceeds the rival Louisiana Generating bid by $30.5 million.
The increase in purchase price is funded partially by a rate adjustment
agreed to by the eight distribution cooperatives that support the joint plan.
Rates under the amended plan remain below the level found to be "not
presumptively unreasonable" by the Louisiana Public Service Commission. The
revised rates remain below those proposed by rival Louisiana Generating.
The competing reorganization plans are subject to confirmation by
Bankruptcy Court and regulatory approvals. Confirmation hearings are under way,
scheduled through June 25, in U.S. Bankruptcy Court in Opelousas, La.
The Committee of Certain Members includes Beauregard Electric Cooperative,
Inc., Dixie Electric Membership Corp., Jefferson Davis Electric Cooperative,
Inc., Northeast Louisiana Power Cooperative, Inc., South Louisiana Electric
Cooperative Association and Valley Electric Membership Corp.
Washington-St.Tammany Electric Cooperative, Inc. (WST) is a co-proponent with
SWEPCO and the Committee.
Claiborne Electric Cooperative, Inc. which is not a membe of the
Committee, also supports the SWEPCO/Committee/WST plan.
Southwestern Electric Power Co., based in Shreveport, La., is a subsidiary
of Central and South West Corp. (NYSE: CSR), a Dallas-based public utility
holding company.
# # #
Exhibit 99.2
AEP AMERICAN
ELECTRIC
POWER
AEP: America's Energy Partner
Media contacts: Pat D. Hemlepp Larry Jones
American Electric Power Central and South West Corp.
614/223-1620 214/777-1276
Analysts contacts: John Bilacic Becky Hall
American Electric Power Central and South West Corp.
614/223-2847 214/777-1277
FOR IMMEDIATE RELEASE
AEP ANNOUNCES PLAN TO RESTART COOK NUCLEAR PLANT;
UNITS SCHEDULED TO RETURN TO SERVICE IN APRIL AND SEPTEMBER 2000
COLUMBUS, Ohio, June 25, 1999 - American Electric Power Company Inc. (NYSE: AEP)
today announced that its board of directors has approved a comprehensive plan to
restart the idle Cook Nuclear Plant. Unit 2 is scheduled to return to service in
April 2000 and Unit 1 is to return to service in September 2000.
The announcement follows a comprehensive systems readiness review of all
operating systems at the Cook plant. Plant officials shut down both units of the
facility, located in Bridgman, Mich., in September 1997 because of questions
raised during a design inspection by the Nuclear Regulatory Commission.
E. Linn Draper Jr., chairman, president and chief executive officer of
AEP, said, "After evaluating the difficult choices facing the future of the Cook
plant, AEP management and its board of directors determined that restarting the
plant is the best decision for our shareholders, customers and employees. The
restart plan is comprehensive, realistic and deliverable and we are confident
that it can be completed on schedule and on budget. Our confidence is based on
the caliber of the team managing the restart effort, its effective working
relationship with the regulatory authorities and the consistency of the timing
and cost estimates of our plan with other comparable successful restarts."
The company said that expenditures associated with the restart will total
approximately $574 million, of which $192 million has already been spent. These
costs will be accounted for primarily as expenses in 1999 and 2000. The company
expects the outage and restart effects to reduce AEP's earnings per share by
about 27 cents a share for the first half of 1999, another 37 cents per share
for the second half of 1999, and $1.15 per share in the year 2000. A portion of
1999 restart costs have been deferred, so the earnings impact for 1999 is less
than it would otherwise have been. The company indicated that the financial
impact of this restart plan will not affect the company's dividend.
Before making its decision, the board evaluated whether to restart the
plant or to shut it down completely. In examining the restart option, the board
considered cost estimates derived from a thorough readiness review by an
experienced management group, the newly strengthened controls set in place to
manage the project, and the likelihood that the anticipated expenditures would
be recoverable in a competitive marketplace.
In addition, the board considered the opportunities for improved
operational performance that could be achieved from a successful restart, as
well as the likelihood that the actions taken to qualify the plant for restart
also will enable it to satisfy the NRC's rigorous requirements for relicensing
and extended operation. Based on its evaluation, the board concluded that the
risks associated with restart were manageable and appropriate, particularly when
compared to the alternative of shutting down the plant, writing off the
investment and losing significant sales opportunities.
Draper added, "We have brought together seasoned nuclear executives to
develop and implement the restart plan. They are unparalleled in experience and
success in restarting idle nuclear facilities, truly a world-class team of
highly experienced engineers and experts. Most of the key members have helped to
direct successful plant restarts and all have effective working relationships
with regulators and the industry that will contribute to the efficient and
effective implementation of the restart plan."
Bob Powers, AEP's senior vice president of nuclear generation said, "We
have undertaken the most comprehensive, rigorous review of the Cook operations
since the plant first came on line, in continuous contact with the NRC. During
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the course of our review, the team has uncovered many engineering and design
issues that were masked by the successful operation of the Cook plant.
Fortunately, all of these issues have been successfully dealt with in other
restart programs and none will require untested solutions or major plant
modifications."
The company had previously indicated that it will replace a steam
generator for Unit 1 before that unit would be returned to service. The expected
costs of replacement have been set at approximately $165 million, of which $68
million has already been spent. These costs will be accounted for as a capital
investment unrelated to the restart.
"When the units are returned to service, Cook plant will be a more
efficient and more predictable producer of energy and revenue," Powers said.
"Moreover, as a result of the scope and thoroughness of the restart effort, the
plant will be in the best possible position to satisfy the NRC's stringent
requirements for relicensing and extended operation," he added.
"The decision to restart Cook, like the decision to merge with Central and
South West Corp. (NYSE: CSR) and to acquire Louisiana Intrastate Gas,
underscores AEP's long term strategy of growing our already substantial energy
commodity business by building a diversified portfolio of operations from a
variety of fuels and strategically located geographic sources," Draper noted.
"Restarting Cook and qualifying it for relicensing and extended operation
expands the range of that portfolio," he added.
E. R. Brooks, chairman and chief executive officer of Dallas-based CSW,
AEP's merger partner, said, "We continue to believe in the strategic logic of
this merger. We will continue with AEP to assess developments at Cook in the
context of the overall transaction. The current projections by AEP for the Cook
plant have not altered our continuing support for the transaction. We are
continuing to cooperate fully in the activities necessary to achieve successful
completion of the merger."
AEP, a global energy company, is one of the United States' largest
investor-owned utilities, providing energy to 3 million customers in Indiana,
Kentucky, Michigan, Ohio, Tennessee, Virginia and West Virginia. AEP has
holdings in the United States, the United Kingdom, China and Australia. Wholly
owned subsidiaries provide power engineering, energy consulting and energy
management services around the world. The company is based in Columbus, Ohio. On
Dec. 22, 1997, AEP announced a definitive merger agreement for a tax-free,
stock-for-stock transaction with Central and South West Corp., a public utility
holding company based in Dallas.
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---
This press release contains statements that are forward looking within the
meaning of Section 21 E of the Securities Exchange Act of 1934. These forward
looking statements reflect numerous assumptions and involve a number of risks
and uncertainties. Key factors that could have a direct impact include various
events that could impact the successful execution of the restart plan, such as
the timing and the nature of actions by the NRC and other regulatory bodies,
potential new plant modifications not foreseen at this time which could extend
the outage further, the impact of the outage and restart activities on earnings,
and other factors described in the Company's Securities and Exchange Commission
filings.
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News releases and other information about AEP can be found on the World
Wide Web at http://www.aep.com.
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